SIT LARGE CAP GROWTH FUND INC, N-30B-2, 2000-10-31

SIT LARGE CAP GROWTH FUND INC
N-30B-2, 2000-10-31

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SIT MUTUAL FUNDS

STOCK FUNDS
QUARTERLY REPORT

QUARTER ENDED SEPTEMBER 30, 2000

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

<PAGE>

SIT MUTUAL FUNDS
STOCK FUNDS QUARTERLY REPORT
TABLE OF CONTENTS

PAGE

Chairman's Letter........................................................ 3

Performance Review....................................................... 4

FUND REVIEWS

Balanced Fund...................................................... 6

Large Cap Growth Fund.............................................. 8

Mid Cap Growth Fund................................................ 10

International Growth Fund.......................................... 12

Small Cap Growth Fund.............................................. 14

Science and Technology Growth Fund................................. 16

Developing Markets Growth Fund..................................... 18

<PAGE>

A LOOK AT THE SIT MUTUAL FUNDS

Sit Mutual Funds are managed by Sit Investment Associates, Inc. Sit
Investment 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 $10.4
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, 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 check writing 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 AND APPRECIATION
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

<PAGE>

[PHOTO] SIT MUTUAL FUNDS
Quarter Ended September 30, 2000 [LOGO]
-----------------------------------------------------------------------
Chairman's Letter

Dear Fellow Shareholders:

Global equity markets struggled to gain ground during the third quarter of 2000,
as investors began to assess the combined impact of moderating economic growth
and higher oil prices on corporate profits. However, we believe the long-term
prospects for continued global economic expansion are excellent, which should
lead to an improving equity market environment in the months ahead.

ECONOMIC OVERVIEW
Despite surprisingly strong +5.6% growth in second quarter Gross Domestic
Product (GDP), most signs point to somewhat slower growth for the second half of
the year. Overall, we believe that the U.S. economy is heading toward a "soft"
landing, with GDP growing at a more sustainable +3.5 to +4.0 percent pace during
the second half of 2000 and into next year.

Although higher energy prices may continue to cause some volatility in inflation
statistics, overall price inflation appears to be under reasonable control. We
expect inflation to be moderately higher over the next few quarters, primarily
due to energy costs, but it should begin to abate by spring 2001.

As expected, the Federal Open Market Committee (FOMC) decided at its meeting on
October 3rd to maintain its existing stance on monetary policy, leaving the
target for the federal funds rate at 6.50%. Although FOMC officials continue to
voice concerns over the continued high rate of employment and the inflationary
risks posed by higher energy costs, we believe that the Federal Reserve is done
tightening. Although the rising cost of energy is something to watch, higher
energy prices may actually help the U.S. economy achieve a soft landing by
applying additional brakes to overall demand.

EQUITY STRATEGY SUMMARY
Returns for domestic equity indices were mixed in the third quarter, as market
concerns shifted from the threat of higher interest rates to worries over a
deceleration in corporate profits. However, we have not changed our intermediate
term outlook that the secular bull market is intact.

Investors have become concerned over the direction of corporate profits, as
several prominent corporations announced that third quarter earnings would be
below analyst expectations. Historically, however, there is a strong seasonality
to earnings "pre-announcements," with September being the second worst month of
the year. We also believe that we are in a period of transition, whereby
analysts and investors adjust earnings forecasts to reflect a more modest, but
sustainable, level of economic growth.

There has been particular volatility in the NASDAQ OTC Composite, including
stocks in the technology sector. In short, we strongly believe that the secular
growth rate of technology spending is not slowing. Innovation is continuing and
technology spending will overwhelm other forms of business investment in coming
years as corporations seek to enhance productivity. Furthermore, the
technological advance that is occurring is secular and broad-based through the
global economy; company-specific "bad news" is not indicative of a broad
downturn in the entire sector. Finally, it must be noted the higher valuation
for the technology sector naturally results in greater volatility. This has
historically led to attractive opportunities in certain areas within technology,
providing attractive entry points to add to existing positions or build new
ones.

Major international markets produced negative returns for the third quarter, as
higher interest rates and oil prices took their toll. We remain particularly
enthusiastic over prospects for Europe. As cyclical pressures subside, we
believe investors will focus on the positive factors influencing the region,
including strengthening economic growth, tax reform, robust corporate profit
growth, and corporate restructuring. Overall, our forecast calls for a global
"soft landing" and sustained economic growth, perhaps +3.5% for this year and
next. In this context, we believe the prospects for global corporate profit
growth are good, providing a strong underpinning for worldwide equity markets.

With best wishes,

/s/ Eugene C. Sit

Eugene C. Sit, CFA
Chairman and Chief Investment Officer

3
<PAGE>

SIT MUTUAL FUNDS
Quarter Ended September 30, 2000
--------------------------------------------------------------------------------
Performance Summary - Stock Funds

Returns for stocks were generally weak during the third quarter of 2000, with
returns varying widely depending on capitalization size, investment style,
economic sector, and geography.

Domestically, small and mid capitalization stocks posted the strongest
returns for the quarter, with the S&P 400 MidCap Index and Russell 2000 Index
increasing +12.2% and +1.1%, respectively. The S&P 500 Index third quarter
return was -1.0%. Value stocks outperformed growth stocks during the quarter
across the capitalization spectrum. The Russell 1000 Value Index returned +7.9%
during the quarter, while the Russell 1000 Growth Index fell -5.4%. Value also
outperformed growth in the small capitalization sector, as the Russell 2000
Value Index returned +7.3, while the Russell 2000 Growth Index fell -4.0%.

In terms of sector performance, the improving interest rate outlook led to
solid performance for financials and utilities, while rising oil prices helped
push the energy sector higher. While these sectors were among the best
performing across styles and capitalizations, their strong price gains added to
the relative performance of value indices because of higher weights in interest
rate sensitive and energy sectors. Sectors that trailed the overall market in
the quarter include electronic technology, technology services, and process
industries.

Rising interest rates and higher oil prices weighed heavily on international
equity markets in the third quarter, as most major markets posted negative
returns. The MSCI World Index fell -5.0% for the quarter. Although the MSCI
Europe Index fell only modestly in local currency terms, the sharp decline in
the value of the euro resulted in a decline of -7.3% for the Index in U.S.
dollar terms. Returns were negative across Asia, particularly in Japan, as the
MSCI Japan Index fell -10.5%.

1988 1989 1990
---------------------------------
SIT BALANCED -- -- --
-------------------------------------------------------------------------
SIT LARGE CAP GROWTH 5.33% 32.02% -2.37%
-------------------------------------------------------------------------
SIT MID CAP GROWTH(1) 9.77 35.15 -2.04
-------------------------------------------------------------------------
SIT INTERNATIONAL GROWTH(2) -- -- --
-------------------------------------------------------------------------
SIT SMALL CAP GROWTH(1) -- -- --
-------------------------------------------------------------------------
SIT SCIENCE AND TECHNOLOGY GROWTH(3) -- -- --
-------------------------------------------------------------------------
SIT DEVELOPING MARKETS GROWTH(2) -- -- --
-------------------------------------------------------------------------
S&P 500 INDEX 16.55 31.61 -3.05
S&P MIDCAP 400 INDEX 20.87 35.55 -5.12
MSCI EAFE INDEX (5) -- -- --
RUSSELL 2000 INDEX (6) -- -- --
PSE TECH 100 INDEX -- -- --
MSCI EMERGING MARKETS FREE INDEX (7) -- -- --

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(8)
S&P MIDCAP 400 INDEX(8)
MSCI EAFE INDEX (5)
RUSSELL 2000 INDEX (6)
PSE TECH 100 INDEX
MSCI EMERGING MARKETS FREE INDEX (7)

-------------------------------------------------------------------------
(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
<PAGE>

[LOGO]
-------------------------------------------------------------------------

TOTAL RETURN - CALENDAR YEAR

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE
TOTAL RETURN PERIODS ENDED SEPTEMBER 30, 2000
QUARTER SIX MONTHS SINCE
ENDED 9/30/00 ENDED 9/30/00 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
-------------------------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0.36% -2.18% 19.22% 15.44% 16.84% -- 15.52%
---------------------------------------------------------------------------------------------------
-1.96 -6.01 28.50 22.18 23.80 19.53% 17.22
---------------------------------------------------------------------------------------------------
9.04 1.06 81.29 30.08 26.47 23.85 21.29
---------------------------------------------------------------------------------------------------
-7.38 -21.16 15.14 10.78 11.45 -- 12.71
---------------------------------------------------------------------------------------------------
7.55 4.91 117.78 36.49 29.39 -- 32.86
---------------------------------------------------------------------------------------------------
4.22 3.67 109.70 -- -- -- 57.34
---------------------------------------------------------------------------------------------------
-11.84 -22.82 23.72 -2.35 4.73 -- 2.86
---------------------------------------------------------------------------------------------------
-0.97 -3.60 13.28 16.44 21.69 19.43 18.16
12.15 8.45 43.21 18.97 21.71 21.75 19.24
-8.07 -11.71 3.18 7.39 8.58 -- 8.25
1.11 -2.72 23.39 5.97 12.38 -- 14.70
-5.69 -10.61 65.51 -- -- -- 58.91
-13.35 -22.70 -1.29 -8.39 -3.71 -- -3.40
</TABLE>

--------------------------------------------------------------------------------
(5) FIGURES ASSUME AN INCEPTION DATE OF 10/31/91.
(6) FIGURES ASSUME AN INCEPTION DATE OF 07/01/94.
(7) FIGURES ASSUME AN INCEPTION DATE OF 06/30/94.
(8) FIGURES ASSUME AN INCEPTION DATE OF 09/02/82.

PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR
LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. HIGH DOUBLE
AND TRIPLE DIGIT PERFORMANCE FIGURES ARE ATTRIBUTABLE TO UNUSUALLY FAVORABLE
MARKET CONDITIONS AND MAY NOT BE REPEATED OR CONSISTENTLY ACHIEVED IN THE
FUTURE.

5
<PAGE>

[PHOTO] SIT BALANCED FUND
Quarter Ended September 30, 2000
-----------------------------------------------------------------------
Peter L. Mitchelson, CFA, Senior Portfolio Manager
Bryce A. Doty, CFA, Senior Portfolio Manager

The Sit Balanced Fund third quarter return was +0.4%, which compares to the
Lehman Aggregate Bond Index return of +3.0% and the S&P 500 Index performance of
-1.0%.

The fixed income portion of the portfolio posted solid returns for the
quarter, increasing an estimated +3.5%. Bond prices reacted positively to
economic data indicating a gradual slowdown in the U.S. economy, largely due to
the combined impact of Federal Reserve interest increases, higher energy prices,
and a moderating "wealth effect" from domestic equity returns. As the economy
continues to slow to a more sustainable pace, we believe that the Federal
Reserve is done tightening for the time being. This should lead to relatively
stable interest rates in the months ahead. Consistent with our forecast for a
"soft landing" for the U.S. economy, we believe that yield spreads will narrow
between U.S. Treasuries and corporate securities in the coming months.
Therefore, the Fund is maintaining a significant underweight in U.S. Treasuries
and an overweighted position in corporate securities.

We estimate that the equity portion of the portfolio decreased -2.4% during
the quarter. While signs of a slowing economy were beneficial to the fixed
income market, the equity market struggled with the prospect of slowing
corporate earnings. Several prominent companies across a wide variety of sectors
have recently announced that third quarter earnings would be below analyst
consensus expectations. However, we believe that equity market conditions will
improve going forward as analysts and investors adjust earnings forecasts to be
commensurate with a moderating economy. In addition, stabilizing interest rates
should offer support to equity valuations. The focus of the Fund continues to be
on companies with strong secular growth prospects capable of delivering solid
earnings growth regardless of general economic conditions. This leads us to
overweight positions in traditional growth sectors, including electronic
technology, technology services, and health technology.

As of September 30, 2000, the asset allocation of the Fund was 44% equities,
36% fixed income securities, and 20% cash and equivalents. Heavy cash inflows
near quarter end temporarily increased cash levels. The Fund will continue to
focus on high quality securities that offer attractive total return
opportunities.

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, bonds and short-term instruments. The Fund may emphasize either equity
securities, fixed-income securities, or short-term instruments 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: 40-60% in equity
securities, 40-60% in fixed-income securities, and up to 20% in short-term
fixed-income instruments. At all times at least 25% of the assets will be
invested in fixed-income senior securities.

PORTFOLIO SUMMARY

Net Asset Value 9/30/00: $19.13 Per Share
6/30/00: $19.18 Per Share

Total Net Assets: $26.0 Million

PORTFOLIO STRUCTURE
(% OF TOTAL NET ASSETS)

[PIE CHART]

Cash & Other Net Assets 20.5%
Bonds 35.8%
Equities 43.7%

6
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS*

SIT LEHMAN
BALANCED S&P AGGREGATE
FUND 500 INDEX BOND INDEX
-------- --------- ----------
3 Months** 0.36% -0.97% 3.01%
1 Year 19.22 13.28 6.99
3 Years 15.44 16.44 5.93
5 Years 16.84 21.69 6.47
Inception 15.52 20.42 6.28
(12/31/93)

CUMULATIVE TOTAL RETURNS*

SIT LEHMAN
BALANCED S&P AGGREGATE
FUND 500 INDEX BOND INDEX
-------- --------- ----------
1 Year 19.22% 13.28% 6.99%
3 Years 53.83 57.88 18.87
5 Years 117.78 166.81 36.81
Inception 164.92 250.80 50.92
(12/31/93)

*AS OF 9/30/00 **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

[PLOT POINTS CHART]

The sum of $10,000 invested at inception (12/31/93) and held until 9/30/00 would
have grown to $26,492 in the Fund, $15,092 in the Lehman Aggregate Bond Index or
$35,080 in the S&P 500 Index assuming reinvestment of all dividends and capital
gains.

TOP HOLDINGS

Stocks: * General Electric Co.
* Cisco Systems, Inc.
* Amgen, Inc.
* EMC Corp.
* Intel Corp.
Bonds: * U.S. Treasury Note, 7.875%, 11/15/04
* U.S. Treasury Strip, 6.44%, 11/15/09
* Conseco Finance, 7.97%, 5/1/32
* Pentair, Inc., 7.855, 10/15/03
* Whirlpoos Corp., 9.00%, 3/1/03
Total Number of Holdings: 155
Top Holdings represent 21% of the portfolio.

7
<PAGE>

[PHOTO] SIT LARGE CAP GROWTH FUND
Quarter Ended September 30, 2000
----------------------------------------------------------------------
Senior Portfolio Managers
Peter L. Mitchelson, CFA, Roger J. Sit, Ronald D. Sit, CFA

The Sit Large Cap Growth Fund's quarterly performance was a -2.0%, comparing
favorably to the Russell 1000 Growth Index's -5.4%. The S&P 500 Index was -1.0%
over the same time period. The year-to-date return for the Fund was +2.0%, while
the S&P 500 Index and the Russell 1000 Growth Index each posted a -1.4%.

Large capitalization stock indices have produced modestly negative returns
thus far in 2000 after four exceptionally strong years. Most recently, the
equity market has struggled with the prospect of decelerating corporate earnings
after "above-trend" earnings growth for several quarters. However, there is a
basis for optimism for an improving environment for growth stock investing in
the months ahead. First, with the economy showing signs of slowing and inflation
in check, we believe the Federal Reserve is done tightening. This should provide
a better backdrop for equity valuations. Second, although overall market
earnings are likely to decelerate, this has historically provided an attractive
environment for growth stock investing. As earnings growth becomes more and more
scarce, valuations tend to move higher on growth stocks because of their strong
relative earnings performance. And finally, the recent market turbulence has led
to an increasingly attractive valuation level for growth stocks relative to
their earnings growth rates, particularly technology stocks. We continue to
believe that the technology boom has further to go, and the natural volatility
of the sector provides investment opportunities.

As of September 30, 2000, the Fund was 95% invested in equities. Significant
sector weighting changes during the past quarter included increases in financial
services and producer manufacturing. These sectors were increased through the
purchase of Charles Schwab, Northern Trust, Boeing, Emerson Electric, and
Minnesota Mining and Manufacturing. Sector weighting decreases occurred in
utilities, consumer services, and consumer non-durables through the sale of
Sprint, Walt Disney, Coca Cola, and Kimberly-Clark. The largest sector
weightings in the Fund remain in electronic technology, health technology, and
technology services.

Given the attractive environment for growth stock investing and the many
investment opportunities available, we remain optimistic about the Fund's
prospects.

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 primarily in common
stocks of growth companies with a capitalization of $5 billion or more at the
time of purchase.

PORTFOLIO SUMMARY

Net Asset Value 9/30/00: $62.41 Per Share
6/30/00: $63.66 Per Share

Total Net Assets: $181.0 Million
Weighted Average Market Cap: $146.0 Billion

PORTFOLIO STRUCTURE - BY SECTOR
(% OF TOTAL NET ASSETS)

[BAR CHART]

Electronic Technology 28.0
Health Technology 14.7
Technology Services 11.0
Finance 10.0
Producer Manufacturing 7.8
Retail Trade 5.6
Utilities 5.0
Consumer Services 4.5
Sectors Under 3.0% 8.3
Cash & Other Net Assets 5.1

8
<PAGE>

--------------------------------------------------------------------------[LOGO]

AVERAGE ANNUAL TOTAL RETURNS*

SIT RUSSELL
LARGE CAP S&P 1000
GROWTH FUND 500 INDEX GROWTH INDEX
----------- --------- ------------
3 Month** -1.96% -0.97% -5.38%
1 Year 28.50 13.28 23.42
5 Years 23.80 21.69 25.07
10 Year*** 19.53 19.43 21.44
Inception*** 17.22 18.16 18.57
(9/2/82)

CUMULATIVE TOTAL RETURNS*

SIT RUSSELL
LARGE CAP S&P 1000
GROWTH FUND 500 INDEX GROWTH INDEX
----------- --------- ------------
1 Year 28.50% 13.28% 23.42%
5 Year 190.77 166.81 205.99
10 Year*** 495.39 490.50 597.50
Inception*** 1670.98 1946.94 2078.93
(9/2/82)

*AS OF 9/30/00 **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

[PLOT POINTS CHART]

The sum of $10,000 invested at inception (9/2/82) and held until 9/30/00 would
have grown to $177,098 in the Fund, or $204,694 in the S&P 500 Index assuming
reinvestment of all dividends and capital gains.

TOP 10 HOLDINGS

* General Electric Co.
* Cisco Systems, Inc.
* EMC Corp.
* Pfizer, Inc.
* Microsoft Corp.
* Amgen, Inc.
* Sun Microsystems, Inc.
* Intel Corp.
* American International Group, Inc.
* Oracle Corp.
Total Number of Holdings: 84
Top 10 Holdings represent 32.23% of the portfolio.

9
<PAGE>

[PHOTO] SIT MID CAP GROWTH FUND
Quarter Ended September 30, 2000
-----------------------------------------------------------------------
Eugene C. Sit, CFA, Senior Portfolio Manager
Erik S. Anderson, CFA, Senior Portfolio Manager

The Sit Mid Cap Growth Fund posted strong absolute and relative performance
for the quarter ended September 30, 2000. The Fund's +9.0% total return compares
favorably with the +2.5% return for the Russell MidCap Growth Index. The S&P 400
MidCap Index gained +12.2% during the quarter.

Mid capitalization stocks turned in another quarter of strong performance
relative to larger capitalization issues. We attribute this performance trend to
a combination of attractive valuations and strong growth prospects for smaller
companies, particularly those focused on the most dynamic areas within our new
economy, including areas such as biotechnology, semiconductors,
telecommunications, and software. Although investors have recently become
nervous on the broad technology sector after some prominent earnings
"pre-announcements," we believe the secular outlook for growth is not slowing.
We believe technology spending will continue to outpace other forms of capital
expenditures in the coming years due to global competition and ever-growing
needs for productivity. The Fund's largest sector weightings continue to be in
electronic technology, health technology and technology services.

The Fund's strong quarterly performance relative to the Russell Mid Cap
Growth Index was due to a combination of significant exposure in several high
growth areas, such as electronic technology and technology services, and strong
stock selection in these sectors. Some of the "winners" over the past quarter
include Applied Micro Circuits (+110%), Network Appliance (+58%), Check Point
Software Technologies (+49%), and Fiserv (+38%). The Fund also gained relative
performance because of an overweighted position in financial services.

Over the past quarter, the most significant sector weighting increases
occurred in technology services, finance, and health technology. New purchases
in these sectors included Mercury Interactive, Tibco Software, Lehman Brothers,
Capital One Financial, Human Genome Sciences, and Alza. The weighting in the
electronic technology sector was reduced during the quarter by trimming some of
the largest positions, such as Xilinx and Applied Micro Circuits, based on
valuation considerations and by selling Teradyne, Lexmark, American Tower and
QUALCOMM. As of September 30, the Fund was 95% invested in equity securities.

We continue to be enthused about the growth prospects for small and mid
capitalization stocks in our rapidly changing global economy, which makes us
optimistic about the Fund's outlook.

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 primarily in
the common stocks of growth companies with a capitalization of $2 billion to $15
billion at the time of purchase.

PORTFOLIO SUMMARY

Net Asset Value 9/30/00: $25.70 Per Share
6/30/00: $23.57 Per Share

Total Net Assets: $627.4 Million

Weighted Average Market Cap: $20.9 Billion

PORTFOLIO STRUCTURE - BY SECTOR
(% OF TOTAL NET ASSETS)

[BAR CHART]

Electronic Technology 32.3
Technology Services 21.5
Health Technology 13.9
Finance 9.7
Utilities 3.9
Retail Trade 3.7
Sectors 3.0 and under 10.9
Cash Equivalents 4.1

10
<PAGE>

--------------------------------------------------------------------------[LOGO]

AVERAGE ANNUAL TOTAL RETURNS*

SIT S&P RUSSELL
MID CAP MID CAP MID CAP
GROWTH FUND 400 INDEX GROWTH INDEX
-------- --------- ----------
3 Month** 9.04% 12.15% 2.52%
1 Year 81.29 43.21 60.36
5 Year 26.47 21.71 24.63
10 Year 23.85 21.25 22.82
Inception 21.29 19.24 --
(9/2/82)

CUMULATIVE TOTAL RETURNS*

SIT S&P RUSSELL
MID CAP MID CAP MID CAP
GROWTH FUND 400 INDEX GROWTH INDEX
-------- --------- ----------
1 Year 81.29% 43.21% 60.36%
5 Year 223.60 167.09 200.73
10 Year 749.39 615.50 680.94
Inception 3181.89 2311.13 --
(9/2/82)

*AS OF 9/30/00 **NOT ANNUALIZED.

--------------------------------------------------------------------------------
STOCKS OF SMALL- AND MID-SIZED COMPANIES MAY BE SUBJECT TO MORE
ABRUPT OR ERRATIC MARKET MOVEMENTS THAN STOCKS OF LARGER, MORE ESTABLISHED
COMPANIES.

HIGH DOUBLE AND TRIPLE DIGIT PERFORMANCE FIGURES ARE ATTRIBUTABLE TO UNUSUALLY
FAVORABLE MARKET CONDITIONS AND MAY NOT BE REPEATED OR CONSISTENTLY ACHIEVED IN
THE FUTURE.

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

[PLOT POINTS CHART]

The sum of $10,000 invested at inception (9/2/82) and held until
9/30/00 would have grown to $328,189 in the Fund, or $241,113 in the S&P MidCap
400 Index assuming reinvestment of all dividends and capital gains.

TOP 10 HOLDINGS

* JDS Uniphase Corp.
* Applied Micro Circuits Corp.
* Ace, Ltd.
* Check Point Software Tech., Ltd.
* Xilinx, Inc.
* Jabil Circuit, Inc.
* Analog Devices, Inc.
* MedImmune, Inc.
* Fiserv, Inc.
* Siebel Systems, Inc.
Total Number of Holdings: 84
Top 10 Holdings represent 28.74% of the portfolio.
11
<PAGE>

[PHOTO] SIT INTERNATIONAL GROWTH FUND REVIEW
Quarter Ended September 30, 2000
-----------------------------------------------------------------------
Senior Portfolio Managers
Eugene C. Sit, CFA * Roger J. Sit

For the three months ended September 2000, the Sit International Growth Fund
declined -7.4%. This compares with the MSCI EAFE Index benchmark's loss of -8.1%
and the Lipper International Fund Index's -7.3% decline. The primary reason for
the negative performances in the Fund and Indices was the continued sell-off in
the global markets over concerns that higher oil prices and interest rates will
slow world economies.

The euro's unrelenting fall has continued. For the quarter, the euro declined
-7.3% against the dollar. At one point this quarter, the euro dropped to below
$0.85 to the dollar, a 27% decline from its initial introduction. This prompted
the central banks of Europe and the G7 to intervene to support the euro. Should
the currency retest its lows, we believe the central banks, in a renewed
coordinated effort, will prop up the currency. The weak euro, though beneficial
for European exports, has led to earnings concerns for global companies
operating in Euroland and is beginning to flow through to higher inflation as
Euroland imports become more expensive. In addition, inflation concerns have
increasingly mounted globally as the cost of oil has skyrocketed in the past
year. The weak euro and heightening inflation concerns could jeopardize the
fragile recovery occurring in the European and Asian economies.

While we believe the drop in global markets in the September quarter was
healthy for the longer term, it has been overdone. The correction we've
experienced, particularly in the telecommunication and technology sectors have
created opportunities to add to positions in high quality, fundamentally sound
companies. We believe markets in Europe and Asia, particularly Japan, will begin
to recover along with their economies as structural reforms currently being
implemented take hold, interest rate increases subside and the shock of higher
oil prices is mollified. We believe that as the U.S. and global economies manage
a soft landing, the flow of funds that have been strongly biased to the U.S.
will neutralize and flow back to Europe and Japan.

We continue to favor global companies in the technology, telecommunication
equipment, wireless service, health technology, and financial services sectors.
We are focusing on stocks that will provide strong earnings growth and margin
expansion. We expect to maintain the Fund's European weighting in the 58% area
and the Japan weighting in the low 20's.

INVESTMENT OBJECTIVE AND STRATEGY

The objective of the Sit International Growth Fund is to achieve long-term
growth of capital by investing in equity securities of issuers domiciled outside
the United States. The Fund's investment objective reflects the belief that
long-term investment planning should include the investment opportunities that
exist outside the U.S.

The Fund selects its investments based on the characteristics of the
particular markets and economies of the countries in which it invests. Emphasis
is placed on identifying securities of companies believed to be undervalued in
the marketplace in relation to factors such as the company's revenues, earnings,
assets and long-term competitive position which over time will enhance the
equity value of the company.

PORTFOLIO SUMMARY

Net Asset Value9/30/00: $21.84 Per Share
6/30/00: $23.58 Per Share

Total Net Assets: $160.1 Million

Weighted Average Market Cap: $61.2 Billion

PORTFOLIO STRUCTURE - BY REGION
(% OF TOTAL NET ASSETS)

[BAR CHART]

SIT INT'L Morgan Stanley
GROWTH FUND EAFE Index
----------- ----------
Europe Other 28.8 27.4
France, Germany, UK 26.7 40.4
Japan 21.2 26.3
Pacific Basin 8.0 5.9
North America 7.4 0.0
Africa/Middle East 3.1 0.0
Latin America 0.8 0.0
Cash & other Net Assets 4.0 0.0

12
<PAGE>

--------------------------------------------------------------------------[LOGO]

AVERAGE ANNUAL TOTAL RETURNS*

SIT MORGAN STANLEY LIPPER
INTERNATIONAL CAPITAL INT'L INT'L
GROWTH FUND EAFE INDEX INDEX
----------- ---------- -------
3 Month** -7.38% -8.07% -7.34%
1 Year 15.14 3.18 10.82
3 Year 10.78 7.39 8.41
5 Year 11.45 8.58 11.51
Inception 12.71 8.25 10.96
(11/1/91)

CUMULATIVE TOTAL RETURNS*

SIT MORGAN STANLEY LIPPER
INTERNATIONAL CAPITAL INT'L INT'L
GROWTH FUND EAFE INDEX INDEX
----------- ---------- -----
1 Year 15.14% 3.18% 10.82%
3 Year 35.95 23.85 27.41
5 Year 71.93 50.91 72.39
Inception 190.85 102.90 152.95
(11/1/91)

*AS OF 9/30/00 **NOT ANNUALIZED.

--------------------------------------------------------------------------------
INTERNATIONAL INVESTING HAS SPECIAL RISKS, SUCH AS CURRENCY EXCHANGE
FLUCTUATIONS, HIGH VOLITILITY, ILLIQUIDITY AND THE POSSIBILITY OF POLITICAL
INSTABILITY.

HIGH DOUBLE AND TRIPLE DIGIT PERFORMANCE FIGURES ARE ATTRIBUTABLE TO UNUSUALLY
FAVORABLE MARKET CONDITIONS AND MAY NOT BE REPEATED OR CONSISTENTLY ACHIEVED IN
THE FUTURE.

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, AUSTRAILIA, 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

[PLOT POINTS CHART]

The 9/30/00 would have grown to $29,085 in the Fund, or $20,090 in the Morgan
Stanley EAFE Index assuming reinvestment of all dividends and capital gains.

TOP 10 HOLDINGS

* PMC-Sierra, Inc., A.D.R.
* NTT DoCoMo, Inc.
* Nokia Corp., A.D.R.
* Vodafone AirTouch, p.l.c.
* Banca Fideuram
* Takeda Chemical Industries
* Elan Corp., p.l.c., A.D.R.
* Nortel Networks Corp.
* CMG, p.l.c.
* Seven Eleven Japan
Total Number of Holdings: 93
Top 10 Holdings represent 28.63% of the portfolio.
13
<PAGE>

[PHOTO] SIT SMALL CAP GROWTH FUND
Quarter Ended September 30, 2000
-----------------------------------------------------------------------
Eugene C. Sit, CFA, Senior Portfolio Manager

The Sit Small Cap Growth Fund's third quarter return was +7.6%, comparing
favorably to the +1.1% return for the Russell 2000 Index and the -4.0% for the
Russell 2000 Growth Index. Since inception, the Fund's annualized return was
+32.9%. This compares to the +14.7% return for the Russell 2000 Index and the
+15.9% return for the Russell 2000 Growth Index.

Small capitalization stocks continued their strong relative price performance
in the third quarter. The Russell 2000 Index outperformed the S&P 500 Index by
two percentage points for the quarter and by nearly six percentage points on a
year-to-date basis. Relative to the Russell 2000 Growth Index, the Fund's strong
performance during the quarter was a result of positive stock selection in the
four heaviest weighted sectors within the Fund, including electronic technology,
health technology, technology services and finance. We believe that these
sectors are best positioned for strong relative performance based on the
macroeconomic environment we expect in the months ahead. The technology and
health care sectors will benefit from strong relative earnings growth as overall
corporate earnings decelerate. The finance sector should receive greater
investor attention as interest rates stabilize and the market rewards the
sector's predictable earnings growth.

As of September 30, the Fund was 82% invested in equity securities. The large
cap position is the result of new fund flows and our strategy of
opportunistically investing that money in this volatile market. Over the past
quarter, the most significant sector weighting increases occurred in health
technology and finance, accomplished through purchases of Imclone Systems, Cell
Therapeutics, Large Scale Biology, Partner Re, and Waddell & Reed (Class B)
shares. Sector weighting reductions occurred in electronic technology and
technology services, as we reduced or eliminated positions in Burr Brown,
National Computer Systems, Sycamore Networks, and Legato Systems.

We continue to adhere to our philosophy of seeking rapidly growing, well
managed, and financially-stable companies for investment. We very much
appreciate shareholders' continued interest and participation in the Fund.

INVESTMENT OBJECTIVE AND STRAGEGY

The objective of the Sit Small Cap Growth Fund is to maximize long-term
capital appreciation. The Fund pursues this objective by investing primarily in
the common stocks of small growth companies that have a capitalization of $2.5
billion or less at the time of purchase.

In addition, the Fund may purchase securities convertible into common
stocks, preferred stocks and warrants. The Fund may invest in securities not
listed on a national securities exchange but generally such securities will have
an established over-the-counter market.

PORTFOLIO SUMMARY

Net Asset Value 9/30/00: $44.47 Per Share
6/30/00: $41.35 Per Share

Total Net Assets: $300.0 Million

Weighted Average Market Cap: $10.61 Billion

PORTFOLIO STRUCTURE - BY SECTOR
(%OF TOTAL NET ASSETS)

[BAR CHART]

Electronic Technology 28.3
Health Technology 14.4
Finance 12.1
Technology Services 11.1
Health Services 3.4
Sectors Under 3.0% 12.9
Cash & Other Net Assets 17.8
14
<PAGE>

--------------------------------------------------------------------------[LOGO]

AVERAGE ANNUAL TOTAL RETURNS*

SIT RUSSELL
SMALL CAP RUSSELL 2000 2000
GROWTH FUND INDEX GROWTH INDEX
----------- ------------ ------------
3 Month** 7.55% 1.11% -3.97%
1 Year 117.78 23.39 29.66
3 Year 36.49 5.97 8.94
5 Year 29.39 12.38 12.42
Inception 32.86 14.70 15.89
(7/1/94)

CUMULATIVE TOTAL RETURNS*

SIT RUSSELL
SMALL CAP RUSSELL 2000 2000
GROWTH FUND INDEX GROWTH INDEX
----------- ------------ ------------
1 Year 117.78% 23.39% 29.66%
3 Year 154.25 18.99 29.27
5 Year 262.70 79.28 79.57
Inception 491.32 135.79 151.63
(7/1/94)

*AS OF 9/30/00 **NOT ANNUALIZED.

--------------------------------------------------------------------------------

STOCKS OF SMALL- AND MID-SIZED COMPANIES MAY BE SUBJECT TO MORE ABRUPT OR
ERRATIC MARKET MOVEMENTS THAN STOCKS OF LARGER, MORE ESTABLISHED COMPANIES.

HIGH DOUBLE AND TRIPLE DIGIT PERFORMANCE FIGURES ARE ATTRIBUTABLE TO UNUSUALLY
FAVORABLE MARKET CONDITIONS AND MAY NOT BE REPEATED OR CONSISTENTLY ACHIEVED IN
THE FUTURE.

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.
LIPPER ANALYTICAL SERVICES, INC. IS A LARGE INDEPENDENT EVALUATOR OF MUTUAL
FUNDS.

GROWTH OF $10,000

[PLOT POINTS CHART]

9/30/00 would have grown to $59,132 in the Fund, or $23,579 in the Russell 2000
Index assuming reinvestment of all dividends and capital gains.

TOP 10 HOLDINGS

* PMC-Sierra, Inc.
* SDL, Inc.
* Applied Micro Circuits Corp.
* JDS Uniphase Corp.
* Ambac Financial Group, Inc.
* Millipore Corp.
* Flextronics International, Ltd.
* Arthur J. Gallagher & Co.
* Biosite Diagnostics, Inc.
* Legg Mason, Inc.
Total Number of Holdings: 79
Top 10 Holdings represent 25.58% of the portfolio.
15
<PAGE>

[PHOTO] SIT SCIENCE AND TECHNOLOGY GROWTH FUND
Quarter Ended September 30, 2000
-----------------------------------------------------------------------
Eugene C. Sit, CFA, Senior Portfolio Manager

For the quarter ended September 30, 2000, the Sit Science and Technology
Growth Fund posted a return of +4.2%, comparing favorably to the -1.0% for the
S&P 500 Index. The Pacific Stock Exchange Technology 100 (PSE) Index decreased
-5.7% over the same time period.

While many high growth sectors in the market struggled to gain ground in the
quarter, the Fund achieved strong relative returns because of positive stock
selection, particularly in health technology and technology services. Investment
"winners" over the past quarter included Capstone Turbine (+332%), Applied Micro
Circuits (+110%), I2 Technologies (+79%), and Mercury Interactive (+62%). In
addition, vis-a-vis the PSE Index, the greater sector diversification in the
Fund aided performance because of the significant weighting in the health
technology sector.

In light of recent sector volatility, many investors have undoubtedly become
concerned with the outlook for the technology sector. We believe there are
several key considerations. First, the secular growth rate of technology
spending is not slowing. Innovation is continuing and technology spending will
overwhelm other forms of business investment in the coming years as corporations
seek to enhance productivity in a globally competitive marketplace. Second,
valuations have become highly attractive in certain areas within technology,
providing attractive entry points to add to existing positions or build new
ones. Third, as it is now becoming evident that overall corporate profit growth
is slowing, investors may be even more attracted to the strong relative earnings
growth prospects for the technology sector. And finally, we believe that the
technological advance that is occurring is secular and broad-based through the
global economy; company-specific "bad news" is not indicative of a broad
downturn in the entire sector.

As of September 30, the Fund was 95% invested in equity securities. During
the past quarter, the sector weighting fell in electronic technology, offset by
a rise in technology services and health technology. We believe that the Fund is
well positioned to grow alongside some of the fastest growing, dynamic companies
in the equity market. We appreciate shareholders' continued interest and
participation in the Fund.

INVESTMENT OBJECTIVE AND STRATEGY

The objective of the Fund is to maximize long-term capital appreciation.
The Fund pursues this objective by investing primarily in common stocks of
companies which Sit Investment Associates, Inc. expects to benefit from the
development, improvement, advancement and use of science and technology. During
normal market conditions, at least 80% of the Fund's total assets will be
invested in such securities. The Fund emphasizes securities of companies that
the adviser believes have potential for long-term capital growth.

PORTFOLIO SUMMARY

Net Asset Value 9/30/00: $34.79 Per Share
6/30/00: $33.38 Per Share

Total Net Assets: $56.0 Million

Weighted Average Market Cap: $85.2 Billion

PORTFOLIO STRUCTURE - BY SECTOR
(% OF TOTAL NET ASSETS)

[BAR CHART]

Electronic Technology 46.9
Technology Services 25.7
Health Technology 19.0
Sectors Under 3.0% 3.2
Cash & Other Net Assets 5.2
16
<PAGE>

--------------------------------------------------------------------------[LOGO]

AVERAGE ANNUAL TOTAL RETURNS*

SIT PACIFIC STOCK
SCIENCE AND EXCHANGE
TECHNOLOGY TECHNOLOGY S&P
GROWTH FUND 100 INDEX 500 INDEX*
----------- ------------- ---------

3 Month** 4.22% -5.69% -0.97%
1 Year 109.70 65.51 13.28
Inception 57.34 58.91 16.85
(12/31/97)

CUMULATIVE TOTAL RETURNS*

SIT PACIFIC STOCK
SCIENCE AND EXCHANGE
TECHNOLOGY TECHNOLOGY S&P
GROWTH FUND 100 INDEX 500 INDEX*
----------- ------------- ---------

1 Year 109.70% 65.51% 13.28%
Inception 247.90 257.50 53.47
(12/31/97)

*AS OF 9/30/00 **NOT ANNUALIZED.

--------------------------------------------------------------------------------
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.

HIGH DOUBLE AND TRIPLE DIGIT PERFORMANCE FIGURES ARE ATTRIBUTABLE TO UNUSUALLY
FAVORABLE MARKET CONDITIONS AND MAY NOT BE REPEATED OR CONSISTENTLY ACHIEVED IN
THE FUTURE.

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 PACIFIC STOCK EXCHANGE
TECHNOLOGY 100 INDEX AND THE S&P 500 INDEX.
*THE FUND HAS DETERMINED THAT THE S&P 500 INDEX IS MORE REPRESENTATIVE OF THE
PORTFOLIO AND IS NOW USING THIS INDEX AS ITS PRIMARY INDEX.

GROWTH OF $10,000

[PLOT POINTS CHART]

The sum of $10,000 invested at inception (12/31/97) and held until 9/30/00 would
have grown to $34,790 in the Fund, $15,347 in the S&P 500 Index, or $35,750 in
the PSE Tech 100 Index assuming reinvestment of all dividends and capital gains.

TOP 10 HOLDINGS

* Applied Micro Circuits Corp.
* SDL, Inc.
* Cisco Systems, Inc.
* Protein Design Labs
* Check Point Software Technology
* PMC-Sierra, Inc.
* Corning, Inc.
* 12 Technologies, Inc.
* IDEC Pharmaceuticals Corp.
* EMC Corp.
Total Number of Holdings: 67
Top 10 Holdings represent 33.755 of the portfolio.
17
<PAGE>

[PHOTO] SIT DEVELOPING MARKETS GROWTH FUND
Quarter Ended September 30, 2000
-----------------------------------------------------------------------
Eugene C. Sit, CFA, Senior Portfolio Manager

The Sit Developing Markets Growth Fund declined -11.8% during the quarter
ending September 30, 2000, outperforming both the MSCI Emerging Markets Free
Index and the Lipper Emerging Markets Index, which declined -13.4% and -12.4%,
respectively. The Fund's investments in the technology sector boosted relative
performance, and this was offset somewhat by the Fund's underweight positions in
energy sources and utilities.

The Fund had an overweight position in Asia of 44.1% as of September 30
versus 40.2% in the MSCI Emerging Markets Free Index. The indiscriminate selloff
in growth stocks in the region during the past several months has created buying
opportunities, and we have added new positions, including Silverline
Technologies, an India software producer, and Henderson China, a residential
real estate developer that will benefit from the rebounding Chinese economy. We
believe that the People's Republic of China's probable entry into the WTO during
the next several months will be a positive catalyst for share prices in the
Greater China region.

At the end of the quarter, the Fund maintained an underweight position of
18.5% in Latin America versus 28.5% for the Index. Reflecting our more
optimistic view of the Brazilian economy in light of the country's improved
inflationary outlook and fiscal discipline, we recently added a position in
Banco Bradesco, a leading Brazilian bank, and also increased our weighting in
the vertically-integrated oil producer, Petrobras.

We have maintained an underweight position in Emerging Europe, the Middle
East, and Africa of 24.0% versus 31.3% for the MSCI Emerging Markets Free Index.
Our largest position in this region is in Israel, where we have invested in
several world-class technology companies, such as Comverse Technology and Nice
Systems.

INVESTMENT OBJECTIVE AND STRATEGY

The objective of the Sit Developing Markets Growth Fund is to maximize
long-term capital appreciation. The Fund pursues this objective by investing in
equity securities of companies located or otherwise operating in a developing
market.

Developing markets tend to be less economically developed regions of the
world. General characteristics also include a high demand for capital
investment, a high dependence on export markets for their major industries, a
need to develop basic economic infrastructures, rapid economic growth and lower
degrees of political stability. Investors should carefully consider the risks
associated with developing markets such as currency flucuations, high
volatility, illiquidity and the possibility of political instability.

PORTFOLIO SUMMARY

Net Asset Value 9/30/00: $11.84 Per Share
6/30/00: $13.43 Per Share

Total Net Assets: $13.6 Million

Weighted Average Market Cap: $54.3 Billion

PORTFOLIO STRUCTURE - BY REGION
(% OF TOTAL NET ASSETS)

[BAR CHART]

SIT Developing MSCI Emerging
Markets Growth Fund Markets Free Index
------------------- ------------------

Asia 44.1 40.2
Latin America 18.5 18.5
Africa/Middle East 17.6 17.3
Europe 6.4 14.0
North America 0.6 0.0
Cash & Other Net Assets 12.8 0.0

18
<PAGE>

--------------------------------------------------------------------------[LOGO]

AVERAGE ANNUAL TOTAL RETURNS*

SIT MSCI LIPPER
DEVELOPING EMERGING EMERGING
MARKETS MARKETS MARKETS
GROWTH FUND FREE INDEX INDEX
----------- ---------- --------
3 Month** -11.84% -13.35% -12.35%
1 Year 23.72 -1.29 6.56
3 Year -2.35 -8.39 -7.71
5 Year 4.73 -3.71 -0.97
Inception 2.86 -3.40 -0.99
(7/1/94)

CUMULATIVE TOTAL RETURNS*

SIT MSCI LIPPER
DEVELOPING EMERGING EMERGING
MARKETS MARKETS MARKETS
GROWTH FUND FREE INDEX INDEX
----------- ---------- --------
1 Year 23.72% -1.29% 6.56%
3 Year -6.89 -23.11 -21.40
5 Year 25.99 -17.23 -4.74
Inception 19.27 -19.44 -6.04
(7/1/94)

*AS OF 9/30/00 **NOT ANNUALIZED.

--------------------------------------------------------------------------------

INTERNATIONAL INVESTING HAS SPECIAL RISKS, SUCH AS CURRENCY EXCHANGE
FLUCTUATIONS, HIGH VOLITILITY, ILLIQUIDITY AND THE POSSIBILITY OF POLITICAL
INSTABILITY.

HIGH DOUBLE AND TRIPLE DIGIT PERFORMANCE FIGURES ARE ATTRIBUTABLE TO UNUSUALLY
FAVORABLE MARKET CONDITIONS AND MAY NOT BE REPEATED OR CONSISTENTLY ACHIEVED IN
THE FUTURE.

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 MARKET 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

[PLOT POINTS CHART]

The sum of $10,000 invested at inception (7/1/94) and held until 9/30/00 would
have grown to $11,927 in the Fund, or $8,056 in the Morgan Stanley Capital Int'l
Emerging Markets Free Index assuming reinvestment of all dividends and capital
gains.

TOP 10 HOLDINGS

* Telefonos de Mexico, A.D.R.
* Dimension Data Holdings, Ltd.
* Datacraft Asia, Ltd.
* Hon Hai Precision Industry
* Nice Systems, Ltd., A.D.R.
* Wal-Mart de Mexico
* Telefonica, A.D.R.
* India Fund
* China Mobile (Hong Kong) Ltd.
* Comverse Technology, Inc.
Total Number of Holdings: 57
Top 10 Holdings represent 36.46% of the portfolio.

19
<PAGE>

[LOGO] ----------------------------------------------------------------------

Directors:
Eugene C. Sit, CFA
Peter L. Mitchelson, CFA
William E. Frenzel
John E. Hulse
Sidney L. Jones
Donald W. Phillips

Director Emeritus:
Melvin C. Bahle

Stock Funds Officers:
Eugene C. Sit, CFA Chairman
Peter L. Mitchelson, CFA Vice Chairman
Roger J. Sit Executive Vice President
Erik S. Anderson, CFA Vice President-Investments
Ronald D. Sit, CFA Vice President-Investments
Bryce A. Doty, CFA(1) Vice President-Investments
Robert W. Sit (2) Vice President-Investments
Paul E. Rasmussen Vice President & Treasurer
Michael P. Eckert Vice President-Institutional
Client Group
Shelley H. Shutes Vice President-Shareholder
Services
Michael J. Radmer Secretary
Debra A. Sit, CFA Assistant Treasurer
Carla J. Rose Assistant Secretary

(1) Sit Balanced Fund only.
(2) Sit Science and Technology Growth Fund only.

20
<PAGE>

QUARTERLY REPORT STOCK FUNDS

Quarter Ended September 30, 2000

INVESTMENT ADVISOR

Sit Investment Associates, Inc.
90 South Seventh Street, Suite 4600
Minneapolis, MN 55402
612-334-5888 (Metro Area)
800-332-5580

DISTRIBUTOR

SIA Securities Corp.
90 South Seventh Street, Suite 4600
Minneapolis, MN 55402
612-334-5888 (Metro Area)
800-332-5580

CUSTODIAN

The Northern Trust Company
50 South LaSalle Street
Chicago, IL 60675

TRANSFER AGENT AND
DISBURSING AGENT

PFPC Inc.
P.O. Box 5166
Westboro, MA 01581-5166

AUDITORS

KPMG LLP
90 South Seventh Street, Suite 4200
Minneapolis, MN 55402

LEGAL COUNSEL

Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, MN 55402

INVESTMENT SUB-ADVISOR

(Developing Markets Growth Fund and
International Growth Fund)
Sit/Kim International Associates, Inc.
90 South Seventh Street, Suite 4600
Minneapolis, MN 55402
612-334-5888 (Metro Area)
800-332-5580

[LOGO]
SIT INVESTMENT ASSOCIATES
SIT MUTUAL FUNDS