November 20, 2013

Re: Proposed Fidelity Bond and D&O/E&OAnnual Premium Allocations

From: Saturna Capital

Annually at the December meeting the Trustees mustreview and vote to continue the Rule 17g-1 joint fidelity bond coverage. Thismemorandum discusses the ICI Mutual quote and proposed premium allocationamongst the insured parties.

As requested, the D&O/E&O limit was quoted at the underwriter the existing $3 million limit with a deductible of $300,000. This year's quote of $100,000 is less than last year's $102,000 and is a continuation of a downward trend.

The allocation the D&O/E&O policy is shown in Table 1 below.  The table applies an approximate percentage discount to quoted premiums for individual policies of appropriate size for each entity. The individually quoted policy sizes are $3 million for Amana, and $1 million each for Saturna Investment Trust and Saturna Capital, including its subsidiaries, Saturna Brokerage Services and Saturna Trust Company.

The parties have historically allocated the fidelity bond premium according to the portion of each insured's required coverage to the total bond. The 17g-1 AUM coverage requirements for Amana of $4 Billion, Saturna Investment Trust of $500 Million, and the related premium allocation is shown in Table 2 below.

The fidelity bond's coverage requirement has declined slightly to $3,500,000 from last year's $3,525,000. The total premium quoted is now $19,000, down from initially quoted $22,000*, and from last year's $23,460. The quote for the total fidelity bond coverage of $3,500,000 is $600 less than the total of the individual quotes for the parties at their minimum coverage levels. Although Amana was quoted at $1.040 less for an individual policy at its minimum coverage requirement of $2.3 milion, the benefit of participating at the higher coverage of $3,500,000 appears to justify the additional allocated premium.

Attached are letters from ICI Mutual discussing theindividual D&O/E&O policy quote and confirming that the total premiumfor the bond and policy coverage allocated to each investment company is less than the premium such company would have to pay if it purchased a separate policy at the total coverage.
| **Table  1. D&O/E&O Policy Premium Allocation at $3,000,000** |  
**Insured**

**Individual Quote  Coverage**

**Individual Quote**

**Joint Policy Discount (~19%)**

**Policy Premium**

Amana  Mutual Funds Trust  

$3,000,000   

$70,000   

$13,548   

$56,452   

Saturna  Investment Trust  

$1,000,000   

$22,500   

$4,355   

$18,145   

Saturna  Capital  

$1,000,000   

$31,500   

$6,097   

$25,403   

 

  

$124,000   

$24,000   

$100,000   

**Table  2. Fidelity Bond Premium Allocation at a Bond Limit of $3,500,000**

** **

**Insured**

**Minimum Coverage  Requirement**

**Percentage of Total  Bond**

**Allocated Bond Premium[2]**

**Individual Quote at  Min. Req.**

**Individual Quote at  $3,500,000**

 
 Amana  Mutual Funds Trust

$2,300,000 

66% 

$12,540 

$11,500

$17,000

 
Saturna  Investment Trust

$750,000 

21%

$3,990 

$4,100

$16,000

 
Saturna  Capital

$250,000 

7%

$1,330 

$2,100

$15,500

 
Saturna  Brokerage

$200,000 

6%

$1,140 

$1,900

$15,000

 
 

$3,500,000

100%

$19,000

$19,600

$63,500

 
 

[1]Subsequent to itspreliminary indication, ICI Mutual re-evaluated its pricing and provided therevised quote 

[2]Totaldue will differ from amount shown as premiums do not include offsets from ICIMutual dividends |
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