UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSRS
Investment Company Act file number 811-1444
VALUE EQUITY TRUST
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(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, MA 02110-4103
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 454-7190
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Paul Schubert
345 Park Avenue
New York, NY 10154
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(Name and Address of Agent for Service)
Date of fiscal year end: 2/28
Date of reporting period: 08/31/2005
ITEM 1. REPORT TO STOCKHOLDERS
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Semiannual Report to Shareholders |
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August 31, 2005 |
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Contents |
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Click Here Performance Summary Click Here Information About Your Fund's Expenses Click Here Portfolio Management Review Click Here Portfolio Summary Click Here Investment Portfolio Click Here Financial Statements Click Here Financial Highlights Click Here Notes to Financial Statements Click Here Account Management Resources Click Here Privacy Statement |
This report must be preceded or accompanied by a prospectus. To obtain a prospectus for any of our funds, refer to the Account Management Resources information provided in the back of this booklet. We advise you to consider the fund's objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the fund. Please read the prospectus carefully before you invest.
Investments in mutual funds involve risk. Some funds have more risk than others. This fund is subject to stock market risk, meaning stocks in the fund may decline in value for extended periods of time due to the activities and financial prospects of individual companies, or due to general market and economic conditions. The fund may not be able to mirror the S&P 500 index closely enough to track its performance for several reasons, including the fund's cost to buy and sell securities, the flow of money into and out of the fund, and the potential underperformance of stocks selected. The index is not available for direct investment, and there are no fees or expenses associated with the index's performance. Additionally, derivatives may be more volatile and less liquid than traditional securities and the fund could suffer losses on its derivatives positions. Please read this fund's prospectus for specific details regarding its investments and risk profile.
Scudder Investments is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Investment Management Americas Inc., Deutsche Asset Management Inc., Deutsche Asset Management Investment Services Ltd., Deutsche Bank Trust Company Americas and Scudder Trust Company.
Fund shares are not FDIC-insured and are not deposits or other obligations of, or guaranteed by, any bank. Fund shares involve investment risk, including possible loss of principal.
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Classes A, B, C and R
All performance shown is historical, assumes reinvestment of all dividend and capital gain distributions, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Please visit scudder.com for the Fund's most recent month-end performance.
The maximum sales charge for Class A shares is 5.75%. For Class B shares, the maximum contingent deferred sales charge (CDSC) is 4% within the first year after purchase, declining to 0% after six years. Class C shares have no adjustment for front-end sales charges but redemptions within one year of purchase may be subject to a CDSC of 1%. Unadjusted returns do not reflect sales charges and would have been lower if they had. Class R shares are not subject to sales charges.
To discourage short-term trading, shareholders redeeming shares held less than 15 days will have a lower total return due to the effect of the 2% short-term redemption fee.
Returns and rankings during all periods shown for Class A, B, C and R shares reflect a fee waiver and/or expense reimbursement. Without this waiver/reimbursement, returns and rankings would have been lower.
Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns and rankings may differ by share class.
Returns shown for Class A, B and C shares prior to their inception on July 2, 2001 and for Class R shares prior to its inception on November 3, 2003 are derived from the historical performance of Class S shares of the Scudder Select 500 Fund during such periods and have been adjusted to reflect the higher gross total annual operating expenses of each specific class. Any difference in expenses will affect performance. Class S shares are no longer available to new investors except under certain circumstances. (Please refer to the Fund's Statement of Additional Information.)
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Average Annual Total Returns (Unadjusted for Sales Charge) as of 8/31/05 |
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Scudder Select 500 Fund |
6-Month* |
1-Year |
3-Year |
5-Year |
Life of Fund* |
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Class A |
1.48% |
11.53% |
10.66% |
-2.68% |
.59% |
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Class B |
1.09% |
10.70% |
9.78% |
-3.42% |
-.19% |
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Class C |
1.09% |
10.87% |
9.84% |
-3.41% |
-.18% |
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Class R |
1.36% |
11.32% |
10.43% |
-2.89% |
.37% |
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S&P 500 Index+ |
2.33% |
12.56% |
12.03% |
-2.71% |
.50% |
Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.
* Total returns shown for periods less than one year are not annualized.
* The Fund commenced operations on May 17, 1999. Index returns begin May 31, 1999.
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Net Asset Value and Distribution Information |
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Class A |
Class B |
Class C |
Class R |
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Net Asset Value: 8/31/05 |
$ 12.21 |
$ 12.02 |
$ 12.05 |
$ 12.10 |
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2/28/05 |
$ 12.04 |
$ 11.89 |
$ 11.92 |
$ 11.94 |
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Distribution Information: Six Months: Income Dividends as of 8/31/05 |
$ .008 |
$ — |
$ — |
$ .002 |
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Class A Lipper Rankings — Large Cap Core Funds Category as of 8/31/05 |
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Period |
Rank |
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Number of Funds Tracked |
Percentile Ranking |
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1-Year |
443 |
of |
873 |
51 |
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3-Year |
273 |
of |
759 |
36 |
Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings are based on total return unadjusted for sales charges with distributions reinvested. If sales charges had been included, rankings might have been less favorable. Rankings are for Class A shares; other share classes may vary.
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Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge) |
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[] Scudder Select 500 Fund — Class A [] S&P 500 Index+ |
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Yearly periods ended August 31 |
The Fund's growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 5.75%. This results in a net initial investment of $9,425.
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Comparative Results (Adjusted for Maximum Sales Charge) as of 8/31/05 |
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Scudder Select 500 Fund |
1-Year |
3-Year |
5-Year |
Life of Fund* |
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Class A |
Growth of $10,000 |
$10,512 |
$12,771 |
$8,228 |
$9,780 |
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Average annual total return |
5.12% |
8.49% |
-3.83% |
-.35% |
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Class B |
Growth of $10,000 |
$10,770 |
$13,031 |
$8,319 |
$9,882 |
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Average annual total return |
7.70% |
9.23% |
-3.61% |
-.19% |
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Class C |
Growth of $10,000 |
$11,087 |
$13,253 |
$8,408 |
$9,890 |
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Average annual total return |
10.87% |
9.84% |
-3.41% |
-.18% |
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Class R |
Growth of $10,000 |
$11,132 |
$13,468 |
$8,635 |
$10,235 |
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Average annual total return |
11.32% |
10.43% |
-2.89% |
.37% |
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S&P 500 Index+ |
Growth of $10,000 |
$11,256 |
$14,059 |
$8,717 |
$10,317 |
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Average annual total return |
12.56% |
12.03% |
-2.71% |
.50% |
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The growth of $10,000 is cumulative.
* The Fund commenced operations on May 17, 1999. Index returns begin May 31, 1999.
+ The Standard & Poor's 500 (S&P 500) Index is an unmanaged capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
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Class AARP and Class S
Class AARP has been created especially for members of AARP. Class S shares are no longer available to new investors except under certain circumstances. (Please refer to the Fund's Statement of Additional Information.)
All performance shown is historical, assumes reinvestment of all dividend and capital gain distributions, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Please visit aarp.scudder.com (Class AARP) or myScudder.com (Class S) for the Fund's most recent month-end performance.
To discourage short-term trading, shareholders redeeming shares held less than 15 days will have a lower total return due to the effect of the 2% short-term redemption fee.
Returns and rankings during all periods shown for Class AARP and S shares reflect a fee waiver and/or expense reimbursement. Without this waiver/reimbursement, returns and rankings would have been lower.
Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns and rankings may differ by share class.
Returns shown for Class AARP shares prior to its inception on October 2, 2000 are derived from the historical performance of Class S shares of the Scudder Select 500 Fund during such periods and have assumed the same expense structure during such periods. Any difference in expenses will affect performance.
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Average Annual Total Returns as of 8/31/05 |
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Scudder Select 500 Fund |
6-Month* |
1-Year |
3-Year |
5-Year |
Life of Fund* |
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Class S |
1.61% |
11.90% |
10.94% |
-2.44% |
.85% |
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Class AARP |
1.53% |
11.80% |
10.95% |
-2.45% |
.84% |
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S&P 500 Index+ |
2.33% |
12.56% |
12.03% |
-2.71% |
.50% |
Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.
* Total returns shown for periods less than one year are not annualized.
* The Fund commenced operations on May 17, 1999. Index returns begin May 31, 1999.
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Net Asset Value and Distribution Information |
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Class AARP |
Class S |
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Net Asset Value: 8/31/05 |
$ 12.12 |
$ 12.12 |
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2/28/05 |
$ 11.95 |
$ 11.94 |
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Distribution Information: Six Months: Income Dividends as of 8/31/05 |
$ .013 |
$ .013 |
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Growth of an Assumed $10,000 Investment |
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[] Scudder Select 500 Fund — Class S [] S&P 500 Index+ |
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Yearly periods ended August 31 |
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Comparative Results as of 8/31/05 |
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Scudder Select 500 Fund |
1-Year |
3-Year |
5-Year |
Life of Fund* |
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Class S |
Growth of $10,000 |
$11,190 |
$13,655 |
$8,840 |
$10,545 |
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Average annual total return |
11.90% |
10.94% |
-2.44% |
.85% |
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Class AARP |
Growth of $10,000 |
$11,180 |
$13,656 |
$8,834 |
$10,538 |
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Average annual total return |
11.80% |
10.95% |
-2.45% |
.84% |
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S&P 500 Index+ |
Growth of $10,000 |
$11,256 |
$14,059 |
$8,717 |
$10,317 |
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Average annual total return |
12.56% |
12.03% |
-2.71% |
.50% |
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The growth of $10,000 is cumulative.
* The Fund commenced operations on May 17, 1999. Index returns begin May 31, 1999.
+ The Standard & Poor's 500 (S&P 500) Index is an unmanaged capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
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Class S Lipper Rankings — Large Cap Core Funds Category as of 8/31/05 |
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Period |
Rank |
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Number of Funds Tracked |
Percentile Ranking |
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1-Year |
410 |
of |
873 |
47 |
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3-Year |
249 |
of |
759 |
33 |
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5-Year |
184 |
of |
600 |
31 |
Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings are based on total return with distributions reinvested. Rankings are for Class S shares; other share classes may vary.
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As an investor of the Fund, you incur two types of costs: ongoing expenses
and transaction costs. Ongoing expenses include management fees,
distribution and service (12b-1) fees and other Fund expenses. Examples of
transaction costs include sales charges (loads), redemption fees and account
maintenance fees, which are not shown in this section. The following tables
are intended to help you understand your ongoing expenses (in dollars) of
investing in the Fund and to help you compare these expenses with the
ongoing expenses of investing in other mutual funds. In the most recent
six-month period, the Fund limited these expenses; had it not done so,
expenses would have been higher. The tables are based on an investment of
$1,000 made at the beginning of the six-month period ended August 31,
2005.
The tables illustrate your Fund's expenses in two ways:
Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.
Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.
* Expenses are equal to the Fund's annualized expense ratio for each share class, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.
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Annualized Expense Ratios |
Class A |
Class B |
Class C |
Class R |
Class AARP |
Class S |
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Scudder Select 500 Fund |
1.25% |
2.00% |
1.99% |
1.50% |
1.01% |
1.01% |
For more information, please refer to the Fund's prospectus.
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In the following interview, Portfolio Co-Managers Sheri B. Hawkins and Gail Grove
discuss Scudder Select 500 Fund's market environment and investment results for the
six-month period ended August 31, 2005.
Q: How would you describe the economic and market environment over the past six months?
A: Supply, demand and prices of oil and other energy sources have been a major theme of economic news throughout 2005. After moving fairly steadily upward for many months, oil prices spiked as the damaging effects of Hurricane Katrina on the US oil industry became evident. Oil prices had a powerful influence on financial markets at the end of the period covered by this report, as equity markets weakened on fears that rapidly rising fuel prices would dampen consumer spending.
In the early months of 2005, investors demonstrated considerable uncertainty about whether the expansion of the US economy could be sustained. Concerns over the Federal Reserve's continued interest rate tightening and rising commodity prices held markets back. As the year progressed, economic news turned more positive. There was increasing evidence that the economic expansion would continue, as consumer spending and business investment remained strong, and corporate earnings reports were generally favorable.
For the six-month period ended August 31, 2005, equity returns were generally positive: the Standard & Poor's 500 Index (S&P 500) had a return of 2.33%.1 Returns of the 10 industry sectors within the S&P 500 Index varied widely. The strongest were utilities, up 14.02%, and energy, up 9.57%. The weakest sector was materials, which was down 10.87%. Other sectors with negative returns were industrials and consumer discretionary. Returns of the consumer staples, financials, health care, information technology and telecommunications services sectors were positive.
1 The Standard & Poor's (S&P) 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Index returns assume reinvestment of dividends and, unlike fund returns, do not reflect any fees or expenses. It is not possible to invest directly in an index.
Q: How did the fund perform during this period?
A: Scudder Select 500 Fund (Class A shares) produced a total return of 1.48% for the six months ended August 31, 2005. (Returns are unadjusted for sales charges. If sales charges had been included, returns would have been lower. Past performance is no guarantee of future results. Please see pages 3 through 7 for complete performance information.) The fund's return was below that of its benchmark, the S&P 500 Index, and the fund finished below the average return of its Lipper peer group, Large-Cap Core funds. One reason for its below-average return is that Scudder Select 500 Fund holds only those stocks included in the S&P 500 Index, while many funds in the peer group have holdings in smaller-capitalization stocks, which performed better than large caps for the period.
Q: Will you describe the fund's investment process?
A: We manage the fund using a proprietary computer model that is designed to help the fund outperform the S&P 500 Index over the long term. Using this model, we rank the stocks in the index based on their prospects for earnings growth, their valuation relative to other stocks in the index, and their price trend. The lowest-ranking stocks are generally excluded from the portfolio, and other low-ranking stocks are underweighted.2 For example, if our model indicates a stock that makes up 1% of the S&P 500 Index is likely to underperform, we will invest less than 1% of the fund's assets in the stock.
2 Underweight means a fund holds a lower weighting in a given stock than the benchmark index. Overweight means a higher weighting than the benchmark index.
Naturally, holding an underweight position in some of the stocks in the index means we have extra cash to invest. We invest the excess cash so that the fund's fundamental characteristics are very close to the index. This means that the allocation among industries, the average market value of stocks in the portfolio, the growth and value orientation of holdings, and the risk profile are similar to those of the index.While the computer model is the main determinant of the portfolio's deviations from the index, we also consider significant market trends and company news in making decisions regarding underweights.
Q: What investment decisions had the greatest impact on performance over the last six months?
A: The nature of our investment process means that approximately 90% of the difference between the fund's performance and the return of the index will result from stock selection. Differences between the fund's performance and that of the S&P 500 for this period resulted mainly from stock selection decisions in the consumer staples, health care and information technology sectors.
In information technology, our stock selection had a positive effect for the first few months of the period; most of the underperformance occurred in July, when underweights in International Business Machines Corp. (IBM) and QUALCOMM, Inc., proved disadvantageous. IBM reported higher-than-expected revenue in its three main units: hardware, services and software. New service contracts increased significantly, reversing six quarters of declining growth and beating expectations. QUALCOMM beat earnings estimates in July, noting an increase in sales of higher-priced handsets. The company reported that mobile phone makers and operators were adopting its newest technology at a faster rate than expected. A further negative was an overweight in Gateway, Inc., which reduced its 2005 earnings forecast.
Performance benefited from stock selection in the consumer staples sector, particularly from not investing in Avon Products Inc., ConAgra Foods, Inc., and Sara Lee Corp. All three of these companies reported lower-than-expected revenue and earnings growth, raising questions about their long-term prospects.
In the health care sector, stock selection had a negative effect on performance, especially in the month of August. An underweight in Medtronic Inc., which reported strong quarterly revenue and earnings, was a significant factor in the fund's underperformance.
At the end of the period covered by this report, companies in the energy and insurance sectors were affected by Hurricane Katrina. In insurance, a slight overweight in American International Group, Inc., hurt performance as the company's stock dropped on concerns about the cost of insurance payouts resulting from the storm. Energy stocks moved generally higher as the hurricane drove oil prices up. The fund's performance benefited from overweights in Sunoco, Inc., and Devon Energy Corp. but was hurt by underweights in Valero Energy Corp. and Burlington Resources, Inc.
Q: What changes were made in the S&P 500 Index, and how did they affect returns?
A: In order to make sure the S&P 500 Index reflects the large-capitalization market as a whole, Standard & Poor's Corporation, creator of the index, changes the stocks included in the index from time to time and also adjusts the weights of the component stocks. The portfolio is continually rebalanced to reflect these changes in the benchmark index.
Over the six months covered by this report, nine stocks were removed from the index and nine new ones were added. Most of the changes were made because of mergers or acquisitions. Delta Air Lines was removed from the index in August when it became evident that the carrier would file for bankruptcy. None of these changes had a significant impact on the fund's returns.
Q: Do you have other comments for shareholders?
A: The market environment of the last few months has been driven mainly by broad trends, rather than company-specific information. As a result, there has been little distinction between the performance of the high-quality names that are emphasized under our management approach and lower-quality issues. This fund tends to perform better when there is a greater divergence between high-quality and lower-quality stocks.
We have confidence in the investment approach used in managing this fund, which combines the attributes of indexing (that is, tracking broad market performance) with sophisticated mathematical analysis of likely performance and a degree of informed judgment. Over time, we believe shareholders will benefit from this efficient approach to investing in a diversified portfolio of securities.
The views expressed in this report reflect those of the portfolio managers only through the end of the period of the report as stated on the cover. The managers' views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
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Asset Allocation (Excludes Securities Lending Collateral) |
8/31/05 |
2/28/05 |
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Common Stocks |
100% |
99% |
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Cash Equivalents |
— |
1% |
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100% |
100% |
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Sector Diversification (As a % of Common Stocks) |
8/31/05 |
2/28/05 |
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Financials |
21% |
20% |
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Information Technology |
16% |
15% |
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Health Care |
12% |
13% |
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Energy |
11% |
9% |
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Industrials |
11% |
13% |
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Consumer Staples |
10% |
11% |
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Consumer Discretionary |
10% |
10% |
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Telecommunication Services |
4% |
3% |
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Utilities |
4% |
3% |
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Materials |
1% |
3% |
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100% |
100% |
Asset allocation and sector diversification are subject to change.
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Ten Largest Equity Holdings at August 31, 2005 (20.7% of Net Assets) |
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1. ExxonMobil Corp. Explorer and producer of oil and gas |
3.6% |
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2. General Electric Co. Industrial conglomerate |
2.7% |
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3. Microsoft Corp. Developer of computer software |
2.7% |
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4. Pfizer, Inc. Manufacturer of prescription pharmaceuticals and nonprescription self-medications |
1.9% |
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5. Johnson & Johnson Provider of health care products |
1.9% |
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6. Bank of America Corp. Provider of commercial banking services |
1.7% |
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7. Intel Corp. Designer, manufacturer and seller of computer components and related products |
1.6% |
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8. American International Group, Inc. Provider of insurance services |
1.6% |
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9. Citigroup, Inc. Provider of diversified financial services |
1.5% |
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10. Wal-Mart Stores, Inc. Operator of discount stores |
1.5% |
Portfolio holdings are subject to change.
For more complete details about the fund's investment portfolio, see page 17. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Fund as of month end will be posted to scudder.com on the 15th of the following month. Please see the Account Management Resources section for contact information.
Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. This form will be available on the SEC's Web site at www.sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330.
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Shares |
Value ($) |
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Common Stocks 99.7% |
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Consumer Discretionary 10.4% |
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Auto Components 0.4% |
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Dana Corp. |
3,100 |
41,726 |
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Goodyear Tire & Rubber Co.* |
13,600 |
228,480 |
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Johnson Controls, Inc. |
1,600 |
95,968 |
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366,174 |
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Distributors 0.1% |
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Genuine Parts Co. |
1,800 |
82,476 |
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Diversified Consumer Services 0.3% |
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Apollo Group, Inc. "A"* |
600 |
47,196 |
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H&R Block, Inc. |
8,304 |
223,793 |
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270,989 |
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Hotels Restaurants & Leisure 0.9% |
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McDonald's Corp. |
17,300 |
561,385 |
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Starwood Hotels & Resorts Worldwide, Inc. |
1,300 |
75,790 |
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YUM! Brands, Inc. |
5,862 |
277,741 |
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914,916 |
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Household Durables 0.7% |
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Black & Decker Corp. |
3,000 |
255,900 |
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Centex Corp. |
2,000 |
135,500 |
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D.R. Horton, Inc. |
900 |
33,228 |
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KB Home |
3,300 |
244,728 |
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669,356 |
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Internet & Catalog Retail 0.2% |
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eBay, Inc.* |
6,000 |
242,940 |
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Leisure Equipment & Products 0.4% |
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Eastman Kodak Co. |
8,113 |
197,714 |
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Hasbro, Inc. |
8,300 |
171,810 |
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Mattel, Inc. |
2,000 |
36,060 |
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405,584 |
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Media 2.7% |
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Comcast Corp. "A"* |
26,571 |
817,058 |
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Gannett Co., Inc. |
4,947 |
359,746 |
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New York Times Co. "A" |
4,700 |
150,071 |
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News Corp. "A" |
35,300 |
572,213 |
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Time Warner, Inc.* |
14,904 |
267,080 |
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Viacom, Inc. "B" |
120 |
4,079 |
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Walt Disney Co. |
25,224 |
635,392 |
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2,805,639 |
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Multiline Retail 1.4% |
||
|
Dollar General Corp. |
200 |
3,812 |
|
Family Dollar Stores, Inc. |
3,400 |
67,592 |
|
Federated Department Stores, Inc. |
4,320 |
297,994 |
|
Kohl's Corp.* |
1,900 |
99,655 |
|
Nordstrom, Inc. |
7,100 |
238,418 |
|
Sears Holdings Corp.* |
900 |
122,274 |
|
Target Corp. |
11,700 |
628,875 |
|
|
1,458,620 |
|
|
Specialty Retail 2.6% |
||
|
AutoZone, Inc.* |
2,631 |
248,629 |
|
Bed Bath & Beyond, Inc.* |
1,200 |
48,660 |
|
Best Buy Co., Inc. |
5,100 |
243,066 |
|
Home Depot, Inc. |
23,280 |
938,650 |
|
Limited Brands, Inc. |
4,200 |
92,316 |
|
Lowe's Companies, Inc. |
10,100 |
649,531 |
|
RadioShack Corp. |
2,700 |
67,662 |
|
Sherwin-Williams Co. |
4,676 |
216,779 |
|
The Gap, Inc. |
6,200 |
117,862 |
|
|
2,623,155 |
|
|
Textiles, Apparel & Luxury Goods 0.7% |
||
|
Coach, Inc.* |
200 |
6,638 |
|
Jones Apparel Group, Inc. |
2,700 |
76,086 |
|
NIKE, Inc. "B" |
4,368 |
344,679 |
|
Reebok International Ltd. |
3,500 |
197,050 |
|
VF Corp. |
1,700 |
100,827 |
|
|
725,280 |
|
|
Consumer Staples 10.4% |
||
|
Beverages 2.8% |
||
|
Anheuser-Busch Companies, Inc. |
11,200 |
496,272 |
|
Coca-Cola Co. |
24,979 |
1,099,076 |
|
Coca-Cola Enterprises, Inc. |
12,000 |
268,200 |
|
PepsiCo, Inc. |
18,697 |
1,025,530 |
|
|
2,889,078 |
|
|
Food & Staples Retailing 3.0% |
||
|
Albertsons, Inc. |
2,900 |
58,377 |
|
CVS Corp. |
12,794 |
375,760 |
|
Kroger Co.* |
10,100 |
199,374 |
|
Safeway, Inc. |
11,344 |
269,193 |
|
Wal-Mart Stores, Inc. |
34,828 |
1,565,867 |
|
Walgreen Co. |
11,952 |
553,736 |
|
|
3,022,307 |
|
|
Food Products 1.0% |
||
|
Campbell Soup Co. |
9,600 |
282,240 |
|
H.J. Heinz Co. |
6,500 |
233,480 |
|
Kellogg Co. |
4,321 |
195,871 |
|
The Hershey Co. |
5,126 |
302,895 |
|
|
1,014,486 |
|
|
Household Products 1.8% |
||
|
Clorox Co. |
4,286 |
246,745 |
|
Colgate-Palmolive Co. |
8,600 |
451,500 |
|
Kimberly-Clark Corp. |
6,754 |
420,909 |
|
Procter & Gamble Co. |
13,018 |
722,239 |
|
|
1,841,393 |
|
|
Personal Products 0.3% |
||
|
Gillette Co. |
6,500 |
350,155 |
|
Tobacco 1.5% |
||
|
Altria Group, Inc. |
21,695 |
1,533,837 |
|
Energy 10.5% |
||
|
Energy Equipment & Services 1.8% |
||
|
Baker Hughes, Inc. |
3,800 |
223,250 |
|
Halliburton Co. |
1,800 |
111,546 |
|
Nabors Industries Ltd.* |
2,900 |
194,300 |
|
National-Oilwell Varco, Inc.* |
1,577 |
101,259 |
|
Noble Corp. |
2,200 |
156,860 |
|
Rowan Companies, Inc. |
2,100 |
78,120 |
|
Schlumberger Ltd. |
7,900 |
681,217 |
|
Transocean, Inc.* |
3,400 |
200,736 |
|
Weatherford International Ltd.* |
1,300 |
88,023 |
|
|
1,835,311 |
|
|
Oil, Gas and Consumable Fuels 8.7% |
||
|
Amerada Hess Corp. |
2,500 |
317,750 |
|
Anadarko Petroleum Corp. |
4,541 |
412,641 |
|
Apache Corp. |
5,786 |
414,393 |
|
Burlington Resources, Inc. |
300 |
22,137 |
|
Chevron Corp. |
24,053 |
1,476,854 |
|
ConocoPhillips |
12,710 |
838,098 |
|
Devon Energy Corp. |
7,942 |
482,635 |
|
EOG Resources, Inc. |
400 |
25,532 |
|
ExxonMobil Corp. |
61,305 |
3,672,170 |
|
Kerr-McGee Corp. |
2,706 |
238,209 |
|
Marathon Oil Corp. |
851 |
54,728 |
|
Occidental Petroleum Corp. |
6,200 |
514,786 |
|
Sunoco, Inc. |
4,600 |
334,420 |
|
Valero Energy Corp. |
600 |
63,900 |
|
|
8,868,253 |
|
|
Financials 20.8% |
||
|
Banks 6.9% |
||
|
Bank of America Corp. |
41,282 |
1,776,365 |
|
BB&T Corp. |
5,697 |
231,127 |
|
Comerica, Inc. |
4,900 |
296,401 |
|
First Horizon National Corp. |
2,600 |
101,608 |
|
Golden West Financial Corp. |
5,610 |
342,154 |
|
KeyCorp. |
4,500 |
149,040 |
|
Marshall & Ilsley Corp. |
2,500 |
109,425 |
|
National City Corp. |
11,057 |
405,018 |
|
PNC Financial Services Group, Inc. |
6,200 |
348,626 |
|
SunTrust Banks, Inc. |
5,773 |
405,727 |
|
US Bancorp. |
16,969 |
495,834 |
|
Wachovia Corp. |
12,710 |
630,670 |
|
Washington Mutual, Inc. |
10,429 |
433,638 |
|
Wells Fargo & Co. |
18,391 |
1,096,471 |
|
Zions Bancorp. |
2,884 |
201,476 |
|
|
7,023,580 |
|
|
Capital Markets 2.4% |
||
|
Bank of New York Co., Inc. |
500 |
15,285 |
|
Bear Stearns Companies, Inc. |
1,000 |
100,500 |
|
E*TRADE Financial Corp.* |
15,700 |
251,200 |
|
Franklin Resources, Inc. |
1,200 |
96,528 |
|
Lehman Brothers Holdings, Inc. |
4,500 |
475,470 |
|
Mellon Financial Corp. |
10,400 |
337,480 |
|
Merrill Lynch & Co., Inc. |
5,100 |
291,516 |
|
Morgan Stanley |
6,100 |
310,307 |
|
The Goldman Sachs Group, Inc. |
5,200 |
578,136 |
|
|
2,456,422 |
|
|
Consumer Finance 1.7% |
||
|
American Express Co. |
14,280 |
788,827 |
|
Capital One Financial Corp. |
4,700 |
386,528 |
|
MBNA Corp. |
3,500 |
88,200 |
|
Providian Financial Corp.* |
7,800 |
145,080 |
|
SLM Corp. |
6,935 |
345,016 |
|
|
1,753,651 |
|
|
Diversified Financial Services 4.6% |
||
|
CIT Group, Inc. |
6,400 |
289,792 |
|
Citigroup, Inc. |
35,853 |
1,569,286 |
|
Countrywide Financial Corp. |
10,500 |
354,795 |
|
Fannie Mae |
11,509 |
587,419 |
|
Freddie Mac |
8,931 |
539,254 |
|
JPMorgan Chase & Co. |
17,239 |
584,230 |
|
MGIC Investment Corp. |
3,850 |
240,356 |
|
Moody's Corp. |
6,800 |
333,948 |
|
Principal Financial Group, Inc. |
3,368 |
154,254 |
|
|
4,653,334 |
|
|
Insurance 4.3% |
||
|
ACE Ltd. |
1,400 |
62,174 |
|
Allstate Corp. |
6,457 |
362,948 |
|
Ambac Financial Group, Inc. |
400 |
27,432 |
|
American International Group, Inc. |
26,933 |
1,594,433 |
|
Aon Corp. |
2,900 |
86,768 |
|
Chubb Corp. |
1,100 |
95,656 |
|
Cincinnati Financial Corp. |
420 |
17,212 |
|
Hartford Financial Services Group, Inc. |
3,400 |
248,370 |
|
Jefferson-Pilot Corp. |
200 |
9,946 |
|
Lincoln National Corp. |
200 |
9,918 |
|
Loews Corp. |
2,400 |
210,456 |
|
MBIA, Inc. |
4,600 |
266,662 |
|
MetLife, Inc. |
7,920 |
387,922 |
|
Progressive Corp. |
1,329 |
128,129 |
|
Prudential Financial, Inc. |
5,607 |
360,922 |
|
Safeco Corp. |
2,200 |
114,708 |
|
The St. Paul Travelers Companies, Inc. |
5,900 |
253,759 |
|
Torchmark Corp. |
100 |
5,274 |
|
UnumProvident Corp. |
9,200 |
177,744 |
|
XL Capital Ltd. "A" |
300 |
20,850 |
|
|
4,441,283 |
|
|
Real Estate 0.9% |
||
|
Apartment Investment & Management Co. "A" (REIT) |
5,700 |
227,430 |
|
Archstone-Smith Trust (REIT) |
1,900 |
76,570 |
|
Equity Office Properties Trust (REIT) |
2,073 |
69,031 |
|
Plum Creek Timber Co., Inc. (REIT) |
6,100 |
224,175 |
|
Vornado Realty Trust (REIT) |
3,400 |
292,468 |
|
|
889,674 |
|
|
Health Care 12.5% |
||
|
Biotechnology 1.5% |
||
|
Amgen, Inc.* |
13,888 |
1,109,651 |
|
Applera Corp. — Applied Biosystems Group |
10,500 |
225,750 |
|
Genzyme Corp.* |
2,200 |
156,574 |
|
Gilead Sciences, Inc.* |
1,600 |
68,800 |
|
|
1,560,775 |
|
|
Health Care Equipment & Supplies 1.5% |
||
|
Baxter International, Inc. |
500 |
20,165 |
|
Becton, Dickinson & Co. |
600 |
31,578 |
|
C.R. Bard, Inc. |
3,684 |
236,992 |
|
Guidant Corp. |
1,300 |
91,832 |
|
Hospira, Inc.* |
6,440 |
256,570 |
|
Medtronic, Inc. |
7,296 |
415,872 |
|
St. Jude Medical, Inc.* |
2,100 |
96,390 |
|
Zimmer Holdings, Inc.* |
4,732 |
388,828 |
|
|
1,538,227 |
|
|
Health Care Providers & Services 2.5% |
||
|
Aetna, Inc. |
5,142 |
409,663 |
|
AmerisourceBergen Corp. |
1,700 |
126,939 |
|
Cardinal Health, Inc. |
1,700 |
101,337 |
|
HCA, Inc. |
900 |
44,370 |
|
IMS Health, Inc. |
9,500 |
258,400 |
|
Quest Diagnostics, Inc. |
4,700 |
234,906 |
|
UnitedHealth Group, Inc. |
15,524 |
799,486 |
|
WellPoint, Inc.* |
8,316 |
617,463 |
|
|
2,592,564 |
|
|
Pharmaceuticals 7.0% |
||
|
Abbott Laboratories |
17,604 |
794,469 |
|
Allergan, Inc. |
700 |
64,435 |
|
Bristol-Myers Squibb Co. |
25,311 |
619,360 |
|
Eli Lilly & Co. |
644 |
35,433 |
|
Forest Laboratories, Inc.* |
1,800 |
79,920 |
|
Johnson & Johnson |
30,237 |
1,916,723 |
|
Merck & Co., Inc. |
25,950 |
732,569 |
|
Pfizer, Inc. |
75,466 |
1,922,119 |
|
Schering-Plough Corp. |
3,800 |
81,358 |
|
Watson Pharmaceuticals, Inc.* |
2,100 |
72,408 |
|
Wyeth |
16,600 |
760,114 |
|
|
7,078,908 |
|
|
Industrials 10.5% |
||
|
Aerospace & Defense 2.8% |
||
|
Boeing Co. |
9,575 |
641,717 |
|
General Dynamics Corp. |
3,600 |
412,524 |
|
Honeywell International, Inc. |
8,000 |
306,240 |
|
L-3 Communications Holdings, Inc. |
1,000 |
81,880 |
|
Lockheed Martin Corp. |
5,100 |
317,424 |
|
Northrop Grumman Corp. |
6,400 |
358,976 |
|
Rockwell Collins, Inc. |
1,447 |
69,644 |
|
United Technologies Corp. |
13,104 |
655,200 |
|
|
2,843,605 |
|
|
Air Freight & Logistics 1.2% |
||
|
FedEx Corp. |
3,252 |
264,843 |
|
Ryder System, Inc. |
4,200 |
147,378 |
|
United Parcel Service, Inc. "B" |
11,613 |
823,245 |
|
|
1,235,466 |
|
|
Airlines 0.2% |
||
|
Southwest Airlines Co. |
20,700 |
275,724 |
|
Commercial Services & Supplies 0.5% |
||
|
Allied Waste Industries, Inc.* |
3,500 |
27,930 |
|
Equifax, Inc. |
6,800 |
224,672 |
|
Pitney Bowes, Inc. |
6,100 |
263,825 |
|
|
516,427 |
|
|
Electrical Equipment 0.1% |
||
|
Emerson Electric Co. |
900 |
60,552 |
|
Industrial Conglomerates 3.4% |
||
|
3M Co. |
9,584 |
681,902 |
|
General Electric Co. |
81,658 |
2,744,525 |
|
Tyco International Ltd. |
400 |
11,132 |
|
|
3,437,559 |
|
|
Machinery 1.8% |
||
|
Caterpillar, Inc. |
10,000 |
554,900 |
|
Danaher Corp. |
5,400 |
289,224 |
|
Deere & Co. |
5,000 |
326,900 |
|
Eaton Corp. |
600 |
38,352 |
|
Illinois Tool Works, Inc. |
100 |
8,428 |
|
Ingersoll-Rand Co., Ltd. "A" |
2,000 |
159,240 |
|
ITT Industries, Inc. |
2,716 |
296,370 |
|
Navistar International Corp.* |
3,800 |
121,448 |
|
Parker Hannifin Corp. |
300 |
19,332 |
|
|
1,814,194 |
|
|
Road & Rail 0.5% |
||
|
CSX Corp. |
6,600 |
289,938 |
|
Union Pacific Corp. |
3,271 |
223,311 |
|
|
513,249 |
|
|
Information Technology 16.0% |
||
|
Communications Equipment 2.5% |
||
|
Cisco Systems, Inc.* |
69,644 |
1,227,127 |
|
Corning, Inc.* |
2,500 |
49,900 |
|
Lucent Technologies, Inc.* |
91,900 |
283,052 |
|
Motorola, Inc. |
32,200 |
704,536 |
|
QUALCOMM, Inc. |
2,192 |
87,044 |
|
Scientific-Atlanta, Inc. |
200 |
7,652 |
|
Tellabs, Inc.* |
26,100 |
232,029 |
|
|
2,591,340 |
|
|
Computers & Peripherals 4.1% |
||
|
Apple Computer, Inc.* |
9,400 |
441,142 |
|
Dell, Inc.* |
27,129 |
965,792 |
|
EMC Corp.* |
6,500 |
83,590 |
|
Gateway, Inc.* |
57,400 |
174,496 |
|
Hewlett-Packard Co. |
33,855 |
939,815 |
|
International Business Machines Corp. |
17,238 |
1,389,728 |
|
NCR Corp.* |
6,900 |
236,118 |
|
QLogic Corp.* |
300 |
10,368 |
|
|
4,241,049 |
|
|
Electronic Equipment & Instruments 0.1% |
||
|
Agilent Technologies, Inc.* |
1,900 |
61,104 |
|
Jabil Circuit, Inc.* |
100 |
2,944 |
|
|
64,048 |
|
|
IT Consulting & Services 0.7% |
||
|
Affiliated Computer Services, Inc. "A"* |
4,500 |
233,775 |
|
Computer Sciences Corp.* |
5,300 |
236,115 |
|
Convergys Corp.* |
15,600 |
221,832 |
|
|
691,722 |
|
|
Semiconductors & Semiconductor Equipment 4.4% |
||
|
Advanced Micro Devices, Inc.* |
2,900 |
60,233 |
|
Altera Corp.* |
12,800 |
279,936 |
|
Applied Materials, Inc. |
20,600 |
377,186 |
|
Broadcom Corp. "A"* |
6,000 |
261,000 |
|
Freescale Semiconductor, Inc. "B"* |
3,632 |
87,459 |
|
Intel Corp. |
64,064 |
1,647,726 |
|
KLA-Tencor Corp. |
5,900 |
299,484 |
|
LSI Logic Corp.* |
23,900 |
230,396 |
|
Maxim Integrated Products, Inc. |
5,700 |
243,105 |
|
Micron Technology, Inc.* |
700 |
8,337 |
|
National Semiconductor Corp. |
1,300 |
32,409 |
|
NVIDIA Corp.* |
2,300 |
70,564 |
|
PMC-Sierra, Inc.* |
21,800 |
184,864 |
|
Texas Instruments, Inc. |
21,500 |
702,620 |
|
|
4,485,319 |
|
|
Software 4.2% |
||
|
Adobe Systems, Inc. |
10,400 |
281,216 |
|
BMC Software, Inc.* |
5,900 |
118,000 |
|
Intuit, Inc.* |
5,900 |
270,456 |
|
Microsoft Corp. |
99,016 |
2,713,039 |
|
Oracle Corp.* |
53,990 |
700,250 |
|
Parametric Technology Corp.* |
32,000 |
193,920 |
|
|
4,276,881 |
|
|
Materials 1.3% |
||
|
Chemicals 1.0% |
||
|
Air Products & Chemicals, Inc. |
500 |
27,700 |
|
Ashland, Inc. |
3,500 |
212,765 |
|
E.I. du Pont de Nemours & Co. |
12,800 |
506,496 |
|
Ecolab, Inc. |
1,242 |
40,986 |
|
Hercules, Inc.* |
13,800 |
175,950 |
|
|
963,897 |
|
|
Metals & Mining 0.3% |
||
|
Freeport-McMoRan Copper & Gold, Inc. "B" |
1,800 |
75,906 |
|
Phelps Dodge Corp. |
2,300 |
247,319 |
|
|
323,225 |
|
|
Telecommunication Services 3.7% |
||
|
Diversified Telecommunication Services 2.8% |
||
|
ALLTEL Corp. |
6,000 |
371,940 |
|
AT&T Corp. |
14,400 |
283,392 |
|
BellSouth Corp. |
24,209 |
636,455 |
|
CenturyTel, Inc. |
100 |
3,590 |
|
Citizens Communications Co. |
10,000 |
136,400 |
|
Qwest Communications International, Inc.* |
58,200 |
226,980 |
|
SBC Communications, Inc. |
38,523 |
927,634 |
|
Verizon Communications, Inc. |
9,831 |
321,572 |
|
|
2,907,963 |
|
|
Wireless Telecommunication Services 0.9% |
||
|
Sprint Nextel Corp. |
34,325 |
890,047 |
|
Utilities 3.6% |
||
|
Electric Utilities 1.5% |
||
|
American Electric Power Co., Inc. |
6,792 |
252,526 |
|
Entergy Corp. |
800 |
59,928 |
|
Exelon Corp. |
10,084 |
543,427 |
|
FirstEnergy Corp. |
5,671 |
289,391 |
|
Southern Co. |
10,778 |
370,763 |
|
|
1,516,035 |
|
|
Gas Utilities 0.1% |
||
|
Nicor, Inc. |
2,100 |
86,961 |
|
Independent Power Producers & Energy Traders 0.9% |
||
|
Calpine Corp.* (a) |
63,800 |
195,866 |
|
Constellation Energy Group, Inc. |
3,005 |
176,544 |
|
Duke Energy Corp. |
6,600 |
191,334 |
|
TXU Corp. |
3,700 |
358,974 |
|
|
922,718 |
|
|
Multi-Utilities 1.1% |
||
|
Ameren Corp. |
1,863 |
102,335 |
|
CenterPoint Energy, Inc. |
10,100 |
143,521 |
|
CMS Energy Corp.* |
9,700 |
156,170 |
|
Consolidated Edison, Inc. |
5,300 |
248,623 |
|
Dominion Resources, Inc. |
400 |
30,592 |
|
NiSource, Inc. |
400 |
9,656 |
|
PG&E Corp. |
5,023 |
188,463 |
|
Public Service Enterprise Group, Inc. |
2,381 |
153,692 |
|
Sempra Energy |
2,000 |
89,640 |
|
|
1,122,692 |
|
|
Total Common Stocks (Cost $83,884,429) |
101,689,040 |
|
|
|
Principal Amount ($) |
Value ($) |
|
|
|
|
|
US Treasury Obligations 0.1% |
||
|
US Treasury Bill, 3.296% **, 12/1/2005 (b) (Cost $99,189) |
100,000 |
99,189 |
|
|
Shares |
Value ($) |
|
|
|
|
|
Securities Lending Collateral 0.2% |
||
|
Scudder Daily Assets Fund Institutional, 3.61% (c) (d) (Cost $228,400) |
228,400 |
228,400 |
|
|
||
|
Cash Equivalents 0.2% |
||
|
Scudder Cash Management QP Trust, 3.54% (e) (Cost $188,906) |
188,906 |
188,906 |
|
|
% of Net Assets |
Value ($) |
|
|
|
|
|
Total Investment Portfolio (Cost $84,400,924)+ |
100.2 |
102,205,535 |
|
Other Assets and Liabilities, Net |
(0.2) |
(242,427) |
|
Net Assets |
100.0 |
101,963,108 |
* Non-income producing security.
** Annualized yield at time of purchase; not a coupon rate.
+ The cost for federal income tax purposes was $86,203,746. At August 31, 2005, net unrealized appreciation for all securities based on tax cost was $16,001,789. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $18,415,109 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $2,413,320.
(a) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at August 31, 2005 amounted to $172,442, which is 0.2% of net assets.
(b) At August 31, 2005, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.
(c) Represents collateral held in connection with securities lending.
(d) Scudder Daily Assets Fund Institutional, an affiliated fund, is managed by Deutsche Asset Management, Inc. The Rate shown is the annualized seven-day yield at period end.
(e) Scudder Cash Management QP Trust is managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.
REIT: Real Estate Investment Trust
At August 31, 2005, open futures contracts purchased were as follows:
|
Futures |
Expiration Date |
Contracts |
Aggregate Face Value ($) |
Value ($) |
Unrealized Appreciation ($) |
|
S&P 500 Index Futures |
9/15/2005 |
1 |
301,768 |
305,350 |
3,582 |
|
S&P Mini 500 Index Futures |
9/16/2005 |
2 |
120,483 |
122,140 |
1,657 |
|
Total net unrealized appreciation |
|
5,239 |
|||
The accompanying notes are an integral part of the financial statements.
|
|
|
Statement of Assets and Liabilities as of August 31, 2005 (Unaudited) |
|
|
Assets |
|
|
Investments: Investments in securities, at value (cost $83,983,618) — including $172,442 of securities loaned |
$ 101,788,229 |
|
Investment in Scudder Daily Assets Fund Institutional (cost $228,400)* |
228,400 |
|
Investment in Scudder Cash Management QP Trust (cost $188,906) |
188,906 |
|
Total investments in securities, at value (cost $84,400,924) |
102,205,535 |
|
Cash |
164 |
|
Dividends receivable |
217,814 |
|
Interest receivable |
4,119 |
|
Receivable for Fund shares sold |
24,031 |
|
Receivable for daily variation margin on open futures contracts |
4,480 |
|
Other assets |
46,181 |
|
Total assets |
102,502,324 |
|
Liabilities |
|
|
Payable upon return of securities loaned |
228,400 |
|
Payable for Fund shares redeemed |
111,456 |
|
Accrued management fee |
43,595 |
|
Other accrued expenses and payables |
155,765 |
|
Total liabilities |
539,216 |
|
Net assets, at value |
$ 101,963,108 |
|
Net Assets |
|
|
Net assets consist of: Undistributed net investment income |
260,049 |
|
Net unrealized appreciation (depreciation) on: Investments |
17,804,611 |
|
Futures |
5,239 |
|
Accumulated net realized gain (loss) |
(7,127,475) |
|
Paid-in capital |
91,020,684 |
|
Net assets, at value |
$ 101,963,108 |
* Represents collateral on securities loaned.
The accompanying notes are an integral part of the financial statements.
|
|
|
|
|
Statement of Assets and Liabilities as of August 31, 2005 (Unaudited) (continued) |
|
|
Net Asset Value |
|
|
Class A Net Asset Value and redemption price(a) per share ($33,512,216 ÷ 2,743,770 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) |
$ 12.21 |
|
Maximum offering price per share (100 ÷ 94.25 of $12.21) |
$ 12.95 |
|
Class B Net Asset Value, offering and redemption price(a) (subject to contingent deferred sales charge) per share ($13,095,776 ÷ 1,089,420 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) |
$ 12.02 |
|
Class C Net Asset Value, offering and redemption price(a) (subject to contingent deferred sales charge) per share ($9,666,701 ÷ 802,501, outstanding shares of beneficial interest, $.01 par value, unlimited number of shares shares authorized) |
$ 12.05 |
|
Class R Net Asset Value, offering and redemption price(a) per share ($2,733,914 ÷ 225,897 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) |
$ 12.10 |
|
Class AARP Net Asset Value, offering and redemption price(a) per share ($5,871,770 ÷ 484,295 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) |
$ 12.12 |
|
Class S Net Asset Value, offering and redemption price(a) per share |
$ 12.12 |
(a) Redemption price per share for shares held less than 15 days is equal to net asset value less a 2% redemption fee.
The accompanying notes are an integral part of the financial statements.
|
|
|
|
|
Statement of Operations for the six months ended August 31, 2005 (Unaudited) |
|
|
Investment Income |
|
|
Income: Dividends |
$ 943,729 |
|
Interest — Scudder Cash Management QP Trust |
9,651 |
|
Interest |
2,561 |
|
Securities lending income, including income from Scudder Daily Assets Fund Institutional, net of borrower rebates |
11,526 |
|
Total Income |
967,467 |
|
Expenses: Management fee |
264,751 |
|
Services to shareholders |
151,966 |
|
Custodian and accounting fees |
47,777 |
|
Distribution service fees |
169,287 |
|
Auditing |
31,533 |
|
Legal |
6,026 |
|
Trustees' fees and expenses |
3,302 |
|
Reports to shareholders |
26,028 |
|
Registration fees |
23,826 |
|
Other |
14,013 |
|
Total expenses, before expense reductions |
738,509 |
|
Expense reductions |
(37,105) |
|
Total expenses, after expense reductions |
701,404 |
|
Net investment income |
266,063 |
|
Realized and Unrealized Gain (Loss) on Investment Transactions |
|
|
Net realized gain (loss) from: Investments |
4,505,739 |
|
Futures |
18,745 |
|
|
4,524,484 |
|
Net unrealized appreciation (depreciation) during the period on: Investments |
(3,378,721) |
|
Futures |
(9,612) |
|
|
(3,388,333) |
|
Net gain (loss) on investment transactions |
1,136,151 |
|
Net increase (decrease) in net assets resulting from operations |
$ 1,402,214 |
The accompanying notes are an integral part of the financial statements.
|
|
|
|
|
Statement of Changes in Net Assets |
||
|
Increase (Decrease) in Net Assets |
Six Months Ended August 31, 2005 (Unaudited) |
Year Ended February 28, 2005 |
|
Operations: Net investment income (loss) |
$ 266,063 |
$ 749,713 |
|
Net realized gain (loss) on investment transactions |
4,524,484 |
3,426,340 |
|
Net unrealized appreciation (depreciation) during the period on investment transactions |
(3,388,333) |
2,720,722 |
|
Net increase (decrease) in net assets resulting from operations |
1,402,214 |
6,896,775 |
|
Distributions to shareholders from: Net investment income: Class A |
(22,603) |
(223,034) |
|
Class B |
— |
(44,999) |
|
Class C |
— |
(37,194) |
|
Class R |
(417) |
(10,443) |
|
Class AARP |
(6,653) |
(54,200) |
|
Class S |
(38,976) |
(337,137) |
|
Fund share transactions: Proceeds from shares sold |
9,983,444 |
40,635,648 |
|
Reinvestment of distributions |
67,317 |
672,931 |
|
Cost of shares redeemed |
(19,838,597) |
(40,284,696) |
|
Redemption fees |
42 |
95 |
|
Net increase (decrease) in net assets from Fund share transactions |
(9,787,794) |
1,023,978 |
|
Increase (decrease) in net assets |
(8,454,229) |
7,213,746 |
|
Net assets at beginning of period |
110,417,337 |
103,203,591 |
|
Net assets at end of period (including undistributed net investment income of $260,049 and $62,635, respectively) |
$ 101,963,108 |
$ 110,417,337 |
The accompanying notes are an integral part of the financial statements.
|
|
|
Class A |
|||||
|
Years Ended February 28, |
2005a |
2005 |
2004 |
2003 |
2002b |
|
Selected Per Share Data |
|||||
|
Net asset value, beginning of period |
$ 12.04 |
$ 11.30 |
$ 8.38 |
$ 11.04 |
$ 12.15 |
|
Income (loss) from investment operations: Net investment income (loss)c |
.03 |
.09 |
.07 |
.07 |
.03 |
|
Net realized and unrealized gain (loss) on investment transactions |
.15 |
.73 |
2.92 |
(2.68) |
(1.10) |
|
Total from investment operations |
.18 |
.82 |
2.99 |
(2.61) |
(1.07) |
|
Less distributions from: Net investment income |
(.01) |
(.08) |
(.07) |
(.05) |
(.04) |
|
Redemption fees |
.00*** |
.00*** |
— |
— |
— |
|
Net asset value, end of period |
$ 12.21 |
$ 12.04 |
$ 11.30 |
$ 8.38 |
$ 11.04 |
|
Total Return (%)d |
1.48e** |
7.28e |
35.70 |
(23.65) |
(8.84)** |
|
Ratios to Average Net Assets and Supplemental Data |
|||||
|
Net assets, end of period ($ millions) |
34 |
37 |
27 |
7 |
3 |
|
Ratio of expenses before expense reductions (%) |
1.32* |
1.27 |
1.04 |
1.01 |
1.05* |
|
Ratio of expenses after expense reductions (%) |
1.25* |
1.22 |
1.04 |
1.01 |
1.05* |
|
Ratio of net investment income (loss) (%) |
.58* |
.84 |
.73 |
.77 |
.49* |
|
Portfolio turnover rate (%) |
98* |
64 |
65 |
171 |
67 |
|
a For the six months ended August 31, 2005 (Unaudited). b For the period from July 2, 2001 (commencement of operations of Class A shares) to February 28, 2002. c Based on average shares outstanding during the period. d Total return does not reflect the effect of any sales charges. e Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. |
|||||
|
|
|||||
|
Class B |
|||||
|
Years Ended February 28, |
2005a |
2005 |
2004 |
2003 |
2002b |
|
Selected Per Share Data |
|||||
|
Net asset value, beginning of period |
$ 11.89 |
$ 11.20 |
$ 8.33 |
$ 11.02 |
$ 12.15 |
|
Income (loss) from investment operations: Net investment income (loss)c |
(.01) |
.01 |
(.01) |
(.01) |
(.02) |
|
Net realized and unrealized gain (loss) on investment transactions |
.14 |
.71 |
2.90 |
(2.66) |
(1.11) |
|
Total from investment operations |
.13 |
.72 |
2.89 |
(2.67) |
(1.13) |
|
Less distributions from: Net investment income |
— |
(.03) |
(.02) |
(.02) |
— |
|
Redemption fees |
.00*** |
.00*** |
— |
— |
— |
|
Net asset value, end of period |
$ 12.02 |
$ 11.89 |
$ 11.20 |
$ 8.33 |
$ 11.02 |
|
Total Return (%)d |
1.09e** |
6.47e |
34.64 |
(24.28) |
(9.30)** |
|
Ratios to Average Net Assets and Supplemental Data |
|||||
|
Net assets, end of period ($ millions) |
13 |
15 |
19 |
7 |
7 |
|
Ratio of expenses before expense reductions (%) |
2.06* |
2.00 |
1.84 |
1.82 |
1.85* |
|
Ratio of expenses after expense reductions (%) |
2.00* |
1.99 |
1.84 |
1.82 |
1.85* |
|
Ratio of net investment income (loss) (%) |
(.17)* |
.07 |
(.07) |
(.04) |
(.31)* |
|
Portfolio turnover rate (%) |
98* |
64 |
65 |
171 |
67 |
|
a For the six months ended August 31, 2005 (Unaudited). b For the period from July 2, 2001 (commencement of operations of Class B shares) to February 28, 2002. c Based on average shares outstanding during the period. d Total return does not reflect the effect of any sales charges. e Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. |
|||||
|
|
|||||
|
Class C |
|||||
|
Years Ended February 28, |
2005a |
2005 |
2004 |
2003 |
2002b |
|
Selected Per Share Data |
|||||
|
Net asset value, beginning of period |
$ 11.92 |
$ 11.21 |
$ 8.34 |
$ 11.03 |
$ 12.15 |
|
Income (loss) from investment operations: Net investment income (loss)c |
(.01) |
.01 |
(.01) |
(.00)*** |
(.02) |
|
Net realized and unrealized gain (loss) on investment transactions |
.14 |
.73 |
2.90 |
(2.67) |
(1.10) |
|
Total from investment operations |
.13 |
.74 |
2.89 |
(2.67) |
(1.12) |
|
Less distributions from: Net investment income |
— |
(.03) |
(.02) |
(.02) |
— |
|
Redemption fees |
.00*** |
.00*** |
— |
— |
— |
|
Net asset value, end of period |
$ 12.05 |
$ 11.92 |
$ 11.21 |
$ 8.34 |
$ 11.03 |
|
Total Return (%)d |
1.09e** |
6.64 |
34.62 |
(24.25) |
(9.22)** |
|
Ratios to Average Net Assets and Supplemental Data |
|||||
|
Net assets, end of period ($ millions) |
10 |
13 |
11 |
3 |
1 |
|
Ratio of before expense reductions (%) |
1.99* |
1.94 |
1.81 |
1.79 |
1.83* |
|
Ratio of after expense reductions (%) |
1.99* |
1.94 |
1.81 |
1.79 |
1.83* |
|
Ratio of net investment income (loss) (%) |
(.16)* |
.12 |
(.04) |
(.01) |
(.29)* |
|
Portfolio turnover rate (%) |
98* |
64 |
65 |
171 |
67 |
|
a For the six months ended August 31, 2005 (Unaudited). b For the period from July 2, 2001 (commencement of operations of Class C shares) to February 28, 2002. c Based on average shares outstanding during the period. d Total return does not reflect the effect of any sales charges. e Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. |
|||||
|
|
|||
|
Class R |
|||
|
Years Ended February 28, |
2005a |
2005 |
2004b |
|
Selected Per Share Data |
|||
|
Net asset value, beginning of period |
$ 11.94 |
$ 11.22 |
$ 10.47 |
|
Income (loss) from investment operations: Net investment income (loss)c |
.02 |
.07 |
.04 |
|
Net realized and unrealized gain (loss) on investment transactions |
.14 |
.72 |
.74 |
|
Total from investment operations |
.16 |
.79 |
.78 |
|
Less distributions from: Net investment income |
(.00)*** |
(.07) |
(.03) |
|
Redemption fees |
.00*** |
.00*** |
— |
|
Net asset value, end of period |
$ 12.10 |
$ 11.94 |
$ 11.22 |
|
Total Return (%) |
1.36d** |
7.09d |
7.49** |
|
Ratios to Average Net Assets and Supplemental Data |
|||
|
Net assets, end of period ($ millions) |
3 |
2 |
1 |
|
Ratio of expenses before expense reductions (%) |
1.64* |
1.52 |
1.02* |
|
Ratio of expenses after expense reductions (%) |
1.50* |
1.46 |
1.02* |
|
Ratio of net investment income (loss) (%) |
.33* |
.60 |
1.09* |
|
Portfolio turnover rate (%) |
98* |
64 |
65 |
|
a For the six months ended August 31, 2005 (Unaudited). b For the period from November 3, 2003 (commencement of operations of Class R shares) to February 29, 2004. c Based on average shares outstanding during the period. d Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. |
|||
|
|
||||||
|
Class AARP |
||||||
|
Years Ended February 28, |
2005a |
2005 |
2004 |
2003 |
2002 |
2001b |
|
Selected Per Share Data |
||||||
|
Net asset value, beginning of period |
$ 11.95 |
$ 11.20 |
$ 8.31 |
$ 10.95 |
$ 12.03 |
$ 13.59 |
|
Income (loss) from investment operations: Net investment income (loss)c |
.05 |
.12 |
.10 |
.10 |
.08 |
.08 |
|
Net realized and unrealized gain (loss) on investment transactions |
.13 |
.74 |
2.88 |
(2.66) |
(1.10) |
(1.60) |
|
Total from investment operations |
.18 |
.86 |
2.98 |
(2.56) |
(1.02) |
(1.52) |
|
Less distributions from: Net investment income |
(.01) |
(.11) |
(.09) |
(.08) |
(.06) |
(.04) |
|
Redemption fees |
.00*** |
.00*** |
— |
— |
— |
— |
|
Net asset value, end of period |
$ 12.12 |
$ 11.95 |
$ 11.20 |
$ 8.31 |
$ 10.95 |
$ 12.03 |
|
Total Return (%) |
1.53d** |
7.65 |
35.97 |
(23.45) |
(8.47)d |
(11.23)d** |
|
Ratios to Average Net Assets and Supplemental Data |
||||||
|
Net assets, end of period ($ millions) |
6 |
6 |
6 |
3 |
3 |
1 |
|
Ratio of expenses before expense reductions (%) |
1.03* |
.96 |
.77 |
.77 |
.77 |
.77* |
|
Ratio of expenses after expense reductions (%) |
1.01* |
.96 |
.77 |
.77 |
.76 |
.75* |
|
Ratio of net investment income (loss) (%) |
.82* |
1.10 |
1.00 |
1.01 |
.62 |
.63* |
|
Portfolio turnover rate (%) |
98* |
64 |
65 |
171 |
67 |
95 |
|
a For the six months ended August 31, 2005 (Unaudited). b For the period from October 2, 2000 (commencement of operations of Class AARP shares) to February 28, 2001. c Based on average shares outstanding during the period. d Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. |
||||||
|
|
||||||
|
Class S |
||||||
|
Years Ended February 28, |
2005a |
2005 |
2004 |
2003 |
2002 |
2001 |
|
Selected Per Share Data |
||||||
|
Net asset value, beginning of period |
$ 11.94 |
$ 11.20 |
$ 8.30 |
$ 10.94 |
$ 12.03 |
$ 12.63 |
|
Income (loss) from investment operations: Net investment income (loss)b |
.05 |
.12 |
.10 |
.10 |
.07 |
.06 |
|
Net realized and unrealized gain (loss) on investment transactions |
.14 |
.73 |
2.89 |
(2.66) |
(1.10) |
(.61) |
|
Total from investment operations |
.19 |
.85 |
2.99 |
(2.56) |
(1.03) |
(.55) |
|
Less distributions from: Net investment income |
(.01) |
(.11) |
(.09) |
(.08) |
(.06) |
(.05) |
|
Redemption fees |
.00*** |
.00*** |
— |
— |
— |
— |
|
Net asset value, end of period |
$ 12.12 |
$ 11.94 |
$ 11.20 |
$ 8.30 |
$ 10.94 |
$ 12.03 |
|
Total Return (%) |
1.61c** |
7.56c |
35.97 |
(23.38) |
(8.55)c |
(4.41)c |
|
Ratios to Average Net Assets and Supplemental Data |
||||||
|
Net assets, end of period ($ millions) |
37 |
38 |
39 |
30 |
39 |
36 |
|
Ratio of expenses before expense reductions (%) |
1.09* |
1.01 |
.77 |
.77 |
.77 |
1.22d |
|
Ratio of expenses after expense reductions (%) |
1.01* |
.98 |
.77 |
.77 |
.76 |
.76d |
|
Ratio of net investment income (loss) (%) |
.82* |
1.08 |
1.00 |
1.01 |
.62 |
.46 |
|
Portfolio turnover rate (%) |
98* |
64 |
65 |
171 |
67 |
95 |
|
a For the six months ended August 31, 2005 (Unaudited). b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. d The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization in fiscal 2000 before and after expense reductions were 1.20% and .75%, respectively. * Annualized ** Not annualized *** Amount is less than $.005. |
||||||
|
|
A. Significant Accounting Policies
Scudder Select 500 Fund (the "Fund") is a diversified series of Value Equity Trust (the "Trust") which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers multiple classes of shares which provide investors with different purchase options. Class A shares are offered to investors subject to an initial sales charge. Class B shares are offered without an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions. Class B shares automatically convert to Class A shares six years after issuance. Class C shares are offered to investors without an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions within one year of purchase. Class C shares do not convert into another class. Class R shares are only available to participants in certain retirement plans and are offered to investors without an initial sales charge or contingent deferred sales charges. Shares of Class AARP are designed for members of AARP. Class AARP and S shares are not subject to initial or contingent deferred sales charges. Class S shares are no longer available to new investors except under certain circumstances. (Please refer to the Fund's Statement of Additional Information.)
Investment income, realized and unrealized gains and losses, and certain fund-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of all classes of shares, except that each class bears certain expenses unique to that class such as services to shareholders, distribution service fees and certain other class-specific expenses. Differences in class-level expenses may result in payment of different per share dividends by class. All shares of the Fund have equal rights with respect to voting subject to class-specific arrangements.
The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those estimates. The policies described below are followed consistently by the Fund in the preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading. Equity securities are valued at the most recent sale price or official closing price reported on the exchange (US or foreign) or over-the-counter market on which the security is traded most extensively. Securities for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation.
Debt securities are valued by independent pricing services approved by the Trustees of the Fund. If the pricing services are unable to provide valuations, the securities are valued at the most recent bid quotation or evaluated price, as applicable, obtained from a broker-dealer. Such services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes.
Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost. Investments in open-end investment companies and Scudder Cash Management QP Trust are valued at their net asset value each business day.
Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Trustees.
Securities Lending. The Fund may lend securities to financial institutions. The Fund retains beneficial ownership of the securities it has loaned and continues to receive interest and dividends paid by the securities and to participate in any changes in their market value. The Fund requires the borrowers of the securities to maintain collateral with the Fund consisting of liquid, unencumbered assets having a value at least equal to the value of the securities loaned. The Fund may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Fund receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of fees paid to the lending agent. Either the Fund or the borrower may terminate the loan. The Fund is subject to all investment risks associated with the value of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.
Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). The Fund may enter into futures contracts as a hedge against anticipated interest rate, currency or equity market changes, and for duration management, risk management and return enhancement purposes.
Upon entering into a futures contract, the Fund is required to deposit with a financial intermediary an amount ("initial margin") equal to a certain percentage of the face value indicated in the futures contract. Subsequent payments ("variation margin") are made or received by the Fund dependent upon the daily fluctuations in the value of the underlying security and are recorded for financial reporting purposes as unrealized gains or losses by the Fund. When entering into a closing transaction, the Fund will realize a gain or loss equal to the difference between the value of the futures contract to sell and the futures contract to buy. Futures contracts are valued at the most recent settlement price.
Certain risks may arise upon entering into futures contracts, including the risk that an illiquid secondary market will limit the Fund's ability to close out a futures contract prior to the settlement date and that a change in the value of a futures contract may not correlate exactly with the changes in the value of the securities or currencies hedged. When utilizing futures contracts to hedge, the Fund gives up the opportunity to profit from favorable price movements in the hedged positions during the term of the contract.
Federal Income Taxes. The Fund's policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies, and to distribute all of its taxable income to its shareholders. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required.
At February 28, 2005, the Fund had a net tax basis capital loss carryforward of approximately $9,200,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until February 28, 2011 ($8,900,000) and February 29, 2012 ($300,000), the respective expiration dates, whichever occurs first.
Distribution of Income and Gains. Net investment income of the Fund is declared and distributed to shareholders annually. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed, and, therefore, will be distributed to shareholders at least annually.
The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to certain securities sold at a loss and investments in futures contracts. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.
The tax character of current year distributions, if any, will be determined at the end of the current fiscal year.
Redemption Fees. The Fund imposes a redemption fee of 2% of the total redemption amount on all Fund shares redeemed or exchanged within 15 days of buying them, either by purchase or exchange. This fee is assessed and retained by the Fund for the benefit of the the remaining shareholders. The redemption fee is accounted for as an addition to paid-in capital.
Expenses. Expenses of the Trust arising in connection with a specific fund are allocated to that fund. Other Trust expenses which cannot be directly attributed to a fund are apportioned among the funds in the Trust.
Contingencies. In the normal course of business, the Fund may enter into contracts with service providers that contain general indemnifications clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet been made. However, based on experience, the Fund expects the risk of loss to be remote.
Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. Realized gains and losses from investment transactions are recorded on an identified cost basis. All premiums and discounts are amortized/accreted for financial reporting purposes.
B. Purchases and Sales of Securities
During the six months ended August 31, 2005, purchases and sales of investment securities (excluding short-term investments) aggregated $51,219,328 and $58,700,853, respectively.
C. Related Parties
Management Agreement. Under the Management Agreement with Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), an indirect, wholly owned subsidiary of Deutsche Bank AG, the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor determines the securities, instruments and other contracts relating to investments to be purchased, sold or entered into by the Fund. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Management Agreement. The management fee payable under the Management Agreement is equal to an annual rate of 0.50% of the first $500,000,000 of the Fund's average daily net assets, 0.475% of the next $500,000,000 of such net assets and 0.45% of such net assets in excess of $1,000,000,000, computed and accrued daily and payable monthly. Accordingly, for the six months ended August 31, 2005, the fee pursuant to the Management Agreement was equivalent to an annualized effective rate of 0.50% of the Fund's average daily net assets. Northern Trust Investments, N.A. ("NTI") serves as subadvisor to the Fund and is paid by the Advisor for its services. NTI is responsible for the day to day management of the Fund.
Effective October 1, 2003 through June 30, 2006, the Advisor has contractually agreed to waive a portion of its management fee and reimburse or pay certain operating expenses of the Fund to the extent necessary to maintain the operating expenses of Class A, B, C, AARP and S shares at 1.00% of average daily net assets (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, Rule 12b-1 distribution and/or service fees, trustee and trustee counsel fees and organizational and offering expenses). For Class R shares, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses of the Fund to the extent necessary to maintain the operating expenses at 1.50%, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, and trustees and trustee counsel fees.
Service Provider Fees. Scudder Investments Service Company ("SISC"), an affiliate of the Advisor, is the transfer, shareholder service and dividend-paying agent for Class A, B, C and R shares of the Fund. Scudder Service Corporation ("SSC"), a subsidiary of the Advisor, is the transfer, shareholder service and dividend-paying agent for Class AARP and S shares of the Fund. Pursuant to a sub-transfer agency agreement among SISC, SSC and DST Systems, Inc. ("DST"), SISC and SSC have delegated certain transfer agent and dividend-paying agent functions to DST. SISC and SSC compensate DST out of the shareholder servicing fee they receive from the Fund. For the six months ended August 31, 2005, the amounts charged to the Fund by SISC and SSC were as follows:
|
Services to Shareholders |
Total Aggregated |
Waived |
Unpaid at August 31, 2005 |
|
Class A |
$ 46,360 |
$ 13,379 |
$ 7,171 |
|
Class B |
16,703 |
4,261 |
4,369 |
|
Class C |
7,403 |
15 |
4,734 |
|
Class R |
3,758 |
1,549 |
5,786 |
|
Class AARP |
6,399 |
756 |
2,346 |
|
Class S |
45,859 |
14,870 |
10,535 |
|
|
$ 126,482 |
$ 34,830 |
$ 34,941 |
Scudder Fund Accounting Corporation ("SFAC"), an affiliate of the Advisor, is responsible for computing the daily net asset value per share and maintaining the portfolio and general accounting records of the Fund. SFAC has retained State Street Bank and Trust Company to provide certain administrative, fund accounting and record-keeping services to the Fund. For the six months ended August 31, 2005, the amount charged to the Fund by SFAC for accounting services aggregated $39,651, all of which was paid at August 31, 2005.
Distribution Service Agreement. Under the Distribution Service Agreement, in accordance with Rule 12b-1 under the 1940 Act, Scudder Distributors, Inc. ("SDI"), a subsidiary of the Advisor, receives a fee ("Distribution Fee") of 0.75%, 0.75% and 0.25% of average daily net assets of Class B, C and R shares, respectively. Pursuant to the agreement, SDI enters into related selling group agreements with various firms at various rates for sales of Class B, C and R shares. For the six months ended August 31, 2005, the Distribution Fee was as follows:
|
Distribution Fee |
Total Aggregated |
Unpaid at August 31, 2005 |
|
Class B |
$ 52,060 |
$ 8,605 |
|
Class C |
39,794 |
6,370 |
|
Class R |
2,918 |
824 |
|
|
$ 94,772 |
$ 15,799 |
In addition, SDI provides information and administrative services ("Service Fee") to Class A, B, C and R shareholders at an annual rate of up to 0.25% of average daily net assets for each such class. SDI in turn has various agreements with financial services firms that provide these services and pays these fees based upon the assets of shareholder accounts the firms service. For the six months ended August 31, 2005, the Service Fee was as follows:
|
Service Fee |
Total Aggregated |
Unpaid at August 31, 2005 |
Annualized Effective Rate |
|
Class A |
$ 42,715 |
$ 6,751 |
.24% |
|
Class B |
16,726 |
2,961 |
.24% |
|
Class C |
12,305 |
2,174 |
.23% |
|
Class R |
2,769 |
700 |
.24% |
|
|
$ 74,515 |
$ 12,586 |
|
Underwriting Agreement and Contingent Deferred Sales Charge. SDI is the principal underwriter for the Fund. Underwriting commissions paid in connection with the distribution of Class A shares for the six months ended August 31, 2005 aggregated $4,620.
In addition, SDI receives any contingent deferred sales charge ("CDSC") from Class B share redemptions occurring within six years of purchase and Class C share redemptions occurring within one year of purchase. There is no such charge upon redemption of any share appreciation or reinvested dividends. The CDSC is based on declining rates ranging from 4% to 1% for Class B and 1% for Class C, of the value of the shares redeemed. For the six months ended August 31, 2005, the CDSC for Class B and C shares aggregated $21,771 and $3,220, respectively. A deferred sales charge of up to 1% is assessed on certain redemptions of Class A shares. For the six months ended August 31, 2005, SDI received $27.
Typesetting and Filing Service Fees. Under an agreement with DeIM, DeIM is compensated for providing typesetting and regulatory filing services to the Fund. For the six months ended August 31, 2005, the amount charged to the Fund by DeIM included in the reports to shareholders aggregated $22,020, of which $12,230 is unpaid at August 31, 2005.
Trustees' Fees and Expenses. The Fund pays each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
Scudder Cash Management QP Trust. Pursuant to an Exemptive Order issued by the SEC, the Fund may invest in the Scudder Cash Management QP Trust (the "QP Trust'') and other affiliated funds managed by the Advisor. The QP Trust seeks to provide as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. The QP Trust does not pay the Advisor a management fee for the affiliated funds' investments in the QP Trust.
Other Related Parties. AARP through its affiliate, AARP Services, Inc., monitors and oversees the AARP Investment Program from Scudder Investments, but does not act as an investment advisor or recommend specific mutual funds. DeIM has agreed to pay a fee to AARP and/or its affiliates in return for the use of the AARP trademark and services relating to investments by AARP members in AARP Class shares of the Fund. This fee is calculated on a daily basis as a percentage of the combined net assets of the AARP classes of all funds managed by DeIM. The fee rates, which decrease as the aggregate net assets of the AARP classes become larger, are as follows: 0.07% for the first $6 billion of net assets, 0.06% for the next $10 billion of such net assets and 0.05% of such net assets thereafter. These amounts are used for the general purposes of AARP and its members.
D. Expense Reductions
For the six months ended August 31, 2005, the Advisor agreed to reimburse the Fund $1,618, which represents a portion of the fee savings expected to be realized by the Advisor related to the outsourcing by the Advisor of certain administrative services to an unaffiliated service provider.
In addition, the Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the custodian expenses. During the six months ended August 31, 2005, the custodian fee was reduced by $657 for custodian credits earned.
E. Line of Credit
The Fund and several other affiliated funds (the "Participants") share in a $1.1 billion revolving credit facility administered by J.P. Morgan Chase Bank for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated, based upon net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.
F. Share Transactions
The following table summarizes share and dollar activity in the Fund:
|
|
Six Months Ended |
Year Ended |
||
|
|
Shares |
Dollars |
Shares |
Dollars |
|
Shares sold |
||||
|
Class A |
388,260 |
$ 4,595,004 |
1,895,218 |
$ 21,517,348 |
|
Class B |
47,152 |
550,996 |
597,084 |
6,628,375 |
|
Class C |
83,563 |
993,557 |
431,376 |
4,813,984 |
|
Class R |
114,813 |
1,372,024 |
92,717 |
1,043,565 |
|
Class AARP |
52,943 |
621,549 |
129,457 |
1,456,741 |
|
Class S |
156,341 |
1,850,314 |
462,619 |
5,175,635 |
|
|
|
$ 9,983,444 |
|
$ 40,635,648 |
|
Shares issued to shareholders in reinvestment of distributions |
||||
|
Class A |
1,905 |
$ 22,238 |
18,326 |
$ 218,074 |
|
Class B |
— |
— |
3,452 |
40,625 |
|
Class C |
— |
— |
1,902 |
22,419 |
|
Class R |
33 |
390 |
884 |
10,443 |
|
Class AARP |
547 |
6,551 |
4,508 |
52,937 |
|
Class S |
3,186 |
38,138 |
27,991 |
328,433 |
|
|
|
$ 67,317 |
|
$ 672,931 |
|
Shares redeemed |
||||
|
Class A |
(696,418) |
$ (8,349,013) |
(1,212,352) |
$ (13,521,262) |
|
Class B |
(224,949) |
(2,625,901) |
(1,057,779) |
(11,536,441) |
|
Class C |
(334,244) |
(3,915,208) |
(334,509) |
(3,727,710) |
|
Class R |
(50,923) |
(609,456) |
(42,924) |
(473,990) |
|
Class AARP |
(88,796) |
(1,054,802) |
(175,703) |
(1,965,376) |
|
Class S |
(275,995) |
(3,284,217) |
(808,842) |
(9,059,917) |
|
|
|
$ (19,838,597) |
|
$ (40,284,696) |
|
Redemption fees |
$ 42 |
|
$ 95 |
|
|
Net increase (decrease) |
||||
|
Class A |
(306,253) |
$ (3,731,746) |
701,192 |
$ 8,214,160 |
|
Class B |
(177,797) |
(2,074,905) |
(457,243) |
(4,867,441) |
|
Class C |
(250,681) |
(2,921,651) |
98,769 |
1,108,693 |
|
Class R |
63,923 |
762,958 |
50,677 |
580,018 |
|
Class AARP |
(35,306) |
(426,687) |
(41,738) |
(455,698) |
|
Class S |
(116,468) |
(1,395,763) |
(318,232) |
(3,555,754) |
|
|
|
$ (9,787,794) |
|
$ 1,023,978 |
G. Regulatory Matters and Litigation
Since at least July 2003, federal, state and industry regulators have been conducting ongoing inquiries and investigations ("inquiries") into the mutual fund industry, and have requested information from numerous mutual fund companies, including Scudder Investments. The funds' advisors have been cooperating in connection with these inquiries and are in discussions with these regulators concerning proposed settlements. Publicity about mutual fund practices arising from these industry-wide inquiries serves as the general basis of a number of private lawsuits against the Scudder funds. These lawsuits, which previously have been reported in the press, involve purported class action and derivative lawsuits, making various allegations and naming as defendants various persons, including certain Scudder funds, the funds' investment advisors and their affiliates, and certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each Scudder fund's investment advisor has agreed to indemnify the applicable Scudder funds in connection with these lawsuits, or other lawsuits or regulatory actions that may be filed making allegations similar to these lawsuits regarding market timing, revenue sharing, fund valuation or other subjects arising from or related to the pending inquiries. It is not possible to determine with certainty what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors. Based on currently available information, however, the funds' investment advisors believe the likelihood that the pending lawsuits and any regulatory settlements will have a material adverse financial impact on a Scudder fund is remote and such actions are not likely to materially affect their ability to perform under their investment management agreements with the Scudder funds.
|
|
For shareholders of Classes A, B and C
|
Automated Information Lines |
ScudderACCESS (800) 972-3060 Personalized account information, information on other Scudder funds and services via touchtone telephone and for Classes A, B, and C only, the ability to exchange or redeem shares. |
|
Web Site |
scudder.com View your account transactions and balances, trade shares, monitor your asset allocation, and change your address, 24 hours a day. Obtain prospectuses and applications, blank forms, interactive worksheets, news about Scudder funds, subscription to fund updates by e-mail, retirement planning information, and more. |
|
For More Information |
(800) 621-1048 To speak with a Scudder service representative. |
|
Written Correspondence |
Scudder Investments PO Box 219356 |
|
Proxy Voting |
A description of the fund's policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — scudder.com (type "proxy voting" in the search field) — or on the SEC's Web site — www.sec.gov. To obtain a written copy of the fund's policies and procedures without charge, upon request, call us toll free at (800) 621-1048. |
|
Principal Underwriter |
If you have questions, comments or complaints, contact: Scudder Distributors, Inc. 222 South Riverside Plaza (800) 621-1148 |
|
|
Class A |
Class B |
Class C |
|
Nasdaq Symbol |
OUTDX |
OUTBX |
OUTCX |
|
CUSIP Number |
920390-820 |
920390-812 |
920390-796 |
|
Fund Number |
410 |
610 |
710 |
|
|
|
|
For shareholders of Class R
|
Automated Information Lines |
Scudder Flex Plan Access (800) 532-8411 24-hour access to your retirement plan account. |
|
Web Site |
scudder.com Click "Retirement Plans" to reallocate assets, process transactions and review your funds through our secure online account access. Obtain prospectuses and applications, blank forms, interactive worksheets, news about Scudder funds, subscription to fund updates by e-mail, retirement planning information, and more. |
|
For More Information |
(800) 543-5776 To speak with a Scudder service representative. |
|
Written Correspondence |
Scudder Retirement Services 222 South Riverside Plaza |
|
Proxy Voting |
A description of the fund's policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — scudder.com (type "proxy voting" in the search field) — or on the SEC's Web site — www.sec.gov. To obtain a written copy of the fund's policies and procedures without charge, upon request, call us toll free at (800) 621-1048. |
|
Principal Underwriter |
If you have questions, comments or complaints, contact: Scudder Distributors, Inc. 222 South Riverside Plaza (800) 621-1148 |
|
Nasdaq Symbol |
OUTRX |
|
CUSIP Number |
920390-713 |
|
Fund Number |
1514 |
|
|
|
|
|
|
AARP Investment Program Shareholders |
Scudder Class S Shareholders |
|
Automated Information Lines |
Easy-Access Line (800) 631-4636 |
SAILTM (800) 343-2890 |
|
|
Personalized account information, the ability to exchange or redeem shares, and information on other Scudder funds and services via touchtone telephone. |
|
|
Web Sites |
aarp.scudder.com |
myScudder.com |
|
|
View your account transactions and balances, trade shares, monitor your asset allocation, and change your address, 24 hours a day. Obtain prospectuses and applications, blank forms, interactive worksheets, news about Scudder funds, subscription to fund updates by e-mail, retirement planning information, and more. |
|
|
For More Information |
(800) 253-2277 To speak with an AARP Investment Program service representative. |
(800) SCUDDER To speak with a Scudder service representative. |
|
Written Correspondence |
AARP Investment Program from Scudder Investments PO Box 219735 |
Scudder Investments PO Box 219669 |
|
Proxy Voting |
A description of the fund's policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web sites — aarp.scudder.com or myScudder.com (type "proxy voting" in the search field) — or on the SEC's Web site — www.sec.gov. To obtain a written copy of the fund's policies and procedures without charge, upon request, call your service representative. |
|
|
Principal Underwriter |
If you have questions, comments or complaints, contact: Scudder Distributors, Inc. 222 South Riverside Plaza (800) 621-1148 |
|
|
|
Class AARP |
Class S |
|
Nasdaq Symbol |
SSLFX |
SSFFX |
|
Fund Number |
110 |
310 |
|
|
This privacy statement is issued by Deutsche Investment Management Americas Inc., Deutsche Asset Management, Inc., Scudder Distributors, Inc., Scudder Investor Services, Inc., Scudder Trust Company and the Scudder Funds.
We never sell customer lists or individual client information. We consider privacy fundamental to our client relationships and adhere to the policies and practices described below to protect current and former clients' information. Internal policies are in place to protect confidentiality, while allowing client needs to be served. Only individuals who need to do so in carrying out their job responsibilities may access client information. We maintain physical, electronic and procedural safeguards that comply with federal and state standards to protect confidentiality. These safeguards extend to all forms of interaction with us, including the Internet.
In the normal course of business, clients give us nonpublic personal information on applications and other forms, on our websites, and through transactions with us or our affiliates. Examples of the nonpublic personal information collected are name, address, Social Security number and transaction and balance information. To be able to serve our clients, certain of this client information is shared with affiliated and nonaffiliated third party service providers such as transfer agents, custodians, and broker-dealers to assist us in processing transactions and servicing your account with us. In addition, we may disclose all of the information we collect to companies that perform marketing services on our behalf or to other financial institutions with which we have joint marketing agreements. The organizations described above that receive client information may only use it for the purpose designated by the Scudder Companies listed above.
We may also disclose nonpublic personal information about you to other parties as required or permitted by law. For example, we are required or we may provide information to government entities or regulatory bodies in response to requests for information or subpoenas, to private litigants in certain circumstances, to law enforcement authorities, or any time we believe it necessary to protect the firm.
For AARP shareholders only: Certain investors in the AARP Investment Program are advised that limited nonpublic personal information is shared with AARP and its subsidiary AARP Services Inc. (ASI). This includes an investor's status as a current or former Program participant, name, address, and type of account maintained (i.e. IRA or non-IRA). This information must be shared so that ASI can provide quality control services, such as monitoring satisfaction with the Program. However, AARP and ASI may also use this information for other purposes such as member research, and may share this information with other AARP providers to inform members of AARP benefits and services. Shareholders residing in states with certain state specific privacy restrictions are excluded from this information sharing. All other shareholders may instruct us in writing not to share information regarding themselves or joint account holders with AARP or ASI for any purposes unrelated to the AARP Investment Program. With respect to accounts that are jointly held, an opt-out request received from any of the joint account holders will be applied to the entire account.
Questions on this policy may be sent to:
For Class AARP:
AARP Investment Program, Attention: Correspondence,
P.O. Box 219735, Kansas City, MO 64121-9735
For Class S:
Scudder Investments, Attention: Correspondence,
P.O. Box 219669, Kansas City, MO 64121-9669
For all other classes:
Scudder Investments, Attention: Correspondence — Chicago
P.O. Box 219415, Kansas City, MO 64121-9415
September 2005
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable
ITEM 6. SCHEDULE OF INVESTMENTS
Not Applicable
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Committee on Independent Trustees/Directors selects and nominates
Independent Trustees/Directors. Fund shareholders may also submit nominees that
will be considered by the committee when a Board vacancy occurs. Submissions
should be mailed to: c/o Dawn-Marie Driscoll, PO Box 100176, Cape Coral, FL
33910.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Chief Executive and Financial Officers concluded that the Registrant's
Disclosure Controls and Procedures are effective based on the evaluation of the
Disclosure Controls and Procedures as of a date within 90 days of the filing
date of this report.
(b) There have been no changes in the registrant's internal control over
financial reporting that occurred during the registrant's last half-year (the
registrant's second fiscal half-year in the case of the annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal controls over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Certification pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as
Exhibit 99.CERT.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as
Exhibit 99.906CERT.
Form N-CSR Item F
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: Scudder Select 500 Fund, a series of Value
Equity Trust
By: /s/Vincent J. Esposito
----------------------
Vincent J. Esposito
President
Date: November 1, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Registrant: Scudder Select 500 Fund, a series of Value
Equity Trust
By: /s/Vincent J. Esposito
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Vincent J. Esposito
President
Date: November 1, 2005
By: /s/Paul Schubert
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Paul Schubert
Chief Financial Officer and Treasurer
Date: November 1, 2005