Idaho Tax-Exempt
Fund

November 30, 2001 Report

Fellow Shareowners:

For the year ending November 30, 2001, the Idaho Tax-Exempt Fund provided a
  total return of 7.4%. Bonds again performed better than common stocks (the
S&
  P 500 Indexs total return was -12.7% for calendar 2001), and investors
  placed new money into municipals. The Idaho Tax-Exempt Funds assets
increased
  17% to $6.6 million.
  The events of 2001 include the September 11 terrorist attacks, the Afghanistan

  war, recession, a sharp bear market for stocks, and spectacular corporate
demises.
  In addition to dealing with loss of life, property, livelihood, and peace of
  mind in the wake of these events, many investors endured steep equity
declines.
  
  Bonds made gains. The Federal Reserve cut short-term interest rates 11 times
  to their lowest levels in 40 years, boosting bond prices. Increased demand for

  bonds from shell-shocked equity investors and the U.S. Treasurys
announcement
  that it would stop issuing 30-year bonds also helped.
  Idaho confronted its own economic challenges, but its growth continues. Even
  in difficult times, Idahos diverse economy outperforms the national
economy.
  Upswings in manufacturing orders, consumer confidence, housing starts, and the

  stock market signal that better times are coming. Because the steadier service

  industries are growing faster than manufacturing, we expect the 2002 economic
  rebound to be modest.
  Two years ago, we suggested investors reposition financial assets from
  the high-priced stock markets to a core investment holding in tax-exempt
bonds.
  Our advice was correct and for the coming year we continue to recommend a
balanced
  asset allocation that combines bonds with common stocks. 
  We invite you to again review the advantages of the Idaho Tax-Exempt Fund,
including
  current income free from Idaho and federal income taxes, a diversified quality

  bond portfolio, useful services, low expenses, and continuous supervision by
  professional managers. We welcome your comments and suggestions. Only with
your
  help can we be certain that we are meeting your investment needs  our
  primary objective.





|Nicholas
Kaiser, | Phelps
        McIlvaine,        
|---------------- | ---------------------------------
|President        | Vice President, Portfolio Manager

January 4, 2002

Morningstar Mutual Funds has awarded Idaho
Tax-Exempt
  Fund a "4-star" rating as of November 30, 2001. The Morningstar
rating
  is a widely respected measure of historical risk-adjusted performance. The
ratings
  are subject to change each month, and are calculated from a fund's 3 and
5-year
  average annual returns with sales charge adjustments (if any), and a risk
factor
  that reflects performance relative to 3-month Treasury Bill returns. Twenty
  percent of the funds in a Morningstar investment category receive four stars,
  the second-highest rating. The adviser has waived a portion of its fee in past

  years, resulting in higher returns. Naturally, past performance may not
indicate
  future results.

---

|INVESTMENTS |  | 
|----------- |  | 

|Rating*                                                                                                                                            | Issuer                                | Coupon/Maturity      | Face Amount | Market Value
|-------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | -------------------- | ----------- | ------------
|Airport Parking (3.4%)                                                                                                                             |                                       |                      |             |             
|AAA                                                                                                                                                | Boise City Airport Revenue COP        | 5.40% due 8/1/2011   | $215,000    | $224,202    
|Electric Power (2.6%)                                                                                                                              |                                       |                      |             |             
|AAA                                                                                                                                                | Idaho Falls Electric Revenue          | 6.75% due 4/1/2019   | 160,000     | 175,304     
|General Obligations (48.9%)                                                                                                                        |                                       |                      |             |             
|AA-                                                                                                                                                | Ada & Canyon Counties                 | 5.50% due 7/30/2011  | 175,000     | 191,170     
|                                                                                                                                                   | JSD #2 Meridian                       | 5.50% due 7/30/2015  | 100,000     | 109,060     
|AAA                                                                                                                                                | JSD #3 Kuna                           | 4.65% due 7/30/2015  | 100,000     | 99,550      
|                                                                                                                                                   | "                                     | 4.80% due 7/30/2017  | 175,000     | 173,810     
|AAA                                                                                                                                                | Adams County GO                       | 5.00% due 8/1/2014   | 110,000     | 111,089     
|A+                                                                                                                                                 | Bannock County GO Jail                | 5.05% due 9/1/2012   | 95,000      | 97,043      
|A                                                                                                                                                  | Bannock County SD #25                 | 4.90% due 8/1/2009   | 90,000      | 93,240      
|                                                                                                                                                   | "                                     | 5.25% due 8/1/2016   | 110,000     | 112,079     
|AAA                                                                                                                                                | Bingham County SCD #55                | 5.00% due 8/1/2009   | 200,000     | 213,480     
|AA-                                                                                                                                                | Boise City Revenue Bonds              | 5.10% due 2/1/2011   | 110,000     | 113,410     
|AAA                                                                                                                                                | Boise City GO ISD                     | 5.50% due 7/30/2011  | 95,000      | 99,256      
|AA-                                                                                                                                                | "                                     | 5.50% due 7/30/2016  | 150,000     | 157,350     
|A                                                                                                                                                  | Boise County SD #73                   | 5.15% due 7/31/2010  | 125,000     | 130,318     
|AAA                                                                                                                                                | Caldwell, Idaho GO                    | 5.30% due 5/15/2014  | 150,000     | 159,030     
|AAA                                                                                                                                                | Canyon County SD #132                 | 5.40% due 7/30/2011  | 195,000     | 202,742     
|                                                                                                                                                   | "                                     | 5.40% due 7/30/2012  | 100,000     | 103,700     
|A                                                                                                                                                  | Canyon County SD #135 Notus           |                      |             |             
|                                                                                                                                                   | Series 1994                           | 6.00% due 8/1/2007   | 50,000      | 50,001      
|AAA                                                                                                                                                | Cassia, Twin Falls JSD #151           | 5.10% due 8/1/2009   | 90,000      | 96,120      
|                                                                                                                                                   | "                                     | 5.375% due 8/1/2013  | 85,000      | 90,491      
|                                                                                                                                                   | "                                     | 5.375% due 8/1/2015  | 75,000      | 79,695      
|AAA                                                                                                                                                | Clark County ID SCD #161 Dubois       | 5.00 % due 8/1/2015  | 270,000     | 280,908     
|AAA                                                                                                                                                | Kootenai County SD #273               | 5.00% due 7/30/2016  | 70,000      | 70,529      
|AAA                                                                                                                                                | Kuna Sch/Comm Library District        | 4.90% due 8/1/2013   | 75,000      | 76,290      
|AAA                                                                                                                                                | Meridian ID Free Library District     | 5.00% due 8/1/2015   | 200,000     | 202,120     
|AAA                                                                                                                                                | Power & Cassia Co.s JSD #381          | 5.25% due 8/1/2012   | 60,000      | 64,215      
|AAA                                                                                                                                                | Teton County SD #401 GO               | 5.50% due 8/1/2012   | 75,000      | 78,427      
|                                                                                                                                                   | SUB-TOTAL                             |                      | 3.130,000   | 3,255,123   
|Housing (4.7%)                                                                                                                                     |                                       |                      |             |             
|AA                                                                                                                                                 | Idaho Housing Authority               |                      |             |             
|                                                                                                                                                   | Single Fam Mortgage, B-1              | 6.85% due 7/1/2012   | 80,000      | 82,720      
|AA                                                                                                                                                 | Idaho Housing Authority               |                      |             |             
|                                                                                                                                                   | Refunding Series A                    | 6.15% due 7/1/2024   | 140,000     | 145,832     
|AA+                                                                                                                                                | Idaho Housing Authority               |                      |             |             
|                                                                                                                                                   | Single Fam Mort Mezz-E-1              | 6.60% due 7/1/2011   | 55,000      | 56,987      
|AA                                                                                                                                                 | Idaho Housing Authority               |                      |             |             
|                                                                                                                                                   | Single Fam Mort Rev Ser B1            | 8.00% due 1/1/2020   | 10,000      | 10,308      
|AA                                                                                                                                                 | Idaho Housing Authority               |                      |             |             
|                                                                                                                                                   | Single Fam Mort SR Series C1          | 7.70% due 7/1/2017   | 15,000      | 14,938      
|                                                                                                                                                   | SUB-TOTAL                             |                      | 300,000     | 310,622     
|Medical/Hospitals (4%)                                                                                                                             |                                       |                      |             |             
|AAA                                                                                                                                                | Idaho Health Facility Auth. Ref.      |                      |             |             
|                                                                                                                                                   | Holy Cross                            | 5.25% due 12/1/2014  | 80,000      | 82,557      
|AAA                                                                                                                                                | Idaho Health Facility Auth. Corp.     |                      |             |             
|                                                                                                                                                   | Holy Cross Sys Corp Rev               | 5.00% due 12/1/2022  | 155,000     | 114,114     
|AAA                                                                                                                                                | Idaho Health Facility                 |                      |             |             
|                                                                                                                                                   | Holy Cross Rev Refunding              | 5.25% due 12/1/2011  | 65,000      | 68,481      
|                                                                                                                                                   | SUB-TOTAL                             |                      | 260,000     | 265,315     
|Real Estate (6%)                                                                                                                                   |                                       |                      |             |             
|AAA                                                                                                                                                | Idaho State Bldg Authority Series C   | 5.70% due 9/1/2007   | 100,000     | 103,890     
|AAA                                                                                                                                                | Idaho State Building Authority        | 5.00% due 9/1/2021   | 100,000     | 98,950      
|A                                                                                                                                                  | Jerome Urban Renewal District         | 5.40% due 9/1/2013   | 200,000     | 198,992     
|                                                                                                                                                   |                                       |                      | 400,000     | 401,832     
|Roads (2.2%)                                                                                                                                       |                                       |                      |             |             
|A                                                                                                                                                  | Payette L.I.D. #89-1                  | 7.60% due 5/1/2005   | 30,000      | 30,004      
|A                                                                                                                                                  | Post Falls, Kootenai County           | 7.75% due 4/15/2002  | 20,000      | 19,957      
|                                                                                                                                                   | L.I.D. #91-1                          | 7.95% due 4/15/2003  | 20,000      | 19,963      
|                                                                                                                                                   | "                                     | 7.95% due 4/15/2004  | 20,000      | 19,963      
|                                                                                                                                                   | L.I.D. #91-4                          | 7.95% due 4/15/2005  | 20,000      | 19,963      
|                                                                                                                                                   | "                                     | 7.95% due 4/15/2006  | 20,000      | 19,963      
|                                                                                                                                                   | "                                     | 7.95% due 4/15/2007  | 20,000      | 19,963      
|                                                                                                                                                   | SUB-TOTAL                             |                      | 150,000     | 149,776     
|State Education (11.7%)                                                                                                                            |                                       |                      |             |             
|AAA                                                                                                                                                | Boise State University                |                      |             |             
|                                                                                                                                                   | Student Univ. & Housing Sys.          | 5.10% due 4/1/2014   | 300,000     | 307,860     
|AAA                                                                                                                                                | Idaho State University                |                      |             |             
|                                                                                                                                                   | Student Fee Revenue                   | 4.90% due 4/1/2017   | 150,000     | 148,530     
|AAA                                                                                                                                                | University of Idaho                   |                      |             |             
|                                                                                                                                                   | Student Fee Revenue-Elmwood Apts.     | 5.25% due 4/1/2014   | 120,000     | 125,448     
|AAA                                                                                                                                                | University of Idaho                   |                      |             |             
|                                                                                                                                                   | Student Fee Revenue                   | 5.60% due 4/1/2015   | 185,000     | 193,954     
|                                                                                                                                                   | SUB-TOTAL                             |                      | 755,000     | 775,792     
|Sewer (2%)                                                                                                                                         |                                       |                      |             |             
|A                                                                                                                                                  | Troy, Sewer Revenue                   | 7.40% due 2/1/2002   | 10,000      | 9,956       
|                                                                                                                                                   | "                                     | 7.50% due 2/1/2003   | 10,000      | 9,956       
|                                                                                                                                                   | "                                     | 7.60% due 2/1/2004   | 10,000      | 9,968       
|                                                                                                                                                   | "                                     | 7.70% due 2/1/2005   | 15,000      | 14,957      
|                                                                                                                                                   | "                                     | 7.80% due 2/1/2006   | 15,000      | 14,965      
|                                                                                                                                                   | "                                     | 7.90% due 2/1/2007   | 15,000      | 14,970      
|                                                                                                                                                   | "                                     | 8.00% due 2/1/2008   | 15,000      | 14,973      
|                                                                                                                                                   | "                                     | 8.00% due 2/1/2009   | 20,000      | 19,969      
|                                                                                                                                                   | "                                     | 8.00% due 2/1/2010   | 20,000      | 19,971      
|                                                                                                                                                   | SUB-TOTAL                             |                      | 130,000     | 129,685     
|Urban Renewal (5.4%)                                                                                                                               |                                       |                      |             |             
|AAA                                                                                                                                                | Boise City Idaho Urban Renewal        | 5.875% due 8/15/2025 | 190,000     | 202,084     
|AA                                                                                                                                                 | Pocatello Idaho Development Authority | 5.15% due 3/1/2011   | 150,000     | 158,971     
|                                                                                                                                                   | SUB-TOTAL                             |                      | 340,000     | 361,055     
|Water Supply (5.8%)                                                                                                                                |                                       |                      |             |             
|AAA                                                                                                                                                | Ketchum Water Revenue                 | 4.75% due 9/1/2013   | 60,000      | 60,171      
|A                                                                                                                                                  | McCall Water Rev., Series 1994        | 6.25% due 9/1/2008   | 200,000     | 215,658     
|A                                                                                                                                                  | McCall Water Revenue                  | 6.375% due 9/1/2014  | 70,000      | 73,937      
|A                                                                                                                                                  | Ucon Water & Sewer Rev. Refunding     | 7.75% due 12/1/2002  | 35,000      | 35,460      
|                                                                                                                                                   | SUB-TOTAL                             |                      | 365,000     | 385,226     
|                                                                                                                                                   |                                       |                      |             |             
|Total Investments (96.7%)                                                                                                                          |                                       | (Cost = $6,261,604)  | $6,205,000  | 6,433,932   
|Other Assets (net of liabilities) (3.3%)                                                                                                           |                                       |                      |             | 216,226     
|Total Net Assets (100%)                                                                                                                            |                                       |                      |             | $6,650,158  
|* These unaudited bond ratings reflect the adviser's
current
      rating of each bond, as determined using Standard & Poor's and Moody's
ratings.




| | Average Annual Total
Returns                          |        
| | ----------------------------------------------------- | -------
| |                                                       |        
| | 1 year                                                | 5 years
| | 4.16%                                                 | 4.82%  
| | Performance data for calendar years ended 12/31/2001. |        





---



|FINANCIAL
HIGHLIGHTS
|--------------------

Selected data per share of capital stock outstanding throughout the
year:

|                                                                                                                                                                                                                                                                  |                                                                  | Year ended November 30, |       
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ----------------------- | ------
|                                                                                                                                                                                                                                                                  |                                                                  | 2001                    | 2000  
|Net asset value at beginning of year                                                                                                                                                                                                                              |                                                                  | $5.13                   | $5.01 
|                                                                                                                                                                                                                                                                  | Income from investment operations                                |                         |       
|                                                                                                                                                                                                                                                                  | Net investment income                                            | 0.22                    | 0.23  
|                                                                                                                                                                                                                                                                  | Net gains or losses on securities (both realized and
unrealized) | 0.15                    | 0.12  
|Total from investment operations                                                                                                                                                                                                                                  |                                                                  | 0.37                    | 0.35  
|                                                                                                                                                                                                                                                                  | Less distributions                                               |                         |       
|                                                                                                                                                                                                                                                                  | Dividends (from net investment income)                           | (0.22)                  | (0.23)
|                                                                                                                                                                                                                                                                  | Distributions (from capital gains)                               | -                       | -     
|Total distributions                                                                                                                                                                                                                                               |                                                                  | (0.22)                  | (0.23)
|                                                                                                                                                                                                                                                                  |                                                                  |                         |       
|Net asset value at end of year                                                                                                                                                                                                                                    |                                                                  | $5.28                   | $5.13 
|                                                                                                                                                                                                                                                                  |                                                                  |                         |       
|Total Return                                                                                                                                                                                                                                                      |                                                                  | 7.40%                   | 7.28% 
|                                                                                                                                                                                                                                                                  |                                                                  |                         |       
|Ratios / Supplemental Data                                                                                                                                                                                                                                        |                                                                  |                         |       
|Net assets ($000), end of year                                                                                                                                                                                                                                    |                                                                  | $6,650                  | $5,628
|Ratio of gross expenses to average net assets*                                                                                                                                                                                                                    |                                                                  | 0.79%                   | 0.80% 
|Ratio of net investment income to average net assets                                                                                                                                                                                                              |                                                                  | 4.21%                   | 4.69% 
|Portfolio turnover rate                                                                                                                                                                                                                                           |                                                                  | 13%                     | 14%   
|                                                                                                                                                                                                                                                                  |                                                                  |                         |       
|* 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 the ratio of expenses to average net assets would be .11%, .14%, .05%,
      .07%, and .16%, respectively.



STATEMENT OF ASSETS
          AND LIABILITIES


|As of November 30, 2001                                  |                                                                        |                                                  |            |           
|-------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------------------------------ | ---------- | ----------
|Assets                                                   |                                                                        |                                                  |            |           
|                                                         | Investments (cost $6,261,604)                                          |                                                  | $6,433,932 |           
|                                                         | Cash                                                                   |                                                  | 114,652    |           
|                                                         | Interest Receivable                                                    |                                                  | 110,693    |           
|                                                         | Insurance Reserve Premium                                              |                                                  | 2,473      |           
|                                                         |                                                                        | Total Assets                                     |            | $6,661,750
|Liabilities                                              |                                                                        |                                                  |            |           
|                                                         | Other Liabilities                                                      |                                                  | 11,592     |           
|                                                         |                                                                        | Total Liabilities                                |            | 11,592    
|                                                         |                                                                        |                                                  |            |           
|Net Assets                                               |                                                                        |                                                  |            | $6,650,158
|                                                         |                                                                        |                                                  |            |           
|Fund Shares Outstanding                                  |                                                                        |                                                  |            | 1,258,648 
|                                                         |                                                                        |                                                  |            |           
|Analysis of Net Assets                                   |                                                                        |                                                  |            |           
|                                                         | Paid in Capital (unlimited shares authorized, without par
      value) |                                                  | 6,516,590  |           
|                                                         | Undistributed net investment income                                    |                                                  | 245        |           
|                                                         | Accumulated net realized loss on investments                           |                                                  | (39,005)   |           
|                                                         | Unrealized net appreciation to Fund shares outstanding                 |                                                  | 172,328    |           
|                                                         |                                                                        | Net Assets applicable to Fund shares outstanding |            | $6,650,158
|Net Asset Value, Offering and Redemption price per
share |                                                                        |                                                  | $5.28     



(The accompanying notes are an integral part of these
financial
  statements)

---

|STATEMENT OF
OPERATIONS
|-----------------------

|For the year ended November 30, 2001                 |                                                        |                                                 |          |         
|---------------------------------------------------- | ------------------------------------------------------ | ----------------------------------------------- | -------- | --------
|                                                     |                                                        |                                                 |          |         
|Investment income                                    |                                                        |                                                 |          |         
|                                                     | Interest income                                        |                                                 | $320,204 |         
|                                                     | Amortization of bond premium                           |                                                 | (9,914)  |         
|                                                     | Accretion                                              |                                                 | 680      |         
|                                                     |                                                        | Gross investment income                         |          | $311,690
|                                                     |                                                        |                                                 |          |         
|Expenses                                             |                                                        |                                                 |          |         
|                                                     | Investment advisor and administration fee              |                                                 | 30,957   |         
|                                                     | Professional fees                                      |                                                 | 10,244   |         
|                                                     | Shareholder service fee                                |                                                 | 3,750    |         
|                                                     | Meetings                                               |                                                 | 3,057    |         
|                                                     | Printing and postage                                   |                                                 | 2,194    |         
|                                                     | Insurance                                              |                                                 | 2,145    |         
|                                                     | Custodian fees                                         |                                                 | 1,623    |         
|                                                     | Miscellaneous expenses                                 |                                                 | 1,039    |         
|                                                     | Filing and registration fees                           |                                                 | 731      |         
|                                                     | Total gross expenses                                   |                                                 | 55,740   |         
|                                                     |                                                        | Less: Advisor fees waived                       | (5,310)  |         
|                                                     |                                                        | Less: Custodian fees waived                     | (1,623)  |         
|                                                     | Net expenses                                           |                                                 |          | 48,807  
|                                                     |                                                        | Net investment income                           |          | 262,883 
|Net realized gain on investments                     |                                                        |                                                 |          |         
|                                                     | Proceeds from sales                                    |                                                 | 761,976  |         
|                                                     | Less: cost of securities sold based on identified cost |                                                 | 728,406  |         
|                                                     |                                                        | Realized net loss                               |          | 33,570  
|Unrealized gain on investments                       |                                                        |                                                 |          |         
|                                                     | End of year                                            |                                                 | 172,328  |         
|                                                     | Beginning of year                                      |                                                 | 33,131   |         
|                                                     |                                                        | Increase in unrealized gain for the year        |          | 139,197 
|                                                     |                                                        | Net realized and unrealized gain on investments |          | 172,767 
|Net increase in net assets resulting from
operations |                                                        |                                                 | $435,650

(The accompanying notes are an integral
part
  of these financial statements)

---

|STATEMENT OF CHANGES
        IN NET ASSETS
|------------------------------------------

|                                                        |                                                               | Year ended    | Year ended    | 
|------------------------------------------------------- | ------------------------------------------------------------- | ------------- | ------------- | 
|                                                        |                                                               | Nov. 30, 2001 | Nov. 30, 2000 | 
|INCREASE IN NET ASSETS                                  |                                                               |               |               | 
|From Operations                                         |                                                               |               |               | 
|                                                        | Net investment income                                         | $262,883      | $262,487      | 
|                                                        | Net realized gain (loss) on investments                       | 33,570        | (71,423)      | 
|                                                        | Net increase in unrealized appreciation                       | 139,197       | 197,204       | 
|                                                        | Net increase in net assets from operations                    | 435,650       | 388,268       | 
|                                                        |                                                               |               |               | 
|Dividends to shareowners from                           |                                                               |               |               | 
|                                                        | Net investment income                                         | (262,974)     | (262,550)     | 
|                                                        |                                                               |               |               | 
|Fund share transactions                                 |                                                               |               |               | 
|                                                        | Proceeds from sales of shares                                 | 1,150,800     | 485,456       | 
|                                                        | Value of shares issued in reinvestment of dividends           | 213,038       | 214,861       | 
|                                                        |                                                               | 1,363,838     | 700,317       | 
|                                                        | Cost of shares redeemed                                       | (514,250)     | (1,350,100)   | 
|                                                        | Net increase (decrease) in net assets from share transactions | 849,588       | (649,783)     | 
|Total increase (decrease) in net assets                 |                                                               | $1,022,264    | (524,065)     | 
|                                                        |                                                               |               |               | 
|NET ASSETS                                              |                                                               |               |               | 
|                                                        | Beginning of year                                             | 5,627,894     | 6,151,959     | 
|                                                        | End of year                                                   | $6,650,158    | $5,627,894    | 
|                                                        |                                                               |               |               | 
|Shares of the fund sold and redeemed                    |                                                               |               |               | 
|                                                        | Number of shares sold                                         | 218,964       | 96,797        | 
|                                                        | Number of shares issued in reinvestment of dividends          | 40,308        | 42,755        | 
|                                                        |                                                               | 259,272       | 139,552       | 
|                                                        | Number of shares redeemed                                     | (97,226)      | (270,432)     | 
|Net increase (decrease) in number of shares outstanding |                                                               | 162,046       | (130,880)     | 

(The accompanying notes are
  an integral part of these financial statements)

---

DISCUSSION of FUND
PERFORMANCE(unaudited)

FISCAL YEAR 2001
  For the year ending November 30, 2001, Idaho Tax-Exempt Fund returned
shareowners
  7.40%, the second consecutive year over seven percent. With interest rates
falling,
  bond investments easily outperformed most stock portfolios in both 2000 and
  2001. Since its inception in 1987, the Fund has provided shareowners a 6.03%
  average annual total return. At November 30, 2001, the Fund held
Morningstars
  second-best 4-star rating (judged against 1635 Tax-Exempt Fixed
  Income funds). 
  Fund assets increased 17% to $6.6 million. As of November 30, 2001 the
thirty-day
  SEC yield was 3.79% (net of expenses). Consistent with the our conservative
  style, the Funds share price moved in a narrow range from low ($5.13)
  to high ($5.41).FACTORS AFFECTING PAST PERFORMANCE 
  Idahos municipal bond supply remains limited as strong tax receipts and
  project revenues reduce the need to issue bonds. Idahos high personal
  income tax creates a substantial appetite among residents for tax-exempt
bonds.
  This imbalance between the demand for and the supply of municipal issues
underlies
  the continuing solid performance of Idaho bonds. The bond quality of the Fund
  remains secure. 
  The Federal Reserve Bank and the US Government reacted to the national
economic
  weakness by lowering interest rates and reducing federal income taxes.
Interest
  rates are the lowest point in decades. Ten-year insured general obligation
bonds
  rates fell and the insured general obligation yield curve steepened over the
  year. The Fund kept its average effective maturity near the short end of its
  six to fifteen year range and benefited from this steepening curve.

The average maturity of the Fund is an important factor affecting portfolio
  principal values. The Funds weighted average maturity is now 7.1 years,
  down from 8.8 years last November. Because of a flight to quality
  after September 11th, municipal bonds did not return as much the US Treasury
  market in 2001.LOOKING FORWARD
  The current U.S. economic recession does not mean Idahos diverse, robust

  economy is declining. Idaho non-farm employment and personal income are both
  expected to expand in 2002. 
  We expect the US economy to resume growth in the second half of 2002,
inflation
  to remain subdued and the yield curve to flatten as a slow recovery unfolds.
  We do not expect a cyclical rise in rates until after the economic recovery
  is underway. This forecast implies several more months of favorable returns
  for Idaho bond investors, and positive Fund returns should continue a while
  longer. We expect the seven to nine year area of the yield curve to offer the
  best combination of risk and return for 2002 and plan to maintain average
portfolio
  maturity in this range. Low energy prices, mortgage rates and inflation are
  fueling consumer spending and economic recovery. Lower federal income tax
rates
  are reducing the relative attractiveness of municipal bonds. Eventual



---

higher interest rates will increase the Funds current tax-exempt
dividend
  income.COMPARISON TO INDEX
  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 Lehman Index data includes
  reinvested income (as computed by Lehman Brothers Fixed Income Research). The
  Funds return, considering its lower volatility, compares well to that
  of the Index. 
  Note that this graph compares an unmanaged, expense-free index to an actively
  managed fund that has transaction and operating costs. The fund stands ready
  to buy and sell its own securities to shareholders on a daily basis, as well
  as providing a wide range of services to them. Few investors are able to
invest
  in an exact index portfolio because of the large amount of securities required

  to model such an index.
  The graph shows that $10,000 invested in the Idaho Tax Exempt Fund ten years
  ago (November 1991) would have grown to $17,336 at the end of November 2001.
  If $10,000 could have been invested in the Lehman Brothers Composite Municipal

  Bond Index ten years ago, it would have grown to $19,594. The returns shown
  do not reflect the deduction of lower-rate capital gains taxes that a
shareowner
  could pay on fund capital gain distributions or the redemption of fund shares
  for a profit.



Idaho Tax Exempt Bond Fund vs. Lehman Composite Municipal
  Bond Index

(graphic omitted)



---



NOTES TO FINANCIAL
STATEMENTS


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



Note 2 - Significant Accounting
PoliciesThe 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 matrices based on maturity, quality, yield, call
  features 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 or call, as
  appropriate.
  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
each
  month. Shareowners electing to reinvest dividends and distributions purchase
  additional shares at the net asset value on the payable date.

Use of Estimates:
  The preparation of financial statements in conformity with generally accepted
  accounting principles requires management to make estimates and assumptions
  that affect the reported amounts of assets and liabilities at the date of the
  financial statements. Actual results could differ from those estimates.



Note 3 - Transactions with Affiliated
PersonsUnder 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, 2001, the Fund incurred advisory
  fee expenses of $30,957.
  Saturna Capital has volunteered to waive its advisory fee to the extent that
  total expenses of the Fund, (excluding interest, brokerage commissions and
taxes)
  exceeds .80% through March 31, 2002. Accordingly, for the year ended November
  30, 2001, Saturna Capital waived $5,310 of the advisory fee. 
  In accordance with the Funds agreement with its custodian, National City

  Bank of Indiana, for the year ended November 30, 2001, custodian fees incurred

  by the Fund amounted to $1,623. The custodian waived its fees for earnings
credits.
  One trustee is also a director and officer 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 agent for the Fund,
  for a monthly fee plus certain expenses. For the year ended November 30, 2001,

  the Fund paid such a fee of $3,750. 
  Unaffiliated trustees receive a fee of $100 per meeting attended, allocated
  pro-rata to the five Funds of Saturna Investment Trust. On November 30, 2001,
  the trustees, officers and their immediate families as a group owned 0.1% of
  the outstanding shares of the Fund.

Note 4 - Federal Income TaxesAt November 30, 2000, Idaho Tax-Exempt had capital loss carryforwards
  of $72,925, of which $1,502 expires in 2007 and $71,423 expires in 2008,
subject
  to regulation. Prior to their expiration, such loss carryforwards may be used
  to offset future net capital gains realized for federal income tax purposes.

Note 5 - InvestmentsAt November 30, 2001, the net unrealized appreciation of investments
  for the Fund of $172,328 comprised gross unrealized gains of $179,486 and
gross
  unrealized losses of $7,158, and cost for federal income tax purposes was
$6,261,604.
  During the year ended November 30, 2001, the Fund purchased $1,771,197 of
securities
  and sold / matured $761,976 of securities.



---



REPORT ofINDEPENDENT
ACCOUNTANTS


To the Shareowners and Board of Trustees
  Idaho Tax-Exempt Fund
  We have audited the accompanying statement of assets and liabilities of the
  Idaho Tax-Exempt Fund, a series of shares of the Saturna Investment Trust,
including
  the schedules of investments as of November 30, 2001, and the related
statements
  of operations for the year then ended, the changes in net assets for each of
  the two years then ended, and the financial highlights for the five years then

  ended. These financial statements and financial highlights are the
responsibility
  of the Trusts management. Our responsibility is to express an opinion
  on these financial statements and financial highlights based on our audits.
  
  We conducted our audits in accordance with auditing standards generally
accepted
  in the United States of America. Those standards require that we plan and
perform
  the audit to obtain reasonable assurance about whether the financial
statements
  and financial highlights are free of material misstatement. An audit includes
  examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements. Our procedures included confirmation of
securities
  owned as of November 30, 2001, by correspondence with the custodian. Our audit

  also includes assessing the accounting principles used and significant
estimates
  made by management, as well as evaluating the overall financial statement
presentation.
  We believe that our audits provide a reasonable basis for our opinion.
  In our opinion the financial statements and financial highlights referred to
  above present fairly, in all material respects, the financial position of
Idaho
  Tax-Exempt Fund as of November 30, 2001, the results of its operations for the

  year then ended, the changes in net assets for each of the two years then
ended,
  and the financial highlights for each of the five years then ended, in
conformity
  with accounting principles generally accepted in the United States of America.

Philadelphia, Pennsylvania



/s/ signature
  Tait, Weller & Baker

December 13, 2001



---

Privacy
Statement
        At Saturna Capital, we understand the importance of maintaining the

          privacy of your financial information. To that end, we want to insure
          that we protect the confidentiality of any personal information you
          share with us.
          We collect personal information about you from information we receive
          from you on applications and other forms and from transactions or
trades
          placed with us. Please be assured that except to administer a
transaction
          with an affiliated third party upon your request, we do not disclose
          any personal information about our customers, or our former customers,

          to anyone, except as may be required by law. We maintain our own
technology
          resources to minimize the use of outside service providers.
          Additionally, Saturna Capital restricts access to personal information

          about you to those employees who need to know that information to
provide
          products or services to you. We maintain physical, electronic, and
procedural
          safeguards that comply with federal standards to guard your personal
          information. If you have further questions or concerns about the
security
          or privacy of the information we receive from you, please call us at
          1-888/732-6262.
        
        Web: http://www.saturna.com
          E-mail: idaho@saturna.com
        (logo)
          Mutual Funds
        1300 N. State Street
          Bellingham, WA 98225-4730
          1-800/SATURNA
          (1-800/728-8762)
        1-888/732-6262 for automated
assistance,
          including fund prices
        This report is issued for the information of the shareowners of
          the Fund. It is not authorized for distribution to prospective
investors
          unless it is accompanied 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 omitted)
        
        
        
        I D A H OTax-Exempt Fund
        
        
        
        Annual ReportNovember 30, 2001


---