ITE
(Graphic  Omitted)

IDAHO  TAX-EXEMPT  FUND
NOVEMBER  30,  1998  REPORT
MORNINGSTAR  MUTUAL  FUNDS HAS AWARDED ITS HIGHEST  "FIVE-STAR"  RATING TO IDAHO
TAX-EXEMPT  FUND AS OF NOVEMBER 30,  1998.  THE  MORNINGSTAR  RATING IS A WIDELY
RESPECTED  MEASURE OF RISK-ADJUSTED  PERFORMANCE.* THE FUND'S MANAGERS ARE PROUD
OF THIS ACCOMPLISHMENT AND WORK HARD TO CONTINUE THESE EXCELLENT RESULTS.

Fellow  Shareowners:

For the twelve month period ending November 30, 1998, our Idaho  Tax-Exempt Fund
provided  shareholders with a total return of 7.28%. The current 30-day yield on
your Fund is 4.00%, tax-free.  This is the equivalent of 7.20% of taxable income
to top-bracket Idaho taxpayers.

For the first eight months of 1998,  municipal  interest rates fell slightly and
Federal Reserve Bank policy remained stable.  In the third quarter however,  the
stock market fell  precipitously and a large hedge fund collapsed.  Taxable bond
rates  fell  dramatically  in a brief but  pronounced  flight to  quality.  As a
result,  the yield on intermediate  term municipal bonds rose to 85% and in some
cases 100% of the yield of taxable issues.  This presents a rare  opportunity to
invest in  tax-free  municipals  at yields  nearly  equal to the yields on fully
taxable  issues.  This situation  persists to this day. The Federal Reserve Bank
has subsequently  restored liquidity to the bond market and restored  confidence
to  the  slumping  stock  market  by  lowering  overnight  Federal  Funds  rates
seventy-five basis points.

For the next twelve  months,  we expect the  economies  of US and Idaho to slow.
This should give the Federal Reserve the opportunity to lower  short-term  rates
further to 4.00%.  We will continue to gradually  increase the credit quality of
the fund and keep the  average  maturity  in the  seven to nine year area of the
curve.

As  always,   our  staff  and  portfolio  managers  welcome  your  comments  and
suggestions.  Only with your help can we be  certain  that we are  meeting  your
investment needs - our primary objective. We appreciate your investing with us.

     NICHOLAS  KAISER,          PHELPS  MCILVAINE,
     PRESIDENT          VICE    PRESIDENT,  PORTFOLIO  MANAGER
December  23,  1998
------------------
*Morningstar's proprietary ratings reflect 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 three month  Treasury  bill
returns. Ten per cent of the funds in a Morningstar  investment category receive
five stars. From time to time the adviser has waived all or a portion of fees or
expenses,  resulting in higher  returns.  Naturally,  past  performance  may not
indicate future results.

Page  1
<PAGE>
(Graphic  Omitted)
IDAHO TAX-EXEMPT FUND                                             November 30,
1998  Annual  Report
November  30,  1998                                              Investments

<TABLE>

<CAPTION>




<S>                          <C>                                <C>                   <C>           <C>

RATING                       Issuer                             Coupon/Maturity       Face Amount   Market Value
---------------------------  ---------------------------------  --------------------  ------------  -------------
AIRPORT PARKING (1.9%)
AAA                          Boise City ID Airport Revenue COP    5.40% due 8/1/2011  $    115,000  $     121,290
ELECTRIC POWER (2.8%)
AAA                          Idaho Falls Electric Revenue         6.75% due 4/1/2019       160,000        178,358
GENERAL OBLIGATIONS (48.9%)
AA                           Ada & Canyon Counties ID
                             JSD #2 Meridian                     5.50% due 7/30/2011       175,000        187,653
AAA                          Adams County ID GO                   5.00% due 8/1/2014       110,000        114,575
A+                           Bannock County ID GO Jail            5.05% due 9/1/2012        95,000        100,025
A                            Bannock County ID SD #25             4.90% due 8/1/2009        90,000         94,095
                                                             "    5.25% due 8/1/2016       110,000        113,960
AAA                          Boise City ID GO ISD                5.50% due 7/30/2011        95,000        100,966
AA-                                                          "   5.50% due 7/30/2016       150,000        157,830
A                            Boise County ID SD #73              5.15% due 7/31/2010       125,000        130,688
AAA                          Canyon County ID SD #132            5.40% due 7/30/2011       100,000        106,200
                                                             "   5.40% due 7/30/2012       100,000        105,630
A                            Canyon County ID SD #135 Notus       6.00% due 8/1/2007        50,000         52,068
                             Series 1994
AAA                          Cassia, Twin Falls ID JSD #151       5.10% due 8/1/2009        90,000         95,346
                                                             "   5.375% due 8/1/2013        85,000         89,743
                                                             "   5.375% due 8/1/2015        75,000         78,653
AAA                          Elmore County ID SD #193            4.75% due 7/31/2007       250,000        258,850
AAA                          Gooding County ID SD #232 Wendell    6.00% due 8/1/2008        55,000         58,265
AAA                          Kootenai County ID SD #273          4.85% due 7/31/2013       200,000        204,760
                                                             "   5.00% due 7/30/2016        70,000         71,015
AAA                          Kuna ID Sch/Comm Library Dist.        4.9% due 8/1/2013        75,000         77,438
AAA                          Madison County ID SD #321            5.60% due 2/1/2010       150,000        157,950
AA                           Payette County ID SD #372           6.50% due 7/31/2008        80,000         89,016
                             Payette County ID SD #372           6.75% due 7/31/2009       155,000        173,879
                             Payette County ID SD #372           6.75% due 7/31/2010       100,000        112,180
AAA                          Payette County ID SD #373           4.45% due 7/31/2009       250,000        254,200
AAA                          Teton County ID SD #401 GO           5.50% due 8/1/2012        75,000         79,553
                                                                                      ------------  -------------
                             SUB-TOTAL                                                   2,910,000      3,064,538
HOUSING (6.8%)
AA                           Idaho Housing Authority
                             Single Fam Mortgage, B-1             6.85% due 7/1/2012       100,000        104,621
AA                           Idaho Housing Authority
                             Refunding Series A                   6.15% due 7/1/2024       150,000        157,056
AA                           Idaho Housing Authority
                             Single Fam Mort Mezz-E-1             6.60% due 7/1/2011        95,000         99,580
AA                           Idaho Housing Authority
                             Single Fam Mort Rev Ser B1          8.125% due 7/1/2019         5,000          5,222
                                                             "    8.00% due 1/1/2020        20,000         20,867
AA                           Idaho Housing Authority
                             Single Fam Mort SR Series C1         7.70% due 7/1/2017        35,000         36,122
                                                                                      ------------  -------------
                             SUB-TOTAL                                                     405,000        423,468
IRRIGATION (0.9%)
AA                           Boise Kuna Irr. Dist.                6.00% due 7/1/2008        50,000         52,965
MEDICAL/HOSPITALS (4.9%)
                             Idaho Health Facility Auth.
A                            Hospital Rev - Elks Rehab          5.125% due 7/15/2013       300,000        305,670
</TABLE>


(The  accompanying  notes  are an integral part of these financial statements)
Page  2
<PAGE>


(Graphic  Omitted)
IDAHO TAX-EXEMPT FUND                                             November 30,
1998  Annual  Report
November  30,  1998                                              Investments

<TABLE>

<CAPTION>




<S>                                       <C>                                  <C>                   <C>           <C>

RATING                                    Issuer                               Coupon/Maturity       Face Amount   Market Value
AAA                                       Idaho State Bldg Authority Series C    5.70% due 9/1/2007  $    100,000  $     107,870
AAA                                       Idaho State Building Authority         5.00% due 9/1/2021       100,000        100,200
                                                                                                     ------------  -------------
                                                                                                          200,000        208,070
ROADS (3.1%)
A                                         Payette L.I.D. #89-1                   7.60% due 5/1/2005        30,000         30,412
A                                         Post Falls, Kootenai County           7.20% due 4/15/1999        15,000         15,074
                                          L.I.D. #91-1                          7.40% due 4/15/2000        15,000         15,043
                                                                            "   7.60% due 4/15/2001        15,000         15,045
                                                                            "   7.75% due 4/15/2002        20,000         20,058
                                                                            "   7.95% due 4/15/2003        20,000         20,063
                                                                            "   7.95% due 4/15/2004        20,000         20,075
                                          L.I.D. #91-4                          7.95% due 4/15/2005        20,000         20,058
                                          L.I.D. #91-4                          7.95% due 4/15/2006        20,000         20,065
                                          L.I.D. #91-4                          7.95% due 4/15/2007        20,000         20,063
                                                                                                     ------------  -------------
                                          SUB-TOTAL                                                       195,000        195,956
STATE EDUCATION (13.4%)
AAA                                       Boise State University
                                          Student Univ. & Housing Sys.           5.10% due 4/1/2014       300,000        309,330
AAA                                       Idaho State University
                                          Student Fee Revenue                    4.90% due 4/1/2017       275,000        275,468
AAA                                       University of Idaho
                                          Student Fee Revenue                    5.60% due 4/1/2015       185,000        196,933
A-                                        University of Idaho Fee Revenue        6.85% due 4/1/2016        50,000         54,585
                                                                                                     ------------  -------------
                                          SUB-TOTAL                                                       810,000        836,316
SEWER (2.6%)
A                                         Troy ID, Sewer Revenue                 7.10% due 2/1/1999        10,000         10,025
                                                                            "    7.20% due 2/1/2000        10,000         10,227
                                                                            "    7.30% due 2/1/2001        10,000         10,222
                                                                            "    7.40% due 2/1/2002        10,000         10,237
                                                                            "    7.50% due 2/1/2003        10,000         10,246
                                                                            "    7.60% due 2/1/2004        10,000         10,257
                                                                            "    7.70% due 2/1/2005        15,000         15,402
                                                                            "    7.80% due 2/1/2006        15,000         15,419
                                                                            "    7.90% due 2/1/2007        15,000         15,429
                                                                            "    8.00% due 2/1/2008        15,000         15,434
                                                                            "    8.00% due 2/1/2009        20,000         20,590
                                                                            "    8.00% due 2/1/2010        20,000         20,594
                                                                                                     ------------  -------------
                                          SUB-TOTAL                                                       160,000        164,082
WATER SUPPLY (9.1%)
A-                                        American Falls ID Reservoir            7.25% due 5/1/2004        70,000         75,104
                                          Refunding Series A                    7.625% due 5/1/2021       150,000        160,421
A                                         McCall Water Rev., Series 1994         6.25% due 9/1/2008       200,000        221,622
A                                         McCall Water Revenue                  6.375% due 9/1/2014        70,000         76,976
A                                         Ucon Water & Sewer Rev. Refunding     7.75% due 12/1/2002        35,000         35,982
                                                                                                     ------------  -------------
                                          SUB-TOTAL                                                       525,000        570,105
TOTAL INVESTMENTS (97.7%)                 Cost = $5,852,982                    $          5,830,000  $  6,120,818
                                                                               ====================  ------------
Other Assets (net of liabilities) (2.3%)                                                                  142,901
                                                                                                     ------------
TOTAL NET ASSETS (100%)                                                                              $  6,263,719
<FN>


*These unaudited bond ratings reflect the adviser's current rating of each bond,
as determined using Standard & Poor's and Moody's ratings.
</FN>
</TABLE>


(The  accompanying  notes  are an integral part of these financial statements)
Page  3
<PAGE>

IDAHO  TAX-EXEMPT FUND                         November 30, 1998 Annual Report

Financial  Highlights

Selected  data  per  share  of  capital stock outstanding throughout the year.
<TABLE>

<CAPTION>

                             Year ended November 30
                                                     ----------------------


<S>                                                             <C>      <C>      <C>      <C>      <C>

                                                                  1998     1997     1996     1995      1994
                                                                -------  -------  -------  -------  --------
NET ASSET VALUE AT BEGINNING OF YEAR                            $ 5.28   $ 5.25   $ 5.28   $ 4.76   $  5.23
                                                                -------  -------  -------  -------  --------
Income from investment operations
Net investment income                                             0.25     0.26     0.27     0.26      0.27
Net gains or losses on securities (both realized & unrealized)    0.12     0.03    (0.03)    0.52     (0.46)
                                                                -------  -------  -------  -------  --------
Total from investment operations                                  0.37     0.29     0.24     0.78     (0.19)
Less distributions
Dividends (from net investment income)                           (0.25)   (0.26)   (0.27)   (0.26)    (0.27)
Distributions (from capital gains)                               (0.04)    0.00     0.00     0.00     (0.01)
                                                                -------  -------  -------  -------  --------
Total distributions                                              (0.29)   (0.26)   (0.27)   (0.26)    (0.28)
NET ASSET VALUE AT END OF YEAR                                  $ 5.36   $ 5.28   $ 5.25   $ 5.28   $  4.76
                                                                =======  =======  =======  =======  ========
TOTAL RETURN                                                      7.27%    5.69%    4.66%   16.68%   (3.76)%
Ratios / Supplemental Data
--------------------------------------------------------------
Net assets ($000), end of year                                  $6,264   $5,255   $5,064   $5,220   $ 6,841
Ratio of expenses to average net assets                           0.76%    0.80%    0.79%    0.75%     0.75%
Ratio of net investment income to average net assets              4.69%    4.99%    5.10%    5.07%     5.28%
Portfolio turnover rate                                             23%      20%      10%      28%       36%

<FN>

  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 .07%, .16%, .27%, .26%, and .14%,
                                                                                               respectively.
</FN>
</TABLE>


(The  accompanying  notes  are an integral part of these financial statements)
Page  4
<PAGE>

November  30,  1998  Annual  Report                      IDAHO TAX-EXEMPT FUND

Statement  of  Assets  and  Liabilities

<TABLE>

<CAPTION>

As  of  November  30,  1998


<S>                                                                     <C>

ASSETS
      Bond investments (cost $5,852,982)                                $6,120,818
      Cash                                                                  41,703
      Interest receivable                                                  104,912
      Insurance reserve premium                                              2,473
                                                                        ----------
            Total Assets                                                 6,269,906
LIABILITIES
      Other Liabilities                                                      6,187
                                                                        ----------
            Total Liabilities                                                6,187
                                                                        ----------
NET ASSETS                                                              $6,263,719
                                                                        ==========
      Fund shares outstanding                                            1,169,397
ANALYSIS OF NET ASSETS
      Paid  in  capital  (unlimited  shares   authorized,   without  par  value)
      $5,995,055   Undistributed  net  investment  income  478  Accumulated  net
      realized gain (loss) on investments  350 Unrealized  net  appreciation  on
      investments 267,836
                                                                        ----------
      Net Assets applicable to Fund shares outstanding                  $6,263,719
                                                                        ==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE                $     5.36
                                                                        ==========
</TABLE>



Statement  of  Operations

<TABLE>

<CAPTION>

For  the  year  ended  November  30,  1998


<S>                                                                   <C>          <C>

INVESTMENT INCOME
     Interest income                                                  $  322,951
     Amortization of bond premiums                                        (9,554)
     Accretion                                                             1,644
     Miscellaneous income                                                     60
                                                                      -----------
          Gross investment income                                                  $315,101
EXPENSES
     Investment adviser and administration fee                            28,953
     Professional fees                                                     9,446
     Shareholder servicing                                                 4,059
     Printing and postage                                                  3,369
     Other expenses                                                        1,185
     Filing and registration fees                                          1,184
                                                                      -----------
     Total gross expenses                                                 48,196
          Less advisory fee waived                                        (4,401)
                                                                      -----------
     Net expenses                                                                    43,795
                                                                                   --------
          Net investment income                                                     271,306
                                                                                   --------
NET REALIZED GAIN ON INVESTMENTS
     Proceeds from sales                                               1,280,938
     Less cost of securities sold based on           identified cost   1,206,346
                                                                      -----------
          Realized net gain                                                          74,592
                                                                                   --------
UNREALIZED GAIN ON INVESTMENTS
     End of period                                                       267,836
     Beginning of period                                                 208,126
                                                                      -----------
     Increase in unrealized gain for the period                                      59,710
                                                                                   --------
          Net realized and unrealized gain on investments                           134,302
                                                                                   --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                               $405,608
                                                                                   ========
</TABLE>


(The  accompanying  notes  are an integral part of these financial statements)
Page  5
<PAGE>

IDAHO  TAX-EXEMPT  FUND                        November 30, 1998 Annual Report

Statement  of  Changes  in  Net  Assets
<TABLE>

<CAPTION>

                                     Year ended      Year ended
                                  Nov. 30, 1998      Nov. 30, 1997
                                  -------------     --------------


<S>                                                         <C>          <C>

INCREASE IN NET ASSETS
FROM OPERATIONS:
      Net investment income                                 $  271,306   $  253,087
      Net realized gain on investments                          74,592       47,467
      Net increase in unrealized appreciation                   59,710      (17,678)
      Net increase  in net assets from operations              405,608      282,876
DIVIDENDS TO SHAREOWNERS FROM:
      Net investment income                                   (270,610)    (253,388)
      Capital gains distributions                              (52,202)           -
                                                              (322,812)    (253,388)
FUND SHARE TRANSACTIONS:
      Proceeds from sales of shares                          1,495,612      661,445
      Value of shares issued in reinvestment of dividends      247,973      190,941
                                                             1,743,585      852,386
      Cost of shares redeemed                                 (817,660)    (691,110)
      Net Increase in net assets from share transactions       925,925      161,276
Total increase in net assets                                 1,008,721      190,764
NET ASSETS
      Beginning of period                                    5,254,998    5,064,234
      End of period                                         $6,263,719   $5,254,998
Shares of the Fund sold and redeemed
      Number of shares sold                                    280,787      126,666
      Number of shares issued in reinvestment of dividends      46,374       36,545
                                                               327,161      163,211
      Number of shares redeemed                               (153,071)    (132,545)
Net Increase in Number of Shares Outstanding                   174,090       30,666
</TABLE>


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

Page  6
<PAGE>

DISSCUSSION  of  FUND  PERFORMANCE
(unaudited)

For the  twelve-month  period  ending  November 30, 1998,  Idaho Tax Exempt Fund
returned shareholders +7.27%, our best year since 1995. On November 30, 1998 the
thirty-day SEC yield for the Fund was 4.00%.

In 1998, the troubles were not in municipal bonds. The Russian debt default, the
failure  of a huge  hedge  fund and the  third-quarter  plunge in equity  prices
produced a sudden and severe flight to quality.  There was de-leveraging of risk
in the bond market,  and the yield on municipal  bonds was suddenly equal to the
yield on US Treasury bonds. An investor could buy a municipal bond with the same
yield as a US Treasury bond and capture the tax exemption for free.  The Federal
Reserve Bank quickly moved to restore  liquidity and  confidence by lowering the
Federal Funds rate. Today, municipal securities remain exceptionally inexpensive
relative  to  other  fixed-income  securities.  In  1999,  we  expect  municipal
securities  spreads to return to normal levels.  This means the municipal sector
should outperform other fixed income sectors on a relative basis. We also expect
low domestic inflation and lower short-term interest rates.  However,  long-term
rates will have  difficulty  falling much from their  currently low levels.  For
1999,  we  forecast  most of the Fund's  return will come from income and spread
compression instead of price appreciation.

The  primary  objective  of the Fund is income  exempt  from  federal  and Idaho
personal income taxes.  As the yield  advantage and supply of lower-rated  paper
continues to dwindle,  we have  continued to increase the average credit quality
of the Fund. Only 14% of the portfolio is invested in non-rated paper, down from
19% at the beginning of the year.

The  secondary  objective  of the  Fund is  capital  preservation.  The  average
maturity of the Fund is the most important factor affecting  principal values in
the  portfolio.  The effective  average  maturity of the Fund is now 7.46 years,
slightly  greater than at the beginning of the year. We remain  optimistic  that
interest  rates can move lower in 1998,  but we do not  believe  that  extending
beyond  the  intermediate   sector  of  the  yield  curve  represents  the  best
risk/return  balance for the Fund.  The average  maturity of the portfolio  will
remain between six and nine years.

Idaho's  economy  took  blows  from the Asian  Crisis  in 1998.  A  slowdown  in
commercial  construction,  lower  wood  product  output,  weak farm  prices  and
declining immigration put dampers on the state's economy. Still, Idaho surprised
economists with a better year than forecast. Semiconductor chip prices rebounded
in the fall,  jobs  increased  at a 2.9% annual rate and housing  starts came in
9.8% above 1997.  Idaho's economic expansion has actually lasted longer than the
amazing  national  expansion  - eleven  years  compared to eight.  Its  economic
strengths  will  allow the Gem State to remain a  formidable  competitor  in the
national and world economy.

Idaho's high state income taxes create a substantial  appetite  among  residents
for tax-exempt  bonds.  Idaho municipal bonds benefit from an imbalance  between
the  number of buyers  and the number of issues  sold  within  the  state.  This
imbalance is  especially  important in weak markets,  when Idaho bonds  normally
outperform issues from other states.  Idaho's record of repaying  municipal debt
remains in unblemished condition and this also adds to investors' appetites.

Page  7
<PAGE>

Though the Fund does not try to "beat" the  Lehman  Brothers  Index or any other
specific  index,  the Fund's returns,  considering the lower price  fluctuation,
compares  well  to that of the  Index  for the  fiscal  year,  as  shown  in the
accompanying chart.

The Line 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).

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 own  securities to  shareholders  on a daily basis,  as well as
providing a wide range of services to them. Additionally, few investors are able
to invest in an exact index portfolio  because of the large amount of securities
required to model such an 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.
However,  maintaining the stability of capital is an objective of the portfolio,
and  we  believe  the  Fund  has  performed  well   considering  its  investment
restrictions.

The graph shows that $10,000 invested in the Idaho Tax Exempt Fund at the end of
September  1987 would have grown to $20,444 at the end of November  1998. If the
$10,000 could have been invested in the Lehman Brothers Composite Municipal Bond
Index at the end of September 1987, it would have grown to $25,283.


Idaho  Tax  Exempt  Fund  vs  Lehman  Composite  Municipal  Index

(Graph  omitted)

Page  8
<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
invest-ment  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 sig-nificant  accounting  policies followed by
the Fund.

INVESTMENTS:
Fixed-income  securities  for  which  there  are no  publicly  available  market
quo-tations  are valued using  matrices  based on maturity,  quality,  industry,
yield,  call features and similar  factors,  which are compared  periodically to
multiple dealer bids and ad-justed by the adviser under policies  established by
the Trustees.

The cost of  securities  is the same  for  accounting  and  Federal  income  tax
purposes.  Securities  trans-actions 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 con-stant
yield basis from pur-chase date to maturity or expected call date,  whichever is
earlier.

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

Expenses incurred by the Trust on be-half 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
ex-penses, as described below.

INCOME  TAXES:
The Fund has elected to be taxed as a  regulated  investment  company  under the
Internal  Revenue  Code and  distribute  sub-stantially  all of its  taxable net
invest-ment  income  and  realized  net gains on  in-vest-ments.  Therefore,  no
provision  for Federal  income taxes is required.  Further,  the Fund intends to
meet IRS  requirements for tax-free income  divi-dends,  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 share-owners are recorded on the ex-dividend
date.    Div-idends  are  paid  daily  and  distrib-

Page  9
<PAGE>


uted on the last  business day of each month.  Shareowners  electing to reinvest
dividends and distributions  pur-chase  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   ad-vi-sory   services  and  certain  other
adminis-tra-tive and distribution services to conduct the Fund's busi-ness.  For
such  services,  the Fund pays an annual fee equal to .50% of av-erage daily net
assets.  For the year ended  November 30, 1998,  the Fund incurred  advisory fee
expenses of $28,953.

Saturna  Capital has  volunteered to reimburse the Fund to the extent that total
expenses of the Fund  (excluding  interest,  brokerage  commis-sions  and taxes)
exceeds .80% through March 31, 1999.  Accordingly,  for the year ended  November
30, 1998, Saturna Capital waived $4,401 of the advisory fee.

In accordance with the Fund's  agreement with its custodian bank,  National City
Bank of Indiana,  for the year ended November 30, 1998,  custodian fees incurred
by the Fund amounted to $1,677.

One  trustee  and  shareowner  also  serves as  president  of the Trust and is a
di-rector 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  sub-si-diary  of  Saturna  Capital
Corporation)  is  itself  registered  as  a  broker-dealer,  where  it  acts  as
dis-tributor   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, 1998,  the Fund paid
such a fee of $4,059.

Unaffiliated  trustees  receive a fee of $100 per  meeting  attended,  allocated
pro-rata to the five Funds of Saturna  Investment  Trust.  On November 30, 1998,
the trustees, officers and their immediate families as a group owned 0.1% of the
outstanding shares of the Fund.

Note  4--INVESTMENTS
At November 30, 1998, the net  unreal-ized  appreciation  of investments for the
Fund of  $267,836  com-prised  gross  unrealized  gains of  $270,701  and  gross
unrealized losses of $2,865.

During the year ended  November  30, 1998,  the Fund  pur-chased  $2,179,676  of
securities and sold/matured $1,280,938 of securities.


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<PAGE>


REPORT  of
INDEPENDENT  ACCOUNTANTS

To  the  Shareholders  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, 1998, and the related
statements of operations and changes in net assets and the financial  highlights
for the year 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. The financial statements and financial highlights presented for the year
ended  November 30, 1996 and prior were audited by other  auditors  whose report
dated December 16, 1996,  expressed an unqualified  opinion on those statements.
We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  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, 1998, 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 1998 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,  1998,  the results of its  operations,  the
changes in net assets and the financial  highlights for the year then ended,  in
conformity with generally accepted accounting principles.

                                                          TAIT, WELLER & BAKER
Philadelphia,  Pennsylvania
January  8,  1999


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<PAGE>

Saturna  Capital


Mutual  Funds


http:/www.saturna.com


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.


Tax-Exempt  Fund


A  Portfolio  of  Saturna  Investment  Trust

(Graphic  Omitted)


ANNUAL  REPORT


November  30,  1998