UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSR
Investment Company Act file number 811-07507
SCUDDER INVESTMENTS VIT FUNDS
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(Exact Name of Registrant as Specified in Charter)
101 Federal Street Boston, Massachusetts 02110
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 535-0532
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Daniel O. Hirsch
Deutsche Asset Management
One South Street Baltimore, MD 21202
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(Name and Address of Agent for Service)
Date of fiscal year end: 12/31
Date of reporting period: 6/30/03
ITEM 1. REPORT TO STOCKHOLDERS
[Scudder Investments logo]
Scudder Investments VIT FundsSemiannual Report |
| June 30, 2003 |
| |
| Scudder Real Estate Securities Portfolio |
<Click Here> Management Summary
<Click Here> Investment Portfolio
<Click Here> Financial Statements
<Click Here> Financial Highlights
<Click Here> Notes to Financial Statements
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUEInvestments in variable portfolios involve risk. Some portfolios have more risk than others. These include portfolios that allow exposure to or otherwise concentrate investments in certain sectors, geographic regions, security types, market capitalization or foreign securities (e.g., political or economic instability, which can be accentuated in emerging market countries). Please read the prospectus for specific details regarding its investments and risk profile.Management Summary June 30, 2003 |
|
During a period of improving investor sentiment and equity prices, the portfolio posted a positive return for the two months ended June 30, 2003, though it slightly underperformed its benchmark, the Wilshire REIT Index.
Underperformance was primarily driven by an underweight position in the office sector, which outpaced all other property sector types during the second quarter of 2003 in anticipation of an economic recovery. Despite its run-up, we remain negative on the office sector due to the amount of direct and sublease vacancy across the market and the lack of visible job growth. The portfolio's overweight in the apartment, industrial and retail sectors, all underperforming, also held back return during the period.
On the flip side, the portfolio benefited from a slight overweight in the hotel sector, which outperformed during the period. An overweight position in the regional mall sector, which performed on par with the index, also bolstered return. Among the top-10 equity holdings, shopping mall owner and developer General Growth Properties, office property owner and developer Mack-Cali Realty and Boston Properties all contributed to performance. We continue to like the regional mall sector given its solid fundamentals and earnings growth.
Although Real Estate Investment Trusts (REITs) are trading at a slight premium to their underlying net asset value, we continue to believe that REITs offer a compelling way to potentially add income and diversification to investors' portfolios.
Karen J. Knudson
John F. Robertson
John W. Vojticek
Mark D. Zeisloft
Co-Managers
The unmanaged Wilshire REIT Index is a capitalization-weighted group of real estate investment trusts. The index includes the reinvestment of all distributions and is not available for direct investment.
Past performance is not a guarantee of future results. Returns and principal value will fluctuate so that accumulation units, when redeemed, may be worth more or less than their original cost.Portfolio management market commentary is as of June 30, 2003, and may not come to pass. This information is subject to change at any time, based on market and other conditions.Investment Portfolio as of June 30, 2003 (Unaudited) | |
|
|
Shares
| Value ($) |
|
|
Common Stocks 75.4% |
|
|
Apartments 16.9%
|
Archstone Smith Trust
| 2,900
| 69,600
|
Avalonbay Communities, Inc.
| 600
| 25,584
|
BRE Properties, Inc.
| 1,500
| 49,800
|
Equity Residential
| 3,300
| 85,635
|
Essex Property Trust
| 500
| 28,625
|
Home Properties N.Y., Inc.
| 600
| 21,144
|
Post Properties, Inc.
| 200
| 5,300
|
United Dominion Realty Trust, Inc.
| 3,200
| 55,104
|
| 340,792 |
Hotels 4.9%
|
Starwood Hotels & Resorts
| 1,000
| 28,590
|
Host Marriott Corp.*
| 3,500
| 32,025
|
Hilton Hotels Corp.
| 3,000
| 38,370
|
|
| 98,985 |
Industrial 11.6%
|
Catellus Development Corp.*
| 2,800
| 61,600
|
Centerpoint Properties Trust
| 500
| 30,625
|
Liberty Property
| 700
| 24,220
|
Prologis
| 4,300
| 117,390
|
| 233,835 |
Office 16.2%
|
Arden Realty, Inc.
| 1,300
| 33,735
|
Boston Properties, Inc.
| 1,500
| 65,700
|
Brookfield Properties Corp.
| 2,200
| 46,750
|
Carramerica Realty Corp.
| 1,000
| 27,810
|
Highwoods Properties, Inc.
| 1,400
| 31,220
|
Mack-Cali Realty Corp.
| 1,800
| 65,484
|
Reckson Associates Realty Corp.
| 1,100
| 22,946
|
Sl Green Realty Corp.
| 900
| 31,401
|
| 325,046 |
Regional Malls 14.8%
|
General Growth Properties, Inc.
| 1,600
| 99,904
|
Pennsylvania Real Estate
| 400
| 11,980
|
Rouse Co.
| 1,000
| 38,100
|
Simon Properties Group, Inc.
| 3,200
| 124,896
|
Taubman Centers, Inc.
| 1,200
| 22,992
|
| 297,872 |
Retail 11.0%
|
Chelsea Properties Group, Inc.
| 1,700
| 68,527
|
Developers Diversified Realty
| 1,400
| 39,816
|
Kimco Realty Corp.
| 700
| 26,530
|
Pan Pacific Retail Properties, Inc.
| 1,200
| 47,220
|
Regency Centers Corp.
| 900
| 31,482
|
Boardwalk Equities, Inc.
| 700
| 7,945
|
| 221,520 |
Total Common Stocks (Cost $1,455,242)
| 1,518,050 |
|
| Principal
Amount ($) | Value ($) |
|
|
Repurchase Agreements** 24.6%
|
State Street Bank and Trust Co., 1.0%, dated 6/30/2003, to be repurchased at $496,014 on 7/1/2003
(cost $496,000)
| 496,000
| 496,000 |
Total Investment Portfolio - 100.0% (Cost $1,951,242) (a)
| 2,014,050 |
* Non-income producing security.** Repurchase Agreements are fully collateralized by US Treasury or government agency securities.(a) The cost for federal income tax purposes was $1,951,242. At June 30, 2003, net unrealized appreciation for all securities based on tax cost was $62,808. This consisted of aggregate gross unrealized appreciation for all securities in which there was a excess of value over tax cost of $65,041 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $2,233.The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of June 30, 2003 (Unaudited) |
Assets
|
Investments in securities, at value (cost $1,455,242)
| $ 1,518,050 |
Repurchase agreements, at value (cost $496,000)
| 496,000 |
Cash
| 379 |
Dividends receivable
| 6,433 |
Interest receivable
| 14 |
Receivable for Portfolio shares sold
| 65,418 |
Due from Advisor
| 9,450 |
Total assets
| 2,095,744 |
Liabilities
|
Other accrued expenses and payables
| 12,683 |
Total liabilities
| 12,683 |
Net assets, at value
| $ 2,083,061 |
Net Assets
|
Net assets consist of:
Undistributed net investment income
| $ 9,489 |
Net unrealized appreciation (depreciation) on:
Investment securities
| 62,808 |
Paid-in capital
| 2,010,764 |
Net assets, at value
| $ 2,083,061 |
Class B
|
Net Asset Value, offering and redemption price per share ($2,083,061 / 195,515 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)
| $ 10.65 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the period May 1, 2003 (commencement of operations) to June 30, 2003 (Unaudited) |
Investment Income
|
Income:
Dividends
| $ 12,259 |
Interest
| 463 |
Total income
| 12,722 |
Expenses:
Advisory fee
| 1,939 |
Administrator service fee
| 267 |
Distribution service fees (Class B)
| 539 |
Record keeping fees (Class B)
| 323 |
Auditing
| 2,280 |
Legal
| 1,680 |
Trustees' fees and expenses
| 480 |
Reports to shareholders
| 1,980 |
Organization and offering costs
| 3,900 |
Other
| 1,501 |
Total expenses, before expense reductions
| 14,889 |
Expense reductions
| (11,656) |
Total expenses, after expense reductions
| 3,233 |
Net investment income (loss)
| 9,489 |
Realized and Unrealized Gain (Loss) on Investment Transactions
|
Net unrealized appreciation (depreciation) during the period on investments
| 62,808 |
Net gain (loss) on investment transactions
| 62,808 |
Net increase (decrease) in net assets resulting from operations
| $ 72,297 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| For the Period May 1, 2003 (commencement of operations) to June 30, 2003 (Unaudited) |
Operations:
Net investment income (loss)
| $ 9,489 |
Net unrealized appreciation (depreciation) on investment transactions during the period
| 62,808 |
Net increase (decrease) in net assets resulting from operations
| 72,297 |
Fund share transactions:
Proceeds from shares sold - Class B
| 1,010,764 |
Net increase (decrease) in net assets from Fund share transactions
| 1,010,764 |
Increase (decrease) in net assets
| 1,083,061 |
Net assets at beginning of period (original investment)
| 1,000,000 |
Net assets at end of period (including undistributed net investment income of $9,489 at June 30, 2003)
| $ 2,083,061 |
Other Information
|
Class B
|
Shares outstanding at beginning of period (original investment)
| 100,000 |
Shares sold
| 95,515 |
Shares outstanding at end of period
| 195,515 |
The accompanying notes are an integral part of the financial statements.
Class B
| 2003a |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 10.00 |
Income (loss) from investment operations:
Net investment income (loss)b
| .09 |
Net realized and unrealized gain (loss) on investment transactions
| .56 |
Total from investment operations
| .65 |
Net asset value, end of period
| $ 10.65 |
Total Return (%)c
| 6.50** |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 2 |
Ratio of expenses before expense reductions (%)
| 6.91* |
Ratio of expenses after expense reductions (%)
| 1.50* |
Ratio of net investment income (loss) (%)
| 4.40* |
Portfolio turnover rate (%)
| - |
a For the period May 1, 2003 (commencement of sales of Class B shares) to June 30, 2003 (Unaudited).b Based on average shares outstanding during the period.c Total return would have been lower had certain expenses not been reduced.* Annualized** Not annualizedNotes to Financial Statements (Unaudited) |
|
A. Significant Accounting Policies
Scudder Real Estate Securities Portfolio (the "Portfolio") is a non-diversified series of Scudder Investments VIT Funds (formerly, Deutsche Asset Management VIT Funds) (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.
Multiple Classes of Shares of Beneficial Interest. The Portfolio offers Class A shares (none sold as of June 30, 2003) and Class B shares. Sales of Class B shares commenced May 1, 2003 and are subject to Rule 12b-1 fees under the 1940 Act, and record keeping fees, equal to an annual rate of up to 0.25% and 0.15%, respectively, of the average daily net assets of the Class B shares. Class A shares are not subject to such fees.
Investment income, realized and unrealized gains and losses, and certain portfolio-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 (including the applicable 12b-1 fee and record keeping fee). Differences in class-level expenses may result in payment of different per share dividends by class. All shares have equal rights with respect to voting subject to class-specific arrangements.
The Portfolio'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 Portfolio 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 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.
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.
Repurchase Agreements. The Portfolio may enter into repurchase agreements with certain banks and broker/dealers whereby the Portfolio, through its custodian or sub-custodian bank, receives delivery of the underlying securities, the amount of which at the time of purchase and each subsequent business day is required to be maintained at such a level that the value is equal to at least the principal amount of the repurchase price plus accrued interest.
Other. Investment transactions are accounted for on the trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Certain dividends from foreign securities may be recorded subsequent to the ex-dividend date as soon as the Portfolio is informed of such dividends. Realized gains and losses from investment transactions are recorded on an identified cost basis.
The Trust accounts separately for the assets, liabilities and operations of each of the funds in the Trust. Expenses directly attributable to a fund are charged to that fund, while the expenses that are attributable to the Trust are allocated among the funds in the Trust based upon the relative net assets of each fund.
Federal Income Taxes. It is Portfolio's policy to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable income to shareholders. Therefore, no federal income taxes have been accrued.
Distribution of Income and Gains. The Portfolio pays annual dividends from its net investment income and makes annual distributions of any net realized capital gains to the extent they exceed capital loss carryforwards. The Portfolio records dividends and distributions on its books on the ex-dividend date.
B. Purchase and Sales
The aggregate cost of purchases and proceeds from sales of investments for the period ended June 30, 2003, were $1,455,242 and $0, respectively.
C. Related Parties
Deutsche Asset Management, Inc. ("DeAM" or the "Advisor"), an indirect, wholly-owned subsidiary of Deutsche Bank AG, is the Portfolio's Advisor. Under the Investment Advisory Agreement the Portfolio pays the Advisor an annual fee based on its average daily net assets which is calculated daily and paid monthly at the annual rate of 0.90% of the first $250,000,000 of portfolio's average daily net assets, 0.875% of the next $250,000,000 of such net assets, 0.85% of the next $500,000,000 of such net assets, 0.825% of the next $1,500,000,000 of such net assets, and 0.80% of such net assets in excess of $2,500,000,000. For the period ended June 30, 2003, all of the Advisory fee was waived.
The Advisor has delegated all its advisory responsibilities to RREEF America L.L.C. ("RREEF" or the "Sub-Advisor"), an indirect, wholly owned subsidiary of Deutsche Bank AG. The Sub-Advisor is responsible for managing the investment operations of the Portfolio and the composition of the Portfolio's holdings of securities and other investments. As compensation for its services, under the Sub-Advisory Agreement, RREEF is entitled to an annual rate, paid monthly, of 0.45% of the first $100 million of the Portfolio's average daily net assets, 0.40% of the next $100 million of such assets, and 0.35% of such assets exceeding $200 million. RREEF is paid by DeAM, Inc. and not the Portfolio.
Investment Company Capital Corp. ("ICCC" or the "Administrator"), an affiliate of the Advisor and Sub-Advisor, is the Portfolio's Administrator. The Portfolio pays the Administrator an annual fee ("Administrator service fee") based on its average daily net assets which is accrued daily and payable monthly at an annual rate of 0.12%. For the period ended June 30, 2003, ICCC received an administrator service fee of $267, all of which was waived.
The Advisor and Administrator have agreed to waive their fees and/or reimburse expenses of the Portfolio, to the extent necessary, to maintain the annualized expenses of Class B shares at 1.50%. Accordingly, for the period ended June 30, 2003, the Advisor has agreed to reimburse the Portfolio for $9,450 of expenses.
Scudder Distributors, Inc. ("SDI"), also an affiliate of the Advisor and Sub-Advisor, is the Portfolio's Distributor. In accordance with the Distribution Plan, SDI receives 12b-1 fees of up to 0.25% of average daily net assets of Class B shares.
Certain officers and trustees of the Portfolio are also officers and trustees of Deutsche Asset Management, Inc. These persons are not paid by the Portfolio for serving in these capacities.
About the Portfolio's Advisor
Deutsche Asset Management, Inc. ("DeAM, Inc.") is the Portfolio's advisor and RREEF America L.L.C. ("RREEF") is the Portfolio's sub-advisor. DeAM, Inc. and RREEF are indirect wholly owned subsidiaries of Deutsche Bank AG.
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.
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.
Scudder Distributors, Inc.
222 South Riverside Plaza
Chicago, IL 60606
1-800-778-1482
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by individual investors.
VIT-3 (8/29/03) 24411
ITEM 2. CODE OF ETHICS.
Not currently applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not currently applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not currently applicable.
ITEM 5. [RESERVED]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
ITEM 8. [RESERVED]
ITEM 9. 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) During the six month period ended June 30, 2003, management identified
an issue related to a different registrant within the Scudder fund complex.
Management discussed the issue with the Registrant's Audit Committee and
auditors and instituted additional procedures to enhance its internal controls
over financial reporting.
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 VIT Real Estate Securities Portfolio
By: /s/Richard T. Hale
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Richard T. Hale
Chief Executive Officer
Date: August 19, 2003
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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 VIT Real Estate Securities Portfolio
By: /s/Richard T. Hale
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Richard T. Hale
Chief Executive Officer
Date: August 19, 2003
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By: /s/Charles A. Rizzo
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Charles A. Rizzo
Chief Financial Officer
Date: August 19, 2003
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