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.
Page 10
<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
Page 11
<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
