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.
(Graphic Omitted)
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: [email protected]
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
