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)
80 South Eighth Street
3300 IDS Center
Minneapolis, MN 55402
(Address of principal executive offices)
Paul E. Rasmussen, VP Treasurer
Sit Mutual Funds, Inc.
80 South Eighth Street
3300 IDS Center
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, 2013
Date of reporting period: December 31, 2012
Item 1: Reports to Stockholders
Sit Mutual Funds STOCK FUNDS SEMI-ANNUAL REPORT
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Fund Reviews and Schedules of Investments | ||
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This document must be preceded or accompanied by a Prospectus.
February 6, 2013
Dear Fellow Shareholders:
Stock prices have been quite volatile in recent months, as investors have been forced to contend with a variety of issues, including a U.S. presidential election, “fiscal cliff” concerns, decelerating corporate earnings and Hurricane Sandy. However, despite these concerns, the U.S. economy generally has remained resilient, with the final estimate of third quarter 2012 real Gross Domestic Product (GDP) growth recently revised upward to +3.1%. While swings in net exports and inventories can generate volatility in the data from quarter to quarter, it has been encouraging that consumer spending, by far the most important component of the GDP calculation, has remained a relatively steady contributor to growth. The recovery in the labor market has been subpar, but stable, averaging 153,000 new jobs per month over the course of 2012. In addition, the residential housing market appears to have bottomed and is now likely to contribute to economic growth more positively with each passing quarter.
In terms of fiscal policy, Congress rang in the New Year by passing legislation to temporarily patch most of the tax and spending items that were set to change materially on January 1st, 2013, commonly known as the fiscal cliff. While this brought some near term clarity on certain issues, particularly related to tax rates, it is disappointing that many of the most important decisions were simply pushed out for a few months. This will put politicians in the more complicated position of having to negotiate a more permanent solution to the fiscal cliff. While policy risks are still in place, we expect the “subpar” economic recovery to continue. Our forecasts call for 2013 GDP growth of 2.0%, representing a slight deceleration from 2012, as higher tax rates (payroll taxes, in particular) will likely have some negative impact on growth in the year ahead.
Outside the U.S., Europe continues to be a key focal point for investors as it appears that the region slipped into recession during the second half of 2012. With the health of the region’s banking system posing a significant downside risk, a key positive development was the European Central Bank’s (ECB) steps to backstop peripheral Europe’s bond markets and its desire, although highly complex to construct, to develop a regional banking union. This is a key factor supporting our belief in some economic stabilization in 2013. In addition, recent data points from emerging economies point to better prospects in the year ahead. The Chinese economy, for example appears to be reaccelerating modestly, with recent data points on manufacturing, power consumption and retail sales all showing encouraging trends.
Equity Strategy
Global equities have generally performed quite well in recent months, as aggressive monetary policy by the world’s central banks has, to this point, been enough to overcome political and policy uncertainty occurring in many key regions.
While investors will remain on guard, given the multitude of challenges to overcome, we believe there are still many factors
supportive of higher equity prices in the year ahead. First, valuations for stocks are not excessive, with the current price/earnings multiple for the S&P 500 at 14 times 2012 earnings, slightly below the 50-year average of 15 times. Second, the rate of inflation remains subdued and interest rates linger at very low levels, two factors that often pave the way for higher price to earnings multiples. Third, corporations continue to be flush with cash - over $2 trillion rests on corporate balance sheets - and companies are generating near-record levels of free cash flow. This “excess capital” can be put to work for shareholders in the form of higher dividends, share repurchases and accretive acquisitions. And finally, while the deceleration in virtually all economies outside the U.S. has pressured corporate earnings forecasts in recent quarters, this should be coming to an end, as data support a bottoming in the European region and a reacceleration in emerging economies (particularly China).
Particularly, given the relatively strong performance of stocks in recent quarters, one cannot discount the numerous risks related to policy (e.g., U.S. debt ceiling negotiations) and the fragility of the economic conditions (particularly in Europe) that could threaten markets in the year ahead. In light of this potential for higher volatility, we believe it is prudent to remain diversified among sectors, with a bias towards those benefiting from the slow, but steady, improvement in economic conditions. Throughout the Sit Equity Funds, some favored sectors include technology, energy and capital goods. These are all areas that should benefit from a step-up in growth in emerging markets and a cyclical improvement in capital spending in many regions of the world. Regardless of sector, however, our focus remains on firms that have strong balance sheets, free cash flow generation, and businesses that offer sustainable growth in a continued slow-growth macroeconomic backdrop.
In global portfolios, we have recently added to the allocation in Europe (although still an underweight to benchmarks), as valuations are attractive and economic conditions, as discussed, appear to have reached a bottom. Similarly, we have added to Japanese positions, as the government’s new aggressive quantitative monetary easing policies along with another round of fiscal stimulus are likely to improve investor sentiment. Finally, we remain overweighted in key emerging economies, such as China and India, as these nations are rapidly becoming growth engines for the world and recent economic data has been encouraging, after a soft patch in 2012.
With best wishes,
Roger J. Sit
Chairman, President, CEO and Global CIO
2 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
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DECEMBER 31, 2012 | 3 |
|
OBJECTIVE & STRATEGY
The Sit Balanced Fund’s dual objectives 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.
The Sit Balanced Fund’s six-month return was +3.38% while the S&P 500® Index gained +5.95% and the Barclays Aggregate Bond Index increased +1.80% over the period.
Despite some choppiness in the fourth quarter, U.S. stocks posted solid returns during the second half of 2012. These gains were particularly impressive, given the government policy uncertainty amid U.S. elections and contentious negotiations around the U.S. “fiscal cliff.” Despite the fact that a last minute agreement in Washington brought some clarity on taxes for businesses, consumers and investors, we suspect that the political environment and uncertainty around policy decisions will continue to be a key focus for financial markets. The good news, however, is that valuations for equities remain attractive, particularly given the low levels of interest rates and inflation, and corporations continue to post solid profits. Our research focus remains on both sectors and individual companies that have strong underlying financial characteristics (e.g., balance sheets, cash flow generation) that can manage to grow earnings even if we remain in a slow growth economic environment. In terms of equity performance over the past six months, the Fund trailed the S&P 500® Index, as weakness in the electronic technology sector and underweighting of the strong-performing finance sector detracted from relative returns. This was partially offset by strong performance of holdings within the health technology sector.
We estimate that the fixed income portion of the portfolio outperformed the Barclays Aggregate Bond Index during the second half of the year, primarily due to the income advantage of the Fund’s fixed income securities relative to the benchmark. The Fund also benefitted from its shorter duration relative to the benchmark, as Treasury interest rates rose during the period. For 2013, we expect an extension of low short-term rates and slow economic growth as the debt-ceiling debate, regulatory hurdles and global budgetary concerns continue to hamper economic activity. We believe, however, that the massive amounts of monetary stimulus will eventually put upward pressure on bond yields, and we continue to position the portfolio for an eventual rise in rates. Additionally, we anticipate another downgrade of the U.S. government debt rating and, therefore, are focusing on high-quality, liquid bonds, which will benefit
HYPOTHETICAL GROWTH OF $10,000
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 Barclays Capital 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 Barclays Capital 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.
from heightened demand as investors assess the ramifications of a downgrade.
The stock/fixed income allocation is currently 61.6% equities, 34.3% fixed income, and 4.1% cash and equivalents. Our research staff remains focused on high-quality securities in each asset class within the Fund, and we appreciate shareholders’ continued interest in the Fund.
Roger J. Sit
Bryce A. Doty
John M. Bernstein
Portfolio Managers
4 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2012 | ||||||||||||
| Sit Balanced Fund | S&P 500® Index 1 | Barclays Aggregate Bond Index 2 | |||||||||
Six Month | 3.38% | 5.95% | 1.80% | |||||||||
One Year | 9.95 | 16.00 | 4.22 | |||||||||
Five Year | 2.22 | 1.66 | 5.95 | |||||||||
Ten Year | 6.42 | 7.10 | 5.18 | |||||||||
Since Inception | 6.35 | 8.11 | 6.16 | |||||||||
(12/31/93) |
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 Barclays Capital 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 12/30/12: | $17.34 Per Share | |
Net Asset Value 6/30/12: | $16.97 Per Share | |
Total Net Assets: | $12.3 Million |
TOP HOLDINGS
Top Equity Holdings:
1. | Apple, Inc. |
2. | Chevron Corp. |
3. | International Business Machines Corp. |
4. | Google, Inc. |
5. | Qualcomm, Inc |
Top Fixed Income Holdings:
1. | U.S. Treasury Strips, 3.09%, 8/15/20 |
2. | Pacific Bell Telephone Co., 7.13%, 3/15/26 |
3. | Government National Mortgage Association, 2005-74 HA, 7.50%, 9/16/35 |
3. | Continental Airlines 2009-1 Pass Thru Certs., 9.00%, 7/8/16 |
4. | Procter & Gamble ESOP, 9.36%, 1/1/21 |
Based on total net assets as of December 31, 2012. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2012. Subject to change.
DECEMBER 31, 2012 | 5 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit Balanced Fund
Quantity | Name of Issuer | Fair Value ($) | ||||
Common Stocks - 61.6% | ||||||
Communications - 2.1% | ||||||
2,200 | Rogers Communications, Inc. | 100,144 | ||||
3,575 | Verizon Communications, Inc. | 154,690 | ||||
|
| |||||
254,834 | ||||||
|
| |||||
Consumer Durables - 0.5% | ||||||
900 | Tupperware Brands Corp. | 57,690 | ||||
|
| |||||
Consumer Non-Durables - 6.1% | ||||||
925 | Coach, Inc. | 51,347 | ||||
4,200 | Coca-Cola Co. | 152,250 | ||||
1,325 | General Mills, Inc. | 53,543 | ||||
1,600 | NIKE, Inc. | 82,560 | ||||
2,275 | PepsiCo, Inc. | 155,678 | ||||
1,650 | Philip Morris International, Inc. | 138,006 | ||||
1,800 | Procter & Gamble Co. | 122,202 | ||||
|
| |||||
755,586 | ||||||
|
| |||||
Consumer Services - 2.2% | ||||||
1,600 | McDonald’s Corp. | 141,136 | ||||
825 | Visa, Inc. | 125,054 | ||||
|
| |||||
266,190 | ||||||
|
| |||||
Electronic Technology - 8.6% | ||||||
550 | Apple, Inc. | 293,166 | ||||
4,700 | Applied Materials, Inc. | 53,768 | ||||
1,050 | Avago Technologies, Ltd. | 33,243 | ||||
1,850 | Broadcom Corp. * | 61,438 | ||||
2,750 | Ciena Corp. * | 43,175 | ||||
1,400 | EMC Corp. * | 35,420 | ||||
4,000 | Intel Corp. | 82,520 | ||||
1,185 | International Business Machines Corp. | 226,987 | ||||
2,900 | Qualcomm, Inc. | 179,858 | ||||
1,750 | VeriFone Systems, Inc. * | 51,940 | ||||
|
| |||||
1,061,515 | ||||||
|
| |||||
Energy Minerals - 4.3% | ||||||
400 | Apache Corp. | 31,400 | ||||
2,200 | Chevron Corp. | 237,908 | ||||
2,050 | Marathon Petroleum Corp. | 129,150 | ||||
1,800 | Occidental Petroleum Corp. | 137,898 | ||||
|
| |||||
536,356 | ||||||
|
| |||||
Finance - 6.1% | ||||||
1,175 | ACE, Ltd. | 93,765 | ||||
1,225 | Ameriprise Financial, Inc. | 76,722 | ||||
1,025 | Discover Financial Services | 39,514 | ||||
650 | Franklin Resources, Inc. | 81,705 | ||||
455 | Goldman Sachs Group, Inc. | 58,040 | ||||
2,800 | JPMorgan Chase & Co. | 123,116 | ||||
2,000 | Marsh & McLennan Cos., Inc. | 68,940 | ||||
600 | PartnerRe, Ltd. | 48,294 | ||||
1,200 | US Bancorp | 38,328 |
Quantity | Name of Issuer | Fair Value ($) | ||||
3,700 | Wells Fargo & Co. | 126,466 | ||||
|
| |||||
754,890 | ||||||
|
| |||||
Health Services - 1.5% | ||||||
1,005 | Express Scripts Holding Co. * | 54,270 | ||||
600 | McKesson Corp. | 58,176 | ||||
1,300 | UnitedHealth Group, Inc. | 70,512 | ||||
|
| |||||
182,958 | ||||||
|
| |||||
Health Technology - 6.5% | ||||||
575 | Alexion Pharmaceuticals, Inc. * | 53,941 | ||||
850 | Allergan, Inc. | 77,970 | ||||
700 | Baxter International, Inc. | 46,662 | ||||
3,200 | Bristol-Myers Squibb Co. | 104,288 | ||||
1,375 | Celgene Corp. * | 108,240 | ||||
1,200 | Gilead Sciences, Inc. * | 88,140 | ||||
140 | Intuitive Surgical, Inc. * | 68,652 | ||||
700 | Johnson & Johnson | 49,070 | ||||
3,200 | Pfizer, Inc. | 80,256 | ||||
1,200 | Stryker Corp. | 65,784 | ||||
900 | Thermo Fisher Scientific, Inc. | 57,402 | ||||
|
| |||||
800,405 | ||||||
|
| |||||
Industrial Services - 1.2% | ||||||
1,425 | Schlumberger, Ltd. | 98,738 | ||||
1,200 | Seadrill, Ltd. | 44,160 | ||||
|
| |||||
142,898 | ||||||
|
| |||||
Non-Energy Minerals - 0.5% | ||||||
1,750 | Freeport-McMoRan Copper & Gold, Inc. | 59,850 | ||||
|
| |||||
Process Industries - 1.4% | ||||||
1,650 | Ecolab, Inc. | 118,635 | ||||
475 | Praxair, Inc. | 51,989 | ||||
|
| |||||
170,624 | ||||||
|
| |||||
Producer Manufacturing - 5.8% | ||||||
650 | 3M Co. | 60,352 | ||||
525 | Caterpillar, Inc. | 47,030 | ||||
1,675 | Danaher Corp. | 93,632 | ||||
1,000 | Deere & Co. | 86,420 | ||||
1,625 | Emerson Electric Co. | 86,060 | ||||
525 | Flowserve Corp. | 77,070 | ||||
3,400 | General Electric Co. | 71,366 | ||||
950 | Honeywell International, Inc. | 60,296 | ||||
325 | Precision Castparts Corp. | 61,562 | ||||
950 | United Technologies Corp. | 77,910 | ||||
|
| |||||
721,698 | ||||||
|
| |||||
Retail Trade - 5.7% | ||||||
325 | Amazon.com, Inc. * | 81,620 | ||||
600 | Bed Bath & Beyond, Inc. * | 33,546 | ||||
475 | Costco Wholesale Corp. | 46,916 | ||||
1,750 | CVS Caremark Corp. | 84,612 | ||||
1,900 | Dick’s Sporting Goods, Inc. | 86,431 |
See accompanying notes to financial statements.
6 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Quantity/ Principal Amount ($) | Name of Issuer | Fair Value ($) | ||||
1,425 | Home Depot, Inc. | 88,136 | ||||
2,100 | Target Corp. | 124,257 | ||||
2,300 | TJX Cos., Inc. | 97,635 | ||||
950 | Wal-Mart Stores, Inc. | 64,818 | ||||
|
| |||||
707,971 | ||||||
|
| |||||
Technology Services - 7.0% | ||||||
1,425 | Accenture, PLC | 94,762 | ||||
900 | Cognizant Technology Solutions Corp. * | 66,645 | ||||
255 | Google, Inc. * | 180,889 | ||||
1,400 | Informatica Corp. * | 42,448 | ||||
3,300 | Microsoft Corp. | 88,209 | ||||
4,600 | Oracle Corp. | 153,272 | ||||
140 | priceline.com, Inc. * | 86,968 | ||||
200 | Salesforce.com, Inc. * | 33,620 | ||||
825 | Teradata Corp. * | 51,059 | ||||
650 | VMware, Inc. * | 61,191 | ||||
|
| |||||
859,063 | ||||||
|
| |||||
Transportation - 1.2% | ||||||
800 | Union Pacific Corp. | 100,576 | ||||
625 | United Parcel Service, Inc. | 46,081 | ||||
|
| |||||
146,657 | ||||||
|
| |||||
Utilities - 0.9% | ||||||
1,300 | Kinder Morgan, Inc. | 45,929 | ||||
1,800 | Wisconsin Energy Corp. | 66,330 | ||||
|
| |||||
112,259 | ||||||
|
| |||||
Total Common Stocks | 7,591,444 | |||||
|
| |||||
Bonds - 34.0% |
| |||||
Asset-Backed Securities - 4.0% | ||||||
22,239 | Bayview Financial Acquisition Trust, | 22,745 | ||||
86,665 | Centex Home Equity, | 89,013 | ||||
Citifinancial Mortgage Securities, Inc.: | ||||||
28,291 | 2004-1 AF3, 3.77%, 4/25/34 | 27,741 | ||||
63,700 | 2003-1 AF5, 4.78%, 1/25/33 | 66,074 | ||||
46,534 | Conseco Finance, | 43,839 | ||||
38,989 | First Franklin Mtge. Loan Asset-Backed Certs., | 38,073 | ||||
17,173 | Irwin Home Equity Corp., | 16,584 | ||||
32,200 | New Century Home Equity Loan Trust, | 30,172 | ||||
4,611 | Origen Manufactured Housing, | 4,708 | ||||
75,000 | RAAC Series, | 72,375 | ||||
50,000 | Residential Asset Mortgage Products, Inc., | 47,665 |
Amount ($) | Name of Issuer | Fair Value ($) | ||||
18,921 | Residential Asset Securities Corp., | 19,349 | ||||
17,684 | Residential Funding Mortgage Securities II, Inc., | 17,283 | ||||
|
| |||||
495,621 | ||||||
|
| |||||
Collateralized Mortgage Obligations - 3.9% | ||||||
22,794 | Fannie Mae Grantor Trust, | 27,176 | ||||
Fannie Mae REMIC: | ||||||
55,625 | 2009-30 AG, 6.50%, 5/25/39 | 62,155 | ||||
26,291 | 2010-108 AP, 7.00%, 9/25/40 | 29,689 | ||||
Freddie Mac REMIC: | ||||||
36,428 | 7.00%, 11/15/29 | 39,647 | ||||
78,669 | 7.50%, 6/15/30 | 92,920 | ||||
87,357 | Government National Mortgage Association, | 100,240 | ||||
6,618 | Master Asset Securitization Trust, | 7,014 | ||||
48,412 | Sequoia Mortgage Trust, | 50,332 | ||||
56,160 | Vendee Mortgage Trust, | 67,398 | ||||
|
| |||||
476,571 | ||||||
|
| |||||
Corporate Bonds - 8.5% | ||||||
50,000 | Berkshire Hathaway Finance Corp., | 60,144 | ||||
50,000 | Burlington Resources, Inc., | 69,100 | ||||
25,000 | Comerica Bank (Subordinated), | 27,368 | ||||
85,744 | Continental Airlines 2009-1 Pass Thru Certs., | 99,248 | ||||
50,000 | Google, Inc., | 55,642 | ||||
50,000 | Microsoft Corp., | 57,256 | ||||
70,000 | Northern States Power Co., | 89,385 | ||||
46,475 | Northwest Airlines 1999-2 A Pass Thru Tr, | 50,426 | ||||
75,000 | Pacific Bell Telephone Co., | 100,264 | ||||
25,000 | PacifiCorp, | 37,066 | ||||
25,000 | PartnerRe Finance B LLC, | 27,900 | ||||
50,000 | Procter & Gamble Co., | 74,783 | ||||
72,978 | Procter & Gamble ESOP, | 95,865 |
See accompanying notes to financial statements.
DECEMBER 31, 2012 | 7 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit Balanced Fund (Continued)
Principal Amount ($) | Name of Issuer | Fair Value ($) | ||||
50,000 | Shell International Finance BV, | 57,925 | ||||
50,000 | South Carolina Electric & Gas Co., | 63,608 | ||||
50,000 | Statoil ASA, | 52,948 | ||||
21,000 | Validus Holdings, Ltd., | 28,240 | ||||
|
| |||||
1,047,168 | ||||||
|
|
| Federal Home Loan Mortgage Corporation - 3.0% |
| ||||||||
72,885 | 2.50%, | 4/1/27 | 76,202 | |||||||
38,064 | 2.50%, | 4/1/27 | 39,903 | |||||||
27,610 | 6.00%, | 10/1/21 | 30,359 | |||||||
18,888 | 6.50%, | 1/1/14 | 19,123 | |||||||
45,233 | 7.00%, | 7/1/32 | 52,247 | |||||||
24,012 | 7.00%, | 5/1/34 | 27,820 | |||||||
34,405 | 7.00%, | 11/1/37 | 39,740 | |||||||
16,018 | 7.00%, | 1/1/39 | 18,491 | |||||||
28,992 | 7.50%, | 11/1/36 | 35,374 | |||||||
10,466 | 8.00%, | 9/1/15 | 11,345 | |||||||
13,705 | 8.38%, | 5/17/20 | 15,696 | |||||||
|
| |||||||||
366,300 | ||||||||||
|
| |||||||||
| Federal National Mortgage Association - 5.3% |
| ||||||||
63,915 | 6.50%, | 5/1/36 | 72,188 | |||||||
31,050 | 6.50%, | 5/1/40 | 34,861 | |||||||
61,815 | 6.63%, | 11/1/30 | 71,988 | |||||||
48,868 | 6.63%, | 1/1/31 | 56,911 | |||||||
25,976 | 7.00%, | 12/1/32 | 30,594 | |||||||
48,180 | 7.00%, | 3/1/33 | 53,583 | |||||||
35,321 | 7.00%, | 12/1/36 | 42,598 | |||||||
22,715 | 7.00%, | 11/1/38 | 26,789 | |||||||
54,782 | 7.23%, | 12/1/30 | 63,723 | |||||||
7,541 | 7.50%, | 6/1/32 | 9,246 | |||||||
24,400 | 7.50%, | 4/1/33 | 29,871 | |||||||
25,595 | 7.50%, | 11/1/33 | 31,221 | |||||||
36,533 | 7.50%, | 1/1/34 | 44,601 | |||||||
12,420 | 7.50%, | 4/1/38 | 15,185 | |||||||
40,900 | 8.00%, | 2/1/31 | 50,656 | |||||||
11,113 | 8.42%, | 7/15/26 | 12,020 | |||||||
7,276 | 9.50%, | 5/1/27 | 8,887 | |||||||
|
| |||||||||
654,922 | ||||||||||
|
| |||||||||
| Government National Mortgage Association - 3.0% |
| ||||||||
49,550 | 6.63%, | 4/20/31 | 57,680 | |||||||
28,603 | 7.00%, | 12/15/24 | 33,858 | |||||||
72,217 | 7.00%, | 9/20/38 | 83,339 | |||||||
46,801 | 7.23%, | 12/20/30 | 55,848 | |||||||
50,560 | 8.00%, | 7/15/24 | 59,932 | |||||||
72,727 | 8.38%, | 3/15/31 | 76,380 | |||||||
985 | 9.50%, | 9/20/18 | 1,129 | |||||||
|
| |||||||||
368,166 | ||||||||||
|
|
Principal Amount ($)/ Quantity | Name of Issuer | Fair Value ($) | ||||
Taxable Municipal Securities - 2.2% |
| |||||
100,000 | Academica Charter Schools, | 83,385 | ||||
50,000 | Nassau County Interim Fin. Auth. Rev, | 50,445 | ||||
75,000 | New Jersey Trans. Trust Fund Auth. Rev, | 90,087 | ||||
50,000 | Texas St. Pub. Fin. Auth. Charter Sch. Fin. Rev., | 51,500 | ||||
|
| |||||
275,417 | ||||||
|
| |||||
U.S. Government / Federal Agency Securities - 3.6% | ||||||
50,000 | U.S. Treasury Note: | 50,164 | ||||
50,000 | 1.63%, 11/15/22 | 49,453 | ||||
25,000 | 2.75%, 11/15/42 | 24,086 | ||||
U.S. Treasury Strips: | ||||||
275,000 | 3.09%, 8/15/20 6 | 248,384 | ||||
150,000 | 4.21%, 2/15/36 6 | 76,725 | ||||
|
| |||||
448,812 | ||||||
|
| |||||
Foreign Government Bonds - 0.5% |
| |||||
60,000 | Province of Manitoba Canada, | 59,787 | ||||
|
| |||||
Total Bonds | 4,192,764 | |||||
|
| |||||
Closed-End Mutual Funds - 0.3% |
| |||||
4,300 | American Strategic Income Portfolio, Inc. II | 37,926 | ||||
|
| |||||
Total Closed-End Mutual Funds | 37,926 | |||||
|
| |||||
Total Investments in Securities - 95.9% | 11,822,134 | |||||
Other Assets and Liabilities, net - 4.1% | 508,551 | |||||
|
| |||||
Total Net Assets - 100.0% | $12,330,685 | |||||
|
|
* | Non-income producing security. |
1 | Variable rate security. Rate disclosed is as of December 31, 2012. |
4 | 144A Restricted Security. The total value of such security as of December 31, 2012 was $83,385 and represented 0.7% of net assets. This security has been determined to be liquid by the Adviser in accordance with guidelines established by the Board of Directors. |
6 | Zero coupon security. Rate disclosed is the effective yield on purchase date. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
ADR — American Depositary Receipt
PLC — Public Limited Company
See accompanying notes to financial statements.
8 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
A summary of the levels for the Fund’s investments as of December 31, 2012 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||||||
Level 1 Quoted Price ($) | Level 2 Other significant observable inputs ($) | Level 3 Significant unobservable inputs ($) | Total ($) | |||||||||||||
|
| |||||||||||||||
Common Stocks ** | 7,591,444 | — | — | 7,591,444 | ||||||||||||
Asset-Backed Securities | — | 495,621 | — | 495,621 | ||||||||||||
Collateralized Mortgage | ||||||||||||||||
Obligations | — | 476,571 | — | 476,571 | ||||||||||||
Corporate Bonds | — | 1,047,168 | — | 1,047,168 | ||||||||||||
Federal Home Loan Mortgage | ||||||||||||||||
Corporation | — | 366,300 | — | 366,300 | ||||||||||||
Federal National Mortgage | ||||||||||||||||
Association | — | 654,922 | — | 654,922 | ||||||||||||
Government National Mortgage | ||||||||||||||||
Association | — | 368,166 | — | 368,166 | ||||||||||||
Taxable Municipal Securities | — | 275,417 | — | 275,417 | ||||||||||||
U.S. Government / Federal Agency | ||||||||||||||||
Securities | — | 448,812 | — | 448,812 | ||||||||||||
Foreign Government Bonds | — | 59,787 | — | 59,787 | ||||||||||||
Closed-End Mutual Funds | 37,926 | — | — | 37,926 | ||||||||||||
Total: | 7,629,370 | 4,192,764 | — | 11,822,134 |
** | For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown. |
For the reporting period, there were no transfers between levels 1, 2 and 3.
See accompanying notes to financial statements.
DECEMBER 31, 2012 | 9 |
Sit Dividend Growth Fund - Class I and Class S
|
OBJECTIVE & STRATEGY
The objective of the 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.
The Sit Dividend Growth Fund Class I posted a +5.82% return for the last six months of 2012, compared to the +5.95% return for the S&P 500® Index.
Stock prices were quite volatile over the second half of the year, as investors were forced to contend with a variety of issues, including a U.S. presidential election, fiscal “cliff” concerns, decelerating corporate earnings and Hurricane Sandy. These negatives were, to some degree, offset by positive signs that many developing economies (most notably China) are re-accelerating and that the U.S. economy is likely to get a boost from a slow, but steady, recovery within the housing market. Importantly, Washington policymakers’ last minute agreement on the “cliff” brought clarity on tax rates, with relatively modest increases in dividend and capital gains rates for 2013. With some clarity on taxes, we believe investors will again focus on dividends as a source of incremental returns in a continued slow-growth economic environment with low yields on high-quality fixed income instruments. In this regard, it has been encouraging to see corporations respond to investors’ desire for higher dividends. For example, over the past twelve months, 81 companies within the Fund (out of 89 current holdings) have increased their dividend, with a median increase of +11.5%.
The Fund continues to be well diversified, reflecting the breadth of opportunities in virtually all sectors and our strategy to guard against market volatility with a diversified approach. Finance remains the most heavily-weighted sector within the Fund, followed by health technology, electronic technology and consumer non-durables.
The Fund’s performance was essentially in line with the S&P 500® Index during second half of 2012. Strong performance of holdings within the producer manufacturing and consumer non-durables sectors were key contributors to returns. Autoliv, ADT Corporation, Flowserve, Diageo and Nike were particularly strong performers in these sectors. The Fund also benefited from an underweighted position in the electronic technology sector, which was a laggard during the second half of 2012. On the negative side, relative returns were
HYPOTHETICAL GROWTH OF $10,000
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 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.
hurt by poor stock selection within the consumer services, process industries and energy minerals sectors. Laggards within these sectors included Pearson PLC, McDonald’s, DuPont, Occidental Petroleum and Apache.
We continue to believe that dividend-paying growth stocks remain attractive and will reward investors over the long term, as companies begin to increase payout ratios from unprecedentedly low levels.
Roger J. Sit
Kent L. Johnson
Michael J. Stellmacher
Portfolio Managers
10 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2012 | ||||||||||||
Sit Dividend Growth Fund | ||||||||||||
Class I | Class S | S&P 500® Index 1 | ||||||||||
Six Month | 5.82 | % | 5.64 | % | 5.95 | % | ||||||
One Year | 13.54 | 13.23 | 16.00 | |||||||||
Five Year | 3.84 | 3.57 | 1.66 | |||||||||
Since Inception - Class I | 7.73 | n/a | 4.93 | |||||||||
(12/31/03) | ||||||||||||
Since Inception - Class S | n/a | 6.10 | 3.63 | |||||||||
(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 12/31/12: | $14.50 Per Share | |
Net Asset Value 6/30/12: | $14.10 Per Share | |
Total Net Assets: | $687.8 Million | |
Class S: | ||
Net Asset Value 12/31/12: | $14.46 Per Share | |
Net Asset Value 6/30/12: | $14.06 Per Share | |
Total Net Assets: | $114.4 Million | |
Weighted Average Market Cap: | $81.0 Billion |
TOP 10 HOLDINGS
1. Chevron Corp.
2. International Business Machines Corp.
3. Verizon Communications, Inc.
4. PepsiCo, Inc.
5. Procter & Gamble Co.
6. Occidental Petroleum Corp.
7. JPMorgan Chase & Co.
8. Pfizer, Inc.
9. Qualcomm, Inc.
10. Johnson & Johnson
Based on total net assets as of December 31, 2012. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2012. Subject to change.
DECEMBER 31, 2012 | 11 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit Dividend Growth Fund
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Common Stocks - 95.8% | ||||||
Commercial Services - 0.8% | ||||||
125,623 | Moody’s Corp. | 6,321,349 | ||||
|
| |||||
Communications - 3.6% | ||||||
227,400 | Rogers Communications, Inc. | 10,351,248 | ||||
436,000 | Verizon Communications, Inc. | 18,865,720 | ||||
|
| |||||
29,216,968 | ||||||
|
| |||||
Consumer Durables - 3.4% | ||||||
151,300 | Snap-On, Inc. | 11,951,187 | ||||
124,950 | Stanley Black & Decker, Inc. | 9,242,552 | ||||
90,400 | Tupperware Brands Corp. | 5,794,640 | ||||
|
| |||||
26,988,379 | ||||||
|
| |||||
Consumer Non-Durables - 9.7% | ||||||
71,400 | Coach, Inc. | 3,963,413 | ||||
55,615 | Colgate-Palmolive Co. | 5,813,992 | ||||
66,250 | Diageo, PLC, ADR | 7,723,425 | ||||
245,900 | General Mills, Inc. | 9,936,819 | ||||
126,300 | NIKE, Inc. | 6,517,080 | ||||
242,200 | PepsiCo, Inc. | 16,573,746 | ||||
134,100 | Philip Morris International, Inc. | 11,216,124 | ||||
237,700 | Procter & Gamble Co. | 16,137,453 | ||||
|
| |||||
77,882,052 | ||||||
|
| |||||
Consumer Services - 1.8% | ||||||
103,000 | McDonald’s Corp. | 9,085,630 | ||||
284,500 | Pearson, PLC, ADR | 5,559,130 | ||||
|
| |||||
14,644,760 | ||||||
|
| |||||
Electronic Technology - 9.9% | ||||||
17,700 | Apple, Inc. | 9,434,631 | ||||
349,200 | Applied Materials, Inc. | 3,994,848 | ||||
142,300 | Avago Technologies, Ltd. | 4,505,218 | ||||
240,200 | Broadcom Corp. * | 7,977,042 | ||||
424,100 | Intel Corp. | 8,749,183 | ||||
113,900 | International Business Machines Corp. | 21,817,545 | ||||
131,000 | Linear Technology Corp. | 4,493,300 | ||||
238,200 | Qualcomm, Inc. | 14,773,164 | ||||
89,700 | TE Connectivity, Ltd. | 3,329,663 | ||||
|
| |||||
79,074,594 | ||||||
|
| |||||
Energy Minerals - 8.9% | ||||||
247,000 | Chevron Corp. | 26,710,580 | ||||
66,450 | EQT Corp. | 3,919,221 | ||||
198,100 | Marathon Oil Corp. | 6,073,746 | ||||
139,000 | Marathon Petroleum Corp. | 8,757,000 | ||||
202,950 | Occidental Petroleum Corp. | 15,548,000 | ||||
146,050 | Royal Dutch Shell, PLC, ADR | 10,353,484 | ||||
|
| |||||
71,362,031 | ||||||
|
| |||||
Finance - 14.5% | ||||||
132,000 | ACE, Ltd. | 10,533,600 |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
159,700 | Ameriprise Financial, Inc. | 10,002,011 | ||||
188,500 | First Republic Bank | 6,179,030 | ||||
67,400 | Franklin Resources, Inc. | 8,472,180 | ||||
346,500 | JPMorgan Chase & Co. | 15,235,605 | ||||
50,500 | M&T Bank Corp. | 4,972,735 | ||||
317,426 | Marsh & McLennan Cos., Inc. | 10,941,674 | ||||
100,100 | PartnerRe, Ltd. | 8,057,049 | ||||
386,200 | PennantPark Investment Corp. | 4,246,269 | ||||
124,000 | Travelers Cos., Inc. | 8,905,680 | ||||
277,000 | US Bancorp | 8,847,380 | ||||
220,800 | Validus Holdings, Ltd. | 7,635,264 | ||||
354,900 | Wells Fargo & Co. | 12,130,482 | ||||
|
| |||||
116,158,959 | ||||||
|
| |||||
Health Services - 2.9% | ||||||
177,800 | Cardinal Health, Inc. | 7,321,804 | ||||
83,100 | McKesson Corp. | 8,057,376 | ||||
150,100 | UnitedHealth Group, Inc. | 8,141,424 | ||||
|
| |||||
23,520,604 | ||||||
|
| |||||
Health Technology - 10.7% | ||||||
94,100 | Abbott Laboratories | 6,163,550 | ||||
166,100 | Baxter International, Inc. | 11,072,226 | ||||
253,500 | Bristol-Myers Squibb Co. | 8,261,565 | ||||
193,900 | Covidien, PLC | 11,195,786 | ||||
198,600 | Johnson & Johnson | 13,921,860 | ||||
294,700 | Merck & Co., Inc. | 12,065,018 | ||||
604,400 | Pfizer, Inc. | 15,158,352 | ||||
144,200 | Stryker Corp. | 7,905,044 | ||||
|
| |||||
85,743,401 | ||||||
|
| |||||
Industrial Services - 2.2% | ||||||
108,250 | National Oilwell Varco, Inc. | 7,398,888 | ||||
98,302 | Oceaneering International, Inc. | 5,287,665 | ||||
147,000 | Seadrill, Ltd. | 5,409,600 | ||||
|
| |||||
18,096,153 | ||||||
|
| |||||
Non-Energy Minerals - 0.7% | ||||||
161,400 | Freeport-McMoRan Copper & Gold, Inc. | 5,519,880 | ||||
|
| |||||
Process Industries - 0.6% | ||||||
119,703 | International Paper Co. | 4,768,968 | ||||
|
| |||||
Producer Manufacturing - 9.1% | ||||||
65,800 | 3M Co. | 6,109,530 | ||||
92,700 | ADT Corp. | 4,309,623 | ||||
90,700 | Autoliv, Inc. | 6,112,273 | ||||
68,700 | Deere & Co. | 5,937,054 | ||||
177,300 | Emerson Electric Co. | 9,389,808 | ||||
33,200 | Flowserve Corp. | 4,873,760 | ||||
405,400 | General Electric Co. | 8,509,346 | ||||
185,300 | Honeywell International, Inc. | 11,760,991 | ||||
100 | Pentair, Ltd. * | 4,915 |
See accompanying notes to financial statements.
12 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
234,100 | Tyco International, Ltd. | 6,847,425 | ||||
109,500 | United Technologies Corp. | 8,980,095 | ||||
|
| |||||
72,834,820 | ||||||
|
| |||||
Retail Trade - 6.2% | ||||||
136,900 | Cato Corp. | 3,755,167 | ||||
218,800 | CVS Caremark Corp. | 10,578,980 | ||||
136,700 | Home Depot, Inc. | 8,454,895 | ||||
180,900 | Target Corp. | 10,703,853 | ||||
161,600 | TJX Cos., Inc. | 6,859,920 | ||||
140,200 | Wal-Mart Stores, Inc. | 9,565,846 | ||||
|
| |||||
49,918,661 | ||||||
|
| |||||
Technology Services - 5.0% | ||||||
178,100 | Accenture, PLC | 11,843,650 | ||||
111,550 | Automatic Data Processing, Inc. | 6,359,466 | ||||
486,900 | Microsoft Corp. | 13,014,837 | ||||
265,300 | Oracle Corp. | 8,839,796 | ||||
|
| |||||
40,057,749 | ||||||
|
| |||||
Transportation - 1.8% | ||||||
66,000 | Union Pacific Corp. | 8,297,520 | ||||
85,000 | United Parcel Service, Inc. | 6,267,050 | ||||
|
| |||||
14,564,570 | ||||||
|
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Utilities - 4.0% | ||||||
311,700 | Kinder Morgan, Inc. | 11,012,361 | ||||
126,800 | NextEra Energy, Inc. | 8,773,292 | ||||
154,200 | UGI Corp. | 5,043,882 | ||||
195,900 | Wisconsin Energy Corp. | 7,218,915 | ||||
|
| |||||
32,048,450 | ||||||
|
| |||||
Total Common Stocks | 768,722,348 | |||||
|
| |||||
Closed-End Mutual Funds - 1.7% |
| |||||
313,046 | Kayne Anderson MLP Investment Co. | 9,225,466 | ||||
143,900 | Tortoise Energy Capital Corp. | 4,096,833 | ||||
|
| |||||
Total Closed-End Mutual Funds | 13,322,299 | |||||
|
| |||||
Total Investments in Securities - 97.5% | 782,044,647 | |||||
Other Assets and Liabilities, net - 2.5% | 20,117,363 | |||||
|
| |||||
Total Net Assets - 100.0% | $ | 802,162,010 | ||||
|
|
* | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
ADR — American Depositary Receipt
PLC — Public Limited Company
A summary of the levels for the Fund’s investments as of December 31, 2012 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 | Total ($) | |||||||||
|
| |||||||||||
Common Stocks ** | 768,722,348 | — | — | 768,722,348 | ||||||||
Closed-End Mutual Funds | 13,322,299 | — | — | 13,322,299 | ||||||||
|
| |||||||||||
Total: | 782,044,647 | — | — | 782,044,647 | ||||||||
|
|
** For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.
For the reporting period, there were no transfers between levels 1, 2 and 3.
See accompanying notes to financial statements.
DECEMBER 31, 2012 | 13 |
Sit Global Dividend Growth Fund - Class I and Class S
|
OBJECTIVE & STRATEGY
The objective of the Global Dividend Growth Fund is to provide current income that exceeds the dividend yield of a composite index (comprised of 60% S&P 500® Index and 40% MSCI EAFE 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.
Despite facing challenges from an intensifying European debt crisis, slowing economic growth in the U.S. and China, and a tense political standoff on the U.S. fiscal cliff, global equity markets benefited from favorable monetary policies in the U.S. and globally and resiliently delivered positive double digit returns in 2012. In the last six months of 2012, the Sit Global Dividend Growth Fund Class I, while delivering a competitive absolute return of +7.48%, trailed the 9.11% return of the Composite Index (60% S&P 500 Index and 40% MSCI EAFE Index). Non-dividend paying, more aggressive, cyclical stocks outperformed the market and as a result, the more conservative Sit Global Dividend Growth Fund achieved a strong absolute return, but trailed the Composite Index. Within the Composite Index, the financial and material sectors had the strongest returns and the utilities and telecommunication sectors were the largest underperformers at the group level. Regionally, Europe and Asia ex-Japan were the top performing regions while North America and Japan were the worst performing regions.
Contributing favorably to the relative performance in the last six months were the Fund’s holdings in telecommunication services (Rogers Communications and not owning Vodafone and AT&T), utilities (Centrica and Kinder Morgan), and retailing (Inditex and Home Depot). The underweight in Apple, which has been a consistent detractor from the relative performance in 2012 throughout the first two quarters of the year, was the largest individual contributor amongst underweight stocks to the relative results in the last six months of 2012 with Apple returning - 8.05%. Detracting modestly from the relative results over the aforementioned time period were the Fund’s holdings in materials (E.I. DuPont), banks (not owning U.S. Bancorp and Barclays), and pharmaceuticals (GlaxoSmithKline).
Regionally, Japan (Komatsu) contributed favorably to the relative performance over the last six months, as the positive currency effect more than offset the underweight position and stock selection. North America was the next best relative contributor thanks to holdings in Rogers Communications, Marathon Petroleum, and Baxter International. Conversely, the United Kingdom (GlaxoSmithKline, Pearson, and Burberry) and the euro area (not owning BNP Paribas and BASF) took away from relative performance.
The Fund continues to maintain a high quality bias as measured by historical dividend growth, free cash flow yield, earnings stability,
HYPOTHETICAL GROWTH OF $10,000
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 Composite Index, S&P 500® Index and MSCI EAFE 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 | A composite index comprised of 60% S&P 500® Index and 40% MSCI EAFE Index. This is the Fund’s primary index. |
2 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.
3 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.
return on invested capital, free cash flow margins and debt levels. Importantly, despite this high quality bias, the portfolio is attractively valued compared to the broad market index. As was seen in the first six months of 2012, dividend increases have continued in the second half of 2012. Dividend increases remain on the rise and nearly all of the companies (95%) in the Fund increased their dividends in the year 2012. The average dividend increase for the year was nearly 20%.
Roger J. Sit Kent L. Johnson Raymond E. Sit | Michael J. Stellmacher Tasha M. Murdoff |
Portfolio Managers
14 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2012 | ||||||||||||||||||||
Sit Global Dividend Growth Fund | MSCI EAFE | |||||||||||||||||||
Class I | Class S | Composite Index 1 | S&P 500® Index 2 | |||||||||||||||||
Six Month | 7.48 | % | 7.29 | % | 9.11 | % | 5.95 | % | 13.95 | % | ||||||||||
One Year | 13.61 | 13.35 | 16.64 | 16.00 | 17.32 | |||||||||||||||
Since Inception | 9.27 | 9.00 | 5.94 | 7.22 | 3.79 | |||||||||||||||
(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 | A composite index comprised of 60% S&P 500® Index and 40% MSCI EAFE Index. |
2 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.
3 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.
PORTFOLIO SUMMARY
Class I: | ||
Net Asset Value 12/31/12: | $13.22 Per Share | |
Net Asset Value 6/30/12: | $12.55 Per Share | |
Total Net Assets: | $12.1 Million | |
Class S: | ||
Net Asset Value 12/31/12: | $13.21 Per Share | |
Net Asset Value 6/30/12: | $12.54 Per Share | |
Total Net Assets: | $2.5 Million | |
Weighted Average Market Cap: | $85.8 Billion |
TOP 10 HOLDINGS
1. Centrica, PLC
2. Chevron Corp.
3. Royal Dutch Shell, PLC, ADR
4. Verizon Communications, Inc.
5. Rogers Communications, Inc.
6. GlaxoSmithKline, PLC, ADR
7. Covidien, PLC
8. BHP Billiton, Ltd., ADR
9. McDonald’s Corp.
10. SGS SA
Based on total net assets as of December 31, 2012. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2012. Subject to change.
DECEMBER 31, 2012 | 15 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit Global Dividend Growth Fund
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Common Stocks - 94.8% | ||||||
Asia - 7.0% | ||||||
Australia - 3.2% | ||||||
3,750 | BHP Billiton, Ltd., ADR | 294,150 | ||||
1,300 | Westpac Banking Corp., ADR | 179,283 | ||||
|
| |||||
473,433 | ||||||
|
| |||||
China/Hong Kong - 1.3% | ||||||
3,475 | HSBC Holdings, PLC, ADR | 184,418 | ||||
|
| |||||
Japan - 2.0% | ||||||
6,300 | Komatsu, Ltd. | 161,660 | ||||
4,600 | Seven & I Holdings Co., Ltd. | 129,678 | ||||
|
| |||||
291,338 | ||||||
|
| |||||
Singapore - 0.5% | ||||||
2,200 | Avago Technologies, Ltd. | 69,652 | ||||
|
| |||||
Europe - 27.2% | ||||||
France - 1.0% | ||||||
2,200 | Schlumberger, Ltd. | 152,438 | ||||
|
| |||||
Germany - 1.3% | ||||||
1,035 | Muenchener Rueckver | 186,847 | ||||
|
| |||||
Ireland - 3.0% | ||||||
2,050 | Accenture, PLC | 136,325 | ||||
5,125 | Covidien, PLC | 295,918 | ||||
|
| |||||
432,243 | ||||||
|
| |||||
Norway - 1.4% | ||||||
5,600 | Seadrill, Ltd. | 206,080 | ||||
|
| |||||
Spain - 1.4% | ||||||
1,455 | Inditex SA | 204,438 | ||||
|
| |||||
Sweden - 1.0% | ||||||
2,200 | Autoliv, Inc. | 148,258 | ||||
|
| |||||
Switzerland - 5.1% | ||||||
1,700 | ACE, Ltd. | 135,660 | ||||
600 | Kuehne & Nagel International | 72,336 | ||||
3,850 | Nestle SA | 251,187 | ||||
126 | SGS SA | 279,854 | ||||
|
| |||||
739,037 | ||||||
|
| |||||
United Kingdom - 13.0% | ||||||
2,670 | British American Tobacco, PLC | 135,730 | ||||
8,850 | Burberry Group, PLC | 177,899 | ||||
77,000 | Centrica, PLC | 420,245 | ||||
1,950 | Diageo, PLC, ADR | 227,331 | ||||
7,300 | GlaxoSmithKline, PLC, ADR | 317,331 | ||||
14,300 | Pearson, PLC, ADR | 279,422 | ||||
4,900 | Royal Dutch Shell, PLC, ADR | 347,361 | ||||
|
| |||||
1,905,319 | ||||||
|
| |||||
North America - 60.6% | ||||||
Bermuda - 1.0% | ||||||
1,900 | PartnerRe, Ltd. | 152,931 | ||||
|
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Canada - 2.2% |
| |||||
7,000 | Rogers Communications, Inc. | 318,640 | ||||
|
| |||||
United States - 57.4% | ||||||
1,150 | 3M Co. | 106,778 | ||||
415 | Apple, Inc. | 221,208 | ||||
1,950 | Automatic Data Processing, Inc. | 111,170 | ||||
2,000 | Baxter International, Inc. | 133,320 | ||||
3,100 | Bristol-Myers Squibb Co. | 101,029 | ||||
2,400 | Broadcom Corp. * | 79,704 | ||||
4,100 | Cardinal Health, Inc. | 168,838 | ||||
2,000 | Caterpillar, Inc. | 179,160 | ||||
3,525 | Chevron Corp. | 381,194 | ||||
3,800 | CVS Caremark Corp. | 183,730 | ||||
1,600 | Deere & Co. | 138,272 | ||||
3,300 | Emerson Electric Co. | 174,768 | ||||
800 | Franklin Resources, Inc. | 100,560 | ||||
3,175 | Freeport-McMoRan Copper & Gold, Inc. | 108,585 | ||||
3,850 | General Mills, Inc. | 155,578 | ||||
600 | Goldman Sachs Group, Inc. | 76,536 | ||||
3,000 | Home Depot, Inc. | 185,550 | ||||
2,975 | Honeywell International, Inc. | 188,823 | ||||
6,600 | Intel Corp. | 136,158 | ||||
1,350 | International Business Machines Corp. | 258,592 | ||||
1,700 | International Paper Co. | 67,727 | ||||
3,000 | Johnson & Johnson | 210,300 | ||||
5,800 | JPMorgan Chase & Co. | 255,026 | ||||
5,250 | Kinder Morgan, Inc. | 185,482 | ||||
2,325 | Marathon Petroleum Corp. | 146,475 | ||||
4,100 | Marsh & McLennan Cos., Inc. | 141,327 | ||||
3,275 | McDonald’s Corp. | 288,888 | ||||
4,000 | Merck & Co., Inc. | 163,760 | ||||
8,100 | Microsoft Corp. | 216,513 | ||||
2,175 | Moody’s Corp. | 109,446 | ||||
2,975 | Occidental Petroleum Corp. | 227,915 | ||||
2,100 | Oracle Corp. | 69,972 | ||||
3,150 | PepsiCo, Inc. | 215,554 | ||||
9,900 | Pfizer, Inc. | 248,292 | ||||
2,500 | Philip Morris International, Inc. | 209,100 | ||||
2,000 | Procter & Gamble Co. | 135,780 | ||||
2,800 | Qualcomm, Inc. | 173,656 | ||||
1,875 | Snap-On, Inc. | 148,106 | ||||
1,400 | Stanley Black & Decker, Inc. | 103,558 | ||||
3,400 | Target Corp. | 201,178 | ||||
3,750 | TJX Cos., Inc. | 159,188 | ||||
1,400 | Travelers Cos., Inc. | 100,548 | ||||
2,325 | Tupperware Brands Corp. | 149,032 | ||||
775 | Union Pacific Corp. | 97,433 | ||||
2,950 | United Parcel Service, Inc. | 217,504 | ||||
2,125 | United Technologies Corp. | 174,271 | ||||
7,500 | US Bancorp | 239,550 | ||||
7,500 | Verizon Communications, Inc. | 324,525 | ||||
1,100 | Wal-Mart Stores, Inc. | 75,053 |
See accompanying notes to financial statements.
16 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
4,000 | Wells Fargo & Co. | 136,720 | ||||
|
| |||||
8,381,432 | ||||||
|
| |||||
Total Common Stocks | 13,846,504 | |||||
|
| |||||
Closed-End Mutual Funds - 1.2% | ||||||
3,400 | Kayne Anderson MLP Investment Co. | 100,198 | ||||
2,500 | Tortoise Energy Capital Corp. | 71,175 | ||||
|
| |||||
Total Closed-End Mutual Funds | 171,373 | |||||
|
| |||||
Total Investments in Securities - 96.0% | ||||||
(cost: $12,460,362) | 14,017,877 | |||||
Other Assets and Liabilities, net - 4.0% | 584,286 | |||||
|
| |||||
Total Net Assets - 100.0% | $ | 14,602,163 | ||||
|
|
* Non-income producing security.
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
ADR — American Depositary Receipt
MLP — Master Limited Partnership
PLC — Public Limited Company
See accompanying notes to financial statements.
DECEMBER 31, 2012 | 17 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit Global Dividend Growth Fund (Continued)
A summary of the levels for the Fund’s investments as of December 31, 2012 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||||
Level 1 Price ($) | Level 2 Other significant | Level 3 Significant | Total ($) | |||||||||||
|
| |||||||||||||
Common Stocks | ||||||||||||||
Australia | 473,433 | — | — | 473,433 | ||||||||||
Bermuda | 152,931 | — | — | 152,931 | ||||||||||
Canada | 318,640 | — | — | 318,640 | ||||||||||
China/Hong Kong | 184,418 | — | — | 184,418 | ||||||||||
France | 152,438 | — | — | 152,438 | ||||||||||
Germany | — | 186,847 | — | 186,847 | ||||||||||
Ireland | 432,243 | — | — | 432,243 | ||||||||||
Japan | — | 291,338 | — | 291,338 | ||||||||||
Norway | 206,080 | — | — | 206,080 | ||||||||||
Singapore | 69,652 | — | — | 69,652 | ||||||||||
Spain | — | 204,438 | — | 204,438 | ||||||||||
Sweden | 148,258 | — | — | 148,258 | ||||||||||
Switzerland | 135,660 | 603,377 | — | 739,037 | ||||||||||
United Kingdom | 1,171,445 | 733,874 | — | 1,905,319 | ||||||||||
United States | 8,381,432 | — | — | 8,381,432 | ||||||||||
|
| |||||||||||||
11,826,630 | 2,019,874 | — | 13,846,504 | |||||||||||
|
| |||||||||||||
Closed-End Mutual Funds | 171,373 | — | — | 171,373 | ||||||||||
|
| |||||||||||||
Total: | 11,998,003 | 2,019,874 | — | 14,017,877 | ||||||||||
|
|
The Fund adjusts the closing price of foreign equity securities by applying a systematic process for events occurring after the close of the foreign exchange. At each reporting period, this process is applied for all foreign securities and therefore all foreign securities are classified as level 2. There are no transfers between level 1 and level 2 between reporting periods as a result of applying this process. Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs) 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.
18 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
[This page intentionally left blank.]
DECEMBER 31, 2012 | 19 |
|
OBJECTIVE & STRATEGY
The objective of the 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.
The Sit Large Cap Growth Fund’s six-month return was +4.37%, compared to the +4.71% return for the Russell 1000® Growth Index. The S&P 500® Index return for the period was +5.95%.
Despite a considerable slowing in the pace of corporate earnings growth as the year progressed and a slight setback early in the fourth quarter, U.S. equity markets posted solid gains during the second half of 2012. The U.S. economy was relatively resilient, despite considerable uncertainty surrounding the presidential election and the impact brought on by the “fiscal cliff.” As we begin 2013, our investment strategy is largely based on our economic outlook, which calls for “more of the same.” Specifically, we see modest economic growth and inflation in the U.S., with the negative impact of higher tax rates for consumers largely offset by improvements in housing and somewhat better economic trends outside the U.S. (particularly in emerging markets), which should give exports a boost. We continue to believe that a focus on quality growth companies is appropriate in this slow growth environment. Quality, as we define it, refers to companies with strong balance sheets, predictable earnings growth, consistent cash flow generation and management teams that focus on improving returns on capital. While there are high quality companies in many sectors of the market, we believe they are particularly prevalent in the heaviest-weighted sectors within the Fund, including electronic technology, technology services, consumer non-durables, retail trade and health technology. Each of these sectors has a greater than 10% weighting within the Fund.
Relative to the Russell 1000® Growth Index, the Fund performance was negatively impacted by our overweighted position in the electronic technology sector and our underweighted position in consumer services. Stock selection within process industries also detracted from relative performance. Conversely, the Fund’s return benefited from strong performance of holdings within the finance, health technology and technology services sectors. In terms of individual stocks, the most positive contributors to returns included Marathon Petroleum, Gilead Sciences, Flowserve, Celgene and Rogers Communications.
HYPOTHETICAL GROWTH OF $10,000
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.
The holdings that most detracted from performance were Informatica, Intuitive Surgical, Teradata, VeriFone Systems and priceline.com.
Based on the strong fundamentals and attractive valuations for companies held in the Fund, we remain enthusiastic about the long-term outlook.
Roger J. Sit
Ronald D. Sit
Michael J. Stellmacher
Portfolio Managers
20 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2012 | ||||||||||||
Sit Large Cap Growth Fund | Russell 1000® Growth Index 1 | Russell 1000® Index 2 | ||||||||||
Six Month | 4.37 | % | 4.71 | % | 6.44 | % | ||||||
One Year | 13.96 | 15.26 | 16.42 | |||||||||
Five Year | 1.18 | 3.12 | 1.92 | |||||||||
Ten Year | 7.55 | 7.52 | 7.52 | |||||||||
Since Inception 3 | 9.46 | 10.43 | 11.32 | |||||||||
(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 12/31/12: | $43.45 Per Share | |
Net Asset Value 6/30/12: | $45.53 Per Share | |
Total Net Assets: | $203.2 Million | |
Weighted Average Market Cap: | $107.9 Billion |
TOP 10 HOLDINGS
1. Apple, Inc.
2. International Business Machines Corp.
3. Google, Inc.
4. Oracle Corp.
5. Qualcomm, Inc.
6. Philip Morris International, Inc.
7. Coca-Cola Co.
8. PepsiCo, Inc.
9. McDonald’s Corp.
10. Chevron Corp.
Based on total net assets as of December 31, 2012. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2012. Subject to change.
DECEMBER 31, 2012 | 21 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit Large Cap Growth Fund
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Common Stocks - 99.1% | ||||||
Communications - 2.0% | ||||||
24,000 | Rogers Communications, Inc. | 1,092,480 | ||||
67,800 | Verizon Communications, Inc. | 2,933,706 | ||||
|
| |||||
4,026,186 | ||||||
|
| |||||
Consumer Durables - 0.6% | ||||||
20,200 | Tupperware Brands Corp. | 1,294,820 | ||||
|
| |||||
Consumer Non-Durables - 10.5% | ||||||
30,200 | Coach, Inc. | 1,676,402 | ||||
117,600 | Coca-Cola Co. | 4,263,000 | ||||
43,900 | General Mills, Inc. | 1,773,999 | ||||
47,800 | NIKE, Inc. | 2,466,480 | ||||
59,000 | PepsiCo, Inc. | 4,037,370 | ||||
52,200 | Philip Morris International, Inc. | 4,366,008 | ||||
41,800 | Procter & Gamble Co. | 2,837,802 | ||||
|
| |||||
21,421,061 | ||||||
|
| |||||
Consumer Services - 3.6% | ||||||
42,300 | McDonald’s Corp. | 3,731,283 | ||||
23,500 | Visa, Inc. | 3,562,130 | ||||
|
| |||||
7,293,413 | ||||||
|
| |||||
Electronic Technology - 18.5% | ||||||
24,800 | Apple, Inc. | 13,219,144 | ||||
89,900 | Applied Materials, Inc. | 1,028,456 | ||||
33,800 | Avago Technologies, Ltd. | 1,070,108 | ||||
64,900 | Broadcom Corp. * | 2,155,329 | ||||
109,500 | Ciena Corp. * | 1,719,150 | ||||
72,400 | EMC Corp. * | 1,831,720 | ||||
113,000 | Intel Corp. | 2,331,190 | ||||
42,600 | International Business Machines Corp. | 8,160,030 | ||||
80,000 | Qualcomm, Inc. | 4,961,600 | ||||
34,500 | VeriFone Systems, Inc. * | 1,023,960 | ||||
|
| |||||
37,500,687 | ||||||
|
| |||||
Energy Minerals - 3.4% | ||||||
33,100 | Chevron Corp. | 3,579,434 | ||||
37,500 | Marathon Petroleum Corp. | 2,362,500 | ||||
11,800 | Occidental Petroleum Corp. | 903,998 | ||||
|
| |||||
6,845,932 | ||||||
|
| |||||
Finance - 3.8% | ||||||
19,400 | ACE, Ltd. | 1,548,120 | ||||
18,200 | Franklin Resources, Inc. | 2,287,740 | ||||
9,600 | Goldman Sachs Group, Inc. | 1,224,576 | ||||
35,900 | JPMorgan Chase & Co. | 1,578,523 | ||||
34,200 | Marsh & McLennan Cos., Inc. | 1,178,874 | ||||
|
| |||||
7,817,833 | ||||||
|
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Health Services - 2.7% | ||||||
35,819 | Express Scripts Holding Co. * | 1,934,226 | ||||
17,700 | McKesson Corp. | 1,716,192 | ||||
33,500 | UnitedHealth Group, Inc. | 1,817,040 | ||||
|
| |||||
5,467,458 | ||||||
|
| |||||
Health Technology - 10.5% | ||||||
16,800 | Alexion Pharmaceuticals, Inc. * | 1,576,008 | ||||
24,900 | Allergan, Inc. | 2,284,077 | ||||
19,400 | Baxter International, Inc. | 1,293,204 | ||||
86,100 | Bristol-Myers Squibb Co. | 2,805,999 | ||||
27,200 | Celgene Corp. * | 2,141,184 | ||||
35,200 | Gilead Sciences, Inc. * | 2,585,440 | ||||
3,700 | Intuitive Surgical, Inc. * | 1,814,369 | ||||
21,800 | Johnson & Johnson | 1,528,180 | ||||
89,600 | Pfizer, Inc. | 2,247,168 | ||||
27,100 | Stryker Corp. | 1,485,622 | ||||
23,500 | Thermo Fisher Scientific, Inc. | 1,498,830 | ||||
|
| |||||
21,260,081 | ||||||
|
| |||||
Industrial Services - 1.9% | ||||||
34,200 | Schlumberger, Ltd. | 2,369,718 | ||||
40,200 | Seadrill, Ltd. | 1,479,360 | ||||
|
| |||||
3,849,078 | ||||||
|
| |||||
Non-Energy Minerals - 0.8% | ||||||
49,200 | Freeport-McMoRan Copper & Gold, Inc. | 1,682,640 | ||||
|
| |||||
Process Industries - 3.6% | ||||||
13,000 | CF Industries Holdings, Inc. | 2,641,080 | ||||
42,400 | Ecolab, Inc. | 3,048,560 | ||||
15,100 | Praxair, Inc. | 1,652,695 | ||||
|
| |||||
7,342,335 | ||||||
|
| |||||
Producer Manufacturing - 8.9% | ||||||
23,300 | 3M Co. | 2,163,405 | ||||
20,200 | Caterpillar, Inc. | 1,809,516 | ||||
38,600 | Danaher Corp. | 2,157,740 | ||||
26,250 | Deere & Co. | 2,268,525 | ||||
34,900 | Emerson Electric Co. | 1,848,304 | ||||
13,500 | Flowserve Corp. | 1,981,800 | ||||
29,000 | Honeywell International, Inc. | 1,840,630 | ||||
9,800 | Precision Castparts Corp. | 1,856,316 | ||||
25,100 | United Technologies Corp. | 2,058,451 | ||||
|
| |||||
17,984,687 | ||||||
|
| |||||
Retail Trade - 10.1% | ||||||
10,200 | Amazon.com, Inc. * | 2,561,628 | ||||
18,000 | Bed Bath & Beyond, Inc. * | 1,006,380 | ||||
11,000 | Costco Wholesale Corp. | 1,086,470 | ||||
63,800 | CVS Caremark Corp. | 3,084,730 | ||||
56,300 | Dick’s Sporting Goods, Inc. | 2,561,087 | ||||
40,100 | Home Depot, Inc. | 2,480,185 | ||||
50,800 | Target Corp. | 3,005,836 |
See accompanying notes to financial statements.
22 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
64,200 | TJX Cos., Inc. | 2,725,290 | ||||
30,500 | Wal-Mart Stores, Inc. | 2,081,015 | ||||
|
| |||||
20,592,621 | ||||||
|
| |||||
Technology Services - 14.5% | ||||||
46,600 | Accenture, PLC | 3,098,900 | ||||
22,500 | Cognizant Technology Solutions Corp. * | 1,666,125 | ||||
10,500 | Google, Inc. * | 7,448,385 | ||||
45,100 | Informatica Corp. * | 1,367,432 | ||||
102,000 | Microsoft Corp. | 2,726,460 | ||||
151,300 | Oracle Corp. | 5,041,316 | ||||
4,500 | priceline.com, Inc. * | 2,795,400 | ||||
6,700 | Salesforce.com, Inc. * | 1,126,270 | ||||
25,937 | Teradata Corp. * | 1,605,241 | ||||
28,500 | VMware, Inc. * | 2,682,990 | ||||
|
| |||||
29,558,519 | ||||||
|
| |||||
Transportation - 2.4% | ||||||
24,800 | Union Pacific Corp. | 3,117,856 | ||||
23,600 | United Parcel Service, Inc. | 1,740,028 | ||||
|
| |||||
4,857,884 | ||||||
|
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Utilities - 1.3% | ||||||
41,000 | Kinder Morgan, Inc. | 1,448,530 | ||||
33,900 | Wisconsin Energy Corp. | 1,249,215 | ||||
|
| |||||
2,697,745 | ||||||
|
| |||||
Total Common Stocks | 201,492,980 | |||||
|
| |||||
Total Investments in Securities - 99.1% | 201,492,980 | |||||
Other Assets and Liabilities, net 0.9% | 1,740,653 | |||||
|
| |||||
Total Net Assets - 100.0% | $ | 203,233,633 | ||||
|
|
* | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
PLC — Public Limited Company
A summary of the levels for the Fund’s investments as of December 31, 2012 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||
Level 1 Quoted Price ($) | Level 2 Other significant | Level 3 Significant | Total ($) | |||||||||
|
| |||||||||||
Common Stocks ** | 201,492,980 | — | — | 201,492,980 | ||||||||
|
| |||||||||||
Total: | 201,492,980 | — | — | 201,492,980 | ||||||||
|
|
** For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.
For the reporting period, there were no transfers between levels 1, 2 and 3.
See accompanying notes to financial statements.
DECEMBER 31, 2012 | 23 |
|
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 the common stocks of growth companies with capitalizations of $2 billion to $15 billion at the time of purchase.
The Sit Mid Cap Growth Fund’s return for the second half of 2012 was +5.30%, compared to +7.13% for the Russell Midcap® Growth Index. The S&P MidCap 400® Index rose +8.54% during the period.
Despite some volatility along the way, mid cap stocks posted solid returns over the past six months. Facing a slowdown in the pace of corporate earnings growth, investors’ sentiment toward equities has clearly benefited from a highly accommodative Federal Reserve, as another quantitative easing (“QE”) program was announced in September. While the economic impact from these programs is far from clear, there is no question that these unconventional policies have supported “risk” assets, such as equities. With valuations for stocks moving higher over the past year, we believe a focus on fundamentals is particularly important, given our projection of another year of modest growth in the U.S. economy. Primarily, we believe a focus on companies with strong financial characteristics (e.g., low debt levels, strong free cash flow generation) will outperform the overall market, as “organic” growth becomes more challenging. These companies have the potential to create value for shareholders by repurchasing stock, increasing dividends or making accretive acquisitions. In addition, we believe maintaining a diversified portfolio is prudent to guard against volatility, given that considerable uncertainties still exist (i.e., U.S. debt ceiling, fragility in Europe). The heaviest weighted sectors within the Fund are producer manufacturing, technology services and retail trade.
Relative to the Russell Midcap® Growth Index, the key reasons for the Fund’s underperformance was stock selection in several sectors, including electronic technology, consumer services and process industries. Stocks that lagged in these sectors over the period included Skyworks Solutions, Veeco Instruments, Chipotle Mexican Grill, International Game Technology, Ecolab and Albemarle. On the positive side, strong stock selection in energy minerals, retail trade and finance aided performance during the second half of the year. Top performers
HYPOTHETICAL GROWTH OF $10,000
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.
in these sectors included Gulfport Energy, Marathon Petroleum, lululemon athletica, Macy’s, Ameriprise Financial and Affiliated Managers Group.
Our research staff remains committed and focused on identifying lasting investment opportunities that will help our shareholders achieve their investment goals over the long term.
Roger J. Sit
Kent L. Johnson
Robert W. Sit
Portfolio Managers
24 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2012 | ||||||||||||
Sit Mid Cap Growth Fund | Russell Midcap® Growth Index 1 | Russell Midcap® Index 2 | ||||||||||
Six Month | 5.30 | % | 7.13 | % | 8.62 | % | ||||||
One Year | 18.36 | 15.81 | 17.28 | |||||||||
Five Year | 0.83 | 3.23 | 3.57 | |||||||||
Ten Year | 9.75 | 10.32 | 10.65 | |||||||||
Since Inception | 11.59 | n/a | n/a | |||||||||
(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 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 12/31/12: | $16.24 Per Share | |
Net Asset Value 6/30/12: | $15.77 Per Share | |
Total Net Assets: | $142.9 Million | |
Weighted Average Market Cap: | $12.3 Billion |
TOP 10 HOLDINGS
1. TJX Cos., Inc.
3. ANSYS, Inc.
2. Ecolab, Inc.
4. Cognizant Technology Solutions Corp.
5. Flowserve Corp.
6. Ulta Salon Cosmetics & Fragrance, Inc.
7. Iconix Brand Group, Inc.
7. Trimble Navigation, Ltd.
8. Dunkin’ Brands Group, Inc.
10. CF Industries Holdings, Inc.
Based on total net assets as of December 31, 2012. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2012. Subject to change.
DECEMBER 31, 2012 | 25 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit Mid Cap Growth Fund
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Common Stocks - 98.7% | ||||||
Commercial Services - 0.5% | ||||||
14,800 | Moody’s Corp. | 744,736 | ||||
|
| |||||
Communications - 1.2% | ||||||
|
| |||||
24,600 | SBA Communications Corp. * | 1,747,092 | ||||
|
| |||||
Consumer Durables - 4.1% | ||||||
13,100 | Fossil, Inc. * | 1,219,610 | ||||
11,900 | Polaris Industries, Inc. | 1,001,385 | ||||
23,200 | Snap-On, Inc. | 1,832,568 | ||||
27,900 | Tupperware Brands Corp. | 1,788,390 | ||||
|
| |||||
5,841,953 | ||||||
|
| |||||
Consumer Non-Durables - 5.6% | ||||||
30,200 | Coach, Inc. | 1,676,402 | ||||
63,900 | Coca-Cola Enterprises, Inc. | 2,027,547 | ||||
112,500 | Iconix Brand Group, Inc. * | 2,511,000 | ||||
33,400 | Monster Beverage Corp. * | 1,766,192 | ||||
|
| |||||
7,981,141 | ||||||
|
| |||||
Consumer Services - 4.0% | ||||||
5,800 | Chipotle Mexican Grill, Inc. * | 1,725,268 | ||||
74,900 | Dunkin’ Brands Group, Inc. | 2,485,182 | ||||
39,532 | Marriott International, Inc. | 1,473,358 | ||||
|
| |||||
5,683,808 | ||||||
|
| |||||
Electronic Technology - 8.1% | ||||||
32,800 | Avago Technologies, Ltd. | 1,038,448 | ||||
56,000 | Broadcom Corp. * | 1,859,760 | ||||
89,800 | Ciena Corp. * | 1,409,860 | ||||
11,100 | F5 Networks, Inc. * | 1,078,365 | ||||
42,500 | Linear Technology Corp. | 1,457,750 | ||||
10,700 | MICROS Systems, Inc. * | 454,107 | ||||
80,800 | Skyworks Solutions, Inc. * | 1,640,240 | ||||
42,500 | Veeco Instruments, Inc. * | 1,254,600 | ||||
45,500 | VeriFone Systems, Inc. * | 1,350,440 | ||||
|
| |||||
11,543,570 | ||||||
|
| |||||
Energy Minerals - 4.3% | ||||||
7,400 | Apache Corp. | 580,900 | ||||
32,500 | Gulfport Energy Corp. * | 1,242,150 | ||||
31,200 | Marathon Petroleum Corp. | 1,965,600 | ||||
20,200 | Murphy Oil Corp. | 1,202,910 | ||||
32,800 | Southwestern Energy Co. * | 1,095,848 | ||||
|
| |||||
6,087,408 | ||||||
|
| |||||
Finance - 7.8% | ||||||
18,050 | ACE, Ltd. | 1,440,390 | ||||
14,800 | Affiliated Managers Group, Inc. * | 1,926,220 | ||||
29,000 | Ameriprise Financial, Inc. | 1,816,270 | ||||
14,900 | Discover Financial Services | 574,395 | ||||
7,200 | IntercontinentalExchange, Inc. * | 891,432 | ||||
32,200 | Marsh & McLennan Cos., Inc. | 1,109,934 |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
27,100 | Signature Bank/New York NY * | 1,933,314 | ||||
21,400 | T Rowe Price Group, Inc. | 1,393,782 | ||||
|
| |||||
11,085,737 | ||||||
|
| |||||
Health Services - 2.0% | ||||||
25,000 | Express Scripts Holding Co. * | 1,350,000 | ||||
9,400 | Laboratory Corp. of America Holdings * | 814,228 | ||||
7,500 | Stericycle, Inc. * | 699,525 | ||||
|
| |||||
2,863,753 | ||||||
|
| |||||
Health Technology - 9.0% | ||||||
11,300 | Alexion Pharmaceuticals, Inc. * | 1,060,053 | ||||
21,800 | Allergan, Inc. | 1,999,714 | ||||
26,300 | Celgene Corp. * | 2,070,336 | ||||
15,400 | Edwards Lifesciences Corp. * | 1,388,618 | ||||
13,400 | IDEXX Laboratories, Inc. * | 1,243,520 | ||||
3,700 | Intuitive Surgical, Inc. * | 1,814,369 | ||||
29,450 | Thermo Fisher Scientific, Inc. | 1,878,321 | ||||
38,300 | Thoratec Corp. * | 1,437,016 | ||||
|
| |||||
12,891,947 | ||||||
|
| |||||
Industrial Services - 5.1% | ||||||
34,800 | Chicago Bridge & Iron Co. NV | 1,612,980 | ||||
17,100 | National Oilwell Varco, Inc. | 1,168,785 | ||||
14,950 | Schlumberger, Ltd. | 1,035,886 | ||||
43,000 | Seadrill, Ltd. | 1,582,400 | ||||
57,700 | Waste Connections, Inc. | 1,949,683 | ||||
|
| |||||
7,349,734 | ||||||
|
| |||||
Non-Energy Minerals - 2.0% | ||||||
26,700 | Haynes International, Inc. | 1,384,929 | ||||
116,000 | Stillwater Mining Co. * | 1,482,480 | ||||
|
| |||||
2,867,409 | ||||||
|
| |||||
Process Industries - 8.4% | ||||||
17,200 | Airgas, Inc. | 1,570,188 | ||||
30,400 | Albemarle Corp. | 1,888,448 | ||||
11,800 | CF Industries Holdings, Inc. | 2,397,288 | ||||
40,600 | Ecolab, Inc. | 2,919,140 | ||||
31,200 | FMC Corp. | 1,825,824 | ||||
30,900 | Scotts Miracle-Gro Co. | 1,361,145 | ||||
|
| |||||
11,962,033 | ||||||
|
| |||||
Producer Manufacturing - 12.0% | ||||||
31,600 | AGCO Corp. * | 1,552,192 | ||||
60,187 | AMETEK, Inc. | 2,261,226 | ||||
20,300 | Cummins, Inc. | 2,199,505 | ||||
11,622 | Eaton Corp., PLC | 629,904 | ||||
19,300 | Flowserve Corp. | 2,833,240 | ||||
15,500 | MSC Industrial Direct Co., Inc. | 1,168,390 | ||||
11,900 | Precision Castparts Corp. | 2,254,098 | ||||
25,500 | SPX Corp. | 1,788,825 | ||||
41,700 | Trimble Navigation, Ltd. * | 2,492,826 | ||||
|
| |||||
17,180,206 | ||||||
|
|
See accompanying notes to financial statements.
26 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Retail Trade - 10.2% | ||||||
19,000 | Bed Bath & Beyond, Inc. * | 1,062,290 | ||||
52,100 | Dick’s Sporting Goods, Inc. | 2,370,029 | ||||
27,000 | Lululemon Athletica, Inc. * | 2,058,210 | ||||
58,600 | Macy’s, Inc. | 2,286,572 | ||||
18,300 | Nordstrom, Inc. | 979,050 | ||||
78,300 | TJX Cos., Inc. | 3,323,835 | ||||
26,200 | Ulta Salon Cosmetics & Fragrance, Inc. | 2,574,412 | ||||
|
| |||||
14,654,398 | ||||||
|
| |||||
Technology Services - 10.4% | ||||||
47,100 | ANSYS, Inc. * | 3,171,714 | ||||
15,100 | Citrix Systems, Inc. * | 992,825 | ||||
38,300 | Cognizant Technology Solutions Corp. * | 2,836,115 | ||||
63,400 | Informatica Corp. * | 1,922,288 | ||||
3,000 | priceline.com, Inc. * | 1,863,600 | ||||
31,000 | Teradata Corp. * | 1,918,590 | ||||
22,600 | Ultimate Software Group, Inc. * | 2,133,666 | ||||
|
| |||||
14,838,798 | ||||||
|
| |||||
Transportation - 1.9% | ||||||
24,100 | CH Robinson Worldwide, Inc. | 1,523,602 | ||||
29,200 | Expeditors International of Washington, Inc. | 1,154,860 | ||||
|
| |||||
2,678,462 | ||||||
|
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Utilities - 2.1% | ||||||
51,500 | Calpine Corp. * | 933,695 | ||||
25,100 | UGI Corp. | 821,021 | ||||
35,300 | Wisconsin Energy Corp. | 1,300,805 | ||||
|
| |||||
3,055,521 | ||||||
|
| |||||
Total Common Stocks | 141,057,706 | |||||
|
| |||||
Total Investments in Securities - 98.7% | 141,057,706 | |||||
Other Assets and Liabilities, net 1.3% | 1,887,937 | |||||
|
| |||||
Total Net Assets - 100.0% | $ | 142,945,643 | ||||
|
|
* | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
PLC — Public Limited Company
A summary of the levels for the Fund’s investments as of December 31, 2012 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||
Level 1 Quoted | Level 2 Other significant | Level 3 Significant | Total ($) | |||||||||
|
| |||||||||||
Common Stocks ** | 141,057,706 | — | — | 141,057,706 | ||||||||
|
| |||||||||||
Total: | 141,057,706 | — | — | 141,057,706 | ||||||||
|
|
** For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.
For the reporting period, there were no transfers between levels 1, 2 and 3.
See accompanying notes to financial statements.
DECEMBER 31, 2012 | 27 |
|
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 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 ($5.2 billion as of December 31, 2012).
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.
The Sit Small Cap Growth Fund returned +3.49% over the past six months. This compares to the six-month return of +5.30% for the Russell 2000® Growth Index, and the +7.20% return for the Russell 2000® Index.
Small cap stocks posted solid returns over the second half of 2012, in spite of some meaningful headwinds. Corporate earnings growth, for example, has moderated considerably in recent quarters, as comparisons have grown more difficult, compounded by slowing economies in many geographic regions around the world and uncertainty ahead of U.S. “fiscal cliff” negotiations. Since we expect another year of tepid economic growth in 2013, our investment staff is focused on identifying small- to mid-sized companies that do not require a robust economy to deliver solid earnings growth. In the producer manufacturing sector, for example, we prefer companies exposed to commercial aerospace, where a combination of solid traffic growth, emerging market demand and the need for greater fuel efficiency is driving demand. We continue to see multiple growth drivers for technology, emphasizing companies with exposure to key secular growth areas, including mobile commerce, the proliferation of mobile devices and the deployment of upgraded telecommunications infrastructure. Finally, we have increased exposure to the finance sector, focusing on banks with strong balance sheets that are generating loan growth, and property/casualty insurance companies that are benefiting from rising premium rates following several years of declines.
The Fund underperformed the Russell 2000® Growth Index during the second half of 2012. Relative performance was negatively impacted by stock selection in the electronic technology, technology services and consumer non-durables sectors. Laggards in these sectors included Skyworks Solutions, Micros Systems, Informatica, Citrix Systems and Monster Beverage. Conversely, holdings in health technology, energy minerals, and consumer durables positively impacted returns over the period. In terms of individual stocks in these sectors, Celgene,
HYPOTHETICAL GROWTH OF $10,000
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.
Amylin Pharmaceuticals, Gulfport Energy, Snap-On and Fossil had the most favorable impact on relative returns over the period.
Our research team remains highly focused on identifying long-term investment opportunities within the small cap universe, and we appreciate shareholders’ continued interest in the Fund.
Roger J. Sit | Michael J. Stellmacher | |
Kent L. Johnson | Robert W. Sit | |
Portfolio Managers |
28 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2012 | |||||||||||||||
Sit Small Cap Growth Fund | Russell 2000® Growth Index 1 | Russell 2000® Index 2 | |||||||||||||
Six Month | 3.49 | % | 5.30 | % | 7.20 | % | |||||||||
One Year | 14.40 | 14.59 | 16.35 | ||||||||||||
Five Year | 1.97 | 3.49 | 3.56 | ||||||||||||
Ten Year | 9.34 | 9.80 | 9.72 | ||||||||||||
Since Inception | 10.30 | 6.55 | 8.49 | ||||||||||||
(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 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 12/31/12: | $45.43 Per Share | |
Net Asset Value 6/30/12: | $43.90 Per Share | |
Total Net Assets: | $78.5 Million | |
Weighted Average Market Cap: | $4.9 Billion |
TOP 10 HOLDINGS
1. Ultimate Software Group, Inc.
2. Gulfport Energy Corp.
3. Alexion Pharmaceuticals, Inc.
4. ANSYS, Inc.
5. Tupperware Brands Corp.
6. Polaris Industries, Inc.
7. Snap-On, Inc.
8. Dunkin’ Brand Group, Inc.
9. Iconix Brand Group, Inc.
10. Affilliated Managers Group, Inc.
Based on total net assets as of December 31, 2012. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2012. Subject to change.
DECEMBER 31, 2012 | 29 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit Small Cap Growth Fund
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Common Stocks - 98.6% |
| |||||
Commercial Services - 0.6% |
| |||||
5,400 | Factset Research Systems, Inc. | 475,524 | ||||
|
| |||||
Communications - 2.2% | ||||||
13,150 | SBA Communications Corp. * | 933,913 | ||||
32,200 | TW Telecom, Inc. * | 820,134 | ||||
|
| |||||
1,754,047 | ||||||
|
| |||||
Consumer Durables - 6.9% | ||||||
9,200 | Fossil, Inc. * | 856,520 | ||||
18,000 | Polaris Industries, Inc. | 1,514,700 | ||||
19,100 | Snap-On, Inc. | 1,508,709 | ||||
24,400 | Tupperware Brands Corp. | 1,564,040 | ||||
|
| |||||
5,443,969 | ||||||
|
| |||||
Consumer Non-Durables - 7.1% | ||||||
65,400 | Iconix Brand Group, Inc. * | 1,459,728 | ||||
26,500 | Monster Beverage Corp. * | 1,401,320 | ||||
35,600 | Schweitzer-Mauduit International, Inc. | 1,389,468 | ||||
54,000 | Vera Bradley, Inc. * | 1,355,400 | ||||
|
| |||||
5,605,916 | ||||||
|
| |||||
Consumer Services - 4.7% | ||||||
18,000 | Buffalo Wild Wings, Inc. * | 1,310,760 | ||||
45,300 | Dunkin’ Brands Group, Inc. | 1,503,054 | ||||
17,400 | Life Time Fitness, Inc. * | 856,254 | ||||
|
| |||||
3,670,068 | ||||||
|
| |||||
Electronic Technology - 7.1% | ||||||
69,500 | Ciena Corp. * | 1,091,150 | ||||
4,400 | F5 Networks, Inc. * | 427,460 | ||||
17,700 | MICROS Systems, Inc. * | 751,188 | ||||
46,900 | Skyworks Solutions, Inc. * | 952,070 | ||||
15,800 | Synaptics, Inc. * | 473,526 | ||||
23,200 | Veeco Instruments, Inc. * | 684,864 | ||||
24,900 | VeriFone Systems, Inc. * | 739,032 | ||||
26,100 | Volterra Semiconductor Corp. * | 448,137 | ||||
|
| |||||
5,567,427 | ||||||
|
| |||||
Energy Minerals - 3.8% | ||||||
49,700 | Gulfport Energy Corp. * | 1,899,534 | ||||
66,300 | Northern Oil and Gas, Inc. * | 1,115,166 | ||||
|
| |||||
3,014,700 | ||||||
|
| |||||
Finance - 9.6% | ||||||
10,800 | Affiliated Managers Group, Inc. * | 1,405,620 | ||||
13,000 | Allied World Assurance Co. Holdings AG | 1,024,400 | ||||
28,100 | Axis Capital Holdings, Ltd. | 973,384 | ||||
24,400 | First Republic Bank/CA | 799,832 | ||||
17,000 | Signature Bank/New York NY * | 1,212,780 | ||||
12,650 | Stifel Financial Corp. * | 404,421 | ||||
38,500 | TCF Financial Corp. | 467,775 |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
10,100 | Texas Capital Bancshares, Inc. * | 452,682 | ||||
22,400 | Validus Holdings, Ltd. | 774,592 | ||||
|
| |||||
7,515,486 | ||||||
|
| |||||
Health Services - 1.2% | ||||||
10,400 | Stericycle, Inc. * | 970,008 | ||||
|
| |||||
Health Technology - 13.0% | ||||||
18,700 | Alexion Pharmaceuticals, Inc. * | 1,754,247 | ||||
15,600 | Celgene Corp. * | 1,228,032 | ||||
11,400 | Cubist Pharmaceuticals, Inc. * | 479,484 | ||||
22,800 | Haemonetics Corp. * | 931,152 | ||||
2,450 | Intuitive Surgical, Inc. * | 1,201,406 | ||||
15,200 | NuVasive, Inc. * | 234,992 | ||||
18,400 | PerkinElmer, Inc. | 584,016 | ||||
9,100 | Techne Corp. | 621,894 | ||||
31,300 | Thoratec Corp. * | 1,174,376 | ||||
21,000 | Tornier NV * | 352,590 | ||||
13,900 | United Therapeutics Corp. * | 742,538 | ||||
37,100 | Volcano Corp. * | 875,931 | ||||
|
| |||||
10,180,658 | ||||||
|
| |||||
Industrial Services - 5.5% | ||||||
15,500 | Atwood Oceanics, Inc. * | 709,745 | ||||
27,400 | Chicago Bridge & Iron Co. NV | 1,269,990 | ||||
5,200 | Core Laboratories NV | 568,412 | ||||
11,700 | Lufkin Industries, Inc. | 680,121 | ||||
31,000 | Waste Connections, Inc. | 1,047,490 | ||||
|
| |||||
4,275,758 | ||||||
|
| |||||
Non-Energy Minerals - 1.7% | ||||||
12,700 | Haynes International, Inc. | 658,749 | ||||
50,600 | Stillwater Mining Co. * | 646,668 | ||||
|
| |||||
1,305,417 | ||||||
|
| |||||
Process Industries - 3.1% | ||||||
6,400 | CF Industries Holdings, Inc. | 1,300,224 | ||||
19,000 | Olin Corp. | 410,210 | ||||
15,900 | Scotts Miracle-Gro Co. | 700,395 | ||||
|
| |||||
2,410,829 | ||||||
|
| |||||
Producer Manufacturing - 10.6% | ||||||
31,600 | AMETEK, Inc. | 1,187,212 | ||||
18,800 | Applied Industrial Technologies, Inc. | 789,788 | ||||
14,000 | CLARCOR, Inc. | 668,920 | ||||
6,600 | Esterline Technologies Corp. * | 419,826 | ||||
25,500 | IDEX Corp. | 1,186,515 | ||||
14,000 | Lincoln Electric Holdings, Inc. | 681,520 | ||||
8,400 | MSC Industrial Direct Co., Inc. | 633,192 | ||||
23,000 | Trimble Navigation, Ltd. * | 1,374,940 | ||||
10,000 | Wabtec Corp. | 875,400 | ||||
14,000 | Woodward Governor Co. | 533,820 | ||||
|
| |||||
8,351,133 | ||||||
|
|
See accompanying notes to financial statements. | ||
30 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Retail Trade - 7.2% |
| |||||
23,000 | Casey’s General Stores, Inc. | 1,221,300 | ||||
22,500 | Cato Corp. | 617,175 | ||||
28,600 | Dick’s Sporting Goods, Inc. | 1,301,014 | ||||
14,500 | Lululemon Athletica, Inc. * | 1,105,335 | ||||
14,100 | Ulta Salon Cosmetics & Fragrance, Inc. | 1,385,466 | ||||
|
| |||||
5,630,290 | ||||||
|
| |||||
Technology Services - 11.6% | ||||||
25,000 | ANSYS, Inc. * | 1,683,500 | ||||
7,900 | Citrix Systems, Inc. * | 519,425 | ||||
20,100 | Concur Technologies, Inc. * | 1,357,152 | ||||
40,100 | Informatica Corp. * | 1,215,832 | ||||
17,600 | Solera Holdings, Inc. | 941,072 | ||||
22,500 | Syntel, Inc. | 1,205,775 | ||||
22,800 | Ultimate Software Group, Inc. * | 2,152,548 | ||||
|
| |||||
9,075,304 | ||||||
|
| |||||
Transportation - 1.5% | ||||||
18,900 | Hub Group, Inc. * | 635,040 | ||||
38,100 | Knight Transportation, Inc. | 557,403 | ||||
|
| |||||
1,192,443 | ||||||
|
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Utilities - 1.2% |
| |||||
6,300 | ITC Holdings Corp. | 484,533 | ||||
13,100 | UGI Corp. | 428,501 | ||||
|
| |||||
913,034 | ||||||
|
| |||||
Total Common Stocks | 77,352,011 | |||||
|
| |||||
Total Investments in Securities - 98.6% | 77,352,011 | |||||
Other Assets and Liabilities, net - 1.4% | 1,130,168 | |||||
|
| |||||
Total Net Assets - 100.0% | $ | 78,482,179 | ||||
|
|
* | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of December 31, 2012 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||
Level 1 Price ($) | Level 2 Other significant observable inputs ($) | Level 3 Significant | Total ($) | |||||||||
Common Stocks ** | 77,352,011 | — | — | 77,352,011 | ||||||||
Total: | 77,352,011 | — | — | 77,352,011 |
** | For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown. |
For the reporting period, there were no transfers between levels 1, 2 and 3.
See accompanying notes to financial statements. | ||
DECEMBER 31, 2012 | 31 |
|
OBJECTIVE & STRATEGY
The objective of the 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.
International equity markets rallied strong in the last six months of 2012, with Asia ex-Japan and Europe leading the way and Japanese equities trailing the market. Equity markets benefited from favorable monetary policies in the U.S. and globally, despite facing challenges from the European debt crisis, slowing economic growth in the U.S. and China, and a tense political standoff on the U.S. fiscal cliff. In this positive equity market performance environment, the Sit International Growth Fund performed in line with the MSCI EAFE Growth Index, appreciating +12.53% versus +12.52% for the Index. Within the Index, the financial, industrial, and materials sectors had the strongest returns and the energy sector had negative performance.
The information technology and energy sectors were two of the top contributing sectors given good stock selection. Financial stocks also contributed to positive relative performance largely due to the overweight stance and positive currency translation. The consumer discretionary sector detracted the most from relative performance, a result of negative stock selection. From a regional geographic perspective, Japan was the top contributing country to performance and the United Kingdom took away the most relative performance.
While various economic data points all signal a continued slowdown, sentiment is starting to turn positive, and we believe the European economy will likely bottom in the next few quarters. Therefore we are modestly lessening the underweight in the euro area as valuations are more attractive in this region than the rest of Europe. We believe euro area banks will continue to remain challenged in the longer term given higher capital requirements, increased regulation, ongoing litigation, lower loan growth, and higher costs. However, some of the larger and more prominent banks have improved their financial situation quite substantially and are benefiting from an improved funding environment, thus providing us an opportunity to modestly increase this exposure and reduce the underweight. In addition to banks, we are also looking to modestly increase cyclical exposure. The European holdings are comprised of global exporters, late-cyclical stocks, domestic-consumption securities, and companies with emerging markets growth exposure.
Over the last few years, the Japanese equity market has been viewed as a “safe-haven” market. We no longer believe this to be the case
HYPOTHETICAL GROWTH OF $10,000
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 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 MSCI EAFE Growth Index (Europe Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that measures the equity market performance of growth oriented developed market stocks within Europe, Australasia and the Far East. It is not possible to invest directly in an index. This is the Fund’s primary index.
because of economic concerns, ongoing leadership turnover and growing dependence on foreigners. The major catalyst driving the market will be the government’s new aggressive quantitative easing policy and stimulus programs. Given this new catalyst, we are modestly increasing the Japan weight. Preferred investments include: defensive consumption stocks, heavy industry stocks, and export-oriented stocks. Elsewhere in Asia, China and India are showing signs of economic stabilization and recovery. The Asia ex-Japan investments are focused primarily on consumer-related, materials, and energy sectors. In summary, the Fund continues to maintain a high quality bias as measured by free cash flow yield, earnings stability, return on invested capital, free cash flow margins, and debt levels.
Roger J. Sit Tasha M. Murdoff
Portfolio Managers
32 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2012 | |||||||||||||||
Sit International Growth Fund | MSCI EAFE Growth Index 1 | MSCI EAFE Index 2 | |||||||||||||
Six Month | 12.53 | % | 12.52 | % | 13.95 | % | |||||||||
One Year | 18.79 | 16.86 | 17.32 | ||||||||||||
Five Year | -4.01 | -3.09 | -3.69 | ||||||||||||
Ten Year | 6.42 | 7.77 | 8.21 | ||||||||||||
Since Inception | 3.87 | 3.73 | 5.11 | ||||||||||||
(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 Growth Index (Europe Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that measures the equity market performance of growth oriented developed market stocks within Europe, Australasia and the Far East. It is not possible to invest directly in an index.
2 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 Growth Fund | MSCI EAFE Growth Index | |||||||||
Europe | 60.6 | % | 62.8 | % | ||||||
Asia | 25.7 | % | 36.7 | % | ||||||
Other | 10.5 | % | 0.5 | % | ||||||
Cash & Other Net Assets | 3.2 | % | — |
Based on total net assets as of December 31, 2012. Subject to change.
PORTFOLIO SUMMARY
Net Asset Value 12/31/12: | $14.72 Per Share | |
Net Asset Value 6/30/12: | $13.29 Per Share | |
Total Net Assets: | $20.3 Million | |
Weighted Average Market Cap: | $61.6 Billion |
TOP 10 HOLDINGS
1. Royal Dutch Shell, PLC, ADR
2. BHP Billiton, Ltd.
3. Nestle SA
4. British American Tobacco, PLC
5. GlaxoSmithKline, PLC, ADR
6. Diageo, PLC, ADR
7. Centrica, PLC
8. Pearson, PLC, ADR
9. Honda Motor Co., Ltd.
10. Reckitt Benckiser Group, PLC
Based on total net assets as of December 31, 2012. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2012. Subject to change.
DECEMBER 31, 2012 | 33 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit International Growth Fund
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Common Stocks - 96.8% | ||||||
Africa/Middle East - 2.3% | ||||||
Israel - 1.4% | ||||||
7,500 | Teva Pharmaceutical Industries, Ltd., ADR | 280,050 | ||||
|
| |||||
South Africa - 0.9% | ||||||
4,500 | Sasol, Ltd., ADR | 194,805 | ||||
|
| |||||
Asia - 25.7% | ||||||
Australia - 6.5% | ||||||
7,700 | Australia & New Zealand Banking Group, Ltd. | 202,792 | ||||
18,800 | BHP Billiton, Ltd. | 733,963 | ||||
2,400 | Rio Tinto, PLC, ADR | 139,416 | ||||
1,775 | Westpac Banking Corp., ADR | 244,790 | ||||
|
| |||||
1,320,961 | ||||||
|
| |||||
China/Hong Kong - 4.4% | ||||||
33,950 | HSBC Holdings, PLC | 359,846 | ||||
9,860 | HSBC Holdings, PLC | 104,485 | ||||
10,200 | New Oriental Education & Tech. Group, ADR | 198,186 | ||||
8,880 | Standard Chartered, PLC | 229,813 | ||||
|
| |||||
892,330 | ||||||
|
| |||||
Japan - 10.7% | ||||||
48,000 | Daicel Corp. | 317,584 | ||||
1,200 | Fanuc, Ltd. | 223,260 | ||||
13,800 | Honda Motor Co., Ltd. | 511,078 | ||||
14,100 | Komatsu, Ltd. | 361,812 | ||||
14,000 | Kubota Corp. | 160,964 | ||||
4,800 | Makita Corp. | 222,981 | ||||
6,600 | Seven & I Holdings Co., Ltd. | 186,059 | ||||
1,100 | SMC Corp. | 199,820 | ||||
|
| |||||
2,183,558 | ||||||
|
| |||||
Singapore - 1.5% | ||||||
3,200 | Avago Technologies, Ltd. | 101,312 | ||||
17,000 | DBS Group Holdings, Ltd. | 208,701 | ||||
|
| |||||
310,013 | ||||||
|
| |||||
South Korea - 2.6% | ||||||
775 | Hyundai Mobis | 210,264 | ||||
440 | Samsung Electronics Co., Ltd., GDR | 310,200 | ||||
|
| |||||
520,464 | ||||||
|
| |||||
Europe - 60.6% | ||||||
France - 5.8% | ||||||
2,850 | BNP Paribas | 162,251 | ||||
3,460 | Dassault Systemes SA | 386,855 | ||||
6,815 | Ingenico | 387,703 | ||||
3,450 | Schlumberger, Ltd. | 239,050 | ||||
|
| |||||
1,175,859 | ||||||
|
| |||||
Germany - 6.0% | ||||||
3,430 | Adidas AG | 306,126 | ||||
2,575 | Allianz SE | 358,949 | ||||
1,890 | Muenchener Rueckver | 341,199 |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
750 | Rational AG | 216,649 | ||||
|
| |||||
1,222,923 | ||||||
|
| |||||
Ireland - 1.9% | ||||||
6,800 | Covidien, PLC | 392,632 | ||||
|
| |||||
Italy - 0.7% | ||||||
3,600 | Tenaris SA, ADR | 150,912 | ||||
|
| |||||
Netherlands - 2.6% | ||||||
3,696 | Asml Holding NV | 238,059 | ||||
29,400 | ING Groep NV * | 279,242 | ||||
|
| |||||
517,301 | ||||||
|
| |||||
Norway - 2.0% | ||||||
10,800 | Seadrill, Ltd. | 397,440 | ||||
|
| |||||
Spain - 1.7% | ||||||
2,415 | Inditex SA | 339,325 | ||||
|
| |||||
Sweden - 1.9% | ||||||
3,000 | Autoliv, Inc. | 202,170 | ||||
2,175 | Millicom International Cellular SA, SDR | 188,792 | ||||
|
| |||||
390,962 | ||||||
|
| |||||
Switzerland - 14.0% | ||||||
1,550 | Kuehne & Nagel International | 186,867 | ||||
10,000 | Nestle SA | 652,435 | ||||
4,900 | Novartis AG | 309,549 | ||||
2,050 | Roche Holding AG | 414,471 | ||||
196 | SGS SA | 435,328 | ||||
2,200 | Sulzer AG | 348,192 | ||||
1,200 | Syngenta AG | 484,784 | ||||
|
| |||||
2,831,626 | ||||||
|
| |||||
United Kingdom - 24.0% | ||||||
12,470 | British American Tobacco, PLC | 633,915 | ||||
15,170 | Burberry Group, PLC | 304,941 | ||||
106,500 | Centrica, PLC | 581,248 | ||||
5,050 | Diageo, PLC, ADR | 588,729 | ||||
13,675 | GlaxoSmithKline, PLC, ADR | 594,452 | ||||
28,500 | Pearson, PLC, ADR | 556,890 | ||||
7,900 | Reckitt Benckiser Group, PLC | 501,491 | ||||
12,000 | Royal Dutch Shell, PLC, ADR | 850,680 | ||||
104,500 | Vodafone Group, PLC | 263,056 | ||||
|
| |||||
4,875,402 | ||||||
|
| |||||
Latin America - 2.2% | ||||||
Argentina - 0.6% | ||||||
1,575 | MercadoLibre, Inc. | 123,748 | ||||
|
| |||||
Brazil - 1.0% | ||||||
4,100 | AGCO Corp. * | 201,392 | ||||
|
| |||||
Peru - 0.6% | ||||||
3,100 | Southern Copper Corp. | 117,385 | ||||
|
|
See accompanying notes to financial statements. | ||
34 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
North America - 6.0% | ||||||
Bermuda - 1.6% | ||||||
4,150 | PartnerRe, Ltd. | 334,034 | ||||
|
| |||||
Canada - 4.4% | ||||||
2,100 | Canadian National Railway Co. | 191,121 | ||||
1,875 | Lululemon Athletica, Inc. * | 142,931 | ||||
6,700 | Rogers Communications, Inc. | 304,984 | ||||
4,100 | Royal Bank of Canada | 247,230 | ||||
|
| |||||
886,266 | ||||||
|
| |||||
Total Common Stocks | ||||||
(cost: $15,473,369) | 19,659,388 | |||||
|
| |||||
Total Investments in Securities - 96.8% | ||||||
(cost: $15,473,369) | 19,659,388 | |||||
Other Assets and Liabilities, net - 3.2% | 643,005 | |||||
|
| |||||
Total Net Assets - 100.0% | $ | 20,302,393 | ||||
|
|
* | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
ADR — American Depositary Receipt
GDR — Global Depositary Receipt
PLC — Public Limited Company
SDR — Swedish Depositary Receipt
See accompanying notes to financial statements. | ||
DECEMBER 31, 2012 | 35 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit International Growth Fund (Continued)
A summary of the levels for the Fund’s investments as of December 31, 2012 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 | Total ($) | |||||||||||||||||
|
| |||||||||||||||||||
Common Stocks | ||||||||||||||||||||
Argentina | 123,748 | — | — | 123,748 | ||||||||||||||||
Australia | 384,206 | 936,755 | — | 1,320,961 | ||||||||||||||||
Bermuda | 334,034 | — | — | 334,034 | ||||||||||||||||
Brazil | 201,392 | — | — | 201,392 | ||||||||||||||||
Canada | 886,266 | — | — | 886,266 | ||||||||||||||||
China/Hong Kong | 198,186 | 694,144 | — | 892,330 | ||||||||||||||||
France | 239,050 | 936,809 | — | 1,175,859 | ||||||||||||||||
Germany | — | 1,222,923 | — | 1,222,923 | ||||||||||||||||
Ireland | 392,632 | — | — | 392,632 | ||||||||||||||||
Israel | 280,050 | — | — | 280,050 | ||||||||||||||||
Italy | 150,912 | — | — | 150,912 | ||||||||||||||||
Japan | — | 2,183,558 | — | 2,183,558 | ||||||||||||||||
Netherlands | 238,059 | 279,242 | — | 517,301 | ||||||||||||||||
Norway | 397,440 | — | — | 397,440 | ||||||||||||||||
Peru | 117,385 | — | — | 117,385 | ||||||||||||||||
Singapore | 101,312 | 208,701 | — | 310,013 | ||||||||||||||||
South Africa | 194,805 | — | — | 194,805 | ||||||||||||||||
South Korea | 310,200 | 210,264 | — | 520,464 | ||||||||||||||||
Spain | — | 339,325 | — | 339,325 | ||||||||||||||||
Sweden | 202,170 | 188,792 | — | 390,962 | ||||||||||||||||
Switzerland | — | 2,831,626 | — | 2,831,626 | ||||||||||||||||
United Kingdom | 2,590,751 | 2,284,651 | — | 4,875,402 | ||||||||||||||||
|
| |||||||||||||||||||
Total: | 7,342,598 | 12,316,790 | — | 19,659,388 | ||||||||||||||||
|
|
The Fund adjusts the closing price of foreign equity securities by applying a systematic process for events occurring after the close of the foreign exchange. At each reporting period, this process is applied for all foreign securities and therefore all foreign securities are classified as level 2. There are no transfers between level 1 and level 2 between reporting periods as a result of applying this process. Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs) 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. | ||
36 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
[This page intentionally left blank.]
DECEMBER 31, 2012 | 37 |
OBJECTIVE & STRATEGY
The Fund seeks 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.
Emerging markets stocks performed well in the last six months of 2012. The Sit Developing Markets Growth Fund appreciated +10.27% for the aforementioned time period, while the MSCI Emerging Markets Index rose +12.57%. Within the context of emerging markets, stocks in Asia and emerging Europe were the top performers, while securities in Latin America lagged. Investors were less risk averse in the last half of 2012 than in the first half. As such, the technology and financial sectors performed well, while the utilities and telecommunications sectors underperformed the broad market index.
The Asian and Africa/Middle East regions in the Fund experienced double-digit appreciation for the June through December 2012 period. Good stock selection in Asia helped the Fund, but currency translation more than offset the positive stock selection. Latin America appreciated in the mid-single digits for the same time period but underperformed relative to the Index. The decision to overweight the worst performing region Latin America and the negative currency translation also negatively impacted relative performance.
On a sector basis, the utilities, materials, and industrial sectors contributed nicely to relative performance thanks to good stock selection. Conversely, the financial sector took away the most from relative performance. This sector was the top performing sector in the Index and the decision to underweight the sector along with less-than-stellar stock selection (the Fund’s financial holdings were up around 11% while the Index’s financial holdings increased approximately 18%) led it to have the largest negative impact on the Fund. The consumer staples and discretionary sectors also detracted from relative performance.
In Asia, China and India are showing signs of economic stabilization and recovery. Both countries’ governments are taking stronger action to promote economic growth driven by domestic demand. China and India, along with the rest of Asia, have young populations that continue to improve their living standards. In addition, the path to industrialization is moving forward. The Fund’s Asia ex-Japan investments are centered on consumer-related, materials, and energy related companies. The Fund focuses on holding high-quality growth companies with strong and experienced management teams, sound balance sheets, good cash flow generation, and sustainable earnings and revenue growth.
HYPOTHETICAL GROWTH OF $10,000
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.
The Fund is heavily weighted in Latin American securities. Similar to Asia, the holdings are focused in the consumer, energy, industrial, and material sectors. The desire to upgrade lifestyles to “western” standards along with the growth of the middle class should continue to drive investments in the above-mentioned sectors. Elsewhere, the Fund is underweight the emerging Europe, Africa, and Middle East regions. We believe growth prospects in Asia and Latin America create a stronger investment case. Within these regions, investments are primarily in consumer-related sectors.
Roger J. Sit
Raymond E. Sit
Portfolio Managers
38 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURN
as of December 31, 2012 | |||||||||||||||
Sit Developing Markets Growth Fund | MSCI Emerging Markets Index 1 | MSCI Emerging Markets Growth Index 2 | |||||||||||||
Six Month | 10.27 | % | 12.57 | % | 14.26 | % | |||||||||
One Year | 11.08 | 15.15 | 18.13 | ||||||||||||
Five Year | -4.19 | -3.26 | -3.89 | ||||||||||||
Ten Year | 13.02 | 13.71 | 12.62 | ||||||||||||
Since Inception | 4.93 | 4.36 | n/a | ||||||||||||
(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.
2 MSCI Emerging Markets Growth Index is an unmanaged free float-adjusted market capitalization index that measures equity market performance of growth oriented emerging market stocks.
FUND DIVERSIFICATION - BY REGION
Sit Developing Markets Growth Fund | MSCI Emerging Markets Index | |||
Asia | 57.0% | 60.4% | ||
Latin America | 30.0% | 21.4% | ||
Africa/Middle East | 8.4% | 8.1% | ||
Europe | 2.8% | 10.1% | ||
Cash & Other Net Assets | 1.8% | — |
Based on total net assets as of December 31, 2012. Subject to change.
PORTFOLIO SUMMARY
Net Asset Value 12/31/12: | $18.02 Per Share | |
Net Asset Value 6/30/12: | $17.70 Per Share | |
Total Net Assets: | $12.1 Million | |
Weighted Average Market Cap: | $44.5 Billion |
TOP 10 HOLDINGS
1. Samsung Electronics Co., Ltd.
2. Cia de Bebidas das Americas, ADR
3. BHP Billiton, Ltd., ADR
4. CNOOC, Ltd., ADR
5. Vale SA, ADR
6. Banco Bradesco SA
7. Shinhan Financial Group Co., Ltd.
8. Belle International Holdings, Ltd.
9. Bangkok Bank PCL
10. Petrobras
Based on total net assets as of December 31, 2012. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2012. Subject to change.
DECEMBER 31, 2012 | 39 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit Developing Markets Growth Fund
|
| |||||||
Quantity | Name of Issuer | Fair Value ($) | ||||||
|
| |||||||
| Common Stocks - 98.2% | |||||||
Africa/Middle East - 8.4% | ||||||||
Israel - 0.8% | ||||||||
2,800 | NICE Systems, Ltd., ADR * | 93,744 | ||||||
|
| |||||||
South Africa - 7.6% | ||||||||
7,300 | Bidvest Group, Ltd. | 186,761 | ||||||
10,700 | MTN Group, Ltd. | 225,221 | ||||||
3,960 | Naspers, Ltd. | 255,780 | ||||||
5,800 | Sasol, Ltd., ADR | 251,082 | ||||||
|
| |||||||
918,844 | ||||||||
|
| |||||||
Asia - 57.0% | ||||||||
Australia - 4.9% | ||||||||
5,525 | BHP Billiton, Ltd., ADR | 433,381 | ||||||
2,300 | Rio Tinto, Ltd. | 161,711 | ||||||
|
| |||||||
595,092 | ||||||||
|
| |||||||
China/Hong Kong - 22.8% | ||||||||
1,650 | Baidu, Inc., ADR * | 165,478 | ||||||
135,000 | Belle International Holdings, Ltd. | 298,563 | ||||||
4,200 | China Life Insurance Co., Ltd., ADR | 208,698 | ||||||
31,000 | China Mengniu Dairy Co., Ltd. | 88,609 | ||||||
98,000 | China Oilfield Services, Ltd. | 205,483 | ||||||
46,500 | China Shenhua Energy Co., Ltd. | 208,288 | ||||||
3,600 | China Unicom Hong Kong, Ltd., ADR | 58,643 | ||||||
1,675 | CNOOC, Ltd., ADR | 368,500 | ||||||
36,000 | ENN Energy Holdings, Ltd. | 157,748 | ||||||
26,500 | Hengan International Group Co., Ltd. | 242,019 | ||||||
9,900 | New Oriental Education & Tech. Group, ADR | 192,357 | ||||||
58,000 | PetroChina Co., Ltd. | 83,675 | ||||||
7,400 | Tencent Holdings, Ltd. | 242,696 | ||||||
149,000 | Travelsky Technology, Ltd. | 79,835 | ||||||
104,000 | Want Want China Holdings, Ltd. | 145,746 | ||||||
|
| |||||||
2,746,338 | ||||||||
|
| |||||||
India - 2.4% | ||||||||
4,400 | ICICI Bank, Ltd., ADR | 191,884 | ||||||
3,200 | Reliance Industries, Ltd., GDR 4 | 98,068 | ||||||
|
| |||||||
289,952 | ||||||||
|
| |||||||
Indonesia - 2.2% | ||||||||
331,500 | Astra International Tbk PT | 262,597 | ||||||
|
| |||||||
Philippines - 1.4% | ||||||||
207,700 | Manila Water Co., Inc. | 162,220 | ||||||
|
| |||||||
Singapore - 1.0% | ||||||||
10,000 | DBS Group Holdings, Ltd. | 122,765 | ||||||
|
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
South Korea - 15.1% | ||||||
13,655 | Cheil Worldwide, Inc. | 275,454 | ||||
760 | E-Mart Co., Ltd. | 168,953 | ||||
650 | Hyundai Mobis | 176,351 | ||||
6,317 | Industrial Bank of Korea | 70,623 | ||||
1,100 | POSCO, ADR | 90,365 | ||||
510 | Samsung Electronics Co., Ltd. | 732,768 | ||||
8,500 | Shinhan Financial Group Co., Ltd. | 311,079 | ||||
|
| |||||
1,825,593 | ||||||
|
| |||||
Taiwan - 4.3% | ||||||
58,856 | Cathay Financial Holding Co., Ltd. | 64,188 | ||||
29,860 | Hon Hai Precision Industry Co., Ltd., GDR | 179,459 | ||||
83,482 | Taiwan Semiconductor Co. | 279,231 | ||||
|
| |||||
522,878 | ||||||
|
| |||||
Thailand - 2.9% | ||||||
8,900 | Advanced Info Service PCL | 60,807 | ||||
42,600 | Bangkok Bank PCL | 292,260 | ||||
|
| |||||
353,067 | ||||||
|
| |||||
Europe - 2.8% | ||||||
Russia - 1.5% | ||||||
18,550 | Gazprom OAO, ADR | 179,294 | ||||
|
| |||||
Sweden - 1.3% | ||||||
1,875 | Millicom International Cellular SA, SDR | 162,752 | ||||
|
| |||||
Latin America - 30.0% | ||||||
Argentina - 1.0% | ||||||
1,500 | MercadoLibre, Inc. | 117,855 | ||||
|
| |||||
Brazil - 21.2% | ||||||
5,025 | AGCO Corp. * | 246,828 | ||||
10,000 | Arcos Dorados Holdings, Inc. | 119,600 | ||||
20,577 | Banco Bradesco SA | 353,452 | ||||
5,000 | Cia Brasileira de Distribuicao Grupo Pao de Acucar, ADR | 221,950 | ||||
12,000 | Cia de Bebidas das Americas, ADR | 503,880 | ||||
9,450 | Embraer SA, ADR | 269,420 | ||||
29,500 | Petrobras | 281,241 | ||||
8,250 | Telefonica Brasil SA, ADR | 198,495 | ||||
17,400 | Vale SA, ADR | 364,704 | ||||
|
| |||||
2,559,570 | ||||||
|
| |||||
Chile - 1.7% | ||||||
7,250 | Banco Santander Chile, ADR | 206,560 | ||||
|
| |||||
Mexico - 3.8% | ||||||
11,300 | America Movil SAB de CV, ADR | 261,482 | ||||
2,500 | Grupo Televisa SA, ADR | 66,450 | ||||
39,700 | Wal-Mart de Mexico | 129,546 | ||||
|
| |||||
457,478 | ||||||
|
|
See accompanying notes to financial statements.
40 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Peru - 2.3% | ||||||
7,350 | Southern Copper Corp. | 278,274 | ||||
|
| |||||
Total Common Stocks | ||||||
(cost: $8,145,071) | 11,854,873 | |||||
|
| |||||
Total Investments in Securities - 98.2% | ||||||
(cost: $8,145,071) | 11,854,873 | |||||
Other Assets and Liabilities, net - 1.8% | 212,207 | |||||
|
| |||||
Total Net Assets - 100.0% | $ | 12,067,080 | ||||
|
|
* | Non-income producing security. |
4 | 144A Restricted Security. The total value of such security as of December 31, 2012 was $98,068 and represented 0.8% of net assets. This security has been determined to be liquid by the Adviser in accordance with guidelines established by the Board of Directors. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
ADR — American Depositary Receipt
GDR — Global Depositary Receipt
SDR — Swedish Depositary Receipt
See accompanying notes to financial statements.
DECEMBER 31, 2012 | 41 |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2012
Sit Developing Markets Growth Fund (Continued)
A summary of the levels for the Fund’s investments as of December 31, 2012 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||||||||||
Level 1 Quoted Price ($) | Level 2 Other significant observable inputs ($) | Level 3 Significant | Total ($) | |||||||||||||||||
|
| |||||||||||||||||||
Common Stocks | ||||||||||||||||||||
Argentina | 117,855 | — | — | 117,855 | ||||||||||||||||
Australia | 433,381 | 161,711 | — | 595,092 | ||||||||||||||||
Brazil | 2,559,570 | — | — | 2,559,570 | ||||||||||||||||
Chile | 206,560 | — | — | 206,560 | ||||||||||||||||
China/Hong Kong | 993,676 | 1,752,662 | — | 2,746,338 | ||||||||||||||||
India | 289,952 | — | — | 289,952 | ||||||||||||||||
Indonesia | — | 262,597 | — | 262,597 | ||||||||||||||||
Israel | 93,744 | — | — | 93,744 | ||||||||||||||||
Mexico | 457,478 | — | — | 457,478 | ||||||||||||||||
Peru | 278,274 | — | — | 278,274 | ||||||||||||||||
Philippines | — | 162,220 | — | 162,220 | ||||||||||||||||
Russia | — | 179,294 | — | 179,294 | ||||||||||||||||
Singapore | — | 122,765 | — | 122,765 | ||||||||||||||||
South Africa | 251,082 | 667,762 | — | 918,844 | ||||||||||||||||
South Korea | 90,365 | 1,735,228 | — | 1,825,593 | ||||||||||||||||
Sweden | — | 162,752 | — | 162,752 | ||||||||||||||||
Taiwan | — | 522,878 | — | 522,878 | ||||||||||||||||
Thailand | — | 353,067 | — | 353,067 | ||||||||||||||||
|
| |||||||||||||||||||
5,771,937 | 6,082,936 | — | 11,854,873 | |||||||||||||||||
|
| |||||||||||||||||||
Total: | 5,771,937 | 6,082,936 | — | 11,854,873 | ||||||||||||||||
|
|
The Fund adjusts the closing price of foreign equity securities by applying a systematic process for events occurring after the close of the foreign exchange. At each reporting period, this process is applied for all foreign securities and therefore all foreign securities are classified as level 2. There are no transfers between level 1 and level 2 between reporting periods as a result of applying this process. Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs) 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.
42 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
[This page intentionally left blank.]
DECEMBER 31, 2012 | 43 |
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
December 31, 2012
Sit Balanced Fund | Sit Dividend Growth Fund | Sit Global Dividend Growth Fund | ||||||||||
ASSETS | ||||||||||||
Investments in securities, at identified cost | $9,663,077 | $708,733,387 | $12,460,362 | |||||||||
|
|
|
|
|
| |||||||
Investments in securities, at fair value - see accompanying schedule for detail | $11,822,134 | $782,044,647 | $14,017,877 | |||||||||
Cash in bank on demand deposit | 500,534 | 22,256,771 | 629,582 | |||||||||
Accrued interest and dividends receivable. | 43,498 | 1,185,804 | 28,458 | |||||||||
Receivable for investment securities sold | 17,051 | 206,851 | — | |||||||||
Other receivables (note 5) | — | — | — | |||||||||
Receivable for Fund shares sold | 329 | 5,318,436 | 140,659 | |||||||||
|
|
|
|
|
| |||||||
Total assets | 12,383,546 | 811,012,509 | 14,816,576 | |||||||||
|
|
|
|
|
| |||||||
LIABILITIES | ||||||||||||
Payable for investment securities purchased | 20,090 | 7,090,168 | 128,967 | |||||||||
Payable for Fund shares redeemed. | 22,247 | 1,062,884 | 70,000 | |||||||||
Cash portion of dividends payable to shareholders | — | 189 | — | |||||||||
Accrued investment management fees and advisory fees | 10,524 | 673,029 | 14,898 | |||||||||
Accrued 12b-1 fees (Class S) | — | 24,229 | 548 | |||||||||
|
|
|
|
|
| |||||||
Total liabilities | 52,861 | 8,850,499 | 214,413 | |||||||||
|
|
|
|
|
| |||||||
Net assets applicable to outstanding capital stock | $12,330,685 | $802,162,010 | $14,602,163 | |||||||||
|
|
|
|
|
| |||||||
Net assets consist of: | ||||||||||||
Capital (par value and paid-in surplus) | $10,925,801 | $730,322,068 | $12,937,788 | |||||||||
Undistributed (distributions in excess of) net investment income | 8,606 | 143,526 | (4,393 | ) | ||||||||
Accumulated net realized gain (loss) from security transactions and foreign currency transactions | (762,779 | ) | (1,614,844 | ) | 111,311 | |||||||
Unrealized appreciation (depreciation) on investments and foreign currency transactions | 2,159,057 | 73,311,260 | 1,557,457 | |||||||||
|
|
|
|
|
| |||||||
$12,330,685 | $802,162,010 | $14,602,163 | ||||||||||
|
|
|
|
|
| |||||||
Outstanding shares: | ||||||||||||
Common Shares (Class I) * | 711,129 | 47,428,241 | 912,242 | |||||||||
|
|
|
|
|
| |||||||
Common Shares (Class S) * | — | 7,908,301 | 192,111 | |||||||||
|
|
|
|
|
| |||||||
Net assets applicable to outstanding shares: | ||||||||||||
Common Shares (Class I) * | $12,330,685 | $687,776,011 | $12,063,832 | |||||||||
|
|
|
|
|
| |||||||
Common Shares (Class S) * | — | 114,385,999 | 2,538,331 | |||||||||
|
|
|
|
|
| |||||||
Net asset value per share of outstanding capital stock: | ||||||||||||
Common Shares (Class I) * | $17.34 | $14.50 | $13.22 | |||||||||
|
|
|
|
|
| |||||||
Common Shares (Class S) * | — | $14.46 | $13.21 | |||||||||
|
|
|
|
|
|
* | Dividend Growth and Global Dividend Growth Funds offer multiple share classes (I and S). All other Funds offer a single share class. |
See accompanying notes to financial statements.
44 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Sit Large Cap Growth Fund | Sit Mid Cap Growth Fund | Sit Small Cap Growth Fund | Sit International Growth Fund | Sit Developing Markets Growth Fund | ||||||||||||||
$151,193,598 | $95,066,539 | $57,296,166 | $15,473,369 | $8,145,071 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$201,492,980 | $141,057,706 | $77,352,011 | $19,659,388 | $11,854,873 | ||||||||||||||
1,424,208 | 1,997,421 | 1,236,220 | 335,369 | 193,465 | ||||||||||||||
164,097 | 48,052 | 10,562 | 70,653 | 12,613 | ||||||||||||||
1,084,743 | — | — | — | 25,235 | ||||||||||||||
— | — | — | 275,505 | — | ||||||||||||||
178,276 | 12,916 | 5,337 | 624 | 879 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
204,344,304 | 143,116,095 | 78,604,130 | 20,341,539 | 12,087,065 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
— | — | — | — | — | ||||||||||||||
928,548 | 18,639 | 22,282 | 13,343 | — | ||||||||||||||
— | 71 | — | 2 | — | ||||||||||||||
182,123 | 151,742 | 99,669 | 25,801 | 19,985 | ||||||||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
1,110,671 | 170,452 | 121,951 | 39,146 | 19,985 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$203,233,633 | $142,945,643 | $78,482,179 | $20,302,393 | $12,067,080 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$153,020,834 | $94,257,614 | $63,548,620 | $19,826,700 | $8,164,064 | ||||||||||||||
1,426 | 23,792 | (153,007 | ) | (2,427 | ) | 2,203 | ||||||||||||
| (88,009 | ) | 2,673,070 | (4,969,279 | ) | (3,707,094 | ) | 191,058 | ||||||||||
| 50,299,382 |
| 45,991,167 | 20,055,845 | 4,185,214 | 3,709,755 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$203,233,633 | $142,945,643 | $78,482,179 | $20,302,393 | $12,067,080 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
4,676,965 | 8,803,053 | 1,727,420 | 1,379,463 | 669,465 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$203,233,633 | $142,945,643 | $78,482,179 | $20,302,393 | $12,067,080 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$43.45 | $16.24 | $45.43 | $14.72 | $18.02 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
DECEMBER 31, 2012 | 45 |
STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended December 31, 2012
Sit Balanced Fund | Sit Dividend Growth Fund | Sit Global Dividend Growth Fund | ||||||||||
Investment income: | ||||||||||||
Income: | ||||||||||||
Dividends* | $87,579 | $11,641,032 | $204,901 | |||||||||
Interest | 77,520 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total income | 165,099 | 11,641,032 | 204,901 | |||||||||
|
|
|
|
|
| |||||||
Expenses (note 4): | ||||||||||||
Investment management and advisory service fee | 61,762 | 3,882,258 | 85,888 | |||||||||
12b-1 fees (Class S) | — | 137,244 | 3,334 | |||||||||
|
|
|
|
|
| |||||||
Total expenses | 61,762 | 4,019,502 | 89,222 | |||||||||
|
|
|
|
|
| |||||||
Net investment income (loss) | 103,337 | 7,621,530 | 115,679 | |||||||||
|
|
|
|
|
| |||||||
Realized and unrealized gain (loss): | ||||||||||||
Net realized gain (loss) on investments | 15,214 | 8,695,909 | 205,200 | |||||||||
Net realized gain (loss) on foreign currency transactions | — | — | (245 | ) | ||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | 286,389 | 26,898,590 | 646,285 | |||||||||
|
|
|
|
|
| |||||||
Net gain (loss) on investments | 301,603 | 35,594,499 | 851,240 | |||||||||
|
|
|
|
|
| |||||||
Net increase (decrease) in net assets resulting from operations | $404,940 | $43,216,029 | $966,919 | |||||||||
|
|
|
|
|
| |||||||
| ||||||||||||
* Foreign taxes withheld on dividends received | $261 | $27,980 | $1,336 |
See accompanying notes to financial statements.
46 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Sit Large Cap Growth Fund | Sit Mid Cap Growth Fund | Sit Small Cap Growth Fund | Sit International Growth Fund | Sit Developing Markets Growth Fund | ||||||||||||||
$2,438,338 | $936,834 | $438,565 | $234,775 | $131,344 | ||||||||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
2,438,338 | 936,834 | 438,565 | 234,775 | 131,344 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
1,185,600 | 913,042 | 591,572 | 150,145 | 117,632 | ||||||||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
1,185,600 | 913,042 | 591,572 | 150,145 | 117,632 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
1,252,738 | 23,792 | (153,007 | ) | 84,630 | 13,712 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
18,660,536 | 2,673,077 | 686,987 | 663,802 | 420,816 | ||||||||||||||
— | — | — | (142 | ) | (566 | ) | ||||||||||||
| (9,285,137 | ) | 4,549,735 | 2,157,548 | 1,603,497 | 722,499 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
9,375,399 | 7,222,812 | 2,844,535 | 2,267,157 | 1,142,749 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$10,628,137 | $7,246,604 | $2,691,528 | $2,351,787 | $1,156,461 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$4,719 | $— | $1,406 | $1,682 | $11,929 |
DECEMBER 31, 2012 | 47 |
STATEMENTS OF CHANGES IN NET ASSETS
Sit Balanced Fund | Sit Dividend Growth Fund | |||||||||||||||
Six Months Ended December 31, 2012 (Unaudited) | Year Ended June 30, 2012 | Six Months Ended December 31, 2012 (Unaudited) | Year Ended June 30, 2012 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $103,337 | $193,914 | $7,621,530 | $8,772,052 | ||||||||||||
Net realized gain (loss) on investments and foreign currency transactions | 15,214 | 291,129 | 8,695,909 | 4,527,727 | ||||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | 286,389 | 14,485 | 26,898,590 | 13,514,965 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | 404,940 | 499,528 | 43,216,029 | 26,814,744 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Distributions from: | ||||||||||||||||
Net investment income | ||||||||||||||||
Common shares (Class I) | (142,000 | ) | (167,000 | ) | (8,912,732 | ) | (6,136,804 | ) | ||||||||
Common shares (Class S) | — | — | (1,305,369 | ) | (947,200 | ) | ||||||||||
Net realized gains on investments | ||||||||||||||||
Common shares (Class I) | — | — | (10,089,890 | ) | (2,673,682 | ) | ||||||||||
Common shares (Class S) | — | — | (1,708,350 | ) | (539,573 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total distributions | (142,000 | ) | (167,000 | ) | (22,016,341 | ) | (10,297,259 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions: | ||||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Common shares (Class I) | 753,836 | 835,851 | 141,897,293 | 386,618,169 | ||||||||||||
Common shares (Class S) | — | — | 21,178,383 | 57,987,284 | ||||||||||||
Reinvested distributions | ||||||||||||||||
Common shares (Class I) | 140,806 | 165,623 | 7,301,126 | 2,714,201 | ||||||||||||
Common shares (Class S) | — | — | 2,994,231 | 1,479,873 | ||||||||||||
Payments for shares redeemed | ||||||||||||||||
Common shares (Class I) | (648,371 | ) | (662,941 | ) | (99,553,202 | ) | (111,475,601 | ) | ||||||||
Common shares (Class S) | — | — | (13,400,288 | ) | (17,633,797 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Increase (decrease) in net assets from capital transactions | 246,271 | 338,533 | 60,417,543 | 319,690,129 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | 509,211 | 671,061 | 81,617,231 | 336,207,614 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 11,821,474 | 11,150,413 | 720,544,779 | 384,337,165 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period * | $12,330,685 | $11,821,474 | $802,162,010 | $720,544,779 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital transactions in shares: | ||||||||||||||||
Sold | ||||||||||||||||
Common shares (Class I) | 43,406 | 50,113 | 9,732,864 | 28,454,189 | ||||||||||||
Common shares (Class S) | — | — | 1,451,735 | 4,335,020 | ||||||||||||
Reinvested distributions | ||||||||||||||||
Common shares (Class I) | 8,198 | 10,185 | 501,374 | 206,662 | ||||||||||||
Common shares (Class S) | — | — | 206,189 | 113,481 | ||||||||||||
Redeemed | ||||||||||||||||
Common shares (Class I) | (37,270 | ) | (40,716 | ) | (6,739,125 | ) | (8,316,466 | ) | ||||||||
Common shares (Class S) | — | — | (924,976 | ) | (1,331,075 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 14,334 | 19,582 | 4,228,061 | 23,461,811 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
* includes undistributed net investment income (loss) | $8,606 | $47,269 | $143,526 | $2,740,097 |
See accompanying notes to financial statements.
48 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Sit Global Dividend Growth Fund | Sit Large Cap Growth Fund | Sit Mid Cap Growth Fund | ||||||||||||||||||||
Six Months Ended | Year Ended June 30, 2012 | Six Months Ended December 31, 2012 (Unaudited) | Year Ended June 30, 2012 | Six Months Ended December 31, 2012 (Unaudited) | Year Ended June 30, 2012 | |||||||||||||||||
$115,679 | $192,469 | $1,252,738 | $1,777,799 | $23,792 | ($480,599 | ) | ||||||||||||||||
| 204,955 |
| (12,776 | ) | 18,660,536 | 27,810,923 | 2,673,077 | 6,985,144 | ||||||||||||||
| 646,285 |
| (308,151 | ) | (9,285,137 | ) | (22,004,874 | ) | 4,549,735 | (8,630,862 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 966,919 |
| (128,458 | ) | 10,628,137 | 7,583,848 | 7,246,604 | (2,126,317 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(154,429) | (136,621 | ) | (2,065,000 | ) | (2,117,000 | ) | — | — | ||||||||||||||
(32,571) | (30,379 | ) | — | — | — | — | ||||||||||||||||
(68,213) | (90,583 | ) | (16,571,341 | ) | — | (3,183,573 | ) | — | ||||||||||||||
(15,464) | (23,745 | ) | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(270,677) | (281,328 | ) | (18,636,341 | ) | (2,117,000 | ) | (3,183,573 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
1,156,797 | 3,330,147 | 3,562,851 | 24,201,382 | 3,110,040 | 5,259,839 | |||||||||||||||||
224,220 | 1,310,129 | — | — | — | — | |||||||||||||||||
219,969 | 224,872 | 18,309,597 | 2,015,056 | 3,080,881 | — | |||||||||||||||||
47,949 | 54,094 | — | — | — | — | |||||||||||||||||
(288,288) | (598,820 | ) | (64,886,966 | ) | (142,471,528 | ) | (11,909,462 | ) | (23,820,050 | ) | ||||||||||||
(484,113) | (158,928 | ) | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
876,534 | 4,161,494 | (43,014,518 | ) | (116,255,090 | ) | (5,718,541 | ) | (18,560,211 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
1,572,776 | 3,751,708 | (51,022,722 | ) | (110,788,242 | ) | (1,655,510 | ) | (20,686,528 | ) | |||||||||||||
13,029,387 | 9,277,679 | 254,256,355 | 365,044,597 | 144,601,153 | 165,287,681 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$14,602,163 | $13,029,387 | $203,233,633 | $254,256,355 | $142,945,643 | $144,601,153 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
87,518 | 268,737 | 76,256 | 540,919 | 187,666 | 330,880 | |||||||||||||||||
17,552 | 107,366 | — | — | — | — | |||||||||||||||||
16,882 | 18,743 | 417,360 | 49,486 | 189,127 | — | |||||||||||||||||
3,685 | 4,537 | — | — | — | — | |||||||||||||||||
(22,212) | (48,310 | ) | (1,400,533 | ) | (3,311,258 | ) | (742,850 | ) | (1,571,151 | ) | ||||||||||||
(37,167) | (12,884 | ) | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
66,258 | 338,189 | (906,917 | ) | (2,720,853 | ) | (366,057 | ) | (1,240,271 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
($4,393) | $66,928 | $1,426 | $813,688 | 23,792 | — |
DECEMBER 31, 2012 | 49 |
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
Sit Small Cap Growth Fund | Sit International Growth Fund | |||||||||||||||
Six Months Ended December 31, 2012 (Unaudited) | Year Ended June 30, 2012 | Six Months Ended December 31, 2012 (Unaudited) | Year Ended June 30, 2012 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | ($153,007 | ) | ($630,338 | ) | $84,630 | $333,300 | ||||||||||
Net realized gain on investments and foreign currency transactions | 686,987 | 6,595,004 | 663,660 | (36,363 | ) | |||||||||||
Net change in unrealized appreciation (depreciation) of investments and foreign currency transactions | 2,157,548 | (8,427,070 | ) | 1,603,497 | (3,006,587 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | 2,691,528 | (2,462,404 | ) | 2,351,787 | (2,709,650 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Distributions from: | ||||||||||||||||
Net investment income | ||||||||||||||||
Common shares (Class I) | — | — | (323,000 | ) | (348,000 | ) | ||||||||||
Net realized gains on investments | ||||||||||||||||
Common shares (Class I) | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total distributions | — | — | (323,000 | ) | (348,000 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions: | ||||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Common shares (Class I) | 1,021,338 | 4,473,100 | 94,577 | 558,305 | ||||||||||||
Reinvested distributions | ||||||||||||||||
Common shares (Class I) | — | — | 321,168 | 344,445 | ||||||||||||
Payments for shares redeemed | ||||||||||||||||
Common shares (Class I) | (3,432,987 | ) | (18,552,516 | ) | (1,438,236 | ) | (3,371,988 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Increase (decrease) in net assets from capital transactions | (2,411,649 | ) | (14,079,416 | ) | (1,022,491 | ) | (2,469,238 | ) | ||||||||
�� |
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | 279,879 | (16,541,820 | ) | 1,006,296 | (5,526,888 | ) | ||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 78,202,300 | 94,744,120 | 19,296,097 | 24,822,985 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period* | $78,482,179 | $78,202,300 | $20,302,393 | $19,296,097 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital transactions in shares: | ||||||||||||||||
Sold | ||||||||||||||||
Common shares (Class I) | 22,747 | 104,438 | 6,706 | 42,488 | ||||||||||||
Reinvested distributions | ||||||||||||||||
Common shares (Class I) | — | — | 21,759 | 28,187 | ||||||||||||
Redeemed | ||||||||||||||||
Common shares (Class I) | (76,801 | ) | (483,086 | ) | (100,449 | ) | (257,048 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | (54,054 | ) | (378,648 | ) | (71,984 | ) | (186,373 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
*includes undistributed net investment income (loss) | (153,007 | ) | — | ($2,427 | ) | $235,943 |
See accompanying notes to financial statements.
50 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Sit Developing Markets Growth Fund | ||||||
Six Months Ended December 31, 2012 (Unaudited) | Year Ended June 30, 2012 | |||||
$13,712 | $35,900 | |||||
|
420,250 |
| 673,110 | |||
|
722,499 |
| (3,117,392 | ) | ||
|
|
|
| |||
|
1,156,461 |
| (2,408,382 | ) | ||
|
|
|
| |||
(36,001) | (36,001 | ) | ||||
(881,318) | (956,672 | ) | ||||
|
|
|
| |||
(917,319) | (992,673 | ) | ||||
|
|
|
| |||
253,614 | 1,890,676 | |||||
901,850 | 977,185 | |||||
(961,621) | (3,252,391 | ) | ||||
|
|
|
| |||
|
193,843 |
| (384,530 | ) | ||
|
|
|
| |||
432,985 | (3,785,585 | ) | ||||
11,634,095 | 15,419,680 | |||||
|
|
|
| |||
$12,067,080 | $11,634,095 | |||||
|
|
|
| |||
13,866 | 103,103 | |||||
50,552 | 56,616 | |||||
(52,310) | (165,992 | ) | ||||
|
|
|
| |||
12,108 | (6,273 | ) | ||||
|
|
|
| |||
$2,203 | $24,492 |
DECEMBER 31, 2012 | 51 |
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Balanced Fund
| Six Months Ended December 31, 2012 |
| Years Ended June 30, | |||||||||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||||||||
Beginning of period | $16.97 | $16.47 | $14.18 | $12.96 | $16.32 | $16.93 | ||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||
Net investment income 1 | 0.15 | 0.29 | 0.27 | 0.35 | 0.41 | 0.38 | ||||||||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.42 | 0.46 | 2.32 | 1.24 | (3.32 | ) | (0.66 | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
Total from operations | 0.57 | 0.75 | 2.59 | 1.59 | (2.91 | ) | (0.28 | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||||||||
From net investment income | (0.20) | (0.25 | ) | (0.30 | ) | (0.37 | ) | (0.45 | ) | (0.33 | ) | |||||||||||||||||||
|
| |||||||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||||||||
End of period | $17.34 | $16.97 | $16.47 | $14.18 | $12.96 | $16.32 | ||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
Total investment return 2 | 3.38% | 4.61% | 18.46% | 12.33% | (17.84% | ) | (1.72% | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
Net assets at end of period (000’s omitted) | $12,331 | $11,821 | $11,150 | $10,550 | $10,349 | $12,939 | ||||||||||||||||||||||||
Ratios: 3 | ||||||||||||||||||||||||||||||
Expenses | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | ||||||||||||||||||||||||
Net investment income | 1.67% | 1.75% | 1.75% | 2.44% | 3.12% | 2.22% | ||||||||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 13.87%4 | 47.01% | 40.84% | 46.79% | 30.26% | 54.96% |
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 | Not annualized. |
52 | SIT MUTUAL FUNDS SEMI-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 |
| Six Months Ended December 31, 2012 |
| Years Ended June 30, | ||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $14.10 | $13.91 | $10.64 | $9.60 | $13.11 | $14.42 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income 1 | 0.15 | 0.24 | 0.21 | 0.19 | 0.23 | 0.23 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.67 | 0.26 | 3.23 | 1.03 | (3.09 | ) | (0.63 | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
Total from operations | 0.82 | 0.50 | 3.44 | 1.22 | (2.86 | ) | (0.40 | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
Redemption fees 2 | — | — | — | — | — | — | ||||||||||||||||||
|
| |||||||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
From net investment income | (0.20) | (0.21 | ) | (0.17 | ) | (0.18 | ) | (0.26 | ) | (0.22 | ) | |||||||||||||
From net realized gains | (0.22) | (0.10 | ) | — | — | (0.39 | ) | (0.69 | ) | |||||||||||||||
|
| |||||||||||||||||||||||
Total distributions | (0.42) | (0.31 | ) | (0.17 | ) | (0.18 | ) | (0.65 | ) | (0.91 | ) | |||||||||||||
|
| |||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
End of period | $14.50 | $14.10 | $13.91 | $10.64 | $9.60 | $13.11 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total investment return 3 | 5.82% | 3.76% | 32.58% | 12.71% | (21.59% | ) | (3.06% | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
Net assets at end of period (000’s omitted) | $687,776 | $619,667 | $328,057 | $39,430 | $28,305 | $41,239 | ||||||||||||||||||
Ratios: 4 | ||||||||||||||||||||||||
Expenses | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | ||||||||||||||||||
Net investment income | 2.00% | 1.79% | 1.59% | 1.70% | 2.35% | 1.68% | ||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) 5 | 16.12%6 | 26.84% | 14.67% | 31.84% | 69.10% | 38.86% | ||||||||||||||||||
Class S | | Six Months Ended December 31, 2012 | | Years Ended June 30, | ||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $14.06 | $13.87 | $10.61 | $9.58 | $13.08 | $14.39 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income 1 | 0.13 | 0.21 | 0.17 | 0.16 | 0.21 | 0.20 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.66 | 0.26 | 3.23 | 1.02 | (3.09 | ) | (0.63 | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
Total from operations | 0.79 | 0.47 | 3.40 | 1.18 | (2.88 | ) | (0.43 | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
Redemption fees 2 | — | — | — | — | — | — | ||||||||||||||||||
|
| |||||||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
From net investment income | (0.17) | (0.18 | ) | (0.14 | ) | (0.15 | ) | (0.23 | ) | (0.19 | ) | |||||||||||||
From net realized gains | (0.22) | (0.10 | ) | — | — | (0.39 | ) | (0.69 | ) | |||||||||||||||
|
| |||||||||||||||||||||||
Total distributions | (0.39) | (0.28 | ) | (0.14 | ) | (0.15 | ) | (0.62 | ) | (0.88 | ) | |||||||||||||
|
| |||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
End of period | $14.46 | $14.06 | $13.87 | $10.61 | $9.58 | $13.08 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total investment return 3 | 5.64% | 3.53% | 32.27% | 12.37% | (21.79% | ) | (3.27% | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
Net assets at end of period (000’s omitted) | $114,386 | $100,878 | $56,280 | $24,894 | $15,730 | $14,300 | ||||||||||||||||||
Ratios: 4 | ||||||||||||||||||||||||
Expenses | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | ||||||||||||||||||
Net investment income | 1.75% | 1.54% | 1.34% | 1.45% | 2.10% | 1.43% |
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 | The portfolio turnover rate presented is for the entire Fund. |
6 | Not annualized. |
DECEMBER 31, 2012 | 53 |
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 |
| Six Months Ended December 31, 2012 |
| Years Ended June 30, |
| Nine Months Ended June 30, |
| |||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||
Net Asset Value: | ||||||||||||||||||||
Beginning of period | $12.55 | $13.26 | $10.41 | $9.70 | $10.00 | |||||||||||||||
|
| |||||||||||||||||||
Operations: | ||||||||||||||||||||
Net investment income 1 | 0.11 | 0.24 | 0.20 | 0.17 | 0.15 | |||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.82 | (0.58 | ) | 2.95 | 0.68 | (0.36 | ) | |||||||||||||
|
| |||||||||||||||||||
Total from operations | 0.93 | (0.34 | ) | 3.15 | 0.85 | (0.21 | ) | |||||||||||||
|
| |||||||||||||||||||
Redemption fees | — 2 | — | — | — | — | |||||||||||||||
|
| |||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||
From net investment income | (0.18) | (0.22 | ) | (0.17 | ) | (0.14 | ) | (0.09 | ) | |||||||||||
From net realized gains | (0.08) | (0.15 | ) | (0.13 | ) | — | — | |||||||||||||
|
| |||||||||||||||||||
Total distributions | (0.26) | (0.37 | ) | (0.30 | ) | (0.14 | ) | (0.09 | ) | |||||||||||
|
| |||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||
End of period | $13.22 | $12.55 | $13.26 | $10.41 | $9.70 | |||||||||||||||
|
| |||||||||||||||||||
Total investment return 3 | 7.48% | (2.44% | ) | 30.55% | 8.79% | (2.06% | )4 | |||||||||||||
|
| |||||||||||||||||||
Net assets at end of period (000’s omitted) | $12,064 | $10,421 | $7,834 | $2,832 | $2,290 | |||||||||||||||
Ratios: 5 | ||||||||||||||||||||
Expenses | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | |||||||||||||||
Net investment income | 1.73% | 1.97% | 1.57% | 1.48% | 2.30% | |||||||||||||||
Portfolio turnover rate (excluding short-term securities) 6 | 12.64%4 | 26.65% | 21.84% | 21.60% | 17.69% | 4 | ||||||||||||||
Class S | | Six Months Ended December 31, 2012 | | Years Ended June 30, | | Nine Months Ended | | |||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||
Net Asset Value: | ||||||||||||||||||||
Beginning of period | $12.54 | $13.24 | $10.40 | $9.70 | $10.00 | |||||||||||||||
|
| |||||||||||||||||||
Operations: | ||||||||||||||||||||
Net investment income 1 | 0.10 | 0.21 | 0.16 | 0.14 | 0.13 | |||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.81 | (0.57 | ) | 2.95 | 0.68 | (0.36 | ) | |||||||||||||
|
| |||||||||||||||||||
Total from operations | 0.91 | (0.36 | ) | 3.11 | 0.82 | (0.23 | ) | |||||||||||||
|
| |||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||
From net investment income | (0.16) | (0.19 | ) | (0.14 | ) | (0.12 | ) | (0.07 | ) | |||||||||||
From net realized gains | (0.08) | (0.15 | ) | (0.13 | ) | — | — | |||||||||||||
|
| |||||||||||||||||||
Total distributions | (0.24) | (0.34 | ) | (0.27 | ) | (0.12 | ) | (0.07 | ) | |||||||||||
|
| |||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||
End of period | $13.21 | $12.54 | $13.24 | $10.40 | $9.70 | |||||||||||||||
|
| |||||||||||||||||||
Total investment return 3 | 7.29% | (2.60% | ) | 30.17% | 8.47% | (2.18% | )4 | |||||||||||||
|
| |||||||||||||||||||
Net assets at end of period (000’s omitted) | $2,538 | $2,608 | $1,444 | $882 | $740 | |||||||||||||||
Ratios: 5 | ||||||||||||||||||||
Expenses | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | |||||||||||||||
Net investment income | 1.48% | 1.72% | 1.32% | 1.23% | 2.05% |
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 | Not annualized. |
5 | 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. |
6 | The portfolio turnover rate presented is for the entire Fund. |
54 | SIT MUTUAL FUNDS SEMI-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
| Six Months Ended December 31, 2012 |
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| Years Ended June 30, |
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(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $45.53 | $43.96 | $34.75 | $32.42 | $43.41 | $43.99 | ||||||||||||||||||
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Operations: | ||||||||||||||||||||||||
Net investment income 1 | 0.25 | 0.26 | 0.22 | 0.22 | 0.28 | 0.20 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 1.79 | 1.63 | 9.21 | 2.33 | (11.06 | ) | (0.65 | ) | ||||||||||||||||
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Total from operations | 2.04 | 1.89 | 9.43 | 2.55 | (10.78 | ) | (0.45 | ) | ||||||||||||||||
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Redemption fees | — 2 | — | 2 | — | 2 | — | 2 | 0.01 | — | 2 | ||||||||||||||
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Distributions to Shareholders: | ||||||||||||||||||||||||
From net investment income | (0.46) | (0.32 | ) | (0.22 | ) | (0.22 | ) | (0.22 | ) | (0.13 | ) | |||||||||||||
From net realized gains | (3.66) | — | — | — | — | — | ||||||||||||||||||
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Total distributions | (4.12) | — | — | — | — | — | ||||||||||||||||||
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Net Asset Value: | ||||||||||||||||||||||||
End of period | $43.45 | $45.53 | $43.96 | $34.75 | $32.42 | $43.41 | ||||||||||||||||||
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Total investment return 3 | 4.37% | 4.39% | 27.18% | 7.80% | (24.77% | ) | (1.03% | ) | ||||||||||||||||
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Net assets at end of period (000’s omitted) | $203,234 | $254,256 | $365,045 | $407,359 | $324,071 | $287,695 | ||||||||||||||||||
Ratios: 4 | ||||||||||||||||||||||||
Expenses | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | ||||||||||||||||||
Net investment income | 1.06% | 0.61% | 0.54% | 0.58% | 0.85% | 0.46% | ||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 6.21%5 | 15.06% | 25.36% | 15.93% | 27.98% | 21.97% |
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 | Not annualized. |
DECEMBER 31, 2012 | 55 |
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
| Six Months Ended December 31, 2012 |
| Years Ended June 30, | |||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $15.77 | $15.88 | $11.57 | $9.90 | $14.83 | $15.71 | ||||||||||||||||||
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Operations: | ||||||||||||||||||||||||
Net investment income (loss) 1 | — 2 | (0.05 | ) | (0.06 | ) | (0.05 | ) | (0.03 | ) | (0.07 | ) | |||||||||||||
Net realized and unrealized gains (losses) on investments | 0.84 | (0.06 | ) | 4.37 | 1.72 | (4.81 | ) | (0.31 | ) | |||||||||||||||
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Total from operations | 0.84 | (0.11 | ) | 4.31 | 1.67 | (4.84 | ) | (0.38 | ) | |||||||||||||||
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Capital share proceeds | — | — | — | 2,3 | — | — | — | |||||||||||||||||
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Redemption fees 2 | — | — | — | — | — | — | ||||||||||||||||||
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Distributions to Shareholders: | ||||||||||||||||||||||||
From net realized gains | (0.37) | — | — | — | (0.09 | ) | (0.50 | ) | ||||||||||||||||
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Net Asset Value: | ||||||||||||||||||||||||
End of period | $16.24 | $15.77 | $15.88 | $11.57 | $9.90 | $14.83 | ||||||||||||||||||
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Total investment return 4 | 5.30% | (0.69% | ) | 37.25% | 5 | 16.87% | (32.51% | ) | (2.63% | ) | ||||||||||||||
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Net assets at end of period (000’s omitted) | $142,946 | $144,601 | $165,288 | $130,258 | $127,477 | $210,880 | ||||||||||||||||||
Ratios: 6, 7 | ||||||||||||||||||||||||
Expenses (without waiver) | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | ||||||||||||||||||
Expenses (with waiver) | 1.25% | 1.25% | 1.20% | 1.15% | 1.15% | 1.15% | ||||||||||||||||||
Net investment income (loss) (without waiver) | 0.03% | (0.33% | ) | (0.49% | ) | (0.52% | ) | (0.40% | ) | (0.52% | ) | |||||||||||||
Net investment income (loss) (with waiver) | 0.03% | (0.33% | ) | (0.44% | ) | (0.42% | ) | (0.30% | ) | (0.42% | ) | |||||||||||||
Portfolio turnover rate (excluding short-term securities) | 9.98%8 | 16.23% | 26.98% | 20.39% | 18.07% | 34.61% |
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 | The Fund accounted for proceeds during the year from market timing settlements. See Note 5. |
4 | 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. |
5 | Impact on total return from capital share proceeds was less than 0.01%. |
6 | 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. |
7 | Total Fund expenses are calculated at 1.25% of average daily net assets. The investment adviser voluntarily limited expenses to 1.15% of average daily net assets through December 31, 2010 at which time the agreement was terminated. |
8 | Not annualized. |
56 | SIT MUTUAL FUNDS SEMI-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 Growth Fund
Six Months Ended December 31, 2012 (Unaudited) | Years Ended June 30, | |||||||||||||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||||||||
Beginning of period | $43.90 | $43.86 | $31.32 | $25.89 | $37.44 | $40.14 | ||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||
Net investment loss 1 | (0.09 | ) | (0.34 | ) | (0.36 | ) | (0.24 | ) | (0.16 | ) | (0.37 | ) | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 1.62 | 0.38 | 12.89 | 5.67 | (11.39 | ) | (2.33 | ) | ||||||||||||||||||||||
Total from operations | 1.53 | 0.04 | 12.53 | 5.43 | (11.55 | ) | (2.70 | ) | ||||||||||||||||||||||
Capital share proceeds | — | — | 0.01 | 2 | — | — | — | |||||||||||||||||||||||
Redemption fees | — | — | 3 | — | 3 | — | 3 | — | 3 | — | 3 | |||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||||||||
End of period | $45.43 | $43.90 | $43.86 | $31.32 | $25.89 | $37.44 | ||||||||||||||||||||||||
Total investment return 4 | 3.49% | 0.09% | 40.04% | 5 | 20.97% | (30.85% | ) | (6.73% | ) | |||||||||||||||||||||
Net assets at end of period (000’s omitted) | $78,482 | �� | $78,202 | $94,744 | $59,848 | $58,352 | $93,527 | |||||||||||||||||||||||
Ratios: 6 | ||||||||||||||||||||||||||||||
Expenses | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | ||||||||||||||||||||||||
Net investment loss | (0.39% | ) | (0.82% | ) | (0.91% | ) | (0.80% | ) | (0.61% | ) | (0.93% | ) | ||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 11.90% | 7 | 22.32% | 30.33% | 22.41% | 26.19% | 37.20% |
1 | The net investment income (loss) per share is based on average shares outstanding for the period. |
2 | The Fund accounted for proceeds during the year from market timing settlements. See Note 5. |
3 | Amount represents less than $0.01 per share. |
4 | 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. |
5 | Impact on total return from capital share proceeds was 0.03%. |
6 | 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. |
7 | Not annualized. |
DECEMBER 31, 2012 | 57 |
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
Six Months Ended (Unaudited) | Years Ended June 30, | |||||||||||||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||||||||
Beginning of period | $13.29 | $15.16 | $11.67 | $10.90 | $17.80 | $18.70 | ||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||
Net investment income 1 | 0.06 | 0.22 | 0.16 | 0.11 | 0.13 | 0.15 | ||||||||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 1.61 | (1.86 | ) | 3.39 | 0.65 | (6.95 | ) | (0.85 | ) | |||||||||||||||||||||
Total from operations | 1.67 | (1.64 | ) | 3.55 | 0.76 | (6.82 | ) | (0.70 | ) | |||||||||||||||||||||
Capital share proceeds | — | — | 0.07 | 2 | 0.13 | 2 | 0.10 | 2 | — | |||||||||||||||||||||
Redemption fees | — | — | 3 | — | 3 | — | 3 | — | 3 | — | 3 | |||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||||||||
From net investment income | (0.24 | ) | (0.23 | ) | (0.13 | ) | (0.12 | ) | (0.18 | ) | (0.20 | ) | ||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||||||||
End of period | $14.72 | $13.29 | $15.16 | $11.67 | $10.90 | $17.80 | ||||||||||||||||||||||||
Total investment return 4 | 12.53% | (10.69% | ) | 31.08% | 5 | 8.10% | 5 | (37.71% | )5 | (3.82% | ) | |||||||||||||||||||
Net assets at end of period (000’s omitted) | $20,302 | $19,296 | $24,823 | $20,586 | $21,009 | $37,714 | ||||||||||||||||||||||||
Ratios: 6, 7 | ||||||||||||||||||||||||||||||
Expenses (without waiver) | 1.50% | 1.50% | 1.61% | 1.85% | 1.85% | 1.85% | ||||||||||||||||||||||||
Expenses (with waiver) | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | ||||||||||||||||||||||||
Net investment income (without waiver) | 0.85% | 1.62% | 1.01% | 0.50% | 0.74% | 0.43% | ||||||||||||||||||||||||
Net investment income (with waiver) | 0.85% | 1.62% | 1.12% | 0.85% | 1.09% | 0.78% | ||||||||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 8.34% | 8 | 27.82% | 35.95% | 25.09% | 33.12% | 16.83% |
1 | The net investment income per share is based on average shares outstanding for the period. |
2 | The Fund accounted for proceeds during the year from market timing settlements. See Note 5. |
3 | Amount represents less than $0.01 per share. |
4 | 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. |
5 | Impact on total return from capital share proceeds was 0.60%, 1.20%, and 0.57% for the years ended June 30, 2011, 2010, and 2009, respectively. |
6 | 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. |
7 | Effective November 1, 2010, total Fund expenses are limited to 1.50% of average daily net assets. Prior to this date, expenses were calculated at a higher rate, and the investment adviser voluntarily absorbed expenses that were otherwise payable by the Fund. |
8 | Not annualized. |
58 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
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
Six Months Ended (Unaudited) | Years Ended June 30, | |||||||||||||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||||||||
Beginning of period | $17.70 | $23.24 | $19.00 | $16.13 | $25.97 | $24.94 | ||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||
Net investment income (loss) 1 | 0.02 | 0.06 | 0.03 | 0.01 | 0.04 | (0.07 | ) | |||||||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 1.78 | (3.89 | ) | 4.90 | 2.90 | (9.15 | ) | 1.40 | ||||||||||||||||||||||
Total from operations | 1.80 | (3.83 | ) | 4.93 | 2.91 | (9.11 | ) | 1.33 | ||||||||||||||||||||||
Capital share proceeds | — | — | — | — | 0.09 | 2 | — | |||||||||||||||||||||||
Redemption fees | — | — | 3 | — | — | 3 | — | 0.01 | ||||||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||||||||
From net investment income | (0.06 | ) | (0.06 | ) | (0.02 | ) | (0.04 | ) | — | (0.04 | ) | |||||||||||||||||||
From net realized gains | (1.42 | ) | (1.65 | ) | (0.67 | ) | — | (0.82 | ) | (0.27 | ) | |||||||||||||||||||
Total distributions | (1.48 | ) | (1.71 | ) | (0.69 | ) | (0.04 | ) | (0.82 | ) | (0.31 | ) | ||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||||||||
End of period | $18.02 | $17.70 | $23.24 | $19.00 | $16.13 | $25.97 | ||||||||||||||||||||||||
Total investment return 4 | 10.27% | (16.29% | ) | 25.95% | 18.05% | (33.73% | )5 | 5.26% | ||||||||||||||||||||||
Net assets at end of period (000’s omitted) | $12,067 | $11,634 | $15,420 | $14,043 | $13,203 | $23,195 | ||||||||||||||||||||||||
Ratios: 6 | ||||||||||||||||||||||||||||||
Expenses | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% | ||||||||||||||||||||||||
Net investment income (loss) | 0.23% | 0.29% | 0.15% | 0.06% | 0.24% | (0.27% | ) | |||||||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 4.07% | 7 | 22.56% | 19.14% | 19.90% | 13.56% | 9.40% |
1 | The net investment income per share is based on average shares outstanding for the period. |
2 | The Fund accounted for proceeds during the year from market timing settlements. See Note 5. |
3 | Amount represents less than $0.01 per share. |
4 | 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. |
5 | Impact on total return from capital share proceeds was 0.37%. |
6 | 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. |
7 | Not annualized. |
DECEMBER 31, 2012 | 59 |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2012
(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 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 a composite index (60% S&P 500 Index and 40% MSCI EAFE Index) and that grows over a period of years. Secondarily, maximize long-term capital appreciation. | |
Large Cap Growth Fund | Maximize long-term capital appreciation. | |
Mid Cap Growth Fund | 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 and Global 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 |
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. 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 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, including level-yield amortization of long-term bond premium and discount, is recorded on the accrual basis.
60 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Fair Value Measurements
The inputs and valuations techniques used to measure fair value of the Funds’ net assets are summarized into three levels as described in the hierarchy below:
• Level 1 – quoted prices for 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 December 31, 2012 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, 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. E.S.T). 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, 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.
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. Also, 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.
Management has analyzed the Funds’ tax positions taken in federal tax returns for all open tax years and has concluded that as of December 31, 2012, no provision for income would be required in the Funds’ financial statements. The Funds’ federal and state income and federal excise returns for the 2009, 2010 and 2011 tax years for which the applicable statutes of limitations have not expired remain subject to examination by the Internal Revenue Service and state departments of revenue.
DECEMBER 31, 2012 | 61 |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2012 (Continued)
At December 31, 2012, 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 | $2,334,556 | ($175,499) | $2,159,057 | $9,663,077 | ||||||||||||
Dividend Growth | 79,881,602 | (6,570,342) | 73,311,260 | 708,733,387 | ||||||||||||
Global Dividend Growth | 1,726,347 | (168,832) | 1,557,515 | 12,460,362 | ||||||||||||
Large Cap Growth | 54,312,105 | (4,012,723) | 50,299,382 | 151,193,598 | ||||||||||||
Mid Cap Growth | 49,139,219 | (3,148,052) | 45,991,167 | 95,066,539 | ||||||||||||
Small Cap Growth | 22,946,308 | (2,890,463) | 20,055,845 | 57,296,166 | ||||||||||||
International Growth | 4,480,999 | (294,980) | 4,186,019 | 15,473,369 | ||||||||||||
Developing Markets Growth | 4,178,434 | (468,632) | 3,709,802 | 8,145,071 |
Net investment income and net realized gains differ for financial statement and tax purposes because of 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, 2012 and 2011 were as follows:
Year Ended June 30, 2012:
Long Term | ||||||||||||
Ordinary Income | Capital Gain | Total | ||||||||||
Balanced | $167,000 | — | $167,000 | |||||||||
Dividend Growth (Class I) | 6,136,804 | $2,673,682 | 8,810,486 | |||||||||
Dividend Growth (Class S) | 947,200 | 539,573 | 1,486,773 | |||||||||
Global Dividend Growth (Class I) | 136,621 | 90,583 | 227,204 | |||||||||
Global Dividend Growth (Class S) | 30,379 | 23,745 | 54,124 | |||||||||
Large Cap Growth | 2,117,000 | — | 2,117,000 | |||||||||
Mid Cap Growth | — | — | — | |||||||||
Small Cap Growth | — | — | — | |||||||||
International Growth | 348,000 | — | 348,000 | |||||||||
Developing Markets Growth | 36,913 | 955,760 | 992,673 | |||||||||
Year Ended June 30, 2011: | ||||||||||||
Long Term | ||||||||||||
Ordinary Income | Capital Gain | �� | Total | |||||||||
Balanced | $220,001 | — | $220,001 | |||||||||
Dividend Growth (Class I) | 1,576,972 | — | 1,576,972 | |||||||||
Dividend Growth (Class S) | 394,029 | — | 394,029 | |||||||||
Global Dividend Growth (Class I) | 56,472 | $34,809 | 91,281 | |||||||||
Global Dividend Growth (Class S) | 12,874 | 10,956 | 23,830 | |||||||||
Large Cap Growth | 2,300,000 | — | 2,300,000 | |||||||||
Mid Cap Growth | — | — | — | |||||||||
Small Cap Growth | — | — | — | |||||||||
International Growth | 215,000 | — | 215,000 | |||||||||
Developing Markets Growth | 10,903 | 469,086 | 479,989 |
62 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
As of June 30, 2012 , the components of distributable earnings on a tax basis were as follows:
Undistributed Ordinary | Accumulated | Unrealized Appreciation | ||||||||||
Income | Gain (Loss) | (Depreciation) | ||||||||||
Balanced | $47,269 | ($778,944) | $1,873,619 | |||||||||
Dividend Growth | 2,740,097 | 3,248,252 | 44,651,905 | |||||||||
Global Dividend Growth | 66,928 | (12,302) | 913,507 | |||||||||
Large Cap Growth | 813,688 | (2,071,026) | 59,478,341 | |||||||||
Mid Cap Growth | — | 3,183,566 | 41,441,432 | |||||||||
Small Cap Growth | — | (5,606,924) | 17,848,955 | |||||||||
International Growth | 235,943 | (4,231,109) | 2,442,072 | |||||||||
Developing Markets Growth | 24,492 | 653,163 | 2,986,219 |
Net capital loss carryovers and late year losses, if any, as of June 30, 2012, available to offset future realized capital gains and thereby reduce future capital gains distributions. Under the Regulated Investment Company Modernization Act of 2010 (“Act”), the Funds’ are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses, and will not be considered exclusively short-term as under previous law. The Funds’ first fiscal year end subject to the Modernization Act was June 30, 2012. The net capital loss carryovers and the expiration dates for capital losses carryover from pre-enactment taxable years and the late year losses deferred as of June 30, 2012, were as follows:
Pre-Enactment | Post-Enactment | |||||||||||||||||||||
Net Capital Loss | Unlimited Period of Net | Late Year | Accumulated | |||||||||||||||||||
Carryover Expiring in: | Capital Loss Carryover | Losses | Capital and | |||||||||||||||||||
2013 | 2014-2019 | Short-Term | Long-Term | Deferred | Other Losses | |||||||||||||||||
Balanced | $117,820 | $661,124 | — | — | — | $778,944 | ||||||||||||||||
Global Dividend Growth | — | — | $12,302 | — | — | 12,302 | ||||||||||||||||
Large Cap Growth | — | 1,262,091 | — | — | $808,935 | 2,071,026 | ||||||||||||||||
Small Cap Growth | — | 5,606,924 | — | — | — | 5,606,924 | ||||||||||||||||
International Growth | 63,389 | 3,613,000 | — | — | 554,720 | 4,231,109 |
For the year ended June 30, 2012, the Funds’ utilized capital losses and expired capital losses as follows:
Utilized | Expiring In | Expired | ||||||||
Balanced | $284,786 | 2012 | $738,510 | |||||||
Large Cap Growth | 3,060,968 | 2012 | — | |||||||
5,033,957 | 2017 | — | ||||||||
20,514,481 | 2018 | — | ||||||||
Mid Cap Growth | 3,801,578 | 2018 | — | |||||||
Small Cap Growth | 3,736,397 | 2012 | — | |||||||
2,874,777 | 2018 | — | ||||||||
International Growth | 617,843 | 2012 | 5,370,384 |
DECEMBER 31, 2012 | 63 |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2012 (Continued)
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 and Global Dividend Growth Funds and declared and paid annually for Developing Markets Growth, Small Cap Growth, International Growth, Mid Cap Growth, and Large Cap 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 six months ended December 31, 2012, were as follow:
Purchases | Proceeds | |||||||||||||||
U.S. Government | Other | U.S. Government | Other | |||||||||||||
Balanced | $629,313 | $1,412,540 | $423,825 | $1,186,696 | ||||||||||||
Dividend Growth | — | 176,585,908 | — | 119,991,314 | ||||||||||||
Global Dividend Growth | — | 2,243,299 | — | 1,685,959 | ||||||||||||
Large Cap Growth | — | 14,361,191 | — | 73,515,516 | ||||||||||||
Mid Cap Growth | — | 14,223,971 | — | 22,604,335 | ||||||||||||
Small Cap Growth | — | 9,008,721 | — | 9,617,610 | ||||||||||||
International Growth | — | 1,597,102 | — | 2,854,149 | ||||||||||||
Developing Markets Growth | — | 467,779 | — | 1,140,304 |
64 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
(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:
Balanced | 1.00 | % | ||
Dividend Growth Fund Class I and Class S | 1.00 | % | ||
Global Dividend Growth Fund Class I and Class S | 1.25 | % | ||
Large Cap Growth | 1.00 | % | ||
Mid Cap Growth | 1.25 | % | ||
Small Cap Growth | 1.50 | % | ||
International Growth | 1.50 | % | ||
Developing Markets Growth | 2.00 | % |
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 Global Dividend Growth and 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.
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 December 31, 2012:
% Shares | ||||||
Shares | Outstanding | |||||
Balanced | 216,927 | 30.5 | ||||
Dividend Growth | 815,190 | 1.5 | ||||
Global Dividend Growth | 427,010 | 38.7 | ||||
Large Cap Growth | 289,470 | 6.2 | ||||
Mid Cap Growth | 2,883,239 | 32.8 | ||||
Small Cap Growth | 794,985 | 46.0 | ||||
International Growth | 721,751 | 52.3 | ||||
Developing Markets Growth | 237,202 | 35.4 |
DECEMBER 31, 2012 | 65 |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2012 (Continued)
(5) Capital Share Activity
Market Timing Settlements
During the year ended June 30, 2012, the Mid Cap Growth Fund, Small Cap Growth Fund and the International Growth Fund received market timing settlements due to the Funds from fiscal year ended June 30, 2011 in the amount of $2,188, $14,142 and $67,740, respectively. The International Growth Fund expects to receive additional settlement dollars for approximately $275,505 from market timing settlements payable to the Fund for the fiscal years ended June 30, 2010 and June 30, 2011. These amounts are recorded upon notification of settlement proceeds from an appropriate authority and separately reflected on the statements of changes in net assets and in the financial highlights.
The impact on the Funds’ performance for the years ended 2011 and 2010 was:
Year Ended June 30, 2011 | Year Ended June 30, 2010 | |||||||||||||||
Impact on | Impact on | |||||||||||||||
Proceeds | Total Return | Proceeds | Total Return | |||||||||||||
Mid Cap Growth | $2,188 | —* | — | — | ||||||||||||
Small Cap Growth | 14,142 | 0.03% | — | — | ||||||||||||
International Growth | 114,003 | 0.60% | $ | 229,242 | 1.20% |
* less than 0.01%
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 six months ended December 31, 2012, the Funds received the following redemption fees:
Class I | Class S | |||||||
Dividend Growth | $ | 3,809 | $ | 623 | ||||
Global Dividend Growth | 1 | — | ||||||
Large Cap Growth | 657 | — | ||||||
Mid Cap Growth | 3,174 | — |
(6) Subsequent Events
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued, and has determined that there were no subsequent events that would require disclosure in or adjustments to the financial statements.
66 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
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 July 1, 2012 to December 31, 2012.
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 (7/1/12) | Ending (12/31/12) | Expenses Paid During Period* (7/1/12- 12/31/12) | |||||||||
Balanced Fund | ||||||||||||
Actual | $1,000 | $1,033.80 | $5.13 | |||||||||
Hypothetical | $1,000 | $1,020.16 |
| $5.09
|
| |||||||
Dividend Growth Fund | ||||||||||||
Actual | ||||||||||||
Class I | $1,000 | $1,058.20 | $5.19 | |||||||||
Class S | $1,000 | $1,056.40 | $6.48 | |||||||||
Hypothetical | ||||||||||||
Class I | $1,000 | $1,020.16 | $5.09 | |||||||||
Class S | $1,000 | $1,018.90 |
| $6.36
|
| |||||||
Global Dividend Growth Fund | ||||||||||||
Actual | ||||||||||||
Class I | $1,000 | $1,074.80 | $6.54 | |||||||||
Class S | $1,000 | $1,072.90 | $7.84 | |||||||||
Hypothetical | ||||||||||||
Class I | $1,000 | $1,018.90 | $6.36 | |||||||||
Class S | $1,000 | $1,017.64 |
| $7.63
|
| |||||||
Large Cap Growth | ||||||||||||
Actual | $1,000 | $1,043.70 | $5.15 | |||||||||
Hypothetical | $1,000 | $1,020.16 |
| $5.09
|
| |||||||
Mid Cap Growth Fund | ||||||||||||
Actual | $1,000 | $1,053.00 | $6.47 | |||||||||
Hypothetical | $1,000 | $1,018.90 |
| $6.36
|
| |||||||
Small Cap Growth Fund | ||||||||||||
Actual | $1,000 | $1,034.90 | $7.69 | |||||||||
Hypothetical | $1,000 | $1,017.64 |
| $7.63
|
| |||||||
International Growth Fund | ||||||||||||
Actual | $1,000 | $1,125.30 | $8.04 | |||||||||
Hypothetical | $1,000 | $1,017.64 |
| $7.63
|
| |||||||
Developing Markets Growth Fund | ||||||||||||
Actual | $1,000 | $1,102.70 | $10.60 | |||||||||
Hypothetical | $1,000 | $1,015.12 | $10.16 |
*Expenses are equal to the Fund’s annualized expense ratio of 1.00%, for the Balanced, Dividend Growth, Class I and Large Cap Growth Funds; 1.25% for Dividend Growth Fund, Class S, Global Dividend Growth Fund, Class I and Mid Cap Growth Fund; 1.50% for Global Dividend Growth, Class S, Small Cap Growth and International Growth Funds; and 2.00% for Developing Markets Growth Fund, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period.)
DECEMBER 31, 2012 | 67 |
ADDITIONAL INFORMATION (Unaudited)
PROXY VOTING
Each fund follows certain policies and procedures for voting proxies for securities held in each portfolio. A description of the Funds’ proxy voting policies and procedures is available without charge upon request by calling the Funds at 1-800-332-5580.
Information regarding how each Fund voted proxies relating to its portfolio securities during the most recent twelve-month period ended June 30 is available without charge upon request by calling the Funds at 1-800-332-5580, and is available on the U.S. Securities and Exchange Commission’s website at www.sec.gov.
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
The Funds’ file their complete schedules of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Form N-Qs are available without charge upon request by calling the Funds at 1-800-332-5580 and are available on the SEC’s website at www.sec.gov. In addition, the Funds’ Form N-Qs may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-202-551-8090.
RE-APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS
At their joint meeting held on October 29, 2012 the Boards of Directors of the Sit Mutual Funds unanimously approved the continuation for another one year period the investment management agreements entered into by and between Sit Investment Associates, Inc. (“SIA”) and Sit Mid Cap Growth Fund, Inc. dated November 1, 1996; Sit Large Cap Growth Fund, Inc. dated November 1, 1996; and Sit Mutual Funds Inc., dated November 1, 1992; (the “Agreements”).
The Boards approved the Agreements after a lengthy discussion and consideration of various factors relating to the Boards’ selection of SIA as the investment adviser, and the Boards’ approval of the fees to be paid under the Agreements.
Investment Adviser Criteria. The Directors began their analysis by discussing their criteria for determining the quality of an investment adviser. The Directors’ noted that their analysis is similar to that used by institutional investors in evaluating and selecting investment advisers. The Directors discussed several factors used to determine the overall quality of an investment adviser and the nature, extent and quality of the services performed by SIA, including the following:
Investment Philosophy and Process. The Directors considered SIA’s philosophy of managing assets. With respect to equity securities, SIA identifies growth-oriented securities issued by companies with the potential for earnings growth at a faster rate than the general economy and market index. SIA believes that earnings growth is the primary determinant of superior long-term returns for equity securities, and invests in companies it believes exhibit above market and consistent growth as well as conservative and cyclical growth companies. SIA’s actively managed portfolios not only concentrate on the best growth opportunities but do so at reasonable valuation levels. The Directors determined that the Stock Funds’ investment objectives are consistent with SIA’s investment philosophy and growth style. The Directors reviewed the Stock Funds’ portfolio characteristics, and noted that SIA has consistently managed the Stock Funds in a growth style and the Directors found no indication of style drift away from growth stocks over market cycles. The Directors noted that in years during which growth stocks have generally under-performed relative to value stocks, many funds with a stated growth style objective actually strayed from the growth style and invested a portion of their portfolios in value stocks. This has been especially true with funds investing in international equity securities. In these instances, the Stock Funds may at times not rank favorably in comparisons with other funds investing in value stocks because the Stock Funds were disciplined in maintaining their growth style.
The Directors discussed SIA’s consistent and well-defined investment process. With respect to equity securities, SIA utilizes a team based top-down and bottom-up investment decision making process.
Investment Professionals. The Directors discussed the experience, knowledge and organizational stability of SIA and its investment professionals. The Directors noted that SIA’s senior professionals are actively involved in the investment process and have significant investment industry experience.
68 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
ADDITIONAL INFORMATION (Unaudited) (Continued)
The Directors discussed the depth of SIA’s investment staff. The Directors noted that SIA has over 30 investment professionals. Given the investment products offered by SIA and the assets under management, the Directors determined that SIA’s investment staff is well positioned to meet the current needs of its clients, including the Funds, and to accommodate growth in the number of clients and assets under management for the near future. The Directors concluded that the depth of the investment staff, and in particular senior management and investment analysts, is actually greater than the Funds currently require at their present asset size. The Directors noted that SIA has the resources of a $11 billion investment firm working for the benefit of the Fund shareholders.
Investment Performance. The Directors reviewed and discussed the Funds’ investment performance on an absolute and comparable basis for various periods as discussed below. The Directors noted that the investment performance of the Funds has generally been competitive with indices and other funds with similar investment styles as the Funds, such as equity growth funds.
Corporate Culture. The Directors discussed SIA’s corporate values to operate under the highest ethical and professional standards. SIA’s culture is set and practiced by senior management who insist that all professionals exhibit honesty and integrity. The Board noted that the firm’s values are evident in all of the services provided to the Funds.
Review of Specific Factors. The Directors continued their analysis by reviewing specific information on SIA and the Funds and specific terms of the Agreements, including the following:
Investment Performance. The Directors reviewed investment performance of each Fund for 1 month, 3 months, 6 months, year-to-date, 1 year, 5 years (as applicable), 10 years (as applicable) and since inception, both on an absolute basis and on a comparative basis to indices and mutual funds within the same investment categories. As noted above, the Directors concluded that the investment performance of the Funds has been competitive in relation to their stated objectives and strategies on a comparable basis with funds with similar objectives and strategies.
Fees and Expenses. The Directors noted that the Funds pay SIA a monthly fee and SIA is responsible for all of the Funds’ expenses, except fees paid under a distribution plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 for Class S shares of Sit Dividend Growth Fund and Sit Global Dividend Growth Fund, interest, brokerage commissions and transaction charges and certain extraordinary expenses. The Directors reviewed fees paid in prior years (both before and after the voluntary waiver of fees by SIA with respect to certain funds) and the current fees to be paid under the Agreements.
The Directors reviewed the average and median expense ratios of mutual funds within the same investment category for each Fund. The Directors noted that each Fund’s total expense ratio compares favorably to the total expense ratios of other no-load funds within the Fund’s Morningstar category, and are lower than the average total expense ratio for the full Morningstar category. The Directors concluded that the fees paid by the Funds are reasonable and appropriate.
The Directors reviewed the extent to which the fees to be paid under the Agreements by each Fund may be affected by an increase in the Fund’s assets, which included reviewing each Fund’s current and historical assets and the likelihood and magnitude of future increases in the Fund’s assets. The Directors agreed that it is appropriate that the Funds benefit from improved economies of scale as the Funds’ assets increase. However, the Directors concluded that given the amount of the Funds’ current assets and the likelihood and magnitude of future increases in the Funds’ assets, negotiating a graduated fee structure for each Fund is unnecessary at this time since the fees to be paid under the current Agreements are reasonable and appropriate.
The Directors reviewed the expenses paid by SIA relating to the operations of the Funds, and SIA’s income with respect to the management of the Funds for the past two calendar years. The Directors concluded that the expenses paid were appropriate.
The Directors reviewed SIA’s investment advisory fee schedule for investment management services provided to other clients. The Directors compared the services provided to the Funds and other clients of SIA, and recognized that the Funds’ expenses are borne by SIA except as noted above. The Directors concluded that the fees paid by the Funds in relation to the fees paid by other SIA clients were appropriate and reasonable. The Directors also concluded that SIA’s profit margin with respect to the management of the Funds was appropriate.
DECEMBER 31, 2012 | 69 |
ADDITIONAL INFORMATION (Unaudited) (Continued)
The Directors discussed the extent to which SIA receives benefits from the relationship with the Funds such as soft dollar arrangements by which brokers provide research services to SIA as a result of brokerage generated by the Funds. The Board concluded that any benefits SIA receives from its relationship with the Funds are well within industry norms and are reflected in the amount of the fees paid by the Funds to SIA and are appropriate and reasonable.
Non-Advisory Services. The Directors considered the quality of non-advisory services which SIA provides to the Funds (and their shareholders) and the quality and depth of SIA’s non investment personnel who provide such services. Directors concluded that the level of such services and the quality and depth of such personnel are consistent with industry standards.
Finally, the Directors considered the compliance staff and the regulatory history of SIA and the Funds, and concluded that both are consistent with industry standards.
Based on these conclusions, without any single conclusion being dispositive, the Directors determined that renewal of the Agreements was in the interest of each Fund and its shareholders.
70 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
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DECEMBER 31, 2012 | 71 |
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72 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Item 2: Code of Ethics. Not applicable to Semi-Annual Report.
Item 3: Audit Committee Financial Expert. Not applicable to Semi-Annual Report.
Item 4: Principal Accountant Fees and Services. Not applicable to Semi-Annual Report.
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 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 changes in the Registrant’s internal control over financial reporting as defined in Rule 30a-3(d) under the Act) that occurred during the Registrant’s last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12: 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 CFR 270.30a-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 February 28, 2013
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 February 28, 2013
By (Signature and Title) | /s/ Roger J. Sit | |||
Roger J. Sit Chairman |
Date February 28, 2013