UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSRS
Investment Company Act file number 811-07507
DWS Investments VIT Funds
(Exact Name of Registrant as Specified in Charter)
Two International Place
Boston, MA 02110
(Address of principal executive offices) (Zip code)
Registrant’s Telephone Number, including Area Code: (212) 454-7190
Paul Schubert
345 Park Avenue
New York, NY 10154
(Name and Address of Agent for Service)
Date of fiscal year end: | 12/31 |
Date of reporting period: | 6/30/07 |
ITEM 1. REPORT TO STOCKHOLDERS
June 30, 2007
SEMIANNUAL REPORT
DWS INVESTMENTS VIT FUNDS
DWS Equity 500 Index VIP
Contents
click here Performance Summary
click here Information About Your Portfolio's Expenses
click here Management Summary
click here Portfolio Summary
click here Investment Portfolio
click here Financial Statements
click here Financial Highlights
click here Notes to Financial Statements
click here Proxy Voting
This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus, call (800) 778-1482 or your financial representative. We advise you to consider the portfolio's objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the portfolio. Please read the prospectus carefully before you invest.
The portfolio is subject to investment risks, including possible loss of principal amount invested. There is no guarantee that the portfolio will be able to mirror the S&P 500® Index closely enough to track its performance. Please read the prospectus for specific details regarding its investments and risk profile.
"Standard & Poor's," "S&P, " "S&P 500," "Standard & Poor's 500" and "500" are trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use by the portfolio's advisor. DWS Equity 500 Index VIP is not sponsored, endorsed, sold, nor promoted by Standard & Poor's, and Standard & Poor's makes no representation regarding the advisability of investing in the portfolio. There is no guarantee that the portfolio will be able to mirror the S&P 500® Index closely enough to track its performance.
DWS Scudder is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment Management Americas Inc. and DWS Trust Company.
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
Performance Summary June 30, 2007
All performance shown is historical, assumes reinvestment of all dividend and capital gain distributions, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when sold, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Please contact your participating insurance company for the Portfolio's most recent month-end performance. Performance figures for Classes A, B and B2 differ because each class maintains a distinct expense structure. Performance doesn't reflect charges and fees ("contract charges") associated with the separate account that invests in the Portfolio or any variable life insurance policy or variable annuity contract for which the Portfolio is an investment option. These charges and fees will reduce returns.
The total annual portfolio operating expense ratio, gross of any fee waivers or expense reimbursements, as stated in the fee table of the prospectus dated May 1, 2007 is 0.31%, 0.56% and 0.70% for Class A, Class B and Class B2 shares, respectively. Please see the Information About Your Portfolio's Expenses, the Financial Highlights and Notes to the Financial Statements (Note C, Related Parties) sections of this report for gross and net expense related disclosure for the period ended June 30, 2007.
Portfolio returns during all periods shown reflect a fee waiver/and or reimbursement. Without this waiver/reimbursement, returns would have been lower.
Growth of an Assumed $10,000 Investment | ||
[] DWS Equity 500 Index VIP — Class A [] S&P 500® Index | The Standard & Poor's (S&P) 500® Index is an unmanaged, capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Index returns assume reinvestment of dividends and, unlike portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index. | |
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Yearly periods ended June 30 | |
Comparative Results (as of June 30, 2007) | ||||||
DWS Equity 500 Index VIP | 6-Month+ | 1-Year | 3-Year | 5-Year | Life of Portfolio* | |
Class A | Growth of $10,000 | $10,686 | $12,036 | $13,834 | $16,420 | $17,905 |
Average annual total return | 6.86% | 20.36% | 11.43% | 10.43% | 6.16% | |
S&P 500 Index | Growth of $10,000 | $10,696 | $12,059 | $13,928 | $16,631 | $18,520 |
Average annual total return | 6.96% | 20.59% | 11.68% | 10.71% | 6.52% | |
DWS Equity 500 Index VIP | 6-Month+ | 1-Year | 3-Year | 5-Year | Life of Class** | |
Class B | Growth of $10,000 | $10,672 | $12,004 | $13,727 | $16,226 | $14,930 |
Average annual total return | 6.72% | 20.04% | 11.14% | 10.16% | 8.07% | |
S&P 500 Index | Growth of $10,000 | $10,696 | $12,059 | $13,928 | $16,631 | $15,333 |
Average annual total return | 6.96% | 20.59% | 11.68% | 10.71% | 8.62% | |
DWS Equity 500 Index VIP | 6-Month+ | 1-Year | 3-Year | 5-Year | Life of Class*** | |
Class B2 | Growth of $10,000 | $10,661 | $11,991 | N/A | N/A | $12,424 |
Average annual total return | 6.61% | 19.91% | N/A | N/A | 12.95% | |
S&P 500 Index | Growth of $10,000 | $10,696 | $12,059 | N/A | N/A | $12,644 |
Average annual total return | 6.96% | 20.59% | N/A | N/A | 14.34% |
The growth of $10,000 is cumulative.
+ Total returns shown for periods less than one year are not annualized.* The Portfolio commenced operations on October 1, 1997. Index returns began on September 30, 1997.
** The Portfolio commenced offering Class B shares on April 30, 2002. Index returns began on April 30, 2002.
*** The Portfolio commenced offering Class B2 shares on September 16, 2005. Index returns began on September 30, 2005.
Information concerning portfolio holdings of the Portfolio as of a month end will be posted to www.dws-scudder.com on or after the last day of the following month.
Information About Your Portfolio's Expenses
As an investor of the Portfolio, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Portfolio expenses. Examples of transaction costs include contract charges, 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 Portfolio and to help you compare these expenses with the ongoing expenses of investing in other mutual portfolios. In the most recent period, the Portfolio limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period (January 1, 2007 to June 30, 2007).
The tables illustrate your Portfolio's expenses in two ways:
Actual Portfolio Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Portfolio using the Portfolio'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% Portfolio Return. This helps you to compare your Portfolio's ongoing expenses (but not transaction costs) with those of other mutual funds using the Portfolio's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Portfolio 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 June 30, 2007 | |||||
Actual Portfolio Return | Class A |
| Class B |
| Class B2 |
Beginning Account Value 1/1/07 | $ 1,000.00 |
| $ 1,000.00 |
| $ 1,000.00 |
Ending Account Value 6/30/07 | $ 1,068.60 |
| $ 1,067.20 |
| $ 1,066.10 |
Expenses Paid per $1,000* | $ 1.49 |
| $ 2.77 |
| $ 3.28 |
Hypothetical 5% Portfolio Return | Class A |
| Class B |
| Class B2 |
Beginning Account Value 1/1/07 | $ 1,000.00 |
| $ 1,000.00 |
| $ 1,000.00 |
Ending Account Value 6/30/07 | $ 1,023.36 |
| $ 1,022.12 |
| $ 1,021.62 |
Expenses Paid per $1,000* | $ 1.45 |
| $ 2.71 |
| $ 3.21 |
Annualized Expense Ratios | Class A |
| Class B |
| Class B2 |
DWS Equity 500 Index VIP | .29% |
| .54% |
| .64% |
For more information, please refer to the Portfolio's prospectus.
These tables do not reflect charges and fees ("contract charges") associated with the separate account that invests in the Portfolio or any variable life insurance policy or variable annuity contract for which the Portfolio is an investment option.
Management Summary June 30, 2007
Except for a period of weakness in late February and early March, equity markets were quite strong during the first half of 2007. By the end of May, most indices were at or near their all-time highs; markets were volatile with no pronounced trend in June. The Russell 3000® Index, which is generally regarded as a good indicator of the broad stock market, returned 7.11% for the six-month period. Growth stocks, as measured by the Russell 1000® Growth Index, performed better than value stocks, as measured by the Russell 1000® Value Index.
The Portfolio returned 6.86% (Class A shares, unadjusted for contract charges). Since the Portfolio's investment strategy is to replicate, as closely as possible, before the deduction of expenses, the performance of the Standard & Poor's 500® (S&P 500®) Index, the Portfolio's return is normally quite close to the return of the index.
In the first half of 2007, nine of the 10 industry sectors within the S&P 500 had positive returns. Only the financial sector had a modestly negative return, as shares of many banks and financial institutions dropped on concerns about the impact of a weakening housing market on their mortgage businesses. The strongest sector was energy, with a return above 17%, followed by materials, telecommunication services and industrials, all of which posted double-digit returns.
Brent Reeder
Vice President
Northern Trust Investments, N.A. (NTI), Subadvisor to the Portfolio
All performance shown is historical, assumes reinvestment of all dividend and capital gain distributions, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when sold, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Please contact your participating insurance company for the Portfolio's most recent month-end performance. Performance figures for Classes A and B differ because each class maintains a distinct expense structure. Performance doesn't reflect charges and fees ("contract charges") associated with the separate account that invests in the Portfolio or any variable life insurance policy or variable annuity contract for which the Portfolio is an investment option. These charges and fees will reduce returns.
Risk Considerations
The Portfolio is subject to investment risks, including possible loss of principal amount invested. The Portfolio may not be able to mirror the S&P 500 index closely enough to track its performance for several reasons, including the Portfolio's cost to buy and sell securities, the flow of money into and out of the Portfolio and the potential underperformance of stocks selected. Please read this Portfolio's prospectus for specific details regarding its investments and risk profile.
The Russell 3000 Index measures the performance of the 3,000 largest US companies based on total market capitalization, which represents approximately 98% of the investable US equity market.
The Russell 1000 Growth Index is an unmanaged, capitalization-weighted index consisting of those stocks in the Russell 1000 Index that have greater-than-average growth orientation.
The Russell 1000 Value Index is an unmanaged, capitalization-weighted index which consists of those stocks in the Russell 1000 Index with lower price-to-book ratios and lower forecasted-growth values.
The Standard & Poor's 500 (S&P 500) Index is an unmanaged, capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
"Standard & Poor's," "S&P 500," "Standard & Poor's 500" and "500" are trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use by the Portfolio's investment advisor. This Portfolio is not sponsored, endorsed, sold or promoted by Standard & Poor's, and Standard & Poor's makes no representation regarding the advisability of investing in the Portfolio.
Index returns assume reinvestment of dividends and, unlike portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
Portfolio management market commentary is as of June 30, 2007, and may not come to pass. This information is subject to change at any time based on market and other conditions and should not be construed as a recommendation. Past performance does not guarantee future results.
Asset Allocation (Excludes Securities Lending Collateral) | 6/30/07 | 12/31/06 |
|
|
|
Common Stocks | 98% | 97% |
Cash Equivalents | 2% | 3% |
| 100% | 100% |
Sector Diversification (As a % of Common Stocks) | 6/30/07 | 12/31/06 |
|
|
|
Financials | 21% | 22% |
Information Technology | 15% | 15% |
Health Care | 12% | 12% |
Industrials | 11% | 11% |
Energy | 11% | 10% |
Consumer Discretionary | 10% | 11% |
Consumer Staples | 9% | 9% |
Telecommunication Services | 4% | 3% |
Utilities | 4% | 4% |
Materials | 3% | 3% |
| 100% | 100% |
Ten Largest Equity Holdings (19.0% of Net Assets) | |
1. ExxonMobil Corp. Explorer and producer of oil and gas | 3.5% |
2. General Electric Co. Industrial conglomerate | 2.9% |
3. AT&T, Inc. Provider of communications services | 1.9% |
4. Citigroup, Inc. Provider of diversified financial services | 1.9% |
5. Microsoft Corp. Developer of computer software | 1.8% |
6. Bank of America Corp. Provider of commercial banking services | 1.6% |
7. Procter & Gamble Co. Manufacturer of diversified consumer products | 1.4% |
8. American International Group, Inc. Provider of insurance services | 1.4% |
9. Chevron Corp. Operator of petroleum exploration, delivery and refining facilities | 1.3% |
10. Pfizer, Inc. Manufacturer of prescription pharmaceuticals and nonprescription self medications | 1.3% |
Asset allocation, sector diversification, and holdings are subject to change.
For more complete details about the Portfolio's investment portfolio, see page 7. Information concerning portfolio holdings of the Portfolio as of month end will be posted to www.dws-scudder.com on or after the last day of the following month. In addition, the Portfolio's top ten holdings and other information about the Portfolio is posted on www.dws-scudder.com as of the calendar quarter-end on or after the 15th day following quarter-end.
Following the Portfolio'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 June 30, 2007 (Unaudited)
|
| Value ($) |
|
| |
Common Stocks 98.5% | ||
Consumer Discretionary 10.0% | ||
Auto Components 0.2% | ||
Goodyear Tire & Rubber Co.* | 19,994 | 694,992 |
Johnson Controls, Inc. | 17,746 | 2,054,454 |
| 2,749,446 | |
Automobiles 0.4% | ||
Ford Motor Co. (a) | 172,675 | 1,626,599 |
General Motors Corp. | 51,766 | 1,956,755 |
Harley-Davidson, Inc. | 23,586 | 1,405,961 |
| 4,989,315 | |
Distributors 0.1% | ||
Genuine Parts Co. | 15,509 | 769,246 |
Diversified Consumer Services 0.1% | ||
Apollo Group, Inc. "A"* | 12,844 | 750,475 |
H&R Block, Inc. | 27,896 | 651,929 |
| 1,402,404 | |
Hotels Restaurants & Leisure 1.5% | ||
Carnival Corp. | 40,546 | 1,977,428 |
Darden Restaurants, Inc. | 12,254 | 539,053 |
Harrah's Entertainment, Inc. | 17,119 | 1,459,566 |
Hilton Hotels Corp. | 35,532 | 1,189,256 |
International Game Technology | 31,456 | 1,248,803 |
Marriott International, Inc. "A" | 30,140 | 1,303,254 |
McDonald's Corp. | 110,291 | 5,598,371 |
Starbucks Corp.* | 68,028 | 1,785,055 |
Starwood Hotels & Resorts Worldwide, Inc. | 19,625 | 1,316,249 |
Wendy's International, Inc. | 9,311 | 342,179 |
Wyndham Worldwide Corp.* | 16,737 | 606,884 |
Yum! Brands, Inc. | 48,316 | 1,580,900 |
| 18,946,998 | |
Household Durables 0.6% | ||
Black & Decker Corp. | 6,022 | 531,803 |
Centex Corp. | 12,235 | 490,624 |
D.R. Horton, Inc. | 25,000 | 498,250 |
Fortune Brands, Inc. | 14,655 | 1,207,132 |
Harman International Industries, Inc. | 5,700 | 665,760 |
KB HOME | 7,092 | 279,212 |
Leggett & Platt, Inc. | 15,364 | 338,776 |
Lennar Corp. "A" | 12,600 | 460,656 |
Newell Rubbermaid, Inc. | 23,497 | 691,517 |
Pulte Homes, Inc. | 18,582 | 417,166 |
Snap-on, Inc. | 5,393 | 272,400 |
The Stanley Works | 7,556 | 458,649 |
Whirlpool Corp. | 7,588 | 843,786 |
| 7,155,731 | |
Internet & Catalog Retail 0.2% | ||
Amazon.com, Inc.* | 28,528 | 1,951,600 |
IAC/InterActiveCorp.* | 21,200 | 733,732 |
| 2,685,332 | |
Leisure Equipment & Products 0.2% | ||
Brunswick Corp. | 8,506 | 277,551 |
Eastman Kodak Co. (a) | 25,007 | 695,945 |
Hasbro, Inc. | 14,586 | 458,146 |
|
| Value ($) |
|
| |
Mattel, Inc. | 35,998 | 910,389 |
| 2,342,031 | |
Media 3.3% | ||
CBS Corp. "B" | 67,487 | 2,248,667 |
Clear Channel Communications, Inc. | 45,152 | 1,707,649 |
Comcast Corp. "A"* | 285,487 | 8,027,895 |
Dow Jones & Co., Inc. | 5,261 | 302,245 |
E.W. Scripps Co. "A" | 7,600 | 347,244 |
Gannett Co., Inc. | 20,842 | 1,145,268 |
Interpublic Group of Companies, Inc.* | 39,697 | 452,546 |
McGraw-Hill Companies, Inc. | 32,464 | 2,210,149 |
Meredith Corp. | 3,524 | 217,078 |
New York Times Co. "A" (a) | 16,710 | 424,434 |
News Corp. "A" | 213,854 | 4,535,843 |
Omnicom Group, Inc. | 30,432 | 1,610,461 |
The DIRECTV Group, Inc.* | 70,500 | 1,629,255 |
Time Warner, Inc. | 347,530 | 7,312,031 |
Tribune Co. | 6,835 | 200,949 |
Viacom, Inc. "B"* | 63,287 | 2,634,638 |
Walt Disney Co. | 182,480 | 6,229,867 |
| 41,236,219 | |
Multiline Retail 1.1% | ||
Big Lots, Inc.* | 9,492 | 279,255 |
Dillard's, Inc. "A" | 5,551 | 199,448 |
Dollar General Corp. | 28,584 | 626,561 |
Family Dollar Stores, Inc. (a) | 13,770 | 472,586 |
J.C. Penney Co., Inc. | 20,522 | 1,485,382 |
Kohl's Corp.* | 29,878 | 2,122,234 |
Macy's, Inc. | 42,008 | 1,671,078 |
Nordstrom, Inc. | 20,648 | 1,055,526 |
Sears Holdings Corp.* | 7,543 | 1,278,539 |
Target Corp. | 78,210 | 4,974,156 |
| 14,164,765 | |
Specialty Retail 1.8% | ||
Abercrombie & Fitch Co. "A" | 8,100 | 591,138 |
AutoNation, Inc.* | 13,851 | 310,817 |
AutoZone, Inc.* | 4,491 | 613,560 |
Bed Bath & Beyond, Inc.* | 26,716 | 961,509 |
Best Buy Co., Inc. | 36,936 | 1,723,803 |
Circuit City Stores, Inc. | 13,030 | 196,492 |
Home Depot, Inc. | 181,599 | 7,145,921 |
Limited Brands, Inc. | 31,270 | 858,362 |
Lowe's Companies, Inc. | 139,200 | 4,272,048 |
Office Depot, Inc.* | 25,303 | 766,681 |
OfficeMax, Inc. | 7,641 | 300,291 |
RadioShack Corp. | 12,445 | 412,427 |
Staples, Inc. | 65,489 | 1,554,054 |
The Gap, Inc. | 48,632 | 928,871 |
The Sherwin-Williams Co. | 9,389 | 624,087 |
Tiffany & Co. | 12,000 | 636,720 |
TJX Companies, Inc. | 41,458 | 1,140,095 |
| 23,036,876 | |
Textiles, Apparel & Luxury Goods 0.5% | ||
Coach, Inc.* | 33,800 | 1,601,782 |
Jones Apparel Group, Inc. | 9,694 | 273,856 |
Liz Claiborne, Inc. | 8,624 | 321,675 |
NIKE, Inc. "B" | 36,550 | 2,130,500 |
|
| Value ($) |
|
| |
Polo Ralph Lauren Corp. | 5,600 | 549,416 |
VF Corp. | 8,487 | 777,239 |
| 5,654,468 | |
Consumer Staples 9.1% | ||
Beverages 2.0% | ||
Anheuser-Busch Companies, Inc. | 69,909 | 3,646,454 |
Brown-Forman Corp. "B" | 7,080 | 517,406 |
Coca-Cola Co. | 184,114 | 9,631,003 |
Coca-Cola Enterprises, Inc. | 28,150 | 675,600 |
Constellation Brands, Inc. "A"* (a) | 17,900 | 434,612 |
Molson Coors Brewing Co. "B" | 4,192 | 387,592 |
Pepsi Bottling Group, Inc. | 12,211 | 411,267 |
PepsiCo, Inc. | 149,546 | 9,698,058 |
| 25,401,992 | |
Food & Staples Retailing 2.3% | ||
Costco Wholesale Corp. | 41,345 | 2,419,509 |
CVS Caremark Corp. | 140,790 | 5,131,796 |
Kroger Co. | 64,963 | 1,827,409 |
Safeway, Inc. | 40,227 | 1,368,925 |
SUPERVALU, Inc. | 18,848 | 873,039 |
Sysco Corp. | 56,357 | 1,859,218 |
Wal-Mart Stores, Inc. | 222,627 | 10,710,585 |
Walgreen Co. | 91,396 | 3,979,382 |
Whole Foods Market, Inc. (a) | 13,500 | 517,050 |
| 28,686,913 | |
Food Products 1.4% | ||
Archer-Daniels-Midland Co. | 59,607 | 1,972,396 |
Campbell Soup Co. | 19,885 | 771,737 |
ConAgra Foods, Inc. | 45,705 | 1,227,636 |
Dean Foods Co. | 11,600 | 369,692 |
General Mills, Inc. | 31,528 | 1,841,866 |
H.J. Heinz Co. | 29,679 | 1,408,862 |
Kellogg Co. | 21,632 | 1,120,321 |
Kraft Foods, Inc. "A" | 147,282 | 5,191,690 |
McCormick & Co., Inc. | 12,214 | 466,331 |
Sara Lee Corp. | 67,639 | 1,176,919 |
The Hershey Co. | 15,246 | 771,752 |
Tyson Foods, Inc. "A" | 23,100 | 532,224 |
Wm. Wrigley Jr. Co. | 19,833 | 1,096,963 |
| 17,948,389 | |
Household Products 2.0% | ||
Clorox Co. | 12,930 | 802,953 |
Colgate-Palmolive Co. | 48,621 | 3,153,072 |
Kimberly-Clark Corp. | 41,747 | 2,792,457 |
Procter & Gamble Co. | 288,455 | 17,650,561 |
| 24,399,043 | |
Personal Products 0.2% | ||
Avon Products, Inc. | 42,270 | 1,553,423 |
Estee Lauder Companies, Inc. "A" | 10,600 | 482,406 |
| 2,035,829 | |
Tobacco 1.2% | ||
Altria Group, Inc. | 192,670 | 13,513,874 |
Reynolds American, Inc. | 15,828 | 1,031,985 |
UST, Inc. | 14,635 | 786,046 |
| 15,331,905 | |
Energy 10.6% | ||
Energy Equipment & Services 2.1% | ||
Baker Hughes, Inc. | 29,271 | 2,462,569 |
BJ Services Co. | 26,786 | 761,794 |
|
| Value ($) |
|
| |
ENSCO International, Inc. | 13,800 | 841,938 |
Halliburton Co. | 83,573 | 2,883,269 |
Nabors Industries Ltd.* | 25,896 | 864,408 |
National-Oilwell Varco, Inc.* | 17,000 | 1,772,080 |
Noble Corp. | 12,295 | 1,199,008 |
Rowan Companies, Inc. | 10,282 | 421,356 |
Schlumberger Ltd. | 107,718 | 9,149,567 |
Smith International, Inc. | 18,400 | 1,078,976 |
Transocean, Inc.* | 26,503 | 2,808,788 |
Weatherford International Ltd.* | 31,744 | 1,753,539 |
| 25,997,292 | |
Oil, Gas & Consumable Fuels 8.5% | ||
Anadarko Petroleum Corp. | 43,514 | 2,262,293 |
Apache Corp. | 29,953 | 2,443,865 |
Chesapeake Energy Corp. | 39,800 | 1,377,080 |
Chevron Corp. | 197,282 | 16,619,036 |
ConocoPhillips | 150,242 | 11,793,997 |
CONSOL Energy, Inc. | 16,700 | 770,037 |
Devon Energy Corp. | 40,692 | 3,185,777 |
El Paso Corp. | 64,954 | 1,119,157 |
EOG Resources, Inc. | 21,857 | 1,596,872 |
ExxonMobil Corp. | 517,304 | 43,391,460 |
Hess Corp. | 24,650 | 1,453,364 |
Marathon Oil Corp. | 64,042 | 3,839,958 |
Murphy Oil Corp. | 16,300 | 968,872 |
Occidental Petroleum Corp. | 76,588 | 4,432,914 |
Peabody Energy Corp. | 24,300 | 1,175,634 |
Spectra Energy Corp. | 57,991 | 1,505,446 |
Sunoco, Inc. | 11,516 | 917,595 |
Valero Energy Corp. | 50,172 | 3,705,704 |
Williams Companies, Inc. | 54,687 | 1,729,203 |
XTO Energy, Inc. | 34,908 | 2,097,971 |
| 106,386,235 | |
Financials 20.6% | ||
Capital Markets 3.6% | ||
Ameriprise Financial, Inc. | 21,505 | 1,367,073 |
Bank of New York Co., Inc.* | 69,084 | 2,862,841 |
Bear Stearns Companies, Inc. | 10,930 | 1,530,200 |
Charles Schwab Corp. | 92,889 | 1,906,082 |
E*TRADE Financial Corp.* | 39,000 | 861,510 |
Federated Investors, Inc. "B" | 7,200 | 275,976 |
Franklin Resources, Inc. | 15,252 | 2,020,432 |
Janus Capital Group, Inc. | 17,971 | 500,312 |
Legg Mason, Inc. | 12,000 | 1,180,560 |
Lehman Brothers Holdings, Inc. | 48,042 | 3,580,090 |
Mellon Financial Corp. | 36,475 | 1,604,900 |
Merrill Lynch & Co., Inc. | 79,972 | 6,684,060 |
Morgan Stanley | 96,740 | 8,114,551 |
Northern Trust Corp. | 16,549 | 1,063,108 |
State Street Corp. | 36,465 | 2,494,206 |
T. Rowe Price Group, Inc. | 24,720 | 1,282,721 |
The Goldman Sachs Group, Inc. | 37,533 | 8,135,278 |
| 45,463,900 | |
Commercial Banks 3.7% | ||
BB&T Corp. | 49,334 | 2,006,907 |
Comerica, Inc. | 13,837 | 822,886 |
Commerce Bancorp, Inc. (a) | 17,100 | 632,529 |
Compass Bancshares, Inc. | 11,900 | 820,862 |
Fifth Third Bancorp. | 50,906 | 2,024,532 |
First Horizon National Corp. | 10,698 | 417,222 |
Huntington Bancshares, Inc. | 33,560 | 763,155 |
|
| Value ($) |
|
| |
KeyCorp. | 35,229 | 1,209,412 |
M&T Bank Corp. | 6,850 | 732,265 |
Marshall & Ilsley Corp. | 21,854 | 1,040,906 |
National City Corp. | 54,176 | 1,805,144 |
PNC Financial Services Group, Inc. | 31,626 | 2,263,789 |
Regions Financial Corp. | 66,661 | 2,206,479 |
SunTrust Banks, Inc. | 33,071 | 2,835,508 |
Synovus Financial Corp. | 32,903 | 1,010,122 |
US Bancorp. | 161,954 | 5,336,384 |
Wachovia Corp. | 174,199 | 8,927,699 |
Wells Fargo & Co. | 308,748 | 10,858,667 |
Zions Bancorp. | 10,011 | 769,946 |
| 46,484,414 | |
Consumer Finance 1.0% | ||
American Express Co. | 109,025 | 6,670,150 |
Capital One Financial Corp. | 38,802 | 3,043,629 |
SLM Corp. | 38,878 | 2,238,595 |
| 11,952,374 | |
Diversified Financial Services 5.0% | ||
Bank of America Corp. | 407,486 | 19,921,991 |
Chicago Mercantile Exchange Holdings, Inc. "A" | 3,200 | 1,709,952 |
CIT Group, Inc. | 17,724 | 971,807 |
Citigroup, Inc. | 454,031 | 23,287,250 |
JPMorgan Chase & Co. | 314,762 | 15,250,219 |
Moody's Corp. | 21,152 | 1,315,654 |
| 62,456,873 | |
Insurance 4.7% | ||
ACE Ltd. | 29,376 | 1,836,588 |
Aflac, Inc. | 44,737 | 2,299,482 |
Allstate Corp. | 55,756 | 3,429,552 |
Ambac Financial Group, Inc. | 9,578 | 835,106 |
American International Group, Inc. | 237,781 | 16,651,803 |
Aon Corp. | 26,983 | 1,149,746 |
Assurant, Inc. | 9,100 | 536,172 |
Chubb Corp. | 37,370 | 2,023,212 |
Cincinnati Financial Corp. | 15,909 | 690,451 |
Genworth Financial, Inc. "A" | 38,400 | 1,320,960 |
Hartford Financial Services Group, Inc. | 29,034 | 2,860,139 |
Lincoln National Corp. | 24,869 | 1,764,456 |
Loews Corp. | 40,970 | 2,088,651 |
Marsh & McLennan Companies, Inc. | 50,113 | 1,547,489 |
MBIA, Inc. | 11,364 | 707,068 |
MetLife, Inc. | 68,132 | 4,393,151 |
Principal Financial Group, Inc. | 24,311 | 1,417,088 |
Progressive Corp. | 68,056 | 1,628,580 |
Prudential Financial, Inc. | 42,863 | 4,167,569 |
Safeco Corp. | 10,818 | 673,529 |
The Travelers Companies, Inc. | 60,971 | 3,261,948 |
Torchmark Corp. | 8,810 | 590,270 |
Unum Group | 31,365 | 818,940 |
XL Capital Ltd. "A" | 15,877 | 1,338,272 |
| 58,030,222 | |
Real Estate Investment Trusts 1.2% | ||
Apartment Investment & Management Co. "A" (REIT) | 7,700 | 388,234 |
Archstone-Smith Trust (REIT) | 21,800 | 1,288,598 |
AvalonBay Communities, Inc. (REIT) | 7,100 | 844,048 |
Boston Properties, Inc. (REIT) | 11,500 | 1,174,495 |
|
| Value ($) |
|
| |
Developers Diversified Realty Corp. (REIT) | 13,800 | 727,398 |
Equity Residential (REIT) | 25,730 | 1,174,060 |
General Growth Properties, Inc. (REIT) | 22,500 | 1,191,375 |
Host Hotels & Resorts, Inc. (REIT) | 47,600 | 1,100,512 |
Kimco Realty Corp. (REIT) | 19,200 | 730,944 |
Plum Creek Timber Co., Inc. (REIT) | 16,700 | 695,722 |
ProLogis (REIT) | 23,400 | 1,331,460 |
Public Storage, Inc. (REIT) | 10,546 | 810,144 |
Simon Property Group, Inc. (REIT) (a) | 20,241 | 1,883,222 |
Vornado Realty Trust (REIT) | 12,600 | 1,383,984 |
| 14,724,196 | |
Real Estate Management & Development 0.1% | ||
CB Richard Ellis Group, Inc. "A"* | 16,900 | 616,850 |
Thrifts & Mortgage Finance 1.3% | ||
Countrywide Financial Corp. | 53,938 | 1,960,646 |
Fannie Mae | 89,250 | 5,830,702 |
Freddie Mac | 62,363 | 3,785,434 |
Hudson City Bancorp., Inc. | 47,200 | 576,784 |
MGIC Investment Corp. | 7,642 | 434,524 |
Sovereign Bancorp, Inc. (a) | 31,798 | 672,210 |
Washington Mutual, Inc. | 81,643 | 3,481,258 |
| 16,741,558 | |
Health Care 11.5% | ||
Biotechnology 1.2% | ||
Amgen, Inc.* | 107,416 | 5,939,031 |
Biogen Idec, Inc.* | 26,260 | 1,404,910 |
Celgene Corp.* | 34,800 | 1,995,084 |
Genzyme Corp.* | 25,203 | 1,623,073 |
Gilead Sciences, Inc.* | 84,972 | 3,294,364 |
| 14,256,462 | |
Health Care Equipment & Supplies 1.6% | ||
Bausch & Lomb, Inc. | 5,836 | 405,252 |
Baxter International, Inc. | 59,403 | 3,346,765 |
Becton, Dickinson & Co. | 22,378 | 1,667,161 |
Biomet, Inc. | 22,443 | 1,026,094 |
Boston Scientific Corp.* | 111,265 | 1,706,805 |
C.R. Bard, Inc. | 8,898 | 735,242 |
Hospira, Inc.* | 13,720 | 535,629 |
Medtronic, Inc. | 105,325 | 5,462,154 |
St. Jude Medical, Inc.* | 31,488 | 1,306,437 |
Stryker Corp. (a) | 27,282 | 1,721,221 |
Varian Medical Systems, Inc.* | 11,800 | 501,618 |
Zimmer Holdings, Inc.* | 21,684 | 1,840,755 |
| 20,255,133 | |
Health Care Providers & Services 2.2% | ||
Aetna, Inc. | 47,272 | 2,335,237 |
AmerisourceBergen Corp. | 17,282 | 854,941 |
Cardinal Health, Inc. | 36,600 | 2,585,424 |
CIGNA Corp. | 26,405 | 1,378,869 |
Coventry Health Care, Inc.* | 14,195 | 818,342 |
Express Scripts, Inc.* | 24,868 | 1,243,649 |
Humana, Inc.* | 14,775 | 899,945 |
Laboratory Corp. of America Holdings* | 11,191 | 875,808 |
Manor Care, Inc. | 6,738 | 439,924 |
McKesson Corp. | 27,015 | 1,611,175 |
Medco Health Solutions, Inc.* | 26,364 | 2,056,128 |
Patterson Companies, Inc.* | 12,700 | 473,329 |
|
| Value ($) |
|
| |
Quest Diagnostics, Inc. | 14,216 | 734,256 |
Tenet Healthcare Corp.* | 43,100 | 280,581 |
UnitedHealth Group, Inc. | 123,808 | 6,331,541 |
WellPoint, Inc.* | 56,188 | 4,485,488 |
| 27,404,637 | |
Health Care Technology 0.0% | ||
IMS Health, Inc. | 16,930 | 543,961 |
Life Sciences Tools & Services 0.3% | ||
Applera Corp. — Applied Biosystems Group | 16,029 | 489,526 |
Millipore Corp.* | 4,915 | 369,067 |
PerkinElmer, Inc. | 11,136 | 290,204 |
Thermo Fisher Scientific, Inc.* | 39,721 | 2,054,370 |
Waters Corp.* | 9,300 | 552,048 |
| 3,755,215 | |
Pharmaceuticals 6.2% | ||
Abbott Laboratories | 140,982 | 7,549,586 |
Allergan, Inc. | 27,724 | 1,598,011 |
Barr Pharmaceuticals, Inc.* | 9,200 | 462,116 |
Bristol-Myers Squibb Co. | 183,862 | 5,802,685 |
Eli Lilly & Co. | 92,237 | 5,154,203 |
Forest Laboratories, Inc.* | 28,995 | 1,323,622 |
Johnson & Johnson | 264,534 | 16,300,585 |
King Pharmaceuticals, Inc.* | 22,186 | 453,926 |
Merck & Co., Inc. | 198,059 | 9,863,338 |
Mylan Laboratories, Inc. | 22,436 | 408,111 |
Pfizer, Inc. | 647,589 | 16,558,851 |
Schering-Plough Corp. | 135,950 | 4,138,318 |
Watson Pharmaceuticals, Inc.* | 9,355 | 304,318 |
Wyeth | 123,676 | 7,091,582 |
| 77,009,252 | |
Industrials 11.2% | ||
Aerospace & Defense 2.6% | ||
Boeing Co. | 72,108 | 6,933,905 |
General Dynamics Corp. | 36,934 | 2,888,978 |
Goodrich Corp. | 10,561 | 629,013 |
Honeywell International, Inc. | 71,947 | 4,049,177 |
L-3 Communications Holdings, Inc. | 11,500 | 1,119,985 |
Lockheed Martin Corp. | 32,993 | 3,105,631 |
Northrop Grumman Corp. | 31,331 | 2,439,745 |
Precision Castparts Corp. | 13,100 | 1,589,816 |
Raytheon Co. | 40,796 | 2,198,496 |
Rockwell Collins, Inc. | 14,731 | 1,040,598 |
United Technologies Corp. | 92,600 | 6,568,118 |
| 32,563,462 | |
Air Freight & Logistics 0.9% | ||
C.H. Robinson Worldwide, Inc. | 15,800 | 829,816 |
FedEx Corp. | 28,065 | 3,114,373 |
United Parcel Service, Inc. "B" | 97,458 | 7,114,434 |
| 11,058,623 | |
Airlines 0.1% | ||
Southwest Airlines Co. | 71,995 | 1,073,446 |
Building Products 0.1% | ||
American Standard Companies, Inc. | 15,264 | 900,271 |
Masco Corp. | 36,165 | 1,029,617 |
| 1,929,888 | |
Commercial Services & Supplies 0.5% | ||
Allied Waste Industries, Inc.* | 23,275 | 313,282 |
Avery Dennison Corp. | 8,886 | 590,741 |
|
| Value ($) |
|
| |
Cintas Corp. | 12,742 | 502,417 |
Equifax, Inc. | 11,791 | 523,756 |
Monster Worldwide, Inc.* | 11,785 | 484,364 |
Pitney Bowes, Inc. | 20,146 | 943,236 |
R.R. Donnelley & Sons Co. | 19,629 | 854,058 |
Robert Half International, Inc. | 15,000 | 547,500 |
Waste Management, Inc. | 49,269 | 1,923,954 |
| 6,683,308 | |
Construction & Engineering 0.1% | ||
Fluor Corp. | 8,025 | 893,744 |
Electrical Equipment 0.4% | ||
Cooper Industries Ltd. "A" | 15,728 | 897,911 |
Emerson Electric Co. | 74,904 | 3,505,507 |
Rockwell Automation, Inc. | 15,847 | 1,100,416 |
| 5,503,834 | |
Industrial Conglomerates 3.9% | ||
3M Co. | 66,136 | 5,739,943 |
General Electric Co. | 941,632 | 36,045,673 |
Textron, Inc. | 12,041 | 1,325,835 |
Tyco International Ltd. | 180,753 | 6,107,644 |
| 49,219,095 | |
Machinery 1.7% | ||
Caterpillar, Inc. | 58,736 | 4,599,029 |
Cummins, Inc. | 9,656 | 977,284 |
Danaher Corp. | 21,765 | 1,643,258 |
Deere & Co. | 20,712 | 2,500,767 |
Dover Corp. | 17,502 | 895,227 |
Eaton Corp. | 13,405 | 1,246,665 |
Illinois Tool Works, Inc. | 37,794 | 2,048,057 |
Ingersoll-Rand Co., Ltd. "A" | 28,122 | 1,541,648 |
ITT Corp. | 15,894 | 1,085,242 |
PACCAR, Inc. | 23,201 | 2,019,415 |
Pall Corp. | 11,353 | 522,124 |
Parker Hannifin Corp. | 11,179 | 1,094,536 |
Terex Corp.* | 9,300 | 756,090 |
| 20,929,342 | |
Road & Rail 0.8% | ||
Burlington Northern Santa Fe Corp. | 32,738 | 2,787,313 |
CSX Corp. | 39,848 | 1,796,348 |
Norfolk Southern Corp. | 36,086 | 1,897,041 |
Ryder System, Inc. | 4,852 | 261,038 |
Union Pacific Corp. | 24,881 | 2,865,047 |
| 9,606,787 | |
Trading Companies & Distributors 0.1% | ||
W.W. Grainger, Inc. | 6,709 | 624,272 |
Information Technology 15.2% | ||
Communications Equipment 2.6% | ||
Avaya, Inc.* | 40,192 | 676,833 |
Ciena Corp.* | 8,365 | 302,227 |
Cisco Systems, Inc.* | 554,695 | 15,448,256 |
Corning, Inc.* | 143,422 | 3,664,432 |
JDS Uniphase Corp.* (a) | 19,278 | 258,904 |
Juniper Networks, Inc.* | 53,600 | 1,349,112 |
Motorola, Inc. | 212,580 | 3,762,666 |
QUALCOMM, Inc. | 151,420 | 6,570,114 |
Tellabs, Inc.* | 39,916 | 429,496 |
| 32,462,040 | |
|
| Value ($) |
|
| |
Computers & Peripherals 3.9% | ||
Apple, Inc.* | 78,962 | 9,636,522 |
Dell, Inc.* | 207,709 | 5,930,092 |
EMC Corp.* | 192,667 | 3,487,273 |
Hewlett-Packard Co. | 241,427 | 10,772,473 |
International Business Machines Corp. | 124,802 | 13,135,410 |
Lexmark International, Inc. "A"* | 8,768 | 432,350 |
NCR Corp.* | 15,651 | 822,303 |
Network Appliance, Inc.* | 34,484 | 1,006,933 |
QLogic Corp.* | 17,518 | 291,675 |
SanDisk Corp.* | 21,900 | 1,071,786 |
Sun Microsystems, Inc.* | 327,781 | 1,724,128 |
| 48,310,945 | |
Electronic Equipment & Instruments 0.2% | ||
Agilent Technologies, Inc.* | 36,397 | 1,399,101 |
Jabil Circuit, Inc. | 16,147 | 356,364 |
Molex, Inc. | 12,217 | 366,632 |
Solectron Corp.* | 82,607 | 303,994 |
Tektronix, Inc. | 7,624 | 257,234 |
| 2,683,325 | |
Internet Software & Services 1.4% | ||
eBay, Inc.* | 103,768 | 3,339,254 |
Google, Inc. "A"* (a) | 19,853 | 10,390,663 |
VeriSign, Inc.* | 22,500 | 713,925 |
Yahoo!, Inc.* | 111,088 | 3,013,818 |
| 17,457,660 | |
IT Services 1.1% | ||
Affiliated Computer Services, Inc. "A"* | 9,673 | 548,653 |
Automatic Data Processing, Inc. | 50,308 | 2,438,429 |
Cognizant Technology Solutions Corp. "A"* | 13,000 | 976,170 |
Computer Sciences Corp.* | 15,844 | 937,173 |
Convergys Corp.* | 10,872 | 263,537 |
Electronic Data Systems Corp. | 46,591 | 1,291,968 |
Fidelity National Information Services, Inc. | 15,500 | 841,340 |
First Data Corp. | 68,812 | 2,248,088 |
Fiserv, Inc.* | 16,442 | 933,906 |
Paychex, Inc. | 32,911 | 1,287,478 |
Unisys Corp.* | 27,480 | 251,167 |
Western Union Co. | 70,112 | 1,460,433 |
| 13,478,342 | |
Office Electronics 0.1% | ||
Xerox Corp.* | 86,788 | 1,603,842 |
Semiconductors & Semiconductor Equipment 2.7% | ||
Advanced Micro Devices, Inc.* (a) | 49,660 | 710,138 |
Altera Corp. (a) | 32,586 | 721,128 |
Analog Devices, Inc. | 30,535 | 1,149,337 |
Applied Materials, Inc. (a) | 127,230 | 2,528,060 |
Broadcom Corp. "A"* | 43,121 | 1,261,289 |
Intel Corp. | 529,545 | 12,581,989 |
KLA-Tencor Corp. | 19,145 | 1,052,018 |
Linear Technology Corp. (a) | 23,214 | 839,883 |
LSI Corp.* | 70,413 | 528,802 |
Maxim Integrated Products, Inc. | 29,301 | 978,946 |
MEMC Electronic Materials, Inc.* | 20,500 | 1,252,960 |
Micron Technology, Inc.* | 66,620 | 834,749 |
National Semiconductor Corp. | 25,926 | 732,928 |
Novellus Systems, Inc.* | 11,514 | 326,652 |
NVIDIA Corp.* | 33,214 | 1,372,070 |
|
| Value ($) |
|
| |
Teradyne, Inc.* | 16,804 | 295,414 |
Texas Instruments, Inc. | 131,879 | 4,962,607 |
Xilinx, Inc. (a) | 30,346 | 812,363 |
| 32,941,333 | |
Software 3.2% | ||
Adobe Systems, Inc.* | 53,810 | 2,160,471 |
Autodesk, Inc.* | 21,448 | 1,009,772 |
BMC Software, Inc.* | 18,306 | 554,672 |
CA, Inc. (a) | 37,559 | 970,149 |
Citrix Systems, Inc.* | 16,498 | 555,488 |
Compuware Corp.* | 29,646 | 351,602 |
Electronic Arts, Inc.* | 29,358 | 1,389,221 |
Intuit, Inc.* | 31,270 | 940,602 |
Microsoft Corp. | 773,071 | 22,782,402 |
Novell, Inc.* | 31,036 | 241,770 |
Oracle Corp.* | 363,478 | 7,164,151 |
Symantec Corp.* | 84,552 | 1,707,950 |
| 39,828,250 | |
Materials 3.1% | ||
Chemicals 1.6% | ||
Air Products & Chemicals, Inc. | 19,739 | 1,586,423 |
Ashland, Inc. | 5,108 | 326,657 |
Dow Chemical Co. | 87,661 | 3,876,369 |
E.I. du Pont de Nemours & Co. | 86,412 | 4,393,186 |
Eastman Chemical Co. | 7,030 | 452,240 |
Ecolab, Inc. | 15,766 | 673,208 |
Hercules, Inc.* | 13,807 | 271,308 |
International Flavors & Fragrances, Inc. | 6,543 | 341,152 |
Monsanto Co. | 50,916 | 3,438,867 |
PPG Industries, Inc. | 14,250 | 1,084,567 |
Praxair, Inc. | 29,085 | 2,093,829 |
Rohm & Haas Co. | 12,194 | 666,768 |
Sigma-Aldrich Corp. | 14,240 | 607,621 |
| 19,812,195 | |
Construction Materials 0.1% | ||
Vulcan Materials Co. (a) | 8,625 | 987,907 |
Containers & Packaging 0.2% | ||
Ball Corp. | 8,836 | 469,810 |
Bemis Co., Inc. | 7,872 | 261,193 |
Pactiv Corp.* | 14,219 | 453,444 |
Sealed Air Corp. | 14,896 | 462,074 |
Temple-Inland, Inc. | 9,436 | 580,597 |
| 2,227,118 | |
Metals & Mining 0.9% | ||
Alcoa, Inc. | 79,481 | 3,221,365 |
Allegheny Technologies, Inc. | 9,317 | 977,167 |
Freeport-McMoRan Copper & Gold, Inc. | 34,299 | 2,840,643 |
Newmont Mining Corp. | 41,232 | 1,610,522 |
Nucor Corp. | 27,530 | 1,614,635 |
United States Steel Corp. | 10,859 | 1,180,916 |
| 11,445,248 | |
Paper & Forest Products 0.3% | ||
International Paper Co. | 39,972 | 1,560,907 |
MeadWestvaco Corp. | 16,959 | 598,992 |
Weyerhaeuser Co. | 19,298 | 1,523,191 |
| 3,683,090 | |
|
| Value ($) |
|
| |
Telecommunication Services 3.7% | ||
Diversified Telecommunication Services 3.1% | ||
AT&T, Inc. | 566,236 | 23,498,794 |
CenturyTel, Inc. | 10,519 | 515,957 |
Citizens Communications Co. | 27,790 | 424,353 |
Embarq Corp. | 13,398 | 849,031 |
Qwest Communications International, Inc.* (a) | 142,640 | 1,383,608 |
Verizon Communications, Inc. | 265,929 | 10,948,297 |
Windstream Corp. | 46,459 | 685,735 |
| 38,305,775 | |
Wireless Telecommunication Services 0.6% | ||
ALLTEL Corp. | 32,908 | 2,222,936 |
Sprint Nextel Corp. | 265,268 | 5,493,700 |
| 7,716,636 | |
Utilities 3.5% | ||
Electric Utilities 1.8% | ||
Allegheny Energy, Inc.* | 14,110 | 730,051 |
American Electric Power Co., Inc. | 36,216 | 1,631,169 |
Duke Energy Corp. | 116,083 | 2,124,319 |
Edison International | 28,867 | 1,620,016 |
Entergy Corp. | 19,256 | 2,067,132 |
Exelon Corp. | 61,242 | 4,446,169 |
FirstEnergy Corp. | 29,154 | 1,887,139 |
FPL Group, Inc. | 37,684 | 2,138,190 |
Pinnacle West Capital Corp. | 7,608 | 303,179 |
PPL Corp. | 34,028 | 1,592,170 |
Progress Energy, Inc. | 21,831 | 995,275 |
Southern Co. | 69,004 | 2,366,147 |
| 21,900,956 | |
Gas Utilities 0.1% | ||
Nicor, Inc. | 4,084 | 175,285 |
Questar Corp. | 15,800 | 835,030 |
| 1,010,315 | |
Independent Power Producers & Energy Traders 0.5% | ||
AES Corp.* | 60,648 | 1,326,978 |
Constellation Energy Group | 16,510 | 1,439,177 |
Dynegy, Inc. "A"* | 34,972 | 330,136 |
TXU Corp. | 42,112 | 2,834,137 |
| 5,930,428 | |
|
| Value ($) |
|
| |
Multi-Utilities 1.1% | ||
Ameren Corp. | 17,369 | 851,255 |
CenterPoint Energy, Inc. | 26,021 | 452,765 |
CMS Energy Corp. | 24,872 | 427,798 |
Consolidated Edison, Inc. | 26,622 | 1,201,185 |
Dominion Resources, Inc. | 33,617 | 2,901,483 |
DTE Energy Co. | 15,657 | 754,980 |
Integrys Energy Group, Inc. | 7,200 | 365,256 |
KeySpan Corp. | 15,514 | 651,278 |
NiSource, Inc. | 26,608 | 551,052 |
PG&E Corp. | 32,049 | 1,451,820 |
Public Service Enterprise Group, Inc. | 24,375 | 2,139,637 |
Sempra Energy | 25,687 | 1,521,441 |
TECO Energy, Inc. | 24,500 | 420,910 |
Xcel Energy, Inc. | 34,057 | 697,147 |
| 14,388,007 | |
Total Common Stocks (Cost $923,880,378) | 1,227,274,689 |
| Principal Amount ($) | Value ($) |
|
| |
Government & Agency Obligations 0.2% | ||
US Treasury Bill, 4.64%**, 8/9/2007 (b) (Cost $2,118,587) | 2,130,000 | 2,118,587 |
|
| Value ($) |
|
| |
Securities Lending Collateral 1.3% | ||
Daily Assets Fund Institutional, 5.36% (c) (d) (Cost $16,758,750) | 16,758,750 | 16,758,750 |
| ||
Cash Equivalents 1.4% | ||
Cash Management QP Trust, 5.34% (c) (Cost $17,043,526) | 17,043,526 | 17,043,526 |
| % of Net Assets | Value ($) |
|
| |
Total Investment Portfolio (Cost $959,801,241)+ | 101.4 | 1,263,195,552 |
Other Assets and Liabilities, Net (a) | (1.4) | (16,942,634) |
Net Assets | 100.0 | 1,246,252,918 |
** Annualized yield at time of purchase; not a coupon rate.
+ The cost for federal income tax purposes was $988,360,334. At June 30, 2007, net unrealized appreciation for all securities based on tax cost was $274,835,218. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $325,614,358 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $50,779,140.
(a) All or a portion of these securities were on loan amounting to $16,248,118. In addition, included in other assets and liabilities, net are pending sales, amounting to $125,730, that are also on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2007 amounted to $16,373,848 which is 1.3% of net assets.
(b) At June 30, 2007, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.
(c) Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.
(d) Represents collateral held in connection with securities lending.
REIT: Real Estate Investment Trust
At June 30, 2007, open futures contracts purchased were as follows:
Futures | Expiration Date | Contracts | Aggregate Face Value ($) | Value ($) | Unrealized Depreciation ($) |
S&P 500 Index | 9/20/2007 | 53 | 20,200,215 | 20,079,050 | (121,165) |
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of June 30, 2007 (Unaudited) | |
Assets | |
Investments: Investments in securities, at value (cost $925,998,965) — including $16,248,118 of securities loaned | $ 1,229,393,276 |
Investment in Daily Assets Fund Institutional (cost $16,758,750)* | 16,758,750 |
Investment in Cash Management QP Trust (cost $17,043,526) | 17,043,526 |
Total investments in securities, at value (cost $959,801,241) | 1,263,195,552 |
Dividends receivable | 1,570,637 |
Receivable for investments sold | 798,373 |
Interest receivable | 143,891 |
Receivable for Portfolio shares sold | 90,364 |
Other assets | 49,945 |
Total assets | 1,265,848,762 |
Liabilities | |
Payable upon return of securities loaned | 16,758,750 |
Payable for investments purchased | 1,730,140 |
Payable for Portfolio shares redeemed | 487,275 |
Payable for daily variation margin on open futures contracts | 26,322 |
Accrued management fee | 354,086 |
Other accrued expenses and payables | 239,271 |
Total liabilities | 19,595,844 |
Net assets, at value | $ 1,246,252,918 |
Net Assets | |
Net assets consist of: Undistributed net investment income | 12,557,880 |
Net unrealized appreciation (depreciation) on: Investments | 303,394,311 |
Futures | (121,165) |
Accumulated net realized gain (loss) | 6,045,946 |
Paid-in capital | 924,375,946 |
Net assets, at value | $ 1,246,252,918 |
Class A Net Asset Value, offering and redemption price per share ($1,122,878,130 ÷ 71,253,742 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized) | $ 15.76 |
Class B Net Asset Value, offering and redemption price per share ($68,134,145 ÷ 4,321,041 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized) | $ 15.77 |
Class B2 Net Asset Value, offering and redemption price per share ($55,240,643 ÷ 3,502,676 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized) | $ 15.77 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended June 30, 2007 (Unaudited) | |
Investment Income | |
Income: Dividends | $ 14,193,717 |
Interest | 78,167 |
Interest — Cash Management QP Trust | 806,439 |
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates | 35,737 |
Total Income | 15,114,060 |
Expenses: Management fee | 1,457,046 |
Administration fee | 761,757 |
Custodian fee | 32,401 |
Distribution service fees (Class B and Class B2) | 168,699 |
Record keeping fee (Class B2) | 38,361 |
Services to shareholders | 668 |
Auditing | 20,252 |
Legal | 28,249 |
Trustees' fees and expenses | 24,088 |
Reports to shareholders and shareholder meeting | 219,183 |
Other | 50,675 |
Total expenses before expense reductions | 2,801,379 |
Expense reductions | (265,992) |
Total expenses after expense reductions | 2,535,387 |
Net investment income (loss) | 12,578,673 |
Realized and Unrealized Gain (Loss) on Investment Transactions | |
Net realized gain (loss) from: Investments | 20,763,135 |
In-kind redemptions | 73,117,202 |
Futures | 977,140 |
| 94,857,477 |
Net unrealized appreciation (depreciation) during the period on: Investments | (7,997,040) |
Futures | (175,557) |
| (8,172,597) |
Net gain (loss) on investment transactions | 86,684,880 |
Net increase (decrease) in net assets resulting from operations | $ 99,263,553 |
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 June 30, 2007 (Unaudited) | Year Ended December 31, 2006 |
Operations: Net investment income (loss) | $ 12,578,673 | $ 23,189,108 |
Net realized gain (loss) on investment transactions | 94,857,477 | 2,943,751 |
Net unrealized appreciation (depreciation) during the period on investment transactions | (8,172,597) | 178,849,313 |
Net increase (decrease) in net assets resulting from operations | 99,263,553 | 204,982,172 |
Distributions to shareholders from: Net investment income: Class A | (21,156,472) | (13,781,595) |
Class B | (1,115,985) | (640,558) |
Class B2 | (629,996) | (485,019) |
Portfolio share transactions: Class A Proceeds from shares sold | 107,903,386 | 369,528,119 |
Reinvestment of distributions | 21,156,472 | 13,781,595 |
Cost of shares redeemed | (190,049,073) | (245,811,474) |
In-kind redemptions | (297,115,219) | — |
Net increase (decrease) in net assets from Class A share transactions | (358,104,434) | 137,498,240 |
Class B Proceeds from shares sold | 11,261,472 | 21,759,460 |
Reinvestment of distributions | 1,115,985 | 640,558 |
Cost of shares redeemed | (32,651,243) | (15,841,867) |
Net increase (decrease) in net assets from Class B share transactions | (20,273,786) | 6,558,151 |
Class B2 Proceeds from shares sold | 2,328,741 | 10,704,216 |
Reinvestment of distributions | 629,996 | 485,019 |
Cost of shares redeemed | (8,123,693) | (20,239,713) |
Net increase (decrease) in net assets from Class B2 share transactions | (5,164,956) | (9,050,478) |
Increase (decrease) in net assets | (307,182,076) | 325,080,913 |
Net assets at beginning of period | 1,553,434,994 | 1,228,354,081 |
Net assets at end of period (including undistributed net investment income of $12,557,880 and $22,881,660, respectively) | $ 1,246,252,918 | $ 1,553,434,994 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets (continued) | ||
Other Information | Six Months Ended June 30, 2007 (Unaudited) | Year Ended December 31, 2006 |
Class A Shares outstanding at beginning of period | 94,305,191 | 84,067,247 |
Shares sold | 7,020,876 | 27,355,596 |
Shares issued to shareholders in reinvestment of distributions | 1,366,697 | 1,008,902 |
Shares redeemed | (12,570,970) | (18,126,554) |
In-kind redemptions | (18,868,052) | — |
Net increase (decrease) in Class A shares | (23,051,449) | 10,237,944 |
Shares outstanding at end of period | 71,253,742 | 94,305,191 |
Class B Shares outstanding at beginning of period | 5,613,107 | 5,155,670 |
Shares sold | 733,491 | 1,579,717 |
Shares issued to shareholders in reinvestment of distributions | 72,046 | 46,858 |
Shares redeemed | (2,097,603) | (1,169,138) |
Net increase (decrease) in Class B shares | (1,292,066) | 457,437 |
Shares outstanding at end of period | 4,321,041 | 5,613,107 |
Class B2 Shares outstanding at beginning of period | 3,841,811 | 4,506,034 |
Shares sold | 153,726 | 788,488 |
Shares issued to shareholders in reinvestment of distributions | 40,645 | 35,455 |
Shares redeemed | (533,506) | (1,488,166) |
Net increase (decrease) in Class B2 shares | (339,135) | (664,223) |
Shares outstanding at end of period | 3,502,676 | 3,841,811 |
The accompanying notes are an integral part of the financial statements.
Class A Years Ended December 31, | 2007a | 2006 | 2005 | 2004 | 2003 | 2002 |
Selected Per Share Data | ||||||
Net asset value, beginning of period | $ 14.97 | $ 13.11 | $ 12.73 | $ 11.64 | $ 9.20 | $ 11.98 |
Income (loss) from investment operations: Net investment income (loss)b | .13 | .24 | .21 | .21 | .15 | .14 |
Net realized and unrealized gain (loss) on investment transactions | .89 | 1.78 | .37 | 1.01 | 2.41 | (2.81) |
Total from investment operations | 1.02 | 2.02 | .58 | 1.22 | 2.56 | (2.67) |
Less distributions from: Net investment income | (.23) | (.16) | (.20) | (.13) | (.12) | (.11) |
Net asset value, end of period | $ 15.76 | $ 14.97 | $ 13.11 | $ 12.73 | $ 11.64 | $ 9.20 |
Total Return (%) | 6.86c** | 15.52c | 4.68 | 10.59c | 28.16c | (22.31)c |
Ratios to Average Net Assets and Supplemental Data | ||||||
Net assets, end of period ($ millions) | 1,123 | 1,412 | 1,102 | 790 | 627 | 395 |
Ratio of expenses before expense reductions and/or recoupments (%) | .33* | .28 | .27 | .28 | .30 | .32 |
Ratio of expenses after expense reductions and/or recoupments (%) | .29* | .27 | .27 | .29 | .30 | .30 |
Ratio of net investment income (loss) (%) | 1.69* | 1.73 | 1.62 | 1.76 | 1.50 | 1.33 |
Portfolio turnover rate (%) | 4d** | 9 | 15 | 1 | 1 | 10 |
a For the six months ended June 30, 2007 (Unaudited). b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. d Excludes portfolio securities delivered as a result of processing redemption in-kind transactions. * Annualized ** Not annualized |
Class B Years Ended December 31, | 2007a | 2006 | 2005 | 2004 | 2003 | 2002b |
Selected Per Share Data | ||||||
Net asset value, beginning of period | $ 14.96 | $ 13.10 | $ 12.72 | $ 11.63 | $ 9.20 | $ 11.27 |
Income (loss) from investment operations: Net investment income (loss)c | .11 | .21 | .17 | .20 | .14 | .09 |
Net realized and unrealized gain (loss) on investment transactions | .89 | 1.78 | .38 | .99 | 2.40 | (2.07) |
Total from investment operations | 1.00 | 1.99 | .55 | 1.19 | 2.54 | (1.98) |
Less distributions from: Net investment income | (.19) | (.13) | (.17) | (.10) | (.11) | (.09) |
Net asset value, end of period | $ 15.77 | $ 14.96 | $ 13.10 | $ 12.72 | $ 11.63 | $ 9.20 |
Total Return (%) | 6.72d** | 15.24d | 4.42 | 10.32d | 27.83 | (17.56)** |
Ratios to Average Net Assets and Supplemental Data | ||||||
Net assets, end of period ($ millions) | 68 | 84 | 68 | 53 | 17 | 3 |
Ratio of expenses before expense reductions and/or recoupments (%) | .58* | .53 | .52 | .53 | .55 | .55* |
Ratio of expenses after expense reductions and/or recoupments (%) | .54* | .52 | .52 | .54 | .55 | .55* |
Ratio of net investment income (loss) (%) | 1.44* | 1.48 | 1.37 | 1.71 | 1.29 | 1.45* |
Portfolio turnover rate (%) | 4e** | 9 | 15 | 1 | 1 | 10 |
a For the six months ended June 30, 2007 (Unaudited). b For the period April 30, 2002 (commencement of operations) to December 31, 2002. c Based on average shares outstanding during the period. d Total return would have been lower had certain expenses not been reduced. e Excludes portfolio securities delivered as a result of processing redemption in-kind transactions. * Annualized ** Not annualized |
Class B2 Years Ended December 31, | 2007a | 2006 | 2005b |
Selected Per Share Data | |||
Net asset value, beginning of period | $ 14.96 | $ 13.09 | $ 12.94 |
Income (loss) from investment operations: Net investment income (loss)c | .10 | .19 | .05 |
Net realized and unrealized gain (loss) on investment transactions | .89 | 1.79 | .10 |
Total from investment operations | .99 | 1.98 | .15 |
Less distributions from: Net investment income | (.18) | (.11) | — |
Net asset value, end of period | $ 15.77 | $ 14.96 | $ 13.09 |
Total Return (%)d | 6.61** | 15.20 | 1.16** |
Ratios to Average Net Assets and Supplemental Data | |||
Net assets, end of period ($ millions) | 55 | 57 | 59 |
Ratio of expenses before expense reductions (%) | .72* | .67 | .66* |
Ratio of expenses after expense reductions (%) | .64* | .63 | .63* |
Ratio of net investment income (loss) (%) | 1.34* | 1.37 | 1.34* |
Portfolio turnover rate (%) | 4e** | 9 | 15 |
a For the six months ended June 30, 2007 (Unaudited). b For the period September 16, 2005 (commencement of operations) to December 31, 2005. c Based on average shares outstanding during the period. d Total return would have been lower had certain expenses not been reduced. e Excludes portfolio securities delivered as a result of processing redemption in-kind transactions. * Annualized ** Not annualized |
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
DWS Investments VIT Funds (the "Trust") is registered under the Investment Company Act of 1940 as amended, (the "1940 Act"), as a diversified, open-end management investment company. The Trust is organized as a Massachusetts business trust. The Trust is comprised of several portfolios. DWS Equity 500 Index VIP (the "Portfolio") is one of the series the Trust offers to investors. The Portfolio is intended to be the underlying investment vehicle for variable annuity contracts and variable life insurance policies to be offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies").
Multiple Classes of Shares of Beneficial Interest. The Portfolio offers three classes of shares to investors: Class A Shares, Class B Shares and Class B2 shares. Class B and Class B2 Shares are subject to Rule 12b-1 distribution fees under the 1940 Act equal to an annual rate up to 0.25% of average daily net assets. In addition, Class B2 shares are subject to record keeping fees equal to an annual rate of up to 0.15% of average daily net assets. 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 distribution 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 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 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.
In September 2006, the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. As of June 30, 2007, management does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements, however, additional disclosures will be required about the inputs used to develop the measurements of fair value and the effect of certain of the measurements reported in the statement of operations for a fiscal period.
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 Portfolio enters into futures contracts to keep cash on hand to meet shareholder redemptions or other needs while maintaining exposure to the stock market.
Upon entering into a futures contract, the Portfolio 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 Portfolio depending 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 Portfolio. When entering into a closing transaction, the Portfolio 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 Portfolio'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 hedged.
Federal Income Taxes. The Portfolio'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 and tax-exempt income to its shareholders. Accordingly, the Portfolio paid no federal income taxes and no federal income tax provision was required.
At December 31, 2006, DWS Equity 500 Index VIP had a net tax basis capital loss carryforward of approximately $60,044,000, of which $46,481,000 was inherited from its merger with the SVS II Index 500 Portfolio, and may be applied against any realized net taxable gains of each succeeding year until fully utilized or until the expiration dates December 31, 2009 ($5,504,000), December 31, 2010 ($17,081,000) and December 31, 2011 ($4,052,000) and December 31, 2012 ($33,407,000), whichever occurs first, and which may be subject to certain limitations under Sections 382-384 of the Internal Revenue Code.
In addition, from November 1, 2006 through December 31, 2006, the Portfolio incurred approximately $169,000 of net realized capital losses. As permitted by tax regulations, the Portfolio intends to elect to defer these losses and treat them as arising in the fiscal year end December 31, 2007.
In July 2006, FASB issued Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109" (the "Interpretation"). The Interpretation establishes for the Portfolio a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns. Management has evaluated the application of FIN 48 and has determined there is no impact on the Portfolio's financial statements.
Distribution of Income and Gains. Net investment income of the Portfolio, if any, is declared and distributed to shareholders annually. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Portfolio 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 investments in futures contracts and certain securities sold at a 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 Portfolio may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Portfolio.
The tax character of current year distributions will be determined at the end of the current fiscal year.
Securities Lending. The Portfolio may lend securities to financial institutions. The Portfolio retains beneficial ownership of the securities it has loaned and continues to receive interest and dividends paid by the issuer of securities and to participate in any changes in their market value. The Portfolio requires the borrowers of the securities to maintain collateral with the Portfolio consisting of liquid, unencumbered assets having a value at least equal to the value of the securities loaned. The Portfolio may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Portfolio receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of fees paid to a lending agent. Either the Portfolio or the borrower may terminate the loan. The Portfolio is subject to all investment risks associated with the value of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.
Contingencies. In the normal course of business, the Portfolio may enter into contracts with service providers that contain general indemnification clauses. The Portfolio's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet been made. However, based on experience, the Portfolio expects the risk of loss to be remote.
Expenses. Expenses of the Trust arising in connection with a specific portfolio are allocated to that portfolio. Other Trust expenses which cannot be directly attributed to a portfolio are apportioned among the portfolios in the Trust.
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 security transactions are reported on 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 as soon as the Portfolio is informed of such dividends. 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 June 30, 2007, purchases and sales of investment securities (excluding short-term investments and in-kind redemptions) aggregated $64,532,101 and $132,959,706, respectively.
C. Related Parties
Investment Management Agreement. Under the Investment Management Agreement with Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), an indirect, wholly owned subsidiary of Deutsche Bank AG, the Advisor directs the investments of the Portfolio in accordance with its investment objectives, policies and restrictions. Pursuant to the Investment Management Agreement with the Advisor, the Portfolio pays a monthly management fee based on the Portfolio's average daily net assets, accrued daily and payable monthly, at the following annual rates:
First $1 billion of the Portfolio's average daily net assets | .200% |
Next $1 billion of such net assets | .175% |
Over $2 billion of such net assets | .150% |
Northern Trust Investments, N.A. ("NTI") acts as investment sub-advisor for the Portfolio. As the Portfolio's investment sub-advisor, NTI makes the Portfolio's investment decisions. It buys and sells securities for the Portfolio and conducts the research that leads to these purchase and sale decisions. NTI is paid by the Advisor for its services.
For the period from January 1, 2007 through April 30, 2009, the Advisor contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses of the Portfolio to the extent necessary to maintain operating expenses of each class (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, proxy and organizational and offering costs) as follows:
Class A | .28% |
Class B | .53% |
Class B2 | .63% |
Accordingly, for the six months ended June 30, 2007, the Advisor waived a portion of its Management fee aggregating $253,493 and the amount charged aggregated $1,203,553, which was equivalent to an annualized effective rate of 0.16% of the Portfolio's average daily net assets.
In addition, the Advisor reimbursed the Portfolio $10,642 of record keeping fees for Class B2 shares for the six months ended June 30, 2007.
The Advisor may recoup any of its waived investment management fees within the following three years if the Portfolio is able to make the repayment without exceeding its contractual expense limits during the period of waiver/reimbursement. As of June 30, 2007, $357,627 was subject to repayment to the Advisor.
Administration Fee. Pursuant to the Administrative Services Agreement with DIMA, the Advisor provides most administrative services to the Portfolio. For all services provided under the Administrative Services Agreement, the Portfolio pays the Advisor an annual fee ("Administration fee") of 0.10% of the Portfolio's average daily net assets, computed and accrued daily and payable monthly. For the six months ended June 30, 2007, the Advisor received an Administration fee of $761,757, of which $124,379 is unpaid.
Distribution Service Agreement. DWS Scudder Distributors, Inc. ("DWS-SDI"), an affiliate of the Advisor, is the Portfolio's distributor. In accordance with the Distribution Plan, DWS-SDI receives 12b-1 fees of up to 0.25% of average daily net assets of Class B and B2 shares. For the six months ended June 30, 2007, the Distribution Service Fees were as follows:
Distribution Service Fees | Total Aggregated | Unpaid at June 30, 2007 |
Class B | $ 99,130 | $ 17,885 |
Class B2 | 69,569 | 12,097 |
| $ 168,699 | $ 29,982 |
Service Provider Fees. DWS Scudder Investments Service Company ("DWS-SISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent of the Portfolio. Pursuant to a sub-transfer agency agreement among DWS-SISC and DST Systems, Inc. ("DST"), DWS-SISC has delegated certain transfer agent and dividend paying agent functions to DST. DWS-SISC compensates DST out of the shareholder servicing fee they receive from the Portfolio. For the six months ended June 30, 2007, the amounts charged to the Portfolio by DWS-SISC were as follows:
Services to Shareholders | Total Aggregated | Waived | Unpaid at June 30, 2007 |
Class A | $ 497 | $ 497 | $ — |
Class B | 97 | 24 | 87 |
Class B2 | 74 | 74 | — |
| $ 668 | $ 595 | $ 87 |
Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Portfolio. For the six months ended June 30, 2007, the amount charged to the Portfolio by DIMA included in the Statement of Operations under "reports to shareholders and shareholder meeting" aggregated $8,501, of which $7,668 is unpaid.
Trustees Fees and Expenses. As compensation for his or her services, each Independent Trustee receives an aggregated annual fee, plus a fee for each meeting attended (plus reimbursement for reasonable out-of-pocket expenses incurred in connection with his or her attendance at board and committee meetings) from each Fund in the Fund Complex for which he or she serves. In addition, the Chairperson of the Board and the Chairperson of each committee of the Board receives additional compensation for their services. Payment of such fees and expenses is allocated among all such Funds described above in direct proportion to their relative net assets.
Cash Management QP Trust. Pursuant to an Exemptive Order issued by the SEC, the Portfolio may invest in the Cash Management QP Trust (the "QP Trust") and other affiliated funds managed by the Manager or 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 Manager or Advisor a management fee for the affiliated funds' investments in the QP Trust.
D. Fee Reductions
The Portfolio 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 Portfolio's custodian expenses. During the six months ended June 30, 2007, the Portfolio's custodian fees were reduced by $1,262 for custody credits earned.
E. Line of Credit
The Portfolio and other affiliated funds (the "Participants") share in a $750 million revolving credit facility administered by JPMorgan Chase Bank N.A. 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 0.35%. The Portfolio may borrow up to a maximum of 33% of its net assets under the agreement.
F. Ownership of the Portfolio
At June 30, 2007, two participating insurance companies were beneficial owners of record of 10% or more of the total outstanding Class A shares of the Portfolio, each owning 52% and 18%, respectively. At June 30, 2007, one participating insurance company was a beneficial owner of record of 10% or more of the total outstanding Class B shares of the Portfolio, owning 83%. At June 30, 2007, two participating insurance companies were beneficial owners of record of 10% or more of the outstanding Class B2 shares of the Portfolio, each owning 77% and 13%, respectively.
G. Regulatory Matters and Litigation
Regulatory Settlements. On December 21, 2006, Deutsche Asset Management ("DeAM") settled proceedings with the Securities and Exchange Commission ("SEC") and the New York Attorney General on behalf of Deutsche Asset Management, Inc. ("DAMI") and Deutsche Investment Management Americas Inc. ("DIMA"), the investment advisors to many of the DWS Scudder funds, regarding allegations of improper trading at DeAM and at the legacy Scudder and Kemper organizations prior to their acquisition by DeAM in April 2002. These regulators alleged that although the prospectuses for certain funds in the regulators' view indicated that the funds did not permit market timing, DAMI and DIMA breached their fiduciary duty to those funds in that their efforts to limit trading activity in the funds were not effective at certain times. The regulators also alleged that DAMI and DIMA breached their fiduciary duty to certain funds by entering into certain market timing arrangements with investors. These trading arrangements originated in businesses that existed prior to the currently constituted DeAM organization, which came together as a result of various mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the arrangements were terminated prior to the start of the regulatory investigations that began in the summer of 2003. No current DeAM employee approved these trading arrangements. Under the terms of the settlements, DAMI and DIMA neither admit nor deny any wrongdoing.
The terms of the SEC settlement, which identified improper trading in the legacy Deutsche and Kemper mutual funds only, provide for payment of disgorgement in the amount of $17.2 million. The terms of the settlement with the New York Attorney General provide for payment of disgorgement in the amount of $102.3 million, which is inclusive of the amount payable under the SEC settlement, plus a civil penalty in the amount of $20 million. The total amount payable by DeAM, approximately $122.3 million, would be distributed to funds in accordance with a distribution plan to be developed by a distribution consultant. The funds' investment advisors do not believe these amounts will have a material adverse financial impact on them or materially affect their ability to perform under their investment management agreements with the DWS funds. The above-described amounts are not material to Deutsche Bank, and have already been reserved.
Among the terms of the settled orders, DeAM is subject to certain undertakings regarding the conduct of its business in the future, including: formation of a Code of Ethics Oversight Committee to oversee all matters relating to issues arising under the advisors' Code of Ethics; establishment of an Internal Compliance Controls Committee having overall compliance oversight responsibility of the advisors; engagement of an Independent Compliance Consultant to conduct a comprehensive review of the advisors' supervisory compliance and other policies and procedures designed to prevent and detect breaches of fiduciary duty, breaches of the Code of Ethics and federal securities law violations by the advisors and their employees; and commencing in 2008, the advisors shall undergo a compliance review by an independent third party.
In addition, DeAM is subject to certain further undertakings relating to the governance of the mutual funds, including that: at least 75% of the members of the Boards of Trustees/Directors overseeing the DWS Funds continue to be independent of DeAM; the Chairmen of the DWS Funds' Boards of Trustees/Directors continue to be independent of DeAM; DeAM maintain existing management fee reductions for these certain funds for a period of five years and not increase management fees for certain funds during this period; the funds retain a senior officer (or independent consultants, as applicable) responsible for assisting in the review of fee arrangements and monitoring compliance by the funds and the investment advisors with securities laws, fiduciary duties, codes of ethics and other compliance policies, the expense of which shall be borne by DeAM; and periodic account statements, fund prospectuses and the mutual funds' web site contain additional disclosure and/or tools that assist investors in understanding the fees and costs associated with an investment in the funds and the impact of fees and expenses on fund returns.
DeAM has also settled proceedings with the Illinois Secretary of State regarding market timing matters. The terms of the Illinois settlement provide for investor education contributions totaling approximately $4 million and a payment in the amount of $2 million to the Securities Audit and Enforcement Fund.
On September 28, 2006, the SEC and the National Association of Securities Dealers ("NASD") announced final agreements in which Deutsche Investment Management Americas Inc. ("DIMA"), Deutsche Asset Management, Inc. ("DAMI") and Scudder Distributors, Inc. ("SDI") (now known as DWS Scudder Distributors, Inc.) settled administrative proceedings regarding disclosure of brokerage allocation practices in connection with sales of the Scudder Funds' (now known as the DWS Scudder Funds) shares during 2001-2003. The agreements with the SEC and NASD are reflected in orders which state, among other things, that DIMA and DAMI failed to disclose potential conflicts of interest to the fund Boards and to shareholders relating to SDI's use of certain funds' brokerage commissions to reduce revenue sharing costs to broker-dealer firms with whom it had arrangements to market and distribute Scudder Fund shares. These directed brokerage practices were discontinued in October 2003.
Under the terms of the settlements, in which DIMA, DAMI and SDI neither admitted nor denied any of the regulators' findings, DIMA, DAMI and SDI agreed to pay disgorgement, prejudgment interest and civil penalties in the total amount of $19.3 million. The portion of the settlements distributed to the funds was approximately $17.8 million and was paid to the funds as prescribed by the settlement orders based upon the amount of brokerage commissions from each fund used to satisfy revenue sharing agreements with broker-dealers who sold fund shares. Based on the prescribed settlement order, the Portfolio was not entitled to a portion of the settlement.
As part of the settlements, DIMA, DAMI and SDI also agreed to implement certain measures and undertakings relating to revenue sharing payments including making additional disclosures in the fund Prospectuses or Statements of Additional Information, adopting or modifying relevant policies and procedures and providing regular reporting to the fund Boards.
Private Litigation Matters. The matters alleged in the regulatory settlements described above also serve as the general basis of a number of private class action lawsuits involving the DWS funds. These lawsuits name as defendants various persons, including certain DWS funds, the funds' investment advisors and their affiliates, and certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each DWS fund's investment advisor has agreed to indemnify the applicable DWS funds in connection with these lawsuits, or other lawsuits or regulatory actions that may be filed making similar allegations.
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 DWS fund is remote and such actions are not likely to materially affect their ability to perform under their investment management agreements with the DWS funds.
H. In-Kind Redemption
In certain circumstances, the Portfolio may distribute portfolio securities rather than cash as payments for a redemption of Portfolio shares (in-kind redemption). For financial reporting purposes, the Portfolio recognizes a gain on in-kind redemptions to the extent the value of the distributed securities exceeds their costs; the Portfolio recognizes a loss if cost exceeds value. Gains and losses realized on in-kind redemptions are not recognized for tax purposes, and are reclassified from undistributed realized gain (loss) to paid-in capital. During the six months ended June 30, 2007, the Portfolio realized $73,117,202 of net gain attributable to in-kind redemptions.
A description of the Portfolio's policies and procedures for voting proxies for portfolio securities and information about how the Portfolio voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — www.dws-scudder.com (click on "proxy voting"at the bottom of the page) — or on the SEC's Web site — www.sec.gov. To obtain a written copy of the Portfolio's policies and procedures without charge, upon request, call us toll free at (800) 778-1482.
Notes
About the Portfolio's Advisor
Deutsche Investment Management Americas Inc. ("DIMA"), an indirect, wholly owned subsidiary of Deutsche Bank AG, is the Portfolio's Advisor.
DWS Scudder is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment Management Americas Inc. and DWS 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.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by individual investors.
DWS Scudder Distributors, Inc.
222 South Riverside Plaza
Chicago, IL 60606
(800) 778-1482
vit-equ500-3 (49962 8/07)
ITEM 2. | CODE OF ETHICS |
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| Not applicable. |
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ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT |
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| Not applicable. |
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ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
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| Not applicable. |
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS |
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| Not Applicable |
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ITEM 6. | SCHEDULE OF INVESTMENTS |
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| Not Applicable |
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ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES |
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| Not applicable. |
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ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES |
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| Not applicable. |
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS |
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| Not Applicable. |
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
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| The Committee on Independent Trustees/Directors selects and nominates Independent Trustees/Directors. Fund shareholders may 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. |
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ITEM 11. | CONTROLS AND PROCEDURES |
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| (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. |
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| (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. |
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ITEM 12. | EXHIBITS |
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| (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. |
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| (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-CSRS 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: | DWS Equity 500 Index VIP, a series of DWS Investments VIT Funds |
By: | /s/Michael G. Clark |
| Michael G. Clark |
President
Date: | August 16, 2007 |
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: | DWS Equity 500 Index VIP, a series of DWS Investments VIT Funds |
By: | /s/Michael G. Clark |
| Michael G. Clark |
President
Date: | August 16, 2007 |
By: | /s/Paul Schubert |
| Paul Schubert |
Chief Financial Officer and Treasurer
Date: | August 16, 2007 |