N-CSR 1 d934132dncsr.htm SIT MUTUAL FUNDS, INC. Sit Mutual Funds, Inc.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-06373

 

 

Sit Mutual Funds, Inc.

(Exact name of registrant as specified in charter)

 

 

3300 IDS Center

80 South Eighth Street

Minneapolis, MN 55402

(Address of principal executive offices)

 

 

Paul E. Rasmussen, VP Treasurer

Sit Mutual Funds, Inc.

3300 IDS Center

80 South Eighth Street

Minneapolis, MN 55402

(Name and address of agent for service)

 

 

Copy to:

Mike Radmer, Esq.

Dorsey & Whitney

Suite 1500

50 South Sixth Street

Minneapolis, MN 55402-1498

Registrant’s telephone number, including area code: (612) 332-3223

Date of fiscal year end: June 30, 2020

Date of reporting period: June 30, 2020

 

 

 

Item 1:

Reports to Stockholders

 

Annual Report

June 30, 2020

 

 

Balanced Fund

 

Dividend Growth Fund

 

Global Dividend Growth Fund

 

Large Cap Growth Fund

 

ESG Growth Fund

 

Mid Cap Growth Fund

 

Small Cap Dividend Growth Fund

 

Small Cap Growth Fund

 

International Growth Fund

 

Developing Markets Growth Fund

 

Important Information on Paperless Delivery

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from Sit Mutual Funds or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will remain available on the Funds’ website (sitfunds.com) and you will be notified by mail each time a report is posted and provided with a website link to access the report.

 

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports electronically from the Fund by calling 1-800-332-5580 or by enrolling online at sitfunds.com, or, if you are invested through your financial intermediary, you may contact them directly.

 

You may elect to receive all future reports in paper free of charge. You can inform the Funds by calling 1-800-332-5580, or, if you are invested through your financial intermediary, you may contact them directly. Your election to receive reports in paper will apply to all funds held with Sit Mutual Funds or through your financial intermediary, as applicable.

 

LOGO Sit Mutual Funds

 

Sit Mutual Funds

STOCK FUNDS ANNUAL REPORT

TABLE OF CONTENTS

 

 

     Page  

Chairman’s Letter

      2  

Fund Reviews and Schedules of Investments

   

Balanced Fund

      4  

Dividend Growth Fund

      12  

Global Dividend Growth Fund

      16  

Large Cap Growth Fund

      20  

ESG Growth Fund

      24  

Mid Cap Growth Fund

      28  

Small Cap Dividend Growth Fund

      32  

Small Cap Growth Fund

      36  

International Growth Fund

      40  

Developing Markets Growth Fund

      46  

Statements of Assets and Liabilities

      50  

Statements of Operations

      52  

Statements of Changes in Net Assets

      54  

Financial Highlights

      58  

Notes to Financial Statements

      72  

Report of Independent Registered Public Accounting Firm

      80  

Expense Example

      81  

Federal Tax Information

      83  

Information About Directors and Officers

      84  

Additional Information

      86  

 

This document must be preceded or accompanied by a Prospectus.

    

CHAIRMAN’S LETTER

 

August 5, 2020

Dear Fellow Shareholders:

Led by massive fiscal and monetary stimulus, the U.S. economy is poised to improve over the next several quarters following a deep, but short-lived, technical recession, sparked by the COVID-19 pandemic and measures to contain its spread. The sharp rebound in stock prices has pushed stocks to “fair” valuation levels; we suspect investors will need more clarity on the corporate earnings outlook for stocks to move significantly higher from here.

Economic Overview

Nationwide efforts to slow the spread of COVID-19 appear to have had some initial success, but a surge in new infections as states began to lift restrictions shows the U.S. is still not out of the woods. Despite the surge, future containment measures will likely be more targeted given the severe economic harm caused by large-scale lockdowns. Yet, with a vaccine not expected before 2021, less-than-favorable virus-related headlines could slow the recovery, if consumers remain housebound and businesses do not fully reopen. Although headline consumer confidence has plunged, digging deeper into the data reveals relative optimism about economic and job prospects. Household balance sheets are also in good shape, and excess savings may ultimately fuel higher spending as jobs return. Recent data on personal spending, housing, and manufacturing have been supportive of a sharp economic rebound in the second half of 2020.

With the lingering fallout from the 2007-2008 financial crisis a not too distant memory, policymakers continue to pump enormous amounts of liquidity into the economy to short-circuit a series of events that could precipitate a lengthier downturn. The Federal Reserve’s renewed asset purchase program and emergency lending facilities have stabilized financial markets, keeping credit flowing and borrowing costs low. The Fed’s balance sheet has ballooned to over $7.1 trillion from $4.2 trillion at the end of 2019 – chiefly through purchases of Treasuries and mortgage-backed securities – and the consensus is for assets to top $9 trillion by year end. On the fiscal side, Congress has so far enacted emergency spending legislation of $3.3 trillion, bringing projected federal outlays to levels not seen since WWII. The combined U.S. fiscal and monetary stimulus allocated, but not fully deployed, thus far equals about 45% of GDP. As a result, money supply, growth of which has traditionally presaged improved economic activity, is expanding by historic proportions. The swift and substantial policy response, along with the largely self-inflicted nature of this contraction, signals an initial rebound as restrictions are lifted. However, risks abound: the pace of new COVID-19 infections is re-accelerating; bankruptcies are surging; and trade tensions are on the upswing. The outcome of the U.S. elections also has major implications for corporate profitability and legislative priorities.

Political analysts, public opinion pollsters, and oddsmakers, by and large, currently favor Joe Biden to win the U.S. presidency. Biden’s policy agenda includes a partial rollback in corporate tax cuts; taxes on the wealthy; spending on infrastructure, social programs, and clean energy; protections for workers and the environment; controls on drug pricing; and expansion of the Affordable Care Act. Based on estimates from Cornerstone Macro, this agenda’s major components will create around $6 trillion in new spending over ten years, offset by $4 trillion in higher taxes. Although big policy shifts will be tempered in the likely case of a divided government, polls suggest a Democratic sweep is a real possibility. A Democratic government could dampen business confidence, given the potential for higher taxes and regulation. Key offsets, however, include infrastructure spending and policies to promote onshoring, both of which could contribute to a revival in domestic investment.

Economic activity across much of Europe has begun to improve against abnormally easy sequential comparisons as the pace of new COVID-19 cases slows, allowing restrictions to be relaxed. Fortunately, the European Central Bank’s fast response has kept credit flowing and precluded another Euro Crisis. In addition, fiscal stimulus to support growth has come in the form of furloughing schemes, direct loans to companies, and loan guarantees. If the pandemic and associated economic fallout were not enough, the European Union and United Kingdom must also negotiate all the terms of a post-Brexit relationship by year end or risk subjecting the region to further turmoil come 2021, as the United Kingdom has refused a further extension.

We believe China will return to the pre-pandemic level of GDP in the second half of 2020 and achieve positive low-single-digit GDP growth for the full year. The COVID-19 pandemic looks broadly under control in China, thanks to effective public health containment efforts. Hence, domestic demand has gradually improved since late February, with manufacturing activity largely returning to pre-virus levels. However, the outbreak continues to be painful for emerging market economies. South Korea and India are notable exceptions, as both went into lockdown relatively early and were able to control the outbreak better.

Equity Strategy

Investor sentiment has swung wildly from euphoria in February, to panic in March, and now back to euphoria. We remain constructive on U.S. equities over the intermediate and longer term. Still, we recognize that the strong rebound in stock prices has, at least to some degree, discounted the uptick in economic activity and corporate earnings growth likely over the next several quarters.

The S&P 500® Index ended second quarter 2020 at a level of 3,100, rallying +39% off its late-March low of 2,237 and placing it within striking distance of topping its mid-February high of 3,386. The strong gains came on the heels of the Index’s

 

 

  

 

2

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

 

quickest ever -30% correction (22 days). The equally sharp stock market rebound has been driven by massive global stimulus, credit market stabilization, promise of a COVID-19 vaccine, signs containment efforts were reducing the rate of new infections, short covering, active retail participation, and anticipation of better corporate earnings. The deep economic contraction has resulted in a significant decrease in consensus earnings expectations over the next several quarters. The succeeding strong rebound in stock prices has, in turn, led to a sharp increase in the price-to-earnings (PE) multiple for the S&P 500, which has expanded to approximately 22 times next 12-months earnings versus the long-term average of 16 times. As a result, some fear the stock market is in a bubble, driven by easy money and/or overly optimistic expectations. We do not subscribe to this view for two key reasons. First, the unprecedented speed and depth of the recession has contributed to especially depressed earnings projections, notably in the industrial sector. As a result, investors are rationally looking out even further to value stocks based on “normalized” earnings. Second, stocks should be valued at higher levels, when record low interest rates and benign inflation are considered. While not cheap, we believe the recent rebound has brought the S&P 500 Index closer to fair value, as opposed to implying a bubble. Further earnings multiple expansion for the overall market is not our base case. Instead, we believe earnings growth will be the primary driver of equity gains going forward.

A key challenge is determining appropriate valuations when revenue and earnings forecasts are highly uncertain and subject to the path of the COVID-19 pandemic, consumer sentiment, and further fiscal support. Valuations for many companies on forward earnings are now higher than prior to the shutdown, and we suspect that investors will need more clarity on near-term earnings power for equity markets to move meaningfully higher from here. Our investment focus remains on companies that can deliver above-average earnings growth, regardless of the economic backdrop. Our preferred sectors include technology (e.g., 5G, cloud computing, e-commerce, software) and healthcare. In addition, we have exposure to select high quality manufacturing and transportation firms, as earnings expectations should prove conservative against a backdrop of improving manufacturing activity indicators and companies’ cost reduction efforts.

Dividend-paying stocks have posted disappointing total returns so far in 2020 for two key reasons. First, investors have opted for high growth technology stocks, including ‘stay at home’ beneficiaries and the FAANG technology stocks. Second, the severity of the economic decline has made investors question dividend sustainability for many companies, negating their usual defensive attributes in volatile and uncertain markets. We believe, however, that fears over dividend cuts will subside as the economy slowly reopens. In addition, relative valuations for many dividend-paying stocks have not been this attractive in many years, and yields are compelling, particularly relative to bonds. As of June 30, 2020, we calculate over 78% of S&P 500® stocks currently offer dividend yields above the 10-year Treasury yield. We believe, however, that selectivity is critical, and our investment focus remains on companies with strong balance sheets, experienced management teams, and growth potential. We continue to believe that a diversified portfolio of high quality, dividend-paying growth stocks can provide investors with an opportunity to participate in market gains, while also giving them downside protection if market fundamentals deteriorate.

Within international portfolios, we currently prefer exposure to investment opportunities in China, South Korea, and India. We remain positive on China, given its first in, first out position amid the global economic recovery and attractive relative valuations. We favor investments in the new economy, along with domestic demand-driven sectors. South Korea’s strong fiscal stimulus, which focuses on providing money to both consumers and corporations, will be positive for consumer and financial companies. Improving exports will also benefit semiconductor, electrical machinery, and smartphone manufacturers. Our investments in India are biased toward economically sensitive sectors, such as consumer, financials, energy, information services, and industrials.

 

 

LOGO

Roger J. Sit

Chairman, President, CEO and Global CIO

 

 

    

   

 

JUNE 30, 2020

   

 

 

 

3

 

 

    

    Sit Balanced Fund

 

 

OBJECTIVE & STRATEGY

The dual objectives of the Sit Balanced Fund are to seek long-term growth of capital consistent with the preservation of principal and to provide regular income. It pursues its objectives by investing in a diversified portfolio of stocks and bonds. The Fund may emphasize either equity securities or fixed-income securities, or hold equal amounts of each, dependent upon the Adviser’s analysis of market, financial and economic conditions.

The Fund’s permissible investment allocation is: 35-65% in equity securities and 35-65% in fixed-income securities. At all times at least 25% of the fixed-income assets will be invested in fixed-income senior securities.

 

 

 

Fund Performance

The Sit Balanced Fund’s return for the twelve-month period ending June 30, 2020 was +11.91%. The S&P 500® Index return was +7.51% over the period, while the Bloomberg Barclays Aggregate Bond Index gained +8.74%.

Factors that Influenced the Fund’s Performance

Returns for the fixed income portion of the portfolio lagged those of the Bloomberg Barclays Aggregate Bond Index for the 12-month period, as the portfolio’s significant income advantage was more than offset by underperformance from a price perspective. The global COVID-19 pandemic threw markets into turmoil during the second half of the period, resulting in a meaningful flight-to-quality among bond investors. The U.S. Government and Federal Reserve launched a number of initiatives to keep credit flowing to the battered economy. As a result, interest rates declined significantly and bond prices rose. The portfolio’s underweight to U.S. Treasury securities detracted from returns, as Treasuries were the best-performing sector during the flight-to-quality. Non-government sectors underperformed throughout the emergence of the pandemic. The portfolio’s positions in sectors, such as closed-end bond funds and taxable municipal securities, did not experience as much price appreciation as the Bloomberg Barclays Aggregate Bond Index, which detracted from their returns relative to the benchmark. The large outperformance in the equity portion of the Fund during the period was driven heavily by a large overweight position in the technology services sector as well as an underweight position in the finance sector. Stock selection in both sectors also contributed to returns. Key holdings during the period included DexCom, Adobe, Atlassian, Splunk, Applied Materials, and PayPal Holdings. Adversely affecting performance was the Fund’s overweight position in the producer manufacturing sector and underweight position in the retail trade sector.

Outlook and Positioning

The fixed-income portion of the portfolio is currently positioned with an emphasis on credit-related securities, which we expect to outperform government bonds following what will likely be a very strong positive reaction to the discovery of vaccine options to treat COVID-19. We expect to tactically raise or lower risk in the portfolio, depending on factors, such as the efficacy of new vaccines, how quickly they can be created and effectively distributed, and how quickly consumer spending recovers following a vaccine rollout. We continue to emphasize maintaining an income advantage relative to the

 

LOGO

The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the S&P 500® Index and the Bloomberg Barclays Aggregate Bond Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks of large-cap companies. It is not possible to invest directly in an index. This is the primary index for the equity portion of the Fund.

2 Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index which measures the performance of investment grade debt securities with maturities of at least one year. This is the primary index for the fixed income portion of the Fund.

 

benchmark, which we expect to drive outperformance over the market cycle. In the equity portion of the Fund, we have maintained a large overweight position in technology companies that should benefit from emerging secular trends, some of which have been accelerated by the COVID-19 pandemic. Additionally, we are looking to selectively grow our exposure to early-stage cyclicals (e.g., transports), which should benefit more than the market as economic growth improves in the second half of 2020.

As of June 30, 2020, the asset allocation of the Fund was 60.4% equities, 32.4% fixed-income, and 7.2% cash and equivalents.

Roger J. Sit

Bryce A. Doty

Portfolio Managers

 

 

Information on this page is unaudited.

 

4

    SIT MUTUAL FUNDS ANNUAL REPORT

    

    

 

COMPARATIVE RATES OF RETURNS

 

as of June 30, 2020

 

      Sit
Balanced
Fund		   S&P 500®
Index 1		   Bloomberg
Barclays
Aggregate
Bond
Index 2

One Year

        11.91 %       7.51 %       8.74 %

Five Year

        8.68       10.73       4.30

Ten Year

        9.85       13.99       3.82

Since Inception
(12/31/93)

        7.28       9.53       5.36

 

Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.

1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks of large-cap companies. It is not possible to invest directly in an index.

2 Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index which measures the performance of investment grade debt securities with maturities of at least one year.

PORTFOLIO SUMMARY

 

 

Net Asset Value 6/30/20:

    $26.37 Per Share

Net Asset Value 6/30/19:

    $25.06 Per Share

Total Net Assets:

    $46.7   Million

TOP HOLDINGS

 

Top Equity Holdings:

1. Apple, Inc.

2. Microsoft Corp.

3. Amazon.com, Inc.

4. Alphabet, Inc.

5. Visa, Inc.

Top Fixed Income Holdings:

1. MN Hsg. Fin. Agy., 2.31%, 1/1/27

2. Hartford HealthCare Corp., 3.45%, 7/1/54

3. Utah Charter Sch. Fin. Auth., 2.40%, 10/15/27

4. Towd Point Mortgage Trust, 2.18%, 2/25/60

5. Equifax, Inc., 6.90%, 7/1/28

 

 

Based on total net assets as of June 30, 2020. Subject to change.

FUND DIVERSIFICATION

 

 

LOGO

Based on total net assets as of June 30, 2020. Subject to change.

 

 

Information on this page is unaudited.

 

   

 

JUNE 30, 2020

   

 

 

 

5

 

 

    

SCHEDULE OF INVESTMENTS

June 30, 2020

 

Sit Balanced Fund

Investments are grouped by economic sectors.

     
Name of Issuer    Quantity      Fair Value ($)  

 

Common Stocks - 60.4%

      

Communications - 1.5%

      

American Tower Corp.

      1,150        297,321  

Verizon Communications, Inc.

      7,100        391,423  
     

 

 

  
        688,744  
     

 

 

  

Consumer Durables - 0.9%

      

YETI Holdings, Inc. *

     9,600        410,208  
     

 

 

  

Consumer Non-Durables - 4.0%

      

Conagra Brands, Inc.

      8,900        313,013  

Constellation Brands, Inc.

      1,700        297,415  

Estee Lauder Cos., Inc. - Class A

      2,375        448,115  

Mondelez International, Inc.

      6,300        322,119  

NIKE, Inc.

      1,775        174,039  

PepsiCo, Inc.

      2,475        327,344  
     

 

 

  
        1,882,045  
     

 

 

  

Consumer Services - 3.5%

      

McDonald’s Corp.

      2,300        424,281  

Starbucks Corp.

      3,800        279,642  

Visa, Inc.

      4,750        917,558  
     

 

 

  
        1,621,481  
     

 

 

  

Electronic Technology - 8.8%

      

Advanced Micro Devices, Inc. *

     2,500        131,525  

Apple, Inc.

      4,125        1,504,800  

Applied Materials, Inc.

      7,200        435,240  

Broadcom, Inc.

      1,660        523,913  

Ciena Corp. *

     7,250        392,660  

Intel Corp.

      5,575        333,552  

Keysight Technologies, Inc. *

     4,150        418,237  

NVIDIA Corp.

      975        370,412  
     

 

 

  
        4,110,339  
     

 

 

  

Energy Minerals - 0.3%

      

Chevron Corp.

      1,825        162,845  
     

 

 

  

Finance - 5.0%

      

Ameriprise Financial, Inc.

      2,250        337,590  

Aon, PLC

      1,900        365,940  

Chubb, Ltd.

      2,950        373,529  

Everest Re Group, Ltd.

      225        46,395  

First Republic Bank

      1,750        185,482  

Goldman Sachs Group, Inc.

      2,100        415,002  

JPMorgan Chase & Co.

      2,800        263,368  

T Rowe Price Group, Inc.

      2,075        256,262  

US Bancorp

      2,675        98,494  
     

 

 

  
        2,342,062  
     

 

 

  

Health Services - 2.3%

      

HCA Healthcare, Inc.

      3,900        378,534  

UnitedHealth Group, Inc.

      2,325        685,759  
     

 

 

  
        1,064,293  
     

 

 

  
     
Name of Issuer    Quantity      Fair Value ($)  

 

Health Technology - 5.6%

      

Abbott Laboratories

      3,550        324,577  

Boston Scientific Corp. *

     5,600        196,616  

Bristol-Myers Squibb Co.

      6,300        370,440  

Bristol-Myers Squibb Co., Rights *

     1,025        3,669  

DexCom, Inc. *

     900        364,860  

Illumina, Inc. *

     350        129,622  

Intuitive Surgical, Inc. *

     620        353,295  

Johnson & Johnson

      3,000        421,890  

Thermo Fisher Scientific, Inc.

      1,250        452,925  
     

 

 

  
        2,617,894  
     

 

 

  

Process Industries - 1.5%

      

Ecolab, Inc.

      1,875        373,031  

Sherwin-Williams Co.

      600        346,710  
     

 

 

  
        719,741  
     

 

 

  

Producer Manufacturing - 4.1%

      

3M Co.

      875        136,491  

Honeywell International, Inc.

      1,925        278,336  

L3Harris Technologies, Inc.

      1,450        246,021  

Motorola Solutions, Inc.

      1,125        157,646  

Northrop Grumman Corp.

      500        153,720  

Otis Worldwide Corp.

      1,500        85,290  

Raytheon Technologies Corp.

      5,125        315,802  

Safran SA, ADR *

     13,950        351,540  

Trane Technologies, PLC

      2,175        193,532  
     

 

 

  
        1,918,378  
     

 

 

  

Retail Trade - 5.5%

      

Amazon.com, Inc. *

     485        1,338,028  

CVS Health Corp.

      4,525        293,989  

Home Depot, Inc.

      2,050        513,545  

TJX Cos., Inc.

      6,550        331,168  

Ulta Beauty, Inc. *

     430        87,471  
     

 

 

  
        2,564,201  
     

 

 

  

Technology Services - 15.7%

      

Accenture, PLC

      2,025        434,808  

Adobe, Inc. *

     1,525        663,848  

Alphabet, Inc. - Class A *

     550        779,927  

Alphabet, Inc. - Class C *

     205        289,790  

Atlassian Corp., PLC *

     2,200        396,594  

Autodesk, Inc. *

     1,700        406,623  

Facebook, Inc. *

     2,700        613,089  

Intuit, Inc.

      1,200        355,428  

Microsoft Corp.

      7,375        1,500,886  

Paycom Software, Inc. *

     550        170,352  

PayPal Holdings, Inc. *

     3,300        574,959  

salesforce.com, Inc. *

     3,575        669,705  

ServiceNow, Inc. *

     150        60,759  

Splunk, Inc. *

     1,950        387,465  
     

 

 

  
        7,304,233  
     

 

 

  
 

 

See accompanying notes to financial statements.

   

 

6

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

 

Name of Issuer    Quantity
/Principal
Amount ($)		      Fair Value ($)  

 

Transportation - 1.2%

      

FedEx Corp.

      1,375        192,802  

Union Pacific Corp.

      2,050        346,594  
     

 

 

  
        539,396  
     

 

 

  

Utilities - 0.5%

      

NextEra Energy, Inc.

      1,035        248,576  
     

 

 

  

Total Common Stocks
(cost: $18,918,672)

         28,194,436  
     

 

 

  

Bonds - 30.1%

      

Asset-Backed Securities - 2.1%

      

Bayview Opportunity Master Fund,
2017-SPL1 A, 4.00%, 10/28/64 1, 4

      51,282        53,138  

Credit Suisse First Boston Mortgage Corp.,
2005-AGE1 M3, 1 Mo. Libor + 0.65, 0.83%, 2/25/32 1

     38,657        38,634  

Irwin Home Equity Corp.,
2005-1 M1, 5.92%, 6/25/35 14

     21,374        21,777  

New Century Home Equity Loan Trust,
2005-A A4W, 4.68%, 8/25/35 14

     5,798        5,863  

OSCAR US Funding Trust VII, LLC:

      

2017-2A A3, 2.45%, 12/10/21 4

     45,779        45,862  

2017-2A A4, 2.76%, 12/10/24 4

     100,000        101,198  

Small Business Administration:

      

2008-20A 1, 5.17%, 1/1/28

      34,506        37,477  

2007-20H 1, 5.78%, 8/1/27

      34,603        37,586  

Towd Point Mortgage Trust:

      

2020-MH1 A1A, 2.18%, 2/25/60 1, 4

      185,723        188,079  

2019-MH1 A2, 3.00%, 11/25/58 1, 4

      100,000        101,764  

2019-SJ3 A2, 3.00%, 11/25/59 1, 4

      125,000        125,714  

2019-SJ1 A1, 3.75%, 11/25/58 1, 4

      104,520        105,405  

2019-SJ1 A2, 4.17%, 11/25/58 1, 4

      100,000        101,630  
     

 

 

  
        964,127  
     

 

 

  

Collateralized Mortgage Obligations - 5.1%

      

Fannie Mae:

      

2017-84 JP, 2.75%, 10/25/47

      85,284        90,366  

2003-34 A1, 6.00%, 4/25/43

      35,194        40,974  

2004-T1 1A1, 6.00%, 1/25/44

      22,230        25,925  

1999-17 C, 6.35%, 4/25/29

      11,622        13,061  

2001-82 ZA, 6.50%, 1/25/32

      16,249        18,435  

2009-30 AG, 6.50%, 5/25/39

      49,611        57,313  

2013-28 WD, 6.50%, 5/25/42

      47,967        57,721  

2004-T1 1A2, 6.50%, 1/25/44

      71,017        83,890  

2004-W9 2A1, 6.50%, 2/25/44

      39,320        46,438  

2010-108 AP, 7.00%, 9/25/40

      1,920        2,243  

2004-T3, 1A3, 7.00%, 2/25/44

      7,470        8,983  

1993-21 KA, 7.70%, 3/25/23

      20,802        22,062  

Freddie Mac:

      

4784 BV, 3.50%, 12/15/32

      100,000        105,050  

4293 BA, 5.28%, 10/15/47 1

     12,555        14,318  

2122 ZE, 6.00%, 2/15/29

      59,676        68,857  

 

Name of Issuer   

 

Principal
Amount ($)

      Fair Value ($)  

 

2126 C, 6.00%, 2/15/29

      39,868        45,388  

2485 WG, 6.00%, 8/15/32

      39,419        46,134  

2480 Z, 6.00%, 8/15/32

      38,006        43,324  

2575 QE, 6.00%, 2/15/33

      18,363        21,155  

2980 QA, 6.00%, 5/15/35

      19,430        23,090  

2283 K, 6.50%, 12/15/23

      4,726        5,038  

2357 ZJ, 6.50%, 9/15/31

      23,532        26,382  

4520 HM, 6.50%, 8/15/45

      36,144        43,203  

1142 IA, 7.00%, 10/15/21

      10,268        10,442  

3946 KW, 7.00%, 11/15/29

      360        361  

3704 CT, 7.00%, 12/15/36

      16,570        20,215  

2238 PZ, 7.50%, 6/15/30

      15,228        18,348  

Government National Mortgage Association:

 

2015-80 BA, 6.99%, 6/20/45 1

     25,324        29,650  

2018-147 AM, 7.00%, 10/20/48

      94,346        113,106  

2018-160 DA, 7.00%, 11/20/48

      86,313        97,531  

2014-69 W, 7.21%, 11/20/34 1

     28,978        34,210  

2013-133 KQ, 7.30%, 8/20/38 1

     28,436        33,891  

2005-74 HA, 7.50%, 9/16/35

      9,860        10,672  

JP Morgan Mortgage Trust:

      

2019-HYB1 A5A, 3.00%, 10/25/49 1, 4

      138,632        140,602  

2019-8 A4, 3.50%, 3/25/50 1, 4

      107,480        109,542  

2019-9 A8, 3.50%, 5/25/50 1, 4

      125,000        128,635  

2020-2 A4, 3.50%, 7/25/50 1, 4

      176,510        180,932  

New Residential Mortgage Loan Trust:

      

2018-3A A1, 4.50%, 5/25/58 1, 4

      71,457        77,273  

PMT Loan Trust: 2013-J1 A11, 3.50%, 9/25/43 1, 4

      118,698        123,760  

Sequoia Mortgage Trust:

      

2019-5 A4, 3.50%, 12/25/49 1, 4

      84,450        86,506  

2020-2 A4, 3.50%, 3/25/50 1, 4

      139,283        143,538  

Vendee Mortgage Trust:

      

2008-1 B, 6.18%, 3/15/25 1

     11,384        13,309  

1994-2 2, 6.72%, 5/15/24 1

     9,932        10,277  

Wells Fargo Mortgage Backed Securities Trust: 2020-2 A3, 3.00%, 12/25/49 1, 4

      100,000        102,844  
     

 

 

  
        2,394,994  
     

 

 

  

Corporate Bonds - 12.9%

      

3M Co., 3.05%, 4/15/30

      150,000        169,819  

AbbVie, Inc., 4.88%, 11/14/48

      100,000        131,324  

Alleghany Corp., 3.63%, 5/15/30

      100,000        106,113  

American Airlines Trust, 3.20%, 6/15/28

      83,200        78,362  

American Financial Group, 5.25%, 4/2/30

      100,000        118,763  

Arizona Public Service Co., 3.15%, 5/15/25

      50,000        54,888  

AXIS Specialty Finance, 3.90%, 7/15/29

      100,000        106,926  

Bank of America Corp., 3.25%, 10/21/27

      100,000        110,287  

Brown & Brown, Inc., 4.20%, 9/15/24

      68,000        73,734  

Carrier Global Corp., 2.70%, 2/15/31 4

     75,000        74,780  

Charles Stark Draper Laboratory, Inc.,
4.39%, 9/1/48

      100,000        125,656  
 

 

See accompanying notes to financial statements.

   

 

JUNE 30, 2020

   

 

 

 

7

 

 

    

SCHEDULE OF INVESTMENTS

June 30, 2020

Sit Balanced Fund (Continued)

 

     
Name of Issuer   

 

Principal
Amount ($)

      Fair Value ($)  

 

Citigroup, Inc., 3 Mo. Libor + 1.34, 3.98%, 3/20/30 1

     150,000        172,376  

CNO Financial Group, Inc., 5.25%, 5/30/29

      100,000        107,173  

Comerica, Inc., 4.00%, 2/1/29

      150,000        168,542  

Cox Communications, Inc., 8.38%, 3/1/39 4

     100,000        163,362  

CSX Corp., 4.25%, 11/1/66

      150,000        181,788  

Delta Air Lines 2015-1 Class A Pass Through Trust, 3.88%, 7/30/27

      160,976        141,640  

Delta Air Lines 2015-1 Class AA Pass Through Trust, 3.63%, 7/30/27

      120,730        119,396  

Doric Nimrod Air Alpha 2013-1 Trust,
5.25%, 5/30/23 4

     34,313        31,182  

Doric Nimrod Air Finance Alpha 2012-1 Trust, 5.13%, 11/30/22 4

     25,998        24,052  

Duke Energy Florida, LLC, 2.54%, 9/1/29

      50,000        53,571  

Emerson Electric Co., 1.95%, 10/15/30

      150,000        153,036  

Entergy Louisiana, LLC, 4.95%, 1/15/45

      150,000        163,435  

Equifax, Inc., 6.90%, 7/1/28

      150,000        184,672  

Essential Utilities, Inc., 2.70%, 4/15/30

      50,000        52,277  

Fidelity National Financial, 3.40%, 6/15/30

      50,000        52,052  

Fulton Financial Corp. (Subordinated),
4.50%, 11/15/24

      150,000        160,698  

Georgia-Pacific, LLC:

      

1.75%, 9/30/25 4

     150,000        154,745  

7.38%, 12/1/25

      100,000        127,798  

HP, Inc., 2.20%, 6/17/25

      150,000        154,824  

Intuit, Inc., 0.95%, 7/15/25

      50,000        50,108  

ITT, LLC, 7.40%, 11/15/25

      25,000        31,665  

Johnson & Johnson, 3.55%, 3/1/36

      150,000        177,442  

JPMorgan Chase & Co., 8.75%, 9/1/30

      100,000        145,132  

Lincoln National Corp., 7.00%, 6/15/40

      100,000        142,840  

Mercury General Corp., 4.40%, 3/15/27

      100,000        109,080  

NetApp, Inc., 1.88%, 6/22/25

      150,000        152,138  

Northern Trust Corp. (Subordinated), 3 Mo. Libor + 1.13, 3.38%, 5/8/32 1

     150,000        160,731  

Northrop Grumman Corp., 3.20%, 2/1/27

      150,000        166,124  

Phillips 66, 2.15%, 12/15/30

      50,000        48,535  

Principal Financial Group, Inc., 3 Mo. Libor + 3.04, 3.44%, 5/15/55 1

     100,000        89,620  

Ross Stores, Inc., 4.70%, 4/15/27

      150,000        174,028  

Security Benefit Life Insurance Co. (Subordinated), 7.45%, 10/1/33 4

     100,000        133,733  

Spirit Airlines 2015-1A Trust, 4.10%, 4/1/28

      109,835        93,052  

SW Public Service Co., 3.30%, 6/15/24

      100,000        108,063  

Tyson Foods, Inc., 5.10%, 9/28/48

      100,000        128,619  

Union Pacific Railroad Co., 2014-1 Pass Through Trust, 3.23%, 5/14/26

      119,040        131,004  

Unum Group, 4.50%, 12/15/49

      25,000        23,365  

Wachovia Corp., (Subordinated), 7.57%,
8/1/26 14

     75,000        95,803  

Webster Financial Corp., 4.38%, 2/15/24

      125,000        131,335  
     
Name of Issuer   

 

Principal
Amount ($)

      Fair Value ($)  

 

WestRock MWV, LLC, 7.95%, 2/15/31

      100,000        142,195  

Xilinx, Inc., 2.38%, 6/1/30

      50,000        51,473  
     

 

 

  
     

 

 

 

6,003,356

 

 

     

 

 

  

Federal Home Loan Mortgage Corporation - 0.3%

 

   

6.50%,    2/1/22

      5,519        5,601  

7.50%,    7/1/29

      112,352        132,015  

8.00%,    2/1/34

      13,723        16,661  

8.50%,    9/1/24

      8,487        8,777  
     

 

 

  
     

 

 

 

163,054

 

 

     

 

 

  

Federal National Mortgage Association - 2.0%

      

2.48%,    2/1/35

      150,000        164,749  

2.68%,    2/1/35

      150,000        166,537  

4.50%,    8/1/40

      49,978        52,799  

5.50%,    10/1/33

      69,887        77,827  

6.50%,    2/1/24

      14,947        15,753  

6.50%,    9/1/27

      43,773        48,693  

6.50%,    6/1/40

      108,404        123,265  

7.00%,    1/1/32

      10,511        11,495  

7.00%,    3/1/33

      19,830        22,433  

7.00%,    12/1/38

      41,059        45,828  

8.00%,    6/1/24

      9,108        9,799  

8.00%,    1/1/31

      11,104        11,228  

8.00%,    2/1/31

      18,602        23,370  

8.00%,    9/1/37

      66,977        85,020  

8.43%,    7/15/26

      2,705        2,763  

8.50%,    10/1/30

      23,808        28,523  

10.00%, 6/1/31

      25,358        28,398  
     

 

 

  
        918,480  
     

 

 

  

Government National Mortgage Association - 0.5%

 

   

5.00%,    5/20/48

      83,968        92,417  

5.75%,    12/15/22

      21,187        22,481  

6.50%,    11/20/38

      19,629        22,173  

7.00%,    12/15/24

      8,397        8,996  

7.00%,    11/20/27

      12,217        14,097  

7.00%,    9/20/29

      33,047        38,347  

7.00%,    9/20/38

      11,530        13,855  

7.50%,    4/20/32

      24,886        28,983  

8.00%,    7/15/24

      6,297        6,631  
     

 

 

  
     

 

 

 

247,980

 

 

     

 

 

  

Taxable Municipal Securities - 6.8%

      

Bucks Co. Industrial Dev. Auth.,
4.00%, 10/1/21

      65,000        64,545  

Buffalo State Col. Foundation Hsg. Corp.,
2.80%, 11/1/30

      100,000        103,918  

Florida Dev. Fin. Corp., 4.11%, 4/1/50

      150,000        149,053  

Great Lakes Water Auth. Sewage Disposal System, 3.51%, 7/1/44

      150,000        155,494  

Hartford HealthCare Corp., 3.45%, 7/1/54

      250,000        231,226  

Kentucky Higher Edu. Student Loan Corp. (Subordinated), 5.27%, 6/1/36

      100,000        105,702  
 

 

See accompanying notes to financial statements.

   

 

8

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

    

 

    

 

Name of Issuer   

Principal

Amount ($)/

Quantity

      Fair Value ($)  

 

Lane Cnty. Sch. Dist. No. 52 Bethel, 2.52%,
6/15/27

      60,000        62,774  

Massachusetts Edu. Auth.:

      

4.00%, 1/1/32

      105,000        108,574  

4.41%, 7/1/34

      50,000        55,828  

MI Hsg. Dev. Auth., 3.53%, 6/1/50

      100,000        103,424  

MN Hsg. Fin. Agy.:

      

2.31%, 1/1/27

      230,000        238,425  

4.73%, 1/1/49

      95,000        102,955  

Montgomery Cnty. Indst. Dev. Auth., 2.65%,
11/15/25

      100,000        100,123  

ND Hsg. Fin. Agy., 3.70%, 7/1/33

      100,000        107,595  

NJ Higher Edu. Student Assit. Auth., 3.50%,
12/1/39 8

     100,000        99,349  

North Hudson Sewer Auth., 2.88%, 6/1/28

      150,000        159,024  

Oregon State Fac. Auth., 3.29%, 10/1/40

      100,000        99,008  

Public Finance Authority, 4.23%, 7/1/32

      105,000        122,181  

So. Dakota Hsg. Dev. Auth., 3.89%, 5/1/32

      15,000        16,165  

South Carolina Ports Auth., 3.88%, 7/1/55

      150,000        154,288  

Texas Children’s Hospital, 3.37%, 10/1/29 17

     115,000        128,291  

Tulane University, 0.69%, 2/15/36 1

     90,000        84,751  

Utah Charter Sch. Fin. Auth., 2.40%, 10/15/27

      205,000        205,461  

Western MI Univ. Homer Stryker MD. Sch. of Med., 4.75%, 11/15/28

      100,000        115,953  

Willoughby-Eastlake City Sch. Dist., 3.36%, 12/1/46

      150,000        152,024  

Wisconsin Center District, 4.17%, 12/15/50

      150,000        157,140  
     

 

 

  
        3,183,271  
     

 

 

  

U.S. Treasury / Federal Agency Securities - 0.4%

 

   

U.S. Treasury Bond, 2.00%, 2/15/50

      150,000        171,785  
     

 

 

  

Total Bonds
(cost: $13,689,594)

         14,047,047  
     

 

 

  

 

Investment Companies - 2.3%

      

BlackRock Enhanced Government Fund

      4,886        63,664  

BlackRock Income Trust

      23,300        143,761  

BlackRock Taxable Municipal Bond Trust

      1,200        29,904  

Duff & Phelps Utility & Corp. Bond Tr., Inc.

      8,900        83,215  

Eaton Vance Short Duration Div. Inc. Fund

      14,000        158,900  

Eaton Vance, Ltd. Duration Inc. Fund

      13,100        147,637  

Franklin, Ltd. Duration, Income Trust

      17,300        146,358  

MFS Intermediate Income Trust

      2,200        8,140  

Nuveen Multi-Market Income Fund, Inc.

      3,953        27,276  

Putnam Master Intermediate Income Trust

      26,900        109,752  

Putnam Premier Income Trust

      30,400        144,096  
     

 

 

  

 

Total Investment Companies
(cost: $1,023,912)

         1,062,703  
     

 

 

  
Name of Issue   

 

Quantity

      Fair Value ($)  

 

Short-Term Securities - 9.4%

      

Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%

      4,389,935        4,389,935  
     

 

 

  

(cost: $4,389,935)

      

Total Investments in Securities - 102.2%
(cost: $38,022,113)

         47,694,121  

Other Assets and Liabilities, net - (2.2%)

         (1,036,620 ) 
     

 

 

  

Total Net Assets - 100.0%

         $46,657,501  
     

 

 

  
                   

 

*

Non-income producing security.

1 

Variable rate security. Rate disclosed is as of June 30, 2020. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or, for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their descriptions.

4 

144A Restricted Security. The total value of such securities as of June 30, 2020 was $2,498,276 and represented 5.4% of net assets. These securities have been determined to be liquid by the Adviser in accordance with guidelines established by the Board of Directors.

8 

Securities the income from which is treated as a tax preference that is included in alternative minimum taxable income for purposes of computing federal alternative minimum tax (AMT). At June 30, 2020, 0.2% of net assets in the Fund was invested in such securities.

14

Step Coupon: A bond that pays a coupon rate that increases on a specified date(s). Rate disclosed is as of June 30, 2020.

17

Security that is either an absolute and unconditional obligation of the United States Government or is collateralized by securities, loans, or leases guaranteed by the U.S. Government or its agencies or instrumentalities.

ADR — American Depositary Receipt

LLC — Limited Liability Company

PLC — Public Limited Company

Numeric footnotes not disclosed are not applicable to this Schedule of Investments.

 

 

See accompanying notes to financial statements.

   

 

JUNE 30, 2020

   

 

 

 

9

 

 

    

SCHEDULE OF INVESTMENTS

June 30, 2020

Sit Balanced Fund (Continued)

 

A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):

 

     Investment in Securities  
    

 

Level 1

Quoted
Price ($)

      Level 2
Other significant
observable inputs ($)		     

Level 3

Significant
unobservable inputs ($)

    Total ($)  

Common Stocks **

     28,194,436        —              —      28,194,436  

Asset-Backed Securities

      —        964,127              —      964,127  

Collateralized Mortgage Obligations

      —        2,394,994              —      2,394,994  

Corporate Bonds

      —        6,003,356              —      6,003,356  

Federal Home Loan Mortgage Corporation

      —        163,054              —      163,054  

Federal National Mortgage Association

      —        918,480              —      918,480  

Government National Mortgage Association

      —        247,980              —      247,980  

Taxable Municipal Securities

      —        3,183,271              —      3,183,271  

U.S. Treasury / Federal Agency Securities

      —        171,785              —      171,785  

Investment Companies

      1,062,703        —              —      1,062,703  

Short-Term Securities

      4,389,935        —              —      4,389,935  
        

 

Total:

   

 

 

 

33,647,074

 

 

      14,047,047              —      47,694,121  
        

 

** 

For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.

There were no transfers into or out of level 3 during the reporting period.

 

See accompanying notes to financial statements.

   

 

10

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

 

[This page intentionally left blank.]

 

 

 

 

    

   

 

JUNE 30, 2020

   

 

 

 

11

 

 

    

    Sit Dividend Growth Fund - Class I and Class S

 

 

OBJECTIVE & STRATEGY

The objective of the Sit Dividend Growth Fund is to provide current income that exceeds the dividend yield of the S&P 500® Index and that grows over a period of years. Secondarily, the Fund seeks long-term capital appreciation.

The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in dividend-paying common stocks. The Fund may invest the balance of its assets in preferred stocks, convertible bonds, and U.S. Treasury securities.

 

 

 

Fund Performance

The Sit Dividend Growth Fund Class I posted a +5.46% return during the 12-month period ending June 30, 2020, compared to the +7.51% return for the S&P 500® Index. The Fund’s gross dividend yield (before deducting Fund expenses) was 2.45% as of 6/30/20, compared to 1.96% for the S&P 500® Index.

Factors that Influenced the Fund’s Performance

Although the Fund posted strong absolute returns over the 12-month period, it underperformed the S&P500® Index. The main reason for the underperformance was the exceptional returns for non-dividend-paying stocks during the COVID-19 outbreak. The two key sectors that led to underperformance over the period were technology services and retail trade. The technology services sector contains many companies that were in favor with investors through the pandemic, such as high growth technology companies, which were stay-at-home beneficiaries due to their cloud computing or software exposure. Unfortunately, many of these companies do not pay dividends. Additionally, performance in the retail trade sector was adversely affected by its lack of exposure to large internet retailers that were major stay-at-home beneficiaries, but do not pay dividends. Conversely, performance also suffered from the Fund’s large exposure to high dividend-paying sectors, such as energy minerals and utilities, as investors worried about the sustainability of dividends for these companies through the pandemic. Positively, an underweight position in the consumer services sector and strong stock selection in the finance sector benefited relative performance during the period. Standouts among our finance picks included Legg Mason and Mor-gan Stanley.

Outlook and Positioning

We believe the recent underperformance of dividend-paying stocks will prove a propitious buying opportunity. Valuations for many dividend-paying stocks have not been this attractive in years and yields are compelling, particularly relative to bonds. As of June 30, 2020, we calculate that over 78% of the S&P 500® stocks currently offer dividend yields above the 10-year Treasury bond yield. As fears over dividend cuts subside with the economy gradually reopening, we

HYPOTHETICAL GROWTH OF $10,000

 

 

LOGO

The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the S&P 500® Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks of large-cap companies. It is not possible to invest directly in an index. This is the Fund’s primary index.

 

expect the relative valuation gap between dividend payers and non-dividend payers to narrow. Within this framework, we believe it is key to be selective, and we maintain our focus on purchasing only dividend-paying stocks with strong balance sheets and cash flow generation, and that have business models that are not susceptible to large-scale disruptions from secular changes. Our favorite sectors include electronic technology and healthcare technology, which should benefit from secular market shifts. We continue to believe that a diversified portfolio of high quality, dividend-paying companies can provide investors with an opportunity to participate in market gains, while also providing downside protection if market fundamentals deteriorate.

Roger J. Sit

Kent L. Johnson

Portfolio Managers

 

 

Information on this page is unaudited.

 

12

    SIT MUTUAL FUNDS ANNUAL REPORT

    

    

 

 

COMPARATIVE RATES OF RETURNS

 

as of June 30, 2020

 

     Sit Dividend
    Growth Fund    		     S&P 500®
Index 1		  
      Class I     Class S  

One Year

      5.46 %      5.19 %      7.51 % 

Five Year

      8.64       8.36       10.73  

Ten Year

      12.30       12.02       13.99  

Since Inception - Class I

      9.22       n/a       8.62  

(12/31/03)

       

Since Inception - Class S

      n/a       8.52       8.57  

(3/31/06)

       

 

Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.

1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks of large-cap companies. It is not possible to invest directly in an index.

PORTFOLIO SUMMARY

 

 

Class I:

   

Net Asset Value 6/30/20:

      $13.48 Per Share  

Net Asset Value 6/30/19:

      $14.45 Per Share  

Total Net Assets:

      $172.7 Million  

Class S:

   

Net Asset Value 6/30/20:

      $13.40 Per Share  

Net Asset Value 6/30/19:

      $14.37 Per Share  

Total Net Assets:

      $29.1   Million  

Weighted Average Market Cap:

      $298.8 Billion  

TOP 10 HOLDINGS

 

  1. Microsoft Corp.

  2. Apple, Inc.

  3. Johnson & Johnson

  4. Verizon Communications, Inc.

  5. Broadcom, Inc.

  6. Home Depot, Inc.

  7. Applied Materials, Inc.

  8. Procter & Gamble Co.

  9. PepsiCo, Inc.

10. UnitedHealth Group, Inc.

 

 

Based on total net assets as of June 30, 2020. Subject to change.

SECTOR ALLOCATION

 

 

 

LOGO

Based on total net assets as of June 30, 2020. Subject to change.

 

 

Information on this page is unaudited.

   

 

JUNE 30, 2020

   

 

 

 

13

 

 

    

SCHEDULE OF INVESTMENTS

June 30, 2020

 

Sit Dividend Growth Fund

Investments are grouped by economic sectors.

 

 

Name of Issuer    Quantity      Fair Value ($)  

 

Common Stocks - 99.4%

      

Commercial Services - 0.9%

      

S&P Global, Inc.

      5,575        1,836,851  
     

 

 

  

Communications - 4.0%

      

American Tower Corp.

      11,250        2,908,575  

Verizon Communications, Inc.

      93,800        5,171,194  
     

 

 

  
        8,079,769  
     

 

 

  

Consumer Durables - 0.9%

      

Activision Blizzard, Inc.

      23,200        1,760,880  
     

 

 

  

Consumer Non-Durables - 8.6%

      

Coca-Cola Co.

      53,750        2,401,550  

Conagra Brands, Inc.

      64,075        2,253,518  

Mondelez International, Inc.

      47,525        2,429,953  

NIKE, Inc.

      14,550        1,426,628  

PepsiCo, Inc.

      27,125        3,587,552  

Procter & Gamble Co.

      33,175        3,966,735  

Tyson Foods, Inc.

      21,900        1,307,649  
     

 

 

  
        17,373,585  
     

 

 

  

Consumer Services - 3.2%

      

McDonald’s Corp.

      16,350        3,016,084  

Visa, Inc.

      18,075        3,491,548  
     

 

 

  
        6,507,632  
     

 

 

  

Electronic Technology - 15.5%

      

Apple, Inc.

      29,975        10,934,880  

Applied Materials, Inc.

      70,075        4,236,034  

Broadcom, Inc.

      14,850        4,686,808  

Garmin, Ltd.

      18,625        1,815,938  

Intel Corp.

      57,075        3,414,797  

Keysight Technologies, Inc. *

     15,325        1,544,454  

Qualcomm, Inc.

      18,150        1,655,462  

Skyworks Solutions, Inc.

      23,600        3,017,496  
     

 

 

  
        31,305,869  
     

 

 

  

Energy Minerals - 1.6%

      

ConocoPhillips

      43,225        1,816,314  

Valero Energy Corp.

      25,775        1,516,086  
     

 

 

  
        3,332,400  
     

 

 

  

Finance - 14.2%

      

Allstate Corp.

      2,125        206,104  

Ameriprise Financial, Inc.

      17,325        2,599,443  

Aon, PLC

      14,300        2,754,180  

BlackRock, Inc.

      3,625        1,972,326  

Chubb, Ltd.

      20,675        2,617,868  

Everest Re Group, Ltd.

      8,700        1,793,940  

Goldman Sachs Group, Inc.

      4,900        968,338  

 

 

 

Name of Issuer    Quantity      Fair Value ($)  

 

JPMorgan Chase & Co.

      26,400        2,483,184  

MetLife, Inc.

      66,250        2,419,450  

Morgan Stanley

      65,925        3,184,178  

New York Community Bancorp, Inc.

      139,725        1,425,195  

Physicians Realty Trust

      84,725        1,484,382  

Realty Income Corp.

      33,750        2,008,125  

T Rowe Price Group, Inc.

      16,025        1,979,088  

Truist Financial Corp.

      21,600        811,080  
     

 

 

  
        28,706,881  
     

 

 

  

Health Services - 2.8%

      

Quest Diagnostics, Inc.

      18,000        2,051,280  

UnitedHealth Group, Inc.

      12,025        3,546,774  
     

 

 

  
        5,598,054  
     

 

 

  

Health Technology - 14.9%

      

Abbott Laboratories

      32,075        2,932,617  

AbbVie, Inc.

      26,875        2,638,588  

Agilent Technologies, Inc.

      13,225        1,168,693  

Amgen, Inc.

      11,175        2,635,736  

AstraZeneca, PLC, ADR

      43,000        2,274,270  

Bristol-Myers Squibb Co.

      45,250        2,660,700  

Johnson & Johnson

      40,250        5,660,358  

Medtronic, PLC

      33,575        3,078,828  

Merck & Co., Inc.

      41,175        3,184,063  

Sanofi, ADR

      38,625        1,971,806  

Zimmer Biomet Holdings, Inc.

      16,000        1,909,760  
     

 

 

  
        30,115,419  
     

 

 

  

Industrial Services - 0.9%

      

TC Energy Corp.

      44,275        1,897,626  
     

 

 

  

Process Industries - 1.4%

      

Air Products & Chemicals, Inc.

      11,625        2,806,972  
     

 

 

  

Producer Manufacturing - 6.8%

      

Deere & Co.

      7,550        1,186,482  

Dover Corp.

      22,775        2,199,154  

Eaton Corp., PLC

      25,355        2,218,055  

Honeywell International, Inc.

      15,100        2,183,309  

Lockheed Martin Corp.

      6,725        2,454,087  

Parker-Hannifin Corp.

      9,075        1,663,175  

Raytheon Technologies Corp.

      28,925        1,782,358  
     

 

 

  
        13,686,620  
     

 

 

  

Retail Trade - 5.8%

      

CVS Health Corp.

      33,050        2,147,258  

Home Depot, Inc.

      18,325        4,590,596  

Target Corp.

      22,325        2,677,437  

TJX Cos., Inc.

      43,375        2,193,040  
     

 

 

  
        11,608,331  
     

 

 

  
 

 

See accompanying notes to financial statements.

   

 

14

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

 

     
Name of Issuer    Quantity      Fair Value ($)  

Technology Services - 10.6%

      

Accenture, PLC

      13,925        2,989,976  

Alphabet, Inc. - Class A *

     1,505        2,134,165  

Facebook, Inc. *

     7,900        1,793,853  

Microsoft Corp.

      64,300        13,085,693  

Oracle Corp.

      25,250        1,395,568  
     

 

 

  
        21,399,255  
     

 

 

  

Transportation - 2.5%

      

FedEx Corp.

      11,100        1,556,442  

Union Pacific Corp.

      20,875        3,529,336  
     

 

 

  
        5,085,778  
     

 

 

  

Utilities - 4.8%

      

Dominion Resources, Inc.

      33,050        2,682,999  

Entergy Corp.

      15,600        1,463,436  

FirstEnergy Corp.

      74,800        2,900,744  

NextEra Energy, Inc.

      10,800        2,593,836  
     

 

 

  
        9,641,015  
     

 

 

  

Total Common Stocks
(cost: $168,147,080)

         200,742,937  
     

 

 

  
     
Name of Issuer    Quantity      Fair Value ($)  

Short-Term Securities - 0.3%

      

Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%
(cost: $564,093)

      564,093        564,093  
     

 

 

  

Total Investments in Securities - 99.7%
(cost: $168,711,173)

         201,307,030  

Other Assets and Liabilities, net - 0.3%

         544,764  
     

 

 

  

Total Net Assets - 100.0%

       $ 201,851,794  
     

 

 

  

 

 

*

Non-income producing security.

 

  

ADR — American Depositary Receipt

 

  

PLC — Public Limited Company

Numeric footnotes not disclosed are not applicable to this Schedule of Investments.

 

 

A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2—significant accounting policies in the notes to financial statements):

 

     Investment in Securities  
     Level 1      Level 2    Level 3       
     Quoted
Price ($)		      Other significant
observable inputs ($)		    Significant
unobservable inputs ($)		    Total ($)  

Common Stocks **

     200,742,937      —    —      200,742,937  

Short-Term Securities

      564,093      —    —      564,093  

Total:

      201,307,030      —    —      201,307,030  

 

**

For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.

There were no transfers into or out of level 3 during the reporting period.

 

See accompanying notes to financial statements.

   

 

JUNE 30, 2020

   

 

 

 

15

 

 

    

    Sit Global Dividend Growth Fund - Class I and Class S

 

 

OBJECTIVE & STRATEGY

The objective of the Sit Global Dividend Growth Fund is to provide current income that exceeds the dividend yield of the MSCI World Index and that grows over a period of years. Secondarily, the Fund seeks long-term capital appreciation.

The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in dividend-paying common stocks issued by U.S. and foreign companies. The Fund may invest the balance of its assets in preferred stocks, convertible bonds, and U.S. Treasury securities.

 

 

 

Fund Performance

Sit Global Dividend Growth Fund Class I shares provided a return of +4.93% during the 12-month period ending June 30, 2020, compared to the return of the MSCI World Index of +2.84%.

Factors that Influenced the Fund’s Performance

Contributing favorably to performance during the 12-month period were the Fund’s underweight in the banks sector and stock selection in the technology hardware (Logitech International, Apple) and materials (Lonza Group, Scotts Miracle-Gro) sectors. A higher cash position also helped relative performance. Conversely, the Fund’s holdings in the retailing (not owningAmazon.com), capital goods (Singapore Technologies Engineering, Honeywell International) and commercial & professional services (Waste Management) sectors detracted from performance.

Geographically, holdings in the Non-Euroland (Logitech International, Lonza Group) andAsia Pacific ex-Japan (Atlassian, Broadcom) regions added value due to positive stock selection, while stock selection in the North America region (Delta Air Lines, Suncor Energy, Marathon Petroleum, Euronet Worldwide) hurt performance.

Outlook and Positioning

We remain constructive on U.S. equities over the intermediate and longer term. Still, we recognize that the strong rebound in stock prices has, at least to some degree, discounted the uptick in economic activity and corporate earnings growth that is likely over the next several quarters. A key challenge is assessing appropriate valuations when earnings and revenue forecasts are highly uncertain and subject to the path of the COVID-19 pandemic, consumer sentiment, and further fiscal support. Valuations for many companies on forward earnings are now higher than prior to the coronavirus shutdown, and we suspect that investors will need more clarity on near-term earnings power for equity markets to move meaningfully higher from here. Our investment focus remains on companies that can deliver above average-earnings growth, regardless of the economic backdrop. Our preferred sectors include technology and healthcare.

HYPOTHETICAL GROWTH OF $10,000

 

 

LOGO

The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years (or for the life of the Fund if shorter) as compared to the performance of the MSCI World Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

1 The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. It is not possible to invest directly in an index. This is the Fund’s primary index.

 

For non-U.S. exposure, we currently prefer investment opportunities in China, South Korea, and India. We remain positive on China, given its first in, first out position amid the global economic recovery and attractive relative valuations. We favor investments in the new economy, along with domestic demand-driven sectors. South Korea’s 100 trillion won of financial measures, which focus on providing money to both consumers and corporations will be positive for consumer and financial companies. In addition, improving exports will benefit semiconductor, electrical machinery, and smartphone manufacturers. Our investments in India are biased toward economically sensitive sectors, such as consumer, financials, energy, information services, and industrials.

 

Roger J. Sit

   

Raymond E. Sit

   

            

Kent L. Johnson

      

Kent L. Johnson

      
 

 

Information on this page is unaudited.

16

    SIT MUTUAL FUNDS ANNUAL REPORT

    

    

 

 

COMPARATIVE RATES OF RETURNS

 

as of June 30, 2020

 

     Sit Global
Dividend
Growth Fund		     

MSCI
World
Index 1

      Class I      Class S  

One Year

      4.93 %       4.60 %     2.84%

Five Year

      6.07        5.80      6.90

Ten Year

      9.04        8.76      9.95

Since Inception

      8.22        7.95      7.61

(9/30/08)

         

 

Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.

1 The MSCIWorld Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. It is not possible to invest directly in an index.

PORTFOLIO SUMMARY

 

 

Class I:

     

Net Asset Value 6/30/20:

    $16.87   Per Share

Net Asset Value 6/30/19:

    $16.34   Per Share

Total Net Assets:

    $31.4   Million

Class S:

     

Net Asset Value 6/30/20:

    $16.85   Per Share

Net Asset Value 6/30/19:

    $16.33   Per Share

Total Net Assets:

    $3.4   Million

Weighted Average Market Cap:

    $291.8   Billion

TOP 10 HOLDINGS

 

  1. Microsoft Corp.

  2. Apple, Inc.

  3. Johnson & Johnson

  4. Logitech International SA

  5. Nestle SA

  6. AstraZeneca, PLC, ADR

  7. Accenture, PLC

  8. Lonza Group AG

  9. PepsiCo, Inc.

10. Abbott Laboratories

 

Based on total net assets as of June 30, 2020. Subject to change.

SECTORALLOCATION

 

LOGO

Based on total net assets as of June 30, 2020. Subject to change.

 

 

Information on this page is unaudited.

JUNE 30,2020

    17

    

SCHEDULE OF INVESTMENTS

June 30, 2020

 

Sit Global Dividend Growth Fund

Investments are grouped by geographic region.

 

 

Name of Issuer    Quantity      Fair Value ($)  

 

Common Stocks - 97.7%

      

Asia - 6.5%

      

Australia - 2.9%

      

Atlassian Corp., PLC *

     3,925        707,560  

Macquarie Group, Ltd.

      3,900        323,668  
     

 

 

  
     

 

 

 

1,031,228

 

 

     

 

 

  

Japan - 2.5%

      

Astellas Pharma, Inc.

      29,900        499,317  

Recruit Holdings Co., Ltd.

      10,800        371,414  
     

 

 

  
     

 

 

 

870,731

 

 

     

 

 

  

Singapore - 1.1%

      

Singapore Technologies Engineering, Ltd.

      158,600        378,538  
     

 

 

  

Europe - 29.5%

      

France - 0.9%

      

Safran SA, ADR *

     4,900        123,480  

Sanofi, ADR

      3,800        193,990  
     

 

 

  
     

 

 

 

317,470

 

 

     

 

 

  

Germany - 4.5%

      

adidas AG *

     1,385        365,156  

Allianz SE

      35,000        718,200  

Aurelius SE & Co.

      5,500        91,303  

Siemens AG

      3,200        377,397  
     

 

 

  
     

 

 

 

1,552,056

 

 

     

 

 

  

Ireland - 3.0%

      

Accenture, PLC

      3,675        789,096  

Trane Technologies, PLC

      2,950        262,491  
     

 

 

  
     

 

 

 

1,051,587

 

 

     

 

 

  

Spain - 2.0%

      

Iberdrola SA

      60,400        705,148  
     

 

 

  

Switzerland - 9.2%

      

Chubb, Ltd.

      1,750        221,585  

Logitech International SA

      12,950        844,599  

Lonza Group AG

      1,450        768,062  

Nestle SA

      7,525        834,301  

Partners Group Holding AG

      585        532,755  
     

 

 

  
     

 

 

 

3,201,302

 

 

     

 

 

  

United Kingdom - 9.9%

      

AstraZeneca, PLC, ADR

      15,400        814,506  

BAE Systems, PLC

      74,675        446,515  

Diageo, PLC, ADR

      4,225        567,798  

DS Smith, PLC

      94,275        382,705  

London Stock Exchange Group, PLC

      6,875        714,965  

RELX, PLC

      21,200        490,653  
     

 

 

  
     

 

 

 

3,417,142

 

 

     

 

 

  

North America - 61.7%

      

Bermuda - 0.2%

      

Everest Re Group, Ltd.

      350        72,170  
     

 

 

  

 

 

 

 

Name of Issuer    Quantity      Fair Value ($)  

 

Canada - 1.3%

      

Suncor Energy, Inc.

      10,275        173,236  

TC Energy Corp.

      6,300        270,018  
     

 

 

  
     

 

 

 

443,254

 

 

     

 

 

  

United States - 60.2%

      

Abbott Laboratories

      8,300        758,869  

Alphabet, Inc. - Class A *

     450        638,122  

Apple, Inc.

      4,800        1,751,040  

Applied Materials, Inc.

      8,175        494,179  

Arthur J Gallagher & Co.

      3,775        368,025  

Bank of America Corp.

      16,300        387,125  

Broadcom, Inc.

      1,825        575,988  

Chevron Corp.

      4,150        370,304  

Constellation Brands, Inc.

      2,750        481,112  

CVS Health Corp.

      2,400        155,928  

Euronet Worldwide, Inc. *

     2,800        268,296  

FedEx Corp.

      475        66,604  

Goldman Sachs Group, Inc.

      1,400        276,668  

Home Depot, Inc.

      2,550        638,800  

Honeywell International, Inc.

      3,200        462,688  

Intel Corp.

      8,625        516,034  

Johnson & Johnson

      6,925        973,863  

JPMorgan Chase & Co.

      7,350        691,341  

L3Harris Technologies, Inc.

      2,050        347,823  

Lockheed Martin Corp.

      1,565        571,100  

Marathon Petroleum Corp.

      4,100        153,258  

McDonald’s Corp.

      1,860        343,114  

Microsoft Corp.

      12,100        2,462,471  

Mondelez International, Inc.

      7,100        363,023  

Otis Worldwide Corp.

      3,875        220,332  

PepsiCo, Inc.

      5,775        763,802  

Raytheon Technologies Corp.

      3,375        207,968  

Scotts Miracle-Gro Co.

      2,675        359,707  

Sherwin-Williams Co.

      800        462,280  

Starbucks Corp.

      9,875        726,701  

T Rowe Price Group, Inc.

      4,800        592,800  

Thermo Fisher Scientific, Inc.

      1,175        425,750  

Union Pacific Corp.

      4,050        684,734  

UnitedHealth Group, Inc.

      675        199,091  

US Bancorp

      7,900        290,878  

Verizon Communications, Inc.

      12,750        702,908  

Waste Management, Inc.

      5,900        624,869  

WEC Energy Group, Inc.

      6,150        539,048  
     

 

 

  
     

 

 

 

20,916,643

 

 

     

 

 

  

Total Common Stocks
(cost: $24,934,776)

         33,957,269  
     

 

 

  
 

 

See accompanying notes to financial statements.

   

18

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    
 
 

 

     
Name of Issuer    Quantity      Fair Value ($)  

 

Short-Term Securities - 2.2%

      

Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%
(cost: $767,958)

      767,958        767,958  
     

 

 

  

Total Investments in Securities - 99.9%
(cost: $25,702,734)

         34,725,227  

Other Assets and Liabilities, net - 0.1%

         27,060  
     

 

 

  

Total Net Assets - 100.0%

      

 

 

 

$34,752,287

 

 

     

 

 

  

 

 

*

Non-income producing security.

 

  

ADR — American Depositary Receipt

  

PLC — Public Limited Company

Numeric footnotes not disclosed are not applicable to this Schedule of Investments.

 

 

A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):

 

     Investment in Securities  
     Level 1
Quoted
Price ($)		      Level 2
Other significant
observable inputs ($)		     

Level 3

Significant
unobservable inputs ($)

      Total ($)  

Common Stocks

            

Australia

      707,560        323,668        —        1,031,228  

Bermuda

      72,170        —        —        72,170  

Canada

      443,254        —        —        443,254  

France

      317,470        —        —        317,470  

Germany

      718,200        833,856        —        1,552,056  

Ireland

      1,051,587        —        —        1,051,587  

Japan

      —        870,731        —        870,731  

Singapore

      —        378,538        —        378,538  

Spain

      —        705,148        —        705,148  

Switzerland

      1,066,184        2,135,118        —        3,201,302  

United Kingdom

      1,872,957        1,544,185        —        3,417,142  

United States

      20,916,643        —        —        20,916,643  

Short-Term Securities

      767,958        —        —        767,958  

 

Total:

   

 

 

 

27,933,983

 

 

      6,791,244        —        34,725,227  

Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.

 

See accompanying notes to financial statements.

   

 

JUNE 30, 2020

      19  

 

  Sit Large Cap Growth Fund

 

 

 

OBJECTIVE & STRATEGY

The objective of the Sit Large Cap Growth Fund is to maximize long-term capital appreciation. The Fund pursues this objective by investing at least 80% of its net assets in the common stocks of domestic growth companies with capitalizations of $5 billion or more at the time of purchase.

 

 

 

Fund Performance

The Sit Large Cap Growth Fund’s return was +21.34% during the 12-month period ending June 30, 2020, compared to a +23.28% return for the Russell 1000® Growth Index. The S&P 500® Index return for the period was +7.51%.

Factors that Influenced the Fund’s Performance

The Fund posted strong absolute returns over the period; however, it lagged the Russell 1000® Growth Index due to several factors. The largest detractor to relative performance over the 12-month period was the Fund’s stock selection in the transportation sector, where it owned DeltaAir Lines, whose stock price suffered amid the COVID-19 outbreak. Also, the Fund has maintained a modest overweight position in the energy sector, as valuations and high dividend yields appeared attractive. However, with energy prices falling precipitously during the pandemic due to an oversupply as demand dried up, the Fund’s energy holdings – particularly its ownership of Marathon Petroleum – contributed to underperformance. Finally, while the Fund’s consumer durables holdings performed well during the period – especially YETI Holdings – its preference to own profitable companies detracted from relative performance, as we did not own Tesla, which was up nearly +400% during the last twelve months. Countering most of this underperformance was strong stock selection, combined with an overweight position, in the technology services sector, and strong stock selection in the electronic technology sector. Key holdings in these sectors included PayPal Holdings, Alphabet, Adobe, Applied Materials, and Apple.

Outlook and Positioning

Even with the COVID-19 sell-off, stocks posted strong gains over the prior 12-month period. Following the drastic plunge in equity prices, the Fed stepped in to add liquidity to the market, which, combined with a shift in sentiment that the virus-related economic damage will now be short-lived, drove a massive expansion in price-to-earnings multiples (with many stocks now trading on depressed earnings estimates). At this point, it appears that this rebound in stock prices is discounting a rebound in economic activity and corporate earnings in the second half of 2020 and into 2021.Accordingly, the Fund

  HYPOTHETICAL GROWTH OF $10,000

 

 

LOGO

The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the Russell 1000® Growth Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

1 Russell 1000® Growth Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index. This is the Fund’s primary index.

 

 

continues to maintain a “barbell” strategy, focused on balancing early cyclical companies that are likely to be major beneficiaries of an uptick in economic activity (such as transports and financials) with stable, long-term earnings growers that should post above-average growth, regardless of market conditions. This includes sectors with large, secular growth tailwinds, such as companies in the technology sector, which will benefit from accelerating growth in 5G, cloud computing, e-commerce, and software. We also favor healthcare companies that should benefit from an aging U.S. population, although we acknowledge political risk in light of the upcoming U.S. elections.

Roger J. Sit

Ronald D. Sit

Portfolio Managers

 

 

Information on this page is unaudited.

20

    SIT MUTUAL FUNDS ANNUAL REPORT

    

    

 

COMPARATIVE RATES OF RETURNS

 

as of June 30, 2020

 

      Sit Large
Cap Growth
Fund		     Russell
1000®
Growth
Index  1		     Russell
1000®
Index 2		  

One Year

      21.34 %      23.28 %      7.48 % 

Five Year

      13.50       15.89       10.47  

Ten Year

      14.53       17.23       13.97  

Since Inception 3

      10.49       11.73       11.68  

(9/2/82)

                         

Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.

1 Russell 1000® Growth Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.

2 Russell 1000® Index is an unmanaged index that measures the performance of approximately 1,000 of the largest U.S. companies by market capitalization.

3 On 6/6/93, the Fund’s investment objective changed to allow for a portfolio of 100% stocks. Prior to that time, the portfolio was required to contain no more than 80% stocks.

PORTFOLIO SUMMARY

 

 

 Net Asset Value 6/30/20:

   

$47.07 Per Share

 Net Asset Value 6/30/19:

   

$42.53 Per Share

 Total Net Assets:

   

$129.2 Million

 Weighted Average Market Cap:

   

$522.6 Billion

TOP 10 HOLDINGS

 

  1. Apple, Inc.

  2. Microsoft Corp.

  3. Amazon.com, Inc.

  4. Alphabet, Inc.

  5. Facebook, Inc.

  6. Visa, Inc.

  7. Adobe, Inc.

  8. salesforce.com, Inc.

  9. UnitedHealth Group, Inc.

10. PayPal Holdings, Inc.

 

Based on total net assets as of June 30, 2020. Subject to change.

SECTOR ALLOCATION

 

 

LOGO

Based on total net assets as of June 30, 2020. Subject to change.

 

 

Information on this page is unaudited.

   

 

JUNE 30, 2020

   

 

21

    

SCHEDULE OF INVESTMENTS

June 30, 2020

 

Sit Large Cap Growth Fund

Investments are grouped by economic sectors.

     
Name of Issuer    Quantity      Fair Value ($)  

 

Common Stocks - 98.4%

      

Communications - 1.7%

      

American Tower Corp.

      4,100        1,060,014  

Verizon Communications, Inc.

      20,925        1,153,595  
     

 

 

  
     

 

 

 

2,213,609

 

 

     

 

 

  

Consumer Durables - 1.2%

      

YETI Holdings, Inc. *

     36,425        1,556,440  
     

 

 

  

Consumer Non-Durables - 4.9%

      

Constellation Brands, Inc.

      7,425        1,299,004  

Estee Lauder Cos., Inc. - Class A

      9,800        1,849,064  

Mondelez International, Inc.

      17,900        915,227  

NIKE, Inc.

      5,125        502,506  

PepsiCo, Inc.

      13,125        1,735,912  
     

 

 

  
     

 

 

 

6,301,713

 

 

     

 

 

  

Consumer Services - 5.7%

      

McDonald’s Corp.

      6,650        1,226,726  

Starbucks Corp.

      21,900        1,611,621  

Visa, Inc.

      23,525        4,544,324  
     

 

 

  
     

 

 

 

7,382,671

 

 

     

 

 

  

Electronic Technology - 17.0%

      

Advanced Micro Devices, Inc. *

     11,875        624,744  

Apple, Inc.

      33,075        12,065,760  

Applied Materials, Inc.

      38,900        2,351,505  

Broadcom, Inc.

      7,800        2,461,758  

Ciena Corp. *

     22,200        1,202,352  

Intel Corp.

      16,800        1,005,144  

Keysight Technologies, Inc. *

     7,875        793,643  

NVIDIA Corp.

      3,875        1,472,151  
     

 

 

  
     

 

 

 

21,977,057

 

 

     

 

 

  

Finance - 3.5%

      

Aon, PLC

      5,975        1,150,785  

Chubb, Ltd.

      5,050        639,431  

Goldman Sachs Group, Inc.

      5,150        1,017,743  

JPMorgan Chase & Co.

      4,900        460,894  

T Rowe Price Group, Inc.

      9,725        1,201,038  
     

 

 

  
     

 

 

 

4,469,891

 

 

     

 

 

  

Health Services - 2.6%

      

UnitedHealth Group, Inc.

      11,575        3,414,046  
     

 

 

  

Health Technology - 7.6%

      

Abbott Laboratories

      15,500        1,417,165  

Boston Scientific Corp. *

     26,975        947,092  

Bristol-Myers Squibb Co.

      5,675        333,690  

DexCom, Inc. *

     4,050        1,641,870  

Illumina, Inc. *

     1,800        666,630  

Intuitive Surgical, Inc. *

     2,800        1,595,524  

Johnson & Johnson

      9,400        1,321,922  

Thermo Fisher Scientific, Inc.

      5,250        1,902,285  
     

 

 

  
     

 

 

 

9,826,178

 

 

     

 

 

  

 

     
Name of Issuer    Quantity      Fair Value ($)  

 

Process Industries - 2.5%

      

Ecolab, Inc.

      7,125        1,417,519  

Sherwin-Williams Co.

      3,150        1,820,228  
     

 

 

  
     

 

 

 

3,237,747

 

 

     

 

 

  

Producer Manufacturing - 4.8%

      

3M Co.

      3,900        608,361  

Honeywell International, Inc.

      8,425        1,218,171  

L3Harris Technologies, Inc.

      6,550        1,111,338  

Northrop Grumman Corp.

      2,700        830,088  

Otis Worldwide Corp.

      7,450        423,607  

Raytheon Technologies Corp.

      18,974        1,169,178  

Trane Technologies, PLC

      8,900        791,922  
     

 

 

  
     

 

 

 

6,152,665

 

 

     

 

 

  

Retail Trade - 9.5%

      

Amazon.com, Inc. *

     3,150        8,690,283  

Home Depot, Inc.

      9,825        2,461,261  

TJX Cos., Inc.

      22,700        1,147,712  
     

 

 

  
     

 

 

 

12,299,256

 

 

     

 

 

  

Technology Services - 35.1%

      

Accenture, PLC

      11,425        2,453,176  

Adobe, Inc. *

     8,750        3,808,963  

Alphabet, Inc. - Class A *

     625        886,281  

Alphabet, Inc. - Class C *

     4,635        6,552,082  

Atlassian Corp., PLC *

     10,375        1,870,301  

Autodesk, Inc. *

     8,300        1,985,277  

Facebook, Inc. *

     21,250        4,825,238  

Intuit, Inc.

      6,100        1,806,759  

Microsoft Corp.

      58,900        11,986,739  

Paycom Software, Inc. *

     1,300        402,649  

PayPal Holdings, Inc. *

     19,300        3,362,639  

salesforce.com, Inc. *

     18,825        3,526,487  

ServiceNow, Inc. *

     750        303,795  

Splunk, Inc. *

     8,100        1,609,470  
     

 

 

  
     

 

 

 

45,379,856

 

 

     

 

 

  

Transportation - 1.7%

      

FedEx Corp.

      3,300        462,726  

Union Pacific Corp.

      10,150        1,716,060  
     

 

 

  
     

 

 

 

2,178,786

 

 

     

 

 

  

Utilities - 0.6%

      

NextEra Energy, Inc.

      3,275        786,557  
     

 

 

  

Total Common Stocks
(cost: $55,495,372)

         127,176,472  
     

 

 

  
 

 

See accompanying notes to financial statements.

   

 

22

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

 

 

Name of Issuer

    Quantity      Fair Value ($)  

 

Short-Term Securities - 1.6%

      

Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%

      2,035,513        2,035,513  
     

 

 

  

(cost: $2,035,513)

      

 

Total Investments in Securities - 100.0%
(cost: $57,530,885)

         129,211,985  

Other Assets and Liabilities, net - (0.0%)

         (57,980 ) 
     

 

 

  

Total Net Assets - 100.0%

      

 

 

 

$129,154,005

 

 

     

 

 

  

 

 

*

Non-income producing security.

 

  

PLC — Public Limited Company

Numeric footnotes not disclosed are not applicable to this Schedule of Investments.

 

 

A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):

 

     Investment in Securities  
     Level 1      Level 2    Level 3       
     Quoted
Price ($)		      Other significant
observable inputs ($)		    Significant
unobservable inputs ($)		    Total ($)  

Common Stocks **

     127,176,472      —    —      127,176,472  

Short-Term Securities

      2,035,513      —    —      2,035,513  

 

Total:

   

 

 

 

129,211,985

 

 

    —    —      129,211,985  

 

**

For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.

There were no transfers into or out of level 3 during the reporting period.

 

See accompanying notes to financial statements.

   

 

JUNE 30, 2020

   

 

 

 

23

 

 

    

    Sit ESG Growth Fund - Class I and Class S

 

 

OBJECTIVE & STRATEGY

The objective of the Sit ESG Growth Fund is to maximize long-term capital appreciation. The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in companies that the Adviser believes have strong environmental, social and corporate governance (ESG) practices at the time of purchase. The Fund invests in common stocks of U.S. and foreign companies, primarily of large to medium capitalizations (companies with market capitalization in excess of $2 billion).

 

 

 

Fund Performance

Sit ESG Growth Fund Class I shares provided a return of +6.47% during the 12-month period ending June 30, 2020, compared to the return of the MSCI World Index of +2.84%.

Factors that Influenced the Fund’s Performance

Contributing favorably to performance during the 12-month period were the Fund’s holdings in the software & services (Microsoft, Adobe, salesforce.com, Alphabet), technology hardware (Logitech International, Apple) and materials (Lonza Group) sectors. Conversely, the holdings in retailing (not owning Amazon.com), pharmaceuticals (Pfizer, AbbVie), and food beverage & tobacco (Coca-Cola Euro-pean Partners) detracted from performance.

Regionally, the Non-Euroland (Lonza Group, Logitech International), North America (Microsoft, Adobe, Apple, salesforce.com), and Japan (Terumo, Keyence) regions added value during the last 12 months. However, a higher cash balance and the Euroland holdings (Allianz, adidas) negatively impacted relative performance.

Outlook and Positioning

We remain constructive on U.S. equities over the intermediate and longer term. Still, we recognize that the strong rebound in stock prices has, at least to some degree, discounted the uptick in economic activity and corporate earnings growth that is likely over the next several quarters. A key challenge is assessing appropriate valuations when earnings and revenue forecasts are highly uncertain and subject to the path of the COVID-19 pandemic, consumer sentiment, and further fiscal support. Valuations for many companies on forward earnings are now higher than prior to the coronavirus shutdown, and we suspect that investors will need more clarity on near-term earnings power for equity markets to move meaningfully higher from here. Our investment focus remains on companies that can deliver above average-earnings growth, regardless of the economic backdrop. Our preferred sectors include technology and healthcare.

HYPOTHETICAL GROWTH OF $10,000

 

 

LOGO

The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years (or for the life of the Fund if shorter) as compared to the performance of the MSCI World Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

1 The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. It is not possible to invest directly in an index. This is the Fund’s primary index.

 

For non-U.S. exposure, we currently prefer investment opportunities in China, South Korea, and India. We remain positive on China, given its first in, first out position amid the global economic recovery and attractive relative valuations. We favor investments in the new economy, along with domestic demand-driven sectors. South Korea’s 100 trillion won of financial measures, which focus on providing money to both consumers and corporations will be positive for consumer and financial companies. In addition, improving exports will benefit semiconductor, electrical machinery, and smartphone manufacturers. Our investments in India are biased toward economically sensitive sectors, such as consumer, financials, energy, information services, and industrials.

Roger J. Sit

Ronald D. Sit

Portfolio Managers

 

 

Information on this page is unaudited.

24

    SIT MUTUAL FUNDS ANNUAL REPORT

 

    

 

COMPARATIVE RATES OF RETURNS

 

as of June 30, 2020

 

     Sit ESG
Growth Fund		  

MSCI

World
Index 1

      Class I   Class S

One Year

        6.47 %       6.22 %       2.84 %

Since Inception

        9.58       9.31       9.46

(6/30/16)

             

 

Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.

1 The MSCIWorld Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. It is not possible to invest directly in an index.

PORTFOLIO SUMMARY

 

 

Class I:

   

Net Asset Value 6/30/20:

      $13.85 Per Share  

Net Asset Value 6/30/19:

      $13.21 Per Share  

Total Net Assets:

      $3.5     Million  

Class S:

   

Net Asset Value 6/30/20:

      $13.78 Per Share  

Net Asset Value 6/30/19:

      $13.16 Per Share  

Total Net Assets:

      $3.2     Million  

Weighted Average Market Cap:

      $317.9 Billion  

TOP 10 HOLDINGS

 

  1. Microsoft Corp.

  2. Apple, Inc.

  3. Facebook, Inc.

  4. Iberdrola SA, ADR

  5. Home Depot, Inc.

  6. Allianz SE, ADR

  7. Adobe, Inc.

  8. Alphabet, Inc. - Class A

  9. Lonza Group AG

10. Visa, Inc.

 

Based on total net assets as of June 30, 2020. Subject to change.

SECTOR ALLOCATION

 

 

LOGO

Based on total net assets as of June 30, 2020. Subject to change.

 

 

Information on this page is unaudited.

   

 

JUNE 30, 2020

   

 

 

 

25

 

 

    

SCHEDULE OF INVESTMENTS

June 30, 2020

 

Sit ESG Growth Fund

Investments are grouped by geographic region.

Name of Issuer   

 

Quantity

      Fair Value ($)  

 

Common Stocks - 94.6%

      

Asia - 9.4%

      

Japan - 8.6%

      

Astellas Pharma, Inc.

      4,500        75,148  

Keyence Corp.

      200        83,812  

Recruit Holdings Co., Ltd.

      3,100        106,610  

Shiseido Co., Ltd.

      1,100        70,093  

Sony Corp., ADR

      1,925        133,075  

Terumo Corp.

      2,600        98,963  
     

 

 

  
     

 

 

 

567,701

 

 

     

 

 

  

Singapore - 0.8%

      

Singapore Technologies Engineering, Ltd.

      21,500        51,315  
     

 

 

  

Europe - 29.6%

      

France - 0.9%

      

Safran SA, ADR *

     900        22,680  

Sanofi, ADR

      700        35,735  
     

 

 

  
     

 

 

 

58,415

 

 

     

 

 

  

Germany - 5.1%

      

adidas AG, ADR *

     650        85,592  

Allianz SE, ADR

      8,800        180,576  

Siemens AG, ADR

      1,175        69,313  
     

 

 

  
     

 

 

 

335,481

 

 

     

 

 

  

Ireland - 4.4%

      

Accenture, PLC

      575        123,464  

CRH, PLC, ADR

      1,200        41,172  

Trane Technologies, PLC

      1,400        124,572  
     

 

 

  
     

 

 

 

289,208

 

 

     

 

 

  

Spain - 2.8%

      

Iberdrola SA, ADR

      4,050        188,082  
     

 

 

  

Switzerland - 8.8%

      

Logitech International SA

      1,550        101,091  

Lonza Group AG

      320        169,503  

Nestle SA, ADR

      1,425        157,377  

Novartis AG, ADR

      1,800        157,212  
     

 

 

  
     

 

 

 

585,183

 

 

     

 

 

  

United Kingdom - 7.6%

      

AstraZeneca, PLC, ADR

      2,950        156,026  

BAE Systems, PLC, ADR

      2,300        55,200  

Coca-Cola European Partners, PLC

      2,100        79,296  

Diageo, PLC, ADR

      785        105,496  

RELX, PLC, ADR

      4,700        110,732  
     

 

 

  
     

 

 

 

506,750

 

 

     

 

 

  
Name of Issuer   

 

Quantity

      Fair Value ($)  

 

North America - 55.6%

      

Canada - 0.4%

      

Suncor Energy, Inc.

      1,800        30,348  
     

 

 

  

United States - 55.2%

      

3M Co.

      400        62,396  

Adobe, Inc. *

     410        178,477  

Allstate Corp.

      675        65,468  

Alphabet, Inc. - Class A *

     125        177,256  

Apple, Inc.

      900        328,320  

Baxter International, Inc.

      850        73,185  

Boston Scientific Corp. *

     1,650        57,932  

ConocoPhillips

      1,250        52,525  

Ecolab, Inc.

      600        119,370  

Facebook, Inc. *

     845        191,874  

FedEx Corp.

      90        12,620  

Goldman Sachs Group, Inc.

      600        118,572  

Home Depot, Inc.

      745        186,630  

Intel Corp.

      2,125        127,139  

Johnson & Johnson

      975        137,114  

JPMorgan Chase & Co.

      1,075        101,115  

Lockheed Martin Corp.

      185        67,510  

Microsoft Corp.

      2,000        407,020  

NIKE, Inc.

      925        90,696  

NVIDIA Corp.

      100        37,991  

PepsiCo, Inc.

      875        115,728  

salesforce.com, Inc. *

     850        159,230  

Starbucks Corp.

      1,600        117,744  

T Rowe Price Group, Inc.

      1,175        145,113  

TJX Cos., Inc.

      1,380        69,773  

UnitedHealth Group, Inc.

      500        147,475  

Verizon Communications, Inc.

      2,600        143,338  

Visa, Inc.

      875        169,024  
     

 

 

  
     

 

 

 

3,660,635

 

 

     

 

 

  

Total Common Stocks
(cost: $4,519,971)

         6,273,118  
     

 

 

  

Short-Term Securities - 5.4%

      

Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%

      360,368        360,368  
     

 

 

  

(cost: $360,368)

      

 

Total Investments in Securities - 100.0%
(cost: $4,880,339)

         6,633,486  

Other Assets and Liabilities, net - 0.0%

         2,304  
     

 

 

  

Total Net Assets - 100.0%

      

 

 

 

$6,635,790

 

 

     

 

 

  

 

*

Non-income producing security.

ADR—American Depositary Receipt

PLC—Public Limited Company

Numeric footnotes not disclosed are not applicable to this Schedule of Investments

 

 

See accompanying notes to financial statements.

   

 

26

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

 

A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):

 

     Investment in Securities  
    

Level 1

Quoted
Price ($)

     

Level 2

Other significant
observable inputs ($)

     

Level 3

Significant
unobservable inputs ($)

      Total ($)  

Common Stocks

            

Canada

      30,348        —                —        30,348  

France

      58,415        —                —        58,415  

Germany

      335,481        —                —        335,481  

Ireland

      289,208        —                —        289,208  

Japan

      133,075        434,626                —        567,701  

Singapore

      —        51,315                —        51,315  

Spain

      188,082        —                —        188,082  

Switzerland

      415,680        169,503                —        585,183  

United Kingdom

      506,750        —                —        506,750  

United States

      3,660,635        —                —        3,660,635  

Short-Term Securities

      360,368        —                —        360,368  

Total:

      5,978,042        655,444                —        6,633,486  

Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.

 

See accompanying notes to financial statements.

   

 

JUNE 30, 2020

   

 

 

 

27

 

 

    

  Sit Mid Cap Growth Fund

 

 

OBJECTIVE & STRATEGY

The objective of the Sit Mid Cap Growth Fund is to maximize long-term capital appreciation. The Fund pursues this objective by investing at least 80% of its net assets in common stocks that, at the time of purchase, have market capitalizations that fall within the range of companies included in the Russell Midcap® Growth Index during the most recent 12-month period. The Russell Midcap® Growth Index ranged from approximately $365 million to $82 billion during the 12-month period ended June 30, 2020.

 

 

 

Fund Performance

The Sit Mid Cap Growth Fund’s return during the 12-month period ending June 30, 2020 was +8.75%, compared to a +11.91% return for the Russell Midcap® Growth Index. The Russell Midcap® Index declined -2.24% during the period.

Factors that Influenced the Fund’s Performance

The Fund underperformed its benchmark during the latest 12-month period, mostly due to negative stock selection in three sectors. First, stock selection in the technology services sector weighed on performance. The main contributor to this was the Fund’s large position in Euronet Worldwide (-43%), which has substantial exposure to tourism and was significantly, adversely affected by the COVID-19 outbreak. Second, in the retail trade sector, the Fund’s performance was hurt by its large position in Ulta Beauty (-41%), which, after an extended period of outperformance, gave back considerable gains in the final six months of 2019 and then suddenly had a major COVID-related business disruption in the first half of 2020. Finally, stock selection in the commercial services sector weighed on performance, including ownership of Brinks and Service Corp. International. On a positive note, strong stock selection in the health services, health technology, non-energy minerals, and consumer durables sectors boosted the Fund’s performance. Strong performers in these groups during the period included Teledoc Health, DexCom, Insulet, iRhythmTech-nologies, Trex, and YETI Holdings.

Outlook and Positioning

During the period, midcap stocks, while posting strong returns, lagged their large cap peers. In addition, growth stocks outperformed their value counterparts across all market capitalizations. Returns during the period were largely driven by multiple expansion, as investor sentiment improved due to a combination of the Federal Reserve’s renewed asset purchase program and its emergency lending facilities, which have stabilized financial markets and kept credit flowing and borrowing costs low. These factors led to a sharp improvement in investor sentiment, with optimism growing for a quick economic rebound following the technical recession in the first half of the year. The Fund maintains an overweight position in the electronic technology sector, as we believe emerging technologies – including 5G,

HYPOTHETICAL GROWTH OF $10,000

 

LOGO

The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the Russell Midcap® Growth Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

1 Russell Midcap® Growth Index is an unmanaged index that measures the performance of those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index. This is the Fund’s primary index.

 

 

investment in cloud computing and artificial intelligence – will prove to be secular growth drivers and will benefit well-positioned firms. This shift looks to have been accelerated by the large work-at-home migration during the pandemic. Additionally, the Fund remains underweight the retail trade sector, as e-commerce and changing consumer buying patterns continue to pressure many established brick-and-mortar businesses in the space. Selective ownership in this sector is focused on companies that have demonstrated resilient business models with the ability to deliver above-average growth.

 

Roger J. Sit

Kent L. Johnson

Robert W. Sit

Portfolio Managers

 

 

Information on this page is unaudited.

 

28

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

 

COMPARATIVE RATES OF RETURNS

 

 

as of June 30, 2020

 

      Sit
Mid Cap
Growth Fund		     Russell
Midcap®
Growth
Index 1		     Russell
Midcap®
Index 2		  

One Year

      8.75 %      11.91 %      -2.24 % 

Five Year

      7.29       11.60       6.76  

Ten Year

      11.82       15.09       12.35  

Since Inception
(9/2/82)

      11.39       n/a       n/a  

 

 

Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains and all fee waivers. Without the fee waivers total return and yield figures would have been lower. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.

1 Russell Midcap® Growth Index is an unmanaged index that measures the performance of those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.

2 Russell Midcap® Index is an unmanaged index that measures the performance of approximately 800 of the smallest companies in the Russell 1000® Index.

PORTFOLIO SUMMARY

 

     

Net Asset Value 6/30/20:

   

$19.05 Per Share

Net Asset Value 6/30/19:

   

$18.84 Per Share

Total Net Assets:

   

$172.7 Million

Weighted Average Market Cap:

   

$24.4   Billion

TOP 10 HOLDINGS

 

  1. DexCom, Inc.

  2. Autodesk, Inc.

  3. Splunk, Inc.

  4. Atlassian Corp., PLC

  5. Teladoc Health, Inc.

  6. YETI Holdings, Inc.

  7. Thermo Fisher Scientific, Inc.

  8. Arista Networks, Inc.

  9. Booz Allen Hamilton Holding Corp.

10. Waste Connections, Inc.

 

 

Based on total net assets as of June 30, 2020. Subject to change.

SECTOR ALLOCATION

 

 

LOGO

Based on total net assets as of June 30, 2020. Subject to change.

 

 

Information on this page is unaudited.

 

JUNE 30, 2020

   

 

29

    

SCHEDULE OF INVESTMENTS

June 30, 2020

 

Sit Mid Cap Growth Fund

Investments are grouped by economic sectors.

     
Name of Issuer    Quantity        Fair Value ($)  

Common Stocks - 94.9%

      

Commercial Services - 2.7%

      

ASGN, Inc. *

     13,525        901,847  

Booz Allen Hamilton Holding Corp.

      48,200        3,749,478  
     

 

 

  
                4,651,325  
     

 

 

  

Consumer Durables - 2.2%

      

YETI Holdings, Inc. *

     91,500        3,909,795  
     

 

 

  

Consumer Non-Durables - 0.9%

      

Coca-Cola European Partners, PLC

      40,700        1,536,832  
     

 

 

  

Consumer Services - 5.5%

      

Chegg, Inc. *

     43,600        2,932,536  

Dunkin’ Brands Group, Inc.

      21,600        1,408,968  

Nexstar Media Group, Inc.

      20,650        1,728,198  

Service Corp. International

      44,400        1,726,716  

Strategic Education, Inc.

      7,800        1,198,470  

Vail Resorts, Inc.

      3,300        601,095  
     

 

 

  
        9,595,983  
     

 

 

  

Electronic Technology - 15.2%

      

Advanced Micro Devices, Inc. *

     55,300        2,909,333  

Applied Materials, Inc.

      35,475        2,144,464  

Arista Networks, Inc. *

     17,900        3,759,537  

Broadcom, Inc.

      9,100        2,872,051  

Cabot Microelectronics Corp.

      10,825        1,510,521  

Ciena Corp. *

     44,800        2,426,368  

Garmin, Ltd.

      26,500        2,583,750  

Keysight Technologies, Inc. *

     23,150        2,333,057  

MKS Instruments, Inc.

      11,750        1,330,570  

Monolithic Power Systems, Inc.

      5,400        1,279,800  

Skyworks Solutions, Inc.

      23,900        3,055,854  
     

 

 

  
        26,205,305  
     

 

 

  

Finance - 8.2%

      

Ameriprise Financial, Inc.

      11,700        1,755,468  

Arthur J Gallagher & Co.

      18,900        1,842,561  

Carlyle Group, Inc.

      96,800        2,700,720  

First Republic Bank

      16,550        1,754,134  

Intercontinental Exchange, Inc.

      25,300        2,317,480  

Legg Mason, Inc.

      26,800        1,333,300  

Selective Insurance Group, Inc.

      18,250        962,505  

T Rowe Price Group, Inc.

      11,800        1,457,300  
     

 

 

  
        14,123,468  
     

 

 

  

Health Services - 3.2%

      

Encompass Health Corp.

      24,100        1,492,513  

Teladoc Health, Inc. *

     21,450        4,093,518  
     

 

 

  
                5,586,031  
     

 

 

  

Health Technology - 15.3%

      

Align Technology, Inc. *

     8,900        2,442,516  

BioMarin Pharmaceutical, Inc. *

     23,500        2,898,490  

DexCom, Inc. *

     13,050        5,290,470  
     
     
     
Name of Issuer    Quantity        Fair Value ($)  

Edwards Lifesciences Corp. *

     10,800        746,388  

Exact Sciences Corp. *

     29,650        2,577,771  

Insulet Corp. *

     11,700        2,272,842  

iRhythm Technologies, Inc. *

     17,950        2,080,226  

Jazz Pharmaceuticals, PLC *

     5,700        628,938  

Sarepta Therapeutics, Inc. *

     22,600        3,623,684  

Thermo Fisher Scientific, Inc.

      10,550        3,822,687  
     

 

 

  
                26,384,012  
     

 

 

  

Industrial Services - 3.5%

      

Jacobs Engineering Group, Inc.

      27,800        2,357,440  

Waste Connections, Inc.

      38,950        3,653,120  
     

 

 

  
        6,010,560  
     

 

 

  

Non-Energy Minerals - 1.9%

      

Trex Co., Inc. *

     25,100                3,264,757  
     

 

 

  

Process Industries - 3.2%

      

Ecolab, Inc.

      13,000        2,586,350  

Scotts Miracle-Gro Co.

      21,800        2,931,446  
     

 

 

  
                5,517,796  
     

 

 

  

Producer Manufacturing - 7.5%

      

AMETEK, Inc.

      24,000        2,144,880  

Carlisle Cos., Inc.

      13,300        1,591,611  

Dover Corp.

      27,000        2,607,120  

Hubbell, Inc.

      11,000        1,378,960  

L3Harris Technologies, Inc.

      6,600        1,119,822  

Rockwell Automation, Inc.

      6,300        1,341,900  

Trane Technologies, PLC

      31,700        2,820,666  
     

 

 

  
                13,004,959  
     

 

 

  

Retail Trade - 2.9%

      

TJX Cos., Inc.

      60,000        3,033,600  

Ulta Beauty, Inc. *

     9,700        1,973,174  
     

 

 

  
        5,006,774  
     

 

 

  

Technology Services - 19.9%

      

Altair Engineering, Inc. *

     24,800        985,800  

ANSYS, Inc. *

     10,750        3,136,098  

Aspen Technology, Inc. *

     19,900        2,061,839  

Atlassian Corp., PLC *

     22,900        4,128,183  

Autodesk, Inc. *

     17,900        4,281,501  

Booking Holdings, Inc. *

     450        716,553  

Euronet Worldwide, Inc. *

     29,575        2,833,877  

GoDaddy, Inc. *

     14,600        1,070,618  

HubSpot, Inc. *

     11,950        2,680,982  

Paycom Software, Inc. *

     6,100        1,889,353  

PTC, Inc. *

     39,600        3,080,484  

Qualys, Inc. *

     13,350        1,388,667  

Science Applications International Corp.

      25,100        1,949,768  

Splunk, Inc. *

     20,900        4,152,830  
     

 

 

  
        34,356,553  
     

 

 

  
 

 

See accompanying notes to financial statements.

   

 

30

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

 

     
Name of Issuer    Quantity        Fair Value ($)  

Transportation - 1.4%

      

Alaska Air Group, Inc.

      17,300        627,298  

Knight-Swift Transportation Holdings, Inc.

      41,600        1,735,136  
     

 

 

  
        2,362,434  
     

 

 

  

Utilities - 1.4%

      

WEC Energy Group, Inc.

      27,800        2,436,670  
     

 

 

  

Total Common Stocks
(cost: $85,926,890)

         163,953,254  
     

 

 

  
     
Name of Issuer    Quantity        Fair Value ($)  

Short-Term Securities - 5.2%

      

Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%

      8,994,980        8,994,980  
     

 

 

  

(cost: $8,994,980)

      

Total Investments in Securities - 100.1%
(cost: $94,921,870)

 

      172,948,234  

Other Assets and Liabilities, net - (0.1%)

 

      (204,043 ) 
     

 

 

  

Total Net Assets - 100.0%

       $ 172,744,191  
     

 

 

  

 

 

* Non-income producing security.

  PLC — Public Limited Company

Numeric footnotes not disclosed are not applicable to this Schedule of Investments.

 

 

A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):

 

     Investment in Securities  
     Level 1
Quoted
Price ($)		      Level 2
Other significant
observable inputs ($)		    Level 3
Significant
unobservable inputs ($)		    Total ($)  

Common Stocks **

     163,953,254      —    —      163,953,254  

Short-Term Securities

      8,994,980      —    —      8,994,980  

Total:

      172,948,234      —    —      172,948,234  

**  For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.

There were no transfers into or out of level 3 during the reporting period.

 

See accompanying notes to financial statements.

   

 

JUNE 30, 2020

   

 

 

 

31

 

 

    

    Sit Small Cap Dividend Growth Fund Class I and Class S

 

 

OBJECTIVE & STRATEGY

The objective of the Sit Small Cap Dividend Growth Fund is to provide current income that exceeds the Fund’s benchmark index and that grows over a period of years. Secondarily the Fund seeks long-term capital appreciation. The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in small cap dividend-paying common stocks that have market capitalizations at the time of purchase of up to $3.0 billion, or up to the market capitalization of the largest company included in the Russell 2000® Index measured at the end of the previous twelve months ($10.3 billion as of June 30, 2020). The Fund may invest the balance of its assets in preferred stocks, convertible bonds, U.S. Treasury securities (including Treasury bills, notes and bonds), closed-end investment companies, and master limited partnerships.

 

 

 

Fund Performance

The Sit Small Cap Dividend Growth Fund Class I posted a -3.05% return over the last past twelve months ending June 30, 2020, compared to the -6.63% return for the Russell 2000® Index. The Fund’s gross dividend yield (before deducting Fund expenses) was 2.29% as of 6/30/20, compared to a yield of 1.78% for the Russell 2000® Index.

Factors that Influenced the Fund’s Performance

Contributing favorably to the Fund’s outperformance during the 12-month period were its stock selections in the electronic technology, finance, consumer durables, and consumer services sectors. Key holdings in these groups that contributed to outperformance included Monolithic Power Systems, MKS Instruments, Cabot Microelectronics, QTS Realty Trust, Carlyle Group, and Thor Industries. The Fund was also helped during the period by its positions in Chegg, Scotts Miracle-Gro, AtriCure, and Globant. Conversely, the Fund’s holdings in utilities, commercial services, and health services as well as a significant underweight position in health technology weighed on absolute and relative performance. Many of the stocks in the health technology sector are non-dividend-paying biotech companies with zero or minimal prospects of paying a dividend in the future. Accordingly, our health technology sector performance was constrained by a dearth of the type of companies that the Fund seeks to own (i.e., cash flow-generating enterprises that pay dividends), compared to the more speculative constituents in the benchmark.

Outlook and Positioning

Small capitalization stocks underperformed large capitalization peers, with growth significantly outperforming value within the small cap universe. As investors flocked to growth companies, valuation spreads between growth and value are now at very elevated levels. Overall, we believe equity returns in the near to intermediate term will be largely driven by earnings growth and that dividend-paying companies will remain attractive in this environment of muted returns. Accordingly, the Fund is overweighted in those sectors where we believe earnings growth will exceed the market average. The Fund’s overweight positions in electronic technology, commercial services, and producer manufacturing should be helped by easy year-ago

 

HYPOTHETICAL GROWTH OF $10,000

 

LOGO

The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the Russell 2000® Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

1 Russell 2000® Index is an unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, an index consisting of the 3,000 largest U.S. companies based on market capitalization. It is not possible to invest directly in an index. This is the Fund’s primary index.

 

 

comparisons and an expected rebound in economic growth in the second half of 2020, as the U.S. economy gradually reopens. Select technology companies should also benefit, as U.S. technology capital spending continues to grow, driven by investments in cloud computing and other emerging technologies. Finally, we believe defensive “bond proxy” areas of the market, including REITs and select utilities, provide a good hedge to market risks, including the upcoming U.S. presidential election, growing geopolitical tensions, and a potential escalation in trade tension with China. Given valuation declines through the first half of 2020, these areas look attractive due to both their valuation and their yield advantage to the market and prevailing U.S. Treasury yields.

 

Roger J. Sit

   

Michael T. Manns

Kent L. Johnson

   

Robert W. Sit

Portfolio Managers

   
 

 

Information on this page is unaudited.

32

    SIT MUTUAL FUNDS ANNUAL REPORT

    

    

 

 

COMPARATIVE RATES OF RETURNS

 

 

as of June 30, 2020

 

     Sit Small Cap
Dividend
Growth Fund		    

Russell

2000®

Index 1

  
      Class I     Class S  

One Year

      -3.05 %      -3.30 %      -6.63 % 

Five Year

      4.18       3.90       4.29  

Since Inception
(3/31/15)

      3.89       3.63       4.16  

 

 

Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.

1 Russell 2000® Index is an unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, an index consisting of the 3,000 largest U.S. companies based on market capitalization. It is not possible to directly invest in an index.

PORTFOLIO SUMMARY

 

     

Class I:

   

Net Asset Value 6/30/20:

   

$11.39 Per Share

Net Asset Value 6/30/19:

   

$11.89 Per Share

Total Net Assets:

   

$11.8   Million

Class S:

   

Net Asset Value 6/30/20:

   

$11.38 Per Share

Net Asset Value 6/30/19:

   

$11.88 Per Share

Total Net Assets:

   

$3.7     Million

Weighted Average Market Cap:

   

$4.4     Billion

TOP 10 HOLDINGS

 

 

  1. Monolithic Power Systems, Inc.

  2. MKS Instruments, Inc.

  3. Cabot Microelectronics Corp.

  4. Strategic Education, Inc.

  5. Scotts Miracle-Gro Co.

  6. Chegg, Inc.

  7. QTS Realty Trust, Inc.

  8. Globant SA

  9. Hubbell, Inc.

10. Encompass Health Corp.

 

 

Based on total net assets as of June 30, 2020. Subject to change.

SECTOR ALLOCATION

 

 

 

LOGO

Based on total net assets as of June 30, 2020. Subject to change.

 

 

Information on this page is unaudited.

   

 

JUNE 30, 2020

   

 

 

 

33

 

 

    

SCHEDULE OF INVESTMENTS

June 30, 2020

 

 

Sit Small Cap Dividend Growth Fund

Investments are grouped by economic sectors.

     
Name of Issuer    Quantity        Fair Value ($)  

Common Stocks - 97.1%

      

Commercial Services - 5.3%

      

Booz Allen Hamilton Holding Corp.

      3,200        248,928  

Brink’s Co.

      3,400        154,734  

Colliers International Group, Inc.

      2,350        134,678  

FTI Consulting, Inc. *

     1,425        163,234  

Herman Miller, Inc.

      4,900        115,689  
     

 

 

  
                817,263  
     

 

 

  

Communications - 1.2%

      

Shenandoah Telecommunications Co.

      3,800        187,302  
     

 

 

  

Consumer Durables - 6.6%

      

Acushnet Holdings Corp.

      5,500        191,345  

BRP, Inc.

      4,375        186,288  

Helen of Troy, Ltd. *

     425        80,138  

MDC Holdings, Inc.

      3,750        133,875  

National Presto Industries, Inc.

      750        65,542  

Thor Industries, Inc.

      2,300        245,019  

YETI Holdings, Inc. *

     2,700        115,371  
     

 

 

  
        1,017,578  
     

 

 

  

Consumer Non-Durables - 0.4%

      

Sensient Technologies Corp.

      1,250        65,200  
     

 

 

  

Consumer Services - 9.1%

      

Chegg, Inc. *

     4,900        329,574  

Dunkin’ Brands Group, Inc.

      2,625        171,229  

Nexstar Media Group, Inc.

      2,850        238,516  

Service Corp. International

      3,900        151,671  

Strategic Education, Inc.

      2,290        351,858  

Vail Resorts, Inc.

      925        168,489  
     

 

 

  
        1,411,337  
     

 

 

  

Electronic Technology - 11.0%

      

Cabot Microelectronics Corp.

      2,700        376,758  

MKS Instruments, Inc.

      4,600        520,904  

Monolithic Power Systems, Inc.

      2,575        610,275  

Power Integrations, Inc.

      1,700        200,821  
     

 

 

  
        1,708,758  
     

 

 

  

Finance - 25.1%

      

American Equity Investment Life Holding Co.

      5,250        129,728  

Artisan Partners Asset Management, Inc.

      3,900        126,750  

Axis Capital Holdings, Ltd.

      6,300        255,528  

Carlyle Group, Inc.

      8,075        225,292  

CNO Financial Group, Inc.

      14,000        217,980  

CubeSmart

      5,250        141,698  

Donegal Group, Inc.

      9,500        135,090  

Essential Properties Realty Trust, Inc.

      7,700        114,268  

Evercore Partners, Inc.

      2,800        164,976  

Hanover Insurance Group, Inc.

      1,275        129,196  

HCI Group, Inc.

      4,950        228,591  

Hercules Capital, Inc.

      13,100        137,157  

Investors Bancorp, Inc.

      7,250        61,625  
     
     
     
Name of Issuer    Quantity        Fair Value ($)  

Legg Mason, Inc.

      4,800        238,800  

Mercury General Corp.

      2,400        97,800  

Old National Bancorp

      9,550        131,408  

People’s United Financial, Inc.

      16,325        188,880  

Physicians Realty Trust

      14,750        258,420  

Piper Sandler Cos

      2,875        170,085  

QTS Realty Trust, Inc.

      4,350        278,792  

Selective Insurance Group, Inc.

      1,700        89,658  

Stifel Financial Corp.

      4,000        189,720  

STORE Capital Corp.

      3,375        80,359  

Wintrust Financial Corp.

      2,250        98,145  
     

 

 

  
                3,889,946  
     

 

 

  

Health Services - 2.4%

      

Encompass Health Corp.

      4,200        260,106  

Tenet Healthcare Corp. *

     6,400        115,904  
     

 

 

  
        376,010  
     

 

 

  

Health Technology - 5.1%

      

AtriCure, Inc. *

     4,000        179,800  

Atrion Corp.

      160        101,922  

iRhythm Technologies, Inc. *

     1,200        139,068  

LeMaitre Vascular, Inc.

      4,175        110,220  

STERIS, PLC

      1,100        168,784  

Wright Medical Group NV *

     2,850        84,702  
     

 

 

  
        784,496  
     

 

 

  

Industrial Services - 2.4%

      

EMCOR Group, Inc.

      2,000        132,280  

KBR, Inc.

      10,775        242,976  
     

 

 

  
        375,256  
     

 

 

  

Non-Energy Minerals - 1.6%

      

AZEK Co., Inc. *

     1,900        60,534  

Commercial Metals Co.

      3,950        80,580  

PotlatchDeltic Corp.

      2,810        106,864  
     

 

 

  
        247,978  
     

 

 

  

Process Industries - 3.2%

      

Huntsman Corp.

      4,650        83,560  

Neenah, Inc.

      1,550        76,663  

Scotts Miracle-Gro Co.

      2,500        336,175  
     

 

 

  
        496,398  
     

 

 

  

Producer Manufacturing - 11.3%

      

Apogee Enterprises, Inc.

      3,925        90,432  

Applied Industrial Technologies, Inc.

      1,950        121,660  

Carlisle Cos, Inc.

      1,300        155,571  

Crane Co.

      2,675        159,056  

H&E Equipment Services, Inc.

      7,500        138,600  

Hubbell, Inc.

      2,100        263,256  

Lincoln Electric Holdings, Inc.

      1,525        128,466  

MSA Safety, Inc.

      2,000        228,880  

Oshkosh Corp.

      2,400        171,888  
 

 

See accompanying notes financial statements.

   

 

34

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

    

 

    

 

     
Name of Issuer    Quantity        Fair Value ($)  

Rexnord Corp.

      3,725        108,584  

Watsco, Inc.

      1,050        186,585  
     

 

 

  
        1,752,978  
     

 

 

  

Retail Trade - 2.0%

      

Casey’s General Stores, Inc.

      1,025        153,258  

PetMed Express, Inc.

      4,625        164,835  
     

 

 

  
        318,093  
     

 

 

  

Technology Services - 4.1%

      

Globant SA *

     1,800        269,730  

ManTech International Corp.

      1,800        123,282  

Science Applications International Corp.

      3,075        238,866  
     

 

 

  
        631,878  
     

 

 

  

Transportation - 4.2%

      

Alaska Air Group, Inc.

      3,825        138,694  

Knight-Swift Transportation Holdings, Inc.

      3,425        142,857  

Marten Transport, Ltd.

      7,900        198,764  

TFI International, Inc.

      5,000        177,250  
     

 

 

  
                657,565  
     

 

 

  
     
Name of Issuer    Quantity        Fair Value ($)  

Utilities - 2.1%

      

Black Hills Corp.

      2,900        164,314  

New Jersey Resources Corp.

      2,150        70,198  

Spire, Inc.

      1,375        90,351  
     

 

 

  
        324,863  
     

 

 

  

Total Common Stocks
(cost: $13,101,643)

         15,062,899  
     

 

 

  

Investment Companies - 0.3%

      

Tortoise Energy Infrastructure Corp.

      2,856        45,782  
     

 

 

  

    (cost: $283,527)

      

Short-Term Securities - 3.2%

      

Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%

      487,341        487,341  
     

 

 

  

    (cost: $487,341)

      

Total Investments in Securities - 100.6%

      

    (cost: $13,872,511)

         15,596,022  

Other Assets and Liabilities, net - (0.6%)

         (89,907 ) 
     

 

 

  

Total Net Assets - 100.0%

               $ 15,506,115  
     

 

 

  

 

 

* Non-income producing security.

  PLC — Public Limited Company

Numeric footnotes not disclosed are not applicable to this Schedule of Investments.

 

 

A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):

 

     Investment in Securities  
     Level 1
Quoted
Price ($)		      Level 2
Other significant
observable inputs ($)		    Level 3
Significant
unobservable inputs ($)		    Total ($)  

Common Stocks **

     15,062,899      —    —      15,062,899  

Investment Companies

      45,782      —    —      45,782  

Short-Term Securities

      487,341      —    —      487,341  

Total:

      15,596,022      —    —      15,596,022  

**  For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.

There were no transfers into or out of level 3 during the reporting period.

 

See accompanying notes to financial statements.

   

 

JUNE 30, 2020

   

 

 

 

35

 

 

    

    Sit Small Cap Growth Fund

 

 

OBJECTIVE & STRATEGY

The objective of the Sit Small Cap Growth Fund is to maximize long-term capital appreciation. The Fund seeks to achieve its objective by investing, under normal market conditions, at least 80% of its net assets in common stocks of companies with market capitalizations at the time of purchase of up to $3.0 billion, or up to the market capitalization of the largest company included in the Russell 2000® Index measured at the end of the previous twelve months ($10.3 billion as of June 30, 2020).

The Adviser invests in a diversified group of growing small companies it believes exhibit the potential for superior growth. The Adviser believes that a company’s earnings growth is the primary determinant of its potential long-term return and evaluates a company’s potential for above average long-term earnings and revenue growth.

 

 

 

Fund Performance

The Sit Small Cap Growth Fund return was +5.68% over the 12-month period ending June 30, 2020. This compares to the return of +3.48% for the Russell 2000® Growth Index and a -6.63% decline for the Russell 2000® Index.

Factors that Influenced the Fund’s Performance

The majority of the Fund’s outperformance during the period can be explained by its stock selection and overweight positions in both the consumer durables and electronic technology sectors. Within consumer durables, key holdings that benefited returns were in YETI Holdings, Thor Industries, Acushnet Holdings, and Take-Two Interactive Software. All of these companies were helped during the first half of 2020 by their focus on areas of consumer growth during the pandemic, including outdoor activities, home improvement, and stay-at-home games. The Fund’s key holdings in the electronic technology sector were Monolithic Power Systems, Skyworks Solutions, and MKS Instruments. Additional individual holdings in other sectors that also benefited from the stay-at-home orders and contributed to performance included Teladoc Health, Chegg, Trex, and Scotts Miracle-Gro. The main detractor to performance during the period was the Fund’s very large (in excess of 1000 basis points) underweight position in the health technology sector.

Outlook and Positioning

In terms of sector positioning, we expect pro-growth/cyclical areas to continue to outperform the market, as economic growth rebounds in the back half of 2020. Transportation, select producer manufacturing, and technology stocks stand to benefit especially, based on the potential for an upward earnings inflection. Within technology, we expect investor enthusiasm for a 5G wireless spending cycle to boost select semiconductor companies as well as firms leveraged to increasingly complex wireless ecosystems. Additionally, despite the shock from the COVID-19 outbreak, the U.S. consumer remains in good shape, with consumer sentiment gradually improving from low levels. This should release some pent-up demand. Accordingly, the Fund retains significant overweight positions in the consumer durables and consumer services sectors. We continue to significantly

 

HYPOTHETICAL GROWTH OF $10,000

LOGO

The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the Russell 2000® Growth Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

1 Russell 2000® Growth Index is an unmanaged index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index. This is the Fund’s primary index.

 

 

underweight the health technology sector, as many of the biotech companies in the benchmark Russell 2000® Growth Index depend on debt or equity offerings to fund operations and rely on binary events, such as clinical trials and acquisition potential, to drive stock performance. The Fund maintains a preference for investing in proven, cash-generating companies. With small capitalization valuations at the high end of their historical levels, we believe price appreciation will largely come from earnings growth. Therefore, the Fund is positioned towards more visible growth companies that we expect to generate above-average near- and long-term earnings growth.

Roger J. Sit                Kent L. Johnson

Robert W. Sit

Portfolio Managers

 

 

Information on this page is unaudited.

36

    SIT MUTUAL FUNDS ANNUAL REPORT

    

    

 

 

COMPARATIVE RATES OF RETURNS

 

 

as of June 30, 2020

 

     Sit
Small Cap
Growth Fund		     Russell
2000®
Growth Index  1		     Russell
2000®
Index 2		  

One Year

     5.68 %      3.48 %      -6.63 % 

Five Year

     4.86       6.86       4.29  

Ten Year

     10.61       12.92       10.50  

Since Inception
(7/1/94)

     9.88       8.01       8.58  

 

 

Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.

1 Russell 2000® Growth Index is an unmanaged index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.

2 Russell 2000® Index is an unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, an index consisting of the 3,000 largest U.S. companies based on market capitalization.

PORTFOLIO SUMMARY

 

     

Net Asset Value 6/30/20:

   

$56.81 Per Share

Net Asset Value 6/30/19:

   

$55.46 Per Share

Total Net Assets:

   

$100.6 Million

Weighted Average Market Cap:

   

$8.0     Billion

TOP 10 HOLDINGS

 

 

  1. Chegg, Inc.

  2. Teladoc Health, Inc.

  3. Trex Co., Inc.

  4. Monolithic Power Systems, Inc.

  5. Paycom Software, Inc.

  6. YETI Holdings, Inc.

  7. Waste Connections, Inc.

  8. Sarepta Therapeutics, Inc.

  9. HubSpot, Inc.

10. iRhythm Technologies, Inc.

 

 

Based on total net assets as of June 30, 2020. Subject to change.

 

SECTOR ALLOCATION

 

 

 

LOGO

Based on total net assets as of June 30, 2020. Subject to change.

 

 

 

Information on this page is unaudited.

   

 

JUNE 30, 2020

   

 

 

 

37

 

 

    

SCHEDULE OF INVESTMENTS

June 30, 2020

 

Sit Small Cap Growth Fund

Investments are grouped by economic sectors.

     
Name of Issuer    Quantity        Fair Value ($)  

Common Stocks - 96.6%

      

Commercial Services - 4.6%

      

ASGN, Inc. *

     25,100        1,673,668  

Booz Allen Hamilton Holding Corp.

      20,000        1,555,800  

Colliers International Group, Inc.

      6,875        394,006  

FTI Consulting, Inc. *

     8,950        1,025,223  
     

 

 

  
                4,648,697  
     

 

 

  

Communications - 1.1%

      

Shenandoah Telecommunications Co.

      22,700        1,118,883  
     

 

 

  

Consumer Durables - 7.1%

      

Acushnet Holdings Corp.

      30,800        1,071,532  

BRP, Inc.

      19,150        815,407  

Helen of Troy, Ltd. *

     2,750        518,540  

Take-Two Interactive Software, Inc. *

     8,625        1,203,791  

Thor Industries, Inc.

      11,200        1,193,136  

YETI Holdings, Inc. *

     53,700        2,294,601  
     

 

 

  
        7,097,007  
     

 

 

  

Consumer Services - 8.3%

      

Chegg, Inc. *

     37,500        2,522,250  

Dunkin’ Brands Group, Inc.

      12,800        834,944  

Grand Canyon Education, Inc. *

     3,600        325,908  

Nexstar Media Group, Inc.

      15,225        1,274,180  

Service Corp. International

      25,600        995,584  

Strategic Education, Inc.

      9,100        1,398,215  

Vail Resorts, Inc.

      5,600        1,020,040  
     

 

 

  
        8,371,121  
     

 

 

  

Electronic Technology - 10.1%

      

Arista Networks, Inc. *

     7,800        1,638,234  

Cabot Microelectronics Corp.

      8,825        1,231,441  

Ciena Corp. *

     26,250        1,421,700  

MKS Instruments, Inc.

      15,750        1,783,530  

Monolithic Power Systems, Inc.

      10,200        2,417,400  

Skyworks Solutions, Inc.

      13,200        1,687,752  
     

 

 

  
        10,180,057  
     

 

 

  

Finance - 5.5%

      

Artisan Partners Asset Management, Inc.

      18,500        601,250  

Axis Capital Holdings, Ltd.

      11,775        477,594  

Essential Properties Realty Trust, Inc.

      9,700        143,948  

First Republic Bank

      6,400        678,336  

Legg Mason, Inc.

      24,800        1,233,800  

Physicians Realty Trust

      61,600        1,079,232  

Selective Insurance Group, Inc.

      10,375        547,178  

SVB Financial Group *

     3,775        813,626  
     

 

 

  
        5,574,964  
     

 

 

  
     
     
     
Name of Issuer    Quantity        Fair Value ($)  

Health Services - 4.1%

      

Encompass Health Corp.

      14,600        904,178  

Teladoc Health, Inc. *

     13,125        2,504,775  

Tenet Healthcare Corp. *

     40,100        726,211  
     

 

 

  
        4,135,164  
     

 

 

  

Health Technology - 15.9%

      

Align Technology, Inc. *

     3,600        987,984  

AtriCure, Inc. *

     25,825        1,160,834  

Bio-Techne Corp.

      4,800        1,267,536  

Exact Sciences Corp. *

     15,700        1,364,958  

Insulet Corp. *

     4,950        961,587  

iRhythm Technologies, Inc. *

     17,600        2,039,664  

LeMaitre Vascular, Inc.

      26,775        706,860  

Mesoblast, Ltd. ADR *

     30,975        352,805  

PerkinElmer, Inc.

      8,400        823,956  

Sarepta Therapeutics, Inc. *

     13,400        2,148,556  

STAAR Surgical Co. *

     28,850        1,775,429  

STERIS, PLC

      9,100        1,396,304  

Wright Medical Group NV *

     33,700        1,001,564  
     

 

 

  
        15,988,037  
     

 

 

  

Industrial Services - 5.4%

      

Advanced Disposal Services, Inc. *

     40,825        1,231,690  

EMCOR Group, Inc.

      15,800        1,045,012  

KBR, Inc.

      43,500        980,925  

Waste Connections, Inc.

      23,100        2,166,549  
     

 

 

  
        5,424,176  
     

 

 

  

Non-Energy Minerals - 2.8%

      

AZEK Co., Inc. *

     12,400        395,064  

Trex Co., Inc. *

     18,700        2,432,309  
     

 

 

  
        2,827,373  
     

 

 

  

Process Industries - 1.7%

      

Scotts Miracle-Gro Co.

      12,600        1,694,322  
     

 

 

  

Producer Manufacturing - 7.9%

      

Crane Co.

      15,400        915,684  

H&E Equipment Services, Inc.

      23,200        428,736  

Hubbell, Inc.

      8,000        1,002,880  

IDEX Corp.

      6,100        964,044  

Lincoln Electric Holdings, Inc.

      8,900        749,736  

MSA Safety, Inc.

      11,400        1,304,616  

Oshkosh Corp.

      13,800        988,356  

Rexnord Corp.

      23,600        687,940  

Watsco, Inc.

      5,050        897,385  
     

 

 

  
        7,939,377  
     

 

 

  

Retail Trade - 1.3%

      

Casey’s General Stores, Inc.

      4,300        642,936  

Ulta Beauty, Inc. *

     3,050        620,431  
     

 

 

  
                1,263,367  
     

 

 

  
 

 

See accompanying notes financial statements.

   

 

38

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

    

 

    

 

     
Name of Issuer    Quantity        Fair Value ($)  

Technology Services - 17.0%

      

Altair Engineering, Inc. *

     29,983        1,191,824  

ANSYS, Inc. *

     3,725        1,086,694  

Aspen Technology, Inc. *

     14,500        1,502,345  

Euronet Worldwide, Inc. *

     16,600        1,590,612  

Globant SA *

     13,400        2,007,990  

GoDaddy, Inc. *

     15,025        1,101,783  

HubSpot, Inc. *

     9,450        2,120,108  

Paycom Software, Inc. *

     7,450        2,307,488  

PTC, Inc. *

     17,600        1,369,104  

Qualys, Inc. *

     10,050        1,045,401  

Science Applications International Corp.

      14,800        1,149,664  

Talend SA, ADR *

     19,100        662,006  
     

 

 

  
                17,135,019  
     

 

 

  

Transportation - 2.8%

      

Alaska Air Group, Inc.

      11,500        416,990  

Knight-Swift Transportation Holdings, Inc.

      13,500        563,085  

Marten Transport, Ltd.

      48,050        1,208,938  

TFI International, Inc.

      17,100        606,195  
     

 

 

  
                2,795,208  
     

 

 

  
     
Name of Issuer    Quantity        Fair Value ($)  

Utilities - 1.0%

      

Fortis, Inc.

      12,107        461,035  

Spire, Inc.

      7,525        494,468  
     

 

 

  
        955,503  
     

 

 

  

Total Common Stocks
(cost: $56,885,067)

         97,148,275  
     

 

 

  

Short-Term Securities - 3.8%

      

Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%

      3,827,644        3,827,644  
     

 

 

  

    (cost: $3,827,644)

      

Total Investments in Securities - 100.4%
(cost: $60,712,711)

 

      100,975,919  

Other Assets and Liabilities, net - (0.4%)

 

      (363,216 ) 
     

 

 

  

Total Net Assets - 100.0%

 

            $ 100,612,703  
     

 

 

  

 

 

* Non-income producing security.

  ADR — American Depositary Receipt

  PLC — Public Limited Company

Numeric footnotes not disclosed are not applicable to this Schedule of Investments.

 

 

A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):

 

     Investment in Securities  
     Level 1
Quoted
Price ($)		      Level 2
Other significant
observable inputs ($)		    Level 3
Significant
unobservable inputs ($)		    Total ($)  

Common Stocks **

     97,148,275      —    —      97,148,275  

Short-Term Securities

      3,827,644      —    —      3,827,644  

Total:

      100,975,919      —    —      100,975,919  

**  For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.

There were no transfers into or out of level 3 during the reporting period.

 

See accompanying notes to financial statements.

   

 

JUNE 30, 2020

   

 

 

 

39

 

 

    

    Sit International Growth Fund

 

 

 

OBJECTIVE STRATEGY

The objective of the Sit International Growth Fund is long-term growth. The Fund seeks to achieve its objective by investing at least 90% of its net assets in common stocks of growth companies domiciled outside the United States. In selecting investments for the Fund, the Adviser begins by selecting countries or regions in which to invest by considering several factors affecting the economy and equity market of foreign countries and regions. After the country and regional allocations are determined, the Adviser seeks industries and sectors that it believes have earnings growth prospects that are greater than the average. Within the selected industries and sectors, the Adviser invests in foreign growth-oriented companies it believes exhibit the potential for superior growth.

 

Fund Performance

 

The Sit International Growth Fund outperformed the MSCI EAFE Index for the 12-month period ended June 30, 2020, with a return of +2.43%. This compares to the MSCI EAFE Index return of -5.13%.

Factors that Influenced the Fund’s Performance

Contributing favorably to performance during the 12-month period were the Fund’s sector underweight in banks, its overweight in software & services (Globant, Tencent Holdings, Atlassian), and its stock selection in technology hardware (Logitech International, Keyence). Adversely affecting performance were the Fund’s holdings in the pharmaceuticals (Canopy Growth, Cronos) and food beverage & tobacco (Coca-Cola European Partners) sectors.

Geographically, stock selection in Asia Pacific ex-Japan (Tencent Holdings, Atlassian, Alibaba Group Holding), Non-Euroland (Logitech International, Lonza Group), and Euroland (Cellnex Telecom, Schnei-der Electric) contributed value, while allocation to North America (Euronet Worldwide, Suncor Energy) and Japan (Shiseido) hurt performance. EAFE Index returns were driven by massive global stimulus, credit market stabilization, promise of a COVID-19 vaccine, signs that containment efforts were reducing the rate of new infections, asset rotation, and anticipation of better corporate earnings.

Outlook and Positioning

Economic activity has improved in Europe, Japan, China, and some emerging markets, as the pace of new COVID-19 cases has slowed, allowing restrictions to be relaxed. The European Central Bank has kept credit flowing, having purchased 345.5 billion euros in assets under its freshly launched 1.35 trillion euros Pandemic Emergency Purchase Programme. This stimulus has taken the form of furloughing schemes, direct loans to companies, and loan guarantees. Japan should also participate in the global economic recovery following the COVID-19 shock; yet, we expect an uneven recovery restrained by the ongoing structural challenges of an aging population, a rigid labor system, and a highly indebted government. We believe China will return to its pre-pandemic GDP level in the second half of 2020 and achieve positive low-single-digit GDP growth for the full year, as domestic demand has gradually improved and growth will be underpinned by policy support, recovery in consumption, and better export demand. South Korea and India both went into lockdown early and thus were able to better control COVID-19, allowing them to ease restrictions.

Regarding investment strategy, we prefer Asia ex-Japan and are underweight Europe. We are positive on China, given its first in, first out position amid the global economic recovery. Our investments are in

HYPOTHETICAL GROWTH OF $10,000

 

LOGO

The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the MSCI EAFE Index and MSCI EAFE Growth Index. The primary index used to compare the Fund’s performance was changed to the MSCI EAFE Index from the MSCI EAFE Growth Index because the Investment Adviser believes that the MSCI EAFE Index more accurately reflects the Fund’s investment objectives and strategies. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

1 MSCI EAFE Index (Europe, Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that measures the equity market performance of developed markets, excluding the US & Canada. This is the Fund’s primary index.

 

the new economy and domestic demand-driven sectors. The South Korean holdings are in consumer, financial, and export-beneficiary (semiconductor, electrical machinery, smartphone manufacturers) companies. In India, we favor the economically sensitive sectors of consumer, financials, energy, information services, and industrials. In Japan, we remain focused on quality, well-managed, growth-oriented companies with strong balance sheets, along with defensive domestic-focused consumption names. We are cautious on Europe, given continued uncertainty regarding the post-Brexit relationship, high exposure to global trade or tourism, the possibility of another eurozone crisis, fiscal stress, and threat of another wave of COVID-19 infections. Our European holdings are biased toward thematic opportunities within the technology, healthcare, and services sectors, as well as key beneficiaries of government stimulus.

Roger J. Sit

Portfolio Manager

 

 

Information on this page is unaudited.

40

    SIT MUTUAL FUNDS ANNUAL REPORT

    

    

 

COMPARATIVE RATES OF RETURNS

 

as of June 30, 2020

 

     Sit                

                

     International             
     Growth        MSCI EAFE       
      Fund         Index 1     

One Year

      2.43 %         -5.13 %   

Five Year

      2.68                       2.05    

Ten Year

      5.91          5.73    

Since Inception

      3.92          4.87    

(11/1/91)

          

 

Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains and all fee waivers. Without the fee waivers total return and yield figures would have been lower. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.

1 MSCI EAFE Index (Europe, Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that measures the equity market performance of developed markets, excluding the US & Canada.

FUND DIVERSIFICATION - BY REGION

 

 

     Sit Int’l        MSCI EAFE    
      Growth Fund         Index     

Europe

      58.1 %         61.6 %   

Asia

      31.8          37.7    

North America

      7.2          —    

Latin America

      2.0          —    

Africa/Middle East

      —          0.7    

Cash & Other Net Assets

      0.9          —    

 

Based on total net assets as of June 30, 2020. Subject to change.

PORTFOLIO SUMMARY

 

 

  Net Asset Value 6/30/20:

    $17.38 Per Share  

  Net Asset Value 6/30/19:

    $17.13 Per Share  

  Total Net Assets:

    $23.0   Million                 

  Weighted Average Market Cap:

    $89.5   Billion  

TOP 10 HOLDINGS

 

1. Nestle SA

2. ASML Holding NV

3. Tencent Holdings, Ltd.

4. Lonza Group AG

5. Schneider Electric SE

6. Iberdrola SA

7. London Stock Exchange Group, PLC

8. Logitech International SA

9. Alibaba Group Holding, Ltd., ADR

10. Terumo Corp.

 

 

Based on total net assets as of June 30, 2020. Subject to change.

SECTOR ALLOCATION

 

 

LOGO

Based on total net assets as of June 30, 2020. Subject to change.

 

 

Information on this page is unaudited.

 

JUNE 30, 2020

   

 

41

    

SCHEDULE OF INVESTMENTS

June 30, 2020

 

Sit International Growth Fund

Investments are grouped by geographic region.

 

 

Name of Issuer    Quantity      Fair Value ($)  

Common Stocks - 98.0%

      

Asia - 30.7%

      

Australia - 5.1%

      

Amcor, Ltd.

      9,125        92,164  

Atlassian Corp., PLC *

     2,500        450,675  

CSL, Ltd.

      350        69,611  

Macquarie Group, Ltd.

      2,600        215,779  

Rio Tinto, PLC, ADR

      4,400        247,192  

Westpac Banking Corp., ADR

      8,300        103,833  
     

 

 

  
        1,179,254  
     

 

 

  

China/Hong Kong - 11.1%

      

AIA Group, Ltd.

      32,200        301,315  

Alibaba Group Holding, Ltd., ADR *

     2,350        506,895  

Baidu, Inc., ADR *

     1,525        182,832  

China Tower Corp., Ltd.

      1,342,000        238,481  

CSPC Pharmaceutical Group, Ltd.

      105,600        199,994  

ENN Energy Holdings, Ltd.

      18,400        207,929  

Ping An Insurance Group Co. of China, Ltd.

      33,500        333,961  

Tencent Holdings, Ltd.

      9,000        576,701  
     

 

 

  
        2,548,108  
     

 

 

  

Japan - 10.0%

      

Astellas Pharma, Inc.

      17,700        295,582  

Keyence Corp.

      1,000        419,062  

Recruit Holdings Co., Ltd.

      11,200        385,170  

Shiseido Co., Ltd.

      4,100        261,255  

Sony Corp., ADR

      6,300        435,519  

Terumo Corp.

      13,100        498,622  
     

 

 

  
        2,295,210  
     

 

 

  

Singapore - 1.9%

      

DBS Group Holdings, Ltd.

      15,600        234,731  

Singapore Technologies Engineering, Ltd.

      78,400        187,121  
     

 

 

  
        421,852  
     

 

 

  

South Korea - 2.6%

      

LG Chem, Ltd.

      975        402,362  

Samsung Electronics Co., Ltd., GDR

      185        202,245  
     

 

 

  
        604,607  
     

 

 

  

Europe - 58.1%

      

Denmark - 0.9%

      

Bavarian Nordic *

     7,550        206,951  
     

 

 

  

France - 8.5%

      

AXA SA *

     11,750        247,253  

Dassault Systemes SA

      2,625        455,679  

Safran SA *

     3,200        321,891  

Sanofi, ADR

      3,800        193,990  

Schneider Electric SE

      5,000        556,181  

Talend SA, ADR *

     4,900        169,834  
     

 

 

  
        1,944,828  
     

 

 

  

 

 

 

Name of Issuer    Quantity      Fair Value ($)  

Germany - 5.3%

      

adidas AG *

     1,630        429,750  

Allianz SE

      2,250        459,768  

Aurelius SE & Co.

      4,660        77,358  

Siemens AG

      2,225        262,409  
     

 

 

  
        1,229,285  
     

 

 

  

Ireland - 2.0%

      

CRH, PLC, ADR

      4,800        164,688  

STERIS, PLC

      1,950        299,208  
     

 

 

  
        463,896  
     

 

 

  

Netherlands - 3.9%

      

ASML Holding NV

      1,700        625,651  

Koninklijke Philips NV *

     5,750        269,330  
     

 

 

  
        894,981  
     

 

 

  

Spain - 4.0%

      

Cellnex Telecom SA

      6,123        373,977  

Iberdrola SA

      45,900        535,866  
     

 

 

  
        909,843  
     

 

 

  

Sweden - 1.0%

      

Hexagon AB *

     3,800        223,157  
     

 

 

  

Switzerland - 16.7%

      

Garmin, Ltd.

      3,600        351,000  

Interroll Holding AG

      120        242,769  

Logitech International SA

      8,125        529,913  

Lonza Group AG

      1,075        569,425  

Nestle SA

      6,600        731,746  

Novartis AG

      4,325        376,799  

Partners Group Holding AG

      385        350,617  

Roche Holding AG

      1,320        457,313  

Zurich Insurance Group AG

      680        240,945  
     

 

 

  
        3,850,527  
     

 

 

  

United Kingdom - 15.8%

      

Ashtead Group, PLC

      9,600        323,836  

AstraZeneca, PLC, ADR

      8,300        438,987  

BAE Systems, PLC

      52,600        314,519  

Coca-Cola European Partners, PLC

      5,400        203,904  

Dechra Pharmaceuticals, PLC

      5,300        186,680  

Diageo, PLC, ADR

      2,775        372,932  

DS Smith, PLC

      63,600        258,181  

HomeServe, PLC

      15,000        242,504  

London Stock Exchange Group, PLC

      5,100        530,374  

Reckitt Benckiser Group, PLC

      3,100        285,194  

RELX, PLC

      14,700        340,217  

Royal Dutch Shell, PLC, ADR

      4,500        147,105  
     

 

 

  
        3,644,433  
     

 

 

  
 

 

See accompanying notes to financial statements.

   

 

42

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

 

 

 

Name of Issuer    Quantity      Fair Value ($)  

Latin America - 2.0%

      

Argentina - 2.0%

      

Globant SA *

     3,100        464,535  
     

 

 

  

North America - 7.2%

      

Canada - 3.4%

      

Alimentation Couche-Tard, Inc.

      5,200        163,055  

BRP, Inc.

      2,925        124,748  

Colliers International Group, Inc.

      1,600        91,696  

Suncor Energy, Inc.

      6,150        103,689  

Waste Connections, Inc.

      3,250        304,818  
     

 

 

  
        788,006  
     

 

 

  

United States - 3.8%

      

Broadcom, Inc.

      1,025        323,500  

Euronet Worldwide, Inc. *

     3,150        301,833  

Mondelez International, Inc.

      4,800        245,424  
     

 

 

  
        870,757  
     

 

 

  

Total Common Stocks
(cost: $17,124,923)

         22,540,230  
     

 

 

  

Investment Companies - 1.1%

      

iShares MSCI India ETF

      8,700        252,474  
     

 

 

  

    (cost: $258,117)

      

Short-Term Securities - 0.7%

      

Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%

      173,695        173,695  
     

 

 

  

    (cost: $173,695)

      

Total Investments in Securities - 99.8%
(cost: $17,556,735)

         22,966,399  

Other Assets and Liabilities, net - 0.2%

         38,160  
     

 

 

  

Total Net Assets - 100.0%

         $23,004,559  
     

 

 

  

 

 

* 

Non-income producing security.

 

 

ADR — American Depositary Receipt

 

GDR — Global Depositary Receipt

 

PLC — Public Limited Company

Numeric footnotes not disclosed are not applicable to this Schedule of Investments.

    

 

 

See accompanying notes to financial statements.

   

 

JUNE 30, 2020

   

 

 

 

43

 

 

    

SCHEDULE OF INVESTMENTS

June 30, 2020

Sit International Growth Fund (Continued)

 

A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):

 

    Investment in Securities  
        Level 1      Level 2   Level 3       
        Quoted      Other significant   Significant       
        Price ($)              observable inputs ($)           unobservable inputs ($)                Total ($)    

Common Stocks

          

Argentina

     464,535        —                   —            464,535  

Australia

     801,700        377,554           —            1,179,254  

Canada

     788,006        —           —            788,006  

China/Hong Kong

     689,727        1,858,381           —            2,548,108  

Denmark

     —        206,951           —            206,951  

France

     363,824        1,581,004           —            1,944,828  

Germany

     —        1,229,285           —            1,229,285  

Ireland

     463,896        —           —            463,896  

Japan

     435,519        1,859,691           —            2,295,210  

Netherlands

     894,981        —           —            894,981  

Singapore

     —        421,852           —            421,852  

South Korea

     —        604,607           —            604,607  

Spain

     —        909,843           —            909,843  

Sweden

     —        223,157           —            223,157  

Switzerland

     880,913        2,969,614           —            3,850,527  

United Kingdom

     1,503,145        2,141,288           —            3,644,433  

United States

     870,757        —           —            870,757  

Investment Companies

     252,474        —           —            252,474  

Short-Term Securities

     173,695        —           —            173,695  

Total:

         8,583,172        14,383,227           —            22,966,399   

Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.

 

See accompanying notes to financial statements.

   

 

44

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

 

    

 

[This page intentionally left blank.]

 

 

 

 

  

 

JUNE 30, 2020

   

 

 

 

45

 

 

    

    Sit Developing Markets Growth Fund

 

 

OBJECTIVE & STRATEGY

The objective of the Sit Developing Markets Growth Fund is to maximize long-term capital appreciation. The Fund seeks to achieve its objective by investing at least 80% of its net assets in common stocks of companies domiciled or operating in a developing market. In selecting investments for the Fund, the Adviser begins by selecting countries or regions in which to invest by considering several factors affecting the economy and equity market of foreign countries and regions. After the country and regional allocations are determined, the Adviser seeks industries and sectors that appear to have strong earnings growth prospects. Within the selected industries and sectors, the Adviser invests in foreign growth-oriented companies it believes exhibit the potential for superior growth.

 

Fund Performance

 

The Sit Developing Markets Growth Fund increased +2.20% during the 12-month period ended June 30, 2020, compared to the MSCI Emerging Markets Index return of -5.67%.

Factors that Influenced the Fund’s Performance

Contributing to outperformance during the 12-month period were the Fund’s holdings in the consumer services (TAL Education Group), technology hardware (Skyworks Solutions, NICE), and materials (LG Chemical) sectors. Conversely, sectors that hurt performance were pharmaceuticals (Medy-Tox), funds (iShares MSCI India ETF), and health care equipment (Sinopharm Group).

Geographically, holdings in the regions of Africa/Mideast (Naspers, NICE), Latin America (Globant), and Asia Pacific ex-Japan (TAL Education Group, JD.com, CSPC Pharmaceutical Group) added value, while owning GeoPark in North America and Suzuki Motor in Japan detracted from performance. By country, the Fund’s positions in China, Israel and Argentina helped performance, while those in Korea, Tai-wan and the United States hurt the return. The outperformance of emerging market equities was driven by massive global stimulus, promise of a COVID-19 vaccine, signs that containment efforts were reducing the rate of new infections, and anticipation of better corporate earnings.

Outlook and Positioning

We believe China is on track for a full economic recovery, but other emerging market economies are challenged. China is expected to return to its pre-pandemic GDP level in the second half of 2020 and achieve positive low-single-digit GDP growth for the full year. The COVID-19 outbreak looks broadly under control in China, thanks to effective public health containment efforts. Hence, domestic demand has gradually improved, and growth will be underpinned by policy support, recovery in consumption, and better export demand. Finally, the Phase 1 trade deal with the U.S. appears intact. On the other hand, the COVID-19 outbreak has been painful for other emerging market economies, in general. South Korea and India both went into lockdown early and thus were able to better control COVID-19, allowing those nations to ease restrictions to resume economic growth. South Korea’s growth is supported by the government’s supplemental budget, which includes measures to support distressed corporations, assist the poor with emergency cash, and create jobs. And India’s stimulus measures include interest rate cuts and a fiscal policy pack-

HYPOTHETICAL GROWTH OF $10,000

 

LOGO

The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the MSCI Emerging Markets Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

1 MSCI Emerging Markets Index is an unmanaged free float-adjusted market capitalization index that measures equity market performance of emerging markets. It is not possible to invest directly in an index. This is the Fund’s primary index.

 

age. Conversely, Brazil and Mexico did not go into strict lockdown, resulting in a continued rise in new infections. Consequently, we expect negative GDP growth for Brazil and Mexico this year.

Regarding investment strategy, we favor investment opportunities in China, South Korea, and India. We remain positive on China given its first in, first out position amid the global economic recovery. Our investments are in the new economy and domestic demand-driven sectors. South Korea’s economic growth will be supported by its supplemental budget, which is positive for consumer and financial companies. In addition, improving exports will benefit semiconductor, electrical machinery, and smartphone manufacturers. Our investments in India are biased toward economically sensitive sectors, such as consumer, financials, energy, information services, and industrials. Finally, we continue to have a defensive position in Latin America and own consumer staple stocks.

Roger J. Sit         Raymond E. Sit

Portfolio Managers

 

 

Information on this page is unaudited.

46

    SIT MUTUAL FUNDS ANNUAL REPORT

    

    

 

COMPARATIVE RATES OF RETURN

 

as of June 30, 2020

 

     

Sit
    Developing    
Markets
Growth

Fund

  

    MSCI        

    Emerging        
    Markets         

    Index 1        

 One Year

      2.20 %      -5.67 %     

 Five Year

      3.66       0.47  

 Ten Year

      2.81       0.81  

 Since Inception

      3.99       2.85  

 (7/1/94)

     

 

Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.

1 MSCI Emerging Markets Index is an unmanaged free float-adjusted market capitalization index that measures equity market performance of emerging markets. It is not possible to invest directly in an index.

 

FUND DIVERSIFICATION - BY REGION

 

    

Sit
    Developing    
Markets
Growth

Fund

  

    MSCI        

    Emerging        
    Markets         

    Index        

 Asia

     73.5 %      79.2 %     

 Africa/Middle East

     9.8       7.9  

 Latin America

     8.4       8.1  

 North America

     3.8       —  

 Europe

     —       4.8  

 Cash & Other Net Assets

     4.5       —  

 

Based on total net assets as of June 30, 2020. Subject to change.

PORTFOLIO SUMMARY

 

 

 Net Asset Value 6/30/20:

    $16.28 Per Share   

 Net Asset Value 6/30/19:

    $16.21 Per Share        

 Total Net Assets:

    $10.3 Million   

 Weighted Average Market Cap:

    $141.1 Billion   

 

TOP 10 HOLDINGS

 

  1. Tencent Holdings, Ltd.

  2. Alibaba Group Holding, Ltd., ADR

  3. TAL Education Group, ADR

  4. Samsung Electronics Co., Ltd.

  5. Taiwan Semiconductor Co.

  6. NICE Systems, Ltd., ADR

  7. iShares MSCI India ETF

  8. China Construction Bank Corp.

  9. CSPC Pharmaceutical Group, Ltd.

10. JD.com, Inc., ADR

 

Based on total net assets as of June 30, 2020. Subject to change.

 

SECTOR ALLOCATION

 

 

LOGO

Based on total net assets as of June 30, 2020. Subject to change.

 

 

Information on this page is unaudited.

   

 

JUNE 30, 2020

   

 

 

 

47

 

 

    

SCHEDULE OF INVESTMENTS

June 30, 2020

 

Sit Developing Markets Growth Fund

Investments are grouped by geographic region.

 

Name of Issuer

    Quantity      Fair Value ($)  

Common Stocks - 92.4%

      

Africa/Middle East - 9.8%

      

Israel - 3.4%

      

NICE Systems, Ltd., ADR *

     1,800        340,632  
     

 

 

  

South Africa - 6.4%

      

Bid Corp., Ltd.

      13,200        216,755  

Bidvest Group, Ltd.

      5,525        45,332  

Naspers, Ltd.

      1,425        261,887  

Prosus NV *

     1,425        132,465  
     

 

 

  
        656,439  
     

 

 

  

Asia - 70.4%

      

Australia - 1.4%

      

Rio Tinto, PLC, ADR

      2,475        139,045  
     

 

 

  

China/Hong Kong - 44.3%

      

AIA Group, Ltd.

      21,400        200,253  

Alibaba Group Holding, Ltd., ADR *

     2,875        620,137  

Baidu, Inc., ADR *

     1,375        164,849  

China Construction Bank Corp.

      359,000        292,005  

China Mengniu Dairy Co., Ltd.

      48,000        184,060  

China Petroleum & Chemical Corp., ADR

      1,400        58,744  

China Tower Corp., Ltd.

      586,000        104,136  

CSPC Pharmaceutical Group, Ltd.

      144,000        272,720  

ENN Energy Holdings, Ltd.

      21,900        247,481  

GDS Holdings, Ltd., ADR *

     600        47,796  

Hong Kong Exchanges & Clearing, Ltd.

      4,300        183,144  

JD.com, Inc., ADR *

     4,450        267,801  

Meituan Dianping *

     6,000        134,078  

Ping An Insurance Group Co. of China, Ltd.

      19,900        198,383  

Sinopharm Group Co., Ltd.

      44,900        115,436  

TAL Education Group, ADR *

     8,900        608,582  

Tencent Holdings, Ltd.

      11,400        730,488  

WH Group, Ltd.

      132,500        114,506  
     

 

 

  
                4,544,599  
     

 

 

  

India - 2.4%

      

HDFC Bank, Ltd., ADR

      5,350        243,211  
     

 

 

  

Indonesia - 2.4%

      

Astra International Tbk PT

      176,000        59,530  

XL Axiata Tbk PT

      948,800        185,200  
     

 

 

  
        244,730  
     

 

 

  

Singapore - 2.9%

      

DBS Group Holdings, Ltd.

      14,500        218,179  

Singapore Technologies Engineering, Ltd.

      33,700        80,433  
     

 

 

  
        298,612  
     

 

 

  

South Korea - 9.7%

      

LG Chem, Ltd.

      575        237,290  

Medy-Tox, Inc.

      370        45,211  

 

 

 

 

Name of Issuer

    Quantity      Fair Value ($)  

Samsung Electronics Co., Ltd.

      12,250        542,278  

Shinhan Financial Group Co., Ltd.

      7,200        173,997  
     

 

 

  
        998,776  
     

 

 

  

Taiwan - 6.6%

      

Cathay Financial Holding Co., Ltd.

      82,085        116,765  

Hon Hai Precision Industry Co., Ltd., GDR

      22,160        129,858  

Taiwan Semiconductor Co.

      37,482        400,290  

Taiwan Semiconductor Co., ADR

      600        34,062  
     

 

 

  
        680,975  
     

 

 

  

Thailand - 0.7%

      

Bangkok Bank PCL

      21,200        73,877  
     

 

 

  

Latin America - 8.4%

      

Argentina - 2.0%

      

Globant SA *

     1,350        202,297  
     

 

 

  

Brazil - 2.8%

      

Ambev SA, ADR

      10,800        28,512  

Banco Bradesco SA

      25,083        96,631  

Lojas Renner SA

      4,000        31,003  

Pagseguro Digital, Ltd. *

     3,800        134,292  
     

 

 

  
        290,438  
     

 

 

  

Chile - 2.1%

      

Banco Santander Chile, ADR

      4,700        77,080  

Geopark, Ltd.

      14,156        138,587  
     

 

 

  
        215,667  
     

 

 

  

Peru - 1.5%

      

Southern Copper Corp.

      3,900        155,103  
     

 

 

  

North America - 3.8%

      

Mexico - 1.0%

      

Fomento Economico Mexicano, ADR

      1,575        97,666  
     

 

 

  

United States - 2.8%

      

Broadcom, Inc.

      550        173,585  

Skyworks Solutions, Inc.

      925        118,270  
     

 

 

  
        291,855  
     

 

 

  

Total Common Stocks
(cost: $6,842,779)

                 9,473,922  
     

 

 

  

Investment Companies - 3.1%

      

iShares MSCI India ETF

      11,100        322,122  
     

 

 

  

(cost: $333,061)

      
 

 

See accompanying notes to financial statements.

   

 

48

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

    

    

 

 

 

Name of Issuer

    Quantity      Fair Value ($)  

Short-Term Securities - 4.4%

      

Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%

      449,313        449,313  
     

 

 

  

(cost: $449,313)

      

Total Investments in Securities - 99.9%
(cost: $7,625,153)

         10,245,357  

Other Assets and Liabilities, net - 0.1%

         14,432  
     

 

 

  

Total Net Assets - 100.0%

       $ 10,259,789  
     

 

 

  

 

 

*

Non-income producing security.

ADR — American Depositary Receipt

GDR — Global Depositary Receipt

Numeric footnotes not disclosed are not applicable to this Schedule of Investments.

 

    

 

A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):

 

     Investment in Securities  
     Level 1      Level 2      Level 3         
     Quoted      Other significant      Significant         
     Price ($)      observable inputs ($)      unobservable inputs ($)      Total ($)  

Common Stocks

            

Argentina

      202,297        —                —                        202,297  

Australia

      139,045        —                —                        139,045  

Brazil

      290,438        —                —                        290,438  

Chile

      215,667        —                —                        215,667  

China/Hong Kong

      1,767,909        2,776,690                —                        4,544,599  

India

      243,211        —                —                        243,211  

Indonesia

      —        244,730                —                        244,730  

Israel

      340,632        —                —                        340,632  

Mexico

      97,666        —                —                        97,666  

Peru

      155,103        —                —                        155,103  

Singapore

      —        298,612                —                        298,612  

South Africa

      132,465        523,974                —                        656,439  

South Korea

      —        998,776                —                        998,776  

Taiwan

      163,920        517,055                —                        680,975  

Thailand

      —        73,877                —                        73,877  

United States

      291,855        —                —                        291,855  

Investment Companies

      322,122        —                —                        322,122  

Short-Term Securities

      449,313        —                —                        449,313  

Total:

      4,811,643        5,433,714                —                        10,245,357  

Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.

 

See accompanying notes to financial statements.

   

 

JUNE 30, 2020

   

 

 

 

49

 

 

    

STATEMENTS OF ASSETS AND LIABILITIES

June 30, 2020

 

     Sit
Balanced
Fund		      Sit
Dividend
Growth
Fund		      Sit
Global
Dividend
Growth
Fund		  

ASSETS

         

Investments in securities, at identified cost

    $ 38,022,113      $ 168,711,173      $ 25,702,734  
  

 

 

     

 

 

     

 

 

  

Investments in securities, at fair value - see accompanying schedule for detail

    $ 47,694,121      $ 201,307,030      $ 34,725,227  

Cash in bank on demand deposit

      1,153        —        1,564  

Accrued interest and dividends receivable

      113,700        189,435        53,920  

Receivable for investment securities sold

      —        890,659        —  

Receivable for Fund shares sold

      15,375        39,618        811  
  

 

 

     

 

 

     

 

 

  

Total assets

      47,824,349        202,426,742        34,781,522  
  

 

 

     

 

 

     

 

 

  

LIABILITIES

         

Payable for investment securities purchased

      1,038,867        337,568        —  

Payable for Fund shares redeemed

      91,608        112,152        56  

Accrued investment management fees and advisory fees

      36,373        119,209        28,479  

Accrued 12b-1 fees (Class S)

      —        6,019        700  
  

 

 

     

 

 

     

 

 

  

Total liabilities

      1,166,848        574,948        29,235  
  

 

 

     

 

 

     

 

 

  

Net assets applicable to outstanding capital stock

    $ 46,657,501      $ 201,851,794      $ 34,752,287  
  

 

 

     

 

 

     

 

 

  

Net assets consist of:

         

Capital (par value and paid-in surplus)

    $ 36,429,739      $ 165,166,528      $ 26,641,957  

Total distributable earnings (loss), including unrealized appreciation (depreciation)

      10,227,762        36,685,266        8,110,330  
  

 

 

     

 

 

     

 

 

  
   $ 46,657,501      $ 201,851,794      $ 34,752,287  
  

 

 

     

 

 

     

 

 

  

Outstanding shares:

         

Common Shares (Class I) *

      1,769,110        12,814,303        1,859,373  
  

 

 

     

 

 

     

 

 

  

Common Shares (Class S) *

      —        2,171,404        201,264  
  

 

 

     

 

 

     

 

 

  

Net assets applicable to outstanding shares:

         

Common Shares (Class I) *

    $ 46,657,501      $ 172,746,099      $ 31,360,920  
  

 

 

     

 

 

     

 

 

  

Common Shares (Class S) *

      —        29,105,695        3,391,367  
  

 

 

     

 

 

     

 

 

  

Net asset value per share of outstanding capital stock:

         

Common Shares (Class I) *

      $26.37        $13.48        $16.87  
  

 

 

     

 

 

     

 

 

  

Common Shares (Class S) *

      —        $13.40        $16.85  
  

 

 

     

 

 

     

 

 

  

 

*

Dividend Growth, Global Dividend Growth, ESG Growth and Small Cap Dividend Growth Funds offer multiple share classes (I and S). All other Funds offer a single share class.

 

 

See accompanying notes to financial statements.

   

 

50

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

 

        

    

 

Sit
Large Cap
Growth
Fund		     Sit
ESG
Growth
Fund		     Sit
Mid Cap
Growth
Fund		     Sit
Small Cap
Dividend
Growth
Fund		     Sit
Small Cap
Growth
Fund		      Sit
International
Growth
Fund		      Sit
Developing
Markets
Growth
Fund		  
                      
  $57,530,885     $ 4,880,339       $94,921,870     $ 13,872,511       $60,712,711      $ 17,556,735        $7,625,153  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
$ 129,211,985     $ 6,633,486     $ 172,948,234     $ 15,596,022     $ 100,975,919      $ 22,966,399      $ 10,245,357  
  4,717       742       16,801       —       —        2,307        1,082  
  21,522       7,637       33,694       21,130       51,051        63,835        23,776  
  —       —       —       —       —        —        —  
  68,477       —       4,261       1,365       3,233        1,363        1,349  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
  129,306,701       6,641,865       173,002,990       15,618,517       101,030,203        23,033,904        10,271,564  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
                      
  —       —       —       35,061       235,864        —        —  
  48,624       —       81,730       63,714       58,456        1,224        149  
  104,072       5,429       177,069       12,845       123,180        28,121        11,626  
  —       646       —       782       —        —        —  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
  152,696       6,075       258,799       112,402       417,500        29,345        11,775  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
$ 129,154,005     $ 6,635,790     $ 172,744,191     $ 15,506,115     $ 100,612,703      $ 23,004,559      $ 10,259,789  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
                      
  $53,179,198     $ 4,957,024       $90,393,316     $ 13,995,850       $60,429,953      $ 18,979,436        $7,671,691  
  75,974,807       1,678,766       82,350,875       1,510,265       40,182,750        4,025,123        2,588,098  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
$ 129,154,005     $ 6,635,790     $ 172,744,191     $ 15,506,115     $ 100,612,703      $ 23,004,559      $ 10,259,789  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
                      
  2,744,066       251,047       9,066,950       1,034,761       1,771,105        1,323,597        630,386  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
  —       229,203       —       326,775       —        —        —  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
                      
$ 129,154,005     $ 3,477,402     $ 172,744,191     $ 11,786,363     $ 100,612,703      $ 23,004,559      $ 10,259,789  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
  —       3,158,388       —       3,719,752       —        —        —  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
                      
  $47.07       $13.85       $19.05       $11.39       $56.81        $17.38        $16.28  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
  —       $13.78       —       $11.38       —        —        —  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

 

    

 

    

   

 

JUNE 30, 2020

   

 

 

 

51

 

 

    

STATEMENTS OF OPERATIONS

Year Ended June 30, 2020

 

     Sit
Balanced
Fund		      Sit
Dividend
Growth
Fund		     Sit
Global
Dividend
Growth
Fund		  

Investment income:

        

Income:

        

Dividends*

      $358,253        $5,357,725       $793,363  

Interest

      382,608        29,160       16,520  
  

 

 

     

 

 

    

 

 

  

Total income

      740,861        5,386,885       809,883  
  

 

 

     

 

 

    

 

 

  

Expenses (note 4):

        

Investment management and advisory service fee

      371,609        2,339,326       428,404  

12b-1 fees (Class S)

      —        87,811       8,293  
  

 

 

     

 

 

    

 

 

  

Total expenses

      371,609        2,427,137       436,697  
  

 

 

     

 

 

    

 

 

  

Less fees and expenses waived by investment adviser

      —        (701,798 )      (85,681 ) 
  

 

 

     

 

 

    

 

 

  

Total net expenses

      371,609        1,725,339       351,016  
  

 

 

     

 

 

    

 

 

  

Net investment income (loss)

      369,252        3,661,546       458,867  
  

 

 

     

 

 

    

 

 

  

Realized and unrealized gain (loss):

        

Net realized gain (loss) on investments

      696,800        10,697,810       135,089  

Net realized gain (loss) on foreign currency transactions

      —        —       (357 ) 

Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions

      2,719,030        (2,538,615 )      942,590  
  

 

 

     

 

 

    

 

 

  

Net gain (loss)

      3,415,830        8,159,195       1,077,322  
  

 

 

     

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

    $ 3,785,082      $ 11,820,741     $ 1,536,189  
  

 

 

     

 

 

    

 

 

  

 

        

* Foreign taxes withheld on dividends received

      —        $56,034       $30,130  

 

See accompanying notes to financial statements.

   

 

52

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

 

    

    

 

Sit
Large Cap
Growth
Fund		     Sit
ESG
Growth
Fund		     Sit
Mid Cap
Growth
Fund		     Sit
Small Cap
Dividend
Growth
Fund		     Sit
Small Cap
Growth
Fund		     Sit
International
Growth
Fund		      Sit
Developing
Markets
Growth
Fund		  
                     
                     
  $1,360,941       $116,496       $1,539,007       $330,260       $877,096       $413,169        $294,025  
  17,474       3,661       66,413       9,127       56,290       4,677        5,188  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
  1,378,415       120,157       1,605,420       339,387       933,386       417,846        299,213  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
                     
  1,177,876       80,076       2,055,165       197,553       1,436,329       338,324        195,927  
  —       7,453       —       9,779       —       —        —  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
  1,177,876       87,529       2,055,165       207,332       1,436,329       338,324        195,927  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
  —       (16,015 )      —       (39,511 )      —       —        (58,778 ) 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
  1,177,876       71,514       2,055,165       167,821       1,436,329       338,324        137,149  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
  200,539       48,643       (449,745 )      171,566       (502,943 )      79,522        162,064  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
                     
  7,837,834       52,810       8,298,971       (63,100 )      2,423,438       (342,874 )       (25,438 ) 
  —       (23 )      194       —       —       (1,362 )       (583 ) 
 

     

14,917,326

  

 

     285,159       5,783,828       (650,584 )      3,290,428       761,010        55,100  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
  22,755,160       337,946       14,082,993       (713,684 )      5,713,866       416,774        29,079  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
$ 22,955,699       $386,589     $ 13,633,248     ( $542,118 )    $ 5,210,923     $ 496,296      $ 191,143  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
 

    

               
  —       $6,363       $4,177       $1,717       $5,976       $40,481        $19,404  

 

    

   

 

JUNE 30, 2020

   

 

 

 

53

 

 

    

STATEMENTS OF CHANGES IN NET ASSETS

 

     Sit Balanced Fund     Sit Dividend Growth Fund  
     Year Ended
June 30,
2020		     Year Ended
June 30,
2019		     Year Ended
June 30,
2020		     Year Ended
June 30,
2019		  

Operations:

         

Net investment income

      $369,252       $482,453       $3,661,546       $14,057,076  

Net realized gain (loss) on investments and foreign currency transactions

      696,800       1,552,948       10,697,810       91,002,769  

Net change in unrealized appreciation (depreciation) of investments and foreign currency transactions

      2,719,030       328,736       (2,538,615 )      (108,242,415 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

      3,785,082       2,364,137       11,820,741       (3,182,570 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Distributions from:

         

Net investment income and net realized gains

         

Common shares (Class I)

      (2,136,305 )      (801,302 )      (25,345,878 )      (104,820,743 ) 

Common shares (Class S)

      —       —       (4,407,144 )      (8,833,909 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total distributions

      (2,136,305 )      (801,302 )      (29,753,022 )      (113,654,652 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Capital share transactions:

         

Proceeds from shares sold

         

Common shares (Class I)

      17,316,727       7,363,030       25,105,046       70,924,492  

Common shares (Class S)

      —       —       1,253,693       2,521,662  

Reinvested distributions

         

Common shares (Class I)

      2,103,223       787,611       23,804,702       101,138,488  

Common shares (Class S)

      —       —       4,392,885       8,734,436  

Payments for shares redeemed

         

Common shares (Class I)

      (8,876,091 )      (12,789,473 )      (75,291,359 )      (765,396,526 ) 

Common shares (Class S)

      —       —       (13,413,244 )      (17,067,708 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (decrease) in net assets from capital transactions

      10,543,859       (4,638,832 )      (34,148,277 )      (599,145,156 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      12,192,636       (3,075,997 )      (52,080,558 )      (715,982,378 ) 

Net assets:

         

Beginning of period

      34,464,865       37,540,862       253,932,352       969,914,730  
  

 

 

    

 

 

    

 

 

    

 

 

  

End of period

    $ 46,657,501     $ 34,464,865     $ 201,851,794     $ 253,932,352  
  

 

 

    

 

 

    

 

 

    

 

 

  

Capital transactions in shares:

         

Sold

         

Common shares (Class I)

      680,555       307,091       1,827,566       4,474,113  

Common shares (Class S)

      —       —       92,706       167,274  

Reinvested distributions

         

Common shares (Class I)

      83,820       34,382       1,675,670       7,846,703  

Common shares (Class S)

      —       —       310,474       687,436  

Redeemed

         

Common shares (Class I)

      (370,549 )      (545,889 )      (5,513,813 )      (52,548,963 ) 

Common shares (Class S)

      —       —       (995,697 )      (1,181,017 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease)

      393,826       (204,416 )      (2,603,094 )      (40,554,454 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes to financial statements.

   

 

54

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

 

    

 

Sit Global Dividend Growth Fund     Sit Large Cap Growth Fund     Sit ESG Growth Fund  
Year Ended
June 30,
2020		     Year Ended
June 30,
2019		     Year Ended
June 30,
2020		     Year Ended
June 30,
2019		     Year Ended
June 30,
2020		     Year Ended
June 30,
2019		  
                  
  $458,867       $568,865       $200,539       $453,312       $48,643       $74,979  
 

     

134,732

  

 

     (234,375 )      7,837,834       9,704,669       52,787       (76,675 ) 
 

     

942,590

  

 

     2,588,960       14,917,326       878,764       285,159       472,193  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  1,536,189       2,923,450       22,955,699       11,036,745       386,589       470,497  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                  
                  
  (495,881 )      (521,860 )      (10,751,684 )      (9,934,663 )      (55,450 )      (40,551 ) 
  (45,123 )      (49,144 )      —       —       (44,523 )      (31,449 ) 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  (541,004 )      (571,004 )      (10,751,684 )      (9,934,663 )      (99,973 )      (72,000 ) 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                  
                  
  2,566,271       2,468,958       3,793,196       4,477,170       53,788       169,033  
  493,938       95,183       —       —       88,716       25,229  
                  
  473,429       504,463       10,576,386       9,726,108       55,450       40,551  
  44,849       48,033       —       —       44,523       31,449  
                  
  (3,345,936 )      (3,055,896 )      (14,001,032 )      (17,516,267 )      (168,614 )      (78,105 ) 
  (538,748 )      (373,656 )      —       —       (6,803 )      (5,309 ) 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  (306,197 )      (312,915 )      368,550       (3,312,989 )      67,060       182,848  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  688,988       2,039,531       12,572,565       (2,210,907 )      353,676       581,345  
                  
  34,063,299       32,023,768       116,581,440       118,792,347       6,282,114       5,700,769  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
$ 34,752,287     $ 34,063,299     $ 129,154,005     $ 116,581,440     $ 6,635,790     $ 6,282,114  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                  
                  
  150,362       159,277       90,022       106,595       3,933       13,267  
  32,537       6,375       —       —       6,554       2,101  
                  
  29,095       33,104       246,824       272,975       3,936       3,575  
  2,759       3,149       —       —       3,173       2,781  
                  
  (206,028 )      (194,896 )      (334,238 )      (439,602 )      (13,142 )      (6,263 ) 
  (32,495 )      (24,279 )      —       —       (491 )      (418 ) 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  (23,770 )      (17,270 )      2,608       (60,032 )      3,963       15,043  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

    

   

 

JUNE 30, 2020

   

 

 

 

55

 

 

    

STATEMENTS OF CHANGES IN NET ASSETS (Continued)

 

     Sit Mid Cap Growth Fund     Sit Small Cap
Dividend Growth Fund		  
     Year Ended
June 30,
2020		     Year Ended
June 30,
2019		     Year Ended
June 30,
2020		     Year Ended
June 30,
2019		  

Operations:

         

Net investment income (loss)

      ($449,745 )      ($251,290 )      $171,566       $215,896  

Net realized gain (loss) on investments and foreign currency transactions

      8,299,165       15,207,092       (63,100 )      172,807  

Net change in unrealized appreciation (depreciation) of investments and foreign currency transactions

      5,783,828       2,857,207       (650,584 )      (600,408 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

      13,633,248       17,813,009       (542,118 )      (211,705 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Distributions from:

         

Net investment income and net realized gains

         

Common shares (Class I)

      (12,018,685 )      (15,426,149 )      (143,293 )      (316,700 ) 

Common shares (Class S)

      —       —       (37,709 )      (80,916 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total distributions

      (12,018,685 )      (15,426,149 )      (181,002 )      (397,616 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Capital share transactions:

         

Proceeds from shares sold

         

Common shares (Class I)

      1,783,445       2,026,500       1,690,858       492,580  

Common shares (Class S)

      —       —       114,119       367,898  

Reinvested distributions

         

Common shares (Class I)

      11,531,885       14,750,446       135,470       302,420  

Common shares (Class S)

      —       —       35,517       76,543  

Payments for shares redeemed

         

Common shares (Class I)

      (11,284,411 )      (8,565,701 )      (2,069,396 )      (2,339,374 ) 

Common shares (Class S)

      —       —       (216,438 )      (230,823 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (decrease) in net assets from capital transactions

      2,030,919       8,211,245       (309,870 )      (1,330,756 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      3,645,482       10,598,105       (1,032,990 )      (1,940,077 ) 

Net assets:

         

Beginning of period

      169,098,709       158,500,604       16,539,105       18,479,182  
  

 

 

    

 

 

    

 

 

    

 

 

  

End of period

    $ 172,744,191     $ 169,098,709     $ 15,506,115     $ 16,539,105  
  

 

 

    

 

 

    

 

 

    

 

 

  

Capital transactions in shares:

         

Sold

         

Common shares (Class I)

      99,516       109,497       141,777       41,558  

Common shares (Class S)

      —       —       9,990       31,277  

Reinvested distributions

         

Common shares (Class I)

      632,577       980,096       11,483       28,229  

Common shares (Class S)

      —       —       2,979       7,209  

Redeemed

         

Common shares (Class I)

      (638,495 )      (475,717 )      (174,897 )      (202,972 ) 

Common shares (Class S)

      —       —       (21,280 )      (19,991 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease)

      93,598       613,876       (29,948 )      (114,690 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes to financial statements.

   

 

56

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

 

    

 

Sit Small Cap Growth Fund     Sit International Growth Fund         
Sit Developing Markets Growth Fund		  
Year Ended
June 30,
2020		     Year Ended
June 30,
2019		     Year Ended
June 30,
2020		     Year Ended
June 30,
2019		     Year Ended
June 30,
2020		     Year Ended
June 30,
2019		  
                  
  ($502,943 )      ($454,301 )      $79,522       $216,541       $162,064       $64,345  
 

     

2,423,438

  

 

     4,285,203       (344,236 )      (297,517 )      (26,021 )      40,533  
 

     

3,290,428

  

 

     2,110,594       761,010       807,103       55,100       (630,178 ) 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  5,210,923       5,941,496       496,296       726,127       191,143       (525,300 ) 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                  
                  
  (3,070,107 )      (7,455,033 )      (227,001 )      (245,338 )      (185,000 )      (152,148 ) 
  —       —       —       —       —       —  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  (3,070,107 )      (7,455,033 )      (227,001 )      (245,338 )      (185,000 )      (152,148 ) 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                  
                  
  1,513,165       1,457,035       906,266       446,495       936,308       1,190,290  
  —       —       —       —       —       —  
                  
  3,017,215       7,320,824       222,999       240,594       180,261       149,029  
  —       —       —       —       —       —  
                  
  (5,688,108 )      (7,672,934 )      (1,856,893 )      (1,580,128 )      (858,591 )      (1,693,585 ) 
  —       —       —       —       —       —  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  (1,157,728 )      1,104,925       (727,628 )      (893,039 )      257,978       (354,266 ) 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  983,088       (408,612 )      (458,333 )      (412,250 )      264,121       (1,031,714 ) 
                  
  99,629,615       100,038,227       23,462,892       23,875,142       9,995,668       11,027,382  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  $100,612,703       $99,629,615       $23,004,559       $23,462,892       $10,259,789       $9,995,668  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                  
                  
  28,064       26,846       52,331       27,320       57,066       74,310  
  —       —       —       —       —       —  
                  
  54,719       163,960       12,584       16,872       10,714       10,495  
  —       —       —       —       —       —  
                  
  (108,206 )      (143,779 )      (110,718 )      (99,856 )      (54,070 )      (107,545 ) 
  —       —       —       —       —       —  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  (25,423 )      47,027       (45,803 )      (55,664 )      13,710       (22,740 ) 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

    

   

 

JUNE 30, 2020

   

 

 

 

57

 

 

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.

 

Sit Balanced Fund

 

      Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $25.06       $23.76       $22.71       $20.40       $21.54  
  

 

 

  

Operations:

           

Net investment income 1

     0.25       0.32       0.25       0.25       0.26  

Net realized and unrealized gains

      2.64       1.52       1.96       2.29       0.04  
  

 

 

  

Total from operations

      2.89       1.84       2.21       2.54       0.30  
  

 

 

  

Distributions to Shareholders:

           

From net investment income

      (0.27 )      (0.31 )      (0.27 )      (0.23 )      (0.45 ) 

From net realized gains

      (1.31 )      (0.23 )      (0.89 )      —       (0.99 ) 
  

 

 

  

Total distributions

      (1.58 )      (0.54 )      (1.16 )      (0.23 )      (1.44 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $26.37       $25.06       $23.76       $22.71       $20.40  
  

 

 

  

Total investment return 2

     11.91%       7.98%       9.84%       12.56%       1.47%  
  

 

 

  

Net assets at end of period (000’s omitted)

      $46,658       $34,465       $37,541       $25,242       $23,511  

Ratios: 3

          

Expenses

      1.00%       1.00%       1.00%       1.00%       1.00%  

Net investment income

      0.99%       1.33%       1.07%       1.18%       1.25%  

Portfolio turnover rate (excluding short-term securities)

      58.63%       50.45%       50.49%       50.31%       54.46%  

 

1 

The net investment income per share is based on average shares outstanding for the period.

2 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

3 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

 

 

58

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.

 

Sit Dividend Growth Fund

 

Class I    Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $14.45       $16.69       $16.88       $15.82       $17.40  
  

 

 

  

Operations:

           

Net investment income 1

     0.22       0.38       0.26       0.24       0.26  

Net realized and unrealized gains

      0.64       0.55       1.49       2.09       0.32  
  

 

 

  

Total from operations

      0.86       0.93       1.75       2.33       0.58  
  

 

 

  

Redemption fees 2

     —       —       —       —       —  
  

 

 

  

Distributions to Shareholders:

           

From net investment income

      (0.24 )      (0.40 )      (0.26 )      (0.23 )      (0.32 ) 

From net realized gains

      (1.59 )      (2.77 )      (1.68 )      (1.04 )      (1.84 ) 
  

 

 

  

Total distributions

      (1.83 )      (3.17 )      (1.94 )      (1.27 )      (2.16 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $13.48       $14.45       $16.69       $16.88       $15.82  
  

 

 

  

Total investment return 3

     5.46%       8.37%       10.36%       15.41%       3.94%  
  

 

 

  

Net assets at end of period (000’s omitted)

      $172,746       $214,204       $918,584       $1,015,920       $942,244  

Ratios: 4

          

Expenses (without waiver)

      1.00%5       1.00%5       1.00%5       1.00%       1.00%  

Expenses (with waiver)

      0.70%5       0.70%5       0.78%5       1.00%       1.00%  

Net investment income (without waiver)

      1.30%       2.04%       1.31%       1.49%       1.64%  

Net investment income (with waiver)

      1.60%       2.34%       1.53%       1.49%       1.64%  

Portfolio turnover rate (excluding short-term securities)

      68.43%       51.52%       68.38%       61.33%       75.94%  

 

1 

The net investment income per share is based on average shares outstanding for the period.

2 

Amount represents less than $0.01 per share.

3 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

4 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

5 

Total Fund expenses are limited to 1.00% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund.

 

 

JUNE 30, 2020

   

 

59

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)

 

Sit Dividend Growth Fund

 

Class S    Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $14.37       $16.61       $16.81       $15.76       $17.34  
  

 

 

  

Operations:

           

Net investment income 1

     0.19       0.32       0.22       0.20       0.22  

Net realized and unrealized gains (losses)

      0.63       0.57       1.47       2.08       0.32  
  

 

 

  

Total from operations

      0.82       0.89       1.69       2.28       0.54  
  

 

 

  

Redemption fees 2

     —       —       —       —       —  
  

 

 

  

Distributions to Shareholders:

           

From net investment income

      (0.20 )      (0.36 )      (0.21 )      (0.19 )      (0.28 ) 

From net realized gains

      (1.59 )      (2.77 )      (1.68 )      (1.04 )      (1.84 ) 
  

 

 

  

Total distributions

      (1.79 )      (3.13 )      (1.89 )      (1.23 )      (2.12 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $13.40       $14.37       $16.61       $16.81       $15.76  
  

 

 

  

Total investment return 3

     5.19%       8.12%       10.06%       15.11%       3.68%  
  

 

 

  

Net assets at end of period (000’s omitted)

      $29,106       $39,729       $51,331       $65,278       $67,620  

Ratios: 4

          

Expenses (without waiver)

      1.25%5       1.25%5       1.25%5       1.25%       1.25%  

Expenses (with waiver)

      0.95%5       0.95%5       1.03%5       1.25%       1.25%  

Net investment income (without waiver)

      1.05%       1.80%       1.06%       1.24%       1.39%  

Net investment income (with waiver)

      1.35%       2.10%       1.28%       1.24%       1.39%  

Portfolio turnover rate (excluding short-term securities)

      68.43%       51.52%       68.38%       61.33%       75.94%  

 

1 

The net investment income per share is based on average shares outstanding for the period.

2 

Amount represents less than $0.01 per share.

3 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

4 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

5 

Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund.

 

 

60

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.

 

Sit Global Dividend Growth Fund

 

Class I    Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $16.34       $15.24       $14.54       $13.19       $14.80  
  

 

 

  

Operations:

           

Net investment income 1

     0.22       0.28       0.27       0.22       0.21  

Net realized and unrealized gains (losses)

      0.57       1.10       0.67       1.34       (0.48 ) 
  

 

 

  

Total from operations

      0.79       1.38       0.94       1.56       (0.27 ) 
  

 

 

  

Redemption fees

      —   2       —   2       —       —   2       —  
  

 

 

  

Distributions to Shareholders:

           

From net investment income

      (0.26 )      (0.28 )      (0.24 )      (0.21 )      (0.34 ) 

From net realized gains

      —       —       —       —       (1.00 ) 
  

 

 

  

Total distributions

      (0.26 )      (0.28 )      (0.24 )      (0.21 )      (1.34 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $16.87       $16.34       $15.24       $14.54       $13.19  
  

 

 

  

Total investment return 3

     4.93%       9.18%       6.46%       11.94%       (1.67% ) 
  

 

 

  

Net assets at end of period (000’s omitted)

      $31,361       $30,823       $28,778       $25,623       $22,333  

Ratios: 4

          

Expenses (without waiver)

      1.25%5       1.25%5       1.25%5       1.25%       1.25%  

Expenses (with waiver)

      1.00%5       1.00%5       1.06%5       1.25%       1.25%  

Net investment income (without waiver)

      1.11%       1.53%       1.59%       1.63%       1.56%  

Net investment income (with waiver)

      1.36%       1.78%       1.78%       1.63%       1.56%  

Portfolio turnover rate (excluding short-term securities)

      22.15%       15.07%       19.80%       32.04%       48.30%  

 

1 

The net investment income per share is based on average shares outstanding for the period.

2 

Amount represents less than $0.01 per share.

3 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

4 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

5 

Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund.

 

 

JUNE 30, 2020

   

 

61

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)

 

Sit Global Dividend Growth Fund

 

Class S    Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $16.33       $15.22       $14.53       $13.18       $14.78  
  

 

 

  

Operations:

           

Net investment income 1

     0.18       0.24       0.23       0.19       0.18  

Net realized and unrealized gains (losses)

      0.56       1.11       0.66       1.33       (0.48 ) 
  

 

 

  

Total from operations

      0.74       1.35       0.89       1.52       (0.30 ) 
  

 

 

  

Redemption fees

      —   2       —       —       —       —  
  

 

 

  

Distributions to Shareholders:

           

From net investment income

      (0.22 )      (0.24 )      (0.20 )      (0.17 )      (0.30 ) 

From net realized gains

      —       —       —       —       (1.00 ) 
  

 

 

  

Total distributions

      (0.22 )      (0.24 )      (0.20 )      (0.17 )      (1.30 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $16.85       $16.33       $15.22       $14.53       $13.18  
  

 

 

  

Total investment return 3

     4.60%       8.98%       6.13%       11.67%       (1.89% ) 
  

 

 

  

Net assets at end of period (000’s omitted)

      $3,391       $3,241       $3,246       $3,274       $2,861  

Ratios: 4

          

Expenses (without waiver)

      1.50%5       1.50%5       1.50%5       1.50%       1.50%  

Expenses (with waiver)

      1.25%5       1.25%5       1.31%5       1.50%       1.50%  

Net investment income (without waiver)

      0.87%       1.28%       1.33%       1.38%       1.31%  

Net investment income (with waiver)

      1.12%       1.53%       1.52%       1.38%       1.31%  

Portfolio turnover rate (excluding short-term securities)

      22.15%       15.07%       19.80%       32.04%       48.30%  

 

1 

The net investment income per share is based on average shares outstanding for the period.

2 

Amount represents less than $0.01 per share.

3 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

4 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

5 

Total Fund expenses are limited to 1.50% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund.

 

 

62

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.

 

Sit Large Cap Growth Fund

 

      Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $42.53       $42.40       $40.56       $36.02       $47.21  
  

 

 

  

Operations:

           

Net investment income 1

     0.07       0.16       0.13       0.21       0.18  

Net realized and unrealized gains (losses)

      8.60       3.61       6.55       7.07       (0.42 ) 
  

 

 

  

Total from operations

      8.67       3.77       6.68       7.28       (0.24 ) 
  

 

 

  

Redemption fees 2

     —       —       —       —       —  
  

 

 

  

Distributions to Shareholders:

           

From net investment income

      (0.12 )      (0.15 )      (0.17 )      (0.19 )      (1.44 ) 

From net realized gains

      (4.01 )      (3.49 )      (4.67 )      (2.55 )      (9.51 ) 
  

 

 

  

Total distributions

      (4.13 )      (3.64 )      (4.84 )      (2.74 )      (10.95 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $47.07       $42.53       $42.40       $40.56       $36.02  
  

 

 

  

Total investment return 3

     21.34%       10.54%       16.93%       21.18%       (0.89% ) 
  

 

 

  

Net assets at end of period (000’s omitted)

      $129,154       $116,581       $118,792       $113,620       $117,459  

Ratios: 4

          

Expenses

      1.00%       1.00%       1.00%       1.00%       1.00%  

Net investment income

      0.17%       0.39%       0.30%       0.54%       0.44%  

Portfolio turnover rate (excluding short-term securities)

      14.53%       16.02%       15.20%       17.69%       20.05%  

 

1 

The net investment income per share is based on average shares outstanding for the period.

2 

Amount represents less than $0.01 per share.

3 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

4 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

 

 

JUNE 30, 2020

   

 

63

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.

 

Sit ESG Growth Fund

 

Class I    Year Ended
June 30, 2020		     Year Ended
June 30, 2019		     Year Ended
June 30, 2018		     Year Ended
June 30, 2017 *		  

Net Asset Value:

         

Beginning of period

      $13.21       $12.37       $11.29       $10.00  
  

 

 

  

Operations:

         

Net investment income 1

     0.12       0.17       0.16       0.11  

Net realized and unrealized gains

      0.74       0.83       1.03       1.20  
  

 

 

  

Total from operations

      0.86       1.00       1.19       1.31  
  

 

 

  

Distributions to Shareholders:

         

From net investment income

      (0.17 )      (0.16 )      (0.11 )      (0.02 ) 

From net realized gains

      (0.05 )      —       —       —  
  

 

 

  

Total distributions.

      (0.22 )      (0.16 )      (0.11 )      (0.02 ) 
  

 

 

  

Net Asset Value:

         

End of period

      $13.85       $13.21       $12.37       $11.29  
  

 

 

  

Total investment return 2

     6.47%       8.30%       10.57%       13.13%  
  

 

 

  

Net assets at end of period (000’s omitted)

      $3,477       $3,387       $3,041       $2,349  

Ratios: 3

        

Expenses (without waiver)

      1.25%4       1.25%4       1.25%4       1.25%  

Expenses (with waiver)

      1.00%4       1.00%4       1.06%4       1.25%  

Net investment income (without waiver)

      0.63%       1.14%       1.10%       1.01%  

Net investment income (with waiver)

      0.88%       1.38%       1.29%       1.01%  

Portfolio turnover rate (excluding short-term securities)

      25.28%       9.26%       14.97%       27.60%  

 

*

The Fund commenced investment operations on June 30, 2016.

1 

The net investment income per share is based on average shares outstanding for the period.

2 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

3 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

4 

Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund.

 

 

64

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)

 

Sit ESG Growth Fund

 

Class S    Year Ended
June 30, 2020		     Year Ended
June 30, 2019		     Year Ended
June 30, 2018		     Year Ended
June 30, 2017 *		  

Net Asset Value:

         

Beginning of period

      $13.16       $12.34       $11.28       $10.00  
  

 

 

  

Operations:

         

Net investment income 1

     0.08       0.14       0.13       0.08  

Net realized and unrealized gains

      0.74       0.83       1.03       1.21  
  

 

 

  

Total from operations

      0.82       0.97       1.16       1.29  
  

 

 

  

Distributions to Shareholders:

         

From net investment income

      (0.15 )      (0.15 )      (0.10 )      (0.01 ) 

From net realized gains

      (0.05 )      —       —       —  
  

 

 

  

Total distributions

      (0.20 )      (0.15 )      (0.10 )      (0.01 ) 
  

 

 

  

Net Asset Value:

         

End of period

      $13.78       $13.16       $12.34       $11.28  
  

 

 

  

Total investment return 2

     6.22%       8.01%       10.37%       12.79%  
  

 

 

  

Net assets at end of period (000’s omitted)

      $3,158       $2,895       $2,660       $2,321  

Ratios: 3

        

Expenses (without waiver)

      1.50%4       1.50%4       1.50%4       1.50%  

Expenses (with waiver)

      1.25%4       1.25%4       1.31%4       1.50%  

Net investment income (without waiver)

      0.38%       0.89%       0.84%       0.76%  

Net investment income (with waiver)

      0.63%       1.14%       1.03%       0.76%  

Portfolio turnover rate (excluding short-term securities)

      25.28%       9.26%       14.97%       27.60%  

 

*

The Fund commenced investment operations on June 30, 2016.

1 

The net investment income per share is based on average shares outstanding for the period.

2 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

3 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

4 

Total Fund expenses are limited to 1.50% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund.

 

 

JUNE 30, 2020

   

 

65

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.

 

Sit Mid Cap Growth Fund

 

      Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $18.84       $18.96       $18.06       $15.36       $20.22  
  

 

 

  

Operations:

           

Net investment loss 1

     (0.05 )      (0.03 )      (0.03 )      —  2       (0.04 ) 

Net realized and unrealized gains (losses)

      1.64       1.79       1.71       2.86       (1.92 ) 
  

 

 

  

Total from operations

      1.59       1.76       1.68       2.86       (1.96 ) 
  

 

 

  

Redemption fees 2

     —       —       —       —       —  
  

 

 

  

Distributions to Shareholders:

           

From net investment income

      —       —       —  2       —       —  

From net realized gains

      (1.38 )      (1.88 )      (0.78 )      (0.16 )      (2.90 ) 
  

 

 

  

Total distributions

      (1.38 )      (1.88 )      (0.78 )      (0.16 )      (2.90 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $19.05       $18.84       $18.96       $18.06       $15.36  
  

 

 

  

Total investment return 3

     8.75%       11.76%       9.42%       18.74%       (9.97% ) 
  

 

 

  

Net assets at end of period (000’s omitted)

      $172,744       $169,099       $158,501       $156,305       $139,523  

Ratios: 4

          

Expenses

      1.25%       1.25%       1.25%       1.25%       1.25%  

Net investment loss

      (0.27% )      (0.16% )      (0.17% )      (0.01% )      (0.23% ) 

Portfolio turnover rate (excluding short-term securities)

      25.58%       27.70%       28.89%       23.02%       21.57%  

 

1 

The net investment income (loss) per share is based on average shares outstanding for the period.

2 

Amount represents less than $0.01 per share.

3 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

4 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

 

 

66

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.

 

Sit Small Cap Dividend Growth Fund

 

Class I    Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $11.89       $12.27       $11.47       $10.00       $9.96  
  

 

 

  

Operations:

           

Net investment income 1

     0.13       0.15       0.11       0.12       0.14  

Net realized and unrealized gains (losses)

      (0.49 )      (0.25 )      0.80       1.46       0.02  
  

 

 

  

Total from operations

      (0.36 )      (0.10 )      0.91       1.58       0.16  
  

 

 

  

Distributions to Shareholders:

           

From net investment income

      (0.14 )      (0.15 )      (0.11 )      (0.11 )      (0.12 ) 

From net realized gains

      —       (0.13 )      —       —       —  2  
  

 

 

  

Total distributions

      (0.14 )      (0.28 )      (0.11 )      (0.11 )      (0.12 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $11.39       $11.89       $12.27       $11.47       $10.00  
  

 

 

  

Total investment return 3

     (3.05% )      (0.54% )      8.00%       15.84%       1.71%  
  

 

 

  

Net assets at end of period (000’s omitted)

      $11,786       $12,559       $14,597       $12,716       $5,777  

Ratios: 4

  

Expenses (without waiver)

      1.25%5       1.25%5       1.25%5       1.25%       1.25%  

Expenses (with waiver)

      1.00%5       1.00%5       1.06%5       1.25%       1.25%  

Net investment income (without waiver)

      0.90%       1.07%       0.75%       1.06%       1.46%  

Net investment income (with waiver)

      1.15%       1.32%       0.94%       1.06%       1.46%  

Portfolio turnover rate (excluding short-term securities)

      27.58%       24.17%       29.74%       19.57%       26.43%  

 

1 

The net investment income per share is based on average shares outstanding for the period.

2 

Amount represents less than $0.01 per share.

3 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

4 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

5 

Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund.

 

 

JUNE 30, 2020

   

 

67

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)

 

Sit Small Cap Dividend Growth Fund

 

Class S    Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $11.88       $12.26       $11.46       $10.00       $9.96  
  

 

 

  

Operations:

           

Net investment income 1

     0.10       0.12       0.08       0.09       0.11  

Net realized and unrealized gains (losses)

      (0.49 )      (0.25 )      0.80       1.45       0.03  
  

 

 

  

Total from operations

      (0.39 )      (0.13 )      0.88       1.54       0.14  
  

 

 

  

Distributions to Shareholders:

           

From net investment income

      (0.11 )      (0.12 )      (0.08 )      (0.08 )      (0.10 ) 

From net realized gains

      —       (0.13 )      —       —       —  2 
  

 

 

  

Total distributions

      (0.11 )      (0.25 )      (0.08 )      (0.08 )      (0.10 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $11.38       $11.88       $12.26       $11.46       $10.00  
  

 

 

  

Total investment return 3

     (3.30% )      (0.80% )      7.74%       15.46%       1.46%  
  

 

 

  

Net assets at end of period (000’s omitted)

      $3,720       $3,981       $3,882       $3,461       $2,587  

Ratios: 4

          

Expenses (without waiver)

      1.50%5       1.50%5       1.50%5       1.50%       1.50%  

Expenses (with waiver)

      1.25%5       1.25%5       1.31%5       1.50%       1.50%  

Net investment income (without waiver)

      0.64%       0.82%       0.51%       0.81%       1.21%  

Net investment income (with waiver)

      0.89%       1.07%       0.70%       0.81%       1.21%  

Portfolio turnover rate (excluding short-term securities)

      27.58%       24.17%       29.74%       19.57%       26.43%  

 

1 

The net investment income per share is based on average shares outstanding for the period.

2 

Amount represents less than $0.01 per share.

3 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

4 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

5 

Total Fund expenses are limited to 1.50% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund.

 

 

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FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.

 

Sit Small Cap Growth Fund

 

                                    
     Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $55.46       $57.18       $54.18       $45.59       $60.10  
  

 

 

  

Operations:

           

Net investment loss 1

     (0.28 )      (0.25 )      (0.29 )      (0.24 )      (0.33 ) 

Net realized and unrealized gains (losses)

      3.38       2.88       7.01       8.91       (8.97 ) 
  

 

 

  

Total from operations

      3.10       2.63       6.72       8.67       (9.30 ) 
  

 

 

  

Redemption fees 2

     —       —       —       —       —  
  

 

 

  

Distributions to Shareholders:

           

From net realized gains

      (1.75 )      (4.35 )      (3.72 )      (0.08 )      (5.21 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $56.81       $55.46       $57.18       $54.18       $45.59  
  

 

 

  

Total investment return 3

     5.68%       6.45%       12.68%       19.06%       (16.00% ) 
  

 

 

  

Net assets at end of period (000’s omitted)

      $100,613       $99,630       $100,038       $90,817       $81,209  

Ratios: 4

          

Expenses

      1.50%       1.50%       1.50%       1.50%       1.50%  

Net investment loss

      (0.53% )      (0.47% )      (0.51% )      (0.47% )      (0.65% ) 

Portfolio turnover rate (excluding short-term securities)

      25.74%       26.34%       29.01%       29.08%       27.37%  

 

1 

The net investment income (loss) per share is based on average shares outstanding for the period.

2 

Amount represents less than $0.01 per share.

3 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

4 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

 

    

   

 

JUNE 30, 2020

   

 

 

 

69

 

 

    

FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.

 

Sit International Growth Fund

 

                                    
     Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $17.13       $16.75       $16.23       $14.48       $16.92  
  

 

 

  

Operations:

           

Net investment income 1

     0.06       0.16       0.19       0.14       0.12  

Net realized and unrealized gains (losses)

      0.36       0.40       0.47       1.68       (1.47 ) 
  

 

 

  

Total from operations

      0.42       0.56       0.66       1.82       (1.35 ) 
  

 

 

  

Redemption fees

      —  2      —       —  2      —  2       —  
  

 

 

  

Distributions to Shareholders:

           

From net investment income

      (0.17 )      (0.18 )      (0.14 )      (0.07 )      (0.09 ) 

From net realized gains

      —       —       —       —       (1.00 ) 
  

 

 

  

Total distributions

      (0.17 )      (0.18 )      (0.14 )      (0.07 )      (1.09 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $17.38       $17.13       $16.75       $16.23       $14.48  
  

 

 

  

Total investment return 3

     2.43%       3.55%       4.06%       12.64%       (8.19% ) 
  

 

 

  

Net assets at end of period (000’s omitted)

      $23,005       $23,463       $23,875       $22,618       $20,440  

Ratios: 4

          

Expenses

      1.50%       1.50%       1.50%       1.50%       1.50%  

Net investment income

      0.35%       0.97%       1.11%       0.97%       0.76%  

Portfolio turnover rate (excluding short-term securities)

      13.38%       27.38%       16.35%       39.23%       37.94%  

 

1 

The net investment income per share is based on average shares outstanding for the period.

2 

Amount represents less than $0.01 per share.

3 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

4 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

 

  

 

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FINANCIAL HIGHLIGHTS

Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.

 

Sit Developing Markets Growth Fund

 

                                    
     Years Ended June 30,  
      2020     2019     2018     2017     2016  

Net Asset Value:

           

Beginning of period

      $16.21       $17.25       $15.23       $12.26       $14.77  
  

 

 

  

Operations:

           

Net investment income (loss) 1

     0.26       0.10       0.03       (0.02 )      0.04  

Net realized and unrealized gains (losses)

      0.11       (0.90 )      2.24       3.02       (2.18 ) 
  

 

 

  

Total from operations

      0.37       (0.80 )      2.27       3.00       (2.14 ) 
  

 

 

  

Redemption fees

      —  2       —       —  2      —       —  2 
  

 

 

  

Distributions to Shareholders:

           

From net investment income

      (0.30 )      (0.08 )      —       (0.03 )      (0.02 ) 

From net realized gains

      —       (0.16 )      (0.25 )      —       (0.35 ) 
  

 

 

  

Total distributions

      (0.30 )      (0.24 )      (0.25 )      (0.03 )      (0.37 ) 
  

 

 

  

Net Asset Value:

           

End of period

      $16.28       $16.21       $17.25       $15.23       $12.26  
  

 

 

  

Total investment return 3

     2.20%       (4.43% )      14.94%       24.56%       (14.42% ) 
  

 

 

  

Net assets at end of period (000’s omitted)

      $10,260       $9,996       $11,027       $9,561       $7,297  

Ratios: 4

          

Expenses (without waiver)

      2.00% 5       2.00% 5       2.00% 5       2.00%       2.00%  

Expenses (with waiver)

      1.40% 5       1.40% 5       1.54% 5       2.00%       2.00%  

Net investment income (loss) (without waiver)

      1.05%       0.03%       (0.26% )      (0.18% )      0.31%  

Net investment income (loss) (with waiver)

      1.65%       0.63%       0.20%       (0.18% )      0.31%  

Portfolio turnover rate (excluding short-term securities)

      4.15%       10.28%       30.30%       19.67%       28.14%  

 

1

The net investment income (loss) per share is based on average shares outstanding for the period.

2 

Amount represents less than $0.01 per share.

3 

Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value.

4 

Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios.

5 

Total Fund expenses are limited to 2.00% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund.

 

    

   

 

JUNE 30, 2020

   

 

 

 

71

 

 

    

NOTES TO FINANCIAL STATEMENTS

Year Ended June 30, 2020

 

(1)

Organization

Sit Mutual Funds are no-load funds, and are registered under the Investment Company Act of 1940 (as amended) as diversified, open-end management investment companies, or series thereof. The Sit Balanced, Sit Dividend Growth, Sit Global Dividend Growth, Sit ESG Growth, Sit Small Cap Dividend Growth, Sit Small Cap Growth, Sit International Growth, and Sit Developing Markets Growth are series funds of Sit Mutual Funds, Inc.

This report covers the equity funds of the Sit Mutual Funds (the Funds). Each fund has 10 billion authorized shares of capital stock with a par value of $0.001. The investment objective for each Fund is as follows:

 

Fund    Investment Objective

Balanced

    Long-term growth consistent with the preservation of principal and to provide regular income.

Dividend Growth

    Provide current income that exceeds the dividend yield of the S&P 500® Index and that grows over a period of years. Secondarily, maximize long-term capital appreciation.

Global Dividend Growth

    Provide current income that exceeds the dividend yield of the MSCI World Index that grows over a period of years. Secondarily, maximize long-term capital appreciation.

Large Cap Growth

    Maximize long-term capital appreciation.

ESG Growth

    Maximize long-term capital appreciation.

Mid Cap Growth

    Maximize long-term capital appreciation.

Small Cap Dividend Growth

    Provide current income that exceeds the yield of the Russell 2000® Index and that grows over a period of years. Secondarily, maximize long-term capital appreciation.

Small Cap Growth

    Maximize long-term capital appreciation.

International Growth

    Maximize long-term growth.

Developing Markets Growth

    Maximize long-term capital appreciation.

The Dividend Growth, Global Dividend Growth, ESG Growth and Small Cap Dividend Growth Funds offer Class I and Class S shares. Both classes of shares have identical voting, dividend, and liquidation rights. The distribution fee differs among classes, the Class S shares have a 0.25% distribution fee, whereas Class I has no distribution fee. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets.

 

(2)

Significant Accounting Policies

The Funds are investment companies and follow accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services-Investment Companies”. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”).

Investments in Securities

Investments in securities traded on national or international securities exchanges are valued at the last reported sales price prior to the time when assets are valued. Equity securities traded on the over-the-counter market are valued at the last reported sales price or if the last sales price is not available, at the last reported bid price. The sale and bid prices or prices deemed best to reflect fair value quoted by dealers who make markets in these securities are obtained from independent pricing services. Consistent with the Funds’ valuation policies and procedures, debt securities maturing in more than 60 days are priced by an independent pricing service. The pricing service may use models that price securities based on current yields and relative security characteristics, such as coupon rate, maturity date, issuer credit quality, and prepayment speeds as applicable. When market quotations are not readily available, or when the Adviser becomes aware that a significant event impacting the value of a security or group of securities has occurred after the closing of the exchange on which the security or securities principally trade, but before the calculation of the daily net asset value, securities are valued at fair value as determined in good faith using procedures established by the Board of Directors. The procedures consider, among

 

  

 

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others, the following factors to determine a security’s fair value: the nature and pricing history (if any) of the security; whether any dealer quotations for the security are available; and possible valuation methodologies that could be used to determine the fair value of the security. Debt securities of sufficient credit quality maturing in less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued at amortized cost, which approximates fair value.

Security transactions are accounted for on the date the securities are purchased or sold. Securities gains and losses are calculated on the identified-cost basis. Dividend income is recorded on the ex-dividend date or upon the receipt of ex-dividend notification in the case of certain foreign securities. Interest income is recorded on an accrual basis, including level-yield amortization of long-term bond premium and discount using the effective yield method.

Fair Value Measurements

The inputs and valuation techniques used to measure fair value of the Funds’ investments are summarized into three levels as described in the hierarchy below:

• Level 1 – quoted prices in active markets for identical securities. An active market for the security is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value.

• Level 2 – debt securities are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, U.S. government and government agency obligations, and municipal securities the pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity, and type as well as dealer supplied prices. For asset-backed securities and mortgage-backed securities, the pricing services utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity, and type as well as dealer supplied prices. For foreign equities, the pricing services adjust closing prices by applying a systematic process for events occurring after the close of the foreign exchange by utilizing such inputs as Depositary Receipts, quoted prices for similar securities, exchange rates, and certain indexes. All of these inputs are derived principally from or corroborated by observable market data. An adjustment to any observable input that is significant to the fair value may render the measurement a Level 3 measurement.

• Level 3 – significant unobservable inputs, including the Adviser’s own assumptions in determining the fair value of investments.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

A summary of the levels for the Funds’ investments as of June 30, 2020 is included with the Funds’ schedule of investments.

Foreign Currency Translations and Forward Foreign Currency Contracts

The fair value of securities and other assets and liabilities denominated in foreign currencies for Global Dividend Growth, ESG Growth, International Growth and Developing Markets Growth Funds are translated daily into U.S. dollars at the closing rate of exchange (approximately 4:00 p.m. Eastern Time). Purchases and sales of securities, income and expenses are translated at the exchange rate on the transaction date. Dividend and interest income includes currency exchange gains (losses) realized between the accrual and payment dates on such income. Exchange gains (losses) may also be realized between the trade and settlement dates on security and forward contract transactions. For securities denominated in foreign currencies, the effect of changes in foreign exchange rates on realized and unrealized gains or losses is reflected as a component of such gains or losses.

The Global Dividend Growth, ESG Growth, International Growth and Developing Markets Growth Funds may enter into forward foreign currency exchange contracts generally for operational purposes, but the Adviser may occasionally utilize contracts to protect against adverse exchange rate fluctuation. Any gains (losses) generated by these contracts are disclosed separately on the statement of operations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Funds and the resulting unrealized appreciation or depreciation is determined using foreign currency exchange rates from an independent pricing service. The Funds are subject to the credit risk that the other party will not complete the obligations of the contract.

 

  

 

JUNE 30, 2020

   

 

 

 

73

 

 

    

NOTES TO FINANCIAL STATEMENTS

Year Ended June 30, 2020 (Continued)

 

Federal Taxes

The Funds’ policy is to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of their taxable income to shareholders. Therefore, no income tax provision is required. In order to avoid the payment of any federal excise taxes, the Funds will distribute substantially all of their net investment income and net realized gains on a calendar year basis. Also, the Funds may utilize equalization accounting for tax purposes, whereby a portion of redemption payments are treated as distributions of income or gain for income tax purposes.

Management has analyzed the Funds’ tax positions taken in federal tax returns for all open tax years and has concluded that as of June 30, 2020, no provision for income tax would be required in the Funds’ financial statements. The Funds’ federal and state income and federal excise tax returns remain subject to examination by the Internal Revenue Service and state departments of revenue until such time as the applicable statute of limitations for audit has expired. For example, U.S. tax returns are generally subject to audit for three years from the date they are filed.

At June 30, 2020, the gross unrealized appreciation (depreciation) on investments and cost of securities on a tax basis for federal income tax purposes were as follows:

 

                  Net Unrealized      Cost of  
    Unrealized      Unrealized      Appreciation      Securities on a  
    Appreciation      Depreciation      (Depreciation)      Tax Basis  

Balanced

     $10,134,848         ($472,086)         $9,662,762           $38,031,359    

Dividend Growth

     36,962,444         (6,528,193)         30,434,251           170,872,779    

Global Dividend Growth

     10,436,419         (1,418,130)         9,018,289           25,707,777    

Large Cap Growth

     72,009,973         (329,642)         71,680,331           57,531,654    

ESG Growth

     1,858,228         (105,081)         1,753,147           4,880,339    

Mid Cap Growth

     78,526,141         (808,595)         77,717,546           95,230,688    

Small Cap Dividend Growth

     3,154,970         (1,428,878)         1,726,092           13,869,930    

Small Cap Growth

     41,172,664         (958,631)         40,214,033           60,761,886    

International Growth

     6,490,465         (1,104,385)         5,386,080           17,581,598    

Developing Markets Growth

     3,530,653         (922,019)         2,608,634           7,636,659    

Net investment income and net realized gains differ for financial statement and tax purposes because of corporate actions on shares held and/or losses deferred due to “wash sale” transactions. A “wash sale” occurs when a Fund sells a security that it has acquired within a period beginning thirty days before and ending thirty days after the date of sale (a sixty one day period). The character of distributions made during the year from net investment income or net realized gains may also differ from its ultimate characterization for tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Funds. The tax character of distributions paid during the fiscal years ended June 30, 2020 and 2019 were as follows:

 

  

 

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Year Ended June 30, 2020:

         
            Long Term         
     Ordinary Income      Capital Gain      Total  

Balanced

      $486,523               $1,649,782          $2,136,305  

Dividend Growth (Class I)

      4,432,308               20,913,570          25,345,878  

Dividend Growth (Class S)

      695,533               3,711,611          4,407,144  

Global Dividend Growth (Class I)

      495,881               —          495,881  

Global Dividend Growth (Class S)

      45,123               —          45,123  

Large Cap Growth

      313,002               10,438,682          10,751,684  

ESG Growth (Class I)

      43,224               12,226          55,450  

ESG Growth (Class S)

      33,888               10,635          44,523  

Mid Cap Growth

      —               12,018,685          12,018,685  

Small Cap Dividend Growth (Class I)

      143,293               —          143,293  

Small Cap Dividend Growth (Class S)

      37,709               —          37,709  

Small Cap Growth

      —               3,070,107          3,070,107  

International Growth

      227,001               —          227,001  

Developing Markets Growth

      185,000               —          185,000  

Year Ended June 30, 2019:

         
            Long Term         
     Ordinary Income      Capital Gain      Total  

Balanced

      $459,001               $342,301          $801,302  

Dividend Growth (Class I)

      17,847,831               86,972,912          104,820,743  

Dividend Growth (Class S)

      1,193,973               7,639,936          8,833,909  

Global Dividend Growth (Class I)

      521,860               —          521,860  

Global Dividend Growth (Class S)

      49,144               —          49,144  

Large Cap Growth

      456,987               9,477,676          9,934,663  

ESG Growth (Class I)

      40,551               —          40,551  

ESG Growth (Class S)

      31,449               —          31,449  

Mid Cap Growth

      1,152,232               14,273,917          15,426,149  

Small Cap Dividend Growth (Class I)

      169,480               147,220          316,700  

Small Cap Dividend Growth (Class S)

      38,521               42,395          80,916  

Small Cap Growth

      —               7,455,033          7,455,033  

International Growth

      245,338               —          245,338  

Developing Markets Growth

      49,252               102,896          152,148  

 

    

   

 

JUNE 30, 2020

   

 

 

 

75

 

 

 

NOTES TO FINANCIAL STATEMENTS

Year Ended June 30, 2020 (Continued)

 

As of June 30, 2020, the components of distributable earnings on a tax basis were as follows:

 

     Undistributed
Ordinary
Income		      Undistributed
Long-Term
Capital Gains		      Accumulated
Capital and
Other Losses		      Unrealized
Appreciation
(Depreciation)		  

Balanced

      $183,595            $381,405           —          $9,662,762     

Dividend Growth

      821,481            12,122,888           ($6,693,354)         30,434,251     

Global Dividend Growth

      139,947            —           (1,047,906)         9,018,289     

Large Cap Growth

      63,675            4,230,801           —          71,680,331     

ESG Growth

      21,980            —           (96,362)         1,753,148     

Mid Cap Growth

      —            4,894,109           (260,780)         77,717,546     

Small Cap Dividend Growth

      37,627            —           (253,454)         1,726,092     

Small Cap Growth

      —            702,416           (733,699)         40,214,033     

International Growth

      61,406            —           (1,422,363)         5,386,080     

Developing Markets Growth

      10,868            —           (31,404)         2,608,634     

On the statement of assets and liabilities, as a result of permanent book-to-tax differences, reclassification adjustments were made to the following capital accounts:

 

          Distributable
Earnings		              Additional
Paid-in Capital		  

Mid Cap Growth

         $292,945              ($292,945)     

Small Cap Growth

         290,390              (290,390)     

These differences were primarily attributable to non-deductible net operating losses.

Net capital loss carryovers and late year losses, if any, as of June 30, 2020, are available to offset future realized capital gains and thereby reduce future capital gains distributions. The Funds’ are permitted to carry forward capital losses for an unlimited period. Capital losses that are carried forward retain their character as either short-term or long-term capital losses. The net capital loss carryovers and the late year losses deferred as of June 30, 2020, were as follows:

 

     Unlimited Period of Net
Capital Loss Carryover		      Late Year
Losses Deferred		  
     Short-Term      Long-Term      Ordinary      Capital  

Dividend Growth

      —        —         —        $6,693,354  

Global Dividend Growth

      $1,047,906        —         —        —  

ESG Growth

      —        —         —        96,362  

Mid Cap Growth

      —        —         $260,780        —  

Small Cap Dividend Growth

      101,296        $152,158         —        —  

Small Cap Growth

      —        —         286,404        447,295  

International Growth

      1,086,655        335,708         —        —  

Developing Markets Growth

      31,404        —         —        —  

For the year ended June 30, 2020, the Funds’ utilized capital losses and expired capital losses as follows:

 

     Utilized      Expired             

                                 

Global Dividend Growth

      $133,881        —       

ESG Growth

      126,311        —       

 

  

 

76

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

 

Distributions

Distributions to shareholders are recorded as of the close of business on the record date. Such distributions are payable in cash or reinvested in additional shares of the Funds’ capital stock. Distributions from net investment income, if any, are declared and paid quarterly for the Balanced, Dividend Growth, Global Dividend Growth and Small Cap Dividend Growth Funds and declared and paid annually for Developing Markets Growth, Small Cap Growth, International Growth, Mid Cap Growth, Large Cap Growth and ESG Growth Funds. Distributions from net realized gains, if any, will be made annually for each of the Funds.

Concentration of Investments

The Developing Markets Growth Fund may concentrate investments in countries with limited or developing capital markets which may involve greater risks than investments in more developed markets and the prices of such investments may be volatile. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of the Fund’s investments and the income it generates, as well as the Fund’s ability to repatriate such amounts.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results for the respective periods. Actual results could differ from those estimates.

Guarantees and Indemnifications

Under each Fund’s organizational documents, its officers and directors are indemnified against certain liability arising out of the performance of their duties to each Fund. In addition, certain of each Fund’s contracts with its service providers contain general indemnification clauses. Each Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against each Fund cannot be determined and each Fund has no historical basis for predicting the likelihood of any such claims.

(3) Investment Security Transactions

The cost of purchases and proceeds from sales and maturities of investment securities, other than short-term securities, for the year ended June 30, 2020, were as follows:

 

     Purchases      Proceeds  
     U.S. Government      Other      U.S. Government      Other  

Balanced

      $4,203,501             $23,478,023        $6,260,492             $14,201,667  

Dividend Growth

      —             157,756,211        —             215,528,615  

Global Dividend Growth

      —             7,476,526        —             7,338,379  

Large Cap Growth

      —             16,924,522        —             25,883,836  

ESG Growth

      —             1,555,049        —             1,548,557  

Mid Cap Growth

      —             40,755,228        —             50,010,969  

Small Cap Dividend Growth

      —             4,353,367        —             4,176,134  

Small Cap Growth

      —             23,763,091        —             25,338,512  

International Growth

      —             2,953,381        —             3,508,085  

Developing Markets Growth

      —             666,686        —             388,418  

 

  

 

JUNE 30, 2020

   

 

 

 

77

 

 

 

NOTES TO FINANCIAL STATEMENTS

Year Ended June 30, 2020 (Continued)

 

(4) Affiliated Fees and Transactions

Investment Adviser

The Funds each have entered into an investment management agreement with Sit Investment Associates, Inc. (SIA), under which SIA manages the Funds’ assets and provides research, statistical and advisory services, and pays related office rental, executive expenses and executive salaries. The current fee for investment management and advisory services is based on the average daily net assets of the Funds at the annual rate of:

 

     Management Fee      Net of Adviser’s
Voluntary Fee Waiver

Balanced

      1.00%              N/A

Dividend Growth Fund Class I and Class S

      1.00%                  0.70%

Global Dividend Growth Fund Class I and Class S

      1.25%                  1.00%

Large Cap Growth

      1.00%              N/A

ESG Growth Fund Class I and Class S

      1.25%                  1.00%

Mid Cap Growth

      1.25%              N/A

Small Cap Dividend Growth Fund Class I and Class S

      1.25%                  1.00%

Small Cap Growth

      1.50%              N/A

International Growth

      1.50%              N/A

Developing Markets Growth

      2.00%                  1.40%

SIA is obligated to pay all of the Funds’ expenses (excluding extraordinary expenses, stock transfer taxes, interest, brokerage commissions, 12b-1 fees and other transaction charges relating to investing activities).

In addition to the annual management fees, the Class S shares of Dividend Growth, Global Dividend Growth, ESG Growth and Small Cap Dividend Growth Funds also have a 0.25% annual distribution (12b-1) fee, which is used to pay for distribution fees related to the sale and distribution of its shares.

Effective October 1, 2017, the Adviser has agreed to limit the management fee of the Dividend Growth Fund to 0.70%, the Global Dividend Growth Fund to 1.00%, the ESG Growth Fund to 1.00%, the Small Cap Dividend Growth Fund to 1.00% and the Developing Markets Growth Fund to 1.40% for the period through June 30, 2021 of the Fund’s daily average net assets, respectively.

Transactions with affiliates

The investment adviser, affiliates of the investment adviser, directors and officers of the Funds as a whole owned the following shares as of June 30, 2020:

 

     Shares      % Shares
    Outstanding    		   

                

Balanced

      300,850      17.0

Dividend Growth

      1,432,435      9.6

Global Dividend Growth

      450,307      21.9

Large Cap Growth

      730,305      26.6

ESG Growth

      450,751      93.9

Mid Cap Growth

      4,229,553      46.6

Small Cap Dividend Growth

      649,671      47.7

Small Cap Growth

      995,676      56.2

International Growth

      770,369      58.2

Developing Markets Growth

      277,612      44.0

 

  

 

78

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

    

 

(5)

Capital Share Activity

Short-Term Trading (Redemption) Fees

The Funds (except Balanced) charge a redemption fee equal to 2.00% of the proceeds on shares held for less than 30 calendar days. The fee is retained by the Fund for the benefit of its long-term shareholders and accounted for as an addition to paid in capital. For the year ended June 30, 2020, the Funds received the following redemption fees:

 

       Class I        Class S                      

Dividend Growth

        $340          $54       

Global Dividend Growth

        27          2       

Large Cap Growth

        3,235          —       

Mid Cap Growth

        1,817          —       

Small Cap Growth

        474          —       

International Growth Fund

        243            

Developing Markets Growth

        10          —       

 

  

 

JUNE 30, 2020

   

 

 

 

79

 

 

    

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

    

 

To the Shareholders and Board of Directors

Sit Mutual Funds, Inc.

Sit Large Cap Growth Fund

Sit Mid Cap Growth Fund:

Opinion on the Financial Statements

We have audited the accompanying statements of assets and liabilities of the Sit Balanced Fund, Sit Dividend Growth Fund, Sit Global Dividend Growth Fund, Sit ESG Growth Fund, Sit Small Cap Dividend Growth Fund, Sit Small Cap Growth Fund, Sit International Growth Fund, Sit Developing Markets Growth Fund (each a series of Sit Mutual Funds, Inc.), Sit Large Cap Growth Fund, and Sit Mid Cap Growth Fund (collectively, the Funds), including the schedules of investments, as of June 30, 2020, the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years or periods in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of June 30, 2020, the results of their operations for the year then ended, the changes in their net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years or periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of June 30, 2020, by correspondence with custodians and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.

/s/KPMG LLP

We have served as the auditor of one or more Sit Mutual Funds investment companies since 1982.

Minneapolis, Minnesota

August 19, 2020

 

  

 

80

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

EXPENSE EXAMPLE (Unaudited)

    

 

As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2020 to June 30, 2020.

Actual Expenses

The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs (redemption fees) were included, your costs would have been higher.

Fund    Beginning
Account
Value
(1/1/20)		    Ending
Account
Value
(6/30/20)		    Expenses
Paid During
Period*
(1/1/20-
6/30/20)

Balanced Fund

 

Actual

        $1,000        $1,045.70        $5.09

Hypothetical

        $1,000        $1,019.89        $5.02

    

               

Dividend Growth Fund

 

Actual

               

Class I

        $1,000        $944.50        $3.38

Class S

        $1,000        $942.80        $4.59

Hypothetical

 

Class I

        $1,000        $1,021.38        $3.52

Class S

        $1,000        $1,020.14        $4.77

    

               

Global Dividend Growth Fund

 

Actual

               

Class I

        $1,000        $961.40        $4.88

Class S

        $1,000        $960.20        $6.09

Hypothetical

 

Class I

        $1,000        $1,019.89        $5.02

Class S

        $1,000        $1,018.65        $6.27

    

               

Large Cap Growth Fund

 

Actual

        $1,000        $1,089.60        $5.20

Hypothetical

        $1,000        $1,019.89        $5.02

    

               

ESG Growth Fund

 

Actual

               

Class I

        $1,000        $976.00        $4.91

Class S

        $1,000        $975.20        $6.14

Hypothetical

 

Class I

        $1,000        $1,019.89        $5.02

Class S

        $1,000        $1,018.65        $6.27

    

               

Mid Cap Growth Fund

 

Actual

        $1,000        $1,039.30        $6.34

Hypothetical

        $1,000        $1,018.65        $6.27

    

               

Small Cap Dividend Growth Fund

 

Actual

               

Class I

        $1,000        $904.50        $4.74

Class S

        $1,000        $903.70        $5.92

Hypothetical

 

Class I

        $1,000        $1,019.89        $5.02

Class S

        $1,000        $1,018.65        $6.27
 

 

  

 

JUNE 30, 2020

   

 

 

 

81

 

 

    

EXPENSE EXAMPLE (Unaudited) (Continued)

    

 

Fund    Beginning
Account
Value
(1/1/20)		    Ending
Account
Value
(6/30/20)		    Expenses
Paid During
Period*
(1/1/20-
6/30/20)

Small Cap Growth Fund

 

Actual

        $1,000        $1,021.10        $7.54

Hypothetical

        $1,000        $1,017.40        $7.52

    

               

International Growth Fund

 

Actual

        $1,000        $970.40        $7.35

Hypothetical

        $1,000        $1,017.40        $7.52

    

               

Developing Markets Growth Fund

 

Actual

        $1,000        $959.90        $6.82

Hypothetical

        $1,000        $1,017.90        $7.02

*Expenses are Gequal to the Fund’s annualized expense ratio of 0.70% for the Dividend Growth, Class I Fund; 0.95% for the Dividend Growth, Class S Fund; 1.00%, for the Balanced, Global Dividend Growth, Class I, Large Cap Growth, ESG Growth, Class I, and Small Cap Dividend Growth, Class I Funds; 1.25% for Dividend Growth, Class S, Global Dividend Growth, Class S, ESG Growth, Class S, Mid Cap Growth, and Small Cap Dividend Growth, Class S Funds;1.40% for Developing Markets Growth Fund and 1.50% for Small Cap Growth, and International Growth Funds, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period.)

    

 

 

 

82

   

 

 

 

SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

FEDERAL TAX INFORMATION (Unaudited)

    

 

Sit Equity Funds

 

For corporate shareholders, the percentage of investment income (dividend income and short-term gains, if any), for each of the Funds that qualify for the Dividends Received Deductions for the period of July 1, 2019 to June 30, 2020 is as follows:

 

Fund    Percentage

Balanced Fund

        61.6 %

Dividend Growth Fund

        94.7

Global Dividend Growth Fund

        100.0

Large Cap Growth Fund

        100.0

ESG Growth Fund

        100.0

Small Cap Dividend Growth Fund

        100.0

International Growth Fund

        7.5

Developing Markets Growth Fund

        12.1

For the year ended June 30, 2020, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions made by the following Funds, the corresponding percentages represent the amount of each distribution which may qualify for the 15% dividend income tax rate.

 

Fund    Percentage

Balanced Fund

        64.9 %

Dividend Growth Fund

        100.0

Global Dividend Growth Fund

        100.0

Large Cap Growth Fund

        100.0

ESG Growth Fund

        100.0

Small Cap Dividend Growth Fund

        100.0

International Growth Fund

        100.0

Developing Markets Growth Fund

        83.6

The following Funds designated the listed amounts as long-term capital gain dividends during the year ended June 30, 2020. Distributable long-term gains are based on net realized long term gains determined on a tax basis and may differ from such amounts for financial reporting purposes.

 

Fund    Amount

Balanced Fund

        $1,649,782

Dividend Growth Fund

        24,625,181

Large Cap Growth Fund

        10,438,682

ESG Growth Fund

        22,861

Mid Cap Growth Fund

        12,018,685

Small Cap Growth Fund

        3,070,107
 

 

  

 

JUNE 30, 2020

   

 

 

 

83

 

 

    

INFORMATION ABOUT DIRECTORS AND OFFICERS (Unaudited)

    

 

The Sit Mutual Funds are a family of no-load mutual funds. The Stock Funds described in this Annual Report are the Sit Mid Cap Growth Fund, Sit Large Cap Growth Fund, Sit International Growth Fund, Sit Balanced Fund, Sit Developing Markets Growth Fund, Sit ESG Growth Fund, Sit Small Cap Growth Fund, Sit Dividend Growth Fund, Sit Global Dividend Growth Fund, and Sit Small Cap Dividend Growth Fund (the “Funds” or individually, a “Fund”). The bond funds within the Sit Mutual Fund family are described in a separate Bond Funds’ Annual Report. The Sit Mid Cap Growth Fund and Sit Large Cap Growth Fund, and the corporate issuer of the Sit International Growth Fund, Sit Balanced Fund, Sit Developing Markets Growth Fund, Sit ESG Growth Fund, Sit Small Cap Growth Fund, Sit Dividend Growth Fund, Sit Global Dividend Growth Fund and Sit Small Cap Dividend Growth Fund have a Board of Directors and officers. Pursuant to Minnesota law, the Boards of Directors are responsible for the management of the Funds and the establishment of the Funds’ policies. The officers of the Funds manage the day-to-day operation of the Funds. Information pertaining to the directors and officers of the Funds is set forth below. The business address, unless otherwise noted below, is that of the Funds’ investment adviser – 3300 IDS Center, 80 South Eighth Street, Minneapolis, Minnesota 55402. The Boards have a separate Audit Committee. The Stock Funds’ SAI has additional information about the Fund’s directors and is available without charge upon request by calling the Sit Funds at 800-332-5580.

 

Name, Age, and
Position

with Funds

   

Term of

Office (1)
and Length of Time
Served

   

Principal Occupations During

Past Five Years

    Number of Funds 
Overseen in
Fund Complex		    Other Directorships
Held by Director (3)

INTERESTED DIRECTORS:

               

Roger J. Sit (2)

Age: 58

Chairman and President

   

Chairman since 10/08;

Officer since 1998.

    Chairman, President, CEO and Global CIO of Sit Investment Associates, Inc. (the “Adviser”); Chairman and CEO of Sit Investment Fixed Income Advisors, Inc. (“SF”); Chairman of SIA Securities Corp. (the “Distributor”).    14    TCF Financial Corporation.
INDEPENDENT DIRECTORS:               

Edward M. Giles

Age: 84

Director

    Director since 2012 or the Fund’s inception, if later.    Senior Vice President of Peter B. Cannell & Co., July 2011 to present.    14    None.

Sidney L. Jones

Age: 86

Director

    Director from 1988 to 1989 and since 1993 or the Fund’s inception, if later.    Lecturer, Washington Campus Consortium of 17 Universities.    14    None.

Bruce C. Lueck

Age: 79

Director

    Director since 2004 or the Fund’s inception, if later.    Consultant for Zephyr Management, L.P. (investment management) and committee member of several investment funds and foundations.    14    None.

Donald W. Phillips 

Age: 72

Director

    Director of the International Fund since 1993, and since 1990 or the Fund’s inception, if later for all other Funds.    Chairman and CEO of WP Global Partners Inc., July 2005 to present;    14    None.

Barry N. Winslow

Age: 72

Director

    Director since 2010 or the Fund’s inception, if later.    Board member, TCF Financial Corporation.    14    TCF Financial Corporation.

 

  

 

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SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

    

    

 

Name, Age, and
Position

with Funds

   

Term of

Office (1)
and Length of Time
Served

   

Principal Occupations During

Past Five Years

    Number of Funds 
Overseen in
Fund Complex		    Other Directorships
Held by Director (3)

OFFICERS:

               

Mark H. Book

Age: 57

Vice President – Investments of Balanced Fund only

    Officer since 2002; Re-Elected by the Boards annually.    Vice President and Portfolio Manager of SF.    N/A    N/A

Kelly K. Boston

Age: 51

Assistant Secretary & Assistant Treasurer

    Officer since 2000; Re-Elected by the Boards annually.    Staff Attorney of the Adviser; Secretary of the Distributor.    N/A    N/A

Bryce A. Doty

Age: 53

Vice President - Investments of Balanced Fund only.

    Officer since 1996; Re-Elected by the Boards annually.    Senior Vice President and Senior Portfolio Manager of SF.    N/A    N/A

Kent L. Johnson

Age: 54

Vice President - Investments

    Officer since 2003; Re-Elected by the Boards annually.    Senior Vice President - Research and Investment Management of the Adviser.    N/A    N/A

Michael J. Radmer

50 S. 6th Street

Minneapolis, MN

55402

Age: 75

Secretary

    Officer since 1984; Re-Elected by the Boards annually.    Senior Counsel with the law firm of Dorsey & Whitney, LLP since January 2016; Partner from January 1976 to December 2015.    N/A    N/A

Paul E. Rasmussen

Age: 59

Vice President, Treasurer & Chief Compliance Officer

    Officer since 1994; Re-Elected by the Boards annually.    Vice President, Secretary, Controller and Chief Compliance Officer of the Adviser; Vice President, Secretary, and Chief Compliance Officer of SF; President and Treasurer of the Distributor.    N/A    N/A

Carla J. Rose

Age: 54

Vice President, Assistant Secretary & Assistant Treasurer

    Officer since 2000; Re-Elected by the Boards annually.    Vice President, Administration & Deputy Controller of the Adviser; Vice President, Controller, Treasurer & Assistant Secretary of SF; Vice President and Assistant Secretary of the Distributor.    N/A    N/A

Robert W. Sit

Age: 51

Vice President - Investments

    Officer since 1997; Re-Elected by the Boards annually.    Vice President - Research and Investment Management of the Adviser.    N/A    N/A

Ronald D. Sit

Age: 60

Vice President - Investments

    Officer since 1985; Re-Elected by the Boards annually.    Vice President - Research and Investment Management of the Adviser.    N/A    N/A

 

1 

Each Director serves until their resignation, removal or the next meeting of the shareholders at which election of directors is an agenda item and his successor is duly elected and shall qualify.

2 

Directors who are deemed to be “interested person” of the Funds as that term is defined by the Investment Company Act of 1940. Mr. Sit is considered an “interested person” because he is a an officer of Sit Investment Associates, Inc., the Fund’s investment adviser.

3 

Includes only directorships of companies required to report under the Securities Exchange Act of 1934 (i.e., public companies) or other investment companies registered under the 1940 Act.

 

  

 

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85

 

 

    

ADDITIONAL INFORMATION (Unaudited)

    

 

PROXY VOTING

A description of the policies and procedures that Sit Investment uses to vote proxies related to the Funds’ portfolio securities is set forth in the Funds’ Statement of Additional Information, which is available on the Funds’ website at www.sitfunds.com, without charge by calling 800-332-5580 and on the Securities and Exchange Commission’s (SEC) website at www.sec.gov. The Funds’ proxy voting record is available without charge by calling 800-332-5580 and on the SEC’s website at www.sec.gov no later than August 31 for the prior 12 months ending June.

QUARTERLY SCHEDULE OF INVESTMENTS SCHEDULES

Each Fund files a complete schedule of investments with the SEC for the first and third quarters of each fiscal year on Form N-PORT. The Funds’ Form N-PORT is available on the SEC’s website at www.sec.gov. Each Fund’s complete schedule of investments, as filed on Form N-PORT, is also available on its website at www.sitfunds.com, or without charge by calling 800-332-5580.

STATEMENT REGARDING LIQUIDITY RISK MANAGEMENT PROGRAM

The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.

At their joint meeting held on October 21, 2019, the Boards of Directors (the “Boards”) of the Sit Mutual Funds (the “Funds”) reviewed the Funds’ liquidity risk management program (the “Program”) pursuant to the Liquidity Rule. Sit Investment Associates, Inc. (“SIA”), the investment adviser to the Funds, serves as the Program Administrator and provided the Boards with a report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation and any material changes to the Program as of September 30, 2019 (the “Report”).

The Report described its liquidity classification methodology and the determination that a Highly Liquid Investment Minimum is not currently necessary for any Fund. The Report also noted that the Program complied with the key factors for consideration under the Liquidity Rule for assessing, managing, and periodically reviewing liquidity risk, as follows:

A. Each Fund’s investment strategy and liquidity of investments during both normal and reasonably foreseeable stressed conditions: SIA reviewed each Fund’s strategy and the determinations that each strategy remains appropriate for an open-end fund. This determination was based on each Fund’s holding’s liquidity, diversification, and average position size.

B. Short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions: The Report indicated that it considered historical net redemption activity and shareholder ownership concentration and distribution channels to determine each Fund’s Reasonably Anticipated Trading Size. It was also noted that each Fund has adopted an in-kind redemption policy which may be utilized to meet large redemption requests.

C. Holdings of cash and cash equivalents, as well as borrowing arrangements: The report reviewed each Fund’s holdings of cash and cash equivalents, available borrowing arrangements if any, and other funding sources.

There were no material changes to the Program during the past year. The Report stated that SIA concluded that the Program is operating as intended and is effective in implementing the requirements of the Liquidity Rule.

 

  

 

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SIT MUTUAL FUNDS ANNUAL REPORT

 

 

    

  

 

Annual Report

June 30, 2020

 

    

    

     
     
     
 

INVESTMENT ADVISER

   INDEPENDENT REGISTERED PUBLIC  
 

Sit Investment Associates, Inc.

   ACCOUNTING FIRM  
 

80 S. Eighth Street

Suite 3300

Minneapolis, MN 55402

 

CUSTODIAN

The Bank Of New York Mellon

111 Sanders Creek Parkway

Syracuse, NY 13057

 

TRANSFER AGENT AND

DISBURSING AGENT

BNY Mellon Investment Servicing (US) Inc.

4400 Computer Drive

Westborough, MA 01581

  

KPMG LLP

Minneapolis, MN

 

GENERAL COUNSEL

Dorsey & Whitney LLP

Minneapolis, MN

  
     
 

LOGO

   
 

1-800-332-5580

www.sitfunds.com

    
     
     

Stock 6-2020.

 

Item 2:

Code of Ethics.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. The registrant has not made any amendment to its code of ethics during the period covered by this report which must be described herein pursuant to Item 2. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report.

A copy of the registrant’s code of ethics is available without charge upon request by calling the registrant at 612-332-3223 or 1-800-332-5580, or by mail at Sit Mutual Funds, 3300 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402.

 

Item 3:

Audit Committee Financial Expert.

The registrant’s Board of Directors has determined that Mr. Edward M. Giles, Mr. Sidney L. Jones, Mr. Bruce C. Lueck, Mr. Donald W. Phillips and Mr. Barry N. Winslow are audit committee financial experts serving on its audit committee. Mr. Giles, Mr. Jones, Mr. Lueck, Mr. Phillips and Mr. Winslow are independent for purposes of this item.

 

Item 4:

Principal Accountant Fees and Services.

(a) – (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant’s principal accountant were as follows:

 

    2020     2019        
    Audit     Audit     Tax     Other     Audit     Audit     Tax     Other        
    Fees     Related     Fees     Fees     Fees     Related     Fees     Fees     Fees  

Fiscal year ended June 30

                  

Sit Mutual Funds, Inc.

                  

Sit International Growth Fund (series A)

   $ 23,800       0     $ 5,650       0     $ 23,000       0     $ 5,650       0       0  

Sit Balanced Fund (series B)

     26,200       0       5,650       0       25,400       0       5,650       0       0  

Sit Developing Markets Growth Fund (series C)

     23,800       0       5,650       0       23,000       0       5,650       0       0  

Sit Small Cap Growth Fund (series D)

     24,000       0       5,650       0       23,200       0       5,650       0       0  

Sit Dividend Growth Fund (series G)

     29,000       0       5,650       0       28,200       0       5,650       0       0  

Sit Global Dividend Growth Fund (series H)

     23,800       0       5,650       0       23,000       0       5,650       0       0  

Sit Small Cap Dividend Growth Fund (series I)

     23,800       0       5,650       0       23,000       0       5,650       0    

Sit ESG Growth Fund (series J)

     23,800       0       5,650       0       23,000       0       5,650       0       0  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Sit Mutual Funds, Inc.

     198,200       0       45,200       0       191,800       0       45,200       0       0  

Audit fees include amounts related to the audit of the registrant’s annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Audit-related fees include amounts reasonably related to the performance of the audit of the registrant’s financial statements, and/or are traditionally performed by the auditor. Tax fees include amounts related to tax compliance, tax planning, and tax advice. Other Fees include services provided to review the Fund’s order processing and trading procedures.

(e) (1) The Audit Committee is required to pre-approve audit and non-audit services performed for the registrant by the independent auditor in order to assure that the provision of such services does not impair the auditor’s independence. The audit committee also is required to pre-approve certain non-audit services performed by the registrant’s independent auditor for the registrant’s investment adviser and certain of the adviser’s affiliates if the services relate directly to the operations and financial reporting of the registrant. Services to be provided by the auditor must receive general pre-approval or specific pre-approval by the audit committee. Any proposed services exceeding pre-approved cost levels will require separate pre-approval by the audit committee.

The audit committee may delegate pre-approval authority to the audit committee chairman. The chairman shall report any pre-approval decisions to the audit committee at its next scheduled meeting. The audit committee does not delegate its responsibility to pre-approve services performed by the independent auditor to management.

(2) No services included in (b) – (d) were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not applicable.

(g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant’s principal accountant for non-audit services rendered to the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $0 and $0, respectively.

(h) The registrant’s audit committee has determined that the provision of non-audit services rendered to the registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is considered compatible with maintaining the principal accountant’s independence.

 

Item 5:

Audit Committee of Listed Registrants.

Not applicable to open-end investment companies.

 

Item 6:

Schedule of Investments.

The schedule of investments is included as part of the report to shareholders filed under Item 1 of this Form.

 

Item 7:

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

 

Item 8:

Portfolio Managers of Closed-End Management Investments Companies.

Not applicable to open-end investment companies.

 

Item 9:

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable to open-end investment companies.

 

Item 10.

Submission of Matters to a vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors.

 

Item 11:

Controls and Procedures.

(a) Based on their evaluation of the Registrant’s Disclosure Controls and Procedures as of a date within 90 days of the Filing Date, the Registrant’s Chairman and Treasurer have determined that the Disclosure Controls and Procedures (as defined in Rule 30a-2(c) under the Act) are designed to ensure that information required to be disclosed by the Registrant is recorded, processed, summarized and reported by the filing Date, and that information required to be disclosed in the report is communicated to the Registrant’s management, as appropriate, to allow timely decisions regarding required disclosure.

(b) There were no significant changes in the Registrant’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, and there were no corrective actions with regard to significant deficiencies and material weaknesses.

 

Item 12:

Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 13:

Exhibits:

(a) The following exhibits are attached to this Form N-CSR:

 

  (2)

A separate certification for each principal executive and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR270.30a-2 (certification required by Section 302 of the Sarbanes-Oxley Act of 2002).

(b) Certification required by Rule 30a-2(b) under the Act (certification required by Section 906 of the Sarbanes-Oxley Act of 2002).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Sit Mutual Funds, Inc.

 

By (Signature and Title)*   

/s/ Paul E. Rasmussen

   
   Paul E. Rasmussen   
   Vice President, Treasurer   

Date August 26, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)   

/s/ Paul E. Rasmussen

   
   Paul E. Rasmussen   
   Vice President, Treasurer   

Date August 26, 2020

 

By (Signature and Title)   

/s/ Roger J. Sit

   
   Roger J. Sit   
   Chairman   

Date August 26, 2020