UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-06373
Sit Mutual Funds, Inc.
(Exact name of registrant as specified in charter)
80 South Eighth Street
3300 IDS Center
Minneapolis, MN 55402
(Address of principal executive offices)
Paul E. Rasmussen, VP Treasurer
Sit Mutual Funds, Inc.
80 South Eighth Street
3300 IDS Center
Minneapolis, MN 55402
(Name and address of agent for service)
Copy to:
Mike Radmer, Esq.
Dorsey & Whitney
Suite 1500
50 South Sixth Street
Minneapolis, MN 55402-1498
Registrant’s telephone number, including area code:
(612) 332-3223
Date of fiscal year end: June 30, 2015
Date of reporting period: December 31, 2014
Item 1: | Reports to Stockholders |
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Fund Reviews and Schedules of Investments | ||||
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This document must be preceded or accompanied by a Prospectus.
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February 4, 2015
Dear Fellow Shareholders:
U.S. stocks overcame significant volatility in recent months to turn in another solid year of performance in 2014. While we see potential for further gains in the year ahead, we also expect that markets will face some fresh challenges and an increase in volatility.
With respect to the U.S. economy, growth trends clearly improved during the second half of the year, following a very sluggish start to 2014. Labor markets continue to improve at a steady pace, with just under three million jobs created during the calendar year. This was the highest level since 1999 and drove the unemployment rate down to 5.6%, although this statistic has been influenced (downwardly) by a very low labor participation rate. Although wage gains continue to be modest, job growth is helping to drive solid gains in consumer spending, which accounts for over two-thirds of U.S Gross Domestic Product. Some other bright spots include the manufacturing sector, with the Institute of Supply Management (ISM) data pointing to sturdy expansion, and auto sales, which have risen to nearly a 17 million unit annual run rate in recent months. In short, we believe that the economic expansion will continue at a modest, but steady, pace in 2015. A key wild card relates to the 50% decrease in oil prices in recent months, which, if sustained, could have a stimulative (but temporary) impact on the overall economy, and we will be watching for signs of a pickup in consumer spending in the months ahead.
The Federal Reserve ended its quantitative easing program in the fourth quarter, and investors are now focused on the timing of increases in the federal funds rate. While the current consensus assumes rate increases in the latter half of 2015, we believe there is a high probability that rate hikes will begin later than the current consensus expectation. Our view is based largely on the outlook that inflation will moderate in the months ahead (from already low levels), as collapsing oil prices and a strengthening U.S. dollar will certainly have an impact. To be sure, there are many potential variables that could alter this outcome in the months ahead. For example, the Federal Reserve is clearly looking at emerging tightness in labor markets as a precursor to wage inflation but, to this point, wage pressures have been minimal.
Outside the U.S., growth trends weakened in 2014 in many regions of the world and were a key factor triggering sharp increases in the relative value of the U.S. dollar. While there had been some early encouraging signs that Europe was emerging from its economic slump, growth in the region weakened during the second half of the year and deflationary pressures are building. We believe a host of factors will keep a lid on growth in the region, including tight credit conditions, high unemployment, high debt levels and a hobbled banking system. We also remain cautious on the outlook for Japan, as Prime Minister Abe’s policy initiatives have shown limited progress to this point in overcoming the country’s structural problems
(i.e., aging population, rigid labor markets, lack of innovation, elevated public debt levels). And, while China had been viewed as a growth engine for the world, economic momentum has faded, as the economy adjusts to a “new normal,” after a long period of excessive investment spending and, most recently, bank lending.
Equity Strategy
Although U.S. equities performed quite well in 2014, there were significant variations in returns in other regions of the world. Our base case for the year ahead is that the environment will likely remain supportive for further gains in equity prices, but there are reasons to expect a pickup in volatility from the subdued levels experienced over the past several years.
The positive case for stocks is based on a continuation of a “Goldilocks” environment, with steady economic growth and minimal inflation pressures. While valuations for stocks appear “fair” relative to historical averages, extremely low interest rates are encouraging investors to seek riskier assets, such as equities. Strong corporate balance sheets and record cash flow generation are providing companies ample opportunity to create value for shareholders through a combination of mergers and acquisitions, stock repurchases and dividend increases. Finally, the decline in energy prices will provide a windfall for consumers and decreasing costs for energy-intensive companies.
With stocks at record levels, however, it is important to assess the key risks to the outlook. First, while the strong U.S. dollar has some positive impacts for the economy overall (e.g., lower inflation), multinational companies will face earnings pressure due to a combination of relative weakness in overseas economies and the negative impact of translating profits into U.S. dollars from weaker currencies. Second, the rapid fall in energy prices will have a significant impact on many companies, including oil producers and the equipment companies servicing them. It should be noted that the “shale revolution” in the U.S. has been a key driver of industrial activity in recent years. In addition, the fallout in the credit markets (due to energy-related lending) may be significant in the months ahead, and there is potential for rising geopolitical risks stemming from economic weakness in many parts of the world (e.g., Middle East, Russia, Venezuela). A final factor to consider is the path of interest rates. If U.S. economic growth accelerates (perhaps driven by lower energy prices), there will be some investor concern over the timing and pace of Federal Reserve interest rate increases. Bottom line, while we remain optimistic on the potential for further equity gains in the year ahead, these factors, at a minimum, will likely lead to an increase in market volatility.
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SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
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While higher beta, lower “quality” stocks have led the way as the market has surged over the last three years, we believe relative valuation clearly favors higher quality companies that can deliver predictable, above-average earnings growth in an uncertain environment. In terms of themes within the Sit equity funds, we are currently favoring domestically-oriented firms and, from a sector perspective, health care and technology companies. Regardless of sector, however, our focus remains on high quality companies, characterized by strong balance sheets, free cash flow generation, and management teams focused on improving profitability while returning excess capital to shareholders.
Outside the U.S., while we continue to be concerned about economic trends in Europe, we enter 2015 with cautious optimism, based on the premise that valuations are attractive and additional liquidity-enhancing measures by the ECB, a weaker currency and lower oil prices will be catalysts for a more positive corporate earnings backdrop. Lower oil prices should increase discretionary income and confidence, thus increasing demand for other goods and services. Within our allocation to Japanese equities, our strategy remains unchanged. We continue to prefer companies with exposure to overseas sources of demand and defensive domestic consumption. Japanese multinationals and exporters should benefit from relatively stronger demand in overseas markets, as well as from the weakened yen.
With best wishes,
Roger J. Sit
Chairman, President, CEO and Global CIO
DECEMBER 31, 2014 |
3 |
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OBJECTIVE & STRATEGY
The Sit Balanced Fund’s dual objectives are to seek long-term growth of capital consistent with the preservation of principal and to provide regular income. It pursues its objectives by investing in a diversified portfolio of stocks and bonds. The Fund may emphasize either equity securities or fixed-income securities, or hold equal amounts of each, dependent upon the Adviser’s analysis of market, financial and economic conditions.
The Fund’s permissible investment allocation is: 35-65% in equity securities and 35-65% in fixed-income securities. At all times at least 25% of the fixed-income assets will be invested in fixed-income senior securities.
The Sit Balanced Fund’s six-month return was +4.80% while the S&P 500® Index increased +6.12% and the Barclays Capital Aggregate Bond Index gained +1.96% over the period. The Lipper Balanced Fund Index rose +1.73%.
Both stocks and bonds generated positive returns over the past six months, as the “Goldilocks” environment continued, with modest economic growth, very low inflation and steady corporate earnings growth. While we believe this environment will likely persist into 2015, there are many cross-currents that will influence markets in the months ahead, including currency and commodity price volatility, changes in Federal Reserve policy and geopolitics. Against this backdrop, the equity portion of the Fund is well-diversified, with a focus on high quality, well-managed growth companies. The largest sector weightings are in health technology, technology services, finance and electronic technology. We estimate that the equity portion of the fund modestly outperformed the S&P 500 Index over the past six months, driven by strong performance within the consumer services, health technology and retail trade sectors. Home Depot, Visa, CVS Health, Avago Technologies, Celgene and TJX were among the individual stocks driving the strong returns for these sectors. The producer manufacturing and technology services sectors were the laggards during the second half of the year. Among individual names, Continental Resources, 3D Systems, Trinity Industries, Helmerich & Payne and Gulfport Energy were the worst performers during the period.
The fixed income portion of the Fund outperformed the Barclays Capital Aggregate Bond Index over the past six months, primarily due to its attractive yield advantage. Interest rates on longer maturity bonds declined materially during the period, producing attractive price returns from tactical allocations to longer maturity U.S. Treasury securities. In aggregate, principal returns for the fixed income portion of the portfolio essentially matched that of the benchmark. We continue to expect a rise in interest rates over the intermediate term now that the Federal Reserve has discontinued its monthly purchases of additional bonds as part of its quantitative easing initiative. We expect the increase in interest rates on shorter maturity securities to be particularly large. We have adopted a defensive posture
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.
within the portfolio against a rise in interest rates and continue to focus on higher quality bonds that provide an attractive income advantage relative to the benchmark.
The Fund’s asset allocation is currently 62.7% equities, 33.6% fixed income, and 3.7% cash and equivalents. Our research staff remains focused on high quality securities in each asset class within the Fund, and we appreciate shareholders’ continued interest.
Roger J. Sit
Bryce A. Doty
John M. Bernstein
Portfolio Managers
4 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
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COMPARATIVE RATES OF RETURNS
as of December 31, 2014
Sit Balanced Fund | S&P 500® Index 1 | Barclays Aggregate Bond Index 2 | ||||||||||
Six Month | 4.80% | 6.12% | 1.96% | |||||||||
One Year | 9.15 | 13.69 | 5.97 | |||||||||
Five Year | 9.88 | 15.45 | 4.45 | |||||||||
Ten Year | 6.34 | 7.67 | 4.71 | |||||||||
Since Inception (12/31/93) | 7.03 | 9.42 | 5.75 |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks of large-cap companies. It is not possible to invest directly in an index.
2 Barclays Aggregate Bond Index is an unmanaged market value-weighted index which measures the performance of investment grade debt securities with maturities of at least one year.
PORTFOLIO SUMMARY
Net Asset Value 12/31/14: | $21.17 Per Share | |
Net Asset Value 6/30/14: | $21.01 Per Share | |
Total Net Assets: | $16.9 Million |
TOP HOLDINGS
Top Equity Holdings:
1. Apple, Inc.
2. Google, Inc.
3. Visa, Inc.
4. CVS Health Corp.
5. Microsoft Corp.
Top Fixed Income Holdings:
1. GNMA, 4.50%, 6/15/40
2. U.S. Treasury Note, 2.75%, 11/15/42
2. U.S. Treasury Strips, 2.85%, 11/15/23
4. U.S. Treasury Note, 1.00%, 12/15/17
5. Microsoft Corp., 5.20%, 6/1/39
Based on total net assets as of December 31, 2014. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2014. Subject to change.
DECEMBER 31, 2014 |
5 |
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SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit Balanced Fund
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Common Stocks - 62.7% |
| |||||
Commercial Services - 1.2% |
| |||||
1,100 | Equifax, Inc. | 88,957 | ||||
1,950 | Robert Half International, Inc. | 113,841 | ||||
|
| |||||
202,798 | ||||||
|
| |||||
Communications - 1.6% | ||||||
850 | SBA Communications Corp. * | 94,146 | ||||
3,750 | Verizon Communications, Inc. | 175,425 | ||||
|
| |||||
269,571 | ||||||
|
| |||||
Consumer Durables - 0.5% | ||||||
600 | Polaris Industries, Inc. | 90,744 | ||||
|
| |||||
Consumer Non-Durables - 4.3% | ||||||
1,475 | Michael Kors Holdings, Ltd. * | 110,772 | ||||
1,300 | NIKE, Inc. | 124,995 | ||||
2,275 | PepsiCo, Inc. | 215,124 | ||||
1,250 | Philip Morris International, Inc. | 101,812 | ||||
1,850 | Procter & Gamble Co. | 168,516 | ||||
|
| |||||
721,219 | ||||||
|
| |||||
Consumer Services - 3.9% | ||||||
1,650 | H&R Block, Inc. | 55,572 | ||||
1,700 | Starbucks Corp. | 139,485 | ||||
1,150 | Time Warner, Inc. | 98,233 | ||||
3,000 | Twenty-First Century Fox, Inc. | 115,215 | ||||
975 | Visa, Inc. | 255,645 | ||||
|
| |||||
664,150 | ||||||
|
| |||||
Electronic Technology - 6.2% | ||||||
3,220 | Apple, Inc. | 355,424 | ||||
5,100 | Applied Materials, Inc. | 127,092 | ||||
1,550 | Avago Technologies, Ltd. | 155,914 | ||||
3,000 | Ciena Corp. * | 58,230 | ||||
2,425 | EMC Corp. | 72,120 | ||||
3,900 | Intel Corp. | 141,531 | ||||
1,400 | Qualcomm, Inc. | 104,062 | ||||
700 | Xilinx, Inc. | 30,303 | ||||
|
| |||||
1,044,676 | ||||||
|
| |||||
Energy Minerals - 3.4% | ||||||
1,300 | Chevron Corp. | 145,834 | ||||
1,850 | Continental Resources, Inc. * | 70,966 | ||||
550 | EOG Resources, Inc. | 50,638 | ||||
950 | Gulfport Energy Corp. * | 39,653 | ||||
1,425 | Marathon Petroleum Corp. | 128,620 | ||||
1,800 | Occidental Petroleum Corp. | 145,098 | ||||
|
| |||||
580,809 | ||||||
|
| |||||
Finance - 6.4% | ||||||
500 | ACE, Ltd. | 57,440 | ||||
1,500 | Ameriprise Financial, Inc. | 198,375 | ||||
1,325 | Discover Financial Services | 86,774 | ||||
1,100 | Franklin Resources, Inc. | 60,907 |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
760 | Goldman Sachs Group, Inc. | 147,311 | ||||
3,525 | JPMorgan Chase & Co. | 220,594 | ||||
1,250 | Marsh & McLennan Cos., Inc. | 71,550 | ||||
375 | Prudential Financial, Inc. | 33,922 | ||||
1,900 | US Bancorp | 85,405 | ||||
2,300 | Wells Fargo & Co. | 126,086 | ||||
|
| |||||
1,088,364 | ||||||
|
| |||||
Health Services - 1.8% | ||||||
755 | Express Scripts Holding Co. * | 63,926 | ||||
650 | McKesson Corp. | 134,927 | ||||
1,125 | UnitedHealth Group, Inc. | 113,726 | ||||
|
| |||||
312,579 | ||||||
|
| |||||
Health Technology - 10.1% | ||||||
375 | Actavis, PLC * | 96,529 | ||||
425 | Alexion Pharmaceuticals, Inc. * | 78,638 | ||||
775 | Allergan, Inc. | 164,757 | ||||
1,650 | Bristol-Myers Squibb Co. | 97,400 | ||||
1,380 | Celgene Corp. * | 154,367 | ||||
1,550 | Covidien, PLC | 158,534 | ||||
2,075 | Gilead Sciences, Inc. * | 195,590 | ||||
1,350 | Johnson & Johnson | 141,170 | ||||
2,450 | Medtronic, Inc. | 176,890 | ||||
1,050 | Mylan, Inc. * | 59,188 | ||||
125 | Regeneron Pharmaceuticals, Inc. * | 51,281 | ||||
2,050 | St. Jude Medical, Inc. | 133,312 | ||||
900 | Thermo Fisher Scientific, Inc. | 112,761 | ||||
725 | Zimmer Holdings, Inc. | 82,230 | ||||
|
| |||||
1,702,647 | ||||||
|
| |||||
Industrial Services - 0.7% | ||||||
1,475 | Schlumberger, Ltd. | 125,980 | ||||
|
| |||||
Process Industries - 1.9% | ||||||
1,800 | Ecolab, Inc. | 188,136 | ||||
1,225 | International Paper Co. | 65,636 | ||||
475 | Praxair, Inc. | 61,541 | ||||
|
| |||||
315,313 | ||||||
|
| |||||
Producer Manufacturing - 5.4% | ||||||
575 | 3M Co. | 94,484 | ||||
875 | Caterpillar, Inc. | 80,089 | ||||
1,650 | Danaher Corp. | 141,422 | ||||
1,000 | Delphi Automotive, PLC | 72,720 | ||||
1,300 | Emerson Electric Co. | 80,249 | ||||
1,575 | Honeywell International, Inc. | 157,374 | ||||
500 | Illinois Tool Works, Inc. | 47,349 | ||||
875 | Raytheon Co. | 94,649 | ||||
2,000 | Trinity Industries, Inc. | 56,020 | ||||
750 | United Technologies Corp. | 86,250 | ||||
|
| |||||
910,606 | ||||||
|
| |||||
Retail Trade - 4.9% | ||||||
2,400 | CVS Health Corp. | 231,144 |
See accompanying notes to financial statements.
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6 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
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| ||||||
Quantity/ Principal Amount ($) | Name of Issuer | Fair Value ($) | ||||
| ||||||
1,350 | Dick’s Sporting Goods, Inc. | 67,028 | ||||
2,125 | Home Depot, Inc. | 223,061 | ||||
900 | Macy’s, Inc. | 59,175 | ||||
1,200 | Target Corp. | 91,092 | ||||
2,250 | TJX Cos., Inc. | 154,305 | ||||
|
| |||||
825,805 | ||||||
|
| |||||
Technology Services - 8.4% | ||||||
1,275 | Accenture, PLC | 113,870 | ||||
2,350 | Adobe Systems, Inc. * | 170,845 | ||||
925 | ANSYS, Inc. * | 75,850 | ||||
2,000 | Cognizant Technology Solutions Corp. * | 105,320 | ||||
1,250 | Facebook, Inc. * | 97,525 | ||||
280 | Google, Inc. - Class A * | 148,585 | ||||
255 | Google, Inc. - Class C * | 134,232 | ||||
1,900 | Informatica Corp. * | 72,456 | ||||
4,825 | Microsoft Corp. | 224,121 | ||||
2,650 | Oracle Corp. | 119,170 | ||||
135 | priceline.com, Inc. * | 153,928 | ||||
|
| |||||
1,415,902 | ||||||
|
| |||||
Transportation - 2.0% | ||||||
850 | Ryder System, Inc. | 78,922 | ||||
1,475 | Union Pacific Corp. | 175,717 | ||||
800 | United Parcel Service, Inc. | 88,936 | ||||
|
| |||||
343,575 | ||||||
|
| |||||
Total Common Stocks | 10,614,738 | |||||
|
| |||||
Bonds - 33.6% | ||||||
Asset-Backed Securities - 2.0% | ||||||
8,340 | Bayview Financial Acquisition Trust, | 8,328 | ||||
54,612 | Centex Home Equity, | 56,073 | ||||
19,643 | Citifinancial Mortgage Securities, Inc., | 19,943 | ||||
40,418 | Conseco Finance, | 38,870 | ||||
9,973 | First Franklin Mtge. Loan Asset-Backed Certs., 2005-FF2 M2, 0.83%, 3/25/35 1 | 9,966 | ||||
34,583 | Green Tree Financial Corp., | 35,708 | ||||
50,000 | HouseHold Home Equity Loan Trust, | 49,027 | ||||
12,041 | Irwin Home Equity Corp., | 12,120 | ||||
26,546 | New Century Home Equity Loan Trust, | 27,604 | ||||
33,988 | RAAC Series, | 33,624 | ||||
35,460 | Residential Asset Mortgage Products, Inc., | 35,322 |
| ||||||
Principal Amount ($) | Name of Issuer | Fair Value ($) | ||||
| ||||||
9,442 | Residential Funding Mortgage Securities II, Inc., | 9,550 | ||||
|
| |||||
336,135 | ||||||
|
| |||||
Collateralized Mortgage Obligations - 4.9% | ||||||
Fannie Mae Grantor Trust: | ||||||
63,647 | 2004-T1 1A1, 6.00%, 1/25/44 | 72,138 | ||||
16,231 | 2004-T3, 1A3, 7.00%, 2/25/44 | 18,554 | ||||
Fannie Mae REMIC: | ||||||
21,750 | 2009-30 AG, 6.50%, 5/25/39 | 23,599 | ||||
10,296 | 2013-28 WD, 6.50%, 5/25/42 | 11,677 | ||||
72,961 | 2012-68 GW, 7.00%, 5/25/31 | 87,615 | ||||
9,643 | 2010-108 AP, 7.00%, 9/25/40 | 10,814 | ||||
47,294 | Freddie Mac, | |||||
6.50%, 12/15/23 | 52,639 | |||||
Freddie Mac REMIC: | ||||||
93,882 | 3.00%, 3/15/32 | 94,827 | ||||
75,663 | 5.33%, 10/15/47 1 | 81,257 | ||||
20,594 | 7.00%, 11/15/29 | 22,341 | ||||
39,807 | 7.50%, 6/15/30 | 45,824 | ||||
Government National Mortgage Association: | ||||||
91,080 | 2014-69 W, 7.28%, 11/20/34 1 | 105,000 | ||||
56,752 | 2005-74 HA, 7.50%, 9/16/35 | 64,018 | ||||
Sequoia Mortgage Trust: | ||||||
21,845 | 2013-4 A3, 1.55%, 4/25/43 1 | 20,380 | ||||
42,873 | 2013-3 A2, 2.50%, 3/25/43 1 | 40,687 | ||||
30,488 | 2012-4 A2, 3.00%, 9/25/42 1 | 30,021 | ||||
38,661 | Vendee Mortgage Trust, | |||||
2008-1 B, 7.79%, 3/15/25 1 | 44,860 | |||||
|
| |||||
826,251 | ||||||
|
| |||||
Corporate Bonds - 12.2% | ||||||
50,000 | Amazon.com, Inc., | 50,508 | ||||
63,183 | America West Airlines 2000-1 Trust, | 71,713 | ||||
50,000 | American Express Bank FSB, | 55,738 | ||||
50,000 | Assured Guaranty US Holdings, Inc., | 58,310 | ||||
75,000 | Bank of America Corp., | 83,562 | ||||
50,000 | Bank One Corp., | 60,988 | ||||
25,000 | BB&T Corp., | 24,993 | ||||
25,000 | Coca-Cola Refreshments USA, Inc., | 33,526 | ||||
50,000 | CR Bard, Inc., | 49,411 | ||||
15,726 | Delta Air Lines 2007-1 Class A Trust, | 18,242 | ||||
28,226 | Delta Air Lines 2009-1 Class A Trust, | 32,671 | ||||
63,912 | Doric Nimrod Air Alpha 2013-1 Trust, | 67,747 | ||||
100,000 | General Electric Co., | 110,931 | ||||
50,000 | Google, Inc., | 53,647 | ||||
50,000 | Johnson & Johnson, | 53,501 |
See accompanying notes to financial statements.
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DECEMBER 31, 2014 |
7 |
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SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit Balanced Fund (Continued)
| ||||||
Principal Amount ($) | Name of Issuer | Fair Value ($) | ||||
| ||||||
50,000 | Kinder Morgan, Inc., | 55,125 | ||||
25,000 | Kroger Co., | 27,943 | ||||
65,000 | Manufacturers & Traders Trust Co. (Subordinated), | 67,677 | ||||
100,000 | Microsoft Corp., | 119,010 | ||||
50,000 | MUFG Union Bank NA, | 50,737 | ||||
40,000 | Northern States Power Co., | 51,924 | ||||
25,000 | Northern Trust Co. (Subordinated), | 27,843 | ||||
47,743 | Northwest Airlines 1999-2 A Trust, | 53,711 | ||||
19,513 | Northwest Airlines 2007-1 A Trust, | 22,148 | ||||
60,696 | Procter & Gamble ESOP, | 74,936 | ||||
25,000 | Progressive Corp. (Subordinated), | 27,044 | ||||
75,000 | Royal Bank of Canada, | 74,572 | ||||
50,000 | State Street Corp., | 66,773 | ||||
50,000 | Suncor Energy, Inc., | 56,085 | ||||
100,000 | Target Corp., | 112,681 | ||||
50,000 | Tosco Corp., | 72,743 | ||||
25,000 | Toyota Motor Credit Corp., | 24,934 | ||||
44,751 | Virgin Australia 2013-1A Trust, | 46,093 | ||||
100,000 | Wyeth, LLC, | 109,578 | ||||
70,000 | XTO Energy, Inc., | 102,675 | ||||
|
| |||||
2,069,720 | ||||||
|
| |||||
Federal Home Loan Mortgage Corporation - 1.2% |
| |||||
53,141 | 2.50%, 4/1/27 | 54,193 | ||||
30,002 | 3.00%, 5/1/27 | 30,721 | ||||
15,725 | 6.00%, 10/1/21 | 17,029 | ||||
35,397 | 7.00%, 7/1/32 | 39,207 | ||||
7,014 | 7.00%, 5/1/34 | 8,042 | ||||
13,687 | 7.00%, 11/1/37 | 15,164 | ||||
9,875 | 7.00%, 1/1/39 | 11,374 | ||||
18,617 | 7.50%, 11/1/36 | 22,675 | ||||
1,761 | 8.00%, 9/1/15 | 1,790 | ||||
7,498 | 8.38%, 5/17/20 | 8,042 | ||||
|
| |||||
208,237 | ||||||
|
| |||||
Federal National Mortgage Association - 3.2% |
| |||||
30,387 | 5.50%, 2/1/18 | 32,091 | ||||
21,765 | 6.50%, 5/1/36 | 24,853 | ||||
93,274 | 6.50%, 3/1/40 | 106,223 | ||||
57,972 | 6.63%, 11/1/30 | 59,914 | ||||
46,004 | 6.63%, 1/1/31 | 47,258 | ||||
32,833 | 7.00%, 1/1/32 | 36,359 | ||||
15,097 | 7.00%, 12/1/32 | 17,875 | ||||
31,576 | 7.00%, 3/1/33 | 36,268 | ||||
21,270 | 7.00%, 12/1/36 | 25,437 |
| ||||||
Principal Amount ($) | Name of Issuer | Fair Value ($) | ||||
| ||||||
8,638 | 7.00%, 11/1/38 | 10,121 | ||||
16,264 | 7.50%, 4/1/33 | 19,895 | ||||
16,720 | 7.50%, 11/1/33 | 20,024 | ||||
24,013 | 7.50%, 1/1/34 | 29,169 | ||||
8,057 | 7.50%, 4/1/38 | 9,813 | ||||
36,126 | 8.00%, 2/1/31 | 45,486 | ||||
8,285 | 8.44%, 7/15/26 | 9,552 | ||||
6,663 | 9.50%, 5/1/27 | 7,865 | ||||
|
| |||||
538,203 | ||||||
|
| |||||
Government National Mortgage Association - 2.8% |
| |||||
256,209 | 4.50%, 6/15/40 | 283,596 | ||||
24,064 | 7.00%, 12/15/24 | 26,840 | ||||
39,475 | 7.00%, 9/20/38 | 45,271 | ||||
34,016 | 8.00%, 7/15/24 | 38,722 | ||||
69,147 | 8.38%, 3/15/31 | 72,170 | ||||
|
| |||||
466,599 | ||||||
|
| |||||
Taxable Municipal Securities - 3.0% |
| |||||
55,000 | College Park Business & Industrial Dev. Auth., | 55,547 | ||||
85,000 | County of St. Clair IL, | 91,720 | ||||
75,000 | Denver Health & Hospital Authority, | 75,348 | ||||
50,000 | Energy Northwest, | 50,705 | ||||
50,000 | Macomb Interceptor Drain Drainage District, | 53,592 | ||||
45,000 | New Hampshire Housing Finance Authority, | 46,695 | ||||
50,000 | Pasco County School Board, | 51,375 | ||||
75,000 | Texas St. Pub. Fin. Auth. Charter Sch. Fin. Rev., | 83,728 | ||||
|
| |||||
508,710 | ||||||
|
| |||||
U.S. Government / Federal Agency Securities - 4.3% |
| |||||
U.S. Treasury Note: | ||||||
100,000 | 0.08%, 1/31/16 1 | 99,973 | ||||
140,000 | 1.00%, 12/15/17 | 139,672 | ||||
50,000 | 1.13%, 4/30/20 | 48,512 | ||||
225,000 | 2.75%, 11/15/42 | 224,771 | ||||
U.S. Treasury Strips: | ||||||
200,000 | 2.85%, 11/15/23 6 | 163,778 | ||||
100,000 | 4.22%, 2/15/36 6 | 59,284 | ||||
|
| |||||
735,990 | ||||||
|
| |||||
Total Bonds | 5,689,845 | |||||
|
|
See accompanying notes to financial statements.
| ||
8 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
| ||||||
Principal Amount ($) | Name of Issuer | Fair Value ($) | ||||
| ||||||
Total Investments in Securities - 96.3% | 16,304,583 | |||||
Other Assets and Liabilities, net - 3.7% | 619,487 | |||||
|
| |||||
Total Net Assets - 100.0% | $16,924,070 | |||||
|
|
* | Non-income producing security. |
1 | Variable rate security. Rate disclosed is as of December 31, 2014. |
4 | 144A Restricted Security. The total value of such securities as of December 31, 2014 was $113,840 and represented 0.7% of net assets. These securities have been determined to be liquid by the Adviser in accordance with guidelines established by the Board of Directors. |
6 | Zero coupon or convertible capital appreciation bond, for which the rate disclosed is either the effective yield on purchase date or the coupon rate to be paid upon conversion to coupon paying, respectively. |
14 | Step Coupon: A bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate disclosed is as of December 31, 2014. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
PLC — Public Limited Company
REMIC — Real Estate Mortgage Investment Conduit
See accompanying notes to financial statements.
| ||
DECEMBER 31, 2014 |
9 |
|
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit Balanced Fund (Continued)
A summary of the levels for the Fund’s investments as of December 31, 2014 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||||||||||
Level 1 Quoted Price ($) | Level 2 Other significant observable inputs ($) | Level 3 Significant | Total ($) | |||||||||||||||||
Common Stocks ** | 10,614,738 | — | — | 10,614,738 | ||||||||||||||||
Asset-Backed Securities | — | 336,135 | — | 336,135 | ||||||||||||||||
Collateralized Mortgage Obligations | — | 826,251 | — | 826,251 | ||||||||||||||||
Corporate Bonds | — | 2,069,720 | — | 2,069,720 | ||||||||||||||||
Federal Home Loan Mortgage Corporation | — | 208,237 | — | 208,237 | ||||||||||||||||
Federal National Mortgage Association | — | 538,203 | — | 538,203 | ||||||||||||||||
Government National Mortgage Association | — | 466,599 | — | 466,599 | ||||||||||||||||
Taxable Municipal Securities | — | 508,710 | — | 508,710 | ||||||||||||||||
U.S. Government / Federal Agency Securities | — | 735,990 | — | 735,990 | ||||||||||||||||
Total: | 10,614,738 | 5,689,845 | — | 16,304,583 |
** | 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.
| ||
10 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
[This page intentionally left blank.]
DECEMBER 31, 2014 |
11 |
Sit Dividend Growth Fund - Class I and Class S
|
OBJECTIVE & STRATEGY
The objective of the Dividend Growth Fund is to provide current income that exceeds the dividend yield of the S&P 500® Index and that grows over a period of years. Secondarily, the Fund seeks long-term capital appreciation.
The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in dividend-paying common stocks. The Fund may invest the balance of its assets in preferred stocks, convertible bonds, and U.S. Treasury securities.
The Sit Dividend Growth Fund Class I posted a +5.58% return for the last six months of 2014, compared to the +6.12% return for the S&P 500® Index.
U.S. stocks overcame significant volatility to post sold returns during the second half of 2014. Although economic growth picked up in the U.S. after a sluggish start to the year, growth prospects in many other regions of the world deteriorated. This was a key a factor behind the significant strengthening in the U.S. dollar relative to other major currencies. The other major event in the second half of the year was the roughly 50% decline in oil prices. Given our view that there is unlikely to be a major reversal in these trends in the coming months, some opportunistic sector adjustments were made in light of these changes in the economic and corporate earnings backdrop. For example, we added exposure to all Consumer sectors (Retail Trade, Consumer Non-Durables, Consumer Services and Consumer Durables), as these sectors will likely benefit from higher levels of consumer spending against a backdrop of a sharp drop in gas prices. Conversely, since it is our view that oil prices are not likely to snap back to the $80+ level in the near to intermediate term, we reduced our exposure to energy-exposed companies in several sectors, including energy minerals, industrial services and producer manufacturing.
While higher beta, lower “quality” stocks have led the way in recent quarters, we believe relative valuations favor higher quality companies that can generate predictable earnings growth, while paying strong and consistent dividends to shareholders. To this point, 86 out of 92 holdings within the Fund raised dividend payments over the past twelve months, with an median increase of +11%.
The Fund modestly underperformed the S&P 500® Index return during the period. Stock selection in the finance sector was a primary factor, as the Fund’s holdings of Kayne Anderson and Tortoise Energy were impacted by falling energy prices, while Berkshire Hathaway (which does not pay a dividend and, therefore, is not held in the Fund) strongly outperformed the overall index. The Fund’s gross dividend yield (before deduction of Fund expenses) is 2.49% compared to 2.04% of the S&P 500® Index. Stock selection in the health technology sector was also a negative, due to weak performance from
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. 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.
St. Jude Medical and the absence of biotechnology stocks in the Fund. Biotech stocks generated strong returns during the period. On the positive side, strong performance of holdings within the retail trade, consumer durables and technology services sectors contributed positively to returns over the past six months. Key outperformers within these sectors included Home Depot, CVS Health, TJX, Snap-on, Genuine Parts, Automatic Data Processing and Microsoft.
We continue to believe that dividend-paying growth stocks are attractive in the current environment of slow economic growth and modest inflation.
Roger J. Sit
Kent L. Johnson
Michael J. Stellmacher
Portfolio Managers
12 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
COMPARATIVE RATES OF RETURNS
as of December 31, 2014
Sit Dividend | |||||||||||||||
Growth Fund | |||||||||||||||
S&P 500® | |||||||||||||||
Class I | Class S | Index 1 | |||||||||||||
Six Month | 5.58 | % | 5.45 | % | 6.12 | % | |||||||||
One Year | 12.12 | 11.79 | 13.69 | ||||||||||||
Five Year | 14.44 | 14.15 | 15.45 | ||||||||||||
Ten Year | 9.75 | n/a | 7.67 | ||||||||||||
Since Inception - Class I (12/31/03) | 9.85 | n/a | 7.96 | ||||||||||||
Since Inception - Class S (3/31/06) | n/a | 9.04 | 7.71 |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks of large-cap companies. It is not possible to invest directly in an index.
PORTFOLIO SUMMARY
Class I: | ||||||
Net Asset Value 12/31/14: | $ | 17.31 | Per Share | |||
Net Asset Value 6/30/14: | $ | 18.69 | Per Share | |||
Total Net Assets: | $ | 966.9 | Million | |||
Class S: | ||||||
Net Asset Value 12/31/14: | $ | 17.26 | Per Share | |||
Net Asset Value 6/30/14: | $ | 18.63 | Per Share | |||
Total Net Assets: | $ | 91.1 | Million | |||
Weighted Average Market Cap: | $ | 93.2 | Billion |
TOP 10 HOLDINGS
1. Microsoft Corp.
2. Johnson & Johnson
3. Honeywell International, Inc.
4. Home Depot, Inc.
5. PepsiCo, Inc.
6. JPMorgan Chase & Co.
7. Verizon Communications, Inc.
8. Medtronic, Inc.
9. Apple, Inc.
10. Intel Corp.
Based on total net assets as of December 31, 2014. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2014. Subject to change.
DECEMBER 31, 2014 |
13 |
|
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit Dividend Growth Fund
|
| |||||||
Quantity | Name of Issuer | Fair Value ($) | ||||||
|
| |||||||
| Common Stocks - 98.3% |
| ||||||
| Commercial Services - 3.0% |
| ||||||
97,650 | Equifax, Inc. | 7,896,956 | ||||||
81,900 | Moody’s Corp. | 7,846,839 | ||||||
204,375 | Nielsen Holdings NV | 9,141,694 | ||||||
109,196 | Robert Half International, Inc. | 6,374,862 | ||||||
|
| |||||||
31,260,351 | ||||||||
|
| |||||||
| Communications - 2.7% | |||||||
96,200 | BCE, Inc. | 4,411,732 | ||||||
507,100 | Verizon Communications, Inc. | 23,722,138 | ||||||
|
| |||||||
28,133,870 | ||||||||
|
| |||||||
| Consumer Durables - 2.1% | |||||||
76,450 | Genuine Parts Co. | 8,147,276 | ||||||
101,875 | Snap-On, Inc. | 13,930,388 | ||||||
|
| |||||||
22,077,664 | ||||||||
|
| |||||||
| Consumer Non-Durables - 6.7% | |||||||
67,150 | Diageo, PLC, ADR | 7,661,144 | ||||||
84,150 | JM Smucker Co./The | 8,497,467 | ||||||
54,925 | Kimberly-Clark Corp. | 6,346,034 | ||||||
261,925 | PepsiCo, Inc. | 24,767,628 | ||||||
75,750 | Philip Morris International, Inc. | 6,169,838 | ||||||
191,175 | Procter & Gamble Co. | 17,414,131 | ||||||
|
| |||||||
70,856,242 | ||||||||
|
| |||||||
| Consumer Services - 3.5% | |||||||
257,669 | H&R Block, Inc. | 8,678,293 | ||||||
130,500 | Starbucks Corp. | 10,707,525 | ||||||
208,975 | Time Warner, Inc. | 17,850,644 | ||||||
|
| |||||||
37,236,462 | ||||||||
|
| |||||||
| Electronic Technology - 8.4% | |||||||
190,100 | Apple, Inc. | 20,983,238 | ||||||
476,600 | Applied Materials, Inc. | 11,876,872 | ||||||
151,250 | Avago Technologies, Ltd. | 15,214,238 | ||||||
536,925 | Intel Corp. | 19,485,008 | ||||||
147,375 | Qualcomm, Inc. | 10,954,384 | ||||||
233,250 | Xilinx, Inc. | 10,097,392 | ||||||
|
| |||||||
88,611,132 | ||||||||
|
| |||||||
| Energy Minerals - 5.0% | |||||||
101,740 | Chevron Corp. | 11,413,193 | ||||||
186,300 | Devon Energy Corp. | 11,403,423 | ||||||
80,500 | Marathon Petroleum Corp. | 7,265,930 | ||||||
180,950 | Occidental Petroleum Corp. | 14,586,380 | ||||||
262,900 | Suncor Energy, Inc. | 8,354,962 | ||||||
|
| |||||||
53,023,888 | ||||||||
|
| |||||||
| Finance - 15.8% | |||||||
66,675 | ACE, Ltd. | 7,659,624 | ||||||
45,800 | Alexandria Real Estate Equities, Inc. | 4,064,292 | ||||||
103,075 | Ameriprise Financial, Inc. | 13,631,669 |
|
| |||||||
Quantity | Name of Issuer | Fair Value ($) | ||||||
|
| |||||||
177,083 | Ares Capital Corp. | 2,763,380 | ||||||
168,775 | Arthur J Gallagher & Co. | 7,945,927 | ||||||
31,300 | Avalonbay Communities, Inc. | 5,114,107 | ||||||
186,950 | Discover Financial Services | 12,243,356 | ||||||
118,775 | First Republic Bank | 6,190,553 | ||||||
40,875 | Goldman Sachs Group, Inc. | 7,922,801 | ||||||
380,725 | JPMorgan Chase & Co. | 23,825,770 | ||||||
171,375 | Macquarie Infrastructure Co., LLC | 12,183,049 | ||||||
129,275 | Marsh & McLennan Cos., Inc. | 7,399,701 | ||||||
245,000 | PacWest Bancorp | 11,137,700 | ||||||
127,825 | PNC Financial Services Group, Inc. | 11,661,475 | ||||||
119,675 | Prudential Financial, Inc. | 10,825,800 | ||||||
132,875 | T Rowe Price Group, Inc. | 11,408,648 | ||||||
95,075 | Validus Holdings, Ltd. | 3,951,317 | ||||||
224,500 | XL Group, PLC | 7,716,065 | ||||||
|
| |||||||
167,645,234 | ||||||||
|
| |||||||
| Health Services - 2.6% | |||||||
197,350 | Cardinal Health, Inc. | 15,932,066 | ||||||
113,775 | UnitedHealth Group, Inc. | 11,501,515 | ||||||
|
| |||||||
27,433,581 | ||||||||
|
| |||||||
| Health Technology - 14.7% | |||||||
241,250 | Abbott Laboratories | 10,861,075 | ||||||
132,875 | Becton Dickinson and Co. | 18,490,885 | ||||||
177,150 | Bristol-Myers Squibb Co. | 10,457,164 | ||||||
80,900 | Covidien, PLC | 8,274,452 | ||||||
258,875 | Johnson & Johnson | 27,070,559 | ||||||
316,250 | Medtronic, Inc. | 22,833,250 | ||||||
275,525 | Merck & Co., Inc. | 15,647,065 | ||||||
488,025 | Pfizer, Inc. | 15,201,979 | ||||||
207,200 | St. Jude Medical, Inc. | 13,474,216 | ||||||
120,675 | Zimmer Holdings, Inc. | 13,686,958 | ||||||
|
| |||||||
155,997,603 | ||||||||
|
| |||||||
| Industrial Services - 2.1% | |||||||
133,800 | Halliburton Co. | 5,262,354 | ||||||
81,050 | Helmerich & Payne, Inc. | 5,464,391 | ||||||
52,400 | Oceaneering International, Inc. | 3,081,644 | ||||||
196,300 | Republic Services, Inc. | 7,901,075 | ||||||
|
| |||||||
21,709,464 | ||||||||
|
| |||||||
| Process Industries - 2.9% | |||||||
36,700 | Agrium, Inc. | 3,476,224 | ||||||
203,125 | Archer-Daniels-Midland Co. | 10,562,500 | ||||||
199,700 | International Paper Co. | 10,699,926 | ||||||
80,975 | LyondellBasell Industries NV | 6,428,605 | ||||||
|
| |||||||
31,167,255 | ||||||||
|
|
See accompanying notes to financial statements.
| ||
14 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
|
| |||||||
Quantity | Name of Issuer | Fair Value ($) | ||||||
|
| |||||||
| Producer Manufacturing - 9.5% |
| ||||||
49,375 | 3M Co. | 8,113,300 | ||||||
55,150 | Cummins, Inc. | 7,950,976 | ||||||
131,325 | Delphi Automotive, PLC | 9,549,954 | ||||||
86,900 | Emerson Electric Co. | 5,364,337 | ||||||
256,225 | Honeywell International, Inc. | 25,602,002 | ||||||
121,000 | Illinois Tool Works, Inc. | 11,458,700 | ||||||
48,925 | Lockheed Martin Corp. | 9,421,487 | ||||||
80,910 | Raytheon Co. | 8,752,035 | ||||||
313,425 | Tyco International, PLC | 13,746,820 | ||||||
|
| |||||||
99,959,611 | ||||||||
|
| |||||||
| Retail Trade - 7.1% | |||||||
192,600 | CVS Health Corp. | 18,549,306 | ||||||
240,725 | Home Depot, Inc. | 25,268,903 | ||||||
236,650 | Macy’s, Inc. | 15,559,738 | ||||||
235,775 | TJX Cos., Inc. | 16,169,450 | ||||||
|
| |||||||
75,547,397 | ||||||||
|
| |||||||
| Technology Services - 4.3% | |||||||
89,875 | Accenture, PLC | 8,026,736 | ||||||
94,300 | Automatic Data Processing, Inc. | 7,861,791 | ||||||
639,825 | Microsoft Corp. | 29,719,871 | ||||||
|
| |||||||
45,608,398 | ||||||||
|
| |||||||
| Transportation - 3.2% | |||||||
125,650 | Ryder System, Inc. | 11,666,602 | ||||||
115,450 | Union Pacific Corp. | 13,753,558 | ||||||
76,475 | United Parcel Service, Inc. | 8,501,726 | ||||||
|
| |||||||
33,921,886 | ||||||||
|
|
|
| |||||||
Quantity | Name of Issuer | Fair Value ($) | ||||||
|
| |||||||
| Utilities - 4.7% | |||||||
290,600 | CenterPoint Energy, Inc. | 6,808,758 | ||||||
265,175 | Kinder Morgan, Inc. | 11,219,554 | ||||||
169,725 | Laclede Group, Inc. | 9,029,370 | ||||||
104,450 | NextEra Energy, Inc. | 11,101,990 | ||||||
227,900 | Wisconsin Energy Corp. | 12,019,446 | ||||||
|
| |||||||
50,179,118 | ||||||||
|
| |||||||
| Total Common Stocks | 1,040,369,156 | ||||||
|
| |||||||
| Investment Companies - 1.5% | |||||||
259,936 | Kayne Anderson MLP Investment Co. | 9,924,356 | ||||||
123,425 | Tortoise Energy Infrastructure Corp. | 5,402,312 | ||||||
|
| |||||||
| Total Investment Companies | 15,326,668 | ||||||
|
| |||||||
| Total Investments in Securities - 99.8% | 1,055,695,824 | ||||||
| Other Assets and Liabilities, net - 0.2% | 2,416,173 | ||||||
|
| |||||||
| Total Net Assets - 100.0% | $1,058,111,997 | ||||||
|
|
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
ADR — American Depositary Receipt
LLC — Limited Liability Company
MLP — Master Limited Partnership
PLC — Public Limited Company
A summary of the levels for the Fund’s investments as of December 31, 2014 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
Quoted | Other significant | Significant | ||||||||||
Price ($) | observable inputs ($) | unobservable inputs ($) | Total ($) | |||||||||
Common Stocks ** | 1,040,369,156 | — | — | 1,040,369,156 | ||||||||
Investment Companies | 15,326,668 | — | — | 15,326,668 | ||||||||
Total: | 1,055,695,824 | — | — | 1,055,695,824 |
** | For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown. |
For the reporting period, there were no transfers between levels 1, 2 and 3.
See accompanying notes to financial statements.
| ||
DECEMBER 31, 2014 |
15 |
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.
Global equity markets delivered mixed returns over the six-month period ending December 31, 2014. The U.S. equity markets appreciated in the mid-single digits, while international markets were down in the mid-single digits. Although there is clear evidence of strengthening in the U.S. economic recovery, we believe growth will remain at subpar levels. It appears that the Euro Area will undergo another year of lackluster economic growth in 2015. We also remain cautious on the Japanese economy’s future growth prospects. We continue to expect the Chinese economy to stabilize. For the last six months of 2014, the Sit Global Dividend Fund Class I appreciated +0.14%, outperforming the MSCI World Index, which was down -1.17%. Within the Index, the information technology, health care and consumer discretionary sectors had the strongest returns, while the energy and material sectors were down double digits. Regionally, North America was the sole region with positive performance. The weakest region was Europe.
Contributing most favorably to relative performance in the last six months were the Fund’s holdings in the consumer discretionary sector. The positive stock selection in retailing stocks such as Home Depot, NIKE, TJX Companies, Macy’s and Burberry helped meaningfully. The Fund’s underweight position modestly detracted from the sector’s relative performance. The Fund’s underweight in the energy sector and positive stock selection led the energy sector to be the next best relative contributor to performance. The holding in Marathon Petroleum boosted the energy sector performance. Positive stock selection in the information technology sector also helped relative performance. Holdings such as Avago Technologies, Automatic Data Processing, and Applied Materials contributed positively to absolute and relative performance. Similar to the consumer discretionary sector, the Fund’s underweight position in information technology modestly detracted from relative performance. Conversely, the Fund’s negative stock selection effect in health care could not be offset by the positive impact from the overweight stance.
Regionally, the United States was the top contributing country in strong stock selection. The top contributing stocks in the United States were Home Depot, CVS Health, Medtronic, Cardinal Health and NIKE. Europe had the largest negative impact due to stock selection. The three energy-related stocks of Schlumberger, LyondellBasell Industries, and Seadrill (no longer owned) had the largest negative impact.
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 MSCI World Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. It is not possible to invest directly in an index. This is the Fund’s primary index.
The Fund’s gross dividend yield (before deduction of Fund expenses) is 2.82% and is approximately +36 basis points higher than the 2.46% yield of the MSCI World Index. The portfolio continues to maintain a high quality bias as measured by historical dividend growth, free cash flow yield, earnings stability, return on invested capital, free cash flow margins and debt levels. Importantly, despite this high quality bias, the portfolio is attractively valued compared to the Index. Dividends rose throughout 2014 and the bulk of the companies (89%) in the Fund increased their dividends in the year 2013. The average dividend increase for the year was +9.7%.
Roger J. Sit Raymond E. Sit Tasha M. Murdoff
Kent L. Johnson Michael J. Stellmacher
Portfolio Managers
16 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
COMPARATIVE RATES OF RETURNS
as of December 31, 2014
Sit Global | |||||||||||||||
Dividend | |||||||||||||||
Growth Fund | MSCI | ||||||||||||||
Class I | Class S | World Index 1 | |||||||||||||
Six Month | 0.14 | % | 0.02 | % | -1.17 | % | |||||||||
One Year | 4.03 | 3.76 | 4.94 | ||||||||||||
Five Year | 9.35 | 9.07 | 10.20 | ||||||||||||
Since Inception | 10.30 | 10.02 | 8.37 | ||||||||||||
(9/30/08) |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. It is not possible to invest directly in an index.
PORTFOLIO SUMMARY
Class I: | ||
Net Asset Value 12/31/14: | $14.53 Per Share | |
Net Asset Value 6/30/14: | $15.74 Per Share | |
Total Net Assets: | $24.0 Million | |
Class S: | ||
Net Asset Value 12/31/14: | $14.52 Per Share | |
Net Asset Value 6/30/14: | $15.72 Per Share | |
Total Net Assets: | $5.7 Million | |
Weighted Average Market Cap: | $102.7 Billion |
TOP 10 HOLDINGS
1. Medtronic, Inc.
2. Verizon Communications, Inc.
3. Roche Holding AG
4. Diageo, PLC, ADR
5. Seven & I Holdings Co., Ltd.
6. Johnson & Johnson
7. Nestle SA
8. Chevron Corp.
9. Cardinal Health, Inc.
10. DS Smith, PLC
Based on total net assets as of December 31, 2014. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2014. Subject to change.
DECEMBER 31, 2014 |
17 |
|
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit Global Dividend Growth Fund
|
| |||||||
Quantity | Name of Issuer | Fair Value ($) | ||||||
|
| |||||||
| Common Stocks - 90.2% | |||||||
| Asia - 5.4% | |||||||
| Australia - 0.4% | |||||||
4,550 | Westpac Banking Corp., ADR | 122,395 | ||||||
|
| |||||||
| China/Hong Kong - 1.3% | |||||||
8,500 | HSBC Holdings, PLC, ADR | 401,455 | ||||||
|
| |||||||
| Japan - 2.2% | |||||||
17,900 | Seven & I Holdings Co., Ltd. | 643,887 | ||||||
|
| |||||||
| Singapore - 1.5% | |||||||
4,400 | Avago Technologies, Ltd. | 442,596 | ||||||
|
| |||||||
| Europe - 28.7% | |||||||
| Belgium - 1.5% | |||||||
3,975 | Anheuser-Busch InBev NV, ADR | 446,472 | ||||||
|
| |||||||
| France - 3.7% | |||||||
5,120 | BNP Paribas SA | 302,255 | ||||||
18,300 | GDF Suez | 426,740 | ||||||
4,425 | Schlumberger, Ltd. | 377,939 | ||||||
|
| |||||||
1,106,934 | ||||||||
|
| |||||||
| Germany - 2.6% | |||||||
1,965 | Allianz SE | 325,456 | ||||||
3,800 | Siemens AG | 426,377 | ||||||
|
| |||||||
751,833 | ||||||||
|
| |||||||
| Ireland - 1.8% | |||||||
2,400 | Accenture, PLC | 214,344 | ||||||
3,050 | Covidien, PLC | 311,954 | ||||||
|
| |||||||
526,298 | ||||||||
|
| |||||||
| Italy - 0.6% | |||||||
8,615 | Azimut Holding SpA | 187,156 | ||||||
|
| |||||||
| Netherlands - 2.5% | |||||||
4,675 | LyondellBasell Industries NV | 371,148 | ||||||
8,200 | Nielsen Holdings NV | 366,786 | ||||||
|
| |||||||
737,934 | ||||||||
|
| |||||||
| Spain - 1.2% | |||||||
37,500 | Banco Bilbao Vizcaya Argentaria SA, ADR | 352,125 | ||||||
|
| |||||||
| Switzerland - 7.0% | |||||||
1,900 | ACE, Ltd. | 218,272 | ||||||
4,510 | Adecco SA | 310,014 | ||||||
8,150 | Nestle SA | 594,143 | ||||||
2,575 | Roche Holding AG | 697,676 | ||||||
125 | SGS SA | 255,246 | ||||||
|
| |||||||
2,075,351 | ||||||||
|
| |||||||
| United Kingdom - 7.8% | |||||||
139,700 | Barclays, PLC | 525,181 | ||||||
10,090 | Burberry Group, PLC | 256,001 | ||||||
4,400 | Delphi Automotive, PLC | 319,968 |
|
| |||||||
Quantity | Name of Issuer | Fair Value ($) | ||||||
|
| |||||||
5,850 | Diageo, PLC, ADR | 667,426 | ||||||
109,890 | DS Smith, PLC | 547,998 | ||||||
|
| |||||||
2,316,574 | ||||||||
|
| |||||||
| North America - 56.1% | |||||||
| Canada - 2.4% | |||||||
9,600 | BCE, Inc. | 440,256 | ||||||
8,200 | Suncor Energy, Inc. | 260,596 | ||||||
|
| |||||||
700,852 | ||||||||
|
| |||||||
| United States - 53.7% | |||||||
1,550 | 3M Co. | 254,696 | ||||||
1,600 | Ameriprise Financial, Inc. | 211,600 | ||||||
4,900 | Apple, Inc. | 540,862 | ||||||
5,900 | Applied Materials, Inc. | 147,028 | ||||||
8,400 | Arthur J Gallagher & Co. | 395,472 | ||||||
2,150 | Automatic Data Processing, Inc. | 179,246 | ||||||
8,000 | Bristol-Myers Squibb Co. | 472,240 | ||||||
6,800 | Cardinal Health, Inc. | 548,964 | ||||||
16,900 | CenterPoint Energy, Inc. | 395,967 | ||||||
5,150 | Chevron Corp. | 577,727 | ||||||
3,700 | CVS Health Corp. | 356,347 | ||||||
4,900 | Discover Financial Services | 320,901 | ||||||
4,175 | Emerson Electric Co. | 257,724 | ||||||
4,100 | Home Depot, Inc. | 430,377 | ||||||
4,800 | Honeywell International, Inc. | 479,616 | ||||||
7,500 | Intel Corp. | 272,175 | ||||||
4,900 | International Paper Co. | 262,542 | ||||||
5,900 | Johnson & Johnson | 616,963 | ||||||
7,400 | JPMorgan Chase & Co. | 463,092 | ||||||
6,750 | Kinder Morgan, Inc. | 285,592 | ||||||
2,325 | Lockheed Martin Corp. | 447,725 | ||||||
6,000 | Macy’s, Inc. | 394,500 | ||||||
2,900 | Marathon Petroleum Corp. | 261,754 | ||||||
3,600 | Marsh & McLennan Cos., Inc. | 206,064 | ||||||
10,600 | Medtronic, Inc. | 765,320 | ||||||
9,500 | Microsoft Corp. | 441,275 | ||||||
4,000 | NIKE, Inc. | 384,600 | ||||||
3,850 | Occidental Petroleum Corp. | 310,348 | ||||||
4,500 | PepsiCo, Inc. | 425,520 | ||||||
3,100 | Philip Morris International, Inc. | 252,495 | ||||||
3,650 | Procter & Gamble Co. | 332,478 | ||||||
4,200 | Prudential Financial, Inc. | 379,932 | ||||||
2,800 | Qualcomm, Inc. | 208,124 | ||||||
1,525 | Snap-On, Inc. | 208,529 | ||||||
5,600 | St. Jude Medical, Inc. | 364,168 | ||||||
4,950 | Starbucks Corp. | 406,148 | ||||||
4,500 | Time Warner, Inc. | 384,390 | ||||||
3,250 | TJX Cos., Inc. | 222,885 | ||||||
1,800 | Union Pacific Corp. | 214,434 | ||||||
2,800 | United Parcel Service, Inc. | 311,276 | ||||||
2,450 | United Technologies Corp. | 281,750 |
See accompanying notes to financial statements.
| ||
18 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
2,800 | US Bancorp | 125,860 | ||||
15,100 | Verizon Communications, Inc. | 706,378 | ||||
9,600 | Xilinx, Inc. | 415,584 | ||||
|
| |||||
15,920,668 | ||||||
|
| |||||
Total Common Stocks | 26,732,530 | |||||
|
| |||||
Investment Companies - 1.0% | ||||||
8,000 | Kayne Anderson MLP Investment Co. | 305,440 | ||||
|
| |||||
(cost: $254,428) | ||||||
Total Investments in Securities - 91.2% | 27,037,970 | |||||
Other Assets and Liabilities, net - 8.8% | 2,602,467 | |||||
|
| |||||
Total Net Assets - 100.0% | $29,640,437 | |||||
|
|
Numeric footnotes not disclosed are not applicable to this Schedule of Investments
ADR — American Depositary Receipt
MLP — Master Limited Partnership
PLC — Public Limited Company
See accompanying notes to financial statements.
| ||
DECEMBER 31, 2014 |
19 |
|
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit Global Dividend Growth Fund (Continued)
A summary of the levels for the Fund’s investments as of December 31, 2014 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||||
Level 1 Quoted Price ($) | Level 2 Other significant observable inputs ($) | Level 3 Significant | Total ($) | |||||||||||
Common Stocks | ||||||||||||||
Australia | 122,395 | — | — | 122,395 | ||||||||||
Belgium | 446,472 | — | — | 446,472 | ||||||||||
Canada | 700,852 | — | — | 700,852 | ||||||||||
China/Hong Kong | 401,455 | — | — | 401,455 | ||||||||||
France | 377,939 | 728,995 | — | 1,106,934 | ||||||||||
Germany | — | 751,833 | — | 751,833 | ||||||||||
Ireland | 526,298 | — | — | 526,298 | ||||||||||
Italy | — | 187,156 | — | 187,156 | ||||||||||
Japan | — | 643,887 | — | 643,887 | ||||||||||
Netherlands | 737,934 | — | — | 737,934 | ||||||||||
Singapore | 442,596 | — | — | 442,596 | ||||||||||
Spain | 352,125 | — | — | 352,125 | ||||||||||
Switzerland | 218,272 | 1,857,079 | — | 2,075,351 | ||||||||||
United Kingdom | 987,394 | 1,329,180 | — | 2,316,574 | ||||||||||
United States | 15,920,668 | — | — | 15,920,668 | ||||||||||
21,234,400 | 5,498,130 | — | 26,732,530 | |||||||||||
Investment Companies | 305,440 | — | — | 305,440 | ||||||||||
Total: | 21,539,840 | 5,498,130 | — | 27,037,970 |
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.
| ||
20 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
[This page intentionally left blank.]
DECEMBER 31, 2014 |
21 |
|
OBJECTIVE & STRATEGY
The objective of the Large Cap Growth Fund is to maximize long-term capital appreciation. The Fund pursues this objective by investing at least 80% of its net assets in the common stocks of domestic growth companies with capitalizations of $5 billion or more at the time of purchase.
The Sit Large Cap Growth Fund’s six-month return was +6.63%, compared to the +6.34% return for the Russell 1000® Growth Index. The S&P 500® Index return for the period was +6.12%.
U.S stocks overcame significant volatility in recent months to post solid gains during the second half of 2014. There were clearly some striking developments in the global economy in recent months, including a surge in the value of the U.S. dollar and an almost 50% decline in the price of oil since mid-2014. While the impact of this volatility will play out in the markets – and corporate earnings – in the coming months, portfolios have been somewhat repositioned based on these developments. Specifically, we have recently reduced the weighting of our energy holdings, as low commodity prices will result in significantly lower earnings, and, relatedly, we have cut back our positions in equipment companies servicing the energy sector, particularly in the industrial service and producer manufacturing sectors. Conversely, we have increased weightings in the health technology and technology service sectors, as we believe companies in these groups can deliver above-average earnings growth in an environment of moderate growth for the overall economy. Regardless of sector, our investment emphasis remains on high quality companies that can generate predictable earnings growth, even in volatile economic conditions.
Relative to the Russell 1000® Growth Index, the Fund’s strong performance was positively impacted by stock selection in the consumer services, retail trade and health services sectors. Visa, Time Warner, CVS Health, TJX, UnitedHealth, HCA and Express Scripts were among the key outperformers within these sectors. Conversely, the Fund’s return was negatively impacted by holdings in the technology services, producer manufacturing and energy minerals sectors. Individual stocks in these groups that contributed most negatively to returns included Facebook, Priceline, Google, Trinity Industries, Eaton, Continental Resources and Gulfport Energy. The best-performing stocks over the period were Regeneron Pharmaceuticals (+45% six-month gain) and Avago Technologies (+41%), while
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.
Continental Resources (-51%) and 3D Systems (- 47%) were the worst performers.
We remain enthusiastic about the long-term outlook for companies held in the Fund based on attractive valuations and sustainable earnings growth potential.
Roger J. Sit
Ronald D. Sit
Michael J. Stellmacher
Portfolio Managers
22 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
COMPARATIVE RATES OF RETURNS
as of December 31, 2014
Russell | |||||||||||||||
Sit Large | 1000® | Russell | |||||||||||||
Cap Growth | Growth | 1000® | |||||||||||||
Fund | Index 1 | Index 2 | |||||||||||||
Six Month | 6.63 | % | 6.34 | % | 5.56% | ||||||||||
One Year | 10.97 | 13.05 | 13.24 | ||||||||||||
Five Year | 12.48 | 15.81 | 15.64 | ||||||||||||
Ten Year | 7.62 | 8.49 | 7.96 | ||||||||||||
Since Inception 3 (9/2/82) | 10.07 | 11.16 | 12.00 |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 Russell 1000® Growth Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.
2 Russell 1000® Index is an unmanaged index that measures the performance of approximately 1,000 of the largest U.S. companies by market capitalization.
3 On 6/6/93, the Fund’s investment objective changed to allow for a portfolio of 100% stocks. Prior to that time, the portfolio was required to contain no more than 80% stocks.
PORTFOLIO SUMMARY
Net Asset Value 12/31/14: | $45.51 Per Share | |
Net Asset Value 6/30/14: | $52.51 Per Share | |
Total Net Assets: | $174.8 Million | |
Weighted Average Market Cap: | $119.5 Billion |
TOP 10 HOLDINGS
1. Apple, Inc.
2. Google, Inc.
3. Gilead Sciences, Inc.
4. Visa, Inc.
5. Microsoft Corp.
6. CVS Caremark Corp.
7. PepsiCo, Inc.
8. Home Depot, Inc.
9. Union Pacific Corp.
10. Ecolab, Inc.
Based on total net assets as of December 31, 2014. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2014. Subject to change.
DECEMBER 31, 2014 |
23 |
|
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit Large Cap Growth Fund
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Common Stocks - 99.1% |
| |||||
Commercial Services - 2.0% |
| |||||
21,600 | Equifax, Inc. | 1,746,792 | ||||
30,600 | Robert Half International, Inc. | 1,786,428 | ||||
|
| |||||
3,533,220 | ||||||
|
| |||||
Communications - 2.6% | ||||||
13,300 | SBA Communications Corp. * | 1,473,108 | ||||
66,800 | Verizon Communications, Inc. | 3,124,904 | ||||
|
| |||||
4,598,012 | ||||||
|
| |||||
Consumer Durables - 0.8% | ||||||
9,800 | Polaris Industries, Inc. | 1,482,152 | ||||
|
| |||||
Consumer Non-Durables - 7.1% | ||||||
21,800 | Michael Kors Holdings, Ltd. * | 1,637,180 | ||||
25,000 | NIKE, Inc. | 2,403,750 | ||||
41,800 | PepsiCo, Inc. | 3,952,608 | ||||
18,600 | Philip Morris International, Inc. | 1,514,970 | ||||
31,800 | Procter & Gamble Co. | 2,896,662 | ||||
|
| |||||
12,405,170 | ||||||
|
| |||||
Consumer Services - 6.9% | ||||||
26,400 | H&R Block, Inc. | 889,152 | ||||
32,700 | Starbucks Corp. | 2,683,035 | ||||
23,175 | Time Warner, Inc. | 1,979,608 | ||||
54,500 | Twenty-First Century Fox, Inc. | 2,093,072 | ||||
17,000 | Visa, Inc. | 4,457,400 | ||||
|
| |||||
12,102,267 | ||||||
|
| |||||
Electronic Technology - 11.7% | ||||||
76,475 | Apple, Inc. | 8,441,310 | ||||
94,800 | Applied Materials, Inc. | 2,362,416 | ||||
24,700 | Avago Technologies, Ltd. | 2,484,573 | ||||
52,000 | Ciena Corp. * | 1,009,320 | ||||
42,300 | EMC Corp. | 1,258,002 | ||||
58,500 | Intel Corp. | 2,122,965 | ||||
30,800 | Qualcomm, Inc. | 2,289,364 | ||||
12,500 | Xilinx, Inc. | 541,125 | ||||
|
| |||||
20,509,075 | ||||||
|
| |||||
Energy Minerals - 2.8% | ||||||
30,200 | Continental Resources, Inc. * | 1,158,472 | ||||
9,300 | EOG Resources, Inc. | 856,251 | ||||
13,800 | Gulfport Energy Corp. * | 576,012 | ||||
13,130 | Marathon Petroleum Corp. | 1,185,115 | ||||
12,900 | Occidental Petroleum Corp. | 1,039,869 | ||||
|
| |||||
4,815,719 | ||||||
|
| |||||
Finance - 3.3% | ||||||
7,500 | Goldman Sachs Group, Inc. | 1,453,725 | ||||
31,800 | JPMorgan Chase & Co. | 1,990,044 |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
16,700 | Marsh & McLennan Cos., Inc. | 955,908 | ||||
14,900 | T Rowe Price Group, Inc. | 1,279,314 | ||||
|
| |||||
5,678,991 | ||||||
|
| |||||
Health Services - 3.5% | ||||||
19,600 | Express Scripts Holding Co. * | 1,659,532 | ||||
11,900 | McKesson Corp. | 2,470,202 | ||||
19,300 | UnitedHealth Group, Inc. | 1,951,037 | ||||
|
| |||||
6,080,771 | ||||||
|
| |||||
Health Technology - 17.3% | ||||||
7,500 | Actavis, PLC * | 1,930,575 | ||||
8,500 | Alexion Pharmaceuticals, Inc. * | 1,572,755 | ||||
13,400 | Allergan, Inc. | 2,848,706 | ||||
28,800 | Bristol-Myers Squibb Co. | 1,700,064 | ||||
21,900 | Celgene Corp. * | 2,449,734 | ||||
27,000 | Covidien, PLC | 2,761,560 | ||||
50,200 | Gilead Sciences, Inc. * | 4,731,852 | ||||
18,800 | Johnson & Johnson | 1,965,916 | ||||
42,500 | Medtronic, Inc. | 3,068,500 | ||||
20,200 | Mylan, Inc./PA * | 1,138,674 | ||||
2,400 | Regeneron Pharmaceuticals, Inc. * | 984,600 | ||||
35,600 | St. Jude Medical, Inc. | 2,315,068 | ||||
11,900 | Thermo Fisher Scientific, Inc. | 1,490,951 | ||||
11,775 | Zimmer Holdings, Inc. | 1,335,520 | ||||
|
| |||||
30,294,475 | ||||||
|
| |||||
Industrial Services - 1.2% | ||||||
23,700 | Schlumberger, Ltd. | 2,024,217 | ||||
|
| |||||
Process Industries - 3.0% | ||||||
30,000 | Ecolab, Inc. | 3,135,600 | ||||
15,000 | International Paper Co. | 803,700 | ||||
9,500 | Praxair, Inc. | 1,230,820 | ||||
|
| |||||
5,170,120 | ||||||
|
| |||||
Producer Manufacturing - 9.0% | ||||||
11,400 | 3M Co. | 1,873,248 | ||||
5,500 | Caterpillar, Inc. | 503,415 | ||||
4,800 | Cummins, Inc. | 692,016 | ||||
26,700 | Danaher Corp. | 2,288,457 | ||||
15,700 | Delphi Automotive, PLC | 1,141,704 | ||||
21,800 | Emerson Electric Co. | 1,345,714 | ||||
27,000 | Honeywell International, Inc. | 2,697,840 | ||||
11,000 | Illinois Tool Works, Inc. | 1,041,700 | ||||
15,300 | Raytheon Co. | 1,655,001 | ||||
37,600 | Trinity Industries, Inc. | 1,053,176 | ||||
12,600 | United Technologies Corp. | 1,449,000 | ||||
|
| |||||
15,741,271 | ||||||
|
|
See accompanying notes to financial statements.
| ||
24 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Retail Trade - 7.8% |
| |||||
41,700 | CVS Health Corp. | 4,016,127 | ||||
17,200 | Dick’s Sporting Goods, Inc. | 853,980 | ||||
36,500 | Home Depot, Inc. | 3,831,405 | ||||
15,600 | Macy’s, Inc. | 1,025,700 | ||||
20,900 | Target Corp. | 1,586,519 | ||||
34,500 | TJX Cos., Inc. | 2,366,010 | ||||
|
| |||||
13,679,741 | ||||||
|
| |||||
Technology Services - 16.6% | ||||||
24,700 | Accenture, PLC | 2,205,957 | ||||
38,200 | Adobe Systems, Inc. * | 2,777,140 | ||||
16,800 | ANSYS, Inc. * | 1,377,600 | ||||
42,200 | Cognizant Technology Solutions Corp. * | 2,222,252 | ||||
30,100 | Facebook, Inc. * | 2,348,402 | ||||
6,300 | Google, Inc.-Class A * | 3,343,158 | ||||
6,800 | Google, Inc.-Class C * | 3,579,520 | ||||
23,900 | Informatica Corp. * | 911,427 | ||||
94,700 | Microsoft Corp. | 4,398,815 | ||||
65,700 | Oracle Corp. | 2,954,529 | ||||
2,550 | priceline.com, Inc. * | 2,907,536 | ||||
|
| |||||
29,026,336 | ||||||
|
| |||||
Transportation - 3.5% | ||||||
14,000 | Ryder System, Inc. | 1,299,900 |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
26,900 | Union Pacific Corp. | 3,204,597 | ||||
13,800 | United Parcel Service, Inc. | 1,534,146 | ||||
|
| |||||
6,038,643 | ||||||
|
| |||||
Total Common Stocks | 173,180,180 | |||||
|
| |||||
Total Investments in Securities - 99.1% | 173,180,180 | |||||
Other Assets and Liabilities, net - 0.9% | 1,571,435 | |||||
|
| |||||
Total Net Assets - 100.0% | $174,751,615 | |||||
|
|
* | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
PLC — Public Limited Company
A summary of the levels for the Fund’s investments as of December 31, 2014 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||
Level 1 Quoted Price ($) | Level 2 Other significant observable inputs ($) | Level 3 Significant | Total ($) | |||||||||
Common Stocks ** | 173,180,180 | — | — | 173,180,180 | ||||||||
Total: | 173,180,180 | — | — | 173,180,180 |
** | For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown. |
For the reporting period, there were no transfers between levels 1, 2 and 3.
See accompanying notes to financial statements.
| ||
DECEMBER 31, 2014 |
25 |
|
OBJECTIVE & STRATEGY
The objective of the Sit Mid Cap Growth Fund is to maximize long-term capital appreciation. The Fund pursues this objective by investing at least 80% of its net assets in common stocks that, at the time of purchase, have market capitalizations that fall within the range of companies included in the Russell Midcap® Growth Index during the most recent 12-month period. The Russell Midcap® Growth Index ranged from approximately $275 million to $38.5 billion during the 12-month period ended December 31, 2014.
The Sit Mid Cap Growth Fund’s return for the second half of 2014 was +3.40%, compared to +5.07% for the Russell Midcap® Growth Index. The S&P Mid Cap 400® Index rose +2.47% during the period.
Equity markets moved solidly ahead during the second half of 2014, buoyed by continued low interest rates and some signs of improvement in the U.S. economy after a slow start to the year. Although growth prospects have improved somewhat in the domestic economy, challenges persist in many other regions of the world, particularly Japan and Europe. The overall growth for the global economy, as a whole, remains largely unchanged, as we continue to think we are in an environment of modest growth with minimal inflationary pressures. We strongly believe that an investment focus should be placed on quality growth companies in the context of a well-diversified portfolio. Our investment staff continues to identify attractive themes within many sectors, with a particular emphasis on health care. Our investment focus is on companies that innovate and provide good value – primarily through therapies, new drugs or technologies – and can ideally lower costs in a more regulated environment. While the health care sector weightings increased compared to six months ago, weightings in energy minerals, industrial services and producer manufacturing decreased. Positions in these sectors were reduced based on these sectors’ earnings risk due to falling energy prices or the slowdowns being experienced in many economies outside the U.S.
Over the past six months, while the Fund posted solid absolute returns, performance slightly lagged the return for the Russell Midcap® Growth Index. Lagging sectors over the period included consumer non-durables, producer manufacturing and process industries. In terms of individual stocks, the worst six-month performers included Continental Resources, 3D Systems, Southwestern Energy, Trinity Industries and Gulfport Energy. The top-performing sectors, in terms of relative returns, included electronic technology, energy minerals, and consumer services. Stocks that turned in strong performance over the period included Skyworks Solutions, Avago Technologies, Ulta Salon, Concur Technologies and Arcadia Healthcare. Overweighting the health technology sector was beneficial to returns over the
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.
period, while an overweight position in the industrial services sector detracted from returns. This latter sector includes many energy service companies, which were hit hard by the dramatic drop in oil prices during the second half of the year.
Our research staff remains committed and focused on identifying investment opportunities that will help our shareholders achieve their investment goals over the long term.
Roger J. Sit
Kent L. Johnson
Robert W. Sit
Portfolio Managers
26 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
COMPARATIVE RATES OF RETURNS
as of December 31, 2014
Sit Mid Cap | Russell Midcap® Growth Index 1 | Russell Midcap® Index 2 | |||||||||||||
Six Month | 3.40 | % | 5.07 | % | 4.18 | % | |||||||||
One Year | 6.01 | 11.90 | 13.22 | ||||||||||||
Five Year | 14.74 | 16.94 | 17.19 | ||||||||||||
Ten Year | 8.27 | 9.43 | 9.56 | ||||||||||||
Since Inception (9/2/82) | 12.03 | 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 12/31/14: | $19.09 Per Share | |
Net Asset Value 6/30/14: | $21.08 Per Share | |
Total Net Assets: | $177.9 Million | |
Weighted Average Market Cap: | $18.7 Billion |
TOP 10 HOLDINGS
1. Skyworks Solutions, Inc.
2. TJX Cos., Inc.
3. Allergan, Inc.
4. Avago Technologies, Ltd.
5. Macy’s, Inc.
6. Ecolab, Inc.
7. Marriott International, Inc.
8. Ultimate Software Group, Inc.
9. priceline.com, Inc.
10. Chipotle Mexican Grill, Inc.
Based on total net assets as of December 31, 2014. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2014. Subject to change.
DECEMBER 31, 2014 |
27 |
|
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit Mid Cap Growth Fund
|
| |||||||
Quantity | Name of Issuer | Fair Value ($) | ||||||
|
| |||||||
| Common Stocks - 98.9% |
| ||||||
| Commercial Services - 6.0% |
| ||||||
59,100 | Cardtronics, Inc. * | 2,280,078 | ||||||
21,300 | Equifax, Inc. | 1,722,531 | ||||||
19,100 | Moody’s Corp. | 1,829,971 | ||||||
31,200 | Nielsen Holdings NV | 1,395,576 | ||||||
31,500 | Robert Half International, Inc. | 1,838,970 | ||||||
13,900 | Towers Watson & Co. | 1,573,063 | ||||||
|
| |||||||
10,640,189 | ||||||||
|
| |||||||
| Communications - 1.2% |
| ||||||
19,500 | SBA Communications Corp. * | 2,159,820 | ||||||
|
| |||||||
| Consumer Durables - 3.8% |
| ||||||
16,300 | Carlisle Cos., Inc. | 1,470,912 | ||||||
15,900 | Polaris Industries, Inc. | 2,404,716 | ||||||
20,900 | Snap-On, Inc. | 2,857,866 | ||||||
|
| |||||||
6,733,494 | ||||||||
|
| |||||||
| Consumer Non-Durables - 4.9% |
| ||||||
52,200 | Coca-Cola Enterprises, Inc. | 2,308,284 | ||||||
14,500 | G-III Apparel Group, Ltd. * | 1,464,645 | ||||||
82,300 | Iconix Brand Group, Inc. * | 2,780,917 | ||||||
28,900 | Michael Kors Holdings, Ltd. * | 2,170,390 | ||||||
|
| |||||||
8,724,236 | ||||||||
|
| |||||||
| Consumer Services - 7.3% |
| ||||||
22,900 | AMC Networks, Inc. * | 1,460,333 | ||||||
4,300 | Chipotle Mexican Grill, Inc. * | 2,943,393 | ||||||
67,100 | Dunkin’ Brands Group, Inc. | 2,861,815 | ||||||
26,800 | H&R Block, Inc. | 902,624 | ||||||
53,600 | Lions Gate Entertainment Corp. | 1,716,272 | ||||||
39,532 | Marriott International, Inc. | 3,084,683 | ||||||
|
| |||||||
12,969,120 | ||||||||
|
| |||||||
| Electronic Technology - 7.7% |
| ||||||
23,400 | 3D Systems Corp. * | 769,158 | ||||||
35,700 | Avago Technologies, Ltd. | 3,591,063 | ||||||
74,700 | Ciena Corp. * | 1,449,927 | ||||||
11,100 | F5 Networks, Inc. * | 1,448,162 | ||||||
62,400 | Skyworks Solutions, Inc. | 4,537,104 | ||||||
6,400 | Synaptics, Inc. * | 440,576 | ||||||
35,100 | Xilinx, Inc. | 1,519,479 | ||||||
|
| |||||||
13,755,469 | ||||||||
|
| |||||||
| Energy Minerals - 2.6% |
| ||||||
25,400 | Continental Resources, Inc. * | 974,344 | ||||||
44,700 | Gulfport Energy Corp. * | 1,865,778 | ||||||
20,805 | Marathon Petroleum Corp. | 1,877,859 | ||||||
|
| |||||||
4,717,981 | ||||||||
|
| |||||||
| Finance - 9.2% | |||||||
8,900 | Affiliated Managers Group, Inc. * | 1,888,936 | ||||||
22,100 | Ameriprise Financial, Inc. | 2,922,725 | ||||||
39,500 | Arthur J Gallagher & Co. | 1,859,660 |
|
| |||||||
Quantity | Name of Issuer | Fair Value ($) | ||||||
|
| |||||||
24,700 | Discover Financial Services | 1,617,603 | ||||||
29,700 | First Republic Bank | 1,547,964 | ||||||
7,200 | Intercontinentalexchange Group, Inc. | 1,578,888 | ||||||
15,700 | PacWest Bancorp | 713,722 | ||||||
15,600 | Signature Bank/New York NY * | 1,964,976 | ||||||
26,200 | T Rowe Price Group, Inc. | 2,249,532 | ||||||
|
| |||||||
16,344,006 | ||||||||
|
| |||||||
| Health Services - 4.1% | |||||||
38,600 | Acadia Healthcare Co., Inc. * | 2,362,706 | ||||||
25,000 | Express Scripts Holding Co. * | 2,116,750 | ||||||
14,500 | Stericycle, Inc. * | 1,900,660 | ||||||
16,200 | Team Health Holdings, Inc. * | 931,986 | ||||||
|
| |||||||
7,312,102 | ||||||||
|
| |||||||
| Health Technology - 12.6% | |||||||
10,900 | Actavis, PLC * | 2,805,769 | ||||||
12,800 | Alexion Pharmaceuticals, Inc. * | 2,368,384 | ||||||
13,000 | Align Technology, Inc. * | 726,830 | ||||||
18,300 | Allergan, Inc. | 3,890,397 | ||||||
19,400 | Celgene Corp. * | 2,170,084 | ||||||
6,000 | IDEXX Laboratories, Inc. * | 889,620 | ||||||
10,300 | Jazz Pharmaceuticals, PLC * | 1,686,419 | ||||||
18,700 | Mylan, Inc. * | 1,054,119 | ||||||
33,200 | St. Jude Medical, Inc. | 2,158,996 | ||||||
20,950 | Thermo Fisher Scientific, Inc. | 2,624,826 | ||||||
14,200 | Vertex Pharmaceuticals, Inc. * | 1,686,960 | ||||||
3,275 | Zimmer Holdings, Inc. | 371,450 | ||||||
|
| |||||||
22,433,854 | ||||||||
|
| |||||||
| Industrial Services - 2.9% | |||||||
29,800 | Jacobs Engineering Group, Inc. * | 1,331,762 | ||||||
13,500 | Oceaneering International, Inc. | 793,935 | ||||||
8,850 | Schlumberger, Ltd. | 755,878 | ||||||
52,600 | Waste Connections, Inc. | 2,313,874 | ||||||
|
| |||||||
5,195,449 | ||||||||
|
| |||||||
| Non-Energy Minerals - 0.9% | |||||||
20,400 | Eagle Materials, Inc. | 1,551,012 | ||||||
|
| |||||||
| Process Industries - 5.1% | |||||||
8,400 | Airgas, Inc. | 967,512 | ||||||
33,300 | Ecolab, Inc. | 3,480,516 | ||||||
31,600 | FMC Corp. | 1,802,148 | ||||||
20,100 | International Paper Co. | 1,076,958 | ||||||
27,000 | Scotts Miracle-Gro Co. | 1,682,640 | ||||||
|
| |||||||
9,009,774 | ||||||||
|
| |||||||
| Producer Manufacturing - 8.4% | |||||||
37,400 | AMETEK, Inc. | 1,968,362 | ||||||
14,100 | Cummins, Inc. | 2,032,797 | ||||||
19,600 | Delphi Automotive, PLC | 1,425,312 | ||||||
23,300 | Flowserve Corp. | 1,394,039 | ||||||
33,900 | Hexcel Corp. * | 1,406,511 | ||||||
22,700 | Ingersoll-Rand, PLC | 1,438,953 |
See accompanying notes to financial statements.
| ||
28 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
27,500 | ITT Corp. | 1,112,650 | ||||
32,400 | Trinity Industries, Inc. | 907,524 | ||||
52,400 | Tyco International, PLC | 2,298,264 | ||||
3,500 | WW Grainger, Inc. | 892,115 | ||||
|
| |||||
14,876,527 | ||||||
|
| |||||
Retail Trade - 8.6% | ||||||
56,900 | Dick’s Sporting Goods, Inc. | 2,825,085 | ||||
37,000 | Finish Line, Inc. | 899,470 | ||||
53,700 | Macy’s, Inc. | 3,530,775 | ||||
18,300 | Nordstrom, Inc. | 1,452,837 | ||||
59,100 | TJX Cos., Inc. | 4,053,078 | ||||
19,500 | Ulta Salon Cosmetics & Fragrance, Inc. * | 2,492,880 | ||||
|
| |||||
15,254,125 | ||||||
|
| |||||
Technology Services - 8.7% | ||||||
33,300 | ANSYS, Inc. * | 2,730,600 | ||||
51,505 | Aspen Technology, Inc. * | 1,803,705 | ||||
38,900 | Cognizant Technology Solutions Corp. * | 2,048,474 | ||||
19,200 | CommVault Systems, Inc. * | 992,448 | ||||
20,400 | Euronet Worldwide, Inc. * | 1,119,960 | ||||
20,400 | Informatica Corp. * | 777,954 | ||||
2,650 | priceline.com, Inc. * | 3,021,556 | ||||
20,700 | Ultimate Software Group, Inc. * | 3,039,070 | ||||
|
| |||||
15,533,767 | ||||||
|
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Transportation - 3.4% |
| |||||
39,400 | Alaska Air Group, Inc. | 2,354,544 | ||||
23,700 | Ryder System, Inc. | 2,200,545 | ||||
52,300 | Swift Transportation Co. * | 1,497,349 | ||||
|
| |||||
6,052,438 | ||||||
|
| |||||
Utilities - 1.5% | ||||||
51,500 | Calpine Corp. * | 1,139,695 | ||||
29,700 | Wisconsin Energy Corp. | 1,566,378 | ||||
|
| |||||
2,706,073 | ||||||
|
| |||||
Total Common Stocks | 175,969,436 | |||||
|
| |||||
Total Investments in Securities - 98.9% | 175,969,436 | |||||
Other Assets and Liabilities, net - 1.1% | 1,918,669 | |||||
|
| |||||
Total Net Assets - 100.0% | $177,888,105 | |||||
|
|
* | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
PLC — Public Limited Company
A summary of the levels for the Fund’s investments as of December 31, 2014 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||
Level 1 Price ($) | Level 2 Other significant observable inputs ($) | Level 3 Significant | Total ($) | |||||||||
Common Stocks ** | 175,969,436 | — | — | 175,969,436 | ||||||||
Total: | 175,969,436 | — | — | 175,969,436 |
** | For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown. |
For the reporting period, there were no transfers between levels 1, 2 and 3.
See accompanying notes to financial statements.
| ||
DECEMBER 31, 2014 |
29 |
|
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 ($10.6 billion as of December 31, 2014).
The Adviser invests in a diversified group of growing small companies it believes exhibit the potential for superior growth. The Adviser believes that a company’s earnings growth is the primary determinant of its potential long-term return and evaluates a company’s potential for above average long-term earnings and revenue growth.
The Sit Small Cap Growth Fund returned +1.87% during the second half of 2014. This compares to the six- month return of +3.31% for the Russell 2000® Growth Index and the +1.65% return for the Russell 2000® Index.
Small capitalization stocks posted modest returns over past six months. Market volatility has increased in recent months, partially driven by significant currency and commodity price swings during the period. Although we believe stocks can climb higher from here, we expect volatility to persist due to a number of factors, including the potential for Federal Reserve interest rate increases, economic challenges occurring in many regions of the world and geopolitical events. Relative to larger cap stocks, valuations for small stocks have retreated somewhat compared to this time last year. Second, since smaller companies tend to be more domestically oriented, they are somewhat more immune to economic weakness (and currency swings) occurring outside the U.S. Our investment team continues to focus on high quality, well-managed small companies that can produce strong earnings growth, even in the current slow growth environment. We currently see these opportunities in diverse sectors within the market, particularly the most heavily weighted sectors in the Fund: health technology, technology services, producer manufacturing, finance, electronic technology and health services. Each of these sectors carries a 7% or higher weighing within the Fund, reflecting our desire for diversification in what is likely to be a volatile market environment in the months ahead.
The Fund underperformed the benchmark Russell 2000® Growth Index during the second half of 2014. Relative performance was negatively by impacted by stock selection in the electronic technology and technology services sectors, an underweight position in the strong-performing health technology sector, and overweighting the weak-performing Industrial Services sector, which lagged the index return over the past six months. Conversely, the Fund benefited from strong stock selection in the energy minerals and consumer durables sectors. An overweight position in the outperforming transportation sector also contributed positively to performance.
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.
In terms of individual stocks, the top performers during the period included Puma Biotechnology, Isis Pharmaceuticals, Tetraphase Pharmaceuticals and Skyworks Solutions, all up more than +55% during the period. The worst six-month performers were 3D Systems, Thoratec, Web.com and Gulfport Energy.
Our research team remains highly focused on identifying long-term investment opportunities within the small cap universe. We appreciate shareholders’ continued interest in the Fund.
Roger J. Sit | Michael J. Stellmacher | |
Kent L. Johnson | Robert W. Sit | |
Portfolio Managers |
30 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
COMPARATIVE RATES OF RETURNS
as of December 31, 2014
Sit Small Cap Growth Fund | Russell 2000® | Russell 2000® Index 2 | |||||||||||||
Six Month | 1.87 | % | 3.31 | % | 1.65 | % | |||||||||
One Year | 1.46 | 5.60 | 4.89 | ||||||||||||
Five Year | 14.87 | 16.80 | 15.55 | ||||||||||||
Ten Year | 8.87 | 8.54 | 7.77 | ||||||||||||
Since Inception (7/1/94) | 10.97 | 8.05 | 9.62 |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 Russell 2000® Growth Index is an unmanaged index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.
2 Russell 2000® Index is an unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, an index consisting of the 3,000 largest U.S. companies based on market capitalization.
PORTFOLIO SUMMARY
Net Asset Value 12/31/14: | $55.47 Per Share | |
Net Asset Value 6/30/14: | $61.38 Per Share | |
Total Net Assets: | $99.0 Million | |
Weighted Average Market Cap: | $7.0 Billion |
TOP 10 HOLDINGS
1. Skyworks Solutions, Inc.
2. Alexion Pharmaceuticals, Inc.
3. Polaris Industries, Inc.
4. Ultimate Software Group, Inc.
5. Snap-On, Inc.
6. Buffalo Wild Wings, Inc.
7. Affiliated Managers Group, Inc.
8. Celgene Corp.
9. Synaptics, Inc.
10. First Republic Bank/CA
Based on total net assets as of December 31, 2014. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2014. Subject to change.
DECEMBER 31, 2014 |
31 |
|
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit Small Cap Growth Fund
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Common Stocks - 99.2% |
| |||||
Commercial Services - 3.3% |
| |||||
31,500 | AMN Healthcare Services, Inc. * | 617,400 | ||||
32,600 | Cardtronics, Inc. * | 1,257,708 | ||||
41,700 | On Assignment, Inc. * | 1,384,023 | ||||
|
| |||||
3,259,131 | ||||||
|
| |||||
Communications - 1.2% |
| |||||
10,750 | SBA Communications Corp. * | 1,190,670 | ||||
|
| |||||
Consumer Durables - 4.6% |
| |||||
28,800 | Century Communities, Inc. * | 497,664 | ||||
13,600 | Polaris Industries, Inc. | 2,056,864 | ||||
14,400 | Snap-On, Inc. | 1,969,056 | ||||
|
| |||||
4,523,584 | ||||||
|
| |||||
Consumer Non-Durables - 3.4% |
| |||||
12,390 | G-III Apparel Group, Ltd. * | 1,251,514 | ||||
47,100 | Iconix Brand Group, Inc. * | 1,591,509 | ||||
9,800 | Skechers U.S.A., Inc. * | 541,450 | ||||
|
| |||||
3,384,473 | ||||||
|
| |||||
Consumer Services - 6.2% |
| |||||
10,700 | Buffalo Wild Wings, Inc. * | 1,930,066 | ||||
13,600 | Capella Education Co. | 1,046,656 | ||||
14,300 | DeVry Education Group, Inc. | 678,821 | ||||
35,500 | Dunkin’ Brands Group, Inc. | 1,514,075 | ||||
30,700 | Lions Gate Entertainment Corp. | 983,014 | ||||
|
| |||||
6,152,632 | ||||||
|
| |||||
Electronic Technology - 7.7% |
| |||||
12,950 | 3D Systems Corp. * | 425,666 | ||||
6,700 | Ambarella, Inc. * | 339,824 | ||||
55,500 | Ciena Corp. * | 1,077,255 | ||||
5,600 | F5 Networks, Inc. * | 730,604 | ||||
49,200 | Invensense, Inc. * | 799,992 | ||||
33,800 | Skyworks Solutions, Inc. | 2,457,598 | ||||
26,400 | Synaptics, Inc. * | 1,817,376 | ||||
|
| |||||
7,648,315 | ||||||
|
| |||||
Energy Minerals - 2.6% |
| |||||
14,800 | Carrizo Oil & Gas, Inc. * | 615,680 | ||||
26,600 | Gulfport Energy Corp. * | 1,110,284 | ||||
21,600 | Western Refining, Inc. | 816,048 | ||||
|
| |||||
2,542,012 | ||||||
|
| |||||
Finance - 7.9% |
| |||||
9,000 | Affiliated Managers Group, Inc. * | 1,910,160 | ||||
33,900 | First Republic Bank/CA | 1,766,868 | ||||
8,700 | PacWest Bancorp | 395,502 | ||||
13,000 | Signature Bank/New York NY * | 1,637,480 |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
14,750 | Stifel Financial Corp. * | 752,545 | ||||
10,900 | Texas Capital Bancshares, Inc. * | 592,197 | ||||
17,800 | Validus Holdings, Ltd. | 739,768 | ||||
|
| |||||
7,794,520 | ||||||
|
| |||||
Health Services - 7.4% |
| |||||
24,800 | Acadia Healthcare Co., Inc. * | 1,518,008 | ||||
20,600 | Advisory Board Co. * | 1,008,988 | ||||
22,900 | Air Methods Corp. * | 1,008,287 | ||||
3,800 | Athenahealth, Inc. * | 553,660 | ||||
45,500 | Healthcare Services Group, Inc. | 1,407,315 | ||||
9,700 | Stericycle, Inc. * | 1,271,476 | ||||
8,900 | Team Health Holdings, Inc. * | 512,017 | ||||
|
| |||||
7,279,751 | ||||||
|
| |||||
Health Technology - 13.9% |
| |||||
11,400 | Alexion Pharmaceuticals, Inc. * | 2,109,342 | ||||
13,400 | Align Technology, Inc. * | 749,194 | ||||
38,300 | BioCryst Pharmaceuticals, Inc. * | 465,728 | ||||
31,900 | BioDelivery Sciences International, Inc. * | 383,438 | ||||
5,400 | Bio-Techne Corp. | 498,960 | ||||
46,800 | Cardiovascular Systems, Inc. * | 1,407,744 | ||||
16,600 | Celgene Corp. * | 1,856,876 | ||||
39,000 | Celldex Therapeutics, Inc. * | 711,750 | ||||
3,700 | Clovis Oncology, Inc. * | 207,200 | ||||
20,500 | Halozyme Therapeutics, Inc. * | 197,825 | ||||
25,600 | Isis Pharmaceuticals, Inc. * | 1,580,544 | ||||
17,100 | PerkinElmer, Inc. | 747,783 | ||||
3,100 | Puma Biotechnology, Inc. * | 586,737 | ||||
16,600 | Sangamo BioSciences, Inc. * | 252,486 | ||||
17,900 | STERIS Corp. | 1,160,815 | ||||
3,600 | Synageva BioPharma Corp. * | 334,044 | ||||
34,900 | Tekmira Pharmaceuticals Corp. * | 528,735 | ||||
|
| |||||
13,779,201 | ||||||
|
| |||||
Industrial Services - 4.2% |
| |||||
3,800 | Core Laboratories NV | 457,292 | ||||
24,600 | EMCOR Group, Inc. | 1,094,454 | ||||
51,770 | Tutor Perini Corp. * | 1,246,104 | ||||
31,800 | Waste Connections, Inc. | 1,398,882 | ||||
|
| |||||
4,196,732 | ||||||
|
| |||||
Non-Energy Minerals - 0.9% |
| |||||
11,200 | Eagle Materials, Inc. | 851,536 | ||||
|
| |||||
Process Industries - 1.6% |
| |||||
2,300 | CF Industries Holdings, Inc. | 626,842 | ||||
14,900 | Scotts Miracle-Gro Co. | 928,568 | ||||
|
| |||||
1,555,410 | ||||||
|
|
See accompanying notes to financial statements.
| ||
32 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Producer Manufacturing - 10.1% |
| |||||
19,100 | AMETEK, Inc. | 1,005,233 | ||||
15,900 | CLARCOR, Inc. | 1,059,576 | ||||
12,500 | Crane Co. | 733,750 | ||||
8,700 | Greenbrier Cos, Inc. | 467,451 | ||||
19,900 | Hexcel Corp. * | 825,651 | ||||
16,500 | IDEX Corp. | 1,284,360 | ||||
25,300 | ITT Corp. | 1,023,638 | ||||
9,800 | MSC Industrial Direct Co., Inc. | 796,250 | ||||
10,300 | Proto Labs, Inc. * | 691,748 | ||||
9,120 | RBC Bearings, Inc. | 588,514 | ||||
17,200 | Rexnord Corp. * | 485,212 | ||||
11,900 | Wabtec Corp. | 1,033,991 | ||||
|
| |||||
9,995,374 | ||||||
|
| |||||
Retail Trade - 4.0% | ||||||
8,300 | Casey’s General Stores, Inc. | 749,656 | ||||
30,300 | Dick’s Sporting Goods, Inc. | 1,504,395 | ||||
28,100 | Finish Line, Inc. | 683,111 | ||||
8,200 | Ulta Salon Cosmetics & Fragrance, Inc. * | 1,048,288 | ||||
|
| |||||
3,985,450 | ||||||
|
| |||||
Technology Services - 12.8% | ||||||
15,700 | ANSYS, Inc. * | 1,287,400 | ||||
28,000 | Aspen Technology, Inc. * | 980,560 | ||||
16,300 | CommVault Systems, Inc. * | 842,547 | ||||
12,700 | comScore, Inc. * | 589,661 | ||||
17,100 | Dealertrack Technologies, Inc. * | 757,701 | ||||
8,000 | DST Systems, Inc. | 753,200 | ||||
11,200 | Euronet Worldwide, Inc. * | 614,880 | ||||
28,400 | Informatica Corp. * | 1,083,034 | ||||
28,900 | Manhattan Associates, Inc. * | 1,176,808 |
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
18,500 | Solera Holdings, Inc. | 946,830 | ||||
36,000 | Syntel, Inc. * | 1,619,280 | ||||
13,500 | Ultimate Software Group, Inc. * | 1,982,002 | ||||
|
| |||||
12,633,903 | ||||||
|
| |||||
Transportation - 5.5% | ||||||
21,400 | Alaska Air Group, Inc. | 1,278,864 | ||||
38,100 | Knight Transportation, Inc. | 1,282,446 | ||||
16,900 | Ryder System, Inc. | 1,569,165 | ||||
47,500 | Swift Transportation Co. * | 1,359,925 | ||||
|
| |||||
5,490,400 | ||||||
|
| |||||
Utilities - 1.9% | ||||||
30,200 | GasLog, Ltd. | 614,570 | ||||
18,900 | ITC Holdings Corp. | 764,127 | ||||
10,100 | Laclede Group, Inc. | 537,320 | ||||
|
| |||||
1,916,017 | ||||||
|
| |||||
Total Common Stocks | 98,179,111 | |||||
|
| |||||
Total Investments in Securities - 99.2% | 98,179,111 | |||||
Other Assets and Liabilities, net - 0.8% | 828,536 | |||||
|
| |||||
Total Net Assets - 100.0% | $99,007,647 | |||||
|
|
* | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of December 31, 2014 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
Quoted Price ($) | Other significant observable inputs ($) | Significant unobservable inputs ($) | Total ($) | |||||||||
Common Stocks ** | 98,179,111 | — | — | 98,179,111 | ||||||||
Total: | 98,179,111 | — | — | 98,179,111 |
** | For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown. |
For the reporting period, there were no transfers between levels 1, 2 and 3.
See accompanying notes to financial statements.
| ||
DECEMBER 31, 2014 |
33 |
|
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 depreciated -9.51% for the six month period ended December 31, 2014. This compares to the MSCI EAFE Growth Index which depreciated -7.71% over the same period. Positive stock selection and a favorable currency impact within the semiconductor, materials, and pharmaceutical industries could not offset the combined negative effect of (1) stock selection in diversified financials and retailing and (2) an overweight position in energy.
On a regional basis, stock selection and a positive currency effect in the United Kingdom contributed the most to relative performance. However, returns were negatively impacted by Japanese stock selection and our significant underweight position, which prevented the Fund from fully participating in the rally of the U.S. dollar against the Japanese.
While there is certainly is no shortage of uncertainties that could negatively impact European equity performance, we enter 2015 with cautious optimism based on the premise that additional liquidity-enhancing measures by the European Central Bank, a weaker currency, and lower oil prices will be catalysts for positive corporate earnings revisions.
Europe continues to be a large absolute weight in the Fund. Regionally, we are avoiding direct exposure to Greece given the upcoming election. For the European holdings in general, the majority of the holdings earnings are driven by business outside of Europe. We are very cautious on companies with significant direct exposure to Latin America and Russia. Some holdings in the portfolios have been eliminated given the uncertainty in the aforementioned regions. While Chinese growth in slowing, in absolute terms, the country is still one of the fastest growing countries in the world and represents a large avenue of growth for the European companies. That said, many companies are modifying their strategies in regards to China and becoming more focused on profitability rather than sales growth. We’ve been gradually reducing the exposure to the UK, as we fear the prospect of rising rates will put a damper on equity market performance.
We continue to remain meaningfully underweight Japanese equities as we remain cautious on the domestic economy’s growth prospects. The Japanese economy continues to face substantial obstacles to sustained longer-term growth, and it remains unclear whether Mr. Abe
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.
will be able to formulate and implement pro-growth reforms to place Japan on a path of sustained growth. With valuations only moderately attractive relative to other developed regions, we do not believe the risk is appropriately priced and believe an underweight position remains appropriate.
Within our allocation of Japanese equities, we continue to prefer companies with exposure to overseas sources of demand and defensive domestic consumption names. Multinationals and exporters should benefit from relatively stronger demand in overseas markets as well as from the weakened yen. Domestically, we prefer defensive consumption names, such as food retailers and tobacco companies, which will hold up well in a subdued demand environment.
Roger J. Sit Tasha M. Murdoff
Portfolio Managers
34 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
COMPARATIVE RATES OF RETURNS
as of December 31, 2014
Sit International Growth Fund | MSCI EAFE Growth Index 1 | MSCI EAFE Index 2 | |||||||||||||
Six Month | -9.51 | % | -7.71 | % | -9.24 | % | |||||||||
One Year | -7.88 | -4.43 | -4.90 | ||||||||||||
Five Year | 4.67 | 6.19 | 5.33 | ||||||||||||
Ten Year | 3.33 | 4.91 | 4.43 | ||||||||||||
Since Inception (11/1/91) | 3.88 | 4.11 | 5.36 |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains 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 | 69.2 | % | 66.2 | % | ||||||
Asia | 25.2 | % | 33.3 | % | ||||||
Other | 3.6 | % | 0.5 | % | ||||||
Cash & Other Net Assets | 2.0 | % | — |
Based on total net assets as of December 31, 2014. Subject to change.
PORTFOLIO SUMMARY
Net Asset Value 12/31/14: | $15.52 Per Share | |
Net Asset Value 6/30/14: | $17.44 Per Share | |
Total Net Assets: | $21.1 Million | |
Weighted Average Market Cap: | $62.5 Billion |
TOP 10 HOLDINGS
1. Nestle SA
2. Diageo, PLC, ADR
3. Covidien, PLC
4. Roche Holding AG
5. Novartis AG.
6. DS Smith, PLC
7. Seven & I Holdings Co., Ltd.
8. Siemens AG
9. British American Tobacco, PLC
10. Barclays, PLC
Based on total net assets as of December 31, 2014. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2014. Subject to change.
DECEMBER 31, 2014 |
35 |
|
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit International Growth Fund
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Common Stocks - 97.0% |
| |||||
Africa/Middle East - 0.7% |
| |||||
South Africa - 0.7% |
| |||||
7,580 | MTN Group, Ltd. | 144,191 | ||||
|
| |||||
Asia - 24.2% | ||||||
Australia - 2.1% | ||||||
9,090 | BHP Billiton, Ltd. | 214,912 | ||||
8,700 | Westpac Banking Corp., ADR | 234,030 | ||||
|
| |||||
448,942 | ||||||
|
| |||||
China/Hong Kong - 5.3% | ||||||
1,525 | Alibaba Group Holding, Ltd., ADR * | 158,508 | ||||
7,700 | Hong Kong Exchanges & Clearing, Ltd. | 169,991 | ||||
26,550 | HSBC Holdings, PLC | 252,463 | ||||
27,000 | Hutchison Whampoa, Ltd. | 308,652 | ||||
15,600 | Tencent Holdings, Ltd. | 225,715 | ||||
|
| |||||
1,115,329 | ||||||
|
| |||||
Japan - 14.4% | ||||||
13,000 | Ajinomoto Co., Inc. | 242,020 | ||||
13,500 | Asics Corp. | 325,017 | ||||
16,800 | Astellas Pharma, Inc. | 233,891 | ||||
27,000 | Daicel Corp. | 315,373 | ||||
18,300 | Inpex Corp. | 203,733 | ||||
6,600 | Makita Corp. | 297,409 | ||||
13,100 | Seven & I Holdings Co., Ltd. | 471,225 | ||||
800 | SMC Corp. | 209,779 | ||||
5,700 | Sumitomo Mitsui Financial Group, Inc. | 206,071 | ||||
8,700 | Suzuki Motor Corp. | 260,716 | ||||
11,800 | Terumo Corp. | 267,816 | ||||
|
| |||||
3,033,050 | ||||||
|
| |||||
Singapore - 1.7% | ||||||
3,600 | Avago Technologies, Ltd. | 362,124 | ||||
|
| |||||
South Korea - 0.7% | ||||||
3,550 | Shinhan Financial Group Co., Ltd. | 142,693 | ||||
|
| |||||
Europe - 69.2% | ||||||
Belgium - 1.8% | ||||||
3,400 | Anheuser-Busch InBev NV, ADR | 381,888 | ||||
|
| |||||
Denmark - 2.7% | ||||||
14,700 | Gn Store Nord A/S | 321,163 | ||||
6,070 | Novo Nordisk A/S | 256,760 | ||||
|
| |||||
577,923 | ||||||
|
| |||||
France - 8.8% | ||||||
6,160 | BNP Paribas SA | 363,651 | ||||
3,300 | Dassault Systemes SA | 201,236 | ||||
1,050 | Eurofins Scientific SE | 268,015 | ||||
13,000 | GDF Suez | 303,148 | ||||
3,400 | Ingenico | 358,152 | ||||
4,350 | Schlumberger, Ltd. | 371,534 | ||||
|
| |||||
1,865,736 | ||||||
|
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Germany - 8.9% |
| |||||
2,235 | Allianz SE | 370,176 | ||||
6,000 | GEA Group AG | 263,798 | ||||
1,780 | Linde AG | 327,881 | ||||
4,800 | Norma Group SE | 229,109 | ||||
675 | Rational AG | 211,501 | ||||
4,150 | Siemens AG | 465,647 | ||||
|
| |||||
1,868,112 | ||||||
|
| |||||
Ireland - 4.4% |
| |||||
1,525 | Actavis, PLC * | 392,550 | ||||
5,150 | Covidien, PLC | 526,742 | ||||
|
| |||||
919,292 | ||||||
|
| |||||
Italy - 1.0% |
| |||||
9,685 | Azimut Holding SpA | 210,401 | ||||
|
| |||||
Netherlands - 5.9% |
| |||||
2,150 | ASML Holding NV | 231,834 | ||||
31,950 | ING Groep NV * | 412,784 | ||||
3,325 | LyondellBasell Industries NV | 263,972 | ||||
7,500 | Nielsen NV | 335,475 | ||||
|
| |||||
1,244,065 | ||||||
|
| |||||
Spain - 4.2% |
| |||||
25,400 | Banco Bilbao Vizcaya Argentaria SA, ADR | 238,506 | ||||
9,500 | Grifols SA, ADR | 322,905 | ||||
11,700 | Inditex SA | 333,748 | ||||
|
| |||||
895,159 | ||||||
|
| |||||
Switzerland - 11.9% |
| |||||
3,150 | Adecco SA | 216,529 | ||||
9,995 | Credit Suisse Group AG, ADR | 250,675 | ||||
9,670 | Nestle SA | 704,953 | ||||
5,275 | Novartis AG | 489,222 | ||||
1,940 | Roche Holding AG | 525,628 | ||||
105 | SGS SA | 214,407 | ||||
230 | Swatch Group AG | 102,179 | ||||
|
| |||||
2,503,593 | ||||||
|
|
See accompanying notes to financial statements.
| ||
36 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
United Kingdom - 19.6% |
| |||||
113,300 | Barclays, PLC | 425,933 | ||||
7,420 | Bellway, PLC | 222,539 | ||||
8,500 | British American Tobacco, PLC | 460,624 | ||||
10,375 | Burberry Group, PLC | 263,232 | ||||
5,000 | Delphi Automotive, PLC | 363,600 | ||||
6,000 | Diageo, PLC, ADR | 684,540 | ||||
94,680 | DS Smith, PLC | 472,149 | ||||
27,100 | Essentra, PLC | 307,209 | ||||
3,440 | Indivior, PLC * | 8,010 | ||||
3,440 | Reckitt Benckiser Group, PLC | 278,620 | ||||
3,500 | Royal Dutch Shell, PLC, ADR | 234,325 | ||||
2,700 | Royal Dutch Shell, PLC, ADR | 187,811 | ||||
3,290 | Shire, PLC | 233,262 | ||||
|
| |||||
4,141,854 | ||||||
|
| |||||
North America - 2.9% |
| |||||
Bermuda - 0.6% |
| |||||
6,800 | GasLog, Ltd. | 138,379 | ||||
|
| |||||
Canada - 1.3% |
| |||||
5,800 | BCE, Inc. | 265,988 | ||||
|
| |||||
United States - 1.0% |
| |||||
3,800 | Euronet Worldwide, Inc. * | 208,620 | ||||
|
| |||||
Total Common Stocks | 20,467,339 | |||||
|
| |||||
Investment Companies - 1.0% |
| |||||
7,300 | iShares MSCI India ETF | 219,657 | ||||
|
| |||||
(cost: $218,794) | ||||||
Total Investments in Securities - 98.0% | 20,686,996 | |||||
Other Assets and Liabilities, net - 2.0% | 417,460 | |||||
|
| |||||
Total Net Assets - 100.0% | $21,104,456 | |||||
|
|
* | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
ADR — American Depositary Receipt
PLC — Public Limited Company
See accompanying notes to financial statements.
| ||
DECEMBER 31, 2014 |
37 |
|
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit International Growth Fund (Continued)
A summary of the levels for the Fund’s investments as of December 31, 2014 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||||
Level 1 Quoted Price ($) | Level 2 Other significant observable inputs ($) | Level 3 Significant | Total ($) | |||||||||||
Common Stocks | ||||||||||||||
Australia | 234,030 | 214,912 | — | 448,942 | ||||||||||
Belgium | 381,888 | — | — | 381,888 | ||||||||||
Bermuda | 138,379 | — | — | 138,379 | ||||||||||
Canada | 265,988 | — | — | 265,988 | ||||||||||
China/Hong Kong | 158,508 | 956,821 | — | 1,115,329 | ||||||||||
Denmark | — | 577,923 | — | 577,923 | ||||||||||
France | 371,534 | 1,494,202 | — | 1,865,736 | ||||||||||
Germany | — | 1,868,112 | — | 1,868,112 | ||||||||||
Ireland | 919,292 | — | — | 919,292 | ||||||||||
Italy | — | 210,401 | — | 210,401 | ||||||||||
Japan | — | 3,033,050 | — | 3,033,050 | ||||||||||
Netherlands | 831,281 | 412,784 | — | 1,244,065 | ||||||||||
Singapore | 362,124 | — | — | 362,124 | ||||||||||
South Africa | — | 144,191 | — | 144,191 | ||||||||||
South Korea | — | 142,693 | — | 142,693 | ||||||||||
Spain | 561,411 | 333,748 | — | 895,159 | ||||||||||
Switzerland | 250,675 | 2,252,918 | — | 2,503,593 | ||||||||||
United Kingdom | 1,470,276 | 2,671,578 | — | 4,141,854 | ||||||||||
United States | 208,620 | — | — | 208,620 | ||||||||||
Investment Companies | 219,657 | — | — | 219,657 | ||||||||||
Total: | 6,373,663 | 14,313,333 | — | 20,686,996 |
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.
| ||
38 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
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DECEMBER 31, 2014 |
39 |
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 Developing Markets Growth Fund slightly underperformed the MSCI Emerging Markets Index over the last six months, falling -9.64% versus -8.99% for the Index. Emerging markets’ performance were affected by a slowdown in China’s economy, weaker economic growth in Europe, political/economic uncertainty in Greece, and lower oil prices. China’s economy has been the growth engine for world growth. India’s economy is gaining strength from the agricultural sector and inflation is falling because of lower oil and food prices. South Korea’s economy continues to be weak, prompting the government to stimulate growth through a tax revision bill and interest rate cuts. The Fund’s strategy continues to be conservative in nature versus the Index and is comprised of high-quality companies with strong, experienced management teams, leading market positions, healthy balance sheets, good cash flow generation, and sustainable earnings and revenue growth.
The Asia Pacific ex-Japan region contributed negative relative underperformance, largely due to our overweight in China stocks. Positive stock selection in Brazil, India, and Thailand and underweighting in Russia and Greece added to relative performance. However, the exposure to Brazil, Taiwan, and Australia hurt relative performance.
The software & services (Bitauto), technology hardware (Nice Systems) and insurance (China Life) sectors helped contribute to relative outperformance. Retailing (OSIM, sold during the fourth quarter), utilities (ENN Energy), and food & staples (Pao de Acucar) had the most negative impact on relative underperformance due to poor stock selection.
The Fund’s overweight in the consumer discretionary industry had a mixed result on relative performance, being positive for media, but negative for automobiles. Banks and pharmaceuticals contributed negatively, as the Fund was underweight relative to the Index.
In China, we continue to like the consumer, banks, insurance, and utilities sectors. We remain positive on the Chinese internet and e-commerce names. With China’s economy slowing, the government is taking steps to support growth through interest rate cuts, reforms such as opening up the capital account through the Shanghai-Hong Kong Connect, and budget plans to make local borrowing more accountable. We also like the markets of India, Indonesia, Malaysia,
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.
and Thailand on stronger economic growth. Lower inflation in India should allow them to lower interest rates. In Latin America, stronger economic growth will be driven by Mexico. Mexico’s GDP will benefit from the U.S. economic recovery and Mexico’s energy reform. An improving economy and lower energy prices should further increase industrial property expansion and domestic spending. Brazil’s economy is teetering on a recession, affected by a slowdown in domestic demand, rising unemployment, weak commodity exports, high inflation, high interest rates, and soaring budget deficit. The Mexican investment strategy is focused on consumer plays and industrial properties. In Brazil, the investments are defensive, with a concentration in consumer staples, telecoms, and global-leading exporters.
Roger J. Sit
Raymond E. Sit
Portfolio Managers
40 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
COMPARATIVE RATES OF RETURN
as of December 31, 2014 | |||||||||||||||
Sit Developing Markets Growth Fund | MSCI Emerging Markets Index 1 | MSCI Emerging Markets Growth Index 2 | |||||||||||||
Six Month | -9.64% | -8.99% | -6.96% | ||||||||||||
One Year | -7.79 | -4.63 | -2.20 | ||||||||||||
Five Year | -0.77 | -0.68 | 1.01 | ||||||||||||
Ten Year | 6.37 | 5.84 | 6.17 | ||||||||||||
Since Inception (7/1/94) | 4.05 | 3.43 | 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 | 69.1% | 66.4% | ||||||||
Latin America | 18.4% | 16.5% | ||||||||
Africa/Middle East | 10.8% | 9.7% | ||||||||
Europe | — | 7.4% | ||||||||
Cash & Other Net Assets
| 1.7% | — |
Based on total net assets as of December 31, 2014. Subject to change.
PORTFOLIO SUMMARY | ||
Net Asset Value 12/31/14: | $14.45 Per Share | |
Net Asset Value 6/30/14: | $17.48 Per Share | |
Total Net Assets: | $9.4 Million | |
Weighted Average Market Cap: | $44.3 Billion |
TOP 10 HOLDINGS |
1. Tencent Holdings, Ltd. |
2. Samsung Electronics Co., Ltd. |
3. Embraer SA, ADR |
4. Shinhan Financial Group Co., Ltd. |
5. Naspers, Ltd. |
6. Ambev SA, ADR |
7. ICICI Bank, Ltd., ADR |
8. China Life Insurance Co., Ltd., ADR |
9. Taiwan Semiconductor Co. |
10. Astra International Tbk PT
|
Based on total net assets as of December 31, 2014. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of December 31, 2014. Subject to change.
DECEMBER 31, 2014 |
41 |
|
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit Developing Markets Growth Fund
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
Common Stocks - 96.3% |
| |||||
Africa/Middle East - 10.8% |
| |||||
Israel - 1.5% |
| |||||
2,800 | NICE Systems, Ltd., ADR | 141,820 | ||||
|
| |||||
South Africa - 9.3% |
| |||||
6,410 | Bidvest Group, Ltd. | 167,582 | ||||
9,850 | MTN Group, Ltd. | 187,372 | ||||
2,755 | Naspers, Ltd. | 356,374 | ||||
4,300 | Sasol, Ltd., ADR | 163,271 | ||||
|
| |||||
874,599 | ||||||
|
| |||||
Asia - 67.1% | ||||||
Australia - 2.4% |
| |||||
3,950 | BHP Billiton, Ltd., ADR | 186,914 | ||||
815 | Rio Tinto, Ltd. | 38,208 | ||||
|
| |||||
225,122 | ||||||
|
| |||||
China/Hong Kong - 27.8% |
| |||||
675 | Alibaba Group Holding, Ltd., ADR * | 70,160 | ||||
2,800 | Bitauto Holdings, Ltd., ADR * | 197,148 | ||||
5,100 | China Life Insurance Co., Ltd., ADR | 299,421 | ||||
41,000 | China Mengniu Dairy Co., Ltd. | 168,823 | ||||
3,150 | China Mobile, Ltd., ADR | 185,283 | ||||
80,000 | China Oilfield Services, Ltd. | 138,133 | ||||
268,500 | China ZhengTong Auto Services, Ltd. | 118,991 | ||||
1,650 | CNOOC, Ltd., ADR | 223,476 | ||||
34,000 | ENN Energy Holdings, Ltd. | 192,349 | ||||
20,000 | Hengan International Group Co., Ltd. | 208,524 | ||||
3,900 | JD.com, Inc., ADR * | 90,246 | ||||
6,800 | New Oriental Education & Tech. Group, ADR * | 138,788 | ||||
52,000 | PetroChina Co., Ltd. | 57,725 | ||||
725 | PetroChina Co., Ltd., ADR | 80,445 | ||||
30,600 | Tencent Holdings, Ltd. | 442,749 | ||||
|
| |||||
2,612,261 | ||||||
|
| |||||
India - 5.1% |
| |||||
26,000 | ICICI Bank, Ltd., ADR | 300,300 | ||||
4,350 | Tata Motors, Ltd., ADR | 183,918 | ||||
|
| |||||
484,218 | ||||||
|
| |||||
Indonesia - 2.5% |
| |||||
398,500 | Astra International Tbk PT | 237,659 | ||||
|
| |||||
Malaysia - 1.0% |
| |||||
5,100 | British American Tobacco Malaysia | 94,456 | ||||
|
| |||||
Singapore - 1.6% |
| |||||
10,000 | DBS Group Holdings, Ltd. | 154,813 | ||||
|
|
| ||||||
Quantity | Name of Issuer | Fair Value ($) | ||||
| ||||||
South Korea - 14.1% |
| |||||
8,485 | Cheil Worldwide, Inc. * | 132,777 | ||||
2,500 | CJ CGV Co., Ltd. | 122,366 | ||||
485 | E-Mart Co., Ltd. | 89,753 | ||||
625 | Hyundai Motor Co. | 95,473 | ||||
4,787 | Industrial Bank of Korea | 61,238 | ||||
1,100 | POSCO, ADR | 70,191 | ||||
320 | Samsung Electronics Co., Ltd. | 384,718 | ||||
9,100 | Shinhan Financial Group Co., Ltd. | 365,776 | ||||
|
| |||||
1,322,292 | ||||||
|
| |||||
Taiwan - 5.8% |
| |||||
82,086 | Cathay Financial Holding Co., Ltd. | 121,293 | ||||
27,150 | Hon Hai Precision Industry Co., Ltd., GDR | 152,312 | ||||
62,482 | Taiwan Semiconductor Co. | 275,263 | ||||
|
| |||||
548,868 | ||||||
|
| |||||
Thailand - 3.5% |
| |||||
18,900 | Advanced Info Service PCL | 143,322 | ||||
31,800 | Bangkok Bank PCL | 188,927 | ||||
|
| |||||
332,249 | ||||||
|
| |||||
Turkey - 3.3% |
| |||||
7,100 | BIM Birlesik Magazalar A/S | 151,833 | ||||
19,000 | Tav Havalimanlari Holding A/S | 155,110 | ||||
|
| |||||
306,943 | ||||||
|
| |||||
Latin America - 18.4% |
| |||||
Brazil - 15.2% |
| |||||
53,700 | Ambev SA, ADR | 334,014 | ||||
13,601 | Banco Bradesco SA | 179,385 | ||||
4,300 | Cia Brasileira de Distribuicao Grupo Pao de Acucar, ADR | 158,369 | ||||
10,250 | Embraer SA, ADR | 377,815 | ||||
15,800 | Petrobras | 59,558 | ||||
18,400 | Qualicorp SA * | 192,431 | ||||
4,150 | Telefonica Brasil SA, ADR | 73,371 | ||||
6,800 | Vale SA, ADR | 55,623 | ||||
|
| |||||
1,430,566 | ||||||
|
| |||||
Chile - 1.3% |
| |||||
5,950 | Banco Santander Chile, ADR | 117,339 | ||||
|
| |||||
Mexico - 0.9% |
| |||||
2,600 | Grupo Televisa SA, ADR | 88,555 | ||||
|
|
See accompanying notes to financial statements.
| ||
42 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
|
Quantity | Name of Issuer | Fair Value ($) | ||||
Peru - 1.0% | ||||||
3,400 | Southern Copper Corp. | 95,883 | ||||
|
| |||||
Total Common Stocks | 9,067,643 | |||||
|
| |||||
Investment Companies - 2.0% | ||||||
6,100 | iShares MSCI India ETF | 183,549 | ||||
|
| |||||
(cost: $179,956) | ||||||
Total Investments in Securities - 98.3% | 9,251,192 | |||||
Other Assets and Liabilities, net - 1.7% | 160,760 | |||||
|
| |||||
Total Net Assets - 100.0% | $9,411,952 | |||||
|
|
* | Non-income producing security. |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
ADR — American Depositary Receipt
GDR — Global Depositary Receipt
See accompanying notes to financial statements.
| ||
DECEMBER 31, 2014 |
43 |
|
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2014
Sit Developing Markets Growth Fund (Continued)
A summary of the levels for the Fund’s investments as of December 31, 2014 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
Investment in Securities | ||||||||||||||
Level 1 Quoted Price ($) | Level 2 Other significant observable inputs ($) | Level 3 Significant | Total ($) | |||||||||||
Common Stocks | ||||||||||||||
Australia | 186,914 | 38,208 | — | 225,122 | ||||||||||
Brazil | 1,430,566 | — | — | 1,430,566 | ||||||||||
Chile | 117,339 | — | — | 117,339 | ||||||||||
China/Hong Kong | 1,284,967 | 1,327,294 | — | 2,612,261 | ||||||||||
India | 484,218 | — | — | 484,218 | ||||||||||
Indonesia | — | 237,659 | — | 237,659 | ||||||||||
Israel | 141,820 | — | — | 141,820 | ||||||||||
Malaysia | — | 94,456 | — | 94,456 | ||||||||||
Mexico | 88,555 | — | — | 88,555 | ||||||||||
Peru | 95,883 | — | — | 95,883 | ||||||||||
Singapore | — | 154,813 | — | 154,813 | ||||||||||
South Africa | 163,271 | 711,328 | — | 874,599 | ||||||||||
South Korea | 70,191 | 1,252,101 | — | 1,322,292 | ||||||||||
Taiwan | 152,312 | 396,556 | — | 548,868 | ||||||||||
Thailand | — | 332,249 | — | 332,249 | ||||||||||
Turkey | — | 306,943 | — | 306,943 | ||||||||||
Investment Companies | 183,549 | — | — | 183,549 | ||||||||||
Total: | 4,399,585 | 4,851,607 | — | 9,251,192 |
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.
| ||
44 |
SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
[This page intentionally left blank.]
DECEMBER 31, 2014 |
|
45 |
|
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
December 31, 2014
Sit | Sit Global | |||||||||||
Sit | Dividend | Dividend | ||||||||||
Balanced | Growth | Growth | ||||||||||
Fund | Fund | Fund | ||||||||||
ASSETS | ||||||||||||
Investments in securities, at identified cost | $12,133,676 | $858,393,330 | $24,389,774 | |||||||||
|
|
|
|
|
| |||||||
Investments in securities, at fair value - see accompanying schedule for detail | $16,304,583 | $1,055,695,824 | $27,037,970 | |||||||||
Cash in bank on demand deposit | 708,522 | 2,856,364 | 3,342,612 | |||||||||
Accrued interest and dividends receivable | 53,071 | 1,499,095 | 51,608 | |||||||||
Receivable for investment securities sold | 86,411 | 9,266,743 | — | |||||||||
Receivable for Fund shares sold | 3,916 | 1,571,085 | — | |||||||||
|
|
|
|
|
| |||||||
Total assets | 17,156,503 | 1,070,889,111 | 30,432,190 | |||||||||
|
|
|
|
|
| |||||||
LIABILITIES | ||||||||||||
Payable for investment securities purchased | 218,452 | 10,546,841 | 760,584 | |||||||||
Payable for Fund shares redeemed | — | 1,265,851 | 1,916 | |||||||||
Accrued investment management fees and advisory fees | 13,981 | 944,803 | 28,388 | |||||||||
Accrued 12b-1 fees (Class S) | — | 19,619 | 865 | |||||||||
|
|
|
|
|
| |||||||
Total liabilities | 232,433 | 12,777,114 | 791,753 | |||||||||
|
|
|
|
|
| |||||||
Net assets applicable to outstanding capital stock | $16,924,070 | $1,058,111,997 | $29,640,437 | |||||||||
|
|
|
|
|
| |||||||
Net assets consist of: | ||||||||||||
Capital (par value and paid-in surplus) | $12,716,541 | $818,782,739 | $26,695,410 | |||||||||
Undistributed (distributions in excess of) net investment income | 2,034 | 21,863 | 5,147 | |||||||||
Accumulated net realized gain (loss) from security transactions and foreign currency transactions | 34,588 | 42,004,901 | 293,325 | |||||||||
Unrealized appreciation (depreciation) on investments and foreign currency transactions | 4,170,907 | 197,302,494 | 2,646,555 | |||||||||
|
|
|
|
|
| |||||||
$16,924,070 | $1,058,111,997 | $29,640,437 | ||||||||||
|
|
|
|
|
| |||||||
Outstanding shares: | ||||||||||||
Common Shares (Class I) * | 799,340 | 55,860,646 | 1,649,884 | |||||||||
|
|
|
|
|
| |||||||
Common Shares (Class S) * | — | 5,283,060 | 389,652 | |||||||||
|
|
|
|
|
| |||||||
Net assets applicable to outstanding shares: | ||||||||||||
Common Shares (Class I) * | $16,924,070 | $966,928,149 | $23,980,855 | |||||||||
|
|
|
|
|
| |||||||
Common Shares (Class S) * | — | 91,183,848 | 5,659,582 | |||||||||
|
|
|
|
|
| |||||||
Net asset value per share of outstanding capital stock: | ||||||||||||
Common Shares (Class I) * | $21.17 | $17.31 | $14.53 | |||||||||
|
|
|
|
|
| |||||||
Common Shares (Class S) * | — | $17.26 | $14.52 | |||||||||
|
|
|
|
|
|
* 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. | ||||
46 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Sit | Sit | Sit | Sit | Sit Developing | ||||||||||||||
Large Cap | Mid Cap | Small Cap | International | Markets | ||||||||||||||
Growth | Growth | Growth | Growth | Growth | ||||||||||||||
Fund | Fund | Fund | Fund | Fund | ||||||||||||||
$109,720,020 | $107,793,951 | $67,092,456 | $19,038,222 | $7,650,762 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$173,180,180 | $175,969,436 | $98,179,111 | $20,686,996 | $9,251,192 | ||||||||||||||
1,268,117 | 2,180,847 | 1,350,362 | 378,533 | 171,364 | ||||||||||||||
165,362 | 59,919 | 15,805 | 84,231 | 4,659 | ||||||||||||||
1,670,430 | 1,066,202 | — | — | 35,954 | ||||||||||||||
276,614 | 7,286 | 15,321 | 311 | 324 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
176,560,703 | 179,283,690 | 99,560,599 | 21,150,071 | 9,463,493 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
1,113,216 | 1,035,643 | 362,741 | — | 19,737 | ||||||||||||||
544,887 | 170,747 | 65,571 | 18,296 | 15,720 | ||||||||||||||
150,985 | 189,195 | 124,640 | 27,319 | 16,084 | ||||||||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
1,809,088 | 1,395,585 | 552,952 | 45,615 | 51,541 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$174,751,615 | $177,888,105 | $99,007,647 | $21,104,456 | $9,411,952 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$107,524,018 | $102,946,443 | $65,122,280 | $19,471,243 | $7,723,528 | ||||||||||||||
54,840 | (245,910 | ) | (332,176 | ) | (484 | ) | (29,284 | ) | ||||||||||
|
3,712,597 |
| 7,012,087 | 3,130,888 | (8,652 | ) | 117,304 | |||||||||||
|
63,460,160 |
| 68,175,485 | 31,086,655 | 1,642,349 | 1,600,404 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$174,751,615 | $177,888,105 | $99,007,647 | $21,104,456 | $9,411,952 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
3,839,914 | 9,317,804 | 1,785,042 | 1,359,794 | 651,363 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$174,751,615 | $177,888,105 | $99,007,647 | $21,104,456 | $9,411,952 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$45.51 | $19.09 | $55.47 | $15.52 | $14.45 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
DECEMBER 31, 2014 |
47 |
STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended December 31, 2014
Sit | ||||||||||||
Sit | Global | |||||||||||
Sit | Dividend | Dividend | ||||||||||
Balanced | Growth | Growth | ||||||||||
Fund | Fund | Fund | ||||||||||
Investment income: | ||||||||||||
Income: | ||||||||||||
Dividends* | $85,481 | $14,183,364 | $299,373 | |||||||||
Interest | 94,838 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total income | 180,319 | 14,183,364 | 299,373 | |||||||||
|
|
|
|
|
| |||||||
Expenses (note 4): | ||||||||||||
Investment management and advisory service fee | 80,007 | 5,684,960 | 162,006 | |||||||||
12b-1 fees (Class S) | — | 123,313 | 4,783 | |||||||||
|
|
|
|
|
| |||||||
Total expenses | 80,007 | 5,808,273 | 166,789 | |||||||||
|
|
|
|
|
| |||||||
Net investment income (loss) | 100,312 | 8,375,091 | 132,584 | |||||||||
|
|
|
|
|
| |||||||
Realized and unrealized gain (loss): | ||||||||||||
Net realized gain (loss) on investments | 401,103 | 78,450,375 | 970,953 | |||||||||
Net realized gain (loss) on foreign currency transactions | — | — | (677 | ) | ||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | 242,176 | (25,206,094 | ) | (1,119,367 | ) | |||||||
|
|
|
|
|
| |||||||
Net gain (loss) | 643,279 | 53,244,281 | (149,091 | ) | ||||||||
|
|
|
|
|
| |||||||
Net increase (decrease) in net assets resulting from operations | $743,591 | $61,619,372 | ($16,507 | ) | ||||||||
|
|
|
|
|
| |||||||
| ||||||||||||
* Foreign taxes withheld on dividends received | — | $42,615 | $6,546 |
See accompanying notes to financial statements. | ||||
48 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Sit | ||||||||||||||||||
Sit | Sit | Sit | Sit | Developing | ||||||||||||||
Large Cap | Mid Cap | Small Cap | International | Markets | ||||||||||||||
Growth | Growth | Growth | Growth | Growth | ||||||||||||||
Fund | Fund | Fund | Fund | Fund | ||||||||||||||
$1,284,100 | $870,785 | $400,183 | $170,031 | $77,218 | ||||||||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
1,284,100 | 870,785 | 400,183 | 170,031 | 77,218 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
910,816 | 1,116,695 | 732,359 | 170,515 | 106,502 | ||||||||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
910,816 | 1,116,695 | 732,359 | 170,515 | 106,502 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
373,284 | (245,910 | ) | (332,176 | ) | (484 | ) | (29,284 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
13,253,906 | 10,824,214 | 5,492,969 | 1,211,829 | 260,312 | ||||||||||||||
— | — | — | (2,157 | ) | (2,318 | ) | ||||||||||||
(2,035,446 | ) | (4,731,519 | ) | (3,363,527 | ) | (3,478,948 | ) | (1,262,606 | ) | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
11,218,460 | 6,092,695 | 2,129,442 | (2,269,276 | ) | (1,004,612 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$11,591,744 | $5,846,785 | $1,797,266 | ($2,269,760 | ) | ($1,033,896 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
— | $3,466 | $1,215 | $7,842 | $11,311 |
DECEMBER 31, 2014 |
49 |
STATEMENTS OF CHANGES IN NET ASSETS
Sit Balanced Fund | Sit Dividend Growth Fund | |||||||||||||||
Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||
December 31, 2014 | June 30, | December 31, 2014 | June 30, | |||||||||||||
(Unaudited) | 2014 | (Unaudited) | 2014 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $100,312 | $200,254 | $8,375,091 | $16,078,913 | ||||||||||||
Net realized gain (loss) on investments and foreign currency transactions | 401,103 | 788,842 | 78,450,375 | 120,808,574 | ||||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | 242,176 | 1,132,195 | (25,206,094 | ) | 64,724,930 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | 743,591 | 2,121,291 | 61,619,372 | 201,612,417 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Distributions from: | ||||||||||||||||
Net investment income | ||||||||||||||||
Common shares (Class I) | (154,000) | (190,000 | ) | (11,131,854 | ) | (14,116,740 | ) | |||||||||
Common shares (Class S) | — | — | (868,146 | ) | (1,647,273 | ) | ||||||||||
Net realized gains on investments | ||||||||||||||||
Common shares (Class I) | (480,078) | — | (119,694,646 | ) | (34,547,857 | ) | ||||||||||
Common shares (Class S) | — | — | (10,548,178 | ) | (5,368,982 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total distributions | (634,078) | (190,000 | ) | (142,242,824 | ) | (55,680,852 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions: | ||||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Common shares (Class I) | 1,112,795 | 1,552,785 | 105,430,222 | 215,015,927 | ||||||||||||
Common shares (Class S) | — | — | 5,309,930 | 24,916,784 | ||||||||||||
Reinvested distributions | ||||||||||||||||
Common shares (Class I) | 630,976 | 188,535 | 46,188,882 | 17,771,240 | ||||||||||||
Common shares (Class S) | — | — | 11,332,864 | 6,951,326 | ||||||||||||
Payments for shares redeemed | ||||||||||||||||
Common shares (Class I) | (574,312) | (1,519,254 | ) | (127,638,178 | ) | (266,221,111 | ) | |||||||||
Common shares (Class S) | — | — | (22,427,840 | ) | (78,648,123 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Increase (decrease) in net assets from capital transactions | 1,169,459 | 222,066 | 18,195,880 | (80,213,957 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | 1,278,972 | 2,153,357 | (62,427,572 | ) | 65,717,608 | |||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 15,645,098 | 13,491,741 | 1,120,539,569 | 1,054,821,961 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period * | $16,924,070 | $15,645,098 | $1,058,111,997 | $1,120,539,569 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital transactions in shares: | ||||||||||||||||
Sold | ||||||||||||||||
Common shares (Class I) | 52,044 | 79,403 | 5,628,020 | 12,312,665 | ||||||||||||
Common shares (Class S) | — | — | 285,552 | 1,452,954 | ||||||||||||
Reinvested distributions | ||||||||||||||||
Common shares (Class I) | 29,833 | 9,775 | 2,659,458 | 1,033,969 | ||||||||||||
Common shares (Class S) | — | — | 654,520 | 405,516 | ||||||||||||
Redeemed | ||||||||||||||||
Common shares (Class I) | (27,155) | (77,091 | ) | (6,856,730 | ) | (15,216,805 | ) | |||||||||
Common shares (Class S) | — | — | (1,210,047 | ) | (4,559,813 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 54,722 | 12,087 | 1,160,773 | (4,571,514 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
* includes undistributed (distributions in excess) net investment income (loss) | $2,034 | $55,722 | $21,863 | $3,646,772 |
See accompanying notes to financial statements. | ||||
50 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Sit Global Dividend Growth Fund | Sit Large Cap Growth Fund | Sit Mid Cap Growth Fund | ||||||||||||||||||||
Six Months Ended | Year Ended | Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||||||
December 31, 2014 | June 30, | December 31, 2014 | June 30, | December 31, 2014 | June 30, | |||||||||||||||||
(Unaudited) | 2014 | (Unaudited) | 2014 | (Unaudited) | 2014 | |||||||||||||||||
$132,584 | $335,668 | $373,284 | $1,121,113 | ($245,910) | ($636,119 | ) | ||||||||||||||||
|
970,276 |
| 1,363,966 | 13,253,906 | 31,100,027 | 10,824,214 | 19,973,360 | |||||||||||||||
|
(1,119,367) |
| 1,616,209 | (2,035,446) | 8,823,262 | (4,731,519) | 18,652,542 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
(16,507) |
| 3,315,843 | 11,591,744 | 41,044,402 | 5,846,785 | 37,989,783 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(217,411) | (263,794 | ) | (774,000) | (1,460,025 | ) | — | — | |||||||||||||||
(30,589) | (43,211 | ) | — | — | — | — | ||||||||||||||||
(1,500,249) | (736,258 | ) | (33,093,221) | (19,160,085 | ) | (22,297,243) | (8,937,914 | ) | ||||||||||||||
(245,468) | (153,131 | ) | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(1,993,717) | (1,196,394 | ) | (33,867,221) | (20,620,110 | ) | (22,297,243) | (8,937,914 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
3,727,710 | 5,465,390 | 1,806,290 | 5,430,647 | 581,439 | 2,174,926 | |||||||||||||||||
2,895,510 | 1,326,440 | — | — | — | — | |||||||||||||||||
1,717,518 | 999,990 | 33,300,492 | 20,300,124 | 21,501,154 | 8,666,217 | |||||||||||||||||
276,057 | 196,343 | — | — | — | — | |||||||||||||||||
(1,228,333) | (1,000,114 | ) | (26,653,653) | (53,865,750 | ) | (8,019,598) | (11,746,192 | ) | ||||||||||||||
(528,127) | (1,770,346 | ) | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
6,860,335 |
| 5,217,703 | 8,453,129 | (28,134,979 | ) | 14,062,995 | (905,049 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
4,850,111 | 7,337,152 | (13,822,348) | (7,710,687 | ) | (2,387,463) | 28,146,820 | ||||||||||||||||
24,790,326 | 17,453,174 | 188,573,963 | 196,284,650 | 180,275,568 | 152,128,748 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$29,640,437 | $24,790,326 | $174,751,615 | $188,573,963 | $177,888,105 | $180,275,568 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
248,113 | 366,646 | 35,297 | 107,350 | 28,055 | 108,717 | |||||||||||||||||
194,059 | 87,386 | — | — | — | — | |||||||||||||||||
116,951 | 67,695 | 727,721 | 412,688 | 1,124,537 | 433,962 | |||||||||||||||||
18,814 | 13,301 | — | — | — | — | |||||||||||||||||
(79,010) | (65,214 | ) | (514,282) | (1,058,721 | ) | (385,169) | (592,470 | ) | ||||||||||||||
(34,615) | (117,825 | ) | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
464,312 | 351,989 | 248,736 | (538,683 | ) | 767,423 | (49,791 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
$5,147 |
| $120,563 | $54,840 | $455,556 | ($245,910) | — |
DECEMBER 31, 2014 |
51 |
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
Sit Small Cap Growth Fund | Sit International Growth Fund | |||||||||||||||
Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||
December 31, 2014 | June 30, | December 31, 2014 | June 30, | |||||||||||||
(Unaudited) | 2014 | (Unaudited) | 2014 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | ($332,176) | ($909,126 | ) | ($484) | $391,390 | |||||||||||
Net realized gain (loss) on investments and foreign currency transactions | 5,492,969 | 10,433,876 | 1,209,672 | 1,834,049 | ||||||||||||
Net change in unrealized appreciation (depreciation) of investments and foreign currency transactions | (3,363,527) | 9,402,621 | (3,478,948) | 1,342,866 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | 1,797,266 | 18,927,371 | (2,269,760) | 3,568,305 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Distributions from: | ||||||||||||||||
Net investment income | ||||||||||||||||
Common shares (Class I) | — | — | (354,576) | (231,001 | ) | |||||||||||
Net realized gains on investments | ||||||||||||||||
Common shares (Class I) | (11,167,851) | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total distributions | (11,167,851) | — | (354,576) | (231,001 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions: | ||||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Common shares (Class I) | 2,231,586 | 4,035,232 | 325,541 | 1,784,889 | ||||||||||||
Reinvested distributions | ||||||||||||||||
Common shares (Class I) | 10,988,401 | — | 352,967 | 229,662 | ||||||||||||
Payments for shares redeemed | ||||||||||||||||
Common shares (Class I) | (4,351,538) | (8,245,564 | ) | (1,077,132) | (2,114,470 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Increase (decrease) in net assets from capital transactions | 8,868,449 | (4,210,332 | ) | (398,624) | (99,919 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | (502,136) | 14,717,039 | (3,022,960) | 3,237,385 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 99,509,783 | 84,792,744 | 24,127,416 | 20,890,031 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period* | $99,007,647 | $99,509,783 | $21,104,456 | $24,127,416 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital transactions in shares: | ||||||||||||||||
Sold | ||||||||||||||||
Common shares (Class I) | 38,328 | 70,531 | 19,428 | 108,905 | ||||||||||||
Reinvested distributions | ||||||||||||||||
Common shares (Class I) | 198,096 | — | 22,396 | 13,868 | ||||||||||||
Redeemed | ||||||||||||||||
Common shares (Class I) | (72,621) | (142,415 | ) | (65,824) | (127,374 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 163,803 | (71,884 | ) | (24,000) | (4,601 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
*includes undistributed (distributions in excess) net investment income (loss) | ($332,176) | — | ($484) | $354,576 |
See accompanying notes to financial statements. | ||||
52 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Sit Developing Markets Growth Fund | ||||||
Six Months Ended | Year Ended | |||||
December 31, 2014 | June 30, | |||||
(Unaudited) | 2014 | |||||
($29,284 | ) | ($7,675 | ) | |||
|
257,994 |
| 654,087 | |||
|
(1,262,606 |
) | 641,337 | |||
|
|
|
| |||
|
(1,033,896 |
) | 1,287,749 | |||
|
|
|
| |||
— | (16,575 | ) | ||||
(795,509 | ) | (596,525 | ) | |||
|
|
|
| |||
(795,509 | ) | (613,100 | ) | |||
|
|
|
| |||
186,830 | 876,017 | |||||
781,882 | 602,798 | |||||
(535,070 | ) | (1,961,000 | ) | |||
|
|
|
| |||
433,642 | (482,185 | ) | ||||
|
|
|
| |||
(1,395,763 | ) | 192,464 | ||||
10,807,715 | 10,615,251 | |||||
|
|
|
| |||
$9,411,952 | $10,807,715 | |||||
|
|
|
| |||
10,849 | 50,956 | |||||
54,601 | 35,859 | |||||
(32,470 | ) | (115,884 | ) | |||
|
|
|
| |||
32,980 | (29,069 | ) | ||||
|
|
|
| |||
($29,284 | ) | — |
DECEMBER 31, 2014 |
53 |
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Balanced Fund
Six Months Ended | ||||||||||||||||||||||||||||||
December 31, 2014 | Years Ended June 30, | |||||||||||||||||||||||||||||
(Unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||||||||
Beginning of period | $21.01 | $18.42 | $16.97 | $16.47 | $14.18 | $12.96 | ||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||
Net investment income 1 | 0.13 | 0.27 | 0.27 | 0.29 | 0.27 | 0.35 | ||||||||||||||||||||||||
Net realized and unrealized gains | 0.88 | 2.58 | 1.46 | 0.46 | 2.32 | 1.24 | ||||||||||||||||||||||||
Total from operations | 1.01 | 2.85 | 1.73 | 0.75 | 2.59 | 1.59 | ||||||||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||||||||
From net investment income | (0.21) | (0.26) | (0.28) | (0.25) | (0.30) | (0.37) | ||||||||||||||||||||||||
From net realized gains | (0.64) | — | — | — | — | — | ||||||||||||||||||||||||
Total distributions | (0.85) | (0.26) | (0.28) | (0.25) | (0.30) | (0.37) | ||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||||||||
End of period | $21.17 | $21.01 | $18.42 | $16.97 | $16.47 | $14.18 | ||||||||||||||||||||||||
Total investment return 2 | 4.80% | 15.58% | 10.26% | 4.61% | 18.46% | 12.33% | ||||||||||||||||||||||||
Net assets at end of period (000’s omitted) | $16,924 | $15,645 | $13,492 | $11,821 | $11,150 | $10,550 | ||||||||||||||||||||||||
Ratios: 3 | ||||||||||||||||||||||||||||||
Expenses | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | ||||||||||||||||||||||||
Net investment income | 1.25% | 1.36% | 1.52% | 1.75% | 1.75% | 2.44% | ||||||||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 20.91%4 | 54.52% | 30.86% | 47.01% | 40.84% | 46.79% |
1 | The net investment income per share is based on average shares outstanding for the period. |
2 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
3 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
4 | Not annualized. |
54 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Dividend Growth Fund
Six Months Ended | ||||||||||||||||||||||||
Class I | December 31, 2013 | Years Ended June 30, | ||||||||||||||||||||||
(Unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $18.69 | $16.35 | $14.10 | $13.91 | $10.64 | $9.60 | ||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income 1 | 0.14 | 0.26 | 0.27 | 0.24 | 0.21 | 0.19 | ||||||||||||||||||
Net realized and unrealized gains | 0.89 | 2.96 | 2.46 | 0.26 | 3.23 | 1.03 | ||||||||||||||||||
Total from operations | 1.03 | 3.22 | 2.73 | 0.50 | 3.44 | 1.22 | ||||||||||||||||||
Redemption fees 2 | — | — | — | — | — | — | ||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
From net investment income | (0.20) | (0.25) | (0.26) | (0.21) | (0.17) | (0.18) | ||||||||||||||||||
From net realized gains | (2.21) | (0.63) | (0.22) | (0.10) | — | — | ||||||||||||||||||
Total distributions | (2.41) | (0.88) | (0.48) | (0.31) | (0.17) | (0.18) | ||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
End of period | $17.31 | $18.69 | $16.35 | $14.10 | $13.91 | $10.64 | ||||||||||||||||||
Total investment return 3 | 5.58% | 20.26% | 19.77% | 3.76% | 32.58% | 12.71% | ||||||||||||||||||
Net assets at end of period (000’s omitted) | $966,928 | $1,017,106 | $920,324 | $619,667 | $328,057 | $39,430 | ||||||||||||||||||
Ratios: 4 | ||||||||||||||||||||||||
Expenses | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | ||||||||||||||||||
Net investment income | 1.49% | 1.50% | 1.78% | 1.79% | 1.59% | 1.70% | ||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 27.56%5 | 44.36% | 26.58% | 26.84% | 14.67% | 31.84% | ||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
Class S | December 31, 2013 | Years Ended June 30, | ||||||||||||||||||||||
(Unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $18.63 | $16.29 | $14.06 | $13.87 | $10.61 | $9.58 | ||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income 1 | 0.12 | 0.22 | 0.23 | 0.21 | 0.17 | 0.16 | ||||||||||||||||||
Net realized and unrealized gains | 0.89 | 2.96 | 2.44 | 0.26 | 3.23 | 1.02 | ||||||||||||||||||
Total from operations | 1.01 | 3.18 | 2.67 | 0.47 | 3.40 | 1.18 | ||||||||||||||||||
Redemption fees 2 | — | — | — | — | — | — | ||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
From net investment income | (0.17) | (0.21) | (0.22) | (0.18) | (0.14) | (0.15) | ||||||||||||||||||
From net realized gains | (2.21) | (0.63) | (0.22) | (0.10) | — | — | ||||||||||||||||||
Total distributions | (2.38) | (0.84) | (0.44) | (0.28) | (0.14) | (0.15) | ||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
End of period | $17.26 | $18.63 | $16.29 | $14.06 | $13.87 | $10.61 | ||||||||||||||||||
Total investment return 3 | 5.45% | 20.02% | 19.39% | 3.53% | 32.27% | 12.37% | ||||||||||||||||||
Net assets at end of period (000’s omitted) | $91,184 | $103,433 | $134,498 | $100,878 | $56,280 | $24,894 | ||||||||||||||||||
Ratios: 4 | ||||||||||||||||||||||||
Expenses | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | ||||||||||||||||||
Net investment income | 1.24% | 1.25% | 1.53% | 1.54% | 1.34% | 1.45% | ||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 27.56%5 | 44.36% | 26.58% | 26.84% | 14.67% | 31.84% |
1 | The net investment income per share is based on average shares outstanding for the period. |
2 | Amount represents less than $0.01 per share. |
3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
5 | Not annualized. |
DECEMBER 31, 2014 |
55 |
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
Six Months Ended | ||||||||||||||||||||||||
Class I | December 31, 2014 | Years Ended June 30, | ||||||||||||||||||||||
(Unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $15.74 | $14.27 | $12.55 | $13.26 | $10.41 | $9.70 | ||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income 1 | 0.08 | 0.23 | 0.25 | 0.24 | 0.20 | 0.17 | ||||||||||||||||||
Net realized and unrealized gains (losses) | (0.06) | 2.09 | 1.78 | (0.58 | ) | 2.95 | 0.68 | |||||||||||||||||
Total from operations | 0.02 | 2.32 | 2.03 | (0.34 | ) | 3.15 | 0.85 | |||||||||||||||||
Redemption fees | — | — | 2 | — | 2 | — | — | — | ||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
From net investment income | (0.16) | (0.22 | ) | (0.23 | ) | (0.22 | ) | (0.17 | ) | (0.14 | ) | |||||||||||||
From net realized gains | (1.07) | (0.63 | ) | (0.08 | ) | (0.15 | ) | (0.13 | ) | — | ||||||||||||||
Total distributions | (1.23) | (0.85 | ) | (0.31 | ) | (0.37 | ) | (0.30 | ) | (0.14 | ) | |||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
End of period | $14.53 | $15.74 | $14.27 | $12.55 | $13.26 | $10.41 | ||||||||||||||||||
Total investment return 3 | 0.14% | 16.76% | 16.36% | (2.44% | ) | 30.55% | 8.79% | |||||||||||||||||
Net assets at end of period (000’s omitted) | $23,981 | $21,467 | $14,196 | $10,421 | $7,834 | $2,832 | ||||||||||||||||||
Ratios: 4 | ||||||||||||||||||||||||
Expenses | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | ||||||||||||||||||
Net investment income | 1.06% | 1.55% | 1.81% | 1.97% | 1.57% | 1.48% | ||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 27.91%5 | 48.68% | 26.15% | 26.65% | 21.84% | 21.60% | ||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
Class S | December 31, 2014 | Years Ended June 30, | ||||||||||||||||||||||
(Unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $15.72 | $14.25 | $12.54 | $13.24 | $10.40 | $9.70 | ||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income 1 | 0.06 | 0.20 | 0.21 | 0.21 | 0.16 | 0.14 | ||||||||||||||||||
Net realized and unrealized gains (losses) | (0.06) | 2.09 | 1.78 | (0.57 | ) | 2.95 | 0.68 | |||||||||||||||||
Total from operations | — | 2.29 | 1.99 | (0.36 | ) | 3.11 | 0.82 | |||||||||||||||||
Redemption fees | — | — | 2 | — | — | — | — | |||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
From net investment income | (0.13) | (0.19 | ) | (0.20 | ) | (0.19 | ) | (0.14 | ) | (0.12 | ) | |||||||||||||
From net realized gains | (1.07) | (0.63 | ) | (0.08 | ) | (0.15 | ) | (0.13 | ) | — | ||||||||||||||
Total distributions | (1.20) | (0.82 | ) | (0.28 | ) | (0.34 | ) | (0.27 | ) | (0.12 | ) | |||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
End of period | $14.52 | $15.72 | $14.25 | $12.54 | $13.24 | $10.40 | ||||||||||||||||||
Total investment return 3 | 0.02% | 16.49% | 16.01% | (2.60% | ) | 30.17% | 8.47% | |||||||||||||||||
Net assets at end of period (000’s omitted) | $5,660 | $3,323 | $3,257 | $2,608 | $1,444 | $882 | ||||||||||||||||||
Ratios: 4 | ||||||||||||||||||||||||
Expenses | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | ||||||||||||||||||
Net investment income | 0.80% | 1.30% | 1.56% | 1.72% | 1.32% | 1.23% | ||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 27.91%5 | 48.68% | 26.15% | 26.65% | 21.84% | 21.60% |
1 | The net investment income per share is based on average shares outstanding for the period. |
2 | Amount represents less than $0.01 per share. |
3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
5 | Not annualized. |
56 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Large Cap Growth Fund
Six Months Ended December 31, 2014 | Years Ended June 30, | |||||||||||||||||||||||
(Unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||
| ||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $52.51 | $47.53 | $45.53 | $43.96 | $34.75 | $32.42 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income 1 | 0.11 | 0.29 | 0.43 | 0.26 | 0.22 | 0.22 | ||||||||||||||||||
Net realized and unrealized gains | 3.43 | 10.23 | 5.69 | 1.63 | 9.21 | 2.33 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total from operations | 3.54 | 10.52 | 6.12 | 1.89 | 9.43 | 2.55 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Redemption fees 2 | — | — | — | — | — | — | ||||||||||||||||||
|
| |||||||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
From net investment income | (0.24) | (0.39 | ) | (0.46 | ) | (0.32 | ) | (0.22 | ) | (0.22 | ) | |||||||||||||
From net realized gains | (10.30) | (5.15 | ) | (3.66 | ) | — | — | — | ||||||||||||||||
|
| |||||||||||||||||||||||
Total distributions | (10.54) | (5.54 | ) | (4.12 | ) | (0.32 | ) | (0.22 | ) | (0.22 | ) | |||||||||||||
|
| |||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
End of period | $45.51 | $52.51 | $47.53 | $45.53 | $43.96 | $34.75 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total investment return 3 | 6.63% | 22.92% | 14.18% | 4.39% | 27.18% | 7.80% | ||||||||||||||||||
|
| |||||||||||||||||||||||
Net assets at end of period (000’s omitted) | $174,752 | $188,574 | $196,285 | $254,256 | $365,045 | $407,359 | ||||||||||||||||||
Ratios: 4 | ||||||||||||||||||||||||
Expenses | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | ||||||||||||||||||
Net investment income | 0.41% | 0.57% | 0.92% | 0.61% | 0.54% | 0.58% | ||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 10.12%5 | 27.34% | 13.42% | 15.06% | 25.36% | 15.93% |
1 | The net investment income per share is based on average shares outstanding for the period. |
2 | Amount represents less than $0.01 per share. |
3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
5 | Not annualized. |
DECEMBER 31, 2014 |
57 |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Mid Cap Growth Fund
Six Months Ended December 31, 2014 | Years Ended June 30, | |||||||||||||||||||||||
(Unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||
| ||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $21.08 | $17.69 | $15.77 | $15.88 | $11.57 | $9.90 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment loss 1 | (0.03) | (0.07 | ) | (0.03 | ) | (0.05 | ) | (0.06 | ) | (0.05 | ) | |||||||||||||
Net realized and unrealized gains (losses) | 0.75 | 4.54 | 2.32 | (0.06 | ) | 4.37 | 1.72 | |||||||||||||||||
|
| |||||||||||||||||||||||
Total from operations | 0.72 | 4.47 | 2.29 | (0.11 | ) | 4.31 | 1.67 | |||||||||||||||||
|
| |||||||||||||||||||||||
Capital share proceeds | — | — | — | — | — | 2,3 | — | |||||||||||||||||
|
| |||||||||||||||||||||||
Redemption fees | — | — | 2 | — | 2 | — | 2 | — | 2 | — | 2 | |||||||||||||
|
| |||||||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
From net realized gains | (2.71) | (1.08 | ) | (0.37 | ) | — | — | — | ||||||||||||||||
|
| |||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
End of period | $19.09 | $21.08 | $17.69 | $15.77 | $15.88 | $11.57 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total investment return 4 | 3.40% | 25.58% | 14.70% | (0.69% | ) | 37.25% | 5 | 16.87% | ||||||||||||||||
|
| |||||||||||||||||||||||
Net assets at end of period (000’s omitted) | $177,888 | $180,276 | $152,129 | $144,601 | $165,288 | $130,258 | ||||||||||||||||||
Ratios: 6, 7 | ||||||||||||||||||||||||
Expenses (without waiver) | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | ||||||||||||||||||
Expenses (with waiver) | 1.25% | 1.25% | 1.25% | 1.25% | 1.20% | 1.15% | ||||||||||||||||||
Net investment loss (without waiver) | (0.28%) | (0.37% | ) | (0.17% | ) | (0.33% | ) | (0.49% | ) | (0.52% | ) | |||||||||||||
Net investment loss (with waiver) | (0.28%) | (0.37% | ) | (0.17% | ) | (0.33% | ) | (0.44% | ) | (0.42% | ) | |||||||||||||
Portfolio turnover rate (excluding short-term securities) | 11.00%8 | 27.65% | 16.91% | 16.23% | 26.98% | 20.39% |
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. |
8 | Not annualized. |
58 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Small Cap Growth Fund
Six Months Ended December 31, 2014 | Years Ended June 30, | |||||||||||||||||||||||
(Unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||
| ||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $61.38 | $50.08 | $43.90 | $43.86 | $31.32 | $25.89 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment loss 1 | (0.21) | (0.55 | ) | (0.30 | ) | (0.34 | ) | (0.36 | ) | (0.24 | ) | |||||||||||||
Net realized and unrealized gains | 1.36 | 11.85 | 6.48 | 0.38 | 12.89 | 5.67 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total from operations | 1.15 | 11.30 | 6.18 | 0.04 | 12.53 | 5.43 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Capital share proceeds | — | — | — | — | 0.01 | 2 | — | |||||||||||||||||
|
| |||||||||||||||||||||||
Redemption fees 3 | — | — | — | — | — | — | ||||||||||||||||||
|
| |||||||||||||||||||||||
Distributions from: | ||||||||||||||||||||||||
Net realized gains | (7.06) | — | — | — | — | — | ||||||||||||||||||
|
| |||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
End of period | $55.47 | $61.38 | $50.08 | $43.90 | $43.86 | $31.32 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total investment return 4 | 1.87% | 22.56% | 14.08% | 0.09% | 40.04%5 | 20.97% | ||||||||||||||||||
|
| |||||||||||||||||||||||
Net assets at end of period (000’s omitted) | $99,008 | $99,510 | $84,793 | $78,202 | $94,744 | $59,848 | ||||||||||||||||||
Ratios: 6 | ||||||||||||||||||||||||
Expenses | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | ||||||||||||||||||
Net investment loss | (0.68%) | (0.94% | ) | (0.64% | ) | (0.82% | ) | (0.91% | ) | (0.80% | ) | |||||||||||||
Portfolio turnover rate (excluding short-term securities) | 17.56%7 | 33.38% | 28.36% | 22.32% | 30.33% | 22.41% |
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. |
7 | Not annualized. |
DECEMBER 31, 2014 |
59 |
|
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit International Growth Fund
Six Months Ended December 31, 2014 | Years Ended June 30, | |||||||||||||||||||||||
(Unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||
| ||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $17.44 | $15.05 | $13.29 | $15.16 | $11.67 | $10.90 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income (loss) 1 | (0.00)2 | 0.28 | 0.20 | 0.22 | 0.16 | 0.11 | ||||||||||||||||||
Net realized and unrealized gains (losses) | (1.65) | 2.28 | 1.80 | (1.86 | ) | 3.39 | 0.65 | |||||||||||||||||
|
| |||||||||||||||||||||||
Total from operations. | (1.65) | 2.56 | 2.00 | (1.64 | ) | 3.55 | 0.76 | |||||||||||||||||
|
| |||||||||||||||||||||||
Capital share proceeds | — | — | — | — | 0.07 | 3 | 0.13 | 3 | ||||||||||||||||
|
| |||||||||||||||||||||||
Redemption fees | — | — | — | — | 2 | — | 2 | — | 2 | |||||||||||||||
|
| |||||||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
From net investment income | (0.27) | (0.17 | ) | (0.24 | ) | (0.23 | ) | (0.13 | ) | (0.12 | ) | |||||||||||||
|
| |||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
End of period | $15.52 | $17.44 | $15.05 | $13.29 | $15.16 | $11.67 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total investment return 4 | (9.51%) | 17.06% | 15.06% | (10.69% | ) | 31.08%5 | 8.10% | 5 | ||||||||||||||||
|
| |||||||||||||||||||||||
Net assets at end of period (000’s omitted) | $21,104 | $24,127 | $20,890 | $19,296 | $24,823 | $20,586 | ||||||||||||||||||
Ratios: 6, 7 | ||||||||||||||||||||||||
Expenses (without waiver) | 1.50% | 1.50% | 1.50% | 1.50% | 1.61% | 1.85% | ||||||||||||||||||
Expenses (with waiver) | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | ||||||||||||||||||
Net investment income (loss)(with waiver) | (0.00%)8 | 1.69% | 1.39% | 1.62% | 1.01% | 0.50% | ||||||||||||||||||
Net investment income (loss)(with waiver) | (0.00%)8 | 1.69% | 1.39% | 1.62% | 1.12% | 0.85% | ||||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 28.42%9 | 46.91% | 27.93% | 27.82% | 35.95% | 25.09% |
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 | 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 0.60% and 1.20% for the years ended June 30, 2011 and 2010, respectively. |
6 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
7 | Effective November 1, 2010, total Fund expenses are limited to 1.50% of average daily net assets. Prior to this date, expenses were calculated at a higher rate, and the investment adviser voluntarily absorbed expenses that were otherwise payable by the Fund. |
8 | Amount represents less than 0.01%. |
9 | Not annualized. |
60 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Developing Markets Growth Fund
Six Months Ended December 31, 2014 | Years Ended June 30, | |||||||||||||||||||||||
(Unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||
| ||||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
Beginning of period | $17.48 | $16.40 | $17.70 | $23.24 | $19.00 | $16.13 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income (loss) 1 | (0.05) | (0.01 | ) | 0.04 | 0.06 | 0.03 | 0.01 | |||||||||||||||||
Net realized and unrealized gains (losses) | (1.65) | 2.07 | 0.14 | (3.89 | ) | 4.90 | 2.90 | |||||||||||||||||
|
| |||||||||||||||||||||||
Total from operations | (1.70) | 2.06 | 0.18 | (3.83 | ) | 4.93 | 2.91 | |||||||||||||||||
|
| |||||||||||||||||||||||
Redemption fees | — | — | — | — | 2 | — | — | 2 | ||||||||||||||||
|
| |||||||||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
From net investment income | — | (0.03 | ) | (0.06 | ) | (0.06 | ) | (0.02 | ) | (0.04 | ) | |||||||||||||
From net realized gains | (1.33) | (0.95 | ) | (1.42 | ) | (1.65 | ) | (0.67 | ) | — | ||||||||||||||
|
| |||||||||||||||||||||||
Total distributions | (1.33) | (0.98 | ) | (1.48 | ) | (1.71 | ) | (0.69 | ) | (0.04 | ) | |||||||||||||
|
| |||||||||||||||||||||||
Net Asset Value: | ||||||||||||||||||||||||
End of period | $14.45 | $17.48 | $16.40 | $17.70 | $23.24 | $19.00 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total investment return 3 | (9.64%) | 12.79% | 0.36% | (16.29% | ) | 25.95% | 18.05% | |||||||||||||||||
|
| |||||||||||||||||||||||
Net assets at end of period (000’s omitted) | $9,412 | $10,808 | $10,615 | $11,634 | $15,420 | $14,043 | ||||||||||||||||||
Ratios: 4 | ||||||||||||||||||||||||
Expenses | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% | ||||||||||||||||||
Net investment income (loss) | (0.55%) | (0.07% | ) | 0.24% | 0.29% | 0.15% | 0.06% | |||||||||||||||||
Portfolio turnover rate (excluding short-term securities) | 11.49%5 | 21.45% | 15.48% | 22.56% | 19.14% | 19.90% |
1 | The net investment income (loss) per share is based on average shares outstanding for the period. |
2 | Amount represents less than $0.01 per share. |
3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
5 | Not annualized. |
DECEMBER 31, 2014 |
61 |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2014
(1) | Organization |
Sit Mutual Funds are no-load funds, and are registered under the Investment Company Act of 1940 (as amended) as diversified, open-end management investment companies, or series thereof. The Sit Balanced, Sit Dividend Growth, Sit Global Dividend Growth, Sit Small Cap Growth, Sit International Growth, and Sit Developing Markets Growth are series funds of Sit Mutual Funds, Inc.
This report covers the equity funds of the Sit Mutual Funds (the Funds). Each fund has 10 billion authorized shares of capital stock with a par value of $0.001. The investment objective for each Fund is as follows:
Fund | Investment Objective | |
Balanced | Long-term growth consistent with the preservation of principal and to provide regular income. | |
Dividend Growth | Provide current income that exceeds the dividend yield of the S&P 500® Index and that grows over a period of years. Secondarily, maximize long-term capital appreciation. | |
Global Dividend Growth | Provide current income that exceeds the dividend yield of the MSCI World Index 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.
62 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Fair Value Measurements
The inputs and valuations techniques used to measure fair value of the Funds’ net assets are summarized into three levels as described in the hierarchy below:
• Level 1 – quoted prices for active markets for identical securities. An active market for the security is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value.
• Level 2 – debt securities are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, U.S. government and government agency obligations, and municipal securities the pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity, and type as well as dealer supplied prices. For asset-backed securities and mortgage-backed securities, the pricing services utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity, and type as well as dealer supplied prices. For foreign equities, the pricing services adjust closing prices by applying a systematic process for events occurring after the close of the foreign exchange by utilizing such inputs as Depositary Receipts, quoted prices for similar securities, exchange rates, and certain indexes. All of these inputs are derived principally from or corroborated by observable market data. An adjustment to any observable input that is significant to the fair value may render the measurement a Level 3 measurement.
• Level 3 – significant unobservable inputs, including the Adviser’s own assumptions in determining the fair value of investments.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
A summary of the levels for the Funds’ investments as of December 31, 2014 is included with the Funds’ schedule of investments.
Foreign Currency Translations and Forward Foreign Currency Contracts
The fair value of securities and other assets and liabilities denominated in foreign currencies for Global Dividend Growth, International Growth and Developing Markets Growth Funds are translated daily into U.S. dollars at the closing rate of exchange (approximately 4:00 p.m. E.S.T). Purchases and sales of securities, income and expenses are translated at the exchange rate on the transaction date. Dividend and interest income includes currency exchange gains (losses) realized between the accrual and payment dates on such income. Exchange gains (losses) may also be realized between the trade and settlement dates on security and forward contract transactions. For securities denominated in foreign currencies, the effect of changes in foreign exchange rates on realized and unrealized gains or losses is reflected as a component of such gains or losses.
The Global Dividend Growth, International Growth and Developing Markets Growth Funds may enter into forward foreign currency exchange contracts generally for operational purposes, but the Adviser may occasionally utilize contracts to protect against adverse exchange rate fluctuation. Any gains (losses) generated by these contracts are disclosed separately on the statement of operations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Funds and the resulting unrealized appreciation or depreciation is determined using foreign currency exchange rates from an independent pricing service. The Funds are subject to the credit risk that the other party will not complete the obligations of the contract.
Federal Taxes
The Funds’ policy is to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of their taxable income to shareholders. Therefore, no income tax provision is required. Also, in order to avoid the payment of any federal excise taxes, the Funds will distribute substantially all of their net investment income and net realized gains on a calendar year basis.
Management has analyzed the Funds’ tax positions taken in federal tax returns for all open tax years and has concluded that as of December 31, 2014, no provision for income would be required in the Funds’ financial statements. The Funds’ federal and state income and federal excise returns for the 2011, 2012 and 2013 tax years for which the applicable statutes of limitations have not expired remain subject to examination by the Internal Revenue Service and state departments of revenue.
DECEMBER 31, 2014 |
63 |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2014 (Continued)
At December 31, 2014, 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 | $4,268,628 | ($97,721 | ) | $4,170,907 | $12,133,676 | |||||||||||||||
Dividend Growth | 209,260,478 | (11,957,984 | ) | 197,302,494 | 858,393,330 | |||||||||||||||
Global Dividend Growth | 3,528,705 | (880,509 | ) | 2,648,196 | 24,389,774 | |||||||||||||||
Large Cap Growth | 64,955,537 | (1,495,377 | ) | 63,460,160 | 109,720,020 | |||||||||||||||
Mid Cap Growth | 70,683,586 | (2,508,101 | ) | 68,175,485 | 107,793,951 | |||||||||||||||
Small Cap Growth | 33,271,475 | (2,184,820 | ) | 31,086,655 | 67,092,456 | |||||||||||||||
International Growth | 3,275,515 | (1,626,741 | ) | 1,648,774 | 19,038,222 | |||||||||||||||
Developing Markets Growth | 2,463,383 | (862,953 | ) | 1,600,430 | 7,650,762 |
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, 2014 and 2013 were as follows:
Year Ended June 30, 2014:
Long Term | |||||||||||||||
Ordinary Income | Capital Gain | Total | |||||||||||||
Balanced | $190,000 | — | $190,000 | ||||||||||||
Dividend Growth (Class I) | 17,289,602 | $31,374,733 | 48,664,335 | ||||||||||||
Dividend Growth (Class S) | 2,140,368 | 4,875,856 | 7,016,224 | ||||||||||||
Global Dividend Growth (Class I) | 263,794 | 736,258 | 1,000,052 | ||||||||||||
Global Dividend Growth (Class S) | 43,211 | 153,131 | 196,342 | ||||||||||||
Large Cap Growth | 1,617,540 | 19,002,570 | 20,620,110 | ||||||||||||
Mid Cap Growth | — | 8,937,914 | 8,937,914 | ||||||||||||
Small Cap Growth | — | — | — | ||||||||||||
International Growth | 231,001 | — | 231,001 | ||||||||||||
Developing Markets Growth | 16,575 | 596,525 | 613,100 | ||||||||||||
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 |
64 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
As of June 30, 2014, the components of distributable earnings on a tax basis were as follows:
Undistributed | Unrealized | ||||||||||||||
Ordinary | Accumulated | Appreciation | |||||||||||||
Income | Gain (Loss) | (Depreciation) | |||||||||||||
Balanced | $55,722 | $113,138 | $3,929,156 | ||||||||||||
Dividend Growth | 7,869,583 | 89,806,212 | 222,277,208 | ||||||||||||
Global Dividend Growth | 157,119 | 1,041,943 | 3,756,189 | ||||||||||||
Large Cap Growth | 646,669 | 23,378,884 | 65,477,521 | ||||||||||||
Mid Cap Growth | — | 18,485,116 | 72,907,004 | ||||||||||||
Small Cap Growth | — | 8,808,775 | 34,447,177 | ||||||||||||
International Growth | 354,576 | (1,081,060 | ) | 4,984,033 | |||||||||||
Developing Markets Growth | — | 655,564 | 2,862,265 |
Net capital loss carryovers and late year losses, if any, as of June 30, 2014, 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, 2014, were as follows:
Pre-Enactment | Post-Enactment | |||||||||||
Net Capital Loss | Unlimited Period of Net | Late Year | Accumulated | |||||||||
Carryover Expiring in: | Capital Loss Carryover | Losses | Capital and | |||||||||
2014 | 2015-2019 | Short-Term | Long-Term | Deferred | Other Losses | |||||||
International Growth | — | $1,081,060 | — | — | — | $1,081,060 |
For the year ended June 30, 2014, the Funds’ utilized pre-enactment capital losses and expired capital losses as follows:
Utilized | Expiring In | Expired | |||||||||||||
Balanced | $95,283 | 2017 | $— | ||||||||||||
565,841 | 2018 | — | |||||||||||||
Small Cap Growth | 1,528,246 | 2018 | — | ||||||||||||
International Growth | 1,832,899 | 2018 | — |
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.
DECEMBER 31, 2014 |
|
65 |
|
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2014 (Continued)
Concentration of Investments
The Developing Markets Growth Fund may concentrate investments in countries with limited or developing capital markets which may involve greater risks than investments in more developed markets and the prices of such investments may be volatile. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of the Fund’s investments and the income it generates, as well as the Fund’s ability to repatriate such amounts.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results for the respective periods. Actual results could differ from those estimates.
Guarantees and Indemnifications
Under each Fund’s organizational documents, its officers and directors are indemnified against certain liability arising out of the performance of their duties to each Fund. In addition, certain of each Fund’s contracts with its service providers contain general indemnification clauses. Each Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against each Fund cannot be determined and each Fund has no historical basis for predicting the likelihood of any such claims.
(3) | Investment Security Transactions |
The cost of purchases and proceeds from sales and maturities of investment securities, other than short-term securities, for the six months ended December 31, 2014, were as follows:
Purchases | Proceeds | |||||||||||||||
|
| |||||||||||||||
U.S. Government | Other | U.S. Government | Other | |||||||||||||
|
| |||||||||||||||
Balanced | $707,595 | $2,844,964 | $409,000 | $2,852,991 | ||||||||||||
Dividend Growth | — | 306,483,312 | — | 415,687,951 | ||||||||||||
Global Dividend Growth | — | 9,821,068 | — | 7,068,186 | ||||||||||||
Large Cap Growth | — | 18,134,900 | — | 43,171,640 | ||||||||||||
Mid Cap Growth | — | 19,337,432 | — | 26,888,463 | ||||||||||||
Small Cap Growth | — | 16,917,480 | — | 18,423,312 | ||||||||||||
International Growth | — | 6,330,430 | — | 7,116,747 | ||||||||||||
Developing Markets Growth | — | 1,195,044 | — | 1,559,468 |
66 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
(4) | Affiliated Fees and Transactions |
Investment Adviser
The Funds each have entered into an investment management agreement with Sit Investment Associates, Inc. (SIA), under which SIA manages the Funds’ assets and provides research, statistical and advisory services, and pays related office rental, executive expenses and executive salaries. The current fee for investment management and advisory services is based on the average daily net assets of the Funds at the annual rate of:
Balanced | 1.00 | % | ||||
Dividend Growth Fund Class I and Class S | 1.00 | % | ||||
Global Dividend Growth Fund Class I and Class S | 1.25 | % | ||||
Large Cap Growth | 1.00 | % | ||||
Mid Cap Growth | 1.25 | % | ||||
Small Cap Growth | 1.50 | % | ||||
International Growth | 1.50 | % | ||||
Developing Markets Growth | 2.00 | % |
SIA is obligated to pay all of the Funds’ expenses (excluding extraordinary expenses, stock transfer taxes, interest, brokerage commissions, 12b-1 fees and other transaction charges relating to investing activities).
In addition to the annual management fees, the Class S shares of Global Dividend Growth and Dividend Growth Funds also have a 0.25% annual distribution (12b-1) fee, which is used to pay for distribution fees related to the sale and distribution of its shares.
Transactions with affiliates
The investment adviser, affiliates of the investment adviser, directors and officers of the Funds as a whole owned the following shares as of December 31, 2014:
% Shares | ||||||||
Shares | Outstanding | |||||||
Balanced | 234,889 | 29.4 | ||||||
Dividend Growth | 986,567 | 1.6 | ||||||
Global Dividend Growth | 650,238 | 31.9 | ||||||
Large Cap Growth | 449,551 | 11.7 | ||||||
Mid Cap Growth | 3,376,685 | 36.2 | ||||||
Small Cap Growth | 858,986 | 48.1 | ||||||
International Growth | 753,894 | 55.4 | ||||||
Developing Markets Growth | 262,008 | 40.2 |
DECEMBER 31, 2014 |
|
67 |
|
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2014 (Continued)
(5) | Capital Share Activity |
Short-Term Trading (Redemption) Fees
The Funds (except Balanced) charge a redemption fee equal to 2.00% of the proceeds on shares held for less than 30 calendar days. The fee is retained by the Fund for the benefit of its long-term shareholders and accounted for as an addition to paid in capital. For the six months ended December 31, 2014, the Funds received the following redemption fees:
Class I | Class S | |||||||||||
Dividend Growth | $920 | $2,633 | ||||||||||
Large Cap Growth | 461 | — | ||||||||||
Small Cap Growth | 6 | — |
(6) | Subsequent Events |
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued, and has determined that there were no subsequent events that would require disclosure in or adjustments to the financial statements.
68 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2014 to December 31, 2014.
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.
Expenses | ||||||||||||
Beginning | Ending | Paid During | ||||||||||
Account | Account | Period* | ||||||||||
Value | Value | (7/1/14- | ||||||||||
Fund | (7/1/14) | (12/31/14) | 12/31/14) | |||||||||
Balanced Fund | ||||||||||||
Actual | $1,000 | $ | 1,048.00 | $5.16 | ||||||||
Hypothetical | $1,000 | $ | 1,020.16 | $5.09 | ||||||||
Dividend Growth Fund | ||||||||||||
Actual | ||||||||||||
Class I | $1,000 | $ | 1,055.80 | $5.18 | ||||||||
Class S | $1,000 | $ | 1,054.50 | $6.47 | ||||||||
Hypothetical | ||||||||||||
Class I | $1,000 | $ | 1,020.16 | $5.09 | ||||||||
Class S | $1,000 | $ | 1,018.90 | $6.36 | ||||||||
Global Dividend Growth Fund | ||||||||||||
Actual | ||||||||||||
Class I | $1,000 | $ | 1,001.40 | $6.31 | ||||||||
Class S | $1,000 | $ | 1,000.20 | $7.56 | ||||||||
Hypothetical | ||||||||||||
Class I | $1,000 | $ | 1,018.90 | $6.36 | ||||||||
Class S | $1,000 | $ | 1,017.64 | $7.63 | ||||||||
Large Cap Growth | ||||||||||||
Actual | $1,000 | $ | 1,066.30 | $5.21 | ||||||||
Hypothetical | $1,000 | $ | 1,020.16 | $5.09 | ||||||||
Mid Cap Growth Fund | ||||||||||||
Actual | $1,000 | $ | 1,034.00 | $6.41 | ||||||||
Hypothetical | $1,000 | $ | 1,018.90 | $6.36 | ||||||||
Small Cap Growth Fund | ||||||||||||
Actual | $1,000 | $ | 1,018.70 | $7.63 | ||||||||
Hypothetical | $1,000 | $ | 1,017.64 | $7.63 | ||||||||
International Growth Fund | ||||||||||||
Actual | $1,000 | $ | 904.90 | $7.20 | ||||||||
Hypothetical | $1,000 | $ | 1,017.64 | $7.63 | ||||||||
Developing Markets Growth Fund | ||||||||||||
Actual | $1,000 | $ | 903.60 | $9.60 | ||||||||
Hypothetical | $1,000 | $ | 1,015.12 | $10.16 |
*Expenses are equal to the Fund’s annualized expense ratio of 1.00%, for the Balanced, Dividend Growth, Class I and Large Cap Growth Funds; 1.25% for Dividend Growth Fund, Class S, Global Dividend Growth, 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 184/365 (to reflect the one-half year period.)
DECEMBER 31, 2014 |
69 |
ADDITIONAL INFORMATION (Unaudited)
PROXY VOTING
Each fund follows certain policies and procedures for voting proxies for securities held in each portfolio. A description of the Funds’ proxy voting policies and procedures is available without charge upon request by calling the Funds at 1-800-332-5580.
Information regarding how each Fund voted proxies relating to its portfolio securities during the most recent twelve-month period ended June 30 is available without charge upon request by calling the Funds at 1-800-332-5580, and is available on the U.S. Securities and Exchange Commission’s website at www.sec.gov.
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
The Funds’ file their complete schedules of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Form N-Qs are available without charge upon request by calling the Funds at 1-800-332-5580 and are available on the SEC’s website at www.sec.gov. In addition, the Funds’ Form N-Qs may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-202-551-8090.
RE-APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS
At their joint meeting held on October 27, 2014 the Boards of Directors of the Sit Mutual Funds unanimously approved the continuation for another one year period the investment management agreements entered into by and between Sit Investment Associates, Inc. (“SIA”) and Sit Mid Cap Growth Fund, Inc. dated November 1, 1996; Sit Large Cap Growth Fund, Inc. dated November 1, 1996; and Sit Mutual Funds Inc., dated November 1, 1992; (the “Agreements”).
The Boards approved the Agreements after a lengthy discussion and consideration of various factors relating to the Boards’ selection of SIA as the investment adviser, and the Boards’ approval of the fees to be paid under the Agreements.
Investment Adviser Criteria. The Directors began their analysis by discussing their criteria for determining the quality of an investment adviser. The Directors’ noted that their analysis is similar to that used by institutional investors in evaluating and selecting investment advisers. The Directors discussed several factors used to determine the overall quality of an investment adviser and the nature, extent and quality of the services performed by SIA, including the following:
Investment Philosophy and Process. The Directors considered SIA’s philosophy of managing assets. With respect to equity securities, SIA identifies growth-oriented securities issued by companies with the potential for earnings growth at a faster rate than the general economy and market index. SIA believes that earnings growth is the primary determinant of superior long-term returns for equity securities, and invests in companies it believes exhibit above market and consistent growth as well as conservative and cyclical growth companies. SIA’s actively managed portfolios not only concentrate on the best growth opportunities but do so at reasonable valuation levels. The Directors determined that the Stock Funds’ investment objectives are consistent with SIA’s investment philosophy and growth style. The Directors reviewed the Stock Funds’ portfolio characteristics, and noted that SIA has consistently managed the Stock Funds in a growth style and the Directors found no indication of style drift away from growth stocks over market cycles. The Directors noted that in years during which growth stocks have generally under-performed relative to value stocks, many funds with a stated growth style objective actually strayed from the growth style and invested a portion of their portfolios in value stocks. This has been especially true with funds investing in international equity securities. In these instances, the Stock Funds may at times not rank favorably in comparisons with other funds investing in value stocks because the Stock Funds were disciplined in maintaining their growth style.
The Directors discussed SIA’s consistent and well-defined investment process. With respect to equity securities, SIA utilizes a team based top-down and bottom-up investment decision making process.
Investment Professionals. The Directors discussed the experience, knowledge and organizational stability of SIA and its investment professionals. The Directors noted that SIA’s senior professionals are actively involved in the investment process and have significant investment industry experience.
70 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
ADDITIONAL INFORMATION (Unaudited) (Continued)
The Directors discussed the depth of SIA’s investment staff. The Directors noted that SIA has over 30 investment professionals. Given the investment products offered by SIA and the assets under management, the Directors determined that SIA’s investment staff is well positioned to meet the current needs of its clients, including the Funds, and to accommodate growth in the number of clients and assets under management for the near future. The Directors concluded that the depth of the investment staff, and in particular senior management and investment analysts, is actually greater than the Funds currently require at their present asset size. The Directors noted that SIA has the resources of a $14 billion investment firm working for the benefit of the Fund shareholders.
Investment Performance. The Directors reviewed and discussed the Funds’ investment performance on an absolute and comparable basis for various periods as discussed below. The Directors noted that the investment performance of the Funds has generally been competitive with indices and other funds with similar investment styles as the Funds, such as equity growth funds.
Corporate Culture. The Directors discussed SIA’s corporate values to operate under the highest ethical and professional standards. SIA’s culture is set and practiced by senior management who insist that all professionals exhibit honesty and integrity. The Board noted that the firm’s values are evident in all of the services provided to the Funds.
Review of Specific Factors. The Directors continued their analysis by reviewing specific information on SIA and the Funds and specific terms of the Agreements, including the following.
Investment Performance. The Directors reviewed investment performance of each Fund for 1 month, 3 months, 6 months, year-to-date, 1 year, 5 years (as applicable), 10 years (as applicable) and since inception, both on an absolute basis and on a comparative basis to indices and mutual funds within the same investment categories. As noted above, the Directors concluded that the investment performance of the Funds has been competitive in relation to their stated objectives and strategies on a comparable basis with funds with similar objectives and strategies.
Fees and Expenses. The Directors noted that the Funds pay SIA a monthly fee and SIA is responsible for all of the Funds’ expenses, except fees paid under a distribution plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 for Class S shares of Sit Dividend Growth Fund and Sit Global Dividend Growth Fund, interest, brokerage commissions and transaction charges and certain extraordinary expenses. The Directors reviewed fees paid in prior years (both before and after the voluntary waiver of fees by SIA with respect to Mid Cap Growth Fund prior to January 1, 2011 and International Growth Fund prior to November 1, 2010) and the current fees to be paid under the Agreements.
The Directors compared each Fund’s expense ratio to the average and median expense ratios of no-load mutual funds within the same Morningstar, Inc. investment category, the average expense ratios for load funds within the Morningstar category, and the average expense ratios for all funds within the Morningstar category. Certain of the Fund’s expense ratios were higher than the averages, and certain of the Fund’s expense ratios were lower than the averages. The Directors noted that the Morningstar no-load categories include funds of various asset sizes, some of which are significantly larger in assets than the Funds. The Directors found each Fund’s total expense ratio to be within an acceptable range compared to the total expense ratios of other no-load funds within the Fund’s Morningstar category. The Directors concluded that the fees paid by the Funds are reasonable and appropriate.
The Directors reviewed the extent to which the fees to be paid under the Agreements by each Fund may be affected by an increase in the Fund’s assets, which included reviewing each Fund’s current and historical assets and the likelihood and magnitude of future increases in the Fund’s assets. The Directors agreed that it is appropriate that the Funds benefit from improved economies of scale as the Funds’ assets increase. However, the Directors concluded that given the amount of the Funds’ current assets and the likelihood and magnitude of future increases in the Funds’ assets, negotiating a graduated fee structure for each Fund is unnecessary at this time since the fees to be paid under the current Agreements are reasonable and appropriate.
The Directors reviewed the expenses paid by SIA relating to the operations of the Funds, and SIA’s income with respect to the management of the Funds for the past two calendar years. The Directors concluded that the expenses paid were appropriate.
The Directors reviewed SIA’s investment advisory fee schedule for investment management services provided to other clients. The Directors compared the services provided to the Funds and other clients of SIA, and recognized that the Funds’ expenses are borne by SIA
DECEMBER 31, 2014 |
71 |
ADDITIONAL INFORMATION (Unaudited) (Continued)
except as noted above. The Directors concluded that the fees paid by the Funds in relation to the fees paid by other SIA clients were appropriate and reasonable. The Directors also concluded that SIA’s profit margin with respect to the management of the Funds was appropriate.
The Directors discussed the extent to which SIA receives benefits from the relationship with the Funds such as soft dollar arrangements by which brokers provide research services to SIA as a result of brokerage generated by the Funds. The Board concluded that any benefits SIA receives from its relationship with the Funds are well within industry norms and are reflected in the amount of the fees paid by the Funds to SIA and are appropriate and reasonable.
Non-Advisory Services. The Directors considered the quality of non-advisory services which SIA provides to the Funds (and their shareholders) and the quality and depth of SIA’s non-investment personnel who provide such services. Directors concluded that the level of such services and the quality and depth of such personnel are consistent with industry standards.
Finally, the Directors considered the compliance staff and the regulatory history of SIA and the Funds, and concluded that both are consistent with industry standards.
Based on these conclusions, without any single conclusion being dispositive, the Directors determined that renewal of the Agreements was in the interest of each Fund and its shareholders.
72 | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
Item 2: | Code of Ethics. Not applicable to Semi-Annual Report. |
Item 3: | Audit Committee Financial Expert. Not applicable to Semi-Annual Report. |
Item 4: | Principal Accountant Fees and Services. Not applicable to Semi-Annual Report. |
Item 5: | Audit Committee of Listed Registrants. |
Not applicable to open-end investment companies.
Item 6: | Schedule of Investments. |
The schedule of investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8: Portfolio Managers of Closed-End Management Companies.
Not applicable to open-end investment companies.
Item 9: Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors.
Item 11: Controls and Procedures -
(a) Based on their evaluation of the Registrant’s Disclosure Controls and Procedures as of a date within 90 days of the Filing Date, the Registrant’s Chairman and Treasurer have determined that the Disclosure Controls and Procedures (as defined in Rule 30a-2(c) under the Act) are designed to ensure that information required to be disclosed by the Registrant is recorded, processed, summarized and reported by the filing Date, and that information required to be disclosed in the report is communicated to the Registrant’s management, as appropriate, to allow timely decisions regarding required disclosure.
(b) There were no changes in the Registrant’s internal control over financial reporting as defined in Rule 30a-3(d) under the Act) that occurred during the Registrant’s last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12: Exhibits:
(a) The following exhibits are attached to this Form N-CSR:
(2) A separate certification for each principal executive and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2) (certification required by Section 302 of the Sarbanes-Oxley Act of 2002).
(b) Certification required by Rule 30a-2(b) under the Act (certification required by Section 906 of the Sarbanes-Oxley Act of 2002).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Sit Mutual Funds, Inc. | ||||
By (Signature and Title) | /s/ Paul E. Rasmussen | |||
Paul E. Rasmussen | ||||
Vice President, Treasurer |
Date February 26, 2015
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title) | /s/ Paul E. Rasmussen | |||
Paul E. Rasmussen | ||||
Vice President, Treasurer |
Date February 26, 2015
By (Signature and Title) | /s/ Roger J. Sit | |||
Roger J. Sit | ||||
Chairman |
Date February 26, 2015