PART B
STATEMENT OF ADDITIONAL
INFORMATION
1
Trust History
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 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 Income Fund commenced operations 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 the Income, Growth, and Developing World Fund were first offered on
September 25, 2013. The Participation Fund, including its Investor and
Institutional Shares, began operations September 28, 2015.
Fund Descriptions, Investments, and Risks
Classification
Amana
Mutual Funds Trust is designed to meet the needs of various investors, and the
particular needs of Muslims, by investing in accordance with Islamic principles.
The Trust is open to any investor.
The
Trust is technically known as an “open-end diversified management investment
company.” The Trust is a “series trust” that presently offers four separate
funds for investors: the Income Fund, Growth Fund, Developing World Fund, and
Participation Fund. The Income Fund, Growth Fund, and Developing World Fund
operate as diversified funds and the Participation Fund operates as a non-
diversified fund.
Investment
Strategies and Risks
The
Prospectuses and Summary Prospectuses describe the principal investment
strategies of each Fund and principal risks of those strategies.
The
Funds pursue these investment strategies by purchasing equity and sukuk
securities, as well as other Islamic finance instruments. The Funds may purchase
preferred stocks and engage in covered option writing.
In
accordance with Islamic principles, the Funds shall not purchase conventional
bonds, debentures, or other interest-paying obligations of indebtedness.
The
Funds may use income-producing investments to the extent the Board of Trustees
and Saturna’s Islamic consultants agree that those investments are consistent
with Islamic principles. Short-term investments are securities that mature or
have a remaining maturity of 12 months or less from the date of purchase. Most
ordinary mutual funds use a variety of interest-paying investments for
short-term needs. Because the Funds may not receive interest from their
investments, the Funds cannot use them. A limited amount of Islamic investments
that do not pay interest are available. The Funds may invest in them when such
opportunities are suitable for the Funds.
Saturna
Capital Corporation, the Funds’ investment adviser (the “adviser”) selects
investments that to its knowledge do not violate the requirements of the Islamic
faith at the time of investment. To ensure that investments meet the
requirements of the Islamic faith, the adviser engages Amanie Advisors Sdn Bhd,
a leading consultant specializing in Islamic finance.
The
Funds may participate in the ReFlow, LLC (“ReFlow”) liquidity program, which is
designed to provide a liquidity source for mutual funds experiencing net
redemptions of their shares. In order to pay cash to shareowners who redeem
their shares on a given day, a Fund typically must hold cash in its portfolio or
liquidate portfolio securities, which imposes certain costs on a Fund. ReFlow
provides participating mutual funds with another source of cash by standing
ready to purchase shares from a Fund equal to the amount of the Fund’s net
redemptions on a given day. In return for this service, the Fund will pay a fee
to ReFlow at a rate determined by a daily “Dutch auction” with other
participating mutual funds seeking liquidity that day. The costs to a Fund for
participating in ReFlow are expected to be influenced by and comparable to the
cost of other sources of liquidity, such as the costs of selling portfolio
securities to meet redemptions.
ReFlow’s
purchases of Fund shares through the liquidity program are made on an
investment-blind basis without regard to the Fund’s objective, policies, or
anticipated performance. In accordance with federal securities laws, ReFlow is
prohibited from acquiring more than 3% of the outstanding voting securities of a
Fund. While ReFlow holds Fund shares, it will have the same rights and
privileges with respect to those shares as any other shareowner. ReFlow will
periodically redeem its entire share position in the Fund (when the Fund
experiences net sales, at the end of a maximum holding period determined by
ReFlow -currently 8 days- or at other times at ReFlow’s discretion) and request
that such redemption be met in kind in accordance with the Fund’s in-kind
redemption policies described under Purchase and Sale of Fund Shares in
the Prospectus. Investments in a Fund by ReFlow in connection with the ReFlow
liquidity program are not subject to the Funds’ Frequent Trading Policy.
2
Fund Policies
The
objectives of the Income Fund are
current income and preservation of capital, consistent with Islamic principles;
current income is its primary objective. The objective of the Growth Fund is long-term capital growth,
consistent with Islamic principles. The objective of the Developing World Fund is long-term capital
growth, consistent with Islamic principles. The objectives of the Participation Fund are capital preservation
and current income, consistent with Islamic principles; capital preservation is
its primary objective. In addition to the following fundamental policies, the
trustees have instructed that investments not be made in preferred stocks and
that the Funds should favor no-debt and low-debt companies. In accordance with
Islamic principles, the Funds shall not make any investments that pay interest.
These investment objectives, and the policies that follow, are fundamental
policies and cannot be changed without approval by vote of a majority of the
outstanding shares of the Fund. Other restrictions in the form of operating
policies are subject to change by the Trust’s Board without shareowner approval.
Senior
Securities
Each
Fund shall not issue senior securities.
Borrowing
Each
Fund shall not borrow money, except for emergency purposes, including
facilitation of heavy redemption requests, and then only in amounts not
exceeding 10% of the then net liquidating value of the Fund’s assets. The Trust
is authorized to mortgage or pledge assets of a Fund to the extent necessary to
secure such temporary borrowings.
Underwriting
Each
Fund shall not act as an underwriter of another issuer’s securities, except to
the extent that the Fund may be deemed to be an underwriter within the meaning
of the Securities Act of 1933 (the 1933 Act), in connection with the purchase
and sale of portfolio securities.
Industry
Concentration
Each
Fund, other than the Participation Fund, shall not concentrate its investments
in any particular industry, and no investment shall be made if such investment
at the time made would cause more than 25% of the total assets of the Fund,
taken at market value or fair value as determined by the Trustees, to be
invested in securities of issuers in any one industry. This restriction does not
apply to the Participation Fund.
Real
Estate and Commodities
Each
Fund shall not engage in the purchase or sale of real estate, commodities, or
commodity contracts except as may be acquired by the Fund in connection with a
merger, consolidation, reorganization, or in satisfaction of a debt.
Loans
Each
Fund shall not make loans, except that a Fund may, subject to applicable
restrictions imposed by law, make loans of portfolio securities to brokers or
dealers in corporate or governmental securities, banks, or other recognized
institutional borrowers of securities against no less than 100% cash or
equivalent collateral if immediately thereafter the aggregate market value of
securities loaned shall not exceed 33% of the market value of its total assets.
Diversification
With
respect to 75% of its total assets, each Fund, other than the Participation
Fund, shall not: (1) purchase more than 10% of the outstanding securities of any
one issuer; or (2) purchase securities of any issuer if, as a result, more than
5% of the Fund’s total assets would be invested in that issuer’s securities.
This limitation does not apply to obligations of the US government or its
agencies or instrumentalities. This restriction does not apply to the
Participation Fund.
Options
Each
Fund shall not purchase or sell options, except that a Fund may sell covered
call options and purchase call options for the purpose of terminating call
options previously sold.
Short
Sales
Each
Fund shall not make short sales of securities or maintain a short position,
unless at all times when a short position is open, the Fund owns an equal amount
of such securities or owns securities which, without the payment of any further
consideration, are convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold short.
Temporary
Defensive Position
The
Funds may use short-term income-producing investments to the extent the Board of
Trustees and Saturna’s Islamic consultants agree that those investments are
consistent with Islamic principles. Short-term investments that meet Islamic and
mutual fund requirements are currently limited in the United States.
During
uncertain or adverse market or economic conditions, or the unavailability of
attractive investment opportunities, a Fund may adopt a temporary defensive
position. The Funds cannot invest in interest-paying instruments frequently used
by other mutual funds for this purpose. When markets are unattractive, the
adviser chooses between continuing to follow the Funds’ investment policies or
converting securities to cash or cash equivalents for temporary, defensive
purposes. These holdings will be non-interest bearing and may, in whole or in
part, not be insured by the Federal Deposit Insurance Corporation (FDIC). Taking
a temporary defensive position may adversely impact achievement of the Funds’
investment objectives. This choice is based on the adviser’s evaluation of
market conditions and a Fund’s portfolio holdings. In the event a Fund takes
such a position, it may not be able to achieve its investment objective.
Cayman
Island Subsidiary
The
Participation Fund will invest in a wholly-owned subsidiary organized under the
laws of the Cayman Islands (the “Subsidiary”), the registered offices of which
is located at Solomon Harris, 53 Market Street, Unit 3211, Camana Bay, PO Box
1990, Grand Cayman KY1-1104, Cayman Islands. The Fund will be the sole
shareholder of the Subsidiary, and does not expect shares of the Subsidiary to
be offered or sold to other investors. The Fund’s investment in the Subsidiary
may not exceed 25% of the value of its total assets (ignoring any subsequent
market appreciation in the Subsidiary’s value), which limitation is imposed by
the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and
is measured at the end of each quarter of its taxable year.
3
To
the extent applicable, the Subsidiary otherwise is subject to the same
fundamental and non-fundamental investment restrictions as the Participation
Fund and, in particular, to the same requirements relating to liquidity, and the
timing and method of valuation of portfolio investments and Fund shares.
(Accordingly, references in this SAI to the Participation Fund may also include
the Subsidiary.) By investing in the Subsidiary, the Fund may be considered to
be investing indirectly in the same investments as the subsidiary and is
indirectly exposed to the risks associated with those investments.
The
Subsidiary is not registered with the SEC as an investment company under the
1940 Act and is not subject to the investor protections of the 1940 Act. As an
investor in the Subsidiary, the Fund will not have the same protections offered
to shareholders of registered investment companies. However, because the
Subsidiary is wholly-owned and controlled by the Fund and the Fund is managed by
Saturna Capital Corporation, it is unlikely that the Subsidiary will take action
in any manner contrary to the interest of the Fund or its shareholders. Because
the Subsidiary has the same investment objective and, to the extent applicable,
will comply with the same investment policies as the Fund, Saturna Capital
Corporation manages the Subsidiary’s portfolio in a manner similar to that of
the Fund.
The
Subsidiary has a board of directors that oversees its activities. The Subsidiary
has entered into a separate investment advisory agreement with Saturna Capital
Corporation and the Participation Fund pays Saturna a fee for its services. The
Subsidiary also has entered into agreements with the Fund’s service providers
for the provision of administrative, accounting, transfer agency, and custody
services.
The
Fund and the Subsidiary may not be able to operate as described in the
Prospectus and this SAI in the event of changes to the laws of the United States
or the Cayman Islands. If the laws of the Cayman Islands required the Subsidiary
to pay taxes to a governmental authority, the Fund would be likely to suffer
decreased returns.
Portfolio
Turnover
The
Trust places no formal restrictions on portfolio turnover and will buy or sell
investments accounting to the adviser’s appraisal of the factors affecting the
market and the economy. Excessive portfolio turnover may be considered gambling
by Islamic investors. The portfolio turnover rates for the most recent three
fiscal years ended May 31 were:
Portfolio
Turnover |
|
2023 |
2022 |
2021 |
Amana
Income Fund |
8% |
5% |
5% |
Amana
Growth Fund |
6% |
3%A |
3%
A |
Amana
Developing World Fund |
6% |
30% |
3% |
Amana
Participation Fund |
48%
B |
15% |
19% |
A
As restated to reflect the exclusion of redemptions in-kind, which
reduced the percentage by 4% and 2% for the years ended May 31, 2022 and 2021,
respectively.
B
The portfolio turnover rate for Amana Participation Fund increased
significantly during the 2023 fiscal year compared to the prior year. The
increase was primarily driven by increased trading within the portfolio relating
generally to factors concerning the desirability of holdings.
The
Trustees have adopted a policy that seeks to minimize potential current income
taxes paid by shareowners, with includes: (1) infrequent trading, (2) offsetting
capital gains with losses, and (3) selling highest cost tax lots first.
Disclosure
of Portfolio Holdings
The
Amana Mutual Funds Trust has adopted a portfolio holdings disclosure policy
governing the disclosure of the Funds’ portfolio holdings. In accordance with
this policy, the Funds may provide portfolio holdings information to third
parties no earlier than the time a report is filed with the SEC that is required
to contain such information or one day after the information is posted on the
Funds’ publicly accessible website, www.amanafunds.com. A list of portfolio
holdings is generally made available on the Funds’ website within 10 business
days after each month-end. Additionally, the Funds publish on the website a list
of their Top 10 Holdings as of the end of each calendar quarter, within 10
business days after the end of the quarter for which the information is
current.
The
Funds may disclose portfolio holdings information that has not been included in
a filing with the SEC or posted on the Funds’ website (i.e., non-public
portfolio holdings information) only if there is a legitimate business purpose
for doing so and if the recipient is required, either by explicit agreement or
by virtue of the recipient’s duties to the Funds as an agent or service
provider, to maintain the confidentiality of the information and to not use the
information in an improper manner (e.g., personal trading). The Funds may
disclose on an ongoing basis such non-public portfolio holdings information in
the normal course of their investment and administrative operations to various
service providers, including the adviser, independent registered public
accounting firm, custodian, financial printer, and to the legal counsel for the
Funds’ trustees. The adviser may disclose daily non-public portfolio holdings
information on a next-day basis to service providers to enable the adviser to
perform statistical analysis using those service providers’ systems and software
programs. The adviser may also provide certain non-public portfolio holdings
information to broker-dealers from time to time in connection with the purchase
or sale of securities. In providing this information, reasonable precautions are
taken in an effort to avoid potential misuse of the disclosed information,
including limitations on the scope of the portfolio holdings information
disclosed, when appropriate.
Non-public
portfolio holdings information may be provided to other persons if approved by
the adviser’s president or designee upon a determination that there is a
legitimate business purpose for doing so, the disclosure is consistent with the
interests of the Funds, and the recipient is obligated to maintain the
confidentiality of the information and not misuse it.
Neither
the adviser, the Funds, nor any affiliated or non-affiliated party shall receive
any compensation or other consideration in connection with the disclosure of
portfolio holdings.
In
view of these Fund policies, it is unlikely that a conflict of interest between
the interests of the Funds, the adviser, or any affiliated person of the Funds
may arise. However, should the adviser’s president become aware that a potential
conflict of interest may exist in connection with authorized portfolio
disclosures, she will promptly consult with the chairman of the Trust’s Board of
Trustees with regard to action to be taken. For further information about
conflicts of interest, see the Portfolio Managers.
4
Proxy
Voting Policies
The
proxy voting guidelines summarize Saturna Capital Corporation’s positions and
give a general indication of how portfolio securities held in advisory accounts,
such as the Funds, will be voted.
The
guidelines are not exhaustive and do not include all potential voting issues.
Because proxy issues and the circumstances of individual companies are varied,
there may be instances when the adviser may not vote in strict adherence to
these guidelines. We will evaluate the merits and intentions of all proposals,
and will typically vote in favor of those proposals we determine to be
constructive to the company, to the environment in which it operates, and to the
best interest of its shareowners. We will typically oppose proposals we deem to
be immaterial, nuisance proposals, or proposals that would entail significant
costs in compliance with little associated benefit.
Regardless
of the circumstances, the adviser will always attempt to vote in accordance with
the Funds’ specific investment objectives and policies, which includes careful
examination of environmental, social, and governance issues.
Saturna
Capital Corporation’s investment professionals, as part of their ongoing review
and analysis of all portfolio holdings, are responsible for monitoring
significant corporate developments, including proxy proposals submitted to
shareowners. The research analyst assigned to the sector in which an issue falls
is responsible for voting the associated proxies.
These
guidelines are reviewed and approved annually by the Trustees. The research
analyst will refer all issues where there could be a conflict of interest (e.g.,
a familial or business relationship with a company or management) or uncertainty
regarding the merits of any management or shareowner proposal to Saturna’s Proxy
Committee for discussion and adjudication. The Proxy Committee consists of the
Chief Investment Officer, President, and Chief Legal Officer of Saturna Capital
Corporation, as well as other relevant investment professionals who may
participate from time to time.
Disclosure
of the proxy voting record is a responsibility of the Trust’s secretary. The
Funds’ voting record is filed on Form N-PX for each 12-month period ending June
30 and is available (1) without charge, upon request, by calling Saturna Capital
Corporation toll-free at 1-800-728-8762; (2) on the Saturna website; and (3) on
the SEC’s website at www.sec.gov.
Corporate
Governance
We
will generally vote FOR:
|
●
|
Proposals
requesting disclosure of the company’s political |
|
|
contributions
and policies governing political contributions. |
|
●
|
Proposals
requesting disclosure of the company’s lobbying expenditures and policies
governing lobbying expenditures. |
|
●
|
Proposals
requesting disclosure of the company’s participation in drafting and/or
supporting legislation (including the names of partnering organizations,
if applicable). |
|
●
|
Management’s
recommendation for ratification of the auditor, except in the case where
non-audit fees represent more than 30% of the total fees paid in the
previous year. |
Corporate
Transactions
We
will generally vote AGAINST:
|
●
|
Authorization
to transact other, unidentified, substantive business at the meeting.
|
We
will vote CASE BY CASE
on:
|
●
|
Mergers
and acquisitions, leveraged buyouts, spin-offs, re-incorporations, tax
inversions, liquidations, and asset sales with regard to the impact on
existing shareowners' and community stakeholders’ interests.
|
|
●
|
Proposals
to amend a company’s charter or by-laws. |
Director
Elections
We
will generally vote FOR:
|
●
|
Proposals
that require a majority of independent Directors. |
|
●
|
Proposals
to separate the Chief Executive Officer and Chairman of the Board
positions. |
|
●
|
Proposals
seeking to increase the independence and diversity of board nominating,
audit, and compensation committees. |
|
●
|
Establishment
of reasonable retirement age for Directors. |
|
●
|
Proposals
that require Directors to own a minimum number of shares in the company.
|
We
will generally vote AGAINST:
|
● |
Directors
who have attended less than 75% of Board meetings. |
|
● |
Management
proposals that give management the ability to alter the size of the Board
without shareowner approval. |
|
● |
Efforts
to classify the Board or eliminate cumulative
voting. |
|
●
|
The
election of Directors who serve on the compensation committee who also
serve as CEO of any public company. |
|
● |
Proposals
to elect Directors on a staggered schedule. |
We
will vote CASE BY CASE
on:
|
●
|
Individual
Directors, committee members, or on the entire board.
|
|
● |
Directors
who are incumbent members of the nominating committee if the Board, in our
judgment, lacks diversity. |
Takeover
Defenses
We
will generally vote FOR:
|
●
|
The
elimination of dual class stock with unequal voting rights.
|
|
●
|
Proposals
to put poison pills to a shareowner vote. |
We
will generally vote AGAINST:
5
|
●
|
Proposals
to introduce dual-class shareholding structures or non-voting share
classes. |
|
●
|
Proposals
to adopt anti-takeover defenses. |
Capital
Structure
We
will generally vote FOR:
|
●
|
Proposals
to effect stock splits. |
|
●
|
Proposals
authorizing share repurchase programs. |
We
will vote CASE BY CASE
on:
|
●
|
Proposals
to increase common stock. |
Compensation
We
will generally vote FOR:
|
● |
Proposals
to allow shareowners to vote on executive
compensation. |
|
●
|
Compensation
programs that relate executive compensation to a company’s long-term
performance. |
|
●
|
Stock
option plans unless they could result in significant dilution or have
other provisions clearly not in the interest of existing shareholders.
|
We
will vote CASE BY CASE
on:
|
● |
Executive
and director compensation. We generally favor capital-related Key
Performance Indicators (KPIs): return on capital expenditure (ROCE);
return on investment capital (ROIC); economic value added (EVA) rather
than accounting-related indicators (sales; earnings per share or EPS); and
earnings before interest, taxes, depreciation and amortization
(EBITDA). |
Environment
We
expect companies to be mindful of their environmental record and impact. We will
vote in favor of proposals requesting that companies adopt the Ceres principles,
and in favor of requests for corporate social responsibility or sustainability
reports detailing a company’s environmental practices.
We
will also generally vote in favor of any proposal that requests disclosure
and/or improvement relating to the company’s approach to:
|
●
|
Addressing
climate change. |
|
●
|
Reducing
greenhouse gas emissions. |
|
●
|
Reducing
other toxic emissions. |
|
●
|
Taking
responsibility for toxic cleanup. |
|
●
|
Mitigating
water-related risks. |
|
●
|
Mitigating
negative impact on biodiversity in the communities in which the company
operates. |
|
●
|
The
use of harmful pesticides, antibiotics, genetically-engineered organisms,
and other chemicals in food production. |
|
●
|
Health
and environmental hazards the company’s operations present to the
communities in which it operates. |
|
●
|
Sustainable
business operations. |
Social
Responsibility
We
will generally vote for any proposals that request disclosure and/or improvement
relating to the company’s approach to:
|
●
|
The
representation of women and minorities in the workplace.
|
|
●
|
Equal
employment opportunities and/or nondiscrimination policies.
|
|
●
|
Workplace
codes of conduct, particularly practices related to employee health and
safety. |
|
●
|
Product-related
safety issues, including product quality and recalls.
|
6
Management of the Trust
Board
of Trustees
A
Board of five Trustees oversees the Trust: M. Yaqub Mirza, Miles K. Davis,
Ronald H. Fielding, Firas J. Al-Barzinji, and Nicholas F. Kaiser. The Trustees
establish policies as well as review and approve contracts and their
continuance. The Trustees also elect the officers, authorize the payment of any
dividend or capital gain distribution, and serve on committees of the Trust.
Trustees serve for the lifetime of the Trust or until reaching the mandatory
retirement age, death, resignation, removal, or non re-election by the
shareowners. The Trustees annually appoint officers for one-year terms.
Management
Information |
Name,
Address, and Age |
Position(s)
held with Trust; term of office and length of time served |
Principal
occupation(s) during past 5 years |
Number
of portfolios in Saturna fund complex overseen by Trustee |
Other
directorships held by Trustee during past 5 years |
Independent
Trustees |
|
M.
Yaqub Mirza, PhD1 1300 N.
State Street Bellingham, WA 98225
Age:
76 |
Independent
Chairman (since 2014); Vice Chairman, Independent Trustee (2009 to 2014);
Independent Trustee (1987 to 2003); Chairman (2000 to 2003); Audit and
Compliance Committee; Governance, Compensation and Nominations
Committee |
CEO,
Sterling Management Group, Inc. (management services) |
Four |
None |
|
Miles
K. Davis, PhD2 1300 N.
State Street Bellingham, WA 98225
Age:
64 |
Independent
Trustee (since 2008); Audit and Compliance Committee |
President,
Linfield University
Former
Dean and George Edward Durell Chair of Management, Harry F. Byrd, Jr.
School of Business, Shenandoah University;
Former
Associate Professor of Management/ Director of the Institute for
Entrepreneurship, Shenandoah University |
Four |
None |
|
Ronald
H. Fielding, MA,
MBA, CFA® 1300 N. State Street Bellingham, WA 98225
Age:
74 |
Independent
Trustee (since 2012); Audit and Compliance Committee (Chairman, Financial
Expert) |
Director,
ICI Mutual Insurance Company |
Thirteen |
Saturna
Investment Trust |
|
Firas
J. Al-Barzinji, JD, MBA 1300 N. State
Street Bellingham, WA 98225
Age:
40 |
Independent
Trustee (since 2022) |
General
Counsel, Sterling Management Group, Inc. (management services); Director
and Chief Compliance Officer of Sterling Advisory Services, Inc. |
Four |
None |
Interested
Trustee |
|
|
Nicholas
F. Kaiser, MBA3,5 1300
N. State Street Bellingham, WA 98225
Age:
77 |
President,
Trustee (since 1989); Governance, Compensation and Nominations
Committee |
Chairman
and Director, Saturna Capital Corporation (the Trust’s investment
adviser);
Chairman
and Director, Saturna Trust Company |
Four |
None |
7
Officers
Who Are Not Trustees |
Name,
Address, and Age |
Position(s)
held with Trust (length of time served); and term of office |
Principal
occupation(s) during past 5 years |
Officers
Who Are Not Trustees |
|
Jane
K. Carten, MBA3,5 1300
N. State Street Bellingham, WA 98225
Age:
48 |
Vice
President (since 2012) |
President,
Chief Executive Officer, and Director, Saturna Capital Corporation;
President and Director, Saturna Brokerage Services; Vice President and
Director, Saturna Trust Company |
|
Christopher
R. Fankhauser4 1300 N. State
Street Bellingham, WA 98225
Age:
51 |
Treasurer (since
2002) |
Chief
Operations Officer and Director, Saturna Capital Corporation; Vice
President and Chief Operations Officer, Saturna Brokerage Services; Vice
President, Director, and Chief Operations Officer, Saturna Trust
Company |
|
Michael
E. Lewis4 1300 N. State
Street Bellingham, WA 98225
Age:
62 |
Chief
Compliance Officer (since 2012) |
Chief
Compliance Officer, Saturna Capital, Saturna Trust Company, and Affiliated
Funds |
|
Jacob
A. Stewart4 1300 N. State
Street Bellingham, WA 98225
Age:
43 |
Anti-Money
Laundering Officer (since 2015) |
Anti-Money
Laundering Officer, Saturna Capital Corporation, Saturna Brokerage
Services Chief Compliance Officer, Saturna Brokerage Services Bank Secrecy
Act Officer, Saturna Trust Company |
|
Elliot
S. Cohen4 1300 N. State
Street Bellingham, WA 98225
Age:
59 |
Secretary
(since 2022) |
Chief
Legal Officer, Saturna Capital Corporation; Former Associate General
Counsel for Russell Investments |
As
of December 31, 2022, no Independent Trustee (or any of his immediate family
members) owned beneficially or of record securities of the adviser or the
Trust’s principal underwriter, or any person (other than a registered investment
company) directly or indirectly, controlling, controlled by, or under common
control with the adviser or principal underwriter.
1
Dr. Mirza is the President and CEO, and Mr. Al-Barzinji is Director and
Chief Compliance Officer, of Sterling Advisory Services, Inc., the investment
adviser to two private investment funds that are sub-advised by Saturna Capital
Corporation, and which pay an investment sub-advisory fee to Saturna Capital
Corporation.
2
Saturna Capital Corporation has committed to make a charitable donation to
the School of Business at Linfield University to support education programming
in sustainable investing. Saturna Capital has committed to make a donation of
$125,000 over five years, in the amount of $25,000 a year, beginning on
September 30, 2021. Dr. Miles Davis serves as President of Linfield University.
3
Mr. Kaiser is an “interested person” of the Trust as an employee of the
adviser.
4
Mrs. Carten, Mr. Fankhauser, Mr. Lewis, Mr. Stewart, and Mr. Cohen are
“interested persons” of the Trust as employees of the adviser. Mr. Fankhauser,
Mr. Lewis, Mr. Stewart, and Mr. Cohen hold the same positions with Saturna
Investment Trust, which has nine fund portfolios and is also managed by Saturna
Capital Corporation.
5
Mrs. Carten is Mr. Kaiser’s daughter.
8
Management
Ownership Information (as of December 31,
2022) |
Trustee/Officer |
Dollar
range of equity securities in Funds of Saturna fund complex |
Aggregate
dollar range of equity securities in all Registered Investment Companies
overseen by Trustee/Officer in Saturna fund complex |
M.
Yaqub Mirza |
Amana
Income Investor
Shares: over $100,000
Amana
Income Institutional Shares: over
$100,000
Amana
Growth Institutional Shares: over
$100,000
Amana
Developing World Investor Shares:
$10,001-$50,000 |
Over
$100,000 |
Miles
K. Davis |
Amana
Income Investor
Shares: $10,001-$50,000
Amana
Income Institutional Shares:
$10,001-$50,000
Amana
Growth Investor
Shares: $10,001-$50,000
Amana
Growth Institutional Shares:
$1-$10,000
Amana
Developing World Investor Shares:
$1-$10,000 |
$50,001-$100,000 |
Ronald
H. Fielding |
Amana
Income Institutional Shares: over
$100,000
Amana
Growth Institutional Shares: over
$100,000
Sextant International Z Shares: over
$100,000
Sextant Global High Income: over $100,000 |
Over
$100,000 |
Firas
J. Al-Barzinji |
Amana
Income Investor
Shares: $10,001-$50,000
Amana
Growth Investor
Shares: $50,001-$100,000 |
$50,001-$100,000 |
Nicholas
F. Kaiser |
Amana
Income Institutional Shares: over
$100,000
Amana
Growth Institutional Shares: over
$100,000
Amana
Developing World Institutional Shares: over
$100,000
Amana
Participation Institutional Shares: over
$100,000
Sextant
Growth Z Shares:
over $100,000
Sextant
International Z
Shares: over $100,000
Sextant
Core: over
$100,000
Sextant
Global High Income: over $100,000
Sextant
Short-Term Bond:
over $100,000
Sextant
Bond Income:
over $100,000
Saturna
Sustainable Bond: over $100,000
Saturna
Sustainable Equity: over $100,000
Idaho
Tax-Exempt: over
$100,000 |
Over
$100,000 |
9
Leadership
Structure and Board of Trustees
As
part of its annual governance assessment, the Board reviews the collective and
individual experience, qualifications, attributes, and skills of the Trustees.
Attributes common to all Trustees are strong educational backgrounds, lifetimes
of experience in business and finance, and the ability to effectively request,
evaluate, and discuss information about Amana with the adviser and other service
providers to the Trust. The chairman of the Board and all other Trustees (except
Mr. Kaiser) are independent of the adviser or other service providers, and
fulfill the legal definition of Disinterested Trustee. They reside in diverse
communities across the continent, and all have lived outside the United States.
The
Board has concluded that its current leadership structure, in which the chairman
of the Board is an Independent Trustee and not affiliated with the adviser, is
appropriate and in the best interest of shareowners. In light of the services
provided to the Trust daily by the adviser and the responsibilities of the
adviser to the Trust, the Board believes it appropriate and in the best interest
of shareowners to have a separate President who is an active adviser employee.
In making the determination that each Trustee is qualified to serve, the Board
considers a variety of criteria, including actual service, commitment, and
participation of each Trustee during their tenure with the Trust. In addition to
the information set forth in the Trustees table above and other relevant
qualifications, the following are additional important qualifications of each
Trustee:
M.
Yaqub Mirza, PhD,
returned to the position of the Trust’s independent chairman in 2014. He
suggested the concept of a US Islamic equity mutual fund in 1984. He is a
founding member of the Board of Trustees and served from 1987 through 2003 as an
Independent Trustee, and as chairman of the Board from 2000 until 2003. He is
the CEO of Sterling Management Group, Inc. (Herndon, VA), a consulting, venture
capital, business management, and real estate investment firm. Dr. Mirza has
served on the boards of public and private corporations, and has been actively
involved with agro-industrial and technology businesses in several countries. He
serves as a leader of numerous charities, and lectures on both
entrepreneurialism and philanthropy. Dr. Mirza’s degrees include a master’s
degree in science from the University of Karachi and a doctorate in physics from
the University of Texas at Dallas. The Board feels Dr. Mirza’s long service to
the Trust, community organizations, considerable board experience, financial
business background, and leadership make him an excellent board
member.
Firas
J. Al-Barzinji, JD,
MBA, was added to the Board of Trustees in 2022. He is a Virginia-licensed
attorney and serves as General Counsel to Sterling Management Group, Inc.
(Herndon, VA), a consulting, venture capital, business management, and real
estate investment firm. Mr. Al-Barzinji serves on the boards of several private
companies and has worked in private equity since 2012. His main focus has been
in agro-industrial and technology investments. Mr. Al-Barzinji also serves
multiple charitable institutions through board or committee membership. Mr.
Al-Barzinji’s degrees include a bachelor’s degree in English from Virginia Tech,
a juris doctor from the George Mason University School of Law, and a master’s
degree in business administration from the University of Virginia Darden School
of Business. The Board feels Mr. Al-Barzinji’s legal experience, financial
business background, volunteer service and board leadership make him an
excellent board member.
Miles
K. Davis, PhD, is
President of Linfield Univeristy (McMinnville, OR). Dr. Davis is active in the
microfinance movement, and lectures regularly in the US, Africa, and Europe. An
authority on entrepreneurship, his work focuses on the areas of integrity,
values, and principles within the business world. He is a former Dean and George
Edward Durell Chair of Management, Harry F. Byrd, Jr. School of Business at
Shenandoah University (Winchester, VA). Dr. Davis earned a bachelor’s degree in
communications from Duquesne University, a master’s degree in human resource
development from Bowie State University, and a doctorate in organizational
behavior and management from The George Washington University. The Board feels
Dr. Davis’ proven academic leadership skills, financial background, and
experience make him an excellent board member.
Ronald
H. Fielding, MA, MBA,
CFA®, has worked in the mutual fund industry as a portfolio manager,
owner, and senior officer of mutual fund advisers for over 35 years. He has
served on the board of Investment Company Institute Mutual Insurance for over 20
years. He has taught courses in finance and economics, and serves on
philanthropic and educational institution boards. Mr. Fielding has a bachelor’s
degree in liberal arts from St. John’s College, plus master’s degrees in
economics and business from the University of Rochester. The Board feels Mr.
Fielding’s demonstrated mutual fund industry experience and background, and his
volunteer service and leadership on many boards, including ICI Mutual Insurance
and St. John’s College, make him an excellent board member.
Nicholas
F. Kaiser, MBA, is
president of the Trust and served as portfolio manager of the Amana Income and
Amana Growth Funds until April 2020. He is chairman of Saturna Capital
Corporation, Amana’s investment adviser and administrator. He is also chairman
of Saturna Capital Corporation’s trust company. For over 40 years, Mr. Kaiser
and his firms have provided investment management, administration, accounting,
servicing, marketing, and other services to mutual funds. Mr. Kaiser earned a
bachelor’s degree in economics from Yale College, and a master’s degree in
business administration from the University of Chicago. The Board feels Mr.
Kaiser’s experience leading mutual funds and investment advisory firms, both
domestic and foreign, plus leadership experience on various other boards, make
him an excellent board member.
Board
Role in Risk Oversight
The
Board’s role in management of the Trust is oversight. Day-to-day management of
the Trust, selection of Fund investments, administration services, and
management of operational and portfolio risk are responsibilities of the
adviser. Distribution services are the responsibility of Saturna Brokerage
Services, Inc., a subsidiary of the adviser. The Board provides general
supervision and risk oversight with respect to the operation of the Trust and
the Funds, including through the following activities: receipt of reports from
the adviser, distributor, and third parties; meetings of the whole board as well
as its committees; independent experiences including shareowner contacts; and
communications with board advisors such as auditors, legal counsel, compliance
officers, and regulators. The chairman’s duties include developing the agenda
for each Board meeting in consultation with management, presiding at each Board
meeting, discussing Trust matters with management between Board meetings, and
facilitating communication and coordination between the Trustees and management.
10
Committees
The
Board has established two standing committees: the Audit and Compliance
Committee and the Governance, Compensation, and Nominations Committee. The
respective duties and current memberships of the standing committees are:
Audit
and Compliance Committee. The Audit and Compliance
Committee selects the independent registered public accounting firm, reviews all
audit reports, and monitors compliance programs. Ronald H. Fielding, M. Yaqub
Mirza, and Firas J. Al-Barzinji are the members of the Audit and Compliance
Committee. During the fiscal year ended May 31, 2023, the Audit and Compliance
Committee met once.
Governance,
Compensation, and Nominations Committee. The Governance, Compensation,
and Nominations Committee oversees the Board’s annual review of operations and
structure, and recommends trustee compensation. Shareowners wishing to recommend
nominees may do so by sending written information to Dr. Davis at his address as
given above. M. Yaqub Mirza, Miles K. Davis, and Nicholas F. Kaiser (an
Interested Trustee) are the members of the Governance, Compensation, and
Nominations Committee. With respect to the selection of nominees for Independent
Trustees, Mr. Kaiser acts solely in an advisory capacity and does not vote.
During the fiscal year ended May 31, 2023, the Governance, Compensation, and
Nominations Committee met once.
Compensation
Saturna
Capital Corporation, not the Trust, pays the salaries of officers of the Trust,
except the Trust’s Chief Compliance Officer’s salary, for which the Trust may
partially reimburse the adviser. The Trust pays the Independent Trustees
$3,5001 per quarter in arrears, $1,000 per board meeting attended (in
person or by phone), $250 for each portfolio of the Trust, and reimbursement of
travel expenses. The Trustees are also paid $250 for committee meetings
attended. The Trust pays the Board chairman and each committee chairman an
additional $500 per quarter in arrears. For the fiscal year ended May 31, 2023,
the Trust paid $75,250 of compensation expenses. No pension or retirement
benefits were incurred.
1
On December 5, 2022, the quarterly fees payable to independent trustees
increased from $2,500 to $3,500.
Code
of Ethics
The
Trust, its investment adviser Saturna Capital Corporation, and its principal
underwriter Saturna Brokerage Services, have adopted a common Code of Ethics
under Rule 17j-1 of the Investment Company Act and Rule 204A-1 of the Investment
Advisers Act. The Code permits personnel subject to the Code (as defined in the
Code) to invest in securities, including common stocks and mutual funds. To
prevent conflicts of interest, the Code includes restrictions on investing in
securities that may be purchased by the Funds. A copy of the Code is available
without charge by contacting the Trust or the adviser, and is available on the
Trust’s website.
Trustee
Compensation for Fiscal Year ended May 31, 2023 |
Name
of Person; Position |
Aggregate
Compensation from Trust |
Pension
or Retirement Benefits Accrued as Part of Trust Expenses |
Estimated
Annual Benefits Upon Retirement |
Total
Compensation From Trust and Fund Complex Paid to Trustees |
M.
Yaqub Mirza; Trustee, Independent Chairman |
$19,500 |
$0 |
$0 |
$19,500 |
Miles
K Davis; Trustee |
$19,250 |
$0 |
$0 |
$19,250 |
Ronald
H. Fielding; Trustee1 |
$19,250 |
$0 |
$0 |
$28,687 |
Firas
J. Al-Barzinji, Trustee |
$17,250 |
$0 |
$0 |
$17,250 |
Nicholas
F. Kaiser; Trustee |
$0 |
$0 |
$0 |
$0 |
Michael
Lewis; Chief Compliance Officer2 |
$100,000 |
$0 |
$0 |
n/a |
1
Ronald H. Fielding serves as Trustee to the Saturna Investment Trust, to
which Saturna Capital Corporation is adviser.
2
Michael E. Lewis also serves as Chief Compliance Officer to the Saturna
Investment Trust, to which Saturna Capital Corporation is adviser, and to
Saturna Trust Company. The Trustees have approved a portion of Mr. Lewis’
compensation be allocated to the Trust.
11
Control Persons and Principal Holders of Securities
Principal
Holders of Securities |
As
of September 11, 2023, the principal holders of record (those with 5% or
more of the outstanding shares) of securities of the following Funds
were: |
|
Name
and Address |
Shares |
Percentage |
Amana
Income
Investor
Shares |
NFSC
Omnibus Account for the Exclusive Benefit of our Customers
200
Liberty Street, New York, NY 10281 |
5,350,078 |
41.40% |
|
Charles
Schwab & Co., Inc. Special Custody Account FBO Customers
101
Montgomery Street, San Francisco, CA 94104 |
2,242,638 |
17.36% |
|
Voya
Retirement, Insurance and Annuity Company
One
Orange Way, Windsor, CT 06095 |
1,287,589 |
9.96% |
Amana
Income
Institutional
Shares |
Vanguard
Fiduciary Trust Company
400
Devon Park Drive K22, Wayne, PA 19087 |
1,814,888 |
12.30% |
|
NFSC
Omnibus Account for the Exclusive Benefit of Our Customers
200
Liberty Street, New York, NY 10281 |
1,576,585 |
10.68% |
Amana
Growth Investor
Shares |
NFSC
Omnibus Account for the Exclusive Benefit of our Customers
200
Liberty Street, New York, NY 10281 |
13,047,036 |
42.33% |
|
Charles
Schwab & Co., Inc. Special Custody Account FBO Customers
101
Montgomery Street San Francisco, CA 94104 |
6,774,727 |
21.98% |
Amana
Growth
Institutional
Shares |
NFSC
Omnibus Account for the Exclusive Benefit of our Customers
200
Liberty Street, New York, NY 10281 |
4,818,896 |
15.12% |
|
Charles
Schwab & Co., Inc. Special Custody Account FBO Customers
101
Montgomery Street San Francisco, CA 94104 |
2,352,243 |
7.38% |
|
American
Enterprise Investments FBO #41999970
707
2nd Ave South, Minneapolis MN,55402 |
1,643,694 |
5.16% |
Amana
Developing World Investor
Shares |
NFSC
Omnibus Account for the Exclusive Benefit of our Customers
200
Liberty Street, New York, NY 10281 |
847,731 |
32.71% |
|
Charles
Schwab & Co., Inc. Special Custody Account FBO Customers
101
Montgomery Street San Francisco, CA 94104 |
519,459 |
20.04% |
|
Voya
Institutional Trust Company
One
Orange Way, Windsor, CT 06095 |
269,933 |
10.41% |
Amana
Developing World-Institutional
Shares |
American
Enterprise Investments FBO #41999970
707
2nd Ave South, Minneapolis MN,55402 |
1,125,410 |
19.04% |
|
NFSC
Omnibus Account for the Exclusive Benefit of our Customers
200
Liberty Street, New York, NY 10281 |
689,294 |
11.66% |
|
Charles
Schwab & Co., Inc. Special Custody Account FBO Customers
101
Montgomery Street San Francisco, CA 94104 |
653,443 |
11.05% |
|
Charles
Schwab & Co., Inc. Special Custody Account FBO Customers
101
Montgomery Street San Francisco, CA 94104 |
299,134 |
5.06% |
Amana
Participation Investor
Shares |
NFSC
Omnibus Account for the Exclusive Benefit of our Customers
200
Liberty Street, New York, NY 10281 |
1,146,690 |
38.74% |
|
Charles
Schwab & Co., Inc. Special Custody Account FBO Customers
101
Montgomery Street San Francisco, CA 94104 |
668,851 |
22.60% |
|
Pershing
LLC
1
Pershing Plaza, Jersey City, NJ 07399 |
176,274 |
5.96% |
Amana
Participation Institutional
Shares |
Charles
Schwab & Co., Inc. Special Custody Account FBO Customers
101
Montgomery Street San Francisco, CA 94104 |
4,096,680 |
21.12% |
|
Charles
Schwab & Co., Inc. Special Custody Account FBO Customers
101
Montgomery Street San Francisco, CA 94104 |
3,292,956 |
17.50% |
|
SEI
Private Trust Company1 Freedom Valley Drive, Oaks, PA
19456 |
1,713,202 |
8.83% |
|
NFSC
Omnibus Account for the Exclusive Benefit of our Customers
200
Liberty Street, New York, NY 10281 |
1,360,904 |
7.02% |
12
As
of September 11, 2023, 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) |
0.04% |
Income
Fund Institutional Shares
(AMINX) |
1.64% |
Growth
Fund Investor
Shares (AMAGX) |
0.02% |
Growth
Fund Institutional Shares
(AMIGX) |
0.81% |
Developing
World Fund Investor Shares
(AMDWX) |
0.77% |
Developing
World Fund Institutional Shares
(AMIDX) |
4.42% |
Participation
Fund Investor
Shares (AMAPX) |
0.04% |
Participation
Fund Institutional Shares
(AMIPX) |
3.45% |
The
Control Persons and Principal Holders of Securities tables show the only persons
known to the Trust to be the owners of record or beneficial owners of more than
5% or more of any Fund.
13
Investment Advisory and Other Services
Investment
Adviser and Administrator
Saturna
Capital Corporation, 1300 N. State Street, Bellingham, Washington 98225 is the
Investment Adviser and Administrator (the “adviser”) for the Trust. Saturna
Capital Corporation is also the Trust’s transfer agent. Mrs. Jane K. Carten,
president of Saturna Capital, through her ownership of 52% of its voting stock,
is a control person of the adviser. Mr. Nicholas F. Kaiser, chairman of Saturna
Capital, through his ownership of 41% of its voting stock, is a control person
of the adviser. Mr. Kaiser is also a trustee and president of Amana Mutual Funds
Trust. A discussion regarding the Trustees’ approval of the continuance of the
Investment Advisory and Administrative Services Agreement is available in the
Trust’s semi-annual report published every January.
Advisory
Fee
Under
their Investment Advisory and Administrative Services Agreement, effective
December 1, 2020, the Amana Growth Fund, Amana Income Fund, and Amana Developing
World Fund each pay the adviser an advisory and administration fee of 0.80% on
the first $1 billion of a Fund’s average daily net assets, 0.65% on the next $1
billon, and 0.50% on assets over $2 billion. Under the Investment Advisory and
Administrative Services Agreement for the Participation Fund, the Fund pays the
adviser an advisory and administration fee of 0.50% annually of the average
daily net assets. The adviser, at its own expense and without additional cost to
the Funds, furnishes office space, office facilities and equipment, personnel
(including executive officers), and clerical and bookkeeping services required
to conduct the Funds’ business.
The
Advisory and Administration Fees table below shows amounts Saturna
Capital Corporation was paid as the Funds’ investment adviser and administrator
for the three most recent fiscal years ended May 31.
The
Investment Advisory and Administrative Services Agreement also provide that in
the event the total expenses of a Fund (excluding taxes, commissions, and
extraordinary items) for any fiscal year exceed 2% of average daily net assets,
the Fund shall be reimbursed for such excess. No reimbursements have been
required.
The
Investment Advisory and Administrative Services Agreement is renewable from year
to year with respect to each Fund, so long as its continuance is approved at
least annually (1) by the vote of a majority of the Independent Trustees, cast
in person at a meeting called for the purpose of voting on such approval, and
(2) by the vote of a majority of the Trustees or by a majority vote of the
outstanding shares of the Fund (as defined by the 1940 Act).
Under
its respective Investment Advisory and Administrative Services Agreement, each
Fund pays its own taxes, brokerage commissions, trustees’ fees, legal and
auditing fees, insurance premiums, custodian fees, transfer agent fees,
registrar and dividend disbursing agent fees, expenses incurred in complying
with state and federal laws regulating the issue and sale of its shares, and
mailing and printing costs for prospectuses, reports, and notices to
shareowners.
Advisory
and Administration Fees |
|
2023 |
2022 |
Amana
Income Fund |
$11,376,612 |
$11,772,305 |
Amana
Growth Fund |
$21,129,372 |
$21,590,063 |
Amana
Developing World Fund |
$572,079 |
$571,303 |
Amana
Participation Fund |
$1,061,544 |
$1,044,070 |
Advisory
and Administration Fees |
|
2021 |
Amana
Income Fund |
$10,656,894 |
Amana
Growth Fund |
$18,089,154 |
Amana
Developing World Fund |
$372,854 |
Amana
Participation Fund |
$699,940 |
Principal
Underwriter
The
adviser’s wholly-owned subsidiary, Saturna Brokerage Services, Inc., 1300 N.
State Street, Bellingham, WA 98225, is a general securities brokerage firm and
acts as distributor for the Trust.
Mr.
Kaiser, an Interested Trustee, is chairman and director of Saturna Capital
Corporation and Saturna Trust Company. Mrs. Jane Carten, an officer of the
Trust, is president, chief executive officer, a director, and controlling
shareowner of Saturna Capital Corporation; she is also president and a director
of Saturna Brokerage Services, Inc. and a vice president and director of Saturna
Trust Company. Mr. Fankhauser, an officer of the Trust, is chief operations
officer and a director of Saturna Capital Corporation; he is also chief
operations officer and a vice president of Saturna Brokerage Services, Inc. and
a vice president, chief operations officer, and director of Saturna Trust
company. All employees of the distributor are also employees of the adviser.
Shareowner
Servicing
Under
a separate service agreement, Saturna Capital Corporation also provides
shareowner services as the transfer agent and dividend-paying agent for the
Funds. As transfer agent, Saturna furnishes to each shareowner a confirmation
after each transaction, a historical statement at the end of each year showing
all transactions during the year, and Form 1099 and Form 1042 tax forms. Saturna
also, on behalf of the Funds, responds to shareowners’ questions and
correspondence. Furthermore, the transfer agent regularly furnishes the Funds
with current shareowner lists and information necessary to keep the shares in
balance with the Funds’ records. The transfer agent protects the privacy of
shareowner information, but provides shareowner information to regulators and
other parties with legal rights to such information, and to a mailing service,
under a confidentiality agreement, to facilitate the distribution of shareowner
reports. The transfer agent performs the mailing of all financial statements,
notices, and prospectuses to shareowners. The transfer agent makes year-end
zakah computations for shareowners requesting this service. Pursuant to the
Transfer Agent Agreement, each Fund pays the transfer agent a monthly fee of
$0.25 per active account with a minimum monthly fee of $833 for each Fund.
Effective June 1, 2019, Saturna Capital waives its transfer agent fee for each
Fund.
The
Transfer Agent Fees table below shows the amounts Saturna Capital Corporation
was paid as the Funds’ shareowner servicing and transfer agent for the three
most recent fiscal years ended May 31.
14
Transfer
Agent Fees |
|
|
2023 |
2022 |
2021 |
Amana
Income Fund Institutional
Shares |
$0 |
$0 |
$0 |
Amana
Income Fund Investor
Shares |
$0 |
$0 |
$0 |
Amana
Growth Fund Institutional
Shares |
$0 |
$0 |
$0 |
Amana
Growth Fund Investor
Shares |
$0 |
$0 |
$0 |
Amana
Developing World Fund Institutional
Shares |
$0 |
$0 |
$0 |
Amana
Developing World Fund Investor
Shares |
$0 |
$0 |
$0 |
Amana
Participation Fund Institutional
Shares |
n/a |
n/a |
n/a |
Amana
Participation Fund Investor
Shares |
n/a |
n/a |
n/a |
Saturna
Trust Company, a wholly-owned subsidiary of Saturna Capital Corporation, is the
Funds’ retirement plan custodian and, as such, is paid compensation for
maintaining records of contributions, disbursements, and assets as required for
IRAs and other IRS-qualified retirement accounts. Each class of shares of a Fund
pays an annual fee of $10 per account for retirement plan services to Saturna
Trust Company.
Retirement
plans using Saturna Trust Company as the custodian, including IRAs, invest in
Amana Institutional Shares (i.e., without 12b-1 plan expenses).
The
Retirement Plan Custodian Fees table below shows the amounts Saturna
Trust Company was paid as the Funds’ retirement plan custodian for the three
most recent fiscal years ended May 31.
Retirement
Plan Custodial Fees |
|
|
2023 |
2022 |
2021 |
Amana
Income Fund Institutional
Shares |
$59,795 |
$58,021 |
$26,225 |
Amana
Income Fund Investor
Shares |
$63 |
$102 |
$70 |
Amana
Growth Fund Institutional
Shares |
$89,707 |
$83,653 |
$39,089 |
Amana
Growth Fund Investor
Shares |
$112 |
$115 |
$110 |
Amana
Developing World Fund Institutional
Shares |
$18,991 |
$16,175 |
$8,755 |
Amana
Developing World Fund Investor
Shares |
$36 |
$12 |
$98 |
Amana
Participation Fund Institutional
Shares |
$14,022 |
$7,885 |
$9,185 |
Amana
Participation Fund Investor
Shares |
$63 |
$133 |
$87 |
Subsidiary
Service Providers
The
Subsidiary has entered into an agreement with the Trust’s service providers for
the provision of administrative, accounting, transfer agency, and custody
services. The Subsidiary will bear the expenses associated with these services,
which are not expected to be material in relation to the value of the
Participation Fund’s assets. It is also anticipated that the Fund’s own expenses
will be reduced to some extent as a result of the payment of such expenses at
the Subsidiary level. Therefore, it is expected that the Fund’s investment in
the Subsidiary will not result in the Fund’s paying duplicative fees for similar
services provided to the Fund and the Subsidiary.
Rule
12b-1 Plan
Effective
July 19, 2013, the Trust entered into a distribution agreement with Saturna
Brokerage Services, Inc. (the “distributor”), a broker-dealer registered under
the Securities Exchange Act of 1934, pursuant to which the distributor acts as
principal underwriter of Fund shares for sale to the public. Additionally, the
Trust has adopted a Rule 12b-1 plan which provides for each Fund to reimburse
the distributor monthly at a rate of up to 0.25% annually of that Fund’s average
daily net assets applicable to Income Fund, Growth Fund, Developing World Fund,
and Participation Fund Investor Shares to finance the distribution of those
shares and to furnish services to owners of Investor Shares. The plan reimburses
the distributor only for expenses incurred and does not compensate the
distributor regardless of expenses. The Trust does not participate in any joint
distribution activities with another investment company.
The
Trustees, in seeking shareowner approval for the distribution plan, expected
that it would help the adviser and distributor have the flexibility to direct
their distribution activities in a manner consistent with prevailing market
conditions by using, subject to regular Trustee approval, a portion of Trust
assets to make payments to the distributor or third parties for marketing,
distribution, and other services. They expected that to the extent the adviser
and distributor have greater flexibility and resources under the plan,
additional sales of Income Fund, Growth Fund, Developing World Fund, and
Participation Fund Investor Shares may result, and that this has the potential
to benefit the Funds by reducing the possibility that a Fund would experience
net redemptions, which might require the liquidation of portfolio securities in
amounts and at times that could be disadvantageous for investment purposes.
There can be no assurance that these events will occur.
The
12b-1 Fees table below shows the amounts Saturna Brokerage Services was
paid as the Funds’ underwriter under the distribution plan for the three most
recent fiscal years ended May 31.
Institutional
Shares do not pay the 12b-1 fee.
12b-1
Fees |
|
|
2023 |
2022 |
2021 |
Amana
Income Fund Institutional
Shares |
n/a |
n/a |
n/a |
Amana
Income Fund Investor
Shares |
$1,817,671 |
$2,006,713 |
$1,944,976 |
Amana
Growth Fund Institutional
Shares |
n/a |
n/a |
n/a |
Amana
Growth Fund Investor
Shares |
$4,225,979 |
$4,664,456 |
$3,838,348 |
Amana
Developing World Fund Institutional
Shares |
n/a |
n/a |
n/a |
Amana
Developing World Fund Investor
Shares |
$59,778 |
$60,329 |
$43,085 |
Amana
Participation Fund Institutional
Shares |
n/a |
n/a |
n/a |
Amana
Participation Fund Investor
Shares |
$63,507 |
$62,742 |
$51,679 |
No
Trustee who is not an interested person of the Trust has direct or indirect
financial interest in the operation of the plan or related agreements. While
Saturna Brokerage Services is paid fees under the plan, there is no benefit to
Saturna Capital Corporation or its employees, including Mr. Kaiser, as the
amounts spent by Saturna Capital Corporation (described below) substantially
exceed the 12b-1 fees received.
15
Under
the distribution plan, the distributor has entered into dealer selling
agreements with a large number of brokerage firms. These selling agreements do
not compensate dealers for actual sales (the Amana Funds pay no sales
commissions), only for assets they hold and service for their customers.
During
the fiscal year ended May 31, 2023, the Funds reimbursed the distributor the
following amounts allocated to the following principal activities:
Advertising: |
$- |
Printing
and mailing of prospectuses |
|
to
other than current shareowners: |
$- |
Compensation
to underwriters: |
$- |
Compensation
to broker-dealers: |
$10,606,578 |
The
adviser spent an additional $4,439,643 of its own resources to compensate
broker-dealers. The adviser may pay such additional compensation, out of its own
resources and not as an expense of the Funds, to brokers 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 Income Fund, Growth Fund, Developing
World Fund, and Participation Fund Investor Shares, these payments could be
considered “revenue sharing.” In some cases, these payments may create an
incentive for the intermediary or its employees to recommend or sell shares of
the Funds to you. If you have purchased shares of a Fund through an
intermediary, please contact your intermediary to learn more about any payments
it receives from the adviser and/or its affiliates, as well as fees and/or
commissions the intermediary charges. You should also consult disclosures made
by your intermediary at the time of purchase. Any such payments will not change
the net asset value or the price of a Fund’s shares.
Custodian
The
Funds’ custodian is UMB Bank, NA, 928 Grand Blvd, 5th Floor, Kansas City,
Missouri 64155.
The
custodian holds all securities and cash, settles all Fund portfolio securities
transactions, receives (on behalf of the Funds) the money from sale of Fund
shares, and on order of the Funds, pays the authorized expenses of the Funds.
When investors redeem Fund shares, the proceeds are paid to the shareowner from
a Fund’s account at the custodian bank.
Independent
Registered Public Accounting Firm
Tait,
Weller and Baker LLP, 50 South 16th Street, Suite 2900, Philadelphia, PA 19102,
is the independent registered public accounting firm for the Trust and the
Funds. The accountants conduct an annual audit of the Funds as of May 31 each
year. With pre-approval of the Trustees, they may provide related services such
as preparing Fund tax returns.
16
Portfolio Managers
All
Saturna Capital employees, including Elizabeth W. Alm, Patrick T. Drum, Bryce R.
Fegley, Scott F. Klimo, Christopher E. Paul, Monem A. Salam, Levi Stewart
Zurbrugg, and other portfolio managers are paid an annual salary, as set by the
board of Saturna Capital. The board also pays bonuses that are partly dependent
on the profits of Saturna Capital and may also reflect the results of specific
managed accounts or specific businesses of Saturna Capital. As owners of shares
and/or stock options of Saturna Capital Corporation, Ms. Alm and Messrs. Drum,
Fegley, Klimo, Paul, Salam, and Stewart Zurbrugg may benefit from any increase
in its value per share that might result from its operations or profits. They
may also receive dividends on shares of Saturna Capital. All Saturna Capital
employees are eligible for a retirement plan, health care and other benefits,
and a stock option plan. Stock options are annually awarded on the basis of
years of service, and not individual performance. Mutual fund portfolio managers
are paid a monthly bonus (which may be shared with other employees) when a Fund
achieves an overall rating of 4 or 5 stars from Morningstar. The bonus is 1% of
the adviser’s net monthly fee (which is based on both assets and performance)
for a 4-star rating and 2% of the monthly fee for a 5-star rating.
Saturna
Capital’s portfolio managers may manage multiple accounts, including mutual
funds and separate accounts for individuals, investment partnerships, pension
funds, and charities. Portfolio managers make investment decisions for each
account based on the investment objectives, policies, practices, and other
relevant investment considerations that the managers believe are applicable to
that account. The management of multiple accounts may give rise to potential
conflicts of interest when the accounts have similar or different objectives,
benchmarks, time horizons, and fees because the portfolio manager must allocate
his time and investment ideas across multiple accounts. Consequently, a manager
may purchase (or sell) a security for one account and not for another. The
adviser has adopted policies designed to fairly allocate securities purchased or
sold on an aggregated basis. Transactions executed for one account may adversely
affect the value of securities held by other accounts. Securities selected for
some accounts may outperform the securities selected for others. A portfolio
manager’s compensation plan may give rise to potential conflicts of interest. To
reduce this risk, a mutual fund portfolio manager’s account performance bonus
depends upon the Fund’s overall Morningstar™ rating, which derives from
investment results over the last three, five, and 10 years. A manager’s
compensation tends to increase with assets under management, which in turn may
increase the value of Saturna Capital Corporation.
Portfolio
Managers (as of
May 31, 2023) |
Portfolio
Manager: |
Trust
portfolios served as primary manager (assets): |
Other
investment company portfolios served as primary manager (assets): |
Other
pooled investment vehicles served as primary manager (assets): |
Other
accounts (assets): |
Elizabeth
W. Alm |
None |
Sextant
Bond Income Fund ($9,708,898)1
Idaho
Tax-Exempt Fund ($11,914,683) |
None |
None |
Patrick
T. Drum |
Amana
Participation Fund ($218,710,629) |
Saturna
Sustainable Bond Fund ($29,489,462) |
None |
None |
Bryce
R. Fegley |
None |
Sextant
Global High Income Fund ($9,142,818)1
Sextant
Core Fund ($20,023,819)1 |
None |
Two
($5,272,535 ) |
Scott
F. Klimo |
Amana
Growth Fund ($3,824,483,537) |
Sextant
Growth Fund ($57,940,220)1 |
None |
None |
Monem
A. Salam |
Amana
Income Fund ($1,575,188,468)
Amana
Developing Wold Fund (84,056,890) |
None |
None |
Sixty-seven
($107,091,425 ) |
Christopher
E. Paul |
None |
None |
Five
($82,837,002)1 |
Three
($3,883,517) |
Levi
Stewart Zurbrugg |
None |
Sextant
Short-Term Bond Fund ($10,707,514)1
Sextant
Core Fund ($20,023,819)1 |
None |
Five
($5,424,360) |
1
Assets managed with a performance fee
17
Portfolio
Manager Fund Ownership (as of May 31,
2023) |
Dollar
range of equity securities in Amana Mutual Funds Trust owned beneficially
by Portfolio Managers |
Elizabeth
W. Alm |
Amana
Growth Fund Institutional Shares: $100,000-$500,000 |
|
Amana
Participation Fund Institutional Shares $10,001-$50,000 |
Patrick
T. Drum |
Amana
Growth Investor Shares: $1-$10,000 |
|
Amana
Participation Fund Institutional Shares $1-$10,000 |
Bryce
R. Fegley |
Amana
Income Investor Shares: $1-$10,000 |
|
Amana
Income Institutional Shares: $100,000-$500,000 |
|
Amana
Growth Investor Shares: $1-$10,000 |
|
Amana
Growth Institutional Shares: $100,000-$500,00 |
|
Amana
Developing World Institutional Shares: $1-$10,000 |
Scott
F. Klimo |
Amana
Income Institutional Shares: $100,000-$500,000 |
|
Amana
Growth Institutional Shares: $100,000-$500,00 |
Monem
A. Salam |
Amana
Income Institutional Shares: $100,000-$500,000 |
|
Amana
Growth Institutional Shares: $500,000-$1,000,00 |
|
Amana
Developing World Institutional Shares: $100,000-$500,000 |
|
Amana
Participation Fund Institutional Shares $10,001-$50,000 |
Christopher
E. Paul |
Amana
Growth Investor Shares: $1-$10,000 |
Levi
Stewart Zurbrugg |
Amana
Income Institutional Shares: $1-$10,000 |
|
Amana
Growth Investor Shares: $1-$10,000 |
|
Amana
Growth Institutional Shares: $10,000-$50,000 |
|
Amana
Developing World Institutional Shares:
$10,000-$50,000 |
Amana’s
net monthly advisory fee is solely dependent on Fund assets. The net monthly fee
from the Sextant Funds is partly based on Sextant Fund performance results. The
Sextant International Fund, Sextant Growth Fund (which Mr. Klimo manages),
Sextant Global High Income Fund (which Mr. Fegley manages) and the Sextant Bond
Income Fund (which Ms. Alm manages), Sextant Core Fund (which Messrs. Fegley and
Stewart Zurbrugg manage), and Sextant Short-Term Bond Fund (which Ms. Alm
manages), pay a base fee of 0.50% of average daily net assets.
Since
all fund assets vary over time with performance and investors favor mutual funds
with superior investment records, the portfolio manager’s bonus is a function of
both performance and assets.
Three
of the private pooled investment portfolios managed by Mr. Paul pay Saturna
Capital Corporation as adviser a performance fee of 10% of the year’s increase
in net asset value achieved from the previous highest year-end net asset value.
There is no base fee and no performance fee in years when the net asset value is
below the highest previous value. As portfolio manager, Mr. Paul normally
receives a significant portion of any fee earned as a bonus.
A
portfolio manager’s compensation plan may give rise to potential conflicts of
interest. To reduce this risk, a mutual fund portfolio manager’s account
performance bonus depends upon the Fund’s overall Morningstar™ rating, which
derives from investment results over the last three, five, and 10 years. A
manager’s compensation tends to increase with assets under management, which in
turn may increase the value of Saturna Capital Corporation.
18
Brokerage Allocation
The
placing of purchase and sale orders as well as the negotiation of commissions is
performed by the adviser and is reviewed by the Board of Trustees. Although it
is permitted to do so, the adviser does not allocate brokerage to any broker in
return for research or services.
The
primary consideration in effecting securities transactions for the Trust is to
obtain the best price and execution which in the judgment of the adviser is
attainable at the time and which would bring the best net overall economic
result to a Fund. Factors taken into account in the selection of brokers include
the price of the security, commissions paid on the transaction, the efficiency
and cooperation with which the transaction is effected, the expediency of making
settlement, and the financial strength and stability of the broker. The adviser
may negotiate commissions at a rate in excess of the amount another broker would
have charged if it determines in good faith that the overall net economic result
is favorable to the Fund and is not required to execute trades in
“over-the-counter” securities with primary market-makers if similar terms are
available
elsewhere.
The adviser evaluates whether brokerage commissions are reasonable based upon
available information about the general level of commissions paid by similar
mutual funds for comparable services.
When
consistent with best execution, brokerage may be directed to Saturna Brokerage
Services, Inc., a wholly-owned subsidiary of the adviser, which engages in a
discount brokerage business. Saturna Brokerage Services currently executes
portfolio transactions for the Trust for free (no commissions). Transactions
effected through other brokers are subject to commissions payable to that
broker.
The
Commissions Paid To Saturna Brokerage Services
table below contains the commissions each Fund paid Saturna Brokerage
for each of the last three fiscal years.
The
Commissions Paid To Other Broker-Dealers
table below contains the commissions each Fund paid to unaffiliated
broker-dealers for each of the last three fiscal years.
The
Trustees review brokerage activity in detail at each regular meeting. Meetings
are held on a quarterly schedule.
Commissions
Paid To Saturna Brokerage Services |
|
2023 |
2022 |
2021 |
%
of 2023 aggregate brokerage commissions paid Saturna Brokerage |
%
of 2023 aggregate dollar amount of transactions involving the payment of
commissions through Saturna Brokerage |
Income
Fund |
$0 |
$0 |
$0 |
0% |
0% |
Growth
Fund |
$0 |
$0 |
$0 |
0% |
0% |
Developing
World Fund |
$0 |
$0 |
$0 |
0% |
0% |
Participation
Fund |
n/a |
n/a |
n/a |
n/a |
n/a |
Commissions
Paid To Other Broker-Dealers |
|
2023 |
2022 |
2021 |
Income
Fund |
$0 |
$471 |
$1,760 |
Growth
Fund |
$1,000 |
$4,606 |
$1,825 |
Developing
World Fund |
$17,453 |
$35,869 |
$13,333 |
Participation
Fund |
n/a |
n/a |
n/a |
19
Capital Stock
The
Amana Mutual Funds Trust is organized as a “series” investment company. Each
Fund of the Trust is divided into classes, which are further divided into shares
of beneficial interest. Those Funds and classes are named: Income Fund Investor,
Income Fund Institutional, Growth Fund Investor, Growth Fund Institutional,
Developing World Fund Investor, Developing World Fund Institutional,
Participation Fund Investor, and Participation Fund Institutional. There are no
restrictions on shareowners’ rights to freely retain or dispose of shares of any
class. There are no material obligations or potential liabilities associated
with owning a Fund’s shares except the investment risks described in the Funds’
prospectus and summary prospectuses, and in this statement of additional
information in the section Fund Descriptions, Investments, and Risks on page 2.
The shareowners of each separate Fund may look only to that Fund for dividends,
income, capital gains or losses, redemption, liquidation, or termination. Each
class of shares of a Fund will have (i) exclusive voting rights on any matter
submitted to shareowners that relates solely to its arrangement and (ii)
separate voting rights on any matter submitted to shareowners in which the
interests of one class differ from the interest of any other class (however, the
Participation Fund may impose a redemption fee). The voting rights of each class
of shares can only be modified by a majority vote of that class. Shareowners may
elect to convert eligible Investor Shares into corresponding Institutional
Shares of the same series, provided that following the conversion the investor
meets applicable eligibility requirements for the Institutional Shares. Any such
conversion will occur at the next available respective net asset values of the
share classes. There are no sinking fund provisions. The creditors and
shareowners of each class of shares are limited to the assets of that class of
shares for recovery of charges, expenses, and liabilities.
Purchase,
Redemption, and Pricing of Shares
See
Purchase and Sale of Fund Shares in each Fund’s Summary Prospectus and Fund
Share Pricing in the Trust’s Prospectus for an explanation about the ways to
purchase or redeem shares. Both purchases and redemptions are made at net asset
value per share.
Each
Fund reserves the right, under certain conditions, to honor any request for
redemption by making payment in whole or in part in securities valued as
described in “Fund Share Pricing” in the prospectus. If payment is made in
securities, a shareowner or Institution generally will incur brokerage expenses
or other transaction costs in converting those securities into cash and will be
subject to fluctuation in the market prices of those securities until they are
sold. The Funds would do so when the Manager or the Fund Trustees determine that
it is in the best interests of a Fund’s shareowners as a whole.
It
is important to note that there are differences between the two share classes.
Investor Shares are subject to an annual distribution fee to compensate
financial intermediaries for providing investors with ongoing account services.
Institutional Shares are not subject to an annual distribution fee and,
consequently, holders of Institutional Shares may not receive the same types or
levels of services from financial intermediaries. In choosing between Investor
Shares versus Institutional Shares, investors should weigh the benefits of the
services to be provided by financial intermediaries against the annual
distribution fee imposed upon some shares.
Offering
Price
Each
Fund computes its price per share of each share class on each business day by
dividing the value of all securities and other assets, less liabilities,
attributable to each share class, by the number of shares outstanding of that
class. The daily price is determined for each class of each Fund as of the close
of trading on the New York Stock Exchange (generally 4 p.m. Eastern time) on
each day the Exchange is open for trading. The Exchange is generally closed on
New Year’s Day, Martin Luther King Day, President’s Day, Good Friday, Memorial
Day, Juneteenth, Independence Day, Labor Day, Thanksgiving, and Christmas. See
the balance sheet in the Annual Report or Semi-Annual Report for a specimen
sheet showing how the Funds calculate net asset value, which is the price used
for both purchase and redemption of shares.
Pricing
of Foreign Equity Securities
Foreign
securities traded outside the US are valued on the basis of their most recent
closing market prices at 4 p.m. Eastern time.
Foreign
markets may close before the time at which the Funds’ prices are determined.
Because of this, events occurring after the close of a foreign market and before
the determination of the Funds’ net asset values may have a material effect on
the Funds’ foreign security prices. To account for this, the Funds may use
independent pricing services for valuation of securities.
In
developing valuations for foreign securities, the independent pricing services
review a variety of factors, including developments in foreign markets, the
performance of US securities markets, and the performance of instruments trading
in US markets that represent foreign securities and baskets of foreign
securities. The Funds may also fair value securities in other situations, for
example, when a particular foreign market is closed but the Fund is open.
The
Funds routinely compare closing market prices, the next day’s opening prices in
the same markets, and adjusted prices and other factors they believe are
relevant for such testing. Other mutual funds may adjust the prices of their
securities by different amounts.
Intermediary
Processing
Investors
should be aware that intermediaries might have policies different from the
Funds’ policies regarding trading and redemptions, and these may be in addition
to or in place of the Funds’ policies. For more information about these
restrictions and policies, please contact your broker, retirement plan
administrator, or other intermediary.
Abandoned
Property
It
is the responsibility of the investor to ensure that Saturna Capital Corporation
maintains a correct address for the investor’s account(s). An incorrect address
may cause an investor’s account statements and other mailings to be returned. If
Saturna Capital Corporation is unable to locate the investor, then it will
determine whether the investor’s account has been legally abandoned. Saturna
Capital Corporation is legally obligated to escheat (or transfer) abandoned
property to the appropriate state’s unclaimed property administrator in
accordance with statutory requirements. The investor’s last known address of
record determines which state has jurisdiction.
20
Taxation of the Trust
Each
Fund is a separate economic entity and as such, the tax status and tax
consequences to shareowners of each Fund may differ, depending upon the
investment objectives, operations, income, gain or loss, and distributions from
each Fund.
Each
Fund intends to qualify as a regulated investment company for US federal income
tax purposes. In order to so qualify, a Fund must satisfy certain requirements
with respect to the types of income that it earns each year (the “Income
Requirement”) and satisfy other requirements with respect to diversifying its
investment holdings, measured at the end of each quarter of its taxable year
(the “Diversification Requirement”).
Each
Fund intends to distribute to shareowners substantially all of its net
investment income and net realized capital gains, if any, and to comply, as each
has since inception, with the provisions of the Internal Revenue Code applicable
to regulated investment companies (Subchapter M), which relieve mutual funds of
federal income tax on the amounts so distributed.
If
a Fund failed to qualify for treatment as a regulated investment company for any
taxable year, (a) it would be taxed as an ordinary corporation on the full
amount of its taxable income for that year without being able to deduct the
distributions it makes to its shareowners and (b) the shareowners would treat
all those distributions, including distributions of net capital gain, as
dividends to the extent of that Fund’s earnings and profits, taxable as ordinary
income (except that, for individual shareowners, the part thereof that is
“qualified dividend income” would be subject to federal income tax at the rate
for net capital gains – a maximum rate of 20%) and eligible for the
dividends-received deduction available to corporations under certain
circumstances. In addition, the Fund could be required to recognize unrealized
gains, pay substantial taxes and interest, and make substantial distributions
before requalifying for regulated investment company treatment.
The
Trust’s custodian may use foreign sub-custodians to hold securities of a Fund
outside the US, which can subject the Fund to foreign withholding or other
taxes. Working with its custodian, the Fund can normally reclaim such foreign
taxes.
As
of May 31, 2023, the components of distributable earnings on a tax basis were as
follows:
Income
Fund |
|
Undistributed
ordinary income |
$263,796 |
Accumulated
capital gains |
$28,415,809 |
Tax
accumulated earnings |
$28,679,605 |
Unrealized
Appreciation |
$933,132,140 |
Other
unrealized accumulated losses |
$(130,780) |
Total
accumulated earnings |
$961,680,965 |
|
|
Growth
Fund |
|
Undistributed
ordinary income |
$4,427,748 |
Accumulated
capital gains |
$22,495,314 |
Tax
accumulated earnings |
$26,923,062 |
Unrealized
Appreciation |
$2,316,406,878 |
Total
accumulated earnings |
$2,343,329,940 |
|
|
Developing
World Fund |
|
Undistributed
ordinary income |
$384,940 |
Accumulated
capital gains |
$36,834 |
Tax
accumulated earnings |
$421,774 |
Unrealized
Appreciation |
$118,959 |
Other
unrealized gains |
$13 |
Total
accumulated earnings |
$540,760 |
|
|
Participation
Fund |
|
Undistributed
ordinary income |
$16,974 |
Accumulated
capital and other losses |
$(4,246,085) |
Tax
accumulated earnings |
$(4,229,111) |
Unrealized
Depreciation |
$(8,354,252) |
Total
accumulated earnings |
$(12,583,363) |
|
|
The
Funds’ transfer agent must withhold and remit to the US Treasury 24% of
dividends, capital gains distributions, and redemption proceeds (regardless of
the extent to which gains or losses may be realized) otherwise payable to any
individual or certain other non-corporate shareowner who fails to properly
furnish the transfer agent with a correct Social Security or other taxpayer
identification number. Withholding at that rate also is required from a Fund’s
dividends and capital gains distributions otherwise payable to such a shareowner
who is subject to backup withholding for any other reason. Backup withholding is
not an additional tax, and any amounts so withheld may be credited against a
shareowner’s federal income tax liability or refunded.
If
the IRS determines that a Fund should be fined or penalized for inaccurate,
missing, or otherwise inadequate reporting of a Tax Identification Number, the
amount of the IRS fee or penalty will be directly assessed to the shareowner
account involved.
Dividends
a Fund pays to a foreign shareowner, other than (1) dividends paid to a foreign
shareowner whose ownership of shares is effectively connected with a US trade or
business the shareowner carries on and (2) capital gains distributions paid to a
non-resident alien individual who is physically present in the United States for
no more than 182 days during the taxable year, generally will be subject to a
federal withholding tax of 30% (or lower treaty rate). Two categories of
dividends, however, “interest-related dividends” and “short-term capital gain
dividends,” if properly designated by a Fund, will be exempt from that tax.
21
Investment
in the Subsidiary
The
Participation Fund will invest up to 25% of its total assets (by value) in the
Subsidiary which is expected to provide the Fund with exposure to sukuk,
murahaba, and wakala within the limitations of the Income Requirement and the
Diversification Requirement. The Subsidiary will be classified as a corporation
for federal tax purposes and, as a foreign corporation, generally will not be
subject to federal income taxation unless it is engaged in a US trade or
business. A foreign corporation that is not a dealer in stocks, securities, or
commodities may engage in the following activities without being deemed to be so
engaged: (1) trading in stocks or securities (including contracts or options to
buy or sell securities) for its own account; and (2) trading in commodities that
are “of a kind customarily dealt in on an organized commodity exchange . . . if
the transaction is of a kind customarily consummated at such place” for its own
account. It is expected that the Subsidiary will conduct its securities trading
activities to comply with the foregoing.
In
general, a foreign corporation that does not conduct a US trade or business is
nonetheless subject to federal income tax at a flat rate of 30% (or lower treaty
rate) on the gross amount of certain US-source income, including dividends and
certain interest income, which is not effectively connected with a US trade or
business. There is no tax treaty in force between the United States and the
Cayman Islands that would reduce the 30% rate. The 30% tax does not apply to
US-source capital gains (whether long-term or short-term), interest paid to a
foreign corporation on its deposits with US banks, or “portfolio interest”
(which includes interest, including OID, on certain obligations in registered
form and, under certain circumstances, interest on bearer obligations).
The
Subsidiary will be a “controlled foreign corporation” (“CFC”) if, on any day of
its taxable year, more than 50% of the voting power or value of its stock is
directly, indirectly, or constructively owned by “United States shareholders.” A
United States shareholder is defined as a “United States person” (as defined in
Internal Revenue Code section 957(c)) who directly, indirectly, or
constructively owns 10% or more of the total combined voting power or 10% or
more of the total value of all classes of a foreign corporation’s voting stock.
Because the Fund is a United States shareholder of the Subsidiary – it is a
United States person that owns and will continue to own at least 10% of the
voting power or 10% or more of the total value of the Subsidiary’s stock – that
owns all of the Subsidiary’s stock, the Subsidiary thus is a CFC. As a United
States shareholder, the Fund annually is required to include in its gross income
all of the Subsidiary’s “subpart F income” – which includes interest, OID,
dividends, net gains from the disposition of stocks or securities, receipts with
respect to securities loans, net payments received with respect to equity swaps
and similar derivatives, and net gains from transactions (including futures and
forwards) in commodities and is expected to constitute all of the Subsidiary’s
income – regardless of whether the Subsidiary distributes that income to the
Fund. The Fund’s recognition of the Subsidiary’s subpart F income increases its
tax basis in its stock in the Subsidiary. Distributions by the Subsidiary to the
Fund, if any, will be tax-free, to the extent of its previously undistributed
subpart F income, and will correspondingly reduce the Fund’s tax basis in the
Subsidiary’s stock. Subpart F income is generally treated as ordinary income,
regardless of the character of the Subsidiary’s underlying income.
Underwriters
Effective
July 19, 2013, the Trust entered into a distribution agreement with Saturna
Brokerage Services, Inc. (the “distributor”), a broker-dealer registered under
the Securities Exchange Act of 1934, pursuant to which distributor acts as
principal underwriter of the Funds’ shares for sale to the public. The
distributor is a member of the the Financial Industry Regulatory Authority and a
wholly-owned subsidiary of Saturna Capital Corporation. All employees of the
distributor are also employees of the adviser. Additionally, the Trust has
adopted a Rule 12b-1 Plan, under which the distributor is reimbursed by the
Trust on a monthly basis at a rate of up to 0.25% annually of the Funds’ average
daily net assets applicable to Investor Shares to finance the distribution of
Income Fund, Growth Fund, Developing World Fund, and Participation Fund Investor
Shares and to furnish services to owners of Investor Shares. See Rule 12b-1
Plan on page 15 for more information.
In
accordance with its contract with the Trust, the distributor devotes appropriate
efforts to effect the sales of shares of each of the Funds, but is not obligated
to sell any certain number of shares. The offering of shares is continuous.
Financial Statements
The
most recent audited Annual Report accompanies this Statement of Additional
Information.
There
is incorporated by reference into this Registration Statement the following
financial information in the Annual
Report to shareowners for the fiscal year ended May 31, 2023:
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●
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Report
of Tait, Weller & Baker LLP, Independent Registered Public Accounting
Firm |
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● |
Statements
of Assets and Liabilities as of May 31, 2023 |
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● |
Financial
Highlights — Years ended May 31, 2023, 2022, 2021, 2020, and
2019 |
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●
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Statements
of Operations — Year ended May 31, 2023 |
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● |
Statements
of Changes in Net Assets — Years ended May 31, 2023 and
2022 |
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● |
Investments
— As of May 31, 2023 |
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●
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Notes
to Financial Statements |
22