UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM N-CSR Investment Company Act file number 811-09057 SCUDDER INVESTORS TRUST -------------------------------- (Exact Name of Registrant as Specified in Charter) 222 South Riverside Plaza, Chicago, Illinois 60606 -------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code: (617) 295-2663 -------------- Salvatore Schiavone Two International Place Boston, Massachusetts 02110 --------------------------------------- (Name and Address of Agent for Service) Date of fiscal year end: 8/31 Date of reporting period: 8/31/04ITEM 1. REPORT TO STOCKHOLDERS
[Scudder Investments logo]
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Annual Report to Shareholders | ||
August 31, 2004 |
Contents |
<Click Here> Performance Summary <Click Here> Information About Your Fund's Expenses <Click Here> Portfolio Management Review <Click Here> Portfolio Summary <Click Here> Investment Portfolio <Click Here> Financial Statements <Click Here> Financial Highlights <Click Here> Notes to Financial Statements <Click Here> Report of Independent Registered Public Accounting Firm <Click Here> Tax Information <Click Here> Trustees and Officers <Click Here> Account Management Resources |
This report must be preceded or accompanied by a prospectus. To obtain a prospectus for any of our funds, refer to the Account Management Resources information provided in the back of this booklet. We advise you to consider the fund's objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the fund. Please read the prospectus carefully before you invest.
Investments in mutual funds involve risk. Some funds have more risk than others. While the fund seeks to closely track the characteristics and performance of the S&P 500 index, important differences between the two exist. The index is not available for direct investment, and there are no fees or expenses associated with the index's performance. As with most other mutual funds, this Scudder fund has fees and expenses. The S&P 500 index and the fund include stocks from many industries. Index and fund composition change periodically as companies are added or dropped, and prices of stocks in the index fluctuate. Please read this fund's prospectus for specific details regarding its risk profile.
Scudder Investments is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Investment Management Americas Inc., Deutsche Asset Management Inc., Deutsche Asset Management Investment Services Ltd., Deutsche Bank Trust Company Americas and Scudder Trust Company.
Fund shares are not FDIC-insured and are not deposits or other obligations of, or guaranteed by, any bank. Fund shares involve investment risk, including possible loss of principal.
"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 fund's advisor or its affiliates. The product 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 product.
All performance shown is historical, assumes reinvestment of all dividends and capital gains, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Please visit scudder.com for the product's most recent month-end performance.
The maximum sales charge for Class A shares is 4.5%. For Class B shares, the maximum contingent deferred sales charge (CDSC) is 4% within the first year after purchase, declining to 0% after six years. Class C shares have no adjustment for front-end sales charges but redemptions within one year of purchase may be subject to a CDSC of 1%. Unadjusted returns do not reflect sales charges and would have been lower if they had.
Returns and rankings during all periods shown reflect a fee waiver and/or expense reimbursement. Without this waiver/reimbursement returns and rankings would have been lower.
Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns and rankings may differ by share class.
Average Annual Total Returns (Unadjusted for Sales Charge) as of 8/31/04 | |||
Scudder S&P 500 Stock Fund | 1-Year | 3-Year | Life of Fund* |
Class A | 10.90% | -.06% | -6.28% |
Class B | 9.92% | -.81% | -6.97% |
Class C | 9.76% | -.90% | -7.03% |
S&P 500 Index+ | 11.46% | .80% | -5.25% |
Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.
* The Fund commenced operations on April 3, 2000. Index returns begin March 31, 2000.Net Asset Value and Distribution Information | |||
Class A | Class B | Class C | |
Net Asset Value: 8/31/04 | $ 6.97 | $ 6.87 | $ 6.87 |
8/31/03 | $ 6.34 | $ 6.25 | $ 6.26 |
Distribution Information: Twelve Months: Income Dividends as of 8/31/04 | $ .05 | $ - | $ 0.01 |
Class A Lipper Rankings - S&P 500 Index Objective Funds Category as of 8/31/04 | ||||
Period | Rank | Number of Funds Tracked | Percentile Ranking | |
1-Year | 78 | of | 172 | 46 |
3-Year | 122 | of | 157 | 78 |
Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings are based on total return unadjusted for sales charges with distributions reinvested. If sales charges had been included, results might have been less favorable. Rankings are for Class A shares; other share classes may vary.
Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge) |
[] Scudder S&P 500 Stock Fund - Class A [] S&P 500 Index+ |
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The Fund's growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 4.50%. This results in a net initial investment of $9,550.
Comparative Results (Adjusted for Maximum Sales Charge) as of 8/31/04 | ||||
Scudder S&P 500 Stock Fund | 1-Year | 3-Year | Life of Fund* | |
Class A | Growth of $10,000 | $10,591 | $9,532 | $7,173 |
Average annual total return | 5.91% | -1.58% | -7.26% | |
Class B | Growth of $10,000 | $10,724 | $9,564 | $7,126 |
Average annual total return | 7.24% | -1.47% | -7.40% | |
Class C | Growth of $10,000 | $10,976 | $9,733 | $7,251 |
Average annual total return | 9.76% | -.90% | -7.03% | |
S&P 500 Index+ | Growth of $10,000 | $11,146 | $10,243 | $7,882 |
Average annual total return | 11.46% | .80% | -5.25% |
The growth of $10,000 is cumulative.
* The Fund commenced operations on April 3, 2000. Index returns begin March 31, 2000.+ The Standard & Poor's (S&P) 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include sales charges (loads), redemption fees and account maintenance fees, which are not shown in this section. The following table is intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it not done so, expenses would have been higher. The table is based on an investment of $1,000 made at the beginning of the six-month period ended August 31, 2004.
The table illustrates your Fund's expenses in two ways:
• Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.
• Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.
* Expenses are equal to the Fund's annualized expense ratio for each share class, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.
Annualized Expense Ratios | Class A | Class B | Class C |
Scudder S&P 500 Stock Fund | .67% | 1.43% | 1.44% |
For more information, please refer to the Fund's prospectus.
Scudder S&P 500 Stock Fund: A Team Approach to Investing
Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), which is part of Deutsche Asset Management, is the investment advisor for Scudder S&P 500 Stock Fund. DeIM and its predecessors have more than 80 years of experience managing mutual funds and DeIM provides a full range of investment advisory services to institutional and retail clients. DeIM is also responsible for selecting brokers and dealers and for negotiating brokerage commissions and dealer charges.
Deutsche Asset Management is a global asset management organization that offers a wide range of investing expertise and resources. This well-resourced global investment platform brings together a wide variety of experience and investment insight across industries, regions, asset classes and investing styles.
DeIM is an indirect, wholly owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual funds, retail, private and commercial banking, investment banking and insurance.
Northern Trust Investments, N.A. ("NTI"), an indirect subsidiary of Northern Trust Corporation, is the subadvisor for the fund. As of June 30, 2004, NTI had approximately $251 billion of assets under management.
Portfolio Management Team
The fund is managed by a team of portfolio managers that specializes in domestic large-cap index investing.
In the following interview, members of the portfolio management team discuss Scudder S&P 500 Stock Fund's market environment and investment results for the12-month period ended August 31, 2004.
Q: Will you describe the economic environment for stocks during the fund's most recent fiscal year?
A: In late summer 2003, the Federal Reserve (the "Fed") was maintaining short-term interest rates at their lowest level in more than 40 years, and Washington was enacting tax cuts with the hope of pushing the US economy forward. As the recovery gathered momentum over the months following - with the government reporting 4% gross domestic product growth for the fourth quarter of 2003 - optimism regarding continued growth and stronger corporate earnings was tempered by wide swings in monthly job-creation statistics. This balance of stronger economic data and improved corporate earnings countered by concern over jobs, the continued insurgency in Iraq, terrorism fears and rising oil prices kept large-cap stocks in a narrow trading range for much of the period. Gradually, the stock market began a shift during the second quarter of 2004. As investors reassessed their tolerance for risk and uncertainty, they began to favor larger, more well-established companies over the small-cap stocks that had dominated in 2003 and the first quarter of 2004.
Over the 12-month period, most of the US stock market's positive performance has come from value stocks. For the period, the value component of the S&P 500 rose 16.09%, compared with the 6.94% return of the growth component. Despite the shift to large-cap stocks late in the period, small-cap stocks as measured by the S&P 600 (up 14.85%) outperformed the S&P 500 index during the period.
Q: Which sectors of the stock market led the way?
A: During the 12-month period, all index sectors posted positive performance, though information technology finished essentially flat. The best returns came from energy stocks (up 30.24%) a function of the higher energy prices that we've seen. Financials continue to make up the largest weighting in the index, finishing August 2004 at 21%. This large weighting in financials imbues the S&P 500 with a certain degree of interest rate sensitivity.
Q: How did the fund perform during its most recent annual period?
A: The total return of Scudder S&P 500 Stock Fund for its most recent fiscal year ended August 31, 2004 was 10.90% (Class A shares) underperforming the 11.46% return of the S&P 500 index. (Return is unadjusted for maximum sales charges. If sales charges had been included, return would have been lower. Past performance is no guarantee of future results. Please see pages 3 through 4 for the performance of other share classes and more complete performance information.)
Q: Which individual stocks were key drivers of index performance during the period?
A: Allegheny Technologies, Inc. was the top performer over the 12-month period, followed by Autodesk, Inc. The worst-performing stocks in the S&P 500 during the period were telecommunications company CIENA Corp. and Delta Airlines, Inc. Airlines have been negatively affected by higher fuel costs and terrorism concerns that have also hurt the US economy in general.
A complete listing of sector performance within the S&P 500 index for the annual period August 31, 2004, is displayed in the accompanying chart:
S&P 500 Sector Performance1 | |||
Economic Sector | Average Weight % | Total Return % | Contribution to Index Return % |
Basic Materials | 2.99 | 18.21 | 0.53 |
Capital Goods | 8.83 | 17.28 | 1.45 |
Communication Services | 3.48 | 18.87 | 0.61 |
Consumer Cyclicals | 10.05 | 3.73 | 0.44 |
Consumer Staples | 12.92 | 10.04 | 1.29 |
Energy | 5.98 | 30.24 | 1.53 |
Financials | 20.70 | 16.64 | 3.36 |
Health Care | 12.87 | 8.01 | 1.03 |
Technology | 17.73 | 0.04 | 0.33 |
Transportation | 1.58 | 14.52 | 0.24 |
Utilities | 2.86 | 23.96 | 0.64 |
Source: FactSet Research Systems Inc. as of 8/31/04. FactSet sector returns vary slightly in relation to the overall index return, which is provided by Lipper Inc.
Past performance is not a guarantee of future results.
1 The total return of each sector should be distinguished from its contribution to index return. Whereas the former represents the total return of a sector independent of the index, the latter represents the sector's contribution to the index's return.Q: What changes were made to the index during the period?
A: For the first eight of months of 2004, we saw more changes to the S&P 500 index than in all of 2003. There have been 12 changes to the index in 2004, with the index's turnover rate increasing to 1.95%. But the biggest news regarding S&P 500 turnover was Standard & Poor's plan to move the index to "float-adjusted" market-capitalization weightings. This means that going forward, closely held shares not available for trading on the major stock exchanges will no longer be counted as market capitalization in determining a company's ranking within the S&P 500 index. This change will create a great deal of turnover within the index over the next two years. Stocks such as Wal-Mart, UPS and Microsoft - all companies with high levels of insider-ownership shares not available to the marketplace - will see their relative weightings within the index decline. The effect on S&P 500 index funds industrywide is that assets held in companies such as Wal-Mart and Microsoft will be spread across the remaining stocks in the index. Overall, approximately 130 stocks will experience declines in index weightings, and 368 stocks will see increases. When the changes are completed in September 2005, the forecast is for an 8% turnover in the index. The move to "float-adjusted" weightings, which will more accurately reflect supply and demand in the share marketplace, is an ongoing trend among stock market indices worldwide.
Q: Will you review the fund's investment process?
A: We seek to provide investment results that, before fund expenses, correspond to the total return of the S&P 500 index. The fund offers investors a convenient means of participating in the large-cap area of the stock market - as measured by the S&P 500 - while relieving investors of the time and paperwork it would require to own all of these investments directly. The fund employs a "passive," or "indexing," approach, attempting to duplicate the overall performance of the S&P 500. In doing so, we as managers attempt to allocate the fund's portfolio weightings in approximately the same manner as the index, beginning with the heaviest-weighted stocks that make up a larger portion of the index's value. Because the portfolio turnover rate of index funds is typically lower than that of actively managed funds, index funds tend to generate few taxable capital gains. Of course there is no guarantee that the fund will be able to mirror the index closely enough to track its performance.
Q: How do you assess the stock market at present?
A: We have recently come through a period in which the Fed began to tighten credit in order to control growth, given various periods in which the economy seemed to be accelerating and then weakening and then looking stronger again. We believe that the Fed's intention is to return to a neutral stance rather than to clamp down on the economy with significantly higher rates. As passive managers, we do not make market forecasts, but we are hopeful that the market's shift from more speculative stocks to well-established, large-cap stocks will continue over the coming months.
Going forward, we believe that Scudder S&P 500 Stock Fund is a suitable vehicle for investors seeking to participate in the long-term growth of large American and multinational corporations.
The views expressed in this report reflect those of the portfolio management team only through the end of the report period as stated on the cover. The team's views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
Asset Allocation | 8/31/04 | 8/31/03 |
Common Stocks | 99% | 99% |
Cash Equivalents | 1% | 1% |
100% | 100% |
Sector Diversification (Excludes Cash Equivalents) | 8/31/04 | 8/31/03 |
Financials | 21% | 20% |
Information Technology | 15% | 16% |
Health Care | 13% | 13% |
Industrials | 12% | 12% |
Consumer Staples | 11% | 12% |
Consumer Discretionary | 11% | 11% |
Energy | 7% | 6% |
Telecommunication Services | 4% | 4% |
Materials | 3% | 3% |
Utilities | 3% | 3% |
100% | 100% |
Asset allocation and sector diversification are subject to change.
Ten Largest Equity Holdings at August 31, 2004 (22.3% of Portfolio) | |
1. General Electric Co. Industrial conglomerate | 3.3% |
2. ExxonMobil Corp. Explorer and producer of oil and gas | 2.9% |
3. Microsoft Corp. Developer of computer software | 2.8% |
4. Pfizer, Inc. Manufacturer of prescription pharmaceuticals and non-prescription self-medications | 2.4% |
5. Citigroup, Inc. Provider of diversified financial services | 2.3% |
6. Wal-Mart Stores, Inc. Operator of discount stores | 2.1% |
7. American International Group, Inc. Provider of insurance services | 1.8% |
8. Bank of America Corp. Provider of commercial banking services | 1.7% |
9. Johnson & Johnson Provider of health care products | 1.6% |
10. Procter & Gamble Co. Manufacturer of diversified consumer products | 1.4% |
Portfolio holdings are subject to change.
For more complete details about the fund's investment portfolio, see page 15. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Fund as of month end is available upon request on the 16th of the following month. Please see the Account Management Resources section for contact information.
Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. This form will be available on the SEC's Web site at www.sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330.
| Value ($) | |
Common Stocks 99.0% | ||
Consumer Discretionary 10.8% | ||
Auto Components 0.2% | ||
Cooper Tire & Rubber Co. | 901 | 20,399 |
Dana Corp. | 1,713 | 32,324 |
Delphi Corp. | 6,581 | 60,282 |
Goodyear Tire & Rubber Co.* | 2,201 | 24,167 |
Johnson Controls, Inc. | 2,128 | 119,806 |
Visteon Corp. | 1,581 | 14,751 |
271,729 | ||
Automobiles 0.7% | ||
Ford Motor Co. | 21,555 | 304,141 |
General Motors Corp. | 6,593 | 272,357 |
Harley-Davidson, Inc. | 3,485 | 212,655 |
789,153 | ||
Distributors 0.1% | ||
Genuine Parts Co. | 1,986 | 75,289 |
Hotels Restaurants & Leisure 1.4% | ||
Carnival Corp. | 7,330 | 335,641 |
Darden Restaurants, Inc. | 1,887 | 39,646 |
Harrah's Entertainment, Inc. | 1,307 | 62,984 |
Hilton Hotels Corp. | 4,513 | 80,557 |
International Game Technology | 4,060 | 117,131 |
Marriott International, Inc. "A" | 2,694 | 127,830 |
McDonald's Corp. | 14,679 | 396,626 |
Starbucks Corp.* | 4,595 | 198,688 |
Starwood Hotels & Resorts Worldwide, Inc. | 2,313 | 102,235 |
Wendy's International, Inc. | 1,324 | 45,506 |
YUM! Brands, Inc. | 3,489 | 138,548 |
1,645,392 | ||
Household Durables 0.5% | ||
Black & Decker Corp. | 951 | 65,552 |
Centex Corp. | 1,442 | 66,000 |
Fortune Brands, Inc. | 1,681 | 122,965 |
KB Home | 506 | 34,798 |
Leggett & Platt, Inc. | 2,181 | 58,647 |
Maytag Corp. | 1,016 | 20,554 |
Newell Rubbermaid, Inc. | 3,275 | 70,511 |
Pulte Homes, Inc. | 1,460 | 86,067 |
Snap-On, Inc. | 625 | 19,856 |
The Stanley Works | 1,039 | 44,947 |
Whirlpool Corp. | 892 | 54,537 |
644,434 | ||
Internet & Catalog Retail 0.5% | ||
eBay, Inc.* | 7,672 | 663,935 |
Leisure Equipment & Products 0.2% | ||
Brunswick Corp. | 1,115 | 43,831 |
Eastman Kodak Co. | 3,407 | 100,779 |
Hasbro, Inc. | 1,992 | 36,912 |
Mattel, Inc. | 4,956 | 79,742 |
261,264 | ||
Media 3.4% | ||
Clear Channel Communications, Inc. | 7,174 | 240,401 |
Comcast Corp. "A"* | 26,703 | 752,223 |
Dow Jones & Co., Inc. | 985 | 40,434 |
Gannett Co., Inc. | 3,239 | 274,343 |
Interpublic Group of Companies, Inc.* | 4,897 | 51,663 |
Knight-Ridder, Inc. | 966 | 62,239 |
McGraw-Hill Companies, Inc. | 2,175 | 164,713 |
Meredith Corp. | 544 | 27,244 |
New York Times Co. "A" | 1,725 | 70,069 |
Omnicom Group, Inc. | 2,160 | 148,630 |
Time Warner, Inc.* | 52,959 | 865,880 |
Tribune Co. | 3,879 | 161,948 |
Univision Communications, Inc. "A"* | 3,713 | 122,529 |
Viacom, Inc. "B" | 20,664 | 688,318 |
Walt Disney Co. | 23,699 | 532,043 |
4,202,677 | ||
Multiline Retail 1.1% | ||
Big Lots, Inc.* | 1,368 | 16,676 |
Dillard's, Inc. "A" | 1,014 | 19,266 |
Dollar General Corp. | 3,854 | 75,924 |
Family Dollar Stores, Inc. | 1,966 | 52,001 |
Federated Department Stores, Inc. | 2,060 | 89,404 |
J.C. Penny Co., Inc. | 3,260 | 124,923 |
Kohl's Corp.* | 3,986 | 197,227 |
Nordstrom, Inc. | 1,590 | 59,036 |
Sears, Roebuck & Co. | 2,617 | 100,179 |
Target Corp. | 10,781 | 480,617 |
The May Department Stores Co. | 3,429 | 84,045 |
1,299,298 | ||
Specialty Retail 2.3% | ||
AutoNation, Inc.* | 3,200 | 52,608 |
AutoZone, Inc.* | 1,046 | 77,467 |
Bed Bath & Beyond, Inc.* | 3,835 | 143,506 |
Best Buy Co., Inc. | 3,720 | 173,054 |
Boise Cascade Corp. | 1,046 | 32,729 |
Circuit City Stores, Inc. | 2,383 | 30,908 |
Home Depot, Inc. | 26,055 | 952,571 |
Limited Brands | 5,353 | 107,488 |
Lowe's Companies, Inc. | 9,125 | 453,512 |
Office Depot, Inc.* | 3,567 | 57,108 |
RadioShack Corp. | 1,879 | 50,620 |
Sherwin-Williams Co. | 1,680 | 69,384 |
Staples, Inc. | 6,114 | 175,350 |
The Gap, Inc. | 10,612 | 198,869 |
Tiffany & Co. | 1,690 | 52,305 |
TJX Companies, Inc. | 5,856 | 123,913 |
Toys "R" Us, Inc.* | 2,414 | 39,203 |
2,790,595 | ||
Textiles, Apparel & Luxury Goods 0.4% | ||
Coach, Inc.* | 2,200 | 92,730 |
Jones Apparel Group, Inc. | 1,470 | 52,464 |
Liz Claiborne, Inc. | 1,283 | 48,844 |
NIKE, Inc. "B" | 3,153 | 237,452 |
Reebok International Ltd. | 638 | 21,673 |
VF Corp. | 1,272 | 62,761 |
515,924 | ||
Consumer Staples 11.0% | ||
Beverages 2.5% | ||
Adolph Coors Co. "B" | 395 | 27,054 |
Anheuser-Busch Companies, Inc. | 9,633 | 508,622 |
Brown-Forman Corp. "B" | 1,416 | 67,246 |
Coca-Cola Co. | 28,810 | 1,288,095 |
Coca-Cola Enterprises, Inc. | 5,275 | 108,929 |
Pepsi Bottling Group, Inc. | 3,015 | 80,772 |
PepsiCo, Inc. | 19,841 | 992,050 |
3,072,768 | ||
Food & Drug Retailing 3.4% | ||
Albertsons, Inc. | 4,278 | 105,153 |
Costco Wholesale Corp. | 5,666 | 233,269 |
CVS Corp. | 4,597 | 183,880 |
Kroger Co.* | 8,677 | 143,431 |
Safeway, Inc.* | 5,095 | 102,919 |
Supervalu, Inc. | 1,557 | 41,042 |
Sysco Corp. | 7,490 | 240,729 |
Wal-Mart Stores, Inc. | 49,898 | 2,628,128 |
Walgreen Co. | 11,911 | 434,156 |
Winn-Dixie Stores, Inc. | 1,637 | 6,826 |
4,119,533 | ||
Food Products 1.3% | ||
Archer-Daniels-Midland Co. | 7,625 | 121,771 |
Campbell Soup Co. | 4,757 | 123,492 |
ConAgra Foods, Inc. | 6,221 | 162,990 |
General Mills, Inc. | 4,364 | 206,199 |
H.J. Heinz Co. | 4,017 | 152,285 |
Hershey Foods Corp. | 3,022 | 145,902 |
Kellogg Co. | 4,771 | 200,287 |
McCormick & Co, Inc. | 1,589 | 53,311 |
Sara Lee Corp. | 9,277 | 205,300 |
William Wrigley Jr. Co. | 2,638 | 163,635 |
1,535,172 | ||
Household Products 2.1% | ||
Clorox Co. | 2,378 | 125,653 |
Colgate-Palmolive Co. | 6,274 | 338,796 |
Kimberly-Clark Corp. | 5,937 | 395,998 |
Procter & Gamble Co. | 30,376 | 1,700,145 |
2,560,592 | ||
Personal Products 0.6% | ||
Alberto-Culver Co. "B" | 1,076 | 51,960 |
Avon Products, Inc. | 5,404 | 238,749 |
Gillette Co. | 11,717 | 497,972 |
788,681 | ||
Tobacco 1.1% | ||
Altria Group, Inc. | 24,301 | 1,189,534 |
Reynolds American, Inc. | 1,736 | 131,068 |
UST, Inc. | 1,778 | 71,333 |
1,391,935 | ||
Energy 6.8% | ||
Energy Equipment & Services 0.9% | ||
Baker Hughes, Inc. | 4,030 | 158,500 |
BJ Services Co.* | 1,826 | 87,739 |
Halliburton Co. | 5,049 | 147,279 |
Nabors Industries Ltd.* | 1,689 | 74,485 |
Noble Corp.* | 1,556 | 62,582 |
Rowan Companies, Inc.* | 1,229 | 29,889 |
Schlumberger Ltd. | 7,168 | 442,983 |
Transocean, Inc.* | 3,668 | 112,608 |
1,116,065 | ||
Oil & Gas 5.9% | ||
Amerada Hess Corp. | 1,104 | 88,872 |
Anadarko Petroleum Corp. | 2,930 | 173,515 |
Apache Corp. | 3,812 | 170,358 |
Ashland, Inc. | 754 | 38,778 |
Burlington Resources, Inc. | 4,596 | 166,513 |
ChevronTexaco Corp. | 12,397 | 1,208,707 |
ConocoPhillips | 8,117 | 604,148 |
Devon Energy Corp. | 2,821 | 182,829 |
El Paso Corp. | 7,549 | 61,751 |
EOG Resources, Inc. | 1,391 | 80,358 |
ExxonMobil Corp. | 76,592 | 3,530,891 |
Kerr-McGee Corp. | 1,731 | 91,362 |
Kinder Morgan, Inc. | 1,447 | 87,544 |
Marathon Oil Corp. | 3,889 | 141,054 |
Occidental Petroleum Corp. | 4,584 | 236,764 |
Sunoco, Inc. | 937 | 57,626 |
Unocal Corp. | 3,089 | 115,343 |
Valero Energy Corp. | 1,500 | 99,045 |
Williams Companies, Inc. | 6,149 | 73,112 |
7,208,570 | ||
Financials 20.9% | ||
Banks 6.7% | ||
AmSouth Bancorp. | 4,206 | 109,566 |
Bank of America Corp. | 47,500 | 2,136,550 |
BB&T Corp. | 6,474 | 258,895 |
Charter One Financial, Inc. | 2,614 | 116,245 |
Comerica, Inc. | 2,034 | 122,345 |
Fifth Third Bancorp. | 6,925 | 344,934 |
First Horizon National Corp. | 1,500 | 68,205 |
Golden West Financial Corp. | 1,747 | 189,078 |
Huntington Bancshares, Inc. | 2,687 | 66,288 |
KeyCorp. | 4,965 | 155,653 |
M&T Bank Corp. | 1,400 | 132,972 |
Marshall & Ilsley Corp. | 2,668 | 106,933 |
National City Corp. | 7,891 | 298,201 |
North Fork Bancorp., Inc. | 1,800 | 75,492 |
PNC Financial Services Group | 3,306 | 177,433 |
Regions Financial Corp. | 5,204 | 168,037 |
SouthTrust Corp. | 4,231 | 174,952 |
Sovereign Bancorp, Inc. | 3,503 | 76,576 |
SunTrust Banks, Inc. | 3,301 | 224,798 |
Synovus Financial Corp. | 3,573 | 90,754 |
US Bancorp. | 22,814 | 673,013 |
Wachovia Corp. | 15,755 | 739,067 |
Washington Mutual, Inc. | 10,638 | 413,074 |
Wells Fargo & Co. | 19,744 | 1,159,960 |
Zions Bancorp. | 1,129 | 70,314 |
8,149,335 | ||
Capital Markets 2.7% | ||
Bank of New York Co., Inc. | 8,989 | 267,872 |
Bear Stearns Companies, Inc. | 1,224 | 107,614 |
Charles Schwab Corp. | 16,007 | 151,266 |
E*TRADE Financial Corp.* | 4,368 | 51,455 |
Federated Investors, Inc "B" | 1,278 | 36,870 |
Franklin Resources, Inc. | 2,904 | 154,696 |
Goldman Sachs Group, Inc. | 5,540 | 496,661 |
Janus Capital Group, Inc. | 2,809 | 38,596 |
Lehman Brothers Holdings, Inc. | 3,306 | 244,281 |
Mellon Financial Corp. | 5,064 | 146,147 |
Merrill Lynch & Co., Inc. | 11,319 | 578,061 |
Morgan Stanley | 13,092 | 664,157 |
Northern Trust Corp. | 2,056 | 88,511 |
State Street Corp. | 3,926 | 177,220 |
T. Rowe Price Group, Inc. | 1,464 | 72,512 |
3,275,919 | ||
Consumer Finance 1.3% | ||
American Express Co. | 15,345 | 767,557 |
Capital One Finance Corp. | 2,703 | 183,155 |
MBNA Corp. | 14,852 | 358,528 |
Providian Financial Corp.* | 3,446 | 49,760 |
SLM Corp. | 5,161 | 201,382 |
1,560,382 | ||
Diversified Financial Services 5.2% | ||
Citigroup, Inc. | 60,229 | 2,805,467 |
Countrywide Financial Corp. | 6,388 | 227,094 |
Fannie Mae | 11,434 | 851,261 |
Freddie Mac | 8,264 | 554,680 |
JPMorgan Chase & Co. | 41,376 | 1,637,662 |
MGIC Investment Corp. | 1,172 | 80,013 |
Moody's Corp. | 1,713 | 117,443 |
Principal Financial Group, Inc. | 3,678 | 127,663 |
6,401,283 | ||
Insurance 4.6% | ||
ACE Ltd. | 3,300 | 127,215 |
AFLAC, Inc. | 5,960 | 238,996 |
Allstate Corp. | 8,428 | 397,886 |
AMBAC Financial Group, Inc. | 1,311 | 98,980 |
American International Group, Inc. | 30,285 | 2,157,503 |
Aon Corp. | 3,642 | 94,510 |
Chubb Corp. | 2,188 | 148,806 |
Cincinnati Financial Corp. | 1,950 | 78,683 |
Hartford Financial Services Group, Inc. | 3,359 | 205,436 |
Jefferson-Pilot Corp. | 1,629 | 78,029 |
Lincoln National Corp. | 2,030 | 91,959 |
Loews Corp. | 2,119 | 120,359 |
Marsh & McLennan Companies, Inc. | 6,231 | 278,463 |
MBIA, Inc. | 1,691 | 96,844 |
MetLife, Inc. | 8,741 | 325,602 |
Progressive Corp. | 2,474 | 198,662 |
Prudential Financial, Inc. | 6,260 | 289,087 |
Safeco Corp. | 1,529 | 73,652 |
St. Paul Companies, Inc. | 8,114 | 281,475 |
Torchmark Corp. | 1,327 | 68,314 |
UnumProvident Corp. | 3,410 | 55,174 |
XL Capital Ltd. "A" | 1,475 | 103,545 |
5,609,180 | ||
Real Estate 0.4% | ||
Apartment Investment & Management Co. (REIT) | 1,114 | 39,547 |
Equity Office Properties Trust (REIT) | 4,634 | 132,347 |
Equity Residential (REIT) | 3,220 | 104,296 |
Plum Creek Timber Co., Inc. (REIT) | 2,086 | 68,921 |
ProLogis (REIT) | 2,064 | 74,614 |
Simon Property Group, Inc. (REIT) | 2,474 | 138,420 |
558,145 | ||
Health Care 13.4% | ||
Biotechnology 1.4% | ||
Amgen, Inc.* | 15,085 | 894,390 |
Applera Corp. - Applied Biosystems Group | 2,331 | 44,382 |
Biogen Idec, Inc.* | 3,952 | 234,472 |
Chiron Corp.* | 2,233 | 94,635 |
Genzyme Corp. (General Division)* | 2,630 | 142,020 |
Gilead Sciences, Inc.* | 2,530 | 174,899 |
MedImmune, Inc.* | 2,884 | 68,841 |
1,653,639 | ||
Health Care Equipment & Supplies 2.2% | ||
Bausch & Lomb, Inc. | 568 | 37,460 |
Baxter International, Inc. | 7,116 | 217,323 |
Becton, Dickinson and Co. | 2,940 | 141,473 |
Biomet, Inc. | 3,173 | 144,847 |
Boston Scientific Corp.* | 9,781 | 349,475 |
C.R. Bard, Inc. | 1,224 | 68,666 |
Fisher Scientific International, Inc.* | 1,400 | 79,758 |
Guidant Corp. | 3,677 | 219,885 |
Hospira, Inc.* | 1,795 | 49,721 |
Medtronic, Inc. | 14,342 | 713,514 |
Millipore Corp.* | 529 | 26,609 |
PerkinElmer, Inc. | 1,475 | 25,783 |
St. Jude Medical, Inc.* | 1,970 | 132,482 |
Stryker Corp. | 4,626 | 209,558 |
Thermo Electron Corp.* | 1,896 | 49,808 |
Waters Corp.* | 1,416 | 61,327 |
Zimmer Holdings, Inc.* | 2,822 | 201,209 |
2,728,898 | ||
Health Care Providers & Services 2.0% | ||
Aetna, Inc. | 1,762 | 163,249 |
AmerisourceBergen Corp. | 1,317 | 71,250 |
Anthem, Inc.* | 1,599 | 129,903 |
Cardinal Health, Inc. | 5,016 | 226,723 |
Caremark Rx, Inc.* | 5,241 | 150,417 |
CIGNA Corp. | 1,628 | 108,360 |
Express Scripts, Inc. "A"* | 941 | 59,471 |
HCA, Inc. | 5,872 | 227,892 |
Health Management Associates, Inc. "A" | 2,834 | 54,186 |
Humana, Inc.* | 1,857 | 35,283 |
IMS Health, Inc. | 2,796 | 65,231 |
Manor Care, Inc. | 1,069 | 32,786 |
McKesson Corp. | 3,455 | 106,932 |
Medco Health Solutions, Inc.* | 3,230 | 100,873 |
Quest Diagnostics, Inc. | 1,223 | 104,689 |
Tenet Healthcare Corp.* | 5,439 | 56,674 |
UnitedHealth Group, Inc. | 7,882 | 521,237 |
WellPoint Health Networks, Inc.* | 1,781 | 174,858 |
2,390,014 | ||
Pharmaceuticals 7.8% | ||
Abbott Laboratories | 18,651 | 777,560 |
Allergan, Inc. | 1,523 | 113,692 |
Bristol-Myers Squibb Co. | 23,344 | 553,953 |
Eli Lilly & Co. | 13,383 | 849,151 |
Forest Laboratories, Inc.* | 4,287 | 196,559 |
Johnson & Johnson | 34,475 | 2,002,998 |
King Pharmaceuticals, Inc.* | 2,856 | 35,586 |
Merck & Co., Inc. | 25,915 | 1,165,398 |
Mylan Laboratories, Inc. | 3,200 | 55,744 |
Pfizer, Inc. | 89,383 | 2,920,143 |
Schering-Plough Corp. | 17,431 | 321,776 |
Watson Pharmaceuticals, Inc.* | 1,217 | 33,516 |
Wyeth | 15,439 | 564,604 |
9,590,680 | ||
Industrials 11.4% | ||
Aerospace & Defense 2.0% | ||
Boeing Co. | 10,033 | 523,923 |
General Dynamics Corp. | 2,249 | 219,592 |
Goodrich Corp. | 1,375 | 43,670 |
Honeywell International, Inc. | 10,111 | 363,794 |
Lockheed Martin Corp. | 5,288 | 284,389 |
Northrop Grumman Corp. | 4,324 | 223,334 |
Raytheon Co. | 4,945 | 171,740 |
Rockwell Collins, Inc. | 2,035 | 69,984 |
United Technologies Corp. | 6,087 | 571,630 |
2,472,056 | ||
Air Freight & Logistics 1.1% | ||
FedEx Corp. | 3,435 | 281,636 |
Ryder System, Inc. | 703 | 30,798 |
United Parcel Service, Inc. "B" | 13,328 | 973,610 |
1,286,044 | ||
Airlines 0.1% | ||
Delta Air Lines, Inc.* | 1,422 | 5,745 |
Southwest Airlines Co. | 9,194 | 136,255 |
142,000 | ||
Building Products 0.2% | ||
American Standard Companies, Inc.* | 2,549 | 95,868 |
Masco Corp. | 5,205 | 167,237 |
263,105 | ||
Commercial Services & Supplies 1.0% | ||
Allied Waste Industries, Inc.* | 3,776 | 38,666 |
Apollo Group, Inc. "A"* | 2,209 | 172,302 |
Avery Dennison Corp. | 1,298 | 80,671 |
Cendant Corp. | 12,324 | 266,568 |
Cintas Corp. | 1,954 | 80,133 |
Deluxe Corp. | 548 | 23,410 |
Equifax, Inc. | 1,608 | 39,235 |
H&R Block, Inc. | 2,033 | 98,113 |
Monster Worldwide, Inc.* | 1,325 | 26,805 |
Pitney Bowes, Inc. | 2,732 | 119,006 |
R.R. Donnelley & Sons Co. | 2,523 | 77,532 |
Robert Half International, Inc. | 1,956 | 47,922 |
Waste Management, Inc. | 6,753 | 187,666 |
1,258,029 | ||
Construction & Engineering 0.0% | ||
Fluor Corp. | 989 | 42,280 |
Electrical Equipment 0.4% | ||
American Power Conversion Corp. | 2,253 | 37,850 |
Cooper Industries, Inc. "A" | 1,098 | 60,632 |
Emerson Electric Co. | 5,072 | 315,732 |
Power-One, Inc.* | 1,003 | 7,532 |
Rockwell Automation, Inc. | 2,127 | 82,953 |
504,699 | ||
Industrial Conglomerates 4.6% | ||
3M Co. | 9,296 | 765,619 |
General Electric Co. | 123,261 | 4,041,728 |
Textron, Inc. | 1,667 | 105,838 |
Tyco International Ltd. | 23,282 | 729,192 |
5,642,377 | ||
Machinery 1.4% | ||
Caterpillar, Inc. | 4,065 | 295,525 |
Crane Co. | 644 | 17,388 |
Cummins, Inc. | 464 | 31,223 |
Danaher Corp. | 3,536 | 181,821 |
Deere & Co. | 2,896 | 183,230 |
Dover Corp. | 2,313 | 87,269 |
Eaton Corp. | 1,748 | 105,492 |
Illinois Tool Works, Inc. | 3,540 | 323,167 |
Ingersoll-Rand Co. "A" | 2,001 | 130,085 |
ITT Industries, Inc. | 1,109 | 87,722 |
Navistar International Corp.* | 747 | 26,728 |
PACCAR, Inc. | 2,292 | 137,955 |
Pall Corp. | 1,507 | 36,711 |
Parker-Hannifin Corp. | 1,398 | 76,009 |
1,720,325 | ||
Road & Rail 0.5% | ||
Burlington Northern Santa Fe Corp. | 4,333 | 155,121 |
CSX Corp. | 2,520 | 79,582 |
Norfolk Southern Corp. | 4,639 | 131,748 |
Union Pacific Corp. | 3,105 | 177,326 |
543,777 | ||
Trading Companies & Distributors 0.1% | ||
W.W. Grainger, Inc. | 1,117 | 59,659 |
Information Technology 15.3% | ||
Communications Equipment 2.7% | ||
ADC Telecommunications, Inc.* | 8,563 | 18,325 |
Andrew Corp.* | 2,222 | 24,642 |
Avaya, Inc.* | 5,003 | 60,636 |
CIENA Corp.* | 8,049 | 14,649 |
Cisco Systems, Inc.* | 78,810 | 1,478,476 |
Comverse Technologies, Inc.* | 2,191 | 38,364 |
Corning, Inc.* | 15,913 | 161,040 |
JDS Uniphase Corp.* | 18,389 | 57,190 |
Lucent Technologies, Inc.* | 48,348 | 151,329 |
Motorola, Inc. | 27,976 | 451,812 |
QUALCOMM, Inc. | 19,258 | 732,767 |
Scientific-Atlanta, Inc. | 1,754 | 47,779 |
Tellabs, Inc.* | 5,503 | 49,912 |
3,286,921 | ||
Computers & Peripherals 3.5% | ||
Apple Computer, Inc.* | 4,708 | 162,379 |
Dell, Inc.* | 29,831 | 1,039,312 |
EMC Corp.* | 28,119 | 302,842 |
Gateway, Inc.* | 4,360 | 19,140 |
Hewlett-Packard Co. | 36,174 | 647,153 |
International Business Machines Corp. | 19,591 | 1,659,162 |
Lexmark International, Inc.* | 1,493 | 132,056 |
NCR Corp.* | 1,126 | 49,735 |
Network Appliance, Inc.* | 3,941 | 79,096 |
QLogic Corp.* | 1,327 | 34,648 |
Sun Microsystems, Inc.* | 37,934 | 145,666 |
4,271,189 | ||
Electronic Equipment & Instruments 0.3% | ||
Agilent Technologies, Inc.* | 5,555 | 113,877 |
Jabil Circuit, Inc.* | 2,268 | 46,789 |
Molex, Inc. | 2,164 | 62,475 |
Sanmina-SCI Corp.* | 6,125 | 42,385 |
Solectron Corp.* | 10,268 | 52,983 |
Symbol Technologies, Inc. | 2,707 | 34,920 |
Tektronix, Inc. | 1,019 | 29,113 |
382,542 | ||
Internet Software & Services 0.4% | ||
Yahoo!, Inc.* | 15,622 | 445,383 |
IT Consulting & Services 1.1% | ||
Affiliated Computer Services, Inc. "A"* | 1,575 | 85,570 |
Automatic Data Processing, Inc. | 7,195 | 286,145 |
Computer Sciences Corp.* | 2,134 | 98,911 |
Convergys Corp.* | 1,653 | 22,977 |
Electronic Data Systems Corp. | 5,608 | 107,786 |
First Data Corp. | 10,222 | 431,879 |
Fiserv, Inc.* | 2,210 | 76,864 |
Paychex, Inc. | 4,693 | 139,241 |
Sabre Holdings Corp. | 1,513 | 34,799 |
SunGard Data Systems, Inc.* | 3,415 | 78,545 |
Unisys Corp.* | 3,897 | 39,126 |
1,401,843 | ||
Office Electronics 0.1% | ||
Xerox Corp.* | 9,248 | 124,201 |
Semiconductors & Semiconductor Equipment 2.9% | ||
Advanced Micro Devices, Inc.* | 4,679 | 53,481 |
Altera Corp.* | 4,406 | 83,362 |
Analog Devices, Inc. | 4,352 | 151,101 |
Applied Materials, Inc.* | 19,529 | 310,316 |
Applied Micro Circuits Corp.* | 3,569 | 11,956 |
Broadcom Corp. "A"* | 3,483 | 94,529 |
Intel Corp. | 75,395 | 1,605,160 |
KLA-Tencor Corp.* | 2,528 | 94,446 |
Linear Technology Corp. | 3,585 | 128,235 |
LSI Logic Corp.* | 4,509 | 21,778 |
Maxim Integrated Products, Inc. | 3,756 | 163,123 |
Micron Technology, Inc.* | 7,106 | 81,790 |
National Semiconductor Corp.* | 4,060 | 54,120 |
Novellus Systems, Inc.* | 2,062 | 50,375 |
NVIDIA Corp.* | 2,258 | 28,135 |
PMC-Sierra, Inc.* | 2,573 | 24,032 |
Teradyne, Inc.* | 2,174 | 27,979 |
Texas Instruments, Inc. | 20,081 | 392,383 |
Xilinx, Inc. | 3,938 | 108,019 |
3,484,320 | ||
Software 4.3% | ||
Adobe Systems, Inc. | 2,798 | 128,344 |
Autodesk, Inc. | 1,423 | 63,196 |
BMC Software, Inc.* | 2,664 | 39,880 |
Citrix Systems, Inc.* | 1,879 | 29,895 |
Computer Associates International, Inc. | 6,838 | 165,616 |
Compuware Corp.* | 4,568 | 20,693 |
Electronic Arts, Inc.* | 3,741 | 186,227 |
Intuit, Inc.* | 2,305 | 97,479 |
Mercury Interactive Corp.* | 1,289 | 44,483 |
Microsoft Corp. | 126,126 | 3,443,240 |
Novell, Inc.* | 5,181 | 30,568 |
Oracle Corp.* | 61,624 | 614,391 |
Parametric Technology Corp.* | 2,178 | 10,607 |
PeopleSoft, Inc.* | 4,397 | 76,508 |
Siebel Systems, Inc.* | 5,875 | 44,709 |
Symantec Corp.* | 3,600 | 172,656 |
VERITAS Software Corp.* | 4,845 | 81,008 |
5,249,500 | ||
Materials 3.0% | ||
Chemicals 1.5% | ||
Air Products & Chemicals, Inc. | 2,664 | 139,540 |
Dow Chemical Co. | 10,903 | 466,757 |
E.I. du Pont de Nemours & Co. | 11,818 | 499,429 |
Eastman Chemical Co. | 939 | 43,692 |
Ecolab, Inc. | 2,989 | 89,431 |
Engelhard Corp. | 1,460 | 41,274 |
Great Lakes Chemical Corp. | 549 | 14,340 |
Hercules, Inc.* | 1,302 | 17,864 |
International Flavors & Fragrances, Inc. | 1,115 | 42,961 |
Monsanto Co. | 3,179 | 116,351 |
PPG Industries, Inc. | 1,956 | 116,910 |
Praxair, Inc. | 3,725 | 151,161 |
Rohm & Haas Co. | 2,614 | 105,945 |
Sigma-Aldrich Corp. | 752 | 43,082 |
1,888,737 | ||
Construction Materials 0.1% | ||
Vulcan Materials Co. | 1,203 | 57,347 |
Containers & Packaging 0.2% | ||
Ball Corp. | 1,222 | 45,629 |
Bemis Co., Inc. | 1,252 | 33,090 |
Pactiv Corp.* | 1,846 | 43,658 |
Sealed Air Corp.* | 1,021 | 50,152 |
Temple-Inland, Inc. | 593 | 40,490 |
213,019 | ||
Metals & Mining 0.7% | ||
Alcoa, Inc. | 10,435 | 337,885 |
Allegheny Technologies, Inc. | 974 | 18,321 |
Freeport-McMoRan Copper & Gold, Inc. "B" | 1,966 | 73,981 |
Newmont Mining Corp. | 5,377 | 238,685 |
Nucor Corp. | 849 | 66,468 |
Phelps Dodge Corp. | 1,106 | 90,205 |
United States Steel Corp. | 1,527 | 56,362 |
Worthington Industries, Inc. | 1,037 | 21,103 |
903,010 | ||
Paper & Forest Products 0.5% | ||
Georgia-Pacific Corp. | 2,950 | 100,241 |
International Paper Co. | 5,609 | 224,472 |
Louisiana-Pacific Corp. | 1,248 | 30,826 |
MeadWestvaco Corp. | 2,280 | 68,742 |
Weyerhaeuser Co. | 2,783 | 173,965 |
598,246 | ||
Telecommunication Services 3.6% | ||
Diversified Telecommunication Services 3.0% | ||
ALLTEL Corp. | 3,583 | 195,811 |
AT&T Corp. | 9,142 | 135,119 |
BellSouth Corp. | 21,256 | 568,811 |
CenturyTel, Inc. | 1,663 | 53,532 |
Citizens Communications Co. | 3,300 | 41,679 |
Qwest Communications International, Inc.* | 20,281 | 58,612 |
SBC Communications, Inc. | 39,288 | 1,013,237 |
Sprint Corp. | 17,036 | 335,268 |
Verizon Communications, Inc. | 32,139 | 1,261,456 |
3,663,525 | ||
Wireless Telecommunication Services 0.6% | ||
AT&T Wireless Services, Inc.* | 31,636 | 462,518 |
Nextel Communications, Inc. "A"* | 13,220 | 306,572 |
769,090 | ||
Utilities 2.8% | ||
Electric Utilities 2.0% | ||
Allegheny Energy, Inc.* | 1,527 | 22,432 |
Ameren Corp. | 2,072 | 96,949 |
American Electric Power Co. | 4,582 | 149,969 |
CenterPoint Energy, Inc. | 3,618 | 39,581 |
Cinergy Corp. | 2,031 | 82,215 |
Consolidated Edison, Inc. | 2,650 | 111,830 |
DTE Energy Co. | 1,931 | 79,789 |
Edison International | 3,832 | 103,004 |
Entergy Corp. | 2,981 | 179,754 |
Exelon Corp. | 7,938 | 292,515 |
FirstEnergy Corp. | 3,776 | 151,946 |
FPL Group, Inc. | 2,099 | 145,251 |
PG&E Corp.* | 4,842 | 141,338 |
Pinnacle West Capital Corp. | 1,100 | 46,431 |
PPL Corp. | 2,022 | 96,712 |
Progress Energy, Inc. | 2,857 | 125,394 |
Southern Co. | 8,524 | 258,703 |
TECO Energy, Inc. | 2,179 | 28,894 |
TXU Corp. | 3,786 | 157,611 |
Xcel Energy, Inc. | 4,724 | 83,379 |
2,393,697 | ||
Gas Utilities 0.1% | ||
KeySpan Corp. | 1,824 | 69,494 |
NICOR, Inc. | 477 | 17,101 |
NiSource, Inc. | 3,145 | 65,416 |
Peoples Energy Corp. | 404 | 16,786 |
168,797 | ||
Multi-Utilities & Unregulated Power 0.7% | ||
AES Corp.* | 7,251 | 73,163 |
Calpine Corp. (e) * | 4,780 | 16,348 |
CMS Energy Corp.* | 1,847 | 17,731 |
Constellation Energy Group, Inc. | 1,914 | 78,665 |
Dominion Resources, Inc. | 4,117 | 267,152 |
Duke Energy Corp. | 10,539 | 233,333 |
Dynegy, Inc. "A"* | 3,927 | 17,122 |
Public Service Enterprise Group, Inc. | 2,761 | 116,901 |
Sempra Energy | 2,663 | 96,267 |
916,682 | ||
Total Common Stocks (Cost $116,674,510) | 121,022,881 |
Principal Amount ($) | Value ($) | |
US Government Backed 0.1% | ||
US Treasury Bill, 1.66%**, 12/23/2004 (b) (Cost $148,993) | 150,000 | 149,235 |
| Value ($) | |
Securities Lending Collateral 0.0% | ||
Daily Assets Fund Institutional, 1.55% (d) (f) (Cost $20,000) | 20,000 | 20,000 |
Cash Equivalents 0.9% | ||
Scudder Cash Management QP Trust, 1.54% (c) (Cost $1,051,154) | 1,051,154 | 1,051,154 |
Total Investment Portfolio - 100.0% (Cost $117,894,657) (a) | 122,243,270 |
* Non-income producing security.
** Annualized yield at time of purchase; not a coupon rate.
(a) The cost for federal income tax purposes was $125,470,694. At August 31, 2004, net unrealized depreciation for all securities based on tax cost was $3,227,424. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $7,928,962 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $11,156,386.
(b) At August 31, 2004, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.
(c) Scudder Cash Management QP Trust is managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.
(d) Daily Assets Fund Institutional, an affiliated fund, is managed by Deutsche Asset Management Inc. The rate shown is the annualized seven-day yield at period end.
(e) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at August 31, 2004 amounted to $13,480, which is 0.01% of net assets.
(f) Represents collateral held in connection with securities lending.
At August 31, 2004, open futures contracts purchased were as follows:
Futures | Expiration Date | Contracts | Aggregate Face Value ($) | Value ($) | Unrealized Appreciation (Depreciation) ($) |
S&P 500 Index | 9/16/2004 | 5 | 1,367,380 | 1,380,125 | 12,745 |
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of August 31, 2004 | |
Assets | |
Investments: Investments in securities, at value (cost $116,823,503) - including $13,480 of securities loaned | $ 121,172,116 |
Investment in Daily Assets Fund Institutional (cost $20,000) | 20,000 |
Investment in Scudder Cash Management QP Trust (cost $1,051,154) | 1,051,154 |
Total investments in securities, at value (cost $117,894,657) | 122,243,270 |
Receivable for daily variation margin on open futures contracts | 6,375 |
Dividends receivable | 214,078 |
Receivable for Fund shares sold | 133,820 |
Interest receivable | 2,156 |
Due from Advisor | 224,881 |
Other assets | 15,969 |
Total assets | 122,840,549 |
Liabilities | |
Payable upon return of securities loaned | 20,000 |
Payable for investments purchased | 92,730 |
Payable for Fund shares redeemed | 1,289,473 |
Accrued management fee | 34,818 |
Other accrued expenses and payables | 154,230 |
Total liabilities | 1,591,251 |
Net assets, at value | $ 121,249,298 |
Net Assets | |
Net assets consist of: Undistributed net investment income | 676,341 |
Net unrealized appreciation (depreciation) on: Investments | 4,348,613 |
Futures | 12,745 |
Accumulated net realized gain (loss) | (15,964,404) |
Paid-in capital | 132,176,003 |
Net assets, at value | $ 121,249,298 |
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of August 31, 2004 (continued) | |
Net Asset Value | |
Class A Net Asset Value and redemption price per share ($92,237,227 / 13,236,585 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 6.97 |
Maximum offering price per share (100 / 95.50 of $6.97) | $ 7.30 |
Class B Net Asset Value, offering and redemption price (subject to contingent deferred sales charge) per share ($15,829,495 / 2,303,872 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 6.87 |
Class C Net Asset Value, offering and redemption price (subject to contingent deferred sales charge) per share ($13,182,576 / 1,918,502 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 6.87 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the year ended August 31, 2004 | |
Investment Income | |
Income: Dividends | $ 1,888,948 |
Interest - Scudder Cash Management QP Trust | 14,082 |
Interest | 5,941 |
Securities lending income, including income from Daily Assets Fund Institutional | 187 |
Total Income | 1,909,158 |
Expenses: Management fee | 361,383 |
Administrative fee | 28,900 |
Distribution service fees | 492,714 |
Custodian and accounting fees | 132,655 |
Services to shareholders | 436,999 |
Auditing | 43,095 |
Legal | 45,091 |
Trustees' fees and expenses | 20,424 |
Reports to shareholders | 43,632 |
Registration fees | 24,413 |
Other | 6,298 |
Total expenses before expense reductions | 1,635,604 |
Expense reductions | (666,713) |
Total expenses, after expense reductions | 968,891 |
Net investment income (loss) | 940,267 |
Realized and Unrealized Gain (Loss) on Investment Transactions | |
Net realized gain (loss) from: Investments | (2,208,131) |
Futures | 179,873 |
(2,028,258) | |
Net unrealized appreciation (depreciation) during the period on: Investments | 11,159,320 |
Futures | (18,838) |
11,140,482 | |
Net gain (loss) on investment transactions | 9,112,224 |
Net increase (decrease) in net assets resulting from operations | $ 10,052,491 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets | ||
Years Ended August 31, | ||
Increase (Decrease) in Net Assets | 2004 | 2003 |
Operations: Net investment income | $ 940,267 | $ 527,542 |
Net realized gain (loss) on investment transactions | (2,028,258) | (6,166,943) |
Net unrealized appreciation (depreciation) on investment transactions during the period | 11,140,482 | 14,603,794 |
Net increase (decrease) in net assets resulting from operations | 10,052,491 | 8,964,393 |
Distributions to shareholders from: Net investment income: Class A | (571,559) | (331,565) |
Class C | (20,834) | - |
Fund share transactions: Proceeds from shares sold | 80,693,084 | 56,890,636 |
Reinvestment of distributions | 591,503 | 330,928 |
Cost of shares redeemed | (64,859,877) | (42,182,800) |
Net increase (decrease) in net assets from Fund share transactions | 16,424,710 | 15,038,764 |
Increase (decrease) in net assets | 25,884,808 | 23,671,592 |
Net assets at beginning of period | 95,364,490 | 71,692,898 |
Net assets at end of period (including undistributed net investment income of $676,341 and $338,815, respectively) | $ 121,249,298 | $ 95,364,490 |
The accompanying notes are an integral part of the financial statements.
Class A | |||||
Years Ended August 31, | 2004 | 2003 | 2002 | 2001 | 2000a |
Selected Per Share Data | |||||
Net asset value, beginning of period | $ 6.34 | $ 5.75 | $ 7.10 | $ 9.59 | $ 9.50 |
Income (loss) from investment operations: Net investment incomeb | .07 | .05 | .03 | .03 | .03 |
Net realized and unrealized gain (loss) | .61 | .57 | (1.37) | (2.46) | .06 |
Total from investment operations | .68 | .62 | (1.34) | (2.43) | .09 |
Less distribution from: Net investment income | (.05) | (.03) | (.01) | (.04) | - |
Net realized gains on investment transactions | - | - | - | (.02) | - |
Total distributions | (.05) | (.03) | (.01) | (.06) | - |
Net asset value, end of period | $ 6.97 | $ 6.34 | $ 5.75 | $ 7.10 | $ 9.59 |
Total Return (%)c | 10.90d | 10.93 | (18.87) | (25.46)d | .95d** |
Ratios to Average Net Assets and Supplemental Data | |||||
Net assets, end of period ($ millions) | 92 | 69 | 51 | 45 | 22 |
Ratio of expenses before expense reductions (%) | 1.25 | .92 | 1.00 | 1.62e | 3.19* |
Ratio of expenses after expense reductions (%) | .68 | .92 | 1.00 | 1.03e | 1.00* |
Ratio of net investment income (loss) (%) | 1.04 | .89 | .48 | .41 | .90* |
Portfolio turnover rate (%) | 8 | 11 | 12 | 8 | 43* |
a For the period from April 3, 2000 (commencement of operations) to August 31, 2000. b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charge. d Total return would have been lower had certain expenses not been reduced. e The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 1.61% and 1.02%, respectively. * Annualized ** Not annualized |
Class B | |||||
Years Ended August 31, | 2004 | 2003 | 2002 | 2001 | 2000a |
Selected Per Share Data | |||||
Net asset value, beginning of period | $ 6.25 | $ 5.68 | $ 7.06 | $ 9.57 | $ 9.50 |
Income (loss) from investment operations: Net investment income (loss)b | .02 | .01 | (.02) | (.03) | .00 |
Net realized and unrealized gain (loss) | .60 | .56 | (1.36) | (2.46) | .07 |
Total from investment operations | .62 | .57 | (1.38) | (2.49) | .07 |
Less distribution from: Net realized gains on investment transactions | - | - | - | (.02) | - |
Net asset value, end of period | $ 6.87 | $ 6.25 | $ 5.68 | $ 7.06 | $ 9.57 |
Total Return (%)c | 9.92d | 10.04 | (19.55) | (26.04)d | .74d** |
Ratios to Average Net Assets and Supplemental Data | |||||
Net assets, end of period ($ millions) | 16 | 14 | 13 | 14 | 3 |
Ratio of expenses before expense reductions (%) | 2.15 | 1.72 | 1.80 | 2.64e | 4.18* |
Ratio of expenses after expense reductions (%) | 1.43 | 1.72 | 1.80 | 1.81e | 1.75* |
Ratio of net investment income (loss) (%) | .29 | .09 | (.32) | (.38) | .09* |
Portfolio turnover rate (%) | 8 | 11 | 12 | 8 | 43* |
a For the period from April 3, 2000 (commencement of operations) to August 31, 2000. b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charge. d Total return would have been lower had certain expenses not been reduced. e The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 2.64% and 1.80%, respectively. * Annualized ** Not annualized |
Class C | |||||
Years Ended August 31, | 2004 | 2003 | 2002 | 2001 | 2000a |
Selected Per Share Data | |||||
Net asset value, beginning of period | $ 6.26 | $ 5.68 | $ 7.06 | $ 9.57 | $ 9.50 |
Income (loss) from investment operations: Net investment income (loss)b | .02 | .01 | (.02) | (.03) | .00 |
Net realized and unrealized gain (loss) | .60 | .57 | (1.36) | (2.46) | .07 |
Total from investment operations | .62 | .58 | (1.38) | (2.49) | .07 |
Less distribution from: Net investment income | (.01) | - | - | - | - |
Net realized gains on investment transactions | - | - | - | (.02) | - |
Total distributions | (.01) | - | - | (.02) | - |
Net asset value, end of period | $ 6.87 | $ 6.26 | $ 5.68 | $ 7.06 | $ 9.57 |
Total Return (%)c | 9.76d | 10.21 | (19.55) | (26.04)d | .74d** |
Ratios to Average Net Assets and Supplemental Data | |||||
Net assets, end of period ($ millions) | 13 | 12 | 8 | 5 | 2 |
Ratio of expenses before expense reductions (%) | 2.08 | 1.69 | 1.77 | 2.67e | 4.13* |
Ratio of expenses after expense reductions (%) | 1.44 | 1.69 | 1.77 | 1.80e | 1.75* |
Ratio of net investment income (loss) (%) | .29 | .12 | (.29) | (.36) | .09* |
Portfolio turnover rate (%) | 8 | 11 | 12 | 8 | 43* |
a For the period from April 3, 2000 (commencement of operations) to August 31, 2000. b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charge. d Total return would have been lower had certain expenses not been reduced. e The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 2.66% and 1.79%, respectively. * Annualized ** Not annualized |
A. Significant Accounting Policies
Scudder S&P 500 Stock Fund (the "Fund") is a diversified series of Scudder Investors Trust (the "Trust") which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers multiple classes of shares which provide investors with different purchase options. Class A shares are offered to investors subject to an initial sales charge. Class B shares are offered without an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions. Class B shares automatically convert to Class A shares six years after issuance. Class C shares are offered without an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions within one year of purchase. Prior to March 1, 2004, Class C shares were offered with an initial sales charge. Class C shares do not convert into another class.
Investment income, realized and unrealized gains and losses, and certain fund-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of all classes of shares, except that each class bears certain expenses unique to that class such as distribution service fees, administrative fees and certain other class-specific expenses. Differences in class-level expenses may result in payment of different per share dividends by class. All shares of the Fund have equal rights with respect to voting subject to class-specific arrangements.
The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those estimates. The policies described below are followed consistently by the Fund in the preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading. Equity securities are valued at the most recent sale price or official closing price reported on the exchange (US or foreign) or over-the-counter market on which the security is traded most extensively. Securities for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation.
Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost. Investments in open-end investment companies and Scudder Cash Management QP Trust are valued at their net asset value each business day.
Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Trustees.
Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). The Fund may enter into futures contracts as a hedge against anticipated interest rate, currency or equity market changes, and for duration management, risk management and return enhancement purposes.
Upon entering into a futures contract, the Fund is required to deposit with a financial intermediary an amount ("initial margin") equal to a certain percentage of the face value indicated in the futures contract. Subsequent payments ("variation margin") are made or received by the Fund dependent upon the daily fluctuations in the value of the underlying security and are recorded for financial reporting purposes as unrealized gains or losses by the Fund. When entering into a closing transaction, the Fund will realize a gain or loss equal to the difference between the value of the futures contract to sell and the futures contract to buy. Futures contracts are valued at the most recent settlement price.
Certain risks may arise upon entering into futures contracts, including the risk that an illiquid secondary market will limit the Fund's ability to close out a futures contract prior to the settlement date and that a change in the value of a futures contract may not correlate exactly with the changes in the value of the securities or currencies hedged. When utilizing futures contracts to hedge, the Fund gives up the opportunity to profit from favorable price movements in the hedged positions during the term of the contract.
Securities Lending. The Fund may lend securities to financial institutions. The Fund retains beneficial ownership of the securities it has loaned and continues to receive interest and dividends paid by the securities and to participate in any changes in their market value. The Fund requires the borrowers of the securities to maintain collateral with the Fund consisting of liquid, unencumbered assets having a value at all times not less than 100% of the value of the securities loaned. The Fund may invest the cash collateral in an affiliated money market fund pursuant to an Exemptive Order issued by the SEC. The Fund receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of fees paid to the lending agent. Either the Fund or the borrower may terminate the loan. The Fund is subject to all investment risks associated with the value of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.
Federal Income Taxes. The Fund's policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies, and to distribute all of its taxable income to its shareholders. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required.
At August 31, 2004, the Fund had a net tax basis capital loss carryforward of approximately $8,187,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until August 31, 2009 ($228,000), August 31, 2010 ($638,000), August 31, 2011 ($3,250,000) and August 31, 2012 $(4,071,000) the expiration dates, whichever occurs first.
In addition, from November 1, 2003 through August 31, 2004, the Fund incurred approximately $188,000 of net realized capital losses. As permitted by tax regulations, the Fund intends to elect to defer these losses and treat them as arising in the fiscal year ended August 31, 2005.
Distribution of Income and Gains. Distributions of net investment income, if any, are made annually. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed, and, therefore, will be distributed to shareholders at least annually.
The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to securities sold at a loss and investments in futures contracts. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.
At August 31, 2004, the Fund's components of distributable earnings (accumulated losses) on a tax-basis are as follows:
Undistributed ordinary income* | $ 677,711 |
Undistributed net long-term capital gains | $ - |
Capital loss carryforwards | $ (8,187,000) |
Unrealized appreciation (depreciation) on investments | $ (3,227,424) |
In addition, during the years ended August 31, 2004 and August 31, 2003, the tax character of distributions paid to shareholders by the Fund is summarized as follows:
Years Ended August 31, | ||
2004 | 2003 | |
Distributions from ordinary income* | $ 592,393 | $ 331,565 |
* For tax purposes short-term capital gains distributions are considered ordinary income distributions.
Expenses. Expenses of the Trust arising in connection with a specific fund are allocated to that fund. Other Trust expenses which cannot be directly attributed to a fund are apportioned among the funds in the Trust.
Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. Realized gains and losses from investment transactions are recorded on an identified cost basis.
B. Purchases and Sales of Securities
During the year ended August 31, 2004, purchases and sales of investment securities (excluding short-term instruments) aggregated $25,904,938 and $8,275,623, respectively.
C. Related Parties
Management Agreement. Under the Management Agreement with Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), an indirect, wholly owned subsidiary of Deutsche Bank AG, the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor determines the securities, instruments and other contracts relating to investments to be purchased, sold or entered into by the Fund. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Management Agreement. The management fee payable under the Agreement was equal to an annual rate of 0.33% of the first $100,000,000 of the Fund's average daily net assets, 0.29% of the next $100,000,000 of such net assets and 0.27% of such net assets in excess of $200,000,000, computed and accrued daily and payable monthly. Accordingly, for the year ended August 31, 2004, the fee pursuant to the Management Agreement was equivalent to an annual effective rate of 0.33% of the Fund's average daily net assets.
Northern Trust Investments, N.A. ("NTI"), an indirect subsidiary of Northern Trust Corporation, serves as sub-advisor to the Fund and is paid by the Advisor for its services.
For the year ended August 31, 2004, the Advisor has agreed to reimburse the Fund $991 for expenses.
Administrative Fee. Under the Administrative Agreement (the "Administrative Agreement"), the Advisor provided or paid others to provide substantially all of the administrative services required by the Fund (other than those provided by the Advisor under its Management Agreement with the Fund, as described above) such as transfer agent, custody, legal and audit, in exchange for the payment by each class of the Fund of an administrative services fee (the "Administrative Fee") of 0.35%, 0.40% and 0.375% of the average daily net assets for Class A, B and C shares, respectively, computed and accrued daily and payable monthly.
The Administrative Agreement between the Advisor and the Fund terminated effective September 30, 2003, and effective October 1, 2003, the Fund directly bears the cost of those expenses formerly covered under the Administrative Agreement.
For the period from September 1, 2003 to September 30, 2003, the Administrative Fee was as follows:
Administrative Fee | Total Aggregated |
Class A | $ 20,387 |
Class B | 4,720 |
Class C | 3,793 |
$ 28,900 |
Effective October 1, 2003 through September 30, 2005, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses of the Fund to the extent necessary to maintain the operating expenses of each class at 0.75%, 0.80% and 0.80% of average daily net assets for Class A, B and C shares, respectively (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest, Rule 12b-1 distribution and/or service fees, trustee and trustee counsel fees and organizational and offering expenses).
In addition to the contractual expense limitation described above, from October 1, 2003 through August 31, 2004, the Fund's Advisor, accounting agent, principal underwriter and administrator, and transfer agent have each contractually agreed to limit their respective fees or reimburse expenses to the extent necessary to maintain the Fund's total operating expenses at 0.66%, 1.41% and 1.41% of the average daily net assets for Class A, B and C shares, respectively (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest).
Service Provider Fees. Scudder Investments Service Company ("SISC"), an affiliate of the Advisor, is the Fund's transfer, dividend-paying agent and shareholder service agent. Pursuant to a sub-transfer agency agreement between SISC and DST Systems, Inc. ("DST"), SISC has delegated certain transfer agent and dividend paying agent functions to DST. The costs and expenses of such delegation are borne by SISC, not by the Fund. For the period October 1, 2003 through August 31, 2004, the amount charged to the Fund by SISC was as follows:
Service Provider Fee | Total Aggregated | Not Imposed |
Class A | $ 283,861 | $ 283,861 |
Class B | 74,937 | 74,937 |
Class C | 52,093 | 52,093 |
$ 410,891 | $ 410,891 |
Prior to September 30, 2003, the fees outlined above were paid by the Advisor in accordance with the Administrative Agreement.
Scudder Fund Accounting Corporation ("SFAC"), an affiliate of the Advisor, is responsible for computing the daily net asset value per share and maintaining the portfolio and general accounting records of the Fund. SFAC has retained State Street Bank and Trust Company to provide certain administrative, fund accounting and record-keeping services to the Fund. The amount charged to the Fund by SFAC for accounting services aggregated $108,494, all of which was unpaid at August 31, 2004.
Distribution Service Agreement. Under the Distribution Service Agreement, in accordance with Rule 12b-1 under the 1940 Act, Scudder Distributors, Inc. ("SDI"), a subsidiary of the Advisor, receives a fee ("Distribution Fee") of 0.75% of average daily net assets of Class B and C shares. Pursuant to the agreement, SDI enters into related selling group agreements with various firms at various rates for sales of Class B and C shares. For the year ended August 31, 2004, the Distribution Fee was as follows:
Distribution Fee | Total Aggregated | Unpaid at August 31, 2004 |
Class B | $ 119,521 | $ 19,680 |
Class C | 95,824 | 16,104 |
$ 215,345 | $ 35,784 |
In addition, SDI provides information and administrative services ("Service Fee") to Class A, B and C shareholders at an annual rate of up to 0.25% of average daily net assets for each such class. SDI in turn has various agreements with financial services firms that provide these services and pays these fees based upon the assets of shareholder accounts the firms service. For the year ended August 31, 2004, the Service Fee was as follows:
Service Fee | Total Aggregated | Not Imposed | Effective Rate |
Class A | $ 205,889 | $ 186,773 | .02% |
Class B | 39,826 | 38,532 | .01% |
Class C | 31,654 | 29,505 | .02% |
$ 277,369 | $ 254,810 |
Underwriting Agreement and Contingent Deferred Sales Charge. SDI is the principal underwriter for the Fund. Underwriting commissions paid in connection with the distribution of Class A and C shares for the year ended August 31, 2004 aggregated $1,030 and $0, respectively.
In addition, SDI receives any contingent deferred sales charge ("CDSC") from Class B share redemptions occurring within six years of purchase and Class C share redemptions occurring within one year of purchase. There is no such charge upon redemption of any share appreciation or reinvested dividends. The CDSC is based on declining rates ranging from 4% to 1% for Class B and 1% for Class C, of the value of the shares redeemed. For the year ended August 31, 2004 the CDSC for Class B and C shares aggregated $62,882 and $67, respectively. A deferred sales charge of up to 1% is assessed on certain redemptions of Class A shares. For the year ended August 31, 2004, SDI received $1,103.
Trustees' Fees and Expenses. The Trust pays each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
Scudder Cash Management QP Trust. Pursuant to an Exemptive Order issued by the SEC, the Fund may invest in the Scudder Cash Management QP Trust (the "QP Trust") and other affiliated funds managed by Scudder Investments, Inc. The QP Trust seeks to provide as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. The QP Trust does not pay the Advisor a management fee for the affiliated funds' investments in the QP Trust.
D. Expense Off-Set Arrangement
The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund's custodian expenses. During the year ended ended August 31, 2004, the custodian fee was reduced by $21 for custodian credits earned.
E. Line of Credit
The Fund and several other affiliated funds (the "Participants") share in a $1.25 billion revolving credit facility administered by J.P. Morgan Chase Bank for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated, based upon net assets, among each of the Participants. Interest is calculated at the Federal Funds rate plus 0.5 percent. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.
F. Share Transactions
The following table summarizes share and dollar activity in the Fund:
Year Ended | Year Ended | |||
Shares | Dollars | Shares | Dollars | |
Shares sold | ||||
Class A | 8,671,919 | $ 59,952,522 | 7,037,294 | $ 40,177,197 |
Class B | 1,995,217 | 13,516,516 | 1,863,607 | 10,593,527 |
Class C | 1,057,539 | 7,224,046 | 1,081,710 | 6,119,912 |
$ 80,693,084 | $ 56,890,636 | |||
Shares issued in reinvestment of dividends | ||||
Class A | 83,694 | $ 570,796 | 59,095 | $ 330,928 |
Class C | 3,063 | 20,707 | - | - |
$ 591,503 | $ 330,928 | |||
Shares redeemed | ||||
Class A | (6,471,671) | $ (44,744,383) | (5,011,984) | $ (28,491,274) |
Class B | (1,909,426) | (12,892,534) | (1,973,680) | (11,006,249) |
Class C | (1,066,073) | (7,222,960) | (479,136) | (2,685,277) |
$ (64,859,877) | $ (42,182,800) | |||
Net increase (decrease) | ||||
Class A | 2,283,942 | $ 15,778,935 | 2,084,405 | $ 12,016,851 |
Class B | 85,791 | 623,982 | (110,073) | (412,722) |
Class C | (5,471) | 21,793 | 602,574 | 3,434,635 |
$ 16,424,710 | $ 15,038,764 |
G. Regulatory Matters and Litigation
Since at least July 2003, federal, state and industry regulators have been conducting ongoing inquiries and investigations ("inquiries") into the mutual fund industry, and have requested information from numerous mutual fund companies, including Scudder Investments. It is not possible to determine what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors. Publicity about mutual fund practices arising from these industry-wide inquiries serves as the general basis of a number of private lawsuits against the Scudder funds. These lawsuits, which previously have been reported in the press, involve purported class action and derivative lawsuits, making various allegations and naming as defendants various persons, including certain Scudder funds, the funds' investment advisors and their affiliates, certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each Scudder fund's investment advisor has agreed to indemnify the applicable Scudder funds in connection with these lawsuits, or other lawsuits or regulatory actions that may be filed making allegations similar to these lawsuits regarding market timing, revenue sharing, fund valuation or other subjects arising from or related to the pending inquiries. Based on currently available information, the funds' investment advisors believe the likelihood that the pending lawsuits will have a material adverse financial impact on a Scudder fund is remote and such actions are not likely to materially affect their ability to perform under their investment management agreements with the Scudder funds.
To the Trustees of Scudder Investors Trust and Shareholders of Scudder S&P 500 Stock Fund:
We have audited the accompanying statement of assets and liabilities, including the investment portfolio, of the Scudder S&P 500 Stock Fund (the "Fund"), a series of the Scudder Investors Trust (the "Trust"), as of August 31, 2004, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of August 31, 2004, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Scudder S&P 500 Stock Fund at August 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts | /s/ Ernst & Young LLP |
For corporate shareholders, 100% of the income dividends paid during the Fund's fiscal year ended August 31, 2004 qualified for the dividends received deduction.
For federal income tax purposes, the Fund designates $2,078,000, or the maximum amount allowable under tax law, as qualified dividend income.
Please consult a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns. If you have specific questions about your account, please call 1-800-SCUDDER.
The following table presents certain information regarding the Trustees and Officers of the fund as of August 31, 2004. Each individual's year of birth is set forth in parentheses after his or her name. Unless otherwise noted, (i) each individual has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity, and (ii) the address of each individual is c/o Deutsche Asset Management, 222 South Riverside Plaza, Chicago, Illinois, 60606. Each Trustee's term of office extends until the next shareholder's meeting called for the purpose of electing Trustees and until the election and qualification of a successor, or until such Trustee sooner dies, retires, resigns or is removed as provided in the governing documents of the fund.
Independent Trustees | ||
Name, Year of Birth, Position(s) Held with the Fund and Length of Time Served1 | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen |
Shirley D. Peterson (1941) Chairman, 2004-present Trustee, 1995-present | Retired; formerly, President, Hood College (1995-2000); prior thereto, Partner, Steptoe & Johnson (law firm); Commissioner, Internal Revenue Service; Assistant Attorney General (Tax), US Department of Justice. Directorships: Federal Mogul Corp. (supplier of automotive components and subsystems); AK Steel (steel production); Goodyear Tire & Rubber Co.; Trustee, Bryn Mawr College. Former Directorship: Bethlehem Steel Corp. | 85 |
John W. Ballantine (1946) Trustee, 1999-present | Retired; formerly, Executive Vice President and Chief Risk Management Officer, First Chicago NBD Corporation/The First National Bank of Chicago (1996-1998); Executive Vice President and Head of International Banking (1995-1996). Directorships: Enron Corporation (energy trading firm) (effective May 30, 2002); First Oak Brook Bancshares, Inc.; Oak Brook Bank; American Healthways, Inc. (provider of disease and care management services); Portland General Electric (utility company) | 85 |
Lewis A. Burnham (1933) Trustee, 1977-present | Retired; formerly, Director of Management Consulting, McNulty & Company (1990-1998); prior thereto, Executive Vice President, Anchor Glass Container Corporation | 85 |
Donald L. Dunaway (1937) Trustee, 1980-present | Retired; formerly, Executive Vice President, A.O. Smith Corporation (diversified manufacturer) (1963-1994) | 85 |
James R. Edgar (1946) Trustee, 1999-present | Distinguished Fellow, University of Illinois, Institute of Government and Public Affairs (1999-present); formerly, Governor, State of Illinois (1991-1999). Directorships: Kemper Insurance Companies; John B. Sanfilippo & Son, Inc. (processor/packager/marketer of nuts, snacks and candy products); Horizon Group Properties, Inc.; Youbet.com (online wagering platform); Alberto-Culver Company (manufactures, distributes and markets health and beauty care products) | 85 |
Paul K. Freeman (1950) Trustee, 2002-present | President, Cook Street Holdings (consulting); Senior Visiting Research Scholar, Graduate School of International Studies, University of Denver; Consultant, World Bank/Inter-American Development Bank; formerly, Project Leader, International Institute for Applied Systems Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986-1998) | 85 |
Robert B. Hoffman (1936) Trustee, 1981-present | Retired; formerly, Chairman, Harnischfeger Industries, Inc. (machinery for the mining and paper industries) (1999-2000); prior thereto, Vice Chairman and Chief Financial Officer, Monsanto Company (agricultural, pharmaceutical and nutritional/food products) (1994-1999). Directorships: RCP Advisors, LLC (a private equity investment advisory firm) | 85 |
Fred B. Renwick (1930) Trustee, 1988-present | Retired; Professor Emeritus of Finance, New York University, Stern School of Business (2001-present); formerly, Professor, New York University Stern School of Business (1965-2001). Directorships: The Wartburg Foundation; Chairman, Finance Committee of Morehouse College Board of Trustees; formerly, Director of Board of Pensions, Evangelical Lutheran Church in America; member of the Investment Committee of Atlanta University Board of Trustees; Chair of the Investment Committee, American Bible Society Board of Trustees | 85 |
John G. Weithers (1933) Trustee, 1993-present | Retired; formerly, Chairman of the Board and Chief Executive Officer, Chicago Stock Exchange. Directorships: Federal Life Insurance Company; Chairman of the Members of the Corporation and Trustee, DePaul University; formerly, International Federation of Stock Exchanges; Records Management Systems | 85 |
Interested Trustee and Officers2 | ||
Name, Year of Birth, Position(s) Held with the Fund and Length of Time Served1 | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen |
William N. Shiebler3 (1942) Trustee, 2004-present | Chief Executive Officer in the Americas for Deutsche Asset Management ("DeAM") and a member of the DeAM Global Executive Committee (since 2002); Vice Chairman of Putnam Investments, Inc. (1999); Director and Senior Managing Director of Putnam Investments, Inc. and President, Chief Executive Officer, and Director of Putnam Mutual Funds Inc. (1990-1999) | 139 |
Julian F. Sluyters4,7 (1960) President and Chief Executive Officer, 2004-present | Managing Director, Deutsche Asset Management (since May 2004); President and Chief Executive Officer of The Germany Fund, Inc., The New Germany Fund, Inc., The Central Europe and Russia Fund, Inc., The Brazil Fund, Inc., The Korea Fund, Inc., Scudder Global High Income Fund, Inc. and Scudder New Asia Fund, Inc. (since May 2004); President and Chief Executive Officer, UBS Fund Services (2001-2003); Chief Administrative Officer (1998-2001) and Senior Vice President and Director of Mutual Fund Operations (1991-1998) UBS Global Asset Management | n/a |
Philip J. Collora (1945) Vice President and Assistant Secretary, 1986-present | Director, Deutsche Asset Management | n/a |
Kenneth Murphy5 (1963) Vice President, 2002-present | Vice President, Deutsche Asset Management (2000-present); formerly, Director, John Hancock Signature Services (1992-2000) | n/a |
Paul H. Schubert4,7 (1963) Chief Financial Officer, 2004-present | Managing Director, Deutsche Asset Management (2004-present); formerly, Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds at UBS Global Asset Management (1994-2004) | n/a |
Charles A. Rizzo5 (1957) Treasurer, 2002-present | Managing Director, Deutsche Asset Management (April 2004-present); formerly, Director, Deutsche Asset Management (April 2000-March 2004); Vice President and Department Head, BT Alex. Brown Incorporated (now Deutsche Bank Securities Inc.) (1998-1999); Senior Manager, Coopers & Lybrand L.L.P. (now PricewaterhouseCoopers LLP) (1993-1998) | n/a |
John Millette5 (1962) Secretary, 2001-present | Director, Deutsche Asset Management | n/a |
Lisa Hertz4 (1970) Assistant Secretary, 2003-present | Assistant Vice President, Deutsche Asset Management | n/a |
Daniel O. Hirsch6 (1954) Assistant Secretary, 2002-present | Managing Director, Deutsche Asset Management (2002-present) and Director, Deutsche Global Funds Ltd. (2002-present); formerly, Director, Deutsche Asset Management (1999-2002); Principal, BT Alex. Brown Incorporated (now Deutsche Bank Securities Inc.) (1998-1999); Assistant General Counsel, United States Securities and Exchange Commission (1993-1998) | n/a |
Caroline Pearson5 (1962) Assistant Secretary, 1998-present | Managing Director, Deutsche Asset Management | n/a |
Kevin M. Gay5 (1959) Assistant Treasurer, 2004-present | Vice President, Deutsche Asset Management | n/a |
Salvatore Schiavone5 (1965) Assistant Treasurer, 2003-present | Director, Deutsche Asset Management | n/a |
Kathleen Sullivan D'Eramo5 (1957) Assistant Treasurer, 2003-present | Director, Deutsche Asset Management | n/a |
1 Length of time served represents the date that each Trustee was first elected to the common board of Trustees which oversees a number of investment companies, including the fund, managed by the Advisor. For the Officers of the fund, the length of time served represents the date that each Officer was first elected to serve as an Officer of any fund overseen by the aforementioned common board of Trustees.
2 As a result of their respective positions held with the Advisor, these individuals are considered "interested persons" of the Advisor within the meaning of the 1940 Act. Interested persons receive no compensation from the fund.
3 Address: 280 Park Avenue, New York, New York
4 Address: 345 Park Avenue, New York, New York
5 Address: Two International Place, Boston, Massachusetts
6 Address: One South Street, Baltimore, Maryland
7 Effective September 30, 2004, Mr. Sluyters and Mr. Schubert were elected as President of the fund and Chief Financial Officer of the fund, respectively.
The fund's Statement of Additional Information ("SAI") includes additional information about the Trustees. The SAI is available, without charge, upon request. If you would like to request a copy of the SAI, you may do so by calling the following toll-free number: 1-800-621-1048.
Automated Information Lines | ScudderACCESS (800) 972-3060 Personalized account information, information on other Scudder funds and services via touchtone telephone and for Classes A, B, and C only, the ability to exchange or redeem shares. |
Web Site | scudder.com View your account transactions and balances, trade shares, monitor your asset allocation, and change your address, 24 hours a day.Obtain prospectuses and applications, blank forms, interactive worksheets, news about Scudder funds, subscription to fund updates by e-mail, retirement planning information, and more. |
For More Information | (800) 621-1048 To speak with a Scudder service representative. |
Written Correspondence | Scudder Investments PO Box 219356Kansas City, MO 64121-9356 |
Proxy Voting | A description of the fund's policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site - scudder.com (type "proxy voting" in the search field) - or on the SEC's Web site - www.sec.gov. To obtain a written copy of the fund's policies and procedures without charge, upon request, call us toll free at (800) 621-1048. |
Principal Underwriter | If you have questions, comments or complaints, contact: Scudder Distributors, Inc. 222 South Riverside PlazaChicago, IL 60606-5808 (800) 621-1148 |
Class A | Class B | Class C | |
Nasdaq Symbol | KSAAX | KSABX | KSACX |
CUSIP Number | 811166-701 | 811166-800 | 811166-883 |
Fund Number | 155 | 255 | 355 |
Notes |
Notes |
Notes |
Notes |
Notes |
ITEM 2. CODE OF ETHICS. As of the end of the period, August 31, 2004, Scudder Investors Trust has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Principal Executive Officer and Principal Financial Officer. There have been no amendments to, or waivers from, a provision of the code of ethics during the period covered by this report that would require disclosure under Item 2. A copy of the code of ethics is filed as an exhibit to this Form N-CSR. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Fund's Board of Directors/Trustees has determined that the Fund has at least one "audit committee financial expert" serving on its audit committee: Mr. Donald L. Dunaway. This audit committee member is "independent," meaning that he is not an "interested person" of the Fund (as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940) and he does not accept any consulting, advisory, or other compensatory fee from the Fund (except in the capacity as a Board or committee member). An "audit committee financial expert" is not an "expert" for any purpose, including for purposes of Section 11 of the Securities Act of 1933, as a result of being designated as an "audit committee financial expert." Further, the designation of a person as an "audit committee financial expert" does not mean that the person has any greater duties, obligations, or liability than those imposed on the person without the "audit committee financial expert" designation. Similarly, the designation of a person as an "audit committee financial expert" does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. SCUDDER S&P 500 STOCK FUND FORM N-CSR DISCLOSURE RE: AUDIT FEES The following table shows the amount of fees that Ernst & Young, LLP ("E&Y"), the Fund's auditor, billed to the Fund during the Fund's last two fiscal years. For engagements with E&Y entered into on or after May 6, 2003, the Audit Committee approved in advance all audit services and non-audit services that E&Y provided to the Fund. The Audit Committee has delegated certain pre-approval responsibilities to its Chairman (or, in his absence, any other member of the Audit Committee). Services that the Fund's Auditor Billed to the Fund - -------------------------------------------------------------------------------- Audit- All Fiscal Audit Related Tax Other Year Fees Fees Fees Fees Ended Billed Billed Billed Billed August 31, to Fund to Fund to Fund to Fund - -------------------------------------------------------------------------------- 2004 $37,680 $0 $6,649 $0 - -------------------------------------------------------------------------------- 2003 $34,672 $0 $6,033 $0 - -------------------------------------------------------------------------------- The above "Tax Fees" were billed for professional services rendered for tax compliance and tax return preparation. Services that the Fund's Auditor Billed to the Adviser and Affiliated Fund Service Providers The following table shows the amount of fees billed by E&Y to Deutsche Investment Management Americas, Inc. ("DeIM" or the "Adviser"), and any entity controlling, controlled by or under common control with DeIM ("Control Affiliate") that provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for engagements directly related to the Fund's operations and financial reporting, during the Fund's last two fiscal years. - -------------------------------------------------------------------------------- All Audit-Related Tax Fees Other Fiscal Fees Billed to Billed to Fees Billed Year Adviser and Adviser and to Adviser and Ended Affiliated Fund Affiliated Fund Affiliated Fund August 31, Service Providers Service Providers Service Providers - -------------------------------------------------------------------------------- 2004 $133,500 $0 $0 - -------------------------------------------------------------------------------- 2003 $325,700 $0 $0 - -------------------------------------------------------------------------------- The "Audit-Related Fees" were billed for services in connection with the assessment of internal controls and additional related procedures.Non-Audit Services The following table shows the amount of fees that E&Y billed during the Fund's last two fiscal years for non-audit services. For engagements entered into on or after May 6, 2003, the Audit Committee pre-approved all non-audit services that E&Y provided to the Adviser and any Affiliated Fund Service Provider that related directly to the Fund's operations and financial reporting. The Audit Committee requested and received information from E&Y about any non-audit services that E&Y rendered during the Fund's last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee considered this information in evaluating E&Y's independence. - -------------------------------------------------------------------------------- Total Non-Audit Fees billed to Adviser and Affiliated Total Fund Non-Audit Service Fees Providers billed to (engagements Adviser related and directly Affiliated Total to the Fund Non-Audit operations Service Fees and financial Providers Fiscal Billed reporting of (all other Total of Year to Fund the Fund) engagements) (A), (B) Ended August 31, (A) (B) (C) and (C) - -------------------------------------------------------------------------------- 2004 $6,649 $0 $597,354 $604,003 - -------------------------------------------------------------------------------- 2003 $6,033 $0 $4,196,492 $4,202,525 - -------------------------------------------------------------------------------- All other engagement fees were billed for services in connection with risk management and process improvement initiatives for DeIM and other related entities that provide support for the operations of the fund. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not Applicable ITEM 6. SCHEDULE OF INVESTMENTS Not Applicable ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not Applicable ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS Not Applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The primary function of the Nominating and Governance Committee is to identify and recommend individuals for membership on the Board and oversee the administration of the Board Governance Procedures and Guidelines. Shareholders may recommend candidates for Board positions by forwarding their correspondence by U.S. mail or courier service to the Fund's Secretary for the attention of the Chairman of the Nominating and Governance Committee, Two International Place, Boston, MA 02110. Suggestions for candidates must include a resume of the candidate. ITEM 10. 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. Fund management has previously identified a significant deficiency relating to the overall fund expense payment and accrual process. This matter relates primarily to a bill payment processing issue. There was no material impact to shareholders, fund net asset value, fund performance or the accuracy of any fund's financial statements. Fund management discussed this matter with the Registrant's Audit Committee and auditors, instituted additional procedures to enhance its internal controls and will continue to develop additional controls and redesign work flow to strengthen the overall control environment associated with the processing and recording of fund expenses. (b) There have been no changes in the registrant's internal control over financial reporting that occurred during the registrant's last half-year (the registrant's second fiscal half-year in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal controls over financial reporting. ITEM 11. EXHIBITS. (a)(1) Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. (a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. Form N-CSR Item F SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: Scudder S&P 500 Stock Fund By: /s/Julian Sluyters ----------------------------------- Julian Sluyters Chief Executive Officer Date: October 28, 2004 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 S&P 500 Stock Fund By: /s/Julian Sluyters ----------------------------------- Julian Sluyters Chief Executive Officer Date: October 28, 2004 By: /s/Paul Schubert ----------------------------------- Paul Schubert Chief Financial Officer Date: October 28, 2004