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: 811-03342
Sit Mid Cap Growth 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) 332-3223
Date of fiscal year end: June 30, 2020
Date of reporting period: June 30, 2020
| Item 1: | Reports to Stockholders |
|
Annual Report |
June 30, 2020 |
Balanced Fund Dividend Growth Fund Global Dividend Growth Fund Large Cap Growth Fund ESG Growth Fund Mid Cap Growth Fund Small Cap Dividend Growth Fund Small Cap Growth Fund International Growth Fund Developing Markets Growth Fund |
Important Information on Paperless Delivery Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from Sit Mutual Funds or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will remain available on the Funds’ website (sitfunds.com) and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports electronically from the Fund by calling 1-800-332-5580 or by enrolling online at sitfunds.com, or, if you are invested through your financial intermediary, you may contact them directly. You may elect to receive all future reports in paper free of charge. You can inform the Funds by calling 1-800-332-5580, or, if you are invested through your financial intermediary, you may contact them directly. Your election to receive reports in paper will apply to all funds held with Sit Mutual Funds or through your financial intermediary, as applicable.  Sit Mutual Funds
|
|
|
Sit Mutual Funds STOCK FUNDS ANNUAL REPORT TABLE OF CONTENTS |
This document must be preceded or accompanied by a Prospectus.
CHAIRMAN’S LETTER
August 5, 2020
Dear Fellow Shareholders:
Led by massive fiscal and monetary stimulus, the U.S. economy is poised to improve over the next several quarters following a deep, but short-lived, technical recession, sparked by the COVID-19 pandemic and measures to contain its spread. The sharp rebound in stock prices has pushed stocks to “fair” valuation levels; we suspect investors will need more clarity on the corporate earnings outlook for stocks to move significantly higher from here.
Economic Overview
Nationwide efforts to slow the spread of COVID-19 appear to have had some initial success, but a surge in new infections as states began to lift restrictions shows the U.S. is still not out of the woods. Despite the surge, future containment measures will likely be more targeted given the severe economic harm caused by large-scale lockdowns. Yet, with a vaccine not expected before 2021, less-than-favorable virus-related headlines could slow the recovery, if consumers remain housebound and businesses do not fully reopen. Although headline consumer confidence has plunged, digging deeper into the data reveals relative optimism about economic and job prospects. Household balance sheets are also in good shape, and excess savings may ultimately fuel higher spending as jobs return. Recent data on personal spending, housing, and manufacturing have been supportive of a sharp economic rebound in the second half of 2020.
With the lingering fallout from the 2007-2008 financial crisis a not too distant memory, policymakers continue to pump enormous amounts of liquidity into the economy to short-circuit a series of events that could precipitate a lengthier downturn. The Federal Reserve’s renewed asset purchase program and emergency lending facilities have stabilized financial markets, keeping credit flowing and borrowing costs low. The Fed’s balance sheet has ballooned to over $7.1 trillion from $4.2 trillion at the end of 2019 – chiefly through purchases of Treasuries and mortgage-backed securities – and the consensus is for assets to top $9 trillion by year end. On the fiscal side, Congress has so far enacted emergency spending legislation of $3.3 trillion, bringing projected federal outlays to levels not seen since WWII. The combined U.S. fiscal and monetary stimulus allocated, but not fully deployed, thus far equals about 45% of GDP. As a result, money supply, growth of which has traditionally presaged improved economic activity, is expanding by historic proportions. The swift and substantial policy response, along with the largely self-inflicted nature of this contraction, signals an initial rebound as restrictions are lifted. However, risks abound: the pace of new COVID-19 infections is re-accelerating; bankruptcies are surging; and trade tensions are on the upswing. The outcome of the U.S. elections also has major implications for corporate profitability and legislative priorities.
Political analysts, public opinion pollsters, and oddsmakers, by and large, currently favor Joe Biden to win the U.S. presidency. Biden’s policy agenda includes a partial rollback in corporate tax cuts; taxes on the wealthy; spending on infrastructure, social programs, and clean energy; protections for workers and the environment; controls on drug pricing; and expansion of the Affordable Care Act. Based on estimates from Cornerstone Macro, this agenda’s major components will create around $6 trillion in new spending over ten years, offset by $4 trillion in higher taxes. Although big policy shifts will be tempered in the likely case of a divided government, polls suggest a Democratic sweep is a real possibility. A Democratic government could dampen business confidence, given the potential for higher taxes and regulation. Key offsets, however, include infrastructure spending and policies to promote onshoring, both of which could contribute to a revival in domestic investment.
Economic activity across much of Europe has begun to improve against abnormally easy sequential comparisons as the pace of new COVID-19 cases slows, allowing restrictions to be relaxed. Fortunately, the European Central Bank’s fast response has kept credit flowing and precluded another Euro Crisis. In addition, fiscal stimulus to support growth has come in the form of furloughing schemes, direct loans to companies, and loan guarantees. If the pandemic and associated economic fallout were not enough, the European Union and United Kingdom must also negotiate all the terms of a post-Brexit relationship by year end or risk subjecting the region to further turmoil come 2021, as the United Kingdom has refused a further extension.
We believe China will return to the pre-pandemic level of GDP in the second half of 2020 and achieve positive low-single-digit GDP growth for the full year. The COVID-19 pandemic looks broadly under control in China, thanks to effective public health containment efforts. Hence, domestic demand has gradually improved since late February, with manufacturing activity largely returning to pre-virus levels. However, the outbreak continues to be painful for emerging market economies. South Korea and India are notable exceptions, as both went into lockdown relatively early and were able to control the outbreak better.
Equity Strategy
Investor sentiment has swung wildly from euphoria in February, to panic in March, and now back to euphoria. We remain constructive on U.S. equities over the intermediate and longer term. Still, we recognize that the strong rebound in stock prices has, at least to some degree, discounted the uptick in economic activity and corporate earnings growth likely over the next several quarters.
The S&P 500® Index ended second quarter 2020 at a level of 3,100, rallying +39% off its late-March low of 2,237 and placing it within striking distance of topping its mid-February high of 3,386. The strong gains came on the heels of the Index’s
| | | | |
| | | | |
2 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
quickest ever -30% correction (22 days). The equally sharp stock market rebound has been driven by massive global stimulus, credit market stabilization, promise of a COVID-19 vaccine, signs containment efforts were reducing the rate of new infections, short covering, active retail participation, and anticipation of better corporate earnings. The deep economic contraction has resulted in a significant decrease in consensus earnings expectations over the next several quarters. The succeeding strong rebound in stock prices has, in turn, led to a sharp increase in the price-to-earnings (PE) multiple for the S&P 500, which has expanded to approximately 22 times next 12-months earnings versus the long-term average of 16 times. As a result, some fear the stock market is in a bubble, driven by easy money and/or overly optimistic expectations. We do not subscribe to this view for two key reasons. First, the unprecedented speed and depth of the recession has contributed to especially depressed earnings projections, notably in the industrial sector. As a result, investors are rationally looking out even further to value stocks based on “normalized” earnings. Second, stocks should be valued at higher levels, when record low interest rates and benign inflation are considered. While not cheap, we believe the recent rebound has brought the S&P 500 Index closer to fair value, as opposed to implying a bubble. Further earnings multiple expansion for the overall market is not our base case. Instead, we believe earnings growth will be the primary driver of equity gains going forward.
A key challenge is determining appropriate valuations when revenue and earnings forecasts are highly uncertain and subject to the path of the COVID-19 pandemic, consumer sentiment, and further fiscal support. Valuations for many companies on forward earnings are now higher than prior to the shutdown, and we suspect that investors will need more clarity on near-term earnings power for equity markets to move meaningfully higher from here. Our investment focus remains on companies that can deliver above-average earnings growth, regardless of the economic backdrop. Our preferred sectors include technology (e.g., 5G, cloud computing, e-commerce, software) and healthcare. In addition, we have exposure to select high quality manufacturing and transportation firms, as earnings expectations should prove conservative against a backdrop of improving manufacturing activity indicators and companies’ cost reduction efforts.
Dividend-paying stocks have posted disappointing total returns so far in 2020 for two key reasons. First, investors have opted for high growth technology stocks, including ‘stay at home’ beneficiaries and the FAANG technology stocks. Second, the severity of the economic decline has made investors question dividend sustainability for many companies, negating their usual defensive attributes in volatile and uncertain markets. We believe, however, that fears over dividend cuts will subside as the economy slowly reopens. In addition, relative valuations for many dividend-paying stocks have not been this attractive in many years, and yields are compelling, particularly relative to bonds. As of June 30, 2020, we calculate over 78% of S&P 500® stocks currently offer dividend yields above the 10-year Treasury yield. We believe, however, that selectivity is critical, and our investment focus remains on companies with strong balance sheets, experienced management teams, and growth potential. We continue to believe that a diversified portfolio of high quality, dividend-paying growth stocks can provide investors with an opportunity to participate in market gains, while also giving them downside protection if market fundamentals deteriorate.
Within international portfolios, we currently prefer exposure to investment opportunities in China, South Korea, and India. We remain positive on China, given its first in, first out position amid the global economic recovery and attractive relative valuations. We favor investments in the new economy, along with domestic demand-driven sectors. South Korea’s strong fiscal stimulus, which focuses on providing money to both consumers and corporations, will be positive for consumer and financial companies. Improving exports will also benefit semiconductor, electrical machinery, and smartphone manufacturers. Our investments in India are biased toward economically sensitive sectors, such as consumer, financials, energy, information services, and industrials.
Roger J. Sit
Chairman, President, CEO and Global CIO
OBJECTIVE & STRATEGY
The dual objectives of the Sit Balanced Fund are to seek long-term growth of capital consistent with the preservation of principal and to provide regular income. It pursues its objectives by investing in a diversified portfolio of stocks and bonds. The Fund may emphasize either equity securities or fixed-income securities, or hold equal amounts of each, dependent upon the Adviser’s analysis of market, financial and economic conditions.
The Fund’s permissible investment allocation is: 35-65% in equity securities and 35-65% in fixed-income securities. At all times at least 25% of the fixed-income assets will be invested in fixed-income senior securities.
Fund Performance
The Sit Balanced Fund’s return for the twelve-month period ending June 30, 2020 was +11.91%. The S&P 500® Index return was +7.51% over the period, while the Bloomberg Barclays Aggregate Bond Index gained +8.74%.
Factors that Influenced the Fund’s Performance
Returns for the fixed income portion of the portfolio lagged those of the Bloomberg Barclays Aggregate Bond Index for the 12-month period, as the portfolio’s significant income advantage was more than offset by underperformance from a price perspective. The global COVID-19 pandemic threw markets into turmoil during the second half of the period, resulting in a meaningful flight-to-quality among bond investors. The U.S. Government and Federal Reserve launched a number of initiatives to keep credit flowing to the battered economy. As a result, interest rates declined significantly and bond prices rose. The portfolio’s underweight to U.S. Treasury securities detracted from returns, as Treasuries were the best-performing sector during the flight-to-quality. Non-government sectors underperformed throughout the emergence of the pandemic. The portfolio’s positions in sectors, such as closed-end bond funds and taxable municipal securities, did not experience as much price appreciation as the Bloomberg Barclays Aggregate Bond Index, which detracted from their returns relative to the benchmark. The large outperformance in the equity portion of the Fund during the period was driven heavily by a large overweight position in the technology services sector as well as an underweight position in the finance sector. Stock selection in both sectors also contributed to returns. Key holdings during the period included DexCom, Adobe, Atlassian, Splunk, Applied Materials, and PayPal Holdings. Adversely affecting performance was the Fund’s overweight position in the producer manufacturing sector and underweight position in the retail trade sector.
Outlook and Positioning
The fixed-income portion of the portfolio is currently positioned with an emphasis on credit-related securities, which we expect to outperform government bonds following what will likely be a very strong positive reaction to the discovery of vaccine options to treat COVID-19. We expect to tactically raise or lower risk in the portfolio, depending on factors, such as the efficacy of new vaccines, how quickly they can be created and effectively distributed, and how quickly consumer spending recovers following a vaccine rollout. We continue to emphasize maintaining an income advantage relative to the
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the S&P 500® Index and the Bloomberg Barclays Aggregate Bond Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks of large-cap companies. It is not possible to invest directly in an index. This is the primary index for the equity portion of the Fund.
2 Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index which measures the performance of investment grade debt securities with maturities of at least one year. This is the primary index for the fixed income portion of the Fund.
benchmark, which we expect to drive outperformance over the market cycle. In the equity portion of the Fund, we have maintained a large overweight position in technology companies that should benefit from emerging secular trends, some of which have been accelerated by the COVID-19 pandemic. Additionally, we are looking to selectively grow our exposure to early-stage cyclicals (e.g., transports), which should benefit more than the market as economic growth improves in the second half of 2020.
As of June 30, 2020, the asset allocation of the Fund was 60.4% equities, 32.4% fixed-income, and 7.2% cash and equivalents.
Roger J. Sit
Bryce A. Doty
Portfolio Managers
| | |
Information on this page is unaudited. |
4 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2020
| | | | | | | | | | | | | | | |
| | | Sit
Balanced
Fund | | S&P 500®
Index 1 | | Bloomberg
Barclays
Aggregate
Bond
Index 2 |
| | | |
One Year | | | | 11.91 | % | | | | 7.51 | % | | | | 8.74 | % |
Five Year | | | | 8.68 | | | | | 10.73 | | | | | 4.30 | |
Ten Year | | | | 9.85 | | | | | 13.99 | | | | | 3.82 | |
Since Inception
(12/31/93) | | | | 7.28 | | | | | 9.53 | | | | | 5.36 | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks of large-cap companies. It is not possible to invest directly in an index.
2 Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index which measures the performance of investment grade debt securities with maturities of at least one year.
PORTFOLIO SUMMARY
| | |
Net Asset Value 6/30/20: | | $26.37 Per Share |
Net Asset Value 6/30/19: | | $25.06 Per Share |
Total Net Assets: | | $46.7 Million |
TOP HOLDINGS
Top Equity Holdings:
1. Apple, Inc.
2. Microsoft Corp.
3. Amazon.com, Inc.
4. Alphabet, Inc.
5. Visa, Inc.
Top Fixed Income Holdings:
1. MN Hsg. Fin. Agy., 2.31%, 1/1/27
2. Hartford HealthCare Corp., 3.45%, 7/1/54
3. Utah Charter Sch. Fin. Auth., 2.40%, 10/15/27
4. Towd Point Mortgage Trust, 2.18%, 2/25/60
5. Equifax, Inc., 6.90%, 7/1/28
Based on total net assets as of June 30, 2020. Subject to change.
FUND DIVERSIFICATION
Based on total net assets as of June 30, 2020. Subject to change.
| | | | |
Information on this page is unaudited. | | | | |
JUNE 30, 2020 | | | 5 | |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit Balanced Fund
Investments are grouped by economic sectors.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
Common Stocks - 60.4% | | | | | | | | |
Communications - 1.5% | | | | | | | | |
American Tower Corp. | | | 1,150 | | | | 297,321 | |
Verizon Communications, Inc. | | | 7,100 | | | | 391,423 | |
| | | | | | | | |
| | |
| | | | | | | 688,744 | |
| | | | | | | | |
Consumer Durables - 0.9% | | | | | | | | |
YETI Holdings, Inc. * | | | 9,600 | | | | 410,208 | |
| | | | | | | | |
Consumer Non-Durables - 4.0% | | | | | | | | |
Conagra Brands, Inc. | | | 8,900 | | | | 313,013 | |
Constellation Brands, Inc. | | | 1,700 | | | | 297,415 | |
Estee Lauder Cos., Inc. - Class A | | | 2,375 | | | | 448,115 | |
Mondelez International, Inc. | | | 6,300 | | | | 322,119 | |
NIKE, Inc. | | | 1,775 | | | | 174,039 | |
PepsiCo, Inc. | | | 2,475 | | | | 327,344 | |
| | | | | | | | |
| | |
| | | | | | | 1,882,045 | |
| | | | | | | | |
Consumer Services - 3.5% | | | | | | | | |
McDonald’s Corp. | | | 2,300 | | | | 424,281 | |
Starbucks Corp. | | | 3,800 | | | | 279,642 | |
Visa, Inc. | | | 4,750 | | | | 917,558 | |
| | | | | | | | |
| | |
| | | | | | | 1,621,481 | |
| | | | | | | | |
Electronic Technology - 8.8% | | | | | | | | |
Advanced Micro Devices, Inc. * | | | 2,500 | | | | 131,525 | |
Apple, Inc. | | | 4,125 | | | | 1,504,800 | |
Applied Materials, Inc. | | | 7,200 | | | | 435,240 | |
Broadcom, Inc. | | | 1,660 | | | | 523,913 | |
Ciena Corp. * | | | 7,250 | | | | 392,660 | |
Intel Corp. | | | 5,575 | | | | 333,552 | |
Keysight Technologies, Inc. * | | | 4,150 | | | | 418,237 | |
NVIDIA Corp. | | | 975 | | | | 370,412 | |
| | | | | | | | |
| | |
| | | | | | | 4,110,339 | |
| | | | | | | | |
Energy Minerals - 0.3% | | | | | | | | |
Chevron Corp. | | | 1,825 | | | | 162,845 | |
| | | | | | | | |
Finance - 5.0% | | | | | | | | |
Ameriprise Financial, Inc. | | | 2,250 | | | | 337,590 | |
Aon, PLC | | | 1,900 | | | | 365,940 | |
Chubb, Ltd. | | | 2,950 | | | | 373,529 | |
Everest Re Group, Ltd. | | | 225 | | | | 46,395 | |
First Republic Bank | | | 1,750 | | | | 185,482 | |
Goldman Sachs Group, Inc. | | | 2,100 | | | | 415,002 | |
JPMorgan Chase & Co. | | | 2,800 | | | | 263,368 | |
T Rowe Price Group, Inc. | | | 2,075 | | | | 256,262 | |
US Bancorp | | | 2,675 | | | | 98,494 | |
| | | | | | | | |
| | |
| | | | | | | 2,342,062 | |
| | | | | | | | |
Health Services - 2.3% | | | | | | | | |
HCA Healthcare, Inc. | | | 3,900 | | | | 378,534 | |
UnitedHealth Group, Inc. | | | 2,325 | | | | 685,759 | |
| | | | | | | | |
| | |
| | | | | | | 1,064,293 | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
Health Technology - 5.6% | | | | | | | | |
Abbott Laboratories | | | 3,550 | | | | 324,577 | |
Boston Scientific Corp. * | | | 5,600 | | | | 196,616 | |
Bristol-Myers Squibb Co. | | | 6,300 | | | | 370,440 | |
Bristol-Myers Squibb Co., Rights * | | | 1,025 | | | | 3,669 | |
DexCom, Inc. * | | | 900 | | | | 364,860 | |
Illumina, Inc. * | | | 350 | | | | 129,622 | |
Intuitive Surgical, Inc. * | | | 620 | | | | 353,295 | |
Johnson & Johnson | | | 3,000 | | | | 421,890 | |
Thermo Fisher Scientific, Inc. | | | 1,250 | | | | 452,925 | |
| | | | | | | | |
| | |
| | | | | | | 2,617,894 | |
| | | | | | | | |
Process Industries - 1.5% | | | | | | | | |
Ecolab, Inc. | | | 1,875 | | | | 373,031 | |
Sherwin-Williams Co. | | | 600 | | | | 346,710 | |
| | | | | | | | |
| | |
| | | | | | | 719,741 | |
| | | | | | | | |
Producer Manufacturing - 4.1% | | | | | | | | |
3M Co. | | | 875 | | | | 136,491 | |
Honeywell International, Inc. | | | 1,925 | | | | 278,336 | |
L3Harris Technologies, Inc. | | | 1,450 | | | | 246,021 | |
Motorola Solutions, Inc. | | | 1,125 | | | | 157,646 | |
Northrop Grumman Corp. | | | 500 | | | | 153,720 | |
Otis Worldwide Corp. | | | 1,500 | | | | 85,290 | |
Raytheon Technologies Corp. | | | 5,125 | | | | 315,802 | |
Safran SA, ADR * | | | 13,950 | | | | 351,540 | |
Trane Technologies, PLC | | | 2,175 | | | | 193,532 | |
| | | | | | | | |
| | |
| | | | | | | 1,918,378 | |
| | | | | | | | |
Retail Trade - 5.5% | | | | | | | | |
Amazon.com, Inc. * | | | 485 | | | | 1,338,028 | |
CVS Health Corp. | | | 4,525 | | | | 293,989 | |
Home Depot, Inc. | | | 2,050 | | | | 513,545 | |
TJX Cos., Inc. | | | 6,550 | | | | 331,168 | |
Ulta Beauty, Inc. * | | | 430 | | | | 87,471 | |
| | | | | | | | |
| | |
| | | | | | | 2,564,201 | |
| | | | | | | | |
Technology Services - 15.7% | | | | | | | | |
Accenture, PLC | | | 2,025 | | | | 434,808 | |
Adobe, Inc. * | | | 1,525 | | | | 663,848 | |
Alphabet, Inc. - Class A * | | | 550 | | | | 779,927 | |
Alphabet, Inc. - Class C * | | | 205 | | | | 289,790 | |
Atlassian Corp., PLC * | | | 2,200 | | | | 396,594 | |
Autodesk, Inc. * | | | 1,700 | | | | 406,623 | |
Facebook, Inc. * | | | 2,700 | | | | 613,089 | |
Intuit, Inc. | | | 1,200 | | | | 355,428 | |
Microsoft Corp. | | | 7,375 | | | | 1,500,886 | |
Paycom Software, Inc. * | | | 550 | | | | 170,352 | |
PayPal Holdings, Inc. * | | | 3,300 | | | | 574,959 | |
salesforce.com, Inc. * | | | 3,575 | | | | 669,705 | |
ServiceNow, Inc. * | | | 150 | | | | 60,759 | |
Splunk, Inc. * | | | 1,950 | | | | 387,465 | |
| | | | | | | | |
| | |
| | | | | | | 7,304,233 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
6 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
| Name of Issuer | | Quantity
/Principal
Amount ($) | | | Fair Value ($) | |
Transportation - 1.2% | | | | | | | | |
FedEx Corp. | | | 1,375 | | | | 192,802 | |
Union Pacific Corp. | | | 2,050 | | | | 346,594 | |
| | | | | | | | |
| | |
| | | | | | | 539,396 | |
| | | | | | | | |
Utilities - 0.5% | | | | | | | | |
NextEra Energy, Inc. | | | 1,035 | | | | 248,576 | |
| | | | | | | | |
Total Common Stocks
(cost: $18,918,672) | | | | | | | 28,194,436 | |
| | | | | | | | |
| | |
Bonds - 30.1% | | | | | | | | |
| | |
Asset-Backed Securities - 2.1% | | | | | | | | |
Bayview Opportunity Master Fund,
2017-SPL1 A, 4.00%, 10/28/64 1, 4 | | | 51,282 | | | | 53,138 | |
Credit Suisse First Boston Mortgage Corp.,
2005-AGE1 M3, 1 Mo. Libor + 0.65, 0.83%, 2/25/32 1 | | | 38,657 | | | | 38,634 | |
Irwin Home Equity Corp.,
2005-1 M1, 5.92%, 6/25/35 14 | | | 21,374 | | | | 21,777 | |
New Century Home Equity Loan Trust,
2005-A A4W, 4.68%, 8/25/35 14 | | | 5,798 | | | | 5,863 | |
OSCAR US Funding Trust VII, LLC: | | | | | | | | |
2017-2A A3, 2.45%, 12/10/21 4 | | | 45,779 | | | | 45,862 | |
2017-2A A4, 2.76%, 12/10/24 4 | | | 100,000 | | | | 101,198 | |
Small Business Administration: | | | | | | | | |
2008-20A 1, 5.17%, 1/1/28 | | | 34,506 | | | | 37,477 | |
2007-20H 1, 5.78%, 8/1/27 | | | 34,603 | | | | 37,586 | |
Towd Point Mortgage Trust: | | | | | | | | |
2020-MH1 A1A, 2.18%, 2/25/60 1, 4 | | | 185,723 | | | | 188,079 | |
2019-MH1 A2, 3.00%, 11/25/58 1, 4 | | | 100,000 | | | | 101,764 | |
2019-SJ3 A2, 3.00%, 11/25/59 1, 4 | | | 125,000 | | | | 125,714 | |
2019-SJ1 A1, 3.75%, 11/25/58 1, 4 | | | 104,520 | | | | 105,405 | |
2019-SJ1 A2, 4.17%, 11/25/58 1, 4 | | | 100,000 | | | | 101,630 | |
| | | | | | | | |
| | |
| | | | | | | 964,127 | |
| | | | | | | | |
Collateralized Mortgage Obligations - 5.1% | | | | | | | | |
Fannie Mae: | | | | | | | | |
2017-84 JP, 2.75%, 10/25/47 | | | 85,284 | | | | 90,366 | |
2003-34 A1, 6.00%, 4/25/43 | | | 35,194 | | | | 40,974 | |
2004-T1 1A1, 6.00%, 1/25/44 | | | 22,230 | | | | 25,925 | |
1999-17 C, 6.35%, 4/25/29 | | | 11,622 | | | | 13,061 | |
2001-82 ZA, 6.50%, 1/25/32 | | | 16,249 | | | | 18,435 | |
2009-30 AG, 6.50%, 5/25/39 | | | 49,611 | | | | 57,313 | |
2013-28 WD, 6.50%, 5/25/42 | | | 47,967 | | | | 57,721 | |
2004-T1 1A2, 6.50%, 1/25/44 | | | 71,017 | | | | 83,890 | |
2004-W9 2A1, 6.50%, 2/25/44 | | | 39,320 | | | | 46,438 | |
2010-108 AP, 7.00%, 9/25/40 | | | 1,920 | | | | 2,243 | |
2004-T3, 1A3, 7.00%, 2/25/44 | | | 7,470 | | | | 8,983 | |
1993-21 KA, 7.70%, 3/25/23 | | | 20,802 | | | | 22,062 | |
Freddie Mac: | | | | | | | | |
4784 BV, 3.50%, 12/15/32 | | | 100,000 | | | | 105,050 | |
4293 BA, 5.28%, 10/15/47 1 | | | 12,555 | | | | 14,318 | |
2122 ZE, 6.00%, 2/15/29 | | | 59,676 | | | | 68,857 | |
| | | | | | | | |
| Name of Issuer | | Principal
Amount ($) | | | Fair Value ($) | |
2126 C, 6.00%, 2/15/29 | | | 39,868 | | | | 45,388 | |
2485 WG, 6.00%, 8/15/32 | | | 39,419 | | | | 46,134 | |
2480 Z, 6.00%, 8/15/32 | | | 38,006 | | | | 43,324 | |
2575 QE, 6.00%, 2/15/33 | | | 18,363 | | | | 21,155 | |
2980 QA, 6.00%, 5/15/35 | | | 19,430 | | | | 23,090 | |
2283 K, 6.50%, 12/15/23 | | | 4,726 | | | | 5,038 | |
2357 ZJ, 6.50%, 9/15/31 | | | 23,532 | | | | 26,382 | |
4520 HM, 6.50%, 8/15/45 | | | 36,144 | | | | 43,203 | |
1142 IA, 7.00%, 10/15/21 | | | 10,268 | | | | 10,442 | |
3946 KW, 7.00%, 11/15/29 | | | 360 | | | | 361 | |
3704 CT, 7.00%, 12/15/36 | | | 16,570 | | | | 20,215 | |
2238 PZ, 7.50%, 6/15/30 | | | 15,228 | | | | 18,348 | |
Government National Mortgage Association: | |
2015-80 BA, 6.99%, 6/20/45 1 | | | 25,324 | | | | 29,650 | |
2018-147 AM, 7.00%, 10/20/48 | | | 94,346 | | | | 113,106 | |
2018-160 DA, 7.00%, 11/20/48 | | | 86,313 | | | | 97,531 | |
2014-69 W, 7.21%, 11/20/34 1 | | | 28,978 | | | | 34,210 | |
2013-133 KQ, 7.30%, 8/20/38 1 | | | 28,436 | | | | 33,891 | |
2005-74 HA, 7.50%, 9/16/35 | | | 9,860 | | | | 10,672 | |
JP Morgan Mortgage Trust: | | | | | | | | |
2019-HYB1 A5A, 3.00%, 10/25/49 1, 4 | | | 138,632 | | | | 140,602 | |
2019-8 A4, 3.50%, 3/25/50 1, 4 | | | 107,480 | | | | 109,542 | |
2019-9 A8, 3.50%, 5/25/50 1, 4 | | | 125,000 | | | | 128,635 | |
2020-2 A4, 3.50%, 7/25/50 1, 4 | | | 176,510 | | | | 180,932 | |
New Residential Mortgage Loan Trust: | | | | | | | | |
2018-3A A1, 4.50%, 5/25/58 1, 4 | | | 71,457 | | | | 77,273 | |
PMT Loan Trust: 2013-J1 A11, 3.50%, 9/25/43 1, 4 | | | 118,698 | | | | 123,760 | |
Sequoia Mortgage Trust: | | | | | | | | |
2019-5 A4, 3.50%, 12/25/49 1, 4 | | | 84,450 | | | | 86,506 | |
2020-2 A4, 3.50%, 3/25/50 1, 4 | | | 139,283 | | | | 143,538 | |
Vendee Mortgage Trust: | | | | | | | | |
2008-1 B, 6.18%, 3/15/25 1 | | | 11,384 | | | | 13,309 | |
1994-2 2, 6.72%, 5/15/24 1 | | | 9,932 | | | | 10,277 | |
Wells Fargo Mortgage Backed Securities Trust: 2020-2 A3, 3.00%, 12/25/49 1, 4 | | | 100,000 | | | | 102,844 | |
| | | | | | | | |
| | |
| | | | | | | 2,394,994 | |
| | | | | | | | |
Corporate Bonds - 12.9% | | | | | | | | |
3M Co., 3.05%, 4/15/30 | | | 150,000 | | | | 169,819 | |
AbbVie, Inc., 4.88%, 11/14/48 | | | 100,000 | | | | 131,324 | |
Alleghany Corp., 3.63%, 5/15/30 | | | 100,000 | | | | 106,113 | |
American Airlines Trust, 3.20%, 6/15/28 | | | 83,200 | | | | 78,362 | |
American Financial Group, 5.25%, 4/2/30 | | | 100,000 | | | | 118,763 | |
Arizona Public Service Co., 3.15%, 5/15/25 | | | 50,000 | | | | 54,888 | |
AXIS Specialty Finance, 3.90%, 7/15/29 | | | 100,000 | | | | 106,926 | |
Bank of America Corp., 3.25%, 10/21/27 | | | 100,000 | | | | 110,287 | |
Brown & Brown, Inc., 4.20%, 9/15/24 | | | 68,000 | | | | 73,734 | |
Carrier Global Corp., 2.70%, 2/15/31 4 | | | 75,000 | | | | 74,780 | |
Charles Stark Draper Laboratory, Inc.,
4.39%, 9/1/48 | | | 100,000 | | | | 125,656 | |
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2020 | | | 7 | |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit Balanced Fund (Continued)
| | | | | | | | |
| | | |
| Name of Issuer | | Principal
Amount ($) | | | Fair Value ($) | |
Citigroup, Inc., 3 Mo. Libor + 1.34, 3.98%, 3/20/30 1 | | | 150,000 | | | | 172,376 | |
CNO Financial Group, Inc., 5.25%, 5/30/29 | | | 100,000 | | | | 107,173 | |
Comerica, Inc., 4.00%, 2/1/29 | | | 150,000 | | | | 168,542 | |
Cox Communications, Inc., 8.38%, 3/1/39 4 | | | 100,000 | | | | 163,362 | |
CSX Corp., 4.25%, 11/1/66 | | | 150,000 | | | | 181,788 | |
Delta Air Lines 2015-1 Class A Pass Through Trust, 3.88%, 7/30/27 | | | 160,976 | | | | 141,640 | |
Delta Air Lines 2015-1 Class AA Pass Through Trust, 3.63%, 7/30/27 | | | 120,730 | | | | 119,396 | |
Doric Nimrod Air Alpha 2013-1 Trust,
5.25%, 5/30/23 4 | | | 34,313 | | | | 31,182 | |
Doric Nimrod Air Finance Alpha 2012-1 Trust, 5.13%, 11/30/22 4 | | | 25,998 | | | | 24,052 | |
Duke Energy Florida, LLC, 2.54%, 9/1/29 | | | 50,000 | | | | 53,571 | |
Emerson Electric Co., 1.95%, 10/15/30 | | | 150,000 | | | | 153,036 | |
Entergy Louisiana, LLC, 4.95%, 1/15/45 | | | 150,000 | | | | 163,435 | |
Equifax, Inc., 6.90%, 7/1/28 | | | 150,000 | | | | 184,672 | |
Essential Utilities, Inc., 2.70%, 4/15/30 | | | 50,000 | | | | 52,277 | |
Fidelity National Financial, 3.40%, 6/15/30 | | | 50,000 | | | | 52,052 | |
Fulton Financial Corp. (Subordinated),
4.50%, 11/15/24 | | | 150,000 | | | | 160,698 | |
Georgia-Pacific, LLC: | | | | | | | | |
1.75%, 9/30/25 4 | | | 150,000 | | | | 154,745 | |
7.38%, 12/1/25 | | | 100,000 | | | | 127,798 | |
HP, Inc., 2.20%, 6/17/25 | | | 150,000 | | | | 154,824 | |
Intuit, Inc., 0.95%, 7/15/25 | | | 50,000 | | | | 50,108 | |
ITT, LLC, 7.40%, 11/15/25 | | | 25,000 | | | | 31,665 | |
Johnson & Johnson, 3.55%, 3/1/36 | | | 150,000 | | | | 177,442 | |
JPMorgan Chase & Co., 8.75%, 9/1/30 | | | 100,000 | | | | 145,132 | |
Lincoln National Corp., 7.00%, 6/15/40 | | | 100,000 | | | | 142,840 | |
Mercury General Corp., 4.40%, 3/15/27 | | | 100,000 | | | | 109,080 | |
NetApp, Inc., 1.88%, 6/22/25 | | | 150,000 | | | | 152,138 | |
Northern Trust Corp. (Subordinated), 3 Mo. Libor + 1.13, 3.38%, 5/8/32 1 | | | 150,000 | | | | 160,731 | |
Northrop Grumman Corp., 3.20%, 2/1/27 | | | 150,000 | | | | 166,124 | |
Phillips 66, 2.15%, 12/15/30 | | | 50,000 | | | | 48,535 | |
Principal Financial Group, Inc., 3 Mo. Libor + 3.04, 3.44%, 5/15/55 1 | | | 100,000 | | | | 89,620 | |
Ross Stores, Inc., 4.70%, 4/15/27 | | | 150,000 | | | | 174,028 | |
Security Benefit Life Insurance Co. (Subordinated), 7.45%, 10/1/33 4 | | | 100,000 | | | | 133,733 | |
Spirit Airlines 2015-1A Trust, 4.10%, 4/1/28 | | | 109,835 | | | | 93,052 | |
SW Public Service Co., 3.30%, 6/15/24 | | | 100,000 | | | | 108,063 | |
Tyson Foods, Inc., 5.10%, 9/28/48 | | | 100,000 | | | | 128,619 | |
Union Pacific Railroad Co., 2014-1 Pass Through Trust, 3.23%, 5/14/26 | | | 119,040 | | | | 131,004 | |
Unum Group, 4.50%, 12/15/49 | | | 25,000 | | | | 23,365 | |
Wachovia Corp., (Subordinated), 7.57%,
8/1/26 14 | | | 75,000 | | | | 95,803 | |
Webster Financial Corp., 4.38%, 2/15/24 | | | 125,000 | | | | 131,335 | |
| | | | | | | | |
| | | |
| Name of Issuer | | Principal
Amount ($) | | | Fair Value ($) | |
WestRock MWV, LLC, 7.95%, 2/15/31 | | | 100,000 | | | | 142,195 | |
Xilinx, Inc., 2.38%, 6/1/30 | | | 50,000 | | | | 51,473 | |
| | | | | | | | |
| | | | | | | 6,003,356 | |
| | | | | | | | |
Federal Home Loan Mortgage Corporation - 0.3% | | | | | |
6.50%, 2/1/22 | | | 5,519 | | | | 5,601 | |
7.50%, 7/1/29 | | | 112,352 | | | | 132,015 | |
8.00%, 2/1/34 | | | 13,723 | | | | 16,661 | |
8.50%, 9/1/24 | | | 8,487 | | | | 8,777 | |
| | | | | | | | |
| | | | | | | 163,054 | |
| | | | | | | | |
Federal National Mortgage Association - 2.0% | | | | | | | | |
2.48%, 2/1/35 | | | 150,000 | | | | 164,749 | |
2.68%, 2/1/35 | | | 150,000 | | | | 166,537 | |
4.50%, 8/1/40 | | | 49,978 | | | | 52,799 | |
5.50%, 10/1/33 | | | 69,887 | | | | 77,827 | |
6.50%, 2/1/24 | | | 14,947 | | | | 15,753 | |
6.50%, 9/1/27 | | | 43,773 | | | | 48,693 | |
6.50%, 6/1/40 | | | 108,404 | | | | 123,265 | |
7.00%, 1/1/32 | | | 10,511 | | | | 11,495 | |
7.00%, 3/1/33 | | | 19,830 | | | | 22,433 | |
7.00%, 12/1/38 | | | 41,059 | | | | 45,828 | |
8.00%, 6/1/24 | | | 9,108 | | | | 9,799 | |
8.00%, 1/1/31 | | | 11,104 | | | | 11,228 | |
8.00%, 2/1/31 | | | 18,602 | | | | 23,370 | |
8.00%, 9/1/37 | | | 66,977 | | | | 85,020 | |
8.43%, 7/15/26 | | | 2,705 | | | | 2,763 | |
8.50%, 10/1/30 | | | 23,808 | | | | 28,523 | |
10.00%, 6/1/31 | | | 25,358 | | | | 28,398 | |
| | | | | | | | |
| | |
| | | | | | | 918,480 | |
| | | | | | | | |
Government National Mortgage Association - 0.5% | | | | | |
5.00%, 5/20/48 | | | 83,968 | | | | 92,417 | |
5.75%, 12/15/22 | | | 21,187 | | | | 22,481 | |
6.50%, 11/20/38 | | | 19,629 | | | | 22,173 | |
7.00%, 12/15/24 | | | 8,397 | | | | 8,996 | |
7.00%, 11/20/27 | | | 12,217 | | | | 14,097 | |
7.00%, 9/20/29 | | | 33,047 | | | | 38,347 | |
7.00%, 9/20/38 | | | 11,530 | | | | 13,855 | |
7.50%, 4/20/32 | | | 24,886 | | | | 28,983 | |
8.00%, 7/15/24 | | | 6,297 | | | | 6,631 | |
| | | | | | | | |
| | | | | | | 247,980 | |
| | | | | | | | |
Taxable Municipal Securities - 6.8% | | | | | | | | |
Bucks Co. Industrial Dev. Auth.,
4.00%, 10/1/21 | | | 65,000 | | | | 64,545 | |
Buffalo State Col. Foundation Hsg. Corp.,
2.80%, 11/1/30 | | | 100,000 | | | | 103,918 | |
Florida Dev. Fin. Corp., 4.11%, 4/1/50 | | | 150,000 | | | | 149,053 | |
Great Lakes Water Auth. Sewage Disposal System, 3.51%, 7/1/44 | | | 150,000 | | | | 155,494 | |
Hartford HealthCare Corp., 3.45%, 7/1/54 | | | 250,000 | | | | 231,226 | |
Kentucky Higher Edu. Student Loan Corp. (Subordinated), 5.27%, 6/1/36 | | | 100,000 | | | | 105,702 | |
| | | | |
See accompanying notes to financial statements. | | | | |
8 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
| Name of Issuer | | Principal Amount ($)/ Quantity | | | Fair Value ($) | |
Lane Cnty. Sch. Dist. No. 52 Bethel, 2.52%,
6/15/27 | | | 60,000 | | | | 62,774 | |
Massachusetts Edu. Auth.: | | | | | | | | |
4.00%, 1/1/32 | | | 105,000 | | | | 108,574 | |
4.41%, 7/1/34 | | | 50,000 | | | | 55,828 | |
MI Hsg. Dev. Auth., 3.53%, 6/1/50 | | | 100,000 | | | | 103,424 | |
MN Hsg. Fin. Agy.: | | | | | | | | |
2.31%, 1/1/27 | | | 230,000 | | | | 238,425 | |
4.73%, 1/1/49 | | | 95,000 | | | | 102,955 | |
Montgomery Cnty. Indst. Dev. Auth., 2.65%,
11/15/25 | | | 100,000 | | | | 100,123 | |
ND Hsg. Fin. Agy., 3.70%, 7/1/33 | | | 100,000 | | | | 107,595 | |
NJ Higher Edu. Student Assit. Auth., 3.50%,
12/1/39 8 | | | 100,000 | | | | 99,349 | |
North Hudson Sewer Auth., 2.88%, 6/1/28 | | | 150,000 | | | | 159,024 | |
Oregon State Fac. Auth., 3.29%, 10/1/40 | | | 100,000 | | | | 99,008 | |
Public Finance Authority, 4.23%, 7/1/32 | | | 105,000 | | | | 122,181 | |
So. Dakota Hsg. Dev. Auth., 3.89%, 5/1/32 | | | 15,000 | | | | 16,165 | |
South Carolina Ports Auth., 3.88%, 7/1/55 | | | 150,000 | | | | 154,288 | |
Texas Children’s Hospital, 3.37%, 10/1/29 17 | | | 115,000 | | | | 128,291 | |
Tulane University, 0.69%, 2/15/36 1 | | | 90,000 | | | | 84,751 | |
Utah Charter Sch. Fin. Auth., 2.40%, 10/15/27 | | | 205,000 | | | | 205,461 | |
Western MI Univ. Homer Stryker MD. Sch. of Med., 4.75%, 11/15/28 | | | 100,000 | | | | 115,953 | |
Willoughby-Eastlake City Sch. Dist., 3.36%, 12/1/46 | | | 150,000 | | | | 152,024 | |
Wisconsin Center District, 4.17%, 12/15/50 | | | 150,000 | | | | 157,140 | |
| | | | | | | | |
| | | | | | | 3,183,271 | |
| | | | | | | | |
U.S. Treasury / Federal Agency Securities - 0.4% | | | | | |
U.S. Treasury Bond, 2.00%, 2/15/50 | | | 150,000 | | | | 171,785 | |
| | | | | | | | |
Total Bonds
(cost: $13,689,594) | | | | | | | 14,047,047 | |
| | | | | | | | |
Investment Companies - 2.3% | | | | | | | | |
BlackRock Enhanced Government Fund | | | 4,886 | | | | 63,664 | |
BlackRock Income Trust | | | 23,300 | | | | 143,761 | |
BlackRock Taxable Municipal Bond Trust | | | 1,200 | | | | 29,904 | |
Duff & Phelps Utility & Corp. Bond Tr., Inc. | | | 8,900 | | | | 83,215 | |
Eaton Vance Short Duration Div. Inc. Fund | | | 14,000 | | | | 158,900 | |
Eaton Vance, Ltd. Duration Inc. Fund | | | 13,100 | | | | 147,637 | |
Franklin, Ltd. Duration, Income Trust | | | 17,300 | | | | 146,358 | |
MFS Intermediate Income Trust | | | 2,200 | | | | 8,140 | |
Nuveen Multi-Market Income Fund, Inc. | | | 3,953 | | | | 27,276 | |
Putnam Master Intermediate Income Trust | | | 26,900 | | | | 109,752 | |
Putnam Premier Income Trust | | | 30,400 | | | | 144,096 | |
| | | | | | | | |
Total Investment Companies
(cost: $1,023,912) | | | | | | | 1,062,703 | |
| | | | | | | | |
| | | | | | | | |
| Name of Issue | | Quantity | | | Fair Value ($) | |
Short-Term Securities - 9.4% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 0.06% | | | 4,389,935 | | | | 4,389,935 | |
| | | | | | | | |
(cost: $4,389,935) | | | | | | | | |
Total Investments in Securities - 102.2%
(cost: $38,022,113) | | | | | | | 47,694,121 | |
Other Assets and Liabilities, net - (2.2%) | | | | | | | (1,036,620 | ) |
| | | | | | | | |
Total Net Assets - 100.0% | | | | | | | $46,657,501 | |
| | | | | | | | |
| | | | | | | | | |
| * | Non-income producing security. |
| 1 | Variable rate security. Rate disclosed is as of June 30, 2020. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or, for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their descriptions. |
| 4 | 144A Restricted Security. The total value of such securities as of June 30, 2020 was $2,498,276 and represented 5.4% of net assets. These securities have been determined to be liquid by the Adviser in accordance with guidelines established by the Board of Directors. |
| 8 | Securities the income from which is treated as a tax preference that is included in alternative minimum taxable income for purposes of computing federal alternative minimum tax (AMT). At June 30, 2020, 0.2% of net assets in the Fund was invested in such securities. |
| 14 | Step Coupon: A bond that pays a coupon rate that increases on a specified date(s). Rate disclosed is as of June 30, 2020. |
| 17 | Security that is either an absolute and unconditional obligation of the United States Government or is collateralized by securities, loans, or leases guaranteed by the U.S. Government or its agencies or instrumentalities. |
ADR — American Depositary Receipt
LLC — Limited Liability Company
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2020 | | | 9 | |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit Balanced Fund (Continued)
A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1 Quoted
Price ($) | | | Level 2
Other significant
observable inputs ($) | | | Level 3 Significant
unobservable inputs ($) | | Total ($) | |
Common Stocks ** | | | 28,194,436 | | | | — | | | — | | | 28,194,436 | |
Asset-Backed Securities | | | — | | | | 964,127 | | | — | | | 964,127 | |
Collateralized Mortgage Obligations | | | — | | | | 2,394,994 | | | — | | | 2,394,994 | |
Corporate Bonds | | | — | | | | 6,003,356 | | | — | | | 6,003,356 | |
Federal Home Loan Mortgage Corporation | | | — | | | | 163,054 | | | — | | | 163,054 | |
Federal National Mortgage Association | | | — | | | | 918,480 | | | — | | | 918,480 | |
Government National Mortgage Association | | | — | | | | 247,980 | | | — | | | 247,980 | |
Taxable Municipal Securities | | | — | | | | 3,183,271 | | | — | | | 3,183,271 | |
U.S. Treasury / Federal Agency Securities | | | — | | | | 171,785 | | | — | | | 171,785 | |
Investment Companies | | | 1,062,703 | | | | — | | | — | | | 1,062,703 | |
Short-Term Securities | | | 4,389,935 | | | | — | | | — | | | 4,389,935 | |
| | | | |
Total: | | | 33,647,074 | | | | 14,047,047 | | | — | | | 47,694,121 | |
| | | | |
| ** | For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown. |
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
10 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
[This page intentionally left blank.]
|
|
|
Sit Dividend Growth Fund - Class I and Class S |
OBJECTIVE & STRATEGY
The objective of the Sit Dividend Growth Fund is to provide current income that exceeds the dividend yield of the S&P 500® Index and that grows over a period of years. Secondarily, the Fund seeks long-term capital appreciation.
The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in dividend-paying common stocks. The Fund may invest the balance of its assets in preferred stocks, convertible bonds, and U.S. Treasury securities.
Fund Performance
The Sit Dividend Growth Fund Class I posted a +5.46% return during the 12-month period ending June 30, 2020, compared to the +7.51% return for the S&P 500® Index. The Fund’s gross dividend yield (before deducting Fund expenses) was 2.45% as of 6/30/20, compared to 1.96% for the S&P 500® Index.
Factors that Influenced the Fund’s Performance
Although the Fund posted strong absolute returns over the 12-month period, it underperformed the S&P500® Index. The main reason for the underperformance was the exceptional returns for non-dividend-paying stocks during the COVID-19 outbreak. The two key sectors that led to underperformance over the period were technology services and retail trade. The technology services sector contains many companies that were in favor with investors through the pandemic, such as high growth technology companies, which were stay-at-home beneficiaries due to their cloud computing or software exposure. Unfortunately, many of these companies do not pay dividends. Additionally, performance in the retail trade sector was adversely affected by its lack of exposure to large internet retailers that were major stay-at-home beneficiaries, but do not pay dividends. Conversely, performance also suffered from the Fund’s large exposure to high dividend-paying sectors, such as energy minerals and utilities, as investors worried about the sustainability of dividends for these companies through the pandemic. Positively, an underweight position in the consumer services sector and strong stock selection in the finance sector benefited relative performance during the period. Standouts among our finance picks included Legg Mason and Mor-gan Stanley.
Outlook and Positioning
We believe the recent underperformance of dividend-paying stocks will prove a propitious buying opportunity. Valuations for many dividend-paying stocks have not been this attractive in years and yields are compelling, particularly relative to bonds. As of June 30, 2020, we calculate that over 78% of the S&P 500® stocks currently offer dividend yields above the 10-year Treasury bond yield. As fears over dividend cuts subside with the economy gradually reopening, we
HYPOTHETICAL GROWTH OF $10,000
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the S&P 500® Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks of large-cap companies. It is not possible to invest directly in an index. This is the Fund’s primary index.
expect the relative valuation gap between dividend payers and non-dividend payers to narrow. Within this framework, we believe it is key to be selective, and we maintain our focus on purchasing only dividend-paying stocks with strong balance sheets and cash flow generation, and that have business models that are not susceptible to large-scale disruptions from secular changes. Our favorite sectors include electronic technology and healthcare technology, which should benefit from secular market shifts. We continue to believe that a diversified portfolio of high quality, dividend-paying companies can provide investors with an opportunity to participate in market gains, while also providing downside protection if market fundamentals deteriorate.
Roger J. Sit
Kent L. Johnson
Portfolio Managers
| | |
Information on this page is unaudited. |
12 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2020
| | | | | | | | | | | | |
| | | Sit Dividend
Growth Fund | | | S&P 500®
Index 1 | |
| | | Class I | | | Class S | |
One Year | | | 5.46 | % | | | 5.19 | % | | | 7.51 | % |
Five Year | | | 8.64 | | | | 8.36 | | | | 10.73 | |
Ten Year | | | 12.30 | | | | 12.02 | | | | 13.99 | |
Since Inception - Class I | | | 9.22 | | | | n/a | | | | 8.62 | |
(12/31/03) | | | | | | | | | | | | |
Since Inception - Class S | | | n/a | | | | 8.52 | | | | 8.57 | |
(3/31/06) | | | | | | | | | | | | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 S&P 500® Index is an unmanaged capitalization-weighted index that measures the performance of 500 widely held common stocks of large-cap companies. It is not possible to invest directly in an index.
PORTFOLIO SUMMARY
| | | | |
Class I: | | | | |
Net Asset Value 6/30/20: | | | $13.48 Per Share | |
Net Asset Value 6/30/19: | | | $14.45 Per Share | |
Total Net Assets: | | | $172.7 Million | |
Class S: | | | | |
Net Asset Value 6/30/20: | | | $13.40 Per Share | |
Net Asset Value 6/30/19: | | | $14.37 Per Share | |
Total Net Assets: | | | $29.1 Million | |
| |
Weighted Average Market Cap: | | | $298.8 Billion | |
TOP 10 HOLDINGS
1. Microsoft Corp.
2. Apple, Inc.
3. Johnson & Johnson
4. Verizon Communications, Inc.
5. Broadcom, Inc.
6. Home Depot, Inc.
7. Applied Materials, Inc.
8. Procter & Gamble Co.
9. PepsiCo, Inc.
10. UnitedHealth Group, Inc.
Based on total net assets as of June 30, 2020. Subject to change.
SECTOR ALLOCATION
Based on total net assets as of June 30, 2020. Subject to change.
| | | | |
Information on this page is unaudited. | | | | |
JUNE 30, 2020 | | | 13 | |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit Dividend Growth Fund
Investments are grouped by economic sectors.
| | | | | | | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
Common Stocks - 99.4% | | | | | | | | |
Commercial Services - 0.9% | | | | | | | | |
S&P Global, Inc. | | | 5,575 | | | | 1,836,851 | |
| | | | | | | | |
Communications - 4.0% | | | | | | | | |
American Tower Corp. | | | 11,250 | | | | 2,908,575 | |
Verizon Communications, Inc. | | | 93,800 | | | | 5,171,194 | |
| | | | | | | | |
| | | | | | | 8,079,769 | |
| | | | | | | | |
Consumer Durables - 0.9% | | | | | | | | |
Activision Blizzard, Inc. | | | 23,200 | | | | 1,760,880 | |
| | | | | | | | |
Consumer Non-Durables - 8.6% | | | | | | | | |
Coca-Cola Co. | | | 53,750 | | | | 2,401,550 | |
Conagra Brands, Inc. | | | 64,075 | | | | 2,253,518 | |
Mondelez International, Inc. | | | 47,525 | | | | 2,429,953 | |
NIKE, Inc. | | | 14,550 | | | | 1,426,628 | |
PepsiCo, Inc. | | | 27,125 | | | | 3,587,552 | |
Procter & Gamble Co. | | | 33,175 | | | | 3,966,735 | |
Tyson Foods, Inc. | | | 21,900 | | | | 1,307,649 | |
| | | | | | | | |
| | | | | | | 17,373,585 | |
| | | | | | | | |
Consumer Services - 3.2% | | | | | | | | |
McDonald’s Corp. | | | 16,350 | | | | 3,016,084 | |
Visa, Inc. | | | 18,075 | | | | 3,491,548 | |
| | | | | | | | |
| | | | | | | 6,507,632 | |
| | | | | | | | |
Electronic Technology - 15.5% | | | | | | | | |
Apple, Inc. | | | 29,975 | | | | 10,934,880 | |
Applied Materials, Inc. | | | 70,075 | | | | 4,236,034 | |
Broadcom, Inc. | | | 14,850 | | | | 4,686,808 | |
Garmin, Ltd. | | | 18,625 | | | | 1,815,938 | |
Intel Corp. | | | 57,075 | | | | 3,414,797 | |
Keysight Technologies, Inc. * | | | 15,325 | | | | 1,544,454 | |
Qualcomm, Inc. | | | 18,150 | | | | 1,655,462 | |
Skyworks Solutions, Inc. | | | 23,600 | | | | 3,017,496 | |
| | | | | | | | |
| | | | | | | 31,305,869 | |
| | | | | | | | |
Energy Minerals - 1.6% | | | | | | | | |
ConocoPhillips | | | 43,225 | | | | 1,816,314 | |
Valero Energy Corp. | | | 25,775 | | | | 1,516,086 | |
| | | | | | | | |
| | | | | | | 3,332,400 | |
| | | | | | | | |
Finance - 14.2% | | | | | | | | |
Allstate Corp. | | | 2,125 | | | | 206,104 | |
Ameriprise Financial, Inc. | | | 17,325 | | | | 2,599,443 | |
Aon, PLC | | | 14,300 | | | | 2,754,180 | |
BlackRock, Inc. | | | 3,625 | | | | 1,972,326 | |
Chubb, Ltd. | | | 20,675 | | | | 2,617,868 | |
Everest Re Group, Ltd. | | | 8,700 | | | | 1,793,940 | |
Goldman Sachs Group, Inc. | | | 4,900 | | | | 968,338 | |
| | | | | | | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
JPMorgan Chase & Co. | | | 26,400 | | | | 2,483,184 | |
MetLife, Inc. | | | 66,250 | | | | 2,419,450 | |
Morgan Stanley | | | 65,925 | | | | 3,184,178 | |
New York Community Bancorp, Inc. | | | 139,725 | | | | 1,425,195 | |
Physicians Realty Trust | | | 84,725 | | | | 1,484,382 | |
Realty Income Corp. | | | 33,750 | | | | 2,008,125 | |
T Rowe Price Group, Inc. | | | 16,025 | | | | 1,979,088 | |
Truist Financial Corp. | | | 21,600 | | | | 811,080 | |
| | | | | | | | |
| | | | | | | 28,706,881 | |
| | | | | | | | |
Health Services - 2.8% | | | | | | | | |
Quest Diagnostics, Inc. | | | 18,000 | | | | 2,051,280 | |
UnitedHealth Group, Inc. | | | 12,025 | | | | 3,546,774 | |
| | | | | | | | |
| | | | | | | 5,598,054 | |
| | | | | | | | |
Health Technology - 14.9% | | | | | | | | |
Abbott Laboratories | | | 32,075 | | | | 2,932,617 | |
AbbVie, Inc. | | | 26,875 | | | | 2,638,588 | |
Agilent Technologies, Inc. | | | 13,225 | | | | 1,168,693 | |
Amgen, Inc. | | | 11,175 | | | | 2,635,736 | |
AstraZeneca, PLC, ADR | | | 43,000 | | | | 2,274,270 | |
Bristol-Myers Squibb Co. | | | 45,250 | | | | 2,660,700 | |
Johnson & Johnson | | | 40,250 | | | | 5,660,358 | |
Medtronic, PLC | | | 33,575 | | | | 3,078,828 | |
Merck & Co., Inc. | | | 41,175 | | | | 3,184,063 | |
Sanofi, ADR | | | 38,625 | | | | 1,971,806 | |
Zimmer Biomet Holdings, Inc. | | | 16,000 | | | | 1,909,760 | |
| | | | | | | | |
| | | | | | | 30,115,419 | |
| | | | | | | | |
Industrial Services - 0.9% | | | | | | | | |
TC Energy Corp. | | | 44,275 | | | | 1,897,626 | |
| | | | | | | | |
Process Industries - 1.4% | | | | | | | | |
Air Products & Chemicals, Inc. | | | 11,625 | | | | 2,806,972 | |
| | | | | | | | |
Producer Manufacturing - 6.8% | | | | | | | | |
Deere & Co. | | | 7,550 | | | | 1,186,482 | |
Dover Corp. | | | 22,775 | | | | 2,199,154 | |
Eaton Corp., PLC | | | 25,355 | | | | 2,218,055 | |
Honeywell International, Inc. | | | 15,100 | | | | 2,183,309 | |
Lockheed Martin Corp. | | | 6,725 | | | | 2,454,087 | |
Parker-Hannifin Corp. | | | 9,075 | | | | 1,663,175 | |
Raytheon Technologies Corp. | | | 28,925 | | | | 1,782,358 | |
| | | | | | | | |
| | | | | | | 13,686,620 | |
| | | | | | | | |
Retail Trade - 5.8% | | | | | | | | |
CVS Health Corp. | | | 33,050 | | | | 2,147,258 | |
Home Depot, Inc. | | | 18,325 | | | | 4,590,596 | |
Target Corp. | | | 22,325 | | | | 2,677,437 | |
TJX Cos., Inc. | | | 43,375 | | | | 2,193,040 | |
| | | | | | | | |
| | | | | | | 11,608,331 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
14 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
Technology Services - 10.6% | | | | | | | | |
Accenture, PLC | | | 13,925 | | | | 2,989,976 | |
Alphabet, Inc. - Class A * | | | 1,505 | | | | 2,134,165 | |
Facebook, Inc. * | | | 7,900 | | | | 1,793,853 | |
Microsoft Corp. | | | 64,300 | | | | 13,085,693 | |
Oracle Corp. | | | 25,250 | | | | 1,395,568 | |
| | | | | | | | |
| | | | | | | 21,399,255 | |
| | | | | | | | |
Transportation - 2.5% | | | | | | | | |
FedEx Corp. | | | 11,100 | | | | 1,556,442 | |
Union Pacific Corp. | | | 20,875 | | | | 3,529,336 | |
| | | | | | | | |
| | | | | | | 5,085,778 | |
| | | | | | | | |
Utilities - 4.8% | | | | | | | | |
Dominion Resources, Inc. | | | 33,050 | | | | 2,682,999 | |
Entergy Corp. | | | 15,600 | | | | 1,463,436 | |
FirstEnergy Corp. | | | 74,800 | | | | 2,900,744 | |
NextEra Energy, Inc. | | | 10,800 | | | | 2,593,836 | |
| | | | | | | | |
| | | | | | | 9,641,015 | |
| | | | | | | | |
Total Common Stocks
(cost: $168,147,080) | | | | | | | 200,742,937 | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
Short-Term Securities - 0.3% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%
(cost: $564,093) | | | 564,093 | | | | 564,093 | |
| | | | | | | | |
Total Investments in Securities - 99.7%
(cost: $168,711,173) | | | | | | | 201,307,030 | |
Other Assets and Liabilities, net - 0.3% | | | | | | | 544,764 | |
| | | | | | | | |
Total Net Assets - 100.0% | | | | | | $ | 201,851,794 | |
| | | | | | | | |
| * | Non-income producing security. |
| | ADR — American Depositary Receipt |
| | PLC — Public Limited Company |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2—significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1 | | �� | Level 2 | | Level 3 | | | |
| | | Quoted
Price ($) | | | Other significant
observable inputs ($) | | Significant
unobservable inputs ($) | | Total ($) | |
Common Stocks ** | | | 200,742,937 | | | — | | — | | | 200,742,937 | |
Short-Term Securities | | | 564,093 | | | — | | — | | | 564,093 | |
Total: | | | 201,307,030 | | | — | | — | | | 201,307,030 | |
| ** | For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown. |
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2020 | | | 15 | |
|
|
|
Sit Global Dividend Growth Fund - Class I and Class S |
OBJECTIVE & STRATEGY
The objective of the Sit Global Dividend Growth Fund is to provide current income that exceeds the dividend yield of the MSCI World Index and that grows over a period of years. Secondarily, the Fund seeks long-term capital appreciation.
The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in dividend-paying common stocks issued by U.S. and foreign companies. The Fund may invest the balance of its assets in preferred stocks, convertible bonds, and U.S. Treasury securities.
Fund Performance
Sit Global Dividend Growth Fund Class I shares provided a return of +4.93% during the 12-month period ending June 30, 2020, compared to the return of the MSCI World Index of +2.84%.
Factors that Influenced the Fund’s Performance
Contributing favorably to performance during the 12-month period were the Fund’s underweight in the banks sector and stock selection in the technology hardware (Logitech International, Apple) and materials (Lonza Group, Scotts Miracle-Gro) sectors. A higher cash position also helped relative performance. Conversely, the Fund’s holdings in the retailing (not owningAmazon.com), capital goods (Singapore Technologies Engineering, Honeywell International) and commercial & professional services (Waste Management) sectors detracted from performance.
Geographically, holdings in the Non-Euroland (Logitech International, Lonza Group) andAsia Pacific ex-Japan (Atlassian, Broadcom) regions added value due to positive stock selection, while stock selection in the North America region (Delta Air Lines, Suncor Energy, Marathon Petroleum, Euronet Worldwide) hurt performance.
Outlook and Positioning
We remain constructive on U.S. equities over the intermediate and longer term. Still, we recognize that the strong rebound in stock prices has, at least to some degree, discounted the uptick in economic activity and corporate earnings growth that is likely over the next several quarters. A key challenge is assessing appropriate valuations when earnings and revenue forecasts are highly uncertain and subject to the path of the COVID-19 pandemic, consumer sentiment, and further fiscal support. Valuations for many companies on forward earnings are now higher than prior to the coronavirus shutdown, and we suspect that investors will need more clarity on near-term earnings power for equity markets to move meaningfully higher from here. Our investment focus remains on companies that can deliver above average-earnings growth, regardless of the economic backdrop. Our preferred sectors include technology and healthcare.
HYPOTHETICAL GROWTH OF $10,000
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years (or for the life of the Fund if shorter) as compared to the performance of the MSCI World Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. It is not possible to invest directly in an index. This is the Fund’s primary index.
For non-U.S. exposure, we currently prefer investment opportunities in China, South Korea, and India. We remain positive on China, given its first in, first out position amid the global economic recovery and attractive relative valuations. We favor investments in the new economy, along with domestic demand-driven sectors. South Korea’s 100 trillion won of financial measures, which focus on providing money to both consumers and corporations will be positive for consumer and financial companies. In addition, improving exports will benefit semiconductor, electrical machinery, and smartphone manufacturers. Our investments in India are biased toward economically sensitive sectors, such as consumer, financials, energy, information services, and industrials.
| | | | |
Roger J. Sit | | Raymond E. Sit | | |
| | |
Kent L. Johnson | | | | |
Kent L. Johnson | | | | |
| | |
| Information on this page is unaudited. |
16 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2020
| | | | | | | | | | |
| | | Sit Global
Dividend
Growth Fund | | | MSCI
World
Index 1 |
| | | Class I | | | Class S | |
One Year | | | 4.93 | % | | | 4.60 | % | | 2.84% |
Five Year | | | 6.07 | | | | 5.80 | | | 6.90 |
Ten Year | | | 9.04 | | | | 8.76 | | | 9.95 |
Since Inception | | | 8.22 | | | | 7.95 | | | 7.61 |
(9/30/08) | | | | | | | | | | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 The MSCIWorld Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. It is not possible to invest directly in an index.
PORTFOLIO SUMMARY
| | | | |
Class I: | | | | |
Net Asset Value 6/30/20: | | $16.87 | | Per Share |
Net Asset Value 6/30/19: | | $16.34 | | Per Share |
Total Net Assets: | | $31.4 | | Million |
Class S: | | | | |
Net Asset Value 6/30/20: | | $16.85 | | Per Share |
Net Asset Value 6/30/19: | | $16.33 | | Per Share |
Total Net Assets: | | $3.4 | | Million |
| | |
Weighted Average Market Cap: | | $291.8 | | Billion |
TOP 10 HOLDINGS
1. Microsoft Corp.
2. Apple, Inc.
3. Johnson & Johnson
4. Logitech International SA
5. Nestle SA
6. AstraZeneca, PLC, ADR
7. Accenture, PLC
8. Lonza Group AG
9. PepsiCo, Inc.
10. Abbott Laboratories
Based on total net assets as of June 30, 2020. Subject to change.
SECTORALLOCATION
Based on total net assets as of June 30, 2020. Subject to change.
| | |
| Information on this page is unaudited. |
JUNE 30,2020 | | 17 |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit Global Dividend Growth Fund
Investments are grouped by geographic region.
| | | | | | | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
Common Stocks - 97.7% | | | | | | | | |
Asia - 6.5% | | | | | | | | |
Australia - 2.9% | | | | | | | | |
Atlassian Corp., PLC * | | | 3,925 | | | | 707,560 | |
Macquarie Group, Ltd. | | | 3,900 | | | | 323,668 | |
| | | | | | | | |
| | | | | | | 1,031,228 | |
| | | | | | | | |
Japan - 2.5% | | | | | | | | |
Astellas Pharma, Inc. | | | 29,900 | | | | 499,317 | |
Recruit Holdings Co., Ltd. | | | 10,800 | | | | 371,414 | |
| | | | | | | | |
| | | | | | | 870,731 | |
| | | | | | | | |
Singapore - 1.1% | | | | | | | | |
Singapore Technologies Engineering, Ltd. | | | 158,600 | | | | 378,538 | |
| | | | | | | | |
Europe - 29.5% | | | | | | | | |
France - 0.9% | | | | | | | | |
Safran SA, ADR * | | | 4,900 | | | | 123,480 | |
Sanofi, ADR | | | 3,800 | | | | 193,990 | |
| | | | | | | | |
| | | | | | | 317,470 | |
| | | | | | | | |
Germany - 4.5% | | | | | | | | |
adidas AG * | | | 1,385 | | | | 365,156 | |
Allianz SE | | | 35,000 | | | | 718,200 | |
Aurelius SE & Co. | | | 5,500 | | | | 91,303 | |
Siemens AG | | | 3,200 | | | | 377,397 | |
| | | | | | | | |
| | | | | | | 1,552,056 | |
| | | | | | | | |
Ireland - 3.0% | | | | | | | | |
Accenture, PLC | | | 3,675 | | | | 789,096 | |
Trane Technologies, PLC | | | 2,950 | | | | 262,491 | |
| | | | | | | | |
| | | | | | | 1,051,587 | |
| | | | | | | | |
Spain - 2.0% | | | | | | | | |
Iberdrola SA | | | 60,400 | | | | 705,148 | |
| | | | | | | | |
Switzerland - 9.2% | | | | | | | | |
Chubb, Ltd. | | | 1,750 | | | | 221,585 | |
Logitech International SA | | | 12,950 | | | | 844,599 | |
Lonza Group AG | | | 1,450 | | | | 768,062 | |
Nestle SA | | | 7,525 | | | | 834,301 | |
Partners Group Holding AG | | | 585 | | | | 532,755 | |
| | | | | | | | |
| | | | | | | 3,201,302 | |
| | | | | | | | |
United Kingdom - 9.9% | | | | | | | | |
AstraZeneca, PLC, ADR | | | 15,400 | | | | 814,506 | |
BAE Systems, PLC | | | 74,675 | | | | 446,515 | |
Diageo, PLC, ADR | | | 4,225 | | | | 567,798 | |
DS Smith, PLC | | | 94,275 | | | | 382,705 | |
London Stock Exchange Group, PLC | | | 6,875 | | | | 714,965 | |
RELX, PLC | | | 21,200 | | | | 490,653 | |
| | | | | | | | |
| | | | | | | 3,417,142 | |
| | | | | | | | |
North America - 61.7% | | | | | | | | |
Bermuda - 0.2% | | | | | | | | |
Everest Re Group, Ltd. | | | 350 | | | | 72,170 | |
| | | | | | | | |
| | | | | | | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
Canada - 1.3% | | | | | | | | |
Suncor Energy, Inc. | | | 10,275 | | | | 173,236 | |
TC Energy Corp. | | | 6,300 | | | | 270,018 | |
| | | | | | | | |
| | | | | | | 443,254 | |
| | | | | | | | |
United States - 60.2% | | | | | | | | |
Abbott Laboratories | | | 8,300 | | | | 758,869 | |
Alphabet, Inc. - Class A * | | | 450 | | | | 638,122 | |
Apple, Inc. | | | 4,800 | | | | 1,751,040 | |
Applied Materials, Inc. | | | 8,175 | | | | 494,179 | |
Arthur J Gallagher & Co. | | | 3,775 | | | | 368,025 | |
Bank of America Corp. | | | 16,300 | | | | 387,125 | |
Broadcom, Inc. | | | 1,825 | | | | 575,988 | |
Chevron Corp. | | | 4,150 | | | | 370,304 | |
Constellation Brands, Inc. | | | 2,750 | | | | 481,112 | |
CVS Health Corp. | | | 2,400 | | | | 155,928 | |
Euronet Worldwide, Inc. * | | | 2,800 | | | | 268,296 | |
FedEx Corp. | | | 475 | | | | 66,604 | |
Goldman Sachs Group, Inc. | | | 1,400 | | | | 276,668 | |
Home Depot, Inc. | | | 2,550 | | | | 638,800 | |
Honeywell International, Inc. | | | 3,200 | | | | 462,688 | |
Intel Corp. | | | 8,625 | | | | 516,034 | |
Johnson & Johnson | | | 6,925 | | | | 973,863 | |
JPMorgan Chase & Co. | | | 7,350 | | | | 691,341 | |
L3Harris Technologies, Inc. | | | 2,050 | | | | 347,823 | |
Lockheed Martin Corp. | | | 1,565 | | | | 571,100 | |
Marathon Petroleum Corp. | | | 4,100 | | | | 153,258 | |
McDonald’s Corp. | | | 1,860 | | | | 343,114 | |
Microsoft Corp. | | | 12,100 | | | | 2,462,471 | |
Mondelez International, Inc. | | | 7,100 | | | | 363,023 | |
Otis Worldwide Corp. | | | 3,875 | | | | 220,332 | |
PepsiCo, Inc. | | | 5,775 | | | | 763,802 | |
Raytheon Technologies Corp. | | | 3,375 | | | | 207,968 | |
Scotts Miracle-Gro Co. | | | 2,675 | | | | 359,707 | |
Sherwin-Williams Co. | | | 800 | | | | 462,280 | |
Starbucks Corp. | | | 9,875 | | | | 726,701 | |
T Rowe Price Group, Inc. | | | 4,800 | | | | 592,800 | |
Thermo Fisher Scientific, Inc. | | | 1,175 | | | | 425,750 | |
Union Pacific Corp. | | | 4,050 | | | | 684,734 | |
UnitedHealth Group, Inc. | | | 675 | | | | 199,091 | |
US Bancorp | | | 7,900 | | | | 290,878 | |
Verizon Communications, Inc. | | | 12,750 | | | | 702,908 | |
Waste Management, Inc. | | | 5,900 | | | | 624,869 | |
WEC Energy Group, Inc. | | | 6,150 | | | | 539,048 | |
| | | | | | | | |
| | | | | | | 20,916,643 | |
| | | | | | | | |
Total Common Stocks
(cost: $24,934,776) | | | | | | | 33,957,269 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
18 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
Short-Term Securities - 2.2% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 0.06%
(cost: $767,958) | | | 767,958 | | | | 767,958 | |
| | | | | | | | |
Total Investments in Securities - 99.9%
(cost: $25,702,734) | | | | | | | 34,725,227 | |
Other Assets and Liabilities, net - 0.1% | | | | | | | 27,060 | |
| | | | | | | | |
Total Net Assets - 100.0% | | | | | | | $34,752,287 | |
| | | | | | | | |
| * | Non-income producing security. |
| | ADR — American Depositary Receipt |
| | PLC — Public Limited Company |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1
Quoted
Price ($) | | | Level 2
Other significant
observable inputs ($) | | | Level 3 Significant
unobservable inputs ($) | | | Total ($) | |
Common Stocks | | | | | | | | | | | | | | | | |
Australia | | | 707,560 | | | | 323,668 | | | | — | | | | 1,031,228 | |
Bermuda | | | 72,170 | | | | — | | | | — | | | | 72,170 | |
Canada | | | 443,254 | | | | — | | | | — | | | | 443,254 | |
France | | | 317,470 | | | | — | | | | — | | | | 317,470 | |
Germany | | | 718,200 | | | | 833,856 | | | | — | | | | 1,552,056 | |
Ireland | | | 1,051,587 | | | | — | | | | — | | | | 1,051,587 | |
Japan | | | — | | | | 870,731 | | | | — | | | | 870,731 | |
Singapore | | | — | | | | 378,538 | | | | — | | | | 378,538 | |
Spain | | | — | | | | 705,148 | | | | — | | | | 705,148 | |
Switzerland | | | 1,066,184 | | | | 2,135,118 | | | | — | | | | 3,201,302 | |
United Kingdom | | | 1,872,957 | | | | 1,544,185 | | | | — | | | | 3,417,142 | |
United States | | | 20,916,643 | | | | — | | | | — | | | | 20,916,643 | |
Short-Term Securities | | | 767,958 | | | | — | | | | — | | | | 767,958 | |
Total: | | | 27,933,983 | | | | 6,791,244 | | | | — | | | | 34,725,227 | |
Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2020 | | | 19 | |
|
|
| |
Sit Large Cap Growth Fund |
OBJECTIVE & STRATEGY
The objective of the Sit Large Cap Growth Fund is to maximize long-term capital appreciation. The Fund pursues this objective by investing at least 80% of its net assets in the common stocks of domestic growth companies with capitalizations of $5 billion or more at the time of purchase.
Fund Performance
The Sit Large Cap Growth Fund’s return was +21.34% during the 12-month period ending June 30, 2020, compared to a +23.28% return for the Russell 1000® Growth Index. The S&P 500® Index return for the period was +7.51%.
Factors that Influenced the Fund’s Performance
The Fund posted strong absolute returns over the period; however, it lagged the Russell 1000® Growth Index due to several factors. The largest detractor to relative performance over the 12-month period was the Fund’s stock selection in the transportation sector, where it owned DeltaAir Lines, whose stock price suffered amid the COVID-19 outbreak. Also, the Fund has maintained a modest overweight position in the energy sector, as valuations and high dividend yields appeared attractive. However, with energy prices falling precipitously during the pandemic due to an oversupply as demand dried up, the Fund’s energy holdings – particularly its ownership of Marathon Petroleum – contributed to underperformance. Finally, while the Fund’s consumer durables holdings performed well during the period – especially YETI Holdings – its preference to own profitable companies detracted from relative performance, as we did not own Tesla, which was up nearly +400% during the last twelve months. Countering most of this underperformance was strong stock selection, combined with an overweight position, in the technology services sector, and strong stock selection in the electronic technology sector. Key holdings in these sectors included PayPal Holdings, Alphabet, Adobe, Applied Materials, and Apple.
Outlook and Positioning
Even with the COVID-19 sell-off, stocks posted strong gains over the prior 12-month period. Following the drastic plunge in equity prices, the Fed stepped in to add liquidity to the market, which, combined with a shift in sentiment that the virus-related economic damage will now be short-lived, drove a massive expansion in price-to-earnings multiples (with many stocks now trading on depressed earnings estimates). At this point, it appears that this rebound in stock prices is discounting a rebound in economic activity and corporate earnings in the second half of 2020 and into 2021.Accordingly, the Fund
HYPOTHETICAL GROWTH OF $10,000
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the Russell 1000® Growth Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 Russell 1000® Growth Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index. This is the Fund’s primary index.
continues to maintain a “barbell” strategy, focused on balancing early cyclical companies that are likely to be major beneficiaries of an uptick in economic activity (such as transports and financials) with stable, long-term earnings growers that should post above-average growth, regardless of market conditions. This includes sectors with large, secular growth tailwinds, such as companies in the technology sector, which will benefit from accelerating growth in 5G, cloud computing, e-commerce, and software. We also favor healthcare companies that should benefit from an aging U.S. population, although we acknowledge political risk in light of the upcoming U.S. elections.
Roger J. Sit
Ronald D. Sit
Portfolio Managers
| | |
| Information on this page is unaudited. |
20 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2020
| | | | | | | | | | | | |
| | | Sit Large
Cap Growth
Fund | | | Russell
1000®
Growth
Index 1 | | | Russell
1000®
Index 2 | |
One Year | | | 21.34 | % | | | 23.28 | % | | | 7.48 | % |
Five Year | | | 13.50 | | | | 15.89 | | | | 10.47 | |
Ten Year | | | 14.53 | | | | 17.23 | | | | 13.97 | |
Since Inception 3 | | | 10.49 | | | | 11.73 | | | | 11.68 | |
(9/2/82) | | | | | | | | | | | | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 Russell 1000® Growth Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.
2 Russell 1000® Index is an unmanaged index that measures the performance of approximately 1,000 of the largest U.S. companies by market capitalization.
3 On 6/6/93, the Fund’s investment objective changed to allow for a portfolio of 100% stocks. Prior to that time, the portfolio was required to contain no more than 80% stocks.
PORTFOLIO SUMMARY
| | |
Net Asset Value 6/30/20: | | $47.07 Per Share |
Net Asset Value 6/30/19: | | $42.53 Per Share |
Total Net Assets: | | $129.2 Million |
Weighted Average Market Cap: | | $522.6 Billion |
TOP 10 HOLDINGS
1. Apple, Inc.
2. Microsoft Corp.
3. Amazon.com, Inc.
4. Alphabet, Inc.
5. Facebook, Inc.
6. Visa, Inc.
7. Adobe, Inc.
8. salesforce.com, Inc.
9. UnitedHealth Group, Inc.
10. PayPal Holdings, Inc.
Based on total net assets as of June 30, 2020. Subject to change.
SECTOR ALLOCATION
Based on total net assets as of June 30, 2020. Subject to change.
| | |
Information on this page is unaudited. | | |
JUNE 30, 2020 | | 21 |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit Large Cap Growth Fund
Investments are grouped by economic sectors.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
Common Stocks - 98.4% | | | | | | | | |
Communications - 1.7% | | | | | | | | |
American Tower Corp. | | | 4,100 | | | | 1,060,014 | |
Verizon Communications, Inc. | | | 20,925 | | | | 1,153,595 | |
| | | | | | | | |
| | | | | | | 2,213,609 | |
| | | | | | | | |
Consumer Durables - 1.2% | | | | | | | | |
YETI Holdings, Inc. * | | | 36,425 | | | | 1,556,440 | |
| | | | | | | | |
Consumer Non-Durables - 4.9% | | | | | | | | |
Constellation Brands, Inc. | | | 7,425 | | | | 1,299,004 | |
Estee Lauder Cos., Inc. - Class A | | | 9,800 | | | | 1,849,064 | |
Mondelez International, Inc. | | | 17,900 | | | | 915,227 | |
NIKE, Inc. | | | 5,125 | | | | 502,506 | |
PepsiCo, Inc. | | | 13,125 | | | | 1,735,912 | |
| | | | | | | | |
| | | | | | | 6,301,713 | |
| | | | | | | | |
Consumer Services - 5.7% | | | | | | | | |
McDonald’s Corp. | | | 6,650 | | | | 1,226,726 | |
Starbucks Corp. | | | 21,900 | | | | 1,611,621 | |
Visa, Inc. | | | 23,525 | | | | 4,544,324 | |
| | | | | | | | |
| | | | | | | 7,382,671 | |
| | | | | | | | |
Electronic Technology - 17.0% | | | | | | | | |
Advanced Micro Devices, Inc. * | | | 11,875 | | | | 624,744 | |
Apple, Inc. | | | 33,075 | | | | 12,065,760 | |
Applied Materials, Inc. | | | 38,900 | | | | 2,351,505 | |
Broadcom, Inc. | | | 7,800 | | | | 2,461,758 | |
Ciena Corp. * | | | 22,200 | | | | 1,202,352 | |
Intel Corp. | | | 16,800 | | | | 1,005,144 | |
Keysight Technologies, Inc. * | | | 7,875 | | | | 793,643 | |
NVIDIA Corp. | | | 3,875 | | | | 1,472,151 | |
| | | | | | | | |
| | | | | | | 21,977,057 | |
| | | | | | | | |
Finance - 3.5% | | | | | | | | |
Aon, PLC | | | 5,975 | | | | 1,150,785 | |
Chubb, Ltd. | | | 5,050 | | | | 639,431 | |
Goldman Sachs Group, Inc. | | | 5,150 | | | | 1,017,743 | |
JPMorgan Chase & Co. | | | 4,900 | | | | 460,894 | |
T Rowe Price Group, Inc. | | | 9,725 | | | | 1,201,038 | |
| | | | | | | | |
| | | | | | | 4,469,891 | |
| | | | | | | | |
Health Services - 2.6% | | | | | | | | |
UnitedHealth Group, Inc. | | | 11,575 | | | | 3,414,046 | |
| | | | | | | | |
Health Technology - 7.6% | | | | | | | | |
Abbott Laboratories | | | 15,500 | | | | 1,417,165 | |
Boston Scientific Corp. * | | | 26,975 | | | | 947,092 | |
Bristol-Myers Squibb Co. | | | 5,675 | | | | 333,690 | |
DexCom, Inc. * | | | 4,050 | �� | | | 1,641,870 | |
Illumina, Inc. * | | | 1,800 | | | | 666,630 | |
Intuitive Surgical, Inc. * | | | 2,800 | | | | 1,595,524 | |
Johnson & Johnson | | | 9,400 | | | | 1,321,922 | |
Thermo Fisher Scientific, Inc. | | | 5,250 | | | | 1,902,285 | |
| | | | | | | | |
| | | | | | | 9,826,178 | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
Process Industries - 2.5% | | | | | | | | |
Ecolab, Inc. | | | 7,125 | | | | 1,417,519 | |
Sherwin-Williams Co. | | | 3,150 | | | | 1,820,228 | |
| | | | | | | | |
| | | | | | | 3,237,747 | |
| | | | | | | | |
Producer Manufacturing - 4.8% | | | | | | | | |
3M Co. | | | 3,900 | | | | 608,361 | |
Honeywell International, Inc. | | | 8,425 | | | | 1,218,171 | |
L3Harris Technologies, Inc. | | | 6,550 | | | | 1,111,338 | |
Northrop Grumman Corp. | | | 2,700 | | | | 830,088 | |
Otis Worldwide Corp. | | | 7,450 | | | | 423,607 | |
Raytheon Technologies Corp. | | | 18,974 | | | | 1,169,178 | |
Trane Technologies, PLC | | | 8,900 | | | | 791,922 | |
| | | | | | | | |
| | | | | | | 6,152,665 | |
| | | | | | | | |
Retail Trade - 9.5% | | | | | | | | |
Amazon.com, Inc. * | | | 3,150 | | | | 8,690,283 | |
Home Depot, Inc. | | | 9,825 | | | | 2,461,261 | |
TJX Cos., Inc. | | | 22,700 | | | | 1,147,712 | |
| | | | | | | | |
| | | | | | | 12,299,256 | |
| | | | | | | | |
Technology Services - 35.1% | | | | | | | | |
Accenture, PLC | | | 11,425 | | | | 2,453,176 | |
Adobe, Inc. * | | | 8,750 | | | | 3,808,963 | |
Alphabet, Inc. - Class A * | | | 625 | | | | 886,281 | |
Alphabet, Inc. - Class C * | | | 4,635 | | | | 6,552,082 | |
Atlassian Corp., PLC * | | | 10,375 | | | | 1,870,301 | |
Autodesk, Inc. * | | | 8,300 | | | | 1,985,277 | |
Facebook, Inc. * | | | 21,250 | | | | 4,825,238 | |
Intuit, Inc. | | | 6,100 | | | | 1,806,759 | |
Microsoft Corp. | | | 58,900 | | | | 11,986,739 | |
Paycom Software, Inc. * | | | 1,300 | | | | 402,649 | |
PayPal Holdings, Inc. * | | | 19,300 | | | | 3,362,639 | |
salesforce.com, Inc. * | | | 18,825 | | | | 3,526,487 | |
ServiceNow, Inc. * | | | 750 | | | | 303,795 | |
Splunk, Inc. * | | | 8,100 | | | | 1,609,470 | |
| | | | | | | | |
| | | | | | | 45,379,856 | |
| | | | | | | | |
Transportation - 1.7% | | | | | | | | |
FedEx Corp. | | | 3,300 | | | | 462,726 | |
Union Pacific Corp. | | | 10,150 | | | | 1,716,060 | |
| | | | | | | | |
| | | | | | | 2,178,786 | |
| | | | | | | | |
Utilities - 0.6% | | | | | | | | |
NextEra Energy, Inc. | | | 3,275 | | | | 786,557 | |
| | | | | | | | |
Total Common Stocks
(cost: $55,495,372) | | | | | | | 127,176,472 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
22 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
Name of Issuer | | Quantity | | | Fair Value ($) | |
Short-Term Securities - 1.6% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 0.06% | | | 2,035,513 | | | | 2,035,513 | |
| | | | | | | | |
(cost: $2,035,513) | | | | | | | | |
Total Investments in Securities - 100.0%
(cost: $57,530,885) | | | | | | | 129,211,985 | |
Other Assets and Liabilities, net - (0.0%) | | | | | | | (57,980 | ) |
| | | | | | | | |
Total Net Assets - 100.0% | | | | | | | $129,154,005 | |
| | | | | | | | |
| * | Non-income producing security. |
| | PLC — Public Limited Company |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1 | | | Level 2 | | Level 3 | | | |
| | | Quoted
Price ($) | | | Other significant
observable inputs ($) | | Significant
unobservable inputs ($) | | Total ($) | |
Common Stocks ** | | | 127,176,472 | | | — | | — | | | 127,176,472 | |
Short-Term Securities | | | 2,035,513 | | | — | | — | | | 2,035,513 | |
Total: | | | 129,211,985 | | | — | | — | | | 129,211,985 | |
| ** | For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown. |
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2020 | | | 23 | |
|
|
|
Sit ESG Growth Fund - Class I and Class S |
OBJECTIVE & STRATEGY
The objective of the Sit ESG Growth Fund is to maximize long-term capital appreciation. The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in companies that the Adviser believes have strong environmental, social and corporate governance (ESG) practices at the time of purchase. The Fund invests in common stocks of U.S. and foreign companies, primarily of large to medium capitalizations (companies with market capitalization in excess of $2 billion).
Fund Performance
Sit ESG Growth Fund Class I shares provided a return of +6.47% during the 12-month period ending June 30, 2020, compared to the return of the MSCI World Index of +2.84%.
Factors that Influenced the Fund’s Performance
Contributing favorably to performance during the 12-month period were the Fund’s holdings in the software & services (Microsoft, Adobe, salesforce.com, Alphabet), technology hardware (Logitech International, Apple) and materials (Lonza Group) sectors. Conversely, the holdings in retailing (not owning Amazon.com), pharmaceuticals (Pfizer, AbbVie), and food beverage & tobacco (Coca-Cola Euro-pean Partners) detracted from performance.
Regionally, the Non-Euroland (Lonza Group, Logitech International), North America (Microsoft, Adobe, Apple, salesforce.com), and Japan (Terumo, Keyence) regions added value during the last 12 months. However, a higher cash balance and the Euroland holdings (Allianz, adidas) negatively impacted relative performance.
Outlook and Positioning
We remain constructive on U.S. equities over the intermediate and longer term. Still, we recognize that the strong rebound in stock prices has, at least to some degree, discounted the uptick in economic activity and corporate earnings growth that is likely over the next several quarters. A key challenge is assessing appropriate valuations when earnings and revenue forecasts are highly uncertain and subject to the path of the COVID-19 pandemic, consumer sentiment, and further fiscal support. Valuations for many companies on forward earnings are now higher than prior to the coronavirus shutdown, and we suspect that investors will need more clarity on near-term earnings power for equity markets to move meaningfully higher from here. Our investment focus remains on companies that can deliver above average-earnings growth, regardless of the economic backdrop. Our preferred sectors include technology and healthcare.
HYPOTHETICAL GROWTH OF $10,000
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years (or for the life of the Fund if shorter) as compared to the performance of the MSCI World Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. It is not possible to invest directly in an index. This is the Fund’s primary index.
For non-U.S. exposure, we currently prefer investment opportunities in China, South Korea, and India. We remain positive on China, given its first in, first out position amid the global economic recovery and attractive relative valuations. We favor investments in the new economy, along with domestic demand-driven sectors. South Korea’s 100 trillion won of financial measures, which focus on providing money to both consumers and corporations will be positive for consumer and financial companies. In addition, improving exports will benefit semiconductor, electrical machinery, and smartphone manufacturers. Our investments in India are biased toward economically sensitive sectors, such as consumer, financials, energy, information services, and industrials.
Roger J. Sit
Ronald D. Sit
Portfolio Managers
| | |
| Information on this page is unaudited. |
24 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2020
| | | | | | | | | | | | | | | |
| | | Sit ESG
Growth Fund | | MSCI World
Index 1 |
| | | Class I | | Class S |
One Year | | | | 6.47 | % | | | | 6.22 | % | | | | 2.84 | % |
Since Inception | | | | 9.58 | | | | | 9.31 | | | | | 9.46 | |
(6/30/16) | | | | | | | | | | | | | | | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 The MSCIWorld Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. It is not possible to invest directly in an index.
PORTFOLIO SUMMARY
| | | | |
Class I: | | | | |
Net Asset Value 6/30/20: | | | $13.85 Per Share | |
Net Asset Value 6/30/19: | | | $13.21 Per Share | |
Total Net Assets: | | | $3.5 Million | |
Class S: | | | | |
Net Asset Value 6/30/20: | | | $13.78 Per Share | |
Net Asset Value 6/30/19: | | | $13.16 Per Share | |
Total Net Assets: | | | $3.2 Million | |
| |
Weighted Average Market Cap: | | | $317.9 Billion | |
TOP 10 HOLDINGS
1. Microsoft Corp.
2. Apple, Inc.
3. Facebook, Inc.
4. Iberdrola SA, ADR
5. Home Depot, Inc.
6. Allianz SE, ADR
7. Adobe, Inc.
8. Alphabet, Inc. - Class A
9. Lonza Group AG
10. Visa, Inc.
Based on total net assets as of June 30, 2020. Subject to change.
SECTOR ALLOCATION
Based on total net assets as of June 30, 2020. Subject to change.
| | | | |
Information on this page is unaudited. | | | | |
JUNE 30, 2020 | | | 25 | |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit ESG Growth Fund
Investments are grouped by geographic region.
| | | | | | | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
Common Stocks - 94.6% | | | | | | | | |
Asia - 9.4% | | | | | | | | |
Japan - 8.6% | | | | | | | | |
Astellas Pharma, Inc. | | | 4,500 | | | | 75,148 | |
Keyence Corp. | | | 200 | | | | 83,812 | |
Recruit Holdings Co., Ltd. | | | 3,100 | | | | 106,610 | |
Shiseido Co., Ltd. | | | 1,100 | | | | 70,093 | |
Sony Corp., ADR | | | 1,925 | | | | 133,075 | |
Terumo Corp. | | | 2,600 | | | | 98,963 | |
| | | | | | | | |
| | | | | | | 567,701 | |
| | | | | | | | |
Singapore - 0.8% | | | | | | | | |
Singapore Technologies Engineering, Ltd. | | | 21,500 | | | | 51,315 | |
| | | | | | | | |
Europe - 29.6% | | | | | | | | |
France - 0.9% | | | | | | | | |
Safran SA, ADR * | | | 900 | | | | 22,680 | |
Sanofi, ADR | | | 700 | | | | 35,735 | |
| | | | | | | | |
| | | | | | | 58,415 | |
| | | | | | | | |
Germany - 5.1% | | | | | | | | |
adidas AG, ADR * | | | 650 | | | | 85,592 | |
Allianz SE, ADR | | | 8,800 | | | | 180,576 | |
Siemens AG, ADR | | | 1,175 | | | | 69,313 | |
| | | | | | | | |
| | | | | | | 335,481 | |
| | | | | | | | |
Ireland - 4.4% | | | | | | | | |
Accenture, PLC | | | 575 | | | | 123,464 | |
CRH, PLC, ADR | | | 1,200 | | | | 41,172 | |
Trane Technologies, PLC | | | 1,400 | | | | 124,572 | |
| | | | | | | | |
| | | | | | | 289,208 | |
| | | | | | | | |
Spain - 2.8% | | | | | | | | |
Iberdrola SA, ADR | | | 4,050 | | | | 188,082 | |
| | | | | | | | |
Switzerland - 8.8% | | | | | | | | |
Logitech International SA | | | 1,550 | | | | 101,091 | |
Lonza Group AG | | | 320 | | | | 169,503 | |
Nestle SA, ADR | | | 1,425 | | | | 157,377 | |
Novartis AG, ADR | | | 1,800 | | | | 157,212 | |
| | | | | | | | |
| | | | | | | 585,183 | |
| | | | | | | | |
United Kingdom - 7.6% | | | | | | | | |
AstraZeneca, PLC, ADR | | | 2,950 | | | | 156,026 | |
BAE Systems, PLC, ADR | | | 2,300 | | | | 55,200 | |
Coca-Cola European Partners, PLC | | | 2,100 | | | | 79,296 | |
Diageo, PLC, ADR | | | 785 | | | | 105,496 | |
RELX, PLC, ADR | | | 4,700 | | | | 110,732 | |
| | | | | | | | |
| | | | | | | 506,750 | |
| | | | | | | | |
| | | | | | | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
North America - 55.6% | | | | | | | | |
Canada - 0.4% | | | | | | | | |
Suncor Energy, Inc. | | | 1,800 | | | | 30,348 | |
| | | | | | | | |
United States - 55.2% | | | | | | | | |
3M Co. | | | 400 | | | | 62,396 | |
Adobe, Inc. * | | | 410 | | | | 178,477 | |
Allstate Corp. | | | 675 | | | | 65,468 | |
Alphabet, Inc. - Class A * | | | 125 | | | | 177,256 | |
Apple, Inc. | | | 900 | | | | 328,320 | |
Baxter International, Inc. | | | 850 | | | | 73,185 | |
Boston Scientific Corp. * | | | 1,650 | | | | 57,932 | |
ConocoPhillips | | | 1,250 | | | | 52,525 | |
Ecolab, Inc. | | | 600 | | | | 119,370 | |
Facebook, Inc. * | | | 845 | | | | 191,874 | |
FedEx Corp. | | | 90 | | | | 12,620 | |
Goldman Sachs Group, Inc. | | | 600 | | | | 118,572 | |
Home Depot, Inc. | | | 745 | | | | 186,630 | |
Intel Corp. | | | 2,125 | | | | 127,139 | |
Johnson & Johnson | | | 975 | | | | 137,114 | |
JPMorgan Chase & Co. | | | 1,075 | | | | 101,115 | |
Lockheed Martin Corp. | | | 185 | | | | 67,510 | |
Microsoft Corp. | | | 2,000 | | | | 407,020 | |
NIKE, Inc. | | | 925 | | | | 90,696 | |
NVIDIA Corp. | | | 100 | | | | 37,991 | |
PepsiCo, Inc. | | | 875 | | | | 115,728 | |
salesforce.com, Inc. * | | | 850 | | | | 159,230 | |
Starbucks Corp. | | | 1,600 | | | | 117,744 | |
T Rowe Price Group, Inc. | | | 1,175 | | | | 145,113 | |
TJX Cos., Inc. | | | 1,380 | | | | 69,773 | |
UnitedHealth Group, Inc. | | | 500 | | | | 147,475 | |
Verizon Communications, Inc. | | | 2,600 | | | | 143,338 | |
Visa, Inc. | | | 875 | | | | 169,024 | |
| | | | | | | | |
| | | | | | | 3,660,635 | |
| | | | | | | | |
Total Common Stocks
(cost: $4,519,971) | | | | | | | 6,273,118 | |
| | | | | | | | |
| | |
Short-Term Securities - 5.4% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 0.06% | | | 360,368 | | | | 360,368 | |
| | | | | | | | |
(cost: $360,368) | | | | | | | | |
Total Investments in Securities - 100.0%
(cost: $4,880,339) | | | | | | | 6,633,486 | |
Other Assets and Liabilities, net - 0.0% | | | | | | | 2,304 | |
| | | | | | | | |
Total Net Assets - 100.0% | | | | | | | $6,635,790 | |
| | | | | | | | |
| * | Non-income producing security. |
ADR—American Depositary Receipt
PLC—Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments
| | | | |
See accompanying notes to financial statements. | | | | |
26 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1 Quoted
Price ($) | | | Level 2 Other significant
observable inputs ($) | | | Level 3 Significant
unobservable inputs ($) | | | Total ($) | |
Common Stocks | | | | | | | | | | | | | | | | |
Canada | | | 30,348 | | | | — | | | | — | | | | 30,348 | |
France | | | 58,415 | | | | — | | | | — | | | | 58,415 | |
Germany | | | 335,481 | | | | — | | | | — | | | | 335,481 | |
Ireland | | | 289,208 | | | | — | | | | — | | | | 289,208 | |
Japan | | | 133,075 | | | | 434,626 | | | | — | | | | 567,701 | |
Singapore | | | — | | | | 51,315 | | | | — | | | | 51,315 | |
Spain | | | 188,082 | | | | — | | | | — | | | | 188,082 | |
Switzerland | | | 415,680 | | | | 169,503 | | | | — | | | | 585,183 | |
United Kingdom | | | 506,750 | | | | — | | | | — | | | | 506,750 | |
United States | | | 3,660,635 | | | | — | | | | — | | | | 3,660,635 | |
Short-Term Securities | | | 360,368 | | | | — | | | | — | | | | 360,368 | |
Total: | | | 5,978,042 | | | | 655,444 | | | | — | | | | 6,633,486 | |
Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2020 | | | 27 | |
The objective of the Sit Mid Cap Growth Fund is to maximize long-term capital appreciation. The Fund pursues this objective by investing at least 80% of its net assets in common stocks that, at the time of purchase, have market capitalizations that fall within the range of companies included in the Russell Midcap® Growth Index during the most recent 12-month period. The Russell Midcap® Growth Index ranged from approximately $365 million to $82 billion during the 12-month period ended June 30, 2020.
Fund Performance
The Sit Mid Cap Growth Fund’s return during the 12-month period ending June 30, 2020 was +8.75%, compared to a +11.91% return for the Russell Midcap® Growth Index. The Russell Midcap® Index declined -2.24% during the period.
Factors that Influenced the Fund’s Performance
The Fund underperformed its benchmark during the latest 12-month period, mostly due to negative stock selection in three sectors. First, stock selection in the technology services sector weighed on performance. The main contributor to this was the Fund’s large position in Euronet Worldwide (-43%), which has substantial exposure to tourism and was significantly, adversely affected by the COVID-19 outbreak. Second, in the retail trade sector, the Fund’s performance was hurt by its large position in Ulta Beauty (-41%), which, after an extended period of outperformance, gave back considerable gains in the final six months of 2019 and then suddenly had a major COVID-related business disruption in the first half of 2020. Finally, stock selection in the commercial services sector weighed on performance, including ownership of Brinks and Service Corp. International. On a positive note, strong stock selection in the health services, health technology, non-energy minerals, and consumer durables sectors boosted the Fund’s performance. Strong performers in these groups during the period included Teledoc Health, DexCom, Insulet, iRhythmTech-nologies, Trex, and YETI Holdings.
Outlook and Positioning
During the period, midcap stocks, while posting strong returns, lagged their large cap peers. In addition, growth stocks outperformed their value counterparts across all market capitalizations. Returns during the period were largely driven by multiple expansion, as investor sentiment improved due to a combination of the Federal Reserve’s renewed asset purchase program and its emergency lending facilities, which have stabilized financial markets and kept credit flowing and borrowing costs low. These factors led to a sharp improvement in investor sentiment, with optimism growing for a quick economic rebound following the technical recession in the first half of the year. The Fund maintains an overweight position in the electronic technology sector, as we believe emerging technologies – including 5G,
HYPOTHETICAL GROWTH OF $10,000
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the Russell Midcap® Growth Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 Russell Midcap® Growth Index is an unmanaged index that measures the performance of those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index. This is the Fund’s primary index.
investment in cloud computing and artificial intelligence – will prove to be secular growth drivers and will benefit well-positioned firms. This shift looks to have been accelerated by the large work-at-home migration during the pandemic. Additionally, the Fund remains underweight the retail trade sector, as e-commerce and changing consumer buying patterns continue to pressure many established brick-and-mortar businesses in the space. Selective ownership in this sector is focused on companies that have demonstrated resilient business models with the ability to deliver above-average growth.
|
Roger J. Sit |
Kent L. Johnson |
Robert W. Sit |
Portfolio Managers |
Information on this page is unaudited.
| | | | |
28 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
COMPARATIVE RATES OF RETURNS
as of June 30, 2020
| | | | | | | | | | | | |
| | | Sit
Mid Cap
Growth Fund | | | Russell
Midcap®
Growth
Index 1 | | | Russell
Midcap®
Index 2 | |
One Year | | | 8.75 | % | | | 11.91 | % | | | -2.24 | % |
Five Year | | | 7.29 | | | | 11.60 | | | | 6.76 | |
Ten Year | | | 11.82 | | | | 15.09 | | | | 12.35 | |
Since Inception
(9/2/82) | | | 11.39 | | | | n/a | | | | n/a | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains and all fee waivers. Without the fee waivers total return and yield figures would have been lower. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 Russell Midcap® Growth Index is an unmanaged index that measures the performance of those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.
2 Russell Midcap® Index is an unmanaged index that measures the performance of approximately 800 of the smallest companies in the Russell 1000® Index.
| | |
PORTFOLIO SUMMARY | | |
| |
Net Asset Value 6/30/20: | | $19.05 Per Share |
| |
Net Asset Value 6/30/19: | | $18.84 Per Share |
Total Net Assets: | | $172.7 Million |
Weighted Average Market Cap: | | $24.4 Billion |
TOP 10 HOLDINGS
1. DexCom, Inc.
2. Autodesk, Inc.
3. Splunk, Inc.
4. Atlassian Corp., PLC
5. Teladoc Health, Inc.
6. YETI Holdings, Inc.
7. Thermo Fisher Scientific, Inc.
8. Arista Networks, Inc.
9. Booz Allen Hamilton Holding Corp.
10. Waste Connections, Inc.
Based on total net assets as of June 30, 2020. Subject to change.
SECTOR ALLOCATION
Based on total net assets as of June 30, 2020. Subject to change.
Information on this page is unaudited.
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit Mid Cap Growth Fund
Investments are grouped by economic sectors.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 94.9% | | | | | | | | |
Commercial Services - 2.7% | | | | | | | | |
ASGN, Inc. * | | | 13,525 | | | | 901,847 | |
Booz Allen Hamilton Holding Corp. | | | 48,200 | | | | 3,749,478 | |
| | | | | | | | |
| | |
| | | | | | | 4,651,325 | |
| | | | | | | | |
| | |
Consumer Durables - 2.2% | | | | | | | | |
YETI Holdings, Inc. * | | | 91,500 | | | | 3,909,795 | |
| | | | | | | | |
| | |
Consumer Non-Durables - 0.9% | | | | | | | | |
Coca-Cola European Partners, PLC | | | 40,700 | | | | 1,536,832 | |
| | | | | | | | |
| | |
Consumer Services - 5.5% | | | | | | | | |
Chegg, Inc. * | | | 43,600 | | | | 2,932,536 | |
Dunkin’ Brands Group, Inc. | | | 21,600 | | | | 1,408,968 | |
Nexstar Media Group, Inc. | | | 20,650 | | | | 1,728,198 | |
Service Corp. International | | | 44,400 | | | | 1,726,716 | |
Strategic Education, Inc. | | | 7,800 | | | | 1,198,470 | |
Vail Resorts, Inc. | | | 3,300 | | | | 601,095 | |
| | | | | | | | |
| | |
| | | | | | | 9,595,983 | |
| | | | | | | | |
| | |
Electronic Technology - 15.2% | | | | | | | | |
Advanced Micro Devices, Inc. * | | | 55,300 | | | | 2,909,333 | |
Applied Materials, Inc. | | | 35,475 | | | | 2,144,464 | |
Arista Networks, Inc. * | | | 17,900 | | | | 3,759,537 | |
Broadcom, Inc. | | | 9,100 | | | | 2,872,051 | |
Cabot Microelectronics Corp. | | | 10,825 | | | | 1,510,521 | |
Ciena Corp. * | | | 44,800 | | | | 2,426,368 | |
Garmin, Ltd. | | | 26,500 | | | | 2,583,750 | |
Keysight Technologies, Inc. * | | | 23,150 | | | | 2,333,057 | |
MKS Instruments, Inc. | | | 11,750 | | | | 1,330,570 | |
Monolithic Power Systems, Inc. | | | 5,400 | | | | 1,279,800 | |
Skyworks Solutions, Inc. | | | 23,900 | | | | 3,055,854 | |
| | | | | | | | |
| | |
| | | | | | | 26,205,305 | |
| | | | | | | | |
| | |
Finance - 8.2% | | | | | | | | |
Ameriprise Financial, Inc. | | | 11,700 | | | | 1,755,468 | |
Arthur J Gallagher & Co. | | | 18,900 | | | | 1,842,561 | |
Carlyle Group, Inc. | | | 96,800 | | | | 2,700,720 | |
First Republic Bank | | | 16,550 | | | | 1,754,134 | |
Intercontinental Exchange, Inc. | | | 25,300 | | | | 2,317,480 | |
Legg Mason, Inc. | | | 26,800 | | | | 1,333,300 | |
Selective Insurance Group, Inc. | | | 18,250 | | | | 962,505 | |
T Rowe Price Group, Inc. | | | 11,800 | | | | 1,457,300 | |
| | | | | | | | |
| | |
| | | | | | | 14,123,468 | |
| | | | | | | | |
| | |
Health Services - 3.2% | | | | | | | | |
Encompass Health Corp. | | | 24,100 | | | | 1,492,513 | |
Teladoc Health, Inc. * | | | 21,450 | | | | 4,093,518 | |
| | | | | | | | |
| | |
| | | | | | | 5,586,031 | |
| | | | | | | | |
| | |
Health Technology - 15.3% | | | | | | | | |
Align Technology, Inc. * | | | 8,900 | | | | 2,442,516 | |
BioMarin Pharmaceutical, Inc. * | | | 23,500 | | | | 2,898,490 | |
DexCom, Inc. * | | | 13,050 | | | | 5,290,470 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Edwards Lifesciences Corp. * | | | 10,800 | | | | 746,388 | |
Exact Sciences Corp. * | | | 29,650 | | | | 2,577,771 | |
Insulet Corp. * | | | 11,700 | | | | 2,272,842 | |
iRhythm Technologies, Inc. * | | | 17,950 | | | | 2,080,226 | |
Jazz Pharmaceuticals, PLC * | | | 5,700 | | | | 628,938 | |
Sarepta Therapeutics, Inc. * | | | 22,600 | | | | 3,623,684 | |
Thermo Fisher Scientific, Inc. | | | 10,550 | | | | 3,822,687 | |
| | | | | | | | |
| | |
| | | | | | | 26,384,012 | |
| | | | | | | | |
| | |
Industrial Services - 3.5% | | | | | | | | |
Jacobs Engineering Group, Inc. | | | 27,800 | | | | 2,357,440 | |
Waste Connections, Inc. | | | 38,950 | | | | 3,653,120 | |
| | | | | | | | |
| | |
| | | | | | | 6,010,560 | |
| | | | | | | | |
| | |
Non-Energy Minerals - 1.9% | | | | | | | | |
Trex Co., Inc. * | | | 25,100 | | | | 3,264,757 | |
| | | | | | | | |
| | |
Process Industries - 3.2% | | | | | | | | |
Ecolab, Inc. | | | 13,000 | | | | 2,586,350 | |
Scotts Miracle-Gro Co. | | | 21,800 | | | | 2,931,446 | |
| | | | | | | | |
| | |
| | | | | | | 5,517,796 | |
| | | | | | | | |
| | |
Producer Manufacturing - 7.5% | | | | | | | | |
AMETEK, Inc. | | | 24,000 | | | | 2,144,880 | |
Carlisle Cos., Inc. | | | 13,300 | | | | 1,591,611 | |
Dover Corp. | | | 27,000 | | | | 2,607,120 | |
Hubbell, Inc. | | | 11,000 | | | | 1,378,960 | |
L3Harris Technologies, Inc. | | | 6,600 | | | | 1,119,822 | |
Rockwell Automation, Inc. | | | 6,300 | | | | 1,341,900 | |
Trane Technologies, PLC | | | 31,700 | | | | 2,820,666 | |
| | | | | | | | |
| | |
| | | | | | | 13,004,959 | |
| | | | | | | | |
| | |
Retail Trade - 2.9% | | | | | | | | |
TJX Cos., Inc. | | | 60,000 | | | | 3,033,600 | |
Ulta Beauty, Inc. * | | | 9,700 | | | | 1,973,174 | |
| | | | | | | | |
| | |
| | | | | | | 5,006,774 | |
| | | | | | | | |
| | |
Technology Services - 19.9% | | | | | | | | |
Altair Engineering, Inc. * | | | 24,800 | | | | 985,800 | |
ANSYS, Inc. * | | | 10,750 | | | | 3,136,098 | |
Aspen Technology, Inc. * | | | 19,900 | | | | 2,061,839 | |
Atlassian Corp., PLC * | | | 22,900 | | | | 4,128,183 | |
Autodesk, Inc. * | | | 17,900 | | | | 4,281,501 | |
Booking Holdings, Inc. * | | | 450 | | | | 716,553 | |
Euronet Worldwide, Inc. * | | | 29,575 | | | | 2,833,877 | |
GoDaddy, Inc. * | | | 14,600 | | | | 1,070,618 | |
HubSpot, Inc. * | | | 11,950 | | | | 2,680,982 | |
Paycom Software, Inc. * | | | 6,100 | | | | 1,889,353 | |
PTC, Inc. * | | | 39,600 | | | | 3,080,484 | |
Qualys, Inc. * | | | 13,350 | | | | 1,388,667 | |
Science Applications International Corp. | | | 25,100 | | | | 1,949,768 | |
Splunk, Inc. * | | | 20,900 | | | | 4,152,830 | |
| | | | | | | | |
| | |
| | | | | | | 34,356,553 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
30 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Transportation - 1.4% | | | | | | | | |
Alaska Air Group, Inc. | | | 17,300 | | | | 627,298 | |
Knight-Swift Transportation Holdings, Inc. | | | 41,600 | | | | 1,735,136 | |
| | | | | | | | |
| | | | | | | 2,362,434 | |
| | | | | | | | |
| | |
Utilities - 1.4% | | | | | | | | |
WEC Energy Group, Inc. | | | 27,800 | | | | 2,436,670 | |
| | | | | | | | |
Total Common Stocks
(cost: $85,926,890) | | | | | | | 163,953,254 | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Short-Term Securities - 5.2% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 0.06% | | | 8,994,980 | | | | 8,994,980 | |
| | | | | | | | |
(cost: $8,994,980) | | | | | | | | |
Total Investments in Securities - 100.1%
(cost: $94,921,870) | | | | 172,948,234 | |
Other Assets and Liabilities, net - (0.1%) | | | | (204,043 | ) |
| | | | | | | | |
Total Net Assets - 100.0% | | | | | | $ | 172,744,191 | |
| | | | | | | | |
* Non-income producing security.
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1
Quoted
Price ($) | | | Level 2
Other significant
observable inputs ($) | | Level 3
Significant
unobservable inputs ($) | | Total ($) | |
Common Stocks ** | | | 163,953,254 | | | — | | — | | | 163,953,254 | |
Short-Term Securities | | | 8,994,980 | | | — | | — | | | 8,994,980 | |
Total: | | | 172,948,234 | | | — | | — | | | 172,948,234 | |
** For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2020 | | | 31 | |
|
|
|
Sit Small Cap Dividend Growth Fund Class I and Class S |
OBJECTIVE & STRATEGY
The objective of the Sit Small Cap Dividend Growth Fund is to provide current income that exceeds the Fund’s benchmark index and that grows over a period of years. Secondarily the Fund seeks long-term capital appreciation. The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in small cap dividend-paying common stocks that have market capitalizations at the time of purchase of up to $3.0 billion, or up to the market capitalization of the largest company included in the Russell 2000® Index measured at the end of the previous twelve months ($10.3 billion as of June 30, 2020). The Fund may invest the balance of its assets in preferred stocks, convertible bonds, U.S. Treasury securities (including Treasury bills, notes and bonds), closed-end investment companies, and master limited partnerships.
Fund Performance
The Sit Small Cap Dividend Growth Fund Class I posted a -3.05% return over the last past twelve months ending June 30, 2020, compared to the -6.63% return for the Russell 2000® Index. The Fund’s gross dividend yield (before deducting Fund expenses) was 2.29% as of 6/30/20, compared to a yield of 1.78% for the Russell 2000® Index.
Factors that Influenced the Fund’s Performance
Contributing favorably to the Fund’s outperformance during the 12-month period were its stock selections in the electronic technology, finance, consumer durables, and consumer services sectors. Key holdings in these groups that contributed to outperformance included Monolithic Power Systems, MKS Instruments, Cabot Microelectronics, QTS Realty Trust, Carlyle Group, and Thor Industries. The Fund was also helped during the period by its positions in Chegg, Scotts Miracle-Gro, AtriCure, and Globant. Conversely, the Fund’s holdings in utilities, commercial services, and health services as well as a significant underweight position in health technology weighed on absolute and relative performance. Many of the stocks in the health technology sector are non-dividend-paying biotech companies with zero or minimal prospects of paying a dividend in the future. Accordingly, our health technology sector performance was constrained by a dearth of the type of companies that the Fund seeks to own (i.e., cash flow-generating enterprises that pay dividends), compared to the more speculative constituents in the benchmark.
Outlook and Positioning
Small capitalization stocks underperformed large capitalization peers, with growth significantly outperforming value within the small cap universe. As investors flocked to growth companies, valuation spreads between growth and value are now at very elevated levels. Overall, we believe equity returns in the near to intermediate term will be largely driven by earnings growth and that dividend-paying companies will remain attractive in this environment of muted returns. Accordingly, the Fund is overweighted in those sectors where we believe earnings growth will exceed the market average. The Fund’s overweight positions in electronic technology, commercial services, and producer manufacturing should be helped by easy year-ago
HYPOTHETICAL GROWTH OF $10,000
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the Russell 2000® Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 Russell 2000® Index is an unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, an index consisting of the 3,000 largest U.S. companies based on market capitalization. It is not possible to invest directly in an index. This is the Fund’s primary index.
comparisons and an expected rebound in economic growth in the second half of 2020, as the U.S. economy gradually reopens. Select technology companies should also benefit, as U.S. technology capital spending continues to grow, driven by investments in cloud computing and other emerging technologies. Finally, we believe defensive “bond proxy” areas of the market, including REITs and select utilities, provide a good hedge to market risks, including the upcoming U.S. presidential election, growing geopolitical tensions, and a potential escalation in trade tension with China. Given valuation declines through the first half of 2020, these areas look attractive due to both their valuation and their yield advantage to the market and prevailing U.S. Treasury yields.
| | |
Roger J. Sit | | Michael T. Manns |
Kent L. Johnson | | Robert W. Sit |
Portfolio Managers | | |
| | |
| Information on this page is unaudited. |
32 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2020
| | | | | | | | | | | | |
| | | Sit Small Cap
Dividend
Growth Fund | | | Russell 2000® Index 1 | |
| | | Class I | | | Class S | |
One Year | | | -3.05 | % | | | -3.30 | % | | | -6.63 | % |
Five Year | | | 4.18 | | | | 3.90 | | | | 4.29 | |
Since Inception
(3/31/15) | | | 3.89 | | | | 3.63 | | | | 4.16 | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 Russell 2000® Index is an unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, an index consisting of the 3,000 largest U.S. companies based on market capitalization. It is not possible to directly invest in an index.
| | |
PORTFOLIO SUMMARY | | |
| |
Class I: | | |
| |
Net Asset Value 6/30/20: | | $11.39 Per Share |
Net Asset Value 6/30/19: | | $11.89 Per Share |
Total Net Assets: | | $11.8 Million |
Class S: | | |
Net Asset Value 6/30/20: | | $11.38 Per Share |
Net Asset Value 6/30/19: | | $11.88 Per Share |
Total Net Assets: | | $3.7 Million |
| |
Weighted Average Market Cap: | | $4.4 Billion |
TOP 10 HOLDINGS
1. Monolithic Power Systems, Inc.
2. MKS Instruments, Inc.
3. Cabot Microelectronics Corp.
4. Strategic Education, Inc.
5. Scotts Miracle-Gro Co.
6. Chegg, Inc.
7. QTS Realty Trust, Inc.
8. Globant SA
9. Hubbell, Inc.
10. Encompass Health Corp.
Based on total net assets as of June 30, 2020. Subject to change.
SECTOR ALLOCATION
Based on total net assets as of June 30, 2020. Subject to change.
| | | | |
Information on this page is unaudited. | | | | |
JUNE 30, 2020 | | | 33 | |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit Small Cap Dividend Growth Fund
Investments are grouped by economic sectors.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 97.1% | | | | | | | | |
Commercial Services - 5.3% | | | | | | | | |
Booz Allen Hamilton Holding Corp. | | | 3,200 | | | | 248,928 | |
Brink’s Co. | | | 3,400 | | | | 154,734 | |
Colliers International Group, Inc. | | | 2,350 | | | | 134,678 | |
FTI Consulting, Inc. * | | | 1,425 | | | | 163,234 | |
Herman Miller, Inc. | | | 4,900 | | | | 115,689 | |
| | | | | | | | |
| | |
| | | | | | | 817,263 | |
| | | | | | | | |
| | |
Communications - 1.2% | | | | | | | | |
Shenandoah Telecommunications Co. | | | 3,800 | | | | 187,302 | |
| | | | | | | | |
| | |
Consumer Durables - 6.6% | | | | | | | | |
Acushnet Holdings Corp. | | | 5,500 | | | | 191,345 | |
BRP, Inc. | | | 4,375 | | | | 186,288 | |
Helen of Troy, Ltd. * | | | 425 | | | | 80,138 | |
MDC Holdings, Inc. | | | 3,750 | | | | 133,875 | |
National Presto Industries, Inc. | | | 750 | | | | 65,542 | |
Thor Industries, Inc. | | | 2,300 | | | | 245,019 | |
YETI Holdings, Inc. * | | | 2,700 | | | | 115,371 | |
| | | | | | | | |
| | |
| | | | | | | 1,017,578 | |
| | | | | | | | |
| | |
Consumer Non-Durables - 0.4% | | | | | | | | |
Sensient Technologies Corp. | | | 1,250 | | | | 65,200 | |
| | | | | | | | |
| | |
Consumer Services - 9.1% | | | | | | | | |
Chegg, Inc. * | | | 4,900 | | | | 329,574 | |
Dunkin’ Brands Group, Inc. | | | 2,625 | | | | 171,229 | |
Nexstar Media Group, Inc. | | | 2,850 | | | | 238,516 | |
Service Corp. International | | | 3,900 | | | | 151,671 | |
Strategic Education, Inc. | | | 2,290 | | | | 351,858 | |
Vail Resorts, Inc. | | | 925 | | | | 168,489 | |
| | | | | | | | |
| | |
| | | | | | | 1,411,337 | |
| | | | | | | | |
| | |
Electronic Technology - 11.0% | | | | | | | | |
Cabot Microelectronics Corp. | | | 2,700 | | | | 376,758 | |
MKS Instruments, Inc. | | | 4,600 | | | | 520,904 | |
Monolithic Power Systems, Inc. | | | 2,575 | | | | 610,275 | |
Power Integrations, Inc. | | | 1,700 | | | | 200,821 | |
| | | | | | | | |
| | |
| | | | | | | 1,708,758 | |
| | | | | | | | |
| | |
Finance - 25.1% | | | | | | | | |
American Equity Investment Life Holding Co. | | | 5,250 | | | | 129,728 | |
Artisan Partners Asset Management, Inc. | | | 3,900 | | | | 126,750 | |
Axis Capital Holdings, Ltd. | | | 6,300 | | | | 255,528 | |
Carlyle Group, Inc. | | | 8,075 | | | | 225,292 | |
CNO Financial Group, Inc. | | | 14,000 | | | | 217,980 | |
CubeSmart | | | 5,250 | | | | 141,698 | |
Donegal Group, Inc. | | | 9,500 | | | | 135,090 | |
Essential Properties Realty Trust, Inc. | | | 7,700 | | | | 114,268 | |
Evercore Partners, Inc. | | | 2,800 | | | | 164,976 | |
Hanover Insurance Group, Inc. | | | 1,275 | | | | 129,196 | |
HCI Group, Inc. | | | 4,950 | | | | 228,591 | |
Hercules Capital, Inc. | | | 13,100 | | | | 137,157 | |
Investors Bancorp, Inc. | | | 7,250 | | | | 61,625 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Legg Mason, Inc. | | | 4,800 | | | | 238,800 | |
Mercury General Corp. | | | 2,400 | | | | 97,800 | |
Old National Bancorp | | | 9,550 | | | | 131,408 | |
People’s United Financial, Inc. | | | 16,325 | | | | 188,880 | |
Physicians Realty Trust | | | 14,750 | | | | 258,420 | |
Piper Sandler Cos | | | 2,875 | | | | 170,085 | |
QTS Realty Trust, Inc. | | | 4,350 | | | | 278,792 | |
Selective Insurance Group, Inc. | | | 1,700 | | | | 89,658 | |
Stifel Financial Corp. | | | 4,000 | | | | 189,720 | |
STORE Capital Corp. | | | 3,375 | | | | 80,359 | |
Wintrust Financial Corp. | | | 2,250 | | | | 98,145 | |
| | | | | | | | |
| | |
| | | | | | | 3,889,946 | |
| | | | | | | | |
| | |
Health Services - 2.4% | | | | | | | | |
Encompass Health Corp. | | | 4,200 | | | | 260,106 | |
Tenet Healthcare Corp. * | | | 6,400 | | | | 115,904 | |
| | | | | | | | |
| | |
| | | | | | | 376,010 | |
| | | | | | | | |
| | |
Health Technology - 5.1% | | | | | | | | |
AtriCure, Inc. * | | | 4,000 | | | | 179,800 | |
Atrion Corp. | | | 160 | | | | 101,922 | |
iRhythm Technologies, Inc. * | | | 1,200 | | | | 139,068 | |
LeMaitre Vascular, Inc. | | | 4,175 | | | | 110,220 | |
STERIS, PLC | | | 1,100 | | | | 168,784 | |
Wright Medical Group NV * | | | 2,850 | | | | 84,702 | |
| | | | | | | | |
| | |
| | | | | | | 784,496 | |
| | | | | | | | |
| | |
Industrial Services - 2.4% | | | | | | | | |
EMCOR Group, Inc. | | | 2,000 | | | | 132,280 | |
KBR, Inc. | | | 10,775 | | | | 242,976 | |
| | | | | | | | |
| | |
| | | | | | | 375,256 | |
| | | | | | | | |
| | |
Non-Energy Minerals - 1.6% | | | | | | | | |
AZEK Co., Inc. * | | | 1,900 | | | | 60,534 | |
Commercial Metals Co. | | | 3,950 | | | | 80,580 | |
PotlatchDeltic Corp. | | | 2,810 | | | | 106,864 | |
| | | | | | | | |
| | |
| | | | | | | 247,978 | |
| | | | | | | | |
| | |
Process Industries - 3.2% | | | | | | | | |
Huntsman Corp. | | | 4,650 | | | | 83,560 | |
Neenah, Inc. | | | 1,550 | | | | 76,663 | |
Scotts Miracle-Gro Co. | | | 2,500 | | | | 336,175 | |
| | | | | | | | |
| | |
| | | | | | | 496,398 | |
| | | | | | | | |
| | |
Producer Manufacturing - 11.3% | | | | | | | | |
Apogee Enterprises, Inc. | | | 3,925 | | | | 90,432 | |
Applied Industrial Technologies, Inc. | | | 1,950 | | | | 121,660 | |
Carlisle Cos, Inc. | | | 1,300 | | | | 155,571 | |
Crane Co. | | | 2,675 | | | | 159,056 | |
H&E Equipment Services, Inc. | | | 7,500 | | | | 138,600 | |
Hubbell, Inc. | | | 2,100 | | | | 263,256 | |
Lincoln Electric Holdings, Inc. | | | 1,525 | | | | 128,466 | |
MSA Safety, Inc. | | | 2,000 | | | | 228,880 | |
Oshkosh Corp. | | | 2,400 | | | | 171,888 | |
| | | | |
See accompanying notes financial statements. | | | | |
34 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Rexnord Corp. | | | 3,725 | | | | 108,584 | |
Watsco, Inc. | | | 1,050 | | | | 186,585 | |
| | | | | | | | |
| | |
| | | | | | | 1,752,978 | |
| | | | | | | | |
Retail Trade - 2.0% | | | | | | | | |
Casey’s General Stores, Inc. | | | 1,025 | | | | 153,258 | |
PetMed Express, Inc. | | | 4,625 | | | | 164,835 | |
| | | | | | | | |
| | |
| | | | | | | 318,093 | |
| | | | | | | | |
Technology Services - 4.1% | | | | | | | | |
Globant SA * | | | 1,800 | | | | 269,730 | |
ManTech International Corp. | | | 1,800 | | | | 123,282 | |
Science Applications International Corp. | | | 3,075 | | | | 238,866 | |
| | | | | | | | |
| | |
| | | | | | | 631,878 | |
| | | | | | | | |
Transportation - 4.2% | | | | | | | | |
Alaska Air Group, Inc. | | | 3,825 | | | | 138,694 | |
Knight-Swift Transportation Holdings, Inc. | | | 3,425 | | | | 142,857 | |
Marten Transport, Ltd. | | | 7,900 | | | | 198,764 | |
TFI International, Inc. | | | 5,000 | | | | 177,250 | |
| | | | | | | | |
| | |
| | | | | | | 657,565 | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Utilities - 2.1% | | | | | | | | |
Black Hills Corp. | | | 2,900 | | | | 164,314 | |
New Jersey Resources Corp. | | | 2,150 | | | | 70,198 | |
Spire, Inc. | | | 1,375 | | | | 90,351 | |
| | | | | | | | |
| | |
| | | | | | | 324,863 | |
| | | | | | | | |
Total Common Stocks
(cost: $13,101,643) | | | | | | | 15,062,899 | |
| | | | | | | | |
Investment Companies - 0.3% | | | | | | | | |
Tortoise Energy Infrastructure Corp. | | | 2,856 | | | | 45,782 | |
| | | | | | | | |
(cost: $283,527) | | | | | | | | |
Short-Term Securities - 3.2% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 0.06% | | | 487,341 | | | | 487,341 | |
| | | | | | | | |
(cost: $487,341) | | | | | | | | |
Total Investments in Securities - 100.6% | | | | | | | | |
(cost: $13,872,511) | | | | | | | 15,596,022 | |
Other Assets and Liabilities, net - (0.6%) | | | | | | | (89,907 | ) |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | $ | 15,506,115 | |
| | | | | | | | |
* Non-income producing security.
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1
Quoted
Price ($) | | | Level 2
Other significant
observable inputs ($) | | Level 3
Significant
unobservable inputs ($) | | Total ($) | |
Common Stocks ** | | | 15,062,899 | | | — | | — | | | 15,062,899 | |
Investment Companies | | | 45,782 | | | — | | — | | | 45,782 | |
Short-Term Securities | | | 487,341 | | | — | | — | | | 487,341 | |
Total: | | | 15,596,022 | | | — | | — | | | 15,596,022 | |
** For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2020 | | | 35 | |
|
|
|
Sit Small Cap Growth Fund |
OBJECTIVE & STRATEGY
The objective of the Sit Small Cap Growth Fund is to maximize long-term capital appreciation. The Fund seeks to achieve its objective by investing, under normal market conditions, at least 80% of its net assets in common stocks of companies with market capitalizations at the time of purchase of up to $3.0 billion, or up to the market capitalization of the largest company included in the Russell 2000® Index measured at the end of the previous twelve months ($10.3 billion as of June 30, 2020).
The Adviser invests in a diversified group of growing small companies it believes exhibit the potential for superior growth. The Adviser believes that a company’s earnings growth is the primary determinant of its potential long-term return and evaluates a company’s potential for above average long-term earnings and revenue growth.
Fund Performance
The Sit Small Cap Growth Fund return was +5.68% over the 12-month period ending June 30, 2020. This compares to the return of +3.48% for the Russell 2000® Growth Index and a -6.63% decline for the Russell 2000® Index.
Factors that Influenced the Fund’s Performance
The majority of the Fund’s outperformance during the period can be explained by its stock selection and overweight positions in both the consumer durables and electronic technology sectors. Within consumer durables, key holdings that benefited returns were in YETI Holdings, Thor Industries, Acushnet Holdings, and Take-Two Interactive Software. All of these companies were helped during the first half of 2020 by their focus on areas of consumer growth during the pandemic, including outdoor activities, home improvement, and stay-at-home games. The Fund’s key holdings in the electronic technology sector were Monolithic Power Systems, Skyworks Solutions, and MKS Instruments. Additional individual holdings in other sectors that also benefited from the stay-at-home orders and contributed to performance included Teladoc Health, Chegg, Trex, and Scotts Miracle-Gro. The main detractor to performance during the period was the Fund’s very large (in excess of 1000 basis points) underweight position in the health technology sector.
Outlook and Positioning
In terms of sector positioning, we expect pro-growth/cyclical areas to continue to outperform the market, as economic growth rebounds in the back half of 2020. Transportation, select producer manufacturing, and technology stocks stand to benefit especially, based on the potential for an upward earnings inflection. Within technology, we expect investor enthusiasm for a 5G wireless spending cycle to boost select semiconductor companies as well as firms leveraged to increasingly complex wireless ecosystems. Additionally, despite the shock from the COVID-19 outbreak, the U.S. consumer remains in good shape, with consumer sentiment gradually improving from low levels. This should release some pent-up demand. Accordingly, the Fund retains significant overweight positions in the consumer durables and consumer services sectors. We continue to significantly
HYPOTHETICAL GROWTH OF $10,000
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the Russell 2000® Growth Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 Russell 2000® Growth Index is an unmanaged index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index. This is the Fund’s primary index.
underweight the health technology sector, as many of the biotech companies in the benchmark Russell 2000® Growth Index depend on debt or equity offerings to fund operations and rely on binary events, such as clinical trials and acquisition potential, to drive stock performance. The Fund maintains a preference for investing in proven, cash-generating companies. With small capitalization valuations at the high end of their historical levels, we believe price appreciation will largely come from earnings growth. Therefore, the Fund is positioned towards more visible growth companies that we expect to generate above-average near- and long-term earnings growth.
Roger J. Sit Kent L. Johnson
Robert W. Sit
Portfolio Managers
| | |
| Information on this page is unaudited. |
36 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2020
| | | | | | | | | | | | |
| | | Sit
Small Cap
Growth Fund | | | Russell
2000®
Growth Index 1 | | | Russell
2000®
Index 2 | |
One Year | | | 5.68 | % | | | 3.48 | % | | | -6.63 | % |
Five Year | | | 4.86 | | | | 6.86 | | | | 4.29 | |
Ten Year | | | 10.61 | | | | 12.92 | | | | 10.50 | |
Since Inception
(7/1/94) | | | 9.88 | | | | 8.01 | | | | 8.58 | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 Russell 2000® Growth Index is an unmanaged index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.
2 Russell 2000® Index is an unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, an index consisting of the 3,000 largest U.S. companies based on market capitalization.
| | |
PORTFOLIO SUMMARY | | |
| |
Net Asset Value 6/30/20: | | $56.81 Per Share |
Net Asset Value 6/30/19: | | $55.46 Per Share |
Total Net Assets: | | $100.6 Million |
Weighted Average Market Cap: | | $8.0 Billion |
TOP 10 HOLDINGS
1. Chegg, Inc.
2. Teladoc Health, Inc.
3. Trex Co., Inc.
4. Monolithic Power Systems, Inc.
5. Paycom Software, Inc.
6. YETI Holdings, Inc.
7. Waste Connections, Inc.
8. Sarepta Therapeutics, Inc.
9. HubSpot, Inc.
10. iRhythm Technologies, Inc.
Based on total net assets as of June 30, 2020. Subject to change.
SECTOR ALLOCATION
Based on total net assets as of June 30, 2020. Subject to change.
| | | | |
Information on this page is unaudited. | | | | |
JUNE 30, 2020 | | | 37 | |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit Small Cap Growth Fund
Investments are grouped by economic sectors.
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 96.6% | | | | | | | | |
Commercial Services - 4.6% | | | | | | | | |
ASGN, Inc. * | | | 25,100 | | | | 1,673,668 | |
Booz Allen Hamilton Holding Corp. | | | 20,000 | | | | 1,555,800 | |
Colliers International Group, Inc. | | | 6,875 | | | | 394,006 | |
FTI Consulting, Inc. * | | | 8,950 | | | | 1,025,223 | |
| | | | | | | | |
| | |
| | | | | | | 4,648,697 | |
| | | | | | | | |
Communications - 1.1% | | | | | | | | |
Shenandoah Telecommunications Co. | | | 22,700 | | | | 1,118,883 | |
| | | | | | | | |
Consumer Durables - 7.1% | | | | | | | | |
Acushnet Holdings Corp. | | | 30,800 | | | | 1,071,532 | |
BRP, Inc. | | | 19,150 | | | | 815,407 | |
Helen of Troy, Ltd. * | | | 2,750 | | | | 518,540 | |
Take-Two Interactive Software, Inc. * | | | 8,625 | | | | 1,203,791 | |
Thor Industries, Inc. | | | 11,200 | | | | 1,193,136 | |
YETI Holdings, Inc. * | | | 53,700 | | | | 2,294,601 | |
| | | | | | | | |
| | |
| | | | | | | 7,097,007 | |
| | | | | | | | |
Consumer Services - 8.3% | | | | | | | | |
Chegg, Inc. * | | | 37,500 | | | | 2,522,250 | |
Dunkin’ Brands Group, Inc. | | | 12,800 | | | | 834,944 | |
Grand Canyon Education, Inc. * | | | 3,600 | | | | 325,908 | |
Nexstar Media Group, Inc. | | | 15,225 | | | | 1,274,180 | |
Service Corp. International | | | 25,600 | | | | 995,584 | |
Strategic Education, Inc. | | | 9,100 | | | | 1,398,215 | |
Vail Resorts, Inc. | | | 5,600 | | | | 1,020,040 | |
| | | | | | | | |
| | |
| | | | | | | 8,371,121 | |
| | | | | | | | |
Electronic Technology - 10.1% | | | | | | | | |
Arista Networks, Inc. * | | | 7,800 | | | | 1,638,234 | |
Cabot Microelectronics Corp. | | | 8,825 | | | | 1,231,441 | |
Ciena Corp. * | | | 26,250 | | | | 1,421,700 | |
MKS Instruments, Inc. | | | 15,750 | | | | 1,783,530 | |
Monolithic Power Systems, Inc. | | | 10,200 | | | | 2,417,400 | |
Skyworks Solutions, Inc. | | | 13,200 | | | | 1,687,752 | |
| | | | | | | | |
| | |
| | | | | | | 10,180,057 | |
| | | | | | | | |
Finance - 5.5% | | | | | | | | |
Artisan Partners Asset Management, Inc. | | | 18,500 | | | | 601,250 | |
Axis Capital Holdings, Ltd. | | | 11,775 | | | | 477,594 | |
Essential Properties Realty Trust, Inc. | | | 9,700 | | | | 143,948 | |
First Republic Bank | | | 6,400 | | | | 678,336 | |
Legg Mason, Inc. | | | 24,800 | | | | 1,233,800 | |
Physicians Realty Trust | | | 61,600 | | | | 1,079,232 | |
Selective Insurance Group, Inc. | | | 10,375 | | | | 547,178 | |
SVB Financial Group * | | | 3,775 | | | | 813,626 | |
| | | | | | | | |
| | |
| | | | | | | 5,574,964 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Health Services - 4.1% | | | | | | | | |
Encompass Health Corp. | | | 14,600 | | | | 904,178 | |
Teladoc Health, Inc. * | | | 13,125 | | | | 2,504,775 | |
Tenet Healthcare Corp. * | | | 40,100 | | | | 726,211 | |
| | | | | | | | |
| | |
| | | | | | | 4,135,164 | |
| | | | | | | | |
Health Technology - 15.9% | | | | | | | | |
Align Technology, Inc. * | | | 3,600 | | | | 987,984 | |
AtriCure, Inc. * | | | 25,825 | | | | 1,160,834 | |
Bio-Techne Corp. | | | 4,800 | | | | 1,267,536 | |
Exact Sciences Corp. * | | | 15,700 | | | | 1,364,958 | |
Insulet Corp. * | | | 4,950 | | | | 961,587 | |
iRhythm Technologies, Inc. * | | | 17,600 | | | | 2,039,664 | |
LeMaitre Vascular, Inc. | | | 26,775 | | | | 706,860 | |
Mesoblast, Ltd. ADR * | | | 30,975 | | | | 352,805 | |
PerkinElmer, Inc. | | | 8,400 | | | | 823,956 | |
Sarepta Therapeutics, Inc. * | | | 13,400 | | | | 2,148,556 | |
STAAR Surgical Co. * | | | 28,850 | | | | 1,775,429 | |
STERIS, PLC | | | 9,100 | | | | 1,396,304 | |
Wright Medical Group NV * | | | 33,700 | | | | 1,001,564 | |
| | | | | | | | |
| | |
| | | | | | | 15,988,037 | |
| | | | | | | | |
Industrial Services - 5.4% | | | | | | | | |
Advanced Disposal Services, Inc. * | | | 40,825 | | | | 1,231,690 | |
EMCOR Group, Inc. | | | 15,800 | | | | 1,045,012 | |
KBR, Inc. | | | 43,500 | | | | 980,925 | |
Waste Connections, Inc. | | | 23,100 | | | | 2,166,549 | |
| | | | | | | | |
| | |
| | | | | | | 5,424,176 | |
| | | | | | | | |
Non-Energy Minerals - 2.8% | | | | | | | | |
AZEK Co., Inc. * | | | 12,400 | | | | 395,064 | |
Trex Co., Inc. * | | | 18,700 | | | | 2,432,309 | |
| | | | | | | | |
| | |
| | | | | | | 2,827,373 | |
| | | | | | | | |
Process Industries - 1.7% | | | | | | | | |
Scotts Miracle-Gro Co. | | | 12,600 | | | | 1,694,322 | |
| | | | | | | | |
Producer Manufacturing - 7.9% | | | | | | | | |
Crane Co. | | | 15,400 | | | | 915,684 | |
H&E Equipment Services, Inc. | | | 23,200 | | | | 428,736 | |
Hubbell, Inc. | | | 8,000 | | | | 1,002,880 | |
IDEX Corp. | | | 6,100 | | | | 964,044 | |
Lincoln Electric Holdings, Inc. | | | 8,900 | | | | 749,736 | |
MSA Safety, Inc. | | | 11,400 | | | | 1,304,616 | |
Oshkosh Corp. | | | 13,800 | | | | 988,356 | |
Rexnord Corp. | | | 23,600 | | | | 687,940 | |
Watsco, Inc. | | | 5,050 | | | | 897,385 | |
| | | | | | | | |
| | |
| | | | | | | 7,939,377 | |
| | | | | | | | |
Retail Trade - 1.3% | | | | | | | | |
Casey’s General Stores, Inc. | | | 4,300 | | | | 642,936 | |
Ulta Beauty, Inc. * | | | 3,050 | | | | 620,431 | |
| | | | | | | | |
| | |
| | | | | | | 1,263,367 | |
| | | | | | | | |
| | | | |
See accompanying notes financial statements. | | | | |
38 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Technology Services - 17.0% | | | | | | | | |
Altair Engineering, Inc. * | | | 29,983 | | | | 1,191,824 | |
ANSYS, Inc. * | | | 3,725 | | | | 1,086,694 | |
Aspen Technology, Inc. * | | | 14,500 | | | | 1,502,345 | |
Euronet Worldwide, Inc. * | | | 16,600 | | | | 1,590,612 | |
Globant SA * | | | 13,400 | | | | 2,007,990 | |
GoDaddy, Inc. * | | | 15,025 | | | | 1,101,783 | |
HubSpot, Inc. * | | | 9,450 | | | | 2,120,108 | |
Paycom Software, Inc. * | | | 7,450 | | | | 2,307,488 | |
PTC, Inc. * | | | 17,600 | | | | 1,369,104 | |
Qualys, Inc. * | | | 10,050 | | | | 1,045,401 | |
Science Applications International Corp. | | | 14,800 | | | | 1,149,664 | |
Talend SA, ADR * | | | 19,100 | | | | 662,006 | |
| | | | | | | | |
| | |
| | | | | | | 17,135,019 | |
| | | | | | | | |
Transportation - 2.8% | | | | | | | | |
Alaska Air Group, Inc. | | | 11,500 | | | | 416,990 | |
Knight-Swift Transportation Holdings, Inc. | | | 13,500 | | | | 563,085 | |
Marten Transport, Ltd. | | | 48,050 | | | | 1,208,938 | |
TFI International, Inc. | | | 17,100 | | | | 606,195 | |
| | | | | | | | |
| | |
| | | | | | | 2,795,208 | |
| | | | | | | | |
| | | | | | | | |
| | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Utilities - 1.0% | | | | | | | | |
Fortis, Inc. | | | 12,107 | | | | 461,035 | |
Spire, Inc. | | | 7,525 | | | | 494,468 | |
| | | | | | | | |
| | |
| | | | | | | 955,503 | |
| | | | | | | | |
Total Common Stocks
(cost: $56,885,067) | | | | | | | 97,148,275 | |
| | | | | | | | |
Short-Term Securities - 3.8% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 0.06% | | | 3,827,644 | | | | 3,827,644 | |
| | | | | | | | |
(cost: $3,827,644) | | | | | | | | |
Total Investments in Securities - 100.4%
(cost: $60,712,711) | | | | 100,975,919 | |
Other Assets and Liabilities, net - (0.4%) | | | | (363,216 | ) |
| | | | | | | | |
| |
Total Net Assets - 100.0% | | | $ | 100,612,703 | |
| | | | | | | | |
* Non-income producing security.
ADR — American Depositary Receipt
PLC — Public Limited Company
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1
Quoted
Price ($) | | | Level 2
Other significant
observable inputs ($) | | Level 3
Significant
unobservable inputs ($) | | Total ($) | |
Common Stocks ** | | | 97,148,275 | | | — | | — | | | 97,148,275 | |
Short-Term Securities | | | 3,827,644 | | | — | | — | | | 3,827,644 | |
Total: | | | 100,975,919 | | | — | | — | | | 100,975,919 | |
** For equity securities categorized in a single level, refer to the Schedule of Investments for further breakdown.
There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2020 | | | 39 | |
|
|
|
Sit International Growth Fund |
OBJECTIVE STRATEGY
The objective of the Sit International Growth Fund is long-term growth. The Fund seeks to achieve its objective by investing at least 90% of its net assets in common stocks of growth companies domiciled outside the United States. In selecting investments for the Fund, the Adviser begins by selecting countries or regions in which to invest by considering several factors affecting the economy and equity market of foreign countries and regions. After the country and regional allocations are determined, the Adviser seeks industries and sectors that it believes have earnings growth prospects that are greater than the average. Within the selected industries and sectors, the Adviser invests in foreign growth-oriented companies it believes exhibit the potential for superior growth.
Fund Performance
The Sit International Growth Fund outperformed the MSCI EAFE Index for the 12-month period ended June 30, 2020, with a return of +2.43%. This compares to the MSCI EAFE Index return of -5.13%.
Factors that Influenced the Fund’s Performance
Contributing favorably to performance during the 12-month period were the Fund’s sector underweight in banks, its overweight in software & services (Globant, Tencent Holdings, Atlassian), and its stock selection in technology hardware (Logitech International, Keyence). Adversely affecting performance were the Fund’s holdings in the pharmaceuticals (Canopy Growth, Cronos) and food beverage & tobacco (Coca-Cola European Partners) sectors.
Geographically, stock selection in Asia Pacific ex-Japan (Tencent Holdings, Atlassian, Alibaba Group Holding), Non-Euroland (Logitech International, Lonza Group), and Euroland (Cellnex Telecom, Schnei-der Electric) contributed value, while allocation to North America (Euronet Worldwide, Suncor Energy) and Japan (Shiseido) hurt performance. EAFE Index returns were driven by massive global stimulus, credit market stabilization, promise of a COVID-19 vaccine, signs that containment efforts were reducing the rate of new infections, asset rotation, and anticipation of better corporate earnings.
Outlook and Positioning
Economic activity has improved in Europe, Japan, China, and some emerging markets, as the pace of new COVID-19 cases has slowed, allowing restrictions to be relaxed. The European Central Bank has kept credit flowing, having purchased 345.5 billion euros in assets under its freshly launched 1.35 trillion euros Pandemic Emergency Purchase Programme. This stimulus has taken the form of furloughing schemes, direct loans to companies, and loan guarantees. Japan should also participate in the global economic recovery following the COVID-19 shock; yet, we expect an uneven recovery restrained by the ongoing structural challenges of an aging population, a rigid labor system, and a highly indebted government. We believe China will return to its pre-pandemic GDP level in the second half of 2020 and achieve positive low-single-digit GDP growth for the full year, as domestic demand has gradually improved and growth will be underpinned by policy support, recovery in consumption, and better export demand. South Korea and India both went into lockdown early and thus were able to better control COVID-19, allowing them to ease restrictions.
Regarding investment strategy, we prefer Asia ex-Japan and are underweight Europe. We are positive on China, given its first in, first out position amid the global economic recovery. Our investments are in
HYPOTHETICAL GROWTH OF $10,000
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the MSCI EAFE Index and MSCI EAFE Growth Index. The primary index used to compare the Fund’s performance was changed to the MSCI EAFE Index from the MSCI EAFE Growth Index because the Investment Adviser believes that the MSCI EAFE Index more accurately reflects the Fund’s investment objectives and strategies. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 MSCI EAFE Index (Europe, Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that measures the equity market performance of developed markets, excluding the US & Canada. This is the Fund’s primary index.
the new economy and domestic demand-driven sectors. The South Korean holdings are in consumer, financial, and export-beneficiary (semiconductor, electrical machinery, smartphone manufacturers) companies. In India, we favor the economically sensitive sectors of consumer, financials, energy, information services, and industrials. In Japan, we remain focused on quality, well-managed, growth-oriented companies with strong balance sheets, along with defensive domestic-focused consumption names. We are cautious on Europe, given continued uncertainty regarding the post-Brexit relationship, high exposure to global trade or tourism, the possibility of another eurozone crisis, fiscal stress, and threat of another wave of COVID-19 infections. Our European holdings are biased toward thematic opportunities within the technology, healthcare, and services sectors, as well as key beneficiaries of government stimulus.
Roger J. Sit
Portfolio Manager
| | |
| Information on this page is unaudited. |
40 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURNS
as of June 30, 2020
| | | | | | | | | | | | | | | | | | |
| | | Sit | | | | | | | | |
| | | International | | | | | | |
| | | Growth | | | | MSCI EAFE | | |
| | | Fund | | | | Index 1 | | |
One Year | | | 2.43 | % | | | | | | | -5.13 | % | | | | |
Five Year | | | 2.68 | | | | | | | | 2.05 | | | | | |
Ten Year | | | 5.91 | | | | | | | | 5.73 | | | | | |
Since Inception | | | 3.92 | | | | | | | | 4.87 | | | | | |
(11/1/91) | | | | | | | | | | | | | | | | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains and all fee waivers. Without the fee waivers total return and yield figures would have been lower. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 MSCI EAFE Index (Europe, Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that measures the equity market performance of developed markets, excluding the US & Canada.
FUND DIVERSIFICATION - BY REGION
| | | | | | | | | | | | | | | | |
| | | Sit Int’l | | | | MSCI EAFE | | |
| | | Growth Fund | | | | Index | | |
Europe | | | 58.1 | % | | | | | | | 61.6 | % | | | | |
Asia | | | 31.8 | | | | | | | | 37.7 | | | | | |
North America | | | 7.2 | | | | | | | | — | | | | | |
Latin America | | | 2.0 | | | | | | | | — | | | | | |
Africa/Middle East | | | — | | | | | | | | 0.7 | | | | | |
Cash & Other Net Assets | | | 0.9 | | | | | | | | — | | | | | |
Based on total net assets as of June 30, 2020. Subject to change.
PORTFOLIO SUMMARY
| | | | | | |
Net Asset Value 6/30/20: | | $17.38 Per Share | | | | |
Net Asset Value 6/30/19: | | $17.13 Per Share | | | | |
Total Net Assets: | | $23.0 Million | | | | |
Weighted Average Market Cap: | | $89.5 Billion | | | | |
TOP 10 HOLDINGS
1. Nestle SA
2. ASML Holding NV
3. Tencent Holdings, Ltd.
4. Lonza Group AG
5. Schneider Electric SE
6. Iberdrola SA
7. London Stock Exchange Group, PLC
8. Logitech International SA
9. Alibaba Group Holding, Ltd., ADR
10. Terumo Corp.
Based on total net assets as of June 30, 2020. Subject to change.
SECTOR ALLOCATION
Based on total net assets as of June 30, 2020. Subject to change.
| | |
Information on this page is unaudited. |
JUNE 30, 2020 | | 41 |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit International Growth Fund
Investments are grouped by geographic region.
| | | | | | | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 98.0% | | | | | | | | |
Asia - 30.7% | | | | | | | | |
Australia - 5.1% | | | | | | | | |
Amcor, Ltd. | | | 9,125 | | | | 92,164 | |
Atlassian Corp., PLC * | | | 2,500 | | | | 450,675 | |
CSL, Ltd. | | | 350 | | | | 69,611 | |
Macquarie Group, Ltd. | | | 2,600 | | | | 215,779 | |
Rio Tinto, PLC, ADR | | | 4,400 | | | | 247,192 | |
Westpac Banking Corp., ADR | | | 8,300 | | | | 103,833 | |
| | | | | | | | |
| | |
| | | | | | | 1,179,254 | |
| | | | | | | | |
China/Hong Kong - 11.1% | | | | | | | | |
AIA Group, Ltd. | | | 32,200 | | | | 301,315 | |
Alibaba Group Holding, Ltd., ADR * | | | 2,350 | | | | 506,895 | |
Baidu, Inc., ADR * | | | 1,525 | | | | 182,832 | |
China Tower Corp., Ltd. | | | 1,342,000 | | | | 238,481 | |
CSPC Pharmaceutical Group, Ltd. | | | 105,600 | | | | 199,994 | |
ENN Energy Holdings, Ltd. | | | 18,400 | | | | 207,929 | |
Ping An Insurance Group Co. of China, Ltd. | | | 33,500 | | | | 333,961 | |
Tencent Holdings, Ltd. | | | 9,000 | | | | 576,701 | |
| | | | | | | | |
| | |
| | | | | | | 2,548,108 | |
| | | | | | | | |
Japan - 10.0% | | | | | | | | |
Astellas Pharma, Inc. | | | 17,700 | | | | 295,582 | |
Keyence Corp. | | | 1,000 | | | | 419,062 | |
Recruit Holdings Co., Ltd. | | | 11,200 | | | | 385,170 | |
Shiseido Co., Ltd. | | | 4,100 | | | | 261,255 | |
Sony Corp., ADR | | | 6,300 | | | | 435,519 | |
Terumo Corp. | | | 13,100 | | | | 498,622 | |
| | | | | | | | |
| | |
| | | | | | | 2,295,210 | |
| | | | | | | | |
Singapore - 1.9% | | | | | | | | |
DBS Group Holdings, Ltd. | | | 15,600 | | | | 234,731 | |
Singapore Technologies Engineering, Ltd. | | | 78,400 | | | | 187,121 | |
| | | | | | | | |
| | |
| | | | | | | 421,852 | |
| | | | | | | | |
South Korea - 2.6% | | | | | | | | |
LG Chem, Ltd. | | | 975 | | | | 402,362 | |
Samsung Electronics Co., Ltd., GDR | | | 185 | | | | 202,245 | |
| | | | | | | | |
| | |
| | | | | | | 604,607 | |
| | | | | | | | |
Europe - 58.1% | | | | | | | | |
Denmark - 0.9% | | | | | | | | |
Bavarian Nordic * | | | 7,550 | | | | 206,951 | |
| | | | | | | | |
France - 8.5% | | | | | | | | |
AXA SA * | | | 11,750 | | | | 247,253 | |
Dassault Systemes SA | | | 2,625 | | | | 455,679 | |
Safran SA * | | | 3,200 | | | | 321,891 | |
Sanofi, ADR | | | 3,800 | | | | 193,990 | |
Schneider Electric SE | | | 5,000 | | | | 556,181 | |
Talend SA, ADR * | | | 4,900 | | | | 169,834 | |
| | | | | | | | |
| | |
| | | | | | | 1,944,828 | |
| | | | | | | | |
| | | | | | | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Germany - 5.3% | | | | | | | | |
adidas AG * | | | 1,630 | | | | 429,750 | |
Allianz SE | | | 2,250 | | | | 459,768 | |
Aurelius SE & Co. | | | 4,660 | | | | 77,358 | |
Siemens AG | | | 2,225 | | | | 262,409 | |
| | | | | | | | |
| | |
| | | | | | | 1,229,285 | |
| | | | | | | | |
Ireland - 2.0% | | | | | | | | |
CRH, PLC, ADR | | | 4,800 | | | | 164,688 | |
STERIS, PLC | | | 1,950 | | | | 299,208 | |
| | | | | | | | |
| | |
| | | | | | | 463,896 | |
| | | | | | | | |
Netherlands - 3.9% | | | | | | | | |
ASML Holding NV | | | 1,700 | | | | 625,651 | |
Koninklijke Philips NV * | | | 5,750 | | | | 269,330 | |
| | | | | | | | |
| | |
| | | | | | | 894,981 | |
| | | | | | | | |
Spain - 4.0% | | | | | | | | |
Cellnex Telecom SA | | | 6,123 | | | | 373,977 | |
Iberdrola SA | | | 45,900 | | | | 535,866 | |
| | | | | | | | |
| | |
| | | | | | | 909,843 | |
| | | | | | | | |
Sweden - 1.0% | | | | | | | | |
Hexagon AB * | | | 3,800 | | | | 223,157 | |
| | | | | | | | |
Switzerland - 16.7% | | | | | | | | |
Garmin, Ltd. | | | 3,600 | | | | 351,000 | |
Interroll Holding AG | | | 120 | | | | 242,769 | |
Logitech International SA | | | 8,125 | | | | 529,913 | |
Lonza Group AG | | | 1,075 | | | | 569,425 | |
Nestle SA | | | 6,600 | | | | 731,746 | |
Novartis AG | | | 4,325 | | | | 376,799 | |
Partners Group Holding AG | | | 385 | | | | 350,617 | |
Roche Holding AG | | | 1,320 | | | | 457,313 | |
Zurich Insurance Group AG | | | 680 | | | | 240,945 | |
| | | | | | | | |
| | |
| | | | | | | 3,850,527 | |
| | | | | | | | |
United Kingdom - 15.8% | | | | | | | | |
Ashtead Group, PLC | | | 9,600 | | | | 323,836 | |
AstraZeneca, PLC, ADR | | | 8,300 | | | | 438,987 | |
BAE Systems, PLC | | | 52,600 | | | | 314,519 | |
Coca-Cola European Partners, PLC | | | 5,400 | | | | 203,904 | |
Dechra Pharmaceuticals, PLC | | | 5,300 | | | | 186,680 | |
Diageo, PLC, ADR | | | 2,775 | | | | 372,932 | |
DS Smith, PLC | | | 63,600 | | | | 258,181 | |
HomeServe, PLC | | | 15,000 | | | | 242,504 | |
London Stock Exchange Group, PLC | | | 5,100 | | | | 530,374 | |
Reckitt Benckiser Group, PLC | | | 3,100 | | | | 285,194 | |
RELX, PLC | | | 14,700 | | | | 340,217 | |
Royal Dutch Shell, PLC, ADR | | | 4,500 | | | | 147,105 | |
| | | | | | | | |
| | |
| | | | | | | 3,644,433 | |
| | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
42 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
| Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Latin America - 2.0% | | | | | | | | |
Argentina - 2.0% | | | | | | | | |
Globant SA * | | | 3,100 | | | | 464,535 | |
| | | | | | | | |
North America - 7.2% | | | | | | | | |
Canada - 3.4% | | | | | | | | |
Alimentation Couche-Tard, Inc. | | | 5,200 | | | | 163,055 | |
BRP, Inc. | | | 2,925 | | | | 124,748 | |
Colliers International Group, Inc. | | | 1,600 | | | | 91,696 | |
Suncor Energy, Inc. | | | 6,150 | | | | 103,689 | |
Waste Connections, Inc. | | | 3,250 | | | | 304,818 | |
| | | | | | | | |
| | |
| | | | | | | 788,006 | |
| | | | | | | | |
United States - 3.8% | | | | | | | | |
Broadcom, Inc. | | | 1,025 | | | | 323,500 | |
Euronet Worldwide, Inc. * | | | 3,150 | | | | 301,833 | |
Mondelez International, Inc. | | | 4,800 | | | | 245,424 | |
| | | | | | | | |
| | |
| | | | | | | 870,757 | |
| | | | | | | | |
Total Common Stocks
(cost: $17,124,923) | | | | | | | 22,540,230 | |
| | | | | | | | |
Investment Companies - 1.1% | | | | | | | | |
iShares MSCI India ETF | | | 8,700 | | | | 252,474 | |
| | | | | | | | |
(cost: $258,117) | | | | | | | | |
Short-Term Securities - 0.7% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 0.06% | | | 173,695 | | | | 173,695 | |
| | | | | | | | |
(cost: $173,695) | | | | | | | | |
| | |
Total Investments in Securities - 99.8%
(cost: $17,556,735) | | | | | | | 22,966,399 | |
Other Assets and Liabilities, net - 0.2% | | | | | | | 38,160 | |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | | $23,004,559 | |
| | | | | | | | |
| * | Non-income producing security. |
| | ADR — American Depositary Receipt |
| | GDR — Global Depositary Receipt |
| | PLC — Public Limited Company |
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2020 | | | 43 | |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit International Growth Fund (Continued)
A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1 | | | Level 2 | | Level 3 | | | |
| | | Quoted | | | Other significant | | Significant | | | |
| | | Price ($) | | | observable inputs ($) | | unobservable inputs ($) | | Total ($) | |
Common Stocks | | | | | | | | | | | | | | | | |
Argentina | | | 464,535 | | | | — | | | | — | | | | 464,535 | |
Australia | | | 801,700 | | | | 377,554 | | | | — | | | | 1,179,254 | |
Canada | | | 788,006 | | | | — | | | | — | | | | 788,006 | |
China/Hong Kong | | | 689,727 | | | | 1,858,381 | | | | — | | | | 2,548,108 | |
Denmark | | | — | | | | 206,951 | | | | — | | | | 206,951 | |
France | | | 363,824 | | | | 1,581,004 | | | | — | | | | 1,944,828 | |
Germany | | | — | | | | 1,229,285 | | | | — | | | | 1,229,285 | |
Ireland | | | 463,896 | | | | — | | | | — | | | | 463,896 | |
Japan | | | 435,519 | | | | 1,859,691 | | | | — | | | | 2,295,210 | |
Netherlands | | | 894,981 | | | | — | | | | — | | | | 894,981 | |
Singapore | | | — | | | | 421,852 | | | | — | | | | 421,852 | |
South Korea | | | — | | | | 604,607 | | | | — | | | | 604,607 | |
Spain | | | — | | | | 909,843 | | | | — | | | | 909,843 | |
Sweden | | | — | | | | 223,157 | | | | — | | | | 223,157 | |
Switzerland | | | 880,913 | | | | 2,969,614 | | | | — | | | | 3,850,527 | |
United Kingdom | | | 1,503,145 | | | | 2,141,288 | | | | — | | | | 3,644,433 | |
United States | | | 870,757 | | | | — | | | | — | | | | 870,757 | |
Investment Companies | | | 252,474 | | | | — | | | | — | | | | 252,474 | |
Short-Term Securities | | | 173,695 | | | | — | | | | — | | | | 173,695 | |
| | | | |
Total: | | | 8,583,172 | | | | 14,383,227 | | | | — | | | | 22,966,399 | |
Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
44 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
[This page intentionally left blank.]
|
|
|
Sit Developing Markets Growth Fund |
OBJECTIVE & STRATEGY
The objective of the Sit Developing Markets Growth Fund is to maximize long-term capital appreciation. The Fund seeks to achieve its objective by investing at least 80% of its net assets in common stocks of companies domiciled or operating in a developing market. In selecting investments for the Fund, the Adviser begins by selecting countries or regions in which to invest by considering several factors affecting the economy and equity market of foreign countries and regions. After the country and regional allocations are determined, the Adviser seeks industries and sectors that appear to have strong earnings growth prospects. Within the selected industries and sectors, the Adviser invests in foreign growth-oriented companies it believes exhibit the potential for superior growth.
Fund Performance
The Sit Developing Markets Growth Fund increased +2.20% during the 12-month period ended June 30, 2020, compared to the MSCI Emerging Markets Index return of -5.67%.
Factors that Influenced the Fund’s Performance
Contributing to outperformance during the 12-month period were the Fund’s holdings in the consumer services (TAL Education Group), technology hardware (Skyworks Solutions, NICE), and materials (LG Chemical) sectors. Conversely, sectors that hurt performance were pharmaceuticals (Medy-Tox), funds (iShares MSCI India ETF), and health care equipment (Sinopharm Group).
Geographically, holdings in the regions of Africa/Mideast (Naspers, NICE), Latin America (Globant), and Asia Pacific ex-Japan (TAL Education Group, JD.com, CSPC Pharmaceutical Group) added value, while owning GeoPark in North America and Suzuki Motor in Japan detracted from performance. By country, the Fund’s positions in China, Israel and Argentina helped performance, while those in Korea, Tai-wan and the United States hurt the return. The outperformance of emerging market equities was driven by massive global stimulus, promise of a COVID-19 vaccine, signs that containment efforts were reducing the rate of new infections, and anticipation of better corporate earnings.
Outlook and Positioning
We believe China is on track for a full economic recovery, but other emerging market economies are challenged. China is expected to return to its pre-pandemic GDP level in the second half of 2020 and achieve positive low-single-digit GDP growth for the full year. The COVID-19 outbreak looks broadly under control in China, thanks to effective public health containment efforts. Hence, domestic demand has gradually improved, and growth will be underpinned by policy support, recovery in consumption, and better export demand. Finally, the Phase 1 trade deal with the U.S. appears intact. On the other hand, the COVID-19 outbreak has been painful for other emerging market economies, in general. South Korea and India both went into lockdown early and thus were able to better control COVID-19, allowing those nations to ease restrictions to resume economic growth. South Korea’s growth is supported by the government’s supplemental budget, which includes measures to support distressed corporations, assist the poor with emergency cash, and create jobs. And India’s stimulus measures include interest rate cuts and a fiscal policy pack-
HYPOTHETICAL GROWTH OF $10,000
The chart above illustrates the total value of a hypothetical $10,000 investment in the Fund over the past 10 years as compared to the performance of the MSCI Emerging Markets Index. Past performance does not guarantee future results. Returns include the reinvestment of distributions. The chart does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 MSCI Emerging Markets Index is an unmanaged free float-adjusted market capitalization index that measures equity market performance of emerging markets. It is not possible to invest directly in an index. This is the Fund’s primary index.
age. Conversely, Brazil and Mexico did not go into strict lockdown, resulting in a continued rise in new infections. Consequently, we expect negative GDP growth for Brazil and Mexico this year.
Regarding investment strategy, we favor investment opportunities in China, South Korea, and India. We remain positive on China given its first in, first out position amid the global economic recovery. Our investments are in the new economy and domestic demand-driven sectors. South Korea’s economic growth will be supported by its supplemental budget, which is positive for consumer and financial companies. In addition, improving exports will benefit semiconductor, electrical machinery, and smartphone manufacturers. Our investments in India are biased toward economically sensitive sectors, such as consumer, financials, energy, information services, and industrials. Finally, we continue to have a defensive position in Latin America and own consumer staple stocks.
Roger J. Sit Raymond E. Sit
Portfolio Managers
| | |
| Information on this page is unaudited. |
46 | | SIT MUTUAL FUNDS ANNUAL REPORT |
COMPARATIVE RATES OF RETURN
as of June 30, 2020
| | | | | | | | |
| | | Sit
Developing
Markets
Growth Fund | | MSCI Emerging
Markets Index 1 |
One Year | | | 2.20 | % | | | -5.67 | % |
Five Year | | | 3.66 | | | | 0.47 | |
Ten Year | | | 2.81 | | | | 0.81 | |
Since Inception | | | 3.99 | | | | 2.85 | |
(7/1/94) | | | | | | | | |
Performance figures are historical and do not guarantee future results. Investment returns and principal value will vary, and you may have a gain or loss when you sell shares. Current performance may be lower or higher than the performance data quoted. Contact the Fund for performance data current to the most recent month-end. Returns include changes in share price as well as reinvestment of all dividends and capital gains. Returns do not reflect the deduction of the 2% redemption fee imposed if shares are redeemed or exchanged within 30 calendar days from their date of purchase. If imposed, the fee would reduce the performance quoted. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Management fees and administrative expenses are included in the Fund’s performance. Returns for periods greater than one year are compounded average annual rates of return.
1 MSCI Emerging Markets Index is an unmanaged free float-adjusted market capitalization index that measures equity market performance of emerging markets. It is not possible to invest directly in an index.
FUND DIVERSIFICATION - BY REGION
| | | | | | | | |
| | | Sit
Developing
Markets
Growth Fund | | MSCI Emerging
Markets Index |
Asia | | | 73.5 | % | | | 79.2 | % |
Africa/Middle East | | | 9.8 | | | | 7.9 | |
Latin America | | | 8.4 | | | | 8.1 | |
North America | | | 3.8 | | | | — | |
Europe | | | — | | | | 4.8 | |
Cash & Other Net Assets | | | 4.5 | | | | — | |
Based on total net assets as of June 30, 2020. Subject to change.
PORTFOLIO SUMMARY
| | | | |
Net Asset Value 6/30/20: | | $16.28 Per Share | | |
Net Asset Value 6/30/19: | | $16.21 Per Share | | |
Total Net Assets: | | $10.3 Million | | |
Weighted Average Market Cap: | | $141.1 Billion | | |
TOP 10 HOLDINGS
1. Tencent Holdings, Ltd.
2. Alibaba Group Holding, Ltd., ADR
3. TAL Education Group, ADR
4. Samsung Electronics Co., Ltd.
5. Taiwan Semiconductor Co.
6. NICE Systems, Ltd., ADR
7. iShares MSCI India ETF
8. China Construction Bank Corp.
9. CSPC Pharmaceutical Group, Ltd.
10. JD.com, Inc., ADR
Based on total net assets as of June 30, 2020. Subject to change.
SECTOR ALLOCATION
Based on total net assets as of June 30, 2020. Subject to change.
| | | | |
Information on this page is unaudited. | | | | |
JUNE 30, 2020 | | | 47 | |
SCHEDULE OF INVESTMENTS
June 30, 2020
Sit Developing Markets Growth Fund
Investments are grouped by geographic region.
| | | | | | | | |
Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Common Stocks - 92.4% | | | | | | | | |
Africa/Middle East - 9.8% | | | | | | | | |
Israel - 3.4% | | | | | | | | |
NICE Systems, Ltd., ADR * | | | 1,800 | | | | 340,632 | |
| | | | | | | | |
South Africa - 6.4% | | | | | | | | |
Bid Corp., Ltd. | | | 13,200 | | | | 216,755 | |
Bidvest Group, Ltd. | | | 5,525 | | | | 45,332 | |
Naspers, Ltd. | | | 1,425 | | | | 261,887 | |
Prosus NV * | | | 1,425 | | | | 132,465 | |
| | | | | | | | |
| | |
| | | | | | | 656,439 | |
| | | | | | | | |
Asia - 70.4% | | | | | | | | |
Australia - 1.4% | | | | | | | | |
Rio Tinto, PLC, ADR | | | 2,475 | | | | 139,045 | |
| | | | | | | | |
China/Hong Kong - 44.3% | | | | | | | | |
AIA Group, Ltd. | | | 21,400 | | | | 200,253 | |
Alibaba Group Holding, Ltd., ADR * | | | 2,875 | | | | 620,137 | |
Baidu, Inc., ADR * | | | 1,375 | | | | 164,849 | |
China Construction Bank Corp. | | | 359,000 | | | | 292,005 | |
China Mengniu Dairy Co., Ltd. | | | 48,000 | | | | 184,060 | |
China Petroleum & Chemical Corp., ADR | | | 1,400 | | | | 58,744 | |
China Tower Corp., Ltd. | | | 586,000 | | | | 104,136 | |
CSPC Pharmaceutical Group, Ltd. | | | 144,000 | | | | 272,720 | |
ENN Energy Holdings, Ltd. | | | 21,900 | | | | 247,481 | |
GDS Holdings, Ltd., ADR * | | | 600 | | | | 47,796 | |
Hong Kong Exchanges & Clearing, Ltd. | | | 4,300 | | | | 183,144 | |
JD.com, Inc., ADR * | | | 4,450 | | | | 267,801 | |
Meituan Dianping * | | | 6,000 | | | | 134,078 | |
Ping An Insurance Group Co. of China, Ltd. | | | 19,900 | | | | 198,383 | |
Sinopharm Group Co., Ltd. | | | 44,900 | | | | 115,436 | |
TAL Education Group, ADR * | | | 8,900 | | | | 608,582 | |
Tencent Holdings, Ltd. | | | 11,400 | | | | 730,488 | |
WH Group, Ltd. | | | 132,500 | | | | 114,506 | |
| | | | | | | | |
| | |
| | | | | | | 4,544,599 | |
| | | | | | | | |
India - 2.4% | | | | | | | | |
HDFC Bank, Ltd., ADR | | | 5,350 | | | | 243,211 | |
| | | | | | | | |
Indonesia - 2.4% | | | | | | | | |
Astra International Tbk PT | | | 176,000 | | | | 59,530 | |
XL Axiata Tbk PT | | | 948,800 | | | | 185,200 | |
| | | | | | | | |
| | |
| | | | | | | 244,730 | |
| | | | | | | | |
Singapore - 2.9% | | | | | | | | |
DBS Group Holdings, Ltd. | | | 14,500 | | | | 218,179 | |
Singapore Technologies Engineering, Ltd. | | | 33,700 | | | | 80,433 | |
| | | | | | | | |
| | |
| | | | | | | 298,612 | |
| | | | | | | | |
South Korea - 9.7% | | | | | | | | |
LG Chem, Ltd. | | | 575 | | | | 237,290 | |
Medy-Tox, Inc. | | | 370 | | | | 45,211 | |
| | | | | | | | |
Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Samsung Electronics Co., Ltd. | | | 12,250 | | | | 542,278 | |
Shinhan Financial Group Co., Ltd. | | | 7,200 | | | | 173,997 | |
| | | | | | | | |
| | |
| | | | | | | 998,776 | |
| | | | | | | | |
Taiwan - 6.6% | | | | | | | | |
Cathay Financial Holding Co., Ltd. | | | 82,085 | | | | 116,765 | |
Hon Hai Precision Industry Co., Ltd., GDR | | | 22,160 | | | | 129,858 | |
Taiwan Semiconductor Co. | | | 37,482 | | | | 400,290 | |
Taiwan Semiconductor Co., ADR | | | 600 | | | | 34,062 | |
| | | | | | | | |
| | |
| | | | | | | 680,975 | |
| | | | | | | | |
Thailand - 0.7% | | | | | | | | |
Bangkok Bank PCL | | | 21,200 | | | | 73,877 | |
| | | | | | | | |
Latin America - 8.4% | | | | | | | | |
Argentina - 2.0% | | | | | | | | |
Globant SA * | | | 1,350 | | | | 202,297 | |
| | | | | | | | |
Brazil - 2.8% | | | | | | | | |
Ambev SA, ADR | | | 10,800 | | | | 28,512 | |
Banco Bradesco SA | | | 25,083 | | | | 96,631 | |
Lojas Renner SA | | | 4,000 | | | | 31,003 | |
Pagseguro Digital, Ltd. * | | | 3,800 | | | | 134,292 | |
| | | | | | | | |
| | |
| | | | | | | 290,438 | |
| | | | | | | | |
Chile - 2.1% | | | | | | | | |
Banco Santander Chile, ADR | | | 4,700 | | | | 77,080 | |
Geopark, Ltd. | | | 14,156 | | | | 138,587 | |
| | | | | | | | |
| | |
| | | | | | | 215,667 | |
| | | | | | | | |
Peru - 1.5% | | | | | | | | |
Southern Copper Corp. | | | 3,900 | | | | 155,103 | |
| | | | | | | | |
North America - 3.8% | | | | | | | | |
Mexico - 1.0% | | | | | | | | |
Fomento Economico Mexicano, ADR | | | 1,575 | | | | 97,666 | |
| | | | | | | | |
United States - 2.8% | | | | | | | | |
Broadcom, Inc. | | | 550 | | | | 173,585 | |
Skyworks Solutions, Inc. | | | 925 | | | | 118,270 | |
| | | | | | | | |
| | |
| | | | | | | 291,855 | |
| | | | | | | | |
Total Common Stocks
(cost: $6,842,779) | | | | | | | 9,473,922 | |
| | | | | | | | |
Investment Companies - 3.1% | | | | | | | | |
iShares MSCI India ETF | | | 11,100 | | | | 322,122 | |
| | | | | | | | |
(cost: $333,061) | | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
48 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
Name of Issuer | | Quantity | | | Fair Value ($) | |
| | |
Short-Term Securities - 4.4% | | | | | | | | |
Fidelity Inst. Money Mkt. Gvt. Fund, 0.06% | | | 449,313 | | | | 449,313 | |
| | | | | | | | |
(cost: $449,313) | | | | | | | | |
| | |
Total Investments in Securities - 99.9%
(cost: $7,625,153) | | | | | | | 10,245,357 | |
Other Assets and Liabilities, net - 0.1% | | | | | | | 14,432 | |
| | | | | | | | |
| | |
Total Net Assets - 100.0% | | | | | | $ | 10,259,789 | |
| | | | | | | | |
| * | Non-income producing security. |
ADR — American Depositary Receipt
GDR — Global Depositary Receipt
Numeric footnotes not disclosed are not applicable to this Schedule of Investments.
A summary of the levels for the Fund’s investments as of June 30, 2020 is as follows (see Note 2 - significant accounting policies in the notes to financial statements):
| | | | | | | | | | | | | | | | |
| | | Investment in Securities | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | | |
| | | Quoted | | | Other significant | | | Significant | | | | |
| | | Price ($) | | | observable inputs ($) | | | unobservable inputs ($) | | | Total ($) | |
Common Stocks | | | | | | | | | | | | | | | | |
Argentina | | | 202,297 | | | | — | | | | — | | | | 202,297 | |
Australia | | | 139,045 | | | | — | | | | — | | | | 139,045 | |
Brazil | | | 290,438 | | | | — | | | | — | | | | 290,438 | |
Chile | | | 215,667 | | | | — | | | | — | | | | 215,667 | |
China/Hong Kong | | | 1,767,909 | | | | 2,776,690 | | | | — | | | | 4,544,599 | |
India | | | 243,211 | | | | — | | | | — | | | | 243,211 | |
Indonesia | | | — | | | | 244,730 | | | | — | | | | 244,730 | |
Israel | | | 340,632 | | | | — | | | | — | | | | 340,632 | |
Mexico | | | 97,666 | | | | — | | | | — | | | | 97,666 | |
Peru | | | 155,103 | | | | — | | | | — | | | | 155,103 | |
Singapore | | | — | | | | 298,612 | | | | — | | | | 298,612 | |
South Africa | | | 132,465 | | | | 523,974 | | | | — | | | | 656,439 | |
South Korea | | | — | | | | 998,776 | | | | — | | | | 998,776 | |
Taiwan | | | 163,920 | | | | 517,055 | | | | — | | | | 680,975 | |
Thailand | | | — | | | | 73,877 | | | | — | | | | 73,877 | |
United States | | | 291,855 | | | | — | | | | — | | | | 291,855 | |
Investment Companies | | | 322,122 | | | | — | | | | — | | | | 322,122 | |
Short-Term Securities | | | 449,313 | | | | — | | | | — | | | | 449,313 | |
| | | | |
Total: | | | 4,811,643 | | | | 5,433,714 | | | | — | | | | 10,245,357 | |
Level 1 securities of foreign issuers are primarily American Depositary Receipts (ADRs), Public Limited Companies (PLCs) or Global Depositary Receipts (GDRs). There were no transfers into or out of level 3 during the reporting period.
| | | | |
See accompanying notes to financial statements. | | | | |
JUNE 30, 2020 | | | 49 | |
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2020
| | | | | | | | | | | | |
| | | Sit
Balanced
Fund | | | Sit
Dividend
Growth
Fund | | | Sit
Global
Dividend
Growth
Fund | |
ASSETS | | | | | | | | | | | | |
Investments in securities, at identified cost | | $ | 38,022,113 | | | $ | 168,711,173 | | | $ | 25,702,734 | |
| | | | | | | | | | | | |
| | | |
Investments in securities, at fair value - see accompanying schedule for detail | | $ | 47,694,121 | | | $ | 201,307,030 | | | $ | 34,725,227 | |
Cash in bank on demand deposit | | | 1,153 | | | | — | | | | 1,564 | |
Accrued interest and dividends receivable | | | 113,700 | | | | 189,435 | | | | 53,920 | |
Receivable for investment securities sold | | | — | | | | 890,659 | | | | — | |
Receivable for Fund shares sold | | | 15,375 | | | | 39,618 | | | | 811 | |
| | | | | | | | | | | | |
| | | |
Total assets | | | 47,824,349 | | | | 202,426,742 | | | | 34,781,522 | |
| | | | | | | | | | | | |
| | | |
LIABILITIES | | | | | | | | | | | | |
Payable for investment securities purchased | | | 1,038,867 | | | | 337,568 | | | | — | |
Payable for Fund shares redeemed | | | 91,608 | | | | 112,152 | | | | 56 | |
Accrued investment management fees and advisory fees | | | 36,373 | | | | 119,209 | | | | 28,479 | |
Accrued 12b-1 fees (Class S) | | | — | | | | 6,019 | | | | 700 | |
| | | | | | | | | | | | |
| | | |
Total liabilities | | | 1,166,848 | | | | 574,948 | | | | 29,235 | |
| | | | | | | | | | | | |
| | | |
Net assets applicable to outstanding capital stock | | $ | 46,657,501 | | | $ | 201,851,794 | | | $ | 34,752,287 | |
| | | | | | | | | | | | |
| | | |
Net assets consist of: | | | | | | | | | | | | |
Capital (par value and paid-in surplus) | | $ | 36,429,739 | | | $ | 165,166,528 | | | $ | 26,641,957 | |
Total distributable earnings (loss), including unrealized appreciation (depreciation) | | | 10,227,762 | | | | 36,685,266 | | | | 8,110,330 | |
| | | | | | | | | | | | |
| | $ | 46,657,501 | | | $ | 201,851,794 | | | $ | 34,752,287 | |
| | | | | | | | | | | | |
| | | |
Outstanding shares: | | | | | | | | | | | | |
Common Shares (Class I) * | | | 1,769,110 | | | | 12,814,303 | | | | 1,859,373 | |
| | | | | | | | | | | | |
Common Shares (Class S) * | | | — | | | | 2,171,404 | | | | 201,264 | |
| | | | | | | | | | | | |
| | | |
Net assets applicable to outstanding shares: | | | | | | | | | | | | |
Common Shares (Class I) * | | $ | 46,657,501 | | | $ | 172,746,099 | | | $ | 31,360,920 | |
| | | | | | | | | | | | |
Common Shares (Class S) * | | | — | | | | 29,105,695 | | | | 3,391,367 | |
| | | | | | | | | | | | |
| | | |
Net asset value per share of outstanding capital stock: | | | | | | | | | | | | |
Common Shares (Class I) * | | | $26.37 | | | | $13.48 | | | | $16.87 | |
| | | | | | | | | | | | |
Common Shares (Class S) * | | | — | | | | $13.40 | | | | $16.85 | |
| | | | | | | | | | | | |
| * | Dividend Growth, Global Dividend Growth, ESG Growth and Small Cap Dividend Growth Funds offer multiple share classes (I and S). All other Funds offer a single share class. | |
| | | | |
See accompanying notes to financial statements. | | | | |
50 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Sit
Large Cap
Growth
Fund | | | Sit
ESG
Growth
Fund | | | Sit
Mid Cap
Growth
Fund | | | Sit
Small Cap
Dividend
Growth
Fund | | | Sit
Small Cap
Growth
Fund | | | Sit
International
Growth
Fund | | | Sit
Developing
Markets
Growth
Fund | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $57,530,885 | | | $ | 4,880,339 | | | | $94,921,870 | | | $ | 13,872,511 | | | | $60,712,711 | | | $ | 17,556,735 | | | | $7,625,153 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| $ | 129,211,985 | | | $ | 6,633,486 | | | $ | 172,948,234 | | | $ | 15,596,022 | | | $ | 100,975,919 | | | $ | 22,966,399 | | | $ | 10,245,357 | |
| | 4,717 | | | | 742 | | | | 16,801 | | | | — | | | | — | | | | 2,307 | | | | 1,082 | |
| | 21,522 | | | | 7,637 | | | | 33,694 | | | | 21,130 | | | | 51,051 | | | | 63,835 | | | | 23,776 | |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | 68,477 | | | | — | | | | 4,261 | | | | 1,365 | | | | 3,233 | | | | 1,363 | | | | 1,349 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | 129,306,701 | | | | 6,641,865 | | | | 173,002,990 | | | | 15,618,517 | | | | 101,030,203 | | | | 23,033,904 | | | | 10,271,564 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | — | | | | — | | | | — | | | | 35,061 | | | | 235,864 | | | | — | | | | — | |
| | 48,624 | | | | — | | | | 81,730 | | | | 63,714 | | | | 58,456 | | | | 1,224 | | | | 149 | |
| | 104,072 | | | | 5,429 | | | | 177,069 | | | | 12,845 | | | | 123,180 | | | | 28,121 | | | | 11,626 | |
| | — | | | | 646 | | | | — | | | | 782 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | 152,696 | | | | 6,075 | | | | 258,799 | | | | 112,402 | | | | 417,500 | | | | 29,345 | | | | 11,775 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| $ | 129,154,005 | | | $ | 6,635,790 | | | $ | 172,744,191 | | | $ | 15,506,115 | | | $ | 100,612,703 | | | $ | 23,004,559 | | | $ | 10,259,789 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $53,179,198 | | | $ | 4,957,024 | | | | $90,393,316 | | | $ | 13,995,850 | | | | $60,429,953 | | | $ | 18,979,436 | | | | $7,671,691 | |
| | 75,974,807 | | | | 1,678,766 | | | | 82,350,875 | | | | 1,510,265 | | | | 40,182,750 | | | | 4,025,123 | | | | 2,588,098 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 129,154,005 | | | $ | 6,635,790 | | | $ | 172,744,191 | | | $ | 15,506,115 | | | $ | 100,612,703 | | | $ | 23,004,559 | | | $ | 10,259,789 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2,744,066 | | | | 251,047 | | | | 9,066,950 | | | | 1,034,761 | | | | 1,771,105 | | | | 1,323,597 | | | | 630,386 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | — | | | | 229,203 | | | | — | | | | 326,775 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 129,154,005 | | | $ | 3,477,402 | | | $ | 172,744,191 | | | $ | 11,786,363 | | | $ | 100,612,703 | | | $ | 23,004,559 | | | $ | 10,259,789 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | — | | | | 3,158,388 | | | | — | | | | 3,719,752 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $47.07 | | | | $13.85 | | | | $19.05 | | | | $11.39 | | | | $56.81 | | | | $17.38 | | | | $16.28 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | — | | | | $13.78 | | | | — | | | | $11.38 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
STATEMENTS OF OPERATIONS
Year Ended June 30, 2020
| | | | | | | | | | | | |
| | | Sit
Balanced
Fund | | | Sit
Dividend
Growth
Fund | | | Sit
Global
Dividend
Growth
Fund | |
Investment income: | | | | | | | | | | | | |
Income: | | | | | | | | | | | | |
Dividends* | | | $358,253 | | | | $5,357,725 | | | | $793,363 | |
Interest | | | 382,608 | | | | 29,160 | | | | 16,520 | |
| | | | | | | | | | | | |
Total income | | | 740,861 | | | | 5,386,885 | | | | 809,883 | |
| | | | | | | | | | | | |
| | | |
Expenses (note 4): | | | | | | | | | | | | |
Investment management and advisory service fee | | | 371,609 | | | | 2,339,326 | | | | 428,404 | |
12b-1 fees (Class S) | | | — | | | | 87,811 | | | | 8,293 | |
| | | | | | | | | | | | |
Total expenses | | | 371,609 | | | | 2,427,137 | | | | 436,697 | |
| | | | | | | | | | | | |
Less fees and expenses waived by investment adviser | | | — | | | | (701,798 | ) | | | (85,681 | ) |
| | | | | | | | | | | | |
Total net expenses | | | 371,609 | | | | 1,725,339 | | | | 351,016 | |
| | | | | | | | | | | | |
| | | |
Net investment income (loss) | | | 369,252 | | | | 3,661,546 | | | | 458,867 | |
| | | | | | | | | | | | |
| | | |
Realized and unrealized gain (loss): | | | | | | | | | | | | |
Net realized gain (loss) on investments | | | 696,800 | | | | 10,697,810 | | | | 135,089 | |
Net realized gain (loss) on foreign currency transactions | | | — | | | | — | | | | (357 | ) |
| | | |
Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions | | | 2,719,030 | | | | (2,538,615 | ) | | | 942,590 | |
| | | | | | | | | | | | |
| | | |
Net gain (loss) | | | 3,415,830 | | | | 8,159,195 | | | | 1,077,322 | |
| | | | | | | | | | | | |
| | | |
Net increase (decrease) in net assets resulting from operations | | $ | 3,785,082 | | | $ | 11,820,741 | | | $ | 1,536,189 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | |
* Foreign taxes withheld on dividends received | | | — | | | | $56,034 | | | | $30,130 | |
| | | | |
See accompanying notes to financial statements. | | | | |
52 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Sit
Large Cap
Growth
Fund | | | Sit
ESG
Growth
Fund | | | Sit
Mid Cap
Growth
Fund | | | Sit
Small Cap
Dividend
Growth
Fund | | | Sit
Small Cap
Growth
Fund | | | Sit
International
Growth
Fund | | | Sit
Developing
Markets
Growth
Fund | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $1,360,941 | | | | $116,496 | | | | $1,539,007 | | | | $330,260 | | | | $877,096 | | | | $413,169 | | | | $294,025 | |
| | 17,474 | | | | 3,661 | | | | 66,413 | | | | 9,127 | | | | 56,290 | | | | 4,677 | | | | 5,188 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1,378,415 | | | | 120,157 | | | | 1,605,420 | | | | 339,387 | | | | 933,386 | | | | 417,846 | | | | 299,213 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1,177,876 | | | | 80,076 | | | | 2,055,165 | | | | 197,553 | | | | 1,436,329 | | | | 338,324 | | | | 195,927 | |
| | — | | | | 7,453 | | | | — | | | | 9,779 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1,177,876 | | | | 87,529 | | | | 2,055,165 | | | | 207,332 | | | | 1,436,329 | | | | 338,324 | | | | 195,927 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | — | | | | (16,015 | ) | | | — | | | | (39,511 | ) | | | — | | | | — | | | | (58,778 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1,177,876 | | | | 71,514 | | | | 2,055,165 | | | | 167,821 | | | | 1,436,329 | | | | 338,324 | | | | 137,149 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | 200,539 | | | | 48,643 | | | | (449,745 | ) | | | 171,566 | | | | (502,943 | ) | | | 79,522 | | | | 162,064 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 7,837,834 | | | | 52,810 | | | | 8,298,971 | | | | (63,100 | ) | | | 2,423,438 | | | | (342,874 | ) | | | (25,438 | ) |
| | — | | | | (23 | ) | | | 194 | | | | — | | | | — | | | | (1,362 | ) | | | (583 | ) |
| | | | | | |
|
14,917,326 |
| | | 285,159 | | | | 5,783,828 | | | | (650,584 | ) | | | 3,290,428 | | | | 761,010 | | | | 55,100 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | 22,755,160 | | | | 337,946 | | | | 14,082,993 | | | | (713,684 | ) | | | 5,713,866 | | | | 416,774 | | | | 29,079 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| $ | 22,955,699 | | | | $386,589 | | | $ | 13,633,248 | | | ( | $542,118 | ) | | $ | 5,210,923 | | | $ | 496,296 | | | $ | 191,143 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | — | | | | $6,363 | | | | $4,177 | | | | $1,717 | | | | $5,976 | | | | $40,481 | | | | $19,404 | |
STATEMENTS OF CHANGES IN NET ASSETS
| | | | | | | | | | | | | | | | |
| | | Sit Balanced Fund | | | Sit Dividend Growth Fund | |
| | | Year Ended
June 30,
2020 | | | Year Ended
June 30,
2019 | | | Year Ended
June 30,
2020 | | | Year Ended
June 30,
2019 | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income | | | $369,252 | | | | $482,453 | | | | $3,661,546 | | | | $14,057,076 | |
Net realized gain (loss) on investments and foreign currency transactions | | | 696,800 | | | | 1,552,948 | | | | 10,697,810 | | | | 91,002,769 | |
Net change in unrealized appreciation (depreciation) of investments and foreign currency transactions | | | 2,719,030 | | | | 328,736 | | | | (2,538,615 | ) | | | (108,242,415 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) in net assets resulting from operations | | | 3,785,082 | | | | 2,364,137 | | | | 11,820,741 | | | | (3,182,570 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Distributions from: | | | | | | | | | | | | | | | | |
Net investment income and net realized gains | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (2,136,305 | ) | | | (801,302 | ) | | | (25,345,878 | ) | | | (104,820,743 | ) |
Common shares (Class S) | | | — | | | | — | | | | (4,407,144 | ) | | | (8,833,909 | ) |
| | | | | | | | | | | | | | | | |
Total distributions | | | (2,136,305 | ) | | | (801,302 | ) | | | (29,753,022 | ) | | | (113,654,652 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Capital share transactions: | | | | | | | | | | | | | | | | |
Proceeds from shares sold | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 17,316,727 | | | | 7,363,030 | | | | 25,105,046 | | | | 70,924,492 | |
Common shares (Class S) | | | — | | | | — | | | | 1,253,693 | | | | 2,521,662 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 2,103,223 | | | | 787,611 | | | | 23,804,702 | | | | 101,138,488 | |
Common shares (Class S) | | | — | | | | — | | | | 4,392,885 | | | | 8,734,436 | |
Payments for shares redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (8,876,091 | ) | | | (12,789,473 | ) | | | (75,291,359 | ) | | | (765,396,526 | ) |
Common shares (Class S) | | | — | | | | — | | | | (13,413,244 | ) | | | (17,067,708 | ) |
| | | | | | | | | | | | | | | | |
Increase (decrease) in net assets from capital transactions | | | 10,543,859 | | | | (4,638,832 | ) | | | (34,148,277 | ) | | | (599,145,156 | ) |
| | | | | | | | | | | | | | | | |
Total increase (decrease) in net assets | | | 12,192,636 | | | | (3,075,997 | ) | | | (52,080,558 | ) | | | (715,982,378 | ) |
| | | | |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 34,464,865 | | | | 37,540,862 | | | | 253,932,352 | | | | 969,914,730 | |
| | | | | | | | | | | | | | | | |
End of period | | $ | 46,657,501 | | | $ | 34,464,865 | | | $ | 201,851,794 | | | $ | 253,932,352 | |
| | | | | | | | | | | | | | | | |
| | | | |
Capital transactions in shares: | | | | | | | | | | | | | | | | |
Sold | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 680,555 | | | | 307,091 | | | | 1,827,566 | | | | 4,474,113 | |
Common shares (Class S) | | | — | | | | — | | | | 92,706 | | | | 167,274 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 83,820 | | | | 34,382 | | | | 1,675,670 | | | | 7,846,703 | |
Common shares (Class S) | | | — | | | | — | | | | 310,474 | | | | 687,436 | |
Redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (370,549 | ) | | | (545,889 | ) | | | (5,513,813 | ) | | | (52,548,963 | ) |
Common shares (Class S) | | | — | | | | — | | | | (995,697 | ) | | | (1,181,017 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) | | | 393,826 | | | | (204,416 | ) | | | (2,603,094 | ) | | | (40,554,454 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
54 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | | | | | | | | | | | | | | | |
| Sit Global Dividend Growth Fund | | | Sit Large Cap Growth Fund | | | Sit ESG Growth Fund | |
Year Ended
June 30,
2020 | | | Year Ended
June 30,
2019 | | | Year Ended
June 30,
2020 | | | Year Ended
June 30,
2019 | | | Year Ended
June 30,
2020 | | | Year Ended
June 30,
2019 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | $458,867 | | | | $568,865 | | | | $200,539 | | | | $453,312 | | | | $48,643 | | | | $74,979 | |
|
134,732 |
| | | (234,375 | ) | | | 7,837,834 | | | | 9,704,669 | | | | 52,787 | | | | (76,675 | ) |
|
942,590 |
| | | 2,588,960 | | | | 14,917,326 | | | | 878,764 | | | | 285,159 | | | | 472,193 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | 1,536,189 | | | | 2,923,450 | | | | 22,955,699 | | | | 11,036,745 | | | | 386,589 | | | | 470,497 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (495,881 | ) | | | (521,860 | ) | | | (10,751,684 | ) | | | (9,934,663 | ) | | | (55,450 | ) | | | (40,551 | ) |
| | (45,123 | ) | | | (49,144 | ) | | | — | | | | — | | | | (44,523 | ) | | | (31,449 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | (541,004 | ) | | | (571,004 | ) | | | (10,751,684 | ) | | | (9,934,663 | ) | | | (99,973 | ) | | | (72,000 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 2,566,271 | | | | 2,468,958 | | | | 3,793,196 | | | | 4,477,170 | | | | 53,788 | | | | 169,033 | |
| | 493,938 | | | | 95,183 | | | | — | | | | — | | | | 88,716 | | | | 25,229 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 473,429 | | | | 504,463 | | | | 10,576,386 | | | | 9,726,108 | | | | 55,450 | | | | 40,551 | |
| | 44,849 | | | | 48,033 | | | | — | | | | — | | | | 44,523 | | | | 31,449 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (3,345,936 | ) | | | (3,055,896 | ) | | | (14,001,032 | ) | | | (17,516,267 | ) | | | (168,614 | ) | | | (78,105 | ) |
| | (538,748 | ) | | | (373,656 | ) | | | — | | | | — | | | | (6,803 | ) | | | (5,309 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | (306,197 | ) | | | (312,915 | ) | | | 368,550 | | | | (3,312,989 | ) | | | 67,060 | | | | 182,848 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | 688,988 | | | | 2,039,531 | | | | 12,572,565 | | | | (2,210,907 | ) | | | 353,676 | | | | 581,345 | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 34,063,299 | | | | 32,023,768 | | | | 116,581,440 | | | | 118,792,347 | | | | 6,282,114 | | | | 5,700,769 | |
| | | | | | | | | | | | | | | | | | | | | | |
| $ | 34,752,287 | | | $ | 34,063,299 | | | $ | 129,154,005 | | | $ | 116,581,440 | | | $ | 6,635,790 | | | $ | 6,282,114 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 150,362 | | | | 159,277 | | | | 90,022 | | | | 106,595 | | | | 3,933 | | | | 13,267 | |
| | 32,537 | | | | 6,375 | | | | — | | | | — | | | | 6,554 | | | | 2,101 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 29,095 | | | | 33,104 | | | | 246,824 | | | | 272,975 | | | | 3,936 | | | | 3,575 | |
| | 2,759 | | | | 3,149 | | | | — | | | | — | | | | 3,173 | | | | 2,781 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (206,028 | ) | | | (194,896 | ) | | | (334,238 | ) | | | (439,602 | ) | | | (13,142 | ) | | | (6,263 | ) |
| | (32,495 | ) | | | (24,279 | ) | | | — | | | | — | | | | (491 | ) | | | (418 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | (23,770 | ) | | | (17,270 | ) | | | 2,608 | | | | (60,032 | ) | | | 3,963 | | | | 15,043 | |
| | | | �� | | | | | | | | | | | | | | | | | | |
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
| | | | | | | | | | | | | | | | |
| | | Sit Mid Cap Growth Fund | | | Sit Small Cap
Dividend Growth Fund | |
| | | Year Ended
June 30,
2020 | | | Year Ended
June 30,
2019 | | | Year Ended
June 30,
2020 | | | Year Ended
June 30,
2019 | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) | | | ($449,745 | ) | | | ($251,290 | ) | | | $171,566 | | | | $215,896 | |
Net realized gain (loss) on investments and foreign currency transactions | | | 8,299,165 | | | | 15,207,092 | | | | (63,100 | ) | | | 172,807 | |
Net change in unrealized appreciation (depreciation) of investments and foreign currency transactions | | | 5,783,828 | | | | 2,857,207 | | | | (650,584 | ) | | | (600,408 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) in net assets resulting from operations | | | 13,633,248 | | | | 17,813,009 | | | | (542,118 | ) | | | (211,705 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Distributions from: | | | | | | | | | | | | | | | | |
Net investment income and net realized gains | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (12,018,685 | ) | | | (15,426,149 | ) | | | (143,293 | ) | | | (316,700 | ) |
Common shares (Class S) | | | — | | | | — | | | | (37,709 | ) | | | (80,916 | ) |
| | | | | | | | | | | | | | | | |
Total distributions | | | (12,018,685 | ) | | | (15,426,149 | ) | | | (181,002 | ) | | | (397,616 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Capital share transactions: | | | | | | | | | | | | | | | | |
Proceeds from shares sold | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 1,783,445 | | | | 2,026,500 | | | | 1,690,858 | | | | 492,580 | |
Common shares (Class S) | | | — | | | | — | | | | 114,119 | | | | 367,898 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 11,531,885 | | | | 14,750,446 | | | | 135,470 | | | | 302,420 | |
Common shares (Class S) | | | — | | | | — | | | | 35,517 | | | | 76,543 | |
Payments for shares redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (11,284,411 | ) | | | (8,565,701 | ) | | | (2,069,396 | ) | | | (2,339,374 | ) |
Common shares (Class S) | | | — | | | | — | | | | (216,438 | ) | | | (230,823 | ) |
| | | | | | | | | | | | | | | | |
Increase (decrease) in net assets from capital transactions | | | 2,030,919 | | | | 8,211,245 | | | | (309,870 | ) | | | (1,330,756 | ) |
| | | | | | | | | | | | | | | | |
Total increase (decrease) in net assets | | | 3,645,482 | | | | 10,598,105 | | | | (1,032,990 | ) | | | (1,940,077 | ) |
| | | | |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 169,098,709 | | | | 158,500,604 | | | | 16,539,105 | | | | 18,479,182 | |
| | | | | | | | | | | | | | | | |
End of period | | $ | 172,744,191 | | | $ | 169,098,709 | | | $ | 15,506,115 | | | $ | 16,539,105 | |
| | | | | | | | | | | | | | | | |
| | | | |
Capital transactions in shares: | | | | | | | | | | | | | | | | |
Sold | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 99,516 | | | | 109,497 | | | | 141,777 | | | | 41,558 | |
Common shares (Class S) | | | — | | | | — | | | | 9,990 | | | | 31,277 | |
Reinvested distributions | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | 632,577 | | | | 980,096 | | | | 11,483 | | | | 28,229 | |
Common shares (Class S) | | | — | | | | — | | | | 2,979 | | | | 7,209 | |
Redeemed | | | | | | | | | | | | | | | | |
Common shares (Class I) | | | (638,495 | ) | | | (475,717 | ) | | | (174,897 | ) | | | (202,972 | ) |
Common shares (Class S) | | | — | | | | — | | | | (21,280 | ) | | | (19,991 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) | | | 93,598 | | | | 613,876 | | | | (29,948 | ) | | | (114,690 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
See accompanying notes to financial statements. | | | | |
56 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | | | | | | | | | | | | | | | |
| Sit Small Cap Growth Fund | | | Sit International Growth Fund | | |
Sit Developing Markets Growth Fund | |
Year Ended
June 30,
2020 | | | Year Ended
June 30,
2019 | | | Year Ended
June 30,
2020 | | | Year Ended
June 30,
2019 | | | Year Ended
June 30,
2020 | | | Year Ended
June 30,
2019 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | ($502,943 | ) | | | ($454,301 | ) | | | $79,522 | | | | $216,541 | | | | $162,064 | | | | $64,345 | |
|
2,423,438 |
| | | 4,285,203 | | | | (344,236 | ) | | | (297,517 | ) | | | (26,021 | ) | | | 40,533 | |
|
3,290,428 |
| | | 2,110,594 | | | | 761,010 | | | | 807,103 | | | | 55,100 | | | | (630,178 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | 5,210,923 | | | | 5,941,496 | | | | 496,296 | | | | 726,127 | | | | 191,143 | | | | (525,300 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (3,070,107 | ) | | | (7,455,033 | ) | | | (227,001 | ) | | | (245,338 | ) | | | (185,000 | ) | | | (152,148 | ) |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | (3,070,107 | ) | | | (7,455,033 | ) | | | (227,001 | ) | | | (245,338 | ) | | | (185,000 | ) | | | (152,148 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 1,513,165 | | | | 1,457,035 | | | | 906,266 | | | | 446,495 | | | | 936,308 | | | | 1,190,290 | |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 3,017,215 | | | | 7,320,824 | | | | 222,999 | | | | 240,594 | | | | 180,261 | | | | 149,029 | |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (5,688,108 | ) | | | (7,672,934 | ) | | | (1,856,893 | ) | | | (1,580,128 | ) | | | (858,591 | ) | | | (1,693,585 | ) |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | (1,157,728 | ) | | | 1,104,925 | | | | (727,628 | ) | | | (893,039 | ) | | | 257,978 | | | | (354,266 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| | 983,088 | | | | (408,612 | ) | | | (458,333 | ) | | | (412,250 | ) | | | 264,121 | | | | (1,031,714 | ) |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 99,629,615 | | | | 100,038,227 | | | | 23,462,892 | | | | 23,875,142 | | | | 9,995,668 | | | | 11,027,382 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $100,612,703 | | | | $99,629,615 | | | | $23,004,559 | | | | $23,462,892 | | | | $10,259,789 | | | | $9,995,668 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 28,064 | | | | 26,846 | | | | 52,331 | | | | 27,320 | | | | 57,066 | | | | 74,310 | |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 54,719 | | | | 163,960 | | | | 12,584 | | | | 16,872 | | | | 10,714 | | | | 10,495 | |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (108,206 | ) | | | (143,779 | ) | | | (110,718 | ) | | | (99,856 | ) | | | (54,070 | ) | | | (107,545 | ) |
| | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | (25,423 | ) | | | 47,027 | | | | (45,803 | ) | | | (55,664 | ) | | | 13,710 | | | | (22,740 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Balanced Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $25.06 | | | | $23.76 | | | | $22.71 | | | | $20.40 | | | | $21.54 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.25 | | | | 0.32 | | | | 0.25 | | | | 0.25 | | | | 0.26 | |
Net realized and unrealized gains | | | 2.64 | | | | 1.52 | | | | 1.96 | | | | 2.29 | | | | 0.04 | |
| | | | |
Total from operations | | | 2.89 | | | | 1.84 | | | | 2.21 | | | | 2.54 | | | | 0.30 | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.27 | ) | | | (0.31 | ) | | | (0.27 | ) | | | (0.23 | ) | | | (0.45 | ) |
From net realized gains | | | (1.31 | ) | | | (0.23 | ) | | | (0.89 | ) | | | — | | | | (0.99 | ) |
| | | | |
Total distributions | | | (1.58 | ) | | | (0.54 | ) | | | (1.16 | ) | | | (0.23 | ) | | | (1.44 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $26.37 | | | | $25.06 | | | | $23.76 | | | | $22.71 | | | | $20.40 | |
| | | | |
Total investment return 2 | | | 11.91% | | | | 7.98% | | | | 9.84% | | | | 12.56% | | | | 1.47% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $46,658 | | | | $34,465 | | | | $37,541 | | | | $25,242 | | | | $23,511 | |
| | | | | |
Ratios: 3 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | |
Net investment income | | | 0.99% | | | | 1.33% | | | | 1.07% | | | | 1.18% | | | | 1.25% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 58.63% | | | | 50.45% | | | | 50.49% | | | | 50.31% | | | | 54.46% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 3 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| | | | |
58 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| Class I | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $14.45 | | | | $16.69 | | | | $16.88 | | | | $15.82 | | | | $17.40 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.22 | | | | 0.38 | | | | 0.26 | | | | 0.24 | | | | 0.26 | |
Net realized and unrealized gains | | | 0.64 | | | | 0.55 | | | | 1.49 | | | | 2.09 | | | | 0.32 | |
| | | | |
Total from operations | | | 0.86 | | | | 0.93 | | | | 1.75 | | | | 2.33 | | | | 0.58 | |
| | | | |
Redemption fees 2 | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.24 | ) | | | (0.40 | ) | | | (0.26 | ) | | | (0.23 | ) | | | (0.32 | ) |
From net realized gains | | | (1.59 | ) | | | (2.77 | ) | | | (1.68 | ) | | | (1.04 | ) | | | (1.84 | ) |
| | | | |
Total distributions | | | (1.83 | ) | | | (3.17 | ) | | | (1.94 | ) | | | (1.27 | ) | | | (2.16 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $13.48 | | | | $14.45 | | | | $16.69 | | | | $16.88 | | | | $15.82 | |
| | | | |
Total investment return 3 | | | 5.46% | | | | 8.37% | | | | 10.36% | | | | 15.41% | | | | 3.94% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $172,746 | | | | $214,204 | | | | $918,584 | | | | $1,015,920 | | | | $942,244 | |
| | | | | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.00%5 | | | | 1.00%5 | | | | 1.00%5 | | | | 1.00% | | | | 1.00% | |
Expenses (with waiver) | | | 0.70%5 | | | | 0.70%5 | | | | 0.78%5 | | | | 1.00% | | | | 1.00% | |
Net investment income (without waiver) | | | 1.30% | | | | 2.04% | | | | 1.31% | | | | 1.49% | | | | 1.64% | |
Net investment income (with waiver) | | | 1.60% | | | | 2.34% | | | | 1.53% | | | | 1.49% | | | | 1.64% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 68.43% | | | | 51.52% | | | | 68.38% | | | | 61.33% | | | | 75.94% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Amount represents less than $0.01 per share. |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| 5 | Total Fund expenses are limited to 1.00% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)
Sit Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| Class S | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $14.37 | | | | $16.61 | | | | $16.81 | | | | $15.76 | | | | $17.34 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.19 | | | | 0.32 | | | | 0.22 | | | | 0.20 | | | | 0.22 | |
Net realized and unrealized gains (losses) | | | 0.63 | | | | 0.57 | | | | 1.47 | | | | 2.08 | | | | 0.32 | |
| | | | |
Total from operations | | | 0.82 | | | | 0.89 | | | | 1.69 | | | | 2.28 | | | | 0.54 | |
| | | | |
Redemption fees 2 | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.20 | ) | | | (0.36 | ) | | | (0.21 | ) | | | (0.19 | ) | | | (0.28 | ) |
From net realized gains | | | (1.59 | ) | | | (2.77 | ) | | | (1.68 | ) | | | (1.04 | ) | | | (1.84 | ) |
| | | | |
Total distributions | | | (1.79 | ) | | | (3.13 | ) | | | (1.89 | ) | | | (1.23 | ) | | | (2.12 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $13.40 | | | | $14.37 | | | | $16.61 | | | | $16.81 | | | | $15.76 | |
| | | | |
Total investment return 3 | | | 5.19% | | | | 8.12% | | | | 10.06% | | | | 15.11% | | | | 3.68% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $29,106 | | | | $39,729 | | | | $51,331 | | | | $65,278 | | | | $67,620 | |
| | | | | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.25%5 | | | | 1.25%5 | | | | 1.25%5 | | | | 1.25% | | | | 1.25% | |
Expenses (with waiver) | | | 0.95%5 | | | | 0.95%5 | | | | 1.03%5 | | | | 1.25% | | | | 1.25% | |
Net investment income (without waiver) | | | 1.05% | | | | 1.80% | | | | 1.06% | | | | 1.24% | | | | 1.39% | |
Net investment income (with waiver) | | | 1.35% | | | | 2.10% | | | | 1.28% | | | | 1.24% | | | | 1.39% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 68.43% | | | | 51.52% | | | | 68.38% | | | | 61.33% | | | | 75.94% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Amount represents less than $0.01 per share. |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| 5 | Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. |
| | | | |
60 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Global Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| Class I | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $16.34 | | | | $15.24 | | | | $14.54 | | | | $13.19 | | | | $14.80 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.22 | | | | 0.28 | | | | 0.27 | | | | 0.22 | | | | 0.21 | |
Net realized and unrealized gains (losses) | | | 0.57 | | | | 1.10 | | | | 0.67 | | | | 1.34 | | | | (0.48 | ) |
| | | | |
Total from operations | | | 0.79 | | | | 1.38 | | | | 0.94 | | | | 1.56 | | | | (0.27 | ) |
| | | | |
Redemption fees | | | — | 2 | | | — | 2 | | | — | | | | — | 2 | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.26 | ) | | | (0.28 | ) | | | (0.24 | ) | | | (0.21 | ) | | | (0.34 | ) |
From net realized gains | | | — | | | | — | | | | — | | | | — | | | | (1.00 | ) |
| | | | |
Total distributions | | | (0.26 | ) | | | (0.28 | ) | | | (0.24 | ) | | | (0.21 | ) | | | (1.34 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $16.87 | | | | $16.34 | | | | $15.24 | | | | $14.54 | | | | $13.19 | |
| | | | |
Total investment return 3 | | | 4.93% | | | | 9.18% | | | | 6.46% | | | | 11.94% | | | | (1.67% | ) |
| | | | |
Net assets at end of period (000’s omitted) | | | $31,361 | | | | $30,823 | | | | $28,778 | | | | $25,623 | | | | $22,333 | |
| | | | | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.25%5 | | | | 1.25%5 | | | | 1.25%5 | | | | 1.25% | | | | 1.25% | |
Expenses (with waiver) | | | 1.00%5 | | | | 1.00%5 | | | | 1.06%5 | | | | 1.25% | | | | 1.25% | |
Net investment income (without waiver) | | | 1.11% | | | | 1.53% | | | | 1.59% | | | | 1.63% | | | | 1.56% | |
Net investment income (with waiver) | | | 1.36% | | | | 1.78% | | | | 1.78% | | | | 1.63% | | | | 1.56% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 22.15% | | | | 15.07% | | | | 19.80% | | | | 32.04% | | | | 48.30% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Amount represents less than $0.01 per share. |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| 5 | Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)
Sit Global Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| Class S | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $16.33 | | | | $15.22 | | | | $14.53 | | | | $13.18 | | | | $14.78 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.18 | | | | 0.24 | | | | 0.23 | | | | 0.19 | | | | 0.18 | |
Net realized and unrealized gains (losses) | | | 0.56 | | | | 1.11 | | | | 0.66 | | | | 1.33 | | | | (0.48 | ) |
| | | | |
Total from operations | | | 0.74 | | | | 1.35 | | | | 0.89 | | | | 1.52 | | | | (0.30 | ) |
| | | | |
Redemption fees | | | — | 2 | | | — | | | | — | | | | — | | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.22 | ) | | | (0.24 | ) | | | (0.20 | ) | | | (0.17 | ) | | | (0.30 | ) |
From net realized gains | | | — | | | | — | | | | — | | | | — | | | | (1.00 | ) |
| | | | |
Total distributions | | | (0.22 | ) | | | (0.24 | ) | | | (0.20 | ) | | | (0.17 | ) | | | (1.30 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $16.85 | | | | $16.33 | | | | $15.22 | | | | $14.53 | | | | $13.18 | |
| | | | |
Total investment return 3 | | | 4.60% | | | | 8.98% | | | | 6.13% | | | | 11.67% | | | | (1.89% | ) |
| | | | |
Net assets at end of period (000’s omitted) | | | $3,391 | | | | $3,241 | | | | $3,246 | | | | $3,274 | | | | $2,861 | |
| | | | | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.50%5 | | | | 1.50%5 | | | | 1.50%5 | | | | 1.50% | | | | 1.50% | |
Expenses (with waiver) | | | 1.25%5 | | | | 1.25%5 | | | | 1.31%5 | | | | 1.50% | | | | 1.50% | |
Net investment income (without waiver) | | | 0.87% | | | | 1.28% | | | | 1.33% | | | | 1.38% | | | | 1.31% | |
Net investment income (with waiver) | | | 1.12% | | | | 1.53% | | | | 1.52% | | | | 1.38% | | | | 1.31% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 22.15% | | | | 15.07% | | | | 19.80% | | | | 32.04% | | | | 48.30% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Amount represents less than $0.01 per share. |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| 5 | Total Fund expenses are limited to 1.50% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. |
| | | | |
62 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Large Cap Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $42.53 | | | | $42.40 | | | | $40.56 | | | | $36.02 | | | | $47.21 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.07 | | | | 0.16 | | | | 0.13 | | | | 0.21 | | | | 0.18 | |
Net realized and unrealized gains (losses) | | | 8.60 | | | | 3.61 | | | | 6.55 | | | | 7.07 | | | | (0.42 | ) |
| | | | |
Total from operations | | | 8.67 | | | | 3.77 | | | | 6.68 | | | | 7.28 | | | | (0.24 | ) |
| | | | |
Redemption fees 2 | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.12 | ) | | | (0.15 | ) | | | (0.17 | ) | | | (0.19 | ) | | | (1.44 | ) |
From net realized gains | | | (4.01 | ) | | | (3.49 | ) | | | (4.67 | ) | | | (2.55 | ) | | | (9.51 | ) |
| | | | |
Total distributions | | | (4.13 | ) | | | (3.64 | ) | | | (4.84 | ) | | | (2.74 | ) | | | (10.95 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $47.07 | | | | $42.53 | | | | $42.40 | | | | $40.56 | | | | $36.02 | |
| | | | |
Total investment return 3 | | | 21.34% | | | | 10.54% | | | | 16.93% | | | | 21.18% | | | | (0.89% | ) |
| | | | |
Net assets at end of period (000’s omitted) | | | $129,154 | | | | $116,581 | | | | $118,792 | | | | $113,620 | | | | $117,459 | |
| | | | | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | | | | 1.00% | |
Net investment income | | | 0.17% | | | | 0.39% | | | | 0.30% | | | | 0.54% | | | | 0.44% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 14.53% | | | | 16.02% | | | | 15.20% | | | | 17.69% | | | | 20.05% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Amount represents less than $0.01 per share. |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit ESG Growth Fund
| | | | | | | | | | | | | | | | |
| Class I | | Year Ended
June 30, 2020 | | | Year Ended
June 30, 2019 | | | Year Ended
June 30, 2018 | | | Year Ended
June 30, 2017 * | |
Net Asset Value: | | | | | | | | | | | | | | | | |
Beginning of period | | | $13.21 | | | | $12.37 | | | | $11.29 | | | | $10.00 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.12 | | | | 0.17 | | | | 0.16 | | | | 0.11 | |
Net realized and unrealized gains | | | 0.74 | | | | 0.83 | | | | 1.03 | | | | 1.20 | |
| | | | |
Total from operations | | | 0.86 | | | | 1.00 | | | | 1.19 | | | | 1.31 | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | |
From net investment income | | | (0.17 | ) | | | (0.16 | ) | | | (0.11 | ) | | | (0.02 | ) |
From net realized gains | | | (0.05 | ) | | | — | | | | — | | | | — | |
| | | | |
Total distributions. | | | (0.22 | ) | | | (0.16 | ) | | | (0.11 | ) | | | (0.02 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | |
End of period | | | $13.85 | | | | $13.21 | | | | $12.37 | | | | $11.29 | |
| | | | |
Total investment return 2 | | | 6.47% | | | | 8.30% | | | | 10.57% | | | | 13.13% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $3,477 | | | | $3,387 | | | | $3,041 | | | | $2,349 | |
| | | | |
Ratios: 3 | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.25%4 | | | | 1.25%4 | | | | 1.25%4 | | | | 1.25% | |
Expenses (with waiver) | | | 1.00%4 | | | | 1.00%4 | | | | 1.06%4 | | | | 1.25% | |
Net investment income (without waiver) | | | 0.63% | | | | 1.14% | | | | 1.10% | | | | 1.01% | |
Net investment income (with waiver) | | | 0.88% | | | | 1.38% | | | | 1.29% | | | | 1.01% | |
| | | | |
Portfolio turnover rate (excluding short-term securities) | | | 25.28% | | | | 9.26% | | | | 14.97% | | | | 27.60% | |
| * | The Fund commenced investment operations on June 30, 2016. |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 3 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| 4 | Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. |
| | | | |
64 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)
Sit ESG Growth Fund
| | | | | | | | | | | | | | | | |
| Class S | | Year Ended
June 30, 2020 | | | Year Ended
June 30, 2019 | | | Year Ended
June 30, 2018 | | | Year Ended
June 30, 2017 * | |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | |
Beginning of period | | | $13.16 | | | | $12.34 | | | | $11.28 | | | | $10.00 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.08 | | | | 0.14 | | | | 0.13 | | | | 0.08 | |
Net realized and unrealized gains | | | 0.74 | | | | 0.83 | | | | 1.03 | | | | 1.21 | |
| | | | |
Total from operations | | | 0.82 | | | | 0.97 | | | | 1.16 | | | | 1.29 | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | |
From net investment income | | | (0.15 | ) | | | (0.15 | ) | | | (0.10 | ) | | | (0.01 | ) |
From net realized gains | | | (0.05 | ) | | | — | | | | — | | | | — | |
| | | | |
Total distributions | | | (0.20 | ) | | | (0.15 | ) | | | (0.10 | ) | | | (0.01 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | |
End of period | | | $13.78 | | | | $13.16 | | | | $12.34 | | | | $11.28 | |
| | | | |
Total investment return 2 | | | 6.22% | | | | 8.01% | | | | 10.37% | | | | 12.79% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $3,158 | | | | $2,895 | | | | $2,660 | | | | $2,321 | |
| | | | |
Ratios: 3 | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.50%4 | | | | 1.50%4 | | | | 1.50%4 | | | | 1.50% | |
Expenses (with waiver) | | | 1.25%4 | | | | 1.25%4 | | | | 1.31%4 | | | | 1.50% | |
Net investment income (without waiver) | | | 0.38% | | | | 0.89% | | | | 0.84% | | | | 0.76% | |
Net investment income (with waiver) | | | 0.63% | | | | 1.14% | | | | 1.03% | | | | 0.76% | |
| | | | |
Portfolio turnover rate (excluding short-term securities) | | | 25.28% | | | | 9.26% | | | | 14.97% | | | | 27.60% | |
| * | The Fund commenced investment operations on June 30, 2016. |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 3 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| 4 | Total Fund expenses are limited to 1.50% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Mid Cap Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $18.84 | | | | $18.96 | | | | $18.06 | | | | $15.36 | | | | $20.22 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment loss 1 | | | (0.05 | ) | | | (0.03 | ) | | | (0.03 | ) | | | — | 2 | | | (0.04 | ) |
Net realized and unrealized gains (losses) | | | 1.64 | | | | 1.79 | | | | 1.71 | | | | 2.86 | | | | (1.92 | ) |
| | | | |
Total from operations | | | 1.59 | | | | 1.76 | | | | 1.68 | | | | 2.86 | | | | (1.96 | ) |
| | | | |
Redemption fees 2 | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | — | | | | — | | | | — | 2 | | | — | | | | — | |
From net realized gains | | | (1.38 | ) | | | (1.88 | ) | | | (0.78 | ) | | | (0.16 | ) | | | (2.90 | ) |
| | | | |
Total distributions | | | (1.38 | ) | | | (1.88 | ) | | | (0.78 | ) | | | (0.16 | ) | | | (2.90 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $19.05 | | | | $18.84 | | | | $18.96 | | | | $18.06 | | | | $15.36 | |
| | | | |
Total investment return 3 | | | 8.75% | | | | 11.76% | | | | 9.42% | | | | 18.74% | | | | (9.97% | ) |
| | | | |
Net assets at end of period (000’s omitted) | | | $172,744 | | | | $169,099 | | | | $158,501 | | | | $156,305 | | | | $139,523 | |
| | | | | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.25% | | | | 1.25% | | | | 1.25% | | | | 1.25% | | | | 1.25% | |
Net investment loss | | | (0.27% | ) | | | (0.16% | ) | | | (0.17% | ) | | | (0.01% | ) | | | (0.23% | ) |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 25.58% | | | | 27.70% | | | | 28.89% | | | | 23.02% | | | | 21.57% | |
| 1 | The net investment income (loss) per share is based on average shares outstanding for the period. |
| 2 | Amount represents less than $0.01 per share. |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| | | | |
66 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
Sit Small Cap Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| Class I | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $11.89 | | | | $12.27 | | | | $11.47 | | | | $10.00 | | | | $9.96 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.13 | | | | 0.15 | | | | 0.11 | | | | 0.12 | | | | 0.14 | |
Net realized and unrealized gains (losses) | | | (0.49 | ) | | | (0.25 | ) | | | 0.80 | | | | 1.46 | | | | 0.02 | |
| | | | |
Total from operations | | | (0.36 | ) | | | (0.10 | ) | | | 0.91 | | | | 1.58 | | | | 0.16 | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.14 | ) | | | (0.15 | ) | | | (0.11 | ) | | | (0.11 | ) | | | (0.12 | ) |
From net realized gains | | | — | | | | (0.13 | ) | | | — | | | | — | | | | — | 2 |
| | | | |
Total distributions | | | (0.14 | ) | | | (0.28 | ) | | | (0.11 | ) | | | (0.11 | ) | | | (0.12 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $11.39 | | | | $11.89 | | | | $12.27 | | | | $11.47 | | | | $10.00 | |
| | | | |
Total investment return 3 | | | (3.05% | ) | | | (0.54% | ) | | | 8.00% | | | | 15.84% | | | | 1.71% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $11,786 | | | | $12,559 | | | | $14,597 | | | | $12,716 | | | | $5,777 | |
| |
Ratios: 4 | | | | |
Expenses (without waiver) | | | 1.25%5 | | | | 1.25%5 | | | | 1.25%5 | | | | 1.25% | | | | 1.25% | |
Expenses (with waiver) | | | 1.00%5 | | | | 1.00%5 | | | | 1.06%5 | | | | 1.25% | | | | 1.25% | |
Net investment income (without waiver) | | | 0.90% | | | | 1.07% | | | | 0.75% | | | | 1.06% | | | | 1.46% | |
Net investment income (with waiver) | | | 1.15% | | | | 1.32% | | | | 0.94% | | | | 1.06% | | | | 1.46% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 27.58% | | | | 24.17% | | | | 29.74% | | | | 19.57% | | | | 26.43% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Amount represents less than $0.01 per share. |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| 5 | Total Fund expenses are limited to 1.25% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements. (Continued)
Sit Small Cap Dividend Growth Fund
| | | | | | | | | | | | | | | | | | | | |
| Class S | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $11.88 | | | | $12.26 | | | | $11.46 | | | | $10.00 | | | | $9.96 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.10 | | | | 0.12 | | | | 0.08 | | | | 0.09 | | | | 0.11 | |
Net realized and unrealized gains (losses) | | | (0.49 | ) | | | (0.25 | ) | | | 0.80 | | | | 1.45 | | | | 0.03 | |
| | | | |
Total from operations | | | (0.39 | ) | | | (0.13 | ) | | | 0.88 | | | | 1.54 | | | | 0.14 | |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.11 | ) | | | (0.12 | ) | | | (0.08 | ) | | | (0.08 | ) | | | (0.10 | ) |
From net realized gains | | | — | | | | (0.13 | ) | | | — | | | | — | | | | — | 2 |
| | | | |
Total distributions | | | (0.11 | ) | | | (0.25 | ) | | | (0.08 | ) | | | (0.08 | ) | | | (0.10 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $11.38 | | | | $11.88 | | | | $12.26 | | | | $11.46 | | | | $10.00 | |
| | | | |
Total investment return 3 | | | (3.30% | ) | | | (0.80% | ) | | | 7.74% | | | | 15.46% | | | | 1.46% | |
| | | | |
Net assets at end of period (000’s omitted) | | | $3,720 | | | | $3,981 | | | | $3,882 | | | | $3,461 | | | | $2,587 | |
| | | | | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 1.50%5 | | | | 1.50%5 | | | | 1.50%5 | | | | 1.50% | | | | 1.50% | |
Expenses (with waiver) | | | 1.25%5 | | | | 1.25%5 | | | | 1.31%5 | | | | 1.50% | | | | 1.50% | |
Net investment income (without waiver) | | | 0.64% | | | | 0.82% | | | | 0.51% | | | | 0.81% | | | | 1.21% | |
Net investment income (with waiver) | | | 0.89% | | | | 1.07% | | | | 0.70% | | | | 0.81% | | | | 1.21% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 27.58% | | | | 24.17% | | | | 29.74% | | | | 19.57% | | | | 26.43% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Amount represents less than $0.01 per share. |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| 5 | Total Fund expenses are limited to 1.50% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. |
| | | | |
68 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
| | | | | | | | | | | | | | | | | | | | |
Sit Small Cap Growth Fund | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $55.46 | | | | $57.18 | | | | $54.18 | | | | $45.59 | | | | $60.10 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment loss 1 | | | (0.28 | ) | | | (0.25 | ) | | | (0.29 | ) | | | (0.24 | ) | | | (0.33 | ) |
Net realized and unrealized gains (losses) | | | 3.38 | | | | 2.88 | | | | 7.01 | | | | 8.91 | | | | (8.97 | ) |
| | | | |
Total from operations | | | 3.10 | | | | 2.63 | | | | 6.72 | | | | 8.67 | | | | (9.30 | ) |
| | | | |
| | | | | |
Redemption fees 2 | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
| | | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net realized gains | | | (1.75 | ) | | | (4.35 | ) | | | (3.72 | ) | | | (0.08 | ) | | | (5.21 | ) |
| | | | |
| | | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $56.81 | | | | $55.46 | | | | $57.18 | | | | $54.18 | | | | $45.59 | |
| | | | |
Total investment return 3 | | | 5.68% | | | | 6.45% | | | | 12.68% | | | | 19.06% | | | | (16.00% | ) |
| | | | |
| | | | | |
Net assets at end of period (000’s omitted) | | | $100,613 | | | | $99,630 | | | | $100,038 | | | | $90,817 | | | | $81,209 | |
| | | | | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | |
Net investment loss | | | (0.53% | ) | | | (0.47% | ) | | | (0.51% | ) | | | (0.47% | ) | | | (0.65% | ) |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 25.74% | | | | 26.34% | | | | 29.01% | | | | 29.08% | | | | 27.37% | |
| 1 | The net investment income (loss) per share is based on average shares outstanding for the period. |
| 2 | Amount represents less than $0.01 per share. |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
| | | | | | | | | | | | | | | | | | | | |
Sit International Growth Fund | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $17.13 | | | | $16.75 | | | | $16.23 | | | | $14.48 | | | | $16.92 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income 1 | | | 0.06 | | | | 0.16 | | | | 0.19 | | | | 0.14 | | | | 0.12 | |
Net realized and unrealized gains (losses) | | | 0.36 | | | | 0.40 | | | | 0.47 | | | | 1.68 | | | | (1.47 | ) |
| | | | |
Total from operations | | | 0.42 | | | | 0.56 | | | | 0.66 | | | | 1.82 | | | | (1.35 | ) |
| | | | |
Redemption fees | | | — | 2 | | | — | | | | — | 2 | | | — | 2 | | | — | |
| | | | |
| | | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.17 | ) | | | (0.18 | ) | | | (0.14 | ) | | | (0.07 | ) | | | (0.09 | ) |
From net realized gains | | | — | | | | — | | | | — | | | | — | | | | (1.00 | ) |
| | | | |
Total distributions | | | (0.17 | ) | | | (0.18 | ) | | | (0.14 | ) | | | (0.07 | ) | | | (1.09 | ) |
| | | | |
| | | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $17.38 | | | | $17.13 | | | | $16.75 | | | | $16.23 | | | | $14.48 | |
| | | | |
Total investment return 3 | | | 2.43% | | | | 3.55% | | | | 4.06% | | | | 12.64% | | | | (8.19% | ) |
| | | | |
| | | | | |
Net assets at end of period (000’s omitted) | | | $23,005 | | | | $23,463 | | | | $23,875 | | | | $22,618 | | | | $20,440 | |
| | | | | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | | | | 1.50% | |
Net investment income | | | 0.35% | | | | 0.97% | | | | 1.11% | | | | 0.97% | | | | 0.76% | |
| | | | | |
Portfolio turnover rate (excluding short-term securities) | | | 13.38% | | | | 27.38% | | | | 16.35% | | | | 39.23% | | | | 37.94% | |
| 1 | The net investment income per share is based on average shares outstanding for the period. |
| 2 | Amount represents less than $0.01 per share. |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| | | | |
| | | | |
70 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the period. See accompanying notes to financial statements.
| | | | | | | | | | | | | | | | | | | | |
Sit Developing Markets Growth Fund | | | | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
Beginning of period | | | $16.21 | | | | $17.25 | | | | $15.23 | | | | $12.26 | | | | $14.77 | |
| | | | |
Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) 1 | | | 0.26 | | | | 0.10 | | | | 0.03 | | | | (0.02 | ) | | | 0.04 | |
Net realized and unrealized gains (losses) | | | 0.11 | | | | (0.90 | ) | | | 2.24 | | | | 3.02 | | | | (2.18 | ) |
| | | | |
Total from operations | | | 0.37 | | | | (0.80 | ) | | | 2.27 | | | | 3.00 | | | | (2.14 | ) |
| | | | |
Redemption fees | | | — | 2 | | | — | | | | — | 2 | | | — | | | | — | 2 |
| | | | |
Distributions to Shareholders: | | | | | | | | | | | | | | | | | | | | |
From net investment income | | | (0.30 | ) | | | (0.08 | ) | | | — | | | | (0.03 | ) | | | (0.02 | ) |
From net realized gains | | | — | | | | (0.16 | ) | | | (0.25 | ) | | | — | | | | (0.35 | ) |
| | | | |
Total distributions | | | (0.30 | ) | | | (0.24 | ) | | | (0.25 | ) | | | (0.03 | ) | | | (0.37 | ) |
| | | | |
Net Asset Value: | | | | | | | | | | | | | | | | | | | | |
End of period | | | $16.28 | | | | $16.21 | | | | $17.25 | | | | $15.23 | | | | $12.26 | |
| | | | |
Total investment return 3 | | | 2.20% | | | | (4.43% | ) | | | 14.94% | | | | 24.56% | | | | (14.42% | ) |
| | | | |
Net assets at end of period (000’s omitted) | | | $10,260 | | | | $9,996 | | | | $11,027 | | | | $9,561 | | | | $7,297 | |
Ratios: 4 | | | | | | | | | | | | | | | | | | | | |
Expenses (without waiver) | | | 2.00% | 5 | | | 2.00% | 5 | | | 2.00% | 5 | | | 2.00% | | | | 2.00% | |
Expenses (with waiver) | | | 1.40% | 5 | | | 1.40% | 5 | | | 1.54% | 5 | | | 2.00% | | | | 2.00% | |
Net investment income (loss) (without waiver) | | | 1.05% | | | | 0.03% | | | | (0.26% | ) | | | (0.18% | ) | | | 0.31% | |
Net investment income (loss) (with waiver) | | | 1.65% | | | | 0.63% | | | | 0.20% | | | | (0.18% | ) | | | 0.31% | |
Portfolio turnover rate (excluding short-term securities) | | | 4.15% | | | | 10.28% | | | | 30.30% | | | | 19.67% | | | | 28.14% | |
| 1 | The net investment income (loss) per share is based on average shares outstanding for the period. |
| 2 | Amount represents less than $0.01 per share. |
| 3 | Total investment return is based on the change in net asset value of a share during the period (not annualized) and assumes reinvestment of distributions at net asset value. |
| 4 | Ratios are annualized for periods less than one year. In addition to fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. |
| 5 | Total Fund expenses are limited to 2.00% of average daily net assets. However, during the period above, the investment advisor voluntarily absorbed expenses that were otherwise payable by the Fund. |
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 2020
Sit Mutual Funds are no-load funds, and are registered under the Investment Company Act of 1940 (as amended) as diversified, open-end management investment companies, or series thereof. The Sit Balanced, Sit Dividend Growth, Sit Global Dividend Growth, Sit ESG Growth, Sit Small Cap Dividend Growth, Sit Small Cap Growth, Sit International Growth, and Sit Developing Markets Growth are series funds of Sit Mutual Funds, Inc.
This report covers the equity funds of the Sit Mutual Funds (the Funds). Each fund has 10 billion authorized shares of capital stock with a par value of $0.001. The investment objective for each Fund is as follows:
| | |
| Fund | | Investment Objective |
Balanced | | Long-term growth consistent with the preservation of principal and to provide regular income. |
Dividend Growth | | Provide current income that exceeds the dividend yield of the S&P 500® Index and that grows over a period of years. Secondarily, maximize long-term capital appreciation. |
Global Dividend Growth | | Provide current income that exceeds the dividend yield of the MSCI World Index that grows over a period of years. Secondarily, maximize long-term capital appreciation. |
Large Cap Growth | | Maximize long-term capital appreciation. |
ESG Growth | | Maximize long-term capital appreciation. |
Mid Cap Growth | | Maximize long-term capital appreciation. |
Small Cap Dividend Growth | | Provide current income that exceeds the yield of the Russell 2000® Index and that grows over a period of years. Secondarily, maximize long-term capital appreciation. |
Small Cap Growth | | Maximize long-term capital appreciation. |
International Growth | | Maximize long-term growth. |
Developing Markets Growth | | Maximize long-term capital appreciation. |
The Dividend Growth, Global Dividend Growth, ESG Growth and Small Cap Dividend Growth Funds offer Class I and Class S shares. Both classes of shares have identical voting, dividend, and liquidation rights. The distribution fee differs among classes, the Class S shares have a 0.25% distribution fee, whereas Class I has no distribution fee. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets.
| (2) | Significant Accounting Policies |
The Funds are investment companies and follow accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services-Investment Companies”. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”).
Investments in Securities
Investments in securities traded on national or international securities exchanges are valued at the last reported sales price prior to the time when assets are valued. Equity securities traded on the over-the-counter market are valued at the last reported sales price or if the last sales price is not available, at the last reported bid price. The sale and bid prices or prices deemed best to reflect fair value quoted by dealers who make markets in these securities are obtained from independent pricing services. Consistent with the Funds’ valuation policies and procedures, debt securities maturing in more than 60 days are priced by an independent pricing service. The pricing service may use models that price securities based on current yields and relative security characteristics, such as coupon rate, maturity date, issuer credit quality, and prepayment speeds as applicable. When market quotations are not readily available, or when the Adviser becomes aware that a significant event impacting the value of a security or group of securities has occurred after the closing of the exchange on which the security or securities principally trade, but before the calculation of the daily net asset value, securities are valued at fair value as determined in good faith using procedures established by the Board of Directors. The procedures consider, among
| | | | |
| | | | |
72 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
others, the following factors to determine a security’s fair value: the nature and pricing history (if any) of the security; whether any dealer quotations for the security are available; and possible valuation methodologies that could be used to determine the fair value of the security. Debt securities of sufficient credit quality maturing in less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued at amortized cost, which approximates fair value.
Security transactions are accounted for on the date the securities are purchased or sold. Securities gains and losses are calculated on the identified-cost basis. Dividend income is recorded on the ex-dividend date or upon the receipt of ex-dividend notification in the case of certain foreign securities. Interest income is recorded on an accrual basis, including level-yield amortization of long-term bond premium and discount using the effective yield method.
Fair Value Measurements
The inputs and valuation techniques used to measure fair value of the Funds’ investments are summarized into three levels as described in the hierarchy below:
• Level 1 – quoted prices in active markets for identical securities. An active market for the security is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value.
• Level 2 – debt securities are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, U.S. government and government agency obligations, and municipal securities the pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity, and type as well as dealer supplied prices. For asset-backed securities and mortgage-backed securities, the pricing services utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity, and type as well as dealer supplied prices. For foreign equities, the pricing services adjust closing prices by applying a systematic process for events occurring after the close of the foreign exchange by utilizing such inputs as Depositary Receipts, quoted prices for similar securities, exchange rates, and certain indexes. All of these inputs are derived principally from or corroborated by observable market data. An adjustment to any observable input that is significant to the fair value may render the measurement a Level 3 measurement.
• Level 3 – significant unobservable inputs, including the Adviser’s own assumptions in determining the fair value of investments.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
A summary of the levels for the Funds’ investments as of June 30, 2020 is included with the Funds’ schedule of investments.
Foreign Currency Translations and Forward Foreign Currency Contracts
The fair value of securities and other assets and liabilities denominated in foreign currencies for Global Dividend Growth, ESG Growth, International Growth and Developing Markets Growth Funds are translated daily into U.S. dollars at the closing rate of exchange (approximately 4:00 p.m. Eastern Time). Purchases and sales of securities, income and expenses are translated at the exchange rate on the transaction date. Dividend and interest income includes currency exchange gains (losses) realized between the accrual and payment dates on such income. Exchange gains (losses) may also be realized between the trade and settlement dates on security and forward contract transactions. For securities denominated in foreign currencies, the effect of changes in foreign exchange rates on realized and unrealized gains or losses is reflected as a component of such gains or losses.
The Global Dividend Growth, ESG Growth, International Growth and Developing Markets Growth Funds may enter into forward foreign currency exchange contracts generally for operational purposes, but the Adviser may occasionally utilize contracts to protect against adverse exchange rate fluctuation. Any gains (losses) generated by these contracts are disclosed separately on the statement of operations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Funds and the resulting unrealized appreciation or depreciation is determined using foreign currency exchange rates from an independent pricing service. The Funds are subject to the credit risk that the other party will not complete the obligations of the contract.
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 2020 (Continued)
Federal Taxes
The Funds’ policy is to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of their taxable income to shareholders. Therefore, no income tax provision is required. In order to avoid the payment of any federal excise taxes, the Funds will distribute substantially all of their net investment income and net realized gains on a calendar year basis. Also, the Funds may utilize equalization accounting for tax purposes, whereby a portion of redemption payments are treated as distributions of income or gain for income tax purposes.
Management has analyzed the Funds’ tax positions taken in federal tax returns for all open tax years and has concluded that as of June 30, 2020, no provision for income tax would be required in the Funds’ financial statements. The Funds’ federal and state income and federal excise tax returns remain subject to examination by the Internal Revenue Service and state departments of revenue until such time as the applicable statute of limitations for audit has expired. For example, U.S. tax returns are generally subject to audit for three years from the date they are filed.
At June 30, 2020, the gross unrealized appreciation (depreciation) on investments and cost of securities on a tax basis for federal income tax purposes were as follows:
| | | | | | | | | | | | | | | | |
| | | | | | | | | Net Unrealized | | | Cost of | |
| | | Unrealized | | | Unrealized | | | Appreciation | | | Securities on a | |
| | | Appreciation | | | Depreciation | | | (Depreciation) | | | Tax Basis | |
Balanced | | | $10,134,848 | | | | ($472,086) | | | | $9,662,762 | | | | $38,031,359 | |
Dividend Growth | | | 36,962,444 | | | | (6,528,193) | | | | 30,434,251 | | | | 170,872,779 | |
Global Dividend Growth | | | 10,436,419 | | | | (1,418,130) | | | | 9,018,289 | | | | 25,707,777 | |
Large Cap Growth | | | 72,009,973 | | | | (329,642) | | | | 71,680,331 | | | | 57,531,654 | |
ESG Growth | | | 1,858,228 | | | | (105,081) | | | | 1,753,147 | | | | 4,880,339 | |
Mid Cap Growth | | | 78,526,141 | | | | (808,595) | | | | 77,717,546 | | | | 95,230,688 | |
Small Cap Dividend Growth | | | 3,154,970 | | | | (1,428,878) | | | | 1,726,092 | | | | 13,869,930 | |
Small Cap Growth | | | 41,172,664 | | | | (958,631) | | | | 40,214,033 | | | | 60,761,886 | |
International Growth | | | 6,490,465 | | | | (1,104,385) | | | | 5,386,080 | | | | 17,581,598 | |
Developing Markets Growth | | | 3,530,653 | | | | (922,019) | | | | 2,608,634 | | | | 7,636,659 | |
Net investment income and net realized gains differ for financial statement and tax purposes because of corporate actions on shares held and/or losses deferred due to “wash sale” transactions. A “wash sale” occurs when a Fund sells a security that it has acquired within a period beginning thirty days before and ending thirty days after the date of sale (a sixty one day period). The character of distributions made during the year from net investment income or net realized gains may also differ from its ultimate characterization for tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Funds. The tax character of distributions paid during the fiscal years ended June 30, 2020 and 2019 were as follows:
| | | | |
| | | | |
74 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | | | | | |
Year Ended June 30, 2020: | | | | | | | | | | | | |
| | | |
| | | | | | Long Term | | | | |
| | | Ordinary Income | | | Capital Gain | | | Total | |
Balanced | | | $486,523 | | | | $1,649,782 | | | | $2,136,305 | |
Dividend Growth (Class I) | | | 4,432,308 | | | | 20,913,570 | | | | 25,345,878 | |
Dividend Growth (Class S) | | | 695,533 | | | | 3,711,611 | | | | 4,407,144 | |
Global Dividend Growth (Class I) | | | 495,881 | | | | — | | | | 495,881 | |
Global Dividend Growth (Class S) | | | 45,123 | | | | — | | | | 45,123 | |
Large Cap Growth | | | 313,002 | | | | 10,438,682 | | | | 10,751,684 | |
ESG Growth (Class I) | | | 43,224 | | | | 12,226 | | | | 55,450 | |
ESG Growth (Class S) | | | 33,888 | | | | 10,635 | | | | 44,523 | |
Mid Cap Growth | | | — | | | | 12,018,685 | | | | 12,018,685 | |
Small Cap Dividend Growth (Class I) | | | 143,293 | | | | — | | | | 143,293 | |
Small Cap Dividend Growth (Class S) | | | 37,709 | | | | — | | | | 37,709 | |
Small Cap Growth | | | — | | | | 3,070,107 | | | | 3,070,107 | |
International Growth | | | 227,001 | | | | — | | | | 227,001 | |
Developing Markets Growth | | | 185,000 | | | | — | | | | 185,000 | |
| | | |
Year Ended June 30, 2019: | | | | | | | | | | | | |
| | | | | | Long Term | | | | |
| | | Ordinary Income | | | Capital Gain | | | Total | |
Balanced | | | $459,001 | | | | $342,301 | | | | $801,302 | |
Dividend Growth (Class I) | | | 17,847,831 | | | | 86,972,912 | | | | 104,820,743 | |
Dividend Growth (Class S) | | | 1,193,973 | | | | 7,639,936 | | | | 8,833,909 | |
Global Dividend Growth (Class I) | | | 521,860 | | | | — | | | | 521,860 | |
Global Dividend Growth (Class S) | | | 49,144 | | | | — | | | | 49,144 | |
Large Cap Growth | | | 456,987 | | | | 9,477,676 | | | | 9,934,663 | |
ESG Growth (Class I) | | | 40,551 | | | | — | | | | 40,551 | |
ESG Growth (Class S) | | | 31,449 | | | | — | | | | 31,449 | |
Mid Cap Growth | | | 1,152,232 | | | | 14,273,917 | | | | 15,426,149 | |
Small Cap Dividend Growth (Class I) | | | 169,480 | | | | 147,220 | | | | 316,700 | |
Small Cap Dividend Growth (Class S) | | | 38,521 | | | | 42,395 | | | | 80,916 | |
Small Cap Growth | | | — | | | | 7,455,033 | | | | 7,455,033 | |
International Growth | | | 245,338 | | | | — | | | | 245,338 | |
Developing Markets Growth | | | 49,252 | | | | 102,896 | | | | 152,148 | |
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 2020 (Continued)
As of June 30, 2020, the components of distributable earnings on a tax basis were as follows:
| | | | | | | | | | | | | | | | |
| | | Undistributed
Ordinary
Income | | | Undistributed
Long-Term
Capital Gains | | | Accumulated
Capital and
Other Losses | | | Unrealized
Appreciation
(Depreciation) | |
Balanced | | | $183,595 | | | | $381,405 | | | | — | | | | $9,662,762 | |
Dividend Growth | | | 821,481 | | | | 12,122,888 | | | | ($6,693,354) | | | | 30,434,251 | |
Global Dividend Growth | | | 139,947 | | | | — | | | | (1,047,906) | | | | 9,018,289 | |
Large Cap Growth | | | 63,675 | | | | 4,230,801 | | | | — | | | | 71,680,331 | |
ESG Growth | | | 21,980 | | | | — | | | | (96,362) | | | | 1,753,148 | |
Mid Cap Growth | | | — | | | | 4,894,109 | | | | (260,780) | | | | 77,717,546 | |
Small Cap Dividend Growth | | | 37,627 | | | | — | | | | (253,454) | | | | 1,726,092 | |
Small Cap Growth | | | — | | | | 702,416 | | | | (733,699) | | | | 40,214,033 | |
International Growth | | | 61,406 | | | | — | | | | (1,422,363) | | | | 5,386,080 | |
Developing Markets Growth | | | 10,868 | | | | — | | | | (31,404) | | | | 2,608,634 | |
On the statement of assets and liabilities, as a result of permanent book-to-tax differences, reclassification adjustments were made to the following capital accounts:
| | | | | | | | | | | | | | |
| | | | | Distributable
Earnings | | | | | | Additional
Paid-in Capital | |
Mid Cap Growth | | | | | $292,945 | | | | | | | | ($292,945) | |
Small Cap Growth | | | | | 290,390 | | | | | | | | (290,390) | |
These differences were primarily attributable to non-deductible net operating losses.
Net capital loss carryovers and late year losses, if any, as of June 30, 2020, are available to offset future realized capital gains and thereby reduce future capital gains distributions. The Funds’ are permitted to carry forward capital losses for an unlimited period. Capital losses that are carried forward retain their character as either short-term or long-term capital losses. The net capital loss carryovers and the late year losses deferred as of June 30, 2020, were as follows:
| | | | | | | | | | | | | | | | |
| | | Unlimited Period of Net
Capital Loss Carryover | | | Late Year
Losses Deferred | |
| | | Short-Term | | | Long-Term | | | Ordinary | | | Capital | |
Dividend Growth | | | — | | | | — | | | | — | | | | $6,693,354 | |
Global Dividend Growth | | | $1,047,906 | | | | — | | | | — | | | | — | |
ESG Growth | | | — | | | | — | | | | — | | | | 96,362 | |
Mid Cap Growth | | | — | | | | — | | | | $260,780 | | | | — | |
Small Cap Dividend Growth | | | 101,296 | | | | $152,158 | | | | — | | | | — | |
Small Cap Growth | | | — | | | | — | | | | 286,404 | | | | 447,295 | |
International Growth | | | 1,086,655 | | | | 335,708 | | | | — | | | | — | |
Developing Markets Growth | | | 31,404 | | | | — | | | | — | | | | — | |
For the year ended June 30, 2020, the Funds’ utilized capital losses and expired capital losses as follows:
| | | | | | | | | | |
| | | Utilized | | | Expired | | | |
Global Dividend Growth | | | $133,881 | | | | — | |
ESG Growth | | | 126,311 | | | | — | |
| | | | |
| | | | |
76 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
Distributions
Distributions to shareholders are recorded as of the close of business on the record date. Such distributions are payable in cash or reinvested in additional shares of the Funds’ capital stock. Distributions from net investment income, if any, are declared and paid quarterly for the Balanced, Dividend Growth, Global Dividend Growth and Small Cap Dividend Growth Funds and declared and paid annually for Developing Markets Growth, Small Cap Growth, International Growth, Mid Cap Growth, Large Cap Growth and ESG Growth Funds. Distributions from net realized gains, if any, will be made annually for each of the Funds.
Concentration of Investments
The Developing Markets Growth Fund may concentrate investments in countries with limited or developing capital markets which may involve greater risks than investments in more developed markets and the prices of such investments may be volatile. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of the Fund’s investments and the income it generates, as well as the Fund’s ability to repatriate such amounts.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results for the respective periods. Actual results could differ from those estimates.
Guarantees and Indemnifications
Under each Fund’s organizational documents, its officers and directors are indemnified against certain liability arising out of the performance of their duties to each Fund. In addition, certain of each Fund’s contracts with its service providers contain general indemnification clauses. Each Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against each Fund cannot be determined and each Fund has no historical basis for predicting the likelihood of any such claims.
(3) Investment Security Transactions
The cost of purchases and proceeds from sales and maturities of investment securities, other than short-term securities, for the year ended June 30, 2020, were as follows:
| | | | | | | | | | | | | | | | |
| | | Purchases | | | Proceeds | |
| | | U.S. Government | | | Other | | | U.S. Government | | | Other | |
Balanced | | | $4,203,501 | | | | $23,478,023 | | | | $6,260,492 | | | | $14,201,667 | |
Dividend Growth | | | — | | | | 157,756,211 | | | | — | | | | 215,528,615 | |
Global Dividend Growth | | | — | | | | 7,476,526 | | | | — | | | | 7,338,379 | |
Large Cap Growth | | | — | | | | 16,924,522 | | | | — | | | | 25,883,836 | |
ESG Growth | | | — | | | | 1,555,049 | | | | — | | | | 1,548,557 | |
Mid Cap Growth | | | — | | | | 40,755,228 | | | | — | | | | 50,010,969 | |
Small Cap Dividend Growth | | | — | | | | 4,353,367 | | | | — | | | | 4,176,134 | |
Small Cap Growth | | | — | | | | 23,763,091 | | | | — | | | | 25,338,512 | |
International Growth | | | — | | | | 2,953,381 | | | | — | | | | 3,508,085 | |
Developing Markets Growth | | | — | | | | 666,686 | | | | — | | | | 388,418 | |
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 2020 (Continued)
(4) Affiliated Fees and Transactions
Investment Adviser
The Funds each have entered into an investment management agreement with Sit Investment Associates, Inc. (SIA), under which SIA manages the Funds’ assets and provides research, statistical and advisory services, and pays related office rental, executive expenses and executive salaries. The current fee for investment management and advisory services is based on the average daily net assets of the Funds at the annual rate of:
| | | | | | |
| | | Management Fee | | | Net of Adviser’s
Voluntary Fee Waiver |
Balanced | | | 1.00% | | | N/A |
Dividend Growth Fund Class I and Class S | | | 1.00% | | | 0.70% |
Global Dividend Growth Fund Class I and Class S | | | 1.25% | | | 1.00% |
Large Cap Growth | | | 1.00% | | | N/A |
ESG Growth Fund Class I and Class S | | | 1.25% | | | 1.00% |
Mid Cap Growth | | | 1.25% | | | N/A |
Small Cap Dividend Growth Fund Class I and Class S | | | 1.25% | | | 1.00% |
Small Cap Growth | | | 1.50% | | | N/A |
International Growth | | | 1.50% | | | N/A |
Developing Markets Growth | | | 2.00% | | | 1.40% |
SIA is obligated to pay all of the Funds’ expenses (excluding extraordinary expenses, stock transfer taxes, interest, brokerage commissions, 12b-1 fees and other transaction charges relating to investing activities).
In addition to the annual management fees, the Class S shares of Dividend Growth, Global Dividend Growth, ESG Growth and Small Cap Dividend Growth Funds also have a 0.25% annual distribution (12b-1) fee, which is used to pay for distribution fees related to the sale and distribution of its shares.
Effective October 1, 2017, the Adviser has agreed to limit the management fee of the Dividend Growth Fund to 0.70%, the Global Dividend Growth Fund to 1.00%, the ESG Growth Fund to 1.00%, the Small Cap Dividend Growth Fund to 1.00% and the Developing Markets Growth Fund to 1.40% for the period through June 30, 2021 of the Fund’s daily average net assets, respectively.
Transactions with affiliates
The investment adviser, affiliates of the investment adviser, directors and officers of the Funds as a whole owned the following shares as of June 30, 2020:
| | | | | | | | |
| | | Shares | | | % Shares
Outstanding | | |
Balanced | | | 300,850 | | | 17.0 |
Dividend Growth | | | 1,432,435 | | | 9.6 |
Global Dividend Growth | | | 450,307 | | | 21.9 |
Large Cap Growth | | | 730,305 | | | 26.6 |
ESG Growth | | | 450,751 | | | 93.9 |
Mid Cap Growth | | | 4,229,553 | | | 46.6 |
Small Cap Dividend Growth | | | 649,671 | | | 47.7 |
Small Cap Growth | | | 995,676 | | | 56.2 |
International Growth | | | 770,369 | | | 58.2 |
Developing Markets Growth | | | 277,612 | | | 44.0 |
| | | | |
| | | | |
78 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| (5) | Capital Share Activity |
Short-Term Trading (Redemption) Fees
The Funds (except Balanced) charge a redemption fee equal to 2.00% of the proceeds on shares held for less than 30 calendar days. The fee is retained by the Fund for the benefit of its long-term shareholders and accounted for as an addition to paid in capital. For the year ended June 30, 2020, the Funds received the following redemption fees:
| | | | | | | | | | | | | | |
| | | Class I | | | Class S | | | | | | |
Dividend Growth | | | $340 | | | | $54 | | | | | |
Global Dividend Growth | | | 27 | | | | 2 | | | | | |
Large Cap Growth | | | 3,235 | | | | — | | | | | |
Mid Cap Growth | | | 1,817 | | | | — | | | | | |
Small Cap Growth | | | 474 | | | | — | | | | | |
International Growth Fund | | | 243 | | | | | | | | | |
Developing Markets Growth | | | 10 | | | | — | | | | | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
Sit Mutual Funds, Inc.
Sit Large Cap Growth Fund
Sit Mid Cap Growth Fund:
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of the Sit Balanced Fund, Sit Dividend Growth Fund, Sit Global Dividend Growth Fund, Sit ESG Growth Fund, Sit Small Cap Dividend Growth Fund, Sit Small Cap Growth Fund, Sit International Growth Fund, Sit Developing Markets Growth Fund (each a series of Sit Mutual Funds, Inc.), Sit Large Cap Growth Fund, and Sit Mid Cap Growth Fund (collectively, the Funds), including the schedules of investments, as of June 30, 2020, the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years or periods in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of June 30, 2020, the results of their operations for the year then ended, the changes in their net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years or periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
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 are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of June 30, 2020, by correspondence with custodians and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
/s/KPMG LLP
We have served as the auditor of one or more Sit Mutual Funds investment companies since 1982.
Minneapolis, Minnesota
August 19, 2020
| | | | |
| | | | |
80 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
EXPENSE EXAMPLE (Unaudited)
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2020 to June 30, 2020.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs (redemption fees) were included, your costs would have been higher.
| | | | | | | | | | | | | | | |
| Fund | | Beginning
Account
Value
(1/1/20) | | Ending
Account
Value
(6/30/20) | | Expenses
Paid During
Period*
(1/1/20-
6/30/20) |
Balanced Fund | |
Actual | | | | $1,000 | | | | | $1,045.70 | | | | | $5.09 | |
Hypothetical | | | | $1,000 | | | | | $1,019.89 | | | | | $5.02 | |
| | | | | | | | | | | | | | | |
Dividend Growth Fund | |
Actual | | | | | | | | | | | | | | | |
Class I | | | | $1,000 | | | | | $944.50 | | | | | $3.38 | |
Class S | | | | $1,000 | | | | | $942.80 | | | | | $4.59 | |
Hypothetical | |
Class I | | | | $1,000 | | | | | $1,021.38 | | | | | $3.52 | |
Class S | | | | $1,000 | | | | | $1,020.14 | | | | | $4.77 | |
| | | | | | | | | | | | | | | |
Global Dividend Growth Fund | |
Actual | | | | | | | | | | | | | | | |
Class I | | | | $1,000 | | | | | $961.40 | | | | | $4.88 | |
Class S | | | | $1,000 | | | | | $960.20 | | | | | $6.09 | |
Hypothetical | |
Class I | | | | $1,000 | | | | | $1,019.89 | | | | | $5.02 | |
Class S | | | | $1,000 | | | | | $1,018.65 | | | | | $6.27 | |
| | | | | | | | | | | | | | | |
Large Cap Growth Fund | |
Actual | | | | $1,000 | | | | | $1,089.60 | | | | | $5.20 | |
Hypothetical | | | | $1,000 | | | | | $1,019.89 | | | | | $5.02 | |
| | | | | | | | | | | | | | | |
ESG Growth Fund | |
Actual | | | | | | | | | | | | | | | |
Class I | | | | $1,000 | | | | | $976.00 | | | | | $4.91 | |
Class S | | | | $1,000 | | | | | $975.20 | | | | | $6.14 | |
Hypothetical | |
Class I | | | | $1,000 | | | | | $1,019.89 | | | | | $5.02 | |
Class S | | | | $1,000 | | | | | $1,018.65 | | | | | $6.27 | |
| | | | | | | | | | | | | | | |
Mid Cap Growth Fund | |
Actual | | | | $1,000 | | | | | $1,039.30 | | | | | $6.34 | |
Hypothetical | | | | $1,000 | | | | | $1,018.65 | | | | | $6.27 | |
| | | | | | | | | | | | | | | |
Small Cap Dividend Growth Fund | |
Actual | | | | | | | | | | | | | | | |
Class I | | | | $1,000 | | | | | $904.50 | | | | | $4.74 | |
Class S | | | | $1,000 | | | | | $903.70 | | | | | $5.92 | |
Hypothetical | |
Class I | | | | $1,000 | | | | | $1,019.89 | | | | | $5.02 | |
Class S | | | | $1,000 | | | | | $1,018.65 | | | | | $6.27 | |
EXPENSE EXAMPLE (Unaudited) (Continued)
| | | | | | | | | | | | | | | |
| Fund | | Beginning
Account
Value
(1/1/20) | | Ending
Account
Value
(6/30/20) | | Expenses
Paid During
Period*
(1/1/20-
6/30/20) |
Small Cap Growth Fund | |
Actual | | | | $1,000 | | | | | $1,021.10 | | | | | $7.54 | |
Hypothetical | | | | $1,000 | | | | | $1,017.40 | | | | | $7.52 | |
| | | | | | | | | | | | | | | |
International Growth Fund | |
Actual | | | | $1,000 | | | | | $970.40 | | | | | $7.35 | |
Hypothetical | | | | $1,000 | | | | | $1,017.40 | | | | | $7.52 | |
| | | | | | | | | | | | | | | |
Developing Markets Growth Fund | |
Actual | | | | $1,000 | | | | | $959.90 | | | | | $6.82 | |
Hypothetical | | | | $1,000 | | | | | $1,017.90 | | | | | $7.02 | |
*Expenses are Gequal to the Fund’s annualized expense ratio of 0.70% for the Dividend Growth, Class I Fund; 0.95% for the Dividend Growth, Class S Fund; 1.00%, for the Balanced, Global Dividend Growth, Class I, Large Cap Growth, ESG Growth, Class I, and Small Cap Dividend Growth, Class I Funds; 1.25% for Dividend Growth, Class S, Global Dividend Growth, Class S, ESG Growth, Class S, Mid Cap Growth, and Small Cap Dividend Growth, Class S Funds;1.40% for Developing Markets Growth Fund and 1.50% for Small Cap Growth, and International Growth Funds, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period.)
| | | | |
82 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
FEDERAL TAX INFORMATION (Unaudited)
Sit Equity Funds
For corporate shareholders, the percentage of investment income (dividend income and short-term gains, if any), for each of the Funds that qualify for the Dividends Received Deductions for the period of July 1, 2019 to June 30, 2020 is as follows:
| | | | | |
| Fund | | Percentage |
Balanced Fund | | | | 61.6 | % |
Dividend Growth Fund | | | | 94.7 | |
Global Dividend Growth Fund | | | | 100.0 | |
Large Cap Growth Fund | | | | 100.0 | |
ESG Growth Fund | | | | 100.0 | |
Small Cap Dividend Growth Fund | | | | 100.0 | |
International Growth Fund | | | | 7.5 | |
Developing Markets Growth Fund | | | | 12.1 | |
For the year ended June 30, 2020, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions made by the following Funds, the corresponding percentages represent the amount of each distribution which may qualify for the 15% dividend income tax rate.
| | | | | |
| Fund | | Percentage |
Balanced Fund | | | | 64.9 | % |
Dividend Growth Fund | | | | 100.0 | |
Global Dividend Growth Fund | | | | 100.0 | |
Large Cap Growth Fund | | | | 100.0 | |
ESG Growth Fund | | | | 100.0 | |
Small Cap Dividend Growth Fund | | | | 100.0 | |
International Growth Fund | | | | 100.0 | |
Developing Markets Growth Fund | | | | 83.6 | |
The following Funds designated the listed amounts as long-term capital gain dividends during the year ended June 30, 2020. Distributable long-term gains are based on net realized long term gains determined on a tax basis and may differ from such amounts for financial reporting purposes.
| | | | | |
| Fund | | Amount |
Balanced Fund | | | | $1,649,782 | |
Dividend Growth Fund | | | | 24,625,181 | |
Large Cap Growth Fund | | | | 10,438,682 | |
ESG Growth Fund | | | | 22,861 | |
Mid Cap Growth Fund | | | | 12,018,685 | |
Small Cap Growth Fund | | | | 3,070,107 | |
INFORMATION ABOUT DIRECTORS AND OFFICERS (Unaudited)
The Sit Mutual Funds are a family of no-load mutual funds. The Stock Funds described in this Annual Report are the Sit Mid Cap Growth Fund, Sit Large Cap Growth Fund, Sit International Growth Fund, Sit Balanced Fund, Sit Developing Markets Growth Fund, Sit ESG Growth Fund, Sit Small Cap Growth Fund, Sit Dividend Growth Fund, Sit Global Dividend Growth Fund, and Sit Small Cap Dividend Growth Fund (the “Funds” or individually, a “Fund”). The bond funds within the Sit Mutual Fund family are described in a separate Bond Funds’ Annual Report. The Sit Mid Cap Growth Fund and Sit Large Cap Growth Fund, and the corporate issuer of the Sit International Growth Fund, Sit Balanced Fund, Sit Developing Markets Growth Fund, Sit ESG Growth Fund, Sit Small Cap Growth Fund, Sit Dividend Growth Fund, Sit Global Dividend Growth Fund and Sit Small Cap Dividend Growth Fund have a Board of Directors and officers. Pursuant to Minnesota law, the Boards of Directors are responsible for the management of the Funds and the establishment of the Funds’ policies. The officers of the Funds manage the day-to-day operation of the Funds. Information pertaining to the directors and officers of the Funds is set forth below. The business address, unless otherwise noted below, is that of the Funds’ investment adviser – 3300 IDS Center, 80 South Eighth Street, Minneapolis, Minnesota 55402. The Boards have a separate Audit Committee. The Stock Funds’ SAI has additional information about the Fund’s directors and is available without charge upon request by calling the Sit Funds at 800-332-5580.
| | | | | | | | |
Name, Age, and
Position with Funds | | Term of Office (1)
and Length of Time
Served | | Principal Occupations During Past Five Years | | Number of Funds
Overseen in
Fund Complex | | Other Directorships
Held by Director (3) |
INTERESTED DIRECTORS: | | | | | | |
Roger J. Sit (2) Age: 58 Chairman and President | | Chairman since 10/08; Officer since 1998. | | Chairman, President, CEO and Global CIO of Sit Investment Associates, Inc. (the “Adviser”); Chairman and CEO of Sit Investment Fixed Income Advisors, Inc. (“SF”); Chairman of SIA Securities Corp. (the “Distributor”). | | 14 | | TCF Financial Corporation. |
| INDEPENDENT DIRECTORS: | | | | | | |
Edward M. Giles Age: 84 Director | | Director since 2012 or the Fund’s inception, if later. | | Senior Vice President of Peter B. Cannell & Co., July 2011 to present. | | 14 | | None. |
Sidney L. Jones Age: 86 Director | | Director from 1988 to 1989 and since 1993 or the Fund’s inception, if later. | | Lecturer, Washington Campus Consortium of 17 Universities. | | 14 | | None. |
Bruce C. Lueck Age: 79 Director | | Director since 2004 or the Fund’s inception, if later. | | Consultant for Zephyr Management, L.P. (investment management) and committee member of several investment funds and foundations. | | 14 | | None. |
Donald W. Phillips Age: 72 Director | | Director of the International Fund since 1993, and since 1990 or the Fund’s inception, if later for all other Funds. | | Chairman and CEO of WP Global Partners Inc., July 2005 to present; | | 14 | | None. |
Barry N. Winslow Age: 72 Director | | Director since 2010 or the Fund’s inception, if later. | | Board member, TCF Financial Corporation. | | 14 | | TCF Financial Corporation. |
| | | | |
| | | | |
84 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | | | |
Name, Age, and
Position with Funds | | Term of Office (1)
and Length of Time
Served | | Principal Occupations During Past Five Years | | Number of Funds
Overseen in
Fund Complex | | Other Directorships
Held by Director (3) |
OFFICERS: | | | | | | |
Mark H. Book Age: 57 Vice President – Investments of Balanced Fund only | | Officer since 2002; Re-Elected by the Boards annually. | | Vice President and Portfolio Manager of SF. | | N/A | | N/A |
Kelly K. Boston Age: 51 Assistant Secretary & Assistant Treasurer | | Officer since 2000; Re-Elected by the Boards annually. | | Staff Attorney of the Adviser; Secretary of the Distributor. | | N/A | | N/A |
Bryce A. Doty Age: 53 Vice President - Investments of Balanced Fund only. | | Officer since 1996; Re-Elected by the Boards annually. | | Senior Vice President and Senior Portfolio Manager of SF. | | N/A | | N/A |
Kent L. Johnson Age: 54 Vice President - Investments | | Officer since 2003; Re-Elected by the Boards annually. | | Senior Vice President - Research and Investment Management of the Adviser. | | N/A | | N/A |
Michael J. Radmer 50 S. 6th Street Minneapolis, MN 55402 Age: 75 Secretary | | Officer since 1984; Re-Elected by the Boards annually. | | Senior Counsel with the law firm of Dorsey & Whitney, LLP since January 2016; Partner from January 1976 to December 2015. | | N/A | | N/A |
Paul E. Rasmussen Age: 59 Vice President, Treasurer & Chief Compliance Officer | | Officer since 1994; Re-Elected by the Boards annually. | | Vice President, Secretary, Controller and Chief Compliance Officer of the Adviser; Vice President, Secretary, and Chief Compliance Officer of SF; President and Treasurer of the Distributor. | | N/A | | N/A |
Carla J. Rose Age: 54 Vice President, Assistant Secretary & Assistant Treasurer | | Officer since 2000; Re-Elected by the Boards annually. | | Vice President, Administration & Deputy Controller of the Adviser; Vice President, Controller, Treasurer & Assistant Secretary of SF; Vice President and Assistant Secretary of the Distributor. | | N/A | | N/A |
Robert W. Sit Age: 51 Vice President - Investments | | Officer since 1997; Re-Elected by the Boards annually. | | Vice President - Research and Investment Management of the Adviser. | | N/A | | N/A |
Ronald D. Sit Age: 60 Vice President - Investments | | Officer since 1985; Re-Elected by the Boards annually. | | Vice President - Research and Investment Management of the Adviser. | | N/A | | N/A |
| 1 | Each Director serves until their resignation, removal or the next meeting of the shareholders at which election of directors is an agenda item and his successor is duly elected and shall qualify. |
| 2 | Directors who are deemed to be “interested person” of the Funds as that term is defined by the Investment Company Act of 1940. Mr. Sit is considered an “interested person” because he is a an officer of Sit Investment Associates, Inc., the Fund’s investment adviser. |
| 3 | Includes only directorships of companies required to report under the Securities Exchange Act of 1934 (i.e., public companies) or other investment companies registered under the 1940 Act. |
ADDITIONAL INFORMATION (Unaudited)
PROXY VOTING
A description of the policies and procedures that Sit Investment uses to vote proxies related to the Funds’ portfolio securities is set forth in the Funds’ Statement of Additional Information, which is available on the Funds’ website at www.sitfunds.com, without charge by calling 800-332-5580 and on the Securities and Exchange Commission’s (SEC) website at www.sec.gov. The Funds’ proxy voting record is available without charge by calling 800-332-5580 and on the SEC’s website at www.sec.gov no later than August 31 for the prior 12 months ending June.
QUARTERLY SCHEDULE OF INVESTMENTS SCHEDULES
Each Fund files a complete schedule of investments with the SEC for the first and third quarters of each fiscal year on Form N-PORT. The Funds’ Form N-PORT is available on the SEC’s website at www.sec.gov. Each Fund’s complete schedule of investments, as filed on Form N-PORT, is also available on its website at www.sitfunds.com, or without charge by calling 800-332-5580.
STATEMENT REGARDING LIQUIDITY RISK MANAGEMENT PROGRAM
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
At their joint meeting held on October 21, 2019, the Boards of Directors (the “Boards”) of the Sit Mutual Funds (the “Funds”) reviewed the Funds’ liquidity risk management program (the “Program”) pursuant to the Liquidity Rule. Sit Investment Associates, Inc. (“SIA”), the investment adviser to the Funds, serves as the Program Administrator and provided the Boards with a report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation and any material changes to the Program as of September 30, 2019 (the “Report”).
The Report described its liquidity classification methodology and the determination that a Highly Liquid Investment Minimum is not currently necessary for any Fund. The Report also noted that the Program complied with the key factors for consideration under the Liquidity Rule for assessing, managing, and periodically reviewing liquidity risk, as follows:
A. Each Fund’s investment strategy and liquidity of investments during both normal and reasonably foreseeable stressed conditions: SIA reviewed each Fund’s strategy and the determinations that each strategy remains appropriate for an open-end fund. This determination was based on each Fund’s holding’s liquidity, diversification, and average position size.
B. Short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions: The Report indicated that it considered historical net redemption activity and shareholder ownership concentration and distribution channels to determine each Fund’s Reasonably Anticipated Trading Size. It was also noted that each Fund has adopted an in-kind redemption policy which may be utilized to meet large redemption requests.
C. Holdings of cash and cash equivalents, as well as borrowing arrangements: The report reviewed each Fund’s holdings of cash and cash equivalents, available borrowing arrangements if any, and other funding sources.
There were no material changes to the Program during the past year. The Report stated that SIA concluded that the Program is operating as intended and is effective in implementing the requirements of the Liquidity Rule.
| | | | |
| | | | |
86 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
[This page intentionally left blank.]
[This page intentionally left blank.]
| | | | |
| | | | |
88 | | | SIT MUTUAL FUNDS ANNUAL REPORT | |
| | | | | | |
| | Annual Report June 30, 2020 | | | | |
| | | |
| | | | | | |
| | | |
| | | | | | |
| | | |
| | | | | | |
| | INVESTMENT ADVISER | | INDEPENDENT REGISTERED PUBLIC | | |
| | Sit Investment Associates, Inc. | | ACCOUNTING FIRM | | |
| | 80 S. Eighth Street Suite 3300 Minneapolis, MN 55402 CUSTODIAN The Bank Of New York Mellon 111 Sanders Creek Parkway Syracuse, NY 13057 TRANSFER AGENT AND DISBURSING AGENT BNY Mellon Investment Servicing (US) Inc. 4400 Computer Drive Westborough, MA 01581 | | KPMG LLP Minneapolis, MN GENERAL COUNSEL Dorsey & WhitneyLLP Minneapolis, MN | | |
| | | |
| | | | | | |
| | | |
| | 
| | | | |
| | 1-800-332-5580 www.sitfunds.com | | | | |
| | | |
| | | | | | |
| | | | | | |
Stock 6-2020.
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. The registrant has not made any amendment to its code of ethics during the period covered by this report which must be described herein pursuant to Item 2. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report.
A copy of the registrant’s code of ethics is available without charge upon request by calling the registrant at 612-334-5888 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. Edward M. Giles, Mr. Sidney L. Jones, Mr. Bruce C. Lueck, Mr. Donald W. Phillips and Mr. Barry N. Winslow are audit committee financial experts serving on its audit committee. Mr. Giles, Mr. Jones, Mr. Lueck, Mr. Phillips and Mr. Winslow are independent for purposes of this item.
| Item 4: | Principal Accountant Fees and Services. |
(a) – (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant’s principal accountant were as follows:
| | | | | | | | | | | | | | | | |
| | | Audit
Fees (a) | | | Audit
Related
Fees (b) | | | Tax
Fees (c) | | | Other
Fees (d) | |
Fiscal year ended June 30, 2020 | | $ | 23,800 | | | | 0 | | | $ | 5,650 | | | | 0 | |
Fiscal year ended June 30, 2019 | | $ | 23,000 | | | | 0 | | | $ | 5,650 | | | | 0 | |
Audit fees include amounts related to the audit of the registrant’s annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Audit-related fees include amounts reasonably related to the performance of the audit of the registrant’s financial statements, and/or are traditionally performed by the auditor. Tax fees include amounts related to tax compliance, tax planning, and tax advice. Other Fees include services provided to review the Fund’s order processing and trading procedures.
(e) (1) The Audit Committee is required to pre-approve audit and non-audit services performed for the registrant by the independent auditor in order to assure that the provision of such services does not impair the auditor’s independence. The audit committee also is required to pre-approve certain non-audit services performed by the registrant’s independent auditor for the registrant’s investment adviser and certain of the adviser’s affiliates if the services relate directly to the operations and financial reporting of the registrant. Services to be provided by the auditor must receive general pre-approval or specific pre-approval by the audit committee. Any proposed services exceeding pre-approved cost levels will require separate pre-approval by the audit committee.
The audit committee may delegate pre-approval authority to the audit committee chairman. The chairman shall report any pre-approval decisions to the audit committee at its next scheduled meeting. The audit committee does not delegate its responsibility to pre-approve services performed by the independent auditor to management.
(2) No services included in (b) – (d) were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant’s principal accountant for non-audit services rendered to the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $0 and $0, 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: | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. |
Not applicable to open-end investment companies.
(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 Mid Cap Growth Fund, Inc. |
| |
By (Signature and Title)* | | /s/ Paul E. Rasmussen |
| | Paul E. Rasmussen |
| | Vice President, Treasurer |
Date August 26, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | |
By (Signature and Title) | | /s/ Paul E. Rasmussen |
| | Paul E. Rasmussen |
| | Vice President, Treasurer |
Date August 26, 2020
| | |
By (Signature and Title) | | /s/ Roger J. Sit |
| | Roger J. Sit |
| | Chairman |
Date August 26, 2020
