-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B49vsCJ6/drEukj2Bp5h3cDQa2kvlCS2wWWdU8MsZQKik0LBt/lW0SOBSzmV76q5 JUE+zMRMs/jbsdADx6Q5mA== 0000897101-04-000391.txt : 20040225 0000897101-04-000391.hdr.sgml : 20040225 20040225161122 ACCESSION NUMBER: 0000897101-04-000391 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040225 EFFECTIVENESS DATE: 20040225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIT LARGE CAP GROWTH FUND INC CENTRAL INDEX KEY: 0000356786 IRS NUMBER: 411414580 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03343 FILM NUMBER: 04627813 BUSINESS ADDRESS: STREET 1: 4600 NORWEST CENTER 90 S SEVENTH ST CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 612-332-32 MAIL ADDRESS: STREET 1: 4600 NORWEST CENTER 90 SOUTH ST STREET 2: 4600 NORWEST CENTER 90 SOUTH ST CITY: MINNEAPOLIS STATE: MN ZIP: 55402 FORMER COMPANY: FORMER CONFORMED NAME: SIT GROWTH & INCOME FUND INC DATE OF NAME CHANGE: 19940620 FORMER COMPANY: FORMER CONFORMED NAME: NEW BEGINNING GROWTH FUND INC/NEW DATE OF NAME CHANGE: 19870907 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIT MID CAP GROWTH FUND INC CENTRAL INDEX KEY: 0000356787 IRS NUMBER: 411414580 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03342 FILM NUMBER: 04627811 BUSINESS ADDRESS: STREET 1: 4600 NORWEST CTR 90 S 17TH ST CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 612-332-32 MAIL ADDRESS: STREET 1: 4600 NORWEST CTR, 90 S 17TH ST STREET 2: 4600 NORWEST CTR, 90 S 17TH ST CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4130 FORMER COMPANY: FORMER CONFORMED NAME: SIT GROWTH FUND INC DATE OF NAME CHANGE: 19940620 FORMER COMPANY: FORMER CONFORMED NAME: SIT NEW BEGINNING GROWTH & INCOME FUND INC DATE OF NAME CHANGE: 19930923 FORMER COMPANY: FORMER CONFORMED NAME: NEW BEGINNING INCOME & GROWTH FUND INC DATE OF NAME CHANGE: 19870907 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIT MUTUAL FUNDS INC CENTRAL INDEX KEY: 0000877880 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06373 FILM NUMBER: 04627814 BUSINESS ADDRESS: STREET 1: 4600 NORWEST CENTER STREET 2: 90 S SEVENTH ST CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 612-332-32 MAIL ADDRESS: STREET 1: 4600 NORWEST CTR, 90 SOUTH SEVENTH ST STREET 2: 4600 NORWEST CTR, 90 SOUTH SEVENTH ST CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4130 FORMER COMPANY: FORMER CONFORMED NAME: SIT NEW BEGINNING MUTUAL FUNDS INC DATE OF NAME CHANGE: 19920929 N-CSRS 1 stockfunds040858_ncsrs.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR ---------- CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-06373 --------- Sit Mutual Funds, Inc. (Exact name of registrant as specified in charter) 4600 Wells Fargo Center 90 South Seventh Street Minneapolis, Mn 55402 (Address of principal executive offices) Paul E. Rasmussen, VP Treasurer Sit Mutual Funds, Inc. 4600 Wells Fargo Center 90 South Seventh Street Minneapolis, Mn 55402 (Name and address of agent for service) Copy to: Mike Radmer, Esq. Dorsey & Whitney Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498 Registrant's telephone number, including area code: (612) 334-5888 Date of fiscal year end: June 30, 2003 Date of reporting period: December 31, 2003 Item 1: Reports to Stockholders UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR ---------- CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-03343 --------- Sit Large Cap Growth Fund, Inc. (Exact name of registrant as specified in charter) 4600 Wells Fargo Center 90 South Seventh Street Minneapolis, Mn 55402 (Address of principal executive offices) Paul E. Rasmussen, VP Treasurer Sit Mutual Funds, Inc. 4600 Wells Fargo Center 90 South Seventh Street Minneapolis, Mn 55402 (Name and address of agent for service) Copy to: Mike Radmer, Esq. Dorsey & Whitney Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498 Registrant's telephone number, including area code: (612) 334-5888 Date of fiscal year end: June 30, 2003 Date of reporting period: December 31, 2003 Item 1: Reports to Stockholders UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR ---------- CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-03342 --------- Sit Mid Cap Growth Fund, Inc. (Exact name of registrant as specified in charter) 4600 Wells Fargo Center 90 South Seventh Street Minneapolis, Mn 55402 (Address of principal executive offices) Paul E. Rasmussen, VP Treasurer Sit Mutual Funds, Inc. 4600 Wells Fargo Center 90 South Seventh Street Minneapolis, Mn 55402 (Name and address of agent for service) Copy to: Mike Radmer, Esq. Dorsey & Whitney Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498 Registrant's telephone number, including area code: (612) 334-5888 Date of fiscal year end: June 30, 2003 Date of reporting period: December 31, 2003 Item 1: Reports to Stockholders SIT MUTUAL FUNDS STOCK FUNDS SEMI-ANNUAL REPORT SIX MONTHS ENDED DECEMBER 31, 2003 A FAMILY OF NO-LOAD FUNDS ------------------------- BALANCED FUND LARGE CAP GROWTH FUND MID CAP GROWTH FUND INTERNATIONAL GROWTH FUND SMALL CAP GROWTH FUND SCIENCE AND TECHNOLOGY GROWTH FUND DEVELOPING MARKETS GROWTH FUND [LOGO] SIT INVESTMENT ASSOCIATES ------------------------- SIT MUTUAL FUNDS SIT MUTUAL FUNDS STOCK FUNDS SEMI-ANNUAL REPORT TABLE OF CONTENTS PAGE Chairman's Letter 2 Performance Summary and Stock Funds Market Review 4 Average Annual Total Returns 6 - -------------------------------------------------------------------------------- FUND REVIEWS AND PORTFOLIOS OF INVESTMENTS - -------------------------------------------------------------------------------- Balanced Fund 8 Large Cap Growth Fund 14 Mid Cap Growth Fund 18 International Growth Fund 22 Small Cap Growth Fund 28 Science and Technology Growth Fund 32 Developing Markets Growth Fund 36 Notes to Portfolios of Investments 40 Statements of Assets and Liabilities 42 Statements of Operations 44 Statements of Changes in Net Assets 46 Notes to Financial Statements 49 Financial Highlights 54 Results of Shareholder Meeting 62 1 SIT MUTUAL FUNDS [PHOTO] SIX MONTHS ENDED DECEMBER 31, 2003 ------------------------------------------------------------------------ CHAIRMAN'S LETTER Dear Fellow Shareholders: Following a volatile period in early 2003, domestic equities surged over the final nine months to post solid gains for the year. With increasing signs that the economy is on a sustainable upswing, we remain positive on the investment outlook for the year ahead. ECONOMIC OVERVIEW The U.S. economy, as measured by the Gross Domestic Product (GDP), grew by +3.1% in 2003. Growth was particularly strong during the second half, largely due to the powerful impact of monetary and fiscal stimuli put in place over the last couple of years, along with the waning of geopolitical concerns. Importantly, there have been increasing signs that a broad recovery is taking place throughout the world and, importantly, is leading to a resurgence in capital spending by corporations. We believe the economic momentum established in late-2003 will carry into 2004, driven by steady personal income gains (which will benefit in the first half of 2004 from the further impact of tax reductions), inventory rebuilding, accelerating capital spending, ongoing strength in housing, and steady growth in government expenditures. Even trends in net exports, which have been a consistent drag on the economy for many years, are slowly improving, largely due to weakness in the U.S. dollar. While there has been lingering concern over the pace of the recovery in U.S. employment, as evidenced by the weak nonfarm payroll figures for December, we believe that the jobs picture will improve markedly in 2004. Job trends in the so-called household survey are already in a strong uptrend, and initial unemployment claims have been trending down since mid-2003. In addition, government employment surveys have historically understated job gains at the start of recoveries, simply due to the fact that these surveys often miss the pick up in new business formation at the beginning of a recovery. In short, we believe that an imminent improvement in job creation will further support consumer spending, and is a primary factor in our optimistic outlook for +4.5% to +5.0% GDP growth in 2004. Although this strong rate of growth will eventually raise inflation fears, recent trends in the Consumer Price Index (CPI) have been surprisingly quiescent. While the CPI rose to +2.3% in 2003, up from +1.6% in 2002, recent monthly year-over-year have shown deceleration, which is somewhat surprising given the significant economic rebound underway. Because of this lack of current inflationary pressure and the lingering concerns about the labor market, the Federal Reserve is unlikely to raise short-term interest rates in the near- term. Market interest rates, however, will likely trend gradually upward as anticipation of Federal Reserve action grows. In terms of fiscal policy, the federal budget deficit is likely to grow further in the coming year, with some estimates exceeding $500 billion. Although no major tax initiatives appear to be on the way in 2004, the President's State of the Union address included comments urging Congress to make permanent the tax cuts put in place over the past three years. We believe the upcoming presidential election will bring greater attention to the severe deterioration in the country's fiscal situation. With the recent passage of a bill that greatly expands Medicare expenditures, perhaps costing $410 billion over ten years, it remains quite clear that the U.S. economy must grow at a robust pace over the next several years to turn the deficit around. EQUITY STRATEGY SUMMARY After three straight years of negative stock returns, investors were rewarded handsomely with broad-based and substantial gains in 2003. Improving economic fundamentals, accelerating corporate profits, and steadily improving investor psychology supported the strong market performance. 2 - -----------------------------------------------------------------------[GRAPHIC] Although returns for the year ahead will probably be somewhat less robust than in 2003, we remain optimistic on the prospects for the equity market for three key reasons. First, investor sentiment remains very positive and, despite the negative headlines focusing on improprieties in the investment industry, billions of dollars have flowed into equity mutual funds in recent months. Second, we believe that corporate earnings growth will remain strong over the next several quarters, particularly in the most economically sensitive sectors of the economy. Third, while the market's advance has left stocks less undervalued than a year ago, we believe the relatively high equity market valuations (i.e., P/E ratios) can be sustained, based on our view that interest rates are unlikely to rise dramatically in the year ahead. In terms of sector positioning within portfolios, our forecast for strong economic growth argues for continued emphasis on companies most leveraged to the strengthening economy and, specifically, to rapidly-improving business capital spending trends. In this regard, over the past several months, we have been gradually increasing our sector allocations to such areas as electronic technology, technology services and capital goods. Looking ahead, we believe that the prospect of higher Federal Reserve interest rates, perhaps coinciding with signs of peaking in the current profits cycle, may result in a shift in strategy sometime in 2004. In this type of environment, which has historically been very positive for relative performance of the growth style (vs. value), our emphasis may involve shifting from economically-sensitive companies to more stable, consistent growth companies in such areas as health care, consumer nondurables, growth retailers and technology services. The timing of this shift cannot be precisely pinpointed, but we are continuously monitoring the events that may lead to these incremental strategy adjustments over time. While the environment remains attractive for many of the same groups that led the market higher in 2003, we do not foresee continued market leadership from some of the more speculative segments of the market. Over the past twelve months, the stocks of companies with solid earnings, balance sheets, and dividends have often trailed the performance of companies with weaker long-term fundamentals. With market valuations now higher and interest rates likely to trend upward as the economic expansion continues, we believe investors will place a greater emphasis on higher quality stocks with long-term earnings and dividend growth potential. The investment environment remains favorable in many regions outside the U.S., as well. Economic activity has visibly improved throughout the world, particularly in Asia, as surging growth in China continues to be the growth engine for the entire region. We have continued to maintain an overweighted allocation to Asia and have added to our weighting in Japan due to signs of improving economic growth and progress on key reforms. Although most European economies appear to be slowly rebounding, we continue to maintain an underweighted allocation to the region, as the slow implementation of reforms, along with a weak U.S. dollar versus the euro, may serve to undermine growth prospects in the near-to-intermediate term. With best wishes, /s/ Eugene C. Sit, CFA Eugene C. Sit, CFA Chairman and Chief Investment Officer 3 SIT MUTUAL FUNDS SIX MONTHS ENDED DECEMBER 31, 2003 - -------------------------------------------------------------------------------- PERFORMANCE SUMMARY AND STOCK FUNDS MARKET REVIEW Domestic equity returns were strong across-the-board over the past six months, with virtually every major index we monitor posting double-digit gains. Small and mid-capitalization stocks continued their strong performance relative to larger issues. For the second half of 2004, the S&P 400 MidCap Index and the Russell 2000 Index rose +20.64% and +24.92%, respectively, while the S&P 500 Index gained +15.14%. In fact, 2003 marked the fourth consecutive year that the Russell 2000 Index outperformed the S&P 500 Index. Although growth stocks outperformed value issues in the first half of 2003, growth lagged value over the last six months across all capitalization styles. For example, the Russell 1000 Growth Index rose +14.75% over the period, while the Russell 1000 Value gained +16.55%, and the Russell 2000 Value Index (+25.35% for the period) edged the Russell 2000 Growth (+24.48%) by +0.90%. In terms of sector performance, all groups within the S&P 500 Index posted gains in the second half of the year, although the strongest performing sectors tended to be those most linked to the recovering economy. Within the S&P 500 Index, the strongest sectors included electronic technology, consumer durables, producer manufacturing, and non-energy minerals. We estimate that each of these sectors rose 20% or more during the period. The relatively weaker groups included less cyclical areas such as health technology (+2%), utilities (+7%), and communications (+3%). In general, this same trend (i.e., cyclicals outperforming non-cyclicals) also took place in the smaller cap Russell 2000 Index. The strong performance of the technology sector was the primary factor driving the tech-laden NASDAQ OTC Composite Index, which gained +23.45% over the six-month period. Despite achieving strong absolute returns in 2003, the broad U.S. stock market fared poorly in international comparisons, in part due to the relative weakness of the U.S. dollar. The MSCI World Index gained +19.79% over the six-month period, with the U.S. component up only +14.85%. The MSCI Europe Index increased +25.07% over the period. The MSCI Pacific Index rose 30.44%, led by the heavily-weighted Japan component, which increased +32.05%. 1991 1992 1993 SIT BALANCED -- -- -- - -------------------------------------------------------------------------------- SIT LARGE CAP GROWTH 32.72% 4.94% 3.15% - -------------------------------------------------------------------------------- SIT MID CAP GROWTH(1) 65.50 -2.14 8.55 - -------------------------------------------------------------------------------- SIT INTERNATIONAL GROWTH(2) 4.10(4) 2.69 48.37 - -------------------------------------------------------------------------------- SIT SMALL CAP GROWTH(1) -- -- -- - -------------------------------------------------------------------------------- SIT SCIENCE AND TECHNOLOGY GROWTH(3) -- -- -- - -------------------------------------------------------------------------------- SIT DEVELOPING MARKETS GROWTH(2) -- -- -- - -------------------------------------------------------------------------------- S&P 500 INDEX 30.46 7.64 10.07 S&P MIDCAP 400 INDEX 50.11 11.92 13.95 MSCI EAFE INDEX 0.26(5) -12.17 32.56 RUSSELL 2000 INDEX -- -- -- MSCI EMERGING MARKETS FREE INDEX -- -- -- NASDAQ SYMBOL INCEPTION ------ --------- SIT BALANCED SIBAX 12/31/93 - -------------------------------------------------------------------------------- SIT LARGE CAP GROWTH SNIGX 09/02/82 - -------------------------------------------------------------------------------- SIT MID CAP GROWTH NBNGX 09/02/82 - -------------------------------------------------------------------------------- SIT INTERNATIONAL GROWTH SNGRX 11/01/91 - -------------------------------------------------------------------------------- SIT SMALL CAP GROWTH SSMGX 07/01/94 - -------------------------------------------------------------------------------- SIT SCIENCE AND TECHNOLOGY GROWTH SISTX 12/31/97 - -------------------------------------------------------------------------------- SIT DEVELOPING MARKETS GROWTH SDMGX 07/01/94 - -------------------------------------------------------------------------------- S&P 500 INDEX(5) S&P MIDCAP 400 INDEX(5) MSCI EAFE INDEX (6) RUSSELL 2000 INDEX (7) MSCI EMERGING MARKETS FREE INDEX (8) (1) STOCKS OF SMALL- AND MID-SIZED COMPANIES MAY BE SUBJECT TO MORE ABRUPT OR ERRATIC MARKET MOVEMENTS THAN STOCKS OF LARGER, MORE ESTABLISHED COMPANIES. (2) INTERNATIONAL INVESTING HAS SPECIAL RISKS, SUCH AS CURRENCY EXCHANGE FLUCTUATIONS, HIGH VOLITILITY, ILLIQUIDITY AND THE POSSIBILITY OF POLITICAL INSTABILITY. (3) SINCE THE FUND FOCUSES ITS INVESTMENT ON COMPANIES INVOLVED IN THE TECHNOLOGY SECTOR, AN INVESTMENT IN THE FUND MAY INVOLVE A GREATER DEGREE OF RISK THAN AN INVESTMENT IN OTHER MUTUAL FUNDS WITH GREATER DIVERSIFICATION. (4) PERIOD FROM FUND INCEPTION THROUGH CALENDAR YEAR-END. 4 - -----------------------------------------------------------------------[GRAPHIC]
TOTAL RETURN - CALENDAR YEAR - --------------------------------------------------------------------------------------------- YTD 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 - ------------------------------------------------------------------------------------------------------ -0.33% 25.43% 15.80% 21.73% 21.30% 20.15% -4.80% -12.99% -18.59% 19.20% - ------------------------------------------------------------------------------------------------------ 2.83 31.66 23.05 31.70 30.56 33.41 -13.84 -27.70 -30.58 26.34 - ------------------------------------------------------------------------------------------------------ -0.47 33.64 21.87 17.70 6.84 70.65 -4.35 -33.39 -34.64 38.51 - ------------------------------------------------------------------------------------------------------ -2.99 9.36 10.31 4.81 18.95 50.77 -26.66 -33.26 -29.84 28.70 - ------------------------------------------------------------------------------------------------------ 11.57(4) 52.16 14.97 7.63 1.97 108.63 6.25 -28.19 -26.22 34.57 - ------------------------------------------------------------------------------------------------------ -- -- -- -- 38.40 85.98 -6.55 -47.78 -44.45 40.09 - ------------------------------------------------------------------------------------------------------ - -2.02(4) -4.29 17.27 -5.20 -24.93 82.50 -30.18 -12.01 -18.37 45.96 - ------------------------------------------------------------------------------------------------------ 1.32 37.58 22.96 33.36 28.58 21.04 -9.11 -11.88 -22.10 28.68 -3.60 30.94 19.19 32.29 19.11 14.72 17.50 -0.61 -14.52 35.62 7.78 11.21 6.05 1.78 20.00 26.96 -14.17 -21.44 -15.94 38.59 4.61 28.45 16.49 22.36 -2.54 21.26 -3.02 2.49 -20.48 47.25 2.80 -6.94 3.92 -13.40 -27.52 63.70 -31.80 -4.91 -7.97 51.59
AVERAGE ANNUAL TOTAL RETURNS FOR THE - ------------------------------ PERIODS ENDED DECEMBER 31, 2003 TOTAL RETURN -------------------------------------------------------------- QUARTER SIX MONTHS SINCE ENDED 12/31/03 ENDED 12/31/03 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION - ------------------------------ -------------------------------------------------------------- 6.91% 8.73% 19.20% -5.49% -0.70% 7.51% 7.51% - ------------------------------------------------------------------------------------------------------ 9.50 12.30 26.34 -14.09 -6.13 7.64 11.12 - ------------------------------------------------------------------------------------------------------ 10.77 17.37 38.51 -15.52 -0.32 7.21 13.61 - ------------------------------------------------------------------------------------------------------ 14.24 20.20 28.70 -15.54 -7.80 -0.28 3.62 - ------------------------------------------------------------------------------------------------------ 10.02 15.67 34.57 -10.66 9.59 -- 13.69 - ------------------------------------------------------------------------------------------------------ 11.02 17.64 40.09 -25.93 -6.72 -- -0.38 - ------------------------------------------------------------------------------------------------------ 15.31 27.81 45.96 1.59 5.96 -- 0.47 - ------------------------------------------------------------------------------------------------------ 12.18 15.14 28.68 -4.05 -0.57 11.06 14.09 13.19 20.64 35.62 4.84 9.21 13.92 16.64 17.08 26.59 38.59 -2.91 -0.05 4.47 4.98 14.52 24.92 47.25 6.27 7.13 -- 10.72 17.25 33.09 51.59 9.88 8.17 -- -0.83
(5) FIGURES ASSUME AN INCEPTION DATE OF 09/02/82. (6) FIGURES ASSUME AN INCEPTION DATE OF 10/31/91. (7) FIGURES ASSUME AN INCEPTION DATE OF 07/01/94. (8) FIGURES ASSUME AN INCEPTION DATE OF 06/30/94. 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. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. 5 SIT MUTUAL FUNDS - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2003 The tables on this page and the next page show the Funds' average annual total returns (before and after taxes) and the change in value of a broad-based market index over various periods ended December 31, 2003. The index information is intended to permit you to compare each Fund's performance to a broad measure of market performance. The after-tax returns are intended to show the impact of federal income taxes on an investment in a Fund. The highest individual federal marginal income tax rate in effect during the specified period are assumed, and the state and local tax impact is not reflected. A Fund's "Return After Taxes on Distributions" shows the effect of taxable distributions (dividends and capital gain distributions), but assumes that you still hold the fund shares at the end of the period and so do not have any taxable gain or loss on your investment in the Fund. A Fund's "Return After Taxes on Distributions and Sale of Fund Shares" shows the effect of both taxable distributions and any taxable gain or loss that would be realized if the Fund shares were purchased at the beginning and sold at the end of the specified period. The Funds' past performance, before and after taxes, is not an indication of how the Funds will perform in the future. Your actual after-tax returns depend on your own tax situation and may differ from those shown. After-tax returns reflect past tax effects and are not predictive of future tax effects. After-tax returns are not relevant to investors who hold their Fund shares in a tax-deferred account (including a 401(k) or IRA account). Indices reflect no deduction for fees, expenses, or taxes.
SIT BALANCED FUND 1 YEAR 5 YEARS 10 YEARS Return Before Taxes 19.2% -0.7% 7.5% Return After Taxes on Distributions 18.6% -1.8% 6.1% Return After Taxes on Distributions and Sale of Fund Shares 16.0% -1.1% 5.8% Lehman Aggregate Bond Index 4.1% 6.6% 7.0% S&P 500 Index 28.7% -0.6% 11.1% SIT LARGE CAP GROWTH FUND 1 YEAR 5 YEARS 10 YEARS Return Before Taxes 26.3% -6.1% 7.6% Return After Taxes on Distributions 26.3% -6.7% 6.3% Return After Taxes on Distributions and Sale of Fund Shares 22.4% -5.0% 6.3% S&P 500 Index 28.7% -0.6% 11.1% SIT MID CAP GROWTH FUND 1 YEAR 5 YEARS 10 YEARS Return Before Taxes 38.5% -0.3% 7.2% Return After Taxes on Distributions 38.5% -1.4% 4.9% Return After Taxes on Distributions and Sale of Fund Shares 32.7% -0.1% 5.6% S&P MidCap 500 Index 35.6% 9.2% 13.9%
6 - -----------------------------------------------------------------------[GRAPHIC]
SIT INTERNATIONAL GROWTH FUND 1 YEAR 5 YEARS 10 YEARS Return Before Taxes 28.7% -7.8% -0.3% Return After Taxes on Distributions 28.6% -8.2% -1.0% Return After Taxes on Distributions and Sale of Fund Shares 24.4% -6.4% -0.4% MSCI EAFE Index 38.6% -0.1% 4.5% SIT SMALL CAP GROWTH FUND 1 YEAR 5 YEARS SINCE INCEPTION* Return Before Taxes 34.6% 9.6% 13.7% Return After Taxes on Distributions 34.6% 9.5% 12.9% Return After Taxes on Distributions and Sale of Fund Shares 29.4% 8.4% 11.9% Russell 2000 Index 47.3% 7.1% 10.7% *Inception date 7/1/94 SIT SCIENCE AND TECHNOLOGY GROWTH FUND 1 YEAR 5 YEARS SINCE INCEPTION* Return Before Taxes 40.1% -6.7% -0.4% Return After Taxes on Distributions 40.1% -6.8% -0.5% Return After Taxes on Distributions and Sale of Fund Shares 34.1% -5.5% -0.2% S&P 500 Index 28.7% -0.6% 3.8% *Inception date 12/31/97 SIT DEVELOPING MARKETS GROWTH FUND 1 YEAR 5 YEARS SINCE INCEPTION* Return Before Taxes 46.0% 6.0% 0.5% Return After Taxes on Distributions 45.8% 5.9% 0.4% Return After Taxes on Distributions and Sale of Fund Shares 39.1% 5.2% 0.4% MSCI Emerging Markets Free Index 51.6% 8.2% -0.8% *Inception date 7/1/94
7 SIT BALANCED FUND SIX MONTHS ENDED DECEMBER 31, 2003 [PHOTO] ------------------------------------------------------------------------ PETER L. MITCHELSON, CFA, SENIOR PORTFOLIO MANAGER BRYCE A. DOTY , CFA, SENIOR PORTFOLIO MANAGER The Sit Balanced Fund's six-month return was +8.73%, largely reflecting strong equity markets during the second half of the year. The S&P 500 Index return was +15.14%, while the Lehman Aggregate Bond Index increased +0.17%. STOCKS SHOW STRONG GAINS Following the conclusion of the Iraqi war and a subsequent jump in stock prices in the second quarter of 2003, U.S. stocks continued their advance during the second half of the year, as economic momentum fueled significantly greater investor confidence. While equity valuations and expectations are clearly elevated from the depressed levels in early 2003, we believe that economic strength will translate into continued corporate profit gains. These gains should be significant enough to drive stock prices higher in the year ahead, even if valuations (i.e., P/E ratios) are constrained due to an expected up-tick in interest rates. Over the past six months, the equity portion of the Fund benefited from strong returns in the communications and electronic technology sectors, while the finance and health technology sectors detracted from performance. FIXED-INCOME STRATEGY: PLAYING DEFENSE We believe that as long as inflation remains subdued, the Federal Reserve is unlikely to raise interest rates as aggressively as they have in the past at this point in the economic cycle. The prospect for higher interest rates at some point, however, has led us to a "defensive" tilt within the fixed-income portion of the Fund. We continue to maintain relatively short durations, emphasizing corporate and mortgage-backed securities, while under-weighting U.S. Treasuries. CONTINUING SHIFT TOWARD EQUITIES As of December 31, 2003, the asset allocation of the Fund was 64% equities (up from 61% on June 30, 2003), 33% fixed-income (down from 38%), and 3% cash and other net assets (up from 1%). We will continue to emphasize high-quality securities in each asset class within the Fund. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND STRATEGY - -------------------------------------------------------------------------------- The Sit Balanced Fund's dual objectives are to seek long-term growth of capital consistent with the preservation of principal and to provide regular income. It pursues its objectives by investing in a diversified portfolio of stocks and bonds. The Fund may emphasize either equity securities or fixed-income securities, or hold equal amounts of each, dependent upon the Adviser's analysis of market, financial and economic conditions. The Fund's permissible investment allocation is: 35-65% in equity securities and 35-65% in fixed-income securities. At all times at least 25% of the fixed-income assets will be invested in fixed-income senior securities. - -------------------------------------------------------------------------------- PORTFOLIO SUMMARY - -------------------------------------------------------------------------------- Net Asset Value 12/31/03: $13.38 Per Share 6/30/03: $12.47 Per Share Total Net Assets: $17.4 Million TOTAL DIVIDEND: $0.17 PER SHARE Ordinary Income: $0.17 Per Share - -------------------------------------------------------------------------------- PORTFOLIO STRUCTURE (% OF TOTAL NET ASSETS) - -------------------------------------------------------------------------------- [PIE CHART] Cash & Other Net Assets 3.3% Bonds 33.2% Equities 63.5% 8 - -----------------------------------------------------------------------[GRAPHIC] - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT LEHMAN BALANCED S&P AGGREGATE FUND 500 INDEX BOND INDEX ---- --------- ---------- 3 Month** 6.91% 12.18% 0.32% 6 Month** 8.73 15.14 0.17 1 Year 19.20 28.68 4.10 3 Years -0.70 -0.57 6.62 5 Years 7.51 11.06 6.94 Inception 7.51 11.06 6.94 (12/31/93) - -------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT LEHMAN BALANCED S&P AGGREGATE FUND 500 INDEX BOND INDEX ---- --------- ---------- 1 Year 19.20% 28.68% 4.10% 5 Years -3.43 -2.82 37.80 10 Years 106.44 185.61 95.76 Inception 106.44 185.61 95.76 (12/31/93) *AS OF 12/31/03 **NOT ANNUALIZED. - -------------------------------------------------------------------------------- PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE; HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE LEHMAN AGGREGATE BOND INDEX AND THE S&P 500 INDEX. LIPPER AVERAGES AND INDICES ARE OBTAINED FROM LIPPER ANALYTICAL SERVICES, INC., A LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS. - -------------------------------------------------------------------------------- GROWTH OF $10,000 - -------------------------------------------------------------------------------- [LINE GRAPH] The sum of $10,000 invested at inception (12/31/93) and held until 12/31/03 would have grown to $20,644 in the Fund, $19,576 in the Lehman Aggregate Bond Index or $28,561 in the S&P 500 Index assuming reinvestment of all dividends and capital gains. - -------------------------------------------------------------------------------- TOP HOLDINGS - -------------------------------------------------------------------------------- Stocks * Citigroup, Inc. * Cisco Systems, Inc. * Microsoft Corp. * Amgen, Inc. * General Electric Co. Bonds * Sunamerica, Inc. (AIG), 8.125%, 4/28/23 * CA Rural Home Mtg. Fin. Auth., 5.25%, 12/1/24 * US Treasury Note, 1.625%, 1/31/05 * GNMA,7.00%, 7/15/23 * Northwest Airlines Corp.,8.07%, 10/1/19 Total Number of Holdings: 145 9 SIT BALANCED FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - December 31, 2003 (Unaudited) - -------------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- COMMON STOCKS (63.5%) (2) COMMERCIAL SERVICES (0.9%) 1,200 Omnicom Group, Inc. 104,796 1,400 SYSCO Corp. 52,122 -------------- 156,918 -------------- COMMUNICATIONS (2.6%) 14,200 AT&T Wireless Services, Inc. (3) 113,458 3,000 Nextel Communications, Inc. (3) 84,180 10,600 Sprint Corp. (3) 59,572 7,600 Vodafone Group, A.D.R. 190,304 -------------- 447,514 -------------- CONSUMER DURABLES (1.1%) 2,200 Electronic Arts, Inc. (3) 105,116 1,800 Harley-Davidson, Inc. 85,554 -------------- 190,670 -------------- CONSUMER NON-DURABLES (2.5%) 4,600 PepsiCo, Inc. 214,452 2,300 The Procter & Gamble Co. 229,724 -------------- 444,176 -------------- CONSUMER SERVICES (3.7%) 6,700 Time Warner, Inc. (3) 120,533 3,400 Comcast Corp. (3) 111,758 2,000 Harrah's Entertainment, Inc. (3) 99,540 10,160 Liberty Media Group (3) 120,802 4,500 Viacom, Inc. (3) 199,710 -------------- 652,343 -------------- ELECTRONIC TECHNOLOGY (10.8%) 5,800 Analog Devices, Inc. 264,770 7,400 Applied Materials, Inc. (3) 166,130 15,600 Cisco Systems, Inc. (3) 378,924 6,300 Dell Computer Corp. (3) 213,948 9,400 EMC Corp. (3) 121,448 1,000 Hewlett-Packard Co. 22,970 8,100 Intel Corp. 260,820 4,000 Jabil Circuit, Inc. (3) 113,200 2,400 Linear Technology Corp. 100,968 6,200 Nokia Corp., A.D.R. 105,400 2,500 Qualcomm, Inc. 134,825 -------------- 1,883,403 -------------- ENERGY MINERALS (3.0%) 1,800 ConocoPhillips Co. 118,026 1,600 Murphy Oil Corp. 104,496 3,200 Occidental Petroleum Corp. 135,168 2,200 Suncor Energy, Inc. 55,132 2,800 Unocal Corp. 103,124 -------------- 515,946 -------------- - -------------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- FINANCE (9.6%) 4,600 ACE, Ltd. 190,532 3,921 American International Group, Inc. 259,884 8,366 Citigroup, Inc. 406,086 2,400 Franklin Resources, Inc. 124,944 1,800 Goldman Sachs Group, Inc. 177,714 3,000 J.P. Morgan Chase & Co. 110,190 200 Legg Mason, Inc. 15,436 1,800 Marsh & McLennan Cos., Inc. 86,202 4,000 Wells Fargo Co. 235,560 800 XL Capital, Ltd. 62,040 -------------- 1,668,588 -------------- HEALTH SERVICES (1.5%) 4,400 UnitedHealth Group, Inc. 255,992 -------------- HEALTH TECHNOLOGY (9.5%) 5,600 Amgen, Inc. (3) 346,080 2,800 Bristol-Myers Squibb Co. 80,080 3,400 Boston Scientific Corp. (3) 124,984 10,400 Elan Corp., A.D.R. (3) 71,656 1,600 Eli Lilly and Co. 112,528 1,200 Genentech, Inc. (3) 112,284 800 Gilead Sciences, Inc. (3) 46,512 2,000 Johnson & Johnson 103,320 1,600 MedImmune, Inc. (3) 40,640 1,800 Medtronic, Inc. 87,498 2,400 Merck & Co., Inc. 110,880 7,655 Pfizer, Inc. 270,451 2,700 Teva Pharmaceutical, Ltd., A.D.R. 153,117 -------------- 1,660,030 -------------- INDUSTRIAL SERVICES (0.8%) 400 Noble Corp. (3) 14,312 2,200 Schlumberger Ltd. 120,384 -------------- 134,696 -------------- PRODUCER MANUFACTURING (5.1%) 1,000 Danaher Corp. 91,750 1,000 Eaton Corp. 107,980 10,800 General Electric Co. 334,584 1,200 ITT Industries, Inc. 89,052 1,700 Lockheed Martin Corp. 87,380 2,000 3M Co. 170,060 -------------- 880,806 -------------- RETAIL TRADE (5.4%) 4,200 Best Buy Co., Inc. 219,408 800 eBay, Inc. (3) 51,672 1,600 Kohl's Corp. (3) 71,904 4,600 Lowe's Companies, Inc. 254,794 8,700 Target Corp. 334,080 -------------- 931,858 -------------- 10 - -----------------------------------------------------------------------[GRAPHIC] - -------------------------------------------------------------------------------- QUANTITY/PAR($) NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- TECHNOLOGY SERVICES (7.0%) 4,400 Adobe Systems, Inc. 172,920 3,850 Check Point Software Technology (3) 64,757 3,400 First Data Corp. 139,706 13,400 Microsoft Corp. 369,036 4,000 Oracle Corp. (3) 52,800 4,200 Symantec Corp. (3) 145,530 5,400 Veritas Software Corp. (3) 200,664 1,400 Yahoo!, Inc. (3) 63,238 -------------- 1,208,651 -------------- Total common stocks 11,031,591 -------------- (cost: $10,868,948) BONDS (30.7%) (2) ASSET-BACKED SECURITIES (4.3%) 190,562 Advanta Mortgage Loan Trust, 1999-3 A4, 7.75%, 10/25/26 199,897 85,305 Conseco Mfg. Housing Series 2002, 6.03%, 3/1/33 85,402 Green Tree Financial Corp.: 14,440 1995-5, 7.25%, 9/15/26 15,171 20,933 1997-4, 7.03%, 2/15/29 21,653 140,231 1999-4, 6.97%, 5/1/31 145,368 220,184 Green Tree Home Equity Loan Trust, 1999-D A5, 7.88%, 9/15/30 228,530 50,000 Origen Mfg. Housing Series 2001A, 7.08%, 3/15/32 52,630 -------------- 748,651 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS (0.1%) 7,092 Vendee Mortgage Trust, Series 1997-2 E, 7.50%, 5/15/24 7,155 -------------- CORPORATE BONDS (12.4%) Continental Airlines: 86,895 Series 2000-2 A1, 7.71%, 4/2/21 88,053 94,468 Series 2001-1B, 7.37%, 12/15/15 82,060 55,000 Conoco Philips, 8.125%, 2/15/30 70,138 92,000 Dow Capital BV, 8.70%, 5/15/22 94,799 95,000 Duke Realty LP, 7.375%, 9/22/05 103,347 100,000 El Paso Electric Co., 9.40%, 5/1/11 117,034 150,000 Everest Reins. Hldgs., 8.75%, 3/15/10 181,798 100,000 Exxon Mobil Co. (Seariver), zero coupon, 4.04% effective yield, 9/1/12 65,540 100,000 First Hawaiian Cap., 8.34%, 7/1/27 114,331 - -------------------------------------------------------------------------------- QUANTITY/PAR($) NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- 75,000 Ford Motor Credit Co., 9.14%, 12/30/14 78,579 50,000 General Electric Cap. Corp., 6.75%,3/15/32 55,356 100,000 General Motors Corp., Series 1991, 8.80%, 3/1/21 115,818 100,000 McDonald's Corp., 7.31%, 9/15/27 106,833 212,089 Northwest Airlines Corp., 8.07%, 10/1/19 233,093 100,000 Pacific Bell Corp., 7.25%, 11/1/27 106,531 151,780 Southwest Air Co., 7.67%, 1/2/14 175,413 200,000 Sunamerica, Inc. (AIG), 8.125%, 4/28/23 251,674 100,000 Susa Partnership LP, 7.50%, 12/1/27 116,087 -------------- 2,156,484 -------------- FEDERAL HOME LOAN MORTGAGE CORPORATION (1.2%) 72,252 8.38%, 5/17/20 78,687 99,724 8.50%, 10/1/30 107,547 6,269 9.00%, 7/1/16 6,962 21,037 9.00%, 7/1/16 23,362 -------------- 216,558 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION (4.6%) 43,714 7.00%, 3/1/07 44,903 184,838 7.00%, 10/1/11 197,494 61,064 7.50%, 6/1/32 65,737 61,466 8.00%, 7/1/26 66,850 87,440 8.46%, 4/15/26 96,987 61,128 9.00%, 6/1/27 68,107 88,926 9.50%, 5/1/27 99,093 28,608 9.75%, 1/15/13 31,681 3,020 10.00%, 1/1/20 3,381 74,524 10.00%, 7/1/26 83,602 34,481 10.25%, 6/15/13 38,437 -------------- 796,272 -------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (4.0%) 219,600 7.00%, 7/15/23 235,624 127,902 7.50%, 7/15/23 137,998 7,139 9.00%, 6/15/11 8,064 22,743 9.00%, 6/15/09 24,979 37,660 9.00%, 11/15/16 42,057 61 9.50%, 1/15/04 62 2,768 9.50%, 11/15/04 2,839 6,083 9.50%, 7/20/05 6,385 3,896 9.50%, 5/20/16 4,338 79,501 9.50%, 9/15/30 88,976 59,758 9.50%, 3/15/18 66,927 17,272 9.50%, 9/20/18 19,258 13,823 9.50%, 2/20/19 15,399 11,332 9.75%, 10/15/05 11,963 29,855 10.00%, 3/20/16 33,280 3,859 11.25%, 10/15/11 4,422 -------------- 702,571 -------------- See accompanying notes to portfolios of investments on page 40. 11 SIT BALANCED FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - December 31, 2003 (Unaudited) - -------------------------------------------------------------------------------- QUANTITY/PAR($) NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- TAXABLE MUNICIPAL SECURITIES (1.9%) 10,000 Bernalillo Multifamily. Series 1998A, 7.50%, 9/20/20 11,003 249,000 CA Rural Home Mtg. Fin. Auth. Rev. Series 2003A, 5.25%, 12/1/24 251,652 66,878 Tobacco Settlement Series 2001A, 7.67%, 5/15/16 66,763 -------------- 329,418 -------------- U.S. GOVERNMENT SECURITIES (2.2%) U.S. Treasury Bond, 5.50%, 8/15/28 50,000 5.50%, 8/15/28 52,080 50,000 5.375%, 2/15/31 52,143 100,000 U.S. Treasury Strip, Zero Coupon, 5.64% Effective Yield, 11/15/27 26,942 250,000 U.S. Treasury Note, 1.625%, 1/31/05 250,967 -------------- 382,132 -------------- Total bonds 5,339,241 -------------- (cost: $5,242,509) CLOSED-END MUTUAL FUNDS (2.5%) (2) 6,009 American Select Portfolio 84,066 403 American Strategic, Inc. Portfolio 5,307 15,470 American Strategic, Inc. Portfolio II 215,961 10,609 American Strategic, Inc. Portfolio III 137,493 -------------- Total closed-end mutual funds 442,827 -------------- (cost: $368,185) SHORT-TERM SECURITIES (2.7%) (2) 461,000 Sit Money Market Fund, 0.58% (4) 461,000 -------------- (cost: $461,000) Total investments in securities (cost: $16,940,642) (5) $17,274,659 ============== See accompanying notes to portfolios of investments on page 40. 12 - -----------------------------------------------------------------------[GRAPHIC] This page has been left blank intentionally. 13 SIT LARGE CAP GROWTH FUND SIX MONTHS ENDED DECEMBER 31, 2003 [PHOTO] ------------------------------------------------------------------------ SENIOR PORTFOLIO MANAGERS PETER L. MITCHELSON, CFA * ROGER J. SIT * RONALD D. SIT, CFA The Sit Large Cap Growth Fund's six-month return was +12.30%, compared to the +15.14% return for the S&P 500 Index (the "Index"). DRAMATIC MARKET CHANGE FOR THE BETTER Investors were rewarded for their patience in 2003, as the rally that began last spring proved to be sustainable for the balance of the year. Economic activity accelerated sharply during the second half of the year, corporate earnings came on strong, and investor sentiment turned decidedly positive. We believe fundamentals are in place for momentum in the economy in 2004. Business and consumer confidence is rising, interest rates remain low, and strengthening corporate profitability should contribute to improved labor market conditions as the year progresses. While stock prices have clearly reflected some of this optimism, we believe that there is more room to go. Although valuations (i.e., P/E ratios) are unlikely to advance this year as much as they did in 2003, corporate earnings growth should still propel stock prices higher. SOLID RETURNS FROM TECHNOLOGY While the absolute return for the Fund was strong in 2003, an overweight position in the health technology sector caused us to lag the Index over the six-month period as investors moved to more economically sensitive sectors. Conversely, the Fund benefited from strong stock selection in the communications sector and an overweight position in the electronic technology sector. A BETTER ENVIRONMENT FOR LARGE COMPANIES Large stocks continued to lag smaller issues over the period, but we believe that the stage is set for stronger large cap relative performance for two key reasons. First, after five reasonably strong years, smaller stocks are no longer as undervalued relative to larger issues. Second, the weak U.S. dollar, combined with improving economic conditions outside the U.S., suggests that large multinational companies will show stronger earnings growth in 2004. Current holdings such as American International Group, General Electric, Medtronic, Microsoft, and 3M all stand to benefit. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND STRATEGY - -------------------------------------------------------------------------------- The objective of the Large Cap Growth Fund is to maximize long-term capital appreciation. The Fund pursues this objective by investing at least 80% of its net assets in the common stocks of domestic growth companies with capitalizations of $5 billion or more at the time of purchase. - -------------------------------------------------------------------------------- PORTFOLIO SUMMARY - -------------------------------------------------------------------------------- Net Asset Value 12/31/03: $30.21 Per Share 6/30/03: $26.92 Per Share Total Net Assets: $61.9 Million Weighted Average Market Cap: $85.8 Billion - -------------------------------------------------------------------------------- PORTFOLIO STRUCTURE - BY SECTOR (% OF TOTAL NET ASSETS) - -------------------------------------------------------------------------------- [BAR CHART] Electronic Technology 16.6 Health Technology 16.0 Finance 13.3 Technology Services 11.1 Retail Trade 8.1 Producer Manufacturing 7.6 Consumer Services 6.0 Sectors less than 5.0% 21.0 Cash & Other Net Assets 0.3 14 - -----------------------------------------------------------------------[GRAPHIC] - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT RUSSELL LARGE CAP S&P 1000 GROWTH FUND 500 INDEX GROWTH INDEX ----------- --------- ------------ 3 Month** 9.50% 12.18% 10.42% 6 Month** 12.30 15.14 14.75 1 Year 26.34 28.68 29.76 5 Years -6.13 -0.57 -5.11 10 Year 7.64 11.06 9.21 Inception*** 11.12 14.09 12.67 (9/2/82) - -------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT RUSSELL LARGE CAP S&P 1000 GROWTH FUND 500 INDEX GROWTH INDEX ----------- --------- ------------ 1 Year 26.34% 28.68% 29.76% 5 Year -27.11 -2.82 -23.08 10 Year 108.78 185.61 141.40 Inception*** 848.78 1566.56 1176.25 (9/2/82) *AS OF 12/31/03 **NOT ANNUALIZED. - -------------------------------------------------------------------------------- PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE; HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE RUSSELL 1000 GROWTH INDEX AND THE S&P 500 INDEX. ***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. - -------------------------------------------------------------------------------- GROWTH OF $10,000 - -------------------------------------------------------------------------------- [LINE GRAPH] The sum of $10,000 invested at inception (9/2/82) and held until 12/31/03 would have grown to $94,878 in the Fund or $166,656 in the S&P 500 Index assuming reinvestment of all dividends and capital gains. - -------------------------------------------------------------------------------- TOP 10 HOLDINGS - -------------------------------------------------------------------------------- * Amgen, Inc. * Citigroup, Inc. * Microsoft Corp. * General Electric Co. * Target Corp. * Pfizer, Inc. * Cisco Systems, Inc. * Intel Corp. * Analog Devices, Inc. * Lowe's Companies, Inc. Total Number of Holdings: 77 15 SIT LARGE CAP GROWTH FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2003 (UNAUDITED) - ---------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - ---------------------------------------------------------------------------- COMMON STOCKS (99.7%) (2) COMMERCIAL SERVICES (2.1%) 6,500 Omnicom Group, Inc. 567,645 19,600 SYSCO Corp. 729,708 ------------- 1,297,353 ------------- COMMUNICATIONS (4.2%) 83,500 AT&T Wireless Services, Inc. (3) 667,165 17,500 Nextel Communications, Inc. (3) 491,050 60,000 Sprint Corp. (3) 337,200 43,200 Vodafone Group, A.D.R. 1,081,728 ------------- 2,577,143 ------------- CONSUMER DURABLES (1.8%) 12,000 Electronic Arts, Inc. (3) 573,360 10,900 Harley-Davidson, Inc. 518,077 ------------- 1,091,437 ------------- CONSUMER NON-DURABLES (4.1%) 26,000 PepsiCo, Inc. 1,212,120 13,250 Procter & Gamble Co. 1,323,410 ------------- 2,535,530 ------------- CONSUMER SERVICES (6.0%) 19,500 Comcast Corp. (3) 640,965 11,500 Harrah's Entertainment, Inc. 572,355 57,304 Liberty Media Corp. (3) 681,345 39,400 Time Warner, Inc. (3) 708,806 24,977 Viacom, Inc. 1,108,479 ------------- 3,711,950 ------------- ELECTRONIC TECHNOLOGY (16.6%) 33,000 Analog Devices, Inc. 1,506,450 40,500 Applied Materials, Inc. (3) 909,225 68,800 Cisco Systems, Inc. (3) 1,671,152 31,500 Dell Computer Corp. (3) 1,069,740 55,400 EMC Corp. (3) 715,768 9,500 Hewlett-Packard Co. 218,215 47,800 Intel Corp. 1,539,160 22,500 Jabil Circuit, Inc. (3) 636,750 13,850 Linear Technology Corp. 582,670 36,500 Nokia Corp., A.D.R. 620,500 14,500 Qualcomm, Inc. 781,985 ------------- 10,251,615 ------------- - ---------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - ---------------------------------------------------------------------------- ENERGY MINERALS (4.6%) 11,000 ConocoPhillips Co. 721,270 8,500 Murphy Oil Corp. 555,135 18,000 Occidental Petroleum Corp. 760,320 12,000 Suncor Energy, Inc. 300,720 14,500 Unocal Corp. 534,035 ------------- 2,871,480 ------------- FINANCE (13.3%) 20,462 American International Group, Inc. 1,356,221 44,000 Citigroup, Inc. 2,135,760 13,000 Franklin Resources, Inc. 676,780 17,500 J.P. Morgan Chase & Co. 642,775 1,500 Legg Mason, Inc. 115,770 9,500 Marsh & McLennan Cos., Inc. 454,955 11,500 The Goldman Sachs Group, Inc. 1,135,395 24,000 Wells Fargo Co. 1,413,360 4,000 XL Capital, Ltd. 310,200 ------------- 8,241,216 ------------- HEALTH SERVICES (2.1%) 22,000 UnitedHealth Group, Inc. 1,279,960 ------------- HEALTH TECHNOLOGY (16.0%) 35,200 Amgen, Inc. (3) 2,175,360 20,000 Boston Scientific Corp. (3) 735,200 16,500 Bristol-Myers Squibb Co. 471,900 62,550 Elan Corp., A.D.R. (3) 430,969 8,800 Eli Lilly and Co. 618,904 7,000 Genentech, Inc. (3) 654,990 4,500 Gilead Sciences, Inc. (3) 261,630 12,150 Johnson & Johnson 627,669 10,700 MedImmune, Inc. (3) 271,780 9,700 Medtronic, Inc. 471,517 13,000 Merck & Co., Inc. 600,600 48,825 Pfizer, Inc. 1,724,987 15,300 Teva Pharmaceutical, Ltd., A.D.R. 867,663 ------------- 9,913,169 ------------- INDUSTRIAL SERVICES (1.3%) 2,500 Noble Corp. (3) 89,450 13,300 Schlumberger, Ltd. 727,776 ------------- 817,226 ------------- 16 - -----------------------------------------------------------------------[GRAPHIC] - ---------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - ---------------------------------------------------------------------------- PRODUCER MANUFACTURING (7.6%) 5,500 Danaher Corp. 504,625 4,750 Eaton Corp. 512,905 63,700 General Electric Co. 1,973,426 5,000 ITT Industries, Inc. 371,050 10,000 Lockheed Martin Corp. 514,000 10,000 3M Co. 850,300 ------------- 4,726,306 ------------- RETAIL TRADE (8.1%) 24,050 Best Buy Co., Inc. 1,256,372 4,000 eBay, Inc. (3) 258,360 6,100 Kohl's Corp. (3) 274,134 25,800 Lowe's Companies, Inc. 1,429,062 46,500 Target Corp. 1,785,600 ------------- 5,003,528 ------------- TECHNOLOGY SERVICES (11.1%) 25,000 Adobe Systems, Inc. 982,500 23,200 Check Point Software Tech., Ltd. (3) 390,224 18,500 First Data Corp. 760,165 76,000 Microsoft Corp. 2,093,040 23,000 Oracle Corp. (3) 303,600 25,000 Symantec Corp. (3) 866,250 30,900 Veritas Software Corp. (3) 1,148,244 7,500 Yahoo!, Inc. (3) 338,775 ------------- 6,882,798 ------------- TRANSPORTATION (0.8%) 7,000 FedEx Corp. 472,500 ------------- Total common stocks 61,673,211 ------------- (cost: $56,816,079) SHORT-TERM SECURITIES (0.7%) (2) 421,000 Sit Money Market Fund, 0.58% (4) 421,000 ------------- (cost: $421,000) Total investments in securities (cost: $57,237,079) (5) $62,094,211 ============= See accompanying notes to portfolios of investments on page 40. 17 SIT MID CAP GROWTH FUND SIX MONTHS ENDED DECEMBER 31, 2003 [PHOTO] ------------------------------------------------------------------------ EUGENE C. SIT, CFA, SENIOR PORTFOLIO MANAGER ERIK S. ANDERSON, CFA, SENIOR PORTFOLIO MANAGER The Sit Mid Cap Growth Fund's six-month return was +17.37%, compared to +20.64% for the S&P Mid Cap 400 Index. TURNING THE CORNER Small- and mid-sized growth companies turned in strong stock performance in 2003, as improving economic and market sentiment buoyed stock prices. Some advances in the early months of the rally were clearly due to investors breathing a sigh of relief that geopolitical risks were waning. However, we believe that returns in the second half of the year were reflective of a significantly improved business environment, and these conditions continue as we enter 2004. Earnings improvement appears broad-based across sectors, and we anticipate the next "leg" of the market rally will relate to investors' focus on companies delivering accelerating earnings. We believe that the Fund is positioned to benefit from this emerging trend. TECHNOLOGY LEADS THE WAY Technology stocks were the star performers in 2003. The absolute return of the Fund benefited from a significant weighting in this sector during the second half of 2003, with particularly strong performance from key holdings such as ASML Holding (up +70% since June 30, 2003), Xilinx (+53%), Sonus Networks (+56%), and Symantec (+57%). The Fund's under-performance relative to the S&P Mid Cap 400 Index for the period was caused by our holdings in technology services and health technology, particularly Biovail Corporation, which fell - -60%. SECTOR LEADERSHIP TO CONTINUE IN 2004 We expect that companies with sensitivity to improving global economic conditions will continue to do well in the year ahead. We have therefore added to our sector weightings in electronic technology, technology services, and producer manufacturing in recent months. These increases were offset in the less economically sensitive health technology and health services sectors. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND STRATEGY - -------------------------------------------------------------------------------- The objective of the Sit Mid Cap Growth Fund is to maximize long-term capital appreciation. The Fund pursues this objective by investing at least 80% of its net assets in the common stocks of growth companies with capitalizations of $2 billion to $15 billion at the time of purchase. - -------------------------------------------------------------------------------- PORTFOLIO SUMMARY - -------------------------------------------------------------------------------- Net Asset Value 12/31/03: $9.46 Per Share 6/30/03: $8.06 Per Share Total Net Assets: $192.3 Million Weighted Average Market Cap: $7.5 Billion - -------------------------------------------------------------------------------- PORTFOLIO STRUCTURE - BY SECTOR (% OF TOTAL NET ASSETS) - -------------------------------------------------------------------------------- [BAR CHART] Electronic Technology 19.8 Technology Services 16.3 Health Technology 13.5 Finance 8.6 Retail Trade 7.7 Sectors Less Than 6.0% 29.6 Cash and Other Net Assets 4.5 18 - -----------------------------------------------------------------------[GRAPHIC] - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT S&P RUSSELL MID CAP MIDCAP MID CAP GROWTH FUND 400 INDEX GROWTH INDEX ----------- --------- ------------ 3 Month** 10.77% 13.91% 12.16% 6 Month** 17.37 20.64 20.19 1 Year 38.51 35.62 42.71 5 Year -0.32 9.21 2.01 10 Year 7.21 13.92 9.40 Inception 13.61 16.64 -- (9/2/82) - -------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT S&P RUSSELL MID CAP MIDCAP MID CAP GROWTH FUND 400 INDEX GROWTH INDEX ----------- --------- ------------ 1 Year 38.51% 35.62% 42.71% 5 Year -1.57 55.34 10.45 10 Year 100.62 268.28 145.65 Inception 1423.96 2571.36 -- (9/2/82) *As of 12/31/03 **Not annualized. - -------------------------------------------------------------------------------- PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE; HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE RUSSELL MID CAP GROWTH INDEX AND THE S&P MIDCAP 400 INDEX. - -------------------------------------------------------------------------------- GROWTH OF $10,000 - -------------------------------------------------------------------------------- [LINE GRAPH] The sum of $10,000 invested at inception (9/2/82) and held until 12/31/03 would have grown to $152,396 in the Fund, or $267,136 in the S&P MidCap 400 Index assuming reinvestment of all dividends and capital gains. - -------------------------------------------------------------------------------- TOP 10 HOLDINGS - -------------------------------------------------------------------------------- * TCF Financial Corp. * ASML Holding N.V. * Ceridian Corp. * Legg Mason, Inc. * Symantec Corp. * Celgene Corp. * Chico's FAS, Inc. * Adobe Systems, Inc. * Xilinx, Inc. * Coach, Inc. Total Number of Holdings: 88 19 SIT MID CAP GROWTH FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2003 (UNAUDITED) - -------------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- COMMON STOCKS (95.5%) (2) COMMERCIAL SERVICES (1.8%) 30,500 Fair Isaac Corp. 1,499,380 48,000 Fisher Scientific International, Inc. (3) 1,985,760 ------------------ 3,485,140 ------------------ COMMUNICATIONS (1.9%) 69,500 Nextel Communications, Inc. (3) 1,950,170 57,250 Nextel Partners, Inc. (3) 770,013 156,250 Sprint Corp. (PCS) (3) 878,125 ------------------ 3,598,308 ------------------ CONSUMER DURABLES (1.5%) 59,800 Electronic Arts, Inc. (3) 2,857,244 ------------------ CONSUMER NON-DURABLES (1.8%) 91,000 Coach, Inc. (3) 3,435,250 ------------------ CONSUMER SERVICES (5.1%) 49,500 Career Education Corp. (3) 1,983,465 57,100 EchoStar Communications Corp. (3) 1,941,400 31,400 Harrah's Entertainment, Inc. 1,562,778 116,500 Hilton Hotels Corp. 1,995,645 65,500 International Game Technology 2,338,350 ------------------ 9,821,638 ------------------ ELECTRONIC TECHNOLOGY (19.8%) 32,750 ADC Telecommunications, Inc. (3) 97,267 56,000 ADTRAN, Inc. 1,736,000 45,050 Analog Devices, Inc. 2,056,532 203,500 ASML Holding N.V. (3) 4,080,175 67,500 ATI Technologies, Inc. (3) 1,020,600 58,850 Broadcom Corp. (3) 2,006,196 15,950 Brooks Automation, Inc. (3) 385,511 86,000 Foundry Networks, Inc. (3) 2,352,960 102,850 Jabil Circuit, Inc. (3) 2,910,655 81,900 Juniper Networks, Inc. (3) 1,529,892 33,500 KLA-Tencor Corp. (3) 1,965,445 18,700 Lam Research Corp. (3) 604,010 36,500 Lexmark International, Inc. (3) 2,870,360 47,000 Marvell Technology Group, Ltd. (3) 1,782,710 48,000 Novellus Systems, Inc. (3) 2,018,400 35,000 QLogic Corp. (3) 1,806,000 76,000 Rockwell Automation, Inc. 2,705,600 13,500 SanDisk Corp. (3) 825,390 246,150 Sonus Networks, Inc. (3) 1,860,894 90,200 Xilinx, Inc. (3) 3,494,348 ------------------ 38,108,945 ------------------ - -------------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- ENERGY MINERALS (3.4%) 23,450 Apache Corp. 1,901,795 32,500 Murphy Oil Corp. 2,122,575 90,250 XTO Energy, Inc. 2,554,075 ------------------ 6,578,445 ------------------ FINANCE (8.6%) 71,350 Ace, Ltd. 2,955,317 49,500 Legg Mason, Inc. 3,820,410 19,800 Lehman Brothers Holdings, Inc. 1,528,956 54,500 New York Community Bancorp, Inc. 2,073,725 118,900 TCF Financial Corp. 6,105,515 ------------------ 16,483,923 ------------------ HEALTH SERVICES (5.5%) 102,850 Caremark Rx, Inc. (3) 2,605,190 54,800 Laboratory Corp. (3) 2,024,860 36,000 Oxford Health Plans, Inc. 1,566,000 49,800 Stericycle, Inc. (3) 2,325,660 36,500 Universal Health Services, Inc. 1,960,780 ------------------ 10,482,490 ------------------ HEALTH TECHNOLOGY (13.5%) 25,800 Alcon, Inc. 1,561,932 21,500 Beckman Coulter, Inc. 1,092,845 54,905 Biogen Idec, Inc. (3) 2,019,406 58,000 Boston Scientific Corp. (3) 2,132,080 81,500 Celgene Corp. (3) 3,669,130 324,100 Elan Corp., A.D.R. (3) 2,233,049 38,500 Genzyme Corp. (3) 1,899,590 36,250 Gilead Sciences, Inc. (3) 2,107,575 58,600 MedImmune, Inc. (3) 1,488,440 31,000 NPS Pharmaceuticals, Inc. (3) 952,940 35,350 Pharmaceutical Resources, Inc. (3) 2,303,053 39,700 Teva Pharmaceutical Industries, A.D.R. 2,251,387 31,500 Varian Medical Systems, Inc. (3) 2,176,650 ------------------ 25,888,077 ------------------ INDUSTRIAL SERVICES (1.0%) 55,000 Noble Corp. (3) 1,967,900 ------------------ PROCESS INDUSTRIES (1.0%) 70,500 Pall Corp. 1,891,515 ------------------ 20 - -----------------------------------------------------------------------[GRAPHIC] - -------------------------------------------------------------------------------- QUANTITY/PAR($) NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- PRODUCER MANUFACTURING (5.4%) 31,500 AMETEK, Inc. 1,520,190 24,350 Danaher Corp. 2,234,113 24,000 Gentex Corp. 1,059,840 33,100 ITT Industries, Inc. 2,456,351 123,050 Thermo Electron Corp. (3) 3,100,860 ------------------ 10,371,354 ------------------ RETAIL TRADE (7.7%) 46,050 Best Buy Co., Inc. 2,405,652 97,900 Chico's FAS, Inc. (3) 3,617,405 44,200 Family Dollar Stores, Inc. 1,585,896 64,000 Michaels Stores, Inc. 2,828,800 23,000 PETsMART, Inc. 547,400 58,950 Staples, Inc. (3) 1,609,335 101,800 TJX Companies, Inc. 2,244,690 ------------------ 14,839,178 ------------------ TECHNOLOGY SERVICES (16.3%) 89,590 Adobe Systems, Inc. 3,520,887 147,450 BEA Systems, Inc. (3) 1,813,635 48,500 Business Objects, A.D.R. (3) 1,681,495 78,500 Cadence Design Systems, Inc. (3) 1,411,430 186,800 Ceridian Corp. (3) 3,911,592 108,050 Check Point Software Tech., Ltd. (3) 1,817,401 78,250 Citrix Systems, Inc. (3) 1,659,683 63,500 Cognos, Inc. (3) 1,944,370 64,062 Fiserv, Inc. (3) 2,531,090 39,500 Intuit, Inc. (3) 2,089,945 30,500 Mercury Interactive Corp. (3) 1,483,520 66,900 SunGard Data Systems, Inc. (3) 1,853,799 108,000 Symantec Corp. (3) 3,742,200 52,600 Veritas Software Corp. (3) 1,954,616 ------------------ 31,415,663 ------------------ TRANSPORTATION (1.2%) 63,000 Expeditors Intl. of Washington, Inc. 2,372,580 ------------------ Total common stocks 183,597,650 ------------------ (cost: $150,372,471) SHORT-TERM SECURITIES (3.1%) (2) 6,036,000 Sit Money Market Fund, 0.58% (4) 6,036,000 ------------------ (cost: $6,036,000) Total investments in securities (cost: $156,408,471) (5) $189,633,650 ================== See accompanying notes to portfolios of investments on page 40. 21 SIT INTERNATIONAL GROWTH FUND SIX MONTHS ENDED DECEMBER 31, 2003 [PHOTO] ------------------------------------------------------------------------ EUGENE C. SIT, CFA, SENIOR PORTFOLIO MANAGER ROGER J. SIT, SENIOR PORTFOLIO MANAGER The Sit International Growth Fund returned +20.20% for the last half of 2003 compared with +26.59% for the MSCI EAFE Index (the "Index") and +23.37% in the MSCI EAFE Growth Index. The Fund's holdings in Japan (stock selection) and Israel (overweight) caused the Fund to lag the Index for the period, while excellent results from the Netherlands (stock selection) and India (overweight) partially offset the relative under-performance. EUROPE IMPROVING, BUT STILL UNDERWEIGHT The Fund had a weighting of 54.0% in Europe at year-end, versus 68.4% for the Index. Although European reform measures appear to be headed in the right direction and the economies are showing modest economic improvement, we see better opportunities elsewhere, as further strengthening of the euro may dampen growth prospects. Within Europe, we are shifting to higher-quality companies with solid fundamentals and superior growth prospects. Recent additions include Philips Electronics (consumer electronics), WPP Group (advertising) and Siemens (capital goods). ASIAN EXPOSURE GROWS, INCLUDING JAPAN In Japan, our weight increased to 18.0% versus 21.4% for the Index. We look for companies best positioned within their industries to take advantage of tangible progress in banking and corporate reform. The strengthening yen will likely continue to put a damper on export-oriented companies. We added to three financials, Nikko Cordial, Sumitomo Mitsui Financial, and Mitsubishi Tokyo Financial. We have also added to consumer- or capital-related stocks such as Nitto Denko, Takashimaya, and NEC Electronics. Our weighting in Asia ex-Japan was 20.5%, nearly twice the Index weight of 10.2%. Robust economic growth is taking place powered by China's industrialization and urbanization trends. Exports are rising now that IT expenditures are picking up and domestic consumption is strengthening. Anticipating Hong Kong property price appreciation, we added Henderson Land and Sun Hung Kai Property. New holdings in China Life and PICC Property and Casualty reflect tremendous growth prospects in insurance. We also added Neptune Orient Lines, a Singapore shipper. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND STRATEGY - -------------------------------------------------------------------------------- The objective of the International Growth Fund is long-term growth. The Fund seeks to achieve its objective by investing at least 90% of its net assets in common stocks of growth companies domiciled outside the United States. In selecting investments for the Fund, the Sub-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 Sub-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 Sub-Adviser invests in foreign growth-oriented companies it believes exhibit the potential for superior growth. - -------------------------------------------------------------------------------- PORTFOLIO SUMMARY - -------------------------------------------------------------------------------- Net Asset Value 12/31/03: $11.20 Per Share 6/30/03: $9.39 Per Share Total Net Assets: $57.8 Million Weighted Average Market Cap: $50.5 Billion - -------------------------------------------------------------------------------- PORTFOLIO STRUCTURE - BY REGION (% OF TOTAL NET ASSETS) - -------------------------------------------------------------------------------- [BAR CHART] SIT INT'L MORGAN STANLEY GROWTH FUND EAFE INDEX France, Germany, UK 33.1 40.1 Europe Other 20.9 28.3 Pacific Basin 20.5 10.2 Japan 18.0 21.4 Africa /Middle East 2.8 0.0 Latin America 2.0 0.0 North America 2.0 0.0 Cash and 0.7 0.0 Other Net Assets 22 - -----------------------------------------------------------------------[GRAPHIC] - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT MORGAN STANLEY LIPPER INTERNATIONAL CAPITAL INT'L INT'L GROWTH FUND EAFE INDEX INDEX ----------- ---------- ----- 3 Month** 14.24% 17.08% 15.45% 6 Month** 20.20 26.59 24.56 1 Year 28.70 38.59 36.00 5 Year -7.80 -0.05 2.13 10 Year -0.28 4.47 5.31 Inception 3.62 4.98 7.06 (11/1/91) - -------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT MORGAN STANLEY LIPPER INTERNATIONAL CAPITAL INT'L INT'L GROWTH FUND EAFE INDEX INDEX ----------- ---------- ----- 1 Year 28.70% 38.59% 36.00% 5 Year -33.36 -0.27 11.13 10 Year -2.78 54.81 67.80 Inception 54.20 80.70 129.52 (11/1/91) *AS OF 12/31/03 **NOT ANNUALIZED. - -------------------------------------------------------------------------------- PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE; HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE (EUROPE, AUSTRALIA, FAR EAST) INDEX. THE LIPPER AVERAGES AND INDICES ARE OBTAINED FROM LIPPER ANALYTICAL SERVICES, INC., A LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS. - -------------------------------------------------------------------------------- GROWTH OF $10,000 - -------------------------------------------------------------------------------- [LINE GRAPH] The sum of $10,000 invested at inception (11/1/91) and held until 12/31/03 would have grown to $15,420 in the Fund, or $18,070 in the Morgan Stanley EAFE Index assuming reinvestment of all dividends and capital gains. - -------------------------------------------------------------------------------- PORTFOLIO STRUCTURE - BY SECTOR (% OF TOTAL NET ASSETS) - -------------------------------------------------------------------------------- Finance 23.5 Electronic Technology 11.0 Health Technology 10.4 Communications 9.8 Consumer Non-Durables 7.6 Consumer Services 7.0 Energy Minerals 6.9 Sectors Less Than 5.0% 23.1 Cash & Other Net Assets 0.7 23 SIT INTERNATIONAL GROWTH FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2003 (UNAUDITED) - -------------------------------------------------------------------------------- TOP 10 HOLDINGS - -------------------------------------------------------------------------------- * Vodafone Group, p.l.c. * Royal Bank of Scotland * HSBC Holdings, p.l.c. * ING Groep N.V. * Novartis, A.G. * Nestle, S.A. * Nomura Holdings, Inc. * Telefonica, S.A. * Total, S.A. * ASML Holding N.V., A.D.R. Total Number of Holdings: 103 - -------------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- COMMON STOCKS (98.6%) (2) AFRICA/ MIDDLE EAST (2.8%) ISRAEL (2.8%) 33,000 Amdocs, Ltd., A.D.R. (Tech. Services) (3) 741,840 15,600 Teva Pharmaceutical, A.D.R. (Health Tech.) 884,676 -------------- 1,626,516 -------------- ASIA (37.8%) AUSTRALIA (4.4%) 42,663 Australia and New Zealand Banking Group (Finance) 568,313 104,852 BHP Billiton, Ltd. (Non-Energy Minerals) 963,018 27,100 News Corp., Ltd., A.D.R. (Consumer Svcs.) 819,775 1,500 Rio Tinto, p.l.c., A.D.R. (Non-Energy Minerals) 166,965 -------------- 2,518,071 -------------- HONG KONG / CHINA (8.1%) 5,000 China Life Insurance Co., Ltd., A.D.R. (Finance) (3) 164,850 47,500 CLP Holdings, Ltd. (Utilities) 226,377 131,000 Citic Pacific, Ltd. (Industrial Services) 334,098 199,000 Cnooc, Ltd. (Energy Minerals) 389,613 85,000 Henderson Land Development Co., Ltd. (Finance) 375,535 78,400 HSBC Holdings, p.l.c. (Finance) 1,237,055 321,915 Johnson Electric Holdings (Producer Mfg.) 410,500 216,000 Li & Fung, Ltd. (Retail Trade) 370,035 698,000 Petrochina Co., Ltd. (Energy Minerals) 400,085 490,000 PICC Property & Casualty Co., Ltd. (Finance) (3) 219,325 35,000 Sun Hung Kai Properties, Ltd. (Finance) 289,653 238,000 Tsingtao Brewing Co., Ltd. (Consumer Non- Durables) 278,968 -------------- 4,696,094 -------------- - -------------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- JAPAN (18.0%) 7,800 AFLAC, Inc., A.D.R. (Finance) 282,204 14,000 Canon, Inc. (Electronic Technology) 651,861 137 East Japan Railway (Transportation) 645,563 9,000 Honda Motor Co., Ltd. (Producer Mfg.) 399,739 28,000 Kao Corp. (Consumber Non-Durables) 569,562 100 Mitsubishi Tokyo Financial Group, Inc. (Finance) 780,069 1,900 NEC Electronics Corp. (Electronic Technology) 138,994 52,000 Nikko Cordial Corp. (Finance) 289,671 2,500 NITTO DENKO Corp. (Producer Manufacturing) 132,966 63,000 Nomura Holdings, Inc. (Finance) 1,072,828 419 NTT DoCoMo, Inc. (Communications) 950,051 16,300 Shin-Etsu Chemical Co., Ltd. (Industrial Svcs.) 666,175 5,000 SMC Corp. (Producer Manufacturing) 622,376 11,700 Sony Corp. (Consumer Durables) 405,029 190 Sumitomo Mitsui Financial Group, Inc. (Finance) 1,012,317 42,000 Takashimaya Co., Ltd. (Retail Trade) 299,804 14,000 Takeda Chemical (Health Technology) 555,193 7,600 Tokyo Electron, Ltd. (Electronic Tech.) 577,251 10,500 Yamada Denki Co. (Consumer Durables) 352,711 -------------- 10,404,364 -------------- SINGAPORE (4.9%) 72,846 DBS Group Holdings, Ltd. (Finance) 630,534 49,100 Flextronics Intl. (Electronic Tech.) (3) 728,644 359,000 Neptune Orient Lines, Ltd. (Transportation) (3) 456,598 23,000 Singapore Press Hldgs. (Consumer Services) 255,962 65,000 Venture Corp. (Electronic Technology) 765,471 -------------- 2,837,209 -------------- SOUTH KOREA (0.1%) 28,023 Industrial Bank of Korea, G.D.R. (Finance) (3) 161,132 350 Samsung Electronics Co., G.D.R. (Electronic Technology) 66,240 -------------- 227,372 -------------- TAIWAN (1.5%) 86,671 Hon Hai Precision (Electronic Technology) 340,812 49,586 Taiwan Semiconductor, A.D.R. (Electronic Technology) (3) 507,761 -------------- 848,573 -------------- THAILAND (0.8%) 214,800 Advanced Info Services (Communications) 458,088 -------------- 24 - -----------------------------------------------------------------------[GRAPHIC] - -------------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- EUROPE (54.0%) FINLAND (1.4%) 45,600 Nokia Corp., A.D.R. (Electronic Tech.) 775,200 -------------- FRANCE (10.5%) 35,252 AXA (Finance) 754,574 7,523 Aventis, S.A. (Health Technology) 497,232 11,500 Business Objects, A.D.R. (Tech. Svcs.) (3) 398,705 20,400 Business Objects (Tech. Services) (3) 711,478 6,560 Carrefour, S.A. (Retail Trade) 360,105 3,554 Danone (Consumer Non-Durables) 580,080 5,503 L'oreal Co. (Consumer Non-Durables) 451,179 12,900 STMicroelectronics, A.D.R. (Elec. Tech.) 348,429 11,800 Schlumberger, Ltd. (Industrial Svcs.) 645,696 5,705 Total, S.A. (Energy Minerals) 1,060,692 10,337 Veolia Environment (Utilities) 277,722 -------------- 6,085,892 -------------- GERMANY (2.3%) 4,172 Muenchener Rueckver (Finance) 509,502 2,782 SAP AG (Technology Services) 469,515 4,158 Siemens AG (Technology Services) 333,039 -------------- 1,312,056 -------------- IRELAND (1.3%) 18,000 Allied Irish Banks p.l.c. (Finance) 286,983 63,700 Elan Corp., A.D.R. (Health Technology) (3) 438,893 -------------- 725,876 -------------- ITALY (1.5%) 105,957 Telecom Italia (Saving) (Communications) 314,075 67,040 Telecom Italia (Ord.) (Communications) (3) 136,566 76,550 Telecom Italia Mobile (Communications) 416,158 -------------- 866,799 -------------- NETHERLANDS (6.1%) 52,900 ASML Holding N.V., A.D.R. (Electronic Technology) (3) 1,060,645 48,235 ING Groep N.V. (Finance) 1,124,956 13,542 Koninklijke (Royal) Philips Electronics N.V. (Electronic Technology) (3) 395,430 18,200 Royal Dutch Petroleum, A.D.R. (Energy Minerals) 953,498 -------------- 3,534,529 -------------- SPAIN (1.9%) 72,400 Telefonica, S.A. (Communications) 1,062,987 -------------- - -------------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- SWITZERLAND (8.7%) 9,328 Adecco, S. A. (Commercial Svcs.) 599,617 18,034 Credit Suisse Group (Finance) 659,825 4,331 Nestle, S.A. (Consumer Non-Durables) 1,082,093 24,444 Novartis, A.G. (Health Technology) 1,109,788 5,115 Roche Holdings, A.G. (Health Tech.) 515,946 15,402 UBS, A.G. (Finance) 1,054,821 -------------- 5,022,090 -------------- UNITED KINGDOM (20.3%) 47,783 Acambis, p.l.c. (Health Technology) (3) 261,108 15,344 AstraZeneca, p.l.c. (Health Technology) 747,442 12,900 BP p.l.c., A.D.R. (Energy Minerals) 636,615 96,569 Barclays, p.l.c. (Finance) 861,343 73,561 Burberry Group, p.l.c. (Retail Trade) 481,311 155,409 Compass Group, p.l.c. (Consumer Services) 1,057,185 41,900 Diageo, p.l.c. (Consumer Non-Durables) 551,306 21,184 GlaxoSmithkline, A.D.R. (Health Tech.) 987,598 140,204 Hilton Group, p.l.c. (Consumer Services) 564,094 46,178 Pearson, p.l.c. (Consumer Services) 514,182 13,754 Reckitt Benckiser, p.l.c. (Cons. Non-Durables) 311,220 43,482 Royal Bank of Scotland (Finance) 1,281,240 157,584 Tesco, p.l.c. (Retail Trade) 727,113 61,580 Unilever, p.l.c. (Consumer Non-Durables) 574,064 615,723 Vodafone Group, p.l.c. (Communications) 1,526,604 7,500 Vodafone Group, A.D.R. (Communications) 187,800 45,800 WPP Group p.l.c. (Consumer Services) 449,711 -------------- 11,719,936 -------------- LATIN AMERICA (2.0%) BRAZIL (0.3%) 10,500 Tele Norte Leste Participacoes, A.D.R. (Communications) 162,015 -------------- MEXICO (1.7%) 12,900 Telefonos de Mexico, A.D.R. (Communications) 426,087 194,030 Wal-Mart de Mexico (Retail Trade) 553,052 -------------- 979,139 -------------- NORTH AMERICA (2.0%) CANADA (2.0%) 13,500 Precision Drilling Corp. (Industrial Svcs.) (3) 589,680 11,500 Suncor Energy, Inc. (Energy Minerals) 288,190 4,700 Talisman Energy, Inc. (Energy Minerals) 266,020 -------------- 1,143,890 -------------- Total common stocks 57,006,696 -------------- (cost: $55,677,290) See accompanying notes to portfolios of investments on page 40. 25 SIT INTERNATIONAL GROWTH FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2003 (UNAUDITED) - -------------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- CLOSED-END MUTUAL FUND (0.7%) (2) 15,500 India Fund (Consumer Services) 390,600 -------------- (cost: $277,184) SHORT TERM SECURITIES (0.0%) (2) 1,000 Sit Money Market Fund, 0.58% (4) 1,000 -------------- (cost: $1,000) Total investments in securities (cost: $55,955,474) (5) $57,398,296 ============== See accompanying notes to portfolios of investments on page 40. 26 - -----------------------------------------------------------------------[GRAPHIC] This page has been left blank intentionally. 27 SIT SMALL CAP GROWTH FUND SIX MONTHS ENDED DECEMBER 31, 2003 [PHOTO] ------------------------------------------------------------------------ EUGENE C. SIT, CFA, SENIOR PORTFOLIO MANAGER The Sit Small Cap Growth Fund returned +15.67% over the past six months. This compares to +24.92% for the Russell 2000 Index. A STRONG REBOUND After three years of negative returns, 2003 proved to be a rewarding year for participants in the equity markets. In addition, small cap stocks turned in another strong performance compared to larger issues. In fact, 2003 marked the fifth consecutive year where the Russell 2000 Index outperformed the Russell 1000 Index. Equity markets surged following the end of the Iraqi conflict, and momentum was sustained through the second half of 2003, as the economy began to show clear signs of rebounding. For the first time in three years, we begin a new year with positive market sentiment and tangible signs of a global economic upturn. SPECULATIVE STOCKS LEAD THE PACK IN 2003 In 2003, investors showed a strong preference for more speculative issues, regardless of the long-term fundamental appeal. For example, within the Russell 2000 Index, many of the best performers included companies without positive earnings, with stock prices under $5, and with poor balance sheets. These types of stocks are not emphasized within the Fund. We believe our not investing in these speculative stocks accounted for much of the Fund's relative under-performance in the short run. Health technology and electronic technology were the two sectors with high speculative activity that drove most of the shortfall. SMALL CAP LEADERSHIP SHIFT EXPECTED Although we believe the foundation is in place for another good year in 2004, we expect a change in market leadership will occur during the year ahead, particularly within small cap investing. We believe our shareholders will benefit from a market shift to "higher quality" investments, as investors gravitate towards companies with improving earnings, attractive valuations, and sustainable business models. Our research team remains focused on identifying the best long-term investment opportunities for our shareholders. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND 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 at least 80% of its net assets in common stocks of small growth companies with capitalizations of $2.5 billion or less at the time of purchase. 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. - -------------------------------------------------------------------------------- PORTFOLIO SUMMARY - -------------------------------------------------------------------------------- Net Asset Value 12/31/03: $25.03 Per Share 6/30/03: $21.64 Per Share Total Net Assets: $219.2 Million Weighted Average Market Cap: $2.4 Billion - -------------------------------------------------------------------------------- PORTFOLIO STRUCTURE - BY SECTOR (% OF TOTAL NET ASSETS) - -------------------------------------------------------------------------------- Electronic Technology 24.7 Finance 11.9 Health Technology 11.8 Technology Services 9.0 Retail Trade 5.6 Sectors 5.0% and Less 34.9 Cash and Other Net Assets 2.1 28 - -----------------------------------------------------------------------[GRAPHIC] - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT RUSSELL SMALL CAP RUSSELL 2000 2000 GROWTH FUND INDEX GROWTH INDEX ----------- ----- ------------ 3 Month** 10.02% 14.52% 12.69% 6 Month** 15.67 24.92 24.48 1 Year 34.57 47.25 48.53 3 Year -10.66 6.27 -2.04 5 Year 9.59 7.13 0.85 Inception 13.69 10.72 6.91 (7/1/94) - -------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT RUSSELL SMALL CAP RUSSELL 2000 2000 GROWTH FUND INDEX GROWTH INDEX ----------- ----- ------------ 1 Year 34.57% 47.25% 48.53% 3 Year -28.70 20.00 -5.99 5 Year 58.05 41.11 4.34 Inception 238.56 163.41 88.76 (7/1/94) *AS OF 12/31/03 **NOT ANNUALIZED. - -------------------------------------------------------------------------------- PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE; HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE RUSSELL 2000 INDEX AND THE RUSSELL 2000 GROWTH INDEX. - -------------------------------------------------------------------------------- GROWTH OF $10,000 - -------------------------------------------------------------------------------- The sum of $10,000 invested at inception (7/1/94) and held until 12/31/03 would have grown to $33,856 in the Fund, or $26,341 in the Russell 2000 Index assuming reinvestment of all dividends and capital gains. - -------------------------------------------------------------------------------- TOP 10 HOLDINGS - -------------------------------------------------------------------------------- * New York Community Bancorp, Inc. * Coach, Inc. * Business Objects S.A., A.D.R. * Chico's FAS, Inc. * Affiliated Managers Group, Inc. * XTO Energy, Inc. * Intersil Corp. * NetScreen Technologies, Inc. * Cuno, Inc. * Cymer, Inc. Total Number of Holdings: 91 29 SIT SMALL CAP GROWTH FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2003 (UNAUDITED) - -------------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- COMMON STOCKS (97.9%) (2) COMMERCIAL SERVICES (2.6%) 74,200 Performance Food Group Co. (3) 2,683,814 358,100 SkillSoft, A.D.R. (3) 3,097,565 ------------------ 5,781,379 ------------------ CONSUMER DURABLES (1.8%) 24,700 Polaris Industries, Inc. 2,187,926 64,000 WMS Industries, Inc. (3) 1,676,800 ------------------ 3,864,726 ------------------ CONSUMER NON-DURABLES (3.0%) 142,700 Coach, Inc. (3) 5,386,925 30,000 Liz Claiborne, Inc. 1,063,800 ------------------ 6,450,725 ------------------ CONSUMER SERVICES (2.6%) 56,600 Career Education Corp. (3) 2,267,962 79,300 Emmis Communications Corp. (3) 2,145,065 26,000 Getty Images, Inc. (3) 1,303,380 ------------------ 5,716,407 ------------------ ELECTRONIC TECHNOLOGY (24.7%) 61,550 Applied Micro Circuits Corp. (3) 368,069 118,600 At Road, Inc. (3) 1,577,380 7,000 Avid Technology, Inc. (3) 336,000 16,850 Benchmark Electronics, Inc. (3) 586,548 130,950 Brooks Automation, Inc. (3) 3,165,061 322,400 ChipPAC, Inc. (3) 2,447,016 39,150 Cognex Corp. 1,105,596 288,050 Cray, Inc. (3) 2,860,336 87,200 Cymer, Inc. (3) 4,027,768 122,850 Emulex Corp. (3) 3,277,638 172,950 Extreme Networks, Inc. (3) 1,246,969 139,500 Foundry Networks, Inc. (3) 3,816,720 51,150 Integrated Circuit Systems, Inc. (3) 1,457,263 178,460 Intersil Corp. 4,434,731 77,500 InVision Technologies, Inc. (3) 2,601,675 80,125 Kronos, Inc. (3) 3,173,751 54,500 Lexar Media, Inc. (3) 949,935 167,850 NetScreen Technologies, Inc. (3) 4,154,288 22,750 OmniVision Technologies, Inc. (3) 1,256,938 83,200 Silicon Laboratories, Inc. (3) 3,595,904 330,300 Sonus Networks, Inc. (3) 2,497,068 69,800 Varian Semiconductor Equip. Associates, Inc. (3) 3,049,562 15,700 Zebra Technologies Corp. (3) 1,042,009 65,395 Zoran Corp. (3) 1,137,219 ------------------ 54,165,444 ------------------ - -------------------------------------------------------------------------------- QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - -------------------------------------------------------------------------------- ENERGY MINERALS (2.1%) 159,433 XTO Energy, Inc. 4,511,954 ------------------ FINANCE (11.9%) 66,850 Affiliated Managers Group, Inc. (3) 4,652,091 44,000 Aspen Insurance Holdings, Ltd. (3) 1,091,640 27,000 Legg Mason, Inc. 2,083,860 62,050 Mercury General Corp. 2,888,428 183,340 New York Community Bancorp, Inc. 6,976,087 36,150 PartnerRe, Ltd. 2,098,508 89,000 Platinum Underwriters Holdings, Ltd. 2,670,000 64,920 UCBH Holdings, Inc. 2,529,932 26,350 Wintrust Financial Corp. 1,188,385 ------------------ 26,178,931 ------------------ HEALTH SERVICES (4.4%) 39,650 Accredo Health, Inc. (3) 1,253,337 37,500 AdvancePCS (3) 1,974,750 14,450 Covance, Inc. (3) 387,260 11,050 e-Research Technology, Inc. (3) 280,891 64,450 Stericycle, Inc. (3) 3,009,815 49,950 Universal Health Services, Inc. 2,683,314 ------------------ 9,589,367 ------------------ HEALTH TECHNOLOGY (11.8%) 43,500 Amylin Pharmaceuticals, Inc. (3) 966,570 118,300 Biosite, Inc. (3) 3,424,785 52,500 Celgene Corp. (3) 2,363,550 133,500 Cell Therapeutics, Inc. (3) 1,161,450 241,550 CryoLife, Inc. (3) 1,396,159 41,500 Invitrogen Corp. (3) 2,905,000 35,450 Neurocrine Biosciences, Inc. (3) 1,933,443 70,750 NPS Pharmaceuticals, Inc. (3) 2,174,855 61,650 Pharmaceutical Resources, Inc. (3) 4,016,498 162,700 Sangamo BioSciences, Inc. (3) 901,358 16,750 Telik, Inc. (3) 385,418 27,950 Varian Medical Systems, Inc. (3) 1,931,345 78,400 Wright Medical Group, Inc. (3) 2,386,496 ------------------ 25,946,927 ------------------ INDUSTRIAL SERVICES (3.0%) 130,400 Chicago Bridge & Iron Co. 3,768,560 65,500 Smith International, Inc. (3) 2,719,560 ------------------ 6,488,120 ------------------ PROCESS INDUSTRIES (3.5%) 89,900 Cuno, Inc. (3) 4,048,197 86,450 Millipore Corp. (3) 3,721,673 ------------------ 7,769,870 ------------------ 30 - -----------------------------------------------------------------------[GRAPHIC] - -------------------------------------------------------------------------------- QUANTITY Name of Issuer MARKET VALUE($)(1) - -------------------------------------------------------------------------------- PRODUCER MANUFACTURING (4.9%) 23,600 AMETEK, Inc. 1,138,936 10,800 Dionex Corp. (3) 497,016 83,100 DRS Technologies, Inc. (3) 2,308,518 60,000 Gardner Denver, Inc. (3) 1,432,200 33,500 Jacobs Engineering Group, Inc. (3) 1,608,335 53,500 Joy Global, Inc. 1,399,025 45,800 Roper Industries, Inc. 2,256,108 ------------------ 10,640,138 ------------------ RETAIL TRADE (5.6%) 41,000 Advance Auto Parts, Inc. (3) 3,337,400 130,850 Chico's FAS, Inc. (3) 4,834,907 59,950 Cost Plus, Inc. (3) 2,457,950 57,000 PETCO Animal Supplies, Inc. (3) 1,735,650 ------------------ 12,365,907 ------------------ TECHNOLOGY SERVICES (9.0%) 154,550 Business Objects S.A., A.D.R. (3) 5,358,249 33,100 CACI International, Inc. (3) 1,609,322 180,700 Citrix Systems, Inc. (3) 3,832,647 32,450 Hyperion Solutions Corp. (3) 978,043 91,450 Informatica Corp. (3) 941,935 82,700 Mercury Interactive Corp. (3) 4,022,528 211,000 Quest Software, Inc. (3) 2,996,200 ------------------ 19,738,924 ------------------ TRANSPORTATION (2.0%) 58,700 C.H. Robinson Worldwide, Inc. 2,225,317 59,500 UTI Worldwide, Inc. 2,256,835 ------------------ 4,482,152 ------------------ UTILITIES (5.0%) 446,900 Calpine Corp. (3) 2,149,589 66,700 Equitable Resources, Inc. 2,862,764 66,000 Questar Corp. 2,319,900 149,500 Southwestern Energy Co. (3) 3,573,050 ------------------ 10,905,303 ------------------ Total common stocks (cost: $179,338,154) 214,596,274 ------------------ SHORT-TERM SECURITIES (1.7%) (2) 3,808,000 Sit Money Market Fund, 0.58% (4) 3,808,000 ------------------ (cost: $3,808,000) Total investments in securities (cost: $183,146,154) (5) $218,404,274 ================== See accompanying notes to portfolios of investments on page 40. 31 SIT SCIENCE AND TECHNOLOGY GROWTH FUND SIX MONTHS ENDED DECEMBER 31, 2003 [PHOTO] ------------------------------------------------------------------------ EUGENE C. SIT, CFA, SENIOR PORTFOLIO MANAGER The Sit Science and Technology Growth Fund returned +17.64% over the last six months, compared to the +15.14% return for the S&P 500 Index. A DRAMATIC CHANGE IN SENTIMENT Science and technology stocks continued their strong performance during the second half of 2003, as attractive valuations and improving economic conditions fueled the advance. The long-awaited upturn in business capital spending has begun, and it is clearly translating into stronger revenues for the companies held in the Fund. For example, last quarter the median sales growth rate for companies held in the Fund was +20% over the prior year, accelerating to post the highest figure since the downturn began in early 2000. In addition, the improvements appear to be broad-based across a number of industries, including semiconductors, storage, software, security, and Internet-focused companies. TECHNOLOGY OUTPERFORMED HEALTH CARE In absolute terms, the major technology sectors outperformed health care by a wide margin during the second half of the year. This is not surprising since technology fundamentals are more closely linked with economic trends. The Fund's strong returns in both electronic technology and technology services drove its out-performance to the S&P 500, with particularly strong returns coming from Business Objects (six-month return of +59%), Symantec (+57%), Documentum (+55%), Intel (+54%), and Xilinx (+53%). The Fund was most negatively impacted by under-performance in the health technology sector, by our position in Biovail (-60% over the period), in particular. STRONG FUNDAMENTALS IN PLACE We believe that the 2003 turnaround is sustainable into the new year. The global economy is improving, capital spending is on the rise, and intense cost cutting by many technology companies over the past three years should cause increases in revenue growth to have an outsized impact on the bottom line for most companies. We believe that the companies held in the Fund will be beneficiaries of improving business fundamentals in 2004. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND STRATEGY - -------------------------------------------------------------------------------- The objective of the 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 principally engaged in science and technology business activities. Such companies include those whose assets, gross income, or net profits are significantly committed to, or derived from, science and technology. The Adviser seeks stocks of science and technology companies having superior growth potential in virtually any industry in which they may be found. - -------------------------------------------------------------------------------- PORTFOLIO SUMMARY - -------------------------------------------------------------------------------- Net Asset Value 12/31/03: $9.47 Per Share 6/30/03: $8.05 Per Share Total Net Assets: $18.0 Million Weighted Average Market Cap: $30.8 Billion - -------------------------------------------------------------------------------- PORTFOLIO STRUCTURE - BY SECTOR (% OF TOTAL NET ASSETS) - -------------------------------------------------------------------------------- Electronic Technology 41.1 Technology Services 27.7 Health Technology 17.7 Sectors less than 3.0% 11.3 Cash & Other Net Assets 2.2 32 - -----------------------------------------------------------------------[GRAPHIC] - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT SCIENCE AND TECHNOLOGY S&P GROWTH FUND 500 INDEX ----------- --------- 3 Month** 11.02% 12.18% 6 Month** 17.64 15.14 1 Year 40.09 28.68 3 Years -25.93 -4.05 5 Years -6.72 -0.57 Inception -0.38 3.78 (12/31/97) - -------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT SCIENCE AND TECHNOLOGY S&P GROWTH FUND 500 INDEX ----------- --------- 1 Year 40.09% 28.68% 3 Years -59.36 -11.67 5 Years -29.38 -2.82 Inception -2.26 24.95 (12/31/97) *AS OF 12/3103 **NOT ANNUALIZED. - -------------------------------------------------------------------------------- PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE; HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE S & P 500 INDEX. - -------------------------------------------------------------------------------- GROWTH OF $10,000 - -------------------------------------------------------------------------------- The sum of $10,000 invested at inception (12/31/97) and held until 12/31/03 would have declined to $9,774 in the Fund or grown to $12,495 in the S&P 500 Index. - -------------------------------------------------------------------------------- TOP 10 HOLDINGS - -------------------------------------------------------------------------------- * Cisco Systems, Inc. * Symantec Corp. * Analog Devices, Inc. * Genetech, Inc. * Amgen, Inc. * Qualcomm, Inc. * Foundry Networks, Inc. * Veritas Software Corp. * Adobe Systems, Inc. * St. Jude Medical, Inc. Total Number of Holdings: 64 33 SIT SCIENCE AND TECHNOLOGY GROWTH FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2003 (UNAUDITED) - ------------------------------------------------------------------------------ QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - ------------------------------------------------------------------------------ COMMON STOCKS (97.8%) (2) COMMUNICATIONS (2.0%) 12,600 Nextel Communications, Inc. (3) 353,556 -------------------- CONSUMER DURABLES (2.0%) 7,600 Electronic Arts, Inc. (3) 363,128 -------------------- CONSUMER SERVICES (1.0%) 9,600 Time Warner, Inc. (3) 172,704 -------------------- ELECTRONIC TECHNOLOGY (41.1%) 6,800 Agilent Technologies, Inc. (3) 198,832 10,000 Analog Devices, Inc. 456,500 13,800 Applied Materials, Inc. (3) 309,810 10,400 ASML Holding N.V. (3) 208,520 11,800 At Road, Inc. (3) 156,940 9,000 Broadcom Corp. (3) 306,810 10,400 Brooks Automation, Inc. (3) 251,368 25,200 Cisco Systems, Inc. (3) 612,108 6,400 Cognex Corp. 180,736 37,000 Cray, Inc. (3) 367,410 3,600 Cymer, Inc. (3) 166,284 9,000 Dell Computer Corp. (3) 305,640 19,100 EMC Corp. (3) 246,772 14,800 Foundry Networks, Inc. (3) 404,928 7,800 Hewlett-Packard Co. 179,166 11,200 Intel Corp. 360,640 11,000 Jabil Circuit, Inc. (3) 311,300 6,200 KLA-Tencor Corp. (3) 363,754 14,400 Netscreen Technologies, Inc. (3) 356,400 8,000 Novellus Systems, Inc. (3) 336,400 7,700 Qualcomm, Inc. 415,261 40,200 Sonus Networks, Inc. (3) 303,912 7,800 Synopsys, Inc. (3) 263,328 9,000 Xilinx, Inc. (3) 348,660 -------------------- 7,411,479 -------------------- HEALTH SERVICES (1.1%) 8,100 e-Research Technology, Inc. (3) 205,902 -------------------- HEALTH TECHNOLOGY (17.7%) 7,200 Amgen, Inc. (3) 444,960 10,000 Boston Scientific Corp. (3) 367,600 44,400 Elan Corp., A.D.R (3) 305,916 4,800 Genentech, Inc. (3) 449,136 5,000 Genzyme Corp. (3) 246,700 3,800 Gilead Sciences, Inc. (3) 220,932 - ------------------------------------------------------------------------------ QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - ------------------------------------------------------------------------------ 3,400 MedImmune, Inc. (3) 86,360 4,600 Medtronic, Inc. 223,606 21,600 Sangamo BioSciences, Inc. (3) 119,664 30,000 StemCells, Inc. (3) 59,400 6,000 St. Jude Medical, Inc. (3) 368,100 5,400 Teva Pharmaceutical, Ltd., A.D.R. 306,234 -------------------- 3,198,608 -------------------- PROCESS INDUSTRIES (1.2%) 5,000 Millipore Corp. (3) 215,250 -------------------- PRODUCER MANUFACTURING (2.7%) 8,000 American Power Conversion Corp. 195,600 11,400 Thermo Electron Corp. (3) 287,280 -------------------- 482,880 -------------------- RETAIL TRADE (1.3%) 3,600 eBay, Inc. (3) 232,524 -------------------- TECHNOLOGY SERVICES (27.7%) 9,400 Adobe Systems, Inc. 369,420 12,800 Amdocs, Ltd. (3) 287,744 14,200 BEA Systems, Inc. (3) 174,660 7,800 Business Objects, A.D.R. (3) 270,426 4,000 CACI International, Inc. (3) 194,480 4,200 Cadence Design Systems, Inc. (3) 75,516 12,000 Check Point Software Technology (3) 201,840 8,600 Citrix Systems, Inc. (3) 182,406 8,200 Cognos, Inc. (3) 251,084 5,000 First Data Corp. 205,450 7,600 Fiserv, Inc. (3) 300,276 20,600 Informatica Corp. (3) 212,180 4,000 Intuit, Inc. (3) 211,640 6,900 Mercury Interactive Corp. (3) 335,616 9,000 Microsoft Corp. 247,860 7,800 SAP, A.D.R. 324,168 14,000 Symantec Corp. (3) 485,100 10,800 Veritas Software Corp. (3) 401,328 6,000 Yahoo!, Inc. (3) 271,020 -------------------- 5,002,214 -------------------- Total common stocks 17,638,245 -------------------- (cost: $16,029,059) SHORT-TERM SECURITIES (1.0%) (2) 172,000 Sit Money Market Fund, 0.58% (4) 172,000 -------------------- (cost: $172,000) Total investments in securities (cost: $16,201,059) $17,810,245 ==================== See accompanying notes to portfolios of investments on page 40. 34 - -----------------------------------------------------------------------[GRAPHIC] This page has been left blank intentionally. 35 SIT DEVELOPING MARKETS GROWTH FUND SIX MONTHS ENDED DECEMBER 31, 2003 [PHOTO] ------------------------------------------------------------------------ SENIOR PORTFOLIO MANAGERS EUGENE C. SIT, CFA AND ROGER J. SIT The Sit Developing Markets Growth Fund returned +27.81% for six months ended December 31, 2003 compared with +33.09% for the MSCI Emerging Markets Free Index (the "Index") and +31.50% for the MSCI Emerging Markets Free Growth Index. The Fund's holdings in Brazil and Mexico drove the relative underperformance due to stock selection. Israel also caused relative underperformance due to our stock selection and overweighting. Conversely, our holdings in India and China outperformed the Index. ASIAN GROWTH LEADS THE WORLD The Fund's weight in Asia was 68.5% versus 54.1% for the Index. Robust economic growth is taking place in Asia, powered by China's industrial and urbanization trends, which are rapidly bidding up commodity prices. Exports are rising now that IT expenditures are picking up and domestic consumption is strengthening. The possible slowing of China's robust economic growth is a concern, as is the possible reoccurrence of SARS. In China we added Tsingtao Brewery (food beverage & tobacco), Ports Design (luxury goods) and PICC Property and Casualty (insurance) to capitalize on consumer growth. We also added POSCO, a steel producer in Korea, to benefit from rising commodity prices. BRAZIL EMPHASIZED OVER MEXICO The Fund had a weighting of 18.4% in Latin America versus the Index weight of 19.1%. We continue to maintain a material weight as the political environment and economic outlook improve and inflation remains relatively low. However, we have been shifting our weight to Brazil from Mexico, which faces political uncertainty, tax reform issues, and long-term competitive challenges from Asia. In Brazil we expect strong economic growth as interest rates decline and the fiscal outlook improves. We recently added Companhia Vale do Rio Doce, a Brazilian materials firm. LESS EMPHASIS IN OTHER REGIONS We remain materially underweight in the Middle East, Emerging Europe and Africa (11.2% versus 26.8% for the Index). In Israel, we own two generic pharmaceutical companies, Teva and Taro, both of which should benefit from health care reform in Europe. For consumer exposure to India's growth, we added ICICI Bank. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND STRATEGY - -------------------------------------------------------------------------------- The Fund seeks to maximize long-term capital appreciation. The Fund seeks to achieve its objective by investing at least 80% of its net assets in common stocks of companies domiciled or operating in a developing market. In selecting investments for the Fund, the Sub-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 Sub-Adviser seeks industries and sectors that appear to have strong earnings growth prospects. Within the selected industries and sectors, the Sub-Adviser invests in foreign growth-oriented companies it believes exhibit the potential for superior growth. - -------------------------------------------------------------------------------- PORTFOLIO SUMMARY - -------------------------------------------------------------------------------- Net Asset Value 12/31/03: $10.32 Per Share 6/30/03: $8.12 Per Share Total Net Assets: $9.1 Million Weighted Average Market Cap: $36.8 Billion - -------------------------------------------------------------------------------- PORTFOLIO STRUCTURE - BY REGION (% OF TOTAL NET ASSETS) - -------------------------------------------------------------------------------- [BAR CHART] SIT DEVELOPING MSCI EMERGING MARKETS GROWTH FUND MARKETS FREE INDEX Asia 68.5 54.1 Latin America 18.4 19.1 Africa/ 9.9 17.6 Middle East Europe 1.3 9.2 Cash and Other 1.9 0.0 Net Assets 36 - -----------------------------------------------------------------------[GRAPHIC] - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT MSCI LIPPER DEVELOPING EMERGING EMERGING MARKETS MARKETS MARKETS GROWTH FUND FREE INDEX INDEX ----------- ---------- ----- 3 Month** 15.31% 17.25% 18.68% 6 Month** 27.81 33.09 35.34 1 Year 45.96 51.59 56.94 3 Year 1.59 9.88 13.04 5 Year 5.96 8.17 11.02 Inception 0.47 -0.83 1.79 (7/1/94) - -------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURNS* - -------------------------------------------------------------------------------- SIT MSCI LIPPER DEVELOPING EMERGING EMERGING MARKETS MARKETS MARKETS GROWTH FUND FREE INDEX INDEX ----------- ---------- ----- 1 Year 45.96% 51.59% 56.94% 3 Year 4.84 32.65 44.45 5 Year 33.58 48.10 68.65 Inception 4.56 -7.60 18.36 (7/1/94) *AS OF 12/31/03 **NOT ANNUALIZED. - -------------------------------------------------------------------------------- PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE; HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE MSCI EMERGING MARKETS FREE INDEX. THE LIPPER AVERAGES AND INDICES ARE OBTAINED FROM LIPPER ANALYTICAL SERVICES, INC., A LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS. - -------------------------------------------------------------------------------- GROWTH OF $10,000 - -------------------------------------------------------------------------------- [LINE GRAPH] The sum of $10,000 invested at inception (7/1/94) and held until 12/31/03 would have increased to $10,456 in the Fund, or declined to $9,240 in the Morgan Stanley Capital Int'l Emerging Markets Free Index assuming reinvestment of all dividends and capital gains. - -------------------------------------------------------------------------------- PORTFOLIO STRUCTURE - BY SECTOR (% OF TOTAL NET ASSETS) - -------------------------------------------------------------------------------- Electronic Technology 16.4 Communications 14.9 Finance 14.6 Energy Minerals 11.9 Non-EnergyMinerals 9.7 Retail Trade 8.6 Consumer Services 8.2 Sectors less than 5.0% 13.8 Cash and Other Net Assets 1.9 37 SIT DEVELOPING MARKETS GROWTH FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECMEBER 31, 2003 - -------------------------------------------------------------------------------- 10 LARGEST HOLDINGS - -------------------------------------------------------------------------------- * Samsung Electronics * Petrochina Co. * India Fund * BHP Billiton Limited, A.D.R. * Taiwan Semiconductor * HSBC Holdings p.l.c. * Hon Hai Precision Industry * Teva Pharmaceutical, A.D.R. * Anglo American p.l.c. * Wal-Mart de Mexico Total Number of Holdings: 58 - ------------------------------------------------------------------------------ QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - ------------------------------------------------------------------------------ COMMON STOCKS (92.6%) (2) AFRICA/ MIDDLE EAST (9.9%) ISRAEL (7.0%) 8,500 Amdocs, Ltd. (Technology Services) (3) 191,080 2,600 Taro Pharmaceutical Industries, Ltd. (Health Technology) (3) 167,700 4,900 Teva Pharmaceutical, A.D.R. (Health Technology) 277,879 ------------- 636,659 ------------- SOUTH AFRICA (2.9%) 12,100 Anglo American p.l.c. (Non-Energy Minerals) 261,447 ------------- ASIA (63.0%) AUSTRALIA (4.3%) 21,410 BHP Billiton, Ltd., A.D.R. (Non-Energy Minerals) 390,947 ------------- CHINA / HONG KONG (17.7%) 32,000 China Mobile (Hong Kong), Ltd. (Communications) 98,305 49,000 Citic Pacific, Ltd. (Industrial Services) 124,968 9,000 CLP Holdings (Utilities) 42,893 38,000 CNOOC, Ltd. (Energy Minerals) 74,399 19,600 HSBC Holdings p.l.c. (Finance) 309,264 22,962 Johnson Electric Holdings, Ltd. (Producer Manufacturing) 29,281 42,000 Li & Fung, Ltd. (Retail Trade) 71,951 876,000 PetroChina Co. (Energy Minerals) 502,112 276,000 PICC Property & Casualty Co., Ltd. (Finance) (3) 123,538 55,627 Ports Design, Ltd. (Retail Trade) (3) 99,953 - ------------------------------------------------------------------------------ QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - ------------------------------------------------------------------------------ 13,000 Sun Hung Kai Properties, Ltd. (Finance) 107,585 16,000 Tsingtao Brewery Co., Ltd. (Consumer Non-Durables) 18,754 ------------- 1,603,003 ------------- INDIA (0.7%) 4,000 ICICI Bank, A.D.R. (Finance) 68,720 ------------- MALAYSIA (2.1%) 47,000 Maxis Berhad (Communications) 93,382 17,500 Nestle Berhad (Consumer Non-Durables) 100,395 ------------- 193,777 ------------- PHILIPPINES (1.2%) 912,000 SM Prime Holdings, Inc. (Retail Trade) 106,772 ------------- RUSSIA (3.5%) 700 LUKOIL, A.D.R. (Energy Minerals) 65,100 600 Mobile Telesystems, A.D.R. (Communications) (3) 49,680 1,000 Vimpel Communications, A.D.R. (Communications) (3) 73,500 3,000 YUKOS, A.D.R. (Energy Minerals) 127,800 ------------- 316,080 ------------- SINGAPORE (4.7%) 17,097 DBS Group Holdings, Ltd. (Finance) 147,987 54,000 Neptune Orient Lines, Ltd. (Transportation) (3) 68,680 18,000 Venture Corp., Ltd. (Electronic Tech.) 211,977 ------------- 428,644 ------------- SOUTH KOREA (15.5%) 8,507 Industrial Bank of Koea (Finance) (3) 48,915 2,200 Kookmin Bank (Finance) 82,442 600 Kookmin Bank, A.D.R. (Finance) 22,704 2,500 KT Corp. (Communications) 93,580 5,000 POSCO, A.D.R. (Non-Energy Minerals) 169,850 1,569 Samsung Electronics (Electronic Technology) 593,889 10,100 Shinhan Financial Group (Finance) 161,481 570 Shinsegae Co., Ltd. (Retail Trade) 138,733 5,100 SK Telecom Co., A.D.R. (Communications) 95,115 ------------- 1,406,709 ------------- TAIWAN (7.5%) 77,950 Hon Hai Precision Industry (Electronic Technology) 306,519 201,302 Taiwan Semiconductor Co. (Electronic Technology) 376,515 ------------- 683,034 ------------- 38 - -----------------------------------------------------------------------[GRAPHIC] - ------------------------------------------------------------------------------ QUANTITY NAME OF ISSUER MARKET VALUE($)(1) - ------------------------------------------------------------------------------ THAILAND (5.8%) 94,600 Advanced Info Service Public Co., Ltd. 201,746 (Communications) 50,600 Bangkok Bank Public Co., Ltd. (Finance) (3) 146,861 15,600 BEC World Public Co. (Consumer Services) 88,980 278,800 Land & Houses Public Co., Ltd. (Consumer Durables) 89,362 ------------- 526,949 ------------- EUROPE (1.3%) SPAIN (1.3%) 2,592 Telefonica, A.D.R. (Communications) 114,541 ------------- LATIN AMERICA (18.4%) BRAZIL (9.9%) 19,936,532 Banco Bradesco S.A. (Finance) 105,038 2,000 Brasil Telecom, A.D.R. (Communications) 75,600 1,000 Companhia Vale do Rio Doce, A.D.R. (Non-Energy Minerals) (3) 58,500 3,883 Embraer de Aeronautica, A.D.R. (Transportation) 136,022 4,900 Pao de Acucar, A.D.R. (Retail Trade) 123,235 5,860 Petrobras (Energy Minerals) 155,183 5,300 Petrobras, A.D.R. (Energy Minerals) 154,972 6,100 Tele Norte Leste Participacoes, A.D.R. (Communications) 94,123 ------------- 902,673 ------------- MEXICO (8.5%) 6,200 America Movil, A.D.R. (Communications) 169,508 4,100 Grupo Televisa S.A., A.D.R. (Consumer Services) 163,426 5,900 Telefonos de Mexico, A.D.R. (Communications) 194,877 84,770 Wal-Mart de Mexico (Retail Trade) 241,623 ------------- 769,434 ------------- Total common stocks 8,409,389 ------------- (cost: $6,514,562) CLOSED-END MUTUAL FUND (5.5%) (2) 19,640 India Fund (Consumer Services) 494,928 ------------- (cost: $336,404) SHORT-TERM SECURITIES (0.6%) (2) 52,000 Sit Money Market Fund, 0.58% (4) 52,000 ------------- (cost: $52,000) Total investments in securities (cost: $6,902,966) (5) $8,956,317 ============= See accompanying notes to portfolios of investments on page 40. 39 - -----------------------------------------------------------------------[GRAPHIC] SIT MUTUAL FUNDS - -------------------------------------------------------------------------------- NOTES TO PORTFOLIOS OF INVESTMENTS (1) Securities are valued by procedures described in note 1 to the financial statements. (2) Percentage figures indicate percentage of total net assets. (3) Presently non-income producing securities. (4) This security represents an investment in an affiliated party. See note 3 to the accompanying financial statements. (5) At December 31, 2003, the cost of securities for federal income tax purposes and the aggregate gross unrealized appreciation and depreciation based on that cost were as follows:
LARGE CAP MID CAP INTERNATIONAL BALANCED GROWTH GROWTH GROWTH FUND FUND FUND FUND --------------- --------------- --------------- --------------- Cost for federal income tax purposes $ 16,940,642 $ 57,237,079 $ 156,408,471 $ 55,955,474 =============== =============== =============== =============== Unrealized appreciation (depreciation) on investments: Gross unrealized appreciation $ 1,504,099 $ 11,085,190 $ 41,708,325 $ 8,267,176 Gross unrealized depreciation (1,170,082) (6,228,058) (8,483,146) (6,824,354) --------------- --------------- --------------- --------------- Net unrealized appreciation (depreciation) $ 334,017 $ 4,857,132 $ 33,225,179 $ 1,442,822 =============== =============== =============== =============== Cost for federal income tax purposes $ 183,146,154 $ 16,201,059 $ 6,902,966 =============== =============== =============== SCIENCE AND DEVELOPING SMALL CAP TECHNOLOGY MARKETS GROWTH GROWTH GROWTH FUND FUND FUND --------------- --------------- --------------- Unrealized appreciation (depreciation) on investments: Gross unrealized appreciation $ 46,073,329 $ 3,271,180 $ 2,493,042 Gross unrealized depreciation (10,815,209) (1,661,994) (439,691) --------------- --------------- --------------- Net unrealized appreciation (depreciation) $ 35,258,120 $ 1,609,186 $ 2,053,351 =============== =============== ===============
40 - -----------------------------------------------------------------------[GRAPHIC] This page has been left blank intentionally. 41 SIT MUTUAL FUNDS DECEMBER 31, 2003 - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS & LIABILITIES (Unaudited)
LARGE CAP MID CAP BALANCED GROWTH GROWTH ASSETS FUND FUND FUND --------------- --------------- --------------- Investments in securities, at identified cost $ 16,940,642 $ 57,237,079 $ 156,408,471 =============== =============== =============== Investments in securities, at market value - see accompanying schedule for detail $ 17,274,659 $ 62,094,211 $ 189,633,650 Cash in bank on demand deposit 24 123,671 15,311 Receivables: Dividends and accrued interest 72,834 54,016 32,330 Fund shares sold 29,649 107,286 91,736 Investment securities sold 176,818 599,751 5,360,809 Other receivables -- 10,598 -- --------------- --------------- --------------- Total assets 17,553,984 62,989,533 195,133,836 --------------- --------------- --------------- LIABILITIES Payables: Disbursements in excess of cash balances -- -- -- Investment securities purchased 156,357 1,069,093 2,451,072 Fund shares redeemed -- 1,970 84,668 Accrued investment management and advisory services fee 14,547 52,415 185,239 Other payables 6,156 -- 147,215 --------------- --------------- --------------- Total liabilities 177,060 1,123,478 2,868,194 --------------- --------------- --------------- Net assets applicable to outstanding capital stock 17,376,924 61,866,055 192,265,642 =============== =============== =============== Capital Stock Par $ 0.001 $ 0.001 $ 0.001 Authorized shares 10,000,000,000 10,000,000,000 10,000,000,000 Outstanding shares 1,298,416 2,048,096 20,333,204 =============== =============== =============== Net asset value per share of outstanding capital stock $ 13.38 $ 30.21 $ 9.46 =============== =============== ===============
42 - -----------------------------------------------------------------------[GRAPHIC]
SCIENCE AND DEVELOPING INTERNATIONAL SMALL CAP TECHNOLOGY MARKETS GROWTH GROWTH GROWTH GROWTH ASSETS FUND FUND FUND FUND --------------- --------------- --------------- --------------- Investments in securities, at identified cost $ 55,955,474 $ 183,146,154 $ 16,201,059 $ 6,902,966 =============== =============== =============== =============== Investments in securities, at market value - see accompanying schedule for detail $ 57,398,296 $ 218,404,274 $ 17,810,245 $ 8,956,317 Cash in bank on demand deposit 4,806 11,027 8,595 79,728 Receivables: Dividends and accrued interest 74,226 21,400 1,206 33,239 Fund shares sold 54,519 115,235 36,120 34,767 Investment securities sold 588,893 1,746,105 498,365 -- Other receivables -- 54,825 -- 4,516 --------------- --------------- --------------- --------------- Total assets 58,120,740 220,352,866 18,354,531 9,108,567 --------------- --------------- --------------- --------------- LIABILITIES Payables: Disbursements in excess of cash balances -- -- -- -- Investment securities purchased 137,705 752,499 274,873 -- Fund shares redeemed 89,301 123,285 5,387 15,534 Accrued investment management and advisory services fee 75,935 275,524 20,419 15,241 Other payables 30,751 -- 19,636 -- --------------- --------------- --------------- --------------- Total liabilities 333,692 1,151,308 320,315 30,775 --------------- --------------- --------------- --------------- Net assets applicable to outstanding capital stock 57,787,048 219,201,558 18,034,216 9,077,792 =============== =============== =============== =============== Capital Stock Par $ 0.001 $ 0.001 $ 0.001 $ 0.001 Authorized shares 10,000,000,000 10,000,000,000 10,000,000,000 10,000,000,000 Outstanding shares 5,160,760 8,758,229 1,904,485 879,492 =============== =============== =============== =============== Net asset value per share of outstanding capital stock $ 11.20 $ 25.03 $ 9.47 $ 10.32 =============== =============== =============== ===============
See accompanying notes to financial statements on page 49. 43 - -----------------------------------------------------------------------[GRAPHIC] SIT MUTUAL FUNDS SIX MONTHS ENDED DECEMBER 31, 2003 - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS (UNAUDITED)
LARGE CAP MID CAP INTERNATIONAL BALANCED GROWTH GROWTH GROWTH FUND FUND FUND FUND --------------- --------------- --------------- --------------- INVESTMENT INCOME: INCOME: Dividends * $ 77,021 $ 315,293 $ 356,194 $ 372,066 Interest 145,553 4,354 22,718 4,750 --------------- --------------- --------------- --------------- Total income 222,574 319,647 378,912 376,816 --------------- --------------- --------------- --------------- EXPENSES (NOTE 3): Investment management and advisory services fee 82,835 305,097 1,142,180 494,736 Less fees and expenses absorbed by investment adviser -- -- (91,374) (93,599) --------------- --------------- --------------- --------------- Total net expenses 82,835 305,097 1,050,806 401,137 --------------- --------------- --------------- --------------- Net investment income (loss) 139,739 14,550 (671,894) (24,321) --------------- --------------- --------------- --------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS : Net realized gain (loss) (176,715) (239,174) 2,744,662 (1,328,722) Net change in unrealized appreciation (depreciation) on investments 1,437,931 7,246,811 26,397,096 11,368,003 Realized gain (loss) on foreign currency transactions -- -- -- 3,749 Net change in unrealized appreciation (depreciation) on foreign currency transactions -- -- -- 2,929 --------------- --------------- --------------- --------------- Net gain (loss) on investments 1,261,216 7,007,637 29,141,758 10,045,959 --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 1,400,955 $ 7,022,187 $ 28,469,864 $ 10,021,638 =============== =============== =============== ===============
- ---------------------- * Dividends are net of foreign withholding tax of $27,853 and $10,003 in the International Growth Fund and Developing Markets Growth Fund, respectively. 44 - -----------------------------------------------------------------------[GRAPHIC]
SCIENCE AND DEVELOPING SMALL CAP TECHNOLOGY MARKETS GROWTH GROWTH GROWTH FUND FUND FUND ------------ ------------ ------------ INVESTMENT INCOME: INCOME: Dividends * $ 347,768 $ 10,701 $ 104,069 Interest 86,122 2,529 2,222 ------------ ------------ ------------ Total income 433,890 13,230 106,291 ------------ ------------ ------------ EXPENSES (NOTE 3): Investment management and advisory services fee 1,552,316 127,290 93,184 Less fees and expenses absorbed by investment adviser -- (12,729) -- ------------ ------------ ------------ Total net expenses 1,552,316 114,561 93,184 ------------ ------------ ------------ Net investment income (loss) (1,118,426) (101,331) 13,107 ------------ ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS : Net realized gain (loss) 3,325,059 (1,552,504) 74,485 Net change in unrealized appreciation (depreciation) on investments 26,833,137 4,279,983 2,182,562 Realized gain (loss) on foreign currency transactions -- -- 273 Net change in unrealized appreciation (depreciation) on foreign currency transactions -- -- 156 ------------ ------------ ------------ Net gain (loss) on investments 30,158,196 2,727,479 2,257,476 ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations $ 29,039,770 $ 2,626,148 $ 2,270,583 ============ ============ ============
- ---------------------- * Dividends are net of foreign withholding tax of $27,853 and $10,003 in the International Growth Fund and Developing Markets Growth Fund, respectively. See accompanying notes to financial statements on page 49. 45 SIT MUTUAL FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
BALANCED LARGE CAP FUND GROWTH FUND ---------------------------- ----------------------------- SIX MONTHS SIX MONTHS ENDED ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED 2003 JUNE 30, 2003 JUNE 30, (UNAUDITED) 2003 (UNAUDITED) 2003 ------------ ------------ ------------ ------------ Operations: Net investment income (loss) $ 139,739 $ 402,738 $ 14,550 $ 43,757 Net realized gain (loss) on investments (176,715) (1,647,606) (239,174) (6,536,986) Net change in unrealized appreciation (depreciation) on investments 1,437,931 1,829,489 7,246,811 7,056,934 Net realized gain (loss) on foreign currency transactions -- -- -- -- Net change in unrealized appreciation (depreciation) on foreign currency transactions -- -- -- -- ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations 1,400,955 584,621 7,022,187 563,705 ------------ ------------ ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (219,000) (455,000) (43,757) -- Net realized gains on investments -- -- -- -- ------------ ------------ ------------ ------------ Total distributions (219,000) (455,000) (43,757) -- ------------ ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold 1,188,038 4,198,470 3,359,693 10,694,474 Reinvested distributions 217,252 450,934 42,592 -- Payments for shares redeemed (1,275,193) (6,539,306) (7,838,353) (15,773,839) ------------ ------------ ------------ ------------ Increase (decrease) in net assets from capital share transactions 130,097 (1,889,902) (4,436,068) (5,079,365) ------------ ------------ ------------ ------------ Total increase (decrease) in net assets 1,312,052 (1,760,281) 2,542,362 (4,515,660) NET ASSETS Beginning of period 16,064,872 17,825,153 59,323,693 63,839,353 ------------ ------------ ------------ ------------ End of period $ 17,376,924 $ 16,064,872 $ 61,866,055 $ 59,323,693 ============ ============ ============ ============ NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $ 22,607,530 $ 22,477,433 $ 80,839,521 $ 85,275,589 Undistributed (distributions in excess of) net investment income 1,477 80,738 14,550 43,757 Accumulated net realized gain (loss) from security transactions and foreign currency transactions (5,566,099) (5,389,384) (23,845,148) (23,605,974) Unrealized appreciation (depreciation) on investments 334,016 (1,103,915) 4,857,132 (2,389,679) Unrealized appreciation (depreciation) on foreign currency transactions -- -- -- -- ------------ ------------ ------------ ------------ $ 17,376,924 $ 16,064,872 $ 61,866,055 $ 59,323,693 ============ ============ ============ ============ CAPITAL TRANSACTIONS IN SHARES: Sold 92,373 359,102 118,406 436,179 Reinvested distributions 16,909 39,140 1,477 -- Redeemed (99,628) (559,312) (275,541) (650,676) ------------ ------------ ------------ ------------ Net increase (decrease) 9,654 (161,070) (155,658) (214,497) ============ ============ ============ ============
46 - -----------------------------------------------------------------------[GRAPHIC]
MID CAP INTERNATIONAL GROWTH FUND GROWTH FUND --------------------------- ---------------------------- SIX MONTHS SIX MONTHS ENDED ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED 2003 JUNE 30, 2003 JUNE 30, (UNAUDITED) 2003 (UNAUDITED) 2003 ------------ ------------ ------------ ------------ Operations: Net investment income (loss) ($ 671,894) ($ 1,124,324) ($ 24,321) $ 420,128 Net realized gain (loss) on investments 2,744,662 (29,541,134) (1,328,722) (11,557,686) Net change in unrealized appreciation (depreciation) on investments 26,397,096 31,743,942 11,368,003 4,260,724 Net realized gain (loss) on foreign currency transactions -- -- 3,749 4,027 Net change in unrealized appreciation (depreciation) on foreign currency transactions -- -- 2,929 (2,822) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations 28,469,864 1,078,484 10,021,638 (6,875,629) ------------ ------------ ------------ ------------ Distributions to shareholders from: Net investment income -- -- (424,155) -- Net realized gains on investments -- -- -- -- ------------ ------------ ------------ ------------ Total distributions -- -- (424,155) -- ------------ ------------ ------------ ------------ Capital share transactions: Proceeds from shares sold 10,202,436 36,506,428 40,549,067 232,337,183 Reinvested distributions -- -- 372,107 -- Payments for shares redeemed (16,579,194) (48,759,036) (41,264,860) (246,748,641) ------------ ------------ ------------ ------------ Increase (decrease) in net assets from capital share transactions (6,376,758) (12,252,608) (343,686) (14,411,458) ------------ ------------ ------------ ------------ Total increase (decrease) in net assets 22,093,106 (11,174,124) 9,253,797 (21,287,087) Net assets Beginning of period 170,172,536 181,346,660 48,533,251 69,820,338 ------------ ------------ ------------ ------------ End of period $192,265,642 $170,172,536 $ 57,787,048 $ 48,533,251 ============ ============ ============ ============ Net assets consist of: Capital (par value and paid-in surplus) $222,647,644 $229,024,402 $ 92,031,929 $ 92,375,615 Undistributed (distributions in excess of) net investment income (671,894) -- (24,321) 424,155 Accumulated net realized gain (loss) from security transactions and foreign currency transactions (62,935,287) (65,679,949) (35,667,167) (34,342,194) Unrealized appreciation (depreciation) on investments 33,225,179 6,828,083 1,442,822 (9,925,181) Unrealized appreciation (depreciation) on foreign currency transactions -- -- 3,785 856 ------------ ------------ ------------ ------------ $192,265,642 $170,172,536 $ 57,787,048 $ 48,533,251 ============ ============ ============ ============ Capital transactions in shares: Sold 1,158,188 5,098,620 4,206,726 26,277,940 Reinvested distributions -- -- 34,907 -- Redeemed (1,927,913) (6,920,288) (4,251,173) (27,581,341) ------------ ------------ ------------ ------------ Net increase (decrease) (769,725) (1,821,668) (9,540) (1,303,401) ============ ============ ============ ============
[WIDE TABLE CONTINUED BELOW] [WIDE TABLE CONTINUED FROM ABOVE]
SMALL CAP GROWTH FUND --------------------------- SIX MONTHS ENDED DECEMBER 31, YEAR ENDED 2003 JUNE 30, (UNAUDITED) 2003 ------------ ------------ Operations: Net investment income (loss) ($ 1,118,426) ($ 1,567,958) Net realized gain (loss) on investments 3,325,059 (24,258,198) Net change in unrealized appreciation (depreciation) on investments 26,833,137 29,931,512 Net realized gain (loss) on foreign currency transactions -- -- Net change in unrealized appreciation (depreciation) on foreign currency transactions -- -- ------------ ------------ Net increase (decrease) in net assets resulting from operations 29,039,770 4,105,356 ------------ ------------ Distributions to shareholders from: Net investment income -- -- Net realized gains on investments -- -- ------------ ------------ Total distributions -- -- ------------ ------------ Capital share transactions: Proceeds from shares sold 32,299,285 59,140,518 Reinvested distributions -- -- Payments for shares redeemed (25,049,217) (61,017,722) ------------ ------------ Increase (decrease) in net assets from capital share transactions 7,250,068 (1,877,204) ------------ ------------ Total increase (decrease) in net assets 36,289,838 2,228,152 Net assets Beginning of period 182,911,720 180,683,568 ------------ ------------ End of period $219,201,558 $182,911,720 ============ ============ Net assets consist of: Capital (par value and paid-in surplus) $261,867,634 $254,617,566 Undistributed (distributions in excess of) net investment income (1,118,426) -- Accumulated net realized gain (loss) from security transactions and foreign currency transactions (76,805,770) (80,130,829) Unrealized appreciation (depreciation) on investments 35,258,120 8,424,983 Unrealized appreciation (depreciation) on foreign currency transactions -- -- ------------ ------------ $219,201,558 $182,911,720 ============ ============ Capital transactions in shares: Sold 1,366,448 3,132,916 Reinvested distributions -- -- Redeemed (1,059,937) (3,260,004) ------------ ------------ Net increase (decrease) 306,511 (127,088) ============ ============
See accompanying notes to financial statements on page 49. 47 SIT MUTUAL FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SCIENCE AND TECHNOLOGY DEVELOPING MARKETS GROWTH FUND GROWTH FUND ---------------------------- ---------------------------- SIX MONTHS SIX MONTHS ENDED ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED 2003 JUNE 30, 2003 JUNE 30, (UNAUDITED) 2003 (UNAUDITED) 2003 ------------ ------------ ------------ ------------ Operations: Net investment income (loss) ($ 101,331) ($ 133,456) $ 13,107 $ 28,009 Net realized gain (loss) on investments (1,552,504) (5,718,058) 74,485 (692,664) Net change in unrealized appreciation (depreciation) on investments 4,279,983 6,706,666 2,182,562 684,551 Net realized gain (loss) on foreign currency transactions -- -- 273 (65) Net change in unrealized appreciation (depreciation) on foreign currency transactions -- -- 156 12 ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations 2,626,148 855,152 2,270,583 19,843 ------------ ------------ ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- -- (49,000) -- Net realized gains on investments -- -- -- -- ------------ ------------ ------------ ------------ Total distributions -- -- (49,000) -- ------------ ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold 3,369,365 5,517,587 9,993,947 37,920,464 Reinvested distributions -- -- 47,680 -- Payments for shares redeemed (3,160,970) (5,190,596) (11,762,688) (40,613,325) ------------ ------------ ------------ ------------ Increase (decrease) in net assets from capital share transactions 208,395 326,991 (1,721,061) (2,692,861) ------------ ------------ ------------ ------------ Total increase (decrease) in net assets 2,834,543 1,182,143 500,522 (2,673,018) NET ASSETS Beginning of period 15,199,673 14,017,530 8,577,270 11,250,288 ------------ ------------ ------------ ------------ End of period $ 18,034,216 $ 15,199,673 $ 9,077,792 $ 8,577,270 ============ ============ ============ ============ NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $ 38,495,874 $ 38,287,479 $ 10,524,055 $ 12,245,116 Undistributed (distributions in excess of) net investment income (101,331) -- (7,949) 27,944 Accumulated net realized gain (loss) from security transactions and foreign currency transactions (21,969,513) (20,417,009) (3,491,825) (3,566,583) Unrealized appreciation (depreciation) on investments 1,609,186 (2,670,797) 2,053,350 (129,212) Unrealized appreciation (depreciation) on foreign currency transactions -- -- 161 5 ------------ ------------ ------------ ------------ $ 18,034,216 $ 15,199,673 $ 9,077,792 $ 8,577,270 ============ ============ ============ ============ CAPITAL TRANSACTIONS IN SHARES: Sold 380,501 772,939 1,131,337 5,153,943 Reinvested distributions -- -- 4,895 -- Redeemed (364,211) (749,462) (1,313,327) (5,486,325) ------------ ------------ ------------ ------------ Net increase (decrease) 16,290 23,477 (177,095) (332,382) ============ ============ ============ ============
See accompanying notes to financial statements on page 49. 48 SIT MUTUAL FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 Developing Markets Growth, Sit Small Cap Growth, Sit International Growth, Sit Balanced, and Sit Science and Technology Growth Funds are series funds of Sit Mutual Funds, Inc. This report covers the equity funds of the Sit Mutual Funds (the Funds). The investment objective for each Fund is as follows: - -------------------------------------------------------------------------------- FUND INVESTMENT OBJECTIVE - -------------------------------------------------------------------------------- Balanced Long-term capital growth consistent with the preservation of principal and to provide regular income. - -------------------------------------------------------------------------------- Large Cap Growth Fund, Inc. Maximize long-term capital appreciation. - -------------------------------------------------------------------------------- Mid Cap Growth Fund, Inc. Maximize long-term capital appreciation. - -------------------------------------------------------------------------------- International Growth Maximize long-term growth. - -------------------------------------------------------------------------------- Small Cap Growth Maximize long-term capital appreciation. - -------------------------------------------------------------------------------- Science and Technology Maximize long-term capital appreciation. Growth Fund - -------------------------------------------------------------------------------- Developing Markets Growth Maximize long-term capital appreciation. - -------------------------------------------------------------------------------- Significant accounting policies followed by the Funds are summarized below: INVESTMENTS IN SECURITIES Investments in securities traded on national or international securities exchanges are valued at the last reported sales price prior to the time when assets are valued. Securities traded on the over-the-counter market are valued at the last reported sales price or if the last sales price is not available at the last reported bid price. The sale and bid prices are obtained from independent pricing services. Debt securities maturing more than 60 days are priced by an independent pricing service. When market quotations are not readily available, or securities cannot be valued by the pricing service, securities are valued at fair value as determined in good faith using procedures established by the Board of Directors, which may include dealer supplied valuations. Debt securities maturing in less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued at amortized cost. 49 - -----------------------------------------------------------------------[GRAPHIC] SIT MUTUAL FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) Security transactions are accounted for on the date the securities are purchased or sold. Securities gains and losses are calculated on the identified-cost basis. Dividend income is recorded on the ex-dividend date or upon the receipt of ex-dividend notification in the case of certain foreign securities. Interest, including level-yield amortization of long-term bond premium and discount, is recorded on the accrual basis. ILLIQUID SECURITIES Each Fund currently limits investments in illiquid securities to 15% of net assets. At December 31, 2003, there were no securities held by the Funds deemed illiquid by the Adviser. Pursuant to the guidelines adopted by the Board of Directors, certain unregistered securities are determined to be liquid and are not included within the limitation specified above. FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS The market value of securities and other assets and liabilities denominated in foreign currencies for Developing Markets Growth Fund and International Growth Fund are translated daily into U.S. dollars at the closing rate of exchange. 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 Developing Markets Growth and International Growth Funds may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Funds and the resulting unrealized appreciation or depreciation is determined using foreign currency exchange rates from an independent pricing service. The Funds are subject to the credit risk that the other party will not complete the obligations of the contract. FEDERAL TAXES The Funds' policy is to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders. Therefore, no income tax provision is required. Also, in order to avoid the payment of any federal excise taxes, the Funds will distribute substantially all of their net investment income and net realized gains on a calendar year basis. Net investment income and net realized gains may differ for financial statement and tax purposes. The character of distributions made during the year for net investment income or net realized gains may also differ from its ultimate characterization for tax purposes. 50 - -----------------------------------------------------------------------[GRAPHIC] As of June 30, 2003, for federal income tax purposes, some Funds have capital loss carryovers which, if not offset by subsequent capital gains, will begin to expire as follows: Loss Carryover Expiration Year -------------- --------------- Balanced $ 5,265,807 2010 Large Cap Growth 23,482,341 2010 Mid Cap Growth 65,362,463 2010 International Growth 34,342,194 2009 Small Cap Growth 79,761,647 2010 Science & Technology Growth 20,109,488 2010 Developing Markets Growth 3,566,582 2007 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 Fund and declared and paid annually for Science and Technology Growth, Developing Markets Growth, Small Cap Growth, International Growth, Mid Cap Growth, and Large Cap Growth Funds. Distributions from net realized gains, if any, will be made annually for each of the Funds. CONCENTRATION OF INVESTMENTS The Developing Markets Growth Fund may concentrate investments in countries with limited or developing capital markets which may involve greater risks than investments in more developed markets and the prices of such investments may be volatile. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of the Fund's investments and the income it generates, as well as the Fund's ability to repatriate such amounts. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results. Actual results could differ from those estimates. 51 - -----------------------------------------------------------------------[GRAPHIC] SIT MUTUAL FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) (2) INVESTMENT SECURITY TRANSACTIONS Purchases of and proceeds from sales and maturities of investment securities, other than short-term securities, for the period ended December 31, 2003, were as follow: Purchases ($) Proceeds ($) ------------- ------------ Balanced Fund 4,078,09 14,433,733 Large Cap Growth Fund 7,294,549 10,823,846 Mid Cap Growth Fund 61,033,988 68,958,933 International Growth Fund 13,817,966 14,203,927 Small Cap Growth Fund 57,720,859 45,051,186 Science and Technology Growth Fund 5,408,526 5,477,533 Developing Markets Growth Fund 1,136,344 2,472,928 (3) EXPENSES INVESTMENT ADVISER The Funds each have entered into an investment management agreement with Sit Investment Associates, Inc. (SIA), under which SIA manages the Funds' assets and provides research, statistical and advisory services, and pays related office rental, executive expenses and executive salaries. 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: Contractual Net of Adviser's Management Fee Voluntary Fee Waiver -------------- -------------------- Balanced Fund 1.00% 1.00% Large Cap Growth Fund 1.00% 1.00% Mid Cap Growth Fund 1.25% 1.15% International Growth Fund 1.85% 1.50% Small Cap Growth Fund 1.50% 1.50% Science and Technology Growth Fund 1.50% 1.35% Developing Markets Growth Fund 2.00% 2.00% SIA is obligated to pay all of the Funds' expenses (excluding extraordinary expenses, stock transfer taxes, interest, brokerage commissions and other transaction charges relating to investing activities). For the periods through December 31, 2004 the Adviser has agreed to limit the management fee of the Mid Cap Growth Fund, Science and Technology Growth Fund, and International Growth Fund to 1.15%, 1.35%, and 1.50% of the Fund's average daily net assets respectively. 52 - -----------------------------------------------------------------------[GRAPHIC] The Funds invest in the Sit Money Market Fund. The terms of such transactions were identical to those of non-related entities except that, to avoid duplicate investment advisory fees, SIA remits to each Fund an amount equal to all fees otherwise due to them under their investment management agreement for the assets invested in the Sit Money Market Fund. The Funds owned the following shares as of December 31, 2003: Shares ------ Balanced Fund 461,000 Large Cap Growth Fund 421,000 Mid Cap Growth Fund 6,036,000 International Growth Fund 1,000 Small Cap Growth Fund 3,808,000 Science and Technology Growth Fund 172,000 Developing Markets Growth Fund 52,000 INVESTMENT SUB-ADVISER SIA has entered into a sub-advisory arrangement with an affiliated international investment adviser, Sit/Kim International Investment Associates, Inc. ("SKI"). SKI provides investment research information and portfolio management service for the Developing Markets Growth Fund and International Growth Fund. Generally, as compensation for its services under the sub-advisory agreement, SIA pays SKI a monthly fee of 1/12 of .75% (.65% net of waiver for the International Growth Fund) on the first $100 million of each Fund's average daily net assets, 1/12 of .50% on the next $100 million of average daily net assets and 1/12 of .40% of average daily net assets in excess of $200 million. SKI has agreed to waive any fees under the agreement to the extent that cumulative out of pocket expenses of each Fund borne by SIA exceed the cumulative fees received by SIA pursuant to each Fund's investment management agreement. In accordance with the agreement, fees of $207,258 were paid or payable to SKI for the period ended December 31, 2003. TRANSACTIONS WITH AFFILIATES The investment adviser, affiliates of the investment adviser, directors and officers of the Funds as a whole owned the following shares as of December 31, 2003: % Shares Shares Outstanding ------ ----------- Balanced Fund 223,521 17.2 Large Cap Growth Fund 393,595 19.2 Mid Cap Growth Fund 2,898,674 14.3 International Growth Fund 624,164 12.1 Small Cap Growth Fund 950,997 10.9 Science and Technology Growth Fund 594,544 31.2 Developing Markets Growth Fund 158,120 18.0 53 SIT BALANCED FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Six Months Ended December 31, Years Ended June 30, 2003 ----------------------------------------------------- (Unaudited) 2003 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: Beginning of period $ 12.47 $ 12.29 $ 15.33 $ 19.18 $ 17.38 - -------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (2) .11 .29 .36 .46 .40 Net realized and unrealized gains (losses) on investments .97 .22 (3.01) (3.51) 2.51 - -------------------------------------------------------------------------------------------------------------------------------- Total from operations 1.08 .51 (2.65) (3.05) 2.91 - -------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (.17) (.33) (.38) (.48) (.37) From realized gains -- -- (.01) (.32) (.74) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions (.17) (.33) (.39) (.80) (1.11) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: End of period $ 13.38 $ 12.47 $ 12.29 $ 15.33 $ 19.18 - -------------------------------------------------------------------------------------------------------------------------------- Total investment return (1) 8.73% 4.43% (17.62%) (16.39%) 17.28% - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000's omitted) $ 17,377 $ 16,065 $ 17,825 $ 24,947 $ 19,304 RATIOS: Expenses to average daily net assets 1.00%(3) 1.00% 1.00% 1.00% 1.00% Net investment income to average daily net assets 1.69%(3) 2.54% 2.52% 2.89% 2.34% Portfolio turnover rate (excluding short-term securities) 25.19% 48.86% 53.53% 63.32% 68.22%
- ----------- (1) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value. (2) The net investment income (loss) per share is based on average shares outstanding for the period. (3) Percentages for the period ended December 31, 2003 are adjusted to an annual rate. 54 SIT LARGE CAP GROWTH FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Six Months Ended December 31, Years Ended June 30, 2003 ----------------------------------------------- (Unaudited) 2003 2002 2001 2000 - ----------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: Beginning of period $ 26.92 $ 26.40 $ 38.99 $ 63.66 $ 52.84 - ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) (2) .01 .02 (.08) (.16) (.18) Net realized and unrealized gains (losses) on investments 3.28 .50 (12.17) (19.48) 14.41 - ----------------------------------------------------------------------------------------------------------------------------- Total from operations 3.29 .52 (12.25) (19.64) 14.23 - ----------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (.02) -- -- -- -- From realized gains -- -- (.34) (5.03) (3.41) - ----------------------------------------------------------------------------------------------------------------------------- Total distributions (.02) -- (.34) (5.03) (3.41) - ----------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: End of period $ 30.21 $ 26.92 $ 26.40 $ 38.99 $ 63.66 - ----------------------------------------------------------------------------------------------------------------------------- Total investment return (1) 12.30% 1.97% (31.63%) (32.92%) 27.75% - ----------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000's omitted) $ 61,866 $ 59,324 $ 63,839 $ 122,829 $ 172,400 RATIOS: Expenses to average daily net assets 1.00%(3) 1.00% 1.00% 1.00% 1.00% Net investment income (loss) to average daily net assets 0.05%(3) 0.08% (0.25%) (0.33%) (0.31%) Portfolio turnover rate (excluding short-term securities) 12.27% 33.40% 34.74% 45.26% 48.95%
- ----------- (1) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value. (2) The net investment income (loss) per share is based on average shares outstanding for the period. (3) Percentages for the period ended December 31, 2003 are adjusted to an annual rate. See accompanying notes to financial statements on page 49. 55 SIT MID CAP GROWTH FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Six Months Ended December 31, Years Ended June 30, 2003 --------------------------------------------------- (Unaudited) 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: Beginning of period $ 8.06 $ 7.91 $ 12.37 $ 23.57 $ 14.54 - ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) (3) (.03) (.05) (.07) (.08) (.12) Net realized and unrealized gains (losses) on investments 1.43 .20 (4.16) (7.05) 10.38 - ------------------------------------------------------------------------------------------------------------------------------- Total from operations 1.40 .15 (4.23) (7.13) 10.26 - ------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS: From net investment income -- -- -- -- -- From realized gains -- -- (.23) (4.07) (1.23) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions -- -- (.23) (4.07) (1.23) - ------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: End of period $ 9.46 $ 8.06 $ 7.91 $ 12.37 $ 23.57 - ------------------------------------------------------------------------------------------------------------------------------- Total investment return (1) 17.37% 1.90% (34.66%) (35.21%) 73.01% - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000's omitted) $192,266 $170,173 $181,347 $360,037 $566,639 RATIOS: Expenses to average daily net assets 1.15%(2) 1.15%(2) 1.15%(2) 1.06%(2) 1.00%(2) Net investment income (loss) to average daily net assets (0.73%)(2) (0.73%)(2) (0.79%)(2) (0.49%)(2) (0.58%)(2) Portfolio turnover rate (excluding short-term securities) 40.60% 53.19% 60.88% 56.21% 62.21%
- ----------- (1) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value. (2) Percentages for the period ended December 31, 2003 are adjusted to an annual rate. Total Fund expenses are contractually limited to 1.25% of average daily net assets. However, during the period ended December 31, 2003, and the years ended June 30, 2003, 2002, 2001, and 2000, the investment adviser voluntarily absorbed expenses that were otherwise payable by the Fund. Had the Fund incurred these expenses, the ratio of expenses to average daily net assets would have been 1.25% for each of these periods and the ratio of net investment income (loss) to average daily net assets would have been (0.83%), (0.83%), (0.89%), (0.68%), and (0.83%), respectively. (3) The net investment income (loss) per share is based on average shares outstanding for the period. 56 SIT INTERNATIONAL GROWTH FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Six Months Ended December 31, Years Ended June 30, 2003 -------------------------------------------------- (Unaudited) 2003 2002 2001 2000 - ----------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: Beginning of period $ 9.39 $ 10.79 $ 14.61 $ 23.58 $ 18.77 - ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) (3) .00 .07 (.03) (.03) (.04) Net realized and unrealized gains (losses) on investments 1.89 (1.47) (3.79) (8.42) 6.36 - ----------------------------------------------------------------------------------------------------------------------------- Total from operations 1.89 (1.40) (3.82) (8.45) 6.32 - ----------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (.08) -- -- -- (.23) From realized gains -- -- -- (.52) (1.28) - ----------------------------------------------------------------------------------------------------------------------------- Total distributions (.08) -- -- (.52) (1.51) - ----------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: End of period $ 11.20 $ 9.39 $ 10.79 $ 14.61 $ 23.58 - ----------------------------------------------------------------------------------------------------------------------------- Total investment return (1) 20.20% (12.97%) (26.15%) (36.43%) 33.38% - ----------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000's omitted) $ 57,787 $ 48,533 $ 69,820 $123,085 $167,909 RATIOS: Expenses to average daily net assets 1.50%(2) 1.50%(2) 1.50%(2) 1.50%(2) 1.50%(2) Net investment income (loss) to average daily net assets (0.09%)(2) 0.81%(2) (0.22%)(2) (0.20%)(2) (0.40%)(2) Portfolio turnover rate (excluding short-term securities) 26.59% 21.02% 25.78% 25.22% 30.61%
- ----------- (1) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value. (2) Percentages for the period ended December 31, 2003 are adjusted to an annual rate. Total Fund expenses are contractually limited to 1.85% of average daily net assets. However, during the period ended December 31, 2003 and the years ended June 30, 2003, 2002, 2001, and 2000, the investment adviser voluntarily absorbed expenses that were otherwise payable by the Fund. Had the Fund incurred these expenses, the ratio of expenses to average daily net assets would have been 1.85% for each of these periods and the ratio of net investment income (loss) to average daily net assets would have been (.44%), 0.46%, (0.57%), (0.55%), and (0.75%), respectively. (3) The net investment income (loss) per share is based on average shares outstanding for the period. See accompanying notes to financial statements on page 49. 57 SIT SMALL CAP GROWTH FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Six Months Ended December 31, Years Ended June 30, 2003 --------------------------------------------- (Unaudited) 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: Beginning of period $ 21.64 $ 21.06 $ 28.99 $ 41.35 $ 18.28 - ------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) (2) (.13) (.18) (.24) (.13) (.18) Net realized and unrealized gains (losses) on investments 3.52 .76 (7.65) (11.65) 23.25 - ------------------------------------------------------------------------------------------------------------------------- Total from operations 3.39 .58 (7.89) (11.78) 23.07 - ------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS: From realized gains -- -- (.04) (.58) -- - ------------------------------------------------------------------------------------------------------------------------- Total distributions -- -- (.04) (.58) -- - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: End of period $ 25.03 $ 21.64 $ 21.06 $ 28.99 $ 41.35 - ------------------------------------------------------------------------------------------------------------------------- Total investment return (1) 15.67% 2.75% (27.24%) (28.79%) 126.20% - ------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000's omitted) $ 219,202 $ 182,912 $ 180,684 $ 227,888 $ 190,630 RATIOS: Expenses to average daily net assets 1.50%(3) 1.50% 1.50% 1.50% 1.50% Net investment income (loss) to average daily net assets (1.08%)(3) (1.00%) (0.99%) (0.41%) (0.83%) Portfolio turnover rate (excluding short-term securities) 23.22% 59.98% 65.25% 39.91% 39.31%
- ----------- (1) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value. (2) The net investment income (loss) per share is based on average shares outstanding for the period. (3) Percentages for the period ended December 31, 2003 are adjusted to an annual rate. 58 SIT SCIENCE AND TECHNOLOGY GROWTH FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Six Months Ended December 31, Years Ended June 30, 2003 ------------------------------------------------------ (Unaudited) 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: Beginning of period $ 8.05 $ 7.52 $ 15.23 $ 33.38 $ 15.23 - ------------------------------------------------------------------------------------------------------------------------------- Operations: Net investment income (loss) (3) (.05) (.07) (.12) (.19) (.17) Net realized and unrealized gains (losses) on investments 1.47 .60 (7.58) (17.10) 18.32 - ------------------------------------------------------------------------------------------------------------------------------- Total from operations 1.42 .53 (7.70) (17.29) 18.15 - ------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS: From net investment income -- -- -- -- -- From realized gains -- -- (.01) (.86) -- - ------------------------------------------------------------------------------------------------------------------------------- Total distributions -- -- (.01) (.86) -- - ------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: End of period $ 9.47 $ 8.05 $ 7.52 $ 15.23 $ 33.38 - ------------------------------------------------------------------------------------------------------------------------------- Total investment return (1) 17.64% 7.05% (50.57%) (52.96%) 119.17% - ------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period (000's omitted) $ 18,034 $ 15,200 $ 14,018 $ 30,453 $ 46,173 RATIOS: Expenses to average daily net assets 1.35%(2) 1.35%(2) 1.35%(2) 1.29%(2) 1.25%(2) Net investment income (loss) to average net assets (1.19%)(2) (1.05%)(2) (1.06%)(2) (0.94%)(2) (0.86%)(2) Portfolio turnover rate (excluding short-term securities) 33.01% 49.67% 76.78% 34.59% 29.60%
- ----------- (1) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value. (2) Percentages for the period ended December 31, 2003 are adjusted to an annual rate. Total Fund expenses are contractually limited to 1.50% of average daily net assets. However, during the period ended December 31, 2003 and the years ended June 30, 2003, 2002, 2001, and 2000, the investment adviser voluntarily absorbed expenses that were otherwise payable by the Fund. Had the Fund incurred these expenses, the ratio of expenses to average daily net assets would have been 1.50% for each of these periods and the ratio of net investment income (loss) to average daily net assets would have been (1.34%), (1.20%), (1.21%), (1.15%), and (1.11%), respectively. (3) The net investment income (loss) per share is based on average shares outstanding for the period. See accompanying notes to financial statements on page 49. 59 SIT DEVELOPING MARKETS GROWTH FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Six Months Ended December 31, Years Ended June 30, 2003 --------------------------------------------- (Unaudited) 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE: Beginning of period $ 8.12 $ 8.10 $ 9.17 $ 13.43 $ 9.98 - ------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) (2) .01 .02 (.02) -- (.06) Net realized and unrealized gains (losses) on investments 2.19 -- (1.05) (4.26) 3.51 - ------------------------------------------------------------------------------------------------------------------------ Total from operations 2.20 .02 (1.07) (4.26) 3.45 - ------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (.05) -- -- -- -- From realized gains -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------ Total distributions -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE: End of period $ 10.32 $ 8.12 $ 8.10 $ 9.17 $ 13.43 - ------------------------------------------------------------------------------------------------------------------------ Total investment return (1) 27.81% 0.25% (11.66%) (31.72%) 34.57% - ------------------------------------------------------------------------------------------------------------------------ Net assets at end of period (000's omitted) $ 9,078 $ 8,577 $ 11,250 $ 13,877 $ 14,676 RATIOS: Expenses to average daily net assets 2.00%(3) 2.00% 2.00% 2.00% 2.00% Net investment income (loss) to average daily net assets 0.28%(3) 0.31% (0.20%) 0.02% (0.55%) Portfolio turnover rate (excluding short-term securities) 12.93% 6.61% 25.40% 21.87% 48.39%
- ----------- (1) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value. (2) The net investment income (loss) per share is based on average shares outstanding for the period. (3) Percentages for the period ended December 31, 2003 are adjusted to an annual rate. See accompanying notes to financial statements on page 49. 60 - -----------------------------------------------------------------------[GRAPHIC] This page has been left blank intentionally. 61 RESULTS OF SHAREHOLDER MEETING - -------------------------------------------------------------------------------- The annual meeting of the shareholders of the Funds was held on October 20, 2003. Directors elected by the shareholders were as follows: Eugene C. Sit, William E. Frenzel, John E. Hulse, Sidney L. Jones, Bruce C. Lueck, and Donald W. Phillips. The matters voted on by the shareholders of record as of August 21, 2003 and results of the shareholders' vote at the October 20, 2003 meeting were as follows: PROPOSAL ONE: ELECTION OF DIRECTORS - -------------------------------------------------------------------------------- SIT JONES FRENZEL LUECK --- ----- ------- ----- SMALL CAP GROWTH For 6,972,042.277 7,051,201.822 6,962,702.858 7,055,937.425 Against 176,580.979 97,421.434 185,920.398 92,685.831 Abstain 0.000 0.000 0.000 0.000 MID CAP GROWTH For 12,369,997.310 12,648,439.426 12,369,114.289 12,656,333.821 Against 467,278.469 188,836.353 468,161.490 180,941.958 Abstain 0.000 0.000 0.000 0.000 LARGE CAP GROWTH For 1,395,078.700 1,436,697.097 1,394,906.766 1,436,379.684 Against 47,921.157 6,302.760 48,093.091 6,620.173 Abstain 0.000 0.000 0.000 0.000 SCIENCE & TECHNOLOGY For 1,270,884.211 1,268,488.551 1,268,619.034 1,270,401.035 Against 7,496.934 9,892.594 9,762.111 7,980.111 Abstain 0.000 0.000 0.000 0.000 INTERNATIONAL GROWTH For 2,452,260.729 2,600,125.301 2,451,686.251 2,601,126.763 Against 162,026.923 14,162.351 162,601.401 13,160.889 Abstain 0.000 0.000 0.000 0.000 DEVELOPING MARKETS For 818,094.798 819,344.397 819,121.725 822,878.075 Against 17,993.259 16,743.660 16,966.332 13,209.982 Abstain 0.000 0.000 0.000 0.000 BALANCED For 925,909.665 922,900.279 921,219.903 927,685.565 Against 8,509.299 11,518.685 13,199.061 6,733.399 Abstain 0.000 0.000 0.000 0.000 62 - -----------------------------------------------------------------------[GRAPHIC] PROPOSAL TWO: RATIFY KPMG LLP AS THE FUNDS' AUDITORS - ------------------------------ -------------------------------------- HULSE PHILLIPS SMALL CAP GROWTH 7,053,277.679 7,055,886.078 For 7,032,032.295 95,345.577 92,737.178 Against 69,949.604 0.000 0.000 Abstain 46,641.357 MID CAP GROWTH 12,662,206.201 12,643,874.141 For 12,653,041.101 175,069.578 193,401.638 Against 70,586.220 0.000 0.000 Abstain 113,648.458 LARGE CAP GROWTH 1,436,697.097 1,436,379.684 For 1,433,671.930 6,302.760 6,620.173 Against 6,988.677 0.000 0.000 Abstain 2,339.250 SCIENCE & TECHNOLOGY 1,268,916.034 1,270,319.035 For 1,269,412.583 9,465.111 8,062.110 Against 7,064.920 0.000 0.000 Abstain 1,903.642 INTERNATIONAL GROWTH 2,600,125.301 2,601,126.763 For 2,599,313.567 14,162.351 13,160.889 Against 9,567.266 0.000 0.000 Abstain 5,406.819 DEVELOPING MARKETS 819,344.394 820,597.772 For 827,173.475 16,743.660 15,490.285 Against 3,674.268 0.000 0.000 Abstain 5,240.314 BALANCED 927,685.565 927,685.565 For 928,071.985 6,733.399 6,733.399 Against 155.083 0.000 0.000 Abstain 6,191.896 63 SIT MUTUAL FUNDS - -------------------------------------------------------------------------------- A LOOK AT SIT MUTUAL FUNDS Sit Mutual Funds are managed by Sit Investment Associates, Inc. Sit Investment Associates was founded by Eugene C. Sit in July 1981 and is dedicated to a single purpose, to be one of the premier investment management firms in the United States. Sit Investment Associates currently manages approximately $6.3 billion for some of America's largest corporations, foundations and endowments. Sit Mutual Funds are comprised of twelve NO-LOAD funds. NO-LOAD means that Sit Mutual Funds have no sales charges on purchases, no deferred sales charges, no 12b-1 fees and no redemption fees and no exchange fees. Every dollar you invest goes to work for you. Sit Mutual Funds offer: * Free telephone exchange * Dollar-cost averaging through an automatic investment plan * Electronic transfer for purchases and redemptions * Free checkwriting privileges on bond funds * Retirement accounts including IRAs and 401(k) plans SIT FAMILY OF FUNDS [GRAPH] STABILITY: INCOME: GROWTH: HIGH GROWTH: SAFETY OF PRINCIPAL INCREASED INCOME LONG-TERM CAPITAL LONG-TERM CAPITAL AND CURRENT INCOME APPRECIATION APPRECIATION AND INCOME MONEY MARKET U.S. GOVERNMENT BALANCED MID CAP GROWTH SECURITIES LARGE CAP GROWTH INTERNATIONAL GROWTH TAX-FREE INCOME SMALL CAP GROWTH MINNESOTA TAX-FREE SCIENCE AND INCOME TECHNOLOGY GROWTH BOND DEVELOPING MARKETS GROWTH 64 SEMI-ANNUAL REPORT STOCK FUNDS Six Months Ended December 31, 2003 INVESTMENT ADVISER AUDITORS Sit Investment Associates, Inc. KPMG LLP 90 South Seventh Street, Suite 4600 90 South Seventh Street, Suite 4200 Minneapolis, MN 55402 Minneapolis, MN 55402 612-334-5888 (Metro Area) 800-332-5580 LEGAL COUNSEL DISTRIBUTOR Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 SIA Securities Corp. Minneapolis, MN 55402 90 South Seventh Street, Suite 4600 Minneapolis, MN 55402 612-334-5888 (Metro Area) INVESTMENT SUB-ADVISER 800-332-5580 (Developing Markets Growth Fund and CUSTODIAN International Growth Fund) Sit/Kim International Associates, Inc. The Northern Trust Company 90 South Seventh Street, Suite 4600 50 South LaSalle Street Minneapolis, MN 55402 Chicago, IL 60675 612-334-5888 (Metro Area) 800-332-5580 TRANSFER AGENT AND DISBURSING AGENT PFPC Inc. P.O. BOX 5166 Westboro, MA 01581-5166 [LOGO] SIT INVESTMENT ASSOCIATES ------------------------- SIT MUTUAL FUNDS Item 2: Code of Ethics. Not applicable to Semi-Annual Report. Item 3: Audit Committee Financial Expert. Not applicable to Semi-Annual Report. Item 4: Principal Accountant Fees and Services - Not applicable to this Semi-Annual Report Item 5: Audit Committee of Listed Registrants. Not applicable to Semi-Annual Report. Item 6: Reserved. Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. - Not applicable Item 8: Reserved. Item 9: Submission of Matters to a Vote of Security Holders. - Not applicable Item 10: 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 11: Exhibits: (a) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. Not applicable to Semi-Annual Report. (b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2). Attached hereto as part of EX-99.CERT. (c) Certification pursuant to Section 906 of the Sarbanes-Oxley Act. Attached hereto as part of Ex-99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIT MUTUAL FUNDS, INC. - ---------------------- By (Signature and Title)* /s/ Paul E. Rasmussen ---------------------------- Paul E. Rasmussen Vice President Treasurer Date February 25, 2004 ----------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIT MUTUAL FUNDS, INC. By (Signature and Title)* /s/ Eugene C. Sit ----------------- Eugene C. Sit Chairman Date February 25, 2004 ----------------- Item 2: Code of Ethics. Not applicable to Semi-Annual Report. Item 3: Audit Committee Financial Expert. Not applicable to Semi-Annual Report. Item 4: Principal Accountant Fees and Services - Not applicable to this Semi-Annual Report Item 5: Audit Committee of Listed Registrants. Not applicable to Semi-Annual Report. Item 6: Reserved. Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. - Not applicable Item 8: Reserved. Item 9: Submission of Matters to a Vote of Security Holders. - Not applicable Item 10: 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 11: Exhibits: (a) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. Not applicable to Semi-Annual Report. (b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2). Attached hereto as part of EX-99.CERT. (c) Certification pursuant to Section 906 of the Sarbanes-Oxley Act. Attached hereto as part of Ex-99.906CERT. 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 Large Cap Growth Fund, INC. - ------------------------------- By (Signature and Title)* /s/ Paul E. Rasmussen ---------------------------- Paul E. Rasmussen Vice President Treasurer Date February 25, 2004 ----------------- 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 Large Cap Growth Fund, INC. By (Signature and Title)* /s/ Eugene C. Sit ------------------------ Eugene C. Sit Chairman Date February 25, 2004 --------------------------------------------- Item 2: Code of Ethics. Not applicable to Semi-Annual Report. Item 3: Audit Committee Financial Expert. Not applicable to Semi-Annual Report. Item 4: Principal Accountant Fees and Services - Not applicable to this Semi-Annual Report Item 5: Audit Committee of Listed Registrants. Not applicable to Semi-Annual Report. Item 6: Reserved. Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. - Not applicable Item 8: Reserved. Item 9: Submission of Matters to a Vote of Security Holders. - Not applicable Item 10: 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 11: Exhibits: (a) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. Not applicable to Semi-Annual Report. (b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2). Attached hereto as part of EX-99.CERT. (c) Certification pursuant to Section 906 of the Sarbanes-Oxley Act. Attached hereto as part of Ex-99.906CERT. 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 February 25, 2004 ----------------- 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/ Eugene C. Sit ----------------- Eugene C. Sit Chairman Date February 25, 2004 ----------------- EX-99.CERT 3 stockfunds040858_ex99cert.txt EXHIBIT 99.CERT I, Paul E. Rasmussen, certify that: 1. I have reviewed this report on Form N-CSR of Sit Mutual Funds, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based upon such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 25, 2004 - ----------------------- /s/ Paul E. Rasmussen - ----------------------------- Signature - Paul E. Rasmussen Vice President Treasurer FORM N-CSR CERTIFICATION I, Eugene C. Sit, certify that: 1. I have reviewed this report on Form N-CSR of Sit Mutual Funds, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based upon such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 25, 2004 - ----------------------- /s/ Eugene C. Sit - ------------------------------- Signature - Eugene C. Sit Chairman I, Paul E. Rasmussen, certify that: 1. I have reviewed this report on Form N-CSR of Sit Large Cap Growth Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based upon such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 25, 2004 - ----------------------- /s/ Paul E. Rasmussen - ----------------------------- Signature - Paul E. Rasmussen Vice President Treasurer FORM N-CSR CERTIFICATION I, Eugene C. Sit, certify that: 1. I have reviewed this report on Form N-CSR of Sit Large Cap Growth Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based upon such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 25, 2004 - ----------------------- /s/ Eugene C. Sit - ------------------------------- Signature - Eugene C. Sit Chairman I, Paul E. Rasmussen, certify that: 1. I have reviewed this report on Form N-CSR of Sit Mid Cap Growth Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based upon such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 25, 2004 - ----------------------- /s/ Paul E. Rasmussen - ----------------------------- Signature - Paul E. Rasmussen Vice President Treasurer FORM N-CSR CERTIFICATION I, Eugene C. Sit, certify that: 1. I have reviewed this report on Form N-CSR of Sit Mid Cap Growth Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based upon such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 25, 2004 - ----------------------- /s/ Eugene C. Sit - ------------------------------- Signature - Eugene C. Sit Chairman EX-99.906 4 stkfds040858_ex99-906cert.txt EXHIBIT 99.906CERT CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Sit Mutual Funds, Inc., do hereby certify, to such officer's knowledge, that the report on Form N-CSR of Sit Mutual Funds, Inc. for the period ended December 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of Sit Mutual Funds, Inc. for the periods presented in the report. /s/ Eugene C. Sit /s/ Paul E. Rasmussen - -------------------------------- ----------------------------------- Eugene C. Sit Paul E. Rasmussen Chairman VP Treasurer Sit Mutual Funds, Inc. Sit Mutual Funds, Inc. Dated: February 25, 2004 - ------------------------ A signed original of this written statement required by Section 906 has been provided by Sit Mutual Funds, Inc. and will be retained by Sit Mutual Funds, Inc. and furnished to the SEC or its staff upon request. CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Sit Large Cap Growth Fund, Inc., do hereby certify, to such officer's knowledge, that the report on Form N-CSR of Sit Large Cap Growth Fund, Inc. for the period ended December 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of Sit Large Cap Growth Fund, Inc. for the periods presented in the report. /s/ Eugene C. Sit /s/ Paul E. Rasmussen - --------------------------------- ----------------------------------- Eugene C. Sit Paul E. Rasmussen Chairman VP Treasurer Sit Large Cap Growth Fund, Inc. Sit Large Cap Growth Fund, Inc. Dated: February 25, 2004 - ------------------------ A signed original of this written statement required by Section 906 has been provided by Sit Mutual Funds, Inc. and will be retained by Sit Mutual Funds, Inc. and furnished to the SEC or its staff upon request. CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Sit Mid Cap Growth Fund, Inc., do hereby certify, to such officer's knowledge, that the report on Form N-CSR of Sit Mid Cap Growth Fund, Inc. for the period ended December 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of Sit Mid Cap Growth Fund, Inc. for the periods presented in the report. /s/ Eugene C. Sit /s/ Paul E. Rasmussen - --------------------------------- --------------------------------- Eugene C. Sit Paul E. Rasmussen Chairman VP Treasurer Sit Mid Cap Growth Fund, Inc. Sit Mid Cap Growth Fund, Inc. Dated: February 25, 2004 - ------------------------ A signed original of this written statement required by Section 906 has been provided by Sit Mutual Funds, Inc. and will be retained by Sit Mutual Funds, Inc. and furnished to the SEC or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----