N-CSRS 1 ssc.htm SEMIANNUAL REPORT 

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                   FORM N-CSRS

Investment Company Act file number 811-43

                                 Investment Trust
                             ----------------------
               (Exact Name of Registrant as Specified in Charter)

                 Two International Place, Boston, MA 02110-4103
                 ----------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

        Registrant's Telephone Number, including Area Code: (617) 295-3488
                                                            --------------

                                  Charles Rizzo
                             Two International Place
                           Boston, Massachusetts 02110
                     ---------------------------------------
                     (Name and Address of Agent for Service)

Date of fiscal year end:        9/30

Date of reporting period:       03/31/2005



ITEM 1.  REPORT TO STOCKHOLDERS


Scudder Small Company
Stock Fund

 

 

 

 

Semiannual Report to Shareholders

 

March 31, 2005

Contents

 

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. Stocks of small-sized companies involve greater risk as they often have limited product lines, markets, or financial resources and may be sensitive to erratic and abrupt market movements more so than securities of larger, more-established companies. Please read this fund's prospectus for specific information 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.

Performance Summary March 31, 2005

 

Classes A, B and C

All performance shown is historical, assumes reinvestment of all dividends 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.

To discourage short-term trading, shareholders redeeming shares held less than 30 days will have a lower total return due to the effect of the 2% short-term redemption fee.

Returns during the 5-year and Life of Fund periods shown for Class A and C shares and for all periods shown for Class B shares reflect a contractual fee and/or expense waiver. Without this waiver, returns 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 for the periods prior to their inception on June 25, 2001 are derived from the historical performance of Class AARP shares of the Scudder Small Company Stock 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.

Average Annual Total Returns (Unadjusted for Sales Charge) as of 3/31/05

Scudder Small Company Stock Fund

6-Month*

1-Year

3-Year

5-Year

Life of Fund*

Class A

9.97%

6.71%

11.01%

9.50%

7.97%

Class B

9.51%

5.84%

10.12%

8.59%

7.08%

Class C

9.56%

5.92%

10.17%

8.62%

7.11%

Russell 2000 Index+

8.00%

5.41%

8.05%

4.01%

7.81%

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 February 1, 1997. Index returns begin on January 31, 1997.

 

 

Net Asset Value and Distribution Information

 

Class A

Class B

Class C

Net Asset Value:

3/31/05

$ 24.27

$ 23.42

$ 23.45

9/30/04

$ 24.87

$ 24.20

$ 24.21

Distribution Information:

Six Months:

Capital Gains as of March 31, 2005

$ 3.11

$ 3.11

$ 3.11

Class A Lipper Rankings — Small-Cap Core Funds Category as of 3/31/05

Period

Rank

 

Number of Funds Tracked

Percentile Ranking

1-Year

353

of

572

62

3-Year

112

of

472

24

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.

 

 

Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge)

[] Scudder Small Company Stock Fund — Class A

[] Russell 2000 Index+

ssc_g10k250

Yearly periods ended March 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.

Comparative Results (Adjusted for Maximum Sales Charge) as of 3/31/05

Scudder Small Company Stock Fund 

1-Year

3-Year

5-Year

Life of Fund*

Class A

Growth of $10,000

$10,057

$12,892

$14,837

$17,625

Average annual total return

.57%

8.84%

8.21%

7.19%

Class B

Growth of $10,000

$10,303

$13,154

$14,997

$17,485

Average annual total return

3.03%

9.57%

8.44%

7.08%

Class C

Growth of $10,000

$10,592

$13,371

$15,120

$17,526

Average annual total return

5.92%

10.17%

8.62%

7.11%

Russell 2000 Index+

Growth of $10,000

$10,541

$12,613

$12,173

$18,480

Average annual total return

5.41%

8.05%

4.01%

7.81%

The growth of $10,000 is cumulative.

* The Fund commenced operations on February 1, 1997. Index returns begin on January 31, 1997.

+ The Russell 2000 Index is an unmanaged capitalization-weighted measure of approximately 2,000 small US stocks. 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.

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 dividends 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 30 days will have a lower total return due to the effect of the 2% short-term redemption fee.

Returns and rankings during the 5-year and Life of Fund periods shown reflect a contractual fee and/or expense waiver. Without this waiver, 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 S shares for the periods prior to its inception on July 17, 2000 are derived from the historical performance of Class AARP of the Scudder Small Company Stock Fund during such periods and have assumed the same expense structure during such periods. Any difference in expenses will affect performance.

Average Annual Total Returns as of 3/31/05

Scudder Small Company Stock Fund

6-Month*

1-Year

3-Year

5-Year

Life of Fund*

Class AARP

9.95%

6.84%

11.23%

9.75%

8.24%

Class S

 

10.03%

6.97%

11.29%

9.79%

8.26%

Russell 2000 Index+

8.00%

5.41%

8.05%

4.01%

7.81%

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 February 1, 1997. Index returns begin on January 31, 1997.

Net Asset Value and Distribution Information

 

Class AARP

Class S

Net Asset Value:

3/31/05

$ 24.51

$ 24.54

9/30/04

$ 25.09

$ 25.10

Distribution Information:

Six Months:

Capital Gains as of March 31, 2005

$ 3.11

$ 3.11

 

 

Class AARP Lipper Rankings — Small-Cap Core Funds Category as of 3/31/05

Period

Rank

 

Number of Funds Tracked

Percentile Ranking

1-Year

343

of

572

60

3-Year

102

of

472

22

5-Year

125

of

323

39

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 AARP shares; other share classes may vary.

Growth of an Assumed $10,000 Investment

[] Scudder Small Company Stock Fund — Class AARP

[] Russell 2000 Index+

ssc_g10k240

Yearly periods ended March 31

Comparative Results as of 3/31/05

Scudder Small Company Stock Fund

1-Year

3-Year

5-Year

Life of Fund*

Class AARP

Growth of $10,000

$10,684

$13,761

$15,921

$19,079

Average annual total return

6.84%

11.23%

9.75%

8.24%

Class S

Growth of $10,000

$10,697

$13,784

$15,950

$19,112

Average annual total return

6.97%

11.29%

9.79%

8.26%

Russell 2000 Index+

Growth of $10,000

$10,541

$12,613

$12,173

$18,480

Average annual total return

5.41%

8.05%

4.01%

7.81%

The growth of $10,000 is cumulative.

* The Fund commenced operations on February 1, 1997. Index returns begin on January 31, 1997.

+ The Russell 2000 Index is an unmanaged capitalization-weighted measure of approximately 2,000 small US stocks. 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.

Information About Your Fund's Expenses

 

ssc_top_margin3As 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 March 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 and Value of a $1,000 Investment
for the six months ended March 31, 2005

Actual Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 10/1/04

$ 1,000.00

$ 1,000.00

$ 1,000.00

$ 1,000.00

$ 1,000.00

Ending Account Value 3/31/05

$ 1,099.70

$ 1,095.10

$ 1,095.60

$ 1,099.50

$ 1,100.30

Expenses Paid per $1,000*

$ 7.80

$ 12.22

$ 11.91

$ 6.49

$ 5.97

Hypothetical 5% Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 10/1/04

$ 1,000.00

$ 1,000.00

$ 1,000.00

$ 1,000.00

$ 1,000.00

Ending Account Value 3/31/05

$ 1,017.50

$ 1,013.26

$ 1,013.56

$ 1,018.75

$ 1,019.25

Expenses Paid per $1,000*

$ 7.49

$ 11.75

$ 11.45

$ 6.24

$ 5.74

* 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.

Annualized Expense Ratios

Class A

Class B

Class C

Class AARP

Class S

Scudder Small Company Stock Fund

1.49%

2.34%

2.28%

1.24%

1.14%

For more information, please refer to the Fund's prospectuses.

Portfolio Management Review

 

ssc_top_margin2In the following interview, Lead Portfolio Managers Janet Campagna and Robert Wang discuss Scudder Small Company Stock Fund's performance, management's strategy and the market environment during the six-month period ended March 31, 2005.

Q:  How would you describe the market environment over the last six months?

A:  It was an interesting period for the market, with a pronounced difference between the fourth calendar quarter of 2004, when the market was strong, and the first quarter of 2005, when stock prices were generally down.

In the fourth quarter of 2004, US stock prices moved up as oil prices fell slightly, stronger-than-expected economic growth was reported for the third quarter and the uncertainties surrounding the presidential election were resolved.

In the first quarter of 2005, US equities finished lower, as concerns arose regarding increasing prices of commodities (especially oil), rising interest rates, and the staying power of corporate earnings growth in the face of higher costs and competitive pressures that make it difficult to raise prices. While high energy costs have been a drag on the rest of the market, record-setting crude oil prices have boosted earnings growth at many energy companies.

Over the six-month period ended March 31, 2005, stocks of smaller companies as a category outperformed stocks of large companies: The Russell 2000 Index had a return of 8.00%, compared with the Standard & Poor's 500 Index (the S&P 500), which had a return of 6.88%.1 Within the small-cap category, value performed better than growth: The Russell 2000 Value Index had a return of 8.70%, compared with 7.23% for the Russell 2000 Growth Index.2 Among major industry groups, energy was strongest by far, and this was an important factor in the outperformance of value stocks, as the Russell 2000 Value benchmark has a higher concentration of energy holdings.

1 The Russell 2000 Index is an unmanaged, capitalization-weighted measure of approximately 2,000 small US stocks. The Standard & Poor's 500 Index is an unmanaged group of stocks generally representative of the US stock market.

It is not possible to invest directly in an index.

2 The Russell 2000 Value Index measures the performance of small companies with lower price-to-book ratios and lower forecasted growth values than the overall market. The Russell 2000 Growth Index measures the performance of small companies with a greater-than-average growth orientation as compared with the overall market. Index returns assume reinvestment of all distributions and, unlike fund returns, do not reflect any fees or expenses. It is not possible to invest directly in an index.

3 The Lipper Small-Cap Core Funds category is an unmanaged group of mutual funds that invest primarily in large-cap stocks with a greater-than-average growth orientation compared with the overall market. Returns reflect the reinvestment of all distributions. It is not possible to invest directly in a Lipper category.

Q:  How did the fund perform during this period?

A:  Scudder Small Company Stock Fund (Class A shares) produced a total return of 9.97% for the six months ended March 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 outperformed its benchmark, the Russell 2000 Index, which returned 8.00% for the period. For the six months, the fund finished slightly ahead of its peer group, the Lipper Small-Cap Core Funds category, which posted an average return of 9.39%.3

Q:  How is this fund managed?

A:  Our investment process is focused on stock selection, using a combination of quantitative processes and fundamental analysis.

We analyze a broad universe of stocks in an effort to find those that we believe will outperform their industry peers over time. The universe for Scudder Small Company Stock Fund includes the stocks in the Russell 2000 Index, which tracks 2,000 stocks of small US-based companies; median market capitalization is approximately $500 million.

We begin by sorting these stocks into 24 clearly defined industry groups. Next, we compare the stocks side by side within their industry groups based on current and historical data, including valuation, a measure of how expensive a stock is; earnings growth and growth potential; and market sentiment, which is indicated by such data as volume of shares traded and fluctuations in stock price. By synthesizing all this information we rank stocks according to their expected performance. Our model also creates an "optimal" portfolio, suggesting which stocks should be included in the fund and which ones should be omitted, as well as proportions of individual stocks to be held. We carefully analyze our model's suggestions, double-checking data and seeking additional information about each potential holding. This step-by-step approach leads to a portfolio of roughly 300 to 325 stocks. By diversifying holdings among a large number of stocks, we reduce the risk associated with each individual stock.

This model makes it possible to analyze far more stocks than can most traditional active portfolio managers, who rely primarily on their own talent and experience as well as the analytical skills of research professionals to assess each stock. Our approach combines technology and professional skill to create what we believe is the best way to reduce risk by choosing stocks that are attractively valued in an objective, consistent and repeatable manner.

Q:  What decisions enabled the fund to outperform its benchmark over the last six months?

A:  As we analyze performance over this period, we see that stock selection, particularly in the information technology sector, was the major contributor to performance. Among holdings in this sector, F5 Networks, Inc. was a top contributor to relative performance. The company's revenue growth was derived primarily from strong sales of its core traffic management products and services, which manage access to software applications on networks, a category in which F5 Networks is the global leader.

Also positive for performance was our position in the energy sector, where performance benefited further from favorable stock selection. In this sector, Vintage Petroleum, Inc., was particularly strong. Vintage is an independent energy company with operations primarily in the exploration and production, and gas marketing segments of the oil and gas industry. The company has experienced strong oil production and demand and has also benefited from the increase in oil prices. The fund's position in Vintage was sold during the period.

In the retailing group, Payless ShoeSource, Inc. was a top contributor to relative returns. This company completed a successful restructuring and also saw increased customer traffic and sales as a result of improved merchandising. Within the pharmaceuticals and biotechnology industry group, Kos Pharmaceuticals, Inc. was a key contributor to relative performance. The company's stock moved higher on news that pending litigation regarding a major drug is in discussion to be settled.

Relative performance was hurt by stock selection in several industry groups. In the consumer durables and apparel industry group, Guess, Inc., which reported poor sales figures and lacked the ability to correctly anticipate and leverage fashion trends in the last months of 2004, was a top detractor from relative performance. Within retailing, our position in Cash America International, Inc. hurt relative performance. The company is subject to new regulations that may constrain its business of payday loans.

Another holding that was negative for relative performance was Silicon Image, Inc. (semiconductor industry), which experienced a significant shortfall in licensing revenue and consumer electronics products.

Q:  Do you have other comments for shareholders?

A:  We are pleased with the fund's performance and its current positioning. We will continue to utilize a balanced approach to stock selection to seek attractive investment opportunities among small-cap stocks.

In closing, we would like to thank our investors for continued interest in the fund.

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.

Portfolio Summary March 31, 2005

 

Asset Allocation  

3/31/05

9/30/04

 

Common Stocks

98%

97%

Cash Equivalents

2%

3%

 

100%

100%

Sector Diversification (As a % of Common Stocks)

3/31/05

9/30/04

 

Financials

19%

21%

Industrials

17%

14%

Information Technology

15%

17%

Health Care

14%

14%

Consumer Discretionary

14%

15%

Energy

8%

7%

Materials

7%

7%

Utilities

2%

2%

Consumer Staples

2%

2%

Telecommunication Services

2%

1%

 

100%

100%

Asset allocation and sector diversification are subject to change.

 

 

Ten Largest Equity Holdings at March 31, 2005 (8.6% of Net Assets)

1. Energen Corp.

Producer and distributor of natural gas

1.0%

2. Cabot Oil & Gas Corp.

Explorer and producer of oil and gas

1.0%

3. Overseas Shipholding Group, Inc.

Operator of a fleet of marine transport vessels

0.9%

4. Downey Financial Corp.

Provider of banking services

0.9%

5. Plains Exploration & Production Co.

Is an independent oil and gas company with onshore and offshore operations

0.8%

6. Quanex Corp.

Manufacturer of specialized carbon, alloy, steel and aluminum products

0.8%

7. Southern Union Co.

Explorer of natural gas distributors

0.8%

8. FirstFed Financial Corp.

Holder for provider of banking services

0.8%

9. Comstock Resources, Inc.

Producer and explorer for oil and natural gas reserves

0.8%

10. Payless Shoesource, Inc.

Foot retailer that operates self-service family shoe stores

0.8%

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. The 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.

Investment Portfolio as of March 31, 2005 (Unaudited)

ssc_accompanying_notes0 ssc_top_margin1

 

 


Shares

Value ($)

 

 

Common Stocks 97.9%

Consumer Discretionary 13.2%

Auto Components 0.5%

Hayes Lemmerz International, Inc.*

25,100

130,520

Midas, Inc.*

10,400

237,432

Tenneco Automotive, Inc.*

45,400

565,684

933,636

Hotels, Restaurants & Leisure 4.1%

Ameristar Casinos, Inc.

20,600

1,126,408

Argosy Gaming Co.*

26,000

1,193,920

California Pizza Kitchen, Inc.*

22,900

536,776

CEC Entertainment, Inc.*

35,150

1,286,490

CKE Restaurants, Inc.*

50,300

797,255

Dave & Buster's, Inc.*

13,700

256,190

Jack in the Box, Inc.*

17,700

656,670

Scientific Games Corp. "A"*

48,300

1,103,655

6,957,364

Household Durables 0.7%

American Woodmark Corp.

15,000

544,200

Hooker Furniture Corp.

4,700

88,783

WCI Communities, Inc.*

18,000

541,440

1,174,423

Internet & Catalog Retail 0.6%

drugstore.com, Inc.*

26,100

67,338

J. Jill Group, Inc.*

40,400

555,904

Priceline.com, Inc.*

16,000

403,200

1,026,442

Leisure Equipment & Products 0.4%

Arctic Cat, Inc.

8,000

216,480

Callaway Golf Co.

5,000

64,000

Escalade, Inc.

12,500

170,375

The Topps Co., Inc.

20,200

186,042

636,897

Media 0.6%

Insight Communications Co., Inc. "A"*

5,700

67,545

Journal Communications, Inc. "A"

16,300

269,765

LodgeNet Entertainment Corp.*

20,900

393,756

Salem Communications Corp. "A"*

9,700

199,820

Thomas Nelson, Inc.

6,200

146,630

1,077,516

Specialty Retail 4.5%

Aeropostale, Inc.*

27,300

894,075

Cato Corp. "A"

23,700

764,325

Jo-Ann Stores, Inc.*

2,300

64,607

Men's Wearhouse, Inc.*

28,100

1,186,101

Payless Shoesource, Inc.*

86,400

1,364,256

Select Comfort Corp.*

53,900

1,101,716

Stein Mart, Inc.*

51,600

1,161,000

The Children's Place Retail Stores, Inc.*

8,100

386,775

Too, Inc.*

12,600

310,842

Trans World Entertainment Corp.*

28,200

415,386

7,649,083

Textiles, Apparel & Luxury Goods 1.8%

Guess!, Inc.*

48,700

667,190

K-Swiss Inc.

23,300

769,599

Skechers USA, Inc. "A"*

49,800

770,904

UniFirst Corp.

9,400

375,060

Wolverine World Wide, Inc.

26,300

563,609

3,146,362

Consumer Staples 2.1%

Beverages 0.2%

Boston Beer Co., Inc. "A"*

12,700

278,130

Food & Staples Retailing 1.1%

Great Atlantic & Pacific Tea Co., Inc.*

36,700

546,830

Nash-Finch Co.

17,500

664,825

Pantry, Inc.*

24,100

746,377

1,958,032

Food Products 0.4%

J & J Snack Foods Corp.

12,000

561,960

Lance, Inc.

5,000

80,350

642,310

Personal Products 0.4%

Nature's Sunshine Products, Inc.

14,600

250,682

Nutraceutical International Corp.*

24,600

390,156

640,838

Energy 8.1%

Oil & Gas

Berry Petroleum Co. "A"

14,400

740,880

Cabot Oil & Gas Corp. "A"

29,800

1,643,470

Callon Petroleum Co.*

47,100

731,934

Cimarex Energy Co.*

15,500

604,500

Comstock Resources, Inc.*

47,900

1,376,646

Denbury Resources, Inc.*

9,500

334,685

Edge Petroleum Corp.*

10,900

180,504

KCS Energy, Inc.*

26,300

403,968

Meridian Resource Corp.*

53,300

275,028

Mission Resources Corp.*

57,900

409,932

Overseas Shipholding Group, Inc.

24,200

1,522,422

Penn Virginia Corp.

2,200

100,980

Plains Exploration & Production Co.*

41,600

1,451,840

Remington Oil & Gas Corp.*

19,600

617,792

Southwestern Energy Co.*

11,900

675,444

Stone Energy Corp.*

27,100

1,316,247

Tesoro Petroleum Corp.*

29,500

1,092,090

Whiting Petroleum Corp.*

10,900

444,502

13,922,864

Financials 18.5%

Banks 8.6%

AMCORE Finanical, Inc.

10,100

285,325

Bank of the Ozarks, Inc.

19,800

628,650

BankUnited Financial Corp. "A"

8,300

222,938

Cathay General Bancorp.

14,000

441,000

Center Financial Corp.

3,900

68,757

Corus Bankshares, Inc.

2,600

123,994

Downey Financial Corp.

23,900

1,470,567

East West Bancorp., Inc.

28,500

1,052,220

Fidelity Bancshares, Inc.

8,100

186,138

First BanCorp.

13,300

561,925

First Charter Corp.

1,600

36,144

First Financial Bankshares, Inc.

2,300

102,649

First Republic Bank

34,650

1,121,621

FirstFed Financial Corp.*

27,200

1,387,472

Hancock Holding Co.

9,100

295,750

Hanmi Financial Corp.

20,200

334,310

IBERIABANK Corp.

3,200

180,032

Nara Bancorp, Inc.

9,500

133,475

NetBank, Inc.

30,000

254,400

OceanFirst Financial Corp.

5,000

114,850

Old National Bancorp.

12,500

253,750

Pacific Capital Bancorp.

10,533

313,673

PFF Bancorp., Inc.

31,950

881,820

Prosperity Bancshares, Inc.

11,600

307,284

R & G Financial Corp. "B"

40,650

1,267,060

Republic Bancorp., Inc.

12,873

174,300

Seacoast Banking Corp. of Florida

7,080

139,334

Southwest Bancorporation of Texas, Inc.

15,642

287,031

Sterling Financial Corp.*

9,360

334,152

Texas Regional Bancshares, Inc. "A"

2,572

77,443

UMB Financial Corp.

2,100

119,532

WesBanco, Inc.

5,700

156,807

Westamerica Bancorp.

6,400

331,328

Wintrust Financial Corp.

11,650

548,599

WSFS Financial Corp.

9,400

494,064

14,688,394

Capital Markets 0.1%

Investment Technology Group, Inc.*

10,200

178,500

Consumer Finance 0.6%

Cash America International, Inc.

42,800

938,604

Encore Capital Group, Inc.*

7,000

101,850

1,040,454

Diversified Financial Services 1.0%

Accredited Home Lenders Holding Co.*

28,100

1,018,063

Gabelli Asset Management, Inc.

3,200

142,880

National Financial Partners Corp.

8,300

330,340

Santander BanCorp

3,000

78,990

TNS, Inc.*

8,200

147,190

1,717,463

Insurance 1.6%

American Physicians Capital, Inc.*

16,700

572,309

Argonaut Group, Inc.*

11,500

244,030

Commerce Group, Inc.

5,400

334,692

Stewart Information Services Corp.

5,000

187,600

The Midland Co.

3,500

110,285

Zenith National Insurance Corp.

25,700

1,332,802

2,781,718

Real Estate 6.6%

Alexandria Real Estate Equities, Inc. (REIT)

6,200

399,156

Anthracite Capital, Inc. (REIT)

9,200

102,488

Brandywine Realty Trust (REIT)

17,500

497,000

Capital Automotive (REIT)

14,300

473,616

Capstead Mortgage Corp. (REIT)

10,600

90,630

CarrAmerica Realty Corp. (REIT)

17,400

548,970

Colonial Properties Trust (REIT)

5,200

199,732

Commercial Net Lease Realty (REIT)

10,900

201,105

Cousins Properties, Inc. (REIT)

7,700

199,199

CRT Properties, Inc. (REIT)

4,000

87,120

Equity Lifestyle Properties, Inc. (REIT)

7,100

250,275

Essex Property Trust, Inc. (REIT)

7,600

525,160

First Industrial Realty Trust, Inc. (REIT)

8,300

313,989

Glimcher Realty Trust (REIT)

5,900

139,830

Heritage Property Investment Trust (REIT)

7,600

225,568

Highwoods Properties, Inc. (REIT)

18,000

482,760

Home Properties, Inc. (REIT)

12,300

477,240

Jones Lang LaSalle, Inc.*

5,600

261,240

Kilroy Realty Corp. (REIT)

12,400

507,284

Maguire Properties, Inc. (REIT)

10,000

238,800

Nationwide Health Properties, Inc. (REIT)

24,700

499,187

New Century Financial Corp. (REIT)

12,600

589,932

Novastar Financial, Inc. (REIT)

11,000

396,110

Pennsylvania Real Estate Investment Trust (REIT)

8,300

334,656

Prentiss Properties Trust (REIT)

15,500

529,480

PS Business Parks, Inc. (REIT)

2,900

116,870

RAIT Investment Trust (REIT)

7,100

190,422

Realty Income Corp. (REIT)

11,000

251,680

Redwood Trust, Inc. (REIT)

7,700

394,086

Sovran Self Storage, Inc. (REIT)

9,200

364,596

Sun Communities, Inc. (REIT)

6,800

243,440

Tanger Factory Outlet Centers, Inc. (REIT)

11,000

242,000

Taubman Centers, Inc. (REIT)

18,900

524,286

Washington Real Estate Investment Trust (REIT)

9,100

261,625

11,159,532

Health Care 13.2%

Biotechnology 0.4%

Albany Molecular Research, Inc.*

36,200

372,136

Third Wave Technologies*

68,300

393,408

765,544

Health Care Equipment & Supplies 4.2%

Align Technology, Inc.*

48,400

302,016

Alliance Imaging, Inc.*

54,500

520,475

American Medical Systems Holdings, Inc.*

51,800

889,924

DJ Orthopedics, Inc.*

13,300

333,165

Haemonetics Corp.*

29,200

1,231,072

Hologic, Inc.*

11,300

360,188

Immucor, Inc.*

29,200

881,548

Integra LifeSciences Holdings Corp.*

15,000

528,300

Ista Pharmaceuticals, Inc.*

3,200

31,616

PolyMedica Corp.

27,300

867,048

SurModics, Inc.*

7,300

232,943

Ventana Medical Systems, Inc.*

28,000

1,048,880

7,227,175

Health Care Providers & Services 4.7%

Allscripts Healthcare Solutions, Inc.*

43,900

627,770

Amedisys, Inc.*

15,300

462,825

America Service Group, Inc.*

10,350

229,045

Centene Corp.*

34,400

1,031,656

Cerner Corp.*

13,200

693,132

Chemed Corp.

7,700

588,896

Lifeline Systems, Inc.*

6,700

203,144

MedCath Corp.*

10,400

304,720

Molina Healthcare, Inc.*

15,400

709,786

Option Care, Inc.

26,000

535,340

PDI, Inc.*

20,100

412,050

RehabCare Group, Inc.*

24,400

700,524

Res-Care, Inc.*

58,400

730,584

SFBC International, Inc.*

21,400

754,136

7,983,608

Pharmaceuticals 3.9%

Alpharma, Inc. "A"

51,300

632,016

Bone Care International, Inc.*

6,300

163,422

Connetics Corp.*

35,900

907,911

First Horizon Pharmaceutical Corp.*

25,500

430,440

Impax Laboratories, Inc.*

33,700

539,200

Keryx Biopharmaceuticals, Inc.*

41,700

557,112

Kos Pharmaceuticals, Inc.*

20,900

871,112

Ligand Pharmaceuticals, Inc. "B"*

67,700

387,921

Progenics Pharmaceuticals, Inc.*

15,100

253,831

United Therapeutics Corp.*

20,600

941,317

Valeant Pharmaceuticals International

37,300

839,996

ZymoGenetics, Inc.*

9,600

146,496

6,670,774

Industrials 16.9%

Aerospace & Defense 2.3%

Ceradyne, Inc.*

33,900

758,343

DRS Technologies, Inc.*

17,200

731,000

Hexcel Corp.*

41,300

640,563

Moog, Inc. "A"*

12,300

555,960

Orbital Sciences Corp.*

22,300

215,864

Teledyne Technologies, Inc.*

30,700

960,910

3,862,640

Airlines 0.5%

Pinnacle Airlines Corp.*

85,200

904,824

Building Products 1.0%

Eagle Materials, Inc.

14,000

1,133,160

Griffon Corp.*

27,500

588,775

Jacuzzi Brands, Inc.*

5,000

48,800

1,770,735

Commercial Services & Supplies 6.8%

Administaff, Inc.

39,900

582,540

Brady Corp. "A"

30,800

996,380

Casella Waste Systems, Inc. "A"*

4,300

56,889

Coinstar, Inc.*

22,200

470,640

Consolidated Graphics, Inc.*

14,700

773,220

DiamondCluster International, Inc.*

37,400

602,140

Duratek, Inc.*

12,800

255,360

Euronet Worldwide, Inc.*

29,500

842,225

Geo Group, Inc.*

2,300

65,734

Heidrick & Struggles International, Inc.*

24,300

893,511

John H. Harland Co.

11,200

384,832

Korn/Ferry International*

47,200

898,216

NCO Group, Inc.*

13,300

260,015

Nu Skin Enterprises, Inc. "A"

44,600

1,003,946

NuCo2, Inc.*

12,900

339,270

Stewart Enterprises, Inc. "A"

39,500

242,925

TeleTech Holdings, Inc.*

72,200

932,824

Ventiv Health, Inc.*

29,600

680,800

Waste Connections, Inc.*

35,600

1,237,100

11,518,567

Construction & Engineering 1.1%

Dycom Industries, Inc.*

34,700

797,753

EMCOR Group, Inc.*

6,800

318,376

Perini Corp.*

51,000

703,290

1,819,419

Electrical Equipment 0.5%

Franklin Electric Co., Inc.

19,000

716,870

Regal-Beloit Corp.

3,700

106,523

823,393

Industrial Conglomerates 0.7%

Blount International, Inc.*

11,100

188,478

ESCO Technologies, Inc.*

1,400

112,490

Matthews International Corp. "A"

1,400

45,864

Tredegar Corp.

52,800

890,208

1,237,040

Machinery 1.8%

Astec Industries, Inc.*

40,200

886,410

JLG Industries, Inc.

39,700

855,535

Mueller Industries, Inc.

3,900

109,785

Sauer-Danfoss, Inc.

3,300

74,679

Stewart & Stevenson Services, Inc.

8,300

189,987

Terex Corp.*

22,500

974,250

3,090,646

Road & Rail 1.8%

Arkansas Best Corp.

17,000

642,260

Dollar Thrifty Automotive Group, Inc.*

22,400

734,272

Knight Transportation, Inc.

44,500

1,097,815

Old Dominion Freight Line, Inc.*

19,900

619,885

3,094,232

Trading Companies & Distributors 0.4%

WESCO International, Inc.*

26,600

744,800

Information Technology 14.9%

Communications Equipment 1.9%

Arris Group, Inc.*

79,000

545,890

Belden CDT, Inc.

5,400

119,934

Brocade Communications Systems, Inc.*

143,100

847,152

CommScope, Inc.*

5,800

86,768

Equinix, Inc.*

1,500

63,510

F5 Networks, Inc.*

13,800

696,762

Inter-Tel, Inc.

10,500

257,250

InterDigital Communications Corp.*

46,600

713,912

3,331,178

Computers & Peripherals 1.0%

Dot Hill Systems Corp.*

83,700

498,015

Hutchinson Technology, Inc.*

21,200

737,336

Mobility Electronics, Inc.*

53,200

371,868

SBS Technologies, Inc.*

2,900

32,335

1,639,554

Electronic Equipment & Instruments 1.9%

Agilysys, Inc.

32,900

646,814

BEI Technologies, Inc.

22,100

529,737

Digimarc Corp.*

48,500

298,275

Itron, Inc.*

2,400

71,136

LeCroy Corp.*

32,700

560,151

MIPS Technologies, Inc.*

10,000

115,000

MTS Systems Corp.

4,900

142,247

Rofin-Sinar Technologies, Inc.*

20,300

652,442

X-Rite, Inc.

11,700

175,968

3,191,770

Internet Software & Services 1.2%

@Road, Inc.*

9,400

38,540

Digital Insight Corp.*

10,400

170,560

EarthLink, Inc.*

23,700

213,300

j2 Global Communications, Inc.*

13,700

470,047

Openwave Systems, Inc.*

22,600

275,494

Watchguard Technologies, Inc.*

4,500

14,535

WebEx Communications, Inc.*

19,400

418,846

Websense, Inc.*

9,500

511,100

2,112,422

IT Consulting & Services 0.7%

Covansys Corp.*

47,100

702,496

Intrado, Inc.*

31,900

392,370

ProQuest Co.*

2,900

104,835

1,199,701

Semiconductors & Semiconductor Equipment 4.2%

ADE Corp.*

4,400

97,680

AMIS Holdings, Inc.*

65,800

742,882

ATMI, Inc.*

27,500

688,600

Cirrus Logic, Inc.*

53,700

242,724

Diodes, Inc.*

28,500

773,205

Helix Technology Corp.

42,100

651,287

IXYS Corp.*

57,600

658,944

Micrel, Inc.*

65,500

603,910

OmniVision Technologies, Inc.*

38,100

577,215

Photronics, Inc.*

40,000

724,000

Silicon Image, Inc.*

54,100

544,246

Skyworks Solutions, Inc.*

77,000

488,950

TTM Technologies*

39,000

407,940

7,201,583

Software 4.0%

Altiris, Inc.*

25,100

598,635

Ansoft Corp.*

29,400

793,212

ANSYS, Inc.*

17,200

588,412

E. Piphany*

17,600

62,480

Kronos, Inc.*

19,800

1,011,978

Parametric Technology Corp.*

161,800

904,462

RSA Security, Inc.*

21,800

345,530

SeaChange International, Inc.*

31,400

406,630

SS&C Technologies, Inc.

32,350

737,580

Ulticom, Inc.*

36,000

400,680

Verity, Inc.*

22,700

214,515

Wind River Systems, Inc.*

10,300

155,324

Witness Systems, Inc.*

32,600

572,130

6,791,568

Materials 6.8%

Chemicals 1.4%

Compass Minerals International, Inc.

38,600

982,370

Octel Corp.

9,700

179,741

Terra Industries, Inc.*

91,700

711,592

W.R. Grace & Co.*

56,200

478,824

2,352,527

Containers & Packaging 1.7%

Crown Holdings, Inc.*

66,400

1,033,184

Greif, Inc. "A"

12,000

836,160

Silgan Holdings, Inc.

15,500

1,007,190

2,876,534

Metals & Mining 2.8%

Carpenter Technology Corp.

4,800

285,168

Hecla Mining Co.*

110,900

607,732

NS Group, Inc.*

25,900

813,519

Oregon Steel Mills, Inc.*

28,500

655,500

Quanex Corp.

26,800

1,428,976

Steel Dynamics, Inc.

29,900

1,030,055

4,820,950

Paper & Forest Products 0.9%

Buckeye Technologies, Inc.*

16,000

172,800

Deltic Timber Corp.

13,400

523,940

Pope & Talbot, Inc.

54,200

952,836

1,649,576

Telecommunication Services 1.9%

Diversified Telecommunication Services 1.1%

Alaska Communications Systems Group, Inc.

36,800

369,840

General Communication, Inc. "A"*

18,200

166,166

North Pittsburgh Systems, Inc.

12,300

243,110

Premiere Global Services, Inc.*

72,600

821,832

Talk America Holdings, Inc.*

42,600

274,770

1,875,718

Wireless Telecommunication Services 0.8%

Alamosa Holdings, Inc.*

34,900

407,283

Centennial Communications Corp.*

48,400

525,140

UbiquiTel, Inc.*

58,000

388,600

1,321,023

Utilities 2.3%

Electric Utilities 0.3%

PNM Resources, Inc.

19,500

520,260

Gas Utilities 2.0%

Energen Corp.

24,800

1,651,680

South Jersey Industries, Inc.

6,400

360,960

Southern Union Co.*

55,900

1,403,649

3,416,289

Total Common Stocks (Cost $152,130,088)

167,424,008

 

Principal
Amount ($)

Value ($)

 

 

US Government Backed 0.4%

US Treasury Bill, 2.356%**, 4/21/2005 (b) (Cost $654,160)

655,000

654,054

 


Shares

Value ($)

 

 

Cash Equivalents 1.8%

Scudder Cash Management QP Trust, 2.69% (c) (Cost $2,985,793)

2,985,793

2,985,793

 

% of Net Assets

Value ($)

 

 

Total Investment Portfolio (Cost $155,770,041) (a)

100.1

171,063,855

Other Assets and Liabilities, Net

(0.1)

(125,139)

Net Assets

100.0

170,938,716

* Non-income producing security.

** Annualized yield at the time of purchase; not a coupon rate.

(a) The cost for federal income tax purposes was $155,719,463. At March 31, 2005, net unrealized appreciation for all securities based on tax cost was $15,344,392. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $22,637,663 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $7,293,271.

(b) At March 31, 2005, this security has been segregated, in whole or in part, to cover initial margin requirements for open futures contracts.

(c) 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 March 31, 2005, open futures contracts purchased were as follows:

Futures

Expiration Date

Contracts

Aggregate Face Value ($)

Value ($)

Unrealized Depreciation ($)

Russell 2000 Index

6/16/2005

11

3,530,500

3,397,900

(132,600)

The accompanying notes are an integral part of the financial statements.

Financial Statements

 

Statement of Assets and Liabilities as of March 31, 2005 (Unaudited)

Assets

Investments

Investments in securities, at value (cost $152,784,248)

$ 168,078,062

Investment in Scudder Cash Management QP Trust (cost $2,985,793)

2,985,793

Total investments in securities, at value (cost $155,770,041)

171,063,855

Cash

10,000

Receivable for Fund shares sold

100,281

Dividends receivable

118,768

Interest receivable

7,480

Receivable for daily variation margin on open futures contracts

8,525

Other assets

30,571

Total assets

171,339,480

Liabilities

Payable for Fund shares redeemed

58,964

Accrued management fee

108,012

Other accrued expenses and payables

233,788

Total liabilities

400,764

Net assets, at value

$ 170,938,716

Net Assets

Net assets consist of

Accumulated net investment loss

 

(130,884)

Net unrealized appreciation (depreciation) on:

Investments

15,293,814

Futures

(132,600)

Accumulated net realized gain (loss)

12,174,001

Paid-in capital

143,734,385

Net assets, at value

$ 170,938,716

The accompanying notes are an integral part of the financial statements.

 

 

Statement of Assets and Liabilities as of March 31, 2005 (Unaudited) (continued)

Net Asset Value

Class A

Net Asset Value and redemption price(a) per share ($13,370,216 ÷ 550,879 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)

$ 24.27

Maximum offering price per share (100 ÷ 94.25 of $24.27)

$ 25.75

Class B

Net Asset Value, offering and redemption price(a) (subject to contingent deferred sales charge) per share ($2,608,819 ÷ 111,371 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)

$ 23.42

Class C

Net Asset Value, offering and redemption price(a) (subject to contingent deferred sales charge) per share ($1,551,021 ÷ 66,137 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)

$ 23.45

Class AARP

Net Asset Value, offering and redemption price(a) per share ($66,573,852 ÷ 2,715,753 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)

$ 24.51

Class S

Net Asset Value, offering and redemption price(a) per share ($86,834,808 ÷ 3,538,818 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)

$ 24.54

(a) Redemption price per share for shares held less than 30 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 March 31, 2005 (Unaudited)

Investment Income

Income:

Dividends

$ 861,945

Interest — Scudder Cash Management QP Trust

45,015

Interest

6,437

Total Income

913,397

Expenses:

Management fee

633,874

Services to shareholders

240,886

Custodian and accounting fees

46,328

Distribution service fees

36,888

Auditing

27,924

Legal

2,237

Trustees' fees and expenses

3,060

Reports to shareholders

22,801

Registration fees

27,236

Other

5,030

Total expenses before expense reductions

1,046,264

Expense reductions

(1,983)

Total expenses after expense reductions

1,044,281

Net investment income (loss)

(130,884)

Realized and Unrealized Gain (Loss) on Investment Transactions

Net realized gain (loss) from:

Investments

12,710,929

Futures

452,035

 

13,162,964

Net unrealized appreciation (depreciation) during the period on:

Investments

2,621,174

Futures

(204,153)

 

2,417,021

Net gain (loss) on investment transactions

15,579,985

Net increase (decrease) in net assets resulting from operations

$ 15,449,101

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 March 31, 2005 (Unaudited)

Year Ended September 30, 2004

Operations:

Net investment income (loss)

$ (130,884)

$ (569,416)

Net realized gain (loss) on investment transactions

13,162,964

21,979,649

Net unrealized appreciation (depreciation) during the period on investment transactions

2,417,021

(396,586)

Net increase (decrease) in net assets resulting from operations

15,449,101

21,013,647

Distributions to shareholders from:

Net realized gains:

Class A

(1,639,869)

(201,960)

Class B

(314,619)

(69,815)

Class C

(164,992)

(37,648)

Class AARP

(7,770,002)

(1,678,419)

Class S

(9,602,050)

(1,770,725)

Fund share transactions:

Proceeds from shares sold

20,576,665

72,187,693

Reinvestment of distributions

18,511,128

3,588,425

Cost of shares redeemed

(19,739,084)

(46,856,624)

Redemption fees

18

—

Net increase (decrease) in net assets from Fund share transactions

19,348,727

28,919,494

Increase (decrease) in net assets

15,306,296

46,174,574

Net assets at beginning of period

155,632,420

109,457,846

Net assets at end of period (including accumulated net investment loss of $130,884 and $0, respectively)

$ 170,938,716

$ 155,632,420

The accompanying notes are an integral part of the financial statements.

Financial Highlights

 

Class A

Years Ended September 30,

2005a

2004

2003

2002

2001b

Selected Per Share Data

Net asset value, beginning of period

$ 24.87

$ 21.43

$ 16.02

$ 16.04

$ 18.50

Income (loss) from investment operations:

Net investment income (loss)c

(.05)

(.15)

(.05)

(.08)

(.03)

Net realized and unrealized gain (loss) on investment transactions

2.56

4.29

5.46

.06

(2.43)

Total from investment operations

2.51

4.14

5.41

(.02)

(2.46)

Less distributions from:

Net realized gains on investment transactions

(3.11)

(.70)

—

—

—

Redemption fees

.00***

—

—

—

—

Net asset value, end of period

$ 24.27

$ 24.87

$ 21.43

$ 16.02

$ 16.04

Total Return (%)d

9.97**

19.45

33.77

(.12)

(13.30)**

Ratios to Average Net Assets and Supplemental Data

Net assets, end of period ($ millions)

13

13

5

1

.009

Ratio of expenses (%)

1.49*

1.50

1.42

1.48

1.48*

Ratio of net investment income (loss) (%)

(.41)*

(.62)

(.25)

(.44)

(.60)*

Portfolio turnover rate (%)

179*

186

164

146

48

a For the six months ended March 31, 2005 (Unaudited).

b For the period from June 25, 2001 (commencement of sales of Class A shares) to September 30, 2001.

c Based on average shares outstanding during the period.

d Total return does not reflect the effect of any sales charges.

* Annualized

** Not annualized

*** Amount is less than $.005.

 

Class B

Years Ended September 30,

2005a

2004

2003

2002

2001b

Selected Per Share Data

Net asset value, beginning of period

$ 24.20

$ 21.03

$ 15.85

$ 16.01

$ 18.50

Income (loss) from investment operations:

Net investment income (loss)c

(.15)

(.33)

(.19)

(.22)

(.06)

Net realized and unrealized gain (loss) on investment transactions

2.48

4.20

5.37

.06

(2.43)

Total from investment operations

2.33

3.87

5.18

(.16)

(2.49)

Less distributions from:

Net realized gains on investment transactions

(3.11)

(.70)

—

—

—

Redemption fees

.00***

—

—

—

—

Net asset value, end of period

$ 23.42

$ 24.20

$ 21.03

$ 15.85

$ 16.01

Total Return (%)d

9.51**

18.47e

32.68

(1.00)

(13.46)**

Ratios to Average Net Assets and Supplemental Data

Net assets, end of period ($ millions)

3

3

2

.9

.02

Ratio of expenses before expense reduction (%)

2.34*

2.32

2.25

2.28

2.28*

Ratio of expenses after expense reduction (%)

2.34*

2.31

2.25

2.28

2.28*

Ratio of net investment income (loss) (%)

(1.26)*

(1.43)

(1.08)

(1.24)

(1.40)*

Portfolio turnover rate (%)

179*

186

164

146

48

a For the six months ended March 31, 2005 (Unaudited).

b For the period from June 25, 2001 (commencement of sales of Class B shares) to September 30, 2001.

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 September 30,

2005a

2004

2003

2002

2001b

Selected Per Share Data

Net asset value, beginning of period

$ 24.21

$ 21.04

$ 15.85

$ 16.01

$ 18.50

Income (loss) from investment operations:

Net investment income (loss)c

(.14)

(.33)

(.20)

(.22)

(.06)

Net realized and unrealized gain (loss) on investment transactions

2.49

4.20

5.39

.06

(2.43)

Total from investment operations

2.35

3.87

5.19

(.16)

(2.49)

Less distributions from:

Net realized gains on investment transactions

(3.11)

(.70)

—

—

—

Redemption fees

.00***

—

—

—

—

Net asset value, end of period

$ 23.45

$ 24.21

$ 21.04

$ 15.85

$ 16.01

Total Return (%)d

9.56**

18.51

32.74

(1.00)

(13.46)**

Ratios to Average Net Assets and Supplemental Data

Net assets, end of period ($ millions)

2

1

.9

.1

.002

Ratio of expenses (%)

2.28*

2.28

2.21

2.26

2.25*

Ratio of net investment income (loss) (%)

(1.20)*

(1.40)

(1.04)

(1.22)

(1.37)*

Portfolio turnover rate (%)

179*

186

164

146

48

a For the six months ended March 31, 2005 (Unaudited).

b For the period from June 25, 2001 (commencement of sales of Class C shares) to September 30, 2001.

c Based on average shares outstanding during the period.

d Total return does not reflect the effect of any sales charges.

* Annualized

** Not annualized

*** Amount is less than $.005.

 

Class AARP

Years Ended September 30,

2005a

2004

2003

2002

2001

2000

Selected Per Share Data

Net asset value, beginning of period

$ 25.09

$ 21.57

$ 16.09

$ 16.06

$ 18.32

$ 17.89

Income (loss) from investment operations:

Net investment income (loss)b

(.02)

(.09)

(.01)

(.03)

(.06)

(.08)

Net realized and unrealized gain (loss) on investment transactions

2.55

4.31

5.49

.06

(2.20)

.53

Total from investment operations

2.53

4.22

5.48

.03

(2.26)

.45

Less distributions from:

Net investment income

—

—

—

—

—

(.02)

Net realized gains on investment transactions

(3.11)

(.70)

—

—

—

—

Total distributions

(3.11)

(.70)

—

—

—

(.02)

Redemption fees

.00***

—

—

—

—

—

Net asset value, end of period

$ 24.51

$ 25.09

$ 21.57

$ 16.09

$ 16.06

$ 18.32

Total Return (%)

9.95**

19.70

34.06

.19

(12.34)

2.41c

Ratios to Average Net Assets and Supplemental Data

Net assets, end of period ($ millions)

67

63

50

37

34

48

Ratio of expenses before expense reductions (%)

1.24*

1.25

1.21

1.21

1.23

1.86d

Ratio of expenses after expense reductions (%)

1.24*

1.25

1.21

1.21

1.23

1.73d

Ratio of net investment income (loss) (%)

(.16)*

(.37)

(.04)

(.17)

(.32)

(.46)

Portfolio turnover rate (%)

179*

186

164

146

48

48

a For the six months ended March 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 before and after expense reductions were 1.78% and 1.65%, respectively.

* Annualized

** Not annualized

*** Amount is less than $.005.

 

Class S

Years Ended September 30,

2005a

2004

2003

2002

2001

2000b

Selected Per Share Data

Net asset value, beginning of period

$ 25.10

$ 21.56

$ 16.08

$ 16.05

$ 18.30

$ 18.50

Income (loss) from investment operations:

Net investment income (loss)c

(.01)

(.08)

(.01)

(.03)

(.06)

.00***

Net realized and unrealized gain (loss) on investment transactions

2.56

4.32

5.49

.06

(2.19)

(.20)

Total from investment operations

2.55

4.24

5.48

.03

(2.25)

(.20)

Less distributions from:

Net realized gains on investment transactions

(3.11)

(.70)

—

—

—

—

Redemption fees

.00***

—

—

—

—

—

Net asset value, end of period

$ 24.54

$ 25.10

$ 21.56

$ 16.08

$ 16.05

$ 18.30

Total Return (%)

10.03**

19.80

34.08

.19

(12.30)

(1.14)**

Ratios to Average Net Assets and Supplemental Data

Net assets, end of period ($ millions)

87

77

52

41

42

46

Ratio of expenses (%)

1.14*

1.20

1.21

1.21

1.23

1.19d*

Ratio of net investment income (loss) (%)

(.06)*

(.32)

(.04)

(.17)

(.32)

(.21)*

Portfolio turnover rate (%)

179*

186

164

146

48

48

a For the six months ended March 31, 2005 (Unaudited).

b For the period from July 17, 2000 (commencement of sales of Class S shares) to September 30, 2000.

c Based on average shares outstanding during the period.

d The ratio of operating expenses includes a one-time reduction in reorganization costs from fiscal 2000. The ratio without this reduction was 1.24%.

* Annualized

** Not annualized

*** Amount is less than $.005.

Notes to Financial Statements (Unaudited)

 

ssc_top_margin0A. Significant Accounting Policies

Scudder Small Company Stock Fund (the "Fund") is a diversified series of Investment 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 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. Shares of Class AARP are designed 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). Class AARP and S shares are not subject to initial or contingent deferred sales charges.

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 distribution service fees, administrative fees, services to shareholders 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.

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.

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.

Distribution of Income and Gains. Net investment income of the Fund is distributed, if any, is distributed to shareholder 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 net investment losses incurred by the Fund and certain securities sold at loss. 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, will be determined at the end of the current fiscal year.

Redemption Fees. Effective February 1, 2005, the Fund imposes a redemption fee of 2% of the total redemption amount on the Fund shares redeemed or exchanged within 30 days of buying them, either by purchase or exchange. This fee is assessed and retained by the Fund for the benefit of 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 indemnification 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 occurred. 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 valuation calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Dividend income is recorded on the ex-dividend date. Realized gains and losses from investment transactions are recorded on an identified cost basis.

B. Purchases and Sales of Securities

During the six months ended March 31, 2005, purchases and sales of investment securities (excluding short-term investments) aggregated $149,002,350 and $148,066,237, 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 0.75% of the first $500,000,000 of the Fund's average daily net assets, 0.70% of the next $500,000,000 of such net assets and 0.65% of such net assets in excess of $1,000,000,000, computed and accrued daily and payable monthly. Accordingly, for the six months ended March 31, 2005, the fee pursuant to the Management Agreement was equivalent to an annualized effective rate of 0.75% of the Fund's average daily net assets.

Effective October 1, 2003 through September 30, 2005, the Advisor has agreed to contractually 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 of each class at 1.50% of average daily net assets (excluding certain expenses such as Rule 12b-1 distribution and/or service fees, trustees and trustee counsel fees, extraordinary expenses, taxes, brokerage, interest and organizational and offering expenses).

In addition to the contractual expense limitation described above, for the period April 1, 2004 through November 30, 2005, the Advisor has 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 1.34%, 1.36%, 1.36%, 1.34% and 1.34% for Class A, B, C, AARP and S, respectively, of average daily net assets (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, Rule 12b-1 distribution and/or service fees, trustees and trustees' counsel fees and organizational and offering expenses).

Service Provider Fees. Scudder Investments Service Company ("SISC"), an affiliate of the Advisor, is the transfer, dividend-paying and shareholder service agent for Class A, B, and C shares. Scudder Service Corporation ("SSC"), a subsidiary of the Advisor, is the transfer, dividend-paying and shareholder service agent for Class AARP and S shares. Pursuant to a sub-transfer agency agreement among SISC, SSC and DST Systems, Inc. ("DST"), SISC and SCC 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 March 31, 2005, the amounts charged to the Fund by SISC and SSC were as follows:

Services to Shareholders

Total Aggregated

Unpaid at March 31, 2005

Class A

$ 19,955

$ 15,459

Class B

5,000

3,245

Class C

2,155

1,476

Class AARP

95,852

64,640

Class S

75,619

50,270

 

$ 198,581

$ 135,090

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 March 31, 2005, the amount charged to the Fund by SFAC for accounting services aggregated $37,505, of which $15,930 is unpaid.

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% of average daily net assets of Class B and C shares. Pursuant to the agreement, SDI enters into related selling group agreements with various firms at various rates for sales of Class B and C shares. For the six months ended March 31, 2005, the Distribution Fee was as follows:

Distribution Fee

Total Aggregated

Unpaid at March 31, 2005

Class B

$ 9,804

$ 1,736

Class C

5,004

1,003

 

$ 14,808

$ 2,739

In addition, SDI provides information and administrative services ("Service Fee") to Class A, B and C 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 March 31, 2005, the Service Fee was as follows:

Service Fee

Total Aggregated

Unpaid at March 31, 2005

Annualized Effective Rate

Class A

$ 17,144

$ 3,923

.25%

Class B

3,268

1,131

.25%

Class C

1,668

588

.25%

 

$ 22,080

$ 5,642

 

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 March 31, 2005 aggregated $1,465. There were no underwriting commissions paid in connection with the distribution of Class C shares for the six months ended March 31, 2005.

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 March 31, 2005, the CDSC for Class B and C shares aggregated $6,458 and $33, respectively.

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.

Insurance Brokerage Commissions. The Fund paid insurance premiums to an unaffiliated insurance broker in 2002 and 2003. This broker in turn paid a portion of its commissions to an affiliate of the Advisor, which performed certain insurance brokerage services for the broker. The Advisor has reimbursed the Fund for the portion of commissions (plus interest) paid to the affiliate of the Advisor attributable to the premiums paid by the Fund. The amounts for 2002 and 2003 were $30 and $35, respectively.

D. Expense Reductions

For the six months ended March 31, 2005, the Advisor agreed to reimburse the Fund $1,710, which represents a portion of the fee savings expected to be realized by 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 Fund's custodian expenses. During the six months ended March 31, 2005, the custodian fees were reduced by $273 for custodian credits earned.

E. Line of Credit

The Fund and several other affiliated funds (the "Participants") share in a $1.25 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
March 31, 2005

Year Ended
September 30, 2004

 

Shares

Dollars

Shares

Dollars

Shares sold

Class A

128,618

$ 3,210,657

745,149

$ 18,446,587

Class B

23,779

580,927

57,834

1,376,337

Class C

34,260

858,838

62,358

1,485,393

Class AARP

194,303

5,032,121

737,195

18,199,151

Class S

428,636

10,894,122

1,320,003

32,680,225

 

 

$ 20,576,665

 

$ 72,187,693

Shares issued to shareholders in reinvestment of distributions

Class A

53,811

$ 1,318,918

8,203

$ 195,311

Class B

12,352

293,076

2,608

60,805

Class C

6,047

143,475

1,605

37,431

Class AARP

298,206

7,389,877

66,485

1,594,331

Class S

377,805

9,365,782

70,943

1,700,547

 

 

$ 18,511,128

 

$ 3,588,425

Shares redeemed

Class A

(151,196)

$ (3,697,427)

(447,454)

$ (10,366,672)

Class B

(29,932)

(730,768)

(48,737)

(1,152,279)

Class C

(16,582)

(411,085)

(64,408)

(1,516,850)

Class AARP

(271,628)

(6,891,108)

(617,268)

(15,138,968)

Class S

(316,752)

(8,008,696)

(763,174)

(18,681,855)

 

 

$ (19,739,084)

 

$ (46,856,624)

Redemption fees

$ 18

 

$ —

Net increase (decrease)

Class A

31,233

$ 832,158

305,898

$ 8,275,226

Class B

6,199

143,241

11,705

284,863

Class C

23,725

591,230

(445)

5,974

Class AARP

220,881

5,530,890

186,412

4,654,514

Class S

489,689

12,251,208

627,772

15,698,917

 

 

$ 19,348,727

 

$ 28,919,494

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. It is not possible to determine what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors. 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, 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. Based on currently available information, the funds' investment advisors believe the likelihood that the pending lawsuits 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.

Account Management Resources

 

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
Kansas City, MO 64121-9356

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
Chicago, IL 60606-5808

(800) 621-1148

 

Class A

Class B

Class C

Nasdaq Symbol

SZCAX

SZCBX

SZCCX

CUSIP Number

460965-585

460965-577

460965-569

Fund Number

439

639

739

 

 

 

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
Kansas City, MO 64121-9735

Scudder Investments

PO Box 219669
Kansas City, MO 64121-9669

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
Chicago, IL 60606-5808

(800) 621-1148

 

Class AARP

Class S

Nasdaq Symbol

ASCSX

SSLCX

Fund Number

139

339

Privacy Statement

 

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 2004

Notes

 

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Notes

 

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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 Small Company Stock Fund


By:                                 /s/Julian Sluyters
                                    ---------------------------
                                    Chief Executive Officer

Date:                               May 31, 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 Small Company Stock Fund


By:                                 /s/Julian Sluyters
                                    ---------------------------
                                    Chief Executive Officer

Date:                               May 31, 2005



By:                                 /s/Paul Schubert
                                    ---------------------------
                                    Chief Financial Officer

Date:                               May 31, 2005