IDAH0 TAX-EXEMPT FUND ANNUAL REPORT
                                November 30, 1996
DEAR SHAREOWNERS:

1996 was a year of  patience  and  determination  for  fixed  income  investors.
Concern over excessive  economic  growth and the potential for rising  inflation
pushed  interest rates higher and bond prices lower through July. But high taxes
and restrictive monetary policy kept the economy and inflation under control. In
the end,  Idaho  Tax-Exempt  Fund provided a total 4.66% return for fiscal 1996.
The current  tax-exempt  yield of 4.74% is equivalent to 8.54% taxable yield for
top-bracket Idaho taxpayers.

Looking forward, we foresee a positive environment for fixed income investments.
Modest growth and low inflation should continue, allowing interest rates to move
lower into 1997.  Congress will limit federal  spending.  The cautious  monetary
policy of the Federal Reserve will continue under  Greenspan's  leadership.  The
highly competitive world economy limits inflation's potential.

Idaho  Tax-Exempt  Fund has over 9 full  years of  operating  experience.  Total
return since inception has averaged 6.70% per year,  almost  entirely  tax-free.
The Fund  maintains  its  conservative  approach  to credit  quality  (portfolio
average  rating is AA-) and maturity  risk  (portfolio  average  maturity is 7.1
years). We shun risk enhancing techniques such as derivatives or leverage in the
Fund.  We buy only quality  Idaho  municipal  bonds,  which can be hard to find,
rather than substitutes from places like Puerto Rico or Guam. We seek to improve
yield through low operating expenses rather than high portfolio risks.

As your portfolio manager, I welcome  opportunities to hear from shareowners and
prospective  investors.  As a  true  no-load  mutual  fund,  the  Fund  provides
investors with the advantages of daily liquidity, professional management, and a
proven record of relative price stability.  Thank you for investing with us, and
our best wishes for the New Year.

          PHELPS MCILVAINE,
               VICE  PRESIDENT, PORTFOLIO MANAGER

<PAGE>

<TABLE>
<CAPTION>
INVESTMENTS
November 30, 1996
RATING* ISSUER         COUPON/MATURITY  FACE AMOUNT  MARKET VALUE
-------------------------------------------------------------------------------
ELECTRIC POWER (2.1%)
<S>                        <C>          <C>         <C>
AAA   Idaho Falls
      Electric Revenue      6.75%due    $100,000    $105,344
                            4/1/2019

GENERAL OBLIGATIONS (33.5%)
AA    Ada and Canyon        6.65%due     100,000     108,330
      Counties              1/30/2011
      Joint School Dist     7.375%due    100,000     110,200
      #2 Meridian           7/30/2000
A-    Bannock County        6.00%due     100,000     103,684
      County Jail Bond      9/1/2012
AAA   Boise City ID         5.50%due      95,000      97,506
      UTGO ISD              7/30/2011
AA-         "               5.50%due     150,000     152,005
                            7/30/2016
A     Bonneville            7.00%due     100,000     106,673
      Cnty SD #91           8/1/2008
AAA   Canyon County ISD     5.40%due     100,000     101,752
      #132                  7/30/2011
A     Canyon County SD      5.90%due      50,000      52,079
      #135 Notus            8/1/2005
            "               6.00%due      50,000      52,201
                            8/1/2006
            "               6.00%due      50,000      52,222
                            8/1/2007
AAA   Gooding County
      (Wendell)
      School Dist.#232      6.00%due      55,000      57,606
                            8/1/2008
AAA   Kootenai County
      School District       6.00%due     100,000     104,831
      #273                  8/1/2012
AAA   Madison County
      School District       5.60%due     150,000     153,890
      #321                  2/1/2010
AA    Payette County        6.50%due      80,000      86,777
                            7/31/2008
AA    School District       6.75%due     155,000     169,935
      #372                  7/31/2009
            "               6.75%due     100,000     109,193
                            7/31/2010
AAA   Teton County          5.50%due      75,000      77,292
      ID UTGO               8/01/2012    --------    --------
      SUB-TOTAL                        1,610,000   1,696,176

HOUSING (9.4%)
AA    Idaho Housing
      Authority Single
      Farm Mortgage, B-1    6.85%due     110,000     113,308
                            7/1/2012
AA    Idaho Housing
      Authority
      Refunding Ser A       6.15%due     150,000     154,380
                            7/1/2024
AA    Idaho Housing
      Authority Single
      Fam Mort Mezz-E-1     6.60%due     115,000     119,250
                            7/1/2011
AA    Idaho Housing
      Authority Single
      Fam Mort Rev Ser B1   8.125%due      5,000       5,250
                            7/1/2019
            "               8.00%due      25,000      26,095
                            1/1/2020
AA    Idaho Housing
      Authority Single      7.70%due      55,000      56,543
      Fam Mort SR Ser C1    7/1/2017     --------    --------
      SUB-TOTAL                          460,000     474,826

IRRIGATION (4.2%)
AA    Boise Kuna            6.00%due     200,000     211,390
      Irr. Dist.            7/1/2008

MEDICAL/HOSPITALS (4.6%)
      Idaho Health
      Facility
AA    St. Alphonsus         6.25%due     175,000     187,350
      Medical Center        12/1/2012
AA          "               6.25%due      45,000      47,551
                            12/1/2022    --------    --------
      SUB-TOTAL                          220,000     234,901

REAL ESTATE (6.6%)
A     Idaho Falls           8.05%due     100,000     115,820
      Redevel. Agency Rev   10/1/2006
                  "         8.125%due    100,000     115,786
                            10/1/2008
AAA   Idaho St Bldg         5.70%due     100,000     104,571
      Authority Ser C       9/1/2007     --------    --------
      SUB-TOTAL                          300,000     336,177
(The accompanying notes are an integral part of these
 financial statements)
<PAGE>

               Investments, continued

RATING ISSUER   COUPON/MATURITY    FACE AMOUNT   MARKET VALUE
-------------------------------------------------------------
ROADS (5.6%)
A     Payette L.I.D.       7.60%due       30,000      30,366
                           5/1/2005
A     Post Falls,          6.75%due       10,000       9,985
      Kootenai County      4/15/1997
      L.I.D. #91-1         7.00%due       10,000       9,987
                           4/15/1998
            "              7.20%due       15,000      14,990
                           4/15/1999
            "              7.40%          15,000      15,004
                           4/15/2000
            "              7.60%due       15,000      15,010
                           4/15/2001
            "              7.75%due       20,000      20,018
                           4/15/2002
            "              7.95%due       20,000      20,030
                           4/15/2003
            "              7.95%due       20,000      20,029
                           4/15/2004
            "              7.95%due       20,000      20,020
                           4/15/2005
            "              7.95%due       20,000      20,019
                           4/15/2006
            "              7.95%due       20,000      20,018
                           4/15/2007
A     Post Falls L.I.D.    5.40%due       35,000      34,957
      #91-4                9/1/2002
                  "        5.60%due       35,000      34,838
                           9/1/2003      --------    -------
        SUB-TOTAL                        285,000     285,271

STATE EDUCATION (14.5%)
AAA   Boise St. Univ.      6.20%due      200,000     212,694
                           4/1/2010
AAA   Fee Revenue          6.30%due      100,000     106,437
                           4/1/2014
A-    Idaho State
      University Student
      Fee Revenue          6.40%due      250,000     269,591
                           4/1/2014
AAA   University of Idaho
      Student Fee Revenue  7.70%due       85,000      89,313
                           4/1/2010
A-    University of Idaho
      Fee Revenue          6.85%due       50,000      54,738
                           4/1/2016      --------    --------
      SUB-TOTAL                          685,000     732,773

SEWER (4.9%)
A     Hayden Lake          6.00%due       60,000      59,516
      L.I.D. #1            9/1/2004
A     Troy Sewer           6.90%due       10,000      10,001
      Revenue               2/1/1997
            "              7.00%due       10,000      10,188
                           2/1/1998
            "              7.10%due       10,000      10,327
                           2/1/1999
            "              7.20%due       10,000      10,466
                           2/1/2000
            "              7.30%due       10,000      10,470
                           2/1/2001
            "              7.40%due       10,000      10,463
                           2/1/2002
            "              7.50%due       10,000      10,474
                           2/1/2003
            "              7.60%due       10,000      10,446
                           2/1/2004
            "              7.70%due       15,000      15,679
                           2/1/2005
            "              7.80%due       15,000      15,731
                           2/1/2006
            "              7.90%due       15,000      15,747
                           2/1/2007
            "              8.00%due       15,000      15,754
                           2/1/2008
            "              8.00%due       20,000      21,035
                           2/1/2009
            "              8.00%due       20,000      21,118
                           2/1/2010      --------    --------
        SUB-TOTAL                        240,000     247,415

WATER SUPPLY (11.0%)
A-    American Falls       7.25%due       70,000      76,302
      Res.                 5/1/2004
      Ref. Series A        7.625%due     150,000     164,630
                           5/1/2021
A     McCall Water         6.25%due      200,000     204,516
      Rev., Ser 1994       9/1/2008
A     McCall Water         6.375%due      70,000      74,402
      Revenue              9/1/2014
A     Ucon Water &         7.75%due       35,000      37,338
      Sewer Rev. Ref.      12/1/2002     --------    --------
      SUB-TOTAL                          525,000     557,188
                                         --------    --------
TOTAL INVESTMENTS     Cost$4,682,148  $4,625,000  $4,881,461
(96.4%)                                ==========
Other Assets (net
of liabilities) (3.6%)                               182,773
                                                     --------
Total Net Assets (100%)                           $5,064,234
                                                  ===========

<FN>
*
These unaudited bond ratings reflect the adviser's  current rating of each bond,
as determined  using Standard & Poor's and Moody's  ratings.  (The  accompanying
notes are an integral part of these financial  statements) 
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

FINANCIAL HIGHLIGHTS
Selected data per share of capital
                                                                                       Sept. 4'87
stock outstanding throughout the period:                                               (commencement
                                                                                       of operations)
                                                                                       to
                                          For Year Ended November 30
                 ---------------------------------------------------------------

                1996   1995   1994   1993   1992   1991   1990   1989   1988        NOV.30 '87*
                ----   ----   ----   ----   ----   ----   ----   ----   ----        -----------
NET ASSET VALUE
<S>            <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>
AT BEGINNING OF
 PERIOD        $5.28  $4.76  $5.23  $5.16  $5.10  $5.03  $5.07  $4.98   %5.03       $5.00
INCOME FROM
 INVESTMENT
 OPERATIONS
Net investment
 income         0.27   0.26   0.27   0.25   0.28   0.30   0.33   0.35    0.35        0.02
Net gains or
 losses on
 securities
 (both realized
  and
 unrealized)   (0.03)  0.52  (0.46)  0.12   0.09   0.07  (0.04)  0.09   (0.05)       0.02
                ----   ----   ----   ----   ----   ----   ----   ----    ----        ----
Total From      0.24   0.78  (0.19)  0.37   0.37   0.37   0.29   0.44    0.30        0.04
 Investment
 Operations
LESS DISTRIBUTIONS
 Dividends (from
  net investment
  income)     $(0.27)$(0.26)$(0.27)$(0.25)$(0.29) $(0.30)$(0.33)$(0.35)$(0.35)     $(0.01)
 Distributions
  (from capital
  gains)        0.00   0.00  (0.01) (0.05)(0.025)   0.00   0.00   0.00   0.00        0.00
                ----   ----   ----   ----  -----    ----   ----   ----   ----        ----
Total
Distributions  (0.27) (0.26) (0.28) (0.30) (0.31)  (0.30) (0.33) (0.35) (0.35)      (0.01)

Net asset
 value at end
 of period     $5.25  $5.28  $4.76  $5.23  $5.16   $5.10  $5.03  $5.07  $4.98       $5.03
               =====  =====  =====  =====  =====   =====  =====  =====  =====       =====

TOTAL RETURN   4.66% 16.68% (3.76)% 7.35%  7.49%  7.63%  5.94%  9.17%   6.45%       3.20%

RATIOS/
SUPPLEMENTAL DATA
Net assets ($000),
end of period $5,064 $5,220 $6,841 $7,367 $5,808 $3,803 $2,540 $  808 $  335       $   29
Ratio of expenses
 to average net
 assets+        0.79%  0.75%  0.75%  0.75%  0.75%  0.75%  0.97%  0.90%   0.28%       0.11%
Ratio of net
 investment
 income to average
 net assets+    5.10%  5.07%  5.28%  4.79%   5.64%  6.08% 6.74%  6.51%   6.58%       0.56%
Portfolio
turnover rate      9%    28%    36%    31%     17%    15%    17%    13%   100%          0%
 <FN>
*Not annualized                                                                                        annualized
+
For each of the above years,  all or a portion of the expenses  were waived.  If
these costs had not been waived, the resulting increase to expenses per share in
each of the above periods would be $.01, $.016, $.007,$.009,  $.008, $.02, $.02,
$.05, $.10, $.19, and $.01  respectively.  The increase to the ratio of expenses
to average daily net assets would be .27%, .26%,  .14%,.18%,  .17%, .54%, 1.01%,
1.25%, 2.24%, and .11%, respectively.

</FN>
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
As of November 30, 1996
ASSETS
<S>                                                   <C>
   Municipal Bond Investments
    (cost $4,655,657)                                 $4,881,461
   Cash                                                   93,746
   Interest receivable                                    93,850
   Insurance deposit                                         801
                                                      ----------
         Total Assets                                 $5,069,858
                                                      ----------
LIABILITIES
   Payable to affiliate                                    5,624
                                                      ----------
         Total Liabilities                                 5,624
                                                      ----------
NET ASSETS                                            $5,064,234
                                                      ==========
FUND SHARES OUTSTANDING                                  964,641
ANALYSIS OF NET ASSETS
   Paid in capital (unlimited shares authorized,
   no par value)                                       4,907,854
   Undistributed net investment income (loss)                 84
   Accumulated net realized gain (loss)
   on investments                                        (69,508)
   Unrealized net appreciation on investments            225,804
                                                      -----------
   Net Assets applicable to Fund shares outstanding   $5,064,234
                                                      ===========
NET ASSET VALUE PER SHARE                                  $5.25
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended November 30, 1996
INVESTMENT INCOME
<S>                                          <C>        <C>
   Interest income                           $302,111
   Amortization of bond premiums              (10,769)
   Accretion                                      202
                                             ---------
       Gross Investment Income                            $291,544
EXPENSES
   Investment adviser and administration fee   24,540
   Professional fees                           15,349
   Shareowner servicing                         4,232
   Printing and postage                         3,909
   Filing and registration fees                 1,878
   Custodian Fees                               1,128
   Other expenses                                 864
                                             --------
   Total gross expenses                        51,900
        Less earnings credi                    (1,128)
        Less advisory fee waive               (11,923)
                                             ---------
     Net expenses                                           38,849
                                                          --------
         Net investment income                             252,695
                                                          --------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
    Proceeds from sales                       586,517
    Less cost of securities sold
     based on identified cost                 592,031
                                             ---------
         Realized net loss                                  (5,514)
                                                          --------
UNREALIZED GAIN (LOSS)ON INVESTMENTS
    End of period                             225,804
    Beginning of period                       251,225
                                             ---------
    Decrease in unrealized gain
     for the period                                        (25,421)
                                                          ---------
         Net realized and unrealized
          gain on investments                              (30,935)
                                                          ---------
NET INCREASE IN NET ASSESTS RESULTING
FROM OPERATIONS                                            $221,760
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
                                        Year ended   Year ended
                                        Nov.30,1996  Nov.30,1995
OPERATIONS:
<S>                                    <C>             <C>
    Net investment income              $ 252,695       $ 311,923
    Net realized (loss) gain
     on investments                       (5,514)        (64,404)
    Net increase (decrease)in
     unrealized appreciation             (25,421)        751,487
                                     ------------    ------------
    Net increase (decrease)in
     net assets                          221,760         999,006
                                     ------------    ------------

DIVIDENDS TO SHAREOWNERS FROM:
    Net investment income               (252,571)       (311,941)
                                     ------------    ------------
    Capital gains distributions      ------------    ------------


FUND SHARE TRANSACTIONS:
    Proceeds from sales of shares        837,937         793,990
    Value of shares issued in
     reinvestment of dividends           191,502         226,992
                                     ------------    ------------
                                       1,029,439       1,020,982
    Cost of shares redeemed           (1,154,708)     (3,329,049)
                                     ------------    ------------
    Net increase (decrease) in net
     assets from share transactions     (125,269)     (2,308,067)
                                     ------------    ------------
Total (decrease) in net assests         (156,080)     (1,621,002)


NET ASSETS
    Beginning of period                5,220,314       6,841,316
                                     ------------    ------------
    End of period                     $5,064,234      $5,220,314
                                     ============    ============
    (Including  undistributed  net investment income of $98 at November 30, 1996
    and ($26) at November 30, 1995)
Shares of the Fund Sold and Redeemed
    Number of shares sold                208,082         225,327
    Number of shares issued in
     reinvestment of dividends            36,855          44,240
    Number of shares redeemed           (269,057)       (717,954)
                                     -------------    ------------
Net Increase (Decrease) in Number
 of Shares Outstanding                   (24,120)       (448,387)
                                     =============    ============
</TABLE>
(The accompanying notes are an integral part of these financial
statements)
<PAGE>

For the  twelve-month  period  ending  November 30, 1996,  Idaho Tax Exempt Fund
returned  shareholders  +4.66%.  At November 30, 1996,  the price per share (Net
Asset Value) was $5.25 and the current yield was 4.74%.

For the year, on a relative  basis  municipal  bonds  performed well compared to
corporate and government  debt.  Municipal  bonds recouped their relative losses
due  to the  1995  "flat  tax"  scare  and  closed  the  year  in a more  normal
relationship to other bond sectors.  Despite  reasonably  strong economic growth
and rising  interest rates in the first half of 1996,  bond prices have returned
to similar levels of one year ago. The bond market has become  comfortable  with
the  possibility  that  economic  growth  does not  necessarily  lead to  higher
inflation. And if the economy does slow, we expect to see inflation and interest
rates fall further.

The  primary  objective  of the Fund is income  exempt  from  federal  and Idaho
personal income taxes.  To earn high income,  24% of the Fund is invested in the
debt of non-rated issuers with strong  creditworthiness.  These issuers must, in
the opinion of the advisor,  must have credit  quality  strong enough to earn at
least an "A" rating from a  nationally  recognized  rating  agency.  In the last
fiscal year, the yield spread between highly rated and non-rated Idaho municipal
issues has narrowed.  Non-rated  paper  performed  well compared to higher rated
issues.

The  secondary  objective  of the  Fund is  capital  preservation.  The  average
maturity of the Fund may be the most important factor affecting principal values
in the portfolio.  The effective  average maturity of the Fund is now 7.1 years,
slightly  less than the 7.9 years at the  beginning of the fiscal  year.  We are
optimistic  that  interest  rates  will  continue  to fall in 1997 but we do not
believe that extending beyond the intermediate  sector of the yield curve offers
enough additional return to compensate for the added risk to the Fund.

Idaho's  economic  outlook  remains  healthy.   However,   economic  growth  and
employment  have slowed  from the  unusually  high levels of 1994 and 1995.  The
weakness in the computer  industries,  important to Idaho's income tax revenues,
appears to be passing.  Idaho's  superior  quality of life  continues to attract
significant  immigration.  Property  values  continue to increase in many areas,
providing additional protection to the value of many municipal bonds.

The current  combination of high federal and state income taxes in Idaho creates
a substantial  appetite among investors for tax-exempt  bonds.  Idaho municipals
benefit from an imbalance  between the number of buyers and the number of issues
sold within the <PAGE>

 state.  This imbalance is especially important in weak markets when Idaho

bonds often  outperform  similar issues from other states.  Idaho's  outstanding
record of repaying municipal debt also fuels investor appetites.

The  graph  below  compares  the  Idaho  Tax-Exempt  Fund`s  performance  to the
performance of the Lehman Brothers Composite Municipal Bond Index, a broad-based
municipal bond market index. To be comparable, the Municipal Index data includes
reinvested income (as computed by Lehman Brothers Fixed Income Research). Though
the Fund does not try to "beat" the Lehman  Brothers Index or any other specific
index, the Fund's returns,  considering its lower  volatility,  compares well to
that of the Index for the fiscal year, as shown in the accompanying chart.

Note that this graph  compares an  unmanaged,  expense free index to an actively
managed Fund that has transaction and other costs. The Fund also stands ready to
buy and  sell  its  securities  to  shareholders  on a daily  basis,  as well as
providing  a wide range of services  to them.  Additionally,  it should be noted
that few if any investors are able to invest in an exact index portfolio because
of the large amount of securities involved to model such a index.

Were the Fund to target the index as an  objective,  the Fund might take greater
risk by extending the average maturity of its portfolio to take advantage of the
greater price  fluctuation  (for better or worse) available in such a portfolio.
As  maintaining  capital  stability is also an objective  of the  portfolio,  we
believe the Fund has performed well considering its investment objectives.

The graph shows that $10,000 invested in the Idaho Tax Exempt Fund at the end of
September  1987 would have grown to $21,893 at the end of November  1996. If the
$10,000 could have been invested in the Lehman Brothers Composite Municipal Bond
Index at the end of September 1987, then it would have grown to $18,028.
Date       The Fund    Lehman Index
  Sep-87   $10,000      $10,000
11/30/88    10,679       11,391
11/30/89    11,658       12,644
11/30/90    12,351       13,620
11/29/91    13,294       15,019
11/30/92    14,290       16,525
11/30/93    15,341       18,356
11/30/94    14,763       17,392
11/30/95    17,225       20,678
11/30/96    18,028       21,893

(Graph Omitted)

<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1-ORGANIZATION
Saturna  Investment  Trust,  (formerly  Northwest  Investors  Trust)  Trust (the
"Trust")  was  established  under  Washington  State Law as a Business  Trust on
February  20,  1987.  The Trust is  registered  as a  no-load,  open-end  series
investment  company under the Investment  Company Act of 1940, as amended.  Four
portfolios  have been created to date in addition to Idaho  Tax-Exempt Fund (the
"Fund.") The other four portfolios  distribute through a separate prospectus and
the results of those funds are contained in a separate report.

Note 2--SIGNIFICANT ACCOUNTING

POLICIES

The following is a summary of the significant  accounting  policies  followed by
the Fund.

INVESTMENTS:

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

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

INCOME AND EXPENSES:

Interest income is reduced by the  amortization of bond premiums,  on a constant
yield-to-maturity basis from purchase date to maturity.

Interest  income  is  increased  by  accretion  only for bonds  underwritten  as
original issue  discounts.  Market discounts are recorded as realized gains upon
disposition.

Expenses incurred by the Trust on behalf of the Fund (e.g.,  professional  fees)
are  allocated  to the Fund and the  other  Funds of the  Trust on the  basis of
relative  daily average net assets.  The Adviser has agreed to certain limits on
expenses, as described below.

INCOME TAXES:

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

DIVIDENDS AND DISTRIBUTIONS TO SHAREOWNERS:

Dividends and distributions to shareowners are recorded on the ex-dividend date.
Dividends  are paid daily and distributed on the last  business day of
<PAGE> 

each  month.  Shareowners  electing  to  reinvest  dividends  and  distributions
purchase additional shares at the net asset value on the payable date.

Note 3--TRANSACTIONS WITH AFFILIATED PERSONS

Under a contract  approved by shareowners on October 12, 1990,  Saturna  Capital
Corporation   provides   investment   advisory   services   and  certain   other
administrative  and distribution  services to conduct the Fund's  business.  For
such  services,  the Fund pays an annual fee equal to .50% of average  daily net
assets.  For the year ended  November 30, 1996,  the Fund incurred  advisory fee
expenses of $24,540.

Saturna  Capital has  volunteered to reimburse the Fund to the extent that total
expenses of the Fund,  (excluding  interest,  brokerage  commissions  and taxes)
exceeds .80% through March 31, 1997.  Accordingly,  for the year ended  November
30, 1996, Saturna Capital waived $11,923 of the advisory fee.

In accordance with the Fund's  agreement with its custodian bank,  National City
Bank, for the year ended November 30, 1996, custodian fees incurred by the Fund,
amounted to $1,128.  The  custodian  waived its fees for  earnings  credits,  as
represented in the Statement of Operations.

One  trustee  also  serves  as  president  of the Trust  and is a  director  and
president of Saturna Capital Corporation.

The Trust acts as a  distributor  of its own shares,  except in those  states in
which   Investors   National   Corporation  (a  subsidiary  of  Saturna  Capital
Corporation)  is itself  registered as a  broker-dealer  and acts as distributor
without  compensation.  Saturna Capital Corporation acts as shareowner servicing
(transfer) agent for the Fund, for a monthly fee plus certain expenses.  For the
fiscal year ended November 30, 1996, the Fund paid such a fee of $4,232.

Unaffiliated  trustees receive a fee of $100 per meeting  attended.  On November
30, 1996, the trustees,  officers and their immediate  families as a group owned
none of the outstanding shares of the Fund.

Note 4--FEDERAL INCOME TAXES

At November 30, 1996, the Fund had capital loss  carryforwards  of $69,918 which
expire in 2004. Prior to their expiration,  such loss  carryforwards may be used
to offset future net capital gains realized for Federal income tax purposes.

Note 5--INVESTMENTS

At November 30, 1996, the net  unrealized  appreciation  of investments  for the
Fund of  $225,804  comprised  gross  unrealized  gains  of  $230,249  and  gross
unrealized losses of $4,445.

During  the year  ended  November  30,  1996,  the Fund  purchased  $468,452  of
securities and sold/matured $586,517 of securities.
<PAGE>

                                        REPORT OF
                                  INDEPENDENT ACCOUNTANTS

To the Board of Trustees
and Shareowners of
Saturna Investment Trust

In our opinion, the accompanying statement of assets and liabilities,  including
the schedule of  investments,  and the related  statements of operations  and of
changes  in net assets  and the  financial  highlights  present  fairly,  in all
material respects, the financial position of the Idaho Tax-Exempt Fund, a series
of Saturna  Investment Trust,  (formerly  Northwest  Investors Trust;  hereafter
referred to as the "Trust") at November 30, 1996,  the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the six years
in the period then ended,  in  conformity  with  generally  accepted  accounting
principles.  These  financial  statements  and financial  highlights  (hereafter
referred to as "financial  statements")  are the  responsibility  of the Trust's
management;  our  responsibility  is to express  an  opinion on these  financial
statements  based on our  audits.  We  conducted  our audits of these  financial
statements  in accordance  with  generally  accepted  auditing  standards  which
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial  statements  are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.  We believe that our audits,  which included
confirmation  of  securities  at November  30, 1996 by  correspondence  with the
custodian  and a broker,  provide a reasonable  basis for the opinion  expressed
above.  The  financial  statements of the Trust for each of the two years in the
period  ended   November  30,  1989  and  for  the  period   September  4,  1987
(commencement  of  operations)  through  November 30, 1987 were audited by other
independent  accountants  whose  report  dated  January  19, 1990  expressed  an
unqualified opinion on those statements.

Seattle, Washington
December 18, 1996
<PAGE>
                     IDAHO TAX-EMEMPT FUND
             A PORTFOLIO OF SATURNA INVESTMENT TRUST
                        SATURNA CAPITAL
                         MUTUAL FUNDS
                         1-800/SATURNA
                        (800)/728-8762
This report is issued for the  information of the shareowners of the Fund. It is
not  authorized  for   distribution  to  prospective   investors  unless  it  is
accompanied or preceded by an effective prospectus relating to the securities of
the Fund. Idaho Tax-Exempt Fund is a series of Saturna Investment Trust.
                      (Graphic of Idaho Map Omitted)
                           ANNUAL REPORT
                         NOVEMBER 30, 1996