SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-05071 / 33-13247
SATURNA INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
1300 N. State Street
Bellingham, Washington 98225-4730
(Address of Principal Executive Offices, including ZIP Code)
Nicholas F. Kaiser
1300 N. State Street
Bellingham, Washington 98225-4730
(Name and Address of Agent for Service)
Registrant's Telephone Number — (360) 734-9900
Date of fiscal year end: November 30, 2011
Date of reporting period: May 31, 2011
Item 1. Report To Shareowners
Sextant Mutual Funds
Semi-Annual Report
May 31, 2011
Short-Term Bond | Bond Income | Core | Growth | International |
Performance Summary as of June 30, 2011:
Comparative returns and percentile Morningstar™ category rankings (1 is best)†
Average Annual Returns vs. Category Average Returns | 10 Years | 5 Years | 3 Years | 1 Year | Expense Ratio¹ |
Sextant Short-Term Bond vs. Short-Term Bond Category | |||||
Fund Return | 3.95% | 4.43% | 3.85% | 2.41% | 1.34% |
Morningstar Category | 3.67% | 3.98% | 3.93% | 3.02% | N/A |
% Rank (category size) | 38 (189) | 36 (323) | 49 (376) | 64 (432) | N/A |
Sextant Bond Income vs. Intermediate-Term Bond Category | |||||
Fund Return | 5.44% | 5.64% | 6.11% | 4.14% | 1.24% |
Morningstar Category | 5.30% | 5.99% | 6.69% | 5.33% | N/A |
% Rank (category size) | 44 (567) | 68 (871) | 67 (1017) | 71 (1159) | N/A |
Sextant Core² vs. Moderate Allocation Category | |||||
Fund Return | N/A | N/A | 4.80% | 17.68% | 1.21% |
Morningstar Category | 4.11% | 3.92% | 4.09% | 20.44% | N/A |
% Rank (category size) | N/A | N/A | 39 (830) | 84 (949) | N/A |
Sextant Growth vs. Large Growth Category | |||||
Fund Return | 5.37% | 3.37% | 2.28% | 23.44% | 1.01% |
Morningstar Category | 2.24% | 4.07% | 3.02% | 33.08% | N/A |
% Rank (category size) | 5 (803) | 61 (1276) | 60 (1476) | 97 (1657) | N/A |
Sextant International vs. Foreign Large Blend Category | |||||
Fund Return | 8.46% | 6.87% | 2.07% | 21.02% | 1.03% |
Morningstar Category | 5.14% | 1.70% | -1.65% | 30.80% | N/A |
% Rank (category size) | 6 (303) | 1 (539) | 8 (714) | 97 (826) | N/A |
Performance data quoted above represents past performance, is before any taxes payable by shareowners, and is no guarantee of future results. Current performance may be higher or lower than that stated herein. Performance current to the most recent month-end is available by calling toll-free (800) SATURNA or visiting www.sextantmutualfunds.com. Average annual total returns are historical and include change in share value as well as reinvestment of dividends and capital gains, if any, and do not include the potential deduction of a 2% redemption fee on shares held less than 90 days. Share price, yield, and return will vary and you may have a gain or loss when you sell your shares. 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.
Please consider an investment's objective, risks, charges, and expenses carefully before investing. To obtain a free prospectus or summary prospectus that contains this and other important information on the Sextant Funds, please call toll-free (800) SATURNA or visit www.sextantmutualfunds.com. Please read the prospectus or summary prospectus carefully before investing.
¹By regulation, expense ratios shown in this table are as of the Funds' most recent prospectus which is dated March 25, 2011, and incorporate results for the fiscal year ended November 30, 2010. 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 (shown on page 4).
²Sextant Core began operations March 30, 2007.
†Morningstar 06/30/2011. Morningstar, Inc. is an independent fund performance monitor. Rankings and category returns are determined monthly from total returns by Morningstar, by category as determined by Morningstar. Morningstar calculates total return by taking the change in a fund's NAV, assuming the reinvestment of all income and capital gains distributions (on the actual reinvestment date used by the fund) during the period, and then dividing by the initial NAV. Unless marked as load-adjusted total returns, Morningstar does not adjust total return for sales charges or for redemption fees. (Morningstar Return™, Morningstar Risk-Adjusted Ratings™, and the load-adjusted returns do incorporate those fees.) Total returns account for management, administrative, 12b-1 fees, and other costs automatically deducted from fund assets.
Sextant Short-Term Bond was 279th of 432 Short-Term Bond funds in the last year, 185th of 376 funds in the last 3 years, 117th of 323 funds in the last 5 years, and 72nd of 189 funds in the last 10 years. Sextant Bond Income was 823rd of 1159 Intermediate-Term Bond funds in the last year, 682nd of 1017 funds in the last 3 years, 597th of 871 funds in the last 5 years, and 252nd of 567 funds in the last 10 years. Sextant Core was 799th of 949 Moderate Allocation funds in the last year and 321st of 830 funds in the last 3 years. Sextant Growth was 1609th of 1657 Large Growth funds in the last year, 886th of 1476 funds in the last 3 years, 774th of 1276 funds in the last 5 years, and 34th of 803 funds in the last 10 years. Sextant International was 804th of 826 Foreign Large Blend funds in the last year, 57th of 714 funds in the last 3 years, 2nd of 539 funds in the last 5 years, and 19th of 303 funds in the last 10 years.
2 | May 31, 2011 Semi-Annual Report
Fellow Shareowners:
As the world worries about recession, financial crises, and spending addictions, the Sextant Funds have performed reasonably well. For the semi-annual period ended May 31, 2011, each Fund provided a positive return. Sextant Growth returned 12.49%, Sextant International gained 6.99%, and stalwart Sextant Core Fund was up a solid 9.25%. During the same period, the S&P 500 provided a total return of 15.03% while the NYSE-Arca International Index appreciated 14.74%.
Lack of inflation helped the bond markets over the last six months. In this unstable climate, the less volatile Short-Term Bond Fund returned 0.77% and the Bond Income Fund returned 2.80%.
Assets under management for the Sextant Fund family increased 20% in the past six months to $229 million. The combination of spreading fixed expenses over higher assets and the effects of Sextant's performance fee structure (based on one-year results relative to Morningstar categories) lowered the dollar-weighted, annualized expense ratio for the Sextant Funds as a whole to 0.88% (see page 39).
Long-term Results
As long-term investors, we stress the importance of measuring performance over multiple years. This reveals how a fund performs during both good times and bad. The Performance Summary tables (as of June 30, 2011, on the previous page, and for May 31, 2011, on the next page) provide comparative returns and Morningstar category rankings so you may review Fund performance for periods of up to ten years.
Going Forward
Hobbled by decades of profligacy, collapsing economies are forcing governments everywhere to cut spending. Economic growth has flatlined as worried consumers also hold back on spending. Although core inflation is non-existent, we fear that it must return. Interest rates are low, but shy lenders mean any monetary stimulus can only be meager — making fiscal restraint the only avenue to recovery.
This creates a mixed climate for the world's equity markets. We will continue to invest in innovative companies with strong business advantages and balance sheets needed to navigate these trying times. We aim to avoid companies dependent on government spending and the regions and countries that will be hurt the most in the new austerity. Turbulent times also create opportunity, and we seek entrepreneurial companies that can grow profits. Indeed, equity investors are optimistic that better-than-expected earnings at companies from Apple to UPS mean they will be rewarded.
We expect a long, slow transition to higher interest rates. Bondholders are being rewarded with real returns. Low interest rates today reflect high confidence — not just among Americans but among investors around the world — that approaching economic storms will be survived.
Sextant Funds stress low operating expenses and employ a "fulcrum" advisory fee structure that rewards or penalizes Saturna Capital for investment results. This "profit sharing" structure appeals to many informed investors. |
Going forward, The Sextant Funds continue to offer investors a broad mix of investment vehicles: growth equities, international exposure, and a blended portfolio, plus short-term and long-term fixed income options. This array of portfolios serves our investors in both bull and bear markets by continuing to provide steady, long-term growth with a focus on preservation of capital. Please review the following pages for more in-depth information about each Fund.
Respectfully,
(graphics omitted)
Nicholas Kaiser, President
(Manager — Sextant Growth, Sextant International)
Phelps McIlvaine, Vice President
(Manager — Sextant Short-Term Bond, Sextant Bond Income)
Peter Nielsen, Senior Analyst
(Manager — Sextant Core)
July 15, 2011
May 31, 2011 Semi-Annual Report | 3
Performance Summary as of May 31, 2011:
Comparative returns and percentile Morningstar™ category rankings (1 is best)†
Average Annual Returns vs. Category Average Returns | 10 Years | 5 Years | 3 Years | 1 Year | Expense Ratio¹ |
Sextant Short-Term Bond vs. Short-Term Bond Category | |||||
Fund Return | 3.98% | 4.41% | 3.91% | 2.86% | 1.34% |
Morningstar Category | 3.65% | 3.97% | 3.87% | 3.72% | N/A |
% Rank (category size) | 37 (193) | 40 (327) | 49 (380) | 68 (433) | N/A |
Sextant Bond Income vs. Intermediate-Term Bond Category | |||||
Fund Return | 5.58% | 5.77% | 6.55% | 6.66% | 1.24% |
Morningstar Category | 5.39% | 6.08% | 6.63% | 7.40% | N/A |
% Rank (category size) | 42 (564) | 67 (883) | 59 (1029) | 58 (1173) | N/A |
Sextant Core² vs. Moderate Allocation Category | |||||
Fund Return | N/A | N/A | 3.23% | 16.78% | 1.21% |
Morningstar Category | 4.08% | 4.19% | 2.71% | 18.96% | N/A |
% Rank (category size) | N/A | N/A | 41 (888) | 83 (1002) | N/A |
Sextant Growth vs. Large Growth Category | |||||
Fund Return | 5.49% | 3.63% | 0.64% | 18.13% | 1.01% |
Morningstar Category | 2.14% | 4.32% | 1.05% | 27.38% | N/A |
% Rank (category size) | 5 (798) | 60 (1276) | 33 (1482) | 97 (1659) | N/A |
Sextant International vs. Foreign Large Blend Category | |||||
Fund Return | 7.96% | 6.83% | 0.52% | 19.41% | 1.03% |
Morningstar Category | 4.95% | 1.89% | -3.93% | 31.21% | N/A |
% Rank (category size) | 8 (303) | 1 (531) | 6 (705) | 99 (826) | N/A |
Performance data quoted above represents past performance and is no guarantee of future results. Results are shown for 12 months ending May 31, 2011 ("1 Year" column above) because the Sextant Funds' performance fees are based on the same period. Results are shown for other fiscal periods by regulation.
¹By regulation, expense ratios shown in this table are as of the Funds' most recent prospectus which is dated March 25, 2011, and incorporate results for the fiscal year ended November 30, 2010. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different periods.
²Sextant Core began operations on March 30, 2007.
†Morningstar 05/31/2011. Morningstar, Inc. is an independent fund performance monitor. Rankings and category returns are determined monthly from total returns by Morningstar, by category as determined by Morningstar.
Sextant Short-Term Bond was 297th of 433 Short-Term Bond funds in the last year, 186th of 380 funds in the last 3 years, 130th of 327 funds in the last 5 years, and 72nd of 193 funds in the last 10 years. Sextant Bond Income was 684th of 1173 Intermediate-Term Bond funds in the last year, 604th of 1029 funds in the last 3 years, 596th of 883 funds in the last 5 years, and 237th of 564 funds in the last 10 years. Sextant Core was 831st of 1002 Moderate Allocation funds in the last year, and 368th of 888 funds in the last 3 years. Sextant Growth was 1614th of 1659 Large Growth funds in the last year, 488th of 1482 funds in the last 3 years, 763rd of 1276 funds in the last 5 years, and 35th of 798 funds in the last 10 years. Sextant International was 821st of 826 Foreign Large Blend funds in the last year, 43rd of 705 funds in the last 3 years, 2nd of 531 funds in the last 5 years, and 23rd of 303 funds in the last 10 years.
4 | May 31, 2011 Semi-Annual Report
Sextant Short-Term Bond Fund
Performance Summary
Average Annual Returns as of May 31, 2011 | ||||
10 Years | 5 Years | 1 Year | Expense Ratio¹ | |
Sextant Short-Term Bond Fund | 3.98% | 4.41% | 2.86% | 1.34% |
Citigroup Gov./Corp. Inv. Grade Index 1-3 Years | 4.04% | 4.54% | 2.31% | N/A |
Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the index is unmanaged, and expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in the Fund on May 31, 2001, to an identical amount invested in the index, which reflects the types of securities in which the Fund invests. The graph shows that an investment in the Fund would have risen to $14,761 versus $14,870 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, nor do they reflect the potential deduction of a 2% redemption fee on shares held less than 90 calendar days. ¹By regulation, the expense ratio shown in this table is as of the Fund's most recent prospectus which is dated March 25, 2011, and incorporates results for the fiscal year ended November 30, 2010. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods. |
Fund Objective
The objectives of the Short-Term Bond Fund are capital preservation and current income.
Industry Allocation | Top Ten Holdings | ||
% of Fund Assets | |||
Industry weightings are shown as a percentage of net assets. | U.S. Treasury Note 1.50% due 12/31/2013 | 5.9% | |
Deutsche Telecom Int. Fin. 5.25% due 07/22/2013 | 4.5% | ||
Oracle 3.75% due 07/08/2014 | 4.4% | ||
Blackrock 3.50% due 12/10/2014 | 4.4% | ||
Canada Government 2.375% due 09/10/2014 | 4.0% | ||
Ontario Prov. Canada 4.10% due 06/16/2014 | 3.9% | ||
American Express Bank Med. Term CD 4.75% due 12/24/2013 | 3.9% | ||
PNC Funding 5.40% due 06/10/2014 | 3.7% | ||
Teck Resources 9.75% due 05/15/2014 | 3.6% | ||
Xstrata Canada 7.35% due 06/05/2012 | 3.5% |
May 31, 2011 Semi-Annual Report | 5
Sextant Short-Term Bond Fund
Schedule of Investments | ||||
Issuer | Coupon / Maturity | Face Amount | Market Value | Percentage of Assets |
Certificate of Deposit — 3.9% | ||||
Finance | ||||
American Express Bank Med. Term CD | 4.75% due 12/24/2013 | $220,000 | $238,004 | 3.9% |
Corporate Bonds — 59.4% | ||||
Basic Materials | ||||
Teck Resources | 9.75% due 05/15/2014 | 180,000 | 219,853 | 3.6% |
Computers | ||||
International Business Machines | 5.05% due 10/22/2012 | 135,000 | 143,126 | 2.4% |
Oracle | 3.75% due 07/08/2014 | 250,000 | 268,925 | 4.4% |
385,000 | 412,051 | 6.8% | ||
Consumer/Non-Cyclical | ||||
Cocal Cola Hellenic | 5.125% due 09/17/2013 | 100,000 | 107,444 | 1.8% |
Diversified Financial Services | ||||
Blackrock | 3.50% due 12/10/2014 | 250,000 | 264,776 | 4.4% |
General Electric Capital | 5.25% due 10/19/2012 | 100,000 | 106,033 | 1.8% |
350,000 | 370,809 | 6.2% | ||
Energy | ||||
Noble | 5.875% due 06/01/2013 | 190,000 | 207,000 | 3.4% |
Finance | ||||
Bank of New York Mellon | 6.375% due 04/01/2012 | 160,000 | 167,790 | 2.8% |
Berkshire Hathaway Financial | 4.75% due 05/15/2012 | 100,000 | 104,106 | 1.7% |
HSBC Finance | 6.375% due 10/15/2011 | 100,000 | 102,185 | 1.7% |
PNC Funding | 5.40% due 06/10/2014 | 200,000 | 221,779 | 3.7% |
Protective Life Secured Trust | 5.00% due 05/15/2013 | 200,000 | 208,853 | 3.4% |
760,000 | 804,713 | 13.3% | ||
Machinery | ||||
Stanley Works | 4.90% due 11/01/2012 | 180,000 | 188,833 | 3.1% |
Medical | ||||
AstraZeneca | 5.40% due 09/15/2012 | 125,000 | 132,716 | 2.2% |
Metal Ores | ||||
Rio Tinto Finance | 8.95% due 05/01/2014 | 150,000 | 181,401 | 3.0% |
Xstrata Canada | 7.35% due 06/05/2012 | 200,000 | 211,907 | 3.5% |
350,000 | 393,308 | 6.5% | ||
Telecommunications | ||||
Deutsche Telecom Int. Fin. | 5.25% due 07/22/2013 | 250,000 | 271,203 | 4.5% |
Verizon New England | 4.75% due 10/01/2013 | 129,000 | 137,741 | 2.3% |
379,000 | 408,944 | 6.8% | ||
Transportation | ||||
SeaRiver Maritime | 0.00% due 09/01/2012 | 202,000 | 196,224 | 3.3% |
Continued on next page. |
The accompanying notes are an integral part of these financial statements.
6 | May 31, 2011 Semi-Annual Report
Sextant Short-Term Bond Fund
Schedule of Investments | ||||
Issuer | Coupon / Maturity | Face Amount | Market Value | Percentage of Assets |
Corporate Bonds — 59.4% | ||||
Utilities | ||||
Florida Power & Light | 5.625% due 09/01/2011 | $140,000 | $141,679 | 2.4% |
Total corporate bonds | 3,341,000 | 3,583,574 | 59.4% | |
Foreign Government Bonds — 7.9% | ||||
Canadian Government | ||||
Canada Government | 2.375% due 09/10/2014 | 230,000 | 239,730 | 4.0% |
Ontario Prov. Canada | 4.10% due 06/16/2014 | 220,000 | 239,206 | 3.9% |
450,000 | 478,936 | 7.9% | ||
Municipal Bonds — 13.8% | ||||
General Obligation | ||||
Commerce Charter Township MI | 5.50% due 12/01/2013 | 125,000 | 135,085 | 2.2% |
Manhattan KS | 3.276% due 12/01/2013 | 180,000 | 185,962 | 3.1% |
Passaic NJ Taxable Pension GO | 5.00% due 02/01/2013 | 100,000 | 101,885 | 1.7% |
Southwestern MI Comm. College | 4.875% due 05/15/2015 | 125,000 | 133,871 | 2.2% |
530,000 | 556,803 | 9.2% | ||
Revenue | ||||
Dawson Springs KY ISD Bldg.¹ | 3.60% due 08/01/2013 | 95,000 | 97,756 | 1.6% |
Rhode Island Econ. Dev. Corp. | 4.52% due 05/15/2013 | 175,000 | 181,244 | 3.0% |
270,000 | 279,000 | 4.6% | ||
Total municipal bonds | 800,000 | 835,803 | 13.8% | |
U.S. Government Bonds — 5.9% | ||||
Treasury Notes | ||||
U.S. Treasury Note | 1.50% due 12/31/2013 | 350,000 | 357,656 | 5.9% |
Total investments | (Cost = $5,362,837) | $5,161,000 | 5,493,973 | 90.9% |
Other assets (net of liabilities) | 547,806 | 9.1% | ||
Total net assets | $6,041,779 | 100.0% |
¹Fair valued, see "Odd Lots" on page 35
Bond Quality Diversification |
Based on net assets as of May 31, 2011.
Source: Moody's Investors Services. When ratings are not available from Moody's, Standard and Poor's is used as a supplemental source.
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 7
Sextant Short-Term Bond Fund
Statement of Assets and Liabilities | ||
As of May 31, 2011 | ||
Assets | ||
Investments in securities, at value (Cost $5,362,837) | $5,493,973 | |
Cash | 485,995 | |
Interest receivable | 65,227 | |
Prepaid filing and registration | 7,393 | |
Receivable for Fund shares sold | 75 | |
Total assets | 6,052,663 | |
Liabilities | ||
Payable for Fund shares redeemed | 5,274 | |
Other liabilities | 3,334 | |
Accrued distribution fee | 1,273 | |
Payable to affiliates | 942 | |
Distribution payable | 61 | |
Total liabilities | 10,884 | |
Net Assets | $6,041,779 | |
Analysis of net assets | ||
Paid-in capital (unlimited shares authorized, without par value) | $5,926,052 | |
Unrealized net appreciation on investments | 131,136 | |
Accumulated net realized loss | (16,782) | |
Undistributed net investment income | 1,373 | |
Net assets applicable to Fund shares outstanding | $6,041,779 | |
Fund shares outstanding | 1,181,593 | |
Net asset value, offering, and redemption price per share | $5.11 |
Statement of Operations | ||
Period ended May 31, 2011 | ||
Investment income | ||
Interest income | $73,017 | |
Miscellaneous Income | 5 | |
Gross investment income | 73,022 | |
Expenses | ||
Investment adviser fees | 15,562 | |
Filing and registration fees | 10,150 | |
Distribution fees | 6,820 | |
Retirement plan custodial fees | 2,178 | |
Audit fees | 1,188 | |
Printing and postage | 641 | |
Chief Compliance Officer expenses | 353 | |
Trustee fees | 345 | |
Other expenses | 312 | |
Custodian fees | 125 | |
Legal fees | 55 | |
Total gross expenses | 37,729 | |
Less adviser fees waived | (17,053) | |
Less custodian fee credits | (125) | |
Net expenses | 20,551 | |
Net investment income | $52,471 | |
Net realized gain from investments | $7,446 | |
Net decrease in unrealized appreciation on investments | (5,174) | |
Net gain on investments | $2,272 | |
Net increase in net assets resulting from operations | $54,743 |
The accompanying notes are an integral part of these financial statements.
8 | May 31, 2011 Semi-Annual Report
Sextant Short-Term Bond Fund
Statements of Changes in Net Assets | Period ended May 31, 2011 | Year ended Nov. 30, 2010 |
Increase (decrease) in net assets from operations: | ||
From operations | ||
Net investment income | $52,471 | $113,514 |
Net realized gain on investments | 7,446 | 7,888 |
Net increase (decrease) in unrealized appreciation | (5,174) | 12,990 |
Net increase in net assets | 54,743 | 134,392 |
Distributions to shareholders from | ||
Net investment income | (52,471) | (113,515) |
Capital share transactions | ||
Proceeds from sales of shares | 1,236,185 | 1,562,715 |
Value of shares issued in reinvestment of dividends | 51,608 | 112,390 |
Early redemption fees retained | 39 | 165 |
Cost of shares redeemed | (383,955) | (630,567) |
Net increase in net assets | 903,877 | 1,044,703 |
Total increase in net assets | 906,149 | 1,065,580 |
Net assets | ||
Beginning of period | 5,135,630 | 4,070,050 |
End of period | 6,041,779 | 5,135,630 |
Undistributed net investment income | $1,373 | $1,373 |
Shares of the Fund sold and redeemed | ||
Number of shares sold | 242,977 | 307,479 |
Number of shares issued in reinvestment of dividends | 10,136 | 22,074 |
Number of shares redeemed | (75,489) | (123,942) |
Net increase in number of shares outstanding | 177,624 | 205,611 |
Financial Highlights | Period ended | For year ended November 30, | ||||
Selected data per share of outstanding capital stock throughout each period: | May 31, 2011 | 2010 | 2009 | 2008 | 2007 | 2006 |
Net asset value at beginning of period | $5.12 | $5.10 | $4.84 | $4.99 | $4.90 | $4.85 |
Income from investment operations | ||||||
Net investment income | 0.05 | 0.12 | 0.16 | 0.18 | 0.17 | 0.16 |
Net gain (loss) on securities (both realized and unrealized) | (0.01) | 0.02 | 0.26 | (0.15) | 0.09 | 0.05 |
Total from investment operations | 0.04 | 0.14 | 0.42 | 0.03 | 0.26 | 0.21 |
Less distributions | ||||||
Dividends (from net investment income) | (0.05) | (0.12) | (0.16) | (0.18) | (0.17) | (0.16) |
Total distributions | (0.05) | (0.12) | (0.16) | (0.18) | (0.17) | (0.16) |
Paid-in capital from early redemption fees | 0.00¹ | 0.00¹ | 0.00¹ | 0.00¹ | 0.00¹ | 0.00¹ |
Net asset value at end of period | $5.11 | $5.12 | $5.10 | $4.84 | $4.99 | $4.90 |
Total return | 0.77% | 2.87% | 8.87% | 0.66% | 5.51% | 4.41% |
Ratios / supplemental data | ||||||
Net assets ($000), end of period | $6,042 | $5,136 | $4,070 | $3,024 | $2,995 | $2,937 |
Ratio of expenses to average net assets | ||||||
Before fee waivers and custodian fee credits | 0.69% | 1.34% | 1.49% | 1.60% | 1.58% | 1.39% |
After fee waivers | 0.38% | 0.76% | 0.76% | 0.77% | 0.82% | 0.60% |
After fee waivers and custodian fee credits | 0.38% | 0.75% | 0.75% | 0.75% | 0.75% | 0.57% |
Ratio of net investment income after fee waivers and custodian fee credits to average net assets | 0.96% | 2.42% | 3.26% | 3.70% | 3.54% | 3.41% |
Portfolio turnover rate | 7% | 27% | 28% | 22% | 28% | 41% |
¹Amount is less than $0.01 |
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 9
Sextant Bond Income Fund
Performance Summary
Average Annual Returns as of May 31, 2011 | ||||
10 Years | 5 Years | 1 Year | Expense Ratio¹ | |
Sextant Bond Income Fund | 5.58% | 5.77% | 6.66% | 1.24% |
Citigroup Broad Investment Grade Bond Index | 5.92% | 6.81% | 5.67% | N/A |
Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the index is unmanaged, and expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in the Fund on May 31, 2001, to an identical amount invested in the index, which reflects the types of securities in which the Fund invests. The graph shows that an investment in the Fund would have risen to $17,213 versus $17,778 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, nor do they reflect the potential deduction of a 2% redemption fee on shares held less than 90 calendar days. ¹By regulation, the expense ratio shown in this table is as of the Fund's most recent prospectus which is dated March 25, 2011, and incorporates results for the fiscal year ended November 30, 2010. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods. |
Fund Objective
The objective of the Bond Income Fund is current income.
Industry Allocation | Top Ten Holdings | ||
% of Fund Assets | |||
Industry weightings are shown as a percentage of net assets. | American Municipal Power Ohio Rev. 7.20% due 02/15/2029 | 5.3% | |
Johnson Co. KS Bldg Ls/Pr Rev. BAB 4.60% due 09/01/2026 | 4.6% | ||
Springville UT GO BAB 5.30% due 05/01/2031 | 4.5% | ||
Quebec Canada Yankee 7.125% due 02/09/2024 | 4.2% | ||
SeaRiver Maritime 0.00% due 09/01/2012 | 4.0% | ||
Entergy Louisiana 5.40% due 11/01/2024 | 4.0% | ||
San Marcos Texas ULTD GO BAB 6.028% due 08/15/2030 | 3.9% | ||
StatoilHydro 2.90% due 10/15/2014 | 3.9% | ||
Dell Rapids SD School Dist. 49-3 6.257% due 01/15/2030 | 3.8% | ||
Idaho Hsg & Fin GARVEE BAB A-2 5.379% due 07/15/2020 | 3.5% |
10 | May 31, 2011 Semi-Annual Report
Sextant Bond Income Fund
Schedule of Investments | ||||
Issuer | Coupon / Maturity | Face Amount | Market Value | Percentage of Assets |
Corporate Bonds — 49.6% | ||||
Automotive | ||||
AutoZone | 5.50% due 11/15/2015 | $95,000 | $105,913 | 1.9% |
Banking | ||||
CitiCorp | 7.25% due 10/15/2011 | 50,000 | 51,152 | 0.9% |
Building | ||||
Masco | 7.125% due 08/15/2013 | 60,000 | 65,224 | 1.2% |
Chemicals | ||||
Air Products & Chemicals | 8.75% due 04/15/2021 | 50,000 | 67,253 | 1.2% |
Electronics | ||||
Phillips Electronics | 7.25% due 08/15/2013 | 75,000 | 84,357 | 1.6% |
Energy | ||||
Baker Hughes | 6.875% due 01/15/2029 | 100,000 | 120,072 | 2.2% |
Conoco Phillips | 6.00% due 01/15/2020 | 150,000 | 177,436 | 3.3% |
250,000 | 297,508 | 5.5% | ||
Finance | ||||
Goldman Sachs | 5.95% due 01/15/2027 | 180,000 | 180,202 | 3.3% |
Morgan Stanley Dean Witter | 6.75% due 10/15/2013 | 50,000 | 55,137 | 1.0% |
Paine Webber Group | 7.625% due 02/15/2014 | 50,000 | 56,060 | 1.0% |
280,000 | 291,399 | 5.3% | ||
Food Production | ||||
H.J. Heinz | 6.00% due 03/15/2012 | 75,000 | 78,193 | 1.4% |
Insurance | ||||
Allstate | 7.50% due 6/15/2013 | 50,000 | 56,057 | 1.0% |
Progressive | 7.00% due 10/01/2013 | 75,000 | 83,470 | 1.6% |
St. Paul Travelers | 5.50% due 12/01/2015 | 125,000 | 141,015 | 2.6% |
250,000 | 280,542 | 5.2% | ||
Machinery | ||||
Caterpillar | 9.375% due 08/15/2011 | 40,000 | 40,750 | 0.8% |
Deere & Co. | 8.10% due 05/15/2030 | 95,000 | 131,808 | 2.4% |
135,000 | 172,558 | 3.2% | ||
Medical | ||||
Pharmacia | 6.50% due 12/01/2018 | 100,000 | 119,243 | 2.2% |
Metal Ores | ||||
BHP Finance U.S.A. | 5.25% due 12/15/2015 | 125,000 | 141,627 | 2.6% |
Oil & Gas | ||||
StatoilHydro | 2.90% due 10/15/2014 | 200,000 | 209,796 | 3.9% |
Continued on next page. |
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 11
Sextant Bond Income Fund
Schedule of Investments | ||||
Issuer | Coupon / Maturity | Face Amount | Market Value | Percentage of Assets |
Corporate Bonds — 49.6% (continued) | ||||
Retail | ||||
Wal-Mart Stores | 7.25% due 06/01/2013 | $45,000 | $50,740 | 0.9% |
Transportation | ||||
SeaRiver Maritime | 0.00% due 09/01/2012 | 225,000 | 218,566 | 4.0% |
Southwest Airlines | 6.50% due 03/01/2012 | 75,000 | 77,980 | 1.5% |
300,000 | 296,546 | 5.5% | ||
Utilities | ||||
Commonwealth Edison | 7.50% due 07/01/2013 | 50,000 | 56,152 | 1.0% |
Entergy Louisiana | 5.40% due 11/01/2024 | 200,000 | 216,918 | 4.0% |
Florida Power & Light | 5.95% due 10/01/2033 | 100,000 | 112,307 | 2.1% |
350,000 | 385,377 | 7.1% | ||
Total corporate bonds | 2,440,000 | 2,697,428 | 49.6% | |
Foreign Government Bonds — 4.2% | ||||
Canadian Government | ||||
Quebec Canada Yankee | 7.125% due 02/09/2024 | 175,000 | 228,973 | 4.2% |
Municipal Bonds — 40.7% | ||||
General Obligation | ||||
City of Burlington Taxable GO 2009 Series B | 5.75% due 11/01/2028 | 160,000 | 167,490 | 3.1% |
Dell Rapids SCD 49-3 | 6.257% due 01/15/2030 | 200,000 | 208,808 | 3.8% |
Dupage Co. II CCD #502 | 5.50% due 01/01/2026 | 150,000 | 156,255 | 2.9% |
Idaho Hsg. & Fin GARVEE BAB A-2 | 5.379% due 07/15/2020 | 180,000 | 192,649 | 3.5% |
Milan Co. MI Area Schools | 6.45% due 05/01/2024 | 150,000 | 159,972 | 2.9% |
San Marcos Texas ULTD GO BAB | 6.028% due 08/15/2030 | 200,000 | 211,170 | 3.9% |
Springville UT GO BAB | 5.30% due 05/01/2031 | 240,000 | 241,613 | 4.5% |
1,280,000 | 1,337,957 | 24.6% | ||
Revenue | ||||
American Municipal Power Ohio Rev. | 7.20% due 02/15/2029 | 250,000 | 287,525 | 5.3% |
Graves Co. KY SCD Bldg. Lease Rev. | 5.95% due 06/01/2024 | 150,000 | 157,133 | 2.9% |
Johnson Co. KS Bldg Ls./Pr. Rev. BAB | 4.60% due 09/01/2026 | 250,000 | 248,110 | 4.6% |
Oklahoma City Fin. Auth. Ed. Lease Rev. | 6.60% due 09/01/2022 | 160,000 | 179,440 | 3.3% |
810,000 | 872,208 | 16.1% | ||
Total municipal bonds | 2,090,000 | 2,210,165 | 40.7% | |
Total investments | (Cost = $4,856,262) | $4,705,000 | 5,136,566 | 94.5% |
Other assets (net of liabilities) | 296,110 | 5.5% | ||
Total net assets | $5,432,676 | 100.0% |
The accompanying notes are an integral part of these financial statements.
12 | May 31, 2011 Semi-Annual Report
Sextant Bond Income Fund
Statement of Assets and Liabilities | ||
As of May 31, 2011 | ||
Assets | ||
Investments in securities, at value (Cost $4,856,262) | $5,136,566 | |
Cash | 209,268 | |
Interest receivable | 87,956 | |
Prepaid filing and registration | 6,315 | |
Insurance reserve premium | 400 | |
Total assets | 5,440,505 | |
Liabilities | ||
Accrued expenses | 3,910 | |
Payable to affilliates | 2,280 | |
Accrued distribution fee | 1,147 | |
Distributions payable | 268 | |
Payable for Fund shares redeemed | 224 | |
Total liabilities | 7,829 | |
Net assets | $5,432,676 | |
Analysis of net assets | ||
Paid-in capital (unlimited shares authorized, without par value) | $5,200,115 | |
Unrealized net appreciation on investments | 280,304 | |
Accumulated net realized loss | (47,743) | |
Net assets applicable to Fund shares outstanding | $5,432,676 | |
Fund shares outstanding | 1,072,187 | |
Net asset value, offering, and redemption price per share | $5.07 |
Statement of Operations | ||
Period ended May 31, 2011 | ||
Investment income | ||
Interest income | $129,457 | |
Gross investment income | 129,457 | |
Expenses | ||
Investment adviser fees | 13,437 | |
Filing and registration fees | 8,518 | |
Distribution fees | 6,630 | |
Audit fees | 1,129 | |
Other expenses | 837 | |
Retirement plan custodial fees | 748 | |
Printing and postage | 610 | |
Chief Compliance Officer expenses | 358 | |
Trustee fees | 345 | |
Custodian fees | 125 | |
Total gross expenses | 32,737 | |
Less adviser fees waived | (8,620) | |
Less custodian fee credits | (125) | |
Net expenses | 23,992 | |
Net investment income | $105,465 | |
Net realized gain on securities sold | $19,888 | |
Net increase in unrealized appreciation on investments | 26,175 | |
Net gain on investments | $46,063 | |
Net increase in net assets resulting from operations | $151,528 |
Bond Quality Diversification |
Based on net assets as of May 31, 2011.
Source: Moody's Investors Services. When ratings are not available from Moody's, Standard and Poor's is used as a supplemental source.
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 13
Sextant Bond Income Fund
Statements of Changes in Net Assets | Period ended May 31, 2011 | Year ended Nov. 30, 2010 |
Increase (decrease) in net assets from operations: | ||
From operations | ||
Net investment income | $105,465 | $184,745 |
Net realized gain on investments | 19,888 | 15,188 |
Net increase in unrealized appreciation | 26,175 | 61,380 |
Net increase in net assets | 151,528 | 261,313 |
Distributions to shareholders from | ||
Net investment income | (105,465) | (184,745) |
Capital share transactions | ||
Proceeds from sales of shares | 266,978 | 1,513,103 |
Value of shares issued in reinvestment of dividends | 102,841 | 182,326 |
Early redemption fees retained | - | 38 |
Cost of shares redeemed | (401,554) | (304,961) |
Net increase (decrease) in net assets | (31,735) | 1,390,506 |
Total increase in net assets | 14,328 | 1,467,074 |
Net assets | ||
Beginning of period | 5,418,348 | 3,951,274 |
End of period | $5,432,676 | $5,418,348 |
Shares of the Fund sold and redeemed | ||
Number of shares sold | 54,244 | 306,375 |
Number of shares issued in reinvestment of dividends | 20,742 | 36,567 |
Number of shares redeemed | (81,049) | (62,121) |
Net increase (decrease) in number of shares outstanding | (6,063) | 280,821 |
Financial Highlights | Period ended | For year ended November 30, | ||||
Selected data per share of outstanding capital stock throughout each period: | May 31, 2011 | 2010 | 2009 | 2008 | 2007 | 2006 |
Net asset value at beginning of period | $5.03 | $4.96 | $4.46 | $4.91 | $4.92 | $4.92 |
Income from investment operations | ||||||
Net investment income | 0.10 | 0.19 | 0.21 | 0.22 | 0.22 | 0.22 |
Net gain (loss) on securities (both realized and unrealized) | 0.04 | 0.07 | 0.50 | (0.45) | (0.01) | 0.00¹ |
Total from investment operations | 0.14 | 0.26 | 0.71 | (0.23) | 0.21 | 0.22 |
Less distributions | ||||||
Dividends (from net investment income) | (0.10) | (0.19) | (0.21) | (0.22) | (0.22) | (0.22) |
Total distributions | (0.10) | (0.19) | (0.21) | (0.22) | (0.22) | (0.22) |
Paid-in capital from early redemption fees | - | 0.00¹ | - | 0.00¹ | 0.00¹ | 0.00¹ |
Net asset value at end of period | $5.07 | $5.03 | $4.96 | $4.46 | $4.91 | $4.92 |
Total return | 2.80% | 5.43% | 16.33% | (4.80)% | 4.53% | 4.73% |
Ratios / supplemental data | ||||||
Net assets ($000), end of period | $5,433 | $5,418 | $3,951 | $3,306 | $3,412 | $3,384 |
Ratio of expenses to average net assets | ||||||
Before fee waivers and custodian fee credits | 0.62% | 1.24% | 1.70% | 1.45% | 1.38% | 1.27% |
After fee waivers | 0.45% | 0.91% | 0.90% | 0.91% | 0.94% | 0.95% |
After fee waivers and custodian fee credits | 0.45% | 0.90% | 0.89% | 0.91% | 0.90% | 0.90% |
Ratio of net investment income after fee waivers and custodian fee credits to average net assets | 1.98% | 3.89% | 4.46% | 4.68% | 4.64% | 4.64% |
Portfolio turnover rate | 9% | 10% | 38% | 9% | 22% | 36% |
¹Amount is less than $0.01 |
The accompanying notes are an integral part of these financial statements.
14 | May 31, 2011 Semi-Annual Report
Sextant Core Fund
Performance Summary
Average Annual Returns as of May 31, 2011 | ||||
10 Years | 5 Years | 1 Year | Expense Ratio¹ | |
Sextant Core Fund | N/A | N/A | 16.78% | 1.21% |
Dow Jones Moderate U.S. Portfolio Index | 6.64% | 5.55% | 19.83% | N/A |
Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the index is unmanaged, and expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in the Fund on March 30, 2007 (the Fund's inception), to an identical amount invested in the index, which reflects the types of securities in which the Fund invests. The graph shows that an investment in the Fund would have risen to $11,737 versus $11,821 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, nor do they reflect the potential deduction of a 2% redemption fee on shares held less than 90 calendar days. ¹By regulation, the expense ratio shown in this table is as of the Fund's most recent prospectus which is dated March 25, 2011, and incorporates results for the fiscal year ended November 30, 2010. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods. |
Fund Objective
The objectives of the Core Fund are long-term appreciation and capital preservation.
Industry Allocation | Top Ten Holdings | ||
% of Fund Assets | |||
Industry weightings are shown as a percentage of net assets. | Emerson Electric 5.375% due 10/15/2017 | 2.0% | |
E.I. du Pont de Nemours 5.25% due 12/15/2016 | 2.0% | ||
Oracle 5.25% due 01/15/2016 | 2.0% | ||
Home Depot 5.40% due 03/01/2016 | 2.0% | ||
Boardwalk Pipelines 5.50% due 02/01/2017 | 1.9% | ||
SeaRiver Maritime 0.00% due 09/01/2012 | 1.9% | ||
Countrywide Home Loan 6.73% due 04/17/2013 | 1.9% | ||
General Electric Capital 5.35% due 04/15/2022 | 1.8% | ||
WR Berkley 5.875% due 02/15/2013 | 1.8% | ||
Bellsouth 4.75% due 11/15/2012 | 1.8% |
May 31, 2011 Semi-Annual Report | 15
Sextant Core Fund
Schedule of Investments | ||||||
Common Stocks — 58.6% | Symbol | Number of Shares | Cost | Market Value | Country¹ | Percentage of Assets |
Automotive | ||||||
Autoliv | ALV | 700 | $49,555 | $53,886 | 0.9% | |
Banking | ||||||
Australia & New Zealand Banking Group ADS | ANZBY | 3,000 | 67,942 | 70,710 | Australia | 1.2% |
JP Morgan Chase | JPM | 1,000 | 40,451 | 43,240 | 0.8% | |
PNC Bank | PNC | 600 | 42,748 | 37,452 | 0.7% | |
Toronto-Dominion Bank | TD | 550 | 35,553 | 47,377 | Canada | 0.8% |
Visa | V | 600 | 52,850 | 48,636 | 0.8% | |
Washington Federal | WFSL | 2,000 | 41,520 | 31,780 | 0.6% | |
281,064 | 279,195 | 4.9% | ||||
Building | ||||||
CRH ADS | CRH | 600 | 26,439 | 13,278 | Ireland | 0.2% |
Lowe's Companies | LOW | 1,400 | 39,433 | 33,796 | 0.6% | |
65,872 | 47,074 | 0.8% | ||||
Chemicals | ||||||
BASF ADS | BASFY | 400 | 22,550 | 37,188 | Germany | 0.6% |
Praxair | PX | 700 | 44,349 | 74,088 | 1.3% | |
RPM International | RPM | 1,000 | 23,110 | 23,500 | 0.4% | |
90,009 | 134,776 | 2.3% | ||||
Computers | ||||||
Adobe Systems² | ADBE | 1,100 | 45,474 | 38,093 | 0.7% | |
Apple² | AAPL | 250 | 28,478 | 86,958 | 1.5% | |
Hewlett-Packard | HPQ | 1,200 | 46,561 | 44,856 | 0.8% | |
Taiwan Semiconductor ADS | TSM | 4,534 | 39,575 | 61,934 | Taiwan | 1.1% |
160,088 | 231,841 | 4.1% | ||||
Cosmetics & Toiletries | ||||||
Procter & Gamble | PG | 900 | 58,842 | 60,300 | 1.0% | |
Diversified Operations | ||||||
Honeywell International | HON | 850 | 42,855 | 50,617 | 0.9% | |
3M | MMM | 600 | 50,092 | 56,628 | 1.0% | |
92,947 | 107,245 | 1.9% | ||||
Energy | ||||||
Arch Coal | ACI | 2,000 | 36,980 | 59,780 | 1.0% | |
Cenovus | CVE | 1,000 | 28,598 | 37,090 | Canada | 0.7% |
ConocoPhillips | COP | 1,250 | 79,855 | 91,525 | 1.6% | |
Devon Energy | DVN | 1,200 | 81,888 | 100,884 | 1.8% | |
NextEra Energy | NEE | 600 | 36,752 | 34,770 | 0.6% | |
Noble | NE | 1,600 | $67,677 | $66,992 | 1.2% | |
Statoil ADS | STO | 2,003 | 49,259 | 52,759 | Norway | 0.9% |
Total ADS | TOT | 1,100 | 60,835 | 63,349 | France | 1.1% |
Continued on next page. |
The accompanying notes are an integral part of these financial statements.
16 | May 31, 2011 Semi-Annual Report
Sextant Core Fund
Schedule of Investments | ||||||
Common Stocks — 58.6% | Symbol | Number of Shares | Cost | Market Value | Country¹ | Percentage of Assets |
Energy (continued) | ||||||
Williams Companies | WMB | 3,000 | $48,330 | $94,170 | 1.6% | |
490,174 | 601,319 | 10.5% | ||||
Food Production | ||||||
General Mills | GIS | 2,000 | 57,764 | 79,540 | 1.4% | |
H.J. Heinz | HNZ | 1,500 | 57,732 | 82,380 | 1.4% | |
PepsiCo | PEP | 1,000 | 66,423 | 71,120 | 1.2% | |
Unilever ADS | UL | 1,850 | 58,335 | 60,292 | United Kingdom | 1.1% |
240,254 | 293,332 | 5.1% | ||||
Hotels & Motels | ||||||
Orient-Express Hotels Class A² | OEH | 1,000 | 56,450 | 11,690 | Global³ | 0.2% |
Instruments — Control | ||||||
Parker Hannifin | PH | 500 | 29,672 | 44,425 | 0.8% | |
Insurance | ||||||
Chubb | CB | 750 | 39,270 | 49,192 | 0.9% | |
Medical | ||||||
Eli Lilly | LLY | 1,000 | 54,703 | 38,480 | 0.7% | |
Express Scripts² | ESRX | 1,200 | 37,116 | 71,472 | 1.2% | |
GlaxoSmithKline ADS | GSK | 500 | 26,859 | 21,730 | United Kingdom | 0.4% |
Humana² | HUM | 1,000 | 37,627 | 80,530 | 1.4% | |
Johnson & Johnson | JNJ | 900 | 54,760 | 60,561 | 1.0% | |
Novartis ADR | NVS | 950 | 44,016 | 61,294 | Switzerland | 1.1% |
Novo Nordisk ADS | NVO | 400 | 18,098 | 50,404 | Denmark | 0.9% |
Sanofi-Aventis ADR | SNY | 1,050 | 31,947 | 41,591 | France | 0.7% |
UnitedHealth Group | UNH | 2,000 | 83,055 | 97,900 | 1.7% | |
388,181 | 523,962 | 9.1% | ||||
Metal Ores | ||||||
Alcoa | AA | 2,000 | 56,062 | 33,620 | 0.6% | |
Anglo American ADR | AAUKY | 1,119 | 33,771 | 27,897 | South Africa | 0.5% |
BHP Billiton ADS | BHP | 650 | 31,866 | 62,023 | Australia | 1.0% |
Freeport-McMoRan Copper & Gold | FCX | 1,000 | 42,343 | 51,640 | Indonesia4 | 0.9% |
164,042 | 175,180 | 3.0% | ||||
Paper & Paper Products | ||||||
Kimberly-Clark | KMB | 925 | 61,586 | 63,178 | 1.1% | |
Publishing | ||||||
McGraw-Hill | MHP | 1,000 | 58,293 | 42,470 | 0.7% | |
Pearson ADS | PSO | 3,100 | 46,698 | 58,373 | United Kingdom | 1.0% |
104,991 | 100,843 | 1.7% | ||||
Shoes & Related Apparel | ||||||
Nike Class B | NKE | 900 | 51,646 | 76,005 | 1.3% | |
Continued on next page. |
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 17
Sextant Core Fund
Schedule of Investments | ||||||
Common Stocks — 58.6% | Symbol | Number of Shares | Cost | Market Value | Country¹ | Percentage of Assets |
Steel | ||||||
Nucor | NUE | 800 | $48,085 | $33,872 | 0.6% | |
Telecommunications | ||||||
AT&T | T | 2,600 | 78,553 | 82,056 | 1.4% | |
China Mobile ADS | CHL | 500 | 23,058 | 22,885 | China | 0.4% |
Harris | HRS | 800 | 37,077 | 39,552 | 0.7% | |
Telefonica ADS | TEF | 2,400 | 58,784 | 58,392 | Spain | 1.0% |
197,472 | 202,885 | 3.5% | ||||
Tools | ||||||
Stanley Black & Decker | SWK | 446 | 29,654 | 32,950 | 0.6% | |
Transportation | ||||||
Canadian National Railway | CNI | 800 | 40,237 | 62,624 | Canada | 1.1% |
LAN Airlines ADS | LFL | 3,500 | 48,996 | 100,520 | Chile | 1.7% |
89,233 | 163,144 | 2.8% | ||||
Utilities | ||||||
IDACORP | IDA | 1,400 | 48,938 | 55,118 | 1.0% | |
NRG Energy² | NRG | 1,200 | 29,348 | 29,712 | 0.5% | |
78,286 | 84,830 | 1.5% | ||||
Total equities | $2,867,373 | $3,371,124 | 58.6% |
Issuer | Coupon / Maturity | Face Amount | Market Value | Percentage of Assets |
Corporate Bonds — 21.4% | ||||
Building Products | ||||
Home Depot | 5.40% due 03/01/2016 | $100,000 | $ 112,704 | 2.0% |
Chemicals | ||||
E.I. du Pont de Nemours | 5.25% due 12/15/2016 | 100,000 | 113,883 | 2.0% |
Computer Software | ||||
Oracle | 5.25% due 01/15/2016 | 100,000 | 113,317 | 2.0% |
Electronics | ||||
Emerson Electric | 5.375% due 10/15/2017 | 100,000 | 114,545 | 2.0% |
General Electric Capital | 5.35% due 04/15/2022 | $101,000 | $106,718 | 1.8% |
201,000 | 221,263 | 3.8% | ||
Energy | ||||
Boardwalk Pipelines | 5.50% due 02/01/2017 | 100,000 | 109,668 | 1.9% |
Finance Services | ||||
Countrywide Home Loan | 6.73% due 04/17/2013 | 100,000 | 106,879 | 1.9% |
Western Union | 5.93% due 10/01/2016 | 30,000 | 34,188 | 0.6% |
130,000 | 141,067 | 2.5% | ||
Continued on next page. |
The accompanying notes are an integral part of these financial statements.
18 | May 31, 2011 Semi-Annual Report
Sextant Core Fund
Schedule of Investments | ||||
Issuer | Coupon / Maturity | Face Amount | Market Value | Percentage of Assets |
Corporate Bonds — 21.4% | ||||
Insurance | ||||
WR Berkley | 5.875% due 02/15/2013 | $100,000 | $105,921 | 1.8% |
Office Equipment | ||||
Staples | 7.375% due 10/01/2012 | 90,000 | 96,651 | 1.7% |
Telecommunications | ||||
Bellsouth | 4.75% due 11/15/2012 | 100,000 | 105,601 | 1.8% |
Transportation | ||||
SeaRiver Maritime | 0.00% due 09/01/2012 | 112,000 | 108,797 | 1.9% |
Total Corporate Bonds | 1,133,000 | 1,228,872 | 21.4% | |
Municipal Bonds — 3.5% | ||||
General Obligation | ||||
Lake Washington SD 414 WA BAB | 4.906% due 12/01/2027 | 100,000 | 100,376 | 1.7% |
Skagit SD#1 | 4.613% due 12/01/2022 | 100,000 | 100,721 | 1.8% |
200,000 | 201,097 | 3.5% | ||
U.S. Government Agency — 1.7% | ||||
Freddie Mac | ||||
FHLMC | 4.55% due 02/15/2030 | $100,000 | 99,867 | 1.7% |
Total investments | (Cost=$4,345,132) | 4,900,960 | 85.2% | |
Other assets (net of liabilities) | 852,198 | 14.8% | ||
Total net assets | $5,753,158 | 100.0% | ||
¹Country of domicile unless otherwise indicated; equities are issued from U.S. domiciled companies where no Country is listed ²Non-income producing security ³Denotes a worldwide presence, comprising an entity with exposure to many regions and countries. 4Denotes country of primary exposure ADS: American Depositary Share |
Bond Quality Diversification |
Based on net assets as of May 31, 2011.
Source: Moody's Investors Services. When ratings are not available from Moody's, Standard and Poor's is used as a supplemental source.
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 19
Sextant Core Fund
Statement of Assets and Liabilities | ||
As of May 31, 2011 | ||
Assets | ||
Investments in securities, at value (Cost $4,345,132) | $4,900,960 | |
Cash | 926,428 | |
Dividends and interest receivable | 28,060 | |
Prepaid filing and registration | 5,487 | |
Total assets | 5,860,935 | |
Liabilities | ||
Payable for securities purchased | 100,000 | |
Payable to affiliates | 3,613 | |
Accrued expenses | 2,949 | |
Accrued distribution fee | 1,215 | |
Total liabilities | 107,777 | |
Net assets | $5,753,158 | |
Analysis of net assets | ||
Paid-in capital (unlimited shares authorized, without par value) | $5,308,228 | |
Accumulated net realized loss | (160,678) | |
Unrealized net appreciation on investments | 555,828 | |
Undistributed net investment income | 49,780 | |
Net assets applicable to Fund shares outstanding | $5,753,158 | |
Fund shares outstanding | 523,601 | |
Net asset value, offering, and redemption price per share | $10.99 |
Statement of Operations | ||
Period ended May 31, 2011 | ||
Investment income | ||
Dividends (net of foreign tax of $2,697) | $44,122 | |
Interest income | 36,724 | |
Gross investment income | 80,846 | |
Expenses | ||
Investment adviser fees | 12,561 | |
Filing and registration fees | 8,099 | |
Distribution fees | 6,936 | |
Audit fees | 1,145 | |
Other expenses | 1,086 | |
Retirement plan custodial fees | 609 | |
Chief Compliance Officer expenses | 453 | |
Trustee fees | 360 | |
Custodian fees | 128 | |
Legal fees | 67 | |
Total gross expenses | 31,444 | |
Less custodian fee credits | (128) | |
Net expenses | 31,316 | |
Net investment income | $49,530 | |
Net realized loss from investments and foreign currency | $(11,021) | |
Net increase in unrealized appreciation on investments | 446,955 | |
Net gain on investments | $435,934 | |
Net increase in net assets resulting from operations | $485,464 |
The accompanying notes are an integral part of these financial statements.
20 | May 31, 2011 Semi-Annual Report
Sextant Core Fund
Statements of Changes in Net Assets | Period ended May 31, 2011 | Year ended Nov. 30, 2010 |
Increase (decrease) in net assets from operations: | ||
From operations | ||
Net investment income | $49,530 | $81,532 |
Net realized loss on investments | (11,021) | (11,776) |
Net increase in unrealized appreciation | 446,955 | 248,687 |
Net increase in net assets | 485,464 | 318,443 |
Distributions to shareholders from | ||
Net investment income | - | (81,285) |
Capital share transactions | ||
Proceeds from sales of shares | 299,443 | 934,199 |
Value of shares issued in reinvestment of dividends | - | 81,285 |
Early redemption fees retained | 5 | 11 |
Cost of shares redeemed | (259,426) | (195,800) |
Net increase in net assets | 40,022 | 819,695 |
Total increase in net assets | 525,486 | 1,056,853 |
Net assets | ||
Beginning of period | 5,227,672 | 4,170,819 |
End of period | 5,753,158 | 5,227,672 |
Undistributed net investment income | $49,780 | $250 |
Shares of the Fund sold and redeemed | ||
Number of shares sold | 28,273 | 95,662 |
Number of shares issued in reinvestment of dividends | - | 8,080 |
Number of shares redeemed | (24,201) | (19,806) |
Net increase in number of shares outstanding | 4,072 | 83,936 |
Financial Highlights | Period ended | Year ended Nov. 30, | Period ended | ||
Selected data per share of outstanding capital stock throughout each period: | May 31, 2011 | 2010 | 2009 | 2008 | Nov. 30, 2007¹ |
Net asset value at beginning of period | $10.06 | $9.58 | $7.97 | $10.67 | $10.00 |
Income from investment operations | |||||
Net investment income | 0.09 | 0.16 | 0.13 | 0.19 | 0.12 |
Net gain (loss) on securities (both realized and unrealized) | 0.84 | 0.48 | 1.61 | (2.70) | 0.69 |
Total from investment operations | 0.93 | 0.64 | 1.74 | (2.51) | 0.81 |
Less distributions | |||||
Dividends (from net investment income) | - | (0.16) | (0.13) | (0.19) | (0.12) |
Distribution in excess (from net investment income) | - | - | - | - | (0.02) |
Return of capital | - | - | - | 0.00² | - |
Total distributions | - | (0.16) | (0.13) | (0.19) | (0.14) |
Paid-in capital from early redemption fees | 0.00² | 0.00² | - | - | 0.00² |
Net asset value at end of period | $10.99 | $10.06 | $9.58 | $7.97 | $10.67 |
Total return | 9.25% | 6.67% | 21.81% | (23.52)% | 8.12%³ |
Ratios / supplemental data | |||||
Net assets ($000), end of period | $5,753 | $5,228 | $4,171 | $3,082 | $3,907 |
Ratio of expenses to average net assets | |||||
Before custodian fee credits | 0.57% | 1.21% | 1.78% | 1.54% | 1.35%4 |
After custodian fee credits | 0.56% | 1.21% | 1.78% | 1.53% | 1.21%4 |
Ratio of net investment income after custodian fee credits to average net assets | 0.89% | 1.74% | 1.57% | 1.89% | 2.08%4 |
Portfolio turnover rate | 2% | 13% | 40% | 16% | 7%³ |
¹Fund commenced operations March 30, 2007 ²Amount is less than $0.01 ³Since inception March 30, 2007; not annualized 4Annualized |
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 21
Sextant Growth Fund
Performance Summary
Average Annual Returns as of May 31, 2011 | ||||
10 Years | 5 Years | 1 Year | Expense Ratio¹ | |
Sextant Growth Fund | 5.49% | 3.63% | 18.13% | 1.01% |
S&P 500 Index | 2.64% | 3.32% | 25.95% | N/A |
Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the index is unmanaged, and expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in the Fund on May 31, 2001, to an identical amount invested in the index, which reflects the types of securities in which the Fund invests. The graph shows that an investment in the Fund would have risen to $17,069 versus $12,974 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, nor do they reflect the potential deduction of a 2% redemption fee on shares held less than 90 calendar days. ¹By regulation, the expense ratio shown in this table is as of the Fund's most recent prospectus which is dated March 25, 2011, and incorporates results for the fiscal year ended November 30, 2010. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods. |
Fund Objective
The objective of the Growth Fund is long-term capital growth.
Industry Allocation | Top Ten Holdings | ||
% of Fund Assets | |||
Industry weightings are shown as a percentage of net assets. | Apple | 6.3% | |
Amazon.com | 4.5% | ||
Alaska Air | 2.5% | ||
Johnson & Johnson | 2.5% | ||
Dr. Pepper Snapple Group | 2.5% | ||
Oracle | 2.5% | ||
Agilent Technologies | 2.4% | ||
Intuit | 2.4% | ||
Trimble Navigation | 2.3% | ||
Honeywell International | 2.3% |
22 | May 31, 2011 Semi-Annual Report
Sextant Growth Fund
Schedule of Investments | |||||
Common Stocks | Symbol | Number of Shares | Cost | Market Value | Percentage of Assets |
Auto | |||||
Ford Motor¹ | F | 30,000 | $394,590 | $447,600 | 1.7% |
Banking | |||||
Washington Banking | WBCO | 25,000 | 318,265 | 331,750 | 1.3% |
Building | |||||
KB Home | KBH | 15,000 | 173,598 | 184,200 | 0.7% |
Lowe's Companies | LOW | 15,000 | 295,388 | 362,100 | 1.4% |
Weyerhaeuser | WY | 27,082 | 436,216 | 583,346 | 2.2% |
905,202 | 1,129,646 | 4.3% | |||
Computers | |||||
Adobe Systems¹ | ADBE | 11,000 | 144,216 | 380,930 | 1.4% |
Apple¹ | AAPL | 4,800 | 39,606 | 1,669,584 | 6.3% |
Hewlett-Packard | HPQ | 12,000 | 370,775 | 448,560 | 1.7% |
Intuit¹ | INTU | 12,000 | 302,027 | 647,640 | 2.4% |
Oracle | ORCL | 19,000 | 241,810 | 650,180 | 2.5% |
3D Systems¹ | DDD | 10,000 | 240,848 | 199,900 | 0.8% |
1,339,282 | 3,996,794 | 15.1% | |||
Diversified Operations | |||||
Honeywell International | HON | 10,000 | 330,476 | 595,500 | 2.3% |
Raytheon Company | RTN | 6,500 | 348,174 | 327,470 | 1.2% |
678,650 | 922,970 | 3.5% | |||
Electronics | |||||
Advanced Micro Devices¹ | AMD | 20,000 | 139,886 | 173,600 | 0.7% |
Agilent Technologies¹ | A | 13,000 | 312,921 | 648,310 | 2.4% |
Trimble Navigation¹ | TRMB | 14,000 | 202,081 | 611,660 | 2.3% |
654,888 | 1,433,570 | 5.4% | |||
Energy | |||||
Devon Energy | DVN | 6,000 | 381,365 | 504,420 | 1.9% |
NextEra Energy | NEE | 7,000 | 244,409 | 405,650 | 1.5% |
Noble | NE | 10,000 | 198,915 | 418,700 | 1.6% |
Spectra Energy | SE | 13,000 | 236,250 | 358,670 | 1.4% |
1,060,939 | 1,687,440 | 6.4% | |||
Engineering R&D Services | |||||
Aecom Technology¹ | ACM | 10,000 | 290,600 | 286,700 | 1.1% |
Finance | |||||
Charles Schwab | SCHW | 25,000 | 79,726 | 450,250 | 1.7% |
E*TRADE Financial¹ | ETFC | 25,000 | 432,082 | 395,250 | 1.5% |
511,808 | 845,500 | 3.2% | |||
Continued on next page. |
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 23
Sextant Growth Fund
Schedule of Investments | |||||
Common Stocks | Symbol | Number of Shares | Cost | Market Value | Percentage of Assets |
Food Production | |||||
Dr. Pepper Snapple Group | DPS | 16,000 | $383,381 | $659,200 | 2.5% |
PepsiCo | PEP | 8,000 | 459,066 | 568,960 | 2.1% |
842,447 | 1,228,160 | 4.6% | |||
Hotels & Motels | |||||
Red Lion Hotels¹ | RLH | 50,000 | 224,859 | 406,000 | 1.5% |
Insurance | |||||
Chubb | CB | 7,000 | 308,505 | 459,130 | 1.7% |
Medical | |||||
Abbott Laboratories | ABT | 7,000 | 305,488 | 365,750 | 1.4% |
Amgen¹ | AMGN | 3,700 | 111,703 | 223,998 | 0.9% |
AmSurg¹ | AMSG | 15,000 | 324,804 | 388,650 | 1.5% |
Johnson & Johnson | JNJ | 10,000 | 642,017 | 672,900 | 2.5% |
Pharmaceutical Product Development | PPDI | 15,000 | 63,420 | 432,750 | 1.6% |
VCA Antech¹ | WOOF | 8,000 | 209,048 | 195,600 | 0.7% |
1,656,480 | 2,279,648 | 8.6% | |||
Metal Ores | |||||
Alcoa | AA | 30,000 | 394,483 | 504,300 | 1.9% |
Publishing | |||||
John Wiley & Sons Class A | JW/A | 10,000 | 335,172 | 530,000 | 2.0% |
Real Estate | |||||
LoopNet¹ | LOOP | 20,000 | 156,091 | 369,400 | 1.4% |
Retail | |||||
Amazon.com¹ | AMZN | 6,000 | 260,090 | 1,180,140 | 4.5% |
Bed Bath & Beyond¹ | BBBY | 9,000 | 331,221 | 485,010 | 1.8% |
Best Buy | BBY | 10,000 | 454,356 | 317,600 | 1.2% |
Coach | COH | 8,500 | 352,465 | 541,110 | 2.0% |
CVS Caremark | CVS | 10,000 | 339,270 | 386,900 | 1.5% |
Guess? | GES | 8,000 | 363,777 | 365,760 | 1.4% |
Staples | SPLS | 15,000 | 322,143 | 252,300 | 0.9% |
2,423,322 | 3,528,820 | 13.3% | |||
Steel | |||||
Nucor | NUE | 4,000 | 189,851 | 169,360 | 0.6% |
Technology | |||||
Qualcomm | QCOM | 5,000 | 284,403 | 292,950 | 1.1% |
Telecommunications | |||||
AT&T | T | 10,000 | 232,700 | 315,600 | 1.2% |
Continued on next page. |
The accompanying notes are an integral part of these financial statements.
24 | May 31, 2011 Semi-Annual Report
Sextant Growth Fund
Schedule of Investments | |||||
Common Stocks | Symbol | Number of Shares | Cost | Market Value | Percentage of Assets |
Tools | |||||
Lincoln Electric Holdings | LECO | 6,000 | $325,653 | $447,900 | 1.7% |
Regal-Beloit | RBC | 5,500 | 173,846 | 379,500 | 1.4% |
Stanley Black & Decker | SWK | 3,000 | 190,295 | 221,640 | 0.9% |
689,794 | 1,049,040 | 4.0% | |||
Transportation | |||||
Alaska Air¹ | ALK | 10,000 | 286,762 | 675,400 | 2.5% |
Boeing | BA | 3,000 | 228,390 | 234,090 | 0.9% |
Norfolk Southern | NSC | 7,000 | 318,942 | 513,170 | 1.9% |
United Parcel Service Class B | UPS | 6,000 | 395,747 | 440,940 | 1.7% |
1,229,841 | 1,863,600 | 7.0% | |||
Utilities | |||||
Duke Energy | DUK | 10,000 | 172,211 | 187,500 | 0.7% |
IDACORP | IDA | 12,000 | 372,928 | 472,440 | 1.8% |
NRG Energy¹ | NRG | 10,000 | 234,150 | 247,600 | 0.9% |
Piedmont Natural Gas | PNY | 8,000 | 220,875 | 251,760 | 1.0% |
Sempra Energy | SRE | 6,000 | 276,535 | 331,020 | 1.2% |
1,276,699 | 1,490,320 | 5.6% | |||
Total investments | $16,398,871 | 25,568,298 | 96.5% | ||
Other assets (net of liabilities) | 936,395 | 3.5% | |||
Total net assets | $26,504,693 | 100% | |||
¹Non-income producing |
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 25
Sextant Growth Fund
Statement of Assets and Liabilities | ||
As of May 31, 2011 | ||
Assets | ||
Investments in securities, at value (Cost $16,398,871) | $25,568,298 | |
Cash | 931,164 | |
Dividends receivable | 28,402 | |
Insurance reserve premium | 1,215 | |
Receivable for Fund shares sold | 610 | |
Total assets | 26,529,689 | |
Liabilities | ||
Payable to affiliates | 16,912 | |
Accrued distribution fee | 5,639 | |
Accrued expenses | 2,221 | |
Payable for Fund shares redeemed | 224 | |
Total liabilities | 24,996 | |
Net assets | $26,504,693 | |
Analysis of net assets | ||
Paid-in capital (unlimited shares authorized, without par value) | $17,344,764 | |
Unrealized net appreciation on investments | 9,169,427 | |
Accumulated net realized loss | (70,173) | |
Undistributed net investment income | 60,675 | |
Net assets applicable to Fund shares outstanding | $26,504,693 | |
Fund shares outstanding | 1,330,991 | |
Net asset value, offering, and redemption price per share | $19.91 |
Statement of Operations | ||
Period ended May 31, 2011 | ||
Investment income | ||
Dividends | $165,792 | |
Miscellaneous income | 30 | |
Gross investment income | 165,822 | |
Expenses | ||
Investment adviser fees | 46,335 | |
Distribution fees | 32,499 | |
Filing and registration fees | 9,417 | |
Printing and postage | 4,777 | |
Audit fees | 4,077 | |
Other expenses | 3,526 | |
Retirement plan custodial fees | 3,119 | |
Trustee fees | 1,680 | |
Chief Compliance Officer expenses | 1,364 | |
Custodian fees | 622 | |
Legal fees | 440 | |
Total gross expenses | 107,856 | |
Less custodian fee credits | (622) | |
Net expenses | 107,234 | |
Net investment income | $58,588 | |
Net realized loss from investments | $(53,402) | |
Net increase in unrealized appreciation on investments | 3,015,079 | |
Net gain on investments | $2,961,677 | |
Net increase in net assets resulting from operations | $3,020,265 |
The accompanying notes are an integral part of these financial statements.
26 | May 31, 2011 Semi-Annual Report
Sextant Growth Fund
Statements of Changes in Net Assets | Period ended May 31, 2011 | Year ended Nov. 30, 2010 |
Increase in net assets from operations: | ||
From operations | ||
Net investment income | $58,588 | $68,004 |
Net realized gain (loss) on investments | (53,402) | 660,507 |
Net increase in unrealized appreciation | 3,015,079 | 1,661,727 |
Net increase in net assets | 3,020,265 | 2,390,238 |
Distributions to shareholders from | ||
Net investment income | - | (65,917) |
Capital share transactions | ||
Proceeds from sales of shares | 1,887,437 | 5,126,976 |
Value of shares issued in reinvestment of dividends | - | 63,514 |
Early redemption fees retained | 178 | 943 |
Cost of shares redeemed | (2,608,599) | (4,843,972) |
Net increase (decrease) in net assets | (720,984) | 347,461 |
Total increase in net assets | 2,299,281 | 2,671,782 |
Net assets | ||
Beginning of period | 24,205,412 | 21,533,630 |
End of period | 26,504,693 | 24,205,412 |
Undistributed net investment income | $60,675 | $2,087 |
Shares of the Fund sold and redeemed | ||
Number of shares sold | 99,371 | 305,136 |
Number of shares issued in reinvestment of dividends | - | 3,589 |
Number of shares redeemed | (135,981) | (286,706) |
Net increase (decrease) in number of shares outstanding | (36,610) | 22,019 |
Financial Highlights | ||||||
Selected data per share of outstanding capital stock throughout each period: | Period ended | For year ended November 30, | ||||
May 31, 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | |
Net asset value at beginning of period | $17.70 | $16.00 | $13.45 | $19.99 | $18.66 | $17.11 |
Income from investment operations | ||||||
Net investment income (loss) | 0.04 | 0.05 | (0.04) | 0.04 | 0.01 | (0.02) |
Net gains (losses) on securities (both realized and unrealized) | 2.17 | 1.70 | 2.59 | (6.55) | 1.80 | 1.74 |
Total from investment operations | 2.21 | 1.75 | 2.55 | (6.51) | 1.81 | 1.72 |
Less distributions | ||||||
Dividends (from net investment income) | - | (0.05) | (0.00)¹ | (0.03) | (0.01) | - |
Distributions (from capital gains) | - | - | - | (0.00)¹ | (0.47) | (0.17) |
Total distributions | - | (0.05) | (0.00)¹ | (0.03) | (0.48) | (0.17) |
Paid-in capital from early redemption fees | 0.00¹ | 0.00¹ | 0.00¹ | 0.00¹ | 0.00¹ | 0.00¹ |
Net asset value at end of period | $19.91 | $17.70 | $16.00 | $13.45 | $19.99 | $18.66 |
Total return | 12.49% | 10.93% | 18.98% | (32.58)% | 9.74% | 10.06% |
Ratios / supplemental data | ||||||
Net assets ($000), end of period | $26,505 | $24,205 | $21,534 | $12,157 | $15,996 | $13,728 |
Ratio of expenses to average net assets | ||||||
Before custodian fee credits | 0.41% | 1.01% | 1.34% | 1.25% | 1.32% | 1.25% |
After custodian fee credits | 0.41% | 1.00% | 1.34% | 1.24% | 1.30% | 1.21% |
Ratio of net investment income (loss) after custodian fee credits to average net assets | 0.22% | 0.30% | (0.25)% | 0.20% | 0.09% | (0.12)% |
Portfolio turnover rate | 6% | 16% | 7% | 2% | 3% | 11% |
¹Amount is less than $0.01 |
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 27
Sextant International Fund
Performance Summary
Average Annual Returns as of May 31, 2011 | ||||
10 Years | 5 Years | 1 Year | Expense Ratio¹ | |
Sextant International Fund | 7.96% | 6.83% | 19.41% | 1.03% |
NYSE Arca International Market Index | 4.73% | 2.76% | 27.38% | N/A |
Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the index is unmanaged, and expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in the Fund on May 31, 2001, to an identical amount invested in the index, which reflects the types of securities in which the Fund invests. The graph shows that an investment in the Fund would have risen to $21,503 versus $12,035 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, nor do they reflect the potential deduction of a 2% redemption fee on shares held less than 90 calendar days. ¹By regulation, the expense ratio shown in this table is as of the Fund's most recent prospectus which is dated March 25, 2011, and incorporates results for the fiscal year ended November 30, 2010. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods. |
Fund Objective
The objective of the International Fund is long-term capital growth.
Industry Allocation | Top Ten Holdings | ||
% of Fund Assets | |||
Industry weightings are shown as a percentage of net assets. | Teck Resources | 2.8% | |
Novartis ADR | 2.1% | ||
Copa Holdings | 2.0% | ||
LAN Airlines ADS | 2.0% | ||
Potash Corp. of Saskatchewan | 2.0% | ||
Toronto-Dominion Bank | 1.9% | ||
Novo Nordisk ADS | 1.7% | ||
SAP ADS | 1.7% | ||
Infosys ADS | 1.7% | ||
Shire ADR | 1.6% |
28 | May 31, 2011 Semi-Annual Report
Sextant International Fund
Schedule of Investments | ||||||
Common Stocks | Symbol | Number of Shares | Cost | Market Value | Country¹ | Percentage of Assets |
Automotive | ||||||
Nissan Motor ADS | NSANY | 120,000 | $1,712,551 | $2,398,800 | Japan | 1.3% |
Toyota Motor ADS | TM | 20,000 | 1,496,296 | 1,665,800 | Japan | 0.9% |
3,208,847 | 4,064,600 | 2.2% | ||||
Banking | ||||||
Australia & New Zealand Banking Group ADS | ANZBY | 80,000 | 1,581,457 | 1,885,600 | Australia | 1.0% |
AXA ADS | AXAHY | 17,000 | 376,633 | 364,820 | France | 0.2% |
ICICI Bank | IBN | 45,000 | 1,400,253 | 2,146,050 | India | 1.1% |
Mitsubishi UFJ Financial Group ADR | MTU | 400,000 | 2,185,178 | 1,828,000 | Japan | 1.0% |
Nomura Holdings ADR | NMR | 30,000 | 351,958 | 149,700 | Japan | 0.1% |
Toronto-Dominion Bank | TD | 40,000 | 2,302,163 | 3,445,600 | Canada | 1.9% |
8,197,642 | 9,819,770 | 5.3% | ||||
Building | ||||||
Ritchie Bros. Auctioneers | RBA | 30,000 | 634,727 | 831,600 | Canada | 0.4% |
Chemicals | ||||||
BASF ADS | BASFY | 25,000 | 1,649,816 | 2,324,250 | Germany | 1.2% |
Potash Corp. of Saskatchewan | POT | 65,000 | 2,058,502 | 3,679,000 | Canada | 2.0% |
3,708,318 | 6,003,250 | 3.2% | ||||
Computers | ||||||
ASML Holding | ASML | 75,000 | 3,034,157 | 2,925,750 | Netherlands | 1.6% |
Dassault Systems ADR | DASTY | 25,000 | 1,727,827 | 2,135,250 | France | 1.1% |
Infosys ADS | INFY | 50,000 | 2,271,519 | 3,087,500 | India | 1.7% |
Nice Systems ADS² | NICE | 60,000 | 2,122,719 | 2,136,000 | Israel | 1.1% |
SAP ADS | SAP | 50,000 | 2,794,738 | 3,108,500 | Germany | 1.7% |
11,950,960 | 13,393,000 | 7.2% | ||||
Energy | ||||||
BP ADS | BP | 50,000 | 2,180,675 | 2,312,000 | Britain | 1.3% |
Cenovus Energy | CVE | 60,000 | 1,516,298 | 2,225,400 | Canada | 1.2% |
EnCana | ECA | 40,000 | 1,097,866 | 1,364,000 | Canada | 0.7% |
Petroleo Brasileiro ADR | PBR | 70,000 | 2,615,500 | 2,424,100 | Brazil | 1.3% |
Repsol YPF ADS² | REP | 80,000 | 2,071,573 | 2,722,400 | Spain | 1.5% |
Statoil ADS | STO | 30,173 | 716,086 | 794,757 | Norway | 0.4% |
Total ADS | TOT | 45,000 | 2,528,346 | 2,591,550 | France | 1.4% |
Vestas Wind Systems ADR² | VWDRY | 50,000 | 854,000 | 501,000 | Denmark | 0.3% |
13,580,344 | 14,935,207 | 8.1% | ||||
Food Production | ||||||
Coca-Cola Femsa ADS | KOF | 27,557 | 1,357,613 | 2,394,979 | Mexico | 1.3% |
Fomento Economico Mex ADS | FMX | 20,000 | 826,024 | 1,238,600 | Mexico | 0.7% |
Unilever ADS | UL | 20,000 | 366,600 | 651,800 | United Kingdom | 0.3% |
2,550,237 | 4,285,379 | 2.3% | ||||
Games/Hobby Production | ||||||
Nintendo ADR | NTDOY | 17,000 | 718,849 | 491,300 | Japan | 0.3% |
Continued on next page. |
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 29
Sextant International Fund
Schedule of Investments | ||||||
Common Stocks | Symbol | Number of Shares | Cost | Market Value | Country¹ | Percentage of Assets |
Hotels & Motels | ||||||
Orient-Express Hotels Class A² | OEH | 170,000 | $1,507,427 | $1,987,300 | Global³ | 1.1% |
Insurance | ||||||
ING Groep ADS² | ING | 167,852 | 1,985,301 | 2,039,402 | Netherlands | 1.1% |
Machinery | ||||||
Komatsu ADS | KMTUY | 50,000 | 1,775,000 | 1,500,000 | Japan | 0.8% |
Nidec ADR | NJ | 26,703 | 514,164 | 599,215 | China4 | 0.3% |
2,289,164 | 2,099,215 | 1.1% | ||||
Medical | ||||||
GlaxoSmithKline ADS | GSK | 50,000 | 1,935,020 | 2,173,000 | United Kingdom | 1.2% |
Novartis ADR | NVS | 60,000 | 3,076,591 | 3,871,200 | Switzerland | 2.1% |
Novo Nordisk ADS | NVO | 25,000 | 1,631,867 | 3,150,250 | Denmark | 1.7% |
Shire ADR | SHPGY | 32,000 | 1,738,765 | 3,058,880 | United Kingdom | 1.6% |
Teva Pharmaceutical Industries ADS | TEVA | 50,000 | 2,472,947 | 2,545,000 | Israel | 1.4% |
10,855,190 | 14,798,330 | 8.0% | ||||
Metal Ores | ||||||
Anglo American ADR | AAUKY | 110,000 | 1,551,559 | 2,742,300 | South Africa4 | 1.5% |
Barrick Gold | ABX | 60,000 | 2,580,603 | 2,865,600 | Canada | 1.6% |
BHP Billiton ADS | BHP | 20,000 | 1,066,959 | 1,908,400 | Australia | 1.0% |
Newcrest Mining ADS | NCMGY | 67,301 | 2,618,682 | 2,840,102 | Australia | 1.5% |
Rio Tinto ADS | RIO | 30,000 | 1,584,073 | 2,103,600 | United Kingdom | 1.1% |
Teck Resources | TCK | 100,000 | 458,225 | 5,257,000 | Canada | 2.8% |
Tenaris ADR | TS | 2,500 | 95,290 | 121,725 | Argentina4 | 0.1% |
Vale ADR | VALE | 60,000 | 998,791 | 1,935,600 | Brazil | 1.1% |
10,954,182 | 19,774,327 | 10.7% | ||||
Office Equipment | ||||||
Canon ADS | CAJ | 50,000 | 2,268,340 | 2,399,000 | Japan | 1.3% |
Paper & Paper Products | ||||||
Fibria Celulose | FBR | 150,000 | 2,152,042 | 2,335,500 | Brazil | 1.2% |
Metso ADS | MXCYY | 12,100 | 130,802 | 699,985 | Finland | 0.4% |
2,282,844 | 3,035,485 | 1.6% | ||||
Publishing | ||||||
Pearson ADS | PSO | 90,000 | 1,021,915 | 1,694,700 | United Kingdom | 0.9% |
Telecommunications | ||||||
America Movil ADS | AMX | 30,000 | 917,471 | 1,581,000 | Mexico | 0.8% |
BCE | BCE | 60,000 | 1,414,018 | 2,414,400 | Canada | 1.3% |
China Mobile ADS | CHL | 25,000 | 1,172,229 | 1,144,250 | China | 0.6% |
China Techfaith Wireless ADR² | CNTF | 40,000 | 168,300 | 224,000 | China | 0.1% |
Millicom International Cellular | MIC SS | 10,000 | 905,668 | 1,142,000 | Global³ | 0.6% |
PT Indosat ADR | IIT | 20,000 | 539,605 | 607,000 | Indonesia | 0.3% |
SK Telecom ADR | SKM | 30,000 | 511,437 | 530,700 | South Korea | 0.3% |
Telecom New Zealand ADS | NZT | 20,000 | 193,396 | 196,800 | New Zealand | 0.1% |
Continued on next page. |
The accompanying notes are an integral part of these financial statements.
30 | May 31, 2011 Semi-Annual Report
Sextant International Fund
Schedule of Investments | ||||||
Common Stocks | Symbol | Number of Shares | Cost | Market Value | Country¹ | Percentage of Assets |
Telecommunications (continued) | ||||||
Telecomunicacoes de Sao Paulo ADR | VIV | 50,000 | $1,322,495 | $1,462,000 | Brazil | 0.8% |
Telefonica ADS | TEF | 90,000 | 1,918,697 | 2,189,700 | Spain | 1.2% |
Telefonos de Mexico ADS Class L | TMX | 30,000 | 489,451 | 535,800 | Mexico | 0.3% |
Telus | TU | 45,000 | 1,334,187 | 2,355,300 | Canada | 1.3% |
Turkcell Iletisim Hizmetleri ADR² | TKC | 70,000 | 970,618 | 984,900 | Turkey | 0.5% |
Vodaphone Group ADS | VOD | 50,000 | 963,420 | 1,401,500 | United Kingdom | 0.8% |
12,820,992 | 16,769,350 | 9.0% | ||||
Transportation | ||||||
Canadian Pacific Railway | CP | 32,000 | 1,228,587 | 2,032,320 | Canada | 1.1% |
Copa Holdings | CPA | 60,000 | 3,268,200 | 3,749,400 | Panama | 2.0% |
LAN Airlines ADS | LFL | 130,000 | 1,191,580 | 3,733,600 | Chile | 2.0% |
Ryanair Holdings ADS | RYAAY | 20,000 | 623,100 | 588,000 | Ireland | 0.3% |
6,311,467 | 10,103,320 | 5.4% | ||||
Utilities | ||||||
BG Group ADS | BRGYY | 14,000 | 1,253,784 | 1,627,080 | United Kingdom | 0.9% |
CPFL Energia ADR | CPL | 30,000 | 2,111,625 | 2,631,900 | Brazil | 1.4% |
Enersis ADS | ENI | 65,000 | 1,024,863 | 1,410,500 | Chile | 0.8% |
Korea Electric Power ADS² | KEP | 20,000 | 304,261 | 274,800 | South Korea | 0.1% |
4,694,533 | 5,944,280 | 3.2% | ||||
Total investments | $101,541,279 | 134,468,815 | 72.4% | |||
Other assets (net of liabilities) | 51,141,029 | 27.6% | ||||
Total net assets | $185,609,844 | 100.0% | ||||
¹Country of domicile unless otherwise indicated ²Non-income producing security ³Denotes a worldwide presence, comprising an entity with exposure to many regions and countries. 4Denotes country of primary exposure ADS: American Depositary Share |
Countries | |
% of Fund Assets | |
Canada | 14.3% |
United Kingdom | 6.8% |
Brazil | 5.8% |
Japan | 5.7% |
Australia | 3.5% |
Mexico | 3.1% |
Germany | 2.9% |
India | 2.8% |
Chile | 2.8% |
France | 2.7% |
Netherlands | 2.7% |
Spain | 2.7% |
Israel | 2.5% |
Switzerland | 2.1% |
Panama | 2.0% |
Denmark | 2.0% |
Other countries <2% | 8.0% |
Other assets | 27.6% |
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 31
Sextant International Fund
Statement of Assets and Liabilities | ||
As of May 31, 2011 | ||
Assets | ||
Investments in securities, at value (Cost $101,541,279) | $134,468,815 | |
Cash | 50,872,552 | |
Dividends receivable | 459,853 | |
Receivable for Fund shares sold | 122,695 | |
Total assets | 185,923,915 | |
Liabilities | ||
Payable for Fund shares redeemed | 145,425 | |
Payable to affiliates | 97,127 | |
Accrued distribution fee | 38,785 | |
Accrued expenses | 32,734 | |
Total liabilities | 314,071 | |
Net assets | $185,609,844 | |
Analysis of net assets | ||
Paid-in capital (unlimited shares authorized, without par value) | $151,804,929 | |
Unrealized net appreciation on investments | 32,927,536 | |
Accumulated net realized gain on investments | 25,597 | |
Undistributed net investment income | 851,782 | |
Net assets applicable to Fund shares outstanding | $185,609,844 | |
Fund shares outstanding | 11,539,484 | |
Net asset value, offering and redemption price per share | $16.08 |
Statement of Operations | ||
Period ended May 31, 2011 | ||
Investment income | ||
Dividends (net foreign tax of $229,584) | $1,606,959 | |
Interest income | 2,597 | |
Gross investment income | 1,609,556 | |
Expenses | ||
Investment adviser fees | 472,743 | |
Distribution fees | 218,870 | |
Audit fees | 22,839 | |
Printing and postage | 19,042 | |
Trustee fees | 11,310 | |
Filing and registration fees | 10,702 | |
Chief Compliance Officer expenses | 8,792 | |
Other expenses | 6,507 | |
Custodian fees | 3,342 | |
Retirement plan custodial fees | 2,929 | |
Legal fees | 1,987 | |
Total gross expenses | 779,063 | |
Less custodian fee credits | (3,342) | |
Net expenses | 775,721 | |
Net investment income | $833,835 | |
Net realized gain from investments and foreign currency | $25,489 | |
Net increase in unrealized appreciation on investments | 10,147,799 | |
Net gain on investments | $10,173,288 | |
Net increase in net assets resulting from operations | $11,007,123 |
The accompanying notes are an integral part of these financial statements.
32 | May 31, 2011 Semi-Annual Report
Sextant International Fund
Statements of Changes in Net Assets | Period ended May 31, 2011 | Year ended Nov. 30, 2010 |
Increase in net assets from operations: | ||
From operations | ||
Net investment income | $833,835 | $600,368 |
Net realized gain on investments | 25,489 | 1,594,850 |
Net increase in unrealized appreciation | 10,147,799 | 6,930,644 |
Net increase in net assets | 11,007,123 | 9,125,862 |
Distributions to shareholders from | ||
Net investment income | - | (585,559) |
Capital gains distribution | - | (1,227,888) |
Total distributions | - | (1,813,447) |
Capital share transactions | ||
Proceeds from sales of shares | 54,335,722 | 78,011,156 |
Value of shares issued in reinvestment of dividends | - | 1,802,654 |
Early redemption fees retained | 32,759 | 23,972 |
Cost of shares redeemed | (30,553,610) | (32,246,915) |
Net increase in net assets | 23,814,871 | 47,590,867 |
Total increase in net assets | 34,821,994 | 54,903,282 |
Net assets | ||
Beginning of period | 150,787,850 | 95,884,568 |
End of period | 185,609,844 | 150,787,850 |
Undistributed net investment income | $851,782 | $17,947 |
Shares of the Fund sold and redeemed | ||
Number of shares sold | 3,435,216 | 5,343,193 |
Number of shares issued in reinvestment of dividends | - | 120,017 |
Number of shares redeemed | (1,930,719) | (2,264,418) |
Net increase in number of shares outstanding | 1,504,497 | 3,198,792 |
Financial Highlights | ||||||
Selected data per share of outstanding capital stock throughout each period: | Period ended | For year ended November 30, | ||||
May 31, 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | |
Net asset value at beginning of period | $15.03 | $14.03 | $11.32 | $16.11 | $13.56 | $11.22 |
Income from investment operations | ||||||
Net investment income | 0.07 | 0.06 | 0.02 | 0.03 | 0.04 | 0.11 |
Net gains (losses) on securities (both realized and unrealized) | 0.98 | 1.12 | 2.72 | (4.79) | 2.93 | 2.34 |
Total from investment operations | 1.05 | 1.18 | 2.74 | (4.76) | 2.97 | 2.45 |
Less distributions | ||||||
Dividends (from net investment income) | - | (0.06) | (0.03) | (0.03) | (0.03) | (0.11) |
Distributions (from capital gains) | - | (0.12) | - | - | (0.39) | - |
Total distributions | - | (0.18) | (0.03) | (0.03) | (0.42) | (0.11) |
Paid-in capital from early redemption fees | 0.00¹ | 0.00¹ | 0.00¹ | 0.00¹ | 0.00¹ | 0.00¹ |
Net asset value at end of period | $16.08 | $15.03 | $14.03 | $11.32 | $16.11 | $13.56 |
Total return | 6.99% | 8.43% | 24.22% | (29.56)% | 21.90% | 21.85% |
Ratios / supplemental data | ||||||
Net assets ($000), end of period | $185,610 | $150,788 | $95,885 | $21,497 | $13,854 | $9,266 |
Ratio of expenses to average net assets | ||||||
Before custodian fee credits | 0.44% | 1.03% | 1.14% | 1.43% | 1.50% | 1.09% |
After custodian fee credits | 0.44% | 1.03% | 1.13% | 1.42% | 1.47% | 1.02% |
Ratio of net investment income after custodian fee credits to average net assets | 0.47% | 0.51% | 0.27% | 0.40% | 0.30% | 0.94% |
Portfolio turnover rate | 3% | 2% | 2% | 10% | 8% | 9% |
¹Amount is less than $0.01 |
The accompanying notes are an integral part of these financial statements.
May 31, 2011 Semi-Annual Report | 33
Notes To Financial Statements
NOTE 1 — Organization
Saturna Investment Trust (the "Trust") was established under Washington State Law as a business trust on February 20, 1987. The Trust is registered as a no-load, open-end, diversified series management investment company under the Investment Company Act of 1940, as amended. Six portfolio series have been created to date: Sextant Short-Term Bond Fund, Sextant Bond Income Fund, Sextant Core Fund, Sextant Growth Fund, Sextant International Fund (the "Funds"), and Idaho Tax-Exempt Fund, which is offered through a separate prospectus and the results of which are contained in a separate report.
Sextant Growth (previously known as Idaho Limited Maturity Tax-Exempt Fund until October 12, 1990, then Northwest Growth Fund until September 28, 1995, when the investment objective of only Northwest stocks was changed) commenced operations as an equity fund on December 30, 1990. Sextant International and Sextant Short-Term Bond began operations September 28, 1995. Sextant Bond Income Fund (previously known as Washington Tax-Exempt Fund until September 28, 1995, when the investment objective of only Washington State Municipal Bonds was changed) began operations on March 2, 1993. Sextant Core Fund commenced operations March 30, 2007.
The investment objective of the Growth and International Funds is long-term capital growth. The investment objectives of the Core Fund are long-term capital appreciation and preservation. The investment objective of the Bond Income and Short-Term Bond Funds is current income, with Short-Term Bond having the additional objective of capital preservation.
NOTE 2 — Unaudited Information
The information in this interim report has not been subjected to independent audit.
NOTE 3 — Significant Accounting Policies
The following is a summary of the significant accounting policies, in conformity with accounting principles generally accepted in the United States of America, which are consistently followed by the Funds in preparation of their financial statements.
Security valuation:
Investments in securities traded on a national securities exchange and over-the-counter securities for which sale prices are available are valued at that price. Securities for which there are no sales are valued at latest bid price.
Fixed-income debt instruments, such as commercial paper, bankers' acceptances and U.S. Treasury Bills, with a maturity of 60 days or less are valued at amortized cost, which approximates market value. Any discount or premium is accreted or amortized on a straight-line basis until maturity.
Foreign markets may close before the time as of which the Funds' share prices are determined. Because of this, events occurring after the close and before the determination of the Funds' share prices may have a material effect on the values of some or all of the Funds' foreign securities. To account for this, the Funds may use outside pricing services for valuation of their non-U.S. securities.
In cases in which there is not a readily available market price, a fair value for such security is determined in good faith by or under the direction of the Board of Trustees.
Security transactions are recorded on trade date. Realized gains and losses on sales of securities are recorded on the identified cost basis.
Foreign currency:
Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions.
The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds' books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
Share valuation:
The net asset value ("NAV") per share of each Fund is calculated by dividing the sum of the value of the securities held by each Fund, plus cash or other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for each Fund, rounded to the nearest cent. The Funds' shares are not priced or traded on days the NYSE is closed. The NAV is the offering and redemption price per share.
The Trustees have adopted certain policies and procedures with respect to frequent trading of Fund shares. The Funds are intended for long-term investment and do not permit rapid trading of their shares. To discourage speculation, shares held less than ninety calendar days, including those held in omnibus accounts at intermediaries, may be assessed a 2% early redemption fee (payable to the Fund) when redeemed. These fees are deducted from the redemption proceeds otherwise payable to the shareowner and retained by the Funds as paid-in capital and included in the daily NAV calculation. The Funds cannot always identify all intermediaries, or detect or prevent trading that violates the Frequent Trading Policy through intermediaries or omnibus accounts.
Fair value measurements:
The Funds have adopted authoritative fair valuation accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value and a discussion in changes in valuation techniques and related inputs during the period. These inputs are summarized in the three broad levels listed below.
Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access.
Level 2 — Observable inputs other than quoted prices in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Trust's own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet
34 | May 31, 2011 Semi-Annual Report
Notes To Financial Statements (continued)
established in the market place, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used as of May 31, 2011 in valuing the Funds' investments carried at value:
Funds | Total | Level 1 Quoted Price | Level 2 Significant Observable Input | Level 3 Significant Unobservable Input |
Short-Term Bond | ||||
Certificate of Deposit | $238,004 | $- | $238,004 | $- |
Corporate Bonds | $3,583,574 | $- | $3,583,574 | $- |
U.S. Government | $357,656 | $- | $357,656 | $- |
Foreign Government Bonds | $478,936 | $- | $478,936 | $- |
Municipal Bonds | $835,803 | $- | $738,047 | $97,756 |
Total Assets | $5,493,973 | $- | $5,396,217 | $97,756 |
Short-Term Bond Level 3 Roll-Forward Municipal Securities | ||||
Beginning balance | $98,080 | |||
Total unrealized gains or losses | $(324) | |||
Purchases | $- | |||
Maturity | $- | |||
Transfers in and/or out of level 3 | $- | |||
Ending Balance | $97,756 | |||
Bond Income | ||||
Corporate Bonds | $2,697,428 | $- | $2,697,428 | $- |
Foreign Government Bonds | $228,973 | $- | $228,973 | $- |
Municipal Bonds | $2,210,165 | $- | $2,210,165 | $- |
Total Assets | $5,136,566 | $- | $5,136,566 | $- |
Core Fund | ||||
Common Stocks | $3,371,124 | $3,371,124 | $- | $- |
Corporate Bonds | $1,228,872 | $- | $1,228,872 | $- |
U.S. Government Agency Bonds | $99,867 | $- | $99,867 | $- |
Municipal Bonds | $201,097 | $- | $201,097 | $- |
Total Assets | $4,900,960 | $3,371,124 | $1,529,836 | $- |
Funds | Total | Level 1 Quoted Price | Level 2 Significant Observable Input | Level 3 Significant Unobservable Input |
Growth Fund | ||||
Common Stocks | $25,568,298 | $25,568,298 | $- | $- |
Total Assets | $25,568,298 | $25,568,298 | $- | $- |
International Fund | ||||
Common Stocks | $134,468,815 | $134,468,815 | $- | $- |
Total Assets | $134,468,815 | $134,468,815 | $- | $- |
During the period ended May 31, 2011, no Fund had transfers between Level 1 and Level 2.
New accounting pronouncement:
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements." ASU No. 2010-06 amends FASB Acounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures, to require additional disclosures regarding fair value measurements. Effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years, entities will need to disclose information about purchases, sales issuances and settlements of Level 3 securities on a gross basis rather than a net basis as currently required. Management is currently evaluating the impact ASU No. 2010-06 will have on the Funds' financial statement disclosures.
In May 2011, FASB issued ASU No. 2011-04 "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements" in GAAP and the International Financial Reporting Standards ("IFRSs"). ASU No. 2011-04 amends FASB ASC Topic 820, Fair Value Measurements and Disclosures, to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and IFRSs. ASU No. 2011-04 is effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. Management is currently evaluating the impact these amendments may have on the Funds' financial statements.
Odd Lots:
The bid-side valuations provided by the independent pricing service are for institutional "round-lot" holdings ("Round Lots"). Round Lots consist of 100 bonds (approximately $100,000 each). Some of a Fund's holdings may consist of less than a Round Lot and are considered "Odd Lots." Odd Lot municipal bonds trade at a discount to Round Lots municipal bonds to compensate for the effect of the fixed costs associated with any trade. To reflect this discount, the Fund applies a discount to the valuation of Odd Lot municipal bonds holdings as shown in the following chart.
Total Face Value | Adjustment to Price |
Under 10,000 | -0.750% |
10,000-24,999 | -0.625% |
25,000-49,999 | -0.500% |
50,000-74,999 | -0.375% |
75,000-99,999 | -0.250% |
100,000 and up | none |
May 31, 2011 Semi-Annual Report | 35
Notes To Financial Statements (continued)
Derivative instruments and hedging activities:
The Funds have adopted the financial accounting reporting rules regulations that require enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity's results of operations and financial position.
During the period ended May 31, 2011, the Funds did not hold any derivative instruments.
Investment concentration:
The Funds may have deposits of cash with the custodian from time to time for one or more reasons. "Other assets (net of liabilities)" in the Funds' Schedules of Investments primarily represents cash on deposit with the custodian. Cash on deposit will vary widely over time. Accounting standards identify these items as a concentration of credit risk, requiring disclosure regardless of the degree of risk. The risk is managed by financial analysis and review of the custodian's operations, resources, and protections available to the Trust. This periodic process includes evaluation of other financial institutions providing investment company custody services.
Federal income taxes:
The Funds intend to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and to make the requisite distributions of income and capital gains to its shareowners sufficient to relieve it from all or substantially all federal income taxes. Therefore, no federal income tax provision is required.
The Funds recognize the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. Management has analyzed the Funds' tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (2008 — 2010), or expected to be taken in the Funds' 2010 tax returns. The Funds identify their major tax jurisdiction as U.S. federal and foreign jurisdictions where the Funds make significant investments; however, the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
Reclassification of capital accounts:
Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share:
Short-Term Bond | Bond Income | |
Undistributed net investment income | $ - | $ - |
Accumulated gains (losses) | - | - |
Paid-in capital | $ - | $ - |
Core | |
Undistributed net investment income | $ 3 |
Accumulated gains (losses) | (3) |
Paid-in capital | $ - |
Growth | International | |
Undistributed net investment income | $ - | $3,138 |
Accumulated gains (losses) | - | (699) |
Paid-in capital | $ - | $(2,439) |
These reclassifications were due to expiration of capital loss carry forwards, return of capital distributions, non-deductible excise tax, and the tax treatment of distributions of short-term gains.
Distributions to shareowners:
For the Sextant Short-Term Bond Fund and Sextant Bond Income Fund, dividends to shareowners from net investment income are paid daily and distributed on the last business day of each month. For the Sextant Core Fund, Sextant Growth Fund, and Sextant International Fund, dividends to shareholders from net investment income are payable at the end of each November.
Distributions of capital gains, if any, are made at least annually, and as required to comply with federal excise tax requirements. Distributions to shareowners are determined in accordance with income tax regulations, and are recorded on the ex-dividend date. Dividends are paid in shares of the Funds, at the net asset value on the payable date. Shareowners may elect to take dividends in cash.
Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
Other:
Interest income is recognized on an accrual basis. Premiums on securities purchased are amortized and discounts are accreted over the lives of the respective securities. Cash dividends from equity securities are recorded as income on the ex-dividend date.
NOTE 4 — Transactions with Affiliated Persons
Under a contract approved annually by Sextant's independent trustees, Saturna Capital Corporation provides investment advisory services and certain other administrative and distribution services required to conduct Trust business. Expenses incurred by the Trust on behalf of the Funds (e.g., professional fees) are allocated to the Funds on the basis of relative daily average net assets. For such services, each of the Funds pays the Adviser a base Investment Advisory and Administrative Services Fee of .60% of average net assets per annum, payable monthly. The Adviser has agreed to certain limits on expenses, as described below.
The base Advisory Fee is subject to adjustment up or down depending on the investment performance of the Fund relative to a specified index.
Performance Adjustment for Sextant Short-Term Bond Fund and Sextant Bond Income Fund:
- For each month in which either of these Funds' total investment return (change in net asset value plus all distributions reinvested) for the one year period through that month outperforms or underperforms the total return of a specified index for that period by 1% or more but less than 2%, the Base Fee is increased or decreased by the annual rate of .10% of the Fund's average daily net assets for the preceding year.
- If the outperformance or underperformance is 2% or more, then the adjustment is at the annual rate of .20%.
Performance adjustment for Sextant Core Fund, Sextant Growth Fund, and Sextant International Fund:
- For each month in which these Funds' total investment returns (change in net asset value plus all distributions reinvested) for the one year period through that month outperforms or underperforms the total return of a specified index for
36 | May 31, 2011 Semi-Annual Report
Notes To Financial Statements (continued)
that period by 1% or more but less than 2%, the Base Fee is increased or decreased by the annual rate of .10% of the Fund's average daily net assets for the preceding year.
- If the outperformance or underperformance is 2% or more but less than 4%, then the adjustment is at the annual rate of .20%.
- If the outperformance or underperformance is 4% or more, the adjustment is at an annual rate of .30%.
Saturna Capital has voluntarily undertaken to limit expenses of Sextant Short-Term Bond Fund to 0.75%, and Sextant Bond Income Fund to 0.90%, through March 31, 2012. It waives its investment advisory and administrative fee to Sextant Short-Term Bond Fund and Sextant Bond Income Fund completely should assets of such Fund be less than $2 million. For the period ended May 31, 2011, the advisory fees incurred were as follows:
Adviser Fees | Adviser Fees Waived | Expense Reimbursement | |
Short-Term Bond | $15,562 | $(15,562) | $(1,491) |
Bond Income | 13,437 | (8,620) | - |
Core | 12,561 | N/A | N/A |
Growth | 46,335 | N/A | N/A |
International | $472,743 | N/A | N/A |
In accordance with the expense waiver noted above, for the period ended May 31, 2011, Saturna Capital waived a portion of the advisory fees of the Sextant Short-Term Bond Fund and Sextant Bond Income Fund. The adviser cannot recoup previously waived fees.
Saturna Brokerage Services, Inc. ("SBS"), a discount brokerage and subsidiary of Saturna Capital Corporation, is registered as a broker-dealer and acts as distributor. The Trust has adopted a Distribution Plan in accordance with Rule 12b-1 under the 1940 Act. The plan provides that the Funds will pay a fee to SBS at an annual rate of .25% of the average net assets of the Funds. During the period ended May 31, 2011, the Trust paid SBS the following amounts:
12b-1 Fees | |
Short-Term Bond | $6,820 |
Bond Income | 6,630 |
Core | 6,936 |
Growth | 32,499 |
International | $218,870 |
For the period ended May 31, 2011, Saturna Capital spent $67,000 from additional resources of its own, and not as an expense of the Funds, to compensate broker-dealers or other financial intermediaries, or their affiliates, in connection with the sale, distribution, retention, and/or servicing of Fund shares. To the extent that these resources are derived from advisory fees paid by the Funds, these payments could be considered "revenue sharing." Any such payments will not change the net asset value or the price of a Fund's shares.
SBS is the primary broker used to effect portfolio transactions for the Trust. SBS currently executes portfolio transactions for the Trust for free (no commissions). Should any change occur in this policy, shareowners would be notified. Transactions effected through other brokers may be subject to a commission payable to that broker.
Saturna Trust Company ("STC"), a subsidiary of Saturna Capital, acts as retirement plan custodian for Fund shareowners. For the period ended May 31, 2011, the Funds incurred the following amounts:
Retirement plan custodial fees | |
Short-Term Bond | $2,178 |
Bond Income | 748 |
Core | 609 |
Growth | 3,119 |
International | $2,929 |
Nicholas Kaiser serves as a trustee and president of the Trust. Also a director and the chairman of Saturna Capital, he is not compensated by the Trust. For the period ended May 31, 2011, the Trust incurred compensation expenses of $15,000 for the Independent Trustees.
The officers are paid by Saturna Capital, and not the Trust, except for Mr. James D. Winship, who is partially compensated by the Trust. Regulations require the Trust to designate a Chief Compliance Officer; Mr. James Winship was retained by the Trust during the period ended May 31, 2011. For this period, the Short-Term Bond, Bond Income, Core, Growth, and International incurred $353; $358; $453; $1,364; and $8,792 of expense, respectively, for the Chief Compliance Officer.
On May 31, 2011, the trustees, officers, and their affiliates as a group owned 23.8%, 26.1%, 43.6%, 8.7% and 1.6% of the outstanding shares of Short-Term Bond, Bond Income, Core, Growth, and International Funds, respectively.
NOTE 5 — Distributions to Shareowners
The tax characteristics of distributions paid during the period ended May 31, 2011, and the fiscal year ended November 30, 2010, were as follows:
Period ended May 31, 2011 | Year ended Nov. 30, 2010 | |
Short-Term Bond Fund | ||
Ordinary income | $52,471 | $113,515 |
Bond Income Fund | ||
Ordinary income | 105,465 | 184,745 |
Core Fund | ||
Ordinary income | - | 81,285 |
Growth Fund | ||
Ordinary income | - | 65,917 |
International Fund | ||
Ordinary income | - | 585,559 |
Long-Term Capital Gain¹ | $- | $1,227,888 |
¹Long-term capital gain dividend designated pursuant to Section 852(b)(3) of the Internal Revenue Code.
NOTE 6 — Federal Income Taxes
The cost basis of investments for federal income tax purposes at May 31, 2011 was as follows:
Short-Term Bond | Bond Income | |
Cost of investments | $5,362,837 | $4,856,262 |
Gross tax unrealized appreciation | 131,136 | 286,522 |
Gross tax unrealized depreciation | - | 6,218 |
Net tax unrealized appreciation | $131,136 | $280,304 |
May 31, 2011 Semi-Annual Report | 37
Notes To Financial Statements (continued)
Core | |
Cost of investments | $4,345,132 |
Gross tax unrealized appreciation | 765,781 |
Gross tax unrealized depreciation | 209,953 |
Net tax unrealized appreciation | $555,828 |
Growth | International | |
Cost of investments | $16,398,871 | $101,541,279 |
Gross tax unrealized appreciation | 9,715,078 | 35,999,582 |
Gross tax unrealized depreciation | 545,651 | 3,072,046 |
Net tax unrealized appreciation | $9,169,427 | $32,927,536 |
As of November 30, 2010, components of distributable earnings on a tax basis were as follows:
Short-Term Bond | Bond Income | |
Net tax unrealized appreciation | $136,310 | $254,129 |
Undistributed ordinary income | 1,373 | - |
Accumulated net realized loss | (24,228) | (67,631) |
Total distributable loss | (22,855) | (67,631) |
Total accumulated earnings | $113,455 | $186,498 |
Core | |
Net tax unrealized appreciation | $108,873 |
Undistributed ordinary income | 250 |
Accumulated net realized loss | (149,657) |
Total distributable loss | (149,407) |
Total accumulated loss | $(40,534) |
Growth | International | |
Net tax unrealized appreciation | $6,122,467 | $22,779,737 |
Undistributed ordinary income | 2,087 | 17,947 |
Accumulated net realized gain | 15,110 | 108 |
Total distributable earnings | 17,197 | 18,055 |
Total accumulated earnings | $6,139,664 | $22,797,792 |
At November 30, 2010, the Funds had capital loss carryforwards as follows, subject to regulation:
Carryforward | Expiration | |
Short-Term Bond | ||
$3,074 | 2013 | |
10,899 | 2014 | |
10,255 | 2016 | |
$24,228 | ||
Bond Income | ||
$13,440 | 2014 | |
4,203 | 2015 | |
29,521 | 2016 | |
20,467 | 2017 | |
$67,631 |
Carryforward | Expiration | |
Core | ||
$74,883 | 2016 | |
62,995 | 2017 | |
11,779 | 2018 | |
$149,657 |
Prior to their expiration, such loss carryforwards may be used to offset future net capital gains realized for federal income tax purposes.
NOTE 7 — Investments
Investment transactions other than short-term investments for the period ended May 31, 2011, were as follows:
Purchases | Sales | |
Short-Term Bond | $1,126,780 | $348,275 |
Bond Income | 672,880 | 436,581 |
Core | 119,889 | 660,094 |
Growth | 2,499,542 | 1,372,380 |
International | $35,648,822 | $3,881,801 |
NOTE 8 — Custodian
Under agreements in place with the Trust's custodian, BNY Mellon, custody fees are reduced by credits for cash balances. Such reductions for the period ended May 31, 2011, were as follows:
Custodian Fee Credits | |
Short-Term Bond | $125 |
Bond Income | $125 |
Core | $128 |
Growth | $622 |
International | $3,342 |
NOTE 9 — Subsequent Events
In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. There were no events or transactions during the period that materially impacted the amounts or disclosures in the Funds' financial statements.
38 | May 31, 2011 Semi-Annual Report
Expenses
All mutual funds have operating expenses. As a Sextant Fund shareowner, you incur ongoing costs, including management fees, distribution (or service) 12b-1 fees, and other fund expenses such as shareowner reports (like this one). Operating expenses, which are deducted from a fund's gross earnings, directly reduce the investment return of a fund. All mutual funds (unlike some other financial investments) only report their results after deduction of operating expenses.
With the Sextant Funds, unlike many other mutual funds, you do not incur sales charges (loads) on purchase payments, reinvested dividends, or other distributions. You do not incur redemption fees, exchange fees, or fees related to Saturna Individual Retirement Accounts. However, to discourage speculation, you may incur a 2% redemption fee for shares held less than 90 calendar days. You may incur fees related to extra services requested by you for your account, such as a checkbook to use for redemptions or bank wires. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
Examples
The following example is based on an investment of $1,000 invested at the beginning of the semi-annual period and held for six months (December 1, 2010, to May 31, 2011).
Actual Expenses
The first line for each Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you have invested, to estimate the expenses you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The Funds also charge for extra services rendered on request, which you may need to add to determine your total expenses, for example $10 per checkbook, $25 per domestic bank wire, $35 per international bank wire, or overnight courier delivery charges.
Hypothetical Example For Comparison Purposes
The second line for each Fund provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio (based on the last six months) and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending balance or expenses you paid for the period. You may use this information to compare ongoing costs of investing in the Fund and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareowner reports of other mutual funds. You may wish to add other fees that are not included in the expenses shown in the table, such as IRA fees (there are no fees on Saturna Capital IRAs, ESAs or HSAs with the Sextant Funds), and charges for extra services such as check writing and bank wires.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or exchange fees (note that the Sextant Funds do not have any such transactional costs). Therefore, the "Hypothetical" line of each fund is useful in comparing ongoing costs only, and may not help you determine the relative total costs of owning different funds.
Beginning Account Value [December 1, 2010] | Ending Account Value [May 31, 2011] | Expenses Paid During Period¹ | Annualized Expense Ratio | |
Short-Term Bond Fund | ||||
Actual | $1,000 | $1,007.70 | $3.80 | 0.76% |
Hypothetical (5% return before expenses) | $1,000 | $1,021.14 | $3.83 | 0.76% |
Bond Income Fund | ||||
Actual | $1,000 | $1,028.00 | $4.55 | 0.90% |
Hypothetical (5% return before expenses) | $1,000 | $1,020.44 | $4.53 | 0.90% |
Core Fund | ||||
Actual | $1,000 | $1,092.50 | $5.84 | 1.12% |
Hypothetical (5% return before expenses) | $1,000 | $1,019.35 | $5.64 | 1.12% |
Growth Fund | ||||
Actual | $1,000 | $1,124.90 | $4.34 | 0.82% |
Hypothetical (5% return before expenses) | $1,000 | $1,020.84 | $4.13 | 0.82% |
International Fund | ||||
Actual | $1,000 | $1,069.90 | $4.54 | 0.88% |
Hypothetical (5% return before expenses) | $1,000 | $1,020.54 | $4.43 | 0.88% |
¹ Expenses are equal to the annualized expense ratio indicated above (based on the most recent semi-annual period of December 1, 2010, through May 31, 2011), multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
May 31, 2011 Semi-Annual Report | 39
Availability of Portfolio Information
- The Sextant Funds file complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.
- The Funds' Forms N-Q are available on the SEC's website at www.sec.gov, and at www.sextantmutualfunds.com.
- The Funds' Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
- The Funds make a complete schedule of portfolio holdings after the end of each month available to investors at www.sextantmutualfunds.com.
Availability of Proxy Voting Information
- A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (a) without charge, upon request, by calling Saturna Capital at 1-800-728-8762; (b) on the Funds' website at www. sextantmutualfunds.com; and (c) on the SEC's website at www.sec.gov.
- Information regarding how each Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (a) without charge, upon request, by calling Saturna Capital at 1-800-728-8762; (b) on the Funds' website at www.sextantmutualfunds.com; and (c) on the SEC's website at www.sec.gov.
Privacy Statement
At Saturna Capital, we understand the importance of maintaining the privacy of your financial information. We want to assure you that we protect the confidentiality of any personal information that you share with us. In addition, we do not sell information about our current or former customers.
In the course of our relationship, we gather certain nonpublic information about you, including your name, address, investment choices, and account information. We do not disclose your information to unaffiliated third parties unless it is necessary to process a transaction; service your account; deliver your account statements, shareholder reports and other information; or as required by law. When we disclose information to unaffiliated third parties, we require a contract to restrict the companies' use of customer information and from sharing or using it for any purposes other than performing the services for which they were required.
We may share information within the Saturna Capital family of companies in the course of informing you about products or services that may address your investing needs.
We maintain our own technology resources to minimize the need for any third party services, and restrict access to information within Saturna. We maintain physical, electronic, and procedural safeguards to guard your personal information. If you have any questions or concerns about the security or privacy of your information please call us at 1-800/SATURNA (1-800-728-8762)
Householding Policy
To reduce expenses, we may mail only one copy of the Funds' prospectus, each annual and semi-annual report, and proxy statements when necessary, to those addresses shared by two or more accounts. If you wish to receive individual and/or more copies of these documents, please call us at 1-800/SATURNA or write to us at Saturna Capital/Sextant Mutual Funds, P.O. Box N, Bellingham, WA 98227. We will begin sending you individual copies 30 days after receiving your request.
If you are currently receiving multiple copies and wish to receive only one copy, please call us at 1-800/SATURNA or write to us at Saturna Capital/Sextant Mutual Funds, P.O. Box N, Bellingham, WA 98227. We will begin sending you a single copy with subsequent report mailings.
www.sextantmutualfunds.com
(graphic omitted) Saturna Capital | This report is issued for the information of the shareowners of the Funds. It is not authorized for distribution to prospective investors unless it is accompanied or preceded by an effective prospectus or summary prospectus relating to the securities of the Funds. The Sextant Funds are series of Saturna Investment Trust. Saturna Brokerage Services, Distributor |
Idaho Tax-Exempt Fund
Semi-Annual Report
May 31, 2011
This report is issued for the information of the shareowners of the Idaho Tax-Exempt Fund. It is not authorized for distribution to prospective investors unless it is accompanied or preceded by an effective prospectus or summary prospectus relating to the securities of the Fund, a series of Saturna Investment Trust.
Performance Summary:
Average Annual Returns as of June 30, 2011: | |||||
10 Years | 5 Years | 3 Years | 1 Year | Expense Ratio¹ | |
Idaho Tax-Exempt Fund | 4.01% | 4.34% | 4.75% | 3.07% | 0.74% |
S&P Idaho Municipal Bond Index | 5.40% | 4.83% | 5.71% | 4.19% | N/A |
Morningstar™ Ratings² | |||||
"Muni Single State Long" Category | Overall | 10 Year | 5 Years | 3 Years | 1 Year |
Morningstar Rating™ | * * * * | * * * | * * * * | * * * * | n/a |
% Rank in category | n/a | 59 | 16 | 25 | 23 |
Funds in category | 325 | 276 | 298 | 325 | 336 |
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 (800) SATURNA or visiting www.idahotaxexemptfund.com. Average annual total returns are historical and include change in share value as well as reinvestment of dividends and capital gains, if any, and do not include the potential deduction of a 2% redemption fee on shares held less than 90 calendar days. Share price, yield, and return will vary and you may have a gain or loss when you sell your shares.
¹ By regulation, the expense ratio shown in this table is as of the Fund's most recent prospectus which is dated March 25, 2011, and incorporates results for the fiscal year ended November 30, 2010. The ratio presented in this table differs from 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 (shown on page 4).
² Source: Morningstar June 30, 2011. Morningstar, Inc. is an independent fund performance monitor. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% in each category receive 5 stars, the next 22.5% 4 stars, the next 35% 3 stars, the next 22.5% 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of performance figures associated with its 3, 5, and 10 year (if applicable) Morningstar Rating metrics.
% Rank in Category: This is the fund's total-return 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.
Please consider an investment's objectives, risks, charges, and expenses carefully before investing. To obtain the Fund's prospectus or summary prospectus which contains this and other important information, please visit www.idahotaxexemptfund.com or call toll free 1-800/SATURNA. Please read the prospectus or summary prospectus carefully before investing.
2 | May 31, 2011 Semi- Annual Report
(graphic omitted)
Fellow Shareowners:
For the six months ended May 31, 2011, Idaho Tax-Exempt Fund returned 2.06%. For the twelve months ended May 31, 2011, the Fund returned 3.46%. At May 31, 2011, the net asset value per share was $5.45 up $0.02 for the period.
Since November 30, 2010, the Fund's outstanding shares decreased 0.4% to 2.79 million. Net assets declined 0.1% to $15.2 million.
Idaho's seasonally adjusted unemployment rate remained below the U.S. unemployment rate from October 2001 to December 2010. Today, Idaho's rate is above the national average and the highest in the Pacific Northwest. Despite recent declines in regional unemployment rates over the last year, Idaho's unemployment rose from 9.2% to 9.4%. Idaho job creation is lagging the nation.
Idaho's recession has exposed the quality of Idaho's underlying credit. On March 31, 2011, Standard & Poors upgraded Idaho to an AA+ rating based on the strength of Idaho's annual budgeting results and funding for long-term health care and pension liabilities. Despite periods of significant volatility in other fixed income asset classes over the last six months, Idaho Tax Exempt Fund's price volatility was subdued, remaining in a four percent range from high to low.
Looking ahead, deleveraging will continue to limit economic growth. U.S. growth and inflation will remain modest. Monetary policy will remain accommodative. Idaho's conservative fiscal credentials will persist. Personal income in Idaho hit an annualized record of $52.3 billion in the first quarter of 2011, led by increases in farming and returns on investments.
We expect Idaho's credit quality to remain solid at the state and local levels.
For those seeking a conservative investment vehicle, the Idaho Tax-Exempt Fund offers a diversified portfolio of high-grade, 100% Idaho issues that provide income exempt from federal income and alternative minimum taxes as well as Idaho state income tax. Idaho municipal bonds should continue to offer real returns for risk-averse, income-oriented investors.
We invite you to review the advantages of the Idaho Tax-Exempt Fund, and we welcome your suggestions. Only with your help can we be certain that we are meeting our primary objective — fulfilling your investment needs.
Respectfully,
July 8, 2011
(graphic omitted)
Nicholas Kaiser,
President
(graphic omitted)
Phelps McIlvaine,
Vice President, Portfolio Manager
Semi- Annual Report May 31, 2011 | 3
Performance Summary
Average Annual Returns as of May 31, 2011 | ||||
10 Years | 5 Years | 1 Year | Expense Ratio1 | |
Idaho Tax-Exempt Fund | 4.12% | 4.30% | 3.46% | 0.74% |
S&P Idaho Municipal Bond Index | 5.43% | 4.69% | 3.76% | N/A |
Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the Index is unmanaged, and expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs, (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in the Fund on May 31, 2001 to an identical amount invested in the Standard & Poor's Idaho Municipal Bond Index, which reflects the types of securities in which the Fund invests. The graph shows that an investment in the Fund would have risen to $14,968 versus $16,972 in the S&P Idaho Municipal Bond 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, nor do they reflect the potential deduction of a 2% redemption fee on shares held less than 90 calendar days. ¹ By regulation, the expense ratio shown in this table is as of the Fund's most recent prospectus which is dated March 25, 2011, and incorporates results for the fiscal year ended November 30, 2010. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods. |
Fund Objective
Idaho Tax-Exempt Fund seeks to provide income free from federal income, federal alternative minimum, and Idaho state income taxes, with a secondary objective of capital preservation.
Industry Allocation | Top Ten Holdings | ||
% of Fund Assets | |||
Industry weightings are shown as a percentage of net assets. | Ada & Canyon Cos. JSD #3 Kuna 5.00% due 09/15/2019 | 3.6% | |
Madison County SCD #321 Rexburg 4.50% due 08/15/2024 | 2.8% | ||
Boise State University Revenue 5.00% due 04/01/2034 | 2.6% | ||
Payette County SCD #373 5.00% due 09/15/2024 | 2.5% | ||
Owyhee & Elmore Cos. JSD #365 Grand View 4.00% due 08/15/2027 | 2.5% | ||
Pocatello ID Water Revenue 4.75% due 02/01/2026 | 2.4% | ||
Canyon County SCD #139 Vallivue 4.35% due 09/15/2025 | 2.4% | ||
Canyon County SCD #131 Nampa 4.75% due 08/15/2019 | 2.3% | ||
Valley & Adams Cos. JSD #421 McCall 4.50% due 08/01/2024 | 2.0% | ||
Bingham County SCD #55 Blackfoot 4.65% due 08/01/2017 | 2.0% |
4 | May 31, 2011 Semi- Annual Report
Schedule of Investments | ||||
Tax-Exempt Municipal Bonds | ||||
Issuer | Coupon/Maturity | Face Amount | Market Value | Percentage of Assets |
Electric Power | ||||
Idaho Falls Electric Revenue | 6.75% due 04/01/2019 | $120,000 | $133,969 | 0.9% |
Financial Services | ||||
Boise City General Fund Revenue Series A | 5.20% due 12/01/2017 | 160,000 | 162,898 | 1.1% |
Boise City General Fund Revenue Series A | 5.25% due 12/01/2018 | 100,000 | 101,745 | 0.7% |
Idaho Bond Bank Authority¹ | 4.00% due 09/15/2019 | 90,000 | 97,897 | 0.6% |
350,000 | 362,540 | 2.4% | ||
General Obligation | ||||
Ada & Canyon Cos. JSD #2 Meridian | 5.00% due 08/15/2020 | 165,000 | 182,804 | 1.2% |
Ada & Canyon Cos. JSD #2 Meridian | 5.00% due 08/15/2021 | 155,000 | 171,069 | 1.1% |
Ada & Canyon Cos. JSD #2 Meridian¹ | 5.50% due 07/30/2015 | 50,000 | 58,175 | 0.4% |
Ada & Canyon Cos. JSD #3 Kuna | 5.00% due 09/15/2019 | 500,000 | 551,900 | 3.6% |
Adams & Washington Cos. JSD #432 | 4.00% due 08/15/2019 | 100,000 | 107,639 | 0.7% |
Bingham County SCD #52 Snake HS | 4.00% due 09/01/2020 | 250,000 | 273,660 | 1.8% |
Bingham County SCD #52 Snake HS | 4.00% due 09/01/2027 | 200,000 | 204,668 | 1.4% |
Bingham County SCD #55 Blackfoot | 4.65% due 08/01/2017 | 285,000 | 299,598 | 2.0% |
Blaine County ID Series A | 4.05% due 08/01/2023 | 150,000 | 157,932 | 1.0% |
Bonneville & Bingham Cos. JSD #93 | 4.50% due 09/15/2016 | 150,000 | 168,599 | 1.1% |
Boundary County SCD #101 | 4.00%due 08/15/2021 | 240,000 | 255,295 | 1.7% |
Canyon County SCD #131 Nampa | 4.75% due 08/15/2019 | 325,000 | 346,528 | 2.3% |
Canyon County SCD #131 Nampa | 5.00% due 08/15/2023 | 105,000 | 111,730 | 0.7% |
Canyon County SCD #134 Middleton | 4.65% due 07/31/2016 | 170,000 | 185,337 | 1.2% |
Canyon County SCD #139 Vallivue | 4.35% due 09/15/2025 | 350,000 | 358,446 | 2.4% |
Fremont & Madison Cos. JSD #215 | 4.00% due 08/15/2019 | 200,000 | 219,820 | 1.4% |
Fremont & Madison Cos. JSD #215 | 4.125% due 09/01/2024 | 130,000 | 137,195 | 0.9% |
Jefferson & Madison Cos. SCD #251 Rigby | 4.25% due 09/01/2024 | 100,000 | 106,320 | 0.7% |
Jerome, Lincoln, & Gooding Cos. JSD #261 | 3.75% due 09/15/2018 | 125,000 | 134,869 | 0.9% |
Jerome, Lincoln, & Gooding Cos. JSD #261 | 5.00% due 09/15/2022 | 250,000 | 275,275 | 1.8% |
Kootenai-Shoshone Area Libraries | 4.25% due 08/01/2021 | 220,000 | 231,202 | 1.5% |
Latah, Nez Perce & Clearwater JSD #283 | 4.50% due 08/15/2027 | 190,000 | 201,618 | 1.3% |
Lemhi County | 4.20% due 08/01/2015 | 100,000 | 103,408 | 0.7% |
Madison County SCD #321 Rexburg | 4.50% due 08/15/2024 | 410,000 | 425,203 | 2.8% |
Madison County SCD #321 Rexburg | 4.50% due 08/15/2026 | 250,000 | 255,790 | 1.7% |
Meridian Free Library District | 5.00% due 08/01/2015 | 100,000 | 100,662 | 0.7% |
Minidoka & Jerome Cos. JSD #331 | 4.375% due 08/15/2024 | 225,000 | 230,400 | 1.5% |
Minidoka & Jerome Cos. JSD #331 | 4.50% due 08/15/2025 | 160,000 | 163,563 | 1.1% |
Minidoka & Jerome Cos. JSD #331¹ | 4.50% due 08/15/2018 | 75,000 | 80,338 | 0.5% |
Minidoka & Jerome Cos. JSD #331¹ | 4.50% due 08/15/2020 | 75,000 | 78,638 | 0.5% |
Nampa ID Series B | 5.00% due 08/01/2020 | 200,000 | 213,350 | 1.4% |
Owyhee & Canyon Cos. JSD #370 Homedale | 4.55% due 08/15/2016 | 160,000 | 185,363 | 1.2% |
Owyhee & Elmore Cos. JSD #365 Grand View | 4.00% due 08/15/2027 | 350,000 | 371,962 | 2.5% |
Payette County SCD #373 | 5.00% due 09/15/2024 | 350,000 | 376,505 | 2.5% |
Twin Falls ID SCD 411 | 4.30% due 09/15/2025 | 120,000 | 124,648 | 0.8% |
Valley & Adams Cos. JSD #421 McCall | 4.50% due 08/01/2024 | 290,000 | 300,658 | 2.0% |
Valley & Adams Cos. JSD #421 McCall | 4.50% due 08/01/2022 | 135,000 | 141,708 | 0.9% |
7,410,000 | 7,891,875 | 51.9% | ||
Medical/Hospitals | ||||
Idaho Health Facility Authority Holy Cross Revenue | 5.25% due 12/01/2014 | 110,000 | 110,365 | 0.7% |
Idaho Health Facility Authority Holy Cross Revenue | 5.00% due 12/01/2022 | 115,000 | 115,340 | 0.8% |
Idaho Health Facility Authority Holy Cross Revenue¹ | 5.00% due 12/01/2028 | 50,000 | 49,830 | 0.3% |
Continued on next page. |
The accompanying notes are an integral part of these financial statements.
Semi- Annual Report May 31, 2011 | 5
Schedule of Investments | ||||
Tax-Exempt Municipal Bonds | ||||
Issuer | Coupon/Maturity | Face Amount | Market Value | Percentage of Assets |
Medical/Hospitals (continued) | ||||
Idaho Health Facility Authority Revenue | 6.00% due 12/01/2023 | $200,000 | $224,580 | 1.5% |
Idaho Health Facility Authority Revenue Group B | 6.25% due 12/01/2033 | 115,000 | 125,619 | 0.8% |
590,000 | 625,734 | 4.1% | ||
Municipal Leases | ||||
Nez Perce County COP | 4.50% due 02/01/2021 | 150,000 | 152,541 | 1.0% |
Pollution Control | ||||
Caldwell ID Par Lien Sewer Revenue 2010 | 4.50% due 09/01/2019 | 100,000 | 112,583 | 0.7% |
Idaho Bond Bank Authority Revenue Series A | 4.30% due 09/01/2022 | 135,000 | 139,790 | 0.9% |
Idaho Bond Bank Authority Revenue Series A¹ | 4.125% due 09/15/2023 | 75,000 | 78,334 | 0.5% |
Moscow ID Sewer Revenue | 4.45% due 05/01/2028 | 200,000 | 206,724 | 1.3% |
510,000 | 537,431 | 3.4% | ||
Real Estate | ||||
Idaho Housing & Finance Association | 4.80% due 06/01/2017 | 100,000 | 104,485 | 0.7% |
Idaho Housing & Finance Association¹ | 5.00% due 07/15/2027 | 50,000 | 52,749 | 0.3% |
Idaho Housing & Finance Association¹ | 5.65% due 07/02/2028 | 85,000 | 87,165 | 0.6% |
Idaho State Building Authority Revenue | 4.50% due 09/01/2023 | 110,000 | 112,612 | 0.7% |
Post Falls LID SPA | 5.00% due 05/01/2021 | 240,000 | 224,465 | 1.5% |
585,000 | 581,476 | 3.8% | ||
State Education | ||||
Boise State University Revenue | 4.50% due 04/01/2027 | 250,000 | 257,215 | 1.7% |
Boise State University Revenue | 5.00% due 04/01/2034 | 385,000 | 396,277 | 2.6% |
Idaho State University Revenue | 4.90% due 04/01/2017 | 150,000 | 151,958 | 1.0% |
Idaho State University Revenue, Series B | 4.625% due 04/01/2024 | 220,000 | 227,003 | 1.5% |
University of Idaho Revenue | 5.00% due 04/02/2028 | 225,000 | 235,948 | 1.6% |
University of Idaho Revenue Series A | 5.00% due 04/01/2019 | 200,000 | 214,880 | 1.4% |
University of Idaho Revenue Series A | 5.00% due 04/01/2020 | 260,000 | 277,111 | 1.8% |
1,690,000 | 1,760,392 | 11.6% | ||
Transportation | ||||
Idaho Housing & Finance Association | 4.60% due 07/15/2023 | 250,000 | 264,920 | 1.7% |
Idaho Housing & Finance Association | 5.00% due 07/15/2024 | 200,000 | 211,534 | 1.4% |
450,000 | 476,454 | 3.1% | ||
Urban Renewal | ||||
Boise City Urban Renewal Agency Lease Revenue | 5.00% due 08/15/2020 | 160,000 | 171,944 | 1.1% |
Boise City Urban Renewal Agency Lease Revenue¹ | 5.00% due 08/15/2021 | 90,000 | 96,126 | 0.6% |
Jerome Urban Renewal District Revenue Series A | 5.40% due 09/01/2013 | 200,000 | 201,590 | 1.4% |
450,000 | 469,660 | 3.1% | ||
Water Supply | ||||
Blackfoot ID COP | 5.80% due 09/01/2018 | 135,000 | 135,340 | 0.9% |
Idaho Bond Bank Authority Revenue | 4.00% due 09/15/2024 | 100,000 | 103,079 | 0.7% |
Idaho Bond Bank Authority Revenue | 5.00% due 09/15/2026 | 250,000 | 264,960 | 1.7% |
Pocatello ID Water Revenue | 4.50% due 02/01/2024 | 100,000 | 102,482 | 0.7% |
Pocatello ID Water Revenue | 4.75% due 02/01/2026 | 350,000 | 361,270 | 2.4% |
935,000 | 967,131 | 6.4% | ||
Total investments | (Cost=$13,483,136) | $13,240,000 | 13,959,203 | 91.8% |
Other assets (net of liabilities) | 1,255,949 | 8.2% | ||
Total net assets (100%) | $15,215,152 | 100.0% | ||
¹ Fair valued. See page 9 |
The accompanying notes are an integral part of these financial statements.
6 | May 31, 2011 Semi- Annual Report
Statement of Assets and Liabilities | ||
As of May 31, 2011 | ||
Assets | ||
Investments in securities, at value (Cost $13,483,136) | $13,959,203 | |
Cash | 1,105,085 | |
Interest receivable | 173,056 | |
Receivable for Fund shares sold | 15,200 | |
Insurance reserve premium | 801 | |
Total assets | 15,253,345 | |
Liabilities | ||
Payable for Fund shares redeemed | 11,791 | |
Accrued expenses | 10,788 | |
Distributions payable | 8,967 | |
Payable to affiliates | 6,647 | |
Total liabilities | 38,193 | |
Net assets | $15,215,152 | |
Analysis of net assets | ||
Paid-in capital (unlimited shares authorized, without par value) | $14,723,864 | |
Unrealized net appreciation on investments | 476,067 | |
Accumulated net realized gain | 11,379 | |
Undistributed tax free income | 3,842 | |
Net assets applicable to Fund shares outstanding | $15,215,152 | |
Fund shares outstanding | 2,794,258 | |
Net asset value, offering, and redemption price per share | $5.45 |
Statement of Operations | ||
Period ended May 31, 2011 | ||
Investment income | ||
Interest income | $294,875 | |
Gross investment income | 294,875 | |
Expenses | ||
Investment adviser fees | 36,937 | |
Audit fees | 2,258 | |
Printing and postage | 1,814 | |
Other expenses | 1,454 | |
Trustee fees | 960 | |
Shareholder servicing | 865 | |
Filing and registration fees | 846 | |
Chief Compliance Officer expenses | 845 | |
Custodian fees | 354 | |
Retirement plan custodial fees | 37 | |
Legal fees | 6 | |
Total gross expenses | 46,376 | |
Less custodian fees credits | (354) | |
Net expenses | 46,022 | |
Net investment income | $248,853 | |
Net realized gain from investments | $11,379 | |
Net increase in unrealized appreciation on investments | 17,531 | |
Net gain on investments | $28,910 | |
Net increase in net assets resulting from operations | $277,763 |
Bond Quality Diversification |
Based on net assets as of May 31, 2011. |
The accompanying notes are an integral part of these financial statements.
Semi- Annual Report May 31, 2011 | 7
Statements of Changes of Net Assets | Period ended May 31, 2011 | Year ended Nov. 30, 2010 |
Increase (decrease) in net assets from operations: | ||
From operations | ||
Net investment income | $248,853 | $485,264 |
Net realized gain on investments | 11,379 | - |
Net increase (decrease) in unrealized appreciation | 17,531 | (10,068) |
Net increase in net assets | 277,763 | 475,196 |
Distributions to shareholders from | ||
Net investment income | (248,853) | (481,474) |
Capital gains distributions | - | (2,357) |
Total distributions | (248,853) | (483,831) |
Capital share transactions | ||
Proceeds from sales of shares | 1,347,740 | 1,740,420 |
Value of shares issued in reinvestment of dividends | 196,150 | 375,933 |
Early redemption fees retained | - | 106 |
Cost of shares redeemed | (1,587,470) | (1,487,732) |
Net increase (decrease) in net assets | (43,580) | 628,727 |
Total increase (decrease) in net assets | (14,670) | 620,092 |
Net assets | ||
Beginning of period | 15,229,822 | 14,609,730 |
End of period | 15,215,152 | 15,229,822 |
Undistributed tax free income | $3,842 | $3,842 |
Shares of the Fund sold and redeemed | ||
Number of shares sold | 252,294 | 319,277 |
Number of shares issued in reinvestment of dividends | 36,572 | 68,783 |
Number of shares redeemed | (300,034) | (271,856) |
Net increase (decrease) in number of shares outstanding | (11,168) | 116,204 |
Financial Highlights | Period ended | For Year Ended November 30, | ||||
Selected data per share of outstanding capital stock throughout each period: | May 31, 2011 | 2010 | 2009 | 2008 | 2007 | 2006 |
Net asset value at beginning of period | $5.43 | $5.43 | $4.94 | $5.30 | $5.32 | $5.27 |
Income from investment operations | ||||||
Net investment income | 0.09 | 0.17 | 0.17 | 0.18 | 0.18 | 0.18 |
Net gains (losses) on securities (both realized & unrealized) | 0.02 | - | 0.49 | (0.36) | (0.02) | 0.06 |
Total from investment operations | 0.11 | 0.17 | 0.66 | (0.18) | 0.16 | 0.24 |
Less distributions | ||||||
Dividends (from net investment income) | (0.09) | (0.17) | (0.17) | (0.18) | (0.18) | (0.18) |
Distributions (from capital gains) | - | 0.00¹ | - | - | - | (0.01) |
Total distributions | (0.09) | (0.17) | (0.17) | (0.18) | (0.18) | (0.19) |
Paid-in capital from early redemption fees | - | 0.00¹ | 0.00¹ | 0.00¹ | 0.00¹ | 0.00¹ |
Net asset value at end of period | $5.45 | $5.43 | $5.43 | $4.94 | $5.30 | $5.32 |
Total return | 2.06% | 3.26% | 13.46% | (3.36)% | 3.02% | 4.66% |
Ratios / supplemental data | ||||||
Net assets ($000), end of period | $15,215 | $15,230 | $14,610 | $11,774 | $10,016 | $8,783 |
Ratio of expenses to average net assets | ||||||
Before custodian credits | 0.31% | 0.74% | 0.85% | 0.77% | 0.89% | 0.87% |
After custodian credits | 0.31% | 0.73% | 0.84% | 0.76% | 0.87% | 0.83% |
Ratio of net investment income after custodian credits to average net assets | 1.68% | 3.23% | 3.19% | 3.51% | 3.35% | 3.40% |
Portfolio turnover rate | 0% | 2% | 3% | 7% | 6% | 24% |
¹Amount is less than $0.01 |
The accompanying notes are an integral part of these financial statements.
8 | May 31, 2011 Semi- Annual Report
Notes To Financial Statements
Note 1 — Organization
Saturna Investment Trust (the "Trust") was established under Washington State Law as a Business Trust on February 20, 1987. The Trust is registered as a no-load, open-end series investment company under the Investment Company Act of 1940, as amended. Five portfolios have been created to date in addition to Idaho Tax-Exempt Fund (the "Fund"). The other five portfolios are offered through a separate prospectus and the results of those funds are contained in a separate report.
The Idaho Tax-Exempt Fund was first authorized to sell shares of beneficial interest on September 4, 1987. The investment objective of the Fund is to provide income free from federal income, federal alternative minimum, and Idaho state income taxes, with a secondary objective of capital preservation.
Note 2 — Unaudited Information
The information in this interim report has not been subjected to independent audit.
Note 3 — Significant Accounting Policies
The following is a summary of the significant accounting policies, in conformity with accounting principles generally accepted in the United States of America, which are consistently followed by the Fund in preparation of its financial statements.
Security valuation:
Debt securities are valued using bid-side valuations provided by an independent service. The service determines valuations using a matrix. This technique considers such factors as yields or prices of bonds of comparable quality, type of issue, coupon maturity, ratings, trading activity, and general market conditions. In the absence of a valuation from an independent service for a security, a fair value for such security is determined in good faith by or under the direction of the Board of Trustees.
Share valuation:
The net asset value ("NAV") per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash or other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for the Fund, rounded to the nearest cent. The Fund's shares are not priced or traded on days the New York Stock Exchange is closed. The NAV is the offering and redemption price per share.
The Trustees have adopted certain policies and procedures with respect to frequent trading of Fund shares. The Fund is intended for long-term investment and does not permit rapid trading of its shares. To discourage speculation, shares held less than 90 calendar days, including those held in omnibus accounts at intermediaries, may be assessed a 2% early-redemption fee (payable to the Fund) when redeemed. These fees are deducted from the redemption proceeds otherwise payable to the shareowner and retained by the Fund as paid-in capital and included in the daily NAV calculation. The Fund cannot always identify all intermediaries, or detect or prevent trading that violates the Frequent Trading Policy.
Fair value measurements:
The Fund has adopted authoritative fair valuation accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value and a discussion in changes in valuation techniques and related inputs during the period. These inputs are summarized in the three broad levels listed below.
Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access.
Level 2 — Observable inputs other than quoted prices in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Trust's own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the market place, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Semi- Annual Report May 31, 2011 | 9
Notes To Financial Statements (continued)
The following table is a summary of the inputs used as of May 31, 2011 in valuing the Fund's investments carried at value:
Fair Value Inputs | Total | Level 1 Quoted Price | Level 2 Significant Observable Input | Level 3 Significant Unobservable Input |
Municipal Bonds | $13,959,203 | $- | $13,279,951 | $679,252 |
Total Assets | $13,959,203 | $- | $13,279,951 | $679,252 |
During the period ended May 31, 2011, Fund had no transfers between Level 1 and Level 2.
Level 3 Roll-Forward Municipal Securities | |
Beginning balance | $683,176 |
Total unrealized gains or losses | 1,076 |
Purchases | - |
Maturity/call | (5,000) |
Transfers in to and/or out of level 3 | - |
Ending balance | $679,252 |
New accounting pronouncement:
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements." ASU No. 2010-06 amends FASB Acounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures, to require additional disclosures regarding fair value measurements. Effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years, entities will need to disclose information about purchases, sales issuances and settlements of Level 3 securities on a gross basis rather than a net basis as currently required. Management is currently evaluating the impact ASU No. 2010-06 will have on the Funds' financial statement disclosures.
In May 2011, FASB issued ASU No. 2011-04 "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements" in GAAP and the International Financial Reporting Standards ("IFRSs"). ASU No. 2011-04 amends FASB ASC Topic 820, Fair Value Measurements and Disclosures, to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and IFRSs. ASU No. 2011-04 is effective for fiscal years beginning after December 15, 2011, and for interim periods within those fiscal years. Management is currently evaluating the impact these amendments may have on the Funds' financial statements.
Odd Lots:
The bid-side valuations provided by the independent pricing service are for institutional "round-lot" holdings ("Round Lots"). Round Lots consist of 100 bonds (approximately $100,000 each). Some of the Fund's holdings consist of less than a Round Lot and are considered "Odd Lots." Odd Lots trade at a discount to Round Lots to compensate for the effect of the fixed costs associated with any trade. To reflect this discount, the Fund applies a discount to the valuation of Odd Lot holdings as shown in the following chart.
Total Face Value | Adjustment to Price |
Under 10,000 | -0.750% |
10,000-24,999 | -0.625% |
25,000-49,999 | -0.500% |
50,000-74,999 | -0.375% |
75,000-99,999 | -0.250% |
100,000 and up | none |
Income taxes:
As a qualified investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes all of its investment income. It is the Fund's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all its taxable and tax-exempt income to its shareowners. As the Fund intends to meet requirements for tax-free income dividends, and the requirements of the Idaho Department of Revenue for income dividends free of Idaho state income tax, no income tax provisions are required.
There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year-end November 30, 2010, or for any other tax years which are open for exam. As of May 31, 2011, open tax years include the tax years ended November 30, 2008, through 2010. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the Fund did not incur any interest or penalties.
Derivative instruments and hedging activities:
The Fund has adopted the financial reporting rules and regulations that require enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity's results of operations and financial position.
During the period ended May 31, 2011, the Fund did not hold any derivative instruments.
Distributions to shareowners:
The Fund's dividends to shareowners from net investment income are paid daily and distributed on the last business day of each month.
10 | May 31, 2011 Semi- Annual Report
Notes To Financial Statements (continued)
Distributions of capital gains, if any, are made at least annually, and as required to comply with federal excise tax requirements. Distributions to shareowners are determined in accordance with income tax regulations, and are recorded on the ex-dividend date. When distributed at month-end, dividends are normally reinvested without charge in additional shares of the Fund, although shareowners may elect to take dividends in cash.
Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
Other:
The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic and political developments in the State of Idaho.
Interest income is recognized on an accrual basis. Discounts on securities purchased are accreted and premiums are amortized over the lives of the respective securities.
Security transactions are recorded on trade date. Realized gains and losses on sales of securities are recorded on the identified cost basis.
Note 4 — Transactions with Affiliated Persons
Under a contract approved annually by the Fund's independent trustees, Saturna Capital provides investment advisory services and certain other administrative and distribution services to conduct the Fund's business. For such services, the Fund pays an annual fee equal to 0.50% of its average daily net assets. For the period ended May 31, 2011, the Fund incurred advisory fee expenses of $36,937. Expenses incurred by the Trust on behalf of the Fund (e.g., legal fees) are allocated to the Fund and the other Funds of the Trust on the basis of relative daily average net assets.
Saturna Capital also acts as transfer agent for the Fund, for which it was paid $865 for the period ended May 31, 2011. Recently, Saturna Capital voluntarily elected to waive the transfer agent fee for an indefinite period, which may cease at Saturna Capital's election, to reduce the Fund's operating expenses.
Saturna Brokerage Services, Inc. ("SBS"), a discount brokerage and subsidiary of Saturna Capital, is registered as a broker-dealer and acts as distributor for the Fund.
Saturna Trust Company ("STC"), a subsidiary of Saturna Capital, acts as a retirement plan custodian for Fund shareowners. For the six months ended May 31, 2011, the Fund incurred retirement plan custodian fees of $37.
Nicholas Kaiser serves as a trustee and president of the Trust. Also a director and the chairman of Saturna Capital, he is not compensated by the Trust. For the period ended May 31, 2011, the Trust incurred compensation expenses of $15,000 for the four independent Trustees. Idaho Tax-Exempt Fund paid $960 of these total expenses.
The officers are paid by Saturna Capital, and not the Trust, except for Mr. James D. Winship, who is partially compensated by the Trust. Regulations require the Trust to designate a Chief Compliance Officer; Mr. James Winship was retained by the Trust during the period ended May 31, 2011. For the period, the Fund compensated Mr. Winship $845 for his services.
On May 31, 2011, the trustees, officers, and their immediate families as a group directly or indirectly owned 7.22% of the outstanding shares of the Fund.
Note 5 — Investments
During the period ended May 31, 2011, the Fund purchased $0 of securities and sold/matured $636,847 of securities.
Note 6 — Distributions to Shareowners
The tax characteristics of distributions paid during the period ended May 31, 2011, and the fiscal year ended November 30, 2010 were as follows:
Period ended May 31, 2011 | 2010 | |
Tax-exempt income | $248,853 | $480,495 |
Taxable income | - | 679 |
Capital gain¹ | $ - | $2,357 |
¹Long-Term Capital Gain dividend designated pursuant to Section 852(b)(3) of the Internal Revenue Code.
The cost basis of investments for federal income tax purposes at May 31, 2011, were as follows:
Cost of investments | $13,483,136 |
Gross unrealized appreciation | 508,770 |
Gross unrealized depreciation | 32,703 |
Net unrealized appreciation | $476,067 |
As of November 30, 2010, the components of distributable earnings on a tax basis were as follows:
Net unrealized appreciation | $458,536 |
Undistributed tax free income | 3,842 |
Total distributable earnings | 3,842 |
Total accumulated earnings | $462,378 |
Semi- Annual Report May 31, 2011 | 11
Notes To Financial Statements (continued)
Note 7 — Custodian
Under the agreement in place with the trust's custodian, BNY Mellon, custody fees are reduced by credits for cash balances. Such reduction for the period ended May 31, 2011, amounted to $354.
Note 8 — Subsequent Events
In preparing these financial statements, the Fund has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. There were no events or transactions during the period that materially impacted the amounts or disclosures in the Fund's financial statements.
12 | May 31, 2011 Semi- Annual Report
Expenses
All mutual funds have operating expenses. As an Idaho Tax-Exempt Fund shareowner, you incur ongoing costs, including management fees and other fund expenses such as shareowner reports (like this one). Operating expenses, which are deducted from a fund's gross earnings, directly reduce the investment return of a fund. All mutual funds (unlike some other financial investments) only report their results after deduction of operating expenses.
With the Idaho Tax-Exempt Fund, unlike many mutual funds, you do not incur sales charges (loads) on investments, reinvested dividends, or other distributions. You do not incur redemption fees, exchange fees, or fees related to Saturna Individual Retirement Accounts. However, to discourage speculation, you may incur a 2% fee for redemption of shares held less than 90 calendar days. You may incur fees related to extra services requested by you for your account, such as a checkbook to use for redemptions or bank wires. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
Example
The following example is based on an investment of $1,000 invested at the beginning of the semi-annual period and held for six months (December 1, 2010, to May 31, 2011).
Actual Expenses
The first line provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you have invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The Fund also charges the following fees for extra services rendered on request, which you may need to add to determine your total expenses: $10 per checkbook, $25 per domestic bank wire, $35 per international bank wire, or overnight courier delivery charges.
Hypothetical Example for Comparison Purposes
The second line provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio (based on the last six months) and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareowner reports of other mutual funds. You may wish to add other fees that are not included in the expenses shown in the table, such as charges for extra services like check writing and bank wires.
Please note that the expenses shown are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or exchange fees (note that Idaho Tax-Exempt Fund does not have any such transactional costs). Therefore, the "Hypothetical" line is useful in comparing ongoing costs only, and may not help you determine the relative total costs of owning different funds.
Beginning Account Value [December 1, 2010] | Ending Account Value [May 31, 2011] | Expenses Paid During Period¹ | |
Actual | $1,000.00 | $1,020.60 | $3.12 |
Hypothetical (5% annual return before expenses) | $1,000.00 | $1,021.84 | $3.13 |
¹ Expenses are equal to Idaho Tax-Exempt Bond Fund's annualized expense ratio of 0.62% (based on the most recent semi-annual period of December 1, 2010, through May 31, 2011), multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semi- Annual Report May 31, 2011 | 13
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14 | May 31, 2011 Semi- Annual Report
Availability of Fund Portfolio Information
- The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.
- The Fund's Form N-Q is available on the SEC's website at www.sec.gov and at www.idahotaxexemptfund.com.
- The Fund's Form N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800/SEC-0330.
- The Fund makes a complete schedule of portfolio holdings after the end of each month available to investors at www.idahotaxexemptfund.com.
Availability of Proxy Voting Information
- A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available (a) without charge, upon request, by calling Saturna Capital at 1-800-728-8762; (b) on the Funds' website at www.idahotaxexemptfund.com; and (c) on the SEC's website at www.sec.gov.
- Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (a) without charge, upon request, by calling Saturna Capital at 1-800-728-8762; (b) on the Funds' website at www.idahotaxexemptfund.com; and (c) on the SEC's website at www.sec.gov.
Privacy Statement
At Saturna Capital, we understand the importance of maintaining the privacy of your financial information. We want to assure you that we protect the confidentiality of any personal information that you share with us. In addition, we do not sell information about our current or former customers.
In the course of our relationship, we gather certain nonpublic information about you, including your name, address, investment choices, and account information. We do not disclose your information to unaffiliated third parties unless it is necessary to process a transaction; service your account; deliver your account statements, shareowner reports, and other information; or as required by law. When we disclose information to unaffiliated third parties, we require a contract to restrict the companies' use of customer information and from sharing or using it for any purposes other than performing the services for which they were required.
We may share information within the Saturna Capital family of companies in the course of informing you about products or services that may address your investing needs.
We maintain our own technology resources to minimize the need for any third party services, and restrict access to information within Saturna. We maintain physical, electronic, and procedural safeguards to guard your personal information. If you have any questions or concerns about the security or privacy of your information please call us at 1-800/SATURNA (1-800-728-8762).
Householding Policy
To reduce expenses, we may mail only one copy of the Fund's prospectus, and each annual and semi-annual report, and proxy statements when necessary, to those addresses shared by two or more accounts. If you wish to receive individual and/or more copies of these documents, please call us at 800/SATURNA or write to us at Saturna Capital/Idaho Tax-Exempt Fund, P.O. Box N, Bellingham, WA 98227. We will begin sending you individual copies 30 days after receiving your request.
If you are currently receiving multiple copies and wish to receive only one copy, please call us at 800/SATURNA or write to us at Saturna Capital/Idaho Tax-Exempt Fund, P.O. Box N, Bellingham, WA 98227. We will begin sending you a single copy with subsequent report mailings.
Semi- Annual Report May 31, 2011 | 15
www.idahotaxexemptfund.com
(graphic omitted)
Saturna Capital
1300 N. State Street
Bellingham, WA 98225
www.saturna.com
(800) SATURNA
Saturna Brokerage Services, Distributor
Item 2. Code of Ethics
Registrant has adopted a code of ethics, which is included with this submission as Exhibit (a)(1) and posted on the Funds' Internet websites at www.sextantmutualfunds.com and www.idahotaxexemptfund.com. Requests may also be made via telephone at 1-800/728-8762, and will be processed within one business day of receiving such request.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) The Schedule of Investments is fully answered in Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
(a) Internal control over financial reporting is under the supervision of the principal executive and financial officers. On June 15, 2011, Mr. Nicholas Kaiser (President) and Mr. Christopher Fankhauser (Treasurer) reviewed the internal control procedures for Saturna Investment Trust and found them reasonable and adequate.
(b) No change.
Item 12. Exhibits
Exhibits included with this filing:
(a)(1) Code of Ethics.
(a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is filed and attached hereto as Exhibit 99.906CERT.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SATURNA INVESTMENT TRUST
By
/s/ Nicholas Kaiser
President
July 29, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By:
/s/ Nicholas Kaiser
President
July 29, 2011
By:
/s/ Christopher Fankhauser
Treasurer
July 29, 2011