BOND FUNDS QUARTERLY REPORT
QUARTER ENDED JUNE 30, 1999
A FAMILY OF 100% NO-LOAD FUNDS
------------------------------
MONEY MARKET FUND
U.S. GOVERNMENT SECURITIES FUND
TAX-FREE INCOME FUND
MINNESOTA TAX-FREE INCOME FUND
BOND FUND
[LOGO] SIT(SM) MUTUAL FUNDS
THE INVESTMENT IS MUTUAL.(SM)
<PAGE>
SIT MUTUAL FUNDS
BOND FUNDS QUARTERLY REPORT
TABLE OF CONTENTS
PAGE
----
A Look at Sit Mutual Funds.................................... 2
Chairman's Letter............................................. 3
Performance Review............................................ 4
Fund Reviews
Money Market Fund.................................... 6
U.S. Government Securities Fund...................... 8
Tax-Free Income Fund................................. 10
Minnesota Tax-Free Income Fund....................... 12
Bond Fund............................................ 14
This document must be preceded or accompanied by a Prospectus.
<PAGE>
A LOOK AT THE SIT MUTUAL FUNDS
Sit Mutual Funds are managed by Sit Investment Associates, Inc. Sit
Investment Associates was founded by Eugene C. Sit in July 1981 and is dedicated
to a single purpose, to be one of the premier investment management firms in the
United States. Sit Investment Associates currently manages approximately $7
billion for some of America's largest corporations, foundations and endowments.
Sit Mutual Funds are comprised of thirteen 100% NO-LOAD funds. 100% 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.
Other features include:
* 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, Keoghs and 401(k) Plans
2
<PAGE>
SIT MUTUAL FUNDS
CHAIRMAN'S LETTER - QUARTER ENDED JUNE 30, 1999
[PHOTO]
EUGENE C. SIT, CFA
CHIEF INVESTMENT OFFICER
Interest rates continued to trend upward during the second quarter 1999 in
anticipation of tighter monetary policy. In response to a strong domestic
economy, the Federal Reserve made a pre-emptive +0.25% increase in the federal
funds rate to 5.00% on June 30th. Most fixed income instruments provided
negative returns during the quarter. Longer-term bond yields have made a full
retreat from the trough that occurred in October 1998 and have returned to their
first quarter 1998 levels.
Economic Overview
The economy expanded by a +4.3% annualized rate during the first quarter of
1999, with broad strength across all sectors except trade. In particular,
personal consumption expenditures (PCE), which represents more than two-thirds
of GDP, grew at an annualized rate of +6.7%. We expect that upcoming figures
will show the domestic economy slowed to a more moderate pace in the second
quarter. The consumer has already shown some evidence of deceleration and other
elements, such as higher mortgage rates and a negative savings rate, support the
case for further moderation. Even with our forecast for second half 1999 growth
to moderate to a +3.0% rate, full year 1999 real GDP growth will still likely
come in close to +4.0% for the third year in a row.
On the inflation front, the news is mixed. The Consumer Price Index (CPI)
recorded no month-to-month change in May and June, following a surprisingly
large April increase of +0.7%. Many of the elements that were particularly
strong in April reversed trend in the subsequent two months. The +2.0%
year-over-year CPI increase for the month of June was almost identical to the
"core" gain of +2.1%. Less favorable inflation indicators include the National
Association of Purchasing Managers Prices Paid Index and crude oil prices, both
of which have moved upward. In addition, concerns persist that the low
unemployment rate will eventually lead to cost-push labor pressures. We expect
that the CPI will remain in the +2.0% to +2.5% range for the year, essentially
the same as in 1997. Market psychology, however, remains highly sensitive to
each inflation report.
With fiscal surpluses now projected, rhetoric has shifted very quickly from
talk of benefit reductions and higher taxes to tax cuts and new entitlement
programs of massive scale. Capital gains tax reductions and across-the-board tax
rate cuts appear unlikely in the first phase, allowing tax reform to become a
focal issue in the 2000 campaign. The Fed remains wary of the potential impact
of tax cuts on an already strong economy.
Strategy Summary
The Federal Reserve raised the federal funds rate by +0.25% at the close of
its two-day meeting on June 30th and shifted to a neutral policy stance from one
of tightening. The Fed continues to express concerns regarding the
sustainability of productivity increases as well as developing labor imbalances,
and how these factors might potentially contribute to inflation. The consensus
among economists is that the Fed will raise interest rates at least once more
this year. We believe the Fed will remain responsive to ongoing developments. If
real GDP growth moves downward toward the Fed's desired +3% level, the Fed may
rest at one or two moves, but if the economy does not slow, then additional
hikes are likely. The next FOMC meeting is scheduled for August 24th. We believe
that interest rates will be relatively stable within their newly established
higher ranges, which should help moderate economic activity.
We have begun a sector shift in taxable bond portfolios to increase
weightings in U.S. Treasuries and significantly reduce corporate holdings, along
with smaller reductions in asset-backed and mortgage-backed securities. Our more
conservative positioning is due to expected weakness in most sectors due to Y2K
concerns. While the Y2K phenomenon will likely be anticlimactic, we expect a
bias toward quality to develop that will lead to diminished demand for non-U.S.
Treasury securities and that better opportunities to purchase corporates,
asset-backed and mortgage-backed securities will emerge as year end approaches.
Taxable portfolios are currently underweighted in longer-maturity securities and
overweighted in intermediate maturity securities as the yield differential
between 10-year and 30-year Treasuries has narrowed to less than 15 basis
points. Taxable portfolio durations are slightly shorter than their respective
benchmarks as we expect interest rates to be relatively stable during the
summer.
While municipal yields experienced only 40% to 60% of the rise in Treasury
yields since the beginning of the year, they remain attractive at these higher
levels and on an after-tax basis. We expect municipal bond yields to remain near
their recent ranges in the months ahead. With the possibility of additional Fed
tightening, however, we continue to remain focused on reducing portfolio
durations in municipal portfolios, particularly as intermediate-maturity bonds
are currently yielding only slightly less than longer maturity bonds.
We believe our continued focus on high current income and stability of
principal value will help provide positive incremental returns over longer-term
periods. We appreciate your continued interest in the Sit Mutual Funds and look
forward to helping you achieve your long-term investment goals.
Sincerely,
/s/ Eugene C. Sit
Eugene C. Sit, CFA
Chairman and Chief Investment Officer
3
<PAGE>
SIT MUTUAL FUNDS
QUARTER ENDED JUNE 30, 1999 PERFORMANCE SUMMARY - BOND FUNDS
BOND MARKET REVIEW
U.S. bond yields continued to rise during the quarter in anticipation of
tighter monetary policy in response to reports of continued economic strength
and a strong April inflation report. Federal Open Market Committee meeting on
May 18th, the Federal Reserve announced a tightening bias, and, by mid-June,
Chairman Greenspan was suggesting that a pre-emptive tightening move was
imminent. The Fed finally raised the federal funds rate by +0.25% to 5.0% at its
meeting on June 30th and then shifted to a neutral directive.
The 3-month Treasury bill yield increased +0.31% during the quarter,
ending at 4.78% on June 30th. The 30-year Treasury bond yield rose by +0.36% to
5.98% at quarter end while 2- to 10-year maturity Treasury yields increased by
approximately +0.55% to yield between 5.53% and 5.80% and causing the shape of
the yield curve to flatten. Longer term Treasury yields have made a full retreat
from the trough in yields that occurred in October 1998 and have returned to
their first quarter 1998 levels, although short-term yields remain lower by
comparison.
A heavy supply of new issuance led corporate bond yields to increase more
than Treasury yields during the quarter. The widening yield spreads, along with
that sector's longer duration, caused corporates to be the worst performing
sector during the quarter. The asset-backed sector, with its relatively shorter
duration, was the best performing sector. The mortgage sector also outperformed
as the rise in interest rates slowed the rapid pace of prepayments and resulted
in increased investor demand.
Municipal bond yields, which had been relatively stable during the first
quarter, increased in line with Treasury yields during the second quarter. The
yield on the Bond Buyer 40-Bond Index increased +0.32% during the quarter to
5.55% on June 30th, a level not seen since the fall of 1997. Since the beginning
of the year, however, municipal yields have experienced only 40% to 60% of the
rise in Treasury yields. The average relative yield ratio of long municipals to
long Treasury bonds decreased to 92.5% during the second quarter. In addition,
year-to-date municipal issuance volume has declined 23% versus the first half of
last year, primarily due to a slowdown in the pace of refundings.
With the rise in municipal yields during June, returns turned negative for
the quarter and year-to-date in most revenue bond sectors. Shorter duration
sectors, such as industrial revenue and resource recovery, outperformed while
longer duration sectors lagged. Hospital bonds, in addition to being hurt by
their longer duration, were further negatively impacted as yield spreads widened
due to credit concerns. The housing sector has continued to outperform due to
its more stable price characteristics.
1990 1991
-------------------
SIT MONEY MARKET FUND (1) -- --
SIT U.S. GOV'T. SECURITIES FUND 10.97% 12.87%
SIT TAX-FREE INCOME FUND 7.29 9.25
SIT MINNESOTA TAX-FREE
INCOME FUND -- --
SIT BOND FUND -- --
3-MONTH U.S. TREASURY BILL INDEX -- --
LEHMAN INTER. GOVERNMENT BOND INDEX 9.56 14.11
LEHMAN 5-YEAR MUNICIPAL BOND INDEX 7.70 11.41
LEHMAN AGGREGATE BOND INDEX -- --
NASDAQ
SYMBOL INCEPTION
------ ---------
SIT MONEY MARKET FUND SNIXX 11/01/93
SIT U.S. GOV'T. SECURITIES FUND SNGVX 06/02/87
SIT TAX-FREE INCOME FUND SNTIX 09/29/88
SIT MINNESOTA TAX-FREE INCOME FUND SMTFX 12/01/93
SIT BOND FUND SIBOX 12/01/93
3-MONTH U.S. TREASURY BILL INDEX 11/01/93
LEHMAN INTER. GOVERNMENT BOND INDEX 05/31/87
LEHMAN 5-YEAR MUNICIPAL BOND INDEX 09/30/88
LEHMAN AGGREGATE BOND INDEX 11/30/93
(1) Converted from Sit Investment Reserve Fund to Sit Money Market Fund on
11/1/93.
(2) Period from Fund inception through calendar year end.
(3) Based on the last 12 monthly distributions of net investment income and
average NAV as of 6/30/99.
(4) Figure represents 7-day compound effective yield. The 7-day simple yield as
of 6/30/99 was 4.46%.
(5) For individuals in the 28%, 31%, 36%, and 39.6% federal tax brackets, the
federal tax equivalent yields are 6.86%, 7.16%, 7.72% and 8.18%,
respectively (Income subject to state tax, if any).
(6) For Minnesota residents in the 28%, 31%, 36% and 39.6% federal tax
brackets, the double exempt tax equivalent yields are 7.51%, 7.84%, 8.45%
and 8.96%, respectively (Assumes the maximum Minnesota tax bracket of
8.5%).
4
<PAGE>
<TABLE>
<CAPTION>
TOTAL RETURN - CALENDAR YEAR
YIELD
YTD AS OF DISTRIBUTION
1992 1993 1994 1995 1996 1997 1998 1999 6/30/99 RATE(3)
- --------------------------------------------------------------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -- 0.46%(2) 3.84% 5.58% 5.08% 5.22% 5.17% 2.24% 4.56%(4)
5.43% 7.34 1.77 11.50 4.99 8.19 6.52 0.04 5.50 5.14%
7.71 10.42 -0.63 12.86 5.69 9.87 6.29 -0.80 4.94(5) 4.89
- -- 1.60(2) 0.63 11.90 5.89 8.19 6.14 -0.06 4.95(6) 4.82
- -- 0.34(2) -1.31 16.83 4.25 9.44 6.52 -0.64 6.04 5.56
- -- 0.53(2) 4.47 5.98 5.27 5.32 5.01 2.30
6.93 8.17 -1.75 14.41 4.06 7.72 8.49 -0.47
7.62 8.73 -1.28 11.65 4.22 6.38 5.84 -0.21
- -- 0.54(2) -2.92 18.47 3.63 9.65 8.69 -1.37
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE
TOTAL RETURN PERIODS ENDED JUNE 30, 1999
QUARTER SIX MONTHS SINCE
ENDED 6/30/99 ENDED 6/30/99 1 YEAR 5 YEARS 10 YEARS INCEPTION
- ------------------------------ -------------------------------------------
<S> <C> <C> <C> <C> <C>
1.12% 2.24% 4.82% 5.11% -- 4.87%
0.04 0.04 3.34 6.52 7.36% 7.78
-1.30 -0.80 2.53 6.84 7.13 7.24
-0.71 -0.06 3.43 6.54 -- 6.08
-0.66 -0.64 2.49 7.41 -- 6.17
1.15 2.30 4.71 5.26 -- 5.07
-0.20 -0.47 4.43 6.87 7.48 7.74
-1.24 -0.21 3.25 5.61 6.55 6.61
-0.88 -1.37 3.15 7.83 -- 6.33
</TABLE>
PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR
LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS.
5
<PAGE>
SIT MONEY MARKET FUND REVIEW
QUARTER ENDED JUNE 30, 1999
[PHOTO]
SENIOR PORTFOLIO MANAGERS
MICHAEL C. BRILLEY
PAUL J. JUNGQUIST, CFA
The Sit Money Market Fund provided investors with a +1.12% return for the
quarter ended June 30, 1999, compared to a +1.03% average return for the Lipper
Analytical Services, Money Market Fund universe. The Fund's performance ranked
63 of 348 funds in its Lipper peer group category for the quarter. In its Lipper
peer group category for the one-, three-, five-year, and since inception periods
ended June 30, 1999, the Fund's performance ranked 67 of 317, 51 of 272, 34 of
213, and 39 of 190 funds, respectively. As of June 30, 1999, the Fund's 7-day
compound yield was 4.56% and its average maturity was 26 days, compared to 4.54%
and 34 days, respectively, on March 31, 1999.
The Federal Reserve Board increased the federal funds rate from 4.75% to
5.00% on June 30th while adopting a neutral policy bias at the same time.
Three-month Treasury bill yields rose over the past three months as tightening
began to appear more likely. Current short-term yield levels imply that the
market is expecting at most one additional tightening in the third quarter of
1999. Strong economic growth and signs of commodity price inflation may outweigh
lower interest rates around the world and may reduce financing needs by the
Treasury as the federal government continues to produce a surplus. The Fund will
try to take advantage of current yield levels and maintain the average maturity
of the portfolio in a range of 20 to 40 days. If an additional tightening by the
Fed begins to appear more likely, the Fund will adjust its average maturity to
the shorter end of this range.
The Fund has produced competitive returns by focusing on credit research
and avoiding the use of risky derivatives. We intend to continue these
conservative policies in the future. As economic activity continues to be
strong, we do not foresee a significant impact on the short-term
creditworthiness of top tier commercial paper issuers in general. Continued
consolidation in the energy, telecommunications, and financial services sectors
may result in some substantially different credit profiles, so we will monitor
the Fund's permissible credits in these sectors closely. Despite mergers and
acquisitions in many sectors, the Fund continues to diversify its core holdings
and its industry exposure.
INVESTMENT OBJECTIVE AND STRATEGY
The objective of the Fund is to achieve maximum current income to the
extent consistent with the preservation of capital and maintenance of liquidity.
The Fund pursues this objective by investing in short-term debt instruments
which mature in 397 days or less and by maintaining a dollar-weighted portfolio
maturity of 90 days or less.
An investment in the Fund is neither insured nor guaranteed by the U.S.
government and there can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00 per share.
PORTFOLIO SUMMARY
Net Asset Value 6/30/99: $1.00 Per Share
3/31/99: $1.00 Per Share
Total Net Assets: $69.4 Million
PORTFOLIO STRUCTURE
(% of total net assets)
Allocation By Sector
[BAR CHART]
Consumer Loan Finance 16.5
Diversified Finance 16.2
Consumer Non-Durables 16.1
Captive Auto Finance 13.1
Captive Equipment Finance 10.1
Utilities 7.6
Energy 7.6
Technical/Business Equipment 4.2
Capital Goods 4.0
Retail 3.9
Other Assets & Liabilities 0.7
6
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS* CUMULATIVE TOTAL RETURNS*
---------------------------------------- ------------------------------------------
Money Lipper Money 3-Month Money Lipper Money 3-Month
Market Market U.S. Treasury Market Market U.S. Treasury
Fund Average Bill Index Fund Average Bill Index
------ ------------ ------------- ------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
3 Months 1.12% 1.03% 1.15% 1.12% 1.03% 1.15%
(not annualized)
1 Year 4.82 4.51 4.71 4.82 4.51 4.71
3 Year 5.07 4.78 5.10 16.00 15.04 16.10
5 Year 5.11 4.90 5.26 28.33 27.05 29.23
Inception 4.87 4.68 5.07 30.93 29.60 32.36
(11/1/93)
</TABLE>
* As of 06/30/99
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. MONEY FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
THERE IS NO ASSURANCE THAT A FUND WILL MAINTAIN A $1 SHARE VALUE. YIELD
FLUCTUATES. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. MANAGEMENT
FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE;
HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE 3-MONTH U.S. TREASURY
BILL 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]
3-MONTH U.S.
TREASURY
BILL INDEX
SIT MONEY
MARKET
FUND
The sum of $10,000 invested at inception (11/1/93) and held until 6/30/99 would
have grown to $13,093 in the Fund or $13,236 in the 3-Month U.S. Treasury Bill
Index assuming reinvestment of all dividends and capital gains.
QUALITY RATINGS
(% of total net assets)
AS RATED BY MOODY'S, S&P AND FITCH
First Tier Securities
100%
[PIE CHART]
First Tier Securities 100%
Second Tier Securities 0%
7
<PAGE>
SIT U.S. GOVERNMENT SECURITIES FUND REVIEW
QUARTER ENDED JUNE 30, 1999
[PHOTO]
SENIOR PORTFOLIO MANAGERS
MICHAEL C. BRILLEY
BRYCE A. DOTY, CFA
The Sit U.S. Government Securities Fund provided investors with a +0.04%
return for the quarter ended June 30, 1999, compared to a -0.52% return of the
Lipper U.S. Government Fund average. For the twelve months ended June 30, 1999,
the Fund's total return was +3.34% versus +1.48% for the Lipper U.S. Government
Fund average. The Fund holds a 5-star Overall rating by Morningstar(1) out of
1,543 funds in the taxable bond category for the period ended June 30, 1999. The
Fund was rated #2 for Morningstar's Highest 5-Year Rating category for its
combined low risk and high return characteristics and #5 in Morningstar's Lowest
5-Year Risk category out of 1,102 funds.
Interest rates rose during the second quarter with intermediate maturity
yields rising the most. Specifically, the yield on the 2-year maturity U.S.
Treasury rose +0.56% while the 30-year maturity yield rose only +0.36%.
Consequently, prices declined significantly in the Fund's longer duration
Collateralized Mortgage Obligation and U.S. Treasury holdings. The increase in
interest rates, however, slowed the rate of prepayments in the mortgage
pass-through sector, which raised the yield that the Fund earned on its mortgage
holdings. As a result, the pass-through holdings provided the highest return in
the Fund for the quarter.
For much of the quarter, the Fund held Treasury Inflation Protection
Securities (TIPS). The principal of these security increases at the rate of CPI,
and the security pays a fixed coupon. The purchase of the TIPS was made to take
advantage of the sharp (yet brief) rise in inflation that occurred early in the
quarter. The coupon yields, or real yields, of TIPS were nearly +4.0% and the
annualized inflation rates were as high as +9.0%, providing an attractive
combined yield. The TIPS were sold at the end of the quarter because the
annualized inflation rate has since fallen to zero.
Looking forward, we expect a modest rise in inflation and more stable
interest rates at the current higher levels. As a result, we intend to keep the
Fund's duration near that of its benchmark and will continue to invest in
securities that offer high levels of interest income.
INVESTMENT OBJECTIVE AND STRATEGY
The objective of the U.S. Government Securities Fund is to provide high
current income and safety of principal, which it seeks to attain by investing
solely in debt obligations issues, guaranteed or insured by the U.S. government
or its agencies or its instrumentalities.
Agency mortgage securities and U.S. Treasury securities will be the
principal holdings in the Fund. The mortgage securities that the Fund will
purchase consist of pass-through securities including those issued by Government
National Mortgage Association (GNMA), Federal National Mortgage Asociation
(FNMA), and Federal Home Loan Mortgage Corporation (FHLMC).
PORTFOLIO SUMMARY
Net Asset Value 6/30/99: $10.37 Per Share
3/31/99: $10.51 Per Share
Total Net Assets: $165.5 Million
30-Day SEC Yield: 5.50%
12-Month Distribution Rate: 5.14%
Average Maturity: 14.2 Years
Effective Duration: 3.1 Years (2)
(2) Effective duration is a measure which reflects estimated price sensitivity
to a given change in interest rates. For example, for an interest rate change of
1.0%, a portfolio with a duration of 5 years would be expected to experience a
price change of 5%. Effective duration is based on current interest rates and
the Adviser's assumptions regarding the expected average life of individual
securities held in the portfolio.
PORTFOLIO STRUCTURE
(% of total net assets)
[BAR CHART]
GNMA Pass-Through 40.3
Collateralized Mortgage Obligations 15.5
FNMA Pass-Through 11.8
U.S. Treasury 9.3
FHLMC Pass-Through 8.8
Cash Equivalent 14.3
8
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS* CUMULATIVE TOTAL RETURNS*
------------------------------------------ ------------------------------------------
U.S. Gov't. Lipper Lehman Inter. U.S. Gov't. Lipper Lehman Inter.
Securities U.S. Gov't. Gov't. Bond Securities U.S. Gov't. Gov't Bond
Fund Fund Average Index Fund Fund Average Index
----------- ------------ ------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
3 Months 0.04% -1.38% -0.20% 0.04% -1.38% -0.20%
(not annualized)
1 Year 3.34 1.48 4.43 3.34 1.48 4.43
5 Years 6.52 6.63 6.87 37.11 37.87 39.40
10 Years 7.36 7.12 7.48 103.49 98.86 105.76
Inception 7.78 7.30 7.74 147.29 134.25 146.42
(6/2/87)
</TABLE>
* As of 06/30/99
PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR
LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT
FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE;
HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE LEHMAN INTERMEDIATE
GOVERNMENT BOND INDEX. THE LIPPER AVERAGES AND INDICES ARE OBTAINED FROM LIPPER
ANALYTICAL SERVICES, INC., A LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS.
GROWTH OF $10,000
[PLOT POINTS CHART]
SIT U.S. GOV'T.
SECURITIES
FUND
LEHMAN
INTER.
GOV'T. BOND
INDEX
The sum of $10,000 invested at inception (6/2/87) and held until 6/30/99 would
have grown to $24,729 in the Fund or $24,642 in the Lehman Intermediate
Government Bond Index assuming reinvestment of all dividends and capital gains.
ESTIMATED AVERAGE LIFE PROFILE
[BAR CHART]
YEARS
-----
0-1 14.3%
1-5 62.3%
5-10 18.4%
10-20 3.6%
20+ 1.4%
The Adviser's estimates of the dollar weighted average life of the portfolio's
securities, which may vary from their stated maturities.
9
<PAGE>
SIT TAX-FREE INCOME FUND REVIEW
QUARTER ENDED JUNE 30, 1999
[PHOTO]
SENIOR PORTFOLIO MANAGERS
MICHAEL C. BRILLEY
DEBRA A. SIT, CFA
Municipal bond yields rose in line with Treasury bond yields in
anticipation of Fed tightening during the quarter. The Fund provided
shareholders a total return of -1.30% for the quarter and +2.53% for the 12
months ended June 30, 1999. The Fund's return ranked 3 of 271general municipal
funds tracked by Lipper Analytical Services for the quarter and ranked 7 of 259
for 12-month period. In addition, the Fund's return ranked 21 of 201 for the
3-year period, 28 of 154 for the 5-year period, 20 of 76 for the 10-year period
and 37 of 74 since its inception. The Fund's performance was helped by its
emphasis on securities that provide higher coupon income, which cushioned the
decline in bond prices. Housing bonds, with their characteristic price
stability, contributed to the Fund's relative outperformance and offset the
negative impact from health care and closed-end bond fund holdings.
As of June 30th, the Fund's 30-day SEC yield was 4.94% and its 12-month
distribution rate was 4.89% versus 4.54% and 4.92%, respectively, on March 31st.
The Fund continues to focus on securities that provide high incremental yield.
Its 30-day SEC yield remains ranked among the top 5% of 255 funds in its Lipper
universe.
Fund assets declined from $895.4 million to $829.0 million during the
quarter. Purchases and the reduction in net assets resulted in increased
weightings in the multi-family housing sector (from 25.9% to 30.5%), in single
family housing bonds (from 13.8% to 15.3%), and in other revenue bonds (from
7.8% to 9.4%). The Fund reduced its holdings in lower yielding, short duration
prerefunded bonds from 2.0% to 0.6%. Cash decreased from 11.0% to 2.0% as the
Fund experienced net withdrawals that are typical around tax payment time. Due
to a reduction in cash, the Fund's implied duration lengthened from 6.9 years to
7.4 years, and its average maturity increased from 17.2 years to 18.4 years. In
addition, while securities rated A or better continued to comprise more than
two-thirds of the portfolio at quarter end, concentrations in BBB rated
securities increased from 29.0% to 32.8%, and health care bonds increased from
23.6% to 25.0%.
We expect economic activity to moderate in the second half of the year and
municipal bond yields to remain near their recent ranges. With the possibility
of additional Fed tightening later in the year, we look for opportunities to
shorten maturities as intermediate maturity bonds, which are currently yielding
only slightly less than longer maturity bonds, are particularly attractive and
have less duration risk. We remain sensitive to our shareholders' objectives of
high income and relative stability of principal value.
INVESTMENT OBJECTIVE AND STRATEGY
The objective of the Tax-Free Income Fund is to provide a high level of
current income that is exempt from federal income tax, consistent with
preservation of capital, by investing in investment-grade municipal securities.
Such municipal securities generate interest that is exempt from regular
federal income taxes. Of the municipal securities in which the Fund invests,
100% will be rated investment grade at time of purchase. The Adviser does not
intend to invest in securities that generate interest income treated as a tax
preference for alternative minimum taxable income purposes.
PORTFOLIO SUMMARY
Net Asset Value 6/30/99: $10.13 Per Share
3/31/99: $10.39 Per Share
Total Net Assets: $829.0 Million
30-Day SEC Yield: 4.94%
Tax Equivalent Yield: 8.18% (1)
12-Month Distribution Rate: 4.89%
Average Maturity: 18.4 Years
Duration to Estimated Avg. Life: 7.7 Years (2)
Implied Duration: 7.4 Years (2)
(1) For individuals in the 39.6% federal tax bracket.
(2) See next page.
PORTFOLIO STRUCTURE
(% of total net assets)
[BAR CHART]
Multifamily Mortgage Revenue 30.5
Hospital/Health Care Revenue 25.0
Single Family Mortgage Revenue 15.3
Other Revenue 9.4
Education/Student Loan 4.9
Closed-End Mutual Funds 4.6
Industrial Rev/Pollution Control 2.6
Transportation 1.5
Gen. Obligation 1.4
Public Facilities 1.0
Municipal Lease Rental 0.7
Escrowed to Maturity/Pre-Refund 0.6
Utility 0.4
Sales Tax Revenue 0.1
Cash Equivalent 2.0
10
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS* CUMULATIVE TOTAL RETURNS*
------------------------------------------- -------------------------------------------
Tax-Free Lipper General Lehman Tax-Free Lipper General Lehman
Income Muni. Bond 5-Year Muni. Income Muni. Bond 5-Year Muni.
Fund Fund Avg. Bond Index Fund Fund Avg. Bond Index
-------- -------------- ------------ -------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
3 Months -1.30% -2.29% -1.24% -1.30% -2.29% -1.24%
(not annualized)
1 Year 2.53 1.13 3.25 2.53 1.13 3.25
5 Years 6.84 6.19 5.61 39.23 35.05 31.38
10 Years 7.13 6.86 6.55 99.03 94.13 88.65
Inception 7.24 7.24 6.61 112.00 112.14 98.95
(9/29/88)
</TABLE>
* As of 06/30/99
PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR
LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT
FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE;
HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE LEHMAN 5-YEAR MUNICIPAL
BOND INDEX. THE LIPPER AVERAGES AND INDICES ARE OBTAINED FROM LIPPER ANALYTICAL
SERVICES, INC., A LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS.
(2) Duration is a measure which reflects estimated price sensitivity to a given
change in interest rates. For example, for an interest rate change of 1%, a
portfolio with a duration of 5 years would be expected to experience a price
change of 5%. Estimated average life duration is based on current interest rates
and the Adviser's assumptions regarding the expected average life of individual
securities held in the portfolio. Implied duration is calculated based on
historical price changes of securities held by the Fund. The Adviser believes
that the portfolio's implied duration is a more accurate estimate of price
sensitivity provided interest rates remain within their historical range. If
interest rates exceed the historical range, the estimated average life duration
may be a more accurate estimate of price sensitivity.
GROWTH OF $10,000
[PLOT POINTS CHART]
SIT TAX-FREE
INCOME FUND
LEHMAN 5-YEAR
MUNI. BOND INDEX
The sum of $10,000 invested at inception (9/29/88) and held until 6/30/99 would
have grown to $21,200 in the Fund or $19,895 in the Lehman 5-Year Municipal Bond
Index assuming reinvestment of all dividends and capital gains.
QUALITY RATINGS
(% of total net assets)
LOWER OF MOODY'S, S&P, FITCH OR DUFF & PHELPS RATINGS USED.
[PIE CHART]
BBB 32.8%
A 24.9%
AAA 24.0%
AA 16.3%
Other Assets & Liabilities 2.0%
Total number of holdings: 502
11
<PAGE>
SIT MINNESOTA TAX-FREE INCOME FUND REVIEW
QUARTER ENDED JUNE 30, 1999
[PHOTO]
SENIOR PORTFOLIO MANAGERS
MICHAEL C. BRILLEY
DEBRA A. SIT, CFA
Municipal bond yields rose in line with Treasury bond yields in
anticipation of Fed tightening during the quarter. The Fund provided
shareholders a total return of -0.71% for the quarter and +3.43% for the 12
months ended June 30, 1999. The Fund's return ranked #1 of 48 Minnesota
municipal funds tracked by Lipper Analytical Services for the quarter and ranked
#1 of 47 for the 12-month period. In addition, the Fund's return ranked 5 of 45
for the 3-year period, 5 of 30 for the 5-year period and #1 of 25 since its
inception. The Fund's performance was helped by its emphasis on securities that
provide higher coupon income, which cushioned the decline in bond prices.
Housing bonds, with their characteristic price stability, contributed to the
Fund's relative outperformance and offset the negative impact from closed-end
bond fund holdings.
As of June 30th, the Fund's 30-day SEC yield was 4.95% and its 12-month
distribution rate was 4.82%, compared to 4.52% and 4.87%, respectively, on March
31st. The Fund continues to focus on securities that provide high incremental
yield. Its 30-day SEC yield remains ranked among the top 10% of 48 funds in its
Lipper universe.
Fund assets declined from $271.3 million to $249.5 million during the
quarter. Purchases and the reduction in net assets resulted in increased
weightings in multi-family housing bonds (from 34.0% to 39.0%), in health care
(from 20.2% to 23.1%), and in single family housing bonds (from 11.0% to 12.5%).
The Fund reduced its holdings in lower-yielding, general obligation bonds from
3.4% to 1.3%. Cash decreased from 11.9% to 3.7% as the Fund experienced net
withdrawals that are typical around tax payment time. Due to a reduction in
cash, the Fund's implied duration lengthened from 6.8 years to 7.4 years, and
its average maturity increased from 17.7 years to 19.6 years. In addition,
securities rated A or better decreased from 54.5% to 51.4% and the concentration
in non-rated holdings increased from 37.0% to 40.4%.
We expect economic activity to moderate in the second half of the year and
municipal bond yields to remain near their recent ranges. With the possibility
of additional Fed tightening later in the year, we look for opportunities to
shorten maturities as intermediate maturity bonds, which are currently yielding
only slightly less than longer maturity bonds, are particularly attractive and
have less duration risk. We remain sensitive to our shareholders' objectives of
high income and relative stability of principal value.
INVESTMENT OBJECTIVE AND STRATEGY
The investment objective of the Minnesota Tax-Free Income Fund is to
provide a high level of current income exempt from federal regular income tax
and Minnesota regular personal income tax as is consistent with the preservation
of capital.
The Fund will endeavor to invest 100% of its assets in municipal
securities, the income from which is exempt from federal regular income tax and
Minnesota regular personal income tax. The Fund anticipates that substantially
all of its distributions to its shareholders will be exempt as such. For
investors subject to the alternative minimum tax ("AMT"), up to 20% of the
Fund's income may be alternative minimum taxable income.
PORTFOLIO SUMMARY
Net Asset Value 6/30/99: $10.35 Per Share
3/31/99: $10.55 Per Share
Total Net Assets: $249.5 Million
30-Day SEC Yield: 4.95%
Tax Equivalent Yield: 8.96% (1)
12-Month Distribution Rate: 4.82%
Average Maturity: 19.6 Years
Duration to Estimated Avg. Life: 7.8 Years (2)
Implied Duration: 7.4 Years (2)
(1) For individuals in the 39.6% Federal and 8.5% MN tax brackets
(2) See next page.
PORTFOLIO STRUCTURE
[BAR CHART]
Multifamily Mortgage Revenue 39.0
Hospital/Health Care Revenue 23.1
Single Family Mortgage Revenue 12.5
Other Revenue Bonds 5.3
Industrial Revenue/Pollution Control 3.9
Lease 3.6
Education/Student Loan 3.5
Closed-End Mutual Funds 1.9
General Obligation 1.3
Escrowed to Maturity/Pre-Refund 1.2
Public Facilities 0.7
Utilities 0.3
Cash Equivalent 3.7
12
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS* CUMULATIVE TOTAL RETURNS*
------------------------------------------ -------------------------------------------
MN Tax-Free Lipper MN Lehman MN Tax-Free Lipper MN Lehman
Income Muni. Bond 5-Year Muni. Income Muni. Bond 5-Year Muni.
Fund Fund Avg. Bond Index Fund Fund Avg. Bond Index
----------- ---------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
3 Months -0.71% -1.80% -1.24% -0.71% -1.80% -1.24%
(not annualized)
1 Year 3.43 1.76 3.25 3.43 1.76 3.25
3 Year 6.27 5.51 5.21 20.03 17.46 16.46
5 Year 6.54 5.92 5.61 37.25 33.31 31.38
Inception 6.08 4.77 4.95 39.03 29.71 30.94
(12/1/93)
</TABLE>
* As of 06/30/99
PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR
LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT
FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE;
HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE LEHMAN 5-YEAR MUNICIPAL
BOND INDEX. THE LIPPER AVERAGES AND INDICES ARE OBTAINED FROM LIPPER ANALYTICAL
SERVICES, INC., A LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS.
(2) Duration is a measure which reflects estimated price sensitivity to a given
change in interest rates. For example, for an interest rate change of 1%, a
portfolio with a duration of 5 years would be expected to experience a price
change of 5%. Estimated average life duration is based on current interest rates
and the Adviser's assumptions regarding the expected average life of individual
securities held in the portfolio. Implied duration is calculated based on
historical price changes of securities held by the Fund. The Adviser believes
that the portfolio's implied duration is a more accurate estimate of price
sensitivity provided interest rates remain within their historical range. If
interest rates exceed the historical range, the estimated average life duration
may be a more accurate estimate of price sensitivity.
GROWTH OF $10,000
[PLOT POINTS CHART]
SIT MN TAX-FREE
INCOME FUND
LEHMAN 5-YEAR
MUNI. BOND INDEX
The sum of $10,000 invested at inception (12/1/93) and held until 6/30/99 would
have grown to $13,903 in the Fund or $13,094 in the Lehman 5-Year Municipal Bond
Index assuming reinvestment of all dividends and capital gains.
QUALITY RATINGS
(% of total net assets)
LOWER OF MOODY'S, S&P, FITCH OR DUFF & PHELPS RATINGS USED.
[PIE CHART]
Not Rated 40.4%
AAA 20.6%
AA 16.3%
A 10.8%
BBB 8.2%
Other Assets & Liabilities 3.7%
ADVISER'S ASSESSMENT OF
NOT-RATED SECURITIES
AAA 0.7%
AA 0.2
A 3.1
BBB 24.1
BB 11.4
B 0.9
---- ----
Total 40.4%
13
<PAGE>
SIT BOND FUND REVIEW
QUARTER ENDED JUNE 30, 1999
[PHOTO]
SENIOR PORTFOLIO MANAGERS
MICHAEL C. BRILLEY
BRYCE A, DOTY, CFA
The Sit Bond Fund provided investors with a -0.66% return for the second
quarter of 1999 compared to a -1.11% average return for the Lipper Analytical
Services Intermediate Investment Grade Bond Fund universe. For the quarter ended
June 30, 1999, the Fund's total return of +2.49% exceeded the +2.00% average
return for its Lipper universe.
Interest rates rose during the intermediate quarter with shorter maturity
yields rising the highest. Specifically, the yield on the 2-year maturity U.S.
Treasury rose +0.56% while the 30-year maturity yield rose only +0.36%.
Consequently, prices declined significantly in the Fund's longer duration
Collateralized Mortgage Obligation and U.S. Treasury holdings. The rise in
yields, however, slowed the rate of prepayments in the mortgage pass-through
sector which raised the yield that the Fund earned on its mortgage holdings. As
a result, the pass-through holdings provided the highest return in the Fund for
the quarter.
Last quarter, the Fund began a sector shift that increased the Fund's
weightings in U.S. Treasuries and significantly reduced corporates along with a
smaller reduction in asset- and mortgage-backed securities. This more
conservative positioning is due to expected weakness in most sectors because of
Y2K concerns and a resulting bias toward greater quality/liquidity as year-end
approaches. We believe the Y2K phenomenon will be anticlimactic, but that the
bond market will most likely be concerned, causing a flight to quality. With
last year's flight to quality still fresh in investors' minds, we expect a
diminished demand for non-U.S. Treasury securities as year-end approaches,
thereby creating an opportunity to purchase corporates, asset- and
mortgage-backed securities at more attractive levels at that time.
Our economic outlook is for a modest rise in inflation and more stable
interest rates at the current higher levels. As a result, we intend to keep the
Fund's duration near that of its benchmark and will continue to invest in
securities that offer attractive total return opportunities.
INVESTMENT OBJECTIVE AND STRATEGY
The investment objective of the Fund is to maximize total return,
consistent with preservation of capital. The Fund pursues this objective by
investing in a diversified portfolio of fixed-income securities.
The fund will pursue its objective by investing in a diversified portfolio
or fixed-income securities which include, but are not limited to, the following:
U.S. government securities; corporate debt securities; corporate commercial
paper; mortgage and other asset-backed securities.
PORTFOLIO SUMMARY
Net Asset Value 6/30/99: $9.74 Per Share
3/31/99: $9.95 Per Share
Total Net Assets: $12.6 Million
30-Day SEC Yield: 6.04%
12-Month Distribution Rate: 5.56%
Average Maturity: 15.2 Years
Effective Duration: 4.6 Years (1)
(1) Effective duration is a measure which reflects estimated price sensitivity
to a given change in interest rates. For example, for an interest rate change of
1.0%, a portfolio with a duration of 5 years would be expected to experience a
price change of 5%. Effective duration is based on current interest rates and
the Adviser's assumptions regarding the expected average life of individual
securities held in the portfolio.
PORTFOLIO STRUCTURE
(% of total net assets)
[BAR CHART]
Mortgage Pass Through 29.6
Corporate Bonds & Notes 19.9
U.S. Treasury 18.4
Asset-Backed Securities 13.8
Closed-End Mutual Funds 4.6
Collateralized Mortgage Obligations 4.3
Other Assets and Liabilities and Cash Equivalents 9.4
14
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS* CUMULATIVE TOTAL RETURNS*
--------------------------------------- ---------------------------------------
Lipper Inter. Lehman Lipper Inter. Lehman
Bond Investment Grade Aggregate Bond Investment Grade Aggregate
Fund Bond Fund Avg. Bond Index Fund Bond Fund Avg. Bond Index
----- ---------------- ---------- ------ ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
3 Months -0.66% -1.11% -0.88% -0.66% -1.11% -0.88%
(not annualized)
1 Year 2.49 2.00 3.15 2.49 2.00 3.15
3 Year 6.80 6.36 7.23 21.82 20.31 23.31
5 Year 7.41 6.92 7.83 42.96 39.76 45.75
Inception 6.17 5.49 6.33 39.70 34.75 40.87
(12/1/93)
</TABLE>
* As of 06/30/99
PERFORMANCE FIGURES ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL VARY, AND YOU MAY HAVE A GAIN OR
LOSS WHEN YOU SELL SHARES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE
PRICE AS WELL AS REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS. MANAGEMENT
FEES AND ADMINISTRATIVE EXPENSES ARE INCLUDED IN THE FUND'S PERFORMANCE;
HOWEVER, FEES AND EXPENSES ARE NOT INCORPORATED IN THE LEHMAN 5-YEAR MUNICIPAL
BOND INDEX. THE LIPPER AVERAGES AND INDICES ARE OBTAINED FROM LIPPER ANALYTICAL
SERVICES, INC., A LARGE INDEPENDENT EVALUATOR OF MUTUAL FUNDS.
GROWTH OF $10,000
[PLOT POINTS CHART]
LEHMAN
AGGREGATE
BOND
INDEX
SIT BOND
FUND
The sum of $10,000 invested at inception (12/1/93) and held until 6/30/99 would
have grown to $13,970 in the Fund or $14,087 in the Lehman Aggregate Bond Index
assuming reinvestment of all dividends and capital gains.
QUALITY RATINGS
(% of total net assets)
LOWER OF MOODY'S OR S&P USED.
[PIE CHART]
Government Agency Backed Securities 29.6%
U.S. Government 18.4%
AAA 17.9%
BBB 12.0%
A 9.6%
Other Assets & Liabilities 9.4%
AA 3.1%
15
<PAGE>
[LOGO]
Directors:
Eugene C. Sit, CFA
Peter L. Mitchelson, CFA
Michael C. Brilley
John E. Hulse
Sidney L. Jones
Donald W. Phillips
William E. Frenzel
Director Emeritus:
Melvin C. Bahle
Officers:
Eugene C. Sit, CFA Chairman
Peter L. Mitchelson, CFA Vice Chairman
Mary K. Stern, CFA President
Michael C. Brilley Senior Vice President
Paul E. Rasmussen Vice President & Treasurer
Debra A. Sit, CFA Vice President - Investments;
Assistant Treasurer
Bryce A. Doty, CFA (1) Vice President - Investments
Paul J. Jungquist, CFA (2) Vice President - Investments
Michael P. Eckert Vice President
Michael J. Radmer Secretary
Carla J. Rose Assistant Secretary
(1) Bond and U.S. Government Securities Funds only.
(2) Money Market Fund only.
<PAGE>
QUARTERLY REPORT
BOND FUNDS
QUARTER ENDED JUNE 30, 1999
INVESTMENT ADVISER
SIT INVESTMENT ASSOCIATES, INC.
4600 NORWEST CENTER
MINNEAPOLIS, MN 55402
612-334-5888 (METRO AREA)
800-332-5580
DISTRIBUTOR
SIA SECURITIES CORP.
4600 NORWEST CENTER
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
FIRST DATA INVESTOR SERVICES
P.O. BOX 5166
WESTBORO, MA 01581-5166
AUDITORS
KPMG PEAT MARWICK LLP
4200 NORWEST CENTER
MINNEAPOLIS, MN 55402
MEMBER OF
LEGAL COUNSEL =================
100% NO-LOAD
DORSEY & WHITNEY LLP MUTUAL FUND
220 SOUTH SIXTH STREET COUNCIL
MINNEAPOLIS, MN 55402 =================
