UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-06373
Sit Mutual Funds, Inc.
(Exact name of registrant as specified in charter)
3300 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
(Address of principal executive offices)
Paul E. Rasmussen, VP Treasurer
Sit Mutual Funds, Inc.
3300 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
(Name and address of agent for service)
Copy to:
Mike Radmer, Esq.
Dorsey & Whitney
Suite 1500
50 South Sixth Street
Minneapolis, MN 55402-1498
Registrant’s telephone number, including area code:
(612) 332-3223
Date of fiscal year end: June 30, 2013
Date of reporting period: June 30, 2013
| Item 1: | Reports to Stockholders |
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Sit Mutual Funds STOCK FUNDS ANNUAL REPORT TABLE OF CONTENTS |
This document must be preceded or accompanied by a Prospectus.
CHAIRMAN’S LETTER
August 6, 2013
Dear Fellow Shareholders:
The picture for the U.S. economy has been dynamic and complex in recent years, with varying headwinds and tailwinds producing the same result: a subpar economic recovery. The most recent final estimate for first quarter 2013 real gross domestic product (GDP) was +1.8%, and the underlying consumer spending data, which accounts for over two-thirds of U.S. GDP, point to slightly weaker growth in the second quarter. In addition, while housing has begun to contribute positively to growth, it has largely been offset by relatively weak corporate capital spending and a marked slowdown in federal government spending. On a positive note, the June nonfarm payroll figure was stronger than forecasted and there were upward revisions to the prior two months. However, looking at the data over the past few quarters reveals a somewhat weaker trend, as the number of jobs created in each of the past three quarters has been slowly declining. Manufacturing activity, which had been a key pillar of strength in the early stages of the recovery, has stagnated, as measured by the National Purchasing Managers Indices (PMI’s) on both a regional and national basis. Bottom line, we believe that the sluggish pace of growth will likely continue over the near-to-intermediate term. Our current forecast for 2013 GDP is currently +1.6%.This subdued level of growth, combined with benign inflation trends in recent quarters, point to a continuance of the low interest rate environment that has prevailed over the last several years. We will continue to monitor the statistics closely, but our expectation is that is that inflation will remain controlled for the foreseeable horizon. However, we are also cognizant that at some point the Federal Reserve (Fed) will need to retract the record levels of accommodative monetary policy (including quantitative easing, or QE) at an appropriate pace to maintain a controlled rate of inflation.
Without question, trends outside the U.S. will continue to have a direct impact on both our domestic economy and financial markets. While there are key headwinds facing the European economy, we are beginning to see signs of stabilization. Both the manufacturing and industrial production data have begun to rise, albeit off depressed levels, indicating the severe drawdown of inventories may have run its course. One of the most important issues, however, is the lack of improvement in the rate of unemployment, with recent statistics at all-time high levels. The finance sector has also been slow to recover as banks continue to deleverage and manage through elevated credit costs. Bottom line, we believe the region is “bouncing along the bottom” at current depressed levels, but is no longer worsening. In Japan, the economy has shown early signs of a positive response to Prime Minister Shizo Abe’s economic policy agenda, with a solid improvement in GDP, driven by both improved industrial and consumer activity. However, while the recent improvement is encouraging, the long-term sustainability is unclear given the country’s challenging demographics of the aging population and elevated government debt levels. Finally, while China has been the engine for growth in Asia and the entire global economy, it is clear that new government officials are determined to push forward structural reforms. This will undoubtedly lead to less fiscal stimulus and more restrictive credit policies, which will have the effect of slowing economic growth from the very rapid pace experienced over the past several years.
Equity Strategy
Despite a marked deceleration in corporate earnings growth given ongoing economic challenges, U.S. stocks posted strong gains over the past twelve months. It is our view, however, gains experienced over the past twelve months will be difficult to repeat in the year ahead, barring an unforeseen acceleration in the pace of economic growth. Specifically, the gains in stocks over the past year have been largely due to an expansion of price-earnings multiples rather than corporate earnings growth. For example, we estimate that the S&P 500 price-to-earnings (P/E) multiple (on trailing twelve month earnings) has risen from 13.8x to 16.9x, a 20%+ increase, and therefore accounting for the bulk of gains in stock prices. And while we do not believe valuation levels are excessive given the low levels of interest rates and inflation, valuations look closer to “fair” based on the clouded outlook for corporate earnings and the direction of monetary policy. Without question, the Fed with other central banks around the world, have engaged in highly unusual and accommodative economic policies that have had the effect of boosting the valuation of equities. Speculation surrounding the Fed’s “tapering” the level of quantitative easing resulted in significant volatility in recent weeks as investors grapple with the potential impact, including potentially higher interest rates. We continue to believe, however, that interest rates will be remain very low given the slow pace of economic growth with limited signs of inflationary pressures.
One effect of the Fed’s quantitative easing program, in our view, is that it allowed investors to be less discriminating about companies in which they have chosen to invest. Over the past year, the result has been that more speculative companies with riskier financial metrics have outperformed companies with more sound long-term prospects. Given our view that the U.S. economy will continue to muddle through the current recovery at a subpar rate of growth, we expect the anticipation of the QE tapering to cause differentiation among companies that execute and generate earnings growth in this challenging environment. Against this backdrop, we continue to believe it is appropriate to maintain a highly diversified, high quality bias within the Funds. Our emphasis remains on companies with strong balance sheets and high free cash flow generation. This financial strength enables companies to make acquisitions to augment internal earnings growth or, preferably, return capital back to shareholders in the form of share repurchases and/or dividends.
We continue to believe equity valuations are attractive in many regions outside the U.S., including Europe. We continue to focus on European companies with a global presence, and we have been somewhat encouraged by emerging signs of stability in the regional economy. The Japanese market was considered a relative safe haven for the first half of the fiscal year, but we believe this is no longer the case given the structural risks to the economy and the unproven nature of recently implemented policies. We, therefore, remain underweight in Japan in global Funds. As previously mentioned, while China has been a
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2 | | SIT MUTUAL FUNDS ANNUAL REPORT |
key growth driver for the global economy, policies aimed at structural reform will take time. This leads us to an increasingly cautious, more defensive view on the economy.
Our research effort is highly focused on high quality companies with sustainable, long-term earnings growth prospects. We strongly believe that this focus will reward our shareholders over time.
With best wishes,
Roger J. Sit
Chairman, President, CEO and Global CIO
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 twelve-month return was +10.26%. The S&P 500® Index return was +20.60% over the period, while the Barclays Aggregate Bond Index declined -0.69%. The Lipper Balanced Fund Index gained +11.70% over the period.
Stocks moved solidly higher over the past twelve months. Although economic conditions around the world have posed challenges for corporate earnings, stock valuations have been boosted by continued low interest rates and highly accommodative Federal Reserve policy. We continue to feel strongly that an emphasis on “quality” is particularly important, as risks (higher taxes, excessive government debt, the slowdown in China) to the fragile global economic recovery still exist. We believe that companies with stable earnings growth, strong cash flow generation and minimal debt levels will outperform the overall market, as economic growth remains quite sluggish and investors seek firms that have financial flexibility to repurchase stock, increase dividends or make accretive acquisitions to augment earnings growth. In terms of performance, the equity portion of the Fund lagged the S&P 500® Index return over the past twelve months. This was largely due to negative stock selection in the electronic technology and technology services sectors, while underweighting the strong finance sector also detracted from relative returns. Conversely, the strong performance of Celgene and Gilead Sciences helped the health technology sector contribute positively to relative returns. Underweighting utilities, which lagged over the period, also helped.
Despite the recent rise in interest rates, we believe U.S. Treasury rates remain exceptionally low and, therefore, we remain underweighted to the sector. Conversely, we believe high quality corporate bonds, closed-end funds and mortgages continue to provide investors with attractive risk-adjusted return potential. The fixed income portion of the Fund outperformed the Barclays Aggregate Bond Index over the period. The primary driver of the outperformance was our significant yield advantage. The fixed income portion of the portfolio also benefitted from its defensive interest rate posture, as interest rates rose during the period. In fact, principal returns from both the asset-backed and taxable municipal sectors were positive on an abs-
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 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 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.
olute basis during the period, in contrast to price declines experienced by the majority of fixed income markets.
As of June 30, 2013, the asset allocation of the Fund was 64% equities, 33% fixed income, and 3% cash and equivalents.
Roger J. Sit
Bryce A. Doty
John M. Bernstein
Portfolio Managers
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4 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2013
| | | | | | | | | | | | | | | |
| | | Sit Balanced Fund | | S&P 500® Index 1 | | Barclays Aggregate Bond Index 2 |
One Year | | | | 10.26 | % | | | | 20.60 | % | | | | -0.69 | % |
Five Year | | | | 4.75 | | | | | 7.01 | | | | | 5.19 | |
Ten Year | | | | 6.13 | | | | | 7.30 | | | | | 4.52 | |
Since Inception (12/31/93) | | | | 6.54 | | | | | 8.62 | | | | | 5.87 | |
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 BarclaysAggregate 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
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Net Asset Value 6/30/13: | | $ 18.42 Per Share |
Net Asset Value 6/30/12: | | $ 16.97 Per Share |
Total Net Assets: | | $ 13.5 Million |
TOP HOLDINGS
Top Equity Holdings:
1. Chevron Corp.
2. International Business Machines Corp.
3. Google, Inc.
4. Apple, Inc.
5. Marathon Petroleum Corp.
Top Fixed Income Holdings:
1. GNMA, 4.50%, 6/15/40
2. U.S. Treasury Strips, 3.09%, 8/15/20
3. U.S. Treasury Note, 1.75%, 5/15/23
4. U.S. Treasury Note, 2.75%, 11/15/42
5. EMC Corp., 3.38%, 6/1/23
Based on total net assets as of June 30, 2013. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of June 30, 2013. Subject to change.
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit Balanced Fund
| | | | | | |
Quantity | | Name of Issuer | | Fair Value ($) | |
| |
Common Stocks - 63.7% | | | | |
Communications - 1.9% | | | | |
1,900 | | Rogers Communications, Inc. | | | 74,480 | |
225 | | SBA Communications Corp. * | | | 16,677 | |
3,375 | | Verizon Communications, Inc. | | | 169,898 | |
| | | | | | |
| | |
| | | | | 261,055 | |
| | | | | | |
| |
Consumer Durables - 0.9% | | | | |
500 | | Polaris Industries, Inc. | | | 47,500 | |
900 | | Tupperware Brands Corp. | | | 69,921 | |
| | | | | | |
| | |
| | | | | 117,421 | |
| | | | | | |
| |
Consumer Non-Durables - 6.3% | | | | |
4,200 | | Coca-Cola Co. | | | 168,462 | |
1,325 | | General Mills, Inc. | | | 64,302 | |
1,000 | | Michael Kors Holdings, Ltd. * | | | 62,020 | |
1,300 | | NIKE, Inc. | | | 82,784 | |
2,275 | | PepsiCo, Inc. | | | 186,072 | |
1,650 | | Philip Morris International, Inc. | | | 142,923 | |
1,800 | | Procter & Gamble Co. | | | 138,582 | |
| | | | | | |
| | |
| | | | | 845,145 | |
| | | | | | |
| |
Consumer Services - 3.1% | | | | |
1,600 | | McDonald’s Corp. | | | 158,400 | |
2,500 | | News Corp. | | | 81,500 | |
950 | | Visa, Inc. | | | 173,612 | |
| | | | | | |
| | |
| | | | | 413,512 | |
| | | | | | |
| |
Electronic Technology - 6.9% | | | | |
550 | | Apple, Inc. | | | 217,844 | |
4,000 | | Applied Materials, Inc. | | | 59,640 | |
1,051 | | Avago Technologies, Ltd. | | | 39,249 | |
1,850 | | Broadcom Corp. | | | 62,456 | |
2,750 | | Ciena Corp. * | | | 53,405 | |
1,400 | | EMC Corp. | | | 33,068 | |
2,400 | | Intel Corp. | | | 58,128 | |
1,185 | | International Business Machines Corp. | | | 226,465 | |
2,900 | | Qualcomm, Inc. | | | 177,132 | |
| | | | | | |
| | |
| | | | | 927,387 | |
| | | | | | |
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Energy Minerals - 4.7% | | | | |
2,200 | | Chevron Corp. | | | 260,348 | |
475 | | Continental Resources, Inc. * | | | 40,878 | |
2,675 | | Marathon Petroleum Corp. | | | 190,086 | |
1,600 | | Occidental Petroleum Corp. | | | 142,768 | |
| | | | | | |
| | |
| | | | | 634,080 | |
| | | | | | |
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Finance - 6.6% | | | | |
900 | | ACE, Ltd. | | | 80,532 | |
275 | | Allstate Corp. | | | 13,233 | |
1,225 | | Ameriprise Financial, Inc. | | | 99,078 | |
1,025 | | Discover Financial Services | | | 48,831 | |
650 | | Franklin Resources, Inc. | | | 88,413 | |
| | | | | | |
Quantity | | Name of Issuer | | Fair Value ($) | |
| | |
455 | | Goldman Sachs Group, Inc. | | | 68,819 | |
2,800 | | JPMorgan Chase & Co. | | | 147,812 | |
2,000 | | Marsh & McLennan Cos., Inc. | | | 79,840 | |
400 | | MetLife, Inc. | | | 18,303 | |
600 | | PartnerRe, Ltd. | | | 54,336 | |
1,200 | | US Bancorp | | | 43,380 | |
3,700 | | Wells Fargo & Co. | | | 152,699 | |
| | | | | | |
| | |
| | | | | 895,276 | |
| | | | | | |
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Health Services - 2.0% | | | | |
1,005 | | Express Scripts Holding Co. * | | | 61,998 | |
600 | | McKesson Corp. | | | 68,700 | |
2,225 | | UnitedHealth Group, Inc. | | | 145,693 | |
| | | | | | |
| | |
| | | | | 276,391 | |
| | | | | | |
| |
Health Technology - 7.3% | | | | |
575 | | Alexion Pharmaceuticals, Inc. * | | | 53,038 | |
775 | | Allergan, Inc. | | | 65,286 | |
1,000 | | Baxter International, Inc. | | | 69,270 | |
3,200 | | Bristol-Myers Squibb Co. | | | 143,008 | |
1,050 | | Celgene Corp. * | | | 122,756 | |
400 | | Covidien, PLC | | | 25,135 | |
2,400 | | Gilead Sciences, Inc. * | | | 122,904 | |
50 | | Intuitive Surgical, Inc. * | | | 25,329 | |
700 | | Johnson & Johnson | | | 60,102 | |
4,538 | | Pfizer, Inc. | | | 127,102 | |
1,200 | | Stryker Corp. | | | 77,616 | |
900 | | Thermo Fisher Scientific, Inc. | | | 76,167 | |
359 | | Zoetis, Inc. | | | 11,077 | |
| | | | | | |
| | |
| | | | | 978,790 | |
| | | | | | |
| |
Industrial Services - 1.1% | | | | |
1,425 | | Schlumberger, Ltd. | | | 102,116 | |
1,200 | | Seadrill, Ltd. | | | 48,888 | |
| | | | | | |
| | |
| | | | | 151,004 | |
| | | | | | |
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Process Industries - 2.0% | | | | |
115 | | CF Industries Holdings, Inc. | | | 19,722 | |
1,650 | | Ecolab, Inc. | | | 140,564 | |
1,325 | | International Paper Co. | | | 58,711 | |
475 | | Praxair, Inc. | | | 54,701 | |
| | | | | | |
| | |
| | | | | 273,698 | |
| | | | | | |
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Producer Manufacturing - 6.0% | | | | |
650 | | 3M Co. | | | 71,078 | |
525 | | Caterpillar, Inc. | | | 43,307 | |
1,675 | | Danaher Corp. | | | 106,028 | |
1,000 | | Deere & Co. | | | 81,250 | |
1,050 | | Eaton Corp., PLC | | | 69,100 | |
1,200 | | Emerson Electric Co. | | | 65,448 | |
900 | | Flowserve Corp. | | | 48,609 | |
3,400 | | General Electric Co. | | | 78,846 | |
950 | | Honeywell International, Inc. | | | 75,373 | |
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See accompanying notes to financial statements | | |
6 | | SIT MUTUAL FUNDS ANNUAL REPORT |
| | | | | | |
Quantity/
Principal
Amount ($) | | Name of Issuer | | Fair Value ($) | |
| | |
325 | | Precision Castparts Corp. | | | 73,453 | |
1,050 | | United Technologies Corp. | | | 97,587 | |
| | | | | | |
| | |
| | | | | 810,079 | |
| | | | | | |
| |
Retail Trade - 6.2% | | | | |
245 | | Amazon.com, Inc. * | | | 68,034 | |
475 | | Costco Wholesale Corp. | | | 52,521 | |
1,750 | | CVS Caremark Corp. | | | 100,065 | |
1,900 | | Dick’s Sporting Goods, Inc. | | | 95,114 | |
750 | | eBay, Inc. * | | | 38,790 | |
1,425 | | Home Depot, Inc. | | | 110,395 | |
600 | | Lululemon Athletica, Inc. * | | | 39,312 | |
2,100 | | Target Corp. | | | 144,606 | |
2,300 | | TJX Cos., Inc. | | | 115,138 | |
950 | | Wal-Mart Stores, Inc. | | | 70,766 | |
| | | | | | |
| | |
| | | | | 834,741 | |
| | | | | | |
| |
Technology Services - 6.6% | | | | |
1,425 | | Accenture, PLC | | | 102,543 | |
900 | | Cognizant Technology Solutions Corp. * | | | 56,349 | |
255 | | Google, Inc. * | | | 224,494 | |
1,400 | | Informatica Corp. * | | | 48,972 | |
3,300 | | Microsoft Corp. | | | 113,949 | |
4,200 | | Oracle Corp. | | | 129,024 | |
140 | | priceline.com, Inc. * | | | 115,798 | |
1,225 | | Teradata Corp. * | | | 61,532 | |
650 | | VMware, Inc. * | | | 43,544 | |
| | | | | | |
| | |
| | | | | 896,205 | |
| | | | | | |
| |
Transportation - 1.3% | | | | |
800 | | Union Pacific Corp. | | | 123,424 | |
625 | | United Parcel Service, Inc. | | | 54,050 | |
| | | | | | |
| | |
| | | | | 177,474 | |
| | | | | | |
| |
Utilities - 0.8% | | | | |
1,300 | | Kinder Morgan, Inc. | | | 49,595 | |
1,400 | | Wisconsin Energy Corp. | | | 57,386 | |
| | | | | | |
| | |
| | | | | 106,981 | |
| | | | | | |
| |
Total Common Stocks
(cost: $5,879,642) | | | 8,599,239 | |
| | | | | | |
| |
Bonds - 32.8% | | | | |
| |
Asset-Backed Securities - 3.3% | | | | |
17,891 | | Bayview Financial Acquisition Trust,
2006-D 1A2, 5.66%, 12/28/36 14 | | | 18,105 | |
80,569 | | Centex Home Equity,
2004-D AF4, 4.68%, 6/25/32 14 | | | 83,926 | |
| | Citifinancial Mortgage Securities, Inc.: | | | | |
26,809 | | 2004-1 AF3, 3.77%, 4/25/34 14 | | | 27,396 | |
59,060 | | 2003-1 AF5, 4.78%, 1/25/33 14 | | | 60,932 | |
46,534 | | Conseco Finance,
2001-D M1, 1.54%, 11/15/32 1 | | | 44,552 | |
| | | | | | |
Principal Amount ($) | | Name of Issuer | | Fair Value ($) | |
| | |
29,725 | | First Franklin Mtge. Loan
Asset-Backed Certs.,
2005-FF2 M2, 0.63%, 3/25/35 1 | | | 29,542 | |
15,614 | | Irwin Home Equity Corp., 2005-1 M1,
5.42%, 6/25/35 14 | | | 15,644 | |
31,173 | | New Century Home Equity Loan Trust,
2005-A A4W, 4.88%, 8/25/35 14 | | | 29,087 | |
72,675 | | RAAC Series,
2005-SP2 1M1, 0.71%, 5/25/44 1 | | | 70,576 | |
50,000 | | Residential Asset Mortgage Products, Inc.,
2005-RZ3 A3, 0.59%, 9/25/35 1 | | | 47,391 | |
15,590 | | Residential Funding Mortgage
Securities II, Inc.,
2003-HI2 A6, 5.26%, 7/25/28 14 | | | 15,831 | |
| | | | | | |
| | |
| | | | | 442,982 | |
| | | | | | |
| |
Collateralized Mortgage Obligations - 3.9% | | | | |
19,818 | | Fannie Mae Grantor Trust, 2004-T3, 1A3,
7.00%, 2/25/44 | | | 22,733 | |
| | Fannie Mae REMIC: | | | | |
6,794 | | 2013-35 A, 6.50%, 7/25/31 | | | 6,919 | |
42,736 | | 2009-30 AG, 6.50%, 5/25/39 | | | 46,539 | |
15,000 | | 2013-28 WD, 6.50%, 5/25/42 | | | 17,368 | |
17,021 | | 2010-108 AP, 7.00%, 9/25/40 | | | 19,173 | |
| | Freddie Mac REMIC: | | | | |
28,343 | | 7.00%, 11/15/29 | | | 30,327 | |
61,588 | | 7.50%, 6/15/30 | | | 71,739 | |
79,320 | | Government National Mortgage Association,
2005-74 HA, 7.50%, 9/16/35 | | | 90,526 | |
5,020 | | Master Asset Securitization Trust,
2003-4 CA1, 8.00%, 5/25/18 | | | 5,300 | |
| | Sequoia Mortgage Trust: | | | | |
24,800 | | 2013-4 A3, 1.55%, 4/25/43 1 | | | 24,759 | |
42,749 | | 2013-1 2A1, 1.86%, 2/25/43 1 | | | 38,608 | |
48,875 | | 2013-3 A2, 2.50%, 3/25/43 1 | | | 49,694 | |
39,107 | | 2012-4 A2, 3.00%, 9/25/42 1 | | | 38,861 | |
51,879 | | Vendee Mortgage Trust,
2008-1 B, 7.93%, 3/15/25 1 | | | 60,506 | |
| | | | | | |
| | |
| | | | | 523,052 | |
| | | | | | |
| |
Corporate Bonds - 8.5% | | | | |
50,000 | | Berkshire Hathaway Finance Corp.,
5.40%, 5/15/18 | | | 57,438 | |
100,000 | | BP Capital Markets, PLC,
2.75%, 5/10/23 | | | 92,462 | |
25,000 | | Coca-Cola Refreshments USA, Inc.,
7.00%, 10/1/26 | | | 31,446 | |
83,012 | | Continental Airlines 2009-1 Pass Thru Certs.,
9.00%, 7/8/16 | | | 95,257 | |
50,000 | | Copano Energy Finance Corp.,
7.13%, 4/1/21 | | | 55,625 | |
100,000 | | EMC Corp.,
3.38%, 6/1/23 | | | 98,151 | |
50,000 | | Google, Inc.,
3.63%, 5/19/21 | | | 52,255 | |
| | |
See accompanying notes to financial statements | | |
JUNE 30, 2013 | | 7 |
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit Balanced Fund (Continued)
| | | | | | |
Principal Amount ($) | | Name of Issuer | | Fair Value ($) | |
| | |
50,000 | | Microsoft Corp.,
4.00%, 2/8/21 | | | 54,050 | |
70,000 | | Northern States Power Co.,
7.13%, 7/1/25 | | | 84,367 | |
43,146 | | Northwest Airlines 1999-2 A Pass Thru Tr,
7.58%, 3/1/19 | | | 49,833 | |
75,000 | | Pacific Bell Telephone Co.,
7.13%, 3/15/26 | | | 91,767 | |
25,000 | | PacifiCorp,
7.70%, 11/15/31 | | | 34,206 | |
50,000 | | PepsiCo, Inc.,
2.75%, 3/1/23 | | | 47,309 | |
70,123 | | Procter & Gamble ESOP,
9.36%, 1/1/21 | | | 91,042 | |
50,000 | | South Carolina Electric & Gas Co.,
6.50%, 11/1/18 | | | 60,786 | |
50,000 | | Statoil ASA,
3.15%, 1/23/22 | | | 49,543 | |
50,000 | | Tosco Corp.,
8.13%, 2/15/30 | | | 69,259 | |
21,000 | | Validus Holdings, Ltd.,
8.88%, 1/26/40 | | | 26,516 | |
| | | | | | |
| | |
| | | | | 1,141,312 | |
| | | | | | |
| |
Federal Home Loan Mortgage Corporation - 2.1% | | | | |
65,754 | | 2.50%, 4/1/27 | | | 66,216 | |
22,383 | | 6.00%, 10/1/21 | | | 24,471 | |
7,745 | | 6.50%, 1/1/14 | | | 7,798 | |
14,460 | | 6.50%, 4/1/38 | | | 16,297 | |
44,319 | | 7.00%, 7/1/32 | | | 50,673 | |
16,739 | | 7.00%, 5/1/34 | | | 19,180 | |
27,301 | | 7.00%, 11/1/37 | | | 31,216 | |
14,684 | | 7.00%, 1/1/39 | | | 16,754 | |
26,637 | | 7.50%, 11/1/36 | | | 31,823 | |
7,254 | | 8.00%, 9/1/15 | | | 7,804 | |
12,020 | | 8.38%, 5/17/20 | | | 13,736 | |
| | | | | | |
| | |
| | | | | 285,968 | |
| | | | | | |
| |
Federal National Mortgage Association - 4.1% | | | | |
45,181 | | 6.50%, 5/1/36 | | | 50,487 | |
60,911 | | 6.63%, 11/1/30 | | | 69,196 | |
48,190 | | 6.63%, 1/1/31 | | | 54,744 | |
21,960 | | 7.00%, 12/1/32 | | | 24,954 | |
44,648 | | 7.00%, 3/1/33 | | | 49,213 | |
30,001 | | 7.00%, 12/1/36 | | | 35,329 | |
19,559 | | 7.00%, 11/1/38 | | | 22,648 | |
54,065 | | 7.23%, 12/1/30 | | | 61,635 | |
6,208 | | 7.50%, 6/1/32 | | | 7,409 | |
21,674 | | 7.50%, 4/1/33 | | | 25,906 | |
22,699 | | 7.50%, 11/1/33 | | | 27,077 | |
31,716 | | 7.50%, 1/1/34 | | | 37,747 | |
11,213 | | 7.50%, 4/1/38 | | | 13,402 | |
40,265 | | 8.00%, 2/1/31 | | | 48,740 | |
10,413 | | 8.42%, 7/15/26 | | | 11,244 | |
| | | | | | |
Principal Amount ($)/ Quantity | | Name of Issuer | | Fair Value ($) | |
| | |
7,134 | | 9.50%, 5/1/27 | | | 8,548 | |
| | | | | | |
| | |
| | | | | 548,279 | |
| | | | | | |
| | | | | | |
| |
Government National Mortgage Association - 5.2% | | | | |
324,581 | | 4.50%, 6/15/40 | | | 360,698 | |
48,839 | | 6.63%, 4/20/31 | | | 55,965 | |
27,865 | | 7.00%, 12/15/24 | | | 32,388 | |
63,013 | | 7.00%, 9/20/38 | | | 72,019 | |
44,346 | | 7.23%, 12/20/30 | | | 51,941 | |
45,343 | | 8.00%, 7/15/24 | | | 53,011 | |
71,891 | | 8.38%, 3/15/31 | | | 75,543 | |
919 | | 9.50%, 9/20/18 | | | 1,043 | |
| | | | | | |
| | |
| | | | | 702,608 | |
| | | | | | |
| |
Taxable Municipal Securities - 0.8% | | | | |
60,000 | | Academica Charter Schools,
7.18%, 8/15/13 4 | | | 59,865 | |
50,000 | | Texas St. Pub. Fin. Auth. Charter Sch.
Fin. Rev.,
8.75%, 8/15/27 | | | 55,789 | |
| | | | | | |
| | |
| | | | | 115,654 | |
| | | | | | |
| |
U.S. Government / Federal Agency Securities - 4.5% | | | | |
| | U.S. Treasury Note: | | | | |
150,000 | | 1.75%, 5/15/23 | | | 140,484 | |
50,000 | | 2.00%, 2/15/23 | | | 48,121 | |
125,000 | | 2.75%, 11/15/42 | | | 107,774 | |
| | U.S. Treasury Strips: | | | | |
275,000 | | 3.09%, 8/15/20 6 | | | 238,356 | |
150,000 | | 4.21%, 2/15/36 6 | | | 67,614 | |
| | | | | | |
| | |
| | | | | 602,349 | |
| | | | | | |
| |
Foreign Government Bonds - 0.4% | | | | |
60,000 | | Province of Manitoba Canada,
2.10%, 9/6/22 | | | 55,861 | |
| | | | | | |
| |
Total Bonds
(cost: $4,335,273) | | | 4,418,065 | |
| | | | | | |
| |
Closed-End Mutual Funds - 0.4% | | | | |
4,300 | | American Strategic Income Portfolio, Inc. II | | | 35,303 | |
1,100 | | Blackrock Build America Bond Trust | | | 22,219 | |
| | | | | | |
| |
Total Closed-End Mutual Funds
(cost: $63,375) | | | 57,522 | |
| | | | | | |
| |
Total Investments in Securities - 96.9%
(cost: $10,278,290) | | | 13,074,826 | |
| |
Other Assets and Liabilities, net - 3.1% | | | 416,915 | |
| | | | | | |
| |
Total Net Assets - 100.0% | | | $13,491,741 | |
| | | | | | |
| | |
See accompanying notes to financial statements | | |
8 | | SIT MUTUAL FUNDS ANNUAL REPORT |
| * | Non-income producing security. |
| 1 | Variable rate security. Rate disclosed is as of June 30, 2013. |
| 4 | 144A Restricted Security. The total value of such securities as of June 30, 2013 was $59,865 and represented 0.4% of net assets. This security has been determined to be liquid by the Adviser in accordance with guidelines established by the Board of Directors. |
| 6 | Zero coupon or convertible capital appreciation bond, for which the rate disclosed is either the effective yield on purchase date or the coupon rate to be paid upon conversion to coupon paying, respectively. |
| 14 | Step Coupon: A bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate disclosed is as of June 30, 2013. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
PLC — Public Limited Company
REMIC — Real Estate Mortgage Investment Conduit
A summary of the levels for the Fund’s investments as of June 30, 2013 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1
Quoted
Price ($) | | | Level 2
Other significant
observable inputs ($) | | | Level 3 Significant
unobservable inputs ($) | | Total ($) | |
Common Stocks ** | | | 8,599,239 | | | | — | | | — | | | 8,599,239 | |
Asset-Backed Securities | | | — | | | | 442,982 | | | — | | | 442,982 | |
Collateralized Mortgage Obligations | | | — | | | | 523,052 | | | — | | | 523,052 | |
Corporate Bonds | | | — | | | | 1,141,312 | | | — | | | 1,141,312 | |
Federal Home Loan Mortgage Corporation | | | — | | | | 285,968 | | | — | | | 285,968 | |
Federal National Mortgage Association | | | — | | | | 548,279 | | | — | | | 548,279 | |
Government National Mortgage Association | | | — | | | | 702,608 | | | — | | | 702,608 | |
Taxable Municipal Securities | | | — | | | | 115,654 | | | — | | | 115,654 | |
U.S. Government / Federal Agency Securities | | | — | | | | 602,349 | | | — | | | 602,349 | |
Foreign Government Bonds | | | — | | | | 55,861 | | | — | | | 55,861 | |
Closed-End Mutual Funds | | | 57,522 | | | | — | | | — | | | 57,522 | |
| | | | |
Total: | | | 8,656,761 | | | | 4,418,065 | | | — | | | 13,074,826 | |
| ** | 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
|
|
| |
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 +19.77% return over the last twelve months, compared to the +20.60% return for the S&P 500® Index.
U.S. equities posted solid gains despite a decidedly clouded economic picture, both in the U.S. and in many regions around the world. While market volatility has increased in recent months as investors contemplate the eventual end to the Federal Reserve’s quantitative easing (QE) program, we believe interest rates will be remain very low, given the slow pace of economic growth with limited signs of inflationary pressures. Against this backdrop, we continue to believe it is appropriate to maintain a highly diversified, high quality bias within the Fund. It is our view that investors will continue to rotate to dividend-paying stocks as “total return” vehicles, given stillattractive equity valuations and low interest rates generated from most fixed income instruments. It remains encouraging to see companies respond to investors’ desire for higher dividends. For example, over the past twelve months, 83 companies within the Fund (out of 90 current holdings) have increased their dividend, with a median increase of +11%. In terms of portfolio structure, the Fund’s largest sector overweightings (compared to the S&P 500® Index) are in producer manufacturing, consumer durables and health technology. The largest underweightings are in consumer services, technology services and process industries.
Relative to the S&P 500® Index, performance over the past year was negatively impacted by underweighting the strong-performing consumer services sector, the impact of cash reserves (which diluted returns in a rising market), and stock selection within finance. While the Fund’s finance holdings produced strong absolute returns, the comparable S&P 500® Index was aided by strong performances by Citigroup and Bank of America, which do not offer attractive dividend yields (and are therefore are not held in the Fund). On a positive note, the electronic technology and utilities sectors helped relative performance over the period.The Fund’s underweighted position
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.
in Apple and strong performances of shares of Kinder Morgan and UGI added to relative returns in these sectors.
Our research effort is highly focused on companies with strong financial characteristics, growth prospects and management teams committed to returning excess capital back to shareholders over the long term.
Roger J. Sit
Kent L. Johnson
Michael J. Stellmacher
Portfolio Managers
| | |
10 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2013
| | | | | | |
| | | Sit Dividend
Growth Fund | | |
| | | Class I | | Class S | | S&P 500®
Index 1 |
One Year | | 19.77% | | 19.39% | | 20.60% |
Five Year | | 7.80 | | 7.52 | | 7.01 |
Since Inception - Class I (12/31/03) | | 8.72 | | n/a | | 6.11 |
Since Inception - Class S (3/31/06) | | n/a | | 7.47 | | 5.24 |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks of large-cap companies. It is not possible to invest directly in an index.
PORTFOLIO SUMMARY
| | |
Class I: | | |
Net Asset Value 6/30/13: | | $ 16.35 Per Share |
Net Asset Value 6/30/12: | | $ 14.10 Per Share |
Total Net Assets: | | $ 920.3 Million |
Class S: | | |
Net Asset Value 6/30/13: | | $ 16.29 Per Share |
Net Asset Value 6/30/12: | | $ 14.06 Per Share |
Total Net Assets: | | $ 134.5 Million |
| |
Weighted Average Market Cap: | | $ 88.6 Billion |
TOP 10 HOLDINGS
1. Chevron Corp.
2. International Business Machines Corp.
3. Verizon Communications, Inc.
4. Johnson & Johnson
5. PepsiCo, Inc.
6. Microsoft Corp.
7. JPMorgan Chase & Co.
8. Procter & Gamble Co.
9. Pfizer, Inc.
10. Occidental Petroleum Corp.
Based on total net assets as of June 30, 2013. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of June 30, 2013. Subject to change.
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit Dividend Growth Fund
| | | | | | |
Quantity | | Name of Issuer | | Fair Value ($) | |
| |
Common Stocks - 96.6% | | | | |
| |
Commercial Services - 1.5% | | | | |
135,500 | | Moody’s Corp. | | | 8,256,015 | |
222,250 | | Nielsen Holdings NV | | | 7,465,378 | |
| | | | | | |
| | |
| | | | | 15,721,393 | |
| | | | | | |
| |
Communications - 3.5% | | | | |
326,400 | | Rogers Communications, Inc. | | | 12,794,880 | |
475,700 | | Verizon Communications, Inc. | | | 23,946,738 | |
| | | | | | |
| | |
| | | | | 36,741,618 | |
| | | | | | |
| |
Consumer Durables - 2.6% | | | | |
144,800 | | Snap-On, Inc. | | | 12,942,224 | |
103,800 | | Stanley Black & Decker, Inc. | | | 8,023,740 | |
88,900 | | Tupperware Brands Corp. | | | 6,906,641 | |
| | | | | | |
| | |
| | | | | 27,872,605 | |
| | | | | | |
| |
Consumer Non-Durables - 9.7% | | | | |
98,800 | | Coach, Inc. | | | 5,640,492 | |
106,100 | | Colgate-Palmolive Co. | | | 6,078,469 | |
99,050 | | Diageo, PLC, ADR | | | 11,385,798 | |
246,400 | | General Mills, Inc. | | | 11,957,792 | |
165,500 | | NIKE, Inc. | | | 10,539,040 | |
271,300 | | PepsiCo, Inc. | | | 22,189,627 | |
152,600 | | Philip Morris International, Inc. | | | 13,218,212 | |
276,100 | | Procter & Gamble Co. | | | 21,256,939 | |
| | | | | | |
| | |
| | | | | 102,266,369 | |
| | | | | | |
| |
Consumer Services - 2.3% | | | | |
119,800 | | McDonald’s Corp. | | | 11,860,200 | |
182,600 | | Viacom, Inc. | | | 12,425,930 | |
| | | | | | |
| | |
| | | | | 24,286,130 | |
| | | | | | |
| |
Electronic Technology - 9.0% | | | | |
24,700 | | Apple, Inc. | | | 9,783,176 | |
411,500 | | Applied Materials, Inc. | | | 6,135,465 | |
293,500 | | Avago Technologies, Ltd. | | | 10,971,030 | |
242,400 | | Broadcom Corp. | | | 8,183,424 | |
570,700 | | Intel Corp. | | | 13,822,354 | |
140,100 | | International Business Machines Corp. | | | 26,774,511 | |
253,000 | | Qualcomm, Inc. | | | 15,453,240 | |
81,700 | | TE Connectivity, Ltd. | | | 3,720,618 | |
| | | | | | |
| | |
| | | | | 94,843,818 | |
| | | | | | |
| |
Energy Minerals - 8.6% | | | | |
287,200 | | Chevron Corp. | | | 33,987,248 | |
69,650 | | EQT Corp. | | | 5,528,120 | |
284,100 | | Marathon Oil Corp. | | | 9,824,178 | |
179,300 | | Marathon Petroleum Corp. | | | 12,741,058 | |
203,000 | | Occidental Petroleum Corp. | | | 18,113,690 | |
153,050 | | Royal Dutch Shell, PLC, ADR | | | 10,142,624 | |
| | | | | | |
| | |
| | | | | 90,336,918 | |
| | | | | | |
| | | | | | |
Quantity | | Name of Issuer | | Fair Value ($) | |
| |
Finance - 14.3% | | | | |
108,650 | | ACE, Ltd. | | | 9,722,002 | |
163,500 | | Ameriprise Financial, Inc. | | | 13,223,880 | |
124,500 | | Discover Financial Services | | | 5,931,180 | |
198,600 | | First Republic Bank | | | 7,642,128 | |
84,150 | | Franklin Resources, Inc. | | | 11,446,083 | |
63,200 | | Goldman Sachs Group, Inc. | | | 9,559,000 | |
404,800 | | JPMorgan Chase & Co. | | | 21,369,392 | |
330,700 | | Marsh & McLennan Cos., Inc. | | | 13,201,544 | |
145,800 | | MetLife, Inc. | | | 6,671,808 | |
54,900 | | PartnerRe, Ltd. | | | 4,971,744 | |
428,200 | | PennantPark Investment Corp. | | | 4,731,610 | |
96,900 | | Travelers Cos., Inc. | | | 7,744,248 | |
352,100 | | US Bancorp | | | 12,728,415 | |
219,600 | | Validus Holdings, Ltd. | | | 7,931,952 | |
342,900 | | Wells Fargo & Co. | | | 14,151,483 | |
| | | | | | |
| | |
| | | | | 151,026,469 | |
| | | | | | |
| |
Health Services - 2.9% | | | | |
197,300 | | Cardinal Health, Inc. | | | 9,312,560 | |
69,400 | | McKesson Corp. | | | 7,946,300 | |
200,200 | | UnitedHealth Group, Inc. | | | 13,109,096 | |
| | | | | | |
| | |
| | | | | 30,367,956 | |
| | | | | | |
| |
Health Technology - 11.6% | | | | |
189,500 | | Abbott Laboratories | | | 6,609,760 | |
208,800 | | Baxter International, Inc. | | | 14,463,576 | |
261,800 | | Bristol-Myers Squibb Co. | | | 11,699,842 | |
278,600 | | Covidien, PLC | | | 17,507,224 | |
272,200 | | Johnson & Johnson | | | 23,371,092 | |
333,900 | | Merck & Co., Inc. | | | 15,509,655 | |
703,338 | | Pfizer, Inc. | | | 19,700,490 | |
182,500 | | Stryker Corp. | | | 11,804,100 | |
41,237 | | Zoetis, Inc. | | | 1,273,820 | |
| | | | | | |
| | |
| | | | | 121,939,559 | |
| | | | | | |
| |
Industrial Services - 1.9% | | | | |
96,400 | | National Oilwell Varco, Inc. | | | 6,641,960 | |
90,900 | | Oceaneering International, Inc. | | | 6,562,980 | |
178,550 | | Seadrill, Ltd. | | | 7,274,127 | |
| | | | | | |
| | |
| | | | | 20,479,067 | |
| | | | | | |
| |
Process Industries - 1.3% | | | | |
314,469 | | International Paper Co. | | | 13,934,121 | |
| | | | | | |
| |
Producer Manufacturing - 10.8% | | | | |
72,100 | | 3M Co. | | | 7,884,135 | |
200,525 | | ADT Corp. | | | 7,990,921 | |
90,400 | | Autoliv, Inc. | | | 6,996,056 | |
98,100 | | Caterpillar, Inc. | | | 8,092,269 | |
65,300 | | Deere & Co. | | | 5,305,625 | |
226,400 | | Eaton Corp., PLC | | | 14,899,384 | |
194,500 | | Emerson Electric Co. | | | 10,608,030 | |
| | |
See accompanying notes to financial statements | | |
12 | | SIT MUTUAL FUNDS ANNUAL REPORT |
| | | | | | |
Quantity | | Name of Issuer | | Fair Value ($) | |
| | |
479,600 | | General Electric Co. | | | 11,121,924 | |
215,500 | | Honeywell International, Inc. | | | 17,097,770 | |
334,900 | | Tyco International, Ltd. | | | 11,034,955 | |
142,800 | | United Technologies Corp. | | | 13,271,832 | |
| | | | | | |
| | |
| | | | | 114,302,901 | |
| | | | | | |
| |
Retail Trade - 5.7% | | | | |
257,900 | | CVS Caremark Corp. | | | 14,746,722 | |
150,500 | | Home Depot, Inc. | | | 11,659,235 | |
160,000 | | Target Corp. | | | 11,017,600 | |
189,800 | | TJX Cos., Inc. | | | 9,501,388 | |
179,200 | | Wal-Mart Stores, Inc. | | | 13,348,608 | |
| | | | | | |
| | |
| | | | | 60,273,553 | |
| | | | | | |
| |
Technology Services - 4.9% | | | | |
197,300 | | Accenture, PLC | | | 14,197,708 | |
114,950 | | Automatic Data Processing, Inc. | | | 7,915,457 | |
619,500 | | Microsoft Corp. | | | 21,391,335 | |
265,200 | | Oracle Corp. | | | 8,146,944 | |
| | | | | | |
| | |
| | | | | 51,651,444 | |
| | | | | | |
| |
Transportation - 1.9% | | | | |
72,100 | | Union Pacific Corp. | | | 11,123,588 | |
107,800 | | United Parcel Service, Inc. | | | 9,322,544 | |
| | | | | | |
| | |
| | | | | 20,446,132 | |
| | | | | | |
| | | | | | |
Quantity | | Name of Issuer | | Fair Value ($) | |
| |
Utilities - 4.1% | | | | |
404,600 | | Kinder Morgan, Inc. | | | 15,435,490 | |
143,500 | | NextEra Energy, Inc. | | | 11,692,380 | |
164,600 | | UGI Corp. | | | 6,437,506 | |
223,000 | | Wisconsin Energy Corp. | | | 9,140,770 | |
| | | | | | |
| | |
| | | | | 42,706,146 | |
| | | | | | |
| |
Total Common Stocks | | | | |
(cost: $865,519,794) | | | 1,019,196,199 | |
| | | | | | |
| |
Closed-End Mutual Funds - 1.7% | | | | |
338,700 | | Kayne Anderson MLP Investment Co. | | | 13,172,043 | |
142,100 | | Tortoise Energy Capital Corp. | | | 4,916,660 | |
| | | | | | |
| |
Total Closed-End Mutual Funds | | | | |
(cost: $13,981,450) | | | 18,088,703 | |
| | | | | | |
| |
Total Investments in Securities - 98.3% | | | | |
(cost: $879,501,244) | | | 1,037,284,902 | |
| |
Other Assets and Liabilities, net - 1.7% | | | 17,537,059 | |
| | | | | | |
| |
Total Net Assets - 100.0% | | $ | 1,054,821,961 | |
| | | | | | |
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 June 30, 2013 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 ** | | | 1,019,196,199 | | | — | | — | | | 1,019,196,199 | |
Closed-End Mutual Funds | | | 18,088,703 | | | — | | — | | | 18,088,703 | |
| | | | |
Total: | | | 1,037,284,902 | | | — | | — | | | 1,037,284,902 | |
| ** | 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 | | |
JUNE 30, 2013 | | 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 the MSCI World Index and that grows over a period of years. Secondarily, the Fund seeks long-term capital appreciation.
The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in dividend-paying common stocks issued by U.S. and foreign companies. The Fund may invest the balance of its assets in preferred stocks, convertible bonds, and U.S. Treasury securities.
The Sit Global Dividend Growth Fund Class I trailed the MSCI World Index for the last twelve months, appreciating +16.36% versus a rise of 18.58% for the Index. The last twelve months can be described as a very volatile period. Generally, non-dividend-paying, smaller cap, and lower quality stocks outperformed in this market environment. The Fund’s high quality and dividend focus contributed to the underperformance over the last twelve-month period. In addition, the Japanese equity market responded positively to Prime Minister Shizo Abe’s recent economic policy agenda, causing that market to rally immensely since November 2012. The Fund is meaningfully underweight Japanese securities as high quality dividend paying stocks are limited.
On an industry basis, the utility and telecom stocks contributed positively to performance thanks to great stock selection. The overweight stance in both sectors slightly took away from relative performance. The underweight position and negative stock selection in the media, banks, semiconductor, and automobile industries more than offset the above reference positive performance. Given the strong upward markets over the last twelve months, the cash position also hurt relative performance.
Geographically, North America was the top contributing region on a relative basis due to good stock selection. The overweight position modestly detracted from relative performance. Asian securities (ex-Japan) trailed the market over the last twelve months and in particular emerging market stocks have trailed in the last six months. Conversely, the UK hurt performance as the Fund was overweight an underperforming region and the stock selection was poor.
The Fund is broadly diversified on an industry basis and on a geographic basis is more heavily skewed to the United States and Europe. The securities are primarily globally dominant, large cap stocks that are of high quality and pay dividends. Typical characteristics may include: healthy dividend growth, high free cash flow yield, earnings stability, good return on invested capital, strong free cash flow margins, and low debt levels. The Fund remains attractively valued relative to the Index. We believe the focus on companies with strong operational and financial characteristics will generate solid and predictable earnings along with growing dividends and thus should reward shareholders over the longer term. Over the past twelve months, dividend
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, MSCI EAFE Index and MSCIWorld Index. The index used to compare the Fund’s performance was changed to the MSCI World Index from a composite index (comprised of 60% S&P 500 and 40% MSCI EAFE Index) because the InvestmentAdviser believes that the MSCIWorld Index is an appropriate broad-based securities market index which is more widely available to investors. 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.
4 The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.
increases continue with nearly 95% (80 out of 84) of the companies within the Fund increasing their dividends over the past twelve months. The average dividend increase was 16.5%.
Roger J. Sit Raymond E. Sit Tasha M. Murdoff
Kent L. Johnson Michael J. Stellmacher
Portfolio Managers
| | |
14 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2013
| | | | | | | | | | | | |
| | | Sit Global
Dividend
Growth Fund | | | MSCI
World Index 4 | |
| | | Class I | | | Class S | | |
One Year | | | 16.36 | % | | | 16.01 | % | | | 18.58 | % |
Since Inception (9/30/08) | | | 10.09 | | | | 9.81 | | | | 6.49 | |
The index used to compare the Fund’s performance was changed to the MSCI World Index from a composite index (comprised of 60% S&P 500 and 40% MSCI EAFE Index) because the InvestmentAdviser believes that the MSCIWorld Index is an appropriate broad-based securities market index which is more widely available to investors.
as of June 30, 2013
| | | | | | | | | | | | | | | | | | | | |
| | | Sit Global
Dividend
Growth Fund | | | Composite | | | S&P
500® | | | MSCI
EAFE | |
| | | Class I | | | Class S | | | Index 1 | | | Index 2 | | | Index 3 | |
One Year | | | 16.36 | % | | | 16.01 | % | | | 19.90 | % | | | 20.60 | % | | | 18.62 | % |
Since Inception (9/30/08) | | | 10.09 | | | | 9.81 | | | | 7.42 | | | | 9.39 | | | | 4.27 | |
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.
4 The MSCIWorld Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.
PORTFOLIO SUMMARY
| | |
Class I: | | |
Net Asset Value 6/30/13: | | $14.27 Per Share |
Net Asset Value 6/30/12: | | $12.55 Per Share |
Total Net Assets: | | $14.2 Million |
Class S: | | |
Net Asset Value 6/30/13: | | $14.25 Per Share |
Net Asset Value 6/30/12: | | $12.54 Per Share |
Total Net Assets: | | $3.3 Million |
| |
Weighted Average Market Cap: | | $91.0 Billion |
TOP 10 HOLDINGS
1. Centrica, PLC
2. Chevron Corp.
3. Verizon Communications, Inc.
4. Covidien, PLC
5. GlaxoSmithKline, PLC, ADR
6. Johnson & Johnson
7. McDonald’s Corp.
8. Diageo, PLC, ADR
9. Pfizer, Inc.
10. International Business Machines Corp.
Based on total net assets as of June 30, 2013. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of June 30, 2013. Subject to change.
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit Global Dividend Growth Fund
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Common Stocks - 95.9% | | |
| |
Asia - 6.8% | | |
| |
Australia - 2.5% | | |
4,450 | | BHP Billiton, Ltd., ADR | | 256,587 |
1,350 | | Westpac Banking Corp., ADR | | 178,052 |
| | | | |
| | |
| | | | 434,639 |
| | | | |
| |
China/Hong Kong - 1.3% | | |
4,250 | | HSBC Holdings, PLC, ADR | | 220,575 |
| | | | |
| |
Japan - 2.3% | | |
6,300 | | Komatsu, Ltd. | | 145,101 |
7,000 | | Seven & I Holdings Co., Ltd. | | 256,363 |
| | | | |
| | |
| | | | 401,464 |
| | | | |
| |
Singapore - 0.7% | | |
3,500 | | Avago Technologies, Ltd. | | 130,830 |
| | | | |
| |
Europe - 29.9% | | |
| |
France - 1.4% | | |
1,450 | | BNP Paribas SA | | 79,381 |
2,300 | | Schlumberger, Ltd. | | 164,818 |
| | | | |
| | |
| | | | 244,199 |
| | | | |
| |
Germany - 2.2% | | |
900 | | Allianz SE | | 131,364 |
690 | | Muenchener Rueckver | | 126,761 |
650 | | Volkswagen AG | | 131,289 |
| | | | |
| | |
| | | | 389,414 |
| | | | |
| |
Ireland - 3.9% | | |
2,050 | | Accenture, PLC | | 147,518 |
5,700 | | Covidien, PLC | | 358,188 |
2,725 | | Eaton Corp., PLC | | 179,332 |
| | | | |
| | |
| | | | 685,038 |
| | | | |
| |
Italy - 0.7% | | |
6,300 | | Eni SpA | | 129,300 |
| | | | |
| |
Norway - 1.5% | | |
6,300 | | Seadrill, Ltd. | | 256,662 |
| | | | |
| |
Spain - 2.0% | | |
10,800 | | Banco Bilbao Vizcaya Argentaria SA, ADR | | 90,828 |
2,090 | | Inditex SA | | 257,790 |
| | | | |
| | |
| | | | 348,618 |
| | | | |
| |
Sweden - 0.7% | | |
1,600 | | Autoliv, Inc. | | 123,824 |
| | | | |
| |
Switzerland - 5.2% | | |
1,500 | | ACE, Ltd. | | 134,220 |
4,505 | | Nestle SA | | 295,621 |
135 | | SGS SA | | 289,834 |
2,400 | | Syngenta AG, ADR | | 186,864 |
| | | | |
| | |
| | | | 906,539 |
| | | | |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
United Kingdom - 12.3% | | |
3,440 | | British American Tobacco, PLC | | 176,437 |
10,675 | | Burberry Group, PLC | | 219,613 |
92,465 | | Centrica, PLC | | 505,760 |
3,025 | | Diageo, PLC, ADR | | 347,724 |
7,100 | | GlaxoSmithKline, PLC, ADR | | 354,787 |
16,600 | | Pearson, PLC, ADR | | 297,306 |
3,700 | | Royal Dutch Shell, PLC, ADR | | 245,199 |
| | | | |
| | |
| | | | 2,146,826 |
| | | | |
| |
North America - 59.2% | | |
| |
Bermuda - 0.5% | | |
1,000 | | PartnerRe, Ltd. | | 90,560 |
| | | | |
| |
Canada - 1.5% | | |
6,600 | | Rogers Communications, Inc. | | 258,720 |
| | | | |
| |
United States - 57.2% | | |
1,150 | | 3M Co. | | 125,752 |
575 | | Apple, Inc. | | 227,746 |
1,950 | | Automatic Data Processing, Inc. | | 134,277 |
2,400 | | Baxter International, Inc. | | 166,248 |
3,000 | | Bristol-Myers Squibb Co. | | 134,070 |
2,400 | | Broadcom Corp. | | 81,024 |
3,700 | | Cardinal Health, Inc. | | 174,640 |
2,700 | | Caterpillar, Inc. | | 222,723 |
4,050 | | Chevron Corp. | | 479,277 |
3,800 | | CVS Caremark Corp. | | 217,284 |
1,925 | | Deere & Co. | | 156,406 |
3,100 | | Emerson Electric Co. | | 169,074 |
900 | | Franklin Resources, Inc. | | 122,418 |
2,450 | | General Mills, Inc. | | 118,898 |
600 | | Goldman Sachs Group, Inc. | | 90,750 |
3,000 | | Home Depot, Inc. | | 232,410 |
2,750 | | Honeywell International, Inc. | | 218,185 |
7,600 | | Intel Corp. | | 184,072 |
1,575 | | International Business Machines Corp. | | 300,998 |
3,900 | | International Paper Co. | | 172,809 |
4,100 | | Johnson & Johnson | | 352,026 |
5,600 | | JPMorgan Chase & Co. | | 295,624 |
7,350 | | Kinder Morgan, Inc. | | 280,402 |
3,100 | | Marathon Petroleum Corp. | | 220,286 |
4,300 | | Marsh & McLennan Cos., Inc. | | 171,656 |
3,550 | | McDonald’s Corp. | | 351,450 |
4,700 | | Merck & Co., Inc. | | 218,315 |
2,000 | | MetLife, Inc. | | 91,520 |
7,600 | | Microsoft Corp. | | 262,428 |
1,550 | | Moody’s Corp. | | 94,442 |
2,375 | | Occidental Petroleum Corp. | | 211,921 |
3,050 | | PepsiCo, Inc. | | 249,460 |
11,800 | | Pfizer, Inc. | | 330,507 |
2,850 | | Philip Morris International, Inc. | | 246,867 |
2,750 | | Procter & Gamble Co. | | 211,722 |
| | | | |
See accompanying notes to financial statements. | | | | |
16 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | |
Quantity | | Name of Issuer | | Fair Value ($) | |
3,700 | | Qualcomm, Inc. | | | 225,996 | |
1,800 | | Snap-On, Inc. | | | 160,884 | |
1,625 | | Stanley Black & Decker, Inc. | | | 125,612 | |
2,975 | | Target Corp. | | | 204,858 | |
3,450 | | TJX Cos., Inc. | | | 172,707 | |
1,000 | | Travelers Cos., Inc. | | | 79,920 | |
1,600 | | Tupperware Brands Corp. | | | 124,304 | |
825 | | Union Pacific Corp. | | | 127,281 | |
3,150 | | United Parcel Service, Inc. | | | 272,412 | |
2,125 | | United Technologies Corp. | | | 197,498 | |
7,000 | | US Bancorp | | | 253,050 | |
8,900 | | Verizon Communications, Inc. | | | 448,026 | |
1,100 | | Wal-Mart Stores, Inc. | | | 81,939 | |
4,000 | | Wells Fargo & Co. | | | 165,080 | |
693 | | Zoetis, Inc. | | | 21,416 | |
| | | | | | |
| | |
| | | | | 9,978,670 | |
| | | | | | |
| |
Total Common Stocks
(cost: $14,666,251) | | | 16,745,878 | |
| | | | | | |
| |
Closed-End Mutual Funds - 1.3% | | | | |
3,400 | | Kayne Anderson MLP Investment Co. | | | 132,226 | |
2,500 | | Tortoise Energy Capital Corp. | | | 86,500 | |
| | | | | | |
| |
Total Closed-End Mutual Funds
(cost: $148,353) | | | 218,726 | |
| | | | | | |
| |
Total Investments in Securities - 97.2%
(cost: $14,814,604) | | | 16,964,604 | |
| |
Other Assets and Liabilities, net - 2.8% | | | 488,570 | |
| | | | | | |
| |
Total Net Assets - 100.0% | | | $17,453,174 | |
| | | | | | |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
ADR — American Depositary Receipt
MLP — Master Limited Partnership
PLC — Public Limited Company
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2013 | | | 17 | |
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit Global Dividend Growth Fund (Continued)
A summary of the levels for the Fund’s investments as of June 30, 2013 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1
Quoted
Price ($) | | | Level 2
Other significant
observable inputs ($) | | | Level 3 Significant
unobservable inputs ($) | | Total ($) | |
Common Stocks | | | | | | | | | | | | | | |
Australia | | | 434,639 | | | | — | | | — | | | 434,639 | |
Bermuda | | | 90,560 | | | | — | | | — | | | 90,560 | |
Canada | | | 258,720 | | | | — | | | — | | | 258,720 | |
China/Hong Kong | | | 220,575 | | | | — | | | — | | | 220,575 | |
France | | | 164,818 | | | | 79,381 | | | — | | | 244,199 | |
Germany | | | — | | | | 389,414 | | | — | | | 389,414 | |
Ireland | | | 685,038 | | | | — | | | — | | | 685,038 | |
Italy | | | — | | | | 129,300 | | | — | | | 129,300 | |
Japan | | | — | | | | 401,464 | | | — | | | 401,464 | |
Norway | | | 256,662 | | | | — | | | — | | | 256,662 | |
Singapore | | | 130,830 | | | | — | | | — | | | 130,830 | |
Spain | | | 90,828 | | | | 257,790 | | | — | | | 348,618 | |
Sweden | | | 123,824 | | | | — | | | — | | | 123,824 | |
Switzerland | | | 321,084 | | | | 585,455 | | | — | | | 906,539 | |
United Kingdom | | | 1,245,016 | | | | 901,810 | | | — | | | 2,146,826 | |
United States | | | 9,978,670 | | | | — | | | — | | | 9,978,670 | |
| | | | |
| | | 14,001,264 | | | | 2,744,614 | | | — | | | 16,745,878 | |
| | | | |
Closed-End Mutual Funds | | | 218,726 | | | | — | | | — | | | 218,726 | |
| | | | |
Total: | | | 14,219,990 | | | | 2,744,614 | | | — | | | 16,964,604 | |
The Fund adjusts the closing price of foreign equity securities by applying a systematic process for events occurring after the close of the foreign exchanges. 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 ANNUAL REPORT | |
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|
|
| |
Sit Large Cap Growth Fund |
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 one-year return was +14.18%, compared to the +17.07% return for the Russell 1000® Growth index.
U.S. stocks posted solid returns over the past twelve months.Although corporate earnings growth has slowed considerably in recent quarters, equity valuations have moved higher amid continued low interest rates and highly accommodative monetary policy by the Federal Reserve (the “Fed”). Also, while market volatility has increased in recent months as investors consider the impact of the end of the Fed’s quantitative easing (QE) program, we believe the combination of sluggish economic growth with low inflation will keep interest rates contained, which will further fuel investors’ appetite for stocks and support valuations. In terms of investment strategy, we continue a focus on high quality companies that can generate earnings growth even in a slow growth economy. In addition to earnings growth, the Fund’s emphasis remains on companies with strong balance sheets and high free cash flow generation. This financial strength enables companies to make acquisitions to augment earnings growth or, preferably, return capital back to shareholders in the form of share repurchases or dividends. In terms of sectors, we continue to favor growth companies in the technology, health care and retail sectors.
Relative to the Russell 1000® Growth Index, performance over the past year was negatively impacted by stock selection in the technology services and process industries sectors. Laggards in these sectors included CF Industries, Praxair, VMware, Teradata and Informatica. In addition, performance was hurt by an underweighted position in consumer services, as many cable and media companies not held in the Fund posted strong returns over the period. On the positive side, strong stock selection in health technology and finance aided performance over the past twelve months. Gilead Sciences, Celgene, Bristol-Myers Squibb,Thermo Fisher Scientific, Goldman Sachs Group and JPMorgan Chase were among the key outperformers in these sectors, with each stock posting a return of +40% or greater over the period.
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.
Based on strong business fundamentals and attractive valuations, we continue to be optimistic on the outlook for companies held in the Fund.
Roger J. Sit
Ronald D. Sit
Michael J. Stellmacher
Portfolio Managers
| | |
20 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2013
| | | | | | | | | | | | |
| | | Sit Large
Cap Growth
Fund | | | Russell
1000®
Growth
Index 1 | | | Russell
1000®
Index 2 | |
One Year | | | 14.18 | % | | | 17.07 | % | | | 21.24 | % |
Five Year | | | 4.21 | | | | 7.47 | | | | 7.12 | |
Ten Year | | | 7.25 | | | | 7.40 | | | | 7.67 | |
Since Inception 3 | | | 9.62 | | | | 10.65 | | | | 11.60 | |
(9/2/82) | | | | | | | | | | | | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 Russell 1000® Growth Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.
2 Russell 1000® Index is an unmanaged index that measures the performance of approximately 1,000 of the largest U.S. companies by market capitalization.
3 On 6/6/93, the Fund’s investment objective changed to allow for a portfolio of 100% stocks. Prior to that time, the portfolio was required to contain no more than 80% stocks.
PORTFOLIO SUMMARY
| | |
Net Asset Value 6/30/13: | | $ 47.53 Per Share |
Net Asset Value 6/30/12: | | $ 45.53 Per Share |
Total Net Assets: | | $ 196.3 Million |
Weighted Average Market Cap: | | $ 99.3 Billion |
TOP 10 HOLDINGS
1. Google, Inc.
2. International Business Machines Corp.
3. Apple, Inc.
4. Qualcomm, Inc.
5. Oracle Corp.
6. PepsiCo, Inc.
7. Visa, Inc.
8. Coca-Cola Co.
9. Philip Morris International, Inc.
10. Ecolab, Inc.
Based on total net assets as of June 30, 2013. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of June 30, 2013. Subject to change.
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit Large Cap Growth Fund
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Common Stocks - 98.6% | | |
| |
Communications - 2.4% | | |
30,700 | | Rogers Communications, Inc. | | 1,203,440 |
5,300 | | SBA Communications Corp. * | | 392,836 |
63,200 | | Verizon Communications, Inc. | | 3,181,488 |
| | | | |
| | |
| | | | 4,777,764 |
| | | | |
|
Consumer Durables - 1.2% |
11,800 | | Polaris Industries, Inc. | | 1,121,000 |
16,000 | | Tupperware Brands Corp. | | 1,243,040 |
| | | | |
| | |
| | | | 2,364,040 |
| | | | |
|
Consumer Non-Durables - 10.1% |
95,300 | | Coca-Cola Co. | | 3,822,483 |
33,300 | | General Mills, Inc. | | 1,616,049 |
21,400 | | Michael Kors Holdings, Ltd. * | | 1,327,228 |
33,400 | | NIKE, Inc. | | 2,126,912 |
50,300 | | PepsiCo, Inc. | | 4,114,037 |
43,800 | | Philip Morris International, Inc. | | 3,793,956 |
40,500 | | Procter & Gamble Co. | | 3,118,095 |
| | | | |
| | |
| | | | 19,918,760 |
| | | | |
|
Consumer Services - 4.6% |
31,600 | | McDonald’s Corp. | | 3,128,400 |
55,400 | | News Corp. | | 1,806,040 |
22,200 | | Visa, Inc. | | 4,057,050 |
| | | | |
| | |
| | | | 8,991,490 |
| | | �� | |
|
Electronic Technology - 13.7% |
16,350 | | Apple, Inc. | | 6,475,908 |
70,700 | | Applied Materials, Inc. | | 1,054,137 |
32,700 | | Avago Technologies, Ltd. | | 1,222,326 |
51,800 | | Broadcom Corp. | | 1,748,768 |
88,600 | | Ciena Corp. * | | 1,720,612 |
56,800 | | EMC Corp. | | 1,341,616 |
79,100 | | Intel Corp. | | 1,915,802 |
36,600 | | International Business Machines Corp. | | 6,994,626 |
71,200 | | Qualcomm, Inc. | | 4,348,896 |
| | | | |
| | |
| | | | 26,822,691 |
| | | | |
|
Energy Minerals - 3.9% |
26,600 | | Chevron Corp. | | 3,147,844 |
11,500 | | Continental Resources, Inc. * | | 989,690 |
34,900 | | Marathon Petroleum Corp. | | 2,479,994 |
11,400 | | Occidental Petroleum Corp. | | 1,017,222 |
| | | | |
| | |
| | | | 7,634,750 |
| | | | |
|
Finance - 3.9% |
11,100 | | ACE, Ltd. | | 993,228 |
13,900 | | Franklin Resources, Inc. | | 1,890,678 |
9,300 | | Goldman Sachs Group, Inc. | | 1,406,625 |
34,700 | | JPMorgan Chase & Co. | | 1,831,813 |
25,600 | | Marsh & McLennan Cos., Inc. | | 1,021,952 |
9,100 | | MetLife, Inc. | | 416,416 |
| | | | |
| | |
| | | | 7,560,712 |
| | | | |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
|
Health Services - 3.5% |
29,819 | | Express Scripts Holding Co. * | | 1,839,534 |
14,200 | | McKesson Corp. | | 1,625,900 |
52,600 | | UnitedHealth Group, Inc. | | 3,444,248 |
| | | | |
| | |
| | | | 6,909,682 |
| | | | |
|
Health Technology - 12.2% |
14,700 | | Alexion Pharmaceuticals, Inc. * | | 1,355,928 |
19,400 | | Allergan, Inc. | | 1,634,256 |
22,900 | | Baxter International, Inc. | | 1,586,283 |
71,100 | | Bristol-Myers Squibb Co. | | 3,177,459 |
26,300 | | Celgene Corp. * | | 3,074,733 |
9,400 | | Covidien, PLC | | 590,696 |
68,100 | | Gilead Sciences, Inc. * | | 3,487,401 |
1,200 | | Intuitive Surgical, Inc. * | | 607,896 |
21,100 | | Johnson & Johnson | | 1,811,646 |
97,254 | | Pfizer, Inc. | | 2,724,084 |
26,200 | | Stryker Corp. | | 1,694,616 |
22,700 | | Thermo Fisher Scientific, Inc. | | 1,921,101 |
7,865 | | Zoetis, Inc. | | 242,949 |
| | | | |
| | |
| | | | 23,909,048 |
| | | | |
|
Industrial Services - 1.6% |
30,400 | | Schlumberger, Ltd. | | 2,178,464 |
24,400 | | Seadrill, Ltd. | | 994,056 |
| | | | |
| | |
| | | | 3,172,520 |
| | | | |
|
Process Industries - 4.0% |
7,900 | | CF Industries Holdings, Inc. | | 1,354,850 |
41,000 | | Ecolab, Inc. | | 3,492,790 |
29,200 | | International Paper Co. | | 1,293,852 |
14,600 | | Praxair, Inc. | | 1,681,336 |
| | | | |
| | |
| | | | 7,822,828 |
| | | | |
|
Producer Manufacturing - 9.3% |
20,000 | | 3M Co. | | 2,187,000 |
19,600 | | Caterpillar, Inc. | | 1,616,804 |
42,100 | | Danaher Corp. | | 2,664,930 |
25,450 | | Deere & Co. | | 2,067,812 |
12,400 | | Eaton Corp., PLC | | 816,044 |
26,700 | | Emerson Electric Co. | | 1,456,218 |
19,800 | | Flowserve Corp. | | 1,069,398 |
25,100 | | Honeywell International, Inc. | | 1,991,434 |
8,500 | | Precision Castparts Corp. | | 1,921,085 |
26,500 | | United Technologies Corp. | | 2,462,910 |
| | | | |
| | |
| | | | 18,253,635 |
| | | | |
|
Retail Trade - 10.6% |
7,500 | | Amazon.com, Inc. * | | 2,082,675 |
10,600 | | Costco Wholesale Corp. | | 1,172,042 |
51,100 | | CVS Caremark Corp. | | 2,921,898 |
| | | | |
See accompanying notes to financial statements | | | | |
22 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| | |
46,400 | | Dick’s Sporting Goods, Inc. | | 2,322,784 |
16,000 | | eBay, Inc. * | | 827,520 |
34,800 | | Home Depot, Inc. | | 2,695,956 |
13,200 | | Lululemon Athletica, Inc. * | | 864,864 |
44,900 | | Target Corp. | | 3,091,814 |
56,900 | | TJX Cos., Inc. | | 2,848,414 |
25,600 | | Wal-Mart Stores, Inc. | | 1,906,944 |
| | | | |
| | |
| | | | 20,734,911 |
| | | | |
| |
Technology Services - 13.7% | | |
45,100 | | Accenture, PLC | | 3,245,396 |
21,800 | | Cognizant Technology Solutions Corp. * | | 1,364,898 |
8,800 | | Google, Inc. * | | 7,747,256 |
38,800 | | Informatica Corp. * | | 1,357,224 |
80,000 | | Microsoft Corp. | | 2,762,400 |
139,100 | | Oracle Corp. | | 4,273,152 |
3,600 | | priceline.com, Inc. * | | 2,977,668 |
29,937 | | Teradata Corp. * | | 1,503,736 |
24,200 | | VMware, Inc. * | | 1,621,158 |
| | | | |
| | |
| | | | 26,852,888 |
| | | | |
| |
Transportation - 2.5% | | |
22,000 | | Union Pacific Corp. | | 3,394,160 |
18,300 | | United Parcel Service, Inc. | | 1,582,584 |
| | | | |
| | |
| | | | 4,976,744 |
| | | | |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Utilities - 1.4% | | |
39,700 | | Kinder Morgan, Inc. | | 1,514,555 |
32,100 | | Wisconsin Energy Corp. | | 1,315,779 |
| | | | |
| | |
| | | | 2,830,334 |
| | | | |
| |
Total Common Stocks
(cost: $136,860,453) | | 193,532,797 |
| | | | |
| |
Total Investments in Securities - 98.6%
(cost: $136,860,453) | | 193,532,797 |
| |
Other Assets and Liabilities, net - 1.4% | | 2,751,853 |
| | | | |
| |
Total Net Assets - 100.0% | | $196,284,650 |
| | | | |
| * | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
PLC — Public Limited Company
A summary of the levels for the Fund’s investments as of June 30, 2013 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | |
| | Investment in Securities |
| | Level 1
Quoted
Price ($) | | Level 2
Other significant
observable inputs ($) | | Level 3
Significant
unobservable inputs ($) | | Total ($) |
Common Stocks ** | | 193,532,797 | | — | | — | | 193,532,797 |
Total: | | 193,532,797 | | — | | — | | 193,532,797 |
| ** | 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
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 twelve-month return was +14.70%, compared to +22.88% for the Russell Midcap® Growth Index. The Russell MidCap® Index advanced +25.41% during the period.
Stocks overcame a broad-based slowdown in corporate earnings to post solid returns over the past few months. The key issue for the U.S. equity market is the growth outlook for the economy. While there are clearly some bright spots – including a recovery in housing and booming domestic energy production – we continue to believe the sluggish growth environment is likely to persist. A slowdown in government spending, higher tax rates and very modest growth in consumer incomes are among the key reasons for this subdued outlook. The good news, however, from our perspective, is that there are many companies selling at attractive valuations with positive secular growth prospects.While the Fund’s largest sector weightings remain in the “traditional” growth sectors of electronic technology and health technology, we also have a significant commitment to the retail trade and finance sectors. These sectors are benefitting from a combination of improving credit conditions, driven by slow but steady gains in the labor market, and the “wealth effect,” generated from higher real estate values and stock prices.
Although we are happy to report solid absolute returns to our shareholders, we are not pleased by the relative underperformance compared to the Russell Midcap® Growth Index. The Fund’s one-year relative performance was negatively impacted by stock selection in the electronic technology, process industries, consumer services and health technology sectors. Underperformers in these sectors included VeriFone Systems, Skyworks Solutions, CF Industries, Albemarle, Chipotle Mexican Grill, Intuitive Surgical and Allergan. These negatives were partially offset by positive stock selection in finance and energy minerals sectors. Strong performers in these sectors included Ameriprise Financial, Affiliated Managers Group, Gulfport Energy and Marathon Petroleum.
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.
Our research effort is highly focused on companies with strong, experienced management teams, sound balance sheets, and sustainable earnings growth potential. We strongly believe that this focus will reward our shareholders over time. We appreciate your continued interest in the Fund.
Roger J. Sit
Kent L. Johnson
Robert W. Sit
Portfolio Managers
| | |
24 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2013
| | | | | | | | | | | | |
| | | Sit Mid Cap
Growth Fund | | | Russell
Midcap®
Growth
Index 1 | | | Russell
Midcap®
Index 2 | |
One Year | | | 14.70 | % | | | 22.88 | % | | | 25.41 | % |
Five Year | | | 4.28 | | | | 7.61 | | | | 8.28 | |
Ten Year | | | 8.87 | | | | 9.94 | | | | 10.65 | |
Since Inception (9/2/82) | | | 11.70 | | | | n/a | | | | n/a | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains and all fee waivers. Without the fee waivers total return and yield figures would have been lower. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 Russell Midcap® Growth Index is an unmanaged index that measures the performance of those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.
2 Russell Midcap® Index is an unmanaged index that measures the performance of approximately 800 of the smallest companies in the Russell 1000® Index.
PORTFOLIO SUMMARY
| | |
Net Asset Value 6/30/13: | | $ 17.69 Per Share |
Net Asset Value 6/30/12: | | $15.77 Per Share |
Total Net Assets: | | $152.1 Million |
Weighted Average Market Cap: | | $13.9 Billion |
TOP 10 HOLDINGS
1. TJX Cos., Inc.
2. ANSYS, Inc.
3. Ecolab, Inc.
4. Dunkin’ Brands Group, Inc.
5. Iconix Brand Group, Inc.
6. Waste Connections, Inc.
7. Macy’s, Inc.
8. Precision Castparts Corp.
9. Ultimate Software Group, Inc.
10. Ulta Salon Cosmetics & Fragrance, Inc.
Based on total net assets as of June 30, 2013. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of June 30, 2013. Subject to change.
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit Mid Cap Growth Fund
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Common Stocks - 97.7% | | |
| |
Commercial Services - 1.3% | | |
14,800 | | Moody’s Corp. | | 901,764 |
31,200 | | Nielsen Holdings NV | | 1,048,008 |
| | | | |
| | |
| | | | 1,949,772 |
| | | | |
| |
Communications - 1.4% | | |
29,300 | | SBA Communications Corp. * | | 2,171,716 |
| | | | |
| |
Consumer Durables - 4.7% | | |
13,100 | | Fossil Group, Inc. * | | 1,353,361 |
15,900 | | Polaris Industries, Inc. | | 1,510,500 |
27,000 | | Snap-On, Inc. | | 2,413,260 |
24,100 | | Tupperware Brands Corp. | | 1,872,329 |
| | | | |
| | |
| | | | 7,149,450 |
| | | | |
| |
Consumer Non-Durables - 4.5% | | |
52,200 | | Coca-Cola Enterprises, Inc. | | 1,835,352 |
108,500 | | Iconix Brand Group, Inc. * | | 3,190,985 |
28,900 | | Michael Kors Holdings, Ltd. * | | 1,792,378 |
| | | | |
| | |
| | | | 6,818,715 |
| | | | |
| |
Consumer Services - 5.0% | | |
10,700 | | AMC Networks, Inc. * | | 699,887 |
5,800 | | Chipotle Mexican Grill, Inc. * | | 2,113,230 |
74,900 | | Dunkin’ Brands Group, Inc. | | 3,207,218 |
39,532 | | Marriott International, Inc. | | 1,595,907 |
| | | | |
| | |
| | | | 7,616,242 |
| | | | |
| |
Electronic Technology - 6.9% | | |
42,000 | | Avago Technologies, Ltd. | | 1,569,960 |
56,800 | | Broadcom Corp. | | 1,917,568 |
89,800 | | Ciena Corp. * | | 1,743,916 |
11,100 | | F5 Networks, Inc. * | | 763,680 |
29,500 | | Linear Technology Corp. | | 1,086,780 |
10,700 | | MICROS Systems, Inc. * | | 461,705 |
80,800 | | Skyworks Solutions, Inc. * | | 1,768,712 |
34,900 | | Veeco Instruments, Inc. * | | 1,236,158 |
| | | | |
| | |
| | | | 10,548,479 |
| | | | |
| |
Energy Minerals - 3.6% | | |
8,900 | | Continental Resources, Inc. * | | 765,934 |
32,500 | | Gulfport Energy Corp. * | | 1,529,775 |
31,200 | | Marathon Petroleum Corp. | | 2,217,072 |
27,500 | | Southwestern Energy Co. * | | 1,004,575 |
| | | | |
| | |
| | | | 5,517,356 |
| | | | |
| |
Finance - 9.7% | | |
18,050 | | ACE, Ltd. | | 1,615,114 |
14,800 | | Affiliated Managers Group, Inc. * | | 2,426,312 |
29,000 | | Ameriprise Financial, Inc. | | 2,345,520 |
19,800 | | Arthur J Gallagher & Co. | | 865,062 |
24,700 | | Discover Financial Services | | 1,176,708 |
7,200 | | IntercontinentalExchange, Inc. * | | 1,279,872 |
32,200 | | Marsh & McLennan Cos., Inc. | | 1,285,424 |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| | |
27,100 | | Signature Bank/New York NY * | | 2,249,842 |
21,400 | | T Rowe Price Group, Inc. | | 1,565,410 |
| | | | |
| | |
| | | | 14,809,264 |
| | | | |
| |
Health Services - 1.6% | | |
25,000 | | Express Scripts Holding Co. * | | 1,542,250 |
7,500 | | Stericycle, Inc. * | | 828,225 |
| | | | |
| | |
| | | | 2,370,475 |
| | | | |
| |
Health Technology - 8.9% | | |
16,000 | | Alexion Pharmaceuticals, Inc. * | | 1,475,840 |
18,300 | | Allergan, Inc. | | 1,541,592 |
20,500 | | Celgene Corp. * | | 2,396,655 |
11,300 | | Edwards Lifesciences Corp. * | | 759,360 |
13,400 | | IDEXX Laboratories, Inc. * | | 1,203,052 |
2,700 | | Intuitive Surgical, Inc. * | | 1,367,766 |
29,450 | | Thermo Fisher Scientific, Inc. | | 2,492,354 |
38,300 | | Thoratec Corp. * | | 1,199,173 |
14,200 | | Vertex Pharmaceuticals, Inc. * | | 1,134,154 |
| | | | |
| | |
| | | | 13,569,946 |
| | | | |
| |
Industrial Services - 5.7% | | |
34,800 | | Chicago Bridge & Iron Co. NV | | 2,076,168 |
11,000 | | National Oilwell Varco, Inc. | | 757,900 |
14,950 | | Schlumberger, Ltd. | | 1,071,317 |
43,000 | | Seadrill, Ltd. | | 1,751,820 |
71,700 | | Waste Connections, Inc. | | 2,949,738 |
| | | | |
| | |
| | | | 8,606,943 |
| | | | |
| |
Non-Energy Minerals - 1.7% | | |
26,700 | | Haynes International, Inc. | | 1,278,129 |
116,000 | | Stillwater Mining Co. * | | 1,245,840 |
| | | | |
| | |
| | | | 2,523,969 |
| | | | |
| |
Process Industries - 8.0% | | |
17,200 | | Airgas, Inc. | | 1,641,912 |
30,400 | | Albemarle Corp. | | 1,893,616 |
11,800 | | CF Industries Holdings, Inc. | | 2,023,700 |
38,400 | | Ecolab, Inc. | | 3,271,296 |
31,200 | | FMC Corp. | | 1,905,072 |
30,900 | | Scotts Miracle-Gro Co. | | 1,492,779 |
| | | | |
| | |
| | | | 12,228,375 |
| | | | |
| |
Producer Manufacturing - 10.9% | | |
31,600 | | AGCO Corp. | | 1,586,004 |
60,187 | | AMETEK, Inc. | | 2,545,910 |
20,300 | | Cummins, Inc. | | 2,201,738 |
11,622 | | Eaton Corp., PLC | | 764,834 |
28,800 | | Flowserve Corp. | | 1,555,488 |
15,500 | | MSC Industrial Direct Co., Inc. | | 1,200,630 |
11,900 | | Precision Castparts Corp. | | 2,689,519 |
25,500 | | SPX Corp. | | 1,835,490 |
83,400 | | Trimble Navigation, Ltd. * | | 2,169,234 |
| | | | |
| | |
| | | | 16,548,847 |
| | | | |
| | | | |
See accompanying notes to financial statements | | | | |
26 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Retail Trade - 10.9% | | |
15,800 | | Bed Bath & Beyond, Inc. * | | 1,120,220 |
52,100 | | Dick’s Sporting Goods, Inc. | | 2,608,126 |
13,100 | | Dollar Tree, Inc. * | | 666,003 |
26,600 | | Lululemon Athletica, Inc. * | | 1,742,832 |
58,600 | | Macy’s, Inc. | | 2,812,800 |
18,300 | | Nordstrom, Inc. | | 1,096,902 |
78,300 | | TJX Cos., Inc. | | 3,919,698 |
26,200 | | Ulta Salon Cosmetics & Fragrance, Inc. * | | 2,624,192 |
| | | | |
| | |
| | | | 16,590,773 |
| | | | |
| |
Technology Services - 10.6% | | |
47,100 | | ANSYS, Inc. * | | 3,443,010 |
15,100 | | Citrix Systems, Inc. * | | 910,983 |
38,300 | | Cognizant Technology Solutions Corp. * | | 2,397,963 |
63,400 | | Informatica Corp. * | | 2,217,732 |
3,000 | | priceline.com, Inc. * | | 2,481,390 |
39,500 | | Teradata Corp. * | | 1,984,085 |
22,600 | | Ultimate Software Group, Inc. * | | 2,650,754 |
| | | | |
| | |
| | | | 16,085,917 |
| | | | |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Utilities - 2.3% | | |
51,500 | | Calpine Corp. * | | 1,093,345 |
25,100 | | UGI Corp. | | 981,661 |
35,300 | | Wisconsin Energy Corp. | | 1,446,947 |
| | | | |
| | |
| | | | 3,521,953 |
| | | | |
| |
Total Common Stocks
(cost: $94,373,730) | | 148,628,192 |
| | | | |
| |
Total Investments in Securities - 97.7%
(cost: $94,373,730) | | 148,628,192 |
| |
Other Assets and Liabilities, net - 2.3% | | 3,500,556 |
| | | | |
| |
Total Net Assets - 100.0% | | $152,128,748 |
| | | | |
| * | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
| | PLC — Public Limited Company |
A summary of the levels for the Fund’s investments as of June 30, 2013 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | |
| | | Investment in Securities | |
| |
| Level 1
Quoted
Price ($) |
| | Level 2
Other significant
observable inputs ($) | | Level 3
Significant
unobservable inputs ($) | | | Total ($) | |
| | | | |
Common Stocks ** | | | 148,628,192 | | | — | | — | | | 148,628,192 | |
| | | | |
Total: | | | 148,628,192 | | | — | | — | | | 148,628,192 | |
| ** | 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 | | | | |
JUNE 30, 2013 | | | 27 | |
|
|
| |
Sit Small Cap Growth Fund |
OBJECTIVE & STRATEGY
The objective of the Sit Small Cap Growth Fund is to maximize long-term capital appreciation. The Fund seeks to achieve its objective by investing, under normal market conditions, at least 80% of its net assets in common stocks of companies with 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 ($6.7 billion as of June 30, 2013).
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 return was +14.08% over the past twelve months. This compares to the +23.67% return for the Russell 2000® Growth Index and the +24.21% gain for the Russell 2000® Index.
Despite an increase in volatility in recent months, U.S. equity markets posted solid returns over the past year. And, while corporate earnings have slowed considerably in recent quarters as the economic recovery has stalled to some degree, low interest rates and a highly accommodative Federal Reserve have been key factors supporting stock prices. However, we believe returns are likely to be more modest in the year ahead, as valuations have moved higher despite the absence of a material gain in corporate profits. Moreover, based on several metrics that we monitor, we believe lower quality, more speculative small capitalization stocks have been a key to beating the market in recent months. While there are many possible explanations for this (including the Federal Reserve’s quantitative easing program), we believe higher quality companies will outperform in the long run. 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, producer manufacturing, health technology and finance.
The Fund underperformed the Russell 2000® Growth Index over the past twelve months. Relative performance was negatively impacted by stock selection in the electronic technology, technology services, retail trade and consumer non-durables sectors. In terms of individual stocks, Monster Beverage, Informatica, Skyworks Solutions,
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.
VeriFone Systems,Alexion Pharmaceuticals andVolcano most negatively impacted relative returns. Conversely, the Fund’s energy minerals holdings performed well over the period, with particular strong performance from our Gulfport Energy position. In addition, holdings in the consumer durables sector added to relative returns, as Snap-On and Tupperware Brands outperformed the market over the period.
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 ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2013
| | | | | | | | | | | | |
| | | Sit
Small Cap
Growth
Fund | | | Russell 2000®
Growth Index 1 | | | Russell
2000®
Index 2 | |
One Year | | | 14.08 | % | | | 23.67 | % | | | 24.21 | % |
Five Year | | | 5.99 | | | | 8.89 | | | | 8.77 | |
Ten Year | | | 8.75 | | | | 9.62 | | | | 9.53 | |
Since Inception (7/1/94) | | | 10.59 | | | | 7.28 | | | | 9.10 | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 Russell 2000® Growth Index is an unmanaged index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.
2 Russell 2000® Index is an unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, an index consisting of the 3,000 largest U.S. companies based on market capitalization.
PORTFOLIO SUMMARY
| | |
Net Asset Value 6/30/13: | | $ 50.08 Per Share |
Net Asset Value 6/30/12: | | $ 43.90 Per Share |
Total Net Assets: | | $ 84.8 Million |
Weighted Average Market Cap: | | $ 5.2 Billion |
TOP 10 HOLDINGS
1. Ultimate Software Group, Inc.
2. Gulfport Energy Corp.
3. Dunkin’ Brand Group, Inc.
4. Affiliated Managers Group, Inc.
5. Snap-On, Inc.
6. ANSYS, Inc.
7. Iconix Brand Group, Inc.
8. Schweitzer-Mauduit International, Inc.
9. Chicago Bridge & Iron Co. NV.
10. Buffalo Wild Wings, Inc.
Based on total net assets as of June 30, 2013. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of June 30, 2013. Subject to change.
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit Small Cap Growth Fund
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Common Stocks - 99.1% | | |
| |
Commercial Services - 1.8% | | |
14,800 | | DigitalGlobe, Inc. * | | 458,948 |
41,200 | | On Assignment, Inc. * | | 1,100,864 |
| | | | |
| | |
| | | | 1,559,812 |
| | | | |
| |
Communications - 1.9% | | |
13,150 | | SBA Communications Corp. * | | 974,678 |
24,100 | | TW Telecom, Inc. * | | 678,174 |
| | | | |
| | |
| | | | 1,652,852 |
| | | | |
| |
Consumer Durables - 6.2% | | |
8,000 | | Fossil Group, Inc. * | | 826,480 |
17,000 | | Polaris Industries, Inc. | | 1,615,000 |
19,600 | | Snap-On, Inc. | | 1,751,848 |
13,200 | | Tupperware Brands Corp. | | 1,025,508 |
| | | | |
| | |
| | | | 5,218,836 |
| | | | |
| |
Consumer Non-Durables - 4.7% | | |
56,900 | | Iconix Brand Group, Inc. * | | 1,673,429 |
33,000 | | Schweitzer-Mauduit International, Inc. | | 1,646,040 |
30,300 | | Vera Bradley, Inc. * | | 656,298 |
| | | | |
| | |
| | | | 3,975,767 |
| | | | |
| |
Consumer Services - 5.1% | | |
16,600 | | Buffalo Wild Wings, Inc. * | | 1,629,456 |
42,800 | | Dunkin’ Brands Group, Inc. | | 1,832,696 |
31,300 | | Lions Gate Entertainment Corp. * | | 859,811 |
120 | | Noodles & Co. * | | 4,410 |
| | | | |
| | |
| | | | 4,326,373 |
| | | | |
| |
Electronic Technology - 6.1% | | |
9,750 | | 3D Systems Corp. * | | 428,025 |
57,300 | | Ciena Corp. * | | 1,112,766 |
4,400 | | F5 Networks, Inc. * | | 302,720 |
9,000 | | MICROS Systems, Inc. * | | 388,350 |
51,500 | | Skyworks Solutions, Inc. * | | 1,127,335 |
23,000 | | Synaptics, Inc. * | | 886,880 |
19,200 | | Veeco Instruments, Inc. * | | 680,064 |
20,100 | | Volterra Semiconductor Corp. * | | 283,812 |
| | | | |
| | |
| | | | 5,209,952 |
| | | | |
| |
Energy Minerals - 4.3% | | |
5,700 | | EPL Oil & Gas, Inc. * | | 167,352 |
44,200 | | Gulfport Energy Corp. * | | 2,080,494 |
31,200 | | Northern Oil and Gas, Inc. * | | 416,208 |
35,000 | | Western Refining, Inc. | | 982,450 |
| | | | |
| | |
| | | | 3,646,504 |
| | | | |
| |
Finance - 9.3% | | |
10,800 | | Affiliated Managers Group, Inc. * | | 1,770,552 |
21,700 | | Axis Capital Holdings, Ltd. | | 993,426 |
29,200 | | First Republic Bank/CA | | 1,123,616 |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| | |
18,900 | | Signature Bank/New York NY * | | 1,569,078 |
12,650 | | Stifel Financial Corp. * | | 451,225 |
38,500 | | TCF Financial Corp. | | 545,930 |
14,400 | | Texas Capital Bancshares, Inc. * | | 638,784 |
22,400 | | Validus Holdings, Ltd. | | 809,088 |
| | | | |
| | |
| | | | 7,901,699 |
| | | | |
| |
Health Services - 4.8% | | |
13,000 | | Advisory Board Co. * | | 710,450 |
8,900 | | Air Methods Corp. | | 301,532 |
7,100 | | Athenahealth, Inc. * | | 601,512 |
30,700 | | Healthcare Services Group, Inc. | | 752,764 |
23,000 | | HMS Holdings Corp. * | | 535,900 |
10,400 | | Stericycle, Inc. * | | 1,148,472 |
| | | | |
| | |
| | | | 4,050,630 |
| | | | |
| |
Health Technology - 9.8% | | |
16,900 | | Alexion Pharmaceuticals, Inc. * | | 1,558,856 |
11,300 | | Celgene Corp. * | | 1,321,083 |
11,400 | | Cubist Pharmaceuticals, Inc. * | | 550,620 |
18,700 | | Haemonetics Corp. * | | 773,245 |
3,600 | | HeartWare International, Inc. * | | 342,396 |
1,300 | | Intuitive Surgical, Inc. * | | 658,554 |
15,200 | | NuVasive, Inc. * | | 376,808 |
18,400 | | PerkinElmer, Inc. | | 598,000 |
9,100 | | Techne Corp. | | 628,628 |
20,500 | | Thoratec Corp. * | | 641,855 |
12,000 | | Vivus, Inc. * | | 150,960 |
37,100 | | Volcano Corp. * | | 672,623 |
| | | | |
| | |
| | | | 8,273,628 |
| | | | |
| |
Industrial Services - 7.4% | | |
13,200 | | Atwood Oceanics, Inc. * | | 687,060 |
27,400 | | Chicago Bridge & Iron Co. NV | | 1,634,684 |
5,200 | | Core Laboratories NV | | 788,632 |
15,000 | | EMCOR Group, Inc. | | 609,750 |
10,700 | | Lufkin Industries, Inc. | | 946,629 |
39,100 | | Waste Connections, Inc. | | 1,608,574 |
| | | | |
| | |
| | | | 6,275,329 |
| | | | |
| |
Non-Energy Minerals - 1.2% | | |
12,700 | | Haynes International, Inc. | | 607,949 |
42,200 | | Stillwater Mining Co. * | | 453,228 |
| | | | |
| | |
| | | | 1,061,177 |
| | | | |
| |
Process Industries - 3.5% | | |
27,600 | | American Vanguard Corp. | | 646,668 |
6,400 | | CF Industries Holdings, Inc. | | 1,097,600 |
19,000 | | Olin Corp. | | 454,480 |
15,900 | | Scotts Miracle-Gro Co. | | 768,129 |
| | | | |
| | |
| | | | 2,966,877 |
| | | | |
| | | | |
See accompanying notes to financial statements | | | | |
30 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Producer Manufacturing - 11.9% | | |
6,400 | | AGCO Corp. | | 321,216 |
31,600 | | AMETEK, Inc. | | 1,336,680 |
14,000 | | Applied Industrial Technologies, Inc. | | 676,620 |
14,000 | | CLARCOR, Inc. | | 730,940 |
14,400 | | Crane Co. | | 862,848 |
6,600 | | Esterline Technologies Corp. * | | 477,114 |
25,500 | | IDEX Corp. | | 1,372,155 |
14,000 | | Lincoln Electric Holdings, Inc. | | 801,780 |
8,400 | | MSC Industrial Direct Co., Inc. | | 650,664 |
9,100 | | Proto Labs, Inc. * | | 591,227 |
46,000 | | Trimble Navigation, Ltd. * | | 1,196,460 |
20,000 | | Wabtec Corp. | | 1,068,600 |
| | | | |
| | |
| | | | 10,086,304 |
| | | | |
| |
Retail Trade - 5.8% | | |
17,700 | | Casey’s General Stores, Inc. | | 1,064,832 |
28,600 | | Dick’s Sporting Goods, Inc. | | 1,431,716 |
14,800 | | Lululemon Athletica, Inc. * | | 969,696 |
14,100 | | Ulta Salon Cosmetics & Fragrance, Inc. * | | 1,412,256 |
| | | | |
| | |
| | | | 4,878,500 |
| | | | |
| |
Technology Services - 12.4% | | |
23,200 | | ANSYS, Inc. * | | 1,695,920 |
7,900 | | Citrix Systems, Inc. * | | 476,607 |
10,100 | | CommVault Systems, Inc. * | | 766,489 |
18,600 | | Concur Technologies, Inc. * | | 1,513,668 |
34,500 | | Informatica Corp. * | | 1,206,810 |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| | |
14,100 | | Solera Holdings, Inc. | | 784,665 |
22,500 | | Syntel, Inc. | | 1,414,575 |
20,400 | | Ultimate Software Group, Inc. * | | 2,392,716 |
11,600 | | ValueClick, Inc. * | | 286,288 |
| | | | |
| | |
| | | | 10,537,738 |
| | | | |
| |
Transportation - 1.6% | | |
18,900 | | Hub Group, Inc. * | | 688,338 |
38,100 | | Knight Transportation, Inc. | | 640,842 |
| | | | |
| | |
| | | | 1,329,180 |
| | | | |
| |
Utilities - 1.3% | | |
6,300 | | ITC Holdings Corp. | | 575,190 |
13,100 | | UGI Corp. | | 512,341 |
| | | | |
| | |
| | | | 1,087,531 |
| | | | |
| |
Total Common Stocks
(cost: $58,991,128) | | 84,038,689 |
| | | | |
| |
Total Investments in Securities - 99.1%
(cost: $58,991,128) | | 84,038,689 |
| |
Other Assets and Liabilities, net - 0.9% | | 754,055 |
| | | | |
| |
Total Net Assets - 100.0% | | $84,792,744 |
| | | | |
| * | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of June 30, 2013 is as follows (see Note 2 - significant accounting policies in the notes to financial statements:
| | | | | | | | | | | | |
| | | Investment in Securities | |
| |
| Level 1
Quoted
Price ($) |
| | Level 2
Other significant
observable inputs ($) | | Level 3
Significant
unobservable inputs ($) | | | Total ($) | |
| | | | |
Common Stocks ** | | | 84,038,689 | | | — | | — | | | 84,038,689 | |
| | | | |
Total: | | | 84,038,689 | | | — | | — | | | 84,038,689 | |
| ** | 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 | | | | |
JUNE 30, 2013 | | | 31 | |
|
|
| |
Sit International Growth Fund |
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.
The Sit International Growth Fund appreciated +15.06% for the twelvemonth period ended June 30, 2013, but modestly underperformed the MSCI EAFE Growth Index, which appreciated +18.67%. The Fund’s top contributing sectors to absolute performance were information technology, financials, industrials, and health care. On a geographic basis, European and Japanese stocks led the rest of international markets. Much of the performance in European stocks was a “bounce off the bottom” from last summer’s financial crisis lows. Over the last six months, the Japanese equity market responded positively to Prime Minister Shizo Abe’s economic policy agenda, even though the agenda has yet to be proven.
The top two contributing industries to relative performance were materials and technology hardware. The combination of good stock selection, the underweight position in materials, and overweight position in technology hardware relative to the Index led to the strong relative performance. Finally the retailing, insurance, energy, and semiconductor industries all contributed to the relative performance due to either stock selection or the allocation effect. While those industries all contributed to relative performance, the automobile, media, telecommunications, and consumer services industries all took away to performance due to less than stellar stock selection.
On a regional basis, euro area stocks contributed the most to relative performance due to strong stock selection and the underweight position. The UK was the largest detractor to relative performance due to negative stock selection and the overweight position in a country that lagged the Index.
The Fund’s largest regional exposure remains Europe. In this region, valuations are attractive relative to historical measures. The Fund remains globally diversified. Holdings have exposure to not only Europe, but also to emerging markets (Asia, Latin America, Eastern Europe, and South Africa), along with the U.S. These securities have high quality characteristics such as strong balance sheets, good cash flow, stable and/or improving sales and earnings, and improving margins. The Fund has a broad exposure to a variety of sectors including cyclical securities, consumption stocks, and financials.
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.
In Asia, the Japanese equity market has been considered a safe haven for the past several years; however this no longer appears to be the case given the structural risks to the economy and the unproven nature of Mr.Abe’s economic policies. The Fund remains underweight Japan with a focus on defensive consumption-driven companies and export-oriented businesses. Elsewhere in Asia, China has been the main growth engine for the global economy, but its economy continues to decelerate. Higher wages in China are beginning to push manufacturing overseas to less expensive countries in Southeast Asia and Mexico. China is emphasizing a shift in its economy to consumption. Given the cautious stance on China over the near term, the Fund’s holdings remain defensively positioned.
Roger J. Sit Tasha M. Murdoff
Portfolio Managers
| | |
32 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2013
| | | | | | | | | | | | |
| | | Sit
International
Growth
Fund | | | MSCI
EAFE
Growth
Index 1 | | | MSCI
EAFE
Index 2 | |
One Year | | | 15.06 | % | | | 18.67 | % | | | 18.62 | % |
Five Year | | | -1.93 | | | | -0.38 | | | | -0.63 | |
Ten Year | | | 5.93 | | | | 7.62 | | | | 7.67 | |
Since Inception (11/1/91) | | | 3.88 | | | | 3.89 | | | | 5.18 | |
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 | | | 64.4% | | | | 62.6% | |
Asia | | | 26.3% | | | | 36.9% | |
Other | | | 6.4% | | | | 0.5% | |
Cash & Other Net Assets | | | 2.9% | | | | — | |
Based on total net assets as of June 30, 2013. Subject to change.
PORTFOLIO SUMMARY
| | |
Net Asset Value 6/30/13: | | $ 15.05 Per Share |
Net Asset Value 6/30/12: | | $ 13.29 Per Share |
Total Net Assets: | | $ 20.9 Million |
Weighted Average Market Cap: | | $ 60.8 Billion |
TOP 10 HOLDINGS
1. Nestle SA
2. Diageo, PLC, ADR
3. Royal Dutch Shell, PLC, ADR
4. Centrica, PLC
5. British American Tobacco, PLC
6. Roche Holding AG
7. BHP Billiton, Ltd.
8. Syngenta AG
9. Pearson, PLC, ADR
10. Honda Motor Co., Ltd.
Based on total net assets as of June 30, 2013. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of June 30, 2013. Subject to change.
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit International Growth Fund
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Common Stocks - 97.1% | | |
| |
Africa/Middle East - 0.9% | | |
| |
South Africa - 0.9% | | |
4,500 | | Sasol, Ltd., ADR | | 194,895 |
| | | | |
| |
Asia - 26.3% | | |
| |
Australia - 5.5% | | |
7,575 | | Australia & New Zealand Banking Group, Ltd. | | 196,643 |
18,750 | | BHP Billiton, Ltd. | | 539,680 |
2,400 | | Rio Tinto, PLC, ADR | | 98,591 |
2,300 | | Westpac Banking Corp., ADR | | 303,347 |
| | | | |
| | |
| | | | 1,138,261 |
| | | | |
| |
China/Hong Kong - 3.6% | | |
33,950 | | HSBC Holdings, PLC | | 351,901 |
9,860 | | HSBC Holdings, PLC | | 102,073 |
4,900 | | New Oriental Education & Tech. Group, ADR | | 108,535 |
8,880 | | Standard Chartered, PLC | | 192,789 |
| | | | |
| | |
| | | | 755,298 |
| | | | |
| |
Japan - 14.5% | | |
41,000 | | Daicel Corp. | | 358,339 |
700 | | Fanuc, Ltd. | | 101,309 |
13,800 | | Honda Motor Co., Ltd. | | 512,662 |
6,100 | | Japan Tobacco, Inc. | | 215,315 |
14,100 | | Komatsu, Ltd. | | 324,750 |
18,000 | | Kubota Corp. | | 261,961 |
4,800 | | Makita Corp. | | 258,059 |
9,100 | | Seven & I Holdings Co., Ltd. | | 333,272 |
1,100 | | SMC Corp. | | 220,523 |
3,900 | | Softbank Corp. | | 227,019 |
4,900 | | Sumitomo Mitsui Financial Group, Inc. | | 224,288 |
| | | | |
| | |
| | | | 3,037,497 |
| | | | |
| |
Singapore - 1.8% | | |
5,000 | | Avago Technologies, Ltd. | | 186,900 |
15,000 | | DBS Group Holdings, Ltd. | | 182,519 |
| | | | |
| | |
| | | | 369,419 |
| | | | |
| |
South Korea - 0.9% | | |
330 | | Samsung Electronics Co., Ltd., GDR | | 192,390 |
| | | | |
| |
Europe - 64.4% | | |
| |
Denmark - 1.1% | | |
1,525 | | Novo Nordisk A/S | | 237,080 |
| | | | |
| |
France - 6.6% | | |
3,985 | | BNP Paribas SA | | 218,158 |
2,525 | | Dassault Systemes SA | | 308,622 |
5,900 | | Ingenico | | 392,609 |
2,020 | | Sanofi | | 208,828 |
3,450 | | Schlumberger, Ltd. | | 247,227 |
| | | | |
| | |
| | | | 1,375,444 |
| | | | |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Germany - 6.9% | | |
2,930 | | Adidas AG | | 316,728 |
2,750 | | Allianz SE | | 401,391 |
1,160 | | Muenchener Rueckver | | 213,106 |
900 | | Rational AG | | 301,303 |
1,015 | | Volkswagen AG | | 205,012 |
| | | | |
| | |
| | | | 1,437,540 |
| | | | |
| |
Ireland - 2.0% | | |
6,550 | | Covidien, PLC | | 411,602 |
| | | | |
| |
Italy - 2.5% | | |
8,400 | | Eni SpA | | 172,400 |
23,600 | | Prada SpA | | 212,819 |
3,600 | | Tenaris SA, ADR | | 144,971 |
| | | | |
| | |
| | | | 530,190 |
| | | | |
| |
Netherlands - 2.4% | | |
2,450 | | ASML Holding NV | | 193,795 |
33,700 | | ING Groep NV * | | 307,986 |
| | | | |
| | |
| | | | 501,781 |
| | | | |
| |
Norway - 2.0% | | |
10,500 | | Seadrill, Ltd. | | 427,770 |
| | | | |
| |
Spain - 2.7% | | |
17,300 | | Banco Bilbao Vizcaya Argentaria SA, ADR | | 145,493 |
3,350 | | Inditex SA | | 413,205 |
| | | | |
| | |
| | | | 558,698 |
| | | | |
| |
Sweden - 1.0% | | |
2,700 | | Autoliv, Inc. | | 208,953 |
| | | | |
| |
Switzerland - 15.9% | | |
8,195 | | Credit Suisse Group AG, ADR | | 216,840 |
10,200 | | Nestle SA | | 669,328 |
5,225 | | Novartis AG | | 370,090 |
2,175 | | Roche Holding AG | | 539,829 |
228 | | SGS SA | | 489,498 |
1,925 | | Sulzer AG | | 307,390 |
360 | | Swatch Group AG | | 196,646 |
1,370 | | Syngenta AG | | 534,244 |
| | | | |
| | |
| | | | 3,323,865 |
| | | | |
| |
United Kingdom - 21.3% | | |
11,570 | | British American Tobacco, PLC | | 593,424 |
16,370 | | Burberry Group, PLC | | 336,774 |
110,300 | | Centrica, PLC | | 603,313 |
5,450 | | Diageo, PLC, ADR | | 626,477 |
9,350 | | GlaxoSmithKline, PLC, ADR | | 467,220 |
28,900 | | Pearson, PLC, ADR | | 517,599 |
4,430 | | Reckitt Benckiser Group, PLC | | 313,365 |
9,400 | | Royal Dutch Shell, PLC, ADR | | 622,938 |
3,485 | | Shire, PLC | | 110,441 |
86,330 | | Vodafone Group, PLC | | 247,395 |
| | | | |
| | |
| | | | 4,438,946 |
| | | | |
| | | | |
See accompanying notes to financial statements | | | | |
34 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Latin America - 1.6% | | |
| |
Argentina - 0.7% | | |
1,300 | | MercadoLibre, Inc. | | 140,087 |
| | | | |
| |
Brazil - 0.9% | | |
3,800 | | AGCO Corp. | | 190,722 |
| | | | |
| |
North America - 3.9% | | |
| |
Bermuda - 0.8% | | |
1,850 | | PartnerRe, Ltd. | | 167,536 |
| | | | |
| |
Canada - 3.1% | | |
2,100 | | Canadian National Railway Co. | | 204,267 |
3,300 | | Lululemon Athletica, Inc. * | | 216,216 |
5,700 | | Rogers Communications, Inc. | | 223,440 |
| | | | |
| | |
| | | | 643,923 |
| | | | |
| |
Total Common Stocks
(cost: $16,500,321) | | 20,281,897 |
| | | | |
| |
Total Investments in Securities - 97.1%
(cost: $16,500,321) | | 20,281,897 |
| |
Other Assets and Liabilities, net - 2.9% | | 608,134 |
| | | | |
| |
Total Net Assets - 100.0% | | $20,890,031 |
| | | | |
| * | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
ADR — American Depositary Receipt
GDR — Global Depositary Receipt
PLC — Public Limited Company
See accompanying notes to financial statements
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit International Growth Fund (Continued)
A summary of the levels for the Fund’s investments as of June 30, 2013 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1
Quoted
Price ($) | | | Level 2
Other significant
observable inputs ($) | | | Level 3 Significant
unobservable inputs ($) | | Total ($) | |
Common Stocks | | | | | | | | | | | | | | |
Argentina | | | 140,087 | | | | — | | | — | | | 140,087 | |
Australia | | | 401,938 | | | | 736,323 | | | — | | | 1,138,261 | |
Bermuda | | | 167,536 | | | | — | | | — | | | 167,536 | |
Brazil | | | 190,722 | | | | — | | | — | | | 190,722 | |
Canada | | | 643,923 | | | | — | | | — | | | 643,923 | |
China/Hong Kong | | | 108,535 | | | | 646,763 | | | — | | | 755,298 | |
Denmark | | | — | | | | 237,080 | | | — | | | 237,080 | |
France | | | 247,227 | | | | 1,128,217 | | | — | | | 1,375,444 | |
Germany | | | — | | | | 1,437,540 | | | — | | | 1,437,540 | |
Ireland | | | 411,602 | | | | — | | | — | | | 411,602 | |
Italy | | | 144,971 | | | | 385,219 | | | — | | | 530,190 | |
Japan | | | — | | | | 3,037,497 | | | — | | | 3,037,497 | |
Netherlands | | | 193,795 | | | | 307,986 | | | — | | | 501,781 | |
Norway | | | 427,770 | | | | — | | | — | | | 427,770 | |
Singapore | | | 186,900 | | | | 182,519 | | | — | | | 369,419 | |
South Africa | | | 194,895 | | | | — | | | — | | | 194,895 | |
South Korea | | | 192,390 | | | | — | | | — | | | 192,390 | |
Spain | | | 145,493 | | | | 413,205 | | | — | | | 558,698 | |
Sweden | | | 208,953 | | | | — | | | — | | | 208,953 | |
Switzerland | | | 216,840 | | | | 3,107,025 | | | — | | | 3,323,865 | |
United Kingdom | | | 2,234,234 | | | | 2,204,712 | | | — | | | 4,438,946 | |
| | | | |
Total: | | | 6,457,811 | | | | 13,824,086 | | | — | | | 20,281,897 | |
The Fund adjusts the closing price of foreign equity securities by applying a systematic process for events occurring after the close of the foreign exchanges. 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 ANNUAL REPORT | |
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|
|
| |
Sit Developing Markets Growth Fund |
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.
The Sit Development Markets Growth Fund slightly outperformed the MSCI Emerging Markets Index, rising +0.36% versus +0.32% for the Index. The relative performance gain was made in the first six months of 2013. As markets grew more volatile and emerging markets sold off more than other international stocks, the Fund gained traction relative to the Index. The more conservative style and high quality nature of the Fund were the two key reasons. The Fund continues to hold companies with strong, experienced management teams, sound balance sheets, cash flow generation, and sustainable earnings and revenue growth.
The capital goods and utilities industries meaningfully contributed the relative outperformance over the last twelve months thanks to great stock selection. The media industry also positively impacted relative performance given the overweight position (relative to the Index) and good stock selection. Partially offsetting the above relative performance was the negative stock selection and underweight in the banking industry, which outperformed the overall Index. Consumer services also negatively impacted the Fund due to poor stock selection.
On a country basis, South Africa, Korea, and Brazil contributed the most to relative performance. All three proved to have positive stock selection even though all three countries underperformed the Index in U.S. dollar terms. China and Mexico took away absolute performance, due to less-than-stellar stock selection.
China has been the main growth engine for the global economy, but its economy continues to decelerate. Higher wages in China are beginning to push manufacturing overseas to less expensive countries in Southeast Asia and Mexico. Southeast Asian economic growth will be strong in 2013, growing at around 5.0% for Indonesia, Malaysia, the Philippines, and Thailand, driven by domestic consumption. The shift in manufacturing to these countries, together with a young population, will further increase consumption. Given our cautious stance on the economic growth prospects in China over the near term, we remain defensive.
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.
Latin America continues to lose steam, driven by Brazil and recent weakness in Mexico. Brazil’s economy has been affected by the slowdown in China’s demand for raw materials. Slower economic growth has hurt the consumer. Moreover, in late June, a political crisis erupted with riots that included more than 300,000 protesters. The unrest began over a 7% increase in bus fares (since rescinded), but it is also a reflection of anger over the government’s focus on the upcoming World Cup in 2014 and Olympics in 2016, and not enough attention on infrastructure improvement for the rest of the population. Mexi-co’s economy was also weak because of slower growth from the United States, its main trading partner.Within LatinAmerica the focus remains on high quality growth stocks.
Roger J. Sit
Raymond E. Sit
Portfolio Managers
| | |
38 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURN
as of June 30, 2013
| | | | | | | | | | | | |
| | | Sit
Developing
Markets
Growth
Fund | | | MSCI
Emerging
Markets
Index 1 | | | MSCI
Emerging
Markets
Growth
Index 2 | |
One Year | | | 0.36 | % | | | 0.32 | % | | | 4.88 | % |
Five Year | | | -3.71 | | | | -2.86 | | | | -2.48 | |
Ten Year | | | 10.49 | | | | 10.95 | | | | 10.50 | |
Since Inception (7/1/94) | | | 4.28 | | | | 3.61 | | | | n/a | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. 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 | | | 59.5% | | | | 62.5% | |
Latin America | | | 28.2% | | | | 20.2% | |
Africa/Middle East | | | 9.9% | | | | 7.5% | |
Europe | | | 1.1% | | | | 9.8% | |
Cash & Other Net Assets | | | 1.3% | | | | — | |
Based on total net assets as of June 30, 2013. Subject to change.
PORTFOLIO SUMMARY
| | |
Net Asset Value 6/30/13: | | $ 16.40 Per Share |
Net Asset Value 6/30/12: | | $ 17.70 Per Share |
Total Net Assets: | | $ 10.6 Million |
Weighted Average Market Cap: | | $ 35.1 Billion |
TOP 10 HOLDINGS
1. Samsung Electronics Co., Ltd.
2. Cia de Bebidas das Americas, ADR
3. Hengan International Group Co., Ltd.
4. Embraer SA, ADR
5. Tencent Holdings, Ltd.
6. Bangkok Bank PCL
7. Naspers, Ltd.
8. BHP Billiton, Ltd., ADR
9. Banco Bradesco SA
10. CNOOC, Ltd., ADR
Based on total net assets as of June 30, 2013. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of June 30, 2013. Subject to change.
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit Developing Markets Growth Fund
| | | | | | |
| | | |
| Quantity | | Name of Issuer | | Fair Value ($) | |
| |
Common Stocks - 98.7% | | | | |
| |
Africa/Middle East - 9.9% | | | | |
| |
Israel - 1.1% | | | | |
3,300 | | NICE Systems, Ltd., ADR | | | 121,737 | |
| | | | | | |
South Africa - 8.8% | | | | |
6,275 | | Bidvest Group, Ltd. | | | 155,469 | |
11,500 | | MTN Group, Ltd. | | | 213,893 | |
4,180 | | Naspers, Ltd. | | | 308,533 | |
5,800 | | Sasol, Ltd., ADR | | | 251,198 | |
| | | | | | |
| | |
| | | | | 929,093 | |
| | | | | | |
| |
Asia - 59.5% | | | | |
| |
Australia - 3.8% | | | | |
5,175 | | BHP Billiton, Ltd., ADR | | | 298,390 | |
2,300 | | Rio Tinto, Ltd. | | | 110,229 | |
| | | | | | |
| | |
| | | | | 408,619 | |
| | | | | | |
| |
China/Hong Kong - 23.6% | | | | |
160,000 | | Belle International Holdings, Ltd. | | | 218,733 | |
4,200 | | China Life Insurance Co., Ltd., ADR | | | 146,496 | |
26,000 | | China Mengniu Dairy Co., Ltd. | | | 92,809 | |
104,000 | | China Oilfield Services, Ltd. | | | 202,268 | |
53,000 | | China Shenhua Energy Co., Ltd. | | | 134,730 | |
3,600 | | China Unicom Hong Kong, Ltd., ADR | | | 47,303 | |
204,000 | | China ZhengTong Auto Services, Ltd. * | | | 95,065 | |
1,725 | | CNOOC, Ltd., ADR | | | 288,903 | |
36,000 | | ENN Energy Holdings, Ltd. | | | 190,680 | |
31,500 | | Hengan International Group Co., Ltd. | | | 342,251 | |
7,600 | | New Oriental Education & Tech. Group, ADR | | | 168,340 | |
66,000 | | PetroChina Co., Ltd. | | | 71,568 | |
8,400 | | Tencent Holdings, Ltd. | | | 327,997 | |
149,000 | | Travelsky Technology, Ltd. | | | 94,420 | |
58,000 | | Want Want China Holdings, Ltd. | | | 81,295 | |
| | | | | | |
| | |
| | | | | 2,502,858 | |
| | | | | | |
| |
India - 2.5% | | | | |
4,400 | | ICICI Bank, Ltd., ADR | | | 168,300 | |
3,200 | | Reliance Industries, Ltd., GDR 4 | | | 92,901 | |
| | | | | | |
| | |
| | | | | 261,201 | |
| | | | | | |
| |
Indonesia - 2.7% | | | | |
409,000 | | Astra International Tbk PT | | | 287,521 | |
| | | | | | |
| |
Malaysia - 1.0% | | | | |
5,600 | | British American Tobacco Malaysia | | | 105,354 | |
| | | | | | |
| |
Philippines - 1.5% | | | | |
207,700 | | Manila Water Co., Inc. | | | 155,616 | |
| | | | | | |
| |
Singapore - 0.9% | | | | |
8,000 | | DBS Group Holdings, Ltd. | | | 97,343 | |
| | | | | | |
| | | | | | |
| | | |
| Quantity | | Name of Issuer | | Fair Value ($) | |
| |
South Korea - 13.0% | | | | |
13,025 | | Cheil Worldwide, Inc. * | | | 279,604 | |
760 | | E-Mart Co., Ltd. | | | 133,469 | |
6,317 | | Industrial Bank of Korea | | | 60,259 | |
1,100 | | POSCO, ADR | | | 71,588 | |
480 | | Samsung Electronics Co., Ltd. | | | 561,036 | |
8,500 | | Shinhan Financial Group Co., Ltd. | | | 278,698 | |
| | | | | | |
| | |
| | | | | 1,384,654 | |
| | | | | | |
| |
Taiwan - 4.9% | | | | |
65,856 | | Cathay Financial Holding Co., Ltd. | | | 89,500 | |
29,860 | | Hon Hai Precision Industry Co., Ltd., GDR | | | 144,862 | |
78,482 | | Taiwan Semiconductor Co. | | | 284,112 | |
| | | | | | |
| | |
| | | | | 518,474 | |
| | | | | | |
| |
Thailand - 5.6% | | | | |
13,000 | | Advanced Info Service PCL | | | 117,526 | |
46,600 | | Bangkok Bank PCL | | | 310,370 | |
227,683 | | Siam Global House PCL | | | 170,104 | |
| | | | | | |
| | |
| | | | | 598,000 | |
| | | | | | |
| |
Europe - 1.1% | | | | |
| |
Russia - 1.1% | | | | |
18,550 | | Gazprom OAO, ADR * | | | 121,813 | |
| | | | | | |
| |
Latin America - 28.2% | | | | |
| |
Argentina - 1.5% | | | | |
1,500 | | MercadoLibre, Inc. | | | 161,640 | |
| | | | | | |
| |
Brazil - 20.3% | | | | |
4,150 | | AGCO Corp. | | | 208,288 | |
22,635 | | Banco Bradesco SA | | | 292,146 | |
6,000 | | Cia Brasileira de Distribuicao Grupo Pao de Acucar, ADR | | | 272,760 | |
12,000 | | Cia de Bebidas das Americas, ADR | | | 448,200 | |
9,150 | �� | Embraer SA, ADR | | | 337,544 | |
21,500 | | Petrobras | | | 156,383 | |
9,250 | | Telefonica Brasil SA, ADR | | | 211,085 | |
17,400 | | Vale SA, ADR | | | 228,810 | |
| | | | | | |
| | |
| | | | | 2,155,216 | |
| | | | | | |
| |
Chile - 1.7% | | | | |
7,250 | | Banco Santander Chile, ADR | | | 177,269 | |
| | | | | | |
| |
Mexico - 2.8% | | | | |
6,000 | | America Movil SAB de CV, ADR | | | 130,500 | |
2,500 | | Grupo Televisa SA, ADR | | | 62,099 | |
35,100 | | Wal-Mart de Mexico | | | 98,386 | |
| | | | | | |
| | |
| | | | | 290,985 | |
| | | | | | |
| | | | |
See accompanying notes to financial statements | | | | |
40 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | |
Quantity | | Name of Issuer | | Fair Value ($) |
| |
Peru - 1.9% | | |
7,350 | | Southern Copper Corp. | | 203,009 |
| | | | |
| |
Total Common Stocks
(cost: $8,258,286) | | 10,480,402 |
| | | | |
| |
Total Investments in Securities - 98.7%
(cost: $8,258,286) | | 10,480,402 |
| |
Other Assets and Liabilities, net - 1.3% | | 134,849 |
| | | | |
| |
Total Net Assets - 100.0% | | $10,615,251 |
| | | | |
| * | Non-income producing security. |
| 4 | 144A Restricted Security. The total value of such securities as of June 30, 2013 was $92,901 and represented 0.9% of net assets. This security has been determined to be liquid by the Adviser in accordance with guidelines established by the Board of Directors. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
ADR — American Depositary Receipt
GDR — Global Depositary Receipt
See accompanying notes to financial statements
SCHEDULE OF INVESTMENTS
June 30, 2013
Sit Developing Markets Growth Fund (Continued)
A summary of the levels for the Fund’s investments as of June 30, 2013 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1 Quoted Price ($) | | | Level 2 Other significant
observable inputs ($) | | | Level 3 Significant unobservable inputs ($) | | Total ($) | |
Common Stocks | | | | | | | | | | | | | | |
Argentina | | | 161,640 | | | | — | | | — | | | 161,640 | |
Australia | | | 298,390 | | | | 110,229 | | | — | | | 408,619 | |
Brazil | | | 2,155,216 | | | | — | | | — | | | 2,155,216 | |
Chile | | | 177,269 | | | | — | | | — | | | 177,269 | |
China/Hong Kong | | | 651,042 | | | | 1,851,816 | | | — | | | 2,502,858 | |
India | | | 261,201 | | | | — | | | — | | | 261,201 | |
Indonesia | | | — | | | | 287,521 | | | — | | | 287,521 | |
Israel | | | 121,737 | | | | — | | | — | | | 121,737 | |
Malaysia | | | — | | | | 105,354 | | | — | | | 105,354 | |
Mexico | | | 290,985 | | | | — | | | — | | | 290,985 | |
Peru | | | 203,009 | | | | — | | | — | | | 203,009 | |
Philippines | | | — | | | | 155,616 | | | — | | | 155,616 | |
Russia | | | — | | | | 121,813 | | | — | | | 121,813 | |
Singapore | | | — | | | | 97,343 | | | — | | | 97,343 | |
South Africa | | | 251,198 | | | | 677,895 | | | — | | | 929,093 | |
South Korea | | | 71,588 | | | | 1,313,066 | | | — | | | 1,384,654 | |
Taiwan | | | — | | | | 518,474 | | | — | | | 518,474 | |
Thailand | | | — | | | | 598,000 | | | — | | | 598,000 | |
| | | | |
| | | 4,643,275 | | | | 5,837,127 | | | — | | | 10,480,402 | |
| | | | |
Total: | | | 4,643,275 | | | | 5,837,127 | | | — | | | 10,480,402 | |
The Fund adjusts the closing price of foreign equity securities by applying a systematic process for events occurring after the close of the foreign exchanges. 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 ANNUAL REPORT | |
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STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2013
| | | | | | | | | | | | |
| | | Sit
Balanced
Fund | | | Sit
Dividend
Growth
Fund | | | Sit
Global
Dividend
Growth
Fund | |
ASSETS | | | | | | | | | | | | |
Investments in securities, at identified cost | | | $10,278,290 | | | | $879,501,244 | | | | $14,814,604 | |
| | | | | | | | | | | | |
| | | |
Investments in securities, at fair value - see accompanying schedule for detail | | | $13,074,826 | | | | $1,037,284,902 | | | | $16,964,604 | |
Cash in bank on demand deposit | | | 469,239 | | | | 17,418,955 | | | | 535,779 | |
Accrued interest and dividends receivable | | | 45,240 | | | | 1,368,595 | | | | 41,659 | |
Receivable for investment securities sold | | | 25,755 | | | | 3,087,890 | | | | — | |
Other receivables (note 5) | | | — | | | | — | | | | — | |
Receivable for Fund shares sold | | | — | | | | 2,991,453 | | | | 800 | |
| | | | | | | | | | | | |
| | | |
Total assets | | | 13,615,060 | | | | 1,062,151,795 | | | | 17,542,842 | |
| | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | |
Payable for investment securities purchased | | | 112,129 | | | | 3,886,391 | | | | 71,149 | |
Payable for Fund shares redeemed | | | — | | | | 2,569,553 | | | | — | |
Accrued investment management fees and advisory fees | | | 11,190 | | | | 846,112 | | | | 17,861 | |
Accrued 12b-1 fees (Class S) | | | — | | | | 27,778 | | | | 658 | |
| | | | | | | | | | | | |
| | | |
Total liabilities | | | 123,319 | | | | 7,329,834 | | | | 89,668 | |
| | | | | | | | | | | | |
| | | |
Net assets applicable to outstanding capital stock | | | $13,491,741 | | | | $1,054,821,961 | | | | $17,453,174 | |
| | | | | | | | | | | | |
| | | |
Net assets consist of: | | | | | | | | | | | | |
Capital (par value and paid-in surplus) | | | $11,325,016 | | | | $880,800,816 | | | | $14,617,372 | |
Undistributed (distributions in excess of) net investment income | | | 45,468 | | | | 3,697,176 | | | | 96,078 | |
Accumulated net realized gain (loss) from security transactions and foreign currency transactions | | | (675,279 | ) | | | 12,540,311 | | | | 590,011 | |
Unrealized appreciation (depreciation) on investments and foreign currency transactions | | | 2,796,536 | | | | 157,783,658 | | | | 2,149,713 | |
| | | | | | | | | | | | |
| | | $13,491,741 | | | | $1,054,821,961 | | | | $17,453,174 | |
| | | | | | | | | | | | |
| | | |
Outstanding shares: | | | | | | | | | | | | |
Common Shares (Class I) * | | | 732,531 | | | | 56,300,069 | | | | 994,703 | |
| | | | | | | | | | | | |
Common Shares (Class S) * | | | — | | | | 8,254,378 | | | | 228,532 | |
| | | | | | | | | | | | |
| | | |
Net assets applicable to outstanding shares: | | | | | | | | | | | | |
Common Shares (Class I) * | | | $13,491,741 | | | | $920,323,751 | | | | $14,196,272 | |
| | | | | | | | | | | | |
Common Shares (Class S) * | | | — | | | | 134,498,210 | | | | 3,256,902 | |
| | | | | | | | | | | | |
| | | |
Net asset value per share of outstanding capital stock: | | | | | | | | | | | | |
Common Shares (Class I) * | | | $18.42 | | | | $16.35 | | | | $14.27 | |
| | | | | | | | | | | | |
Common Shares (Class S) * | | | — | | | | $16.29 | | | | $14.25 | |
| | | | | | | | | | | | |
* 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 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 | |
| | | | | | | | | | | | | | | | | | | |
| | $136,860,453 | | | | $94,373,730 | | | | $58,991,128 | | | | $16,500,321 | | | | $8,258,286 | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | $193,532,797 | | | | $148,628,192 | | | | $84,038,689 | | | | $20,281,897 | | | | $10,480,402 | |
| | 2,502,700 | | | | 3,782,658 | | | | 894,385 | | | | 275,755 | | | | 106,494 | |
| | 199,884 | | | | 76,876 | | | | 20,110 | | | | 110,523 | | | | 38,899 | |
| | 1,800,154 | | | | — | | | | 163,737 | | | | — | | | | — | |
| | — | | | | — | | | | — | | | | 275,505 | | | | — | |
| | 4,784 | | | | 1,772 | | | | 75 | | | | — | | | | 7,279 | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | 198,040,319 | | | | 152,489,498 | | | | 85,116,996 | | | | 20,943,680 | | | | 10,633,074 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | 1,266,004 | | | | 170,240 | | | | 200,894 | | | | 23,401 | | | | — | |
| | 324,321 | | | | 32,657 | | | | 18,595 | | | | 4,001 | | | | — | |
| | 165,344 | | | | 157,853 | | | | 104,763 | | | | 26,247 | | | | 17,823 | |
| | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | 1,755,669 | | | | 360,750 | | | | 324,252 | | | | 53,649 | | | | 17,823 | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | $196,284,650 | | | | $152,128,748 | | | | $84,792,744 | | | | $20,890,031 | | | | $10,615,251 | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | |
| | $127,205,868 | | | | $90,424,616 | | | | $61,373,289 | | | | $19,969,786 | | | | $7,780,497 | |
| | 794,468 | | | | — | | | | — | | | | 197,482 | | | | 16,575 | |
|
11,611,970 |
| | | 7,449,670 | | | | (1,628,106 | ) | | | (3,055,668 | ) | | | 596,506 | |
|
56,672,344 |
| | | 54,254,462 | | | | 25,047,561 | | | | 3,778,431 | | | | 2,221,673 | |
| | | | | | | | | | | | | | | | | | |
| | $196,284,650 | | | | $152,128,748 | | | | $84,792,744 | | | | $20,890,031 | | | | $10,615,251 | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | |
| | 4,129,861 | | | | 8,600,172 | | | | 1,693,123 | | | | 1,388,395 | | | | 647,452 | |
| | | | | | | | | | | | | | | | | | |
| | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | |
| | $196,284,650 | | | | $152,128,748 | | | | $84,792,744 | | | | $20,890,031 | | | | $10,615,251 | |
| | | | | | | | | | | | | | | | | | |
| | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | |
| | $47.53 | | | | $17.69 | | | | $50.08 | | | | $15.05 | | | | $16.40 | |
| | | | | | | | | | | | | | | | | | |
| | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | |
STATEMENTS OF OPERATIONS
Year Ended June 30, 2013
| | | | | | | | | | | | |
| | | Sit
Balanced
Fund | | | Sit
Dividend
Growth
Fund | | | Sit
Global
Dividend
Growth
Fund | |
Investment income: | | | | | | | | | | | | |
Income: | | | | | | | | | | | | |
Dividends* | | | $169,808 | | | | $23,583,011 | | | | $462,357 | |
Interest | | | 151,359 | | | | — | | | | — | |
| | | | | | | | | | | | |
Total income | | | 321,167 | | | | 23,583,011 | | | | 462,357 | |
| | | | | | | | | | | | |
| | | |
Expenses (note 4): | | | | | | | | | | | | |
Investment management and advisory service fee | | | 127,525 | | | | 8,481,022 | | | | 188,601 | |
12b-1 fees (Class S) | | | — | | | | 297,557 | | | | 6,920 | |
| | | | | | | | | | | | |
Total expenses | | | 127,525 | | | | 8,778,579 | | | | 195,521 | |
| | | | | | | | | | | | |
| | | |
Net investment income (loss) | | | 193,642 | | | | 14,804,432 | | | | 266,836 | |
| | | | | | | | | | | | |
| | | |
Realized and unrealized gain (loss): | | | | | | | | | | | | |
Net realized gain (loss) on investments | | | 102,059 | | | | 22,700,812 | | | | 682,074 | |
Net realized gain (loss) on foreign currency transactions | | | — | | | | — | | | | (104 | ) |
| | | |
Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | | | 923,868 | | | | 111,370,988 | | | | 1,238,541 | |
| | | | | | | | | | | | |
| | | |
Net gain (loss) | | | 1,025,927 | | | | 134,071,800 | | | | 1,920,511 | |
| | | | | | | | | | | | |
| | | |
Net increase (decrease) in net assets resulting from operations | | | $1,219,569 | | | | $148,876,232 | | | | $2,187,347 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | | |
| | | |
* Foreign taxes withheld on dividends received | | | $480 | | | | $63,648 | | | | $8,005 | |
| | | | |
See accompanying notes to financial statements. | | | | |
46 | | | SIT MUTUAL FUNDS 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 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | $4,265,080 | | | | $1,607,552 | | | | $697,100 | | | | $593,228 | | | | $263,244 | |
| | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | |
| | 4,265,080 | | | | 1,607,552 | | | | 697,100 | | | | 593,228 | | | | 263,244 | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | |
| | 2,219,300 | | | | 1,854,434 | | | | 1,211,421 | | | | 307,540 | | | | 235,309 | |
| | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | |
| | 2,219,300 | | | | 1,854,434 | | | | 1,211,421 | | | | 307,540 | | | | 235,309 | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | 2,045,780 | | | | (246,882 | ) | | | (514,321 | ) | | | 285,688 | | | | 27,935 | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | |
| | 30,360,515 | | | | 7,449,677 | | | | 4,028,160 | | | | 1,315,086 | | | | 825,698 | |
| | — | | | | — | | | | — | | | | (1,149 | ) | | | 149 | |
| | | | |
|
(2,912,175) |
| | | 12,813,030 | | | | 7,149,264 | | | | 1,196,714 | | | | (765,583 | ) |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | 27,448,340 | | | | 20,262,707 | | | | 11,177,424 | | | | 2,510,651 | | | | 60,264 | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | $29,494,120 | | | | $20,015,825 | | | | $10,663,103 | | | | $2,796,339 | | | | $88,199 | |
| | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | |
| | $8,174 | | | | $1,271 | | | | $1,540 | | | | $32,163 | | | | $26,719 | |
STATEMENTS OF CHANGES IN NET ASSETS
| | | | | | | | | | | | | | | | |
| | | Sit Balanced Fund | | | Sit Dividend Growth Fund | |
| | | Year Ended
June 30,
2013 | | | Year Ended
June 30,
2012 | | | Year Ended
June 30,
2013 | | | Year Ended
June 30,
2012 | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) | | | $193,642 | | | | $193,914 | | | | $14,804,432 | | | | $8,772,052 | |
Net realized gain (loss) on investments and foreign currency transactions | | | 102,059 | | | | 291,129 | | | | 22,700,812 | | | | 4,527,727 | |
Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | | | 923,868 | | | | 14,485 | | | | 111,370,988 | | | | 13,514,965 | |
| | | | | | | | | | | | | | | | |
Net increase (decrease) in net assets resulting from operations | | | 1,219,569 | | | | 499,528 | | | | 148,876,232 | | | | 26,814,744 | |
| | | | | | | | | | | | | | | | |
| | | | |
Distributions from: | | | | | | | | | | | | | | | | |
Net investment income | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (196,000 | ) | | | (167,000 | ) | | | (11,965,578 | ) | | | (6,136,804 | ) |
Common shares (Class S) | | | — | | | | — | | | | (1,731,523 | ) | | | (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 | | | (196,000 | ) | | | (167,000 | ) | | | (25,495,341 | ) | | | (10,297,259 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Capital share transactions: | | | | | | | | | | | | | | | | |
Proceeds from shares sold | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 2,160,216 | | | | 835,851 | | | | 391,479,786 | | | | 386,618,169 | |
Common shares (Class S) | | | — | | | | — | | | | 45,123,682 | | | | 57,987,284 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 194,442 | | | | 165,623 | | | | 8,486,434 | | | | 2,714,201 | |
Common shares (Class S) | | | — | | | | — | | | | 3,416,911 | | | | 1,479,873 | |
Payments for shares redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (1,707,960 | ) | | | (662,941 | ) | | | (205,257,111 | ) | | | (111,475,601 | ) |
Common shares (Class S) | | | — | | | | — | | | | (32,353,411 | ) | | | (17,633,797 | ) |
| | | | | | | | | | | | | | | | |
Increase (decrease) in net assets from capital transactions. | | | 646,698 | | | | 338,533 | | | | 210,896,291 | | | | 319,690,129 | |
| | | | | | | | | | | | | | | | |
Total increase (decrease) in net assets | | | 1,670,267 | | | | 671,061 | | | | 334,277,182 | | | | 336,207,614 | |
| | | | |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 11,821,474 | | | | 11,150,413 | | | | 720,544,779 | | | | 384,337,165 | |
| | | | | | | | | | | | | | | | |
End of period * | | | $13,491,741 | | | | $11,821,474 | | | | $1,054,821,961 | | | | $720,544,779 | |
| | | | | | | | | | | | | | | | |
| | | | |
Capital transactions in shares: | | | | | | | | | | | | | | | | |
Sold | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 119,571 | | | | 50,113 | | | | 25,170,642 | | | | 28,454,189 | |
Common shares (Class S) | | | — | | | | — | | | | 2,958,887 | | | | 4,335,020 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 11,088 | | | | 10,185 | | | | 574,182 | | | | 206,662 | |
Common shares (Class S) | | | — | | | | — | | | | 232,216 | | | | 113,481 | |
Redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (94,923 | ) | | | (40,716 | ) | | | (13,377,883 | ) | | | (8,316,466 | ) |
Common shares (Class S) | | | — | | | | — | | | | (2,112,078 | ) | | | (1,331,075 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) | | | 35,736 | | | | 19,582 | | | | 13,445,966 | | | | 23,461,811 | |
| | | | | | | | | | | | | | | | |
* includes undistributed net investment income (loss) | | | $45,468 | | | | $47,269 | | | | $3,697,176 | | | | $2,740,097 | |
| | | | |
See accompanying notes to financial statements. | | | | |
48 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | | | | | | | | | | | | | | | |
| Sit Global Dividend Growth Fund | | | Sit Large Cap Growth Fund | | | Sit Mid Cap Growth Fund | |
Year Ended
June 30,
2013 | | | Year Ended
June 30,
2012 | | | Year Ended
June 30,
2013 | | | Year Ended
June 30,
2012 | | | Year Ended
June 30,
2013 | | | Year Ended
June 30,
2012 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | $266,836 | | | | $192,469 | | | | $2,045,780 | | | | $1,777,799 | | | | ($246,882 | ) | | | ($480,599 | ) |
|
681,970 |
| | | (12,776 | ) | | | 30,360,515 | | | | 27,810,923 | | | | 7,449,677 | | | | 6,985,144 | |
|
1,238,541 |
| | | (308,151 | ) | | | (2,912,175 | ) | | | (22,004,874 | ) | | | 12,813,030 | | | | (8,630,862 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | 2,187,347 | | | | (128,458 | ) | | | 29,494,120 | | | | 7,583,848 | | | | 20,015,825 | | | | (2,126,317 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (196,378 | ) | | | (136,621 | ) | | | (2,065,000 | ) | | | (2,117,000 | ) | | | — | | | | — | |
| | (39,623 | ) | | | (30,379 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | (68,213 | ) | | | (90,583 | ) | | | (16,571,341 | ) | | | — | | | | (3,183,573 | ) | | | — | |
| | (15,464 | ) | | | (23,745 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | (319,678 | ) | | | (281,328 | ) | | | (18,636,341 | ) | | | (2,117,000 | ) | | | (3,183,573 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 3,225,955 | | | | 3,330,147 | | | | 10,446,065 | | | | 24,201,382 | | | | 5,582,140 | | | | 5,259,839 | |
| | 829,670 | | | | 1,310,129 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 259,962 | | | | 224,872 | | | | 18,309,598 | | | | 2,015,056 | | | | 3,080,881 | | | | — | |
| | 55,002 | | | | 54,094 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (1,247,399 | ) | | | (598,820 | ) | | | (97,585,147 | ) | | | (142,471,528 | ) | | | (17,967,678 | ) | | | (23,820,050 | ) |
| | (567,072 | ) | | | (158,928 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | 2,556,118 | | | | 4,161,494 | | | | (68,829,484 | ) | | | (116,255,090 | ) | | | (9,304,657 | ) | | | (18,560,211 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | 4,423,787 | | | | 3,751,708 | | | | (57,971,705 | ) | | | (110,788,242 | ) | | | 7,527,595 | | | | (20,686,528 | ) |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 13,029,387 | | | | 9,277,679 | | | | 254,256,355 | | | | 365,044,597 | | | | 144,601,153 | | | | 165,287,681 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $17,453,174 | | | | $13,029,387 | | | | $196,284,650 | | | | $254,256,355 | | | | $152,128,748 | | | | $144,601,153 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 232,699 | | | | 268,737 | | | | 223,599 | | | | 540,919 | | | | 330,997 | | | | 330,880 | |
| | 59,328 | | | | 107,366 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 19,646 | | | | 18,743 | | | | 417,360 | | | | 49,486 | | | | 189,127 | | | | — | |
| | 4,174 | | | | 4,537 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (87,696 | ) | | | (48,310 | ) | | | (2,094,980 | ) | | | (3,311,258 | ) | | | (1,089,062 | ) | | | (1,571,151 | ) |
| | (43,011 | ) | | | (12,884 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | 185,140 | | | | 338,189 | | | | (1,454,021 | ) | | | (2,720,853 | ) | | | (568,938 | ) | | | (1,240,271 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | $96,078 | | | | $66,928 | | | | $794,468 | | | | $813,688 | | | | — | | | | — | |
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
| | | | | | | | | | | | | | | | |
| | | Sit Small Cap Growth Fund | | | Sit International Growth Fund | |
| | | Year Ended
June 30,
2013 | | | Year Ended
June 30,
2012 | | | Year Ended
June 30,
2013 | | | Year Ended
June 30,
2012 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) | | | ($514,321 | ) | | | ($630,338 | ) | | | $285,688 | | | | $333,300 | |
Net realized gain (loss) on investments and foreign currency transactions | | | 4,028,160 | | | | 6,595,004 | | | | 1,313,937 | | | | (36,363 | ) |
Net change in unrealized appreciation (depreciation) of investments and foreign currency transactions | | | 7,149,264 | | | | (8,427,070 | ) | | | 1,196,714 | | | | (3,006,587 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) in net assets resulting from operations | | | 10,663,103 | | | | (2,462,404 | ) | | | 2,796,339 | | | | (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) | | | 2,569,401 | | | | 4,473,100 | | | | 691,966 | | | | 558,305 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | — | | | | — | | | | 321,167 | | | | 344,445 | |
Payments for shares redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (6,642,060 | ) | | | (18,552,516 | ) | | | (1,892,538 | ) | | | (3,371,988 | ) |
| | | | | | | | | | | | | | | | |
Decrease in net assets from capital transactions | | | (4,072,659 | ) | | | (14,079,416 | ) | | | (879,405 | ) | | | (2,469,238 | ) |
| | | | | | | | | | | | | | | | |
Total increase (decrease) in net assets | | | 6,590,444 | | | | (16,541,820 | ) | | | 1,593,934 | | | | (5,526,888 | ) |
| | | | |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 78,202,300 | | | | 94,744,120 | | | | 19,296,097 | | | | 24,822,985 | |
| | | | | | | | | | | | | | | | |
End of period* | | | $84,792,744 | | | | $78,202,300 | | | | $20,890,031 | | | | $19,296,097 | |
| | | | | | | | | | | | | | | | |
| | | | |
Capital transactions in shares: | | | | | | | | | | | | | | | | |
Sold | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 54,522 | | | | 104,438 | | | | 45,368 | | | | 42,488 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | — | | | | — | | | | 21,759 | | | | 28,187 | |
Redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (142,873 | ) | | | (483,086 | ) | | | (130,179 | ) | | | (257,048 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (88,351 | ) | | | (378,648 | ) | | | (63,052 | ) | | | (186,373 | ) |
| | | | | | | | | | | | | | | | |
*includes undistributed net investment income (loss) | | | — | | | | — | | | | $197,482 | | | | $235,943 | |
| | | | |
See accompanying notes to financial statements. | | | | |
50 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | |
| Sit Developing Markets Growth Fund | |
Year Ended
June 30,
2013 | | | Year Ended
June 30,
2012 | |
| |
| | | | | | | |
| | $27,935 | | | | $35,900 | |
|
825,847 |
| | | 673,110 | |
|
(765,583 |
) | | | (3,117,392 | ) |
| | | | | | |
| | 88,199 | | | | (2,408,382 | ) |
| | | | | | |
| |
| | | | | | | |
| | | | | | | |
| | (36,001 | ) | | | (36,001 | ) |
| | | | | | | |
| | (881,318 | ) | | | (956,672 | ) |
| | | | | | |
| | (917,319 | ) | | | (992,673 | ) |
| | | | | | |
| |
| | | | | | | |
| | | | | | | |
| | 882,833 | | | | 1,890,676 | |
| | | | | | | |
| | 901,850 | | | | 977,185 | |
| | | | | | | |
| | (1,974,407 | ) | | | (3,252,391 | ) |
| | | | | | |
| | (189,724 | ) | | | (384,530 | ) |
| | | | | | |
| | (1,018,844 | ) | | | (3,785,585 | ) |
| |
| | | | | | | |
| | 11,634,095 | | | | 15,419,680 | |
| | | | | | |
| | $10,615,251 | | | | $11,634,095 | |
| | | | | | |
| |
| | | | | | | |
| | | | | | | |
| | 48,716 | | | | 103,103 | |
| | | | | | | |
| | 50,552 | | | | 56,616 | |
| | | | | | | |
| | (109,173 | ) | | | (165,992 | ) |
| | | | | | |
| | (9,905 | ) | | | (6,273 | ) |
| | | | | | |
| | $16,575 | | | | $24,492 | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Balanced Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $16.97 | | | | $16.47 | | | | $14.18 | | | | $12.96 | | | | $16.32 | |
| | | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.27 | | | | 0.29 | | | | 0.27 | | | | 0.35 | | | | 0.41 | |
Net realized and unrealized gains (losses) | | | 1.46 | | | | 0.46 | | | | 2.32 | | | | 1.24 | | | | (3.32 | ) |
Total from operations | | | 1.73 | | | | 0.75 | | | | 2.59 | | | | 1.59 | | | | (2.91 | ) |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.28 | ) | | | (0.25 | ) | | | (0.30 | ) | | | (0.37 | ) | | | (0.45 | ) |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $18.42 | | | | $16.97 | | | | $16.47 | | | | $14.18 | | | | $12.96 | |
Total investment return 2 | | | 10.26% | | | | 4.61% | | | | 18.46% | | | | 12.33% | | | | (17.84% | ) |
Net assets at end of period (000’s omitted) | | | $13,492 | | | | $11,821 | | | | $11,150 | | | | $10,550 | | | | $10,349 | |
| | | | | |
Ratios: 3 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | |
Net investment income | | | 1.52% | | | | 1.75% | | | | 1.75% | | | | 2.44% | | | | 3.12% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 30.86% | | | | 47.01% | | | | 40.84% | | | | 46.79% | | | | 30.26% | |
| 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. |
| | | | |
| | | | |
52 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| Class I | | Years Ended June 30, | |
| | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | $ | 14.10 | | | $ | 13.91 | | | $ | 10.64 | | | $ | 9.60 | | | $ | 13.11 | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.27 | | | | 0.24 | | | | 0.21 | | | | 0.19 | | | | 0.23 | |
Net realized and unrealized gains (losses) | | | 2.46 | | | | 0.26 | | | | 3.23 | | | | 1.03 | | | | (3.09 | ) |
Total from operations | | | 2.73 | | | | 0.50 | | | | 3.44 | | | | 1.22 | | | | (2.86 | ) |
Redemption fees 2 | | | — | | | | — | | | | — | | | | — | | | | — | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.26 | ) | | | (0.21 | ) | | | (0.17 | ) | | | (0.18 | ) | | | (0.26 | ) |
From net realized gains | | | (0.22 | ) | | | (0.10 | ) | | | — | | | | — | | | | (0.39 | ) |
Total distributions | | | (0.48 | ) | | | (0.31 | ) | | | (0.17 | ) | | | (0.18 | ) | | | (0.65 | ) |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | $ | 16.35 | | | $ | 14.10 | | | $ | 13.91 | | | $ | 10.64 | | | $ | 9.60 | |
Total investment return 3 | | | 19.77% | | | | 3.76% | | | | 32.58% | | | | 12.71% | | | | (21.59% | ) |
Net assets at end of period (000’s omitted) | | $ | 920,324 | | | $ | 619,667 | | | $ | 328,057 | | | $ | 39,430 | | | $ | 28,305 | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | |
Net investment income | | | 1.78% | | | | 1.79% | | | | 1.59% | | | | 1.70% | | | | 2.35% | |
Portfolio turnover rate (excluding short-term securities) | | | 26.58% | | | | 26.84% | | | | 14.67% | | | | 31.84% | | | | 69.10% | |
| Class S | | Years Ended June 30, | |
| | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | $ | 14.06 | | | $ | 13.87 | | | $ | 10.61 | | | $ | 9.58 | | | $ | 13.08 | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.23 | | | | 0.21 | | | | 0.17 | | | | 0.16 | | | | 0.21 | |
Net realized and unrealized gains (losses) | | | 2.44 | | | | 0.26 | | | | 3.23 | | | | 1.02 | | | | (3.09 | ) |
Total from operations | | | 2.67 | | | | 0.47 | | | | 3.40 | | | | 1.18 | | | | (2.88 | ) |
Redemption fees 2 | | | — | | | | — | | | | — | | | | — | | | | — | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.22 | ) | | | (0.18 | ) | | | (0.14 | ) | | | (0.15 | ) | | | (0.23 | ) |
From net realized gains | | | (0.22 | ) | | | (0.10 | ) | | | — | | | | — | | | | (0.39 | ) |
Total distributions | | | (0.44 | ) | | | (0.28 | ) | | | (0.14 | ) | | | (0.15 | ) | | | (0.62 | ) |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | $ | 16.29 | | | $ | 14.06 | | | $ | 13.87 | | | $ | 10.61 | | | $ | 9.58 | |
Total investment return 3 | | | 19.39% | | | | 3.53% | | | | 32.27% | | | | 12.37% | | | | (21.79% | ) |
Net assets at end of period (000’s omitted) | | $ | 134,498 | | | $ | 100,878 | | | $ | 56,280 | | | $ | 24,894 | | | $ | 15,730 | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.25% | | | | 1.25% | | | | 1.25% | | | | 1.25% | | | | 1.25% | |
Net investment income | | | 1.53% | | | | 1.54% | | | | 1.34% | | | | 1.45% | | | | 2.10% | |
Portfolio turnover rate (excluding short-term securities) | | | 26.58% | | | | 26.84% | | | | 14.67% | | | | 31.84% | | | | 69.10% | |
| 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. |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Global Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| Class I | | Years Ended June 30, | | | Nine
Months Ended
June 30, | |
| | 2013 | | | 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 | | | 0.25 | | | | 0.24 | | | | 0.20 | | | | 0.17 | | | | 0.15 | |
Net realized and unrealized gains (losses) | | | 1.78 | | | | (0.58 | ) | | | 2.95 | | | | 0.68 | | | | (0.36 | ) |
Total from operations | | | 2.03 | | | | (0.34 | ) | | | 3.15 | | | | 0.85 | | | | (0.21 | ) |
Redemption fees 2 | | | — | | | | — | | | | — | | | | — | | | | — | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.23 | ) | | | (0.22 | ) | | | (0.17 | ) | | | (0.14 | ) | | | (0.09 | ) |
From net realized gains | | | (0.08 | ) | | | (0.15 | ) | | | (0.13 | ) | | | — | | | | — | |
Total distributions | | | (0.31 | ) | | | (0.37 | ) | | | (0.30 | ) | | | (0.14 | ) | | | (0.09 | ) |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $14.27 | | | | $12.55 | | | | $13.26 | | | | $10.41 | | | | $9.70 | |
Total investment return 3 | | | 16.36% | | | | (2.44% | ) | | | 30.55% | | | | 8.79% | | | | (2.06% | ) |
Net assets at end of period (000’s omitted) | | | $14,196 | | | | $10,421 | | | | $7,834 | | | | $2,832 | | | | $2,290 | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.25% | | | | 1.25% | | | | 1.25% | | | | 1.25% | | | | 1.25% | |
Net investment income | | | 1.81% | | | | 1.97% | | | | 1.57% | | | | 1.48% | | | | 2.30% | |
Portfolio turnover rate (excluding short-term securities) | | | 26.15% | | | | 26.65% | | | | 21.84% | | | | 21.60% | | | | 17.69% | 5 |
| | | | | | | | | | | | | | | | | | | | |
| Class S | | Years Ended June 30, | | | Nine Months Ended
June 30, | |
| | 2013 | | | 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 | | | 0.21 | | | | 0.21 | | | | 0.16 | | | | 0.14 | | | | 0.13 | |
Net realized and unrealized gains (losses) | | | 1.78 | | | | (0.57 | ) | | | 2.95 | | | | 0.68 | | | | (0.36 | ) |
Total from operations | | | 1.99 | | | | (0.36 | ) | | | 3.11 | | | | 0.82 | | | | (0.23 | ) |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.20 | ) | | | (0.19 | ) | | | (0.14 | ) | | | (0.12 | ) | | | (0.07 | ) |
From net realized gains | | | (0.08 | ) | | | (0.15 | ) | | | (0.13 | ) | | | — | | | | — | |
Total distributions | | | (0.28 | ) | | | (0.34 | ) | | | (0.27 | ) | | | (0.12 | ) | | | (0.07 | ) |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $14.25 | | | | $12.54 | | | | $13.24 | | | | $10.40 | | | | $9.70 | |
Total investment return 3 | | | 16.01% | | | | (2.60% | ) | | | 30.17% | | | | 8.47% | | | | (2.18% | ) |
Net assets at end of period (000’s omitted) | | | $3,257 | | | | $2,608 | | | | $1,444 | | | | $882 | | | | $740 | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | |
Net investment income | | | 1.56% | | | | 1.72% | | | | 1.32% | | | | 1.23% | | | | 2.05% | |
Portfolio turnover rate (excluding short-term securities) | | | 26.15% | | | | 26.65% | | | | 21.84% | | | | 21.60% | | | | 17.69% | |
| 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. |
| | | | |
| | | | |
54 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Large Cap Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $45.53 | | | | $43.96 | | | | $34.75 | | | | $32.42 | | | | $43.41 | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.43 | | | | 0.26 | | | | 0.22 | | | | 0.22 | | | | 0.28 | |
Net realized and unrealized gains (losses) | | | 5.69 | | | | 1.63 | | | | 9.21 | | | | 2.33 | | | | (11.06 | ) |
Total from operations | | | 6.12 | | | | 1.89 | | | | 9.43 | | | | 2.55 | | | | (10.78 | ) |
Redemption fees | | | — | 2 | | | — | 2 | | | — | 2 | | | — | 2 | | | 0.01 | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.46 | ) | | | (0.32 | ) | | | (0.22 | ) | | | (0.22 | ) | | | (0.22 | ) |
From net realized gains | | | (3.66 | ) | | | — | | | | — | | | | — | | | | — | |
Total distributions | | | (4.12 | ) | | | (0.32 | ) | | | (0.22 | ) | | | (0.22 | ) | | | (0.22 | ) |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $47.53 | | | | $45.53 | | | | $43.96 | | | | $34.75 | | | | $32.42 | |
Total investment return 3 | | | 14.18% | | | | 4.39% | | | | 27.18% | | | | 7.80% | | | | (24.77% | ) |
Net assets at end of period (000’s omitted) | | | $196,285 | | | | $254,256 | | | | $365,045 | | | | $407,359 | | | | $324,071 | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | |
Net investment income | | | 0.92% | | | | 0.61% | | | | 0.54% | | | | 0.58% | | | | 0.85% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 13.42% | | | | 15.06% | | | | 25.36% | | | | 15.93% | | | | 27.98% | |
| 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. |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Mid Cap Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $15.77 | | | | $15.88 | | | | $11.57 | | | | $9.90 | | | | $14.83 | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment loss 1 | | | (0.03 | ) | | | (0.05 | ) | | | (0.06 | ) | | | (0.05 | ) | | | (0.03 | ) |
Net realized and unrealized gains (losses) | | | 2.32 | | | | (0.06 | ) | | | 4.37 | | | | 1.72 | | | | (4.81 | ) |
Total from operations | | | 2.29 | | | | (0.11 | ) | | | 4.31 | | | | 1.67 | | | | (4.84 | ) |
Capital share proceeds | | | — | | | | — | | | | — | 2,3 | | | — | | | | — | |
Redemption fees 2 | | | — | | | | — | | | | — | | | | — | | | | — | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net realized gains | | | (0.37 | ) | | | — | | | | — | | | | — | | | | (0.09 | ) |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $17.69 | | | | $15.77 | | | | $15.88 | | | | $11.57 | | | | $9.90 | |
Total investment return 4 | | | 14.70% | | | | (0.69% | ) | | | 37.25% | 5 | | | 16.87% | | | | (32.51% | ) |
Net assets at end of period (000’s omitted) | | | $152,129 | | | | $144,601 | | | | $165,288 | | | | $130,258 | | | | $127,477 | |
| | | | | |
Ratios: 6, 7 | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.25% | | | | 1.25% | | | | 1.25% | | | | 1.25% | | | | 1.25% | |
Expenses (with waiver) | | | 1.25% | | | | 1.25% | | | | 1.20% | | | | 1.15% | | | | 1.15% | |
Net investment loss (without waiver) | | | (0.17% | ) | | | (0.33% | ) | | | (0.49% | ) | | | (0.52% | ) | | | (0.40% | ) |
Net investment loss (with waiver) | | | (0.17% | ) | | | (0.33% | ) | | | (0.44% | ) | | | (0.42% | ) | | | (0.30% | ) |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 16.91% | | | | 16.23% | | | | 26.98% | | | | 20.39% | | | | 18.07% | |
| 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. |
| 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. |
| | | | |
| | | | |
56 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Small Cap Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | $ | 43.90 | | | $ | 43.86 | | | $ | 31.32 | | | $ | 25.89 | | | $ | 37.44 | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment loss 1 | | | (0.30 | ) | | | (0.34 | ) | | | (0.36 | ) | | | (0.24 | ) | | | (0.16 | ) |
Net realized and unrealized gains (losses) | | | 6.48 | | | | 0.38 | | | | 12.89 | | | | 5.67 | | | | (11.39 | ) |
Total from operations | | | 6.18 | | | | 0.04 | | | | 12.53 | | | | 5.43 | | | | (11.55 | ) |
Capital share proceeds | | | — | | | | — | | | | 0.01 | 2 | | | — | | | | — | |
Redemption fees 3 | | | — | | | | — | | | | — | | | | — | | | | — | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | $ | 50.08 | | | $ | 43.90 | | | $ | 43.86 | | | $ | 31.32 | | | $ | 25.89 | |
Total investment return 4 | | | 14.08% | | | | 0.09% | | | | 40.04% | 5 | | | 20.97% | | | | (30.85% | ) |
Net assets at end of period (000’s omitted) | | $ | 84,793 | | | $ | 78,202 | | | $ | 94,744 | | | $ | 59,848 | | | $ | 58,352 | |
| | | | | |
Ratios: 6 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | |
Net investment loss | | | (0.64% | ) | | | (0.82% | ) | | | (0.91% | ) | | | (0.80% | ) | | | (0.61% | ) |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 28.36% | | | | 22.32% | | | | 30.33% | | | | 22.41% | | | | 26.19% | |
| 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. |
| 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. |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit International Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $13.29 | | | | $15.16 | | | | $11.67 | | | | $10.90 | | | | $17.80 | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.20 | | | | 0.22 | | | | 0.16 | | | | 0.11 | | | | 0.13 | |
Net realized and unrealized gains (losses) | | | 1.80 | | | | (1.86 | ) | | | 3.39 | | | | 0.65 | | | | (6.95 | ) |
Total from operations | | | 2.00 | | | | (1.64 | ) | | | 3.55 | | | | 0.76 | | | | (6.82 | ) |
Capital share proceeds | | | — | | | | — | | | | 0.07 | 2 | | | 0.13 | 2 | | | 0.10 | 2 |
Redemption fees | | | — | | | | — | 3 | | | — | 3 | | | — | 3 | | | — | 3 |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.24 | ) | | | (0.23 | ) | | | (0.13 | ) | | | (0.12 | ) | | | (0.18 | ) |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $15.05 | | | | $13.29 | | | | $15.16 | | | | $11.67 | | | | $10.90 | |
Total investment return 4 | | | 15.06% | | | | (10.69% | ) | | | 31.08% | 5 | | | 8.10% | 5 | | | (37.71% | )5 |
Net assets at end of period (000’s omitted) | | | $20,890 | | | | $19,296 | | | | $24,823 | | | | $20,586 | | | | $21,009 | |
| | | | | |
Ratios: 6, 7 | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.50% | | | | 1.50% | | | | 1.61% | | | | 1.85% | | | | 1.85% | |
Expenses (with waiver) | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | |
Net investment income (without waiver) | | | 1.39% | | | | 1.62% | | | | 1.01% | | | | 0.50% | | | | 0.74% | |
Net investment income (with waiver) | | | 1.39% | | | | 1.62% | | | | 1.12% | | | | 0.85% | | | | 1.09% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 27.93% | | | | 27.82% | | | | 35.95% | | | | 25.09% | | | | 33.12% | |
| 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. |
| | | | |
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58 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Developing Markets Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $17.70 | | | | $23.24 | | | | $19.00 | | | | $16.13 | | | | $25.97 | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.04 | | | | 0.06 | | | | 0.03 | | | | 0.01 | | | | 0.04 | |
Net realized and unrealized gains (losses) | | | 0.14 | | | | (3.89 | ) | | | 4.90 | | | | 2.90 | | | | (9.15 | ) |
Total from operations | | | 0.18 | | | | (3.83 | ) | | | 4.93 | | | | 2.91 | | | | (9.11 | ) |
Capital share proceeds | | | — | | | | — | | | | — | | | | — | | | | 0.09 | 2 |
Redemption fees | | | — | | | | — | 3 | | | — | | | | — | 3 | | | — | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.06 | ) | | | (0.06 | ) | | | (0.02 | ) | | | (0.04 | ) | | | — | |
From net realized gains | | | (1.42 | ) | | | (1.65 | ) | | | (0.67 | ) | | | — | | | | (0.82 | ) |
Total distributions | | | (1.48 | ) | | | (1.71 | ) | | | (0.69 | ) | | | (0.04 | ) | | | (0.82 | ) |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $16.40 | | | | $17.70 | | | | $23.24 | | | | $19.00 | | | | $16.13 | |
Total investment return 4 | | | 0.36% | | | | (16.29% | ) | | | 25.95% | | | | 18.05% | | | | (33.73% | )5 |
Net assets at end of period (000’s omitted) | | | $10,615 | | | | $11,634 | | | | $15,420 | | | | $14,043 | | | | $13,203 | |
| | | | | |
Ratios: 6 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 2.00% | | | | 2.00% | | | | 2.00% | | | | 2.00% | | | | 2.00% | |
Net investment income. | | | 0.24% | | | | 0.29% | | | | 0.15% | | | | 0.06% | | | | 0.24% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 15.48% | | | | 22.56% | | | | 19.14% | | | | 19.90% | | | | 13.56% | |
| 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. |
| 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. |
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 2013
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 the MSCI World 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.
| | | | |
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60 | | | SIT MUTUAL FUNDS 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:
Ÿ 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.
Ÿ 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.
Ÿ Level 3 – significant unobservable inputs, including the Adviser’s own assumptions in determining the fair value of investments.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
A summary of the levels for the Funds’ investments as of June 30, 2013 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 June 30, 2013, no provision for income would be required in the Funds’ financial statements. The Funds’ federal and state income and federal excise returns for the 2010, 2011 and 2012 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.
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 2013 (Continued)
At June 30, 2013, 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 | | | $2,963,164 | | | | ($166,192 | ) | | | $2,796,972 | | | | $10,277,854 | |
Dividend Growth | | | 163,192,377 | | | | (7,072,287 | ) | | | 156,120,090 | | | | 881,164,812 | |
Global Dividend Growth | | | 2,460,449 | | | | (307,874 | ) | | | 2,152,575 | | | | 14,812,029 | |
Large Cap Growth | | | 58,489,977 | | | | (1,821,033 | ) | | | 56,668,944 | | | | 136,863,853 | |
Mid Cap Growth | | | 56,423,107 | | | | (2,168,645 | ) | | | 54,254,462 | | | | 94,373,730 | |
Small Cap Growth | | | 27,612,712 | | | | (2,571,819 | ) | | | 25,040,893 | | | | 58,997,796 | |
International Growth | | | 4,062,272 | | | | (422,405 | ) | | | 3,639,867 | | | | 16,642,030 | |
Developing Markets Growth | | | 2,920,552 | | | | (698,455 | ) | | | 2,222,097 | | | | 8,258,305 | |
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, 2013 and 2012 were as follows:
Year Ended June 30, 2013:
| | | | | | | | | | | | |
| | | | | | Long Term | | | | |
| | | Ordinary Income | | | Capital Gain | | | Total | |
Balanced | | | $196,000 | | | | — | | | | $196,000 | |
Dividend Growth (Class I) | | | 12,385,536 | | | | $9,669,932 | | | | 22,055,468 | |
Dividend Growth (Class S) | | | 1,802,627 | | | | 1,637,246 | | | | 3,439,873 | |
Global Dividend Growth (Class I) | | | 196,378 | | | | 68,213 | | | | 264,591 | |
Global Dividend Growth (Class S) | | | 39,623 | | | | 15,464 | | | | 55,087 | |
Large Cap Growth | | | 2,065,000 | | | | 16,571,341 | | | | 18,636,341 | |
Mid Cap Growth | | | — | | | | 3,183,573 | | | | 3,183,573 | |
Small Cap Growth | | | — | | | | — | | | | — | |
International Growth | | | 323,000 | | | | — | | | | 323,000 | |
Developing Markets Growth | | | 36,001 | | | | 881,318 | | | | 917,319 | |
| | | |
| 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 | |
| | | | |
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62 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
As of June 30, 2013 , the components of distributable earnings on a tax basis were as follows:
| | | | | | |
| | | Undistributed | | | | Unrealized |
| | | Ordinary | | Accumulated | | Appreciation |
| | | Income | | Gain (Loss) | | (Depreciation) |
Balanced | | $45,468 | | ($675,715) | | $2,796,972 |
Dividend Growth | | 5,445,212 | | 12,455,843 | | 156,120,090 |
Global Dividend Growth | | 96,078 | | 587,436 | | 2,152,288 |
Large Cap Growth | | 794,468 | | 11,615,370 | | 56,668,944 |
Mid Cap Growth | | — | | 7,449,670 | | 54,254,462 |
Small Cap Growth | | — | | (1,621,438) | | 25,040,893 |
International Growth | | 197,482 | | (2,913,959) | | 3,636,722 |
Developing Markets Growth | | 16,575 | | 596,525 | | 2,221,654 |
On the statement of assets and liabilities, as a result of permanent book-to-tax differences, reclassification adjustments were made to the following capital accounts:
| | | | | | |
| | | Undistributed | | Accumulated | | |
| | | Net Investment | | Net Realized | | Additional |
| | | Income | | Gain (Loss) | | Paid-in Capital |
Balanced | | $557 | | $655 | | ($1,212) |
Dividend Growth | | (150,252) | | 150,252 | | — |
Global Dividend Growth | | (1,685) | | 1,685 | | — |
Mid Cap Growth | | 246,882 | | — | | (246,882) |
Small Cap Growth | | 514,321 | | — | | (514,321) |
International Growth | | (1,149) | | 1,149 | | — |
Developing Markets Growth | | 149 | | (149) | | — |
These differences were primarily attributable to return of capital dividends received, 988 reclassifications, non-deductible net operating losses and capital loss carryforwards expiring.
Net capital loss carryovers and late year losses, if any, as of June 30, 2013, 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, 2013, were as follows:
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 2013 (Continued)
| | | | | | | | | | | | | | | | |
| | | Pre-Enactment Net Capital Loss
Carryover Expiring in: | | Post-Enactment Unlimited Period of Net
Capital Loss Carryover | | Late Year Losses | | | Accumulated
Capital and | |
| | | 2014 | | 2015-2019 | | Short-Term | | Long-Term | | Deferred | | | Other Losses | |
Balanced | | — | | $661,124 | | — | | — | | | $14,591 | | | | $675,715 | |
Small Cap Growth | | — | | 1,528,246 | | — | | — | | | 93,192 | | | | 1,621,438 | |
International Growth | | — | | 2,913,959 | | — | | — | | | — | | | | 2,913,959 | |
For the year ended June 30, 2013, the Funds’ utilized pre-enactment capital losses and expired capital losses as follows:
| | | | | | | | | | |
| | | Utilized | | | Expiring In | | Expired | |
Balanced | | | $116,608 | | | 2013 | | | $1,212 | |
Large Cap Growth | | | 1,262,091 | | | 2018 | | | — | |
Small Cap Growth | | | 4,078,678 | | | 2018 | | | — | |
International Growth | | | 63,389 | | | 2013 | | | — | |
| | | 370,045 | | | 2017 | | | — | |
| | | 328,996 | | | 2018 | | | — | |
For the year ended June 30, 2013, the Global Dividend Growth Fund utilized post-enactment capital losses of $12,302.
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.
| | | | |
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64 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| (3) | Investment Security Transactions |
The cost of purchases and proceeds from sales and maturities of investment securities, other than short-term securities, for the year ended June 30, 2013, were as follows:
| | | | | | | | | | | | | | | | |
| | | Purchases | | | Proceeds | |
| | | U.S. Government | | | Other | | | U.S. Government | | | Other | |
Balanced | | | $1,651,567 | | | | $3,107,863 | | | | $1,049,875 | | | | $2,720,901 | |
Dividend Growth | | | — | | | | 433,839,221 | | | | — | | | | 220,372,327 | |
Global Dividend Growth | | | — | | | | 6,302,576 | | | | — | | | | 3,868,197 | |
Large Cap Growth | | | — | | | | 29,380,740 | | | | — | | | | 114,583,470 | |
Mid Cap Growth | | | — | | | | 24,658,110 | | | | — | | | | 38,468,496 | |
Small Cap Growth | | | — | | | | 22,390,181 | | | | — | | | | 24,532,833 | |
International Growth | | | — | | | | 5,526,965 | | | | — | | | | 6,405,475 | |
Developing Markets Growth | | | — | | | | 1,786,140 | | | | — | | | | 2,743,512 | |
| (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.
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 2013 (Continued)
Transactions with affiliates
The investment adviser, affiliates of the investment adviser, directors and officers of the Funds as a whole owned the following shares as of June 30, 2013:
| | | | | | | | | | |
| | | | | | % Shares | | | |
| | | Shares | | | Outstanding | | |
Balanced | | | 216,928 | | | | 29.6 | | |
Dividend Growth | | | 840,921 | | | | 1.3 | | |
Global Dividend Growth | | | 459,783 | | | | 37.6 | | |
Large Cap Growth | | | 299,281 | | | | 7.2 | | |
Mid Cap Growth | | | 2,887,188 | | | | 33.6 | | |
Small Cap Growth | | | 803,102 | | | | 47.4 | | |
International Growth | | | 715,902 | | | | 51.6 | | |
Developing Markets Growth | | | 232,545 | | | | 35.9 | | |
| (5) | Capital Share Activity |
Market Timing Settlements
The International Growth Fund expects to receive a settlement for approximately $275,505 from market timing settlements payable to the Fund for the fiscal years ended June 30, 2010 and June 30, 2011. This amount is 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 Fund’s 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 |
International Growth | | | $114,003 | | | 0.60% | | | $229,242 | | | 1.20% |
Short-Term Trading (Redemption) Fees
The Funds (except Balanced) charge a redemption fee equal to 2.00% of the proceeds on shares held for less than 30 calendar days. The fee is retained by the Fund for the benefit of its long-term shareholders and accounted for as an addition to paid in capital. For the year ended June 30, 2013, the Funds received the following redemption fees:
| | | | | | | | | | |
| | | Class I | | | Class S | | | |
Dividend Growth | | | $4,052 | | | | $691 | | |
Global Dividend Growth | | | 2 | | | | — | | |
Large Cap Growth | | | 2,091 | | | | — | | |
Mid Cap Growth | | | 4,610 | | | | — | | |
Small Cap Growth | | | 365 | | | | — | | |
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.
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66 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders:
Sit Mutual Funds, Inc.
Sit Large Cap Growth Fund, Inc.
Sit Mid Cap Growth Fund, Inc.
We have audited the accompanying statements of assets and liabilities of Sit Balanced Fund, Sit Dividend Growth Fund, Sit Global Dividend Growth Fund, Sit Small Cap Growth Fund, Sit International Growth Fund, Sit Developing Markets Growth Fund (each a series of Sit Mutual Funds, Inc.), Sit Large Cap Growth Fund, Inc., and Sit Mid Cap Growth Fund, Inc., including the schedules of investments, as of June 30, 2013, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years or periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2013, by correspondence with the custodian and brokers or by performing other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Sit Balanced Fund, Sit Dividend Growth Fund, Sit Global Dividend Growth Fund, Sit Small Cap Growth Fund, Sit International Growth Fund, Sit Developing Markets Growth Fund, Sit Large Cap Growth Fund, and Sit Mid Cap Growth Fund as of June 30, 2013, the results of their operations for the year then ended, the changes in their net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years or periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
KPMG LLP
Minneapolis, Minnesota
August 20, 2013
EXPENSE EXAMPLE (Unaudited)
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2013 to June 30, 2013.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs (redemption fees) were included, your costs would have been higher.
| | | | | | | | | | | | |
| Fund | | Beginning
Account Value (1/1/13) | | | Ending Account Value (6/30/13) | | | Expenses
Paid During
Period*
(1/1/13-
6/30/13) | |
| Balanced Fund | |
Actual | | | $1,000 | | | | $1,066.60 | | | | $5.12 | |
Hypothetical | | | $1,000 | | | | $1,019.84 | | | | $5.01 | |
| | | | | | | | | | | | |
| Dividend Growth Fund | |
Actual | | | | | | | | | | | | |
Class I | | | $1,000 | | | | $1,131.80 | | | | $5.29 | |
Class S | | | $1,000 | | | | $1,130.20 | | | | $6.60 | |
Hypothetical | | | | | | | | | | | | |
Class I | | | $1,000 | | | | $1,019.84 | | | | $5.01 | |
Class S | | | $1,000 | | | | $1,018.60 | | | | $6.26 | |
| | | | | | | | | | | | |
| Global Dividend Growth Fund | |
Actual | | | | | | | | | | | | |
Class I | | | $1,000 | | | | $1,082.60 | | | | $6.45 | |
Class S | | | $1,000 | | | | $1,081.30 | | | | $7.74 | |
Hypothetical | | | | | | | | | | | | |
Class I | | | $1,000 | | | | $1,018.60 | | | | $6.26 | |
Class S | | | $1,000 | | | | $1,017.36 | | | | $7.50 | |
| | | | | | | | | | | | |
| Large Cap Growth | |
Actual | | | $1,000 | | | | $1,093.90 | | | | $5.19 | |
Hypothetical | | | $1,000 | | | | $1,019.84 | | | | $5.01 | |
| | | | | | | | | | | | |
| Mid Cap Growth Fund | |
Actual | | | $1,000 | | | | $1,089.30 | | | | $6.48 | |
Hypothetical | | | $1,000 | | | | $1,018.60 | | | | $6.26 | |
| | | | | | | | | | | | |
| Small Cap Growth Fund | |
Actual | | | $1,000 | | | | $1,102.40 | | | | $7.82 | |
Hypothetical | | | $1,000 | | | | $1,017.36 | | | | $7.50 | |
| | | | | | | | | | | | |
| International Growth Fund | |
Actual | | | $1,000 | | | | $1,022.40 | | | | $7.52 | |
Hypothetical | | | $1,000 | | | | $1,017.36 | | | | $7.50 | |
| | | | | | | | | | | | |
| Developing Markets Growth Fund | |
Actual | | | $1,000 | | | | $910.10 | | | | $9.47 | |
Hypothetical | | | $1,000 | | | | $1,014.88 | | | | $9.99 | |
*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, Class I and Mid Cap Growth Funds; 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 181/365 (to reflect the one-half year period.)
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68 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FEDERAL TAX INFORMATION (Unaudited)
Sit Equity Funds
For corporate shareholders, the percentage of investment income (dividend income and short-term gains, if any), for each of the Funds that qualify for the Dividends Received Deductions for the period of July 1, 2012 to June 30, 2013 is as follows:
| | | | |
| Fund | | Percentage | |
Balanced Fund | | | 74.5 | % |
Dividend Growth Fund | | | 100.0 | |
Global Dividend Growth Fund | | | 94.4 | |
Large Cap Growth Fund | | | 100.0 | |
Mid Cap Growth Fund | | | — | |
Small Cap Growth Fund | | | — | |
International Growth Fund | | | 5.3 | |
Developing Markets Growth Fund | | | 63.2 | |
For the year ended June 30, 2013, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions made by the following Funds, the corresponding percentages represent the amount of each distribution which may qualify for the 15% dividend income tax rate.
| | | | |
| Fund | | Percentage | |
Balanced Fund | | | 78.3 | % |
Dividend Growth Fund | | | 100.0 | |
Global Dividend Growth Fund | | | 100.0 | |
Large Cap Growth Fund | | | 100.0 | |
Mid Cap Growth Fund | | | — | |
Small Cap Growth Fund | | | — | |
International Growth Fund | | | 100.0 | |
Developing Markets Growth Fund | | | 100.0 | |
The following Funds designated the listed amounts as long-term capital gain dividends during the year ended June 30, 2013. Distributable long-term gains are based on net realized long term gains determined on a tax basis and may differ from such amounts for financial reporting purposes.
| | | | |
| Fund | | Amount | |
Balanced Fund | | | — | |
Dividend Growth Fund | | $ | 20,514,769 | |
Global Dividend Growth Fund | | | 671,113 | |
Large Cap Growth Fund | | | 28,186,711 | |
Mid Cap Growth Fund | | | 7,449,677 | |
Small Cap Growth Fund | | | — | |
International Growth Fund | | | — | |
Developing Markets Growth Fund | | | 881,318 | |
INFORMATION ABOUT DIRECTORS AND OFFICERS (Unaudited)
The Sit Mutual Funds are a family of no-load mutual funds. The Stock Funds described in this Annual Report are the Sit Mid Cap Growth Fund, Sit Large Cap Growth Fund, Sit International Growth Fund, Sit Balanced Fund, Sit Developing Markets Growth Fund, Sit Small Cap Growth Fund, Sit Dividend Growth Fund, and the Sit Global Dividend Growth Fund (the “Funds” or individually, a “Fund”). The bond funds within the Sit Mutual Fund family are described in a separate Bond Funds’ Annual Report. The Sit Mid Cap Growth Fund and Sit Large Cap Growth Fund, and the corporate issuer of the Sit International Growth Fund, Sit Balanced Fund, Sit Developing Markets Growth Fund, Sit Small Cap Growth Fund, Sit Dividend Growth Fund, and Sit Global Dividend Growth Fund have a Board of Directors and officers. Pursuant to Minnesota law, the Boards of Directors are responsible for the management of the Funds and the establishment of the Funds’ policies. The officers of the Funds manage the day-to-day operation of the Funds. Information pertaining to the directors and officers of the Funds is set forth below. The business address, unless otherwise noted below, is that of the Funds’ investment adviser – 3300 IDS Center, 80 South Eighth Street, Minneapolis, Minnesota 55402. The Boards have a separate Audit Committee. The Stock Funds’ SAI has additional information about the Funds’ directors and is available without charge upon request by calling the Sit Funds at 800-332-5580.
| | | | | | | | |
Name, Age, and Position with Funds | | Term of Office (1) and Length of Time Served | | Principal Occupations During Past Five Years | | Number of Funds Overseen in Fund Complex | | Other Directorships
Held by Director (3) |
INTERESTED DIRECTORS: |
Roger J. Sit (2) Age:51 Chairman and President | | Chairman since 10/08; Officer since 1998. | | Chairman, President, CEO and Global CIO of Sit Investment Associates, Inc. (the “Adviser”); Chairman and CEO of Sit Investment Fixed Income Advisors, Inc. (“SF”); Chairman of SIA Securities Corp. (the “Distributor”). | | 12 | | None. |
William E. Frenzel (2) Age: 84 Director | | Director since 1991 or the Fund’s inception if later. | | Guest Scholar at The Brookings Institution and member of several government policy committees, foundations and organizations; Director of the Adviser; Director of SF. | | 12 | | None. |
INDEPENDENT DIRECTORS: |
Edward M. Giles Age: 77 Director | | Director since 2012 or the Fund’s inception, if later. | | Senior Vice President of Peter B. Cannell & Co., 7/11 to present; Managing Member of GME Capital, 2005 to 2011; Advisory Director of Sit Investment Associates, Inc. 1/08 to 12/11. | | 12 | | Ventana Medical Systems, Inc.
(1992 - 2008). |
Sidney L. Jones Age: 79 Director | | Director since 1993 or the Fund’s inception, if later: Director from 1988 to 1989. | | Lecturer, Washington Campus Consortium of 17 Universities. | | 12 | | None. |
Bruce C. Lueck Age: 72 Director | | Director since 2004 or the Fund’s inception, if later. | | Consultant for Zephyr Management, L.P. (investment management) and committee member of several investment funds and foundations. | | 12 | | None. |
Donald W. Phillips Age: 65 Director | | Director of the International Fund since1993, and since 1990 or the Fund’s inception, if later. | | Chairman and CEO of WP Global Partners Inc., 7/05 to present. | | 12 | | None. |
Barry N. Winslow Age: 65 Director | | Director since 2010 or the Fund’s inception, if later. | | Vice-Chairman of TCF Financial Corporation, 7/08 to present. | | 12 | | TCF Financial Corporation. |
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70 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
Name, Age, and Position with Funds | | Term of Office (1) and Length of Time Served | | Principal Occupations During Past Five Years | | Number of Funds Overseen in Fund Complex | | Other Directorships
Held by Director (3) |
OFFICERS: |
Mark H. Book Age: 50 Vice President – Investments of Balanced Fund only | | Officer since 2002; Re-Elected by the Boards annually. | | Vice President and Portfolio Manager of SF. | | N/A | | N/A |
Kelly K. Boston Age: 44 Assistant Secretary & Assistant Treasurer | | Officer since 2000; Re-Elected by the Boards annually. | | Staff Attorney of the Adviser; Secretary of the Distributor. | | N/A | | N/A |
Bryce A. Doty Age: 46 Vice President - Investments of Balanced Fund only. | | Officer since 1996; Re-Elected by the Boards annually. | | Senior Vice President and Senior Portfolio Manager of SF. | | N/A | | N/A |
Kent L. Johnson Age: 47 Vice President - Investments | | Officer since 2003; Re-Elected by the Boards annually. | | Senior Vice President - Research and Investment Management of the Adviser. | | N/A | | N/A |
Michael J. Radmer 51 S. 6th Street Minneapolis, MN 55402 Age: 68 Secretary | | Officer since 1984; Re-Elected by the Boards annually. | | Partner of the Funds’ general counsel, Dorsey & Whitney, LLP. | | N/A | | N/A |
Paul E. Rasmussen Age: 52 Vice President, Treasurer & Chief Compliance Officer | | Officer since 1994; Re-Elected by the Boards annually. | | Vice President, Secretary, Controller and Chief Compliance Officer of the Adviser; Vice President, Secretary, and Chief Compliance Officer of SF; President and Treasurer of the Distributor. | | N/A | | N/A |
Carla J. Rose Age: 47 Vice President, Assistant Secretary & Assistant Treasurer | | Officer since 2000; Re-Elected by the Boards annually. | | Vice President, Administration & Deputy Controller of the Adviser; Vice President, Controller, Treasurer & Assistant Secretary of SF; Vice President and Assistant Secretary of the Distributor. | | N/A | | N/A |
Robert W. Sit Age: 44 Vice President - Investments | | Officer since 1997; Re-Elected by the Boards annually. | | Vice President - Research and Investment Management of the Adviser. | | N/A | | N/A |
Ronald D. Sit (3) Age: 53 Vice President - Investments | | Officer since 1985; Re-Elected by the Boards annually. | | Vice President - Research and Investment Management of the Adviser. | | N/A | | N/A |
| 1 | Each Director serves until their resignation, removal or the next meeting of the shareholders at which election of directors is an agenda item and his successor is duly elected and shall qualify. |
| 2 | Directors who are deemed to be “interested persons” of the Funds as that term is defined by the Investment Company Act of 1940. Mr. Sit is considered an “interested person” because he is a an officer of Sit Investment Associates, Inc., the Fund’s investment adviser. Mr. Frenzel is considered an interested person because he is a director and shareholder of the Fund’s investment adviser. |
| 3 | Includes only directorships of companies required to report under the Securities Exchange Act of 1934 (i.e., public companies) or other investment companies registered under the 1940 Act. |
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.
| | | | |
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72 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. The registrant has not made any amendment to its code of ethics during the period covered by this report which must be described herein pursuant to Item 2. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report.
A copy of the registrant’s code of ethics is available without charge upon request by calling the registrant at 612-332-3223 or
1-800-332-5580, or by mail at Sit Mutual Funds, 3300 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402.
Item 3: Audit Committee Financial Expert.
The registrant’s Board of Directors has determined that Mr. Edward M. Giles, Mr. Sidney L. Jones, Mr. Bruce C. Lueck, Mr. Donald W. Phillips and Mr. Barry N. Winslow are audit committee financial experts serving on its audit committee. Mr. Giles, Mr. Jones, Mr. Lueck, Mr. Phillips and Mr. Winslow are independent for purposes of this item.
Item 4: Principal Accountant Fees and Services.
(a) – (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant’s principal accountant were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2013 | | | | | | | | | | | 2012 | | | | | | | |
| | | Audit
Fees | | | Audit
Related | | | Tax
Fees | | | Other
Fees | | | | | Audit
Fees | | | Audit
Related | | | Tax
Fees | | | Other
Fees | |
Fiscal year ended June 30 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sit Mutual Funds, Inc. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sit International Growth Fund (series A) | | | 19,000 | | | | 0 | | | | 4,250 | | | | 0 | | | | | | 24,100 | | | | 0 | | | | 3,950 | | | | 0 | |
Sit Balanced Fund (series B) | | | 21,000 | | | | 0 | | | | 4,250 | | | | 0 | | | | | | 16,500 | | | | 0 | | | | 3,950 | | | | 0 | |
Sit Developing Markets Growth Fund (series C) | | | 19,000 | | | | 0 | | | | 4,250 | | | | 0 | | | | | | 15,700 | | | | 0 | | | | 3,950 | | | | 0 | |
Sit Small Cap Growth Fund (series D) | | | 19,000 | | | | 0 | | | | 4,250 | | | | 0 | | | | | | 19,500 | | | | 0 | | | | 3,950 | | | | 0 | |
Sit Dividend Growth Fund (series G) | | | 23,000 | | | | 0 | | | | 4,250 | | | | 0 | | | | | | 15,800 | | | | 0 | | | | 3,950 | | | | 0 | |
Sit Global Dividend Growth Fund (series H) | | | 19,000 | | | | 0 | | | | 4,250 | | | | 0 | | | | | | 15,800 | | | | 0 | | | | 3,950 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Total Mutual Funds, Inc. | | | 120,000 | | | | 0 | | | | 25,500 | | | | 0 | | | | | | 107,400 | | | | 0 | | | | 23,700 | | | | 0 | |
Audit fees include amounts related to the audit of the registrant’s annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Audit-related fees include amounts reasonably related to the performance of the audit of the registrant’s financial statements, and/or are traditionally performed by the auditor. Tax fees include amounts related to tax compliance, tax planning, and tax advice. Other Fees include services provided to review the Fund’s order processing and trading procedures.
(e) (1) The Audit Committee is required to pre-approve audit and non-audit services performed for the registrant by the independent auditor in order to assure that the provision of such services does not impair the auditor’s independence. The audit committee also is required to pre-approve certain non-audit services performed by the registrant’s independent auditor for the registrant’s investment adviser and certain of the adviser’s affiliates if the services relate directly to the operations and financial reporting of the registrant. Services to be provided by the auditor must receive general pre-approval or specific pre-approval by the audit committee. Any proposed services exceeding pre-approved cost levels will require separate pre-approval by the audit committee.
The audit committee may delegate pre-approval authority to the audit committee chairman. The chairman shall report any pre-approval decisions to the audit committee at its next scheduled meeting. The audit committee does not delegate its responsibility to pre-approve services performed by the independent auditor to management.
(2) No services included in (b) – (d) were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant’s principal accountant for non-audit services rendered to the
registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $4,000 and $4,000, respectively.
(h) The registrant’s audit committee has determined that the provision of non-audit services rendered to the registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is considered compatible with maintaining the principal accountant’s independence.
Item 5: Audit Committee of Listed Registrants.
Not applicable to open-end investment companies.
Item 6: Schedule of Investments.
The schedule of investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8: Portfolio Managers of Closed-End Management Investments Companies.
Not applicable to open-end investment companies.
Item 9: Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors.
Item 11: Controls and Procedures -
(a) Based on their evaluation of the Registrant’s Disclosure Controls and Procedures as of a date within 90 days of the Filing Date, the Registrant’s Chairman and Treasurer have determined that the Disclosure Controls and Procedures (as defined in Rule 30a-2(c) under the Act) are designed to ensure that information required to be disclosed by the Registrant is recorded, processed, summarized and reported by the filing Date, and that information required to be disclosed in the report is communicated to the Registrant’s management, as appropriate, to allow timely decisions regarding required disclosure.
(b) There were no significant changes in the Registrant’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, and there were no corrective actions with regard to significant deficiencies and material weaknesses.
Item 12: 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 August 30, 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 August 30, 2013
| | |
By (Signature and Title) | | /s/ Roger J. Sit |
| | Roger J. Sit |
| | Chairman |
Date August 30, 2013
