Documents | Saturna Capital

 

Saturna Sustainable Equity Fund Summary Prospectus March 27, 2020

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

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

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

 

Saturna Sustainable Equity Fund

Ticker Symbol: SEEFX

March 27, 2020

SUMMARY PROSPECTUS

Before you invest, you may want to review Saturna Sustainable Equity Fund's prospectus, which contains more information about the Fund and its risks. You can find the Fund's prospectus and other information about the Fund, including the statement of additional information and most recent reports to shareowners, online at www.saturna.com/prospectus. You can also get this information at no cost by calling 1-800-728-8762 or by sending an email request to info@saturna.com. The Fund's prospectus and statement of additional information, both dated March 27, 2020, are incorporated by reference into this Summary Prospectus.


Saturna Sustainable Equity Fund

SEEFX

Investment Objective

Capital appreciation.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Sustainable Equity 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 0.65%
Other Expenses 1.16%
Total Annual Fund Operating Expenses 1.81%
Fee Waiver and Expense Reimbursement 1.06%
Total Annual Fund Operating Expense after
Fee Waiver and Expense Reimbursement
0.75%

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 0.75%. 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
$184 $569 $980 $2,127

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 your after-tax returns. During the most recent fiscal year, the Fund's portfolio turnover rate was 13.22% of the average value of its portfolio.

Principal Investment Strategies

Under normal conditions, the Fund invests at least 80% of its net assets in equities of issuers located throughout the world 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 fossil fuel extraction.

The Fund diversifies its investments across industries, companies, and countries, and generally follows a large and mid-cap value investment style. The Fund prefers seasoned companies that are expected to grow revenue and earnings, favoring equities of companies trading for less than the adviser's assessment of their intrinsic value, which typically means companies with low price/earnings multiples, strong balance sheets, and higher dividend yields. The Fund principally invests in securities of companies with market capitalizations of greater than $5 billion. The Fund may invest up to 30% of net assets in companies with headquarters in countries with developing economies and/or markets.


Saturna Sustainable Equity Fund

SEEFX

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.

Investment strategy risk: The adviser believes that sustainable investing may mitigate security-specific risk, but the screens used in connection with sustainable investing reduce 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 Fund may perform in different market conditions.

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

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

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

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

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

Performance

Annual Total Return

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

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

Saturna Sustainable Equity Fund Annual Total Returns

* For the period 3/27/2015 (the Fund's inception) through 12/31/2015, and not annualized.

Best Quarter Q1 2019 13.01%
Worst Quarter Q4 2018 -11.81%

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 year and the Life of the Fund compare to those of a broad-based market index.

Periods ended December 31, 2019
  1 Year Life of Fund
Since 3/27/2015
Return before taxes 30.95% 7.99%
Return after taxes on distributions 30.85% 7.89%
Return after taxes on distributions and sale of Fund shares 18.49% 6.31%
S&P Global 1200 Index
(reflects no deduction for fees, expenses or taxes)
28.22% 9.46%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of any state or local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.


Saturna Sustainable Equity Fund

SEEFX

Investment Adviser

Saturna Capital Corporation is the Saturna Sustainable Equity Fund's investment adviser.

Portfolio Manager

Mrs. Jane K. Carten MBA, president of Saturna Capital Corporation, is the person primarily responsible for the day-to-day management of the Saturna Sustainable Equity Fund, a role she assumed in 2017. Mr. Scott F. Klimo CFA®, a portfolio manager and chief investment officer of Saturna Capital Corporation, has been the deputy portfolio manager since 2019.

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 Sustainable Equity 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:   Saturna Sustainable Equity Fund
            Box N
            Bellingham, WA 98227-0596

Or Fax: 360-734-0755

Telephone request

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

Online

Visit: www.saturnasustainable.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.


# # #

 

Saturna Sustainable Funds Prospectus March 27, 2020

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

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

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

Saturna Sustainable Funds

Prospectus

March 27, 2020

Please read this Prospectus and keep it for future reference. It is designed to provide important information and to help investors decide if the Saturna Sustainable 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 Saturna Sustainable Funds are series of Saturna Investment Trust.


Table of Contents:

Saturna Sustainable Equity Fund 3
Saturna Sustainable Bond Fund 6
Investment Objectives 9
Principal Investment Strategies 9
Principal Risks 10
Investment Information 12
Investment Adviser 12
Fund Share Pricing 13
Purchase and Sale of Fund Shares 13
Purchase and Sale of Fund Shares Through Financial Intermediaries 15
Distributions 15
Frequent Trading Policy 16
Tax Consequences 16
Distribution Arrangements 17
Financial Highlights 18

 

2


Saturna Sustainable Equity Fund

SEEFX

Investment Objective

Capital appreciation.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Sustainable Equity 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 0.65%
Other Expenses 1.16%
Total Annual Fund Operating Expenses 1.81%
Fee Waiver and Expense Reimbursement 1.06%
Total Annual Fund Operating Expense after
Fee Waiver and Expense Reimbursement
0.75%

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 0.75%. 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
$184 $569 $980 $2,127

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 your after-tax returns. During the most recent fiscal year, the Fund's portfolio turnover rate was 13.22% of the average value of its portfolio.

Principal Investment Strategies

Under normal conditions, the Fund invests at least 80% of its net assets in equities of issuers located throughout the world 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 fossil fuel extraction.

The Fund diversifies its investments across industries, companies, and countries, and generally follows a large and mid-cap value investment style. The Fund prefers seasoned companies that are expected to grow revenue and earnings, favoring equities of companies trading for less than the adviser's assessment of their intrinsic value, which typically means companies with low price/earnings multiples, strong balance sheets, and higher dividend yields. The Fund principally invests in securities of companies with market capitalizations of greater than $5 billion. The Fund may invest up to 30% of net assets in companies with headquarters in countries with developing economies and/or markets.

3


Saturna Sustainable Equity Fund

SEEFX

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.

Investment strategy risk: The adviser believes that sustainable investing may mitigate security-specific risk, but the screens used in connection with sustainable investing reduce 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 Fund may perform in different market conditions.

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

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

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

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

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

Performance

Annual Total Return

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

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

Saturna Sustainable Equity Fund Annual Total Returns

* For the period 3/27/2015 (the Fund's inception) through 12/31/2015, and not annualized.

Best Quarter Q1 2019 13.01%
Worst Quarter Q4 2018 -11.81%

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 year and the Life of the Fund compare to those of a broad-based market index.

Periods ended December 31, 2019
  1 Year Life of Fund
Since 3/27/2015
Return before taxes 30.95% 7.99%
Return after taxes on distributions 30.85% 7.89%
Return after taxes on distributions and sale of Fund shares 18.49% 6.31%
S&P Global 1200 Index
(reflects no deduction for fees, expenses or taxes)
28.22% 9.46%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of any state or local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

4


Saturna Sustainable Equity Fund

SEEFX

Investment Adviser

Saturna Capital Corporation is the Saturna Sustainable Equity Fund's investment adviser.

Portfolio Manager

Mrs. Jane K. Carten MBA, president of Saturna Capital Corporation, is the person primarily responsible for the day-to-day management of the Saturna Sustainable Equity Fund, a role she assumed in 2017. Mr. Scott F. Klimo CFA®, a portfolio manager and chief investment officer of Saturna Capital Corporation, has been the deputy portfolio manager since 2019.

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 Sustainable Equity 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:   Saturna Sustainable Equity Fund
            Box N
            Bellingham, WA 98227-0596

Or Fax: 360-734-0755

Telephone request

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

Online

Visit: www.saturnasustainable.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


Saturna Sustainable Bond Fund

SEBFX

Investment Objective

Current income 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 Sustainable Bond 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 0.55%
Other Expenses 0.28%
Total Annual Fund Operating Expenses 0.83%
Fee Waiver and Expense Reimbursement 0.18%
Total Annual Fund Operating Expense 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.

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
$85 $265 $460 $1,025

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 your after-tax returns. During the most recent fiscal year, the Fund's portfolio turnover rate was 37.96% of the average value of its portfolio.

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 fossil fuel extraction.

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 BBB) at the time of purchase, and may invest up to 35% in unrated and high-yield bonds ("junk bonds").

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.

Investment strategy risk: The adviser believes that sustainable investing may mitigate security-specific risk, but the screens used in connection with sustainable investing reduce 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 Fund 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. The risks associated with changing

6


Saturna Sustainable Bond Fund

SEBFX

interest rates may have unpredictable effects on bond markets, the liquidity of bonds, and the Fund's investments.

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

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

Performance

Annual Total Return

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

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

Saturna Sustainable Bond Fund Annual Total Returns

* For the period 3/27/2015 (the Fund's inception) through 12/31/2015, and not annualized.

Best Quarter Q1 2019 3.68%
Worst Quarter Q4 2018 -3.05%

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 year and the Life of the Fund compare to those of a broad-based market index.

Periods ended December 31, 2019
  1 Year Life of Fund
Since 3/27/2015
Return before taxes 7.08% 1.96%
Return after taxes on distributions 5.97% 0.88%
Return after taxes on distributions and sale of Fund shares 4.17% 0.97%
FTSE World BIG Bond Index
(reflects no deduction for fees, expenses or taxes)
6.88% 2.76%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of any state or local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

7


Saturna Sustainable Bond Fund

SEBFX

Investment Adviser

Saturna Capital Corporation is the Fund's investment adviser.

Portfolio Manager

Mr. Patrick T. Drum MBA, CFA, is the person primarily responsible for the day-to-day management of the Saturna Sustainable Bond Fund. Ms. Elizabeth Alm CFA®, a portfolio manager and senior investment analyst of Saturna Capital Corporation, is the deputy portfolio manager, a role she assumed in 2020.

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 Sustainable Bond Fund.

The minimum initial investment for each Fund 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:   Saturna Sustainable Bond Fund
            Box N
            Bellingham, WA 98227-0596

Or Fax: 360-734-0755

Telephone request

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

Online

Visit: www.saturnasustainable.com

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.

8


Investment Objectives

The Saturna Sustainable Equity Fund seeks capital appreciation.

The Saturna Sustainable Bond Fund seeks current income and capital preservation.

There can be no guarantee that the particular 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 Saturna Sustainable Funds seek to invest in sustainable and responsible companies. The Funds' adviser believes that companies proactively managing business risks relating to environmental, social, and governance (ESG) issues make better contributions to the global economy and are more resilient. The Funds' adviser uses negative screening to exclude companies engaged in activities that the adviser believes present higher ESG risk, including issuers engaged in:

  • Alcohol
  • Tobacco
  • Weapons
  • Gambling
  • Pornography
  • Fossil fuel extraction

The Funds' adviser employs a rating system based on its own, as well as third-party, data to identify issuers believed to present low ESG risks. In addition to an emphasis on low debt, the main characteristics of the sustainable rating system are:

Environmental

  • Energy
  • Water
  • Climate
  • Waste

Social

  • Community
  • Labor

Governance

  • Board quality
  • Executive compensation
  • Corporate policies

We evaluate companies according to their transparency (i.e., whether they report data on a given factor) and their quality (i.e., how their reporting compares to their peers). Each factor is weighted by our assessment of its importance within its economic sector, or, when appropriate, by its importance relative to its country or regional peers.

The Saturna Sustainable Funds seek tax efficiency for their shareowners and reduced trading expenses through low portfolio turnover.

The Funds may, from time to time, take temporary defensive positions that are inconsistent with the Funds' investment strategies in attempting to respond to adverse market, economic, political, or other conditions. Temporary defensive positions 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.

Under normal circumstances, each Fund limits its investments as follows:

  • No more than 40% in issues from a single country
  • No more than 30% in issues from developing countries (countries not members of the Organisation for Economic Co-operation and Development (OECD))

Saturna Sustainable Equity Fund

Under normal conditions, the Fund invests at least 80% of its net assets in equities of issuers located throughout the world 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 ESG policies. The Fund invests in a diversified portfolio of global common stocks of companies with market capitalizations of greater than $5 billion, and may invest up to 30% of net assets in companies with headquarters in countries with developing economies and/or markets.

The Fund's 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, country and industry position and outlook, corruption indicators, and management assessments.

Saturna Sustainable Bond Fund

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 ESG policies.

The Fund's investments include:

  • Corporate 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.

Under normal circumstances, at least 65% of net assets must be in bonds rated in the four highest grades assigned by a nationally

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recognized bond rating agency (e.g., Standard & Poor's: AAA, AA, A, or BBB) at the time of purchase. The Fund may invest up to 35% in unrated bonds and high-yield bonds ("junk bonds").

Under normal conditions, the Fund maintains a dollar-weighted average maturity of three years or more.

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 risk 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 the Funds 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.

Saturna Sustainable Equity and Saturna Sustainable Bond

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. Changes in value may be temporary or may last for extended periods. 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. Local, regional or global events such as war, acts of terrorism, the spread of infectious disease or other public health issues, or other events could have a significant impact on the Funds and their investments. 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.

Investment strategy risk: The ESG ratings process associated with sustainable investing reduces the investable universe, which limits opportunities and may increase the risk of loss during market declines. The adviser believes that sustainable investing may mitigate security-specific risk, but there is no guarantee that the securities favored by our investment process will perform better and may perform worse than those that are not favored. In addition, the Sustainable Equity Fund and the Sustainable Bond Fund have a relatively limited operating history, having commenced investment operations in March 2015. As a result, the performance history of these Funds is limited and does not provide extensive information on how these Funds may perform in different market conditions.

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

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

Liquidity risk: Liquidity risk exists when particular investments are difficult to sell and may be more difficult to value. If 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. A 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. Because the Sustainable Bond Fund may invest in restricted securities, it may have greater exposure to liquidity risk as result of the legal restrictions on the resale of a portion of its portfolio securities.

Saturna Sustainable Equity

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

Growth investing risk: The Fund may invest in growth stocks, which may be more volatile than slower-growing value stocks. 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 where 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.

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Saturna Sustainable Bond

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.

The historically low interest rate environment heightens the risks associated with rising interest rates. A rising interest rate environment may adversely impact the liquidity of bonds and lead to increased volatility of bond markets. 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 support 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.

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.

Variable rate securities risk: Variable rate debt securities (which include floating rate debt securities) pay interest based on an interest rate benchmark. When the benchmark rate changes, the interest payments on those securities may be reset at a higher or lower rate and, as a result, such securities generally are less price sensitive to interest rate changes than fixed rate debt securities. However, the market value of variable rate debt securities may decline, or not appreciate as quickly as expected, when prevailing interest rates rise, particularly if their interest rates do not rise as much, or as quickly, as interest rates in general. Conversely, variable rate securities will not generally increase in market value if interest rates decline. However, when interest rates fall, there may be a reduction in the payments of interest received by the Fund from its variable rate securities.

LIBOR transtition risk: The Fund may hold investments in floating rate bonds that are currently referenced to an interest rate called LIBOR, which is due to sunset in 2021 and be replaced with a different reference rate called SOFR. The risks associated with changing reference interest rates may have unpredictable effects on bond markets, the liquidity of bonds, income received from these investments, and the Fund's investments.

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.

US government and mortgage related securities risk: Government-related organizations such as Fannie Mae and Freddie Mac are not backed by the full faith and credit of the US government and no assurance can be given that the US government would provide financial support. Mortgage-related securities may be particularly sensitive to changes in economic conditions, including delinquencies and/or defaults. Some mortgage-related securities receive government or private support, but there is no assurance that such support will remain in place. Bond investments, especially mortgage-backed and asset-backed securities, are subject to the risk that borrowers will prepay the principal more quickly than expected (known as prepayment risk) or more slowly than expected (known as extension risk), which will affect the yield, average life, and price of the securities.

Liquidity Program (Both Funds)

The Funds may participate in the ReFlow Fund, LLC ("ReFlow") liquidity program. This program is designed to provide an alternative liquidity source on days where redemptions of Fund shares exceed purchases. Under the program, ReFlow is available to provide cash to the Funds to meet all, or a portion, of daily net shareowner redemptions. ReFlow provides this cash by purchasing shares at net asset value and ReFlow will not be subject to any investment minimum applicable to such shares. Following

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purchases of Fund shares, ReFlow then generally redeems those shares when the Fund experiences net sales, at the end of a maximum holding period determined by ReFlow (currently 14 days) or at other times at ReFlow's discretion. While ReFlow holds Fund shares, it will have the same rights and privileges with respect to those shares as any other shareowner.

For use of the ReFlow service, a participating Fund pays a fee to ReFlow each time it purchases Fund shares, calculated by applying to the purchase amount a fee rate determined through an automated daily "Dutch auction" among other participating mutual funds seeking liquidity that day. The current minimum fee rate is 0.20% of the value of the Fund shares purchased by ReFlow although the Fund may submit a bid at a higher fee rate if it determines that doing so is in the best interest of Fund shareowners. Such a fee is allocated among a Fund's share classes based on relative net assets. In accordance with federal securities laws, ReFlow is prohibited from acquiring more than 3% of the outstanding voting securities of a Fund.

ReFlow will periodically redeem its entire share position in the Fund and request that such redemption be met in kind in accordance with the Fund's in-kind redemption policies described under "Purchase and Sale of Fund Shares" below. Investments in the Fund by ReFlow in connection with the ReFlow liquidity program are not subject to the policy described in the "Frequent Trading Policy" section below. The adviser believes that the program has advantages over more conventional alternatives for meeting the Funds' liquidity needs, which typically involve selling portfolio securities and/or liquidating cash reserves. When Reflow redeems in kind, it is anticipated that the use of the program will reduce a Fund's realization of capital gains.

Operational Risk (Both Funds)

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

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

Investment Information

Shareowners receive a Saturna Sustainable Funds financial report showing the investment returns, portfolio, income, and expenses of each Fund every six months. The audited financial statements of each Fund for the year ended November 30, 2019, included in the Trust's Annual Report, are available upon request. Investors may obtain current share prices daily on financial information websites, by calling toll-free 888-732-6262, on electronic quotation systems, and at www.saturnasustainable.com. The following symbols can be used to obtain quotations and other information:

Saturna Sustainable Equity Fund       SEEFX

Saturna Sustainable Bond Fund       SEBFX

This prospectus, financial reports, performance information, proxy voting records, and other useful information are also available at www.saturnasustainable.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 the investment adviser and administrator ("Saturna Capital" or the "adviser") to each Fund. The adviser's wholly-owned subsidiary, Saturna Brokerage Services, Inc., is the distributor for each Fund. Founded in 1989, Saturna Capital Corporation has approximately $4.3 billion in assets under management as of December 31, 2019. It is also the adviser to other funds of the Saturna Investment Trust, the Amana Mutual Funds Trust, and to separately managed accounts. Saturna Capital's wholly-owned subsidiary in Malaysia manages separate accounts and investment funds. Another wholly-owned subsidiary, Saturna Environmental Corporation, owns an environmental education camp.

Mrs. Jane K. Carten MBA, portfolio manager of Saturna Sustainable Equity Fund, is president, director, and a controlling shareowner of Saturna Capital Corporation. Mrs. Carten joined Saturna Capital in 1997, and previously held positions in operations, information technology, and marketing.

Mr. Scott F. Klimo CFA®, portfolio manager of Sextant Growth Fund, joined Saturna Capital in 2012 as director of research. Mr. Klimo is vice president and chief investment officer of Saturna Capital and a deputy portfolio manager of Amana Income and Amana Developing World 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.

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

Ms. Elizabeth Alm CFA®, portfolio manager of Sextant Bond Income Fund, joined Saturna Capital in 2018. Ms. Alm is also portfolio manager of the Idaho Tax-Exempt Fund and deputy portfolio manager of the Sextant Bond Income, Saturna Sustainable Bond, and Amana Participation Funds. From 2007 to 2018, Ms. Alm was a senior research analyst with Wells Fargo Asset Management focusing on high-yield municipal bonds.

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

Advisory Fee

Each Saturna Sustainable Fund pays the adviser an Advisory and Administrative Services Fee. The Fee is compensation for portfolio management, advice, and recommendations on securities to be purchased, held, or sold. The Fee also covers certain administrative services such as portfolio accounting, shareowner and financial reporting, shareowner servicing, and transfer agency services. The Fee is computed at the annual rate of 0.65% of average daily net assets of the Saturna Sustainable Equity Fund and 0.55% of average daily net assets of the Saturna Sustainable Bond Fund. The Fee is paid monthly.

For the fiscal year ended November 30, 2019, the aggregate advisory fee paid (after waivers) was -0.41% and 0.37% of average net assets for Saturna Sustainable Equity Fund and Saturna Sustainable Bond Fund, respectively.

A discussion regarding the basis for the Board of Trustees' approval of the advisory contracts is available in the Funds' Annual Report for the fiscal year ended November 30, 2019.

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 insufficient to produce a reliable quoted or computed price. When this occurs, a fair value for such security is determined in good faith using fair value procedures approved by and administered under the supervision of the Board of Trustees. Using fair value to price a security may result in a value different from the security's most recent closing price and from the prices used by other mutual funds to calculate their share prices.

Bond markets and foreign markets may close before the time as of which the share price is computed. Because of this, events occurring after the close of the bond market or a foreign market and before the share price computation may have a material effect on bond and foreign security prices. To account for this, the Funds use evaluations provided by an independent pricing service for bonds and foreign securities. Evaluations for foreign securities 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.

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.

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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 $10,000 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.saturnasustainable.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 Corporation when you are wiring money.

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

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

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

The Funds normally send redemption proceeds within one day, however if the Funds reasonably believe that a cash redemption would negatively impact the operations of a Fund or that the shareowner may be engaged in market-timing or frequent trading, the Funds reserve the right delay payment of the redemption proceeds for up to seven calendar days. The Funds' investment team continually monitors portfolio liquidity and adjusts the Funds' cash levels based on market outlook, portfolio and investor transactions, and other relevant criteria. Unlike many mutual funds, the Saturna Sustainable Funds do not maintain a bank line of credit that could be used to meet short-term liquidity needs. The Funds also reserve the right to redeem an investor's shares in kind (i.e., providing investors with portfolio securities instead of cash), in whole or in part to meet redemption requests in both normal and stressed market conditions and other appropriate circumstances. The Funds would do so when the Manager or the Board of Trustees determines that it is in the best interests of a Fund's shareholders as a whole. There can be no assurance that the Fund will be able to manage liquidity successfully in all market environments. Under stressed conditions, the Funds may not pay redemption proceeds in a timely fashion.

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

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

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Unless Saturna is notified in advance that you do not want this privilege, 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.saturnasustainable.com

To initiate transactions online, shareowners must first complete an Online Access and E-Delivery form available on www.saturnasustainable.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.

When you redeem shares, you may 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 Transfers ($100 minimum) with proceeds transmitted 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 can be used.
  • Exchange (in at least the minimum established by the Fund being purchased) for shares of any other Fund for which Saturna Capital Corporation is adviser. If the exchange is your initial investment into the Fund, the new account will automatically have the same registration as your original account.

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.

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 net capital gains are paid annually, typically by the end of the year. Saturna Sustainable Bond Fund declares income dividends daily, which are reinvested or distributed (paid) monthly. Saturna Sustainable Equity Fund pays income dividends annually, typically by the end of the year. As a result of its investment strategy, the Saturna Sustainable Equity Fund may not pay income dividends.

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.

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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.

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 Saturna Sustainable Equity Fund are normally eligible for the "qualified dividend income" tax rate.

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

Shareowners receive quarterly statements. The year-end statement should be retained for tax accounting. As transfer agent, 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 transfer agent reports to each shareowner (consolidated by US taxpayer identification number) and to the Internal Revenue Service ("IRS") the amount of each redemption transaction of the shareowner and the amount of dividends and capital gain distributions he or she received for the preceding calendar year. Capital gains a Fund distributes may be taxed at different rates, depending on the length of time a Fund held its investments on which the gains were realized.

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

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

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

16


Distribution Arrangements

The Saturna Sustainable 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 Saturna Sustainable Equity and Saturna Sustainable Bond Funds are Clean Shares.

Shares may be purchased and sold through intermediaries, such as broker-dealers 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.

17


Financial Highlights

The tables on the following page 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.saturnasustainable.com or by calling 800-728-8762).


 

                                         

Sustainable Equity Fund (SEEFX)

            For year ended November 30,               Period endedA  
           

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

    2019       2018       2017       2016       Nov. 30, 2015  
           

Net asset value at beginning of year

    $11.51       $11.44       $9.43       $9.73       $10.00  
           

Income from investment operations

                                       
           

Net investment income

    0.09       0.09       0.09       0.06       0.02  
           

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

    2.08       0.07       1.97       (0.36     (0.28
                                         
           

Total from investment operations

    2.17       0.16       2.06       (0.30     (0.26
                                         
           

Less distributions

                                       
           

Dividends (from net investment income)

    (0.10     (0.09     (0.05     -       (0.01
                                         
           

Total distributions

    (0.10     (0.09     (0.05     -       (0.01
                                         
           
                                         
           

Net asset value at end of year

    $13.58       $11.51       $11.44       $9.43       $9.73  
           
                                         

Total return

    19.04%       1.39%       22.01%       (3.08 )%      (2.60 )%B  
           

Ratios / supplemental data

                                       
           

Net assets ($000), end of year

    $8,185       $5,658       $4,984       $3,343       $3,423  
           

Ratio of expenses to average net assets

                                       
           

Before fee waivers

    1.81%       1.27%       1.48%       1.65%       1.23% C  
           

After fee waivers

    0.78%       0.76%       0.88%       1.00%       1.00% C  
           

After fee waivers and custodian fee credits

    0.75%       0.75%       0.86%       0.99%       0.99% C  
           

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

    0.80%       0.82%       0.95%       0.67%       0.29% C  
           

Portfolio turnover rate

    13%       8%       12%       48%       53% B  
           
                                         
A 

Operations commenced on March 27, 2015.

B 

Not annualized.

C 

Annualized.

 

                                         

Sustainable Bond Fund (SEBFX)

    Year ended November 30,       Period endedA  
           

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

    2019       2018       2017       2016       Nov. 30, 2015  
           

Net asset value at beginning of year

    $9.39       $9.87       $9.65       $9.75       $10.00  
           

Income from investment operations

                                       
           

Net investment income

    0.28       0.26       0.27       0.24       0.12  
           

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

    0.29       (0.48     0.23       (0.10     (0.25
                                         
           

Total from investment operations

    0.57       (0.22     0.50       0.14       (0.13
                                         
           

Less distributions

                                       
           

Dividends (from net investment income)

    (0.26     (0.26     (0.27     (0.24     (0.12
           

Capital gains distribution

    -       -       (0.01     -       -  
                                         
           

Total distributions

    (0.26     (0.26     (0.28     (0.24     (0.12
                                         
           
                                         
           

Net asset value at end of year

    $9.70       $9.39       $9.87       $9.65       $9.75  
           
                                         

Total return

    6.09%       (2.29 )%      5.28%       1.37%       (1.29 )%B  
           

Ratios / supplemental data

                                       
           

Net assets ($000), end of year

    $27,775       $31,647       $21,980       $8,639       $6,885  
           

Ratio of expenses to average net assets

                                       
           

Before fee waivers

    0.83%       0.77%       0.92%       1.17%       1.02% C  
           

After fee waivers

    0.66%       0.66%       0.75%       0.89%       0.90% C  
           

After fee waivers and custodian fee credits

    0.65%       0.65%       0.74%       0.89%       0.89% C  
           

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

    2.87%       2.99%       2.82%       2.46%       1.92% C  
           

Portfolio turnover rate

    38%       25%       14%       46%       4% B  
           
                                         
A 

Operations commenced on March 27, 2015.

B 

Not annualized on periods less than one year.

C 

Annualized on periods less than one year.

19


www.saturnasustainable.com

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 the Funds' 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 Saturna Sustainable Funds, and to make shareowner inquiries, please contact us at:

Saturna Investment Trust – Saturna Sustainable Funds
1300 N. State St., Bellingham, WA 98225
1-800-728-8762 [1-800-SATURNA]
www.saturnasustainable.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.saturnasustainable.com and/or from your financial intermediary.

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 sending an email to publicinfo@sec.gov.

The Saturna Sustainable 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.


# # #

Saturna Sustainable Funds Annual Report Cover

 


 
     
Performance Summary (as of December 31, 2019)    (unaudited)

 

                                                 

Average Annual Returns (before any taxes paid by shareowners)

 

                                           Expense Ratio1  
             
       1 Year        3 Year        5 Year        10 Year        Gross        Net  
             

Sustainable Equity Fund (SEEFX)

     30.95%        15.16%        n/a        n/a        1.27%        0.75%  
             

S&P Global 1200 Index

     28.22%        13.39%        9.50%        9.99%        n/a        n/a  
             
                                                       
             

Sustainable Bond Fund (SEBFX)

     7.08%        3.16%        n/a        n/a        0.77%        0.65%  
             

FTSE WorldBIG Index

     6.88%        4.25%        2.25%        2.40%        n/a        n/a  

Performance data quoted in this report 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.saturnasustainable.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 23 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 these tables are as stated in the Funds’ most recent Prospectus, dated March 27, 2019, and incorporate results for the fiscal year ended November 30, 2018. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different periods. Also by regulation, the performance in this table represents the most recent quarter-end performance rather than performance through the Funds’ most recent fiscal period. Saturna Capital, the Fund’s adviser, has voluntarily capped actual expenses of the Sustainable Equity Fund at 0.75% and actual expenses of the Sustainable Bond Fund at 0.65% through March 31, 2020.

The S&P Global 1200 Index is a global stock market index covering nearly 70% of the world’s equity markets. The FTSE WorldBIG Index is a multi-asset, multi-currency benchmark, which provides a broad-based measure of the global fixed income markets. Investors cannot invest directly in the indices.

The Saturna Sustainable Funds limit the securities they purchase to those consistent with sustainable principles. This limits opportunities and may affect performance.

 

 

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

 

 

             
 
       
2                  November 30, 2019   Annual Report

 


 
     
Fellow Shareowners:    January 24, 2020

2019 was a great year for equity markets, with the S&P 500 Index returning 31.49% through December 31, 2019 – the best annual profit since 2013. At Saturna, we’re not forecasting 2020 to generate the outsized gains seen in 2019. Still, we enter the new decade optimistically.

It’s rare for the market to experience downturns or big profits following a year when returns exceed 25%. Since 1927, the S&P 500 experienced downturns in only 8% of the years following a year with returns in excess of 25%. Over this same period, only three years saw repeated returns greater than 25%. While statistics may support our forecast, we note “past returns may not indicate future performance.” Why then do we believe 2020 will follow a similar course of decent returns? Four reasons: the four-year US presidential election cycle, calming global trade tensions, a reduction of Brexit’s uncertainties, and accommodative yet stretched global monetary policies. The economy continues in a “goldilocks” state: low unemployment, low inflation, low interest rates, and lower taxes.

After minimal debate, both parties in the US Congress agreed to bigger spending and deficits, and the economy is roaring. Presidential election politicking gets our juices flowing from all sides of the spectrum. Then, as the country moves from primaries to the general election, an incumbent’s narrative always pulls the opposition toward the middle.

 

 

Saturna Sustainable Funds seek sustainable investments with low risks in areas of the environment, social responsibility, and governance (ESG).

 

 

Also awaiting the election returns, the US-China trade war should see reduced agitations. As President Trump looks to claim victory and President Xi takes advantage of US election related pressures, the two sides were compelled to sign an agreement. The truce calls for China to increase imports of US farm goods and the US to decrease tariffs on Chinese products.

Brexit will also have continued impact through 2020. The UK leaving the European Union on January 31, 2020, will not mark the end of the process. As the UK “gets Brexit done” this month, expect a first bounce in the economy. However, details of the trade agreement, and uncertainty related to it, will likely produce volatility in 2020 as the December deadline approaches.

 

 

             
 
       
November 30, 2019   Annual Report                   3

 


 

2019 marked a year of renewed expansionary monetary policy as fears of recession sprouted across the globe. These fears led the Federal Reserve to cut interest rates while central banks elsewhere amassed record levels of negative yielding debt during the summer of 2019. In turn, low to negative interest rates injected fuel into equities, igniting the record bull market. Although the amount of negative yielding debt has since been cut, central banks are operating with less dry powder to reignite the economy should fear of recession renew. We expect that in 2020 central banks will play the part of observer as they balance the need to keep tools on hand for an economic downturn with the want to see 2019’s stimulus work its way through the financial system.

Thank you for investing with us. Please read this report and let us know how we can be of assistance to you in your quest for responsible investments choices.

Respectfully,

(photo omitted)

Jane Carten,

President

(photo omitted)

Gary Goldfogel,

Independent Board Chairman

 

                     
     
    Saturna Sustainable Funds Portfolio Management    
           
    (photo omitted)   

Jane Carten MBA

 

Saturna Sustainable Equity Fund

Portfolio Manager

     (photo omitted)   

Patrick Drum MBA, CFA®, CFP®

 

Saturna Sustainable Bond Fund

Portfolio Manager

   
           
    (photo omitted)   

Scott Klimo CFA®

 

Saturna Sustainable Equity Fund

Deputy Portfolio Manager

     (photo omitted)   

Elizabeth Alm CFA®

 

Saturna Sustainable Bond Fund

Deputy Portfolio Manager

   

 

 

             
 
       
4                  November 30, 2019   Annual Report

 


 
         
Morningstar Sustainability Rating & Carbon Metrics        

 

At Saturna Capital, we have long described ourselves as value and values-based investors. We believe our approach improves the likelihood of achieving superior investment results over the long term. Our approach also leads to investment portfolios we can be proud of from the perspective of Environmental, Social, and Governance (ESG) issues. Morningstar partners with leading ESG research firm Sustainalytics to publish the Morningstar Sustainability Rating and Carbon Metrics. Here are Saturna Sustainable Equity Fund’s fiscal period-end results (Saturna Sustainable Bond Fund was not rated for the period).

 

                 
     

Saturna Sustainable Equity Fund

       
         

As of November 30, 2019

  ؠؠؠ Ø Ø            
     
Ranked in 2nd percentile among 725 World Large Stock Funds        
     
As of September 30, 2019        
Sustainable Equity Fund Carbon Metrics

The Morningstar Sustainability Rating, Low Carbon designation, Carbon Risk Score, and Fossil Fuel Involvement % are not based on fund performance and are not equivalent to the Morningstar Rating (“Star Rating”).

© 2019 Morningstar®. All rights reserved. Morningstar, Inc. is an independent fund performance monitor. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Morningstar Sustainability Rating is as of November 30, 2019. The Morningstar Sustainability Rating is intended to measure how well the issuing companies of the securities within a fund’s portfolio are managing their environmental, social, and governance (“ESG”) risks and opportunities relative to the fund’s Morningstar category peers. The Morningstar Sustainability Rating calculation is a two-step process. First, each fund with at least 50% of assets covered by a company-level ESG score from Sustainalytics receives a Morningstar Portfolio Sustainability Score. The Morningstar Portfolio Sustainability Score is an asset-weighted average of normalized company-level ESG scores with deductions made for controversial incidents by the issuing companies, such as environmental accidents, fraud, or discriminatory behavior. The Morningstar Sustainability Rating is then assigned to all scored funds within Morningstar Categories in which at least ten (10) funds receive a Portfolio Sustainability Score and is determined by each fund’s rank within the following distribution: High (highest 10%), Above Average (next 22.5%), Average (next 35%), Below Average (next 22.5%), and Low (lowest 10%). The Morningstar Sustainability Rating is depicted by globe icons where High equals 5 globes and Low equals 1 globe.

A Sustainability Rating is assigned to any fund that has more than half of its underlying assets rated by Sustainalytics and is within a Morningstar Category with at least 10 scored funds; therefore, the rating it is not limited to funds with explicit sustainable or responsible investment mandates. Morningstar updates its Sustainability Ratings monthly. Portfolios receive a Morningstar Portfolio Sustainability Score and Sustainability Rating one month and six business days after their reported as-of date based on the most recent portfolio. As part of the evaluation process, Morningstar uses Sustainalytics’ ESG scores from the same month as the portfolio as-of date.

Saturna Sustainable Equity Fund was rated on 100% of Assets Under Management.

% 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.

Morningstar Carbon Metrics are as of September 30, 2019. Morningstar carbon metrics are asset-weighted portfolio calculations based on their Sustainalytics subsidiary’s carbon-risk research. Based on two of these metrics – Carbon Risk Score and Fossil Fund Involvement % – funds may receive the Low Carbon designation, which allows investors to easily identify low-carbon funds within the global universe.

The portfolio Carbon Risk Score is a number between 0 and 100 (a lower score is better). A portfolio’s Carbon Risk Score is the asset-weighted sum of the carbon risk scores of its holdings, averaged over the trailing 12 months. The carbon risk of a company is Sustainalytics’ evaluation of the degree to which a firm’s activities and products are aligned with the transition to a low-carbon economy. The assessment includes carbon intensity, fossil fuel involvement, stranded assets exposure, mitigation strategies, and green product solutions.

Fossil Fuel Involvement % is the portfolio’s asset-weighted percentage exposure to fossil fuels, averaged over the trailing 12 months. Companies with fossil fuel involment are defined as these in the following subindustries: Thermal Coal Extraction, Thermal Coal Power Generation, Oil & Gas Production, Oil & Gas Power Generation, and Oil and Gas Products and Services.

To receive the Low Carbon designation a fund must have Carbon Risk Score below 10 and a Fossil Fuel Involvement % of less than 7% of assets. For these metrics to be calculated, at least 67% of a portfolio’s assets must be covered by Sustainalytics company carbon-risk research. All Morningstar carbon metrices are calculated quarterly.

Saturna Sustainable Equity Fund was rated on 100% of Assets Under Management.

The Funds’ portfolios are actively managed and are subject to change, which may result in different Morningstar Sustainability Ratings and Carbon Metrics over time.

 

 

             
 
       

November 30, 2019

 

Annual Report    

             5

 


 
     
Saturna Sustainable Equity Fund: Performance Summary    (unaudited)

 

                                 

Average Annual Returns as of November 30, 2019

                                           
         
       1 Year        5 Year        10 Year        Expense Ratio1  
         

Sustainable Equity Fund (SEEFX)2

       19.04%          n/a          n/a          1.27%  
         

S&P Global 1200 Index

       14.97%          8.40%          9.82%          n/a  

Growth of $10,000

 

 

         
   
Saturna Sustainable Equity 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 27, 2015, to an identical amount invested in the Standard & Poor’s 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 $13,929 versus $14,902 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 27, 2019, and incorporates results for the fiscal year ended November 30, 2018, 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 

Operations commenced on March 27, 2015.

Fund Objective

 

The objective of the Sustainable Equity Fund is capital appreciation.

 

         

Top 10 Holdings

        
 
% of Total Net Assets  
   

Adobe

     3.8%  
   

Apple

     3.3%  
   

Mastercard, Class A

     2.9%  
   

Dassault Systemes ADR

     2.9%  
   

Microsoft

     2.7%  
   

Nintendo ADR

     2.4%  
   

Home Depot

     2.3%  
   

TJX Companies

     2.2%  
   

Accenture, Class A

     2.2%  
   

AIA Group

     2.2%  

 

 

                         

Portfolio Diversification

                        
     
% of Total Net Assets

 

                
       

Application Software

    8.7%             
Saturna Sustainable Equity Fund Portfolio Diversification
 

Household Products

    7.5%        

Specialty Chemicals

    5.7%        

IT Services

    4.2%        

Large Pharma

    4.1%        

Specialty Apparel Stores

    3.4%        

Home Products Stores

    3.4%        

Communications Equipment

    3.3%        

Semiconductor Devices

    2.9%        

Consumer Finance

    2.9%        

Infrastructure Software

    2.7%        

Electrical Power Equipment

    2.5%        

Industries <2.5%

    42.2%        

Other Assets (net of liabilities)

    6.5%        

 

 

             
 
       
6                  November 30, 2019   Annual Report

 


 
     
Saturna Sustainable Equity Fund: Discussion of Fund Performance    (unaudited)

 

(photo omitted)

Fiscal Year 2019

The Saturna Sustainable Equity Fund benefitted from its exposure to global markets during the last fiscal year – exposure which, like the tide, has raised all boats. For the fiscal year ended November 30, 2019, the Saturna Sustainable Equity Fund returned 19.04%, confidently outpacing both the 14.97% return of the S&P Global 1200 Index and the 16.11% return of the S&P 500 Total Return Index.

Factors Affecting Past Performance

Saturna Sustainable Equity Fund has a global mandate with assets allocated among 17 nations. The Fund tends to overweight the Technology and Consumer Discretionary sectors – with nine of the Fund’s top 10 holdings in one of those two sectors – but began angling toward greater exposure to Health Care in the past year in order to take advantage of a macrotrend.

Apple, a cornerstone of the Sustainable Equity Fund and the top contributor to the portfolio during the fiscal year, has shattered expectations in the past two years; its price-to-earnings (P/E) ratio saw continued growth, reaching a new peak of 24.7 at the end of the 2019 calendar year. Despite having a P/E ratio that is typically lower than the S&P 500, “Apple’s margins are almost double the S&P 500’s,” lending “support to a higher multiple.”1 Some analysts expected iPhone sales to slow and enter a decline, but with excitement brewing for 5G, improving near-term expectations for the iPhone 11, and Apple’s wearable devices selling well, “sentiment has improved” with predictions of “year over year growth.”2 Taiwan Semiconductor and MasterCard – the lone holding among the top 10 that is neither a Technology nor Consumer Staples stock – rounded out the top three contributors with similar blockbuster performance.

The portfolio’s holdings remained relatively consistent but became more focused as we exited a number of smaller positions for which our conviction declined. One such holding, LatAm Airlines, was sold due to poor performance and for the incongruency of holding an airline in a sustainable fund. Though a necessary evil in many cases, air travel currently contributes about 2.5 percent of global carbon dioxide emissions. The United Nations anticipates the amount of CO2 emitted will triple by 2050, while the International Council on Clean Transportation believes the increase will be “more than 1.5 times as fast as the UN estimate.”3 With a commitment to deeply analyzing an issuer’s approach to the material ESG issues that impact its industry, we seek true sustainability leaders that meet our strict financial criteria. It is possible that the Fund may invest in an airline or other industries that may burden the environment, but that decision will always be heavily weighed against the company’s overall ESG commitment and performance. As long-term investors, we are focused on the sustainable business practices that improve our world and that also generate sustainable value.

Number of iPhone users in the United States from 2012 to 2021

 

Number of iPhone Users in the US

Gross profit margin forecast of the Apple company worldwide from 2017 to 2019, by segment

 

Apple Gross Profit Margin Over Time

 

Continued on next page.

 

 

             
 
       
November 30, 2019       Annual Report                  7

 


 

Looking Forward

The 2019 fiscal year was remarkable for the market’s continuing boom, but can the frequency of new, all-time highs we are experiencing continue at the same pace into the future? The sheer amplification of market activity seems to indicate that when something does start to happen, it will be colossal. Whether the market continues to grow, or hits its peak and declines, we will work to ensure Saturna Sustainable Equity Fund is well positioned. Saturna’s portfolio managers believe that market volatility is best addressed by a focus on ESG criteria, and Saturna’s focus on low debt and cash generative, highly sustainable companies led by excellent management teams helps protect the investor from potential downsides.

 

1 

Trefis Team. Is Apple’s P/E Ratio Too High Or Too Low? Forbes, December 16, 2019. https://www.forbes.com/sites/greatspeculations/2019/12/16/is-apples-pe-ratio-too-high-or-too-low/#344789a57211

2 

Feuer, William. After its strongest year in a decade, Apple stock is historically expensive on a price-to-earnings basis, CNBC, December 31, 2019. https://www.cnbc. com/2019/12/31/apple-pe-ratio-is-at-historic-high-following-an-explosive-year.html

3 

Tabuchi, Hiroko. ‘Worse Than Anyone Expect’: Air Travel Emissions Vastly Outpace Predictions, September 19, 2019. https://www.nytimes.com/2019/09/19/climate/ air-travel-emissions.html

 

 

             
 
       
8                  November 30, 2019   Annual Report

 


 
     
Saturna Sustainable Equity Fund: Schedule of Investments    As of November 30, 2019

 

                                             
               
    Common Stocks – 93.5%        Number of Shares     Cost      Market Value      Country1    Percentage of Assets  
               
    Communications                                    
               
     Entertainment Content                                    
               
   

Walt Disney Company

         700       $81,479        $106,106      United States      1.3%  
               
     Internet Media                                    
               
   

Naspers ADR

         1,000       39,122        28,490      South Africa      0.3%  
               
     Telecom Carriers                                    
               
   

Telekomunikasi Indonesia ADR

         2,000       65,178        55,340      Indonesia      0.7%  
               
                                                 
               
                       185,779        189,936             2.3%  
               
    Consumer Discretionary                                    
               
     Apparel, Footwear & Accessory
Design
                                   
               
   

adidas ADR

         1,100       138,601        171,655      Germany3      2.1%  
               
     Automobiles                                    
               
   

Toyota Motor ADR

         1,000       107,633        140,210      Japan      1.7%  
               
     E-Commerce Discretionary                                    
               
   

Amazon.com2

         60       103,132        108,048      United States      1.3%  
               
     Home Products Stores                                    
               
   

Home Depot

         850       100,842        187,434      United States      2.3%  
               
   

Lowe’s

         750       80,222        87,982      United States      1.1%  
               
                                                 
               
                       181,064        275,416             3.4%  
               
     Other Commercial Services                                    
               
   

Ecolab

         723       82,096        134,962      United States      1.6%  
               
     Restaurants                                    
               
   

Starbucks

         1,713       102,502        146,342      United States      1.8%  
               
     Specialty Apparel Stores                                    
               
   

Industria de Diseno Textil

         3,000       92,121        93,411      Spain      1.2%  
               
   

TJX Companies

         3,000       103,932        183,390      United States      2.2%  
               
                                                 
               
                       196,053        276,801             3.4%  
               
     Toys & Games                                    
               
   

Hasbro

         600       56,958        61,020      United States      0.8%  
               
                       968,039        1,314,454             16.1%  
               
    Consumer Staples                                    
               
     Food & Drug Stores                                    
               
   

Clicks Group ADR

         1,500       38,630        50,460      South Africa      0.6%  

 

Continued on next page.

 

 

                 
 
         
The accompanying notes are an integral part of these financial statements.   November 30, 2019   Annual Report                  9

 


 
     
Saturna Sustainable Equity Fund: Schedule of Investments    As of November 30, 2019

 

                                             
               
    Common Stocks – 93.5%        Number of Shares     Cost      Market Value      Country1    Percentage of Assets  
               
    Consumer Staples (continued)                                    
               
     Household Products                                    
               
   

Church & Dwight

         2,400       $104,866        $168,576      United States      2.1%  
               
   

Kimberly-Clark de Mexico, Class A2

         13,000       21,584        24,721      Mexico      0.3%  
               
   

L’Oreal ADR

         2,750       129,792        156,915      United States3      1.9%  
               
   

Reckitt Benckiser Group PLC ADR

         6,250       100,292        100,188      United Kingdom      1.2%  
               
   

Unilever NY

         2,700       116,608        160,785      Netherlands      2.0%  
               
                                                 
               
                       473,142        611,185             7.5%  
               
     Packaged Food                                    
               
   

Nestle ADR

         1,000       86,610        103,940      Switzerland      1.2%  
               
                       598,382        765,585             9.3%  
               
    Energy                                    
               
     Renewable Energy Equipment                                    
               
   

Siemens Gamesa Renewable Energy

         6,000       93,745        95,748      Spain      1.2%  
               
   

Vestas Wind Systems

         900       65,551        85,654      Denmark      1.0%  
               
                                                 
               
                       159,296        181,402             2.2%  
               
                       159,296        181,402             2.2%  
               
    Financials                                    
               
     Banks                                    
               
   

Toronto-Dominion Bank

         2,800       131,011        161,840      Canada      2.0%  
               
     Consumer Finance                                    
               
   

Mastercard, Class A

         824       74,154        240,798      United States      2.9%  
               
     Diversified Banks                                    
               
   

Banco Santander ADR

         10,081       50,683        39,013      Spain      0.5%  
               
     Islamic Banking                                    
               
   

BIMB Holdings

         150,600       153,571        149,999      Malaysia      1.8%  
               
     Life Insurance                                    
               
   

AIA Group

         18,000       131,997        180,140      Hong Kong      2.2%  
               
     P&C Insurance                                    
               
   

Chubb

         1,000       122,138        151,480      Switzerland      1.9%  
               
                       663,554        923,270             11.3%  
               
    Health Care                                    
               
     Health Care Facilities                                    
               
   

IHH Healthcare

         80,000       105,026        102,895      Malaysia      1.3%  
               
     Large Pharma                                    
               
   

Astellas Pharma Inc. ADR

         5,000       82,913        85,050      United States      1.0%  
               
   

Novartis ADR

         1,750       157,311        161,525      Switzerland      2.0%  
               
   

Novo Nordisk ADR

         1,569       86,408        88,099      Denmark      1.1%  
               
                                                 
               
                       326,632        334,674             4.1%  

 

Continued on next page.

 

 

                 
 
         
10                  November 30, 2019   Annual Report   The accompanying notes are an integral part of these financial statements.

 


 
     
Saturna Sustainable Equity Fund: Schedule of Investments    As of November 30, 2019

 

                                             
               
    Common Stocks – 93.5%        Number of Shares     Cost      Market Value      Country1    Percentage of Assets  
               
    Health Care (continued)                                    
               
     Medical Equipment                                    
               
   

Koninklijke Philips

         3,588       $101,701        $166,770      Netherlands      2.0%  
               
                       533,359        604,339             7.4%  
               
    Industrials                                    
               
     Commercial & Residential
Building Equipment & Systems
                                   
               
   

Legrand

         2,100       140,972        165,926      France      2.0%  
               
     Electrical Components                                    
               
   

TE Connectivity

         1,351       117,010        125,251      Switzerland      1.5%  
               
     Electrical Power Equipment                                    
               
   

Schneider Electric ADR

         7,000       127,185        134,610      United States      1.7%  
               
   

Siemens ADR

         1,000       66,086        64,440      Germany      0.8%  
               
                                                 
               
                       193,271        199,050             2.5%  
               
     Rubber & Plastic                                    
               
   

Hartalega

         80,000       63,885        100,580      Malaysia      1.2%  
               
                       515,138        590,807             7.2%  
               
    Materials                                    
               
     Specialty Chemicals                                    
               
   

Johnson Matthey

         4,031       163,844        149,746      United Kingdom      1.9%  
               
   

Koninklijke DSM

         1,213       135,638        155,545      Netherlands      1.9%  
               
   

Novozymes ADR

         3,300       146,658        157,542      Denmark      1.9%  
               
                                                 
               
                       446,140        462,833             5.7%  
               
                       446,140        462,833             5.7%  
               
    Technology                                    
               
     Application Software                                    
               
   

Adobe Systems2

         1,000       108,410        309,530      United States      3.8%  
               
   

Dassault Systemes ADR

         1,506       119,029        238,038      France      2.9%  
               
   

Open Text

         3,750       154,568        163,425      Canada      2.0%  
               
                                                 
               
                       382,007        710,993             8.7%  
               
     Communications Equipment                                    
               
   

Apple

         1,000       113,474        267,250      United States      3.3%  
               
     Consumer Electronics                                    
               
   

Nintendo ADR

         4,000       189,340        193,560      United States      2.4%  
               
     Electronics Components                                    
               
   

Murata Manufacturing

         3,000       133,698        173,885      Japan      2.1%  
               
     Information Services                                    
               
   

Wolters Kluwer

         2,000       119,754        143,749      Netherlands      1.8%  
               
     Infrastructure Software                                    
               
   

Microsoft

         1,438       62,724        217,684      United States      2.7%  

 

Continued on next page.

 

 

                 
 
         
The accompanying notes are an integral part of these financial statements.   November 30, 2019   Annual Report                  11

 


 
     
Saturna Sustainable Equity Fund: Schedule of Investments    As of November 30, 2019

 

                                             
               
    Common Stocks – 93.5%        Number of Shares     Cost      Market Value      Country1    Percentage of Assets  
               
    Technology (continued)                                    
               
     IT Services                                    
               
   

Accenture, Class A

         900       $89,878        $181,044      Ireland      2.2%  
               
   

CGI Group Inc Class A2

         2,000       146,223        166,280      Canada      2.0%  
               
                                                 
               
                       236,101        347,324             4.2%  
               
     Semiconductor Devices                                    
               
   

NXP Semiconductors

         1,300       127,836        150,254      Netherlands      1.8%  
               
   

STMicroelectronics

         3,800       84,537        92,606      Switzerland      1.1%  
               
                                                 
               
                       212,373        242,860             2.9%  
               
     Semiconductor Manufacturing                                    
               
   

Taiwan Semiconductor ADR

         3,250       78,323        172,543      Taiwan      2.1%  
               
                                                 
               
                       1,527,794        2,469,848             30.2%  
               
    Utilities                                    
               
     Power Generation                                    
               
   

Iberdrola

         15,000       153,475        147,673      Spain      1.8%  
               
                       153,475        147,673             1.8%  
               
                                                 
               
    Total investments                  $5,750,956        $7,650,147             93.5%  
               
    Other assets (net of liabilities)                           534,720             6.5%  
               
    Total net assets                           $8,184,867             100.0%  
               
                                                 
1 

Country of domicile

2 

Non-income producing security

3 

Denotes a country of primary exposure

ADR: American Depository Receipt

 

         

Countries

     (unaudited)  
          
 
Saturna Sustainable Equity Fund Geographic Diversification

 

 
Weightings shown are a percentage of total net assets.

 

 

 

 

                 
 
         
12                  November 30, 2019   Annual Report   The accompanying notes are an integral part of these financial statements.

 


 

Saturna Sustainable Equity Fund

Statement of Assets and Liabilities

 

         
As of November 30, 2019

 

   

    

       
   

Assets

       
   

Investments in securities, at value
(Cost $5,750,956)

    $7,650,147  
   

Cash

    558,384  
   

Dividends and interest receivable

    10,721  
   

Receivable from adviser

    4,487  
   

Other assets

    2,385  
   

Receivable for Fund shares sold

    853  
         
   

Total assets

    8,226,977  
         
   

Liabilities

       
   

Accrued registration/filling fees

    26,630  
   

Accrued audit expenses

    5,520  
   

Accrued retirement plan custody fee

    5,099  
   

Accrued other expenses

    2,024  
   

Accrued Chief Compliance Officer expenses

    1,958  
   

Accrued trustee expenses

    879  
         
   

Total liabilities

    42,110  
         
   

Net assets

    $8,184,867  
   
         
   

Analysis of net assets

       
   

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

    $6,512,942  
   

Total distributable earnings

    1,671,925  
         
   

Net assets applicable to Fund shares outstanding

    $8,184,867  
   
         

Fund shares outstanding

    602,641  
   

Net asset value, offering, and redemption price per share

    $13.58  
         

 

Statement of Operations

 

         
Year ended November 30, 2019

 

   

    

       
   

Investment income

       
   

Dividend income

(net of foreign tax of ($12,666)

    $99,238  
         
   

Total investment income

    99,238  
         
   

Expenses

       
   

Filing and registration fees

    46,901  
   

Advisory fees

    40,911  
   

Audit fees

    8,973  
   

Retirement plan custodial fees

    5,271  
   

Printing and postage fees

    3,420  
   

Chief Compliance Officer expenses

    3,355  
   

Trustee fees

    2,292  
   

Other expenses

    1,032  
   

Legal fees

    954  
   

Custodian fees

    759  
   

Other operating expenses

    154  
   

Misc. Shareowner expense

    15  
         
   

Total gross expenses

    114,037  
         
   

Less adviser fees waived

    (64,802
   

Less custodian fee credits

    (746
         
   

Net expenses

    48,489  
         
   

Net investment income

    $50,749  
   
         
   

    

       
   

Net realized gain from investments and foreign currency

    $12,338  
   

Net increase in unrealized appreciation on investments and foreign currency

    1,032,935  
         
   

Net gain on investments and foreign currency

    $1,045,273  
   
         
   

Net increase in net assets resulting from operations

    $1,096,022  
         

 

 

                 
 
         
The accompanying notes are an integral part of these financial statements.   November 30, 2019   Annual Report                   13

 


 

Saturna Sustainable Equity Fund

 

                 

Statements of Changes of Net Assets

    Year ended November 30, 2019          Year ended November 30, 2018  
     

Increase in net assets from operations

                  
     

From operations

                  
     

Net investment income

    $50,749          $45,439  
     

Net realized gain (loss) on investment and foreign currency

    12,338          (24,490
     

Net increase in unrealized appreciation on investments and in foreign currencies

    1,032,935          23,969  
                    
     

Net increase in net assets resulting from operations

    1,096,022          44,918  
                    
     
                    
     

Distributions to shareowners

    (46,186        (40,318
     
                    
     

Capital share transactions

                  
     

Proceeds from sales of shares

    2,048,795          1,036,069  
     

Value of shares issued in reinvestment of dividends

    46,186          40,318  
     

Cost of shares redeemed

    (618,104        (407,062
                    
     

Total capital share transactions

    1,476,877          669,325  
                    
     

Total increase in net assets

    2,526,713          673,925  
     
                    
     

Net assets

                  
     

Beginning of year

    5,658,154          4,984,229  
     

End of year

    $8,184,867          $5,658,154  
     
                    
     

Shares of the Fund sold and redeemed

                  
     

Number of shares sold

    159,107          87,399  
     

Number of shares issued in reinvestment of dividends

    4,324          3,500  
     

Number of shares redeemed

    (52,449        (34,886
                    
     

Net increase in number of shares outstanding

    110,982          56,013  
     
                    

 

                                         

Financial Highlights

            For year ended November 30,               Period endedA  
           

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

    2019       2018       2017       2016       November 30, 2015  
           

Net asset value at beginning of year

    $11.51       $11.44       $9.43       $9.73       $10.00  
           

Income from investment operations

                                       
           

Net investment income

    0.09       0.09       0.09       0.06       0.02  
           

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

    2.08       0.07       1.97       (0.36     (0.28
                                         
           

Total from investment operations

    2.17       0.16       2.06       (0.30     (0.26
                                         
           

Less distributions

                                       
           

Dividends (from net investment income)

    (0.10     (0.09     (0.05     -       (0.01
                                         
           

Total distributions

    (0.10     (0.09     (0.05     -       (0.01
                                         
           
                                         
           

Net asset value at end of year

    $13.58       $11.51       $11.44       $9.43       $9.73  
           
                                         

Total return

    19.04%       1.39%       22.01%       (3.08 )%      (2.60 )%B  
           

Ratios / supplemental data

                                       
           

Net assets ($000), end of year

    $8,185       $5,658       $4,984       $3,343       $3,423  
           

Ratio of expenses to average net assets

                                       
           

Before fee waivers

    1.81%       1.27%       1.48%       1.65%       1.23% C  
           

After fee waivers

    0.78%       0.76%       0.88%       1.00%       1.00% C  
           

After fee waivers and custodian fee credits

    0.75%       0.75%       0.86%       0.99%       0.99% C  
           

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

    0.80%       0.82%       0.95%       0.67%       0.29% C  
           

Portfolio turnover rate

    13%       8%       12%       48%       53% B  
           
                                         
A 

Operations commenced on March 27, 2015.

B 

Not annualized.

C 

Annualized.

 

 

                 
 
         
14                  November 30, 2019   Annual Report   The accompanying notes are an integral part of these financial statements.

 


 
     
Saturna Sustainable Bond Fund: Performance Summary    (unaudited)

 

                                 

Average Annual Returns as of November 30, 2019

 

         
       1 Year        5 Year        10 Year        Expense Ratio1  
         

Sustainable Bond Fund (SEBFX)2

       6.09%          n/a          n/a          0.77%  
         

FTSE WorldBIG Index3

       8.55%          2.02%          1.95%          n/a  

Growth of $10,000

 

 

     
Saturna Sustainable 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 March 27, 2015, to an identical amount invested in the FTSE WorldBIG Index, a multi-asset, multi-currency benchmark, which provides a broad-based measure of the global fixed income markets. The graph shows that an investment in the Fund would have risen to $10,920 versus rising to $11,381 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 27, 2019, and incorporates results for the fiscal year ended November 30, 2018, 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.

 

2 

Operations commenced March 27, 2015.

 

3 

The FTSE WorldBIG Index was formerly known as the Citi WorldBIG Index. The London Stock Exchange Group acquired Citigroup Index LLC in August 2017.

Fund Objective

 

The objectives of the Sustainable Bond Fund are current income and capital preservation.

 

         

Top 10 Holdings

 

 
% of Total Net Assets  
   

Toronto-Dominion Bank (1.85% due 09/11/2020)

     4.9%  
   

KFW (2.00% due 11/30/2021)

     4.7%  
   

First Abu Dhabi Bank (3.00% due 03/30/2022)

     4.6%  
   

Nokia OYJ (3.375% due 06/12/2022)

     4.6%  
   

Koninklijke DSM NV (1.00% due 04/09/2025)

     4.1%  
   

Telus (3.20% due 04/05/2021)

     4.1%  
   

United States Treasury Note (3.625% due 02/15/2021)

     4.1%  
   

MAF Sukuk (4.638% due 05/14/2029)

     3.9%  
   

NMC Health Sukuk (5.95% due 11/21/2023)

     3.8%  
   

United States Treasury Bond (4.50% due 05/15/2038)

     3.7%  

 

 

 

                         

Portfolio Diversification

 

        
     
% of Total Net Assets

 

                
       

Government Bonds

    30.9%           

 

 

 

Saturna Sustainable Bond Fund Portfolio Diversification

 

 

Financials

    25.7%        

Technology

    10.4%        

Consumer Discretionary

    9.8%        

Health Care

    6.5%        

Communications

    4.1%        

Materials

    4.1%        

Consumer Staples

    1.2%        

Industrials

    0.9%        

Other Assets (net of liabilities)

    6.4%        

 

 

             
 
       
November 30, 2019   Annual Report                  15

 


 
     
Saturna Sustainable Bond Fund: Discussion of Fund Performance    (unaudited)

 

(photo omitted)

Fiscal Year 2019

For the fiscal year ending November 30, 2019, the Saturna Sustainable Bond Fund produced a total return of 6.09% versus its benchmark, the FTSE World Big Bond Index, which returned 8.55%. The Fund had an effective duration (price sensitivity to changes in interest rates) of 3.34 years relative to 7.10 for the Index. The underperformance was primarily due to the Fund’s being overweight floating rate securities in December of 2018, when the combination of possible Fed rate cuts and low liquidity caused prices to fall.

Factors Affecting Past Performance

Corporate credit spreads, floating rate securities, currency movements, and US Treasury positions all played an important role in the performance of Sustainable Bond Fund. Corporate credit spreads tightened throughout 2019, especially in the BBB space. Many of the Fund’s top performers included corporate bonds with BBB credit ratings. For example, AXA Insurance was the top performing security, showing a total return of 20% for the year.

The majority of negative performance occurred in the Fund’s floating rate securities from mid-November through December of 2018, with prices leveling out starting the beginning of 2019. Floating rate notes (FRNs) are sensitive to future expectations of interest rates, as the securities have longer final maturities with interest rates that reset quarterly. The price declines coincided immediately after Federal Reserve Chairman Jerome Powell’s November 2018 remarks about growth challenges in 2019 including slowing demand abroad, fading fiscal stimulus at home, and lagged economic impact of the Fed’s past rate increases. The expectations for potentially fewer rate hikes and an extended lower interest rate environment drove the price volatility. The securities saw some price improvement, and the Fund sold all floating rate positions, bringing the exposure down from 19.89% on 11/30/18, to 0% by 2019 fiscal year-end. Going forward, the Fund is positioned for expected future volatility.

In total, the Sustainable Bond Fund held 27.46% of the portfolio in foreign currencies as of 11/30/19, and currency movement played an important role in performance. The Fund’s 6.49% position in the Mexican peso produced favorable returns, with peso-denominated positions showing a total return of 16.08% for the year. Canadian dollar-denominated positions also produced positive results, returning 4.49% for the year. Brazilian and Colombian currencies depreciated relative to the dollar and detracted from overall performance.

 

                         
       
       Sustainable Bond
Fund Exposure
 
 
     Index
Exposure
 
 
    
 
11/30/18 - 11/29/19
Performance (per
USD
 
 
       

Canadian Dollar

     8.67        -        0.08  
       

Mexican Peso

     6.49        -        4.28  
       

Euro

     4.13        29.36        -2.64  
       

Colombian Peso

     2.74        -        -8.04  
       

Brazilian Real

     2.51        -        -8.75  
       

Australian Dollar

     1.73        0.88        -7.43  
       

Norwegian Krone

     1.19        -        -6.57  
       

New Zealand Dollar

     -        -        -6.55  
       

British Pound

     -        4.21        1.38  
       

Japanese Yen

     -        10.33        3.73  
       

Other

     -        2.66        -  

Aside from currency movements, the Fund’s positions in US Treasurys contributed positively to performance, with downward shifts across the yield curve for the year. As of 11/30/19, the Fund held 11.39% in Treasury bonds. The 10, 20, and 30-year Treasury positions in the Fund produced a total return of 11.88%, 15.36%, and 14.49%, respectively.

 

US Treasury Curve

 

US Treasury Curve

 

 

             
 
       
16                  November 30, 2019   Annual Report

 


 

Looking Forward

Over the past year, the Fund has focused on favorable positioning for potential volatility and will continue this into next year. The portfolio has shifted focus to high-grade corporate issues in the one to three-year maturity range, and global exposure in well-diversified companies better positioned to handle business cycles. As a part of the overall strategy, the Fund is also set up to take advantage of select global opportunities with excellent sustainability stories should volatility lend to favorable pricing in 2020. Sustainable Bond Fund has been expanding positions in higher-grade corporate issues, while making strategic curve allocations with the use of Treasurys.

The outlook on monetary policy for early 2020 is that the Federal Reserve will likely stay on hold, keeping short-end yields stable, while the longer end will move with the economy. The Federal Reserve meeting at the end of January 2020 is likely to focus on funding markets and the balance sheet rather than any meaningful shifts in monetary policy. 2019 saw three cuts by the Fed, which have helped reverse the yield curve inversion. As shown in the chart above, 2019 saw the Treasury curve shift downward, as recession fears driven by falling manufacturing activity and tariffs weighed on the economy and pushed yields lower. Going forward, a trade deal with China or easing fears about a potential recession would likely see the 10-year Treasury yields go higher.

 

 

             
 
       
November 30, 2019   Annual Report                  17

 


 
     
Saturna Sustainable Bond Fund: Schedule of Investments    As of November 30, 2019

 

                                         
               
    Corporate Bonds – 62.7%       Coupon / Maturity    Face Amount      Market Value      Country1    Percentage of Assets  
               
    Communications                                  
               
   

Telus

      3.20% due 04/05/2021      CAD 1,500,000        $1,142,679      Canada      4.1%  
               
                            1,142,679             4.1%  
               
                                             
               
    Consumer Discretionary                                  
               
   

Barry Callebaut2

      5.50% due 06/15/2023      500,000        544,487      Belgium      2.0%  
               
   

Barry Callebaut3

      5.50% due 06/15/2023      500,000        544,487      Belgium      2.0%  
               
   

BMW US Capital

      2.75% due 12/02/2019      AUD 200,000        135,280      Germany      0.4%  
               
   

Danone3

      2.077% due 11/02/2021      500,000        499,769      France      1.8%  
               
   

Hasbro

      3.15% due 05/15/2021      500,000        505,616      United States      1.8%  
               
   

Starbucks

      2.45% due 06/15/2026      500,000        504,101      United States      1.8%  
               
                            2,733,740             9.8%  
               
                                             
               
    Consumer Staples                                  
               
   

Nestle Holdings

      2.75% due 04/15/2020      NOK 3,000,000        326,409      Switzerland      1.2%  
               
                            326,409             1.2%  
               
                                             
               
    Financials                                  
               
   

AXA2

      5.125% due 01/17/2047      500,000        545,909      France      2.0%  
               
   

Canadian Imperial Bank4

      3.42% due 01/26/2026      CAD 1,150,000        877,621      Canada      3.1%  
               
   

First Abu Dhabi Bank2

      3.00% due 03/30/2022      1,250,000        1,266,385      United Arab Emirates      4.6%  
               
   

Iron Mountain

      5.75% due 08/15/2024      1,000,000        1,013,210      United States      3.6%  
               
   

MAF Sukuk2

      4.638% due 05/14/2029      1,000,000        1,072,941      United Arab Emirates      3.9%  
               
   

RaboBank

      2.50% due 01/19/2021      500,000        503,029      Netherlands      1.8%  
               
   

RaboBank3

      4.75% due 01/15/2020      500,000        501,623      Netherlands      1.8%  
               
   

Toronto-Dominion Bank

      1.85% due 09/11/2020      1,350,000        1,349,908      United States      4.9%  
               
                            7,130,626             25.7%  
               
                                             
               
    Health Care                                  
               
   

NMC Health Sukuk2

      5.95% due 11/21/2023      1,000,000        1,056,396      United Arab Emirates      3.8%  
               
   

Novartis Capital

      1.80% due 02/14/2020      250,000        249,936      Switzerland      0.9%  
               
   

Roche

      2.875% due 09/29/2021      500,000        508,919      Switzerland      1.8%  
               
                            1,815,251             6.5%  
               
                                             
               
    Industrials                                  
               
   

Ingersoll-Rand

      2.625% due 05/01/2020      250,000        250,459      Luxembourg      0.9%  
               
                            250,459             0.9%  
               
                                             
               
    Materials                                  
               
   

Koninklijke DSM NV2

      1.00% due 04/09/2025      EUR 1,000,000        1,150,040      Netherlands      4.1%  
               
                            1,150,040             4.1%  
               
                                             

 

Continued on next page.

 

 

                 
 
         
18                  November 30, 2019   Annual Report   The accompanying notes are an integral part of these financial statements.

 


 
     
Saturna Sustainable Bond Fund: Schedule of Investments    As of November 30, 2019

 

                                         
               
    Corporate Bonds – 62.7%       Coupon / Maturity    Face Amount      Market Value      Country1    Percentage of Assets  
               
    Technology                                  
               
   

Apple2

      2.65% due 06/10/2020      AUD 500,000        $340,670      United States      1.2%  
               
   

Microsoft

      5.30% due 02/08/2041      525,000        723,429      United States      2.6%  
               
   

Nokia OYJ

      3.375% due 06/12/2022      1,250,000        1,264,000      Finland      4.6%  
               
   

RELX

      4.00% due 03/18/2029      500,000        549,469      United Kingdom      2.0%  
               
                            2,877,568             10.4%  
               
                                             
               
    Total Corporate Bonds                       $17,426,772             62.7%  
               
                                             
               
    Government Bonds – 30.9%       Coupon / Maturity    Face Amount      Market Value      Country1    Percentage of Assets  
               
    Banks                                  
               
   

KFW

      2.00% due 11/30/2021      $1,300,000        $1,308,183      Germany      4.7%  
               
                            1,308,183             4.7%  
               
                                             
               
    Foreign Government Bonds                                  
               
   

Federal Republic of Brazil

      12.50% due 01/05/2022      BRL 2,500,000        675,704      Brazil      2.4%  
               
   

International Financial Corp

      4.75% due 04/29/2021      MXN 15,000,000        741,842      Mexico      2.7%  
               
   

Mexico Bonos Desarrollo

      6.50% due 06/10/2021      MXN 200,000        1,016,804      Mexico      3.7%  
               
   

Ontario

      2.65% due 02/05/2025      CAD 500,000        390,571      Canada      1.4%  
               
   

Perusahaan Penerbit SBSN2

      3.75% due 03/01/2023      500,000        518,155      Indonesia      1.9%  
               
   

Republic of Colombia

      7.75% due 04/14/2021      COP 2,500,000,000        735,501      Colombia      2.6%  
               
                            4,078,577             14.7%  
               
                                             
               
    United States Treasury Bonds                                  
               
   

United States Treasury Bond

      5.25% due 11/15/2028      500,000        643,945      United States      2.3%  
               
   

United States Treasury Bond

      4.50% due 05/15/2038      750,000        1,037,373      United States      3.7%  
               
   

United States Treasury Bond

      3.375% due 11/15/2048      300,000        375,363      United States      1.4%  
               
                            2,056,681             7.4%  
               
                                             
               
    United States Treasury Note                                  
               
   

United States Treasury Note

      3.625% due 02/15/2021      $1,100,000        1,125,008      United States      4.1%  
               
                            1,125,008             4.1%  
               
                                             
               
    Total Government Bonds                       $8,568,449             30.9%  
               
                                             
               
    Total investments       (Cost is $26,038,467)               25,995,221             93.6%  
               
    Other assets (net of liabilities)                       1,780,211             6.4%  
               
    Total net assets                       $27,775,432             100.0%  
               
                                             

 

1 

Country of risk

2 

Security was purchased pursuant to Regulation S under the Securities Act of 1933 which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At November 30, 2019, the aggregate value of these securities was $6,494,983 representing 23.4% of net assets.

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. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At November 30, 2019, the net value of these securities was $1,545,879 representing 5.6% of net assets.

4 

Canadian Imperial Bank is a fixed to float bond. The bond has a fixed rate until 01/26/2021. The interest rate represents the rate in effect at November 30, 2019.

 

 

                 
 
         
The accompanying notes are an integral part of these financial statements.   November 30, 2019   Annual Report                  19

 


 
     
Saturna Sustainable Bond Fund: Schedule of Investments    As of November 30, 2019

 

         

Countries

     (unaudited)  
 

            

 

 
Saturna Sustainable Bond Fund Geographic Diversification

 

 
Weightings shown are a percentage of total net assets.

 

 

                         

Bond Quality Diversification

 

             (unaudited)  
     
% of Total Net Assets

 

                
       

Rated “AAA”

    21.5%           

 

 

 

Saturna Sustainable Bond Fund Bond Quality Diversification

 

 

Rated “AA+”

    6.1%        

Rated “AA-”

    12.6%        

Rated “A+”

    1.3%        

Rated “A-”

    9.8%        

Rated “BBB+”

    14.6%        

Rated “BBB”

    9.3%        

Rated “BBB-”

    4.0%        

Rated “BB+”

    3.8%        

Rated “BB”

    7.0%        

Rated “B”

    3.6%        

Other Assets (net of liabilities)

    6.4%        
 
Credit ratings are the lesser of S&P Global Ratings or Moody’s Investors Service. If neither S&P nor Moody’s rate a particular security, that security is categorized as not rated (except for US Treasury securities and securities issued or backed by US agencies which inherit the credit rating for the US government). Ratings range from AAA (highest) to D (lowest). Bonds rated BBB or above are considered investment grade. Credit ratings BB and below are lower-rated securities (junk bonds). Ratings apply to the credit worthiness of the issuers of the underlying securities and not the fund or its shares. Ratings may be subject to change.