AMANA MUTUAL FUNDS TRUST
May 31, 1996 Report Income Fund
Growth Fund
Fellow Shareowners:
It's been another very good year for stock market investors. Amana Trust's
assets are now $16.6 million, up a healthy 31% for the year. Our almost 1,800
shareowner accounts are spread to 41 states and 8 foreign countries. Inside
please find the details of the fiscal year's operations and current portfolios
For the fiscal year ended May 31, Amana's Income Fund total return was 17% --a
strong performance considering its conservative, income-oriented nature. For the
past five years, total return has averaged 8.75% per year. Those shareowners
willing to assume full market risk were well rewarded, as the Growth Fund
appreciated over 37%in this strong bull market. In comparison, the S&P 500
provided a total return of 28% and the Dow Jones 30 Industrials 29% for the last
year. Since inception in 1994, Amana Growth Fund's total return has averaged 15%
per year. Our positive outlook for the next year is based upon a healthy US
economy. GDP should continue to increase at 2-3%, and inflation worries are
remote. Consumer confidence is rising, fueled by increasing real incomes and
productivity. World economies are recovering based upon the US leadership. We
continue to focus the Funds investments in value-based businesses, in part to
avoid the froth apparent in some market sectors. Your board is proud to note
that on June 23, the Amana Income Fund completed 10 years of operation. One of
the lessons of the marketplace is that experience matters. Demonstrated
capability to provide successful management and quality service in good times
and bad is highly important in the volatile financial markets. During the course
of this year, transaction volume has increased with
more investors taking advantage of our true "no-load" structure. Our free
Automatic Investment Plan and free retirement plans are increasingly popular.
And Saturna Capital's new site on the Internet's World Wide Web is an excellent
source of information (http://www.saturna.com/amana). As always, we appreciate
your investing with us. If you have any questions or need help, please call us
at 1-800/SATURNA.
Respectfully,
Nicholas Kaiser, President Bassam Osman, Chairman
June 24, 1996
INVESTMENTS
May 31, 1996
<TABLE>
<CAPTION>
Number Market
Issue of Shares Cost Value
- -----------------------------------------------------------------------------------------------------
COMMON STOCKS (94.9%)
<S> <C> <C> <C>
Building (1.9%)
Hanson Trust plc ADR
16,000 240,655 234,000
Business Services (5.9%)
Dun & Bradstreet
6,500 331,020 415,188
H&R Block
9,000 328,185 313,875
SUB-TOTAL
659,205 729,063
Chemicals (7.1%)
ARCO Chemical
6,500 238,792 337,188
Chemed
10,000 356,116 376,250
Lawter International
14,738 116,591 169,487
SUB-TOTAL
711,499 882,925
Machinery (3.6%)
Manitowoc Company
12,000 276,657 445,500
Medical (10.5%)
American Home Products
10,000 242,862 535,000
Bristol-Myers Squibb
6,000 261,835 512,250
Glaxo-Wellcome plc ADR
10,000 260,427 261,250
SUB-TOTAL
765,124 1,308,500
Mining (5.0%)
ASARCO
10,000 330,433 313,750
RTZ Corp PLC ADS
5,000 279,565 316,250
SUB-TOTAL
609,998 630,000
Oil & Gas Production (9.5%)
Atlantic Richfield
4,000 447,256 478,500
Exxon
5,000 307,279 423,750
Mobil
2,500 282,713 282,187
SUB-TOTAL
1,037,248 1,184,437
Paper & Paper Products (3.4%)
Consolidated Papers
4,000 218,215 209,000
Georgia-Pacific
3,000 228,196 216,750
SUB-TOTAL
446,411 425,750
Paint and Allied Products (2.7%)
R P M, Inc
20,313 182,267 337,695
Telecommunications (17.6%)
BCE, Inc
13,000 436,370 516,750
Cable & Wireless PLC ADR
16,000 310,930 330,000
Pacific Telesis Group
14,000 375,305 467,250
Telecom Corp New Zealand ADS
7,500 358,258 492,188
Telefonica de Espana, ADR
7,500 202,956 392,813
SUB-TOTAL
1,683,819 2,199,001
Utilities - Electric (17.7%)
Enova Corporation
18,300 399,878 398,025
FPL Group
10,000 344,874 427,500
Idaho Power
10,000 250,658 292,500
NIPSCO Industries
10,000 362,973 372,500
Pacific Gas & Electric
15,000 356,897 348,750
Washington Water Power
19,900 343,236 368,150
SUB-TOTAL
2,058,516 2,207,425
Utilities -Water & Gas (10.0%)
American Water Works
10,000 295,430 356,250
Peoples Energy
14,000 380,014 448,000
Piedmont Natural Gas
20,200 286,923 436,824
SUB-TOTAL
962,367 1,241,074
TOTAL INVESTMENTS (94.9%) $9,633,766 11,825,370
Other Assets (net of liabilities) (5.1%) =========
639,026
TOTAL NET ASSETS (100%) $12,464,396
</TABLE>
<TABLE>
<CAPTION>
============
FINANCIAL HIGHLIGHTS
Selected data per share of outstanding capital stock outstanding throughout
each period.
Jun.23
For Year Ended May 31 1986
(in-
------------------------------------------------------------------------ception)
to
1996 1995 1994 1993 1992 1991 1990 1989 1988 5/31/87
Net asset value at beginning
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
of period $12.92 $12.18 $12.86 $11.94 $11.36 $10.86 $10.39 $9.11 $10.73 $10.00
Income from investment
operations
Net investment income 0.42 0.38 0.30 0.32 0.32 0.39 0.38 0.38 0.30 0.28
Net gains or losses on
securities
(both realized and
unrealized) 1.76 0.80 (0.36) 0.92 0.58 0.46 0.53 1.29 (1.65) 1.24
Total from investment
operations 2.18 1.18 (0.06) 1.24 0.90 0.85 0.91 1.67 (1.35) 1.52
Less distributions
Dividends (from net
investment
income) (0.41) (0.44) (0.30) (0.32) (0.32) (0.35) (0.44) (0.39) (0.27) (0.28)
Distributions (from
capital gains) (0.76) 0.00 (0.32) 0.00 0.00 0.00 0.00 0.00 0.00 (0.51)
Total distributions (1.17) (0.44) (0.62) (0.32) (0.32) (0.35) (0.44) (0.39) (0.27) (0.79)
Net asset value at end
of period $13.93 $12.92 $12.18 $12.86 $11.94 $11.36 $10.86 $10.39 $9.11 $10.73
Total return 17.03% 9.95% (0.63)% 10.26% 7.88% 8.11% 8.85% 18.86% (12.68)% 15.21%
Ratios / Supplemental Data
Net assets ($000), end of
period $12,464 $10,708 $10,432 $9,398 $6,913 $5,868 $4,760 $3,645 $3,559 $3,189
Ratio of expenses to ave. net
assets (not annualized) 1.57% 1.56% 1.58% 1.58% 1.58% 1.66% 1.76% 1.88% 2.07% 1.81%
Ratio of net investment
income to
ave. net assets (not 3.06% 3.11% 2.22% 2.65% 2.75% 3.73% 3.67% 3.85% 3.17% 3.53%
annualized)
Portfolio turnover rate 24% 29% 21% 29% 19% 29% 19% 71% 66% 55%
Average commission rate paid $0.0460
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
As of May 31, 1996
Assets
Investments, at value
<S> <C>
Common stocks (cost $9,633,766) $11,825,370
Cash 607,333
Dividends receivable 45,921
Insurance deposit 2,528
Total Assets $12,481,152
Liabilities
Payable to affiliate 11,797
Other liabilities 4,959
Total liabilities 16,756
NET ASSETS $12,464,396
============
Fund shares outstanding 894,550
Analysis of Net Assets
Paid in capital (unlimited shares authorized, without par) $10,257,826
Undistributed net investment income (loss) 2,892
Undistributed net realized gain (loss) on 12,074
investments
Unrealized net appreciation on investments 2,191,604
Net Assets applicable to Fund shares outstanding $12,464,396
============
Net Asset Value per share $13.93
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
Year Ended May 31, 1996
Investment income
<S> <C>
Dividends $523,211
Miscellaneous income
155
Gross investment income $523,366
Expenses
Investment adviser and administration fee 109,078
Shareowner servicing 17,102
Miscellaneous taxes 16,057
Professional fees 15,233
Filing and 10,444
registration fees
Printing and postage 6,542
Custodial fees 3,308
Other expenses 3,318
Total gross expenses 181,082
Less earnings (3,308)
credits
Net expenses 177,774
Net investment 345,592
income
Net realized gain (loss) on investments
Proceeds from sales 2,542,959
Less cost of securities sold based on identified cost (1,902,786)
Realized net gain 640,173
Unrealized gain (loss) on investments
End of period 2,191,604
Beginning of period 1,397,750
Increase in unrealized gain for the period 793,854
Net realized and unrealized gain on investments 1,434,027
Net increase in net assets resulting from operations $1,779,619
==========
</TABLE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS Year ended Year ended
May 31, 1996 May 31, 1995
From Operations
<S> <C> <C>
Net investment income $ 345,592 $325,747
Net realized (loss) gain on investments 640,173 42,419
Net increase (decrease) in unrealized appreciation 793,854 637,606
Net increase (decrease) in net assets 1,779,619 1,005,772
Dividends to Shareowners From
Net investment income (341,768) (371,430)
Capital gains distributions (630,728) -
807,123 634,342
Fund Share Transactions
Proceeds from sales of shares 2,282,709 1,844,615
Value of shares issued in reinvestment of dividends 950,785 368,278
3,233,494 2,212,893
Cost of shares redeemed (2,284,062) (2,571,123)
Net increase (decrease) in net assets from share transactions 949,432 (358,230)
Total increase (decrease) in net assets 1,756,555 276,112
Net Assets
Beginning of period 10,707,841 10,431,729
End of period $12,464,396 $ 10,707,841
Shares of the Fund Sold and Redeemed
Number of shares sold 165,713 153,971
Number of shares issued in reinvestment of dividends 67,575 29,409
233,288 183,380
Number of shares redeemed (167,597) (210,643)
Net Increase (Decrease) in Number of Shares Outstanding 65,691 (27,263)
====== =======
</TABLE>
INVESTMENTS
May 31, 1996
<TABLE>
<CAPTION>
Number Market
Issue of Cost Value
Shares
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (93.3%)
<S> <C> <C> <C>
Building (4.2%)
BMC West $4,500 $ 74,188 $78,750
Butler Manufacturing 2,500 60,890 94,375
SUB-TOTAL 135,078 173,125
Chemicals (0.6%)
RPM, Inc. 1,625 23,763 27,016
Computers (10.0%)
Apple Computer 1,000 32,551 26,125
Compaq Computer 1,000 36,201 48,625
Hewlett-Packard 1,000 41,638 106,750
Microsoft 700 70,040 83,125
Oracle 2,400 78,773 79,500
Quarterdeck Corp. 5,000 70,583 72,500
SUB-TOTAL 329,786 416,625
Computer Software (8.4%)
Adobe Systems 2,000 84,122 74,250
Informix 4,000 78,967 91,000
Intuit 1,500 56,731 78,000
Shiva 1,400 24,546 104,650
SUB-TOTAL 244,366 347,900
Food (1.6%)
Coca-Cola FEMSA S.A. ADR 2,400 57,093 69,300
Electric Utilities (2.3%)
Enersis S.A. ADR 3,200 91,624 94,000
Electronics (11.5%)
FLIR 3,200 41,655 44,800
GaSonics International 5,000 52,711 66,250
Interpoint 2,500 20,108 74,375
Merix 2,500 56,373 77,813
Motorola 1,200 65,543 80,250
Qualcomm 2,500 72,970 136,094
SUB-TOTAL 309,360 479,582
Financial Information (3.9%)
McGraw-Hill 2,000 89,380 93,750
Reuters Holdings PLC-ADR 1,000 43,333 69,625
SUB-TOTAL 132,713 163,375
Healthcare (2.4%)
United Healthcare 800 35,376 43,900
Cardinal Health 900 33,941 57,488
SUB-TOTAL 69,317 101,388
Machinery (4.5%)
Deere & Co. 2,000 79,849 83,250
Valley Forge 7,000 105,321 103,250
SUB-TOTAL 185,170 186,500
Medical Technology (7.6%)
Amgen 1,200 32,403 71,400
Johnson & Johnson 1,000 91,871 97,375
Liposome 4,000 21,665 80,000
Glaxo Wellcome plc ADR 2,500 55,379 65,313
SUB-TOTAL 201,318 314,088
Mining & Precious Metals (3.2%)
Cyprus Amax Minerals 1,100 33,054 26,400
Freeport McMoran Copper & Gold B 2,000 70,595 66,500
RTZ Corp PLC ADS 600 30,446 37,950
SUB-TOTAL 134,095 130,850
Oil & Gas Production (9.3%)
Atlantic Richfield 900 104,880 107,663
Noble Drilling 8,750 60,832 117,031
Williams Companies 1,200 60,536 60,300
YPF S.A. ADB 4,500 99,632 99,000
SUB-TOTAL 325,880 383,994
Paper & Paper Products (1.2%)
Aracruz Cellulose SA ADR 5,600 45,915 50,400
Photographic Supplies (1.5%)
Fuji Photo Film ADR 1,000 46,837 62,000
Retail (2.6%)
Nordstrom 2,100 85,980 107,100
Steel Producers (3.8%)
Nucor 1,200 64,623 66,000
Schnitzer Steel Industries 3,300 79,380 93,225
SUB-TOTAL 144,003 159,225
Telecommunications (6.9%)
Cincinnati Bell 2,400 43,614 127,500
PT Indostat ADR 2,000 69,719 68,500
Telefonica de Espana ADS 1,700 70,376 89,038
SUB-TOTAL 183,709 285,038
Transportation (6.0%)
Mesa Airlines 7,000 56,180 92,750
Southwest Airlines 3,100 86,905 85,250
Fritz Companies 2,000 29,732 69,000
SUB-TOTAL 172,817 247,000
Water Treatmment (1.8%)
Ionics 1,500 69,482 74,247
TOTAL INVESTMENTS (93.3%) $2,988,306 3,872,753
==========
Other Assets (net of liabilities) (6.7%) 278,029
TOTAL NET ASSETS (100%) $4,150,782
===========
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data per share of outstanding capital stock outstanding throughout each
period.
Year Year 2/3/94
Ending Ending (Inception)
May 31, May 31, May 31,
1996 1995 1994
<S> <C> <C> <C>
Net asset value at beginning of period $5.04 $4.69 $5.00
Income from investment operations
Net investment income (0.05) (0.04) (0.01)
Net gains or losses on
securities
(both realized and unrealized) 1.95 0.39 (0.30)
Total from investment operations 1.90 0.35 (0.31)
Less distributions
Dividends (from net investment income) 0.00 0.00 (0.01)
Distributions (from capital gains) (0.08) 0.00 0.00
Total distributions (0.08) 0.00 (0.01)
Net asset value at end of period $6.86 $5.04 $4.69
Total return 37.20% 7.46% (6.20)%
Ratios/supplemental data
Net assets ($000), end of period $4,151 $1,974 $952
Ratio of expenses to average net assets (not annualized) 1.94% 2.00% 0.62%
Ratio of net investment income to average net assets (not (0.79)% (0.82)% (0.35)%
annualized)
Portfolio turnover rate (not annualied) 22% 38% 6%
Average commission rate paid $0.0596
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1996
Assets
Investments, at value
<S> <C>
Common stocks (cost $2,988,306) $3,872,753
Cash 278,078
Dividends receivable 6,084
Organization expense, unamortized 2,401
Total Assets $4,159,316
Liabilities
Payable to affiliate 6,192
Other liabilities 2,342
Total Liabilities 8,534
Net assets $4,150,782
========
Fund Shares Outstanding 605,062
Analysis of Net Assets
Paid in capital (unlimited shares authorized, without par) $3,297,266
Undistributed net investment income (loss) (35,765)
Undistributed net realized gain (loss) on investments 4,834
Unrealized net appreciation on investments 884,447
Net Assets applicable to Fund shares $4,150,782
==========
Net Asset Value per Share $6.86
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Year Ended May 31, 1996
Investment income
<S> <C>
Dividends $30,163
Miscellaneous Income 149
Gross investment income $30,312
Expenses
Investment adviser and administation fee 25,375
Shareowner servicing 9,984
Filing and registration 5,883
Custodial Expenses 4,013
Professional 3,017
Miscellaneous taxes 2,410
Printing and postage 1,658
Other expenses 2,601
Total gross expenses 54,941
Less earnings credits (4,013)
Net expenses 50,928
Net investment income (loss) (20,616)
Net realized gain (loss) on investments
Proceeds from sales 564,467
Less cost of securities sold based on identified cost (462,235)
Realized net gain 102,232
Unrealized gain (loss) on investments
End of period 884,447
Beginning of period 137,726
Increase in unrealized gain for the period 746,721
Net realized and unrealized gain on investments 848,953
Net increase in net assets resulting from operations $828,337
=======
</TABLE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS Year ended Year ended
May 31, 1996 May 31, 1995
From Operations
<S> <C> <C>
Net investment income $(20,616) (12,307)
Net realized (loss) gain on investments 102,232 (41,304)
Net increase (decrease) in unrealized appreciation 746,721 170,599
Net increase (decrease) in net assets 828,337 116,988
Dividends to Shareowners From
Net investment income 0 0
Capital gains distributions (44,764) -
783,573 116,988
Fund Share Transactions
Proceeds from sales of shares 2,282,028 1,440,053
Value of shares issued in reinvestment of dividends 44,134 -
2,326,162 1,440,053
Cost of shares redeemed (933,301) (534,515)
Net increase (decrease) in net assets from share transactions 1,392,861 905,538
Total increase (decrease) in net assets 2,176,434 1,022,526
Net Assets
Beginning of period 1,974,348 951,822
End of period $4,150,782 $1,974,348
Shares of the Fund Sold and Redeemed
Number of shares sold 370,342 302,223
Number of shares issued in reinvestment of dividends 6,452 -
376,794 302,223
Number of shares redeemed (163,437) (113,544)
Net Increase (Decrease) in Number of Shares Outstanding 213,357 188,679
======= ========
</TABLE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - Organization
Amana Mutual Funds Trust (the "Trust") was established under Indiana Law as a
Business Trust on July 26, 1984.The Trust is registered as a no-load, open-end
diversified series investment 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. Two portfolio series have
been created to date, the Income Fund and the Growth Fund (collectively, the
"Funds").
NOTE 2 - Significant Accounting Policies
The following is a summary of the significant accounting policies followed by
the Trust.
Investments:
Securities traded on a national exchange and NASDAQ's National Market are valued
at the price carried by the composite tape of all national exchanges after 4
p.m. New York time or, in the absence of any sale on that date, the 4 p.m. bid
price. Securities traded in the over-the-counter market are valued at the
closing bid price.
The cost of securities is the same for accounting and Federal income tax
purposes. Realized gains and losses are recorded on the identified cost basis.
Cash dividends from equity securities are recorded as income on the ex-dividend
date. 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.
Federal income taxes:
The Funds have elected to be taxed as regulated investment companies under the
Internal Revenue Code and distribute substantially all of their taxable net
investment income and realized net gains on investments. Therefore, no provision
for Federal income taxes is required.
Dividends and distributions to shareowners:
Dividends and distributions to shareowners are recorded on the ex-dividend date.
Dividend payable dates are the end of May and December. Shareowners electing to
reinvest dividends and distributions purchase additional shares at the net asset
value on the payable date.
Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles 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 the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 3 - Transactions with Affiliated Persons
Under a contract approved by shareowners on December 28, 1989, Saturna Capital
Corporation provides investment advisory services and certain other
administrative and distribution services and facilities required by the Trust to
conduct its business. For such services, each Fund pays an annual fee equal to
.95% of its average daily net assets. For the year ended May 31, 1996, the
Income Fund and Growth Fund paid advisory fee expenses of $109,078 and $25,375,
respectively.
Saturna Capital acts as transfer agent for the Trust, for which it was paid
$17,102 and $9,934 for the Income and Growth Fund, respectively, for the year
ended May 31, 1996.
In the event that total expenses of a Fund in any one year (excluding interest,
brokerage commissions and federal and state taxes) exceed 2% of average daily
net assets, Saturna Capital is required to reimburse the Fund the amount of any
such excess. No waived or reimbursement was required for the Income and Growth
Fund.
The Trust acts as distributor of its own shares, except in those states in which
Investors National Corporation (a subsidiary of Saturna Capital Corporation) is
itself registered as a broker-dealer and acts as distributor without
compensation. Investors National Corporation is the primary stockbrokerage used
to effect portfolio transactions for the Trust, and was paid $11,690 in
commissions at deep-discount rates during the year ended May 31, 1996.
North American Islamic Trust, Inc., is the religious consultant to Saturna
regarding issues of Islamic principles under an agreement with Saturna as
adviser. From its advisory fee, Saturna pays a fee to North American Islamic
Trust, Inc. equal to .20% of the average daily net assets of the Trust. This fee
amounted to $28,348 for the year ended May 31, 1996. One trustee of the Trust is
also a trustee of North American Islamic Trust.
At inception, Amana Growth Fund reimbursed Saturna Capital $6,375 for
organizational expenses, which amount is being amortized evenly over 60 months.
An initial shareholder has agreed not to redeem more shares than any remaining
unamortized organizational expenses.
All trustees serve without compensation. The Trustees, officers and their
immediate families, and North American Islamic Trust as a group owned 7.49% of
the Income Fund's and 4.3% of the Growth Fund's outstanding shares on May 31,
1996.
NOTE 4 - Dividends
Income Fund dividends from net investment income were $.264 per share paid
December 31, 1995, and $.157 per share paid May 31, 1996. Income Fund
distributions from net realized long-term capital gains were $.066 per share
paid December 31, 1995, and $.696 per share paid May 31, 1996. The Growth Fund
distributions from net realized long-term capital gains were $.075 per share
paid May 31, 1996.
From its inception to May 31, 1996, the Income Fund has realized net gains from
sales of securities of $1,052,463 and has distributed realized net gains of
$1,040,390, while the Growth Fund has realized net gains from sales of
securities of $49,598 and has distributed realized net gains of $44,764.
NOTE 5 - Investments
At May 31, 1996, for Amana Income Fund the net unrealized appreciation of
investments of $2,191,604 comprised gross unrealized gains of $2,295,934 and
gross unrealized losses of $104,330. During the year ended May 31, 1996, the
Income Fund purchased $2,749,717 of securities and sold $2,542,959 of
securities. At May 31, 1996, for Amana Growth Fund the net unrealized
appreciation of investments of $884,447 comprised gross unrealized gains of
$967,047 and gross unrealized losses of $82,600. During the period ended May 31,
1996,the Fund purchased $1,713,603 of securities and sold $564,467 of
securities.
- -------------------------------------------------------------------------------
REPORT OF
- -------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
To the Board of Trustees and
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Shareowners of
- -------------------------------------------------------------------------------
Amana Mutual Funds Trust
- -------------------------------------------------------------------------------
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments,and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Income Fund and the Growth Fund
(constituting Amana Mutual Funds Trust, hereafter referred to as the "Trust") at
May 31, 1996, the results of each of their operations for the period then ended,
the changes in each of their net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits,which included confirmation of securities at May 31,
1996 by correspondence with the custodian, provide a reasonable basis for the
opinion expressed above.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
/s/ Price Waterhouse
Seattle, Washington
June 20, 1996
DISCUSSION OF FUND PERFORMANCE
(Unaudited)
Following the varied 1994 market, 1995 was generally a very strong year. In
1995, prices of both stocks and bonds rose, and continued upward in early 1996.
For the 12-month period ended May 31, 1996, Amana Income Fund provided
shareowners with a total return of 17.03%. Amana Growth provided a total return
of 37.20%.
Some comparable market index twelve-month total returns are the S&P 500
Composite (+28.44%), the Dow Jones Utility Index (-7.96%), and the S&P 400
MidCap Index (+28.44%). Since these unmanaged, expense-free indices are not
directly comparable to an actively managed portfolio that has transaction and
other costs (including advisory fees), it is useful to consider the performance
of other mutual funds. Comparable Lipper mutual fund averages are Equity-Income
Funds (+22.34%), Utility Funds (+15.38%), and Growth Funds (+27.34%).
When evaluating the performance of the Amana Funds, it is important to remember
their specialized nature, as well as a number of factors applicable to mutual
funds in general.
Amana Income Fund's primary objective is current income, with preservation of
capital the secondary objective. In following these objectives, the Income Fund
buys income-producing equity securities. Amana Growth Fund's primary objective
is long-term capital growth. The Funds may also hold cash when market conditions
appear uncertain. It is not the objective of either Fund to "beat" any specific
market index.
All mutual funds have investment restrictions that affect investment
performance. In addition to these other restrictions, Amana's Funds are
restricted to buying only U.S.-traded equity securities of companies whose
business operations are generally consistent with Islamic principles. This
special restriction affects performance in a number of ways. The Funds, for
example, are not allowed to earn interest on cash balances. Neither do the Funds
invest in businesses that have substantial earnings from interest, such as
banks.
The difficult environment for utility stocks had an adverse impact on the Income
Fund, which emphasizes income and contains a number of utility stocks to meet
that objective. On the other hand, the Growth Fund has no income requirements
and is able to focus more heavily on growth issues, which performed better in
the bull market of 1995-1996.
Comparison to S & P 500; Discussion
The following line graphs compare the Funds' performance to the Standard &
Poor's 500 Composite Index, a broad-based securities market index. To be
comparable, the S&P 500 data includes reinvested dividends. It is difficult to
compare an unmanaged expense-free index against actively managed portfolios
bearing expenses for management and transaction costs, such as the Amana Funds.
Chart (Grpahic) Omitted
S & P 500 Amana
Jun-86 $10,000 $10,000
Jul-86 $9,431 $9,870
Aug-86 $10,136 $10,500
Sep-86 $9,303 $10,020
Oct-86 $9,820 $10,430
Nov-86 $10,072 $10,610
Dec-86 $9,806 $10,399
Jan-87 $11,123 $11,313
Feb-87 $11,582 $11,685
Mar-87 $11,897 $11,746
Apr-87 $11,793 $11,644
May-87 $11,914 $11,521
Jun-87 $12,509 $11,875
Jul-87 $13,132 $12,154
Aug-87 $13,637 $12,326
Sep-87 $13,337 $12,056
Oct-87 $10,467 $9,636
Nov-87 $9,610 $9,181
Dec-87 $10,319 $9,615
Jan-88 $10,760 $9,931
Feb-88 $11,265 $10,269
Mar-88 $10,925 $9,874
Apr-88 $11,043 $10,017
May-88 $11,129 $10,060
Jun-88 $11,646 $10,458
Jul-88 $11,599 $10,591
Aug-88 $11,215 $10,491
Sep-88 $11,691 $10,814
Oct-88 $12,010 $10,992
Nov-88 $11,839 $10,748
Dec-88 $12,053 $10,905
Jan-89 $12,925 $11,402
Feb-89 $12,603 $11,233
Mar-89 $12,901 $11,233
Apr-89 $13,566 $11,631
May-89 $14,112 $11,938
Jun-89 $14,035 $11,892
Jul-89 $15,296 $12,512
Aug-89 $15,591 $12,742
Sep-89 $15,530 $12,742
Oct-89 $15,168 $12,442
Nov-89 $15,484 $12,592
Dec-89 $15,849 $12,907
Jan-90 $14,786 $12,284
Feb-90 $14,976 $12,355
Mar-90 $15,370 $12,544
Apr-90 $14,992 $12,201
May-90 $16,454 $12,994
Jun-90 $16,339 $13,042
Jul-90 $16,286 $13,078
Aug-90 $14,816 $12,216
Sep-90 $14,087 $11,893
Oct-90 $14,035 $11,833
Nov-90 $14,939 $12,479
Dec-90 $15,348 $12,469
Jan-91 $16,026 $12,811
Feb-91 $17,174 $13,533
Mar-91 $17,583 $13,717
Apr-91 $17,632 $13,680
May-91 $18,386 $14,047
Jun-91 $17,546 $13,565
Jul-91 $18,367 $14,047
Aug-91 $18,799 $14,406
Sep-91 $18,491 $14,517
Oct-91 $18,738 $14,690
Nov-91 $17,981 $14,381
Dec-91 $20,037 $15,417
Jan-92 $19,664 $15,066
Feb-92 $19,916 $15,154
Mar-92 $19,525 $14,803
Apr-92 $20,093 $15,166
May-92 $20,202 $15,154
Jun-92 $19,909 $14,951
Jul-92 $20,711 $15,471
Aug-92 $20,293 $15,243
Sep-92 $20,526 $15,116
Oct-92 $20,600 $15,027
Nov-92 $21,295 $15,471
Dec-92 $21,573 $15,706
Jan-93 $21,731 $15,642
Feb-93 $22,024 $15,950
Mar-93 $22,498 $16,504
Apr-93 $21,947 $16,362
May-93 $22,539 $16,709
Jun-93 $22,598 $16,540
Jul-93 $22,502 $16,631
Aug-93 $23,342 $17,294
Sep-93 $23,154 $17,190
Oct-93 $23,628 $17,554
Nov-93 $23,391 $17,086
Dec-93 $23,666 $17,528
Jan-94 $24,464 $17,980
Feb-94 $23,788 $17,422
Mar-94 $22,744 $16,664
Apr-94 $23,031 $16,771
May-94 $23,392 $16,604
Jun-94 $22,819 $15,991
Jul-94 $23,567 $16,591
Aug-94 $24,534 $16,959
Sep-94 $23,935 $16,959
Oct-94 $24,471 $16,986
Nov-94 $23,580 $16,359
Dec-94 $23,929 $16,396
Jan-95 $24,559 $16,730
Feb-95 $25,514 $17,091
Mar-95 $26,267 $17,493
Apr-95 $27,039 $18,021
May-95 $28,118 $18,257
Jun-95 $28,770 $18,426
Jul-95 $29,674 $18,638
Aug-95 $29,748 $18,709
Sep-95 $31,003 $19,232
Oct-95 $30,892 $19,528
Nov-95 $32,249 $20,277
Dec-95 $32,871 $20,899
Jan-96 $33,985 $21,058
Feb-96 $34,301 $20,827
Mar-96 $34,630 $21,116
Apr-96 $35,139 $21,261
May-96 $36,043 $21,365
This graph shows that $10,000 invested in Amana Income at inception (June 1986)
would have grown to $21,365 at the end of May 1996. If $10,000 could have been
invested in the S&P 500 at the end of June 1986, that would have grown to
$36,043.
S & P 500 Amana
2/3/94 $10,000 $10,000
Feb-94 $9,742 $10,140
Mar-94 $9,317 $9,680
Apr-94 $9,437 $9,480
May-94 $9,591 $9,380
Jun-94 $9,356 $9,080
Jul-94 $9,663 $9,500
Aug-94 $10,059 $9,720
Sep-94 $9,814 $9,360
Oct-94 $10,034 $9,940
Nov-94 $9,669 $9,520
Dec-94 $9,812 $9,360
Jan-95 $10,070 $9,340
Feb-95 $10,461 $9,520
Mar-95 $10,770 $9,800
Apr-95 $11,087 $9,940
May-95 $11,529 $10,080
Jun-95 $11,796 $10,940
Jul-95 $12,167 $11,560
Aug-95 $12,197 $11,700
Sep-95 $12,712 $11,860
Oct-95 $12,667 $11,820
Nov-95 $13,223 $12,340
Dec-95 $13,478 $12,640
Jan-96 $13,935 $12,520
Feb-96 $14,064 $12,840
Mar-96 $14,199 $12,820
Apr-96 $14,408 $13,620
May-96 $14,778 $13,830
The second graph shows that $10,000 invested in Amana Growth at inception
(February 1994) would have grown to $13,830 at the end of May 1996. If $10,000
could have been invested in the S&P 500 at the beginning of February 1994, that
would have grown to $14,778 over that same period.
EXPERIENCE IS IMPORTANT
Amana Mutual Funds Trust began operations in 1986. Saturna Capital, with
extensive experience in mutual funds,invests the Fund portfolios and handles
their operations.
The Trust is managed by a Board of five Trustees, all serving without
compensation:
Trustees
Bassam Osman, MD, Chairman
Nicholas Kaiser, MBA, President
M. Yaqub Mirza, Ph.D., Treasurer
Jamal M. al-Barzinji, Ph.D
Iqbal Unus, Ph.D.
Officers
Bassam Osman, Chairman
Nicholas Kaiser, President
M. Naziruddin Ali, Vice President
James D. Winship, Secretary
M. Yaqub Mirza, Treasurer
Meredith Ross, Asst. Treasurer
Iqbal Unus, Asst. Secretary
Saturna Capital
Mutual Funds
Investment Adviser
and
Administrator
NORTH AMERICAN ISLAMIC TRUST
Religious Consultant
This report is for the information of the shareowners of the Trust. It is not
authorized for distribution to prospective investors unless it is accompanied or
preceded by an effective prospectus.
AMANA
MUTUAL FUNDS TRUST
INCOME FUND
GROWTH FUND
MAY 31, 1996
REPORT
1300 No. State Street
Bellingham WA 98225-4730
1-800/SATURNA
(1-800/728-8762)
e-mail: [email protected]
