SECURITIES AND EXCHANGE COMMISSION  WASHINGTON, DC 20549**FORM N-CSR****CERTIFIED SHAREHOLDER REPORT OF REGISTERED  MANAGEMENT INVESTMENT COMPANIES**  Investment Company Act file number: 811-05071 or 33-13247**SATURNA INVESTMENT TRUST**  (Exact Name of Registrant as Specified in Charter)**1300 N. State Street  Bellingham, Washington 98225-4730**  (Address of Principal Executive Offices, including ZIP Code)  Nicholas F. Kaiser  1300 N. State Street  Bellingham, Washington 98225-4730  (Name and Address of Agent for Service)  Registrant’s Telephone Number- (360) 734-9900  Date of fiscal year end: November 30, 2003  Date of reporting period: May 31, 2003

*N-CSRS Semi-Annual Report May 31,2003*

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**REPORT TO STOCKHOLDERS**

**Idaho Tax-Exempt Fund**
 
**May 31, 2003 Report**
*Fellow Shareowners:*
Idaho Tax Exempt Fund provided a total return of +5.57% for the six months  and +9.54% for the twelve months ending May 31, 2003. Total Fund assets rose  to $7.5 million from $6.7 million. Your Fund’s +9.54% one-year returnoutperformed  the -8.06% S&P 500 Index for a third year by a wide margin.   In the last six months, the U.S. Federal Reserve Bank and the US Congressinstituted  a second round of significant interest rate and tax rate reductions toinvigorate  the US economy. As a result, ten-year AAA municipal bond yields have fallen  0.75% over the last six months and 1.00% over twelve months. We believe arebound  in economic growth will soon emerge.  At cyclical low points in economic growth, interest rates tend to rise (and  bond prices fall) in anticipation of a return to higher levels of inflation.  Ballooning federal deficits, huge trade imbalances and the depressed dollar  are all reasons for concern in the inflation outlook. However, we expect US  inflation will continue to restrained by competitive structural forces in the  US, as well as Europe and Japan. Thus, we expect increases in US interestrates  over the coming twelve months will be modest.  The Fund portfolio is already positioned to reduce the price risk associated  with an increase in rates. The portfolio’s dollar weighted effectiveaverage  maturity is reduced to only 5.6 years. This is less than the minimum for the  Fund’s “normal” six to fifteen year range for average maturity.  From this unusally defensive position, we feel more confident that the Fund  can continue to produce positive returns in the years ahead. With 49% of the  portfolio in General Obligation issues, the quality is exceptionally high.  Like the rest of the US, Idaho suffers from the current economic weakness.However,  Idaho’s pro-business policies, balanced budget and responsive legislature  give the State a competitive edge for the future. The credit quality of Idaho  municipal issuers has remained sound despite the State’s current economic  slowdown.  We invite you to review the advantages of the Idaho Tax-Exempt Fund, including  low expenses, income free from Idaho and federal income taxes (includingfederal  alternative minimum tax), a high-quality diversified bond portfolio andprofessional  supervision. Please call us for details on how to check out your new on-line  Internet account access. We welcome your suggestions. Only with your help can  we be certain that we are meeting your investment needs — our primaryobjective.

***NicholasKaiser,******Phelps        McIlvaine,*****President**
**Vice President, Portfolio Manager**
July 14, 2003Performance data quoted in this reportrepresents      past  Average Annual Total Returnsperformance and is no guarantee of futureperformance.      The investment return and principal value of investments  One Year5 Years10 Yearsin the Fund fluctuate daily, and an investor's      shares when redeemed may be worth more or less than the originalcost. 8.12% 5.52% 5.65%    Performance data for years ended 6/30/2003.*2**N-CSRS Semi-Annual Report May        31, 2003*
 ***Investments*** *As of May 31, 2003***Rating*****Issuer****Coupon/Maturity****Face Amount****Market Value**   **Airport Parking (3%)**  AAABoise City Airport Revenue COP5.40% due 8/1/2011$215,000 $226,355**Electric Power (2.3%)**  AAAIdaho Falls Electric Revenue 6.75% due 4/1/2019155,000 169,610**Financial Services (2.4%)**  AAABoise City General Fund Revenue5.20% due 12/1/2017160,000180,005**General Obligations (49.1%)**  AA-Ada & Canyon Counties 5.50% due 7/30/2011175,000 207,386 JSD #2 Meridian5.50% due 7/30/2015100,000 120,079AAAAdams County GO5.00% due 8/1/2014110,000119,947A+Bannock County GO Jail5.05% due 9/1/201295,000 103,246ABannock County SD #254.90% due 8/1/200990,000 99,118AAA"5.20% due 8/1/2014100,000111,359A"5.25% due 8/1/2016110,000 121,535AAABingham County SCD #554.65% due 8/1/2017285,000309,286AA-Boise City GO ISD5.50% due 7/30/2016150,000 164,569ABoise County SD #735.15% due 7/31/2010125,000 135,479AABoise City ISD-Red.5.00% due 8/15/2014100,000111,312AAA Caldwell GO5.30% due 5/15/2014150,000 170,802AAACanyon County SD #1325.40% due 7/30/2011195,000 205,886 "5.40% due 7/30/2012100,000 105,582AAACanyon County SD #134 Middleton4.65% due 7/31/2016170,000187,380ACanyon County SD #135 Notus Series 19946.00% due 8/1/200750,000 50,118AAACassia, Twin Falls JSD #1515.375% due 8/1/201385,000 93,064 "5.375% due 8/1/201575,000 82,063AAAClark County SD #161 Dubois5.00% due 8/1/2015270,000303,997AAIdaho Housing & Finance Assoc.4.80% due 6/1/2017100,000108,684AAAKootenai County SD #2735.00% due 7/30/201670,000 75,254AAAKuna Sch/Comm Library Dist.4.90% due 8/1/201375,000 82,637AAALatah County SCD #2874.10 due 8/1/2021150,000140,072AAALemhi County GO4.20% due 8/1/2015100,000104,123AAAMeridian ID Free Library Dist.5.00% due 8/1/2015200,000216,841AAA Power & Cassia Cos. JSD #3815.25% due 8/1/201260,000 69,077AAATeton County SD #401 GO5.50% due 8/1/201275,000 82,974 SUB-TOTAL 3,365,0003,681,870*N-CSRS Semi-Annual Report May 31,      2003**3* ****Investments******Rating*****Issuer****Coupon/Maturity****Face Amount****Market Value****Housing (4.4%)**  AAIdaho Housing Authority  Single Fam Mortgage, B-16.85% due 7/1/2012$50,000$50,746AAIdaho Housing Authority  Refunding Series A6.15% due 7/1/202495,00096,534AA+Idaho Housing Authority  Single Fam Mort Mezz-E-16.60% due 7/1/201135,00036,370AAIdaho Housing Authority  Single Fam Mort Rev Ser B18.00% due 1/1/202010,000 10,496AAAValley County Jail Project Ref.4.70% due 8/1/2014125,000133,416 SUB-TOTAL 315,000327,562**Medical/Hospitals (4.2%)**  AAAIdaho Health Facility Auth.  Holy Cross 5.25% due 12/1/2014110,000122,725AAAIdaho Health Facility Auth. Corp.    Holy Cross Sys Corp Rev5.00% due 12/1/2022115,000 122,051AAAIdaho Health Facility    Holy Cross Rev Refunding5.25% due 12/1/201165,000 72,835 SUB-TOTAL 290,000317,611**Real Estate (1.4%)**  AAAIdaho State Building Authority5.00% due 9/1/2021100,000 106,235**Roads (1.5%)**  APayette L.I.D. #89-17.95% due 5/1//200420,00020,158A"7.60 due 5/1/200530,00030,364 
L.I.D. #91-4
7.95% due 4/15/200520,000 20,141 "7.95% due 4/15/200620,000 20,141 "7.95% due 4/15/200720,000 20,234 SUB-TOTAL 110,000111,0384*N-CSRS Semi-Annual Report May        31, 2003***Rating*****Issuer****Coupon/Maturity****Face Amount****Market Value****State Education (11.2%)**  AAABoise State University  Student Univ. & Housing Sys.5.10% due 4/1/2014$300,000 $332,846AAAIdaho State University  Student Fee Revenue4.90% due 4/1/2017150,000 163,863AAAUniversity of Idaho  Student Fee Revenue-Elmwood Apts.5.25% due 4/1/2014120,000 136,846AAAUniversity of Idaho  Student Fee Revenue5.60% due 4/1/2015185,000210,222 SUB-TOTAL 755,000 843,697**Sewer (3.9%)**  AAAMoscow Sewer Revenue4.125% due 11/1/2008165,000179,700ATroy, Sewer Revenue7.60% due 2/1/200410,000 10,041 "7.70% due 2/1/200515,000 15,061 "7.80% due 2/1/200615,000 15,102 "7.90% due 2/1/200715,000 15,133 "8.00% due 2/1/200815,000 15,175 "8.00% due 2/1/200920,000 20,265 "8.00% due 2/1/201020,000 20,236 SUB-TOTAL 275,000290,713**Urban Renewal (8.9%)**    AAABoise City Urban Renewal5.875 due 8/15/2025190,000216,051AAABoise Ciy urb. Ren. Agy. Pk. Rev & RA5.00% due 8/15/201265,00072,914AJerome Urban Renewal District5.40% due 9/1/2013200,000212,888AAPocatello Development Authority5.15% due 3/1/2011150,000163,474 SUB-TOTAL 605,000665,327**Water Supply (4.8%)**  AAAKetchum Water Revenue4.75% due 9/1/201360,000 65,573AMcCall Water Rev., Series 19946.25% due 9/1/2008200,000 218,466AMcCall Water Revenue6.375% due 9/1/201470,000 74,641 SUB-TOTAL 330,000 358,680     **Total Investments (97.1%)** (Cost=$6,757,973)**$6,675,000****$7,278,703**Other Assets (net of liabilities) (2.9%)  219,945**Total Net Assets (100%)**  **$7,498,648**** These unaudited bond ratings reflect the adviser'scurrent      rating of each bond, as determined using Standard & Poor's and Moody'sratings.*
 
*N-CSRS Semi-Annual Report May 31,      2003**5****Financial        Highlights***    Year ended November 30, *Selected data per share of capital stock outstanding        throughout the period:*
Period ended        May 31, 2003
20022001200019991998**Net asset value at beginning of period**      *Income from investment operations*$5.37$5.28$5.13$5.01$5.36$5.28 Net investment income0.100.220.220.230.240.25 Net gains or losses on securities (both realized andunrealized)0.200.090.150.12(0.35)0.12Total From investment operations0.300.310.370.35(0.11)0.37 *Less Distributions* Dividends (from net investment income)(0.10)(0.22)(0.22)(0.23)(0.24)(0.25) Distributions (from capital gains)-----(0.04)Total Distributions(0.10)(0.22)(0.22)(0.23)(0.24)(0.29)**Net asset value at end of period**$5.57$5.37$5.28$5.13$5.01$5.36**Total Return**5.57%5.98%7.40%7.28%(2.18)%7.27%  Ratios/Supplemental dataNet assets ($000), end of period$7,499$6,943$6,650$5,628$6,151$6,264Ratio of expenses to average net assets*0.41%0.80%0.79%0.80%0.80%0.76%Ratio of net investment income to average net assets1.95%4.14%4.21%4.69%4.55%4.69%Portfolio turnover rate6%11%13%14%13%23%
*For each of the above periods, all or a portion of the expenses were        waived. If these costs had not been waived, the resulting increase to        the ratio of expenses to average net assets would be .02%, .08%, .11%,        .14%, .05%, and .07%, respectively.
***Statement        of Assets and Liabilities*** *As of May 31, 2003*   **Assets**    Bond investments (Cost $6,757,973) $7,278,703  Cash 118,767  Interest receivable 101,536  Insurance Reserve Premium2,473    Total Assets  $7,501,479    **Liabilities**    Other Liabilities 2,831   Total Liabilities 2,831    **Net Assets**  $7,498,648    **Fund Shares Outstanding**   1,347,060****   **Analysis of Net Assets**    Paid in capital (unlimited shares authorized, without par        value)6,997,733   Accumulated net realized loss(19,814)   Unrealized net appreciation on investments520,729   Net Assets applicable to Fund shares outstanding $7,498,648    **Net Asset Value, Offering and Redemption price pershare** $5.57
*(The accompanying notes are an integralpart  of these financial statements)*

 
***6**N-CSRS Semi-Annual Report May        31, 2003* ****Statement        of Operations*****For the period ended May 31, 2003*       **Investment income**    Interest income $173,478  Amortization of bond premium (5,854)  Accretion 363   Gross investment income  $167,987    **Expenses**    Investment adviser and administration fee 17,832  Professional fees 5,438  Shareholder service fee 2,059  Insurance1,761  Custodian fees 920  Printing and postage 794  Meetings653  Filing and registration fees 398  Other expenses351  Total gross expenses 30,206  Less: custodian fees waived (920)  Less: adviser fees waived(329)  Net expenses 28,957  Net investment income  139,030    **Net realized gain on investments**    Proceeds from sales 397,974  Less: cost of securities sold (based on identifiedcost)387,157   Realized net gain  10,817    **Unrealized gain on investments**    End of period 520,729  Beginning of period275,905  Increase in unrealized gain for the period  244,824  Net realized and unrealized gain oninvestments 255,641    **Net increase in net assets resulting fromoperations** $394,671*****Statement        of Changes in Net Assets*****   **Period ended****Year ended**  **May 31, 2003****Nov. 30, 2002****INCREASE IN NET ASSETS**   **From Operations**    Net investment income  $139,030 $279,783 Net realized gain on investments 10,817 8,373 Net increase in unealized appreciation 244,824 103,577 Net increase in net assets from operations 394,671 391,733    **Dividends to shareowners from**    Net investment income(139,301)(280,029)**From fund share transactions**    Proceeds from sales of shares622,651633,759 Value of shares issued in reinvestment of dividends109,065222,546  731,716856,305 Cost of shares redeemed(431,606)(674,999) Net increase in net assets from sharetransactions300,110181,306**Total increase in net assets********$555,480****$293,010**    **NET ASSETS**    Beginning of period6,943,1686,650,158 End of period7,498,6486,943,168    **Shares of the fund sold and redeemed**   ****Number of shares sold113,981118,569****Number of shares issued in reinvestment of dividends19,94241,714**** 133,923160,283****Number of shares redeemed(78,850)(126,945)**Net increase in number of shares outstanding****55,073****33,338**
*(The accompanying notes are an integralpart  of these financial statements)*
*N-CSRS Semi-Annual Report May          31, 2003**7*** *****Notes        to Financial Statements*****
**Organization**        Saturna Investment Trust, (the "Trust") was established under        Washington State Law as a Business Trust on February 20, 1987. The Trust        is registered as a no-load, open-end series investment company under the        Investment Company Act of 1940, as amended. Four portfolios have been        created to date in addition to Idaho Tax-Exempt Fund (the"Fund").        The other four portfolios distribute through a separate prospectus and        the results of those funds are contained in a separate report. 

**Unaudited Information**        The information in this interim report has not been subject toindependent        audit. 

**Significant Accounting Policies**        The following is a summary of the significant accounting policiesfollowed        by the Funds.

**Investments:**        Fixed-income securities for which there are no publicly available market        quotations are valued using matrices based on maturity, quality, yield        and similar factors, which are compared periodically to multiple dealer        bids and adjusted by the adviser under policies established by theTrustees.      

The cost of securities is the same for accounting and Federal income        tax purposes. Securities transactions are recorded on trade date.Realized        gains and losses are recorded on the identified cost basis. 

**Income and Expenses**:        Interest income is reduced by the amortization of bond premiums, on a        constant yield-to-maturity basis from purchase date to maturity or call,        as appropriate. 

Interest income is increased by accretion for bonds underwritten asoriginal        issue discounts and for bonds purchased at market discounts.         Expenses incurred by the Trust on behalf of the Fund (e.g., professional        fees) are allocated to the Fund and the other Funds of the Trust on the        basis of relative daily average net assets. The Adviser has agreed to        certain limits on expenses, as described below. 

**Income taxes:**        The Fund has elected to be taxed as a regulated investment company under        the Internal Revenue Code and distribute substantially all of itstaxable        net investment income and realized net gains on investments. Therefore,        no provision for Federal income taxes is required. Further, the Fundintends        to meet IRS requirements for tax-free income dividends, and requirements        of the Idaho Department of Revenue for income dividends free of Idaho        state income tax. 

**Dividends and distributions to shareowners:**        Dividends and distributions to shareowners are recorded on theex-dividend        date. Dividends are paid daily and distributed on the last business day        of each month. Shareowners electing to reinvest dividends anddistributions        purchase additional shares at the net asset value on the distribution        date. 

**Transactions with AffiliatedPersons**        Under a contract approved by shareowners on October 12, 1990, Saturna        Capital Corporation provides investment advisory services and certain        other administrative and distribution services to conduct the Fund'sbusiness.        For such services, the Fund pays an annual fee equal to .50% of average        daily net assets. For the six months ended May 31, 2003, the Fundincurred        advisory fee expenses of $17,832.

 Saturna Capital has volunteered to reimburse the Fund to the extent        that total expenses of the Fund, (excluding interest, brokeragecommissions        and taxes) exceeded .80% through March 31, 2003. Accordingly, for the        six months ended May 31, 2002, Saturna Capital waived $329 of theadvisory        fee.

 In accordance with the Fund's agreement with its custodian, National        City Bank of Indiana, for the six months ended May 31, 2003, custodian        fees incurred by the Fund amounted to $920. The custodian waived itsfees        for earnings credits.

The Trust acts as a distributor of its own shares, except in thosestates        in which Saturna Brokerage Services, Inc. (a subsidiary of SaturnaCapital        Corporation) is itself registered as a broker-dealer and acts asdistributor        without compensation. Saturna Capital Corporation acts as shareownerservicing        agent for the Fund, for a monthly fee plus certain expenses. For the six        months ended May 31, 2003, the Fund paid such a fee of $2,059. 

One trustee is also a director and officer of Saturna CapitalCorporation.        The unaffiliated trustees receive a fee of $100 per meeting attended,        and in the period ending May 31, 2003, such fees totalled $700 for the        Trust. 

**Investments**At May 31, 2003, the net unrealized appreciation ofinvestments        for the Fund of $520,729 comprised gross unrealized gains of $529,696        and gross unrealized losses of $8,967. 

During the six months ended May 31, 2003, the Fund purchased $679,774        of securities and sold/matured $397,974 of securities.
***8**N-CSRS Semi-Annual Report          May 31, 2003*
 
 

**Web: http://www.saturna.com          E-mail: idaho@saturna.com**

 

 

 

(logo)

SaturnaCapital*Mutual Funds*

 

 

**1-800/SATURNA**          (800/728-8762)*1-888/732-6262 for automated assistance,           including fund prices*

 

This report is issued for the          information of the shareowners of the Fund. It is not authorized for          distribution to prospective investors unless it is accompanied orpreceded          by an effective prospectus relating to the securities of the Fund.Idaho          Tax-Exempt Fund is a series of Saturna Investment Trust

 
(graphic omitted)I D A H OTAX-EXEMPT FUND       
 

 

SEMI-ANNUALREPORT

**May 31, 2003**

**CODE OF ETHICS**

 

**AUDIT COMMITTEE FINANCIALEXPERT**

(a) (1) (i) The Trustees of Saturna Investment Trustdetermined,    at their quarterly meeting of June 18, 2003, that the Trust has at least one    audit committee financial expert serving on its audit committee.     (a) (2) (ii) Mr. John Moore, an independent Trustee (as defined forinvestment    companies), was deemed qualified and agreed to serve.

**CONTROLS AND PROCEDURES**

 

**EXHIBITS**

Exhibits included with this filing:    (a) Code of Ethics.

 (b) Certifications.    (1) Nicholas Kaiser, President, Saturna Investment Trust    (2) Christopher Fankhauser, Treasurer, Saturna Investment Trust

 
*N-CSRS Semi-Annual Report May 31,        2003**9*
**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act    of 1934 and the Investment Company Act of 1940, the registrant has dulycaused    this report to be signed on its behalf by the undersigned, thereunto duly    authorized.**SATURNA INVESTMENT TRUST**    By:    /s/ Nicholas Kaiser    Nicholas Kaiser, President     Date: July 30, 2003    Pursuant to the requirements of the Securities Exchange Act of 1934 and the    Investment Act of 1940, this report has been signed below by the following    persons on behalf of the registrant and in the capacities and on the dates    indicated.

By:    /s/ Nicholas Kaiser    Nicholas Kaiser, President     Date: July 30, 2003

    By:    /s/ Christopher Fankhouser     Christopher Fankhouser, Treasurer    Date: July 30, 2003

 

 

 

 
***10**N-CSRS Semi-Annual Report          May 31, 2003*