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Sextant  Mutual Funds Navigating Today's Volatile Markets

Sextant Bond Income Fund

Overview

Fund Facts

As of September 30, 2014
Net Assets: $7.73 Million
Ticker Symbol: SBIFX
CUSIP: 804096303
Inception Date: March 1, 1993†
Minimum Initial Investment: $1,000
30-Day Yield¹: 2.27%

† The Sextant Bond Income Fund began operation under its current objective Sept. 28, 1995. Previously, it was the Washington Tax-Exempt Fund.

Portfolio Managers

Phelps McIlvaine Phelps McIlvaine

Portfolio manager since 1996

Investment Style

Targeted to investors seeking current income

Dollar-weighted average maturity of ten years or more

Diversified across industries and companies

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

Investment Objective

Current income.

Principal Investment Strategies

The Bond Income Fund invests at least 80% of its assets in bonds. Under normal circumstances, the Fund maintains a dollar-weighted average maturity of ten years or more. The Fund invests at least 65% of assets in bonds rated within the three highest grades (Aaa, Aa or A) and may not invest in a bond rated at time of purchase below the fourth highest grade (Baa).

Principal Risks of Investing in the Fund

The value of Bond Income Fund shares rises and falls as the value of the bonds in which the Fund invests goes up and down. Only consider investing in the Fund if you are willing to accept the risk that you may lose money. Fund share prices, yields, and total returns will change with market fluctuations as well as the fortunes of the countries, industries, and companies in which the Fund invests.

The risks inherent in the Bond Income Fund depend primarily on the terms and quality of the obligations in its portfolio, as well as on bond market conditions. When interest rates rise bond prices fall. When interest rates fall, bond prices go up. Bonds with longer maturities, such as those held by the Bond Income Fund, usually are more sensitive to interest rate changes than bonds with shorter maturities. The Fund entails credit risk, which is the possibility that a bond will not be able to pay interest or principal when due. If the credit quality of a bond is perceived to decline, investors will demand a higher yield, which means a lower price on that bond to compensate for the higher level of risk.

Performance

Daily Price and Stats

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As of November 26, 2014 Ticker Price Change YTD 30-Day Yield¹ Dividend
October 31, 2014
Sextant Bond Income SBIFX $5.25 $0.00 7.92% 2.28% $0.01371 INC

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Average Annual Total Returns

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Month-end, as of October 31, 2014 Ticker 1 Year 3 Year 5 Year 10 Year Expense
Ratio²
30-Day
Yield¹
Sextant Bond Income SBIFX 6.18% 3.41% 4.75% 4.28% 1.12% 2.27%
Citigroup BIG Bond Index 4.09% 2.71% 4.14% 4.73% n/a n/a
Quarter-end, as of September 30, 2014 Ticker 1 Year 3 Year 5 Year 10 Year Expense
Ratio²
30-Day
Yield¹
Sextant Bond Income SBIFX 5.99% 3.02% 4.56% 4.25% 1.12% 2.27%
Citigroup BIG Bond Index 3.90% 2.41% 4.03% 4.72% 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 September 30, 2014

Annual Total ReturnsAnnual Total Returns

The Citigroup Broad Investment Grade Bond Index is a broad-based index of medium and long-term investment grade bond prices that reflects no deductions for fees, expenses, or taxes. Investors cannot invest directly in the index.

Holdings

As of September 30, 2014

Top Ten Holdings

 U.S. Treasury Bond 5.375% 02/15/2031  6.9%
 American Municipal Power Ohio Rev.  4.1%
 Becton Dickinson  4.0%
 Puget Sound Energy  3.9%
 Merck & Co. (Schering)  3.7%
 Blaine Co. ID SCD #61 Hailey  3.6%
 Canadian Natural Resources  3.6%
 Boeing   3.6%
 Johnson Co. KS Bldg Ls/Pr. Rev.BAB  3.4%
 Teva Pharmaceutical   3.3%
Total 40.1%

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

Sector Allocation

Municipal Bonds 31.7% 19.9% Sextant Bond Income Fund Sector Allocation
Health Care 12.5% color box key
Energy 10.2% color box key
Government Bonds 9.7% color box key
Utilities 8.5% color box key
Financials 8.1% color box key
Industrials 5.4% color box key
Foreign Government 2.9% color box key
Materials 2.6% color box key
Consumer Discretionary 1.3% color box key
Cash and equivalents 7.1% color box key

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

Ratings

Morningstar Ratings™

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Month-end Ratings

As of October 31, 2014 Overall 1 Year 3 Year 5 Year 10 Year
Sextant Bond Income — "Long-Term Bond" Category
(SBIFX) ★ ★ ★ n/a ★ ★ ★ ★ ★ ★ ★ ★
% Rank in Category n/a 61 64 61 29
Funds in Category 23 34 23 14 8

Quarter-end Ratings

As of September 30, 2014 Overall 1 Year 3 Year 5 Year 10 Year
Sextant Bond Income — "Long-Term Bond" Category
(SBIFX) ★ ★ n/a ★ ★ ★ ★ n/a
% Rank in Category n/a 67 70 69 60
Funds in Category 21 34 21 14 6

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Morningstar requires a minimum number of funds in a category to issue a Star Rating. As of the most recent quarter-end, there were not enough funds in the "Long-Term Bond" category with a 10 Year history and Morningstar did not issue a rating for the Sextant Bond Income Fund for that time period.

Source: Morningstar, Inc. 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.

A fund's % Rank in Category is the 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.

Distributions

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Record Date Ex, Pay and
Reinvest Date
Qualified
Income
Short-Term
Capital Gains
Long-Term
Capital Gains
Taxable
Income
Total Distributions
(per share)
Sextant Bond Income (SBIFX)
10/30/2014 10/31/2014 $0.00 $0.00 $0.00 $0.01371 $0.01371
09/29/2014 09/30/2014 $0.00 $0.00 $0.00 $0.01302 $0.01302
08/28/2014 08/29/2014 $0.00 $0.00 $0.00 $0.01195 $0.01195
07/30/2014 07/31/2014 $0.00 $0.00 $0.00 $0.01355 $0.01355
06/27/2014 06/30/2014 $0.00 $0.00 $0.00 $0.01275 $0.01275
05/29/2014 05/30/2014 $0.00 $0.00 $0.00 $0.01360 $0.01360
04/29/2014 04/30/2014 $0.00 $0.00 $0.00 $0.01283 $0.01283
03/28/2014 03/31/2014 $0.00 $0.00 $0.00 $0.01506 $0.01506
02/27/2014 02/28/2014 $0.00 $0.00 $0.00 $0.01202 $0.01202
01/30/2014 01/31/2014 $0.00 $0.00 $0.00 $0.01345 $0.01345
12/30/2013 12/31/2013 $0.00 $0.00 $0.00 $0.01401 $0.01401
11/27/2013 11/29/2013 $0.00 $0.00 $0.00 $0.01310 $0.01310
10/30/2013 10/31/2013 $0.00 $0.00 $0.00 $0.01335 $0.01335
09/30/2013 09/27/2013 $0.00 $0.00 $0.00 $0.01349 $0.01349
08/29/2013 08/30/2013 $0.00 $0.00 $0.00 $0.01303 $0.01303
07/30/2013 07/31/2013 $0.00 $0.00 $0.00 $0.01575 $0.01575
06/27/2013 06/28/2013 $0.00 $0.00 $0.00 $0.01343 $0.01343
05/30/2013 05/31/2013 $0.00 $0.00 $0.00 $0.01473 $0.01473
04/29/2013 04/30/2013 $0.00 $0.00 $0.00 $0.01515 $0.01515
03/27/2013 03/28/2013 $0.00 $0.00 $0.00 $0.01465 $0.01465
02/27/2013 02/28/2013 $0.00 $0.00 $0.00 $0.01247 $0.01247
01/30/2013 01/31/2013 $0.00 $0.00 $0.00 $0.01416 $0.01416
12/28/2012 12/31/2012 $0.00 $0.00 $0.00 $0.01457 $0.01457
11/29/2012 11/30/2012 $0.00 $0.00 $0.00 $0.01359 $0.01359
10/30/2012 10/31/2012 $0.00 $0.00 $0.00 $0.01616 $0.01616
09/27/2012 09/28/2012 $0.00 $0.00 $0.00 $0.01261 $0.01261
08/30/2012 08/31/2012 $0.00 $0.00 $0.00 $0.01446 $0.01446
07/30/2012 07/31/2012 $0.00 $0.00 $0.00 $0.01539 $0.01539
06/28/2012 06/29/2012 $0.00 $0.00 $0.00 $0.01344 $0.01344
05/30/2012 05/31/2012 $0.00 $0.00 $0.00 $0.01491 $0.01491

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The Sextant Bond Income Fund intends to distribute its net investment income and net realized capital gains, if any, to its shareowners. The Fund pays income dividends daily, which are reinvested or distributed monthly. As a result of its investment strategy, the Fund expects that its dividends will consist primarily of ordinary income.

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

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

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

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

Fees and 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
Sextant Bond Income SBIFX
Management Fees 0.49%
Distribution (12b-1) Fees 0.25%
Other Expenses 0.38%
Total Annual Fund Operating Expenses 1.12%
Fee Waiver and Expense Reimbursement -0.23%
Total Annual Fund Operating Expenses after Fee Waiver and Expense Reimbursement‡ 0.89%

‡The adviser has committed through March 31, 2015, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's net operating expenses, excluding brokerage commissions, interest, taxes, and extraordinary expenses do not exceed the net operating expense ratio of 0.90%. The committed net operating expense ratio may be changed or terminated only with approval of the Board of Trustees.

¹ A Fund's 30-Day Yield is calculated by dividing the net investment income per share during the preceding 30 days by the net asset value per share on the last day of the period. 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 of the Fund's most recent prospectus or summary prospectus dated March 27, 2014.

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.