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
INCOME FUND AMANA MUTUAL FUNDS
TRUST
INVESTMENTS
May 31, 1996
Number of
Issue Shares Cost Market Value
COMMON STOCKS (94.9%)
Building (1.9%)
Hanson Trust plc ADS 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
SUBTOTAL 659,205 729,063
Chemicals (7.1%)
ARCO Chemical 6,550 238,792 337,188
Chemed 10,000 356,116 376,250
Lawler International 14,738 116,591 169,487
SUBTOTAL 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
SUBTOTAL 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
SUBTOTAL 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
SUBTOTAL 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
SUBTOTAL 446,411 425,750
Paint & 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
SUBTOTAL 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
SUBTOTAL 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
SUBTOTAL 962,367 1,241,071
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
AMANA MUTUAL FUNDS TRUST INCOME FUND
FINANCIAL HIGHLIGHTS
Selected data per share of outstanding capital stock outstanding
throughout each period.
<TABLE>
<CAPTION>
For Year Ended May 31
Jun. 23
1986 (in-
ception to
1996 1995 1994 1993 1992 1991 1990 1989 1988 5/31/87
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning 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 9.91 1.67 (1.35) 1.53
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/Suplemental 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 annualized) 3.06% 3.11% 2.22% 2.65% 2.75% 3.73% 3.67% 3.85% 3.17% 3.53%
Portfolio turnover rate 24% 29% 21% 29% 19% 29% 19% 71% 66% 55%
Average commission
rate paid $0.0460
</TABLE>
(The accompanying notes are an integral part of these financial
statements)
AMANA MUTUAL FUNDS TRUST INCOME STATEMENT
STATEMENT OF ASSETS AND LIABILITIES
As of May 31, 1996
Assets
Investment, at value
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 investments 12,074
Unrealized net appreciation
on investments 2,191,604
Net assets applicable to
Fund shares outstanding $ 12,464,396
Net Asset Value per Shares $ 13.93
STATEMENT OF OPERATIONS
Year Ended May 31, 1996
Investment Income
Dividends $ 523,211
Miscellaneous income 155
Gross investment income $ 523,366
Expenses
Investment adviser and
administration fee 109,078
Shareowner servicing 17,102
Miscellaenous taxes 16,057
Professional fees 15,233
Filing and registration fees 10,444
Printing and postage 6,542
Custodial fees 3,308
Other expenses 3,318
Total gross expenses 181,082
Less earnings credits (3,308)
Net expenses 177,774
Net investment income 345,592
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 gain 640,173
Unrealized gain (loss) on investments
End of period 2,191,604
Beginning of period 1,397,786
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
(The accompanying notes are an integral part of these financial
statements)
AMANA MUTUAL FUNDS TRUST INCOME STATEMENT
STATEMENTS OF CHANGES IN NET ASSETS
Year ended Year ended
May 31, 1996 May 31, 1995
INCREASE (DECRESE) IN NET ASSETS
From operations
Net investment income $ 345,592 $ 325,474
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 Shareholders 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 shares
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)
AMANA MUTUAL FUNDS TRUST GROWTH FUND
INVESTMENTS
May 31, 1996
Number Market
Issue of Shares Cost Value
COMMON STOCKS (93.3%)
Building (4.2%)
BMC West 4,500 $ 74,188 $ 78,750
Butler Manufcturing 2,500 60,890 94,375
SUBTOTAL 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 48,635
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
SUBTOTAL 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
SUBTOTAL 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
SUBTOTAL 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
SUBTOTAL 132,713 163,375
Healthcare (2.4%)
United Healthcare 800 35,376 43,900
Cardinal Health 900 33,941 57,488
SUBTOTAL 69,317 101,388
Machinery (4.5%)
Deere & Co. 2,000 79,849 83,250
Valley Forge 7,000 105,321 103,250
SUBTOTAL ` 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
SUBTOTAL 201,318 314,088
Mining & Precious Metals (3.2%)
Cyprus Amax Minterals 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
SUBTOTAL 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
SUBTOTAL
325,880 383,994
Paper & Paper Products (1.2%)
Aracruz Cellulos SSA 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
SUBTOTAL 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
SUBTOTAL 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
SUBTOTAL 172,817 247,000
Water Treatment (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
AMANA MUTUAL FUNDS TRUST GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected data per share of outstanding capital stock outstanding
throughout each period
Year Year 2/3/94
Ending Ending (Inception)
May 31, 1996 May 31, 1995 May 31, 1994
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 expense to
average net assets
(not annualized) 1.94% 2.00% 0.62%
Ratio of net investment
income to average
net assets (not
annualized) (0.79)% (0.82)% (0.35)%
Portfolio turnover
rate (not annualized) 22% 38% 6%
Average commision
rate paid $0.0596
AMANA MUTUAL FUNDS TRUST GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1996
Assets
Investment, at value
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
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 outstanding $ 4,150,782
Net Asset Value per Share $6.86
AMANA MUTUAL FUNDS TRUST GROWTH FUND
STATEMENT OF OPERATIONS
For the Year Ended May 31, 1996
Investment income
Dividends $30,163
Miscellaneous Income 149
Gross Investment Income $ 30,312
Expenses
Investment adviser and
administration 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
(The accompanying notes are an integral part of these financial
statements)
AMANA MUTUAL FUNDS TRUST GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
Year ended Year ended
May 31, 1996 May 31, 1995
INCREASE (DECRESE) IN NET ASSETS
From Operations
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 shares
transactions 1,392,861 905,583
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
(The accompanying notes are an integral part of these financial
statements)
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.
PRICE WATERHOUSE LLP
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.
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
June 1986 $10,000 $10,000
July 1986 9,431 9,870
August 1986 10,136 10,500
September 1986 9,303 10,020
October 1986 9,820 10,430
November 1986 10,072 10,610
December 1986 9,806 10,399
January 1987 11,123 11,313
February 1987 11,582 11,685
March 1987 11,897 11,746
April 1987 11,793 11,644
May 1987 11,914 11,521
June 1987 12,509 11,875
July 1987 13,132 12,154
August 1987 13,637 12,326
September 1987 13,337 12,056
October 1987 10,467 9,636
November 1987 9,610 9,181
December 1987 10,319 9,615
January 1988 10,760 9,931
February 1988 11,265 10,269
March 1988 10,925 9,874
April 1988 11,043 10,017
May 1988 11,129 10,060
June 1988 11,646 10,458
July 1988 11,599 10,591
August 1988 11,215 10,491
September 1988 11,691 10,814
October 1988 12,010 10,992
November 1988 11,839 10,748
December 1988 12,053 10,905
January 1989 12,925 11,402
February 1989 12,603 11,233
March 1989 12,901 11,233
April 1989 13,566 11,631
May 1989 14,112 11,938
June 1989 14,035 11,892
July 1989 15,296 12,512
August 1989 15,591 12,742
September 1989 15,530 12,742
October 1989 15,168 12,442
November 1989 15,484 12,592
December 1989 15,849 12,907
January 1990 14,786 12,284
February 1990 14,976 12,355
March 1990 15,370 12,544
April 1990 14,992 12,201
May 1990 16,454 12,994
June 1990 16,339 13,042
July 1990 16,286 13,078
August 1990 14,816 12,216
September 1990 14,087 11,893
October 1990 14,035 11,833
November 1990 14,939 12,479
December 1990 15,348 12,469
January 1991 16,026 12,811
February 1991 17,174 13,533
March 1991 17,583 13,717
April 1991 17,632 13,680
May 1991 18,386 14,047
June 1991 17,546 13,565
July 1991 18,367 14,047
August 1991 18,799 14,406
September 1991 18,491 14,517
October 1991 18,738 14,690
November 1991 17,981 14,381
December 1991 20,037 15,417
January 1992 19,664 15,066
February 1992 19,916 15,154
March 1992 19,525 14,803
April 1992 20,093 15,166
May 1992 20,202 15,154
June 1992 19,909 14,951
July 1992 20,711 15,471
August 1992 20,293 15,243
September 1992 20,526 15,116
October 1992 20,600 15,027
November 1992 21,295 15,471
December 1992 21,573 15,706
January 1993 21,731 15,642
February 1993 22,024 15,950
March 1993 22,498 16,504
April 1993 21,947 16,362
May 1993 22,539 16,709
June 1993 22,598 16,540
July 1993 22,502 16,631
August 1993 23,342 17,294
September 1993 23,154 17,190
October 1993 23,628 17,554
November 1993 23,391 17,086
December 1993 23,666 17,528
January 1994 24,464 17,980
February 1994 23,788 17,422
March 1994 22,744 16,664
April 1994 23,031 16,771
May 1994 23,392 16,604
June 1994 22,819 15,991
July 1994 23,567 16,571
August 1994 24,534 16,959
September 1994 23,935 16,959
October 1994 24,471 16,986
November 1994 23,580 16,359
December 1994 23,929 16,396
January 1995 24,559 16,730
February 1995 25,514 17,091
March 1995 26,267 17,493
April 1995 27,039 18,021
May 1995 28,118 18,257
June 1995 28,770 18,426
July 1995 29,674 18,638
August 1995 29,748 18,709
September 1995 31,003 19,232
October 1995 30,892 19,528
November 1995 32,249 20,277
December 1995 32,871 20,899
January 1996 33,985 21,058
February 1996 34,301 20,827
March 1996 34,630 21,116
April 1996 35,139 21,261
May 1996 36,043 21,365
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.
S&P 500 Amana
2/3/94 $10,000 $10,000
February 1994 9,742 10,140
March 1994 9,317 9,680
April 1994 9,437 9,480
May 1994 9,591 9,380
June 1994 9,356 9,080
July 1994 9,663 9,500
August 1994 10,059 9,720
September 1994 9,814 9,360
October 1994 10,034 9,940
November 1994 9,669 9,520
December 1994 9,812 9,360
January 1995 10,070 9,340
February 1995 10,461 9,520
March 1995 10,770 9,800
April 1995 11,087 9,940
May 1995 11,529 10,080
June 1995 11,796 10,940
July 1995 12,167 11,560
August 1995 12,197 11,700
September 1995 12,712 11,860
October 1995 12,667 11,820
November 1995 13,223 12,340
December 1995 13,478 12,640
January 1996 13,935 12,520
February 1996 14,064 12,840
March 1996 14,199 12,820
April 1996 14,408 13,620
May 1996 14,779 13,830
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
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]
