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Idaho Tax-Exempt Fund

Overview

Fund Facts

As of June, 2016
Net Assets: $18.21 Million
Ticker Symbol: NITEX
CUSIP: 804096204
Inception Date: September 4, 1987
Minimum Initial Investment: $1,000
30-Day Yield¹: 1.16%

Portfolio Manager

Phelps McIlvaine

Portfolio Manager since 1995

Phelps McIlvaine, Vice President, joined Saturna Capital in 1993. He serves Saturna as Portfolio Manager and a Research Analyst for Idaho Tax-Exempt Fund, Sextant Short-Term Bond Fund and Sextant Bond Income Fund. He also acts as Director for Saturna's wholly-owned brokerage subsidiary, Saturna Brokerage Services. Mr. McIlvaine was born in Illinois in 1953, and has a BA in economics (University of Denver, 1975 Phi Beta Kappa).

Mr. McIlvaine entered the investment business in 1976 and traded US bond and derivative markets from 1977 to 1986 for commercial banks in Boston and Chicago. From 1987 to 1993 he managed fixed income derivative hedge funds in Chicago and London. He serves on the Endowment Committees of the Nooksack Salmon Enhancement Association and the Bellingham Interfaith Coalition.

SCC: Director, Vice President
SBS: Director, Vice President

Patrick Drum MBA, CFA, CFP®

Deputy Portfolio Manager since 2015

Patrick T. Drum, Research Analyst, and Saturna Sustainable Bond Fund and Amana Participation Fund Portfolio Manager joined Saturna Capital in October 2014. He is an adjunct professor of finance for the Sustainable MBA Program at the Bainbridge Graduate Institute (BGI) at Pinchot. Mr. Drum holds a BA in economics from Western Washington University and an MBA from Seattle University Albers School of Business. He is a Chartered Financial Analyst Charterholder and a Certified Financial Planner®.

Prior to joining Saturna Capital, Mr. Drum led environmental, social, and governance (ESG) research and was director of fixed income portfolio management since 2007 at The Arbor Group, a member of UBS Institutional Consulting Services specializing in investment management for global conservation and national wildlife park endowments as well as sustainable-social screened private client portfolios.

Mr. Drum's past experience also includes business valuation at Moss Adams and portfolio management at Washington Mutual Bank. He lives in Bellingham and is a proud father of two. He enjoys sea kayaking, hiking, and being part of the Pacific Northwest community.

Investment Style

Targeted to investors seeking income free from federal income, federal alternative minimum, and Idaho state income taxes

Dollar-weighted average maturity between 6 and 15 years

Investment grade municipal bonds, Idaho focused

Diversified across industries and companies

Actively managed by the award-winning, values-based, global expertise of Saturna Capital

Investment Objective

Idaho Tax-Exempt Fund seeks to provide income free from federal income, federal alternative minimum, and Idaho state income taxes. Preservation of capital is a secondary objective.

Principal Investment Strategies

Idaho Tax-Exempt Fund invests in debt securities issued by the State of Idaho and its political subdivisions. These municipal bonds, notes, and commercial paper may be in various forms, including general obligation bonds, revenue bonds, mortgage bonds, certificates of participation, local improvement district bonds, and refunding bonds.

The Fund buys investment grade bonds, meaning those rated "Baa" or higher by a national bond rating agency (e.g., Moody's Investor's Services), or, if unrated, of equivalent quality in the opinion of the adviser, considered at the time of purchase. At least 40% of bonds that the Fund buys must be rated "A" or higher or, if unrated, of equivalent quality, on a similar basis. Factors used in bond evaluations include such information as the bond district's financial position, population size, employment trends, economic activity, and diversification. The portfolio's dollar-weighted average effective maturity is expected to range between 6 and 15 years. In accordance with the fundamental investment policies of the Fund, under normal circumstances, at least 80% of assets are invested in debt securities generating income exempt from both federal and Idaho income tax.

Principal Risks of Investing

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

Investment strategy risk: Because the Fund concentrates its investments primarily in Idaho municipal securities, its investments are susceptible to factors adversely affecting Idaho. These factors include economic and financial trends as well as political conditions in Idaho and its political subdivisions. Investing primarily in Idaho bonds means the Fund is less diversified than some other types of mutual funds. Concentrating investments in a single state or a small number of security issues may lead to underperformance compared to investments selected in greater number and/or from a wider universe.

Tax risk: The Fund is vulnerable to tax rate changes, either at the Idaho or federal level, since part of municipal securities' value is derived from the recipient's ability to exclude interest payments from taxation. Should this exclusion be reduced, the market for municipal securities, and consequently the Fund's share value, may be adversely affected.

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

Performance

Daily Price & Stats

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As of July 25, 2016 Ticker Price Change YTD 30-Day Yield¹ Dividend
June 30, 2016
Idaho Tax-Exempt NITEX $5.57 $0.00 2.60% 1.07% $0.01070 TXFR

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Average Annual Total Returns

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Month-end, as of June 30, 2016 Ticker 1 Year 3 Year 5 Year 10 Year Expense
Ratio²
30-Day
Yield¹
Idaho Tax-Exempt NITEX 5.55% 4.21% 3.67% 4.00% 0.67% 1.16%
S&P Idaho Municipal Bond Index 7.52% 6.38% 6.03% 5.43% n/a n/a
Quarter-end, as of June 30, 2016 Ticker 1 Year 3 Year 5 Year 10 Year Expense
Ratio²
30-Day
Yield¹
Idaho Tax-Exempt NITEX 5.55% 4.21% 3.67% 4.00% 0.67% 1.16%
S&P Idaho Municipal Bond Index 7.52% 6.38% 6.03% 5.43% n/a n/a

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Growth of $10,000

Growth of $10,000Growth of $10,000

This chart illustrates the performance of a hypothetical $10,000 invested at the beginning of the period and redeemed at the end of the period, and assumes reinvestment of all dividends and capital gains.

Annual Total Returns

As of June 30, 2016

Annual Total ReturnsAnnual Total Returns

The Standard and Poor's Idaho Municipal Bond Index is a broad-based index of Idaho municipal bond prices. Investors cannot invest directly in the index.

Holdings

As of June 30, 2016

Top Ten Holdings

University of Idaho Revenue 3.0%
Twin Falls Co. ID SCD #414 Kimberly 2.9%
Boise City Urban Renewal Lease Rev 2.7%
Idaho State Building Authority 2.7%
Canyon Co. ID SCD #134 Middleton 2.6%
Ada & Canyon Cos. ID JSD #3 Kuna 2.6%
Idaho Bond Bank Authority 2.5%
Boise State University ID Revenues 2.4%
Madison Co. ID SCD #321 Rexburg 2.3%
Ada & Canyon Co.'s ID #2 Meridian 2.2%
Total 25.9%

View full month-end portfolio schedule. This link will open a new browser window.

Sector Allocation

General Obligation 58.8% color box key Idaho Tax-Exempt Fund Sector Allocation
State Education 12.3% color box key
Real Estate 4.5% color box key
Water Supply 4.1% color box key
Transportation 4.1% color box key
Medical - Hospitals 3.7% color box key
Municipal Leases 3.6% color box key
Financial Services 3.0% color box key
Pollution Control 3.0% color box key
Power Generation 0.2% color box key
Cash and equivalents 2.7% color box key

Security and sector weightings are shown as a percentage of total net assets.

Distributions

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Record Date Ex, Pay and Reinvest Date Tax-Free Income Qualified / Taxable Income Short-Term Capital Gains Long-Term Capital Gains Total Distributions (per share)
06/29/2016 06/30/2016 $0.01070 $0.00 $0.00 $0.00 $0.01070
05/27/2016 05/31/2016 $0.01284 $0.00 $0.00 $0.00 $0.01284
04/28/2016 04/29/2016 $0.01115 $0.00 $0.00 $0.00 $0.01115
03/30/2016 03/31/2016 $0.01316 $0.00 $0.00 $0.00 $0.01316
02/26/2016 02/29/2016 $0.01267 $0.00 $0.00 $0.00 $0.01267
01/28/2016 01/29/2016 $0.01167 $0.00 $0.00 $0.00 $0.01167
12/30/2015 12/31/2015 $0.01297 $0.00 $0.00 $0.00 $0.01297
11/27/2015 11/30/2015 $0.01097 $0.00 $0.00 $0.00400 $0.01497
10/29/2015 10/30/2015 $0.01147 $0.00 $0.00 $0.00 $0.01147
09/29/2015 09/30/2015 $0.01124 $0.00 $0.00 $0.00 $0.01124
08/28/2015 08/31/2015 $0.01187 $0.00 $0.00 $0.00 $0.01187
07/30/2015 07/31/2015 $0.01306 $0.00 $0.00 $0.00 $0.01306
06/29/2015 06/30/2015 $0.01299 $0.00 $0.00 $0.00 $0.01299
05/28/2015 05/29/2015 $0.01208 $0.00 $0.00 $0.00 $0.01208
04/29/2015 04/30/2015 $0.01218 $0.00 $0.00 $0.00 $0.01218
03/30/2015 03/31/2015 $0.01429 $0.00 $0.00 $0.00 $0.01429
02/26/2015 02/27/2015 $0.01085 $0.00 $0.00 $0.00 $0.01085
01/29/2015 01/30/2015 $0.01193 $0.00 $0.00 $0.00 $0.01193
12/30/2014 12/31/2014 $0.01300 $0.00 $0.00 $0.00 $0.01300
11/26/2014 11/28/2014 $0.01242 $0.00 $0.00 $0.00329 $0.01571
10/30/2014 10/31/2014 $0.01204 $0.00 $0.00 $0.00 $0.01204
09/29/2014 09/30/2014 $0.01333 $0.00 $0.00 $0.00 $0.01333
08/28/2014 08/29/2014 $0.01231 $0.00 $0.00 $0.00 $0.01231
07/30/2014 07/31/2014 $0.01376 $0.00 $0.00 $0.00 $0.01376
06/27/2014 06/30/2014 $0.01283 $0.00 $0.00 $0.00 $0.01283
05/29/2014 05/30/2014 $0.01360 $0.00 $0.00 $0.00 $0.01360
04/29/2014 04/30/2014 $0.01255 $0.00 $0.00 $0.00 $0.01255
03/28/2014 03/31/2014 $0.01461 $0.00 $0.00 $0.00 $0.01461
02/27/2014 02/28/2014 $0.01174 $0.00 $0.00 $0.00 $0.01174
01/30/2014 01/31/2014 $0.01304 $0.00 $0.00 $0.00 $0.01304

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The Idaho Tax-Exempt Fund intends to distribute its net investment income and net realized capital gains, if any, to its shareowners. The Fund accounts for its distributions as taxable capital gains (originating from net realized gains on portfolio transactions), taxable ordinary income (originating from dividends, taxable interest, and certain other types of gains), or tax-exempt income (originating from interest on municipal bonds). Income dividends are paid daily and reinvested or distributed monthly. Distributions from capital gains (which may be taxable at different rates depending on the length of time the Fund holds its assets) are paid at the end of November.

Distributions for the last two years are listed in the table above. For prior distributions, please contact a Saturna representative.

Regulations regarding distributions can be complex, and there are several methods for managing your tax liability. Please consult a tax advisor about your particular circumstances. You also may obtain helpful information by calling the Internal Revenue Service at 1-800-829-1040 or visiting www.irs.gov.

If applicable, distribution information will appear on Form 1099-DIV, typically sent in late January. For more information on tax documentation, please visit our Tax Documentation page.

The Fund pays per-share distributions to shareowners invested on the Record Date. On the Payable Date, the fund's share price is reduced by the amount of its distribution.

Fees & Expenses

The following tables describe the fees and expenses mutual fund shareowners may pay. There are no shareowner fees (fees paid directly from an investment). The Fund imposes no sales charge (load) on purchases or reinvested dividends, or any deferred sales charge (load) upon redemption. There are no exchange fees or account fees. Investments in mutual funds are subject to ongoing expenses. Saturna endeavors to keep these fees low. We encourage you to compare the following fees with similar fees of other no-load mutual funds:

Shareowner Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price): 0%
Maximum Deferred Sales Charge (Load): 0%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends/Distributions: 0%
Early Redemption Fee: 0%
Exchange Fee (between Saturna's affiliated funds): 0%
Maximum Account Fee: 0%
Annual Fund Operating Expenses (expenses deducted from Fund Assets)²
Idaho Tax-Exempt Fund
Management Fees 0.50%
Distribution (12b-1) Fees None
Other Expenses 0.17%
Total Annual Fund Operating Expenses 0.67%

¹ A Fund's 30-Day Yield, sometimes referred to as "standardized yield" or "SEC yield,” is expressed as an annual percentage rate using a method of calculation adopted by the Securities and Exchange Commission (SEC). The 30-Day Yield provides an estimate of a Fund's investment income rate, but may not equal the actual income distribution rate.

² Expense ratios shown are as stated in the Fund's most recent prospectus or summary prospectus dated March 29, 2016.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than performance data quoted. Standardized returns current to the most recent month-end can be obtained by visiting our Month-End Returns Page or by calling toll free 1-800-SATURNA. The Fund cannot guarantee that its investment objective will be met. Securities of the Fund are offered and sold only through the prospectus or summary prospectus.

Check out the background of Saturna Brokerage Services, Inc. or any firm or investment professional on FINRA's BrokerCheck.