UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMN-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, 2019
Date of reporting period: December 31, 2019
| Item 1: | Reports to Stockholders |
Semi-Annual Report December 31, 2019 Balanced Fund Dividend Growth Fund Global Dividend Growth Fund Large Cap Growth Fund ESG Growth Fund Mid Cap Growth Fund Small Cap Dividend Growth Fund Small Cap Growth Fund International Growth Fund Developing Markets Growth Fund Important Information on Paperless Delivery Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from Sit Mutual Funds or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will remain available on the Funds’ website (sitfunds.com) and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports electronically from the Fund by calling1-800-332-5580 or by enrolling online at sitfunds.com, or, if you are invested through your financial intermediary, you may contact them directly. You may elect to receive all future reports in paper free of charge. You can inform the Funds by calling1-800-332-5580, or, if you are invested through your financial intermediary, you may contact them directly. Your election to receive reports in paper will apply to all funds held with Sit Mutual Funds or through your financial intermediary, as applicable.
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Sit Mutual Funds STOCK FUNDS SEMI-ANNUAL REPORT TABLE OF CONTENTS |
This document must be preceded or accompanied by a Prospectus.
CHAIRMAN’S LETTER
January 31, 2020
Dear Fellow Shareholders:
The global economy has shown signs of stabilization over the past several months, and we believe 2020 will provide another year of slow but steady growth, as we enter the twelfth year of expansion since the 2008 crisis. While most equity indices are hovering nearall-time-highs, fundamentals are broadly positive and point to further gains in 2020.
Economic Outlook
The U.S. consumer, buoyed by steady job and wage gains, has remained the key pillar of growth for both the domestic and global economies. But measures of business confidence, while still abovepre-2016 election levels, have been on a down-trend for the past two years, as the lagged impact of 2015-2018 Federal Reserve tightening and chronic trade policy uncertainty contributed to a slump in manufacturing and dampened economic prospects. Capital spending growth followed suit, steadily fading after an early-2018 peak. However, concurrent easing by central banks worldwide (including a sharpU-turn from the U.S Federal Reserve), fiscal stimulus, and diminished U.S.-China trade tensions have since set the stage for at least a modest upturn in global growth. Overall, the U.S economy remains on solid footing as we enter 2020, with an expected uptick in manufacturing activity providing incremental support to healthy consumer spending.
Inmid-December, the U.S. and China announced agreement on terms of a “Phase One” trade deal. While not a game changer per se, it suggested a major ceasefire in the18-month-long battle and is a good start in resolving trade tension between the two countries. The preliminary trade deal was signed January 15th and calls for China to boost its purchase of U.S. goods and services by $200 billion over the next two years, including $32 billion in agricultural products. China also promised to further open up its markets to foreign companies (especially in financial services) and to implement changes to protect American companies’ trade secrets and intellectual property. The agreement also establishes a system for resolving trade disputes between the two countries. In turn, the U.S. agreed to cut tariffs on $120 billion in Chinese goods by half, to 7.5%, within about 30 days, and to forgo other planned tariffs. However, it leaves in place U.S. tariffs on about $370 billion in Chinese goods, or about three-quarters of Chinese imports to the U.S. Further possible tariff reductions will be left to later negotiations.
Outside the U.S., we expect a slight improvement in growth in 2020. Just as the trade-reliant Euro Area suffered the fallout from the downturn in global trade that began in early 2018, so should it reap the gains from the prospective modest upturn. While Brexit risks remain, some clarity in the months ahead will enable companies to plan for the inevitable, possibly unleashing somepent-up business investment. Growth in Japan remains uneven. The consumption tax hike will restrain the consumer,
which will be balanced by easing trade tensions, stabilizing manufacturing conditions, and higher fiscal spending. A decrease in trade tensions with the U.S. will reduce the drag on China’s economy and provide some relief in 2020. However, structural adjustments, which have been the main driver of economic malaise in the last two years, will continue to limit growth prospects in the intermediate term.
While we expect an uptick in global GDP, the improvement should be only incremental and not enough to put central bankers on high alert. Unlike previous cycles, the absence of inflation has become a key concern of policymakers, including the Federal Reserve. Therefore, we suspect the Fed will allow the economy to run “hot” before it considers a tightening bias. A resumption in global growth, however, could eventually reignite inflation fears, particularly since labor markets have tightened globally and commodity prices have recently been on the rise.
From an investment perspective, the same set of conditions that has provided a near-perfect environment for stocks over the decade-long expansion appears sustainable over the near to intermediate term. This includes slow economic growth and low interest rates, underpinned by structural disinflationary pressures. Throughout this cycle, slow growth and the scars from the global financial crisis have led to an extreme degree of caution among consumers and corporations. Consequently, there are simply no obvious, systemic “excesses” – either in the real economy or asset prices – to unwind.
Equity Strategy
Positive equity market fundamentals are supported by accommodative monetary policy and signs that an uptick in corporate earnings growth is underway. With equity valuations now generally at “fair” levels, we believe improvement in corporate earnings will be a key determinant of the direction and magnitude of equity returns going forward.
Corporate earnings have been impacted by weaker manufacturing activity, with an almost unprecedented divergence between recent earnings for the consumer and manufacturing sectors. As previously noted, help for manufacturing is on the way in the form of trade (including tariff reductions) and monetary policy. Sector-specific earnings pressures also appear to be ebbing, as higher oil prices will boost the energy sector and a steeper yield curve will help bank earnings. Finally, the unrelenting climb in the U.S. dollar has continually pressured the profits of multinationals in recent quarters, but the retreat in the dollar in recent months implies negligible foreign exchange impacts ahead, if prevailing exchange rates hold. These factors should contribute to an end to the “earnings recession” fears that have periodically weighed on investor sentiment. Wall Street earnings forecasts have a long history of being overly optimistic, but the high-single-digit profit growth embedded
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2 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
in S&P 500® expectations may not be a stretch, if current fundamentals persist. This is an important development, considering the strong 2019 rebound in valuations.
In terms of equity valuations,price-to-earnings multiples are high from a historical standpoint, but the levels are far from unprecedented, and they remain accompanied by rock-bottom short- and long-term interest rates. While it is true that higherprice-to-earnings multiples accounted for most of the market gains in 2019, we note that stocks are only marginally more expensive than they were before the correction in fourth quarter 2018. And, despite the recent jump in the10-year U.S. Treasury note yield, it is at approximately the same level as the dividend yield for the S&P 500® Index. While one could make a case for P/E multiple expansion, based on the current level of interest rates and the expected imminent return of corporate profit growth, we suspect “late cycle” psychology may restrain valuations from here. However, are-rating ofnon-U.S. stocks is quite possible, given relatively depressed valuations. In terms of sector positioning, we expectpro-growth/ cyclical areas to continue to outperform the market, as recession fears recede. Capital goods and technology stocks stand to especially benefit, based on attractive valuations and the potential for an earnings inflection. Within technology, we expect investor enthusiasm for a 5G wireless spending cycle to boost select semiconductor companies as well as firms leveraged to increasingly complex wireless ecosystems. Central banks’ efforts to fend off risks of disinflation should continue to steepen yield curves, lifting the financial sector. Healthcare remains the most attractive defensive sector of the market, as we believe growth and valuation support are enough to overcome election-related risks. Finally, we suspect defensive “bond proxy” areas of the market, including consumer staples and utilities, may underperform in the near term, due to high valuations against an improving growth backdrop in other areas of the market.
Mostnon-U.S. markets are more influenced by cyclical swings in the global economy, and even a modest growth uptick could push valuations somewhat higher. However, we remain cautious on Europe, as structural growth impediments outweigh incremental support from improved trade prospects and accommodative fiscal and monetary policy. We remain positive on emerging economies within Asia, including India, South Korea, and China. The Chinese economy continues to slow, yet GDP growth remains well above the global average and equity valuations are attractive. However, outsized growth in the industrial economy is now behind China; therefore, we continue to emphasize secular growth in “new economy” areas, such as healthcare,e-commerce, and information technology.
While the “Goldilocks” environment is supportive of stocks in the near term, 2020 is not without risks. As noted, an inflation “surprise” may be the most underappreciated of these risks. Also, the prospect of a “Phase Two” U.S.-China trade agreement appears daunting, and trade tensions could reemerge. Finally, the U.S. election could bring uncertainty around policy, and the stakes are especially high this time around, given vastly different agendas among candidates. The recent Wuhan Coronavirus outbreak is likely to hit economic growth in the U.S. and globally as well as in China. We are closely monitoring the issue and its broad impact, but historical precedence of similar outbreaks would suggest that the effects will be short-term. From our perspective, a key role of active management is to pivot, perhaps aggressively, when conditions warrant such a move. A focus on quality, including dividend-paying stocks, is a key element within our Fund offerings. They offer inherent downside protection should market conditions change.
Roger J. Sit
Chairman, President, CEO and Global CIO
OBJECTIVE & STRATEGY
The dual objectives of the Sit Balanced Fund are to seek long-term growth of capital consistent with the preservation of principal and to provide regular income. It pursues its objectives by investing in a diversified portfolio of stocks and bonds. The Fund may emphasize either equity securities or fixed-income securities, or hold equal amounts of each, dependent upon the Adviser’s analysis of market, financial and economic conditions.
The Fund’s permissible investment allocation is:35-65% in equity securities and35-65% in fixed-income securities. At all times at least 25% of the fixed-income assets will be invested in fixed-income senior securities.
Fund Performance
The Sit Balanced Fund’s return for the6-month period ending December 31, 2019 was +7.03%. The S&P 500® Index return was +10.92% over the period, while the Bloomberg Barclays Aggregate Bond Index gained +2.45%.
Factors that Influenced the Fund’s Performance
The return for the fixed income portion of the portfolio exceeded that of the Bloomberg Barclays Aggregate Bond Index for the6-month period, as a significant yield advantage relative to the benchmark drove performance. Outperformance generated by the yield advantage was partially offset by underperformance from a price perspective, as the fixed income segment of the portfolio maintained a shorter-than-benchmark duration throughout the period while interest rates declined. The allocation toclosed-end bond funds was the best-performing sector within the fixed income portion of the Fund, generating a return more than double that of the benchmark. During the period, the Fund’s modest underperformance in the equity portion was due primarily to stock selection in the retail trade (Ulta Beauty) and health technology (Illumina) sectors and an overweight position in the lagging consumer services sector. This was partially offset by strong stock selection in the electronic technology sector.
Outlook and Positioning
Regarding the fixed income segment of the Fund, the Federal Reserve continued to cut their federal funds rate target throughout 2019, following signs that economic growth was looking vulnerable during the 2nd quarter. Shorter-term interest rates declined in conjunction with these Fed rate cuts, which steepened the yield curve and drove shorter maturity bond prices higher. At present, the fixed income portion of the fund is positioned defensively against a potential rise in interest rates in the second half of 2020. We continue to emphasize maintaining a substantial yield advantage relative to the fixed income benchmark, through above-benchmark exposure to higher income sectors, such as corporate bonds andclosed-end bond funds, and an underweight in lower yielding U.S. Government bonds. In the equity portion of the Fund, we continue to balance investments inpro-cyclical growth stocks that provide compelling risk-reward opportunities with more predictable, secular growth stocks, based
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the S&P 500® Index and the Bloomberg Barclays Aggregate Bond Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks oflarge-cap companies. It is not possible to invest directly in an index. This is the primary index for the equity portion of the Fund.
2 Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index which measures the performance of investment grade debt securities with maturities of at least one year. This is the primary index for the fixed income portion of the Fund.
on the likelihood that “end of cycle” fears will result in continued bouts of equity market volatility. While we believe a barbell approach continues to provide a balanced risk-reward profile, portfolio composition has been shifted toward more stable, visible earnings growth investments.
As of December 31, 2019, the asset allocation of the Fund was 59% equities, 32% fixed income, and 9% cash and equivalents.
Roger J. Sit
Bryce A. Doty
Portfolio Managers
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4 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
COMPARATIVE RATES OF RETURNS
as of December 31, 2019
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| | | Sit
Balanced
Fund | | S&P 500®
Index 1 | | Bloomberg
Barclays
Aggregate
Bond Index2 |
Six Month | | | | 7.03 | % | | | | 10.92 | % | | | | 2.45 | % |
One Year | | | | 20.69 | | | | | 31.49 | | | | | 8.72 | |
Five Year | | | | 8.13 | | | | | 11.70 | | | | | 3.05 | |
Ten Year | | | | 9.00 | | | | | 13.56 | | | | | 3.75 | |
Since Inception (12/31/93) | | | | 7.24 | | | | | 9.85 | | | | | 5.22 | |
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 recentmonth-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 oflarge-cap companies. It is not possible to invest directly in an index.
2 Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index which measures the performance of investment grade debt securities with maturities of at least one year.
PORTFOLIO SUMMARY
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Net Asset Value 12/31/19: | | $25.28 Per Share |
Net Asset Value 6/30/19: | | $25.06 Per Share |
Total Net Assets: | | $38.3 Million |
TOP HOLDINGS
Top Equity Holdings:
Top Fixed Income Holdings:
| | 1. | U.S. Treasury Strip, 2.34%, 8/15/47 |
| | 2. | Archer-Daniels-Midland Co., 6.75%, 12/15/2027 |
| | 3. | Delta Air Lines2015-1 Class A Pass Through Trust, 3.88%, 7/30/27 |
| | 4. | Air Canada2015-1 Trust, 3.60%, 3/15/27 |
| | 5. | JP Morgan Mortgage Trust, 2019-HYB1 A5A, 3.00%, 10/25/49 |
Based on total net assets as of December 31, 2019. Subject to change.
FUND DIVERSIFICATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit Balanced Fund
Investments are grouped by economic sectors.
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| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 59.2% | | | | | | | | |
Communications - 0.9% | | | | | | | | |
Verizon Communications, Inc. | | | 5,700 | | | | 349,980 | |
| | | | | | | | |
Consumer Durables - 0.7% | | | | | | | | |
YETI Holdings, Inc.* | | | 8,075 | | | | 280,848 | |
| | | | | | | | |
ConsumerNon-Durables - 3.4% | | | | | | | | |
Constellation Brands, Inc. | | | 1,450 | | | | 275,138 | |
Estee Lauder Cos., Inc. - Class A | | | 2,275 | | | | 469,878 | |
Mondelez International, Inc. | | | 4,300 | | | | 236,844 | |
NIKE, Inc. | | | 625 | | | | 63,319 | |
PepsiCo, Inc. | | | 1,975 | | | | 269,923 | |
| | | | | | | | |
| | |
| | | | | | | 1,315,102 | |
| | | | | | | | |
Consumer Services - 4.9% | | | | | | | | |
McDonald’s Corp. | | | 1,750 | | | | 345,818 | |
Starbucks Corp. | | | 3,450 | | | | 303,324 | |
Visa, Inc. | | | 5,500 | | | | 1,033,450 | |
Walt Disney Co. | | | 1,200 | | | | 173,556 | |
| | | | | | | | |
| | |
| | | | | | | 1,856,148 | |
| | | | | | | | |
Electronic Technology- 7.5% | | | | | | | | |
Advanced Micro Devices, Inc.* | | | 1,800 | | | | 82,548 | |
Apple, Inc. | | | 4,125 | | | | 1,211,306 | |
Applied Materials, Inc. | | | 7,200 | | | | 439,488 | |
Broadcom, Inc. | | | 1,460 | | | | 461,389 | |
Ciena Corp.* | | | 5,500 | | | | 234,795 | |
Intel Corp. | | | 5,575 | | | | 333,664 | |
NVIDIA Corp. | | | 475 | | | | 111,768 | |
| | | | | | | | |
| | |
| | | | | | | 2,874,958 | |
| | | | | | | | |
Energy Minerals - 1.6% | | | | | | | | |
Chevron Corp. | | | 2,725 | | | | 328,390 | |
Marathon Petroleum Corp. | | | 4,600 | | | | 277,150 | |
| | | | | | | | |
| | |
| | | | | | | 605,540 | |
| | | | | | | | |
Finance - 5.8% | | | | | | | | |
Ameriprise Financial, Inc. | | | 1,625 | | | | 270,693 | |
Aon, PLC | | | 1,150 | | | | 239,534 | |
Chubb, Ltd. | | | 2,025 | | | | 315,212 | |
Everest Re Group, Ltd. | | | 225 | | | | 62,289 | |
First Republic Bank | | | 1,750 | | | | 205,538 | |
Goldman Sachs Group, Inc. | | | 1,375 | | | | 316,154 | |
JPMorgan Chase & Co. | | | 2,800 | | | | 390,320 | |
T Rowe Price Group, Inc. | | | 2,075 | | | | 252,818 | |
US Bancorp | | | 2,675 | | | | 158,601 | |
| | | | | | | | |
| | |
| | | | | | | 2,211,159 | |
| | | | | | | | |
Health Services - 2.3% | | | | | | | | |
HCA Healthcare, Inc. | | | 1,525 | | | | 225,410 | |
UnitedHealth Group, Inc. | | | 2,250 | | | | 661,455 | |
| | | | | | | | |
| | |
| | | | | | | 886,865 | |
| | | | | | | | |
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| | |
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| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Health Technology - 5.1% | | | | | | | | |
Abbott Laboratories | | | 2,950 | | | | 256,237 | |
Boston Scientific Corp.* | | | 6,875 | | | | 310,888 | |
Bristol-Myers Squibb Co. | | | 1,025 | | | | 65,795 | |
Bristol-Myers Squibb Co., Rights* | | | 1,025 | | | | 3,085 | |
DexCom, Inc.* | | | 750 | | | | 164,055 | |
Illumina, Inc.* | | | 350 | | | | 116,109 | |
Intuitive Surgical, Inc.* | | | 520 | | | | 307,398 | |
Johnson & Johnson | | | 2,300 | | | | 335,501 | |
Thermo Fisher Scientific, Inc. | | | 1,200 | | | | 389,844 | |
| | | | | | | | |
| | |
| | | | | | | 1,948,912 | |
| | | | | | | | |
Process Industries - 2.0% | | | | | | | | |
Ecolab, Inc. | | | 2,050 | | | | 395,629 | |
Sherwin-Williams Co. | | | 600 | | | | 350,124 | |
| | | | | | | | |
| | |
| | | | | | | 745,753 | |
| | | | | | | | |
Producer Manufacturing - 4.5% | | | | | | | | |
3M Co. | | | 875 | | | | 154,368 | |
Boeing Co. | | | 290 | | | | 94,470 | |
Honeywell International, Inc. | | | 1,925 | | | | 340,725 | |
Ingersoll-Rand, PLC | | | 2,175 | | | | 289,101 | |
L3Harris Technologies, Inc. | | | 1,450 | | | | 286,912 | |
Northrop Grumman Corp. | | | 500 | | | | 171,985 | |
Raytheon Co. | | | 1,175 | | | | 258,194 | |
United Technologies Corp. | | | 950 | | | | 142,272 | |
| | | | | | | | |
| | |
| | | | | | | 1,738,027 | |
| | | | | | | | |
Retail Trade - 3.8% | | | | | | | | |
Amazon.com, Inc.* | | | 410 | | | | 757,614 | |
Home Depot, Inc. | | | 1,875 | | | | 409,462 | |
TJX Cos., Inc. | | | 3,150 | | | | 192,339 | |
Ulta Beauty, Inc.* | | | 430 | | | | 108,850 | |
| | | | | | | | |
| | |
| | | | | | | 1,468,265 | |
| | | | | | | | |
Technology Services - 14.5% | | | | | | | | |
Accenture, PLC | | | 2,025 | | | | 426,404 | |
Adobe, Inc.* | | | 1,575 | | | | 519,451 | |
Alphabet, Inc. - Class A* | | | 475 | | | | 636,210 | |
Alphabet, Inc. - Class C* | | | 205 | | | | 274,089 | |
Atlassian Corp., PLC* | | | 2,000 | | | | 240,680 | |
Autodesk, Inc.* | | | 1,700 | | | | 311,882 | |
Facebook, Inc.* | | | 2,300 | | | | 472,075 | |
Intuit, Inc. | | | 1,250 | | | | 327,412 | |
Microsoft Corp. | | | 7,375 | | | | 1,163,037 | |
PayPal Holdings, Inc.* | | | 3,750 | | | | 405,637 | |
salesforce.com, Inc.* | | | 3,250 | | | | 528,580 | |
Splunk, Inc.* | | | 1,550 | | | | 232,144 | |
| | | | | | | | |
| | |
| | | | | | | 5,537,601 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
6 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | |
| Name of Issuer | | Quantity
/Principal
Amount ($) | | | Fair Value ($) | |
| | |
Transportation - 1.5% | | | | | | | | |
Delta Air Lines, Inc. | | | 3,400 | | | | 198,832 | |
Union Pacific Corp. | | | 2,050 | | | | 370,619 | |
| | | | | | | | |
| | |
| | | | | | | 569,451 | |
| | | | | | | | |
| | |
Utilities - 0.7% | | | | | | | | |
NextEra Energy, Inc. | | | 1,150 | | | | 278,484 | |
| | | | | | | | |
Total Common Stocks
(cost: $14,256,372) | | | | | | | 22,667,093 | |
| | | | | | | | |
| | |
Bonds - 29.0% | | | | | | | | |
| | |
Asset-Backed Securities - 2.0% | | | | | | | | |
Bayview Opportunity Master Fund, 2017-SPL1 A, 4.00%, 10/28/641,4 | | | 58,280 | | | | 59,636 | |
Credit Suisse First Boston Mortgage Corp., 2005-AGE1 M3, 1 Mo. Libor +0.65, 2.44%, 2/25/321 | | | 74,989 | | | | 75,027 | |
Irwin Home Equity Corp.,2005-1 M1, 5.92%, 6/25/3514 | | | 25,120 | | | | 25,461 | |
New Century Home Equity Loan Trust,2005-A A4W, 4.67%, 8/25/3514 | | | 7,592 | | | | 7,712 | |
OSCAR US Funding Trust VII, LLC: | | | | | | | | |
2017-2A A3, 2.45%, 12/10/214 | | | 118,863 | | | | 118,971 | |
2017-2A A4, 2.76%, 12/10/244 | | | 100,000 | | | | 100,778 | |
Small Business Administration: | | | | | | | | |
2008-20A 1, 5.17%, 1/1/28 | | | 40,146 | | | | 42,609 | |
2007-20H 1, 5.78%, 8/1/27 | | | 40,645 | | | | 43,444 | |
Towd Point Mortgage Trust: | | | | | | | | |
2019-MH1 A2, 3.00%, 11/25/581,4 | | | 100,000 | | | | 100,105 | |
2019-3 A2, 4.00%, 2/25/591,4 | | | 100,000 | | | | 106,327 | |
2019-SJ1 A2, 4.17%, 11/25/581,4 | | | 100,000 | | | | 102,081 | |
| | | | | | | | |
| | |
| | | | | | | 782,151 | |
| | | | | | | | |
Collateralized Mortgage Obligations - 7.1% | | | | | |
Fannie Mae: | | | | | | | | |
2017-84 JP, 2.75%, 10/25/47 | | | 103,739 | | | | 103,983 | |
2004-10 ZB, 6.00%, 2/25/34 | | | 121,172 | | | | 135,885 | |
2003-34 A1, 6.00%, 4/25/43 | | | 37,762 | | | | 42,875 | |
2004-T1 1A1, 6.00%, 1/25/44 | | | 24,469 | | | | 27,527 | |
1999-17 C, 6.35%, 4/25/29 | | | 13,155 | | | | 14,349 | |
2001-82 ZA, 6.50%, 1/25/32 | | | 18,414 | | | | 20,213 | |
2009-30 AG, 6.50%, 5/25/39 | | | 55,400 | | | | 61,388 | |
2013-28 WD, 6.50%, 5/25/42 | | | 52,605 | | | | 60,775 | |
2004-T1 1A2, 6.50%, 1/25/44 | | | 78,067 | | | | 89,082 | |
2004-W9 2A1, 6.50%, 2/25/44 | | | 43,095 | | | | 49,138 | |
2015-88 CJ, 6.50%, 7/25/44 | | | 110,715 | | | | 122,564 | |
2010-108AP, 7.00%, 9/25/40 | | | 2,141 | | | | 2,389 | |
2004-T3, 1A3, 7.00%, 2/25/44 | | | 7,878 | | | | 9,159 | |
1993-21 KA, 7.70%, 3/25/23 | | | 25,771 | | | | 27,255 | |
Freddie Mac: | | | | | | | | |
4784 BV, 3.50%, 12/15/32 | | | 100,000 | | | | 102,822 | |
4293 BA, 5.32%, 10/15/471 | | | 12,898 | | | | 14,182 | |
2122 ZE, 6.00%, 2/15/29 | | | 67,057 | | | | 75,051 | |
| | | | | | | | |
| Name of Issuer | | Principal
Amount ($) | | | Fair Value ($) | |
| | |
2126 C, 6.00%, 2/15/29 | | | 43,622 | | | | 48,213 | |
2485 WG, 6.00%, 8/15/32 | | | 45,197 | | | | 50,917 | |
2480 Z, 6.00%, 8/15/32 | | | 40,517 | | | | 46,212 | |
2575 QE, 6.00%, 2/15/33 | | | 19,686 | | | | 22,244 | |
2980 QA, 6.00%, 5/15/35 | | | 23,817 | | | | 27,178 | |
2283 K, 6.50%, 12/15/23 | | | 6,129 | | | | 6,493 | |
2357 ZJ, 6.50%, 9/15/31 | | | 24,296 | | | | 27,120 | |
T-59 1A1, 6.50%, 10/25/43 | | | 68,211 | | | | 81,080 | |
4520 HM, 6.50%, 8/15/45 | | | 42,208 | | | | 50,030 | |
1142 IA, 7.00%, 10/15/21 | | | 18,603 | | | | 19,013 | |
3946 KW, 7.00%, 11/15/29 | | | 1,642 | | | | 1,670 | |
3704 CT, 7.00%, 12/15/36 | | | 18,066 | | | | 21,180 | |
2238 PZ, 7.50%, 6/15/30 | | | 16,274 | | | | 19,002 | |
Government National Mortgage Association: | | | | | | | | |
2015-80 BA, 6.99%, 6/20/451 | | | 31,288 | | | | 35,976 | |
2018-147 AM, 7.00%, 10/20/48 | | | 118,940 | | | | 139,691 | |
2018-160 DA, 7.00%, 11/20/48 | | | 103,741 | | | | 120,293 | |
2014-69 W, 7.22%, 11/20/341 | | | 32,075 | | | | 36,785 | |
2013-133 KQ, 7.30%, 8/20/381 | | | 30,703 | | | | 35,420 | |
2005-74 HA, 7.50%, 9/16/35 | | | 12,597 | | | | 13,529 | |
JP Morgan Mortgage Trust: | | | | | | | | |
2019-HYB1 A5A, 3.00%,
10/25/491,4 | | | 167,374 | | | | 166,984 | |
2019-8 A4, 3.50%, 3/25/501,4 | | | 163,856 | | | | 165,558 | |
2019-9 A8, 3.50%, 5/25/501,4 | | | 125,000 | | | | 126,281 | |
New Residential Mortgage Loan Trust: | | | | | | | | |
2019-NQM5 A2, 2.86%, 11/25/591,4 | | | 99,668 | | | | 99,248 | |
2018-3A A1, 4.50%, 5/25/581,4 | | | 78,248 | | | | 82,527 | |
2016-2A B3, 5.65%, 11/26/351,4 | | | 42,421 | | | | 45,230 | |
PMT Loan Trust: | | | | | | | | |
2013-J1 A11, 3.50%, 9/25/431, 4 | | | 138,337 | | | | 141,514 | |
Sequoia Mortgage Trust: | | | | | | | | |
2019-5 A4, 3.50%, 12/25/491,4 | | | 99,625 | | | | 101,252 | |
Vendee Mortgage Trust: | | | | | | | | |
2008-1 B, 6.48%, 3/15/251 | | | 13,412 | | | | 15,084 | |
1994-2 2, 7.37%, 5/15/241 | | | 12,863 | | | | 13,312 | |
| | | | | | | | |
| | |
| | | | | | | 2,717,673 | |
| | | | | | | | |
Corporate Bonds-9.9% | | | | | | | | |
Air Canada2015-1 Trust, 3.60%, 3/15/274 | | | 163,099 | | | | 170,194 | |
Alphabet, Inc., 3.63%, 5/19/21 | | | 50,000 | | | | 51,315 | |
American Airlines2015-2 Trust, 4.00%, 9/22/27 | | | 145,992 | | | | 153,988 | |
American Airlines2016-2 Trust, 3.20%, 6/15/28 | | | 85,450 | | | | 87,878 | |
Archer-Daniels-Midland Co., 6.75%, 12/15/27 | | | 150,000 | | | | 190,910 | |
Bank of America Corp., 3.88%, 8/1/25 | | | 100,000 | | | | 107,456 | |
Bank of Nova Scotia (Subordinated), 4.50%, 12/16/25 | | | 150,000 | | | | 164,792 | |
Brighthouse Financial, Inc., 4.70%, 6/22/47 | | | 100,000 | | | | 92,661 | |
Brown &Brown, Inc., 4.20%, 9/15/24 | | | 68,000 | | | | 72,341 | |
| | | | |
See accompanying notes to financial statements. | | | | |
DECEMBER 31, 2019 | | | 7 | |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit Balanced Fund (Continued)
| | | | | | | | |
| Name of Issuer | | Principal
Amount ($) | | | Fair Value ($) | |
| | |
Charles Stark Draper Laboratory, Inc., 4.39%, 9/1/48 | | | 100,000 | | | | 109,705 | |
Delta Air Lines2015-1 Class A Pass Through Trust, 3.88%, 7/30/27 | | | 165,359 | | | | 173,320 | |
Doric Nimrod Air Alpha2013-1 Trust, 5.25%, 5/30/234 | | | 39,611 | | | | 40,748 | |
Doric Nimrod Air Finance Alpha2012-1 Trust, 5.13%, 11/30/224 | | | 30,824 | | | | 31,534 | |
Duke Energy Florida, LLC, 2.54%, 9/1/29 | | | 50,000 | | | | 50,153 | |
Fairfax Financial Holdings, 4.85%, 4/17/28 | | | 50,000 | | | | 54,482 | |
Georgia-Pacific, LLC, 7.38%, 12/1/25 | | | 100,000 | | | | 126,566 | |
Hawaiian Airlines2013-1, 3.90%, 1/15/26 | | | 140,050 | | | | 141,794 | |
ITT, LLC, 7.40%, 11/15/25 | | | 25,000 | | | | 30,925 | |
Johnson & Johnson, 3.55%, 3/1/36 | | | 150,000 | | | | 164,161 | |
Kroger Co., 7.50%, 4/1/31 | | | 100,000 | | | | 138,535 | |
Lincoln National Corp., 7.00%, 6/15/40 | | | 100,000 | | | | 142,297 | |
Mercury General Corp., 4.40%, 3/15/27 | | | 125,000 | | | | 131,427 | |
Northern Trust Corp. (Subordinated), 3 Mo. Libor + 1.13, 3.38%, 5/8/321 | | | 150,000 | | | | 154,184 | |
Principal Financial Group, Inc., 3 Mo. Libor + 3.04, 4.70%, 5/15/551 | | | 100,000 | | | | 100,375 | |
Royal Caribbean Cruises, Ltd., 7.50%, 10/15/27 | | | 100,000 | | | | 126,911 | |
Security Benefit Life Insurance Co. (Subordinated), 7.45%, 10/1/334 | | | 100,000 | | | | 129,869 | |
Spirit Airlines 2015-1A Trust, 4.10%, 4/1/28 | | | 114,773 | | | | 119,614 | |
Union Pacific Railroad Co.,2014-1 Pass Through Trust, 3.23%, 5/14/26 | | | 124,200 | | | | 128,789 | |
United Airlines2014-1 Class A Pass Through Trust, 4.00%, 4/11/26 | | | 97,629 | | | | 103,792 | |
United Airlines2015-1 Trust, 3.70%, 12/1/22 | | | 100,000 | | | | 102,856 | |
US Airways2012-2 Trust, 4.63%, 6/3/25 | | | 118,020 | | | | 127,317 | |
Wachovia Corp., (Subordinated), 7.57%, 8/1/2614 | | | 75,000 | | | | 94,906 | |
Weyerhaeuser Co., 7.85%, 7/1/26 | | | 100,000 | | | | 126,202 | |
Williams Cos, Inc., 7.50%, 1/15/31 | | | 45,000 | | | | 58,731 | |
| | | | | | | | |
| | |
| | | | | | | 3,800,728 | |
| | | | | | | | |
Federal Home Loan Mortgage Corporation - 1.1% | | | | | |
5.00%, 10/1/43 | | | 76,337 | | | | 82,715 | |
6.50%, 2/1/22 | | | 11,132 | | | | 11,308 | |
7.50%, 7/1/29 | | | 123,459 | | | | 142,805 | |
7.50%, 3/1/33 | | | 113,897 | | | | 132,473 | |
8.00%, 2/1/34 | | | 14,933 | | | | 17,632 | |
8.38%, 5/17/20 | | | 27 | | | | 27 | |
8.50%, 9/1/24 | | | 11,750 | | | | 12,253 | |
| | | | | | | | |
| | |
| | | | | | | 399,213 | |
| | | | | | | | |
| | | | | | | | |
| Name of Issuer | | Principal
Amount ($) | | | Fair Value ($) | |
|
Federal National Mortgage Association - 2.0% | |
4.50%, 8/1/40 | | | 50,692 | | | | 52,678 | |
5.00%, 2/1/33 | | | 28,000 | | | | 29,225 | |
5.50%, 10/1/33 | | | 71,863 | | | | 77,683 | |
6.00%, 2/1/38 | | | 53,338 | | | | 61,183 | |
6.03%, 11/1/43 | | | 30,040 | | | | 33,831 | |
6.50%, 2/1/24 | | | 18,868 | | | | 19,725 | |
6.50%, 9/1/27 | | | 51,999 | | | | 57,716 | |
6.50%, 6/1/40 | | | 118,018 | | | | 132,604 | |
7.00%, 1/1/32 | | | 10,812 | | | | 11,553 | |
7.00%, 3/1/33 | | | 26,255 | | | | 29,646 | |
7.00%, 12/1/38 | | | 47,848 | | | | 53,107 | |
8.00%, 6/1/24 | | | 11,572 | | | | 12,329 | |
8.00%, 1/1/31 | | | 12,081 | | | | 12,222 | |
8.00%, 2/1/31 | | | 19,234 | | | | 23,354 | |
8.00%, 9/1/37 | | | 67,831 | | | | 83,393 | |
8.43%, 7/15/26 | | | 2,944 | | | | 2,998 | |
8.50%, 10/1/30 | | | 25,724 | | | | 29,966 | |
10.00%, 6/1/31 | | | 33,115 | | | | 36,375 | |
| | | | | | | | |
| | |
| | | | | | | 759,588 | |
| | | | | | | | |
| |
Government National Mortgage Association - 1.0% | | | | | |
5.00%, 5/20/48 | | | 102,713 | | | | 109,376 | |
5.75%, 12/15/22 | | | 31,765 | | | | 33,162 | |
6.50%, 2/20/32 | | | 98,423 | | | | 112,548 | |
6.50%, 11/20/38 | | | 19,934 | | | | 21,770 | |
7.00%, 12/15/24 | | | 10,457 | | | | 11,021 | |
7.00%, 11/20/27 | | | 13,418 | | | | 15,206 | |
7.00%, 9/20/29 | | | 36,346 | | | | 41,303 | |
7.00%, 9/20/38 | | | 11,881 | | | | 13,959 | |
7.50%, 4/20/32 | | | 25,962 | | | | 29,480 | |
8.00%, 7/15/24 | | | 7,796 | | | | 8,166 | |
| | | | | | | | |
| | |
| | | | | | | 395,991 | |
| | | | | | | | |
Taxable Municipal Securities- 4.3% | | | | | | | | |
Baptist Health Obligated Group, 4.10%, 12/1/49 | | | 100,000 | | | | 97,503 | |
Bucks Co. Industrial Dev. Auth., 4.00%, 10/1/21 | | | 65,000 | | | | 65,675 | |
Kentucky Higher Edu. Student Loan Corp. (Subordinated), 5.27%, 6/1/36 | | | 100,000 | | | | 107,094 | |
Lane Cnty. Sch. Dist. No. 52 Bethel, 2.52%, 6/15/27 | | | 60,000 | | | | 59,928 | |
Massachusetts Edu. Auth.: | | | | | | | | |
4.00%, 1/1/32 | | | 115,000 | | | | 118,692 | |
4.41%, 7/1/34 | | | 50,000 | | | | 52,936 | |
MI Hsg. Dev. Auth., 3.53%, 6/1/50 | | | 100,000 | | | | 97,803 | |
MN Hsg. Fin. Agy., 4.73%, 1/1/49 | | | 100,000 | | | | 110,202 | |
ND Hsg. Fin. Agy., 3.70%, 7/1/33 | | | 100,000 | | | | 104,336 | |
North Hudson Sewer Auth., 2.88%, 6/1/28 | | | 150,000 | | | | 150,312 | |
Oregon Port of Newport, 2.85%, 8/1/27 | | | 85,000 | | | | 84,623 | |
Public Finance Authority, 4.23%, 7/1/32 | | | 105,000 | | | | 117,023 | |
So. Dakota Hsg. Dev. Auth., 3.89%, 5/1/32 | | | 15,000 | | | | 15,768 | |
| | | | |
See accompanying notes to financial statements. | | | | |
8 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | |
| Name of Issuer | | Principal
Amount ($)/ Quantity | | | Fair Value ($) | |
| | |
Solano Cnty. Comm. Coll. Dist., 2.38%, 8/1/25 | | | 100,000 | | | | 100,451 | |
South Carolina Ports Auth., 3.88%, 7/1/55 | | | 150,000 | | | | 150,779 | |
Texas Children’s Hospital, 3.37%, 10/1/2917 | | | 115,000 | | | | 120,136 | |
Tulane University, 2.21%, 2/15/361 | | | 95,000 | | | | 90,357 | |
| | | | | | | | |
| | |
| | | | | | | 1,643,618 | |
| | | | | | | | |
U.S. Treasury / Federal Agency Securities - 1.6% | | | | | |
U.S. Treasury Inflation, 0.88%, 1/15/29 | | | 101,918 | | | | 108,226 | |
U.S. Treasury Note, 1.63%, 10/31/26 | | | 100,000 | | | | 98,754 | |
U.S. Treasury Strip, 2.34%, 8/15/476 | | | 775,000 | | | | 398,215 | |
| | | | | | | | |
| | |
| | | | | | | 605,195 | |
| | | | | | | | |
Total Bonds
(cost: $10,875,464) | | | | | | | 11,104,157 | |
| | | | | | | | |
| | |
Investment Companies - 2.7% | | | | | | | | |
BlackRock Enhanced Government Fund | | | 4,886 | | | | 64,251 | |
BlackRock Income Trust | | | 20,900 | | | | 126,445 | |
Duff & Phelps Utility and Corp. Bond Trust | | | 14,400 | | | | 131,616 | |
Eaton Vance Short Duration Div. Inc. Fund | | | 9,500 | | | | 128,250 | |
Eaton Vance, Ltd. Duration Inc. Fund | | | 9,800 | | | | 129,850 | |
Franklin, Ltd. Duration, Income Trust | | | 6,453 | | | | 61,884 | |
MFS Intermediate Income Trust | | | 16,500 | | | | 62,700 | |
Nuveen Multi-Market Income Fund, Inc. | | | 3,953 | | | | 29,252 | |
Putnam Master Intermediate Income Trust | | | 25,502 | | | | 120,880 | |
WA Inflation-Linked Opp. & Inc. Fund | | | 10,600 | | | | 122,324 | |
WA Inflation-Linked Sec. & Inc. Fund | | | 4,600 | | | | 55,890 | |
| | | | | | | | |
| | |
Total Investment Companies
(cost: $998,216) | | | | | | | 1,033,342 | |
| | | | | | | | |
| | |
Short-Term Securities - 2.4% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 1.49%
(cost: $927,485) | | | 927,485 | | | | 927,485 | |
| | | | | | | | |
| |
Total Investments in Securities - 93.3%
(cost: $27,057,537) | | | | 35,732,077 | |
Other Assets and Liabilities, net - 6.7% | | | | 2,581,800 | |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | | $38,313,877 | |
| | | | | | | | |
| * | Non-income producing security. |
| 1 | Variable rate security. Rate disclosed is as of December 31, 2019. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or, for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their descriptions. |
| 4 | 144A Restricted Security. The total value of such securities as of December 31, 2019 was $1,888,837 and represented 4.9% of net assets. These securities have been determined to be liquid by the Adviser in accordance with guidelines established by the Board of Directors. |
| 6 | Zero coupon or convertible capital appreciation bond, for which the rate disclosed is either the effective yield on purchase date or the coupon rate to be paid upon conversion to coupon paying. |
| 14 | Step Coupon: A bond that pays a coupon rate that increases on a specified date(s). Rate disclosed is as of December 31, 2019. |
| 17 | Security that is either an absolute and unconditional obligation of the United States Government or is collateralized by securities, loans, or leases guaranteed by the U.S. Government or its agencies or instrumentalities. |
LLC — Limited Liability Company
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
| | | | |
See accompanying notes to financial statements. | | | | |
DECEMBER 31, 2019 | | | 9 | |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit Balanced Fund (Continued)
A summary of the levels for the Fund’s investments as of December 31, 2019 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | | | | | |
| | | | | Investment in Securities | | |
| | | Level 1
Quoted
Price ($) | | Level 2
Other significant
observable inputs ($) | | Level 3 Significant unobservable inputs ($) | | Total ($) |
Common Stocks** | | | | 22,667,093 | | | | | — | | | | | — | | | | | 22,667,093 | |
Asset-Backed Securities | | | | — | | | | | 782,151 | | | | | — | | | | | 782,151 | |
Collateralized Mortgage Obligations | | | | — | | | | | 2,717,673 | | | | | — | | | | | 2,717,673 | |
Corporate Bonds | | | | — | | | | | 3,800,728 | | | | | — | | | | | 3,800,728 | |
Federal Home Loan Mortgage Corporation | | | | — | | | | | 399,213 | | | | | — | | | | | 399,213 | |
Federal National Mortgage Association | | | | — | | | | | 759,588 | | | | | — | | | | | 759,588 | |
Government National Mortgage Association | | | | — | | | | | 395,991 | | | | | — | | | | | 395,991 | |
Taxable Municipal Securities | | | | — | | | | | 1,643,618 | | | | | — | | | | | 1,643,618 | |
U.S. Treasury / Federal Agency Securities | | | | — | | | | | 605,195 | | | | | — | | | | | 605,195 | |
Investment Companies | | | | 1,033,342 | | | | | — | | | | | — | | | | | 1,033,342 | |
Short-Term Securities | | | | 927,485 | | | | | — | | | | | — | | | | | 927,485 | |
Total: | | | | 24,627,920 | | | | | 11,104,157 | | | | | — | | | | | 35,732,077 | |
| ** | For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown. |
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
10 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
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|
|
|
Sit Dividend Growth Fund - Class I and Class S |
OBJECTIVE & STRATEGY
The objective of the Sit Dividend Growth Fund is to provide current income that exceeds the dividend yield of the S&P 500® Index and that grows over a period of years. Secondarily, the Fund seeks long-term capital appreciation.
The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in dividend-paying common stocks. The Fund may invest the balance of its assets in preferred stocks, convertible bonds, and U.S. Treasury securities.
Fund Performance
The Sit Dividend Growth Fund Class I posted a + 11.66% return during the6-month period ending December 31, 2019, compared to the +10.92% return for the S&P 500® Index. The Fund’s gross dividend yield (before deducting Fund expenses) was 2.24% as of 12/31/ 19, compared to 1.87% for the S&P 500® Index.
Factors that Influenced the Fund’s Performance
The Fund posted strong absolute and relative returns over the final six months of 2019, outperforming the S&P500®. Market sentiment broadened over the period, shifting from narrow, momentum stock leadership to more a wider breadth of stocks, including dividend-paying companies. The Fund’s strong stock selection in retail trade stocks, including Target and TJX, was key to outperformance over the period. Avoiding laggards, such as Netflix and Amazon, also contributed to relative performance. In addition, strong stock selection and the Fund’s slight overweight position in the electronic technology sector added to positive relative performance. The main detractor from performance was sector allocation, particularly in the energy minerals (overweight), technology services (underweight), and industrial services (overweight) sectors, combined with stock selection in the finance area (Lincoln National, Public Storage, and Legg Mason). The Fund’s relative performance was also hurt by an overweight position and stock selection in utilities, which lagged, in part, due to their defensive orientation.
Outlook and Positioning
Despite most equity indices hovering nearall-time highs, fundamentals are broadly positive and point to another year of gains. Slowing global economic and earnings growth in 2019 has been offset by ongoing easier monetary policy, which should continue to support growth and sentiment in the months ahead. Central banks’ efforts to fend off risks of disinflation should continue to steepen yield curves, boosting the financial sector. With recession fears fading and trade news improving, we expect an uptick in business confidence and capital spending in 2020. In addition, the U.S. consumer has remained resilient and is arguably the strongest component of the global economy. Within this backdrop, we expect cyclical sectors of the market to
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 oflarge-cap companies. It is not possible to invest directly in an index. This is the Fund’s primary index.
outperform more defensive areas, which remain expensive by most measures. Accordingly, from a sector standpoint the portfolio is overweight cyclical sectors, such as producer manufacturing and technology, as they stand to benefit the most from an improvement in investor sentiment and a rebound in growth. The Fund continues to balance these cyclicals against more stable, visible growth stocks such as those in the healthcare sector. We maintain an overweight position in healthcare, as it remains the most attractive defensive sector of the market. Here, we believe strong earnings growth and valuation support are enough to overcome election-related risks. The Fund continues its preference for companies committed to returning capital to shareholders through dividend growth and share repurchases.
Roger J. Sit
Kent L. Johnson
Portfolio Managers
| | |
| |
12 | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2019
| | | | | | | | | | | | | | | |
| | | Sit Dividend
Growth Fund | | |
| | | Class I | | Class S | | S&P 500® Index 1 |
| Six Month | | | | 11.66 | % | | | | 11.58 | % | | | | 10.92 | % |
| One Year | | | | 29.10 | | | | | 28.84 | | | | | 31.49 | |
| Five Year | | | | 10.05 | | | | | 9.78 | | | | | 11.70 | |
| Ten Year | | | | 12.22 | | | | | 11.94 | | | | | 13.56 | |
| Since Inception - Class I (12/31/03) | | | | 9.91 | | | | | n/a | | | | | 9.11 | |
| Since Inception - Class S (3/31/06) | | | | n/a | | | | | 9.31 | | | | | 9.14 | |
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 recentmonth-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 oflarge-cap companies. It is not possible to invest directly in an index.
PORTFOLIO SUMMARY
| | |
Class I: | | |
Net Asset Value 12/31/19: | | $14.33 Per Share |
Net Asset Value 6/30/19: | | $14.45 Per Share |
Total Net Assets: | | $219.1 Million |
Class S: | | |
Net Asset Value 12/31/19: | | $14.26 Per Share |
Net Asset Value 6/30/19: | | $14.37 Per Share |
Total Net Assets: | | $38.2 Million |
| |
Weighted Average Market Cap: | | $230.2 Billion |
TOP 10 HOLDINGS
1. Microsoft Corp.
2. Apple, Inc.
3. Verizon Communications, Inc.
4. Johnson & Johnson
5. Broadcom, Inc.
6. JPMorgan Chase & Co.
7. Home Depot, Inc.
8. UnitedHealth Group, Inc.
9. PepsiCo, Inc.
10. Applied Materials, Inc.
Based on total net assets as of December 31, 2019. Subject to change.
SECTOR ALLOCATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit Dividend Growth Fund
Investments are grouped by economic sectors.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 98.7% | | | | | | | | |
Commercial Services - 0.8% | | | | | | | | |
S&P Global, Inc. | | | 7,425 | | | | 2,027,396 | |
| | | | | | | | |
Communications - 3.8% | | | | | | | | |
American Tower Corp. | | | 11,425 | | | | 2,625,694 | |
Verizon Communications, Inc. | | | 115,075 | | | | 7,065,605 | |
| | | | | | | | |
| | |
| | | | | | | 9,691,299 | |
| | | | | | | | |
ConsumerNon-Durables-7.0% | | | | | | | | |
Coca-Cola Co. | | | 68,675 | | | | 3,801,161 | |
Conagra Brands, Inc. | | | 50,025 | | | | 1,712,856 | |
Mondelez International, Inc. | | | 45,100 | | | | 2,484,108 | |
NIKE, Inc. | | | 12,700 | | | | 1,286,637 | |
PepsiCo, Inc. | | | 36,575 | | | | 4,998,705 | |
Procter & Gamble Co. | | | 30,300 | | | | 3,784,470 | |
| | | | | | | | |
| | |
| | | | | | | 18,067,937 | |
| | | | | | | | |
Consumer Services - 4.9% | | | | | | | | |
Comcast Corp. | | | 45,750 | | | | 2,057,378 | |
McDonald’s Corp. | | | 13,050 | | | | 2,578,810 | |
Visa, Inc. | | | 23,825 | | | | 4,476,718 | |
Walt Disney Co. | | | 23,375 | | | | 3,380,726 | |
| | | | | | | | |
| | |
| | | | | | | 12,493,632 | |
| | | | | | | | |
Electronic Technology - 12.4% | | | | | | | | |
Apple, Inc. | | | 35,000 | | | | 10,277,750 | |
Applied Materials, Inc. | | | 75,625 | | | | 4,616,150 | |
Broadcom, Inc. | | | 17,725 | | | | 5,601,455 | |
Cisco Systems, Inc. | | | 24,650 | | | | 1,182,214 | |
Corning, Inc. | | | 44,575 | | | | 1,297,578 | |
Garmin, Ltd. | | | 21,075 | | | | 2,056,077 | |
Intel Corp. | | | 62,050 | | | | 3,713,692 | |
Skyworks Solutions, Inc. | | | 25,250 | | | | 3,052,220 | |
| | | | | | | | |
| | |
| | | | | | | 31,797,136 | |
| | | | | | | | |
Energy Minerals - 5.1% | | | | | | | | |
Chevron Corp. | | | 33,800 | | | | 4,073,238 | |
ConocoPhillips | | | 63,300 | | | | 4,116,399 | |
Suncor Energy, Inc. | | | 38,775 | | | | 1,271,820 | |
Valero Energy Corp. | | | 38,650 | | | | 3,619,572 | |
| | | | | | | | |
| | |
| | | | | | | 13,081,029 | |
| | | | | | | | |
Finance - 15.2% | | | | | | | | |
Ameriprise Financial, Inc. | | | 9,275 | | | | 1,545,030 | |
Aon, PLC | | | 10,500 | | | | 2,187,045 | |
Camden Property Trust | | | 20,725 | | | | 2,198,923 | |
Chubb, Ltd. | | | 12,625 | | | | 1,965,208 | |
CME Group, Inc. | | | 2,400 | | | | 481,728 | |
Everest Re Group, Ltd. | | | 6,750 | | | | 1,868,670 | |
Goldman Sachs Group, Inc. | | | 11,175 | | | | 2,569,468 | |
Hartford Financial Services Group, Inc. | | | 53,450 | | | | 3,248,156 | |
JPMorgan Chase & Co. | | | 38,000 | | | | 5,297,200 | |
Legg Mason, Inc. | | | 61,775 | | | | 2,218,340 | |
Lincoln National Corp. | | | 28,025 | | | | 1,653,755 | |
| | | | | | | | |
| | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Physicians Realty Trust | | | 139,825 | | | | 2,648,286 | |
Synchrony Financial | | | 56,325 | | | | 2,028,263 | |
T Rowe Price Group, Inc. | | | 28,375 | | | | 3,457,210 | |
Truist Financial Corp. | | | 70,125 | | | | 3,949,440 | |
US Bancorp | | | 31,750 | | | | 1,882,458 | |
| | | | | | | | |
| | |
| | | | | | | 39,199,180 | |
| | | | | | | | |
Health Services - 2.6% | | | | | | | | |
Quest Diagnostics, Inc. | | | 16,345 | | | | 1,745,483 | |
UnitedHealth Group, Inc. | | | 17,075 | | | | 5,019,708 | |
| | | | | | | | |
| | |
| | | | | | | 6,765,191 | |
| | | | | | | | |
Health Technology- 13.7% | | | | | | | | |
Abbott Laboratories | | | 43,625 | | | | 3,789,268 | |
Agilent Technologies, Inc. | | | 30,025 | | | | 2,561,433 | |
Amgen, Inc. | | | 11,675 | | | | 2,814,492 | |
AstraZeneca, PLC, ADR | | | 53,650 | | | | 2,674,989 | |
Baxter International, Inc. | | | 22,500 | | | | 1,881,450 | |
Becton Dickinson and Co. | | | 12,825 | | | | 3,488,015 | |
Johnson & Johnson | | | 44,400 | | | | 6,476,628 | |
Medtronic, PLC | | | 39,850 | | | | 4,520,982 | |
Merck & Co., Inc. | | | 43,350 | | | | 3,942,682 | |
Zimmer Biomet Holdings, Inc. | | | 21,025 | | | | 3,147,022 | |
| | | | | | | | |
| | |
| | | | | | | 35,296,961 | |
| | | | | | | | |
Industrial Services- 2.5% | | | | | | | | |
Jacobs Engineering Group, Inc. | | | 23,100 | | | | 2,075,073 | |
Kinder Morgan, Inc. | | | 95,550 | | | | 2,022,794 | |
TC Energy Corp. | | | 45,575 | | | | 2,429,603 | |
| | | | | | | | |
| | |
| | | | | | | 6,527,470 | |
| | | | | | | | |
Process Industries - 2.0% | | | | | | | | |
Air Products & Chemicals, Inc. | | | 4,725 | | | | 1,110,328 | |
LyondellBasell Industries NV | | | 23,600 | | | | 2,229,728 | |
Sherwin-Williams Co. | | | 3,325 | | | | 1,940,270 | |
| | | | | | | | |
| | |
| | | | | | | 5,280,326 | |
| | | | | | | | |
Producer Manufacturing - 8.4% | | | | | | | | |
Boeing Co. | | | 4,525 | | | | 1,474,064 | |
Dover Corp. | | | 17,275 | | | | 1,991,117 | |
Eaton Corp., PLC | | | 34,700 | | | | 3,286,784 | |
Emerson Electric Co. | | | 35,050 | | | | 2,672,913 | |
Honeywell International, Inc. | | | 21,600 | | | | 3,823,200 | |
Lockheed Martin Corp. | | | 7,625 | | | | 2,969,022 | |
Motorola Solutions, Inc. | | | 9,675 | | | | 1,559,030 | |
United Technologies Corp. | | | 25,050 | | | | 3,751,488 | |
| | | | | | | | |
| | |
| | | | | | | 21,527,618 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
14 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Retail Trade - 5.1% | | | | | | | | |
Home Depot, Inc. | | | 23,025 | | | | 5,028,200 | |
Target Corp. | | | 32,100 | | | | 4,115,541 | |
TJX Cos., Inc. | | | 65,625 | | | | 4,007,062 | |
| | | | | | | | |
| | |
| | | | | | | 13,150,803 | |
| | | | | | | | |
Technology Services - 8.3% | | | | | | | | |
Accenture, PLC | | | 15,725 | | | | 3,311,213 | |
Alphabet, Inc. - Class A* | | | 1,510 | | | | 2,022,479 | |
Intuit, Inc. | | | 7,275 | | | | 1,905,541 | |
Microsoft Corp. | | | 78,100 | | | | 12,316,370 | |
Oracle Corp. | | | 35,500 | | | | 1,880,790 | |
| | | | | | | | |
| | |
| | | | | | | 21,436,393 | |
| | | | | | | | |
Transportation - 2.1% | | | | | | | | |
Union Pacific Corp. | | | 18,350 | | | | 3,317,496 | |
United Parcel Service, Inc. | | | 18,200 | | | | 2,130,492 | |
| | | | | | | | |
| | |
| | | | | | | 5,447,988 | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Utilities - 4.8% | | | | | | | | |
DTE Energy Co. | | | 25,050 | | | | 3,253,244 | |
Entergy Corp. | | | 29,350 | | | | 3,516,130 | |
FirstEnergy Corp. | | | 50,400 | | | | 2,449,440 | |
NextEra Energy, Inc. | | | 12,800 | | | | 3,099,648 | |
| | | | | | | | |
| | |
| | | | | | | 12,318,462 | |
| | | | | | | | |
| | |
Total Common Stocks
(cost: $201,796,985) | | | | | | | 254,108,821 | |
| | | | | | | | |
| | |
Short-Term Securities-1.6% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 1.49%
(cost: $4,039,386) | | | 4,039,386 | | | | 4,039,386 | |
| | | | | | | | |
| | |
Total Investments in Securities - 100.3%
(cost: $205,836,371) | | | | | | | 258,148,207 | |
Other Assets and Liabilities, net - (0.3%) | | | | | | | (805,598 | ) |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | | $257,342,609 | |
| | | | | | | | |
| * | Non-income producing security. |
ADR — American Depositary Receipt
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of December 31, 2019 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | | | | | |
| | | | | Investment in Securities | | |
| | | Level 1
Quoted
Price ($) | | Level 2
Other significant
observable inputs ($) | | Level 3 Significant unobservable inputs ($) | | Total ($) |
Common Stocks** | | | | 254,108,821 | | | | | — | | | | | — | | | | | 254,108,821 | |
Short-Term Securities | | | | 4,039,386 | | | | | — | | | | | — | | | | | 4,039,386 | |
| | | | |
Total: | | | | 258,148,207 | | | | | — | | | | | — | | | | | 258,148,207 | |
** For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
DECEMBER 31, 2019 | | | 15 | |
|
|
|
Sit Global Dividend Growth Fund - Class I and Class S |
OBJECTIVE & STRATEGY
The objective of the Sit Global Dividend Growth Fund is to provide current income that exceeds the dividend yield of the MSCI World Index and that grows over a period of years. Secondarily, the Fund seeks long-term capital appreciation.
The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in dividend-paying common stocks issued by U.S. and foreign companies. The Fund may invest the balance of its assets in preferred stocks, convertible bonds, and U.S. Treasury securities.
Fund Performance
Performance of the Sit Global Dividend Growth Fund Class I shares was in line with the MSCI World Index for the6-month period ended December 31, 2019. The Fund’s shares appreciated +9.13%, compared to a return of +9.14% for the MSCI World Index. The Fund’s gross dividend yield (before deducting Fund expenses) was 2.20% as of December 31, 2019, compared to 2.32% for the MSCI World Index.
Factors that Influenced the Fund’s Performance
Contributing favorably to performance during the6-month period were the Fund’s holdings in the software & services (Microsoft, Alphabet, and Accenture), diversified financials (JPMorgan Chase, Bank of America, and Partners Group), and retailing (Sherwin-Williams, Inditex, and not owning Amazon.com) industries. Conversely, the holdings in pharmaceuticals (Pfizer, AbbVie, Abbott Laboratories, and Johnson & Johnson) and food, beverage & tobacco (Constellation Brands and Mondelez International), and the higher average cash position detracted from relative performance.
Geographically, the regions of Asia Pacificex-Japan (underweighting the sector and owning Broadcom and Macquarie Group),Non-Euroland (Logitech and Partners Group), and the United Kingdom (AstraZeneca plc, BAE Systems, and London Stock Exchange) added value due to stock selection during thesix-month period. However, holding excess cash negatively impacted relative performance, along with positions in Euroland (Allianz SE and Aurelius Equity Opportunities SE).
Outlook and Positioning
From a global perspective, we continue to favor the U.S., at the expense of the rest of the world. We’ve seen some economic improvement lately in Europe, but we remain very cautious on the sustainability of the marginal improvement. The structural issues, populism movement, uncertain consumer, and the inability of the European Central Bank or Bank of England to stimulate the region all continue. Previously, we noted that we preferred the euro area to that of the United Kingdom, given the Brexit uncertainty. While we now have some perceived clarity on the timing of Brexit, we remain cautious as uncertainty will remain elevated until all the details are worked out. Thus, we still prefer the euro area to that of the United Kingdom. We are underweight Japan, due to continued concern about the country’s structural challenges. An aging population, high national debt levels, and a rigid labor market remain major obstacles to sustainablelong-run growth.
HYPOTHETICAL GROWTH OF $10,000
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years (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.
Our sector strategy remains unchanged. We prefer the technology services sector, given the better earnings growth projections relative to other sectors in 2020. We continue to underweight the banking industry due to the poor interest rate environment. In looking at the consumer space, we are more apt to be invested in discretionary stocks at the expense of defensive companies as the growth profile is more favorable. Health care remains at market weight, as we like the sector’s defensive nature and long-term prospects, but believe there are some risks with the upcoming elections. Our emphasis is on pharmaceuticals with attractive pipelines.
The Fund continues to be well-diversified and emphasizes high quality, dividend-paying growth stocks. We believe the Fund is well positioned to outperform in down markets if financial market volatility picks up, which we believe may occur during 2020.
| | | | |
Roger J. Sit | | Raymond E. Sit | | |
Tasha M. Murdoff | | Kent L. Johnson | | |
Portfolio Managers | | | | |
| | |
| |
16 | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2019
| | | | | | | | | | | | | | | |
| | | Sit Global
Dividend
Growth Fund | | MSCI |
| | | Class I | | Class S | | World
Index 1 |
| Six Months | | | | 9.13 | % | | | | 8.94 | % | | | | 9.14 | % |
| One Year | | | | 26.70 | | | | | 26.41 | | | | | 27.67 | |
| Five Year | | | | 7.35 | | | | | 7.08 | | | | | 8.74 | |
| Ten Year | | | | 8.35 | | | | | 8.07 | | | | | 9.47 | |
Since Inception (9/30/08) | | | | 8.98 | | | | | 8.70 | | | | | 8.53 | |
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 recentmonth-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 12/31/19: | | $17.60 Per Share |
Net Asset Value 6/30/19: | | $16.34 Per Share |
Total Net Assets: | | $33.3 Million |
Class S: | | |
Net Asset Value 12/31/19: | | $17.59 Per Share |
Net Asset Value 6/30/19: | | $16.33 Per Share |
Total Net Assets: | | $3.5 Million |
| |
Weighted Average Market Cap: | | $218.8 Billion |
TOP 10 HOLDINGS
1. Microsoft Corp.
2. Apple, Inc.
3. JPMorgan Chase & Co.
4. Johnson & Johnson
5. Starbucks Corp.
6. Allianz SE, ADR
7. Nestle SA
8. PepsiCo, Inc.
9. Verizon Communications, Inc.
10. Accenture, PLC
Based on total net assets as of December 31, 2019. Subject to change.
SECTOR ALLOCATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit Global Dividend Growth Fund
Investments are grouped by geographic region.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 97.0% | | | | | | | | |
Asia - 6.1% | | | | | | | | |
Australia - 2.3% | | | | | | | | |
Atlassian Corp., PLC* | | | 3,925 | | | | 472,334 | |
Macquarie Group, Ltd. | | | 3,900 | | | | 377,271 | |
| | | | | | | | |
| | |
| | | | | | | 849,605 | |
| | | | | | | | |
Japan - 2.5% | | | | | | | | |
Astellas Pharma, Inc. | | | 29,900 | | | | 514,592 | |
Recruit Holdings Co., Ltd. | | | 10,800 | | | | 407,429 | |
| | | | | | | | |
| | |
| | | | | | | 922,021 | |
| | | | | | | | |
Singapore - 1.3% | | | | | | | | |
Singapore Technologies Engineering, Ltd. | | | 158,600 | | | | 464,615 | |
| | | | | | | | |
| | |
Europe - 30.8% | | | | | | | | |
Germany - 5.3% | | | | | | | | |
adidas AG | | | 1,385 | | | | 450,222 | |
Allianz SE, ADR | | | 35,000 | | | | 847,350 | |
Aurelius SE & Co. | | | 5,500 | | | | 240,606 | |
Siemens AG | | | 3,200 | | | | 418,315 | |
| | | | | | | | |
| | |
| | | | | | | 1,956,493 | |
| | | | | | | | |
Ireland - 3.2% | | | | | | | | |
Accenture, PLC | | | 3,675 | | | | 773,845 | |
Ingersoll-Rand, PLC | | | 2,950 | | | | 392,114 | |
| | | | | | | | |
| | |
| | | | | | | 1,165,959 | |
| | | | | | | | |
Netherlands - 0.8% | | | | | | | | |
LyondellBasell Industries NV | | | 3,225 | | | | 304,698 | |
| | | | | | | | |
Spain - 2.6% | | | | | | | | |
Iberdrola SA | | | 60,400 | | | | 621,954 | |
Industria de Diseno Textil SA | | | 9,800 | | | | 345,721 | |
| | | | | | | | |
| | |
| | | | | | | 967,675 | |
| | | | | | | | |
Switzerland-7.5% | | | | | | | | |
Chubb, Ltd. | | | 1,750 | | | | 272,405 | |
Logitech International SA | | | 12,950 | | | | 610,722 | |
Lonza Group AG | | | 1,450 | | | | 529,180 | |
Nestle SA | | | 7,525 | | | | 814,703 | |
Partners Group Holding AG | | | 585 | | | | 536,401 | |
| | | | | | | | |
| | |
| | | | | | | 2,763,411 | |
| | | | | | | | |
United Kingdom - 11.4% | | | | | | | | |
AstraZeneca, PLC, ADR | | | 15,400 | | | | 767,844 | |
BAE Systems, PLC | | | 74,675 | | | | 558,673 | |
Cineworld Group, PLC | | | 149,650 | | | | 434,317 | |
Diageo, PLC, ADR | | | 4,225 | | | | 711,574 | |
DS Smith, PLC | | | 94,275 | | | | 479,779 | |
London Stock Exchange Group, PLC | | | 6,875 | | | | 705,768 | |
RELX, PLC | | | 21,200 | | | | 534,102 | |
| | | | | | | | |
| | |
| | | | | | | 4,192,057 | |
| | | | | | | | |
| | | | | | | | |
| | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
North America - 60.1% | | | | | | | | |
Bermuda - 0.3% | | | | | | | | |
Everest Re Group, Ltd. | | | 350 | | | | 96,894 | |
| | | | | | | | |
| | |
Canada - 1.8% | | | | | | | | |
Suncor Energy, Inc. | | | 10,275 | | | | 337,020 | |
TC Energy Corp. | | | 6,300 | | | | 335,853 | |
| | | | | | | | |
| | |
| | | | | | | 672,873 | |
| | | | | | | | |
United States - 58.0% | | | | | | | | |
Abbott Laboratories | | | 8,300 | | | | 720,938 | |
Alphabet, Inc. - Class A* | | | 450 | | | | 602,726 | |
Apple, Inc. | | | 4,000 | | | | 1,174,600 | |
Applied Materials, Inc. | | | 8,175 | | | | 499,002 | |
Arthur J Gallagher & Co. | | | 3,775 | | | | 359,493 | |
Bank of America Corp. | | | 16,300 | | | | 574,086 | |
Broadcom, Inc. | | | 1,825 | | | | 576,737 | |
Chevron Corp. | | | 4,150 | | | | 500,116 | |
Constellation Brands, Inc. | | | 2,750 | | | | 521,812 | |
Delta Air Lines, Inc. | | | 4,850 | | | | 283,628 | |
Euronet Worldwide, Inc.* | | | 575 | | | | 90,597 | |
Goldman Sachs Group, Inc. | | | 1,400 | | | | 321,902 | |
Home Depot, Inc. | | | 2,550 | | | | 556,869 | |
Honeywell International, Inc. | | | 3,200 | | | | 566,400 | |
Intel Corp. | | | 8,625 | | | | 516,206 | |
Johnson & Johnson | | | 6,925 | | | | 1,010,150 | |
JPMorgan Chase & Co. | | | 7,350 | | | | 1,024,590 | |
L3Harris Technologies, Inc. | | | 2,050 | | | | 405,634 | |
Lockheed Martin Corp. | | | 1,565 | | | | 609,380 | |
Marathon Petroleum Corp. | | | 7,950 | | | | 478,988 | |
McDonald’s Corp. | | | 1,860 | | | | 367,555 | |
Microsoft Corp. | | | 12,100 | | | | 1,908,170 | |
Mondelez International, Inc. | | | 7,100 | | | | 391,068 | |
PepsiCo, Inc. | | | 5,775 | | | | 789,269 | |
ScottsMiracle-Gro Co. | | | 2,625 | | | | 278,722 | |
Sherwin-Williams Co. | | | 800 | | | | 466,832 | |
Starbucks Corp. | | | 9,875 | | | | 868,210 | |
T Rowe Price Group, Inc. | | | 4,800 | | | | 584,832 | |
Thermo Fisher Scientific, Inc. | | | 1,175 | | | | 381,722 | |
Union Pacific Corp. | | | 4,050 | | | | 732,200 | |
United Technologies Corp. | | | 3,375 | | | | 505,440 | |
UnitedHealth Group, Inc. | | | 675 | | | | 198,436 | |
US Bancorp | | | 7,900 | | | | 468,391 | |
Verizon Communications, Inc. | | | 12,750 | | | | 782,850 | |
Waste Management, Inc. | | | 5,900 | | | | 672,364 | |
WEC Energy Group, Inc. | | | 6,150 | | | | 567,214 | |
| | | | | | | | |
| | |
| | | | | | | 21,357,129 | |
| | | | | | | | |
Total Common Stocks
(cost: $25,314,781) | | | | | | | 35,713,430 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
18 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Short-Term Securities - 3.0% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 1.49%
(cost: $1,120,194) | | | 1,120,195 | | | | 1,120,195 | |
| | | | | | | | |
| | |
Total Investments in Securities - 100.0%
(cost: $26,434,975) | | | | | | | 36,833,625 | |
Other Assets and Liabilities, net- 0.0% | | | | | | | (12,889 | ) |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | | $36,820,736 | |
| | | | | | | | |
| * | Non-income producing security. |
ADR — American Depositary Receipt
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of December 31, 2019 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | | | | | |
| | | | | Investment in Securities | | |
| | | Level 1
Quoted
Price ($) | | Level 2
Other significant
observable inputs ($) | | Level 3 Significant unobservable inputs ($) | | Total ($) |
Common Stocks | | | | | | | | | | | | | | | | | | | | |
Australia | | | | 849,605 | | | | | — | | | | | — | | | | | 849,605 | |
Bermuda | | | | 96,894 | | | | | — | | | | | — | | | | | 96,894 | |
Canada | | | | 672,873 | | | | | — | | | | | — | | | | | 672,873 | |
Germany | | | | 1,956,493 | | | | | — | | | | | — | | | | | 1,956,493 | |
Ireland | | | | 1,165,959 | | | | | — | | | | | — | | | | | 1,165,959 | |
Japan | | | | 922,021 | | | | | — | | | | | — | | | | | 922,021 | |
Netherlands | | | | 304,698 | | | | | — | | | | | — | | | | | 304,698 | |
Singapore | | | | 464,615 | | | | | — | | | | | — | | | | | 464,615 | |
Spain | | | | 967,675 | | | | | — | | | | | — | | | | | 967,675 | |
Switzerland | | | | 2,763,411 | | | | | — | | | | | — | | | | | 2,763,411 | |
United Kingdom | | | | 4,192,057 | | | | | — | | | | | — | | | | | 4,192,057 | |
United States | | | | 21,357,129 | | | | | — | | | | | — | | | | | 21,357,129 | |
Short-Term Securities | | | | 1,120,195 | | | | | — | | | | | — | | | | | 1,120,195 | |
| | | | |
Total: | | | | 36,833,625 | | | | | — | | | | | — | | | | | 36,833,625 | |
Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
DECEMBER 31, 2019 | | | 19 | |
|
|
|
Sit Large Cap Growth Fund |
OBJECTIVE & STRATEGY
The objective of the Sit Large Cap Growth Fund is to maximize long-term capital appreciation. The Fund pursues this objective by investing at least 80% of its net assets in the common stocks of domestic growth companies with capitalizations of $5 billion or more at the time of purchase.
Fund Performance
The Sit Large Cap Growth Fund’s return was +11.36% during the6-month period ending December 31, 2019, compared to a +12.27% return for the Russell 1000® Growth Index. The S&P 500® Index return for the period was +10.92%.
Factors that Influenced the Fund’s Performance
The Fund posted strong absolute returns over the period; however, it lagged the Russell 1000® Growth Index due to several factors. The largest detractor to relative performance over the6-month period was the Fund’s stock selection in the health technology sector, where we owned Illumina, which detracted from performance, but were underweight Amgen, Bristol-Myers Squibb, and AbbVie, top performers in the sector. The Fund has maintained an underweight position in the sector as we saw better growth opportunities in other areas. As policy rhetoric on issues, such as “Medicare for All,” became more muted in the later stages of 2019, stocks in this space rebounded after a period of underperformance. Adverse stock selection in the consumernon-durables (Constellation Brands) and consumer services (Marriott International and McDonald’s) sectors also weighed on performance. Countering this, stock selection in the electronic technology and technology services sectors contributed favorably to the Fund’s performance. Some of the best-performing stocks here were: Applied Materials, Intel, Alphabet, and Splunk. Additionally, stock selection in the finance sector, including JPMorgan Chase, boosted relative returns.
Outlook and Positioning
Stocks posted strong gains over the6-month period, driven primarily byprice-to-earnings multiple expansion, as valuations continued their recovery from the lows seen at the end of 2018. With equity valuations now at “fair” levels, we believe an improvement in corporate earnings will be a key determinant of the direction and magnitude of equity returns going forward. Global monetary and fiscal accommodation, which is expected to continue into calendar 2020, provide a favorable backdrop for economic growth and equity price appreciation looking ahead. The U.S.-China trade deal provides a positive catalyst for equity markets and should contribute to improving capital spending. The 2020 U.S. presidential election will likely receive a disproportionate amount of investor focusvis-à-vis past
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 higherprice-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.
elections and contribute to elevated financial market volatility. Diversification and an emphasis on companies with visible growth remain key elements of our investment strategy. Sector leadership will likely vacillate, as investors struggle with ongoing uncertainties surrounding geopolitics, trade, and the efficacy of easier monetary policy at this stage of the economic cycle. We continue to believe in the merits of a “barbell” strategy, balancingpro-growth cyclicals with more stable, visible growth companies. During the period, we continued to shift to a slightly cyclical bias, in anticipation of a recovery in capital spending and manufacturing activity in 2020, by adding to the Fund’s overweight positions in the technology services and producer manufacturing sectors. The Fund continues to have minimal exposure to slow growth sectors, including energy and utilities.
Roger J. Sit
Ronald D. Sit
Portfolio Managers
| | |
| |
20 | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2019
| | | | | | | | | | | | | | | |
| | | Sit Large
Cap Growth
Fund | | Russell
1000®
Growth
Index1 | | Russell
1000®
Index 2 |
| Six Month | | | | 11.36 | % | | | | 12.27 | % | | | | 10.59 | % |
| One Year | | | | 32.81 | | | | | 36.39 | | | | | 31.43 | |
| Five Year | | | | 12.39 | | | | | 14.63 | | | | | 11.48 | |
| Ten Year | | | | 12.44 | | | | | 15.22 | | | | | 13.54 | |
Since Inception3 (9/2/82) | | | | 10.38 | | | | | 11.62 | | | | | 11.93 | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recentmonth-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 higherprice-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 12/31/19: | | $43.20 Per Share |
Net Asset Value 6/30/19: | | $42.53 Per Share |
Total Net Assets: | | $122.7 Million |
Weighted Average Market Cap: | | $390.2 Billion |
TOP 10 HOLDINGS
1. Apple, Inc.
2. Microsoft Corp.
3. Alphabet, Inc.
4. Amazon.com, Inc.
5. Visa, Inc.
6. Facebook, Inc.
7. UnitedHealth Group, Inc.
8. salesforce.com, Inc.
9. Adobe, Inc.
10. Broadcom, Inc.
Based on total net assets as of December 31, 2019. Subject to change.
SECTOR ALLOCATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit Large Cap Growth Fund
Investments are grouped by economic sectors.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 99.1% | | | | | | | | |
Communications - 1.0% | | | | | | | | |
Verizon Communications, Inc. | | | 20,925 | | | | 1,284,795 | |
| | | | | | | | |
Consumer Durables - 1.0% | | | | | | | | |
YETI Holdings, Inc.* | | | 36,425 | | | | 1,266,862 | |
| | | | | | | | |
ConsumerNon- Durables- 5.6% | | | | | | | | |
Constellation Brands, Inc. | | | 7,425 | | | | 1,408,894 | |
Estee Lauder Cos., Inc. - Class A | | | 11,275 | | | | 2,328,738 | |
Mondelez International, Inc. | | | 17,900 | | | | 985,932 | |
NIKE, Inc. | | | 3,200 | | | | 324,192 | |
PepsiCo, Inc. | | | 13,125 | | | | 1,793,794 | |
| | | | | | | | |
| | |
| | | | | | | 6,841,550 | |
| | | | | | | | |
Consumer Services- 7.6% | | | | | | | | |
McDonald’s Corp. | | | 6,650 | | | | 1,314,107 | |
Starbucks Corp. | | | 21,900 | | | | 1,925,448 | |
Visa, Inc. | | | 27,300 | | | | 5,129,670 | |
Walt Disney Co. | | | 6,200 | | | | 896,706 | |
| | | | | | | | |
| | |
| | | | | | | 9,265,931 | |
| | | | | | | | |
Electronic Technology - 15.6% | | | | | | | | |
Advanced Micro Devices, Inc.* | | | 9,400 | | | | 431,084 | |
Apple, Inc. | | | 36,700 | | | | 10,776,955 | |
Applied Materials, Inc. | | | 38,900 | | | | 2,374,456 | |
Broadcom, Inc. | | | 7,800 | | | | 2,464,956 | |
Ciena Corp.* | | | 28,900 | | | | 1,233,741 | |
Intel Corp. | | | 16,800 | | | | 1,005,480 | |
NVIDIA Corp. | | | 3,725 | | | | 876,492 | |
| | | | | | | | |
| | |
| | | | | | | 19,163,164 | |
| | | | | | | | |
Energy Minerals- 1.1% | | | | | | | | |
Chevron Corp. | | | 4,900 | | | | 590,499 | |
Marathon Petroleum Corp. | | | 12,400 | | | | 747,100 | |
| | | | | | | | |
| | |
| | | | | | | 1,337,599 | |
| | | | | | | | |
Finance - 4.7% | | | | | | | | |
Aon, PLC | | | 5,975 | | | | 1,244,533 | |
Bank of America Corp. | | | 20,400 | | | | 718,488 | |
Chubb, Ltd. | | | 5,050 | | | | 786,083 | |
Goldman Sachs Group, Inc. | | | 5,150 | | | | 1,184,139 | |
JPMorgan Chase & Co. | | | 4,900 | | | | 683,060 | |
T Rowe Price Group, Inc. | | | 9,725 | | | | 1,184,894 | |
| | | | | | | | |
| | |
| | | | | | | 5,801,197 | |
| | | | | | | | |
Health Services - 4.1% | | | | | | | | |
HCA Healthcare, Inc. | | | 8,100 | | | | 1,197,261 | |
UnitedHealth Group, Inc. | | | 13,000 | | | | 3,821,740 | |
| | | | | | | | |
| | |
| | | | | | | 5,019,001 | |
| | | | | | | | |
| | | | | | | | |
| | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Health Technology- 7.5% | | | | | | | | |
Abbott Laboratories | | | 15,500 | | | | 1,346,330 | |
Boston Scientific Corp.* | | | 36,700 | | | | 1,659,574 | |
DexCom, Inc.* | | | 4,050 | | | | 885,897 | |
Illumina, Inc.* | | | 1,800 | | | | 597,132 | |
Intuitive Surgical, Inc.* | | | 2,800 | | | | 1,655,220 | |
Johnson & Johnson | | | 9,400 | | | | 1,371,178 | |
Thermo Fisher Scientific, Inc. | | | 5,250 | | | | 1,705,568 | |
| | | | | | | | |
| | |
| | | | | | | 9,220,899 | |
| | | | | | | | |
Process Industries - 2.8% | | | | | | | | |
Ecolab, Inc. | | | 8,425 | | | | 1,625,941 | |
Sherwin-Williams Co. | | | 3,150 | | | | 1,838,151 | |
| | | | | | | | |
| | |
| | | | | | | 3,464,092 | |
| | | | | | | | |
Producer Manufacturing- 6.6% | | | | | | | | |
3M Co. | | | 3,900 | | | | 688,038 | |
Boeing Co. | | | 2,025 | | | | 659,664 | |
Honeywell International, Inc. | | | 8,425 | | | | 1,491,225 | |
Ingersoll-Rand, PLC | | | 8,900 | | | | 1,182,988 | |
L3Harris Technologies, Inc. | | | 6,550 | | | | 1,296,048 | |
Northrop Grumman Corp. | | | 2,700 | | | | 928,719 | |
Raytheon Co. | | | 5,000 | | | | 1,098,700 | |
United Technologies Corp. | | | 4,900 | | | | 733,824 | |
| | | | | | | | |
| | |
| | | | | | | 8,079,206 | |
| | | | | | | | |
Retail Trade- 7.9% | | | | | | | | |
Amazon.com, Inc.* | | | 3,150 | | | | 5,820,696 | |
Home Depot, Inc. | | | 11,125 | | | | 2,429,478 | |
TJX Cos., Inc. | | | 22,700 | | | | 1,386,062 | |
| | | | | | | | |
| | |
| | | | | | | 9,636,236 | |
| | | | | | | | |
Technology Services - 30.4% | | | | | | | | |
Accenture, PLC | | | 11,425 | | | | 2,405,762 | |
Adobe, Inc.* | | | 8,750 | | | | 2,885,837 | |
Alphabet, Inc. - Class A* | | | 625 | | | | 837,119 | |
Alphabet, Inc. - Class C* | | | 4,835 | | | | 6,464,492 | |
Atlassian Corp., PLC* | | | 10,375 | | | | 1,248,528 | |
Autodesk, Inc.* | | | 9,800 | | | | 1,797,908 | |
Facebook, Inc.* | | | 18,950 | | | | 3,889,487 | |
Intuit, Inc. | | | 6,100 | | | | 1,597,773 | |
Microsoft Corp. | | | 62,000 | | | | 9,777,400 | |
PayPal Holdings, Inc.* | | | 19,300 | | | | 2,087,681 | |
salesforce.com, Inc.* | | | 18,825 | | | | 3,061,698 | |
Splunk, Inc.* | | | 8,100 | | | | 1,213,137 | |
| | | | | | | | |
| | |
| | | | | | | 37,266,822 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
22 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Transportation - 2.4% | | | | | | | | |
Delta Air Lines, Inc. | | | 18,400 | | | | 1,076,032 | |
Union Pacific Corp. | | | 10,150 | | | | 1,835,018 | |
| | | | | | | | |
| | |
| | | | | | | 2,911,050 | |
| | | | | | | | |
Utilities - 0.8% | | | | | | | | |
NextEra Energy, Inc. | | | 4,000 | | | | 968,640 | |
| | | | | | | | |
Total Common Stocks
(cost: $57,697,343) | | | | | | | 121,527,044 | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Short-Term Securities - 1.0% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 1.49%
(cost: $1,201,311) | | | 1,201,311 | | | | 1,201,311 | |
| | | | | | | | |
| | |
Total Investments in Securities - 100.1%
(cost: $58,898,654) | | | | | | | 122,728,355 | |
Other Assets and Liabilities, net - (0.1%) | | | | | | | (63,795 | ) |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | | $122,664,560 | |
| | | | | | | | |
| * | Non-income producing security. |
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of December 31, 2019 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | | | | | |
| | | | | Investment in Securities | | |
| | | Level 1
Quoted
Price ($) | | Level 2
Other significant
observable inputs ($) | | Level 3 Significant unobservable inputs ($) | | Total ($) |
Common Stocks** | | | | 121,527,044 | | | | | — | | | | | — | | | | | 121,527,044 | |
Short-Term Securities | | | | 1,201,311 | | | | | — | | | | | — | | | | | 1,201,311 | |
Total: | | | | 122,728,355 | | | | | — | | | | | — | | | | | 122,728,355 | |
** For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
DECEMBER 31, 2019 | | | 23 | |
|
|
|
Sit ESG Growth Fund - Class I and Class S |
OBJECTIVE & STRATEGY
The objective of the Sit ESG Growth Fund is to maximize long-term capital appreciation. The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in companies that the Adviser believes have strong environmental, social and corporate governance (ESG) practices at the time of purchase. The Fund invests in common stocks of U.S. and foreign companies, primarily of large to medium capitalizations (companies with market capitalization in excess of $2 billion).
Fund Performance
The Sit ESG Growth Fund Class I shares slightly underperformed the MSCI World Index for the6-month period ended December 31, 2019. The Fund’s Class I shares appreciated +9.09%, while the return of the MSCI World Index was +9.14%.
Factors that Influenced the Fund’s Performance
Contributing favorably to performance during the6-month period were the Fund’s holdings in the software & services (Alphabet, Microsoft, and Facebook) and retailing (Inditex, TJX, and not owning Amazon.com) industries. Conversely, the food, beverage & tobacco holdings (Coca-Cola European Partners and Nestle S.A.), the pharmaceuticals holdings (Pfizer, AbbVie, and Johnson & Johnson), and the insurance holdings (Prudential Financial and Allianz SE) detracted from absolute and relative performance.
From a geographic standpoint, the regions of Japan (Recruit Holdings, Astellas Pharma, Terumo, and Keyence), Asia Pacificex-Japan (not owning any securities), and North America (Intel, JPMorgan Chase, Alphabet and Starbucks, and not owning Amazon.com) added value due to positive stock selection in thesix-month period. However, the overweight in the United Kingdom relative to the MSCI World Index and the higher average cash balance negatively impacted the Fund’s relative performance.
Outlook and Positioning
From a global perspective, we continue to favor the U.S., at the expense of the rest of the world. We’ve seen some economic improvement of late in Europe, but we remain very cautious on the sustainability of the marginal improvement. The structural issues, populism movement, uncertain consumer, and the inability of the European Central Bank or Bank of England to stimulate the region all persist. Previously, we noted that we preferred the euro area to that of the United Kingdom, given the Brexit uncertainty. While there appears to be some clarity now on the timing of Brexit, we remain cautious, as uncertainty will remain elevated until all the details are worked out. So, we still prefer the euro area over the United Kingdom. We are underweight Japan due to continued concern about the country’s structural challenges. An aging population, high national debt levels, and a rigid labor market remain major obstacles to sustainablelong-run growth.
HYPOTHETICAL GROWTH OF $10,000
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years (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.
Our sector strategy remains unchanged. We prefer the technology services sector, given the better earnings growth projections relative to other sectors in 2020. We continue to underweight the banking industry due to the poor interest rate environment. In looking at the consumer space, we are more apt to be invested in discretionary stocks at the expense of defensive companies, as their growth profile is more favorable. Health care remains a market weight, as we like the sector’s defensive nature and long-term prospects, but believe there are some risks with the upcoming elections. Our emphasis is on pharmaceuticals with attractive pipelines.
The focus of the Sit ESG Fund is to invest at least 80% of the assets in companies that have strong ESG (environmental, social, and corporate governance) practices. We remain positive 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
Portfolio Managers
| | |
| |
24 | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2019
| | | | | | | | | | | | | | | |
| | | Sit ESG
Growth Fund | | MSCI |
| | | Class I | | Class S | | World
Index 1 |
| Six Month | | | | 9.09 | % | | | | 8.92 | % | | | | 9.14 | % |
| One Year | | | | 26.41 | | | | | 26.06 | | | | | 27.67 | |
Since Inception (6/30/16) | | | | 11.79 | | | | | 11.50 | | | | | 12.77 | |
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 recentmonth-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 12/31/19: | | $14.19 Per Share |
Net Asset Value 6/30/19: | | $13.21 Per Share |
Total Net Assets: | | $3.7 Million |
Class S: | | |
Net Asset Value 12/31/19: | | $14.13 Per Share |
Net Asset Value 6/30/19: | | $13.16 Per Share |
Total Net Assets: | | $3.2 Million |
| |
Weighted Average Market Cap: | | $234.0 Billion |
TOP 10 HOLDINGS
1. Microsoft Corp.
2. Allianz SE, ADR
3. Apple, Inc.
4. Ingersoll-Rand, PLC
5. Novartis AG, ADR
6. Alphabet, Inc. - Class A
7. Iberdrola SA, ADR
8. Visa, Inc.
9. Home Depot, Inc.
10. Verizon Communications, Inc.
Based on total net assets as of December 31, 2019. Subject to change.
SECTOR ALLOCATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit ESG Growth Fund
Investments are grouped by geographic region.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 97.0% | | | | | | | | |
Asia - 9.3% | | | | | | | | |
Japan - 8.4% | | | | | | | | |
Astellas Pharma, Inc. | | | 4,500 | | | | 77,447 | |
Keyence Corp. | | | 200 | | | | 70,848 | |
Recruit Holdings Co., Ltd. | | | 3,100 | | | | 116,947 | |
Shiseido Co., Ltd. | | | 1,100 | | | | 78,783 | |
Sony Corp., ADR | | | 1,925 | | | | 130,900 | |
Terumo Corp. | | | 2,600 | | | | 92,964 | |
| | | | | | | | |
| | |
| | | | | | | 567,889 | |
| | | | | | | | |
Singapore - 0.9% | | | | | | | | |
Singapore Technologies Engineering, Ltd. | | | 21,500 | | | | 62,984 | |
| | | | | | | | |
Europe - 33.3% | | | | | | | | |
Germany- 6.2% | | | | | | | | |
adidas AG, ADR | | | 650 | | | | 105,820 | |
Allianz SE, ADR | | | 9,900 | | | | 239,679 | |
Siemens AG, ADR | | | 1,175 | | | | 76,340 | |
| | | | | | | | |
| | |
| | | | | | | 421,839 | |
| | | | | | | | |
Ireland - 5.2% | | | | | | | | |
Accenture, PLC | | | 575 | | | | 121,078 | |
CRH, PLC, ADR | | | 1,200 | | | | 48,396 | |
Ingersoll-Rand, PLC | | | 1,400 | | | | 186,088 | |
| | | | | | | | |
| | |
| | | | | | | 355,562 | |
| | | | | | | | |
Netherlands - 2.1% | | | | | | | | |
ING Groep NV, ADR | | | 12,075 | | | | 145,504 | |
| | | | | | | | |
Spain - 3.8% | | | | | | | | |
Iberdrola SA, ADR | | | 4,050 | | | | 167,306 | |
Industria de Diseno Textil SA | | | 2,575 | | | | 90,840 | |
| | | | | | | | |
| | |
| | | | | | | 258,146 | |
| | | | | | | | |
Switzerland - 7.6% | | | | | | | | |
Logitech International SA | | | 1,550 | | | | 73,098 | |
Lonza Group AG | | | 320 | | | | 116,784 | |
Nestle SA, ADR | | | 1,425 | | | | 154,271 | |
Novartis AG, ADR | | | 1,800 | | | | 170,442 | |
| | | | | | | | |
| | |
| | | | | | | 514,595 | |
| | | | | | | | |
United Kingdom - 8.4% | | | | | | | | |
AstraZeneca, PLC, ADR | | | 2,950 | | | | 147,087 | |
BAE Systems, PLC, ADR | | | 2,300 | | | | 69,644 | |
Coca-Cola European Partners, PLC | | | 2,100 | | | | 106,848 | |
Diageo, PLC, ADR | | | 785 | | | | 132,210 | |
RELX, PLC, ADR | | | 4,700 | | | | 118,769 | |
| | | | | | | | |
| | |
| | | | | | | 574,558 | |
| | | | | | | | |
North America - 54.4% | | | | | | | | |
Canada - 1.9% | | | | | | | | |
Suncor Energy, Inc. | | | 4,000 | | | | 131,200 | |
| | | | | | | | |
| | | | | | | | |
| | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
United States - 52.5% | | | | | | | | |
3M Co. | | | 400 | | | | 70,568 | |
Adobe, Inc.* | | | 410 | | | | 135,222 | |
Allstate Corp. | | | 525 | | | | 59,036 | |
Alphabet, Inc. - Class A* | | | 125 | | | | 167,424 | |
Apple, Inc. | | | 800 | | | | 234,920 | |
Baxter International, Inc. | | | 850 | | | | 71,077 | |
Boston Scientific Corp.* | | | 3,000 | | | | 135,660 | |
ConocoPhillips | | | 1,250 | | | | 81,288 | |
Delta Air Lines, Inc. | | | 1,200 | | | | 70,176 | |
Ecolab, Inc. | | | 775 | | | | 149,567 | |
Facebook, Inc.* | | | 620 | | | | 127,255 | |
Goldman Sachs Group, Inc. | | | 600 | | | | 137,958 | |
Home Depot, Inc. | | | 745 | | | | 162,693 | |
Intel Corp. | | | 2,125 | | | | 127,181 | |
Johnson & Johnson | | | 975 | | | | 142,223 | |
JPMorgan Chase & Co. | | | 1,075 | | | | 149,855 | |
Lockheed Martin Corp. | | | 185 | | | | 72,035 | |
Microsoft Corp. | | | 2,000 | | | | 315,400 | |
NIKE, Inc. | | | 700 | | | | 70,917 | |
PepsiCo, Inc. | | | 875 | | | | 119,586 | |
salesforce.com, Inc.* | | | 850 | | | | 138,244 | |
Starbucks Corp. | | | 1,600 | | | | 140,672 | |
T Rowe Price Group, Inc. | | | 1,175 | | | | 143,162 | |
TJX Cos., Inc. | | | 1,380 | | | | 84,263 | |
UnitedHealth Group, Inc. | | | 500 | | | | 146,990 | |
Verizon Communications, Inc. | | | 2,600 | | | | 159,640 | |
Visa, Inc. | | | 875 | | | | 164,412 | |
| | | | | | | | |
| | |
| | | | | | | 3,577,424 | |
| | | | | | | | |
| | |
Total Common Stocks
(cost: $4,746,752) | | | | | | | 6,609,701 | |
| | | | | | | | |
| | |
Short-Term Securities - 3.0% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 1.49%
(cost: $204,267) | | | 204,267 | | | | 204,267 | |
| | | | | | | | |
| | |
Total Investments in Securities - 100.0% (cost: $4,951,019) | | | | | | | 6,813,968 | |
Other Assets and Liabilities, net - 0.0% | | | | | | | 1,974 | |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | | $6,815,942 | |
| | | | | | | | |
| * | Non-income producing security. |
ADR — American Depositary Receipt
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments
| | | | |
See accompanying notes to financial statements. | | | | |
26 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
A summary of the levels for the Fund’s investments as of December 31, 2019 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | | | | | |
| | | | | Investment in Securities | | |
| | | Level 1
Quoted
Price ($) | | Level 2
Other significant
observable inputs ($) | | Level 3 Significant unobservable inputs ($) | | Total ($) |
Common Stocks | | | | | | | | | | | | | | | | | | | | |
Canada | | | | 131,200 | | | | | — | | | | | — | | | | | 131,200 | |
Germany | | | | 421,839 | | | | | — | | | | | — | | | | | 421,839 | |
Ireland | | | | 355,562 | | | | | — | | | | | — | | | | | 355,562 | |
Japan | | | | 567,889 | | | | | — | | | | | — | | | | | 567,889 | |
Netherlands | | | | 145,504 | | | | | — | | | | | — | | | | | 145,504 | |
Singapore | | | | 62,984 | | | | | — | | | | | — | | | | | 62,984 | |
Spain | | | | 258,146 | | | | | — | | | | | — | | | | | 258,146 | |
Switzerland | | | | 514,595 | | | | | — | | | | | — | | | | | 514,595 | |
United Kingdom | | | | 574,558 | | | | | — | | | | | — | | | | | 574,558 | |
United States | | | | 3,577,424 | | | | | — | | | | | — | | | | | 3,577,424 | |
Short-Term Securities | | | | 204,267 | | | | | — | | | | | — | | | | | 204,267 | |
| | | | |
Total: | | | | 6,813,968 | | | | | — | | | | | — | | | | | 6,813,968 | |
Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
DECEMBER 31, 2019 | | | 27 | |
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 recent12-month period. The Russell Midcap® Growth Index ranged from approximately $365 million to $82 billion during the12-month period ended December 31, 2019.
Fund Performance
The Sit Mid Cap Growth Fund’s return during the6-month period ending December 31, 2019 was +4.64%, compared to a +7.44% return for the Russell Midcap® Growth Index. The Russell Midcap® Index advanced +7.58% during the period.
Factors that Influenced the Fund’s Performance
The Fund underperformed its benchmark during the latest6-month period, mostly due to stock selection in three sectors. First, stock selection in the retail trade sector weighed on performance. The main contributor to this was the Fund’s large position in Ulta Beauty(-27%), which, after an extended period of outperformance, gave back some of its gains in the final six months of 2019. Second, the Fund was negatively impacted by stock selection in the consumer services sector where the Fund’s holdings infor-profit university operators Strategic Education and Grand Canyon Education weighed on performance. Finally, although the Fund benefitted from its underweight position in technology services, this was not enough to overcome negative stock selection in the sector. On a positive note, stock selection in the finance, health services, and producer manufacturing sectors added to the Fund’s performance. Strong performers in these groups during the period included Carlyle Group, First Republic Bank, Ameriprise Financial, Teladoc Health, Anixter International, Hubbell, and Carlisle Cos.
Outlook and Positioning
During the period, midcap stocks, while posting strong returns, lagged their large cap peers. Returns during the period were largely driven by multiple expansion, as investor sentiment improved due to a combination of monetary policy and progress in U.S.-China trade negotiations. Central banks’ efforts to fend off risks of disinflation should continue to steepen yield curves, lifting the financial sector. Accordingly, the Fund is structured to benefit through a large overweight position in these stocks. The Fund also maintains an overweight position in the electronic technology sector, as we believe emerging technologies – including 5G, investment in cloud computing, and artificial intelligence – will prove to be secular growth drivers and should
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 higherprice-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.
benefit semiconductor holdings. Additionally, the Fund remains underweight the retail trade sector, ase-commerce and changing consumer buying patterns continue to pressure many establishedbrick-and-mortar businesses in the area. Selective ownership in this sector is focused on companies that have demonstrated resilient business models in the face of industrywide changes. The Fund also maintains a large underweight position in the commercial services sector, as we believe the evolving digital landscape will continue to pressure legacy companies in mature markets.
Roger J. Sit
Kent L. Johnson
Robert W. Sit
Portfolio Managers
| | |
| |
28 | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2019
| | | | | | | | | | | | | | | |
| | | Sit Mid Cap
Growth Fund | | Russell
Midcap®
Growth
Index1 | | Russell
Midcap®
Index2 |
| Six Month | | | | 4.64 | % | | | | 7.44 | % | | | | 7.58 | % |
| One Year | | | | 30.21 | | | | | 35.47 | | | | | 30.54 | |
| Five Year | | | | 7.70 | | | | | 11.60 | | | | | 9.33 | |
| Ten Year | | | | 11.16 | | | | | 14.24 | | | | | 13.19 | |
Since Inception (9/2/82) | | | | 11.44 | | | | | 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 recentmonth-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 higherprice-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 12/31/19: | | $18.33 Per Share |
Net Asset Value 6/30/19: | | $18.84 Per Share |
Total Net Assets: | | $171.2 Million |
Weighted Average Market Cap: | | $23.0 Billion |
TOP 10 HOLDINGS
1. TJX Cos., Inc.
2. Euronet Worldwide, Inc.
3. Ingersoll-Rand, PLC
4. DexCom, Inc.
5. Arista Networks, Inc.
6. Waste Connections, Inc.
7. Booz Allen Hamilton Holding Corp.
8. Thermo Fisher Scientific, Inc.
9. ANSYS, Inc.
10. Autodesk, Inc.
Based on total net assets as of December 31, 2019. Subject to change.
SECTOR ALLOCATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit Mid Cap Growth Fund
Investments are grouped by economic sectors.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 98.2% | | | | | | | | |
Commercial Services - 4.0% | | | | | | | | |
ASGN, Inc.* | | | 13,525 | | | | 959,869 | |
Booz Allen Hamilton Holding Corp. | | | 48,200 | | | | 3,428,466 | |
Brink’s Co. | | | 26,625 | | | | 2,414,355 | |
| | | | | | | | |
| | |
| | | | | | | 6,802,690 | |
| | | | | | | | |
Consumer Durables - 1.9% | | | | | | | | |
YETI Holdings, Inc.* | | | 91,500 | | | | 3,182,370 | |
| | | | | | | | |
ConsumerNon-Durables-1.6% | | | | | | | | |
Canada Goose Holdings, Inc.* | | | 19,100 | | | | 692,184 | |
Coca-Cola European Partners, PLC | | | 40,700 | | | | 2,070,816 | |
| | | | | | | | |
| | |
| | | | | | | 2,763,000 | |
| | | | | | | | |
Consumer Services- 7.8% | | | | | | | | |
Chegg, Inc.* | | | 60,825 | | | | 2,305,876 | |
Cinemark Holdings, Inc. | | | 45,600 | | | | 1,543,560 | |
Dunkin’ Brands Group, Inc. | | | 21,600 | | | | 1,631,664 | |
Nexstar Media Group, Inc. | | | 20,650 | | | | 2,421,212 | |
Service Corp. International | | | 55,500 | | | | 2,554,665 | |
Strategic Education, Inc. | | | 7,800 | | | | 1,239,420 | |
Vail Resorts, Inc. | | | 7,200 | | | | 1,726,776 | |
| | | | | | | | |
| | |
| | | | | | | 13,423,173 | |
| | | | | | | | |
Electronic Technology - 13.7% | | | | | | | | |
Advanced Micro Devices, Inc.* | | | 55,300 | | | | 2,536,058 | |
Applied Materials, Inc. | | | 35,475 | | | | 2,165,394 | |
Arista Networks, Inc.* | | | 17,900 | | | | 3,640,860 | |
Broadcom, Inc. | | | 9,100 | | | | 2,875,782 | |
Cabot Microelectronics Corp. | | | 10,825 | | | | 1,562,264 | |
Ciena Corp.* | | | 44,800 | | | | 1,912,512 | |
Garmin, Ltd. | | | 26,500 | | | | 2,585,340 | |
Keysight Technologies, Inc.* | | | 10,950 | | | | 1,123,798 | |
MKS Instruments, Inc. | | | 11,750 | | | | 1,292,618 | |
Monolithic Power Systems, Inc. | | | 5,400 | | | | 961,308 | |
Skyworks Solutions, Inc. | | | 23,900 | | | | 2,889,032 | |
| | | | | | | | |
| | |
| | | | | | | 23,544,966 | |
| | | | | | | | |
Energy Minerals- 0.7% | | | | | | | | |
Marathon Petroleum Corp. | | | 19,500 | | | | 1,174,875 | |
| | | | | | | | |
Finance - 9.8% | | | | | | | | |
Ameriprise Financial, Inc. | | | 7,800 | | | | 1,299,324 | |
Arthur J Gallagher & Co. | | | 18,900 | | | | 1,799,847 | |
Axis Capital Holdings, Ltd. | | | 20,500 | | | | 1,218,520 | |
Carlyle Group LP | | | 96,800 | | | | 3,105,344 | |
First Republic Bank | | | 16,550 | | | | 1,943,798 | |
Intercontinental Exchange, Inc. | | | 25,300 | | | | 2,341,515 | |
Legg Mason, Inc. | | | 35,900 | | | | 1,289,169 | |
New York Community Bancorp, Inc. | | | 107,050 | | | | 1,286,741 | |
SVB Financial Group* | | | 4,250 | | | | 1,066,920 | |
T Rowe Price Group, Inc. | | | 11,800 | | | | 1,437,712 | |
| | | | | | | | |
| | |
| | | | | | | 16,788,890 | |
| | | | | | | | |
| | | | | | | | |
| | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Health Services - 2.7% | | | | | | | | |
Encompass Health Corp. | | | 24,100 | | | | 1,669,407 | |
Teladoc Health, Inc.* | | | 34,350 | | | | 2,875,782 | |
| | | | | | | | |
| | |
| | | | | | | 4,545,189 | |
| | | | | | | | |
Health Technology - 11.5% | | | | | | | | |
Align Technology, Inc.* | | | 8,900 | | | | 2,483,456 | |
BioMarin Pharmaceutical, Inc.* | | | 20,300 | | | | 1,716,365 | |
DexCom, Inc.* | | | 16,950 | | | | 3,707,643 | |
Edwards Lifesciences Corp.* | | | 3,600 | | | | 839,844 | |
Exact Sciences Corp.* | | | 25,700 | | | | 2,376,736 | |
Insulet Corp.* | | | 11,700 | | | | 2,003,040 | |
iRhythm Technologies, Inc.* | | | 17,950 | | | | 1,222,216 | |
Jazz Pharmaceuticals, PLC* | | | 5,700 | | | | 850,896 | |
Sarepta Therapeutics, Inc.* | | | 7,600 | | | | 980,704 | |
Thermo Fisher Scientific, Inc. | | | 10,550 | | | | 3,427,378 | |
| | | | | | | | |
| | |
| | | | | | | 19,608,278 | |
| | | | | | | | |
Industrial Services - 3.5% | | | | | | | | |
Jacobs Engineering Group, Inc. | | | 27,800 | | | | 2,497,274 | |
Waste Connections, Inc. | | | 38,950 | | | | 3,536,270 | |
| | | | | | | | |
| | |
| | | | | | | 6,033,544 | |
| | | | | | | | |
Non-Energy Minerals - 1.3% | | | | | | | | |
Trex Co., Inc.* | | | 25,100 | | | | 2,255,988 | |
| | | | | | | | |
Process Industries - 3.5% | | | | | | | | |
Ecolab, Inc. | | | 15,500 | | | | 2,991,345 | |
Scotts Miracle-Gro Co. | | | 27,600 | | | | 2,930,568 | |
| | | | | | | | |
| | |
| | | | | | | 5,921,913 | |
| | | | | | | | |
Producer Manufacturing - 9.0% | | | | | | | | |
AMETEK, Inc. | | | 24,000 | | | | 2,393,760 | |
Anixter International, Inc.* | | | 4,675 | | | | 430,568 | |
Carlisle Cos., Inc. | | | 13,300 | | | | 2,152,472 | |
Dover Corp. | | | 3,000 | | | | 345,780 | |
Hubbell, Inc. | | | 16,000 | | | | 2,365,120 | |
Ingersoll-Rand, PLC | | | 31,700 | | | | 4,213,564 | |
L3Harris Technologies, Inc. | | | 12,700 | | | | 2,512,949 | |
Rockwell Automation, Inc. | | | 5,100 | | | | 1,033,617 | |
| | | | | | | | |
| | |
| | | | | | | 15,447,830 | |
| | | | | | | | |
Retail Trade - 4.2% | | | | | | | | |
TJX Cos., Inc. | | | 78,500 | | | | 4,793,210 | |
Ulta Beauty, Inc.* | | | 9,700 | | | | 2,455,458 | |
| | | | | | | | |
| | |
| | | | | | | 7,248,668 | |
| | | | | | | | |
Technology Services - 19.6% | | | | | | | | |
Altair Engineering, Inc.* | | | 24,800 | | | | 890,568 | |
ANSYS, Inc.* | | | 13,000 | | | | 3,346,330 | |
Aspen Technology, Inc.* | | | 19,900 | | | | 2,406,507 | |
Atlassian Corp., PLC* | | | 22,900 | | | | 2,755,786 | |
Autodesk, Inc.* | | | 17,900 | | | | 3,283,934 | |
Booking Holdings, Inc.* | | | 650 | | | | 1,334,924 | |
Euronet Worldwide, Inc.* | | | 29,575 | | | | 4,659,837 | |
| | | | |
See accompanying notes to financial statements. | | | | |
30 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
GoDaddy, Inc.* | | | 14,600 | | | | 991,632 | |
Guidewire Software, Inc.* | | | 15,300 | | | | 1,679,481 | |
HubSpot, Inc.* | | | 10,300 | | | | 1,632,550 | |
Paycom Software, Inc.* | | | 6,100 | | | | 1,615,036 | |
PTC, Inc.* | | | 39,600 | | | | 2,965,644 | |
Qualys, Inc.* | | | 8,950 | | | | 746,162 | |
Science Applications International Corp. | | | 25,100 | | | | 2,184,202 | |
Splunk, Inc.* | | | 20,900 | | | | 3,130,193 | |
| | | | | | | | |
| | |
| | | | | | | 33,622,786 | |
| | | | | | | | |
Transportation - 1.9% | | | | | | | | |
Alaska Air Group, Inc. | | | 26,400 | | | | 1,788,600 | |
Knight-Swift Transportation Holdings, Inc. | | | 41,600 | | | | 1,490,944 | |
| | | | | | | | |
| | |
| | | | | | | 3,279,544 | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Utilities - 1.5% | | | | | | | | |
WEC Energy Group, Inc. | | | 27,800 | | | | 2,563,994 | |
| | | | | | | | |
| | |
Total Common Stocks
(cost: $93,722,658) | | | | | | | 168,207,698 | |
| | | | | | | | |
| | |
Short-Term Securities - 2.4% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 1.49%
(cost: $4,046,502) | | | 4,046,502 | | | | 4,046,502 | |
| | | | | | | | |
| | |
Total Investments in Securities - 100.6%
(cost: $97,769,160) | | | | | | | 172,254,200 | |
Other Assets and Liabilities, net - (0.6%) | | | | | | | (1,026,060 | ) |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | $ | 171,228,140 | |
| | | | | | | | |
| * | Non-income producing security. |
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of December 31, 2019 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | | | | | |
| | | | | Investment in Securities | | |
| | | Level 1
Quoted
Price ($) | | Level 2
Other significant
observable inputs ($) | | Level 3 Significant unobservable inputs ($) | | Total ($) |
Common Stocks** | | | | 168,207,698 | | | | | — | | | | | — | | | | | 168,207,698 | |
Short-Term Securities | | | | 4,046,502 | | | | | — | | | | | — | | | | | 4,046,502 | |
| | | | |
Total: | | | | 172,254,200 | | | | | — | | | | | — | | | | | 172,254,200 | |
** For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
DECEMBER 31, 2019 | | | 31 | |
|
|
|
Sit Small Cap Dividend Growth Fund Class I and Class S |
OBJECTIVE &STRATEGY
The objective of the Sit Small Cap Dividend Growth Fund is to provide current income that exceeds the Fund’s benchmark index and that grows over a period of years. Secondarily the Fund seeks long-term capital appreciation. The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in small cap dividend-paying common stocks that have market capitalizations at the time of purchase of up to $3.0 billion, or up to the market capitalization of the largest company included in the Russell 2000® Index measured at the end of the previous twelve months ($10.3 billion as of December 31, 2019). The Fund may invest the balance of its assets in preferred stocks, convertible bonds, U.S. Treasury securities (including Treasury bills, notes and bonds),closed-end investment companies, and master limited partnerships.
Fund Performance
The Sit Small Cap Dividend Growth Fund Class I posted a +7.19% return over the last past six months ending December 31, 2019, which was roughly in line with the +7.30% return for the Russell 2000® Index. The Fund’s gross dividend yield (before deducting Fund expenses) was 2.32% as of 12/31/19, compared to a yield of 1.42% for the Russell 2000® Index.
Factors that Influenced the Fund’s Performance
Contributing favorably to performance during the6-month period were the Fund’s stock selections in the electronic technology, producer manufacturing, consumer durables, and technology services sectors. An overweight position in the electronic technology sector also helped performance. In terms of individual stocks, the best performers included: MKS Instruments, Monolithic Power Systems, Cabot Microelectronics, MSA Safety, Acushnet Holdings, Thor Industries, BRP, and ManTech International. Conversely, the Fund’s positions in health technology, retail trade, and utilities as well as a significant underweight position in health technology and heavy sector overweight in consumer services weighed on absolute and relative performance. Many of the stocks in the health technology sector arenon-dividend paying biotech companies with zero or minimal prospects of paying a dividend in the future. Accordingly, health technology sector performance was constrained by the type of companies that the Fund seeks to own (i.e., cash flow-generating enterprises that pay dividends), compared to the more speculative constituents in the benchmark. Holdings that detracted from performance included Strategic Education, Tortoise Energy Infrastructure, Covanta Holding, Vermilion Energy, and Camping World Holdings.
Outlook and Positioning
Small capitalization stocks posted strong gains over the6-month period, mainly due to valuation expansion resulting from easing trade tensions and accommodative monetary policy. We believe equity returns this year will be largely driven by earnings growth, and that dividend-paying companies will remain attractive in this environment of muted returns. Accordingly, the Fund is over weighted in those sectors where we believe earnings growth will exceed that of the market average. The Fund’s overweight positions in electronic technology, commercial
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® Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 Russell 2000® Index is an unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, an index consisting of the 3,000 largest U.S. companies based on market capitalization. It is not possible to invest directly in an index. This is the Fund’s primary index.
services, and producer manufacturing should be helped by declining recession fears, easy year-ago comparisons, and an expected uptick in capital spending and manufacturing activity. Select tech companies should also benefit, as U.S. technology capital spending continues to grow, driven by investment in cloud computing and an increase in enterprise spending. Additionally, the Fund’s position in the finance sector should benefit from a steepening yield curve driving expanding net interest margins at banks. Finally, we believe defensive “bond proxy” areas of the market, including REITs and select utilities, provide a good hedge to market risks, including the upcoming U.S. Presidential election, growing geopolitical tensions, and a potential escalation in trade tension with China. While expensive on certain valuation metrics, these stocks look attractive, given their yield advantage to both the market and prevailing U.S. Treasury yields.
Roger J. Sit Michael T. Manns
Kent L. Johnson Robert W. Sit
Portfolio Managers
| | |
| |
32 | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2019
| | | | | | | | | | | | |
| | | Sit Small Cap
Dividend
Growth Fund | | | Russell | |
| | | Class I | | | Class S | | | 2000®
Index 1 | |
| Six Month | | | 7.19 | % | | | 7.00 | % | | | 7.30 | % |
| One Year | | | 27.11 | | | | 26.70 | | | | 25.53 | |
Since Inception
(3/31/15) | | | 6.53 | | | | 6.25 | | | | 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 recentmonth-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 Russell 2000® Index is an unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, an index consisting of the 3,000 largest U.S. companies based on market capitalization. It is not possible to directly invest in an index.
PORTFOLIO SUMMARY
| | | | |
Class I: | | | | |
Net Asset Value 12/31/19: | | $12.61 | | Per Share |
Net Asset Value 6/30/19: | | $11.89 | | Per Share |
Total Net Assets: | | $12.1 | | Million |
Class S: | | | | |
Net Asset Value 12/31/19: | | $12.60 | | Per Share |
Net Asset Value 6/30/19: | | $11.88 | | Per Share |
Total Net Assets: | | $4.3 | | Million |
| | |
Weighted Average Market Cap: | | $4.7 | | Billion |
TOP 10 HOLDINGS
1. MKS Instruments, Inc.
2. Monolithic Power Systems, Inc.
3. Cabot Microelectronics Corp.
4. Strategic Education, Inc.
5. Carlyle Group LP
6. Nexstar Media Group, Inc.
7. Booz Allen Hamilton Holding Corp.
8. Encompass Health Corp.
9. KBR, Inc.
10. Scotts Miracle-Gro Co.
Based on total net assets as of December 31, 2019. Subject to change.
SECTOR ALLOCATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit Small Cap Dividend Growth Fund
Investments are grouped by economic sectors.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 96.6% | | | | | | | | |
Commercial Services-7.1% | | | | | | | | |
Booz Allen Hamilton Holding Corp. | | | 4,675 | | | | 332,533 | |
Brink’s Co. | | | 3,400 | | | | 308,312 | |
Colliers International Group, Inc. | | | 2,350 | | | | 183,230 | |
Deluxe Corp. | | | 2,700 | | | | 134,784 | |
Herman Miller, Inc. | | | 4,900 | | | | 204,085 | |
| | | | | | | | |
| | |
| | | | | | | 1,162,944 | |
| | | | | | | | |
Communications - 0.6% | | | | | | | | |
Shenandoah Telecommunications Co. | | | 2,300 | | | | 95,703 | |
| | | | | | | | |
Consumer Durables - 3.5% | | | | | | | | |
Acushnet Holdings Corp. | | | 7,300 | | | | 237,250 | |
BRP, Inc. | | | 2,175 | | | | 99,115 | |
National Presto Industries, Inc. | | | 750 | | | | 66,292 | |
Thor Industries, Inc. | | | 2,300 | | | | 170,867 | |
| | | | | | | | |
| | |
| | | | | | | 573,524 | |
| | | | | | | | |
ConsumerNon-Durables- 0.5% | | | | | | | | |
Sensient Technologies Corp. | | | 1,250 | | | | 82,612 | |
| | | | | | | | |
Consumer Services - 10.8% | | | | | | | | |
Chegg, Inc.* | | | 6,250 | | | | 236,938 | |
Cinemark Holdings, Inc. | | | 4,500 | | | | 152,325 | |
Dunkin’ Brands Group, Inc. | | | 2,625 | | | | 198,292 | |
Nexstar Media Group, Inc. | | | 2,850 | | | | 334,162 | |
Service Corp. International | | | 5,350 | | | | 246,260 | |
Strategic Education, Inc. | | | 2,290 | | | | 363,881 | |
Vail Resorts, Inc. | | | 1,000 | | | | 239,830 | |
| | | | | | | | |
| | |
| | | | | | | 1,771,688 | |
| | | | | | | | |
Electronic Technology - 9.1% | | | | | | | | |
Cabot Microelectronics Corp. | | | 2,700 | | | | 389,664 | |
MKS Instruments, Inc. | | | 4,600 | | | | 506,046 | |
Monolithic Power Systems, Inc. | | | 2,575 | | | | 458,402 | |
Power Integrations, Inc. | | | 1,400 | | | | 138,474 | |
| | | | | | | | |
| | |
| | | | | | | 1,492,586 | |
| | | | | | | | |
Energy Minerals - 0.5% | | | | | | | | |
Delek US Holdings, Inc. | | | 2,300 | | | | 77,119 | |
| | | | | | | | |
Finance - 26.4% | | | | | | | | |
American Equity Investment Life Holding Co. | | | 5,250 | | | | 157,133 | |
Axis Capital Holdings, Ltd. | | | 5,250 | | | | 312,060 | |
Carlyle Group LP | | | 10,525 | | | | 337,642 | |
CubeSmart | | | 5,250 | | | | 165,270 | |
Donegal Group, Inc. | | | 7,700 | | | | 114,114 | |
Essential Properties Realty Trust, Inc. | | | 3,400 | | | | 84,354 | |
Evercore Partners, Inc. | | | 2,800 | | | | 209,328 | |
Great Western Bancorp, Inc. | | | 3,200 | | | | 111,168 | |
Hanover Insurance Group, Inc. | | | 1,075 | | | | 146,920 | |
HCI Group, Inc. | | | 4,400 | | | | 200,860 | |
Hercules Capital, Inc. | | | 13,100 | | | | 183,662 | |
Legg Mason, Inc. | | | 6,300 | | | | 226,233 | |
Macquarie Infrastructure Corp. | | | 4,150 | | | | 177,786 | |
| | | | | | | | |
| | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
New York Community Bancorp, Inc. | | | 6,275 | | | | 75,426 | |
Old National Bancorp | | | 9,550 | | | | 174,670 | |
People’s United Financial, Inc. | | | 16,325 | | | | 275,892 | |
Physicians Realty Trust | | | 13,300 | | | | 251,902 | |
Piper Jaffray Cos | | | 2,875 | | | | 229,828 | |
QTS Realty Trust, Inc. | | | 4,350 | | | | 236,074 | |
Stifel Financial Corp. | | | 4,000 | | | | 242,600 | |
STORE Capital Corp. | | | 3,375 | | | | 125,685 | |
Wintrust Financial Corp. | | | 4,000 | | | | 283,600 | |
| | | | | | | | |
| | |
| | | | | | | 4,322,207 | |
| | | | | | | | |
Health Services-2.0% | | | | | | | | |
Encompass Health Corp. | | | 4,750 | | | | 329,032 | |
| | | | | | | | |
Health Technology - 3.8% | | | | | | | | |
AtriCure, Inc.* | | | 5,700 | | | | 185,307 | |
Atrion Corp. | | | 40 | | | | 30,060 | |
iRhythm Technologies, Inc.* | | | 1,200 | | | | 81,708 | |
PerkinElmer, Inc. | | | 1,675 | | | | 162,642 | |
STERIS, PLC | | | 1,100 | | | | 167,662 | |
| | | | | | | | |
| | |
| | | | | | | 627,379 | |
| | | | | | | | |
Industrial Services - 3.0% | | | | | | | | |
EMCOR Group, Inc. | | | 2,000 | | | | 172,600 | |
KBR, Inc. | | | 10,775 | | | | 328,638 | |
| | | | | | | | |
| | |
| | | | | | | 501,238 | |
| | | | | | | | |
Non-Energy Minerals - 1.3% | | | | | | | | |
Commercial Metals Co. | | | 3,950 | | | | 87,967 | |
PotlatchDeltic Corp. | | | 2,810 | | | | 121,589 | |
| | | | | | | | |
| | |
| | | | | | | 209,556 | |
| | | | | | | | |
Process Industries - 4.9% | | | | | | | | |
Apogee Enterprises, Inc. | | | 3,925 | | | | 127,563 | |
Domtar Corp. | | | 3,575 | | | | 136,708 | |
Huntsman Corp. | | | 4,650 | | | | 112,344 | |
Neenah, Inc. | | | 1,550 | | | | 109,166 | |
Scotts Miracle-Gro Co. | | | 3,025 | | | | 321,194 | |
| | | | | | | | |
| | |
| | | | | | | 806,975 | |
| | | | | | | | |
Producer Manufacturing- 11.4% | | | | | | | | |
Applied Industrial Technologies, Inc. | | | 1,950 | | | | 130,046 | |
Carlisle Cos, Inc. | | | 1,300 | | | | 210,392 | |
Crane Co. | | | 2,675 | | | | 231,066 | |
H&E Equipment Services, Inc. | | | 1,250 | | | | 41,788 | |
Hubbell, Inc. | | | 2,100 | | | | 310,422 | |
Lincoln Electric Holdings, Inc. | | | 2,500 | | | | 241,825 | |
MSA Safety, Inc. | | | 2,300 | | | | 290,628 | |
Oshkosh Corp. | | | 2,400 | | | | 227,160 | |
Watsco, Inc. | | | 1,050 | | | | 189,158 | |
| | | | | | | | |
| | |
| | | | | | | 1,872,485 | |
| | | | | | | | |
Retail Trade- 1.0% | | | | | | | | |
Casey’s General Stores, Inc. | | | 1,000 | | | | 158,990 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
34 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Technology Services - 3.7% | | | | | | | | |
Globant SA* | | | 1,800 | | | | 190,890 | |
ManTech International Corp. | | | 1,800 | | | | 143,784 | |
Science Applications International Corp. | | | 3,075 | | | | 267,586 | |
| | | | | | | | |
| | |
| | | | | | | 602,260 | |
| | | | | | | | |
Transportation - 3.1% | | | | | | | | |
Alaska Air Group, Inc. | | | 3,825 | | | | 259,144 | |
Knight-Swift Transportation Holdings, Inc. | | | 3,425 | | | | 122,752 | |
Marten Transport, Ltd. | | | 5,800 | | | | 124,642 | |
| | | | | | | | |
| | |
| | | | | | | 506,538 | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Utilities - 3.9% | | | | | | | | |
Black Hills Corp. | | | 2,000 | | | | 157,080 | |
Covanta Holding Corp. | | | 13,400 | | | | 198,856 | |
New Jersey Resources Corp. | | | 3,775 | | | | 168,252 | |
Spire, Inc. | | | 1,375 | | | | 114,551 | |
| | | | | | | | |
| | |
| | | | | | | 638,739 | |
| | | | | | | | |
Total Common Stocks
(cost: $12,376,223) | | | | | | | 15,831,575 | |
| | | | | | | | |
Investment Companies-1.2% | | | | | | | | |
Tortoise Energy Infrastructure Corp.
(cost: $301,643) | | | 11,425 | | | | 204,850 | |
| | | | | | | | |
| | |
Short-Term Securities- 1.6% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 1.49%
(cost: $261,459) | | | 261,459 | | | | 261,459 | |
| | | | | | | | |
| | |
Total Investments in Securities - 99.4%
(cost: $12,939,325) | | | | | | | 16,297,884 | |
Other Assets and Liabilities, net- 0.6% | | | | | | | 97,286 | |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | | $16,395,170 | |
| | | | | | | | |
| * | Non-income producing security. |
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of December 31, 2019 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | | | | | |
| | | | | Investment in Securities | | |
| | | Level 1
Quoted
Price ($) | | Level 2
Other significant
observable inputs ($) | | Level 3 Significant unobservable inputs ($) | | Total ($) |
Common Stocks** | | | | 15,831,575 | | | | | — | | | | | — | | | | | 15,831,575 | |
Investment Companies | | | | 204,850 | | | | | — | | | | | — | | | | | 204,850 | |
Short-Term Securities | | | | 261,459 | | | | | — | | | | | — | | | | | 261,459 | |
| | | | |
Total: | | | | 16,297,884 | | | | | — | | | | | — | | | | | 16,297,884 | |
** For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
DECEMBER 31, 2019 | | | 35 | |
|
|
|
Sit Small Cap Growth Fund |
OBJECTIVE &STRATEGY
The objective of the Sit Small Cap Growth Fund is to maximize long-term capital appreciation. The Fund seeks to achieve its objective by investing, under normal market conditions, at least 80% of its net assets in common stocks of companies with market capitalizations at the time of purchase of up to $3.0 billion, or up to the market capitalization of the largest company included in the Russell 2000® Index measured at the end of the previous twelve months ($10.3 billion as of December 31, 2019).
The Adviser invests in a diversified group of growing small companies it believes exhibit the potential for superior growth. The Adviser believes that a company’s earnings growth is the primary determinant of its potential long-term return and evaluates a company’s potential for above average long-term earnings and revenue growth.
Fund Performance
The Sit Small Cap Growth Fund return was +3.50% over the6-month period ending December 31, 2019. This compares to a +6.75% return for the Russell 2000® Growth Index and a +7.30% gain for the Russell 2000® Index.
Factors that Influenced the Fund’s Performance
The majority of the Fund’s underperformance during the period can be explained by its stock selection and underweight position in the health technology sector. The Fund remains underweight this sector in excess of 1000 basis points. Here, the Fund’s underweight position is concentrated in biotechnology stocks. Many of these companies, which outperformed the benchmark over the period, are years away from becoming profitable. While we strive to outperform market indices under any market backdrop, there are times when not investing in these highly speculative companies will constrain results. The Fund’s overweight positions and stock selections in consumer services and technology services also weighed on performance. Conversely, benefitting returns, the Fund’s consumer durables positions (Yeti Holdings, Acushnet Holdings, Thor Industries, and BRP) posted strong returns during the period. In addition, performance was helped by stock selection in electronic technology (Skyworks Solutions, MKS Instruments, and Monolithic Power Systems). Producer manufacturing, which benefitted from an expected uptick in industrial production, also added to returns.
Outlook and Positioning
In terms of sector positioning, we expectpro-growth/cyclical areas to continue to outperform the market, as recession fears continue to recede. Produce manufacturing and technology stocks stand to benefit especially, based on attractive valuations and the potential for an upward earnings inflection. Within technology, we expect investor enthusiasm for a 5G wireless spending cycle to boost select semiconductor companies as well as firms leveraged to increasingly complex wireless ecosystems. The U.S. consumer remains a key driver of domestic growth, with a strong holiday shopping season lifting investor spirits and bolstering projections that consumer spending will sustain solid U.S. economic growth. Accordingly, the Fund retains significant overweight positions in the consumer durables and consumer
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 higherprice-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.
services sectors. Conversely, we continue to maintain a significant underweight position in health technology, as many of the biotech companies in the Russell 2000® Growth Index are reliant on debt or equity offerings to fund operations and rely on binary events, such as clinical trials and acquisition potential, to drive stock performance. The Fund maintains a preference for investing in proven, cash-generating companies. With small capitalization valuations at the high end of their historical levels, we believe stock price appreciation will largely come from earnings growth. Hence, the Fund is positioned towards more visible growth companies, which we expect to generate above-average near- and long-term earnings growth.
| | |
Roger J. Sit | | Kent L. Johnson |
Robert W. Sit | | |
Portfolio Managers | | |
| | |
| |
36 | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2019
| | | | | | | | | | | | | | | |
| | | Sit
Small Cap
Growth
Fund | | Russell 2000®
Growth Index 1 | | Russell
2000®
Index 2 |
| Six Month | | | | 3.50 | % | | | | 6.75 | % | | | | 7.30 | % |
| One Year | | | | 29.17 | | | | | 28.48 | | | | | 25.53 | |
| Five Year | | | | 6.11 | | | | | 9.34 | | | | | 8.23 | |
| Ten Year | | | | 10.40 | | | | | 13.01 | | | | | 11.83 | |
Since Inception (7/1/94) | | | | 10.00 | | | | | 8.30 | | | | | 9.35 | |
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 recentmonth-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 higherprice-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 12/31/19: | | $55.64 | | Per Share |
Net Asset Value 6/30/19: | | $55.46 | | Per Share |
Total Net Assets: | | $100.7 | | Million |
Weighted Average Market Cap: | | $7.9 | | Billion |
TOP 10 HOLDINGS
1. Euronet Worldwide, Inc.
2. Waste Connections, Inc.
3. Globant SA
4. Paycom Software, Inc.
5. Booz Allen Hamilton Holding Corp.
6. YETI Holdings, Inc.
7. Monolithic Power Systems, Inc.
8. Nexstar Media Group, Inc.
9. ScottsMiracle-Gro Co.
10. ASGN, Inc.
Based on total net assets as of December 31, 2019. Subject to change.
SECTOR ALLOCATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit Small Cap Growth Fund
Investments are grouped by economic sectors.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 97.5% | | | | | | | | |
Commercial Services - 6.2% | | | | | | | | |
ASGN, Inc.* | | | 25,100 | | | | 1,781,347 | |
Booz Allen Hamilton Holding Corp. | | | 26,500 | | | | 1,884,945 | |
Brink’s Co. | | | 16,000 | | | | 1,450,880 | |
Colliers International Group, Inc. | | | 14,225 | | | | 1,109,123 | |
| | | | | | | | |
| | |
| | | | | | | 6,226,295 | |
| | | | | | | | |
Communications - 0.6% | | | | | | | | |
Shenandoah Telecommunications Co. | | | 13,300 | | | | 553,413 | |
| | | | | | | | |
Consumer Durables- 6.0% | | | | | | | | |
Acushnet Holdings Corp. | | | 38,400 | | | | 1,248,000 | |
BRP, Inc. | | | 12,450 | | | | 567,346 | |
Take-Two Interactive Software, Inc.* | | | 12,800 | | | | 1,567,104 | |
Thor Industries, Inc. | | | 11,200 | | | | 832,048 | |
YETI Holdings, Inc.* | | | 53,700 | | | | 1,867,686 | |
| | | | | | | | |
| | |
| | | | | | | 6,082,184 | |
| | | | | | | | |
ConsumerNon-Durables - 1.2% | | | | | | | | |
Canada Goose Holdings, Inc.* | | | 12,100 | | | | 438,504 | |
Primo Water Corp.* | | | 65,800 | | | | 738,605 | |
| | | | | | | | |
| | |
| | | | | | | 1,177,109 | |
| | | | | | | | |
Consumer Services - 9.6% | | | | | | | | |
Chegg, Inc.* | | | 35,825 | | | | 1,358,126 | |
Cinemark Holdings, Inc. | | | 33,600 | | | | 1,137,360 | |
Dunkin’ Brands Group, Inc. | | | 12,800 | | | | 966,912 | |
Grand Canyon Education, Inc.* | | | 3,600 | | | | 344,844 | |
Nexstar Media Group, Inc. | | | 15,225 | | | | 1,785,131 | |
Service Corp. International | | | 28,600 | | | | 1,316,458 | |
Strategic Education, Inc. | | | 9,100 | | | | 1,445,990 | |
Vail Resorts, Inc. | | | 5,600 | | | | 1,343,048 | |
| | | | | | | | |
| | |
| | | | | | | 9,697,869 | |
| | | | | | | | |
Electronic Technology - 9.1% | | | | | | | | |
Arista Networks, Inc.* | | | 7,800 | | | | 1,586,520 | |
Cabot Microelectronics Corp. | | | 8,825 | | | | 1,273,624 | |
Ciena Corp.* | | | 26,250 | | | | 1,120,612 | |
MKS Instruments, Inc. | | | 15,750 | | | | 1,732,658 | |
Monolithic Power Systems, Inc. | | | 10,200 | | | | 1,815,804 | |
Skyworks Solutions, Inc. | | | 13,200 | | | | 1,595,616 | |
| | | | | | | | |
| | |
| | | | | | | 9,124,834 | |
| | | | | | | | |
Energy Minerals - 1.4% | | | | | | | | |
Delek US Holdings, Inc. | | | 21,300 | | | | 714,189 | |
Marathon Petroleum Corp. | | | 11,926 | | | | 718,542 | |
| | | | | | | | |
| | |
| | | | | | | 1,432,731 | |
| | | | | | | | |
Finance - 4.7% | | | | | | | | |
Axis Capital Holdings, Ltd. | | | 12,500 | | | | 743,000 | |
First Republic Bank | | | 6,400 | | | | 751,680 | |
Legg Mason, Inc. | | | 31,800 | | | | 1,141,938 | |
| | | | | | | | |
| | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Physicians Realty Trust | | | 49,000 | | | | 928,060 | |
SVB Financial Group* | | | 4,575 | | | | 1,148,508 | |
| | | | | | | | |
| | |
| | | | | | | 4,713,186 | |
| | | | | | | | |
Health Services - 2.7% | | | | | | | | |
Encompass Health Corp. | | | 14,600 | | | | 1,011,342 | |
Teladoc Health, Inc.* | | | 20,300 | | | | 1,699,516 | |
| | | | | | | | |
| | |
| | | | | | | 2,710,858 | |
| | | | | | | | |
Health Technology - 12.3% | | | | | | | | |
Align Technology, Inc.* | | | 4,650 | | | | 1,297,536 | |
AtriCure, Inc.* | | | 33,700 | | | | 1,095,587 | |
Bio-Techne Corp. | | | 4,800 | | | | 1,053,648 | |
Exact Sciences Corp.* | | | 15,700 | | | | 1,451,936 | |
Insulet Corp.* | | | 4,950 | | | | 847,440 | |
iRhythm Technologies, Inc.* | | | 17,600 | | | | 1,198,384 | |
Kindred Biosciences, Inc.* | | | 58,725 | | | | 497,988 | |
PerkinElmer, Inc. | | | 8,400 | | | | 815,640 | |
Sarepta Therapeutics, Inc.* | | | 13,400 | | | | 1,729,136 | |
STAAR Surgical Co.* | | | 13,350 | | | | 469,520 | |
STERIS, PLC | | | 9,100 | | | | 1,387,022 | |
Wright Medical Group NV* | | | 18,500 | | | | 563,880 | |
| | | | | | | | |
| | |
| | | | | | | 12,407,717 | |
| | | | | | | | |
Industrial Services - 6.3% | | | | | | | | |
Advanced Disposal Services, Inc.* | | | 48,100 | | | | 1,581,047 | |
EMCOR Group, Inc. | | | 15,800 | | | | 1,363,540 | |
KBR, Inc. | | | 43,500 | | | | 1,326,750 | |
Waste Connections, Inc. | | | 23,100 | | | | 2,097,249 | |
| | | | | | | | |
| | |
| | | | | | | 6,368,586 | |
| | | | | | | | |
Non-Energy Minerals - 1.7% | | | | | | | | |
Trex Co., Inc.* | | | 18,700 | | | | 1,680,756 | |
| | | | | | | | |
Process Industries - 3.1% | | | | | | | | |
Apogee Enterprises, Inc. | | | 23,600 | | | | 767,000 | |
Domtar Corp. | | | 15,800 | | | | 604,192 | |
ScottsMiracle-Gro Co. | | | 16,800 | | | | 1,783,824 | |
| | | | | | | | |
| | |
| | | | | | | 3,155,016 | |
| | | | | | | | |
Producer Manufacturing - 9.8% | | | | | | | | |
Anixter International, Inc.* | | | 2,700 | | | | 248,670 | |
Crane Co. | | | 15,400 | | | | 1,330,252 | |
H&E Equipment Services, Inc. | | | 7,650 | | | | 255,740 | |
Hubbell, Inc. | | | 10,000 | | | | 1,478,200 | |
IDEX Corp. | | | 6,100 | | | | 1,049,200 | |
Lincoln Electric Holdings, Inc. | | | 11,700 | | | | 1,131,741 | |
MSA Safety, Inc. | | | 12,700 | | | | 1,604,772 | |
Oshkosh Corp. | | | 13,800 | | | | 1,306,170 | |
Rexnord Corp.* | | | 17,650 | | | | 575,743 | |
Watsco, Inc. | | | 5,050 | | | | 909,758 | |
| | | | | | | | |
| | |
| | | | | | | 9,890,246 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
38 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Retail Trade - 1.4% | | | | | | | | |
Casey’s General Stores, Inc. | | | 4,300 | | | | 683,657 | |
Ulta Beauty, Inc. * | | | 3,050 | | | | 772,077 | |
| | | | | | | | |
| | |
| | | | | | | 1,455,734 | |
| | | | | | | | |
Technology Services - 18.3% | | | | | | | | |
Altair Engineering, Inc. * | | | 29,983 | | | | 1,076,690 | |
ANSYS, Inc. * | | | 4,900 | | | | 1,261,309 | |
Aspen Technology, Inc. * | | | 14,500 | | | | 1,753,485 | |
Euronet Worldwide, Inc. * | | | 16,600 | | | | 2,615,496 | |
Globant SA * | | | 19,250 | | | | 2,041,462 | |
GoDaddy, Inc. * | | | 15,025 | | | | 1,020,498 | |
Guidewire Software, Inc. * | | | 9,000 | | | | 987,930 | |
HubSpot, Inc. * | | | 9,450 | | | | 1,497,825 | |
Paycom Software, Inc. * | | | 7,450 | | | | 1,972,462 | |
PTC, Inc. * | | | 17,600 | | | | 1,318,064 | |
Qualys, Inc. * | | | 10,050 | | | | 837,868 | |
Science Applications International Corp. | | | 14,800 | | | | 1,287,896 | |
Talend SA, ADR * | | | 19,100 | | | | 747,001 | |
| | | | | | | | |
| | |
| | | | | | | 18,417,986 | |
| | | | | | | | |
Transportation - 2.0% | | | | | | | | |
Alaska Air Group, Inc. | | | 11,500 | | | | 779,125 | |
Knight-Swift Transportation Holdings, Inc. | | | 13,500 | | | | 483,840 | |
Marten Transport, Ltd. | | | 33,050 | | | | 710,244 | |
| | | | | | | | |
| | |
| | | | | | | 1,973,209 | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Utilities - 1.1% | | | | | | | | |
Fortis, Inc. | | | 12,107 | | | | 502,683 | |
Spire, Inc. | | | 7,525 | | | | 626,908 | |
| | | | | | | | |
| | |
| | | | | | | 1,129,591 | |
| | | | | | | | |
| | |
Total Common Stocks
(cost: $59,916,476) | | | | | | | 98,197,320 | |
| | | | | | | | |
| | |
Short-Term Securities - 2.9% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 1.49%
(cost: $2,961,827) | | | 2,961,827 | | | | 2,961,827 | |
| | | | | | | | |
Total Investments in Securities - 100.4%
(cost: $62,878,303) | | | | | | | 101,159,147 | |
Other Assets and Liabilities, net - (0.4%) | | | | | | | (440,184 | ) |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | | $100,718,963 | |
| | | | | | | | |
| * | Non-income producing security. |
ADR — American Depositary Receipt
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of December 31, 2019 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | | | | | |
| | | | | Investment in Securities | | |
| | | Level 1
Quoted
Price ($) | | Level 2
Other significant
observable inputs ($) | | Level 3 Significant unobservable inputs ($) | | Total ($) |
Common Stocks ** | | | | 98,197,320 | | | | | — | | | | | — | | | | | 98,197,320 | |
Short-Term Securities | | | | 2,961,827 | | | | | — | | | | | — | | | | | 2,961,827 | |
Total: | | | | 101,159,147 | | | | | — | | | | | — | | | | | 101,159,147 | |
** For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
DECEMBER 31, 2019 | | | 39 | |
|
|
|
Sit International Growth Fund |
OBJECTIVE STRATEGY
The objective of the Sit International Growth Fund is long-term growth. The Fund seeks to achieve its objective by investing at least 90% of its net assets in common stocks of growth companies domiciled outside the United States. In selecting investments for the Fund, the Adviser begins by selecting countries or regions in which to invest by considering several factors affecting the economy and equity market of foreign countries and regions. After the country and regional allocations are determined, the Adviser seeks industries and sectors that it believes have earnings growth prospects that are greater than the average. Within the selected industries and sectors, the Adviser invests in foreign growth-oriented companies it believes exhibit the potential for superior growth.
Fund Performance
The Sit International Growth Fund shares underperformed the MSCI EAFE Index for the6-month period ended December 31, 2019. The Fund’s shares appreciated +5.55% versus a return of + 7. 01% for the MSCI EAFE Index.
Factors that Influenced the Fund’s Performance
Contributing favorably to performance during the6-month period were the Fund’s holdings in the retailing (Alibaba Group and Inditex), diversified financials (London Stock Exchange and Partners Group), and energy (Suncor Energy) industries. Conversely, the holdings in pharmaceuticals (Canopy Growth, Cronos Group, and CSL), software & services (Euronet Worldwide and Atlassian), and insurance (Prudential plc, Ping An Insurance, and AIA Group) detracted from absolute and relative performance.
Geographically, the regions of Asia Pacificex-Japan (Alibaba Group, CSPC Pharmaceutical Group, and Broadcom), Euroland (Schneider Electric, CRH plc, and Inditex), andNon-Euroland (Garmin, Logitech, and Partners Group) added value due to stock selection during thesix-month period. Conversely, holdings in the United Kingdom (Cineworld Group, Coca-Cola European Partners plc, and Prudential plc) and Japan (Suzuki Motor and Shiseido) negatively impacted absolute and relative performance.
Outlook and Positioning
From a global perspective, we continue to favor Asiaex-Japan, at the expense of Japan, given the stronger demographic growth profile. We remain underweight Japan due to continued concern about the country’s structural challenges. An aging population, high national debt levels, and a rigid labor market remain major obstacles to sustainablelong-run growth. While we’ve seen some economic improvement recently in Europe, we remain very cautious on the sustainability of the marginal improvement. The structural issues, populism movement, uncertain consumer, and the inability of the European Central Bank or Bank of England to stimulate the region all persist. Previously, we noted that we preferred the euro area to that of the United Kingdom, given the Brexit uncertainty. While we now have some perceived clarity on the timing of Brexit, we remain cautious, as uncertainty will remain elevated until all the details are worked out. Therefore, we still prefer the euro area to that of the United Kingdom.
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 Index and MSCI EAFE Growth Index. The primary index used to compare the Fund’s performance was changed to the MSCI EAFE Index from the MSCI EAFE Growth Index because the Investment Adviser believes that the MSCI EAFE Index more accurately reflects the Fund’s investment objectives and strategies. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 MSCI EAFE Index (Europe, Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that measures the equity market performance of developed markets, excluding the US & Canada. This is the Fund’s primary index.
Our sector strategy remains unchanged. We prefer the technology services sector, given the better earnings growth projections relative to other sectors in 2020. We continue to underweight the banking industry, given the poor interest rate environment. In looking at the consumer space, we are more apt to be invested in discretionary stocks at the expense of defensive companies, as their growth profile is more favorable. Health care remains a market weight, as we like the sector’s defensive nature and long-term prospects, but believe there are some risks with the upcoming elections. Our emphasis is on pharmaceuticals with attractive pipelines.
Roger J. Sit Tasha M. Murdoff
Portfolio Managers
| | |
|
40 | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of December 31, 2019
| | | | | | | | | | |
| | | Sit
International
Growth
Fund | | MSCI EAFE
Index1 |
| Six Month | | | | 5.55 | % | | | | 7.01 | % |
| One Year | | | | 26.17 | | | | | 22.01 | |
| Five Year | | | | 5.10 | | | | | 5.67 | |
| Ten Year | | | | 4.89 | | | | | 5.50 | |
Since Inception (11/1/91) | | | | 4.10 | | | | | 5.41 | |
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 recentmonth-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains and all fee waivers. Without the fee waivers total return and yield figures would have been lower. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 MSCI EAFE Index (Europe, Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that measures the equity market performance of developed markets, excluding the US &Canada.
FUND DIVERSIFICATION - BY REGION
| | | | | | | | | | |
| | | Sit Int’l
Growth Fund | | MSCI EAFE
Index |
| Europe | | | | 58.1 | % | | | | 63.1 | % |
| Asia | | | | 29.4 | | | | | 36.4 | |
| North America | | | | 9.2 | | | | | — | |
| Latin America | | | | 1.9 | | | | | — | |
| Africa/Middle East | | | | — | | | | | 0.5 | |
| Cash & Other Net Assets | | | | 1.4 | | | | | — | |
Based on total net assets as of December 31, 2019. Subject to change.
PORTFOLIO SUMMARY
| | | | |
Net Asset Value 12/31/19: | | $17.91 | | Per Share |
Net Asset Value 6/30/19: | | $17.13 | | Per Share |
Total Net Assets: | | $24.3 | | Million |
Weighted Average Market Cap: | | $83.1 | | Billion |
TOP 10 HOLDINGS
1. Nestle SA
2. Allianz SE
3. adidas AG
4. London Stock Exchange Group, PLC
5. Schneider Electric SE
6. ASML Holding NV
7. Alibaba Group Holding, Ltd., ADR
8. Euronet Worldwide, Inc.
9. Safran SA
10. Iberdrola SA
Based on total net assets as of December 31, 2019. Subject to change.
SECTOR ALLOCATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit International Growth Fund
Investments are grouped by geographic region.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 97.3% | | | | | | | | |
Asia - 28.1% | | | | | | | | |
Australia - 4.5% | | | | | | | | |
Amcor, Ltd. | | | 12,100 | | | | 132,207 | |
Atlassian Corp., PLC* | | | 2,500 | | | | 300,850 | |
Macquarie Group, Ltd. | | | 2,600 | | | | 251,514 | |
Rio Tinto, PLC, ADR | | | 4,400 | | | | 261,184 | |
Westpac Banking Corp., ADR | | | 8,300 | | | | 140,934 | |
| | | | | | | | |
| | |
| | | | | | | 1,086,689 | |
| | | | | | | | |
China/Hong Kong - 10.3% | | | | | | | | |
AIA Group, Ltd. | | | 32,200 | | | | 338,021 | |
Alibaba Group Holding, Ltd., ADR* | | | 2,350 | | | | 498,435 | |
Baidu, Inc., ADR* | | | 1,525 | | | | 192,760 | |
China Tower Corp., Ltd. | | | 1,136,000 | | | | 250,750 | |
CSPC Pharmaceutical Group, Ltd. | | | 88,000 | | | | 209,828 | |
ENN Energy Holdings, Ltd. | | | 18,400 | | | | 201,065 | |
Ping An Insurance Group Co. of China, Ltd. | | | 33,500 | | | | 395,949 | |
Tencent Holdings, Ltd. | | | 9,000 | | | | 433,813 | |
| | | | | | | | |
| | |
| | | | | | | 2,520,621 | |
| | | | | | | | |
Japan - 9.1% | | | | | | | | |
Astellas Pharma, Inc. | | | 14,300 | | | | 246,109 | |
Keyence Corp. | | | 1,000 | | | | 354,240 | |
Recruit Holdings Co., Ltd. | | | 11,200 | | | | 422,519 | |
Shiseido Co., Ltd. | | | 4,100 | | | | 293,647 | |
Sony Corp., ADR | | | 6,300 | | | | 428,400 | |
Terumo Corp. | | | 13,100 | | | | 468,395 | |
| | | | | | | | |
| | |
| | | | | | | 2,213,310 | |
| | | | | | | | |
Singapore - 2.2% | | | | | | | | |
DBS Group Holdings, Ltd. | | | 15,600 | | | | 300,181 | |
Singapore Technologies Engineering, Ltd. | | | 78,400 | | | | 229,671 | |
| | | | | | | | |
| | |
| | | | | | | 529,852 | |
| | | | | | | | |
South Korea - 2.0% | | | | | | | | |
LG Chem, Ltd. | | | 975 | | | | 267,683 | |
Samsung Electronics Co., Ltd., GDR | | | 185 | | | | 220,705 | |
| | | | | | | | |
| | |
| | | | | | | 488,388 | |
| | | | | | | | |
Europe - 58.1% | | | | | | | | |
France - 8.0% | | | | | | | | |
AXA SA | | | 11,750 | | | | 330,951 | |
Dassault Systemes SA | | | 2,625 | | | | 431,513 | |
Safran SA | | | 3,200 | | | | 494,089 | |
Schneider Electric SE | | | 5,000 | | | | 513,180 | |
Talend SA, ADR* | | | 4,900 | | | | 191,639 | |
| | | | | | | | |
| | |
| | | | | | | 1,961,372 | |
| | | | | | | | |
| | | | | | | | |
| | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Germany- 6.5% | | | | | | | | |
adidas AG | | | 1,630 | | | | 529,864 | |
Allianz SE | | | 2,250 | | | | 551,206 | |
Aurelius SE & Co. | | | 4,660 | | | | 203,859 | |
Siemens AG | | | 2,225 | | | | 290,860 | |
| | | | | | | | |
| | |
| | | | | | | 1,575,789 | |
| | | | | | | | |
Ireland - 2.2% | | | | | | | | |
CRH, PLC, ADR | | | 6,100 | | | | 246,013 | |
STERIS, PLC | | | 1,950 | | | | 297,219 | |
| | | | | | | | |
| | |
| | | | | | | 543,232 | |
| | | | | | | | |
Netherlands - 4.0% | | | | | | | | |
ASML Holding NV | | | 1,700 | | | | 503,098 | |
ING Groep NV | | | 16,000 | | | | 191,821 | |
Koninklijke Philips NV | | | 5,750 | | | | 280,600 | |
| | | | | | | | |
| | |
| | | | | | | 975,519 | |
| | | | | | | | |
Spain - 4.2% | | | | | | | | |
Cellnex Telecom SA | | | 6,123 | | | | 263,533 | |
Iberdrola SA | | | 45,900 | | | | 472,644 | |
Industria de Diseno Textil SA | | | 7,900 | | | | 278,693 | |
| | | | | | | | |
| | |
| | | | | | | 1,014,870 | |
| | | | | | | | |
Sweden - 0.9% | | | | | | | | |
Hexagon AB | | | 3,800 | | | | 212,996 | |
| | | | | | | | |
Switzerland- 14.7% | | | | | | | | |
Garmin, Ltd. | | | 3,600 | | | | 351,216 | |
Interroll Holding AG | | | 120 | | | | 269,684 | |
Logitech International SA | | | 8,125 | | | | 383,175 | |
Lonza Group AG | | | 1,075 | | | | 392,323 | |
Nestle SA | | | 6,600 | | | | 714,557 | |
Novartis AG | | | 4,325 | | | | 410,692 | |
Partners Group Holding AG | | | 385 | | | | 353,016 | |
Roche Holding AG | | | 1,320 | | | | 428,270 | |
Zurich Insurance Group AG | | | 680 | | | | 279,012 | |
| | | | | | | | |
| | |
| | | | | | | 3,581,945 | |
| | | | | | | | |
United Kingdom - 17.6% | | | | | | | | |
Ashtead Group, PLC | | | 9,600 | | | | 306,970 | |
AstraZeneca, PLC, ADR | | | 8,300 | | | | 413,838 | |
BAE Systems, PLC | | | 52,600 | | | | 393,521 | |
Cineworld Group, PLC | | | 99,900 | | | | 289,932 | |
Coca-Cola European Partners, PLC | | | 5,400 | | | | 274,752 | |
Diageo, PLC, ADR | | | 2,775 | | | | 467,365 | |
DS Smith, PLC | | | 63,600 | | | | 323,670 | |
HomeServe, PLC | | | 15,000 | | | | 251,146 | |
London Stock Exchange Group, PLC | | | 5,100 | | | | 523,552 | |
Reckitt Benckiser Group, PLC | | | 3,100 | | | | 251,674 | |
RELX, PLC | | | 14,700 | | | | 370,344 | |
Royal Dutch Shell, PLC, ADR - Class A | | | 4,500 | | | | 265,410 | |
Royal Dutch Shell, PLC, ADR - Class B | | | 2,400 | | | | 143,928 | |
| | | | | | | | |
| | |
| | | | | | | 4,276,102 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
42 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Latin America - 1.9% | | | | | | | | |
Argentina - 1.9% | | | | | | | | |
Globant SA* | | | 4,350 | | | | 461,317 | |
| | | | | | | | |
North America - 9.2% | | | | | | | | |
Canada - 4.7% | | | | | | | | |
Alimentation Couche-Tard, Inc. | | | 5,200 | | | | 165,024 | |
BRP, Inc. | | | 2,925 | | | | 133,259 | |
Colliers International Group, Inc. | | | 1,600 | | | | 124,752 | |
Suncor Energy, Inc. | | | 13,100 | | | | 429,680 | |
Waste Connections, Inc. | | | 3,250 | | | | 295,067 | |
| | | | | | | | |
| | |
| | | | | | | 1,147,782 | |
| | | | | | | | |
United States - 4.5% | | | | | | | | |
Broadcom, Inc. | | | 1,025 | | | | 323,920 | |
Euronet Worldwide, Inc.* | | | 3,150 | | | | 496,314 | |
Mondelez International, Inc. | | | 4,800 | | | | 264,384 | |
| | | | | | | | |
| | |
| | | | | | | 1,084,618 | |
| | | | | | | | |
Total Common Stocks
(cost: $17,683,927) | | | | | | | 23,674,402 | |
| | | | | | | | |
Investment Companies - 1.3% | | | | | | | | |
iShares MSCI India ETF
(cost: $258,887) | | | 8,700 | | | | 305,805 | |
| | | | | | | | |
| | |
Short-Term Securities - 1.2% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 1.49%
(cost: $302,785) | | | 302,785 | | | | 302,785 | |
| | | | | | | | |
| | |
Total Investments in Securities - 99.8%
(cost: $18,245,599) | | | | | | | 24,282,992 | |
Other Assets and Liabilities, net - 0.2% | | | | | | | 39,069 | |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | | $24,322,061 | |
| | | | | | | | |
| * | Non-income producing security. |
ADR — American Depositary Receipt
GDR — Global Depositary Receipt
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
| | | | |
See accompanying notes to financial statements. | | | | |
DECEMBER 31, 2019 | | | 43 | |
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit International Growth Fund (Continued)
A summary of the levels for the Fund’s investments as of December 31, 2019 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | | | | | |
| | | | | Investment in Securities | | |
| | | Level 1
Quoted
Price ($) | | Level 2
Other significant
observable inputs ($) | | Level 3 Significant unobservable inputs ($) | | Total ($) |
Common Stocks | | | | | | | | | | | | | | | | | | | | |
Argentina | | | | 461,317 | | | | | — | | | | | — | | | | | 461,317 | |
Australia | | | | 1,086,689 | | | | | — | | | | | — | | | | | 1,086,689 | |
Canada | | | | 1,147,782 | | | | | — | | | | | — | | | | | 1,147,782 | |
China/Hong Kong | | | | 2,520,621 | | | | | — | | | | | — | | | | | 2,520,621 | |
France | | | | 1,961,372 | | | | | — | | | | | — | | | | | 1,961,372 | |
Germany | | | | 1,575,789 | | | | | — | | | | | — | | | | | 1,575,789 | |
Ireland | | | | 543,232 | | | | | — | | | | | — | | | | | 543,232 | |
Japan | | | | 2,213,310 | | | | | — | | | | | — | | | | | 2,213,310 | |
Netherlands | | | | 975,519 | | | | | — | | | | | — | | | | | 975,519 | |
Singapore | | | | 529,852 | | | | | — | | | | | — | | | | | 529,852 | |
South Korea | | | | 488,388 | | | | | — | | | | | — | | | | | 488,388 | |
Spain | | | | 1,014,870 | | | | | — | | | | | — | | | | | 1,014,870 | |
Sweden | | | | 212,996 | | | | | — | | | | | — | | | | | 212,996 | |
Switzerland | | | | 3,581,945 | | | | | — | | | | | — | | | | | 3,581,945 | |
United Kingdom | | | | 4,276,102 | | | | | — | | | | | — | | | | | 4,276,102 | |
United States | | | | 1,084,618 | | | | | — | | | | | — | | | | | 1,084,618 | |
Investment Companies | | | | 305,805 | | | | | — | | | | | — | | | | | 305,805 | |
Short-Term Securities | | | | 302,785 | | | | | — | | | | | — | | | | | 302,785 | |
| | | | |
Total: | | | | 24,282,992 | | | | | — | | | | | — | | | | | 24,282,992 | |
Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
44 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
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|
|
|
Sit Developing Markets Growth Fund |
OBJECTIVE & STRATEGY
The objective of the Sit Developing Markets Growth Fund is to maximize long-term capital appreciation. The Fund seeks to achieve its objective by investing at least 80% of its net assets in common stocks of companies domiciled or operating in a developing market. In selecting investments for the Fund, the Adviser begins by selecting countries or regions in which to invest by considering several factors affecting the economy and equity market of foreign countries and regions. After the country and regional allocations are determined, the Adviser seeks industries and sectors that appear to have strong earnings growth prospects. Within the selected industries and sectors, the Adviser invests in foreign growth-oriented companies it believes exhibit the potential for superior growth.
Fund Performance
The Sit Developing Markets Growth Fund increased +6.47% for the6-month period ended December 31, 2019, outperforming the return of +5.67% for the MSCI Emerging Markets Index.
Factors that Influenced the Fund’s Performance
Contributing favorably to performance during the6-month period were the Fund’s holdings in the consumer services (TAL Education), technology hardware & equipment (Skyworks Solutions and Hon Hai Precision), and pharmaceuticals (CSPC Pharmaceutical) industries. Conversely, the holdings in software & services (owning PagSeguro Digital and Prosus N.V., and not owning NAVER), banks (Banco Santander-Chile), and semiconductors (not owning SK hynix and MediaTek) hurt performance.
Geographically, stock selection in the Africa/Mideast region added value, while stock selection in the Latin America and Asia Pacificex-Japan regions negatively impacted performance. By country, our exposure to China, South Africa, and the United States aided relative outperformance, but Brazil, Hong Kong, and Korea impacted performance adversely. Emerging Market equities performance was driven by the imminent U.S.-China “Phase One” trade agreement, improving global economic growth, and central bank easing.
Outlook and Positioning
We believe that the U.S.-China trade deal could be a turning point for U.S.-China trade tensions and expect thede-escalation to have a positive impact on both Chinese and global economic growth. Still, the longer-term trend in China’s economic growth is downward, as structural adjustments in fiscal, financial, corporate, and household areas will continue to limit growth. In India, GDP growth continues to slow, but the recent catalysts of lower corporate taxes, relaxed foreign direct investment rules, initiatives to increase credit to the private sector, and cuts in interest rates should gradually filter through to the economy. South Korea’s economy will benefit from improving trade, as exports represent over 40% of GDP and about 70% of exports to China are for intermediate use. Brazil’s pace of growth remains sluggish, as the recovery in domestic demand and investment growth have been slow. In Mexico, the recent ratification of the U.S.-Mexico-Canada Agreement by the U.S. Senate is a crucial milestone in providing clarity between these countries. However, the economic outlook in Mexico remains bleak due to weak domestic demand and investment.
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.
From a global perspective, we continue to prefer Asia Pacificex-Japan, primarily China, and to remain underweight Latin America. China’s projected economic growth of about +6% still stands out relative to other major economies. Our China investment strategy remains on “new economy” opportunities ine-commerce, healthcare, and information technology. India’s recently-introduced stimulus measures should support economic growth. Therefore, our India holdings are concentrated in the more economically sensitive areas of consumer, financials, energy, information services, and industrials. In South Korea, the economy should benefit from the U.S.-China trade deal, so we like exporters of computer chips, electrical machinery, and smartphones. Our underweights in Brazil and Mexico are because of their grim economic growth outlooks. Our Brazil investments are in the consumer and financial sectors. In Mexico, a bright spot is consumer staples, whose earnings should rise due to the recent hike in the minimum wage.
Roger J. Sit Raymond E. Sit
Portfolio Managers
| | |
| |
46 | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT |
COMPARATIVE RATES OF RETURN
as of December 31, 2019
| | | | | | | | | | |
| | | Sit
Developing
Markets
Growth
Fund | | MSCI
Emerging
Markets
Index1 |
Six Month | | | | 6.47 | % | | | | 5.67 | % |
One Year | | | | 19.77 | | | | | 15.43 | |
Five Year | | | | 4.97 | | | | | 3.11 | |
Ten Year | | | | 2.06 | | | | | 1.20 | |
Since Inception (7/1/94) | | | | 4.23 | | | | | 3.36 | |
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 recentmonth-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 MSCI Emerging Markets Index is an unmanaged free float-adjusted market capitalization index that measures equity market performance of emerging markets. It is not possible to invest directly in an index.
FUND DIVERSIFICATION - BY REGION
| | | | | | | | | | |
| | | Sit
Developing
Markets
Growth
Fund | | MSCI
Emerging
Markets
Index |
Asia | | | | 71.2 | % | | | | 73.6 | % |
Latin America | | | | 10.6 | | | | | 11.4 | |
Africa/Middle East | | | | 9.9 | | | | | 9.0 | |
North America | | | | 4.0 | | | | | — | |
Europe | | | | — | | | | | 6.0 | |
Cash & Other Net Assets | | | | 4.3 | | | | | — | |
Based on total net assets as of December 31, 2019. Subject to change.
PORTFOLIO SUMMARY
| | |
Net Asset Value 12/31/19: | | $16.96 Per Share |
Net Asset Value 6/30/19: | | $16.21 Per Share |
Total Net Assets: | | $10.8 Million |
Weighted Average Market Cap: | | $118.9 Billion |
TOP 10 HOLDINGS
1. Alibaba Group Holding, Ltd., ADR
2. Samsung Electronics Co., Ltd.
3. Tencent Holdings, Ltd.
4. TAL Education Group, ADR
5. Taiwan Semiconductor Co.
6. iShares MSCI India ETF
7. HDFC Bank, Ltd., ADR
8. NICE Systems, Ltd., ADR
9. Geopark, Ltd.
10. Bid Corp., Ltd.
Based on total net assets as of December 31, 2019. Subject to change.
SECTOR ALLOCATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2019
Sit Developing Markets Growth Fund
Investments are grouped by geographic region.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 92.1% | | | | | | | | |
Africa/Middle East - 9.9% | | | | | | | | |
Israel - 3.1% | | | | | | | | |
NICE Systems, Ltd., ADR* | | | 2,175 | | | | 337,451 | |
| | | | | | | | |
South Africa - 6.8% | | | | | | | | |
Bid Corp., Ltd. | | | 13,200 | | | | 311,207 | |
Bidvest Group, Ltd. | | | 5,525 | | | | 80,776 | |
Naspers, Ltd. | | | 1,425 | | | | 233,070 | |
Prosus NV * | | | 1,425 | | | | 106,344 | |
| | | | | | | | |
| | |
| | | | | | | 731,397 | |
| | | | | | | | |
Asia - 67.6% | | | | | | | | |
Australia - 1.4% | | | | | | | | |
Rio Tinto, PLC, ADR | | | 2,475 | | | | 146,916 | |
| | | | | | | | |
China/Hong Kong - 39.0% | | | | | | | | |
AIA Group, Ltd. | | | 21,400 | | | | 224,648 | |
Alibaba Group Holding, Ltd., ADR* | | | 2,875 | | | | 609,787 | |
Baidu, Inc., ADR* | | | 1,375 | | | | 173,800 | |
China Construction Bank Corp. | | | 359,000 | | | | 310,059 | |
China Mengniu Dairy Co., Ltd. | | | 48,000 | | | | 194,038 | |
China Petroleum & Chemical Corp., ADR | | | 3,100 | | | | 186,465 | |
China Tower Corp., Ltd. | | | 586,000 | | | | 129,348 | |
CSPC Pharmaceutical Group, Ltd. | | | 120,000 | | | | 286,129 | |
ENN Energy Holdings, Ltd. | | | 21,900 | | | | 239,311 | |
GDS Holdings, Ltd., ADR* | | | 600 | | | | 30,948 | |
Hong Kong Exchanges & Clearing, Ltd. | | | 4,300 | | | | 139,612 | |
JD.com, Inc., ADR* | | | 4,450 | | | | 156,774 | |
Ping An Insurance Group Co. of China, Ltd. | | | 19,900 | | | | 235,205 | |
Sinopharm Group Co., Ltd. | | | 44,900 | | | | 163,932 | |
TAL Education Group, ADR* | | | 9,100 | | | | 438,620 | |
Tencent Holdings, Ltd. | | | 11,400 | | | | 549,496 | |
WH Group, Ltd. | | | 132,500 | | | | 136,882 | |
| | | | | | | | |
| | |
| | | | | | | 4,205,054 | |
| | | | | | | | |
India - 3.1% | | | | | | | | |
HDFC Bank, Ltd., ADR | | | 5,350 | | | | 339,030 | |
| | | | | | | | |
Indonesia - 2.8% | | | | | | | | |
Astra International Tbk PT | | | 176,000 | | | | 87,794 | |
XL Axiata Tbk PT* | | | 948,800 | | | | 215,287 | |
| | | | | | | | |
| | |
| | | | | | | 303,081 | |
| | | | | | | | |
Singapore - 3.5% | | | | | | | | |
DBS Group Holdings, Ltd. | | | 14,500 | | | | 279,014 | |
Singapore Technologies Engineering, Ltd. | | | 33,700 | | | | 98,723 | |
| | | | | | | | |
| | |
| | | | | | | 377,737 | |
| | | | | | | | |
South Korea - 10.3% | | | | | | | | |
LG Chem, Ltd. | | | 575 | | | | 157,865 | |
Medy-Tox, Inc. | | | 370 | | | | 96,271 | |
Samsung Electronics Co., Ltd. | | | 12,250 | | | | 591,076 | |
Shinhan Financial Group Co., Ltd.* | | | 7,200 | | | | 269,895 | |
| | | | | | | | |
| | |
| | | | | | | 1,115,107 | |
| | | | | | | | |
| | | | | | | | |
| | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Taiwan - 6.5% | | | | | | | | |
Cathay Financial Holding Co., Ltd. | | | 82,085 | | | | 116,513 | |
Hon Hai Precision Industry Co., Ltd., GDR | | | 22,160 | | | | 135,841 | |
Taiwan Semiconductor Co. | | | 37,482 | | | | 413,869 | |
Taiwan Semiconductor Co., ADR | | | 600 | | | | 34,860 | |
| | | | | | | | |
| | |
| | | | | | | 701,083 | |
| | | | | | | | |
Thailand - 1.0% | | | | | | | | |
Bangkok Bank PCL | | | 21,200 | | | | 112,887 | |
| | | | | | | | |
Latin America - 10.6% | | | | | | | | |
Argentina- 1.8% | | | | | | | | |
Globant SA* | | | 1,850 | | | | 196,192 | |
| | | | | | | | |
Brazil - 3.3% | | | | | | | | |
Ambev SA, ADR | | | 10,800 | | | | 50,328 | |
Banco Bradesco SA | | | 22,803 | | | | 205,033 | |
Pagseguro Digital, Ltd.* | | | 3,050 | | | | 104,188 | |
| | | | | | | | |
| | |
| | | | | | | 359,549 | |
| | | | | | | | |
Chile - 3.9% | | | | | | | | |
Banco Santander Chile, ADR | | | 4,700 | | | | 108,429 | |
Geopark, Ltd. | | | 14,100 | | | | 311,610 | |
| | | | | | | | |
| | |
| | | | | | | 420,039 | |
| | | | | | | | |
Peru - 1.6% | | | | | | | | |
Southern Copper Corp. | | | 3,900 | | | | 165,672 | |
| | | | | | | | |
North America - 4.0% | | | | | | | | |
Mexico - 1.4% | | | | | | | | |
Fomento Economico Mexicano, ADR | | | 1,575 | | | | 148,853 | |
| | | | | | | | |
United States - 2.6% | | | | | | | | |
Broadcom, Inc. | | | 550 | | | | 173,811 | |
Skyworks Solutions, Inc. | | | 925 | | | | 111,814 | |
| | | | | | | | |
| | |
| | | | | | | 285,625 | |
| | | | | | | | |
Total Common Stocks
(cost: $6,897,873) | | | | | | | 9,945,673 | |
| | | | | | | | |
Investment Companies - 3.6% | | | | | | | | |
iShares MSCI India ETF
(cost: $334,045) | | | 11,100 | | | | 390,165 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
48 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Short-Term Securities - 4.2% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 1.49%
(cost: $449,045) | | | 449,045 | | | | 449,045 | |
| | | | | | | | |
| | |
Total Investments in Securities - 99.9%
(cost: $7,680,963) | | | | | | | 10,784,883 | |
Other Assets and Liabilities, net - 0.1% | | | | | | | 11,540 | |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | | $10,796,423 | |
| | | | | | | | |
| | | | | | | | | |
| * | Non-income producing security. |
ADR — American Depositary Receipt
GDR — Global Depositary Receipt
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of December 31, 2019 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | | | | | |
| | | | | Investment in Securities | | |
| | | Level 1
Quoted
Price ($) | | Level 2
Other significant
observable inputs ($) | | Level 3 Significant unobservable inputs ($) | | Total ($) |
Common Stocks | | | | | | | | | | | | | | | | | | | | |
Argentina | | | | 196,192 | | | | | — | | | | | — | | | | | 196,192 | |
Australia | | | | 146,916 | | | | | — | | | | | — | | | | | 146,916 | |
Brazil | | | | 359,549 | | | | | — | | | | | — | | | | | 359,549 | |
Chile | | | | 420,039 | | | | | — | | | | | — | | | | | 420,039 | |
China/Hong Kong | | | | 4,205,054 | | | | | — | | | | | — | | | | | 4,205,054 | |
India | | | | 339,030 | | | | | — | | | | | — | | | | | 339,030 | |
Indonesia | | | | 303,081 | | | | | — | | | | | — | | | | | 303,081 | |
Israel | | | | 337,451 | | | | | — | | | | | — | | | | | 337,451 | |
Mexico | | | | 148,853 | | | | | — | | | | | — | | | | | 148,853 | |
Peru | | | | 165,672 | | | | | — | | | | | — | | | | | 165,672 | |
Singapore | | | | 377,737 | | | | | — | | | | | — | | | | | 377,737 | |
South Africa | | | | 731,397 | | | | | — | | | | | — | | | | | 731,397 | |
South Korea | | | | 1,115,107 | | | | | — | | | | | — | | | | | 1,115,107 | |
Taiwan | | | | 701,083 | | | | | — | | | | | — | | | | | 701,083 | |
Thailand | | | | 112,887 | | | | | — | | | | | — | | | | | 112,887 | |
United States | | | | 285,625 | | | | | — | | | | | — | | | | | 285,625 | |
Investment Companies | | | | 390,165 | | | | | — | | | | | — | | | | | 390,165 | |
Short-Term Securities | | | | 449,045 | | | | | — | | | | | — | | | | | 449,045 | |
| | | | |
Total: | | | | 10,784,883 | | | | | — | | | | | — | | | | | 10,784,883 | |
Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
DECEMBER 31, 2019 | | | 49 | |
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
December 31, 2019
| | | | | | | | | | | | |
| | | |
| | | Sit
Balanced
Fund | | | Sit
Dividend
Growth
Fund | | | Sit
Global
Dividend
Growth
Fund | |
ASSETS | | | | | | | | | | | | |
Investments in securities, at identified cost | | | $27,057,537 | | | | $205,836,371 | | | | $26,434,975 | |
| | | | | | | | | | | | |
| | | |
Investments in securities, at fair value - see accompanying schedule for detail | | | $35,732,077 | | | | $258,148,207 | | | | $36,833,625 | |
Cash in bank on demand deposit | | | 926 | | | | — | | | | 1,563 | |
Accrued interest and dividends receivable | | | 87,899 | | | | 270,805 | | | | 65,514 | |
Receivable for investment securities sold | | | — | | | | 609,247 | | | | — | |
Receivable for Fund shares sold | | | 2,536,581 | | | | 248,718 | | | | 1,189 | |
| | | | | | | | | | | | |
| | | |
Total assets | | | 38,357,483 | | | | 259,276,977 | | | | 36,901,891 | |
| | | | | | | | | | | | |
| | | |
LIABILITIES | | | | | | | | | | | | |
Payable for investment securities purchased | | | — | | | | 1,539,095 | | | | — | |
Payable for Fund shares redeemed | | | 13,540 | | | | 235,921 | | | | 50,000 | |
Accrued investment management fees and advisory fees | | | 30,066 | | | | 151,272 | | | | 30,429 | |
Accrued12b-1 fees (Class S) | | | — | | | | 8,080 | | | | 726 | |
| | | | | | | | | | | | |
| | | |
Total liabilities | | | 43,606 | | | | 1,934,368 | | | | 81,155 | |
| | | | | | | | | | | | |
| | | |
Net assets applicable to outstanding capital stock | | | $38,313,877 | | | | $257,342,609 | | | | $36,820,736 | |
| | | | | | | | | | | | |
Net assets consist of: | | | | | | | | | | | | |
Capital (par value andpaid-in surplus) | | | $29,416,782 | | | | $203,921,397 | | | | $27,074,169 | |
Total distributable earnings (loss), including unrealized appreciation (depreciation) | | | 8,897,095 | | | | 53,421,212 | | | | 9,746,567 | |
| | | | | | | | | | | | |
| | | $38,313,877 | | | | $257,342,609 | | | | $36,820,736 | |
| | | | | | | | | | | | |
Outstanding shares: | | | | | | | | | | | | |
Common Shares (Class I) * | | | 1,515,584 | | | | 15,286,062 | | | | 1,892,632 | |
| | | | | | | | | | | | |
Common Shares (Class S) * | | | — | | | | 2,680,082 | | | | 199,481 | |
| | | | | | | | | | | | |
| | | |
Net assets applicable to outstanding shares: | | | | | | | | | | | | |
Common Shares (Class I) * | | | $38,313,877 | | | | $219,119,574 | | | | $33,311,088 | |
| | | | | | | | | | | | |
Common Shares (Class S) * | | | — | | | | 38,223,035 | | | | 3,509,648 | |
| | | | | | | | | | | | |
| | | |
Net asset value per share of outstanding capital stock: | | | | | | | | | | | | |
Common Shares (Class I) * | | | $25.28 | | | | $14.33 | | | | $17.60 | |
| | | | | | | | | | | | |
Common Shares (Class S) * | | | — | | | | $14.26 | | | | $17.59 | |
| | | | | | | | | | | | |
| * | Dividend Growth, Global Dividend Growth, ESG Growth and Small Cap Dividend Growth Funds offer multiple share classes (I and S). All other Funds offer a single share class. |
| | | | |
See accompanying notes to financial statements. | | | | |
50 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Sit
Large Cap
Growth
Fund | | | Sit
ESG
Growth
Fund | | | Sit
Mid Cap
Growth
Fund | | | Sit
Small Cap
Dividend
Growth
Fund | | | Sit
Small Cap
Growth
Fund | | | Sit
International
Growth
Fund | | | Sit
Developing
Markets
Growth
Fund | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $58,898,654 | | | | $4,951,019 | | | | $97,769,160 | | | | $12,939,325 | | | | $62,878,303 | | | | $18,245,599 | | | | $7,680,963 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | $122,728,355 | | | | $6,813,968 | | | | $172,254,200 | | | | $16,297,884 | | | | $101,159,147 | | | | $24,282,992 | | | | $10,784,883 | |
| | 4,717 | | | | 742 | | | | 16,801 | | | | — | | | | — | | | | — | | | | 2,646 | |
| | 36,643 | | | | 7,560 | | | | 65,208 | | | | 27,238 | | | | 72,265 | | | | 67,270 | | | | 18,845 | |
| | — | | | | — | | | | — | | | | 83,618 | | | | — | | | | — | | | | — | |
| | 6,643 | | | | — | | | | 8,326 | | | | 1,088 | | | | 7,003 | | | | 2,078 | | | | 2,300 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | 122,776,358 | | | | 6,822,270 | | | | 172,344,535 | | | | 16,409,828 | | | | 101,238,415 | | | | 24,352,340 | | | | 10,808,674 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | — | | | | — | | | | 912,439 | | | | — | | | | 372,980 | | | | — | | | | — | |
| | 9,647 | | | | — | | | | 24,871 | | | | — | | | | 20,355 | | | | — | | | | — | |
| | 102,151 | | | | 5,670 | | | | 179,085 | | | | 13,758 | | | | 126,117 | | | | 30,279 | | | | 12,251 | |
| | — | | | | 658 | | | | — | | | | 900 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | 111,798 | | | | 6,328 | | | | 1,116,395 | | | | 14,658 | | | | 519,452 | | | | 30,279 | | | | 12,251 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | $122,664,560 | | | | $6,815,942 | | | | $171,228,140 | | | | $16,395,170 | | | | $100,718,963 | | | | $24,322,061 | | | | $10,796,423 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $56,912,030 | | | | $4,960,181 | | | | $95,304,263 | | | | $13,201,568 | | | | $62,683,123 | | | | $19,540,676 | | | | $7,757,800 | |
| | 65,752,530 | | | | 1,855,761 | | | | 75,923,877 | | | | 3,193,602 | | | | 38,035,840 | | | | 4,781,385 | | | | 3,038,623 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $122,664,560 | | | | $6,815,942 | | | | $171,228,140 | | | | $16,395,170 | | | | $100,718,963 | | | | $24,322,061 | | | | $10,796,423 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2,839,302 | | | | 257,285 | | | | 9,342,187 | | | | 960,095 | | | | 1,810,280 | | | | 1,358,076 | | | | 636,583 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | — | | | | 224,040 | | | | — | | | | 340,629 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $122,664,560 | | | | $3,650,053 | | | | $171,228,140 | | | | $12,102,109 | | | | $100,718,963 | | | | $24,322,061 | | | | $10,796,423 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | — | | | | 3,165,889 | | | | — | | | | 4,293,061 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $43.20 | | | | $14.19 | | | | $18.33 | | | | $12.61 | | | | $55.64 | | | | $17.91 | | | | $16.96 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | — | | | | $14.13 | | | | — | | | | $12.60 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended December 31, 2019
| | | | | | | | | | | | |
| | | Sit
Balanced
Fund | | | Sit
Dividend
Growth
Fund | | | Sit
Global
Dividend
Growth
Fund | |
Investment income: | | | | | | | | | | | | |
Income: | | | | | | | | | | | | |
Dividends* | | | $182,504 | | | | $3,023,850 | | | | $391,305 | |
Interest | | | 188,155 | | | | 24,053 | | | | 12,138 | |
| | | | | | | | | | | | |
Total income | | | 370,659 | | | | 3,047,903 | | | | 403,443 | |
| | | | | | | | | | | | |
| | | |
Expenses (note 4): | | | | | | | | | | | | |
Investment management and advisory service fee | | | 175,199 | | | | 1,262,599 | | | | 216,621 | |
12b-1 fees (Class S) | | | — | | | | 48,621 | | | | 4,217 | |
| | | | | | | | | | | | |
Total expenses | | | 175,199 | | | | 1,311,220 | | | | 220,838 | |
| | | | | | | | | | | | |
Less fees and expenses waived by investment adviser | | | — | | | | (378,780 | ) | | | (43,324 | ) |
| | | | | | | | | | | | |
Total net expenses | | | 175,199 | | | | 932,440 | | | | 177,514 | |
| | | | | | | | | | | | |
| | | |
Net investment income (loss) | | | 195,460 | | | | 2,115,463 | | | | 225,929 | |
| | | | | | | | | | | | |
| | | |
Realized and unrealized gain (loss): | | | | | | | | | | | | |
Net realized gain (loss) on investments | | | 451,393 | | | | 8,471,860 | | | | 534,451 | |
Net realized gain (loss) on foreign currency transactions | | | — | | | | — | | | | (33 | ) |
| | | |
Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | | | 1,721,562 | | | | 17,177,363 | | | | 2,318,078 | |
| | | | | | | | | | | | |
| | | |
Net gain (loss) | | | 2,172,955 | | | | 25,649,223 | | | | 2,852,496 | |
| | | | | | | | | | | | |
| | | |
Net increase (decrease) in net assets resulting from operations | | | $2,368,415 | | | | $27,764,686 | | | | $3,078,425 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | |
* Foreign taxes withheld on dividends received | | | — | | | | $17,621 | | | | $11,398 | |
| | | | |
See accompanying notes to financial statements. | | | | |
52 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Sit
Large Cap
Growth
Fund | | | Sit
ESG
Growth
Fund | | | Sit
Mid Cap
Growth
Fund | | | Sit
Small Cap
Dividend
Growth
Fund | | | Sit
Small Cap
Growth
Fund | | | Sit
International
Growth
Fund | | | Sit
Developing
Markets
Growth
Fund | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $710,112 | | | | $52,458 | | | | $815,298 | | | | $201,439 | | | | $474,591 | | | | $180,945 | | | | $216,384 | |
| | 14,569 | | | | 2,939 | | | | 57,316 | | | | 6,244 | | | | 47,255 | | | | 3,267 | | | | 3,854 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 724,681 | | | | 55,397 | | | | 872,614 | | | | 207,683 | | | | 521,846 | | | | 184,212 | | | | 220,238 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | 587,654 | | | | 40,267 | | | | 1,042,770 | | | | 103,132 | | | | 734,000 | | | | 173,840 | | | | 99,300 | |
| | — | | | | 3,713 | | | | — | | | | 5,066 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 587,654 | | | | 43,980 | | | | 1,042,770 | | | | 108,198 | | | | 734,000 | | | | 173,840 | | | | 99,300 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | — | | | | (8,053 | ) | | | — | | | | (20,627 | ) | | | — | | | | — | | | | (29,790 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 587,654 | | | | 35,927 | | | | 1,042,770 | | | | 87,571 | | | | 734,000 | | | | 173,840 | | | | 69,510 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | 137,027 | | | | 19,470 | | | | (170,156 | ) | | | 120,112 | | | | (212,154 | ) | | | 10,372 | | | | 150,728 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | 5,530,469 | | | | 149,172 | | | | 5,426,653 | | | | 20,643 | | | | 2,258,493 | | | | (145,061 | ) | | | (48,134 | ) |
| | — | | | | (8 | ) | | | 194 | | | | — | | | | — | | | | (649 | ) | | | 81 | |
| | | | | | |
| | 7,065,927 | | | | 394,950 | | | | 2,242,504 | | | | 984,464 | | | | 1,308,064 | | | | 1,387,896 | | | | 538,993 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | 12,596,396 | | | | 544,114 | | | | 7,669,351 | | | | 1,005,107 | | | | 3,566,557 | | | | 1,242,186 | | | | 490,940 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | $12,733,423 | | | | $563,584 | | | | $7,499,195 | | | | $1,125,219 | | | | $3,354,403 | | | | $1,252,558 | | | | $641,668 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | — | | | | $1,746 | | | | $2,016 | | | | $1,526 | | | | $2,847 | | | | $12,889 | | | | $12,056 | |
STATEMENTS OF CHANGES IN NET ASSETS
| | | | | | | | | | | | | | | | |
| | | Sit Balanced Fund | | | Sit Dividend Growth Fund | |
| | | | |
| | | Six Months Ended
December 31, 2019,
(Unaudited) | | | Year Ended
June 30,
2019 | | | Six Months Ended
December 31, 2019,
(Unaudited) | | | Year Ended
June 30,
2019 | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income | | | $195,460 | | | | $482,453 | | | | $2,115,463 | | | | $14,057,076 | |
Net realized gain (loss) on investments and foreign currency transactions | | | 451,393 | | | | 1,552,948 | | | | 8,471,860 | | | | 91,002,769 | |
Net change in unrealized appreciation (depreciation) of investments and foreign currency transactions | | | 1,721,562 | | | | 328,736 | | | | 17,177,363 | | | | (108,242,415 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) in net assets resulting from operations | | | 2,368,415 | | | | 2,364,137 | | | | 27,764,686 | | | | (3,182,570 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Distributions from: | | | | | | | | | | | | | | | | |
Net investment income and net realized gains | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (2,050,305 | ) | | | (801,302 | ) | | | (24,645,532 | ) | | | (104,820,743 | ) |
Common shares (Class S) | | | — | | | | — | | | | (4,315,489 | ) | | | (8,833,909 | ) |
| | | | | | | | | | | | | | | | |
Total distributions | | | (2,050,305 | ) | | | (801,302 | ) | | | (28,961,021 | ) | | | (113,654,652 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Capital share transactions: | | | | | | | | | | | | | | | | |
Proceeds from shares sold | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 4,684,005 | | | | 7,363,030 | | | | 13,458,363 | | | | 70,924,492 | |
Common shares (Class S) | | | — | | | | — | | | | 475,618 | | | | 2,521,662 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 2,018,719 | | | | 787,611 | | | | 23,153,887 | | | | 101,138,488 | |
Common shares (Class S) | | | — | | | | — | | | | 4,301,517 | | | | 8,734,436 | |
Payments for shares redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (3,171,822 | ) | | | (12,789,473 | ) | | | (30,604,708 | ) | | | (765,396,526 | ) |
Common shares (Class S) | | | — | | | | — | | | | (6,178,085 | ) | | | (17,067,708 | ) |
| | | | | | | | | | | | | | | | |
Increase (decrease) in net assets from capital transactions | | | 3,530,902 | | | | (4,638,832 | ) | | | 4,606,592 | | | | (599,145,156 | ) |
| | | | | | | | | | | | | | | | |
Total increase (decrease) in net assets | | | 3,849,012 | | | | (3,075,997 | ) | | | 3,410,257 | | | | (715,982,378 | ) |
| | | | |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 34,464,865 | | | | 37,540,862 | | | | 253,932,352 | | | | 969,914,730 | |
| | | | | | | | | | | | | | | | |
End of period | | | $38,313,877 | | | | $34,464,865 | | | | $257,342,609 | | | | $253,932,352 | |
| | | | | | | | | | | | | | | | |
| | | | |
Capital transactions in shares: | | | | | | | | | | | | | | | | |
Sold | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 184,694 | | | | 307,091 | | | | 912,861 | | | | 4,474,113 | |
Common shares (Class S) | | | — | | | | — | | | | 31,961 | | | | 167,274 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 80,263 | | | | 34,382 | | | | 1,622,758 | | | | 7,846,703 | |
Common shares (Class S) | | | — | | | | — | | | | 303,009 | | | | 687,436 | |
Redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (124,657 | ) | | | (545,889 | ) | | | (2,074,437 | ) | | | (52,548,963 | ) |
Common shares (Class S) | | | — | | | | — | | | | (418,809 | ) | | | (1,181,017 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) | | | 140,300 | | | | (204,416 | ) | | | 377,343 | | | | (40,554,454 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
54 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | | | | | | | | | | | | | | | |
| Sit Global Dividend Growth Fund | | | Sit Large Cap Growth Fund | | | Sit ESG Growth Fund | |
Six Months Ended
December 31, 2019,
(Unaudited) | | | Year Ended
June 30,
2019 | | | Six Months Ended
December 31, 2019,
(Unaudited) | | | Year Ended
June 30,
2019 | | | Six Months Ended
December 31, 2019,
(Unaudited) | | | Year Ended
June 30,
2019 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | $225,929 | | | | $568,865 | | | | $137,027 | | | | $453,312 | | | | $19,470 | | | | $74,979 | |
|
534,418 |
| | | (234,375 | ) | | | 5,530,469 | | | | 9,704,669 | | | | 149,164 | | | | (76,675 | ) |
|
2,318,078 |
| | | 2,588,960 | | | | 7,065,927 | | | | 878,764 | | | | 394,950 | | | | 472,193 | |
| | | | | | | | | | | | | | | | | | | | | | |
|
3,078,425 |
| | | 2,923,450 | | | | 12,733,423 | | | | 11,036,745 | | | | 563,584 | | | | 470,497 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (409,195 | ) | | | (521,860 | ) | | | (10,751,685 | ) | | | (9,934,663 | ) | | | (55,450 | ) | | | (40,551 | ) |
| | (37,808 | ) | | | (49,144 | ) | | | — | | | | — | | | | (44,523 | ) | | | (31,449 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | (447,003 | ) | | | (571,004 | ) | | | (10,751,685 | ) | | | (9,934,663 | ) | | | (99,973 | ) | | | (72,000 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 1,842,081 | | | | 2,468,958 | | | | 1,068,276 | | | | 4,477,170 | | | | 16,963 | | | | 169,033 | |
| | 277,821 | | | | 95,183 | | | | — | | | | — | | | | 18,784 | | | | 25,229 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | 392,007 | | | | 504,463 | | | | 10,576,386 | | | | 9,726,108 | | | | 55,450 | | | | 40,551 | |
| | 37,534 | | | | 48,033 | | | | — | | | | — | | | | 44,523 | | | | 31,449 | |
| | (2,122,471 | ) | | | (3,055,896 | ) | | | (7,543,280 | ) | | | (17,516,267 | ) | | | (58,942 | ) | | | (78,105 | ) |
| | (300,957 | ) | | | (373,656 | ) | | | — | | | | — | | | | (6,561 | ) | | | (5,309 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | 126,015 | | | | (312,915 | ) | | | 4,101,382 | | | | (3,312,989 | ) | | | 70,217 | | | | 182,848 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | 2,757,437 | | | | 2,039,531 | | | | 6,083,120 | | | | (2,210,907 | ) | | | 533,828 | | | | 581,345 | |
| | | | | |
| | 34,063,299 | | | | 32,023,768 | | | | 116,581,440 | | | | 118,792,347 | | | | 6,282,114 | | | | 5,700,769 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $36,820,736 | | | | $34,063,299 | | | | $122,664,560 | | | | $116,581,440 | | | | $6,815,942 | | | | $6,282,114 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | 109,253 | | | | 159,277 | | | | 24,259 | | | | 106,595 | | | | 1,270 | | | | 13,267 | |
| | 16,723 | | | | 6,375 | | | | — | | | | — | | | | 1,369 | | | | 2,101 | |
| | | | | |
| | 23,722 | | | | 33,104 | | | | 246,824 | | | | 272,975 | | | | 3,936 | | | | 3,575 | |
| | 2,276 | | | | 3,149 | | | | — | | | | — | | | | 3,173 | | | | 2,781 | |
| | | | | |
| | (126,287 | ) | | | (194,896 | ) | | | (173,239 | ) | | | (439,602 | ) | | | (4,241 | ) | | | (6,263 | ) |
| | (17,981 | ) | | | (24,279 | ) | | | — | | | | — | | | | (469 | ) | | | (418 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | 7,706 | | | | (17,270 | ) | | | 97,844 | | | | (60,032 | ) | | | 5,038 | | | | 15,043 | |
| | | | | | | | | | | | | | | | | | | | | | |
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
| | | | | | | | | | | | | | | | |
| | | Sit Mid Cap Growth Fund | | | Sit Small Cap
Dividend Growth Fund | |
| | | Six Months Ended
December 31, 2019,
(Unaudited) | | | Year Ended
June 30,
2019 | | | Six Months Ended
December 31, 2019,
(Unaudited) | | | Year Ended
June 30,
2019 | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) | | | ($170,156 | ) | | | ($251,290 | ) | | | $120,112 | | | | $215,896 | |
Net realized gain (loss) on investments and foreign currency transactions | | | 5,426,847 | | | | 15,207,092 | | | | 20,643 | | | | 172,807 | |
Net change in unrealized appreciation (depreciation) of investments and foreign currency transactions | | | 2,242,504 | | | | 2,857,207 | | | | 984,464 | | | | (600,408 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) in net assets resulting from operations | | | 7,499,195 | | | | 17,813,009 | | | | 1,125,219 | | | | (211,705 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Distributions from: | | | | | | | | | | | | | | | | |
Net investment income and net realized gains | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (12,018,685 | ) | | | (15,426,149 | ) | | | (129,290 | ) | | | (316,700 | ) |
Common shares (Class S) | | | — | | | | — | | | | (35,712 | ) | | | (80,916 | ) |
| | | | | | | | | | | | | | | | |
Total distributions | | | (12,018,685 | ) | | | (15,426,149 | ) | | | (165,002 | ) | | | (397,616 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Capital share transactions: | | | | | | | | | | | | | | | | |
Proceeds from shares sold | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 753,534 | | | | 2,026,500 | | | | 383,468 | | | | 492,580 | |
Common shares (Class S) | | | — | | | | — | | | | 63,341 | | | | 367,898 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 11,531,885 | | | | 14,750,446 | | | | 122,304 | | | | 302,420 | |
Common shares (Class S) | | | — | | | | — | | | | 33,636 | | | | 76,543 | |
Payments for shares redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (5,636,498 | ) | | | (8,565,701 | ) | | | (1,678,019 | ) | | | (2,339,374 | ) |
Common shares (Class S) | | | — | | | | — | | | | (28,882 | ) | | | (230,823 | ) |
| | | | | | | | | | | | | | | | |
Increase (decrease) in net assets from capital transactions | | | 6,648,921 | | | | 8,211,245 | | | | (1,104,152 | ) | | | (1,330,756 | ) |
| | | | | | | | | | | | | | | | |
Total increase (decrease) in net assets | | | 2,129,431 | | | | 10,598,105 | | | | (143,935 | ) | | | (1,940,077 | ) |
| | | | |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 169,098,709 | | | | 158,500,604 | | | | 16,539,105 | | | | 18,479,182 | |
| | | | | | | | | | | | | | | | |
End of period | | | $171,228,140 | | | | $169,098,709 | | | | $16,395,170 | | | | $16,539,105 | |
| | | | | | | | | | | | | | | | |
| | | | |
Capital transactions in shares: | | | | | | | | | | | | | | | | |
Sold | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 39,719 | | | | 109,497 | | | | 32,072 | | | | 41,558 | |
Common shares (Class S) | | | — | | | | — | | | | 5,166 | | | | 31,277 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 632,577 | | | | 980,096 | | | | 10,181 | | | | 28,229 | |
Common shares (Class S) | | | — | | | | — | | | | 2,793 | | | | 7,209 | |
Redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (303,461 | ) | | | (475,717 | ) | | | (138,556 | ) | | | (202,972 | ) |
Common shares (Class S) | | | — | | | | — | | | | (2,416 | ) | | | (19,991 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) | | | 368,835 | | | | 613,876 | | | | (90,760 | ) | | | (114,690 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
56 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| | | | | | | | | | | | | | | | | | | | | | |
| Sit Small Cap Growth Fund | | | Sit International Growth Fund | | | Sit Developing Markets Growth Fund | |
Six Months Ended
December 31, 2019,
(Unaudited) | | | Year Ended
June 30,
2019 | | | Six Months Ended
December 31, 2019,
(Unaudited) | | | Year Ended
June 30,
2019 | | | Six Months Ended
December 31, 2019,
(Unaudited) | | | Year Ended
June 30,
2019 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | ($212,154 | ) | | | ($454,301 | ) | | | $10,372 | | | | $216,541 | | | | $150,728 | | | | $64,345 | |
|
2,258,493 |
| | | 4,285,203 | | | | (145,710 | ) | | | (297,517 | ) | | | (48,053 | ) | | | 40,533 | |
| | | | | |
| | 1,308,064 | | | | 2,110,594 | | | | 1,387,896 | | | | 807,103 | | | | 538,993 | | | | (630,178 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | 3,354,403 | | | | 5,941,496 | | | | 1,252,558 | | | | 726,127 | | | | 641,668 | | | | (525,300 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | (3,070,107 | ) | | | (7,455,033 | ) | | | (227,001 | ) | | | (245,338 | ) | | | (185,000 | ) | | | (152,148 | ) |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | (3,070,107 | ) | | | (7,455,033 | ) | | | (227,001 | ) | | | (245,338 | ) | | | (185,000 | ) | | | (152,148 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 711,599 | | | | 1,457,035 | | | | 499,898 | | | | 446,495 | | | | 475,918 | | | | 1,190,290 | |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 3,017,214 | | | | 7,320,824 | | | | 222,998 | | | | 240,594 | | | | 180,261 | | | | 149,029 | |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (2,923,761 | ) | | | (7,672,934 | ) | | | (889,284 | ) | | | (1,580,128 | ) | | | (312,092 | ) | | | (1,693,585 | ) |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | 805,052 | | | | 1,104,925 | | | | (166,388 | ) | | | (893,039 | ) | | | 344,087 | | | | (354,266 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | 1,089,348 | | | | (408,612 | ) | | | 859,169 | | | | (412,250 | ) | | | 800,755 | | | | (1,031,714 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 99,629,615 | | | | 100,038,227 | | | | 23,462,892 | | | | 23,875,142 | | | | 9,995,668 | | | | 11,027,382 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $100,718,963 | | | | $99,629,615 | | | | $24,322,061 | | | | $23,462,892 | | | | $10,796,423 | | | | $9,995,668 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 12,907 | | | | 26,846 | | | | 29,193 | | | | 27,320 | | | | 28,821 | | | | 74,310 | |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 54,719 | | | | 163,960 | | | | 12,585 | | | | 16,872 | | | | 10,711 | | | | 10,495 | |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (53,874 | ) | | | (143,779 | ) | | | (53,102 | ) | | | (99,856 | ) | | | (19,625 | ) | | | (107,545 | ) |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | 13,752 | | | | 47,027 | | | | (11,324 | ) | | | (55,664 | ) | | | 19,907 | | | | (22,740 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS
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, 2019 | | | | | | Years Ended June 30, | | | | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $25.06 | | | | $23.76 | | | | $22.71 | | | | $20.40 | | | | $21.54 | | | | $21.01 | |
| | | | |
| | | | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income1 | | | 0.14 | | | | 0.32 | | | | 0.25 | | | | 0.25 | | | | 0.26 | | | | 0.25 | |
Net realized and unrealized gains | | | 1.61 | | | | 1.52 | | | | 1.96 | | | | 2.29 | | | | 0.04 | | | | 1.16 | |
| | | | |
| | | | | | |
Total from operations | | | 1.75 | | | | 1.84 | | | | 2.21 | | | | 2.54 | | | | 0.30 | | | | 1.41 | |
| | | | |
| | | | | | |
Distributions to Shareholders | | | | | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.22) | | | | (0.31 | ) | | | (0.27 | ) | | | (0.23 | ) | | | (0.45 | ) | | | (0.24 | ) |
From net realized gains | | | (1.31) | | | | (0.23 | ) | | | (0.89 | ) | | | — | | | | (0.99 | ) | | | (0.64 | ) |
| | | | |
| | | | | | |
Total distributions | | | (1.53) | | | | (0.54 | ) | | | (1.16 | ) | | | (0.23 | ) | | | (1.44 | ) | | | (0.88 | ) |
| | | | |
| | | | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $25.28 | | | | $25.06 | | | | $23.76 | | | | $22.71 | | | | $20.40 | | | | $21.54 | |
| | | | |
Total investment return2 | | | 7.03% | | | | 7.98% | | | | 9.84% | | | | 12.56% | | | | 1.47% | | | | 6.86% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $38,314 | | | | $34,465 | | | | $37,541 | | | | $25,242 | | | | $23,511 | | | | $22,970 | |
| | | | | | |
Ratios:3 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | |
Net investment income | | | 1.12% | | | | 1.33% | | | | 1.07% | | | | 1.18% | | | | 1.25% | | | | 1.17% | |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 30.24%4 | | | | 50.45% | | | | 50.49% | | | | 50.31% | | | | 54.46% | | | | 47.49% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. | |
| 2 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 3 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
| | | | |
| | | | |
58 | | | SIT MUTUAL FUNDS 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, 2019 | | | | | | Years Ended June 30, | | | | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $14.45 | | | | $16.69 | | | | $16.88 | | | | $15.82 | | | | $17.40 | | | | $18.69 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income1 | | | 0.13 | | | | 0.38 | | | | 0.26 | | | | 0.24 | | | | 0.26 | | | | 0.25 | |
Net realized and unrealized gains | | | 1.53 | | | | 0.55 | | | | 1.49 | | | | 2.09 | | | | 0.32 | | | | 0.92 | |
| | | | |
Total from operations | | | 1.66 | | | | 0.93 | | | | 1.75 | | | | 2.33 | | | | 0.58 | | | | 1.17 | |
| | | | |
Redemption fees | | | — | | | | —2 | | | | — | 2 | | | — | 2 | | | — | 2 | | | — | 2 |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.19) | | | | (0.40 | ) | | | (0.26 | ) | | | (0.23 | ) | | | (0.32 | ) | | | (0.25 | ) |
From net realized gains | | | (1.59) | | | | (2.77 | ) | | | (1.68 | ) | | | (1.04 | ) | | | (1.84 | ) | | | (2.21 | ) |
| | | | |
Total distributions | | | (1.78) | | | | (3.17 | ) | | | (1.94 | ) | | | (1.27 | ) | | | (2.16 | ) | | | (2.46 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $14.33 | | | | $14.45 | | | | $16.69 | | | | $16.88 | | | | $15.82 | | | | $17.40 | |
| | | | |
Total investment return3 | | | 11.66% | | | | 8.37% | | | | 10.36% | | | | 15.41% | | | | 3.94% | | | | 6.39% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $219,120 | | | | $214,204 | | | | $918,584 | | | | $1,015,920 | | | | $942,244 | | | | $955,460 | |
| | | | | | |
Ratios:4 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.00%5 | | | | 1.00%5 | | | | 1.00%5 | | | | 1.00% | | | | 1.00% | | | | 1.00% | |
Expenses (with waiver) | | | 0.70%5 | | | | 0.70%5 | | | | 0.78%5 | | | | 1.00% | | | | 1.00% | | | | 1.00% | |
Net investment income (without waiver) | | | 1.41% | | | | 2.04% | | | | 1.31% | | | | 1.49% | | | | 1.64% | | | | 1.39% | |
Net investment income (with waiver) | | | 1.71% | | | | 2.34% | | | | 1.53% | | | | 1.49% | | | | 1.64% | | | | 1.39% | |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 29.51%6 | | | | 51.52% | | | | 68.38% | | | | 61.33% | | | | 75.94% | | | | 57.69% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. | |
| 2 | Amount represents less than $0.01 per share. | |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
| 5 | Total Fund expenses are limited to 1.00% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)
Sit Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | Six Months Ended | | | | | | | | | | | | | | | | |
| Class S | | December 31, 2019 | | | | | | Years Ended June 30, | | | | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $14.37 | | | | $16.61 | | | | $16.81 | | | | $15.76 | | | | $17.34 | | | | $18.63 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income1 | | | 0.12 | | | | 0.32 | | | | 0.22 | | | | 0.20 | | | | 0.22 | | | | 0.21 | |
Net realized and unrealized gains | | | 1.52 | | | | 0.57 | | | | 1.47 | | | | 2.08 | | | | 0.32 | | | | 0.91 | |
| | | | |
Total from operations | | | 1.64 | | | | 0.89 | | | | 1.69 | | | | 2.28 | | | | 0.54 | | | | 1.12 | |
| | | | |
Redemption fees2 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.16) | | | | (0.36 | ) | | | (0.21 | ) | | | (0.19 | ) | | | (0.28 | ) | | | (0.20 | ) |
From net realized gains | | | (1.59) | | | | (2.77 | ) | | | (1.68 | ) | | | (1.04 | ) | | | (1.84 | ) | | | (2.21 | ) |
| | | | |
Total distributions | | | (1.75) | | | | (3.13 | ) | | | (1.89 | ) | | | (1.23 | ) | | | (2.12 | ) | | | (2.41 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $14.26 | | | | $14.37 | | | | $16.61 | | | | $16.81 | | | | $15.76 | | | | $17.34 | |
| | | | |
Total investment return3 | | | 11.58% | | | | 8.12% | | | | 10.06% | | | | 15.11% | | | | 3.68% | | | | 6.13% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $38,223 | | | | $39,729 | | | | $51,331 | | | | $65,278 | | | | $67,620 | | | | $82,959 | |
| | | | | | |
Ratios:4 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.25%5 | | | | 1.25%5 | | | | 1.25%5 | | | | 1.25% | | | | 1.25% | | | | 1.25% | |
Expenses (with waiver) | | | 0.95%5 | | | | 0.95%5 | | | | 1.03%5 | | | | 1.25% | | | | 1.25% | | | | 1.25% | |
Net investment income (without waiver) | | | 1.16% | | | | 1.80% | | | | 1.06% | | | | 1.24% | | | | 1.39% | | | | 1.14% | |
Net investment income (with waiver) | | | 1.46% | | | | 2.10% | | | | 1.28% | | | | 1.24% | | | | 1.39% | | | | 1.14% | |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 29.51%6 | | | | 51.52% | | | | 68.38% | | | | 61.33% | | | | 75.94% | | | | 57.69% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. | |
| 2 | Amount represents less than $0.01 per share. | |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
| 5 | Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. | |
| | | | |
| | | | |
60 | | | SIT MUTUAL FUNDS 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 Global Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | Six Months Ended | | | | | | | | | | | | | | | | |
| Class I | | December 31, 2019 | | | | | | Years Ended June 30, | | | | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $16.34 | | | | $15.24 | | | | $14.54 | | | | $13.19 | | | | $14.80 | | | | $15.74 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income1 | | | 0.11 | | | | 0.28 | | | | 0.27 | | | | 0.22 | | | | 0.21 | | | | 0.20 | |
Net realized and unrealized gains (losses) | | | 1.37 | | | | 1.10 | | | | 0.67 | | | | 1.34 | | | | (0.48 | ) | | | 0.13 | |
| | | | |
Total from operations | | | 1.48 | | | | 1.38 | | | | 0.94 | | | | 1.56 | | | | (0.27 | ) | | | 0.33 | |
| | | | |
Redemption fees | | | —2 | | | | — | 2 | | | — | | | | — | 2 | | | — | | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.22) | | | | (0.28 | ) | | | (0.24 | ) | | | (0.21 | ) | | | (0.34 | ) | | | (0.20 | ) |
From net realized gains | | | — | | | | — | | | | — | | | | — | | | | (1.00 | ) | | | (1.07 | ) |
| | | | |
Total distributions | | | (0.22) | | | | (0.28 | ) | | | (0.24 | ) | | | (0.21 | ) | | | (1.34 | ) | | | (1.27 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $17.60 | | | | $16.34 | | | | $15.24 | | | | $14.54 | | | | $13.19 | | | | $14.80 | |
| | | | |
Total investment return3 | | | 9.13% | | | | 9.18% | | | | 6.46% | | | | 11.94% | | | | (1.67% | ) | | | 2.19% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $33,311 | | | | $30,823 | | | | $28,778 | | | | $25,623 | | | | $22,333 | | | | $21,424 | |
| | | | | | |
Ratios:4 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.25%5 | | | | 1.25%5 | | | | 1.25%5 | | | | 1.25% | | | | 1.25% | | | | 1.25% | |
Expenses (with waiver) | | | 1.00%5 | | | | 1.00%5 | | | | 1.06%5 | | | | 1.25% | | | | 1.25% | | | | 1.25% | |
Net investment income (without waiver) | | | 1.08% | | | | 1.53% | | | | 1.59% | | | | 1.63% | | | | 1.56% | | | | 1.33% | |
Net investment income (with waiver) | | | 1.33% | | | | 1.78% | | | | 1.78% | | | | 1.63% | | | | 1.56% | | | | 1.33% | |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 18.22%6 | | | | 15.07% | | | | 19.80% | | | | 32.04% | | | | 48.30% | | | | 75.06% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. | |
| 2 | Amount represents less than $0.01 per share. | |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
| 5 | Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)
Sit Global Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | Six Months Ended | | | | | | | | | | | | | | | | |
| Class S | | December 31, 2019 | | | | | | Years Ended June 30, | | | | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $16.33 | | | | $15.22 | | | | $14.53 | | | | $13.18 | | | | $14.78 | | | | $15.72 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income1 | | | 0.09 | | | | 0.24 | | | | 0.23 | | | | 0.19 | | | | 0.18 | | | | 0.16 | |
Net realized and unrealized gains (losses) | | | 1.36 | | | | 1.11 | | | | 0.66 | | | | 1.33 | | | | (0.48 | ) | | | 0.13 | |
| | | | |
Total from operations | | | 1.45 | | | | 1.35 | | | | 0.89 | | | | 1.52 | | | | (0.30 | ) | | | 0.29 | |
| | | | |
Redemption fees | | | —2 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.19) | | | | (0.24 | ) | | | (0.20 | ) | | | (0.17 | ) | | | (0.30 | ) | | | (0.16 | ) |
From net realized gains | | | — | | | | — | | | | — | | | | — | | | | (1.00 | ) | | | (1.07 | ) |
| | | | |
Total distributions | | | (0.19) | | | | (0.24 | ) | | | (0.20 | ) | | | (0.17 | ) | | | (1.30 | ) | | | (1.23 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $17.59 | | | | $16.33 | | | | $15.22 | | | | $14.53 | | | | $13.18 | | | | $14.78 | |
| | | | |
Total investment return3 | | | 8.94% | | | | 8.98% | | | | 6.13% | | | | 11.67% | | | | (1.89% | ) | | | 2.00% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $3,510 | | | | $3,241 | | | | $3,246 | | | | $3,274 | | | | $2,861 | | | | $3,451 | |
| | | | | | |
Ratios:4 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.50%5 | | | | 1.50%5 | | | | 1.50%5 | | | | 1.50% | | | | 1.50% | | | | 1.50% | |
Expenses (with waiver) | | | 1.25%5 | | | | 1.25%5 | | | | 1.31%5 | | | | 1.50% | | | | 1.50% | | | | 1.50% | |
Net investment income (without waiver) | | | 0.82% | | | | 1.28% | | | | 1.33% | | | | 1.38% | | | | 1.31% | | | | 1.08% | |
Net investment income (with waiver) | | | 1.07% | | | | 1.53% | | | | 1.52% | | | | 1.38% | | | | 1.31% | | | | 1.08% | |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 18.22%6 | | | | 15.07% | | | | 19.80% | | | | 32.04% | | | | 48.30% | | | | 75.06% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. | |
| 2 | Amount represents less than $0.01 per share. | |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
| 5 | Total Fund expenses are limited to 1.50% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. | |
| | | | |
| | | | |
62 | | | SIT MUTUAL FUNDS 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, 2019 | | | | | | Years Ended June 30, | | | | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $42.53 | | | | $42.40 | | | | $40.56 | | | | $36.02 | | | | $47.21 | | | | $52.51 | |
| | | | |
| | | | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income1 | | | 0.05 | | | | 0.16 | | | | 0.13 | | | | 0.21 | | | | 0.18 | | | | 0.20 | |
Net realized and unrealized gains (losses) | | | 4.75 | | | | 3.61 | | | | 6.55 | | | | 7.07 | | | | (0.42 | ) | | | 5.04 | |
| | | | |
| | | | | | |
Total from operations | | | 4.80 | | | | 3.77 | | | | 6.68 | | | | 7.28 | | | | (0.24 | ) | | | 5.24 | |
| | | | |
| | | | | | |
Redemption fees2 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
| | | | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.12) | | | | (0.15 | ) | | | (0.17 | ) | | | (0.19 | ) | | | (1.44 | ) | | | (0.24 | ) |
From net realized gains | | | (4.01) | | | | (3.49 | ) | | | (4.67 | ) | | | (2.55 | ) | | | (9.51 | ) | | | (10.30 | ) |
| | | | |
| | | | | | |
Total distributions | | | (4.13) | | | | (3.64 | ) | | | (4.84 | ) | | | (2.74 | ) | | | (10.95 | ) | | | (10.54 | ) |
| | | | |
| | | | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $43.20 | | | | $42.53 | | | | $42.40 | | | | $40.56 | | | | $36.02 | | | | $47.21 | |
| | | | |
Total investment return3 | | | 11.36% | | | | 10.54% | | | | 16.93% | | | | 21.18% | | | | (0.89% | ) | | | 10.62% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $122,665 | | | | $116,581 | | | | $118,792 | | | | $113,620 | | | | $117,459 | | | | $144,807 | |
| | | | | | |
Ratios:4 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | |
Net investment income | | | 0.23% | | | | 0.39% | | | | 0.30% | | | | 0.54% | | | | 0.44% | | | | 0.41% | |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 10.87%5 | | | | 16.02% | | | | 15.20% | | | | 17.69% | | | | 20.05% | | | | 24.04% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. | |
| 2 | Amount represents less than $0.01 per share. | |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit ESG Growth Fund
| | | | | | | | | | | | | | | | |
| |
| Class I | | Six Months Ended
December 31, 2019 | | Years Ended June 30, | |
| | | (Unaudited) | | 2019 | | | 2018 | | | 2017 * | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | |
Beginning of period | | | $13.21 | | | | $12.37 | | | | $11.29 | | | | $10.00 | |
| | | | |
| | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income1 | | | 0.05 | | | | 0.17 | | | | 0.16 | | | | 0.11 | |
Net realized and unrealized gains | | | 1.15 | | | | 0.83 | | | | 1.03 | | | | 1.20 | |
| | | | |
| | | | |
Total from operations | | | 1.20 | | | | 1.00 | | | | 1.19 | | | | 1.31 | |
| | | | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | |
From net investment income | | | (0.17 | ) | | | (0.16 | ) | | | (0.11 | ) | | | (0.02 | ) |
From net realized gains | | | (0.05 | ) | | | — | | | | — | | | | — | |
| | | | |
Total distributions | | | (0.22 | ) | | | (0.16 | ) | | | (0.11 | ) | | | (0.02 | ) |
| | | | |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | |
End of period | | | $14.19 | | | | $13.21 | | | | $12.37 | | | | $11.29 | |
| | | | |
Total investment return2 | | | 9.09% | | | | 8.30% | | | | 10.57% | | | | 13.13% | |
| | | | |
| | | | |
Net assets at end of period (000’s omitted) | | | $3,650 | | | | $3,387 | | | | $3,041 | | | | $2,349 | |
| | | | |
Ratios:3 | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.25%4 | | | | 1.25%4 | | | | 1.25%4 | | | | 1.25% | |
Expenses (with waiver) | | | 1.00%4 | | | | 1.00%4 | | | | 1.06%4 | | | | 1.25% | |
Net investment income (without waiver) | | | 0.47% | | | | 1.14% | | | | 1.10% | | | | 1.01% | |
Net investment income (with waiver) | | | 0.72% | | | | 1.38% | | | | 1.29% | | | | 1.01% | |
| | | | |
Portfolio turnover rate (excluding short-term securities) | | | 19.52%5 | | | | 9.26% | | | | 14.97% | | | | 27.60% | |
| * | The Fund commenced investment operations on June 30, 2016. | |
| 1 | The net investment income per share is based on average shares outstanding for the period. | |
| 2 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 3 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
| 4 | Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. | |
| | | | |
| | | | |
64 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)
Sit ESG Growth Fund
| | | | | | | | | | | | | | | | |
| |
| Class S | | Six Months Ended
December 31, 2019 | | Years Ended June 30, | |
| | | (Unaudited) | | 2019 | | | 2018 | | | 2017 * | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | |
Beginning of period | | | $13.16 | | | | $12.34 | | | | $11.28 | | | | $10.00 | |
| | | | |
| | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income1 | | | 0.03 | | | | 0.14 | | | | 0.13 | | | | 0.08 | |
Net realized and unrealized gains | | | 1.14 | | | | 0.83 | | | | 1.03 | | | | 1.21 | |
| | | | |
| | | | |
Total from operations | | | 1.17 | | | | 0.97 | | | | 1.16 | | | | 1.29 | |
| | | | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | |
From net investment income | | | (0.15 | ) | | | (0.15 | ) | | | (0.10 | ) | | | (0.01 | ) |
From net realized gains | | | (0.05 | ) | | | — | | | | — | | | | — | |
| | | | |
Total distributions | | | (0.20 | ) | | | (0.15 | ) | | | (0.10 | ) | | | (0.01 | ) |
| | | | |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | |
End of period | | | $14.13 | | | | $13.16 | | | | $12.34 | | | | $11.28 | |
| | | | |
Total investment return2 | | | 8.92% | | | | 8.01% | | | | 10.37% | | | | 12.79% | |
| | | | |
| | | | |
Net assets at end of period (000’s omitted) | | | $3,166 | | | | $2,895 | | | | $2,660 | | | | $2,321 | |
| | | | |
Ratios:3 | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.50%4 | | | | 1.50%4 | | | | 1.50%4 | | | | 1.50% | |
Expenses (with waiver) | | | 1.25%4 | | | | 1.25%4 | | | | 1.31%4 | | | | 1.50% | |
Net investment income (without waiver) | | | 0.22% | | | | 0.89% | | | | 0.84% | | | | 0.76% | |
Net investment income (with waiver) | | | 0.47% | | | | 1.14% | | | | 1.03% | | | | 0.76% | |
| | | | |
Portfolio turnover rate (excluding short-term securities) | | | 19.52%5 | | | | 9.26% | | | | 14.97% | | | | 27.60% | |
| * | The Fund commenced investment operations on June 30, 2016. |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 3 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| 4 | Total Fund expenses are limited to 1.50% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. |
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, 2019 | | | | | | Years Ended June 30, | | | | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $18.84 | | | | $18.96 | | | | $18.06 | | | | $15.36 | | | | $20.22 | | | | $21.08 | |
| | | | |
| | | | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment loss1 | | | (0.02) | | | | (0.03 | ) | | | (0.03 | ) | | | — | 2 | | | (0.04 | ) | | | (0.06 | ) |
Net realized and unrealized gains (losses) | | | 0.89 | | | | 1.79 | | | | 1.71 | | | | 2.86 | | | | (1.92 | ) | | | 1.91 | |
| | | | |
| | | | | | |
Total from operations | | | 0.87 | | | | 1.76 | | | | 1.68 | | | | 2.86 | | | | (1.96 | ) | | | 1.85 | |
| | | | |
| | | | | | |
Redemption fees2 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
| | | | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | — | | | | — | | | | — | 2 | | | — | | | | — | | | | — | |
From net realized gains | | | (1.38) | | | | (1.88 | ) | | | (0.78 | ) | | | (0.16 | ) | | | (2.90 | ) | | | (2.71 | ) |
| | | | |
| | | | | | |
Total distributions | | | (1.38) | | | | (1.88 | ) | | | (0.78 | ) | | | (0.16 | ) | | | (2.90 | ) | | | (2.71 | ) |
| | | | |
| | | | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $18.33 | | | | $18.84 | | | | $18.96 | | | | $18.06 | | | | $15.36 | | | | $20.22 | |
| | | | |
Total investment return3 | | | 4.64% | | | | 11.76% | | | | 9.42% | | | | 18.74% | | | | (9.97% | ) | | | 9.52% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $171,228 | | | | $169,099 | | | | $158,501 | | | | $156,305 | | | | $139,523 | | | | $171,854 | |
| | | | | | |
Ratios:4 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.25% | | | | 1.25% | | | | 1.25% | | | | 1.25% | | | | 1.25% | | | | 1.25% | |
Net investment loss | | | (0.20%) | | | | (0.16% | ) | | | (0.17% | ) | | | (0.01% | ) | | | (0.23% | ) | | | (0.30% | ) |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 18.19%5 | | | | 27.70% | | | | 28.89% | | | | 23.02% | | | | 21.57% | | | | 23.39% | |
| 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 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
| | | | |
| | | | |
66 | | | SIT MUTUAL FUNDS 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 Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | | | | | | | | | | | | | | | | Three | |
| Class I | | Six Months Ended | | | | | | | | | | | | | | | Months Ended | |
| | | December 31, 2019 | | | Years Ended June 30, | | | June 30, | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015* | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $11.89 | | | | $12.27 | | | | $11.47 | | | | $10.00 | | | | $9.96 | | | | $10.00 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income1 | | | 0.09 | | | | 0.15 | | | | 0.11 | | | | 0.12 | | | | 0.14 | | | | 0.02 | |
Net realized and unrealized gains (losses) | | | 0.76 | | | | (0.25 | ) | | | 0.80 | | | | 1.46 | | | | 0.02 | | | | (0.06) | |
| | | | |
Total from operations | | | 0.85 | | | | (0.10 | ) | | | 0.91 | | | | 1.58 | | | | 0.16 | | | | (0.04) | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.13) | | | | (0.15 | ) | | | (0.11 | ) | | | (0.11 | ) | | | (0.12 | ) | | | — | |
From net realized gains | | | — | | | | (0.13 | ) | | | — | | | | — | | | | — | 2 | | | — | |
| | | | |
Total distributions | | | (0.13) | | | | (0.28 | ) | | | (0.11 | ) | | | (0.11 | ) | | | (0.12 | ) | | | — | |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $12.61 | | | | $11.89 | | | | $12.27 | | | | $11.47 | | | | $10.00 | | | | $9.96 | |
| | | | |
Total investment return3 | | | 7.19% | | | | (0.54% | ) | | | 8.00% | | | | 15.84% | | | | 1.71% | | | | (0.40%) | |
| | | | |
Net assets at end of period (000’s omitted) | | | $12,102 | | | | $12,559 | | | | $14,597 | | | | $12,716 | | | | $5,777 | | | | $3,708 | |
| | | | | | |
Ratios:4 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.25%5 | | | | 1.25%5 | | | | 1.25%5 | | | | 1.25% | | | | 1.25% | | | | 1.25% | |
Expenses (with waiver) | | | 1.00%5 | | | | 1.00%5 | | | | 1.06%5 | | | | 1.25% | | | | 1.25% | | | | 1.25% | |
Net investment income (without waiver) | | | 1.26% | | | | 1.07% | | | | 0.75% | | | | 1.06% | | | | 1.46% | | | | 0.98% | |
Net investment income (with waiver) | | | 1.51% | | | | 1.32% | | | | 0.94% | | | | 1.06% | | | | 1.46% | | | | 0.98% | |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 10.39%6 | | | | 24.17% | | | | 29.74% | | | | 19.57% | | | | 26.43% | | | | 2.63%6 | |
| * | The Fund commenced investment operations on March 31, 2015. | |
| 1 | The net investment income per share is based on average shares outstanding for the period. | |
| 2 | Amount represents less than $0.01 per share. | |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
| 5 | Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)
Sit Small Cap Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | | | | | | | | | | | | | | | | Three | |
| Class S | | Six Months Ended | | | | | | | | | | | | | | | Months Ended | |
| | | December 31, 2019 | | | Years Ended June 30, | | | June 30, | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015* | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $11.88 | | | | $12.26 | | | | $11.46 | | | | $10.00 | | | | $9.96 | | | | $10.00 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income1 | | | 0.08 | | | | 0.12 | | | | 0.08 | | | | 0.09 | | | | 0.11 | | | | 0.02 | |
Net realized and unrealized gains (losses) | | | 0.75 | | | | (0.25 | ) | | | 0.80 | | | | 1.45 | | | | 0.03 | | | | (0.06) | |
| | | | |
Total from operations | | | 0.83 | | | | (0.13 | ) | | | 0.88 | | | | 1.54 | | | | 0.14 | | | | (0.04) | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.11) | | | | (0.12 | ) | | | (0.08 | ) | | | (0.08 | ) | | | (0.10 | ) | | | — | |
From net realized gains | | | — | | | | (0.13 | ) | | | — | | | | — | | | | — | 2 | | | — | |
| | | | |
Total distributions | | | (0.11) | | | | (0.25 | ) | | | (0.08 | ) | | | (0.08 | ) | | | (0.10 | ) | | | — | |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $12.60 | | | | $11.88 | | | | $12.26 | | | | $11.46 | | | | $10.00 | | | | $9.96 | |
| | | | |
Total investment return3 | | | 7.00% | | | | (0.80% | ) | | | 7.74% | | | | 15.46% | | | | 1.46% | | | | (0.40%) | |
| | | | |
Net assets at end of period (000’s omitted) | | | $4,293 | | | | $3,981 | | | | $3,882 | | | | $3,461 | | | | $2,587 | | | | $2,230 | |
| | | | | | |
Ratios:4 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.50%5 | | | | 1.50%5 | | | | 1.50%5 | | | | 1.50% | | | | 1.50% | | | | 1.50% | |
Expenses (with waiver) | | | 1.25%5 | | | | 1.25%5 | | | | 1.31%5 | | | | 1.50% | | | | 1.50% | | | | 1.50% | |
Net investment income (without waiver) | | | 1.01% | | | | 0.82% | | | | 0.51% | | | | 0.81% | | | | 1.21% | | | | 0.73% | |
Net investment income (with waiver) | | | 1.26% | | | | 1.07% | | | | 0.70% | | | | 0.81% | | | | 1.21% | | | | 0.73% | |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 10.39%6 | | | | 24.17% | | | | 29.74% | | | | 19.57% | | | | 26.43% | | | | 2.63%6 | |
| * | The Fund commenced investment operations on March 31, 2015. | |
| 1 | The net investment income per share is based on average shares outstanding for the period. | |
| 2 | Amount represents less than $0.01 per share. | |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
| 5 | Total Fund expenses are limited to 1.50% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. | |
| | | | |
| | | | |
68 | | | 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, 2019 | | | | | | Years Ended June 30, | | | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $55.46 | | | | $57.18 | | | | $54.18 | | | | $45.59 | | | | $60.10 | | | | $61.38 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment loss1 | | | (0.12) | | | | (0.25 | ) | | | (0.29 | ) | | | (0.24 | ) | | | (0.33 | ) | | | (0.48) | |
Net realized and unrealized gains (losses) | | | 2.05 | | | | 2.88 | | | | 7.01 | | | | 8.91 | | | | (8.97 | ) | | | 6.26 | |
| | | | |
Total from operations | | | 1.93 | | | | 2.63 | | | | 6.72 | | | | 8.67 | | | | (9.30 | ) | | | 5.78 | |
| | | | |
| | | | | | |
Redemption fees2 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
From net realized gains | | | (1.75) | | | | (4.35 | ) | | | (3.72 | ) | | | (0.08 | ) | | | (5.21 | ) | | | (7.06) | |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $55.64 | | | | $55.46 | | | | $57.18 | | | | $54.18 | | | | $45.59 | | | | $60.10 | |
| | | | |
Total investment return3 | | | 3.50% | | | | 6.45% | | | | 12.68% | | | | 19.06% | | | | (16.00% | ) | | | 10.38% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $100,719 | | | | $99,630 | | | | $100,038 | | | | $90,817 | | | | $81,209 | | | | $103,816 | |
| | | | | | |
Ratios:4 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | |
Net investment loss | | | (0.43%) | | | | (0.47% | ) | | | (0.51% | ) | | | (0.47% | ) | | | (0.65% | ) | | | (0.81%) | |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 12.50%5 | | | | 26.34% | | | | 29.01% | | | | 29.08% | | | | 27.37% | | | | 31.07% | |
| 1 | The net investment income (loss) per share is based on average shares outstanding for the period. | |
| 2 | Amount represents less than $0.01 per share. | |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit International Growth Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | Six Months Ended | | | | | | | | | | | | | | | | |
| | | December 31, 2019 | | | | | | Years Ended June 30, | | | | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $17.13 | | | | $16.75 | | | | $16.23 | | | | $14.48 | | | | $16.92 | | | | $17.44 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income1 | | | 0.01 | | | | 0.16 | | | | 0.19 | | | | 0.14 | | | | 0.12 | | | | 0.09 | |
Net realized and unrealized gains (losses) | | | 0.94 | | | | 0.40 | | | | 0.47 | | | | 1.68 | | | | (1.47 | ) | | | (0.34) | |
| | | | |
Total from operations | | | 0.95 | | | | 0.56 | | | | 0.66 | | | | 1.82 | | | | (1.35 | ) | | | (0.25) | |
| | | | |
| | | | | | |
Redemption fees | | | — | | | | — | | | | — | 2 | | | — | 2 | | | — | | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.17) | | | | (0.18 | ) | | | (0.14 | ) | | | (0.07 | ) | | | (0.09 | ) | | | (0.27) | |
From net realized gains | | | — | | | | — | | | | — | | | | — | | | | (1.00 | ) | | | — | |
| | | | |
Total distributions | | | (0.17) | | | | (0.18 | ) | | | (0.14 | ) | | | (0.07 | ) | | | (1.09 | ) | | | (0.27) | |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $17.91 | | | | $17.13 | | | | $16.75 | | | | $16.23 | | | | $14.48 | | | | $16.92 | |
| | | | |
Total investment return3 | | | 5.55% | | | | 3.55% | | | | 4.06% | | | | 12.64% | | | | (8.19% | ) | | | (1.35%) | |
| | | | |
Net assets at end of period (000’s omitted) | | | $24,322 | | | | $23,463 | | | | $23,875 | | | | $22,618 | | | | $20,440 | | | | $22,485 | |
| | | | | | |
Ratios:4 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | |
Net investment income | | | 0.09% | | | | 0.97% | | | | 1.11% | | | | 0.97% | | | | 0.76% | | | | 0.55% | |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 9.88%5 | | | | 27.38% | | | | 16.35% | | | | 39.23% | | | | 37.94% | | | | 56.97% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. | |
| 2 | Amount represents less than $0.01 per share. | |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
| | | | |
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70 | | | 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, 2019 | | | | | | Years Ended June 30, | | | | |
| | | (Unaudited) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
| |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $16.21 | | | | $17.25 | | | | $15.23 | | | | $12.26 | | | | $14.77 | | | | $17.48 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss)1 | | | 0.24 | | | | 0.10 | | | | 0.03 | | | | (0.02 | ) | | | 0.04 | | | | 0.03 | |
Net realized and unrealized gains (losses) | | | 0.81 | | | | (0.90 | ) | | | 2.24 | | | | 3.02 | | | | (2.18 | ) | | | (1.41) | |
| | | | |
Total from operations | | | 1.05 | | | | (0.80 | ) | | | 2.27 | | | | 3.00 | | | | (2.14 | ) | | | (1.38) | |
| | | | |
| | | | | | |
Redemption fees | | | — | | | | — | | | | — | 2 | | | — | | | | — | 2 | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.30) | | | | (0.08 | ) | | | — | | | | (0.03 | ) | | | (0.02 | ) | | | — | |
From net realized gains | | | — | | | | (0.16 | ) | | | (0.25 | ) | | | — | | | | (0.35 | ) | | | (1.33) | |
| | | | |
Total distributions | | | (0.30) | | | | (0.24 | ) | | | (0.25 | ) | | | (0.03 | ) | | | (0.37 | ) | | | (1.33) | |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | | | | | |
End of period | | | $16.96 | | | | $16.21 | | | | $17.25 | | | | $15.23 | | | | $12.26 | | | | $14.77 | |
| | | | |
Total investment return3 | | | 6.47% | | | | (4.43% | ) | | | 14.94% | | | | 24.56% | | | | (14.42% | ) | | | (7.64%) | |
| | | | |
Net assets at end of period (000’s omitted) | | | $10,796 | | | | $9,996 | | | | $11,027 | | | | $9,561 | | | | $7,297 | | | | $9,192 | |
| | | | | | |
Ratios:4 | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 2.00%5 | | | | 2.00% | 5 | | | 2.00% | 5 | | | 2.00% | | | | 2.00% | | | | 2.00% | |
Expenses (with waiver). | | | 1.40%5 | | | | 1.40% | 5 | | | 1.54% | 5 | | | 2.00% | | | | 2.00% | | | | 2.00% | |
Net investment income (loss) (without waiver) | | | 2.44% | | | | 0.03% | | | | (0.26% | ) | | | (0.18% | ) | | | 0.31% | | | | 0.16% | |
Net investment income (loss) (with waiver) | | | 3.04% | | | | 0.63% | | | | 0.20% | | | | (0.18% | ) | | | 0.31% | | | | 0.16% | |
| | | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 1.91%6 | | | | 10.28% | | | | 30.30% | | | | 19.67% | | | | 28.14% | | | | 21.51% | |
| 1 | The net investment income (loss) per share is based on average shares outstanding for the period. | |
| 2 | Amount represents less than $0.01 per share. | |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. | |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. | |
| 5 | Total Fund expenses are limited to 2.00% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. | |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2019
Sit Mutual Funds areno-load funds, and are registered under the Investment Company Act of 1940 (as amended) as diversified,open-end management investment companies, or series thereof. The Sit Balanced, Sit Dividend Growth, Sit Global Dividend Growth, Sit ESG Growth, Sit Small Cap Dividend Growth, Sit Small Cap Growth, Sit International Growth, and Sit Developing Markets Growth are series funds of Sit Mutual Funds, Inc.
This report covers the equity funds of the Sit Mutual Funds (the Funds). Each fund has 10 billion authorized shares of capital stock with a par value of $0.001. The investment objective for each Fund is as follows:
| | |
| Fund | | Investment Objective |
Balanced | | Long-term growth consistent with the preservation of principal and to provide regular income. |
Dividend Growth | | Provide current income that exceeds the dividend yield of the S&P 500® Index |
| | and that grows over a period of years. Secondarily, maximize long-term capital |
| | appreciation. |
Global Dividend Growth | | Provide current income that exceeds the dividend yield of the MSCI World Index |
| | that grows over a period of years. Secondarily, maximize long-term capital |
| | appreciation. |
Large Cap Growth | | Maximize long-term capital appreciation. |
ESG Growth | | Maximize long-term capital appreciation. |
Mid Cap Growth | | Maximize long-term capital appreciation. |
Small Cap Dividend Growth | | Provide current income that exceeds the yield of the Russell 2000® Index and |
| | that grows over a period of years. Secondarily, maximize long-term capital |
| | appreciation. |
Small Cap Growth | | Maximize long-term capital appreciation. |
International Growth | | Maximize long-term growth. |
Developing Markets Growth | | Maximize long-term capital appreciation. |
The Dividend Growth, Global Dividend Growth, ESG Growth and Small Cap Dividend Growth Funds offer Class I and Class S shares. Both classes of shares have identical voting, dividend, and liquidation rights. The distribution fee differs among classes, the Class S shares have a 0.25% distribution fee, whereas Class I has no distribution fee. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets.
| (2) | Significant Accounting Policies |
The Funds are investment companies and follow accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services-Investment Companies”. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”).
Investments in Securities
Investments in securities traded on national or international securities exchanges are valued at the last reported sales price prior to the time when assets are valued. Equity securities traded on theover-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
| | | | |
| | | | |
72 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
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 theex-dividend date or upon the receipt ofex-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.
Fair Value Measurements
The inputs and valuation techniques used to measure fair value of the Funds’ investments are summarized into three levels as described in the hierarchy below:
• Level 1 – quoted prices in active markets for identical securities. An active market for the security is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value.
• Level 2 – debt securities are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, U.S. government and government agency obligations, and municipal securities the pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity, and type as well as dealer supplied prices. For asset-backed securities and mortgage-backed securities, the pricing services utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity, and type as well as dealer supplied prices. For foreign equities, the pricing services adjust closing prices by applying a systematic process for events occurring after the close of the foreign exchange by utilizing such inputs as Depositary Receipts, quoted prices for similar securities, exchange rates, and certain indexes. All of these inputs are derived principally from or corroborated by observable market data. An adjustment to any observable input that is significant to the fair value may render the measurement a Level 3 measurement.
• Level 3 – significant unobservable inputs, including the Adviser’s own assumptions in determining the fair value of investments.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
A summary of the levels for the Funds’ investments as of December 31, 2019 is included with the Funds’ schedule of investments.
Foreign Currency Translations and Forward Foreign Currency Contracts
The fair value of securities and other assets and liabilities denominated in foreign currencies for Global Dividend Growth, ESG Growth, International Growth and Developing Markets Growth Funds are translated daily into U.S. dollars at the closing rate of exchange (approximately 4:00 p.m. Eastern Time). Purchases and sales of securities, income and expenses are translated at the exchange rate on the transaction date. Dividend and interest income includes currency exchange gains (losses) realized between the accrual and payment dates on such income. Exchange gains (losses) may also be realized between the trade and settlement dates on security and forward contract transactions. For securities denominated in foreign currencies, the effect of changes in foreign exchange rates on realized and unrealized gains or losses is reflected as a component of such gains or losses.
The Global Dividend Growth, ESG Growth, International Growth and Developing Markets Growth Funds may enter into forward foreign currency exchange contracts generally for operational purposes, but the Adviser may occasionally utilize contracts to protect against adverse exchange rate fluctuation. Any gains (losses) generated by these contracts are disclosed separately on the statement of operations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Funds and the resulting unrealized appreciation or depreciation is determined using foreign currency exchange rates from an independent pricing service. The Funds are subject to the credit risk that the other party will not complete the obligations of the contract.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2019 (Continued)
Federal Taxes
The Funds’ policy is to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of their taxable income to shareholders. Therefore, no income tax provision is required. In order to avoid the payment of any federal excise taxes, the Funds will distribute substantially all of their net investment income and net realized gains on a calendar year basis. Also, the Funds may utilize equalization accounting for tax purposes, whereby a portion of redemption payments are treated as distributions of income or gain for income tax purposes.
Management has analyzed the Funds’ tax positions taken in federal tax returns for all open tax years and has concluded that as of December 31, 2019, no provision for income tax would be required in the Funds’ financial statements. The Funds’ federal and state income and federal excise tax returns remain subject to examination by the Internal Revenue Service and state departments of revenue until such time as the applicable statute of limitations for audit has expired. For example, U.S. tax returns are generally subject to audit for three years from the date they are filed.
At December 31, 2019, the gross unrealized appreciation (depreciation) on investments and cost of securities on a tax basis for federal income tax purposes were as follows:
| | | | | | | | | | | | | | | | |
| | | Unrealized
Appreciation | | | Unrealized
Depreciation | | | Net Unrealized
Appreciation
(Depreciation) | | | Cost of
Securities on a
Tax Basis | |
Balanced | | | $8,750,813 | | | | ($76,273) | | | | $8,674,540 | | | | $27,057,537 | |
Dividend Growth | | | 52,839,123 | | | | (557,287) | | | | 52,281,836 | | | | 205,836,371 | |
Global Dividend Growth | | | 10,585,552 | | | | (186,902) | | | | 10,398,650 | | | | 26,434,975 | |
Large Cap Growth | | | 63,982,723 | | | | (153,022) | | | | 63,829,701 | | | | 58,898,654 | |
ESG Growth | | | 1,867,657 | | | | (4,708) | | | | 1,862,949 | | | | 4,951,019 | |
Mid Cap Growth | | | 74,753,944 | | | | (268,904) | | | | 74,485,040 | | | | 97,769,160 | |
Small Cap Dividend Growth | | | 3,695,397 | | | | (336,838) | | | | 3,358,559 | | | | 12,939,325 | |
Small Cap Growth | | | 38,797,793 | | | | (516,949) | | | | 38,280,844 | | | | 62,878,303 | |
International Growth | | | 6,460,290 | | | | (422,897) | | | | 6,037,393 | | | | 18,245,599 | |
Developing Markets Growth | | | 3,515,539 | | | | (411,619) | | | | 3,103,920 | | | | 7,680,963 | |
Net investment income and net realized gains differ for financial statement and tax purposes because of corporate actions on shares held and/or losses deferred due to “wash sale” transactions. A “wash sale” occurs when a Fund sells a security that it has acquired within a period beginning thirty days before and ending thirty days after the date of sale (a sixty one day period). The character of distributions made during the year from net investment income or net realized gains may also differ from its ultimate characterization for tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Funds. The tax character of distributions paid during the fiscal years ended June 30, 2019 and 2018 were as follows:
| | | | |
| | | | |
74 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
Year Ended June 30, 2019:
| | | | | | | | | | | | |
| | | | | | Long Term | | | | |
| | | Ordinary Income | | | Capital Gain | | | Total | |
Balanced | | | $459,001 | | | | $342,301 | | | | $801,302 | |
Dividend Growth (Class I) | | | 17,847,831 | | | | 86,972,912 | | | | 104,820,743 | |
Dividend Growth (Class S) | | | 1,193,973 | | | | 7,639,936 | | | | 8,833,909 | |
Global Dividend Growth (Class I) | | | 521,860 | | | | — | | | | 521,860 | |
Global Dividend Growth (Class S) | | | 49,144 | | | | — | | | | 49,144 | |
Large Cap Growth | | | 456,987 | | | | 9,477,676 | | | | 9,934,663 | |
ESG Growth (Class I) | | | 40,551 | | | | — | | | | 40,551 | |
ESG Growth (Class S) | | | 31,449 | | | | — | | | | 31,449 | |
Mid Cap Growth | | | 1,152,232 | | | | 14,273,917 | | | | 15,426,149 | |
Small Cap Dividend Growth (Class I) | | | 169,480 | | | | 147,220 | | | | 316,700 | |
Small Cap Dividend Growth (Class S) | | | 38,521 | | | | 42,395 | | | | 80,916 | |
Small Cap Growth | | | — | | | | 7,455,033 | | | | 7,455,033 | |
International Growth | | | 245,338 | | | | — | | | | 245,338 | |
Developing Markets Growth | | | 49,252 | | | | 102,896 | | | | 152,148 | |
Year Ended June 30, 2018:
| | | | | | | | | | | | |
| | | | | | Long Term | | | | |
| | | Ordinary Income | | | Capital Gain | | | Total | |
Balanced | | | $307,000 | | | | $1,006,844 | | | | $1,313,844 | |
Dividend Growth (Class I) | | | 31,170,676 | | | | 74,263,557 | | | | 105,434,233 | |
Dividend Growth (Class S) | | | 1,857,317 | | | | 4,855,261 | | | | 6,712,578 | |
Global Dividend Growth (Class I) | | | 431,455 | | | | — | | | | 431,455 | |
Global Dividend Growth (Class S) | | | 44,545 | | | | — | | | | 44,545 | |
Large Cap Growth | | | 821,351 | | | | 11,972,770 | | | | 12,794,121 | |
ESG Growth (Class I) | | | 27,776 | | | | — | | | | 27,776 | |
ESG Growth (Class S) | | | 21,224 | | | | — | | | | 21,224 | |
Mid Cap Growth | | | 4,961 | | | | 6,517,375 | | | | 6,522,336 | |
Small Cap Dividend Growth (Class I) | | | 131,227 | | | | — | | | | 131,227 | |
Small Cap Dividend Growth (Class S) | | | 26,774 | | | | — | | | | 26,774 | |
Small Cap Growth | | | — | | | | 6,111,266 | | | | 6,111,266 | |
International Growth | | | 197,000 | | | | — | | | | 197,000 | |
Developing Markets Growth | | | — | | | | 159,864 | | | | 159,864 | |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2019 (Continued)
As of June 30, 2019, the components of distributable earnings on a tax basis were as follows:
| | | | | | | | | | | | | | | | |
| | | Undistributed
Ordinary
Income | | | Undistributed
Long-Term
Capital Gains | | | Accumulated
Capital and
Other Losses | | | Unrealized
Appreciation
(Depreciation) | |
Balanced | | | $102,226 | | | | $1,524,121 | | | | — | | | | $6,952,638 | |
Dividend Growth | | | 1,068,300 | | | | 22,019,050 | | | | — | | | | 31,530,197 | |
Global Dividend Growth | | | 222,441 | | | | — | | | | $(1,181,787 | ) | | | 8,074,491 | |
Large Cap Growth | | | 176,138 | | | | 6,846,710 | | | | — | | | | 56,747,944 | |
ESG Growth | | | 50,472 | | | | — | | | | (126,311 | ) | | | 1,467,989 | |
Mid Cap Growth | | | — | | | | 11,444,355 | | | | (3,152,283 | ) | | | 72,151,295 | |
Small Cap Dividend Growth | | | 46,837 | | | | — | | | | (191,450 | ) | | | 2,377,998 | |
Small Cap Growth | | | — | | | | 991,788 | | | | (220,127 | ) | | | 36,979,883 | |
International Growth | | | 210,247 | | | | — | | | | (1,078,893 | ) | | | 4,624,474 | |
Developing Markets Growth | | | 34,387 | | | | — | | | | (5,966 | ) | | | 2,553,534 | |
Net capital loss carryovers and late year losses, if any, as of June 30, 2019, are available to offset future realized capital gains and thereby reduce future capital gains distributions. The Funds’ are permitted to carry forward capital losses for an unlimited period. Capital losses that are carried forward retain their character as either short-term or long-term capital losses. The net capital loss carryovers and the late year losses deferred as of June 30, 2019, were as follows:
| | | | | | | | | | | | | | | | |
| | | Unlimited Period of Net | | | Late Year | |
| | | Capital Loss Carryover | | | Losses Deferred | |
| | | | |
| | | Short-Term | | | Long-Term | | | Ordinary | | | Capital | |
Global Dividend Growth | | | $1,117,441 | | | | $64,346 | | | | — | | | | — | |
ESG Growth | | | 81,237 | | | | 45,074 | | | | — | | | | — | |
Mid Cap Growth | | | — | | | | — | | | | $108,009 | | | | $3,044,274 | |
Small Cap Dividend Growth | | | — | | | | — | | | | — | | | | 191,450 | |
Small Cap Growth | | | — | | | | — | | | | 220,127 | | | | — | |
International Growth | | | 913,795 | | | | 165,098 | | | | — | | | | — | |
Developing Markets Growth | | | — | | | | — | | | | — | | | | 5,966 | |
|
For the year ended June 30, 2019, the Funds’ utilized capital losses and expired capital losses as follows: |
| | | | | | | | |
| | | Utilized | | | Expired | | |
Small Cap Dividend Growth | | $ | 180,597 | | | — |
Distributions
Distributions to shareholders are recorded as of the close of business on the record date. Such distributions are payable in cash or reinvested in additional shares of the Funds’ capital stock. Distributions from net investment income, if any, are declared and paid quarterly for the Balanced, Dividend Growth, Global Dividend Growth and Small Cap Dividend Growth Funds and declared and paid annually for Developing Markets Growth, Small Cap Growth, International Growth, Mid Cap Growth, Large Cap Growth and ESG Growth Funds. Distributions from net realized gains, if any, will be made annually for each of the Funds.
Concentration of Investments
The Developing Markets Growth Fund may concentrate investments in countries with limited or developing capital markets which may involve greater risks than investments in more developed markets and the prices of such investments may be volatile. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of the Fund’s investments and the income it generates, as well as the Fund’s ability to repatriate such amounts.
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76 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results for the respective periods. Actual results could differ from those estimates.
Guarantees and Indemnifications
Under each Fund’s organizational documents, its officers and directors are indemnified against certain liability arising out of the performance of their duties to each Fund. In addition, certain of each Fund’s contracts with its service providers contain general indemnification clauses. Each Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against each Fund cannot be determined and each Fund has no historical basis for predicting the likelihood of any such claims.
| (3) | Investment Security Transactions |
The cost of purchases and proceeds from sales and maturities of investment securities, other than short-term securities, for the year ended December 31, 2019, were as follows:
| | | | | | | | | | | | | | | | |
| | | Purchases | | | Proceeds | |
| | | | |
| | | U.S. Government | | | Other | | | U.S. Government | | | Other | |
Balanced | | | $1,490,757 | | | | $8,491,361 | | | | $2,252,023 | | | | $7,831,523 | |
Dividend Growth | | | — | | | | 73,536,338 | | | | — | | | | 95,678,171 | |
Global Dividend Growth | | | — | | | | 6,186,163 | | | | — | | | | 6,067,534 | |
Large Cap Growth | | | — | | | | 12,559,514 | | | | — | | | | 17,023,989 | |
ESG Growth | | | — | | | | 1,334,273 | | | | — | | | | 1,197,363 | |
Mid Cap Growth | | | — | | | | 30,491,438 | | | | — | | | | 29,080,928 | |
Small Cap Dividend Growth | | | — | | | | 1,639,296 | | | | — | | | | 2,300,000 | |
Small Cap Growth | | | — | | | | 13,168,494 | | | | — | | | | 11,585,895 | |
International Growth | | | — | | | | 2,250,170 | | | | — | | | | 2,420,298 | |
Developing Markets Growth | | | — | | | | 537,993 | | | | — | | | | 181,933 | |
| (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:
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Six Months Ended December 31, 2019 (Continued)
| | | | |
| | Management Fee | | Net of Adviser’s Voluntary Fee Waiver |
Balanced | | 1.00% | | N/A |
Dividend Growth Fund Class I and Class S | | 1.00% | | 0.70% |
Global Dividend Growth Fund Class I and Class S | | 1.25% | | 1.00% |
Large Cap Growth | | 1.00% | | N/A |
ESG Growth Fund Class I and Class S | | 1.25% | | 1.00% |
Mid Cap Growth | | 1.25% | | N/A |
Small Cap Dividend Growth Fund Class I and Class S | | 1.25% | | 1.00% |
Small Cap Growth | | 1.50% | | N/A |
International Growth | | 1.50% | | N/A |
Developing Markets Growth | | 2.00% | | 1.40% |
SIA is obligated to pay all of the Funds’ expenses (excluding extraordinary expenses, stock transfer taxes, interest, brokerage commissions,12b-1 fees and other transaction charges relating to investing activities).
In addition to the annual management fees, the Class S shares of Dividend Growth, Global Dividend Growth, ESG Growth and Small Cap Dividend Growth Funds also have a 0.25% annual distribution(12b-1) fee, which is used to pay for distribution fees related to the sale and distribution of its shares.
Effective October 1, 2017, the Adviser has agreed to limit the management fee of the Dividend Growth Fund to 0.70%, the Global Dividend Growth Fund to 1.00%, the ESG Growth Fund to 1.00%, the Small Cap Dividend Growth Fund to 1.00% and the Developing Markets Growth Fund to 1.40% for the period through June 30, 2021 of the Fund’s daily average net assets, respectively.
Transactions with affiliates
The investment adviser, affiliates of the investment adviser, directors and officers of the Funds as a whole owned the following shares as of December 31, 2019:
| | | | | | | | |
| | | Shares | | | % Shares
Outstanding | | |
Balanced | | | 293,606 | | | 19.4 |
Dividend Growth | | | 1,475,754 | | | 8.2 |
Global Dividend Growth | | | 451,234 | | | 21.6 |
Large Cap Growth | | | 730,433 | | | 25.7 |
ESG Growth | | | 453,419 | | | 94.2 |
Mid Cap Growth | | | 4,261,278 | | | 45.6 |
Small Cap Dividend Growth | | | 629,334 | | | 48.4 |
Small Cap Growth | | | 980,671 | | | 54.2 |
International Growth | | | 749,743 | | | 55.2 |
Developing Markets Growth | | | 279,034 | | | 43.8 |
| | | | |
| | | | |
78 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
| (5) | Capital Share Activity |
Short-Term Trading (Redemption) Fees
The Funds (except Balanced) charge a redemption fee equal to 2.00% of the proceeds on shares held for less than 30 calendar days. The fee is retained by the Fund for the benefit of its long-term shareholders and accounted for as an addition to paid in capital. For the six months ended December 31, 2019, the Funds received the following redemption fees:
| | | | | | | | |
| | | Class I | | | Class S | |
Dividend Growth | | | — | | | | $9 | |
Global Dividend Growth | | | $22 | | | | 2 | |
Large Cap Growth | | | 85 | | | | — | |
Mid Cap Growth | | | 912 | | | | — | |
Small Cap Growth | | | 280 | | | | — | |
EXPENSE EXAMPLE (Unaudited)
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2019 to December 31, 2019.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $ 1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs (redemption fees) were included, your costs would have been higher.
| | | | | | |
| Fund | | Beginning
Account
Value
(7/1/19) | | Ending
Account
Value
(12/31/19) | | Expenses
Paid During
Period*
(7/1/19-
12/31/19) |
|
| Balanced Fund |
Actual | | $1,000 | | $1,070.30 | | $5.20 |
Hypothetical | | $1,000 | | $1,020.11 | | $5.08 |
|
| Dividend Growth Fund |
Actual | | | | | | |
Class I | | $1,000 | | $1,116.60 | | $5.32 |
Class S | | $1,000 | | $1,115.80 | | $6.65 |
Hypothetical | | | | | | |
Class I | | $1,000 | | $1,020.11 | | $5.08 |
Class S | | $1,000 | | $1,018.85 | | $6.34 |
|
| Global Dividend Growth Fund |
Actual | | | | | | |
Class I | | $1,000 | | $1,091.30 | | $6.57 |
Class S | | $1,000 | | $1,089.40 | | $7.88 |
Hypothetical | | | | | | |
Class I | | $1,000 | | $1,018.85 | | $6.34 |
Class S | | $1,000 | | $1,017.60 | | $7.61 |
|
| Large Cap Growth Fund |
Actual | | $1,000 | | $1,113.60 | | $5.31 |
Hypothetical | | $1,000 | | $1,020.11 | | $5.08 |
|
| ESG Growth Fund |
Actual | | | | | | |
Class I | | $1,000 | | $1,090.90 | | $6.57 |
Class S | | $1,000 | | $1,089.20 | | $7.88 |
Hypothetical | | | | | | |
Class I | | $1,000 | | $1,018.85 | | $6.34 |
Class S | | $1,000 | | $1,017.60 | | $7.61 |
|
| Mid Cap Growth Fund |
Actual | | $1,000 | | $1,046.40 | | $6.43 |
Hypothetical | | $1,000 | | $1,018.85 | | $6.34 |
|
| Small Cap Dividend Growth Fund |
Actual | | | | | | |
Class I | | $1,000 | | $1,071.90 | | $6.51 |
Class S | | $1,000 | | $1,070.00 | | $7.80 |
Hypothetical | | | | | | |
Class I | | $1,000 | | $1,018.85 | | $6.34 |
Class S | | $1,000 | | $1,017.60 | | $7.61 |
| | | | |
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80 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
EXPENSE EXAMPLE (Unaudited) (Continued)
| | | | | | |
| Fund | | Beginning
Account
Value
(7/1/19) | | Ending
Account
Value
(12/31/19) | | Expenses
Paid During
Period*
(7/1/19-
12/31/19) |
|
| Small Cap Growth Fund |
Actual | | $1,000 | | $1,035.00 | | $7.67 |
Hypothetical | | $1,000 | | $1,017.60 | | $7.61 |
|
| International Growth Fund |
Actual | | $1,000 | | $1,055.50 | | $7.75 |
Hypothetical | | $1,000 | | $1,017.60 | | $7.61 |
|
| Developing Markets Growth Fund |
Actual | | $1,000 | | $1,064.70 | | $10.38 |
Hypothetical | | $1,000 | | $1,015.08 | | $10.13 |
*Expenses are equal to the Fund’s annualized expense ratio of 0.70% for the Dividend Growth, Class I Fund; 0.95% for the Dividend Growth, Class S Fund; 1.00%, for the Balanced, Global Dividend Growth, Class I, Large Cap Growth, ESG Growth, Class I, and Small Cap Dividend Growth, Class I Funds; 1.25% for Dividend Growth, Class S, Global Dividend Growth, Class S, ESG Growth, Class S, Mid Cap Growth, and Small Cap Dividend Growth, Class S Funds; 1.40% for Developing Markets Growth Fund and 1.50% for Small Cap Growth, and International Growth Funds, multiplied by the average account value over the period, multiplied by 184/366 (to reflect theone-half year period.)
ADDITIONAL INFORMATION (Unaudited)
PROXY VOTING
A description of the policies and procedures that Sit Investment uses to vote proxies related to the Funds’ portfolio securities is set forth in the Funds’ Statement of Additional Information, which is available on the Funds’ website at www.sitfunds.com, without charge by calling800-332-5580 and on the Securities and Exchange Commission’s (SEC) website at www.sec.gov. The Funds’ proxy voting record is available without charge by calling800-332-5580 and on the SEC’s website at www.sec.gov no later than August 31 for the prior 12 months ending June.
QUARTERLY SCHEDULE OF INVESTMENTS SCHEDULES
Each Fund files a complete schedule of investments with the SEC for the first and third quarters of each fiscal year on FormN-PORT. The Funds’ FormN-PORT is available on the SEC’s website at www.sec.gov. Each Fund’s complete schedule of investments, as filed on FormN-PORT, is also available on its website at www.sitfunds.com, or without charge by calling800-332-5580.
RE-APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS
At their joint meeting held on October 20, 2019 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 periods during which growth stocks have generally under-performed relative to value stocks, the Stock Funds may not rank favorably in comparisons with other funds investing in value stocks.
The Directors discussed SIA’s consistent and well-defined investment process. With respect to equity securities, SIA utilizes a team basedtop-down andbottom-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.
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
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82 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
ADDITIONAL INFORMATION (Unaudited) (Continued)
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 $13.7 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 interest, brokerage commissions and transaction charges, certain extraordinary expenses, and fees paid under a distribution plan adopted pursuant to Rule12b-1 under the Investment Company Act of 1940 for Class S shares of Sit Dividend Growth Fund, Sit Global Dividend Growth Fund, Sit Small Cap Dividend Growth Fund, and Sit ESG Growth Fund. The Directors reviewed fees paid in prior years and the current fees to be paid under the Agreements both before and after fee waivers with respect to Sit Developing Markets Growth Fund, Sit Dividend Growth Fund, Sit Global Dividend Growth Fund, Sit Small Cap Dividend Growth Fund, and Sit ESG Growth Fund.
The Directors compared each Fund’s expense ratio to the average and median expense ratios ofno-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 Morningstarno-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 otherno-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 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.
ADDITIONAL INFORMATION (Unaudited) (Continued)
The Directors discussed the extent to which SIA receives benefits from the relationship with the Funds such as soft dollar arrangements by which brokers provide research services to SIA as a result of brokerage generated by the Funds. The Board concluded that any benefits SIA receives from its relationship with the Funds are well within industry norms and are reflected in the amount of the fees paid by the Funds to SIA and are appropriate and reasonable.
Non-Advisory Services. The Directors considered the quality ofnon-advisory services which SIA provides to the Funds (and their shareholders) and the quality and depth of SIA’snon-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.
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84 | | | SIT MUTUAL FUNDS SEMI-ANNUAL REPORT | |
Semi-Annual Report December 31, 2019 INVESTMENT ADVISER Sit Investment Associates, Inc. 80 S. Eighth Street Suite 3300 Minneapolis, MN 55402 CUSTODIAN The Bank Of New York Mellon 111 Sanders Creek Parkway Syracuse, NY 13057 TRANSFER AGENT AND DISBURSING AGENT BNY Mellon Investment Servicing (US) Inc. 4400 Computer Drive Westborough, MA 01581 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP Minneapolis, MN GENERAL COUNSEL Dorsey & Whitney LLP Minneapolis, MN Sit Mutual Funds1-800-332-5580 www.sitfunds.com Sit12-31-19 Stock
| 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 toopen-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 forClosed-End Management Investment Companies. |
Not applicable toopen-end investment companies.
| Item 8: | Portfolio Managers ofClosed-End Management Companies. |
Not applicable toopen-end investment companies.
| Item 9: | Purchases of Equity Securities byClosed-End Management Investment Company and Affiliated Purchasers. |
Not applicable toopen-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 Rule30a-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 Rule30a-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.
(a) The following exhibits are attached to this FormN-CSR:
(2) A separate certification for each principal executive and principal financial officer of the registrant as required by Rule30a-2(a) under the Act (17 CFR270.30a-2) (certification required by Section 302 of the Sarbanes-Oxley Act of 2002).
(b) Certification required by Rule30a-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, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | |
| By (Signature and Title) | | | | /s/ Paul E. Rasmussen |
| | | | Paul E. Rasmussen |
| | | | Vice President, Treasurer |
| | |
| Date February 26, 2020 | | | | |
| | |
| By (Signature and Title) | | | | /s/ Roger J. Sit |
| | | | Roger J. Sit |
| | | | Chairman |
| | |
| Date February 26, 2020 | | | | |
