AMANA
INCOME FUND GROWTH FUND
ANNUAL REPORT
MAY 31, 1997
Graphic Omitted
It's been another very good year for stock market investors. Amana Trust's
assets are now $22.5 million, up a healthy 35% for the year. Our 2,300
shareowner accounts are spread to 44 states and 22 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 23.6% -
a good performance considering its income-oriented nature. For the past five
years, total return has averaged 11.8% per year.
Smaller companies underperformed the large-cap market during the last year,
and the GROWTH FUND appreciated just 4.5%. For the past three years, Amana
Growth Fund's total return has averaged 15.6% per year. In comparison, the
S&P 500 (large caps) provided a total return of 28.9% and the Russell 2000
(smaller caps), 7.4% for the last year.
Our POSITIVE OUTLOOK for the next year is based upon an improving US economy.
GDP should continue to increase at 2-3%, and inflation worries are remote.
Consumer confidence is high, fueled by increasing real incomes and
productivity. World economies are improving. 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 Amana Income Fund's 11 years of successful
operation. One of the lessons of the marketplace is that experience matters.
Demonstrated capability to provide successful administration 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 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 23, 1997
<PAGE>
DISSCUSSION OF FUND PERFORMANCE
(GRAPHIC OMMITTED)
Stocks continue to do well. The excellent returns for the 1996 fiscal year
continued for the year ended May 31, 1997. Amana Income Fund's total return
was 23.6% (vs. 17.0% in 1996), and Amana Growth Fund's total return was 4.5%
(vs. 37.2% in 1996).As usual, market results varied by sector. The bigger
companies did best, as evidenced by twelve-month total return for the S&P 500
Composite (+28.9%). Smaller companies fared less well, as shown by the
Russell 2000 (+7.4%) and the S&P 600 SmallCap Index (+12.6%). 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 (+22.2%),
Utility Funds (+13.2%), and Growth Funds (+20.0%).
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. For the year ended May 31, 1997, the S&P Banks Composite Index
provided a total return of 43%.
COMPARISON TO MARKET INDICES
The following line graphs compare Fund performances to representative market
indices. The index returns include reinvested dividends and don't allow for
operating expenses such as those paid by all mutual funds.
The first graph shows that $10,000 invested in Amana Income ten years ago (May
1987) would have grown to $22,927 at the end of May 1997. While not strictly
comparable because Islamic restrictions prevent the Fund
<PAGE>
ANNUAL REPORT
(Graphic Omitted)
from investing in some of the its largest market sectors, the S&P 500
Composite Index is the traditional U.S. securities market benchmark. If
$10,000 could have been invested in the S&P 500 at the end of May 1987, that
would have grown to $37,716 over the same 10 years.
VALUE OF A 10-YEAR $10,000 INVESTMENT IN AMANA INCOME FUND COMPARED TO S & P
500
Average Annual Return
- ----------------------
1 year 5 year 10 year
- ------ ------- --------
+23.6 +11.8 +8.7
Date S&P 500 Amana
May-87 $10,000 $10,000
May-97 $37,716 $22,927
(Graph Omitted)
The second graph shows that $10,000 invested in Amana Growth at inception
(February 1994) would have grown to $14,488 at the end of May 1997. Amana
Growth is switching its comparison to the Russell 2000 Index this year, as the
Russell 2000 Index is more representative of the mid- and smaller-cap growth
companies that make up the Amana Growth Fund. If $10,000 could have been
invested in the Russell 2000 at the beginning of February 1994, that would
have grown to $14,967 over that same period. If $10,000 could have been
invested in the S&P 500 Composite Index, an average of large-cap stocks
previously used as comparison by Amana Growth, the value would have grown to
$19,123 over the same period.
VALUE OF $10,000 INVESTMENT ATINCEPTION IN AMANA GROWTH FUND COMPARED TO
RUSSEL 2000 INDEX
Average Annual Return
- ----------------------
1 year Life of Fund
- ------- ------------
+4.8 +15.6
Date Russell 2000 Amana
2/3/94 $10,000 $10,000
2/3/94 $14,967 $14,488
(Graph Omitted)
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
Amana Mutual Funds Trust
We have audited the accompanying statement of assets and liabilities of the
Amana Income Fund and the Amana Growth Fund, each a series of shares of the
Amana Mutual Funds Trust, including the schedules of investments as of May 31,
1997, and the related statements of operations and changes in net assets and
the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management.
Our responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial statements and
financial highlights presented for the year ended May 31, 1996 and prior were
audited by other auditors whose report dated June 20, 1996, expressed an
unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of May 31, 1997, by correspondence with the custodian. Our audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion the 1997 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Amana Income Fund and Amana Growth Fund as of May 31, 1997, the results of
their operations, the changes in their net assets and their financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
June 13, 1997
<PAGE>
INCOME
INVESTMENTS
ANNUAL REPORTS
(GRAPHIC OMITTED)
<TABLE>
<CAPTION>
Number Market
Issue of Shares Cost Value
- ------------------------------------------ --------- ----------- -----------
<S> <C> <C> <C>
COMMON STOCKS (97.3%)
BUSINESS SERVICES (2.5%)
Dun & Bradstreet 6,500 123,900 169,812
Cognizant 6,500 177,891 240,500
----------- -----------
SUB-TOTAL - 301,791 410,312
CHEMICALS (5.1%)
ARCO Chemical 6,500 238,792 300,625
Chemed 10,000 356,116 365,000
Lawter International 14,738 116,591 169,487
----------- -----------
SUB-TOTAL - 711,499 835,112
DIVERSIFIED OPERATIONS (1.6%)
Canadian Pacific Ltd. 10,000 266,577 265,000
MACHINERY (5.0%)
Manitowoc Company 18,000 276,657 805,500
MEDICAL (12.5%)
American Home Products 10,000 242,862 762,500
Bristol-Myers Squibb 12,000 261,835 880,500
Glaxo-Wellcome plc ADR 10,000 260,427 402,500
----------- -----------
SUB-TOTAL - 765,124 2,045,500
MINING (6.6%)
ASARCO 20,000 578,558 622,500
RTZ Corp PLC ADS 6,500 386,557 453,375
----------- -----------
SUB-TOTAL - 965,115 1,075,875
OIL & GAS PRODUCTION (12.0%)
Atlantic Richfield 4,000 447,255 582,000
Exxon 10,000 307,279 592,500
Mobil 3,500 395,105 489,563
Enron 7,000 282,000 285,250
----------- -----------
SUB-TOTAL - 1,431,639 1,949,313
PAPER & PAPER PRODUCTS (4.3%)
Consolidated Papers 4,000 218,215 218,000
Boise Cascade 13,000 426,205 494,000
----------- -----------
SUB-TOTAL - 644,420 712,000
PAINT AND ALLIED PRODUCTS (2.4%)
R P M, Inc 20,312 182,267 385,928
TELECOMMUNICATIONS (17.7%)
BCE, Inc 26,000 436,370 689,000
Cable & Wireless PLC ADR 20,000 408,073 502,500
GTE 10,000 410,441 441,250
SBC Communications 10,240 375,304 599,040
Telefonica de Espana, ADR 7,500 202,956 655,313
----------- -----------
SUB-TOTAL - 1,833,144 2,887,103
TOOLS (3.2%)
Regal-Beloit Corporation 20,000 357,762 532,500
UTILITIES - ELECTRIC (18.3%)
Edison International 10,000 201,570 233,750
Enova Corporation 22,000 482,336 519,750
FPL Group 10,000 344,874 465,000
Idaho Power 15,000 405,839 450,000
NIPSCO Industries 10,000 362,973 405,000
Pacific Gas & Electric 20,000 458,942 462,500
Washington Water Power 25,000 441,582 450,000
----------- -----------
SUB-TOTAL - 2,698,116 2,986,000
UTILITIES -WATER & GAS (6.1%)
Peoples Energy 14,000 380,014 497,000
Piedmont Natural Gas 20,200 286,927 492,375
----------- -----------
SUB-TOTAL - 666,941 989,375
TOTAL INVESTMENTS (97.3%) - $11,101,052 $15,879,518
=========== ===========
Other Assets (net of liabilities) (2.7%) - - 452,060
-----------
TOTAL NET ASSETS (100%) - - $16,331,578
===========
</TABLE>
<PAGE>
INCOME
FINANCIAL HIGHLIGHTS
ANNUAL REPORT
(GRAPHIC OMITTED)
For Year Ended May 31
<TABLE>
<CAPTION>
Selected data per share of outstanding capital stock outstanding throughout each period.
Jun.23
For Year Ended May 31 1986 (in-
- ------------------------------------------
ception) to
1997 1996 1995 1994 1993 1992 1991 1990 1989
----------- -------- -------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD $ 13.93 $ 12.92 $ 12.18 $ 12.86 $11.94 $11.36 $10.86 $10.39 $ 9.11
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.37 0.42 0.38 0.30 0.32 0.32 0.39 0.38 0.38
Net gains or losses on securities
(both realized and unrealized) 2.88 1.76 0.80 (0.36) 0.92 0.58 0.46 0.53 1.29
----------- -------- -------- -------- ------- ------- ------- ------- -------
Total from investment operations 3.25 2.18 1.18 (0.06) 1.24 0.90 0.85 0.91 1.67
LESS DISTRIBUTIONS
Dividends (from net investment
income) (0.43) (0.41) (0.44) (0.30) (0.32) (0.32) (0.35) (0.44) (0.39)
Distributions (from capital gains) (0.14) (0.76) 0.00 (0.32) 0.00 0.00 0.00 0.00 0.00
----------- -------- -------- -------- ------- ------- ------- ------- -------
Total distributions (0.57) (1.17) (0.44) (0.62) (0.32) (0.32) (0.35) (0.44) (0.39)
NET ASSET VALUE AT END
OF PERIOD $ 16.61 $ 13.93 $ 12.92 $ 12.18 $12.86 $11.94 $11.36 $10.86 $10.39
TOTAL RETURN 23.62% 17.03% 9.95% (0.63)% 10.26% 7.88% 8.11% 8.85% 18.86%
RATIOS / SUPPLEMENTAL DATA
- ------------------------------------------
Net assets ($000), end of period $ 16,332 $12,464 $10,708 $10,432 $9,398 $6,913 $5,868 $4,760 $3,645
Ratio of expenses to ave. net
assets (not annualized) 1.54% 1.57% 1.56% 1.58% 1.58% 1.58% 1.66% 1.76% 1.88%
Ratio of net investment income to
ave. net assets (not annualized) 2.19% 3.06% 3.11% 2.22% 2.65% 2.75% 3.73% 3.67% 3.85%
Portfolio turnover rate 14% 24% 29% 21% 29% 19% 29% 19% 71%
Average commission rate paid $ 0.0336 $0.0460
For Year Ended May 31
- ------------------------------------------
ception) to
1988 5/31/1987
--------- -----------
<S> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD $ 10.73 $ 10.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.30 0.28
Net gains or losses on securities
(both realized and unrealized) (1.65) 1.24
--------- -----------
Total from investment operations (1.35) 1.52
LESS DISTRIBUTIONS
Dividends (from net investment
income) (0.27) (0.28)
Distributions (from capital gains) 0.00 (0.51)
--------- -----------
Total distributions (0.27) (0.79)
NET ASSET VALUE AT END
OF PERIOD $ 9.11 $ 10.73
TOTAL RETURN (12.68)% 15.21%
RATIOS / SUPPLEMENTAL DATA
- ------------------------------------------
Net assets ($000), end of period $ 3,559 $ 3,189
Ratio of expenses to ave. net
assets (not annualized) 2.07% 1.81%
Ratio of net investment income to
ave. net assets (not annualized) 3.17% 3.53%
Portfolio turnover rate 66% 55%
Average commission rate paid
</TABLE>
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.)
(GRAPH OMITTED)
To illustrate investment risk, the chart shows total return for each of the
last 10 fiscal years. While the average annual return has been 8.7%, returns
in individual years varied from -12.6% (1988) to +23.6% (1997).
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
INCOME
(GRAPHIC OMITTED)
As of May 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investments, at value
Common stocks (cost $11,101,053) $ 15,879,518
Cash 398,423
Dividends receivable 71,494
Insurance deposit 2,529
----------------------
Total Assets - $16,351,964
-----------
LIABILITIES
Payable to affiliate 15,473
Other liabilities 4,913
----------------------
Total liabilities - 20,386
-----------
NET ASSETS - $16,331,578
===========
FUND SHARES OUTSTANDING - 983,352
ANALYSIS OF NET ASSETS
Paid in capital (unlimited shares authorized, without par) $ 11,489,829
Undistributed net realized gain (loss) on investments 63,284
Unrealized net appreciation on investments 4,778,465
----------------------
Net Assets applicable to Fund shares outstanding - $16,331,578
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE - $ 16.61
===========
</TABLE>
<PAGE>
INCOME
STATMENT OF OPERATIONS
Year Ended May 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 576,318
Miscellaneous income 438
-----------
Gross investment income - $ 576,756
EXPENSES
Investment adviser and administration fee 136,282
Shareowner servicing 22,194
Filing and registration fees 17,981
Miscellaneous taxes 15,949
Professional fees 13,623
Printing and postage 8,561
Other expenses 4,436
Custodial fees 2,525
-----------
Total gross expenses 221,551
Less earnings credits (2,525)
-----------
Net expenses - 219,026
----------
Net investment income - 357,730
----------- ----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
Proceeds from sales 1,888,481
Less cost of securities sold based on identified cost 1,699,543
-----------
Realized net gain - 188,938
-----------
UNREALIZED GAIN (LOSS) ON INVESTMENTS
End of period 4,778,465
Beginning of period 2,191,604
-----------
Increase in unrealized gain for the period - 2,586,861
----------- ----------
Net realized and unrealized gain on investments - 2,775,799
----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS - $3,133,529
==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS Year ended Year ended
May 31, 1997 May 31, 1996
-------------- --------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 357,730 $ 345,592
Net realized (loss) gain on investments 188,938 640,173
Net increase (decrease) in unrealized appreciation 2,586,861 793,854
-------------- --------------
Net increase (decrease) in net assets 3,133,529 1,779,619
DIVIDENDS TO SHAREOWNERS FROM
Net investment income (410,453) (341,768)
Capital gains distributions (135,100) (630,728)
-------------- --------------
(545,553) 807,123
-------------- --------------
FUND SHARE TRANSACTIONS
Proceeds from sales of shares 3,573,470 2,282,709
Value of shares issued in reinvestment of dividends 533,571 950,785
-------------- --------------
4,107,041 3,233,494
Cost of shares redeemed (2,827,835) (2,284,062)
-------------- --------------
Net increase (decrease) in net assets from share transactions 1,279,206 949,432
-------------- --------------
Total increase (decrease) in net assets 3,867,182 1,756,555
NET ASSETS
Beginning of period 12,464,396 10,707,841
-------------- --------------
End of period $ 16,331,578 $ 12,464,396
============== ==============
(including undistributed net income of (43,360) for May 31, 1997)
Shares of the Fund Sold and Redeemed
Number of shares sold 338,478 165,713
Number of shares issued in reinvestment of dividends 34,497 67,575
-------------- --------------
372,975 233,288
Number of shares redeemed (284,180) (167,597)
-------------- --------------
Net Increase (Decrease) in Number of Shares Outstanding 88,795 65,691
============== ==============
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
<PAGE>
GROWTH
(GRAPHIC OMITTED)
INVESTMENTS
<TABLE>
<CAPTION>
Number Market
Issue of Shares Cost Value
- -------------------------------- --------- -------- --------
<S> <C> <C> <C>
COMMON STOCKS (95.0%)
AUTO PARTS (1.7%)
Genuine Parts 3,000 $ 89,355 $100,500
BUILDING (2.3%)
BMC West* 6,000 95,997 79,500
Champion Enterprises* 3,000 60,485 55,125
-------- --------
SUB-TOTAL - 156,482 134,625
CHEMICALS (1.5%)
RPM, Inc. 4,625 71,869 87,875
COMPUTER HARDWARE (10.5%)
Advanced Digital Information* 5,000 15,230 77,500
Apple Computer* 3,000 76,382 49,875
Compaq Computer* 2,000 92,663 216,000
Hewlett-Packard 2,000 41,638 103,000
Microsoft* 1,400 70,040 173,600
-------- --------
SUB-TOTAL - 295,953 619,975
COMPUTER SOFTWARE (8.0%)
Adobe Systems 3,000 115,558 133,875
Intuit* 2,500 94,298 67,813
Olicom A/S* 3,000 50,357 52,875
Oracle* 2,400 78,773 111,900
Phamis* 5,000 59,622 106,250
-------- --------
SUB-TOTAL - 398,608 472,713
ELECTRONICS (12.8%)
FLIR* 8,000 109,013 128,000
GaSonics International* 12,000 110,311 142,500
Merix* 5,500 101,978 89,375
Micron Technology 3,000 96,873 127,500
Motorola 1,800 98,916 119,475
Qualcomm* 2,500 72,970 120,625
World Access* 2,000 18,819 33,250
-------- --------
SUB-TOTAL - 608,880 760,725
</TABLE>
<PAGE>
GROWTH
(GRAPHIC OMITTED)
AMANA
INVESTMENTS
<TABLE>
<CAPTION>
Number Market
Issue of Shares Cost Value
- ----------------------------------- --------- -------- --------
<S> <C> <C> <C>
FINANCIAL INFORMATION (2.5%)
Hutchison Whampoa ADR 2,000 $ 62,091 $ 81,250
Reuters Holdings PLC-ADR 1,000 43,333 68,453
-------- --------
SUB-TOTAL - 105,424 149,703
FOOD PRODUCTION (3.0%)
Pioneer Hi-Bred International 1,100 77,929 76,725
Potash Corp of Saskatchewan 1,200 87,709 98,550
-------- --------
SUB-TOTAL - 165,638 175,275
MACHINERY (6.6%)
Crane 3,000 76,234 123,000
Deere & Co. 3,000 117,166 153,375
Valley Forge 7,000 105,321 114,625
-------- --------
SUB-TOTAL - 298,721 391,000
MINING (3.3%)
Cyprus Amax Minerals 4,000 96,600 97,500
Freeport McMoran Copper & Gold B 2,000 70,595 58,250
RTZ Corp PLC ADS 600 30,466 41,850
-------- --------
SUB-TOTAL - 197,661 197,600
OIL & GAS PRODUCTION (7.7%)
Atlantic Richfield 900 104,880 130,950
Noble Drilling* 5,000 35,832 108,750
Williams Companies 1,800 60,536 79,425
YPF S.A. ADB 4,500 99,630 134,438
-------- --------
SUB-TOTAL - 300,878 453,563
PAPER & PUBLISHING (1.8%)
McGraw-Hill 2,000 89,380 109,250
PHARMACEUTICALS (10.3%)
Amgen* 1,200 32,403 80,250
Glaxo Wellcome plc ADR 2,500 55,379 100,625
Johnson & Johnson 2,000 91,871 119,750
Ligand Pharmaceuticals* 4,000 58,132 47,500
Liposome* 4,000 21,665 102,000
Novo-Nordisk A/S ADR 2,000 111,090 109,750
Urologix* 3,000 48,106 50,250
-------- --------
SUB-TOTAL - 418,646 610,125
</TABLE>
<PAGE>
GROWTH
(GRAPHIC OMITTED)
INVESTMENTS
ANNUAL REPORT
<TABLE>
<CAPTION>
Number Market
Issue of Shares Cost Value
- ------------------------------------------ --------- ---------- ----------
<S> <C> <C> <C>
PHOTOGRAPHIC SUPPLIES (1.3%)
Fuji Photo Film ADR 2,000 $ 46,837 $ 77,250
REAL ESTATE (0.8%)
Intrawest* 3,000 41,728 50,250
RETAIL (5.7%)
Gap 3,500 111,606 119,875
Nike, Class B 1,200 68,493 68,700
Seattle Film Works* 12,500 131,576 146,875
---------- ----------
SUB-TOTAL - 311,675 335,450
TELECOMMUNICATIONS (4.8%)
PT Indostat ADR 2,000 69,719 59,750
Tele Danmark A/S ADR 3,000 76,615 74,250
Telefonica de Espana ADS 1,700 70,376 148,537
---------- ----------
SUB-TOTAL - 216,710 282,537
TOOLS (2.7%)
Regal-Beloit 6,000 107,448 159,750
TRANSPORTATION (6.5%)
Fritz Companies* 8,500 101,197 92,438
Halter Marine Group* 1,044 18,511 24,533
Mesa Airlines* 10,000 87,781 50,000
Southwest Airlines 5,000 132,586 128,750
Trinity Industries 3,000 83,987 90,000
---------- ----------
SUB-TOTAL - 424,062 385,721
WATER TREATMENT (1.2%)
Ionics* 1,500 69,467 71,625
TOTAL INVESTMENTS (95.0%) - $4,415,462 5,625,512
==========
Other Assets (net of liabilities) (5.0%) - - 298,540
----------
TOTAL NET ASSETS (100%) - - $5,924,052
==========
<FN>
*Non-Income producing security
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
GROWTH
FINANCIAL HIGHLIGHTS
FOR YEAR ENDED MAY 31
SELECTED DATA PER SHARE OF OUTSTANDING CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD.
<TABLE>
<CAPTION>
Selected data per share of outstanding capital stock outstanding throughout each period.
Year Year Year 2/3/1994
Ending Ending Ending (Inception)
May 31, 1997 May 31, 1996 May 31, 1995 May 31, 1994
------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 6.86 $ 5.04 $ 4.69 $ 5.00
-------------- -------------- -------------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (0.02) (0.05) (0.04) -
Net gains or losses on securities
(both realized and unrealized) 0.32 1.95 0.39 (0.30)
-------------- -------------- -------------- --------
Total from investment operations 0.30 1.90 0.35 (0.30)
-------------- -------------- -------------- --------
LESS DISTRIBUTIONS
Dividends (from net investment income) 0.00 0.00 0.00 (0.01)
Distributions (from capital gains) (0.09) (0.08) 0.00 0.00
-------------- -------------- -------------- --------
Total distributions (0.09) (0.08) 0.00 (0.01)
-------------- -------------- -------------- --------
NET ASSET VALUE AT END OF PERIOD $ 7.07 $ 6.86 $ 5.04 $ 4.69
============== ============== ============== ========
TOTAL RETURN 4.46% 37.20% 7.46% (6.20)%
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------
Net assets ($000), end of period $ 5,924 $ 4,151 $ 1,974 $ 952
Ratio of gross expenses to average net assets (not annualized) 1.62% 1.94% 2.00% 0.62%
Ratio of net investment income to average net assets (not annualized) (0.60)% (0.79)% (0.82)% (0.35)%
Portfolio turnover rate (not annualized) 25% 22% 38% 6%
Average commission rate paid $ 0.0396 $ 0.0596
</TABLE>
(The accompanying notes are an integral part of these financial statements)
(GRAPH OMITTED)
1995 7.46
1996 37.2
1997 4.46
To illustrate investment risk, the chart shows total return for each of the
last 3 fiscal years. While the three-year average annual return is 15.8%,
returns in individual years varied greatly from +4.46% (this year) to +37.20%
(last year). Amana Growth Fund has provided both a higher average return and
more volatility than Amana Income Fund.
<PAGE>
GROWTH
STATEMENT OF ASSETS AND LIABILITIES
ANNUAL REPORT
(GRAPHIC OMITTED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investments, at value
Common stocks (cost $4,415,462) $ 5,625,512
Cash 301,309
Dividends receivable 6,669
Organization expense, unamortized 708
----------------------
Total Assets - $5,934,198
----------
LIABILITIES
Payable to affiliate 7,422
Other liabilities 2,724
----------------------
Total Liabilities - 10,146
----------
NET ASSETS - $5,924,052
==========
FUND SHARES OUTSTANDING - 837,389
==========
ANALYSIS OF NET ASSETS
Paid in capital (unlimited shares authorized, without par) $ 4,707,299
Undistributed net realized gain (loss) on investments 6,703
Unrealized net appreciation on investments 1,210,050
----------------------
Net Assets applicable to Fund shares outstanding - $5,924,052
==========
NET ASSET VALUE,OFFERING AND REDEMPTION PRICE PER SHARE - $ 7.07
==========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
GROWTH
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1997
(GRAPHIC OMITTED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Dividends (Net of Foreign Taxes of $2,374) $ 52,735
Miscellaneous Income 406
-----------
Gross investment income - $ 53,141
EXPENSES
Investment adviser and administration fee 49,056
Filing and registration 11,388
Shareowner servicing 10,964
Professional 6,477
Printing and postage 3,467
Other expenses 3,314
Custodial fees 3,182
-----------
Total gross expenses 87,848
Less earnings credits (3,182)
-----------
Net expenses - 84,666
---------
Net investment income (loss) - (31,525)
----------- ---------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
Proceeds from sales 1,180,750
Less cost of securities sold based on identified cost 1,100,344
-----------
Realized net gain - 80,406
UNREALIZED GAIN (LOSS) ON INVESTMENTS
End of period 1,210,050
Beginning of period 884,447
-----------
Increase in unrealized gain for the period - 325,603
----------- ---------
Net realized and unrealized gain on investments - 406,009
----------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS - $374,484
=========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
GROWTH
STATEMENT OF CHANGES IN NET ASSETS
ANNUAL REPORT
(GRAPHIC OMITTED)
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS Year ended Year ended
May 31, 1997 May 31, 1996
-------------- --------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (31,525) $ (20,616)
Net realized (loss) gain on investments 80,406 102,232
Net increase (decrease) in unrealized appreciation 325,603 746,721
-------------- --------------
Net increase (decrease) in net assets 374,484 828,337
-------------- --------------
DIVIDENDS TO SHAREOWNERS FROM
Net investment income 0 0
Capital gains distributions (74,024) (44,764)
-------------- --------------
(74,024) (44,764)
-------------- --------------
FUND SHARE TRANSACTIONS
Proceeds from sales of shares 3,083,797 2,282,028
Value of shares issued in reinvestment of dividends 71,472 44,134
-------------- --------------
3,155,269 2,326,162
Cost of shares redeemed (1,682,459) (933,301)
-------------- --------------
Net increase (decrease) in net assets from share transactions 1,472,810 1,392,861
-------------- --------------
Total increase (decrease) in net assets 1,773,270 2,176,434
NET ASSETS
Beginning of period 4,150,782 1,974,348
-------------- --------------
End of period $ 5,924,052 $ 4,150,782
============== ==============
Shares of the Fund Sold and Redeemed
Number of shares sold 497,832 370,342
Number of shares issued in reinvestment of dividends 11,116 6,452
-------------- --------------
508,948 376,794
Number of shares redeemed (276,621) (163,437)
-------------- --------------
Net Increase (Decrease) in Number of Shares Outstanding 232,327 213,357
============== ==============
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
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 in-vestment company under the Investment Company
Act of 1940, as amended. The Trust restricts its in-vestments 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 Funds.
INVESTMENTS:
Securities traded on a national ex-change and NASDAQ's National Market are
valued at the price carried by the composite tape of all na-tional 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 clos-ing 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 secu-rities are recorded as income on the
ex-div-idend 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 sub-stantially all of their taxable net
invest-ment income and realized net gains on in-vest-ments. Therefore, no
provision for Federal income taxes is required.
DIVIDENDS AND DISTRIBUTIONS TO SHAREOWNERS:
Dividends and distributions to share-owners are recorded on the ex-dividend
date. Dividend payable dates are the end of May and December. Shareowners
electing to reinvest dividends and distributions pur-chase 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 cer-tain other
administrative and distribu-tion 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 aver-age daily net assets. For the year ended May 31,
1997, the Income Fund and Growth Fund paid advisory fee expenses of $136,282
and $49,056, respectively.
Saturna Capital also acts as transfer agent for the Trust, for which it was
paid $22,194 and $10,964 for the Income and Growth Fund, respectively, for the
year ended May 31, 1997.
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 $13,534 in commissions at deep-discount rates during the year ended May
31, 1997.
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 $38,943 for the year ended May 31, 1997. One trustee of the
Trust is also a trustee of North American Islamic Trust.
At inception, the Growth Fund reimbursed Saturna Capital $6,375 for
organizational expenses, which should be fully amortized in 1997. An initial
shareholder has agreed not to redeem more
<PAGE>
(GRAPHIC OMITTED)
ANNUAL REPORT
shares than any remaining unamortized organizational expenses.
All trustees serve without compen-sation. The Trustees, officers and their
immediate families, and North American Islamic Trust as a group owned 3.40% of
the Income Fund's and 1.95% of the Growth Fund's outstanding shares on May 31,
1997.
NOTE 4 - DIVIDENDS
Income Fund dividends from net investment income were $.234 per share paid
December 31, 1996, and $.19 per share paid May 31, 1997. Income Fund
distributions from net realized long-term capital gains were $.14 per share
paid December 31, 1996. The Growth Fund distributions from net realized
long-term capital gains were $.087 per share paid December 31, 1996.
From its inception to May 31, 1997, the Income Fund has realized net long-term
gains from sales of securities of $1,288,659 and has distributed realized net
long-term gains of $1,225,375, while the Growth Fund has realized net
long-term gains from sales of securities of $125,490 and has distributed
realized net long-term gains of $118,787.
NOTE 5 - INVESTMENTS
At May 31, 1997, for Income Fund the net unreal-ized appreciation of
investments of $4,778,465 comprised gross unrealized gains of $4,853,371 and
gross unrealized losses of $74,906. During the year ended May 31, 1997, the
Income Fund purchased $3,166,830 of securities and sold $1,888,481 of
securities.
At May 31, 1997, for Growth Fund the net unreal-ized appreciation of
investments of $1,210,050 comprised gross unrealized gains of $1,399,899 and
gross unrealized losses of $189,844. During the period ended May 31,1997, the
Fund purchased $2,527,501 of securities and sold $1,180,750 of securities.
NOTE 6 - CUSTODY CREDITS
Under an agreement with the custodian bank, custody fees are reduced by
credits for cash balances. Such reduction amounted to $2,525 and $3,182 for
the Income Fund and Growth Fund, respectively, for the year ended May 31,
1997.
TRUSTEES AND OFFICERS
(GRAPHIC OMITTED)
Bassam Osman, MD
Chairman, Trustee
Neurologist
Chairman, North American Islamic Trust
Nicholas Kaiser, MBA
President, Trustee
President, Saturna Capital Corporation
M. Yaqub Mirza, PhD
Treasurer, Independent Trustee
President, Mar-Jac Investments, Inc.
Director and Secretary, Mylex Corporation
Chairman, Jugos Concentrados SA
Jamal M. al-Barzinji, PhD
Independent Trustee
Chairman, Mar--Jac Poultry, Inc.
Director, Safa Trust, Inc.
Iqbal Unus, PhD
Independent Trustee
Dean of Students/Registrar,
School of Islamic and Social Sciences
M. Naziruddin Ali
Vice President
General Manager, North American Islamic Trust
P. Larner
Secretary
Saturna Capital Corporation
T. K. Anderson, MBA
Assistant Treasurer
Saturna Capital Corporation
<PAGE>
Amana Mutual Funds Trust began operations in 1986. Saturna Capital
Corporation, with extensive experience in mutual funds, invests the Fund
portfolios and handles daily operations by direction of the Board of Trustees
(see reverse side).
Investment Advisor and Saturna Capital Corporation
Administrator
- -
- -------
Religious Consultant North American Islamic
Trust
- -
- -------
Custodian National City Bank
of Indiana
- -
- -------
Auditors Tait, Weller &
Baker, Philadelphia
- -
- -------
Legal Counsel Sommer & Barnard,
Indianapolis
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.
1300 N. State Street
Bellingham, WA 98225-4730
1-800/SATURNA
(1-800/728-8762)
email: [email protected]
(GRAPHIC OMITTED)
AMANA MUTUAL FUNDS TRUST
- -------------------------------------------------
GROWTH INCOME
(GRAPHIC OMITTED)
ANNUAL REPORT
MAY 31, 1997
