**UNITED STATESSECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.20549****SCHEDULE 14A**Proxy Statement Pursuant to Section 14(a) of the Securities  Exchange Act of1934

Filed by the Registrant [ x ] Filed by a Party otherthan the Registrant [ ]

Check the appropriate box: [ x ]Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only(as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy Statement [ ]Definitive Additional Materials [ ] Soliciting Material Pursuant to§240.14A-12

**SATURNA INVESTMENTTRUST** (Name of Registrant as Specified in itsCharter) (Name of Person(s) Filing Proxy Statement, if otherthan the Registrant)

Payment of Filing Fee (Check theappropriate box): [ x ] No fee required. [ ] Fee computed ontable below per Exchange Act Rules 14a-6(i)(4) and 0-11.

>  1) Title of each class of securities to which transactionapplies: __________________________ 2) Aggregate number of securitiesto which transaction applies: __________________________ 3) Per unitprice or other underlying value of transaction computed pursuant to Exchange ActRule 0-11 (set forth the amount on which the filing fee is calculated and statehow it was determined):  4) Proposed maximum aggregate value oftransaction:  5) Total fee paid: 

[ ] Fee paid previously with preliminarymaterials. [ ] Check box if any part of the fee is offset as providedby Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsettingfee was paid previously. Identify the previous filing by registration statementnumber, or the form or schedule and the date of its filing.

>  1) Amount Previously Paid:______________________________________________________ 2) Form,Schedule or Registration Statement No.:_____________________________________ 3) Filing Party:________________________________________________________________ 4)Date Filed: _______________________________

PRELIMINARY MATERIALS

**SATURNAINVESTMENT TRUST** SEXTANT GROWTH FUND SEXTANTINTERNATIONAL FUND SEXTANT BOND INCOME FUND SEXTANT SHORT-TERM BONDFUND IDAHO TAX-EXEMPT FUND

1300 North State Street,Bellingham, WA 98225 (1-800-728-8762)

**NOTICEOF SPECIAL MEETING OF SHAREOWNERS TO BE HELD TUESDAY, AUGUST 15,2006**

*To the Shareowners of Saturna InvestmentTrust:*

NOTICE is hereby given that a Special Meeting of theshareowners of Sextant Growth Fund, Sextant International Fund, Sextant BondIncome Fund, Sextant Short-Term Bond Fund and Idaho Tax-Exempt Fund(“Funds”) will be held in the offices of Saturna CapitalCorporation, 1300 North State Street, Bellingham, WA 98225 at 3 PM (PacificTime) on August 15, 2006. The purpose of the Special Meeting is to consider andact upon the following proposals, and to transact such other business as mayproperly come before the Special Meeting or any adjournments thereof.

> 
1) To elect a Board of Trustees (all funds)

2) To approve the adoption of a Plan of Distribution pursuant to Rule 12b-1under the Investment Company Act of 1940 (all funds except Idaho Tax-ExemptFund)

3) To transact any other business that may properly come before theSpecial Meeting

You are entitled to vote atthe Special Meeting and any adjournment thereof if you owned Shares of at theclose of business on July 3, 2006. If you attend the meeting, you may vote yourShares in person. **If you do not expect to attend the meeting, pleasecomplete, sign, date, and return the enclosed proxy card in the enclosedpostage-paid envelope.** You may revoke your proxy by written notice tothe Trust before the meeting, by a subsequent valid proxy, or by request at themeeting before the vote. To avoid unnecessary expense, we ask your cooperationin voting promptly, no matter how large or small your holdings may be.

> 
By order of the Board of Trustees, ETHEL B. BARTOLOME, Secretary

Bellingham, Washington June 30, 2006 

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**YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOUOWN**

Please indicate your voting instructions on the enclosedproxy card, sign, and date the card, and return it in the envelope provided.**IF YOU SIGN, DATE AND RETURN THE PROXY CARD BUT GIVE NO VOTINGINSTRUCTIONS, YOUR SHARES WILL BE VOTED “FOR” THE PROPOSALSDESCRIBED ABOVE.** To avoid the additional expense of furthersolicitation, we ask your cooperation in mailing your proxy card promptly.Shares that are registered in your name may also be voted by faxing yourcompleted proxy card(s) to 360/734-0755. 

| **INSTRUCTIONS FOR EXECUTING PROXY CARD**

Thefollowing general rules for executing proxy cards may be of assistance to youand help avoid the time and expense involved in validating your vote if you failto execute your proxy card properly.

1. **IndividualAccounts:** Your name should be signed exactly as it appears in theregistration on the proxy card.

2. **Joint Accounts:**Either party may sign, but the name of the party signing should conform exactlyto a name shown in the registration.

3. **All otheraccounts** should show the capacity of the individual signing. This canbe shown either in the form of the account registration itself or by theindividual executing the proxy card.

Unless proxy card(s) submitted bycorporations and partnerships are signed by the appropriate persons as indicatedin the voting instructions on the proxy card, they will not be voted. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Registration                                                                     | Valid Signature                                            |
|--------|----------------------------------------------------------------------------------|------------------------------------------------------------|
| A.     | 1) ABC Corp. 2) ABC Corp. c/o John Smith,Treasurer                               | Jane Smith, Treasurer John Smith, Treasurer                |
| B.     | 1) ABC Corp. Profit Sharing Plan 2) ABCTrust 3) John Smith, Trustee u/t/d 3/2/48 | John Smith, TrusteeJohn Smith, Trustee John Smith, Trustee |
| C.     | 1) Jane Smith, Cust. f/b/o John Smith, Jr. UGMA                                  | JaneSmith                                                  |
| D.     | 1) J & J SmithPartnership                                                    | John Smith, Partner                                        |

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**SATURNA INVESTMENT TRUST 1300 N. State Street, Bellingham,WA 98225 (1-800-728-8762) PROXY STATEMENT FOR SPECIAL MEETINGOF SHAREOWNERS AUGUST 15, 2006 ______________________**

ThisProxy Statement is furnished in connection with a solicitation of proxies madeby, and on behalf of, the Board of Trustees of Saturna Investment Trust (the“Trust”) to be used at the Special Meeting of the shareowners ofeach series of the Trust: Sextant Growth Fund, Sextant International Fund,Sextant Bond Income Fund, Sextant Short-Term Bond Fund and Idaho Tax-ExemptFund, to be held on Tuesday, August 15, 2006, at 3 PM in the offices of SaturnaCapital Corporation, 1300 North State Street, Bellingham, WA 98225. 

Thepurpose of the Meeting is set forth in the accompanying Notice. The solicitationis being made primarily by the mailing of this Proxy Statement and theaccompanying proxy on or about July 6, 2006. 

**For a free copy ofthe Trust’s annual report for the fiscal year ended November 30, 2005 andthe semiannual report for the fiscal period ended May 31, 2006, call1-800-728-8762 or write to Saturna Capital Corporation at 1300 N. State Street,Bellingham, WA 98225.**

**VOTINGINFORMATION**

The Trust currently has five investment portfolios:Sextant Growth Fund, Sextant International Fund, Sextant Bond Income Fund,Sextant Short-Term Bond Fund and Idaho Tax-Exempt Fund, each of which has issuedonly one class of Shares of beneficial interest ("Shares"). Theholders of Shares whose names appear of record on the books of a Fund at theclose of business on July 3, 2006 are entitled at the meeting to a vote for eachfull Share or fraction thereof. As of July 3, 2006 the outstanding Shares ofeach Fund were as follows:

| **Fund**                   | **SharesOutstanding** |
|----------------------------|-----------------------|
| ***GrowthFund***           | **XXXXXX**            |
| ***International Fund***   | **XXXXXX**            |
| ***Bond IncomeFund***      | **XXXXXX**            |
| ***Short-Term Bond Fund*** | **XXXXXX**            |
| ***Idaho Tax-ExemptFund*** | **XXXXXX**            |

One-half of each Fund’s Shares outstanding on July 3, 2006, represented inperson or by proxy, will constitute a quorum and must be present for thetransaction of business at the meeting. All Shares that are voted and votes toABSTAIN will be counted towards establishing a quorum.

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**VOTING OFPROXIES**

If a quorum is not present at the meeting or a quorum ispresent but sufficient votes to approve one or more of the proposals are notreceived, the persons named as proxies may propose one or more adjournments ofthe meeting to permit further solicitation of proxies. Any such adjournment willrequire the affirmative vote of a majority of those Shares represented at themeeting in person or by proxy. The persons named as proxies will vote thoseproxies that they are entitled to vote FOR any proposal in favor of such anadjournment and will vote those proxies required to be voted AGAINST a proposalagainst such adjournment. A shareowner vote may be taken on one or more of theproposals in this Proxy Statement prior to any such adjournment if sufficientvotes have been received and it is otherwise appropriate.

Brokernon-votes are Shares held in street name for which the broker indicates thatinstructions have not been received from the beneficial owners or other personsentitled to vote and for which the broker does not have discretionary votingauthority. Abstentions and broker non-votes will be counted as Shares presentfor purposes of determining whether a quorum is present but will not be votedfor or against any adjournment or proposal. Accordingly, abstentions and brokernon-votes effectively will be a vote against adjournment or against any proposalwhere the required vote is a percentage of the Shares present or outstanding.Abstentions and broker non-votes will not be counted, however, as votes cast forpurposes of determining whether sufficient votes have been received to approve aproposal.

With respect to Shares held in Individual Retirement Accountsand other tax-deferred custodial accounts (including Traditional, Rollover, SEP,SARSEP, Roth, SIMPLE IRAs, HSAs, and ESAs) (“Tax-DeferredAccounts”), the Custodian (often, Saturna Capital) for the Tax-DeferredAccounts will vote those Shares for which it has received instructions fromshareowners only in accordance with such instructions. If shareowners ofTax-Deferred Accounts do not vote their Shares, the Custodian for theTax-Deferred Accounts will vote their Shares for them, in the same proportion asother shareowners of Tax-Deferred Accounts have voted, but only to the extentnecessary to reach quorum at the meeting.

The individuals named asproxies on the enclosed proxy card will vote in accordance with your directionsas indicated on the proxy card, if your proxy card is received properly executedby you or by your duly appointed agent or attorney-in-fact. If you sign, dateand return the proxy card, but give no voting instructions, your Shares will bevoted in favor of approval of each of the proposals, and the duly appointedproxies may, in their discretion, vote upon such other matters as may comebefore the meeting. The proxy card may be revoked by giving another proxy or byletter or e-mail revoking the initial proxy. To be effective, revocation must bereceived by the Trust prior to the meeting and must indicate your name andaccount number. If you attend the meeting in person you may, if you wish, voteby ballot at the meeting, thereby canceling any proxy previously given. Inaddition to solicitation by mail, proxies may be solicited by telephone,telegraph, facsimile, electronic means or by personal interview byrepresentatives of the Trust. No solicitations will be made by specificallyengaged agents of the Trust or other paid solicitors. Unless otherwisedirected by the shareowner giving the proxy, the persons acting under theaccompanying proxy will vote the Shares represented thereby (a) for the electionof the five 

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persons named under the caption"Election of Trustees" as nominees for Trustees of the Trust, (b) foradoption of the Plan of Distribution under Rule 12b-1 of the 1940 Act, and (c)in their discretion with respect to the transaction of such other business asmay properly come before the meeting or any adjournment thereof. The Board ofTrustees does not know of any other matter or business that may be broughtbefore the meeting.

**VOTE REQUIRED**

**Proposal 1.** Approval of Proposal 1 requires the affirmativevote of a plurality of the Shares of the entire Trust voted in person or byproxy at the Meeting. 

**Proposal 2.***(Growth Fund,International Fund, Bond Income Fund, and Short-Term Bond Fund only).* EachFund voting on Proposal 2 does so separately. The approval of the Proposal by aFund is applicable only to that particular Fund. A Fund’s approval of theProposal is not dependent on, or affected in any way by, the results of the voteof another Fund. Approval of the Proposal by a Fund requires the "vote of amajority of voting securities" of that Fund, meaning the vote, at anymeeting of shareowners more than 50% of the outstanding Shares of that Fund. With respect to Proposal 2, votes to ABSTAIN and broker non-votes will havethe same effect as votes cast AGAINST the Proposal.

Each outstanding fullShare of each Fund is entitled to one vote, and each outstanding fractionalShare is entitled to a proportionate fractional Share of one vote. If Proposal 2is not approved by the requisite vote of shareowners of a Fund, the personsnamed as proxies may propose one or more adjournments of the meeting to permitfurther solicitation of proxies.

**PROPOSAL 1:NOMINEES FOR ELECTION AS TRUSTEES**

The overall direction andsupervision of the Trust is the responsibility of the Board, which has theprimary duty of ensuring that the Trust’s general investment policies andprograms are adhered to and that the Trust is properly administered. Theofficers of the Trust are responsible for the day-to-day administration of theTrust. Saturna Capital, as investment adviser for the Trust, is primarilyresponsible for providing each portfolio of the Trust with variousadministrative services and supervising the daily business affairs of eachseries. 

Each of the nominees for Trustee has consented to be namedherein and to serve if elected. Should any nominee become unable or unwilling toaccept nomination or election, the persons acting under the proxy will vote forthe election in the nominee's stead of such other person as the Board ofTrustees may recommend. Each trustee serves for the lifetime of the Trust oruntil he dies, resigns, is removed, or not re-elected by the shareowners. Eachofficer serves a one-year term subject to annual reappointment by the Trustees.

The following table provides important information about theTrustees/Nominees and the officers of the Trust.

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| Name (age) Address                                                                         | Position(s) held with Trust and Length of Time Served | PrincipalOccupation(s) during past 5 Years                                                         | Dollar Range of  Securities inthe  Sextant Funds                                                             | Dollar Range of  Securities in all Funds Overseen  or to be  Overseen by Director or  Nominee in Family of  Investment  Companies | Number of  Portfoliosin  Saturna Fund  Complex  Overseen by  Trustee | OtherDirectorships held by Trustee |
|--------------------------------------------------------------------------------------------|-------------------------------------------------------|----------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------|------------------------------------|
| ***IndependentTrustees***                                                                  |
| Gary A.Goldfogel, MD (47) 1500 N. State Street Bellingham, WA 98225                        | Independent Trustee (since 1995)                      | Medical Examiner(pathologist); Owner, Avocet Environmental Testing (laboratory)                    | Growth: over $100,000 International:$50,001-100,000 Short-Term Bond: over $100,000 Bond Income: over$100,000 | over $100,000                                                                                                                     | Five                                                                 | None                               |
| Herbert G. Grubel (71)  Apt. 1202 - 125 West  SecondSt. North Vancouver, BC Canada V7M 1C5 | Independent Trustee(since 2005)                       | Senior Fellow, Fraser Institute; Professor (Emeritus) ofEconomics, Simon Fraser University; Author | Growth: $10,001-50,000                                                                                       | $10,001-50,000                                                                                                                    | Five                                                                 | None                               |
| John E. Love (73) 1002 Spokane StreetGarfield, WA 99130                                    | Chairman; Independent Trustee (since1987)             | Owner, J.E. Love Co. (agricultural equipmentmanufacturer)                                          | Growth:  $10,001-50,000International:  $1-10,000 Short-Term Bond:  over $100,000 BondIncome: $50,001-100,000 | over$100,000                                                                                                                      | Five                                                                 | None                               |
| John S. Moore(74) 346 Bayside Road Bellingham, WA 98225                                    | IndependentTrustee (since 1993)                       | Professor (now retired), College of Businessand Economics, Western Washington University           | Growth: $10,001-50,000                                                                                       | $10,001-50,000                                                                                                                    | Five                                                                 | None                               |

 

| ***InterestedTrustee*** |
|-------------------------|

 

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| Nicholas F. Kaiser,CFA (59) 1300 N. State Street Bellingham, WA 98225   | President;Trustee* (since 1989)        | President, Saturna Capital Corporation;President, Saturna Brokerage Services                       | Growth:over $100,000 International: over $100,000 Short-Term Bond:$10,001-50,000 Bond Income: $10,001-50,000 Idaho Tax-Exempt:$1-10,000 | over $100,000  | Seven | Amana Mutual FundsTrust |
|-------------------------------------------------------------------------|----------------------------------------|----------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------|----------------|-------|-------------------------|
| ***Officers who are notTrustees***                                      |
| Phelps S.McIlvaine (52) 1300 N. State Street Bellingham, WA 98225       | VicePresident (since 1994)             | Vice President, Saturna Capital Corporation;Treasurer, Saturna Brokerage Services                  | None                                                                                                                                    | None           | N/A   | N/A                     |
| Christopher R. Fankhauser (33) 1300 N. State StreetBellingham, WA 98225 | Treasurer* (since 2002)                | Manager ofOperations, Saturna Capital Corporation                                                  | Growth:$1-10,000 International: $1-10,000 Bond Income: $1-10,000Short-Term Bond: $1-10,000                                              | $10,001-50,000 | N/A   | N/A                     |
| Ethel B.Bartolome (33) 1300 N. State Street Bellingham, WA 98225        | Secretary* (since 2001)                | Corporate Administrator, SaturnaCapital Corporation                                                | Growth:$1-10,000                                                                                                                        | $1-10,000      | N/A   | N/A                     |
| James D. Winship, (57) 1300 N. State StreetBellingham, WA 98225         | Chief Compliance Officer* (since 2004) | Attorney; Adjunct Professor,  University of Washington and SeattlePacific University (1999 - 2003) | Growth:$1-10,000                                                                                                                        | $1-10,000      | N/A   | N/A                     |

* Holds the same position with Amana Mutual Funds Trust.

1/Valuations of shareholdings are computed as of May 31, 2006.

2/ Mr.Kaiser is an "interested person" of the Trust, as defined in theInvestment Company Act of 1940, by reason of his positions with theTrust’s adviser and distributor. He is also portfolio manager of theGrowth Fund and the International Fund. See “Additional InformationConcerning the Investment Adviser." 

3/ Each Trustee oversees orwill oversee the five portfolios of the Trust. In addition, Mr. Kaiser overseestwo portfolios of Amana Mutual Funds Trust.

 4/ Mr. McIlvaine is theprimary portfolio manager of the Bond Income Fund, Sextant Short-Term Bond Fundand the Idaho Tax-Exempt Fund.

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The followingtable provides important information about the shareholdings of theTrustees/Nominees, and the officers of the Trust.

| ***Name ofFund***           | ***Name ofIndividual*** | ***Number of Shares*** | ***Percent of Fund**** |
|-----------------------------|-------------------------|------------------------|------------------------|
| **Sextant Growth**          |
|                        | Gary Goldfogel          | 25279.435              | 3.19                   |
|                        | Herbert Grubel          | 611.111                | *                      |
|                        | John Love               | 1297.481               | *                      |
|                        | John Moore              | 671.817                | *                      |
|                        | Nicholas Kaiser         | 23711.690              | *                      |
|                        | Phelps McIlVaine        | None                   | N/A                    |
|                        | Christopher Fankhauser  | 93.094                 | *                      |
|                        | Ethel Bartolome         | 43.087                 | *                      |
|                        | James Winship           | 170.116                | *                      |
| Sextant International       |
|                        | Gary Goldfogel          | 7666.376               | 1.12                   |
|                        | Herbert Grubel          | None                   | N/A                    |
|                        | John Love               | 7842.416               | 1.14                   |
|                        | John Moore              | None                   | N/A                    |
|                        | Nicholas Kaiser         | 22364.460              | 3.26                   |
|                        | Phelps McIlVaine        | None                   | N/A                    |
|                        | Christopher Fankhauser  | 782.739                | *                      |
|                        | Ethel Bartolome         | None                   | N/A                    |
|                        | James Winship           | None                   | N/A                    |
| **Sextant Short-Term Bond** |
|                        | Gary Goldfogel          | 21800.161              | 4.21                   |
|                        | Herbert Grubel          | None                   | N/A                    |
|                        | John Love               | 18483.179              | 3.57                   |
|                        | John Moore              | None                   | N/A                    |
|                        | Nicholas Kaiser         | 4683.990               | *                      |
|                        | Phelps McIlVaine        | None                   | N/A                    |
|                        | Christopher Fankhauser  | 639.367                | *                      |
|                        | Ethel Bartolome         | None                   | N/A                    |
|                        | James Winship           | None                   | N/A                    |

 

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| **Sextant Bond Income Fund** |
|------------------------------|
|                         | Gary Goldfogel | 32551.844 | 5.20 |
|                         | Herbert Grubel | None | N/A |
|                         | John Love | 14165.123 | 2.26 |
|                         | John Moore | None | N/A |
|                         | Nicholas Kaiser | 2931.454 | * |
|                         | Phelps McIlVaine | None | N/A |
|                         | Christopher Fankhauser | 1255.774 | * |
|                         | Ethel Bartolome | None | N/A |
|                         | James Winship | None | N/A |
| **Idaho Tax-Exempt Fund**    |
|                         | Gary Goldfogel | None | N/A |
|                         | Herbert Grubel | None | N/A |
|                         | John Love | None | N/A |
|                         | John Moore | None | N/A |
|                         | Nicholas Kaiser | 815.281 | * |
|                         | Phelps McIlVaine | None | N/A |
|                         | Christopher Fankhauser | None | N/A |
|                         | Ethel Bartolome | None | N/A |
|                         | James Winship | None | N/A |

** Signifies less than 1% ownership*

On May 31,2006,the trustees, officers and their related accounts as a group owned 23.64%,22.81%, 36.97%, 50.34%, 0.05% of the outstanding shares of the Bond Income,Short-Term Bond, Growth, International, and Idaho Tax-Exempt Funds,respectively. The Trust’s Statement of Additional Information,available without charge by calling Saturna Capital at 800-SATURNA, includesadditional information about the trustees.

______________________

If elected, the Trustees will holdoffice without limit in time except that (a) any Trustee may resign; (b) aTrustee may be removed with or without cause by 2/3 vote of the Board or by theshareowners holding 2/3 of the outstanding Shares of the Trust, in either caseat a meeting expressly called for the purpose; (c) Trustees reaching age 78retire by board policy. In case a vacancy shall for any reason exist, theremaining Trustees will fill such vacancy by appointing another Trustee, so longas, immediately after such appointment, at least two-thirds of the Trustees havebeen elected by shareowners.

There are no arrangements known to the Trustthe operation of which may at a subsequent date result in a change in control ofthe Trust.

During the fiscal year ended November 30, 2005, the Board ofTrustees held four regularly scheduled meetings. All trustees proposed forre-election to the Board attended all meetings. It is expected that the Trusteeswill meet at least four times a year at regularly scheduled meetings. TheTrustees have established certain Governance Policies and Procedures to enhancethe

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independence and effectiveness of theIndependent Trustees and to assist them in furthering their roles.

TheBoard has a standing Audit Committee that has adopted a written charter (a copyof which is attached to this Proxy Statement). The Board’s Audit Committeeis composed of the Independent Trustees, and has a financial expert, Mr. JohnMoore, an Independent Trustee. The purpose of the Audit Committee is to:

> 
1) Monitor and oversee the Trust’s accounting andfinancial reporting policies and practices, its internal controls and, asappropriate, the internal controls of the Trust’s service providers;

2) To monitor and oversee the quality and objectivity of the Trust’sfinancial statements and its independent audit;

3) To act as a liaisonbetween the Trust’s external auditors and the full Board; 

4) Toreview and report to the full Board on regulatory and compliance mattersrelating to the Trust and its investment portfolios; and

5) Review andestablish the fees of the independent accountants, and other matters.

During the fiscal year ended November 30, 2005, the auditcommittee held one meeting.  

The Independent Trustees function as thenominating committee, although the Board has not established a formal nominatingcommittee as such, and has not adopted a nominating committee charter. TheIndependent Trustees will consider nominations furnished by shareowners.Nominations (or any other communication directed to the Board or any Trustee)may be sent directly to the Trustee, or to the Secretary of the Trust, c/oSaturna Capital Corporation, 1300 N. State Street, Bellingham, WA 98225.

The Trust does not have a compensation committee.

Effective December2005, the Trust pays disinterested trustees $300 per meeting attended, plusreimbursement of travel expenses (pro-rata to each Fund of the Trust). Mr.Kaiser receives no compensation from the Trust, nor are the other officers ofthe Trust paid for their duties with the Trust; except that Mr. Winship has beenretained by the Trust as Chief Compliance Officer, for which he is compensated.The following table provides the total compensation paid trustees for the fiscalyear ended November 30, 2005.

| Name of Person; Position       | Aggregate Compensation from Trust | Pension orRetirement Benefits Accrued As Part of Trust Expenses | Estimated Annual Benefits Upon Retirement | TotalCompensation From Trust and Fund Complex Paid To Trustees |
|--------------------------------|-----------------------------------|-----------------------------------------------------------------|-------------------------------------------|----------------------------------------------------------------|
| John E. Love Trustee, Chairman | $1000                             | $0                                                              | $0                                        | $1000                                                          |
| John S. More Trustee           | $1000                             | $0                                                              | $0                                        | $1000                                                          |

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| Gary A.Goldfogel Trustee                       | $1000 | $0 | $0 | $1000 |
|------------------------------------------------|-------|----|----|-------|
| Herbert A. Ershig Trustee (retired Sept. 2005) | $600  | $0 | $0 | $600  |
| Herbert G. Grubel Trustee (new Dec. 2005)      | $0    | $0 | $0 | $0    |
| Nicholas F. Kaiser Trustee                     | $0    | $0 | $0 | $0    |

Nicholas F. Kaiser,Trustee and President who is an “interested person” of the Trust,receives compensation as an officer of Saturna Capital or its affiliatedcompanies, but does not receive any director’s fees or other compensationfrom the Trust for his services as Trustee.

**THEBOARD UNANIMOUSLY RECOMMENDS THAT SHAREOWNERS VOTE “FOR”PROPOSAL 1 _________________________**

**PROPOSAL 2: TO APPROVE THE ADOPTION OF A PLAN OFDISTRIBUTION PURSUANT TO RULE 12b-1 UNDER THE INVESTMENT COMPANY ACT OF1940**

The Board of Trustees has approved, and recommends thatshareowners of each of the Growth Fund, International Fund, Bond Income Fund andShort-Term Bond Fund (but not Idaho Tax-Exempt Fund) approve a Distribution Planpursuant to Rule 12b-1 under the Investment Company Act of 1940 (the“Plan”) for each of those Funds. (All references to“Fund” or “Funds” in this discussion of Proposal 2 referonly to the Funds that are voting with respect to this Proposal.) A copy of thePlan is attached to this Proxy Statement as Exhibit A. 

**ThePlan.** The Plan was approved by the Board on June 28, 2006 as providedfor by Rule 12b-1 (the “Rule”) promulgated by the SEC under the 1940Act. The Rule provides that, an investment company (i.e. a mutual fund) actingas a distributor of its Shares must do so pursuant to a written Plan“describing all material aspects of the proposed financing ofdistribution.” Under the Rule, an investment company is deemed to beacting as a distributor of its Shares if it engages “directly orindirectly in financing any activity which is primarily intended to result inthe sale of Shares issued by such company, including, but not necessarilylimited to, advertising, compensation of underwriters, dealers, and salespersonnel, the printing and mailing of prospectuses to other than currentshareowners, and the printing and mailing of sales literature.”

Since the Trust’s inception, distribution expenses of each of the Fundshave been paid by the Adviser. The Trust has entered into a distributionagreement (“Distribution Agreement”) with Saturna Brokerage Services(“Distributor”), a broker-dealer registered under the SecuritiesExchange Act of 1934, pursuant to which the Distributor will act as principalunderwriter of 

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Shares of the Funds for saleto the public. Since the Trust’s inception, the Distributor has provideddistribution and shareowner services for the Funds without compensation. TheDistributor is a member of the National Association of Securities Dealers and awholly-owned subsidiary of Saturna Capital Corporation. All employees of theDistributor are also employees of Saturna Capital Corporation.

The SEChas neither approved nor disapproved the Plan.

The Plan contemplates thateach of the Funds shall pay the Distributor, a monthly fee at the annual rate of0.25% of the average daily net assets of each Fund (“DistributionFee”). Distributor may use all or any portion of the Distribution Fee foractivities that the Distributor determines to be reasonably calculated to resultin sales of Shares. Such activities may include, but neither are required toinclude nor are limited to, compensation to the Distributor or such otherunderwriters, dealers, brokers, banks and other selling or servicing entitiesand sales, marketing and servicing personnel of any of them that have enteredinto agreements with the Distributor for the marketing and sale of Shares or theprovision of shareowner services; payments for producing, printing anddisseminating sales materials, prospectuses, statements of additionalinformation and reports to other than existing shareowners; theDistributor’s expenses, including overhead, telephone and othercommunication expenses; costs of transmitting communications to shareowners,costs of answering shareowner inquiries; expenses incurred in processingshareowner transactions; payments for providing such other information andservices as shareowners reasonably may request; and payments for such othersimilar services that Distributor determines are reasonably calculated to resultin sales of Shares. 

EACH VOTING FUND PAYS, AND WILL CONTINUE TO PAY, ANADVISORY FEE TO THE ADVISER PURSUANT TO A SEPARATE INVESTMENT ADVISORY ANDADMINISTRATIVE SERVICES AGREEMENT.

The Plan does not require theDistributor to perform any specific type or level of distribution activities orto incur any specific level of expenses for activities primarily intended toresult in the sale of Shares.

The Plan specifically recognizes that theAdviser may use its advisory fee revenue, as well as its past profits or itsresources from any other source, to make payment to the Distributor with respectto any expenses incurred in connection with the distribution of Shares,including the activities referred to above. To the extent that the payment ofadvisory fees by a Fund to the Adviser should be deemed to be indirect financingof any activity primarily intended to result in the sale of Shares within themeaning of Rule 12b-1, such payment shall be deemed to be authorized by thisPlan. 

The Plan contains a number of provisions relating to reportingobligations and to its amendment and termination as required by the Rule. Ifapproved by the shareowners of a Fund, the Plan will continue in effect withrespect to that Fund as long as its continuance is specifically approved atleast annually by a majority of the Board of Trustees, as well as a majority ofthe Trustees who are not “interested persons'' of the Trust within themeaning of Section 2(a)(19) of the 1940 Act, and who have no direct or indirectfinancial interest in the operation of the Plan or any agreement 

10

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related to the Plan (the “DisinterestedTrustees”), cast in person at a meeting called for the purpose of votingon the Plan. The Plan may be amended at any time by the Trustees,except that it may not be amended to increase materially the Distribution Feefor a Fund unless such amendment is approved by the vote of a majority of theoutstanding Shares of that Fund (as defined in the 40 Act). All materialamendments to the Plan must be approved by a majority of the non-interestedTrustees. 

The Plan may be terminated with respect to a Fund by the voteof a majority of the Disinterested Trustees or by majority vote of theoutstanding Shares of that Fund as defined in the 1940 Act. 

The Planrequires that the Trust’s Principal Financial Officer or Treasurer, orsuch other person authorized to direct the disposition of monies paid or payableby the Trust, provide to the Trustees, and that the Trustees review, at leastquarterly, a written report of the amounts expended with respect to each Fund,during the quarter under the Plan, and the purposes for which such expenditureswere made. As required by the Rule, while the Plan is in effect, the Board mustsatisfy the fund governance standards as defined in Rule 270.0-1(a)(7).

**ANNUAL FUND OPERATING EXPENSES**

Based on the fiscal year ended November 30, 2005, the table belowsets out the fees paid by each of the Funds and the fees that will be paid ifthe Plan of Distribution is approved:

|           | **Growth**  | **International** | **Short-Term** | **BondIncome** |
|----------------|-------------|-------------------|----------------|----------------|
|           | **Current** | *Proposed*        | **Current**    | *Proposed*     | **Current** | *Proposed* | **Current** | *Proposed* |
| Management Fee | **0.83%**   | *0.83%*           | **0.73%**      | *0.73%*        | **0.58%** | *0.58%* | **0.43%** | *0.43%* |
| Distribution   | **None**    | *0.25%*           | **None**       | *0.25%*        | **None** | *0.25%* | **None** | *0.25%* |
| Other Expenses | **0.45%**   | *0.45%*           | **0.63%**      | *0.63%*        | **0.65%** | *0.65%* | **0.54%** | *0.54%* |
| Total          | **1.28%**   | *1.53%*           | **1.36%**      | *1.61%*        | **1.23%** | *1.48%* | **0.97%** | *1.22%* |

***
*Earnings credits for custody fees further reducedoperating expenses and are not reflected above. For 3/29/2006 through 3/31/2007,expenses for Short-Term Bond Fund are voluntarily capped at 0.75% and BondIncome Fund are voluntarily capped at 0.90%. Managementfees for both Bond fundsare contractually waived when assets are less than $2 million.*

The following table assumes an investor invests $10,000 in a Fundfor the years indicated and then redeems at the end of those years. The examplealso assumes that the investor has a 5% return each year and that theFunds’ “Annual Operating Expenses” shown above (without feewaivers or credits or variation for performance) remain the same. Althoughactual costs may be higher or lower, based on these assumptions, an investorscumulative expenses would be as shown, both under the current fee structure andas if the Plan of Distribution were in place throughout the periods.

|   | **Current  1 Year** | ***1 Year  ProForma*** | **Current  3Year** | ***3 Year  ProForma*** | **Current  5Year** | ***5 Year  ProForma*** | **Current  10Year** | ***10 Year  ProForma*** |
|--------|---------------------|------------------------|--------------------|------------------------|--------------------|------------------------|---------------------|-------------------------|
| SSGFX  | **$134**            | *$161*                 | **$442**           | *$528*                 | **$800**           | *$956*                 | **$1,920**          | *$2,295*                |
| SSIFX  | **$143**            | *$169*                 | **$469**           | *$555*                 | **$850**           | *$1,006*               | **$2,040**          | *$2,415*                |
| STBFX  | **$129**            | *$155*                 | **$424**           | *$511*                 | **$769**           | *$925*                 | **$1,845**          | *$2,220*                |
| SBIFX  | **$102**            | *$128*                 | **$335**           | *$421*                 | **$606**           | *$763*                 | **$1,455**          | *$1,830*                |

**Trustee Consideration.**Inconsidering whether the Funds should establish the Plan, the Board considered avariety of factors and was advised by counsel who are independent within themeaning of the 1940 Act and Rule. The Trustees considered the factors suggestedin the SEC 

11

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Releases that accompanied theproposal and adoption of the Rule, including: the need for independent counselor experts to assist the Trustees in reaching a determination; the nature andapproximate amount of the expected cost of the Plan; the interrelationshipbetween the Plan and the activities of the Adviser in financing the distributionof Fund Shares; the full range of services provided by the Adviser and theDistributor, including services which may be related to the distribution ofShares, the possible benefits of the Plan to the Adviser and its affiliatesrelative to those expected to accrue to the Funds; the effects and benefits ofthe Plan on existing shareowners, including the probability of increasedexpenses when the Plan first becomes effective; and whether the Plan isreasonably likely to benefit the Funds and their shareowners.

TheTrustees believe that, to the extent that the Distributor has greaterflexibility and resources under the Plan, additional sales of Fund Shares mayresult. With shareowners having an increasing number of other funds from whichto choose and multiple ways to invest in and hold funds, many of which arethrough third parties unrelated to funds and distributors, it is more difficultand expensive to attract and retain shareowners. 

The Trusteesrecognized that a significant factor in the attraction and retention ofshareowners today is making existing and potential shareowners aware of thebenefits and performance of the Funds in an increasingly crowded marketplace.This is compounded by the involvement of third party distributors who attractshareowners to their “platforms” which offer multiple funds andother investment choices, breaking the link between funds and their shareowners.A consequence of that is the increased difficulty of making shareowners aware ofthe Funds as well as retaining current shareowners who have less direct contactwith the Funds, and who are constantly faced with information regardingalternative investment choices. 

The Trustees believe that it isimportant to maintain a stable, if not growing, shareowner base to assist inspreading fixed costs of fund management across a wider base, thereby decreasingexpense ratios, increasing investment efficiencies, and assisting investmentmanagers in managing stable portfolios not beset with net redemptions, whichhave adverse effects and costs for remaining shareowners. An additional cost ofdealing with this increasingly difficult environment for maintaining stable andeconomically viable and efficient funds is compensating third parties thatdistribute funds for their contribution and efforts in attracting and supportingshareowners.

Of course, there can be no assurance that these eventswill occur. The Funds may not be successful in achieving their investmentobjectives. The Plan may not work. Changes in the increasingly tumultuousmarketplace, opportunities and demands on shareowners from competitive funds andalternative investments are a constant challenge to maintaining and growing anappropriate shareowner base. Political, economic and other forces outside theinvestment world affect the value of securities that all funds invest in, andchange their relative attractiveness as an investment vehicle. The Trusteesconsidered the limited resources now available for distribution and relatedshareowner servicing expenses to attract and retain shareowners in thisenvironment. The Trustees also considered alternatives to the Plan, such as theimplementation of additional series of the Funds that could be distributed witha sales load. After consideration of alternatives, the 

12

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Trustees concluded that the Plan was the bestalternative available to the Funds in the circumstances, and came to theconclusion that the Plan was reasonably likely to benefit the Funds and theirshareowners.

The Trustees recognized that a greater level of fund assetsbenefits the Adviser by increasing its management fee revenues. The Trusteesalso noted that, although the revenues of the Adviser increase with a higherlevel of assets, expenses of administration of the Funds and servicing a growingshareowner base also rise. These costs affect the Adviser directly because theFunds’ Advisory Contracts include investment management as well asadministration and shareowner servicing as part of its services to theFunds.

The Board noted that each year the Board reviews the AdvisoryContracts of the Funds on their own merits. Each year the Trustees haveconcluded that the level of fees associated with the Advisory Contracts is fairand reasonable, considering the high quality of investment management services,administration, and investor services that have been provided by Adviser overthe years, The Board also found that the Funds are not indirectly subsidizing orbearing distribution costs through the Advisory Contracts. The Trustees note theperformance fee nature of the Advisory Contracts make them more in the interestof shareowners than almost all other mutual funds.

**Conclusion.** For the reasons stated above, the members of theBoard of Trustees concluded in the exercise of their business judgment, and inlight of their fiduciary duties under state law and the 1940 Act, that there isa reasonable likelihood that the Plan will benefit the Funds and theirshareowners. The Trustees recommend that shareowners of each Fund vote FORapproval of the Plan. With respect to each Fund, if the Plan is not approved,the Board and the Advisor will consider alternative means of obtaining theobjectives of the Plan.

**THE BOARD UNANIMOUSLYRECOMMENDS THAT SHAREOWNERS VOTE “FOR” PROPOSAL 2_________________________**

**ADDITIONALINFORMATION**

***The Adviser***

SaturnaCapital Corporation, a Washington State corporation formed in 1989, 1300 N.State Street, Bellingham, Washington 98225, is the Investment Adviser andAdministrator (the “Adviser”) for the Funds. Saturna Capital is alsothe Funds’ shareowner servicing agent. Mr. Nicholas Kaiser, by hisownership of the majority of its voting stock, is the controlling person of theAdviser. The Adviser also serves as investment adviser to individuals andcorporations, as well as other mutual funds.

***IndependentPublic Accountants***

The Trust’s principal publicindependent accountant is Tait, Weller and Baker. A representative from Tait,Weller and Baker is not expected to be present at the meeting, however, arepresentative is expected to be available to respond to appropriatequestions.

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***Audit and Other FeesPaid to Independent Public Accountants***

One hundred percentof the services described in the table below were approved by the AuditCommittee. No services were performed for the adviser and paid for by the Trust.

|                  | ***Fiscal yearending November 30, 2004*** | ***Fiscal year ending November 30,2005*** | ***Nature ofservice***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----------------------|-------------------------------------------|-------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) Audit Fees        | $24,500                                   | $24,500                                   | Total audit fees billed forprofessional auditing services                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (b)Audit-Related Fees | $18,500                                   | $18,500                                   | Fee for(1) auditing of the statements of assets and liabilities, related statements ofoperations and changes in net assets, and the financial highlights of each ofthe Funds; (2) auditing and reporting on the financial statements to be includedin the Amendment to the Funds’ Registration Statement, Form N-1A, to befiled with the Securities and Exchange Commission; (3) review of the Amendmentto the Registration Statement; and (4) issuance of a Report on Internal ControlStructure for inclusion in Form N-SAR. |
| (c) Tax Fees          | $6,000                                    | $6,000                                    | Preparation of the Funds’federal and state income tax returns.                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (d) All othe fees     | N/A                                       | N/A                                       | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

Audit Committee Pre-ApprovalPolicies and Procedures

The following is an excerpt from the SaturnaInvestment Trust Audit Committee Charter:

> 
**D.	Oversight of Independent Auditor**s

3. Pre-approval of Audit and Non-Audit Services. Except as providedbelow, the Committee’s prior approval is necessary for the engagement ofthe independent auditors to provide any audit or non-audit services for theTrust and any non-audit services for any entity controlling, controlled by orunder common control with Saturna that provides ongoing services to the Trust(Saturna and each such entity, an “Adviser Affiliate”) where theengagement relates directly to the operations or financial reporting of theTrust. Non-audit services that qualify under the de minimis exception describedin the Securities Exchange Act of 1934, as amended, and applicable rulesthereunder, that were not pre-approved by the Committee, must be approved by theCommittee prior to the completion of the audit. Pre-approval by the Committee isnot required for engagements entered into pursuant to (a) pre-approval policiesand procedures established by the Committee, or (b) pre-approval granted by oneor more members of the Committee to whom, or by a subcommittee to which, theCommittee has delegated pre-approval authority, provided in either case, thatthe Committee is informed of each such service at its next regular meeting.

**5% BENEFICIALOWNERS**

As of May 31, 2006 the following are the only personsknown to the Trust to be the beneficial owner of more than five percent of anyFund:

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|                    | **Name and Address**                                                    | **Shares**  | **Percentage** |
|-------------------------|-------------------------------------------------------------------------|-------------|----------------|
| **GrowthFund**          |
|                    | Helen F. Schloerb 	P.O. Box 436 Londonderry VT 05148-0436               | 122,186.130 | 15.32%         |
|                    | Marion R. Foote 	 223Chuckanut Point Road  Bellingham WA 98229          | 64,366.070  | 8.07%          |
|                    | Estate of Markell Kaiser  305Chuckanut Point Road  Bellingham WA 98229  | 48,438.272  | 6.07%          |
| **InternationalFund**   |
|                    | Helen F. Schloerb  P.O.Box 436 Londonderry VT 05148-0436                | 127,923.432 | 18.55%         |
|                    | Marion R. Foote  223Chuckanut Point Road  Bellingham WA 98229           | 86,655.113  | 12.56%         |
|                    | Estate of Markell Kaiser 305 Chuckanut Point Road  Bellingham WA 98229  | 77,679.123  | 11.26%         |
| **Short-Term BondFund** |
|                    | Bellingham Anesthesia PSTelfer  2152 Dellesta Drive Bellingham WA 98226 | 77,493.388  | 15.00%         |
|                    | Brian N.Oliver IRA  2965 Haxton Way Bellingham WA 98226                 | 42,579.313  | 8.24%          |
|                    | Helen F.Schloerb  P.O. Box 436 Londonderry VT 05148-0436                | 42,101.094  | 8.15%          |
|                    | Thomas B.Callender IRA Rollover  605 Briar Rd. Bellingham WA 98225-7813 | 37,599.605  | 7.28%          |
|                    | Roger A.Barnhart, MD IRA  3017 Vining Street Bellingham WA 98226        | 33,754.900  | 6.53%          |

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| **Bond IncomeFund**      |
|--------------------------|
|                     | Helen F. Schloerb P.O. Box436 Londonderry VT 05148-0436 | 83,202.438 | 13.29% |
|                     | David K. Heaps IRA Rollover  PO Box 1977 Bellingham WA 98225 | 51,445.306 | 8.21% |
|                     | Bellingham Anesthesia PS Telfer  2152 DellestaDrive Bellingham WA 98226 | 39,832.440 | 6.36% |
|                     | Frederick M. Graham  Mary J. Graham JTWROS 8647 W Sierra Pinta Drive  Peoria AZ 85382 | 39,760.911 | 6.35% |
|                     | Gary A. Goldfogel IRA Rollover 406 Bayside Rd. Bellingham WA 98225 | 32,551.844 | 5.20% |
| **Idaho Tax-ExemptFund** |
|                     | National Investor ServiceCorp.  Omnibus Account  55 Water Street New York NY 10041-3299 | 163,037.159 | 10.25% |
|                     | RobertKitzinger  690 E. Kingsford Drive Meridian ID 83642 | 88,519.360 | 5.56% |
|                     | O. Richard Barker  OrmaH. Barker JTWROS  177 E. Fir Street Shelley NY 83274 | 86,709.481 | 5.45% |
|                     | C. DeanCardin  Kay F. Cardin JTWROS  4911 Sand Hollow Road New Plymouth ID83655 | 81,589.071 | 5.13% |

16

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**EXHIBIT A**

**DISTRIBUTION PLAN OFSATURNAINVESTMENT TRUST PURSUANT TO RULE 12B-1**

SaturnaInvestment Trust (the “Trust”) is registered under the InvestmentCompany Act of 1940, as amended (“1940 Act”), as an open-endmanagement investment company and presently has four series of shares ofbeneficial interest (“Series”): Sextant Growth Fund, SextantInternational Fund, Sextant Bond Income Fund, Sextant Short-Term Bond Fund, withrespect to which it desires to adopt a Plan of Distribution pursuant to Rule12b-1 under the 1940 Act, as well as such other Series as may hereinafter bedesignated by the Trust’s Board of Trustees (“Board”).

The Trust has entered into a Distribution Agreement (“DistributionAgreement”) with Saturna Brokerage Services (the "Distributor"),a broker-dealer registered under the Securities Exchange Act of 1934, pursuantto which Distributor acts as principal underwriter of the Shares of each Series(“Shares”). Pursuant to the Distribution Agreement, Distributorshall devote appropriate efforts to effect sales of Shares of each of theSeries.

The Trust hereby adopts the following Plan with respect to theSeries in accordance with Rule 12b-1 under the 1940 Act:

> 
1)In consideration for the services provided and the expenses incurred by theDistributor pursuant to the Distribution Agreement, each Series that adopts theDistribution Agreement and this Plan shall pay to the Distributor a monthly fee(“Distribution Fee”) at the annual rate of 0.25% of the averagedaily net assets of that Series. The determination of daily net assets shall bemade at the close of business each day throughout the month and computed in themanner specified in the Trust’s then current Prospectus. 

2) TheDistributor may use all or any portion of the Distribution Fee for activitiesthat the Distributor determines to be reasonably calculated to result in salesof Shares. Such activities may include, but neither are required to include norare limited to, compensation to the Distributor or such other underwriters,dealers, brokers, banks and other selling or servicing entities and sales,marketing and servicing personnel of any of them that have entered intoagreements with the Distributor for the marketing and sale of Shares or theprovision of shareholder services; payments for producing, printing anddisseminating sales materials, prospectuses, statements of additionalinformation and reports to other than existing shareholders; theDistributor’s expenses, including overhead, telephone and othercommunication expenses; costs of transmitting communications to shareholders,costs of answering shareholder inquiries; expenses incurred in processingshareholder transactions; payments for providing such other information andservices as shareholders reasonably may request; and payments for such othersimilar services that Distributor determines are reasonably calculated to resultin sales of Shares. 

3) Each Series pays, and will continue to pay, anadvisory fee to Saturna Capital Corporation (the "Adviser") pursuantto a separate Investment Advisory and Administrative Services Agreement betweenthe Series and the Adviser. It is recognized that the Adviser may use itsadvisory fee revenue, as well as its past profits or its resources from anyother source, to make payment to 

Plan 1

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> 
the Distributor with respect to any expenses incurred inconnection with the distribution of Shares, including the activities referred toin paragraph 2 hereof. To the extent that the payment of advisory fees by theSeries to the Adviser should be deemed to be indirect financing of any activityprimarily intended to result in the sale of Shares within the meaning of Rule12b-1, such payment shall be deemed to be authorized by this Plan. 

4) Ifadopted with respect to a Series after any public offering of the Shares of thatSeries, this Plan shall not take effect with respect to those Shares unless ithas first been approved by the vote of a majority of the voting securities ofthat Series. This provision does not apply to adoption of an amended Plan ofDistribution where the prior Plan of Distribution either was approved by thevote of a majority of the voting securities of the applicable Series or suchapproval was not required under Rule 12b-1.

5) This Plan shall not takeeffect with respect to any Series unless it first has been approved, togetherwith the Distribution Agreement and any other related agreements (“RelatedAgreements”) by the votes of a majority of both (a) the Board and (b)those members of the Board who are not interested persons of the Trust and haveno direct or indirect financial interest in the operation of the Plan or in anyRelated Agreements ("Disinterested Trustees"), cast in person at ameeting (or meetings) called for the purpose of voting on such approval; anduntil the Board members who approve the Plan’s taking effect with respectto such Series have reached the conclusions required by Rule 12b-1 under the1940 Act. 

6) After approval as set forth in Paragraph (4) (ifapplicable) and Paragraph (5), this Plan shall take effect and continue in fullforce and effect for so long as such continuance is specifically approved, atleast annually, in the manner provided for approval of this Plan in Paragraph(5).

7) In considering whether to adopt, continue or implement this Plan,the Board shall have a duty to request and evaluate, and the Distributor shallhave a duty to furnish, such information as may be reasonably necessary to aninformed determination of whether this Plan should be adopted, implemented orcontinued.

8) This Plan may not be amended to increase materially theamount of fees provided for in Paragraph (1) hereof unless such amendment isapproved by the vote of a majority of the outstanding voting securities of theaffected Series and no material amendment to the Plan shall be made unlessapproved in the manner provided for initial approval in Paragraph (5)hereof.

9) The Trust’s Principal Financial Officer or Treasurer, orsuch other person authorized to direct the disposition of monies paid or payableby the Trust, shall provide to the Board, and the Board shall review, at leastquarterly, a written report of the amounts expended with respect to each Seriesunder this Plan and the purposes for which such expenditures were made.

10) While this Plan is in effect the Board must satisfy the fund governancestandards defined in Rule 0-1(a)(7).

11) This Plan may be terminated withrespect to any Series at any time by a vote of a majority of the DisinterestedTrustees, or by the vote of a majority of the outstanding voting securities ofthat Series. In the event this Plan is terminated or otherwise discontinued withrespect to a Series, no further payments hereunder will be made by the Plan.

12) To the extent any activity is covered by paragraph (2) and is also anactivity which a Series may pay for without regard to the existence or terms andconditions of a plan of distribution under Rule 12b-1 of the 1940 Act (such asthe printing of prospectuses for existing shareholders), this Plan shall not beconstrued to prevent or restrict the Series from paying such amounts outside thePlan and without limitation hereby and without such payments being included inthe calculation of payments subject to the limitation set forth in paragraph(1).

Plan 2

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> 
13) TheDistribution Agreement is, and any other Related Agreement with any person orentity relating to the implementation of this Plan shall be, in writing andshall provide that (a) such agreement shall be subject to termination withrespect to a Series, without penalty, by the vote of a majority of theoutstanding voting securities of that Series on not more than 60 days' writtennotice to the other party to the agreement, and (b) such agreement shallterminate automatically in the event of its assignment.

14) The Trustshall preserve copies of this Plan and any Related Agreements and all reportsmade pursuant to paragraph (9) hereof, and any other information, estimates,projections and other materials that serve as a basis therefore, considered bythe Board, for a period of not less than six years from the date of this Plan,the agreement or report, as the case may be, the first two years in an easilyaccessible place.

15) This Plan does not require the Adviser orDistributor to perform any specific type or level of distribution activities orto incur any specific level of expenses for activities primarily intended toresult in the sale of Shares.

16) As used in this Plan, the terms“majority of the outstanding voting securities” and“interested person” shall have the same meaning as those terms havein the 1940 Act.

17) The Board members of the Trust and the shareholdersof each Series shall not be liable for any obligations of the Trust or anySeries under this Plan, and the Distributor or any other person asserting anyrights under this Plan, shall look only to the assets and property of suchSeries in settlement of such right or claim, and not to such Board members orshareholders.

18) This Plan does not require the Adviser or Distributorto perform any specific type or level of distribution activities or to incur anyspecific level of expenses for activities primarily intended to result in thesale of Shares.  

IN WITNESS WHEREOF, the Trust hasexecuted this Plan of Distribution on the date and year set forth below.

Date:- _________________

SATURNA INVESTMENT TRUST

By_______________________

Nicholas F. Kaiser, President

 

 

Plan3

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**SATURNA INVESTMENT TRUST AUDITCOMMITTEE CHARTER**

**A.	Purpose**

TheBoard of Trustees of Saturna Investment Trust (the “Trust”) hascreated an Audit Committee (“Committee”). The purpose of the AuditCommittee is to serve as a liaison between the independent auditors and theTrust’s full Board of Trustees (“Board”) and to perform thefollowing activities on behalf of the Trust:

- Oversee theTrust’s accounting and financial reporting policies and practices,including the Trust’s internal controls;
- 	Receive reports withrespect to the quality and objectivity of the Trust’s financial statementsand the independent audit of those statements;
- 	Approve, prior toappointment, the engagement of the Trust’s independent auditors and, inconnection therewith, review and evaluate the independent auditors’qualifications, independence and performance;
-  Oversee compliance withlegal and regulatory requirements that relate to the Trust’s accountingand financial reporting, internal controls and independent audits; and
- Consider such other matters as the Board reasonably shall assign to theCommittee from time to time.

Although the Committee has the dutiesand powers set forth in this Charter, the Committee has no duty to plan orconduct audits for the Trust or to determine that the Trust’s financialstatements are complete, accurate and in accordance with generally acceptedaccounting principles. In carrying out the Committee’s duties, a member ofthe Committee shall be entitled to rely, in good faith, on information,opinions, reports or statements made or prepared by others, including financialstatements and other financial data, if prepared and presented by: (1) one ormore officers of the Trust whom the Committee member reasonably believes to bereliable and competent in the matters presented; (2) legal counsel, publicaccountants, or other persons as to matters the Committee member reasonablybelieves are within the person’s professional or expert competence; or (3)a Board committee of which the Committee member is not a member. 

TheCommittee’s function is oversight. Management is responsible formaintaining appropriate accounting and financial reporting principles andpolicies and internal controls and procedures designed to ensure compliance withaccounting standards and applicable laws and regulations. The independentauditors are responsible for planning and carrying out a proper audit. Theindependent auditors shall report directly to the Committee and ultimately areaccountable to the Board and the Committee.

**B.	CommitteeMembership**

> 
1. Composition. The Committeeshall be comprised of at least three Board members satisfying the independencestandards of B (2) hereof.

2. Independence. No member of theCommittee shall be an “interested person” (as defined in Section2(a)(19) of the Investment Company Act of 1940, as amended (“1940Act”), and the rules thereunder) of the Trust.

Charter 1

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> 
3. Audit CommitteeFinancial Expert. The Board shall determine whether at least one member ofthe Committee qualifies as an “audit committee financial expert”(“ACFE”) as defined by applicable Securities and Exchange Commission(“SEC”) rules. The designation of a Committee member as an ACFEshall be based on a finding by the Board that the Committee member has theattributes of an ACFE set forth in Form N-CSR, Item 3, and has acquired thoseattributes through the education or experience prescribed therein. Thedesignation of a Committee member as an ACFE does not impose on such person anyduties or liabilities that are greater than the duties and liabilities imposedon such person as a member of the Committee and the Board. The designation of anACFE also does not affect the duties or liabilities of any other member of theCommittee or the Board. The Committee is not required to have an ACFE.

4. Compensation. The Board shall determine the compensation of Committeemembers, including the Committee Chairperson.  5. Selection andRemoval. The Board shall appoint members of the Committee and a Chairpersonof the Committee. By a majority vote, the Board may remove or replace members ofthe Committee and designate a different member as Chairperson for any reason atany time. 

**C.	Meetings andProcedures**

> 
1. Meetings. TheCommittee shall meet as often as it determines is appropriate to carry out itsduties under this Charter. Meetings may be called by the Chairperson of theCommittee or by a majority of the Committee members. Meetings shall be chairedby the Chairperson or, in his or her absence, by a member chosen by theCommittee. Meetings may be conducted with members present in person or bytelephone or other communications facilities that permit all personsparticipating in the meeting to hear or communicate with each othersimultaneously. A majority of the members of the Committee shall constitute aquorum for the transaction of business. The act of a majority of the memberspresent at a meeting at which a quorum is present shall be the act of theCommittee. The Committee shall keep minutes of its meetings. The Committeeshall meet periodically in separate executive sessions with management and withthe independent auditors. The Committee may request any officer or employee ofthe Trust, the Trust’s independent legal counsel, any service provider orthe Trust’s independent auditors to attend a meeting of the Committee orto meet with any members of, or consultants to, the Committee. 

2. Subcommittees. The Committee may delegate its authorityto one or more subcommittees (including a subcommittee comprised of a singlemember) when it deems appropriate. Any decision of a subcommittee to pre-approveaudit or non-audit services shall be presented to the full Committee at its nextscheduled meeting.

3. Independent Advisers. TheCommittee shall have the authority, to the extent it deems necessary orappropriate and without seeking approval of the full Board, to retain speciallegal, accounting or other advisers. The Trust shall provide appropriatefunding, as determined by the Committee, for payment of ordinary administrativeCommittee expenses, as well as for compensation to any advisers retained by theCommittee. 

**D.	Oversight ofIndependent Auditors**

> 
1. Selectionand Termination.    The Committee shall be directly responsible forpre-approving the engagement of the Trust’s independent auditors toprovide audit review and attest services for the Trust and recommending to themembers of the Board who are not “interested persons” of the Trustthe selection, retention or termination of the independent auditors. Inconnection with its oversight role, the Committee shall review and discuss withthe independent auditors the planning, 

Charter 2

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> 
scope and staffing of theTrust’s audit and the performance of other audit, review or attestservices for the Trust.

2. Independence. The Committee shall review andevaluate the independent auditors’ independence. In connection with thisreview and evaluation, the Committee shall at least annually obtain and review areport by the independent auditors describing all relationships between theindependent auditors and the Trust, management, any affiliate of the Trust, orany material service provider to the Trust, including the disclosures requiredby Independence Standards Board Standard No. 1. The Committee shall discuss withthe independent auditors any disclosed relationships or services that mightaffect the objectivity and independence of the auditors. The Committee alsoshall consider whether the provision of non-audit services to Saturna CapitalCorporation (“Saturna”) and any entity in the Saturna investmentcompany complex that were not pre-approved pursuant to paragraph 3 below iscompatible with maintaining the independent auditors’ independence. 

3. Pre-approval of Audit and Non-Audit Services. Except as provided below,the Committee’s prior approval is necessary for the engagement of theindependent auditors to provide any audit or non-audit services for the Trustand any non-audit services for any entity controlling, controlled by or undercommon control with Saturna that provides ongoing services to the Trust (Saturnaand each such entity, an “Adviser Affiliate”) where the engagementrelates directly to the operations or financial reporting of the Trust.Non-audit services that qualify under the de minimis exception described in theSecurities Exchange Act of 1934, as amended, and applicable rules thereunder,that were not pre-approved by the Committee, must be approved by the Committeeprior to the completion of the audit. Pre-approval by the Committee is notrequired for engagements entered into pursuant to (a) pre-approval policies andprocedures established by the Committee, or (b) pre-approval granted by one ormore members of the Committee to whom, or by a subcommittee to which, theCommittee has delegated pre-approval authority, provided in either case, thatthe Committee is informed of each such service at its next regular meeting.

4. Compensation. No fees or other compensation for audit or non-auditservices shall be paid to the independent auditors unless such fees or othercompensation have been approved by the Committee. 

**E.	Review and Discussion of Financial ReportingMatters**

> 
The Committee shall:

1. Reviewinformation and reports provided by the independent auditors with respect to,and discuss, as appropriate, with management and/or the independent auditors,among other things:

a.	any matters of concern relating tothe Trust’s financial statements, including any adjustments to thefinancial statements recommended by the independent auditors and other resultsof the audit; 

b.	the independent auditors’ comments withrespect to the Trust’s financial policies, procedures and internalaccounting controls (including the Trust’s critical accounting policiesand practices) and management’s responses thereto; and

c. theeffect on the Trust of any changes in accounting principles or practicesproposed by management or the independent auditors and any other matters thatmay have a material effect on the Trust’s financial statements.

2. Discuss with the independent auditors the matters requiredto be discussed by Statement of Auditing Standards No. 61 relating to theconduct of the audit, including any difficulties 

Charter 3

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> 
encountered in the course ofthe audit work, any restrictions on the scope of activities or access torequested information, and any significant disagreements with management.

3. Review the form of opinion the independent auditors propose to render tothe Board and shareholders.

**F.	Investigations**

The Committee shall have theauthority to investigate any improprieties or suspected improprieties in theTrust’s financial operations, and to direct and supervise an investigationinto any matter brought to its attention within the scope of its duties,functions, and responsibilities, including the authorization to retain, at theTrust’s expense, outside counsel and/or other experts in connection withany such investigation.

**G.	Reporting to theBoards**

> 
1. Reports to the Boards. TheCommittee shall make regular reports to the Board. Such reports shall include areview of any issues that arise with respect to the quality or integrity of aTrust’s financial statements, the qualifications, independence andperformance of its independent auditors, and any other matters that theCommittee deems appropriate or are requested to be reported by the Board.

2. Charter. The Committee shall review and reassess the adequacy ofthis Charter periodically and recommend any proposed changes to the Board forapproval.

 

Adopted: September 25, 2003

 

 

Charter4

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**SATURNA INVESTMENT TRUST:  GROWTHFUND PROXY SOLICITED BY TRUSTEES**

Theundersigned hereby appoint(s) Nicholas F. Kaiser, Ethel B. Bartolome, and PhelpsS. McIlvaine, or any one or more of them, attorneys, with full power ofsubstitution, to vote all shares of Saturna Investment Trust: Growth Fund whichthe undersigned is entitled to vote at the Special Meeting of Shareowners to beheld at the offices of Saturna Capital, Inc., 1300 N. State Street, Bellingham,WA, on Tuesday, August 15, 2006 at 3:00 P.M. and at any adjournments thereof.All powers may be exercised by any of said proxy holders or substitutes. ThisProxy shall be voted on the proposals described in the Proxy Statement asspecified in the spaces on the reverse side. Receipt of the Notice of themeeting and the accompanying Proxy Statement is hereby acknowledged.

|   | NOTE:Please sign exactly as your name appears on this Proxy. When signing in afiduciary, corporate or other capacity, please indicate your authority.

Date __________, 2006 _______________________________________________________________________________________________________________ Signature(s) [Title(s), ifapplicable] |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

PLEASE SIGN, DATE, AND MAIL THIS PROXY CARD PROMPTLY IN THEPOSTAGE-PAID ENVELOPE ENCLOSED

**Please refer to theProxy Statement discussion of each of these matters.**

___________________________________

IF NOSPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE TRUSTEES AND THEPROPOSAL. As to any other matter, said attorneys shall vote in accordance withtheir best judgment.

**THE BOARD OF TRUSTEESRECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:**

| (i)**To elect a Board of Trustees**

**FOR** allnominees listed below | **To withhold authority to vote fora Nominee--**

draw a line through the name of thatperson. |
|-----------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|

**Gary A. Goldfogel,Herbert G. Grubel, Nicholas F. Kaiser, John E. Love, John S. Moore**

| (ii) To approve the adoption of a Plan of Distribution pursuant toRule 12b-1 under the 1940 Act |
|-------------------------------------------------------------------------------------------------|
| **[ ] FOR**                                                                                     | **[ ] AGAINST** | **[ ] ABSTAIN** |

(FOR ADDITIONAL INFORMATION AND TO DATE ANDSIGN THIS PROXY, PLEASE SEE REVERSE SIDE)

Cards 1

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**SATURNA INVESTMENT TRUST:  INTERNATIONAL FUNDPROXY SOLICITED BY TRUSTEES**

The undersigned herebyappoint(s) Nicholas F. Kaiser, Ethel B. Bartolome, and Phelps S. McIlvaine, orany one or more of them, attorneys, with full power of substitution, to vote allshares of Saturna Investment Trust: Growth Fund which the undersigned isentitled to vote at the Special Meeting of Shareowners to be held at the officesof Saturna Capital, Inc., 1300 N. State Street, Bellingham, WA, on Tuesday,August 15, 2006 at 3:00 P.M. and at any adjournments thereof. All powers may beexercised by any of said proxy holders or substitutes. This Proxy shall be votedon the proposals described in the Proxy Statement as specified in the spaces onthe reverse side. Receipt of the Notice of the meeting and the accompanyingProxy Statement is hereby acknowledged.

|   | NOTE: Please sign exactly as yourname appears on this Proxy. When signing in a fiduciary, corporate or othercapacity, please indicate your authority.

 Date __________, 2006_______________________________________________________________________________________________________________ Signature(s) [Title(s), ifapplicable] |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

PLEASE SIGN, DATE, AND MAIL THIS PROXY CARD PROMPTLY IN THEPOSTAGE-PAID ENVELOPE ENCLOSED

**Please refer to theProxy Statement discussion of each of these matters.**

___________________________________

IF NOSPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE TRUSTEES AND THEPROPOSAL. As to any other matter, said attorneys shall vote in accordance withtheir best judgment.

**THE BOARD OF TRUSTEESRECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:**

| (i)**To elect a Board of Trustees**

**FOR** allnominees listed below | **To withhold authority to vote fora Nominee--**

draw a line through the name of that person. |
|-----------------------------------------------------------------------|------------------------------------------------------------------------------------------------|

**Gary A. Goldfogel, Herbert G.Grubel, Nicholas F. Kaiser, John E. Love, John S. Moore**

| (ii) To approve the adoption of a Plan of Distribution pursuant toRule 12b-1 under the 1940 Act |
|-------------------------------------------------------------------------------------------------|
| **[ ] FOR**                                                                                     | **[ ] AGAINST** | **[ ] ABSTAIN** |

(FOR ADDITIONAL INFORMATION AND TO DATE ANDSIGN THIS PROXY, PLEASE SEE REVERSE SIDE)

Cards 2

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**SATURNA INVESTMENT TRUST:  SHORT-TERM BONDFUND PROXY SOLICITED BY TRUSTEES**

Theundersigned hereby appoint(s) Nicholas F. Kaiser, Ethel B. Bartolome, and PhelpsS. McIlvaine, or any one or more of them, attorneys, with full power ofsubstitution, to vote all shares of Saturna Investment Trust: Growth Fund whichthe undersigned is entitled to vote at the Special Meeting of Shareowners to beheld at the offices of Saturna Capital, Inc., 1300 N. State Street, Bellingham,WA, on Tuesday, August 15, 2006 at 3:00 P.M. and at any adjournments thereof.All powers may be exercised by any of said proxy holders or substitutes. ThisProxy shall be voted on the proposals described in the Proxy Statement asspecified in the spaces on the reverse side. Receipt of the Notice of themeeting and the accompanying Proxy Statement is hereby acknowledged.

|   | NOTE:Please sign exactly as your name appears on this Proxy. When signing in afiduciary, corporate or other capacity, please indicate your authority.

Date __________, 2006 _______________________________________________________________________________________________________________ Signature(s) [Title(s), ifapplicable] |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

PLEASE SIGN, DATE, AND MAIL THIS PROXY CARD PROMPTLY IN THEPOSTAGE-PAID ENVELOPE ENCLOSED

**Please refer to theProxy Statement discussion of each of these matters.**

___________________________________

IF NOSPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE TRUSTEES AND THEPROPOSAL. As to any other matter, said attorneys shall vote in accordance withtheir best judgment.

**THE BOARD OF TRUSTEESRECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:**

| (i)**To elect a Board of Trustees**

**FOR** allnominees listed below | **To withhold authority to vote fora Nominee--**

draw a line through the name of that person. |
|-----------------------------------------------------------------------|------------------------------------------------------------------------------------------------|

**Gary A. Goldfogel, Herbert G.Grubel, Nicholas F. Kaiser, John E. Love, John S. Moore**

| (ii) To approve the adoption of a Plan of Distribution pursuant toRule 12b-1 under the 1940 Act |
|-------------------------------------------------------------------------------------------------|
| **[ ] FOR**                                                                                     | **[ ] AGAINST** | **[ ] ABSTAIN** |

(FOR ADDITIONAL INFORMATION AND TO DATE ANDSIGN THIS PROXY, PLEASE SEE REVERSE SIDE)

Cards 3

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**SATURNA INVESTMENT TRUST:  BONDINCOME FUND PROXY SOLICITED BY TRUSTEES**

Theundersigned hereby appoint(s) Nicholas F. Kaiser, Ethel B. Bartolome, and PhelpsS. McIlvaine, or any one or more of them, attorneys, with full power ofsubstitution, to vote all shares of Saturna Investment Trust: Growth Fund whichthe undersigned is entitled to vote at the Special Meeting of Shareowners to beheld at the offices of Saturna Capital, Inc., 1300 N. State Street, Bellingham,WA, on Tuesday, August 15, 2006 at 3:00 P.M. and at any adjournments thereof.All powers may be exercised by any of said proxy holders or substitutes. ThisProxy shall be voted on the proposals described in the Proxy Statement asspecified in the spaces on the reverse side. Receipt of the Notice of themeeting and the accompanying Proxy Statement is hereby acknowledged.

|   | NOTE:Please sign exactly as your name appears on this Proxy. When signing in afiduciary, corporate or other capacity, please indicate your authority.

Date __________, 2006 _______________________________________________________________________________________________________________ Signature(s) [Title(s), ifapplicable] |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

PLEASE SIGN, DATE, AND MAIL THIS PROXY CARD PROMPTLY IN THEPOSTAGE-PAID ENVELOPE ENCLOSED

**Please refer to theProxy Statement discussion of each of these matters.**

___________________________________

IF NOSPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE TRUSTEES AND THEPROPOSAL. As to any other matter, said attorneys shall vote in accordance withtheir best judgment.

**THE BOARD OF TRUSTEESRECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:**

| (i)**To elect a Board of Trustees**

**FOR** allnominees listed below | **To withhold authority to vote fora Nominee--**

draw a line through the name of that person. |
|-----------------------------------------------------------------------|------------------------------------------------------------------------------------------------|

**Gary A. Goldfogel, Herbert G.Grubel, Nicholas F. Kaiser, John E. Love, John S. Moore**

| (ii) To approve the adoption of a Plan of Distribution pursuant toRule 12b-1 under the 1940 Act |
|-------------------------------------------------------------------------------------------------|
| **[ ] FOR**                                                                                     | **[ ] AGAINST** | **[ ] ABSTAIN** |

(FOR ADDITIONAL INFORMATION AND TO DATE ANDSIGN THIS PROXY, PLEASE SEE REVERSE SIDE)

Cards 4

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**SATURNA INVESTMENT TRUST:  IDAHO TAX-EXEMPTFUND PROXY SOLICITED BY TRUSTEES**

Theundersigned hereby appoint(s) Nicholas F. Kaiser, Ethel B. Bartolome, and PhelpsS. McIlvaine, or any one or more of them, attorneys, with full power ofsubstitution, to vote all shares of Saturna Investment Trust: Growth Fund whichthe undersigned is entitled to vote at the Special Meeting of Shareowners to beheld at the offices of Saturna Capital, Inc., 1300 N. State Street, Bellingham,WA, on Tuesday, August 15, 2006 at 3:00 P.M. and at any adjournments thereof.All powers may be exercised by any of said proxy holders or substitutes.. ThisProxy shall be voted on the proposals described in the Proxy Statement asspecified in the spaces on the reverse side. Receipt of the Notice of themeeting and the accompanying Proxy Statement is hereby acknowledged.

|   | NOTE:Please sign exactly as your name appears on this Proxy. When signing in afiduciary, corporate or other capacity, please indicate your authority.

Date __________, 2006 _______________________________________________________________________________________________________________ Signature(s) [Title(s), ifapplicable] |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

PLEASE SIGN, DATE, AND MAIL THIS PROXY CARD PROMPTLY IN THEPOSTAGE-PAID ENVELOPE ENCLOSED

**Please refer to theProxy Statement discussion of each of these matters.**

___________________________________

IF NOSPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE TRUSTEES AND THEPROPOSAL. As to any other matter, said attorneys shall vote in accordance withtheir best judgment.

**THE BOARD OF TRUSTEESRECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:**

| (i)**To elect a Board of Trustees**

**FOR** allnominees listed below | **To withhold authority to vote fora Nominee--**

draw a line through the name of that person. |
|-----------------------------------------------------------------------|------------------------------------------------------------------------------------------------|

**Gary A. Goldfogel, Herbert G.Grubel, Nicholas F. Kaiser, John E. Love, John S. Moore**

(FOR ADDITIONAL INFORMATION AND TO DATE AND SIGN THIS PROXY,PLEASE SEE REVERSE SIDE)

Cards 5

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