UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
----------
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-04995
---------
Sit U.S. Government Securities Fund, Inc.
(Exact name of registrant as specified in charter)
3300 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
(Address of principal executive offices)
Paul E. Rasmussen, VP Treasurer
Sit Mutual Funds, Inc.
3300 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
(Name and address of agent for service)
Copy to:
Mike Radmer, Esq.
Dorsey & Whitney
Suite 1500
50 South Sixth Street
Minneapolis, MN 55402-1498
Registrant's telephone number, including area code:
(612) 334-5888
Date of fiscal year end: March 31, 2005
Date of reporting period: March 31, 2005
Item 1: Reports to Stockholders
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
----------
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-04033
---------
Sit Mutual Funds II, Inc.
(Exact name of registrant as specified in charter)
3300 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
(Address of principal executive offices)
Paul E. Rasmussen, VP Treasurer
Sit Mutual Funds, Inc.
3300 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
(Name and address of agent for service)
Copy to:
Mike Radmer, Esq.
Dorsey & Whitney
Suite 1500
50 South Sixth Street
Minneapolis, MN 55402-1498
Registrant's telephone number, including area code:
(612) 334-5888
Date of fiscal year end: March 31, 2005
Date of reporting period: March 31, 2005
Item 1: Reports to Stockholders
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
----------
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-04032
---------
Sit Money Market Fund, Inc.
(Exact name of registrant as specified in charter)
3300 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
(Address of principal executive offices)
Paul E. Rasmussen, VP Treasurer
Sit Mutual Funds, Inc.
3300 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
(Name and address of agent for service)
Copy to:
Mike Radmer, Esq.
Dorsey & Whitney
Suite 1500
50 South Sixth Street
Minneapolis, MN 55402-1498
Registrant's telephone number, including area code:
(612) 334-5888
Date of fiscal year end: March 31, 2005
Date of reporting period: March 31, 2005
Item 1: Reports to Stockholders
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
----------
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-21447
---------
Sit Mutual Funds Trust
(Exact name of registrant as specified in charter)
3300 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
(Address of principal executive offices)
Paul E. Rasmussen, VP Treasurer
Sit Mutual Funds, Inc.
3300 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
(Name and address of agent for service)
Copy to:
Mike Radmer, Esq.
Dorsey & Whitney
Suite 1500
50 South Sixth Street
Minneapolis, MN 55402-1498
Registrant's telephone number, including area code:
(612) 334-5888
Date of fiscal year end: March 31, 2005
Date of reporting period: March 31, 2005
Item 1: Reports to Stockholders
SIT MUTUAL FUNDS
BOND FUNDS
ANNUAL REPORT
MARCH 31, 2005
MONEY MARKET FUND
U.S. GOVERNMENT SECURITIES FUND
TAX-FREE INCOME FUND
MINNESOTA TAX-FREE INCOME FUND
FLORIDA TAX-FREE INCOME FUND
BOND FUND
[LOGO] SIT INVESTMENT ASSOCIATES
-------------------------
SIT MUTUAL FUNDS
S I T M U T U A L F U N D S
BOND FUNDS ANNUAL REPORT
TABLE OF CONTENTS
PAGE
Chairman's Letter 2
Performance Summary 4
Average Annual Total Returns 6
FUND REVIEWS AND PORTFOLIOS OF INVESTMENTS
Money Market Fund 8
U.S. Government Securities Fund 12
Tax-Free Income Fund 24
Minnesota Tax-Free Income Fund 40
Florida Tax-Free Income Fund 54
Bond Fund 58
Notes to Portfolios of Investments 62
Statements of Assets and Liabilities 64
Statements of Operations 66
Statements of Changes in Net Assets 68
Notes to Financial Statements 70
Financial Highlights 75
Report of Independent Registered Public Accounting Firm 81
Expenses Example 82
Federal Tax Information 86
Information About Directors and Officers 88
Additional Information 92
Results of Shareholder Meeting 96
A Look at Sit Mutual Funds 98
This document must be preceded or accompanied by a Prospectus.
SIT MUTUAL FUNDS
ONE YEAR ENDED MARCH 31, 2005
- --------------------------------------------------------------------------------
CHAIRMAN'S LETTER
Dear fellow shareholders:
The yield curve continued its flattening trend as the Federal Reserve
continued to increase short term interest rates in its effort to shift monetary
policy from a very accommodative stance towards neutral. The Fed has increased
the federal funds rate +0.25% at each of its last seven meetings for a total of
1.75% since June 30, 2004. The targeted federal funds rate stood at 2.75% on
March 22, 2005. 2-Year Treasury note yields increased by an even greater amount,
implying that the market believes that further rate hikes are yet to come.
Longer term bond yields, which rose initially but have since declined, remain in
a remarkably stable range, reflecting investors' confidence in Fed policy.
Intermediate maturity bonds underperformed in this environment while longer
maturity bonds performed best.
The U.S. economy continues to exhibit above average growth, expanding at a
+3.8% annualized rate in the fourth quarter of 2004. Full calendar year growth
averaged +4.4% in 2004, up strongly from +3.0% growth in 2003. We expect growth
in 2005 to moderate to around a +3.5% rate, which is a pace still above the
long-term historical average. The first estimate of first quarter real GDP
growth showed that economic activity moderated to a +3.1% annual rate,
reflecting slower growth in consumer spending during the period. However, we
expect business spending to provide strength as corporate balance sheets are
healthy and corporations need to continue to spend on productivity enhancements,
particularly equipment and software. We expect growth to slow to a more
sustainable pace in the second half of 2005 as the effects of higher interest
rates take hold. The impact of high oil prices is also expected to have a
moderating effect on the economy.
Inflation measures bear close monitoring as commodity prices continue to
trend upward and oil prices reached new highs in early April. Signs of pressure
are beginning to appear in some inflation measures, mostly at the producer
level. Nevertheless, a larger than expected increase in the March Consumer Price
Index suggests that companies have been able to pass on some of these higher
costs to the consumer. Given the expectation that the Federal Reserve will
continue its persistent march toward neutral monetary policy by continuing to
raise short-term interest rates, we expect consumer inflation will remain
contained within our +2.5% to +3.0% forecast range for the year.
The U.S. dollar exchange rate versus major currencies hovers along the bottom
of its 15-year trading range. Structural issues in the U.S. economy, namely, the
budget and trade deficits, will continue to exert downward pressure on the
dollar. An offsetting factor that has permitted a controlled decline in the
dollar has been the financing of these deficits through purchases of U.S.
Treasury securities by foreigners. Major Asian central banks have not only the
liquidity to function as creditors to the U.S., but also have a direct interest
in ensuring the economic health of the major consumer market for their exports.
Continued increases in U.S. short-term interest rates by the Federal Reserve, in
the absence of the same for the other major countries, should make the dollar
relatively more attractive to investors. Fiscal challenges facing the U.S. will
continue to remain in the headlines. President Bush seems firmly committed to
achieving Social Security reform despite what appears to be mounting odds
against him. A combination of reforms will be necessary if a long term solution
is sought. Not yet addressed is the financial challenge for Medicare and
Medicaid which dwarfs that of Social Security by a factor of eight.
STRATEGY SUMMARY
With absolute levels of interest rates remaining at historically low levels,
we believe economic growth will be generally sustained as rates rise moderately.
2
Our outlook for the U.S. economy in 2005 continues to be reasonably controlled
inflation in the +3.0% range and moderate economic growth averaging +3.5%.
Implicit in these forecasts is the assumption that the Federal Reserve will
continue to move toward a neutral stance on monetary policy to contain
inflation. We believe additional +0.25% rate hikes will persist at least into
the summer and that short-term interest rates to rise by another 1.0% to 1.5%
over the next twelve months. Increases in longer term yields are likely to be
smaller, resulting in a continued flattening of the yield curve, as the Fed's
moves are validated by moderating economic growth and controlled inflation.
Under current market conditions, we expect that the majority of fixed income
portfolio returns will continue to be generated by income. Accordingly,
portfolio structure continues to focus on providing a relative yield advantage,
as well as shorter than benchmark durations to cushion portfolios against the
rising interest rate environment. We anticipate extending portfolio durations
later in the year as interest rates move higher. Our taxable bond portfolios
remain focused on the mortgage sector, and particularly, seasoned high coupon
pass-throughs that provide high income and relative price stability as higher
interest rates have reduced prepayment fears. Positions in the corporate sector,
which performed well as bond yields fell, were reduced as concerns regarding
credit quality have surfaced in recent months.
Municipal portfolios also remain focused on securities that provide
incremental yield and remain defensively positioned with durations shorter than
their benchmarks. While the municipal curve has also flattened, it remains
steeper than the Treasury yield curve and historically has always remained
positively sloping. Shorter maturity municipals have thus far experienced only
about two-thirds the rise in Treasury yields and we believe that municipals will
continue to be more stable in price than comparable duration Treasury securities
in the period ahead. Longer-maturity municipals continue to appear attractively
valued to comparable duration taxable bonds, while short-to-intermediate-
maturity municipals appear fairly valued.
Fixed income investments are an important component of a well diversified
long-term portfolio. We believe that the Sit bond funds, with their dual
objectives of high income and stability of principal, offer an attractive
risk/reward profile to complement equity holdings. We appreciate your continued
interest and investment in Sit Mutual Funds and look forward to assisting you in
achieving your long-term investment goals.
With best wishes,
/s/ Eugene C. Sit
Eugene C. Sit, CFA
Chairman and Chief Investment Officer
3
- --------------------------------------------------------------------------------
SIT MUTUAL FUNDS
ONE YEAR ENDED MARCH 31, 2005
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY - BOND FUNDS
The yield curve flattened during the 12-month period as shorter maturity bond
yields rose and longer maturity bond yields were relatively stable. After
reaching historic lows in mid-March 2004, bond yields rose in anticipation of a
shift in monetary policy with signs of economic strength and, indeed, the
Federal Reserve increased the federal funds rate +0.25% on June 30, 2004 from
1.00% to 1.25%. The Fed continued on its path of shifting monetary policy from
accommodative towards neutral, raising rates another six times at subsequent
meetings to bring the federal funds rate to 2.75% on March 22, 2005. The 2-year
Treasury note yield increased +2.21% from 1.57% to 3.78% and currently reflects
expectations of additional rate increases ahead. Longer term bond yields
initially rose sharply but have since declined, reflecting investors' beliefs
that high oil prices will help moderate economic activity. The 30-year Treasury
bond yield peaked at 5.56% in mid May 2004 before declining to end the period at
4.76%, one basis point lower than where it began.
Intermediate maturity bonds performed worst while longer maturity bonds
performed best in the flattening yield curve environment. The mortgage sector
was the best performing taxable bond market sector, benefiting from its high
income and relative price stability as prepayment fears moderated. Corporates
weakened in recent months with increased concerns regarding credit quality, but
still posted the second best taxable sector return for the period. The
asset-backed and Treasury sectors underperformed with the rise in shorter-term
rates.
The municipal yield curve flattened less as shorter maturity municipals
experienced only about two-thirds the rise in Treasury yields. Longer maturity
municipal yields were relatively stable as reflected in the Bond Buyer 40-Bond
Index yield which rose just 8 basis points to 4.87%. Higher yielding municipal
sectors performed best as investors continued to seek out yield. The industrial
revenue sector benefited from strong price gains in tobacco settlement revenue
bonds, while hospitals and housing also outperformed. Municipals remain
attractively valued relative to taxable bonds on an after-tax basis.
TOTAL RETURNS - CALENDAR YEAR
1996 1997
----------------------------
Sit Money Market Fund 5.08% 5.22%
- --------------------------------------------------------------------------------
Sit U.S. Gov't. Securities Fund 4.99 8.19
- --------------------------------------------------------------------------------
Sit Tax-Free Income Fund 5.69 9.87
- --------------------------------------------------------------------------------
Sit Minnesota Tax-Free 5.89 8.19
Income Fund
- --------------------------------------------------------------------------------
Sit Florida Tax-Free -- --
Income Fund
- --------------------------------------------------------------------------------
Sit Bond Fund 4.25 9.44
- --------------------------------------------------------------------------------
3-Month U.S. Treasury Bill 5.27 5.32
Lehman Inter. Government Bond Index 4.06 7.72
Lehman 5-Year Municipal Bond Index 4.22 6.38
Lehman Aggregate Bond Index 3.63 9.65
NASDAQ
SYMBOL INCEPTION
------ ---------
Sit Money Market Fund(1) SNIXX 11/01/93
- --------------------------------------------------------------------------------
Sit U.S. Gov't. Securities Fund SNGVX 06/02/87
- --------------------------------------------------------------------------------
Sit Tax-Free Income Fund SNTIX 09/29/88
- --------------------------------------------------------------------------------
Sit Minnesota Tax-Free Income Fund SMTFX 12/01/93
- --------------------------------------------------------------------------------
Sit Florida Tax-Free Income Fund SFLIX 12/31/03
- --------------------------------------------------------------------------------
Sit Bond Fund SIBOX 12/01/93
- --------------------------------------------------------------------------------
3-Month U.S. Treasury Bill 11/01/93
Lehman Inter. Government Bond Index 05/31/87
Lehman 5-Year Municipal Bond Index 09/30/88
Lehman Aggregate Bond Index 11/30/93
(1) Converted from Sit Investment Reserve Fund to Sit Money Market Fund on
11/1/93.
(2) Based on the last 12 monthly distributions of net investment income and
average NAV as of 3/31/05.
(3) Figure represents 7-day compound effective yield. The 7-day simple yield as
of 3/31/05 was 2.23%.
(4) For individuals in the 25%, 28%, 33%, and 35% federal tax brackets, the
federal tax equivalent yields are 5.91%, 6.15%, 6.61% and 6.82%,
respectively (income subject to state tax, if any).
4
30-DAY
TOTAL RETURNS - CALENDAR YEAR SEC YIELD
YTD AS OF DISTRIBUTION
1998 1999 2000 2001 2002 2003 2004 2005 3/31/05 RATE (2)
- --------------------------------------------------------------- ---------------------------
5.17% 4.79% 6.03% 3.67% 1.25% 0.65% 0.88% 0.49% 2.26%(3)
- --------------------------------------------------------------------------------------------
6.52 1.37 9.15 8.56 5.79 1.19 3.35 0.13 4.37 3.51%
- --------------------------------------------------------------------------------------------
6.29 -4.01 8.32 5.84 5.69 2.87 3.96 0.31 4.43(4) 3.83
- --------------------------------------------------------------------------------------------
6.14 -3.82 8.09 5.85 7.06 4.42 3.68 0.60 4.49(5) 4.33
- --------------------------------------------------------------------------------------------
-- -- -- -- -- -- 2.58 0.35 4.23(6) 2.93
- --------------------------------------------------------------------------------------------
6.52 -0.34 9.25 8.36 6.68 5.08 4.49 -0.25 5.26 4.93
- --------------------------------------------------------------------------------------------
5.01 4.88 6.16 3.50 1.67 1.03 1.41 0.65
8.49 0.49 10.47 8.42 9.64 2.29 2.33 -0.68
5.84 0.74 7.72 6.21 9.27 4.13 2.72 -1.15
8.69 -0.82 11.63 8.44 10.25 4.10 4.34 -0.48
AVERAGE ANNUAL TOTAL RETURNS FOR THE
TOTAL RETURNS PERIODS ENDED MARCH 31, 2005
QUARTER SIX MONTHS SINCE
ENDED 3/31/05 ENDED 3/31/05 1 YEAR 5 YEARS 10 YEARS INCEPTION
- -------------------------------- ---------------------------------------------------------
0.49% 0.87% 1.24% 2.30% 3.72% 3.76%
- -----------------------------------------------------------------------------------------------
0.13 0.64 1.93 5.27 5.73 6.90
- -----------------------------------------------------------------------------------------------
0.31 1.04 2.54 5.06 5.23 6.12
- -----------------------------------------------------------------------------------------------
0.60 1.96 2.69 5.58 5.27 5.24
- -----------------------------------------------------------------------------------------------
0.35 1.18 1.84 -- -- 2.35
- -----------------------------------------------------------------------------------------------
-0.25 0.39 1.61 6.43 6.50 6.01
- -----------------------------------------------------------------------------------------------
0.65 1.16 1.82 2.57 3.90 3.99
-0.68 -0.46 -0.55 6.08 6.24 7.09
-1.15 -0.36 0.26 5.49 5.30 6.09
-0.48 0.47 1.15 7.14 7.14 6.51
(5) For Minnesota residents in the 25%, 28%, 33% and 35% federal tax brackets,
the double exempt tax equivalent yields are 6.50%, 6.77%, 7.27% and 7.50%,
respectively (assumes the maximum Minnesota tax bracket of 7.85%).
(6) For individuals in the 25%, 28%, 33%, and 35% federal tax brackets, the tax
equivalent yields are 5.64%, 5.88%, 6.31% and 6.51%, respectively (income
subject to state tax, if any).
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. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS.
5
- --------------------------------------------------------------------------------
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2004
The tables on the next page show the Funds' average annual total returns (before
and after taxes) and the change in value of a broad-based market index over
various periods ended December 31, 2004. The index information is intended to
permit you to compare each Fund's performance to a broad measure of market
performance. The after-tax returns are intended to show the impact of federal
income taxes on an investment in a Fund. The highest individual federal marginal
income tax rate in effect during the specified period is assumed, and the state
and local tax impact is not reflected.
A Fund's "Return After Taxes on Distributions" shows the effect of taxable
distributions (dividends and capital gain distributions), but assumes that you
still hold the fund shares at the end of the period and so do not have any
taxable gain or loss on your investment in the Fund.
A Fund's "Return After Taxes on Distributions and Sale of Fund Shares" shows the
effect of both taxable distributions and any taxable gain or loss that would be
realized if the Fund shares were purchased at the beginning and sold at the end
of the specified period.
The Funds' past performance, before and after taxes, is not an indication of how
the Funds will perform in the future. Your actual after-tax returns depend on
your own tax situation and may differ from those shown. After-tax returns
reflect past tax effects and are not predictive of future tax effects. After-tax
returns are not relevant to investors who hold their Fund shares in a
tax-deferred account (including a 401(k) or IRA account).
6
- -------------------------------------------------------------------------------------------------
SIT U. S. GOVERNMENT SECURITIES FUND 1 YEAR 5 YEARS 10 YEARS
Return Before Taxes 3.4% 5.6% 6.0%
Return After Taxes on Distributions 2.1% 3.8% 3.9%
Return After Taxes on Distributions and Sale of Fund Shares 2.2% 2.9% 3.4%
Lehman Intermediate Government Bond Index 2.3% 6.6% 6.8%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
SIT TAX-FREE INCOME FUND 1 YEAR 5 YEARS 10 YEARS
Return Before Taxes 4.0% 5.3% 5.6%
Return After Taxes on Distributions 4.0% 5.3% 5.6%
Return After Taxes on Distributions and Sale of Fund Shares 4.0% 5.2% 5.6%
Lehman 5-Year Municipal Bond Index 2.7% 6.0% 5.8%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
SIT MINNESOTA TAX-FREE INCOME FUND 1 YEAR 5 YEARS 10 YEARS
Return Before Taxes 3.7% 5.8% 5.7%
Return After Taxes on Distributions 3.7% 5.8% 5.7%
Return After Taxes on Distributions and Sale of Fund Shares 3.9% 5.7% 5.6%
Lehman 5-Year Municipal Bond Index 2.7% 6.0% 5.8%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
SIT BOND FUND 1 YEAR 5 YEARS 10 YEARS
Return Before Taxes 4.5% 6.8% 7.0%
Return After Taxes on Distributions 2.7% 4.5% 4.5%
Return After Taxes on Distributions and Sale of Fund Shares 2.8% 4.4% 4.4%
Lehman Aggregate Bond Index 4.3% 7.7% 7.7%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
SIT FLORIDA TAX-FREE INCOME FUND 1 YEAR 5 YEARS SINCE INCEPTION*
Return Before Taxes 2.6% n/a 2.6%
Return After Taxes on Distributions 2.6% n/a 2.6%
Return After Taxes on Distributions and Sale of Fund Shares 2.6% n/a 2.6%
Lehman 5-Year Municipal Bond Index 2.7% n/a 2.7%
- -------------------------------------------------------------------------------------------------
*Inception date 12/31/03.
NOTES:
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes.
(2) Actual after-tax returns depend on an investor's tax situation and may
differ from those shown, and after-tax returns shown are not relevant to
investors who hold their shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts.
(3) Indices reflect no deduction for fees, expenses, or taxes.
7
- --------------------------------------------------------------------------------
SIT MONEY MARKET FUND
ONE YEAR ENDED MARCH 31, 2005
- --------------------------------------------------------------------------------
MICHAEL C. BRILLEY, SENIOR PORTFOLIO MANAGER
MARK H. BOOK, CFA, PORTFOLIO MANAGER
The Money Market Fund returned +1.24% for the twelve months ended March 31,
2005 compared to +1.82% for the 3-month U.S. Treasury Bill. As of March 31st,
the Fund's 7-day compound yield was 2.26% and its average maturity was 22 days.
As expected, the Federal Reserve increased the federal funds interest rate
target further by 25 basis points at its meeting on March 22nd, the seventh
increase in the current cycle of removing monetary accommodation. Since the
tightening process began on June 30, 2004, the fed funds rate has increased 175
basis points to 2.75%, while 10-year and 30-year U.S. Treasury yields have
fallen by 10 and 53 basis points, respectively. The most significant change in
emphasis in the statement accompanying the Fed's latest action was a slightly
greater acknowledgment of inflationary pressures. As expected, the Federal
Reserve continued on the path of raising interest rates and increased the fed
funds target by +0.25% at the May 3rd FOMC meeting. Future rate increases are
likely, but the Fed could change its course of action if expectations of
economic growth are unrealized.
The fund has maintained its average maturity near the short end of its
customary 20-40 day range as the 3-Month Treasury Bill yield increased 182 basis
points over the past 12 months. The fund will maintain its rather short maturity
in anticipation of earning higher yields as the Fed raises short-term rates. If
the pace of tightening slows or ceases, we expect to extend the average maturity
to the middle or longer end of its customary 20-40 day range. Corporate credit
quality has generally improved as the economy has strengthened, with the primary
exceptions of Ford and General Motors. The Fund has no direct exposure to either
of these companies and will continue to focus on issuers with top-tier credit
quality. Given the expected rise in short-term rates, we believe the Fund should
produce higher returns over the next six months.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
- --------------------------------------------------------------------------------
The objective of the Fund is to achieve maximum current income to the extent
consistent with the preservation of capital and maintenance of liquidity. The
Fund pursues this objective by investing in short-term debt instruments which
mature in 397 days or less and by maintaining a dollar-weighted portfolio
maturity of 90 days or less.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00 per share.
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY
- --------------------------------------------------------------------------------
Net Asset Value 3/31/05: $1.00 Per Share
3/31/04: $1.00 Per Share
Total Net Assets: $38.1 Million
- --------------------------------------------------------------------------------
PORTFOLIO STRUCTURE
(% OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
Diversified Finance
13.9
Consumer Non-Durables
13.6
Asset-Backed Securities
11.9
Communications
9.4
Energy
8.9
Captive Equipment Finance
7.1
Sectors less than 6.0%
31.5
Cash & Other
Net Assets
3.7
8
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
SIT MONEY 3-MONTH LIPPER
MARKET U.S. TREASURY MONEY
FUND BILL MARKET INDEX
------ ---------- ------------
3 Month** 0.49% 0.65% 0.45%
6 Month** 0.87 1.16 n/a
1 Year 1.24 1.82 1.12
5 Years 2.30 2.57 2.29
10 Years 3.72 3.90 3.69
Inception 3.76 3.99 3.72
(11/1/93)
- --------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS*
- --------------------------------------------------------------------------------
SIT MONEY 3-MONTH LIPPER
MARKET U.S. TREASURY MONEY
FUND BILL MARKET INDEX
------ ---------- ------------
1 Year 1.24% 1.82% 1.12%
5 Year 12.04 13.54 11.99
10 Year 44.10 46.61 43.63
Inception 52.40 56.28 51.70
(11/1/93)
*AS OF 3/31/05 **NOT ANNUALIZED.
- --------------------------------------------------------------------------------
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. MONEY FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
THERE IS NO ASSURANCE THAT A FUND WILL MAINTAIN A $1 SHARE VALUE. YIELD
FLUCTUATES. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. MANAGEMENT
FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE;
HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE 3-MONTH U.S. TREASURY
BILL. THE LIPPER RETURNS ARE OBTAINED FROM LIPPER ANALYTICAL SERVICES, INC., A
LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS.
- --------------------------------------------------------------------------------
GROWTH OF $10,000
- --------------------------------------------------------------------------------
[PLOT POINTS CHART]
3-Month 3-Month 3-Month
SIT MONEY U.S. SIT MONEY U.S. SIT MONEY U.S.
MARKET Treasury MARKET Treasury MARKET Treasury
Date FUND Bill Date FUND Bill Date FUND Bill
---- --------- -------- ---- --------- -------- ---- --------- --------
11/1/1993 10,000 10,000 8/31/1997 11,965 12,110 6/30/2001 14,565 14,721
11/30/1993 10,023 10,027 9/30/1997 12,019 12,161 7/31/2001 14,607 14,764
12/31/1993 10,046 10,053 10/31/1997 12,071 12,213 8/31/2001 14,646 14,806
1/31/1994 10,069 10,079 11/30/1997 12,119 12,261 9/30/2001 14,680 14,836
2/28/1994 10,089 10,106 12/31/1997 12,177 12,319 10/31/2001 14,710 14,859
3/31/1994 10,114 10,137 1/31/1998 12,231 12,374 11/30/2001 14,732 14,886
4/29/1994 10,139 10,169 2/28/1998 12,278 12,428 12/31/2001 14,751 14,907
5/31/1994 10,171 10,205 3/31/1998 12,332 12,481 1/31/2002 14,768 14,929
6/30/1994 10,203 10,242 4/30/1998 12,385 12,534 2/28/2002 14,782 14,951
7/31/1994 10,235 10,280 5/31/1998 12,436 12,587 3/31/2002 14,796 14,974
8/31/1994 10,272 10,320 6/30/1998 12,491 12,641 4/30/2002 14,814 14,996
9/30/1994 10,308 10,361 7/31/1998 12,545 12,694 5/31/2002 14,830 15,018
10/31/1994 10,347 10,405 8/31/1998 12,598 12,748 6/30/2002 14,845 15,039
11/30/1994 10,386 10,452 9/30/1998 12,652 12,798 7/31/2002 14,862 15,061
12/31/1994 10,431 10,502 10/31/1998 12,704 12,841 8/30/2002 14,878 15,082
1/31/1995 10,482 10,554 11/30/1998 12,756 12,890 9/30/2002 14,894 15,104
2/28/1995 10,526 10,607 12/31/1998 12,806 12,938 10/31/2002 14,910 15,124
3/31/1995 10,576 10,659 1/31/1999 12,854 12,986 11/30/2002 14,923 15,139
4/30/1995 10,621 10,711 2/28/1999 12,898 13,035 12/31/2002 14,935 15,155
5/31/1995 10,675 10,764 3/31/1999 12,948 13,085 1/31/2003 14,945 15,170
6/30/1995 10,724 10,814 4/30/1999 12,996 13,133 2/28/2003 14,954 15,185
7/31/1995 10,774 10,864 5/31/1999 13,040 13,184 3/31/2003 14,964 15,199
8/31/1995 10,823 10,915 6/30/1999 13,093 13,236 4/30/2003 14,973 15,214
9/30/1995 10,869 10,964 7/31/1999 13,141 13,287 5/31/2003 14,982 15,228
10/31/1995 10,919 11,014 8/31/1999 13,196 13,341 6/30/2003 14,991 15,240
11/30/1995 10,967 11,064 9/30/1999 13,249 13,395 7/31/2003 14,998 15,251
12/31/1995 11,013 11,113 10/31/1999 13,301 13,451 8/31/2003 15,004 15,264
1/31/1996 11,064 11,161 11/30/1999 13,360 13,510 9/30/2003 15,011 15,276
2/29/1996 11,109 11,207 12/31/1999 13,420 13,570 10/31/2003 15,019 15,288
3/29/1996 11,151 11,255 1/31/2000 13,480 13,632 11/30/2003 15,025 15,299
4/30/1996 11,198 11,302 2/29/2000 13,539 13,697 12/31/2003 15,033 15,311
5/31/1996 11,245 11,351 3/31/2000 13,602 13,764 1/31/2004 15,040 15,323
6/30/1996 11,287 11,400 4/30/2000 13,659 13,831 2/29/2004 15,046 15,336
7/31/1996 11,337 11,451 5/31/2000 13,731 13,900 3/31/2004 15,053 15,348
8/31/1996 11,382 11,500 6/30/2000 13,800 13,968 4/30/2004 15,059 15,360
9/30/1996 11,431 11,550 7/31/2000 13,873 14,039 5/31/2004 15,066 15,373
10/31/1996 11,479 11,600 8/31/2000 13,945 14,113 6/30/2004 15,074 15,390
11/30/1996 11,524 11,650 9/30/2000 14,015 14,185 7/31/2004 15,083 15,408
12/31/1996 11,573 11,699 10/31/2000 14,089 14,259 8/31/2004 15,096 15,427
1/31/1997 11,622 11,749 11/30/2000 14,160 14,335 9/30/2004 15,109 15,449
2/28/1997 11,665 11,799 12/31/2000 14,228 14,406 10/31/2004 15,124 15,472
3/31/1997 11,713 11,851 1/31/2001 14,304 14,469 11/30/2004 15,143 15,499
4/30/1997 11,762 11,901 2/28/2001 14,361 14,530 12/31/2004 15,165 15,527
5/31/1997 11,812 11,955 3/31/2001 14,418 14,585 1/31/2005 15,189 15,558
6/30/1997 11,865 12,006 4/30/2001 14,474 14,633 2/28/2005 15,212 15,592
7/31/1997 11,917 12,058 5/31/2001 14,522 14,678 3/31/2005 15,240 15,628
The sum of $10,000 invested at inception (11/1/93) and held until 3/31/05 would
have grown to $15,240 in the Fund or $15,628 in the 3-Month U.S. Treasury Bill
assuming reinvestment of all dividends and capital gains.
- --------------------------------------------------------------------------------
SIT MONEY MARKET MATURITY RANGES
- --------------------------------------------------------------------------------
48.5% 20.9% 23.1% 3.6% 3.9%
- --------------------------------------------------------------------------------
0 - 15 16 - 30 31 - 45 46 - 60 61+
Days Days Days Days Days
9
- --------------------------------------------------------------------------------
SIT MONEY MARKET FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER (96.4%) (2)
ASSET-BACKED (11.9%)
Daimler-Chrysler Auto Conduit:
500,000 2.83 %, 5/6/2005 498,624
560,000 2.85 %, 5/13/2005 558,138
1,700,000 Mortgage Interest Networking Trust,
2.77 %, 4/4/2005 1,699,608
1,800,000 New Center Asset Trust,
2.65 %, 4/1/2005 1,800,000
----------------
4,556,370
----------------
CAPTIVE AUTO FINANCE (4.7%)
1,800,000 Toyota Motor Credit, 2.71%, 5/3/05 1,795,664
----------------
CAPTIVE EQUIPMENT FINANCE (7.1%)
1,000,000 Caterpillar Financial Services Corp.,
2.58 %, 5/12/2005 997,062
1,700,000 Pitney Bowes Credit Corp.,
2.73 %, 4/29/2005 1,696,390
----------------
2,693,452
----------------
COMMUNICATIONS (9.4%)
1,800,000 Bellsouth Corp., 2.58%, 4/7/05 1,799,226
SBC Communications:
650,000 2.66 %, 4/11/2005 649,520
1,131,000 2.73 %, 4/12/2005 1,130,057
----------------
3,578,803
----------------
CONSUMER DURABLES (4.7%)
American Honda Finance:
1,000,000 2.61 %, 4/12/2005 999,203
800,000 2.73 %, 5/11/2005 797,573
----------------
1,796,776
----------------
CONSUMER LOAN FINANCE (4.4%)
1,700,000 American General Financial Corp.,
2.71 %, 5/5/2005 1,695,649
----------------
CONSUMER NON-DURABLES (13.6%)
Coca Cola Co.,
1,000,000 2.70 %, 4/26/2005 998,125
690,000 2.85 %, 5/16/2005 687,542
Coca Cola Enterprises:
1,000,000 2.59 %, 4/5/2005 (5) 999,712
800,000 2.66 %, 5/2/2005 (5) 798,168
Procter & Gamble:
1,200,000 2.70 %, 4/18/2005 1,198,470
500,000 2.93 %, 6/6/2005 497,314
----------------
5,179,331
----------------
DIVERSIFIED FINANCE (13.9%)
1,800,000 CIT Group, Inc., 2.61%, 4/13/05 1,798,434
1,705,000 GE Capital Corp., 2.68%, 4/25/05 1,701,954
GE Capital Services:
500,000 2.60 %, 4/6/2005 499,819
1,300,000 2.67 %, 4/14/2005 1,298,747
----------------
5,298,954
----------------
ELECTRONIC TECHNOLOGY (4.5%)
1,700,000 IBM Corp., 2.72%, 4/19/05 1,697,688
----------------
ENERGY (8.9%)
1,700,000 Chevron Texaco Funding Corp.,
2.73 %, 4/15/2005 1,698,194
1,700,000 Exxon Project Investment Co.,
2.53 %, 4/8/2005 1,699,164
----------------
3,397,358
----------------
FINANCIAL SERVICES (4.4%)
UBS Finance Corp.:
700,000 2.83 %, 4/27/2005 698,569
1,000,000 2.90 %, 6/1/2005 995,086
----------------
1,693,655
----------------
HEALTH TECHNOLOGY (4.4%)
Pfizer, Inc.:
1,000,000 2.47 %, 4/4/2005 (5) 999,794
700,000 2.85 %, 5/23/2005 (5) 697,118
----------------
1,696,912
----------------
INSURANCE (4.4%)
1,700,000 American Intl. Group, 2.70%, 5/6/05 1,695,538
----------------
Total Commercial Paper 36,776,150
----------------
(cost: $36,776,150)
U.S. GOVERNMENT SECURITIES (3.8%) (2)
1,462,000 FHLMC Discount Note, 2.40%, 4/1/05 1,462,000
----------------
(cost: $1,462,000)
Total investments in securities
(cost: $38,238,150) (7) $38,238,150
================
10 See accompanying notes to portfolios of investments on page 62.
This page has been intentionally left blank.
11
- --------------------------------------------------------------------------------
SIT U.S. GOVERNMENT SECURITIES FUND
ONE YEAR ENDED MARCH 31, 2005
- --------------------------------------------------------------------------------
SENIOR PORTFOLIO MANAGERS, MICHAEL C. BRILLEY AND BRYCE A. DOTY, CFA
PORTFOLIO MANAGER, MARK H. BOOK, CFA
- --------------------------------------------------------------------------------
The Sit U.S. Government Securities Fund provided investors with a +1.93%
return during the fiscal year ending March 31, 2005, while the Lehman
Intermediate Government Bond Index returned -0.55%. The Fund's 30-day SEC yield
was 4.37% and its 12-month distribution rate was 3.51%.
The Fund saw positive contributions to performance from each of its
investment sectors over the 12 month period, with most sectors within the fund
providing a return of over 2.0% better then the funds benchmark. U.S. Treasury
investments were the strongest performers during the period, as the use of these
securities remained focused on maturities that were expected to provide positive
returns given the current economic environment. Mortgage pass-through securities
also contributed strongly to performance, primarily due to high levels of income
received. The Fund's collateralized mortgage obligations (CMOs) were its weakest
performing sector, but still contributed positive incremental returns relative
to the benchmark.
The constraints of high energy prices have been more than offset by the
economic stimulus provided through a federal funds rate that has been well below
historical averages. We believe that the Federal Reserve will continue its
pattern of removing this stimulus as economic growth continues, causing
shorter-term interest rates to rise in the near term. As such, we have continued
the Fund's defensive positioning and maintained its emphasis on securities that
provide a high level of current income. This is primarily accomplished through
the use of high coupon mortgage pass-through securities, as has consistently
been the case since the Fund's inception. The structure of these securities is
ideal during periods of rising interest rates, as they typically provide high
levels of income as well as relative price stability as interest rates rise.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
- --------------------------------------------------------------------------------
The objective of the U.S. Government Securities Fund is to provide high
current income and safety of principal, which it seeks to attain by investing
solely in debt obligations issues, guaranteed or insured by the U.S. government
or its agencies or its instrumentalities.
Agency mortgage securities and U.S. Treasury securities will be the
principal holdings in the Fund. The mortgage securities that the Fund will
purchase consist of pass-through securities including those issued by Government
National Mortgage Association (GNMA), Federal National Mortgage Asociation
(FNMA), and Federal Home Loan Mortgage Corporation (FHLMC).
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY
- --------------------------------------------------------------------------------
Net Asset Value 3/31/05: $10.62 Per Share
3/31/04: $10.79 Per Share
Total Net Assets: $258.4 Million
30-day SEC Yield: 4.37%
12-Month Distribution Rate: 3.51%
Average Maturity: 20.5 Years
Effective Duration: 2.9 Years(1)
(1) Effective duration is a measure which reflects estimated price sensitivity
to a given change in interest rates. For example, for an interest rate change of
1.0%, a portfolio with a duration of 5 years would be expected to experience a
price change of 5%. Effective duration is based on current interest rates and
the Adviser's assumptions regarding the expected average life of individual
securities held in the portfolio.
- --------------------------------------------------------------------------------
PORTFOLIO STRUCTURE
(% OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
FNMA Pass-Through
32.5
Collateralized Mortgage
Obligations
25.2
FHLMC Pass-Through
16.0
GNMA Pass-Through
14.4
U.S. Treasury/
Federal Agency
7.9
Taxable Municipal
0.4
Cash & Other
Net Assets
3.6
12
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
SIT
U.S. GOV'T. LEHMAN LIPPER
SECURITIES INTER. GOV'T. U.S. GOV'T.
FUND BOND INDEX FUND INDEX
------ ---------- ----------
3 Month** 0.13% -0.68% -0.23%
6 Month** 0.64 -0.46 n/a
1 Year 1.93 -0.55 0.66
5 Year 5.27 6.08 6.09
10 Year 5.73 6.24 6.07
Inception 6.90 7.09 6.65
(6/2/87)
- --------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS*
- --------------------------------------------------------------------------------
SIT
U.S. GOV'T. LEHMAN LIPPER
SECURITIES INTER. GOV'T. U.S. GOV'T.
FUND BOND INDEX FUND INDEX
----- ---------- ----------
1 Year 1.93% -0.55% 0.66%
5 Year 29.29 34.33 34.36
10 Year 74.55 83.26 80.28
Inception 228.93 239.67 215.60
(6/2/87)
*AS OF 3/31/05. **NOT ANNUALIZED.
- --------------------------------------------------------------------------------
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. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT
FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE;
HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE LEHMAN INTERMEDIATE
GOVERNMENT BOND INDEX. THE LIPPER RETURNS ARE OBTAINED FROM LIPPER ANALYTICAL
SERVICES, INC., A LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS.
- --------------------------------------------------------------------------------
GROWTH OF $10,000
- --------------------------------------------------------------------------------
[PLOT POINTS CHART]
Lehman Lehman Lehman
Sit U.S. Intermediate Sit U.S. Intermediate Sit U.S. Intermediate
Government Government Government Government Government Government
Securities Bond Securities Bond Securities Bond
Date Fund Index Date Fund Index Date Fund Index
---- ---------- ------------ ---- ---------- ------------ ---- ---------- ------------
6/2/1987 10,000 10,000 5/31/1993 17,436 17,458 5/31/1999 24,731 24,606
6/30/1987 10,100 10,118 6/30/1993 17,564 17,710 6/30/1999 24,729 24,642
7/31/1987 10,306 10,140 7/31/1993 17,645 17,746 7/31/1999 24,760 24,646
8/31/1987 10,308 10,114 8/31/1993 17,702 18,010 8/31/1999 24,776 24,680
9/30/1987 9,992 9,988 9/30/1993 17,785 18,084 9/30/1999 24,939 24,892
10/31/1987 10,359 10,285 10/31/1993 17,844 18,126 10/31/1999 25,017 24,941
11/30/1987 10,530 10,347 11/30/1993 17,869 18,037 11/30/1999 25,076 24,958
12/31/1987 10,605 10,447 12/31/1993 18,003 18,111 12/31/1999 25,057 24,880
1/31/1988 10,922 10,706 1/31/1994 18,133 18,290 1/31/2000 25,055 24,797
2/29/1988 11,028 10,820 2/28/1994 18,161 18,039 2/29/2000 25,184 25,002
3/31/1988 11,040 10,774 3/31/1994 18,038 17,776 3/31/2000 25,440 25,287
4/30/1988 10,993 10,756 4/29/1994 17,937 17,661 4/30/2000 25,513 25,277
5/31/1988 11,043 10,705 5/31/1994 17,993 17,674 5/31/2000 25,615 25,345
6/30/1988 11,180 10,879 6/30/1994 18,036 17,677 6/30/2000 25,877 25,747
7/31/1988 11,162 10,847 7/31/1994 18,174 17,909 7/31/2000 25,961 25,918
8/31/1988 11,158 10,861 8/31/1994 18,278 17,961 8/31/2000 26,202 26,209
9/30/1988 11,363 11,049 9/30/1994 18,228 17,813 9/30/2000 26,444 26,437
10/31/1988 11,547 11,201 10/31/1994 18,291 17,817 10/31/2000 26,635 26,619
11/30/1988 11,457 11,105 11/30/1994 18,270 17,737 11/30/2000 26,985 27,009
12/31/1988 11,439 11,115 12/31/1994 18,322 17,795 12/31/2000 27,349 27,486
1/31/1989 11,584 11,226 1/31/1995 18,502 18,085 1/31/2001 27,630 27,851
2/28/1989 11,574 11,178 2/28/1995 18,792 18,433 2/28/2001 27,902 28,107
3/31/1989 11,604 11,231 3/31/1995 18,844 18,535 3/31/2001 28,070 28,311
4/30/1989 11,739 11,457 4/30/1995 18,986 18,750 4/30/2001 28,164 28,222
5/31/1989 11,939 11,679 5/31/1995 19,348 19,279 5/31/2001 28,357 28,339
6/30/1989 12,152 11,976 6/30/1995 19,458 19,401 6/30/2001 28,516 28,429
7/31/1989 12,333 12,220 7/31/1995 19,533 19,411 7/31/2001 28,902 28,959
8/31/1989 12,241 12,054 8/31/1995 19,699 19,571 8/31/2001 29,172 29,217
9/30/1989 12,306 12,112 9/30/1995 19,843 19,702 9/30/2001 29,422 29,840
10/31/1989 12,558 12,366 10/31/1995 20,049 19,918 10/31/2001 29,894 30,306
11/30/1989 12,653 12,489 11/30/1995 20,270 20,161 11/30/2001 29,783 29,944
12/31/1989 12,701 12,525 12/31/1995 20,429 20,360 12/31/2001 29,690 29,799
1/31/1990 12,634 12,447 1/31/1996 20,531 20,532 1/31/2002 29,875 29,928
2/28/1990 12,706 12,493 2/29/1996 20,447 20,314 2/28/2002 30,109 30,175
3/31/1990 12,742 12,508 3/29/1996 20,516 20,222 3/31/2002 29,903 29,721
4/30/1990 12,660 12,466 4/30/1996 20,477 20,163 4/30/2002 30,265 30,277
5/31/1990 13,072 12,733 5/31/1996 20,499 20,152 5/31/2002 30,418 30,488
6/30/1990 13,255 12,901 6/30/1996 20,651 20,357 6/30/2002 30,600 30,869
7/31/1990 13,438 13,082 7/31/1996 20,709 20,420 7/31/2002 30,879 31,451
8/31/1990 13,346 13,034 8/31/1996 20,770 20,443 8/30/2002 30,967 31,810
9/30/1990 13,446 13,151 9/30/1996 21,001 20,708 9/30/2002 31,172 32,357
10/31/1990 13,569 13,334 10/31/1996 21,271 21,047 10/31/2002 31,169 32,335
11/30/1990 13,887 13,535 11/30/1996 21,477 21,301 11/30/2002 31,145 32,079
12/31/1990 14,095 13,722 12/31/1996 21,449 21,187 12/31/2002 31,410 32,672
1/31/1991 14,276 13,863 1/31/1997 21,525 21,268 1/31/2003 31,430 32,599
2/28/1991 14,388 13,947 2/28/1997 21,577 21,303 2/28/2003 31,570 32,967
3/31/1991 14,453 14,024 3/31/1997 21,448 21,181 3/31/2003 31,578 32,974
4/30/1991 14,560 14,169 4/30/1997 21,745 21,420 4/30/2003 31,679 33,067
5/31/1991 14,660 14,249 5/31/1997 21,877 21,587 5/31/2003 31,717 33,586
6/30/1991 14,605 14,261 6/30/1997 22,091 21,772 6/30/2003 31,652 33,531
7/31/1991 14,794 14,415 7/31/1997 22,542 22,173 7/31/2003 31,152 32,717
8/31/1991 15,104 14,689 8/31/1997 22,496 22,088 8/31/2003 31,291 32,776
9/30/1991 15,296 14,939 9/30/1997 22,763 22,329 9/30/2003 31,652 33,487
10/31/1991 15,450 15,110 10/31/1997 23,004 22,589 10/31/2003 31,533 33,158
11/30/1991 15,547 15,287 11/30/1997 23,019 22,638 11/30/2003 31,557 33,161
12/31/1991 15,909 15,658 12/31/1997 23,206 22,823 12/31/2003 31,785 33,419
1/31/1992 15,682 15,508 1/31/1998 23,403 23,120 1/31/2004 31,928 33,600
2/29/1992 15,855 15,556 2/28/1998 23,434 23,096 2/29/2004 32,137 33,920
3/31/1992 15,787 15,494 3/31/1998 23,529 23,168 3/31/2004 32,268 34,156
4/30/1992 15,868 15,633 4/30/1998 23,652 23,279 4/30/2004 32,031 33,393
5/31/1992 16,196 15,866 5/31/1998 23,796 23,439 5/31/2004 31,925 33,286
6/30/1992 16,339 16,095 6/30/1998 23,930 23,596 6/30/2004 32,081 33,370
7/31/1992 16,434 16,404 7/31/1998 24,013 23,687 7/31/2004 32,273 33,612
8/31/1992 16,563 16,571 8/31/1998 24,271 24,135 8/31/2004 32,617 34,111
9/30/1992 16,687 16,800 9/30/1998 24,489 24,698 9/30/2004 32,683 34,125
10/31/1992 16,646 16,598 10/31/1998 24,540 24,739 10/31/2004 32,830 34,333
11/30/1992 16,659 16,530 11/30/1998 24,603 24,663 11/30/2004 32,668 34,014
12/31/1992 16,773 16,743 12/31/1998 24,719 24,759 12/31/2004 32,851 34,199
1/31/1993 16,901 17,055 1/31/1999 24,806 24,870 1/31/2005 33,013 34,243
2/28/1993 17,093 17,306 2/28/1999 24,599 24,529 2/28/2005 32,963 34,052
3/31/1993 17,236 17,370 3/31/1999 24,718 24,691 3/31/2005 32,893 33,967
4/30/1993 17,337 17,505 4/30/1999 24,773 24,758
The sum of $10,000 invested at inception (6/2/87) and held until
3/31/05 would have grown to $32,893 in the Fund or $33,967 in the Lehman
Intermediate Government Bond Index assuming reinvestment of all dividends and
capital gains.
- --------------------------------------------------------------------------------
ESTIMATED AVERAGE LIFE PROFILE
- --------------------------------------------------------------------------------
The Adviser's estimates of the dollar weighted average life of the portfolio's
securities, which may vary from their stated maturities.
3.6% 86.4% 4.0% 0.8% 5.2%
- --------------------------------------------------------------------------------
0 - 1 Year 1 - 5 Years 5 - 10 Years 10 - 20 Years 20+ Years
13
- --------------------------------------------------------------------------------
SIT U.S. GOVERNMENT SECURITIES FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
MORTGAGE PASS-THROUGH SECURITIES (62.9%) (2)
FEDERAL HOME LOAN MORTGAGE CORPORATION (16.0%):
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
2,656,917 3.08% 5/1/2034 2,617,089
83,208 5.50% 8/1/2017 85,669
348,810 6.38% 12/1/2026 360,221
79,998 6.38% 8/1/2027 83,144
143,561 6.38% 12/1/2027 149,208
937,365 6.50% 8/1/2029 972,897
5,559,670 7.00% 7/1/2032 5,852,075
137,852 7.50% 10/1/2012 145,750
86,994 7.50% 4/1/2021 93,435
218,344 7.50% 5/1/2026 233,580
39,318 7.50% 2/1/2027 42,235
197,117 7.50% 4/1/2027 211,739
1,888,330 7.50% 7/1/2029 2,020,100
212,234 7.50% 3/1/2030 227,044
2,358,280 7.50% 1/1/2031 2,521,247
253,456 7.50% 2/1/2032 271,143
2,674,690 7.50% 7/1/2032 2,863,817
147,887 8.00% 10/1/2016 159,363
910,181 8.00% 12/1/2016 961,032
45,498 8.00% 5/1/2017 48,979
571,870 8.00% 12/1/2023 615,770
232,254 8.00% 7/1/2024 250,586
307,008 8.00% 9/1/2024 331,240
555,938 8.00% 9/15/2024 595,927
204,347 8.00% 11/1/2025 220,420
93,731 8.00% 12/1/2026 100,914
152,138 8.00% 1/1/2027 164,004
139,951 8.00% 10/1/2027 150,803
175,644 8.00% 1/1/2028 189,344
76,254 8.00% 7/1/2028 81,755
394,362 8.00% 6/1/2030 424,333
185,502 8.00% 11/1/2030 199,641
154,130 8.00% 2/1/2032 165,829
42,179 8.25% 12/1/2008 43,586
54,279 8.25% 12/1/2017 58,569
428,642 8.50% 1/1/2016 463,034
761,003 8.50% 5/1/2016 822,768
8,490 8.50% 1/1/2017 9,210
24,942 8.50% 4/1/2017 27,041
85,315 8.50% 5/1/2017 92,559
218,283 8.50% 8/1/2023 236,932
21,563 8.50% 7/1/2024 23,539
93,515 8.50% 1/1/2025 101,479
132,291 8.50% 4/1/2025 143,557
92,042 8.50% 5/1/2025 99,880
41,968 8.50% 6/1/2025 45,542
64,509 8.50% 10/1/2026 70,418
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
751,872 8.50% 12/1/2029 815,904
586,615 8.50% 8/1/2030 640,373
57,132 8.50% 12/1/2030 62,225
1,072,076 8.50% 2/1/2031 1,163,378
163,066 8.50% 4/1/2031 177,460
25,426 8.50% 8/1/2031 27,671
36,770 8.75% 1/1/2017 39,150
22,130 9.00% 5/1/2009 23,203
8,152 9.00% 6/1/2009 8,943
29,377 9.00% 7/1/2009 30,802
34,885 9.00% 7/1/2009 36,614
100,330 9.00% 12/1/2009 105,196
23,157 9.00% 10/1/2013 24,990
410,484 9.00% 11/1/2015 452,685
15,916 9.00% 5/1/2016 17,311
415,391 9.00% 5/1/2016 458,096
101,810 9.00% 7/1/2016 110,734
111,179 9.00% 10/1/2016 120,151
22,579 9.00% 11/1/2016 24,559
10,956 9.00% 1/1/2017 11,916
15,973 9.00% 1/1/2017 17,348
21,822 9.00% 2/1/2017 23,735
58,047 9.00% 2/1/2017 61,348
176,315 9.00% 2/1/2017 191,771
75,117 9.00% 4/1/2017 76,969
7,781 9.00% 4/1/2017 8,384
36,913 9.00% 6/1/2017 40,232
73,377 9.00% 6/1/2017 79,861
57,650 9.00% 7/1/2017 62,704
8,040 9.00% 9/1/2017 8,763
94,983 9.00% 10/1/2017 103,523
65,929 9.00% 6/1/2018 71,148
222,110 9.00% 6/1/2019 241,056
27,117 9.00% 10/1/2019 29,421
88,319 9.00% 10/1/2019 96,609
98,983 9.00% 10/1/2019 108,273
464,543 9.00% 3/1/2020 506,392
258,291 9.00% 9/1/2020 271,745
618,313 9.00% 6/1/2021 657,862
30,764 9.00% 7/1/2021 33,778
87,440 9.00% 7/1/2021 95,858
63,107 9.00% 10/1/2021 66,952
37,407 9.00% 3/1/2022 40,861
80,219 9.00% 4/1/2025 87,257
14,204 9.25% 7/1/2008 14,973
34,115 9.25% 8/1/2008 35,962
25,082 9.25% 8/1/2009 25,997
77,314 9.25% 7/1/2010 79,397
29,530 9.25% 3/1/2011 30,783
14
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
43,153 9.25% 6/1/2016 47,271
25,211 9.25% 3/1/2017 27,617
414,321 9.25% 2/1/2018 445,760
23,412 9.25% 1/1/2019 24,404
243,643 9.25% 3/1/2019 259,669
174,299 9.25% 3/1/2019 188,434
20,426 9.50% 10/1/2005 20,530
46,536 9.50% 10/1/2008 49,201
68,549 9.50% 2/1/2010 72,386
35,561 9.50% 5/1/2010 35,947
28,475 9.50% 6/1/2010 30,069
24,044 9.50% 1/1/2011 25,979
165,681 9.50% 6/1/2011 173,526
40,859 9.50% 6/1/2016 44,996
12,763 9.50% 7/1/2016 14,055
18,766 9.50% 9/1/2016 20,070
53,914 9.50% 10/1/2016 59,372
85,110 9.50% 6/1/2017 93,990
42,160 9.50% 9/1/2017 46,491
50,363 9.50% 4/1/2018 55,747
15,717 9.50% 10/1/2018 17,357
150,187 9.50% 12/1/2018 165,309
12,966 9.50% 6/1/2019 13,867
460,059 9.50% 6/17/2019 507,956
123,912 9.50% 7/1/2020 134,190
76,843 9.50% 8/1/2020 84,580
11,532 9.50% 9/1/2020 12,820
288,730 9.50% 8/1/2021 317,520
1,801,637 9.50% 12/17/2021 1,995,082
39,146 9.75% 12/1/2008 41,397
15,521 9.75% 12/1/2008 16,414
66,164 9.75% 11/1/2009 69,968
17,826 9.75% 6/1/2011 18,851
356,748 9.75% 12/1/2016 388,026
44,503 9.75% 6/1/2017 49,517
272,116 9.75% 12/1/2017 300,837
17,017 9.85% 5/1/2016 18,916
77,784 10.00% 11/1/2010 82,500
93,288 10.00% 11/1/2011 104,996
275,671 10.00% 6/1/2020 312,661
211,001 10.00% 9/1/2020 236,997
148,531 10.00% 3/1/2021 165,028
81,854 10.00% 10/1/2021 90,571
44,480 10.25% 6/1/2010 47,800
37,419 10.25% 2/1/2017 40,213
82,607 10.29% 9/1/2016 89,647
64,727 10.50% 10/1/2013 71,636
116,552 10.50% 5/1/2014 125,689
71,812 10.50% 9/1/2015 80,264
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
25,451 10.50% 1/1/2019 28,885
560,503 10.50% 6/1/2019 629,523
868 10.50% 7/1/2020 985
11,756 11.00% 12/1/2011 12,847
45,055 11.00% 6/1/2015 49,518
52,634 11.00% 2/1/2016 57,644
28,046 11.00% 5/1/2019 30,631
53,701 11.00% 7/1/2019 58,959
15,164 11.25% 10/1/2009 16,478
52,536 11.25% 8/1/2011 57,994
29,787 13.00% 5/1/2017 32,128
----------
41,480,485
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (32.5%):
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
2,683,030 4.03% 4/1/2033 2,666,836
5,836,728 5.00% 11/1/2010 5,880,274
1,005,962 6.00% 9/1/2017 1,042,062
35,859 6.49% 3/1/2019 36,770
775,007 6.95% 8/1/2021 800,516
25,224 7.00% 4/1/2027 26,887
525,639 7.00% 5/1/2028 553,942
983,874 7.00% 1/1/2029 1,036,850
554,558 7.00% 2/1/2032 584,418
2,265,284 7.00% 6/1/2032 2,389,269
582,512 7.00% 6/1/2032 617,819
444,161 7.00% 11/1/2032 468,076
550,913 7.00% 11/1/2032 580,577
2,016,333 7.00% 4/1/2034 2,124,900
236,571 7.24% 5/1/2007 245,947
633,426 7.50% 11/1/2012 645,716
829,277 7.50% 3/1/2016 888,317
1,514,574 7.50% 6/1/2022 1,623,507
1,854,307 7.50% 10/1/2022 1,981,965
637,936 7.50% 9/1/2023 681,854
1,410,933 7.50% 5/1/2024 1,508,067
713,454 7.50% 6/1/2025 766,355
28,116 7.50% 3/1/2027 30,175
28,209 7.50% 9/1/2027 30,570
107,694 7.50% 11/1/2029 115,707
32,712 7.50% 1/1/2030 35,005
988,776 7.50% 1/1/2031 1,058,673
461,304 7.50% 3/1/2032 493,125
847,167 7.50% 6/1/2032 910,963
1,969,778 7.50% 12/1/2034 2,105,385
1,220,354 7.54% 6/1/2016 1,265,681
1,523,347 7.87% 12/15/2025 1,624,142
91,574 8.00% 8/1/2009 96,140
610,279 8.00% 4/1/2016 645,493
See accompanying notes to portfolios of investments on page 62. 15
- --------------------------------------------------------------------------------
SIT U.S. GOVERNMENT SECURITIES FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
94,195 8.00% 11/1/2016 101,622
68,863 8.00% 6/1/2018 72,524
634,826 8.00% 7/1/2021 683,737
219,453 8.00% 1/1/2022 237,482
71,710 8.00% 2/1/2023 77,657
138,640 8.00% 5/1/2023 149,353
81,538 8.00% 9/1/2023 87,865
613,674 8.00% 7/1/2024 663,927
191,764 8.00% 8/1/2024 207,125
30,374 8.00% 4/1/2025 32,782
284,676 8.00% 6/1/2027 307,246
101,379 8.00% 7/1/2027 109,684
241,950 8.00% 9/1/2027 261,648
69,954 8.00% 10/1/2027 75,558
336,805 8.00% 6/1/2028 362,787
260,515 8.00% 9/1/2028 280,612
295,236 8.00% 9/1/2029 319,099
69,397 8.00% 12/1/2029 74,247
35,218 8.00% 2/1/2030 37,942
273,616 8.00% 2/1/2031 294,655
641,892 8.00% 2/1/2031 689,035
304,105 8.00% 3/1/2031 328,653
232,976 8.00% 3/1/2032 248,620
1,210,423 8.00% 9/1/2032 1,304,273
57,805 8.25% 4/1/2022 61,947
1,221,404 8.29% 7/20/2030 1,330,058
885,228 8.33% 7/15/2020 983,825
474,765 8.38% 7/20/2028 517,526
12,574 8.50% 8/1/2006 12,896
100,923 8.50% 11/1/2010 106,433
667,283 8.50% 9/1/2013 685,124
866,527 8.50% 2/1/2016 934,952
44,925 8.50% 4/1/2017 48,633
133,697 8.50% 6/1/2017 137,417
43,687 8.50% 9/1/2017 46,797
145,331 8.50% 8/1/2018 158,564
476,614 8.50% 5/1/2022 516,837
150,524 8.50% 7/1/2022 164,967
87,304 8.50% 11/1/2023 95,240
20,138 8.50% 5/1/2024 22,110
222,639 8.50% 2/1/2025 241,428
91,918 8.50% 9/1/2025 100,148
548,637 8.50% 12/1/2025 598,630
764,515 8.50% 1/1/2026 834,271
534,489 8.50% 1/1/2026 583,257
278,116 8.50% 7/1/2026 300,379
580,047 8.50% 9/1/2026 632,902
1,575,745 8.50% 11/1/2026 1,719,538
52,079 8.50% 12/1/2026 56,831
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
251,724 8.50% 5/1/2027 274,661
419,491 8.50% 6/1/2027 457,766
967,872 8.50% 11/1/2028 1,056,156
2,502,079 8.50% 12/1/2028 2,730,404
270,345 8.50% 12/1/2029 294,980
396,324 8.50% 1/1/2030 427,477
73,690 8.50% 8/1/2030 79,589
33,805 8.50% 11/1/2030 36,805
175,775 8.50% 11/1/2030 189,362
373,705 8.50% 12/1/2030 406,874
50,709 8.50% 1/1/2031 54,669
208,261 8.50% 6/1/2032 227,263
535,847 8.52% 9/15/2030 583,153
199,337 8.87% 12/15/2025 221,684
181,321 9.00% 1/1/2009 191,365
97,825 9.00% 5/1/2009 102,653
78,712 9.00% 5/1/2009 82,222
32,860 9.00% 5/1/2009 34,482
122,901 9.00% 5/1/2009 127,812
20,140 9.00% 4/1/2010 21,320
77,647 9.00% 3/1/2011 82,598
180,009 9.00% 8/1/2016 195,909
264,476 9.00% 11/1/2016 287,837
26,670 9.00% 6/1/2017 27,360
86,366 9.00% 6/1/2017 93,773
30,124 9.00% 7/1/2017 32,707
42,076 9.00% 9/1/2017 45,989
89,318 9.00% 12/1/2017 96,977
43,722 9.00% 2/1/2018 47,789
20,303 9.00% 9/1/2019 21,492
25,131 9.00% 10/1/2019 26,198
101,783 9.00% 12/15/2019 110,607
83,837 9.00% 3/1/2021 91,027
4,431 9.00% 9/1/2021 4,863
74,183 9.00% 4/1/2025 81,722
442,128 9.00% 6/15/2025 486,479
596,891 9.00% 11/1/2025 651,997
43,893 9.00% 12/1/2026 47,381
481,986 9.00% 5/1/2027 525,511
83,221 9.00% 5/1/2030 91,743
165,574 9.00% 8/15/2030 182,104
74,048 9.00% 11/1/2030 81,787
98,602 9.00% 4/1/2031 108,916
150,541 9.00% 6/1/2031 164,156
30,039 9.00% 7/1/2031 32,633
96,493 9.25% 10/1/2009 101,812
36,332 9.25% 7/1/2010 38,665
13,371 9.25% 4/1/2012 13,523
58,202 9.25% 10/1/2016 63,779
16
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
66,432 9.25% 12/1/2016 72,798
224,618 9.25% 2/1/2017 245,516
8,509 9.25% 3/1/2017 9,324
400,482 9.34% 8/20/2027 457,120
1,133 9.50% 1/1/2006 1,228
25,332 9.50% 9/1/2008 26,086
84,484 9.50% 12/1/2009 90,117
20,666 9.50% 1/1/2011 21,870
15,983 9.50% 10/1/2013 17,186
25,621 9.50% 5/1/2014 26,383
89,997 9.50% 4/1/2016 97,291
8,113 9.50% 4/1/2016 8,724
36,063 9.50% 9/1/2016 39,729
38,484 9.50% 9/1/2017 40,659
92,398 9.50% 11/1/2018 102,946
76,876 9.50% 12/1/2018 84,927
50,445 9.50% 5/1/2019 56,334
81,892 9.50% 10/1/2019 90,483
59,295 9.50% 12/1/2019 65,801
1,257,259 9.50% 3/1/2020 1,367,663
48,512 9.50% 3/1/2020 52,723
93,991 9.50% 6/1/2020 104,720
181,174 9.50% 9/1/2020 201,054
245,046 9.50% 9/1/2020 270,734
232,164 9.50% 10/15/2020 254,873
199,424 9.50% 12/15/2020 220,076
47,034 9.50% 12/15/2020 51,779
89,503 9.50% 3/1/2021 99,441
56,244 9.50% 4/15/2021 62,293
279,029 9.50% 7/1/2021 306,569
244,124 9.50% 4/1/2025 269,690
351,103 9.50% 4/1/2025 392,314
665,254 9.50% 11/1/2025 741,690
521,984 9.50% 3/1/2026 583,252
502,205 9.50% 9/1/2026 561,151
580,456 9.50% 10/1/2026 649,190
114,804 9.50% 8/1/2030 127,812
2,032,073 9.55% 8/20/2025 2,241,129
185,306 9.75% 1/15/2013 203,018
127,071 9.75% 1/1/2021 142,141
377,783 9.75% 10/1/2021 422,997
347,721 9.75% 4/1/2025 389,337
9,695 10.00% 3/1/2011 10,293
76,261 10.00% 5/1/2011 81,699
119,776 10.00% 7/1/2013 128,870
100,508 10.00% 6/1/2014 105,318
844,759 10.00% 2/1/2015 933,238
967,654 10.00% 3/1/2015 1,083,120
78,771 10.00% 11/1/2016 87,219
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
45,972 10.00% 3/1/2018 51,017
494,872 10.00% 7/1/2019 546,704
64,783 10.00% 9/1/2019 72,542
104,636 10.00% 12/1/2019 114,126
304,693 10.00% 6/1/2020 342,761
16,990 10.00% 11/1/2020 19,198
62,423 10.00% 1/1/2021 70,823
27,116 10.00% 2/1/2021 30,297
204,557 10.00% 10/1/2021 229,488
193,803 10.00% 5/1/2022 216,537
112,455 10.00% 5/1/2022 127,588
123,639 10.00% 1/1/2024 138,708
803,334 10.00% 2/1/2028 906,949
175,366 10.00% 7/1/2028 198,160
457,007 10.25% 8/15/2013 504,466
14,613 10.50% 5/1/2009 15,592
46,821 10.50% 5/1/2015 50,793
327,117 10.50% 1/1/2016 370,176
41,334 10.50% 3/1/2017 44,940
128,629 10.50% 12/1/2017 144,264
18,291 10.75% 11/1/2010 19,606
4,561 11.00% 10/1/2006 4,621
6,275 11.00% 4/1/2014 6,887
48,973 11.00% 8/1/2015 53,273
40,700 11.00% 4/1/2017 44,513
577,645 11.27% 8/15/2020 645,487
351,719 11.75% 10/20/2022 393,439
-----------
83,961,737
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (14.4%) (3):
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
77,204 6.00% 9/15/2018 79,923
238,972 6.38% 12/15/2027 249,499
310,539 6.38% 4/15/2028 324,081
3,130,437 6.50% 5/15/2023 3,270,768
135,525 6.75% 9/15/2015 143,888
68,873 6.75% 8/15/2028 72,516
40,783 7.00% 9/20/2016 43,147
519,009 7.00% 2/15/2028 548,640
399,661 7.00% 1/15/2030 422,735
402,650 7.00% 1/15/2031 425,732
549,619 7.00% 10/15/2031 580,997
801,961 7.00% 11/15/2032 847,890
48,744 7.05% 2/15/2023 52,122
49,488 7.25% 8/15/2010 51,745
108,073 7.25% 10/15/2028 115,414
69,020 7.27% 7/20/2022 73,874
464,434 7.38% 3/15/2031 474,058
11,690 7.50% 3/15/2007 12,018
See accompanying notes to portfolios of investments on page 62. 17
- --------------------------------------------------------------------------------
SIT U.S. GOVERNMENT SECURITIES FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
135,788 7.50% 5/15/2016 147,183
1,107,958 7.50% 2/15/2027 1,190,476
74,430 7.55% 7/20/2022 79,181
172,781 7.55% 10/20/2022 183,810
153,339 7.65% 10/20/2021 163,574
150,151 7.65% 7/20/2022 160,105
92,550 7.69% 12/15/2030 99,037
216,724 7.75% 6/15/2020 232,839
286,496 7.75% 7/15/2020 307,799
225,278 7.75% 8/15/2020 242,029
303,317 7.75% 8/15/2020 325,871
114,706 7.75% 11/15/2020 123,235
627,518 7.75% 10/15/2022 679,618
36,936 7.90% 9/20/2020 39,644
6,913 7.90% 11/20/2020 7,419
40,230 7.90% 1/20/2021 43,162
47,346 7.90% 1/20/2021 50,797
31,522 7.90% 4/20/2021 33,819
53,457 7.90% 8/20/2021 57,353
277,995 7.95% 2/15/2020 300,011
94,318 7.99% 2/20/2021 101,400
64,400 7.99% 4/20/2021 69,236
164,975 7.99% 7/20/2021 177,363
167,076 7.99% 9/20/2021 179,621
148,006 7.99% 10/20/2021 159,119
252,368 7.99% 1/20/2022 271,222
467,221 7.99% 6/20/2022 502,126
40,519 8.00% 10/15/2012 43,400
898,527 8.00% 10/15/2014 953,954
108,134 8.00% 5/15/2016 117,305
389,257 8.00% 6/15/2016 422,273
167,944 8.00% 9/15/2016 182,188
141,822 8.00% 11/20/2016 151,830
121,700 8.00% 7/15/2017 131,640
50,304 8.00% 7/20/2023 54,051
93,001 8.00% 8/15/2023 100,363
49,107 8.00% 12/20/2023 52,764
24,666 8.00% 2/20/2024 26,499
226,562 8.00% 2/20/2026 243,337
42,632 8.00% 12/15/2026 45,988
42,547 8.00% 12/20/2026 45,698
492,977 8.00% 4/15/2028 531,683
53,750 8.00% 4/15/2028 57,966
54,124 8.00% 9/15/2029 58,360
371,967 8.10% 5/20/2019 402,057
69,999 8.10% 6/20/2019 75,662
138,492 8.10% 7/20/2019 149,696
88,550 8.10% 9/20/2019 95,713
222,465 8.10% 9/20/2019 240,461
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
88,783 8.10% 10/20/2019 95,965
124,904 8.10% 1/20/2020 135,196
81,288 8.10% 4/20/2020 87,986
138,704 8.10% 7/20/2020 150,133
162,092 8.25% 12/15/2011 174,020
51,555 8.25% 1/15/2012 55,596
62,703 8.25% 8/15/2015 68,310
605,979 8.25% 4/15/2019 659,688
210,494 8.25% 2/15/2020 229,479
20,690 8.25% 4/15/2027 22,413
87,982 8.25% 6/15/2027 95,307
139,021 8.38% 10/15/2019 151,760
161,572 8.40% 2/15/2019 176,500
69,006 8.40% 4/15/2019 75,381
129,422 8.40% 6/15/2019 141,379
88,363 8.40% 9/15/2019 96,527
60,037 8.40% 9/15/2019 65,584
59,602 8.40% 2/15/2020 65,204
59,996 8.50% 12/15/2011 64,688
187,007 8.50% 1/15/2012 202,588
75,065 8.50% 4/15/2015 82,205
36,854 8.50% 4/15/2015 40,359
267,520 8.50% 9/15/2016 293,766
233,839 8.50% 1/15/2017 257,398
164,939 8.50% 12/15/2021 181,134
21,276 8.50% 7/20/2022 23,304
156,344 8.50% 10/20/2022 171,248
86,567 8.50% 9/20/2024 95,012
156,622 8.50% 3/20/2025 172,019
342,285 8.50% 12/20/2026 371,723
27,147 8.50% 8/15/2030 29,540
60,310 8.60% 5/15/2018 65,405
100,336 8.60% 6/15/2018 108,813
86,785 8.63% 10/15/2018 94,042
6,892 8.75% 5/15/2006 7,072
6,719 8.75% 5/15/2006 6,895
10,699 8.75% 10/15/2006 10,980
20,585 8.75% 11/15/2006 21,126
16,873 8.75% 2/15/2007 17,854
8,222 8.75% 3/15/2007 8,700
45,277 8.75% 11/15/2009 48,721
58,583 8.75% 6/15/2011 63,657
238,294 8.75% 11/15/2011 258,936
52,354 8.75% 12/15/2011 56,889
18,973 9.00% 4/15/2006 19,500
26,591 9.00% 4/15/2006 27,330
27,544 9.00% 5/15/2006 28,310
16,989 9.00% 5/15/2006 17,462
100,313 9.00% 6/15/2006 103,104
18
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
9,972 9.00% 6/15/2006 10,249
54,698 9.00% 7/15/2006 56,220
49,655 9.00% 10/15/2006 51,037
9,436 9.00% 10/15/2006 9,699
10,248 9.00% 6/15/2007 10,869
31,058 9.00% 10/15/2007 32,940
34,988 9.00% 9/15/2008 36,822
11,078 9.00% 9/15/2008 11,658
15,396 9.00% 10/15/2008 16,202
15,477 9.00% 11/15/2008 16,288
35,881 9.00% 12/15/2008 37,761
4,127 9.00% 2/15/2009 4,378
2,956 9.00% 3/15/2009 3,136
28,410 9.00% 4/15/2009 30,291
15,076 9.00% 4/15/2009 15,992
6,668 9.00% 5/15/2009 7,074
25,394 9.00% 8/15/2009 27,076
26,576 9.00% 9/15/2009 28,336
14,451 9.00% 10/15/2009 15,329
28,940 9.00% 11/15/2009 31,248
11,436 9.00% 12/15/2009 12,193
135,882 9.00% 7/15/2010 145,000
133,963 9.00% 5/15/2011 146,182
45,069 9.00% 5/15/2011 49,179
93,945 9.00% 6/15/2011 102,513
119,112 9.00% 7/15/2011 129,977
106,168 9.00% 8/15/2011 115,852
93,665 9.00% 8/15/2011 101,344
114,344 9.00% 9/15/2011 124,774
72,324 9.00% 9/15/2011 78,921
108,754 9.00% 9/15/2011 118,674
75,206 9.00% 10/15/2011 82,065
43,115 9.00% 1/15/2012 47,255
51,887 9.00% 5/20/2015 56,227
190,192 9.00% 7/15/2015 206,860
38,196 9.00% 8/15/2015 41,543
145,971 9.00% 12/20/2015 158,180
24,287 9.00% 5/20/2016 26,376
28,572 9.00% 7/20/2016 31,029
178,357 9.00% 1/15/2017 198,212
15,982 9.00% 3/20/2017 17,392
545,506 9.00% 6/15/2017 606,234
469,611 9.00% 7/15/2017 521,890
370,796 9.00% 8/20/2017 403,523
53,702 9.00% 5/15/2018 59,449
10,681 9.00% 12/15/2019 11,708
328,903 9.00% 12/15/2019 360,511
3,254 9.00% 7/20/2021 3,564
3,763 9.00% 10/20/2021 4,122
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
426,131 9.00% 11/15/2024 467,416
61,914 9.00% 7/20/2025 68,081
207,874 9.00% 4/15/2026 229,285
24,974 9.10% 5/15/2018 27,455
112,689 9.25% 11/15/2009 122,874
47,631 9.25% 1/15/2010 52,270
41,923 9.25% 4/15/2010 46,005
51,081 9.25% 11/15/2010 56,055
103,624 9.25% 11/15/2011 114,281
23,447 9.25% 4/15/2012 25,987
55,386 9.25% 7/20/2017 60,610
6,337 9.50% 1/15/2006 6,567
10,753 9.50% 7/15/2009 11,502
39,770 9.50% 8/15/2009 42,539
16,400 9.50% 8/15/2009 17,541
18,618 9.50% 9/15/2009 19,857
10,533 9.50% 9/15/2009 11,266
28,048 9.50% 9/15/2009 30,001
11,595 9.50% 10/15/2009 12,402
14,256 9.50% 10/15/2009 15,248
4,216 9.50% 10/15/2009 4,509
129,380 9.50% 10/15/2009 137,988
24,597 9.50% 10/15/2009 26,310
9,963 9.50% 10/15/2009 10,656
48,080 9.50% 10/15/2009 51,278
8,380 9.50% 10/15/2009 8,937
42,738 9.50% 11/15/2009 46,761
107,383 9.50% 1/15/2010 118,293
40,325 9.50% 2/15/2010 43,309
123,325 9.50% 4/15/2010 133,252
32,209 9.50% 8/15/2010 35,482
45,171 9.50% 11/15/2010 49,760
26,403 9.50% 1/15/2011 29,241
119,027 9.50% 3/15/2011 131,818
16,689 9.50% 3/20/2016 18,351
15,215 9.50% 6/15/2016 16,790
75,947 9.50% 10/15/2016 83,810
45,354 9.50% 10/15/2016 50,050
39,239 9.50% 11/15/2016 43,302
47,869 9.50% 11/20/2016 52,634
16,727 9.50% 1/15/2017 18,510
14,572 9.50% 4/15/2017 16,126
45,922 9.50% 8/15/2017 50,820
4,235 9.50% 8/20/2017 4,670
30,721 9.50% 9/15/2017 33,997
18,688 9.50% 9/15/2017 20,681
90,878 9.50% 12/15/2017 100,141
97,117 9.50% 12/15/2017 107,150
29,305 9.50% 12/15/2017 32,339
See accompanying notes to portfolios of investments on page 62. 19
- --------------------------------------------------------------------------------
SIT U.S. GOVERNMENT SECURITIES FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
203,648 9.50% 12/15/2017 224,596
6,711 9.50% 12/20/2017 7,400
6,389 9.50% 4/15/2018 7,087
9,736 9.50% 4/20/2018 10,760
3,244 9.50% 5/20/2018 3,585
124,017 9.50% 6/15/2018 137,564
76,393 9.50% 6/20/2018 84,432
33,278 9.50% 7/20/2018 36,780
13,468 9.50% 8/15/2018 14,939
34,681 9.50% 8/20/2018 38,331
48,726 9.50% 9/15/2018 54,048
70,069 9.50% 9/15/2018 77,723
13,415 9.50% 9/20/2018 14,827
200,309 9.50% 9/20/2018 221,388
80,074 9.50% 9/20/2018 88,500
42,445 9.50% 10/15/2018 46,897
18,479 9.50% 1/15/2019 20,541
28,764 9.50% 4/15/2019 31,973
9,268 9.50% 8/15/2019 10,303
107,909 9.50% 8/20/2019 119,518
31,280 9.50% 9/15/2019 34,770
5,782 9.50% 10/20/2019 6,404
28,997 9.50% 12/15/2019 32,233
3,382 9.50% 1/15/2020 3,766
8,775 9.50% 10/15/2020 9,771
15,168 9.50% 1/15/2021 16,917
13,773 9.50% 2/15/2021 15,361
48,348 9.50% 8/15/2021 53,922
328,270 9.50% 8/15/2022 366,614
1,953 9.75% 6/15/2005 1,985
4,268 9.75% 6/15/2005 4,338
4,684 9.75% 8/15/2005 4,761
3,213 9.75% 9/15/2005 3,266
5,573 9.75% 1/15/2006 5,784
7,171 9.75% 2/15/2006 7,442
107,235 9.75% 8/15/2009 117,429
59,484 9.75% 9/15/2009 65,139
170,145 9.75% 8/15/2010 187,821
50,733 9.75% 11/15/2010 56,003
240,692 9.75% 12/15/2010 265,695
113,496 9.75% 1/15/2011 126,236
251,657 9.75% 1/15/2011 279,905
20,156 9.75% 10/15/2012 22,563
20,137 9.75% 10/15/2012 22,542
43,433 9.75% 10/15/2012 48,621
30,464 9.75% 11/15/2012 34,103
49,699 9.75% 11/15/2012 55,635
60,960 9.75% 11/15/2012 68,241
43,894 9.75% 11/15/2012 49,136
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
2,562 9.75% 12/15/2012 2,868
10,570 10.00% 7/15/2005 10,751
5,409 10.00% 7/15/2005 5,501
40,780 10.00% 11/15/2008 44,357
1,972 10.00% 11/15/2009 2,119
93,956 10.00% 6/15/2010 104,116
5,931 10.00% 6/15/2010 6,572
11,712 10.00% 7/15/2010 12,978
32,155 10.00% 7/15/2010 35,632
15,900 10.00% 10/15/2010 17,619
103,427 10.00% 11/15/2010 114,611
13,170 10.00% 1/15/2011 14,710
34,898 10.00% 3/20/2016 38,880
19,681 10.00% 11/15/2017 22,077
34,019 10.00% 2/15/2019 38,291
33,332 10.00% 2/20/2019 37,385
48,976 10.00% 3/20/2019 54,930
24,592 10.00% 5/15/2019 27,680
41,472 10.00% 5/20/2019 46,513
315,292 10.00% 10/15/2019 362,660
44,911 10.00% 11/15/2019 50,550
8,738 10.00% 7/15/2020 9,849
33,376 10.00% 12/15/2020 37,617
119,927 10.00% 6/15/2021 135,322
11,942 10.00% 10/15/2030 13,549
6,403 10.25% 7/15/2005 6,516
40,770 10.25% 5/15/2009 44,422
31,628 10.25% 11/15/2011 35,062
44,919 10.25% 1/15/2012 50,164
37,251 10.25% 2/15/2012 41,600
4,125 10.25% 2/15/2012 4,606
19,275 10.25% 7/15/2012 21,525
40,495 10.50% 6/15/2009 44,275
8,578 10.50% 7/15/2010 9,468
10,617 10.50% 9/15/2015 11,943
13,827 10.50% 11/15/2015 15,554
22,569 10.50% 8/20/2017 25,427
54,891 10.50% 11/15/2018 62,184
69,330 10.50% 6/15/2019 78,671
346,048 10.50% 2/15/2020 391,590
275,596 10.50% 8/15/2021 317,034
963 10.75% 9/15/2005 982
13,188 10.75% 8/15/2006 13,769
8,511 10.75% 1/15/2010 9,389
1,757 10.75% 7/15/2011 1,944
73,856 11.00% 1/15/2010 80,864
56,855 11.00% 1/15/2010 62,250
86,029 11.00% 1/15/2010 94,192
39,362 11.00% 3/15/2010 43,096
20
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
12,526 11.00% 6/15/2010 13,714
30,454 11.00% 9/15/2010 33,344
6,717 11.25% 9/15/2005 6,857
3,713 11.25% 10/15/2005 3,791
43,280 11.25% 6/15/2010 48,134
59,432 11.25% 9/15/2010 66,096
6,275 11.25% 9/15/2010 6,979
8,523 11.25% 2/15/2011 9,517
6,320 11.25% 2/15/2011 7,056
24,800 11.25% 3/15/2011 27,690
15,222 11.25% 3/15/2011 16,996
53,585 11.25% 4/15/2011 59,829
28,543 11.25% 5/15/2011 31,869
37,242 11.25% 7/15/2011 41,582
8,190 11.25% 7/15/2011 9,144
28,369 11.25% 7/15/2011 31,675
45,482 11.25% 9/15/2011 50,782
17,811 11.25% 10/15/2011 19,886
5,814 11.25% 11/15/2011 6,492
----------
37,145,445
----------
Total mortgage pass-through securities 162,587,667
(cost: $161,860,621) ----------
- --------------------------------------------------------------------------------
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
- --------------------------------------------------------------------------------
TAXABLE MUNICIPAL SECURITIES (0.4%) (2)
236,000 Bernalillo Multifamily Rev. Series
1998A, 7.50%, 9/20/20 257,957
65,000 Cuyahoga County Multifamily Rev.
Series 2000B, 7.00%, 1/20/08 68,410
25,000 Dakota Multifamily Rev. Series
1999A, 6.50%, 12/20/05 25,168
120,000 Louisiana Comm. Dev. Auth Rev.
Series 2002B, 5.25%, 12/20/07 120,976
430,000 Maplewood Multifamily Rev.
Series 1998B, 6.75%, 7/20/15 447,574
82,000 Nortex Multifamily Rev. Series
1999T, 6.50%, 3/20/06 83,393
--------------
Total taxable municipal securities 1,003,478
(cost: $958,000) --------------
U.S. TREASURY / FEDERAL AGENCY SECURITIES (7.9%) (2)
Federal Home Loan Bank:
5,000,000 2.50%, 6/30/09 4,882,765
2,170,000 5.62%, 8/6/18 2,130,877
40,650,000 U.S. Treasury Strips, zero coupon,
4.80% effective yield, 11/15/27 13,329,785
--------------
Total U.S. Treasury / Federal Agency securities 20,343,427
(cost: $19,391,572) --------------
COLLATERALIZED MORTGAGE OBLIGATIONS (25.2%) (2)
FEDERAL HOME LOAN MORTGAGE CORP.:
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
828,711 3.00% 2/15/2023 768,762
5,626,849 3.25% 4/15/2032 5,269,763
891,611 4.00% 11/15/2014 873,703
637,550 4.00% 12/15/2032 613,062
2,576,513 4.25% 11/15/2017 2,529,037
795,475 7.50% 6/15/2017 852,078
32,329 7.75% 3/18/2025 33,874
60,241 9.15% 10/15/2020 63,875
FEDERAL NATIONAL MORTGAGE ASSOCIATION:
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ -------- -------------------
4,719,801 3.50% 2/25/2033 4,371,215
1,702,404 3.50% 3/25/2033 1,661,352
1,629,186 3.75% 5/25/2033 1,525,928
2,097,367 4.00% 11/25/2032 2,056,591
312,772 4.00% 1/25/2033 294,609
2,333,985 4.00% 3/25/2033 2,216,550
351,726 5.00% 8/25/2022 352,033
144,903 7.00% 1/25/2021 150,668
912,467 7.00% 1/25/2022 944,796
79,776 7.70% 3/25/2023 84,592
427,483 8.00% 7/25/2022 445,589
748,333 8.00% 7/25/2044 805,160
184,314 8.20% 4/25/2025 196,635
59,837 8.50% 1/25/2021 63,567
96,511 8.50% 4/25/2021 101,860
549,184 8.50% 9/25/2021 588,347
169,447 8.50% 1/25/2025 180,890
125,104 8.75% 9/25/2020 132,043
315,637 8.95% 10/25/2020 342,663
890,782 9.00% 7/25/2019 963,370
622,596 9.00% 12/25/2019 675,562
196,506 9.00% 5/25/2020 210,259
114,543 9.00% 6/25/2020 124,042
299,399 9.00% 6/25/2020 321,682
43,224 9.00% 7/25/2020 46,767
290,130 9.00% 9/25/2020 315,307
180,556 9.00% 10/25/2020 195,573
359,413 9.00% 3/1/2024 385,742
1,883,235 9.00% 11/25/2028 2,091,367
274,800 9.25% 1/25/2020 299,645
259,189 9.50% 12/25/2018 284,258
539,067 9.50% 3/25/2020 591,622
119,476 9.50% 4/25/2020 128,758
303,368 9.50% 5/25/2020 331,766
389,264 9.50% 11/25/2020 426,882
616,692 9.60% 3/25/2020 677,570
See accompanying notes to portfolios of investments on page 62. 21
- --------------------------------------------------------------------------------
SIT U.S. GOVERNMENT SECURITIES FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
- --------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION:
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ ---------- -------------------
1,083,613 4.00% 10/17/2029 1,057,743
2,244,828 4.50% 2/20/2030 2,233,361
2,000,000 5.00% 5/16/2030 2,005,382
2,361,391 7.00% 1/20/2032 2,535,036
754,633 8.00% 1/16/2030 797,811
VENDEE MORTGAGE TRUST:
Par ($) Coupon Maturity Market Value ($)(1)
--------- ------ ---------- -------------------
1,000,000 5.00% 8/15/2028 975,008
1,000,000 5.00% 7/15/2030 967,447
157,652 5.63% 2/15/2024 157,451
2,000,000 6.00% 4/15/2027 2,043,989
2,000,000 6.00% 2/15/2030 2,054,004
250,000 6.50% 10/15/2025 253,497
7,769,520 6.50% 12/15/2028 7,959,762
5,000,000 7.00% 9/15/2027 5,250,260
647,798 7.50% 11/15/2014 651,977
641,152 8.29% 12/15/2026 670,819
---------------
Total collateralized mortgage obligations 65,202,961
(cost: $66,510,026) ---------------
SHORT-TERM SECURITIES (3.0%) (2)
4,700,000 FNMA, 2.50%, 4/5/05 4,698,694
2,986,406 Dreyfus Cash Mgmt. Fund, 2.56% 2,986,406
---------------
Total short-term securities 7,685,100
(cost: $7,685,100) ---------------
Total investments in securities
(cost: $256,405,319) (7) $256,822,633
===============
22 See accompanying notes to portfolios of investments on page 62.
This page has been left blank intentionally.
23
SIT TAX-FREE INCOME FUND
ONE YEAR ENDED MARCH 31, 2005
- --------------------------------------------------------------------------------
SENIOR PORTFOLIO MANAGERS
MICHAEL C. BRILLEY o DEBRA A. SIT, CFA o PAUL J. JUNGQUIST, CFA
The Sit Tax Free Income Fund returned +2.54% for the fiscal year ended March
31, 2005 compared with a return of +0.26% for the Lehman 5-Year Municipal Bond
Index. The Fund's 30-day SEC yield was 4.43% and its 12-month distribution rate
was 3.83% as of March 31, 2005.
Over the past 12 months, the Federal Reserve increased the federal funds
target rate by 25 basis points on seven occasions beginning on June 30th, 2004.
The municipal yield curve flattened, with one-year maturity municipals rising
1.5%, five year maturities rising 0.9%, ten year maturities rising 0.4%, and
thirty year maturities rising 5 basis points. The rising yields for short and
intermediate term bonds produced price depreciation for bonds in that maturity
range.
The Fund invests in five different market sectors that each account for more
than 10% of the Fund's investments. All of those sectors substantially
outperformed the Lehman 5-Year Index, with returns at least 2% higher than the
index. The Fund's duration averaged about 3.5 years over the past 12 months and
this relatively short duration was the primary factor in the Fund's strong
relative performance over the fiscal year.
We expect the Federal Reserve to further increase short-term rates by 1.0% to
1.5% over the next twelve months. Those interest rate increases are expected to
cause higher interest rate levels across the entire yield curve, with the
largest increases expected in the short to intermediate maturity range. The
Fund's duration is shorter than most municipal bond funds and is, therefore,
positioned to perform well in a rising interest rate environment. We intend to
extend the Fund's duration as interest rates rise further later in the year. No
significant changes in sector allocations are expected over the next year.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
- --------------------------------------------------------------------------------
The objective of the Tax-Free Income Fund is to provide a high level of
current income that is exempt from federal income tax, consistent with
preservation of capital, by investing primarily in investment-grade municipal
securities.
Such municipal securities generate interest income that is exempt from
both regular federal income tax and federal alternative minimum tax. During
normal market conditions, the Fund invests 100% of its net assets in such
tax-exempt municipal securities.
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY
- --------------------------------------------------------------------------------
Net Asset Value 3/31/05: $ 9.77 Per Share
3/31/04: $ 9.90 Per Share
Total Net Assets: $353.9 Million
30-day SEC Yield: 4.43%
Tax Equivalent Yield: 6.82%(1)
12-Month Distribution Rate: 3.83%
Average Maturity: 12.6 Years
Duration to Estimated Avg. Life: 3.2 Years(2)
Implied Duration: 3.7 Years(2)
(1)For individuals in the 35.0% federal tax bracket.
(2)See next page.
- --------------------------------------------------------------------------------
PORTFOLIO STRUCTURE
(% OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
Insured 25.4
Hospital/Health Care 18.8
Revenue
Multifamily Mortgage 17.3
Other Revenue 12.0
Industrial/Pollution 9.1
Control
Sectors less than 4.0% 14.0
Cash & Other 3.4
Net Assets
24
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
SIT LIPPER
TAX-FREE LEHMAN GENERAL
INCOME 5-YEAR MUNI. MUNI. BOND
FUND BOND INDEX FUND INDEX
-------- ------------ -----------
3 Month** 0.31% -1.15% -0.03%
6 Month** 1.04 -0.36 n/a
1 Year 2.54 0.26 2.74
5 Year 5.06 5.49 6.04
10 Year 5.23 5.30 5.66
Inception 6.12 6.09 6.58
(9/29/88)
- --------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS*
- --------------------------------------------------------------------------------
SIT LIPPER
TAX-FREE LEHMAN GENERAL
INCOME 5-YEAR MUNI. MUNI. BOND
FUND BOND INDEX FUND INDEX
-------- ------------ -----------
1 Year 2.54% 0.26% 2.74%
5 Year 27.97 30.62 34.07
10 Year 66.57 67.63 73.36
Inception 166.67 165.47 186.39
(9/29/88)
*AS OF 3/31/05. **NOT ANNUALIZED.
- --------------------------------------------------------------------------------
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. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT
FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE;
HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE LEHMAN 5-YEAR MUNI. BOND
INDEX. THE LIPPER RETURNS ARE OBTAINED FROM LIPPER ANALYTICAL SERVICES, INC., A
LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS.
(2) Duration is a measure which reflects estimated price sensitivity to a given
change in interest rates. For example, for an interest rate change of 1%, a
portfolio with a duration of 5 years would be expected to experience a
price change of 5%. Estimated average life duration is based on current
interest rates and the Adviser's assumptions regarding the expected average
life of individual securities held in the portfolio. Implied duration is
calculated based on historical price changes of securities held by the
Fund. The Adviser believes that the portfolio's implied duration is a more
accurate estimate of price sensitivity provided interest rates remain
within their historical range. If interest rates exceed the historical
range, the estimated average life duration may be a more accurate estimate
of price sensitivity.
- --------------------------------------------------------------------------------
GROWTH OF $10,000
- --------------------------------------------------------------------------------
[PLOT POINTS CHART]
Sit Lehman Sit Lehman Sit Lehman
Tax-Free 5-Year Tax-Free 5-Year Tax-Free 5-Year
Income Municipal Income Municipal Income Municipal
Date Fund Bond Index Date Fund Bond Index Date Fund Bond Index
---- ------- ---------- ---- ------- ---------- ---- ------- ----------
9/29/1988 10,000 10,000 3/31/1994 14,962 14,982 10/31/1999 20,604 20,033
9/30/1988 9,990 10,000 4/29/1994 15,125 15,074 11/30/1999 20,699 20,150
10/31/1988 10,063 10,105 5/31/1994 15,249 15,151 12/31/1999 20,515 20,084
11/30/1988 10,097 10,039 6/30/1994 15,226 15,143 1/31/2000 20,244 20,075
12/31/1988 10,219 10,066 7/31/1994 15,422 15,318 2/29/2000 20,484 20,141
1/31/1989 10,312 10,209 8/31/1994 15,502 15,392 3/31/2000 20,838 20,325
2/28/1989 10,292 10,123 9/30/1994 15,367 15,289 4/30/2000 20,771 20,278
3/31/1989 10,377 10,063 10/31/1994 15,267 15,188 5/31/2000 20,632 20,272
4/30/1989 10,473 10,246 11/30/1994 15,250 15,049 6/30/2000 21,076 20,644
5/31/1989 10,534 10,417 12/31/1994 15,342 15,218 7/31/2000 21,344 20,862
6/30/1989 10,652 10,546 1/31/1995 15,651 15,407 8/31/2000 21,681 21,088
7/31/1989 10,759 10,691 2/28/1995 15,917 15,677 9/30/2000 21,618 21,051
8/31/1989 10,798 10,634 3/31/1995 16,010 15,837 10/31/2000 21,764 21,199
9/30/1989 10,850 10,641 4/30/1995 16,046 15,898 11/30/2000 21,790 21,291
10/31/1989 10,929 10,747 5/31/1995 16,393 16,232 12/31/2000 22,221 21,634
11/30/1989 11,023 10,888 6/30/1995 16,385 16,261 1/31/2001 22,416 22,007
12/31/1989 11,075 10,979 7/31/1995 16,498 16,459 2/28/2001 22,575 22,067
1/31/1990 11,135 10,976 8/31/1995 16,643 16,609 3/31/2001 22,717 22,248
2/28/1990 11,197 11,063 9/30/1995 16,752 16,650 4/30/2001 22,588 22,123
3/31/1990 11,254 11,048 10/31/1995 16,921 16,752 5/31/2001 22,804 22,352
4/30/1990 11,297 11,004 11/30/1995 17,171 16,903 6/30/2001 22,920 22,467
5/31/1990 11,399 11,195 12/31/1995 17,316 16,991 7/31/2001 23,227 22,709
6/30/1990 11,453 11,290 1/31/1996 17,386 17,161 8/31/2001 23,505 23,015
7/31/1990 11,532 11,437 2/29/1996 17,378 17,112 9/30/2001 23,587 23,084
8/31/1990 11,607 11,390 3/29/1996 17,246 16,992 10/31/2001 23,731 23,276
9/30/1990 11,664 11,432 4/30/1996 17,262 16,989 11/30/2001 23,634 23,090
10/31/1990 11,728 11,608 5/31/1996 17,346 16,982 12/31/2001 23,519 22,978
11/30/1990 11,820 11,775 6/30/1996 17,491 17,083 1/31/2002 23,713 23,348
12/31/1990 11,882 11,825 7/31/1996 17,633 17,208 2/28/2002 23,891 23,612
1/31/1991 11,965 11,991 8/31/1996 17,678 17,224 3/31/2002 23,637 23,110
2/28/1991 12,021 12,114 9/30/1996 17,887 17,365 4/30/2002 23,902 23,644
3/31/1991 12,080 12,088 10/31/1996 18,080 17,515 5/31/2002 24,015 23,803
4/30/1991 12,218 12,238 11/30/1996 18,285 17,742 6/30/2002 24,146 24,062
5/31/1991 12,311 12,313 12/31/1996 18,301 17,708 7/31/2002 24,366 24,322
6/30/1991 12,342 12,302 1/31/1997 18,368 17,769 8/30/2002 24,529 24,556
7/31/1991 12,450 12,419 2/28/1997 18,498 17,899 9/30/2002 24,796 24,896
8/31/1991 12,586 12,585 3/31/1997 18,429 17,704 10/31/2002 24,595 24,643
9/30/1991 12,683 12,739 4/30/1997 18,570 17,780 11/30/2002 24,583 24,618
10/31/1991 12,774 12,838 5/31/1997 18,767 17,999 12/31/2002 24,857 25,108
11/30/1991 12,826 12,894 6/30/1997 18,985 18,137 1/31/2003 24,826 25,151
12/31/1991 12,981 13,174 7/31/1997 19,447 18,456 2/28/2003 25,087 25,423
1/31/1992 12,993 13,213 8/31/1997 19,358 18,361 3/31/2003 25,031 25,387
2/29/1992 13,050 13,219 9/30/1997 19,580 18,524 4/30/2003 25,124 25,508
3/31/1992 13,072 13,183 10/31/1997 19,724 18,620 5/31/2003 25,389 25,915
4/30/1992 13,189 13,295 11/30/1997 19,843 18,678 6/30/2003 25,278 25,849
5/31/1992 13,321 13,424 12/31/1997 20,107 18,838 7/31/2003 24,911 25,286
6/30/1992 13,464 13,626 1/31/1998 20,308 19,009 8/31/2003 24,895 25,464
7/31/1992 13,764 13,980 2/28/1998 20,348 19,040 9/30/2003 25,321 26,109
8/31/1992 13,652 13,868 3/31/1998 20,398 19,056 10/31/2003 25,386 25,938
9/30/1992 13,736 13,980 4/30/1998 20,308 18,976 11/30/2003 25,520 26,043
10/31/1992 13,644 13,908 5/31/1998 20,547 19,204 12/31/2003 25,571 26,144
11/30/1992 13,853 14,069 6/30/1998 20,677 19,270 1/31/2004 25,789 26,268
12/31/1992 13,982 14,178 7/31/1998 20,766 19,338 2/29/2004 26,028 26,589
1/31/1993 14,079 14,349 8/31/1998 21,033 19,574 3/31/2004 26,006 26,478
2/28/1993 14,490 14,707 9/30/1998 21,258 19,776 4/30/2004 25,800 25,948
3/31/1993 14,381 14,551 10/31/1998 21,241 19,833 5/31/2004 25,772 25,814
4/30/1993 14,524 14,637 11/30/1998 21,329 19,868 6/30/2004 25,859 25,910
5/31/1993 14,590 14,681 12/31/1998 21,372 19,938 7/31/2004 25,995 26,149
6/30/1993 14,785 14,890 1/31/1999 21,475 20,149 8/31/2004 26,244 26,608
7/31/1993 14,899 14,902 2/28/1999 21,431 20,128 9/30/2004 26,392 26,643
8/31/1993 15,136 15,117 3/31/1999 21,479 20,145 10/31/2004 26,472 26,791
9/30/1993 15,236 15,232 4/30/1999 21,523 20,205 11/30/2004 26,424 26,615
10/31/1993 15,304 15,270 5/31/1999 21,438 20,123 12/31/2004 26,584 26,856
11/30/1993 15,260 15,192 6/30/1999 21,200 19,895 1/31/2005 26,669 26,849
12/31/1993 15,438 15,416 7/31/1999 21,203 20,018 2/28/2005 26,690 26,717
1/31/1994 15,603 15,554 8/31/1999 20,938 20,009 3/31/2005 26,667 26,547
2/28/1994 15,413 15,300 9/30/1999 20,857 20,082
The sum of $10,000 invested at inception (9/29/88) and held until 3/31/05 would
have grown to $26,667 in the Fund or $26,547 in the Lehman 5-Year Municipal Bond
Index assuming reinvestment of all dividends and capital gains.
- --------------------------------------------------------------------------------
QUALITY RATINGS
(% OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
[PIE CHART]
Less Than BBB 2.8%
Other Assets
and Liabilities 3.4%
AA 4.3%
A 23.3%
BBB 32.0%
AAA 34.2%
LOWER OF MOODY'S, S&P, FITCH OR DUFF & PHELPS RATINGS USED.
25
SIT TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
MUNICIPAL BONDS (96.2%) (2)
ALABAMA (1.3%)
1,000,000 Birmingham Baptist Med. Ctr. Special Care Facs. Financing Auth. Rev. Series 1993A,
(Baptist Med. Ctr. Proj.)(MBIA insured), 5.50%, 8/15/23 1,001,850
675,000 Birmingham-Southern College Private Educ. Bldg. Rev. Series 1997, 5.35%, 12/1/19 677,531
300,000 Central Elmore Water & Sewer Auth. Rev. Refunding Series 2003A (MBIA insured), 1.40%, 7/1/05 299,163
400,000 Cullman Med. Park South Med. Clinic Board Rev. Series 1993A (Cullman Regional
Medical Center Proj.), 6.50%, 2/15/13 400,296
150,000 Limestone Co. Water Auth. Rev. Series 1994 (FGIC insured), 5.25%, 12/1/20 151,500
500,000 Madison Co. Brd. Educ. Tax Warrants Series 1997 (MBIA insured), 5.20%, 9/1/15 515,760
750,000 Montgomery Special Care Facs. Fin. Auth. Rev. Series 1997C (Baptist Med. Ctr. Proj.), 5.375%,
9/1/22 792,488
Montgomery Med. Clinic Board Hlth. Care Fac. Rev. Series 1991:
530,000 7.00%, 3/1/15 531,150
115,000 7.375%, 3/1/06 115,273
---------------
4,485,011
---------------
ALASKA (2.8%)
12,505,000 Alaska HFC Gen. Mtg. Rev. 1997 Series A, zero coupon, 6.15% effective yield on purchase date,
12/1/17 6,068,551
450,000 Anchorage Elec. Util. Rev. Sr. Lien Series 1996B (MBIA insured), 5.50%, 2/1/26 462,505
Northern Alaska Tobacco Securitization Corp. Asset-Backed Rev.:
2,240,000 Series 2000, 6.20%, 6/1/22 2,266,365
1,040,000 Series 2001, 4.75%, 6/1/15 1,040,874
--------------
9,838,295
--------------
ARIZONA (1.0%)
230,000 Bullhead City Special Assessment Impt. Dist. Series 1993 (Bullhead Pkwy. Proj.), 6.10%, 1/1/10 233,862
730,000 Phoenix Indus. Dev. Auth. Rev. Refunding Series 1995A (Christian Care Apts. Proj.), 6.25%, 1/1/16 757,178
225,000 Phoenix Indus. Dev. Auth. Multifamily Hsg. Rev. Refunding Series (Woodstone & Silver Springs Proj.)
(Radian insured), 6.25%, 4/1/23 225,000
700,000 Phoenix Street & Hwy. User Rev. Refunding Jr. Lien Series 1992, 6.25%, 7/1/11 706,258
Pima Co. Industrial Dev. Auth. Educ. Rev.:
295,000 Series 2004I (AZ Charter Schools Proj.), 5.00%, 7/1/12 294,711
250,000 Series 2004A (Noah Webster Basic School Proj.), 5.25%, 12/15/16 249,115
1,250,000 Salt River Proj. Agric. Impt. & Pwr. Dist. Elec. Sys. Rev. Refunding Series 1993C, 4.90%, 1/1/08 1,264,937
---------------
3,731,061
---------------
ARKANSAS (0.7%)
50,826 Drew Co. Public Fac. Bd. Single Family Mtg. Rev. Refunding Series 1993-A2
(FNMA backed), 7.90%, 8/1/11 51,974
6,409 Jacksonville Res. Hsg. Fac. Bd. Single Family Mtg. Rev. Refunding Series 1993B, 7.75%, 1/1/11 6,496
935,000 Maumelle HDC First Lien Rev. Refunding 1992 Series A (Section 8), 7.875%, 7/1/09 936,599
North Little Rock Hlth. Facs. Bd. Health Care Rev. Series 2001 (Baptist Health Proj.):
555,000 5.00%, 7/1/06 567,188
300,000 5.00%, 7/1/07 309,969
490,000 5.00%, 7/1/08 509,919
---------------
2,382,145
---------------
2,382,145
---------------
26
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
CALIFORNIA (9.3%)
230,000 ABAG Fin. Auth. For Nonprofit Corp. Rev Series 2002 (Redwood Sr. Homes & Svcs.
Proj.), 4.10%, 11/15/07 231,658
230,000 Bay Area Govt. Assoc. Tax Allocation Rev. Series 1994A (FSA insured), 6.00%, 12/15/14 236,240
1,000,000 Bell Cmty. Hsg. Auth. Rev. Series 1995A (Mobilehomes Park Acquisition Proj.), 6.40%, 10/1/15 1,025,690
250,000 Blythe Redev. Agy. Tax Allocation Refunding Series 1997 (Proj. No. 1), 5.80%, 5/1/28 257,963
200,000 Calexico Cmnty. Redev. Agy. Tax Allocation Series 2000 (Merged Central Bus. District Redev. Proj.)
(Ambac insured), 5.375%, 8/1/26 212,196
4,575,000 CA Co. Tobacco Securitization Agy. Asset-Backed Rev. Series 2002 (Alameda Co.), 4.75%, 6/1/19 4,600,940
125,000 CA Educ. Facs. Auth. Rev. Series 1995A (Pooled College & Univ. Proj.), 5.60%, 12/1/14 128,614
950,000 CA Cmnty. College Fin. Auth. Student Hsg. Rev. Series 2003A (Feather River Cmnty. District Proj.),
4.625%, 7/1/13 958,835
750,000 CA Dept. Water Resources Rev. Series 1972 (Central Valley Proj.), 5.25%, 7/1/22 751,838
220,000 CA Dept. Water Resources Rev. Series 1996Q (Central Valley Proj.)(MBIA insured), 5.375%, 12/1/27 230,322
165,000 CA G.O. Series 1996, 5.25%, 6/1/21 170,917
35,000 CA Prerefunded G.O. Series 1996 (Ambac insured), 5.25%, 6/1/21 36,385
495,000 CA Govt. Fin. Auth. Lease Rev. Series 2003A (Placer Co. Transportation Proj.), 6.00%, 12/1/28 497,272
500,000 CA Hlth. Facs. Fin. Auth. Rev. Series 1997B (Cedars-Sinai Med. Ctr. Proj.), 5.125%, 8/1/27 517,210
4,300,000 CA Public Works Board Lease Rev. Series 1996A (Dept. of Corrections Proj.), 5.50%, 1/1/17 4,468,603
300,000 CA Public Works Board Lease Rev. Series 1993A (Various CA State Univ. Proj.), 5.25%, 12/1/13 (5) 303,621
CA Statewide Cmntys. Dev. Auth. Rev. Series 2005 (Daughters of Charity Hlth. Proj.):
500,000 5.00%, 7/1/06 509,930
500,000 5.00%, 7/1/07 514,970
530,000 5.25%, 7/1/11 562,669
500,000 CA Statewide Cmntys. Dev. Auth. C.O.P. Series 1994 (Motion Picture & TV Fund), 5.35%, 1/1/24 505,980
500,000 CA University Multipurpose Proj. Rev. Series 1998F, 5.00%, 9/1/27 509,475
235,000 Garden Grove C.O.P Series 1993 (Bahia Village/Emerald Isle Proj.)(FSA insured), 5.70%, 8/1/23 237,583
500,000 Golden State Tobacco Securitization Corp. Tobacco Settlement Asset-Backed Rev.
Enhanced Series 2003B, 5.25%, 6/1/16 501,965
750,000 Intercommunity Hosp. Fin. Auth. C.O.P Series 1998 (ACA insured), 5.25%, 11/1/19 768,173
165,000 Loma Linda Hosp. Rev. Refunding Series 1993C (Loma Linda Univ. Med. Ctr.)(MBIA insured), 5.375%,
12/1/22 167,198
400,000 Los Angeles Water & Power Rev. Series 2001A-A3, 5.25%, 7/1/18 406,404
3,175,000 Northern CA Power Agy. Rev. Series 1987A, 5.00%, 7/1/09 3,178,747
245,000 Northern CA Tobacco Securitization Auth. Asset-Backed Senior Rev. Series 2001B, 4.375%, 6/1/21 244,988
500,000 Oceanside C.O.P. Refunding Series 1995 (Oceanside Civic Ctr. Proj.)(MBIA insured), 5.25%, 8/1/19 513,685
1,100,000 Orange Co. Recovery C.O.P Series 1996A (MBIA insured), 6.00%, 7/1/26 1,160,489
1,000,000 Rancho Cucamonga Redev. Agy. Tax Allocation Series 1996 (MBIA insured), 5.25%, 9/1/16 1,050,030
Ridgecrest Refunding C.O.P. Series 1999 (Ridgecrest Civic Center Proj.):
275,000 5.55%, 3/1/09 293,279
290,000 5.65%, 3/1/10 310,860
350,000 6.00%, 3/1/14 370,384
2,500,000 Sacramento District Fing. Auth. Rev. Series 2000A, 5.875%, 12/1/27 2,577,800
100,000 San Jose Redev. Agy. Tax Alloc. Series 1993 (Merged Area Redev. Proj.)(MBIA insured), 5.00%, 8/1/20 101,152
1,000,000 South Tahoe Powers Fin. Auth. Rev. Refunding Series 1995B, 6.00%, 10/1/28 1,031,080
Southern CA Tobacco Securitization Auth. Asset-Backed Senior Rev:
1,400,000 Series 2001B, 6.00%, 5/15/22 1,411,984
515,000 Series 2002A, 5.25%, 6/1/27 519,826
570,000 Turlock Hlth. Fac. Rev. C.O.P. Series 2004 (Emanuel Med. Ctr., Inc. Proj.), 3.00%, 10/15/05 568,940
345,000 Walnut Creek C.O.P. Series 1994 (John Muir Med. Ctr. Proj.), 5.00%, 2/15/20 348,967
---------------
32,994,862
---------------
See accompanying notes to portfolios of investments on page 62. 27
SIT TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
COLORADO (2.0%)
320,000 CO Educ. & Cultural Fac. Rev. Refunding Series 2003C (Cheyenne Mtn. Charter Sch. Proj.),
4.625%, 6/15/12 311,565
1,250,000 CO Hlth. Fac. Auth. Rev. Series 1995 (Covenant Retirement Cmty. Proj.), 6.75%, 12/1/15 1,292,625
CO HFA Single Family Program Senior Series:
145,000 1996B-2, 7.45%, 11/1/27 145,442
95,000 1997B-3, 6.80%, 11/1/28 95,242
CO Hlth. Fac. Auth. Rev. Refunding & Impt. Hosp. Series 1995 (Parkview Proj.):
155,000 Pre-refunded Balance, 6.125%, 9/1/25 160,403
1,005,000 Unrefunded Balance, 6.125%, 9/1/25 1,029,522
CO Hlth. Fac. Auth. Rev.:
250,000 Series 1995 (Covenant Retirement Cmntys. Proj.), 6.20%, 12/1/07 258,905
380,000 Series 2000A (Porter Place Proj.) (GNMA collateralized), 5.10%, 1/20/11 404,100
1,000,000 Series 2000 (Evangelical Lutheran Proj.), 6.25%, 12/1/10 1,101,670
1,000,000 Series 2002 (Evangelical Lutheran Proj.), 5.90%, 10/1/27 1,055,520
350,000 Series 2004 (Vail Med. Ctr. Proj.), 4.00%, 1/15/06 351,761
600,000 Denver Hsg. Corp. Multifamily Rev. Refunding Series 1997A (Section 8), 5.35%, 10/1/12 615,870
160,000 Eagle Bend Met. District No. 2 G.O. Refunding Series 2004, 2.25%, 12/1/05 159,326
40,000 Thornton Single Family Mtg. Rev. Refunding 1992 Series A, 8.05%, 8/1/09 40,024
----------------
7,021,975
----------------
CONNECTICUT (0.6%)
700,000 Bristol Res. Recovery Fac. Operating Committee Solid Waste Rev. Refunding Series 1995
(Ogden Martin Sys. Proj.), 6.50%, 7/1/14 720,818
1,850,000 Mashantucket Western Pequot Tribe Subordinated Special Rev. Series 1999B, zero coupon,
5.05% effective yield on purchase date, 9/1/09 1,522,328
----------------
2,243,146
----------------
DELAWARE (0.2%)
250,000 DE Hlth. Facs. Auth. Rev. Refunding Series 2004A (Beebe Med. Ctr. Proj.), 5.00%, 6/1/05 250,808
650,000 Quaker Hill Hsg. Corp., Inc. Multifamily Rev. Refunding Series 1990A (FNMA collateralized),
7.55%, 8/1/21 658,392
----------------
909,200
----------------
DISTRICT OF COLUMBIA (0.4%)
1,500,000 DC Rev. Series 1996 (Carnegie Endowment Proj.), 5.75%, 11/15/26 1,570,905
----------------
FLORIDA (3.6%)
600,000 Capital Trust Agy. Multifamily Rev. Sr. Series 2003A (Golf Villas, Rivermill, and Village Square
Apts. Proj.), 4.75%, 6/1/13 575,238
625,000 Collier Co. HFA Multifamily Hsg. Rev. Series 2002C (Goodlette Arms Proj.), 5.25%, 8/15/15 653,913
330,000 Dade Co. Public Facs. Rev. Series 1993 (Jackson Mem. Hosp. Proj.), 5.25%, 6/1/23 331,132
385,000 Dade Co. Hlth. Fac. Auth. Hosp. Rev. Refunding Series 1993A (Baptist Hosp. Miami Proj.)
(MBIA insured), 5.25%, 5/15/21 385,966
500,000 Dade Co. School Dist. G.O. Series 1997 (MBIA insured), 5.00%, 2/15/15 519,565
100,000 FL Dept. Gen. Svcs. Div. Facs. Mgmt. Rev. Series 1996A (Ambac insured), 5.375%, 9/1/18 101,995
500,000 FL Div. Bd. Fin. Dept. Gen. Svcs. Rev. Series 1997A, 5.00%, 7/1/11 524,240
750,000 FL HFC Hsg. Rev. Hsg. Series 2000D-1 (Augustine Club Apts. Proj.)(MBIA insured), 5.75%, 10/1/30 779,123
1,950,000 FL University Cap. Impt. Rev. Series 2004, 5.125%, 9/1/33 1,986,679
545,000 Lee Co. Indus. Dev. Auth. Hlth. Care Fac. Rev. Series 1999A (ShellPoint Village Proj.), 5.50%,
11/15/08 569,182
585,000 Marion Co. Hosp. Dist. Rev. Refunding Series 1999 (Munroe Regl. Med. Ctr. Proj), 5.25%, 10/1/10 624,774
680,000 Miami Beach Water & Sewer Rev. Series 1995 (FSA insured), 5.375%, 9/1/15 700,400
190,000 Miami-Dade Co. Special Hsg. Rev. Refunding Series 1998 (Section 8), 5.30%, 10/1/05 189,447
260,000 North Broward Hosp. Dist. Rev. Refunding Series 1997, 5.375%, 1/15/24 270,340
28
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
200,000 Palm Beach Co. Hlth. Fac. Auth. Rev. Refunding Series 2003 (Abbey Delray South Proj.), 5.15%,
10/1/12 208,392
75,000 Plantation Water & Sewer Rev. Series 1989 (MBIA insured), zero coupon, 5.45% effective yield
on purchase date (MBIA insured), 3/1/07 67,617
3,105,000 Port Everglades Auth. Rev. Refunding Series 1989A (FSA insured), 5.00%, 9/1/16 3,110,806
South Lake Co. Hosp. Dist. Rev. Series 2003 (South Lake Hosp. Inc.):
370,000 4.25%, 10/1/08 367,473
700,000 5.50%, 10/1/13 709,961
---------------
12,676,243
---------------
GEORGIA (0.2%)
750,000 Private Colleges & Univ. Auth. Rev. Refunding Series 1999A (Mercer Univ. Proj.), 5.25%, 10/1/14 773,565
---------------
HAWAII (0.3%)
1,155,000 Honolulu Mtg. Rev. Ref. Series 1996A (Hale-Pauahi Proj.)(FHA insured)(MBIA insured), 6.80%,
7/1/28 1,179,590
---------------
ILLINOIS (15.0%)
Broadview Village of Cook Co. Tax Increment Rev. Series 1999:
750,000 4.90%, 7/1/06 761,940
1,410,000 5.00%, 7/1/07 1,440,273
1,085,000 5.05%, 7/1/08 1,117,995
2,030,000 5.10%, 7/1/09 2,107,505
3,000,000 Chicago G.O. Series 1995B, 5.125%, 1/1/25 3,098,850
Chicago Gas Supply Rev. Refunding (People's Gas, Light, & Coke Co. Proj.):
1,500,000 Series 1995A, 6.10%, 6/1/25 1,536,660
3,000,000 Series 1995A (Ambac insured), 6.10%, 6/1/25 3,074,880
805,000 Series 2000B, 4.75%, 3/1/30 829,335
215,000 Chicago Metro Hsg. Dev. Corp. Mtg. Rev. Refunding Series 1992A (FHA insured) (Section 8),
6.85%, 7/1/22 216,668
Chicago O'Hare Intl. Airport Rev. Refunding (MBIA insured):
100,000 Series 1994A Sr. Lien, 5.00%, 1/1/13 101,185
225,000 Series 1993A Sr. Lien, 5.00%, 1/1/16 227,554
4,620,000 Series 1993C 2nd Lien, 5.00%, 1/1/18 4,698,170
450,000 IL DFA Rev. Series 2002A (Chicago Charter School Fdn. Proj.), 5.25%, 12/1/12 461,088
IL DFA Pollution Ctrl. Rev. Refunding:
300,000 Series 1993C2 (Public Svc. Co. Proj.), 5.70%, 8/15/26 302,628
2,500,000 Series 2000A (Ameren CIPS Proj.), 5.50%, 3/1/14 2,554,875
1,250,000 Series 1993C1 (Central IL Pub. Svc. Co.), 5.95%, 8/15/26 1,284,250
IL DFA Refunding & New Money Rev. (Cmty. Rehab. Providers Fac. Acquisition Program):
1,740,000 Series 1997A, 5.80%, 7/1/08 1,806,572
2,690,000 Series 1997A, 6.05%, 7/1/19 2,784,500
300,000 Series 1997A, 5.90%, 7/1/09 310,890
4,610,000 Series 1997A, 6.00%, 7/1/15 4,761,208
1,200,000 Series 1997C, 5.65%, 7/1/19 1,237,620
805,000 Series 1998A, 5.50%, 7/1/12 831,798
185,000 Series 1998A, 5.70%, 7/1/19 191,074
600,000 IL DFA Rev. Refunding Series 1995A (Catholic Hlth. Proj.)(Connie Lee insured), 5.30%, 2/15/18 616,938
60,000 IL HDA Multifamily Rev. Series 1994-5 (Section 8), 6.75%, 9/1/23 61,332
310,000 IL Fin. Auth. Rev. Series 2005A (Depaul Univ. Proj.), 5.00%, 10/1/05 313,611
See accompanying notes to portfolios of investments on page 62. 29
SIT TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
IL Hlth. Fac. Auth. Rev.:
500,000 Series 1993 (Rush-Presbyterian-St. Lukes Proj.), 5.50%, 11/15/25 505,855
1,250,000 Refunding Series 1994 (Passavant Memorial Area Hospital Assn.) (MBIA insured), 5.95%, 10/1/11 1,341,788
2,595,000 Refunding Series 1993A (Edward Hosp. Proj.), 6.00%, 2/15/19 2,626,893
250,000 Refunding Series 1996A (Advocate Hlth. Proj.)(MBIA insured), 5.80%, 8/15/16 267,508
200,000 Refunding Series 1996B (Sarah Bush Lincoln Hlth. Ctr. Proj.), 5.50%, 2/15/16 206,220
375,000 Refunding Series 1999 (Silver Cross Hosp. Proj.), 5.25%, 8/15/15 381,184
970,000 Refunding Series 2001 (Decatur Memorial Hospital Proj.), 4.625%, 10/1/08 1,001,040
500,000 Series 2000 (IA Health System Proj.), 6.75%, 2/15/13 554,110
200,000 IL Sales Tax Rev. Series 1994U, 5.00%, 6/15/10 204,402
250,000 Melrose Park Tax Increment G.O. Series 1999A (FSA insured), 5.25%, 12/15/15 265,158
2,000,000 Onterie Ctr. Hsg. Fin. Corp. Mtg. Rev. Refunding Series 1992 (Onterie Ctr. Proj.)
(MBIA - FHA insured), 7.05%, 7/1/27 2,044,380
1,850,000 Roselle Multifamily Hsg. Rev. Refunding Series 1994A (GNMA collateralized)
(Waterbury Apts.) (FHA insured), 7.00%, 1/1/25 1,889,405
Southwestern IL Dev. Auth. Rev. Series 1999 (Anderson Hosp. Proj.):
750,000 5.375%, 8/15/15 775,455
500,000 5.625%, 8/15/29 511,475
3,200,000 Southwestern IL Dev. Auth. Local Govt. Prog. Rev. Series 1998A (City of East St. Louis
Tax Increment Financing Proj.), 6.00%, 4/1/10 3,139,296
445,000 Upper Illinois River Valley Dev. Auth. Rev. Series 2001 (Morris Hosp. Proj.), 6.05%, 12/1/11 475,674
500,000 Will Co. Student Hsg. Rev. Series 2002A (Joliet Junior College Proj.), 6.375%, 9/1/13 (8)(9) 215,415
---------------
53,134,657
---------------
INDIANA (4.7%)
1,975,000 IN Bond Bank Special Prgm. Series 1997C (Pittsboro Wastewater Treatment Plant Proj.), 5.70%, 8/1/17 2,063,223
IN Hlth. Fac. Fin. Auth. Hosp. Rev.:
355,000 Series 1993 (Riverview Hosp. Proj.), 6.875%, 8/1/17 366,112
Series 1993 (Community Hosp. of Anderson Proj.)(MBIA insured):
135,000 6.00%, 1/1/14 135,377
650,000 6.00%, 1/1/23 651,632
Refunding Series 1998 (Floyd Memorial Hosp. & Hlth. Svcs. Proj.):
505,000 4.85%, 2/15/06 513,075
600,000 5.25%, 2/15/18 613,116
Series 2001A (Community Foundation Northwest IN):
780,000 5.50%, 8/1/05 785,351
1,100,000 5.50%, 8/1/06 1,126,521
1,000,000 6.00%, 8/1/07 1,047,300
1,000,000 6.00%, 8/1/08 1,059,400
1,320,000 5.50%, 8/1/13 1,372,906
340,000 6.375%, 8/1/21 364,283
300,000 Series 2004A (Community Foundation Northwest IN), 4.75%, 3/1/14 295,578
500,000 IN HFA Single Family Mtg. Rev. Refunding Series 1992A, 6.80%, 1/1/17 500,860
IN Hlth. Fac. Fin. Auth. Rev. Refunding Series 1998:
(Greenwood Village South Proj.):
150,000 5.25%, 5/15/06 150,149
170,000 5.35%, 5/15/08 170,120
1,875,000 (Marquette Manor Proj.), 5.00%, 8/15/18 1,816,950
1,000,000 Petersburg Pollution Ctrl. Rev. Refunding Series 1993A (Indianapolis Pwr. & Light Proj.)
(MBIA insured), 6.10%, 1/1/16 1,002,600
240,000 South Knox Ind. Sch. Bldg. Corp. First Mtg. Rev. Series 1998, 4.80%, 7/15/17 246,993
30
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
Sullivan Industrial Pollution Ctrl. Rev. Refunding Series 1991 (Hoosier Energy Corp. Proj.):
1,500,000 7.10%, 4/1/19 1,511,489
760,000 (MBIA insured), 7.10%, 4/1/19 779,912
---------------
16,572,947
---------------
IOWA (0.5%)
250,000 Cedar Rapids Pollution Ctrl. Rev. Refunding Series 1993 (IA Electric Light & Pwr. Co. Proj.),
5.50%, 11/1/23 252,998
1,130,000 IA Fin. Auth. Multifamily Hsg. Rev. Refunding Series 1997A (Kingswood Apts. Proj.)
(GNMA-collateralized), 6.15%, 5/1/32 1,175,652
IA Fin. Auth Single Family Rev. Series 2000D (GNMA/FNMA Mtg. Backed Securities Proj.):
115,000 5.65%, 7/1/07 118,821
135,000 5.75%, 7/1/09 140,377
200,000 Scott Co. Rev. Refunding Series 2004 (Ridgecrest Village Proj.), 3.25%, 11/15/05 199,790
---------------
1,887,638
---------------
KANSAS (0.0%)
130,000 Olathe & Labette Cos. Mtg. Loan Rev. 1991 Series B (GNMA collateralized) zero coupon, 7.56%
effective yield on purchase date, 2/1/23 36,696
---------------
LOUISIANA (1.2%)
East Baton Rouge Single Family Mtg. Rev. Refunding:
1,005,000 Series 1997C-3 Subordinate Bonds, 5.65%, 10/1/18 1,046,466
7,200,000 Capital Appreciation Series 2000D1 (GNMA & FNMA collateralized) zero coupon,
6.46% effective yield on purchase date, 4/1/34 1,148,256
560,000 LA HFA Multifamily Mtg. Rev. Series 2003A (Section 8-202 Proj)(FSA insured), 4.40%, 6/1/33 568,075
500,000 LA Public Facs. Auth. Rev. Series 1995A (Glen Retirement Sys. Proj.), 6.50%, 12/1/15 516,540
400,000 Orleans Levee Dist. Rev. Series 1995A (Tr. Rcpts.) (FSA insured), 5.95%, 11/1/14 420,560
450,000 South LA Port Common Rev. Refunding Series 1997 (Cargill, Inc. Proj.), 5.85%, 4/1/17 470,313
---------------
4,170,210
---------------
MAINE (0.9%)
1,000,000 Regl. Waste Sys. Ind. Solid Waste Res. Recovery Rev. Series 1998P (FSA insured), 6.25%, 7/1/06 1,028,450
1,000,000 Skowhegan Pollution Ctrl. Rev. Refunding Series 1993 (Scott Paper Co. Proj.), 5.90%, 11/1/13 1,012,830
1,000,000 South Berwick Educ. Rev. Series 1998 (Berwick Academy Issue), 5.25%, 8/1/13 1,033,100
---------------
3,074,380
---------------
MARYLAND (0.1%)
930,000 Prince Georges Co. Hsg. Auth. Residual Rev. Series 2000 (GNMA collateralized),
zero coupon, 6.15% effective yield on purchase date, 11/1/20 356,097
---------------
MASSACHUSETTS (0.7%)
MA Hlth. & Educ. Fac. Auth. Rev.:
200,000 Series 1993B (Lahey Clinic Med. Ctr. Proj.), 5.40%, 7/1/06 201,232
Series 1998B (Cape Cod Healthcare Obligated Group Issue):
320,000 5.00%, 11/15/05 322,448
900,000 5.25%, 11/15/13 920,367
255,000 Series 2001E (Berkshire Health Sys.), 4.50%, 10/1/05 255,581
MA Dev. Fin. Agy. Rev. Series 2005 (Evergreen Ctr., Inc.):
185,000 4.00%, 1/1/07 185,115
195,000 4.00%, 1/1/08 194,136
200,000 4.00%, 1/1/09 197,456
10,000 MA HFA Hsg. Projs. Rev. Series 1993A, 6.375%, 4/1/21 10,013
140,000 MA Indus. Fin. Agy. First Mtg. Rev. Series 1994A (Berkshire Retirement Proj.), 6.375%, 7/1/05 140,556
---------------
2,426,904
---------------
See accompanying notes to portfolios of investments on page 62. 31
SIT TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
MICHIGAN (2.8%)
520,000 Central Wayne Co. Sanitation Auth. Incinerator Rev. Series 2003VII, 4.375%, 7/1/06 526,287
395,000 John Tolfree Hlth. System, Mtg. Rev. & Refunding Series 1999, 5.30%, 9/15/05 397,097
225,000 MI Hosp. Fin. Auth. Rev. Refunding Series 1994 (Mercy Mem. Hosp. Proj.)(MBIA insured),
5.25%, 6/1/21 229,858
200,000 MI Hosp. Fin. Auth. Rev. Refunding Series 1997A (Detroit Medical Group), 5.25%, 8/15/27 206,128
1,150,000 MI Strategic Fund Ltd. Obligation Rev. Refunding Series 2001A (Ford Motor Co. Proj.), 7.10%,
2/1/06 1,180,187
2,500,000 MI Strategic Fund Ltd. Obligation Rev. Refunding Series 2003 (Dow Chemical Proj.)
(Mandatory Put 6/1/08), 4.60%, 6/1/14 2,584,525
2,095,000 Southfield Econ. Dev. Corp. Ltd. Obligation Rev. Series 1998A (Lawrence Tech. Univ. Proj.),
5.25%, 2/1/13 2,139,163
1,873,912 Suburban Mobility Auth. Regl. Transportation C.O.P. Series 2002, 4.90%, 2/15/09 (5) 1,889,653
Summit Academy North Public School C.O.P. Series 2001:
130,000 5.60%, 7/1/05 130,694
135,000 5.70%, 7/1/06 138,410
145,000 5.95%, 7/1/07 150,965
200,000 Univ. of Michigan Student Fee Rev. Series 1995A, 5.25%, 4/1/11 204,000
---------------
9,776,967
---------------
MINNESOTA (1.9%)
3,410,000 Dakota Co. HRA Multifamily Mtg. Rev. Refunding Series 1997A (Park Place
Apts. Proj.)(GNMA Collateralized), 6.875%, 2/20/32 3,654,906
740,000 Hopkins Multifamily Hsg. Rev. Series 1996 (Hopkins Renaissance Proj.)(Section 8), 6.375%, 4/1/20 772,072
2,315,000 Plymouth Multifamily Hsg. Dev. Rev. Refunding Series 1996A (GNMA collateralized)
(Fox Forest Apts. Proj.), 8.05%, 6/20/31 2,443,320
---------------
6,870,298
---------------
MISSISSIPPI (0.3%)
1,000,000 MS Hosp. Equip. & Facs. Auth. Rev. Series 1997A (Rush Med. Fdn. Proj.), 6.00%, 1/1/16 1,013,600
---------------
MISSOURI (3.0%)
1,000,000 Cameron Industrial Dev. Auth. Rev. Refunding Series 2000 (Cameron Cmnty. Hosp. Proj.)
(ACA Insured), 5.80%, 12/1/09 1,050,240
535,000 Chesterfield Rev. Refunding & Impt. Series 2002 (Chesterfield Vy. Projs.), 4.50%, 4/15/16 536,493
250,000 Greene Co. C.O.P. Series 2000 (Law Enforcement Proj.), 5.50%, 7/1/09 261,752
MO Dev. Finance Board Infrastructure Fac. Rev.:
Series 2000A (Eastland Ctr. Proj. Phase 1):
1,080,000 5.75%, 4/1/09 1,131,700
550,000 5.75%, 4/1/12 579,640
1,000,000 Series 2000B (Eastland Ctr. Proj. Phase 2), 6.00%, 4/1/15 1,077,660
450,000 Series 2005A (Public Safety Proj.), 4.00%, 3/1/08 454,729
260,000 Joplin Dev. Auth. Hlth. Facs. Rev. Series 2004 (Freeman Hlts. Sys. Proj.), 3.875%, 2/15/07 261,414
500,000 Kansas City Port Auth. Facs. Rev. Series 1995A (Riverfront Park Proj.), 5.75%, 10/1/05 504,470
1,070,000 MO Hlth. & Educ. Fac. Auth. Educ. Fac. Rev. Series 1999 (Park College Proj.), 5.55%, 6/1/09 1,080,925
MO Environmental Impt. & Energy Res. Auth. Water Fac. Rev. Refunding:
825,000 Series 1996, 5.25%, 12/1/09 863,734
150,000 Series 1999 (Tri-Co. Water Auth. Proj.)(Radian insured), 5.50%, 4/1/07 156,692
500,000 Riverside Tax Increment Rev. Series 2004 (L-385 Levee Proj.), 3.00%, 5/1/05 500,120
970,000 St. Louis Co. Industrial Dev. Auth. Hsg. Rev. Refunding Series 1995 (South Point Apts. and
Hunter's Ridge Apts. Proj.), 7.875%, 1/1/25 982,435
5,000 St. Louis Co. Single Family Res. Mtg. Series 1984 (MBIA insured), 6.75%, 4/1/10 5,050
1,000,000 St. Louis Industrial Dev. Auth. Tax-Exempt Impt. Rev. Series 1998 (St. Louis Zoo Fdn.)
(LOC Nationsbank), 5.10%, 8/15/12 1,034,330
---------------
10,481,384
---------------
32
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
MONTANA (0.4%)
1,135,000 Crow Finance Auth. Tribal Purpose Revenue Series 1997A, 5.70%, 10/1/27 1,175,951
Forsyth Pollution Ctrl. Rev. Refunding Series 1993 (Montana Power Co. Proj.)
130,000 (Ambac insured), 5.90%, 12/1/23 130,000
85,000 (MBIA insured), 6.125%, 5/1/23 85,237
---------------
1,391,188
---------------
NEVADA (2.5%)
2,500,000 Clark Co. Industrial Dev. Rev. Refunding Series 1992C (Nevada Power Co.)(Ambac insured),
7.20%, 10/1/22 2,575,000
2,750,000 Clark Co. Pollution Ctrl. Rev. Refunding Series 1992B (Nevada Pwr. Co. Proj.)(FGIC insured),
6.60%, 6/1/19 2,759,598
600,000 Las Vegas Paiute Tribe Rev. Series 2002A (ACA insured), 6.625%, 11/1/17 667,614
NV Hsg. Dev. SF Mtg. Program:
285,000 Mezzanine Series 1998B-1, 5.30%, 4/1/16 297,312
400,000 6.00%, 6/1/08 404,288
1,000,000 6.125%, 6/1/12 1,017,660
1,000,000 Washoe Co. Gas & Water Fac. Rev. Refunding Series 1987 (AMBAC insured), 6.30%, 12/1/14 1,029,800
---------------
8,751,272
---------------
NEW HAMPSHIRE (1.5%)
Manchester Hsg. & Redev. Auth. Rev.:
300,000 Series 2000B (Radian assured) zero coupon, 5.25% effective yield on purchase date, 1/1/19 147,117
875,000 Sereis 2000B (ACA insured), zero coupon, 6.00% effective yield on purchase date, 1/1/21 358,846
890,000 Series 2000A (ACA insured), 6.75%, 1/1/15 945,047
500,000 NH Hlth. & Educ. Fac. Auth. Rev. Series 2004 (Covenant Hlth. Proj.), 5.00%, 7/1/14 509,985
NH Hlth. & Educ. Facs. Auth. Hosp. Rev. Series 2004 (Speare Mem. Hosp. Proj.):
155,000 5.00%, 7/1/10 157,238
500,000 5.00%, 7/1/16 492,360
NH Higher Educ. & Hlth. Fac. Auth. Rev.:
1,575,000 Series 1993 (Frisbie Memorial Hosp. Proj.), 6.125%, 10/1/13 1,591,207
690,000 Series 1997 (Catholic Charities Issue), 5.75%, 8/1/12 706,512
510,000 NH Higher Educ. & Hlth. Fac. Auth. Rev. Series 1998 (New Hampton School), 5.00%, 10/1/08 533,455
---------------
5,441,767
---------------
NEW JERSEY (1.0%)
1,460,000 NJ Hsg. & Mtg. Finance Agy. Multifamily Hsg. Rev. Series 1995A (AMBAC insured), 6.00%, 11/1/14 1,493,463
1,360,000 NJ Tobacco Settlement Financing Corp. Asset-Backed Rev. Series 2003, 4.375%, 6/1/19 1,359,211
500,000 Western Monmouth Utility Auth. Rev. Refunding Series 1995A (Ambac insured), 5.60%, 2/1/14 510,280
---------------
3,362,954
---------------
NEW MEXICO (0.5%)
1,240,000 NM MFA Forward Mortgage-Backed Series 1995E (GNMA collateralized), 6.95%, 1/1/26 1,271,868
500,000 NM Hsg. Auth. Region III Multifamily Hsg. Rev. Series 2003A (Villa Del Oso Apts. Proj.), 6.00%,
7/1/17 495,675
160,000 Taos Co. Gross Receipts Tax Rev. Series 2004 (Co. Education Improvement Proj.), 3.25%, 10/1/08 155,405
---------------
1,922,948
---------------
See accompanying notes to portfolios of investments on page 62. 33
SIT TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
NEW YORK (1.3%)
170,000 Monroe Co. Industrial Dev. Agy. Student Hsg. Rev. Series 1999A (Collegiate Hsg. Fdn. - Rochester
Institute of Technology Proj.), 4.90%, 4/1/09 171,443
1,230,000 NY Dorm Auth. Rev. Series 1996A (Maimonides Med. Ctr. Proj.), 5.75%, 8/1/24 1,282,779
95,000 NY Dorm Auth. Rev. Series 2002 (FHA insured), 4.00%, 2/1/12 94,727
1,215,000 NY Port Auth. Rev. Series 1995, 5.75%, 6/15/30 1,233,602
505,000 NY Unrefunded Balance G.O. Series 1996G, 5.75%, 2/1/17 522,640
400,000 NY Urban Dev. Corp. Rev. Series 1996 (Pine Barrens Proj.), 5.375%, 4/1/17 408,644
NY Tobacco Settlement Fing. Corp Asset-Backed Rev.:
85,000 Series 2003A-1, 5.00%, 6/1/09 85,161
160,000 Series 2003C-1, 5.00%, 6/1/11 163,802
250,000 Series 2003C-1, 5.25%, 6/1/13 264,302
500,000 Series 2003C-1, 5.50%, 6/1/14 538,435
---------------
4,765,535
---------------
NORTH CAROLINA (0.3%)
200,000 Currituck Co. G.O. Series 1995 (MBIA insured), 5.40%, 4/1/14 204,000
270,000 Mecklenburg Co. Indus. Facs. & Pollution Ctrl. Fin. Auth. Rev. Series 1993 (Fluor Corp. Proj.),
5.25%, 12/1/09 270,535
500,000 NC Med. Care Common Rev. Series 2004A (Hlth. Care Hsg. Proj.), 4.65%, 10/1/14 491,715
---------------
966,250
---------------
NORTH DAKOTA (0.1%)
500,000 Mercer Co. Pollution Ctl. Rev. Refunding Series 1992 (Montana-Dakota Utils. Co. Proj.)
(FGIC insured), 6.65%, 6/1/22 501,565
---------------
OHIO (2.5%)
2,780,000 Akron C.O.P. Series 1996 (Akron Baseball Stadium Proj.), 6.90%, 12/1/16 (5) 2,948,941
75,000 Akron Waterworks Rev. Refunding Series 1996 (MBIA insured), 4.80%, 3/1/07 76,637
1,235,000 Bellefontaine Hosp. Rev. Refunding Series 1993 (Mary Rutan Hlth. Assoc.), 6.00%, 12/1/13 1,250,709
295,000 Cleveland-Cuyahoga Port. Auth. Dev. Rev. Series 1999A (Port of Cleveland Bond Fund Capital
Imprv. Proj.), 5.375%, 5/15/19 294,835
Cleveland-Cuyahoga Port. Auth. Dev. Rev. :
700,000 Series 2004D (Garfield Heights Proj.), 5.25%, 5/15/23 685,538
610,000 Series 2004E (Meyers Univ. Proj.), 4.65%, 5/15/14 605,632
530,000 Series 2004E (Meyers Univ. Proj.), 5.60%, 5/15/25 531,055
550,000 Dayton Airport Rev. Refunding Series 1995 (Cox-Dayton Intl. Proj.)(Ambac insured), 5.25%, 12/1/15 563,112
1,000,000 Dayton Special Facs. Rev. Refunding Series 1998A (Emery Air Freight Proj.), 5.625%, 2/1/18 1,068,450
250,000 Franklin Co. Hlth. Care Facs. Rev. Series 2005A (Ohio Presbyterian Svcs. Proj.), 5.125%, 7/1/35 245,380
580,000 Mahoning Co. Hlth. Care Fac. Rev. Refunding Series 2002 (Copeland Oaks Proj.)
(LOC Sky Bank), 4.00%, 4/1/22 580,000
---------------
8,850,289
---------------
OKLAHOMA (2.2%)
Citizen Potawatomi Nation Tax Rev. Series 2004A:
240,000 3.40%, 9/1/05 239,714
660,000 5.00%, 9/1/08 661,617
500,000 6.50%, 9/1/16 504,260
Comanche Co. Hosp. Auth. Rev.:
415,000 Series 1993A (Connie Lee insured), 5.375%, 7/1/23 427,068
200,000 Refunding Series 2004 (Radian insured), 3.75%, 7/1/06 201,672
Norman Regl. Hosp. Auth. Rev. Refunding Series 1996A (MBIA insured):
1,500,000 5.625%, 9/1/16 1,578,255
250,000 5.625%, 9/1/21 262,828
34
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
OK Dev. Fin. Auth. Hosp. Rev. Series 2003A (Duncan Regl. Hosp. Proj.):
670,000 4.00%, 12/1/05 674,931
800,000 4.00%, 12/1/06 809,328
200,000 5.00%, 10/1/05 201,648
1,320,000 Tulsa Industrial Auth. Educ. Fac. Rev. Refunding Series 1999B (Holland Hall School Proj.),
5.00%, 12/1/14 1,359,917
995,000 Valley View Hosp. Auth. Rev. Refunding Series 1996, 6.00%, 8/15/14 1,036,631
---------------
7,957,869
---------------
OREGON (1.2%)
3,305,000 Cow Creek Band Umpqua Tribe of Indians Rev. Series 1998B (Ambac insured), 5.10%, 7/1/12 3,377,644
200,000 Klamath Falls Intercmnty. Hosp. Auth. Rev. Refunding Series 2002 (Merle West Med. Ctr. Proj.),
5.20%, 9/1/09 205,842
475,000 OR Hsg. & Cmty. Svcs. Dept. Mtg. Rev. Series 2000K, 5.70%, 7/1/22 481,508
25,000 OR G.O. Refunding Series 1992B, 6.375%, 8/1/24 25,000
---------------
4,089,994
---------------
PENNSYLVANIA (5.7%)
Allegheny Co. Hosp. Dev. Auth. Rev. Series 2003A (Ohio Valley Gen. Hosp. Proj.):
200,000 2.50%, 4/1/05 200,000
245,000 3.30%, 4/1/08 241,100
135,000 3.875%, 4/1/10 132,759
115,000 Allegheny Co. Redev. Auth. Tax Alloc. Rev. Series 2000B (Waterfront Proj.), 5.75%, 12/15/05 116,765
Beaver Co. Indus. Dev. Auth. Pollution Ctrl. Rev.:
350,000 Series 1977 (St. Joe Minerals Corp. Proj.), 6.00%, 5/1/07 360,080
300,000 Series 1995A (Ambac insured) (OH Edison Beaver Valley Proj.), 7.05%, 10/1/20 312,333
1,150,000 Refunding Series 1995A (Toledo Edison Proj.), 7.75%, 5/1/20 1,208,386
325,000 Bucks Co. Redev. Auth. Mtg. Rev. Refunding Series 1992A (Warminster Hts. Proj.)
(FHA insured)(Section 8), 6.875%, 8/1/23 328,413
565,000 Chartiers Valley Industrial & Commercial Dev. Auth. Rev. Refuning Series 2003A
(Friendship Village South Proj.), 4.75%, 8/15/11 555,378
85,000 Delaware Co. Auth. Hosp. Rev. Series 1994 (Crozer-Chester Proj.)(MBIA insured), 5.30%, 12/15/20 85,991
2,750,000 Grove City Area Hosp. Auth. Rev. Series 1998 (United Cmnty. Hosp. Proj.), 5.25%, 7/1/12 2,752,200
Horizon Hosp. System Auth. Hosp. Rev. Series 1996 (Horizon Hosp. Sys.):
715,000 6.15%, 5/15/08 748,505
710,000 6.25%, 5/15/09 742,426
1,145,000 6.30%, 5/15/11 1,196,559
440,000 Lehigh Co. Indus. Dev. Auth. Pollution Ctrl. Rev. Refunding Series 1994A (PA Pwr. & Light Co. Proj.)
(MBIA insured), 5.50%, 2/15/27 445,223
Lehigh Co. General Purpose Auth.:
500,000 Rev. Refunding Series 1996B (Cedar Crest College), 6.65%, 4/1/17 520,465
610,000 Rev. Series 2004A (Good Shepherd Group), 4.00%, 11/1/09 607,279
500,000 McKean Co. Hosp. Auth. Rev. Refunding Series 1994 (Bradford Hosp. Proj.) (ACA insured), 6.00%,
10/1/13 509,310
220,000 Montgomery Co. Indus. Dev. Auth. Retirement Cmnty. Rev. Series 1998, 5.25%, 11/15/28 220,739
PA Hgr. Educ. Fac. Auth. Hlth. Svcs. Rev. Series 1996A (Allegheny Delaware Valley
Obligated Group, Inc.)(MBIA insured):
150,000 5.500%, 11/15/08 160,169
3,890,000 5.875%, 11/15/16 4,115,464
See accompanying notes to portfolios of investments on page 62. 35
SIT TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
PA Higher Educ. Fac. Auth. Rev. Series (Widener Univ. Proj.):
100,000 3.00%, 7/15/07 99,184
190,000 3.10%, 7/15/08 187,211
750,000 PA Hgr. Educ. Fac. Auth. Rev. Series 1996A (Univ. of PA Hlth. Svcs. Proj.), 5.75%, 1/1/17 774,758
590,000 PA Hgr. Educ. Fac. Auth. Rev. Series 2000 (Univ. of the Arts Proj.)(Radian insured), 5.75%, 3/15/30 629,902
270,000 PA Hgr. Educ. Fac. Auth. Rev. Series 2002 (Geneva College Proj.), 4.25%, 4/1/05 270,000
1,550,000 Pittsburgh G.O. Series 1995B (FGIC insured), 5.00%, 3/1/08 1,565,020
1,010,000 Washington Co. Auth. Rev. Series 1999, 6.15%, 12/1/29 1,074,155
---------------
20,159,774
---------------
RHODE ISLAND (0.6%)
995,000 RI Hsg. & Mtg. Fin. Corp. Rental Hsg. Program Rev. Series 1993A (Section 8), 5.65%, 10/1/08 996,164
260,000 RI Clean Water Protection Fin. Agy. Pooled Lien Rev. Series 1995A (MBIA insured), 5.375%, 10/1/15 268,315
500,000 RI Clean Water Fin. Agy. Rev. Series 1994A (Safe Drinking Water Proj.)(Ambac insured), 6.50%, 1/1/09 511,670
260,000 RI Hlth. & Educ. Bldg. Corp. Rev. Series 1997 (Steere House Proj.), 5.375%, 7/1/07 264,425
175,000 RI Hlth. & Educ. Bldg. Corp. Rev. Series 1996 (Roger Williams Univ.)(Connie Lee insured),
5.375%, 11/15/24 184,116
---------------
2,224,690
---------------
SOUTH CAROLINA (0.2%)
650,000 SC Educ. Facs. Auth. Rev. Series 1996A (Furman Univ. Proj.)(MBIA insured), 5.50%, 10/1/26 683,234
---------------
SOUTH DAKOTA (0.8%)
2,250,000 SD Hlth. & Educ. Fac. Auth. Rev Series 2001C (Sioux Valley Hosp. & Health Sys. Proj.)
(LOC US Bank)(Mandatory Put 11/1/06), 4.85%, 11/1/19 2,294,415
400,000 SD Hlth. & Educ. Fac. Auth. Rev. Series 1994 (Huron Regional Med. Ctr. Proj.), 7.25%, 4/1/20 405,312
---------------
2,699,727
---------------
TENNESSEE (2.3%)
240,000 Metro Govt. Nashville & Davidson Co. Indus. Dev. Brd. Rev. Refunding Series 2001A
(GNMA collateralized), 6.625%, 3/20/36 263,998
Shelby Co. Hlth., Educ. & Hsg. Fac. Board Multifamily Hsg. Rev.:
(CME Memphis Apts. Proj.):
1,850,000 Senior Series 1998A, 5.35%, 1/1/19 (8) (9) 921,929
7,875,000 Senior Series 1998A, 5.55%, 1/1/29 (8) (9) 3,902,614
1,630,000 Subordinate Series 1998C, 6.00%, 1/1/29 (8) (9) 28,525
(Eastwood Park Apts. Proj.):
15,000 Series 1995A, 6.00%, 9/1/05 (8) (9) 10,425
1,000,000 Senior Series 1995 A2, 6.40%, 9/1/25 (8) (9) 695,000
405,000 Subordinate Series 1995C, 7.50%, 9/1/25 (8) (9) 40,500
(Raleigh Forest & Sherwood Apts. Proj.):
2,670,000 Senior Series 1996A, 6.60%, 1/1/26 (8) (9) 2,248,994
610,000 Subordinate Series 1996C, 7.25%, 1/1/26 (8) (9) 61,000
---------------
8,172,985
---------------
TEXAS (11.8%)
Austin Convention Enterprises, Inc. (Convention Ctr.) Revenue:
750,000 Series 2001A (Convention Center), 6.375%, 1/1/16 790,575
850,000 Series 2001B (ZC Specialty Ins. Co.), 5.75%, 1/1/16 889,865
250,000 Series 2001B (ZC Specialty Ins. Co.), 6.00%, 1/1/23 267,995
20,000 Austin Utilities System Rev. Refunding Series 1993 (MBIA insured), 5.25%, 5/15/18 20,035
1,000,000 Bell Co. Hlth. Fac. Dev. Corp. Retirement Fac. Rev. Series 1998 (Buckner Retirement Services, Inc.
Obligated Group, Proj.), 5.00%, 11/15/11 1,031,940
36
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
Beaumont HA Multifamily Mtg. Rev. Series 1993A (Section 8):
385,000 6.65%, 11/1/07 373,827
590,000 6.75%, 11/1/10 551,975
470,000 Bexar Co. Rev. Series 2000 (Venue Proj.)(MBIA insured), 5.75%, 8/15/22 502,251
Bexar Co. HFC Multifamily Hsg. Rev.:
575,000 Subordinated Series 2000C (Honey Creek Apts. Proj.), 8.00%, 4/1/30 566,214
170,000 Subordinated Series 2001B (American Oppty. Hsg. Dublin Kingswood & Waterford Apts. Proj.),
7.50%, 12/1/14 176,771
125,000 Brazos Co. Hlth. Facs. Rev. Refunding Series 1993B (St. Joseph Hosp. & Hlth. Ctr. Proj.), 6.00%,
1/1/19 126,118
650,000 Brazos River Hbr. Nav. Dist Rev. Series 2002B-2 (Dow Chemical Co. Proj.), 4.75%, 5/15/33 672,185
Dallas Hsg. Corp. Capital Program Revenue Bonds:
835,000 Series 1995A (Estell Village Apts.) (Section 8), 7.875%, 12/1/09 838,599
820,000 Series 1995 (Cedar Glen Apts.) (Section 8), 7.75%, 12/1/09 823,592
6,306,000 Dallas HFC Multifamily Mtg. Rev. Series 1998A (GNMA collateralized) (Towne Ctr. Apts. Proj.), 6.75%,
10/20/32 6,838,542
200,000 Fort Bend Co. Utility Dist. No. 30 G.O. Refunding Series 1996 (Radian insured), 5.90%, 9/1/15 202,252
Hidalgo Co. Hlth. Svcs. Rev. Series 2005 (Mission Hosp., Inc. Proj.):
325,000 3.50%, 8/15/05 325,052
255,000 4.00%, 8/15/06 256,244
515,000 4.00%, 2/15/07 515,994
700,000 5.00%, 8/15/19 680,386
500,000 Lewisville Combination Contract Rev. Refunding Series 2004 (ACA insured), 5.75%, 9/1/12 545,935
84,120 Midland HFC Single Family Mtg. Rev. Refunding Series 1992 A-2, 8.45%, 12/1/11 87,307
Mesquite Hlth. Fac. Dev. Corp. Retirement Fac. Rev. (Christian Care Ctr. Proj.):
1,000,000 Series 1996A, 6.30%, 2/15/12 1,014,000
755,000 Series 2000A, 7.00%, 2/15/10 798,971
500,000 North Central Hlth. Fac. Dev. Corp. Rev. Refunding Series 1995 (Baylor Hlth. Care Sys.), 5.50%, 5/15/13 521,475
7,272,000 Nortex Hsg. Fin. Corp. Multifamily Hsg. Rev. Series 1999 (GNMA collateralized) (Highland Oaks Apts.
Proj.), 6.75%, 9/20/32 7,749,625
250,000 Northwest Travis Co. Dist. No. 3 G.O. Refunding Series 1995 (Radian insured), 5.625%, 9/1/14 252,858
266,760 Odessa HFC Single Family Mtg. Rev. Refunding Series 1992B Class B-2, 8.125%, 11/1/11 267,605
200,000 Palmer Plantation Utility Dist. No. 1 G.O. Refunding Series 1996 (Radian insured), 5.90%, 9/1/16 202,252
500,000 Red River Auth. Pollution Ctrl. Rev. Refunding Series 1991 (AMBAC insured), 5.20%, 7/1/11 511,095
1,375,000 Richardson Hosp. Auth. Rev. Refunding Series 1998 (Baylor/Richardson Proj.), 5.625%, 12/1/28 1,411,162
315,000 Tarrant Co. Hlth. Facs. Dev. Corp. Rev. Series 1997A (So. Central Nursing Proj.), 6.00%, 1/1/37 349,237
Tarrant Co. Hlth. Fac. Dev. Corp. Hosp. Rev.:
185,000 Series 1997 (Ft. Worth Osteopathic Hosp. Proj.), 5.25%, 5/15/28 187,483
515,000 Series 2000 (Adventist Hlth. Sys. Proj.), 5.80%, 11/15/05 524,697
Tarrant Co. HFC Multifamily Hsg. Rev:
530,000 Senior Series 2001A (Westridge Apts. Proj.), 5.50%, 6/1/11 266,669
490,000 Subordinate Series 2001C (Crossroads Apt. Proj.), 7.25%, 12/1/36 (8)(9) 277,399
2,000,000 Tomball Hosp. Auth. Rev. Refunding Series 1993, 6.125%, 7/1/23 2,009,660
TX Affordable Hsg. Corp. Multifamily Hsg. Rev:
955,000 Senior Series 2001A (NHT / GTEX Proj.)(MBIA insured), 4.10%, 10/1/08 979,133
740,000 Junior Series 2001B (NHT / GTEX Proj.), 6.75%, 10/1/16 (8)(9) 163,732
TX Dept. Hsg. & Cmnty. Affairs Multifamily Hsg. Rev.:
850,000 Senior Series 1996A (Harbors & Plumtree Apts. Proj.), 6.35%, 7/1/16 878,585
3,610,000 Senior Series 1996A (Harbors & Plumtree Apts. Proj.), 6.45%, 7/1/26 3,698,770
865,000 Subordinate Series 1996C (Harbors & Plumtree Apts. Proj.), 7.375%, 7/1/26 837,424
820,000 TX Public Property Fin. Corp. Mental Hlth. & Mental Retardation Rev. Series 1996, 6.20%, 9/1/16 847,191
See accompanying notes to portfolios of investments on page 62. 37
Sit Tax-Free Income Fund
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
500,000 TX Turnnpike Auth. Rev. Series 1995 (George Bush Turnpike Proj.)(FGIC insured), 5.00%, 1/1/25 505,850
250,000 TX Water Dev. Brd. Sr. Lien Rev. Series 1996B, 5.125%, 7/15/18 257,497
265,000 Tyler Hlth. Facs. Dev. Corp. Rev. Series 1997B (East TX Med. Ctr. Proj.), 5.60%, 11/1/27 282,710
---------------
41,878,734
---------------
UTAH (0.6%)
725,000 Eagle Mountain Water & Sewer Rev. Refunding Series 2000 (ACA insured), 5.60%, 11/15/13 772,618
600,000 Intermountain Power Agy. Rev. Series 1993B, 5.25%, 7/1/17 604,110
Salt Lake Co. College Rev. Series 1999 (Westminister College Proj.):
120,000 5.15%, 10/1/11 127,094
125,000 5.20%, 10/1/12 131,586
130,000 5.25%, 10/1/13 136,317
305,000 UT Hsg. Finance Agy. Multifamily Refunding Rev. Series 1996A (Section 8)
(FHA insured), 6.10%, 7/1/22 317,523
---------------
2,089,248
---------------
VERMONT (0.3%)
VT Educ. & Hlth. Bldgs. Financing Agency Rev.:
420,000 Series 1998 (Norwich Univ. Proj.), 5.13%, 7/1/09 438,325
200,000 Series 2002A (Developmental & Mental Hlth. Proj.), 4.375%, 6/15/07 199,710
400,000 Series 2003A (Vermont Law School Proj.), 5.00%, 1/1/13 407,680
---------------
1,045,715
---------------
VIRGINIA (0.9%)
415,000 Alexandria Industrial Dev. Auth. Rev. Pollution Control Refunding Series 1994 (Potomac Electric
Proj.) (MBIA insured), 5.375%, 2/15/24 419,934
650,000 Chesapeake Hosp. Auth. Fac. Rev. Refunding Series 2004A (Chesapeake Gen. Hosp. Proj.), 4.25%,
7/1/16 621,342
250,000 Chesterfield Co. Industrial Dev. Auth. Pollution Ctrl. Rev. Series 1987A Rmktg.
(VA Elec. & Power Co. Proj.), 5.875%, 6/1/17 269,268
260,000 Fairfax Co. Indus. Dev. Auth. Rev. Series 1996 (Inova Hlth. Sys. Proj.), 6.00%, 8/15/26 274,776
385,000 Hanover Co. Indus. Dev. Auth. Rev. Series 1995 (Bon Secours Hlth. Sys. Proj.), 5.50%, 8/15/25 395,695
Prince William Co. Indus. Dev. Auth. Educ. Fac. Rev. Series 2003 (Catholic Diocese Arlington):
1,000,000 4.375%, 10/1/13 989,510
100,000 5.00%, 10/1/18 100,451
---------------
3,070,976
---------------
WASHINGTON (1.1%)
200,000 Energy Northwest Wind Proj. Rev. Series 2001B, 4.55%, 7/1/06 202,488
King Co. Hsg. Auth. Rev. Refunding:
515,000 Senior Series 1995A, 6.80%, 3/1/26 525,769
1,550,000 Subordinated Series 1995A, 7.20%, 3/1/26 1,586,704
350,000 Skagit Co. Public Hosp. Rev Refunding Series 2003, 3.75%, 12/1/05 349,891
125,000 Sumner Impt. Dist. No. 70 Special Assessment Series 2005, 2.75%, 1/15/22 124,734
500,000 WA HFC Nonprofit Hsg. Rev. Refunding Series 1995A (Horizon House Proj.), 6.125%, 7/1/27 520,945
400,000 WA Tobacco Settlement Fing. Corp Asset-Backed Rev. Series 2002, 5.00%, 6/1/08 409,492
---------------
3,720,023
---------------
WEST VIRGINIA (1.1%)
3,500,000 Pleasants Co. Pollution Ctrl. Rev. Series 1995C (Monongahela Pwr. Co.), 6.15%, 5/1/15 3,600,870
250,000 WV Hsg. Dev. Fd. Rev. Series 1997A, 5.45%, 5/1/09 261,082
---------------
3,861,952
---------------
38
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
WISCONSIN (3.6%)
65,000 WI Hsg. & Econ. Dev. Auth. Home Ownership Rev. Series 1997A, 6.00%, 3/1/17 67,999
1,000,000 WI HEDA Hsg. Rev. Series 1993C (MBIA insured)(Section 8), 5.80%, 11/1/13 1,009,850
WI Hlth. & Educ. Fac. Auth. Rev.:
550,000 Series 1995 (Franciscan Sisters Proj.)(Connie Lee insured), 5.50%, 2/15/14 562,276
335,000 Series 1996 (Meriter Hosp., Inc. Proj.), 6.00%, 12/1/06 341,398
750,000 Refunding Series 1997B, (United Hlth. Grp., Inc. Proj.), 5.50%, 12/15/20 798,652
135,000 Series 1998 (Lawrence Univ. Proj.), 5.125%, 4/15/28 132,933
520,000 Series 1999 (FH Hlth. Care Dev. Inc Proj.), 5.625%, 11/15/09 540,946
Series 1999 (Kenosha Hosp. & Med. Ctr., Inc. Proj.):
670,000 5.00%, 5/15/06 683,065
705,000 5.10%, 5/15/07 729,196
740,000 5.15%, 5/15/08 772,197
820,000 5.35%, 5/15/10 868,191
865,000 5.45%, 5/15/11 914,634
1,130,000 Series 1999A (Aurora Hlth. Care Proj), 5.60%, 2/15/29 1,146,973
125,000 Series 1999B (Aurora Hlth. Care Proj), 5.50%, 2/15/15 128,622
500,000 Series 1999B (Aurora Hlth. Care Proj)(ACA insured), 5.625%, 2/15/29 509,870
780,000 Series 1999 (FH Hlth. Care Dev., Inc. Proj.), 6.25%, 11/15/28 824,327
900,000 Series 1999 (Divine Savior, Inc. Proj.)(ACA insured), 5.70%, 6/1/28 933,012
Series 2001 (Agnesian Healthcare, Inc. Proj.):
150,000 5.00%, 7/1/06 153,460
550,000 6.00%, 7/1/17 586,910
340,000 6.00%, 7/1/21 359,336
105,000 Series 2004A (Three Pillars Sr. Living Proj.), 4.15%, 8/15/11 102,044
450,000 Series 2004 (Blood Ctr. Southeastern Proj.), 5.50%, 6/1/24 460,894
---------------
12,626,785
---------------
WYOMING (0.2%)
615,000 Sweetwater Co. Pollution Ctrl. Rev. Refunding Series 1996A (Idaho Pwr. Co. Proj.), 6.05%, 7/15/26 642,367
---------------
Total municipal bonds (cost: $346,643,035) 340,485,617
---------------
CLOSED-END MUTUAL FUNDS (0.4%) (2)
58,000 Blackrock Insured Municipal Term Trust 2008 914,080
100 Van Kampen Municipal Trust/Investment Grade 1,457
8,000 Van Kampen Muni Income Trust 70,960
16,000 Van Kampen Sector Muni Trust 198,880
12,300 Van Kampen Select Sector Municipal Trust 148,953
---------------
Total closed-end mutual funds (cost: $1,367,204) 1,334,330
---------------
SHORT-TERM SECURITIES (2.2%) (2)
1,573,692 Dreyfus Tax-Exempt Cash Management Fund, 1.97% 1,573,692
2,250,000 SD Hlth. & Educ. Facs. Auth. Rev. Series 2004 (Avera Hlth. Proj.), variable rate, 7/1/24 2,250,000
4,100,000 SD Hlth. & Educ. Facs. Auth. Rev. Series 2004 (Avera Hlth. Proj.), variable rate, 7/1/30 4,100,000
---------------
Total short-term securities (cost: $7,923,692) 7,923,692
---------------
Total investments in securities (cost: $355,933,931) (7) $349,743,639
---------------
See accompanying notes to portfolios of investments on page 62. 39
SIT MINNESOTA TAX-FREE INCOME FUND
ONE YEAR ENDED MARCH 31, 2005
- --------------------------------------------------------------------------------
SENIOR PORTFOLIO MANAGERS
MICHAEL C. BRILLEY o DEBRA A. SIT, CFA o PAUL J. JUNGQUIST, CFA
The Minnesota Tax Free Income Fund returned +2.69% over the past twelve
months compared to +0.26% for the Lehman 5-Year Municipal Bond Index. The Fund's
30-day SEC yield was 4.49% as of March 31st and its 12-month distribution rate
was 4.33%. The Fund's taxable equivalent yield of 7.50% for investors in the
highest state and federal tax brackets compares favorably to taxable
alternatives.
Over the past 12 months, the Federal Reserve increased the federal funds
target rate by 25 basis points on seven occasions beginning on June 30th, 2004.
The municipal yield curve flattened, with 1-year maturity municipals rising
1.5%, 5-year maturities rising 0.9%, 10-year maturities rising 0.4%, and 30-year
maturities rising 0.05%. The rising yields for short and intermediate term bonds
produced price depreciation for bonds in those maturity ranges.
The Fund's largest sector holdings are in multifamily housing,
hospital/healthcare, and industrial revenue/pollution control issues. The
multifamily housing and hospital/healthcare sectors earned higher returns than
the Lehman 5-Year Municipal Bond Index, while the industrial revenue/pollution
control sector was in line with the benchmark. The primary factors affecting
returns over the twelve-month period were the Fund's strong income advantage
relative to the benchmark, and the 32% allocation to multifamily housing issues,
which provided high levels of income with very little price depreciation.
We expect the Federal Reserve to further increase short-term rates by 1.0% to
1.5% over the next twelve months. These rate increases are expected to cause
higher interest rate levels across the entire yield curve, with the largest
increases expected in the short to intermediate maturity range. The Fund's
duration is shorter than most Minnesota municipal bond funds, which should
position it to perform well in a rising interest rate environment.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
- --------------------------------------------------------------------------------
The investment objective of the Minnesota Tax-Free Income Fund is to provide
a high level of current income exempt from federal regular income tax and
Minnesota regular personal income tax as is consistent with the preservation of
capital.
During normal market conditions, the Fund invests 100% of its net assets in
municipal securities that generate interest income that is exempt from regular
federal income tax and Minnesota regular personal income tax. The Fund
anticipates that substantially all of its distributions to its shareholders will
be exempt as such. For investors subject to the alternative minimum tax ("AMT"),
up to 20% of the Fund's income may be alternative minimum taxable income.
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY
- --------------------------------------------------------------------------------
Net Asset Value 3/31/05: $ 10.09 Per Share
3/31/04: $ 10.26 Per Share
Total Net Assets: $233.0 Million
30-day SEC Yield: 4.49%
Tax Equivalent Yield: 7.50%(1)
12-Month Distribution Rate: 4.33%
Average Maturity: 12.7 Years
Duration to Estimated Avg. Life: 4.0 Years(2)
Implied Duration: 4.1 Years(2)
(1)For individuals in the 35.0% federal tax and 7.85% MN tax brackets.
(2)See next page.
- --------------------------------------------------------------------------------
PORTFOLIO STRUCTURE
(% OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
Multifamily Mortgage 31.9
Revenue
Hospital/Health 19.3
Care Revenue
Insured 9.0
Other Revenue Bonds 7.7
Industrial/Pollution 7.7
Control
General Obligations 5.1
Sectors less than 5.0% 11.6
Cash & Other 7.7
Net Assets
40
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
SIT LEHMAN LIPPER
MN TAX-FREE 5-YEAR MUNI. MN MUNI. BOND
INCOME FUND BOND INDEX FUND INDEX
----------- ------------ -------------
3 Month** 0.60% -1.15% -0.13%
6 Month** 1.96 -0.36 n/a
1 Year 2.69 0.26 2.18
5 Years 5.58 5.49 5.87
10 Years 5.27 5.30 5.34
Inception 5.24 5.05 4.98
(12/1/93)
- --------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS*
- --------------------------------------------------------------------------------
SIT LEHMAN LIPPER
MN TAX-FREE 5-YEAR MUNI. MN MUNI. BOND
INCOME FUND BOND INDEX FUND INDEX
----------- ------------ -------------
1 Year 2.69% 0.26% 2.18%
5 Years 31.19 30.62 32.99
10 Years 67.07 67.63 68.18
Inception 78.47 74.72 73.53
(12/1/93)
*AS OF 3/31/05. **NOT ANNUALIZED.
- --------------------------------------------------------------------------------
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. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT
FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE;
HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE LEHMAN 5-YEAR MUNICIPAL
BOND INDEX. THE LIPPER RETURNS ARE OBTAINED FROM LIPPER ANALYTICAL SERVICES,
INC., A LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS.
(2) Duration is a measure which reflects estimated price sensitivity to a given
change in interest rates. For example, for an interest rate change of 1%, a
portfolio with a duration of 5 years would be expected to experience a price
change of 5%. Estimated average life duration is based on current interest rates
and the Adviser's assumptions regarding the expected average life of individual
securities held in the portfolio. Implied duration is calculated based on
historical price changes of securities held by the Fund. The Adviser believes
that the portfolio's implied duration is a more accurate estimate of price
sensitivity provided interest rates remain within their historical range. If
interest rates exceed the historical range, the estimated average life duration
may be a more accurate estimate of price sensitivity.
- --------------------------------------------------------------------------------
GROWTH OF $10,000
- --------------------------------------------------------------------------------
[PLOT POINTS CHART]
Sit Sit Sit
Minnesota Lehman Minnesota Lehman Minnesota Lehman
Tax-Free 5-Year Tax-Free 5-Year Tax-Free 5-Year
Income Municipal Income Municipal Income Municipal
Date Fund Bond Index Date Fund Bond Index Date Fund Bond Index
---- -------- ---------- ---- -------- ---------- ---- -------- ----------
12/1/1993 10,000 10,000 9/30/1997 12,762 12,191 7/31/2001 15,078 14,946
12/31/1993 10,160 10,146 10/31/1997 12,880 12,255 8/31/2001 15,259 15,147
1/31/1994 10,245 10,237 11/30/1997 12,932 12,293 9/30/2001 15,300 15,193
2/28/1994 10,136 10,070 12/31/1997 13,107 12,398 10/31/2001 15,410 15,319
3/31/1994 9,920 9,861 1/31/1998 13,187 12,511 11/30/2001 15,364 15,196
4/29/1994 10,016 9,921 2/28/1998 13,214 12,531 12/31/2001 15,307 15,122
5/31/1994 10,147 9,971 3/31/1998 13,262 12,541 1/31/2002 15,447 15,366
6/30/1994 10,129 9,966 4/30/1998 13,254 12,489 2/28/2002 15,563 15,540
7/31/1994 10,255 10,082 5/31/1998 13,384 12,639 3/31/2002 15,449 15,210
8/31/1994 10,294 10,130 6/30/1998 13,442 12,682 4/30/2002 15,629 15,561
9/30/1994 10,228 10,062 7/31/1998 13,512 12,727 5/31/2002 15,737 15,665
10/31/1994 10,134 9,996 8/31/1998 13,659 12,882 6/30/2002 15,839 15,836
11/30/1994 10,006 9,904 9/30/1998 13,793 13,015 7/31/2002 15,981 16,007
12/31/1994 10,225 10,016 10/31/1998 13,796 13,053 8/30/2002 16,087 16,161
1/31/1995 10,437 10,140 11/30/1998 13,863 13,076 9/30/2002 16,259 16,385
2/28/1995 10,631 10,318 12/31/1998 13,911 13,122 10/31/2002 16,163 16,218
3/31/1995 10,682 10,423 1/31/1999 13,987 13,260 11/30/2002 16,177 16,202
4/30/1995 10,706 10,463 2/28/1999 13,957 13,247 12/31/2002 16,388 16,525
5/31/1995 10,924 10,683 3/31/1999 14,002 13,258 1/31/2003 16,387 16,553
6/30/1995 10,897 10,702 4/30/1999 14,042 13,298 2/28/2003 16,555 16,732
7/31/1995 10,949 10,832 5/31/1999 14,028 13,244 3/31/2003 16,553 16,708
8/31/1995 11,044 10,931 6/30/1999 13,903 13,094 4/30/2003 16,599 16,787
9/30/1995 11,094 10,958 7/31/1999 13,918 13,175 5/31/2003 16,791 17,056
10/31/1995 11,215 11,025 8/31/1999 13,750 13,169 6/30/2003 16,790 17,012
11/30/1995 11,346 11,125 9/30/1999 13,687 13,217 7/31/2003 16,542 16,642
12/31/1995 11,441 11,183 10/31/1999 13,485 13,185 8/31/2003 16,619 16,759
1/31/1996 11,487 11,294 11/30/1999 13,533 13,262 9/30/2003 16,869 17,184
2/29/1996 11,470 11,262 12/31/1999 13,380 13,218 10/31/2003 16,884 17,071
3/29/1996 11,443 11,183 1/31/2000 13,289 13,212 11/30/2003 17,026 17,140
4/30/1996 11,442 11,181 2/29/2000 13,403 13,255 12/31/2003 17,111 17,207
5/31/1996 11,509 11,176 3/31/2000 13,604 13,376 1/31/2004 17,190 17,288
6/30/1996 11,583 11,243 4/30/2000 13,575 13,346 2/29/2004 17,365 17,499
7/31/1996 11,688 11,325 5/31/2000 13,529 13,342 3/31/2004 17,379 17,426
8/31/1996 11,719 11,336 6/30/2000 13,744 13,587 4/30/2004 17,202 17,077
9/30/1996 11,879 11,428 7/31/2000 13,919 13,730 5/31/2004 17,157 16,989
10/31/1996 11,982 11,527 8/31/2000 14,097 13,879 6/30/2004 17,209 17,052
11/30/1996 12,104 11,677 9/30/2000 14,088 13,855 7/31/2004 17,238 17,210
12/31/1996 12,115 11,655 10/31/2000 14,195 13,952 8/31/2004 17,441 17,512
1/31/1997 12,124 11,694 11/30/2000 14,242 14,012 9/30/2004 17,503 17,535
2/28/1997 12,197 11,780 12/31/2000 14,462 14,238 10/31/2004 17,613 17,632
3/31/1997 12,159 11,651 1/31/2001 14,556 14,483 11/30/2004 17,591 17,516
4/30/1997 12,262 11,702 2/28/2001 14,659 14,523 12/31/2004 17,740 17,675
5/31/1997 12,366 11,846 3/31/2001 14,750 14,642 1/31/2005 17,856 17,670
6/30/1997 12,470 11,937 4/30/2001 14,669 14,560 2/28/2005 17,877 17,583
7/31/1997 12,711 12,146 5/31/2001 14,823 14,711 3/31/2005 17,847 17,472
8/31/1997 12,667 12,084 6/30/2001 14,909 14,786
The sum of $10,000 invested at inception (12/1/93) and held until 3/31/05 would
have grown to $17,847 in the Fund or $17,472 in the Lehman 5-Year Municipal Bond
Index assuming reinvestment of all dividends and capital gains.
- --------------------------------------------------------------------------------
QUALITY RATINGS
(% OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
[PIE CHART]
Other Assets
and Liabilities 7.7%
Not Rated 37.3%
Less Than BBB 2.1%
BBB 14.2%
A 16.0%
AA 8.5%
AAA 14.2%
Assessment of
Non-Rated Securities
AAA 7.6%
AA 0.6
A 5.3
BBB 16.6
BB 6.9
Less Than BB 0.3
-----
Total 37.3%
LOWER OF MOODY'S, S&P, FITCH OR DUFF & PHELPS RATINGS USED.
41
SIT MINNESOTA TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
MUNICIPAL BONDS (92.3%) (2)
EDUCATION/STUDENT LOAN (4.5%)
1,000,000 Minneapolis Rev. Series 1997A (Univ. Gateway proj.), 5.25%, 12/1/17 1,048,140
Minnesota Higher Educ. Fac. Auth. Rev. :
125,000 Series 1992-3L1 (Carleton College), 5.75%, 11/1/12 128,833
425,000 Series 1996-4F1 (Augsburg College), 6.25%, 5/1/23 440,126
800,000 Series 1997-4L (St. John's University), 5.35%, 10/1/17 828,728
400,000 Series 1997-4L (St. John's University), 5.40%, 10/1/22 415,952
50,000 Series 1997-4J (Macalester College), 5.40%, 3/1/09 52,066
750,000 Series 1998-4T (College of St. Benedict), 5.35%, 3/1/20 757,927
100,000 Series 1998-4R (St. Olaf College), 5.25%, 10/1/23 101,684
458,000 Lease Rev. Series 1999-5A (Concordia University), 5.25%, 4/25/14 461,238
700,000 Series 1999-4Y (Augsburg College), 5.05%, 10/1/13 718,823
150,000 Series 1999-4Y (Augsburg College), 5.20%, 10/1/16 153,498
75,000 Series 1999-4Y (Augsburg College), 5.30%, 10/1/27 76,666
700,000 Series 2005-6C (Augsburg College), 5.00%, 5/1/23 (10) 716,394
100,000 Series 1999-4Z (Northwestern Hlth. Services University), 4.875%, 10/1/09 102,945
275,000 Series 1999-4Z (Northwestern Hlth. Services University), 5.20%, 10/1/13 280,467
100,000 Series 2000-5D (College Art & Design), 5.75%, 5/1/08 107,154
50,000 Series 1998-4T (St. Benedict College), 5.125%, 3/1/13 50,563
50,000 Series 1996-4A1 (University of St. Thomas), 5.625%, 10/1/21 51,636
Series 2004-5U (St. Mary's Univ.):
200,000 2.00%, 10/1/05 199,348
270,000 3.75%, 10/1/13 260,547
310,000 Northfield Lease Rev. Series 1999A (Village School Proj.), 7.50%, 12/1/24 268,953
550,000 Ramsey Lease Rev. Series 2004A (Pact Charter School Proj.), 5.65%, 12/1/13 552,568
St. Paul Hsg. & Redev. Auth. Lease Rev.:
100,000 Series 1999 (St. Paul Academy & Summit School Proj.), 5.50%, 10/1/24 103,909
825,000 Series 2001A (Cmty. of Peace Academy Proj.), 6.375%, 12/1/11 835,387
750,000 Series 2001A (Cmty. of Peace Academy Proj.), 7.00%, 12/1/15 770,902
350,000 Series 2001A (Cmty. of Peace Academy Proj.), 7.375%, 12/1/19 363,303
415,000 Series 2002A (New Spirit Charter School Proj.), 6.50%, 12/1/12 418,436
100,000 Victoria Private School Fac. Rev. Series 1999A (Holy Family Catholic H.S. Proj.), 5.20%, 9/1/11 100,760
165,000 Winona Port. Auth. Lease Rev. Series 1999A (Bluffview Montessori School Proj.), 8.00%, 12/1/24 174,600
---------------
10,541,553
---------------
ESCROWED TO MATURITY/PREREFUNDED (0.6%)
MN Public Facs. Auth. Wtr. Pollution Ctrl. Rev. Series 1997:
215,000 5.00%, 3/1/12 223,505
105,000 5.00%, 3/1/16 109,154
710,000 Puerto Rico Childrens Trust Fund Tobacco Settlement Rev. Series 2000, 5.75%, 7/1/20 753,665
200,000 Red Wing Hlth. Care Ctr. Fac. Rev. Refunding Series 1993B (River Region Oblig. Group), 6.20%,
9/1/05 203,074
---------------
1,289,398
---------------
GENERAL OBLIGATION (5.1%)
Apple Valley Equipment Certficates G.O. Series 2004:
35,000 2.50%, 10/1/05 35,011
40,000 2.50%, 10/1/06 39,877
515,000 Carver Co. Hsg. & Redev. Auth. Hsg. & Dev. Gross Rev. Ltd.Tax G.O.
(Chanhassen Apts. Proj.), 7.00%, 1/1/25 542,233
75,000 Cold Spring G.O. Series 2000, 5.15%, 2/1/09 76,964
42
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
1,100,000 Fridley Refunding Tax Increment G.O. Series 1997A, 5.00%, 8/1/06 1,108,635
50,000 Hutchinson ISD No. 423 G.O. Series 1996A, 5.85%, 2/1/18 53,280
50,000 Minneapolis Refunding G.O. Series 1993A, 5.10%, 12/1/08 50,826
1,000,000 Minneapolis Refunding G.O. Series 1993B, 5.05%, 3/1/06 1,010,130
45,000 Minneapolis G.O. Series 1999 (Parking Ramp Proj.), 5.125%, 12/1/16 48,201
300,000 Minneapolis ISD No. 001 Series 1997, 5.00%, 2/1/09 305,628
1,000,000 MN G.O. Refunding Series 2003, 2.00%, 8/1/05 999,020
4,000,000 MN G.O. Series 1997, 4.90%, 8/1/14 4,160,440
780,000 New Ulm ISD No. 088 Refunding G.O. Series 1998, 4.35%, 2/1/17 782,964
1,000,000 Savage G.O. Series 1996A, 5.35%, 2/1/07 1,021,620
130,000 St. Anthony G.O. Series 2004B, 1.55%, 2/1/07 126,885
100,000 St. Cloud Infrastructure Mgmt. Fund G.O. Series 1997C, 4.70%, 3/1/06 100,171
St. Paul Cap. Impt. G.O. Series 2005:
835,000 4.00%, 3/1/06 845,872
290,000 4.00%, 9/1/06 295,403
100,000 St. Paul ISD No. 625 G.O. Series 1998A, 5.00%, 2/1/12 101,882
100,000 St. Paul Street Impt. Special Assessment G.O. Series 2000B, 5.30%, 3/1/12 105,472
---------------
11,810,514
---------------
HOSPITAL/HEALTH CARE (19.3%)
Aitkin Hlth. Care Fac. Rev. Series 2001 (Riverwood Hlth. Care Ctr. Proj.):
250,000 6.00%, 2/1/06 251,993
250,000 6.25%, 2/1/07 254,525
Alexandria Hlth. Care Fac. Rev. Series 2002B (BSM Property - Bethany Home Proj.):
375,000 4.65%, 7/1/06 375,326
375,000 4.95%, 7/1/07 375,555
Bemidji Hosp. Fac. Rev. Refunding (North Country Hlth. Proj.):
105,000 Series 1995, 6.05%, 9/1/24 106,026
1,035,000 Series 1996, 5.625%, 9/1/21 1,072,374
Brooklyn Center Hlth. Care Fac. Rev. Series 1993 (Maranatha Proj.):
50,000 6.75%, 12/1/05 50,042
500,000 7.50%, 12/1/10 500,405
200,000 7.60%, 12/1/18 200,148
305,000 Cambridge Hsg. & Hlth. Care Fac. Rev. Series 1998C (Grandview West Proj.), 5.25%, 10/1/08 308,053
970,000 Columbia Heights Multifamily & Health Care Fac. Rev. Series 1998
(Crest View Corp. Proj.), 5.75%, 9/1/11 955,159
Crookston Nursing Home & Multifamily Hsg. Rev Series 2002A (Villa St. Vincent Proj.):
100,000 4.75%, 9/1/08 100,862
75,000 5.50%, 9/1/11 76,447
1,000,000 Cuyuna Range Hosp. Dist. Hlth. Fac. Gross Rev. Series 1999A, 6.00%, 6/1/19 1,002,980
1,500,000 Detroit Lakes Hsg. Rev. Refunding Series 2004E (Mankato Lutheran Proj.), 4.25%, 8/1/34 1,500,285
450,000 Duluth Econ. Dev. Auth. Hlth. Care Fac. Rev. Series 2002 (St. Luke's Hosp. Proj.), 6.00%, 6/15/12 451,255
299,255 Duluth Sr. Hsg. Loan Participation Series 2004 (Lakeshore Proj.), 4.00%, 8/20/36 299,336
Elk River Rev. Series 1998 (Care Choice Member Proj.):
1,000,000 5.60%, 8/1/13 1,004,860
160,000 5.75%, 8/1/23 152,870
850,000 Fergus Falls Hlth. Care Fac. Auth. Rev. Series 1995 (Lake Region Hosp. Corp.), 6.40%, 12/1/15 876,324
Hastings Hlth. Care Fac. Rev. Series 1998 (Augustana Home of Hastings Proj.):
115,000 5.10%, 11/1/09 112,191
120,000 5.20%, 11/1/10 115,980
See accompanying notes to portfolios of investments on page 62. 43
SIT MINNESOTA TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
135,000 5.40%, 11/1/12 128,905
140,000 5.50%, 11/1/13 133,143
1,685,000 Maplewood Hlth. Care Fac. Rev. (Volunteers of America Care Ctrs. Proj.), 7.375%, 10/1/12 1,692,195
Marshall Medical Center Gross Rev. (Weiner Memorial Medical Center Proj.):
305,000 Series 1999, 5.65%, 11/1/13 312,103
320,000 Series 1999, 5.70%, 11/1/14 326,397
150,000 Series 2003B, 4.85%, 11/1/11 157,461
850,000 Series 2003A, 5.85%, 11/1/23 914,005
Minneapolis & St. Paul Hsg. & Redev. Auth. Hlth. Care Sys. Rev. Series 2003 (Healthpartners Proj.):
500,000 4.00%, 12/1/05 503,220
1,000,000 5.25%, 12/1/08 1,053,310
750,000 5.25%, 12/1/12 799,350
700,000 5.25%, 12/1/13 741,566
1,150,000 5.00%, 12/1/14 1,186,903
500,000 5.875%, 12/1/29 521,530
150,000 Minneapolis Hsg. & Hlth. Care Facs. Rev. Series 1997 (Augustana Chapel View Homes Proj.),
6.75%, 6/1/27 149,469
1,081,463 Minneapolis CDA Promissory Note (Augustana Chapel View Proj.), 4.25%, 5/23/09 1,069,232
1,045,000 Minneapolis Hlth. Care Fac. Rev. Series 1993 (St. Olaf Res. Proj.), 7.00%,10/1/18 876,661
1,000,000 Minneapolis Hlth. Care Fac. Rev. Series 1998A (Benchmark Hlth. Care Proj.), 6.625%, 12/1/28 (8) (9) 50,000
930,000 Minneapolis Hlth. Care Fac. Rev. Series 1999 (Shelter Care Foundation Proj.), 6.00%, 4/1/10 916,236
Minneapolis Hlth. Care Fac. Rev. Series 2004A (Augustana Chapel View Homes Proj.):
270,000 3.50%, 1/1/06 268,785
280,000 4.00%, 1/1/07 278,491
315,000 5.20%, 1/1/11 315,750
500,000 5.75%, 1/1/19 501,645
500,000 5.80%, 1/1/24 499,040
400,000 5.50%, 12/1/30 382,044
MN Agr. & Econ. Dev. Board Hlth. Care Rev.:
Series 1999 (Benedictine Care Centers Proj.):
115,000 5.45%, 2/1/09 117,888
120,000 5.45%, 8/1/09 123,251
120,000 5.50%, 2/1/10 123,420
125,000 5.50%, 8/1/10 128,533
MN Agr. & Econ. Dev. Board Rev. Series 2000 (Evangelical Lutheran Good Samaritan Society Proj.):
410,000 5.80%, 8/1/08 435,317
750,000 6.55%, 8/1/16 824,640
MN Agr. & Econ. Dev. Board Rev. Series 2002 (Evangelical Lutheran Good Samaritan Society Proj.):
345,000 5.40%, 2/1/09 362,526
220,000 5.50%, 2/1/12 234,335
MN Agr. & Econ. Dev. Board Rev. Series 2000A (Fairview Hlth. Care Sys. Proj.):
645,000 5.625%. 11/15/05 656,029
590,000 5.70%, 11/15/06 614,444
330,000 6.375%, 11/15/22 360,937
380,000 6.375%, 11/15/29 412,676
New Hope Hlth. Care Facs. Rev. (St. Therese Home, Inc. Proj.):
45,000 Series 2003B, 3.00%, 10/1/06 44,622
300,000 Series 2003A, 5.90%, 10/1/23 306,984
400,000 New Hope Hlth. Care Facs. Rev. (MN Masonic Home North Ridge Proj.), 5.875%, 3/1/29 405,332
44
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
North Oaks Presbyterian Loan Participation:
52,500 Series 2004B, 4.25%, 12/15/34 52,500
43,605 Series 2004C, 4.38%, 12/15/34 43,605
29,940 Series 2004D, 4.75%, 12/15/34 29,617
Northfield Hospital Rev. Series 2001C:
1,080,000 6.00%, 11/1/13 1,164,164
50,000 6.00%, 11/1/21 53,040
3,100,000 6.00%, 11/1/26 3,288,325
Olmsted Co. Hlth. Care Fac. Rev. Series 1998 (Olmsted Medical Ctr. Proj.):
775,000 5.45%, 7/1/13 796,026
900,000 5.55%, 7/1/19 915,525
240,000 Pine Island Hlth. Care Facs. Rev. Series 2001 (Olmsted Med. Ctr. Proj.),
5.00%, 7/1/10 246,312
135,000 Plymouth Hlth. Facs. Rev. Series 2003 (Mission Farm Nursing Home Proj.),
3.25%, 8/1/05 134,649
Rochester Hlth. Care & Hsg. Rev. Series 2003A (Samaritan Bethany Inc. Proj.):
160,000 3.25%, 8/1/06 158,928
500,000 6.25%, 8/1/19 511,740
Shakopee Hlth. Care Facs. Rev. Series 2004 (St. Francis Regl. Med. Ctr. Proj.):
355,000 4.00%, 9/1/05 356,232
315,000 4.00%, 9/1/06 317,700
125,000 5.10%, 9/1/25 125,952
St. Paul Hsg. & Redev. Auth. Hlth. Care Rev. Series
1998 (Regions Hosp. Proj.):
800,000 5.00%, 5/15/08 828,432
250,000 5.00%, 5/15/10 257,840
1,340,000 5.20%, 5/15/13 1,371,075
2,050,000 5.25%, 5/15/18 2,072,263
580,000 5.30%, 5/15/28 582,691
960,000 St. Paul Hsg. & Redev. Auth. Nursing Home Dev. Rev. Refunding Series 1996C
(Franciscan Hlth. Cmmty. Proj., St. Mary's Home), 7.00%, 7/1/21 931,814
St. Paul Hsg. & Redev. Auth. Hlth. Care Rev. Series 2005 (Gillette Childrens Hosp. Proj.):
200,000 4.00%, 2/1/06 200,888
200,000 5.00%, 2/1/07 204,914
300,000 4.00%, 2/1/11 294,780
200,000 5.00%, 2/1/13 204,144
225,000 5.00%, 2/1/14 227,547
400,000 St. Paul Hsg. & Redev. Auth. Hlth. Care Rev. Series 2001A (Model Cities Hlth. Ctr. Proj.),
6.50%, 11/1/11 408,584
150,000 White Bear Lake First Mtg. Rev. Series 2004 (Healtheast Care Ctr. Proj.),
2.75%, 11/1/06 147,912
----------
44,998,570
----------
INDUSTRIAL / POLLUTION CONTROL (7.7%)
2,180,000 Anoka Co. Solid Waste Disp. Rev. Series 1987A (Natl. Rural Util. Proj.),
6.95%, 12/1/08 (4) 2,193,363
1,415,000 Burnsville Solid Waste Rev. Refunding Series 2003A (Freeway Transfer Inc. Proj.),
4.15%, 4/1/10 (4) 1,386,530
500,000 Cohasset Pollution Ctrl. Rev. Refunding Series 2004 (Allete, Inc. Proj.),
4.95%, 7/1/22 505,140
745,000 East Grand Forks Industrial Dev. Rev. Refunding Series 2001B (Am. Crystal Sugar Proj.),
5.40%, 4/1/11 775,344
255,000 Guam Economic Dev. Auth. Tobacco Settlement Asset-Backed Series 2001A,
5.00%, 5/15/22 257,407
1,000,000 Guam Econ. Dev. Auth. Tobacco Settlement Asset-Backed Rev. Series 2001B,
Zero Coupon, 5.20% Effective Yield on Purchase Date, 5/15/15 865,850
1,500,000 Hugo Industial Dev. Rev. Refunding Series 2002 (MN Union Builders Proj.),
7.75%, 3/1/17 (4) 778,140
MN Public Facs. Auth. Water Pollution Ctrl. Rev.:
2,500,000 Series 1997, 6.00%, 3/1/07 2,646,625
85,000 Series 1997, 5.00%, 3/1/12 88,028
See accompanying notes to portfolios of investments on page 62. 45
- --------------------------------------------------------------------------------
SIT MINNESOTA TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
45,000 Series 1997, 5.00%, 3/1/16 46,326
185,000 Series 2001A, 5.00%, 3/1/19 194,875
155,000 MN Agricultural & Econ. Dev. Board Small Business Dev. Loan Program Rev.
Series 2002A Lot 1, 3.65%, 8/1/05 (4) 155,408
210,000 Medina Industrial Dev. Rev. Refunding Series 1998 (Temroc Metals, Inc. Proj.),
5.10%, 10/1/05 (4) 210,949
Owatonna Industrial Dev. Rev. Series 1997:
280,000 7.25%, 5/1/14 (4)(8)(9) 126,913
505,000 7.375%, 5/1/17 (4)(8)(9) 227,518
20,000 7.375%, 5/1/20 (4)(8)(9) 8,981
10,000 7.50%, 5/1/24 (8)(9) 4,480
525,000 Puerto Rico Indus. Tourist, Educ., Medical and Environmental Control Facs. Financing Auth.
Industrial Rev. Series 1998A (Guaynabo Warehouse for Emergencies Proj.), 4.35%, 7/1/06 532,833
Puerto Rico Childrens Trust Fund Tobacco Settlement Rev. :
300,000 Series 2002, 4.00%, 5/15/10 294,834
2,660,000 Series 2002, 5.375%, 5/15/33 2,666,836
465,000 Roseville Dev. Rev. Refunding Series 2004 (Roseville Office Plaza Proj.), 4.625%, 8/1/12 467,269
Sauk Centre Industrial Dev. Rev. Series 1998 (Seluemed LLP Proj.)(LOC First Trust):
75,000 4.95%, 4/1/10 (4) 75,000
275,000 5.75%, 4/1/18 (4) 275,468
St. Paul Hsg. & Redev. Auth. District Cooling Rev. Series 1998J:
150,000 4.75%, 3/1/08 154,700
95,000 5.125%, 3/1/12 98,758
500,000 5.35%, 3/1/18 516,030
Virgin Islands Tobacco Settlement Financing Corp. Asset-Backed Rev. Series 2001:
750,000 Zero Coupon, 4.95% Effective Yield on Purchase Date, 5/15/14 649,905
1,715,000 5.00%, 5/15/21 1,638,117
-----------------
17,841,627
-----------------
INSURED (9.0%)
50,000 Bemidji ISD No. 031 G.O. Series 1998 (FSA insured), 5.00%, 4/1/19 51,493
Dakota Co. Hsg. Dev. G.O. Series 1995 (Ambac insured):
95,000 5.10%, 1/1/11 95,205
235,000 5.125%, 1/1/17 235,407
Goodhue Co. Econ. Dev. Auth. Lease Rev. Series 1998A:
450,000 4.65%, 2/1/12 456,768
475,000 4.70%, 2/1/13 482,367
Hastings Hlth. Care Fac. Rev. Series 1998 (Regina Med. Ctr.)(ACA insured):
565,000 5.25%, 9/15/18 573,351
200,000 5.30%, 9/15/28 201,184
100,000 Itasca Co. ISD No. 318 G.O. Series 1996 (MBIA insured), 5.20%, 2/1/10 100,225
100,000 Lake Crystal G.O. Series 2004B (Ambac insured), 2.00%, 12/1/05 99,784
20,000 Marshall Lease Rev. Series 1998A (Law Enforcement Ctr. Proj.)(MBIA insured), 4.40%, 2/1/06 20,029
400,000 Minneapolis Hlth. Care Facs. Rev. Refunding Series 2005A (Augustana Chapel View Homes Proj.),
5.65%, 12/1/35 381,512
Minneapolis & St. Paul Hsg. & Redev. Auth. Hlth. Care Sys. Rev. Series 1993A (Ambac insured):
175,000 5.00%, 11/15/13 177,084
3,090,000 4.75%, 11/15/18 3,097,169
46
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
Minneapolis & St. Paul Metro Airport Comm. Airport Rev.:
250,000 Series 1998A, 5.00%, 1/1/22 258,317
1,650,000 Series 1998B, 5.25%, 1/1/13 (4) 1,729,777
85,000 MN HFA Single Family Mtg. Rev. Series 2001A (MBIA insured), 5.35%, 7/1/17 88,258
NE Metro Intermediate School Dist. No. 916 C.O.P. Series 2004:
705,000 3.00%, 1/1/06 705,550
500,000 4.25%, 1/1/14 496,365
300,000 Perham Gas Utility Rev. Series 1999 (Radian insured), 5.35%, 6/1/19 316,545
200,000 Puerto Rico Indus. Tourist Educ. Med. & Environmental Ctl. Facs. Rev. Series 1995A
(Hosp. Auxilio Oblig. Group Proj.), 6.25%, 7/1/16 204,540
300,000 Scott Co. Hsg. & Redev. Auth. Ltd. Special Benefits Tax Series 1997B
(River City Centre Proj.), (Ambac insured), 5.45%, 2/1/20 315,468
300,000 St. Cloud Hosp. Facs. Rev. Ref. Series 1996B (St. Cloud Hosp. Proj.)(Ambac insured),
5.00%, 7/1/20 307,068
55,000 St. Cloud Multifamily Rev. Refunding Series 1993B (St. Cloud Hosp. Proj.),
5.40%, 10/1/23 55,595
200,000 St. Cloud Hlth. Care Rev. Series 2000A (St. Cloud Hosp. Obligated Group)(FSA insured),
5.125%, 5/1/09 213,100
250,000 St. Louis Co. Hsg. & Redev. Auth. Rev. Series 1997 (Law Enforce. Proj.)(FGIC insured),
5.00%, 12/1/08 253,853
390,000 St. Paul Hsg. & Redev. Auth. Pkg. Rev. Refunding Series 2005A, 2.50%, 8/1/05 390,195
235,000 St. Paul Hsg. & Redev. Auth. Rev. Series 1993 (Ramsey Med. Ctr. Proj.)(Ambac insured),
5.55%, 5/15/23 235,684
2,480,000 St. Paul Hsg. & Redev. Sales Tax Rev. Refunding Series 1996 (Civic Center Proj.)
(FSA insured), 7.10%, 11/1/23 3,070,736
100,000 St. Paul Ind. School Dist. No. 625 G.O. Series 1997B, 4.65%, 2/1/06 100,166
130,000 Scott Co. Hsg. & Redev. Auth. Fac. Lease Rev. Series 1997 (Justice Ctr. Proj.)(Ambac insured),
5.50%, 12/1/15 137,456
2,750,000 Southern MN Muni Pwr. Agy. Pwr. Supply Sys. Rev. Series 2002A, 5.00%, 1/1/07 2,850,127
805,000 Waconia Hlth. Care Facs. Rev. Series 1999A (Ridgeview Med. Ctr. Proj.) 6.125%, 1/1/29 881,193
300,000 Western MN Pwr. Agy. Rev. Refunding Series 1996A (Ambac insured), 5.50%, 1/1/12 312,177
1,750,000 White Earth Band of Chippewa Indians Rev. Series 2000A (ACA insured), 7.00%, 12/1/11 1,920,152
145,000 Worthington Perm. Impt. Revolving Fd. G.O. Series 1998A (FSA insured), 4.50%, 2/1/10 146,962
-----------------
20,960,862
-----------------
MULTIFAMILY MORTGAGE (31.9%)
Apple Valley Multifamily Hsg. Rev. Refunding Series 1998A (Mtg. Loan/Apple Valley
Villa Proj.) (GNMA collateralized):
40,000 4.90%, 8/1/09 41,438
1,520,000 5.25%, 8/1/18 1,567,166
Austin Hsg. & Redev. Auth. Governmental Hsg. Gross Rev. (Courtyard Res. Proj.):
50,000 Series 1995 A, 7.00%, 1/1/15 51,480
500,000 Series 1995A, 7.25%, 1/1/26 514,205
650,000 Series 2000A, 7.15%, 1/1/20 687,277
500,000 Series 2000A, 7.25%, 1/1/32 526,490
1,150,000 Brooklyn Center Multifamily Hsg. Rev. Series 1993 (Ponds Family Hsg. Proj.),
5.90%, 1/1/20 1,152,714
500,000 Buffalo Hlth. Care C.O.P. Series 2004C (Central MN Sr. Hsg., LLC Proj.),
7.50%, 2/20/33 500,030
250,000 Buffalo Rev. Refunding Series 1998 (Covenant Retirement Cmtys. Proj.),
4.55%, 12/1/05 251,535
Burnsville Multifamily Hsg. Rev. Refunding Series 1991 (Oak Leaf Apts. Proj.)(GNMA collateralized):
720,000 7.05%, 1/1/12 721,289
780,000 7.125%, 1/1/17 781,451
860,000 7.125%, 1/1/21 861,514
150,000 7.15%, 1/1/27 150,207
530,000 7.15%, 1/1/23 530,864
425,000 7.15%, 1/1/25 425,629
See accompanying notes to portfolios of investments on page 62. 47
- --------------------------------------------------------------------------------
SIT MINNESOTA TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
Carver Co. Hsg. & Redev. Auth. Multifamily Hsg.:
1,200,000 Gross Rev. & Ltd. Tax Refunding Series 1997A (Lake Grace Apts. Proj.), 6.00%, 7/1/28 1,209,252
650,000 Rev. Refunding Series 1997A (Waybury Apts. Proj.), 5.875%, 8/1/27 665,132
400,000 Subordinate Rev. Refunding Series 1997C (Waybury Apts. Proj.), 8.00%, 8/1/27 400,940
Chaska Multifamily Hsg. Rev. Series 1999 (West Suburban Hsg. Partners Proj.):
235,000 5.00%, 9/1/09 (4) 230,258
495,000 5.375%, 9/1/14 (4) 471,591
405,000 Chisago City Hlth. Fac. Rev. Refunding Series 1995A (Pleasant Heights Proj.), 7.30%, 7/1/18 414,141
Cloquet Multifamily Hsg. Rev. Refunding Series 2001A (HADC Proj.):
60,000 6.25%, 2/1/06 60,379
60,000 6.50%, 2/1/07 60,853
75,000 7.10%, 2/1/10 76,502
700,000 Coon Rapids Multifamily Hsg. Rev. Refunding Series 1997A (Margaret Place Apts. Proj.),
6.50%, 5/1/25 632,569
Coon Rapids Senior Hsg. Rev. Refunding Series 1998 (Epiphany Sr. Citizens Hsg. Corp. Proj.):
115,000 5.30%, 11/1/07 115,286
115,000 5.40%, 11/1/08 115,258
170,000 5.50%, 11/1/10 169,830
545,000 5.80%, 11/1/18 534,972
Dakota Co. Hsg. & Redev. Auth. Multifamily Hsg. Rev. Refunding (Walnut Trails Apts. Proj.):
4,325,000 Series 1995A (GNMA collateralized), 7.90%, 1/20/31 (4) 4,643,536
185,000 Subordinate Series 1995C, 9.00%, 1/20/15 (4) 204,616
800,000 Dakota Co. Cmty. Dev. Agy. Hsg. Fac. Rev. Subordinate Series 2002B
(HADC Apple Valley Sr. Apts. Proj.), 7.50%, 8/15/43 773,584
330,000 Eagan Multifamily Hsg. Rev. Refunding Series 1997A (Woodridge Apts. Proj.), 5.95%, 2/1/32 346,008
Eden Prairie Multifamily Hsg. Rev. Refunding :
25,000 Series 1997 (Preserve Place Proj.) (GNMA collateralized), 4.90%, 1/20/08 25,991
300,000 Series 1997A (Preserve Place Proj.) (GNMA collateralized), 5.50%, 1/20/18 314,226
410,000 Series 1997A (Preserve Place Proj.) (GNMA collateralized), 5.60%, 7/20/28 419,512
470,000 Senior Series 2001A (Rolling Hills Proj.) (GNMA collateralized), 6.00%, 8/20/21 517,484
675,000 Senior Series 2001A (Rolling Hills Proj.) (GNMA collateralized), 6.15%, 8/20/31 727,393
1,185,000 Series 2001A (Rolling Hills Proj.) (GNMA collateralized), 6.20%, 2/20/43 1,273,531
1,060,000 Subordinate Series 2001C (Rolling Hills Proj.), 9.00%, 4/1/43 1,034,443
Fairmont Hsg. Fac. Rev. Series 2002-A1 (Homestead-GEAC Proj.):
1,100,000 6.625%, 10/1/11 1,142,966
295,000 6.875%, 10/1/14 296,623
Golden Valley Rev. Series 1999A (Covenant Retirement Cmntys. Proj.):
500,000 5.50%, 12/1/25 515,530
1,000,000 5.50%, 12/1/29 1,029,180
Grand Rapids Hsg. & Redev. Auth. (Lakeshore Place and Forest Park West Apts. Proj.):
55,000 Series 1999B, 5.00%, 10/1/09 55,485
500,000 Series 1999A, 5.20%, 10/1/19 511,800
1,660,000 Series 1999A, 5.30%, 10/1/29 1,654,588
130,000 Series 1999B, 5.70%, 10/1/29 128,311
495,000 Hopkins Subordinate Multifamily Hsg. Rev. Refunding Series 1996C (Auburn Apts. Proj.),
8.00%, 6/20/31 474,556
Hopkins Multifamily Hsg. Rev. Series 1996 (Hopkins Renaissance Proj.) (Section 8):
100,000 5.85%, 4/1/09 104,746
450,000 6.25%, 4/1/15 469,696
48
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
Hutchinson Hsg. Fac. Rev. (Prince of Peace Apts. Proj.):
50,000 Series 2003A, 3.50%, 10/1/06 49,913
115,000 Series 2003A, 4.00%, 10/1/07 114,702
120,000 Series 2003A, 4.50%, 10/1/08 119,578
Inver Grove Heights Senior Hsg. Rev. (PHM/Inver Grove, Inc Proj):
85,000 Series 2001, 6.375%, 5/1/31 84,867
105,000 Series 2001A, 5.50%, 5/1/08 104,760
110,000 Series 2001A, 5.50%, 11/1/08 109,712
65,000 Series 2001B, 5.00%, 5/1/06 65,655
70,000 Series 2001B, 5.25%, 5/1/07 70,988
75,000 Series 2001B, 5.50%, 5/1/08 76,101
80,000 Series 2001B, 5.60%, 5/1/09 81,039
70,000 Series 2001B, 5.00%, 11/1/06 70,893
75,000 Series 2001B, 5.50%, 11/1/08 76,199
80,000 Series 2001B, 5.60%, 11/1/09 81,007
100,000 Series 2001B, 7.00%, 11/1/31 99,701
3,115,000 Little Canada Multifamily Hsg. Rev. Series 1997A (Hsg. Alt. Dev. Co. Proj.),
6.10%, 12/1/17 3,285,422
1,400,000 Maplewood Multifamily Hsg. Rev. Series 1998 (Park Edge Apts. Proj.),
6.50%, 5/1/29 (4) 1,240,666
Maplewood Multifamily Refunding Rev. (Village on Woodlyn Proj.):
1,605,000 Series 1999A (GNMA collateralized), 6.75%, 7/20/30 (4) 1,688,733
100,000 Subordinate Series 1999C-1, 8.00%, 11/1/30 (4) 94,016
265,000 Subordinate Series 1999C-2, 8.00%, 11/1/30 (4) 249,142
Minneapolis Multifamily Hsg. Rev.:
500,000 Series 2002A (Keeler Apts. Proj.), 7.00%, 10/1/17 506,675
355,000 Series 1996 (Belmont Apts.), 7.25%, 11/1/16 353,047
Series 1994 (Findley Place Townhomes Proj.) (Section 8):
50,000 6.00%, 12/1/05 (4) 50,122
1,465,000 7.00%, 12/1/16 (4) 1,449,881
500,000 Series 1996A (Nicollet Towers) (Section 8), 5.60%, 6/1/08 522,695
5,020,000 Series 1996A (Nicollet Towers) (Section 8), 6.00%, 12/01/19 5,182,497
1,000,000 Series 1998 (Riverside Plaza Proj.) (GNMA collateralized), 5.10%, 12/20/18 (4) 1,023,430
335,000 Series 2000 (Garr Scott Loft Proj.)(LOC U.S. Bank), 5.95%, 5/1/30 (4) 353,405
50,000 Series 2003A (Sumner Proj.) (GNMA collateralized), 3.00%, 8/20/08 (4) 49,363
3,445,000 Series 2003 (Sumner Field Phase II Proj.), 2.60%, 8/20/08 (4) 3,453,371
Minneapolis Student Hsg. Rev. Series 2000 (Riverton Community Hsg. Proj.):
100,000 6.80%, 7/1/10 103,250
240,000 6.90%, 7/1/11 246,266
50,000 MN HFA Rental Hsg. Rev. Series 1996A, 6.10%, 8/1/27 (4) 51,332
100,000 MN HFA Rental Hsg. Rev. Series 2000A (Section 8), 5.375%, 2/1/09 (4) 104,392
Minnetonka Multifamily Hsg. Rev. Refunding Series 1999A (GNMA collateralized) (Archer Heights Apts. Proj.):
540,000 5.10%, 7/20/13 (4) 562,081
975,000 5.20%, 1/20/18 (4) 1,015,501
New Ulm Multifamily Rev. Series 1999 (HADC Ridgeway Proj.):
95,000 5.35%, 12/1/08 93,727
100,000 5.40%, 12/1/09 97,122
105,000 5.50%, 12/1/10 101,135
110,000 5.60%, 12/1/11 104,964
Oakdale Multifamily Sr. Hsg. Rev. Refunding Series 2004 (Oak Meadows Proj.):
325,000 4.25%, 4/1/08 326,729
600,000 5.00%, 4/1/12 606,708
See accompanying notes to portfolios of investments on page 62. 49
- --------------------------------------------------------------------------------
SIT MINNESOTA TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
Plymouth Multifamily Hsg. Rev. Refunding Series 1996A (Fox Forest Apts. Proj.) (GNMA collateralized):
1,650,000 Series 1996A, 8.05%, 6/20/31 1,741,459
635,000 Series 1996C, 8.00%, 6/20/31 610,070
500,000 Richfield Sr. Hsg. Rev. Refunding Series 2004A (Richfield Sr. Hsg., Inc. Proj.),
5.00%, 12/1/15 484,535
2,800,000 Rochester Multifamily Rev. Refunding Series 2000A (Weatherstone Apts. Proj.) (LOC Household Finance)
(Mandatory Put 9/1/17) 6.375%, 9/1/37 (4) 2,992,920
Roseville Hsg. Fac. Rev. Refunding Bonds Series 1998 (College Properties Inc. Proj.):
2,820,000 5.60%, 10/1/13 2,841,319
100,000 5.875%, 10/1/28 100,237
80,000 Sherburne Co. Hsg. & Redev. Auth. Lease Rev. Series 1997, 5.50%, 2/1/17 80,701
2,520,000 Shoreview Sr. Hsg. Rev. Series 1996 (Shoreview Sr. Residence Proj.), 7.25%, 2/1/26 2,612,056
100,000 St. Cloud Hsg. & Redev. Auth. Multifamily Hsg. Rev. Refunding Series 1998
(Northway Manor Apts. Proj.)(Section 8), 5.35%, 12/1/18 100,658
1,650,000 St. Cloud Hsg. & Redev. Auth. Multifamily Hsg. Rev.:
Series 1993 (Germain Towers Proj.) (Section 8), 5.90%, 9/1/20 1,522,125
73,000 Series 1999A (Parkview Terrace Apts. Proj.) (Section 8), 5.00%, 6/1/09 72,832
St. Louis Park Multifamily Hsg. Rev. Refunding:
650,000 Series 1995 (FHA insured) (Knollwood Cmty. Hsg. Proj.), 6.15%, 12/1/16 668,622
500,000 Series 1998A (Park Ridge Apts. Proj.) (GNMA collateralized), 5.25%, 11/1/20 519,265
200,000 St. Paul Hsg. & Redev. Auth. Multifamily Refunding Rev. Series 1995
(Sun Cliffe Apts. Proj.)(GNMA collateralized), 5.875%, 7/1/15 206,242
3,250,000 St. Paul Port Authority Multifamily Hsg. Refunding (Jackson Towers Apts. Proj.) Senior
Series 1998-1A (GNMA collateralized), 6.95%, 4/20/33 3,467,457
845,000 Washington Co. Hsg. & Redev. Auth. Multifamily Hsg. Rev. Refunding Series 1994
(White Bear Lake Transitional Hsg. Proj.), 6.625%, 8/1/24 840,800
755,000 Washington Co. Hsg. & Redev. Auth. Governmental Hsg. Rev. Refunding Series 1999A (Briar Pond
Apts. Proj.) (GNMA collateralized), 5.50%, 2/20/14 779,855
-----------
74,345,997
-----------
MUNICIPAL LEASE (2.0%) (5)
Andover Econ. Dev. Auth. Public Fac. Lease Rev. Series 2004 (Cmnty. Ctr. Proj.):
185,000 2.125%, 2/1/06 183,620
500,000 5.125%, 2/1/24 507,955
40,000 Anoka Co. C.O.P. Series 1998, 5.40%, 6/1/28 40,504
46,682 Brooklyn Park C.O.P. Series 1996, 5.45%, 9/27/06 47,197
110,000 Burnsville Econ. Dev. Auth. Lease Rev. Series 1994A, 5.90%, 12/1/05 110,305
175,000 Cambridge Econ. Dev. Auth. Public Fac. Lease Rev. Refunding Series 1998, 4.50%, 2/1/10 177,431
50,000 Chaska Econ. Dev. Auth. ISD No. 112 Sch. Facs. Lease Rev. Series 1999A, 5.125%, 12/1/09 53,032
225,000 Goodhue Co. Econ. Dev. Auth. Rev. Series 1997A (Courts Bldg. Proj.), 5.75%, 2/1/13 230,839
89,000 Hennepin Co. Hsg. & Redev. Auth. Rev. Series 1993A (Community Provider Program),
5.70%, 8/1/13 89,099
415,000 Hibbing Econ. Dev. Auth. Public Proj. Rev. Series 1997 (Hibbing Lease Obligations Proj.),
6.10%, 2/1/08 430,172
125,000 Mountain Iron Hsg. & Redev. Auth. Rev. Series 2001A (Arrowhead Library Sys. Proj.),
5.00%, 9/1/09 129,770
140,000 Shorewood Econ. Dev. Auth. Public Safety Fire Fac. Lease Rev. Series 2002A, 3.50%, 2/1/06 140,685
800,000 St. Cloud C.O.P. Series 1997, 5.90%, 12/1/17 806,704
1,369,326 St. Paul Lease Series 1998 (City Hall Annex Building), 5.71%, 10/1/18 1,314,608
40,000 St. Paul ISD No. 625 C.O.P Series 1995C, 5.40%, 2/1/10 40,097
400,000 St. Paul Hsg. & Redev. Auth. Lease Rev. Series 2000 (Rivercentre Pkg. Ramp Proj.),
5.70%, 5/1/08 425,580
-----------
4,727,598
-----------
50
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
PUBLIC FACILITIES (1.2%)
1,000,000 Minneapolis Cmty. Dev. Agy. Ltd. Tax Supported Dev. Rev. Common Bond Fund Series 2001G3
(LOC-U.S. Bank), 5.35%, 12/1/21 1,046,670
395,000 MN Agric. Society State Fair Rev. Series 2003, 3.00%, 9/15/05 395,434
St. Paul Recreational Fac. Gross Rev. Series 1996D:
160,000 5.50%, 6/1/08 163,589
1,245,000 5.875%, 6/1/18 1,272,826
-----------
2,878,519
-----------
SINGLE FAMILY MORTGAGE (2.8%)
Dakota County Hsg. & Redev. Auth. Single Family Mtg. Rev.:
30,000 Series 1994A (FNMA backed), 6.70%, 10/1/09 (4) 30,195
30,000 Series 1995 (FNMA & GNMA backed), 6.25%, 10/1/09 (4) 30,430
80,000 Minneapolis- St. Paul Hsg. Fin. Bd. Single Family Mtg. Rev. Series 1997 (FNMA & GNMA backed),
6.25%, 11/1/30 (4) 84,742
885,000 Minneapolis Redev. Mtg. Rev. Series 1987A (Riverplace Proj.) (LOC Bk. of Tokyo),
7.10%, 1/1/20 888,814
281,337 Minneapolis Residual Interest Mtg. Rev. Series 1995, 7.00%, 10/1/12 284,291
MN HFA Single Family Mtg. Rev.:
205,000 Series 1994E, 5.90%, 7/1/25 208,952
10,000 Series 1995K, 6.20%, 7/1/20 (4) 10,211
160,000 Series 1996D, 6.00%, 1/1/16 165,074
110,000 Series 1997A, 5.60%, 7/1/09 113,996
390,000 Series 1997I, 5.50%, 1/1/17 406,333
250,000 Series 1996H, 6.00%, 1/1/21 257,738
805,000 Series 1997D, 5.85%, 7/1/19 (4) 809,065
50,000 Series 1997E, 5.90%, 7/1/29 (4) 50,258
65,000 Series 1997G, 6.00%, 1/1/18 66,630
1,220,000 Series 1998C, 5.25%, 1/1/17 1,240,728
85,000 Series 1998F-1, 4.75%, 7/1/07 85,586
70,000 Series 1998F, 4.95%, 7/1/08 71,406
365,000 Series 1998F-1, 5.45%, 1/1/17 368,628
110,000 Series 1998F, 5.70%, 1/1/17 111,793
485,000 Series 1999B, 5.25%, 1/1/20 490,301
510,000 Series 1999C, 4.40%, 7/1/05 (4) 512,489
180,000 Series 2000C, 6.10%, 7/1/30 (4) 180,997
-----------
6,468,657
-----------
UTILITY (0.4%)
255,000 Glencoe Light & Power Commission Elec. Rev. Series 2004, 2.00%, 12/1/05 253,919
Lake Crystal Public Utilities Comm. Electric Rev. Series 1998:
40,000 4.80%, 12/1/06 40,135
130,000 5.45%, 12/1/13 130,614
120,000 5.50%, 12/1/16 120,275
70,000 MN Public Facs. Auth. Water Pollution Ctrl. Rev. Series 1996B, 5.00%, 3/1/17 71,535
300,000 Princeton Public Utility Sys. Rev. Series 2004, 5.00%, 4/1/24 301,935
-----------
918,413
-----------
TRANSPORTATION (0.1%)
170,000 Puerto Rico Hwy. & Transportation Auth. Rev. Series 1993X, 5.00%, 7/1/22 170,697
-----------
See accompanying notes to portfolios of investments on page 62. 51
- --------------------------------------------------------------------------------
SIT MINNESOTA TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
OTHER REVENUE BONDS (7.7%)
Columbia Heights Commercial Dev. Refunding Rev. Series 1999 (Columbia Park Properties -
Medical Clinic Proj.):
250,000 5.15%, 12/1/08 242,623
1,750,000 5.60%, 12/1/15 1,594,810
Commissioner of Iron Range Resources and Rehab. Gross Rev. (Giant's Ridge Rec. Area Proj.):
200,000 Series 2000, 6.25%, 11/1/05 202,254
900,000 Series 2000, 7.25%, 11/1/16 928,179
Minneapolis Cmty. Dev. Agy. Ltd. Tax Common Bond Fund:
125,000 Series 1996-1 (LOC-U.S. Bank), 6.00%, 6/1/11 127,824
170,000 Series 1997-1 (Halper Corrugated Box Mfg. Co.), 5.90%, 6/1/07 (4) 178,517
500,000 Series 1999-1A (Discount Steel), 5.25%, 6/1/19 (4) 509,125
160,000 Series 2000-G2 (LOC-U.S. Bank), 6.00%, 12/1/20 172,123
175,000 Series 2001-G3 (LOC-U.S. Bank), 5.45%, 12/1/31 182,975
855,000 Minneapolis Public Hsg. Auth. Series 1997 (General Credit Energy Savings Proj.),
6.00%, 7/1/08 837,430
600,000 Minneapolis Tax Increment Rev. Refunding Series 2004 (St. Anthony Falls Proj.),
4.50%, 2/1/13 601,146
200,000 Renville Gross Rev. Golf Course Bond Series 1997, 6.50%, 2/1/19 202,190
St. Paul Hsg. & Redev. Auth. Tax Increment Rev. :
100,000 Series 2001 (US Bank Operations Ctr. Proj.), 5.70%, 8/1/12 104,614
800,000 Series 2001 (US Bank Operations Ctr. Proj.), 6.125%, 8/1/19 826,680
1,140,000 Series 2002 (North Quadrant Owner Occupied Proj. Phase 2), 7.00%, 2/15/28 1,174,189
1,076,000 Series 2002 (North Quadrant Owner Occupied Proj. Phase 1), 7.50%, 2/15/28 1,152,364
3,000,000 Series 2002A (Upper Landing Proj.), 6.80%, 3/1/29 3,010,140
2,000,000 Series 2002B-2 (Upper Landing Proj.), 6.90%, 3/1/29 1,979,060
1,300,000 Series 2002 (Drake Marble Proj.), 6.75%, 3/1/28 1,300,650
1,335,000 Series 2004 (9th St. Lofts Proj.), 6.375%, 2/15/28 1,341,154
845,000 Steele Co. Hlth. Care Fac. Rev. Series 2000 (Elderly Hsg. Proj.),
6.625%, 6/1/20 907,564
Victoria Recreational Facility Gross Rev. Series 2002:
70,000 4.75%, 2/1/12 72,128
75,000 4.75%, 8/1/12 77,280
85,000 5.10%, 8/1/15 87,389
200,000 Virgin Islands Public Fin. Auth. Rev. Gross Receipts Taxes Loan Note Series 1999A,
5.625%, 10/1/10 211,740
-------------
18,024,148
-------------
Total municipal bonds (cost: $215,297,500) 214,976,553
-------------
SHORT-TERM SECURITIES (7.2%) (2)
2,700,000 Mendota Heights Hsg. Mtg. Rev. Series 1991, variable rate, 11/1/31 2,700,000
1,000,000 Midwest Consortium of Muni Utilities Rev. Series 2005, variable rate, 1/1/25 1,000,000
1,100,000 Minneapolis Nursing Home Rev. Series 2002, variable rate, 12/1/27 1,100,000
1,100,000 Minneapolis Library G.O. Series, variable rate, 12/1/32 1,100,000
900,000 MN Higher Educ. Facs. Rev. Series 2003 , variable rate, 10/1/33 900,000
1,000,000 Robbinsdale Hlth. Care Facs. Rev. Series 2003, variable rate, 5/15/33 1,000,000
2,000,000 St. Cloud Infrastructure Mgmt. Fd. G.O. Series 2004, variable rate, 2/1/16 2,000,000
3,000,000 Southern MN Muni Pwr. Agy. Rev. Series, 2.10%, 4/4/05 3,000,000
3,390,000 Univ. of MN Gateway Proj. Rev. Series 2002, variable rate, 6/1/32 3,390,000
513,075 Wells Fargo Minnesota Municipal Cash Fund, 1.36% 513,075
-------------
Total Short-Term Securities (cost: $16,703,075) 16,703,075
-------------
Total investments in securities (cost: $232,000,575) (7) $231,679,628
=============
52 See accompanying notes to portfolios of investments on page 62.
This page has been intentionally left blank.
53
- --------------------------------------------------------------------------------
SIT FLORIDA TAX-FREE INCOME FUND
ONE YEAR ENDED MARCH 31, 2005
- --------------------------------------------------------------------------------
SENIOR PORTFOLIO MANAGERS
MICHAEL C. BRILLEY o DEBRA A. SIT, CFA o PAUL J. JUNGQUIST, CFA
- --------------------------------------------------------------------------------
The Sit Florida Tax Free Income Fund returned +1.84% for the fiscal year
ended March 31, 2005 compared with a return of +0.26% for the Lehman 5-Year
Municipal Bond Index. The Fund's 30-day SEC yield was 4.23% and its 12-month
distribution rate was 2.93% as of March 31, 2005.
Over the past 12 months, the Federal Reserve increased the federal funds
target rate by 25 basis points on seven occasions beginning on June 30, 2004.
The municipal yield curve flattened, with one-year maturity municipals rising
1.5%, five year maturities rising 0.9%, ten year maturities rising 0.4%, and
thirty year maturities rising 0.05%. The rising yields for short and
intermediate term bonds produced price depreciation for bonds in that maturity
range.
The Fund's largest sector holdings were in insured issues, multifamily
housing, other revenue, and hospital/healthcare. Each of these sectors earned
higher returns that the Lehman 5-Year Municipal Bond Index. Despite the Fund's
small size, it is well diversified across sectors and among individual credits.
The primary factor affecting returns over the twelve-month period was the Fund's
short duration of 2.0 to 2.5 years.
We expect the Federal Reserve to further increase short-term rates by 1.0%
to 1.5% over the next twelve months. Those interest rate increases are expected
to cause higher interest rate levels across the entire yield curve, with the
largest increases expected in the short to intermediate maturity range. The
Fund's duration is shorter than most municipal bond funds and is, therefore,
positioned to perform well in a rising interest rate environment. We intend to
extend the Fund's duration as interest rates rise further later in the year.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
- --------------------------------------------------------------------------------
The objective of the Florida Tax-Free Income Fund is to provide a high
level of current income that is exempt from federal regular income tax by
investing in securities that are exempt from the Florida intangibles tax.
The Fund seeks to achieve its objective by investing primarily in
municipal securities that generate interest income that is exempt from regular
federal income tax and that are exempt from the Florida intangible personal
property tax. During normal market conditions, the Fund invests 100% (and, as a
fundamental policy, no less than 80%) of its net assets in such tax-exempt
municipal securities. The Fund may invest up to 10% of its assets in securities
that generate interest income subject to federal alternative minimum tax.
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY
- --------------------------------------------------------------------------------
Net Asset Value 3/31/05: $9.94 Per Share
3/31/04: $10.05 Per Share
Total Net Assets: $3.2 Million
30-day SEC Yield: 4.23%
Tax Equivalent Yield: 6.51%(1)
12-Month Distribution Rate: 2.93%
Average Maturity: 11.3 Years
Duration to Estimated Avg. Life: 1.9 Years(2)
Implied Duration: 2.6 Years(2)
(1)For individuals in the 35.0% federal tax bracket.
(2)See next page.
- --------------------------------------------------------------------------------
PORTFOLIO STRUCTURE
(% OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
Insured
56.7
Multifamily Mortgage
Revenue
12.8
Hospital/Health
Care Revenue
11.1
Other Revenue Bonds
9.0
Sectors Less
Than 3.0%
6.9
Cash & Other
Net Assets
3.5
54
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
SIT LEHMAN LIPPER FL
FL TAX-FREE 5-YEAR MUNI. MUNI-BOND
INCOME FUND BOND INDEX FUND INDEX
----------- ------------ ----------
3 Month** 0.35% -1.15% 0.10%
6 Month** 1.18 -0.36 n/a
1 Year 1.84 0.26 2.65
3 Years n/a n/a n/a
5 Years n/a n/a n/a
Inception** 2.35 1.23 3.18
(12/31/03)
- --------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS*
- --------------------------------------------------------------------------------
SIT LEHMAN LIPPER FL
FL TAX-FREE 5-YEAR MUNI. MUNI-BOND
INCOME FUND BOND INDEX FUND INDEX
----------- ---------- ----------
1 Year 1.84% 0.26% 2.65%
3 Years n/a n/a n/a
5 Years n/a n/a n/a
Inception 2.94 1.54 3.99
(12/31/03)
*AS OF 3/31/05. **NOT ANNUALIZED.
- --------------------------------------------------------------------------------
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. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT
FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE;
HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE LEHMAN 5-YEAR MUNICIPAL
BOND INDEX. THE LIPPER RETURNS ARE OBTAINED FROM LIPPER ANALYTICAL SERVICES,
INC., A LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS.
(2) Duration is a measure which reflects estimated price sensitivity to a given
change in interest rates. For example, for an interest rate change of 1%, a
portfolio with a duration of 5 years would be expected to experience a price
change of 5%. Estimated average life duration is based on current interest rates
and the Adviser's assumptions regarding the expected average life of individual
securities held in the portfolio. Implied duration is calculated based on
historical price changes of securities held by the Fund. The Adviser believes
that the portfolio's implied duration is a more accurate estimate of price
sensitivity provided interest rates remain within their historical range. If
interest rates exceed the historical range, the estimated average life duration
may be a more accurate estimate of price sensitivity.
- --------------------------------------------------------------------------------
GROWTH OF $10,000
- --------------------------------------------------------------------------------
[PLOT POINTS CHART]
Sit
Florida Lehman
Tax-Free 5-Year
Income Municipal
Date Fund Bond Index
---- -------- ----------
12/31/2003 10,000 10,000
1/31/2004 10,025 10,047
2/29/2004 10,104 10,170
3/31/2004 10,108 10,128
4/30/2004 10,030 9,925
5/31/2004 10,020 9,874
6/30/2004 10,046 9,910
7/31/2004 10,101 10,002
8/31/2004 10,148 10,177
9/30/2004 10,174 10,191
10/31/2004 10,217 10,247
11/30/2004 10,210 10,180
12/31/2004 10,258 10,272
1/31/2005 10,305 10,270
2/28/2005 10,298 10,219
3/31/2005 10,294 10,154
The sum of $10,000 invested at inception (12/31/03) and held until 3/31/05 would
have grown to $10,294 in the Fund or $10,154 in the Lehman 5-Year Municipal Bond
Index assuming reinvestment of all dividends and capital gains.
- --------------------------------------------------------------------------------
QUALITY RATINGS
(% OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
Lower of Moody's, S&P, Fitch or Duff & Phelps ratings used.
[PIE CHART]
Other Assets
and Liabilities
3.5%
Not
Rated
9.9%
BBB
10.3%
A
11.8%
AA
4.9%
AAA
59.6%
Assessment of
Non-Rated Securities
AAA 1.0%
AA 0.0
A 0.0
BBB 0.0
BB 8.9
----
Total 9.9%
55
- --------------------------------------------------------------------------------
SIT FLORIDA TAX-FREE INCOME FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
MUNICIPAL BONDS (96.5%) (2)
ESCROWED TO MATUTIRY / PREREFUNDED (2.4%)
75,000 Tampa Rev. Series 1993 (Allegany Hlth. Sys. - St. Joseph's Hosp. Proj.),
5.125%, 12/1/23 76,225
-----------
GENERAL OBLIGATION (1.9%)
60,000 FL Brd. Ed. Cap Outlay Refunding Series 1995A, 5.50%, 6/1/19 60,919
-----------
HOSPITAL/HEALTH CARE (11.1%)
Highlands Co. Hlth. Facs. Auth. Rev. Series 2003D (Adventist Hlth. Sys. Proj.):
15,000 6.00%, 11/15/25 16,209
25,000 5.875%, 11/15/29 26,861
25,000 Hillsborough Co. Industrial Dev. Auth. Hosp. Rev. Refunding Series 2003A (Tampa General
Hosp. Proj.), 2.50%, 10/1/05 24,956
Marion Co. Hosp. Dist. Rev. Refunding Series 1999 (Munroe Reg. Proj.):
25,000 5.25%, 10/1/10 26,700
50,000 5.50%, 10/1/14 52,886
50,000 Miami Hlth. Fac. Auth. Rev. Series 2003B (Catholic Hlth. East Proj.),
2.50%, 11/15/05 49,930
50,000 Polk Co. Hsg. Fin. Auth. Mtg. Rev. Series 1994A (Lake Wales Gardens Proj.),
5.625%, 5/20/14 53,099
100,000 South Lake Co. Hosp. Dist. Rev. Series 2003 (South Lake Hosp., Inc. Proj.),
5.50%, 10/1/13 101,423
------------
352,064
------------
INSURED (56.7%)
90,000 Brevard Co. School Board C.O.P. Series 1996B (Ambac insured), 5.50%, 7/1/21 94,882
50,000 Clearwater Hsg. Auth. Rev. Refunding Series 1997 (Hamptons at Clearwater Proj.) (ACA insured),
5.40%, 5/1/13 51,668
210,000 Dade Co. Hlth. Fac. Auth. Hosp. Rev. Refunding Series 1993A (Baptist Hosp. Miami Proj.)
(MBIA insured), 5.25%, 5/15/21 210,527
95,000 Dade Co. Public Fac. Rev. Series 1993 (Jackson Mem. Hosp. Proj.)(MBIA insured),
5.25%, 6/1/23 95,326
100,000 Dade Co. Seaport Rev. Refunding Series 1995 (MBIA insured), 5.75%, 10/1/15 103,439
20,000 Dade Co. Water & Sewer System Rev. Series 1995 (FGIC insured), 5.50%, 10/1/18 20,651
15,000 FL Correctional Privatization Certs. Of Participation Series 1995B, 5.00%, 8/1/17 15,388
50,000 FL HFC Hsg. Rev. Hsg. Series 2000D-1 (Augustine Club Apts. Proj.)(Ambac insured),
5.75%, 10/1/30 51,942
75,000 FL Dept. Gen. Svcs. Div. Facs. Mgmt. Rev. Refunding Series 1995B (Ambac insured),
5.70%, 9/1/20 76,601
75,000 Fort Myers Impt. Rev. Series 1992C (Ambac Insured), 5.70%, 12/1/05 75,199
100,000 Halifax Hosp. Med. Ctr. Health Care Fac. Rev. Series 1998A (Halifax Mgmt. Sys. Proj.)
(ACA insured), 5.00%, 4/1/12 102,455
100,000 Hillsborough Co. Educ. Fac. Auth. Rev. Refunding Series 1998 (Univ. of Tampa Proj.)
(Radian insured), 5.75%, 4/1/18 108,405
55,000 Naples Hosp. Rev. Refunding Series 1993 (Cmnty. Hosp. Inc. Proj)(MBIA insured),
5.25%, 10/1/14 55,667
80,000 Orange Co. Hlth. Facs. Auth. Rev. Series 1995 (Adventist Hlth. Sys.)(Ambac insured),
5.25%, 11/15/20 82,590
25,000 Orange Co. School Board C.O.P. Series 1997A (MBIA insured), 5.375%, 8/1/22 26,363
65,000 Osceola Co. School Board C.O.P. Series 1995A
(Ambac insured), 5.25%, 6/1/10 65,941
90,000 Palm Beach Co. Hlth. Facs. Auth. Rev. Series 1993 (Jupiter Med. Ctr. Proj.)(FSA insured),
5.25%, 8/1/18 90,623
Port Everglades Auth. Rev. Refunding & Impt. Series 1989A:
45,000 (FSA insured), 5.00%, 9/1/16 45,084
150,000 (MBIA-IBC insured), 5.00%, 9/1/16 150,280
56
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
50,000 Univ. of South FL Rev. Hsg. Fac. Series 1997A (MBIA insured), 5.35%, 7/1/15 51,929
25,000 Venice Hlth. Care Rev. Series 1996 (Bon Secours Hlth. Sys. Proj.)(MBIA insured),
5.625%, 8/15/26 26,230
140,000 Village Ctr. Cmnty. Dev. Dist. Recreational Rev. Series 1998A (MBIA insured),
5.00%, 11/1/21 145,781
50,000 Volusia Co. Hlth. Fac. Auth. Rev. Refunding & Impt. Series 1994 (Hosp. Fac. - Memorial Hlth. Proj)
(Ambac insured), 5.75%, 11/15/13 51,127
------------
1,798,098
------------
MULTIFAMILY MORTGAGE (12.8%)
100,000 Broward Co. Hsg. Fin. Auth. Multifamily Rev. Refunding Series 1996 (Tamarac Pointe
Apts. Proj.)(GNMA collateralized), 6.15%, 7/1/16 103,842
45,000 Capital Trust Agy. Multifamily Rev. Sr. Series 2003A (Golf Villas, Rivermill, and Village Square
Apts. Proj.), 4.75%, 6/1/13 43,143
45,000 Collier Co. HFA Multifamily Hsg. Rev. Series 2002C (Goodlette Arms Proj.),
5.25%, 8/15/15 47,082
35,000 Miami-Dade Co. Special Hsg. Rev. Refunding Series 1998 (Section 8),
5.30%, 10/1/05 34,898
55,000 Palm Beach Hsg. Fin. Auth. Rev. Refunding Series 1997A, 5.95%, 10/20/31 55,657
120,000 Palm Beach Co. Hlth. Fac. Auth. Rev. Series 1996 (ACTS Retirement Cmnty. Proj.),
5.625%, 11/15/20 122,453
------------
407,075
------------
UTILITY (2.6%)
Jacksonville Elec. Auth Rev.:
50,000 Refunding Series 1997-2-14 (St. John's River Proj.), 4.90%, 10/1/08 51,304
30,000 Water & Sewer Series 2000A, 4.50%, 10/1/09 30,314
-----------
81,618
-----------
OTHER REVENUE BONDS (9.0%)
25,000 Capital Region Cmnty. Dev. Dist. Rev. Series 2001B, 5.95%, 5/1/06 25,037
40,000 Double Branch Cmnty. Dev. Dist. Rev. Series 2003C, 5.125%, 5/1/08 40,374
100,000 Fiddlers Creek Cmnty. Dev. Dist. No. 2 Rev. Series 2003B, 5.75%, 5/1/13 103,055
35,000 Mediterra North Cmnty. Dev. Dist. Impt. Rev. Series 2001B, 6.00%, 5/1/08 35,151
25,000 Parklands Lee Cmnty. Dev. Dist. Rev. Series 2004B, 5.125%, 5/1/11 25,070
20,000 Parklands West Cmnty. Dev. Dist. Rev. Series 2001B, 6.00%, 5/1/06 20,017
35,000 Reunion East Cmnty. Dev. Dist. Series 2002B, 5.90%, 11/1/07 35,587
------------
284,291
------------
Total municipal bonds (cost: $3,064,341) 3,060,290
------------
Total investments in securities (cost: $3,064,341) (7) $3,060,290
============
See accompanying notes to portfolios of investments on page 62. 57
- --------------------------------------------------------------------------------
SIT BOND FUND
ONE YEAR ENDED MARCH 31, 2005
- --------------------------------------------------------------------------------
SENIOR PORTFOLIO MANAGERS, MICHAEL C. BRILLEY AND BRYCE A. DOTY, CFA
PORTFOLIO MANAGER, MARK H. BOOK, CFA
- --------------------------------------------------------------------------------
The Sit Bond Fund provided investors with a +1.61% return during the fiscal
year ending March 31, 2005, while the Lehman Aggregate Bond Index returned
+1.15%. The Fund's 30-day SEC yield was 5.26% and its 12-month distribution rate
was 4.93%.
Asset-backed and mortgage securities each contributed positively to
performance during the 12 month period, primarily through providing high levels
of current income and price stability. This was in contrast to returns of the
Funds benchmark, which saw greater levels of price depreciation during the
period. The U.S. Treasury sector contributed strongly to returns, as the Fund
opportunistically purchased U.S. Treasury securities during periods of market
weakness throughout the year. In addition, a focus on longer maturities within
the sector provided added value as longer-maturity Treasuries out-performed
shorter-maturity Treasuries. Lastly, the Fund benefited by avoiding intermediate
maturity securities as these performed worse then both short and longer-maturity
securities.
The constraints of high energy prices continue to be prevalent throughout
the economy. However, with absolute levels of interest rates at historically low
levels, we believe economic growth will continue, causing interest rates to rise
further. We believe that maintaining an investment strategy focused on high
levels of current income is best suited to provide strong returns within this
market environment, by utilizing securities such as high coupon mortgage
pass-throughs. The high levels of current income produced by these securities as
well as their tendency to exhibit relative price stability during periods of
rising interest rates should result in strong performance for these securities
given current market conditions.
On April 28, 2005 Sit Bond Fund shareholders voted to liquidate the Fund
due to limited net assets. We want to thank our shareholders for their past
support and interest in the Fund.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY
- --------------------------------------------------------------------------------
The investment objective of the Fund is to maximize total return,
consistent with preservation of capital. The Fund will pursue its objective by
investing in a diversified portfolio of fixed-income securities which include,
but are not limited to, the following: U.S. government securities; corporate
debt securities; corporate commercial paper; mortgage and other asset-backed
securities.
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY
- --------------------------------------------------------------------------------
Net Asset Value 3/31/05: $9.74 Per Share
3/31/04: $10.07 Per Share
Total Net Assets: $10.7 Million
30-day SEC Yield: 5.26%
12-Month Distribution Rate: 4.93%
Average Maturity: 15.8 Years
Effective Duration: 3.4 Years(1)
(1) Effective duration is a measure which reflects estimated price sensitivity
to a given change in interest rates. For example, for an interest rate change of
1.0%, a portfolio with a duration of 5 years would be expected to experience a
price change of 5%. Effective duration is based on current interest rates and
the Adviser's assumptions regarding the expected average life of individual
securities held in the portfolio.
- --------------------------------------------------------------------------------
PORTFOLIO STRUCTURE
(% OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
Mortgage Pass-Through
23.5
Asset-Backed Securities
21.7
Corporate Bonds
and Notes
18.1
Collateralized Mortgage
Obligations
5.7
Sectors less than 4.0%
8.7
Cash & Other
Net Assets
22.3
58
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
LIPPER INTER.
SIT LEHMAN INVESTMENT
BOND AGGREGATE GRADE BOND
FUND BOND INDEX FUND INDEX
------ ---------- ------------
3 Month** -0.25% -0.48% -0.48%
6 Month** 0.39 0.47 n/a
1 Year 1.61 1.15 1.24
5 Years 6.43 7.14 6.81
10 Years 6.50 7.14 6.68
Inception 6.01 6.51 6.03
(12/1/93)
- --------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS*
- --------------------------------------------------------------------------------
LIPPER INTER.
SIT LEHMAN INVESTMENT
BOND AGGREGATE GRADE BOND
FUND BOND INDEX FUND INDEX
----- ---------- ----------
1 Year 1.61% 1.15% 1.24%
5 Years 36.56 41.16 39.04
10 Years 87.75 99.32 90.92
Inception 93.82 104.37 94.19
(12/1/93)
*AS OF 3/31/05 **NOT ANNUALIZED.
- --------------------------------------------------------------------------------
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. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT
FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE;
HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE LEHMAN AGGREGATE BOND
INDEX. THE LIPPER RETURNS ARE OBTAINED FROM LIPPER ANALYTICAL SERVICES, INC., A
LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS.
- --------------------------------------------------------------------------------
GROWTH OF $10,000
- --------------------------------------------------------------------------------
[PLOT POINTS CHART]
Lehman Lehman Lehman
Sit Aggregate Sit Aggregate Sit Aggregate
Bond Bond Bond Bond Bond Bond
Date Fund Index Date Fund Index Date Fund Index
---- ------ --------- ---- ------ --------- ---- ------ ---------
12/1/1993 10,000 10,000 9/30/1997 12,928 12,765 7/31/2001 16,205 16,750
12/31/1993 10,034 10,054 10/31/1997 13,085 12,950 8/31/2001 16,386 16,942
1/31/1994 10,176 10,190 11/30/1997 13,109 13,010 9/30/2001 16,493 17,139
2/28/1994 10,066 10,013 12/31/1997 13,200 13,141 10/31/2001 16,835 17,498
3/31/1994 9,878 9,766 1/31/1998 13,352 13,310 11/30/2001 16,616 17,257
4/29/1994 9,798 9,688 2/28/1998 13,338 13,300 12/31/2001 16,588 17,147
5/31/1994 9,804 9,687 3/31/1998 13,356 13,345 1/31/2002 16,723 17,286
6/30/1994 9,772 9,665 4/30/1998 13,414 13,415 2/28/2002 16,851 17,454
7/31/1994 9,900 9,857 5/31/1998 13,531 13,542 3/31/2002 16,598 17,163
8/31/1994 9,927 9,870 6/30/1998 13,631 13,657 4/30/2002 16,943 17,496
9/30/1994 9,815 9,724 7/31/1998 13,642 13,686 5/31/2002 17,077 17,645
10/31/1994 9,811 9,716 8/31/1998 13,827 13,909 6/30/2002 17,246 17,797
11/30/1994 9,816 9,694 9/30/1998 14,056 14,235 7/31/2002 17,312 18,012
12/31/1994 9,903 9,761 10/31/1998 13,924 14,159 8/30/2002 17,461 18,316
1/31/1995 10,045 9,954 11/30/1998 14,003 14,240 9/30/2002 17,635 18,613
2/28/1995 10,253 10,191 12/31/1998 14,060 14,283 10/31/2002 17,417 18,528
3/31/1995 10,323 10,253 1/31/1999 14,127 14,385 11/30/2002 17,487 18,523
4/30/1995 10,417 10,397 2/28/1999 13,964 14,133 12/31/2002 17,697 18,906
5/31/1995 10,839 10,799 3/31/1999 14,063 14,212 1/31/2003 17,752 18,922
6/30/1995 10,942 10,878 4/30/1999 14,117 14,257 2/28/2003 17,889 19,184
7/31/1995 10,911 10,854 5/31/1999 14,008 14,132 3/31/2003 17,884 19,169
8/31/1995 11,027 10,985 6/30/1999 13,970 14,087 4/30/2003 18,055 19,327
9/30/1995 11,137 11,092 7/31/1999 13,964 14,027 5/31/2003 18,287 19,687
10/31/1995 11,296 11,236 8/31/1999 13,919 14,020 6/30/2003 18,264 19,648
11/30/1995 11,466 11,404 9/30/1999 14,026 14,183 7/31/2003 17,884 18,988
12/31/1995 11,569 11,564 10/31/1999 14,015 14,235 8/31/2003 17,959 19,114
1/31/1996 11,629 11,641 11/30/1999 14,049 14,234 9/30/2003 18,327 19,620
2/29/1996 11,467 11,439 12/31/1999 14,012 14,165 10/31/2003 18,268 19,437
3/29/1996 11,414 11,359 1/31/2000 13,920 14,119 11/30/2003 18,391 19,483
4/30/1996 11,346 11,295 2/29/2000 14,054 14,290 12/31/2003 18,596 19,682
5/31/1996 11,319 11,272 3/31/2000 14,193 14,478 1/31/2004 18,740 19,840
6/30/1996 11,468 11,424 4/30/2000 14,117 14,436 2/29/2004 18,943 20,055
7/31/1996 11,490 11,455 5/31/2000 14,064 14,430 3/31/2004 19,075 20,205
8/31/1996 11,524 11,436 6/30/2000 14,312 14,730 4/30/2004 18,660 19,679
9/30/1996 11,693 11,635 7/31/2000 14,390 14,864 5/31/2004 18,601 19,600
10/31/1996 11,909 11,893 8/31/2000 14,612 15,079 6/30/2004 18,706 19,711
11/30/1996 12,148 12,097 9/30/2000 14,741 15,174 7/31/2004 18,857 19,907
12/31/1996 12,061 11,984 10/31/2000 14,775 15,274 8/31/2004 19,205 20,286
1/31/1997 12,084 12,021 11/30/2000 15,048 15,524 9/30/2004 19,307 20,341
2/28/1997 12,124 12,051 12/31/2000 15,308 15,812 10/31/2004 19,379 20,512
3/31/1997 12,008 11,917 1/31/2001 15,477 16,071 11/30/2004 19,225 20,348
4/30/1997 12,211 12,096 2/28/2001 15,769 16,211 12/31/2004 19,431 20,536
5/31/1997 12,319 12,210 3/31/2001 15,780 16,292 1/31/2005 19,542 20,664
6/30/1997 12,477 12,355 4/30/2001 15,584 16,224 2/28/2005 19,480 20,542
7/31/1997 12,847 12,688 5/31/2001 15,712 16,322 3/31/2005 19,382 20,437
8/31/1997 12,730 12,580 6/30/2001 15,868 16,384
The sum of $10,000 invested at inception (12/1/93) and held until 3/31/05 would
have grown to $19,382 in the Fund or $20,437 in the Lehman Aggregate Bond Index
assuming reinvestment of all dividends and capital gains.
- --------------------------------------------------------------------------------
QUALITY RATINGS
(% OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
[PIE CHART]
U.S. Treasury
3.2%
Govt. Agency
Backed
Securities
27.4%
Less Than BBB
7.7%
BBB
10.9%
A
20.8%
AAA
7.7%
Other
Assets
and
Liabilities
22.3%
Lower of Moody's or S&P rating used.
59
- --------------------------------------------------------------------------------
SIT BOND FUND
MARCH 31, 2005
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
U.S. GOVERNMENT SECURITIES (3.2%) (2)
1,050,000 U.S. Treasury Strips, zero coupon,
6.04% effective yield, 11/15/27 344,312
--------------
(cost: $351,906)
ASSET-BACKED SECURITIES (21.7%) (2)
57,392 Bear Stearns Securities, Inc.
Series 2000-1 AF, 7.52%, 3/25/30 58,976
150,000 Chase Funding Mtg. Series 2002-1,
6.595%, 2/25/32 155,932
341,478 Conseco Home Equity Loan Series
2002-A A5, 7.05%, 4/15/32 357,311
157,364 Conseco Mfg. Housing Series,
2002-2 A2, 6.03%, 3/1/33 159,627
Deutsche Financial Capital Securitization:
119,508 Series 1997-I A3, 6.75%, 9/15/27 120,475
57,197 Series 1998-I A3, 6.10%, 4/15/28 56,026
162,959 FMAC Trust Series 1997C, 6.75%, 12/15/19 162,885
Green Tree Financial Corp.:
33,126 1995-5 A6, 7.25%, 9/15/26 33,977
86,065 1997-1 A6, 7.29%, 3/15/28 91,119
172,826 1998-1 A6, 6.33%, 11/1/29 177,191
68,771 1998-3 A6, 6.76%, 3/1/30 71,526
200,000 1999-1 A5, 6.11%, 9/1/23 203,987
214 Green Tree Home Equity Loan Trust
Series 1999-D A5, 7.88%, 9/15/30 214
Indymac Manufactured Housing Contract:
153,640 1998-2 A3, 6.20%, 9/25/17 150,764
115,230 1998-2 A4, 6.64%, 12/25/27 113,607
62,061 Oakwood Mortgage Investors, Inc.
Series 1997-D A4, 6.725%, 2/15/28 62,549
150,000 Origen Mfg. Housing
Series 2001A, 7.08%, 3/15/32 155,082
195,803 UCFC Mfg. Housing Contract
Series1998-2 A3, 6.16%, 8/15/19 197,165
--------------
Total asset-backed securities 2,328,413
(cost: $2,320,013) --------------
COLLATERALIZED MORTGAGE OBLIGATIONS (5.7%) (2)
81,059 Countrywide Home Loans Series 2002-27 A8,
4.00%, 12/25/32 79,657
118,460 FHLMC Series 2647-A, 3.25%, 4/15/32 110,942
210,466 FHLMC Series 2694-BA, 4.00%, 6/15/31 207,314
86,676 FNMA Series 1990 45J, 9.50%, 5/25/20 94,790
118,740 Washington Mutual Series 2002-S8 A7,
5.25%, 1/25/18 119,297
--------------
Total collateralized mortgage obligations 612,000
(cost: $611,387) --------------
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
CORPORATE BONDS & NOTES (18.1%) (2)
100,000 Bank of New York Capital, 7.97%, 12/31/26 109,124
200,000 Barnett Capital (BOA), 8.06%, 12/1/26 216,705
300,000 Citigroup Capital, 8.015%, 2/15/27 330,707
50,000 CSX Transportation, Inc., 9.75%, 6/15/20 70,292
300,000 First Hawaiian Capital Trust, 8.343%, 7/1/27 331,770
200,000 Morton Intl., Inc., 9.25%, 6/1/20 285,715
100,000 Narragansett Electric Co., 7.39%, 10/1/27 109,002
50,000 Prologis Trust, 7.625%, 7/1/17 57,330
100,000 Union Pacific Corp., 7.00%, 2/1/16 113,126
100,000 US Bancorp Capital, 8.27%, 12/15/26 107,429
200,000 Wells Fargo Capital, 7.96%, 12/15/26 218,484
--------------
Total corporate bonds & notes 1,949,684
(cost: $1,898,079) --------------
MORTGAGE PASS-THROUGH SECURITIES (23.5%) (2)(3)
Federal Home Loan Mortgage Corporation:
66,423 3.08%, 5/1/34 65,427
94,417 7.50%, 7/1/29 101,005
89,663 8.00%, 1/1/18 94,431
32,843 8.30%, 7/17/19 35,683
159,077 8.375%, 5/17/20 171,080
88,721 8.50%, 9/1/16 96,576
85,892 9.00%, 3/1/21 93,188
21,886 9.00%, 7/1/22 23,907
13,369 9.00%, 7/1/30 14,797
45,921 9.50%, 8/1/16 51,113
53,904 9.50%, 12/1/22 59,658
38,156 9.50%, 12/1/22 42,112
13,948 10.25%, 9/1/09 14,988
10,191 10.75%, 3/1/11 11,025
Federal National Mortgage Association:
126,260 4.023%, 4/1/33 125,498
57,058 7.50%, 5/1/30 61,269
147,333 7.50%, 6/1/32 158,428
38,615 8.50%, 2/1/25 41,810
86,636 8.50%, 5/1/30 94,540
91,462 9.00%, 1/1/15 100,421
18,577 9.50%, 4/1/25 20,757
51,123 9.75%, 1/15/13 56,009
37,171 10.25%, 8/15/13 41,031
87,942 10.50%, 5/1/19 97,403
35,954 11.00%, 9/1/19 39,554
38,050 11.00%, 11/1/20 41,763
60
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
Government National Mortgage Association:
75,064 7.90%, 8/20/21 80,535
57,951 8.00%, 4/15/17 62,685
92,838 8.50%, 10/15/24 102,266
90,548 8.50%, 11/20/26 98,336
51,431 8.50%, 10/15/24 56,654
48,739 8.75%, 11/15/09 52,445
4,871 9.00%, 10/15/06 5,006
7,838 9.00%, 9/15/08 8,248
6,289 9.00%, 4/15/09 6,672
19,726 9.00%, 4/15/09 20,925
2,356 9.00%, 8/15/11 2,570
39,042 9.00%, 1/15/17 43,388
6,846 9.00%, 8/20/19 7,477
4,696 9.00%, 6/20/21 5,144
7,068 9.00%, 12/20/21 7,742
59,579 9.00%, 2/20/27 65,593
10,685 9.25%, 5/15/10 11,725
3,234 9.50%, 11/15/05 3,283
17,376 9.50%, 2/15/11 19,243
40,523 9.50%, 5/20/16 44,557
3,607 9.50%, 5/20/18 3,987
28,819 9.50%, 7/20/18 31,852
19,640 9.50%, 7/20/18 21,707
423 9.50%, 4/15/20 471
4,356 9.50%, 11/15/21 4,858
--------------
Total mortgage pass-through securities 2,520,842
(cost: $2,498,848) --------------
TAXABLE MUNICIPAL SECURITIES (3.8%) (2)
250,000 Academica Charter Sch. Series 2004,
7.93%, 8/15/19 252,870
19,000 Bernalillo Multifamily. Series 1998A,
7.50%, 9/20/20 20,768
CA Rural HMFA Single Family Mtg. Rev.:
12,000 Series 2003A, 5.25%, 12/1/24 12,011
120,000 Series 2004A, 5.375%, 6/1/29 120,271
--------------
Total taxable municipal securities 405,920
(cost: $401,000) --------------
CLOSED-END MUTUAL FUNDS (1.7%) (2)
15,400 American Strategic Income Portfolio (II) 178,640
--------------
(cost: $194,988)
QUANTITY ($) NAME OF ISSUER MARKET VALUE ($)(1)
SHORT-TERM SECURITIES (17.3%) (2)
198,726 Dreyfus Gov't Cash Mgmt. Fund, 2.56% 198,726
1,656,000 Sit Money Market Fund, 2.26% (6) 1,656,000
--------------
Total short-term securities 1,854,726
(cost: $1,854,726) --------------
Total investments in securities
(cost: $10,130,947) (7) $10,194,537
==============
See accompanying notes to portfolios of investments on page 62. 61
SIT MUTUAL FUNDS
MARCH 31, 2005
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIOS OF INVESTMENTS
(1) Securities are valued by procedures described in note 1 to the
financial statements.
(2) Percentage figures indicate percentage of total net assets.
(3) At March 31, 2005, 4.0% of net assets in the U.S. Government Securities
Fund and 1.3% of net assets in the Bond Fund were invested in GNMA
mobile home pass-through securities.
(4) Securities the income from which is treated as a tax preference that is
included in alternative minimum taxable income for purposes of
computing federal alternative minimum tax (AMT). At March 31, 2005,
12.6% of net assets in the Minnesota Tax-Free Income Fund was invested
in such securities.
(5) Rule 144A Securities, Section 4(2) Commercial Paper, and Municipal
Lease Securities ("Restricted Securities") held by the Funds which have
been determined to be liquid by the Adviser in accordance to guidelines
established by the Board of Directors.
(6) This security represents an investment in an affiliated party. See
notes to the accompanying financial statements.
(7) At March 31, 2005 the cost of securities for federal income tax
purposes and the aggregate gross unrealized appreciation and
depreciation based on that cost were as follows:
U.S.
MONEY GOVERNMENT TAX-FREE
MARKET SECURITIES INCOME
FUND FUND FUND
------------ ------------- -------------
Cost for federal income tax purposes $ 38,238,150 $ 256,435,212 $ 355,933,931
============ ============= =============
Unrealized appreciation (depreciation) on investments:
Gross unrealized appreciation -- $ 3,011,357 $ 4,699,357
Gross unrealized depreciation -- (2,623,936) (10,889,649)
------------ ------------- -------------
Net unrealized appreciation (depreciation) -- $ 387,421 $ (6,190,292)
============ ============= =============
MINNESOTA FLORIDA
TAX-FREE TAX-FREE
INCOME INCOME BOND
FUND FUND FUND
------------ ------------- -------------
Cost for federal income tax purposes $232,000,575 $ 3,064,341 $ 10,130,947
============ ============= =============
Unrealized appreciation (depreciation) on investments:
Gross unrealized appreciation $ 3,393,608 $ 10,178 $ 145,637
Gross unrealized depreciation (3,714,555) (14,229) (82,047)
------------ ------------- -------------
Net unrealized appreciation (depreciation) $ (320,947) $ (4,051) $ 63,590
============ ============= =============
(8) These securities have been identified by the investment adviser as
illiquid securities. The aggregate value of these securities at March
31, 2005, is $8,565,533 and $417,892 in the Tax-Free Income and
Minnesota Tax-Free Income Funds respectively, which represents 2.4% and
0.2% of the Fund's net assets, respectively.
(9) Presently non-income producing securities. Items identified are in
default as to payment of interest.
(10) At March 31, 2005, the total cost of investments purchased on a
when-issued or forward-commitment basis was $716,483 for the Minnesota
Tax-Free Income Fund.
62
This page has been intentionally left blank.
63
SIT MUTUAL FUNDS
MARCH 31, 2005
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
U.S.
MONEY GOVERNMENT TAX-FREE
MARKET SECURITIES INCOME
ASSETS FUND FUND FUND
------------- ------------- -------------
Investments in securities, at
identified cost $ 38,238,150 $ 256,405,319 $ 355,933,931
============= ============= =============
Investments in securities, at
market value - see accompanying
schedules for detail $ 38,238,150 $ 256,822,633 $ 349,743,639
Investments in affiliated mutual funds -- -- --
Cash in bank on demand deposit 93 3,363 --
Accrued interest and dividends receivable -- 1,437,771 5,071,032
Receivable for investment securities sold -- 898,205 766,034
Receivable for principal paydowns -- 315,621 --
Other receivables -- -- --
Receivable for Fund shares sold 2,060 70,756 132,070
------------- ------------- -------------
Total assets 38,240,303 259,548,349 355,712,775
------------- ------------- -------------
LIABILITIES
Disbursements in excess of
cash balances -- -- 14
Payable for investment securities
purchased - when issued (note 1) -- -- --
Payable for investment securities purchased -- -- 448,857
Payable for Fund shares redeemed 7,944 64,994 19,385
Cash portion of dividends
payable to shareholders 74,360 896,910 1,132,532
Other payables -- 2,036 13,049
Accrued investment management
and advisory services fee 17,345 174,735 231,048
------------- ------------- -------------
Total liabilities 99,649 1,138,675 1,844,885
------------- ------------- -------------
Net assets applicable to
outstanding capital stock $ 38,140,654 $ 258,409,674 $ 353,867,890
============= ============= =============
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) $ 38,140,654 $ 261,987,020 $ 389,716,271
Undistributed (distributions in excess of)
net investment income -- -- --
Accumulated net realized gain (loss)
from security transactions -- (3,994,660) (29,658,089)
Unrealized appreciation
(depreciation) on investments -- 417,314 (6,190,292)
------------- ------------- -------------
$ 38,140,654 $ 258,409,674 $ 353,867,890
============= ============= =============
Outstanding shares 38,143,739 24,343,138 36,221,868
============= ============= =============
Net asset value per share of
outstanding capital stock $ 1.00 $ 10.62 $ 9.77
============= ============= =============
64
MINNESOTA FLORIDA
TAX-FREE TAX-FREE
INCOME INCOME BOND
FUND FUND FUND
- ------------- ------------- -------------
$ 232,000,575 $ 3,064,341 $ 10,130,947
============= ============= =============
$ 231,679,628 $ 3,060,290 $ 8,538,537
-- -- 1,656,000
69,785 65,859 --
3,427,855 56,944 70,693
-- -- 536,826
-- -- 2,088
1,955 -- --
20,000 -- --
- ------------- ------------- -------------
235,199,223 3,183,093 10,804,144
- ------------- ------------- -------------
-- -- --
716,483 -- --
308,784 -- --
-- -- 10,304
980,749 8,190 46,163
-- -- 430
158,807 2,145 8,657
- ------------- ------------- -------------
2,164,823 10,335 65,554
- ------------- ------------- -------------
$ 233,034,400 $ 3,172,758 $ 10,738,590
============= ============= =============
$ 241,350,475 $ 3,193,467 $ 10,980,899
-- -- --
(7,995,128) (16,658) (305,899)
(320,947) (4,051) 63,590
- ------------- ------------- -------------
$ 233,034,400 $ 3,172,758 $ 10,738,590
============= ============= =============
23,088,412 319,229 1,103,055
============= ============= =============
$ 10.09 $ 9.94 $ 9.74
============= ============= =============
See accompanying notes to financial statements on pages 70 - 74. 65
SIT MUTUAL FUNDS
ONE YEAR ENDED MARCH 31, 2005
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
U.S.
MONEY GOVERNMENT TAX-FREE
MARKET SECURITIES INCOME
FUND FUND FUND
------------ ------------ ------------
Investment income:
INCOME:
Interest $ 760,780 $ 11,470,766 $ 15,723,197
------------ ------------ ------------
Total income 760,780 11,470,766 15,723,197
------------ ------------ ------------
EXPENSES (NOTE 3):
Investment management and
advisory services fee 353,875 2,232,557 2,729,806
Less fees and expenses absorbed
by investment adviser (132,661) (100,000) (91,226)
------------ ------------ ------------
Total net expenses 221,214 2,132,557 2,638,580
------------ ------------ ------------
Net investment income 539,566 9,338,209 13,084,617
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS :
Net realized gain (loss) -- 445,411 167,720
Net change in unrealized appreciation
(or depreciation) on investments -- (5,039,411) (4,863,575)
------------ ------------ ------------
Net gain (loss) on investments -- (4,594,000) (4,695,855)
------------ ------------ ------------
Net increase (decrease) in net assets resulting
from operations $ 539,566 $ 4,744,209 $ 8,388,762
============ ============ ============
66
MINNESOTA FLORIDA
TAX-FREE TAX-FREE
INCOME INCOME BOND
FUND FUND FUND
- ------------ ------------ ------------
$ 11,351,534 $ 109,655 $ 821,268
- ------------ ------------ ------------
11,351,534 109,655 821,268
- ------------ ------------ ------------
1,768,405 23,500 114,530
-- -- --
- ------------ ------------ ------------
1,768,405 23,500 114,530
- ------------ ------------ ------------
9,583,129 86,155 706,738
- ------------ ------------ ------------
(866,459) (16,907) 3,285
(2,863,486) (12,025) (480,198)
- ------------ ------------ ------------
(3,729,945) (28,932) (476,913)
- ------------ ------------ ------------
$ 5,853,184 $ 57,223 $ 229,825
============ ============ ============
See accompanying notes to financial statements on pages 70 - 74. 67
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
MONEY MARKET U.S. GOVERNMENT
FUND SECURITIES FUND
----------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2005 2004 2005 2004
------------- ------------- ------------- -------------
OPERATIONS:
Net investment income $ 539,566 $ 364,564 $ 9,338,209 $ 8,386,081
Net realized gain (loss) on investments -- -- 445,411 (1,912,803)
Net change in unrealized appreciation
(depreciation) of investments -- -- (5,039,411) (443,196)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from operations 539,566 364,564 4,744,209 6,030,082
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (539,566) (364,564) (9,338,209) (8,386,081)
Net realized gains on investments -- -- -- --
------------- ------------- ------------- -------------
Total distributions (539,566) (364,564) (9,338,209) (8,386,081)
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 200,038,917 293,752,413 79,941,811 138,253,374
Reinvested distributions 370,743 253,263 8,604,289 7,544,075
Payments for shares redeemed (206,878,981) (323,238,848) (112,984,057) (264,839,538)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from
capital share transactions (6,469,321) (29,233,172) (24,437,957) (119,042,089)
------------- ------------- ------------- -------------
Total increase (decrease) in net assets (6,469,321) (29,233,172) (29,031,957) (121,398,088)
NET ASSETS
Beginning of period 44,609,975 73,843,147 287,441,631 408,839,719
------------- ------------- ------------- -------------
End of period $ 38,140,654 $ 44,609,975 $ 258,409,674 $ 287,441,631
============= ============= ============= =============
CAPITAL TRANSACTIONS IN SHARES:
Sold 200,038,917 293,752,412 7,477,550 12,864,871
Reinvested distributions 370,743 253,263 803,437 702,008
Redeemed (206,878,981) (323,238,848) (10,566,532) (24,694,458)
------------- ------------- ------------- -------------
Net increase (decrease) (6,469,321) (29,233,173) (2,285,545) (11,127,579)
============= ============= ============= =============
68
TAX-FREE MINNESOTA TAX-FREE FLORIDA TAX-FREE BOND
INCOME FUND INCOME FUND INCOME FUND FUND
- ----------------------------- ----------------------------- ----------------------------- -----------------------------
THREE MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2005 2004 2005 2004 2005 2004 2005 2004
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
$ 13,084,617 $ 16,074,659 $ 9,583,129 $ 9,619,328 $ 86,155 13,678 $ 706,738 $ 817,160
167,720 (5,180,250) (866,459) (566,405) (16,907) 249 3,285 106,213
(4,863,575) 3,234,491 (2,863,486) 1,430,127 (12,025) 7,974 (480,198) 177,221
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
8,388,762 14,128,900 5,853,184 10,483,050 57,223 21,901 229,825 1,100,594
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
(13,084,617) (16,074,659) (9,583,129) (9,619,328) (86,155) (13,678) (706,738) (817,160)
-- -- -- -- -- -- -- --
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
(13,084,617) (16,074,659) (9,583,129) (9,619,328) (86,155) (13,678) (706,738) (817,160)
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
87,033,580 78,962,625 76,385,175 61,673,832 908,356 2,632,125 3,327,554 4,564,417
11,151,316 13,966,051 7,518,703 7,727,688 83,963 7,425 701,387 801,760
(91,902,209) (153,120,558) (64,912,684) (71,860,224) (438,402) -- (7,736,886) (10,423,529)
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
6,282,687 (60,191,882) 18,991,194 (2,458,704) 553,917 2,639,550 (3,707,945) (5,057,352)
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
1,586,832 (62,137,641) 15,261,249 (1,594,982) 524,985 2,647,773 (4,184,858) (4,773,918)
352,281,058 414,418,699 217,773,151 219,368,133 2,647,773 -- 14,923,448 19,697,366
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
$ 353,867,890 $ 352,281,058 $ 233,034,400 $ 217,773,151 $ 3,172,758 $ 2,647,773 $ 10,738,590 $ 14,923,448
============= ============= ============= ============= ============= ============= ============= =============
8,870,281 8,012,221 7,547,028 6,042,923 91,158 262,821 338,016 460,510
1,136,292 1,414,778 743,012 757,985 8,422 739 71,100 80,921
(9,369,595) (15,522,405) (6,424,729) (7,049,298) (43,911) -- (788,241) (1,051,186)
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
636,978 (6,095,406) 1,865,311 (248,390) 55,669 $ 263,560 (379,125) (509,755)
============= ============= ============= ============= ============= ============= ============= =============
See accompanying notes to financial statements on pages 70 - 74. 69
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Sit Mutual Funds (the Funds) are 100% no-load funds, and are
registered under the Investment Company Act of 1940 (as amended) as
diversified (except Minnesota and Florida Tax-Free Income Funds which
are non-diversified), open-end management investment companies, or
series thereof. The Sit Bond Fund, Sit Minnesota Tax-Free Income Fund,
and the Sit Tax-Free Income Fund are series funds of Sit Mutual Funds
II, Inc. The Sit Florida Tax-Free Income Fund is a series fund of Sit
Mutual Funds Trust. Each fund has 10 billion authorized shares of
capital stock. Shares in the U.S. Government Securities Fund have a par
value of $0.01, and shares in other funds have a par value of $0.001.
This report covers the bond funds of the Sit Mutual Funds. The
investment objective for each Fund is as follows:
----------------------------------------------------------------------------------------------
FUND INVESTMENT OBJECTIVES
----------------------------------------------------------------------------------------------
Money Market Maximum current income with the preservation of capital and maintenance
of liquidity.
----------------------------------------------------------------------------------------------
U.S. Government High level of current income and safety of principal.
Securities
----------------------------------------------------------------------------------------------
Tax-Free Income High level of current income that is exempt from federal income tax,
consistent with the preservation of capital.
----------------------------------------------------------------------------------------------
Minnesota High level of current income that is exempt from federal reglar income tax
Tax-Free Income and Minnesota regular personal income tax, consistent with the preserva-
tion of capital.
----------------------------------------------------------------------------------------------
Florida High level of current income that is exempt from federal regular income
Tax-Free Income tax by investing in securities that are exempt from the Florida intangibles
tax.
----------------------------------------------------------------------------------------------
Bond Maximize total return, consistent with the preservation of capital.
----------------------------------------------------------------------------------------------
Significant accounting policies followed by the Funds are summarized
below:
INVESTMENTS IN SECURITIES
Securities maturing more than 60 days from the valuation date, with the
exception of those in Money Market Fund, are valued at the market price
supplied by an independent pricing vendor based on current interest
rates; those securities with maturities of less than 60 days when
acquired, or which subsequently are within 60 days of maturity, are
valued at amortized cost, which approximates market value. When market
quotations are not readily available, securities are valued at fair
value based on procedures determined in good faith by the Boards of
Directors. Pursuant to Rule 2a-7 of the Investment Company Act of 1940,
all securities in the Money Market Fund are valued at amortized cost,
which approximates market value, in order to maintain a constant net
asset value of $1 per share.
Security transactions are accounted for on the date the securities are
purchased or sold. Gains and losses are calculated on the
identified-cost basis. Interest, including level-yield amortization of
long-term bond premium and discount, is recorded on the accrual basis.
Dividends received from closed-end fund holdings are included in
Interest Income and are generated from the underlying investments.
70
Delivery and payment for securities which have been purchased by the
Funds on a forward commitment or when-issued basis can take place two
weeks or more after the transaction date. During this period, such
securities are subject to market fluctuations and may increase or
decrease in value prior to delivery, and the Funds maintain segregated
assets with a market value greater than the amount of their purchase
commitments. As of March 31, 2005, the Minnesota Tax-Free Income Fund
had entered into when-issued or forward commitments of $716,483.
The Minnesota Tax-Free Income Fund concentrates its investments in
Minnesota, and therefore may have more credit risk related to the
economic conditions in the state of Minnesota than a portfolio with
broader geographical diversification.
The Florida Tax-Free Income Fund concentrates its investments in
Florida, and therefore may have more credit risk related to the
economic conditions in the state of Florida than a portfolio with
broader geographical diversification.
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 its taxable income to shareholders. Therefore, no
income tax provision is required. Also, in order to avoid the payment
of any federal excise taxes, the Funds will distribute substantially
all of their net investment income and net realized gains on a calendar
year basis.
As a result of "wash sales", the book cost of securities in the U.S.
Government Securities Fund on March 31, 2005, was $29,893 less than the
cost of securities on a tax basis.
Net investment income and net realized gains may differ for financial
statement and tax purposes. The character of distributions made during
the year for net investment income or net realized gains may also
differ from its ultimate characterization for tax purposes. The tax
character of distributions paid during the fiscal years ended March 31,
was as follows:
YEAR ENDED MARCH 31, 2005:
Ordinary Income Long Term Capital Gain Total
--------------- ---------------------- -----
Money Market $539,566 -- $539,566
U.S. Government Securities $9,338,209 -- $9,338,209
Tax-Free Income (*) $13,084,617 -- $13,084,617
MN Tax-Free Income (*) $9,583,129 -- $9,583,129
FL Tax-Free Income (*) $86,155 -- $86,155
Bond $706,738 -- $706,738
(*) 100% of dividends were derived from interest on tax-exempt securities.
71
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED MARCH 31, 2004:
Ordinary Income Long Term Capital Gain Total
--------------- ---------------------- -----
Money Market $364,564 -- $364,564
U.S. Government Securities $8,386,081 -- $8,386,081
Tax-Free Income (*) $16,074,659 -- $16,074,659
MN Tax-Free Income (*) $9,619,328 -- $9,619,328
FL Tax-Free Income (*) $13,678 -- $13,678
Bond $817,160 -- $817,160
(*) 100% of dividends were derived from interest on tax-exempt securities.
As of March 31, 2005, the components of distributable earnings on a tax
basis were as follows:
Unrealized
Undistributed Accumulated Appreciation
Ordinary Income Gain (Loss) (Depreciation)
--------------- ----------- --------------
Money Market $74,360 -- --
U.S. Government Securities 896,910 ($3,964,767) $387,421
Tax-Free Income 1,132,532 (29,658,089) (6,190,292)
MN Tax-Free Income 980,749 (7,995,128) (320,947)
FL Tax-Free Income 8,190 (16,907) (4,051)
Bond 46,163 (305,899) 63,590
As of March 31, 2005, for federal income tax purposes, some Funds have
capital loss carryovers which, if not offset by subsequent gains will
begin to expire as follows:
Loss Carryover Expiration Year
-------------- ---------------
U.S. Government Securities $3,964,767 2007
Tax-Free Income $29,658,089 2008
MN Tax-Free Income $7,995,128 2008
Bond $305,899 2008
FL Tax-Free Income $16,907 2013
DISTRIBUTIONS
Distributions to shareholders are recorded as of the close of business
on the record date. Such distributions are payable in cash or
reinvested in additional shares of the Funds' capital stock.
Distributions from net investment income are declared daily and paid
monthly for the Funds. Distributions from net realized gains, if any,
will be made annually for each of the Funds.
72
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported results. Actual results could differ from those estimates.
(2) INVESTMENT SECURITY TRANSACTIONS
Purchases of and proceeds from sales and maturities of investment
securities, other than short-term securities, for the period ended
March 31, 2005, were as follows:
Purchases ($) Proceeds ($)
------------- ------------
U.S. Government Securities Fund 326,225,496 351,121,138
Tax-Free Income Fund 273,353,547 266,727,181
Minnesota Tax-Free Income Fund 191,675,644 174,661,282
Florida Tax-Free Income Fund 1,457,512 939,828
Bond Fund 18,584,097 22,705,340
For the Money Market Fund during the period ended March 31, 2005
purchases of and proceeds from sales and maturities of investment
securities aggregated $1,000,042,947 and $1,007,301,344, respectively.
(3) EXPENSES
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. SIA also is obligated to pay all of the Funds' expenses
(excluding extraordinary expenses, stock transfer taxes, interest,
brokerage commissions, and other transaction charges relating to
investing activities). The fee for investment management and advisory
services is based on the average daily net assets of the Funds at the
annual rate of:
Average Daily
Net Assets
-------------
Bond Fund .80%
Tax-Free Income Fund .80%
Minnesota Tax-Free Income Fund .80%
Florida Tax-Free Income Fund .80%
First Over
$50 Million $50 Million
----------- -----------
Money Market Fund .80% .60%
U.S. Government Securities Fund 1.00% .80%
For the period October 1, 1993, through December 31, 2005, the Adviser
has voluntarily agreed to limit the flat monthly fee (and, thereby, all
Fund expenses, except extraordinary expenses, interest, brokerage
commissions and other transaction charges not payable by the Adviser)
paid by the Tax-Free Income Fund to an annual rate
73
of .70% of the Fund's average daily net assets in excess of $250
million and .60% of the Fund's average daily net assets in excess of
$500 million. After December 31, 2005, this voluntary fee waiver may be
discontinued by the Adviser in its sole discretion.
For the period October 1, 1993, through December 31, 2005, the Adviser
has voluntarily agreed to limit the flat monthly fee (and, thereby, all
Fund expenses, except extraordinary expenses, interest, brokerage
commissions and other transaction charges not payable by the Adviser)
paid by the U.S. Government Securities Fund and Money Market Fund to an
annual rate of .80% and .50%, respectively of the Fund's average daily
net assets. After December 31, 2005, this voluntary fee waiver may be
discontinued by the Adviser in its sole discretion.
As of March 31, 2005, the Bond Fund had invested $1,656,000 in the Sit
Money Market Fund. The terms of such transactions were identical to
those of non-related entities except that, to avoid duplicate
investment advisory fees, SIA remits to the Fund an amount equal to all
fees otherwise due to them under its investment management agreement
for the assets invested in the Sit Money Market Fund.
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
March 31, 2005:
% Shares
Shares Outstanding
------ -----------
Money Market Fund 17,571,128 46.1(*)
U.S. Government Securities Fund 771,808 3.2
Tax-Free Income Fund 2,164,008 6.0
Minnesota Tax-Free Income Fund 1,393,145 6.0
Florida Tax-Free Income Fund 239,448 75.0
Bond Fund 127,681 11.6
(*)19.2% of shares owned by other Sit Mutual Funds.
(4) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock outstanding during the
period and selected supplemental and ratio information for each
period(s), are indicated on pages 75 through 80.
(5) NOTICE TO SHAREHOLDERS
The Sit Bond Fund ("Bond Fund"), a series of Sit Mutual Funds II, Inc.,
was dissolved and liquidated pursuant to a Plan of Dissolution and
Liquidation approved by the shareholders of the Bond Fund at a special
meeting of shareholders held on April 28, 2005.
Proceeds from the Bond Fund dissolution and liquidation were
distributed on April 29, 2005 in the following manners. Intermediaries
were paid via wire transfer. Direct Bond Fund shareholders with regular
accounts were paid by check. Bond Fund proceeds from direct
shareholders' IRA accounts were exchanged into the Sit Money Market
Fund.
74
SIT MONEY MARKET FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Years Ended March 31,
-------------------------------------------------------------------------------
2005 2004 2003 2002 2001
===================================================================================================================================
NET ASSET VALUE:
Beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income 0.01 0.01 0.01 0.03 0.06
- -----------------------------------------------------------------------------------------------------------------------------------
Total from operations 0.01 0.01 0.01 0.03 0.06
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.01) (0.01) (0.01) (0.03) (0.06)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE:
End of period $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total investment return (1) 1.24% 0.60% 1.13% 2.63% 6.00%
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000's omitted) $38,141 $44,610 $73,843 $93,785 $110,505
RATIOS:
Expenses to average daily net assets 0.50% (2) 0.50% (2) 0.50% (2) 0.50% (2) 0.50% (2)
Net investment income to average daily net assets 1.22% (2) 0.60% (2) 1.14% (2) 2.65% (2) 5.88% (2)
- ---------
(1) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
(2) Total Fund expenses are contractually limited to .80% of average daily net
assets for the first $50 million in Fund net assets and .60% of average
daily net assets for Fund net assets exceeding $50 million. However, during
the years ended March 31, 2005, 2004, 2003, 2002, and 2001, the investment
adviser voluntarily absorbed expenses that were otherwise payable by the
Fund. Had the Fund incurred these expenses, the ratio of expenses to
average daily net assets would have been .80%, .76%, .74%, .70%, and .67%
for each of these periods and the ratio of net investment income to average
daily net assets would have been .92%, .34%, .90%, 2.45%, and 5.71%,
respectively.
75
SIT U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Years Ended March 31,
-----------------------------------------------------------------------------
2005 2004 2003 2002 2001
===================================================================================================================================
NET ASSET VALUE:
Beginning of period $10.79 $10.83 $10.69 $10.59 $10.22
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income .38 .27 .45 .58 .65
Net realized and unrealized gains
(losses) on investments (.17) (.04) .14 .10 .37
- -----------------------------------------------------------------------------------------------------------------------------------
Total from operations .21 .23 .59 .68 1.02
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (.38) (.27) (.45) (.58) (.65)
From realized gains -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.38) (.27) (.45) (.58) (.65)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE:
End of period $10.62 $10.79 $10.83 $10.69 $10.59
- -----------------------------------------------------------------------------------------------------------------------------------
Total investment return (1) 1.93% 2.19% 5.60% 6.53% 10.34%
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000's omitted) $258,410 $287,442 $408,840 $211,947 $154,356
RATIOS:
Expenses to average daily net assets 0.80% (2) 0.80% (2) 0.80% (2) 0.80% (2) 0.80% (2)
Net investment income to average daily net assets 3.51% (2) 2.48% (2) 3.98% (2) 5.40% (2) 6.30% (2)
Portfolio turnover rate (excluding short-term securities) 36.64% 61.99% 77.06% 54.69% 55.53%
- ---------
(1) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
(2) Total Fund expenses are contractually limited to 1.00% of average daily net
assets for the first $50 million in Fund net assets and .80% of average
daily net assets for Fund net assets exceeding $50 million. However, during
the years ended March 31, 2005, 2004, 2003, 2002, and 2001 the investment
adviser voluntarily absorbed expenses that were otherwise payable by the
Fund. Had the Fund incurred these expenses, the ratio of expenses to
average daily net assets would have been .84%, .83%, .83%, .85%, and .87%
for each of these periods and the ratio of net investment income to average
daily net assets would have been 3.47%, 2.45%, 3.95%, 5.35%, and 6.23%,
respectively.
76
SIT TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Years Ended March 31,
------------------------------------------------------------------------------
2005 2004 2003 2002 2001
====================================================================================================================================
NET ASSET VALUE:
Beginning of period $9.90 $9.94 $9.82 $9.90 $9.57
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income .38 .42 .45 .48 .51
Net realized and unrealized gains
(losses) on investments (.13) (.04) .12 (.08) .33
- ------------------------------------------------------------------------------------------------------------------------------------
Total from operations .25 .38 .57 .40 .84
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (.38) (.42) (.45) (.48) (.51)
From realized gains -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.38) (.42) (.45) (.48) (.51)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE:
End of period $9.77 $9.90 $9.94 $9.82 $9.90
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return (1) 2.54% 3.89% 5.90% 4.05% 9.02%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000's omitted) $353,868 $352,281 $414,419 $440,431 $502,184
RATIOS:
Expenses to average daily net assets 0.77% (2) 0.76% (2) 0.76% (2) 0.75% (2) 0.74% (2)
Net investment income to average daily net assets 3.84% (2) 4.23% (2) 4.53% (2) 4.79% (2) 5.27% (2)
Portfolio turnover rate (excluding short-term securities) 41.29% 32.33% 37.98% 40.02% 12.14%
- ---------
(1) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
(2) Total Fund expenses are contractually limited to .80% of average daily net
assets. However, during the years ended March 31, 2005, 2004, 2003, 2002,
and 2001, the investment adviser voluntarily absorbed expenses that were
otherwise payable by the Fund. Had the Fund incurred these expenses, the
ratio of expenses to average daily net assets would have been .80% for
these periods, and the ratio of net investment income to average daily net
assets would have been 3.81%, 4.19%, 4.49%, 4.74%, and 5.21%, respectively.
77
SIT MINNESOTA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Years Ended March 31,
------------------------------------------------------------------------------
2005 2004 2003 2002 2001
====================================================================================================================================
NET ASSET VALUE:
Beginning of period $10.26 $10.22 $9.99 $10.01 $9.73
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income .44 .46 .47 .49 .52
Net realized and unrealized gains
(losses) on investments (.17) .04 .23 (.02) .28
- ------------------------------------------------------------------------------------------------------------------------------------
Total from operations .27 .50 .70 .47 .80
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (.44) (.46) (.47) (.49) (.52)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE:
End of period $10.09 $10.26 $10.22 $9.99 $10.01
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return (1) 2.69% 4.99% 7.14% 4.74% 8.43%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000's omitted) $233,034 $217,773 $219,368 $195,275 $181,182
RATIOS:
Expenses to average daily net assets 0.80% 0.80% 0.80% 0.80% 0.80%
Net investment income to average daily net assets 4.33% 4.47% 4.62% 4.87% 5.27%
Portfolio turnover rate (excluding short-term securities) 29.33% 27.31% 19.51% 23.81% 14.59%
- ---------
(1) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
78
SIT FLORIDA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Year Three months
Ended Ended
March 31, March 31,
2005 2004
===============================================================================================
NET ASSET VALUE:
Beginning of period $10.05 $10.00
- -----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income .29 .06
Net realized and unrealized gains
(losses) on investments (.11) .05
- -----------------------------------------------------------------------------------------------
Total from operations .18 .11
- -----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (.29) (.06)
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE:
End of period $9.94 $10.05
- -----------------------------------------------------------------------------------------------
Total investment return (1) 1.84% 1.08%
- -----------------------------------------------------------------------------------------------
Net assets at end of period (000's omitted) $3,173 $2,648
RATIOS:
Expenses to average daily net assets 0.80% 0.80% (2)
Net investment income to average daily net assets 2.93% 2.49% (2)
Portfolio turnover rate (excluding short-term securities) 29.52% 3.45%
- ---------
(1) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
(2) Adjusted to an annual rate.
79
SIT BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Years Ended March 31,
------------------------------------------------------------------------------
2005 2004 2003 2002 2001
====================================================================================================================================
NET ASSET VALUE:
Beginning of period $10.07 $9.89 $9.68 $9.80 $9.43
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income .49 .46 .53 .62 .64
Net realized and unrealized gains
(losses) on investments (.33) .18 .21 (.12) .37
- ------------------------------------------------------------------------------------------------------------------------------------
Total from operations .16 .64 .74 .50 1.01
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (.49) (.46) (.53) (.62) (.64)
From realized gains -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.49) (.46) (.53) (.62) (.64)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE:
End of period $9.74 $10.07 $9.89 $9.68 $9.80
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return (1) 1.61% 6.66% 7.74% 5.18% 11.18%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000's omitted) $10,739 $14,923 $19,697 $14,737 $13,281
RATIOS:
Expenses to average daily net assets 0.80% 0.80% 0.80% 0.80% 0.80%
Net investment income to average daily net assets 4.94% 4.64% 5.30% 6.34% 6.79%
Portfolio turnover rate (excluding short-term securities) 46.20% 70.43% 76.19% 91.23% 89.65%
- ---------
(1) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
80
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
Sit Money Market Fund, Inc.
Sit U.S. Government Securities Fund, Inc.
Sit Mutual Funds II, Inc.
Sit Mutual Funds Trust:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Sit Money Market Fund, Inc., Sit U.S.
Government Securities Fund, Inc., Sit Bond Fund (a series of Sit Mutual Funds
II, Inc.), Sit Tax-Free Income Fund (a series of Sit Mutual Funds II, Inc.), Sit
Minnesota Tax-Free Income Fund (a series of Sit Mutual Funds II, Inc.), and Sit
Florida Tax-Free Income Fund (a series of Sit Mutual Funds Trust) (the "Funds"),
as of March 31, 2005, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years or
periods then ended; and the financial highlights for each of the five years or
periods then ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of March 31, 2005, by correspondence with the custodian or
by other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Sit
Money Market Fund, Sit U.S. Government Securities Fund, Sit Bond Fund, Sit
Tax-Free Income Fund, Sit Minnesota Tax-Free Income Fund, and Sit Florida
Tax-Free Income Fund as of March 31, 2005, and the results of their operations
for the year then ended, the changes in their net assets for each of the two
years or periods then ended, and their financial highlights for each of the five
years or periods then ended, in conformity with accounting principles generally
accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
May 17, 2005
81
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
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 October 1, 2004 to March 31, 2005.
ACTUAL EXPENSES
The first line of the table below 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 below 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.
Beginning Ending Expenses Paid
MONEY MARKET FUND Account Value Account Value During Period*
(10/1/04) (3/31/05) (10/1/04 - 3/31/05)
- --------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,008.70 $2.49
- --------------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,022.50 $2.51
(5% return before expenses)
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.50%, multiplied
by the average account value over the period, multiplied by 181/365 (to
reflect the one-half year period).
82
Beginning Ending Expenses Paid
U.S. GOVERNMENT Account Value Account Value During Period*
SECURITIES FUND (10/1/04) (3/31/05) (10/1/04 - 3/31/05)
- --------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,006.40 $3.98
- --------------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,021.00 $4.01
(5% return before expenses)
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.80%, multiplied
by the average account value over the period, multiplied by 181/365 (to
reflect the one-half year period.)
Beginning Ending Expenses Paid
TAX-FREE INCOME FUND Account Value Account Value During Period*
(10/1/04) (3/31/05) (10/1/04 - 3/31/05)
- --------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,010.40 $3.84
- --------------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,021.15 $3.86
(5% return before expenses)
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.77%, multiplied
by the average account value over the period, multiplied by 181/365 (to
reflect the one-half year period.)
Beginning Ending Expenses Paid
MINNESOTA TAX-FREE Account Value Account Value During Period*
INCOME FUND (10/1/04) (3/31/05) (10/1/04 - 3/31/05)
- --------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,019.60 $4.01
- --------------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,021.00 $4.01
(5% return before expenses)
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.80%, multiplied
by the average account value over the period, multiplied by 181/365 (to
reflect the one-half year period.)
83
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE (CONTINUED)
Beginning Ending Expenses Paid
FLORIDA TAX-FREE Account Value Account Value During Period*
INCOME FUND (10/1/04) (3/31/05) (10/1/04 - 3/31/05)
- --------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,011.80 $3.99
- --------------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,021.00 $4.01
(5% return before expenses)
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.80%, multiplied
by the average account value over the period, multiplied by 181/365 (to
reflect the one-half year period.)
Beginning Ending Expenses Paid
BOND FUND Account Value Account Value During Period*
(10/1/04) (3/31/05) (10/1/04 - 3/31/05)
- --------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,003.90 $3.97
- --------------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,021.00 $4.01
(5% return before expenses)
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.80%, multiplied
by the average account value over the period, multiplied by 181/365 (to
reflect the one-half year period.)
84
This page has been intentionally left blank.
85
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION (UNAUDITED)
We are required by Federal tax regulations to provide shareholders with certain
information regarding dividend distributions on an annual fiscal year basis. The
figures are for information purposes only and should not be used for reporting
to federal or state revenue agencies. All necessary tax information will be
mailed in January each year.
LONG-TERM LONG-TERM
ORDINARY CAPITAL ORDINARY CAPITAL
FUND AND PAYABLE DATE INCOME (a) GAIN (b) FUND AND PAYABLE DATE INCOME (a) GAIN (b)
- ---------------------------- ------------- ------------- ---------------------------------- ------------- -------------
Money Market Fund U.S. Government Securities Fund
April 30, 2004 $0.00043 $ -- April 30, 2004 $0.03050 $ --
May 31, 2004 0.00043 -- May 31, 2004 0.02474 --
June 30, 2004 0.00054 -- June 30, 2004 0.03199 --
July 31, 2004 0.00062 -- July 31, 2004 0.02348 --
August 31, 2004 0.00082 -- August 31, 2004 0.03412 --
September 30, 2004 0.00089 -- September 30, 2004 0.03152 --
October 31, 2004 0.00100 -- October 31, 2004 0.02855 --
November 30, 2004 0.00126 -- November 30, 2004 0.03690 --
December 31, 2004 0.00143 -- December 31, 2004 0.02969 --
January 31, 2005 0.00156 -- January 31, 2005 0.03284 --
February 28, 2005 0.00153 -- February 28, 2005 0.03385 --
March 31, 2005 0.00183 -- March 31, 2005 0.03707 --
------------- ------------- ------------- -------------
$0.01235 (c) $0.00000 $0.37526 (c) $0.00000
============= ============= ============= =============
Bond Fund Tax-Free Income Fund
April 30, 2004 $0.04081 $ -- April 30, 2004 $0.03172 $ --
May 31, 2004 0.03912 -- May 31, 2004 0.02923 --
June 30, 2004 0.04472 -- June 30, 2004 0.03301 --
July 31, 2004 0.03913 -- July 31, 2004 0.03135 --
August 31, 2004 0.04032 -- August 31, 2004 0.03365 --
September 30, 2004 0.04289 -- September 30, 2004 0.03530 --
October 31, 2004 0.03722 -- October 31, 2004 0.03001 --
November 30, 2004 0.04090 -- November 30, 2004 0.03210 --
December 31, 2004 0.04503 -- December 31, 2004 0.02938 --
January 31, 2005 0.03645 -- January 31, 2005 0.03137 --
February 28, 2005 0.03881 -- February 28, 2005 0.02774 --
March 31, 2005 0.04020 -- March 31, 2005 0.03142 --
------------- ------------- ------------- -------------
$0.48561 (c) $0.00000 $0.37627 (d) $0.00000
============= ============= ============= =============
86
LONG-TERM LONG-TERM
ORDINARY CAPITAL ORDINARY CAPITAL
FUND AND PAYABLE DATE INCOME (a) GAIN (b) FUND AND PAYABLE DATE INCOME (a) GAIN (b)
- ---------------------------- ------------- ------------- ---------------------------------- ------------- -------------
Minnesota Tax-Free Income Fund Florida Tax-Free Income Fund
April 30, 2004 0.03574 -- April 30, 2004 $0.02211 $ --
May 31, 2004 0.03356 -- May 31, 2004 0.02039 --
June 30, 2004 0.04043 -- June 30, 2004 0.02580 --
July 31, 2004 0.03689 -- July 31, 2004 0.02456 --
August 31, 2004 0.03842 -- August 31, 2004 0.02615 --
September 30, 2004 0.03563 -- September 30, 2004 0.02518 --
October 31, 2004 0.03375 -- October 31, 2004 0.02256 --
November 30, 2004 0.03702 -- November 30, 2004 0.02339 --
December 31, 2004 0.03591 -- December 31, 2004 0.02599 --
January 31, 2005 0.03600 -- January 31, 2005 0.02592 --
February 28, 2005 0.03224 -- February 28, 2005 0.02357 --
March 31, 2005 0.04247 -- March 31, 2005 0.02589 --
------------- ------------- ------------- -------------
$0.43809 (d) $0.00000 $0.29150 (d) $0.00000
============= ============= ============= =============
(a) Includes distributions of short-term gains, if any, which are taxable as
ordinary income.
(b) Taxable as long-term gain.
(c) Taxable as dividend income and does not qualify for deduction by
corporations or reduced dividend income tax rate for individuals.
(d) 100% of dividends were derived from interest on tax-exempt securities. This
portion of exempt-interest dividends is exempt from federal taxes and
should not be included in shareholders' gross income. Exempt-interest
dividends may be subject to state and local taxes. Each shareholder should
consult a tax adviser about reporting this income for state and local tax
purposes.
87
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
INFORMATION ABOUT DIRECTORS AND OFFICERS
The Sit Mutual Funds are a family of 14 no-load mutual funds. The six Bond Funds
described in this Bond Funds Annual Report are the Sit Money Market Fund, Sit
U.S. Government Securities Fund, Sit Tax-Free Income Fund, Sit Minnesota
Tax-Free Income Fund, Sit Florida Tax-Free Income Fund, and the Sit Bond Fund
(the "Funds" or individually, a "Fund"). The eight stock funds within the Sit
Mutual Fund family are described in a Stock Funds Statement of Additional
Information (SAI). The Sit Money Market Fund, Sit U.S. Government Securities
Fund, the corporate issuer of the Sit Florida Tax-Free Income Fund and the
corporate issuer of the Sit Bond Fund, Sit Tax-Free Income Fund and the Sit
Minnesota Tax-Free Income Fund have a Board of Directors and officers. Pursuant
to Minnesota law, the Boards of Directors are responsible for the management of
the Funds and the establishment of the Funds' policies. The officers of the
Funds manage the day-to-day operation of the Funds. Information pertaining to
the directors and officers of the Funds is set forth below. The business
address, unless otherwise noted below, is that of the Funds' investment adviser
- - 3300 IDS Center, 80 South Eighth Street, Minneapolis, Minnesota 55402. The
Boards have a separate Audit Committee. The Bond Funds' SAI has additional
information about the fund's directors and is available without charge upon
request by calling the Sit Funds at 800-332-5580.
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF
FUNDS IN OTHER
POSITION TERM OF OFFICE(1) FUND COMPLEX DIRECTORSHIPS
HELD WITH AND LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY HELD BY
NAME, ADDRESS AND AGE THE FUNDS TIME SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR(4)
- ---------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTORS:
- ---------------------------------------------------------------------------------------------------------------------
Eugene C. Sit (2) Director and Director since Chairman, CEO and CIO 14 Corning
Age: 66 Chairman inception. of Sit Investment Incorporated;
Associates, Inc. (the Smurfit
"Adviser") and Sit/Kim Stone
International Container
Investment Associates, Corporation
Inc. ("Sit/ Kim");
Director of SIA
Securities Corp. (the
"Distributor"), and
Chairman and CEO of
Sit Investment Fixed
Income Advisors, Inc.
("SF").
- ---------------------------------------------------------------------------------------------------------------------
William E. Frenzel (2) Director Director since 1991 Guest Scholar at The 14 None.
Age: 76 or the Fund's Brookings Institution
inception if later. and member of several
government policy
committees,
foundations and
organizations;
Director of the
Adviser; Director of
Sit/Kim and SF.
- ---------------------------------------------------------------------------------------------------------------------
88
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF
FUNDS IN OTHER
POSITION TERM OF OFFICE(1) FUND COMPLEX DIRECTORSHIPS
HELD WITH AND LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY HELD BY
NAME, ADDRESS AND AGE THE FUNDS TIME SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR(4)
- ---------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS:
- ---------------------------------------------------------------------------------------------------------------------
John E. Hulse Director Director since Trustee, Pacific Gas & 14 None.
Age: 71 1995. Electric Nuclear
Decommissioning Master
Trust.
- ---------------------------------------------------------------------------------------------------------------------
Sidney L. Jones Director Director from 1988 Lecturer, Washington 14 None.
Age: 71 to 1989 and from Campus Consortium of
1993 or the Fund's 17 Universities;
inception if later. Senior Advisor to
Lawrence and Company,
Toronto, Canada.
- ---------------------------------------------------------------------------------------------------------------------
Bruce C. Lueck Director Director since President & CIO, 14 None.
Age: 64 2004. Okabena Investment
Services, Inc. from
1985 to 2003; Board
Member, Okabena
Company from 1985 to
2003.
- ---------------------------------------------------------------------------------------------------------------------
Donald W. Phillips Director Director of the CEO and CIO of WestLB 14 None.
Age: 56 International Fund Asset Management (USA)
since 1993, and LLC from 4/00 to 3/05.
since 1990 or the
Fund's inception if
later for all other
Funds.
- ---------------------------------------------------------------------------------------------------------------------
Melvin C. Bahle Director Director Emeritus Director and/or 14 None.
Age: 85 Emeritus since 1995. officer of several
foundations and
charitable
organizations.
- ---------------------------------------------------------------------------------------------------------------------
OFFICERS:
- ---------------------------------------------------------------------------------------------------------------------
Peter L. Mitchelson Vice Chairman Re-Elected by the Director, President, N/A N/A
Age: 63 Boards annually; Senior Investment
Officer since Officer and Director
inception. of Client Services of
the Adviser;
Director and
Executive Vice
President of
Sit/Kim; Director
of the
Distributor;
Vice Chairman of
SF; Director of
the Sit Funds
through 4/30/02.
- ---------------------------------------------------------------------------------------------------------------------
89
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
INFORMATION ABOUT DIRECTORS AND OFFICERS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF
FUNDS IN OTHER
POSITION TERM OF OFFICE(1) FUND COMPLEX DIRECTORSHIPS
HELD WITH AND LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY HELD BY
NAME, ADDRESS AND AGE THE FUNDS TIME SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR(4)
- ---------------------------------------------------------------------------------------------------------------------
OFFICERS (CONTINUED):
- ---------------------------------------------------------------------------------------------------------------------
Roger J. Sit (3) Executive Re-Elected by the Director, Executive N/A N/A
Age: 43 Vice Boards annually; Vice President -
President Officer since Research
1998. and Investment
Management of the
Adviser;
Director,
President, COO,
and Deputy CIO of
Sit/Kim.
- ---------------------------------------------------------------------------------------------------------------------
Michael C. Brilley Senior Vice Re-Elected by the Senior Vice President N/A N/A
Age: 59 President Boards annually; and Senior Fixed
Officer since 1985. Income Officer of
the Adviser;
Director,
President and
Chief
Fixed-Income
Officer of SF.
Director of the
Sit Funds (Bond
Funds only)
through 4/30/02.
- ---------------------------------------------------------------------------------------------------------------------
Debra A. Sit (3) Vice Re-Elected by the Vice President - Bond N/A N/A
Age: 44 President Boards annually; Investments of the
-Investments Officer since 1994. Adviser; Senior Vice
President, Assistant
Treasurer and
Assistant Secretary of
SF; Assistant
Treasurer and
Assistant Secretary of
Sit/Kim.
- ---------------------------------------------------------------------------------------------------------------------
Mark H. Book Vice Re-Elected by the Vice President and N/A N/A
Age: 41 President - Boards annually; Portfolio Manager of
Investments Officer since 2002. SF.
- ---------------------------------------------------------------------------------------------------------------------
Bryce A. Doty Vice Re-Elected by the Vice President and N/A N/A
Age: 38 President - Boards annually; Portfolio Manager of
Investments Officer since 1996. SF.
- ---------------------------------------------------------------------------------------------------------------------
Paul J. Jungquist Vice Re-Elected by the Vice President and N/A N/A
Age: 43 President - Boards annually; Portfolio Manager of
Investments Officer since 1996. SF.
- ---------------------------------------------------------------------------------------------------------------------
90
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF
FUNDS IN OTHER
POSITION TERM OF OFFICE(1) FUND COMPLEX DIRECTORSHIPS
HELD WITH AND LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY HELD BY
NAME, ADDRESS AND AGE THE FUNDS TIME SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR(4)
- ---------------------------------------------------------------------------------------------------------------------
OFFICERS (CONTINUED):
- ---------------------------------------------------------------------------------------------------------------------
Paul E. Rasmussen Vice Re-Elected by the Vice President, N/A N/A
Age: 44 President Boards annually; Secretary, Controller
and Officer since 1994. and Chief Compliance
Treasurer Officer of the
Adviser; Vice
President,
Secretary, and
Chief Compliance
Officer of
Sit/Kim and SF;
President and
Treasurer of the
Distributor.
- ---------------------------------------------------------------------------------------------------------------------
Michael J. Radmer Secretary Re-Elected by the Partner of Dorsey & N/A N/A
Suite 1500 Boards annually; Whitney, LLP, the
50 South Sixth Street Officer since 1984. Funds' general
Minneapolis, MN 55402 counsel.
Age: 60
- ---------------------------------------------------------------------------------------------------------------------
Carla J. Rose Vice Re-Elected by the Vice President, N/A N/A
Age: 38 President, Boards annually; Administration and
Assistant Officer since 1994. Deputy Controller of
Secretary & the Adviser; Vice
Assistant President,
Treasurer Administration and
Controller of Sit/Kim;
Controller and
Treasurer of SF.
- ---------------------------------------------------------------------------------------------------------------------
Kelly K. Boston Assistant Re-Elected by the Staff Attorney of the N/A N/A
Age: 36 Secretary & Boards annually; Adviser.
Assistant Officer since 2000.
Treasurer
- ---------------------------------------------------------------------------------------------------------------------
(1) Each Director serves until their resignation, removal or the next
meeting of the shareholders at which election of directors is an agenda
item and until his successor is duly elected and shall qualify.
(2) Directors who are deemed to be "interested persons" of the Funds as that
term is defined by the Investment Company Act of 1940. Mr. Sit is
considered an "interested person" because he is an officer of Sit
Investment Associates, Inc., the Fund's investment adviser. Mr. Frenzel
is deemed to be an interested person because he is an advisory director
and shareholder of the Fund's investment adviser.
(3) Mr. Roger Sit is the son of Eugene C. Sit. Ms. Debra Sit is the daughter
of Eugene C. Sit.
(4) Includes only directorships of companies required to report under the
Securities Exchange Act of 1934 (i.e. public companies) or other
investment companies registered under the 1940 Act.
91
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
PROXY VOTING
Each Fund follows certain policies and procedures for voting proxies for
securities held in each portfolio. A description of the Funds' proxy voting
polices and procedures is available without charge upon request by calling the
Funds at 1-800-332-5580.
Information regarding how each Fund voted proxies relating to its portfolio
securities during the most recent twelve-month period ended June 30 is available
1) without charge upon request by calling the Funds at 1-800-332-5580; and 2) on
the U.S. Securities and Exchange Commission's website at http://www.sec.gov.
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
The Funds file their complete schedules of portfolio holdings with the U.S.
Securities and Exchange Commission (SEC) for the first and third quarters of
each fiscal year on Form N-Q. The Funds' Forms N-Q are available on the SEC's
website at http://www.sec.gov. The Funds' Forms N-Q may be reviewed and copied
at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330. Information on the Funds' Forms N-Q is also available without
charge upon request by calling the Funds at 1-800-332-5580.
RE-APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS
At their joint meeting held on October 18, 2004 the Boards of Directors of the
Bond 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 Mutual Funds II, Inc. dated November 1, 1992;
Sit U.S. Government Securities Fund, Inc. dated November 1, 1992; Sit Money
Market Fund, Inc. dated November 1, 1992; and Sit Mutual Funds Trust dated
December 15, 2003 (the "Advisory Agreements").
The Boards approved the Agreements after a lengthy discussion and consideration
of various factors relating to both 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, including the following:
92
INVESTMENT PHILOSOPHY AND PROCESS
The Directors considered SIA's philosophy of managing assets. With respect to
fixed income securities, SIA stresses the consistent attainment of superior
risk-adjusted returns using a conservative investment management approach that
identifies pricing anomalies in the market and management of portfolio duration.
SIA seeks investment grade securities with a special emphasis on interest income
and significant stability of principal value. SIA's style seeks to avoid
excessive return volatility and generate consistent results over an economic
cycle. The Directors noted that the Bond Funds' objectives are to seek high
current income (except for the Sit Bond Fund which has an objective to maximize
total return consistent with preservation of capital). The Directors reviewed
the Bond Funds' characteristics, and noted that SIA has consistently managed the
Bond Funds in this style. The Directors noted that since the Bond Funds
emphasize income, they may at times not rank highly in total return comparisons
with other funds during certain periods.
The Directors discussed SIA's consistent and well-defined investment process.
The portfolio managers are responsible for implementing the strategy set forth
in the Chief Fixed Income Officer's duration targets and the Chief Investment
Officer's interest rate projections.
INVESTMENT PROFESSIONALS
The Directors discussed the experience, knowledge and organizational stability
of SIA and its investment professionals. The Directors noted that SIA's senior
founding professionals are actively involved in the investment process and have
led the organization since its inception in 1981 which has provided not only
organizational stability, but a consistent portfolio management style. The
senior professionals of SIA are among the most experienced professionals in the
industry.
The Directors discussed the depth of SIA's investment staff. The Directors noted
that SIA has over 30 investment professionals. Given the investment products
offered by SIA and the assets under management, the Directors determined that
SIA's investment staff is well positioned to meet the current needs of its
clients, including the Funds, and to accommodate growth in the number of clients
and assets under management for the near future. The Directors concluded that
the depth of the investment staff, and in particular senior management and
investment analysts, is actually greater than the Funds currently require at
their present asset size. The Directors noted that SIA has the resources of a $6
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 fixed income funds seeking to maximize income.
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.
93
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
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 and certain extraordinary expenses. The Directors reviewed
fees paid in prior years and the fees to be paid under the Agreements, both
before and after the voluntary waiver of fees by SIA with respect to the
Tax-Free Income Fund, U.S. Government Fund and Money Market Fund. The Directors
reviewed the average and median expense ratios of mutual funds within the same
investment category for each Fund. The Directors noted that each Fund's total
expense ratio compares favorably to the total expense ratios of other no-load
funds within the Fund's Morningstar category, and are lower than the average
total expense ratio for the full Morningstar category. The Directors concluded
that the fees paid by the Funds are reasonable and appropriate.
The Directors reviewed the extent to which the fees to be paid under the
Agreements by each Fund may be affected by an increase in the Fund's assets,
which included reviewing each Fund's current and historical assets and the
likelihood and magnitude of future increases in the Fund's assets. It was noted
that the Tax-Free Income Fund, U.S. Government Fund, and Money Market Fund have
tiered investment fee schedules after SIA's voluntary fee waiver. 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 limited size of the Funds, negotiating a graduated fee structure for each
Fund is unnecessary since it is unlikely that the size of the Funds will
increase enough to justify a graduated fee schedule within the near future.
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 and
SIA's profits 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. 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 discussed the extent to which SIA receives benefits from the
relationship with the Funds such as soft
94
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 nature, extent, and quality of non-advisory
services which SIA provides to the Funds (and their shareholders) and the
quality and depth of SIA's non-investment personnel who provide such services.
The non-advisory services include all office facilities, equipment and personnel
necessary for the Funds' operations and oversight of third party service
providers. 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.
95
SIT MUTUAL FUNDS
- --------------------------------------------------------------------------------
RESULTS OF SHAREHOLDER MEETING (UNAUDITED)
The annual meeting of the shareholders of the Funds was held on October 18,
2004. Directors elected by the shareholders at the meeting were as follows:
Eugene C. Sit, William E. Frenzel, John E. Hulse, Sideny L. Jones, Bruce C.
Lueck and Donald W. Phillips. The matters voted on by the shareholders of record
were as follows:
PROPOSAL ONE:
ELECTION OF DIRECTORS
---------------------------------
SIT JONES
US GOVERNMENT SECURITIES For 19,961,427.640 19,902,192.166
Total Shares Outstanding 24,893,056.771 Against 217,577.489 276,812.963
Total Shares Voted 20,179,005.129 Abstain 0.000 0.000
Percent of Shares Voted 81% % For 99% 99%
TAX-FREE INCOME For 23,110,840.006 23,004,724.041
Total Shares Outstanding 34,234,472.431 Against 353,385.186 459,501.151
Total Shares Voted 23,464,225.192 Abstain 0.000 0.000
Percent of Shares Voted 69% % For 98% 98%
MONEY MARKET For 25,967,911.060 25,962,409.530
Total Shares Outstanding 46,517,110.890 Against 94,543.620 100,045.150
Total Shares Voted 26,062,454.680 Abstain 0.000 0.000
Percent of Shares Voted 56% % For 100% 100%
MN TAX-FREE INCOME For 13,244,875.592 13,310,692.108
Total Shares Outstanding 21,269,717.842 Against 264,007.698 198,191.182
Total Shares Voted 13,508,833.290 Abstain 0.000 0.000
Percent of Shares Voted 64% % For 98% 99%
BOND For 553,049.097 553,049.097
Total Shares Outstanding 1,505,467.379 Against 3,035.439 3,035.439
Total Shares Voted 556,084.536 Abstain 0.000 0.000
Percent of Shares Voted 37% % For 99% 99%
FLORIDA TAX-FREE INCOME For 259,839.023 259,839.023
Total Shares Outstanding 294,592.980 Against 0.000 0.000
Total Shares Voted 259,839.023 Abstain 0.000 0.000
Percent of Shares Voted 88% % For 100% 100%
96
PROPOSAL TWO:
RATIFY KPMG LLP
AS THE FUNDS' AUDITORS
- ------------------------------------------------------------------ ----------------------
FRENZEL LUECK HULSE PHILLIPS
19,840,422.607 20,022,961.074 19,910,814.804 19,920,271.714 19,786,488.744
338,582.522 156,044.055 268,190.325 258,733.415 261,722.467
0.000 0.000 0.000 0.000 130,793.918
98% 99% 99% 99% 98%
22,948,742.556 23,147,233.949 22,967,866.549 23,097,694.841 23,098,019.981
515,482.636 316,991.243 496,358.643 366,530.351 194,873.981
0.000 0.000 0.000 0.000 171,331.230
98% 99% 98% 98% 98%
25,948,444.680 25,967,911.060 25,967,911.060 25,967,911.060 25,969,217.990
114,010.000 94,543.620 94,543.620 94,543.620 61,469.440
0.000 0.000 0.000 0.000 31,767.250
100% 100% 100% 100% 100%
13,108,223.313 13,341,688.908 13,323,943.797 13,337,098.963 13,295,875.331
400,659.977 167,194.382 84,939.493 171,784.327 119,347.728
0.000 0.000 0.000 0.000 93,660.231
97% 99% 99% 99% 98%
553,049.097 553,049.097 553,049.097 553,049.097 546,015.242
3,035.439 3,035.439 3,035.439 3,035.439 1,713.241
0.000 0.000 0.000 0.000 8,356.053
99% 99% 99% 99% 98%
259,839.023 259,839.023 259,839.023 259,839.023 259,839.023
0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000
100% 100% 100% 100% 100%
97
A LOOK AT SIT MUTUAL FUNDS
Sit Mutual Funds are managed by Sit Investment Associates, Inc. Sit
Investment Associates was founded by Eugene C. Sit in July 1981 and is dedicated
to a single purpose, to be one of the premier investment management firms in the
United States. Sit Investment Associates currently manages approximately $6.1
Billion for some of America's largest corporations, foundations and endowments.
Sit Mutual Funds are comprised of thirteen NO-LOAD Funds. NO-LOAD means that
Sit Mutual Funds have no sales charges on purchases, no deferred sales charges,
no 12b-1 fees and no exchange fees. Every dollar you invest goes to work for
you. Effective November 1, 2003, the Stock Funds, excluding the Balanced Fund,
charge a 2% redemption fee on shares held less than 30 days.
Sit Mutual Funds offer:
o Free telephone exchange
o Dollar-cost averaging through an automatic investment plan
o Electronic transfer for purchases and redemptions
o Free checkwriting privileges on bond funds
o Retirement accounts including IRAs and 401(k) plans
[FLOW CHART]
- --------------------------------------------------------------------------------
SIT FAMILY OF FUNDS
- --------------------------------------------------------------------------------
STABILITY: SAFETY OF PRINCIPAL AND CURRENT INCOME
- -------------------------------------------------
Money Market
INCOME: INCREASED INCOME
- ------------------------
U.S. Government Securities
Tax-Free Income
Minnesota Tax-Free Income
Florida Tax-Free Income
GROWTH: LONG-TERM CAPITAL APPRECIATION AND INCOME
- -------------------------------------------------
Balanced
Dividend Growth Fund
Large Cap Growth
HIGH GROWTH: LONG-TERM CAPITAL APPRECIATION
- -------------------------------------------
Mid Cap Growth
International Growth
Small Cap Growth
Science and Technology Growth
Developing Markets Growth
Principal Stability & Current Income Growth Potential
98
ANNUAL REPORT BOND FUNDS
One Year Ended March 31, 2005
INVESTMENT ADVISER AUDITORS
Sit Investment Associates, Inc. KPMG LLP
80 South Eighth Street 90 South Seventh Street
Suite 3300 Suite 4200
Minneapolis, MN 55402 Minneapolis, MN 55402
612-334-5888 (Metro Area)
800-332-5580
LEGAL COUNSEL
DISTRIBUTOR Dorsey & Whitney LLP
50 South Sixth Street, Suite 1500
SIA Securities Corp. Minneapolis, MN 55402
80 South Eighth Street
Suite 3300
Minneapolis, MN 55402
612-334-5888 (Metro Area)
800-332-5580
CUSTODIAN
The Northern Trust Company
50 South LaSalle Street
Chicago, IL 60675
TRANSFER AGENT AND
DISBURSING AGENT
PFPC, Inc.
P.O. Box 5166
Westboro, MA 01581-5166
[LOGO] SIT INVESTMENT ASSOCIATES
-------------------------
SIT MUTUAL FUNDS
Item 2: Code of Ethics.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer, and persons performing similar functions. The registrant has not made
any amendment to its code of ethics during the period covered by this report.
The registrant has not granted any waivers from any provisions of the code of
ethics during the period covered by this report.
A copy of the registrant's code of ethics is available without charge upon
request by calling the registrant at 612-334-5888 or 1-800-332-5580, or by mail
at Sit Mutual Funds, 3300 IDS Center, 80 South Eighth Street, Minneapolis, MN
55402.
Item 3: Audit Committee Financial Expert.
The registrant's Board of Directors has determined that Mr. John E. Hulse, Mr.
Sidney L. Jones, Mr. Bruce C. Lueck and Mr. Donald W. Phillips are audit
committee financial experts serving on its audit committee. Mr. Hulse, Mr.
Jones, Mr. Lueck and Mr. Phillips are independent for purposes of this item.
Item 4: Principal Accountant Fees and Services.
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal accountant were
as follows:
Audit
Audit Related Tax Other
Fees(a) Fees(b) Fees(c) Fees(d)
------- ------- ------- -------
Fiscal year ended
March 31, 2005 15,400 0 3,720 1,786
Fiscal year ended
March 31, 2004 15,000 0 3,600 0
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings. Audit-related fees include
amounts reasonably related to the performance of the audit of the registrant's
financial statements, and/or are traditionally performed by the auditor. Tax
fees include amounts related to tax compliance, tax planning, and tax advice.
(e) (1) The Audit Committee is required to pre-approve audit and non-audit
services performed for the registrant by the independent auditor in order to
assure that the provision of such services does not impair the auditor's
independence. The audit committee also is required to pre-approve certain
non-audit services performed by the registrant's independent auditor for the
registrant's investment adviser and certain of the adviser's affiliates if the
services relate directly to the operations and financial reporting of the
registrant. Services to be provided by the auditor must receive general
pre-approval or specific pre-approval by the audit committee. Any proposed
services exceeding pre-approved cost levels will require separate pre-approval
by the audit committee.
The audit committee may delegate pre-approval authority to the audit committee
chairman. The chairman shall report any pre-approval decisions to the audit
committee at its next scheduled meeting. The audit committee does not delegate
its responsibility to pre-approve services performed by the independent auditor
to management.
(2) No services included in (b) - (d) were approved pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant were $114,400.00 and $108,200.00,
respectively.
(h) The registrant's audit committee has determined that the provision of
non-audit services rendered to the registrant's investment adviser, and any
entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the registrant, that were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is
considered compatible with maintaining the principal accountant's independence.
Item 5: Audit Committee of Listed Registrants.
Not applicable to open-end investment companies.
Item 6: Schedule of Investments.
The schedule of investments is included as part of the report to shareholders
filed under Item 1 of this Form.
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable to open-end investment companies.
Item 8: Portfolio Managers of Closed-End Management Investments Companies.
Not applicable to open-end investment companies.
Item 9: Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a vote of Security Holders.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors.
Item 11: Controls and Procedures -
(a) Based on their evaluation of the Registrant's Disclosure Controls and
Procedures as of a date within 90 days of the Filing Date, the Registrant's
Chairman and Treasurer have determined that the Disclosure Controls and
Procedures (as defined in Rule 30a-2(c) under the Act) are designed to ensure
that information required to be disclosed by the Registrant is recorded,
processed, summarized and reported by the filing Date, and that information
required to be disclosed in the report is communicated to the Registrant's
management, as appropriate, to allow timely decisions regarding required
disclosure.
(b) There were no significant changes in the Registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, and there were no corrective actions with regard
to significant deficiencies and material weaknesses.
Item 12: Exhibits:
(a) The following exhibits are attached to this Form N-CSR:
(2) A separate certification for each principal executive and principal
financial officer of the registrant as required by Rule 30a-2(a) under the Act
(17 CFR 270.30a-2) (certification required by Section 302 of the Sarbanes-Oxley
Act of 2002).
(b) Certification required by Rule 30a-2(b) under the Act (certification
required by Section 906 of the Sarbanes-Oxley Act of 2002).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SIT U.S. GOVERNMENT SECURITIES FUND, INC.
- -----------------------------------------
By (Signature and Title)* /s/ Paul E. Rasmussen
--------------------------------
Paul E. Rasmussen
Vice President, Treasurer
Date May 31, 2005
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 May 31, 2005
By (Signature and Title) /s/ Eugene C. Sit
--------------------------------
Eugene C. Sit
Chairman
Date May 31, 2005
Item 2: Code of Ethics.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer, and persons performing similar functions. The registrant has not made
any amendment to its code of ethics during the period covered by this report.
The registrant has not granted any waivers from any provisions of the code of
ethics during the period covered by this report.
A copy of the registrant's code of ethics is available without charge upon
request by calling the registrant at 612-334-5888 or 1-800-332-5580, or by mail
at Sit Mutual Funds, 3300 IDS Center, 80 South Eighth Street, Minneapolis, MN
55402.
Item 3: Audit Committee Financial Expert.
The registrant's Board of Directors has determined that Mr. John E. Hulse, Mr.
Sidney L. Jones, Mr. Bruce C. Lueck and Mr. Donald W. Phillips are audit
committee financial experts serving on its audit committee. Mr. Hulse, Mr.
Jones, Mr. Lueck and Mr. Phillips are independent for purposes of this item.
Item 4: Principal Accountant Fees and Services.
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal accountant were
as follows:
Audit
Audit Related Tax Other
Fees(a) Fees(b) Fees(c) Fees(d)
------- ------- ------- -------
Fiscal year ended
March 31, 2005 52,900 0 11,160 5,357
Fiscal year ended
March 31, 2004 51,000 0 10,800 0
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings. Audit-related fees include
amounts reasonably related to the performance of the audit of the registrant's
financial statements, and/or are traditionally performed by the auditor. Tax
fees include amounts related to tax compliance, tax planning, and tax advice.
(e) (1) The Audit Committee is required to pre-approve audit and non-audit
services performed for the registrant by the independent auditor in order to
assure that the provision of such services does not impair the auditor's
independence. The audit committee also is required to pre-approve certain
non-audit services performed by the registrant's independent auditor for the
registrant's investment adviser and certain of the adviser's affiliates if the
services relate directly to the operations and financial reporting of the
registrant. Services to be provided by the auditor must receive general
pre-approval or specific pre-approval by the audit committee. Any proposed
services exceeding pre-approved cost levels will require separate pre-approval
by the audit committee.
The audit committee may delegate pre-approval authority to the audit committee
chairman. The chairman shall report any pre-approval decisions to the audit
committee at its next scheduled meeting. The audit committee does not delegate
its responsibility to pre-approve services performed by the independent auditor
to management.
(2) No services included in (b) - (d) were approved pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant were $114,400.00 and $108,200.00,
respectively.
(h) The registrant's audit committee has determined that the provision of
non-audit services rendered to the registrant's investment adviser, and any
entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the registrant, that were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is
considered compatible with maintaining the principal accountant's independence.
Item 5: Audit Committee of Listed Registrants.
Not applicable to open-end investment companies.
Item 6: Schedule of Investments.
The schedule of investments is included as part of the report to shareholders
filed under Item 1 of this Form.
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable to open-end investment companies.
Item 8: Portfolio Managers of Closed-End Management Investments Companies.
Not applicable to open-end investment companies.
Item 9: Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a vote of Security Holders.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors.
Item 11: Controls and Procedures -
(a) Based on their evaluation of the Registrant's Disclosure Controls and
Procedures as of a date within 90 days of the Filing Date, the Registrant's
Chairman and Treasurer have determined that the Disclosure Controls and
Procedures (as defined in Rule 30a-2(c) under the Act) are designed to ensure
that information required to be disclosed by the Registrant is recorded,
processed, summarized and reported by the filing Date, and that information
required to be disclosed in the report is communicated to the Registrant's
management, as appropriate, to allow timely decisions regarding required
disclosure.
(b) There were no significant changes in the Registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, and there were no corrective actions with regard
to significant deficiencies and material weaknesses.
Item 12: Exhibits:
(a) The following exhibits are attached to this Form N-CSR:
(2) A separate certification for each principal executive and principal
financial officer of the registrant as required by Rule 30a-2(a) under the Act
(17 CFR 270.30a-2) (certification required by Section 302 of the Sarbanes-Oxley
Act of 2002).
(b) Certification required by Rule 30a-2(b) under the Act (certification
required by Section 906 of the Sarbanes-Oxley Act of 2002).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SIT MUTUAL FUNDS II, INC.
- -------------------------
By (Signature and Title)* /s/ Paul E. Rasmussen
--------------------------------
Paul E. Rasmussen
Vice President, Treasurer
Date May 31, 2005
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 May 31, 2005
By (Signature and Title) /s/ Eugene C. Sit
--------------------------------
Eugene C. Sit
Chairman
Date May 31, 2005
Item 2: Code of Ethics.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer, and persons performing similar functions. The registrant has not made
any amendment to its code of ethics during the period covered by this report.
The registrant has not granted any waivers from any provisions of the code of
ethics during the period covered by this report.
A copy of the registrant's code of ethics is available without charge upon
request by calling the registrant at 612-334-5888 or 1-800-332-5580, or by mail
at Sit Mutual Funds, 3300 IDS Center, 80 South Eighth Street, Minneapolis, MN
55402.
Item 3: Audit Committee Financial Expert.
The registrant's Board of Directors has determined that Mr. John E. Hulse, Mr.
Sidney L. Jones, Mr. Bruce C. Lueck and Mr. Donald W. Phillips are audit
committee financial experts serving on its audit committee. Mr. Hulse, Mr.
Jones, Mr. Lueck and Mr. Phillips are independent for purposes of this item.
Item 4: Principal Accountant Fees and Services.
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal accountant were
as follows:
Audit
Audit Related Tax Other
Fees(a) Fees(b) Fees(c) Fees(d)
------- ------- ------- -------
Fiscal year ended
March 31, 2005 16,900 0 3,720 1,786
Fiscal year ended
March 31, 2004 16,500 0 3,600 0
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings. Audit-related fees include
amounts reasonably related to the performance of the audit of the registrant's
financial statements, and/or are traditionally performed by the auditor. Tax
fees include amounts related to tax compliance, tax planning, and tax advice.
(e) (1) The Audit Committee is required to pre-approve audit and non-audit
services performed for the registrant by the independent auditor in order to
assure that the provision of such services does not impair the auditor's
independence. The audit committee also is required to pre-approve certain
non-audit services performed by the registrant's independent auditor for the
registrant's investment adviser and certain of the adviser's affiliates if the
services relate directly to the operations and financial reporting of the
registrant. Services to be provided by the auditor must receive general
pre-approval or specific pre-approval by the audit committee. Any proposed
services exceeding pre-approved cost levels will require separate pre-approval
by the audit committee.
The audit committee may delegate pre-approval authority to the audit committee
chairman. The chairman shall report any pre-approval decisions to the audit
committee at its next scheduled meeting. The audit committee does not delegate
its responsibility to pre-approve services performed by the independent auditor
to management.
(2) No services included in (b) - (d) were approved pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant were $114,400.00 and $108,200.00,
respectively.
(h) The registrant's audit committee has determined that the provision of
non-audit services rendered to the registrant's investment adviser, and any
entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the registrant, that were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is
considered compatible with maintaining the principal accountant's independence.
Item 5: Audit Committee of Listed Registrants.
Not applicable to open-end investment companies.
Item 6: Schedule of Investments.
The schedule of investments is included as part of the report to shareholders
filed under Item 1 of this Form.
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable to open-end investment companies.
Item 8: Portfolio Managers of Closed-End Management Investments Companies.
Not applicable to open-end investment companies.
Item 9: Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a vote of Security Holders.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors.
Item 11: Controls and Procedures -
(a) Based on their evaluation of the Registrant's Disclosure Controls and
Procedures as of a date within 90 days of the Filing Date, the Registrant's
Chairman and Treasurer have determined that the Disclosure Controls and
Procedures (as defined in Rule 30a-2(c) under the Act) are designed to ensure
that information required to be disclosed by the Registrant is recorded,
processed, summarized and reported by the filing Date, and that information
required to be disclosed in the report is communicated to the Registrant's
management, as appropriate, to allow timely decisions regarding required
disclosure.
(b) There were no significant changes in the Registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, and there were no corrective actions with regard
to significant deficiencies and material weaknesses.
Item 12: Exhibits:
(a) The following exhibits are attached to this Form N-CSR:
(2) A separate certification for each principal executive and principal
financial officer of the registrant as required by Rule 30a-2(a) under the Act
(17 CFR 270.30a-2) (certification required by Section 302 of the Sarbanes-Oxley
Act of 2002).
(b) Certification required by Rule 30a-2(b) under the Act (certification
required by Section 906 of the Sarbanes-Oxley Act of 2002).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SIT MONEY MARKET FUND, INC.
- ---------------------------
By (Signature and Title)* /s/ Paul E. Rasmussen
--------------------------------
Paul E. Rasmussen
Vice President, Treasurer
Date May 31, 2005
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 May 31, 2005
By (Signature and Title) /s/ Eugene C. Sit
--------------------------------
Eugene C. Sit
Chairman
Date May 31, 2005
Item 2: Code of Ethics.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer, and persons performing similar functions. The registrant has not made
any amendment to its code of ethics during the period covered by this report.
The registrant has not granted any waivers from any provisions of the code of
ethics during the period covered by this report.
A copy of the registrant's code of ethics is available without charge upon
request by calling the registrant at 612-334-5888 or 1-800-332-5580, or by mail
at Sit Mutual Funds, 3300 IDS Center, 80 South Eighth Street, Minneapolis, MN
55402.
Item 3: Audit Committee Financial Expert.
The registrant's Board of Directors has determined that Mr. John E. Hulse, Mr.
Sidney L. Jones, Mr. Bruce C. Lueck and Mr. Donald W. Phillips are audit
committee financial experts serving on its audit committee. Mr. Hulse, Mr.
Jones, Mr. Lueck and Mr. Phillips are independent for purposes of this item.
Item 4: Principal Accountant Fees and Services.
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal accountant were
as follows:
Audit
Audit Related Tax Other
Fees(a) Fees(b) Fees(c) Fees(d)
------- ------- ------- -------
Fiscal year ended
March 31, 2005 15,400 0 3,720 1,786
Fiscal year ended
March 31, 2004 15,000 0 3,600 0
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings. Audit-related fees include
amounts reasonably related to the performance of the audit of the registrant's
financial statements, and/or are traditionally performed by the auditor. Tax
fees include amounts related to tax compliance, tax planning, and tax advice.
(e) (1) The Audit Committee is required to pre-approve audit and non-audit
services performed for the registrant by the independent auditor in order to
assure that the provision of such services does not impair the auditor's
independence. The audit committee also is required to pre-approve certain
non-audit services performed by the registrant's independent auditor for the
registrant's investment adviser and certain of the adviser's affiliates if the
services relate directly to the operations and financial reporting of the
registrant. Services to be provided by the auditor must receive general
pre-approval or specific pre-approval by the audit committee. Any proposed
services exceeding pre-approved cost levels will require separate pre-approval
by the audit committee.
The audit committee may delegate pre-approval authority to the audit committee
chairman. The chairman shall report any pre-approval decisions to the audit
committee at its next scheduled meeting. The audit committee does not delegate
its responsibility to pre-approve services performed by the independent auditor
to management.
(2) No services included in (b) - (d) were approved pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant were $114,400.00 and $108,200, respectively.
(h) The registrant's audit committee has determined that the provision of
non-audit services rendered to the registrant's investment adviser, and any
entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the registrant, that were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is
considered compatible with maintaining the principal accountant's independence.
Item 5: Audit Committee of Listed Registrants.
Not applicable to open-end investment companies.
Item 6: Schedule of Investments.
The schedule of investments is included as part of the report to shareholders
filed under Item 1 of this Form.
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable to open-end investment companies.
Item 8: Portfolio Managers of Closed-End Management Investments Companies.
Not applicable to open-end investment companies.
Item 9: Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a vote of Security Holders.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors.
Item 11: Controls and Procedures -
(a) Based on their evaluation of the Registrant's Disclosure Controls and
Procedures as of a date within 90 days of the Filing Date, the Registrant's
Chairman and Treasurer have determined that the Disclosure Controls and
Procedures (as defined in Rule 30a-2(c) under the Act) are designed to ensure
that information required to be disclosed by the Registrant is recorded,
processed, summarized and reported by the filing Date, and that information
required to be disclosed in the report is communicated to the Registrant's
management, as appropriate, to allow timely decisions regarding required
disclosure.
(b) There were no significant changes in the Registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, and there were no corrective actions with regard
to significant deficiencies and material weaknesses.
Item 12: Exhibits:
(a) The following exhibits are attached to this Form N-CSR:
(2) A separate certification for each principal executive and principal
financial officer of the registrant as required by Rule 30a-2(a) under the Act
(17 CFR 270.30a-2) (certification required by Section 302 of the Sarbanes-Oxley
Act of 2002).
(b) Certification required by Rule 30a-2(b) under the Act (certification
required by Section 906 of the Sarbanes-Oxley Act of 2002).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SIT MUTUAL FUNDS TRUST
- ----------------------
By (Signature and Title)* /s/ Paul E. Rasmussen
--------------------------------
Paul E. Rasmussen
Vice President, Treasurer
Date May 31, 2005
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 May 31, 2005
By (Signature and Title) /s/ Eugene C. Sit
--------------------------------
Eugene C. Sit
Chairman
Date May 31, 2005