File No. 2-96924
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 15 [X]
--
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
POST-EFFECTIVE AMENDMENT NO. 18 [X]
--
AMANA MUTUAL FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)
1300 N. STATE STREET
BELLINGHAM, WASHINGTON 98225-4730
(Address of Principal Executive Offices, including ZIP Code)
REGISTRANT'S TELEPHONE NUMBER- (360) 734-9900
Nicholas F. Kaiser
1300 N. State Street
Bellingham, Washington 98225-4730
(Name and Address of Agent for Service)
It is proposed that this filing will become effective: [ ] Immediately upon
filing pursuant to paragraph (b) of rule 485, or [ ] on _______ pursuant to
paragraph (b) of Rule 485 [X] 60 days after filing pursuant to paragraph (a)(1)
of Rule 485, or [ ] on _________ pursuant to paragraph (a)(1) of rule 485 [ ] 75
days after filing pursuant to paragraph (a)(2) of Rule 485, or [ ] on _______
pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
EXPLANATORY NOTE
----------------
This Post-Effective Amendment is the annual update to Amana Mutual Fund Trust's
Registration Statement. It includes financial information updated for the fiscal
year ended May 31, 1998. There are no material changes requiring disclosure
update. This Amendment is filed under rule 485(a) because this Registration
Statement is updated to comply with the 1998 amendments to Form N-1A. An
effective date of 8/27/98, somewhat earlier than the normal 60 days under
485(a)(1), is requested pursuant to Rule 485(a)(3), so that the updated
Prospectus is available for the annual Islamic Society of North America
convention to be held September 4-7, 1998. A graphical PDF version of this
filing is available at http://www.saturna.com/red.
<PAGE>
CROSS REFERENCE SHEET
FORM N-1A
Item
- ----
PART A PROSPECTUS
- ------- ----------
1. (a) Front Cover Page COVER PAGE (when folded,
(b) Back Cover Page constitutes both front and back)
2. Risk/Return Summary A QUICK LOOK AT AMANA
3. Fee Table FEES AND EXPENSES
4. (A) Investment Objectives INVESTMENT OBJECTIVES
(b) Principal Investment Strategies PRINCIPAL INVESTMENT STRATEGIES
(c) Risks RISKS
5. Management's Discussion of Performance Not applicable (in Annual
Report)
6. (a) Management INVESTMENT ADVISER
RELIGIOUS CONSULTANT
(b) Capital Structure Not applicable (no restrictions)
7. Shareowner information
(a) Pricing of Fund Shares NET ASSET VALUE
(b) Purchase of Fund Shares HOW TO BUY SHARES
(c) Redemption of Funds Shares HOW TO REDEEM SHARES
(d) Dividends and distributions DIVIDENDS
(e) Tax Consequences TAX INFORMATION
8. Distribution arrangements INVESTMENT ADVISER
9. Financial Highlights Information FINANCIAL HIGHLIGHTS
PART B STATEMENT OF ADDITIONAL INFORMATION
- ---- - --------------------------------------
10. Cover Page & Table of Contents Cover Page
TABLE OF CONTENTS
11. Trust History TRUST HISTORY
12. Fund Descriptions, Investments and Risks FUND DESCRIPTIONS,
INVESTMENTS AND RISKS
13. Management of the Trust MANAGEMENT OF THE TRUST
14. Control Persons and Principal PRINCIPAL HOLDERS OF
Holders of Securities SECURITIES
<PAGE>
15. Investment Advisory and Other INVESTMENT ADVISORY
Services AND OTHER SERVICES
16. Brokerage Allocation and Other BROKERAGE ALLOCATION
Practices
17. Capital Stock and Other Securities CAPITAL STOCK
18. Purchase, Redemptions and Pricing PURCHASE, REDEMPTION AND
of Securities Being Offered PRICING OF SHARES
19. Taxation of the Trust TAXATION OF THE TRUST
20. Underwriters Not applicable
21. Calculations of Performance Data PERFORMANCE DATA
22. Financial Statements FINANCIAL STATEMENTS
PART C
- ---- -
23. Exhibits EXHIBITS
24. Control Persons PERSONS CONTROLLED BY OR UNDER
COMMON CONTROL WITH REGISTRANT
25. Idemnification IDEMNIFICATION
26. Business and other Connections BUSINESS AND OTHER
CONNECTIONS
OF INVESTMENT ADVISER
27. Principal Underwriters PRINCIPAL UNDERWRITERS
28. Records LOCATION OF ACCOUNTS
AND RECORDS
29. Management Services MANAGEMENT SERVICES
30. Undertakings UNDERTAKINGS
<PAGE>
PART A
PROSPECTUS
<PAGE>
AMANA
MUTUAL FUNDS TRUST
Additional information about each Fund's investments and operations is available
in the Trust's annual and semi-annual shareowner reports. The Trust's annual
report includes a discussion of the market conditions and investment strategies
that significantly affected each Fund's performance during its last fiscal year.
A Statement of Additional Information contains more details, and is incorporated
in this Prospectus by reference.
These documents and other information are available upon request, without
charge, from:
(Graphic Omitted)
1300 N. State Street
Bellingham, Washington 98225
http://www.saturna.com/amana
800-SATURNA
[800-728-8762]
Information about the Trust (including the SAI) can be reviewed and copied at
the SEC's Public Reference Room in Washington DC (call 800-SEC-0330 for
information). Reports and other information about the Trust are also available
at http://www.sec.gov and copies may be obtained, upon payment of a duplicating
fee, by writing the Public Reference Section of the SEC, Washington DC
20549-6009. Amana's Investment Company Act file number is 811-4276.
AMANA
MUTUAL FUNDS TRUST
GROWTH FUND
INCOME FUND
Investments are consistent with Islamic principles. There are no sales or
redemption charges or fees.
Please read this Prospectus and keep it for future reference. It is designed to
provide important information and to help investors decide if Fund goals match
their own.
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES AUTHORITY HAS
NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PROSPECTUS
August 27, 1998
<PAGE>
A Quick Look at Amana
FUND INVESTMENT GOALS
GROWTH FUND - long-term capital growth
INCOME FUND - current income and preservation of capital PRINCIPAL INVESTMENT
STRATEGIES The Funds invest only in equity securities, including foreign
securities, in pursuit of these goals. Invest-ment decisions are made in
accordance with Islamic principles. The Funds diversify their investments, but
Islamic principles preclude investments in certain market sectors, such as
financial companies and fixed-income securities. PRINCIPAL RISKS OF INVESTING IN
THE FUNDS The value of Fund shares rise and fall as the value of the securities
in which the Fund invests goes up and down. Only consider investing in the Funds
if you are willing to accept the risk that you may lose money. Fund share
prices, yields, and total returns will change with the fluctuations in the
securities markets as well as the fortunes of the industries and companies in
which the Funds' invest. The Fund's restricted ability to invest in certain
market sectors may increase the risk of loss during economic downturns.
VARIABILITY OF RETURNS The bar charts and table shown below provide an
indication of the risks of investing in the Amana Growth and Amana Income Funds
by showing changes in Fund performance from year to year and by showing how each
Fund's average annual returns compare to those of broad-based market indices.
(Graph Omitted) Amana Growth Fund Calendar Year Percentage Returns (operations
began in 1994) Year Return 1995 35% 1996 4% 1997 18%
Note: 1998 year-to-date return is +5.5% (December 31, 1997 through quarter
ending June 30, 1998)
Highest return for a quarter was +15.4% (quarter ending September 30,
1997).
Lowest return for a quarter was -7.1% (quarter ending December 31,
1997
1
<PAGE>
(Graph Omitted)
Amana Income Fund Calendar Year
1988 13%
1989 18%
1990 -3%
1991 23%
1992 1%
1993 11%
1994 -6%
1995 27%
1996 12%
1997 24%
Note: 1998 year-to-date return is +12.9% (December 31, 1997 through quarter
ending June
Highest return for a quarter was +15.9% (quarter ending March 31,
1991).
Lowest return for a quarter was -8.8% (quarter ending September 28,
1990).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Average Annual Total Returns
(for the periods ending December 31, 1997) Past 1 Year Past 5 Years Past 10 Years
- ------------------------------------------ ------------ ------------- --------------
Amana Growth Fund 18.2% NA NA
- ------------------------------------------ ------------ ------------- --------------
Amana Income Fund 24.5% 13.3% 11.8%
------------ ------------- --------------
S & P 500 * 33.4% 20.0% 17.8%
- ------------------------------------------ ------------ ------------- --------------
<FN>
* The S & P 500 is the Standard & Poor's Composite Index of 500 stocks, a widely
recognized, unmanaged index of common stock prices.
</FN>
</TABLE>
How a Fund has performed in the past is not necessarily an indication of how the
Fund will perform in the future.
INVESTMENT RESULTS
Shareowners receive a financial re-port showing the investment returns,
portfolios, income and expenses of each Fund every six months. Investors may
obtain current share prices daily in major newspapers, by calling 888-73-AMANA,
or by accessing the Internet at www.saturna.com.
2
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses that Amana Fund shareowners may pay.
There are no shareowner fees (fees paid directly from an investment). The Trust
imposes no sales charge (load) on purchases or reinvested dividends, no
distribution fees, or any deferred sales charge (load) upon redemption. There
are no exchange fees, redemption fees, or account fees. There are no fees
charged to retirement plan accounts. The following table illus-trates operating
expenses of the Funds for the fiscal year ending May 31, 1998.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
GROWTH INCOME
------ ------
Management and Administrative Fee 0.95% 0.95%
Distribution (12b-1) Fees .NONE NONE
Other Expenses 0.59% 0.41%
----- -----
Total Annual Fund Operating Expenses1.54% 1.36%
EXPENSES EXAMPLEThis example is intended to help investors compare the cost of
investing in an Amana Fund with the cost of investing in other mutual funds.
1 year total-- $164 $145
3 years total-- $518 $456
5 years total-- $907 $800
10 years total-- $2066 $1821
The Example assumes an investors invests $10,000 in a Fund for the years
indicated and then redeems at the end of those years. The Example also assumes
that the investment has a 5% net return each year and that the Fund's operating
expenses remain the same. Although actual costs may be higher or lower, based on
these assumptions an investor's cumulative expenses would be:
INVESTMENT OBJECTIVES
The primary objective of the GROWTH FUND is long-term capital growth,
consis-tent with Islamic principles.
The objec-tives of the INCOME FUND are cur-rent in-come and preservation of
capi-tal, consis-tent with Islamic principles; current in-come is its pri-mary
objective.
There can be no guar-antee that the particular invest-ment objec-tives of either
Fund will be realized.
INVESTMENT STRATEGIES
AMANA MUTUAL FUNDS TRUST is designed to provide investment alterna-tives that
are consistent with Islamic princi-ples. Gen-erally, Islamic princi-ples
re-quire that investors share in profit and loss, that they receive no usury or
inter-est, and that they do not invest in a busi-ness that is not permit-ted by
Islamic principles. Some of the businesses not permitted are liquor, wine,
casinos, pornography, insurance, gam-bling, pork processing, and interest-based
banks or finance associations.
The Funds do not make any invest-ments that pay interest. In accordance with
Islamic principles, the Funds shall not purchase bonds,
3
<PAGE>
debentures, or other interest paying obli-gations of indebtedness.
These criteria limit investment selection and income-earning opportuni-ties more
than is customary for other mu-tual funds.
The Adviser, Saturna Capital Corporation, selects investments. To insure that
investments meet the requirements of the Islamic faith, the Adviser has a
con-sulting agreement on Islamic issues with the North American Islamic Trust
(NAIT), a non-profit organization serving the Muslim community.
The policy of the INCOME FUND is to invest at least 80% of its assets in
in-come-pro-ducing equity securities, such as divi-dend-paying common stocks.
Some as-sets may be held as cash to cover short-term needs such as redemptions
and for temporary defensive purposes.
Under normal circumstances, it is the policy of the GROWTH FUND to invest at
least 80% of assets in common stocks. The Growth Fund selects investments
primar-ily on the expecta-tion of increases in earnings and share price, and not
cur-rent dividend-paying ability.
To the extent the Funds invest in foreign securities, they invest only in
foreign securities available for trading and settlement in the US, primarily in
American Depository Receipts.
During uncertain market or economic conditions, a Fund may adopt a tem-porary,
defensive position. The Funds cannot invest in interest-pay-ing instru-ments
fre-quently used by mutual funds for this pur-pose. When markets are
unattractive, the Adviser chooses be-tween continuing to follow the Funds'
in-vestment policy or con-verting securities to cash for tempo-rary, defensive
pur-poses. This choice is based on the Adviser's evaluation of mar-ket
conditions and the Funds' portfolio holdings. While cash assets do not
con-tribute to the Income Fund's primary objective of cur-rent income, they do
assist its secondary ob-jective of capital stability.
RISKS
Investing in securities entails both market risks and risk of price variation in
individ-ual securities. Common stock investments involve greater risk, and
commensurably greater opportunity for reward, than some other investments, such
as investments in short-term bonds and money market in-stru-ments.
By diversify-ing its invest-ments, each Fund re-duces the risk of owning one or
a few individual securi-ties. The Growth Fund typically invests in smaller and
less seasoned companies than the Income Fund, which may lead to greater
variability in Growth Fund's returns. The Growth Fund is suitable for investors
seeking higher returns and willing to accept greater fluctuations in value
(risk) than Income Fund investors.
Investing in foreign securities involves risks not typically associated directly
with investing in U.S. securities. These risks include fluctuations in exchange
rates of foreign currencies; less public information with respect to issuers of
securities; less governmental supervision of exchanges, issuers, brokers; lack
of uniform accounting, auditing, and financial reporting standards. There is
also a risk of adverse political, social or diplomatic developments that affect
investment in foreign countries.
INVESTMENT ADVISER
Saturna Capital Corporation, 1300 N. State Street, Bellingham, Washington 98225
is the Investment Adviser and Administrator for the Trust. Saturna Capital's
wholly-owned subsidiary, Investors National Corporation, is a discount brokerage
firm and acts as distribu-tor for the Trust without compen-sation. Founded in
1989, Saturna Capital Corporation is also the adviser to Saturna Investment
Trust and to private accounts. Saturna has approximately $60 million in assets
under management.
Each Fund pays the Adviser an advi-sory and administration fee of 0.95% annually
of average daily net assets.
4
<PAGE>
Mr. Nicholas Kaiser, CFA, is president and controlling shareowner of Saturna
Capital Corporation. Since 1990, Mr. Kaiser has been the person primarily
responsible for the day-to-day management of the Income Fund and the Growth
Fund. Mr. Kaiser has managed equity mutual funds since 1976.
RELIGIOUS CONSULTANT
The North American Islamic Trust, Inc. (NAIT), 2622 East Main Street,
Plainfield, Indiana 46168, acts as the re-ligious consultant to Saturna Capital
regarding issues of Islamic principles relating to the Funds un-der a
sub-advisory agreement with the Ad-viser. From the fee paid Saturna Capital,
NAIT is paid for consulting services an annual fee of 0.20% annually of average
daily net assets.
NAIT is a non-profit organization serving Muslim organizations and communities.
NAIT operates and manages a variety of service activities for the Islamic
Society of North America (ISNA), the Muslim Student Association (MSA), and other
affili-ated organizations and Islamic cen-ters. ISNA and MSA are sepa-rate,
non-profit organiza-tions that provide religious, educational, cultural, and
community services. NET ASSET VALUE Each Fund computes its net asset value per
share each business day by di-vid-ing the value of all of its se-curities and
other as-sets, less liabili-ties, by the num-ber of shares out-standing. The
Funds compute their net as-set values using market prices as of the close of
trading on the New York Stock Exchange (generally 4 p.m. New York time). The
Funds' shares are not priced on the days when New York Stock Exchange trading is
closed (weekends and national holidays). The net asset value appli-ca-ble to
purchases or redemp-tions of shares of each Fund is the net asset value next
com-puted after receipt of a purchase or re-demption order. HOW TO BUY SHARES
Investors may open an account and pur-chase shares by sending a com-pleted
Application with a check for at least US$100 ($25 under a group or retirement
plan) made payable to the Fund desired. The Trust does not ac-cept ini-tial
orders unaccom-pa-nied by payment nor by telephone. There are no sales charges
or loads.
Shareowners may purchase additional shares at any time in minimum amounts of
$25. Once an account is open, pur-chases can be made by check, by electronic
funds transfer, or by wire.
Shareowners may autho-rize the use of the Auto-mated Clearing House ("ACH") to
pur-chase or redeem shares by completing the appropriate section of the
applica-tion. The autho-rization must be received at least two weeks before ACH
can be used. To use ACH to pur-chase or redeem shares, simply call Saturna
Capital. Investors also may wire money to purchase shares, though the wiring
bank typi-cally charges a fee for this service.
Each time shares are purchased or redeemed, a confirmation is mailed showing the
details of the transaction as well as the current number and value of shares
held. Share bal-ances are computed in full and frac-tional shares, expressed to
three decimal places.
The Trust offers several op-tional plans and services, including a prototype
defined contribution plan and free Individual Retirement Accounts. Other plans
offered by the Funds in-clude an auto-matic investment plan, a sys-tem-atic
with-drawal plan, and the right to ex-change your shares without charge for any
other no-load mutual fund for which Saturna Capital is the in-vestment ad-viser.
Ma-terials describ-ing these plans and applica-tions may be obtained from
Saturna Capital.
5
<PAGE>
HOW TO REDEEM SHARES Shareowners may redeem all or
part of their investment on any business day of the Trust. The Funds pay
redemptions in US dol-lars, and the amount per share received is the net asset
value next determined after receipt of a re-demption request. The amount
re-ceived depends on the value of the in-vestments of that Fund at that day and
may be more or less than the cost of the shares being redeemed.
The Funds normally pay for shares redeemed within three days after a proper
instruction is re-ceived. To allow time for clearing, re-demption of
in-vestments made by check or ACH may be re-stricted for up to 14 calendar days.
There are several methods you may choose to redeem shares.
WRITTEN REQUEST
Write: Amana Mutual Funds Trust
Box N
Bellingham WA 98227-0596
Or fax: 360/734-0755
You may redeem shares by a written request and choose one of the follow-ing
options for the proceeds:
1998 Redemption check (no mini-mum) sent to registered owner(s).
1999 Redemption check (no mini-mum) sent as directed if the signa-ture(s)
are guaranteed. If pro-ceeds are to be sent to other than the regis-tered
owner(s) at the last ad-dress, the signa-tures on the request must be
guaran-teed by a national bank or trust com-pany or by a member of a national
se-curities ex-change.
2000 Federal funds wire. The pro-ceeds ($5000 minimum) may be wired to
any bank designated in the re-quest if the signa-ture(s) are guar-an-teed as
explained above.
TELEPHONE REQUEST
Call: 800/728-8762 or
360/734-9900
You may redeem shares by a tele-phone request and choose one of the following
options for the proceeds: 1998 Redemption check (no mini-mum) sent to registered
owner(s). 1999 ACH transfer ($100 minimum) with proceeds trans-ferred to your
bank ac-count as desig-nated by the ACH au-thorization on your applica-tion. The
transfer agent must receive the ACH authori-za-tion at least two weeks before
ACH transfer can be used. 2000 Exchange (in at least the mini-mum estab-lished
by the Fund being purchased) for shares of any other Fund for which Saturna
Capital is adviser. If the ex-change is your initial in-vestment into this Fund,
the new ac-count will au-tomatically have the same registration as your original
ac-count. 2001 Federal funds wire. Proceeds ($5000 min-imum) may be wired only
to the bank previously designated, or as di-rected in a prior written
instruc-tion with signatures guar-anteed, as explained above.
For telephone requests the Funds will en-deavor to confirm that instructions are
genuine and may be liable for losses if they do not. The caller must provide
2002 the name of the per-son making the request, 2003 the name and address of
the regis-tered owner(s),
2004 the account number,
2005 the amount to be withdrawn, and
2006 the method for payment of the pro-ceeds.
The Funds also may require a form of personal identification. The Funds will not
be responsible for the re-sults of transactions they rea-sonably be-lieve
genuine. CHECK WRITING Shareowners may also redeem by writing checks for amounts
of $500 or more. Upon request, a Fund provides a small book of blank checks for
a $10 fee, which may then be used to write checks to any payee. Checks are
re-deemed at the net as-set value next de-termined after re-ceipt by the
transfer agent. To use this feature, request the Check Writing Privi-lege on the
Application.
6
<PAGE>
DIVIDENDS
Each Fund intends to distribute its net investment in-come and net realized
capital gains, if any, to its shareowners. Distributions from capital gains are
paid at the end of December and May; income dividends are paid in December and
May for the Income Fund and in December for the Growth Fund. As a result of its
investment strategies, the Growth Fund does not expect to pay income dividends.
Both dividends and capital gains dis-tri-bu-tions are automatically rein-vested
in addi-tional full and fractional shares of the Fund owned. At your option, you
may receive dividends or capital gain distri-butions in cash. You are notified
of each divi-dend and capital gains distribu-tion when paid.
TAX INFORMATION
Any redemption, including exchanges and checks written by shareowners,
constitutes a sale for federal income tax purposes, and investors may realize a
capital gain or loss on the re-demp-tion.
At the end of each calendar year, shareowners re-ceive a complete annual
state-ment, which should be retained for tax record keeping. Saturna Capital
keeps each account's entire investment transaction history, and helps
shareowners maintain the tax records needed to determine reportable capital
gains and losses as well as dividend income.
Each January, the transfer agent reports to each shareowner (consolidated by
taxpayer ID) and to the IRS the amount of each redemption transaction and the
amount of divi-dends and capital gains distributions. Dividend amounts represent
the pro-portionate share the shareowner is to report on a tax return for the
year. Capital gains may be taxed at different rates, depending on the length of
time the Fund held its investments. Fund distributions, whether paid in cash or
invested in additional shares of the Fund, may be subject to income taxes.
Capital gains and dividends may also be subject to state and local taxes.
To avoid being subject to a 31% fed-eral withholding tax on dividends and
distri-bu-tions, you must furnish your cor-rect Social Security or Tax
Identification Number.
Share-owners who are not US tax-payers may be subject to a 30% with-hold-ing tax
un-der US provisions applicable to foreign investors, unless a reduced rate or
ex-emption is pro-vided under a tax treaty. Capital gain distributions paid by
the Funds are not subject to foreign with-holding.
7
<PAGE>
FINANCIAL HIGHLIGHTS
These tables are to help you understand each Fund's financial performance. The
top section reflects financial results for a single Fund share. The total
returns represent the rate that an investor earned (or lost) on an investment in
each Fund, assuming reinvestment of all dividends and distributions and without
regard to income taxes. Tait Weller & Baker, independent auditors, examined this
information. Their report and each Fund's financial statements are in the
Trust's annual report (available upon request from Saturna Capital). INCOME FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INCOME FUND Year ended May 31,1998 Year ended May 31, 1997 Year ended May 31, 1996
------------------------ ------------------------- -------------------------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 16.61 $ 13.93 $ 12.92
------------------------ ------------------------- -------------------------
INCOME FROM INVESTMENT OPERATIONS - - -
Net investment income 0.26 0.38 0.42
Net gains or losses on securities - - -
(both realized and unrealized) 3.58 2.86 1.76
------------------------ ------------------------- -------------------------
TOTAL FROM INVESTMENT OPERATIONS 3.84 3.24 2.18
------------------------ ------------------------- -------------------------
LESS DISTRIBUTIONS - - -
Dividends (from net investment income) (0.22) (0.42) (0.41)
Distributions (from capital gains) (0.47) (0.14) (0.76)
------------------------ ------------------------- -------------------------
Total distributions (0.69) (0.56) (1.17)
------------------------ ------------------------- -------------------------
NET ASSET VALUE END OF PERIOD $ 19.76 $ 16.61
======================== =========================
$ 13.93
=========================
TOTAL RETURN 23.51% 23.62% 17.03%
RATIOS / SUPPLEMENTAL DATA - - -
- -------------------------------------------
Net assets ($000), end of period 19,886 16,332 12,464
Ratio of gross expenses to Ave. net assets 1.36% 1.44% 1.57%
Ratio of net investment income to 1.43% 2.51% 3.06%
ave. net assets
Portfolio turnover rate 8% 14% 24%
<S> <C> <C>
INCOME FUND Year ended May 31, 1995 Year ended May 31, 1995
------------------------- -------------------------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 12.18 $ 12.86
------------------------- -------------------------
INCOME FROM INVESTMENT OPERATIONS - -
Net investment income 0.38 0.30
Net gains or losses on securities - -
(both realized and unrealized) 0.8 (0.36)
------------------------- -------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.18 (0.06)
------------------------- -------------------------
LESS DISTRIBUTIONS - -
Dividends (from net investment income) (0.44) (0.30)
Distributions (from capital gains) 0.00 (0.32)
------------------------- -------------------------
Total distributions (0.44) (0.62)
------------------------- -------------------------
NET ASSET VALUE END OF PERIOD $ 12.92 $ 12.18
========================= =========================
TOTAL RETURN 9.95% -0.63%
RATIOS / SUPPLEMENTAL DATA - -
- -------------------------------------------
Net assets ($000), end of period 10,708 10,432
Ratio of gross expenses to Ave. net assets 1.56% 1.58%
Ratio of net investment income to 3.11% 2.22%
ave. net assets
Portfolio turnover rate 29% 21%
</TABLE>
GROWTH FUND
<TABLE>
<CAPTION>
<S> <C> <C>
GROWTH FUND Year Ended May 31, 1998 Year Ended May 31, 1997
------------------------- -------------------------
NET ASSET VALUE AT BEGINNING OF PERIOD
$ 7.07 $ 6.86
------------------------- -------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (0.03) (0.02)
Net gains or losses on securities
(both realized and unrealized) 0.90 0.32
------------------------- -------------------------
TOTAL FROM INVESTMENT OPERATIONS 0.87 0.30
------------------------- -------------------------
LESS DISTRIBUTIONS
Dividends (from net investment income) 0.00 0.00
Distributions (from capital gains) (0.16) (0.09)
------------------------- -------------------------
Total distributions (0.16) (0.09)
------------------------- -------------------------
NET ASSET VALUE AT END OF PERIOD $ 7.78 $ 7.07
========================= =========================
TOTAL RETURN 12.39% 4.46%
RATIOS / SUPPLEMENTAL DATA
Net assets ($000), end of period $ 10,080 $ 5,924
Ratio of gross espenses to Ave. net assets 1.54% 1.69%
Ratio of net investment income to ave. net assets (0.40)% (0.60)%
Portfolio turnover rate 25% 25%
<S> <C> <C> <C>
GROWTH FUND Year Ended May 31, 1996 Year Ended May 31, 1995 2/3/1994 Inception to
------------------------- ------------------------- -----------------------
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) (0.00)
Net gains or losses on securities
(both realized and unrealized) 1.95 0.39 (0.30)
------------------------- ------------------------- -----------------------
TOTAL FROM INVESTMENT OPERATIONS 1.90 0.35 (0.30)
------------------------- ------------------------- -----------------------
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 gross espenses to Ave. net assets 1.94% 2.00% *0.62%
Ratio of net investment income to ave. net assets (0.79)% (0.82)% *(0.35)%
Portfolio turnover rate 22% 38% *6%
<FN>
(*not annualized)
(The accompanying notes are an integral part of these financial statement.)
</FN>
</TABLE>
8
<PAGE>
AMANA MUTUAL FUNDS TRUST
INVESTMENT APPLICATION
Mail application and check to: For assistance, call:
AMANA MUTUAL FUNDS TRUST 800-SATURNA or 360/734-9900
Box N, Bellingham WA 98227-0596 FAX 360/734-0755
ACCOUNT TYPE AND NAME (select one)
Individual
First Middle Initial Last
Social Security Number Date of Birth
Month/Day/Year
Joint with
First Middle Initial Last
Joint Owner's Social Security Number
(Joint accounts are presumed to be "Joint Tenancy with Right of
Survivorship" unless indicated)
Gifts to Minor as Custodian for
Name of Custodian Name of Minor
under the Unif.Gifts to Minors Act
State Uniform Transfers Minor's Birthdate
Minor's Soc.Sec. No. to Minors Act
Other
Indicate name of corporation, organization or fiduciary capacity. Tax ID. Number
If a trust, include name(s) of trustees and date of trust instruments.
Person(s) authorized to transact business for the above entity.
MAILING
ADDRESS Street Apt., Suite, Etc.
City State ZIP (+4)
TELEPHONE ( ) ( )
- -
Daytime Home
CITIZENSHIP US Resident Alien Non-Resident Alien
Country
INVESTMENT SELECTION Growth Fund for $ Minimum $100 per Fund. Income Fund for $
Make check(s) payable to each Fund selected.
9
<PAGE>
E-MAIL
Transaction confirmations and shareowner reports may be sent to my personal
e-mail address: In addition to paper mailings Instead to paper mailings (save
paper & postage)
TELEPHONE REDEMPTION PRIVILEGES
You automatically have telephone redemption by check and telephone exchange
privileges unless you strike this line. Each Fund endeavors to confirm that
instructions are genuine and it may be liable for losses if it does not.
(Procedures may include requiring a form of personal identification. The Fund
also provides written confirmation of transactions.)
ACH TELEPHONE TRANSFER PRIVILEGE
To transfer funds by ACH at no charge to or from my (our) bank account, I (we)
authorize electronic fund transfers through the Automated Clearing House (ACH)
for my (our) designated bank account. Please attach a voided check.
AUTOMATIC INVESTMENT PLAN
Invest $ into Growth Fund and/or $ into Income Fund on the _____ day of each
month (the 15th unless another date is chosen) by ACH transfer from my (our)
bank account. This plan may be canceled at any time.
Please attach a voided check.
CHECK WRITING PRIVILEGE ($500 per check minimum) ($10 checkbook charge) I (We)
request the Custodian to honor checks drawn by me (us) on my (our) Growth Fund
and/or Income Fund account subject to acceptance by the Trust, with payment to
be made by redeeming sufficient shares in my (our) account. None of the
custodian bank, Saturna Capital Corporation nor Amana Mutual Funds Trust shall
incur any liability to me (us) for honoring such checks, for redeeming shares to
pay such checks, or for returning checks which are not accepted.
Single Signature Authority -- Joint Accounts Only: (CHECKS FOR JOINT ACCOUNTS
- ------ --------- --------- -- ----- -------- -----
REQUIRE BOTH SIGNATURES UNLESS THIS BOX IS MARKED TO AUTHORIZE CHECKS WITH A
SINGLE SIGNATURE.) By our signatures below, we agree to permit check redemptions
upon the single signature of a joint owner. The signature of one joint owner is
on behalf of himself and as attorney in fact on behalf of each other joint owner
by appointment. We hereby agree with each other, with the Trust and with Saturna
Capital Corporation that all moneys now or hereafter invested in our account are
and shall be owned as Joint Tenants with Right of Survivorship, and not as
Tenants in Common.
The undersigned warrants(s) that I (we) have full authority to make this
Application, am (are) of legal age, and have received and read a current
Prospectus and agree to be bound by its terms. Unless this sentence is struck, I
(we) certify, under penalties of perjury, that I (we) am (are) not subject to
backup withholding under the provisions of section 3406(a)(1)(C) of the Internal
Revenue Code. This application is not effective until it is received and
accepted by the Trust.
Date Signature of Individual (or Custodian)
Date Signature of Joint Registrant, if any
10
<PAGE>
PLEASE SAVE THIS QUICK GUIDE TO
AMANA MUTUAL FUNDS TRUST
ACCOUNTS
Open your account by sending a completed Application to the Trust, indicating
your Fund selection. For convenience, you may have your account consolidated
with others of your household or other group. We will appoint a representative,
responsible to you for all questions on your account(s). Extra forms will be
sent for certain accounts, such as IRA's.
INVESTMENTS
Initial investments are at least $100 ($25 under a group or retirement plan),
and are to be accompanied by an Application. Additional investments may be made
for $25 or more at any time. There are no sales commissions or other charges.
REDEMPTIONS
You may sell your shares any time. As with purchases, you may choose from
several methods - including telephone, written instructions, and checkwriting.
You will be paid the market price for your shares on the day we receive your
instructions, and there are no redemption fees or charges. If we receive your
redemption request by one p.m. Pacific time, your check is normally mailed to
you the same day. Redemption of new investments may be restricted for up to 14
calendar days to allow for bank clearing.
STATEMENTS
On the date of each transaction, you are mailed a confirmation, showing the
details of the transaction and your account balance. At year-end and at selected
points during the year we mail a statement showing all transactions for the
period. Monthly consolidated statements are available upon request.
DIVIDENDS AND PRICES
The Income Fund pays income dividends twice annually, at the end of May and
December. Most shareowners reinvest all dividends in additional shares. Fund
prices are carried in major newspapers and quoted on electronic systems (symbols
AMANX and AMAGX), available by calling 888-73-AMANA (26262), and accessible on
the Internet at www.saturna.com.
FREE RETIREMENT PLANS
We offer a defined contribution Profit-Sharing / Money Purchase plan and an
Individual Retirement Account. There are no extra fees or charges for these
plans.
FOR MORE INFORMATION
Please consult the applicable pages of this Prospectus for additional details
on Amana Mutual Funds Trust and the services to its shareowners. You may also
call 800-SATURNA (800-728-8762) with any questions, and visit Saturna Capital
on the Internet: www.saturna.com.
11
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
AMANA MUTUAL FUNDS TRUST
GROWTH FUND
INCOME FUND
1300 N. State Street
Bellingham, Washington 98225
360/734-9900
800/SATURNA
STATEMENT OF ADDITIONAL INFORMATION
August 27, 1998
This Statement of Additional Information is not a Prospectus. It merely
furnishes additional information concerning the Trust, the Income Fund and the
Growth Fund that is not included in the Prospectus. It should be read in
conjunction with the Prospectus. You may obtain a Prospectus dated August 27,
1998 and shareowner Annual and Semi-Annual reports without charge by writing to
the address shown above, calling toll-free to the number shown above, and on the
Internet at http://www.saturna.com/amana.
1
<PAGE>
TABLE OF CONTENTS
Page
Trust History 3
Fund Descriptions, Investments and Risks 3
Management of the Trust 5
Principal Holders of Securities 7
Investment Advisory and Other Services 8
Brokerage Allocation 9
Capital Stock 10
Purchase, Redemption and Pricing of Shares 11
Taxation of the Trust 11
Performance Data 12
Financial Statements 13
2
<PAGE>
TRUST HISTORY
Amana Mutual Funds Trust was orga-nized as an Indiana Business Trust on July
26, 1984. The Income Fund commenced operations on June 23, 1986. The Growth
Fund began operations on February 3, 1994.
FUND DESCRIPTIONS, INVESTMENTS AND RISKS
CLASSIFICATION
Amana Mutual Funds Trust is de-signed to meet the needs of various investors,
and the particular needs of Muslims by invest-ing in ac-cordance with Islamic
principles. The Trust is open to any investor.
The Trust is techni-cally known as an "open-end diversi-fied man-agement
in-vest-ment com-pany." It is a "series trust" that presently offers two
sepa-rate funds for in-vestors: Growth Fund and Income Fund.
INVESTMENT STRATEGIES AND RISKS
The Prospectus describes the investment strategies and risks of those
strategies.
FUND POLICIES
The primary objective of the GROWTH FUND is long-term capital growth,
consis-tent with Islamic principles. The objec-tives of the INCOME FUND are
cur-rent in-come and preservation of capi-tal, consis-tent with Islamic
principles; current in-come is its pri-mary objective. In accor-dance with
Islamic principles, the Funds shall not make any invest-ments that pay interest.
The in-vestment ob-jec-tives of the Funds cannot be changed without approval by
vote of a majority of the out-standing shares of a Fund.
The Funds pursue these investment objectives by purchasing equity securities.
While the Funds may pur-chase preferred stocks and engage in covered op-tion
writ-ing, they cur-rently do not do so. The Funds also have the power to use
short-term income produc-ing invest-ments.
In accordance with Islamic principles, the Funds shall not purchase bonds,
debentures, or other interest paying obli-gations of indebtedness. The Funds may
not make loans, lend portfolio securities, make short sales, borrow money, or
purchase or sell op-tions, except that they may sell covered call options and
purchase call options for the purpose of termi-nating call options previ-ously
sold. These restrictions are fundamen-tal policies and may not be changed
without prior approval by vote of a majority of the out-standing shares of a
Fund.
The Adviser selects investments in com-panies that to its knowledge do not
vio-late the requirements of the Islamic faith at the time of investment. To
insure that investments meet the requirements of the Islamic faith, the Adviser
has a consulting agreement on Islamic issues with the North American Islamic
Trust (NAIT), a non-profit organization serving the Muslim community. Whenever
the Adviser learns that a company whose stock is owned by a Fund has activities
(through acquisi-tion or otherwise) that it believes are not permitted by
Islamic principles, the Adviser notifies the Board of Trustees. The Board
determines whether the stock of that company should be divested by the Fund.
Immediate divesting may have an ad-verse impact on the investment per-for-mance
of a Fund.
3
<PAGE>
(i) Each Fund has the power to use covered call options, as a method to
in-crease the income received from common and preferred stocks owned by that
Fund. The Funds may sell (write) covered call options and purchase call options
to close out call options previously written. The Trustees currently have, by
policy, suspended the use of call options.
(ii) Each Fund has authority to invest up to 10% of its assets in foreign
secu-rities not traded publicly in the US. While the Funds may occasionally
invest in such foreign securities, current policy limits such investments to 5%
of fund assets.
The Funds intend to invest only in foreign securities available for trading and
set-tlement in the United States, primarily in American Depository Receipts
(ADRs) for foreign securities. These are certificates issued by United States
banks, representing the right to receive securities of the foreign issuer
deposited in that bank or a corre-spondent bank. The Adviser does not plan to
invest fund assets in foreign securities that are not traded and settled
domestically.
(iii) The Funds shall not purchase
securities on margin;
"restricted securities" (those which are subject to legal or contractual
restrictions on resale or are otherwise not readily marketable); or oil, gas or
other mineral exploration leases and programs. In addition, the Funds shall not
purchase real estate; purchase real estate limited part-nerships (excepting
master limited partnerships that are publicly traded on a na-tional security
exchange or NASDAQ's National Market System); purchase commodities or com-modity
contracts; borrow, lend, or issue senior securities; act as a securities
underwriter; purchase se-curities of any issuer in excess of 5% of the value of
a Fund; or purchase more than 10% of the outstanding voting securities of any
issuer or concentrate their in-vestments in a single industry beyond 25% of the
total value of a Fund. Also, no Fund of the Trust shall purchase or retain
securities of any issuer if the offi-cers or trustees of the Trust or its
adviser owning beneficially more than one half of one percent of the securities
of an issuer together own beneficially more than five percent of the securities
of that issuer; the Trust shall not invest in the securities of other
in-vestment companies, except by purchase in the open market where no commission
or profit results from the purchase other than the customary broker's commission
or except when the purchase is part of a plan of merger, consolidation,
reorganization or acquisition; and no Fund of the Trust shall invest more than
10% of its assets in the securities of issuers which together have a record of
less than three years continuous operation or securities of issuers which are
restricted as to disposition. (iv) The Funds' investments in warrants,
valued at the lower of cost or mar-ket, shall not exceed 5% of the value of a
Fund's net assets. Included within that amount, but not to exceed 2% of the
value of a Fund's net assets, may be warrants that are not listed on the New
York or American Stock Exchange. Warrants acquired by a Fund in units or
attached to securities may be deemed to be without value. 4 <PAGE>
(v) The Trustees have also instructed that investments not be made in preferred
stocks.
(vi) The Trustees have also instructed that the Funds should favor no-debt and
low-debt companies.
TEMPORARY DEFENSIVE POSITION
The Funds may use short-term in-come producing investments to the extent the
Board of Trustees and the consultant on Islamic principles agree that those
in-vestments are consistent with Islamic principles. The Adviser does not know
of any short-term invest-ments that meet Islamic requirements that are currently
available in the United States. Accordingly, assets are held in cash at the
custodian when the Adviser implements a defensive position.
PORTFOLIO TURNOVER
The Trust places no restrictions on portfolio turnover and will buy or sell
invest-ments according to the Adviser's appraisal of the factors affecting the
market and the economy. The portfolio turnover rate for the Income Fund for the
fiscal years ended May 31, 1998 and 1997, was 8% and 18%, respectively. The
turnover rate for the Growth Fund for the fiscal years ended May 31, 1998 and
1997, was 25% and 25%, respectively.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
A Board of five Trustees manages the Trust: Bassam Osman, Nicholas Kaiser,
Jamal M. al-Barzinji, M. Yaqub Mirza, and Iqbal Unus. The Trustees establish
policies, as well as review and approve contracts and their continuance. The
Trustees also elect the officers, de-termine the amount of any dividend or
capital gain distribution and serve on any committees of the Trust.
5
<PAGE>
MANAGEMENT INFORMATION
<TABLE>
<CAPTION>
<S> <C>
The Trustees and officers are:
(1) (2)
- ----------------------------------- ----------------------------
Name, Address, and Age Position(s) Held with Trust
Bassam Osman, MD * Chairman and Trustee
Mercy Hospital & Medical Center
Stevenson Expressway at King Drive
Chicago, Illinois 60616
Age: ___
Nicholas Kaiser, MBA * President and Trustee
1300 N. State Street
Bellingham, Washington 98225
Age: 52
Jamal M. al-Barzinji, PhD Trustee
555 Grove Street
Herndon, Virginia 22070
Age: 58
M. Yaqub Mirza, PhD Treasurer and Trustee
555 Grove Street
Herndon, Virginia 22070
Age: 51
Iqbal Unus, PhD Trustee
750-A Miller Drive, SE
Leesburg, VA 20176
Age: 50
M. Naziruddin Ali Vice President
2622 East Main St
Plainfield, Indiana 46168
Age: ___
Pandora Larner Secretary
1300 N. State Street
Bellingham WA 98225
Age: 51
Teresa K. Anderson, MBA Asst. Treasurer
1300 N. State Street
Bellingham WA 98225
Age: 29
- -----------------------------------
<S> <C>
The Trustees and officers are:
(1) (3)
- ----------------------------------- ------------------------------------------------------------------------------------------
Name, Address, and Age Principal Occupation(s)
During Past 5 years
------------------------------------------------------------------------------------------
Bassam Osman, MD * Neurologist
Mercy Hospital & Medical Center Chairman, North American Islamic Trust (Amana's religious consultant)
Stevenson Expressway at King Drive
Chicago, Illinois 60616
Age: ___
Nicholas Kaiser, MBA * President, Saturna Capital Corporation (Amana's investment adviser)
1300 N. State Street President, Investors National Corporation (Amana's distributor)
Bellingham, Washington 98225
Age: 52
Jamal M. al-Barzinji, PhD Chairman, Mar--Jac Poultry, Inc. (Halal food processing)
555 Grove Street Director, Safa Trust, Inc. (charitable organization)
Herndon, Virginia 22070
Age: 58
M. Yaqub Mirza, PhD President, Mar-Jac Investments, Inc. (Halal financial investments)
555 Grove Street Director, Mylex Corporation (computer components)
Herndon, Virginia 22070 Chairman, Jugos Concentrados SA (Halal food processing)
Age: 51
Iqbal Unus, PhD Dean of Students/Registrar, School of Islamic and Social Sciences
750-A Miller Drive, SE
Leesburg, VA 20176
Age: 50
M. Naziruddin Ali General Manager, North American Islamic Trust (Amana's religious consultant)
2622 East Main St
Plainfield, Indiana 46168
Age: ___
Pandora Larner Secretary; Saturna Capital Corporation (Amana's investment adviser) [since 1996]
1300 N. State Street Doncaster Sales (direct marketing) [1993-1995]
Bellingham WA 98225
Age: 51
Teresa K. Anderson, MBA Director of Funds and Operations, Saturna Capital Corporation (Amana's investment adviser)
1300 N. State Street
Bellingham WA 98225
Age: 29
- -----------------------------------
<FN>
Messrs. Kaiser and Osman are "interested persons" of the Trust as
de-fined in the Investment Company Act of 1940.
</FN>
</TABLE>
6
<PAGE>
The Board has authority to establish an Executive Committee with the power to
act on behalf of the Board between meetings and to exercise all powers of the
Trustees in the management of the Trust. No Executive Committee has been
established at this time. COMPENSATION Their respective employers pay the
salaries of officers of the Trust, not the Trust. The Trustees are paid no
compensation or fees by the Trust, other than reim-bursement of travel expense.
For the fiscal year ended May 31, 1998, no Trustees' ex-penses were incurred, as
set forth below:
Pension or Total Aggregate Retirement
Compensation
Name of Compensa- Benefits Accrued Estimated Annual From
Registrant
Person; tion From As Part of Fund Benefits Upon and Fund
Complex
Position Registrant Expenses Retirement Paid to Trustees
- -------- ---------- -------- ---------- ----------------
BASSAM OSMAN, $0 $0 $0 $0
Trustee
JAMAL M. AL-BARZINJI 0 0 0 0
Trustee
M. YAQUB MIRZA, 0 0 0 0
Trustee
IQBAL UNUS, 0 0 0 0
Trustee
NICHOLAS F. KAISER 0 0 0 0
Trustee
PRINCIPAL HOLDERS OF SECURITIES
As of June 30, 1998, the principal holders of rercord (those with more than 5%
of the outstanding shares) of securities of Income Fund were:
NONE
As of June 30,1998, the principal holders (those with more than 5% of the
outstanding shares) of securities of Growth Fund were:
Name and Address Shares Percentage of Class
------------------ ------ -------------------
Humana Charitable Trust 172,841 13.35%
M. Yaqub Mirza, Trustee
555 Grove Street
Herndon VA 20170
Mohammad G. Reda 83,271 6.43%
Mawya Shocair JT WROS
19 Tamarack Rd.
Weston MA 02193
7
<PAGE>
Salaheddine Tomeh 79,431 6.13%
Afaf Tomeh JT WROS
5600 E. Doubletree Rd.
Paradise Valley AZ 85253
As of June 30, 1998, officers and trustees (plus affiliated family members and
entities), as a group, owned 40,709 shares, being 3.9% of the outstanding shares
of the Income Fund. Also as of that date, the similar figures for Growth Fund
were 209,385 shares and 16.2% of the Growth Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER AND ADMINISTRATOR
Saturna Capital Corporation, 1300 N. State Street, Bellingham, Washington 98225
is the Investment Adviser and Administrator (the "Adviser") for the Trust.
Saturna Capital is also the Trust's shareowner servicing agent. Mr. Nicholas
Kaiser, by his ownership of the majority of its voting stock, is the controlling
person of the Adviser. Mr. Kaiser is also a Trustee and President of Amana
Mutual Funds Trust, and the principal portfolio manager of both the Growth Fund
and the Income Fund. Mr. Kaiser, together with his wife, own 2.2% of Income Fund
and 0.5% of Growth Fund. RELIGIOUS CONSULTANT The North American Islamic Trust,
Inc. (NAIT), 2622 East Main Street, Plainfield, Indiana 46168, acts as the
re-ligious consultant to Saturna Capital regarding issues of Islamic principles
relating to the Funds un-der a sub-advisory agreement with the Ad-viser.
NAIT is a non-profit organization, incorporated in 1973, for the purpose of
serving the best interests of Islam, the Islamic community, and other Islamic
organizations. The Trustees of NAIT are Bassam Osman, Chairman; Ahmad Zaki
Hammad, Abdalla Idris Ali, Sala Obeidallah, and Muzammil Siddiqi. NAIT has no
stock or ownership interests and no membership other than its Board of Trustees.
NAIT provides religious, charitable, and educational services to the Islamic
Society of North America (ISNA), the Muslim Student Association (MSA), and other
affiliates. The services of NAIT include holding and managing properties and
Islamic Centers of Muslim organizations in trust, managing projects and
programs, administrating funds of Islamic Centers for religious, charitable and
educational purposes, and publishing books and materials.
ADVISORY FEE
Each Fund pays the Adviser an advi-sory and administration fee of 0.95% annually
of average daily net assets. The Adviser, at its own expense and without
additional cost to the Funds, furnishes office space, office facilities and
equipment, personnel (including executive officers) and clerical and bookkeeping
services required to conduct the Funds' business. Also from the advisory fee,
NAIT is paid for consulting services an an-nual fee of 0.2% of the aver-age
daily net asset value of each Fund.
8
<PAGE>
For the fiscal years ended May 31, 1998, 1997, and 1996, Saturna Capital was
paid $172,680, $136,282, and $109,078, respectively as the Income Fund's
investment adviser and administrator. Similarly, for the fiscal years ended May
31, 1998, 1997, and 1996, Saturna Capital was paid $75,008, $49,056 and $25,375,
respectively, as the Growth Fund's investment adviser and administrator. For the
years ended May 31, 1998, 1997, and 1996, Saturna Capital Corporation paid NAIT
as its religious consultant $53,133, $38,943 and $28,348, respectively.
The advisory agreements also provide in the event that the total ex-penses of
either Fund (excluding taxes, commissions and extraordinary items) for any
fiscal year exceed 2% of average daily net assets, the Fund shall be reimbursed
for such excess.
Under its respective investment advi-sory agreement each Fund pays its own
taxes, bro-kerage commissions, any trustees' fees (currently none), legal and
auditing fees, insurance premi-ums, cus-todian, transfer agent, registrar and
divi-dend disbursing agent fees, ex-penses in-curred in complying with state and
federal laws regulating the issue and sale of its shares, and mailing and
print-ing costs for prospectuses, reports and notices to shareowners.
Under a separate service agreement, Saturna Capital also provides services as
the transfer agent and dividend-paying agent for the Funds. As transfer agent,
Saturna furnishes to each shareowner a statement after each transaction, an
historical statement at the end of each year showing all transactions during the
year, and Form 1099 tax forms. Saturna also, on behalf of the Trust, responds to
shareowners' questions or correspondence. Further, the transfer agent regularly
furnishes the Funds with current shareowner lists and information necessary to
keep the shares in balance with the Trust's records. The transfer agent performs
the mailing of all financial statements, notices and prospectuses to
shareowners. The transfer agent maintains records of contributions,
disbursements and assets as required for IRAs and other qualified retirement
accounts. The transfer agent is paid a monthly fee of $1.50 per active account.
National City Bank, Indiana, of Indianapolis, One Merchants Plaza, Indianapolis,
Indiana 46255 is the custodian of the Funds. As custodian for the Funds, the
bank holds in custody all securities and cash, settles for all securities
trans-actions, receives money from sale of shares and on order of the Funds pays
the autho-rized expenses of the Funds. When investors redeem Fund shares, the
pro-ceeds are paid to the shareowner from an account at the custodian bank.
Tait, Weller and Baker, Two Penn Center Plaza, Suite 700, Philadelphia, PA
19102-1707 are the indepen-dent accountants for the Trust and the Funds. The
accountants conduct an annual audit of the Funds as of May 31 each year, prepare
the tax returns of the Funds and as-sist the Adviser in any accounting matters
throughout the year. PRINCIPAL UNDERWRITER The Adviser's wholly-owned
subsidiary, Investors National Corporation, 1300 N. State Street, Bellingham WA
98225 is a discount brokerage firm and acts as distribu-tor for the Trust
without compen-sation. Mr. Nicholas Kaiser, an affiliated person of the Trust,
is President of Investors National Corporation. BROKERAGE ALLOCATION The placing
of purchase and sale orders as well as the negotiation of commissions is
performed by the Adviser and is reviewed by the Board of Trustees. The Adviser
may make allocation of brokerage to any broker in return for research or
services and for selling shares of any fund of Amana Mutual Funds Trust. Brokers
may provide research or statistical material to the Adviser,
9
<PAGE>
but this information is only supple-mental to the research and other statistics
and material accumulated and maintained through the Adviser's own efforts. Any
such supplemental information may or may not be of value or used in making
investment decisions for the Trust or any other ac-count serviced by the
Adviser. Research services provided by brokers through which the Trust effects
securities transactions may be used by the Trust's investment adviser in
servicing all of its accounts and not all of these services may be used by the
adviser in connection with the Trust.
The primary consideration in effecting securities transactions for the Trust is
to obtain the best price and execution which in the judgment of the Adviser is
at-tainable at the time and which would bring the best net overall economic
result to a Fund. Factors taken into account in the selection of brokers include
the price of the security, commissions paid on the transaction, the efficiency
and cooperation with which the transaction is effected, the expediency of making
settlement and the financial strength and stability of the broker. The Adviser
may negotiate commis-sions at a rate in excess of the amount another broker
would have charged if it de-termines in good faith that the overall net economic
result is favorable to the Fund, and is not required to execute trades in
"over-the-counter" securities with primary market-makers if similar terms are
available elsewhere. The Adviser evaluates whether brokerage commissions are
reasonable based upon available information about the general level of
commissions paid by similar mutual funds for comparable services.
Brokerage is almost entirely directed to Investors National Corporation, a
wholly owned subsidiary of the adviser, which is qualified as a broker-dealer to
engage in a gen-eral brokerage business. Investors National Corporation is a
discount bro-kerage, executing stock trades for a commission of 3 cents per
share plus the price of one share. Consideration is given by the Trust to the
unpaid services of Investors National Corporation as the Trust's principal
underwriter. For the fiscal years ended May 31, 1998, 1997, and 1996, the Income
Fund paid Investors National $4,354, $6,702, and $6,906, respectively, in
commissions. For the fiscal years ended May 31, 1998, 1997 and 1996, Growth Fund
paid Investors National a total of $8,359, $6,832, and $4,783 in commissions.
For the fiscal year ended May 31, 1998, Income Fund paid 100% of its aggregate
brokerage commissions to Investors National, and the Fund effected 100% of its
aggregate dollar amount of transactions involving the payment of commissions
through Investors National. Also for the fiscal year ended May 31, 1998, Growth
Fund paid 97.99% of its aggregate brokerage commissions to Investors National,
and the Fund effected 98.24% of its aggregate dollar amount of transactions
involving the payment of commissions through Investors National. The Trustees
review brokerage activity in detail at each regular meeting. Meetings are held
on a quarterly schedule.
CAPITAL STOCK
Each Fund of Amana Mutual Funds Trust is divided into shares of benefi-cial
inter-est. The shares of each sep-arate Fund of the Trust have equal voting
rights. All shares are fully paid, non-assessable, transferable and with rights
of redemp-tion, and are not subject to preemptive rights. The Trust is not
required to hold annual shareowner meetings. However, special meetings may be
called for such pur-poses as electing or remov-ing Trustees, changing
fundamental policies, or voting on approval of an advisory contract. On issues
relating solely to a single Fund, only the shareowners of that Fund are entitled
to vote. All dividends and distribu-tions for each Fund shall be dis-tributed to
shareown-ers in proportion to the number of shares owned.
10
<PAGE>
PURCHASE, REDEMPTION AND PRICING OF SHARES
See How to Buy Shares, How to Redeem Shares and Net Asset Value in the
Prospectus for an explanation about the ways to purchase or redeem shares. Both
purchases and redemptions are made at net asset value per share.
In addition to normal purchases or redemptions, the shares of the Funds may be
exchanged for shares of other funds of Amana Mutual Funds Trust. Exchanges will
be made at no charge upon written request or by telephone if the shareowner has
previously authorized telephone privileges on the application. A gain or loss
for federal tax purposes will be realized upon redemption of any shares for the
purposes of an exchange as described above.
Net asset value per share is determined by dividing the value of all securities
and other assets, less liabilities, by the number of shares outstanding. The net
asset value is determined for each Fund as of the close of trading on the New
York Stock Exchange (generally 4 p.m. New York time) on each day the Exchange is
open for trading. The Exchange is generally closed on: New Year's Day, Martin
Luther King Day, President's Day, Good Friday, Memorial Day, Independence Day
(observance), Labor Day, Thanksgiving Day and Christmas Holiday. See the balance
sheet in the Annual Report or Semi-Annual Report for a specimen sheet showing
how the Funds calculate net asset value, which is the price used for both
purchase and redemption of shares.
TAXATION OF THE TRUST
The Trust is organized as a "series" investment company. Each Fund of the Trust
is a separate eco-nomic entity with separate assets and liabilities and separate
income streams. The shareowners of each separate Fund may look only to that fund
for income, capital gain or loss, redemption, liquidation, or termination. Each
Fund has separate arrangements with the Adviser. Assets of each Fund are
segregated. The credi-tors and shareowners of each Fund are limited to the
assets of that fund for recovery of charges, expenses and liabilities. Each Fund
of the Trust conducts separate voting on issues relating solely to that fund,
except as required by the Investment Company Act. The tax status and tax
consequences to shareowners of each Fund differ, depending upon the investment
objectives, operations, income, gain or loss, and distributions from each Fund.
Each Fund intends to distribute to shareowners substantially all of its net
investment income and net realized capital gains, if any, and to comply, as they
have since inception, with the provisions of the Internal Revenue Code
applicable to regulated investment companies (Subchapter M), which relieve
mutual funds of federal income taxes on the amounts so distributed.
If shareowners do not furnish the transfer agent with a valid Social Security or
Tax Identification Number and in certain other circumstances, the transfer agent
is required to with-hold 31% of income. Dividends and capital gains
distributions to shareowners who are nonresident aliens may be subject to a 30%
United States foreign with-holding tax under the existing provisions of the code
applicable to foreign individu-als and entities unless a reduced rate of
withholding or a withholding exemption is provided under applicable treaty law.
If the IRS determines that the Trust should be fined or penalized for inaccurate
or missing or otherwise inadequate reporting of a Tax Identification Number, the
amount of the IRS fee or penalty will be directly assessed to the shareowner
account involved.
11
<PAGE>
PERFORMANCE DATA Average annual Total Return and
Current Yield information may be useful to in-vestors in reviewing a Fund's
performance. However, certain factors should be taken into account before using
the information as a basis for comparison with alternative investments. No
adjustment is made for taxes payable on distribu-tions. The performance for any
given past period is not an indication of future rates of return or yield on its
shares. Total return for the Income Fund for one year from May 31, 1997 through
May 31, 1998 was 23.51%. Average annual total return for the five years ended
May 31, 1998 was 14.32%. Average annual total return for the ten years ended May
31, 1998 was 12.48%.
Total Return for Growth Fund for the one year from May 31, 1997 through May 31,
1998 was 12.39%. Its average annual total return for the three years ended May
31, 1998 was 17.34%. The average annual total return from February 3, 1994
(commencement of operations) through May 31, 1998 was 11.95%.
Average annual Total Return quotations for various periods illustrated are
computed by finding the average annual compounded rate of return over the period
quoted that would equate the initial amount invested to the ending redeemable
value accord-ing to the following formula:
P (l + T)n = ERV
WhereP = a hypothetical initial Payment of $1,000 T = average annual Total
return n = number of years ERV = Ending Redeemable Value of the $1,000
payment
made at the beginning of the period.
To solve for average Total Return, the formula is as follows:
T = ( ERV/P)1/n - 1
Current Yield is computed by dividing the net investment income, as defined by
- ------- -----
the Securities and Exchange Commission, over a rolling 30 day period for which
the yield is presented by the average number of shares eligible to receive
dividends for the period over the maximum offering price per share on the last
day of the period, and annualize the results. The formula used is:
Yield = 2[( a-b/cd +1)6 -1]
Where a = dividends accrued during the period b = expenses accrued for the
period (net of reimbursements) c = the average daily number of shares
outstanding during the period that were entitled to receive dividends d = the
price per share on the last day of the period
The Income Fund has no interest income. For the purpose of computing yield, it
recognizes dividend income by accruing 1/360 of the stated annual dividend rate
of the security each day in the last 30 days that the security is in the
portfolio. The cur-rent yield on the Income Fund and the Growth Fund for the 30
day period ending May 30, 1998 was 1.63% and (0.52)%, respectively.
12
<PAGE>
FINANCIAL STATEMENTS
The most recent audited annual report accompanies this Statement of Additional
Information.
There is incorporated into this Registration Statement the following financial
information in the Annual Report to shareowners for the fiscal year ended May
31, 1998. Filed as Exhibit A hereto:
Report of Tait, Weller & Baker, Independent Accountants. Statement of Assets and
Liabilities as of May 31, 1998. Statement of Operations - Year ended May 31,
1998. Statements of Changes in Net Assets - years ended May 31, 1998, and 1997.
Investments - as of May 31, 1998.
Notes to Financial Statements.
13
<PAGE>
PART C
OTHER INFORMATION
A
<PAGE>
EXHIBITS
Exhibits included with this filing:
Items marked with an asterisk (*) are incorporated by reference from exhibits
previously filed with the Registration Statement for Amana Mutual Funds Trust
and amendments thereto.
(a)* Articles of Incorporation.
(1) Agreement and Declaration of Trust of Amana Mutual Funds Trust, filed
July 26, 1984 with Secretary of State of Indiana. Incorporated by Reference.
Filed as Exhibit No. 1 to initial filing of Form N-8A and Form N-1A on April
4, 1985. File Nos. 811-4276 and 2-96924.
(2) Resolution of the Board of Amana Mutual Funds Trust creating series
Amana Growth Fund. Incorporated by Reference. Filed as Exhibit 1-2 to
Post-Effective Amendment No. 10 to Registration Statement on Form N-1A filed
December 3, 1993.
(b)* By-laws.
Bylaws of Amana Mutual Funds Trust. Incorporated by Reference. Filed as
Exhibit No. 2 to initial filing of Form N-8A and Form N-1A on April 4, 1985.
File Nos. 811-4276 and 2-96924.
(c)* Instruments Defining Rights of Security Holders. Included in (a) and
(b).
(d)* Investment Advisory Contracts.
(1) Agreement for Investment Advisory and administrative Services for the
Income Fund of Amana Mutual Funds Trust, effective December 28, 1989, between
the Fund and Saturna Capital Corporation. Filed as Exhibit A to filing of
Proxy Statement dated November 30, 1989. File Nos. 8114276 and 2-96924.
(2) Agreement for Investment Advisory and Administrative Services for the
Growth Fund of Amana Mutual Funds Trust, between the Trust and Saturna Capital
Corporation dated December 3, 1993. Incorporated by reference. Filed as
Exhibit 5-2 to Post-Effective Amendment No. 11 to Registration Statement on
Form N-1A filed August 5, 1994
(3) Sub-advisory Agreement, effective December 28, 1989, between Saturna
Capital Corporation and North American Islamic Trust, Inc. Incorporated by
Reference. Filed as Exhibit B to Proxy Statement dated November 30, 1989.
File Nos. 811-4276 and 2-96924.
(4) Sub-advisory Agreement between Saturna Capital Corporation and North
American Islamic Trust, Inc. for services to Growth Fund series of Amana
Mutual Funds Trust, dated December 3, 1993. Incorporated by reference. Filed
as Exhibit 5-3 to Post-Effective Amendment No. 11 to Registration Statement on
Form N-1A filed August 5, 1994.
(5) Consent of North American Islamic Trust, Inc. as religious
consultant, dated December 19, 1985. Incorporated by Reference. Filed as
Exhibit No. 5 in Pre-effective Amendment No. 2 to Registration Statement on
Form N-1A filed January 24, 1986. File Nos. 811-4276 and 2-96924.
b
<PAGE>
(e) Underwriting Contracts. Not applicable.
(f) Bonus or Profit Sharing Contracts. Not applicable.
(g)* Custodian Agreements.
(a) Custodian Agreement between Income Fund of Amana Mutual Funds Trust
and National City Bank, Indiana effective October 22, 1993, incorporated by
reference. Filed as Exhibit 8-1 to Post-Effective Amendment No. 10 to
Registration Statement on Form N-1A filed December 3, 1993.
(b) Custodian Agreement between Growth Fund of Amana Mutual Funds Trust and
National City Bank, Indiana, dated December 3, 1993, incorporated by reference.
Filed as Exhibit 8-2 to Post-Effective Amendment No 11 to Registration Statement
on Form N-1A filed August 5, 1994.
(h)* Other Material Contracts.
Agreement for Transfer Agent and Dividend Disbursement Agent Services for
the Amana Mutual Funds Trust between the Trust and Saturna Capital Corporation
dated September 1, 1990. Incorporated by Reference. Filed as Exhibit No. 9 to
filing of Amendment No. 6 of Form N-1A in September, 1990.
(i) Legal opinions.
Opinion of Counsel dated July 17, 1998 (attached as Exhibit i)
(j) Other opinions.
(a) Accountant's Consents dated July 15, 1998 (attached as Exhibit j.a)
*(b) Copies of Powers of Attorney. Incorporated by reference. Filed as
Exhibit No. 11-2 to Post-Effective Amendment No. 8 on Form N-1A in
July, 1992.
(k) Omitted Financial Statements. Not applicable.
(l)* Initial Capital Agreements. Form of Subscription Agreement and
Investment Letter. Incorporated by Reference. Filed as Exhibit 13-1 to
Post-Effective Amendment No. 10 to Registration Statement on Form N-1A filed
December 3, 1993.
(m) Rule 12(b)-1 Plan. Not applicable.
(n) A Financial Data Schedule meeting the requirements of rule 483 is
attached as Exhibit n.
(o) Rule 18f-3 Plan. Not applicable.
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT No person or
persons are directly or indirectly controlled by or under common control with
the Registrant.
c
<PAGE>
INDEMNIFICATION
There is no provision for indemnification of the officers and trustees of the
Trust except as provided by Article III, Section 3.18, and Article V, Section
5.3 of the Agreement and Declaration of Trust of Amana Mutual Funds Trust, which
provisions are set forth below:
ARTICLE III
-----------
SECTION 3.18. Indemnification
------- ----- ---------------
In addition to the mandatory indemnification provided for in Article V hereof,
the Trustees shall have power to the extent permitted by law to indemnify or
enter into agreements with any person with whom the Trust or its Portfolios has
dealings, including, without limitation, any investment adviser or subadviser,
including the Adviser, to such extent as the Trustees shall determine.
ARTICLE V
---------
SECTION 5.3. Indemnification
------- ---- ---------------
Any person (and his heirs, executors and administrators) shall be indemnified by
the Trust against reasonable costs and expenses incurred by him in connection
with any action, suit or proceeding to which he may be made a party by reason of
his being or having been a trustee, officer or employee of the Trust, or of
another corporation if the Trust requested him to serve as such, except in
relation to any actions, suits or proceedings in which he has been adjudged
liable because of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office. In the absence of
an adjudication which expressly absolves such person of liability to the Trust
or its shareowners for willful misfeasance, bad faith, gross negligence and
reckless disregard of the duties involved in the conduct of his office, or in
the event of a settlement, each such person (and his heirs, executors and
administrators) shall be indemnified by the Trust against payments made,
including reasonable costs and attorneys' fees, provided that such indemnity
shall be conditioned upon the prior determination made by a written opinion of
independent counsel that such person has no liability by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. Amounts paid in settlement shall not
exceed costs, fees and expenses which would have been reasonably incurred if the
action, suit or proceeding had been litigated to a conclusion. Such a
determination by independent counsel, and the payments of amounts by the Trust
on the basis thereof, shall not prevent a shareowner from challenging such
indemnification by appropriate legal proceedings on the grounds that the person
indemnified was liable to the Trust or its shareowners by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The foregoing rights and indemnification
shall not be exclusive of any other rights to which such persons may be entitled
according to law.
Undertaking as to Indemnification Provisions
- ----------- -- -- --------------- ----------
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or
d
<PAGE>
controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer of controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER The answer to this item is
fully disclosed in Part A and Part B of the Form N-1A.
PRINCIPAL UNDERWRITERS
The broker-dealer subsidiary of the Adviser, Investors National Corporation,
acts where efficient for the Trust as "distributor," without fee or compensation
of any kind, under authority of a resolution by the Trustees. The Trust has no
formal underwriters as the shares technically are sold directly by the Trust
without a sales charge.
Officers and employees of Investors National Corporation receive no compensation
(salary or commissions) from Investors National Corporation. The only
compensation paid employees of Investors National Corporation or of Saturna
Capital Corporation is salary, with an annual bonus primarily dependent upon the
overall financial success of Saturna Capital Corporation.
LOCATION OF ACCOUNTS AND RECORDS
With the exception of those records maintained by the Custodian, National City
Bank, Indiana, 101 W. Washington Street, Indianapolis, Indiana, 46255, all
records of the Trust are physically in the possession of the Trust and
maintained at the offices of Saturna Capital Corporation, 1300 N. State Street,
Bellingham, Washington 98225.
MANAGEMENT SERVICES
There are no management-related contracts in which service is provided to the
Trust other than those discussed in Parts A and B of this Form N-1A.
e
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Trust has duly caused this registration
statement to be duly signed on its behalf by the undersigned, duly authorized,
in the City of Bellingham, State of Washington, on the 15th day of July, 1998
AMANA MUTUAL FUNDS TRUST
By /s/ Nicholas F. Kaiser
-------------------------
Nicholas F. Kaiser,
President
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this amendment has been signed below by the
following persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Nicholas F. Kaiser President; Trustee
- -----------------------
July 15, 1998
Nicholas F. Kaiser (Principal Executive Officer)
/s/ Teresa K. Anderson Asst. Treasurer
- -------------------------
July 15, 1998
Teresa K. Anderson (Principal Financial Officer)
** Bassam Osman All other Trustees July 15, 1998
** Jamal M. al-Barzinji
** M. Yaqub Mirza
** Iqbal Unus
** By /s/ Nicholas F. Kaiser
-------------------------
Nicholas F. Kaiser, Attorney-in-fact
f
<PAGE>
AMANA
INCOME FUND GROWTH FUND
ANNUAL REPORT
MAY 31,1998
(GRAPHIC OMITTED)
May 31, 1998
It's been another very good year for stock market investors. Amana Trust's
assets are almost $30 million, up a healthy 33% for the year. Our 2,909 active
shareowner accounts are spread to 38 states and 27 foreign countries. Inside,
please find the details of the fiscal year's operations and the year-end
portfolios. For the fiscal year ended May 31, Amana's INCOME FUND total return
was 23.5% a good performance considering its investment restrictions and
income-oriented nature. Smaller companies again underperformed the large-cap
market during the last year, and the GROWTH FUND appreciated 12.4%. In
comparison, the S&P 500 (large caps) provided a total return of 30.7% and the
Russell 2000 (smaller caps), 21.4% for the last year. The strong markets of the
last several years have pushed prices to rich levels by most historical
standards . Our frank expectation is that near-term, returns are unlikely to be
as good. Financial problems in Japan and the rest of Asia have yet to be fully
addressed, while US corporate earnings growth has dramatically slowed. We
continue to focus the Funds' investments in value-based businesses, in part to
avoid the volatility we expect in some market sectors. Your board is proud to
note Amana Income Fund's 12 years of successful 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. 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 15, 1998
<PAGE>
Discussion of Fund Performance
(GRAPHIC OMITTED)
Stocks continue to perform well. The unusually good returns for the two previous
fiscal years continued for the year ended May 31, 1998. Amana Income Fund's
total return was 23.5% , and Amana Growth Fund's total return was 12.4%. For the
last three years, Amana Income's average annual return was
------
21.3% and Amana Growth's average annual return was 17.3%
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 (+30.7%).
Smaller companies fared less well, as shown by the Russell 2000 (+21.4%) and the
S&P 600 SmallCap Index (+24.3%). 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 (+25.6%) and Small Company Growth Funds (+23.2%).
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. 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 1988) would have grown
to $32,427 at the end of May 1998. While not strictly comparable, the S&P 500
Composite Index is a traditional U.S. securities market benchmark. If $10,000
could have been invested in the S&P 500 at the end of May 1988, that would have
grown to $52,759 over the same 10 years. 2 <PAGE>
(GRAPHIC OMITTED)
ANNUAL REPORT
(GRAPHIC OMITTED)
VALUE OF 10-YEAR $10,000 INVESTMENT IN AMANA INCOME FUND
COMPARED TO S & P 500
(GRAPH OMITTED)
AVERAGE ANNUAL RETURN
- ---------------------
1 YEAR 5 YEAR 10 YEAR
- ---- ----- -----
+23.5% +14.3% +12.5%
DATE S&P 500 AMANA
May-88 $10,000 $10,000
May-98 $52,759 $32,427
Of course, past performance is not a guarantee of future results.
The second graph shows that $10,000 invested in Amana Growth at inception
(February 1994) would have grown to $16,284 at the end of May 1998. If $10,000
could have been invested in the Russell 2000 (a broad index of mid- and
smaller-cap equities) at the beginning of February 1994, that would have grown
to $18,170 over that same period.
(GRAPH OMITTED)
VALUE OF $10,000 INVETMENT AT INCEPTION IN AMANA GROWTH FUND
COMPARED TO RUSSELL 2000 INDEX
AVERAGE ANNUAL RETURN
- --------------------
1 YEAR LIFE OF FUND
- ----- -----------
+12.4% +12.0%
DATE RUSSELL 2000 AMANA
2/3/94 $10,000 $10,000
May,98 $18,170 $16,284
Of course, past performance is not a guarantee of future results.
3
<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,
1998, and the related statements of operations for the year then ended and the
statement of changes in net assets and the financial highlights for each of the
two years in the period 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 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, 1998, 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 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,
1998, the results of their operations for the year then ended, the changes in
their net assets and their financial highlights for each of the two years in the
period then ended, in conformity with generally accepted accounting principles.
/s/Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
June 12, 1998
4
<PAGE>
INCOME INVESTMENTS ANNUAL REPORT
(Graphic Omitted)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Issue Number of Shares Cost Market Value
- ---------------------------------------- ---------------- --------- -------------
COMMON STOCKS (95.6%) - - -
AEROSPACE (1.8%) - - -
Raytheon Co-Cl A 318 - 16,953
AUTOMOTIVE (1.8%) - - -
General Motors 5,000 328,966 360,625
BUSINESS SERVICES (2.8%) - - -
Dun & Bradstreet 6,500 123,900 219,375
Cognizant 6,500 177,891 346,125
--------- -------------
SUB-TOTAL - 301,791 565,500
CHEMICALS (4.4%) - - -
ARCO Chemical 6,500 238,792 362,375
Chemed 14,000 511,314 515,375
--------- -------------
SUB-TOTAL - 750,106 877,750
MACHINERY (5.6%) - - -
Manitowoc Company 27,000 276,657 1,107,000
MEDICAL (12.6%) - - -
American Home Products 20,000 242,862 966,250
Bristol-Myers Squibb 9,280 206,068 998,760
Glaxo-Wellcome plc ADR 10,000 260,427 539,375
--------- -------------
SUB-TOTAL - 709,357 2,504,385
MINING (2.3%) - - -
Rio Tinto plc ADS 9,000 521,086 454,500
OIL & GAS PRODUCTION (12.2%) - - -
Atlantic Richfield 8,000 447,255 631,000
Exxon 10,000 307,279 705,000
Mobil 7,000 395,105 546,000
Enron 11,000 432,158 551,375
--------- -------------
SUB-TOTAL - 1,581,797 2,433,375
PAPER & PAPER PRODUCTS (3.3%) - - -
Consolidated Papers 8,000 218,215 231,500
Boise Cascade 13,000 426,205 433,875
--------- -------------
SUB-TOTAL - 644,420 665,375
PAINT AND ALLIED PRODUCTS (2.2%) - - -
RPM, Inc 25,390 182,267 431,630
<PAGE>
PHARMACEUTICALS (12.6%)
American Home Products 20,000 $ 242,862 $ 966,250
Bristol-Myers Squibb 9,280 206,068 998,760
Glaxo-Wellcome plc ADR 10,000 260,427 539,375
------------- -----------
SUB-TOTAL - 709,357 2,504,385
TELECOMMUNICATIONS (21.5%) - - -
BCE, Inc 26,000 436,370 1,197,625
Cable & Wireless PLC ADR 20,000 408,073 693,750
GTE 10,000 410,441 583,125
SBC Communications 20,480 375,304 796,160
Telefonica de Espana, ADR 7,500 202,956 1,008,750
--------- -------------
SUB-TOTAL - 1,833,144 4,279,410
TOOLS (3.3%) - - -
Regal-Beloit Corporation 20,000 357,762 652,500
TRANSPORTATION (1.5%)
Canadian Pacific Ltd. 10,000 266,577 290,625
UTILITIES- GAS & ELECTRIC (22.0%)
Edison International 13,000 287,969 383,500
Enova Corporation 26,000 584,022 664,625
FPL Group 10,000 344,874 614,375
NIPSCO Industries 24,000 469,159 645,000
Pacific Gas & Electric 20,000 458,942 630,000
Piedmont Natural Gas 20,200 286,927 640,088
Puget Sound Energy 10,000 285,992 261,250
Washington Water Power 25,000 441,582 540,625
--------- -------------
SUB-TOTAL - 3,159,467 4,379,463
--------- -------------
TOTAL INVESTMENTS (95.6%) - $ 10,913,397 $19,019,091
============= ===========
Other Assets (net of liabilities) (4.4%) - - 867,121
-------------
TOTAL NET ASSETS (100%) - - $19,886,212
===========
</TABLE>
(Graphic Omitted)
AMANA INVESTMENTS INCOME 6
<PAGE>
INCOME FINANCIAL HIGHLIGHTS ANNUAL REPORT
Selected data per share of capital stock outstanding throughout each period.
(Graphic Omitted)
For Year Ended May 31
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Year 1998 1997 1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- ------- ------- ------- -------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 16.61 $ 13.93 $ 12.92 $ 12.18 $ 12.86 $11.94 $11.36 $10.86 $10.39
-------- -------- -------- -------- -------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS - - - - - - - - -
Net investment income 0.26 0.38 0.42 0.38 0.30 0.32 0.32 0.39 0.38
Net gains or losses on securities - - - - - - - - -
(both realized and unrealized) 3.58 2.86 1.76 0.8 (0.36) 0.92 0.58 0.46 0.53
-------- -------- -------- -------- -------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 3.84 3.24 2.18 1.18 (0.06) 1.24 0.90 0.85 0.91
-------- -------- -------- -------- -------- ------- ------- ------- -------
LESS DISTRIBUTIONS - - - - - - - - -
Dividends (from net investment income) (0.22) (0.42) (0.41) (0.44) (0.30) (0.32) (0.32) (0.35) (0.44)
Distributions (from capital gains) (0.47) (0.14) (0.76) 0.00 (0.32) 0.00 0.00 0.00 0.00
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total distributions (0.69) (0.56) (1.17) (0.44) (0.62) (0.32) (0.32) (0.35) (0.44)
-------- -------- -------- -------- -------- ------- ------- ------- -------
NET ASSET VALUE END OF PERIOD $ 19.76 $ 16.61 $ 12.92 $ 12.18 $12.86 $11.94 $11.36 $10.86
======== ======== ======== ======== ======= ======= ======= =======
$ 13.93
========
TOTAL RETURN 23.51% 23.62% 17.03% 9.95% -0.63% 10.26% 7.88% 8.11% 8.85%
RATIOS / SUPPLEMENTAL DATA - - - - - - - - -
- -------------------------------------------
Net assets ($000), end of period 19,886 16,332 12,464 10,708 10,432 9,398 6,913 $5,868 $4,760
Ratio of gross expenses to Ave. net assets 1.36% 1.44% 1.57% 1.56% 1.58% 1.58% 1.58% 1.66% 1.76%
Ratio of net investment income to 1.43% 2.51% 3.06% 3.11% 2.22% 2.65% 2.75% 3.73% 3.67%
ave. net assets
Portfolio turnover rate 8% 14% 24% 29% 21% 29% 19% 29% 19%
<S> <C>
Year 1989
-------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 9.11
-------
INCOME FROM INVESTMENT OPERATIONS -
Net investment income 0.38
Net gains or losses on securities -
(both realized and unrealized) 1.29
-------
TOTAL FROM INVESTMENT OPERATIONS 1.67
-------
LESS DISTRIBUTIONS -
Dividends (from net investment income) (0.39)
Distributions (from capital gains) 0.00
-------
Total distributions (0.39)
-------
NET ASSET VALUE END OF PERIOD $10.39
=======
TOTAL RETURN 18.86%
RATIOS / SUPPLEMENTAL DATA -
- -------------------------------------------
Net assets ($000), end of period $3,645
Ratio of gross expenses to Ave. net assets 1.88%
Ratio of net investment income to 3.85%
ave. net assets
Portfolio turnover rate 71%
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
Amana Income Fund Calendar Year Returns (unaudited)
(Graph Omitted)
1988 13%
1989 18%
1990 -3%
1991 23%
1992 1%
1993 11%
1994 -6%
1995 27%
1996 12%
1997 24%
Note: 1998 year-to-date return is +12.9% (December 31,, 1997 through quarter
ending June 30, 1998). Highest return for a quarter was +15.9%. Lowest
return for a quarter was -8.8% (quarter ending September 28, 1990).
7
<PAGE>
INCOME
(Graphic Omitted)
As of May 31, 1998
STATEMENT OF ASSETS & LIABILITIES
<TABLE>
<CAPTION>
ASSETS - -
<S> <C> <C>
Common stocks (cost $10,913,397) $19,019,091
Cash 812,503
Dividends receivable 77,949
Insurance reserve premium 2,529
------------
Total Assets - $19,912,072
-----------
LIABILITIES - -
Payable to affiliate 25,057
Other liabilities 803
------------
Total liabilities - $ 25,860
-----------
NET ASSETS - $19,886,212
===========
FUND SHARES OUTSTANDING - 1,006,670
ANALYSIS OF NET ASSETS - -
Paid in Capital (unlimited shares authorized, without par) $11,826,749
Accumulated net realized (losses) (87,156)
Undistributed net investment income 40,925
Unrealized net appreciation on investments 8,105,694
------------
Net Asseets applicable to Fund shares outstanding - $19,886,212
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 19.76
============
</TABLE>
8
<PAGE>
STATEMENT OF OPERATIONS Year Ended May 31, 1998 (Graphic Omitted) INCOME ANNUAL
REPORT
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME - -
Dividends (Net of Foreign Taxes of $6729) $ 508,268
Miscellaneous income 420
-----------
Gross investment income - $ 508,688
EXPENSES - -
Investment Adviser and administration fees 172,680
Shareowner servicing 28,000
Filing and registration fees 14,500
Professional fees 12,251
Printing and postage 10,500
Other expenses 9,100
Custodial fees 2,372
-----------
Total gross expenses 249,403
Less earnings credits (2,372)
Net expenses - 247,031
----------
Net investment income - 261,657
----------
NET REALIZED GAIN ON INVESTMENTS - -
Proceeds from sales 1,857,379
Less cost of securities sold based on identified cost 1,536,769
-----------
Realized net gain - 320,610
UNREALIZED GAIN ON INVESTMENTS - -
End of period 8,105,694
Beginning of period 4,778,465
-----------
Increase in unrealized gain for the period - 3,327,229
----------
Net realized and unrealized gain on investments - 3,647,839
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS - $3,909,496
==========
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
9
<PAGE>
INCOME
STATEMENT OF CHANGES IN NET ASSETS
(GRAPHIC OMITTED)
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE IN NET ASSETS Year ended Year ended
May 31,1998 May 31,1997
------------- -------------
FROM OPERATIONS - -
Net Investment Income $ 261,657 $ 357,730
Net realized gain on investmens 320,610 188,938
Net increase in unrealized appreciation 3,327,229 2,586,861
------------- -------------
Net increase in net assets 3,909,496 3,133,529
------------- -------------
DIVIDENDS TO SHAREOWNERS FROM - -
Net investment income (220,732) (410,453)
Capital gains distributions (471,050) (135,100)
------------- -------------
(691,782) (545,553
------------- -------------
FUND SHARE TRANSACTIONS - -
Proceeds from sales of shares 4,096,616 3,573,470
Value of shares issued in reinvestments of dividends 678,726 533,571
------------- -------------
4,775,342 4,107,041
Cost of shares redeemed (4,438,422) (2,827,835)
------------- -------------
Net increase in net assets from share transactins 336,920 1,279,206
------------- -------------
Total increase in net assets 3,554,634 3,867,182
NET ASSETS - -
Beginning of period 16,331,578 12,464,396
------------- -------------
End of period 19,886,212 16,331,578
============= =============
Shares of the Fund Sold and Redeemed - -
Number of shares sold 223,179 338,478
Number of shares issued in reinvestment of dividends 37,711 34,497
------------- -------------
260,890 372,975
Number of shares redeemed (237,572) (284,173)
------------- -------------
Net Increase in Number of Shares Outstanding 23,318 88,802
============= =============
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
10
<PAGE>
GROWTH INVESTMENTS
ANNUAL REPORT
(GRAPHIC OMITTED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Issue Number of Shares Cost Market Value
- ----------------------------------------- ---------------- ---------- -------------
COMMON STOCKS (84.3%) - - -
AUTO PARTS (1.0%) - - -
Genuine Parts 3,000 89,355 101,813
BUIDLING (1.6%) - - -
Champion Enterprise* 6,000 113,562 161,625
CHEMICALS (1.0%) - - -
RPM, Inc. 5,781 71,869 98,277
COMPUTER HARDWARE (11.1%) - - -
Adaptec* 4,000 95,394 60,750
Advanced Digital Information* 6,000 33,778 102,750
Apple 5,000 147,680 133,125
Compaq Computer* 10,000 92,663 273,750
Hewlett Packard 2,000 41,638 124,250
Intel 1,200 91,912 85,725
International Business Machines 1,500 156,659 176,250
Symbol Technologies 4,500 97,435 158,344
---------- -------------
-
SUB-TOTAL 757,159 1,114,944
COMPUTER SOFTWARE (11.3%) - - -
America Online 1,000 87,617 83,313
Adobe Systems 4,200 167,688 167,737
Cisco Systems* 3,000 194,368 226,875
Microsoft* 1,800 85,628 152,662
Olicom A/S* 6,000 112,707 172,125
Oracle* 7,000 154,548 165,375
PeopleSoft 4,000 173,332 174,750
---------- -------------
SUB-TOTAL - 975,888 1,142,837
ELECTRONICS (6.4%) - - -
FLIR* 8,000 109,013 150,000
Merix* 7,500 143,058 87,188
Motorola 3,000 164,632 159,000
Qualcomm* 3,500 121,548 182,437
World Access* 2,000 18,819 62,750
---------- -------------
SUB-TOTAL - 557,070 641,375
<PAGE>
- - -
AMANA GROWTH INVESTMENT
(GRAPHIC OMITTED)
FINANCIAL INFORMATION (0.6%) - - -
Reuters Holdings PLC-ADR 866 $ 43,333 59,321
FOOD PRODUCTION (2.3%) - - -
Pioneer Hi-Bred International 3,300 77,929 125,606
Potash Corp of Saskatchewan 1,200 87,709 103,275
---------- -------------
-
SUB-TOTAL 165,638 228,881
MACHINERY (4.3%) - - -
Crane 3,000 76,234 158,063
Manitowoc 3,000 104,325 123,000
Valley Forge 10,500 105,321 156,187
---------- -------------
-
SUB-TOTAL 285,880 437,250
MINING (2.6%) - - -
ASARCO 5,000 116,423 113,437
Rio Tinto plc ADS 3,000 160,897 151,500
---------- -------------
SUB-TOTAL - 277,320 264,937
OIL & GAS (5.7%) - - -
Atlantic Richfield 2,600 165,029 205,075
Schlumberger Ltd 1,500 120,031 117,094
Williams Companies 3,600 60,536 116,775
YPF S.A. ADS 4,500 99,630 140,062
---------- -------------
SUB-TOTAL - 445,226 579,006
PAPER & PUBLISHING (1.6%) - - -
McGraw-Hill 2,000 89,379 156,375
PHARMACEUTICALS (8.1%) - - -
Affymetrix* 3,000 104,150 80,625
Bone Care International* 10,000 116,370 97,500
Glaxo Wellcome plc ADR 2,500 55,379 134,844
Johnson & Johnson 2,000 91,871 138,125
Ligand Pharmaceuticals* 6,000 90,709 83,625
Lilly (Eli) 2,000 127,124 122,875
Novo-Nordisk A/S ADR 2,000 111,090 157,000
---------- -------------
SUB-TOTAL - 696,693 814,594
PHOTOGRAPHIC SUPPLIES (1.5%) - - -
Fuji Photo Film ADR 4,500 138,736 151,875
12
<PAGE>
ANNUA REPORT GROWTH INVESTMENTS - - -
(GRAPHIC OMITTED)
Issue Number of shares Cost Market Value
- ----------------------------------------- ---------------- ---------- -------------
REAL ESTATE (2.3%) - - -
Hutchison Wampoa ADR 2,000 62,091 52,750
Intrawest 9,000 151,959 178,313
---------- -------------
SUB-TOTAL - 214,050 231,063
RETAIL (4.2%) - - -
Gap 5,250 111,606 283,500
Starbucks* 3,000 133,491 144,000
---------- -------------
SUB-TOTAL - 245,097 427,500
STEEL (0.7%) - - -
AK Steel Holding 4,000 87,392 74,500
TELECOMMUNICATIONS (5%) - - -
Telebras ADS 1,200 137,100 127,800
Tele Danmark A/S ADR 3,000 76,615 139,125
Telefonica de Espana ADS 1,700 70,376 228,650
---------- -------------
SUB-TOTAL - 284,091 495,575
TOOLS (1.9%) - - -
Regal-Beloit 6,000 107,448 195,750
TRANSPORTATION (9.8%) - - -
Daimler Benz ADS 1,300 134,367 128,538
Fritz Companies* 8,500 101,198 110,500
Halter Marine Group* 6,000 80,457 112,500
KLM
Royal Dutch Airlines 4,000 155,823 155,750
Southwest Arilines 7,500 132,585 200,156
Trinity Industries 3,000 117,089 143,250
Virgin Express 8,000 168,782 138,000
---------- -------------
SUB-TOTAL - 890,301 988,694
WATER TREATMENT (1.3%) - - -
Ionics* 3,000 126,925 134,250
---------- -------------
TOTAL INVESTMENTS (84.3%) - $6,662,412 8,500,442
==========
OTHER ASSETS (NET OF LIABILITIES) (15.7%) - - 1,579,270
-------------
TOTAL NET ASSETS (100%) - - $ 10,079,712
=============
<FN>
*Non-income producing security
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
13
<PAGE>
(Graphic Omitted)
GROWTH
FINANCIAL HIGHLIGHTS
For Year Ended May 31
Selected data per share of capital stock outstanding throughout each period.
<TABLE>
<CAPTION>
2/3/94 (Inception)
to
1998 1997 1996 1995 May 31,1994
---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 7.07 $ 6.86 $ 5.04 $ 4.69 $ 5.00
-------- -------- -------- -------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (0.03) (0.02) (0.05) (0.04) (0.00)
Net gains or losses on securities
(both realized and unrealized) 0.90 0.32 1.95 0.39 (0.30)
-------- -------- -------- -------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.87 0.30 1.90 0.35 (0.30)
-------- -------- -------- -------- ---------
LESS DISTRIBUTIONS
Dividends (from net investment income) 0.00 0.00 0.00 0.00 (0.01)
Distributions (from capital gains) (0.16) (0.09) (0.08) 0.00 0.00
-------- -------- -------- -------- ---------
Total distributions (0.16) (0.09) (0.08) 0.00 (0.01)
-------- -------- -------- -------- ---------
NET ASSET VALUE AT END OF PERIOD $ 7.78 $ 7.07 $ 6.86 $ 5.04 $ 4.69
======== ======== ======== ======== =========
TOTAL RETURN 12.39% 4.46% 37.20% 7.46% (6.20)%
RATIOS / SUPPLEMENTAL DATA
- --------------------------------------------------
Net assets ($000), end of period $10,080 $ 5,924 $ 4,151 $ 1,974 $ 952
Ratio of gross espenses to Ave. net assets 1.54% 1.69% 1.94% 2.00% *0.62%
Ratio of net investment income to ave. net assets (0.40)% (0.60)% (0.79)% (0.82)% *(0.35)%
Portfolio turnover rate 25% 25% 22% 38% *6%
<FN>
(*not annualized)
(The accompanying notes are an integral part of these financial statement.)
</FN>
</TABLE>
Amana Growth Fund Calendar Year Returns (unaudited)
(Graph Omitted)
1995 35%
1996 4%
1997 18%
Note: 1998 year-to-date return is +8.2% (December 31, 1997 through quarter
ending March 31, 1998). Highest return for a quarter was +15.4% (quarter ending
September 30, 1997). Lowest return for a quarter was -7.1% (quarter ending
December 31, 1997).
14
<PAGE>
GROWTH
ANNUAL REPORT
(Graphic Omitted)
As of May 31, 1998
STATEMENT OF ASSETS & LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS - -
Common stocks (cost $6,662,412) $8,500,442 -
Cash 1,505,141 -
Receivable for Security Sales 65,111 -
Dividends receivable 22,188 -
----------
Total Assets - $10,092,882
-----------
LIABILITIES
Payable to affiliate 13,170
----------
Total liabilities - 13,170
-----------
NET ASSETS - $10,079,712
===========
FUND SHARES OUTSTANDING - 1,295,087
ANALYSIS OF NET ASSETS
Paid in Capital (unlimited shares authorized, without par) $8,241,682
Unrealized net appreciation on investments 1,838,030
----------
Net Assets applicable to Fund shares outstanding $10,079,712
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 7.78
===========
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
15
<PAGE>
GROWTH
(Graphic Omitted)
STATEMENT OF OPERATIONS
For the yar ended May 31, 1998
<TABLE>
<CAPTION>
INVESTMENT INCOME - -
<S> <C> <C>
Dividends (net of foreign taxes of $4,584) $ 84,156 -
Miscellaneous income 2,906
-----------
Gross investment income $ 87,062
EXPENSES - -
Investment Adviser and administration fees 75,008 -
Shareowner servicing 15,347 -
Filing and registration fees 13,000 -
Professional expenses 6,500 -
Printing and postage 4,700 -
Micellaneous expenses 4,628 -
Custodial fees 3,464 -
-----------
Total gross expenses 122,647
Less earnings credits (3,464)
-----------
Net expenses 119,183
---------
Net investment income (loss) (32,121)
---------
NET REALIZED GAIN ON INVESTMENTS - -
Proceeds from sales 1,552,447 -
Less cost of securities sold based on identified cost -
1,395,476
-----------
Realized net gain 156,971
UNREALIZED GAIN ON INVESTMENTS -
End of period 1,838,030 -
Beginning of period 1,210,050 -
-----------
Increase in unrealized gain for the period -
627,980
---------
Net realized and unrealized gain on investments -
784,951
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS - $752,830
=========
</TABLE>
(The accompanying notes are an integral part of these financial statements).
<PAGE>
GROWTH
(Graphic Omitted)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS Year ended Year ended
- - May 31,1998 May 31,1997
------------- -------------
FROM OPERATIONS - -
Net investment income $ (32,121) $ (31,525)
Net realized gain on investments 156,971 80,406
Net increase in unrealized appreciation 627,980 325,603
------------- -------------
Net increase in net assets 752,830 374,484
------------- -------------
DIVIDENDS TO SHAREOWNERS FROM - -
Net investment income - -
Capital gains distributions (161,000) (74,024)
------------- -------------
(161,000) (74,024)
------------- -------------
FUND SHARE TRANSACTIONS - -
Proceeds from sales of shares 4,765,715 3,083,797
Value of shares issued in reinvestment of dividends 160,607 71,472
------------- -------------
4,926,322 3,155,269
Cost of shares redeemed (1,362,492) (1,682,459)
------------- -------------
Net increase in net assets from share transactions 3,563,830 1,472,810
------------- -------------
Total increase in net assets 4,155,660 1,773,270
NET ASSETS - -
Beginning of period 5,924,052 4,150,782
------------- -------------
End of period $ 10,079,712 $ 5,924,052
============= =============
Shares of the Fund Sold and Redeemed - -
Number of shares sold 612,017 497,832
Number of shares issued in reinvestment of dividends 21,587 11,116
------------- -------------
633,604 508,948
Number of shares redeemed (175,890) (276,621)
------------- -------------
Net increase in Number of Shares Outstanding 457,714 232,327
======= =======
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
(GRAPHIC OMITTED)
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.
The Income Fund has post October losses $87,156 which are treated for federal
income tax purposes as arising in the tax year ending May 31, 1999.
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, 1998, the Income Fund and
Growth Fund paid advisory fee expenses of $172,680 and $75,008, respectively.
Saturna Capital also acts as transfer agent for the Trust, for which it was paid
$28,000 and $15,347 for the Income and Growth Fund, respectively, for the year
ended May 31, 1998. 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
$12,712 in commissions at deep-discount rates during the year ended May 31,
1998. 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 $53,133 for the year ended May 31, 1998. One trustee of the Trust is
also a trustee of North American Islamic Trust.
18
<PAGE>
All trustees serve
without compen-sation. The Trustees, officers and their immediate families, and
North American Islamic Trust as a group owned 3.00% of the Income Fund's and
1.46% of the Growth Fund's outstanding shares on May 31, 1998. NOTE 4 DIVIDENDS
Income Fund dividends from net investment income were $.14 per share paid
December 31, 1997, and $.079 per share paid May 31, 1998. Income Fund
distributions from net realized long-term capital gains were $.466 per share
paid December 31, 1997. The Growth Fund distributions from net realized
long-term capital gains were $.159 per share paid December 31, 1997. From its
inception to May 31, 1998, the Income Fund has realized net long-term gains from
sales of securities of $1,604,430 and has distributed realized net long-term
gains of $1,695,430, while the Growth Fund has realized net long-term gains from
sales of securities of $286,976 and has distributed realized net long-term gains
of $279,789. NOTE 5 - INVESTMENTS At May 31, 1998, for Income Fund the net
unreal-ized appreciation of investments of $8,105,694 comprised gross unrealized
gains of $8,197,021 and gross unrealized losses of $91,327. During the year
ended May 31, 1998, the Income Fund purchased $1,349,113 of securities and sold
$1,857,379 of securities. At May 31, 1998, for Growth Fund the net unreal-ized
appreciation of investments of $1,838,030 comprised gross unrealized gains of
$2,096,489 and gross unrealized losses of $258,459. During the period ended May
31, 1998, the Fund purchased $3,642,425 of securities and sold $1,552,446 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 $2,372 and $3,464 for the Income Fund and Growth Fund, respectively, for the
year ended May 31, 1998.
TRUSTEES AND OFFICERS
(Graphic Omitted)
ANNUAL REPORT
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, 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
- -
- ---
19
<PAGE>
AMANA MUTUAL FUNDS TRUST
-----------
GROWTH INCOME
ANNUAL REPORT
May 31, 1998
(Graphic Omitted)
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 Administrator Saturna Capital Corporation
- ---------------------------------------------------------------------------
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]
Sommer & Barnard
Attorneys at Law- PC
July 17,1998
Amana Mutual Funds Trust
C/O Saturna Capital
1300 North State Street
Bellingham, Washington 98225-4730
Re: Amendment to Form N-1A
Getlemen:
In accordance with the registration of an indefinite number of units
("Units") registered by Amana Mutual Funds Trust (the "Fund"), we have been
asked to provide the opinion of counsel required to be filed as an exhibit to
the Fund's registration statement on Form N-1A (the "Registration Statement").
In rendering this opinion, we have examined such documents (including the
audited financial statements of the Fund as of May 31, 1998), records and
questions of law as we deemed it necessary to examine for the purpose of this
opinion. Based on that examination and investigation, it is our opinion that the
Units will be, upon issuance, validly issued, fully paid and not liable to
further assessments.
We consent to the filing of this letter as an exhibit to Posteffective
Amendment NO. 15 to the Registration Statement.
Very truly yours,
/s/Sommer & Barnard,
PC
SOMMER & BARNARD, PC
Consent of Independent Certified Public Accountants
We consent to the references to our firm in the Post Effective Amendment No. 15
to the Registration Statement on Form N-1A of Amana Mutual Funds Trust and to
the use of our report dated June 12, 1998 on the financial statements and
financial highlights of Amana Income Fund and Amana Growth Fund, each a series
of shares of Amana Mutual Funds Trust. Such financial statements and financial
highlights appear in the 1998 Annual Report to Shareowners, which are
incorporated by reference in the Registrations Statement and Prospectus.
Tait, Weller & Baker
/s/ Tait, Weller & Baker
Philadelphia, Pennsylvania
July 15, 1998
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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