Following Principles of Islamic Finance


Amana Mutual Funds Trust Prospectus September 28, 2018

Amana Mutual Funds Trust

Income Fund

Growth Fund

Developing World Fund

Participation Fund

Investor

(AMANX)

Investor

(AMAGX)

Investor

(AMDWX)

Investor

(AMAPX)

Institutional

(AMINX)

Institutional

(AMIGX)

Institutional

(AMIDX)

Institutional

(AMIPX)

 

Prospectus

September 28, 2018

 

Investments are consistent with Islamic principles.

Please read this Prospectus and keep it for future reference. It is designed to provide important information and to help investors decide if a Fund's goals match their own.

Neither the Securities and Exchange Commission nor any state securities authority has approved or disapproved these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


Table of Contents:

Amana Income Fund 3
Amana Growth Fund 6
Amana Developing World Fund 9
Amana Participation Fund 12
Investment Objectives 16
Principal Investment Strategies 16
Principal Risks 17
Investment Information 19
Investment Adviser 19
Fund Share Pricing 20
Purchase and Sale of Fund Shares 20
Distributions 22
Purchase and Sale of Fund Shares Through Financial Intermediaries 22
Frequent Trading Policy 22
Tax Consequences 23
Distribution Arrangements 24
Financial Highlights 25

2


Amana Income Fund

Investment Objective

Current income and preservation of capital, consistent with Islamic principles. Current income is the Income Fund's primary objective.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Income Fund.

Shareowner Fees

None.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)

Income Fund

Investor Shares

Institutional Shares

Management Fees

0.82%

0.82%

Distribution (12b-1) Fees

0.25%

None

Other Expenses

0.03%

0.05%

Total Annual Fund Operating Expenses

1.10%

0.87%

Example

The example below is intended to help investors compare the cost of investing in shares of the Income Fund with the cost of investing in other mutual funds.

The example assumes an investor invests $10,000 in shares of the Income Fund for the time periods indicated and then redeems all shares at the end of those periods. The example also assumes that the investment has a 5% return each year and that the Fund's operating expenses remain the same. Although actual costs may be higher or lower, based on these assumptions an investor's expenses would be:

 

1 year

3 years

5 years

10 years

Investor Shares

$112

$350

$606

$1,340

Institutional Shares

$89

$278

$482

$1,073

Portfolio Turnover

The Income Fund may have transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in taxable distributions. Personal income taxes, which are not reflected in annual fund operating expenses or in the example, affect your after-tax returns. During the most recent fiscal year, the Fund's portfolio turnover rate was 0.69% of the average value of its portfolio.

Principal Investment Strategies

The Income Fund invests primarily in dividend-paying common stocks, including foreign stocks. Investment decisions are made in accordance with Islamic principles. Generally, Islamic principles require that investors share in profit and loss, that they receive no usury or interest, and that they do not invest in a business that is prohibited by Islamic principles. Some of the businesses not permitted are alcohol, pornography, insurance, gambling, pork processing, and interest-based banks or finance associations.

The Income Fund does not make any investments that pay interest. Islamic principles discourage speculation, and the Fund tends to hold investments for several years.

The Income Fund diversifies its investments across industries and companies, and principally follows a large-cap value investment style. Common stock purchases are restricted to dividend-paying companies. The Fund seeks companies demonstrating both Islamic and sustainable characteristics. The Fund's adviser (Saturna Capital Corporation) considers issuers with sustainable characteristics to be those issuers that are more established, consistently profitable, and financially strong, and with robust policies in the areas of the environment, social responsibility, and corporate governance ("ESG"). The Fund's adviser employs a sustainable rating system based on its own, as well as third-party, data to identify issuers believed to present low risks in ESG. The Fund's adviser also uses negative screening to exclude security issuers primarily engaged in higher ESG risk businesses such as alcohol, tobacco, pornography, weapons, gambling, and fossil fuel extraction.

It is the policy of the Income Fund, under normal circumstances, to invest at least 80% of its total net assets in income-producing securities, primarily dividend-paying common stocks.

Principal Risks of Investing

Market risk: The value of Income Fund shares rises and falls as the value of the securities in which the Fund invests goes up and down. Consider investing in the Fund only if you are willing to accept the risk that you may lose money. Fund share prices, yields, and total returns will change with the fluctuations in the securities markets as well as the fortunes of the industries and companies in which the Fund invests.

Investment strategy risk: Islamic principles restrict the Income Fund's ability to invest in certain market sectors, such as financial companies and conventional fixed-income securities. The adviser believes that Islamic and sustainable

3

Amana Income Fund

investing may mitigate security-specific risks, but the screens used in connection with these strategies reduce the investable universe, which may limit investment opportunities and adversely affect the Fund's performance. Because Islamic principles preclude the use of interest-paying instruments, cash reserves do not earn income.

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

Foreign investing risk: The Income Fund may invest in securities that are not traded in the United States when market conditions or investment opportunities arise that, in the judgment of the adviser (Saturna Capital Corporation), warrant such investment. Investments in the securities of foreign issuers may involve risks in addition to those normally associated with investments in the securities of US issuers. All foreign investments are subject to risks of: (1) foreign political and economic instability; (2) adverse movements in foreign exchange rates; (3) currency devaluation; (4) the imposition or tightening of exchange controls or other limitations on repatriation of foreign capital; (5) changes in foreign governmental attitudes towards private investment, including potential nationalization, increased taxation, or confiscation of assets; and (6) differing reporting, accounting, and auditing standards of foreign countries.

Performance

Annual Total Return

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

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

Amana Income Fund Volatility

Best Quarter

Q2 2009

12.39%

Worst Quarter

Q3 2011

-14.15%

The year-to-date return as of the most recent calendar quarter (which ended June 30, 2018) was -3.91%.

4

Amana Income Fund

Average Annual Total Returns

The table below presents the average annual returns for the Income Fund and provides an indication of the risks of investing in the Fund by showing how the Fund's average annual returns for 1, 5, and 10 years compare to those of a broad-based market index.

 

Periods ended December 31, 2017

1 Year

5 Years

10 Years

Income Fund Investor Shares

AMANX

 

Return before taxes

21.69%

12.84%

8.05%

Return after taxes on distributions

20.21%

11.92%

7.49%

Return after taxes on distributions and sale of Fund shares

13.41%

9.94%

6.28%

S&P 500 Index
(reflects no deduction for fees, expenses, or taxes)

21.83%

15.80%

8.49%

 

1 Year

Since Inception
September 25, 2013

Income Fund Institutional Shares

AMINX

 

Return before taxes

21.97%

10.76%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of any state or local taxes. After-tax returns illustrated are only for the Investor Shares; after-tax returns for Institutional Shares will vary. Actual after-tax returns depend on an investor's tax situation and likely differ from those illustrated. After-tax illustrations are not relevant to retirement plans, corporations, trusts, or other investors that are taxed at special rates.

Investment Adviser

Saturna Capital Corporation is the Income Fund's investment adviser.

Portfolio Managers

Since 1990, Mr. Nicholas Kaiser CFA, chairman of Saturna Capital Corporation, has been primarily responsible for the day-to-day management of the Income Fund. Since 2012, Mr. Scott Klimo CFA, chief investment officer at Saturna Capital Corporation, has been the deputy portfolio manager for the Fund. Since July 2018, and previously from 2008 to 2012, Mr. Monem Salam MBA, a global portfolio manager at Saturna Capital Corporation, has been a deputy portfolio manager for the Fund.

Purchase and Sale of Fund Shares

You may open an account and purchase Income Fund Investor Shares by sending a completed application, a photocopy of a government-issued identity document, and a check for $250 or more payable to the Amana Income Fund.

Income Fund Institutional Shares are available with a minimum investment of $100,000.

Shareowners may purchase additional shares at any time in minimum amounts of $25.

Shareowners may redeem shares of their investment on any business day by these methods:

Written request

Write:       Amana Mutual Funds
                Box N
                Bellingham, WA 98227-0596

Or Fax:     360-734-0755

Telephone request

Call:   888-732-6262 or 360-734-9900

Online

Visit:   www.amanafunds.com

Tax Information

Distributions you receive from the Fund may be taxed as ordinary income, qualified dividend income, or capital gains.

Financial Intermediary Compensation

If you purchase the Income Fund through a broker-dealer or other financial intermediary (such as a bank or investment adviser), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your broker-dealer or other financial intermediary's website for more information.

5

Amana Growth Fund

Investment Objective

Long-term capital growth, consistent with Islamic principles.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Growth Fund.

Shareowner Fees

None.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)

Growth Fund

Investor Shares

Institutional Shares

Management Fees

0.81%

0.81%

Distribution (12b-1) Fees

0.25%

None

Other Expenses

0.02%

0.04%

Total Annual Fund Operating Expenses

1.08%

0.85%

Example

The example below is intended to help investors compare the cost of investing in shares of the Growth Fund with the cost of investing in other mutual funds.

The example assumes an investor invests $10,000 in shares of the Growth Fund for the time periods indicated and then redeems all shares at the end of those periods. The example also assumes that the investment has a 5% return each year and that the Fund's operating expenses remain the same. Although actual costs may be higher or lower, based on these assumptions an investor's expenses would be:

 

1 year

3 years

5 years

10 years

Investor Shares

$110

$343

$595

$1,317

Institutional Shares

$87

$271

$471

$1,049

Portfolio Turnover

The Growth Fund may have transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in taxable distributions. Personal income taxes, which are not reflected in annual fund operating expenses or in the example, affect your after-tax returns. During the most recent fiscal year, the Fund's portfolio turnover rate was 0.00% of the average value of its portfolio.

Principal Investment Strategies

The Growth Fund invests only in common stocks, including foreign stocks. Investment decisions are made in accordance with Islamic principles. Generally, Islamic principles require that investors share in profit and loss, that they receive no usury or interest, and that they do not invest in a business that is prohibited by Islamic principles. Some of the businesses not permitted are alcohol, pornography, insurance, gambling, pork processing, and interest-based banks or finance associations.

The Growth Fund does not make any investments that pay interest. Islamic principles discourage speculation, and the Fund tends to hold investments for several years.

The Growth Fund diversifies its investments across industries and companies, and principally follows a large-cap value investment style. The Fund favors companies expected to grow earnings and stock prices faster than the economy. The Fund may also invest in smaller and less seasoned companies. The Fund seeks companies demonstrating both Islamic and sustainable characteristics. The Fund's adviser (Saturna Capital Corporation) considers issuers with sustainable characteristics to be those issuers that are more established, consistently profitable, and financially strong, and with robust policies in the areas of the environment, social responsibility, and corporate governance ("ESG"). The Fund's adviser employs a sustainable rating system based on its own, as well as third-party, data to identify issuers believed to present low risks in ESG. The Fund's adviser also uses negative screening to exclude security issuers primarily engaged in higher ESG risk businesses such as alcohol, tobacco, pornography, weapons, gambling, and fossil fuel extraction.

It is the policy of the Growth Fund, under normal circumstances, to invest at least 80% of total net assets in common stocks. The Fund's adviser (Saturna Capital Corporation) selects investments primarily on past earnings and revenue growth rates, and the expectation of increases in earnings and share price.

Principal Risks of Investing

Market risk: The value of Growth Fund shares rises and falls as the value of the stocks in which the Fund invests goes up and down. Consider investing in the Fund only if you are willing to accept the risk that you may lose money. Fund share prices, yields, and total returns will change with the fluctuations in the securities markets as well as the fortunes of the industries and companies in which the Fund invests.

6

Amana Growth Fund

Small-cap risk: The smaller and less seasoned companies that may be in the Growth Fund have a greater risk of price volatility. Growth stocks, which can be priced on future expectations rather than current results, may decline substantially when expectations are not met or general market conditions weaken.

Investment strategy risk: Islamic principles restrict the Growth Fund's ability to invest in certain market sectors, such as financial companies and conventional fixed-income securities. The adviser believes that Islamic and sustainable investing may mitigate security-specific risks, but the screens used in connection with these strategies reduce the investable universe, which may limit investment opportunities and adversely affect the Fund's performance. Because Islamic principles preclude the use of interest-paying instruments, cash reserves do not earn income.

Equity securities risk: Equity securities may experience significant volatility in response to economic or market conditions or adverse events that affect a particular industry, sector, or company. Larger companies may have slower rates of growth as compared to smaller, faster-growing companies. Smaller companies may have more limited financial resources, products, or services, and tend to be more sensitive to changing economic or market conditions. The Fund also tends to favor growth stocks, which tend to trade based on future earnings expectations, and may be more volatile than slower-growing value stocks, especially when market expectations are not met.

Foreign investing risk: The Growth Fund may invest in securities that are not traded in the United States when market conditions or investment opportunities arise that, in the judgment of the adviser (Saturna Capital Corporation), warrant such investment. Investments in the securities of foreign issuers may involve risks in addition to those normally associated with investments in the securities of US issuers. All foreign investments are subject to risks of: (1) foreign political and economic instability; (2) adverse movements in foreign exchange rates; (3) currency devaluation; (4) the imposition or tightening of exchange controls or other limitations on repatriation of foreign capital; (5) changes in foreign governmental attitudes towards private investment, including potential nationalization, increased taxation, or confiscation of assets; and (6) differing reporting, accounting, and auditing standards of foreign countries.

Performance

Annual Total Return

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

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

Amana Growth Fund Volatility

Best Quarter

Q3 2010

12.77%

Worst Quarter

Q4 2008

-18.34%

The year-to-date return as of the most recent calendar quarter (which ended June 30, 2018) was 3.69%.

7

Amana Growth Fund

Average Annual Total Returns

The table below presents the average annual returns of the Growth Fund and provides an indication of the risks of investing in the Fund by showing how the Fund's average annual returns for 1, 5, and 10 years compare to those of a broad-based market index.

 

Periods ended December 31, 2017

1 Year

5 Years

10 Years

Growth Fund Investor Shares

AMAGX

 

Return before taxes

28.98%

14.12%

8.59%

Return after taxes on distributions

26.03%

12.12%

7.62%

Return after taxes on distributions and sale of Fund shares

17.94%

10.90%

7.02%

S&P 500 Index
(reflects no deduction for fees, expenses, or taxes)

21.83%

15.80%

8.49%

 

1 Year

Since Inception
September 25, 2013

Growth Fund Institutional Shares

AMIGX

 

Return before taxes

29.29%

13.67%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of any state or local taxes. After-tax returns illustrated are only for the Investor Shares; after-tax returns for Institutional Shares will vary. Actual after-tax returns depend on an investor's tax situation and likely differ from those illustrated. After-tax illustrations are not relevant to retirement plans, corporations, trusts, or other investors that are taxed at special rates.

Investment Adviser

Saturna Capital Corporation is the Growth Fund's investment adviser.

Portfolio Managers

Since 1994, Mr. Nicholas Kaiser CFA, chairman of Saturna Capital Corporation, has been primarily responsible for the day-to-day management of the Growth Fund. Since 2012, Mr. Scott Klimo CFA, chief investment officer at Saturna Capital Corporation, has been the deputy portfolio manager for the Fund. Since July 2018, and previously from 2008 to 2012, Mr. Monem Salam MBA, a global portfolio manager at Saturna Capital Corporation, has been a deputy portfolio manager for the Fund.

Purchase and Sale of Fund Shares

You may open an account and purchase Growth Fund Investor Shares by sending a completed application, a photocopy of a government-issued identity document, and a check for $250 or more payable to the Amana Growth Fund.

Growth Fund Institutional Shares are available with a minimum investment of $100,000.

Shareowners may purchase additional shares at any time in minimum amounts of $25.

Shareowners may redeem shares of their investment on any business day by these methods:

Written request

Write:       Amana Mutual Funds
                Box N
                Bellingham, WA 98227-0596

Or Fax:     360-734-0755

Telephone request

Call:   888-732-6262 or 360-734-9900

Online

Visit:   www.amanafunds.com

Tax Information

Distributions you receive from the Fund may be taxed as ordinary income, qualified dividend income, or capital gains.

Financial Intermediary Compensation

If you purchase the Growth Fund through a broker-dealer or other financial intermediary (such as a bank or investment adviser), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your broker-dealer or other financial intermediary's website for more information.

8

Amana Developing World Fund

Investment Objective

Long-term capital growth, consistent with Islamic principles.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Developing World Fund.

Shareowner Fees

None.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)

Developing World Fund

Investor Shares

Institutional Shares

Management Fees

0.85%

0.85%

Distribution (12b-1) Fees

0.25%

None

Other Expenses

0.21%

0.28%

Total Annual Fund Operating Expenses

1.31%

1.13%

Example

The example below is intended to help investors compare the cost of investing in shares of the Developing World Fund with the cost of investing in other mutual funds.

The example assumes an investor invests $10,000 in shares of the Developing World Fund for the time periods indicated and then redeems all shares at the end of those periods. The example also assumes that the investment has a 5% return each year and that the Fund's operating expenses remain the same. Although actual costs may be higher or lower, based on these assumptions an investor's expenses would be:

 

1 year

3 years

5 years

10 years

Investor Shares

$133

$415

$718

$1,579

Institutional Shares

$115

$359

$622

$1,375

Portfolio Turnover

The Developing World Fund may have transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in taxable distributions. Personal income taxes, which are not reflected in annual fund operating expenses or in the example, affect your after-tax returns. During the most recent fiscal year, the Fund's portfolio turnover rate was 19.64% of the average value of its portfolio.

Principal Investment Strategies

Under normal circumstances, the Developing World Fund invests at least 80% of total net assets in common stocks of companies with significant exposure (50% or more of production assets, or revenues) to countries with developing economies and/or markets. Investment decisions are made in accordance with Islamic principles. Generally, Islamic principles require that investors share in profit and loss, that they receive no usury or interest, and that they do not invest in a business that is prohibited by Islamic principles. Some of the businesses not permitted are alcohol, pornography, insurance, gambling, pork processing, and interest-based banks or finance associations.

The Developing World Fund does not make any investments that pay interest. Islamic principles discourage speculation, and the Funds tend to hold investments for several years.

The Developing World Fund diversifies its investments across the industries, companies, and countries of the developing world, and principally follows a large-cap value investment style. The Fund seeks companies demonstrating both Islamic and sustainable characteristics. The Fund's adviser considers issuers with sustainable characteristics to be those issuers that are more established, consistently profitable, and financially strong, and with robust policies in the areas of the environment, social responsibility, and corporate governance ("ESG"). The Fund's adviser employs a sustainable rating system based on its own, as well as third-party, data to identify issuers believed to present low risks in ESG. The Fund's adviser also uses negative screening to exclude security issuers primarily engaged in higher ESG risk businesses such as alcohol, tobacco, pornography, weapons, gambling, and fossil fuel extraction.

In determining whether a country is part of the developing world, the Fund's adviser (Saturna Capital Corporation) will consider such factors as the country's per capita gross domestic product, the percentage of the country's economy that is industrialized, market capitalization as a percentage of gross domestic product, the overall regulatory environment, and limits on foreign ownership and restrictions on repatriation of initial capital or income.

Through reference to data provided by various globally recognized organizations such as the International Monetary Fund, The World Bank, and the Organization for Economic Cooperation and Development, the adviser maintains a list of countries it considers to have developing economies and/or markets. The list, which changes over time, currently includes: Argentina, Bahrain, Brazil, Chile, China, Colombia, Croatia, Czech Republic, Egypt, Hungary, India, Indonesia, Jordan,

9

Amana Developing World Fund

Kuwait, Lebanon, Malaysia, Malta, Mexico, Morocco, Oman, Panama, Peru, Philippines, Poland, Qatar, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey, Ukraine, and United Arab Emirates.

By allowing investments in companies headquartered in more advanced economies yet having the majority of production assets or revenues in the developing world, the Developing World Fund seeks to reduce its foreign investing risk.

Principal Risks of Investing

Market risk: The value of Developing World Fund shares rises and falls as the value of the stocks in which the Fund invests goes up and down. Consider investing in the Fund only if you are willing to accept the risk that you may lose money. Fund share prices, yields, and total returns will change with the fluctuations in the securities and currency markets as well as the fortunes of the industries and companies in which the Fund invests.

Investment strategy risk: Islamic principles restrict the Developing World Fund's ability to invest in certain market sectors, such as financial companies and conventional fixed-income securities. The adviser believes that Islamic and sustainable investing may mitigate security-specific risks, but the screens used in connection with these strategies reduce the investable universe which may limit investment opportunities and adversely affect the Fund's performance. Because Islamic principles preclude the use of interest-paying instruments, cash reserves do not earn income.

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

Foreign investing risk: The Developing World Fund involves risks not typically associated with investing in US securities. Investments in the securities of foreign issuers may involve risks in addition to those normally associated with investments in the securities of US issuers. All foreign investments are subject to risks of: (1) foreign political and economic instability; (2) adverse movements in foreign exchange rates; (3) currency devaluation; (4) the imposition or tightening of exchange controls or other limitations on repatriation of foreign capital; (5) changes in foreign governmental attitudes towards private investment, including potential nationalization, increased taxation, or confiscation of assets, and (6) differing reporting, accounting, and auditing standards of foreign countries.

Developing world risk: All foreign investments are subject to risks of: (1) foreign political and economic instability; (2) adverse movements in foreign exchange rates; (3) currency devaluation; (4) the imposition or tightening of exchange controls or other limitations on repatriation of foreign capital; (5) changes in foreign governmental attitudes towards private investment, including potential nationalization, increased taxation, or confiscation of assets, and (6) differing reporting, accounting, and auditing standards of foreign countries. In developing markets, these risks are magnified by less mature political systems and weaker corporate governance standards than typically found in the developed world.

Performance

Annual Total Returns

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

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

Amana Developing World Fund Volatility

¹ For the period September 28, 2009 (the inception of the fund) through December 31, 2009 and not annualized.

Best Quarter

Q1 2017

7.13%

Worst Quarter

Q3 2015

-13.37%

The year-to-date return as of the most recent calendar quarter (which ended June 30, 2018) was -8.79%.

10

Amana Developing World Fund

Average Annual Total Returns

The table below presents the average annual returns of the Developing World Fund and provides an indication of the risks of investing in the Fund by showing how the Fund's average annual returns for the previous one and five years and since the Fund's inception on September 28, 2009, compare to those of a broad-based market index.

 

Periods ended December 31, 2017

1 Year

5 Years

Since inception
September 28, 2009

Developing World Fund Investor Shares

AMDWX

Return before taxes

21.39%

0.36%

1.03%

Return after taxes on distributions

21.36%

0.29%

0.98%

Return after taxes on distributions and sale of Fund shares

12.17%

0.27%

0.79%

Morgan Stanley Capital International (MSCI) Emerging Markets Index

(reflects no deduction for fees, expenses, or taxes)

37.28%

4.35%

5.50%

 

1 Year

 

Since inception
September 25, 2013

Developing World Fund Institutional Shares

AMIDX

Return before taxes

21.71%

 

0.30%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of any state or local taxes. After-tax returns illustrated are only for the Investor Shares; after-tax returns for Institutional Shares will vary. Actual after-tax returns depend on an investor's tax situation and likely differ from those illustrated. After-tax illustrations are not relevant to retirement plans, corporations, trusts, or other investors that are taxed at special rates.

Investment Adviser

Saturna Capital Corporation is the Developing World Fund's investment adviser.

Portfolio Managers

Since July 2014, Mr. Scott Klimo CFA, chief investment officer at Saturna Capital Corporation, has been primarily responsible for the day-to-day management of the Developing World Fund. Previously, he was the Fund's deputy portfolio manager since 2012. Since September 2017, and previously from 2009 to 2012, Mr. Monem Salam MBA, a global portfolio manager at Saturna Capital Corporation, has been a deputy portfolio manager for the Fund.

Purchase and Sale of Fund Shares

You may open an account and purchase Developing World Fund Investor Shares by sending a completed application, a photocopy of a government-issued identity document, and a check for $250 or more payable to the Amana Developing World Fund.

Developing World Fund Institutional Shares are available with a minimum investment of $100,000.

Shareowners may purchase additional shares at any time in minimum amounts of $25.

Shareowners may redeem shares of their investment on any business day by these methods:

Written request

Write:       Amana Mutual Funds
                Box N
                Bellingham, WA 98227-0596

Or Fax:     360-734-0755

Telephone request

Call:   888-732-6262 or 360-734-9900

Online

Visit:   www.amanafunds.com

Tax Information

Distributions you receive from the Fund may be taxed as ordinary income, qualified dividend income, or capital gains.

Financial Intermediary Compensation

If you purchase the Developing World Fund through a broker-dealer or other financial intermediary (such as a bank or investment adviser), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your broker-dealer or other financial intermediary's website for more information.

11

Amana Participation Fund

Investment Objective

Capital preservation and current income, consistent with Islamic principles. Capital preservation is its primary objective.

Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold shares of the Participation Fund.

Shareowner Fees

None.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)

Participation Fund

Investor Shares

Institutional Shares

Management Fees

0.50%

0.50%

Distribution (12b-1) Fees

0.25%

None

Other Expenses

0.12%

0.12%

Total Annual Fund Operating Expenses

0.87%

0.62%

Example

The example below is intended to help investors compare the cost of investing in shares of the Participation Fund with the cost of investing in other mutual funds.

The example assumes an investor invests $10,000 in shares of the Participation Fund for the time periods indicated and then redeems all shares at the end of those periods. The example also assumes that the investment has a 5% return each year and that the Fund's operating expenses remain the same. Although actual costs may be higher or lower, based on these assumptions an investor's expenses would be:

 

1 year

3 years

5 years

10 years

Investor Shares

$89

$278

$482

$1,073

Institutional Shares

$63

$199

$346

$774

Portfolio Turnover

The Participation Fund may have transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the example, affect your after-tax returns. During the most recent fiscal year, the Fund's portfolio turnover rate was 6.83% of the average value of its portfolio.

Principal Investment Strategies

Under normal conditions, the Participation Fund invests at least 80% of its total net assets in short and intermediate-term Islamic income-producing investments. Up to 25% of the Fund's total net assets can be invested in a wholly owned and controlled subsidiary (the "Subsidiary") that also invests in short and intermediate-term Islamic income-producing investments. The Fund (and the Subsidiary) invests primarily in notes and certificates issued for payment by foreign governments, their agencies, and financial institutions in transactions structured to be in accordance with Islamic principles. Examples of these notes and certificates include (a) sukuk, which link the returns and cash flows of financing to the assets purchased, or the returns generated from an asset purchased, (b) murabaha, which involves a purchase and sale contract, and (c) wakala, in which accounts are operated under the Islamic finance principle of wakala (an agency agreement).

These investments typically involve the purchase of financial certificates representing investments in tangible assets, project financing, sale and leaseback arrangements, and the distribution of profits (as opposed to the payment of interest) related to the underlying asset or project. Unlike an investment in a bond that represents a promise to pay interest, these investments involve the sharing of profits and losses in the assets or projects financed by the Fund's investment in the notes and certificates. In addition, the Fund may invest in time deposits with banks that involve underlying purchase and sale agreements to generate the return on the deposit.

Generally, Islamic principles require that investors participate in profit and loss, that they receive no usury or interest, and that they do not invest in a prohibited business. Some of the businesses not permitted are liquor, wine, casinos, pornography, insurance, gambling, pork processing, and interest-based banks or finance associations.

In accordance with Islamic principles, the Fund shall not purchase conventional bonds, debentures, or other interest-paying obligations of indebtedness. Islamic principles discourage speculation, and the Fund tends to hold investments for several years. Under normal circumstances the Fund maintains a dollar-weighted average maturity of two to five years.

The Participation Fund restricts its investments so that at least 50% are denominated in US dollars, with no more than 10% in any other single currency.

Under normal conditions, the Fund invests at least 65% of its assets in securities rated within the four highest grades (Aaa, Aa, A, Baa) by a nationally-recognized rating agency and may invest

12

Amana Participation Fund

up to 35% in unrated and high-yield notes and certificates, which may be considered equivalent to "junk bonds."

The Subsidiary's principal investment strategy and principal risks of investing are identical to those of the Fund, and the Subsidiary invests principally in sukuk, murabaha, and wakala. The Fund's investment in the Subsidiary may not exceed 25% of the value of its total net assets at the end of each quarter of its taxable year. The Subsidiary, on a consolidated basis, is also subject to the same requirements relating to liquidity, and the timing and method of valuation of portfolio investments described elsewhere in this Prospectus and in the Statement of Additional Information. The Fund is the sole shareholder of the Subsidiary and does not expect shares of the Subsidiary to be offered or sold to other investors.

Principal Risks of Investing

Market risk: The value of Participation Fund shares rises and falls as the value of the securities in which the Fund invests goes up and down. Consider investing in the Fund only if you are willing to accept the risk that you may lose money. Fund share prices, yields, and total returns will change with the fluctuations in the securities and currency markets as well as the fortunes of the countries, industries, and companies in which the Fund invests.

Diversification and concentration risks: The Fund is non-diversified and may invest a larger percentage of its assets in fewer issuers, which may cause the Fund to experience more volatility than diversified funds. In addition, the Fund may concentrate its investments within the financial services industry and real estate sector.

Investment strategy risk: The Fund's restricted ability to invest in certain market sectors, such as non-Islamic financial companies and conventional fixed-income securities, limits opportunities and may adversely affect the Fund's performance. Because Islamic principles preclude the use of interest-paying instruments, cash reserves do not earn income.

Liquidity risk: Liquidity risk exists when particular investments are difficult to sell. Investments by the Fund in foreign securities and those that are thinly traded, such as lower quality issuers, tend to involve greater liquidity risk. The market for certain investments may become illiquid under adverse market or economic conditions.

The Fund invests substantially in sukuk certificates that are traded outside of the US or within the US subject to certain trading restrictions which may increase the liquidity risks associated with the Fund's investments.

Foreign investing risk: The Participation Fund involves risks not typically associated with investing in US securities. Investments in the securities of foreign issuers may involve risks in addition to those normally associated with investments in the securities of US issuers. All foreign investments are subject to risks of: (1) foreign political and economic instability; (2) adverse movements in foreign exchange rates; (3) currency devaluation; (4) the imposition or tightening of exchange controls or other limitations on repatriation of foreign capital; (5) changes in foreign governmental attitudes towards private investment, including potential nationalization, increased taxation, or confiscation of assets, and (6) differing reporting, accounting, and auditing standards of foreign countries. The risks of foreign investing are generally magnified in the smaller and more volatile securities markets of the Participation Fund.

Developing world risk: All foreign investments are subject to risks of: (1) foreign political and economic instability; (2) adverse movements in foreign exchange rates; (3) currency devaluation; (4) the imposition or tightening of exchange controls or other limitations on repatriation of foreign capital; (5) changes in foreign governmental attitudes towards private investment, including potential nationalization, increased taxation, or confiscation of assets, and (6) differing reporting, accounting, and auditing standards of foreign countries. In developing markets, these risks are magnified by less mature political systems and weaker corporate governance standards than typically found in the developed world.

Sukuk risk: Sukuk are specifically structured to adhere to Islamic investment principles, but also must be engineered to be economically feasible in order to attract investment. Sukuk structures may be significantly more complicated than conventional bonds and often include a series of entities created specifically to support the sukuk structure. In addition, sukuk are largely created in or otherwise subject to the risks of developing economies, many of which have weak or inconsistent accounting, legal, and financial infrastructure. The structural complexity of sukuk, along with the weak infrastructure of the sukuk market, increases risks of investing in sukuk, including operational, legal, and investment risks. In addition, adherence to Islamic investment principles increases the risk of loss in the event of a default. As compared to rights of conventional bondholders, holders of sukuk may have limited ability to pursue legal recourse to enforce the terms of the sukuk or to restructure the sukuk in order to seek recovery of principal. Sukuk are also subject to the risk that issuers or Islamic scholars may deem certain sukuk as not meeting Islamic investment principles subsequent to the sukuk being issued and therefore classify the investments as noncompliant with Islamic principles.

13

Amana Participation Fund

Interest rate risk: Changes in interest rates impact prices of fixed-income and related investments. When interest rates rise, the value of fixed-income investments (paying a lower rate of interest) generally will fall. Investments with shorter terms may have less interest rate risk, but generally have lower returns and, because of the more frequent maturity dates, may involve higher re-investment costs.

Credit risk: Corporate and sovereign issuers of the notes and certificates in which the Fund invests may not be able or willing to make payments when due, which may lead to default or restructuring of the investment. In addition, if the market perceives deterioration in the creditworthiness of an issuer, the value and liquidity of the issuer's securities may decline.

High-yield risk: Securities that are rated below investment grade may have greater price fluctuations and have a higher risk of default than investment grade securities. Below investment grade securities may be difficult to sell at an acceptable price, especially during periods of increased market volatility or significant market decline.

Subsidiary Investment Risk: By investing in the Subsidiary, the Fund is subject to the risks associated with the Subsidiary's investments. Those investments are similar to the investments that are premitted to be held by the Fund and are subject to the same risks that would apply to similar investments if held directly by the Fund. The Subsidiary is organized under the laws of the Cayman Islands and is not registered with the SEC under the Investment Company Act of 1940, as amended. Accordingly, the Fund will not receive all of the protections offered to shareholders of registered investment companies. Changes in the laws of the United States and/or the Cayman Islands could result in the inability of the Fund and/or the Subsidiary to operate as intended, which may negatively affect the Fund and its shareholders.

Tax Risk: To qualify as a regulated investment company ("RIC"), the Fund must meet certain requirements concerning the source of its income. The Fund's investment in the Subsidiary is intended to provide exposure to sukuk, murabaha, and wakala in a manner that is consistent with the "qualifying income" requirement applicable to RICs. The Internal Revenue Service ("IRS") has ceased issuing private letter rulings regarding whether the use of subsidiaries by investment companies constitutes qualifying income. If the IRS determines that this source of income is not "qualifying income," the Fund may cease to qualify as a RIC because the Fund has not received a private letter ruling and is not able to rely on private letter rulings issued to other taxpayers. Failure to qualify as a RIC could subject the Fund to adverse tax consequences, including a federal income tax on its net income at regular corporate rates, as well as a tax to shareholders on such income when distributed as an ordinary dividend.

Based on the principles underlying private letter rulings previously issued to other taxpayers (which the Fund may not cite as a precedent), the Fund intends to treat its income from the Subsidiary as qualifying income without any such ruling from the IRS. The tax treatment of the Fund's investment in the Subsidiary may be adversely affected by future legislation, court decisions, Treasury Regulations, and/or guidance issued by the IRS that could affect whether income derived from such investments is "qualifying income" under Subchapter M of the Internal Revenue Code, or otherwise affect the character, timing, and/or amount of the Fund's taxable income or any gains or distributions made by the Fund.

Performance

Annual Total Returns

The following bar chart presents the calendar year total returns of the Participation Fund Institutional Shares before taxes (Institutional Shares are used for this chart because they represent the largest share class of the Fund). The bar chart provides an indication of the risks of investing in the Fund by showing changes in performance from year to year. A fund's past performance (before and after taxes) is not a guarantee of how a fund will perform in the future.

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

Amana Participation Fund Volatility

¹ For the period September 28, 2015 (the inception of the Fund) through December 31, 2015 and not annualized.

Best Quarter

Q2 2016

2.06%

Worst Quarter

Q4 2016

-1.43%

The year-to-date return as of the most recent calendar quarter (which ended June 30, 2018) was -0.92%.

14

Amana Participation Fund

Average Annual Total Returns

The table below presents the average annual returns of the Participation Fund and provides an indication of the risks of investing in the Fund by showing how the Fund's average annual returns for the previous one year and since the Fund's inception on September 28, 2015, compare to those of a broad-based market index.

 

Periods ended December 31, 2017

1 Year

Since inception
September 28, 2015

Participation Fund Investor Shares

AMAPX

Return before taxes

2.56%

1.85%

Participation Fund Institutional Shares

AMIPX

Return before taxes

2.68%

2.05%

Return after taxes on distributions

1.64%

1.19%

Return after taxes on distributions and sale of Fund shares

1.50%

1.18%

FTSE Sukuk Index

(reflects no deduction for fees, expenses, or taxes)

4.31%

3.64%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of any state or local taxes. After-tax returns illustrated are only for the Institutional Shares; after-tax returns for Investor Shares will vary. Actual after-tax returns depend on an investor's tax situation and likely differ from those illustrated. After-tax illustrations are not relevant to retirement plans, corporations, trusts, or other investors that are taxed at special rates.

Investment Adviser

Saturna Capital Corporation is the Participation Fund's investment adviser.

Portfolio Managers

Mr. Patrick Drum CFA, portfolio manager and research analyst at Saturna Capital Corporation, is primarily responsible for the day-to-day management of the Participation Fund. Mr. Bryce Fegley CFA, tactician, portfolio manager, and investment analyst at Saturna Capital Corporation, is the deputy portfolio manager. They have been the managers of the Fund since inception.

Purchase and Sale of Fund Shares

You may open an account and purchase Participation Fund Investor Shares by sending a completed application, a photocopy of a government-issued identity document, and a check for $5,000 or more payable to the Amana Participation Fund.

Participation Fund Institutional Shares are available with a minimum investment of $100,000.

Shareowners may purchase additional shares at any time in minimum amounts of $25.

Shareowners may redeem shares of their investment on any business day by these methods:

Written request

Write:       Amana Mutual Funds
                Box N
                Bellingham, WA 98227-0596

Or Fax:     360-734-0755

Telephone request

Call:   888-732-6262 or 360-734-9900

Online

Visit:   www.amanafunds.com

Tax Information

Distributions you receive from the Fund may be taxed as ordinary income or capital gains.

Financial Intermediary Compensation

If you purchase the Participation Fund through a broker-dealer or other financial intermediary (such as a bank or investment adviser), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your broker-dealer or other financial intermediary's website for more information.

15


Investment Objectives

The objectives of the Income Fund are current income and preservation of capital, consistent with Islamic principles; current income is its primary objective.

The primary objective of the Growth Fund is long-term capital growth, consistent with Islamic principles.

The primary objective of the Developing World Fund is long-term capital growth, consistent with Islamic principles.

The objectives of the Participation Fund are capital preservation and current income, consistent with Islamic principles; capital preservation is its primary objective.

There can be no guarantee that the particular investment objectives of a Fund will be realized. These investment objectives may only be changed with approval by vote of a majority of the outstanding shares of a Fund.

Principal Investment Strategies

Amana Mutual Funds Trust is designed to provide investment alternatives that are consistent with Islamic principles. Generally, Islamic principles require that investors share in profit and loss, that they receive no usury or interest, and that they do not invest in a business that is prohibited by Islamic principles. Some of the businesses not permitted are alcohol, pornography, insurance, gambling, pork processing, and interest-based banks or finance associations.

The Funds do not make any investments that pay interest. Income-producing investments conforming to Islamic principles, known as sukuk or Islamic bonds, are permitted in the Participation Fund. Islamic principles discourage speculation, and the Funds tend to hold investments for several years.

These criteria limit investment selection and income-earning opportunities more than is customary for mutual funds.

The adviser, Saturna Capital Corporation, selects investments. To ensure that investments meet the requirements of the Islamic faith, the adviser engages Amanie Advisors Sdn Bhd, a leading consultant specializing in Islamic finance.

The Amana Funds favor investing in companies trading for less than the adviser's assessment of intrinsic value, which typically means companies with relatively low price/earning multiples, strong balance sheets, and proven businesses. Once a Fund holds a position in a company, the Fund actively monitors market conditions, industry developments, and other factors that may affect the company or the Fund's rationale for holding the investment. Although the Funds consider valuation when monitoring their investments, a Fund may not necessarily liquidate a position solely because of relatively high valuation. The Funds actively monitor their investment portfolios but do not engage in high turnover or speculative trading.

The Income, Growth, and Developing World Funds seek companies demonstrating both Islamic and sustainable characteristics. The Fund's adviser considers issuers with sustainable characteristics to be those issuers that are more established, consistently profitable, and financially strong, and with robust policies in the areas of the environment, social responsibility, and corporate governance ("ESG"). The Fund's adviser employs a sustainable rating system based on its own, as well as third-party, data to identify issuers believed to present low risks in ESG. The Fund's adviser also uses negative screening to exclude security issuers primarily engaged in higher ESG risk businesses such as alcohol, tobacco, pornography, weapons, gambling, and fossil fuel extraction.

The Funds seek to minimize potential current income taxes paid by shareowners, where the basic strategies to be favored are (1) infrequent trading, (2) offsetting capital gains with losses, and (3) selling highest-cost tax-lots first.

During uncertain or adverse market or economic conditions, a Fund may adopt a temporary defensive position. The Funds cannot invest in interest-paying instruments frequently used by other mutual funds for this purpose. When markets are unattractive, the adviser chooses between continuing to follow the Funds' investment policies or converting securities to cash for temporary, defensive purposes. This choice is based on the adviser's evaluation of market conditions and a Fund's portfolio holdings. In the event a Fund takes such a position, it may not be able to achieve its investment objective.

By diversifying its investments, each Fund seeks to reduce the risk of owning only a few securities. Diversification does not assure a profit or protect against a loss.

Income Fund

It is the policy of the Income Fund, under normal circumstances, to invest at least 80% of its assets in income-producing securities, primarily dividend-paying common stocks. The Income Fund may invest in foreign securities.

While cash assets do not contribute to the Income Fund's primary objective of current income, they do assist its secondary objective of preservation of capital.

Growth Fund

It is the policy of the Growth Fund, under normal circumstances, to invest at least 80% of assets in common stocks. The adviser selects investments primarily on past earnings and revenue growth rates, and the expectation of increases in earnings and share price. The Growth Fund may invest in foreign securities.

16


Cash assets may contribute to the Growth Fund's objective of long-term capital growth by preventing capital losses during periods of market decline.

Developing World Fund

It is the policy of the Developing World Fund, under normal circumstances, to invest at least 80% of assets in common stocks of companies with significant exposure to countries with developing economies and/or markets.

The Developing World Fund may invest in equity securities of any company, regardless of where it is based, if the adviser determines that a significant portion of the company's production, assets, or revenues (50% or more) is attributable to developing countries.

Through reference to data provided by various globally recognized organizations such as the International Monetary Fund, The World Bank, and the Organization for Economic Cooperation and Development, the adviser maintains a list of countries it considers to have developing economies and/or markets. The list, which changes over time, currently includes: Argentina, Bahrain, Brazil, Chile, China, Colombia, Croatia, Czech Republic, Egypt, Hungary, India, Indonesia, Jordan, Kuwait, Lebanon, Malaysia, Malta, Mexico, Morocco, Oman, Panama, Peru, Philippines, Poland, Qatar, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey, Ukraine, and United Arab Emirates.

Cash assets may contribute to the Developing World Fund's objective of long-term capital growth by preventing capital losses during periods of market decline.

Participation Fund

It is the policy of the Participation Fund, under normal circumstances, to invest at least 80% of its assets in short and intermediate-term Islamic income-producing investments. The Fund invests primarily in notes and certificates issued for payment by foreign governments, their agencies, and financial institutions in transactions structured to be in accordance with Islamic principles. Examples of these notes and certificates include (a) sukuk, which link the returns and cash flows of financing to the assets purchased, or the returns generated from an asset purchased, (b) murabaha, which involves a purchase and sale contract, and (c) wakala, in which accounts are operated under the Islamic finance principle of wakala (an agency agreement).

The Fund invests substantially in sukuk certificates that are traded outside of the US or within the US subject to certain trading restrictions which may increase the liquidity risks associated with the Fund's investments.

The Fund may invest up to 25% of its total net assets in the Subsidiary, as measured at the end of the quarter of its taxable year. The Subsidiary, invests, under normal conditions, in sukuk, murabaha, and wakala. The limitation on investment in the Subsidiary is imposed by the Internal Revenue Code of 1986, as amended. The Subsidiary, which is organized under the laws of the Cayman Islands, is wholly-owned and controlled by the Fund. The Fund invests in the Subsidiary in order to gain exposure to the investment returns of sukuk, murabaha, and wakala within the limitations of the federal tax law requirements applicable to regulated investment companies. The Subsidiary is, on a consolidated basis, subject to the same fundamental and non-fundamental investment restrictions as the Fund and, in particular, to the same requirements relating to liquidity, and the timing and method of valuation of portfolio investments and Fund shares described elsewhere in this Prospectus and in the Statement of Additional Information ("SAI"). The Fund is the sole shareholder of the Subsidiary and does not expect shares of the Subsidiary to be offered or sold to other investors.

Principal Risks

Investing in securities entails both market risks and risk of price variation in individual securities. Islamic principles restrict a Fund's ability to invest in certain stocks and market sectors, such as financial companies and conventional fixed-income securities. This may limit investment opportunities and may adversely affect the Funds' performance.

Income Fund

The Income Fund invests mainly in common stocks, which involve greater risk, and commensurately greater opportunity for reward, than other investments such as short-term bonds and money market instruments.

The Income Fund is suitable for investors seeking current income and preservation of capital.

Growth Fund

The Growth Fund typically invests in smaller and less seasoned companies than the Income Fund, which may lead to greater variability in the Fund's returns. Growth stocks, which can be priced on future expectations rather than current results, may decline substantially when expectations are not met or general market conditions weaken.

The Growth Fund is suitable for investors seeking higher returns and willing to accept greater fluctuations in value (risk).

Developing World Fund

Although all securities in the Amana Funds may be adversely affected by currency fluctuations, including devaluation, or global economic, political, or social instability, securities issued by entities based outside the United States, particularly in countries with developing economies and/or markets that are the focus of the Developing World Fund, may be affected to a greater extent.

17


Foreign countries can involve higher risks of confiscatory taxation, seizure or nationalization of assets, establishment of exchange controls, less public information about securities and less governmental market supervision, adoption of government restrictions, or adverse political or social developments that affect investments.

The Developing World Fund is especially susceptible to sharp declines in value.

Investing in countries of the developing world may involve risks in addition to and greater than those generally associated with investing in developed countries. For instance, developing countries may have less developed legal and accounting systems. The governments of these countries may be more unstable and more likely to impose capital controls, nationalize a company or industry, place restrictions on foreign ownership and on withdrawing sale proceeds of securities from the country, and/or impose punitive taxes that could adversely affect security prices. In addition, the economies of these countries may be dependent on relatively few industries that are more susceptible to local and global changes. Securities markets in these countries are also relatively small and have substantially lower trading volumes. As a result, securities issued in these countries may be more volatile and less liquid than securities issued in countries with more developed economies or markets.

The Developing World Fund is suitable for investors seeking higher returns and willing to accept greater fluctuations in value (risk).

Participation Fund

Investing in certificates, notes, and similar securities subjects the Fund to credit risk, which is the risk that a security issuer may not be able pay its obligations when due thus reducing the value of the Fund's portfolio holdings.

Investing in securities related to the fixed-income markets subjects the Fund to interest rate risk, which is the risk that a rise in prevailing interest rates generally causes the price of such securities to fall. The Fund mitigates this risk by seeking to maintain an average portfolio maturity of two to five years (short to intermediate term), in that longer term securities normally have greater declines when interest rates rise.

The Fund is non-diversified, which means it may invest a larger percentage of its assets in fewer issuers as compared to a fund that is more broadly diversified. Because the Fund is not required to diversify its investments among a broader group of issuers, the Fund may be more volatile than diversified funds. Although the Fund is considered non-diversified, the Fund intends to maintain sufficient diversification to qualify for favorable tax treatment provided to mutual funds under the US Internal Revenue Code of 1986.

The Fund may concentrate its investments in the financial services industry and real estate sector. Adverse developments within the financial services industry may have a greater impact on the Fund as compared to a fund that is not similarly concentrated. In addition, because the Fund's investments are concentrated in securities issued by a limited number of issuers, many of which share a single industry, the Fund may be even more susceptible to concentration risk.

By investing in the Subsidiary, the Fund is subject to the risks associated with the Subsidiary's investments. The Subsidiary is not registered with the SEC as an investment company under the 1940 Act, and is not subject to the investor protections of the 1940 Act. As an investor in the Subsidiary, the Fund does not have the same protections offered to shareholders of registered investment companies.

The Fund and the Subsidiary may not be able to operate as described in this Prospectus in the event of changes to the laws of the United States or the Cayman Islands. If the laws of the Cayman Islands required the Subsidiary to pay taxes to a governmental authority, the Fund would be likely to suffer decreased returns. The tax treatment of the Fund's investment in the Subsidiary may be adversely affected by future legislation, court decisions, Treasury Regulations and/or guidance issued by the IRS that could affect whether income derived from such investments is "qualifying income" under Subchapter M of the Internal Revenue Code, or otherwise affect the character, timing and/or amount of the Fund's taxable income or any gains or distributions made by the Fund.

In addition to credit risk, interest rate risk, maturity, and investment grade risk, investing in sukuk and similar forms of Islamic investments involve specific additional risks. Once purchased, these investments tend to be held until maturity, meaning trading is less frequent compared to conventional bonds. Being a relatively new form of security, institutional markets and support for sukuk is less robust than that available in conventional debt markets. Laws and regulations regarding the issuance, trading, default resolution, and other aspects of sukuk are not as well defined as they are for conventional debt issuers.

The Fund's investments in sukuk, especially sukuk issued by foreign governments and their agencies, differ from conventional debt obligations. Holders of conventional bonds typically have legal remedies if the issuer defaults, and the bondholders may pursue their remedies in the courts having jurisdiction over the defaulting party. Sukuk investments may not offer investors the right to pursue such remedies. To the extent a Fund holds sukuk that are in default, the Fund's legal recourse to enforce payment may be significantly limited. Accordingly, a sovereign or private entity's willingness to meet its terms of its obligations gives rise to credit risk but without the legal protections typically provided to lenders.

18


Operational Risk

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

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

Investment Information

Shareowners receive an Amana Mutual Funds Trust financial report showing the investment returns, portfolios, income, and expenses of each Fund every six months. The audited financial statements of each Fund for the year ended May 31, 2018, included in the Trust's Annual Report, are available upon request. Investors may obtain current share prices daily on financial information websites, by calling 1-888-732-6262, on electronic quotation systems, and at www.amanafunds.com. The following symbols can be used to obtain quotations and other information:

Income Fund

Investor Shares

AMANX

Institutional Shares

AMINX

Growth Fund

Investor Shares

AMAGX

Institutional Shares

AMIGX

Developing World Fund

Investor Shares

AMDWX

Institutional Shares

AMIDX

Participation Fund

Investor Shares

AMAPX

Institutional Shares

AMIPX

This prospectus, financial reports, performance information, proxy voting records, and other useful information are also available at www.amanafunds.com. Portfolio holdings are provided each month-end online (see the Statement of Additional Information for a description of portfolio disclosure policies).

Investment Adviser

Saturna Capital Corporation, 1300 N. State Street, Bellingham, Washington 98225, is the Trust's investment adviser and administrator ("adviser"). The adviser's wholly-owned subsidiary, Saturna Brokerage Services, Inc., is the Trust's distributor. Founded in 1989, Saturna Capital Corporation has approximately $3.5 billion in assets under management. It is also the adviser to Saturna Investment Trust and to separately managed accounts. Prior to January 1, 2018, the Amana Growth Fund, Amana Income Fund, and Amana Developing World Fund each paid an advisory and administration fee of 0.95% on the first $500 million of a Fund's average daily net assets, 0.85% on the next $500 million, 0.75% on the next $500 million, and 0.65% on assets over $1.5 billion. Beginning January 1, 2018, the Amana Growth Fund, Amana Income Fund, and Amana Developing World Fund each pay a lower advisory and administration fee of 0.85% on the first $1 billion of a Fund's average daily net assets, 0.75% on the next $1 billion, and 0.65% on assets over $2 billion. The Amana Participation Fund pays an advisory and administration fee of 0.50% of the Fund's average daily net assets. For the fiscal year ended May 31, 2018, these fees amounted to 0.82% for the Income Fund, 0.81% for the Growth Fund, 0.85% for the Developing World Fund, and 0.50% for the Participation Fund. A discussion regarding the basis for the Board of Trustee's renewal of the advisory contracts is available in the Trust's Semi-Annual Report which covers the six months ending November 30, and is published each January.

The Participation Fund may invest up to 25% of its total net assets in the Subsidiary. The Subsidiary has entered into a separate investment advisory agreement with Saturna Capital Corporation. Under this agreement, Saturna Capital Corporation provides to the Subsidiary the same type of investment advisory services on substantially same terms as Saturna Capital Corporation provides advisory services to the Fund. The Fund (not the Subsidiary) pays Saturna Capital Corporation an advisory fee as described above.

The Subsidiary also has entered into an agreement with the Fund's service providers for the provision of administrative, accounting, transfer agency, and custody services. The Subsidiary will bear the expenses associated with these services, which are not expected to be material in relation to the value of the Fund's assets. It is also anticipated that the Fund's own expenses will be reduced to some extent as a result of the payment of such expenses at the Subsidiary level. Therefore, it is expected that the Fund's investment in the Subsidiary will not result in the Fund paying duplicative fees for similar services provided to the Fund or the subsidiary.

Mr. Nicholas Kaiser MBA, CFA®, is chairman and controlling shareowner of Saturna Capital Corporation. Since 1990, Mr. Kaiser has been primarily responsible for the day-to-day management of the Income and Growth Funds' portfolios. He managed the Developing World Fund from its inception in 2009 until 2014.

19


Mr. Kaiser has managed equity mutual funds since 1976; he has managed equity portfolios for the adviser since founding the firm in 1989.

Mr. Scott Klimo CFA®, is a vice president and chief investment officer at the adviser. Since 2014, Mr. Klimo has been primarily responsible for the day-to-day management of the Developing World Fund's portfolio. Since 2012, he has been deputy portfolio manager of the Income and Growth Funds, and served as deputy portfolio manager of the Developing World Fund from 2012 to 2014. From 2001 to 2011, he served as a senior investment analyst, research director, and portfolio manager at Avera Global Partners/Security Global Investors.

Mr. Monem Salam MBA, is executive vice president, a director, and a global portfolio manager for the adviser. Since July 2018, and previously from 2008 to 2012, he has been a deputy portfolio manager of the Income Fund and Growth Fund. Since 2017, he has been deputy portfolio manager of the Developing World Fund. Mr. Salam is also the president and Islamic portfolio manager for Saturna Sdn. Bhd., Saturna Capital Corporation's wholly-owned Malaysian subsidiary.

Mr. Patrick Drum MBA, CFA®, CFP®, is a portfolio manager and research analyst for the adviser. Since 2015, he has been primarily responsible for the day-to-day management of the Participation Fund's portfolio. From 2007 to 2014, Mr. Drum was a senior portfolio manager with the Arbor Group at UBS Financial Services specializing in the investment of non-US fixed income portfolios employing an ESG screening process.

Mr. Bryce Fegley CFA®, CIPM®, is a portfolio manager, investment analyst, and tactician for the adviser. Since 2015, he has been deputy portfolio manager of the Participation Fund. For Saturna Capital Corporation he has worked in brokerage, investment research, and its Malaysian investment advisory subsidiary.

See the Statement of Additional Information for a discussion of their compensation, other accounts managed, and ownership of Amana Funds.

Fund Share Pricing

The Funds compute their daily share prices (net asset values) using market prices as of the close of trading on the New York Stock Exchange (generally 4 p.m. Eastern time). Fund shares are not priced on the days when New York Stock Exchange trading is closed (typically weekends and US national holidays). Securities traded on a national securities exchange and over-the-counter securities are valued at the last reported sale price on the valuation day. Securities for which there are no sales are valued at the latest bid price. Occasionally there may be days without a readily available market price for a security. When this occurs, a fair value for such security is determined in good faith by or under the direction of the Board of Trustees. Using fair value to price a security may result in a value different from the security's most recent closing price and from the prices used by other mutual funds to calculate their share prices.

Foreign markets may close before the time as of which the share price is computed. Because of this, events occurring after the close of a foreign market and before the share price computation may have a material effect on foreign security prices. To account for this, the Funds use evaluations provided by an independent pricing service for many foreign securities, including sukuk. Such evaluations are based on the foreign securities' most recent closing market prices as of 4 p.m. Eastern time and correlations with broad market indices, sector indices, equity index futures contracts, American Depositary Receipts, and other factors. Foreign securities may trade on weekends or other days when the Funds do not price their shares. As a result, the share price may change on days when you will not be able to purchase or redeem shares.

Each Fund computes the share price of each share class by dividing the net assets attributable to each share class by the outstanding shares of that class. Each share class represents an interest in the same investment portfolio. Each share class is identical in all respects except that each class bears its own class expenses, and each class has exclusive voting rights. As a result of the differences in the expenses borne by each share class the share price will vary among a Fund's share classes.

The Participation Fund may invest up to 25% of its total assets in the Subsidiary. The Subsidiary offers to redeem all or a portion of its shares every Business Day. The value of the Subsidiary's shares will fluctuate with the value of its portfolio investments. The Subsidiary uses the same pricing and valuation methodologies described above to price its shares.

Additional information about portfolio security valuation, including foreign securities, is contained in the Trust's Statement of Additional Information (SAI).

Purchase and Sale of Fund Shares

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT: To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. For most accounts, we will ask for a photocopy of your driver's license or other identifying documents.

You may open an account by sending a completed application, a photocopy of a government-issued identity document, and a check made payable to the Fund of your choice. The initial minimum

20


investment for Income, Growth, and Developing World Funds Investor Shares is $250, and for Participation Fund Investor Shares is $5,000. The Funds do not accept initial orders via telephone or unaccompanied by payment.

Institutional Shares are available for purchase with an initial minimum investment of $100,000 in a Fund. A broker-dealer or other financial intermediary that maintains an account with a Fund in the intermediary's name as nominee for the benefit of the intermediary's clients may aggregate client orders to meet the $100,000 initial minimum investment. In addition, Institutional Shares are available for purchase without any minimum initial investment by:

  • Qualified and non-qualified employer-sponsored retirement or benefit plans, including 401(k) plans, 457 plans, 403(b) plans, profit-sharing plans, and deferred compensation plans;
  • Qualified retirement or benefit plans, including IRA, ESA, and HSA plans serviced as trustee by Saturna Trust Company; and
  • Fee-based advisory programs (including mutual fund wrap programs) sponsored by financial intermediaries that provide bundled services for a fee.

The price applicable to purchases and redemptions of Fund shares is the price next computed after receipt of a purchase or redemption request in proper order. There are no sales charges or loads. The Funds may reject purchases for any reason, such as excessive trading. In addition, anti-money laundering regulations limit acceptance of third-party checks and money orders.

Shareowners may purchase additional shares of either class of shares at any time in minimum amounts of $25. Once an account is open, purchases can be made by check, by electronic funds transfer, or by wire. With prior authorization, purchase orders can be entered at www.amanafunds.com.

Shareowners may authorize the purchase or redemption of shares via electronic funds transfer ("EFT") by completing the appropriate section of the application. The authorization must be received at least two weeks before EFT can be used. To use EFT to purchase or redeem shares, simply call 1-888-732-6262. Investors may also wire money to purchase shares, though the wiring bank typically charges a fee for this service. Please notify Saturna Capital Corporation when you are wiring money.

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

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

The Funds normally send redemption proceeds within one day, however if the Funds reasonably believe that a cash redemption would negatively impact the operations of a Fund or that the shareowner may be engaged in market-timing or frequent trading, the Funds reserve the right delay payment of the redemption proceeds for up to seven calendar days. The Fund's investment team continually monitors portfolio liquidity and adjusts the Fund's cash level based on market outlook, portfolio and investor transactions, and other relevant criteria. The Amana Funds do not buy or hold conventional bonds or other types of interest-bearing debt instruments and generally have higher levels of cash and liquidity than other mutual funds. Conversely, unlike many mutual funds, the Amana Funds do not maintain a bank line of credit that could be used to meet short-term liquidity needs. There can be no assurance that the Fund will be able manage liquidity successfully in all market environments. Under stressed conditions, the Fund may not pay redemption proceeds in a timely fashion.

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

There are several methods you may choose to redeem shares:

Written request

Write:       Amana Mutual Funds
                Box N
                Bellingham, WA 98227-0596

Or Fax:     360-734-0755

You may redeem shares by a written request and choose one of the following options for the proceeds:

  • Redemption check (no minimum)
  • Federal funds wire ($5,000 minimum)

Note: Signatures on written requests, such as payments directed to a third party, may need to be guaranteed by a national bank, trust company, or by a member of a national securities exchange.

Prevailing rates apply to federal funds wires and expedited courier service for redemption checks. Delivery times cannot be guaranteed by the Funds.

Telephone request

Call:   888-732-6262 or 360-734-9900

Unless Saturna is notified in advance that you do not want this privilege, you may redeem shares by a telephone request and choose one of the following options for the proceeds:

  • Redemption check (no minimum) sent to registered owner(s). Note: Redemption checks sent to other than registered owners may require a written request.

21


  • Electronic Funds Transfers ($100 minimum) with proceeds transmitted to your bank account as designated by the EFTauthorization on your application. The transfer agent must receive the EFT authorization at least two weeks before EFT can be used.
  • Exchange (in at least the minimum established by the Fund being purchased) for shares of any other Fund for which Saturna Capital Corporation is the adviser. If the exchange is your initial investment into a Fund, the new account will automatically have the same registration as your original account.

For telephone requests, the Funds will endeavor to confirm that instructions are genuine. The caller must provide:

  • the name of the person making the request,
  • the name and address of the registered owner(s),
  • the account number,
  • the amount to be redeemed, and
  • the method for remittance of the proceeds.

Online

Visit:   www.amanafunds.com

To initiate transactions online, shareowners must first complete an Online Access and E-Delivery form available on www.amanafunds.com or by calling toll-free 1-800-728-8762. When accessing their account, users must provide the username and password, and possible security prompts.

As the transfer agent, Saturna may also require a form of personal identification. Neither the transfer agent nor the Fund will be responsible for the results of transactions they reasonably believe genuine.

The shares and/or uncashed checks of redemptions, dividends, or distributions may be transferred to your state of residence if no activity occurs within your account during an "inactivity period" specified in your state's laws.

The Amana Funds may restrain any account and suspend account services when: a Fund believes that there may exist a dispute between the registered or beneficial account owners; a Fund believes that a transaction may be fraudulent; in cases of abusive or threatening conduct or suspected illegal activity; or if a Fund is unable to verify the identity of the person(s) or entity opening an account or requesting a transaction.

Converting Shares

Shareowners may elect to convert eligible Investor Shares into corresponding Institutional Shares of the same Fund, provided that following the conversion the investor meets applicable eligibility requirements for the Institutional Shares. Any such conversion will occur at the next available respective net asset values of the share classes.

Distributions

Each Fund intends to distribute its net investment income and net realized capital gains, if any, to its shareowners. Distributions from net capital gains are paid at the end of December and May; income dividends are paid in December and May for the Income Fund and in December for the Growth Fund and Developing World Fund. The Participation Fund declares dividends daily and pays income distributions monthly. As a result of their investment strategies, the Growth Fund and Developing World Fund may not pay income dividends.

Dividends paid by each Fund with respect to each class of shares are calculated in the same manner and at the same time.

Both dividends and capital gains distributions are paid in additional full and fractional shares of the share class owned. At your option, you may receive dividends and/or capital gain distributions in cash. You are notified of each dividend and capital gain distribution when paid.

You may choose to have your dividends and/or capital gains sent directly to your bank account or a check issued for dividend or capital gain distributions of $10 or more. Dividends or capital gains in amounts less than $10 will be reinvested. If you do not indicate any choice on your application, your dividends will be reinvested.

Returned dividend checks and dividend checks that remain uncashed for six months will be automatically reinvested into your account and invested in additional shares of the Fund; future dividends in such accounts will continue to be reinvested until the shareowner is located or the account is closed.

Purchase and Sale of Fund Shares Through Financial Intermediaries

The Funds have authorized financial intermediaries (such as securities brokers or dealers, retirement plan recordkeepers, banks, and trust companies) to receive purchase, redemption, and exchange orders on behalf of the Funds. These authorized intermediaries may designate other intermediaries to receive such orders. A Fund will be deemed to have received a purchase, redemption, or exchange order when an authorized intermediary (or its designee) receives the transaction request in good order.

If you purchase shares through an intermediary, the transfer agent may not have your account information. If so, you must contact your intermediary to perform transactions. Investors should be aware that intermediaries might have policies different than the Funds' policies regarding purchases, redemptions, or exchanges and these may be in addition to or in place of the Funds' policies. For more information about these restrictions and policies, please contact your broker, retirement plan administrator, or other intermediary.

22


When you buy shares through a financial intermediary, that intermediary may charge a transaction fee or commission which is not reflected in the expenses table or example. Purchases and redemptions of Fund shares will be made at the daily net asset value established by the Fund (before any commission).

Frequent Trading Policy

The Funds are intended for long-term investment and do not permit rapid trading. The Board of Trustees has adopted a Frequent Trading Policy that attempts to identify and limit rapid trading. Rapid trading may lead to higher portfolio turnover, which may negatively affect performance or increase costs, thereby adversely affecting other shareowners.

To the extent reasonably practicable, the Funds monitor trading in Fund shares in an effort to identify trading patterns that appear to indicate frequent purchases and redemptions that might violate the Frequent Trading Policy. If a Fund, the transfer agent, or a Fund's manager, based on the information available, believes that it has identified a pattern of such trading (whether directly through the Fund, indirectly through an intermediary, or otherwise), it may, in its sole discretion, temporarily or permanently bar future purchases of shares of the Fund (or any other fund managed by the adviser) by the account holder, or any accounts under common control (such as those advised by an investment manager or any other type of asset allocator).

In making such a judgment, factors considered may include the size of the trades, the frequency and pattern of trades, the methods used to communicate orders, and other factors considered relevant.

Although this process involves judgments that are inherently subjective, the Funds seek to make decisions that are consistent with the interests of the Funds' shareowners. The Funds reserve the right to refuse or revoke any purchase order for any reason the Fund, the transfer agent, or a Fund's manager believes to be contrary to the Frequent Trading Policy.

The Funds often receive orders through financial intermediaries who trade Fund shares through omnibus accounts (i.e., a single account in which the transactions of individual shareowners are combined). When possible, the Funds obtain contractual agreements with intermediaries to enforce the Funds' redemption policies, and rely on intermediaries to have reasonable procedures in place to detect and prevent market timing of Fund shares. The Funds cannot always identify all intermediaries, or detect or prevent trading that violates the Frequent Trading Policy through intermediaries or omnibus accounts. Some intermediaries trade shares of several funds and cannot always enforce a particular fund's policies.

Tax Consequences

Dividends and capital gains distributions may be subject to income tax, whether they are paid in cash or reinvested in additional Fund shares, depending on the type of distribution, the type of your account, and your city, state, and country of tax residence. Income dividends paid by the Income, Growth, and Developing World Funds are normally eligible for the "qualified dividend income" tax rate.

Investors may realize a capital gain or loss on any redemption or exchange of Fund shares.

Shareowners receive quarterly statements. The year-end statement should be retained for tax accounting. As transfer agent, Saturna Capital Corporation keeps each account's entire investment transaction history and helps shareowners maintain the tax records needed to determine reportable capital gains and losses as well as dividend income.

Each February, the Funds' transfer agent reports to each shareowner (consolidated by US taxpayer identification number) and to the IRS the amount of each redemption transaction of the shareowner and the amount of dividends and capital gains distributions he or she received for the preceding calendar year. Capital gains a Fund distributes may be taxed at different rates, depending on the length of time the Fund held its investments on which the gains were realized.

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

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

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

The Trust places no formal restrictions on portfolio turnover and the Funds' investment adviser will buy or sell investments per its appraisal of the factors affecting each investment, such as its business, its industry, and the market. The Amana Income Fund and Amana Growth Fund have historically had low portfolio turnover, and their portfolio turnover is expected to be lower than

23


that of comparable actively-managed equity funds. Each Fund's portfolio manager seeks to minimize income taxes through a "buy and hold" strategy with low portfolio turnover, offsetting capital gains with losses, and selling highest-cost tax-lots first. A Fund's portfolio investments may have a higher level of unrealized capital appreciation than if the Fund did not use these strategies. During periods of net redemptions or when market conditions warrant, the portfolio manager may sell these investments, generating a higher level of capital gains distributions than would occur if the Fund had not used these low-turnover strategies.

Distribution Arrangements

The Trust has a distribution plan under Rule 12b-1 that allows it to pay distribution and other costs for the sale of Investor Shares and services provided to shareowners. Under the plan, Investor Shares may pay up to 0.25% annually of their average daily net assets. Because these costs are paid out of Investor Share assets on an ongoing basis, over time these costs will increase the cost of your investment in Income Fund, Growth Fund, Developing World Fund, and Participation Fund Investor Shares and may cost you more than paying other types of sales charges. Institutional Shares do not pay 12b-1 fees.

Shares may be purchased and sold through intermediaries, such as broker-dealers and retirement plan administrators, having agreements with the Funds. These intermediaries may charge investors and/or require the adviser/distributor to the Funds to share revenues for their services. Any such payments are in addition to any distribution and service fees paid out of the Trust's 12b-1 plan and could be characterized as "revenue sharing." An intermediary's receipt or expectation of receipt could influence an intermediary's recommendation of the Funds. You should review your intermediary's compensation practices. For more information, see the Trust's Statement of Additional Information.

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[Logo omitted]

Financial Highlights

The tables on the following pages are provided to help you understand each Fund's financial performance. The top section of each table reflects financial results for a single Fund share. The total returns represent the rate that an investor earned (or lost) on an investment in each Fund, assuming reinvestment of all dividends and other distributions and without regard to income taxes. Tait, Weller & Baker, LLP, the independent registered public accounting firm for the Funds, audited this information. Their report and each Fund's financial statements are in the Trust's annual report (available free upon request from the Funds at www.amanafunds.com or by calling 1-888-732-6262).

25


Amana Income Fund: Financial Highlights

Investor Shares (AMANX)

Year ended May 31,

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

2018

2017

2016

2015

2014

Net asset value at beginning of period

$48.03

$44.35

$47.01

$45.34

$38.79

Income from investment operations

    Net investment incomeA

0.58

0.59

0.62

0.58

0.72

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

3.28

4.90

(0.38)

2.10

6.56

Total from investment operations

3.86

5.49

0.24

2.68

7.28

Less distributions

    Dividends (from net investment income)

(0.57)

(0.58)

(0.65)

(0.60)

(0.73)

    Distributions (from capital gains)

(2.41)

(1.23)

(2.25)

(0.41)

-

Total distributions

(2.98)

(1.81)

(2.90)

(1.01)

(0.73)

 

Net asset value at end of period

$48.91

$48.03

$44.35

$47.01

$45.34

 

Total Return

7.82%

12.67%

0.81%

5.94%

18.82%

 

Ratios / supplemental data

Net assets ($000), end of period

$882,571

$956,977

$1,047,345

$1,357,567

$1,524,471

Ratio of expenses to average net assets

    Before custodian fee credits

1.13%

1.13%

1.15%

1.13%

1.15%

    After custodian fee credits

1.12%

1.12%

1.14%

1.12%

1.14%

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

1.14%

1.29%

1.41%

1.26%

1.71%

Portfolio turnover rate

1%

1%

0%

0%

1%

 

Institutional Shares (AMINX)

Year ended May 31,

Period endedB

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

2018

2017

2016

2015

May 31, 2014

Net asset value at beginning of period

$47.90

$44.30

$46.97

$45.30

$40.66

Income from investment operations

    Net investment incomeA

0.70

0.70

0.75

0.72

0.69

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

3.26

4.90

(0.40)

2.09

4.79

Total from investment operations

3.96

5.60

0.35

2.81

5.48

Less distributions

    Dividends (from net investment income)

(0.73)

(0.77)

(0.77)

(0.73)

(0.84)

    Distributions (from capital gains)

(2.41)

(1.23)

(2.25)

(0.41)

-

Total distributions

(3.14)

(2.00)

(3.02)

(1.14)

(0.84)

 

Net asset value at end of period

$48.72

$47.90

$44.30

$46.97

$45.30

 

Total ReturnC

8.05%

12.96%

1.06%

6.22%

13.53%

 

Ratios / supplemental data

Net assets ($000), end of period

$451,651

$372,621

$235,928

$150,831

$83,805

Ratio of expenses to average net assets

    Before custodian fee creditsD

0.89%

0.89%

0.90%

0.88%

0.90%

    After custodian fee creditsD

0.88%

0.89%

0.89%

0.87%

0.90%

Ratio of net investment income after custodian fee credits to average net assetsD

1.39%

1.52%

1.71%

1.54%

2.32%

Portfolio turnover rateC

1%

1%

0%

0%

1%

A Calculated using average shares outstanding
B Operations commenced on 09/25/2013
C Not annualized for periods of less than one year
D Annualized for periods of less than one year

26


Amana Growth Fund: Financial Highlights

Investor Shares (AMAGX)

Year ended May 31,

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

2018

2017

2016

2015

2014

Net asset value at beginning of period

$34.42

$33.05

$35.14

$33.22

$29.03

Income from investment operations

    Net investment incomeA

0.16

0.17

0.18

0.13

0.12

    Net gains on securities (both realized and unrealized)

5.47

5.30

0.09

4.02

5.10

Total from investment operations

5.63

5.47

0.27

4.15

5.22

Less distributions

    Dividends (from net investment income)

(0.17)

(0.22)

(0.17)

(0.13)

(0.19)

    Distributions (from capital gains)

(3.64)

(3.88)

(2.19)

(2.10)

(0.84)

Total distributions

(3.81)

(4.10)

(2.36)

(2.23)

(1.03)

 

Net asset value at end of period

$36.24

$34.42

$33.05

$35.14

$33.22

 

Total Return

16.76%

18.38%

1.06%

12.66%

18.12%

 

Ratios / supplemental data

Net assets ($000), end of period

$1,137,705

$1,113,440

$1,286,511

$1,879,365

$1,890,187

Ratio of expenses to average net assets

    Before custodian fee credits

1.09%

1.10%

1.09%

1.08%

1.10%

    After custodian fee credits

1.09%

1.09%

1.09%

1.08%

1.09%

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

0.45%

0.52%

0.54%

0.38%

0.39%

Portfolio turnover rate

0%

0%B

0%

0%

0%

 

Institutional Shares (AMIGX)

Year ended May 31

Period endedC

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

2018

2017

2016

2015

May 31, 2014

Net asset value at beginning of period

$34.53

$33.11

$35.17

$33.23

$30.45

Income from investment operations

    Net investment incomeA

0.25

0.26

0.29

0.25

0.16

    Net gains on securities (both realized and unrealized)

5.49

5.31

0.07

3.97

3.70

Total from investment operations

5.74

5.57

0.36

4.22

3.86

Less distributions

    Dividends (from net investment income)

(0.26)

(0.27)

(0.23)

(0.18)

(0.24)

    Distributions (from capital gains)

(3.64)

(3.88)

(2.19)

(2.10)

(0.84)

Total distributions

(3.90)

(4.15)

(2.42)

(2.28)

(1.08)

 

Net asset value at end of period

$36.37

$34.53

$33.11

$35.17

$33.23

 

Total ReturnD

17.03%

18.67%

1.31%

12.88%

12.82%

 

Ratios / supplemental data

Net assets ($000), end of period

$565,740

$442,747

$457,898

$172,281

$94,349

Ratio of expenses to average net assets

    Before custodian fee creditsE

0.86%

0.86%

0.85%

0.83%

0.87%

    After custodian fee creditsE

0.86%

0.85%

0.85%

0.83%

0.87%

Ratio of net investment income after custodian fee credits to average net assetsE

0.70%

0.78%

0.89%

0.65%

0.70%

Portfolio turnover rateD

0%

0%B

0%

0%

0%

A Calculated using average shares outstanding
B Amount is less than 0.5%
C Operations commenced on 09/25/2013
D Not annualized for periods of less than one year
E Annualized for periods of less than one year

27


Amana Developing World Fund: Financial Highlights

Investor Shares (AMDWX)

Year ended May 31,

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

2018

2017

2016

2015

2014

Net asset value at beginning of period

$9.97

$9.38

$10.29

$10.88

$10.94

Income from investment operations

    Net investment incomeA

0.03

0.04

0.03

0.05

0.01

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

0.07

0.57

(0.89)

(0.62)

(0.03)

Total from investment operations

0.10

0.61

(0.86)

(0.57)

(0.02)

Less distributions

    Dividends (from net investment income)

(0.02)

(0.02)

(0.05)

(0.02)

(0.04)

Total distributions

(0.02)

(0.02)

(0.05)

(0.02)

(0.04)

 

Net asset value at end of period

$10.05

$9.97

$9.38

$10.29

$10.88

 

Total return

0.98%

6.59%

(8.32)%

(5.24)%

(0.17)%

 

Ratios / supplemental data

Net assets ($000), end of period

$15,067

$14,820

$17,781

$21,051

$20,775

Ratio of expenses to average net assets

    Before custodian fee credits

1.37%

1.35%

1.51%

1.54%

1.59%

    After custodian fee credits

1.32%

1.30%

1.45%

1.48%

1.54%

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

0.27%

0.41%

0.37%

0.50%

0.06%

Portfolio turnover rate

20%

10%

33%

14%

11%

 

Institutional Shares (AMIDX)

Year ended May 31,

Period endedB

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

2018

2017

2016

2015

May 31, 2014

Net asset value at beginning of period

$9.99

$9.43

$10.33

$10.91

$10.87

Income from investment operations

    Net investment incomeA

0.05

0.06

0.06

0.09

0.05

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

0.07

0.57

(0.89)

(0.63)

0.03

Total from investment operations

0.12

0.63

(0.83)

(0.54)

0.08

Less distributions

    Dividends (from net investment income)

(0.03)

(0.07)

(0.07)

(0.04)

(0.04)

Total distributions

(0.03)

(0.07)

(0.07)

(0.04)

(0.04)

 

Net asset value at end of period

$10.08

$9.99

$9.43

$10.33

$10.91

 

Total ReturnC

1.17%

6.74%

(8.00)%

(4.96)%

0.75%

 

Ratios / supplemental data

Net assets ($000), end of period

$16,034

$14,203

$7,340

$8,442

$7,406

Ratio of expenses to average net assets

    Before custodian fee creditsD

1.19%

1.14%

1.20%

1.24%

1.40%

    After custodian fee creditsD

1.14%

1.09%

1.14%

1.18%

1.35%

Ratio of net investment income after custodian fee credits to average net assetsD

0.44%

0.65%

0.67%

0.86%

0.64%

Portfolio turnover rateC

20%

10%

33%

14%

11%

A Calculated using average shares outstanding
B Operations commenced on 09/25/2013
C Not annualized for periods of less than one year
D Annualized for periods of less than one year

28


Amana Participation Fund: Financial Highlights

Investor Shares (AMAPX)

Year ended May 31,

Period endedA

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

2018

2017

May 31, 2016

Net asset value at beginning of period

$10.07

$10.02

$10.00

Income from investment operations

    Net investment incomeB

0.22

0.21

0.10

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

(0.31)

0.07

(0.01)

Total from investment operations

(0.09)

0.28

0.09

Less distributions

    Dividends (from net investment income)

(0.22)

(0.22)

(0.07)

    Distribution (from capital gains)

-

(0.01)

-

Total distributions

(0.22)

(0.23)

(0.07)

    Paid-in capital from early redemption feesC

0.00

0.00

0.00

 

Net asset value at end of period

$9.76

$10.07

$10.02

 

Total ReturnD

(0.94)%

2.87%

0.91%

 

Ratios / supplemental data

Net assets ($000), end of period

$18,212

$12,014

$3,016

Ratio of expenses to average net assets

    Before custodian fee creditsE

0.87%

0.92%

1.12%

    After custodian fee creditsE

0.85%

0.91%

1.12%

Ratio of net investment income after custodian fee credits to average net assetsE

2.18%

2.14%

1.53%

Portfolio turnover rateD

7%

23%

0%

 

Institutional Shares (AMIPX)

Year ended May 31,

Period endedA

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

2018

2017

May 31, 2016

Net asset value at beginning of period

$10.11

$10.05

$10.00

Income from investment operations

    Net investment incomeB

0.24

0.24

0.07

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

(0.32)

0.06

0.04

Total from investment operations

(0.08)

0.30

0.11

Less distributions

    Dividends (from net investment income)

(0.24)

(0.23)

(0.06)

    Distribution (from capital gains)

-

(0.01)

-

Total distributions

(0.24)

(0.24)

(0.06)

    Paid-in capital from early redemption feesC

0.00

0.00

0.00

 

Net asset value at end of period

$9.79

$10.11

$10.05

 

Total ReturnD

(0.80)%

3.09%

1.10%

 

Ratios / supplemental data

Net assets ($000), end of period

$44,729

$26,200

$12,727

Ratio of expenses to average net assets

    Before custodian fee creditsE

0.62%

0.68%

0.72%

    After custodian fee creditsE

0.60%

0.67%

0.72%

Ratio of net investment income after custodian fee credits to average net assetsE

2.45%

2.38%

0.99%

Portfolio turnover rateD

7%

23%

0%

A Operations commenced on 9/28/2015
B Calculated using average shares outstanding
C Amount is less than $0.01
D Not annualized for periods of less than one year
E Annualized for period of less than on year

29


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30


Except for this legend, this page has been left blank intentionally.

31


Additional information about each Fund's investments and operations is available in the Trust's annual and semi-annual shareowner reports. The Trust's annual report includes a discussion of the market conditions and investment strategies that significantly affected each Fund's performance during its last fiscal year. A Statement of Additional Information (SAI) contains more details, and is incorporated in this Prospectus by reference.

To obtain free copies of these documents and other information, and to make shareowner inquiries, please contact us at:

(logo omitted)

Saturna Capital
1300 North State Street
Bellingham, WA 98225-4730
1-800-728-8762
www.saturna.com

(logo omitted)

Amana Mutual Funds Trust
1-888-732-6262   www.amanafunds.com

Copies of the Statement of Additional Information and the annual and semi-annual reports are also available on our website, www.amanafunds.com.

Information about the Trust (including the SAI) can be reviewed and copied at the SEC's Public Reference Room in Washington, DC (call 202-551-8090 for information). Reports and other information about the Trust are also available on the SEC's EDGAR database (www.sec.gov) and copies may be obtained, upon payment of a duplicating fee, by e-mail request to publicinfo@sec.gov or writing the Public Reference Section of the SEC, Washington, DC 20549-1520.

♻ This report is printed on paper with a minimum of 30% post-consumer fiber using soy-based inks. It is 100% recyclable.

Amana's Investment Company Act file number is 811-04276.


# # #


Amana Mutual Funds Trust Annual Report May 31, 2018

(graphic omitted)

Amana Mutual Funds Trust

Annual Report

May 31, 2018

Income Fund
AMANX | AMINX

Growth Fund
AMAGX | AMIGX

Developing World Fund
AMDWX | AMIDX

Participation Fund
AMAPX | AMIPX


Performance Summary

(unaudited)

As of May 31, 2018

Average Annual Returns (before any taxes paid by shareowners)

1 Year

3 Year

5 Year

10 Year

15 Year

Expense Ratio1

Amana Income Fund Investor Shares (AMANX)

7.82%

6.99%

9.04%

7.42%

10.81%

1.13%

Amana Income Fund Institutional Shares (AMINX)

8.05%

7.24%

n/a

n/a

n/a

0.89%

Amana Growth Fund Investor Shares (AMAGX)

16.76%

11.79%

13.20%

8.86%

12.01%

1.10%

Amana Growth Fund Institutional Shares (AMIGX)

17.03%

12.05%

n/a

n/a

n/a

0.86%

Amana Developing World Fund Investor Shares (AMDWX)

0.98%

-0.44%

-1.36%

n/a

n/a

1.35%

Amana Developing World Fund Institutional Shares (AMIDX)

1.17%

-0.22%

n/a

n/a

n/a

1.14%

Amana Participation Fund Investor Shares (AMAPX)

-0.94%

n/a

n/a

n/a

n/a

0.92%

Amana Participation Fund Institutional Shares (AMIPX)

-0.80%

n/a

n/a

n/a

n/a

0.68%

As of June 30, 2018

Average Annual Returns (before any taxes paid by shareowners)

1 Year

3 Year

5 Year

10 Year

15 Year

Expense Ratio1

Amana Income Fund Investor Shares (AMANX)

6.93%

7.77%

9.37%

8.06%

10.72%

1.13%

Amana Income Fund Institutional Shares (AMINX)

7.18%

8.03%

n/a

n/a

n/a

0.89%

Amana Growth Fund Investor Shares (AMAGX)

17.14%

12.84%

13.73%

9.58%

11.83%

1.10%

Amana Growth Fund Institutional Shares (AMIGX)

17.43%

13.12%

n/a

n/a

n/a

0.86%

Amana Developing World Fund Investor Shares (AMDWX)

-2.03%

-0.53%

-1.19%

n/a

n/a

1.35%

Amana Developing World Fund Institutional Shares (AMIDX)

-1.84%

-0.31%

n/a

n/a

n/a

1.14%

Amana Participation Fund Investor Shares (AMAPX)

-0.43%

n/a

n/a

n/a

n/a

0.92%

Amana Participation Fund Institutional Shares (AMIPX)

-0.09%

n/a

n/a

n/a

n/a

0.68%

Performance data quoted in this report represents past performance, is before any taxes payable by shareowners, and is no guarantee of future results. Current performance may be higher or lower than that stated herein. Performance current to the most recent month-end is available by calling toll-free 1-888-732-6262 or visiting www.amanafunds.com. Average annual total returns are historical and include change in share value as well as reinvestment of dividends and capital gains, if any. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Amana Funds limit the securities they purchase to those consistent with Islamic principles, which limits opportunities and may affect performance.

The Amana Developing World Fund began operations September 28, 2009.

Institutional Shares of the Amana Income, Growth, and Developing World Funds began operations September 25, 2013.

The Amana Participation Fund began operations September 28, 2015.

A note about risk: Please see the Notes to Financial Statements beginning on page 40 for a discussion of investment risks. For a more detailed discussion of the risks associated with each Fund, please see the Funds' prospectus or each Fund's summary prospectus.

¹ By regulation, expense ratios shown in this table are as stated in the Funds' most recent prospectus which is dated September 21, 2017, and incorporates results for the fiscal year ended May 31, 2017. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different fiscal periods. Also by regulation, this page shows performance as of the most recent calendar quarter-end in addition to performance through the Funds' most recent fiscal period.

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 Amana Funds, please call toll-free 1-888-732-6262 or visit www.amanafunds.com. Please read the prospectus or summary prospectus carefully before investing.

2

Annual Report

May 31, 2018

Fellow Shareowners:

Equity markets continued strongly for the 12 months ended May 31, 2018. Total return for the S&P 500 Index was 14.38%, and for the broader Dow Jones Islamic Market World Developed Index was 16.37%. Foreign markets performed as well, with the MSCI Emerging Markets Index up 14.03%. Islamic fixed-income markets were more subdued, with the FTSE Sukuk Index falling -0.11%.

The Amana Fund portfolios performed respectably compared to these domestic and foreign indices, which do not have operating expenses. Amana Growth Investor Shares gained 16.76%, Amana Income Investor Shares gained 7.82%, Amana Developing World Investor Shares rose 0.98%, and Amana Participation Investor Shares fell -0.94% for the 12 month period. As expected, lower expenses allowed the Institutional class shares of each Fund to post slightly better returns: Amana Growth 17.03%, Amana Income 8.05%, Amana Developing World 1.17%, and Amana Participation -0.80%. Over 34% of Amana's assets are now in Institutional shares.

The Amana Funds follow Islamic principles, which preclude most investments in banking and finance. We favor companies with low debt levels and strong balance sheets.

Mixed 2018 following strong 2017

Markets rose with abandon during the last half of 2017, but the euphoria melted away as caution brought volatility and doubt. Emerging markets, led by China, suffered as the dollar surged and trade wars loomed. Oil and coal stocks, which we avoid for environmental reasons, were the big winners following political failures in countries such as Venezuela, Brazil, and Iran. Central banks are cutting a decade of stimulus and low rates. In the US, lower taxes are stimulating vast investments, especially in technology, while the global supply chain is being rattled by trade revamps. The future, as always, is murky.

Top Long-Term Results

As experienced investors, we know that gains or losses over a short interval tell an incomplete story compared to performance evaluated over a lengthier time span. That's why the long-term performance recognition that Amana has received is so important to our shareowners.

As of June 30, Amana Income and Amana Growth maintained strong long-term rankings in their respective mutual fund categories. Amana Income Investor Shares ranked in the top 2% in Morningstar's "Large Blend" category, out of 497 similar funds surviving for at least 15 years. Amana Growth Investor Shares ranked in the top 9% in the "Large Growth" category, out of 555 similar funds surviving for 15 years. Please refer to "Morningstar Ratings" on pages 6 and 7 for more details.

New Lower Fees

Beginning January 1, 2018, the Amana equity funds are operating with expenses lower by three to 10 basis points. The trustees approved an advisory fee reduction at their meeting on December 11, 2017, lowering the fees of the Income, Growth, and Developing World Funds to 0.85% on the first $1 billion of a fund's average daily net assets, 0.75% on the next $1 billion, and 0.65% on assets over $2 billion. There is no change to the 0.50% advisory fee for the Participation Fund.

Amana Participation Fund Assets Grow 65%

Assets in each of the Amana funds grew for the year, with the total up 6% at $3.1 billion. The newest is the Participation Fund, whose objectives are capital preservation and current income, consistent with Islamic principles. Participation Fund assets as of May 31, 2018, were $63 million, up 65% from May 31, 2017.

The Participation Fund invests primarily in income-producing notes and certificates issued by foreign governments, their agencies, and financial institutions in transactions structured to be in accordance with Islamic principles – commonly known as sukuk. While the risks of investing in foreign fixed-income issues are material, we believe the Amana Participation Fund offers investors seeking exposure to Islamic fixed-income an excellent opportunity. The Fund may be especially appealing to investors seeking a balance to the other three Amana Funds, which invest only in equities.

Amana Income Fund – 32 Years of Solid Investing

On June 23, 1986, Amana Income Fund began operations, with both Dr. Yaqub Mirza and Mr. Nicholas Kaiser as founding members of the board of trustees.

Annual Report

May 31, 2018

3

From inception to May 31, 2018 – almost 32 years – the Fund's Investor Shares provided an average annual return of 8.63% (after expenses). Few investment vehicles have such a long-term record of success.

As Dr. Mirza and Mr. Kaiser plan for eventual retirement, and as careful stewards, they are working to ensure the established methods of Amana's successful investing are continued by capable hands in the next generation.

As a group, the five Amana trustees are solidly committed to investing in Amana mutual funds. Including their affiliated accounts, they currently have over $21 million invested in the four mutual funds of the Trust.

Morningstar Awards Amana Highest Sustainability Ratings

The Morningstar Sustainability Rating for funds premiered in March of 2016 (see details on next page), giving investors across the globe a way to compare mutual fund portfolios based on an independent measure of sustainability. The Morningstar ratings are calculated using fund holdings data underpinned with company-level environmental, social, and governance (ESG) information from Sustainalytics, a leading provider of ESG research. All three Amana equity funds received Morningstar's highest "5 Globe" Sustainability Ratings at May 31, 2018.

Income Fund ranked in the second percentile of 1,156 funds in its category, and Growth Fund ranked in the first percentile of 1,269 funds in its category. Developing World Fund ranked in the sixth percentile of 674 funds in its category.

We believe the high ratings the Amana Funds received provide strong evidence of the linkage between Islamic and sustainable investing. Investors are cautioned, however, that more than 150 vendors offer "sustainable" investments data, and that no accepted global measurement yet exists.

Respectfully,

(photo omitted)

Nicholas Kaiser,
President

(photo omitted)

M. Yaqub Mirza,
Independent Board Chairman

Amana Funds Portfolio Managers

(photo omitted)

Nicholas Kaiser MBA, CFA®
Amana Income Fund, Amana Growth Fund
Portfolio Manager

 

(photo omitted)

Patrick Drum MBA, CFA®, CFP®
Amana Participation Fund
Portfolio Manager

 

(photo omitted)

Scott Klimo CFA®
Amana Developing World Fund
Portfolio Manager
Amana Income Fund, Amana Growth Fund
Deputy Portfolio Manager

 

(photo omitted)

Bryce Fegley CFA®, CIPM®
Amana Participation Fund
Deputy Portfolio Manager

 

(photo omitted)

Monem Salam MBA
Amana Income Fund, Amana Growth Fund
Amana Developing World Fund
Deputy Portfolio Manager

 

 

4

Annual Report

May 31, 2018

 

Morningstar Sustainability Ratings

As of May 31, 2018 (unaudited)

At Saturna Capital, we have long described ourselves as value and values-based investors. We believe our approach improves the likelihood of achieving superior investment results over the long term. Our approach also leads to investment portfolios we can be proud of from the perspective of Environmental, Social, and Governance (ESG) issues. Morningstar partners with leading ESG research firm Sustainalytics to publish the Morningstar Sustainability Rating – here are the rated Amana Funds' fiscal year-end results:

Amana Income Fund

 

Amana Growth Fund

Investor Shares (AMANX)

Ø Ø Ø Ø Ø

Investor Shares (AMAGX)

Ø Ø Ø Ø Ø

Institutional Shares (AMINX)

Ø Ø Ø Ø Ø

Institutional Shares (AMIGX)

Ø Ø Ø Ø Ø

% Rank in Category: 2

% Rank in Category: 1

Among 1,156 Large Blend Funds

Among 1,269 Large Growth Funds

   

Amana Developing World Fund

The Morningstar Sustainability Rating gives investors across the globe a way to compare fund portfolios based on a standard measure of sustainability. The rating is a holdings-based calculation using company-level environmental, social, and governance (ESG) analytics from Sustainalytics.

Investor Shares (AMDWX)

Ø Ø Ø Ø Ø

Institutional Shares (AMIDX)

Ø Ø Ø Ø Ø

% Rank in Category: 6

Among 674 Diversified Emerging Markets Funds

The Morningstar Sustainability Rating is not based on fund performance and is not equivalent to the Morningstar Rating ("Star Rating").

© 2018 Morningstar®. All rights reserved. Morningstar, Inc. is an independent fund performance monitor. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Morningstar Sustainability Ratings are as of May 31, 2018. The Morningstar Sustainability Rating is intended to measure how well the issuing companies of the securities within a fund's portfolio are managing their environmental, social, and governance ("ESG") risks and opportunities relative to the fund's Morningstar category peers. The Morningstar Sustainability Rating calculation is a two-step process. First, each fund with at least 50% of assets covered by a company-level ESG score from Sustainalytics receives a Morningstar Portfolio Sustainability Score. The Morningstar Portfolio Sustainability Score is an asset-weighted average of normalized company-level ESG scores with deductions made for controversial incidents by the issuing companies, such as environmental accidents, fraud, or discriminatory behavior. The Morningstar Sustainability Rating is then assigned to all scored funds within Morningstar Categories in which at least ten (10) funds receive a Portfolio Sustainability Score and is determined by each fund's rank within the following distribution: High (highest 10%), Above Average (next 22.5%), Average (next 35%), Below Average (next 22.5%), and Low (lowest 10%). The Morningstar Sustainability Rating is depicted by globe icons where High equals 5 globes and Low equals 1 globe. A Sustainability Rating is assigned to any fund that has more than half of its underlying assets rated by Sustainalytics and is within a Morningstar Category with at least 10 scored funds; therefore, the rating it is not limited to funds with explicit sustainable or responsible investment mandates. Morningstar updates its Sustainability Ratings monthly. Portfolios receive a Morningstar Portfolio Sustainability Score and Sustainability Rating one month and six business days after their reported as-of date based on the most recent portfolio. As part of the evaluation process, Morningstar uses Sustainalytics' ESG scores from the same month as the portfolio as-of date.

The Funds were rated on the following percentages of Assets Under Management:

Amana Income Fund 95%
Amana Growth Fund 98%
Amana Developing World Fund 83%

The Funds' portfolios are actively managed and are subject to change, which may result in a different Morningstar Sustainability Score and Rating.

% Rank in Category is the fund's percentile rank for the specified time period relative to all funds that have the same Morningstar category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1. Percentile ranks within categories are most useful in those categories that have a large number of funds.

The Amana Participation Fund has not yet received a Morningstar Sustainability Rating.

Annual Report

May 31, 2018

5

 

Morningstar Ratings (as of May 31, 2018)

(unaudited)

Morningstar Ratings1

1 Year

3 Year

5 Year

10 Year

15 Year

Overall

Amana Income Fund – "Large Blend" Category

Investor Shares (AMANX)

n/a

★ ★

★ ★

★ ★ ★

n/a

★ ★ ★

    % Rank in Category

92

86

90

74

3

n/a

Institutional Shares (AMINX)

n/a

★ ★

☆ ☆

☆ ☆ ☆

n/a

★ ★

    % Rank in Category

92

84

88

73

2

n/a

Number of Funds in Category

1,344

1,156

1,033

768

495

1,156

Amana Growth Fund – "Large Growth" Category

Investor Shares (AMAGX)

n/a

★ ★ ★

★ ★ ★

★ ★ ★

n/a

★ ★ ★

    % Rank in Category

72

50

63

62

8

n/a

Institutional Shares (AMIGX)

n/a

★ ★ ★

☆ ☆ ☆

☆ ☆ ☆

n/a

★ ★ ★

    % Rank in Category

70

47

58

60

7

n/a

Number of Funds in Category

1,461

1,269

1,151

836

559

1,269

Amana Developing World Fund – "Diversified Emerging Markets" Category

Investor Shares (AMDWX)

n/a

n/a

n/a

    % Rank in Category

97

97

98

n/a

n/a

n/a

Institutional Shares (AMIDX)

n/a

n/a

n/a

    % Rank in Category

96

97

98

n/a

n/a

n/a

Number of Funds in Category

819

674

486

n/a

n/a

674

Amana Participation Fund – "Emerging Markets Bond" Category

Investor Shares (AMAPX)

n/a

n/a

n/a

n/a

n/a

n/a

    % Rank in Category

70

n/a

n/a

n/a

n/a

n/a

Institutional Shares (AMIPX)

n/a

n/a

n/a

n/a

n/a

n/a

    % Rank in Category

67

n/a

n/a

n/a

n/a

n/a

Number of Funds in Category

293

n/a

n/a

n/a

n/a

n/a

¹ Source: Morningstar May 31, 2018 and June 30, 2018. Morningstar, Inc. is an independent fund performance monitor. The Morningstar Rating for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history.  Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes.  It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance (not including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance.  The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star.  The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics.  The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings represented as unshaded stars are based on extended performance. These extended performance ratings are based on the historical adjusted returns prior to the inception date of the institutional shares and reflect the historical performance of the investor shares, adjusted to reflect the fees and expenses of the institutional shares.

% Rank in Category is the fund's percentile rank for the specified time period relative to all funds that have the same Morningstar category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1. Percentile ranks within categories are most useful in those categories that have a large number of funds.

Performance data quoted in this report represents past performance, is after expenses paid by a fund, is before any taxes payable by shareowners, and is no guarantee of future results.

6

Annual Report

May 31, 2018

 

Morningstar Ratings (as of June 30, 2018)

(unaudited)

Morningstar Ratings1

1 Year

3 Year

5 Year

10 Year

15 Year

Overall

Amana Income Fund – "Large Blend" Category

Investor Shares (AMANX)

n/a

★ ★ ★

★ ★

★ ★

n/a

★ ★ ★

    % Rank in Category

94

86

90

78

2

n/a

Institutional Shares (AMINX)

n/a

★ ★

☆ ☆

☆ ☆

n/a

★ ★ ★

    % Rank in Category

93

84

88

76

2

n/a

Number of Funds in Category

1,353

1,166

1,042

776

497

1,166

Amana Growth Fund – "Large Growth" Category

Investor Shares (AMAGX)

n/a

★ ★ ★

★ ★ ★

★ ★ ★

n/a

★ ★ ★

    % Rank in Category

70

45

64

67

9

n/a

Institutional Shares (AMIGX)

n/a

★ ★ ★

☆ ☆ ☆

☆ ☆ ☆

n/a

★ ★ ★

    % Rank in Category

68

42

60

64

8

n/a

Number of Funds in Category

1,454

1,265

1,141

825

555

1,265

Amana Developing World Fund – "Diversified Emerging Markets" Category

Investor Shares (AMDWX)

n/a

n/a

n/a

    % Rank in Category

95

94

98

n/a

n/a

n/a

Institutional Shares (AMIDX)

n/a

n/a

n/a

    % Rank in Category

94

97

98

n/a

n/a

n/a

Number of Funds in Category

823

688

489

n/a

n/a

688

Amana Participation Fund – "Emerging Markets Bond" Category

Investor Shares (AMAPX)

n/a

n/a

n/a

n/a

n/a

n/a

    % Rank in Category

20

n/a

n/a

n/a

n/a

n/a

Institutional Shares (AMIPX)

n/a

n/a

n/a

n/a

n/a

n/a

    % Rank in Category

18

n/a

n/a

n/a

n/a

n/a

Number of Funds in Category

288

n/a

n/a

n/a

n/a

n/a

 

Annual Report

May 31, 2018

7

 

Amana Income Fund: Performance Summary

(unaudited)

Average Annual Returns (as of May 31, 2018)

 

1 Year

5 Year

10 Year

Expense Ratio¹

Investor Shares (AMANX)

7.82%

9.04%

7.42%

1.13%

Institutional Shares (AMINX)²

8.05%

n/a

n/a

0.89%

S&P 500 Index

14.38%

12.97%

9.13%

n/a

Growth of $10,000

Amana Income Fund 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 operational 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 Investor Shares of the Fund on May 31, 2018, to an identical amount invested in the S&P 500 Index, a broad-based stock market index. The graph shows that an investment in Investor Shares of the Fund would have risen to $20,452 versus $23,972 in the Index. Investor Shares are used in this chart because they represent the larger share class in terms of assets and have a longer track record. Please note that investors cannot invest directly in the index.

Past performance does not guarantee future results. The"Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, expense ratios shown in this table are as stated in the Funds' most recent prospectus, which is dated September 21, 2017, and incorporates results for the fiscal year ended May 31, 2017. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent older fiscal periods.

² Institutional shares of the Amana Income Fund began operations September 25, 2013.

Fund Objective

The objectives of the Income Fund are current income and preservation of capital, consistent with Islamic principles; current income is its primary objective.

Top 10 Holdings

 

Portfolio Diversification

% of Total Net Assets

% of Total Net Assets

 

Microsoft

4.1%

Large Pharma

16.9%

Amana Income Fund Portfolio Diversification

Eli Lilly

4.0%

Semiconductor Devices

7.4%

Rockwell Automation

3.9%

Specialty Chemicals

6.8%

3M

3.8%

Basic & Diversified Chemicals

6.5%

Intel

3.7%

Household Products

5.8%

Microchip Technology

3.7%

Packaged Food

5.7%

Parker Hannifin

3.5%

Commercial & Residential Building Equipment & Systems

4.6%

Canadian National Railway

3.3%

Infrastructure Software

4.1%

Honeywell International

3.3%

Measurement Instruments

3.9%

Illinois Tool Works

3.2%

Containers & Packaging

3.8%

 

Flow Control Equipment

3.5%

Rail Freight

3.3%

Industrial Machinery

3.2%

Apparel, Footwear & Accessory Design

2.9%

Non Wood Building Materials

2.7%

Automotive Retailers

2.6%

Other Industries < 2.5%

11.2%

Other assets (net of liabilities)

5.1%

 

8

Annual Report

May 31, 2018

 

Amana Income Fund: Discussion of Fund Performance

(unaudited)

Fiscal Year 2018

For the fiscal year ended May 31, 2018, the Amana Income Fund Investor Shares returned 7.82% (versus 12.67% the year before). Reflecting its lower expense structure, Amana Income Fund Institutional Shares returned 8.05% for the year. Both underperformed the broad S&P 500 Index, up 14.38%.

Amana Income Investor Shares paid qualified income dividends totaling 57¢ per share, and the Institutional Shares paid 73¢ per share in qualified income dividends. Careful attention kept the expense ratio in check: 1.12% for Investor Shares and 0.88% for Institutional Shares. Shareowner redemptions exceeded new investments, and total Fund assets were flat during fiscal 2018.

For the 15 years ended May 31, 2018, the Amana Income Investor Shares provided an annualized total return of 10.81%. And for the almost 32 years since the Fund's inception on June 23, 1986, it has provided investors a compounded annual return of 8.63%.

Factors Affecting Past Performance

The 1960s and the 1990s were decades of nearly uninterrupted economic growth and the 2010s are now looking to stake their longevity claim. The last time the economy contracted for two consecutive quarters (the standard definition of a recession) was in the first two quarters of 2009, and current conditions appear buoyant. Despite an unemployment rate that dipped below 4% for the first time since 2000, inflation remains subdued, while corporate profitability and consumer confidence are robust. Conditions over the past several years have contributed to a go-go mentality and income-oriented stocks have been relatively lackluster performers. This has been exacerbated by rising interest rates that diminish the attractiveness of holding dividend paying stocks for some investors.

Amana Income Fund follows a value investing strategy that has served investors well over the years, buying only dividend- paying equities of financially strong companies. Avoiding leveraged and financial stocks again reduced risks during the year, as the market's focus changed to slower growth, overvaluations, and growing financial sector risks.

Despite being underweight the Technology sector, it was the largest contributor to fund returns during the year, followed by Industrials. The latter sector has been strong for several years but is currently coming under pressure due to trade uncertainty. Materials, Consumer Discretionary, and Health Care also provided positive returns. Consumer Staples was the one sector detracting from fund returns as rising interest dimmed the attraction of that sector's high dividend payers. Financials and Energy performed reasonably well during the year, so our absence from those sectors was a detriment to fund returns. We maintained low levels of cash reserves, generally in the neighborhood of 2%. Most of our positions are held at significant gains over their original cost, and we again managed portfolio turnover to minimize capital gain distributions that often are taxable to investors.

Our portfolio of well-established equities has more than 6% in each of the following industries: Large Pharma, Semiconductor Devices, Basic and Diversified Chemicals, and Specialty Chemicals.

We closed our positions in UPS and Emerson Electric.

Concerned about climate change, we have no investments in companies primarily engaged in fossil fuel extraction. As values-based investors, we are pleased that Morningstar rated Amana Income Fund in the top 2% for sustainability out of 1,156 funds in its "Large Blend" fund category for the period ended May 31, 2018.

Looking Forward

We hold no positions in the Telecommunication, Utility, or Financial industries, and no bonds or interest-paying securities – all issues likely to decline in price from rising interest rates.

At this point, the greatest risk to continued economic buoyancy appears to be trade friction, a development that could spin out of control or be contained rather easily with greater flexibility. Economic policies can and do change frequently.

Central bankers are reversing policy and understandably slowing the flow from their stimulus. An extraordinary era of low interest rates fueled upward moves in economies and markets. Central banks are now shifting toward raising rates and/or removing stimulus. We must be vigilant in the coming months for signs of a recession – we believe a riskier period looms ahead.

Amana Income Fund selects its portfolio from financially strong, Islamically acceptable, dividend-paying securities judged likely to appreciate. Our companies are well-regarded on environmental, social, and governance (ESG) measures. Many of our securities regularly increase their dividend payout rates and/or buy back shares in the market. We look for above-average earnings growth in our businesses to improve both the Fund's dividend and price growth long-term.

Annual Report

May 31, 2018

9

 

Amana Income Fund: Schedule of Investments

As of May 31, 2018

Common Stocks – 94.9%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Consumer Discretionary

   

Apparel, Footwear & Accessory Design

  Nike, Class B

540,000

$8,533,064

$38,772,000

2.9%

 

Automotive Retailers

  Genuine Parts

382,000

15,016,749

34,681,780

2.6%

 

Home Improvement

  Stanley Black & Decker

100,000

6,793,209

13,924,000

1.0%

 
 

30,343,022

87,377,780

6.5%

 

Consumer Staples

   

Beverages

  PepsiCo

250,000

15,481,726

25,062,500

1.9%

 

Household Products

  Colgate-Palmolive

524,000

18,364,706

33,059,160

2.5%

  Kimberly-Clark

230,000

13,960,736

23,195,500

1.7%

  Procter & Gamble

40,000

2,317,748

2,926,800

0.2%

  Unilever ADR

325,000

8,850,327

17,966,000

1.4%

 

43,493,517

77,147,460

5.8%

 

Packaged Food

  General Mills

500,000

15,583,597

21,145,000

1.6%

  JM Smucker

185,000

9,946,573

19,887,500

1.5%

  McCormick & Co

350,000

19,137,926

35,350,000

2.6%

 

44,668,096

76,382,500

5.7%

 
 

103,643,339

178,592,460

13.4%

 

Health Care

   

Large Pharma

  AbbVie

380,000

12,238,644

37,597,200

2.8%

  Bristol-Myers Squibb

650,000

15,185,381

34,203,000

2.6%

  Eli Lilly

620,000

22,314,728

52,724,800

4.0%

  GlaxoSmithKline ADR

342,007

11,738,923

13,858,124

1.0%

  Johnson & Johnson

230,000

16,782,694

27,512,600

2.1%

  Novartis ADR

235,400

12,412,698

17,542,008

1.3%

  Pfizer

1,150,000

20,853,910

41,319,500

3.1%

 

111,526,978

224,757,232

16.9%

 

Life Science Equipment

  Abbott Laboratories

350,000

8,392,885

21,535,500

1.6%

 
 

119,919,863

246,292,732

18.5%

 

Continued on next page.

 

10

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

 

Amana Income Fund: Schedule of Investments

As of May 31, 2018

Common Stocks – 94.9%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Industrials

   

Aircraft & Parts

  United Technologies

200,000

$10,901,612

$24,964,000

1.9%

 

Commercial & Residential Building Equipment & Systems

  Honeywell International

300,000

12,559,606

44,373,000

3.3%

  Johnson Controls International

500,000

15,219,297

16,780,000

1.3%

 

27,778,903

61,153,000

4.6%

 

Flow Control Equipment

  Parker Hannifin

275,000

12,527,667

46,997,500

3.5%

 

Industrial Distribution & Rental

  W.W. Grainger

80,000

7,590,798

24,719,200

1.9%

 

Industrial Machinery

  Illinois Tool Works

300,000

14,672,460

43,110,000

3.2%

 

Measurement Instruments

  Rockwell Automation

300,000

13,657,124

52,623,000

3.9%

 

Rail Freight

  Canadian National Railway

534,000

12,727,273

44,578,320

3.3%

 
 

99,855,837

298,145,020

22.3%

 

Materials

   

Agricultural Chemicals

  Nutrien

120,000

8,019,681

6,078,000

0.5%

 

Basic & Diversified Chemicals

  Air Products & Chemicals

200,000

11,099,528

32,282,000

2.4%

  Methanex

300,000

5,849,587

20,460,000

1.5%

  Praxair

220,000

16,103,769

34,377,200

2.6%

 

33,052,884

87,119,200

6.5%

 

Containers & Packaging

  3M

260,000

19,087,243

51,279,800

3.8%

 

Non Wood Building Materials

  Carlisle

330,000

9,208,050

35,438,700

2.7%

 

Specialty Chemicals

  DowDuPont

641,000

22,025,909

41,094,510

3.1%

  PPG Industries

400,000

13,211,578

40,368,000

3.0%

  RPM International

180,000

3,642,493

8,910,000

0.7%

 

38,879,980

90,372,510

6.8%

 
 

108,247,838

270,288,210

20.3%

 

Continued on next page.

 

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

11

 

Amana Income Fund: Schedule of Investments

As of May 31, 2018

Common Stocks – 94.9%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Technology

   

Infrastructure Software

  Microsoft

550,000

$11,610,585

$54,362,000

4.1%

 

Semiconductor Devices

  Intel

900,000

19,537,540

49,680,000

3.7%

  Microchip Technology

504,000

13,974,829

49,079,520

3.7%

 

33,512,369

98,759,520

7.4%

 

Semiconductor Manufacturing

  Taiwan Semiconductor ADR

850,048

8,455,615

32,896,857

2.4%

 
 

53,578,569

186,018,377

13.9%

 

Total investments

 

$515,588,468

1,266,714,579

94.9%

Other assets (net of liabilities)

   

67,507,238

5.1%

Total net assets

   

$1,334,221,817

100.0%

ADR: American Depository Receipt

 

12

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

Amana Income Fund

Statement of Assets and Liabilities

As of May 31, 2018

 

Assets

    Investments in securities, at value
    (Cost $515,588,468)

$1,266,714,579

    Cash

63,808,291

    Dividends receivable

5,008,434

    Receivable for security sales

1,109,737

    Receivable for Fund shares sold

924,900

    Prepaid expenses

19,318

    Insurance reserve premium

2,529

        Total assets

1,337,587,788

Liabilities

    Payable for Fund shares redeemed

1,970,351

    Accrued advisory fees

939,992

    Distributions payable

271,386

    Accrued distribution fee

98,052

    Accrued other expenses

64,052

    Accrued retirement plan custodial fees

13,982

    Accrued Chief Compliance Officer expenses

5,305

    Accrued transfer agent fees

2,851

        Total liabilities

3,365,971

Net Assets

$1,334,221,817

 

Analysis of Net Assets

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

$538,309,163

    Undistributed net investment income

76,167

    Accumulated net realized gain

44,710,376

    Unrealized net appreciation
    on investments

751,126,111

Net assets applicable to Fund shares outstanding

$1,334,221,817

 

Net asset value per Investor Share

AMANX

Net assets, at value

$882,570,677

Shares outstanding

18,045,780

Net asset value, offering and redemption price per share

$48.91

 

Net asset value per Institutional Share

AMINX

Net assets, at value

$451,651,140

Shares outstanding

9,269,946

Net asset value, offering and redemption price per share

$48.72

 

Statement of Operations

Year ended May 31, 2018

 

Investment income

    Dividend income
    (Net of foreign taxes of $592,433)

$31,134,261

    Miscellaneous income

1,935

            Total investment income

31,136,196

Expenses

    Investment adviser fees

11,597,627

    Distribution fees – Investor Shares

2,377,788

    Professional fees

87,685

    Custodian fees

67,028

    Chief Compliance Officer expenses

63,020

    Printing and postage

62,057

    Retirement plan custodial fees

        Investor Shares

119

        Institutional Shares

47,292

    Filing and registration fees

43,796

    Other expenses

32,488

    Transfer agent fees

        Investor Shares

14,991

        Institutional Shares

15,452

    Trustee fees

30,355

            Total gross expenses

14,439,698

    Less custodian fee credits

(67,028)

            Net expenses

14,372,670

Net investment income

$16,763,526

 
 

Net realized gain from investments and foreign currency

$70,428,803

Net increase in unrealized appreciation on investments

16,775,751

Net gain on investments

$87,204,554

 

Net increase in net assets resulting from operations

$103,968,080

 

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

13

Amana Income Fund

Statements of Changes in Net Assets

Year ended May 31, 2018

Year ended May 31, 2017

Increase (decrease) in net assets from operations

From operations

    Net investment income

$16,763,526

$17,550,212

    Net realized gain on investments

70,428,803

47,523,801

    Net increase in unrealized appreciation

16,775,751

91,512,622

            Net increase in net assets

103,968,080

156,586,635

Distributions to shareowners from

    Net investment income

        Investor Shares

(10,372,652)

(11,792,506)

        Institutional Shares

(6,425,892)

(5,716,985)

    Capital gains distribution

        Investor Shares

(44,098,279)

(25,333,455)

        Institutional Shares

(20,093,935)

(8,890,259)

            Total distributions

(80,990,758)

(51,733,205)

Capital share transactions

    Proceeds from the sale of shares

        Investor Shares

80,910,259

97,155,830

        Institutional Shares

124,277,086

154,775,632

    Value of shares issued in reinvestment of dividends and distributions

        Investor Shares

53,345,382

36,415,535

        Institutional Shares

25,273,099

13,859,018

    Cost of shares redeemed

        Investor Shares

(227,913,720)

(303,321,730)

        Institutional Shares

(74,245,172)

(57,412,792)

            Total capital share transactions

(18,353,066)

(58,528,507)

Total increase (decrease) in net assets

4,624,256

46,324,923

 

Net assets

Beginning of year

1,329,597,561

1,283,272,638

End of year

1,334,221,817

1,329,597,561

 

Undistributed net investment income

$76,167

$106,117

 

Shares of the Fund sold and redeemed

Investor Shares (AMANX)

    Number of shares sold

1,599,782

2,109,329

    Number of shares issued in reinvestment of dividends and distributions

1,046,923

810,297

    Number of shares redeemed

(4,524,257)

(6,613,192)

Net decrease in number of shares outstanding

(1,877,547)

(3,693,566)

 

Institutional Shares (AMINX)

    Number of shares sold

2,465,304

3,390,066

    Number of shares issued in reinvestment of dividends and distributions

498,370

308,618

    Number of shares redeemed

(1,473,507)

(1,244,687)

Net increase in number of shares outstanding

1,490,167

2,453,997

 

14

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

Amana Income Fund: Financial Highlights

Investor Shares (AMANX)

Year ended May 31,

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

2018

2017

2016

2015

2014

Net asset value at beginning of period

$48.03

$44.35

$47.01

$45.34

$38.79

Income from investment operations

    Net investment incomeA

0.58

0.59

0.62

0.58

0.72

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

3.28

4.90

(0.38)

2.10

6.56

Total from investment operations

3.86

5.49

0.24

2.68

7.28

Less distributions

    Dividends (from net investment income)

(0.57)

(0.58)

(0.65)

(0.60)

(0.73)

    Distributions (from capital gains)

(2.41)

(1.23)

(2.25)

(0.41)

-

Total distributions

(2.98)

(1.81)

(2.90)

(1.01)

(0.73)

 

Net asset value at end of period

$48.91

$48.03

$44.35

$47.01

$45.34

 

Total Return

7.82%

12.67%

0.81%

5.94%

18.82%

 

Ratios / supplemental data

Net assets ($000), end of period

$882,571

$956,977

$1,047,345

$1,357,567

$1,524,471

Ratio of expenses to average net assets

    Before custodian fee credits

1.13%

1.13%

1.15%

1.13%

1.15%

    After custodian fee credits

1.12%

1.12%

1.14%

1.12%

1.14%

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

1.14%

1.29%

1.41%

1.26%

1.71%

Portfolio turnover rate

1%

1%

0%

0%

1%

 

Institutional Shares (AMINX)

Year ended May 31,

Period endedB

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

2018

2017

2016

2015

May 31, 2014

Net asset value at beginning of period

$47.90

$44.30

$46.97

$45.30

$40.66

Income from investment operations

    Net investment incomeA

0.70

0.70

0.75

0.72

0.69

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

3.26

4.90

(0.40)

2.09

4.79

Total from investment operations

3.96

5.60

0.35

2.81

5.48

Less distributions

    Dividends (from net investment income)

(0.73)

(0.77)

(0.77)

(0.73)

(0.84)

    Distributions (from capital gains)

(2.41)

(1.23)

(2.25)

(0.41)

-

Total distributions

(3.14)

(2.00)

(3.02)

(1.14)

(0.84)

 

Net asset value at end of period

$48.72

$47.90

$44.30

$46.97

$45.30

 

Total ReturnC

8.05%

12.96%

1.06%

6.22%

13.53%

 

Ratios / supplemental data

Net assets ($000), end of period

$451,651

$372,621

$235,928

$150,831

$83,805

Ratio of expenses to average net assets

    Before custodian fee creditsD

0.89%

0.89%

0.90%

0.88%

0.90%

    After custodian fee creditsD

0.88%

0.89%

0.89%

0.87%

0.90%

Ratio of net investment income after custodian fee credits to average net assetsD

1.39%

1.52%

1.71%

1.54%

2.32%

Portfolio turnover rateC

1%

1%

0%

0%

1%

A Calculated using average shares outstanding
B Operations commenced on 09/25/2013
C Not annualized for periods of less than one year
D Annualized for periods of less than one year

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

15

 

Amana Growth Fund: Performance Summary

(unaudited)

Average Annual Returns (as of May 31, 2018)

 

1 Year

5 Year

10 Year

Expense Ratio¹

Investor Shares (AMAGX)

16.76%

13.20%

8.86%

1.10%

Institutional Shares (AMIGX)²

17.03%

n/a

n/a

0.86%

S&P 500 Index

14.38%

12.97%

9.13%

n/a

Growth of $10,000

Amana Growth Fund 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 operational 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 Investor Shares of the Fund on May 31, 2008. The graph shows that an investment in Investor Shares of the Fund would have risen to $23,379 versus $23,972 in the Index. Investor Shares are used in this chart because they represent the larger share class in terms of assets and have a longer track record. Please note that investors cannot invest directly in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, expense ratios shown in this table are as stated in the Funds' most recent prospectus, which is dated September 21, 2017, and incorporates results for the fiscal year ended May 31, 2017. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different fiscal periods.

² Institutional shares of the Amana Growth Fund began operations September 25, 2013.

Fund Objective

The objective of the Growth Fund is long-term capital growth, consistent with Islamic principles.

Top 10 Holdings

 

Portfolio Diversification

% of Total Net Assets

% of Total Net Assets

 

Adobe Systems

6.6%

Application Software

14.0%

Amana Growth Fund Portfolio Diversification

Apple

5.5%

Communications Equipment

9.3%

Intuit

5.3%

Household Products

9.1%

Estee Lauder, Class A

4.0%

Large Pharma

7.5%

Cisco Systems

3.8%

Semiconductor Manufacturing

6.3%

Amgen

3.7%

Rail Freight

5.2%

TJX Companies

3.7%

Semiconductor Devices

5.1%

ASML Holding NY

3.6%

Biotech

4.6%

Alphabet, Class A

3.6%

Measurement Instruments

4.6%

Harris

3.4%

Specialty Apparel Stores

3.7%

 

Internet Media

3.6%

Aircraft & Parts

3.4%

Life Science Equipment

3.3%

Medical Devices

3.1%

Building Sub Contractors

3.1%

Other Industries < 3.0%

11.6%

Other Assets (net of liabilities)

2.5%

 

16

Annual Report

May 31, 2018

 

Amana Growth Fund: Discussion of Fund Performance

(unaudited)

Fiscal Year 2018

For the fiscal year ended May 31, 2018, Amana Growth Fund Investor Shares total return was 16.76% (versus 18.38% the year before). Reflecting its lower expense structure, Amana Growth Fund Institutional Shares returned 17.03% for the year. Both outperformed the broad S&P 500 Index, up 14.38%.

While income is not an investment objective, the Fund paid another qualified income dividend (17¢ per Investor share and 26¢ per Institutional share). Careful attention kept the expense ratio in check: 1.09% for Investor Shares and 0.86% for Institutional Shares. The Fund's total net assets increased 9% during the fiscal year, although redemptions exceeded purchases.

For the 15 years ended May 31, 2018, the Fund provided an annualized total return of 12.01%. And for the over 23 years since the Fund's inception on February 3, 1994, it has provided investors a compounded annual return of 10.75%. Our low turnover Islamic investment style and this year's capital growth has led to our portfolio's market value being 3.39 times its cost basis.

Factors Affecting Past Performance

The 1960's and the 1990's were decades of nearly uninterrupted economic growth and the 2010's are now looking to stake their longevity claim. The last time the economy contracted for two consecutive quarters (the standard definition of a recession) was in the first two quarters of 2009, and current conditions appear buoyant. Despite an unemployment rate that dipped below 4% for the first time since 2000, inflation remains subdued, while corporate profitability and consumer confidence are robust. Conditions over the past several years have contributed to a go-go mentality.

Amana Growth Fund follows a value investing strategy that has served investors well over the years. Avoiding leveraged and financial stocks again reduced risks during the year, as the market's focus changed to slower growth, overvaluations, and growing financial sector risks.

The portfolio benefited from positive returns across all sectors in which we participated, led by the Technology, Industrials, and Consumer Discretionary sectors. Comparatively, we suffered from low participation in the Financial and Energy sectors. We maintained a low level of cash reserves, usually less than 2%. Most of our positions are held at significant gains over their original cost, and we managed portfolio turnover to minimize capital gain distributions that often are taxable to investors.

Our portfolio of well-established equities has more than 6% in each of the following industries: Application Software, Communications Equipment, Large Pharmaceuticals, and Household Products.

We closed our positions in Trip Advisor and Novartis.

Concerned about climate change, we have no investments in companies primarily engaged in fossil fuel extraction. As values- based investors, we are pleased that Morningstar rated Amana Growth Fund in the top 1% for sustainability out of 1,269 funds in its "Large Growth" fund category for the period ended May 31, 2018.

Looking Forward

We hold no positions in the Telecommunication, Utility, or Financial industries, and no bonds or interest-paying securities – all issues likely to decline in price from rising interest rates.

At this point, the greatest risk to continued economic buoyancy appears to be trade friction, a development that could spin out of control or be contained rather easily with greater flexibility. Economic policies can and do change frequently.

Central bankers are reversing policy and understandably slowing the flow from their stimulus. An extraordinary era of low interest rates fueled upward moves in economies and markets. Central banks are now shifting toward raising rates and/or removing stimulus.

We must be vigilant in the coming months for signs of a recession – we believe a riskier period looms ahead. Amana Growth Fund selects its portfolio from financially strong, Islamically acceptable, growth securities judged likely to appreciate. We look for above-average earnings growth in the Fund's investments to improve the Fund's price long-term.

Annual Report

May 31, 2018

17

 

Amana Growth Fund: Schedule of Investments

As of May 31, 2018

Common Stocks – 97.5%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Communications

   

Internet Media

    Alphabet, Class A¹

55,000

$14,419,301

$60,500,000

3.6%

 
 

14,419,301

60,500,000

3.6%

 

Consumer Discretionary

   

Home & Office Product Wholesalers

    Fastenal

600,000

13,668,571

31,938,000

1.9%

 

Home Products Stores

    Lowe's

400,000

8,620,300

38,004,000

2.2%

 

Specialty Apparel Stores

    TJX Companies

700,000

15,131,550

63,224,000

3.7%

 
 

37,420,421

133,166,000

7.8%

 

Consumer Staples

   

Beverages

    PepsiCo

235,000

14,445,016

23,558,750

1.4%

 

Household Products

    Church & Dwight

1,200,000

21,472,365

56,340,000

3.3%

    Clorox

250,000

13,936,595

30,207,500

1.8%

    Estee Lauder, Class A

458,594

16,624,230

68,532,287

4.0%

 

52,033,190

155,079,787

9.1%

 
 

66,478,206

178,638,537

10.5%

 

Health Care

   

Biotech

    Amgen

355,000

18,341,781

63,765,100

3.7%

    Celgene¹

200,000

7,547,036

15,736,000

0.9%

 

25,888,817

79,501,100

4.6%

 

Large Pharma

    Eli Lilly

350,000

12,007,975

29,764,000

1.8%

    Johnson & Johnson

420,000

25,247,246

50,240,400

2.9%

    Novo Nordisk ADR

1,002,195

7,665,243

47,644,350

2.8%

 

44,920,464

127,648,750

7.5%

 

Life Science Equipment

    Agilent Technologies

900,000

16,302,137

55,728,000

3.3%

 

Medical Devices

    Stryker

300,000

15,657,168

52,206,000

3.1%

 

Medical Equipment

    Dentsply Sirona

215,000

6,611,725

9,419,150

0.5%

 
 

109,380,311

324,503,000

19.0%

 

Continued on next page.

 

18

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

 

Amana Growth Fund: Schedule of Investments

As of May 31, 2018

Common Stocks – 97.5%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Industrials

   

Aircraft & Parts

    Harris

390,000

$11,806,300

$58,683,300

3.4%

 

Building Sub Contractors

    EMCOR Group

682,750

14,388,860

51,841,208

3.1%

 

Measurement Instruments

    Keysight Technologies¹

500,000

8,390,911

29,370,000

1.7%

    Trimble¹

1,500,000

15,966,794

49,590,000

2.9%

 

24,357,705

78,960,000

4.6%

 

Metalworking Machinery

    Lincoln Electric Holdings

360,000

8,253,710

32,256,000

1.9%

 

Rail Freight

    Norfolk Southern

300,000

16,971,675

45,495,000

2.7%

    Union Pacific

300,000

16,986,609

42,828,000

2.5%

 

33,958,284

88,323,000

5.2%

 
 

92,764,859

310,063,508

18.2%

 

Technology

   

Application Software

    Adobe Systems¹

450,000

14,116,250

112,176,000

6.6%

    Intuit

450,000

15,564,740

90,720,000

5.3%

    SAP ADR

316,379

19,947,795

35,684,387

2.1%

 

49,628,785

238,580,387

14.0%

 

Communications Equipment

    Apple

504,000

1,526,905

94,182,480

5.5%

    Cisco Systems

1,500,000

26,759,130

64,065,000

3.8%

 

28,286,035

158,247,480

9.3%

 

Information Services

    Gartner¹

180,000

6,186,410

23,893,200

1.4%

 

Infrastructure Software

    Oracle

650,000

12,885,855

30,368,000

1.8%

 

IT Services

    Convergys

351,033

3,139,140

8,298,420

0.5%

 

Semiconductor Devices

    Qualcomm

800,000

30,482,851

46,496,000

2.7%

    Xilinx

600,000

14,947,540

40,866,000

2.4%

 

45,430,391

87,362,000

5.1%

 

Continued on next page.

 

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

19

 

Amana Growth Fund: Schedule of Investments

As of May 31, 2018

Common Stocks – 97.5%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Technology (continued)

   

Semiconductor Manufacturing

    ASML

308,000

$10,937,644

$60,568,200

3.6%

    Taiwan Semiconductor ADR

1,222,471

12,765,781

47,309,628

2.7%

 

23,703,425

107,877,828

6.3%

 
 

169,260,041

654,627,315

38.4%

 

Total investments

$489,723,139

1,661,498,360

97.5%

Other assets (net of liabilities)

 

41,946,787

2.5%

Total net assets

 

$1,703,445,147

100.0%

¹ Non-income producing security

ADR: American Depositary Receipt

 

20

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

Amana Growth Fund

Statement of Assets and Liabilities

As of May 31, 2018

 

Assets

    Investments in securities, at value
    (Cost $489,723,139)

$1,661,498,360

    Cash

39,279,998

    Dividends receivable

4,773,623

    Receivable for Fund shares sold

1,032,476

    Prepaid expenses

28,133

        Total assets

1,706,612,590

Liabilities

Payable for Fund shares redeemed

1,751,244

    Accrued advisory fees

1,160,832

    Accrued distribution fee

124,644

    Accrued other expenses

102,552

    Accrued retirement plan custodial fees

16,831

    Accrued Chief Compliance Officer expenses

7,718

    Accrued transfer agent fees

3,622

        Total liabilities

3,167,443

Net Assets

$1,703,445,147

 

Analysis of Net Assets

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

$483,006,890

    Undistributed net investment income

4,194,241

    Accumulated net realized gain

44,468,795

    Unrealized net appreciation on investments

1,171,775,221

Net assets applicable to Fund shares outstanding

$1,703,445,147

 

Net asset value per Investor Share

AMAGX

Net assets, at value

$1,137,705,354

Shares outstanding

31,393,678

Net asset value, offering and redemption price per share

$36.24

 

Net asset value per Institutional Share

AMIGX

Net assets, at value

$565,739,793

Shares outstanding

15,556,078

Net asset value, offering and redemption price per share

$36.37

 

Statement of Operations

Year ended May 31, 2018

 

Investment income

    Dividend income
    (net of foreign taxes of $956,748)

$25,403,511

    Miscellaneous income

4,363

            Total investment income

25,407,874

Expenses

    Investment adviser fees

13,564,420

    Distribution fees – Investor Shares

2,830,976

    Custodian fees

80,913

    Professional fees

75,500

    Chief Compliance Officer expenses

67,049

    Retirement plan custodial fees

        Investor Shares

226

        Institutional Shares

60,654

Printing and postage

54,980

    Filing and registration fees

40,354

    Transfer agent fees

        Investor Shares

19,616

        Institutional Shares

18,730

    Other expenses

23,883

    Trustee fees

23,222

            Total gross expenses

16,860,523

    Less custodian fee credits

(80,913)

            Net expenses

16,779,610

Net investment income

$8,628,264

 
 

Net realized gain from investments

$70,590,913

Net increase in unrealized appreciation on investments

175,196,961

Net gain on investments

$245,787,874

 

Net increase in net assets resulting from operations

$254,416,138

 

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

21

Amana Growth Fund

Statements of Changes in Net Assets

Year ended May 31, 2018

Year ended May 31, 2017

Increase (decrease) in net assets from operations

From operations

    Net investment income

$8,628,264

$9,500,953

    Net realized gain on investment

70,590,913

251,091,048

    Net increase (decrease) in unrealized appreciation

175,196,961

(2,649,338)

            Net increase in net assets

254,416,138

257,942,663

Distributions to shareowners from

    Net investment income

        Investor Shares

(5,151,503)

(7,429,310)

        Institutional Shares

(3,497,801)

(2,989,475)

Capital gains distribution

        Investor Shares

(108,465,085)

(129,000,764)

        Institutional Shares

(49,858,367)

(42,962,080)

            Total distributions

(166,972,756)

(182,381,629)

Capital share transactions

    Proceeds from the sale of shares

        Investor Shares

105,685,229

88,289,510

        Institutional Shares

124,699,923

173,453,886

    Value of shares issued in reinvestment of dividends and distributions

        Investor Shares

111,640,320

134,544,341

        Institutional Shares

50,075,029

42,815,699

    Cost of shares redeemed

        Investor Shares

(254,372,394)

(447,219,752)

        Institutional Shares

(77,913,676)

(255,666,168)

            Total capital share transactions

59,814,431

(263,782,484)

Total increase (decrease) in net assets

147,257,813

(188,221,450)

 

Net assets

Beginning of year

1,556,187,334

1,744,408,784

End of year

1,703,445,147

1,556,187,334

 

Undistributed net investment income

$4,194,241

$4,215,281

 

Shares of the Fund sold and redeemed

Investor Shares (AMAGX)

    Number of shares sold

2,920,675

2,669,831

    Number of shares issued in reinvestment of dividends and distributions

3,193,373

4,475,860

    Number of shares redeemed

(7,067,832)

(13,722,637)

Net decrease in number of shares outstanding

(953,784)

(6,576,946)

 

Institutional Shares (AMIGX)

    Number of shares sold

3,459,330

5,190,872

    Number of shares issued in reinvestment of dividends and distributions

1,428,674

1,421,504

    Number of shares redeemed

(2,155,787)

(7,617,702)

Net increase (decrease) in number of shares outstanding

2,732,217

(1,005,326)

 

22

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

Amana Growth Fund: Financial Highlights

Investor Shares (AMAGX)

Year ended May 31,

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

2018

2017

2016

2015

2014

Net asset value at beginning of period

$34.42

$33.05

$35.14

$33.22

$29.03

Income from investment operations

    Net investment incomeA

0.16

0.17

0.18

0.13

0.12

    Net gains on securities (both realized and unrealized)

5.47

5.30

0.09

4.02

5.10

Total from investment operations

5.63

5.47

0.27

4.15

5.22

Less distributions

    Dividends (from net investment income)

(0.17)

(0.22)

(0.17)

(0.13)

(0.19)

    Distributions (from capital gains)

(3.64)

(3.88)

(2.19)

(2.10)

(0.84)

Total distributions

(3.81)

(4.10)

(2.36)

(2.23)

(1.03)

 

Net asset value at end of period

$36.24

$34.42

$33.05

$35.14

$33.22

 

Total Return

16.76%

18.38%

1.06%

12.66%

18.12%

 

Ratios / supplemental data

Net assets ($000), end of period

$1,137,705

$1,113,440

$1,286,511

$1,879,365

$1,890,187

Ratio of expenses to average net assets

    Before custodian fee credits

1.09%

1.10%

1.09%

1.08%

1.10%

    After custodian fee credits

1.09%

1.09%

1.09%

1.08%

1.09%

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

0.45%

0.52%

0.54%

0.38%

0.39%

Portfolio turnover rate

0%

0%B

0%

0%

0%

 

Institutional Shares (AMIGX)

Year ended May 31

Period endedC

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

2018

2017

2016

2015

May 31, 2014

Net asset value at beginning of period

$34.53

$33.11

$35.17

$33.23

$30.45

Income from investment operations

    Net investment incomeA

0.25

0.26

0.29

0.25

0.16

    Net gains on securities (both realized and unrealized)

5.49

5.31

0.07

3.97

3.70

Total from investment operations

5.74

5.57

0.36

4.22

3.86

Less distributions

    Dividends (from net investment income)

(0.26)

(0.27)

(0.23)

(0.18)

(0.24)

    Distributions (from capital gains)

(3.64)

(3.88)

(2.19)

(2.10)

(0.84)

Total distributions

(3.90)

(4.15)

(2.42)

(2.28)

(1.08)

 

Net asset value at end of period

$36.37

$34.53

$33.11

$35.17

$33.23

 

Total ReturnD

17.03%

18.67%

1.31%

12.88%

12.82%

 

Ratios / supplemental data

Net assets ($000), end of period

$565,740

$442,747

$457,898

$172,281

$94,349

Ratio of expenses to average net assets

    Before custodian fee creditsE

0.86%

0.86%

0.85%

0.83%

0.87%

    After custodian fee creditsE

0.86%

0.85%

0.85%

0.83%

0.87%

Ratio of net investment income after custodian fee credits to average net assetsE

0.70%

0.78%

0.89%

0.65%

0.70%

Portfolio turnover rateD

0%

0%B

0%

0%

0%

A Calculated using average shares outstanding
B Amount is less than 0.5%
C Operations commenced on 09/25/2013
D Not annualized for periods of less than one year
E Annualized for periods of less than one year

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

23

 

Amana Developing World Fund: Performance Summary

(unaudited)

Average Annual Returns (as of May 31, 2018)

 

1 Year

5 Year

10 Year

Expense Ratio¹

Investor Shares (AMDWX)²

0.98%

-1.36%

n/a

1.35%

Institutional Shares (AMIDX)²

1.17%

n/a

n/a

1.14%

MSCI Emerging Markets Index

14.03%

4.52%

1.62%

n/a

Growth of $10,000

Amana Developing World Fund 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 operational 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 Investor Shares of the Fund on September 28, 2009, to an identical amount invested in the MSCI Emerging Markets Index, a broad-based international equity index. The graph shows that an investment in Investor Shares of the Fund would have fallen to $10,221 versus rising to $14,995 in the Index. Investor Shares are used in this chart because they have a longer track record. Please note that investors cannot invest directly in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, expense ratios shown in this table are as stated in the Funds' most recent prospectus, which is dated September 21, 2017, and incorporates results for the fiscal year ended May 31, 2017. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different fiscal periods.

² The Amana Developing World Fund commenced operations September 28, 2009. Institutional shares of the Amana Developing World Fund began operations September 25, 2013.

Fund Objective

The objective of the Developing World Fund is long-term capital growth, consistent with Islamic principles.

Top 10 Holdings

 

Portfolio Diversification

% of Total Net Assets

% of Total Net Assets

 

Tencent Holdings ADR

5.9%

Apparel, Footwear & Accessory Design

6.0%

Amana Developing World Fund Portfolio Diversification

Clicks Group

5.0%

Application Software

5.9%

SM Prime Holdings

3.6%

Food & Drug Stores

5.0%

VF

3.1%

Communications Equipment

4.5%

Samsonite International

2.9%

Health Care Facilities

4.5%

Baidu ADR

2.7%

Telecom Carriers

4.3%

Techtronic Industries

2.7%

Household Products

4.2%

Hong Kong & China Gas

2.7%

Real Estate Owners & Developers

3.6%

Taiwan Semiconductor ADR

2.6%

Home Improvement

3.5%

Unilever ADR

2.6%

Airlines

3.2%

 

Utility Networks

3.0%

Internet Media

2.7%

Packaged Food

2.7%

Semiconductor Manufacturing

2.6%

Specialty Pharma

2.6%

Precious Metal Mining

2.5%

Other Industries < 2.5%

23.3%

Other Assets (net of liabilities)

15.9%

 

24

Annual Report

May 31, 2018

 

Amana Developing World Fund: Discussion of Fund Performance

(unaudited)

Fiscal Year 2018

For the fiscal year ended May 31, 2018, the Amana Developing World Fund Investor Shares returned 0.98% (versus 6.59% the year before). The Fund's annual return underperformed the MSCI Emerging Markets Index, which returned 14.03%, as well as the MSCI All Country World Index Ex-USA, which returned 9.67%. Reflecting their lower expense structure, the Amana Developing World Fund Institutional Shares returned 1.17% during the same period. While income is not an investment objective, the Fund paid a qualified income dividend (2¢ per share for Investor Shares and 3¢ per share for Institutional Shares) in December 2017. The net expense ratio of Amana Developing World Investor Shares was 1.32% versus 1.30% for the year before. During the year Fund assets grew 7.16%.

Factors Affecting Past Performance

From the start of the financial year through the end of January 2018, emerging markets were among the strongest performing equity groupings in the world. Information Technology, of both the hard and soft varieties, accounts for over a quarter of its benchmark and its performance led the market. Semiconductor and equipment companies in Taiwan and South Korea, such as Taiwan Semiconductor and Samsung Electronics performed very well during the latter half of 2017. Meanwhile, the Chinese internet giants such as Tencent, Baidu and Alibaba, were even stronger. These companies now feature market capitalizations within striking distance of the FAANGs (Facebook, Amazon, Apple, Netflix, Google). It was during this period that the Amana Developing World Fund lagged its benchmark, owing to a significant cash balance and the inability to invest in Taiwan and South Korea. The investment restrictions were removed as of the fourth quarter of the last calendar year.

Moving into 2018, conditions for emerging markets quickly changed. Undoubtedly, this had something to do with the more aggressive stance adopted by the US in its trade discussions. However, the general reduction in global liquidity has been more important. With Federal Reserve's economic stimulus in the rearview mirror and the European Central Bank making noises regarding an end to its own period of extraordinary monetary policy, interest rates have risen, with the US 10-year Treasury yield breaking above 3% for a time in May. As we recall from the second quarter of 2013 and the "taper tantrum" any removal, or even perceived removal, of liquidity from financial markets can be felt dramatically in emerging markets. As a result, the MSCI Emerging Markets Index has fallen -11.41% from its peak on January 26th, through the end of the fiscal year. Over this period, the Amana Developing World Fund has outperformed the index; outperformance that widened through June as the decline in emerging markets accelerated.

From a regional perspective and, Asia was the dominant source of benchmark returns in the prior fiscal year. Asia Pacific accounts for nearly 65% of the emerging markets benchmark, while China, Taiwan and South Korea make up over 80% of the Asian exposure. We have moved to increase our holdings in the latter two but remain underweight the region. While underweight, the performance of our holdings in China significantly outpaced the benchmark. These gains, however, were offset by losses in other countries, especially Indonesia.

We are roughly in line with the Africa & Middle East weight in the benchmark, due to holdings in South Africa. Clicks Group, a South African retail chain, performed especially well during the year. In Latin America, the best performing countries were Colombia, Peru and Chile, where we have difficulty finding stocks of sufficient size and liquidity. Absent Turkey, we currently do not have any holdings in Eastern Europe, as defined by MSCI.

From a sector perspective, the Fund is most heavily exposed to Information Technology, followed by Consumer Discretionary, Consumer Staples, and Healthcare. With the exception of IT, the Fund's other sector exposures were proportionally higher relative to the benchmark due to the significant weight of Financials in the index, where, apart from one small investment in an Islamic bank in Malaysia, we are absent.

Looking Forward

Conditions appear challenging across much of the emerging market landscape. In Latin America Venezuela remains an economic and political basket case, Brazil is plagued by corruption and, despite sensible attempts at reform, Argentina has had difficulty gaining economic traction. Mexican elections brought a new left-wing president. On the other side of the world, elections in Turkey have cemented President Erdogan's position in manner that might be described as a democratic dictatorship. Markets have delivered a very different verdict from that of Turkish voters, with the currency plunging and interest rates soaring. We have seen no improvement in conditions across the Middle East. Russia remains a one-commodity kleptocracy. Asia has long been the brightest star in the emerging markets firmament, but China's debt levels are excessive,its economic statistics mostly false, and its trade practices are bringing local disruptions. We are pleased that Malaysian elections ousted the corrupt Prime Minister Najib and are leading to better governance.

Annual Report

May 31, 2018

25

 

Amana Developing World Fund: Schedule of Investments

As of May 31, 2018

Common Stocks – 84.1%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Communications

   

Entertainment Content

    Naspers ADR

15,600

$849,095

$756,132

South Africa

2.4%

 

Internet Media

    Baidu ADR2

3,500

241,481

848,960

China3

2.7%

 

Telecom Carriers

    Advanced Info Service

99,000

725,933

588,680

Thailand

1.9%

    Telekomunikasi Indonesia ADR

30,000

540,800

741,300

Indonesia

2.4%

 

1,266,733

1,329,980

 

4.3%

 
 

2,357,309

2,935,072

 

9.4%

 

Consumer Discretionary

   

Airlines

    Bangkok Airways Public Company NVDR

1,140,000

685,317

537,161

Thailand

1.8%

    Copa Holdings, Class A

4,000

546,498

443,200

Panama

1.4%

 

1,231,815

980,361

 

3.2%

 

Apparel, Footwear & Accessory Design

    Samsonite International

259,800

773,757

887,031

Hong Kong3

2.9%

    VF

12,000

310,438

973,920

United States

3.1%

 

1,084,195

1,860,951

 

6.0%

 

Automobiles

    Ford Otomotiv Sanayi

52,500

536,206

741,518

Turkey

2.4%

 

Home Improvement

    Coway

3,000

295,839

242,872

South Korea

0.8%

    Techtronic Industries

140,000

591,316

832,745

Hong Kong

2.7%

 

887,155

1,075,617

 

3.5%

 

Jewelry & Watch Stores

    Pandora

5,000

621,454

393,595

Denmark

1.2%

 
 

4,360,825

5,052,042

 

16.3%

 

Consumer Staples

   

Food & Drug Stores

    Clicks Group

98,000

596,646

1,564,717

South Africa

5.0%

 

Household Products

    Colgate-Palmolive

8,000

348,010

504,720

United States

1.6%

    Unilever ADR

14,700

592,155

812,616

United Kingdom

2.6%

 

940,165

1,317,336

 

4.2%

 

Packaged Food

    Indofood CBP Sukses Makmur

800,000

424,798

498,001

Indonesia

1.6%

    M. Dias Branco

30,000

458,337

336,166

Brazil

1.1%

 

883,135

834,167

 

2.7%

 
 

2,419,946

3,716,220

 

11.9%

 

Continued on next page.

 

26

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

 

Amana Developing World Fund: Schedule of Investments

As of May 31, 2018

Common Stocks – 84.1%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Financials

   

Islamic Banking

    BIMB Holdings

531,000

$650,958

$522,120

Malaysia

1.7%

 

Real Estate Owners & Developers

    SM Prime Holdings

1,610,000

619,395

1,132,997

Philippines

3.6%

 
 

1,270,353

1,655,117

 

5.3%

 

Health Care

   

Generic Pharma

    Aspen Pharmacare

28,000

448,859

552,548

South Africa

1.8%

 

Health Care Facilities

    Bangkok Dusit Medical Services NVDR

380,000

238,695

316,824

Thailand

1.0%

    IHH Healthcare

300,000

391,875

453,443

Malaysia

1.5%

    KPJ Healthcare

2,535,992

592,100

628,160

Malaysia

2.0%

 

1,222,670

1,398,427

 

4.5%

 

Specialty Pharma

    Genomma Lab Internacional, Class B2

273,500

615,641

231,474

Mexico

0.7%

    Kalbe Farma

5,900,000

554,771

580,796

Indonesia

1.9%

 

1,170,412

812,270

 

2.6%

 
 

2,841,941

2,763,245

 

8.9%

 

Industrials

   

Logistics Services

    Kerry Logistics Network

400,000

583,456

587,116

China3

1.9%

 

Rail Freight

    Kansas City Southern Industries

6,500

437,054

696,475

United States

2.2%

 

Transport Support Services

    Grupo Aeroportuario Sureste ADR

1,350

297,912

215,690

Mexico

0.7%

 
 

1,318,422

1,499,281

 

4.8%

 

Materials

   

Precious Metal Mining

    Randgold Resources ADR

9,750

953,084

775,320

South Africa

2.5%

 

Specialty Chemicals

    International Flavors & Fragrances

5,000

706,596

610,650

United States

2.0%

 
 

1,659,680

1,385,970

 

4.5%

 

Technology

   

Application Software

    Tencent Holdings ADR

36,000

693,470

1,838,430

China

5.9%

 

Continued on next page.

 

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

27

 

Amana Developing World Fund: Schedule of Investments

As of May 31, 2018

Common Stocks – 84.1%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Technology (continued)

   

Communications Equipment

    Samsung Electronics

16,500

$796,235

$774,801

South Korea

2.5%

    Sercomm

266,000

725,431

611,937

Taiwan

2.0%

 

1,521,666

1,386,738

 

4.5%

 

Computer Hardware & Storage

    Advantech

90,000

639,269

607,556

Taiwan

2.0%

 

Electronics Components

    Silergy

20,400

470,689

465,137

China3

1.5%

 

Semiconductor Manufacturing

    Taiwan Semiconductor ADR

21,000

843,194

812,700

Taiwan

2.6%

 
 

4,168,288

5,110,561

 

16.5%

 

Utilities

   

Integrated Utilities

    Aboitiz Power

815,000

711,370

610,044

Philippines

1.9%

 

Power Generation

    Manila Electric

80,000

517,224

490,929

Philippines

1.6%

 

Utility Networks

    Enersis Americas ADR

10,000

116,073

96,800

Chile

0.3%

    Hong Kong & China Gas

383,570

661,270

827,149

China³

2.7%

 

777,343

923,949

 

3.0%

 
 

2,005,937

2,024,922

 

6.5%

 

Total Common Stock

 

$22,402,701

$26,142,430

 

84.1%

 

Warrants – 0.0%4

Number of Shares

Cost

Market Value

Country1

Percentage of Assets

 

Financials

   

Islamic Banking

    BIMB Holdings Warrants2

80,000

$-

$4,221

Malaysia

0.0%4

 

Total Warrants

   

4,221

 

0.0%4

 

Total investments

$22,402,701

26,146,651

 

84.1%

Other assets (net of liabilities)

   

4,954,373

 

15.9%

Total net assets

   

$31,101,024

 

100.0%

1 Country of domicile unless otherwise indicated
2 Non-Income producing security
3 Denotes a country or region of primary exposure
4 Amount is less than 0.05%

ADR: American Depositary Receipt
NVDR: Thai Non-Voting Depository

 

28

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

 

Amana Developing World Fund: Schedule of Investments

As of May 31, 2018

 

Countries

(unaudited)

Amana Developing World Fund Portfolio Diversification

Other assets (net of liabilities) 15.9%

 

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

29

Amana Developing World Fund

Statement of Assets and Liabilities

As of May 31, 2018

 

Assets

    Investments in securities, at value
    (Cost $22,402,701)

$26,146,651

    Cash

4,913,074

    Dividend receivable

70,076

    Receivable for Fund shares sold

5,328

    Prepaid expenses

4,063

            Total assets

31,139,192

Liabilities

    Accrued advisory fees

22,873

    Accrued retirement plan custodial fees

5,051

    Accrued audit expenses

3,750

    Accrued distribution fee

1,670

    Accrued postage expenses

1,576

    Accrued other expenses

1,255

    Payable for Fund shares redeemed

1,035

    Accrued transfer agent fees

848

    Accrued Chief Compliance Officer expenses

110

            Total liabilities

38,168

Net Assets

$31,101,024

 

Analysis of Net Assets

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

$32,706,422

    Undistributed net investment income

50,686

    Accumulated net realized loss

(5,400,284)

    Unrealized net appreciation on investments

3,744,200

Net assets applicable to Fund shares outstanding

$31,101,024

 

Net asset value per Investor Share

AMDWX

Net assets, at value

$15,066,647

Shares outstanding

1,498,739

Net asset value, offering and redemption price per share

$10.05

 

Net asset value per Institutional Share

AMIDX

Net assets, at value

$16,034,377

Shares outstanding

1,590,623

Net asset value, offering and redemption price per share

$10.08

 

Statement of Operations

Year ended May 31, 2018

 

Investment income

    Dividend income
    (net of foreign taxes of $61,933)

$492,945

    Miscellaneous income

29

            Total investment income

492,974

Expenses

    Investment adviser fees

282,925

    Distribution fees – Investor Shares

37,701

    Filing and registration fees

27,774

    Custodian fees

14,793

    Retirement plan custodial fees

        Investor Shares

32

        Institutional Shares

12,205

    Professional fees

10,672

    Transfer agent fees

        Investor Shares

2,755

        Institutional Shares

3,106

    Printing and postage

3,041

    Chief Compliance Officer expenses

904

    Trustee fees

707

    Other expenses

693

            Total gross expenses

397,308

    Less custodian fee credits

(14,793)

            Net expenses

382,515

Net investment income

$110,459

 
 

Net realized gain from investments and foreign currency

$129,737

Net decrease in unrealized appreciation on investments and foreign currency

(104,247)

Net gain on investments

$25,490

 

Net increase in net assets resulting from operations

$135,949

 

30

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

Amana Developing World Fund

Statements of Changes in Net Assets

Year ended May 31, 2018

Year ended May 31, 2017

Increase in net assets from operations

From operations

    Net investment income

$110,459

$129,828

    Net realized gain on investment

129,737

246,023

Net increase (decrease) in unrealized appreciation

(104,247)

1,352,008

    Net increase in net assets

135,949

1,727,859

Distributions to shareowners from

    Net investment income

        Investor Shares

(26,968)

(35,702)

        Institutional Shares

(42,740)

(83,905)

            Total distributions

(69,708)

(119,607)

Capital share transactions

    Proceeds from the sale of shares

        Investor Shares

4,115,209

4,033,248

        Institutional Shares

8,339,803

7,792,468

    Value of shares issued in reinvestment of dividends and distributions

        Investor Shares

26,829

35,558

        Institutional Shares

42,740

83,755

    Cost of shares redeemed

        Investor Shares

(3,968,970)

(7,754,136)

        Institutional Shares

(6,544,079)

(1,897,285)

            Total capital share transactions

2,011,532

2,293,608

Total increase in net assets

2,077,773

3,901,860

 

Net assets

Beginning of year

29,023,251

25,121,391

End of year

31,101,024

29,023,251

 

Undistributed net investment income

$50,686

$20,274

 

Shares of the Fund sold and redeemed

Investor Shares (AMDWX)

    Number of shares sold

394,629

426,044

    Number of shares issued in reinvestment of dividends and distributions

2,507

4,027

    Number of shares redeemed

(384,211)

(840,000)

Net increase (decrease) in number of shares outstanding

12,925

(409,929)

 

Institutional Shares (AMIDX)

    Number of shares sold

796,298

836,582

    Number of shares issued in reinvestment of dividends and distributions

3,983

9,475

    Number of shares redeemed

(630,852)

(203,654)

Net increase in number of shares outstanding

169,429

642,403

 

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

31

Amana Developing World Fund: Financial Highlights

Investor Shares (AMDWX)

Year ended May 31,

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

2018

2017

2016

2015

2014

Net asset value at beginning of period

$9.97

$9.38

$10.29

$10.88

$10.94

Income from investment operations

    Net investment incomeA

0.03

0.04

0.03

0.05

0.01

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

0.07

0.57

(0.89)

(0.62)

(0.03)

Total from investment operations

0.10

0.61

(0.86)

(0.57)

(0.02)

Less distributions

    Dividends (from net investment income)

(0.02)

(0.02)

(0.05)

(0.02)

(0.04)

Total distributions

(0.02)

(0.02)

(0.05)

(0.02)

(0.04)

 

Net asset value at end of period

$10.05

$9.97

$9.38

$10.29

$10.88

 

Total return

0.98%

6.59%

(8.32)%

(5.24)%

(0.17)%

 

Ratios / supplemental data

Net assets ($000), end of period

$15,067

$14,820

$17,781

$21,051

$20,775

Ratio of expenses to average net assets

    Before custodian fee credits

1.37%

1.35%

1.51%

1.54%

1.59%

    After custodian fee credits

1.32%

1.30%

1.45%

1.48%

1.54%

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

0.27%

0.41%

0.37%

0.50%

0.06%

Portfolio turnover rate

20%

10%

33%

14%

11%

 

Institutional Shares (AMIDX)

Year ended May 31,

Period endedB

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

2018

2017

2016

2015

May 31, 2014

Net asset value at beginning of period

$9.99

$9.43

$10.33

$10.91

$10.87

Income from investment operations

    Net investment incomeA

0.05

0.06

0.06

0.09

0.05

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

0.07

0.57

(0.89)

(0.63)

0.03

Total from investment operations

0.12

0.63

(0.83)

(0.54)

0.08

Less distributions

    Dividends (from net investment income)

(0.03)

(0.07)

(0.07)

(0.04)

(0.04)

Total distributions

(0.03)

(0.07)

(0.07)

(0.04)

(0.04)

 

Net asset value at end of period

$10.08

$9.99

$9.43

$10.33

$10.91

 

Total ReturnC

1.17%

6.74%

(8.00)%

(4.96)%

0.75%

 

Ratios / supplemental data

Net assets ($000), end of period

$16,034

$14,203

$7,340

$8,442

$7,406

Ratio of expenses to average net assets

    Before custodian fee creditsD

1.19%

1.14%

1.20%

1.24%

1.40%

    After custodian fee creditsD

1.14%

1.09%

1.14%

1.18%

1.35%

Ratio of net investment income after custodian fee credits to average net assetsD

0.44%

0.65%

0.67%

0.86%

0.64%

Portfolio turnover rateC

20%

10%

33%

14%

11%

A Calculated using average shares outstanding
B Operations commenced on 09/25/2013
C Not annualized for periods of less than one year
D Annualized for periods of less than one year

32

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

 

Amana Participation Fund: Performance Summary

(unaudited)

Average Annual Returns (as of May 31, 2018)

 

1 Year

5 Year

10 Year

Expense Ratio1

Investor Shares (AMAPX)²

-0.94%

n/a

n/a

0.92%

Institutional Shares (AMIPX)²

-0.80%

n/a

n/a

0.68%

FTSE Sukuk Index

-0.11%

2.92%

4.02%

n/a

Growth of $10,000

Amana Participation Fund 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 operational 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 Institutional Shares of the Fund on September 28, 2015, to an identical amount invested in the FTSE Sukuk Index, a measurement of global Islamic fixed income securities, also known as sukuk. The graph shows that an investment in Institutional Shares of the Fund would have risen to $10,339 versus $10,694 in the Index. Institutional Shares are used in this chart because they represent the larger share class in terms of assets. Please note that investors cannot invest directly 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.

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

¹ By regulation, expense ratios shown in this table are as stated in the Funds' most recent prospectus, which is dated September 21, 2017, and incorporates results for the fiscal year ended May 31, 2017. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different fiscal periods.

² The Amana Participation Fund commenced operations September 28, 2015.

Fund Objective

The objectives of the Participation Fund are capital preservation and current income, consistent with Islamic principles. Capital preservation is its primary objective.

Top 10 Holdings

% of Total Net Assets

Emirates Madina Group (4.564% due 06/18/2024)

4.7%

DP World Crescent (3.908% due 05/31/2023)

4.3%

Dubai Islamic Bank (2.921% due 06/03/2020)

4.3%

SIB Sukuk Co III (3.084% due 09/08/2021)

4.3%

Equate Sukuk Spc (3.944% due 02/21/2024)

4.2%

Kingdom of Saudi Arabia (3.628% due 04/20/2027)

4.2%

Jebel Ali Free Zone (7.00% due 06/19/2019)

4.1%

Majid Al Futtaim (4.50% due 11/03/2025)

4.0%

Dubai International Financial Centre (4.325% due 11/12/2024)

4.0%

Investment Corporation of Dubai (3.508% due 05/21/2020)

3.9%

 

Portfolio Diversification

% of Total Net Assets

 

Financials

37.7%

Amana Participation Fund Portfolio Diversification

Government Bonds

25.6%

Industrials

8.4%

Consumer Discretionary

7.8%

Utilities

5.8%

Materials

4.2%

Communications

3.2%

Technology

2.0%

Energy

1.2%

Other Assets (net of liabilities)

4.1%

 

Annual Report

May 31, 2018

33

 

Amana Participation Fund: Discussion of Fund Performance

(unaudited)

Fiscal Year 2018

For the fiscal year ended May 31, 2018, Amana Participation Fund Investor Shares returned -0.94% and the Institutional Shares returned -0.80%, compared to -0.11% for the benchmark FTSE Sukuk Index. A number of factors contributed to the underperformance, including differences in the Fund's composition relative to the benchmark with respect to investment objective, duration, and regional and security allocation.

The Participation Fund's investment objective is capital preservation and current income consistent with Islamic principles, while the FTSE Sukuk Index measures the performance of global Islamic fixed income securities. The Fund targets a dollar-weighted average maturity from two to five years to mitigate duration risk and helps the Fund meet its primary objective of capital preservation. For example, at the beginning of May of 2018 the index retained a 28.19% exposure to sukuk with maturities of 7 years or longer while the Fund held a small allocation of 7.72%.

Additionally, the Participation Fund employs a more diversified approach than the index as a means of reducing concentration and potential volatility. For example, at the beginning of May of 2018, the index had an 18.49% exposure to issues originating from Saudi Arabia and an 18.07% allocation to Indonesian issues. The Fund's exposures to issuers originating from Saudi Arabia and Indonesia were 6.66% and 4.13%, respectively.

Since the beginning of 2018 until May 31, the Investor Shares returned -1.33% and the Institutional Shares returned -1.23%, compared to the benchmark's return of -1.41%. The slight out-performance this year can be attributed to differences in the Funds' structure relative to the benchmark. The portfolio holds 31 issues reporting a modified duration of 3.69 years. The Fund's 30-day yield was 3.17% for the Investor Shares and 3.40% for the Institutional Shares.

Factors Affecting Past Performance

Amana Participation Fund has grown more than elevenfold since its inception on September 28, 2015, with total assets now at $62.9 million. The Fund is the only US retail mutual fund dedicated to sukuk. These investments – with characteristics of both equities and debt – grouped in a diversified mutual fund, can provide significant income to investors seeking relative capital stability.

Increasing fund assets spreads operating costs over more shares, reducing the fund's operating expense ratio and increasing the net returns to investors. Participation Fund investors favor the lower-expense Institutional Shares (71% of Fund assets), which helped reduce their operating expense ratio to 0.60% from 0.67% for the prior year. The Investor Shares pay distribution platforms for services to investors via a 0.25% 12b-1 fee and the operating expense ratio decreased to 0.85% from 0.91% for the prior year.

We are pleased to see broader acceptance of sukuk in the capital markets, as Sharia compliant investments remain a small subset of the overall capital markets. Adoption by a broader range of investors helps improve liquidity, familiarity and acceptance among conventional investors. Successes help other issuers with the confidence to issue sukuk.

The year 2017 brought several important milestones. It was a record year for sukuk issuance -- a total of $95 billion, reflecting an 11.7% increase from 2016's total issuance of $85 billion. In April of 2017, Saudi Arabia issued the largest sovereign sukuk issue of $9 billion, equally divided among the 5 & 10 year sukuk tenors, which were met with high investor demand. Other countries are entering the market, such as Oman issuing $2 billion in June of 2017.

Still, challenges remain as many GCC members continue to face fiscal shortfalls. Recently, however, conditions have materially improved with the rise in the price of oil. Many sukuk issuing companies and countries are significant oil producers, and the higher prices help improve the overall quality of sukuk issues. Qatar, with close connections to Iran, still remains sequestered both economically and politically following the surprise blockade by Saudi Arabia, UAE, Bahrain, and Egypt.

Looking Forward

We anticipate most central banks will continue progressing on their paths toward monetary normalization, which means additional interest rate hikes. We expect economic growth in the US will remain strong, driven by tax cuts and a more favorable environment for business. We anticipate interest rates in the US to remain higher relative to interest rates observed in foreign markets. Emerging markets, and especially China, are being impacted by changes in the global terms of trade. We only buy dollar-denominated investments, which improves results when problems whack currencies from Turkey, South Africa, and a growing number of Latin countries.

Over the upcoming year we will continue to place our focus on owning US dollar-denominated investments offered by high-quality issuers that are better positioned to endure political challenges. We are especially pleased to note the suprise defeat of a corrupt government in Malaysia, a country that has championed sukuk to the world's markets.

34

Annual Report

May 31, 2018

 

Amana Participation Fund: Schedule of Investments

As of May 31, 2018

Corporate Sukuk – 70.3%

Coupon / Maturity

Face Amount

Market Value

Country¹

Percentage of Assets

 

Communications

   

    Ooredoo Tamweel²

3.039% due 12/03/2018

$2,000,000

$1,998,708

Qatar

3.2%

 
 

 

1,998,708

 

3.2%

 

Consumer Discretionary

   

    Al Shindagha²

3.776% due 11/26/2019

2,400,000

2,396,666

United Arab Emirates

3.8%

    Majid Al Futtaim²

4.50% due 11/03/2025

2,500,000

2,533,695

United Arab Emirates

4.0%

 
 

 

4,930,361

 

7.8%

 

Energy

   

    Petronas Global³

2.707% due 03/18/2020

750,000

742,788

Malaysia

1.2%

 
 

 

742,788

 

1.2%

 

Financials

   

    Dubai International Financial Centre²

4.325% due 11/12/2024

2,500,000

2,522,993

United Arab Emirates

4.0%

    Dubai Islamic Bank²

2.921% due 06/03/2020

2,750,000

2,705,665

United Arab Emirates

4.3%

    Emirates Islamic Bank²

3.542% due 05/31/2021

2,500,000

2,480,782

United Arab Emirates

3.9%

    Emirates Madina Group²

4.564% due 06/18/2024

3,000,000

2,972,223

United Arab Emirates

4.7%

    Exim Sukuk Malaysia²

2.874% due 02/19/2019

1,000,000

997,214

Malaysia

1.6%

    Investment Corporation of Dubai²

3.508% due 05/21/2020

2,500,000

2,481,670

United Arab Emirates

3.9%

    Noor²

2.788% due 04/28/2020

2,000,000

1,959,896

United Arab Emirates

3.1%

    Qatar Islamic Bank²

2.754% due 10/27/2020

2,000,000

1,936,274

Qatar

3.1%

    SIB Sukuk Co III²

3.084% due 09/08/2021

2,750,000

2,683,351

United Arab Emirates

4.3%

    Sukuk Funding No3²

4.348% due 12/03/2018

1,000,000

1,003,378

United Arab Emirates

1.6%

    TF Varlik Kiralama²

5.375% due 04/24/2019

2,000,000

2,008,036

Turkey

3.2%

 
 

 

23,751,482

 

37.7%

 

Industrials

   

    DP World Crescent²

3.908% due 05/31/2023

2,750,000

2,717,418

United Arab Emirates

4.3%

    Jebel Ali Free Zone²

7.00% due 06/19/2019

2,500,000

2,586,500

United Arab Emirates

4.1%

 
 

 

5,303,918

 

8.4%

 

Materials

   

    Equate Sukuk Spc²

3.944% due 02/21/2024

2,750,000

2,676,209

United Arab Emirates

4.2%

 
 

 

2,676,209

 

4.2%

 

Technology

   

    Axiata²

4.357% due 03/24/2026

1,250,000

1,246,304

Malaysia

2.0%

 
 

 

1,246,304

 

2.0%

 

Utilities

   

    Saudi Electric Global³

4.00% due 04/08/2024

1,500,000

1,489,500

Saudi Arabia

2.4%

    TNB Global Ventures Capital²

3.244% due 10/19/2026

2,290,000

2,122,242

Malaysia

3.4%

 
 

3,611,742

 

5.8%

 

Total Corporate Sukuk

 

$44,261,512

 

70.3%

 

Continued on next page.

 

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

35

 

Amana Participation Fund: Schedule of Investments

As of May 31, 2018

Government Sukuk – 25.6%

Coupon / Maturity

Face Amount

Market Value

Country¹

Percentage of Assets

 

Foreign Government Sukuk

   

    China Beige Book International²

6.273% due 11/22/2018

$1,750,000

$1,758,512

Bahrain

2.8%

    Department of Finance Dubai²

3.875% due 01/30/2023

2,250,000

2,233,838

United Arab Emirates

3.6%

    Kingdom of Saudi Arabia²

3.628% due 04/20/2027

2,750,000

2,635,908

Saudi Arabia

4.2%

    Oman Sovereign²

4.397% due 06/01/2024

2,000,000

1,889,444

Oman

3.0%

    Perusahaan Penerbit SBSN III³

6.125% due 03/15/2019

500,000

510,625

Indonesia

0.8%

    Perusahaan Penerbit SBSN²

4.55% due 03/29/2026

1,750,000

1,752,363

Indonesia

2.8%

    Perusahaan Penerbit SBSN³

4.55% due 03/29/2026

250,000

250,337

Indonesia

0.4%

    RAK Capital²

3.094% due 03/31/2025

1,500,000

1,405,710

United Arab Emirates

2.2%

    Sharjah²

3.764% due 09/17/2024

1,500,000

1,476,022

United Arab Emirates

2.3%

    State of Quatar²

3.241% due 01/18/2023

2,250,000

2,193,485

Qatar

3.5%

 

Total Government Sukuk

 

16,106,244

 

25.6%

 

Total investments

(Cost $61,920,377)

 

$60,367,756

 

95.9%

Other assets (net of liabilities)

 

2,574,120

 

4.1%

Total net assets

 

$62,941,876

 

100.0%

¹ Country of activity

² Security was purchased pursuant to Regulation S under the Securities Act of 1933 which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Trust's Board of Trustees. At May 31, 2018, the aggregate value of these securities was $57,374,505 representing 91.1% of net assets.

³ Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust's Board of Trustees. At May 31, 2018, the net value of these securities was $2,993,251 representing 4.7% of net assets.

Sukuk Quality Diversification

% of Total Net Assets

 

Rated "AA-"

3.5%

Amana Participation Fund Sukuk Quality Diversification

Rated "A+"

8.1%

Rated "A"

5.3%

Rated "A-"

27.6%

Rated "BBB+"

8.5%

Rated "BBB"

21.4%

Rated "BBB-"

14.9%

Rated "B+"

2.8%

Not rated

3.8%

Other assets (net of liabilities)

4.1%

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

 

36

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

Amana Participation Fund

Statement of Assets and Liabilities

As of May 31, 2018

 

Assets

    Investments in securities, at value
    (Cost $61,920,377)

$60,367,756

    Cash

2,468,320

    Dividends and Income

522,009

    Receivable for Fund shares sold

18,050

    Prepaid expenses

4,633

        Total assets

63,380,768

Liabilities

    Payable for security purchases

249,090

    Payable for Fund shares redeemed

147,210

    Accrued advisory fees

26,518

    Distributions payable

7,744

    Accrued other expenses

4,836

    Accrued distribution fee

1,999

    Accrued retirement plan custodial fees

1,256

    Accrued Chief Compliance Officer expenses

239

        Total liabilities

438,892

Net Assets

$62,941,876

 

Analysis of Net Assets

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

$64,499,337

    Accumulated net realized loss

(4,840)

    Unrealized net depreciation on investments

(1,552,621)

Net assets applicable to Fund shares outstanding

$62,941,876

 

Net asset value per Investor Share

AMAPX

Net assets, at value

$18,212,429

Shares outstanding

1,866,110

Net asset value, offering and redemption price per share

$9.76

 

Net asset value per Institutional Share

AMIPX

Net assets, at value

$44,729,447

Shares outstanding

4,567,243

Net asset value, offering and redemption price per share

$9.79

 

Statement of Operations

Year ended May 31, 2018

 

Investment income

    Sukuk Income

$1,526,200

    Miscellaneous income

116

            Total investment income

1,526,316

Expenses

    Investment adviser fees

250,321

    Distribution fees – Investor Shares

35,917

    Filing and registration fees

30,196

    Professional Fees

13,466

    Custodian fees

9,268

    Retirement plan custodial fees

 

        Investor Shares

31

        Institutional Shares

3,129

    Printing and postage

2,307

    Chief Compliance Officer expenses

1,272

    Other expenses

864

    Trustee fees

769

            Total gross expenses

347,540

    Less custodian fee credits

(9,268)

            Net expenses

338,272

Net investment income

$1,188,044

 
 

Net realized loss from investments

$(2,029)

Net decrease in unrealized appreciation on investments

(1,764,225)

Net loss on investments

$(1,766,254)

 

Net decrease in net assets resulting from operations

$(578,210)

 

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

37

Amana Participation Fund

Statements of Changes in Net Assets

Year ended May 31, 2018

Year ended May 31, 2017

Increase in net assets from operations

From operations

    Net investment income

$1,188,044

$597,219

    Net realized gain (loss) on investment

(2,029)

29,611

    Net increase (decrease) in unrealized appreciation

(1,764,225)

129,001

            Net increase (decrease) in net assets

(578,210)

755,831

Distributions to shareowners from

    Net investment income

        Investor Shares

(316,414)

(145,007)

        Institutional Shares

(871,630)

(452,212)

Capital gains distribution

   

        Investor Shares

-

(8,765)

        Institutional Shares

-

(23,657)

            Total distributions

(1,188,044)

(629,641)

Capital share transactions

    Proceeds from the sale of shares

        Investor Shares

11,944,335

10,399,606

        Institutional Shares

27,010,316

13,424,189

    alue of shares issued in reinvestment of dividends and distributions

        Investor Shares

314,337

152,347

        Institutional Shares

791,141

441,080

    Early redemption fees retained

        Investor Shares

398

2,498

        Institutional Shares

884

6,596

    Cost of shares redeemed

        Investor Shares

(5,585,736)

(1,598,201)

        Institutional Shares

(7,981,340)

(483,621)

            Total capital share transactions

26,494,335

22,344,494

Total increase in net assets

24,728,081

22,470,684

 

Net assets

Beginning of year

38,213,795

15,743,111

End of year

62,941,876

38,213,795

 

Undistributed net investment Income

$-

$-

 

Shares of the Fund sold and redeemed

Investor Shares (AMAPX)

    Number of shares sold

1,202,404

1,036,045

    Number of shares issued in reinvestment of dividends and distributions

31,650

15,160

    Number of shares redeemed

(560,823)

(159,409)

Net increase in number of shares outstanding

673,231

891,796

 

Institutional Shares (AMIPX)

    Number of shares sold

2,697,778

1,328,602

    Number of shares issued in reinvestment of dividends and distributions

79,448

43,701

    Number of shares redeemed

(800,994)

(48,039)

Net increase in number of shares outstanding

1,976,232

1,324,264

 

38

Annual Report

May 31, 2018

The accompanying notes are an integral part of these financial statements.

Amana Participation Fund: Financial Highlights

Investor Shares (AMAPX)

Year ended May 31,

Period endedA

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

2018

2017

May 31, 2016

Net asset value at beginning of period

$10.07

$10.02

$10.00

Income from investment operations

    Net investment incomeB

0.22

0.21

0.10

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

(0.31)

0.07

(0.01)

Total from investment operations

(0.09)

0.28

0.09

Less distributions

    Dividends (from net investment income)

(0.22)

(0.22)

(0.07)

    Distribution (from capital gains)

-

(0.01)

-

Total distributions

(0.22)

(0.23)

(0.07)

    Paid-in capital from early redemption feesC

0.00

0.00

0.00

 

Net asset value at end of period

$9.76

$10.07

$10.02

 

Total ReturnD

(0.94)%

2.87%

0.91%

 

Ratios / supplemental data

Net assets ($000), end of period

$18,212

$12,014

$3,016

Ratio of expenses to average net assets

    Before custodian fee creditsE

0.87%

0.92%

1.12%

    After custodian fee creditsE

0.85%

0.91%

1.12%

Ratio of net investment income after custodian fee credits to average net assetsE

2.18%

2.14%

1.53%

Portfolio turnover rateD

7%

23%

0%

 

Institutional Shares (AMIPX)

Year ended May 31,

Period endedA

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

2018

2017

May 31, 2016

Net asset value at beginning of period

$10.11

$10.05

$10.00

Income from investment operations

    Net investment incomeB

0.24

0.24

0.07

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

(0.32)

0.06

0.04

Total from investment operations

(0.08)

0.30

0.11

Less distributions

    Dividends (from net investment income)

(0.24)

(0.23)

(0.06)

    Distribution (from capital gains)

-

(0.01)

-

Total distributions

(0.24)

(0.24)

(0.06)

    Paid-in capital from early redemption feesC

0.00

0.00

0.00

 

Net asset value at end of period

$9.79

$10.11

$10.05

 

Total ReturnD

(0.80)%

3.09%

1.10%

 

Ratios / supplemental data

Net assets ($000), end of period

$44,729

$26,200

$12,727

Ratio of expenses to average net assets

    Before custodian fee creditsE

0.62%

0.68%

0.72%

    After custodian fee creditsE

0.60%

0.67%

0.72%

Ratio of net investment income after custodian fee credits to average net assetsE

2.45%

2.38%

0.99%

Portfolio turnover rateD

7%

23%

0%

A Operations commenced on 9/28/2015
B Calculated using average shares outstanding
C Amount is less than $0.01
D Not annualized for periods of less than one year
E Annualized for period of less than on year

The accompanying notes are an integral part of these financial statements.

Annual Report

May 31, 2018

39

Notes To Financial Statements

Note 1 – Organization

Amana Mutual Funds Trust (the "Trust") was organized as a Delaware Statutory Trust on March 11, 2013, and is the successor to Amana Mutual Funds Trust, an Indiana Business Trust ("Prior Trust") organized on July 26, 1984, pursuant to a reorganization on July 19, 2013. Each Fund is a series of the Trust and the Income, Growth, and Developing World Funds are successors to the corresponding series of the Prior Trust. The Trust is registered as an open-end, diversified management company under the Investment Company Act of 1940, as amended. The Trust restricts its investments to those acceptable to Muslims by investing in accordance with Islamic principles. Four portfolio series have been created. The Income Fund was first authorized to sell shares of beneficial interest to the public on June 23, 1986. The Growth Fund began operations on February 3, 1994. The Developing World Fund began operations on September 28, 2009. Institutional shares of Income, Growth, and Developing World Funds were first offered September 25, 2013. The Participation Fund (both Investor and Institutional Shares) began operations September 28, 2015. The Participation Fund is a nondiversified fund.

Each Fund is an investment company and accordingly follows the investment accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 "Financial Services – Investment Companies."

Each class of shares of a Fund represents an interest in the same portfolio of investments of the Fund and has in all respects the same rights and obligations as each other class of the Fund, except that each class bears its own class expenses, and each class has exclusive voting rights. Each class of shares may be subject to different investment minimums and other conditions of eligibility as may be described in the prospectus for the particular class of shares, as from time to time in effect.

Income, realized and unrealized capital gains and losses, and expenses to be paid by a Fund and not allocated to a particular class as provided below, shall be allocated to each class on the basis of relative net assets. Expenses allocable to a specific class are expenses specifically incurred by or for such class including the following:

  • Distribution fees;
  • Retirement plan custodial fees; and
  • Any applicable service fees.

Net investment income dividends and capital gain distributions paid by the Fund on each class of its shares will be calculated in the same manner on the same day and at the same time.

Investment risks:
Income, Growth, Developing World, and Participation Funds: The value of the shares of each of the Funds rises and falls as the value of the securities in which the Funds invest goes up and down. The Funds limit the securities they purchase to those consistent with Islamic principles. This limits opportunities and may affect performance. Each of the Funds may invest in securities that are not traded in the United States. Investments in the securities of foreign issuers may involve risks in addition to those normally associated with investments in the securities of US issuers. These risks include currency and market fluctuations, and political or social instability. The risks of foreign investing are generally magnified in the smaller and more volatile securities markets of the developing world.

Growth Fund: The smaller and less seasoned companies that may be in the Growth Fund have a greater risk of price volatility.

Participation Fund: While the Participation Fund does not invest in conventional bonds, risks similar to those of conventional diversified fixed-income funds apply. These include: diversification and concentration risk, liquidity risk, interest rate risk, credit risk, and high-yield risk. The Participation Fund also includes risks specific to investments in Islamic fixed-income instruments. The structural complexity of sukuk, along with the weak infrastructure of the sukuk market, increases risk. As compared to rights of conventional bondholders, holders of sukuk may have limited ability to pursue legal recourse to enforce the terms of the sukuk or to restructure the sukuk in order to seek recovery of principal. Sukuk are also subject to the risk that some Islamic scholars may deem certain sukuk as not meeting Islamic investment principles subsequent to the sukuk being issued.

The Funds may invest substantially in one or more sectors, which can increase volatility and exposure to issues specific to a particular sector or industry.

Note 2 – 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.

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-US 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.

Sukuk certificates in which the Participation Fund invests are valued based on evaluated prices supplied by an independent pricing service, which include valuations provided by market makers and other participants, provided that there is sufficient market activity on which the pricing service can base such valuations. Where market activity is insufficient for making such determinations, the independent pricing service uses proprietary valuation methodologies and may consider a variety of factors, such as yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, and other factors in order to calculate the security's fair value.

Foreign currency:

Investment securities and other assets and liabilities denominated in foreign currencies are translated into US dollar amounts at the date of valuation. Purchases and sales of investment securities and

40

Annual Report

May 31, 2018

Notes To Financial Statements (continued)

income and expense items denominated in foreign currencies are translated into US 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 US 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:
Each Fund computes the share price of each share class by dividing the net assets attributable to each share class by the outstanding shares of that class. Each share class represents an interest in the same investment portfolio. Each share class is identical in all respects except that each class bears its own class expenses, and each class has exclusive voting rights. As a result of the differences in the expenses borne by each share class, the share price and distributions will vary among a Fund's share classes. The Funds' shares are not priced or traded on days the New York Stock Exchange is closed. The NAV is both the offering and redemption price per share.

Fair value measurements:
Accounting Standards Codification (ASC) 820 establishes a three-tier framework for measuring fair value based on a hierarchy of inputs. The hierarchy distinguishes between market data obtained from independent sources (observable inputs) and the Funds' own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds' investments and are summarized below.

Share Valuation Inputs as of May 31, 2018

Funds

Level 1
Quoted Price

Level 2
Significant Observable Input

Level 3
Significant Unobservable Input

Total

Income Fund

Common Stocks¹

$1,266,714,579

$-

$-

$1,266,714,579

Total Assets

$1,266,714,579

$-

$-

$1,266,714,579

   

Growth Fund

Common Stocks¹

$1,661,498,360

$-

$-

$1,661,498,360

Total Assets

$1,661,498,360

$-

$-

$1,661,498,360

 

Developing World Fund

Common Stocks

    Communications

$2,346,392

$588,680

$-

$2,935,072

    Consumer Discretionary

$1,417,120

$3,634,922

$-

$5,052,042

    Consumer Staples

$1,317,336

$2,398,884

$-

$3,716,220

    Financials

$-

$1,655,117

$-

$1,655,117

    Health Care

$-

$2,763,245

$-

$2,763,245

    Industrials

$912,165

$587,116

$-

$1,499,281

    Materials

$1,385,970

$-

$-

$1,385,970

    Technology

$2,651,130

$2,459,431

$-

$5,110,561

    Utilities

$96,800

$1,928,122

$-

$2,024,922

Total Common Stocks

$10,126,913

$16,015,517

$-

$26,142,430

 

Warrants¹

$4,221

$-

$-

$4,221

 

Total Assets

$10,131,134

$16,015,517

$-

$26,146,651

 

Participation Fund

Corporate Sukuk¹

$-

$44,261,512

$-

$44,261,512

Government Sukuk¹

$-

$16,106,244

$-

$16,106,244

Total Assets

$-

$60,367,756

$-

$60,367,756

During the year ended May 31, 2018, no Fund had transfers between Level 1, Level 2, and Level 3.

¹ See the Schedule of Investments for additional details.

 

Annual Report

May 31, 2018

41

Notes To Financial Statements (continued)

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 marketplace, 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 table on page 41 is a summary of the inputs used as of May 31, 2018, in valuing the Funds' investments carried at fair value.

Derivative instruments and hedging activities:
The Funds have adopted the financial accounting reporting rules required by the Derivatives and Hedging Topic of the FASB Accounting Standards Codification. The Funds are required to include 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 a previous fiscal period, the Funds held positions in rights offerings as a result of actions taken by the board of directors of the underlying companies. Rights offerings are issued to existing shareowners of companies and allow shareowners to purchase additional company shares, generally at a discount to the current market price, prior to a set expiration date. As a result of exercising certain rights offerings, the Funds received warrants. Holders of warrants have the right to purchase additional securities directly from the issuer at a set exercise price, prior to a stated expiration date.

The effects of these derivative instruments on the Fund's financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations are presented in the tables below. The fair values of derivative instruments as of May 31, 2018, by risk category are as follows:

Developing World Fund

Statement of Assets and Liabilities Location

Derivatives not designated as hedging instruments

Asset Derivatives

Investments in securities, at value

Warrants

$4,221

Total

$4,221

Statement of Operations Effects

Developing World Fund

Derivatives not designated as hedging instruments

Realized Gain (Loss)

Changes in Unrealized Gain

Warrants

$-

$(2,788)

Total

$-

$(2,788)

The average monthly notional amount of warrants during the fiscal year ended May 31, 2018, was $92,571.

Investment concentration:
The fundamental policies of the Funds prohibit earning interest, in accordance with Islamic principles. Consequently, cash is held in non-interest-bearing deposits with the Funds' custodian or other banks. "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 Codification ("ASC") 825, "Financial Instruments," identifies these items as a concentration of credit risk. The risk is managed by careful financial analysis and review of the custodian's operations, resources, and protections available to the Trust. This 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 (2015 – 2017) or expected to be taken in the Funds' 2018 tax returns. The Funds identify their major tax jurisdiction as US 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 12 months.

42

Annual Report

May 31, 2018

Notes To Financial Statements (continued)

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 are as of fiscal year ended May 31, 2018, and have no effect on net assets or NAV per share.

 

Income Fund

Growth Fund

Undistributed net income (loss)

$5,068

$-

Accumulated gains (losses)

$(5,068)

$-

Paid-in capital

$-

$-

 

 

Developing World Fund

Participation Fund

Undistributed net income (loss)

$(10,339)

$-

Accumulated gains (losses)

$10,339

$-

Paid-in capital

$-

$-

Distributions to shareowners:
For the Amana Participation Fund, dividends to shareowners from net investment income are paid daily and distributed on the last business day of each month. For the Amana Income Fund, Amana Growth Fund, and Amana Developing World Fund, dividends to shareowners from net investment income, if any, are paid in May and December. As a result of their investment strategies, the Growth and Developing World Funds do not expect to pay income dividends. 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 distributions if they total $10 or more 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 during the reporting period. Actual results could differ from those estimates.

Foreign taxes:
Withholding taxes on foreign dividends are paid (a portion of which may be reclaimable) or provided for in accordance with the applicable country's tax rules and rates and are disclosed in the Statement of Operations. Withholding tax reclaims are filed in certain countries to recover a portion of the amounts previously withheld. The Funds record a reclaim receivable based on a number of factors, including a jurisdiction's legal obligation to pay reclaims as well as payment history and market convention.

Other:
Dividend income is recognized on the ex-dividend date, and sukuk income is recognized on an accrual basis.

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. Net investment losses may not be utilized to offset net investment income in future periods for tax purposes.

Note 3 – Transactions with Affiliated Persons

Under a contract approved annually by Amana's independent trustees, Saturna Capital provides investment advisory services and certain other administrative services and facilities required to conduct Trust business. Prior to January 1, 2018, the Amana Growth Fund, Amana Income Fund, and Amana Developing World Fund each paid an advisory and administration fee of 0.95% on the first $500 million of a Fund's average daily net assets, 0.85% on the next $500 million, 0.75% on the next $500 million, and 0.65% on assets over $1.5 billion. Beginning January 1, 2018, the Amana Growth Fund, Amana Income Fund, and Amana Developing World Fund each pay a lower advisory and administration fee of 0.85% on the first $1 billion of a Fund's average daily net assets, 0.75% on the next $1 billion, and 0.65% on assets over $2 billion. The Amana Participation Fund pays an advisory and administration fee of 0.50% annually of the average daily net assets. For the fiscal year ended May 31, 2018, the Funds paid the following advisory fees to Saturna Capital:

Advisory fees

Income Fund

$11,597,627

Growth Fund

$13,564,420

Developing World Fund

$282,925

Participation Fund

$250,321

Certain officers and one trustee of Amana are also officers and directors of the investment adviser.

Saturna Capital also acts as transfer agent for the Trust for which each class of a Fund pays $0.25 per active account per month for each Fund other than the Participation Fund. For the fiscal year ended May 31, 2018, the Funds paid the following transfer agent fees to Saturna Capital:

Transfer agent fees

Income Fund Investor Shares (AMANX)

$14,991

Income Fund Institutional Shares (AMINX)

$15,452

Growth Fund Investor Shares (AMAGX)

$19,616

Growth Fund Institutional Shares (AMIGX)

$18,730

Developing World Fund Investor Shares (AMDWX)

$2,755

Developing World Fund Institutional Shares (AMIDX)

$3,106

Participation Fund Investor Shares (AMAPX)

n/a

Participation Fund Institutional Shares (AMIPX)

n/a

 

Annual Report

May 31, 2018

43

Notes To Financial Statements (continued)

Saturna Brokerage Services, Inc. ("SBS"), a subsidiary of Saturna Capital, is registered as a broker-dealer and acts as distributor. The Funds have adopted a Distribution Plan in accordance with Rule 12b-1 under the 1940 Act applicable to the Investor Shares of each Fund. The plan provides that the Funds will pay a fee to SBS at an annual rate of up to 0.25% of the average daily net assets applicable to Investor Shares of each Fund. The fee is paid to SBS as reimbursement for expenses incurred for distribution-related activity. For the fiscal year ended May 31, 2018, the Funds paid the following distribution fees to SBS:

Distribution (12b-1) fees

Income Fund Investor Shares (AMANX)

$2,377,788

Income Fund Institutional Shares (AMINX)

n/a

Growth Fund Investor Shares (AMAGX)

$2,830,976

Growth Fund Institutional Shares (AMIGX)

n/a

Developing World Fund Investor Shares (AMDWX)

$37,701

Developing World Fund Institutional Shares (AMIDX)

n/a

Participation Fund Investor Shares (AMAPX)

$35,917

Participation Fund Institutional Shares (AMIPX)

n/a

For the fiscal year ended May 31, 2018, Saturna Capital spent an additional $3,123,019 of its own resources, and not part of the 12b-1 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 used to effect equity portfolio transactions for the Trust. SBS currently executes portfolio transactions without commission. Transactions effected through other brokers are subject to commissions payable to that broker.

Saturna Trust Company ("STC"), a subsidiary of Saturna Capital, acts as retirement plan custodian for Fund shareowners. Each class of shares of a Fund pays an annual fee of $10 per account for retirement plan services to Saturna Trust Company. For the fiscal year ended May 31, 2018, the Funds incurred the following retirement plan custodial fees to STC:

Retirement plan custodial fees

Income Fund Investor Shares (AMANX)

$119

Income Fund Institutional Shares (AMINX)

$47,292

Growth Fund Investor Shares (AMAGX)

$226

Growth Fund Institutional Shares (AMIGX)

$60,654

Developing World Fund Investor Shares (AMDWX)

$32

Developing World Fund Institutional Shares (AMIDX)

$12,205

Participation Fund Investor Shares (AMAPX)

$31

Participation Fund Institutional Shares (AMIPX)

$3,129

Mr. Nicholas Kaiser serves as a trustee and president of the Trust. He is also a director and the chairman of Saturna Capital and Saturna Trust Company. He is not compensated by the Trust. For the fiscal year ended May 31, 2018, the Funds paid trustee compensation expenses of $63,000, which is included in the $75,007 of total expenses paid for the independent Trustees.

On May 31, 2018, the trustees, officers, and their affiliates (including Saturna Capital Corporation) as a group, owned the following percentages of outstanding shares:

Trustees', officers', and affiliates' ownership

Income Fund Investor Shares (AMANX)

0.05%

Income Fund Institutional Shares (AMINX)

1.27%

Growth Fund Investor Shares (AMAGX)

0.02%

Growth Fund Institutional Shares (AMIGX)

1.45%

Developing World Fund Investor Shares (AMDWX)

1.85%

Developing World Fund Institutional Shares (AMIDX)

16.16%

Participation Fund Investor Shares (AMAPX)

0.38%

Participation Fund Institutional Shares (AMIPX)

9.07%

The officers of the Trust are paid by Saturna Capital, not the Trust, except the Chief Compliance Officer, who may be partially compensated by the Trust. For the year ended May 31, 2018, the Funds paid the following compensation expenses for the Chief Compliance Officer:

Chief Compliance Officer

Income Fund

$44,751

Growth Fund

$53,084

Developing World Fund

$941

Participation Fund

$1,224

Note 4 – Distributions to Shareowners

The tax characteristics of distributions paid for the year ended May 31, 2018, and the fiscal year ended May 31, 2017, were as follows:

Income Fund

May 31, 2018

May 31, 2017

Ordinary income

$16,798,544

$17,509,491

Long-term capital gain¹

$64,192,214

$34,223,714

 

Growth Fund

May 31, 2018

May 31, 2017

Ordinary income²

$8,649,304

$10,418,785

Long-term capital gain¹

$158,323,452

$171,962,844

 

Developing World Fund

May 31, 2018

May 31, 2017

Ordinary income²

$69,708

$119,607

 

Participation Fund

May 31, 2018

May 31, 2017

Ordinary income

$1,188,044

$629,641

¹ Long-Term Capital Gain dividend designated pursuant to Section 852(b)(3) of the Internal Revenue Code.

² By policy, the Growth and Developing World Funds seek to avoid paying income dividends.

44

Annual Report

May 31, 2018

Notes To Financial Statements (continued)

Note 5 – Federal Income Taxes

The cost basis of investments for federal income tax purposes at May 31, 2018, were as follows:

 

Income Fund

Growth Fund

Cost of investments

$515,588,468

$489,723,139

Gross unrealized appreciation

$754,475,365

$1,171,775,221

Gross unrealized depreciation

$(3,349,254)

$-

Net unrealized appreciation

$751,126,111

$1,171,775,221

 

 

Developing World Fund

Participation Fund

Cost of investments

$22,402,701

$61,920,377

Gross unrealized appreciation

$5,943,391

$4,674

Gross unrealized depreciation

$(2,199,441)

$(1,557,295)

Net unrealized appreciation (depreciation)

$3,743,950

$(1,552,621)

As of May 31 2018, the components of distributable earnings on a tax basis were as follows:

Income Fund

Undistributed ordinary income

$76,167

Accumulated capital gains

$44,710,376

Tax accumulated earnings

$44,786,543

Unrealized appreciation

$751,126,111

Total accumulated earnings

$795,912,654

 

Growth Fund

Undistributed ordinary income

$4,194,241

Accumulated capital gains

$44,468,795

Tax accumulated earnings

$48,663,036

Unrealized appreciation

$1,171,775,221

Total accumulated earnings

$1,220,438,257

 

 

Developing World Fund

Undistributed ordinary income

$60,893

Tax accumulated earnings

$60,893

Accumulated capital and other losses

$(5,410,491)

Unrealized appreciation

$3,743,950

Other unrealized gains

$250

Total accumulated losses

$(1,605,398)

 

 

Participation Fund

Accumulated capital and other losses

$(4,840)

Unrealized depreciation

$(1,552,621)

Total accumulated earnings

$1,557,461

 

At May 31, 2018, the Funds had the following capital loss carryforwards and loss deferrals, subject to regulation. Prior to their expiration, loss carryforwards may be used to offset future net capital gains realized for federal income tax purposes.

 

Income Fund

Growth Fund

Developing World Fund

Participation Fund

Capital loss carryforwards expiring 2019

$-

$-

$19,458

$-

Short-term loss carryforwards no expiration

$-

$-

$1,057,675

$2,811

Long-term loss carryforwards no expiration

$-

$-

$4,276,008

$-

Total capital loss carryforwards

$-

$-

$5,353,141

$2,811

Post-October loss deferral¹

$-

$-

$47,143

$2,029

Late-year loss deferral²

$-

$-

$10,207

$-

¹ Net capital losses incurred after October 31 and within the taxable year are deemed to arise on the first business day of a fund's next taxable year.

² Net ordinary losses incurred after December 31 and within the taxable year are deemed to arise on the first business day of a fund's next taxable year.

Note 6 – Investments

During the fiscal year ended May 31, 2018, the Funds purchased and sold the following amounts of securities.

 

Purchases

Sales

Income Fund

$9,199,899

$133,036,703

Growth Fund

$-

$112,647,150

Developing World Fund

$7,707,755

$4,967,608

Participation Fund

$28,670,704

$3,260,000

Note 7 – Custodian

Under agreements in place with the Trust's custodian, Bank of New York Mellon, custody fees are reduced by credits for cash balances. For the fiscal year ended May 31, 2018, such reductions were as follows:

Custodian Fee Credits

Income Fund

$67,028

Growth Fund

$80,913

Developing World Fund

$14,793

Participation Fund

$9,268

Note 8 – 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 other events or transactions during the period that materially impacted the amounts or disclosures in the Funds' financial statements.

Annual Report

May 31, 2018

45

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees
Amana Mutual Funds Trust

Opinion on the Financial Statements

We have audited the accompanying statements of assets and liabilities of the Amana Income Fund, the Amana Growth Fund, the Amana Developing World Fund and the Amana Participation Fund (the "Funds"), each a series of Amana Mutual Funds Trust (the "Trust"), including the schedules of investments, as of May 31, 2018, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, financial highlights for each of the five years in the period then ended, except for the Amana Participation Fund in which the financial highlights are for each of the two years in the period then ended and for the period September 28, 2015 (commencement of operations) to May 31, 2016, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of May 31, 2018, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for the periods indicated above, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Funds' management. Our responsibility is to express an opinion on the Funds' financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Funds in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We have served as the auditor of one or more of the funds in the Trust since 1997.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of the Funds' internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of May 31, 2018 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

Philadelphia, Pennsylvania
July 26, 2018

/s/ Tait, Weller & Baker LLP
Tait, Weller & Baker LLP

46

Annual Report

May 31, 2018

 

Expenses

(unaudited)

All mutual funds have operating expenses. As an Amana Mutual 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. Mutual funds (unlike other financial investments) only report their results after deduction of operating expenses.

With the Amana Funds, unlike many mutual funds, you do not incur sales charges (loads) on purchases, reinvested dividends, or other distributions. There are no redemption fees or exchange fees. You may incur fees related to extra services requested by you for your account, such as 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 examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2017 to May 31, 2018).

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 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 Funds may charge for extra services (such as domestic bank wires, international bank wires, or overnight courier delivery of redemption checks) rendered on request, which you may need to estimate to determine your total expenses.

Hypothetical Example For Comparison Purposes
The second line for each Fund provides information about hypothetical account values and hypothetical expenses based on each 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 Funds 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 charged by custodians other than Saturna Trust Company (note that Saturna does not charge such fees to shareowners directly on Saturna IRAs, ESAs, or HSAs with the Amana Funds), and charges for extra services such as 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 Amana Funds do not assess 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, 2017]

Ending Account Value
[May 31, 2018]

Expenses Paid During Period

Annualized Expense Ratio

Income Fund

Investor Shares (AMANX), Actual

$1,000.00

$972.70

$5.45

1.11%

Hypothetical (5% return before expenses)

$1,000.00

$1,019.41

$5.58

1.11%

Institutional Shares (AMINX), Actual

$1,000.00

$973.80

$4.28

0.87%

Hypothetical (5% return before expenses)

$1,000.00

$1,020.60

$4.38

0.87%

 

Growth Fund

Investor Shares (AMAGX), Actual

$1,000.00

$1,041.20

$5.51

1.08%

Hypothetical (5% return before expenses)

$1,000.00

$1,019.53

$5.45

1.08%

Institutional Shares (AMIGX), Actual

$1,000.00

$1,042.60

$4.31

0.85%

Hypothetical (5% return before expenses)

$1,000.00

$1,020.71

$4.26

0.85%

 

Developing World Fund

Investor Shares (AMDWX), Actual

$1,000.00

$968.10

$6.17

1.26%

Hypothetical (5% return before expenses)

$1,000.00

$1,018.66

$6.33

1.26%

Institutional Shares (AMIDX), Actual

$1,000.00

$969.00

$5.35

1.09%

Hypothetical (5% return before expenses)

$1,000.00

$1,019.50

$5.49

1.09%

 

Participation Fund

Investor Shares (AMAPX), Actual

$1,000.00

$987.40

$3.93

0.79%

Hypothetical (5% return before expenses)

$1,000.00

$1,020.98

$4.00

0.79%

Institutional Shares (AMIPX), Actual

$1,000.00

$987.60

$2.72

0.55%

Hypothetical (5% return before expenses)

$1,000.00

$1,022.19

$2.77

0.55%

Expenses are equal to annualized expense ratios indicated above (based on the most recent semi-annual period of December 1, 2017, through May 31, 2018), multiplied by the average account value over the period, multiplied by 182/365 to reflect the semi-annual period.

 

Annual Report

May 31, 2018

47

 

Trustees and Officers

(unaudited)

Name (Age) and Address

Position(s) Held with Trust & Number of Saturna Fund Portfolios Overseen

Principal Occupation(s) during past 5 years, including Directorships

Other
Directorshipsheld by Trustee

INDEPENDENT TRUSTEES

(photo omitted)

M. Yaqub Mirza, PhD (71)
1300 N. State Street
Bellingham, WA 98225

Chairman (since 2014);
Independent Trustee (since 2009);
Vice Chairman (2009 to 2014);
Independent Trustee (1987 to 2003);
Chairman (2000 to 2003);
Executive Committee (Chairman);
Audit and Compliance Committee;

Four

CEO, Sterling Management Group, Inc. (financial services)

None

(photo omitted)

Iqbal J. Unus, PhD (74)
1300 N. State Street
Bellingham, WA 98225

Independent Trustee (since 1989);
Governance, Compensation and Nominations Committee (Chairman);

Four

Adviser, The Fairfax Institute at the International Institute of Islamic Thought

None

(photo omitted)

Miles K. Davis, PhD (58)
1300 N. State Street
Bellingham, WA 98225

Independent Trustee (since 2008);
Executive Committee;
Audit and Compliance Committee;

Four

President, Linfield College

Former Dean and George Edward Durell Chair of Management, Harry F. Byrd, Jr. School of Business,
Shenandoah University;

Former Associate Professor of Management/Director of the Institute for Entrepreneurship, Shenandoah University

None

(photo omitted)

Ronald H. Fielding MA, MBA, CFA (69)
1300 N. State Street
Bellingham, WA 98225

Independent Trustee¹ (since 2012);
Audit and Compliance Committee (Chairman, Financial Expert);

Thirteen

Director, ICI Mutual Insurance Company

Saturna Investment Trust

 

(photo omitted)

Nicholas F. Kaiser, MBA, CFA (72)
1300 N. State Street
Bellingham, WA 98225

President, Trustee (since 1989);
Executive Committee;
Governance, Compensation and Nominations Committee;

Four

Chairman, Saturna Capital Corporation (the Trust's investment adviser);

Chairman, Saturna Trust Company

Former Director, Saturna Brokerage Services

None

 

48

Annual Report

May 31, 2018

 

Trustees and Officers (continued)

(unaudited)

Name (Age) and Address

Position(s) Held with Trust & Number of Saturna Fund Portfolios Overseen

Principal Occupation(s) during past 5 years, including Directorships

Other
Directorshipsheld by Trustee

OFFICERS WHO ARE NOT TRUSTEES

(photo omitted)

Jane Carten MBA (43)
1300 N. State Street
Bellingham, WA 98225

Vice President
(since 2012);
N/A

President, Chief Executive Officer, and Director, Saturna Capital Corporation;

President and Director, Saturna Brokerage Services;

Vice President and Director, Saturna Trust Company

N/A

(photo omitted)

Christopher R. Fankhauser (46)
1300 N. State Street
Bellingham, WA 98225

Treasurer¹
(since 2002);
N/A

Chief Operations Officer and Director, Saturna Capital Corporation;

Vice President and Chief Operations Officer, Saturna Brokerage Services;

Vice President and Director, Saturna Trust Company

N/A

(photo omitted)

Michael E. Lewis (56)
1300 N. State Street
Bellingham, WA 98225

Chief Compliance Officer¹
(since 2012);
N/A

Chief Compliance Officer, Saturna Capital, Saturna Trust Company, and Affiliated Funds.

N/A

(photo omitted)

Jacob A. Stewart (37)
1300 N. State Street
Bellingham, WA 98225

Anti-Money Laundering Officer¹
(since 2015);
N/A

Anti-Money Laundering Officer, Saturna Capital Corporation, Saturna Brokerage Services;

Chief Compliance Officer, Saturna Brokerage Services

Bank Secrecy Act Officer, Saturna Trust Company

N/A

(photo omitted)

Nicole Trudeau (39)
1300 N. State Street
Bellingham, WA 98225

Secretary¹
(since 2018);
N/A

Chief Legal Officer, Saturna Capital Corporation

Counsel, Simpson Thacher & Bartlett LLP; Partner, Stradley Ronon Stevens & Young LLP; Partner, K&L Gates LLP

N/A

Term of Office: Trustees serve for the lifetime of the Trust or until death, resignation, retirement, removal, or non re-election by the shareowners. Officers serve one-year terms subject to annual reappointment by the Trustees.

Amana's Statement of Additional Information, available without charge by calling Saturna Capital Corporation at 1-800-728-8762, includes additional information about Trustees.

On May 31, 2018, the trustees, officers, and their affiliates (including Saturna Capital Corporation) as a group, owned the following percentages of outstanding shares:

Trustees', officers', and affiliates' ownership

Income Fund Investor Shares (AMANX)

0.05%

Income Fund Institutional Shares (AMINX)

1.27%

Growth Fund Investor Shares (AMAGX)

0.02%

Growth Fund Institutional Shares (AMIGX)

1.45%

Developing World Fund Investor Shares (AMDWX)

1.85%

Developing World Fund Institutional Shares (AMIDX)

16.16%

Participation Fund Investor Shares (AMAPX)

0.38%

Participation Fund Institutional Shares (AMIPX)

9.07%

During the year ended May 31, 2018, the Independent Trustees were each paid by the Trust: (1) $8,000 annual retainer plus $1,000 per board meeting attended (in person or by phone), plus reimbursement of travel expenses; (2) $250 for committee meetings; and (3) $500 per quarter for serving as chairman of the board or any committee. As of May 31, 2018, all Trustees owned shares in one or more Amana Funds.

Mr. Kaiser is an Interested Trustee by reason of his positions with the Trust's adviser (Saturna Capital Corporation) and underwriter (Saturna Brokerage Services), and is the primary manager of the Income and Growth Fund portfolios. He is paid by Saturna Capital a salary, plus a bonus for each month the Amana Income or Growth Fund portfolios earn a 4 or 5 star rating from Morningstar (see pages 6 and 7). The officers are paid by Saturna Capital and not the Trust. As of May 31, 2018, all Saturna Capital employees listed above as officers owned shares in one or more of the Amana funds, with Mr. Kaiser owning (directly or indirectly) over $15 million.

¹ Holds the same position with Saturna Investment Trust.

Annual Report

May 31, 2018

49

Except for this legend, this page has been left blank intentionally.

50

Annual Report

May 31, 2018

Availability of Quarterly Portfolio Information

(1) The Amana Funds file complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.

(2) The Funds' Forms N-Q are available on the SEC's website at www.sec.gov.

(3) 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.

(4) The Funds make a complete schedule of portfolio holdings after the end of each month available at www.amanafunds.com.

Availability of Proxy Voting Information

(1) 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 1-888-732-6262; (b) on the Funds' website at www.amanafunds.com; and (c) on the SEC's website at www.sec.gov.

(2) 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 1-888-732-6262; (b) on the Funds' website at www.amanafunds.com; and (c) on the SEC's website at www.sec.gov.

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 1-888-732-6262 or write to us at Saturna Capital/Amana Mutual Funds, P.O. Box N, Bellingham, WA 98227. We will begin sending you individual copies thirty days after receiving your request.

If you are currently receiving multiple copies and wish to receive only one copy, please call us at 1-888-732-6262 or write to us at Saturna Capital/Amana Mutual Funds, P.O. Box N, Bellingham, WA 98227. We will begin sending you a single copy with subsequent report mailings.

Privacy Statement

At Saturna Capital and the Amana Mutual Funds Trust, 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 non-public 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 1-800-728-8762.

Annual Report

May 31, 2018

51

 

This report is 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.

 

Amana Mutual Funds Trust began operations in 1986. Saturna Capital Corporation, with extensive experience in mutual funds, invests the Trust's portfolios and handles daily operations under supervision of Amana's Board of Trustees.

(graphic omitted)

Saturna Capital
1300 N. State Street
Bellingham, WA 98225
1-800-728-8762
www.amanafunds.com

Investment Adviser,
Administrator, and Transfer Agent

Saturna Capital Corporation
Bellingham, WA

Custodian

Bank of New York Mellon
Brooklyn, NY

Independent Registered
Public Accounting Firm

Tait, Weller & Baker LLP
Philadelphia, PA

Legal Counsel

K & L Gates LLP
Washington, DC

♻ This report is printed on paper with a minimum of 30% post-consumer fiber using soy-based inks. It is 100% recyclable.

 

#     #     #


Amana Mutual Funds Trust Semi-Annual Report November 30, 2017

(graphic omitted)

Amana Mutual Funds Trust

Semi-Annual Report

November 30, 2017

Income Fund
AMANX | AMINX

Growth Fund
AMAGX | AMIGX

Developing World Fund
AMDWX | AMIDX

Participation Fund
AMAPX | AMIPX


Performance Summary

(unaudited)

As of November 30, 2017

Average Annual Returns (before any taxes paid by shareowners)

1 Year

3 Year

5 Year

10 Year

15 Year

Expense Ratio1

Amana Income Fund Investor Shares (AMANX)

21.50%

8.22%

12.85%

7.89%

11.49%

1.13%

Amana Income Fund Institutional Shares(AMINX)

21.77%

8.49%

n/a

n/a

n/a

0.89%

Amana Growth Fund Investor Shares (AMAGX)

30.85%

10.89%

14.34%

8.43%

12.11%

1.10%

Amana Growth Fund Institutional Shares (AMIGX)

31.15%

11.14%

n/a

n/a

n/a

0.86%

Amana Developing World Fund Investor Shares (AMDWX)

17.05%

-1.63%

0.38%

n/a

n/a

1.35%

Amana Developing World Fund Institutional Shares (AMIDX)

17.16%

-1.37%

n/a

n/a

n/a

1.14%

Amana Participation Fund Investor Shares (AMAPX)

2.57%

n/a

n/a

n/a

n/a

0.92%

Amana Participation Fund Institutional Shares (AMIPX)

2.79%

n/a

n/a

n/a

n/a

0.68%

As of December 31, 2017

Average Annual Returns (before any taxes paid by shareowners)

1 Year

3 Year

5 Year

10 Year

15 Year

Expense Ratio1

Amana Income Fund Investor Shares (AMANX)

21.69%

8.93%

12.84%

8.05%

11.65%

1.13%

Amana Income Fund Institutional Shares (AMINX)

21.97%

9.20%

n/a

n/a

n/a

0.89%

Amana Growth Fund Investor Shares (AMAGX)

28.98%

11.39%

14.12%

8.59%

12.50%

1.10%

Amana Growth Fund Institutional Shares (AMIGX)

29.29%

11.64%

n/a

n/a

n/a

0.86%

Amana Developing World Fund Investor Shares (AMDWX)

21.39%

0.57%

0.36%

n/a

n/a

1.35%

Amana Developing World Fund Institutional Shares (AMIDX)

21.71%

0.85%

n/a

n/a

n/a

1.14%

Amana Participation Fund Investor Shares (AMAPX)

2.56%

n/a

n/a

n/a

n/a

0.92%

Amana Participation Fund Institutional Shares (AMIPX)

2.68%

n/a

n/a

n/a

n/a

0.68%

Performance data quoted in this report represents past performance, is before any taxes payable by shareowners, and is no guarantee of future results.Current performance may be higher or lower than that stated herein. Performance current to the most recent month-end is available by calling toll-free 1-888-732-6262 or visiting www.amanafunds.com. Average annual total returns are historical and include change in share value as well as reinvestment of dividends and capital gains, if any. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Amana Funds limit the securities they purchase to those consistent with Islamic principles, which limits opportunities and may affect performance.

The Amana Developing World Fund began operations September 28, 2009.

Institutional Shares of the Amana Income, Growth, and Developing World Funds began operations September 25, 2013.

The Amana Participation Fund began operations September 28, 2015.

A note about risk: Please see the Notes to Financial Statements beginning on page 36 for a discussion of investment risks. For a more detailed discussion of the risks associated with each Fund, please see the Funds' prospectus or each Fund's summary prospectus.

1 By regulation, expense ratios shown in this table are as stated in the Funds' most recent prospectus which is dated September 21, 2017, and incorporates results for the fiscal year ended May 31, 2017. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different fiscal periods. Also by regulation, this page shows performance as of the most recent calendar quarter-end in addition to performance through the Funds' most recent fiscal period.

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 Amana Funds, please call toll-free 1-888-732-6262 or visit www.amanafunds.com. Please read the prospectus or summary prospectus carefully before investing.

2

Semi-Annual Report

November 30, 2017

 

Fellow Shareowners:

Equity markets continued strongly for the six months ended November 30, 2017. Total return for the S&P 500 Index was 10.89%, and for the broader Dow Jones Islamic Market World Developed Index was 10.11%. Foreign markets performed as well, with the MSCI Emerging Markets Index up 13.03%. Islamic fixed-income markets were more subdued, with the Citi Sukuk Index rising just 1.31%.

The Amana Fund portfolios performed respectably compared to these domestic and foreign indices, which do not have operating expenses. Amana Growth Investor Shares gained 12.14%, Amana Income Investor Shares gained 10.85%, Amana Developing World Investor Shares rose 4.21%, and Amana Participation Investor Shares rose 0.33% for the six months. As expected, lower expenses allowed the Institutional class shares to post slightly better returns: Amana Growth 12.25%, Amana Income 10.96%, Amana Developing World 4.40%, and Amana Participation 0.44%.

The Amana Funds follow Islamic principles, which preclude most investments in the banking and financial sectors. We favor companies with low debt levels and strong balance sheets.

Government Reforms Power Markets

Culminating with federal tax reforms enacted at the end of December, markets in 2017 were boosted by numerous reforms favorable to the economy. New business investment and corporate hiring are strong to meet demand aided by quick depreciation and lower taxes. Unemployment is at "full employment" levels, and both compensation and consumer spending are rising. Common stocks benefit as profits increase, with increased dividends and stock buyback programs pushing up stock prices. Among trade efforts to increase US exports, a decline in the price of the US currency may boost exports the most.

Top Long-Term Results

As experienced investors, we know that gains or losses over a short interval tell an incomplete story compared to performance evaluated over a lengthier time span. That's why the recognition that Amana has received for long-term performance is so important to our shareowners. As of December 31, 2017, Morningstar has awarded Amana Income Fund a 5-star performance rating and Amana Growth Fund a 4-star performance rating for their returns over 10 years.

Furthermore, as of December 31, Amana Income and Amana Growth maintained strong long-term rankings in their respective mutual fund categories. Amana Income Investor Shares ranked in the top 2% in Morningstar's "Large Blend" category, out of 508 similar funds surviving for 15 years. Amana Growth Investor Shares ranked in the top 8% in the "Large Growth" category, out of 542 similar funds surviving for 15 years. Please refer to "Morningstar Ratings" on pages 6 and 7 for more details.

New Lower Fees

Beginning January 1, 2018, the Amana equity funds are operating with expenses lower by three to 10 basis points. The trustees approved an advisory fee reduction at their December 11, 2017, meeting whereby the Income, Growth, and Developing World Funds now pay 0.85% on the first $1 billion of a fund's average daily net assets, 0.75% on the next $1 billion, and 0.65% on assets over $2 billion. There is no change to the 0.50% advisory fee for the Participation Fund.

Amana Participation Fund Growing

Amana's fourth mutual fund portfolio began operations on September 28, 2015. The objectives of the Participation Fund are capital preservation and current income, consistent with Islamic principles. Assets as of November 30, 2017, were $47 million, up 24% from May 31, 2017.

The Fund invests primarily in income-producing notes and certificates issued by foreign governments, their agencies, and financial institutions in transactions structured to be in accordance with Islamic principles – commonly known as sukuk. While the risks of investing in foreign fixed-income issues are material, we believe the Amana Participation Fund offers investors seeking exposure to Islamic fixed-income an excellent opportunity. The Fund may be especially appealing to investors seeking a balance to the other three Amana Funds, which invest only in equities.

Amana Income Fund – 31 Years of Solid Investing

On June 23, 1986, Amana Income Fund began operations, with both Dr. Yaqub Mirza and Mr. Nicholas Kaiser as founding members of the board of trustees. From inception to November 30, 2017 – over 31 years – the Fund's Investor Shares provided an average annual return of 8.87% (after expenses). Few investment vehicles have such a long-term record of success.

As Dr. Mirza and Mr. Kaiser plan for eventual retirement, and as careful stewards, they are working to ensure the established methods of Amana's successful investing are continued by capable hands in the next generation.

As a group, the five Amana trustees are solidly committed to investing in Amana mutual funds. Including their affiliated accounts, they currently have over $18 million invested in the four mutual funds of the Trust.

Morningstar Awards Amana Highest Sustainability Ratings

The Morningstar Sustainability Rating™ for funds premiered in March of 2016 (see details on next page), giving investors across the globe a way to compare mutual fund portfolios based on an independent measure of sustainability. The Morningstar ratings are calculated using fund holdings data underpinned with company-level environmental, social, and governance (ESG) information from Sustainalytics, a leading provider of ESG research. All three Amana equity funds received Morningstar's highest "5 Globe" Sustainability Ratings at November 30, 2017.

Income Fund ranked in the first percentile of 1,219 funds in its category, and Growth Fund likewise ranked in the first percentile of 1,226 funds in its category. Developing World Fund ranked in the 10th percentile of 636 funds in its category.

We believe the high ratings the Amana Funds received provide strong evidence of the linkage between Islamic and sustainable investing. Investors are cautioned, however, that more than 100 vendors offer "sustainable" investments data, and that no accepted global measurement yet exists.

Respectfully,

(photo omitted)

Nicholas Kaiser,
President

(photo omitted)

M. Yaqub Mirza,
Independent Board Chairman

Amana Funds Portfolio Managers

(photo omitted)

Nicholas Kaiser MBA, CFA®
Amana Income Fund, Amana Growth Fund
Portfolio Manager

 

(photo omitted)

Patrick Drum MBA, CFA®, CFP®
Amana Participation Fund
Portfolio Manager

 

(photo omitted)

Scott Klimo CFA®
Amana Developing World Fund
Portfolio Manager
Amana Income Fund, Amana Growth Fund
Deputy Portfolio Manager

 

(photo omitted)

Bryce Fegley CFA®, CIPM®
Amana Developing World Fund,
Amana Participation Fund
Deputy Portfolio Manager

 

(photo omitted)

Monem Salam MBA
Amana Developing World Fund
Deputy Portfolio Manager

 

4

Semi-Annual Report

November 30, 2017

 

Morningstar Sustainability Ratings

As of November 30, 2017 (unaudited)

At Saturna Capital, we have long described ourselves as value and values-based investors. We believe our approach improves the likelihood of achieving superior investment results over the long term. Our approach also leads to investment portfolios we can be proud of from the perspective of Environmental, Social, and Governance (ESG) issues. Morningstar recently partnered with leading ESG research firm Sustainalytics to develop the Morningstar Sustainability Rating – here are the rated Amana fund's latest results:

Amana Income Fund

 

Amana Growth Fund

Investor Shares (AMANX)

Ø Ø Ø Ø Ø

Investor Shares (AMAGX)

Ø Ø Ø Ø Ø

Institutional Shares (AMINX)

Ø Ø Ø Ø Ø

Institutional Shares (AMIGX)

Ø Ø Ø Ø Ø

% Rank in Category: 1

% Rank in Category: 1

Among 1,219 Large Blend Funds

Among 1,226 Large Growth Funds

   

Amana Developing World Fund

The Morningstar Sustainability Rating gives investors across the globe a way to compare fund portfolios based on a standard measure of sustainability. The rating is a holdings-based calculation using company-level environmental, social, and governance (ESG) analytics from Sustainalytics.

Investor Shares (AMDWX)

Ø Ø Ø Ø Ø

Institutional Shares (AMIDX)

Ø Ø Ø Ø Ø

% Rank in Category: 10

Among 636 Diversified Emerging Markets Funds

The Morningstar Sustainability Rating and the Morningstar Portfolio Sustainability Score are not based on fund performance and are not equivalent to the Morningstar Rating ("Star Rating").

© 2017 Morningstar®. All rights reserved. Morningstar, Inc. is an independent fund performance monitor. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Morningstar Sustainability Ratings are as of November 30, 2017. The Morningstar Sustainability Rating is intended to measure how well the issuing companies of the securities within a fund's portfolio are managing their environmental, social, and governance ("ESG") risks and opportunities relative to the fund's Morningstar category peers. The Morningstar Sustainability Rating calculation is a two-step process. First, each fund with at least 50% of assets covered by a company-level ESG score from Sustainalytics receives a Morningstar Portfolio Sustainability Score. The Morningstar Portfolio Sustainability Score is an asset-weighted average of normalized company-level ESG scores with deductions made for controversial incidents by the issuing companies, such as environmental accidents, fraud, or discriminatory behavior. The Morningstar Sustainability Rating is then assigned to all scored funds within Morningstar Categories in which at least ten (10) funds receive a Portfolio Sustainability Score and is determined by each fund's rank within the following distribution: High (highest 10%), Above Average (next 22.5%), Average (next 35%), Below Average (next 22.5%), and Low (lowest 10%). The Morningstar Sustainability Rating is depicted by globe icons where High equals 5 globes and Low equals 1 globe. A Sustainability Rating is assigned to any fund that has more than half of its underlying assets rated by Sustainalytics and is within a Morningstar Category with at least 10 scored funds; therefore, the rating it is not limited to funds with explicit sustainable or responsible investment mandates. Morningstar updates its Sustainability Ratings monthly. Portfolios receive a Morningstar Portfolio Sustainability Score and Sustainability Rating one month and six business days after their reported as-of date based on the most recent portfolio. As part of the evaluation process, Morningstar uses Sustainalytics' ESG scores from the same month as the portfolio as-of date.

The Funds were rated on the following percentages of Assets Under Management:

Amana Income Fund 99%
Amana Growth Fund 99%
Amana Developing World Fund 76%

The Funds' portfolios are actively managed and are subject to change, which may result in a different Morningstar Sustainability Score and Rating.

% Rank in Category is the fund's percentile rank for the specified time period relative to all funds that have the same Morningstar category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1. Percentile ranks within categories are most useful in those categories that have a large number of funds.

The Amana Participation Fund has not yet received a Morningstar Sustainability Rating.

 

Semi-Annual Report

November 30, 2017

5

 

Morningstar Ratings (as of November 30, 2017)

Morningstar Ratings1

1 Year

3 Year

5 Year

10 Year

15 Year

Overall

Amana Income Fund – "Large Blend" Category

Investor Shares (AMANX)

n/a

★ ★

★ ★

★ ★ ★ ★ ★

n/a

★ ★ ★ ★

    % Rank in Category

54

76

81

40

2

n/a

Institutional Shares (AMINX)

n/a

★ ★

☆ ☆

☆ ☆ ☆ ☆ ☆

n/a

★ ★

    % Rank in Category

50

72

79

35

2

n/a

Number of Funds in Category

1,392

1,219

1,083

797

510

1,219

Amana Growth Fund – "Large Growth" Category

Investor Shares (AMAGX)

n/a

★ ★ ★

★ ★ ★

★ ★ ★ ★

n/a

★ ★ ★ ★

    % Rank in Category

30

49

70

47

7

n/a

Institutional Shares (AMIGX)

n/a

★ ★ ★

☆ ☆ ☆

☆ ☆ ☆ ☆

n/a

★ ★ ★

    % Rank in Category

27

45

65

44

7

n/a

Number of Funds in Category

1,371

1,226

1,110

786

543

1,226

Amana Developing World Fund – "Diversified Emerging Markets" Category

Investor Shares (AMDWX)

n/a

★ ★

n/a

n/a

★ ★

    % Rank in Category

97

99

92

n/a

n/a

n/a

Institutional Shares (AMIDX)

n/a

☆ ☆

n/a

n/a

    % Rank in Category

97

98

92

n/a

n/a

n/a

Number of Funds in Category

796

636

454

n/a

n/a

636

Amana Participation Fund – "Emerging Markets Bond" Category

Investor Shares (AMAPX)

n/a

n/a

n/a

n/a

n/a

n/a

    % Rank in Category

99

n/a

n/a

n/a

n/a

n/a

Institutional Shares (AMIPX)

n/a

n/a

n/a

n/a

n/a

n/a

    % Rank in Category

99

n/a

n/a

n/a

n/a

n/a

Number of Funds in Category

288

n/a

n/a

n/a

n/a

n/a

1Source: Morningstar November 30, 2017 & December 31, 2017. Morningstar, Inc. is an independent fund performance monitor. The Morningstar Rating for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance (not including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings represented as unshaded stars are based on extended performance. These extended performance ratings are based on the historical adjusted returns prior to the inception date of the institutional shares and reflect the historical performance of the investor shares, adjusted to reflect the fees and expenses of the institutional shares.

% Rank in Category is the fund's percentile rank for the specified time period relative to all funds that have the same Morningstar category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1. Percentile ranks within categories are most useful in those categories that have a large number of funds.

Performance data quoted in this report represents past performance, is before any taxes payable by shareowners, and is no guarantee of future results.

 

6

Semi-Annual Report

November 30, 2017

 

 

Morningstar Ratings (as of December 31, 2017)

Morningstar Ratings1

1 Year

3 Year

5 Year

10 Year

15 Year

Overall

Amana Income Fund – "Large Blend" Category

Investor Shares (AMANX)

n/a

★ ★

★ ★

★ ★ ★ ★ ★

n/a

★ ★ ★ ★

    % Rank in Category

32

74

82

40

2

n/a

Institutional Shares (AMINX)

n/a

★ ★ ★

☆ ☆

☆ ☆ ☆ ☆ ☆

n/a

★ ★ ★

    % Rank in Category

27

70

79

35

2

n/a

Number of Funds in Category

1,396

1,217

1,079

800

508

1,217

Amana Growth Fund – "Large Growth" Category

Investor Shares (AMAGX)

n/a

★ ★ ★

★ ★

★ ★ ★ ★

n/a

★ ★ ★

    % Rank in Category

42

49

74

45

8

n/a

Institutional Shares (AMIGX)

n/a

★ ★ ★

☆ ☆ ☆

☆ ☆ ☆ ☆

n/a

★ ★ ★

    % Rank in Category

40

45

70

43

7

n/a

Number of Funds in Category

1,363

1,216

1,109

787

542

1,216

Amana Developing World Fund – "Diversified Emerging Markets" Category

Investor Shares (AMDWX)

n/a

★ ★

n/a

n/a

★ ★

    % Rank in Category

95

99

92

n/a

n/a

n/a

Institutional Shares (AMIDX)

n/a

☆ ☆

n/a

n/a

    % Rank in Category

94

98

91

n/a

n/a

n/a

Number of Funds in Category

806

647

467

n/a

n/a

647

Amana Participation Fund – "Emerging Markets Bond" Category

Investor Shares (AMAPX)

n/a

n/a

n/a

n/a

n/a

n/a

    % Rank in Category

98

n/a

n/a

n/a

n/a

n/a

Institutional Shares (AMIPX)

n/a

n/a

n/a

n/a

n/a

n/a

    % Rank in Category

98

n/a

n/a

n/a

n/a

n/a

Number of Funds in Category

295

n/a

n/a

n/a

n/a

n/a

Survivorship Bias: A concept in the mutual fund industry intended to describe the upward bias in aggregate fund statistics that occurs gradually over time as poorly performing funds are routinely closed or merged with better performing "survivors" and are therefore excluded from future performance calculations.

 

Semi-Annual Report

November 30, 2017

7

 

Amana Income Fund: Performance Summary

Average Annual Returns (as of November 30, 2017)

 

1 Year

5 Year

10 Year

Expense Ratio1

Investor Shares (AMANX)

21.50%

12.85%

7.89%

1.13%

Institutional Shares (AMINX)2

21.77%

n/a

n/a

0.89%

S&P 500 Index

22.87%

15.73%

8.29%

n/a

Growth of $10,000

Amana Income Fund 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 operational 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 Investor Shares of the Fund on November 30, 2007, to an identical amount invested in the S&P 500 Index, a broad-based stock market index. The graph shows that an investment in Investor Shares of the Fund would have risen to $21,365 versus $22,199 in the Index. Investor Shares are used in this chart because they represent the larger share class in terms of assets and have a longer track record. Please note that investors cannot invest directly in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

1 By regulation, expense ratios shown in this table are as stated in the Funds' most recent prospectus, which is dated September 21, 2017, and incorporates results for the fiscal year ended May 31, 2017. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent older fiscal periods..

2Institutional shares of the Amana Income Fund began operations September 25, 2013.

Fund Objective

The objectives of the Income Fund are current income and preservation of capital, consistent with Islamic principles; current income is its primary objective.

Top 10 Holdings

 

Portfolio Diversification

% of Total Net Assets

% of Total Net Assets

 

3M

4.4%

Large Pharma

17.1%

Amana Income Fund Instrustries

Microsoft

4.1%

Specialty Chemicals

7.2%

Rockwell Automation

4.1%

Household Products

6.8%

Eli Lilly

3.7%

Packaged Food

6.4%

Parker Hannifin

3.6%

Semiconductor Devices

6.1%

Illinois Tool Works

3.6%

Basic & Diversified Chemicals

5.8%

Microchip Technology

3.3%

Commercial & Residential Building Equipment & Systems

4.6%

Honeywell International

3.3%

Containers & Packaging

4.4%

PPG Industries

3.3%

Infrastructure Software

4.1%

DowDuPont

3.2%

Measurement Instruments

4.1%

 

Flow Control Equipment

3.6%

Industrial Machinery

3.6%

Apparel, Footwear & Accessory Design

3.2%

Rail Freight

2.9%

Non Wood Building Materials

2.7%

Automotive Retailers

2.5%

Other Industries < 2.5%

12.3%

Other Assets (net of liabilities)

2.6%

 

8

Semi-Annual Report

November 30, 2017

 

Amana Income Fund: Schedule of Investments

As of November 30, 2017

Common Stocks – 97.4%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Consumer Discretionary

   

Apparel, Footwear & Accessory Design

    Nike, Class B

760,000

$12,158,122

$45,919,200

3.2%

 

Automotive Retailers

    Genuine Parts

382,000

15,016,749

35,514,540

2.5%

 

Home Improvement

    Stanley Black & Decker

100,000

6,793,209

16,963,000

1.2%

 
 

33,968,080

98,396,740

6.9%

 

Consumer Staples

   

Beverages

    PepsiCo

250,000

15,481,726

29,130,000

2.1%

 

Household Products

    Colgate-Palmolive

524,000

18,364,706

37,963,800

2.7%

    Kimberly-Clark

230,000

13,960,736

27,544,800

1.9%

    Procter & Gamble

150,000

7,902,175

13,498,500

0.9%

    Unilever ADR

325,000

8,850,327

18,356,000

1.3%

 

49,077,944

97,363,100

6.8%

 

Packaged Food

    General Mills

600,000

19,156,589

33,936,000

2.4%

    JM Smucker

185,000

9,946,573

21,583,950

1.5%

    McCormick & Co

350,000

19,137,926

35,763,000

2.5%

 

48,241,088

91,282,950

6.4%

 
 

112,800,758

217,776,050

15.3%

 

Health Care

   

Large Pharma

    AbbVie

350,000

9,148,095

33,922,000

2.4%

    Bristol-Myers Squibb

650,000

15,185,381

41,073,500

2.9%

    Eli Lilly

620,000

22,314,728

52,476,800

3.7%

    GlaxoSmithKline ADR

342,007

11,738,923

11,990,765

0.8%

    Johnson & Johnson

180,000

10,673,344

25,079,400

1.7%

    Novartis ADR

450,000

22,518,080

38,610,000

2.7%

    Pfizer

1,150,000

20,853,910

41,699,000

2.9%

 

112,432,461

244,851,465

17.1%

 

Life Science Equipment

    Abbott Laboratories

350,000

8,392,885

19,729,500

1.4%

 
 

120,825,346

264,580,965

18.5%

 

Continued on next page.

 

The accompanying notes are an integral part of these financial statements.

Semi-Annual Report

November 30, 2017

9

 

Amana Income Fund: Schedule of Investments

As of November 30, 2017

Common Stocks – 97.4%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Industrials

   

Aircraft & Parts

    United Technologies

250,000

$14,326,611

$30,362,500

2.1%

 

Commercial & Residential Building Equipment & Systems

    Honeywell International

300,000

12,559,606

46,788,000

3.3%

    Johnson Controls International

500,000

15,219,297

18,820,000

1.3%

 

27,778,903

65,608,000

4.6%

 

Courier Services

    United Parcel Service, Class B

180,000

10,479,500

21,861,000

1.5%

 

Flow Control Equipment

    Parker Hannifin

275,000

12,527,667

51,559,750

3.6%

 

Industrial Distribution & Rental

    W.W. Grainger

80,000

7,590,798

17,704,800

1.2%

 

Industrial Machinery

    Illinois Tool Works

300,000

14,672,460

50,775,000

3.6%

 

Measurement Instruments

    Rockwell Automation

300,000

13,657,124

57,924,000

4.1%

 

Rail Freight

    Canadian National Railway

534,000

12,727,273

41,641,320

2.9%

 
 

113,760,336

337,436,370

23.6%

 

Materials

   

Agricultural Chemicals

    Potash Corp of Saskatchewan

300,000

8,019,681

5,895,000

0.4%

 

Basic & Diversified Chemicals

    Air Products & Chemicals

200,000

11,099,528

32,608,000

2.3%

    Methanex

300,000

5,849,587

15,975,000

1.1%

    Praxair

220,000

16,103,769

33,862,400

2.4%

 

33,052,884

82,445,400

5.8%

 

Containers & Packaging

    3M

260,000

19,087,243

63,216,400

4.4%

 

Non Wood Building Materials

 

    Carlisle

330,000

9,208,050

37,940,100

2.7%

 

Specialty Chemicals

    DowDuPont

641,000

22,025,909

46,126,360

3.2%

    PPG Industries

400,000

13,211,578

46,740,000

3.3%

    RPM International

180,000

3,642,493

9,534,600

0.7%

 

38,879,980

102,400,960

7.2%

 
 

108,247,838

291,897,860

20.5%

 

Continued on next page.

 

10

Semi-Annual Report

November 30, 2017

The accompanying notes are an integral part of these financial statements.

 

Amana Income Fund: Schedule of Investments

As of November 30, 2017

Common Stocks – 97.4%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Technology

   

Infrastructure Software

    Microsoft

700,000

$15,492,855

$58,919,000

4.1%

 

Semiconductor Devices

    Intel

900,000

19,537,540

40,356,000

2.8%

    Microchip Technology

540,000

15,306,829

46,974,600

3.3%

 

34,844,369

87,330,600

6.1%

 

Semiconductor Manufacturing

    Taiwan Semiconductor ADR

850,048

8,455,615

33,661,901

2.4%

 
 

58,792,839

179,911,501

12.6%

 

Total investments

 

$548,395,197

1,389,999,486

97.4%

Other assets (net of liabilities)

   

37,550,697

2.6%

Total net assets

   

$1,427,550,183

100.0%

ADR: American Depository Receipt

 

The accompanying notes are an integral part of these financial statements.

Semi-Annual Report

November 30, 2017

11

 

Amana Income Fund

Statement of Assets and Liabilities

As of November 30, 2017

 

Assets

    Investments in securities, at value
    (Cost $548,395,197)

$1,389,999,486

    Cash

33,338,325

    Dividend receivable

5,134,830

    Receivable for Fund shares sold

588,982

    Insurance reserve premium

2,529

          Total assets

1,429,064,152

Liabilities

    Accrued advisor fee expense

986,363

    Payable for Fund shares redeemed

404,038

    Accrued distribution fee

67,221

    Accrued retirement plan custodial fees

38,492

    Accrued expenses

10,240

    Accrued transfer agent fees

4,109

    Accrued Chief Compliance Officer expense

3,506

        Total liabilities

1,513,969

Net Assets

$1,427,550,183

 

Analysis of Net Assets

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

$513,598,354

    Undistributed net investment income

8,156,046

    Accumulated net realized gain

64,191,494

    Unrealized net appreciation on investments

841,604,289

Net assets applicable to Fund shares outstanding

$1,427,550,183

 

Net asset value per Investor Share

AMANX

Net assets, at value

$987,321,087

Shares outstanding

18,546,207

Net asset value, offering and redemption price per share

$53.24

 

Net asset value per Institutional Share

AMINX

Net assets, at value

$440,229,096

Shares outstanding

8,283,346

Net asset value, offering and redemption price per share

$53.15

 

Statement of Operations

Period ended November 30, 2017

 

Investment income

    Dividend income
   (Net of foreign taxes of $317,185)

$15,251,114

    Miscellaneous income

539

        Total investment income

15,251,653

Expenses

    Investment adviser fees

5,838,001

    Distribution fees – Investor Shares

1,198,346

    Chief Compliance Officer expenses

38,756

    Professional fees

34,785

    Custodian fees

32,855

    Retirement plan custodian fees

        Investor Shares

206

        Institutional Shares

25,605

    Transfer agent fees

        Investor Shares

10,317

        Institutional Shares

7,581

    Filing and registration fees

16,151

    Printing and postage

14,262

    Trustee fees

9,596

    Other expenses

8,118

          Total gross expenses

7,234,579

    Less custodian fee credits

(32,855)

          Net expenses

7,201,724

Net investment income

$8,049,929

 
 

Net realized gain from investments and foreign currency

$25,712,639

Net increase in unrealized appreciation on investments

107,253,929

Net gain on investments

$132,966,568

 

Net increase in net assets resulting from operations

$141,016,497

 

12

Semi-Annual Report

November 30, 2017

The accompanying notes are an integral part of these financial statements.

 

Amana Income Fund

Statements of Changes in Net Assets

Period ended November 30, 2017

Year ended May 31, 2017

Increase (decrease) in net assets from operations

From operations

    Net investment income

$8,049,929

$17,550,212

    Net realized gain on investments

25,712,639

47,523,801

    Net increase in unrealized appreciation

107,253,929

91,512,622

            Net increase in net assets

141,016,497

156,586,635

Distributions to shareowners from

    Net investment income

       Investor Shares

-

(11,792,506)

       Institutional Shares

-

(5,716,985)

    Capital gains distribution

       Investor Shares

-

(25,333,455)

       Institutional Shares

-

(8,890,259)

            Total distributions

-

(51,733,205)

Capital share transactions

    Proceeds from the sale of shares

        Investor Shares

38,502,807

97,155,830

        Institutional Shares

53,608,969

154,775,632

    Value of shares issued in reinvestment of dividends and distributions

        Investor Shares

-

36,415,535

        Institutional Shares

-

13,859,018

    Cost of shares redeemed

        Investor Shares

(106,885,666)

(303,321,730)

        Institutional Shares

(28,289,985)

(57,412,792)

            Total capital share transactions

(43,063,875)

(58,528,507)

Total increase (decrease) in net assets

97,952,622

46,324,923

 

Net assets

Beginning of year

1,329,597,561

1,283,272,638

End of year

1,427,550,183

1,329,597,561

 

Undistributed net investment income

$8,156,046

$106,117

 

Shares of the Fund sold and redeemed

Investor Shares (AMANX)

    Number of shares sold

770,619

2,109,329

    Number of shares issued in reinvestment of dividends and distributions

-

810,297

    Number of shares redeemed

(2,147,739)

(6,613,192)

Net decrease in number of shares outstanding

(1,377,120)

(3,693,566)

 

Institutional Shares (AMINX)

    Number of shares sold

1,074,031

3,390,066

    Number of shares issued in reinvestment of dividends and distributions

-

308,618

    Number of shares redeemed

(570,464)

(1,244,687)

Net increase in number of shares outstanding

503,567

2,453,997

 

The accompanying notes are an integral part of these financial statements.

Semi-Annual Report

November 30, 2017

13

 

Amana Income Fund: Financial Highlights

Investor Shares (AMANX)

Period ended

Year ended May 31

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

Nov. 30, 2017

2017

2016

2015

2014

2013

Net asset value at beginning of period

$48.03

$44.35

$47.01

$45.34

$38.79

$31.77

Income from investment operations

    Net investment income

0.28A

0.59A

0.62A

0.58A

0.72A

0.58

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

4.93

4.90

(0.38)

2.10

6.56

7.03

Total from investment operations

5.21

5.49

0.24

2.68

7.28

7.61

Less distributions

    Dividends (from net investment income)

-

(0.58)

(0.65)

(0.60)

(0.73)

(0.58)

    Distributions (from capital gains)

-

(1.23)

(2.25)

(0.41)

-

(0.01)

Total distributions

-

(1.81)

(2.90)

(1.01)

(0.73)

(0.59)

    Paid-in capital from early redemption fees

n/a

n/a

n/a

n/a

n/a

0.00B

 

Net asset value at end of period

$53.24

$48.03

$44.35

$47.01

$45.34

$38.79

 

Total Return

10.85%C

12.67%

0.81%

5.94%

18.82%

24.08%

 

Ratios / supplemental data

Net assets ($000), end of period

$987,321

$956,977

$1,047,345

$1,357,567

$1,524,471

$1,433,461

Ratio of expenses to average net assets

    Before custodian fee credits

1.14%D

1.13%

1.15%

1.13%

1.15%

1.19%

    After custodian fee credits

1.13%D

1.12%

1.14%

1.12%

1.14%

1.18%

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

1.12%D

1.29%

1.41%

1.26%

1.71%

1.58%

Portfolio turnover rate

0%C

1%

0%

0%

1%

1%

 

Institutional Shares (AMINX)

Period ended

Year ended May 31,

Period ended E

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

Nov. 30, 2017

2017

2016

2015

May 31, 2014

Net asset value at beginning of period

$47.90

$44.30

$46.97

$45.30

$40.66

Income from investment operations

    Net investment income

0.33A

0.70A

0.75A

0.72A

0.69A

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

4.92

4.90

(0.40)

2.09

4.79

Total from investment operations

5.25

5.60

0.35

2.81

5.48

Less distributions

    Dividends (from net investment income)

-

(0.77)

(0.77)

(0.73)

(0.84)

    Distributions (from capital gains)

-

(1.23)

(2.25)

(0.41)

-

Total distributions

-

(2.00)

(3.02)

(1.14)

(0.84)

 

Net asset value at end of period

$53.15

$47.90

$44.30

$46.97

$45.30

 

Total Return

10.96%C

12.96%

1.06%

6.22%

13.53%C

 

Ratios / supplemental data

Net assets ($000), end of period

$440,229

$372,621

$235,928

$150,831

$83,805

Ratio of expenses to average net assets

    Before custodian fee credits

0.90%D

0.89%

0.90%

0.88%

0.90%D

    After custodian fee credits

0.90%D

0.89%

0.89%

0.87%

0.90%D

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

1.36%D

1.52%

1.71%

1.54%

2.32%D

Portfolio turnover rate

0%C

1%

0%

0%

1%C

A Calculated using average shares outstanding
B Amount is less than $0.01
C Not Annualized
D Annualized
E Operations commenced on 09/25/2013

 

14

Semi-Annual Report

November 30, 2017

The accompanying notes are an integral part of these financial statements.

 

Amana Growth Fund: Performance Summary

As of November 30, 2017

Average Annual Returns

 

1 Year

5 Year

10 Year

Expense Ratio¹

Investor Shares (AMAGX)

30.85%

14.34%

8.43%

1.10%

Institutional Shares (AMIGX)²

31.15%

n/a

n/a

0.86%

S&P 500 Index

22.87%

15.73%

8.29%

n/a

Growth of $10,000

Amana Growth Fund 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 operational 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 Investor Shares of the Fund on November 30, 2007, to an identical amount invested in the S&P 500 Index, a broad-based stock market index. The graph shows that an investment in Investor Shares of the Fund would have risen to $22,466 versus $22,199 in the Index. Investor Shares are used in this chart because they represent the larger share class in terms of assets and have a longer track record. Please note that investors cannot invest directly in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, expense ratios shown in this table are as stated in the Funds' most recent prospectus, which is dated September 21, 2017, and incorporates results for the fiscal year ended May 31, 2017. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different fiscal periods.

² Institutional shares of the Amana Growth Fund began operations September 25, 2013.

Fund Objective

The objective of the Growth Fund is long-term capital growth, consistent with Islamic principles.

Top 10 Holdings

 

Portfolio Diversification

% of Total Net Assets

% of Total Net Assets

 

Adobe Systems

5.4%

Application Software

11.7%

Amana Growth Fund Portfolio Diversification

Apple

5.1%

Large Pharma

10.4%

Intuit

4.2%

Household Products

8.8%

Trimble

3.7%

Communications Equipment

8.4%

Amgen

3.7%

Semiconductor Manufacturing

6.1%

Agilent Technologies

3.7%

Semiconductor Devices

5.6%

Johnson & Johnson

3.4%

Rail Freight

5.2%

Estee Lauder, Class A

3.4%

Measurement Instruments

5.0%

Alphabet, Class A

3.3%

Biotech

4.9%

Church & Dwight

3.3%

Life Science Equipment

3.7%

 

Aircraft & Parts

3.3%

Building Sub Contractors

3.3%

Internet Media

3.3%

Specialty Apparel Stores

3.1%

Home Products Stores

3.0%

Other Industries < 3.0%

12.8%

Other assets (net of liabilities)

1.4%

 

The accompanying notes are an integral part of these financial statements.

Semi-Annual Report

November 30, 2017

15

 

Amana Growth Fund: Schedule of Investments

As of November 30, 2017

 

Common Stocks — 98.6%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Communications

   

Internet Based Services

    TripAdvisor, Class A¹

25,000

$1,161,119

$865,500

0.1%

 

Internet Media

    Alphabet, Class A¹

55,000

14,419,301

56,989,350

3.3%

 
 

15,580,420

57,854,850

3.4%

 

Consumer Discretionary

   

Home & Office Product Wholesalers

    Fastenal

600,000

13,668,571

31,434,000

1.8%

 

Home Products Stores

    Lowe's

600,000

13,707,440

50,022,000

3.0%

 

Specialty Apparel Stores

    TJX Companies

700,000

15,131,550

52,885,000

3.1%

 
 

42,507,561

134,341,000

7.9%

 

Consumer Staples

   

Beverages

    PepsiCo

235,000

14,445,016

27,382,200

1.6%

 

Household Products

    Church & Dwight

1,200,000

21,472,365

56,508,000

3.3%

    Clorox

250,000

13,936,595

34,822,500

2.1%

    Estee Lauder, Class A

458,594

16,624,230

57,246,289

3.4%

 

52,033,190

148,576,789

8.8%

 
 

66,478,206

175,958,989

10.4%

 

Health Care

   

Biotech

    Amgen

355,000

18,341,782

62,359,300

3.7%

    Celgene¹

200,000

7,547,036

20,166,000

1.2%

 

25,888,818

82,525,300

4.9%

 

Large Pharma

    Eli Lilly

610,000

20,873,827

51,630,400

3.0%

    Johnson

420,000

25,247,246

58,518,600

3.4%

    Novartis ADR

175,000

6,525,188

15,015,000

0.9%

    Novo Nordisk ADR

1,002,195

7,665,243

51,883,635

3.1%

 

60,311,504

177,047,635

10.4%

 

Life Science Equipment

    Agilent Technologies

900,000

16,302,137

62,316,000

3.7%

 

Medical Devices

    Stryker

300,000

15,657,168

46,800,000

2.8%

 

Medical Equipment

    Dentsply Sirona

215,000

6,611,724

14,407,150

0.8%

 
 

124,771,351

383,096,085

22.6%

 

Continued on next page.

 

 

16

Semi-Annual Report

November 30, 2017

The accompanying notes are an integral part of these financial statements.

 

Amana Growth Fund: Schedule of Investments

As of November 30, 2017

 

Common Stocks — 98.6%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Industrials

   

Aircraft & Parts

    Harris

390,000

$11,806,300

$56,355,000

3.3%

 

Building Sub Contractors

    EMCOR Group

682,750

14,388,860

55,145,718

3.3%

 

Measurement Instruments

    Keysight Technologies¹

500,000

8,390,911

21,750,000

1.3%

    Trimble¹

1,500,000

15,966,794

62,985,000

3.7%

 

24,357,705

84,735,000

5.0%

 

Metalworking Machinery

    Lincoln Electric Holdings

360,000

8,253,710

32,810,400

2.0%

 

Rail Freight

    Norfolk Southern

300,000

16,971,675

41,589,000

2.4%

    Union Pacific

370,000

20,957,951

46,805,000

2.8%

 

37,929,626

88,394,000

5.2%

 
 

96,736,201

317,440,118

18.8%

 

Technology

   

Application Software

    Adobe Systems¹

500,000

15,437,480

90,735,000

5.4%

    Intuit

450,000

15,564,740

70,749,000

4.2%

    SAP ADR

316,379

19,947,795

35,861,560

2.1%

 

50,950,015

197,345,560

11.7%

 

Communications Equipment

    Apple

504,000

1,526,905

86,612,400

5.1%

    Cisco Systems

1,500,000

26,759,130

55,950,000

3.3%

 

28,286,035

142,562,400

8.4%

 

Information Services

    Gartner¹

180,000

6,186,410

21,760,200

1.3%

 

Infrastructure Software

    Oracle

650,000

12,885,855

31,889,000

1.9%

 

IT Services

    Convergys

351,033

3,139,140

8,663,494

0.5%

 

Semiconductor Devices

    Qualcomm

800,000

30,482,851

53,072,000

3.1%

    Xilinx

600,000

14,947,540

41,706,000

2.5%

 

45,430,391

94,778,000

5.6%

 

Continued on next page.

 

 

The accompanying notes are an integral part of these financial statements.

Semi-Annual Report

November 30, 2017

17

 

Amana Growth Fund: Schedule of Investments

As of November 30, 2017

 

Common Stocks — 98.6%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Technology (continued)

   

Semiconductor Manufacturing

    ASML

308,000

$10,937,644

$54,060,160

3.2%

    Taiwan Semiconductor ADR

1,243,297

12,977,323

49,234,561

2.9%

 

23,914,967

103,294,721

6.1%

 
 

170,792,813

600,293,375

35.5%

 

Total investments

$516,866,552

1,668,984,417

98.6%

Other assets (net of liabilities)

 

23,505,198

1.4%

Total net assets

 

$1,692,489,615

100.0%

¹ Non-income producing security

ADR: American Depositary Receipt

 

 

18

Semi-Annual Report

November 30, 2017

The accompanying notes are an integral part of these financial statements.

 

Amana Growth Fund

Statement of Assets and Liabilities

As of November 30, 2017

 

Assets

    Investments in securities, at value
   (Cost $516,866,552)

$1,668,984,417

    Cash

20,365,669

    Dividend receivable

4,630,968

    Receivable for Fund shares sold

505,649

        Total Assets

1,694,486,703

Liabilities

    Accrued advisor fee expense

1,137,099

    Payable for Fund shares redeemed

615,610

    Accrued expenses

110,500

    Accrued distribution fee

79,309

    Payable to affiliates

49,756

    Accrued audit fees

12,500

    Accrued Chief Compliance Officer expense

6,296

    Accrued transfer agent fees

5,147

        Total liabilities

1,997,088

Net Assets

$1,692,489,615

 

Analysis of Net Assets

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

$374,070,292

    Undistributed net investment income

8,287,710

    Accumulated net realized gain

158,013,748

    Unrealized net appreciation on investments

1,152,117,865

Net assets applicable to Fund shares outstanding

$1,692,489,615

 

Net asset value per Investor Share

AMAGX

Net assets, at value

$1,163,856,785

Shares outstanding

30,151,231

Net asset value, offering and redemption price per share

$38.60

 

Net asset value per Institutional Share

AMIGX

Net assets, at value

$528,632,830

Shares outstanding

13,637,477

Net asset value, offering and redemption price per share

$38.76

 

Statement of Operations

Period ended November 30, 2017

 

Investment income

    Dividend income
    (net of foreign taxes of $424,501)

$12,340,632

    Miscellaneous income

466

        Total investment income

12,341,098

Expenses

    Investment adviser fees

6,697,054

    Distribution fees – Investor Shares

1,397,359

    Chief Compliance Officer expenses

39,282

    Custodian fees

38,727

    Retirement plan custodial fees

        Investor Shares

217

        Institutional Shares

35,218

    Professional fees

30,815

    Transfer agent fees

        Investor Shares

13,715

        Institutional Shares

8,649

    Filing and registration fees

14,155

    Printing and postage

13,800

    Trustee fees

10,822

    Other expenses

7,583

          Total gross expenses

8,307,396

    Less custodian fee credits

(38,727)

          Net expenses

8,268,669

Net investment income

$4,072,429

 
 

    Net realized gain from investments and foreign currency

$25,812,414

    Net increase in unrealized appreciation on investments

155,539,605

Net gain on investments

$181,352,019

 

Net increase in net assets resulting from operations

$185,424,448

 

The accompanying notes are an integral part of these financial statements.

Semi-Annual Report

November 30, 2017

19

 

Amana Growth Fund

Statements of Changes in Net Assets

Period ended November 30, 2017

Year ended May 31, 2017

Increase (decrease) in net assets from operations

From operations

    Net investment income

$4,072,429

$9,500,953

    Net realized gain on investment

25,812,414

251,091,048

    Net increase in unrealized appreciation

155,539,605

(2,649,338)

          Net increase in net assets

185,424,448

257,942,663

Distributions to shareowners from

    Net investment income

        Investor Shares

-

(7,429,310)

        Institutional Shares

-

(2,989,475)

    Capital gains distribution

        Investor Shares

-

(129,000,764)

        Institutional Shares

-

(42,962,080)

            Total distributions

-

(182,381,629)

Capital share transactions

    Proceeds from the sale of shares

        Investor Shares

39,974,580

88,289,510

        Institutional Shares

57,848,270

173,453,886

    Value of shares issued in reinvestment of dividends and distributions

        Investor Shares

-

134,544,341

        Institutional Shares

-

42,815,699

    Cost of shares redeemed

        Investor Shares

(118,094,407)

(447,219,752)

        Institutional Shares

(28,850,610)

(255,666,168)

            Total capital share transactions

(49,122,167)

(263,782,484)

Total increase (decrease) in net assets

136,302,281

(188,221,450)

 

Net assets

Beginning of year

1,556,187,334

1,744,408,784

End of year

1,692,489,615

1,556,187,334

 

Undistributed net investment income

$8,287,710

$4,215,281

 

Shares of the Fund sold and redeemed

Investor Shares (AMAGX)

    Number of shares sold

1,108,374

2,669,831

    Number of shares issued in reinvestment of dividends and distributions

-

4,475,860

    Number of shares redeemed

(3,304,605)

(13,722,637)

Net decrease in number of shares outstanding

(2,196,231)

(6,576,946)

 

Institutional Shares (AMIGX)

    Number of shares sold

1,614,979

5,190,872

    Number of shares issued in reinvestment of dividends and distributions

-

1,421,504

    Number of shares redeemed

(801,363)

(7,617,702)

Net increase (decrease) in number of shares outstanding

813,616

(1,005,326)

 

20

Semi-Annual Report

November 30, 2017

The accompanying notes are an integral part of these financial statements.

 

Amana Growth Fund: Financial Highlights

Investor Shares (AMAGX)

Period ended

Year ended May 31,

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

Nov. 30, 2017

2017

2016

2015

2014

2013

Net asset value at beginning of period

$34.42

$33.05

$35.14

$33.22

$29.03

$25.32

Income from investment operations

    Net investment income

0.08A

0.17A

0.18A

0.13A

0.12A

0.13

    Net gains on securities (both realized and unrealized)

4.10

5.30

0.09

4.02

5.10

3.65

Total from investment operations

4.18

5.47

0.27

4.15

5.22

3.78

Less distributions

    Dividends (from net investment income)

-

(0.22)

(0.17)

(0.13)

(0.19)

(0.07)

    Distributions (from capital gains)

-

(3.88)

(2.19)

(2.10)

(0.84)

-

Total distributions

-

(4.10)

(2.36)

(2.23)

(1.03)

(0.07)

    Paid-in capital from early redemption fees

n/a

n/a

n/a

n/a

n/a

0.00B

 

Net asset value at end of period

$38.60

$34.42

$33.05

$35.14

$33.22

$29.03

 

Total Return

12.14%C

18.38%

1.06%

12.66%

18.12%

14.94%

 

Ratios / supplemental data

Net assets ($000), end of period

$1,163,857

$1,113,440

$1,286,511

$1,879,365

$1,890,187

$2,185,221

Ratio of expenses to average net assets

    Before custodian fee credits

1.11%D

1.10%

1.09%

1.08%

1.10%

1.11%

    After custodian fee credits

1.11%D

1.09%

1.09%

1.08%

1.09%

1.11%

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

0.44%D

0.52%

0.54%

0.38%

0.39%

0.44%

Portfolio turnover rate

0%C

0%E

0%

0%

0%

1%

 

Institutional Shares (AMIGX)

Period ended

Year ended May 31

Period ended F

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

Nov. 30, 2017

2017

2016

2015

May 31, 2014

Net asset value at beginning of period

$34.53

$33.11

$35.17

$33.23

$30.45

Income from investment operations

    Net investment income

0.12A

0.26A

0.29A

0.25A

0.16A

    Net gains on securities (both realized and unrealized)

4.11

5.31

0.07

3.97

3.70

Total from investment operations

4.23

5.57

0.36

4.22

3.86

Less distributions

    Dividends (from net investment income)

-

(0.27)

(0.23)

(0.18)

(0.24)

    Distributions (from capital gains)

-

(3.88)

(2.19)

(2.10)

(0.84)

Total distributions

-

(4.15)

(2.42)

(2.28)

(1.08)

 

Net asset value at end of period

$38.76

$34.53

$33.11

$35.17

$33.23

 

Total Return

12.25%C

18.67%

1.31%

12.88%

12.82%C

 

Ratios / supplemental data

Net assets ($000), end of period

$528,633

$442,747

$457,898

$172,281

$94,349

Ratio of expenses to average net assets

    Before custodian fee credits

0.88%D

0.86%

0.85%

0.83%

0.87%D

    After custodian fee credits

0.87%D

0.85%

0.85%

0.83%

0.87%D

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

0.68%D

0.78%

0.89%

0.65%

0.70%D

Portfolio turnover rate

0%C

0%E

0%

0%

0%C

A Calculated using average shares outstanding
BAmount is less than $0.01
C Not annualized
DAnnualized
EAmount is less than 0.5%
FOperations commenced on 09/25/2013

 

The accompanying notes are an integral part of these financial statements.

Semi-Annual Report

November 30, 2017

21

 

Amana Developing World Fund: Performance Summary

As of November 30, 2017

Average Annual Returns

 

1 Year

5 Year

10 Year

Expense Ratio¹

Investor Shares (AMDWX)²

17.05%

0.38%

n/a

1.35%

Institutional Shares (AMIDX)²

17.16%

n/a

n/a

1.14%

MSCI Emerging Markets Index

32.82%

4.61%

1.36%

n/a

Growth of $10,000

Amana Developing World Fund 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 operational 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 Investor Shares of the Fund on September 28, 2009, to an identical amount invested in the MSCI Emerging Markets Index, a broad-based international equity index. The graph shows that an investment in Investor Shares of the Fund would have fallen to $10,558 versus rising to $14,864 in the Index. Investor Shares are used in this chart because they have a longer track record. Please note that investors cannot invest directly in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, expense ratios shown in this table are as stated in the Funds' most recent prospectus, which is dated September 21, 2017, and incorporates results for the fiscal year ended May 31, 2017. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different fiscal periods.

² The Amana Developing World Fund commenced operations September 28, 2009. Institutional shares of the Amana Developing World Fund began operations September 25, 2013.

Fund Objective

The objective of the Developing World Fund is long-term capital growth, consistent with Islamic principles.

Top 10 Holdings

 

Portfolio Diversification

% of Total Net Assets

% of Total Net Assets

 

Tencent Holdings ADR

6.1%

Apparel, Footwear & Accessory Design

6.4%

Amana Developing World Fund Portfolio Diversification

Clicks Group

4.1%

Application Software

6.1%

SM Prime Holdings

3.8%

Telecom Carriers

4.8%

Samsonite International

3.5%

Household Products

4.6%

Telekomunikasi Indonesia ADR

3.1%

Health Care Facilities

4.2%

VF

2.9%

Food & Drug Stores

4.1%

Baidu ADR

2.8%

Airlines

3.8%

Taiwan Semiconductor ADR

2.7%

Real Estate Owners & Developers

3.8%

Unilever ADR

2.7%

Generic Pharma

3.4%

Techtronic Industries

2.7%

Specialty Pharma

3.4%

 

Internet Media

2.8%

Utility Networks

2.8%

Home Improvement

2.7%

Semiconductor Manufacturing

2.7%

Other Industies < 2.5%

21.9%

Other assets (net of liabilities)

22.5%

 

22

Semi-Annual Report

November 30, 2017

The accompanying notes are an integral part of these financial statements.

 

Amana Developing World Fund: Schedule of Investments

As of November 30, 2017

 

Common Stocks — 77.5%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Communications

   

Internet Media

    Baidu ADR²

3,500

$241,481

$835,030

China³

2.8%

 

Telecom Carriers

    Advanced Info Service

99,000

725,933

529,717

Thailand

1.7%

    Telekomunikasi Indonesia ADR

30,000

540,800

932,400

Indonesia

3.1%

 

1,266,733

1,462,117

 

4.8%

 
 

1,508,214

2,297,147

 

7.6%

 

Consumer Discretionary

   

Airlines

    Bangkok Airways Public Company NVDR

1,140,000

685,317

625,106

Thailand

2.0%

    Copa Holdings, Class A

4,000

546,498

536,760

Panama

1.8%

 

1,231,815

1,161,866

 

3.8%

 

Apparel, Footwear & Accessory Design

    Samsonite International

259,800

773,757

1,074,333

Hong Kong³

3.5%

    VF

12,000

310,438

875,520

United States

2.9%

 

1,084,195

1,949,853

 

6.4%

 

Automobiles

    Ford Otomotiv Sanayi

52,500

536,206

740,077

Turkey

2.4%

 

Home Improvement

    Techtronic Industries

140,000