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Amana Mutual Funds Trust – ‘N-CSR’ for 5/31/14

On:  Tuesday, 7/29/14, at 6:08pm ET   ·   As of:  7/30/14   ·   Effective:  7/30/14   ·   For:  5/31/14   ·   Accession #:  766285-14-10   ·   File #:  811-04276

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Certified Annual Shareholder Report of a Management Investment Company   —   Form N-CSR
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N-CSR   —   Amana Mutual Funds Trust Form N-CSR May 31, 2014


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  Amana Mutual Funds Trust Form N-CSR May 31, 2014  

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)

Nicholas F. Kaiser
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, 2014
Date of reporting period: May 31, 2014

1. Report to Shareowners


Amana Mutual Funds Trust Annual Report May 2014

Amana Mutual Funds Trust

Annual Report

May 31, 2014

Income Fund
AMANX | AMINX

Growth Fund
AMAGX | AMIGX

Developing World Fund
AMDWX | AMIDX


Performance Summary (as of June 30, 2014) (unaudited)

Average Annual Returns (before any taxes paid by shareowners) 10 Year 5 Year 3 Year 1 Year Expense Ratio¹
Amana Income Fund Investor Shares (AMANX) 11.63% 15.38% 12.88% 22.39% 1.19%
Amana Income Fund Institutional Shares (AMINX) n/a n/a n/a n/a 0.94%
Amana Growth Fund Investor Shares (AMAGX) 10.81% 14.85% 11.32% 23.74% 1.11%
Amana Growth Fund Institutional Shares (AMIGX) n/a n/a n/a n/a 0.86%
Amana Developing World Fund Investor Shares (AMDWX) n/a n/a 0.98% 6.01% 1.54%
Amana Developing World Fund Institutional Shares (AMIDX) n/a n/a n/a n/a 1.29%
 
Morningstar™ Ratings² Overall 10 Year 5 Year 3 Year 1 Year
Amana Income Fund — "Large Blend" Category
Investor Shares (AMANX) ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ n/a
Institutional Shares (AMINX) ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ n/a
Number of Funds in Category 1,338 798 1,192 1,338 1,570
Amana Growth Fund — "Large Growth" Category
Investor Shares (AMAGX) ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ n/a
Institutional Shares (AMIGX) ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ n/a
Number of Funds in Category 1,500 910 1,316 1,500 1,700
Amana Developing World Fund — "Diversified Emerging Markets" Category
Investor Shares (AMDWX) ★ ★ ★ ★ n/a n/a ★ ★ ★ ★ n/a
Institutional Shares (AMIDX) ☆ ☆ ☆ ☆ n/a n/a ☆ ☆ ☆ ☆ n/a
Number of Funds in Category 454 n/a n/a 454 648
 
Lipper Quintile Rankings³ 10 Year 5 Year 3 Year 1 Year
Amana Income Fund Investor Shares (AMANX) — "Equity Income" Category
Quintile Rank 1st 5th 4th 2nd
Absolute Rank (Number of Funds) in Category 3 (159) 224 (269) 251 (317) 148 (450)
Amana Growth Fund Investor Shares (AMAGX) — "Multi-Cap Growth" Category
Quintile Rank 1st 5th 5th 4th
Absolute Rank (Number of Funds) in Category 18 (263) 388 (405) 394 (470) 377 (547)
Amana Developing World Fund Investor Shares (AMDWX) — "Emerging Markets" Category
Quintile Rank n/a n/a 2nd 5th
Absolute Rank (Number of Funds) in Category n/a n/a 146 (461) 619 (649)

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 888/73-AMANA 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 888/73-AMANA 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 September 25, 2013, and incorporates results for the fiscal year ended May 31, 2013. 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, 2014. 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, 2014. 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.

Amana Funds Institutional Shares began operations September 25, 2013, and are not yet rated by Lipper.

2 Annual Report May 31, 2014  

Fellow Shareowners:

Fueled by a recovering economy and stimulative fiscal and monetary policies, US equity markets appreciated nicely for Amana's fiscal year ended May 30, 2014. Total return for the S&P 500 Index was 20.45% and the Dow Jones Islamic Market US Total Return Index was 20.70%. Smaller US companies benefited too, with the Russell 2000 Index up 16.80%. Foreign markets didn't fare as well, with the MSCI Emerging Markets Index returning just 4.27%. Amana Growth Investor returned 18.12%, Amana Income Investor returned 18.82%, and Amana Developing World Investor returned -0.17% for its third full year of operation.

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 continues to receive for superlative long-term performance is so important to our shareowners.

As of May 31, 2014, the Amana portfolios maintained strong long-term performance rankings in their respective mutual fund categories. Amana Income Investor ranked #2 (out of 156 similar funds) in Lipper's Equity Income category for 10 Year performance. Amana Growth Investor ranked #16 (out of 264 funds) in the Multi-Cap Growth category for 10 Year performance.

Also as of May 31, 2014, all Amana portfolios maintained Morningstar's "Four Star" Overall ratings (the Institutional Shares are rated with unshaded stars, as they incorporate historical performance data from the Investor Shares). Morningstar's analysts continue to award both Amana Growth and Amana Income "Silver Shield" 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. This report reflects both the new Institutional share class and the legacy Investor Shares. Without 12b-1 distribution expenses, Institutional Shares are proving popular. By May 31, Amana's Institutional shares attracted more than $185 million.

Going Forward

The US economy is notably improving: unemployment is declining, construction is back, and consumer spending is rising. US manufacturing is strengthening, with exports rising. Consumer confidence has recovered, with low interest rates boosting auto sales and housing. Significant federal government tax increases are collecting more than expected, at least in the short-term. Corporate earnings for 2014 may not improve over a healthy 2013, but the outlook for every industry varies.

The future is always different from the past, and we vigilantly watch for significant changes in major trends. Inflation is a big worry for the years to come. Rising stock and real estate markets are largely the result of credit expansion, bringing the risk of financial bubbles. Governments are making progress toward strengthening the global financial system, but the steam is going out of their efforts. 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.

During the fiscal year ended in May 2014, Amana's assets were little changed. We watch expenses carefully and are pleased to report declines again this year in annualized expense ratios. Amana Income Investor declined to 1.14% and Amana Growth Investor to 1.09%. Amana Developing World increased slightly to 1.54% for the fiscal year. The introduction of Institutional class shares, without the services furnished under the 12b-1 distribution plan, successfully provided lower expense ratios (annualized) of 0.90% for Amana Income Institutional, 0.87% for Amana Growth Institutional, and 1.35% for Amana Developing World Institutional.

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. Mr. Talat Othman, after serving as trustee for 13 years, reached the mandatory retirement age in March. Dr. M. Yaqub Mirza, the trustee who initially proposed the Islamic equity fund concept in 1984, was elected as the new board chairman. For more information, please visit www.amanafunds.com or call 1-888/73-AMANA.

Respectfully,

(photo omitted)

Nicholas Kaiser,
President & Portfolio Manager

(photo omitted)

M. Yaqub Mirza,
Independent Board Chairman

  Annual Report May 31, 2014 3

Performance Summary (as of May 31, 2014) (unaudited)

Morningstar™ Ratings¹ Overall 10 Year 5 Year 3 Year 1 Year
Amana Income Fund — "Large Blend" Category
Investor Shares (AMANX) ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ n/a
Institutional Shares (AMINX) ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ n/a
Number of Funds in Category 1,333 796 1,189 1,333 1,547
 
Amana Growth Fund — "Large Growth" Category
Investor Shares (AMAGX) ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ n/a
Institutional Shares (AMIGX) ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ ☆ n/a
Number of Funds in Category 1,496 915 1,319 1,496 1,705
 
Amana Developing World Fund — "Diversified Emerging Markets" Category
Investor Shares (AMDWX) ★ ★ ★ ★ n/a n/a ★ ★ ★ ★ n/a
Institutional Shares (AMIDX) ☆ ☆ ☆ ☆ n/a n/a ☆ ☆ ☆ ☆ n/a
Number of Funds in Category 444 n/a n/a 444 630
 
 
Lipper Quintile Rankings² 10 Year 5 Year 3 Year 1 Year
Amana Income Fund Investor Shares (AMANX) — "Equity Income" Category
Quintile Rank 1st 5th 4th 2nd
Absolute Rank (Number of Funds) in Category 2 (156) 218 (270) 206 (315) 105 (444)
 
Amana Growth Fund Investor Shares (AMAGX) — "Multi-Cap Growth" Category
Quintile Rank 1st 5th 5th 4th
Absolute Rank (Number of Funds) in Category 16 (264) 386 (402) 395 (466) 412 (540)
   
Amana Developing World Fund Investor Shares (AMDWX) — "Emerging Markets" Category
Quintile Rank n/a n/a 2nd 5th
Absolute Rank (Number of Funds) in Category n/a n/a 133 (457) 549 (641)
 

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 888/73-AMANA or visiting www.amanafunds.com.

¹ Source: Morningstar May 31, 2014. 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, 2014. 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.

Amana Funds Institutional Shares began operations September 25, 2013, and are not yet rated by Lipper.

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.

4 Annual Report May 31, 2014  

Amana Income Fund: Performance Summary (unaudited)

Average Annual Returns (as of May 31, 2014)

  10 Year 5 Year 1 Year Expense Ratio¹
Investor Shares (AMANX) 11.78% 15.11% 18.82% 1.19%
Institutional Shares (AMINX)² n/a n/a n/a 0.94%
S&P 500 Index 7.76% 18.37% 20.45% n/a

Growth of $10,000

Amana Income Fund Growth of $10,000 Comparison of any mutual fund to a market index must be made bearing in mind that the index is unmanaged and expense-free. Conversely, the Fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other operational costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in Investor Shares of the Fund on May 31, 2004, to an identical amount invested in the S&P 500 Index, a broad-based stock market index. The graph shows that an investment in Investor Shares of the Fund would have risen to $30,448 versus $21,134 in the Index. Please note that investors cannot invest directly in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, expense ratios shown in this table are as of the Funds' most recent prospectus, which is dated September 25, 2013, and incorporates results for the fiscal year ended May 31, 2013. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different fiscal periods.

² Institutional shares of the Amana Income Fund began operations September 25, 2013, and consequently have no returns to report.

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.
 
Top Ten Holdings   Portfolio Diversification
% of Total Net Assets % of Total Net Assets  
Illinois Tool Works 2.7% Large Pharmaceuticals 16.9% Amana Income Fund Portfolio Diversification
Nike 2.6% Household Products Manufacturing 7.6%
Colgate-Palmolive 2.6% Basic & Diversified Chemicals 7.3%
Microsoft 2.5% Food Manufacturing 6.9%
Novartis ADS 2.5% Integrated Oils 6.2%
PPG Industries 2.5% Containers & Packaging Manufacturing 5.0%
Canadian National Railway 2.5% Industrial Automation Controls 4.2%
Bristol-Myers Squibb 2.5% Specialty Chemicals 3.6%
Rockwell Automation 2.5% Semiconductor Devices 3.5%
Carlisle 2.4% Apparel, Footwear, Accessory Design 2.6%
  Infrastructure Software 2.5%
Rail Freight Transportation 2.5%
Measurement Instruments 2.5%
Roofing Materials Manufacturing 2.4%
Industrial Supply Distribution 2.4%
Automotive Wholesale 2.2%
Flow Control Equipment 2.1%
Other industries < 2% 17.7%
Cash and equivalents 1.9%
 
  Annual Report May 31, 2014 5

Amana Income Fund: Discussion of Fund Performance

Fiscal Year 2014

For the fiscal year ended May 31, 2014, the Amana Income Fund Investor shares returned 18.82% (versus 24.08% the year before). The broad S&P 500 Index returned a slightly better 20.45%. The new Amana Income Fund Institutional shares commenced operations on September 25, 2013, and have yet to complete a full year of operations.

Amana Income Investor paid qualified income dividends totaling 73¢, up 26% from the prior year. The Institutional shares paid 84¢ in qualified income dividends. Careful attention to expenses brought the gross expense ratio for Investor shares down to 1.14% from 1.18%. The reduced-expense goal for the Institutional shares was achieved with a 0.90% (annualized) ratio. Fund total net assets increased 12.20% during fiscal 2014, which helped to lower the expense ratio.

For the 10 years ended May 31, 2014, the Investor shares provided an annualized total return of 11.78%. This ranked second of the 156 funds surviving in its Lipper "Equity Income" Category peer group. Also for the 10 years ended May 31, 2014, the Investor shares ranked first of the 796 funds surviving in Morningstar's "Large Blend" Category peer group, earning an above-average 5-star overall 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, primarily of financially strong companies. Income-producing stocks did especially well in the last year, as investors sought yield over growth. Avoiding 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. We do hold varying levels of cash, which helps protect us in down periods but can reduce returns in climbing markets.

Our portfolio of well-established equities has more than 5% in each of the industries Large Pharmaceuticals, Household Products Manufacturing, Chemicals, Food Manufacturing, and Integrated Oils. Our five largest individual security holdings — Illinois Tool Works, Nike, Colgate-Palmolive, Microsoft, and Novartis — boosted our results with an average 21.84% return.

The choppy economic environment outside the United States hurt our performance as our global telecom issues often suffered. We liquidated our positions in Enersis ADS, Nucor, and a Malaysian government sukuk (Islamic financial certificate, similar to a bond).

Looking Forward

Interest-rate manipulations by central banks underscore the risks to the world economy as the eurozone recovery has yet to catch hold, employment gains are meager, governments increase taxes, and Asian expansion slows. Financial institutions are cutting global growth estimates for the year, as global indicators of economic activity — investment, employment, and manufacturing — show little improvement. The US economy turned in a surprising weak 2.9% GDP decline for the first quarter of 2014.

Europe, with high unemployment, generally continues in economic difficulty. Major disasters in places like Spain, Italy, Cyprus, and Greece have been averted. Slow progress continues toward banking and budgetary unification that will eventually bring eurozone stability. Countries lowering tax rates, such as the UK, Ireland, and Japan, are prospering. The ASEAN economies look forward to the benefits of common market in 2015.

In the United States, markets will rise only as long as the Federal Reserve engages in stimulative measures, which should be at least be until the November elections. 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, Egypt, 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 2.5% (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.

6 Annual Report May 31, 2014  

Amana Income Fund: Schedule of Investments

Common Stocks — 98.1% Number of Shares Cost Market Value Percentage of Assets
 
Communications
 
Local Media
Pearson ADS 300,000 $4,106,896 $5,889,000 0.3%
 
Telecom Carriers
Chunghwa Telecom ADS 443,505 10,082,172 14,125,634 0.9%
Telus 168,000 3,783,808 6,345,360 0.4%
Verizon 65,750 3,091,565 3,284,870 0.2%
Vodafone Group ADS 136,363 6,685,242 4,774,069 0.3%
  23,642,787 28,529,933 1.8%
 
  27,749,683 34,418,933 2.1%
 
Consumer Discretionary
 
Apparel, Footwear, Accessory Design
Nike 540,000 16,647,545 41,531,400 2.6%
 
Auto Parts
Johnson Controls 600,000 17,273,567 29,016,000 1.8%
 
Automotive Wholesale
Genuine Parts 400,000 15,835,680 34,532,000 2.2%
 
Home Improvement
Stanley Black & Decker 100,000 6,793,209 8,740,000 0.5%
 
  56,550,001 113,819,400 7.1%
 
Consumer Staples
 
Beverages
PepsiCo 340,000 21,040,203 30,032,200 1.9%
 
Food Manufacturing
General Mills 600,000 19,156,589 32,958,000 2.0%
JM Smucker 250,000 13,340,013 25,650,000 1.6%
Kellogg 465,000 23,220,878 32,075,700 2.0%
McCormick & Co 300,000 14,110,805 21,693,000 1.3%
  69,828,285 112,376,700 6.9%
 
Household Products Manufacturing
Colgate-Palmolive 600,000 21,167,901 41,040,000 2.6%
Kimberly-Clark 300,000 19,381,392 33,705,000 2.1%
Procter & Gamble 400,000 23,489,880 32,316,000 2.0%
Unilever ADS 325,000 8,850,327 14,615,250 0.9%
  72,889,500 121,676,250 7.6%
 
  163,757,988 264,085,150 16.4%
 
Energy
 
Exploration & Production
EnCana 250,000 7,113,623 5,827,500 0.4%
 
 
Continued on next page.
 
The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2014 7

Amana Income Fund: Schedule of Investments

Common Stocks — 98.1% Number of Shares Cost Market Value Percentage of Assets
 
Energy (continued)
 
Integrated Oils
Cenovus 400,000 $10,078,223 $11,916,000 0.8%
ConocoPhillips 330,000 13,482,952 26,380,200 1.6%
Exxon Mobil 350,000 23,656,109 35,185,500 2.2%
Total ADS 375,000 20,975,783 26,043,750 1.6%
  68,193,067 99,525,450 6.2%
 
Refining & Marketing
Phillips 66 210,000 6,845,517 17,805,900 1.1%
 
  82,152,207 123,158,850 7.7%
 
Health Care
 
Health Care Supplies
Becton, Dickinson & Co. 210,000 15,293,814 24,717,000 1.5%
 
Large Pharmaceuticals
Abbott Laboratories 350,000 8,392,885 14,003,500 0.9%
AbbVie 350,000 9,148,094 19,015,500 1.2%
AstraZeneca ADS 260,000 11,239,304 18,772,000 1.2%
Bristol-Myers Squibb 800,000 19,124,096 39,792,000 2.5%
Eli Lilly 620,000 22,314,728 37,113,200 2.3%
GlaxoSmithKline ADS 600,000 23,543,156 32,364,000 2.0%
Johnson & Johnson 331,500 22,804,119 33,633,990 2.1%
Novartis ADS 450,000 22,518,080 40,527,000 2.5%
Pfizer 1,200,000 22,076,629 35,556,000 2.2%
  161,161,091 270,777,190 16.9%
 
  176,454,905 295,494,190 18.4%
 
Industrials
 
Aerospace & Defense Parts
United Technologies 250,000 14,326,611 29,055,000 1.8%
 
Flow Control Equipment
Parker Hannifin 275,000 12,527,667 34,438,250 2.1%
 
Industrial Automation Controls
Emerson Electric 450,000 20,934,219 30,028,500 1.9%
Honeywell International 400,000 17,421,205 37,260,000 2.3%
  38,355,424 67,288,500 4.2%
 
Industrial Machinery Manufacturing
Regal-Beloit 85,000 3,417,802 6,488,050 0.4%
 
Industrial Supply Distribution
W.W. Grainger 150,000 14,706,937 38,755,500 2.4%
 
Measurement Instruments
Rockwell Automation 325,000 15,208,967 39,351,000 2.5%
 
 
Continued on next page
 
8 Annual Report May 31, 2014 The accompanying notes are an integral part of these financial statements.

Amana Income Fund: Schedule of Investments

Common Stocks — 98.1% Number of Shares Cost Market Value Percentage of Assets
 
Industrials (continued)
 
Post & Courier Services
United Parcel Service 300,000 $19,152,084 $31,164,000 1.9%
 
Rail Freight Transportation
Canadian National Railway 664,000 15,888,044 40,225,120 2.5%
 
  133,583,536 286,765,420 17.8%
 
Materials
 
Agricultural Chemicals
Potash Corp of Saskatchewan 250,000 8,113,615 9,080,000 0.6%
 
Base Metals
Freeport-McMoRan Copper & Gold 90,000 1,767,834 3,064,500 0.2%
 
Basic & Diversified Chemicals
Air Products & Chemicals 250,000 16,422,819 29,992,500 1.9%
Methanex 300,000 5,849,587 17,130,000 1.1%
PPG Industries 200,000 13,211,578 40,322,000 2.5%
Praxair 220,000 16,103,769 29,092,800 1.8%
  51,587,753 116,537,300 7.3%
 
Containers & Packaging Manufacturing
3M 260,000 19,087,244 37,063,000 2.3%
Illinois Tool Works 500,000 23,226,178 43,275,000 2.7%
  42,313,422 80,338,000 5.0%
 
Roofing Materials Manufacturing
Carlisle 460,000 14,269,102 39,035,600 2.4%
 
Specialty Chemicals
BASF ADS 140,000 5,118,606 16,120,300 1.0%
E.I. du Pont de Nemours 500,000 23,186,120 34,655,000 2.1%
RPM International 180,000 3,642,493 7,752,600 0.5%
  31,947,219 58,527,900 3.6%
 
Steel Producers
Tenaris ADS 110,000 3,439,736 4,933,500 0.3%
 
  153,438,681 311,516,800 19.4%
 
Technology
 
Information Services
Dun & Bradstreet 71,350 5,483,216 7,366,887 0.5%
 
Infrastructure Software
Microsoft 1,000,000 24,161,315 40,940,000 2.5%
 
Semiconductor Devices
Intel 1,000,000 18,997,605 27,320,000 1.7%
Microchip Technology 600,000 17,526,721 28,560,000 1.8%
  36,524,326 55,880,000 3.5%
 
Continued on next page
 
The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2014 9

Amana Income Fund: Schedule of Investments

Common Stocks — 98.1% Number of Shares Cost Market Value Percentage of Assets
 
Technology (continued)
 
Semiconductor Manufacturing Services
Taiwan Semiconductor ADS 1,500,000 $16,043,323 $30,840,000 1.9%
 
  82,212,180 135,026,887 8.4%
 
Utilities
 
Utility Networks
National Fuel Gas 170,000 7,593,521 12,750,000 0.8%
 
  7,593,521 12,750,000 0.8%
 
Total investments $883,492,702 1,577,035,630 98.1%
Other assets (net of liabilities)   31,239,648 1.9%
Total net assets   $1,608,275,278 100.0%
ADS: American Depositary Share
ADR: American Depositary Receipt
 
10 Annual Report May 31, 2014 The accompanying notes are an integral part of these financial statements.

Amana Income Fund

Statement of Assets and Liabilities
As of May 31, 2014
 
Assets
Investments in securities, at value
(Cost $883,492,702)
$1,577,035,630
Cash 34,723,163
Dividends and income 5,839,644
Receivable for Fund shares sold 1,195,843
Insurance reserve premium 2,528
Total assets 1,618,796,808
Liabilities
Payable for Fund shares redeemed 8,582,526
Payable to affiliates 1,161,444
Distributions payable 452,601
Accrued expenses 220,870
Accrued distribution fee 104,089
Total liabilities 10,521,530
Net Assets $1,608,275,278
 
Analysis of Net Assets
Paid-in capital (unlimited shares authorized, without par value) $911,388,478
Undistributed net investment loss (288)
Accumulated net realized gain 3,344,160
Unrealized net appreciation on investments 693,542,928
Net assets applicable to Fund shares outstanding $1,608,275,278
 
Net asset value per Investor Share AMANX
Net assets, at value $1,524,470,666
Shares outstanding 33,623,858
Net asset value, offering and redemption price per share $45.34
 
Net asset value per Institutional Share AMINX
Net assets, at value $83,804,612
Shares outstanding 1,849,866
Net asset value, offering and redemption price per share $45.30
 
Statement of Operations
Year ended May 31, 2014
 
Investment income
Dividends
(net of foreign taxes of $1,460,992)
$43,846,451
Halal income 75,766
Miscellaneous income 1,686
Gross investment income 43,923,903
Expenses
Investment adviser fees 12,951,687
Distribution fees — Investor Shares 3,729,148
Printing and postage 393,975
Custodian fees 75,070
Professional fees 65,029
Shareowner servicing fees
Investor Shares 53,152
Institutional Shares 136
Filing and registration fees 47,861
Chief Compliance Officer expenses 44,319
Trustee fees 42,712
Other expenses 35,184
Retirement plan custodial fees
Investor Shares 30,798
Institutional Shares 227
Total gross expenses 17,469,298
Less custodian fee credits (75,070)
Net expenses 17,394,228
Net investment income $26,529,675
 
 
Net realized gain from investments and foreign currency $8,304,179
Net increase in unrealized appreciation on investments 229,384,503
Net gain on investments $237,688,682
 
Net increase in net assets resulting from operations $264,218,357
 
The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2014 11

Amana Income Fund

Statements of Changes in Net Assets Year ended May 31, 2014 Year ended May 31, 2013
Increase (decrease) in net assets from operations
From operations
Net investment income $26,529,675 $21,035,226
Net realized gain (loss) on investments 8,304,179 (4,956,393)
Net increase in unrealized appreciation 229,384,503 271,061,832
Net increase in net assets 264,218,357 287,140,665
Distributions to shareowners from
Net investment income  
Investor Shares (25,226,313) (21,284,665)
Institutional Shares (1,397,744) -
Capital gains distribution
Investor Shares - (431,052)
Institutional Shares - -
Total distributions (26,624,057) (21,715,717)
Capital share transactions
Proceeds from the sale of shares  
Investor Shares 268,543,466 225,299,456
Institutional Shares 92,811,636 -
Value of shares issued in reinvestment of dividends and distributions  
Investor Shares 24,345,812 20,913,224
Institutional Shares 1,384,890 -
Cost of shares redeemed  
Investor Shares (434,249,928) (375,198,470)
Institutional Shares (15,615,718) -
Early redemption fees retained n/a 23,580
Net decrease in net assets (62,779,842) (128,962,210)
Total increase in net assets 174,814,458 136,462,738
 
Net assets
Beginning of year 1,433,460,820 1,296,998,082
End of year 1,608,275,278 1,433,460,820
 
Undistributed net investment income (loss) $(288) $94,917
 
Shares of the Fund sold and redeemed
Investor Shares (AMANX)
Number of shares sold 6,435,553 6,350,555
Number of shares issued in reinvestment of dividends and distributions 545,910 577,079
Number of shares redeemed (10,310,128) (10,798,292)
Net decrease in number of shares outstanding (3,328,665) (3,870,658)
 
Institutional Shares (AMINX)
Number of shares sold 2,178,895 -
Number of shares issued in reinvestment of dividends and distributions 31,025 -
Number of shares redeemed (360,054) -
Net increase in number of shares outstanding 1,849,866 -
 
12 Annual Report May 31, 2014 The accompanying notes are an integral part of these financial statements.

Amana Income Fund: Financial Highlights

Investor Shares (AMANX) Year ended May 31,
Selected data per share of outstanding capital stock throughout each year: 2014 2013 2012 2011 2010
Net asset value at beginning of year $38.79 $31.77 $33.91 $27.28 $24.27
Income from investment operations
Net investment income 0.721 0.58 0.49 0.44 0.35
Net gains (losses) on securities (both realized and unrealized) 6.56 7.03 (1.98) 6.63 3.01
Total from investment operations 7.28 7.61 (1.49) 7.07 3.36
Less distributions
Dividends (from net investment income) (0.73) (0.58) (0.49) (0.44) (0.35)
Distributions (from capital gains) - (0.01) (0.17) - -
Total distributions (0.73) (0.59) (0.66) (0.44) (0.35)
Paid-in capital from early redemption fees n/a 0.002 0.01 0.002 0.002
 
Net asset value at end of year $45.34 $38.79 $31.77 $33.91 $27.28
 
Total Return 18.82% 24.08% (4.36)% 25.97% 13.80%
 
Ratios / supplemental data
Net assets ($000), end of year $1,524,471 $1,433,461 $1,296,998 $1,399,997 $1,067,854
Ratio of expenses to average net assets
Before custodian fee credits 1.15% 1.19% 1.20% 1.21% 1.26%
After custodian fee credits 1.14% 1.18% 1.20% 1.20% 1.25%
Ratio of net investment income after custodian fee credits to average net assets 1.71% 1.58% 1.52% 1.47% 1.33%
Portfolio turnover rate 1% 1% 3% 3% 5%
 
Institutional Shares (AMINX) Period ended3
Selected data per share of outstanding capital stock throughout each period: May 31, 2014
Net asset value at beginning of period $40.66
Income from investment operations
Net investment income 0.691
Net gains on securities (both realized and unrealized) 4.79
Total from investment operations 5.48
Less distributions
Dividends (from net investment income) (0.84)
Distributions (from capital gains) -
Total distributions (0.84)
 
Net asset value at end of period $45.30
 
Total Return 13.53%4
 
Ratios / supplemental data
Net assets ($000), end of period $83,805
Ratio of expenses to average net assets
Before custodian fee credits 0.90%5
After custodian fee credits 0.90%5
Ratio of net investment income after custodian fee credits to average net assets 2.32%5
Portfolio turnover rate 1%

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

The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2014 13

Amana Growth Fund: Performance Summary (unaudited)

Average Annual Returns (as of May 31, 2014)

  10 Year 5 Year 1 Year Expense Ratio¹
Investor Shares (AMAGX) 10.94% 14.23% 18.12% 1.11%
Institutional Shares (AMIGX)² n/a n/a n/a 0.86%
S&P 500 Index 7.76% 18.37% 20.45% n/a

Growth of $10,000

Amana Growth Fund Growth of $10,000 Comparison of any mutual fund to a market index must be made bearing in mind that the index is unmanaged and expense-free. Conversely, the Fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other operational costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in Investor Shares of the Fund on May 31, 2004, to an identical amount invested in the S&P 500 Index, a broad-based stock market index. The graph shows that an investment in Investor Shares of the Fund would have risen to $28,246 versus $21,134 in the Index. Please note that investors cannot invest directly in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, expense ratios shown in this table are as of the Funds' most recent prospectus, which is dated September 25, 2013, and incorporates results for the fiscal year ended May 31, 2013. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different fiscal periods.

² Institutional shares of the Amana Growth Fund began operations September 25, 2013, and consequently have no returns to report.

Fund Objective

The primary objective of the Growth Fund is long-term capital growth, consistent with Islamic principles.
 
Top Ten Holdings   Portfolio Diversification
% of Total Net Assets % of Total Net Assets  
Adobe Systems 3.8% Large Pharmaceuticals 9.8% Amana Growth Fund Portfolio DIversification
Qualcomm 3.2% Application Software 8.8%
Apple 3.2% Communications Equipment 7.3%
Amgen 3.2% Household Products Manufacturing 7.0%
Trimble Navigation 3.1% Semiconductor Devices 6.4%
Intuit 3.0% Measurement Instruments 5.7%
Johnson & Johnson 2.8% Rail Freight Transportation 5.3%
Church & Dwight 2.8% Biotech 4.0%
Union Pacific 2.8% Internet Media 3.2%
Akamai Technologies 2.7% Beverages 3.1%
  Telecom Carriers 2.7%
Post & Courier Services 2.6%
Specialty Apparel Stores 2.5%
Health Care Supply Chain 2.3%
General Merchant Wholesalers 2.0%
Other industries < 2% 25.1%
Cash and equivalents 2.2%
 
14 Annual Report May 31, 2014

Amana Growth Fund: Discussion of Fund Performance

Fiscal Year 2014

For the fiscal year ended May 31, 2014, Amana Growth Fund Investor shares total return was 18.12% (versus 14.94% the year before). The broad-based S&P 500 Index returned a higher 20.45%, and the large-cap Russell 1000 Growth Index returned 22.16%. The new Amana Growth Fund Institutional shares commenced operations on September 25, 2013, and have yet to complete a full year of operations.

While income is not an investment objective, the Fund paid another qualified income dividend (19¢ per Investor share and 24¢ per Institutional share). Continuing attention to operating expenses meant the net expense ratio of Amana Growth Investor shares improved again, to 1.09% versus 1.11% for the year before. The reduced-expense goal for the Institutional shares was achieved with a 0.87% (annualized) ratio. Fund total net assets decreased 9.17% during fiscal 2014, as long-term equity fund investors generally sought other vehicles.

For the ten years ended May 31, 2014, Amana Growth Investor shares provided an annualized total return of 10.94%. This ranked 16th of the 264 funds surviving in its Lipper "Multi-Cap Growth" Category peer group. Also for the 10 years ended May 31, 2014, the Investor shares ranked in the top 3% of the 915 funds surviving in Morningstar's "Large Growth" Category peer group, earning an above-average 5-star overall performance ranking.

Factors Affecting Past Performance

During the year, the markets appreciated in response to monetary stimulus and corporate profit growth. 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. However, income-producing stocks did better in the last year, as investors sought yield over growth. Avoiding most financial stocks penalized the Fund during the year, as they continued to do well due to the "financial engineering" of the Federal Reserve. We do hold varying levels of cash, which helps protect us in down periods but can reduce returns in climbing markets.

Amana Growth's largest industry is Large Pharmaceuticals, where our best gainer was Novo Nordisk ADS, up 31.22%. Our next largest industry is Application Software, where our largest individual position Adobe Systems led with a 50.41% gain. Our third largest industry is Communications Equipment, where stellar gains were achieved by Harris (54.10%) and Apple (40.75%). Other technology companies — such as Intuit, SanDisk, Google, and Trimble — also gained significantly.

Based on our team's evaluation of their market prospects, we closed our positions in American Movil ADS, Anglo American ADR, Canon ADS, Convergys, Danone ADR, F5 Networks, Intel, IBM, LATAM Airlines ADS, Mattel, Rogers Communications, and Urban Outfitters.

Looking Forward

Interest-rate manipulations by central banks underscore the risks to the world economy as the eurozone recovery has yet to catch hold, employment gains are meager, governments increase taxes, and Asian expansion slows. Financial institutions are cutting growth estimates for the year, as global indicators of economic activity — investment, employment, and manufacturing — show little improvement. The US economy turned in a surprising weak 2.9% GDP decline for the first quarter of 2014.

Europe, with high unemployment, generally continues in economic difficulty. Major disasters in places like Spain, Italy, Cyprus and Greece have been averted. Slow progress continues toward banking and budgetary unification that will eventually bring eurozone stability. Countries lowering tax rates, like the UK, Ireland, and Japan are prospering. The ASEAN economies look forward to the benefits of common market in 2015.

In the United States, markets will rise only as long as the Federal Reserve engages in stimulative measures, which should be at least be until the November elections. 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, Egypt, 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 our businesses to improve the Fund's price long-term.

Annual Report May 31, 2014 15

Amana Growth Fund: Schedule of Investments

Common Stocks — 97.8% Number of Shares Cost Market Value Percentage of Assets
 
Communications
 
Internet Media
Google A¹ 85,000 $19,379,619 $48,590,250 2.5%
Google C¹ 26,000 4,430,262 14,557,140 0.7%
  23,809,881 63,147,390 3.2%
 
Local Media
John Wiley & Sons 35,000 1,249,651 1,917,300 0.1%
 
Telecom Carriers
Akamai Technologies¹ 1,000,000 21,444,890 54,340,000 2.7%
 
  46,504,422 119,404,690 6.0%
 
Consumer Discretionary
 
Auto Parts
Gentex 700,000 14,110,974 20,244,000 1.0%
 
Automotive Wholesale
Genuine Parts 100,000 4,521,739 8,633,000 0.4%
 
General Merchant Wholesalers
Fastenal 800,000 20,471,439 39,000,000 2.0%
 
Home Product Stores
Lowe's 790,000 18,730,150 37,193,200 1.9%
 
Other Specialty Retail — Discretionary
PetSmart 605,000 17,006,324 34,769,350 1.7%
 
Specialty Apparel Stores
TJX Companies 900,000 18,957,770 49,005,000 2.5%
 
  93,798,396 188,844,550 9.5%
 
Consumer Staples
 
Beverages
Monster Beverage¹ 125,000 2,263,769 8,672,500 0.4%
PepsiCo 600,000 36,524,584 52,998,000 2.7%
  38,788,353 61,670,500 3.1%
 
Household Products Manufacturing
Church & Dwight 800,000 31,059,800 55,384,000 2.8%
Clorox 375,000 21,791,092 33,607,500 1.7%
Estee Lauder 640,000 26,422,283 49,036,800 2.5%
  79,273,175 138,028,300 7.0%
 
  118,061,528 199,698,800 10.1%
 
Energy
 
Integrated Oils
Cenovus 50,000 1,100,582 1,489,500 0.1%
 
  1,100,582 1,489,500 0.1%
 
Continued on next page.
 
16 Annual Report May 31, 2014 The accompanying notes are an integral part of these financial statements.

Amana Growth Fund: Schedule of Investments

Common Stocks — 97.8% Number of Shares Cost Market Value Percentage of Assets
 
Health Care
 
Biotech
Amgen 543,000 $29,475,511 $62,982,570 3.2%
Celgene¹ 100,000 7,547,036 15,303,000 0.8%
  37,022,547 78,285,570 4.0%
 
Health Care Facilities
VCA Antech¹ 620,000 17,290,742 20,863,000 1.0%
 
Health Care Supply Chain
Express Scripts Holding¹ 650,000 22,597,762 46,455,500 2.3%
 
Large Pharmaceuticals
Eli Lilly 650,000 23,224,550 38,909,000 2.0%
Johnson & Johnson 546,000 33,179,299 55,397,160 2.8%
Novartis ADS 585,000 26,562,752 52,685,100 2.7%
Novo Nordisk ADS 1,100,000 10,428,308 46,508,000 2.3%
  93,394,909 193,499,260 9.8%
 
Managed Care
Humana 300,000 8,676,855 37,338,000 1.9%
 
Medical Equipment
Dentsply International 600,000 18,840,432 28,374,000 1.4%
 
Orthopedic Devices
Stryker 300,000 15,657,168 25,347,000 1.3%
 
  213,480,415 430,162,330 21.7%
 
Industrials
 
Building Sub-Contractors
EMCOR Group 700,000 14,885,660 31,164,000 1.6%
 
Flow Control Equipment
Crane 300,000 10,212,899 22,233,000 1.1%
 
Industrial Machinery Manufacturing
Regal-Beloit 245,000 13,378,810 18,700,850 0.9%
 
Measurement Instruments
Agilent Technologies 900,000 22,797,417 51,246,000 2.6%
Trimble Navigation¹ 1,700,000 20,463,059 61,319,000 3.1%
  43,260,476 112,565,000 5.7%
 
Metalworking Machinery Manufacturing
Lincoln Electric 500,000 13,126,984 32,845,000 1.7%
 
Post & Courier Services
United Parcel Service 500,000 33,511,923 51,940,000 2.6%
 
Rail Freight Transportation
Norfolk Southern 500,000 26,797,903 50,375,000 2.5%
Union Pacific 276,327 30,102,567 55,063,681 2.8%
  56,900,470 105,438,681 5.3%
 
  185,277,222 374,886,531 18.9%
 
Continued on next page.
 
The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2014 17

Amana Growth Fund: Schedule of Investments

Common Stocks — 97.8% Number of Shares Cost Market Value Percentage of Assets
 
Materials
 
Agricultural Chemicals
Potash Corp of Saskatchewan 900,000 $20,854,762 $32,688,000 1.6%
 
  20,854,762 32,688,000 1.6%
 
Technology
 
Application Software
Adobe Systems¹ 1,181,740 36,045,155 76,269,500 3.8%
Intuit 764,000 24,486,129 60,577,560 3.0%
SAP ADS 506,379 29,881,663 38,737,994 2.0%
  90,412,947 175,585,054 8.8%
 
Communications Equipment
Apple 100,000 2,876,770 63,300,000 3.2%
Cisco Systems 2,000,000 39,273,610 49,240,000 2.5%
Harris 410,000 12,592,772 31,672,500 1.6%
  54,743,152 144,212,500 7.3%
 
Information Services
Gartner¹ 300,000 8,580,120 21,327,000 1.1%
 
Infrastructure Software
Oracle 650,000 12,885,855 27,313,000 1.4%
 
IT Services
Convergys 561,033 7,051,377 12,241,740 0.6%
Infosys ADS 500,000 21,031,185 25,715,000 1.3%
  28,082,562 37,956,740 1.9%
 
Semiconductor Capital Equipment
ASML 385,000 14,279,290 33,063,800 1.7%
 
Semiconductor Devices
Qualcomm 800,000 30,482,851 64,360,000 3.2%
SanDisk 370,000 15,992,445 35,753,100 1.8%
Xilinx 600,000 14,947,540 28,176,000 1.4%
  61,422,836 128,289,100 6.4%
 
Semiconductor Manufacturing Services
Taiwan Semiconductor ADS 1,243,297 12,977,323 25,562,186 1.3%
 
  283,384,085 593,309,380 29.9%
 
Total investments   $962,461,412 1,940,483,781 97.8%
Other assets (net of liabilities)   44,051,552 2.2%
Total net assets   $1,984,535,333 100.0%
¹ Non-income producing security

ADS: American Depositary Share
ADR: American Depositary Receipt

 
18 Annual Report May 31, 2014 The accompanying notes are an integral part of these financial statements.

Amana Growth Fund

Statement of Assets and Liabilities
As of May 31, 2014
 
Assets
Investments in securities, at value
(Cost $962,461,412)
$1,940,483,781
Cash 50,836,753
Dividends and income 2,952,582
Receivable for Fund shares sold 775,188
Total assets 1,995,048,304
Liabilities
Payable for Fund shares redeemed 8,569,016
Payable to affiliates 1,329,958
Accrued expenses 484,556
Accrued distribution fee 129,441
Total liabilities 10,512,971
Net Assets $1,984,535,333
 
Analysis of Net Assets
Paid-in capital (unlimited shares
authorized, without par value)
$921,192,703
Undistributed net investment income 4,370,381
Accumulated net realized gain 80,949,880
Unrealized net appreciation on
investments
978,022,369
Net assets applicable to Fund shares outstanding $1,984,535,333
 
Net asset value per Investor Share AMAGX
Net assets, at value $1,890,186,771
Shares outstanding 56,902,998
Net asset value, offering and redemption price per share $33.22
 
Net asset value per Institutional Share AMIGX
Net assets, at value $94,348,562
Shares outstanding 2,839,367
Net asset value, offering and redemption price per share $33.23
 
Statement of Operations
Year ended May 31, 2014
 
Investment income
Dividends
(Net of foreign taxes of $1,460,601)
$30,750,422
Miscellaneous income 3,004
Gross investment income 30,753,426
Expenses
Investment adviser fees 16,405,519
Distribution fees — Investor Shares 5,033,177
Printing and postage 571,501
Custodian fees 101,857
Professional fees 99,542
Shareowner servicing fees
Investor Shares 84,135
Institutional Shares 143
Chief Compliance Officer expenses 63,540
Trustee fees 61,012
Other expenses 49,476
Retirement plan custodial fees
Investor Shares 47,366
Institutional Shares 189
Filing and registration fees 46,774
Total gross expenses 22,564,231
Less custodian fee credits (101,857)
Net expenses 22,462,374
Net investment income $8,291,052
 
 
Net realized gain from investments and foreign currency $137,821,923
Net increase in unrealized appreciation on investments 196,858,647
Net gain on investments $334,680,570
 
Net increase in net assets resulting from operations $342,971,622
 
The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2014 19

Amana Growth Fund

Statements of Changes in Net Assets Year ended May 31, 2014 Year ended May 31, 2013
Increase (decrease) in net assets from operations
From operations
Net investment income $8,291,052 $9,842,579
Net realized gain on investments 137,821,923 2,915,443
Net increase in unrealized appreciation 196,858,647 295,691,218
Net increase in net assets 342,971,622 308,449,240
Distributions to shareowners from
Net investment income  
Investor Shares (11,635,832) (5,476,978)
Institutional Shares (609,800) -
Capital gains distribution  
Investor Shares (51,193,840)
Institutional Shares (2,115,063)
Total distributions (65,554,535) (5,476,978)
Capital share transactions
Proceeds from the sale of shares  
Investor Shares 190,970,742 347,428,774
Institutional Shares 104,194,038 -
Value of shares issued in reinvestment of dividends and distributions  
Investor Shares 61,346,142 5,284,345
Institutional Shares 2,724,863 -
Cost of shares redeemed  
Investor Shares (819,692,814) (665,717,222)
Institutional Shares (17,646,209) -
Early redemption fees retained n/a 28,484
Net decrease in net assets (478,103,238) (312,975,619)
Total decrease in net assets (200,686,151) (10,003,357)
 
Net assets
Beginning of year 2,185,221,484 2,195,224,841
End of year 1,984,535,333 2,185,221,484
 
Undistributed net investment income $4,370,381 $8,324,786
 
Shares of the Fund sold and redeemed
Investor Shares (AMAGX)
Number of shares sold 6,162,094 12,798,528
Number of shares issued in reinvestment of dividends and distributions 1,917,069 196,517
Number of shares redeemed (26,443,072) (24,437,795)
Net decrease in number of shares outstanding (18,363,909) (11,442,750)
 
Institutional Shares (AMIGX)
Number of shares sold 3,301,054 -
Number of shares issued in reinvestment of dividends and distributions 85,205 -
Number of shares redeemed (546,892) -
Net increase in number of shares outstanding 2,839,367 -
 
20 Annual Report May 31, 2014 The accompanying notes are an integral part of these financial statements.

Amana Growth Fund: Financial Highlights

Investor Shares (AMAGX) Year ended May 31,
Selected data per share of outstanding capital stock throughout each year: 2014 2013 2012 2011 2010
Net asset value at beginning of year $29.03 $25.32 $26.07 $21.19 $17.69
Income from investment operations
Net investment income (loss) 0.121 0.13 0.06 0.02 (0.01)
Net gains (losses) on securities (both realized and unrealized) 5.10 3.65 (0.80) 4.88 3.51
Total from investment operations 5.22 3.78 (0.74) 4.90 3.50
Less distributions
Dividends (from net investment income) (0.19) (0.07) (0.01) (0.02) -
Distributions (from capital gains) (0.84) - - - -
Total distributions (1.03) (0.07) (0.01) (0.02) -
Paid-in capital from early redemption fees n/a 0.002 0.002 0.002 0.002
 
Net asset value at end of year $33.22 $29.03 $25.32 $26.07 $21.19
 
Total Return 18.12% 14.94% (2.84)% 23.10% 19.79%
 
Ratios / supplemental data
Net assets ($000), end of year $1,890,187 $2,185,221 $2,195,225 $2,210,268 $1,596,487
Ratio of expenses to average net assets
Before custodian fee credits 1.10% 1.11% 1.13% 1.14% 1.21%
After custodian fee credits 1.09% 1.11% 1.13% 1.14% 1.20%
Ratio of net investment income after custodian fee credits to average net assets 0.39% 0.44% 0.23% 0.07% (0.05)%
Portfolio turnover rate 0% 1% 12% 5% 5%
 
Institutional Shares (AMIGX) Period ended3
Selected data per share of outstanding capital stock throughout each period: May 31, 2014
Net asset value at beginning of period $30.45
Income from investment operations
Net investment income 0.161
Net gains on securities (both realized and unrealized) 3.70
Total from investment operations 3.86
Less distributions
Dividends (from net investment income) (0.24)
Distributions (from capital gains) (0.84)
Total distributions (1.08)
 
Net asset value at end of period $33.23
 
Total Return 12.82%4
 
Ratios / supplemental data
Net assets ($000), end of period $94,349
Ratio of expenses to average net assets
Before custodian fee credits 0.87%5
After custodian fee credits 0.87%5
Ratio of net investment income after custodian fee credits to average net assets 0.70%5
Portfolio turnover rate 0%

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

The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2014 21

Amana Developing World Fund: Performance Summary (unaudited)

Average Annual Returns as of May 31, 2014

  10 Year 5 Year 1 Year Expense Ratio¹
Investor Shares (AMDWX) n/a n/a -0.17% 1.54%
Institutional Shares (AMIDX)² n/a n/a n/a 1.29%
MSCI Emerging Markets Index 11.61% 8.36% 4.27% n/a

Growth of $10,000

Amana Developing World Fund Growth of $10,000 Comparison of any mutual fund to a market index must be made bearing in mind that the index is unmanaged and expense-free. Conversely, the Fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other operational costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in Investor Shares of the Fund on September 28, 2009, to an identical amount invested in the MSCI Emerging Markets Index, a broad-based international equity index. The graph shows that an investment in Investor Shares the Fund would have risen to $10,930 versus $12,532 in the Index. Please note that investors cannot invest directly in the index.

The Amana Developing World Fund commenced operations September 28, 2009.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, expense ratios shown in this table are as of the Funds' most recent prospectus, which is dated September 25, 2013, and incorporates results for the fiscal year ended May 31, 2013. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different fiscal periods.

² Institutional shares of the Amana Developing World Fund began operations September 25, 2013, and consequently have no returns to report.

Fund Objective

The primary objective of the Developing World Fund is long-term capital growth, consistent with Islamic principles.
 
Top Ten Holdings   Portfolio Diversification
% of Total Net Assets % of Total Net Assets  
Western Digital 2.8% Telecom Carriers 9.6% Amana Developing World Fund Portfolio Diversification
VF 2.7% Food Manufacturing 7.0%
Telenor 2.3% Specialty Pharmaceuticals 6.0%
Telekomunikasi Indonesia ADS 2.3% Utility Networks 5.8%
Aspen Pharmacare 2.3% Generic Pharmaceuticals 5.8%
Bangkok Dusit Medical Services 2.2% Household Products Manufacturing 5.4%
Dr. Reddy's Laboratories ADS 2.2% Health Care Facilities 4.9%
MercadoLibre 2.1% Integrated Oils 3.6%
Kalbe Farma 2.1% Computer Storage 2.8%
Baidu ADS 2.1% Power Generation 2.8%
  Apparel, Footwear, Accessory Design 2.7%
Infrastructure Construction 2.2%
E-Commerce Discretionary 2.1%
Internet Media 2.1%
Other industries < 2% 20.1%
Cash and equivalents 17.1%
 
22 Annual Report May 31, 2014  

Amana Developing World Fund: Discussion of Fund Performance

Fiscal Year 2014

For the fiscal year ended May 31, 2014, the Amana Developing World Fund Investor shares returned -0.17% (versus 10.51% the year before). The Fund's annual return underperformed the MSCI Emerging Markets Index, which returned 4.27%. The new Amana Developing World Fund Institutional shares commenced operations on September 25, 2013, and have yet to complete a full year of operations.

While income is not an investment objective, the Fund paid a qualified income dividend (4¢ per share for both share classes) in December 2013. The net expense ratio of Amana Developing World Investor shares was 1.54% versus 1.51% for the year before. The reduced-expense goal for the Institutional shares was achieved with a 1.35% (annualized) ratio. The Fund remains small, but is growing as total net assets increased 13.14% during fiscal 2014.

Factors Affecting Past Performance

Fiscal 2014 was another volatile year for the world's emerging stock markets. Continuing central bank "easy money" programs, weak eurozone and BRIC economic conditions, and declining commodity prices kept global demand and interest rates exceptionally low.

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

More than 5% of the portfolio is invested in companies headquartered in each of Malaysia, China, Indonesia, Brazil, South Africa, and the United States. More than 5% of the portfolio is in each of the industries Telecom Carriers, Food Manufacturing, Specialty Pharmaceuticals, Utility Networks, Generic Pharmaceuticals, and Household Products Manufacturing. In the Telecom Carriers industry, which often makes up a significant portion of developing world portfolios, we had success with firms like MTN Group and Telenor, but disappointment from Advanced Info Service and Telefonica Brasil. Another success was our largest individual holding, Western Digital, up 38.74% as profits climbed at this Asian electronics manufacturer. Our second largest holding, VF Corp, appreciated 37.10% on its international apparel manufacturing. Poor performers included positions in the Materials sector as prices dropped, especially for gold and potash. Our investments in Asian health care facilities underperformed.

During Fiscal 2014, the Fund's conservative approach to emerging market investing meant that it kept an unusually high proportion of its assets in cash. Our diversified portfolio is adding new investments as our analysts continuously research and identify high-quality, Islamically acceptable companies. Dynamic developing world markets mean some businesses falter while others prosper, and we expect the Developing World Fund's portfolio turnover ratio to generally be higher than those of other Amana mutual funds.

Looking Forward

China is the largest "emerging market" economy, although its past growth rates are slowing as its economy becomes massive and credit is restrained. Aided by higher wages, millions each year move into the middle class and are able to increase consumption expenditures. The economic slowdown is hurting Chinese demand for foreign raw materials, goods, and services. India, the world's second largest economy, is exciting investors as a new prime minister shakes out many cobwebs.

Our favorite area for Amana Developing World Fund investments currently is the countries of the Association of Southeast Asian Nations, such as Indonesia, Malaysia, Thailand, and the Philippines. These economies consistently outstrip the politically paralyzed economic systems of Europe and the United States. Beginning in 2015, they will see real benefits as they together build a common market of 600 million people. The world economic balance is changing, with one consultant illustrating that the center of world economic activity has moved from the north Atlantic to central Asia in just 70 years. Europe especially is struggling after years of low productivity and political weakness.

We suggest that US-based mutual fund investors look beyond short-term volatility and continue to diversify their assets into the developing world. Good values abound today, exemplified by the current 12.90 P/E ratio and 2.66% dividend yield for the component stocks of the MSCI Emerging Markets Index versus the 18.9 P/E ratio and 1.90% dividend yield for the stocks of the S&P 500 Index (as of May 31, 2014).

Switch in Portfolio Management Roles

Begining July 1, Mr. Nicholas Kaiser, the original portfolio manager for this Fund, is switching roles with Mr. Scott Klimo, the deputy portfolio manager. Mr. Klimo, who also serves as Saturna Capital's director of research, joined the firm in 2012. He has over 20 years experience in the financial industry with years of his career spent living and working in a variety of Asian countries and the past 10 years working as a senior analyst, research director, and portfolio manager covering global equities. Mr. Klimo is a chartered financial analyst (CFA) charterholder.

  Annual Report May 31, 2014 23

Amana Developing World Fund: Schedule of Investments

Common Stocks — 82.8% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Communications
 
Internet Media
Baidu ADS² 3,500 $241,481 $580,335 China³ 2.1%
 
Telecom Carriers
Advanced Info Service 15,000 137,060 104,806 Thailand 0.4%
Axiata Group 195,000 394,272 420,678 Malaysia 1.5%
Millicom International 2,500 220,520 231,546 Luxembourg 0.8%
MTN Group 16,000 259,470 337,501 South Africa 1.2%
Telefonica Brasil ADS 15,000 371,442 301,650 Brazil 1.1%
Telekomunikasi Indonesia ADS 15,000 540,800 655,200 Indonesia 2.3%
Telenor 28,000 583,414 664,598 Malaysia³ 2.3%
  2,506,978 2,715,979 9.6%
 
  2,748,459 3,296,314 11.7%
 
Consumer Discretionary
 
Apparel, Footwear, Accessory Design
VF 12,000 310,438 756,240 United States 2.7%
 
Automobile OEM
Ford Otomotiv Sanayi 40,000 378,513 531,371 Turkey 1.9%
 
Department Stores
Robinson Department Store 175,000 340,943 307,031 Thailand 1.1%
 
E-Commerce Discretionary
MercadoLibre 7,000 500,586 595,490 Brazil³ 2.1%
 
  1,530,480 2,190,132 7.8%
 
Consumer Staples
 
Food Manufacturing
Danone ADS 37,000 510,811 552,780 France 2.0%
Indofood CBP Sukses Makmur 250,000 250,542 218,889 Indonesia 0.8%
IOI 300,000 329,545 460,506 Malaysia 1.6%
M. Dias Branco 13,000 368,812 564,612 Brazil 2.0%
Tiger Brands 6,000 199,013 170,324 South Africa 0.6%
  1,658,723 1,967,111 7.0%
 
Household Products Manufacturing
Colgate-Palmolive 8,000 348,011 547,200 United States 1.9%
Kimberly-Clark de Mexico 160,000 488,255 431,719 Mexico 1.5%
Unilever ADS 12,500 500,899 562,125 United Kingdom 2.0%
  1,337,165 1,541,044 5.4%
 
Pharmacies & Drug Stores
Clicks Group 60,000 355,423 360,282 South Africa 1.3%
 
  3,351,311 3,868,437 13.7%
 
Continued on next page.
 
24 Annual Report May 31, 2014 The accompanying notes are an integral part of these financial statements.

Amana Developing World Fund: Schedule of Investments

Common Stocks — 82.8% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Energy
 
Exploration & Production
CNOOC ADS 2,500 $457,585 $428,050 China 1.5%
 
Integrated Oils
China Petroleum & Chemical ADS 1,040 69,690 93,912 China 0.3%
Petroleo Brasileiro ADS 25,000 523,255 352,500 Brazil 1.3%
Sasol ADS 10,000 494,222 562,900 South Africa 2.0%
  1,087,167 1,009,312 3.6%
 
  1,544,752 1,437,362 5.1%
 
Financials
 
Islamic Banking
BIMB Holdings 280,000 365,209 343,626 Malaysia 1.2%
 
Multi Asset Class Real Estate Ownership & Development
IOI Properties Group² 150,000 205,190 115,979 Malaysia 0.4%
SM Prime Holdings 730,000 277,159 280,581 Philippines 1.0%
  482,349 396,560 1.4%
 
  847,558 740,186 2.6%
 
Health Care
 
Cardiovascular Devices
Mindray Medical International ADS 13,000 440,442 403,390 China³ 1.4%
 
Generic Pharmaceuticals
Aspen Pharmacare² 25,000 371,659 645,763 South Africa 2.3%
Dr. Reddy's Laboratories ADS 15,000 457,465 616,650 India 2.2%
Richter Gedeon 20,000 367,156 375,808 Hungary 1.3%
  1,196,280 1,638,221 5.8%
 
Health Care Facilities
Bangkok Dusit Medical Services 1,250,000 368,757 632,983 Thailand 2.2%
IHH Healthcare² 300,000 391,875 383,864 Malaysia 1.4%
KPJ Healthcare 344,666 282,677 354,122 Malaysia 1.3%
  1,043,309 1,370,969 4.9%
 
Specialty Pharmaceuticals
Genomma Lab Internacional² 220,000 493,318 562,984 Mexico 2.0%
Kalbe Farma 4,500,000 400,361 594,477 Indonesia 2.1%
Mead Johnson Nutrition 6,000 352,781 536,820 United States 1.9%
  1,246,460 1,694,281 6.0%
 
  3,926,491 5,106,861 18.1%
 
Industrials
 
Infrastructure Construction
Companhia de Concessoes Rodoviarias 32,000 192,106 252,252 Brazil 0.9%
Jasa Marga 700,000 432,059 352,645 Indonesia 1.3%
 
  624,165 604,897 2.2%
 
Continued on next page.
 
The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2014 25

Amana Developing World Fund: Schedule of Investments

Common Stocks — 82.8% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Materials
 
Agricultural Chemicals
Quimica y Minera de Chile ADS 17,000 $689,167 $514,080 Chile 1.8%
 
Base Metals
Freeport-McMoRan Copper & Gold 15,000 584,100 510,750 Indonesia³ 1.8%
 
Cement & Aggregates
PT Semen 350,000 400,687 441,975 Indonesia 1.6%
 
Precious Metal Mining
Alamos Gold 32,500 500,025 267,660 Mexico³ 0.9%
Impala Platinum ADS 16,000 343,235 165,760 South Africa 0.6%
  843,260 433,420 1.5%
 
Raw Material Suppliers
Vale ADS 12,500 341,208 159,375 Brazil 0.6%
 
Steel Producers
Tenaris ADS 7,000 282,964 313,950 Argentina³ 1.1%
 
  3,141,386 2,373,550 8.4%
 
Technology
 
Application Software
AutoNavi Holdings ADS² 25,000 318,248 520,750 China 1.8%
 
Computer Storage
Western Digital 9,000 363,962 790,650 China 2.8%
 
  682,210 1,311,400 4.6%
 
Utilities
 
Power Generation
Aboitiz Power 450,000 378,383 370,914 Philippines 1.3%
PGE 60,000 300,164 414,875 Poland 1.5%
  678,547 785,789 2.8%
 
Utility Networks
Enersis ADS 10,000 215,250 162,000 Chile 0.6%
Hong Kong & China Gas ADS 200,000 495,666 476,000 China 1.7%
Manila Electric 80,000 517,224 466,509 Philippines 1.6%
Petronas Gas 70,000 449,259 534,043 Malaysia 1.9%
  1,677,399 1,638,552 5.8%
 
  2,355,946 2,424,341 8.6%
 
Total Common Stocks $20,752,758 $23,353,480 82.8%
 
Continued on next page.
 
26 Annual Report May 31, 2014 The accompanying notes are an integral part of these financial statements.

Amana Developing World Fund: Schedule of Investments

Derivatives — 0.1% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Financials
 
Islamic Banking
BIMB Holdings Warrants² 80,000 $- $15,686 Malaysia 0.1%
 
  - 15,686 0.1%
 
Health Care
 
Health Care Facilities
KPJ Healthcare Warrants² 29,332 - 5,980 Malaysia 0.0%4
 
  - 5,980 0.0%4
 
Total Derivatives - 21,666 0.1%
 
Total investments $20,752,758 23,375,146 82.9%
Other assets (net of liabilities)   4,805,573   17.1%
Total assets   $28,180,719 100.0%
¹ Country of domicile unless otherwise indicated
² Non-Income producing security
³ Denotes a country or region of primary exposure
4 Amount is less than 0.05%

ADS: American Depositary Share
ADR: American Depositary Receipt

Countries

Amana Developing World Fund Geographic Diversification
The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2014 27

Amana Developing World Fund

Statement of Assets and Liabilities
As of May 31, 2014
 
Assets
Investments in securities, at value
(Cost $20,752,758)
$23,375,146
Cash 4,776,085
Dividends and income 65,815
Receivable for Fund shares sold 11,658
Total assets 28,228,704
Liabilities
Payable to affiliates 26,069
Accrued expenses 20,406
Accrued distribution fee 1,435
Payable for Fund shares redeemed 75
Total liabilities 47,985
Net Assets $28,180,719
 
Analysis of Net Assets
Paid-in capital (unlimited shares
authorized, without par value)
$27,040,660
Undistributed net investment income 15,151
Accumulated net realized loss (1,497,344)
Unrealized net appreciation on
investments
2,622,252
Net assets applicable to Fund shares outstanding $28,180,719
 
Net asset value per Investor Share AMDWX
Net assets, at value $20,774,918
Shares outstanding 1,909,505
Net asset value, offering and redemption price per share $10.88
 
Net asset value per Institutional Share AMIDX
Net assets, at value $7,405,801
Shares outstanding 678,939
Net asset value, offering and redemption price per share $10.91
 
Statement of Operations
Year ended May 31, 2014
 
Investment income
Dividends
(Net of foreign taxes of $59,172)
$438,799
Miscellaneous income 93
Gross investment income 438,892
Expenses
Investment adviser fees 251,366
Distribution fees — Investor Shares 56,621
Filing and registration fees 39,848
Printing and postage 33,248
Custodian fees 13,021
Retirement plan custodial fees
Investor Shares 7,114
Institutional Shares 20
Professional fees 5,718
Shareowner servicing fees
Investor Shares 4,720
Institutional Shares 18
Chief Compliance Officer expenses 1,078
Trustee fees 749
Other expenses 604
Total gross expenses 414,125
Less custodian fee credits (13,021)
Net expenses 401,104
Net investment income $37,788
 
 
Net realized loss from investments and foreign currency $(823,044)
Net increase in unrealized appreciation on investments and foreign currency 821,549
Net loss on investments $(1,495)
 
Net increase in net assets resulting from operations $36,293
 
28 Annual Report May 31, 2014 The accompanying notes are an integral part of these financial statements.

Amana Developing World Fund

Statements of Changes in Net Assets Year ended May 31, 2014 Year ended May 31, 2013
Increase (decrease) in net assets from operations
From operations
Net investment income $37,788 $138,279
Net realized loss on investments (823,044) (242,839)
Net increase in unrealized appreciation 821,549 2,064,454
Net increase in net assets 36,293 1,959,894
Distributions to shareowners from
Net investment income
Investor Shares (83,707) -
Institutional Shares (19,987) -
Total distributions (103,694) -
Capital share transactions
Proceeds from the sale of shares
Investor Shares 9,662,307 8,373,705
Institutional Shares 7,435,765 -
Value of shares issued in reinvestment of dividends and distributions
Investor Shares 83,422 -
Institutional Shares 19,987 -
Cost of shares redeemed
Investor Shares (13,758,910) (3,498,897)
Institutional Shares (102,587)
Early redemption fees retained n/a 326
Net increase in net assets 3,339,984 4,875,134
Total increase in net assets 3,272,583 6,835,028
 
Net assets
Beginning of year 24,908,136 18,073,108
End of year 28,180,719 24,908,136
 
Undistributed net investment income $15,151 $89,952
 
Shares of the Fund sold and redeemed
Investor Shares (AMDWX)
Number of shares sold 909,412 781,899
Number of shares issued in reinvestment of dividends and distributions 7,915 -
Number of shares redeemed (1,284,802) (329,859)
Net increase (decrease) in number of shares outstanding (367,475) 452,040
 
Institutional Shares (AMIDX)
Number of shares sold 687,152 -
Number of shares issued in reinvestment of dividends and distributions 1,894 -
Number of shares redeemed (10,107) -
Net increase in number of shares outstanding 678,939 -
 
The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2014 29

Amana Developing World Fund: Financial Highlights

Investor Shares (AMDWX) Year ended May 31, Period ended1
Selected data per share of outstanding capital stock throughout each year: 2014 2013 2012 2011 May 31, 2010
Net asset value at beginning of year $10.94 $9.90 $10.88 $10.16 $10.00
Income from investment operations
Net investment income (loss) 0.012 0.06 (0.01) (0.06) (0.05)
Net gains (losses) on securities (both realized and unrealized) (0.03) 0.98 (0.96) 0.78 0.21
Total from investment operations (0.02) 1.04 (0.97) 0.72 0.16
Less distributions
Dividends (from net investment income) (0.04) - (0.01) - -
Total distributions (0.04) - (0.01) - -
Paid-in capital from early redemption fees n/a 0.003 0.003 0.003 0.003
 
Net asset value at end of year $10.88 $10.94 $9.90 $10.88 $10.16
 
Total Return (0.17)% 10.51% (8.94)% 7.09% 1.60%4
 
Ratios / supplemental data
Net assets ($000), end of year $20,775 $24,908 $18,073 $15,839 $9,096
Ratio of expenses to average net assets    
Before custodian fee credits 1.59% 1.54% 1.63% 1.61% 1.59%5
After custodian fee credits 1.54% 1.51% 1.61% 1.60% 1.58%5
Ratio of net investment income (loss) after custodian fee credits to average net assets 0.06% 0.67% (0.10)% (0.63)% (1.14)%5
Portfolio turnover rate 11% 4% 12% 2% 5%4
 
Institutional Shares (AMIDX) Period ended6
Selected data per share of outstanding capital stock throughout each period: May 31, 2014
Net asset value at beginning of period $10.87
Income from investment operations
Net investment income 0.052
Net gains (losses) on securities (both realized and unrealized) 0.03
Total from investment operations 0.08
Less distributions
Dividends (from net investment income) (0.04)
Total distributions (0.04)
 
Net asset value at end of period $10.91
 
Total Return 0.75%4
 
Ratios / supplemental data
Net assets ($000), end of period $7,406
Ratio of expenses to average net assets
Before custodian fee credits 1.40%5
After custodian fee credits 1.35%5
Ratio of net investment income after custodian fee credits to average net assets 0.64%5
Portfolio turnover rate 11%

1 Operations commenced on 9/28/2009
2 Calculated using average shares outstanding
3 Amount is less than $0.01
4 Not annualized
5 Annualized
6 Operations commenced on 09/25/2013

30 Annual Report May 31, 2014 The accompanying notes are an integral part of these financial statements.

Notes To Financial Statements

Note 1 — Organization

Amana Mutual Funds Trust (the "Trust") was 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 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:

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 NYSE is closed. The NAV is 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.

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access.

Level 2 — Observable inputs other than quoted prices in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.

Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Trust's own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

  Annual Report May 31, 2014 31

Notes To Financial Statements (continued)

Share Valuation Inputs as of May 31, 2014
Funds Level 1
Quoted Price
Level 2
Significant Observable Input
Level 3
Significant Unobservable Input
Total
Income Fund
Common Stocks $1,577,035,630¹ $- $- $1,577,035,630
Total Assets $1,577,035,630 $- $- $1,577,035,630
 
Growth Fund
Common Stocks $1,940,483,781¹ $- $- $1,940,483,781
Total Assets $1,940,483,781 $- $- $1,940,483,781
 
Developing World Fund
Common Stocks
Communications $1,537,185 $1,759,129 $- $3,296,314
Consumer Discretionary 1,351,730 838,402 - 2,190,132
Consumer Staples 1,662,105 2,206,332 - 3,868,437
Energy 1,437,362 - - 1,437,362
Financials - 740,186 - 740,186
Health Care 1,556,860 3,550,001 - 5,106,861
Industrials - 604,897 - 604,897
Materials 1,663,915 709,635 - 2,373,550
Technology 1,311,400 - - 1,311,400
Utilities 638,000 1,786,341 - 2,424,341
Total Common Stocks 11,158,557 12,194,923 - 23,353,480
 
Derivatives
Financials - 15,686 - 15,686
Health Care - 5,980 - 5,980
Total Derivatives - 21,666 - 21,666
 
Total Assets $11,158,557 $12,216,589 $- $23,375,146
During the year ended May 31, 2014, no Fund had transfers between Level 1 and Level 2.

¹ See the Schedule of Investments for additional details.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The table above is a summary of the inputs used as of May 31, 2014, in valuing the Funds' investments carried at fair value.

Derivative instruments and hedging activities:

The Funds have adopted the financial accounting reporting rules required by the Derivatives and Hedging Topic of the FASB Accounting Standards Codification. The Funds are required to include enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity's results of operations and financial position.

During the fiscal year ended May 31, 2014, the Funds held positions in rights offerings as a result of actions taken by the board of directors of the underlying companies. Rights offerings are issued to existing shareowners of companies and allow shareowners to purchase additional company shares, generally at a discount to the current market price, prior to a set expiration date. As a result of exercising certain rights offerings, the Funds received warrants. Holders of warrants have the right to purchase additional securities directly from the issuer at a set exercise price, prior to a stated expiration date.

The effects of these derivative instruments on the Fund's financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations are presented

32 Annual Report May 31, 2014  

Notes To Financial Statements (continued)

in the tables below. The fair values of derivative instruments as of May 31, 2014, by risk category are as follows:

Developing World Fund
Statement of Asset and Liabilities Location Derivatives not designated as hedging instruments Asset Derivatives
Investments in securities, at value Rights offerings $-
Warrants 21,666
Total $21,666

Statement of Operations Effects

Developing World Fund
Derivatives not designated
as hedging instruments
Realized Gains Unrealized Gains
Rights offerings $- $-
Warrants - 21,666
Total $- $21,666

Investment concentration:

The fundamental policies of the Funds prohibit earning interest, in accordance with Islamic principles. Consequently, cash is held in non-interest-bearing deposits with the Funds' custodian or other banks. "Other assets (net of liabilities)" in the Funds' Schedules of Investments primarily represents cash on deposit with the custodian. Cash on deposit will vary widely over time. Accounting Standards Codification ("ASC") 825, "Financial Instruments," identifies these items as a concentration of credit risk, requiring disclosure regardless of the degree of risk. The risk is managed by careful financial analysis and review of the custodian's operations, resources, and protections available to the Trust. This process includes evaluation of other financial institutions providing investment company custody services.

Federal income taxes:

The Funds intend to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and to make the requisite distributions of income and capital gains to its shareowners sufficient to relieve it from all or substantially all federal income taxes. Therefore, no federal income tax provision is required.

The Funds recognize the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. Management has analyzed the Funds' tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (2011 — 2013) or expected to be taken in the Funds' 2014 tax returns. The Funds identify their major tax jurisdiction as US federal and foreign jurisdictions where the Funds make significant investments; however, the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.

Reclassification of capital accounts:

Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or NAV.

  Income Fund Growth Fund Developing World Fund
Undistributed net income $(823) $175 $(8,895)
Accumulated gains (losses) 1,093 (175) 8,895
Paid-in capital $(270) $- $-

Distributions to shareowners:

Dividends to shareowners from net investment income, if any, are paid in May and December. As a result of their investment strategies, the Growth and Developing World Funds do not expect to pay income dividends. Distributions of capital gains, if any, are made at least annually, and as required to comply with federal excise tax requirements. Distributions to shareowners are determined in accordance with income tax regulations and recorded on the ex-dividend date, and are paid in shares of the Funds, at the net asset value on the payable date. Shareowners may elect to take distributions if they total $10 or more in cash.

Use of estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 of the financial statements and the reported amounts of increases and decreases in net assets during the reporting period. Actual results could differ from those estimates.

Other:

The Funds record security transactions based on a trade date. Dividend income is recognized on the ex-dividend date, and interest income is recognized on an accrual basis.

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. Net investment losses may not be utilized to offset net investment income in future periods for tax purposes. Withholding taxes on foreign dividends have been provided for in accordance with the Funds' understanding of the applicable country's tax rules and rates.

Note 3 — Transactions with Affiliated Persons

Under a contract approved annually by Amana's independent trustees, Saturna Capital provides investment advisory services and certain other administrative and distribution services and facilities required to conduct Trust business. For such services, each Fund pays an advisory fee of 0.95% on the first $500 million of a fund's average daily net assets, 0.85% on the next $500 million, 0.75% on the next $500 million, and 0.65% on assets over $1.5 billion. For the fiscal year ended May 31, 2014, the Funds paid the following advisory fees to Saturna Capital:

Advisory Fees
Income Fund $12,951,687
Growth Fund 16,405,519
Developing World Fund $ 251,366

Certain officers and one trustee of Amana are also officers and directors of the investment adviser.

  Annual Report May 31, 2014 33

Notes To Financial Statements (continued)

Saturna Capital also acts as transfer agent for the Trust for which each class of a Fund pays $0.25 per account per month. For the fiscal year ended May 31, 2014, the Funds paid the following transfer agent ("shareowner servicing") fees to Saturna Capital:

Shareowner Servicing Fees
Income Fund Investor Shares (AMANX) $53,152
Income Fund Institutional Shares (AMINX) 136
Growth Fund Investor Shares (AMAGX) 84,135
Growth Fund Institutional Shares (AMIGX) 143
Developing World Fund Investor Shares (AMDWX) 4,720
Developing World Fund Institutional Shares (AMIDX) $18

Saturna Brokerage Services, Inc. ("SBS"), a subsidiary of Saturna Capital, is registered as a broker-dealer and acts as distributor. The Funds have adopted a Distribution Plan in accordance with Rule 12b-1 under the 1940 Act applicable to the Investor Shares of each Fund. The plan provides that the Funds will pay a fee to SBS at an annual rate of up to 0.25% of the average net assets applicable to Investor Shares of each Fund. The fee is paid to SBS as reimbursement for expenses incurred for distribution-related activity. For the fiscal year ended May 31, 2014, the Funds paid the following distribution fees to SBS:

Distribution (12b-1) Fees
Income Fund Investor Shares (AMANX) $3,729,148
Income Fund Institutional Shares (AMINX) n/a
Growth Fund Investor Shares (AMAGX) 5,033,177
Growth Fund Institutional Shares (AMIGX) n/a
Developing World Fund Investor Shares (AMDWX) $56,621
Developing World Fund Institutional Shares (AMIDX) n/a

For the fiscal year ended May 31, 2014, Saturna Capital spent $3,980,584 from additional resources of its own, and not part of the 12b-1 expense of the Funds, to compensate broker-dealers or other financial intermediaries, or their affiliates, in connection with the sale, distribution, retention, and/or servicing of Fund shares. To the extent that these resources are derived from advisory fees paid by the Funds, these payments could be considered "revenue sharing." Any such payments will not change the net asset value or the price of a Fund's shares.

SBS is used to effect portfolio transactions for the Trust. SBS currently executes portfolio transactions without commission. Transactions effected through other brokers are subject to commissions payable to that broker.

Saturna Trust Company ("STC"), a subsidiary of Saturna Capital, acts as retirement plan custodian for Fund shareowners. Each class of shares of a Fund pays an annual fee of $10 per account for retirement plan services to Saturna Trust Company. For the fiscal year ended May 31, 2014, the Funds incurred the following retirement plan custodial fees to STC:

Retirement plan custodial fees
Income Fund Investor Shares (AMANX) $30,798
Income Fund Institutional Shares (AMINX) 227
Growth Fund Investor Shares (AMAGX) 47,366
Growth Fund Institutional Shares (AMIGX) 189
Developing World Fund Investor Shares (AMDWX) 7,114
Developing World Fund Institutional Shares (AMIDX) $20

Mr. Nicholas Kaiser serves as a trustee and president of the Trust. He is also a director and the chairman of Saturna Capital, Saturna Brokerage Services, and Saturna Trust Company. He is not compensated by the Trust. For the fiscal year ended May 31, 2014, the Trust incurred trustee compensation expenses of $73,500, which is included in $104,473 of total expenses for the independent Trustees. One trustee retired during the year, reducing the size of the board from six to five.

  Income Fund Growth Fund Developing World Fund
Trustee Fees $29,409 $43,562 $529
Other Trustee expenses $13,303 $17,450 $220

The officers of the Trust are paid by Saturna Capital, and not the Trust, except for the Chief Compliance Officer, who is partially compensated by the Trust. For the fiscal year ended May 31, 2014, the Trust incurred the following related to the expense of its Chief Compliance Officer:

  Income Fund Growth Fund Developing World Fund
Chief Compliance Officer $ 44,319 $63,540 $1,078

On May 31, 2014, the trustees, officers, and their affiliates (including Saturna Capital Corporation) as a group, owned the following percentages of outstanding shares:

Trustees', officers', and affiliates ' ownership
Income Fund Investor Shares (AMANX) 0.03%
Income Fund Institutional Shares (AMINX) 5.28%
Growth Fund Investor Shares (AMAGX) 0.06%
Growth Fund Institutional Shares (AMIGX) 4.52%
Developing World Fund Investor Shares (AMDWX) 1.52%
Developing World Fund Institutional Shares (AMIDX) 36.28%

Note 4 — Distributions to Shareowners

The tax characteristics of distributions paid for the fiscal years ended May 31, 2014, and May 31, 2013, were as follows:

Income Fund May 31, 2014 May 31, 2013
Ordinary income $26,624,057 $21,715,717
 
Growth Fund May 31, 2014 May 31, 2013
Ordinary income¹ $13,498,551 $5,476,978
Long-term capital gain² $52,055,982 $-
 
Developing World Fund May 31, 2014 May 31, 2013
Ordinary income¹ $103,694 $-

¹ By policy, the Growth and Developing World Funds seek to avoid paying income dividends.

² Long-term capital gain dividend designated pursuant to Section 852(b)(3) of the Internal Revenue Code.

34 Annual Report May 31, 2014  

Notes To Financial Statements (continued)

Note 5 — Federal Income Taxes

The cost basis of investments for federal income tax purposes at May 31, 2014, were as follows:

  Income Fund Growth Fund Developing World Fund
Cost of investments $883,492,702 $962,461,412 $20,752,758
Gross unrealized appreciation 697,446,950 981,880,488 4,427,921
Gross unrealized depreciation (3,904,022) (3,858,119) (1,805,533)
Net unrealized appreciation $693,542,928 $978,022,369 $2,622,388

As of May 31, 2014, the components of distributable earnings on a tax basis were as follows:

Income Fund
Accumulated capital gains $3,344,160
Tax accumulated earnings 3,344,160
Other accumulated losses (288)
Unrealized appreciation 693,542,928
Total accumulated earnings $696,886,800
 
Growth Fund
Undistributed ordinary income $3,117,461
Accumulated capital gains 82,202,800
Tax accumulated earnings 85,320,261
Unrealized appreciation 978,022,369
Total accumulated earnings $1,063,342,630
 
Developing World Fund
Undistributed ordinary income $16,237
Tax accumulated earnings 16,237
Accumulated capital and other losses (1,315,151)
Other accumulated losses (183,279)
Unrealized appreciation 2,622,388
Other unrealized losses (136)
Total accumulated earnings $1,140,059

At May 31, 2014, the Funds had the following capital loss carryforwards, subject to regulation. Prior to their expiration, such loss carryforwards may be used to offset future net capital gains realized for federal income tax purposes.

  Income Fund Growth Fund Developing World Fund
Capital loss carryforwards expiring 2018 $- $- $-
Capital loss carryforwards expiring 2019 - - 19,458
Short-term loss carryforwards unlimited expiration - - 435,720
Long-term loss carryforwards unlimited expiration - - 859,973
Total capital loss carryforwards - - 1,315,151
Post-October loss deferral¹ $288 $- $183,279

¹ Net capital losses incurred after October 31 and within the taxable year are deemed to arise on the first business day of a fund's next taxable year.

  Income Fund Growth Fund Developing World Fund
Total capital loss carryforward utilized at
May 31, 2014
$- $2,857,825 $-

Note 6 — Investments

During the fiscal year ended May 31, 2014, the Funds purchased and sold the following amounts of securities.

  Purchases Sales
Income Fund $22,255,014 $68,817,342
Growth Fund - 507,218,975
Developing World Fund $6,057,935 $2,355,143

Note 7 — Custodian

Under agreements in place with the Trust's custodian, Bank of New York Mellon, custody fees are reduced by credits for cash balances. For the fiscal year ended May 31, 2014, such reductions were as follows:

  Income Fund Growth Fund Developing World Fund
Custodian Fee Credits $75,070 $101,857 $13,021

Note 8 — Subsequent Events

In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. There were no events or transactions during the period that materially impacted the amounts or disclosures in the Funds' financial statements.

  Annual Report May 31, 2014 35

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees
Amana Mutual Funds Trust

We have audited the accompanying statements of assets and liabilities of Amana Income Fund, Amana Growth Fund, and Amana Developing World Fund, each a series of Amana Mutual Funds Trust (the "Trust"), including the schedules of investments, as of May 31, 2014, and for the Amana Income Fund and Amana Growth Fund, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended; and for the Amana Developing World Fund, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, and for the period September 28, 2009 (commencement of operations) to May 31, 2010. 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.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of May 31, 2014, by correspondence with the custodian. 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 positions of Amana Income Fund, Amana Growth Fund, and Amana Developing World Fund, as of May 31, 2014, the results of their operations for the year then ended, the changes in their net assets, and their financial highlights for the periods indicated above, in conformity with accounting principles generally accepted in the United States of America.

Philadelphia, Pennsylvania
July 22, 2014

(graphic omitted)
Tait, Weller & Baker LLP

36 Annual Report May 31, 2014  

Expenses (unaudited)

All mutual funds have operating expenses. As an Amana Mutual Fund shareowner, you incur ongoing costs, including management fees, distribution (or service) 12b-1 fees, and other Fund expenses such as shareowner reports (like this one). Operating expenses, which are deducted from a fund's gross earnings, directly reduce the investment return of a fund. Mutual funds (unlike other financial investments) only report their results after deduction of operating expenses.

With the Amana Funds, unlike many mutual funds, you do not incur sales charges (loads) on purchases, reinvested dividends, or other distributions. You do not incur redemption fees or exchange fees. You may incur fees related to extra services requested by you for your account, such as bank wires. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

Examples

The following examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2013 to May 31, 2014).

Actual Expenses

The first line for each Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you have invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The Funds may charge for extra services (such as domestic bank wires, international bank wires, or overnight courier delivery of redemption checks) rendered on request, which you may need to estimate to determine your total expenses.

Hypothetical Example For Comparison Purposes

The second line for each Fund provides information about hypothetical account values and hypothetical expenses based on each Fund's actual expense ratio (based on the last six months) and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareowner reports of other mutual funds. You may wish to add other fees that are not included in the expenses shown in the table, such as IRA fees charged by custodians other than Saturna Trust Company (note that Saturna does not charge such fees to shareowners directly on Saturna IRAs, ESAs, or HSAs with the Amana Funds), and charges for extra services such as check writing and bank wires.

Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or exchange fees (note that the Amana Funds do not assess any such transactional costs). Therefore, the "Hypothetical" line of each fund is useful in comparing ongoing costs only, and may not help you determine the relative total costs of owning different funds.

  Beginning Account Value
[December 1, 2013]
Ending Account Value
[May 31, 2014]
Expenses Paid
During Period
Annualized
Expense Ratio
Income Fund
Investor Shares (AMANX), Actual $1,000.00 $1,064.90 $5.87¹ 1.14%
Hypothetical (5% return before expenses) $1,000.00 $1,019.25 $5.74¹ 1.14%
Institutional Shares (AMINX), Actual $1,000.00 $1,066.10 $4.64² 0.90%²
Hypothetical (5% return before expenses) $1,000.00 $1,020.44 $4.53² 0.90%²
 
Growth Fund
Investor Shares (AMAGX), Actual $1,000.00 $1,069.50 $5.78¹ 1.12%
Hypothetical (5% return before expenses) $1,000.00 $1,019.35 $5.64¹ 1.12%
Institutional Shares (AMIGX), Actual $1,000.00 $1,070.90 $4.44² 0.86%²
Hypothetical (5% return before expenses) $1,000.00 $1,020.64 $4.33² 0.86%²
 
Developing World Fund
Investor Shares (AMDWX), Actual $1,000.00 $1,010.40 $8.32¹ 1.66%
Hypothetical (5% return before expenses) $1,000.00 $1,016.65 $8.35¹ 1.66%
Institutional Shares (AMIDX), Actual $1,000.00 $1,012.20 $6.82² 1.36%²
Hypothetical (5% return before expenses) $1,000.00 $1,018.15 $6.84² 1.36%²
 

¹ Expenses for Investor Shares are equal to annualized expense ratios indicated above (based on the most recent semi-annual period of December 1, 2013, through May 31, 2014), multiplied by the average account value over the period, multiplied by 182/365 to reflect the semi-annual period.

² Expenses for Institutional Shares are based on data for the period since inception September 25, 2013, through May 31, 2014, and annualized.

  Annual Report May 31, 2014 37

Trustees and Officers

Name (Age) and Address Position(s) Held with Trust & Number of Saturna Fund Portfolios Overseen Principal Occupation(s) during past 5 years, including Directorships Other Directorships held by Trustee
INDEPENDENT TRUSTEES
(photo omitted) M. Yaqub Mirza, PhD (67)
1300 N. State Street
Bellingham, WA 98225
Chairman (since 2014);
Independent Trustee (since 2009);
Vice Chairman (2009 to 2014);
Independent Trustee (1987 to 2003);
Chairman (2000 to 2003);
Executive Committee (Chairman);
Audit and Compliance Committee;
Three
CEO,
Sterling Management Group, Inc.
(financial services)
None
(photo omitted) Iqbal J. Unus, PhD (70)
1300 N. State Street
Bellingham, WA 98225
Independent Trustee
(since 1989);
Governance, Compensation and Nominations Committee (Chairman);
Three
Adviser, The Fairfax Institute at the International Institute of Islamic Thought None
(photo omitted) Miles K. Davis, PhD (54)
1300 N. State Street
Bellingham, WA 98225
Independent Trustee
(since 2008);
Executive Committee;
Audit and Compliance Committee;
Three
Dean and George Edward Durell Chair of Management, Harry F. Byrd, Jr. School of Business,
Shenandoah University;
Associate Professor of Management/Director of the Institute for Entrepreneurship, Shenandoah University
None
(photo omitted) Ronald H. Fielding MA, MBA, CFA (65)
1300 N. State Street
Bellingham, WA 98225
Independent Trustee
(since 2012);
Audit and Compliance Committee (Chairman, Financial Expert);
Ten
Retired (2009);
Senior Vice President & Portfolio Manager, OppenheimerFunds Rochester Division;
Director, ICI Mutual Insurance Company
Saturna Investment Trust
INTERESTED TRUSTEE
(photo omitted) Nicholas F. Kaiser, MBA, CFA (68)
1300 N. State Street
Bellingham, WA 98225
President, Trustee¹
(since 1989);
Executive Committee;
Governance, Compensation and Nominations Committee;
Ten
Chairman,
Saturna Capital Corporation
(the Trust's investment adviser);
Chairman,
Saturna Trust Company
Saturna Investment Trust
 
38 Annual Report May 31, 2014  

Trustees and Officers (continued)

Name (Age) and Address Position(s) Held with Trust & Number of Saturna Fund Portfolios Overseen Principal Occupation(s) during past 5 years, including Directorships Other Directorships held by Trustee
OFFICERS WHO ARE NOT TRUSTEES
(photo omitted) Jane Carten MBA (39)
1300 N. State Street
Bellingham, WA 98225
Vice President
(since 2012);
N/A
President, Chief Executive Officer, and Director, Saturna Capital Corporation;
Secretary and Director, Saturna Brokerage Services; Vice President and Director, Saturna Trust Company
N/A
(photo omitted) Christopher R. Fankhauser (42)
1300 N. State Street
Bellingham, WA 98225
Treasurer¹
(since 2002);
N/A
Chief Operations Officer and Director, Saturna Capital Corporation;
Vice President and Chief Operations Officer, Saturna Brokerage Services; Vice President and Director, Saturna Trust Company
N/A
(photo omitted) Ethel B. Bartolome (41)
1300 N. State Street
Bellingham, WA 98225
Secretary¹
(since 2003);
N/A
Corporate Administrator and Secretary, Saturna Capital Corporation; Secretary, Saturna Trust Company N/A
(photo omitted) Michael E. Lewis (52)
1300 N. State Street
Bellingham, WA 98225
Chief Compliance Officer¹
(since 2012);
N/A
Chief Compliance Officer, Saturna Capital, Saturna Trust Company, and Affiliated Funds;
District Director, Seattle Office, Financial Industry Regulatory Authority (FINRA)
N/A

Term of Office: Trustees serve for the lifetime of the Trust or until death, resignation, retirement, removal, or non re-election by the shareowners. Officers serve one-year terms subject to annual reappointment by the Trustees.

Amana's Statement of Additional Information, available without charge by calling Saturna Capital Corporation at 800/SATURNA, includes additional information about Trustees.

On May 31, 2014, the trustees, officers, and their affiliates (including Saturna Capital Corporation) as a group, owned the following percentages of outstanding shares:

Trustees', officers', and affiliates ' ownership
Income Fund Investor Shares (AMANX) 0.03%
Income Fund Institutional Shares (AMINX) 5.28%
Growth Fund Investor Shares (AMAGX) 0.06%
Growth Fund Institutional Shares (AMIGX) 4.52%
Developing World Fund Investor Shares (AMDWX) 1.52%
Developing World Fund Institutional Shares (AMIDX) 36.28%

During the year ended May 31, 2014, the Independent Trustees were each paid by the Trust: (1) $8,000 annual retainer plus $1,000 per board meeting attended (in person or by phone), plus reimbursement of travel expenses; (2) $250 for committee meetings; and (3) $500 per quarter for serving as chairman of the board or any committee. As of May 31, 2014, all Trustees owned shares in one or more Amana Funds.

Mr. Kaiser is an Interested Trustee by reason of his positions with the Trust's adviser (Saturna Capital Corporation) and underwriter (Saturna Brokerage Services), and is the primary manager of the Trust's portfolios. He is paid by Saturna Capital a salary, plus a bonus for each month an Amana portfolio earns a 4 or 5 star rating from Morningstar (see pages 2 and 4). The officers are paid by Saturna Capital and not the Trust. As of May 31, 2014, all Saturna Capital employees listed above as officers owned shares in one or more of the Amana funds, with Mr. Kaiser owning (directly or indirectly) over $10 million.

¹ Holds the same position with Saturna Investment Trust.

 

  Annual Report May 31, 2014 39

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40 Annual Report May 31, 2014  

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  Annual Report May 31, 2014 41

Availability of Quarterly Portfolio Information

(1) The Amana Funds file complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.

(2) The Funds' Forms N-Q are available on the SEC's website at www.sec.gov.

(3) The Funds' Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800/SEC-0330.

(4) The Funds make a complete schedule of portfolio holdings after the end of each month available at www.amanafunds.com.

Availability of Proxy Voting Information

(1) A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (a) without charge, upon request, by calling Saturna Capital at 1-888/73-AMANA; (b) on the Funds' website at www.amanafunds.com; and (c) on the SEC's website at www.sec.gov.

(2) Information regarding how each Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (a) without charge, upon request, by calling Saturna Capital at 1-888/73-AMANA; (b) on the Funds' website at www.amanafunds.com; and (c) on the SEC's website at www.sec.gov.

Householding Policy

To reduce expenses, we may mail only one copy of the Funds' prospectus, each annual and semi-annual report, and proxy statements, when necessary, to those addresses shared by two or more accounts. If you wish to receive individual and/or more copies of these documents, please call us at 888/73-AMANA or write to us at Saturna Capital/Amana Mutual Funds, P.O. Box N, Bellingham, WA 98227. We will begin sending you individual copies thirty days after receiving your request.

If you are currently receiving multiple copies and wish to receive only one copy, please call us at 888/73-AMANA or write to us at Saturna Capital/Amana Mutual Funds, P.O. Box N, Bellingham, WA 98227. We will begin sending you a single copy with subsequent report mailings.

42 Annual Report May 31, 2014  

Privacy Statement

At Saturna Capital and the Amana Mutual Funds Trust, we understand the importance of maintaining the privacy of your financial information. We want to assure you that we protect the confidentiality of any personal information that you share with us. In addition, we do not sell information about our current or former customers.

In the course of our relationship, we gather certain non-public information about you, including your name, address, investment choices, and account information. We do not disclose your information to unaffiliated third parties unless it is necessary to process a transaction; service your account; deliver your account statements, shareholder reports and other information; or as required by law. When we disclose information to unaffiliated third parties, we require a contract to restrict the companies' use of customer information and from sharing or using it for any purposes other than performing the services for which they were required.

We may share information within the Saturna Capital family of companies in the course of informing you about products or services that may address your investing needs.

We maintain our own technology resources to minimize the need for any third party services, and restrict access to information within Saturna. We maintain physical, electronic, and procedural safeguards to guard your personal information. If you have any questions or concerns about the security or privacy of your information please call us at 1-800/SATURNA (1-800-728-8762).

  Annual Report May 31, 2014 43

 

Amana Mutual Funds Trust began operations in 1986. Saturna Capital Corporation, with extensive experience in mutual funds, invests the Trust's portfolios and handles daily operations under supervision of Amana's Board of Trustees.

(logo omitted)

1300 N. State Street
Bellingham, WA 98225
1-800-728-8762
Daily prices at 1-888-73-AMANA
www.amanafunds.com

This report is for the information of the shareowners of the Funds. It is not authorized for distribution to prospective investors unless it is accompanied or preceded by an effective prospectus.

Investment Adviser,
Administrator, and Transfer Agent
Saturna Capital Corporation
Bellingham, WA
Custodian Bank of New York Mellon
Brooklyn, NY
Independent Registered
Public Accounting Firm
Tait, Weller & Baker LLP
Philadelphia, PA
Legal Counsel K & L Gates LLP
Washington, DC

2. Code of Ethics

Registrant has adopted a code of ethics that applies to the registrant's principal executive officer and principal financial officer or persons performing similar functions, which is included with this submission as Exhibit (a)(1) and posted on the Funds' Internet website at www.amanafunds.com. Requests may also be made via telephone at 1-800/728-8762, and will be processed within one business day of receiving such request.

3. Audit Committee Financial Expert

(a)(1)(i) The Trustees of Amana Mutual Funds Trust determined, at their quarterly meeting of June 12, 2003, that the Trust shall have at least one audit committee financial expert serving on its Audit & Compliance Committee.

(a)(2) Mr. Ron Fielding, independent Trustee (as defined for investment companies), presently serves as financial expert.

4. Principal Accountant Fees and Services

(a) Audit Fees
For the fiscal years ending May 31, 2013, and 2014, the aggregate audit fees billed for professional services rendered by the principal accountant were $58,800 and $67,500, respectively.

(b) Audit-Related Fees
There were no fees billed by the principal accountant for assurance and related services that were not included under paragraph (a) for the fiscal years ending May 31, 2013, and 2014.

(c) Tax Fees
For the fiscal years ending May 31, 2013 and 2014, the aggregate tax fees billed for professional tax preparation services rendered by the principal accountant were $10,700 and $11,100 respectively.

(d) All Other Fees
There were no other fees billed by the principal accountant for the fiscal years ending May 31, 2013, and 2014.

(e)(1) Audit Committee Pre-Approval Policies and Procedures
The following is an excerpt from the Amana Mutual Funds Trust Audit & Compliance Committee Charter:

D. Oversight of Independent Auditors

3. Pre-approval of Audit and Non-Audit Services. Except as provided below, the Committee's prior approval is necessary for the engagement of the independent auditors to provide any audit or non-audit services for the Trust and any non-audit services for any entity controlling, controlled by or under common control with Saturna that provides ongoing services to the Trust (Saturna and each such entity, an "Adviser Affiliate") where the engagement relates directly to the operations or financial reporting of the Trust. Non-audit services that qualify under the de minimis exception described in the Securities Exchange Act of 1934, as amended, and applicable rules thereunder, that were not pre-approved by the Committee, must be approved by the Committee prior to the completion of the audit. Pre-approval by the Committee is not required for engagements entered into pursuant to (a) pre-approval policies and procedures established by the Committee, or (b) pre-approval granted by one or more members of the Committee to whom, or by a subcommittee to which, the Committee has delegated pre-approval authority, provided in either case, that the Committee is informed of each such service at its next regular meeting.

(e)(2) Percentages of Services
One hundred percent of the services described in each of paragraphs (b) through (d) were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not applicable.

(g) Not applicable.

(h) Not applicable.

5. Audit Committee of Listed Registrants

Not applicable.

6. Investments

The schedule of Investments is fully answered in Item 1.

7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable.

8. Portfolio Managers of Closed-End Management Investment Companies

Not applicable.

9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable.

10. Submission of Matters to a Vote of Security Holders

Not applicable.

11. Controls and Procedures

Internal control over financial reporting is under the supervision of the principal executive and financial officers. On June 17, 2014, Mr. Nicholas Kaiser (President) and Mr. Christopher Fankhauser (Treasurer), reviewed the internal control procedures for Amana Mutual Funds Trust and found them reasonable and adequate.

12. Exhibits

(a)(1) Code of Ethics.

(a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.

(a)(3) Not applicable.

(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906.CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMANA MUTUAL FUNDS TRUST

By:
/s/ Nicholas Kaiser
President
July 29, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:
/s/ Nicholas Kaiser
President
July 29, 2014

By:
/s/ Christopher Fankhauser
Treasurer
July 29, 2014


# # #


Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘N-CSR’ Filing    Date    Other Filings
Filed as of / Effective on:7/30/14NSAR-B
Filed on:7/29/14NSAR-B
7/22/14
6/30/14N-PX
6/17/14
For Period End:5/31/1424F-2NT,  NSAR-B
5/30/14
12/1/13
9/25/13485BPOS,  497J,  497K
7/19/13485BPOS,  497K,  N-8A/A,  N-CSR
5/31/1324F-2NT,  N-CSR,  NSAR-B
3/11/13
5/31/1024F-2NT,  N-CSR,  NSAR-B
9/28/09485BPOS,  497K
5/31/0424F-2NT,  N-CSR,  N-CSR/A,  N-CSRS/A,  NSAR-B
6/12/03
2/3/94
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