N-CSR 1 aaaiif-ncsrs.htm IMAN FUND ANNUAL REPORT 5-31-15 aaaiif-ncsrs.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES




Investment Company Act file number  811-09821


Allied Asset Advisors Funds
(Exact name of Registrant as specified in charter)



721 Enterprise Drive, Suite 100
Oak Brook, IL 60523
(Address of principal executive offices) (Zip code)



Bassam Osman
Allied Asset Advisors Funds
721 Enterprise Drive, Suite 100
Oak Brook, IL 60523
(Name and address of agent for service)



(877)-417-6161
Registrant's telephone number, including area code



Date of fiscal year end:  May 31, 2015



Date of reporting period: May 31, 2015

 

 
 

 

Item 1. Reports to Stockholders.
 
 
 
 
 

 

 
Annual Report
 
May 31, 2015
 

 


 
 

 

 

 

 
Iman Fund

 
 
 
 
 
 
 
 
 
 

 
 
 

 
 
IMAN FUND



July 17, 2015
 
Dear Shareholder,
 
Assalamu Alaykum (Greetings of Peace),
 
We are pleased to report that Iman Fund (the Fund) has done well in the year ending on May 31, 2015.  The Fund returned 10.22% in that period while the Dow Jones Islamic Market World Index rose 6.89% and the Dow Jones Islamic Market USA Index went up 11.75%.  The Fund outperformed the blended return of these two indexes, which was up 9.32%.  The return of the Wilshire 5000 Total Market Index was 9.39% in the same period.  For the ten years ending on May 31, 2015, the Fund returned 7.03% annually while the annualized blended return of the Dow Jones Islamic Market World Index and the Dow Jones Islamic Market USA Index was 6.90%.  For the five years ending on May 31, 2015, the Fund returned 13.90% annually while the annualized blended return of the Dow Jones Islamic Market World Index and the Dow Jones Islamic Market USA Index was 13.52%*.
 
For the twelve months ending on May 31, 2015 the U.S. stocks did well.  Major indexes closed at or near their all-time high.  Credit can be attributed to the relative strength of the U.S. economy and currency, as well as the relative attractiveness of stocks if one considers alternatives such as bonds.  Growth stocks outperformed value stocks.  For the year ending on May 31, 2015 the health care sector shined, driven primarily by strong product innovation.  Consumer discretionary stocks gained amid rising personal spending.  However, energy stocks lost ground, with a sharp decline in crude prices attributed to a weaker global demand, and an increased U.S. supply.
 
Information technology (e.g. technology hardware and equipment companies, especially Apple) and health care (especially biotechnology) did well, which helped the Fund’s performance.  On the flip side, small-cap stocks lagged, as they were held back by growth and valuation worries.  International stocks also underperformed.  The Fund’s holdings in these areas, along with the Fund’s position in energy, detracted from the Fund’s performance.
 
For the coming year, the Fund’s management is well aware of the specter of raising interest rates and the argument of stretched stock valuations.  The Federal Reserve provided some guidance in June, indicating that its first interest rate hike (since initiating a near zero-interest-rate policy roughly seven years ago) would be data dependent.  U.S. economic data has been less than outstanding lately.  Job growth, housing starts, and unemployment rates continue to make modest progress, but workforce participation rates, consumer spending, and absolute economic growth have lagged.  GDP forecasts have declined.
 
Overseas, the anemic economic growth, deflationary concerns, and currency weakness in the Euro zone along with recessionary pressure in parts of Asia (like Japan), slower growth in China and the Greece and Puerto Rico debt crises are all potential issues hanging over the market.  Some argue that the market has discounted these factors, and any improvement in them might bolster the market.
 
We believe that despite the long-running bull market, valuations are only slightly above average when compared with the last thirty years.  Even with a modest uptick in the Fed rate, interest rates will still be far below average for the last thirty years, which we believe justifies higher stock valuations.  This, if coupled with better corporate earnings, is likely to produce reasonable stock returns in the coming year.  Furthermore, oil stocks did not stage the snap-back rally that some industry pundits were calling for, opening the door for a potential improvement in energy stocks in the coming year.
 

* The expense ratio of the Fund, as disclosed in the Fund’s Prospectus dated September 30, 2014, is 1.48%.
 
The Performance data quoted represents past performance and does not guarantee future results. Investment return and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Call 877-417-6161 or visit us at www.imanfund.com for the most recent month-end performance data. Current performance may be lower or higher than the performance data quoted.
 

 
1

 
 
IMAN FUND

 
 
No one can persistently predict the short-term movement of the stock market.  However, long-term stock investing over many years has historically rewarded investors.
 
We highly appreciate the trust you have placed in us by investing in the Iman Fund.  We promise that we will work diligently and intelligently to continue to be worthy of your trust.
 
Very Truly Yours,
 
Bassam Osman, President
 

The above discussion and analysis of the Fund reflect the opinions of the Adviser as of July 2015, are subject to change and any forecasts made cannot be guaranteed and should not be considered investment advice.
 
Mutual Fund investing involves risk; principal loss is possible.  The Fund invests in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods.  Historically, the Adviser believes that the Islamic restrictions placed on the Fund have not adversely affected the Fund; however, it is possible that these restrictions may result in the Fund not performing as well as mutual funds not subject to such restrictions.  Investments in smaller companies involve additional risk, such as limited liquidity and greater volatility.
 
The Dow Jones Islamic Market USA Index is a diversified compilation of U.S. equity securities considered by Dow Jones to be in compliance with Islamic principles.  The Dow Jones Islamic Market World Index measures the global universe of investable equities considered by Dow Jones to be in compliance with Islamic principles.  The Wilshire 5000 Total Market Index is a market capitalization-weighted index composed of more than 6,700 publicly-traded companies that are headquartered in the United States, are actively traded on an American stock exchange and have pricing information that is widely available to the public.  You cannot invest directly in an index.
 
Diversification does not assure a profit or protect against loss in a declining market.
 
Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis.  It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.
 
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security.  For a complete list of Fund holdings, please refer to the Schedule of Investments included in this report.
 
 

 


 
2

 
 
IMAN FUND
EXPENSE EXAMPLE
May 31, 2015 (Unaudited)
 
 
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (12/1/2014 - 5/31/2015).
 
Actual Expenses
 
The first line of the table below provides information about actual account values and actual expenses. Although the Fund charges no sales load or transaction fees, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC, the Fund’s transfer agent.  If you request a redemption be made by wire transfer, currently a $15.00 fee is charged by the Fund’s transfer agent.  IRA accounts will be charged a $15.00 annual maintenance fee.  The example below includes, but is not limited to, management fees, fund accounting, custody and transfer agent fees.  However, the example below does not include portfolio trading commissions and related expenses, and other extraordinary expenses as determined under generally accepted accounting principles.  You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes
 
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.  Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that Iman Fund does not have any sales charge (loads), redemption fees, or exchange fees.
 
 
Beginning
Ending
Expenses Paid
 
Account Value
Account Value
During Period
 
12/1/14
5/31/15
12/1/14 - 5/31/15*
Actual
$1,000.00
$1,041.90
$7.23
Hypothetical (5% return before expenses)
  1,000.00
  1,017.85
  7.14
 
*
Expenses are equal to the Fund’s annualized expense ratio of 1.42% multiplied by the average account value over the period multiplied by 182/365 (to reflect the one-half year period).

 

 
3

 
 
IMAN FUND
ALLOCATION OF PORTFOLIO ASSETS
(Calculated as a percentage of net assets)
May 31, 2015 (Unaudited)










 

 
 
4

 
 
IMAN FUND
 
Total Rate of Return
For the Period May 31, 2005 to May 31, 2015
(Unaudited)

 


 
This chart assumes an initial investment of $10,000 made on May 31, 2005 and held through May 31, 2015.
 
Performance data quoted represents past performance and does not guarantee future results.  The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.  Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the recent month end may be obtained by visiting www.investaaa.com.
 
Indices mentioned are unmanaged and used to measure U.S. markets.  You cannot invest directly in an index.
 
The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares.
 
 
Six
One
Five
Ten
Average Annual Total Return as of May 31, 2015
Months
Year
Years
Years
Iman Fund
4.19%
10.22%
13.90%
7.03%
Dow Jones Islamic Market USA Index*
3.24%
11.75%
14.38%
7.73%
Blended Dow Jones Islamic Market USA Index*/
       
  Dow Jones Islamic Market World Index**
3.44%
  9.32%
13.52%
6.90%
Russell 3000 Growth Index***
5.15%
14.95%
17.64%
9.33%
*
The Dow Jones Islamic Market USA Index is a diversified compilation of U.S. equity securities considered by Dow Jones to be in compliance with Islamic principles.  The index is constructed from stocks in the Dow Jones Indexes (DJGI) family.  Dow Jones believes that these stocks are accessible to investors and are well traded.  The DJGI methodology removes issues that are not suitable for global investing.  Prior to July 31, 2013, the performance of the Dow Jones Islamic Market USA Index does not include the reinvestment of dividends.
**
The Dow Jones Islamic Market World Index is a compilation of 56 country-level benchmark indexes considered by Dow Jones to be in compliance with Islamic principles.  The index provides a definitive standard for measuring stock market performance for Islamic investors on a global basis, in accordance with Dow Jones Indexes’s established index methodology.  Prior to April 30, 2008, the performance of the Dow Jones Islamic Market World Index does not include the reinvestment of dividends.
***
The Russell 3000 Growth Index takes the largest 3,000 U.S. companies based on market capitalization and measures the performance of those with higher price-to-book ratios and higher forecasted growth values.



 
5

 
 
IMAN FUND
SCHEDULE OF INVESTMENTS
May 31, 2015
(Classifications are based on the North American Industry Classification System)

Number of
         
Shares
     
Value
 
COMMON STOCKS - 99.3%
     
           
   
AEROSPACE PRODUCT & PARTS
     
   
  MANUFACTURING - 1.8%
     
  6,400  
Honeywell International, Inc.
  $ 666,880  
  7,800  
TE Connectivity Ltd. (b)
    538,200  
            1,205,080  
     
AGRICULTURE,
       
     
  CONSTRUCTION &
       
     
  MINING MACHINERY
       
     
  MANUFACTURING - 0.5%
       
  5,400  
The Toro Co.
    369,306  
               
     
AIR FREIGHT &
       
     
  LOGISTICS - 0.2%
       
  1,500  
United Parcel Service,
       
     
  Inc. (UPS) - Class B
    148,830  
               
     
AUTOMOBILES - 0.4%
       
  13,400  
Winnebago Industries, Inc.
    291,182  
               
     
BUILDING MATERIAL &
       
     
  SUPPLIES DEALERS - 1.6%
       
  12,500  
Fastenal Co.
    518,875  
  4,900  
The Home Depot, Inc.
    545,958  
            1,064,833  
     
BUSINESS SUPPORT
       
     
  SERVICES - 0.7%
       
  18,300  
WNS Holdings Ltd. - ADR (a)(b)
    482,937  
               
     
CLOTHING STORES - 0.4%
       
  1,500  
The Children’s Place
       
     
  Retail Stores, Inc.
    98,100  
  5,400  
The Gap, Inc.
    206,982  
            305,082  
     
COMMERCIAL & SERVICE
       
     
  INDUSTRY MACHINERY
       
     
  MANUFACTURING - 2.0%
       
  24,800  
Copart, Inc. (a)
    858,080  
  4,400  
The Middleby Corp. (a)
    478,280  
            1,336,360  
     
COMMUNICATIONS
       
     
  EQUIPMENT
       
     
  MANUFACTURING - 2.7%
       
  30,300  
Cisco Systems, Inc.
    888,093  
  4,300  
Plantronics, Inc.
    237,231  
  10,100  
QUALCOMM, Inc.
    703,768  
            1,829,092  
     
COMPUTER &
       
     
  PERIPHERAL EQUIPMENT
       
     
  MANUFACTURING - 6.1%
       
  23,200  
Apple Inc.
    3,022,496  
  42,500  
EMC Corp.
    1,119,450  
            4,141,946  
     
COMPUTER SYSTEMS
       
     
  DESIGN & RELATED
       
     
  SERVICES - 2.5%
       
  2,900  
Cerner Corp. (a)
    195,141  
  5,000  
Perficient, Inc. (a)
    94,600  
  605  
The Priceline Group, Inc. (a)
    709,084  
  15,900  
Sykes Enterprises, Inc. (a)
    385,257  
  7,600  
Virtusa Corp. (a)
    345,800  
            1,729,882  
     
CUT & SEW APPAREL
       
     
  MANUFACTURING - 1.3%
       
  15,400  
lululemon athletica Inc. (a)
    920,766  
               
     
DAIRY PRODUCT
       
     
  MANUFACTURING - 0.3%
       
  3,800  
WhiteWave Foods Co. (a)
    182,514  
               
     
DATA PROCESSING, HOSTING
       
     
  & RELATED SERVICES - 1.6%
       
  3,900  
Automatic Data Processing, Inc.
    333,489  
  1,950  
CoStar Group Inc. (a)
    407,375  
  4,900  
Red Hat, Inc. (a)
    378,623  
            1,119,487  
 
The accompanying notes are an integral part of these financial statements.

 
6

 
 
IMAN FUND
SCHEDULE OF INVESTMENTS (Continued)
May 31, 2015
(Classifications are based on the North American Industry Classification System)

Number of
         
Shares
     
Value
 
COMMON STOCKS - 99.3% (Continued)
     
           
   
DRUGS & DRUGGISTS’
     
   
  SUNDRIES MERCHANT
     
   
  WHOLESALERS - 2.2%
     
  5,200  
AmerisourceBergen Corp.
  $ 585,312  
  5,400  
Cardinal Health, Inc.
    476,118  
  5,500  
The Procter & Gamble Co.
    431,145  
            1,492,575  
     
ELECTRICAL EQUIPMENT
       
     
  MANUFACTURING - 2.6%
       
  59,000  
ABB Ltd. - ADR (b)
    1,288,560  
  8,800  
AMETEK, Inc.
    473,088  
            1,761,648  
     
ELECTRONIC SHOPPING &
       
     
  MAIL-ORDER HOUSES - 2.9%
       
  4,690  
Amazon.com, Inc. (a)
    2,013,089  
               
     
ELECTRONICS &
       
     
  APPLIANCE STORES - 0.5%
       
  9,400  
Best Buy Co., Inc.
    326,180  
               
     
ENGINE, TURBINE & POWER
       
     
  TRANSMISSION EQUIPMENT
       
     
  MANUFACTURING - 0.7%
       
  8,200  
Brunswick Corp.
    418,528  
  435  
Cummins, Inc.
    58,964  
            477,492  
     
FREIGHT TRANSPORTATION
       
     
  ARRANGEMENT - 1.0%
       
  5,100  
Expeditors International
       
     
  of Washington, Inc.
    233,784  
  2,600  
FedEx Corp.
    450,372  
            684,156  
     
GENERAL FREIGHT
       
     
  TRUCKING - 0.4%
       
  4,500  
Old Dominion Freight Line, Inc. (a)
    306,045  
               
     
GRAIN & OILSEED
       
     
  MILLING - 0.3%
       
  4,500  
Unilever PLC - ADR (b)
    198,675  
               
     
HEALTH & PERSONAL
       
     
  CARE STORES - 1.2%
       
  7,900  
CVS Caremark Corp.
    808,802  
               
     
INDUSTRIAL MACHINERY
       
     
  MANUFACTURING - 1.4%
       
  47,500  
Applied Materials, Inc.
    956,175  
               
     
INSURANCE CARRIERS - 0.9%
       
  9,716  
Health Net Inc. (a)
    604,724  
               
     
MANAGEMENT, SCIENTIFIC &
       
     
  TECHNICAL CONSULTING
       
     
  SERVICES - 1.8%
       
  5,200  
Korn/Ferry International
    166,868  
  6,200  
MAXIMUS, Inc.
    405,294  
  9,100  
Salesforce.com, Inc. (a)
    662,025  
            1,234,187  
     
MEDICAL EQUIPMENT
       
     
  & SUPPLIES
       
     
  MANUFACTURING - 0.9%
       
  1,800  
3M Co.
    286,344  
  520  
Intuitive Surgical, Inc. (a)
    253,630  
  800  
Stryker Corp.
    76,904  
            616,878  
     
METAL ORE MINING - 0.3%
       
  4,000  
Franco-Nevada Corp. (b)
    205,920  
               
     
MOTOR VEHICLE
       
     
  MANUFACTURING - 0.4%
       
  1,120  
Tesla Motors, Inc. (a)
    280,896  
               
     
MOTOR VEHICLE PARTS
       
     
  MANUFACTURING - 1.0%
       
  6,100  
Delphi Automotive PLC (b)
    530,578  
  3,300  
Sun Hydraulics Corp.
    123,354  
            653,932  
 
The accompanying notes are an integral part of these financial statements.

 
7

 
 
IMAN FUND
SCHEDULE OF INVESTMENTS (Continued)
May 31, 2015
(Classifications are based on the North American Industry Classification System)

Number of
         
Shares
     
Value
 
COMMON STOCKS - 99.3% (Continued)
     
           
   
NAVIGATIONAL, MEASURING,
     
   
  ELECTROMEDICAL &
     
   
  CONTROL INSTRUMENTS
     
   
  MANUFACTURING - 1.1%
     
  1,000  
Danaher Corp.
  $ 86,320  
  1,400  
Illumina, Inc. (a)
    288,512  
  5,800  
MTS Systems Corp.
    394,632  
            769,464  
     
NEWSPAPER, PERIODICAL,
       
     
  BOOK, AND DIRECTORY
       
     
  PUBLISHERS - 2.3%
       
  24,200  
Reed Elsevier PLC - ADR (b)
    1,606,638  
               
     
OFFICE ADMINISTRATIVE
       
     
  SERVICES - 0.5%
       
  3,700  
Gartner, Inc. (a)
    323,676  
               
     
OFFICE FURNITURE
       
     
  (INCLUDING FIXTURES)
       
     
  MANUFACTURING - 0.6%
       
  16,000  
La-Z-Boy Inc.
    424,480  
               
     
OIL & GAS EXTRACTION - 2.8%
       
  3,700  
Diamondback Energy, Inc. (a)
    287,897  
  1,000  
EOG Resources, Inc.
    88,690  
  27,500  
Imperial Oil Ltd. (b)
    1,078,275  
  5,500  
Occidental Petroleum Corp.
    430,045  
            1,884,907  
     
OTHER ELECTRICAL
       
     
  EQUIPMENT & COMPONENT
       
     
  MANUFACTURING - 0.9%
       
  2,900  
Emerson Electric Co.
    174,899  
  3,500  
Hubbell Inc. - Class B
    378,105  
            553,004  
     
OTHER FABRICATED
       
     
  METAL PRODUCT
       
     
  MANUFACTURING - 0.1%
       
  540  
Parker Hannifin Corp.
    65,032  
               
     
OTHER GENERAL
       
     
  MERCHANDISE STORES - 0.7%
       
  2,260  
O’Reilly Automotive, Inc. (a)
    496,138  
               
     
OTHER GENERAL
       
     
  PURPOSE MACHINERY
       
     
  MANUFACTURING - 2.7%
       
  4,800  
Graco, Inc.
    348,432  
  6,500  
IDEX Corp.
    502,190  
  4,500  
Pall Corp.
    559,980  
  2,360  
Roper Industries, Inc.
    412,906  
            1,823,508  
     
OTHER INFORMATION
       
     
  SERVICES - 5.3%
       
  6,030  
Baidu, Inc. - ADR (a)(b)
    1,190,322  
  7,600  
Facebook Inc. - Class A (a)
    601,844  
  1,550  
Google Inc. - Class A (a)
    845,246  
  1,814  
Google Inc. - Class C (a)
    965,248  
            3,602,660  
     
PESTICIDE,
       
     
  FERTILIZER & OTHER
       
     
  AGRICULTURAL CHEMICAL
       
     
  MANUFACTURING - 0.7%
       
  4,000  
Monsanto Co.
    467,920  
               
     
PETROLEUM &
       
     
  COAL PRODUCTS
       
     
  MANUFACTURING - 4.7%
       
  14,600  
Chevron Corp.
    1,503,800  
  20,500  
Exxon Mobil Corp.
    1,746,600  
            3,250,400  


The accompanying notes are an integral part of these financial statements.



 
8

 
 
IMAN FUND
SCHEDULE OF INVESTMENTS (Continued)
May 31, 2015
(Classifications are based on the North American Industry Classification System)

Number of
         
Shares
     
Value
 
COMMON STOCKS - 99.3% (Continued)
     
           
   
PHARMACEUTICAL
     
   
  & MEDICINE
     
   
  MANUFACTURING - 16.2%
     
  8,600  
Abbott Laboratories
  $ 417,960  
  4,010  
Actavis plc (a)(b)
    1,230,308  
  8,100  
Alkermes PLC (a)(b)
    494,910  
  3,500  
BioMarin Pharmaceutical Inc. (a)
    439,495  
  5,400  
Bristol-Myers Squibb Co.
    348,840  
  13,700  
Gilead Sciences, Inc. (a)
    1,538,099  
  2,200  
IDEXX Laboratories, Inc. (a)
    298,320  
  560  
Intercept Pharmaceuticals, Inc. (a)
    142,909  
  7,200  
Isis Pharmaceuticals, Inc. (a)
    484,704  
  13,900  
Johnson & Johnson
    1,391,946  
  19,900  
Merck & Co., Inc.
    1,211,711  
  8,600  
Novartis AG - ADR (b)
    883,478  
  1,740  
Receptos, Inc. (a)
    286,908  
  1,460  
Regeneron Pharmaceuticals, Inc. (a)
    748,338  
  3,600  
United Therapeutics Corp. (a)
    661,392  
  4,000  
Vertex Pharmaceuticals Inc. (a)
    513,160  
            11,092,478  
     
PROFESSIONAL &
       
     
  COMMERCIAL EQUIPMENT
       
     
  & SUPPLIES MERCHANT
       
     
  WHOLESALERS - 0.3%
       
  1,700  
Henry Schein, Inc. (a)
    240,839  
               
     
RAIL TRANSPORTATION - 0.7%
       
  4,900  
Union Pacific Corp.
    494,459  
               
     
SCIENTIFIC RESEARCH
       
     
  & DEVELOPMENT
       
     
  SERVICES - 3.9%
       
  2,500  
Alexion Pharmaceuticals, Inc. (a)
    409,600  
  2,160  
Biogen Idec Inc. (a)
    857,498  
  7,600  
Celgene Corp. (a)
    869,744  
  4,900  
Incyte Corp. (a)
    539,735  
            2,676,577  
     
SEMICONDUCTOR & OTHER
       
     
  ELECTRONIC COMPONENT
       
     
  MANUFACTURING - 6.5%
       
  26,200  
Altera Corp.
    1,279,870  
  18,200  
Benchmark Electronics, Inc. (a)
    422,968  
  9,700  
Broadcom Corp. - Class A
    551,445  
  3,400  
Cavium, Inc. (a)
    239,258  
  2,000  
Cree, Inc. (a)
    60,560  
  34,800  
NVIDIA Corp.
    770,124  
  9,300  
Texas Instruments Inc.
    520,056  
  13,200  
Tyco International PLC (b)
    532,752  
  2,000  
Xilinx, Inc.
    94,840  
            4,471,873  
     
SEMICONDUCTOR &
       
     
  SEMICONDUCTOR
       
     
  EQUIPMENT - 1.5%
       
  30,000  
Intel Corp.
    1,033,800  
               
     
SOAP, CLEANING COMPOUND
       
     
  & TOILET PREPARATION
       
     
  MANUFACTURING - 0.7%
       
  7,100  
Tupperware Brands Corp.
    466,754  
               
     
SOFTWARE PUBLISHERS - 4.7%
       
  8,100  
Aspen Technology, Inc. (a)
    346,680  
  30,800  
Microsoft Corp.
    1,443,288  
  24,600  
Oracle Corp.
    1,069,854  
  2,900  
Tyler Technologies, Inc. (a)
    352,292  
            3,212,114  
     
SUPPORT ACTIVITIES
       
     
  FOR MINING - 0.5%
       
  3,700  
Schlumberger Ltd. (b)
    335,849  
               
     
TEXTILE, APPAREL &
       
     
  LUXURY GOODS - 0.2%
       
  1,200  
NIKE, Inc. - Class B
    122,004  


The accompanying notes are an integral part of these financial statements.

 
9

 
 
IMAN FUND
SCHEDULE OF INVESTMENTS (Continued)
May 31, 2015
(Classifications are based on the North American Industry Classification System)

Number of
         
Shares
     
Value
 
COMMON STOCKS - 99.3% (Continued)
     
           
   
TRADING COMPANIES &
     
   
  DISTRIBUTORS - 1.1%
     
  3,280  
W.W. Grainger, Inc.
  $ 788,282  
     
TOTAL COMMON STOCKS
       
     
  (Cost $58,393,758)
    67,951,527  
     
Total Investments
       
     
  (Cost $58,393,758) - 99.3%
    67,951,527  
     
Other Assets in Excess
       
     
  of Liabilities - 0.7%
    488,881  
     
TOTAL NET ASSETS - 100.0%
  $ 68,440,408  

Percentages are stated as a percent of net assets.

ADR - American Depositary Receipt
(a)
Non Income Producing
(b)
Foreign Issued Securities







The accompanying notes are an integral part of these financial statements.

 
10

 
 
IMAN FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2015

Assets:
     
Investments, at value (cost $58,393,758)
  $ 67,951,527  
Cash
    79,720  
Receivable for investments sold
    425,628  
Receivable for capital shares sold
    34,546  
Dividends receivable
    97,547  
Other assets
    22,052  
Total Assets
    68,611,020  
         
Liabilities:
       
Payable to Adviser (Note 3)
    57,272  
Payable for professional fees
    43,066  
Payable for Trustees fees
    1,006  
Accrued expenses and other liabilities
    69,268  
Total Liabilities
    170,612  
Net Assets
  $ 68,440,408  
         
Net assets consist of:
       
Paid-in capital
  $ 56,000,159  
Accumulated net investment loss
    (29,375 )
Accumulated net realized gain on investments
    2,911,855  
Net unrealized appreciation on investments
    9,557,769  
Net Assets
  $ 68,440,408  
         
Shares of beneficial interest outstanding
       
  (unlimited number of shares authorized, no par value)
    6,005,437  
Net asset value, redemption price and offering price per share
  $ 11.40  

 

 
The accompanying notes are an integral part of these financial statements.

 
11

 
 
IMAN FUND
STATEMENT OF OPERATIONS
For the Year Ended May 31, 2015

Investment income:
     
Dividend income (Net of foreign withholding tax of $11,227)
  $ 885,979  
Total investment income
    885,979  
         
Expenses:
       
Advisory fees (Note 3)
    636,158  
Administration fees
    68,622  
Transfer agent fees and expenses
    46,109  
Legal fees
    36,412  
Fund accounting fees
    33,706  
Federal and state registration fees
    29,102  
Trustees’ fees and related expenses
    18,349  
Audit fees
    12,999  
Reports to shareholders
    8,220  
Custody fees
    7,993  
Other expenses
    2,928  
Total expenses
    900,598  
Net investment loss
    (14,619 )
         
Realized and unrealized gain on investments:
       
Net realized gain from security transactions
    5,961,293  
Change in net unrealized appreciation on investments
    288,378  
Realized and unrealized gain on investments
    6,249,671  
Net increase in net assets from operations
  $ 6,235,052  

 

 
The accompanying notes are an integral part of these financial statements.

 
12

 
 
IMAN FUND
STATEMENTS OF CHANGES IN NET ASSETS


   
Year Ended
   
Year Ended
 
   
May 31, 2015
   
May 31, 2014
 
From operations:
           
Net investment loss
  $ (14,619 )   $ (46,929 )
Net realized gain on investments
    5,961,293       5,621,806  
Change in net unrealized appreciation on investments
    288,378       3,917,696  
Net increase in net assets from operations
    6,235,052       9,492,573  
                 
From distributions paid:
               
Net realized gain on investments
    (7,032,880 )     (1,918,859 )
Net decrease in net assets resulting from distributions paid
    (7,032,880 )     (1,918,859 )
                 
From capital share transactions:
               
Proceeds from sale of shares
    6,777,910       8,560,104  
Net asset value of shares issued in reinvestment
               
  of distributions to shareholders
    6,991,051       1,906,543  
Payments for shares redeemed
    (3,752,022 )     (4,025,734 )
Net increase in net assets from capital share transactions
    10,016,939       6,440,913  
                 
Total increase in net assets
    9,219,111       14,014,627  
                 
Net assets:
               
Beginning of period
    59,221,297       45,206,670  
End of period (includes accumulated net investment loss
               
  of $29,375 and $15,049, respectively)
  $ 68,440,408     $ 59,221,297  

 

 
The accompanying notes are an integral part of these financial statements.

 
13

 
 
IMAN FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period

   
Year Ended May 31,
 
   
2015
   
2014
   
2013
   
2012
   
2011
 
Net asset value, beginning of period
  $ 11.59     $ 9.99     $ 8.35     $ 8.97     $ 6.91  
                                         
Income (loss) from investment operations:
                                       
Net investment loss(1)
    (0.00 )(2)     (0.01 )     (0.03 )     (0.05 )     (0.05 )
Net realized and unrealized
                                       
  gains (losses) on investments
    1.13       2.02       1.67       (0.57 )     2.11  
Total from investment operations
    1.13       2.01       1.64       (0.62 )     2.06  
                                         
Less distributions paid:
                                       
From net realized gain on investments
    (1.32 )     (0.41 )                  
Total distributions paid
    (1.32 )     (0.41 )                  
                                         
Net asset value, end of period
  $ 11.40     $ 11.59     $ 9.99     $ 8.35     $ 8.97  
                                         
Total return
    10.22 %     20.30 %     19.64 %     (6.91 )%     29.81 %
                                         
Net assets at end of period (000’s)
  $ 68,440     $ 59,221     $ 45,207     $ 36,123     $ 34,912  
                                         
Ratio of expenses to average net assets
    1.42 %     1.48 %     1.59 %     1.74 %     1.75 %
                                         
Ratio of net investment loss to average net assets
    (0.02 )%     (0.09 )%     (0.36 )%     (0.65 )%     (0.65 )%
                                         
Portfolio turnover rate
    72.0 %     71.7 %     109.5 %     96.9 %     169.3 %

(1)
Net investment loss per share is calculated using ending balances prior to consideration of adjustments for permanent book and tax differences.
(2)
Less than one cent per share.



The accompanying notes are an integral part of these financial statements.

 
14

 
 
IMAN FUND
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2015

1.Organization
 
Allied Asset Advisors Funds (the “Trust”), an open-end management investment company, was organized as a Delaware statutory trust on January 14, 2000.  The Trust currently offers one series of shares to investors, the Iman Fund (the “Fund”), a diversified series of the Trust.  Allied Asset Advisors, Inc. (“AAA” or the “Adviser”), a Delaware corporation, serves as investment adviser to the Fund.
 
The Trust is authorized to issue an unlimited number of shares without par value, of each series.  The Trust currently offers one class of shares of the Fund.
 
The investment objective of the Fund is to seek growth of capital while adhering to Islamic principles. To achieve its investment objective, the Fund seeks investments that meet Islamic principles whose prices the Fund’s Adviser anticipates will increase over the long term. Under normal circumstances, the Fund invests its net assets in domestic and foreign securities chosen by the Adviser in accordance with Islamic principles. Islamic principles generally preclude investments in certain businesses (e.g., alcohol, pornography and gambling) and investments in interest bearing debt obligations.  Any uninvested cash will be held in non-interest bearing deposits or invested in a manner following Islamic principles.
 
2.Significant Accounting Policies
 
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements.  These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
 
Use of Estimates:  In preparing the financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from these estimates.
 
Security Valuation:  Investment securities are carried at fair value determined using the following valuation methods:
 
Equity securities listed on a U.S. securities exchange or NASDAQ for which market quotations are readily available are valued at the last quoted sale price on the valuation date.
 
Options, futures, unlisted U.S. securities and listed U.S. securities not traded on the valuation date for which market quotations are readily available are valued at the most recent quoted bid price.  The Fund did not hold any such securities during the year ended May 31, 2015.
 
Securities or other assets for which market quotations are not readily available are valued at fair value as determined in good faith by the Adviser under direction of the Board of Trustees.
 
The Fund has adopted fair valuation accounting standards which establish an authoritative definition of fair value and a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes.
 
Summary of Fair Value Exposure at May 31, 2015
 
The Trust has performed an analysis of all existing investments to determine the significance and character of all inputs to their fair value determination. Various inputs are used in determining the value of the Fund’s investments.  These inputs are summarized in the three broad levels listed below:
 
Level 1 -
Quoted prices in active markets for identical securities.


 
15

 
 
IMAN FUND
NOTES TO THE FINANCIAL STATEMENTS (Continued)
May 31, 2015

Level 2 -
Other significant observable inputs (including quoted prices for similar securities in active markets, quoted prices for identical or similar instruments in markets that are not active, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, interest rates, prepayment speeds, credit risk, etc.)
 
Level 3 -
Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
 
Inputs that are used in determining a fair value of an investment may include price information, credit data, volatility statistics, and other factors.  These inputs can be either observable or unobservable.  The availability of observable inputs can vary between investments, and is affected by various factors such as the type of investment or similar investments in the marketplace.  The inputs will be considered by the Adviser, along with any other relevant factors in the calculation of an investment’s fair value.  The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations.  During these periods, the availability of prices and inputs may be reduced for many investments.  This condition could cause an investment to be reclassified between the various levels within the hierarchy.
 
Investments falling into the Level 3 category are primarily supported by quoted prices from brokers and dealers participating in the market for those investments.  However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.  Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3.  These models rely on one or more significant unobservable inputs and/or significant assumptions by the Adviser.  Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
 
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
 
The following is a summary of the inputs used to value the Fund’s net assets as of May 31, 2015:
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Common Stocks
  $ 67,951,527     $     $     $ 67,951,527  
Total*
  $ 67,951,527     $     $     $ 67,951,527  
 
*
Additional information regarding the industry and/or geographical classification of these investments is disclosed in the Schedule of Investments.
 
There were no transfers into or out of Level 1, Level 2 or Level 3 fair value measurements during the reporting period for the Fund, as compared to their classification from the most recent annual report. It is the Fund’s policy to consider transfers into or out of Level 1, Level 2 or Level 3 as of the end of the reporting period.
 
Foreign Securities: Investing in securities of foreign companies and foreign governments involves special risks and consideration not typically associated with investing in U.S. companies and the U.S. government. These risks include revaluation of currencies and future adverse political and economic developments. Moreover, securities of many foreign companies and foreign governments and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies and the U.S. government.  The Fund does not invest in securities of U.S. or foreign governments.
 
Federal Income Taxes:  It is the Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and the Fund intends to distribute all of its taxable income and net capital gains to shareholders.  Therefore, no federal income tax provision is required.
 
As of and during the year ended May 31, 2015, the Fund did not have a liability for any unrecognized tax benefits.  The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as other expenses in the Statement of Operations.  During the year, the Fund did not incur any interest or penalties.  The statute of limitations on the Fund’s tax returns remains open for the years ended May 31, 2012 through May 31, 2015.


 
16

 
 
IMAN FUND
NOTES TO THE FINANCIAL STATEMENTS (Continued)
May 31, 2015

As of May 31, 2015, the components of distributable earnings on a tax basis were as follows:
 
Cost of investments
  $ 58,433,046  
Gross tax unrealized appreciation
  $ 10,838,844  
Gross tax unrealized depreciation
    (1,320,363 )
Net tax unrealized appreciation
  $ 9,518,481  
Undistributed ordinary income
    614,802  
Undistributed long-term capital gain
    2,306,966  
Total distributable earnings
  $ 2,921,768  
Other accumulated losses
     
Total accumulated gain
  $ 12,440,249  

The difference between book basis and tax basis unrealized and realized gains and losses is attributable primarily to the tax deferral of losses relating to wash sale transactions and mark-to-market on PFICs.
 
Under current tax laws, losses realized after October 31 may be deferred and treated as occurring on the first business day of the following fiscal year.  For the fiscal year ended May 31, 2015, the Fund did not defer, on a tax basis, any post-October losses.
 
Distributions to Shareholders:  The Fund will distribute substantially all of the net investment income and net realized gains that it has realized on the sale of securities.  These income and gains distributions will generally be paid once each year, on or before December 31.  The character of distributions made during the year from net investment income or net realized gains may differ from the characterization for federal income tax purposes due to differences in the recognition of income, expense or gain items for financial reporting and tax reporting purposes.
 
The tax character of distributions paid were as follows:
 
   
Year Ended
   
Year Ended
 
   
May 31, 2015
   
May 31, 2014
 
Ordinary Income
  $ 2,097,111     $ 747,674  
Long-term capital gains
  $ 4,935,769     $ 1,171,185  
 
Dividend income and distributions to shareholders are recorded on the ex-dividend date.  The Fund may periodically make reclassifications among certain of its capital accounts to reflect the tax character of permanent book/tax differences related to the components of the Fund’s net assets.  These reclassifications have no impact on the net assets or net asset value of the Fund.  For the fiscal year ended May 31, 2015, undistributed net investment income was increased by $293; and accumulated net realized gain was decreased by $293.
 
Other:  Investment transactions and shareholder transactions are accounted for on the trade date.  Net realized gains and losses on securities are computed on the basis of specific security lot identification.  Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates.
 
Subsequent Events:  Management has evaluated the events and transactions that have occurred after May 31, 2015 and through the date the financial statements were issued. At a Board meeting held on April 20, 2015, the Board of Trustees of the Iman Fund (the “Board”) appointed Mr. Azam Nizamuddin as the Trust’s Chief Compliance Officer, as a replacement for Mr. Mohammed Basheeruddin.  At the same meeting, the Board appointed Mr. Saleh Obeidallah as the Trust’s Secretary, as a replacement for Mr. Mujeeb Cheema. These appointments are to be effective as of the date of the Trust’s Registration Statement update, which will be September 30, 2015.  No other events were identified requiring additional disclosure in these financial statements.
 
3.Investment Advisory and Other Agreements
 
The Trust has an Investment Advisory Agreement (the “Agreement”) with the Adviser, with whom certain officers and a Trustee of the Trust are affiliated, to furnish investment advisory services to the Fund.  Under the terms of the Agreement, the Trust, on behalf of the Fund, compensates the Advisor for its management services at the annual rate of 1.00% of the Fund’s daily average net assets.
 
For the year ended May 31, 2015, the Fund had advisory expenses of $636,158 and as of May 31, 2015, the Fund had $57,272 payable to the Advisor.

 
17

 
 
IMAN FUND
NOTES TO THE FINANCIAL STATEMENTS (Continued)
May 31, 2015

The Trust has a distribution agreement and a servicing agreement with Quasar Distributors, LLC (the “Distributor”).  Fees for such distribution services are paid to the Distributor by the Advisor.
 
4.Capital Share Transactions
 
Capital Share Transactions of the Fund for the year ended May 31, 2015, were as follows:
 
   
Amount
   
Shares
 
Shares sold
  $ 6,777,910       582,616  
Shares reinvested
    6,991,051       636,708  
Shares redeemed
    (3,752,022 )     (324,889 )
Net increase
  $ 10,016,939       894,435  
                 
Shares Outstanding
               
Beginning of period
            5,111,002  
End of period
            6,005,437  

Capital Share Transactions of the Fund for the year ended May 31, 2014, were as follows:
 
   
Amount
   
Shares
 
Shares sold
  $ 8,560,104       780,479  
Shares reinvested
    1,906,543       170,379  
Shares redeemed
    (4,025,734 )     (366,088 )
Net increase
  $ 6,440,913       584,770  
                 
Shares Outstanding
               
Beginning of period
            4,526,232  
End of period
            5,111,002  

5.Securities Transactions
 
During the year ended May 31, 2015, the cost of purchases and proceeds from sales of investment securities, other than short-term investments, were $49,018,613 and $45,659,350, respectively. There were no purchases or sales of U.S. government securities for the Fund.
 
6.Beneficial Ownership
 
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of May 31, 2015, the North American Islamic Trust (“NAIT”) held 63.3% of the Fund. NAIT is the parent company of the Advisor.

 
18

 
 
IMAN FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Shareholders and
Board of Trustees of
Iman Fund
 
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Iman Fund (the “Fund”) as of May 31, 2015, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2015, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Iman Fund as of May 31, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
 
 
COHEN FUND AUDIT SERVICES, LTD.
 
 
Cleveland, Ohio
July 28, 2015

 
 

 

 
19

 
 
IMAN FUND
DISCLOSURE REGARDING THE BOARD OF TRUSTEES
APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT (Unaudited)

 
In approving the continuance of the investment advisory contract between Allied Asset Advisors Inc. (the “Adviser”) and the Iman Fund (the “Fund”), the Board of Trustees of the Fund (the “Board”) was advised by, and the independent Trustees of the Board met in executive session with, independent legal counsel to discuss the duties of the Trustees in consideration of the continuance of the agreement.  The Board received and reviewed a substantial amount of information provided by the Adviser and third parties in response to the Board’s requests.  Based on its evaluation of the information provided, the Board, at a meeting held April 20, 2015, approved continuation of the investment advisory contract for a period through June 29, 2016.
 
The Board reviewed and analyzed various factors in considering the contract and reaching its conclusions, including each of the factors described below.
 
1.  Nature, Quality, and Extent of Services
The Board’s analysis of the nature, quality, and extent of the Adviser’s service to the Fund took into account the knowledge gained from the Board’s regular meetings with the Adviser throughout the prior year.  In addition, the Board reviewed information on the key personnel involved in providing investment management services to the Fund and the Adviser’s performance of services for the Fund, such as stock selection, adherence to the Fund’s investment restrictions, and monitoring compliance with applicable Fund policies and procedures.  The Board concluded that the nature, quality, and extent of the services provided by the Adviser to the Fund were appropriate and the Fund was likely to continue to benefit from services provided under its contract with the Adviser.
 
2.  Investment Performance of the Fund and the Adviser
In considering the performance of the Fund and the Adviser, the Board compared the Fund’s performance with that of a universe of greater than 1,000 U.S. large cap mutual funds, as determined by Morningstar, an independent data service provider.  The performance data was for one, three, five and ten year periods ended March 31, 2015.  The Board also compared the Fund’s performance for the three month and one, three, five and ten year periods ended March 31, 2015 with that of three benchmark indices:  the Dow Jones Islamic Market USA Index (the “IMUS”), the S&P 500 Index (the “S&P”) and the Russell 3000 Growth Index (the “Russell”).  In addition, the Board also compared the Fund’s performance for the three month, six month and one year periods ended March 31, 2015 with three other mutual funds that follow Islamic principles.
 
The Board considered that the Fund had outperformed the IMUS for all of the reported periods ended March 31, 2015.  Next, the Board considered that the Fund had outperformed the S&P for the three-month period ended March 31, 2015; and had underperformed the S&P for the one, five and ten year periods ended March 31, 2015.  The Board also considered that the Fund had underperformed the Russell for all of the reported periods ended March 31, 2015.
 
The Board considered that the Fund had outperformed two of Islamic principles peer funds for the three month and, with the exception of one of the funds, the six month and one year periods ended March 31, 2015, underperformed another of the Islamic peer funds for the three month, six month and one year periods ended March 31, 2015.  The Board also reviewed the Fund’s performance against its peer universe, noting that the Fund underperformed its peer universe median for the one, three, five and ten year periods.  The Board then discussed the principal reasons for the Fund’s underperformance in various periods.  During this discussion it was noted that, unlike other funds in the peer universe, the Fund does not invest solely in large capitalization securities, but also in other capitalizations, which is unlike a majority of the funds in the comparison.
 
After considering all the information, the Board concluded that, although past performance cannot be a guarantee of future performance, the Fund and its shareholders were benefiting from the Adviser’s investment management of the Fund.

 
20

 
 
IMAN FUND
DISCLOSURE REGARDING THE BOARD OF TRUSTEES
APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT (Unaudited), (Continued)

 
3.  Costs of Services and Profits Realized by the Adviser
The Board examined the fee and expense information for the Fund as compared to that of other comparable funds and noted that the Adviser’s management fees, as a percentage of net assets, were in the fourth quartile of comparable funds and were higher than the peer group median reported by Morningstar.  The Board noted, however, that the Fund’s peer group average was also above the peer group median reported by Morningstar; and that the Fund’s special nature makes it distinct from most of the funds in its Morningstar peer group, which included many funds that are part of much larger families of funds and, therefore, realize economies of scale that the Fund does not.
 
In addition, the Board considered the Adviser’s costs in serving as the Fund’s investment adviser and manager.  The costs include those associated with the personnel and systems necessary to manage the Fund.  The Board noted that the Adviser had hired two additional employees, which may increase the Adviser’s personnel expenses.  The Board also considered the financial condition of the Adviser and, with the exception of the most recent year, the losses incurred by the Adviser.  An officer of the Adviser indicated that, while the Fund was profitable for the first time in the most recent year, the higher revenue was mostly due to the increase in Fund assets.  The Board also considered the Adviser’s ability to repay its parent company for a promissory note agreed upon on December 31, 2003.  The Board asked the Adviser whether the representation from the parent company indicating that the parent company would not call the note in the near future was still in effect.  An officer of the Adviser affirmed that this was still the case.  The Board also inquired as to whether the Fund would be viable for the Adviser if the parent company were to withdraw all, or substantially all, of its nearly 60 percent holding in the Fund.  An officer of the Adviser again affirmed that the Fund would remain viable at 40 percent of its current size.  The Board concluded that the management fee and the total expenses of the Fund were reasonable in light of the services provided and the performance the Fund achieved over various time periods, and that the other expenses of the Fund also were reasonable.
 
4.  Economies of Scale
The Board considered the extent to which the Fund’s management fee reflected economies of scale for the benefit of Fund shareholders.  The Board noted that because the Adviser was operating at a loss, up until the most recent year, and had a cumulative deficit, a discussion of economies of scale was not applicable with respect to the management fee received by the Adviser.
 
5.  Other Benefits to the Adviser
The Board considered benefits that accrue to the Adviser from its relationship with the Fund.  The Board noted that the Adviser did not employ soft-dollars and therefore did not derive research products or services from brokerage commissions paid by the Fund on its brokerage transactions.
 
After full consideration of the above factors as well as other factors, the Board, including all independent Trustees, unanimously concluded that approval of the Fund’s advisory contract was in the best interest of the Fund and its shareholders.
 



 
21

 
 
IMAN FUND
SUPPLEMENTAL INFORMATION (Unaudited)


Information pertaining to the Trustees and Officers of the Fund is set forth below.  Each Trustee will serve until the termination of the Trust or his earlier death, resignation, retirement, incapacity or removal.  The statement of additional information (SAI) includes additional information about the Trustees and is available without charge, upon request by calling (877) 417-6161 or writing to Iman Fund, c/o Allied Asset Advisors, Inc., 721 Enterprise Drive, Suite 100, Oak Brook, IL 60523.
 
   
No. of
Principal
Other
   
Funds in
Occupation(s)
Trusteeships /
Name, Age, Address
Date First
Complex
during the past
Directorships
Position with Trust
Elected
Overseen
5 years
by Trustee
Bassam Osman*, 63
2000
1
1980 to present – Medical
None
721 Enterprise Drive, Suite 100
   
Doctor; 2000 to present –
 
Oak Brook, IL  60523
   
Portfolio Manager
 
Trustee and President
   
to the Fund
 
Abdalla Idris Ali, 65
2000
1
2011 to present –
None
721 Enterprise Drive, Suite 100
   
Secretary General of
 
Oak Brook, IL  60523
   
“ISNA Canada”; 2009 to
 
Independent Trustee
   
2011 – Deputy Secretary
 
     
General of ISNA Canada;
 
     
2007 to 2009 – Director,
 
     
Center for Islamic Education
 
     
in North America (CIENA)
 
Mohammed Kaiseruddin, 70
Chairperson
1
1973 to present –
None
721 Enterprise Drive, Suite 100
since 2006 and
 
Nuclear Engineer,
 
Oak Brook, IL  60523
Independent
 
Sargent & Lundy
 
Chairperson and
Trustee
     
Independent Trustee
since 2000
     
Muhammad Kudaimi, 58
2009
1
1988 to present –
None
721 Enterprise Drive, Suite 100
   
Medical Doctor
 
Oak Brook, IL  60523
       
Independent Trustee
       
Mohammad Basheeruddin, 64
Treasurer
1
2001 to present –
N/A
721 Enterprise Drive, Suite 100
since 2003 and
 
Accounting Manager,
 
Oak Brook, IL  60523
Chief Compliance
 
North American
 
Treasurer and
Officer
 
Islamic Trust
 
Chief Compliance Officer
since 2008
     
Mujeeb Cheema, 66
2003
1
2003 to present –
N/A
721 Enterprise Drive, Suite 100
   
Executive Director,
 
Oak Brook, IL  60523
   
North American
 
Secretary
   
Islamic Trust
 
*
This trustee is deemed to be an “interested person” of the Trust as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, because he is an officer of the Trust and is a director and officer of Allied Asset Advisors, Inc.
 
Tax Information
 
The Fund designates 44.2% of its ordinary income distribution for the year ended May 31, 2015 as qualified dividend income under the Jobs and Growth Tax Relief Reconciliation Act of 2003.
 
For the year ended May 31, 2015, 32.9% of the dividends paid from net ordinary income for the Fund qualifies for the dividends received deduction available to corporate shareholders.
 
For the year ended May 31, 2015, 100% of the Percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871(k)(2)(C).
 

 
22

 
 
IMAN FUND
ADDITIONAL INFORMATION
May 31, 2015

 
Proxy Voting Policies and Procedures (Unaudited)
 
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling (877) 417-6161 or by accessing the Fund’s website at http://www.investaaa.com.  Furthermore, you can obtain the description on the SEC’s website at http://www.sec.gov.
 
Proxy Voting Record (Unaudited)
 
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling (877) 417-6161.  Furthermore, you can obtain the Fund’s proxy voting records on the SEC’s website at http://www.sec.gov.
 
Availability of Quarterly Portfolio Schedule (Unaudited)
 
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The filing will be available, upon request, by calling (877) 417-6161.  Furthermore, you will be able to obtain a copy of the filing on the SEC’s website at http://www.sec.gov.  The Fund’s Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330.
 


 
PRIVACY POLICY
 
In the course of servicing your account, we collect the following nonpublic personal information about you:
 
 
Information we receive from you on or in applications or other forms, correspondence, or conversations, including, but not limited to, your name, address, phone number, social security number, assets, income and date of birth; and
 
 
Information about your transactions with us, our affiliates, or others, including, but not limited to, your account number and balance, parties to transactions, cost basis information, and other financial information.
 
 
Information collected from our website (including from the use of “cookies”)
 
We do not disclose any nonpublic personal information about our current or former shareholders to nonaffiliated third parties, except as permitted by law. For example, we are permitted by law to disclose all of the information we collect, as described above, to our transfer agent to process your transactions. Furthermore, we restrict access to your nonpublic personal information to those persons who require such information to provide products or services to you. We maintain physical, electronic, and procedural safeguards that comply with industry standards to guard your nonpublic personal information.
 
In the event that you hold shares of the Fund through a financial intermediary, including, but not limited to, a broker-dealer, bank, or trust company, the privacy policy of your financial intermediary would govern how your financial intermediary shares nonpublic personal information with nonaffiliated third parties.
 



 
23

 

 
INVESTMENT ADVISER
Allied Asset Advisors, Inc.
Oak Brook, Illinois


DISTRIBUTOR
Quasar Distributors, LLC
Milwaukee, Wisconsin


INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Cohen Fund Audit Services, Ltd.
Cleveland, Ohio


ADMINISTRATOR, TRANSFER AGENT,
AND FUND ACCOUNTANT
U.S. Bancorp Fund Services, LLC
Milwaukee, Wisconsin


CUSTODIAN
U.S. Bank, N.A.
Milwaukee, Wisconsin


LEGAL COUNSEL
Latham & Watkins
Chicago, Illinois





This report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.  Read the Prospectus carefully before you invest or send money. The Prospectus contains important information about the Fund, including charges and expenses. The principal value of your investment will fluctuate and your shares may be worth less than your original cost. Quasar Distributors, LLC is the Distributor for the Fund.

 
 

 

Item 2. Code of Ethics.

The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer and principal financial officer.  The Registrant has not made any amendments to its code of ethics during the period covered by this report.  The Registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report.  The Registrant’s code of ethics is incorporated herein by reference to its form N-CSR filed on August 9, 2007.

Item 3. Audit Committee Financial Expert.

The Registrant’s board of trustees has determined that it does not have an audit committee financial expert serving on its audit committee.  At this time, the Registrant believes that the experience provided by each member of the audit committee together offers the Registrant adequate oversight for the Registrant’s level of financial complexity.

Item 4. Principal Accountant Fees and Services.

The Registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years.  “Audit services” refer to performing an audit of the Registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.  “Audit-related services” refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit.  “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.  The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.

 
FYE  5/31/2015
FYE  5/31/2014
Audit Fees
13,250
13,250
Audit-Related Fees
-
-
Tax Fees
-
-
All Other Fees
-
-

The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre-approve all audit and non-audit services of the Registrant, including services provided to any entity affiliated with the Registrant.

The percentage of fees billed by Cohen Fund Audit Services, Ltd. applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:

 
FYE  5/31/2015
FYE  5/31/2014
Audit-Related Fees
0%
0%
Tax Fees
0%
0%
All Other Fees
0%
0%
 
All of the principal accountant’s hours spent on auditing the Registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant.

The following table indicates the non-audit fees billed or expected to be billed by the Registrant’s accountant for services to the Registrant and to the Registrant’s investment adviser (and any other controlling entity, etc.—not sub-adviser) for the last two years.  The audit committee of the board of trustees/directors has considered whether the provision of non-audit services that were rendered to the Registrant's investment adviser is compatible with maintaining the principal accountant's independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant’s independence.

Non-Audit Related Fees
FYE  5/31/2015
FYE  5/31/2014
Registrant
-
-
Registrant’s Investment Adviser
-
-

Item 5. Audit Committee of Listed Registrants.

Not applicable to Registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).

Item 6. Investments.

Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.

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

Not applicable to open-end investment companies.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

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

Not applicable to open-end investment companies.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees.

Item 11. Controls and Procedures.

(a)  
The Registrant’s President/Chief Executive Officer and Treasurer/Chief Financial Officer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934.  Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider.

(b)  
There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 12. Exhibits.

(a)  
(1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the Registrant intends to satisfy Item 2 requirements through filing an exhibit.  Incorporated by reference to the Registrant’s Form N-CSR filed August 9, 2007.

(2) A separate certification for each principal executive and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  Filed herewith.

(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the Registrant to 10 or more persons.  Not applicable to open-end investment companies.

(b)  
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  Furnished herewith.

 
 

 

SIGNATURES

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


Allied Asset Advisors Funds




By   ­­­/s/Bassam Osman
Bassam Osman, President


Date     August 3, 2015



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




By   ­­­/s/Bassam Osman
Bassam Osman, President



Date     August 3, 2015





By   /s/Mohammad Basheeruddin
Mohammad Basheeruddin, Treasurer



Date     August 7, 2015