Q1 2024
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The first quarter of 2024 provided several surprises, not least the US stock market’s strong performance following a buoyant 2023. The ebullience was not limited to the United States. Global stock markets performed impressively, apart from a few exceptions such as Brazil and China/Hong Kong. Germany, Italy, the Netherlands, and Japan all registered double-digit local currency returns. Markets advanced despite stronger than expected gross domestic product (GDP) growth and inflation readings that shifted the narrative from a March rate cut to a June cut to maybe no cuts in 2024. Positive GDP data and the Federal Reserve’s stance led to a tough quarter for the bond market as the yield on the 10-year Treasury rose from 3.88% at year-end 2023 to 4.20% as of March 31, 2024. That move helped to support the dollar; the DXY Index strengthened 3.19% during the quarter. While not a stock, gold provided the quarter’s biggest surprise by appreciating nearly in line with the S&P 500 Index – not what one would expect in an environment of rising rates and a strengthening dollar.
The recovery among Industrial stocks is more easily explained than gold’s resurgence. The sector notched the fourth best performance during the quarter, trailing Technology, Financials, and Communications. Technology and Communications benefited from continuing artificial intelligence (AI) excitement with Nvidia and Meta leading the way, while rates remaining higher for longer supported bank margins. The Industrial sector’s performance reflected several factors, including reshoring due to US-China tensions, solid economic performance, and money/incentives made available through the Inflation Reduction Act, the Infrastructure Investment and Jobs Act, and the CHIPS and Science Act. “Total Construction Spending: Manufacturing in the United States” demonstrates the dramatic effect these factors have had on manufacturing construction in the US. “In 2023, construction spending on new manufacturing facilities more than doubled compared with 2022,” said Niels Graham in an article for the Atlantic Council. “Companies spent, on average, $16.2 billion dollars a month building new production facilities.”1
Eventually, construction leads to production, and we may have seen the first signs. The Institute for Supply Management (ISM) PMI reading was 50.3 for the month of March, indicating expansion, and was well ahead of February’s contractionary reading of 47.8.2 Both the Amana Growth Fund and the Amana Income Fund have substantial Industrial investments and we continue to seek new opportunities, especially in electric grid development.
Outlook
Despite the delayed rate cuts, the good news is that performance broadened as economic resilience boosted sentiment across a variety of sectors. Of course, over the long run, interest rate stability engendered by a steadily growing economy beats rate cut catnip. The first quarter continued some of the 2023 Magnificent Seven trends, with AI semiconductor star Nvidia maintaining its torrid pace, rising over 80%. Meta, Amazon, and Microsoft also performed strongly, outpacing the broad market. Alphabet appreciated by single digits. Apple and Tesla shares declined during the quarter, with Tesla falling nearly 30%. Nvidia, Meta, Amazon, and Microsoft combined contributed roughly half the return of the S&P 500.3 Since the days of the BRICs, a group of stocks or markets that move in sync must have a nickname; will the Fab Four’s momentum continue, or will they succumb to the forces that sidelined Apple and Tesla? We view those forces as: 1) valuation; 2) modest to disappointing earnings growth trajectories; 3) regulatory risk. Apple’s growth has been pedestrian for the past couple of years and looks set to continue, making its historically high valuation problematic. Tesla’s sales volume and earnings fell short of expectations, making its stratospheric valuation even more so. From a regulatory perspective, Tesla’s self-driving functions seem to always be under the microscope. In March, the EU fined Apple $2 billion for breaking anti-trust rules with its app store. Meanwhile, the US Department of Justice (DoJ) launched a case against the company for monopolizing the cell phone market.
How do these forces line up for the Fab Four? When it comes to earnings, most companies would kill for the growth these companies are forecasted to achieve over the next four years, ranging from a low of 17% annualized for Microsoft to a high of 39% for Nvidia.4 Price to earnings ratios range from a low of 24.6x for Meta to 43.5x for Amazon, whose earnings growth is estimated at 29% annualized. Given the strength of their business models and undeniable competitive advantages, valuations for the Fab Four strike us as supportable.
However, business model strength and competitive advantages bring us to the third force. Between the DoJ and the Federal Trade Commission (FTC), cases have been lodged against Alphabet, Amazon, Meta, and Apple. One wonders how long it will be until Microsoft draws scrutiny for its AI activities. The Yale Journal on Regulation published a (far from scientific but nonetheless enlightening) report in March, ranking how the courts will evaluate the strength of the cases based on predictions of 19 anti-trust professors.5 The Journal divided the cases into five buckets: Google Search, Google AdTech, Facebook, Amazon, and Apple. The clear consensus among the professors was that the government has the strongest case against Google in both Search and AdTech, although only the latter carries the risk of a breakup. Strangely, Apple is at risk from an adverse Google Search ruling since it could lead to the loss of an annual payment estimated to be as high as $20 billion to make Google the preferred search engine on its devices. Most respondents thought the government has no chance against Amazon, while the Meta and Apple cases are theoretically weak but toss-ups in the courts. Undoubtedly, these cases will persist for years, and the ultimate result may be irrelevant apart from opportunity cost, which shouldn’t be underestimated. Bill Gates has said the government’s case against Microsoft at the turn of the century distracted him from the rise of mobile phones, causing Microsoft to miss out. Others might say Microsoft’s distraction opened the door for Apple, Amazon, Google, and others. Could the same happen again?
Amana Income Fund
In the first quarter of 2024, Amana Income Fund Investor Shares returned 10.02% and the Institutional Shares returned 10.08%. The S&P 500 returned 10.56% over the same period.
The S&P 500 had its best first quarter return since 2019, building on its similarly strong results from the fourth quarter of 2023. Optimism about growth and productivity gains made possible through advances in artificial intelligence (AI) continued to fuel the market’s advance.
Eli Lilly was Amana Income Fund’s top performer in the first quarter, propelled by its robust pipeline of innovative diabetes, obesity, and Alzheimer's treatments that are poised to capitalize on the expanding market of aging Americans. Taiwan Semiconductor also delivered impressive returns; the world’s largest chip foundry was buoyed by surging global demand for its cutting-edge semiconductor manufacturing capabilities, which are critical to powering the latest technological innovations across industries.
Detractors from the Amana Income Fund’s performance were cyclical companies Air Products and Chemicals, Rockwell Automation, and UPS. All are vulnerable to fluctuations in capital costs, and likely suffered from anticipation that the Federal Reserve would delay cutting interest rates.
After strong performance in the first quarter, we have tempered our optimism for the remainder of the year. We are mindful that elevated inflation and interest rates may weigh on corporate profits. Policy uncertainty around what is likely to be a closely contested US presidential election further complicates the investment horizon. Until then (and depending on how either candidate responds to the results), we are looking at limited further upside.
As of March 31, 2024
| 10 Largest Contributors YTD | Return | Contribution |
| Eli Lilly | 33.69% | 4.03 |
| Taiwan Semiconductor ADR | 31.35% | 1.59 |
| Microsoft | 12.09% | 1.08 |
| W.W. Grainger | 23.00% | 0.90 |
| Eaton Corporation | 30.25% | 0.43 |
| Linde | 13.38% | 0.42 |
| Genuine Parts | 12.61% | 0.39 |
| Colgate-Palmolive | 13.65% | 0.28 |
| McCormick & Co. | 12.26% | 0.26 |
| Johnson Controls | 13.98% | 0.25 |
| 10 Largest Detractors YTD | Return | Contribution |
| Rockwell Automation | -5.75% | -0.34 |
| Air Products And Chemicals | -10.87% | -0.20 |
| Honeywell International | -2.86% | -0.16 |
| PPG Industries | -2.67% | -0.10 |
| United Parcel Service | -4.43% | -0.09 |
| Pfizer | -2.14% | -0.04 |
| Cisco Systems | -0.44% | -0.01 |
| Amgen | -0.52% | -0.01 |
| Novartis | -0.58% | 0.00 |
| Merck & Co. | 4.18% | 0.01 |
| Top 10 Holdings | Portfolio Weight |
| Eli Lilly | 13.70% |
| Microsoft | 8.98% |
| Taiwan Semiconductor ADS | 5.99% |
| Rockwell Automation | 4.66% |
| W.W. Grainger | 4.34% |
| Illinois Tool Works | 4.30% |
| Linde | 3.22% |
| Genuine Parts | 3.16% |
| PPG Industries | 2.93% |
| Canadian National Railway | 2.70% |
| 30-Day Yield | |
| Investor Shares (AMANX): | 0.79% |
| Institutional Shares (AMINX): | 1.03% |
Asset-weighted average debt to market cap: 12.6%
Amana Growth Fund
In the first quarter of 2024, Amana Growth Fund Investor Shares returned 10.60%, just ahead of the S&P 500 return of 10.56%. The Fund’s return was driven by Technology, Health Care, and Industrial investments. While Technology was the top contributor to returns, sector selection was weak largely due to our position in Nvidia being less than a quarter of the benchmark weight. Weak performance from Adobe and Cisco also contributed, while ASML, Trimble, and Taiwan Semiconductor performed well. Stock selection in the Health Care and Industrial sectors was positive, led by Eli Lilly, Novo Nordisk, and Merck in the former and Trane Technology and Johnson Controls in the latter.
Eli Lilly and Novo Nordisk continued to ride the wave of their GLP-1 diabetes and weight loss drugs, with both companies still struggling to meet demand. That demand will only increase, as Medicare has indicated it will offer coverage for the drugs if they are prescribed to address a cardiac condition. Historically Medicare has specifically denied coverage of weight loss drugs, but since Novo Nordisk’s five-year trial with 17,000 patients demonstrated a 20% reduction in major adverse cardiac events, that position has become untenable. While Nvidia attracts all the artificial intelligence (AI) chip attention, Taiwan Semiconductor makes the chips with machines it purchases from ASML. Neither company performed especially well in 2023, but they made up for lost time in the first quarter. Advanced Micro, Microsoft, and Broadcom are all AI plays, while heat pump maker Trane Technologies maintained its 2023 momentum. Car parts retailer Autozone came to life following modest 2023 performance.
Most of the companies appearing on this list were solid 2023 performers. We discussed Apple in the introductory commentary. Based on Adobe’s 2023 performance, it could have made the Magnificent Seven the Magnificent Eight. The failure to close the Figma acquisition weakened the stock at year-end, which continued with disappointing guidance following its 2023 results release. We still see Adobe as a core holding. Lululemon also had an excellent 2023, which featured inclusion in the S&P 500 Index. Weak guidance was punished by investors; however, we believe Lululemon still has an excellent international opportunity. With IDEXX, Keysight, Cisco, and Amgen, we see no reason for concern given the minor moves. Union Pacific reflected straightforward exposure to US economic growth. Although Johnson & Johnson and Motorola Solutions had slight positive returns in the quarter, we exited both positions. Johnson & Johnson does not provide a growth profile, despite jettisoning its consumer health care segment. Motorola Solutions appeared at reputational risk due to recent geopolitical developments.
Between December 31, 2023 and March 31, 2024, no positions in the Amana Growth Fund exited or entered the Top 10 Holdings.
As of March 31, 2024
| 10 Largest Contributors YTD | Return | Contribution |
| Eli Lilly | 33.69% | 1.49 |
| ASML Holding NY | 28.43% | 1.43 |
| Novo Nordisk A/S | 25.01% | 1.11 |
| Nvidia | 82.46% | 0.94 |
| Advanced Micro Devices | 22.44% | 0.90 |
| Taiwan Semiconductor | 31.35% | 0.85 |
| Microsoft | 12.09% | 0.62 |
| Trane Technologies | 23.45% | 0.49 |
| Autozone | 21.89% | 0.48 |
| Broadcom | 19.23% | 0.47 |
| 10 Largest Detractors YTD | Return | Contribution |
| Apple | -10.82% | -0.88 |
| Adobe | -15.42% | -0.61 |
| Lululemon Athletica | -23.60% | -0.56 |
| IDEXX Laboratories | -2.72% | -0.03 |
| Keysight Technologies | -1.70% | -0.01 |
| Cisco Systems | -0.44% | -0.01 |
| Amgen | -0.52% | 0.00 |
| Union Pacific | 0.64% | 0.01 |
| Johnson & Johnson | 2.84% | 0.03 |
| Motorola Solutions | 2.52% | 0.03 |
| Top 10 Holdings | Portfolio Weight |
| Apple | 6.53% |
| ASML Holding NY | 5.72% |
| Microsoft | 5.31% |
| Eli Lilly | 5.19% |
| Novo Nordisk ADS | 4.92% |
| Advanced Micro Devices | 4.14% |
| Alphabet, Class A | 3.88% |
| Intuit | 3.55% |
| Taiwan Semiconductor ADS | 3.15% |
| Adobe | 3.10% |
Asset-weighted average debt to market cap: 8.9%
Amana Developing World Fund
Coming into 2024 we noted a multitude of tailwinds supported expectations for emerging market growth to exceed developed markets. We have seen resilient growth in emerging economies; through February 2024, their composite Purchasing Managers Index (PMI) outpaced that of developed markets 53.4 to 51.4. At the same time, emerging economies in aggregate did well at containing inflation, compared to historical levels. Despite these dynamics, the MSCI Emerging Markets Index returned only 2.09% during the quarter and the Investor Shares of Amana Developing World Fund returned 5.12%, lagging that of the MSCI World Index’s 8.88%. Still, valuations in emerging markets are far less rich, at 12.13x forward earnings compared to 18.72x for the MSCI World Index.
The Technology, Consumer Discretionary, Materials, Health Care, and Consumer Staples sectors all appeared in the 10 Largest Contributors to the Amana Developing World Fund’s first-quarter performance. Technology was a dominant driver of performance, with four placements in the top 10. Nvidia was the Fund’s largest contributor. Joining in Nvidia’s success were two critical suppliers: ASML, the principal supplier of advanced semiconductor manufacturing equipment, and Taiwan Semiconductor, the foremost manufacturer of leading edge semiconductors. The trio is indicative of the advancements taking place in emerging markets, where much of the world’s most advanced technology is being manufactured.
Similarly, the Amana Developing World Fund’s largest detractors were dispersed across several sectors and geographies. During the first quarter, the Technology, Materials, Health Care, and Consumer Discretionary sectors were all present among the Fund’s largest detractors. KCE Electronics, a Thai electronic components manufacturer, saw shares come under pressure after a weak fourth quarter of 2023 and guiding to a slow 2024. The company is particularly exposed to the European automotive sector, which was pressured by high interest rates. Despite the challenging near-term outlook, we expect long-term tailwinds for higher automotive electrical content to continue.
While valuations are notoriously poor tools for timing markets, we’re steadfast that market timing is a risky way to make investments. Valuations do, however, provide a lens into expectations. With the MSCI Emerging Markets Index trading at a 35.20% discount to the MSCI World Index, the market appears pessimistic on the fortunes of these companies. And yet, as we’ve discussed previously, emerging markets benefit from numerous structural tailwinds.
Why the disconnect? Clearly, large US stocks have been in the headlines for advancements in artificial intelligence (AI), yet several emerging market stocks play a critical role in the AI revolution. Then there’s concern over governance issues. This concern is merited, and stays front of mind as we seek companies that not only have strong fundamentals but also robust governance controls. The result (when taken together as a homogenous group): emerging markets face plenty of hurdles, but when broken into constituent parts, disparate stories unfold. Looking at the myriad markets and diverse assortment of companies, we remain excited for the opportunities at hand.
As of March 31, 2024
| 10 Largest Contributors YTD | Return | Contribution |
| Nvidia | 82.46% | 3.70 |
| Ford Otomotiv Sanayi | 39.77% | 0.92 |
| ASML Holding NY | 28.43% | 0.90 |
| Taiwan Semiconductor ADS | 31.35% | 0.82 |
| Southern Copper | 24.99% | 0.70 |
| Qualcomm | 17.66% | 0.56 |
| KPJ Healthcare Bhd | 30.50% | 0.39 |
| Colgate-Palmolive | 13.65% | 0.37 |
| Hikma Pharmaceuticals | 8.29% | 0.21 |
| Bim Birlesik Magazalar | 9.60% | 0.18 |
| 10 Largest Detractors YTD | Return | Contribution |
| KCE Electronics | -30.96% | -0.81 |
| Sociedad Quimica Y Minera De Chile | -18.37% | -0.41 |
| Fleury | -18.68% | -0.33 |
| Rio Tinto | -10.93% | -0.32 |
| Clicks Group | -10.69% | -0.32 |
| Unicharm | -11.65% | -0.30 |
| Wilcon Depot | -16.12% | -0.28 |
| Telkom Indonesia (Persero) | -13.59% | -0.27 |
| UltraTech Cement | -7.33% | -0.23 |
| Barrick Gold | -7.37% | -0.21 |
| Top 10 Holdings | Portfolio Weight |
| Nvidia | 7.51% |
| ASML Holding NY | 3.63% |
| Qualcomm | 3.42% |
| Southern Copper | 3.42% |
| Taiwan Semiconductor ADS | 3.11% |
| Samsung Electronics | 3.06% |
| Ford Otomotiv Sanayi | 3.01% |
| Colgate-Palmolive | 2.83% |
| UltraTech Cement | 2.73% |
| Jabil | 2.71% |
Asset-weighted average debt to market cap: 13.9%
Amana Participation Fund
The first quarter of 2024 built upon the previous quarter’s momentum: financial assets demonstrated strong performance and valuations extended even further. Investor optimism that the US would avoid an economic recession and that the Federal Reserve would cut its benchmark interest rates sometime in the first half of 2024 continued into the first quarter as well. However, inflation was higher than expected in January and February, and investor consensus shifted to the possibility that the Fed would cut interest rates later in 2024. In January, the annualized consumer price index (CPI) was 3.9%, slightly above the expected 3.8%. In February, the annualized CPI reached 3.9%, above the expected 3.7%. The illustration “CPI Metric Compared to Federal Funds Rate” measures the US CPI Urban Consumers Less Food & Energy Index, the US CPI Urban Consumers Index, and the Federal Funds Target Rate - Upper Bound since January 2020 to the present.
This reversal in inflationary trends tempered — but did not dash — investor optimism; risk-assets experienced strong investment performance in the first quarter. Although inflationary pressures declined substantially, they did not decline enough to offer central banks the confidence to lower benchmark interest rates. This may motivate the Fed and other central banks to keep interest rates at their current high levels for an extended period.
Such a policy path would be viewed as prudent. A working paper published by the International Monetary Fund (IMF) in September 2023 found that in the more than 100 inflation shock episodes that have occurred since the 1970s, inflation was resolved in under five years for only 60%. Even in those “successful” cases, resolving inflation took over three years, on average.6
Using the three-year average, it is reasonable to expect inflation in the US to subside around the first or second quarter of 2025. The Fed began raising benchmark interest rates on March 21, 2022. In June of 2022, US inflation measured by CPI peaked at 9.1%. Using the five-year average would suggest that inflation may subside by the first or second quarter of 2027.
“Most unresolved [inflationary] episodes involved ‘premature celebrations’ where inflation declined initially, only to plateau at an elevated level or re-accelerate,” said the IMF. “Countries that resolved inflation had tighter monetary policy that was marinated more consistently over time, lower nominal wage growth, and less currency depreciation, compared to unresolved cases.” The IMF paper is an important cautionary warning for investors. We are taking recent policy actions by central banks in stride, while keeping in mind that taming inflation takes time.
Amana Participation Fund – First Quarter Results
For the three-month period ended March 31, 2024, the Amana Participation Fund Investor Shares returned 0.50% and the Institutional Shares returned 0.56%. The Fund’s benchmark, the FTSE IdealRatings Sukuk Index, returned -0.04%, trailing both share classes by 54 basis points (bps) and 60 bps, respectively. For the trailing 12-month period, the Investor Shares returned 2.17% and the Institutional Shares returned 2.43%. The Index returned 3.52%, leading both share classes by 135 bps and 109 bps, respectively. The Fund’s relative underperformance can be partially attributed to differences in the composition of the benchmark versus the Fund.
At the end of the first quarter, the Investor Shares reported a 30-day yield of 2.38% and the Institutional Shares reported a yield of 2.63%. The Amana Participation Fund reported a modified duration of 4.39 years. The Fund is invested among 36 securities to meet its investment objectives of capital preservation and current income while being entirely invested in US dollar-denominated securities.
The two best performers in the Amana Participation Fund for the first quarter were Emaar Properties, a property development manager, and Kuwait Financial House, an Islamic bank. For the same period, the two lowest performers were Indonesian sovereign sukuk and Saudi Arabian energy company Aramco.
As of March 31, 2024
| Top 10 Holdings | Portfolio Weight |
| ICD Sukuk | 5.23% |
| KFH Tier 1 Sukuk | 4.94% |
| Riyad Sukuk Limited | 4.62% |
| DP World Salaam | 4.17% |
| DAE Sukuk | 3.99% |
| EMAAR Sukuk Ltd | 3.41% |
| Perusahaan Penerbit SBSN | 3.29% |
| Air Lease Corp Sukuk Ltd | 3.23% |
| TNB Global Ventures Cap | 3.13% |
| KSA Sukuk | 3.11% |
| 30-Day Yield | |
| Investor Shares (AMAPX): | 2.38% |
| Institutional Shares (AMIPX): | 2.63% |
Performance Summary
As of March 31, 2024
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| Average Annual Total Returns (Before Taxes) Net of fees | YTD | 1 Year | 3 Year | 5 Year | 10 Year | 15 Year | Expense RatioA |
| Amana Income Investor Shares (AMANX) | 10.02% | 21.70% | 9.95% | 12.30% | 10.16% | 12.41% | 1.02% |
| Amana Income Institutional Shares (AMINX) | 10.08% | 21.97% | 10.21% | 12.55% | 10.42% | n/a | 0.78% |
| S&P 500 Index | 10.56% | 29.88% | 11.52% | 15.04% | 12.96% | 15.63% | n/a |
| Morningstar "Large Blend" Category | 9.95% | 27.24% | 9.88% | 13.65% | 11.45% | 14.44% | n/a |
| Amana Growth Investor Shares (AMAGX) | 10.60% | 29.05% | 12.44% | 17.26% | 15.06% | 15.63% | 0.91% |
| Amana Growth Institutional Shares (AMIGX) | 10.65% | 29.34% | 12.72% | 17.54% | 15.33% | n/a | 0.67% |
| S&P 500 Index | 10.56% | 29.88% | 11.52% | 15.04% | 12.96% | 15.63% | n/a |
| Morningstar "Large Growth" Category | 11.92% | 36.45% | 7.95% | 14.89% | 13.24% | 15.69% | n/a |
| Amana Developing World Investor Shares (AMDWX) | 5.12% | 12.00% | 0.80% | 7.04% | 2.70% | n/a | 1.22% |
| Amana Developing World Institutional Shares (AMIDX) | 5.26% | 12.13% | 1.02% | 7.25% | 2.92% | n/a | 1.01% |
| MSCI Emerging Markets Index | 2.09% | 7.86% | -5.15% | 2.16% | 2.92% | 6.63% | n/a |
| Morningstar "Diversified Emerging Markets" Category | 2.70% | 10.31% | -3.83% | 3.23% | 2.96% | 6.96% | n/a |
| Amana Participation Investor Shares (AMAPX) | 0.50% | 2.17% | -0.37% | 1.54% | n/a | n/a | 0.80% |
| Amana Participation Institutional Shares (AMIPX) | 0.56% | 2.43% | -0.15% | 1.77% | n/a | n/a | 0.56% |
| FTSE IdealRatings Sukuk Index | -0.04% | 3.52% | -0.23% | 2.63% | 3.09% | 4.94% | n/a |
| Morningstar "Emerging Markets Bond" Category | 2.14% | 11.22% | -0.96% | 1.25% | 2.51% | 5.75% | n/a |
A Expense ratios shown are as stated in the Funds' most recent Prospectus dated September 28, 2023.
Performance data quoted represents past performance, is before any taxes payable by shareowners, and is no guarantee of future results. Current performance may be higher or lower than that stated herein. Performance current to the most recent month-end is available by calling toll-free 1-800-728-8762 or visiting www.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. Shares of a Fund may only be offered for sale through the Fund's prospectus or summary prospectus.
The S&P 500 is an index comprised of 500 widely held common stocks considered to be representative of the US stock market in general. The MSCI Emerging Markets Index, produced by Morgan Stanley Capital International, measures equity market performance in over 20 emerging market countries. The FTSE IdealRatings Sukuk Index measures the performance of global Islamic fixed-income securities, also known as sukuk. When available, Saturna uses total return components of indices mentioned. Investors cannot invest directly in the indices.
Institutional Shares of the Amana Funds began operations September 25, 2013. The Amana Participation Fund began operations September 28, 2015.
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 Amana Mutual 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 nondiversified 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. 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.
Morningstar Ratings™
As of March 31, 2024
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| Morningstar Ratings™ A | 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 | 91 | 68 | 84 | 85 | 92 | n/a |
| Institutional Shares (AMINX) | n/a | ★ ★ ★ | ★ ★ ★ | ★ ★ | n/a | ★ ★ ★ |
| % Rank in Category | 89 | 61 | 82 | 81 | 90 | n/a |
| Number of Funds in Category | 1,430 | 1,298 | 1,191 | 897 | 683 | 1,298 |
| Amana Growth Fund — "Large Growth" Category | ||||||
| Investor Shares (AMAGX) | n/a | ★ ★ ★ ★ ★ | ★ ★ ★ ★ ★ | ★ ★ ★ ★ ★ | n/a | ★ ★ ★ ★ ★ |
| % Rank in Category | 83 | 5 | 15 | 12 | 47 | n/a |
| Institutional Shares (AMIGX) | n/a | ★ ★ ★ ★ ★ | ★ ★ ★ ★ ★ | ★ ★ ★ ★ ★ | n/a | ★ ★ ★ ★ ★ |
| % Rank in Category | 82 | 4 | 13 | 10 | 41 | n/a |
| Number of Funds in Category | 1,200 | 1,118 | 1,031 | 810 | 599 | 1,118 |
| Amana Developing World Fund — "Diversified Emerging Markets" Category | ||||||
| Investor Shares (AMDWX) | n/a | ★ ★ ★ ★ | ★ ★ ★ ★ ★ | ★ ★ ★ ★ | n/a | ★ ★ ★ ★ |
| % Rank in Category | 38 | 24 | 17 | 60 | n/a | n/a |
| Institutional Shares (AMIDX) | n/a | ★ ★ ★ ★ | ★ ★ ★ ★ ★ | ★ ★ ★ ★ | n/a | ★ ★ ★ ★ |
| % Rank in Category | 37 | 24 | 16 | 52 | n/a | n/a |
| Number of Funds in Category | 816 | 721 | 656 | 402 | n/a | 721 |
| Amana Participation Fund — "Emerging Markets Bond" Category | ||||||
| Investor Shares (AMAPX) | n/a | ★ ★ ★ ★ ★ | ★ ★ ★ ★ | n/a | n/a | ★ ★ ★ ★ |
| % Rank in Category | 100 | 11 | 58 | n/a | n/a | n/a |
| Institutional Shares (AMIPX) | n/a | ★ ★ ★ ★ ★ | ★ ★ ★ ★ | n/a | n/a | ★ ★ ★ ★ |
| % Rank in Category | 99 | 9 | 49 | n/a | n/a | n/a |
| Number of Funds in Category | 243 | 226 | 213 | n/a | n/a | 226 |
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Performance data quoted herein represents past performance and does not guarantee future results.
© 2024 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.
A Morningstar Ratings™ ("Star Ratings") are as of March 31, 2024. 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.
% 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.
Extended performance is an estimate based on the performance of a Fund's oldest share class, adjusted for fees.
The Amana Mutual Funds offer two share classes – Investor Shares and Institutional Shares, each of which has different expense structures.
Footnotes
1 Graham, Niels. “The IRA and CHIPS Act are supercharging US manufacturing construction.” The Atlantic Council, February 13, 2024. https://www.atlanticcouncil.org/blogs/econographics/ the-ira-and-chips-act-are-supercharging-us-manufacturingconstruction/#:~: text=In%202023%2C%20US%20construction%20 spending,month%20building%20new%20production%20facilities.
2 “March 2024 Manufacturing ISM Report on Business.” Institute for Supply Management. https://www.ismworld.org/supplymanagement- news-and-reports/reports/ism-report-on-business/ pmi/march/
3 Singh, Hardika. “The Stock Market’s Magnificent Seven is Now the Fab Four.” The Wall Street Journal, April 1, 2024. https://www.wsj. com/finance/stocks/the-stock-markets-magnificent-seven-is-nowthe- fab-four-2dff87ac?st=hzs6czx94nd98xv&reflink=article_email_ share
4 Earnings growth and PER figures are derived from estimates appearing on LSEG Workspace and stock prices as of April 2, 2024.
5 Crane, Daniel A. “Ranking the Big Tech Monopolization Cases.” Yale Journal on Regulation, March 26, 2024. https://www.yalejreg.com/ nc/ranking-the-big-tech-monopolization-cases-by-daniel-a-crane/
6 Ari, Anil, et al. “One Hundred Inflation Shocks: Seven Stylized Facts.” IMF Working Papers. International Monetary Fund, September 15, 2023. https://www.imf.org/en/Publications/WP/Issues/2023/09/13/ One-Hundred-Inflation-Shocks-Seven-Stylized-Facts-53915
Important Disclaimers and Disclosure
This publication should not be considered investment, legal, accounting, or tax advice, or a representation that any investment or strategy is suitable or appropriate to a particular investor's circumstances or otherwise constitutes a personal recommendation to any investor. This material does not form an adequate basis for any investment decision by any reader and Saturna may not have taken any steps to ensure that the securities referred to in this publication are suitable for any particular investor. Saturna will not treat recipients as its customers by virtue of their reading or receiving the publication.
The information in this publication was obtained from sources Saturna believes to be reliable and accurate at the time of publication.
All material presented in this publication, unless specifically indicated otherwise, is under copyright to Saturna. No part of this publication may be altered in any way, copied, or distributed without the prior express written permission of Saturna.
Asset-weighted average debt to market capitalization: This ratio represents the average debt to market capitalization of the portfolio. It is calculated by taking the debt to market capitalization for each company (its debt divided by its market capitalization), then weighting these values (multiplying each by the company's percent share of total portfolio assets), then totaling the weighted values.
Effective maturity, modified duration, and effective duration are measures of a fund's sensitivity to changes in interest rates and the markets. A fund's effective maturity is a dollar-weighted average length of time until principal payments must be paid. Longer maturities typically indicate greater sensitivity to interest rate changes than shorter maturities. Modified duration differs from effective maturity in that it accounts for interest payments in addition to the length of time until principal payments must be paid. Longer durations tend to indicate greater sensitivity to interest rate changes than shorter durations. Call options and other security specific covenants may be used when calculating effective maturity and modified duration.
A fund's 30-Day Yield, sometimes referred to as standardized yield, current yield, or SEC yield, is based on methods of computation prescribed in SEC Form N-1A. Calculated by dividing the net investment income per share during the preceding 30 days by the net asset value per share on the last day of the period, the 30-Day Yield provides an estimate of a fund's investment income rate, but may not equal the actual income distribution rate.
We note that unlike many funds, the Amana Funds' expenses are not subsidized by its adviser, Saturna Capital, therefore the 30-Day Yields presented are actual, according to the SEC's calculation methodology.
About the Authors
Scott Klimo CFA®
Chief Investment Officer
Portfolio Manager, Amana Growth Fund
Deputy Portfolio Manager, Amana Income & Developing World Funds
Monem Salam MBA
Executive Vice President
Portfolio Manager, Amana Income & Developing World Funds
Deputy Portfolio Manager, Amana Growth Fund
Patrick Drum MBA, CFA®, CFP®
Senior Investment Analyst
Portfolio Manager, Amana Participation Fund
Bryce Fegley MS, CFA®, CIPM®
Senior Investment Analyst
Deputy Portfolio Manager, Amana Income Fund
Elizabeth Alm CFA®
Senior Investment Analyst
Deputy Portfolio Manager, Amana Participation Fund
Levi Stewart Zurbrugg MBA, CPA®, CFA®
Senior Investment Analyst
Deputy Portfolio Manager, Amana Developing World Fund