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Amana Mutual Funds Trust – ‘N-CSR’ for 5/31/15

On:  Tuesday, 8/4/15, at 5:22pm ET   ·   Effective:  8/4/15   ·   For:  5/31/15   ·   Accession #:  766285-15-16   ·   File #:  811-04276

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  As Of                Filer                Filing    For·On·As Docs:Size

 8/04/15  Amana Mutual Funds Trust          N-CSR       5/31/15    4:832K
          → Amana Developing World Fund ⇒ Amana Developing World Fund Institutional Shares (AMIDX) — Amana Developing World Fund Investor Shares (AMDWX)
          → Amana Growth Fund ⇒ Amana Growth Fund Institutional Shares (AMIGX) — Amana Growth Fund Investor Shares (AMAGX)
          → Amana Income Fund ⇒ Amana Income Fund Institutional Shares (AMINX) — Amana Income Fund Investor Shares (AMANX)

Document/Exhibit                   Description                      Pages   Size 

 1: N-CSR       Amana Mutual Funds Trust Annual Report May 31,      HTML    279K 
                          2015                                                   
 4: EX-99.906 CERT  Rule 906 Cetification                           HTML      5K 
 3: EX-99.CERT  Rule 302 Certificaiton                              HTML     11K 
 2: EX-99.CODE ETH  Code of Ethics                                  HTML     33K 

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 2-96924

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)

Thomas R. Phillips, Esq.
1300 N. State Street
Bellingham, Washington 98225-4730
(Name and Address of Agent for Service)

Registrant's Telephone Number — (360) 734-9900

Date of fiscal year end: May 31, 2015
Date of reporting period: May 31, 2015

1. Report to Shareowners

Performance Summary (as of June 30, 2015)

(unaudited)

Performance data quoted in this report represents past performance, is before any taxes payable by shareowners, and is no guarantee of future results. Current performance may be higher or lower than that stated herein. Performance current to the most recent month-end is available by calling toll-free 1-888-732-6262 or visiting www.amanafunds.com. Average annual total returns are historical and include change in share value as well as reinvestment of dividends and capital gains, if any. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Amana Funds limit the securities they purchase to those consistent with Islamic principles, which limits opportunities and may increase risk.

Please consider an investment's objective, risks, charges, and expenses carefully before investing. To obtain a free prospectus or summary prospectus that contains this and other important information on the Amana Funds, please call toll-free 1-888-732-6262 or visit www.amanafunds.com. Please read the prospectus or summary prospectus carefully before investing.

¹ By regulation, expense ratios shown in this table are as of the Funds' most recent prospectus which is dated August 15, 2014, and incorporates results for the fiscal year ended May 31, 2014. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different fiscal periods. Also by regulation, the performance in this table represents the most recent calendar quarter-end performance rather than performance through the Funds' most recent fiscal period.

² Source: Morningstar June 30, 2015. Morningstar, Inc. is an independent fund performance monitor. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% in each category receive 5 stars, the next 22.5% 4 stars, the next 35% 3 stars, the next 22.5% 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of performance figures associated with its 3, 5, and 10 year (if applicable) Morningstar Rating metrics. Morningstar ratings represented as unshaded stars are based on extended performance. These extended performance ratings are based on the historical adjusted returns prior to the inception date of the institutional shares and reflect the historical performance of the investor shares, adjusted to reflect the fees and expenses of the institutional shares.

³ Source: Lipper Inc., A Thomson Reuters Company, June 30, 2015. Lipper Inc. is a nationally recognized organization that ranks performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are based on past performance with capital gains and dividends reinvested.

Fellow Shareowners:

Equity markets again appreciated for Amana's fiscal year ended May 31, 2015. Total return for the S&P 500 Index was 11.81% and the broader Dow Jones Islamic Market World Index was 6.36%. Smaller US companies performed comparably, with the Russell 2000 Index up 11.32% for the period. Foreign markets were more difficult, with the MSCI Emerging Markets Index flat at -0.01%.

Amana Growth Investor Shares returned a strong 12.66%, Amana Income Investor Shares returned 5.94%, while Amana Developing World Investor Shares declined -5.24% during the same period. Lower expenses allowed Institutional Shares to post better returns: Amana Growth 12.88%, Amana Income 6.22%, and Amana Developing World -4.96%.

The Amana Funds follow Islamic principles, which preclude most investments in the banking and financial sectors. We favor companies with low debt levels and strong balance sheets.

Top Long-Term Results

As experienced investors, we know that gains or losses over a short interval tell an incomplete story compared to performance evaluated over a lengthier time span. That's why the recognition that Amana has received for superlative long-term performance is so important to our shareowners.

As of May 31, 2015, Amana Income and Amana Growth maintained high long-term rankings in their respective mutual fund categories. Amana Income Investor Shares ranked #3 (out of 180 similar funds) in Lipper's Equity Income category for 10-year performance. Amana Growth Investor Shares ranked #82 (out of 279 similar funds) in the Multi-Cap Growth category for 10-year performance.

Also as of May 31, 2015, Morningstar's analysts rank both Amana Income and Amana Growth with "Silver Shield" Analyst Ratings. The Analyst Ratings evaluate mutual funds based on five key pillars that Morningstar believes indicate funds that are more likely to outperform over the long term on a risk-adjusted basis. Please refer to the preceding page and following page for Amana's June 30 and May 31 longer-term performance data, respectively.

Institutional Shares

Amana's shareowners approved its reorganization into a Delaware trust, allowing the introduction of Institutional Shares for all three Funds on September 25, 2013. Without 12b-1 distribution expenses and related services, lower-cost Institutional Shares are recommended to all shareowners who meet the requirements. During the past year, the Trust's total number of Investor shares declined while the number of Institutional shares outstanding grew sharply. By May 31, 2015, assets in Amana's Institutional shares totaled more than $331 million.

Going Forward

The US economy leads the world: unemployment has declined, incomes are rising, tax receipts are strong, and consumer spending is up. The strong US currency is attracting money from around a worried world. Consumer confidence has recovered, and low interest rates are boosting auto sales and housing. The growth in government spending has slowed. Corporate earnings for 2015 are still improving over a healthy 2014.

The future is always different from the past, and we vigilantly watch for significant changes in major trends. Inflation, for example, looks to be dead for years to come. After a fifty-year expansion built on ever-increasing credit, we welcome deleveraging by governments and consumers. Commodity prices are at the lowest level in more than a dozen years, and recently oil has fallen by more than half. More efficient, web-based organizations are deflationary, meaning the internet's main effect on business is broadly lower prices and less need for employment. Yet, regardless of the trend, Amana will consistently invest in companies with histories of solid revenues, earnings, dividends, and balance sheets. Our focus on low-debt investing means higher interest rates, which are beginning to rise, will have less impact on our portfolios.

Lower Expenses

We watch expenses carefully and are pleased to again report declines in the annualized expense ratios of all three Funds. For the year, Amana Income Investor Shares report an expense ratio of 1.12%, Amana Growth Investor Shares 1.08%, and Amana Developing World Investor Shares 1.48%. Institutional shares save the 12b-1 distribution fee which results in significantly lower expense ratios. Amana Income Institutional Shares report an expense ratio of 0.87%, Amana Growth Institutional Shares 0.83%, and Amana Developing World Institutional Shares 1.18%.

Amana Mutual Funds embody basic principles of sound finance: good governance, transparency, fairness, and risk sharing. The Trustees are active, taking seriously their responsibilities to shareowners. For more information, please visit www.amanafunds.com or call 1-888-732-6262.

Respectfully,

(Photo Omitted)

Nicholas Kaiser,
President & Portfolio Manager

(Photo Omitted)

M. Yaqub Mirza,
Independent Board Chairman

Performance Summary (as of May 31, 2015)

(unaudited)

Performance data quoted above represents past performance and is no guarantee of future results. Current performance may be higher or lower than that stated herein. Performance current to the most recent month-end is available by calling toll-free 1-888-732-6262 or visiting www.amanafunds.com.

¹ Source: Morningstar, May 31, 2015. Morningstar, Inc. is an independent fund performance monitor. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return™ measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% in each category receive 5 stars, the next 22.5% 4 stars, the next 35% 3 stars, the next 22.5% 2 stars and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a fund is derived from a weighted average of performance figures associated with its 3, 5, and 10 year (if applicable) Morningstar Rating™ metrics. Morningstar ratings represented as unshaded stars are based on extended performance. These extended performance ratings are based on the historical adjusted returns prior to the inception date of the institutional shares and reflect the historical performance of the investor shares, adjusted to reflect the fees and expenses of the institutional shares.

² Source: Lipper Inc., A Thomson Reuters Company, May 31, 2015. Lipper Inc. is a nationally recognized organization that ranks performance of mutual funds within a universe of funds that have similar investment objectives. Quintile Rankings are based on past performance with capital gains and dividends reinvested.

The Morningstar Analyst Rating is not a credit or risk rating. It is a subjective evaluation performed by the mutual fund analysts of Morningstar, Inc. Morningstar evaluates funds based on five key pillars, which are process, performance, people, parent, and price. Morningstar's analysts use this five-pillar evaluation to identify funds they believe are more likely to outperform over the long term on a risk-adjusted basis. Analysts consider quantitative and qualitative factors in their research, but the assessment of each pillar and how they are combined is driven by the analyst's overall assessment and overseen by Morningstar's Analyst Rating Committee. The approach serves not as a formula but as a framework to ensure consistency across Morningstar's global coverage universe.

The Analyst Rating scale ranges from Gold to Negative, with Gold being the highest rating and Negative being the lowest rating. A fund with a "Gold" rating distinguishes itself across the five pillars and has garnered the analysts' highest level of conviction. A fund with a "Silver" rating has notable advantages across several, but perhaps not all, of the five pillars — strengths that give the analysts a high level of conviction. A "Bronze"-rated fund has advantages that outweigh the disadvantages across the five pillars, with sufficient level of analyst conviction to warrant a positive rating. A fund with a "Neutral" rating isn't seriously flawed across the five pillars, nor does it distinguish itself very positively. A "Negative"-rated fund is flawed in at least one pillar, if not more, and is considered an inferior offering to its peers. Analyst Ratings are re-evaluated every 14 months. For more detailed information about Morningstar's Analyst Rating, including its methodology, please go to www.morningstar.com.

The Morningstar Analyst Rating should not be used as the sole basis in evaluating a mutual fund. Morningstar Analyst Ratings are based on Morningstar's current expectations about future events; therefore, in no way does Morningstar or Amana Mutual Funds represent ratings as a guarantee, nor should they be viewed by an investor as such. Morningstar Analyst Ratings involve unknown risks and uncertainties, which may cause Morningstar's expectations not to occur or to differ significantly from what was expected.

Amana Income Fund: Performance Summary

(unaudited)

Average Annual Returns (as of May 31, 2015)

Growth of $10,000

Fund Objective

The objectives of the Income Fund are current income and preservation of capital, consistent with Islamic principles; current income is its primary objective.

Amana Income Fund: Discussion of Fund Performance

Fiscal Year 2015

For the fiscal year ended May 31, 2015, the Amana Income Fund Investor shares returned 5.94% (versus 18.82% the year before). Reflecting a lower expense structure, Amana Income Fund Institutional shares returned 6.22% for the year. The broad S&P 500 Index returned 11.81%, and the large-cap Russell 1000 Value Index returned 9.03%.

Amana Income Investor shares paid qualified income dividends totaling 60¢ per share, and the Institutional shares paid 73¢ per share in qualified income dividends. Careful attention to expenses brought the expense ratio for Investor shares down to 1.12% from 1.14%. The reduced-expense goal for the Institutional shares was achieved with a 0.87% ratio down from 0.90%. Redemptions exceeded purchases for the year, and Fund total net assets decreased -6.21% during fiscal 2015.

For the 10 years ended May 31, 2015, the Investor shares provided an annualized total return of 10.05%. This ranked third of the 180 funds surviving in its Lipper "Equity Income" Category peer group. Also for the 10 years ended May 31, 2015, the Investor shares ranked fourteenth of the 845 funds surviving in Morningstar's "Large Blend" Category peer group, earning an above-average 5-star performance ranking.

Factors Affecting Past Performance

During the year, markets appreciated in response to monetary stimulus. Amana Income Fund follows a conservative investing strategy that has served investors well over the years, buying only dividend-paying equity securities, focusing on financially strong companies. Avoiding leveraged and financial stocks and all bonds penalized the Fund during the year, as they continued to do well due to the "financial engineering" of the Federal Reserve and other central banks. We also suffered from positions in the energy and materials sectors, as commodity prices again fell around the world. The drop in oil prices that began last fall has been especially dramatic. We maintained a low level of cash reserves, usually less than 3%.

Our portfolio of well-established equities has more than 5% in each of the industries Large Pharmaceuticals, Household Products Manufacturing, Chemicals, and Food Manufacturing. Our five largest individual security holdings — Eli Lilly, Illinois Tool Works, Novartis ADS, PPG Industries, and Carlisle — boosted our results with an average 19.32% return.

The choppy economic environment outside the United States hurt our performance, causing us to reduce our foreign exposures. We liquidated all our telecom positions, as their highly competitive industry makes future profit growth difficult. As the predicted profits in the energy industry decline, we eliminated several oil and gas companies from the portfolio.

Looking Forward

The US GDP declined during first quarter of 2015, with only small improvements forecasted. As the US economy moves ahead on marginally higher employment and consumption, the Federal Reserve can reduce its stimulation measures and predict slowly increasing interest rates. Financial institutions are cutting global growth estimates for the year, as global indicators of economic activity — investment, employment, and manufacturing — show modest improvement.

Europe, with high unemployment, continues in economic difficulty. A Greek drama has played for too long, as the world observes the damage excessive debt brings to society. The European Union and its related institutions are now challenged with both political and economic uncertainties. China's growth is clearing slowly, which impacts the rest of Asia.

Record-low interest rates, even negative at times, have stimulated financial and real estate markets around the globe. Should rates materially increase, we don't believe that much of the world will avoid asset price declines. Although the US bull market is in its seventh year, we think its underpinnings are far stronger than, say, overly exuberant China.

In the US capitol, we see the Democratic administration and Republican congress working together better than many predicted. While reasonable solutions to America's unfunded entitlements and poor education system exist, they seem impossible to implement. Gradually raising the age for retirement and related senior benefits, such as Medicare and government pensions, will eventually be necessary to reverse the threatening downward spiral. Meanwhile, tough lessons can be observed from abject failures in places like Puerto Rico, Iraq, Libya, and Detroit.

Amana Income Fund selects its portfolio from financially strong, Islamically acceptable, dividend-paying securities judged likely to appreciate. Many of our securities regularly increase their dividend payout rates, to the point where the portfolio has a yield of 2.46% (before operating expenses). We look for above-average earnings growth in our businesses to improve both the Fund's dividend and price growth long-term.

Amana Income Fund: Schedule of Investments

Amana Income Fund: Schedule of Investments

Amana Income Fund: Schedule of Investments

Amana Income Fund

Amana Income Fund

Amana Income Fund: Financial Highlights

¹ Calculated using average shares outstanding
² Amount is less than $0.01
³ Operations commenced on 09/25/2013
⁴ Not Annualized
⁵ Annualized

Amana Growth Fund: Performance Summary

(unaudited)

Average Annual Returns (as of May 31, 2015)

Growth of $10,000

Fund Objective

The primary objective of the Growth Fund is long-term capital growth, consistent with Islamic principles.

Amana Growth Fund: Discussion of Fund Performance

Fiscal Year 2015

For the fiscal year ended May 31, 2015, Amana Growth Fund Investor shares total return was 12.66% (versus 18.12% the year before). The broad-based S&P 500 Index returned a lower 11.81%, and the large-cap Russell 1000 Growth Index returned 14.73%. Reflecting a lower expense structure, Amana Growth Fund Institutional shares returned 12.88% for the year.

While income is not an investment objective, the Fund paid another qualified income dividend (13¢ per Investor share and 18¢ per Institutional share). Continuing attention to operating expenses meant the net expense ratio of Amana Growth Investor shares improved again to 1.08% versus 1.09% for the year before. The reduced-expense goal for the Institutional shares was achieved with a 0.83% ratio down from 0.87% (annualized). Fund total net assets increased 3.38% during fiscal 2015, which helped to lower the expense ratio.

For the ten years ended May 31, 2015, Amana Growth Investor shares provided an annualized total return of 9.73%. This ranked 82nd of the 279 funds surviving in its Lipper "Multi-Cap Growth" Category peer group. Also for the 10 years ended May 31, 2015, the Investor shares ranked in the top 20% of the 920 funds surviving in Morningstar's "Large Growth" Category peer group, earning an above-average 5-star performance ranking.

Factors Affecting Past Performance

During the year, markets appreciated in response to monetary stimulus. Amana Growth Fund follows a value investing strategy that has served investors well over the years, buying equities of financially strong companies evidencing solid earnings growth. Avoiding leveraged and financial stocks and all bonds penalized the Fund during the year, as they continued to do well due to the "financial engineering" of the Federal Reserve and other central banks. We also suffered from positions in the energy and materials sectors, as commodity prices again fell around the world. The drop in oil prices that began last fall has been especially dramatic. We maintained a low level of cash reserves, usually less than 4%.

Amana Growth's largest industry is Large Pharmaceuticals, where our best gainers were Eli Lilly (+35.72%) and Novo Nordisk ADS (+35.61%). Our next largest industry is Application Software, where Intuit led with a 32.76% gain. Our third largest industry is Communications Equipment, where our long time favorite Apple appreciated an outstanding 46.59%. Technology was again our largest sector, and a number companies — such as Akamai Technologies, ASML, Adobe (our largest position), Cisco, and Taiwan Semiconductor — also gained significantly.

Based on our team's evaluation of their market prospects, we closed our positions in Amgen, Cenovus, Crane, Humana, John Wiley & Sons, Monster Beverage, and PetSmart.

Looking Forward

The US GDP declined during first quarter of 2015, with only small improvements forecasted. As the US economy moves ahead on higher employment and consumption, the Federal Reserve can reduce its stimulation measures and predicts slowly increasing interest rates. Global indicators of economic activity — investment, employment, and manufacturing — show modest improvement.

Europe, with high unemployment, continues in economic difficulty. A Greek drama has played for too long, as the world observes the damage excessive debt brings to society. The European Union and its related institutions are now challenged with both political and economic uncertainties. China's growth is clearly slowing, which impacts the rest of Asia.

Record-low interest rates, even negative at times, have stimulated financial and real estate markets around the globe. Should rates materially increase, we don't believe that much of the world will avoid asset price declines. Although the US bull market is in its seventh year, we think its underpinnings are far stronger than, say, overly exuberant China.

In the US capitol, we see the Democratic administration and Republican congress working together better than many predicted. While reasonable solutions to America's unfunded entitlements and poor education system exist, they seem impossible to implement. Gradually raising the age for retirement and related senior benefits, such as Medicare and government pensions, will eventually be necessary to reverse the threatening downward spiral. Meanwhile, tough lessons can be observed from abject failures in places like Puerto Rico, Iraq, Libya, and Detroit.

Amana Growth Fund selects its portfolio from financially strong, Islamically acceptable, growth securities judged likely to appreciate. We look for above-average earnings growth in the Fund's investments to improve the Fund's price long-term.

Amana Growth Fund: Schedule of Investments

Amana Growth Fund: Schedule of Investments

Amana Growth Fund: Schedule of Investments

Amana Growth Fund

Amana Growth Fund

Amana Growth Fund: Financial Highlights

¹ Calculated using average shares outstanding
² Amount is less than $0.01
³ Operations commenced on 09/25/2013
⁴ Not annualized
⁵ Annualized

Amana Developing World Fund: Performance Summary

(unaudited)

Average Annual Returns as of May 31, 2015

Growth of $10,000

Fund Objective

The primary objective of the Developing World Fund is long-term capital growth, consistent with Islamic principles.

Amana Developing World Fund: Discussion of Fund Performance

Fiscal Year 2015

For the fiscal year ended May 31, 2015, the Amana Developing World Fund Investor shares returned -5.24% (versus -0.17% the year before). The Fund's annual return underperformed the MSCI Emerging Markets Index, which returned -0.01%. The new Amana Developing World Fund Institutional shares returned -4.96% during the same period.

While income is not an investment objective, the Fund paid a qualified income dividend (2¢ per share for Investor shares and 4¢ per share for Institutional shares) in December 2014. The net expense ratio of Amana Developing World Investor shares was 1.48% versus 1.54% for the year before. The reduced-expense goal for the Institutional shares was achieved with a 1.18% ratio versus 1.35% (annualized) for the year before. The Fund remains small, but is growing as total net assets increased 4.65% during fiscal 2015.

Factors Affecting Past Performance

Emerging markets continued to suffer from highly volatile conditions in fiscal 2015 due to a variety of factors. The repercussions of Russia's annexation of Crimea and adventurism in Ukraine combined with the re-emergence of Greek debt concerns battered the prospects of many Eastern European companies. In Latin America, the re-election of Brazil's President Rousseff was quickly followed by a barrage of corruption accusations and investigations concerning state-owned Petrobras — accusations that covered a period of time when the president ran the company. Her popularity and the country's economic performance both plummeted. Argentina continued its long period of economic mismanagement, while Venezuela extended its economic meltdown. Before too long it may become a barter economy. Southeast Asia is generally considered one of the better managed emerging market regions, but even there falling commodity prices and bickering governments have led to policy gridlock and economic underperformance. No discussion of emerging markets would be complete without reference to China's anti-corruption crackdown that has significantly curtailed activity in many consumer-related sectors, especially at the higher end of the price spectrum. China's stock market has also treated us to a remarkable display of volatility as it roared to life last summer after five years of trending down, more than doubling during the fiscal year before abruptly plummeting in mid-June 2015.

While various regions have their specific idiosyncrasies, one common thread has been a significant weakening of their currencies against the USD (China excepted). Russia, Turkey, and Brazil experienced 25-50% depreciation during the fiscal year, while Mexico, South Africa, Indonesia, and Malaysia saw their currencies drop 10-20% relative to the US dollar. Such conditions are difficult for dollar-based investors.

Amana Developing World Fund seeks to profit from long-term growth in financially sound companies that are based in or have significant exposure to developing countries. Investment decisions are made according to Islamic principles. The fund diversifies its investments across the countries of the developing world, industries, and companies and generally follows a value investment style.

At least 5% of the portfolio is invested in companies headquartered in each of China, the Philippines, Indonesia, Malaysia, Thailand, South Africa, Turkey, Brazil, and the United States. More than 5% of the portfolio is invested in each of the following industries: Telecommunications Carriers, Packaged Food, Health Care Facilities, Power Generation, Household Products, and Computer Hardware & Storage. Telecommunication Services is our largest sector and did not perform well during the year. Since these are domestically focused businesses, returns were affected by currency declines. Packaged Food was also weak with currencies again playing a role. M. Dias Branco, a Brazilian pasta and cookie producer, had been a strong performer in previous years but suffered with the downturn in Brazil. On the other hand, our largest position, Argentina-based MercadoLibre, was our strongest performer during the year despite doing most of its business in Brazil. Health Care performed well with our Thai and Malaysian hospital stocks all providing positive returns.

During 2015, the Fund's conservative approach to emerging market investing meant that it continued to keep an unusually high proportion of its assets in cash.

Looking Forward

Conditions for emerging markets remain precarious with the biggest wild card being the arrival of US rate hikes. The mere mention of such a possibility caused the "taper tantrum" in 2013 as the prospect of an end to US quantitative easing spread the fear of reduced capital flows into emerging market debt and equity markets. Were the Federal Reserve to actually begin tightening, the immediate reaction could be sharp and not to investors' advantage. Ultimately, however, a return to a more normalized monetary stance would imply better economic performance and possibly a stronger market for imported manufactured goods. Despite the Greek imbroglio, the economic outlook for Europe has also been improving, which would benefit emerging markets exporters. Finally, the currency declines of the past 24 months have been painful for dollar-based investors but have made many emerging markets countries more competitive. Even with falling commodity prices, the strengthened dollar, in which most commodities are priced, implies better domestic prices for commodity exports. It's been a rocky road and we can certainly expect further bumps along the way, but conditions could develop that favor a rebound in emerging market economies over the next 12 months.

Amana Developing World Fund: Schedule of Investments

Amana Developing World Fund: Schedule of Investments

Amana Developing World Fund: Schedule of Investments

Amana Developing World Fund: Schedule of Investments

Countries

Amana Developing World Fund

Amana Developing World Fund

Amana Developing World Fund: Financial Highlights

¹ Calculated using average shares outstanding
² Amount is less than $0.01
³ Operations commenced on 09/25/2013
⁴ Not annualized
⁵ Annualized

Notes To Financial Statements

Note 1 — Organization

Amana Mutual Funds Trust (the "Trust") was organized as a Delaware Statutory Trust on March 11, 2013, and is the successor to Amana Mutual Funds Trust, an Indiana Business Trust ("Prior Trust") organized on July 26, 1984, pursuant to a reorganization on July 19, 2013. Each Fund is a series of the Trust and the successor to the corresponding series of the Prior Trust. The Trust is registered as a no-load, open-end, diversified series management investment company under the Investment Company Act of 1940, as amended. The Trust restricts its investments to those acceptable to Muslims by investing in accordance with Islamic principles. Three portfolio series have been created. The Income Fund was first authorized to sell shares of beneficial interest to the public on June 23, 1986. The Growth Fund began operations on February 3, 1994. The Developing World Fund began operations on September 28, 2009. Institutional shares of each Fund were first offered September 25, 2013.

Each Fund is an investment company and accordingly follows the investment accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 "Financial Services — Investment Companies."

Each class of shares of a Fund represents an interest in the same portfolio of investments of the Fund and has in all respects the same rights and obligations as each other class of the Fund, except that each class bears its own class expenses, and each class has exclusive voting rights. Each class of shares may be subject to different investment minimums and other conditions of eligibility as may be described in the prospectus for the particular class of shares, as from time to time in effect.

Income, realized and unrealized capital gains and losses, and expenses to be paid by a Fund and not allocated to a particular class as provided below, shall be allocated to each class on the basis of relative net assets. Expenses allocable to a specific class are expenses specifically incurred by or for such class including the following:

• Rule 12b-1 expenses;
• Retirement plan custodial fees; and
• Any applicable service fees.

Net investment income dividends and capital gain distributions paid by the Fund on each class of its shares will be calculated in the same manner on the same day and at the same time.

Note 2 — Significant Accounting Policies

The following is a summary of the significant accounting policies, in conformity with accounting principles generally accepted in the United States of America, which are consistently followed by the Funds in preparation of their financial statements.

Security valuation:
Investments in securities traded on a national securities exchange and over-the-counter securities for which sale prices are available are valued at that price. Securities for which there are no sales are valued at latest bid price.

Foreign markets may close before the time as of which the Funds' share prices are determined. Because of this, events occurring after the close and before the determination of the Funds' share prices may have a material effect on the values of some or all of the Funds' foreign securities. To account for this, the Funds may use outside pricing services for valuation of their non-US securities.

In cases in which there is not a readily available market price, a fair value for such security is determined in good faith by or under the direction of the Board of Trustees.

Security transactions are recorded on trade date. Realized gains and losses on sales of securities are recorded on the identified cost basis.

Foreign currency:
Investment securities and other assets and liabilities denominated in foreign currencies are translated into US dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into US dollar amounts on the respective dates of such transactions.

The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds' books and the US dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.

Share valuation:
Each Fund computes the share price of each share class by dividing the net assets attributable to each share class by the outstanding shares of that class. Each share class represents an interest in the same investment portfolio. Each share class is identical in all respects except that each class bears its own class expenses, and each class has exclusive voting rights. As a result of the differences in the expenses borne by each share class, the share price and distributions will vary among a Fund's share classes. The Funds' shares are not priced or traded on days the New York Stock Exchange is closed. The NAV is both the offering and redemption price per share.

Fair value measurements:
Accounting Standards Codification (ASC) 820 establishes a three-tier framework for measuring fair value based on a hierarchy of inputs. The hierarchy distinguishes between market data obtained from independent sources (observable inputs) and the Funds' own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds' investments and are summarized below.