SIT MUTUAL FUNDS
STOCK FUNDS PROSPECTUS
NOVEMBER 1, 2000
MID CAP GROWTH FUND
SMALL CAP GROWTH FUND
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
INTRODUCTION 1
FUND SUMMARIES
Investment Objectives and Principal Investment Strategies
MID CAP GROWTH FUND 2
SMALL CAP GROWTH FUND 3
Principal Investment Risks 4
Performance
MID CAP GROWTH FUND 5
SMALL CAP GROWTH FUND 6
Fees and Expenses 7
FUND MANAGEMENT
Investment Adviser 8
Portfolio Management 9
Distributor 9
Custodian and Transfer Agent 10
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SHAREHOLDER INFORMATION
Share Price 11
When Orders are Effective 11
Investing Through a Third Party 12
Other Account Policies 12
Purchasing Shares 13
Selling Shares 14
General Rules for Purchasing & Selling Shares 15
Dividends and Distributions 16
Retirement and other Tax-Deferred Accounts 17
Taxes 18
ADDITIONAL INFORMATION
Other Securities, Investment Practices, and Policies 19
Financial Highlights
MID CAP GROWTH FUND 21
SMALL CAP GROWTH FUND 22
For More Information back cover
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FUND SUMMARIES
INTRODUCTION
SIT MUTUAL FUNDS ARE A FAMILY OF 12 NO-LOAD MUTUAL FUNDS OFFERING A SELECTION OF
FUNDS TO INVESTORS. EACH FUND HAS A DISTINCTIVE INVESTMENT OBJECTIVE AND
RISK/REWARD PROFILE.
This Prospectus describes two of the seven stock funds that are a part of the
Sit Mutual Fund family. The descriptions on the following pages may help you
choose the Fund or Funds that best fit your investment goals. Keep in mind,
however, that no Fund can guarantee it will meet its investment objective, and
no Fund should be relied upon as a complete investment program.
The Fund Summaries section describes the principal strategies used by the Funds
in trying to achieve their objectives, and highlights the risks involved with
these strategies. It also provides you with information about the performance,
fees and expenses of the Funds.
1
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FUND SUMMARIES
MID CAP GROWTH FUND
INVESTMENT OBJECTIVE
The Fund seeks to maximize long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks to achieve its objective by investing at least 65% of its total
assets in the common stocks of growth companies with capitalizations of $2
billion to $15 billion at the time of purchase.
The Adviser invests in a diversified group of growing medium to 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. Several factors are considered in the Adviser's
evaluation of a company, including:
> unique product or service,
> growing product demand,
> dominant and growing market share,
> management experience and capabilities, and
> strong financial condition.
When selling equity securities for the Fund, the Adviser considers several
factors, including changes in a company's fundamentals and anticipated earnings.
RISKS
You could lose money by investing in the Fund. The principal risks of investing
in the Fund are Stock Market Risk, Management Risk, and Smaller Company Risk.
See page 4 for a discussion of these risks.
THE FUND INVESTS IN COMPANIES HAVING A MARKET CAPITALIZATION OF $2 BILLION TO
$15 BILLION.
2
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FUND SUMMARIES
SMALL CAP GROWTH FUND
INVESTMENT OBJECTIVE
The Fund seeks to maximize long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks to achieve its objective by investing at least 65% of its total
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. Several factors are considered in the Adviser's evaluation
of a company, including:
> unique product or service,
> growing product demand,
> dominant and growing market share,
> management experience and capabilities, and
> strong financial condition.
When selling equity securities for the Fund, the Adviser considers several
factors, including changes in a company's fundamentals and anticipated earnings.
RISKS
You could lose money by investing in the Fund. The principal risks of investing
in the Fund are Stock Market Risk, Management Risk, Smaller Company Risk and
Liquidity Risk. See page 4 for a discussion of these risks.
THE FUND INVEST IN COMPANINGS HAVING A MARKET CAPITALIZATION OF $2.5 BILLION OR
LESS
3
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FUND SUMMARIES
PRINCIPAL INVESTMENT RISKS
All investments carry some degree of risk which will affect the
value of a Fund's investments, investment performance, and price of its shares.
IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.
The principal risks of investing in the Funds include:
RISKS THAT APPLY TO BOTH FUNDS
> Stock Market Risk: The value of the stocks in which a Fund invests may
go up or down in response to the activities of individual companies,
the stock market and general economic conditions. Stock prices may
decline over short or extended periods. As of the date of this
Prospectus, U.S. stock markets and certain foreign markets are trading
at or close to record high levels. There is no guarantee that such
levels will continue.
> Management Risk: A strategy used by the investment management team may
not produce the intended results.
> Smaller Company Risk: Stocks of smaller companies may be subject to
more abrupt or erratic market movements than stocks of larger, more
established companies. Small companies may have limited product lines
or financial resources, or may be dependent upon a small or
inexperienced management group. In addition, small cap stocks typically
are traded in lower volume, and their issuers typically are subject to
greater degrees of change in their earnings and prospects.
RISK THAT APPLIES PRIMARILY TO THE SMALL CAP GROWTH FUND
> Liquidity Risk: Certain securities may be difficult to sell at the time
and price that the Adviser would like to sell. The Adviser may have to
lower the selling price, sell other securities instead or forego an
investment opportunity, any of which could have a negative effect on
fund performance. During unusual market conditions, unusually high
volume of redemption requests or other reasons, the Fund may not be
able to pay redemption proceeds within the time periods described in
this Prospectus.
4
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FUND SUMMARIES
PERFORMANCE
The following information illustrates how each Fund's performance has varied
over time, which is one indication of the risks of investing in a Fund. A Fund's
past performance does not necessarily indicate how it will perform in the
future. Each bar chart depicts the change in a Fund's performance from year to
year. Each table depicts a Fund's average annual total returns for the periods
indicated. Both the charts and the tables assume that all distributions have
been reinvested.
MID CAP GROWTH FUND
[BAR CHART]
TOTAL RETURN FOR THE CALENDAR YEARS ENDED 12/31(1)
--------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
-2.04% 65.50% -2.14% 8.55% -0.47% 33.64% 21.87% 17.70% 6.84% 70.65%
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(1) The Fund's year-to-date return as of 9/30/00 (not annualized) was
24.21%.
Best Quarter: 45.95% (4th Q 1999) Worst Quarter: -19.10% (3rd Q 1998)
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99
1-Year 5-Years 10-Years
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MID CAP GROWTH FUND 70.65% 28.43% 19.60%
S&P MidCap 400 Index(1) 14.72% 23.05% 17.32%
Russell MidCap Growth Index(2) 51.29% 28.02% 18.96%
(1) An unmanaged index which measures the performance of 400 widely held
common stocks of mid cap companies.
(2) An unmanaged index which measures the performance of those Russell
Midcap companies with higher price-to-book ratios and higher
forecasted growth values. The stocks are also members of the Russell
1000 Growth index.
Recent high double digit returns were obtained during unusually favorable
market conditions and may not be repeated or consistently achieved in the
future.
5
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FUND SUMMARIES
SMALL CAP GROWTH FUND
[BAR CHART]
TOTAL RETURN FOR THE CALENDAR YEARS ENDED 12/31(1)
--------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
11.57%(2) 52.16% 14.97% 7.63% 1.97% 108.63%
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(1) The Fund's year-to-date return as of 9/30/00 (not annualized) was
32.31%.
(2) Period from Fund inception (7/01/94) through calendar year-end.
Best Quarter: 64.59% (4th Q 1999) Worst Quarter: -17.05% (3rd Q 1998)
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99
Since Inception
1-Year 5-years (7/1/94)
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SMALL CAP GROWTH FUND 108.63% 31.99% 31.26%
Russell 2000 Index(1) 21.26% 16.69% 16.00%
Russell 2000 Growth Index(2) 43.10% 18.99% 18.85%
(1) An unmanaged index which measures the performance of the 2,000 smallest
companies in the Russell 3000 Index (an index of the 3,000 largest U.S.
companies based on total market capitalization).
(2) An unmanaged index which measures the performance of those Russell 2000
companies with higher price-to-book ratios and higher forecasted growth
values.
Recent high double or triple digit returns were obtained during unusually
favorable market conditions and may not be repeated or consistently achieved in
the future.
6
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FUND SUMMARIES
FEES AND EXPENSES
This table shows fees and expenses that you may pay if you buy and hold shares
of the Funds. All Sit Mutual Funds are no-load investments, so you will NOT pay
any shareholder fees such as sales loads, redemption fees or exchange fees when
you buy or sell shares of the Funds. However, when you hold shares of a Fund you
indirectly pay a portion of the Fund's operating expenses. These expenses are
deducted from Fund assets.
SHAREHOLDER FEES (fees paid directly from your investment) None
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ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
--------------------------------------------------------------------------------
Mid Cap Growth Fund Small Cap Growth Fund
Management Fees 1.25%(1) 1.50%
Distribution (12b-1) Fees None None
Other Expenses None None
Total Annual Fund Operating Expenses 1.25%(1) 1.50%
(1) Management fees do NOT reflect the Adviser's waiver of fees. Actual
expenses are LOWER than those shown in the table because of a voluntary fee
waiver by the Adviser. As a result of the fee waiver, actual management fees
paid by the Mid Cap Growth Fund was 1.00% of the Fund's average daily net
assets. After December 31, 2000, actual management fees paid by the Mid Cap
Growth Fund will be 1.15% of the Fund's average daily net assets. After December
31, 2001, this fee waiver may be terminated at any time by the Adviser.
EXAMPLE
This example is intended to help you compare the cost of investing in each Fund
(before the fee waiver) with the cost of investing in other mutual funds. It
assumes that you invest $10,000 in a Fund for the time periods indicated (with
reinvestment of all dividends and distributions), that your investment has a 5%
return each year, that the Fund's operating expenses remain the same, and that
you redeem all of your shares at the end of those periods. Although your actual
costs and returns may differ, based on these assumptions your costs would be:
1-Year 3-Years 5-Years 10-Years
--------------------------------------------------------------------------------
Mid Cap Growth Fund $128 $399 $690 $1,518
Small Cap Growth Fund $154 $477 $824 $1,801
7
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FUND MANAGEMENT
INVESTMENT ADVISER
Sit Investment Associates, Inc. (the "Adviser"), 4600 Wells Fargo Center,
Minneapolis, Minnesota 55402, is the Funds' investment adviser. The Adviser was
founded in 1981 and provides investment management services for both public and
private clients. As of September 30, 2000, the Adviser had approximately $10.4
billion in assets under management, including approximately $2.3 billion for the
12 Sit Mutual Funds.
Under Investment Management Agreements between each Fund and the Adviser (the
"Agreements"), the Adviser manages each Fund's business and investment
activities, subject to the authority of the board of directors. The Agreements
require the Adviser to bear each Fund's expenses except interest, brokerage
commissions and transaction charges and certain extraordinary expenses. Each
Fund pays the Adviser a monthly fee for its services. During their most recent
fiscal year, after taking into account voluntary fee waivers, the Funds paid the
following advisory fees to the Adviser:
ADVISORY FEE AS A % OF
FUND AVERAGE DAILY NET ASSETS
--------------------------------------------------------------------------------
Mid Cap Growth Fund 1.00%(1)
Small Cap Growth Fund 1.50%
(1) Net of voluntary fee waiver. After December 31, 2000, the Adviser has agreed
to waive fees paid by the Mid Cap Growth Fund such that the fee paid net of the
voluntary waiver will be equal to 1.15% of the Fund's average daily net assets.
The contractual fees (without waivers) for the Mid Cap Growth Fund is 1.25% per
year of the Fund's average daily net assets. After December 31, 2001, this fee
waiver may be terminated at any time by the Adviser.
8
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FUND MANAGEMENT
PORTFOLIO MANAGEMENT
The Funds' investment decisions are made by a team. Eugene C. Sit is the
Adviser's Chief Investment Officer and oversees the investment decisions for the
Funds. Peter L. Mitchelson is the Adviser's President and Chief Strategist.
Roger J. Sit is the Adviser's Executive Vice President - Research and Investment
Management. Mr. Eugene C. Sit and Mr. Mitchelson have been with the Adviser and
each of the Funds since their inception. Mr. Roger Sit joined the Adviser in
early 1998 with 9 years of investment management experience.
DISTRIBUTOR
SIA Securities Corp. (the "Distributor"), an affiliate of the Adviser, is the
distributor for the Funds. The Distributor markets the Funds' shares only to
certain institutional and individual investors and all other sales of the Funds'
shares are made by each Fund.
The Distributor or the Adviser may enter into agreements under which various
financial institutions and brokerage firms provide administrative services for
customers who are beneficial owners of shares of the Funds. The Distributor or
Adviser may compensate these firms for the services provided, with compensation
based on the aggregate assets of customers that are invested in the Funds.
9
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FUND MANAGEMENT
CUSTODIAN AND TRANSFER AGENT
The Northern Trust Company, located at 50 South LaSalle Street, Chicago, IL
60675, is the Custodian for the Funds.
PFPC Inc. (formally First Data Investor Services Group, Inc.) located at 4400
Computer Drive, Westboro, MA 01581, is the Transfer Agent for the Funds.
THE CUSTODIAN HOLDS THE FUNDS' SECURITIES AND CASH, RECEIVES AND PAYS FOR
SECURITIES PURCHASED, DELIVERS AGAINST PAYMENT FOR SECURITIES SOLD, RECEIVES AND
COLLECTS INCOME FROM INVESTMENTS AND PERFORMS OTHER ADMINISTRATIVE DUTIES.
THE TRANSFER AGENT PROCESSES PURCHASE ORDERS, REDEMPTION ORDERS AND HANDLES ALL
RELATED SHAREHOLDER ACCOUNTING SERVICES.
10
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SHAREHOLDER INFORMATION
SHARE PRICE
Your price for purchasing, selling, or exchanging shares is based on the Fund's
net asset value ("NAV") per share, which is calculated as of the close of
regular trading on the New York Stock Exchange ("NYSE") (generally 3:00 p.m.
Central time) every day the exchange is open. The NAV per share of the Funds
will fluctuate.
NAV is based on the market value of the securities in a Fund's portfolio. When
market value prices are not readily available, fair value is determined in good
faith by the Adviser using methods approved by the board of directors.
Short-term debt securities maturing in less than 60 days are valued at amortized
cost. The amortized cost method of valuation initially values a security at its
purchase cost, then consistently adjusts the cost value by amortizing/accreting
any discount or premium paid until the security's maturity without regard to
fluctuating interest rates.
WHEN ORDERS ARE EFFECTIVE
Purchase, exchange, and sale orders are received and may be accepted by Sit
Mutual Funds only on days the NYSE is open. PURCHASE, EXCHANGE, AND SALE ORDERS
RECEIVED PRIOR TO THE CLOSE OF THE NYSE (GENERALLY 3:00 P.M. CENTRAL TIME) ARE
PROCESSED AT THE NET ASSET VALUE PER SHARE CALCULATED FOR THAT BUSINESS DAY,
EXCEPT PURCHASES MADE TO AN EXISTING ACCOUNT VIA AUTOMATED CLEARING HOUSE,
"ACH," ELECTRONIC TRANSFER OF FUNDS. ACH PURCHASES ARE INVESTED AT THE NET ASSET
VALUE PER SHARE ON THE NEXT BUSINESS DAY AFTER YOUR TELEPHONE CALL TO THE FUNDS
IF YOU CALL THE FUNDS PRIOR TO THE CLOSE OF THE NYSE. Your bank account will be
debited within 1 to 2 business days.
IF YOUR PURCHASE, EXCHANGE, OR SALE ORDER IS RECEIVED AFTER THE CLOSE OF THE
NYSE, THE PURCHASE, EXCHANGE OR SALE WILL BE MADE AT THE NET ASSET VALUE
CALCULATED ON THE NEXT DAY THE NYSE IS OPEN.
A FUND'S SHARE PRICE OR NAV IS DETERMINED BY ADDING THE TOTAL VALUE OF A FUND'S
INVESTMENTS AND OTHER ASSETS (INCLUDING ACCRUED INCOME), SUBTRACTING ITS
LIABILITIES, AND THEN DIVIDING THAT FIGURE BY THE NUMBER OF OUTSTANDING SHARES
OF THE FUND.
11
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SHAREHOLDER INFORMATION
INVESTING THROUGH A THIRD PARTY
There is no charge to invest, exchange, or sell shares when you make
transactions directly through Sit Mutual Funds.
Certain Funds may be available for purchase through a third party financial
institution. If you invest in the Funds through a third party, rather than
directly with Sit Mutual Funds, the fees and policies may be different than
described in this Prospectus. Banks, brokers, 401(k) plans, financial advisors,
and financial supermarkets may charge commissions and transaction fees and may
set different minimum investments or limitations on purchasing or selling
shares. Consult a representative of your plan or financial institution if you
are unsure of their fees and policies.
OTHER ACCOUNT POLICIES
PURCHASE RESTRICTIONS
The Funds may reject or restrict any purchase or exchange order at any time,
when, in the judgment of management, it is in the best interests of the Funds.
For example, it may be in the best interests of the Funds to reject purchase and
exchange orders that are short-term or to restrict excessive trading into and
out of the Funds since such orders may harm performance by disrupting portfolio
management strategies and increasing expenses.
ACCOUNTS WITH LOW BALANCES
If your account balance in a Fund falls below $2,000 as a result of selling or
exchanging shares, the Fund has the right to redeem your shares and send you the
proceeds. Before redeeming your account, the Fund will mail you a notice of its
intention to redeem, which will give you an opportunity to make an additional
investment. If you do not increase the value of your account to at least $2,000
within 30 days of the date the notice was mailed, the Fund may redeem your
account.
12
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SHAREHOLDER INFORMATION
PURCHASING SHARES
TO OPEN AN ACCOUNT
By Mail
-------
Mail a completed account application and your check payable to:
Sit Mutual Funds
P.O. Box 5166
Westboro, MA 01581-5166
Third party checks or starter checks are not accepted for initial purchases.
Please be sure to complete the entire application, including the selection of
which Fund(s) you want to purchase.
By Telephone
------------
Fax a completed account application to Sit Mutual Funds at 612-342-2111, and
then call us at 1-800-332-5580 or 612-334-5888 for a new account number and bank
wiring instructions.
Instruct your bank to wire your investment to us using the wire instructions we
have given you. Your bank may charge a wire fee. Mail the original signed
account application to:
Sit Mutual Funds
P.O. Box 5166
Westboro, MA 01581-5166
NOTE FOR IRA ACCOUNTS: An IRA account cannot be opened over the telephone.
Automatically
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You cannot make a purchase automatically.
TO ADD TO AN ACCOUNT
By Mail
-------
Mail a completed investment slip for a particular fund (which you received in
your account statement) or a letter of instruction, with a check payable to:
Sit Mutual Funds
P.O. Box 5166
Westboro, MA 01581-5166
A letter of instruction must include your account number, the name(s) of the
registered owner(s) and the Fund(s) that you want to purchase.
Starter checks are not accepted for additional purchases.
By Telephone
------------
PAYMENT BY WIRE. Instruct your bank to wire your investment to the Sit Mutual
Funds using the wire instructions on the back of the prospectus. Call us at
1-800-332-5580 or 612-334-5888 and notify us of the wire.
PAYMENT BY ACH. Call us at 1-800-332-5580 or 612-334-5888 to request that a
purchase be made electronically from your bank account. The purchase will be
effective on the next business day following your telephone request made prior
to the close of the NYSE.
Before using the ACH feature, you must set up the ACH option on your initial
account application or a Change of Account Options Form.
Automatically
-------------
You may set up an Automatic Exchange Plan on your initial account application or
on a Change of Account Options Form. The Plan will sell shares of one Sit Fund
and invest in another Sit Fund automatically on any day the Funds are open -
either monthly, quarterly or annually.
Please see page 35 for additional general rules for purchasing and selling
shares.
13
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SHAREHOLDER INFORMATION
SELLING SHARES
TO EXCHANGE SHARES
By Mail
-------
You may sell shares of one Sit Fund and purchase shares of another Sit Fund ing
a letter of instruction signed by all registered owners of the account to:
Sit Mutual Funds
P.O. Box 5166
Westboro, MA 01581-5166
A letter of instruction must include your account number, the name(s) and the
number of shares or dollar amount of the Fund(s) you want to sell and the
name(s) of the Fund(s) you want to purchase.
By Telephone
------------
You may sell shares of one Sit Fund and purchase shares of another Sit Fund by
calling us at 1-800-332-5580 or 612-334-5888. If you call after business hours,
you will need your Personal Identification Number to use the automatic telephone
system.
Automatically
-------------
You may set up an Automatic Exchange Plan on your initial account application or
on a Change of Account Options Form. The Plan will sell shares of one Sit Fund
and invest in another Sit Fund automatically on any day the Funds are open -
either monthly, quarterly or annually.
TO SELL SHARES
By Mail
-------
Mail a written request that includes:
o Account number,
o Names and signatures of all registered owners exactly as they appear on
the account,
o Name of Fund and number of shares or dollar amount you want to sell,
o Medallion signature guarantee(s) if you have requested that the
proceeds from the sale be:
o paid to anyone other than the registered account owners,
o paid by check and mailed to an address other than the
registered address, or
o sent via bank wire (currently an $8 fee) to a bank different
than the bank authorized by you on your account application.
o Supporting legal documents, if required (see "General Rules" on
following page)
o Method of payment (check, wire transfer, or ACH, see "General Rules" on
following page)
NOTE FOR IRA ACCOUNTS: Mail a signed IRA Distribution Form to Sit Mutual Funds.
By Telephone
------------
Call us at 1-800-332-5580 or 612-334-5888 and request a sale of shares.
Before selling shares by telephone, you must set up the option on your initial
account application or a Change of Account Options Form. Proceeds from the sale
will be sent as directed on your application by check, bank wire or ACH. The
Funds' bank charges a wire fee to send the proceeds via bank wire (currently
$8).
NOTE FOR IRA ACCOUNTS: A sale of shares from an IRA account cannot be made over
the telephone. Mail a completed IRA Distribution Form to Sit Mutual Funds.
Automatically
-------------
Shares may be sold through the Automatic Withdrawal Plan (minimum $100) if the
Special Services section of the initial account application is complete.
You may add this option by completing a Change of Account Options Form, and this
option will begin within 10 days of the Funds' receipt of the form.
Proceeds from the sale will be sent as directed on your account application, by
check or ACH.
Please see page 35 for additional general rules for purchasing and selling
shares.
14
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SHAREHOLDER INFORMATION
GENERAL RULES FOR PURCHASING & SELLING SHARES
PURCHASING SHARES
Shares may be purchased on any day the NYSE is open with a minimum initial
investment of $2,000 for each Fund; additional investments must be at least
$100.
Uniform Gifts to Minor Act accounts may be opened with a $500 minimum initial
investment if an Automatic Investment Plan is established for at least $100 per
month.
These minimums do not apply to IRA accounts.
SELLING SHARES
Your sale proceeds will be paid as soon as possible, generally not later than 7
business days after the Funds' receipt of your request to sell. However, if you
purchased shares with nonguaranteed funds, such as a personal check, and you
sell shares, your sale proceeds payment will be delayed until your check clears,
which may take 15 days.
OTHER DOCUMENTS: Under certain circumstances, sales of shares may require
additional legal documentation, such as sales by estates, trusts, guardianships,
custodianships, corporations, pension and profit sharing plans and other
organizations.
MEDALLION SIGNATURE GUARANTEE: A medallion signature guarantee assures that a
signature is genuine and protects shareholders from unauthorized account
transactions. A medallion signature guarantee may be obtained from a bank,
brokerage firm, or other financial institution that is participating in a
medallion program recognized by the Securities Transfer Association. A notary
public stamp cannot be substituted for a medallion signature guarantee.
EXCHANGING SHARES
You may sell shares of one or more Sit Mutual Funds and use the proceeds to buy
shares of another Sit Fund at no cost.
Before making an exchange, please read the prospectus and consider the
investment objective of the Fund you are purchasing.
An exchange of shares is a sale for federal income tax purposes and you may have
a taxable capital gain or loss.
RECEIPT OF SALE PROCEEDS
You may receive proceeds from the sales of your shares in one of three ways:
(1) By Mail
Your check will generally be mailed to the address of record within 7 business
days after receipt of your request.
(2) By Wire
Your bank account will generally be credited within 1 to 2 business days after
receipt of your request. The Funds' bank charges a wire fee (currently $8) which
will be deducted from the balances of your account or from the amount being
wired if your account has been completely redeemed. The recipient bank may also
charge a wire fee.
(3) By ACH
Your bank account will generally be credited within 1 to 2 business days after
receipt of your request. Proceeds from the sale of shares from an IRA account
cannot be paid using ACH.
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SHAREHOLDER INFORMATION
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes an annual dividend from its net investment income. Net
investment income includes dividends on stocks and interest earned on bonds or
other debt securities less operating expenses.
Capital gains, if any, are distributed at least once a year by each Fund. A
capital gain occurs if a Fund sells portfolio securities for more than its cost.
If you buy Fund shares just before a distribution, in effect, you "buy the
distribution." You will pay the full price for the shares and then receive a
portion of that price back as a taxable distribution.
Dividend and capital gain distributions are automatically reinvested in
additional shares of the Fund paying the distribution at the net asset value per
share on the distribution date. However, you may request that distributions be
automatically reinvested in another Sit Mutual Fund, or paid in cash. These
requests may be made on the application, Change of Account Options form, or by
written notice to Sit Mutual Funds. You will receive a quarterly statement
reflecting the dividend payment and, if applicable, the reinvestment of
dividends. If cash payment is requested, an ACH transfer will be initiated, or a
check normally will be mailed within five business days after the payable date.
If the check cannot be delivered because of an incorrect mailing address, the
undelivered distributions and all future distributions will automatically be
reinvested in Fund shares. No interest will accrue on uncashed distribution,
dividend, or sales proceeds checks.
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SHAREHOLDER INFORMATION
RETIREMENT AND OTHER TAX-DEFERRED ACCOUNTS
Taxes on current income can be deferred by investing in Individual Retirement
Accounts (IRAs), 401(k), pension, profit-sharing, 403(b)(7), employee benefit,
deferred compensation and other qualified retirement plans.
The Funds are available for your tax-deferred retirement plan with no minimum
investment requirements for initial or subsequent contributions. Such retirement
plans must have a qualified plan sponsor or trustee. The Adviser sponsors
prototype 401(k), profit sharing, and money purchase plans as well as IRA,
SEP-IRA, Simple IRA and certain 403(b)(7) plans. You should contact the Adviser
for specific plan documentation.
The Funds are also available for Education IRAs, which are vehicles for saving
for post-secondary education on a tax-deferred basis. Contributions to an
Education IRA cannot be made after the minor turns age 18, and are not
deductible for tax purposes.
The federal tax laws governing these tax-deferred plans must be complied with to
avoid adverse tax consequences. You should consult your tax adviser before
investing.
17
<PAGE>
SHAREHOLDER INFORMATION
TAXES
Some of the tax consequences of investing in the Funds are discussed below. More
information about taxes is in the Statement of Additional Information. However,
because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
TAXES ON DISTRIBUTIONS
Each Fund pays its shareholders distributions from its net investment income and
any net capital gains that it has realized. For most investors, these
distributions will be taxable, whether paid in cash or reinvested (unless your
investment is in an IRA or other tax-advantaged account).
Distributions paid from a Fund's net investment income and short-term capital
gains, if any, are taxable as ordinary income. Distributions paid from a Fund's
long-term capital gains, if any, are taxable as long-term capital gains,
regardless of how long you have held your shares.
TAXES ON TRANSACTIONS
The sale or exchange of your shares in a Fund is a taxable transaction, and you
may incur a capital gain or loss on the transaction. If you held the shares for
more than one year, this gain or loss would be a long-term gain or loss. A gain
or loss on shares held for one year or less is considered short-term and is
taxed at the same rates as ordinary income.
18
<PAGE>
ADDITIONAL INFORMATION
OTHER SECURITIES, INVESTMENT PRACTICES, AND POLICIES
The principal investment strategies and risk factors of each Fund are outlined
in the section entitled "Fund Summaries." Below are brief discussions of certain
other investment practices of the Funds. Each Fund may invest in securities and
use investment strategies that are not described in this Prospectus but are
described in the Statement of Additional Information.
PORTFOLIO TURNOVER
The Funds may trade securities frequently, resulting, from time to time, in an
annual portfolio turnover rate of over 100%. However, historically the Funds'
turnover rate has been less than 100%. The "Financial Highlights" section of
this Prospectus shows each Fund's historical portfolio turnover rate. Trading of
securities may produce capital gains, which are taxable to shareholders when
distributed. Active trading may also increase the amount of commissions or
mark-ups to broker-dealers that a Fund pays when it buys and sells securities,
which may decrease the Fund's yield.
19
<PAGE>
ADDITIONAL INFORMATION
INVESTMENT IN THE SIT MONEY MARKET FUND
Each Fund may invest up to 25% of its total net assets in shares of the money
market funds advised by the Adviser, which includes the Sit Money Market Fund,
subject to the conditions contained in an exemptive order issued to the Funds by
the Securities and Exchange Commission. These investments may be made in lieu of
direct investments in short-term money market instruments if the Adviser
believes that they are in the best interest of the Funds.
TEMPORARY DEFENSIVE INVESTING
For temporary defensive purposes in periods of unusual market conditions, each
Fund may invest all of its total assets in cash or short-term debt securities
including certificates of deposit, bankers' acceptances and other bank
obligations, corporate and direct U.S. obligation bonds, notes, bills,
commercial paper and repurchase agreements. As a result, a Fund may not achieve
its investment objective.
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about the shares of each
Fund. This information is intended to help you understand each Fund's financial
performance for the past five years (or, if shorter, the period of the Fund's
operations). Some of this information reflects financial results for a single
Fund share. The total returns in the tables represent the rate that you would
have earned or lost on an investment in a Fund, assuming you reinvested all of
your dividends and distributions. This information has been audited by KPMG LLP,
independent auditors, whose report, along with the Funds' financial statements,
is included in the Funds' annual report, which is available upon request.
20
<PAGE>
ADDITIONAL INFORMATION
SIT MID CAP GROWTH FUND
<TABLE>
<CAPTION>
Fiscal Years Ended June 30,
2000 1999 1998 1997 1996
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of period $ 14.54 $ 16.49 $ 15.43 $ 15.58 $ 13.00
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) (.12) (.06) (.07) (.03) (.04)
Net realized and unrealized gains (losses) on investments 10.38 .65 3.15 2.50 4.07
------------------------------------------------------------------------------------------------------------------------------------
Total from operations 10.26 .59 3.08 2.47 4.03
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- -- -- -- --
From realized gains (1.23) (2.54) (2.02) (2.62) (1.45)
------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.23) (2.54) (2.02) (2.62) (1.45)
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE:
End of period $ 23.57 $ 14.54 $ 16.49 $ 15.43 $ 15.58
------------------------------------------------------------------------------------------------------------------------------------
Total investment return (1) 73.01% 6.94% 22.19% 17.23% 33.00%
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year (000s omitted) $ 566.639 $ 375,343 $ 404,327 $ 386,543 $ 356,317
RATIOS:
Expenses to average daily net assets 1.00%(2) 1.00%(2) 1.00%(2) 0.92%(2) 0.77%
Net investment income (loss) to average daily net assets (0.58%)(2) (0.46%)(2) (0.41%)(2) (0.20%)(2) (0.23%)
Portfolio turnover rate (excluding short-term securities) 62.21% 68.62% 52.62% 38.66% 50.38%
====================================================================================================================================
</TABLE>
(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) Effective November 1, 1996, total Fund expenses are contractually
limited to 1.25% of average daily net assets. However, during the years
ended June 30, 2000, 1999, 1998 and 1997, the investment adviser
voluntarily absorbed $1,209,620, $865,657, $1,004,074, and $609,840,
respectively, in 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%, 1.25%, 1.25% and 1.09% for the
years ended June 30, 2000, 1999, 1998 and 1997, respectively, and the
ratio of net investment income (loss) to average daily net assets would
have been (0.83%), (0.71%), (0.66%) and (0.37%), respectively.
21
<PAGE>
ADDITIONAL INFORMATION
SIT SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
Fiscal Years Ended June 30,
2000 1999 1998 1997 1996
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of period $ 18.28 $ 20.35 $ 18.89 $ 19.27 $ 13.49
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment loss (.18) (.18) (.17) (.14) (.11)
Net realized and unrealized gains on investments 23.25 1.20 2.31 .57 6.03
------------------------------------------------------------------------------------------------------------------------------------
Total from operations 23.07 1.02 2.14 .43 5.92
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From realized gains -- (3.09) (.68) (.81) (.14)
------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (3.09) (.68) (.81) (.14)
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE:
End of period $ 41.35 $ 18.28 20.35 $ 18.89 $ 19.27
------------------------------------------------------------------------------------------------------------------------------------
Total investment return (1) 126.20% 8.77% 11.70% 2.37% 44.13%
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year (000s omitted) $ 190,630 $ 50,335 $ 57,472 $ 58,358 $ 50,846
RATIOS:
Expenses to average daily net assets 1.50% 1.50% 1.50% 1.50% 1.50%
Net income (loss) to average daily net assets (0.83%) (1.08%) (0.72%) (0.81%) (0.91%)
Portfolio turnover rate (excluding short-term securities) 39.31% 71.84% 79.54% 58.39% 69.92%
====================================================================================================================================
</TABLE>
(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.
22
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ADDITIONAL INFORMATION
This Page has been Left Blank Intentionally
23
<PAGE>
ADDITIONAL INFORMATION
This Page has been Left Blank Intentionally
24
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FOR MORE INFORMATION
For more information about the Funds, the following documents are available free
upon request:
STATEMENT OF ADDITIONAL INFORMATION
The SAI contains more details about the Funds and their investment policies. The
SAI is incorporated in this Prospectus by reference.
ANNUAL/SEMI-ANNUAL REPORT
The Funds' Annual and Semi-Annual Reports include a discussion of the market
conditions and investment strategies that significantly affected the Funds'
performance.
To request a copy of the documents listed above, or to obtain more information
about the Funds:
BY TELEPHONE:
(800) 332-5580 or
(612) 334-5888
BY E-MAIL:
[email protected]
ON THE INTERNET:
Visit our website at
www.sitfunds.com
Visit the SEC website at www.sec.gov
BY REGULAR MAIL:
Sit Mutual Funds
P.O. Box 5166
Westboro, MA 01581-5166
BY EXPRESS MAIL:
Sit Mutual Funds
4400 Computer Drive
Westboro, MA 01581
TO WIRE MONEY FOR A PURCHASE:
Boston Safe Deposit & Trust, Boston, MA
ABA #011001234
DDA #056146
Sit Mutual Funds
For Further Credit: (shareholder name)
Account Number: (shareholder account #)
The SAI and the Funds' reports may also be reviewed at the Public Reference Room
of the Securities and Exchange Commission in Washington, D.C. You can get copies
free from the SEC's Website listed above, or by mail, for a fee, by calling the
SEC at 1-800-SEC-0330 or by writing the SECOs Public Reference Section, 450
Fifth Street NW, Washington, D.C. 20549-6009.
[SIT MUTUAL FUNDS LOGO]
1940 Act File Nos. 811-03342; 811-03343; 811-06373
