SECURITIES AND EXCHANGE COMMISSION  WASHINGTON, DC 20549**FORM N-CSRS****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, 2004  Date of reporting period: May 31, 2004

 

*N-CSRS Semi-Annual Report May 31,2004*

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**REPORT TO SHAREHOLDERS**

Sextant

**Mutual Funds**

**
(Graphic Omitted)
**
**
*Fellow Shareowners:*

For the six months ended May 31, 2004, both stocks and bonds    held steady. Bond investors can look for higher yields but little totalreturn    as interest rates climb slowly. Stock investors will see US corporateprofits    jump more than 20% in 2004, helped by low inflation, new employment,confident    consumers, strong exports on a lower US dollar, and lower federal tax rates.    Outside the U.S., the outlook is marginally improving. Big catastrophes are    noticeably absent.    Prudent investors do well to remember that change is the only real constant.    Recent choppy economic seas will again be soothed by the “invisiblehand”    of free economic markets. Change is the rationale for our four distinctly    different Sextant funds, which allow investors to choose the variablereturns    of the domestic and international stock markets, long-term bonds, or thesafety    of short-term bonds.    For the last six months, the Sextant bond funds provided haven whileinterest    rates increased. Now able to purchase greater yields, we expect to beincreasing    maturities and quality in these bond funds. Equities look poised for better    relative returns, as their fundamentals improve. We are recommending abalance    favoring stocks over bonds for the next year.    Our Sextant funds employ a “fulcrum” advisory fee structure that    rewards or penalizes Saturna Capital for investment results. Unfortunately,    relative performance of the Sextant funds over the last 12 months (thefulcrum    fee measurement period) was generally below our Morningstar mutual fundbenchmarks.    For the six and twelve months ended May 31, 2004 comparative total returns    are:
Sextant Fund6-month           Total Return12-month          Total Returnvs. Morningstar12-month          Total ReturnShort-Term Bond+0.33%+0.55%Short-Term Bonds+0.26%Bond Income+0.01%-3.41%Long-Term Bonds-0.78%Growth-1.86%+14.54%Domestic Growth+19.49%International+0.50%+28.19%Foreign Stock+30.01%
While our funds remain small, growing awareness of the Sextant    Funds and their good long-term performance continue to attract investors.    The year 2004 has been solid so far and we are looking forward to the second    half. Thank you for investing your money with ours. 

Respectfully,

**Nicholas Kaiser,*******President*****Phelps McIlvaine,*Vice President***(Manager, Sextant Growth;        Sextant International)(Manager, Sextant Bond Income;        Sextant Short-Term Bond)
July 19, 2004
********2** *N-CSRSSemi-Annual          Report May 31, 2004***INVESTMENTS** **SEXTANTSHORT-TERM          BOND FUND**(graphic omitted)**Rating*****Issuer****Coupon/Maturity****Face Amount****Market Value**    *As of May 31, 2004*      ***Banking (10%)***   ABankers Trust8.25% 5/1/2005$85,000$89,610A+ JP Morgan & Co. Inc.7.625 % 9/15/200480,00080,781A-Washington Mutual Financial 8.25% 6/15/200575,000  79,351 *SUB-TOTAL*  240,000 249,742      ***Building Products (3%)***   A-Lowe's Companies7.50% 12/15/200570,00074,955      ***Computer (2.9%)***   AA-Hewlett Packard7.15 % 6/15/200570,00072,771      ***Cosmetics & Toiletries (4.1%)***   AAvon Products Inc.6.55% 8/1/2007 95,000 103,165      ***Finance & Insurance (18.9%)***   AAlliance Capital Mangement5.625% 8/15/200665,00067,627AAAAmerican General Insurance7.50% 8/11/201090,000102,833A+International Finance AIG5.75% 10/15/200695,00099,905A-Lincoln National Insurance7.25% 5/15/2005 100,000 104,060BBB+Sears Roebuck3.30% 6/15/2006 100,000 100,000 *SUB-TOTAL*  450,000 474,425      ***Machinery (11%)***   ADeere6.55% 7/15/200490,00090,122AEaton6.95% 11/15/200485,00086,810A-Rockwell Automation International6.15% 1/15/200895,00099,976 *SUB-TOTAL* 270,000276,908      ***Medical Drugs (14.8%)***   AAmgen6.50% 12/1/200790,00097,917AAABristol Myers Squibb4.75% 10/1/200690,00092,123AAAPfizer5.625% 2/1/2006100,000104,301A-Wyeth7.90% 2/15/200575,00077,467 *SUB-TOTAL* 355,000371,808
 
*N-CSRS Semi-Annual        Report May 31, 2004* *3*(graphic omitted)**SEXTANT        SHORT-TERM BOND FUND** ******INVESTMENTS****Rating*****Issuer****Coupon/Maturity****Face Amount****Market Value**  ***Oil & Gas (4.2%)***    BBB+Union Oil of California7.20% 5/15/2005 $100,000  $104,171        ***Publishing (1.9%)***    A-Tribune Company6.875% 11/1/2006 45,000 47,514        ***Telecommunications (7.5%)***    AA-Southwestern Bell6.625% 7/15/2007 95,000 101,854 A-Verizon Wireless5.375% 12/15/200682,00085,414  *SUB-TOTAL* 177,000187,268        ***Utilities (11.8%)***    AA-Florida Power & Light6.875% 12/1/2005 95,000 100,191 BBBPSI Energy6.95% 12/1/200592,00097,503 A-Sempra Energy7.85% 10/15/200790,00099,797  SUB-TOTAL 277,000297,491        **Total Investments (90.1%)**(Cost = 2,240,716) 2,149,000 2,260,218  Other Assets (net of liabilities) (9.9%)  249,182  **Total Net Assets (100%)** **$2,509,400**  **Ratings are the lesser of S&P or Moody's(unaudited)*    *4* *N-CSRSSemi-Annual          Report May 31, 2004***FINANCIALHIGHLIGHTS**          
**SEXTANTSHORT-TERM          BOND FUND**(Graphic          Omitted)Selected data per share of capital stock outstandingthroughout        the period:         For Year Ended November 30,   
Period ended          May 31, 2004
20032002200120001999**Net asset value at beginning of period** **$5.09****$5.07****$5.10****$4.95****$4.92****$5.04***Income from investment operations*       Net Investment Income  0.10 0.23 0.27 0.26 0.27 0.26 Net gains or losses on securities        (both realized and unrealized)          (0.06) 0.02 (0.02) 0.14 0.03 (0.12)Total from investment operations  0.04 0.25 0.25 0.40 0.30 0.14 *Less distributions*       Dividends (from net investment income)  (0.10) (0.23) (0.28) (0.25) (0.27) (0.26)Distributions (from capital gains)  - - - - - -Total distributions  (0.10) (0.23) (0.28) (0.25) (0.27) (0.26)        **Net asset value at end of period** **$5.01****$5.09****$5.07****$5.10****$4.95****$4.92**        **Total Return** **0.33%****5.00%****4.90%****8.37%****6.20%****2.88%**        Ratios / Supplemental Data       Net assets ($000), end of period $2,509$2,259$2,177$2,189$2,555$1,795 Ratio of expenses to average net assets* 0.30%0.60%0.93%0.51%0.61%0.47%Ratio of net investment income to average net assets* 1.91%4.47%5.23%5.45%5.45%5.22%        **Portfolio turnover rate** **7%****22%****28%****28%****12%****21%** **For the above periods, all or aportion        of the operating expenses were waived. If costs had not been waived, the        resulting increase to the ratio of expenses to average monthly netaccost        would be .27%, .57%, .21%, .43%, .41%, and .57%respectively.*
   
**STATEMENT OFASSETS          AND LIABILITIES**
*As    of May 31, 2004***Assets**     Investments (Cost $2,240,716)  $2,260,218  Cash  206,658  Interest Receivable  40,178   Total Assets   $2,507,054**Liabilities**     Other Liabilities  (2,346)   Total Liabilities  (2,346)**Net Assets**   $2,509,400     **Fund Shares Outstanding**    501,049     **Analysis of Net Assets**     Paid in Capital (unlimited shares authorized, without par        value) 2,519,423   Accumulated net realized loss on investments  (29,524)  Unrealized net appreciation to Fund sharesoutstanding 19,501   Net Assets applicable to Fund shares outstanding   $2,509,400     **Net Asset Value, Offering and Redemption price pershare**  $5.01
*(The accompanying notes are an integral part of thesefinancial    statements)*
*N-CSRS Semi-Annual        Report May 31, 2004* *5*(Graphic        Omitted)**SEXTANTSHORT-TERM        BOND FUND**  
**STATEMENT OFOPERATIONS***For the Semi-Annual period ended May 31,2004***Investment Income**    Interest income$65,714  Amortization of bond premium(14,203)  Accretion of bond discounts1,195   Gross investment income $52,706    **Expenses**    Investment advisor and administration fee7,716  Professional fees1,802  Filing and registration fees1,456  Custodian fees1,424  Insurance fees591  Printing and postage338  Meetings 194  Other expenses119   Total gross expenses13,640  Less: Advisory fees waived(5,444)  Less: Custodian fees waived(1,003)   Net expenses  7,193  Net investment income 45,513    **Net realized gain on investments**    Proceeds from sales-  Less: cost of securities sold (based on identifiedcost)-   Realized net gain -    **Unrealized gain on investments**    End of period19,501  Beginning of period62,732  Decrease in unrealized gain for the period (43,231)  Net realized and unrealized loss on investments (43,231)   **Net increase in net assets resulting fromoperations** **$2,282****STATEMENT OFCHANGES        IN NET ASSETS** 
****  **Period ended****Year ended**  **May 31, 2004****Nov. 30, 2003****INCREASE IN NET ASSETS**   **From Operations:**    Net investment income $45,513 $101,861 Net realized gain on investments-6,196 Net increase (decrease) in unrealized appreciation(43,231)(795) Net increase in net assets from operations 2,282 107,262    **Dividends to shareowners from:**    Net investment income(45,575)(101,962) Capital gains distributions--  Total Distributions(45,575)(101,962)    **Fund share transactions**    Proceeds from sales of shares582,683551,793 Value of shares issued in reinvestment of dividends45,433100,884  628,116652,677 Cost of shares redeemed(334,720)(575,737) Net increase in net assets from share transactions293,39676,940**Total increase in net assets** **$250,103****$82,240**    **NET ASSETS**    Beginning of period2,259,2972,177,057 End of period$2,509,400$2,259,297**Shares of the fund sold and redeemed**    Number of shares sold114,29286,066 Number of shares issued in reinvestment of dividends8,95423,087  123,246109,153 Number of shares redeemed(65,823)(109,001)**Net increase in number of shares outstanding** **57,423****152**
*(The accompanying notes are an integral part of thesefinancial    statements)*
*6* *N-CSRSSemi-Annual          Report May 31, 2004*  **INVESTMENTS** 
**SEXTANT BONDINCOME          FUND**(Graphic          Omitted)**Rating****Issuer********Coupon/Maturity****Face Amount****Market Value**     As of May 31, 2004       ***Automotive (3.7%)***    BBBAuto Zone Inc. 7.125% 12/1/2013$95,000$91,557       ***Banking (8.8%)***    A+Chase Manhattan 7.125% 6/15/200950,00054,766ACiticorp 7.25% 10/15/201150,000 56,408A-Comerica Bank 7.125% 12/1/201350,000 53,425A+Norwest Financial 6.85% 7/15/2009 50,000  55,107 *SUB-TOTAL*  200,000 219,706       ***Building Products (2.7%)***    BBB+Masco  7.125% 8/15/201360,00066,272       ***Chemicals (2.3%)***    A-Air Products & Chemicals 8.75% 4/15/202150,00058,055       ***Diversified Financial Services (2.8%)***    AAAGeneral Electric Capital  8.125% 5/15/201260,00070,086       ***Electric Utilities (2.3%)***    A-Commonwealth Edison 7.50% 7/1/201350,00056,970       ***Electronics (4.6%)***    A-Koninlijke Phillips Electronics  7.25% 8/15/2013 50,000  56,260A-Sempra Energy 7.95% 3/1/201050,00057,113 *SUB-TOTAL*  100,000113,373       ***Food (7.7%)***    BBB+Conagra 7.875% 9/15/201050,00057,243A+Hershey Foods 6.95% 8/15/201250,00055,052A-HJ Heinz  6.00% 3/15/201275,00078,712 *SUB-TOTAL*  175,000191,007       ***Insurance (9.4%)***    A+Allstate 7.50% 6/15/2013 50,000  55,275A+Progressive 7.00% 10/1/201375,00081,582A+XL Capital 6.50% 1/15/201290,00096,345 *SUB-TOTAL*  215,000233,202       ***Investment Finance (7.9%)***    ABear Stearns 3.500% 6/27/2008100,00084,263AA-Morgan Stanley Dean Witter 6.75% 10/15/2013 50,000  53,909AA+Paine Webber Group 7.625% 2/15/2014 50,000  56,882 *SUB-TOTAL*   200,000 195,054      *N-CSRS Semi-Annual        Report May 31, 2004* *7*(Graphic        Omitted)   **SEXTANT        BOND INCOME FUND** 
**INVESTMENTS****Rating****Issuer********Coupon/Maturity****Face Amount****Market Value**       ***Machinery (5%)***    A+Caterpillar Inc. 9.375% 8/15/2011 $40,000 $49,758A+Dover  6.25% 6/1/200870,00074,931 *SUB-TOTAL*  110,000124,689       ***Medical Supplies (1.8%)***    A+Becton Dickinson 7.15% 10/1/2009 40,000 44,633       ***Oil & Gas (4.9%)***    ABaker Hughes 6.00% 2/15/200970,00074,355A+Texaco Capital 8.625% 6/30/2010 40,000  47,850 *SUB-TOTAL*  110,000122,205       ***Retailing (9.3%)***    ADayton Hudson (Target Stores) 10.00% 1/1/201150,00063,551ALowe's Companies 8.25% 6/1/201050,00058,923AMay Department Stores Corp. 8.00% 7/15/201250,00057,245AAWal-Mart Stores 7.25% 6/1/201345,00051,218 *SUB-TOTAL*  195,000230,937       ***Telecommunications (2.2%)***    A+GTE 6.90% 11/1/2008 50,000  54,508       ***Transportation (5.5%)***    ASouthwest Airlines 6.50% 3/1/201275,00078,023A-US Freightways  8.5% 4/25/2010 50,000  57,480 *SUB-TOTAL*  125,000135,503       ***US Government (9.7%)***    AAAUS Treasury Bond 5.50% 2/15/2008225,000241,594***Total Investments (90.6%)***  (Cost = 2,138,580)2,060,000 2,249,351Other Assets (net of liabilities) (9.4%)    233,774***Total Net Assets (100%)***    **$2,483,125**
**Ratings are the lesser of S&P orMoody's    (unaudited)*
*8* *N-CSRSSemi-Annual            Report May 31, 2004*******FINANCIAL HIGHLIGHTS** 
**SEXTANT BONDINCOME          FUND**(graphic          omitted)Selected data per share of capital stock outstandingthroughout        the period:        Period ended For Year Ended November 30,   May 31, 200420032002200120001999**Net asset value at beginning of period** **$5.07****$4.97****$4.81****$4.56****$4.59****$5.00***Income from investment operations*       Net investment income  0.11 0.22 0.26 0.30 0.29 0.30 Net gains or losses on securities        (both realized and unrealized)  (0.11) 0.10 0.16 0.25 (0.03) (0.41)Total from investment operations  - 0.32 0.42 0.55 0.26 (0.11)*Less distributions*       Dividends (from net investment income)  (0.11) (0.22) (0.26) (0.30) (0.29) (0.30)Distributions (from capital gains) ------Total distributions  (0.11) (0.22) (0.26) (0.30) (0.29) (0.30)        **Net asset value at end of period** **$4.96****$5.07****$4.97****$4.81****$4.56****$4.59**        **Total return** **0.01%****6.52%****9.02%****12.40%****6.05%****(2.20)%**        Ratios/supplemental data       Net assets ($000), end of period  $2,483 $2,272 $2,105 $1,965 $1,505 $885 Ratio of expenses to average net assets* 0.40%0.97%0.72%0.34%0.35%0.39%Ratio of net investment income to average net assets* 2.21%4.29%5.40%6.71%6.58%6.31%        **Portfolio turnover rate** **0%****0%****29%****30%****0%****20%**        **For each of the above periods, all        or a portion of the operating expenses were waived. If these costs had        not been waived,the increase to the ratio of expenses to average monthly        net assets would be .01%, .18%, .34%, .72%, .64%, and..66%.*
**STATEMENT OFASSETS          AND LIABILITIES***As of May 31, 2004*   **Assets**    Bond investments (Cost $2,138,580)$2,249,351  Cash190,468  Interest receivable39,544  Insurance reserve premium1,221   Total Assets $2,480,584    **Liabilities**    Other Liabilities(2,541)   Total Liabilities (2,541)**Net Assets**  $2,483,125   ******Fund Shares Outstanding**   500,796    **Analysis of Net Assets**    Paid in Capital (unlimited shares authorized, without par        value)2,469,050  Accumulated net realized loss on investments(96,696)  Unrealized net appreciation to Fund sharesoutstanding110,771   Net Assets applicable to Fund shares outstanding $2,483,125**Net Asset Value, Offering and Redemption price pershare** $4.96
*(The accompanying notes are an integral part of thesefinancial    statements)*
*N-CSRSSemi-Annual          Report May 31, 2004* *9***(graphicomitted)**SEXTANT BOND INCOME FUND** 
**STATEMENT OFOPERATIONS***For the Semi-Annual period ended May 31,2004***Investment Income**    Interest income$68,894  Amortization of bond premiums(5,988)  Accretion of bond discounts116   Gross investment income  $63,022**Expenses**    Investment advisor and administration fee4,681  Professional fees1,988  Filing and registration fees1,513  Insurance605  Custodian fees574  Printing and postage352  Other expenses328   Total gross expenses10,041  Less: Custodian fees waived(323)   Net expenses 9,718  Net investment income  53,304**Net realized gain on investments**    Proceeds from sales-  Less: Cost of securities sold based on identified cost-   Realized net gain  -**Unrealized gain on investments**    End of period110,771  Beginning of period169,117  Decrease in unrealized gain for the period  (58,346)  Net realized and unrealized loss on investments  (58,346)**Net decrease in net assets resulting fromoperations** **$(5,042)**
**STATEMENT OFCHANGES        IN NET ASSETS**  **Period ended****Year ended****INCREASE IN NET ASSETS** **May 31, 2004****Nov. 30, 2003****From Operations:**    Net investment income  $53,304 $97,023 Net realized gain on investments-- Net increase (decrease) in unrealized appreciation(58,346)45,734 Net increase (decrease) in net assets from operations (5,042) 142,757    **Dividends to shareowners from:**    Net investment income(53,467)(97,200) Capital gains distributions--  Total Distributions(53,467)(97,200)    **Fund share transactions**    Proceeds from sales of shares264,601187,626 Value of shares issued in reinvestment of dividends50,93191,934  315,532279,560 Cost of shares redeemed(46,021)(158,167) Net increase in net assets from share transactions269,511121,393**Total increase in net assets** **$211,002****$166,950**    **NET ASSETS**    Beginning of period2,272,1232,105,173 End of period $2,483,125 2,272,123    **Shares of the fund sold and redeemed**    Number of shares sold51,80436,687 Number of shares issued in reinvestment of dividends9,98317,851  61,78754,538 Number of shares redeemed(9,173)(30,137)**Net increase in number of shares outstanding****52,614****24,401**
*(The accompanying notes are an integral part of thesefinancial    statements)*
**10** *N-CSRSSemi-Annual        Report May 31, 2004***INVESTMENTS** **SEXTANTGROWTH        FUND**(graphic omitted)***Issue******Number of Shares******Cost******Market Value**********As of May 31, 2004***Common Stocks (91.9%)**       ***Banking (9.9%)***   Convergys*4,000$76,250$58,600Frontier Financial 4,000  90,207  136,600Washington Mutual 6,750 44,124 294,907*SUB-TOTAL*  210,581 490,107    ***Computers (17%)***   3Com* 16,000 96,576 103,520Adobe Systems 4,800 50,490 214,224Apple Computer* 7,000 132,046 196,420Earthlink*10,00081,327100,400Intuit* 3,000 131,758 117,780Oracle*  8,000 28,059 91,200Phoenix Technologies Ltd.* 3,06229,14820,087*SUB-TOTAL*  549,404 843,631    ***Construction (6.7%)***   Lowe's Companies4,000135,141214,280Weyerhaeuser 2,000  93,867 121,220*SUB-TOTAL*  229,008 335,500    ***Electronics (7.6%)***   Advamced Micro Devices*10,00041,708155,500Agilent Technologies*4,000108,894102,880Harman International Industries1,500114,354120,210*SUB-TOTAL*  264,956 378,590    ***Food (4.1%)***   Performance Food Group* 3,000 96,917 98,520PepsiCo2,000102,111106,740*SUB-TOTAL* 199,028205,260        ***Hotels & Motels (1.8%)***   Westcoast Hospitality* 15,000 111,772 87,000    ***Investments (4%)***   Schwab (Charles) 20,415  9,117  200,067    ***Machinery (.8%)***   Regal-Beloit 2,000 52,106 40,900***N-CSRS Semi-Annual      Report May 31, 2004* *11*(graphic omitted)**SEXTANT      GROWTH FUND** **INVESTMENTS**)***Issue******Number of Shares******Cost******Market Value******Medical (23.9%)***   Affymetrix* 3,000 $60,231 $88,740Amgen*2,64034,598144,408Barr Laboratories*4,500159,489195,795Bristol-Myers Squibb4,500121,892113,715Caremark Rx*4,00092,592124,800Ligand Pharmaceuticals* 5,000  56,430 102,600Lilly (Eli) 2,000 165,241 147,200Pharmaceutical Product Development* 9,000 80,608 272,520*SUB-TOTAL*  771,081 1,189,778    ***Metal Ores (3.1%)***   Alcoa2,00073,10662,600Phelps Dodge 1,330  76,218 90,267*SUB-TOTAL* 149,324152,867        ***Oil & Gas Production (2.1%)***   Noble* 3,000 54,457 103,380    ***Publishing (2.2%)***   Wiley (John) & Sons, Class A 3,400 74,233 108,120    ***Retail (2.2%)***   Bed Bath & Beyond* 3,000 100,052 111,780    ***Telecommunications (2.1%)***   Sprint (FON Group)1,30024,11423,179Trimble Navigation*3,00066,32581,060*SUB-TOTAL* 90,439104,239    ***Utility (4.4%)***   FPL Group 2,200 134,107 140,338IDACorp3,00078,28778,000*SUB-TOTAL* 212,394218,338        ***Total Investments (91.9%)*** 3,077,952 4,569,557Other Assets (net of liabilities) (8.1%)   403,782***Total Net Assets (100%)***  **$4,973,339**    **Non-income producing*   **12** *N-CSRSSemi-Annual        Report May 31, 2004*
**FINANCIALHIGHLIGHTS****** 
**SEXTANT GROWTHFUND**(graphicomitted)****Selected data per share of capital stock outstandingthroughout      the period:       Period ended  For Year Ended November 30,  May 31, 200420032002200120001999**Net asset value at beginning of period****$12.91****$10.64****$11.90****$13.16****$12.68****$9.29***Income from investment operations*      Net investment income 0.01 (0.04) (0.05) (0.02) (0.07) (0.06)Net gains or losses on securities       (both realized and unrealized) (0.24) 2.31 (1.21) (1.24) 1.36 4.26 Total from investment operations  (0.23) 2.27 (1.26) (1.26) 1.29 4.20 *Less distributions*      Dividends (from net investment income) - - - - - (0.14)Distributions (from capital gains) - - - - (0.81) (0.67)Total distributions  - - - - (0.81) (0.81)        **Net asset value at end of period** **$12.68****$12.91****$10.64****$11.90****$13.16****$12.68**        **Total Return** **(1.86%)****21.31%****(10.51)%****(9.57)%****10.16%****44.76%**        Ratios / Supplemental Data       Net assets ($000), end of period $4,973$4,732$3,373$3,792$3,862$3,116 Ratio of expenses to average net assets* 0.34%1.14%1.11%0.78%1.05%1.12%Ratio of net investment income to average net assets* 0.04%(0.40)%(0.48)%(0.18)%(0.51)%(0.50)%        **Portfolio turnover rate** 4%12%15%8%20%28%        Brokerage Commissions as a percentage of       Average net assets 0.04%0.05%0.07%0.04%0.08%0.09%Principal amount of transactions 0.20%0.20%0.23%0.24%0.17%0.16%        **For the above periods, all or a portion      of the operating expenses were waived. If costs had not been waived, the      resulting increase to the ratio of expenses to average monthly net accost      would be .03%, .06%, .06%, .06%, .06%, and .09%respectively.*
**STATEMENT OF ASSETS        AND LIABILITIES***As of May 31, 2004*       **Assets**    Investments (Cost $3,077,952)$4,569,557  Cash398,254  Dividends receivable2,410  Insurance reserve premium1,214   Total Assets $4,971,435    **Liabilities**    Other Liabilities(1,904)   Total Liabilities (1,904)    **Net Assets**  $4,973,339    **Fund Shares Outstanding**  392,107    **Analysis of Net Assets**    Paid in Capital (unlimited shares authorized, without par      value)3,489,756  Accumulated net realized loss on investments(8,022)  Unrealized net appreciation to Fund shares outstanding1,491,605  Net Assets applicable to Fund shares outstanding  $4,973,339   **Net Asset Value, Offering and Redemption price pershare** **$12.68***(The accompanying notes are an integral part of these financialstatements)****N-CSRS        Semi-Annual Report May 31,2004*** ****13**(graphicomitted)**SEXTANT GROWTH FUND** 
**STATEMENT OFOPERATIONS**
*For the Semi-Annual period ended May 31, 2004*
     **Investment Income**     Dividend income $18,837  Miscellaneous income 4   Gross Investment Income   $18,841     **Expenses**     Investment advisor and administration fee 9,311  Professional fees 3,292  Custodian fees 1,884  Filing and registration fees 1,417  Insurance 1,227  Printing and postage 519  Meetings 329  Other expenses 191   Total gross expenses 18,170  Less: Custodian fees waived (1,261)   Net expenses  16,909  Net investment income   1,932     **Net realized gain on investments**     Proceeds from sales 161,672  Less: cost of securities sold based on identified cost 138,315  Realized net gain  23,357     **Unrealized gain on investments**     End of period 1,491,605  Beginning of period 1,615,709  Decrease in unrealized gain for the period  (124,104)  Net realized and unrealized loss oninvestments  (100,747)    **Net decrease in net assets resulting fromoperations**  **$(98,815)****STATEMENT      OF CHANGES IN NET ASSETS** 
********  **Period ended****Year ended****INCREASE IN NET ASSETS** **May 31, 2004****Nov. 30, 2003****From Operations:**    Net investment income (loss) $1,932 $(15,357) Net realized gain on investments23,35729,017 Net increase (decrease) in unrealized appreciation(124,104)815,393 Net increase (decrease) in net assets from operations (98,815) 829,053    **Dividends to shareowners from:**    Net investment income-- Capital gains distributions--  Total Distributions--    **Fund share transactions**    Proceeds from sales of shares848,581764,452 Value of shares issued in reinvestment of dividends--  848,581764,452 Cost of shares redeemed(508,503)(234,506) Net increase in net assets from share transactions340,078529,946**Total increase in net assets** **$241,263****$1,358,999**    **NET ASSETS**    Beginning of period4,732,0763,373,077 End of period $4,973,339 $4,732,076    **Shares of the fund sold and redeemed**    Number of shares sold64,94170,509 Number of shares issued in reinvestment of dividends--  64,94170,509 Number of shares redeemed(39,239)(21,038)**Net increase in number of shares outstanding****25,702****49,471**
*(The accompanying notes are an integral part of these financialstatements)*

  
**14** *N-CSRSSemi-Annual        Report May 31, 2004*******INVESTMENTS** 
**SEXTANTINTERNATIONAL        FUND**(Graphic        Omitted)***Issue******Number of Shares******Cost******Market Value******Country************As of May 31, 2004***Common Stocks (79.8%)**         ***Aircraft (2.2%)***    Embraer Aircraft ADR1,713$38,169$43,681Brazil     ***Automotive (3.4%)***    Nissan Motor ADR2,00030,08540,640JapanDesc ADR4,50052,75825,515Mexico*SUB-TOTAL* 82,84366,155      ***Banking and Financial (9.9%)***    Aegon NV ADR2,23919,73627,025NetherlandsAXA ADS3,00059,78461,800FranceBanco Bilbao Vizcaya ADS1,8007,70223,904SpainING Groep ADS1,44836,13432,826NetherlandsToronto-Dominion Bank1,40018,15946,970Canada*SUB-TOTAL* 141,515192,525      ***Building Materials (5.5%)***    CRH plc ADR2,00023,07542,660IrelandHanson plc ADR1,10033,05541,965UKJames Hardie Industries NV ADS1,00025,56021,690Netherlands*SUB-TOTAL* 81,690106,315      ***Computers (9.1%)***    Business Objects ADS*6,00019,570131,640FranceDassault Systems ADR1,00028,38045,750France*SUB-TOTAL* 47,950177,390      ***Consumer Products (3.8%)***    Allied Domecq plc1,20040,57640,320UKCoca-Cola Femsa ADS1,5009,75032,760Mexico*SUB-TOTAL* 50,32673,080      ***Electronics (4.5%)***    Epcos AG ADS2,50057,30750,525GermanySony ADR1,00047,51736,940Japan*SUB-TOTAL* 104,82487,465      ***Hotels & Motels (1.4%)***    Fairmont Hotels & Resorts1,10024,38527,071Canada     ***Medical-Drugs (3.2%)***    Glaxo SmithKline Wellcome plc ADR4009,80016,980UKNovartis AG ADR1,00045,17745,170Switzerland*SUB-TOTAL* 54,97762,150      ***Metals & Mining (4.7%)***    Potash Corp. of Saskatchewan50034,23443,510CanadaRio Tinto plc ADS50031,17548,850UK*SUB-TOTAL* 65,40992,360      *N-CSRS Semi-Annual      Report May 31, 2004* *15*(Graphic      Omitted)**SEXTANT      INTERNATIONAL FUND** 
**INVESTMENTS*****Issue******Number of Shares******Cost******Market Value******Country***     ***Oil & Gas Production (6.6%)***    EnCana1,000$35,020$39,370CanadaRepsol-YPF ADR2,00043,59242,320SpainTotal Fina Elf ADR50021,86447,040France*SUB-TOTAL* 100,476128,730      ***Paper Products (3.2%)***    Metso ADS2,10022,80225,851FinlandUPM-Kymmene Oyj2,00034,39936,140Finland*SUB-TOTAL* 57,20161,991      ***Photographic Equipment (3.2%)***    Canon ADR 1,00023,42649,560JapanFuji Photo Film ADR40010,05012,120Japan*SUB-TOTAL* 33,47661,680      ***Telecommunications (10.4%)***    American Movil2,00029,72570,100MexicoBCE1,60030,12031,840CanadaBritish Sky Broadcasting ADS*45011,06320,363UKPT Indosat ADR1,00020,95221,550IndonesiaTelefonica ADS58612,05825,579SpainTelefonos de Mexico ADS1,00035,17033,640Mexico*SUB-TOTAL* 139,088203,072      ***Transportation (4.5%)***    Canadian Pacific Ltd.1,20020,33826,868CanadaLan Chile ADS3,50024,63660,130Chile*SUB-TOTAL* 44,97486,998      ***Utilities-Electric (3.9%)***    Enel ADR80035,37232,712ItalyEnersis ADR4,00037,12524,760ChileKorea Electric Power ADS2,00031,96117,900Korea*SUB-TOTAL* 104,45875,372      ***Utilities-Gas (.3%)***    Transport de Gas del Sur ADR1,50018,8076,060Argentina          ***Total Investments (79.8%)*** 1,190,5681,552,095 Other Assets (net of liabilities) (20.2%)  392,858 ***Total Net Assets (100%)***  **$1,944,953**      ** Non-income producing*    
 
**16** *N-CSRSSemi-Annual        Report May 31, 2004***FINANCIAL HIGHLIGHTS** **SEXTANTINTERNATIONAL          FUND**(graphic          omitted)Selected data per share of capital stock outstanding            throughout the period:         For Year Ended November 30,   
Period endedMay 31, 2004
20032002200120001999**Net asset value at beginning of period****$8.05****$6.07****$7.24****$8.52****$8.32****$6.81***Income from investment operations*      Net investment income 0.02 0.05 0.02 0.04 0.43 0.13 Net gains or losses on securities (both            realized and unrealized) 0.02 1.97 (1.16) (1.30) 0.20 1.57 Total from investment operations  0.04 2.02 (1.14) (1.26) 0.63 1.70 *Less distributions*      Dividends (from net investment income) - (0.04) (0.03) (0.02) (0.43) (0.12)Distributions (from capital gains) - - - - - (0.07)Total distributions  - (0.04) (0.03) (0.02) (0.43) (0.19)        **Net asset value at end of period** **$8.09****$8.05****$6.07****$7.24****$8.52****$8.32**        **Total return** **0.50%****33.23%****(15.80)%****(14.80)%****7.62%****24.90%**        Ratios/supplemental data       Net assets ($000), end of period $1,945$1,650$1,150$1,445$1,736$1,162 Ratio of expenses to average net assets* 0.51%1.10%1.17%1.17%1.20%0.72%Ratio of net investment income to average netassets* 0.25%0.75%0.20%0.34%4.74%1.74%        **Portfolio turnover rate********6%****4%****4%****6%****11%****17%**        Brokerage Commissions as a percentage of       Average net assets 0.03%0.10%0.03%0.06%0.11%0.11%Principal amount of transactions 0.21%0.45%0.37%0.40%0.26%0.34%        **For the above periods, all or a            portion of the operating expenses were waived. If costs had not been            waived, the resulting increase to the ratio of expenses to average            monthly net accost would be .06%, .19%, .19%, .20%, .16%, and .26%            respectively.*
**STATEMENT OF              ASSETS AND LIABILITIES******    *As of May 31, 2004*       **Assets**     Investments (Cost $1,190,568) $1,552,095  Cash 389,020  Dividends Receivable 3,114   Total Assets  $1,944,229    **Liabilities**    Other Liabilities (724)  Total Liabilities (724)    **Net Assets**  $1,944,953   ******Fund Shares Outstanding**  240,523    **Analysis of Net Assets**    Paid in Capital (unlimited shares authorized, without            par value) 1,736,607  Accumulated net realized loss on investments (153,180)  Unrealized net appreciation to Fund sharesoutstanding361,526   Net Assets applicable to Fund shares outstanding $1,944,953    **Net Asset Value, Offering and Redemption price per            share** $8.09
*(The accompanying notes are an integral part of these financialstatements)*
***N-CSRS              Semi-Annual Report May 31,2004*** *17*(Graphic            Omitted)**SEXTANT            INTERNATIONAL FUND** 
**STATEMENT              OF OPERATIONS**
*For the Semi-Annual period ended May 31,2004*
    **Investment Income**    Dividend income (net Foreign Tax of $2,265) $14,730  Miscellaneous income25   Gross investment income  $14,755**Expenses**    Investment advisor and administration fee 6,738  Custodian fees 1,476  Filing and registration fees 1,132  Professional fees 1,068  Other expenses492  Printing and postage227  Total gross expenses 11,133  Less: Custodian fees waived (1,188)   Net expenses 9,945  Net investment income  4,810**Net realized gain on investments**    Proceeds from sales 98,295  Less: cost of securities sold based on identifiedcost68,126   Realized net gain 30,169**Unrealized gain on investments**    End of period 361,526  Beginning of period413,043  Decrease in unrealized gain for the period (51,517)  Net realized and unrealized loss on investments  (21,348)    **Net decrease in net assets resulting fromoperations** **$(16,538)************
**STATEMENT OF              CHANGES IN NET ASSETS**  Period endedYear ended  May 31, 2004Nov. 30, 2003**INCREASE IN NET ASSETS**   **From Operations:**    Net investment income  $4,810 $9,508 Net realized gain (loss) on investments 30,169 (30,670) Net increase (decrease) in unrealizedappreciation (51,517) 418,990 Net increase (decrease) in net assets fromoperations (16,538) 397,828    **Dividends to shareowners from:**    Net investment income - (7,547) Capital gains distributions - - Total Distributions - (7,547)    **Fund share transactions**    Proceeds from sales of shares 635,380 222,528 Value of shares issued in reinvestment ofdividends - 7,529   635,380 230,057 Cost of shares redeemed(323,520)(121,076) Net increase in net assets from sharetransactions 311,860 108,981**Total increase in net assets** **$295,322****$499,262**    **NET ASSETS**    Beginning of period 1,649,631 1,150,369 End of period $1,944,953 $1,649,631    **Shares of the fund sold and redeemed**    Number of shares sold 73,487 32,286 Number of shares issued in reinvestment ofdividends - 935   73,487 33,221 Number of shares redeemed (37,917) (17,938)**Net increase in number of sharesoutstanding****35,570****15,283**
 

*(The accompanying notes are an integral part of            these financial statements)*
*18* *N-CSRS                  Semi-Annual Report May 31, 2004*
**ADDITIONAL                PERFORMANCE INFORMATION**Average Annual              Returns (as of 6/30/2004, per NASD requirement)  1                year 5                years10 years(Graphic Omitted)            Sextant Growth Fund12.26%            1.23%            10.40%             Sextant International Fund28.19%            3.84%            7.22%*Sextant Short-Term Bond Fund0.52%5.25% 5.26%*Sextant Bond Income Fund-2.95%6.98%6.57%
 
*Since inception, 9/28/95
Performance data quoted in this report represents past          performance, is before any taxes that may be payable by investors, and          is no guarantee of future performance. The investment return andprincipal          value of investments in the Funds fluctuate daily, and aninvestor’s          shares when redeemed may be worth more or less than the original cost.          Morningstar, Inc. is an independent fund performance monitor. Theaverage          total return for a category is determined by Saturna Capital,utilizing          the Morningstar database. Results are shown for twelve months in this          report because of the Sextant Funds performance fee advisorystructure.
**NOTES                TO FINANCIAL STATEMENTS**
***Organization***          Saturna Investment Trust (the “Trust”) was established under          Washington State Law as a Business Trust on February 20, 1987. TheTrust          is registered as a no-load, open-end series investment company under          the Investment Company Act of 1940, as amended. Five portfolio series          have been created to date: Sextant Short-Term Bond Fund, Sextant Bond          Income Fund, Sextant Growth Fund, and Sextant International Fund (the          “Funds”), and Idaho Tax-Exempt Fund, distributed through a          separate prospectus and the results of which are contained in aseparate          report.***Unaudited Information***          The information in this interim report has not been subject toindependent          audit.***Significant AccountingPolicies***          The following is a summary of the significant accounting policiesfollowed          by the Funds.**Investments:**          Securities traded on a national exchange or the nationalover-the-counter          market system are valued at the last sale price or, in the absence of          any sale on that date, the closing bid price. Other securities traded          in the over-the-counter market are valued at the last bid price.Fixed-income          securities for which there are no publicly available market quotations          are valued using a matrix based on maturity, quality, yield andsimilar          factors, which are compared periodically to multiple dealer bids and          adjusted by the adviser under policies established by the Trustees.                    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 as original issue discounts and for bonds purchased          at market discounts. Cash dividends from equity securities arerecorded          as income on the ex-dividend date.           Expenses incurred by the Trust on behalf of the Funds (e.g.,professional          fees) are allocated to the Funds and the other fund 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 Funds’ policy is to continue to comply with the requirements          of the Internal Revenue Code that are applicable to regulatedinvestment          companies and to distribute all their income to shareowners.Therefore,          no provision for Federal income taxes is required.
*N-CSRSSemi-Annual              May 2004* *19*
**Dividends and distributions to shareowners:**            Dividends and distributions to shareowners, which are determined in            accordance with income tax regulations, are recorded on theex-dividend            date. For Short-Term Bond and Bond Income, dividends are paid daily            and distributed on the last business day of each month. For Growth            and International, dividends are payable at the end of eachNovember.            Shareowners electing to reinvest dividends and distributionspurchase            additional shares at the net asset value on the payable date. **Use of estimates:**            The preparation of financial statements in conformity with generally            accepted accounting principles requires management to make estimates            and assumptions that affect the reported amounts of assets andliabilities            and disclosure of contingent assets and liabilities at 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 those estimates.***Transactions with AffiliatedPersons***            Under a contract approved by shareowners on September 28, 1995,Saturna            Capital Corporation provides investment advisory services, pluscertain            administrative and shareowner services to the Funds. Each of theFunds            pays the Adviser a base Investment Advisory and AdministrativeServices            Fee of .60% of average net assets per annum, payable monthly. The            base Advisory Fee is subject to adjustment up or down depending on            the investment performance of the Fund relative to a specifiedMorningstar            mutual fund category average. The Adviser has voluntarily undertaken            to limit expenses of Sextant Short-Term Bond Fund to 0.60% through            March 31, 2005 and waives its investment advisory and administrative            fee as to either Sextant bond fund completely so long as assets of            that Fund are less than $2 million.            For the six months ended May 31, 2004, Sextant Bond Income Fund and            Sextant Growth Fund incurred advisory expenses of $4,681 and $9,311,            respectively. Sextant International Fund incurred advisory expenses            of $6,738 and Sextant Short-Term Bond Fund incurred advisoryexpenses            of $7,716.            In accordance with the expense waiver noted above, for the sixmonths            ended May 31, 2004, Saturna Capital waived $5,444 of the SextantShort-Term            Bond Fund advisory fee.            Saturna Brokerage Services, Inc. (a broker-dealer subsidiary ofSaturna            Capital) acts as underwriter for the Trust, without compensation.            The Funds’ custodian, National City Bank Indiana, waived its            fees for earnings credits.            Saturna Brokerage Services, Inc. is the primary stockbroker used to            effect portfolio transactions for Sextant Growth Fund and Sextant            International Fund, and was paid $1,904 and $533, respectively in            commissions at discount rates during the six months ended May 31,            2004.            One trustee is also a director and officer of Saturna CapitalCorporation.            The unaffiliated trustees receive a fee of $100 per meetingattended,            and in the six months ending May 31, 2004, such fees totalled $800            for the Trust.***Dividends***            As of May 31, 2004, the tax composition of dividends are asfollows: Short-Term Bond Income
 IncomeIncome                   Per ShareLong-term                   Capital GainsLong-term                  Capital Gains                  Per Share5/31/04$45,575$0.10$ -$ -11/30/03$101,962$0.23$ -$ -
 Bond Income
 IncomeIncome                   Per ShareLong-term                   Capital GainsLong-term                  Capital Gains                  Per Share5/31/04$53,467$0.11$ -$ -11/30/03$97,200$0.22$ -$ -
Growth
 IncomeIncome                   Per ShareLong-term                   Capital GainsLong-term                  Capital Gains                  Per Share5/31/04$0$ -$ -$ -11/30/03$0$ -$ -$ -
International
 IncomeIncome                   Per ShareLong-term                   Capital GainsLong-term                  Capital Gains                  Per Share5/31/04$0$0.10$ -$ -11/30/03$7,547$0.037$ -$ -
 

***Investments***            At May 31,2004, the net unrealized gain on investments for BondIncome,            Short-Term Bond, Growth and International were $110,771, $19,501,            $1,491,605, and $361,526, which consist of unrealized gains of$127,685,            $40,107, $1,658,294, and $508,288, and unrealized losses of $16,914,            $20,606, $166,689, and $146,762, respectively.            During the six months ended May 31,2004, Bond Income purchased$191,143            of securities and sold/matured $0. Comparable figures for Short-Term            Bond are $427,698 purchased and $160,000 sold/matured; for Growth            $777,941 and $161,671; and for International, $156,261 and$98,295.
*20* *N-CSRS                    Semi-Annual Report May 31, 2004*
**Web: http://www.saturna.com                  E-mail: sextant@saturna.com**

 

 

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SaturnaCapitalMutual Funds

 

 

 

 

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

Thisreport                  is issued for the information of the shareoweners of the Fund.                  It is not authorized for distribution to prospective investors                  unless it is accompanied or preceded by an effectiveprospectus                  relating to the securities of the Fund. Idaho Tax-Exempt Fund                  is a series of Saturna Investment Trust.

 

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SEXTANT                          Mutual Funds 
 

 

**SHORT-TERM                          BOND**

**BONDINCOME**

**GROWTH**

**INTERNATIONAL******

 

 

**SEMI-ANNUAL                          REPORT****May 31, 2004**

 
*N-CSRS                  Semi-Annual Report May 31, 2004* *21*
 

 

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*22* *N-CSRS                      Semi-Annual Report May 31, 2004*
**REPORT TO SHAREHOLDERS**

**Idaho Tax-ExemptFund**
           
**May 31, 2004 Report**
*Fellow Shareowners:*
Idaho Tax Exempt Fund provided a total return of–1.32%            for six months and -1.48% for twelve months ending May 31, 2004.Total            Fund assets declined slightly to $7.4 from $7.5 million.             In the last six months, the economic stimulus produced by twofederal            tax cuts and accommodative central bank policy has finally produced            solid domestic economic and employment growth. Central bankers and            legislators have ended stimulus policies. The central bank hasincreased            the Federal Funds rate for the first time in four years to 1.25%,            the same level as in May 2003.            We thought shareholders would appreciate a perspective on Fundperformance            in past rising rate environments. During major rate climbs in 1994            and 1999, the yield of Bloomberg ten-year AAA General Obligations            index rose 134 and 95 basis points respectively. This coincided with            Fund returns of –3.27%, –3.44% respectively. In the last            year, this Bloomberg index yield is up 83 basis points andFund’s            total return was –1.48%. Had we not kept the average maturity            shorter than normal, total returns might have exceeded –3.00%.                        We look forward to higher rates as an opportunity to buy higheryielding            bonds and extend the dollar weighted average maturity of the Fund            from the current 5.5 years towards a more normal 10 years over the            next 24 months.             Idaho’s economy and population are growing again. While never            really a serious threat, the pressure on Idaho municipalissuer’s            credit quality has abated with the economic recovery. Idaho’s            pro-business policies, tightly managed budget and conservativegovernment            give the State a strong competitive edge.            We invite you to review the advantages of the Idaho Tax-Exempt Fund,            including low expenses, income free from Idaho and federal income            taxes (including federal alternative minimum tax), a high-quality            diversified bond portfolio and professional 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 primary            objective.

***NicholasKaiser,******Phelps                  McIlvaine,*****President**
**Vice President, Portfolio                  Manager**
July 15, 2004Performance data quoted in this                report represents past  Average Annual Total Returnsperformance and is no guarantee of                future performance. 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 original cost. -0.91% +4.97% +5.47%    Performance data for years ended 6/30/2004.
 
*N-CSRSSemi-Annual                Report May 31, 2004* *23*
           **INVESTMENTS** **IDAHO                  TAX-EXEMPT FUND***As of May 31, 2004****Rating*******Issuer******Coupon/Maturity******Face Amount******Market Value***   ***Airport Parking (2.9%)***  AAABoise City Airport Revenue COP5.40% due 8/1/2011$215,000 $217,163     ***Electric Power (2.1%)***  AAAIdaho Falls Electric Revenue 6.75% due 4/1/2019155,000 157,189     ***Financial Services (3.7%)***  AAABoise City General Fund Revenue5.20% due 12/1/2017160,000167,408AAA"5.25% due 12/1/2018100,000104,576 *SUB-TOTAL* 260,000271,984     ***General Obligations (49.3%)***  AA-Ada & Canyon JSD #2 Meridian5.50% due 7/30/2011175,000192,598AA-"5.50% due 7/30/2015100,000 110,271AAAAdams County GO5.00% due 8/1/2014110,000114,167A+Bannock County GO Jail5.05% due 9/1/201295,000 98,066ABannock County SD #25 Pocatello4.90% due 8/1/200990,000 94,502AAA"5.20% due 8/1/2014100,000105,049A"5.25% due 8/1/2016110,000 115,080AAABingham County SCD #55 Blackfoot4.65% due 8/1/2017285,000288,501AA-Boise City ISD UTGO 19965.50% due 7/30/2016150,000 157,575AABoise City ISD-Ref Ada & Boise5.00% due 8/15/2014100,000107,066ABoise County SD #73 Horshoe Bend5.15% due 7/31/2010125,000 131,109AAABoundary County SCD 1014.05% due 8/1/20115200,000194,988AAA"5.10% due 8/1/2022130,000134,804AAA Caldwell GO5.30% due 5/15/2014150,000 160,462AAACanyon County SD #1325.40% due 7/30/2011195,000 197,471AAACanyon County SD #134 Middleton4.65% due 7/31/2016170,000173,644ACanyon County SD #135 Notus Series 19946.00% due 8/1/200750,000 49,875AAACanyon County SCD #139 Valley View4.05% due 8/15/201680,00076,572AAACassia, Twin Falls JSD #1515.375% due 8/1/201385,000 89,391AAA"5.375% due 8/1/201575,000 78,815AAAClark County SD #161 Dubois5.00% due 8/1/2015270,000281,352AAIdaho Housing & Finance Assoc.4.80% due 6/1/2017100,000102,886AAAKootenai County SD #2735.00% due 7/30/201670,000 70,736AAAKuna Sch/Comm Library Dist.4.90% due 8/1/201375,000 78,037AAALemhi County GO4.20% due 8/1/2015100,00098,341AAAMeridian Free Library Dist.5.00% due 8/1/2015200,000206,121AAA Power & Cassia Cos. JSD #3815.25% due 8/1/201260,000 64,489AAATeton County SD #401 GO5.50% due 8/1/201275,000 79,207 *SUB-TOTAL* 3,525,0003,651,175
 
*24* *N-CSRS                  Semi-Annual Report May 31, 2004***IDAHO                  TAX-EXEMPT FUND** **INVESTMENTS*****Rating*******Issuer******Coupon/Maturity******Face Amount******Market Value****************Housing (3.2%)***********AAIdaho Housing Authority  Single Fam Mortgage, B-16.85% due 7/1/2012$30,000$29,903AAIdaho Housing Authority  Refunding Series A6.15% due 7/1/202465,00065,703AA+Idaho Housing Authority  Single Fam Mort Mezz-E-16.60% due 7/1/201115,00015,050AAAValley County Jail Project Ref.4.70% due 8/1/2014125,000128,549 *SUB-TOTAL* 235,000239,205     ***Medical/Hospitals (4%)***  AAAIdaho Health Facility Auth.  Holy Cross 5.25% due 12/1/2014110,000114,850AAAIdaho Health Facility Auth. Corp.    Holy Cross Sys Corp Rev5.00% due 12/1/2022115,000 114,046AAAIdaho Health Facility    Holy Cross Rev Refunding5.25% due 12/1/201165,000 68,443 *SUB-TOTAL* 290,000297,339     ***Real Estate (6.4%)***  AAABoise City Urb Ren Agy Pk Rev & RA5.00% due 9/1/201265,00068,463AAAIdaho State Building Association5.05% due 9/1/201895,00098,275AAAIdaho State Building Authority5.00% due 9/1/2021100,000100,029AJerome Urban Renewal District 5.40% due 9/1/2013200,000205,272 *SUB-TOTAL* 460,000472,039     ***Roads (1.2%)***  APayette L.I.D. #89-17.60 due 5/1/200530,00030,085A
Post Falls L.I.D. #91-4
7.95% due 4/15/200520,000 20,079A"7.95% due 4/15/200620,000 20,062A"7.95% due 4/15/200720,000 20,119 *SUB-TOTAL* 90,00090,345     ***State Education (12.1%)***********AAABoise State University Rev-Ref  Student Univ. & Housing Sys.5.10% due 4/1/2014300,000316,041AAAIdaho State Building Authority4.00% due 9/1/2016105,000101,124AAAIdaho State University  Student Fee Revenue4.90% due 4/1/2017150,000152,199AAAUniversity of Idaho  Student Fee Revenue- Elmwood Apts.5.25% due 4/1/2014120,000128,628AAAUniversity of Idaho    Student Fee Revenue5.60% due 4/1/2015185,000198,018 *SUB-TOTAL* 860,000 896,010     
 
*N-CSRSSemi-Annual                Report May 31, 2004* *25****Rating*******Issuer******Coupon/Maturity******Face Amount******Market Value***     ***Sewer (3.6%)***********AAAMoscow Sewer Revenue4.125% due 11/1/2018$165,000 $170,499ATroy, Sewer Revenue7.70% due 2/1/200515,000 15,025 "7.80% due 2/1/200615,000 15,056 "7.90% due 2/1/200715,000 15,088 "8.00% due 2/1/200815,000 15,104 "8.00% due 2/1/200920,000 20,146 "8.00% due 2/1/201020,000 20,172 *SUB-TOTAL* 265,000271,090***Urban Renewal (4.8%)***    AAABoise City Urban Renewal5.875 due 8/15/2025190,000200,199AAPocatello Development Authority5.15% due 3/1/2011150,000155,763 *SUB-TOTAL* 340,000352,198***Water Supply (4.8%)***  AAAKetchum Water Revenue4.75% due 9/1/201360,000 61,426AAAMcCall Water Rev., Series 19946.25% due 9/1/2008200,000 216,214AAAMcCall Water Revenue6.375% due 9/1/201470,000 74,558 *SUB-TOTAL* 330,000 352,198     ***Total Investments (98.1%)*** (Cost=7,115,600)7,025,0007,271,699Other Assets (net of liabilities) (1.9%)  137,232***Total Net Assets (100%)***  **$7,408,931**   ** These unaudited bond ratings                reflect the adviser's current rating of each bond, as determined                using Standard & Poor's and Moody's ratings.*
 
*26* *N-CSRS                  Semi-Annual Report May 31, 2004***IDAHO                  TAX-EXEMPT FUND** **FINANCIAL                  HIGHLIGHTS**   For Year ended November 30, *Selected data per share of capital stock                  outstanding throughout the period:*
Period ended                  May 31, 2004
20032002200120001999**Net asset value at beginning of period**     *Income from investment operations***$5.46****$5.37****$5.28****$5.13****$5.01****$5.36**Net investment income0.100.210.220.220.230.24Net gains or losses on securities (both realized                and unrealized)(0.17)0.090.090.150.12(0.35)Total From investment operations(0.07)0.300.310.370.35(0.11)*Less Distributions*Dividends (from net investment income)(0.10)(0.21)(0.22)(0.22)(0.23)(0.24)Distributions (from capital gains)------Total Distributions(0.10)(0.21)(0.22)(0.22)(0.23)(0.24)       **Net asset value at end of period****$5.29****$5.46****$5.37****$5.28****$5.13****$5.01**       **Total Return****(1.32)%****5.40%****5.98%****7.40%****7.28%****(2.18)%**  Ratios/Supplemental dataNet assets ($000), end of period$7,409$7,692$6,943$6,650$5,628$6,151Ratio of expenses to average net assets*0.43%0.85%0.80%0.79%0.80%0.80%Ratio of net investment income to average netassets1.84%3.78%4.14%4.21%4.69%4.55%**Portfolio turnover rate****6%****6%****11%****13%****14%****13%**
**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 .01%, .03, .08%, .11%, .14%,                  and .05%, respectively.*
**STATEMENT                  OF ASSETS AND LIABILITIES**     *As of May 31, 2004*       **Assets**    Bond investments (Cost $7,115,600) $7,271,699  Cash 25,465  Interest receivable 111,188  Insurance reserve premium2,473    Total Assets  $7,410,825    **Liabilities**    Other Liabilities 1,894   Total Liabilities 1,894    **Net Assets**  $7,408,931    **Fund Shares Outstanding**   1,399,735****   **Analysis of Net Assets**    Paid in capital (unlimited shares authorized,                  without par value)7,275,446   Accumulated net realized loss(22,614)   Unrealized net appreciation on investments156,099   Net Assets applicable to Fund sharesoutstanding $7,408,931    **Net Asset Value, Offering and Redemptionprice                  per share** $5.29
*(The accompanying notes are an            integral part of these financial statements)*

 
*N-CSRSSemi-Annual                Report May 31, 2004* *27***STATEMENT                OF OPERATIONS** **IDAHO                  TAX-EXEMPT FUND** *For the period ended May 31, 2004*   **Investment income**  Interest income $185,622 Amortization of bond premium (10,140) Accretion 442  Gross investment income  $175,924   **Expenses**  Investment adviser and administration fee 19,515 Professional fees 5,951 Shareholder service fee 2,144 Insurance2,024 Custodian fees 1,256 Printing and postage 1,210 Meetings955 Filing and registration fees 474 Other expenses337 Total gross expenses 33,866 Less: custodian fees waived (801) Less: adviser fees waived- Net expenses 33,065 Net investment income  142,859   **Net realized loss on investments**  Proceeds from sales 444,560 Less: cost of securities sold (based on identified                cost)464,174  Realized net loss  (19,614)   **Unrealized gain on investments**  End of period 156,099 Beginning of period370,360 Decrease in unrealized gain for the period  (214,261) Net realized and unrealized loss (233,875)   **Net decrease in net assets resulting fromoperations** **$(91,016)****STATEMENT                  OF CHANGES IN NET ASSETS**  **Period ended****Year ended** **May 31, 2004****Nov. 30, 2003****INCREASE (DECREASE) IN NET ASSETS**  **From Operations**  Net investment income$142,859$276,090Net realized gain (loss) on investments (19,614) 10,663Net increase (decrease) in unealizedappreciation (214,261) 94,455Net increase (decrease) in net assets fromoperations (91,016) 381,208     **Dividends to shareowners from**  Net investment income(143,265)(276,090)   **From fund share transactions**  Proceeds from sales of shares421,3371,140,412Value of shares issued in reinvestment ofdividends113,567216,574 534,9041,356,986Cost of shares redeemed(583,409)(713,555)Net increase (decrease) in net assets                from share transactions(48,505)643,431**Total increase (decrease) in netassets****$(282,786)****$748,549**   **NET ASSETS**  Beginning of period7,691,7176,943,168End of period**$7,408,931****$7,691,717**   **Shares of the fund sold and redeemed**  Number of shares sold77,333209,181Number of shares issued in reinvestment ofdividends20,92439,726 98,257248,907Number of shares redeemed(108,378)(131,040)   **Net increase (decrease) in number of sharesoutstanding****(10,121)****117,867**
*(The accompanying notes are an            integral part of these financial statements)*
***28* *N-CSRS                  Semi-Annual Report May 31, 2004***IDAHO                  TAX-EXEMPT FUND** **NOTES                  TO FINANCIAL STATEMENTS**
**Organization**                  Saturna Investment Trust, (the "Trust") wasestablished                  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 inaddition                  to Idaho Tax-Exempt Fund (the "Fund"). The otherfour                  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                  to independent audit. 

**Significant AccountingPolicies**                  The following is a summary of the significant accountingpolicies                  followed by the Funds.

***Investments:***                  Fixed-income securities for which there are no publiclyavailable                  market quotations are valued using matrices based on maturity,                  quality, yield and similar factors, which are comparedperiodically                  to multiple dealer bids and adjusted by the adviser underpolicies                  established by the Trustees. 

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 theidentified                  cost basis. 

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

Interest income is increased by accretion for bondsunderwritten                  as original 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 otherFunds                  of the Trust on the basis of relative daily average netassets.                

***Income taxes:***                  The Fund’s policy is to continue to comply with therequirements                  of the Internal Revenue Code that are applicable to regulated                  investment companies and to distribute all its income to its                  shareowners. Therefore, no provision for Federal income taxes                  is required. Further, the Fund intends to meet IRSrequirements                  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, which aredetermined                  in accordance with income tax regulations, are recorded on the                  ex-dividend date. Dividends are paid daily and distributed on                  the last business day of each month. ***Use of estimates:***                  The preparation of financial statements in conformity withgenerally                  accepted accounting principles requires management to makeestimates                  and assumptions that affect the reported amounts of assets and                  liabilities and disclosure of contingent assets andliabilities                  at the date of the financial statements and the reportedamounts                  of increases and decreases in net assets from operationsduring                  the reporting period. Actual results could differ from those                  estimates.

 

**Transactions with AffiliatedPersons**                  Under a contract approved by shareowners on October 12, 1990,                  Saturna Capital Corporation provides investment advisoryservices                  and certain other administrative and distribution services to                  conduct the Fund’s business. For such services, the Fund                  pays an annual fee equal to .50% of average daily net assets.                  For the six months ended May 31, 2004, the Fund incurredadvisory                  fee expenses of $19,515.                  In accordance with the Fund’s agreement with itscustodian,                  National City Bank of Indiana, for the six months ended May                  31, 2004, custodian fees incurred by the Fund amounted to$801.                  The custodian waived its fees for earnings credits.                  The Trust acts as a distributor of its own shares, except in                  those states in which Saturna Brokerage Services, Inc. (asubsidiary                  of Saturna Capital Corporation) is itself registered as abroker-dealer                  and acts as distributor without compensation. Saturna Capital                  Corporation acts as shareowner servicing agent for the Fund,                  for a monthly fee plus certain expenses. For the six months                  ended May 31, 2004, the Fund paid such a fee of $2,144.                   One trustee is also a director and officer of Saturna Capital                  Corporation. The unaffiliated trustees receive a fee of $200                  per meeting attended. For the six months ending May 31, 2004,                  such fees totalled $800 for the Trust.

**Dividends**                  As of May 31, 2004, the tax composition of dividends are as                  follows:5/31/04                   Tax Free Income: $143,265                  Income Per Share: $0.10                  Long-term Capital Gains: $ -                  Long-term Capital Gains Per Share: $ -11/30/03                  Tax Free Income: $276,090                  Income Per Share: $0.21                  Long-term Capital Gains: $ -                  Long-term Capital Gains Per Share: $ -

**Investments**At May 31, 2004, the net unrealized appreciation                  of investments for the Fund of $156,099 comprised grossunrealized                  gains of $198,366 and gross unrealized losses of $42,267. 

During the six months ended May 31, 2004, the Fund purchased                  $494,085 of securities and sold/matured $444,560 ofsecurities.
*N-CSRSSemi-Annual                Report May 31, 2004* *29*
           
 

**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 investorsunless                    it is accompanied or preceded by an effective prospectusrelating                    to the securities of the Fund. Idaho Tax-Exempt Fund is a                    series of Saturna Investment Trust

 
(graphic omitted)I D A HOTAX-EXEMPT FUND       
 

 

SEMI-ANNUAL                    REPORT

**May 31, 2004**

 
*30* *N-CSRS                    Semi-Annual Report May 31, 2004*
 

**Submission of Matters to a Vote of            Securities Holders**

Not applicable.

**Controls andProcedures**

Internal control over financial reporting is under the            supervision of the the principal executive and financial officers.            On July 6, 2004, Mr. Nicholas Kaiser (President) and Mr. Christopher            Fankhauser (Treasurer), reviewed the internal control procedures for            Saturna Investment Trust and found them reasonable and adequate.

**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, 2004* *31*
**Signatures**

Pursuant to the requirements of the SecuritiesExchange            Act of 1934 and the Investment Company Act of 1940, the registrant            has duly caused this report to be signed on its behalf by theundersigned,            thereunto duly authorized.**SATURNA INVESTMENT TRUST**            By:            /s/ Nicholas Kaiser            Nicholas Kaiser, President             Date: July 21, 2004            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 thecapacities            and on the dates indicated.

By:            /s/ Nicholas Kaiser            Nicholas Kaiser, President             Date: July 21, 2004

            By:            /s/ Christopher Fankhouser             Christopher Fankhouser, Treasurer            Date: July 21, 2004

  
*32* *N-CSRS                  Semi-Annual Report May 31, 2004*
 

  

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