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Amana Mutual Funds Trust – ‘N-CSR’ for 5/31/05

On:  Thursday, 7/21/05, at 5:38pm ET   ·   As of:  7/22/05   ·   Effective:  7/22/05   ·   For:  5/31/05   ·   Accession #:  766285-5-13   ·   File #:  811-04276

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

 7/22/05  Amana Mutual Funds Trust          N-CSR       5/31/05    3:339K

Document/Exhibit                   Description                      Pages   Size 

 1: N-CSR       Amana Funds May 2005 Annual Report                  HTML    307K 
 2: EX-99.CERT  Fund Officers Certifications                        HTML     13K 
 3: EX-99.CODE ETH  Saturna Code of Ethics                          HTML     34K 

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, 2005
Date of reporting period: May 31, 2005

N-CSR Annual Report May 31, 2005

REPORT TO SHAREHOLDERS

Stocks generally appreciated last year, although not as strongly as in 2003 .. For the year ended May 31, 2005, Amana Income Fund’s total return was +23.76% (vs.+17.99% the year before). The more volatile Amana Growth Fund’s total return was +25.69% (vs.+23.28% the year before). The excellence of these results is reflected in perhaps the most relevant benchmark, the Dow Jones Islamic Market Index (US component, dividends excluded) which returned just +4.72% (vs.+16.29% the year before) for the fiscal year.

The general stock market, as measured by the Standard & Poor’s 500 Index, returned +8.24%. Middle and smaller-cap stocks did the better, as evidenced by the +9.91% return for the Russell 2000 Index. As usual, market results varied by sector. Low interest rates continued to benefit most financially sensitive issues, like retailing and building. Energy and resource issues performed very well, reflecting higher commodity prices. The NASDAQ Composite Index, overweighted in technology issues, appreciated modestly (up +4.75%). Note also that these unmanaged, expense-free indices are not directly comparable to actively managed portfolios, with transaction and other costs (including advisory fees), such as mutual funds.

The performance of each portfolio is heavily influenced by the distribution of security investments. Islamic restrictions impact the types of investments available to the Funds, as do the objectives of capital preservation and current income (Amana Income) and long-term capital growth (Amana Growth). Amana Income, for example, is more sensitive to changes in the overall level of interest rates than Amana Growth. Amana Growth’s portfolio is weighted towards technology, (including medical technology), where our securities (such as Apple Computer) performed well. The following tables illustrate the primary industry distributions of each portfolio at May 31, 2005:

Amana's Funds are restricted to buying only U.S.-traded equity securities of companies whose primary business operations are generally consistent with Islamic principles. This special restriction affects performance in a number of ways. The Funds, for example, do not receive interest on cash balances. Neither do the Funds invest in businesses that have material earnings from interest (such as financial institutions) or other prohibited activities. The Funds also avoid companies with high levels of debt. Over half the approximately 3,800 U.S.-traded equities screened by Saturna Capital do not qualify for Islamic investment, and the Funds' portfolios may be less diversified than other mutal funds.

When evaluating the performance of the Amana Funds, it is important to remember their specialized nature, as well as a number of factors applicable to mutual funds in general. Amana Income Fund’s primary objective is current income, with preservation of capital being the secondary objective. In following these objectives, the Amana Income Fund only buys income-producing equity securities. Amana Growth Fund’s primary objective is long-term capital growth. The Funds may also hold cash when market conditions appear uncertain. It is not the objective of either Fund to “beat” any specific market index.

COMPARISON TO MARKET INDICES

The line graphs on the next page compare Fund performances to representative market indices. The index returns include reinvested dividends and don’t allow for operating expenses such as those paid by all mutual funds. The first graph shows that $10,000 invested in Amana Income ten years ago (May 1995) would have grown to $24,211 at the end of May 2005. Note that Amana Income’s investment objective is capital preservation and current income, and not growth. While not strictly comparable, the S&P 500 Composite Index is a traditional U.S. securities market benchmark. If $10,000 could have been invested in the S&P 500 at the end of May 1995, that would have grown to $23,859 over the same 10 years.

The second graph shows that $10,000 invested in Amana Growth ten years ago (May 1995) would have grown to $33,683 at the end of May 2005. If $10,000 could have been invested in the Russell 2000 (an index of mid- and smaller-cap equities) ten years ago (May 1995), that would have grown to $22,820 over that same period. The most relevant comparable index may be the Dow Jones Islamic Market (US), which is shown since its inception in 1996 on the Amana Growth Fund line graph. Note that this index was redesigned in 2001 and does not reinvest dividends.

ADS = American Depositary Share
ADR= American Depositary Receipt

All mutal 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 decuted from a fund's gross earnings, directly reduce the investment return of a fund. All mutual funds (unlike some other financial investments) only report their results after deduction of operating expenses.

With the Amana funds, unlike many mutual funds, you do not incur slaes charges (loads) on purchase payments, reinvested dividends, or other distributions. You do not incur redemption fees, exchange fees, or fees related to Individual Retirement Accounts. However, to discourage speculative trading, you may incur a penalty for redemption of shares held less then 30 days. You may incur fees related to extra services requested by you for your account, such as a checkbook to use for redemptions or bank wires.

EXAMPLES

The examples, one for each Fund, are based on an investment of $1,000 invested for the six months ended May 31, 2005 [Tuesday, November 30, 2004 to Tuesday, May 31, 2005].


ACTUAL EXPENSES

The first line of each table 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, a $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under heading entitled “Expenses Paid During Year” to estimate the expenses you paid on your account during this fiscal year. The Funds also charge the following fees for extra services rendered on request, which you may need to add to determine your total expenses: $10 per checkbook, $25 per bank wire, $15 per overnight courier delivery.


HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second line of each table 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 year. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareowner reports of the other funds. You may wish to add other fees that are not included in the expenses shown in the table, such as IRA fees (there are no IRA fees with the Amana Funds), and charges for extra services such as checkwriting 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), redemption fees, or exchange fees (note that the Amana Funds do not have any such transactional costs). Therefore, the second line of each table is useful in comparing ongoing costs only, and may not help you determine the relative total costs of owning different funds.

AMANA INCOME FUND

* Expenses are equal to Amana Income Fund’s annualized expense ratio of 1.50% (based on the most recent semi-annual period of December 1, 2004 through May 31, 2005), multiplied by the average account value of $1,016.90 over the period.

AMANA GROWTH FUND

* Expenses are equal to Amana Growth Fund’s annualized expense ratio of 1.60% (based on the most recent semi-annual period of December 1, 2004 through May 31, 2005), multiplied by the average account value of $1,041.95 over the period.

Privacy Statement (unaudited)

At Saturna Capital, we understand the importance of maintaining the privacy of your financial information. To that end, we want to insure that we protect the confidentiality of any personal information you share with us.

We collect personal information about you from information we receive from you on applications and other forms and from transactions or trades placed with us. Please be assured that except to administer a transaction with an affiliated third party upon your request, we do not disclose any personal information about our customers, or our former customers, to anyone, except as may be required by law. We maintain our own technology resources to minimize the use of outside service providers.

Additionally, Saturna Capital restricts access to personal information about you to those employees who need to know that information to provide products or services to you. We maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your personal information. If you have further questions or concerns about the security or privacy of the information we receive from you, please call us at 1-888/732-6262.

Code of Ethics

Registrant has adopted a code of ethics and is included with this submission as Exhibit (a). The text of the registrant's code of ethics is posted on its internet website at www.saturna.com. The registrant has also undertaken to provide to any person without charge, upon request, a copy of such code of ethics. Requests may be made via Internet or telephone at 1-800-728-8762, and will be processed within one business day of receiving such request.

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 has at least one audit committee financial expert serving on its audit committee.

(a) (2) (ii) Mr. Samir Salah, an independent Trustee (as defined for investment companies), was deemed qualified and agreed to serve.

Principal Accountant Fees and Services

(a) Audit Fees
For the fiscal years ending May 31, 2004 and 2005, the aggregate audit fees billed for professional services rendered by the principal accountant was $18,100 and $19,900 respectively.

(b) Audit-Related Fees
For the fiscal years ending May 31, 2004 and 2005, the aggregate audit-related fees was $18,100 and $19,900 respectively. The nature of the services are: (1) auditing of the statements of assets and liabilities, related statements of operations and changes in net assets, and the financial highlights of each of the Funds; (2) auditing and reporting on the financial statements to be included in the Amendment to the Funds’ Registration Statement, Form N-1A, to be filed with the Securities and Exchange Commission; (3) review of the Amendment to the Registration Statement; and (4) issuance of a Report on Internal Control Structure for inclusion in Form N-SAR.

(c) Tax Fees
For the fiscal years ending May 31, 2004 and 2005, the aggregate tax fees billed for professional services rendered by the principal accountant were $3,500 for both years.

(d) All Other Fees
There were no other fees billed by the principal accountant for the fiscal years ending May 31, 2004 and 2005.

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

Submission of Matters to a Vote of Security Holders

Not applicable.

Controls and Procedures

Internal control over financial reporting is under the supervision of the the principal executive and financial officers. On June 16, 2005, 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.

Exhibits

Exhibits included with this filing:

(a) Code of Ethics.

(b) Certifications.

(1) Nicholas Kaiser, President, Amana Mutual Funds Trust
(2) Christopher Fankhauser, Treasurer, Amana Mutual Funds Trust

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
Nicholas Kaiser, President
Date: July 7, 2005


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
Nicholas Kaiser, President
Date: July 7, 2005

By:
/s/ Christopher Fankhauser
Christopher Fankhauser, Treasurer
Date: July 8, 2005

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Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘N-CSR’ Filing		Date		Other Filings
Filed as of / Effective on:		7/22/05
Filed on:		7/21/05
		7/8/05
		7/7/05
		6/30/05		N-PX
		6/17/05
		6/16/05
For Period End:		5/31/05		24F-2NT,  N-CSR/A,  NSAR-B
		12/31/04
		12/1/04
		11/30/04		N-CSRS,  N-CSRS/A,  NSAR-A
		8/18/04		485BPOS,  497J
		5/31/04		24F-2NT,  N-CSR,  N-CSR/A,  N-CSRS/A,  NSAR-B
		6/30/03
		6/12/03
		6/30/02
		2/3/94
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Filing Submission 0000766285-05-000013   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

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