ITE
(Graphic  Omitted)
IDAHO  TAX-EXEMPT  FUND
NOVEMBER  30,  1997  REPORT
MORNINGSTAR  MUTUAL FUNDS HAS AWARDED ITS SECOND HIGHEST  "FOUR-STAR"  RATING TO
IDAHO  TAX-EXEMPT  FUND AS OF NOVEMBER 30,  1997.  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 EXCELLENT RESULTS.

Fellow  Shareowners:


For the twelve month period ending November 30, 1997, our Idaho  Tax-Exempt Fund
provided  shareholders with a total return of 5.69%. The current 30-day yield on
your Fund is 4.27%, tax-free.  This is the equivalent of 7.69% of taxable income
to top-bracket Idaho taxpayers.

If there is one  outstanding  theme in the U.S.  economy for 1997,  it has to be
balance.  Production and consumption  had never been more closely  synchronized.
This produced  remarkably  stable prices for many goods and services.  Also, the
strong US Dollar, the growing crisis in Asia and worldwide  competition continue
to reduce domestic  inflation.  As a result,  the US bond market and the Federal
Reserve are  beginning to trust that  continuous  growth will not lead to rising
inflation.  Long-term  interest  rates have moved  lower for most of 1997 and we
expect them to move even lower in 1998.

For the next  twelve  months,  we expect the US economy to slow  slightly.  This
should  give the  Federal  Reserve  the  opportunity  to lower  short term rates
modestly as well. All in all, another year of solid, reliable returns similar to
1997 seems like the most likely outcome for 1998.

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  9,  1997
------------------
*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>

(Graphic  Omitted)
IDAHO  TAX-EXEMPT  FUND
                         November 30, 1997 Annual Report
Investments

<TABLE>

<CAPTION>


                                      Investments
RATING*                                  ISSUER                COUPON/MATURITY    FACE AMOUNT   MARKET VALUE
<S>                          <C>                             <C>                  <C>           <C>

AIRPORT PARKING (2.3%)
AAA                          Boise City ID Airport Rev COP    5.40% due 8/1/2011  $    115,000  $     117,852
ELECTRIC POWER (3.3%)
AAA                          Idaho Falls
-                            Electric Revenue                 6.75% due 4/1/2019       160,000        171,149
GENERAL OBLIGATIONS (38.4%)
AA                           Ada & Canyon Ctys ID                              -             -              -
-                            JSD #2 Meridian                 5.50% due 7/30/2011       150,000        154,933
A+                           Bannock Cnty ID GO Jail          5.05% due 9/1/2012        95,000         92,472
A                            Bannock Cnty ID SD #25                            -             -              -
-                            Pocatello                        5.25% due 8/1/2016       110,000        110,387
AAA                          Boise City ID GO ISD            5.50% due 7/30/2011        95,000         98,343
AA-                                                       "  5.50% due 7/30/2016       150,000        153,720
A                            Boise Cty ID SD #73             5.15% due 7/31/2010       125,000        123,577
AAA                          Canyon Cty ID SD #132           5.40% due 7/30/2011       100,000        102,870
-                                                         "  5.40% due 7/30/2012       100,000        102,270
A                            Canyon Cty ID SD #135 Notus      5.90% due 8/1/2005        50,000         51,673
-                            Series 1994                      6.00% due 8/1/2006        50,000         51,805
-                                                         "   6.00% due 8/1/2007        50,000         51,567
AAA                          Cassia, Twin Falls ID JSD #151  5.375% due 8/1/2013        85,000         86,454
-                                                         "  5.375% due 8/1/2015        75,000         75,800
AAA                          Gooding Cty ID SD #232                            -             -              -
-                            Wendell                          6.00% due 8/1/2008        55,000         57,100
AAA                          Kootenai Cty ID SD #273          6.00% due 8/1/2012       100,000        103,220
AAA                          Madison Cty ID SD #321           5.60% due 2/1/2010       150,000        154,878
AA                           Payette Cty ID SD #372          6.50% due 7/31/2008        80,000         88,032
  New Plymouth                          6.75% due 7/31/2009              155,000       171,523
-                                                         "  6.75% due 7/31/2010       100,000        110,960
AAA                          Teton Cty ID SD #401 GO          5.50% due 8/1/2012        75,000         78,390
                                                                                  ------------  -------------
-                            SUB-TOTAL                                         -     1,950,000      2,019,974
HOUSING (8.6%)
AA                           Idaho Housing Authority
-                            Single Fam Mortgage, B-1         6.85% due 7/1/2012       110,000        113,445
AA                           Idaho Housing Authority
-                            Refunding Ser A                  6.15% due 7/1/2024       150,000        155,230
AA                           Idaho Housing Authority
-                            Single Fam Mort Mezz-E-1         6.60% due 7/1/2011       105,000        108,319
AA                           Idaho Housing Authority
-                            Single Fam Mort Rev Ser B1      8.125% due 7/1/2019         5,000          5,098
-                                                         "   8.00% due 1/1/2020        25,000         25,537
AA                           Idaho Housing Authority                           -
-                            Single Fam Mort SR Ser C1        7.70% due 7/1/2017        45,000         45,949
                                                                                  ------------  -------------
-                            SUB-TOTAL                                         -       440,000        453,578
IRRIGATION (4.0%)
AA                           Boise Kuna Irr. Dist.            6.00% due 7/1/2008       200,000        210,360
MEDICAL/HOSPITALS (4.5%)
A                            Idaho Health Facility
-                            St. Alphonsus Medical Center    6.25% due 12/1/2012       175,000        189,228
-                                                         "  6.25% due 12/1/2022        45,000         47,592
                                                                                  ------------  -------------
-                            SUB-TOTAL                                         -       220,000        236,820
REAL ESTATE (2.0%)
AAA                          Idaho St Bldg Authority Ser C    5.70% due 9/1/2007       100,000        105,618



</TABLE>


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

IDAHO  TAX-EXEMPT  FUND
(Graphic  Omitted)
November  30,  1997  Annual  Report
Investments,  Continued


<TABLE>

<CAPTION>



RATING*                                    ISSUER               COUPON/MATURITY     FACE AMOUNT   MARKET VALUE
<S>                             <C>                           <C>                   <C>           <C>
ROADS (3.9%)
A                               Payette L.I.D. #89-1            7.60% due 5/1/2005        30,000        30,219
A                               Post Falls, Kootenai Cty       7.00% due 4/15/1998        10,000         9,981
-                               L.I.D. #91-1                   7.20% due 4/15/1999        15,000        14,980
-                                                          "   7.40% due 4/15/2000        15,000        14,977
-                                                          "   7.60% due 4/15/2001        15,000        14,991
-                                                          "   7.75% due 4/15/2002        20,000        19,989
-                                                          "   7.95% due 4/15/2003        20,000        20,001
-                                                          "   7.95% due 4/15/2004        20,000        20,017
-                                                          "   7.95% due 4/15/2005        20,000        20,008
-                                                          "   7.95% due 4/15/2006        20,000        20,007
-                                                          "   7.95% due 4/15/2007        20,000        20,006
                                                                                    ------------  ------------
-                               SUB-TOTAL                                        -       205,000       205,176
STATE EDUCATION (15.9%)
AAA                             Boise State University          6.20% due 4/1/2010       200,000       214,522
-                               Fee Revenue                     6.30% due 4/1/2014       100,000       106,750
A-                              Idaho State University                           -
-                               Student Fee Revenue             6.40% due 4/1/2014       250,000       269,000
AAA                             University of Idaho                              -
-                               Student Fee Revenue             5.60% due 4/1/2015       185,000       191,771
A-                              University of Idaho                              -
-                               Fee Revenue                     6.85% due 4/1/2016        50,000        54,514
                                                                                    ------------  ------------
-                               SUB-TOTAL                                        -       785,000       836,557
SEWER (3.4%)
A                               Troy ID, Sewer Revenue          7.00% due 2/1/1998        10,000        10,009
-                                                          "    7.10% due 2/1/1999        10,000        10,134
-                                                          "    7.20% due 2/1/2000        10,000        10,243
-                                                          "    7.30% due 2/1/2001        10,000        10,352
-                                                          "    7.40% due 2/1/2002        10,000        10,347
-                                                          "    7.50% due 2/1/2003        10,000        10,355
-                                                          "    7.60% due 2/1/2004        10,000        10,336
-                                                          "    7.70% due 2/1/2005        15,000        15,537
-                                                          "    7.80% due 2/1/2006        15,000        15,574
-                                                          "    7.90% due 2/1/2007        15,000        15,585
-                                                          "    8.00% due 2/1/2008        15,000        15,591
-                                                          "    8.00% due 2/1/2009        20,000        20,808
-                                                          "    8.00% due 2/1/2010        20,000        20,821
                                                                                    ------------  ------------
-                               SUB-TOTAL                                        -       170,000       175,692
WATER SUPPLY (10.7%)
A-                              American Falls ID Reservoir     7.25% due 5/1/2004        70,000        75,512
-                               Ref. Series A                  7.625% due 5/1/2021       150,000       163,590
A                               McCall Water Rev., Ser 1994     6.25% due 9/1/2008       200,000       213,500
A                               McCall Water Revenue           6.375% due 9/1/2014        70,000        73,869
A                               Ucon Water & Sewer Rev. Ref.   7.75% due 12/1/2002        35,000        36,441
                                                                                    ------------  ------------
-                               SUB-TOTAL                                        -       525,000       562,912
TOTAL INVESTMENTS (97.0%)                 Cost = $4,887,562                 $          4,870,000  $  5,095,688
                                                                            ====================  ------------
Other Assets (net of liabilities) (3.0%)                                 -                     -       159,310
                                                                                                  ------------
TOTAL NET ASSETS (100%)                                                                           $  5,254,998
                                                                                                  ============

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

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


(Graphic  Omitted)
IDAHO  TAX-EXEMPT  FUND
                         November 30, 1997 Annual Report
Financial  Highlights
<TABLE>

<CAPTION>
Financial  Highlights
Selected data per share of capital stock outstanding throughout the year:

                                                          For Year Ended November 30
                                       1997      1996     1995     1994     1993     1992     1991      1990    1989     1988
                                       -------  ------- -------   ----      ----     ----     ----     ----     ----     ----


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

NET ASSET VALUE AT BEGINNING
    OF YEAR                           $ 5.25   $ 5.28   $ 4.76   $  5.23   $ 5.16   $ 5.10   $ 5.03   $ 5.07   $ 4.98   $ 5.03
                                      -------  -------  -------  --------  -------  -------  -------  -------  -------  -------
  INCOME FROM INVESTMENT
    OPERATIONS
  Net investment income                 0.26     0.27     0.26      0.27     0.25     0.28     0.30     0.33     0.35     0.35
  Net gains or losses on securities
    (both realized and unrealized)      0.03    (0.03)    0.52     (0.46)    0.12     0.09     0.07    (0.04)    0.09    (0.05)
                                      -------  -------  -------  --------  -------  -------  -------  -------  -------  -------
Total From Investment Operations        0.29     0.24     0.78     (0.19)    0.37     0.37     0.37     0.29     0.44     0.30
  LESS DISTRIBUTIONS
  Dividends (from net investment
    income)                            (0.26)   (0.27)   (0.26)    (0.27)   (0.25)   (0.29)   (0.30)   (0.33)   (0.35)   (0.35)
  Distributions (from capital gains)    0.00     0.00     0.00     (0.01)   (0.05)   (0.03)    0.00     0.00     0.00     0.00
                                      -------  -------  -------  --------  -------  -------  -------  -------  -------  -------
Total Distributions                    (0.26)   (0.27)   (0.26)    (0.28)   (0.30)   (0.31)   (0.30)   (0.33)   (0.35)   (0.35)
NET ASSET VALUE AT END
   OF YEAR                            $ 5.28   $ 5.25   $ 5.28   $  4.76   $ 5.23   $ 5.16   $ 5.10   $ 5.03   $ 5.07   $ 4.98
                                      =======  =======  =======  ========  =======  =======  =======  =======  =======  =======
        TOTAL RETURN                    5.69%    4.66%   16.68%   (3.76)%    7.35%    7.49%    7.63%    5.94%    9.17%    6.45%
RATIOS / SUPPLEMENTAL DATA
------------------------------------
Net assets ($000), end of year        $5,255   $5,064   $5,220   $ 6,841   $7,367   $5,808   $3,803   $2,540   $  808   $  335
Ratio of expenses to average
  net assets                            0.80%    0.79%    0.75%     0.75%    0.75%    0.75%    0.75%    0.97%    0.90%    0.28%
Ratio of net investment income
  to average net assets                 4.99%    5.10%    5.07%     5.28%    4.79%    5.64%    6.08%    6.74%    6.51%    6.58%
Portfolio turnover rate                   20%      10%      28%       36%      31%      17%      15%      17%      13%     100%

<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 expenses per share in
each of the above periods would be $.01, $.01, $.016, $.007, $.009, $.008, $.02,
$.02,  $.05,  $.10,  $.19, and $.01  respectively.  The increase to the ratio of
expenses to average  daily net assets would be .16%,  .27%,  .26%,  .14%,  .18%,
 .17%, .54%, 1.01%, 1.25%, 2.24%, and .11%, respectively.
                                                                                                                          </FN>



</TABLE>


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


<PAGE>


(Graphic  Omitted)
IDAHO  TAX-EXEMPT  FUND
                         November 30, 1997 Annual Report
                      Statement of Assets and Liabilities
<TABLE>

<CAPTION>



ASSETS
<S>                                                            <C>

  Municipal bonds (cost $4,887,562)                            $5,095,688
  Cash                                                            196,274
  Interest receivable                                              90,862
  Insurance deposit                                                   801
                                                               -----------
    Total Assets                                                5,383,625
                                                               -----------
LIABILITIES
  Payable for securities purchased                                124,434
  Other Liabilities                                                 4,193
                                                               -----------
    Total Liabilities                                             128,627
                                                               -----------
NET ASSETS                                                     $5,254,998
                                                               ===========
FUND SHARES OUTSTANDING                                           995,307
ANALYSIS OF NET ASSETS
  Paid in capital (unlimited shares authorized, no par value)   5,068,912
  Accumulated net realized gain (loss) on investments             (22,040)
  Unrealized net appreciation on investments                      208,126
                                                               -----------
  Net Assets applicable to Fund shares outstanding             $5,254,998
                                                               ===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE       $     5.28
                                                               ===========

</TABLE>


                            Statement of Operations
<TABLE>

<CAPTION>



<S>                                                      <C>        <C>

INVESTMENT INCOME
  Interest income                                        $299,389
  Amortization of bond premiums                            (6,767)
  Accretion                                                 1,053
  Miscellaneous Income                                         22
                                                         ---------
    Gross investment income                                         $293,697
EXPENSES
  Investment adviser and administration fee                25,451
  Professional fees                                        12,790
  Shareowner servicing                                      4,050
  Printing and postage                                      4,284
  Filing and registration fees                                446
  Other expenses                                            1,900
                                                         ---------
  Total gross expenses                                     48,921
    Less advisory fee waived                               (8,311)
                                                         ---------
  Net expenses                                                  -     40,610
                                                                    ---------
    Net investment income                                       -    253,087
                                                                    ---------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
  Proceeds from sales                                     986,338
  Less cost of securities sold based on identified cost   938,871
                                                         ---------
    Realized net loss                                           -     47,467
                                                         ---------  ---------
UNREALIZED GAIN (LOSS) ON INVESTMENTS
  End of period                                           208,126
  Beginning of period                                     225,804
                                                         ---------
  Decrease in unrealized gain for the period                    -    (17,678)
                                                         ---------  ---------
    Net realized and unrealized gain on investments             -     29,789
                                                         ---------  ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS            -   $282,876
                                                                    =========



</TABLE>


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


(Graphic  Omitted)
IDAHO  TAX-EXEMPT  FUND
                         November 30, 1997 Annual Report
                      Statement of Changes in Net Assets
<TABLE>

<CAPTION>



INCREASE IN NET ASSETS                                     Year ended       Year ended
                                                          Nov. 30, 1997    Nov. 30, 1996
                                                         ---------------  ---------------
<S>                                                      <C>              <C>

FROM OPERATIONS
  Net investment income                                  $      253,087   $      252,695
  Net realized gain on investments                               47,467           (5,514)
  Net (decrease) in unrealized appreciation                     (17,678)         (25,421)
                                                         ---------------  ---------------
  Net  increase in net assets                                   282,876          221,760
                                                         ---------------  ---------------

DIVIDENDS TO SHAREOWNERS FROM
  Net investment income                                        (253,388)        (252,571)
  Capital gains distributions                                         -                -
                                                         ---------------  ---------------
                                                               (253,388)        (252,571)
                                                         ---------------  ---------------

FUND SHARE TRANSACTIONS
  Proceeds from sales of shares                                 661,445          837,937
  Value of shares issued in reinvestment of dividends           190,941          191,502
                                                         ---------------  ---------------
                                                                852,386        1,029,439
  Cost of shares redeemed                                      (691,110)      (1,154,708)
                                                         ---------------  ---------------
  Net increase in net assets from share transactions            161,276         (125,269)
                                                         ---------------  ---------------
        Total increase in net assets                            190,764         (156,080)

NET ASSETS
  Beginning of period                                         5,064,234        5,220,314
                                                         ---------------  ---------------
  End of period                                          $    5,254,998   $    5,064,234
                                                         ===============  ===============

Shares of the Fund Sold and Redeemed
  Number of shares sold                                         126,666          162,231
  Number of shares issued in reinvestment of dividends           36,545           36,855
                                                         ---------------  ---------------
                                                                163,211          199,086
  Number of shares redeemed                                    (132,545)        (223,206)
                                                         ---------------  ---------------
Net Increase (Decrease) in Number of Shares Outstanding          30,666          (24,120)
                                                         ===============  ===============



</TABLE>


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

<PAGE>


                        Discussion of Fund Performance
                                  (unaudited)

For the twelve  month  period  ending  November  28,  1997 Idaho Tax Exempt Fund
returned  shareholders  +5.69%,  slightly  better  than the  4.88%  in 1996.  On
November  28, 1997 the thirty day SEC yield for the Fund was 4.27%,  compared to
4.74% on  November  29,  1996.  The share  price at  November  28, 1997 was 5.28
compared to 5.25 at the beginning of the fiscal year.

Overall in 1997,  we saw the yield curve  flatten.  Long rates fell modestly and
short rates  remained  little  changed.  Interest rate  volatility  continued to
decline in 1997.  A flatter  yield curve and falling  rate  volatility  are both
signs that the market  believes the steady  erosion in domestic  inflation  will
continue into 1998. The financial  turmoil in Asia has recently caused a classic
"flight  -to-quality"which  pushes US bond  prices up and moves US rates  lower.
This  crisis is  serious  and will  take time to  resolve.  The  spread  between
municipal securities and US treasuries has been narrow most of the year and only
recently  widened in response to foreign  buying of US Treasuries.  However,  we
expect this spread to remain at the narrow end of its usual range.  All of these
factors  argue of high single digit  positive  returns from the ITE portfolio in
1998.

The  primary  objective  of the Fund is income  exempt  from  federal  and Idaho
personal income taxes. As the yield advantage in lower rated paper has decreased
we have  selectively  reduced our  exposure  to the lower rated  sector of Idaho
paper  from 23% to 19% of the  portfolio.  This has  allowed us to  continue  to
achieve high income while reducing credit risk.

The  secondary  objective  of the  Fund is  capital  preservation.  The  average
maturity of the Fund may be the most important factor affecting principal values
in the portfolio.  The effective  average maturity of the Fund is now 6.5 years,
slightly less than the 7.13 years at the beginning of the fiscal 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 Idaho  economy  has slowed and  leveled  off.  The State of Idaho is usually
ranked in the lowest ten states in the country for  personal  income.  This is a
major competitive advantage for attracting new business. Recently, however Idaho
has dropped two places in the National rankings for personal income. Weakness in
potato  prices  and the  effects  of the  financial  turmoil  in the Far East on
Idaho's high  technology  companies will keep the Idaho economy on a leash for a
while longer.  But the government of Idaho has recently  adopted a similar legal
framework  to the State of  Delaware in order to  encourage  new  businesses  to
incorporate in Idaho.  Idaho's superior quality of life,  reasonable land values
and  competitively  priced  labor  makes the State a strong  competitor  for new
business development in the years ahead.

High state income taxes in Idaho creates a substantial  appetite among investors
for local  tax-exempt  paper.  Idaho municipal paper benefits from the 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 paper may
outperform issues from other states.  Idaho's record of repaying  municipal debt
remains in unblemished  condition and this also adds to investors'  appetite for
this high quality paper.

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.

<PAGE>



(Graphic  Omitted)
IDAHO  TAX-EXEMPT  FUND
                         November 30, 1997 Annual Report

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 is  securities  to  shareholders  on a  daily  basis,  as well as
providing  a wide range of services  to them.  Additionally,  it should be noted
that few if any investors are able to invest in an exact index portfolio because
of the large amount of securities involved to model such a index.

Were the Fund to target the index as an  objective,  the Fund might take greater
risk by extending the average maturity of its portfolio to take advantage of the
greater price  fluctuation  (for better or worse) available in such a portfolio.
However,  maintaining the stability of capital is an objective of the portfolio,
so  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 $ 19,057at the end of November  1997. If the
$10,000 could have been invested in the Lehman Brothers Composite Municipal Bond
Index at the end of September 1987, then it would have grown to $ 23,462. (Graph
Omitted) <PAGE>


                         November 30, 1997 Annual Report
                         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:
Securities traded on a national exchange or the national over-the-counter market
system are valued at the last sale price or, in the  absence of any sale on that
date, the closing bid price.  Other  securities  traded in the  over-the-counter
market are valued at the last bid price. Fixed-income securities for which there
are no publicly  available market quo-tations are valued using a matrix based on
maturity, quality, yield 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-to-maturity basis from pur-chase date to maturity.

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.

<PAGE>



DIVIDENDS  AND  DISTRIBUTIONS  TO  SHAREOWNERS:
Dividends and  distributions  to  share-owners  are recorded on the  ex-dividend
date. Div-idends are paid daily and distributed 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, 1997,  the Fund incurred  advisory fee
expenses of $25,451.

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, 1998.  Accordingly,  for the year ended  November
30, 1997, Saturna Capital waived $8,311 of the advisory fee.

In accordance with the Fund's  agreement with its custodian bank,  National City
Bank, for the year ended November 30, 1997, custodian fees incurred by the Fund,
amounted to $1,420.

One  trustee  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  and 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, 1997, the Fund paid such a fee of $4,050.

Unaffiliated  trustees receive a fee of $100 per meeting  attended.  On November
30, 1997, the trustees,  officers and their immediate  families as a group owned
none of the outstanding shares of the Fund.

Note  4--FEDERAL  INCOME  TAXES
At November 30, 1997, the Fund had capital loss  carryforwards  of $22,451 which
expire in 2003. Prior to their expiration,  such loss  carryforwards may be used
to offset future net capital gains realized for Federal income tax purposes.

Note  5--INVESTMENTS
At November 30, 1997, the net  unreal-ized  appreciation  of investments for the
Fund of  $208,126  com-prised  gross  unrealized  gains of  $212,446  and  gross
unrealized losses of $4,320.

During the year ended  November  30, 1997,  the Fund  pur-chased  $1,176,500  of
securities and sold/matured $986,339 of securities.
<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, 1997, 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
audit. 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 audit 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, 1997, by
correspondence with the custodian and brokers. 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 audit provides a reasonable  basis for our opinion.  In our opinion the 1997
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, 1997, 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
December  12,  1997
<PAGE>


(Graphic  Omitted)
Web:  http://www.saturna.com
E-mail:  idaho@saturna.com

Saturna  Capital
MUTUAL  FUNDS
(Graphic  Omitted)MUTUAL  FUNDS
                                 1-800/SATURNA
                                 (800/728-8762)

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

                                     IDAHO
                                TAX-EXEMPT FUND
(Graphic  Omitted)
                    A Portfolio of Saturna Investment Trust
                                 ANNUAL REPORT
                               NOVEMBER 30, 1997