UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSR
Investment Company Act file number 811-4257
SCUDDER VARIABLE SERIES I
-------------------------
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, MA 02110-4103
-----------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 295-2572
--------------
John Millette
Deutsche Investment Management Americas Inc.
Two International Place
Boston, Massachusetts 02110-4103
-----------------------------------------
(Name and Address of Agent for Service)
Date of fiscal year end: 12/31
Date of reporting period: 6/30/03
ITEM 1. REPORT TO STOCKHOLDERS
[Scudder Investments Logo]
Scudder Variable Series I
| Semiannual Report to Shareholders |
| June 30, 2003 |
Money Market Portfolio
<Click Here> Management Summary
<Click Here> Investment Portfolio
<Click Here> Financial Statements
<Click Here> Financial Highlights
Bond Portfolio
<Click Here> Management Summary
<Click Here> Investment Portfolio
<Click Here> Financial Statements
<Click Here> Financial Highlights
Balanced Portfolio
<Click Here> Management Summary
<Click Here> Investment Portfolio
<Click Here> Financial Statements
<Click Here> Financial Highlights
Growth and Income Portfolio
<Click Here> Management Summary
<Click Here> Investment Portfolio
<Click Here> Financial Statements
<Click Here> Financial Highlights
Capital Growth Portfolio
<Click Here> Management Summary
<Click Here> Investment Portfolio
<Click Here> Financial Statements
<Click Here> Financial Highlights
21st Century Growth Portfolio
<Click Here> Management Summary
<Click Here> Investment Portfolio
<Click Here> Financial Statements
<Click Here> Financial Highlights
Global Discovery Portfolio
<Click Here> Management Summary
<Click Here> Investment Portfolio
<Click Here> Financial Statements
<Click Here> Financial Highlights
International Portfolio
<Click Here> Management Summary
<Click Here> Investment Portfolio
<Click Here> Financial Statements
<Click Here> Financial Highlights
Health Sciences Portfolio
<Click Here> Management Summary
<Click Here> Investment Portfolio
<Click Here> Financial Statements
<Click Here> Financial Highlights
<Click Here> Notes to Financial Statements
Management Summary June 30, 2003 |
|
Money Market Portfolio
In the first half of the year, the US economic activity was extremely subdued as the country and the world focused on the war with Iraq. Once the conclusion to the war became more apparent, consumer sentiment turned up, and hopes for economic recovery in the second half of 2003 or early 2004 were rekindled. In order to spur growth in the economy and minimize deflationary risks, it appeared that the Federal Reserve Board would lower its target interest rates again.
As the Fed's June meeting approached, the markets priced in a 50-basis-point cut, which we believed to be too aggressive. As a result, we built up a significant cash position and purchased both one-month securities and callable agency securities. In late June, the Fed decided to ease by 25 basis points, and the yields of all but the shortest-maturity money market securities rose sharply, enabling us to lock up higher yields for the fund. Going forward, we will continue our insistence on the highest credit quality. We also plan to maintain our conservative investment strategies.
A group of investment professionals is responsible for the day-to-day management of the portfolio. These investment professionals have a broad range of experience managing money market funds.
Deutsche Investment Management Americas Inc.
An investment in the Scudder Money Market Portfolio is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the portfolio seeks to preserve the value of your investment at $1.00 per unit, it is possible to lose money by investing in the portfolio.
Past performance is not a guarantee of future results. Returns and principal value will fluctuate so that accumulation units, when redeemed, may be worth more or less than their original cost.
Total return measures net investment income and capital gain or loss from portfolio investments over the period specified, assuming reinvestment of all dividend and capital gain distributions. Total return reflects aggregate change. Performance is net of the portfolio's management fee and other operating expenses but does not include any deduction at the separate account or contract level for any insurance or surrender charge that may be incurred under a contract. Please see the prospectus for more details.
Portfolio management market commentary is as of June 30, 2003, and may not come to pass. This information is subject to change at any time, based on market and other conditions.
Investment Portfolio as of June 30, 2003 (Unaudited) |
|
Money Market Portfolio
| Principal
Amount ($) | Value ($) |
|
|
Certificates of Deposit and Bank Notes 9.6% |
Norddeutsche Landesbank Girozentrale, 1.24%, 8/1/2003
| 2,500,000
| 2,500,085
|
Wells Fargo Bank, 4.25%, 8/15/2003
| 2,500,000
| 2,508,710
|
Westdeutsche Landesbank AG, 1.32%, 4/15/2004
| 3,000,000
| 2,999,762
|
Total Certificates of Deposit and Bank Notes (Cost $8,008,557)
| 8,008,557 |
|
Commercial Paper 59.2% |
Asset Securities Credit Corp., 1.08%**, 7/16/2003
| 4,000,000
| 3,998,200
|
CIT Group Holdings, Inc., 1.0%**, 9/26/2003
| 4,000,000
| 3,990,333
|
Falcon Asset Securitization Corp., 1.19%**, 7/9/2003
| 1,000,000
| 999,736
|
Fortune Brand, 1.32%**, 7/1/2003
| 3,000,000
| 3,000,000
|
Goldman Sachs Group, Inc., 1.28%, 7/7/2003
| 4,000,000
| 4,000,000
|
Irish Life & Permanent, 1.22%**, 8/11/2003
| 2,600,000
| 2,596,387
|
K2 (USA) LLC, 1.34%**, 7/3/2003
| 4,000,000
| 3,999,702
|
Lake Constance Funding, 1.05%**, 12/16/2003
| 4,000,000
| 3,980,400
|
Liberty Street Funding Co., 1.14%**, 8/14/2003
| 4,000,000
| 3,994,427
|
Perry Global Funding LLC, 1.05%**, 10/10/2003
| 4,000,000
| 3,988,217
|
Prudential PLC, 1.24%**, 7/7/2003
| 4,000,000
| 3,999,173
|
Sheffield Receivables Corp., 1.2%**, 7/8/2003
| 4,000,000
| 3,999,067
|
Tango Finance Corp., 1.25%**, 7/15/2003
| 3,000,000
| 2,998,542
|
Verizon Network Funding Group, 1.0%**, 8/26/2003
| 4,000,000
| 3,993,778
|
Total Commercial Paper (Cost $49,537,962)
| 49,537,962 |
|
Floating Rate Notes 15.2% |
Bayer Landesbank NY, 1.3%*, 3/8/2004
| 4,000,000
| 4,001,364
|
General Electric Capital Corp., 1.33%*, 3/25/2004
| 4,750,000
| 4,756,296
|
Morgan Stanley Dean Witter & Co., 1.15%*, 7/21/2003
| 4,000,000
| 4,000,000
|
Total Floating Rate Notes (Cost $12,757,660)
| 12,757,660 |
|
US Agency Obligations 7.2% |
Federal Home Loan Mortgage Corp., 1.06%**, 10/24/2003
| 2,000,000
| 1,993,228
|
Federal National Mortgage Association, 1.38%, 5/7/2004
| 4,000,000
| 4,000,000
|
Total US Agency Obligations (Cost $5,993,228)
| 5,993,228 |
|
Repurchase Agreements*** 8.8% |
Lehman Brothers, Inc., 1.35%, dated 6/30/2003, to be repurchased at $4,000,150 on 7/1/2003
| 4,000,000
| 4,000,000
|
State Street Bank and Trust Co., 1.1%, dated 6/30/2003, to be repurchased at $3,402,104 on 7/1/2003
| 3,402,000
| 3,402,000
|
Total Repurchase Agreements (Cost $7,402,000)
| 7,402,000 |
Total Investment Portfolio - 100.0% (Cost $83,699,407) (a)
| 83,699,407 |
* Floating rate notes are securities whose yields vary with a designated market index or market rate, such as the coupon-equivalent of the US Treasury bill rate. These securities are shown at their current rate as of June 30, 2003.** Annualized yield at time of purchase; not a coupon rate.***Repurchase agreements are fully collateralized by US Treasury or Government agency securities.(a) Cost for federal income tax purposes was $83,699,407.At December 31, 2002, the Money Market Portfolio had a net tax basis capital loss carryforward of approximately $5,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2008 ($1,600) and December 31, 2009 ($3,400), the respective expiration dates, whichever occurs first.
Money Market Portfolio
Statement of Assets and Liabilities as of June 30, 2003 (Unaudited) |
Assets
|
Investments in securities, at amortized cost
| $ 83,699,407 |
Cash
| 564 |
Interest receivable
| 80,993 |
Receivable for Portfolio shares sold
| 170,181 |
Other assets
| 804 |
Total assets
| 83,951,949 |
Liabilities
|
Payable for Portfolio shares redeemed
| 160,518 |
Accrued management fee
| 25,796 |
Other accrued expenses and payables
| 21,467 |
Total liabilities
| 207,781 |
Net assets, at value
| $ 83,744,168 |
Net Assets
|
Net assets consist of:
Undistributed net investment income
| $ 317 |
Accumulated net realized gain (loss)
| (4,513) |
Paid-in capital
| 83,748,364 |
Net assets, at value
| $ 83,744,168 |
Net Asset Value, offering and redemption price per share ($83,744,168 / 83,737,419 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)
| $ 1.00 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended June 30, 2003 (Unaudited) |
Investment Income
|
Income:
Interest
| $ 663,415 |
Expenses:
Management fee
| 167,829 |
Custodian fees
| 8,727 |
Accounting fees
| 15,842 |
Auditing
| 6,208 |
Legal
| 4,945 |
Trustees' fees and expenses
| 4,254 |
Reports to shareholders
| 1,289 |
Other
| 4,161 |
Total expenses, before expense reductions
| 213,255 |
Expense reductions
| (64) |
Total expenses, after expense reductions
| 213,191 |
Net investment income
| 450,224 |
Net realized gain (loss) from investments
| 511 |
Net increase (decrease) in net assets resulting from operations
| $ 450,735 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| Six Months Ended June 30, 2003 (Unaudited) | Year Ended December 31, 2002 |
Operations:
Net investment income
| $ 450,224 | $ 1,806,526 |
Net realized gain (loss) on investment transactions
| 511 | 2,127 |
Net increase (decrease) in net assets resulting from operations
| 450,735 | 1,808,653 |
Distributions to shareholders from net investment income
| (449,907) | (1,806,754) |
Portfolio share transactions:
Proceeds from shares sold
| 22,499,962 | 665,248,347 |
Reinvestment of distributions
| 449,907 | 1,806,754 |
Cost of shares redeemed
| (40,313,658) | (705,059,747) |
Net increase (decrease) in net assets from Portfolio share transactions
| (17,363,789) | (38,004,646) |
Increase (decrease) in net assets
| (17,362,961) | (38,002,747) |
Net assets at beginning of period
| 101,107,129 | 139,109,876 |
Net assets at end of period (including undistributed net investment income of $317 at June 30, 2003)
| $ 83,744,168 | $ 101,107,129 |
Other Information
|
Shares outstanding at beginning of period
| 101,101,208 | 139,105,642 |
Shares sold
| 22,499,962 | 665,248,559 |
Shares issued to shareholders in reinvestment of distributions
| 449,907 | 1,806,754 |
Shares redeemed
| (40,313,658) | (705,059,747) |
Net increase (decrease) in Portfolio shares
| (17,363,789) | (38,004,434) |
Shares outstanding at end of period
| 83,737,419 | 101,101,208 |
The accompanying notes are an integral part of the financial statements.
Money Market Portfolio
Years Ended December 31, | 2003a | 2002 | 2001 | 2000 | 1999 | 1998 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Income from investment operations:
Net investment income
| .005 | .015 | .038 | .060 | .049 | .052 |
Less distributions from:
Net investment income
| (.005) | (.015) | (.038) | (.060) | (.049) | (.052) |
Net asset value, end of period
| $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Total Return (%)
| .49** | 1.49 | 3.88 | 6.21 | 4.99 | 5.29 |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 84 | 101 | 139 | 121 | 179 | 148 |
Ratio of expenses before expense reductions (%)
| .47* | .43 | .46b | .46 | .43 | .44 |
Ratio of expenses after expense reductions (%)
| .47* | .43 | .45b | .46 | .43 | .44 |
Ratio of net investment income (%)
| .99* | 1.49 | 3.77 | 6.00 | 4.90 | 5.17 |
a For the six months ended June 30, 2003 (Unaudited).b The ratios of expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were .45% and ..45%, respectively.* Annualized ** Not annualizedManagement Summary June 30, 2003 |
|
Bond Portfolio
The combination of a still-struggling US economy, war with Iraq and changes to the federal funds rate resulted in a volatile bond market in the first six months of the year. Although some investors expected the Federal Reserve Board to reduce the federal funds rate by 50 basis points at its June meeting, the reduction was only 25 basis points. This reduction was the thirteenth since the beginning of 2001 and brought the federal funds rate to 1% - a level not seen since the 1950s. In this environment, the portfolio posted strong positive results, gaining 4.47%, slightly outperforming its benchmark, the Lehman Brothers Aggregate Bond Index, which returned 3.93%.
Our bottom-up investment strategy, including the effective selection of strong-performing securities, led to strong absolute results for the six-month period. The portfolio's stake in corporate bonds aided results, as its exposure to the lower-quality portion of the investment-grade corporate sector outperformed, in particular. The portfolio's stake in asset-backed securities also aided results, while mortgage-backed securities were fairly flat in the period. Additionally, the portfolio's overall allocation to US Treasury bonds experienced a slight decline, which proved timely, since Treasuries, though posting positive returns, trailed other areas of the bond market.
David Baldt
J. Christopher Gagnier
Gary W. Bartlett
Warren S. Davis
Daniel R. Taylor
Thomas Flaherty
Andrew P. Cestone
Timothy C. Vile
Co-Managers
Brett Diment
Consultant to the Portfolio
The Lehman Brothers Aggregate Bond Index is an unmanaged market value-weighted measure of treasury issues, agency issues, corporate bond issues and mortgage securities. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
Past performance is not a guarantee of future results. Returns and principal value will fluctuate so that accumulation units, when redeemed, may be worth more or less than their original cost.
Total return measures net investment income and capital gain or loss from portfolio investments over the period specified, assuming reinvestment of all dividend and capital gain distributions. Total return reflects aggregate change. Performance is net of the portfolio's management fee and other operating expenses but does not include any deduction at the separate account or contract level for any insurance or surrender charge that may be incurred under a contract. Please see the prospectus for more details.
Portfolio management market commentary is as of June 30, 2003, and may not come to pass. This information is subject to change at any time, based on market and other conditions.
Investment Portfolio as of June 30, 2003 (Unaudited) |
|
Bond Portfolio
| Principal Amount ($) | Value ($) |
|
|
Corporate Bonds 23.0% |
Consumer Discretionary 4.5%
|
American Achieve Corp., 11.625%, 1/1/2007
| 50,000
| 53,500
|
AOL Time Warner, Inc.:
|
|
|
6.125%, 4/15/2006 | 420,000
| 459,247
|
6.75%, 4/15/2011 | 460,000
| 523,727
|
Boca Resorts, Inc., 9.875%, 4/15/2009
| 65,000
| 70,038
|
Choctaw Resort Development Enterprises, 9.25%, 4/1/2009
| 50,000
| 53,938
|
Chumash Casino & Resort Enterprise, 9.0%, 7/15/2010
| 50,000
| 54,000
|
Circus & Eldorado, 10.125%, 3/1/2012
| 50,000
| 49,125
|
Comcast Cable Communications, 6.375%, 1/30/2006
| 725,000
| 791,150
|
Comcast Corp.:
|
|
|
5.5%, 3/15/2011 | 1,175,000
| 1,256,187
|
7.05%, 3/15/2033 | 595,000
| 660,836
|
CSC Holdings, Inc., 7.875%, 12/15/2007
| 50,000
| 51,125
|
Dex Media East LLC/ Financial, 12.125%, 11/15/2012
| 50,000
| 59,125
|
DIMON, Inc., Series B, 9.625%, 10/15/2011
| 155,000
| 170,500
|
EchoStar Communications Corp., 9.375%, 2/1/2009
| 55,000
| 58,644
|
Eldorado Resorts LLC, 10.5%, 8/15/2006
| 50,000
| 51,000
|
Finlay Fine Jewelry Corp., 8.375%, 5/1/2008
| 50,000
| 51,750
|
General Motors Corp.:
|
|
|
8.25%, 7/15/2023 | 765,000
| 764,524
|
8.375%, 7/15/2033 | 1,795,000
| 1,761,075
|
Herbst Gaming, Inc., 10.75%, 9/1/2008
| 80,000
| 88,200
|
Hines Horticulture, Inc., Series B, 12.75%, 10/15/2005
| 50,000
| 52,500
|
International Game Technology, 8.375%, 5/15/2009
| 80,000
| 98,144
|
Intrawest Corp., 10.5%, 2/1/2010
| 50,000
| 53,750
|
Laidlaw International, Inc., 10.75%, 6/15/2011
| 50,000
| 52,500
|
MGM Mirage, Inc., 9.75%, 6/1/2007
| 75,000
| 85,125
|
Park Place Entertainment Corp.:
|
|
|
8.875%, 9/15/2008 | 145,000
| 159,863
|
9.375%, 2/15/2007 | 70,000
| 77,525
|
PRIMEDIA, Inc., 7.625%, 4/1/2008
| 50,000
| 50,500
|
Remington Arms Co., 10.5%, 2/1/2011
| 50,000
| 52,250
|
Schuler Homes, Inc.:
|
|
|
9.375%, 7/15/2009 | 95,000
| 107,350
|
10.5%, 7/15/2011 | 50,000
| 57,500
|
Sinclair Broadcast Group, Inc., 8.75%, 12/15/2011
| 110,000
| 120,725
|
Six Flags, Inc., 8.875%, 2/1/2010
| 50,000
| 48,000
|
Sonic Automotive, Inc., 11.0%, 8/1/2008
| 50,000
| 53,000
|
Starwood Hotels, 7.875%, 5/1/2012
| 50,000
| 54,750
|
Time Warner, Inc.:
|
|
|
7.75%, 6/15/2005 | 500,000
| 548,984
|
8.11%, 8/15/2006 | 705,000
| 810,530
|
Transwestern Publishing, Series F, 9.625%, 11/15/2007
| 50,000
| 52,125
|
Unisys Corp., 6.875%, 3/15/2010
| 50,000
| 52,000
|
Wheeling Island Gaming, Inc., 10.125%, 12/15/2009
| 50,000
| 50,313
|
Worldspan LP/ WS Finance Corp., 9.625%, 6/15/2011
| 50,000
| 51,500
|
| 9,716,625 |
Consumer Staples 0.1%
|
Agrilink Foods, Inc., 11.875%, 11/1/2008
| 50,000
| 53,875
|
Elizabeth Arden, Inc., Series B, 11.75%, 2/1/2011
| 50,000
| 55,750
|
Stater Brothers Holdings, Inc., 10.75%, 8/15/2006
| 50,000
| 52,625
|
| 162,250 |
Energy 1.4%
|
Avista Corp., 9.75%, 6/1/2008
| 170,000
| 197,200
|
Citgo Petroleum Corp., 11.375%, 2/1/2011
| 115,000
| 128,225
|
Devon Energy Corp., 7.95%, 4/15/2032
| 710,000
| 913,899
|
Devon Financing Corp., 7.875%, 9/30/2031
| 190,000
| 241,264
|
Houston Exploration Co., 7.0%, 6/15/2013
| 50,000
| 51,625
|
National Fuel Gas Co., 5.25%, 3/1/2013
| 630,000
| 655,283
|
Panhandle Eastern Pipe Line, 7.95%, 3/15/2023
| 50,000
| 51,750
|
Parker Drilling Co., Series B, 10.125%, 11/15/2009
| 50,000
| 54,000
|
Pioneer Natural Resources Co., 6.5%, 1/15/2008
| 265,000
| 288,617
|
Southern Natural Gas, 8.875%, 3/15/2010
| 50,000
| 54,500
|
Stone Energy Corp., 8.75%, 9/15/2007
| 50,000
| 51,875
|
Trico Marine Services, 8.875%, 5/15/2012
| 50,000
| 43,000
|
Westar Energy, Inc., 7.875%, 5/1/2007
| 55,000
| 61,463
|
Westport Resources Corp., 8.25%, 11/1/2011
| 115,000
| 125,925
|
Williams Cos., Inc., 8.625%, 6/1/2010
| 50,000
| 52,250
|
| 2,970,876 |
Financials 8.3%
|
Ahold Finance USA, Inc., 6.25%, 5/1/2009
| 60,000
| 55,950
|
American General:
|
|
|
7.57%, 12/1/2045 | 370,000
| 473,828
|
8.125%, 3/15/2046 | 675,000
| 912,697
|
Americredit Corp., 9.875%, 4/15/2006
| 50,000
| 49,000
|
Arch Western Finance, 6.75%, 7/1/2013
| 50,000
| 51,250
|
ASIF Global Finance, 4.9%, 1/17/2013
| 1,960,000
| 2,041,028
|
CBRE Escrow, Inc., 9.75%, 5/15/2010
| 50,000
| 52,563
|
Citigroup, Inc., 6.875%, 2/15/2098
| 1,220,000
| 1,462,518
|
Enterprise Rent-A-Car USA Finance Co., 7.35%, 6/15/2008
| 1,600,000
| 1,872,462
|
Farmers Exchange Capital, 7.05%, 7/15/2028
| 50,000
| 44,939
|
Ford Motor Credit Co.:
|
|
|
6.875%, 2/1/2006 | 520,000
| 551,512
|
7.5%, 3/15/2005 | 980,000
| 1,041,415
|
General Electric Capital Corp., 5.45%, 1/15/2013
| 860,000
| 931,502
|
HSBC Holdings, Inc., 5.25%, 12/12/2012
| 1,090,000
| 1,162,505
|
LaBranche & Co., Inc., 12.0%, 3/2/2007
| 85,000
| 96,900
|
LNR Property Corp., 7.625%, 7/15/2013
| 50,000
| 50,572
|
New York Life Insurance Co., 5.875%, 5/15/2033
| 850,000
| 892,061
|
Ohio National Life Insurance, 8.5%, 5/15/2026
| 230,000
| 282,220
|
PEI Holdings, Inc., 11.0%, 3/15/2010
| 50,000
| 55,125
|
PNC Funding Corp., 5.75%, 8/1/2006
| 1,210,000
| 1,335,047
|
Prudential Financial, Inc., 4.5%, 7/15/2013
| 1,550,000
| 1,547,381
|
R.H. Donnelly Finance Corp., 10.875%, 12/15/2012
| 50,000
| 58,250
|
Thornburg Mortgage, Inc., 8.0%, 5/15/2013
| 60,000
| 61,200
|
Verizon Global Funding Corp., 7.25%, 12/1/2010
| 2,050,000
| 2,461,917
|
Wachovia Corp., 7.5%, 7/15/2006
| 210,000
| 242,997
|
| 17,786,839 |
Health Care 0.1%
|
AmerisourceBergen Corp., 7.25%, 11/15/2012
| 75,000
| 81,375
|
Tenet Healthcare Corp.:
|
|
|
6.375%, 12/1/2011 | 50,000
| 46,250
|
7.375%, 12/1/2013 | 85,000
| 82,025
|
| 209,650 |
Industrials 3.1%
|
Allied Waste North America, Inc.:
|
|
|
7.875%, 4/15/2013 | 50,000
| 52,313
|
Series B, 8.5%, 12/1/2008 | 65,000
| 69,875
|
Series B, 10.0%, 8/1/2009 | 120,000
| 127,500
|
America West Airlines, Inc., Series 99-1, 7.93%, 1/2/2019
| 536,477
| 568,902
|
AutoNation, Inc., 9.0%, 8/1/2008
| 80,000
| 88,800
|
Avondale Mills, Inc., 10.25%, 7/1/2013
| 50,000
| 50,000
|
Corrections Corp. of America, 9.875%, 5/1/2009
| 50,000
| 55,813
|
CP Ships Ltd., 10.375%, 7/15/2012
| 50,000
| 55,813
|
Dana Corp.:
|
|
|
7.0%, 3/1/2029 | 50,000
| 43,563
|
10.125%, 3/15/2010 | 50,000
| 55,125
|
Day International Group, Inc., 11.125%, 6/1/2005
| 50,000
| 50,500
|
Flextronics International Ltd., 6.5%, 5/15/2013
| 70,000
| 67,375
|
Golden State Petroleum Transportation, 8.04%, 2/1/2019
| 50,000
| 48,127
|
Hercules, Inc., 11.125%, 11/15/2007
| 115,000
| 133,975
|
ISP Chemco, Inc., Series B, 10.25%, 7/1/2011
| 55,000
| 62,150
|
Kansas City Southern, 7.5%, 6/15/2009
| 80,000
| 82,900
|
Millennium America, Inc.:
|
|
|
7.0%, 11/15/2006 | 155,000
| 156,550
|
9.25%, 6/15/2008 | 60,000
| 64,500
|
Mobile Mini, Inc., 9.5%, 7/1/2013
| 50,000
| 51,750
|
Northwest Airlines Corp., Series 02-1, 6.264%, 11/20/2021
| 1,300,000
| 1,372,371
|
Raytheon Co., 8.2%, 3/1/2006
| 990,000
| 1,142,221
|
Systems 2001 Asset Trust LLC "G", Series 2001, 6.664%, 9/15/2013
| 2,035,713
| 2,291,767
|
Xerox Corp., 9.75%, 1/15/2009
| 50,000
| 56,242
|
| 6,748,132 |
Materials 0.6%
|
Abitibi-Consolidated Finance, 7.875%, 8/1/2009
| 50,000
| 55,500
|
ARCO Chemical Co.:
|
|
|
9.8%, 2/1/2020 | 50,000
| 44,000
|
10.25%, 11/1/2010 | 50,000
| 48,000
|
Caraustar Industries, Inc., 9.875%, 4/1/2011
| 55,000
| 58,575
|
Cascades, Inc., 7.25%, 2/15/2013
| 60,000
| 63,150
|
Dow Chemical Co., 7.0%, 8/15/2005
| 150,000
| 163,865
|
Equistar Chemicals LP, 8.75%, 2/15/2009
| 260,000
| 252,200
|
Georgia-Pacific Corp.:
|
|
|
7.7%, 6/15/2015 | 85,000
| 81,813
|
8.875%, 5/15/2031 | 165,000
| 161,700
|
9.375%, 2/1/2013 | 50,000
| 55,125
|
Owens-Brockway Glass Container, 8.25%, 5/15/2013
| 50,000
| 52,250
|
Texas Industries, Inc., 10.25%, 6/15/2011
| 50,000
| 52,250
|
Toll Corp., 8.25%, 2/1/2011
| 50,000
| 55,750
|
Weyerhaeuser Co., 7.375%, 3/15/2032
| 235,000
| 270,137
|
| 1,414,315 |
Telecommunication Services 0.5%
|
DirecTV Holdings, 8.375%, 3/15/2013
| 50,000
| 55,750
|
Nextel Communications, Inc., 9.5%, 2/1/2011
| 85,000
| 94,138
|
Qwest Services Corp., 5.625%, 11/15/2008
| 145,000
| 139,200
|
Shaw Communications, Inc., 8.25%, 4/11/2010
| 50,000
| 55,625
|
Sprint Capital Corp., 8.375%, 3/15/2012
| 50,000
| 59,866
|
Telecomunicaciones de Puerto Rico, Inc., 6.65%, 5/15/2006
| 560,000
| 619,458
|
| 1,024,037 |
Utilities 4.4%
|
AEP Texas Central Co., 5.5%, 2/15/2013
| 825,000
| 880,155
|
Alabama Power Co., 7.125%, 8/15/2004
| 1,000,000
| 1,064,275
|
Cincinnati Gas & Electric Co., Series A, 5.4%, 6/15/2033
| 790,000
| 759,451
|
CMS Energy Corp.:
|
|
|
7.5%, 1/15/2009 | 80,000
| 79,100
|
8.5%, 4/15/2011 | 75,000
| 78,281
|
Consumers Energy Co., 4.0%, 5/15/2010
| 980,000
| 976,849
|
El Paso Production Holding Corp., 7.75%, 6/1/2013
| 50,000
| 49,875
|
Pacificorp., 6.9%, 11/15/2011
| 1,200,000
| 1,418,950
|
PG&E Corp., 6.875%, 7/15/2008
| 50,000
| 51,875
|
Progress Energy, Inc., 6.75%, 3/1/2006
| 2,400,000
| 2,667,281
|
Reliant Resources, Inc., 9.25%, 7/15/2010
| 50,000
| 50,532
|
TNP Enterprises, Inc., Series B, 10.25%, 4/1/2010
| 70,000
| 70,000
|
Western Resources, Inc., 9.75%, 5/1/2007
| 60,000
| 67,200
|
Xcel Energy, Inc., 7.0%, 12/1/2010
| 1,040,000
| 1,189,406
|
| 9,403,230 |
Total Corporate Bonds (Cost $46,658,364)
| 49,435,954 |
|
Convertible Bonds 0.1% |
Nortel Networks Corp., 4.25%, 9/1/2008
| 50,000
| 42,250
|
Parker Drilling Co., 5.5%, 8/1/2004
| 60,000
| 60,000
|
Total Convertible Bonds (Cost $100,998)
| 102,250 |
|
Asset Backed 12.4% |
Automobile Receivables 5.0%
|
AmeriCredit Automobile Receivables Trust "A4", Series 2001-C, 5.01%, 7/14/2008
| 1,605,000
| 1,681,345
|
Household Automotive Trust "A4A", Series 2002-3, 3.44%, 5/18/2009
| 1,190,000
| 1,226,740
|
MMCA Automobile Trust:
|
|
|
"A4", Series 2002-3, 3.57%, 8/17/2009 | 1,455,000
| 1,481,849
|
"A4", Series 2002-2, 4.3%, 3/15/2010 | 1,945,000
| 1,977,661
|
"B", Series 2002-1, 5.37%, 1/15/2010 | 1,421,398
| 1,440,665
|
WFS Financial Owner Trust:
|
|
|
"A4", Series 2002-3, 3.5%, 2/20/2010 | 1,430,000
| 1,488,991
|
"A4", Series 2002-2, 4.5%, 2/20/2010 | 1,360,000
| 1,430,491
|
| 10,727,742 |
Credit Card Receivables 0.2%
|
MBNA Master Credit Card Trust USA "A", Series 1999-B, 5.9%, 8/15/2011
| 400,000
| 458,885 |
Home Equity Loans 1.3%
|
Oakwood Mortgage Investors, Inc. "A2", Series 2002-B, 5.19%, 9/15/2019
| 800,000
| 792,508
|
Residential Asset Securities Corp. "AI6", Series 2000-KS1, 7.905%, 2/25/2031
| 1,831,389
| 1,984,690
|
| 2,777,198 |
Manufactured Housing Receivables 0.5%
|
Green Tree Financial Corp. "A5", Series 1996-5, 7.05%, 1/15/2019
| 900,000
| 948,314 |
Miscellaneous 5.4%
|
Aircraft Certificate Owner Trust "E", Series 2003-1A, 6.951%, 9/20/2022
| 2,460,000
| 2,607,379
|
Detroit Edison Securitization Funding LLC "A6", Series 2001-1, 6.62%, 3/1/2016
| 1,340,000
| 1,596,423
|
Federal Home Loan Mortgage Corp. "3A", Series T-41, 7.5%, 7/25/2032
| 523,307
| 583,651
|
PECO Energy Transition Trust "A1", Series 2001-A, 6.52%, 12/31/2010
| 1,760,000
| 2,082,527
|
PSE&G Transition Funding LLC:
|
|
|
"A7", Series 2001-1, 6.75%, 6/15/2016 | 2,300,000
| 2,759,235
|
"A8", Series 2001-1, 6.89%, 12/15/2017 | 1,610,000
| 1,959,436
|
| 11,588,651 |
Total Asset Backed (Cost $25,163,870)
| 26,500,790 |
|
Foreign Bonds - US$ Denominated 4.4% |
Bluewater Finance Ltd., 10.25%, 2/15/2012
| 50,000
| 49,500
|
British Sky Broadcasting PLC:
|
|
|
6.875%, 2/23/2009 | 80,000
| 90,400
|
8.2%, 7/15/2009 | 55,000
| 65,175
|
Euramax International PLC, 11.25%, 10/1/2006
| 50,000
| 51,500
|
Fage Dairy Industry SA, 9.0%, 2/1/2007
| 50,000
| 49,500
|
Federative Republic of Brazil, 8.0%, 4/15/2014
| 73,885
| 65,203
|
France Telecom:
|
|
|
8.7%, 3/1/2006 | 490,000
| 558,929
|
9.25%, 3/1/2011 | 535,000
| 673,332
|
Grupo Elektra SA de CV, 12.0%, 4/1/2008
| 50,000
| 50,250
|
Ing Bank NV, 5.125%, 5/1/2015
| 340,000
| 356,003
|
Inversiones CMPC SA, 4.875%, 6/18/2013
| 1,560,000
| 1,541,204
|
Luscar Coal Ltd., 9.75%, 10/15/2011
| 50,000
| 57,125
|
Norske Skog Canada, 8.625%, 6/15/2011
| 50,000
| 52,250
|
OAO Gazprom, 9.625%, 3/1/2013
| 50,000
| 55,125
|
QBE Insurance Group Ltd., 5.647%, 7/1/2023
| 1,040,000
| 1,010,418
|
Royal Caribbean Cruises Ltd., 7.25%, 3/15/2018
| 50,000
| 45,125
|
Sappi Papier Holding AG, 7.5%, 6/15/2032
| 1,540,000
| 1,810,735
|
Stena AB, 9.625%, 12/1/2012
| 50,000
| 54,938
|
Telus Corp., 8.0%, 6/1/2011
| 100,000
| 115,500
|
Tembec Industries, Inc.:
|
|
|
8.5%, 2/1/2011 | 55,000
| 54,450
|
8.625%, 6/30/2009 | 50,000
| 49,375
|
TFM SA de CV:
|
|
|
11.75%, 6/15/2009 | 100,000
| 102,000
|
12.5%, 6/15/2012 | 50,000
| 54,000
|
Tyco International Group SA:
|
|
|
5.8%, 8/1/2006 | 1,075,000
| 1,109,938
|
6.125%, 11/1/2008 | 110,000
| 114,950
|
6.125%, 1/15/2009 | 115,000
| 119,600
|
6.375%, 2/15/2006 | 500,000
| 521,250
|
6.375%, 10/15/2011 | 60,000
| 63,300
|
Ukraine Government, 7.65%, 6/11/2013
| 50,000
| 49,750
|
United Mexican States, 6.375%, 1/16/2013
| 260,000
| 275,600
|
Vicap SA, 11.375%, 5/15/2007
| 55,000
| 49,500
|
Vivendi Universal SA, 9.25%, 4/15/2010
| 100,000
| 113,750
|
Total Foreign Bonds - US$ Denominated (Cost $9,202,245)
| 9,429,675 |
|
US Treasury Obligations 20.0% |
US Treasury Bond:
|
|
|
5.375%, 2/15/2031 | 50,000
| 56,303
|
6.0%, 2/15/2026 | 4,898,000
| 5,854,834
|
10.75%, 8/15/2005 | 65,000
| 77,764
|
US Treasury Note:
|
|
|
1.625%, 4/30/2005 | 15,274,000
| 15,374,228
|
2.125%, 10/31/2004 | 15,078,000
| 15,278,839
|
6.125%, 8/15/2007 | 4,935,000
| 5,708,601
|
US Treasury STRIPS:
|
|
|
Principal only, 3.88%*, 5/15/2013 | 30,000
| 20,529
|
Principal only, 5.12%*, 8/15/2026 | 1,755,000
| 552,688
|
Total US Treasury Obligations (Cost $42,921,901)
| 42,923,786 |
|
US Government Agency Pass-Thrus 12.6% |
Federal Home Loan Mortgage Corp., 5.0%, 7/1/2033 (c)
| 960,000
| 975,300
|
Federal National Mortgage Association:
|
|
|
4.5%, 7/1/2018 (d) | 3,710,000
| 3,784,200
|
5.0%, with various maturities to 7/1/2033 (d) | 4,335,000
| 4,421,433
|
5.4%, 11/1/2008 | 2,140,000
| 2,365,782
|
5.5%, with various maturities to 7/1/2033 (d) | 5,645,971
| 5,853,812
|
6.0%, 11/1/2017 | 1,100,338
| 1,150,498
|
6.31%, 6/1/2008 | 1,700,000
| 1,931,406
|
6.5%, 8/1/2032 | 4,381,263
| 4,584,062
|
6.715%, 12/1/2007 | 1,555,326
| 1,774,546
|
8.0%, 9/1/2015 | 167,022
| 179,251
|
Total US Government Agency Pass-Thrus (Cost $26,565,334)
| 27,020,290 |
|
Collateralized Mortgage Obligations 18.5% |
Bank of America Mortgage Securities, Series 2002-6, 6.0%, 7/25/2032
| 115,637
| 115,710
|
Chase Commerical Mortgage Securities Corp., Series 1996-2, 6.9%, 11/19/2028
| 899,620
| 995,385
|
Federal Home Loan Mortgage Corp.:
|
|
|
"1A2B", Series T-48, 4.688%, 7/25/2022 | 740,000
| 771,001
|
"OC", Series 2381, 5.5%, 9/15/2011 | 1,110,000
| 1,119,768
|
"DB", Series 2483, 5.5%, 9/15/2012 | 1,500,000
| 1,512,750
|
"GD", Series 2497, 5.5%, 7/15/2014 | 1,240,000
| 1,282,023
|
"PN", Series 2392, 5.5%, 11/15/2016 | 730,000
| 772,245
|
"CH", Series 2390, 5.5%, 12/15/2016 | 200,000
| 211,755
|
"PB", Series 2477, 5.5%, 8/15/2032 | 700,000
| 710,668
|
"D", Series 2281, 6.0%, 3/15/2027 | 486,783
| 488,444
|
"GA", Series 2366, 6.0%, 3/15/2029 | 2,509,363
| 2,534,143
|
"GA", Series 2450, 6.25%, 10/15/2022 | 826,294
| 836,728
|
Federal National Mortgage Association:
|
|
|
"A2", Series 2003-63, 2.34%, 7/25/2044 | 310,000
| 308,450
|
"JT", Series 2003-6, 4.5%, 2/1/2033 | 1,720,000
| 1,746,411
|
"PU", Series 2003-33, 4.5%, 5/25/2033 | 1,596,015
| 1,643,383
|
"A2", Series 2002-W10, 4.7%, 8/25/2042 | 395,000
| 410,554
|
"A2", Series 2002-W9, 4.7%, 8/25/2042 | 395,000
| 408,319
|
"A2", Series 2002-60, 4.75%, 2/25/2044 | 500,000
| 519,444
|
"OG", Series 2001-69, 5.5%, 12/25/2016 | 750,000
| 788,915
|
"PG", Series 2002-3, 5.5%, 2/25/2017 | 500,000
| 527,170
|
"QC", Series 2002-11, 5.5%, 3/15/2017 | 290,000
| 306,714
|
"A2", Series 2002-W3, 5.5%, 10/25/2021 | 1,879,000
| 1,932,683
|
"PM", Series 2002-21, 5.5%, 11/25/2022 | 249,283
| 249,163
|
"LN", Series 2001-56, 5.75%, 7/25/2026 | 627,567
| 627,554
|
"QN", Series 2001-51, 6.0%, 10/25/2016 | 1,360,000
| 1,452,242
|
"VD", Series 2002-56, 6.0%, 4/25/2020 | 345,000
| 358,208
|
"A", Series 2001-66, 6.0%, 6/25/2029 | 1,347,835
| 1,361,360
|
"B", Series 1999-32, 6.0%, 7/25/2029 | 550,000
| 570,687
|
"AN", Series 2000-27, 6.0%, 8/25/2030 | 375,000
| 385,358
|
"ZQ", Series G92-9, 7.0%, 12/25/2021 | 783,198
| 819,202
|
"A2", Series 2002-T4, 7.0%, 12/25/2041 | 2,275,253
| 2,480,738
|
"A5", Series 2002-W4, 7.5%, 5/25/2042 | 513,336
| 572,852
|
"2A", Series 2002-W6, 7.5%, 6/25/2042 | 1,575,352
| 1,757,996
|
"1A3", Series 2003-W3, 7.5%, 8/25/2042 | 730,100
| 814,746
|
Government National Mortgage Association, Series 2002-5, 6.0%, 8/16/2026
| 1,939,146
| 1,986,014
|
Master Asset Securitization Trust, Series 2003-6, 5.5%, 7/25/2033
| 1,935,000
| 1,971,281
|
Residential Asset Securitization Trust, Series 2000-A3, 8.0%, 5/25/2030
| 845,776
| 861,710
|
Structured Asset Securities Corp., Series 2003-1, 6.0%, 2/25/2018
| 63,742
| 65,785
|
Wells Fargo Mortgage Backed Securities Trust:
|
|
|
"1A1", Series 2003-6, 5.0%, 6/25/2018 | 1,898,353
| 1,982,915
|
"1A3", Series 2002-18, 6.0%, 12/25/2032 | 1,501,508
| 1,530,832
|
Total Collateralized Mortgage Obligations (Cost $39,591,437)
| 39,791,306 |
|
Municipal Investments 3.1% |
Illinois, State GO, General Obligation, 4.95%, 6/1/2023
| 1,260,000
| 1,256,900
|
Maryland, Airport Revenue, Transportation Authority Limited Obligation Revenue, 6.65%, 7/1/2032 (e)
| 1,360,000
| 1,598,925
|
Trenton, NJ, Core City GO, School District General Obligation Revenue, 4.7%, 4/1/2013 (e)
| 745,000
| 764,184
|
Union County, NJ, Student Loans Revenue, Improvement Authority Revenue, 5.29%, 4/1/2018 (e)
| 940,000
| 992,302
|
Virgin Islands, Port Authority Revenue, Port Authority, Marine Revenue, Series B, 5.08%, 9/1/2013 (e)
| 1,420,000
| 1,513,152
|
Washington, Industrial Development Revenue, Economic Development Financial Authority, CSC Tacoma LLC, Project, Series A, 3.8%, 10/1/2011 (e)
| 550,000
| 547,855
|
Total Municipal Investments (Cost $6,277,520)
| 6,673,318 |
|
Shares
| Value ($) |
|
|
Convertible Preferred Stocks 0.0% |
Hercules Trust II (Cost $29,500)
| 50
| 31,967 |
|
Cash Equivalents 5.9% |
Scudder Cash Management QP Trust, 1.15% (b) (Cost $12,694,124)
| 12,694,124
| 12,694,124 |
Total Investment Portfolio - 100.0% (Cost $209,205,293) (a)
| 214,603,460 |
* Bond equivalent yield to maturity; not a coupon rate.(a) The cost for federal income tax purposes was $209,222,883. At June 30, 2003, net unrealized appreciation for all securities based on tax cost was $5,380,577. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $5,975,534 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $594,957.(b) Scudder Cash Management QP Trust is also managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.(c) When-issued or forward delivery securities included.(d) Mortgage dollar rolls included.(e) Bond is insured by one of these companiesFGIC
| Financial Guaranty Insurance Company
|
FSA
| Financial Housing Administration
|
MBIA
| Municipal Bond Investors Assurance
|
Included in the portfolio are investments in mortgage or asset-backed securities which are interests in separate pools of mortgages or assets. Effective maturities of these investments may be shorter than stated maturities due to prepayments. Some separate investments in the Federal National Mortgage Association issues which have similar coupon rates have been aggregated for presentation purposes in the investment portfolio.
Purchases and sales of investment securities (excluding US Treasury obligations, short-term investments and mortgage dollar roll transactions), for the six months ended June 30, 2003, aggregated $147,571,630 and $116,927,205, respectively. Purchases and sales of US Treasury obligations aggregated $138,757,200 and $130,902,214, respectively. Purchases and sales of mortgage dollar roll transactions aggregated $23,597,814 and $23,672,711, respectively.
At December 31, 2002, the Bond Portfolio had a net tax basis capital loss carryforward of approximately $5,987,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2008 ($3,776,000) and December 31, 2010 ($2,211,000), the respective expiration dates, whichever occurs first.
The accompanying notes are an integral part of the financial statements.
Bond Portfolio
Statement of Assets and Liabilities as of June 30, 2003 (Unaudited) |
Assets
|
Investments in securities, at value (cost $196,511,169)
| $ 201,909,336 |
Investment in Scudder Cash Management QP Trust (cost $12,694,124)
| 12,694,124 |
Receivable for investments sold
| 6,615,011 |
Dividends receivable
| 813 |
Interest receivable
| 1,603,560 |
Receivable for Portfolio shares sold
| 202,842 |
Other assets
| 1,745 |
Total assets
| 223,027,431 |
Liabilities
|
Payable for investments purchased
| 12,638,188 |
Payable for when-issued or forward delivery securities
| 976,173 |
Payable for investments purchased - mortgage dollar rolls
| 5,620,420 |
Payable for Portfolio shares redeemed
| 11,367,497 |
Deferred mortgage dollar roll income
| 8,396 |
Accrued management fee
| 78,614 |
Other accrued expenses and payables
| 23,928 |
Total liabilities
| 30,713,216 |
Net assets, at value
| $ 192,314,215 |
Net Assets
|
Net assets consist of:
Undistributed net investment income
| 3,604,453 |
Net unrealized appreciation (depreciation) on investments
| 5,398,167 |
Accumulated net realized gain (loss)
| (2,155,849) |
Paid-in capital
| 185,467,444 |
Net assets, at value
| $ 192,314,215 |
Net Asset Value, offering and redemption price per share ($192,314,215 / 27,475,586 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 7.00 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended June 30, 2003 (Unaudited) |
Investment Income
|
Income:
Interest
| $ 4,202,062 |
Interest - Scudder Cash Management QP Trust
| 84,724 |
Dividends
| 813 |
Total income
| 4,287,599 |
Expenses:
Management fee
| 436,849 |
Custodian fees
| 7,292 |
Accounting fees
| 36,542 |
Auditing
| 10,489 |
Legal
| 6,064 |
Trustees' fees and expenses
| 4,001 |
Reports to shareholders
| 10,610 |
Other
| 8,890 |
Total expenses, before expense reductions
| 520,737 |
Expense reductions
| (363) |
Total expenses, after expense reductions
| 520,374 |
Net investment income
| 3,767,225 |
Realized and Unrealized Gain (Loss) on Investment Transactions
|
Net realized gain (loss) from:
Investments
| 3,861,437 |
Foreign currency related transactions
| 11 |
| 3,861,448 |
Net unrealized appreciation (depreciation) during the period on investments
| 852,183 |
Net gain (loss) on investment transactions
| 4,713,631 |
Net increase (decrease) in net assets resulting from operations
| $ 8,480,856 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| Six Months Ended June 30, 2003 (Unaudited) | Year Ended December 31, 2002 |
Operations:
Net investment income
| $ 3,767,225 | $ 8,002,676 |
Net realized gain (loss) on investment transactions
| 3,861,448 | (2,044,288) |
Net unrealized appreciation (depreciation) on investment transactions during the period
| 852,183 | 5,498,492 |
Net increase (decrease) in net assets resulting from operations
| 8,480,856 | 11,456,880 |
Distributions to shareholders from:
Net investment income
| (7,871,334) | (8,568,166) |
Portfolio share transactions:
Proceeds from shares sold
| 50,648,210 | 71,186,525 |
Reinvestment of distributions
| 7,871,334 | 8,568,166 |
Cost of shares redeemed
| (31,870,450) | (99,449,677) |
Net increase (decrease) in net assets from Portfolio share transactions
| 26,649,094 | (19,694,986) |
Increase (decrease) in net assets
| 27,258,616 | (16,806,272) |
Net assets at beginning of period
| 165,055,599 | 181,861,871 |
Net assets at end of period (including undistributed net investment income of $3,604,453 and $7,708,562, respectively)
| $ 192,314,215 | $ 165,055,599 |
Other Information
|
Shares outstanding at beginning of period
| 23,649,490 | 26,384,756 |
Shares sold
| 7,223,187 | 10,461,567 |
Shares issued to shareholders in reinvestment of distributions
| 1,150,780 | 1,310,117 |
Shares redeemed
| (4,547,871) | (14,506,950) |
Net increase (decrease) in Portfolio shares
| 3,826,096 | (2,735,266) |
Shares outstanding at end of period
| 27,475,586 | 23,649,490 |
The accompanying notes are an integral part of the financial statements.
Bond Portfolio
Years Ended December 31, | 2003a | 2002 | 2001b | 2000 | 1999 | 1998 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 6.98 | $ 6.89 | $ 6.78 | $ 6.49 | $ 6.88 | $ 6.87 |
Income (loss) from investment operations:
Net investment incomec
| .14 | .34 | .38 | .42 | .42 | .43 |
Net realized and unrealized gain (loss) on investment transactions
| .17 | .17 | .00d | .23 | (.48) | .01 |
Total from investment operations | .31 | .51 | .38 | .65 | (.06) | .44 |
Less distributions from:
Net investment income
| (.29) | (.42) | (.27) | (.36) | (.22) | (.40) |
Net realized gains on investment transactions
| - | - | - | - | (.11) | (.03) |
Total distributions | (.29) | (.42) | (.27) | (.36) | (.33) | (.43) |
Net asset value, end of period
| $ 7.00 | $ 6.98 | $ 6.89 | $ 6.78 | $ 6.49 | $ 6.88 |
Total Return (%)
| 4.47** | 7.66 | 5.75 | 10.56 | (.95) | 6.57 |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 192 | 165 | 182 | 102 | 94 | 106 |
Ratio of expenses before expense reductions (%)
| .57* | .55 | .58e | .58 | .57 | .57 |
Ratio of expenses after expense reductions (%)
| .57* | .55 | .57e | .58 | .57 | .57 |
Ratio of net investment income (%)
| 4.10* | 5.03 | 5.47 | 6.55 | 6.38 | 6.34 |
Portfolio turnover rate (%)
| 274f* | 262f | 169f | 288 | 86 | 115 |
a For the six months ended June 30, 2003 (Unaudited).b As required, effective January 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. In addition, paydowns on mortgage-backed securities which were included in realized gain/loss on investment transactions prior to January 1, 2001 are included as interest income. The effect of this change for the year ended December 31, 2001 was to decrease net investment income by $.02, increase net realized and unrealized gains and losses per share by $.02, and decrease the ratio of net investment income to average net assets from 5.74% to 5.47%. Per share data and ratios for periods prior to January 1, 2001 have not been restated to reflect this change in presentation.cBased on average shares outstanding during the period.d The amount of net realized and unrealized gain shown for a share outstanding for the year ended December 31, 2001 does not correspond with the aggregate net loss on investments for the period due to the timing of sales and repurchases of Portfolio shares in relation to fluctuating market values of the investments of the Portfolio.e The ratios of operating expenses excluding costs incurred in connection with the reorganization before and after expense reductions were .57% and ..57%, respectively.fThe portfolio turnover rate including mortgage dollar roll transactions was 300%, 276% and 193% for the six months ended June 30, 2003 and the years ended December 31, 2002 and December 31, 2001, respectively.* Annualized** Not annualizedManagement Summary June 30, 2003 |
|
Balanced Portfolio
For the first several months of the year, US investment markets faced apprehension over the war in Iraq and uncertainty about fiscal stimulus from Congress. However, the resolution of both of these issues, combined with continued low interest rates, contributed to positive performance for the stock market for the six-month period. Bonds also continued their advance with lower-quality corporate bonds outperforming higher-quality Treasuries. Both the stock and bond portions of the portfolio gained in the period, with the portfolio returning 9.07%. The portfolio's benchmarks were varied, with the Standard and Poor's (S&P) 500 index returning 11.76%, the Russell 1000 Growth Index gaining 13.09% and the Lehman Brothers Aggregate Bond Index climbing 3.93%.
The stock portfolio benefited from strong returns in its biotechnology and information technology stocks. As consumer confidence improved, overweight in consumer discretionary stocks added to returns. An underweight position in consumer staples helped relative performance as this area lagged the overall market. The stock portfolio was held back by its energy overweight. This defensive sector lagged the market due to crude oil and natural gas price concerns; specifically the impact of Iraqi crude oil returning to world markets and aggressive gas storage injections. While we're disappointed with this short-term performance in energy, we like the portfolio's energy position and believe it will perform well going forward. We don't own any utility stocks because they don't reconcile well with our growth investment discipline. Our lack of such holdings hurt this period, as utility stocks posted some of the market's strongest returns.
The income managers continued to trim Treasuries in favor of corporate bonds and mortgages. As of June 30, 2003, the portfolio's allocation was at about 60% stocks and 40% bonds. This represents a neutral posture and reflects our belief that the US economy and stock market are on the road to a gradual recovery.
Julie M. Van Cleave
Jack A. Zehner
Thomas J. Schmid
Portfolio Managers - Equity portion of the Portfolio
J. Christopher Gagnier
Gary W. Bartlett
Janet Campagna
Andrew P. Cestone
Daniel R. Taylor
Thomas Flaherty
Warren S. Davis
Timothy C. Vile
Portfolio Managers - Fixed Income portion of the Portfolio
Brett Diment
Consultant
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.
The Lehman Brothers Aggregate Bond Index is an unmanaged market value-weighted measure of treasury issues, agency issues, corporate bond issues and mortgage securities.
The Russell 1000 Growth Index is an unmanaged capitalization-weighted index containing those securities in the Russell 1000 Index with higher price-to-book ratios and higher forecasted-growth values.
Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
Past performance is not a guarantee of future results. Returns and principal value will fluctuate so that accumulation units, when redeemed, may be worth more or less than their original cost.
Total return measures net investment income and capital gain or loss from portfolio investments over the period specified, assuming reinvestment of all dividend and capital gain distributions. Total return reflects aggregate change. Performance is net of the portfolio's management fee and other operating expenses but does not include any deduction at the separate account or contract level for any insurance or surrender charge that may be incurred under a contract. Please see the prospectus for more details.
Portfolio management market commentary is as of June 30, 2003, and may not come to pass. This information is subject to change at any time, based on market and other conditions.
Investment Portfolio as of June 30, 2003 (Unaudited) |
|
Balanced Portfolio
|
Shares
| Value ($) |
|
|
Common Stocks 59.6% |
Consumer Discretionary 10.8%
|
Automobiles 0.8%
|
Harley-Davidson, Inc.
| 26,000
| 1,036,360 |
Hotel Restaurants & Leisure 1.3%
|
International Game Technology*
| 11,300
| 1,156,329
|
YUM! Brands, Inc.*
| 22,400
| 662,144
|
| 1,818,473 |
Household Durables 0.5%
|
Newell Rubbermaid, Inc.
| 25,400
| 711,200 |
Media 2.9%
|
Comcast Corp. "A"*
| 35,200
| 1,014,816
|
McGraw-Hill, Inc.
| 13,800
| 855,600
|
Omnicom Group, Inc.
| 16,100
| 1,154,370
|
Viacom, Inc. "B"*
| 23,270
| 1,015,968
|
| 4,040,754 |
Multiline Retail 3.8%
|
Kohl's Corp.*
| 17,100
| 878,598
|
Target Corp.
| 50,200
| 1,899,568
|
Wal-Mart Stores, Inc.
| 44,700
| 2,399,049
|
| 5,177,215 |
Specialty Retail 1.5%
|
Home Depot, Inc.
| 36,000
| 1,192,320
|
Staples, Inc.*
| 20,000
| 367,000
|
TJX Companies, Inc.
| 25,800
| 486,072
|
| 2,045,392 |
Consumer Staples 5.3%
|
Beverages 1.9%
|
PepsiCo, Inc.
| 38,660
| 1,720,370
|
The Coca-Cola Co.
| 18,000
| 835,380
|
| 2,555,750 |
Food & Drug Retailing 0.6%
|
Walgreen Co.
| 27,800
| 836,780 |
Household Products 2.8%
|
Colgate-Palmolive Co.
| 38,000
| 2,202,100
|
Procter & Gamble Co.
| 18,950
| 1,689,961
|
| 3,892,061 |
Energy 5.1%
|
Energy Equipment & Services 2.7%
|
Baker Hughes, Inc.
| 25,200
| 845,964
|
Nabors Industries Ltd.*
| 38,600
| 1,526,630
|
Noble Corp.*
| 11,300
| 387,590
|
Schlumberger Ltd.
| 20,200
| 960,914
|
| 3,721,098 |
Oil & Gas 2.4%
|
Anadarko Petroleum Corp.
| 21,400
| 951,658
|
Burlington Resources, Inc.
| 15,300
| 827,271
|
ChevronTexaco Corp.
| 8,500
| 613,700
|
ConocoPhillips
| 16,300
| 893,240
|
| 3,285,869 |
|
Shares
| Value ($) |
|
|
Financials 6.5%
|
Banks 0.8%
|
Bank of America Corp.
| 14,600
| 1,153,838 |
Diversified Financials 4.2%
|
American Express Co.
| 35,600
| 1,488,436
|
Citigroup, Inc.
| 38,933
| 1,666,332
|
Fannie Mae
| 17,700
| 1,193,688
|
Morgan Stanley
| 19,600
| 837,900
|
State Street Corp.
| 14,300
| 563,420
|
| 5,749,776 |
Insurance 1.5%
|
American International Group, Inc.
| 18,610
| 1,026,900
|
Marsh & McLennan Companies, Inc.
| 19,300
| 985,651
|
| 2,012,551 |
Health Care 13.1%
|
Biotechnology 2.1%
|
Genentech, Inc.*
| 25,200
| 1,817,424
|
Gilead Sciences, Inc.*
| 18,600
| 1,033,788
|
| 2,851,212 |
Health Care Equipment & Supplies 2.3%
|
Baxter International, Inc.
| 31,300
| 813,800
|
Medtronic, Inc.
| 34,300
| 1,645,371
|
Zimmer Holdings, Inc.*
| 14,700
| 662,228
|
| 3,121,399 |
Health Care Providers & Services 1.0%
|
UnitedHealth Group, Inc.
| 26,400
| 1,326,600 |
Pharmaceuticals 7.7%
|
Abbott Laboratories
| 46,400
| 2,030,464
|
Eli Lilly & Co.
| 26,900
| 1,855,293
|
Johnson & Johnson
| 51,316
| 2,653,037
|
Merck & Co., Inc.
| 17,100
| 1,035,405
|
Pfizer, Inc.
| 90,450
| 3,088,868
|
| 10,663,067 |
Industrials 4.9%
|
Aerospace & Defense 1.3%
|
United Technologies Corp.
| 24,100
| 1,707,003 |
Air Freight & Logistics 0.6%
|
FedEx Corp.
| 12,800
| 793,984 |
Commercial Services & Supplies 0.6%
|
Fiserv, Inc.*
| 24,900
| 886,689 |
Industrial Conglomerates 2.4%
|
3M Co.
| 4,900
| 632,002
|
General Electric Co.
| 93,900
| 2,693,052
|
| 3,325,054 |
Information Technology 12.4%
|
Communications Equipment 1.3%
|
Cisco Systems, Inc.*
| 109,000
| 1,819,210 |
Computers & Peripherals 2.7%
|
EMC Corp.*
| 116,300
| 1,217,661
|
International Business Machines Corp.
| 29,800
| 2,458,500
|
| 3,676,161 |
|
Shares
| Value ($) |
|
|
Semiconductor Equipment & Products 4.3%
|
Applied Materials, Inc.*
| 90,900
| 1,441,674
|
Intel Corp.
| 114,000
| 2,369,376
|
Linear Technology Corp.
| 30,800
| 992,068
|
Texas Instruments, Inc.
| 64,100
| 1,128,160
|
| 5,931,278 |
Software 4.1%
|
Electronic Arts, Inc.*
| 10,700
| 791,693
|
Microsoft Corp.*
| 136,200
| 3,488,082
|
Oracle Corp.*
| 75,600
| 908,712
|
VERITAS Software Corp.*
| 17,800
| 510,326
|
| 5,698,813 |
Materials 0.4%
|
Chemicals
|
Ecolab, Inc.
| 21,000
| 537,600 |
Telecommunication Services 1.1%
|
Diversified Telecommunication Services 0.7%
|
Verizon Communications, Inc.
| 25,100
| 990,195 |
Wireless Telecommunication Services 0.4%
|
AT&T Wireless Services, Inc.*
| 64,700
| 531,187 |
Total Common Stocks (Cost $76,792,306)
| 81,896,569 |
|
| Principal Amount ($) | Value ($) |
|
|
Corporate Bonds 8.4% |
Consumer Discretionary 1.2%
|
AOL Time Warner, Inc.:
|
|
|
5.625%, 5/1/2005 | 130,000
| 138,012
|
6.75%, 4/15/2011 | 105,000
| 119,546
|
Comcast Cable Communications:
|
|
|
6.375%, 1/30/2006 | 260,000
| 283,723
|
6.875%, 6/15/2009 | 40,000
| 46,245
|
Comcast Corp.:
|
|
|
5.5%, 3/15/2011 | 75,000
| 80,182
|
7.05%, 3/15/2033 | 145,000
| 161,044
|
General Motors Corp.:
|
|
|
8.25%, 7/15/2023 | 90,000
| 90,144
|
8.375%, 7/15/2033 | 240,000
| 235,464
|
Time Warner, Inc.:
|
|
|
7.75%, 6/15/2005 | 135,000
| 148,226
|
8.11%, 8/15/2006
| 190,000
| 218,441
|
| 1,521,027 |
Energy 0.3%
|
Pedernales Electric Cooperative, Series 02-A, 6.202%, 11/15/2032
| 420,000
| 452,798 |
Financials 4.1%
|
American General:
|
|
|
7.57%, 12/1/2045 | 125,000
| 160,077
|
8.125%, 3/15/2046 | 230,000
| 310,993
|
ASIF Global Finance, 4.9%, 1/17/2013
| 400,000
| 416,536
|
Citigroup, Inc., 6.875%, 2/15/2098
| 540,000
| 647,344
|
ERP Operating LP, 6.63%, 4/13/2005
| 475,000
| 511,071
|
Ford Motor Credit Co., 6.875%, 2/1/2006
| 266,000
| 282,120
|
General Electric Capital Corp.:
|
|
|
5.45%, 1/15/2013 | 215,000
| 232,876
|
6.0%, 6/15/2012 | 30,000
| 33,863
|
General Motors Acceptance Corp., 4.5%, 7/15/2006
| 915,000
| 919,582
|
Household Finance Corp., 6.5%, 1/24/2006
| 370,000
| 410,383
|
Ohio National Financial Services, 6.35%, 4/1/2013
| 175,000
| 185,190
|
Pemex Project Funding Master Trust, 9.125%, 10/13/2010
| 300,000
| 363,000
|
PNC Funding Corp., 5.75%, 8/1/2006
| 300,000
| 331,004
|
Prudential Financial, Inc., 4.5%, 7/15/2013
| 410,000
| 409,307
|
Verizon Global Funding Corp., 7.25%, 12/1/2010
| 250,000
| 300,234
|
Wachovia Corp., 7.5%, 7/15/2006
| 50,000
| 57,856
|
| 5,571,436 |
Industrials 0.3%
|
Raytheon Co., 8.2%, 3/1/2006
| 10,000
| 11,538
|
Systems 2001 Asset Trust LLC "G", Series 2001, 6.664%, 9/15/2013
| 374,153
| 421,214
|
| 432,752 |
Materials 0.9%
|
Dow Chemical Co., 7.0%, 8/15/2005
| 350,000
| 382,351
|
Weyerhaeuser Co., 7.375%, 3/15/2032
| 780,000
| 896,626
|
| 1,278,977 |
Telecommunication Services 0.1%
|
Telecomunicaciones de Puerto Rico, Inc., 6.65%, 5/15/2006
| 185,000
| 204,642 |
Utilities 1.5%
|
AEP Texas North Co., 5.5%, 3/1/2013
| 100,000
| 106,707
|
Alabama Power Co., 7.125%, 8/15/2004
| 250,000
| 266,069
|
American Electric Power, 5.625%, 3/15/2010
| 230,000
| 245,833
|
Consumers Energy Co., 4.0%, 5/15/2010
| 270,000
| 269,132
|
Pacificorp., 6.9%, 11/15/2011
| 325,000
| 384,299
|
Progress Energy, Inc., 6.75%, 3/1/2006
| 500,000
| 555,684
|
Xcel Energy, Inc., 7.0%, 12/1/2010
| 245,000
| 280,197
|
| 2,107,921 |
Total Corporate Bonds (Cost $10,936,325)
| 11,569,553 |
|
Asset Backed 6.2% |
Automobile Receivables 2.6%
|
AmeriCredit Automobile Receivables Trust:
|
|
|
"A4", Series 2002-B, 4.46%, 4/12/2009 | 560,000
| 585,462
|
"A4", Series 2001-C, 5.01%, 7/14/2008 | 610,000
| 639,016
|
MMCA Automobile Trust:
|
|
|
"A4", Series 2002-3, 3.57%, 8/17/2009 | 650,000
| 661,994
|
"A4", Series 2002-2, 4.3%, 3/15/2010 | 520,000
| 528,732
|
WFS Financial Owner Trust:
|
|
|
"A4", Series 2002-3, 3.5%, 2/20/2010 | 580,000
| 603,927
|
"A4", Series 2002-2, 4.5%, 2/20/2010
| 620,000
| 652,135
|
| 3,671,266 |
Home Equity Loans 0.7%
|
Advanta Mortgage Loan Trust "A6", Series 2000-2, 7.72%, 3/25/2015
| 400,000
| 448,246
|
Centex Home Equity "A6", Series 2000-B, 7.97%, 7/25/2031
| 495,000
| 547,019
|
| 995,265 |
Industrials 0.4%
|
Aircraft Certificate Owner Trust, "D", Series 2003-1A 6.405%, 9/20/2022
| 510,000
| 538,132 |
Manufactured Housing Receivables 0.7%
|
Green Tree Financial Corp. "A5", Series 1996-5, 7.05%, 1/15/2019
| 265,000
| 279,226
|
Vanderbilt Acquisition Loan Trust "A2", Series 2002-1, 4.77%, 10/7/2018
| 630,000
| 653,379
|
| 932,605 |
Miscellaneous 1.8%
|
Detroit Edison Securitization Funding LLC "A6", Series 2001-1, 6.62%, 3/1/2016
| 595,000
| 708,860
|
Federal Home Loan Mortgage Corp. "3A", Series T-41, 7.5%, 7/25/2032
| 238,566
| 266,076
|
PSE&G Transition Funding LLC:
|
|
|
"A7", Series 2001-1, 6.75%, 6/15/2016 | 1,050,000
| 1,259,651
|
"A8", Series 2001-1, 6.89%, 12/15/2017 | 175,000
| 212,982
|
| 2,447,569 |
Total Asset Backed (Cost $8,117,952)
| 8,584,837 |
|
Foreign Bonds - US$ Denominated 1.6% |
Celulosa Arauco y Constitucion SA, 7.75%, 9/13/2011
| 440,000
| 514,682
|
France Telecom:
|
|
|
8.7%, 3/1/2006 | 160,000
| 182,507
|
9.25%, 3/1/2011 | 390,000
| 490,840
|
Ing Bank NV, 5.125%, 5/1/2015
| 90,000
| 94,236
|
QBE Insurance Group Ltd., 5.647%, 7/1/2023
| 280,000
| 272,036
|
Tyco International Group SA:
|
|
|
5.8%, 8/1/2006 | 290,000
| 299,425
|
6.375%, 2/15/2006 | 240,000
| 250,200
|
United Mexican States, 6.375%, 1/16/2013
| 80,000
| 84,800
|
Total Foreign Bonds - US$ Denominated (Cost $2,146,299)
| 2,188,726 |
|
US Treasury Obligations 4.7% |
US Treasury Bond, 6.0%, 2/15/2026
| 1,575,000
| 1,882,679
|
US Treasury Note:
|
|
|
1.625%, 4/30/2005 | 2,194,000
| 2,208,397
|
2.125%, 10/31/2004 | 1,025,000
| 1,038,653
|
5.0%, 8/15/2011 | 93,000
| 104,320
|
6.125%, 8/15/2007 | 856,000
| 990,185
|
US Treasury STRIPS, Principal Only, 5.12%**, 8/15/2026
| 632,000
| 199,031
|
Total US Treasury Obligations (Cost $6,177,195)
| 6,423,265 |
|
US Government Agency Pass-Thrus 4.1% |
Federal Home Loan Mortgage Corp., 5.0%, 7/1/2033 (d)
| 260,000
| 264,144
|
Federal National Mortgage Association:
|
|
|
4.5%, 7/1/2018 (e) | 540,000
| 550,800
|
5.0% with various maturities to 7/1/2033 (e) | 1,626,655
| 1,670,185
|
5.5%, with various maturities to 7/1/2033 | 1,058,576
| 1,095,627
|
5.946%, 2/1/2012 | 820,442
| 934,791
|
6.0%, 11/1/2017 | 360,911
| 377,363
|
6.5%, 8/1/2032 | 253,397
| 264,251
|
6.715%, 12/1/2007 | 268,008
| 305,783
|
8.0%, 9/1/2015 | 130,909
| 140,494
|
Total US Government Agency Pass-Thrus (Cost $5,481,077)
| 5,603,438 |
|
Collateralized Mortgage Obligations 8.9% |
Bank of America Mortgage Securities, Series 2002-6, 6.0%, 7/25/2032
| 39,192
| 39,217
|
CountryWide Home Loans, Series 2002-27, 5.5%, 12/25/2032
| 510,000
| 523,284
|
Federal Home Loan Mortgage Corp.:
|
|
|
"WM", Series 2391, 5.25%, 10/15/2019 | 405,467
| 405,450
|
"DB", Series 2483, 5.5%, 9/15/2012 | 490,000
| 494,165
|
"PL", Series 2459, 5.5%, 6/15/2030 | 205,953
| 207,899
|
"PB", Series 2321, 6.0%, 2/15/2026 | 50,243
| 50,196
|
"DA", Series 2444, 6.5%, 2/15/2030 | 91,793
| 92,971
|
"H", Series 2278, 6.5%, 1/15/2031 | 568,823
| 578,423
|
Federal National Mortgage Association:
|
|
|
"PU", Series 2003-33, 4.5%, 5/25/2033 | 421,035
| 433,530
|
"A2", Series 2002-W10, 4.7%, 8/25/2042 | 290,000
| 301,419
|
"A2", Series 2002-W9, 4.7%, 8/25/2042 | 290,000
| 299,779
|
"A2", Series 2002-60, 4.75%, 2/25/2044 | 340,000
| 353,222
|
"PE", Series 2002-3, 5.5%, 8/25/2015 | 940,000
| 977,988
|
"PM", Series 2002-21, 5.5%, 11/25/2022 | 84,773
| 84,732
|
"LN", Series 2001-56, 5.75%, 7/25/2026 | 196,611
| 196,607
|
"QN", Series 2001-51, 6.0%, 10/25/2016 | 620,000
| 662,052
|
"VD", Series 2002-56, 6.0%, 4/25/2020 | 115,000
| 119,403
|
"PY", Series 2002-31, 6.0%, 7/25/2014 | 900,000
| 906,284
|
"PD", Series 2002-31, 6.0%, 11/25/2021 | 1,300,000
| 1,379,902
|
"QE", Series 2001-64, 6.0%, 4/25/2027 | 360,000
| 366,582
|
"B", Series 1999-32, 6.0%, 7/25/2029 | 165,000
| 171,206
|
"AN", Series 2000-27, 6.0%, 8/25/2030 | 120,000
| 123,315
|
"A5", Series 2002-W4, 7.5%, 5/25/2042 | 233,335
| 260,387
|
"2A", Series 2002-W6, 7.5%, 6/25/2042 | 633,389
| 706,823
|
"3A2B", Series 2003-W10, 3.056%, 7/25/2037 | 260,000
| 262,478
|
Master Asset Securitization Trust, Series 2003-6, 5.5%, 7/25/2033
| 516,000
| 525,675
|
Residential Asset Securitization Trust, Series 2000-A3, 8.0%, 5/25/2030
| 289,429
| 294,882
|
Structured Asset Securities Corp., Series 2003-1, 6.0%, 2/25/2018
| 262,934
| 271,361
|
Wells Fargo Mortgage Backed Securities Trust:
|
|
|
"1A1", Series 2003-6, 5.0%, 6/25/2018 | 629,506
| 657,547
|
"2A2", Series 2002-4, 6.5%, 2/25/2032 | 478,427
| 478,829
|
Total Collateralized Mortgage Obligations (Cost $12,020,405)
| 12,225,608 |
|
Municipal Investments 1.7% |
Brockton, MA, Core City GO, Economic Development, Series A, 6.45%, 5/1/2017 (c)
| 560,000
| 647,203
|
Charlotte-Meckelberg, NC, Hospital Authority Health Care System, ETM, 5.0%, 8/1/2015
| 510,000
| 536,102
|
Hoboken, NJ, Core City GO, Series B, 3.8%, 1/1/2008 (c)
| 435,000
| 450,516
|
Jersey City, NJ, Water & Sewer Revenue, Municipal Utilities Authority, Water Revenue, Series B, 4.91%, 5/15/2015 (c)
| 385,000
| 398,302
|
Yazoo County, MS, Sales & Special Tax Revenue, Series B, 4.3%, 9/1/2010 (c)
| 355,000
| 370,634
|
Total Municipal Investments (Cost $2,233,349)
| 2,402,757 |
|
Shares
| Value ($) |
|
|
Cash Equivalents 4.8% |
Scudder Cash Management QP Trust, 1.15% (b) (Cost $6,543,000)
| 6,543,000
| 6,543,000 |
Total Investment Portfolio - 100.0% (Cost $130,447,908) (a)
| 137,437,753 |
* Non-income producing security.** Bond equivalent yield to maturity; not a coupon rate.(a) The cost for federal income tax purposes was $133,142,123. At June 30, 2003, net unrealized appreciation for all securities based on tax cost was $4,295,630. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $11,319,019 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $7,023,389.(b) Scudder Cash Management QP Trust is also managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.(c) Bond is insured by one of these Companies:AMBAC
| AMBAC Assurance Company
|
FGIC
| Financial Guaranty Insurance Company
|
MBIA
| Municipal Bond Investors Assurance
|
(d) When-issued or forward delivery securities included.(e) Mortgage dollar rolls included.ETM: Bonds bearing the description ETM (escrowed to maturity) are collateralized by US Treasury securities which are held in escrow and used pay principal and interest on bonds so designated.
Included in the portfolio are investments in mortgage or asset-backed securities which are interests in separate pools of mortgages or assets. Effective maturities of these investments may be shorter than stated maturities due to prepayments. Some separate investments in the Federal National Mortgage Association issues which have similar coupon rates have been aggregated for presentation purposes in the investment portfolio.
Purchases and sales of investment securities (excluding US Treasury obligations, short-term investments and mortgage dollar roll transactions), for the six months ended June 30, 2003, aggregated $36,669,607 and $39,906,962, respectively. Purchases and sales of US Treasury obligations aggregated $24,602,518 and $27,722,406, respectively. Purchases and sales of mortgage dollar roll transactions aggregated $5,600,828 and $5,618,152, respectively.
At December 31, 2002, the Balanced Portfolio had a net tax basis capital loss carryforward of approximately $13,851,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2009 ($13,346,000) and December 31, 2010 ($505,000), the respective expiration dates, whichever occurs first.
In addition, from November 1, 2002 through December 31, 2002, the Portfolio incurred approximately $6,190,000 of net realized capital losses. As permitted by tax regulations, the Portfolio intends to elect to defer these losses and treat them as arising in the fiscal year ending December 31, 2003.
The accompanying notes are an integral part of the financial statements.
Balanced Portfolio
Statement of Assets and Liabilities as of June 30, 2003 (Unaudited) |
Assets
|
Investments in securities, at value (cost $123,904,908)
| $ 130,894,753 |
Investment in Scudder Cash Management QP Trust (cost $6,543,000)
| 6,543,000 |
Cash
| 10,000 |
Receivable for investments sold
| 2,668,636 |
Dividends receivable
| 45,481 |
Interest receivable
| 419,126 |
Receivable for Portfolio shares sold
| 7,990 |
Other assets
| 1,465 |
Total assets
| 140,590,451 |
Liabilities
|
Payable for investments purchased
| 3,644,298 |
Payable for when-issued or forward delivery securities
| 264,369 |
Payable for investments purchased - mortgage dollar rolls
| 820,900 |
Payable for Portfolio shares redeemed
| 127,522 |
Deferred mortgage dollar roll
| 1,170 |
Accrued management fee
| 50,514 |
Other accrued expenses and payables
| 21,972 |
Total liabilities
| 4,930,745 |
Net assets, at value
| $ 135,659,706 |
Net Assets
|
Net assets consist of:
Undistributed net investment income
| 1,193,898 |
Net unrealized appreciation (depreciation) on investments
| 6,989,845 |
Accumulated net realized gain (loss)
| (25,635,596) |
Paid-in capital
| 153,111,559 |
Net assets, at value
| $ 135,659,706 |
Net Asset Value, offering and redemption price per share ($135,659,706 / 13,126,094 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 10.34 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended June 30, 2003 (Unaudited) |
Investment Income
|
Income:
Dividends
| $ 437,814 |
Interest
| 1,202,214 |
Interest - Scudder Cash Management QP Trust
| 27,819 |
Total Income
| 1,667,847 |
Expenses:
Management fee
| 308,109 |
Custodian fees
| 8,400 |
Accounting fees
| 30,462 |
Auditing
| 11,190 |
Legal
| 5,838 |
Trustees' fees and expenses
| 2,313 |
Reports to shareholders
| 5,318 |
Other
| 6,933 |
Total expenses, before expense reductions
| 378,563 |
Expense reductions
| (97) |
Total expenses, after expense reductions
| 378,466 |
Net investment income
| 1,289,381 |
Realized and Unrealized Gain (Loss) on Investment Transactions
|
Net realized gain (loss) from investments
| (2,307,509) |
Net unrealized appreciation (depreciation) during the period on investments
| 12,364,691 |
Net gain (loss) on investment transactions
| 10,057,182 |
Net increase (decrease) in net assets resulting from operations
| $ 11,346,563 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| Six Months Ended June 30, 2003 (Unaudited) | Year Ended December 31, 2002 |
Operations:
Net investment income
| $ 1,289,381 | $ 3,290,511 |
Net realized gain (loss) on investment transactions
| (2,307,509) | (8,603,212) |
Net unrealized appreciation (depreciation) on investment transactions during the period
| 12,364,691 | (19,865,256) |
Net increase (decrease) in net assets resulting from operations
| 11,346,563 | (25,177,957) |
Distributions to shareholders from net investment income
| (3,267,657) | (4,309,159) |
Portfolio share transactions:
Proceeds from shares sold
| 4,952,456 | 14,485,685 |
Reinvestment of distributions
| 3,267,657 | 4,309,159 |
Cost of shares redeemed
| (11,027,288) | (31,496,501) |
Net increase (decrease) in net assets from Portfolio share transactions
| (2,807,175) | (12,701,657) |
Increase (decrease) in net assets
| 5,271,731 | (42,188,773) |
Net assets at beginning of period
| 130,387,975 | 172,576,748 |
Net assets at end of period (including undistributed net investment income of $1,193,898 and $3,172,174, respectively)
| $ 135,659,706 | $ 130,387,975 |
Other Information
|
Shares outstanding at beginning of period
| 13,419,812 | 14,679,733 |
Shares sold
| 496,349 | 1,349,986 |
Shares issued to shareholders in reinvestment of distributions
| 328,078 | 394,973 |
Shares redeemed
| (1,118,145) | (3,004,880) |
Net increase (decrease) in Portfolio shares
| (293,718) | (1,259,921) |
Shares outstanding at end of period
| 13,126,094 | 13,419,812 |
The accompanying notes are an integral part of the financial statements.
Balanced Portfolio
Years Ended December 31, | 2003a | 2002 | 2001b | 2000 | 1999 | 1998 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 9.72 | $ 11.76 | $ 13.39 | $ 16.11 | $ 15.21 | $ 13.30 |
Income (loss) from investment operations:
Net investment incomec
| .10 | .23 | .30 | .34 | .35 | .37 |
Net realized and unrealized gain (loss) on investment transactions
| .77 | (1.97) | (1.07) | (.62) | 1.85 | 2.56 |
Total from investment operations | .87 | (1.74) | (.77) | (.28) | 2.20 | 2.93 |
Less distributions from:
Net investment income
| (.25) | (.30) | (.34) | (.28) | (.18) | (.36) |
Net realized gains on investment transactions
| - | - | (.52) | (2.16) | (1.12) | (.66) |
Total distributions | (.25) | (.30) | (.86) | (2.44) | (1.30) | (1.02) |
Net asset value, end of period
| $ 10.34 | $ 9.72 | $ 11.76 | $ 13.39 | $ 16.11 | $ 15.21 |
Total Return (%)
| 9.07** | (15.07) | (6.06) | (2.02) | 15.32 | 23.19 |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 136 | 130 | 173 | 190 | 199 | 162 |
Ratio of expenses before expense reductions (%)
| .58* | .56 | .57d | .54 | .55 | .56 |
Ratio of expense after expense reductions (%)
| .58* | .56 | .56d | .54 | .55 | .56 |
Ratio of net investment income (%)
| 1.99* | 2.19 | 2.46 | 2.41 | 2.36 | 2.71 |
Portfolio turnover rate (%)
| 96e* | 141d | 100e | 127 | 98 | 74 |
a For the six months ended June 30, 2003 (Unaudited).b As required, effective January 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. In addition, paydowns on mortgage-backed securities which were included in realized gain/loss on investment transactions prior to January 1, 2001 are included as interest income. The effect of this change for the year ended December 31, 2001 was to decrease net investment income per share by $.01, increase net realized and unrealized gain (loss) per share by $.01, and decrease the ratio of net investment income to average net assets from 2.56% to 2.46%. Per share data and ratios for periods prior to January 1, 2001 have not been restated to reflect this change in presentation.cBased on average shares outstanding during the period.dThe ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were ..56% and .56%, respectively.e The Portfolio turnover rate including mortgage dollar roll transactions was 105%, 146% and 104% for the six months ended June 30, 2003 and years ended December 31, 2002 and December 31, 2001, respectively.* Annualized** Not annualizedManagement Summary June 30, 2003 |
|
Growth and Income Portfolio
After struggling for more than three years, the US stock market produced strong gains for the first six months of 2003. Stocks struggled in the first half, but then rallied after war with Iraq ended, corporate earnings improved and a federal economic stimulus package was signed into law.
After relatively strong first quarter performance, the portfolio lost ground to its S&P 500 benchmark in the second quarter and lagged it for the full six-month period, returning 10.78% (Class A shares) for the semiannual period, while the S&P 500 index gained 11.76%. Early in the period, it was helped by strong stock selection in health care and technology. These are exactly the areas that, while gaining ground, underperformed the benchmark in the second half of the period. Likewise, consumer discretionary stocks held back performance in the first quarter and added to performance in the second quarter.
We've experienced a reversal effect, in which the stocks that performed most poorly over the past several quarters rallied strongly in April and May. Additionally, many of the strongest performers within the S&P 500 were smaller capitalization stocks - which are too small to meet our criteria.
We're keeping the portfolio well diversified and we continue to employ a blend of valuation screens, fundamental research and rigorous risk analysis to find the stocks that are most likely to outperform over time. We've closely examined the portfolio and remain confident in our holdings. By taking profits in strong performers and eliminating a few defensive names, we believe the portfolio is positioned to take advantage of an improving economy.
Kathleen T. Millard
Lead Manager
Gregory S. Adams
Portfolio Manager
Andrew Brudenell
Portfolio Manager
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 Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
Past performance is not a guarantee of future results. Returns and principal value will fluctuate so that accumulation units, when redeemed, may be worth more or less than their original cost.
Total return measures net investment income and capital gain or loss from portfolio investments over the period specified, assuming reinvestment of all dividend and capital gain distributions. Total return reflects aggregate change. Performance is net of the portfolio's management fee and other operating expenses but does not include any deduction at the separate account or contract level for any insurance or surrender charge that may be incurred under a contract. Please see the prospectus for more details.
Portfolio management market commentary is as of June 30, 2003, and may not come to pass. This information is subject to change at any time, based on market and other conditions.
Investment Portfolio as of June 30, 2003 (Unaudited) |
|
Growth and Income Portfolio
|
Shares
| Value ($) |
|
|
Common Stocks 98.9% |
Consumer Discretionary 14.4%
|
Hotel Restaurants & Leisure 0.6%
|
International Game Technology*
| 8,400
| 859,572 |
Internet & Catalog Retailing 1.0%
|
Amazon.com, Inc.*
| 43,800
| 1,598,262 |
Media 6.0%
|
AOL Time Warner, Inc.*
| 181,300
| 2,917,117
|
Comcast Corp. "A"*
| 51,000
| 1,470,330
|
Gannett Co., Inc.
| 12,200
| 937,082
|
McGraw-Hill, Inc.
| 18,200
| 1,128,400
|
Viacom, Inc. "B"*
| 61,800
| 2,698,188
|
| 9,151,117 |
Multiline Retail 2.5%
|
Target Corp.
| 42,400
| 1,604,416
|
Wal-Mart Stores, Inc.
| 40,900
| 2,195,103
|
| 3,799,519 |
Specialty Retail 4.3%
|
Home Depot, Inc.
| 41,500
| 1,374,480
|
InterActiveCorp.*
| 20,500
| 811,185
|
Staples, Inc.*
| 121,100
| 2,222,185
|
The Gap, Inc.
| 116,800
| 2,191,168
|
| 6,599,018 |
Consumer Staples 6.9%
|
Beverages 3.5%
|
Anheuser-Busch Companies, Inc.
| 56,500
| 2,884,325
|
PepsiCo, Inc.
| 28,200
| 1,254,900
|
The Coca-Cola Co.
| 25,400
| 1,178,814
|
| 5,318,039 |
Household Products 1.0%
|
Clorox Co.
| 34,100
| 1,454,365 |
Personal Products 2.4%
|
Avon Products, Inc.
| 59,100
| 3,676,020 |
Energy 5.6%
|
Oil & Gas
|
Anadarko Petroleum Corp.
| 26,900
| 1,196,243
|
ChevronTexaco Corp.
| 20,300
| 1,465,660
|
ExxonMobil Corp.
| 126,414
| 4,539,527
|
Total SA (ADR)
| 17,590
| 1,333,322
|
| 8,534,752 |
Financials 18.9%
|
Banks 5.4%
|
Bank of America Corp.
| 64,400
| 5,089,532
|
Bank One Corp.
| 56,200
| 2,089,516
|
Comerica, Inc.
| 23,000
| 1,069,500
|
| 8,248,548 |
Diversified Financials 8.9%
|
Citigroup, Inc.
| 135,600
| 5,803,680
|
Fannie Mae
| 27,500
| 1,854,600
|
Lehman Brothers Holdings, Inc.
| 26,600
| 1,768,368
|
Morgan Stanley
| 97,300
| 4,159,575
|
| 13,586,223 |
Insurance 4.6%
|
Ambac Financial Group, Inc.
| 17,600
| 1,166,000
|
American International Group, Inc.
| 25,900
| 1,429,162
|
Hartford Financial Services Group, Inc.
| 20,100
| 1,012,236
|
Marsh & McLennan Companies, Inc.
| 39,100
| 1,996,837
|
MetLife, Inc.
| 48,300
| 1,367,856
|
| 6,972,091 |
Health Care 16.2%
|
Biotechnology 2.4%
|
Amgen, Inc.*
| 54,900
| 3,620,106 |
Health Care Equipment & Supplies 2.6%
|
Biomet, Inc.*
| 51,850
| 1,486,021
|
Guidant Corp.
| 55,700
| 2,472,523
|
| 3,958,544 |
Health Care Providers & Services 1.7%
|
Caremark Rx, Inc.*
| 58,300
| 1,497,144
|
Wellpoint Health Networks, Inc.*
| 13,700
| 1,154,910
|
| 2,652,054 |
Pharmaceuticals 9.5%
|
Allergan, Inc.
| 15,600
| 1,202,760
|
Biovail Corp.*
| 18,500
| 870,610
|
Eli Lilly & Co.
| 22,800
| 1,572,516
|
Johnson & Johnson
| 78,600
| 4,063,620
|
Merck & Co., Inc.
| 25,300
| 1,531,915
|
Pfizer, Inc.
| 154,300
| 5,269,345
|
| 14,510,766 |
Industrials 11.5%
|
Aerospace & Defense 3.4%
|
Honeywell International, Inc.
| 27,800
| 746,430
|
United Technologies Corp.
| 62,900
| 4,455,207
|
| 5,201,637 |
Industrial Conglomerates 5.9%
|
3M Co.
| 30,300
| 3,908,094
|
General Electric Co.
| 175,500
| 5,033,340
|
| 8,941,434 |
Machinery 2.2%
|
Deere & Co.
| 33,600
| 1,535,520
|
Parker-Hannifin Corp.
| 44,200
| 1,855,958
|
| 3,391,478 |
Information Technology 17.9%
|
Communications Equipment 2.8%
|
Cisco Systems, Inc.*
| 169,300
| 2,825,617
|
Nokia Oyj (ADR)
| 90,300
| 1,483,629
|
| 4,309,246 |
Computers & Peripherals 5.5%
|
Dell Computer Corp.*
| 55,700
| 1,780,172
|
EMC Corp.*
| 228,300
| 2,390,301
|
International Business Machines Corp.
| 30,400
| 2,508,000
|
Lexmark International, Inc.*
| 24,600
| 1,740,942
|
| 8,419,415 |
Semiconductor Equipment & Products 3.3%
|
Altera Corp.*
| 74,100
| 1,215,240
|
Intel Corp.
| 57,500
| 1,195,080
|
Texas Instruments, Inc.
| 152,600
| 2,685,760
|
| 5,096,080 |
Software 6.3%
|
Electronic Arts, Inc.*
| 19,900
| 1,472,401
|
Microsoft Corp.
| 212,600
| 5,444,686
|
Oracle Corp.*
| 219,400
| 2,637,188
|
| 9,554,275 |
Materials 1.7%
|
Chemicals 0.9%
|
E.I. du Pont de Nemours & Co.
| 34,100
| 1,419,924 |
Paper & Forest Products 0.8%
|
International Paper Co.
| 34,600
| 1,236,258 |
Telecommunication Services 4.5%
|
Diversified Telecommunication Services 2.7%
|
ALLTEL Corp.
| 38,500
| 1,856,470
|
Verizon Communications, Inc.
| 56,272
| 2,219,930
|
| 4,076,400 |
Wireless Telecommunication Services 1.8%
|
AT&T Wireless Services, Inc.*
| 335,400
| 2,753,634 |
Utilities 1.3%
|
Electric Utilities
|
FirstEnergy Corp.
| 24,800
| 953,560
|
FPL Group, Inc.
| 14,360
| 959,966
|
| 1,913,526 |
Total Common Stocks (Cost $145,233,575)
| 150,852,303 |
|
Cash Equivalents 1.1% |
Scudder Cash Management QP Trust, 1.15% (b) (Cost $1,681,673)
| 1,681,673
| 1,681,673 |
Total Investment Portfolio - 100.0% (Cost $146,915,248) (a)
| 152,533,976 |
* Non-income producing security.(a) The cost for federal income tax purposes was $149,063,064. At June 30, 2003, net unrealized appreciation for all securities based on tax cost was $3,470,912. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $14,555,824 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $11,084,912.(b) Scudder Cash Management QP Trust is also managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.Purchases and sales of investment securities (excluding short-term investments), for the six months ended June 30, 2003, aggregated $28,426,568 and $31,116,889, respectively.
At December 31, 2002, the Growth and Income Portfolio had a net tax basis capital loss carryforward of approximately $34,898,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2009 ($12,650,000) and December 31, 2010 ($22,248,000), the respective expiration dates, whichever occurs first.
In addition, from November 1, 2002 through December 31, 2002, the Growth and Income Portfolio incurred approximately $5,221,000 of net realized capital losses. As permitted by tax regulations, the Portfolio intends to elect to defer these losses and treat them as arising in the fiscal year ending December 31, 2003.
The accompanying notes are an integral part of the financial statements.
Growth and Income Portfolio
Statement of Assets and Liabilities as of June 30, 2003 (Unaudited) |
Assets
|
Investments in securities, at value (cost $145,233,575)
| $ 150,852,303 |
Investment in Scudder Cash Management QP Trust (cost $1,681,673)
| 1,681,673 |
Cash
| 10,000 |
Receivable for investments sold
| 639,059 |
Dividends receivable
| 103,782 |
Receivable for Portfolio shares sold
| 114,920 |
Foreign taxes recoverable
| 7,351 |
Other assets
| 1,583 |
Total assets
| 153,410,671 |
Liabilities
|
Payable for investments purchased
| 449,140 |
Payable for Portfolio shares redeemed
| 62,187 |
Accrued management fee
| 64,668 |
Other accrued expenses and payables
| 35,580 |
Total liabilities
| 611,575 |
Net assets, at value
| $ 152,799,096 |
Net Assets
|
Net assets consist of:
Undistributed net investment income
| 627,730 |
Net unrealized appreciation (depreciation) on investments
| 5,618,728 |
Accumulated net realized gain (loss)
| (47,319,095) |
Paid-in capital
| 193,871,733 |
Net assets, at value
| $ 152,799,096 |
Class A Net Asset Value, offering and redemption price per share ($142,069,907 / 19,109,920 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 7.43 |
Class B Net Asset Value, offering and redemption price per share ($10,729,189 / 1,446,466 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 7.42 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended June 30, 2003 (Unaudited) |
Investment Income
|
Income:
Dividends (net of foreign taxes withheld of $10,493)
| $ 1,122,022 |
Interest - Scudder Cash Management QP Trust
| 12,062 |
Total Income
| 1,134,084 |
Expenses:
Management fee
| 337,410 |
Custodian fees
| 12,564 |
Accounting fees
| 33,496 |
Distribution service fees (Class B)
| 9,885 |
Record keeping fees (Class B)
| 211 |
Auditing
| 10,452 |
Legal
| 6,086 |
Trustees' fees and expenses
| 4,560 |
Reports to shareholders
| 7,166 |
Other
| 2,263 |
Total expenses, before expense reductions
| 424,093 |
Expense reductions
| (9) |
Total expenses, after expense reductions
| 424,084 |
Net investment income (loss)
| 710,000 |
Realized and Unrealized Gain (Loss) on Investment Transactions
|
Net realized gain (loss) from investments
| (4,876,785) |
Net unrealized appreciation (depreciation) during the period on investments
| 19,094,880 |
Net gain (loss) on investment transactions
| 14,218,095 |
Net increase (decrease) in net assets resulting from operations
| $ 14,928,095 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| Six Months Ended June 30, 2003 (Unaudited) | Year Ended December 31, 2002 |
Operations:
Net investment income (loss)
| $ 710,000 | $ 1,549,481 |
Net realized gain (loss) on investment transactions
| (4,876,785) | (27,315,158) |
Net unrealized appreciation (depreciation) on investment transactions during the period
| 19,094,880 | (20,815,347) |
Net increase (decrease) in net assets resulting from operations
| 14,928,095 | (46,581,024) |
Distributions to shareholders from:
Net investment income:
Class A
| (1,476,002) | (1,605,814) |
Class B
| (71,436) | (57,174) |
Portfolio share transactions:
Class A
Proceeds from shares sold
| 10,244,916 | 49,741,869 |
Reinvestment of distributions
| 1,476,002 | 1,605,814 |
Cost of shares redeemed
| (16,828,760) | (56,127,144) |
Net increase (decrease) in net assets from Class A share transactions
| (5,107,842) | (4,779,461) |
Class B
Proceeds from shares sold
| 3,985,202 | 1,117,081 |
Reinvestment of distributions
| 71,436 | 57,174 |
Cost of shares redeemed
| (847,697) | (2,056,195) |
Net increase (decrease) in net assets from Class B share transactions
| 3,208,941 | (881,940) |
Increase (decrease) in net assets
| 11,481,756 | (53,905,413) |
Net assets at beginning of period
| 141,317,340 | 195,222,753 |
Net assets at end of period (including undistributed net investment income of $627,730 and $1,465,168, respectively)
| $ 152,799,096 | $ 141,317,340 |
Other Information
|
Class A
Shares outstanding at beginning of period
| 19,882,920 | 20,820,420 |
Shares sold
| 1,469,490 | 6,066,477 |
Shares issued to shareholders in reinvestment of distributions
| 208,181 | 195,355 |
Shares redeemed
| (2,450,671) | (7,199,332) |
Net increase (decrease) in Portfolio shares
| (773,000) | (937,500) |
Shares outstanding at end of period
| 19,109,920 | 19,882,920 |
Class B
Shares outstanding at beginning of period
| 990,738 | 1,111,138 |
Shares sold
| 565,493 | 148,089 |
Shares issued to shareholders in reinvestment of distributions
| 10,104 | 6,972 |
Shares redeemed
| (119,869) | (275,461) |
Net increase (decrease) in Portfolio shares
| 455,728 | (120,400) |
Shares outstanding at end of period
| 1,446,466 | 990,738 |
The accompanying notes are an integral part of the financial statements.
Growth and Income Portfolio
Class A
Years Ended December 31, | 2003a | 2002 | 2001 | 2000 | 1999 | 1998 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 6.77 | $ 8.90 | $ 10.38 | $ 10.96 | $ 11.25 | $ 11.48 |
Income (loss) from investment operations:
Net investment incomeb
| .04 | .07 | .09 | .11 | .22 | .27 |
Net realized and unrealized gain (loss) on investment transactions
| .70 | (2.12) | (1.23) | (.33) | .46 | .54 |
Total from investment operations | .74 | (2.05) | (1.14) | (.22) | .68 | .81 |
Less distributions from:
Net investment income
| (.08) | (.08) | (.12) | (.15) | (.13) | (.25) |
Net realized gains on investment transactions
| - | - | (.22) | (.21) | (.84) | (.79) |
Total distributions | (.08) | (.08) | (.34) | (.36) | (.97) | (1.04) |
Net asset value, end of period
| $ 7.43 | $ 6.77 | $ 8.90 | $ 10.38 | $ 10.96 | $ 11.25 |
Total Return (%)
| 10.78** | (23.13) | (11.30) | (2.10) | 5.80 | 7.18 |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 142 | 135 | 185 | 185 | 200 | 184 |
Ratio of expenses before expense reductions (%)
| .59* | .57 | .57c | .56 | .55 | .56 |
Ratio of expenses after expense reductions (%)
| .59* | .57 | .56c | .56 | .55 | .56 |
Ratio of net investment income (loss) (%)
| 1.02* | .92 | .94 | 1.06 | 2.01 | 2.41 |
Portfolio turnover rate (%)
| 41* | 66 | 67 | 65 | 65 | 39 |
Class B
Years Ended December 31, | 2003a | 2002 | 2001 | 2000 | 1999 | 1998 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 6.75 | $ 8.87 | $ 10.35 | $ 10.93 | $ 11.24 | $ 11.47 |
Income (loss) from investment operations:
Net investment incomeb
| .03 | .05 | .06 | .09 | .19 | .25 |
Net realized and unrealized gain (loss) on investment transactions
| .70 | (2.12) | (1.23) | (.33) | .46 | .54 |
Total from investment operations | .73 | (2.07) | (1.17) | (.24) | .65 | .79 |
Less distributions from:
Net investment income
| (.06) | (.05) | (.09) | (.13) | (.12) | (.23) |
Net realized gains on investment transactions
| - | - | (.22) | (.21) | (.84) | (.79) |
Total distributions | (.06) | (.05) | (.31) | (.34) | (.96) | (1.02) |
Net asset value, end of period
| $ 7.42 | $ 6.75 | $ 8.87 | $ 10.35 | $ 10.93 | $ 11.24 |
Total Return (%)
| 10.86** | (23.40) | (11.56) | (2.33) | 5.48 | 6.95 |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 11 | 7 | 10 | 13 | 14 | 14 |
Ratio of expenses before expense reductions (%)
| .84* | .82 | .82c | .81 | .80 | .79 |
Ratio of expenses after expense reductions (%)
| .84* | .82 | .81c | .81 | .80 | .79 |
Ratio of net investment income (loss) (%)
| .77* | .67 | .69 | .81 | 1.76 | 2.20 |
Portfolio turnover rate (%)
| 41* | 66 | 67 | 65 | 65 | 39 |
a For the six months ended June 30, 2003 (Unaudited).bBased on average shares outstanding during the period.cThe ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were ..56% and .56%,and .81% and .81% for Class A and Class B, respectively.* Annualized** Not annualzedManagement Summary June 30, 2003 |
|
Capital Growth Portfolio
Although apprehension over the war in Iraq and uncertainty about fiscal stimulus from Congress overshadowed the investment markets for the first several months of the year, the resolution of both issues contributed to positive performance for the stock market - and the portfolio - for the six-month period. The portfolio, which returned 12.01% (Class A shares), slightly outperformed the return of one key benchmark, the Standard & Poor's 500 (S&P 500) index, which gained 11.76%.
The market was led by strong performance in high-beta technology, telecommunications and utility stocks. The portfolio benefited from strong returns in its biotechnology and information technology stocks. An overweight in consumer discretionary stocks helped as consumer confidence improved in the period. An underweight position in consumer staples also helped relative performance as this area lagged the overall market. The portfolio was held back by its energy overweight. This defensive sector lagged the market due to crude oil and natural gas price concerns; specifically the impact of Iraqi crude oil returning to world markets and aggressive gas storage injections. While we're disappointed with the short-term performance in energy, we like the portfolio's energy position and believe it will return to favor. We don't own any utility stocks because they don't reconcile well with our growth investment discipline. Our lack of such holdings hurt this period, as they were one of the market's leaders.
While the US economy does not seem to be growing as fast as some analysts anticipated, we look for continued improvement in the stock market due to more economic stimulus, improving corporate profits, favorable monetary policy and, most important, attractive stock valuations.
Julie M. Van Cleave
Jack A. Zehner
Thomas J. Schmid
Portfolio Managers
The Standard & Poor's 500 (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 Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
Past performance is not a guarantee of future results. Returns and principal value will fluctuate so that accumulation units, when redeemed, may be worth more or less than their original cost.
Total return measures net investment income and capital gain or loss from portfolio investments over the period specified, assuming reinvestment of all dividend and capital gain distributions. Total return reflects aggregate change. Performance is net of the portfolio's management fee and other operating expenses but does not include any deduction at the separate account or contract level for any insurance or surrender charge that may be incurred under a contract. Please see the prospectus for more details.
Portfolio management market commentary is as of June 30, 2003, and may not come to pass. This information is subject to change at any time, based on market and other conditions.
Investment Portfolio as of June 30, 2003 (Unaudited) |
|
Capital Growth Portfolio
|
Shares
| Value ($) |
|
|
Common Stocks 97.3% |
Consumer Discretionary 18.3%
|
Automobiles 1.2%
|
Harley-Davidson, Inc.
| 185,400
| 7,390,044 |
Hotel Restaurants & Leisure 2.0%
|
International Game Technology*
| 74,300
| 7,603,119
|
YUM! Brands, Inc.*
| 162,700
| 4,809,412
|
| 12,412,531 |
Household Durables 0.8%
|
Newell Rubbermaid, Inc.
| 181,600
| 5,084,800 |
Media 5.8%
|
AOL Time Warner, Inc.*
| 446,500
| 7,184,185
|
Comcast Corp. "A"*
| 251,100
| 7,239,213
|
McGraw-Hill, Inc.
| 97,900
| 6,069,800
|
Omnicom Group, Inc.
| 114,700
| 8,223,990
|
Viacom, Inc. "B"*
| 165,400
| 7,221,364
|
| 35,938,552 |
Multiline Retail 5.8%
|
Kohl's Corp.*
| 122,000
| 6,268,360
|
Target Corp.
| 359,700
| 13,611,048
|
Wal-Mart Stores, Inc.
| 301,400
| 16,176,138
|
| 36,055,546 |
Specialty Retail 2.7%
|
Home Depot, Inc.
| 256,750
| 8,503,560
|
Staples, Inc.*
| 239,600
| 4,396,660
|
TJX Companies, Inc.
| 210,900
| 3,973,356
|
| 16,873,576 |
Consumer Staples 8.3%
|
Beverages 2.9%
|
PepsiCo, Inc.
| 275,700
| 12,268,650
|
Coca-Cola Co.
| 128,700
| 5,972,967
|
| 18,241,617 |
Food & Drug Retailing 1.0%
|
Walgreen Co.
| 198,300
| 5,968,830 |
Household Products 4.4%
|
Colgate-Palmolive Co.
| 268,400
| 15,553,780
|
Procter & Gamble Co.
| 130,600
| 11,646,907
|
| 27,200,687 |
Energy 8.9%
|
Energy Equipment & Services 4.7%
|
Baker Hughes, Inc.
| 183,200
| 6,150,024
|
Nabors Industries Ltd.*
| 280,900
| 11,109,595
|
Noble Corp.*
| 80,700
| 2,768,010
|
Schlumberger Ltd.
| 197,700
| 9,404,589
|
| 29,432,218 |
Oil & Gas 4.2%
|
Anadarko Petroleum Corp.
| 155,500
| 6,915,085
|
ChevronTexaco Corp.
| 61,900
| 4,469,180
|
ConocoPhillips
| 116,300
| 6,373,240
|
EOG Resources, Inc.
| 195,700
| 8,188,088
|
| 25,945,593 |
Financials 11.2%
|
Banks 1.3%
|
Bank of America Corp.
| 104,700
| 8,274,441 |
Diversified Financials 7.1%
|
American Express Co.
| 254,500
| 10,640,645
|
Citigroup, Inc.
| 277,733
| 11,886,972
|
Fannie Mae
| 169,700
| 11,444,568
|
Morgan Stanley
| 139,500
| 5,963,625
|
State Street Corp.
| 102,500
| 4,038,500
|
| 43,974,310 |
Insurance 2.8%
|
American International Group, Inc.
| 184,502
| 10,180,820
|
Marsh & McLennan Companies, Inc.
| 142,100
| 7,257,047
|
| 17,437,867 |
Health Care 20.3%
|
Biotechnology 3.1%
|
Genentech, Inc.*
| 174,700
| 12,599,364
|
Gilead Sciences, Inc.*
| 123,900
| 6,886,362
|
| 19,485,726 |
Health Care Equipment & Supplies 3.5%
|
Baxter International, Inc.
| 208,900
| 5,431,400
|
Medtronic, Inc.
| 245,100
| 11,757,447
|
Zimmer Holdings, Inc.*
| 107,090
| 4,824,405
|
| 22,013,252 |
Health Care Providers & Services 1.6%
|
UnitedHealth Group, Inc.
| 191,600
| 9,627,900 |
Pharmaceuticals 12.1%
|
Abbott Laboratories
| 311,200
| 13,618,113
|
Eli Lilly & Co.
| 188,500
| 13,000,845
|
Johnson & Johnson
| 362,500
| 18,741,250
|
Merck & Co., Inc.
| 120,200
| 7,278,110
|
Pfizer, Inc.
| 657,675
| 22,459,601
|
| 75,097,919 |
Industrials 7.7%
|
Aerospace & Defense 1.9%
|
United Technologies Corp.
| 166,900
| 11,821,527 |
Air Freight & Logistics 0.9%
|
FedEx Corp.
| 91,300
| 5,663,339 |
Commercial Services & Supplies 1.0%
|
Fiserv, Inc.*
| 178,200
| 6,345,702 |
Industrial Conglomerates 3.9%
|
3M Co.
| 35,600
| 4,591,688
|
General Electric Co.
| 670,300
| 19,224,204
|
| 23,815,892 |
Information Technology 20.0%
|
Communications Equipment 2.2%
|
Cisco Systems, Inc.*
| 822,500
| 13,727,525 |
Computers & Peripherals 4.3%
|
EMC Corp.*
| 845,600
| 8,853,432
|
International Business Machines Corp.
| 216,800
| 17,886,000
|
| 26,739,432 |
Semiconductor Equipment & Products 7.1%
|
Applied Materials, Inc.*
| 648,500
| 10,285,210
|
Intel Corp.
| 941,700
| 19,572,293
|
Linear Technology Corp.
| 212,500
| 6,844,625
|
Texas Instruments, Inc.
| 419,300
| 7,379,680
|
| 44,081,808 |
Software 6.4%
|
Electronic Arts, Inc.*
| 76,000
| 5,623,240
|
Microsoft Corp.*
| 966,600
| 24,754,626
|
Oracle Corp.*
| 539,300
| 6,482,386
|
VERITAS Software Corp.*
| 107,700
| 3,087,759
|
| 39,948,011 |
Materials 0.6%
|
Chemicals
|
Ecolab, Inc.
| 152,600
| 3,906,560 |
Telecommunication Services 2.0%
|
Diversified Telecommunication Services 1.1%
|
Verizon Communications, Inc.
| 179,600
| 7,085,220 |
Wireless Telecommunication Services 0.9%
|
AT&T Wireless Services, Inc.*
| 681,300
| 5,593,473 |
Total Common Stocks (Cost $634,118,608)
| 605,183,898 |
|
Cash Equivalents 2.7% |
Scudder Cash Management QP Trust, 1.15% (b) (Cost $16,788,618)
| 16,788,618
| 16,788,618 |
Total Investment Portfolio - 100.0% (Cost $650,907,226) (a)
| 621,972,516 |
* Non-income producing security.(a) The cost for federal income tax purposes was $651,831,858. At June 30, 2003, net unrealized depreciation for all securities based on tax cost was $29,859,342. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $67,035,362 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $96,894,704.(b) Scudder Cash Management QP Trust is also managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.Purchases and sales of investment securities (excluding short-term investments), for the six months ended June 30, 2003, aggregated $20,538,061 and $27,809,624 respectively.
At December 31, 2002 the Capital Growth Portfolio had a net tax basis capital loss carryforward of approximately $139,068,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2009 ($18,038,000) and December 31, 2010 ($121,030,000), the respective expiration dates, whichever occurs first.
From November 1, 2002 through December 31, 2002, the Capital Growth Portfolio incurred approximately $51,516,000 of net realized capital losses. As permitted by tax regulations, the Portfolio intends to elect to defer these losses and treat them as arising in the fiscal year ending December 31, 2003.
The accompanying notes are an integral part of the financial statements.
Capital Growth Portfolio
Statement of Assets and Liabilities as of June 30, 2003 (Unaudited) |
Assets
|
Investments in securities, at value (cost $634,118,608)
| $ 605,183,898 |
Investment in Scudder Cash Management QP Trust (cost $16,788,618)
| 16,788,618 |
Cash
| 10,000 |
Dividends receivable
| 316,232 |
Receivable for Portfolio shares sold
| 292,434 |
Other assets
| 680 |
Total assets
| 622,591,862 |
Liabilities
|
Payable for Portfolio shares redeemed
| 490,395 |
Accrued management fee
| 235,445 |
Other accrued expenses and payables
| 35,992 |
Total liabilities
| 761,832 |
Net assets, at value
| $ 621,830,030 |
Net Assets
|
Net assets consist of:
Undistributed net investment income
| 1,557,735 |
Net unrealized appreciation (depreciation) on investments
| (28,934,710) |
Accumulated net realized gain (loss)
| (202,326,125) |
Paid-in capital
| 851,533,130 |
Net assets, at value
| $ 621,830,030 |
Class A Net Asset Value, offering and redemption price per share ($614,581,500 / 47,700,504 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 12.88 |
Class B Net Asset Value, offering and redemption price per share ($7,248,530 / 564,351 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 12.84 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended June 30, 2003 (Unaudited) |
Investment Income
|
Income:
Dividends
| $ 3,084,885 |
Interest - Scudder Cash Management QP Trust
| 80,937 |
Total Income
| 3,165,822 |
Expenses:
Management fee
| 1,343,088 |
Custodian fees
| 8,664 |
Accounting fees
| 45,442 |
Distribution fees (Class B)
| 4,102 |
Record keeping fees (Class B)
| 1,069 |
Auditing
| 9,683 |
Legal
| 6,418 |
Trustees' fees and expenses
| 10,160 |
Reports to shareholders
| 8,799 |
Other
| 23,882 |
Total expenses, before expense reductions
| 1,461,307 |
Expense reductions
| (12) |
Total expenses, after expense reductions
| 1,461,295 |
Net investment income (loss)
| 1,704,527 |
Realized and Unrealized Gain (Loss) on Investment Transactions
|
Net realized gain (loss) from investments
| (10,801,065) |
Net unrealized appreciation (depreciation) during the period on investments
| 75,267,717 |
Net gain (loss) on investment transactions
| 64,466,652 |
Net increase (decrease) in net assets resulting from operations
| $ 66,171,179 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| Six Months Ended June 30, 2003 (Unaudited) | Year Ended December 31, 2002 |
Operations:
Net investment income (loss)
| $ 1,704,527 | $ 2,627,537 |
Net realized gain (loss) on investment transactions
| (10,801,065) | (158,812,793) |
Net unrealized appreciation (depreciation) on investment transactions during the period
| 75,267,717 | (93,657,671) |
Net increase (decrease) in net assets resulting from operations
| 66,171,179 | (249,842,927) |
Distributions to shareholders from:
Net investment income:
Class A
| (2,595,329) | (2,359,009) |
Class B
| (8,219) | (321) |
Portfolio share transactions:
Class A
Proceeds from shares sold
| 60,472,539 | 157,255,646 |
Reinvestment of distributions
| 2,595,329 | 2,359,009 |
Cost of shares redeemed
| (69,456,845) | (215,777,844) |
Net increase (decrease) in net assets from Class A share transactions
| (6,388,977) | (56,163,189) |
Class B
Proceeds from shares sold
| 6,040,575 | 524,737 |
Reinvestment of distributions
| 8,219 | 321 |
Cost of shares redeemed
| (162,394) | (117,694) |
Net increase (decrease) in net assets from Class B share transactions
| 5,886,400 | 407,364 |
Increase (decrease) in net assets
| 63,065,054 | (307,958,082) |
Net assets at beginning of period
| 558,764,976 | 866,723,058 |
Net assets at end of period (including undistributed net investment income of $1,557,735 and $2,456,756, respectively)
| $ 621,830,030 | $ 558,764,976 |
Other Information
|
Class A
Shares outstanding at beginning of period
| 48,337,865 | 52,934,260 |
Shares sold
| 5,048,231 | 11,277,302 |
Shares issued to shareholders in reinvestment of distributions
| 211,174 | 160,695 |
Shares redeemed
| (5,896,766) | (16,034,392) |
Net increase (decrease) in Portfolio shares
| (637,361) | (4,596,395) |
Shares outstanding at end of period
| 47,700,504 | 48,337,865 |
Class B
Shares outstanding at beginning of period
| 77,608 | 43,484 |
Shares sold
| 498,979 | 43,275 |
Shares issued to shareholders in reinvestment of distributions
| 670 | 22 |
Shares redeemed
| (12,906) | (9,173) |
Net increase (decrease) in Portfolio shares
| 486,743 | 34,124 |
Shares outstanding at end of period
| 564,351 | 77,608 |
The accompanying notes are an integral part of the financial statements.
Capital Growth Portfolio
Class A
Years Ended December 31, | 2003a | 2002 | 2001 | 2000 | 1999 | 1998 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 11.54 | $ 16.36 | $ 23.07 | $ 29.13 | $ 23.95 | $ 20.63 |
Income (loss) from investment operations:
Net investment incomeb
| .03 | .05 | .05 | .08 | .10 | .16 |
Net realized and unrealized gain (loss) on investment transactions
| 1.37 | (4.82) | (4.21) | (2.63) | 7.64 | 4.46 |
Total from investment operations | 1.40 | (4.77) | (4.16) | (2.55) | 7.74 | 4.62 |
Less distributions from:
Net investment income
| (.06) | (.05) | (.08) | (.07) | (.07) | (.17) |
Net realized gains on investment transactions
| - | - | (2.47) | (3.44) | (2.49) | (1.13) |
Total distributions | (.06) | (.05) | (2.55) | (3.51) | (2.56) | (1.30) |
Net asset value, end of period
| $ 12.88 | $ 11.54 | $ 16.36 | $ 23.07 | $ 29.13 | $ 23.95 |
Total Return (%)
| 12.01** | (29.18) | (19.36) | (9.90) | 35.23 | 23.23 |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 615 | 558 | 866 | 1,126 | 1,254 | 901 |
Ratio of expenses before expense reductions (%)
| .51* | .51 | .52c | .49 | .49 | .50 |
Ratio of expenses after expense reductions (%)
| .51* | .51 | .50c | .49 | .49 | .50 |
Ratio of net investment income (loss) (%)
| .60* | .38 | .27 | .30 | .43 | .75 |
Portfolio turnover rate (%)
| 7* | 25 | 33 | 55 | 66 | 55 |
Class B
Years Ended December 31, | 2003a | 2002 | 2001 | 2000 | 1999 | 1998 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 11.49 | $ 16.29 | $ 23.00 | $ 29.05 | $ 23.92 | $ 20.61 |
Income (loss) from investment operations:
Net investment incomeb
| .01 | .02 | .00d | .01 | .04 | .11 |
Net realized and unrealized gain (loss) on investment transactions
| 1.36 | (4.81) | (4.21) | (2.62) | 7.62 | 4.45 |
Total from investment operations | 1.37 | (4.79) | (4.21) | (2.61) | 7.66 | 4.56 |
Less distributions from:
Net investment income
| (.02) | (.01) | (.03) | - | (.04) | (.12) |
Net realized gains on investment transactions
| - | - | (2.47) | (3.44) | (2.49) | (1.13) |
Total distributions | (.02) | (.01) | (2.50) | (3.44) | (2.53) | (1.25) |
Net asset value, end of period
| $ 12.84 | $ 11.49 | $ 16.29 | $ 23.00 | $ 29.05 | $ 23.92 |
Total Return (%)
| 11.88** | (29.37) | (19.64) | (10.13) | 34.88 | 22.94 |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 7 | .89 | .71 | 1.16 | 1.28 | .83 |
Ratio of expenses before expense reductions (%)
| .83* | .76 | .77c | .74 | .74 | .75 |
Ratio of expenses after expense reductions (%)
| .83* | .76 | .75c | .74 | .74 | .75 |
Ratio of net investment income (loss) (%)
| .28* | .13 | .02 | .05 | .18 | .49 |
Portfolio turnover rate (%)
| 7* | 25 | 33 | 55 | 66 | 55 |
a For the six months ended June 30, 2003 (Unaudited).bBased on average shares outstanding during the period.c The ratios of operating expenses excluding costs incurred in connection with the reorganization before and after expense reductions were .50% and ..50%, and .75% and .75% for Class A and Class B, respectively.d Less than $.005 per share* Annualized** Not annualizedManagement Summary June 30, 2003 |
|
21st Century Growth Portfolio
Historically, coming out of market recessions, it's the small-cap stocks that lead the way. This proved to be the case in the second quarter, as small-cap stocks outperformed both the mid- and large-cap tiers. Scudder 21st Century Growth Portfolio posted a strong positive return of 15.85% (Class A shares) for the semiannual period, though it underperformed its benchmark, the Russell 2000 Growth Index, which gained 19.33%. Stock selection in the health care sector accounted for a large share of the underperformance. In particular, our underweight and stock picks in the medical device industry group detracted from performance. The portfolio's performance in the technology sector was also disappointing, due to stock selection. In addition, the portfolio was hurt by an underweight in consumer discretionary, which includes industries such as retail and media. On the positive side, Genta, a biotech company and one of our largest holding, provided a big gain for the quarter. After striking an agreement with a major airline to provide feeder service, SkyWest Inc. also added significantly to return. Strategically, we are going to make bolstering the health care sector a priority over the coming quarter. In addition, we are increasing our weighting in consumer discretionary to be more in line with the benchmark.
Audrey M.T. Jones
Samuel A. Dedio
Doris R. Klug
Co-Managers
The Russell 2000 Growth Index is an unmanaged capitalization-weighted measure of 2,000 of the smallest capitalized US companies with a greater-than-average growth orientation and whose common stocks trade on the NYSE, AMEX, and Nasdaq. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
Past performance is not a guarantee of future results. Returns and principal value will fluctuate so that accumulation units, when redeemed, may be worth more or less than their original cost.
Total return measures net investment income and capital gain or loss from portfolio investments over the period specified, assuming reinvestment of all dividend and capital gain distributions. Total return reflects aggregate change. Performance is net of the portfolio's management fee and other operating expenses but does not include any deduction at the separate account or contract level for any insurance or surrender charge that may be incurred under a contract. Please see the prospectus for more details.
Portfolio management market commentary is as of June 30, 2003, and may not come to pass. This information is subject to change at any time, based on market and other conditions.
Investment Portfolio as of June 30, 2003 (Unaudited) |
|
21st Century Growth Portfolio
|
Shares
| Value ($) |
|
|
Common Stocks 94.3% |
Consumer Discretionary 8.5%
|
Auto Components 1.3%
|
Keystone Automotive Industries, Inc.*
| 28,500
| 520,410 |
Hotel Restaurants & Leisure 4.4%
|
Shuffle Master, Inc.*
| 39,900
| 1,172,661
|
The Cheesecake Factory, Inc.*
| 17,900
| 642,431
|
| 1,815,092 |
Specialty Retail 1.8%
|
Hancock Fabrics, Inc.
| 45,100
| 728,365 |
Textiles, Apparel & Luxury Goods 1.0%
|
Gildan Activewear, Inc.*
| 15,600
| 410,592 |
Consumer Staples 4.8%
|
Beverages 1.1%
|
Constellation Brands, Inc. "A"*
| 14,000
| 439,600 |
Food & Drug Retailing 3.7%
|
Performance Food Group Co.*
| 16,600
| 614,200
|
United Natural Foods, Inc.*
| 32,700
| 920,178
|
| 1,534,378 |
Energy 6.2%
|
Energy Equipment & Services 3.9%
|
FMC Technologies, Inc.*
| 26,000
| 547,300
|
National-Oilwell, Inc.*
| 16,400
| 360,800
|
Unit Corp.*
| 34,500
| 721,395
|
| 1,629,495 |
Oil & Gas 2.3%
|
Western Gas Resources, Inc.
| 12,100
| 479,160
|
Westport Resources Corp.*
| 21,400
| 486,850
|
| 966,010 |
Financials 14.6%
|
Banks 7.6%
|
First Niagara Financial Group
| 30,106
| 420,280
|
Investors Financial Services Corp.
| 33,600
| 974,736
|
Jefferies Group, Inc.
| 17,400
| 866,346
|
Texas Regional Bancshares, Inc. "A"
| 26,150
| 907,405
|
| 3,168,767 |
Diversified Financials 4.2%
|
Affiliated Managers Group, Inc.*
| 14,100
| 859,395
|
Labranche & Co., Inc.
| 42,800
| 885,532
|
| 1,744,927 |
Insurance 2.8%
|
Platinum Underwriters Holdings Ltd.*
| 13,400
| 363,676
|
Triad Guaranty, Inc.*
| 20,500
| 777,975
|
| 1,141,651 |
Health Care 18.0%
|
Biotechnology 4.8%
|
Celgene Corp.*
| 26,900
| 817,760
|
Genta, Inc.*
| 87,500
| 1,165,500
|
| 1,983,260 |
Health Care Equipment & Supplies 7.1%
|
Cytyc Corp.*
| 51,100
| 537,572
|
Edwards Lifesciences Corp.*
| 26,100
| 838,854
|
Integra LifeSciences Holdings Corp.*
| 30,400
| 801,952
|
SurModics, Inc.*
| 24,700
| 753,350
|
| 2,931,728 |
Health Care Providers & Services 1.8%
|
Apria Healthcare Group, Inc.*
| 30,300
| 753,864 |
Pharmaceuticals 4.3%
|
NPS Pharmaceuticals, Inc.*
| 38,900
| 946,826
|
SICOR, Inc.*
| 41,200
| 838,008
|
| 1,784,834 |
Industrials 14.0%
|
Airlines 4.5%
|
JetBlue Airways Corp.*
| 19,350
| 818,312
|
SkyWest, Inc.
| 55,200
| 1,052,112
|
| 1,870,424 |
Commercial Services & Supplies 6.1%
|
ABM Industries, Inc.
| 29,700
| 457,380
|
Corinthian Colleges, Inc.*
| 17,700
| 859,689
|
CoStar Group, Inc.*
| 40,700
| 1,215,302
|
| 2,532,371 |
Construction & Engineering 1.5%
|
Insituform Technologies, Inc.*
| 34,500
| 609,960 |
Road & Rail 1.9%
|
Heartland Express, Inc.*
| 35,964
| 800,199 |
Information Technology 26.6%
|
Communications Equipment 8.0%
|
Adaptec, Inc.*
| 130,500
| 1,015,290
|
Foundry Networks, Inc.*
| 41,600
| 599,040
|
Harris Corp.
| 28,100
| 844,405
|
NetScreen Technologies, Inc.*
| 38,800
| 874,940
|
| 3,333,675 |
Electronic Equipment & Instruments 4.8%
|
Identix, Inc.*
| 124,321
| 789,438
|
Vishay Intertechnology, Inc.*
| 90,200
| 1,190,640
|
| 1,980,078 |
Semiconductor Equipment & Products 11.8%
|
ATMI, Inc.*
| 34,500
| 861,465
|
Exar Corp.*
| 67,500
| 1,068,525
|
Lam Research Corp.*
| 32,600
| 593,646
|
RF Micro Devices, Inc.*
| 129,300
| 778,386
|
Semtech Corp.*
| 39,100
| 556,784
|
Varian Semiconductor Equipment Associates, Inc.*
| 34,600
| 1,029,696
|
| 4,888,502 |
Software 2.0%
|
NetIQ Corp.*
| 53,600
| 828,656 |
Materials 1.6%
|
Containers & Packaging
|
Packaging Corp. of America*
| 34,900
| 643,207 |
Total Common Stocks (Cost $34,118,981)
| 39,040,045 |
Cash Equivalents 5.7% |
Scudder Cash Management QP Trust, 1.15% (b) (Cost $2,371,376)
| 2,371,376
| 2,371,376 |
Total Investment Portfolio - 100.0% (Cost $36,490,357) (a)
| 41,411,421 |
* Non-income producing security.(a) The cost for federal income tax purposes was $36,558,496. At June 30, 2003, net unrealized appreciation for all securities based on tax cost was $4,852,925. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $5,349,554 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $496,629.(b) Scudder Cash Management QP Trust is also managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.Purchases and sales of investment securities (excluding short-term investments), for the six months ended June 30, 2003, aggregated $22,950,300 and $19,490,042, respectively.
At December 31, 2002, the 21st Century Growth Portfolio had a net tax basis capital loss carryforward of approximately $22,643,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2008 ($1,217,000), December 31, 2009 ($12,192,000) and December 31, 2010 ($9,234,000), the respective expiration dates, whichever occurs first.
In addition, from November 1, 2002 through December 31, 2002, the Fund incurred approximately $5,288,000 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 ending December 31, 2003.
The accompanying notes are an integral part of the financial statements.
21st Century Growth Portfolio
Statement of Assets and Liabilities as of June 30, 2003 (Unaudited) |
Assets
|
Investments in securities, at value (cost $34,118,981)
| $ 39,040,045 |
Investment in Scudder Cash Management QP Trust (cost $2,371,376)
| 2,371,376 |
Dividends receivable
| 9,376 |
Receivable for Portfolio shares sold
| 16,657 |
Other assets
| 709 |
Total assets
| 41,438,163 |
Liabilities
|
Payable for Portfolio shares redeemed
| 23,630 |
Accrued management fee
| 29,059 |
Other accrued expenses and payables
| 24,074 |
Total liabilities
| 76,763 |
Net assets, at value
| $ 41,361,400 |
Net Assets
|
Net assets consist of:
Accumulated net investment loss
| (142,558) |
Net unrealized appreciation (depreciation) on investment securities
| 4,921,064 |
Accumulated net realized gain (loss)
| (31,258,154) |
Paid-in capital
| 67,841,048 |
Net assets, at value
| $ 41,361,400 |
Net Asset Value
|
Class A Net Asset Value, offering and redemption price per share ($39,113,786 / 9,228,388 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 4.24 |
Class B Net Asset Value, offering and redemption price per share ($2,247,614 / 537,397 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 4.18 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended June 30, 2003 (Unaudited) |
Investment Income
|
Income:
Dividends
| $ 37,948 |
Interest - Scudder Cash Management QP Trust
| 20,382 |
Total Income
| 58,330 |
Expenses:
Management fee
| 154,049 |
Custodian fees
| 5,650 |
Accounting fees
| 20,692 |
Distribution service fees (Class B)
| 1,166 |
Record keeping fees (Class B)
| 455 |
Auditing
| 6,976 |
Legal
| 4,193 |
Trustees' fees and expenses
| 1,432 |
Reports to shareholders
| 4,941 |
Other
| 1,405 |
Total expenses, before expense reductions
| 200,959 |
Expense reductions
| (71) |
Total expenses, after expense reductions
| 200,888 |
Net investment income (loss)
| (142,558) |
Realized and Unrealized Gain (Loss) on Investment Transactions
|
Net realized gain (loss) from investments
| (3,195,964) |
Net unrealized appreciation (depreciation) during the period on investments
| 8,984,519 |
Net gain (loss) on investment transactions
| 5,788,555 |
Net increase (decrease) in net assets resulting from operations
| $ 5,645,997 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| Six Months Ended June 30, 2003 (Unaudited) | Year Ended December 31, 2002 |
Operations:
Net investment income (loss)
| $ (142,558) | $ (343,895) |
Net realized gain (loss) on investment transactions
| (3,195,964) | (13,981,457) |
Net unrealized appreciation (depreciation) on investment transactions during the period
| 8,984,519 | (7,611,269) |
Net increase (decrease) in net assets resulting from operations
| 5,645,997 | (21,936,621) |
Portfolio share transactions:
Class A
Proceeds from shares sold
| 6,029,104 | 21,627,664 |
Cost of shares redeemed
| (5,811,260) | (10,758,573) |
Net increase (decrease) in net assets from Class A share transactions
| 217,844 | 10,869,091 |
Class B
Proceeds from shares sold
| 1,924,280 | 171,863 |
Cost of shares redeemed
| (99,212) | (6,118) |
Net increase (decrease) in net assets from Class B share transactions
| 1,825,068 | 165,745 |
Increase (decrease) in net assets
| 7,688,909 | (10,901,785) |
Net assets at beginning of period
| 33,672,491 | 44,574,276 |
Net assets at end of period (including accumulated net investment loss of $142,558 at June 30, 2003)
| $ 41,361,400 | $ 33,672,491 |
Other Information
|
Class A
Shares outstanding at beginning of period
| 9,153,467 | 7,152,255 |
Shares sold
| 1,621,333 | 4,412,802 |
Shares redeemed
| (1,546,412) | (2,411,590) |
Net increase (decrease) in Portfolio shares
| 74,921 | 2,001,212 |
Shares outstanding at end of period
| 9,228,388 | 9,153,467 |
Class B
Shares outstanding at beginning of period
| 44,351 | 101 |
Shares sold
| 520,089 | 45,909 |
Shares redeemed
| (27,043) | (1,659) |
Net increase (decrease) in Portfolio shares
| 493,046 | 44,250 |
Shares outstanding at end of period
| 537,397 | 44,351 |
The accompanying notes are an integral part of the financial statements.
21st Century Growth Portfolio
Class A
Years Ended December 31, | 2003a | 2002 | 2001 | 2000 | 1999b |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 3.66 | $ 6.23 | $ 8.12 | $ 10.55 | $ 6.00c |
Income (loss) from investment operations:
Net investment income (loss)d
| (.01) | (.04) | (.04) | (.11) | (.04) |
Net realized and unrealized gain (loss) on investment transactions
| .59 | (2.53) | (1.85) | (2.20) | 4.59 |
Total from investment operations | .58 | (2.57) | (1.89) | (2.31) | 4.55 |
Less distributions from:
Net realized gains on investment transactions
| - | - | - | (.12) | - |
Net asset value, end of period
| $ 4.24 | $ 3.66 | $ 6.23 | $ 8.12 | $ 10.55 |
Total Return (%)
| 15.85** | (41.25) | (23.28)e | (22.39)e | 75.83e** |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 39 | 34 | 45 | 26 | 15 |
Ratio of expenses before expense reductions (%)
| 1.13* | 1.11 | 1.17f | 1.35 | 2.90* |
Ratio of expenses after expense reductions (%)
| 1.13* | 1.11 | 1.15f | 1.29 | 1.50* |
Ratio of net investment income (loss) (%)
| (.80)* | (.88) | (.64) | (1.06) | (.95)* |
Portfolio turnover rate (%)
| 119* | 72 | 103 | 109 | 61 |
Class B
Years Ended December 31, | 2003a | 2002 | 2001 | 2000 | 1999b |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 3.62 | $ 6.15 | $ 8.04 | $ 10.51 | $ 6.00c |
Income (loss) from investment operations:
Net investment income (loss)d
| (.02) | (.05) | (.06) | (.13) | (.06) |
Net realized and unrealized gain (loss) on investment transactions
| .58 | (2.48) | (1.83) | (2.22) | 4.57 |
Total from investment operations | .56 | (2.53) | (1.89) | (2.35) | 4.51 |
Less distributions from:
Net realized gains on investment transactions
| - | - | - | (.12) | - |
Net asset value, end of period
| $ 4.18 | $ 3.62 | $ 6.15 | $ 8.04 | $ 10.51 |
Total Return (%)
| 15.47** | (41.14) | (23.51)e | (22.79)e | 75.17e** |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 2 | .16 | -*** | -*** | -*** |
Ratio of expenses before expense reductions (%)
| 1.47* | 1.36 | 1.42f | 1.60 | 3.15* |
Ratio of expenses after expense reductions (%)
| 1.47* | 1.36 | 1.40f | 1.54 | 1.75* |
Ratio of net investment income (loss) (%)
| (1.14)* | (1.13) | (.89) | (1.31) | (1.20)* |
Portfolio turnover rate (%)
| 119* | 72 | 103 | 109 | 61 |
a For the six months ended June 30, 2003 (Unaudited).b For the period May 3, 1999 (commencement of operations) to December 31, 1999.c Original capital.dBased on average shares outstanding during the period.e Total return would have been lower had certain expenses not been reduced.f The ratios of operating expenses excluding costs incurred in connection with the reorganization before and after expense reductions were 1.16% and 1.15%, and 1.41% and 1.40% for Class A and Class B, respectively.* Annualized** Not annualized*** Net assets less than one millionManagement Summary June 30, 2003 |
|
Global Discovery Portfolio
Global equities rebounded strongly in the first half of 2003, and market analysts now believe that the US economy - the engine of global growth - is recovering. For financial markets, at least, the war in the Middle East that dominated the first quarter is now a distant memory, and geopolitical issues have faded in importance. Against this backdrop, Scudder Global Discovery Portfolio returned 18.35% (Class A shares), outperforming its benchmark, the Citigroup World Equity Extended Market Index, which gained 16.57%.
The primary driver behind the portfolio's outperformance was its significant overweight stake in the health care sector, as well as stock selection within that sector. The portfolio's financials position also contributed to performance despite the fact that the sector as a whole underperformed for the period. In health care, top contributors included Fresenius Medical Care, which rallied during the period after resolving a lawsuit and reporting improved profits. Fresenius has a unique competitive advantage in US dialysis care which should allow it to take market share and improve profitability. Among financials, Deutsche Boerse was a top contributor and continues to benefit from structural changes within the derivatives market - one of its specialties. Additionally, a portfolio stalwart that helped us once again was Anglo Irish Bank Corp., which reported an exceptionally strong first fiscal half. Select technology and telecommunications names detracted from performance.
Joseph Axtell
Portfolio Manager
Citigroup World Equity Extended Market Index, formerly the Salmon Smith Barney World Equity Extended Market Index, is an unmanaged small-capitalization stock universe of 22 countries. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly in an index.
Past performance is not a guarantee of future results. Returns and principal value will fluctuate so that accumulation units, when redeemed, may be worth more or less than their original cost.
Total return measures net investment income and capital gain or loss from portfolio investments over the period specified, assuming reinvestment of all dividend and capital gain distributions. Total return reflects aggregate change. Performance is net of the portfolio's management fee and other operating expenses but does not include any deduction at the separate account or contract level for any insurance or surrender charge that may be incurred under a contract. Please see the prospectus for more details.
Portfolio management market commentary is as of June 30, 2003, and may not come to pass. This information is subject to change at any time, based on market and other conditions.
Investment Portfolio as of June 30, 2003 (Unaudited) |
|
Global Discovery Portfolio
| Shares | Value ($) |
|
|
Common Stocks 94.2% |
Australia 1.5%
|
Macquarie Bank Ltd.
| 78,711
| 1,524,362
|
QBE Insurance Group Ltd.
| 116,844
| 732,289
|
| 2,256,651 |
Bermuda 0.8%
|
Benfield Group PLC*
| 258,972
| 1,208,721 |
Brazil 1.5%
|
Aracruz Celulose SA (preferred) (ADR)
| 76,300
| 1,606,878
|
Empresa Brasiliera de Aeronautica SA (preferred) (ADR)
| 28,418
| 542,784
|
| 2,149,662 |
Denmark 0.6%
|
Group 4 Falck AS*
| 52,900
| 880,002 |
Finland 0.5%
|
Tietoenator Oyj "B"
| 39,800
| 670,755 |
France 6.1%
|
Autoroutes du Sud de la France*
| 73,765
| 2,158,166
|
Flamel Technologies SA (ADR)*
| 59,900
| 806,853
|
Galeries Lafayette SA
| 13,863
| 1,882,148
|
JC Decaux SA*
| 117,957
| 1,478,076
|
Vinci SA
| 41,084
| 2,774,772
|
| 9,100,015 |
Germany 8.6%
|
Deutsche Boerse AG
| 100,370
| 5,322,725
|
Fresenius Medical Care AG
| 87,495
| 4,335,180
|
Puma AG
| 17,385
| 1,720,777
|
Stada Arzneimittel AG*
| 23,216
| 1,467,901
|
| 12,846,583 |
Greece 1.5%
|
Coca-Cola Hellenic Bottling Co. SA
| 95,600
| 1,580,387
|
Greek Organization of Football Prognostics*
| 63,500
| 648,236
|
| 2,228,623 |
Hong Kong 0.7%
|
Legend Group Ltd.
| 2,887,000
| 962,537 |
Ireland 8.3%
|
Anglo Irish Bank Corp., PLC
| 792,308
| 6,995,229
|
Irish Continental Group PLC
| 63,660
| 611,082
|
Irish Life & Permanent PLC
| 115,196
| 1,254,105
|
Jurys Doyle Hotel Group PLC
| 225,150
| 2,174,192
|
Ryanair Holdings PLC*
| 169,500
| 1,221,754
|
| 12,256,362 |
Japan 5.3%
|
AEON Credit Services Co., Ltd.
| 28,600
| 907,406
|
JAFCO Co., Ltd.
| 21,000
| 1,192,285
|
Nidec Corp.
| 35,700
| 2,363,705
|
Olympus Optical Co., Ltd.
| 162,000
| 3,361,192
|
| 7,824,588 |
Netherlands 3.4%
|
Chicago Bridge & Iron Co., N.V.
| 39,200
| 889,056
|
IHC Caland NV
| 47,285
| 2,416,793
|
Vedior NV
| 199,358
| 1,808,245
|
| 5,114,094 |
Norway 0.5%
|
Tandberg ASA*
| 143,400
| 742,080 |
Russia 1.1%
|
Mobile Telesystems (ADR)*
| 27,900
| 1,646,100 |
Spain 0.9%
|
Amadeus Global Travel Distribution SA "A"
| 239,900
| 1,376,187 |
Sweden 1.1%
|
Eniro AB
| 192,100
| 1,644,589 |
Switzerland 2.5%
|
Centerpulse AG (Registered)*
| 6,326
| 1,704,989
|
Converium Holding AG*
| 30,025
| 1,387,579
|
Logitech International SA*
| 17,536
| 658,702
|
| 3,751,270 |
United Kingdom 6.7%
|
Aegis Group PLC
| 1,164,554
| 1,527,506
|
ARM Holdings PLC*
| 719,913
| 798,324
|
Capita Group PLC*
| 496,696
| 1,857,905
|
Matalan PLC
| 225,290
| 644,146
|
Misys PLC
| 283,866
| 1,207,455
|
Taylor Nelson Sofres PLC
| 560,038
| 1,557,224
|
Viridian Group PLC
| 164,628
| 1,520,415
|
Wood Group (John) PLC*
| 289,313
| 861,916
|
| 9,974,891 |
United States 42.6%
|
Advance Auto Parts, Inc.*
| 11,900
| 724,710
|
Affiliated Computer Services, Inc. "A"*
| 31,400
| 1,435,922
|
Alexion Pharmaceuticals, Inc.*
| 10,300
| 175,615
|
Alkermes, Inc.*
| 58,300
| 626,725
|
Arthur J. Gallagher & Co.
| 49,400
| 1,343,680
|
Brinker International, Inc.*
| 103,500
| 3,728,070
|
Caremark Rx, Inc.*
| 154,100
| 3,957,288
|
Celgene Corp.*
| 40,300
| 1,225,120
|
Cephalon, Inc.*
| 11,400
| 469,224
|
Copart, Inc.*
| 150,300
| 1,420,335
|
Diebold, Inc.
| 38,600
| 1,669,450
|
Documentum, Inc.*
| 71,500
| 1,406,405
|
Energy East Corp.
| 110,000
| 2,283,600
|
EOG Resources, Inc.
| 51,700
| 2,163,128
|
Fiserv, Inc.*
| 100,300
| 3,571,683
|
FTI Consulting, Inc.
| 80,850
| 2,018,825
|
Garmin Ltd.*
| 22,300
| 889,101
|
Harman International Industries, Inc.
| 19,000
| 1,503,660
|
Invitrogen Corp.*
| 37,400
| 1,435,038
|
JetBlue Airways Corp.*
| 59,350
| 2,509,912
|
Laboratory Corp. of America Holdings*
| 104,400
| 3,147,660
|
Lam Research Corp.*
| 44,500
| 810,345
|
Legg Mason, Inc.
| 89,300
| 5,800,035
|
Mercury Interactive Corp.*
| 47,900
| 1,849,419
|
NetScreen Technologies, Inc.*
| 33,000
| 744,150
|
NPS Pharmaceuticals, Inc.*
| 31,100
| 756,974
|
Pharmaceutical Resources, Inc.*
| 52,300
| 2,544,918
|
Rowan Companies, Inc.*
| 42,300
| 947,520
|
Spinnaker Exploration Co.*
| 28,100
| 736,220
|
St. Jude Medical, Inc.*
| 46,700
| 2,685,250
|
Symbol Technologies, Inc.
| 115,993
| 1,509,069
|
THQ, Inc.*
| 91,700
| 1,650,600
|
Trimeris, Inc.*
| 13,600
| 621,248
|
Waters Corp.*
| 62,800
| 1,829,364
|
Zions Bancorp.
| 62,400
| 3,158,064
|
| 63,348,327 |
Total Common Stocks (Cost $128,412,371)
| 139,982,037 |
| Principal Amount ($) | Value ($) |
|
|
Convertible Bonds 0.4% |
United States
|
Cephalon, Inc., Convertible, 5.25%, 5/1/2006 (Cost $581,000)
| 581,000
| 597,733 |
| Shares | Value ($) |
|
|
Cash Equivalents 5.4% |
Scudder Cash Management QP Trust, 1.15% (b) (Cost $8,078,626)
| 8,078,626
| 8,078,626 |
Total Investment Portfolio - 100.0% (Cost $137,071,997) (a)
| 148,658,396 |
At June 30, 2003, the Global Discovery Portfolio had the following industry diversification:Industry | Value | | Percent |
Financials
| $ 30,826,480 | | 20.7% |
Health Care
| 29,321,175 | | 19.7% |
Industrials
| 22,220,373 | | 14.9% |
Consumer Discretionary
| 21,542,770 | | 14.5% |
Information Technology
| 20,308,282 | | 13.7% |
Energy
| 7,125,577 | | 4.8% |
Utilities
| 3,804,015 | | 2.6% |
Communication Services
| 1,646,100 | | 1.1% |
Materials
| 1,606,878 | | 1.1% |
Consumer Staples
| 1,580,387 | | 1.1% |
Total Common and Preferred Stocks
| 139,982,037 | | 94.2% |
Convertible Bonds
| 597,733 | | 0.4% |
Cash Equivalents
| 8,078,626 | | 5.4% |
Total Investment Portfolio
| $ 148,658,396 | | 100.0% |
* Non-income producing security.(a) The cost for federal income tax purposes was $137,795,079. At June 30, 2003, net unrealized appreciation for all securities based on tax cost was $10,863,317. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $26,391,336 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $15,528,019.(b) Scudder Cash Management QP Trust is also managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.Purchases and sales of investment securities (excluding short-term investments), for the six months ended June 30, 2003, aggregated $18,635,080 and $21,753,258, respectively.
At December 31, 2002, the Global Discovery Portfolio had a net tax basis capital loss carryforward of approximately $50,485,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2009 ($24,864,000) and December 31, 2010 ($25,621,000), the respective expiration dates, whichever occurs first.
In addition, from November 1, 2002 through December 31, 2002, the Global Discovery Portfolio incurred approximately $1,491,000 of net realized capital losses. As permitted by tax regulations, the Portfolio intends to elect to defer these losses and treat them as arising in the fiscal year ending December 31, 2003.
The accompanying notes are an integral part of the financial statements.
Global Discovery Portfolio
Statement of Assets and Liabilities as of June 30, 2003 (Unaudited) |
Assets
|
Investments in securities, at value (cost $128,993,371)
| $ 140,579,770 |
Investment in Scudder Cash Management QP Trust (cost $8,078,626)
| 8,078,626 |
Foreign currency, at value (cost $392,937)
| 397,740 |
Receivable for investments sold
| 2,886,403 |
Dividends receivable
| 341,937 |
Interest receivable
| 5,084 |
Receivable for Portfolio shares sold
| 29,082 |
Foreign taxes recoverable
| 61,199 |
Other assets
| 1,356 |
Total assets
| 152,381,197 |
Liabilities
|
Payable for investments purchased
| 3,115,030 |
Payable for Portfolio shares redeemed
| 143,582 |
Accrued management fee
| 125,355 |
Other accrued expenses and payables
| 69,910 |
Total liabilities
| 3,453,877 |
Net assets, at value
| $ 148,927,320 |
Net Assets
|
Net assets consist of:
Undistributed net investment income
| 428,109 |
Net unrealized appreciation (depreciation) on:
Investments
| 11,586,399 |
Foreign currency related transactions
| 4,714 |
Accumulated net realized gain (loss)
| (59,175,307) |
Paid-in capital
| 196,083,405 |
Net assets, at value
| $ 148,927,320 |
Class A Net Asset Value, offering and redemption price per share ($141,045,857 / 17,113,349 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 8.24 |
Class B Net Asset Value, offering and redemption price per share ($7,881,463 / 966,981 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 8.15 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended June 30, 2003 (Unaudited) |
Investment Income
|
Income:
Dividends (net of foreign taxes withheld of $106,819)
| $ 1,126,450 |
Interest
| 47,406 |
Interest - Scudder Cash Management QP Trust
| 31,886 |
Total Income
| 1,205,742 |
Expenses:
Management fee
| 619,303 |
Custodian fees
| 46,378 |
Accounting fees
| 58,125 |
Distribution service fees (Class B)
| 6,885 |
Record keeping fees (Class B)
| 168 |
Auditing
| 12,829 |
Legal
| 6,450 |
Trustees' fees and expenses
| 4,025 |
Reports to shareholders
| 8,147 |
Other
| 3,816 |
Total expenses
| 766,126 |
Net investment income (loss)
| 439,616 |
Realized and Unrealized Gain (Loss) on Investment Transactions
|
Net realized gain (loss) from:
Investments
| (6,517,886) |
Foreign currency related transactions
| 107,707 |
| (6,410,179) |
Net unrealized appreciation (depreciation) during the period on:
Investments
| 28,467,940 |
Foreign currency related transactions
| (6,570) |
| 28,461,370 |
Net gain (loss) on investment transactions
| 22,051,191 |
Net increase (decrease) in net assets resulting from operations
| $ 22,490,807 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| Six Months Ended June 30, 2003 (Unaudited) | Year Ended December 31, 2002 |
Operations:
Net investment income (loss)
| $ 439,616 | $ (52,872) |
Net realized gain (loss) on investment transactions
| (6,410,179) | (22,711,667) |
Net unrealized appreciation (depreciation) on investment transactions during the period
| 28,461,370 | (9,589,493) |
Net increase (decrease) in net assets resulting from operations
| 22,490,807 | (32,354,032) |
Distributions to shareholders from:
Net investment income:
Class A
| (133,861) | - |
Portfolio share transactions:
Class A
Proceeds from shares sold
| 12,288,227 | 66,936,815 |
Reinvestment of distributions
| 133,861 | - |
Cost of shares redeemed
| (13,578,611) | (65,055,875) |
Net increase (decrease) in net assets from Class A share transactions
| (1,156,523) | 1,880,940 |
Class B
Proceeds from shares sold
| 2,904,971 | 616,165 |
Cost of shares redeemed
| (595,763) | (1,766,874) |
Net increase (decrease) in net assets from Class B share transactions
| 2,309,208 | (1,150,709) |
Increase (decrease) in net assets
| 23,509,631 | (31,623,801) |
Net assets at beginning of period
| 125,417,689 | 157,041,490 |
Net assets at end of period (including undistributed net investment income of $428,109 and $122,354, respectively)
| $ 148,927,320 | $ 125,417,689 |
Other Information
|
Class A
Shares outstanding at beginning of period
| 17,358,587 | 17,267,802 |
Shares sold
| 1,613,487 | 8,265,963 |
Shares issued to shareholders in reinvestment of distributions
| 18,413 | - |
Shares redeemed
| (1,877,138) | (8,175,178) |
Net increase (decrease) in Portfolio shares
| (245,238) | 90,785 |
Shares outstanding at end of period
| 17,113,349 | 17,358,587 |
Class B
Shares outstanding at beginning of period
| 645,610 | 795,058 |
Shares sold
| 404,266 | 84,878 |
Shares redeemed
| (82,895) | (234,326) |
Net increase (decrease) in Portfolio shares
| 321,371 | (149,448) |
Shares outstanding at end of period
| 966,981 | 645,610 |
The accompanying notes are an integral part of the financial statements.
Global Discovery Portfolio
Class A
Years Ended December 31, | 2003a | 2002 | 2001 | 2000 | 1999 | 1998 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 6.97 | $ 8.70 | $ 11.76 | $ 13.18 | $ 8.04 | $ 7.08 |
Income (loss) from investment operations:
Net investment income (loss)b
| .03 | (.00)f | (.00)f | (.03) | (.06) | (.03) |
Net realized and unrealized gain (loss) on investment transactions
| 1.25 | (1.73) | (2.87) | (.62) | 5.30 | 1.18 |
Total from investment operations | 1.28 | (1.73) | (2.87) | (.65) | 5.24 | 1.15 |
Less distributions from:
Net investment income
| (.01) | - | - | (.11) | - | (.12) |
Net realized gains on investment transactions
| - | - | (.19) | (.66) | (.10) | (.07) |
Total distributions | (.01) | - | (.19) | (.77) | (.10) | (.19) |
Net asset value, end of period
| $ 8.24 | $ 6.97 | $ 8.70 | $ 11.76 | $ 13.18 | $ 8.04 |
Total Return (%)
| 18.35** | (19.89) | (24.59) | (5.29) | 65.88 | 16.44c |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 141 | 121 | 150 | 159 | 71 | 25 |
Ratio of expenses before expense reductions (%)
| 1.20* | 1.19 | 1.23d | 1.28 | 1.63 | 1.79 |
Ratio of expenses after expense reductions (%)
| 1.20* | 1.19 | 1.22d | 1.28 | 1.63 | 1.72 |
Ratio of net investment income (loss) (%)
| .70* | (.03) | .00e | (.25) | (.66) | (.40) |
Portfolio turnover rate (%)
| 29* | 47 | 56 | 66 | 70 | 54 |
Class B
Years Ended December 31, | 2003a | 2002 | 2001 | 2000 | 1999 | 1998 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 6.89 | $ 8.62 | $ 11.69 | $ 13.11 | $ 8.01 | $ 7.07 |
Income (loss) from investment operations:
Net investment income (loss)b
| .02 | (.02) | (.02) | (.07) | (.08) | (.05) |
Net realized and unrealized gain (loss) on investment transactions
| 1.24 | (1.71) | (2.86) | (.61) | 5.28 | 1.18 |
Total from investment operations | 1.26 | (1.73) | (2.88) | (.68) | 5.20 | 1.13 |
Less distributions from:
Net investment income
| - | - | - | (.08) | - | (.12) |
Net realized gains on investment transactions
| - | - | (.19) | (.66) | (.10) | (.07) |
Total distributions | - | - | (.19) | (.74) | (.10) | (.19) |
Net asset value, end of period
| $ 8.15 | $ 6.89 | $ 8.62 | $ 11.69 | $ 13.11 | $ 8.01 |
Total Return (%)
| 18.29** | (20.07) | (24.96) | (5.42) | 65.63 | 16.18c |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 8 | 4 | 7 | 11 | 7 | 4 |
Ratio of expenses before expense reductions (%)
| 1.45* | 1.44 | 1.48d | 1.53 | 1.88 | 2.04 |
Ratio of expenses after expense reductions (%)
| 1.45* | 1.44 | 1.47d | 1.53 | 1.88 | 1.98 |
Ratio of net investment income (loss) (%)
| .45* | (.28) | (.25) | (.52) | (.91) | (.69) |
Portfolio turnover rate (%)
| 29* | 47 | 56 | 66 | 70 | 54 |
a For the six months ended June 30, 2003 (Unaudited).b Based on average shares outstanding during the period.c Total returns would have been lower had certain expenses not been reduced.d The ratios of operating expenses excluding costs incurred in connection with the reorganization before and after expense reductions were 1.22% and 1.22%, and 1.47% and 1.47% for Class A and Class B, respectively.e Less than .005%f Less than $.005 per share * Annualized ** Not annualizedManagement Summary June 30, 2003 |
|
International Portfolio
International equities rebounded strongly in the first half of 2003, and market analysts now believe that the US economy - the engine of global growth - is recovering. For financial markets, at least, the war in the Middle East that dominated the first quarter is now a distant memory, and geopolitical issues have faded in importance. Against this improving backdrop, Scudder International Portfolio gained 5.63% (Class A shares), but lagged its benchmark, the MSCI EAFE & Canada Index, which returned 10.25%.
The underperformance for the period stems primarily from dramatic underperformance by a handful of our holdings within the financials and consumer discretionary sectors. We remained underweight in financials during the period, which in itself did not cost us, but stock selection was poor. Some financials holdings were impacted by Ahold contagion (Ahold, which was not a portfolio holding as of 6/30/03, announced it had overstated earnings and is now under investigation by the SEC). News of dividend cuts and negative earnings reports also weighed on select financials and consumer discretionary positions.
Not all financials holdings detracted from performance. For example, Royal Bank of Scotland was a strong contributor. The company continued to be very cash generative and continued to be able to deliver resilient growth numbers. Finally, select telecommunications holdings such as Vodafone also contributed to performance.
Alex Tedder
Lead Manager
Clare Gray
Marc J. Slendebroek
Co-Managers
The Morgan Stanley Capital International (MSCI) Europe, Australia, the Far East (EAFE) & Canada Index is an unmanaged capitalization-weighted measure of stock markets in Europe, Australia, the Far East and Canada. Index returns assume reinvestment of dividends net of withholding tax and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
Past performance is not a guarantee of future results. Returns and principal value will fluctuate so that accumulation units, when redeemed, may be worth more or less than their original cost.
Total return measures net investment income and capital gain or loss from portfolio investments over the period specified, assuming reinvestment of all dividend and capital gain distributions. Total return reflects aggregate change. Performance is net of the portfolio's management fee and other operating expenses but does not include any deduction at the separate account or contract level for any insurance or surrender charge that may be incurred under a contract. Please see the prospectus for more details.
Portfolio management market commentary is as of June 30, 2003, and may not come to pass. This information is subject to change at any time, based on market and other conditions.
Investment Portfolio as of June 30, 2003 (Unaudited) |
|
International Portfolio
|
Shares
| Value ($) |
|
|
Common Stocks 99.4% |
Australia 2.5%
|
Australia & New Zealand Banking Group Ltd.
| 311,590
| 3,899,330
|
Telstra Corp., Ltd.
| 1,233,640
| 3,650,070
|
Westpac Banking Corp., Ltd.
| 265,197
| 2,897,888
|
| 10,447,288 |
Belgium 0.6%
|
Dexia
| 206,600
| 2,614,955 |
Brazil 0.5%
|
Companhia Vale do Rio Doce (ADR)
| 67,602
| 2,005,075 |
Canada 1.4%
|
Bank of Nova Scotia
| 56,300
| 2,506,857
|
Royal Bank of Canada
| 34,970
| 1,486,630
|
Sun Life Financial, Inc.
| 96,900
| 2,008,714
|
| 6,002,201 |
Finland 3.2%
|
Nokia Oyj (ADR)
| 264,900
| 4,352,307
|
Nokia Oyj
| 374,340
| 6,171,092
|
Stora Enso Oyj "R"
| 241,850
| 2,705,239
|
| 13,228,638 |
France 13.7%
|
Autoroutes du Sud de la France
| 114,666
| 3,354,819
|
Aventis SA
| 92,129
| 5,074,219
|
BNP Paribas SA
| 150,562
| 7,659,057
|
Compagnie de Saint-Gobain
| 86,387
| 3,403,370
|
Compagnie Generale des Etablissements Michelin "B"
| 43,560
| 1,702,603
|
Dassault Systemes SA
| 30,819
| 1,013,284
|
France Telecom SA
| 155,900
| 3,828,195
|
Groupe Danone*
| 24,281
| 3,363,568
|
Lafarge SA
| 1,628
| 95,449
|
Lafarge SA (Rights)*
| 36,237
| 97,896
|
Orange SA*
| 247,400
| 2,198,497
|
Sanofi-Synthelabo SA
| 32,815
| 1,923,930
|
Schneider Electric SA*
| 159,171
| 7,491,321
|
Total Fina Elf SA
| 108,333
| 16,389,409
|
| 57,595,617 |
Germany 8.4%
|
Allianz AG (Registered)
| 28,400
| 2,363,108
|
BASF AG
| 88,877
| 3,800,835
|
Bayerische Motoren Werke AG
| 61,588
| 2,371,852
|
DaimlerChrysler AG
| 73,500
| 2,568,666
|
Deutsche Telekom AG (Registered)
| 460,327
| 7,032,959
|
E.ON AG
| 157,846
| 8,123,951
|
SAP AG
| 10,100
| 1,192,445
|
Schering AG
| 52,700
| 2,579,663
|
Siemens AG
| 112,807
| 5,540,053
|
| 35,573,532 |
Hong Kong 0.8%
|
CNOOC Ltd.
| 835,000
| 1,220,643
|
Hutchison Whampoa Ltd.
| 345,000
| 2,101,406
|
| 3,322,049 |
Hungary 0.2%
|
OTP Bank Rt. (GDR)
| 50,192
| 966,196 |
India 0.4%
|
Infosys Technologies Ltd.
| 10,500
| 738,009
|
Ranbaxy Laboratories Ltd.
| 61,957
| 1,052,108
|
| 1,790,117 |
Ireland 0.5%
|
Bank of Ireland
| 173,100
| 2,099,405 |
Italy 3.4%
|
Assicurazioni Generali SpA
| 75,200
| 1,744,559
|
Autostrade Concessioni e Costruzioni Autostrade SpA
| 148,000
| 2,068,912
|
Eni SpA
| 432,870
| 6,553,751
|
UniCredito Italiano SpA
| 839,240
| 4,003,879
|
| 14,371,101 |
Japan 15.9%
|
Bridgestone Corp.
| 391,000
| 5,321,282
|
Canon, Inc.
| 144,000
| 6,624,697
|
Dai Nippon Printing Co., Ltd.
| 241,145
| 2,557,019
|
Fuji Photo Film Co., Ltd.
| 189,000
| 5,475,745
|
Fujisawa Pharmaceutical Co., Ltd.
| 134,000
| 2,517,325
|
Honda Motor Co., Ltd.
| 52,089
| 1,978,834
|
Kao Corp.
| 114,000
| 2,127,327
|
KDDI Corp.
| 646
| 2,508,057
|
Mitsubishi Corp.
| 1,001,000
| 6,961,952
|
Mitsui & Co.
| 511,000
| 2,568,440
|
Mitsui Fudosan Co., Ltd.
| 506,000
| 3,240,394
|
Nippon Telegraph & Telephone Corp.
| 590
| 2,320,197
|
Nissan Motor Co., Ltd.
| 448,657
| 4,300,394
|
Nomura Holdings, Inc.
| 498,480
| 6,342,853
|
Sony Corp.
| 65,871
| 1,858,929
|
Takeda Chemical Industries, Ltd.
| 96,000
| 3,550,806
|
Toyota Motor Corp.
| 261,600
| 6,792,820
|
| 67,047,071 |
Korea 2.2%
|
Samsung Electronics Co., Ltd.
| 31,234
| 9,282,604 |
Mexico 1.1%
|
Grupo Financiero BBVA Bancomer SA de CV "B"*
| 2,914,240
| 2,462,110
|
Telefonos de Mexico SA de CV "L" (ADR)
| 69,500
| 2,183,690
|
| 4,645,800 |
Netherlands 4.0%
|
ABN AMRO Holding NV*
| 111,528
| 2,134,739
|
ASML Holding NV*
| 160,640
| 1,527,235
|
ING Groep NV
| 74,800
| 1,301,030
|
Koninklijke (Royal) Philips Electronics NV
| 256,850
| 4,889,749
|
Reed Elsevier NV
| 194,030
| 2,290,794
|
TPG NV
| 145,970
| 2,537,243
|
Unilever NV
| 40,915
| 2,197,516
|
| 16,878,306 |
Russia 0.6%
|
LUKOIL (ADR)
| 33,300
| 2,630,700 |
South Africa 0.5%
|
Harmony Gold Mining Co., Ltd. (ADR)
| 152,500
| 2,054,175 |
Spain 3.7%
|
Banco Popular Espanol SA
| 50,660
| 2,562,504
|
Banco Santander Central Hispano SA
| 324,000
| 2,841,948
|
Iberdrola SA
| 181,100
| 3,139,543
|
Telefonica SA*
| 599,591
| 6,968,723
|
| 15,512,718 |
Sweden 1.6%
|
Sandvik AB
| 102,200
| 2,675,928
|
Skandinaviska Enskilda Banken "A"
| 198,800
| 2,024,946
|
Telefonaktiebolaget LM Ericsson "B"*
| 1,783,214
| 1,916,644
|
| 6,617,518 |
Switzerland 11.8%
|
Credit Suisse Group
| 257,400
| 6,785,204
|
Nestle SA (Registered)
| 53,124
| 10,979,117
|
Novartis AG (Registered)
| 239,765
| 9,502,665
|
Roche Holding AG
| 119,050
| 9,353,048
|
Swiss Re (Registered)*
| 91,616
| 5,084,133
|
Syngenta AG
| 61,568
| 3,091,147
|
UBS AG (Registered)
| 90,427
| 5,038,209
|
| 49,833,523 |
Taiwan 0.0%
|
Hon Hai Precision Industry Co., Ltd.
| 82
| 298 |
United Kingdom 22.4%
|
AstraZeneca PLC
| 205,762
| 8,275,529
|
BAA PLC
| 319,895
| 2,596,993
|
BHP Billiton PLC
| 544,500
| 2,874,835
|
BP PLC
| 1,429,811
| 9,945,135
|
British Sky Broadcasting Group PLC*
| 196,473
| 2,183,601
|
GlaxoSmithKline PLC
| 318,706
| 6,451,207
|
Granada Compass PLC
| 1,183,814
| 1,782,991
|
HBOS PLC
| 163,614
| 2,124,407
|
Hilton Group PLC
| 839,400
| 2,556,296
|
HSBC Holdings PLC
| 965,857
| 11,445,906
|
National Grid Transco PLC
| 624,093
| 4,245,369
|
Royal Bank of Scotland Group PLC
| 380,630
| 10,709,674
|
Scottish & Southern Energy PLC
| 393,176
| 4,060,653
|
Shell Transport & Trading Co., PLC
| 1,589,847
| 10,525,425
|
Tesco PLC
| 584,888
| 2,122,446
|
Vodafone Group PLC
| 6,422,865
| 12,597,125
|
| 94,497,592 |
Total Common Stocks (Cost $385,662,134)
| 419,016,479 |
Preferred Stocks 0.6% |
Germany
|
Henkel KGaA (Cost $2,521,775)
| 40,117
| 2,486,248 |
|
Cash Equivalents 0.0% |
Scudder Cash Management QP Trust, 1.15% (b) (Cost $196,377)
| 196,377
| 196,377 |
Total Investment Portfolio - 100.0% (Cost $388,380,286) (a)
| 421,699,104 |
At June 30, 2003, the International Portfolio had the following industry diversification:Industry | Value | | Percent |
Financials
| $ 98,348,635 | | 23.3% |
Health Care
| 50,280,500 | | 11.9% |
Energy
| 47,265,063 | | 11.2% |
Consumer Discretionary
| 46,074,556 | | 10.9% |
Industrials
| 43,857,456 | | 10.5% |
Telecommunication Services
| 43,287,513 | | 10.3% |
Information Technology
| 32,818,615 | | 7.8% |
Consumer Staples
| 23,276,222 | | 5.5% |
Utilities
| 19,569,516 | | 4.6% |
Other
| 16,724,651 | | 4.0% |
Total Common and Preferred Stocks
| 421,502,727 | | 100.0% |
Cash Equivalents
| 196,377 | | 0.0% |
Total Investment Portfolio
| $ 421,699,104 | | 100.0% |
* Non-income producing security.(a) The cost for federal income tax purposes was $394,830,601. At June 30, 2003, net unrealized appreciation for all securities based on tax cost was $26,868,503. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $37,122,506 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $10,254,003.(b) Scudder Cash Management QP Trust is also managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.Purchases and sales of investment securities (excluding short-term investments), for the six months ended June 30, 2003, aggregated $245,868,006 and $246,931,631, respectively.
At December 31, 2002, the International Portfolio had a net tax basis capital loss carryforward of approximately $238,434,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2009 ($133,060,000) and December 31, 2010 ($105,374,000), the respective expiration dates, whichever occurs first.
In addition, from November 1, 2002 through December 31, 2002, the International Portfolio incurred approximately $5,017,000 of net realized capital losses. As permitted by tax regulations, the Portfolio intends to elect to defer these losses and treat them as arising in the fiscal year ending December 31, 2003.
The accompanying notes are an integral part of the financial statements.
International Portfolio
Statement of Assets and Liabilities as of June 30, 2003 (Unaudited) |
Assets
|
Investments in securities, at value (cost $388,183,909)
| $ 421,502,727 |
Investment in Scudder Cash Management QP Trust (cost $196,377)
| 196,377 |
Foreign currency, at value (cost $13,149,349)
| 13,189,686 |
Receivable for investments sold
| 11,771,565 |
Dividends receivable
| 792,333 |
Receivable for Portfolio shares sold
| 524,507 |
Foreign taxes recoverable
| 542,626 |
Total assets
| 448,519,821 |
Liabilities
|
Payable for investments purchased
| 11,296,726 |
Payable for Portfolio shares redeemed
| 1,569,556 |
Accrued management fee
| 320,141 |
Other accrued expenses and payables
| 146,764 |
Total liabilities
| 13,333,187 |
Net assets, at value
| $ 435,186,634 |
Net Assets
|
Net assets consist of:
Undistributed net investment income
| 5,011,959 |
Net unrealized appreciation (depreciation) on:
Investments
| 33,318,818 |
Foreign currency related transactions
| 168,653 |
Accumulated net realized gain (loss)
| (274,674,046) |
Paid-in capital
| 671,361,250 |
Net assets, at value
| $ 435,186,634 |
Net Asset Value
|
Class A Net Asset Value, offering and redemption price per share ($421,028,054 / 61,643,155 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 6.83 |
Class B Net Asset Value, offering and redemption price per share ($14,158,580 / 2,075,235 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 6.82 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended June 30, 2003 (Unaudited) |
Investment Income
|
Income:
Dividends (net of foreign taxes withheld of $1,092,905)
| $ 7,241,609 |
Interest
| 150,969 |
Interest - Scudder Cash Management QP Trust
| 22,323 |
Total Income
| 7,414,901 |
Expenses:
Management fee
| 1,779,156 |
Custodian fees
| 144,353 |
Accounting fees
| 167,127 |
Distribution service fees (Class B)
| 12,623 |
Record keeping fees (Class B)
| 415 |
Auditing
| 12,055 |
Legal
| 14,513 |
Trustees' fees and expenses
| 7,436 |
Reports to shareholders
| 4,147 |
Other
| 16,878 |
Total expenses
| 2,158,703 |
Net investment income (loss)
| 5,256,198 |
Realized and Unrealized Gain (Loss) on Investment Transactions
|
Net realized gain (loss) from:
Investments
| (22,703,634) |
Foreign currency related transactions
| 321,444 |
| (22,382,190) |
Net unrealized appreciation (depreciation) during the period on:
Investments
| 40,877,349 |
Foreign currency related transactions
| 79,716 |
| 40,957,065 |
Net gain (loss) on investment transactions
| 18,574,875 |
Net increase (decrease) in net assets resulting from operations
| $ 23,831,073 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| Six Months Ended June 30, 2003 (Unaudited) | Year Ended December 31, 2002 |
Operations:
Net investment income (loss)
| $ 5,256,198 | $ 3,622,445 |
Net realized gain (loss) on investment transactions
| (22,382,190) | (94,462,069) |
Net unrealized appreciation (depreciation) on investment transactions during the period
| 40,957,065 | 10,724,925 |
Net increase (decrease) in net assets resulting from operations
| 23,831,073 | (80,114,699) |
Distributions to shareholders from:
Net investment income:
Class A
| (3,294,533) | (3,979,977) |
Class B
| (65,246) | (25,865) |
Portfolio share transactions:
Class A
Proceeds from shares sold
| 85,429,542 | 3,252,979,447 |
Reinvestment of distributions
| 3,294,533 | 3,979,977 |
Cost of shares redeemed
| (99,705,540) | (3,274,235,277) |
Net increase (decrease) in net assets from Class A share transactions
| (10,981,465) | (17,275,853) |
Class B
Proceeds from shares sold
| 6,016,695 | 6,033,545 |
Reinvestment of distributions
| 65,246 | 25,865 |
Cost of shares redeemed
| (363,105) | (544,773) |
Net increase (decrease) in net assets from Class B share transactions
| 5,718,836 | 5,514,637 |
Increase (decrease) in net assets
| 15,208,665 | (95,881,757) |
Net assets at beginning of period
| 419,977,969 | 515,859,726 |
Net assets at end of period (including undistributed net investment income of $5,011,959 and $3,115,540, respectively)
| $ 435,186,634 | $ 419,977,969 |
Other Information
|
Class A
Shares outstanding at beginning of period
| 63,268,457 | 63,646,512 |
Shares sold
| 13,341,601 | 423,618,009 |
Shares issued to shareholders in reinvestment of distributions
| 522,046 | 507,650 |
Shares redeemed
| (15,488,949) | (424,503,714) |
Net increase (decrease) in Portfolio shares
| (1,625,302) | (378,055) |
Shares outstanding at end of period
| 61,643,155 | 63,268,457 |
Class B
Shares outstanding at beginning of period
| 1,173,516 | 400,769 |
Shares sold
| 946,861 | 845,134 |
Shares issued to shareholders in reinvestment of distributions
| 10,356 | 3,303 |
Shares redeemed
| (55,498) | (75,690) |
Net increase (decrease) in Portfolio shares
| 901,719 | 772,747 |
Shares outstanding at end of period
| 2,075,235 | 1,173,516 |
The accompanying notes are an integral part of the financial statements.
International Portfolio
Class A
Years Ended December 31, | 2003a | 2002 | 2001 | 2000 | 1999 | 1998 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 6.52 | $ 8.05 | $ 14.26 | $ 20.34 | $ 14.56 | $ 14.11 |
Income (loss) from investment operations:
Net investment incomeb
| .08 | .05 | .06 | .08 | .12c | .13 |
Net realized and unrealized gain (loss) on investment transactions
| .28 | (1.52) | (3.97) | (4.24) | 7.17 | 2.29 |
Total from investment operations | .36 | (1.47) | (3.91) | (4.16) | 7.29 | 2.42 |
Less distributions from:
Net investment income
| (.05) | (.06) | (.05) | (.09) | (.02) | (.26) |
Net realized gains on investment transactions
| - | - | (2.25) | (1.83) | (1.49) | (1.71) |
Total distributions | (.05) | (.06) | (2.30) | (1.92) | (1.51) | (1.97) |
Net asset value, end of period
| $ 6.83 | $ 6.52 | $ 8.05 | $ 14.26 | $ 20.34 | $ 14.56 |
Total Return (%)
| 5.63** | (18.37) | (30.86) | (21.70) | 54.51 | 18.49 |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 421 | 412 | 513 | 720 | 874 | 509 |
Ratio of expenses before expense reductions (%)
| 1.06* | 1.03 | 1.01d | .96 | 1.03 | 1.04 |
Ratio of expenses after expense reductions (%)
| 1.06* | 1.03 | 1.00d | .96 | 1.03 | 1.04 |
Ratio of net investment income (loss) (%)
| .75e | .73 | .64 | .48 | .76 | .90 |
Portfolio turnover rate (%)
| 125* | 123 | 105 | 79 | 86 | 71 |
Class B
Years Ended December 31, | 2003a | 2002 | 2001 | 2000 | 1999 | 1998 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 6.50 | $ 8.03 | $ 14.19 | $ 20.24 | $ 14.51 | $ 14.08 |
Income (loss) from investment operations:
Net investment incomeb
| .07 | .04 | .05 | .04 | .08c | .10 |
Net realized and unrealized gain (loss) on investment transactions
| .29 | (1.53) | (3.94) | (4.22) | 7.14 | 2.29 |
Total from investment operations | .36 | (1.49) | (3.89) | (4.18) | 7.22 | 2.39 |
Less distributions from:
Net investment income
| (.04) | (.04) | (.02) | (.04) | - | (.25) |
Net realized gains on investment transactions
| - | - | (2.25) | (1.83) | (1.49) | (1.71) |
Total distributions | (.04) | (.04) | (2.27) | (1.87) | (1.49) | (1.96) |
Net asset value, end of period
| $ 6.82 | $ 6.50 | $ 8.03 | $ 14.19 | $ 20.24 | $ 14.51 |
Total Return (%)
| 5.54** | (18.62) | (30.81) | (21.89) | 54.13 | 18.28 |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 14 | 8 | 3 | .77 | .69 | .37 |
Ratio of expenses before expense reductions (%)
| 1.32* | 1.28 | 1.26d | 1.21 | 1.28 | 1.28 |
Ratio of expenses after expense reductions (%)
| 1.32* | 1.28 | 1.25d | 1.21 | 1.28 | 1.28 |
Ratio of net investment income (loss) (%)
| .49e | .48 | .39 | .23 | .53 | .69 |
Portfolio turnover rate (%)
| 125* | 123 | 105 | 79 | 86 | 71 |
a For the six months ended June 30, 2003 (Unaudited).bBased on average shares outstanding during the period.c Net investment income per share includes non-recurring dividend income amounting to $.03 per share.d The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 1.00% and 1.00%, and 1.25% and 1.25% for Class A and Class B, respectively.e The ratio for the six months ended June 30, 2003 has not been annualized since the Portfolio believes it would not be appropriate because the Portfolio's income is not earned ratable throughout the fiscal year.* Annualized ** Not annualizedManagement Summary June 30, 2003 |
|
Health Sciences Portfolio
Scudder Health Sciences Portfolio posted a strong positive return of 19.29% (Class A shares) for the semiannual period, outperforming both of its benchmarks, the Standard & Poor's 500 (S&P 500) index, which returned 11.76%, and the Goldman Sachs Healthcare Index, which gained 15.69%. The portfolio's biotechnology holdings, which included stocks such as Gilead Sciences and Amgen, provided solid gains for the period. Large-cap pharmaceutical giant Wyeth, one of the portfolio's biggest holdings, made a strong showing, and the portfolio's significant exposure to generic drug stocks also added nicely to performance. In the health care services area, pharmacy benefit management company Caremark Rx saw a healthy pickup in its stock. It benefited from the increased use of generics and mail-order drug services, and investors looked favorably on its biotechnology drug distribution business. Shares of health care services company McKesson also increased during the period. The portfolio was hurt by its exposure to hospitals, plagued by falling admission trends. Orthopedic stocks were another area of weakness. In addition, because the portfolio is diversified across the health care sector, it was not able to participate in the full upside of the biotechnology comeback that occurred in the second quarter. We believe a confluence of factors bodes well for health care, including a more favorable regulatory environment at the Food and Drug Administration, positive clinical results on many fronts and potential Medicare drug legislation that could be a boon for the generics industry.
James E. Fenger
Leefin Lai
Thomas Bucher
Co-Managers
The Standard & Poor's 500 (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.
The Goldman Sachs Healthcare Index is a market capitalization-weighted index of 114 stocks designed to measure the performance of companies in the health care sector.
Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
Past performance is not a guarantee of future results. Returns and principal value will fluctuate so that accumulation units, when redeemed, may be worth more or less than their original cost.
Total return measures net investment income and capital gain or loss from portfolio investments over the period specified, assuming reinvestment of all dividend and capital gain distributions. Total return reflects aggregate change. Performance is net of the portfolio's management fee and other operating expenses but does not include any deduction at the separate account or contract level for any insurance or surrender charge that may be incurred under a contract. Please see the prospectus for more details.
Portfolio management market commentary is as of June 30, 2003, and may not come to pass. This information is subject to change at any time, based on market and other conditions.
Investment Portfolio as of June 30, 2003 (Unaudited) |
|
Health Sciences Portfolio
|
Shares
| Value ($) |
|
|
Common Stocks 96.3% |
Health Care
|
Biotechnology 19.8%
|
Adolor Corp.*
| 57,300
| 703,071
|
Amgen, Inc.*
| 39,750
| 2,621,115
|
Amylin Pharmaceuticals, Inc.*
| 48,300
| 1,057,287
|
Atrix Laboratories, Inc.*
| 11,600
| 255,084
|
Biogen, Inc.*
| 15,400
| 585,200
|
Celgene Corp.*
| 40,700
| 1,237,280
|
Cephalon, Inc.*
| 7,300
| 300,468
|
Genentech, Inc.*
| 6,800
| 490,416
|
Gilead Sciences, Inc.*
| 36,500
| 2,028,670
|
IDEC Pharmaceuticals Corp.*
| 47,100
| 1,601,400
|
ILEX Oncology, Inc.*
| 73,700
| 1,430,517
|
Inspire Pharmaceuticals, Inc.*
| 61,450
| 663,660
|
InterMune, Inc.*
| 46,400
| 747,504
|
Medicines Co.*
| 40,300
| 802,776
|
MedImmune, Inc.*
| 17,700
| 643,749
|
MGI Pharma, Inc.*
| 22,500
| 576,675
|
Neurocrine Biosciences, Inc.*
| 15,800
| 789,052
|
NPS Pharmaceuticals, Inc.*
| 62,200
| 1,513,948
|
| 18,047,872 |
Health Care Services 19.4%
|
AdvancePCS*
| 22,000
| 841,060
|
Aetna, Inc.
| 8,200
| 493,640
|
AmerisourceBergen Corp.
| 29,000
| 2,011,150
|
Anthem, Inc.*
| 25,600
| 1,975,040
|
Cardinal Health, Inc.
| 11,900
| 765,170
|
Caremark Rx, Inc.*
| 140,700
| 3,613,176
|
First Health Group Corp.*
| 56,200
| 1,551,120
|
Health Management Associates, Inc.
| 31,500
| 581,175
|
McKesson Corp.
| 54,600
| 1,951,404
|
UnitedHealth Group, Inc.
| 38,500
| 1,934,625
|
Wellpoint Health Networks, Inc.*
| 24,000
| 2,023,200
|
| 17,740,760 |
Hospital Management 5.1%
|
HCA, Inc.
| 65,100
| 2,085,804
|
Laboratory Corp. of America Holdings*
| 24,900
| 750,735
|
Triad Hospitals, Inc.*
| 27,500
| 682,550
|
Universal Health Services, Inc. "B"*
| 28,100
| 1,113,322
|
| 4,632,411 |
Life Science Equipment 2.2%
|
Charles River Laboratories International, Inc.*
| 14,500
| 466,610
|
Fisher Scientific International, Inc.*
| 45,100
| 1,573,990
|
| 2,040,600 |
Medical Supply & Specialty 13.0%
|
Abbott Laboratories
| 26,500
| 1,159,640
|
Baxter International, Inc.
| 47,700
| 1,240,200
|
Biomet, Inc.
| 34,600
| 991,636
|
Boston Scientific Corp.*
| 28,400
| 1,735,240
|
Diagnostic Products Corp.
| 28,400
| 1,165,820
|
Guidant Corp.
| 11,800
| 523,802
|
Johnson & Johnson
| 16,800
| 868,560
|
Medtronic, Inc.
| 28,400
| 1,362,348
|
Smith & Nephew PLC
| 146,965
| 847,090
|
St. Jude Medical, Inc.*
| 18,000
| 1,035,000
|
Zimmer Holdings, Inc.*
| 20,900
| 941,545
|
| 11,870,881 |
Pharmaceuticals 36.8%
|
Alcon, Inc.
| 33,300
| 1,521,810
|
Allergan, Inc.
| 12,900
| 994,590
|
Alpharma, Inc.
| 27,900
| 602,640
|
Altana AG*
| 24,083
| 1,521,058
|
AstraZeneca PLC
| 12,511
| 503,179
|
Aventis SA
| 24,147
| 1,329,952
|
Barr Laboratories, Inc.*
| 12,000
| 786,000
|
Biovail Corp.*
| 20,500
| 964,730
|
Eli Lilly & Co.
| 26,400
| 1,820,808
|
Forest Laboratories, Inc.*
| 30,860
| 1,689,585
|
GlaxoSmithKline PLC (ADR)
| 35,400
| 1,435,116
|
King Pharmaceuticals, Inc.*
| 66,733
| 984,979
|
KYORIN Pharmaceutical Co., Ltd.
| 23,000
| 315,321
|
Merck & Co., Inc.
| 8,800
| 532,840
|
Mylan Laboratories, Inc.
| 24,550
| 853,604
|
Novartis AG (Registered)
| 34,096
| 1,351,335
|
Pfizer, Inc.
| 154,140
| 5,263,881
|
Pharmaceutical Resources, Inc.*
| 34,800
| 1,693,368
|
Roche Holding AG
| 19,948
| 1,567,195
|
Sanofi-Synthelabo SA
| 13,860
| 812,606
|
SICOR, Inc.*
| 33,700
| 685,458
|
Taro Pharmaceutical Industries Ltd.*
| 11,900
| 653,072
|
Teva Pharmaceutical Industries Ltd. (ADR)
| 30,200
| 1,719,286
|
Watson Pharmaceuticals, Inc.*
| 6,400
| 258,368
|
Wyeth
| 83,900
| 3,821,645
|
| 33,682,426 |
Total Common Stocks (Cost $77,748,471)
| 88,014,950 |
|
Cash Equivalents 3.7% |
Scudder Cash Management QP Trust, 1.15% (b) (Cost $3,424,071)
| 3,424,071
| 3,424,071 |
Total Investment Portfolio - 100.0% (Cost $81,172,542) (a)
| 91,439,021 |
* Non-income producing security.(a) The cost for federal income tax purposes was $82,063,172. At June 30, 2003, net unrealized appreciation for all securities based on tax cost was $9,375,849. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $14,130,472 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $4,754,623.(b) Scudder Cash Management QP Trust is also managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.Purchases and sales of investment securities (excluding short-term investments), for the six months ended June 30, 2003, aggregated $30,910,094 and $24,216,801, respectively.
At December 31, 2002, the Health Sciences Portfolio had a net tax basis capital loss carryforward of approximately $7,821,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2009 ($305,000) and December 31, 2010 ($7,516,000), the respective expiration dates, whichever occurs first.
From November 1, 2002 through December 31, 2002, the Health Sciences Portfolio incurred approximately $932,000 of net realized capital losses. As permitted by tax regulations, the Portfolio intends to elect to defer these losses and treat them as arising in the fiscal year ending December 31, 2003.
The accompanying notes are an integral part of the financial statements.
Health Sciences Portfolio
Statement of Assets and Liabilities as of June 30, 2003 (Unaudited) |
Assets
|
Investments in securities, at value (cost $77,748,471)
| $ 88,014,950 |
Investment in Scudder Cash Management QP Trust (cost $3,424,071)
| 3,424,071 |
Cash
| 10,000 |
Foreign currency, at value (cost $1,401)
| 1,398 |
Dividends receivable
| 19,067 |
Receivable for Portfolio shares sold
| 56,316 |
Foreign taxes recoverable
| 9,068 |
Other assets
| 768 |
Total assets
| 91,535,638 |
Liabilities
|
Payable for Portfolio shares redeemed
| 42,037 |
Accrued management fee
| 55,089 |
Other accrued expenses and payables
| 29,942 |
Total liabilities
| 127,068 |
Net assets, at value
| $ 91,408,570 |
Net Assets
|
Net assets consist of:
Accumulated net investment loss
| (67,521) |
Net unrealized appreciation (depreciation) on:
Investments
| 10,266,479 |
Foreign currency related transactions
| 420 |
Accumulated net realized gain (loss)
| (12,258,577) |
Paid-in capital
| 93,467,769 |
Net assets, at value
| $ 91,408,570 |
Net Asset Value
|
Class A Net Asset Value, offering and redemption price per share ($86,587,729 / 8,862,589 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 9.77 |
Class B Net Asset Value, offering and redemption price per share ($4,820,841 / 494,412 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)
| $ 9.75 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended June 30, 2003 (Unaudited) |
Investment Income
|
Income:
Dividends (net of foreign taxes withheld of $11,937)
| $ 253,212 |
Interest - Scudder Cash Management QP Trust
| 20,355 |
Total Income
| 273,567 |
Expenses:
Management fee
| 283,808 |
Custodian fees
| 6,970 |
Accounting fees
| 22,682 |
Distribution service fees (Class B)
| 2,489 |
Record keeping fees (Class B)
| 925 |
Auditing
| 11,308 |
Legal
| 2,121 |
Trustees' fees and expenses
| 2,857 |
Reports to shareholders
| 5,176 |
Other
| 2,752 |
Total expenses
| 341,088 |
Net investment income (loss)
| (67,521) |
Realized and Unrealized Gain (Loss) on Investment Transactions
|
Net realized gain (loss) from:
Investments
| (2,407,962) |
Foreign currency related transactions
| 18,038 |
| (2,389,924) |
Net unrealized appreciation (depreciation) during the period on:
Investments
| 16,427,088 |
Foreign currency related transactions
| 114 |
| 16,427,202 |
Net gain (loss) on investment transactions
| 14,037,278 |
Net increase (decrease) in net assets resulting from operations
| $ 13,969,757 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| Six Months Ended June 30, 2003 (Unaudited) | Year Ended December 31, 2002 |
Operations:
Net investment income (loss)
| $ (67,521) | $ (265,275) |
Net realized gain (loss) on investment transactions
| (2,389,924) | (9,367,556) |
Net unrealized appreciation (depreciation) on investment transactions during the period
| 16,427,202 | (8,652,894) |
Net increase (decrease) in net assets resulting from operations
| 13,969,757 | (18,285,725) |
Portfolio share transactions:
Class A
Proceeds from shares sold
| 10,438,732 | 42,730,716 |
Cost of shares redeemed
| (6,320,761) | (11,443,796) |
Net increase (decrease) in net assets from Class A share transactions
| 4,117,971 | 31,286,920 |
Class B
Proceeds from shares sold
| 4,055,304 | 375,318 |
Cost of shares redeemed
| (37,922) | (51,305) |
Net increase (decrease) in net assets from Class B share transactions
| 4,017,382 | 324,013 |
Increase (decrease) in net assets
| 22,105,110 | 13,325,208 |
Net assets at beginning of period
| 69,303,460 | 55,978,252 |
Net assets at end of period (including accumulated net investment loss of $67,521 at June 30, 2003)
| $ 91,408,570 | $ 69,303,460 |
Other Information
|
Class A
Shares outstanding at beginning of period
| 8,419,124 | 5,257,558 |
Shares sold
| 1,199,136 | 4,518,361 |
Shares redeemed
| (755,671) | (1,356,795) |
Net increase (decrease) in Portfolio shares
| 443,465 | 3,161,566 |
Shares outstanding at end of period
| 8,862,589 | 8,419,124 |
Class B
Shares outstanding at beginning of period
| 39,123 | - |
Shares sold
| 459,173 | 45,098 |
Shares redeemed
| (3,884) | (5,975) |
Net increase (decrease) in Portfolio shares
| 455,289 | 39,123 |
Shares outstanding at end of period
| 494,412 | 39,123 |
The accompanying notes are an integral part of the financial statements.
Health Sciences Portfolio
Class A
Years Ended December 31, | 2003a | 2002 | 2001b |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 8.19 | $ 10.65 | $ 10.00 |
Income (loss) from investment operations:
Net investment income (loss)d
| (.01) | (.03) | (.02) |
Net realized and unrealized gain (loss) on investment transactions
| 1.59 | (2.43) | .67 |
Total from investment operations | 1.58 | (2.46) | .65 |
Net asset value, end of period
| $ 9.77 | $ 8.19 | $ 10.65 |
Total Return (%)
| 19.29** | (23.10) | 6.50e** |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 87 | 69 | 56 |
Ratio of expenses before expense reductions (%)
| .89* | .91 | 1.40* |
Ratio of expenses after expense reductions (%)
| .89* | .91 | .95* |
Ratio of net investment income (loss) (%)
| (.17)* | (.38) | (.25)* |
Portfolio turnover rate (%)
| 66* | 53 | 34* |
Class B
| 2003a | 2002c |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 8.19 | $ 8.09 |
Income (loss) from investment operations:
Net investment income (loss)d
| (.02) | (.04) |
Net realized and unrealized gain (loss) on investment transactions
| 1.58 | .14 |
Total from investment operations | 1.56 | .10 |
Net asset value, end of period
| $ 9.75 | $ 8.19 |
Total Return (%)
| 19.05** | 1.24** |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 5 | .3 |
Ratio of expenses (%)
| 1.24* | 1.16* |
Ratio of net investment income (loss) (%)
| (.52)* | (.92)* |
Portfolio turnover rate (%)
| 66* | 53 |
a For the six months ended June 30, 2003 (Unaudited).b For the period May 1, 2001 (commencement of operations) to December 31, 2001.c For the period July 1, 2002 (commencement of sales of Class B shares) to December 31, 2002.d Based on average shares outstanding during the period.e Total return would have been lower had certain expenses not been reduced.* Annualized** Not annualizedNotes to Financial Statements (Unaudited) |
|
A. Significant Accounting Policies
Scudder Variable Series I (the "Fund") is registered under the Investment Company Act of 1940 (the "1940 Act"), as amended, as an open-end, registered management investment company organized as a Massachusetts business trust. The Fund is a series fund consisting of eight diversified portfolios: Money Market Portfolio, Bond Portfolio, Balanced Portfolio, Growth and Income Portfolio, Capital Growth Portfolio, 21st Century Growth Portfolio, Global Discovery Portfolio and International Portfolio, and one non-diversified portfolio: Health Sciences Portfolio (individually or collectively hereinafter referred to as a "Portfolio" or the "Portfolios"). The Fund is intended to be the underlying investment vehicle for variable annuity contracts and variable life insurance policies to be offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies").
Multiple Classes of Shares of Beneficial Interest. The Fund offers one class of shares for the Money Market Portfolio and two classes of shares (Class A shares and Class B shares) for each of the other Portfolios. Class B shares are subject to Rule 12b-1 fees under the 1940 Act and record keeping fees equal to an annual rate of up to 0.25% and up to 0.15%, respectively, of the average daily net assets of the Class B shares of the applicable Portfolio. Class A shares are not subject to such fees. Class B shares for certain Portfolios have not been funded, and thus are not shown in these financial statements.
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 (including the applicable 12b-1 fee and record keeping fees). Differences in class-level expenses may result in payment of different per share dividends by class. All shares have equal rights with respect to voting subject to class-specific arrangements.
The 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 the financial statements for its Portfolios.
Security Valuation. The Money Market Portfolio values all securities utilizing the amortized cost method permitted in accordance with Rule 2a-7 under the 1940 Act and certain conditions therein. Under this method, which does not take into account unrealized capital gains or losses on securities, an instrument is initially valued at its cost and thereafter assumes a constant accretion/amortization to maturity of any discount or premium.
Securities in each of the remaining Portfolios are valued in the following manner:
Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading. Equity securities are valued at the most recent sale price reported on the exchange (US or foreign) or over-the-counter market on which the security is traded most extensively. Securities for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation.
Debt securities are valued by independent pricing services approved by the Trustees of the Fund. If the pricing services are unable to provide valuations, securities are valued at the most recent bid quotation or evaluated price, as applicable, obtained from one or more broker-dealers. Such services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes.
Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost. Investments in open-end investment companies and Scudder Cash Management QP Trust are valued at their net asset value each business day.
Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Trustees.
Foreign Currency Translations. The books and records of the Portfolios are maintained in US dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into US dollars at the prevailing exchange rates at period end. Purchases and sales of investment securities, income and expenses are translated into US dollars at the prevailing exchange rates on the respective dates of the transactions.
Net realized and unrealized gains and losses on foreign currency transactions represent net gains and losses between trade and settlement dates on securities transactions, the disposition of forward foreign currency exchange contracts and foreign currencies, and the difference between the amount of net investment income accrued and the US dollar amount actually received. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed but is included with net realized and unrealized gains and losses on investment securities.
Repurchase Agreements. Each Portfolio may enter into repurchase agreements with certain banks and broker/dealers whereby the Portfolio, through its custodian or sub-custodian bank, receives delivery of the underlying securities, the amount of which at the time of purchase and each subsequent business day is required to be maintained at such a level that the value is equal to at least the principal amount of the repurchase price plus accrued interest.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange contract ("forward currency contract") is a commitment to purchase or sell a foreign currency at the settlement date at a negotiated rate. A portfolio may enter into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign currency denominated portfolio holdings and to facilitate transactions in foreign currency denominated securities.
Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies and unrealized gain (loss) is recorded daily. Sales and purchases of forward currency contracts having the same settlement date and broker are offset and any gain (loss) is realized on the date of offset; otherwise, gain (loss) is realized on settlement date. Realized and unrealized gains and losses which represent the difference between the value of a forward currency contract to buy and a forward currency contract to sell are included in net realized and unrealized gain (loss) from foreign currency related transactions.
Certain risks may arise upon entering into forward currency contracts from the potential inability of counterparties to meet the terms of their contracts. Additionally, when utilizing forward currency contracts to hedge, a portfolio gives up the opportunity to profit from favorable exchange rate movements during the term of the contract.
The Global Discovery Portfolio and International Portfolio entered into forward currency contracts during the six months ended June 30, 2003.
Mortgage Dollar Rolls. The Bond Portfolio and Balanced Portfolio may enter into mortgage dollar rolls in which the Portfolio sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase similar, but not identical, securities on a fixed date. The Portfolio receives compensation as consideration for entering into the commitment to repurchase. The compensation is paid in the form of a lower price for the security upon its repurchase or, alternatively, a fee. Mortgage dollar rolls may be renewed with a new sale and repurchase price and a cash settlement made at each renewal without physical delivery of the securities subject to the contract.
Certain risks may arise upon entering into mortgage dollar rolls from the potential inability of counterparties to meet the terms of their commitments. Additionally, the value of such securities may change adversely before the Portfolio is able to repurchase them. At the time the Portfolio enters into this type of transaction it is required to segregate cash or other liquid assets at least equal to the amount of the commitment.
The Bond Portfolio and Balanced Portfolio entered into mortgage dollar rolls during the six months ended June 30, 2003.
When-Issued/Delayed Delivery Securities. Each Portfolio may purchase securities with delivery or payment to occur at a later date beyond the normal settlement period. At the time a Portfolio enters into a commitment to purchase a security, the transaction is recorded and the value of the security is reflected in the net asset value. The price of such security and the date when the security will be delivered and paid for are fixed at the time the transaction is negotiated. The value of the security may vary with market fluctuations. No interest accrues to the Portfolio until payment takes place. At the time the Portfolio enters into this type of transaction it is required to segregate cash or other liquid assets at least equal to the amount of the commitment.
Certain risks may arise upon entering when-issued or delayed delivery securities from the potential inability of counterparties to meet the terms of their contracts or if the issuer does not issue the securities due to political, economic, or other factors. Additionally, losses may arise due to changes in the value of the underlying securities.
Federal Income Taxes. Each Portfolio is treated as a separate taxpayer as provided for in the Internal Revenue Code of 1986, as amended. It is each Portfolio's policy to comply with the requirements of the Internal Revenue Code, which are applicable to regulated investment companies, and to distribute all of its taxable income to the separate accounts of the Participating Insurance Companies which hold its shares. Accordingly, the Portfolios paid no federal income taxes and no federal income tax provision was required.
Distribution of Income and Gains. All of the net investment income of the Money Market Portfolio is declared as a daily dividend and is distributed to shareholders monthly. All other Portfolios will declare and distribute dividends from their net investment income, if any, in April, although additional distributions may be made if necessary. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to each Portfolio if not distributed, and, therefore, will be distributed to shareholders at least annually.
The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to investments in forward currency contracts, passive foreign investment companies, post October loss deferrals, non-taxable distributions and certain securities sold at a loss. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, each Portfolio may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Portfolio.
At December 31, 2002, the Portfolios' components of distributable earnings (accumulated losses) on a tax-basis are as follows:
Portfolio | Undistributed ordinary income* | Undistributed net long-term capital gains | Capital loss carryforwards | Net unrealized gain (loss) on investments |
Money Market Portfolio
| $ - | $ - | $ (5,000) | $ - |
Bond Portfolio
| 7,708,562 | - | (5,987,000) | 4,515,960 |
Balanced Portfolio
| 3,172,174 | - | (13,851,000) | (8,660,129) |
Growth and Income Portfolio
| 1,465,168 | - | (34,898,000) | (15,799,640) |
Capital Growth Portfolio
| 2,456,756 | - | (139,068,000) | (105,143,913) |
21st Century Growth Portfolio
| - | - | (22,643,000) | (4,193,741) |
Global Discovery Portfolio
| 122,995 | - | (50,485,000) | (17,671,464) |
International Portfolio
| 3,157,149 | - | (238,434,000) | (16,399,523) |
Health Sciences Portfolio
| - | - | (7,821,000) | (7,276,775) |
In addition, the tax character of distributions paid by the Portfolios are summarized as follows:
Portfolio | Distributions from ordinary income*
Years Ended December 31 | Distributions from long-term capital gains
Years Ended December 31 |
2002 | 2001 | 2002 | 2001 |
Money Market Portfolio
| $ 1,806,754 | $ 4,834,222 | $ - | $ - |
Bond Portfolio
| 8,568,166 | 6,205,341 | - | - |
Balanced Portfolio
| 4,309,159 | 4,704,742 | - | 7,232,663 |
Growth and Income Portfolio
| 1,662,988 | 2,209,728 | - | 4,219,419 |
Capital Growth Portfolio
| 2,359,330 | 3,674,000 | - | 116,417,367 |
21st Century Growth Portfolio
| - | - | - | - |
Global Discovery Portfolio
| - | - | - | 2,840,073 |
International Portfolio
| 4,005,842 | 2,534,966 | - | 118,912,248 |
Health Sciences Portfolio
| - | - | - | - |
* For tax purposes short-term capital gains distributions are considered ordinary income distributions.The tax character of current year distributions, if any, will be determined at the end of the current fiscal year.
Expenses. Each Portfolio is charged for those expenses which are directly attributable to it, such as management fees and custodian fees, while other expenses (reports to shareholders, legal and audit fees) are allocated among the Portfolios.
Other. Investment transactions are accounted for on the trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Certain dividends from foreign securities may be recorded subsequent to the ex-dividend date as soon as the Portfolio is informed of such dividends. Realized gains and losses from investment transactions are recorded on an identified cost basis. All discounts and premiums are accreted/amortized for both tax and financial reporting purposes.
B. Related Parties
Under the Management Agreement with Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), 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.
Under the Trust's management agreement with the Advisor, the Portfolios pay a monthly investment management fee, based on the average daily net assets of each Portfolio, payable monthly, at the annual rates shown below:
Portfolio | Annual Management Fee Rate |
Money Market Portfolio
| 0.370% |
Bond Portfolio
| 0.475% |
Balanced Portfolio
| 0.475% |
Growth and Income Portfolio
| 0.475% |
21st Century Growth Portfolio
| 0.875% |
Global Discovery Portfolio
| 0.975% |
The Capital Growth Portfolio pays the Advisor a graduated investment management fee, based on the average daily net assets of the Portfolio, payable monthly, at the annual rates shown below:
Average Daily Net Assets of the Portfolio | Annual Management Fee Rate |
first $500 million
| 0.475% |
next $500 million
| 0.450% |
over $1 billion
| 0.425% |
For the six months ended June 30, 2003, the Capital Growth Portfolio incurred a management fee equivalent to an annualized effective rate of 0.472% of the Portfolio's average daily net assets.
The International Portfolio pays the Advisor a graduated investment management fee, based on the average daily net assets of the Portfolio, payable monthly, at the annual rates shown below:
Average Daily Net Assets of the Portfolio | Annual Management Fee Rate |
first $500 million
| 0.875% |
over $500 million
| 0.725% |
For the six months ended June 30, 2003, the International Portfolio incurred a management fee equivalent to an annualized effective rate of 0.875% of the Portfolio's average daily net assets. Deutsche Asset Management Investment Services Ltd. ("DeAMIS"), an affiliate of the Advisor, serves as subadvisor with respect to the investment and reinvestment of assets in the International Portfolio. The Advisor compensates DeAMIS out of the management fee it receives from the Fund.
The Health Sciences Portfolio pays the Advisor a graduated investment management fee, based on the average daily net assets of the Portfolio, payable monthly, at the annual rates shown below:
Average Daily Net Assets of the Portfolio | Annual Management Fee Rate |
first $250 million
| 0.750% |
next $750 million
| 0.725% |
next $1.5 billion
| 0.700% |
next $2.5 billion
| 0.680% |
next $2.5 billion
| 0.650% |
next $2.5 billion
| 0.640% |
next $2.5 billion
| 0.630% |
over $12.5 billion
| 0.620% |
For the six months ended June 30, 2003, the Health Sciences Portfolio incurred a management fee equivalent to an annualized effective rate of 0.75% of the Portfolio's average daily net assets.
Through May 1, 2003, the Advisor had agreed to maintain the expenses for the 21st Century Growth Portfolio, the Global Discovery Portfolio and the Health Sciences Portfolio to the extent necessary so that the Portfolios' expenses were maintained at 1.50%, 1.25% and 0.95%, respectively, of average daily net assets for Class A and 1.75%, 1.50% and 1.20%, respectively, of average daily net assets for Class B.
Effective May 1, 2003 until April 30, 2004, the Advisor has agreed to maintain the expenses for the 21st Century Growth Portfolio, the Global Discovery Portfolio and the Health Sciences Portfolio to the extent necessary so that the Portfolio's expenses are maintained at 1.50%, 1.25% and 0.95%, respectively, of average daily net assets for Class A and 1.75%, 1.65% and 1.35%, respectively, of average daily net assets for Class B.
The Trustees authorized the Fund on behalf of each Portfolio to pay Scudder Fund Accounting Corporation, a subsidiary of the Advisor, for determining the daily net asset value per share and maintaining the portfolio and general accounting records of the Fund. Scudder Investments Service Company, an affiliate of the Advisor, is the transfer and dividend paying agent of the Fund. These affiliated entities have in turn entered into various agreements with third-party service providers to provide these services.
Scudder Distributors, Inc. ("SDI"), also an affiliate of the Advisor, is the Fund's Distributor. In accordance with the Master Distribution Plan, SDI receives 12b-1 fees of up to 0.25% of average daily net assets of Class B shares. Pursuant to the Master Distribution Plan, SDI remits these fees to the Participating Insurance Companies for various costs incurred or paid by these companies in connection with marketing and distribution of Class B shares. These fees are detailed in each Portfolio's Statement of Operations.
The Portfolios pay each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings. Allocated Trustees' fees and expenses for each Portfolio for the period ended June 30, 2003 are detailed in each Portfolio's Statement of Operations.
Scudder Cash Management QP Trust. Pursuant to an Exemptive Order issued by the SEC, the Fund may invest in the Scudder Cash Management QP Trust (the ``QP Trust''), and other affiliated funds managed by the Advisor. The QP Trust seeks to provide as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. The QP Trust does not pay the Advisor a management fee for the affiliated funds' investments in the QP Trust.
C. Expense Off-Set Arrangements
The Money Market Portfolio, Bond Portfolio, Balanced Portfolio, Growth and Income Portfolio, Capital Growth Portfolio, 21st Century Growth Portfolio and Health Sciences Portfolio have entered into an arrangement with their custodian whereby credits realized as a result of uninvested cash balances were used to reduce a portion of the Portfolios' expenses. During the six months ended June 30, 2003, the custodian fees were reduced as follows:
Portfolio | Custody Credits ($) |
Money Market Portfolio
| 64 |
Bond Portfolio
| 363 |
Balanced Portfolio
| 97 |
Growth and Income Portfolio
| 9 |
Capital Growth Portfolio
| 12 |
21st Century Growth Portfolio
| 71 |
D. Ownership of the Portfolios
At the end of the period, the beneficial ownership in the Portfolios was as follows:
Money Market Portfolio: Two Participating Insurance Companies were owners of record of 10% or more of the total outstanding shares of the Portfolio, each owning 48% and 25%, respectively.
Bond Portfolio: Four Participating Insurance Companies were owners of record of 10% or more of the total outstanding shares of the Portfolio, each owning 47%, 14%, 13% and 10%, respectively.
Balanced Portfolio: Three Participating Insurance Companies were owners of record of 10% or more of the total outstanding shares of the Portfolio, each owning 42%, 34% and 15%, respectively.
Growth and Income Portfolio: Three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Portfolio, each owning 28%, 24% and 23%, respectively. Two Participating Insurance Companies were owners of record of 58% and 38%, respectively, of the total outstanding Class B shares of the Portfolio.
Capital Growth Portfolio: Two Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Portfolio, each owning 58% and 13%, respectively. One Participating Insurance Company was owner of record of 92% of the total outstanding Class B shares of the Portfolio.
21st Century Growth Portfolio: Three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Portfolio, each owning 62%, 22% and 10%, respectively. One Participating Insurance Company was owner of record of 100% of the total outstanding Class B shares of the Portfolio.
Global Discovery Portfolio: Three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Portfolio, each owning 53%, 27% and 10%, respectively. Two Participating Insurance Companies were owners of record of 58% and 40%, respectively, of the total outstanding Class B shares of the Portfolio.
International Portfolio: Three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Portfolio, each owning 33%, 16% and 11%, respectively. Two Participating Insurance Companies were owners of record of 63% and 34%, respectively, of the total outstanding Class B shares of the Portfolio.
Health Sciences Portfolio: Two Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Portfolio, each owning 72% and 27%, respectively. One Participating Insurance Company was owner of record of 99% of the total outstanding Class B shares of the Fund.
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, pro rata based upon net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. Each Portfolio may borrow up to a maximum of 33 percent of its net assets under the agreement.
About the Fund's Advisor
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.
An investment in the Money Market Portfolio is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Money Market Portfolio seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Portfolio.
The views expressed in this report reflect those of the portfolio managers only through the end of the period of the report as stated on the cover. The managers' views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
Scudder Distributors, Inc.
222 South Riverside Plaza
Chicago, IL 60606
1-800-778-1482
Scudder Investments
[Scudder Investments Logo]
A member of Deutsche Asset Management
[Deutsche Asset Management Logo]
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by individual investors.
SVSI-3 (8/29/03) 24409
ITEM 2. CODE OF ETHICS.
Not currently applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not currently applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not currently applicable.
ITEM 5. [RESERVED]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIERS AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Chief Executive and Financial Officers concluded that the
Registrant's Disclosure Controls and Procedures are effective based on the
evaluation of the Disclosure Controls and Procedures as of a date within 90 days
of the filing date of this report.
(b) During the six month period ended June 30, 2003, management identified
an issue related to a different registrant within the Scudder fund complex.
Management discussed the issue with the Registrant's Audit Committee and
auditors and instituted additional procedures to enhance its internal controls
over financial reporting.
Form N-CSR Item F
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: Scudder Variable Series I
By: /s/Richard T. Hale
------------------------------------
Richard T. Hale
Chief Executive Officer
Date: 8/19/03
------------------------------------
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 Variable Series I
By: /s/Richard T. Hale
------------------------------------
Richard T. Hale
Chief Executive Officer
Date: 8/19/03
------------------------------------
By: /s/Charles A. Rizzo
Charles A. Rizzo
Chief Financial Officer
Date: 8/19/03
------------------------------------
