UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSRS
Investment Company Act file number 811-5385
SCUDDER VALUE SERIES, INC.
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(Exact Name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, IL 60606
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 454-7190
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Paul Schubert
345 Park Avenue
New York, NY 10154
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(Name and Address of Agent for Service)
Date of fiscal year end: 11/30
Date of reporting period: 05/31/2005
ITEM 1. REPORT TO STOCKHOLDERS
Scudder
Large Cap Value Fund
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| Semiannual Report to Shareholders |
| May 31, 2005 |
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This report must be preceded or accompanied by a prospectus. To obtain a prospectus for any of our funds, refer to the Account Management Resources information provided in the back of this booklet. We advise you to consider the fund's objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the fund. Please read the prospectus carefully before you invest.
Investments in mutual funds involve risk. Some funds have more risk than others. This fund is subject to stock market risk. It focuses its investments on certain economic sectors, thereby increasing its vulnerability to any single economic, political or regulatory development. This may result in greater share price volatility. Please read this fund's prospectus for specific details regarding its investments and risk profile.
Scudder Investments is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Investment Management Americas Inc., Deutsche Asset Management Inc., Deutsche Asset Management Investment Services Ltd., Deutsche Bank Trust Company Americas and Scudder Trust Company.
Fund shares are not FDIC-insured and are not deposits or other obligations of, or guaranteed by, any bank. Fund shares involve investment risk, including possible loss of principal.
Performance Summary May 31, 2005 |
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Classes A, B, C, R and Institutional
All performance shown is historical, assumes reinvestment of all dividends and capital gain distributions, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Please visit scudder.com for the Fund's most recent month-end performance.
The maximum sales charge for Class A shares is 5.75%. For Class B shares, the maximum contingent deferred sales charge (CDSC) is 4% within the first year after purchase, declining to 0% after six years. Class C shares have no adjustment for front-end sales charges but redemptions within one year of purchase may be subject to a CDSC of 1%. Unadjusted returns do not reflect sales charges and would have been lower if they had. Institutional Class and Class R shares are not subject to sales charges.
To discourage short-term trading, shareholders redeeming shares held less than 15 days will have a lower total return due to the effect of the 2% short-term redemption fee.
Returns and rankings during all periods shown for Class A, B, C, R and Institutional Class shares reflect a fee waiver and/or expense reimbursement. Without this waiver/reimbursement, returns and rankings would have been lower.
Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns and rankings may differ by share class.
Returns shown for Class B and C shares prior to their inception on September 11, 1995 and Class R shares for the periods prior to its inception on October 1, 2003 are derived from the historical performance of Class A shares of the Scudder Large Cap Value Fund during such periods and have been adjusted to reflect the higher gross total annual operating expenses of each specific class. Any difference in expenses will affect performance.
Average Annual Total Returns (Unadjusted for Sales Charge) as of 5/31/05 |
Scudder Large Cap Value Fund | 6-Month* | 1-Year | 3-Year | 5-Year | 10-Year |
Class A | .98% | 5.96% | 5.04% | 6.76% | 10.50% |
Class B | .52% | 5.09% | 4.19% | 5.87% | 9.57% |
Class C | .59% | 5.18% | 4.23% | 5.89% | 9.54% |
Class R | .74% | 5.37% | 4.54% | 6.24% | 9.95% |
Russell 1000 Value Index+ | 4.03% | 15.49% | 8.44% | 5.34% | 12.06% |
S&P 500 Index++ | 2.42% | 8.24% | 5.60% | -1.93% | 10.18% |
Scudder Large Cap Value Fund | 6-Month* | 1-Year | 3-Year | Life of Class* |
Institutional Class | 1.21% | 6.37% | 5.45% | 6.99% |
Russell 1000 Value Index+ | 4.03% | 15.49% | 8.44% | 5.34% |
S&P 500 Index++ | 2.42% | 8.24% | 5.60% | -1.93% |
Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.
* Total returns shown for periods less than one year are not annualized.
* Institutional Class shares commenced operations on June 1, 2000. Index returns begin May 31, 2000.
Net Asset Value and Distribution Information |
| Class A | Class B | Class C | Class R | Institutional Class |
Net Asset Value: 5/31/05 | $ 22.10 | $ 22.09 | $ 22.09 | $ 22.11 | $ 22.13 |
11/30/04 | $ 22.15 | $ 22.14 | $ 22.13 | $ 22.14 | $ 22.19 |
Distribution Information: Six Months: Income Dividends as of 5/31/05 | $ .26 | $ .17 | $ .17 | $ .20 | $ .30 |
Class A Lipper Rankings — Large-Cap Value Funds Category as of 5/31/05 |
Period | Rank | | Number of Funds Tracked | Percentile Ranking |
1-Year | 395 | of | 434 | 91 |
3-Year | 177 | of | 345 | 52 |
5-Year | 24 | of | 230 | 11 |
10-Year | 35 | of | 103 | 34 |
Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings are based on total return unadjusted for sales charges with distributions reinvested. If sales charges had been included, rankings might have been less favorable. Rankings are for Class A shares; other share classes may vary.
Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge) |
[] Scudder Large Cap Value Fund — Class A [] Russell 1000 Value Index+ [] S&P 500 Index++ |
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Yearly periods ended May 31 |
The Fund's growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 5.75%. This results in a net initial investment of $9,425.
Comparative Results (Adjusted for Maximum Sales Charge) as of 5/31/05 |
Scudder Large Cap Value Fund | 1-Year | 3-Year | 5-Year | 10-Year |
Class A | Growth of $10,000 | $9,986 | $10,924 | $13,073 | $25,587 |
Average annual total return | -.14% | 2.99% | 5.51% | 9.85% |
Class B | Growth of $10,000 | $10,209 | $11,109 | $13,201 | $24,939 |
Average annual total return | 2.09% | 3.57% | 5.71% | 9.57% |
Class C | Growth of $10,000 | $10,518 | $11,323 | $13,312 | $24,881 |
Average annual total return | 5.18% | 4.23% | 5.89% | 9.54% |
Class R | Growth of $10,000 | $10,537 | $11,425 | $13,534 | $25,822 |
Average annual total return | 5.37% | 4.54% | 6.24% | 9.95% |
Russell 1000 Value Index+ | Growth of $10,000 | $11,549 | $12,750 | $12,968 | $31,218 |
Average annual total return | 15.49% | 8.44% | 5.34% | 12.06% |
S&P 500 Index++ | Growth of $10,000 | $10,824 | $11,775 | $9,074 | $26,354 |
Average annual total return | 8.24% | 5.60% | -1.93% | 10.18% |
The growth of $10,000 is cumulative.
+ The Russell 1000 Value Index is an unmanaged index that consists of those stocks in the Russell 1000 Index with lower price-to-book ratios and lower forecasted growth values.
++ The Standard & Poor's (S&P) 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
Comparative Results as of 5/31/05 |
Scudder Large Cap Value Fund | 1-Year | 3-Year | Life of Class* |
Institutional Class | Growth of $1,000,000 | $1,063,700 | $1,172,500 | $1,401,400 |
Average annual total return | 6.37% | 5.45% | 6.99% |
Russell 1000 Value Index+ | Growth of $1,000,000 | $1,154,900 | $1,275,000 | $1,296,800 |
Average annual total return | 15.49% | 8.44% | 5.34% |
S&P 500 Index++ | Growth of $1,000,000 | $1,082,400 | $1,177,500 | $907,400 |
Average annual total return | 8.24% | 5.60% | -1.93% |
The growth of $1,000,000 is cumulative.
The minimum initial investment for Institutional Class shares is $1,000,000.
* Institutional Class shares commenced operations on June 1, 2000. Index returns begin May 31, 2000.
+ The Russell 1000 Value Index is an unmanaged index that consists of those stocks in the Russell 1000 Index with lower price-to-book ratios and lower forecasted growth values.
++ The Standard & Poor's (S&P) 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
Information About Your Fund's Expenses |
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As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include sales charges (loads), redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, Class A, B, C, R, AARP and Institutional Class of the Fund limited these expenses; had they not done so, expenses would have been higher. The tables are based on an investment of $1,000 made at the beginning of the six-month period ended May 31, 2005.
The tables illustrate your Fund's expenses in two ways:
Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.
Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.
Expenses and Value of a $1,000 Investment for the six months ended May 31, 2005 |
Actual Fund Return | Class A | Class B | Class C | Class R | Class AARP | Class S | Institutional Class |
Beginning Account Value 12/1/04 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 |
Ending Account Value 5/31/05 | $ 1,009.80 | $ 1,005.20 | $ 1,005.90 | $ 1,007.40 | $ 998.60 | $ 999.80 | $ 1,012.10 |
Expenses Paid per $1,000* | $ 5.16 | $ 9.55 | $ 9.05 | $ 7.26 | $ 4.02 | $ 3.04 | $ 3.31 |
Hypothetical 5% Fund Return | Class A | Class B | Class C | Class R | Class AARP | Class S | Institutional Class |
Beginning Account Value 12/1/04 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 |
Ending Account Value 5/31/05 | $ 1,019.80 | $ 1,015.41 | $ 1,015.91 | $ 1,017.70 | $ 1,018.31 | $ 1,019.29 | $ 1,021.64 |
Expenses Paid per $1,000* | $ 5.19 | $ 9.60 | $ 9.10 | $ 7.29 | $ 4.06 | $ 3.07 | $ 3.33 |
* Expenses are equal to the Fund's annualized expense ratio for each share class, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365. For Class AARP and S shares the average account value over the period was multiplied by the number of days since commencement (December 20, 2004), then divided by 365.
Annualized Expense Ratios | Class A | Class B | Class C | Class R | Class AARP | Class S | Institutional Class |
Scudder Large Cap Value Fund | 1.03% | 1.91% | 1.81% | 1.45% | .90% | .68% | .66% |
For more information, please refer to the Fund's prospectus.
Portfolio Management Review |
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In the following interview, Lead Portfolio Manager Thomas Sassi discusses the economy, the market environment and the performance of Scudder Large Cap Value Fund during the six-month period ended May 31, 2005.
Q: How would you describe the economic and market environment over the last six months?
A: The US stock market had modestly positive returns for the six-month period, but with considerable volatility, as investors changed their perceptions and expectations daily based on the latest media headline or economic data point. For the six-month period, the broad market, as measured by the S&P 500 Index, had a return of 2.42%.1 Over this period, value stocks performed better than growth stocks: The return of the Russell 1000 Value Index was 4.03%, compared with 2.51% for the Russell 1000 Growth Index.
1 The Standard & Poor's (S&P) 500 Index is an unmanaged, capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
2 The Russell 1000 Value Index is an unmanaged index that consists of those stocks in the Russell 1000 Index with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 Growth Index is an unmanaged index that consists of those stocks in the Russell 1000 Index with higher price-to-book ratios and higher forecasted growth values.
Index returns assume reinvestment of dividends and, unlike fund returns, do not reflect any fees or expenses. It is not possible to invest directly in an index.
The economic news was generally good, with strong gross domestic product (GDP) reported for the fourth quarter of 2004 and the first quarter of 2005, and record corporate profits.3 Employment numbers remained solid, consumer spending continued strong, and there was increasing evidence of rising business investment in information technology and capital items such as plants and equipment. Interest rates have risen recently but in a historical context remain low. Remarkably, the economic performance cited has transpired despite major headwinds from rising energy prices and geopolitical issues.
3 Gross domestic product is the total market value of all final goods and services produced in a country in a given year.
It appears that the main reason the stock market has not responded more favorably to positive economic news and has remained volatile is the negative psychology that lingers from the last bear market. Moreover, media reports have overemphasized negative news items, adding to investors' nervousness.
Q: How did the fund perform during this period?
A: For the six months ended May 31, 2005, Scudder Large Cap Value Fund (Class A shares) posted a return of 0.98%. (Returns are unadjusted for sales charges. If sales charges had been included, returns would have been lower. Past performance is no guarantee of future results. Please see pages 3 through 6 for complete performance information.) This return was below that of the fund's benchmarks, the Russell 1000 Value Index, which returned 4.03%, and the S&P 500 Index, which had a return of 2.42%. The fund's Lipper peer group of Large Cap Value Funds had an average return of 2.31%.
A major reason for the fund's underperformance relative to the Russell 1000 Value Index is that mid-cap stocks, which outperformed large-cap stocks for the period, represent a substantial component of the index; the fund does not normally invest in mid-cap stocks.
Q: What strategies or decisions had the greatest effect on the fund's performance?
A: As explained above, the fact that the fund does not have substantial exposure to mid-cap stocks was a chief reason for its underperformance versus the Russell 1000 Value Index. Additionally, over the last six months, lower-quality stocks performed better than higher-quality issues. Our objective is to deliver capital appreciation by investing in high-quality, large-cap value stocks. While in the near term other groups have outperformed, we believe that our strategy will benefit investors over the long term, as demonstrated by our long-term record.
In regard to portfolio positioning, our underweight relative to the Russell 1000 Value Index in energy, which was one of the best-performing sectors, hurt returns as oil prices continued to rise. Within the energy sector, our holdings are concentrated in large integrated oil companies such as ExxonMobil Corp., Royal Dutch Petroleum Co. and ChevronTexaco Corp., which have performed well but are up less than the smaller exploration and production companies that are prevalent in the index. In addition, ExxonMobil, which had double-digit returns, has now reached almost a 6% weight in the value benchmark, while the fund has maintained an average position size of around 3.6% due to the investment strategy's risk-management discipline and desired diversification. Finally, the current underweight in this group is a result of our opinion, shared by many on Wall Street, that current oil prices are not sustainable over the long term. We therefore believe that this group's risk-reward profile is less attractive than that of other sector groups; however, as appropriate, we have added opportunistically.
Q: How did other holdings affect performance?
The biggest positive was an underweight in the telecommunications sector, which has performed poorly. We have maintained a light weighting in this sector because we feel that, in general, many of these companies have poor prospects for earnings growth, even though the stocks could be regarded as cheap and having attractive dividends.
Also positive was stock selection within the information technology sector. Our semiconductor and computer hardware holdings, such as Intel Corp., Hewlett-Packard Co. and Texas Instruments, Inc., benefited from an increase in capital spending.
Another positive was an overweight in health care. Holdings in this group that performed well include Baxter International, Inc., Abbott Laboratories and Bristol-Myers Squibb Co. We believe this category presents one of the best contrarian investment opportunities in the marketplace today, with high-quality, leading pharmaceutical companies that are temporarily depressed on concerns over the product pipeline, generic competition and political reform issues. Our view is that there is a degree of safety in owning companies that sell items people always need, such as health care products. Furthermore, many of these companies have many promising drugs in late stages of development, nearly ready for market. They also have the financial resources to acquire successful smaller drug companies and strong sales forces to distribute products, as well as pay healthy dividends.
On the negative side, some of our retail holdings in the consumer discretionary sector were disappointing. RadioShack Corp.'s stock dropped sharply when the company reported an earnings shortfall on weak cell phone sales. Family Dollar Stores, Inc., was another holding that fell, as earnings came in below expectations, largely because rising oil prices affected the ability of this chain's lower-end consumers to spend. We have maintained both of these positions, in the belief that the companies have solid fundamentals and good prospects for long-term growth.
Q: Do you have other comments for shareholders?
A: Going forward, we expect a continuation of the positive economic and profit momentum here in the United States. We see rising GDP, rising profits, low inflation, rising wages and employment, increasing capital expenditures, improving consumer and business confidence, and somewhat higher interest rates. Despite uncertainties in the geopolitical and energy areas and the associated volatility, we believe ongoing economic fundamentals are strong enough to offset these issues in the future as they did in 2004.
We regard the fund's recent underperformance as a short-term anomaly, resulting mainly from the fund's mandate to hold high-quality large-cap stocks, at a time when mid-cap and lower-quality issues were performing better. Our management team has great confidence in the way the portfolio is structured, with a diversified group of holdings in financially sound companies having good earnings prospects. When market sentiment shifts to favor high-quality large-cap stocks, this portfolio will be well-positioned to benefit.
As always, we thank our shareholders for their continued support and interest. We believe that our disciplined investment approach, seeking quality companies with above-market earnings growth and dividend yields and below-market price-to-earnings ratios, can help us achieve favorable returns over the long term.
The views expressed in this report reflect those of the portfolio managers only through the end of the period of the report as stated on the cover. The managers' views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
Portfolio Summary as of May 31, 2005 |
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Asset Allocation (Excludes Securities Lending Collateral) | 5/31/05 | 11/30/04 |
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Common Stocks | 99% | 94% |
Cash Equivalents | 1% | 6% |
| 100% | 100% |
Sector Diversification (As a % of Common Stocks) | 5/31/05 | 11/30/04 |
|
Financials | 27% | 30% |
Information Technology | 19% | 17% |
Energy | 14% | 7% |
Industrials | 11% | 10% |
Health Care | 10% | 12% |
Consumer Discretionary | 7% | 9% |
Consumer Staples | 5% | 6% |
Materials | 4% | 7% |
Telecommunication Services | 2% | 1% |
Utilities | 1% | 1% |
| 100% | 100% |
Asset allocation and sector diversification are subject to change.
Ten Largest Equity Holdings at May 31, 2005 (31.6% of Net Assets) |
1. ExxonMobil Corp. Explorer and producer of oil and gas | 4.8% |
2. Citigroup, Inc. Provider of diversified financial services | 3.7% |
3. Intel Corp. Designer, manufacturer and seller of computer components and related products | 3.5% |
4. General Electric Co. Industrial conglomerate | 3.4% |
5. ChevronTexaco Corp. Operator of petroleum exploration, delivery and refining facilities | 3.4% |
6. Honeywell International, Inc. Manufacturer of diversified technology products | 2.7% |
7. Bank of America Corp. Provider of commercial banking services | 2.6% |
8. JPMorgan Chase & Co. Provider of global financial services | 2.6% |
9. Automatic Data Processing, Inc. Provider of various data processing services | 2.5% |
10. Nokia Oyj Manufacturer of telecommunication networks and equipment | 2.4% |
Portfolio holdings are subject to change.
For more complete details about the Fund's investment portfolio, see page 16. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Fund as of month end will be posted to scudder.com on the 15th of the following month. Please see the Account Management Resources section for contact information.
Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at www.sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330.
Investment Portfolio as of May 31, 2005 (Unaudited) |  |
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Shares
| Value ($) |
| |
Common Stocks 99.0% |
Consumer Discretionary 7.4% |
Hotels Restaurants & Leisure 0.7% |
McDonald's Corp. | 416,200 | 12,877,228 |
Multiline Retail 1.5% |
Family Dollar Stores, Inc. | 1,218,900 | 31,289,163 |
Specialty Retail 5.2% |
Lowe's Companies, Inc. | 813,000 | 46,511,730 |
RadioShack Corp. | 827,900 | 20,829,964 |
Sherwin-Williams Co. | 187,600 | 8,338,820 |
The Gap, Inc. | 1,493,300 | 31,359,300 |
| 107,039,814 |
Consumer Staples 5.2% |
Food Products 3.5% |
General Mills, Inc. | 923,075 | 45,692,212 |
Unilever NV (NY Shares) | 376,800 | 25,072,272 |
| 70,764,484 |
Household Products 1.7% |
Kimberly-Clark Corp. | 556,800 | 35,818,944 |
Energy 13.6% |
Energy Equipment & Services 1.8% |
Halliburton Co. (d) | 852,200 | 36,423,028 |
Oil, Gas & Consumable Fuels 11.8% |
BP PLC (ADR) | 674,914 | 40,629,823 |
ChevronTexaco Corp. | 1,282,000 | 68,945,960 |
ExxonMobil Corp. | 1,747,030 | 98,183,086 |
Royal Dutch Petroleum Co. (NY Shares) | 598,300 | 35,048,414 |
| 242,807,283 |
Financials 26.4% |
Banks 13.6% |
AmSouth Bancorp. | 1,267,000 | 33,778,220 |
Bank of America Corp. | 1,137,220 | 52,676,030 |
BB&T Corp. | 518,800 | 20,720,872 |
PNC Financial Services Group | 575,500 | 31,451,075 |
SunTrust Banks, Inc. | 347,000 | 25,542,670 |
US Bancorp | 1,406,200 | 41,243,846 |
Wachovia Corp. | 726,200 | 36,854,650 |
Wells Fargo & Co. | 610,500 | 36,880,305 |
| 279,147,668 |
Capital Markets 2.7% |
Bear Stearns Companies, Inc. | 219,500 | 21,739,280 |
Merrill Lynch & Co., Inc. | 630,800 | 34,227,208 |
| 55,966,488 |
Diversified Financial Services 7.6% |
Citigroup, Inc. | 1,619,730 | 76,305,480 |
Freddie Mac | 399,600 | 25,989,984 |
JPMorgan Chase & Co. | 1,469,060 | 52,518,895 |
| 154,814,359 |
Insurance 2.5% |
Allstate Corp. | 285,000 | 16,587,000 |
American International Group, Inc. | 604,700 | 33,591,085 |
| 50,178,085 |
Health Care 10.3% |
Health Care Equipment & Supplies 2.1% |
Baxter International, Inc. | 1,146,100 | 42,291,090 |
Pharmaceuticals 8.2% |
Abbott Laboratories | 601,600 | 29,021,184 |
Bristol-Myers Squibb Co. | 1,908,000 | 48,386,880 |
Johnson & Johnson | 512,200 | 34,368,620 |
Pfizer, Inc. | 884,214 | 24,669,571 |
Wyeth | 750,400 | 32,544,848 |
| 168,991,103 |
Industrials 10.6% |
Aerospace & Defense 2.6% |
Honeywell International, Inc. | 1,502,500 | 54,435,575 |
Commercial Services & Supplies 2.0% |
Avery Dennison Corp. | 520,000 | 27,274,000 |
Pitney Bowes, Inc. | 292,500 | 13,048,425 |
| 40,322,425 |
Electrical Equipment 1.3% |
Emerson Electric Co. | 388,800 | 25,843,536 |
Industrial Conglomerates 4.7% |
General Electric Co. | 1,903,100 | 69,425,088 |
Textron, Inc. | 358,000 | 27,669,820 |
| 97,094,908 |
Information Technology 18.5% |
Communications Equipment 3.1% |
Cisco Systems, Inc.* | 745,300 | 14,443,914 |
Nokia Oyj (ADR) | 2,900,700 | 48,905,802 |
| 63,349,716 |
Computers & Peripherals 3.8% |
Hewlett-Packard Co. | 1,716,363 | 38,635,331 |
International Business Machines Corp. | 520,800 | 39,346,440 |
| 77,981,771 |
IT Consulting & Services 3.4% |
Automatic Data Processing, Inc. | 1,147,200 | 50,247,360 |
First Data Corp. | 531,200 | 20,095,296 |
| 70,342,656 |
Semiconductors & Semiconductor Equipment 6.5% |
Applied Materials, Inc.* | 1,960,000 | 32,163,600 |
Intel Corp. | 2,659,200 | 71,612,256 |
Texas Instruments, Inc. | 1,064,000 | 29,408,960 |
| 133,184,816 |
Software 1.7% |
Microsoft Corp. | 1,338,000 | 34,520,400 |
Materials 4.1% |
Chemicals 1.0% |
Air Products & Chemicals, Inc. | 356,500 | 21,471,995 |
Containers & Packaging 2.1% |
Sonoco Products Co. | 1,606,300 | 42,775,769 |
Metals & Mining 1.0% |
Alcoa, Inc. | 757,500 | 20,528,250 |
Telecommunication Services 1.6% |
Diversified Telecommunication Services |
SBC Communications, Inc. | 548,800 | 12,830,944 |
Verizon Communications, Inc. | 543,700 | 19,236,106 |
| 32,067,050 |
Utilities 1.3% |
Electric Utilities |
Progress Energy, Inc. | 607,900 | 26,887,417 |
Total Common Stocks (Cost $1,725,996,209) | 2,029,215,021 |
|
Securities Lending Collateral 1.7% |
Scudder Daily Assets Fund Institutional, 3.07% (c) (e) (Cost $33,780,600) | 33,780,600 | 33,780,600 |
|
Cash Equivalents 1.1% |
Scudder Cash Management QP Trust, 3.04% (b) (Cost $23,430,046) | 23,430,046 | 23,430,046 |
| % of Net Assets | Value ($) |
| |
Total Investment Portfolio (Cost $1,783,206,855) (a) | 101.8 | 2,086,425,667 |
Other Assets and Liabilities, Net | (1.8) | (36,454,897) |
Net Assets | 100.0 | 2,049,970,770 |
* Non-income producing security.
(a) The cost for federal income tax purposes was $1,786,078,551. At May 31, 2005, net unrealized appreciation for all securities based on tax cost was $300,347,116. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $328,414,408 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $28,067,292.
(b) Scudder Cash Management QP Trust is managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.
(c) Scudder Daily Assets Fund Institutional, an affiliated fund, is managed by Deutsche Asset Management, Inc. The rate shown is the annualized seven-day yield at period end.
(d) All or a portion of these securities were on loan. The value of all securities loaned at May 31, 2005 amounted to $33,091,200, which is 1.6% of net assets.
(e) Represents collateral held in connection with securities lending.
ADR: American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of May 31, 2005 (Unaudited) |
Assets |
Investments: Investments in securities, at value (cost $1,725,996,209) — including $33,091,200 of securities loaned | $ 2,029,215,021 |
Investment in Scudder Daily Assets Fund Institutional (cost $33,780,600)* | 33,780,600 |
Investment in Scudder Cash Management QP Trust (cost $23,430,046) | 23,430,046 |
Total investments in securities, at value (cost $1,783,206,855) | 2,086,425,667 |
Receivable for investments sold | 11,301,115 |
Dividends receivable | 5,405,719 |
Interest receivable | 51,814 |
Receivable for Fund shares sold | 961,289 |
Foreign taxes recoverable | 61,027 |
Other assets | 77,130 |
Total assets | 2,104,283,761 |
Liabilities |
Payable for investments purchased | 8,823,447 |
Payable for Fund shares redeemed | 9,103,198 |
Payable upon return of securities loaned | 33,780,600 |
Accrued management fee | 851,455 |
Other accrued expenses and payables | 1,754,291 |
Total liabilities | 54,312,991 |
Net assets, at value | $ 2,049,970,770 |
Net Assets |
Net assets consist of: Undistributed net investment income | 8,703,445 |
Net unrealized appreciation (depreciation) on investments | 303,218,812 |
Accumulated net realized gain (loss) | 50,569,525 |
Paid-in capital | 1,687,478,988 |
Net assets, at value | $ 2,049,970,770 |
* Represents collateral on securities loaned.
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of May 31, 2005 (Unaudited) (continued) |
Net Asset Value |
Class A Net Asset Value and redemption price(a) per share ($374,376,591 ÷ 16,943,158 shares of capital stock outstanding, $.01 par value, 320,000,000 shares authorized) | $ 22.10 |
Maximum offering price per share (100 ÷ 94.25 of $22.10) | $ 23.45 |
Class B Net Asset Value, offering and redemption price(a) (subject to contingent deferred sales charge) per share ($56,932,655 ÷ 2,576,762 shares of capital stock outstanding, $.01 par value, 320,000,000 shares authorized) | $ 22.09 |
Class C Net Asset Value, offering and redemption price(a) (subject to contingent deferred sales charge) per share ($45,470,479 ÷ 2,058,620 shares of capital stock outstanding, $.01 par value, 80,000,000 shares authorized) | $ 22.09 |
Class R Net Asset Value, offering and redemption price(a) per share ($1,030,302 ÷ 46,607 shares of capital stock outstanding, $.01 par value, 100,000,000 shares authorized) | $ 22.11 |
Class AARP Net Asset Value, offering and redemption price(a) per share ($32,955,851 ÷ 1,491,998, shares of capital stock outstanding, $.01 par value, 150,000,000 shares authorized) | $ 22.09 |
Class S Net Asset Value, offering and redemption price(a) per share ($1,515,489,866 ÷ 68,556,808 shares of capital stock outstanding, $.01 par value, 150,000,000 shares authorized) | $ 22.11 |
Institutional Class Net Asset Value, offering and redemption price(a) per share ($23,715,026 ÷ 1,071,615 shares of capital stock outstanding, $.01 par value, 80,000,000 shares authorized) | $ 22.13 |
(a) Redemption price per share for shares held less than 15 days is equal to net asset value less a 2% redemption fee.
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended May 31, 2005 (Unaudited) |
Investment Income |
Dividends (net of foreign taxes withheld of $476,564) | $ 25,859,962 |
Securities lending income, including income earned from Scudder Daily Assets Fund Institutional, net of borrower rebates | 104,544 |
Interest — Scudder Cash Management QP Trust | 368,672 |
Total Income | 26,333,178 |
Expenses: Management fee | 5,032,510 |
Distribution service fees | 997,309 |
Services to shareholders | 1,647,114 |
Custodian fee | 39,155 |
Auditing | 23,671 |
Legal | 13,721 |
Directors' fees and expenses | 30,232 |
Reports to shareholders | 34,836 |
Registration fees | 125,480 |
Other | 35,731 |
Total expenses, before expense reductions | 7,979,759 |
Expense reductions | (61,137) |
Total expenses, after expense reductions | 7,918,622 |
Net investment income (loss) | 18,414,556 |
Realized and Unrealized Gain (Loss) on Investment Transactions |
Net realized gain (loss) from investments | 80,581,852 |
Net unrealized appreciation (depreciation) during the period on investments | (96,621,998) |
Net gain (loss) on investment transactions | (16,040,146) |
Net increase (decrease) in net assets resulting from operations | $ 2,374,410 |
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 May 31, 2005 (Unaudited) | Year Ended November 30, 2004 |
Operations: Net investment income (loss) | $ 18,414,556 | $ 3,839,056 |
Net realized gain (loss) on investment transactions | 80,581,852 | 9,680,886 |
Net unrealized appreciation (depreciation) during the period on investment transactions | (96,621,998) | 20,570,831 |
Net increase (decrease) in net assets resulting from operations | 2,374,410 | 34,090,773 |
Distributions to shareholders from: Net investment income: Class A | (3,709,177) | (2,417,107) |
Class B | (382,339) | (141,561) |
Class C | (306,454) | (105,229) |
Class R | (6,123) | (2,737) |
Class AARP | (136,761) | — |
Class S | (6,609,493) | — |
Institutional Class | (171,809) | (154,110) |
Fund share transactions: Proceeds from shares sold | 127,673,325 | 202,721,621 |
Net assets acquired in tax-free reorganization | 1,772,926,539 | — |
Reinvestment of distributions | 9,882,153 | 2,406,535 |
Cost of shares redeemed | (231,070,309) | (93,554,604) |
Redemption fees | 610 | — |
Net increase (decrease) in net assets from Fund share transactions | 1,679,412,318 | 111,573,552 |
Increase (decrease) in net assets | 1,670,464,572 | 142,843,581 |
Net assets at beginning of period | 379,506,198 | 236,662,617 |
Net assets at end of period (including undistributed net investment income of $8,703,445 and $1,611,045, respectively) | $ 2,049,970,770 | $ 379,506,198 |
The accompanying notes are an integral part of the financial statements.
Class A |
Years Ended November 30, | 2005a | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per Share Data |
Net asset value, beginning of period | $ 22.15 | $ 19.93 | $ 17.09 | $ 19.05 | $ 17.51 | $ 19.75 |
Income (loss) from investment operations: Net investment income (loss)b | .19 | .30 | .25 | .23 | .19 | .30 |
Net realized and unrealized gain (loss) on investment transactions | .02 | 2.16 | 2.81 | (1.98) | 1.57 | (.39) |
Total from investment operations | .21 | 2.46 | 3.06 | (1.75) | 1.76 | (.09) |
Less distributions from: Net investment income | (.26) | (.24) | (.22) | (.21) | (.22) | (.35) |
Net realized gains on investment transactions | — | — | — | — | — | (1.80) |
Total distributions | (.26) | (.24) | (.22) | (.21) | (.22) | (2.15) |
Redemption fees | .00*** | — | — | — | — | — |
Net asset value, end of period | $ 22.10 | $ 22.15 | $ 19.93 | $ 17.09 | $ 19.05 | $ 17.51 |
Total Return (%)c | .98e** | 12.34e | 18.16e | (9.25) | 10.06 | .54 |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 374 | 283 | 152 | 127 | 130 | 113 |
Ratio of expenses before expense reductions (%) | 1.05* | 1.32 | 1.30 | 1.30 | 1.46 | 1.53d |
Ratio of expenses after expense reductions (%) | 1.03* | 1.21 | 1.29 | 1.30 | 1.46 | 1.52d |
Ratio of net investment income (loss) (%) | 1.68* | 1.39 | 1.41 | 1.26 | 1.04 | 1.85 |
Portfolio turnover rate (%) | 45* | 39 | 69 | 83 | 76 | 46 |
a For the six months ended May 31, 2005 (Unaudited). b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charge. d The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 1.50% and 1.49%, respectively. e Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. |
|
Class B |
Years Ended November 30, | 2005a | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per Share Data |
Net asset value, beginning of period | $ 22.14 | $ 19.91 | $ 17.07 | $ 19.03 | $ 17.47 | $ 19.68 |
Income (loss) from investment operations: Net investment income (loss)b | .09 | .14 | .11 | .08 | .04 | .14 |
Net realized and unrealized gain (loss) on investment transactions | .03 | 2.15 | 2.81 | (1.98) | 1.57 | (.36) |
Total from investment operations | .12 | 2.29 | 2.92 | (1.90) | 1.61 | (.22) |
Less distributions from: Net investment income | (.17) | (.06) | (.08) | (.06) | (.05) | (.19) |
Net realized gains on investment transactions | �� | — | — | — | — | (1.80) |
Total distributions | (.17) | (.06) | (.08) | (.06) | (.05) | (1.99) |
Redemption fees | .00*** | — | — | — | — | — |
Net asset value, end of period | $ 22.09 | $ 22.14 | $ 19.91 | $ 17.07 | $ 19.03 | $ 17.47 |
Total Return (%)c | .52e** | 11.51e | 17.20e | (10.01) | 9.21 | (.29) |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 57 | 50 | 50 | 49 | 67 | 68 |
Ratio of expenses before expense reductions (%) | 1.99* | 2.21 | 2.16 | 2.12 | 2.27 | 2.53d |
Ratio of expenses after expense reductions (%) | 1.91* | 1.96 | 2.11 | 2.12 | 2.27 | 2.53d |
Ratio of net investment income (loss) (%) | .80* | .64 | .59 | .44 | .23 | .84 |
Portfolio turnover rate (%) | 45* | 39 | 69 | 83 | 76 | 46 |
a For the six months ended May 31, 2005 (Unaudited). b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charge. d The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 2.47% and 2.47%, respectively. e Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. |
|
Class C |
Years Ended November 30, | 2005a | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per Share Data |
Net asset value, beginning of period | $ 22.13 | $ 19.91 | $ 17.07 | $ 19.02 | $ 17.48 | $ 19.68 |
Income (loss) from investment operations: Net investment income (loss)b | .10 | .14 | .11 | .09 | .03 | .15 |
Net realized and unrealized gain (loss) on investment transactions | .03 | 2.15 | 2.82 | (1.98) | 1.57 | (.36) |
Total from investment operations | .13 | 2.29 | 2.93 | (1.89) | 1.60 | (.21) |
Less distributions from: Net investment income | (.17) | (.07) | (.09) | (.06) | (.06) | (.19) |
Net realized gains on investment transactions | — | — | — | — | — | (1.80) |
Total distributions | (.17) | (.07) | (.09) | (.06) | (.06) | (1.99) |
Redemption fees | .00*** | — | — | — | — | — |
Net asset value, end of period | $ 22.09 | $ 22.13 | $ 19.91 | $ 17.07 | $ 19.02 | $ 17.48 |
Total Return (%)c | .59e** | 11.51e | 17.23e | (9.94) | 9.10 | (.18) |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 45 | 38 | 21 | 12 | 14 | 12 |
Ratio of expenses before expense reductions (%) | 1.82* | 2.08 | 2.09 | 2.09 | 2.32 | 2.48d |
Ratio of expenses after expense reductions (%) | 1.81* | 1.96 | 2.07 | 2.09 | 2.32 | 2.47d |
Ratio of net investment income (loss) (%) | .90* | .64 | .63 | .47 | .18 | .91 |
Portfolio turnover rate (%) | 45* | 39 | 69 | 83 | 76 | 46 |
a For the six months ended May 31, 2005 (Unaudited). a Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charge. d The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 2.42% and 2.42%, respectively. e Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. |
|
Class R |
Years Ended November 30, | 2005a | 2004 | 2003b |
Selected Per Share Data |
Net asset value, beginning of period | $ 22.14 | $ 19.92 | $ 18.82 |
Income (loss) from investment operations: Net investment income (loss)c | .14 | .18 | .03 |
Net realized and unrealized gain (loss) on investment transactions | .03 | 2.18 | 1.07 |
Total from investment operations | .17 | 2.36 | 1.10 |
Less distributions from: Net investment income | (.20) | (.14) | — |
Redemption fees | .00*** | — | — |
Net asset value, end of period | $ 22.11 | $ 22.14 | $ 19.92 |
Total Return (%) | .74d** | 11.87 | 5.84** |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 1 | .6 | .01 |
Ratio of expenses before expense reductions (%) | 1.60* | 1.74 | 1.72* |
Ratio of expenses after expense reductions (%) | 1.45* | 1.74 | 1.72* |
Ratio of net investment income (loss) (%) | 1.26* | .86 | 0.99* |
Portfolio turnover rate (%) | 45* | 39 | 69 |
a For the six months ended May 31, 2005 (Unaudited). b For the period from October 1, 2003 (commencement of operations of Class R shares) to November 30, 2003. c Based on average shares outstanding during the period. d Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. |
|
Class AARP |
| 2005a |
Selected Per Share Data |
Net asset value, beginning of period | $ 22.21 |
Income (loss) from investment operations: Net investment income (loss)b | .18 |
Net realized and unrealized gain (loss) on investment transactions | (.21) |
Total from investment operations | (.03) |
Less distributions from: Net investment income | (.09) |
Redemption fees | .00*** |
Net asset value, end of period | $ 22.09 |
Total Return (%)c | (.14)** |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 33 |
Ratio of expenses before expense reductions (%) | .91* |
Ratio of expenses after expense reductions (%) | .90* |
Ratio of net investment income (loss) (%) | 1.83* |
Portfolio turnover rate (%) | 45* |
a For the period from December 20, 2004 (commencement of operations of Class AARP shares) to May 31, 2005 (Unaudited). b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. |
|
Class S |
| 2005a |
Selected Per Share Data |
Net asset value, beginning of period | $ 22.21 |
Income (loss) from investment operations: Net investment income (loss)b | .20 |
Net realized and unrealized gain (loss) on investment transactions | (.21) |
Total from investment operations | (.01) |
Less distributions from: Net investment income | (.09) |
Redemption fees | .00*** |
Net asset value, end of period | $ 22.11 |
Total Return (%) | (.02)** |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 1,515 |
Ratio of expenses (%) | .68* |
Ratio of net investment income (loss) (%) | 2.05* |
Portfolio turnover rate (%) | 45* |
a For the period from December 20, 2004 (commencement of operations of Class S shares) to May 31, 2005 (Unaudited). b Based on average shares outstanding during the period. * Annualized ** Not annualized *** Amount is less than $.005. |
|
Institutional Class |
Years Ended November 30, | 2005a | 2004 | 2003 | 2002 | 2001 | 2000b |
Selected Per Share Data |
Net asset value, beginning of period | $ 22.19 | $ 19.98 | $ 17.13 | $ 19.10 | $ 17.56 | $ 17.34 |
Income (loss) from investment operations: Net investment income (loss)c | .23 | .37 | .32 | .31 | .30 | .48 |
Net realized and unrealized gain (loss) on investment transactions | .01 | 2.17 | 2.83 | (1.99) | 1.56 | (.05) |
Total from investment operations | .24 | 2.54 | 3.15 | (1.68) | 1.86 | .43 |
Less distributions from: Net investment income | (.30) | (.33) | (.30) | (.29) | (.32) | (.21) |
Redemption fees | .00*** | — | — | — | — | — |
Net asset value, end of period | $ 22.13 | $ 22.19 | $ 19.98 | $ 17.13 | $ 19.10 | $ 17.56 |
Total Return (%) | 1.21d** | 12.65d | 18.73 | (8.86) | 10.66 | 2.63** |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 24 | 8 | 13 | 8 | 2 | 1 |
Ratio of expenses before expense reductions (%) | .67* | .94 | .87 | .85 | .91 | 1.70* |
Ratio of expenses after expense reductions (%) | .66* | .86 | .87 | .85 | .91 | 1.70* |
Ratio of net investment income (loss) (%) | 2.05* | 1.74 | 1.83 | 1.71 | 1.59 | 6.19* |
Portfolio turnover rate (%) | 45* | 39 | 69 | 83 | 76 | 46 |
a For the six months ended May 31, 2005 (Unaudited). b For the period June 1, 2000 (commencement of operations of Institutional Class shares) to November 30, 2000. c Based on average shares outstanding during the period. d Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. |
Notes to Financial Statements (Unaudited) |
|
A. Significant Accounting Policies
Scudder Large Cap Value Fund, (the ``Fund'') is a diversified series of Scudder Value Series, Inc. (the ``Corporation'') which is registered under the Investment Company Act of 1940, as amended (the ``1940 Act''), as an open-end management investment company organized as a Maryland Corporation.
The Fund offers multiple classes of shares which provide investors with different purchase options. Class A shares are offered to investors subject to an initial sales charge. Class B shares are offered without an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions. Class B shares automatically convert to Class A shares six years after issuance. Class C shares are offered to investors without an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions within one year of purchase. Class C shares do not convert into another class. Class R shares are only available to participants in certain retirement plans and are offered to investors without an initial sales charge or contingent deferred sales charge. On December 20, 2004, the Fund commenced offering Class AARP and Class S shares. Shares of Class AARP are designed for members of AARP. Class AARP and S shares are not subject to initial or contingent deferred sales charges. Class S shares are no longer available to new investors except under certain circumstances. (Please refer to the Fund's Statement of Additional Information for further information.) Institutional Class shares are offered to a limited group of investors, are not subject to initial or contingent deferred sales charges and have lower ongoing expenses than other classes.
Investment income, realized and unrealized gains and losses, and certain fund-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of all classes of shares, except that each class bears certain expenses unique to that class such as distribution service fees, services to shareholders and certain other class-specific expenses. Differences in class-level expenses may result in payment of different per share dividends by class. All shares of the Fund have equal rights with respect to voting subject to class-specific arrangements.
The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those estimates. The policies described below are followed consistently by the Fund in the preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading. Equity securities are valued at the most recent sale price or official closing price reported on the exchange (US or foreign) or over-the-counter market on which the security is traded most extensively. Securities for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation.
Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost. Investments in open-end investment companies and Scudder Cash Management QP Trust are valued at their net asset value each business day.
Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Directors.
Securities Lending. The Fund may lend securities to financial institutions. The Fund retains beneficial ownership of the securities it has loaned and continues to receive interest and dividends paid by the securities and to participate in any changes in their market value. The Fund requires the borrowers of the securities to maintain collateral with the Fund consisting of liquid, unencumbered assets having a value at least equal to the value of the securities loaned. The Fund may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Fund receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of fees paid to the lending agent. Either the Fund or the borrower may terminate the loan. The Fund is subject to all investment risks associated with the value of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.
Federal Income Taxes. The Fund's policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies, and to distribute all of its taxable income to its shareholders. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required.
At November 30, 2004, the Fund had a net tax basis capital loss carryforward of approximately $26,900,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until November 30, 2008 ($9,400,000), November 30, 2010 ($9,900,000) and November 30, 2011 ($7,600,000), the respective expiration dates, whichever occurs first.
Distribution of Income and Gains. Net investment income of the Fund, if any, is distributed to shareholders quarterly. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed, and, therefore, will be distributed to shareholders at least annually.
The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to certain securities sold at a loss. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.
The tax character of current year distributions, if any, will be determined at the end of the fiscal year.
Redemption Fees. Effective February 1, 2005, the Fund imposes a redemption fee of 2% of the total redemption amount on all Fund shares redeemed or exchanged within 15 days of buying them, either by purchase or exchange. This fee is assessed and retained by the Fund for the benefit of the remaining shareholders. The redemption fee is accounted for as an addition to paid-in capital.
Expenses. Expenses of the Corporation arising in connection with a specific fund are allocated to that fund. Other Corporation expenses which cannot be directly attributed to a fund are apportioned among the funds in the Corporation.
Contingencies. In the normal course of business, the Fund may enter into contracts with service providers that contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet been made. However, based on experience, the Fund expects the risk of loss to be remote.
Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. Realized gains and losses from investment transactions are recorded on an identified cost basis.
B. Purchases and Sales of Securities
During the six months ended May 31, 2005, purchases and sales of investment securities (excluding short-term investments) aggregated $411,063,478 and $474,322,561, respectively.
C. Related Parties
Management Agreement. Under the Management Agreement with Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor") an indirect, wholly owned subsidiary of Deutsche Bank AG, the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor determines the securities, instruments and other contracts relating to investments to be purchased, sold or entered into by the Fund. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Management Agreement. The management fee payable under the Management Agreement is as follows:
From December 1, 2004 to December 19, 2004, the management fee was computed and accrued daily and payable monthly at the following rates:
First $250 million of the Fund's average daily net assets | .750% |
Next $750 million of such net assets | .720% |
Next $1.5 billion of such net assets | .700% |
Next $2.5 billion of such net assets | .680% |
Next $2.5 billion of such net assets | .650% |
Next $2.5 billion of such net assets | .640% |
Next $2.5 billion of such net assets | .630% |
Over $12.5 billion of such net assets | .620% |
Effective December 20, 2004, the new management fee was computed and accrued daily and payable monthly at the following rates:
First $1.5 billion of the Fund's average daily net assets | .525% |
Next $500 million of such net assets | .500% |
Next $1 billion of such net assets | .475% |
Next $1 billion of such net assets | .450% |
Next $1 billion of such net assets | .425% |
Over $5 billion of such net assets | .400% |
Accordingly, for the six months ended May 31, 2005, the fee pursuant to the Management Agreement was equivalent to an annualized effective rate of 0.52% of the Fund's average daily net assets. Deutsche Asset Management Investment Services Limited, an affiliate of the Advisor, serves as subadvisor with respect to the investment and reinvestment of assets in the Fund.
Effective October 1, 2003 through December 19, 2004, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses of the Fund to the extent necessary to maintain the operating expenses of each class at 1.50%, 1.50%, 1.50%, and 1.00% of average daily net assets for Class A, B, C and Institutional Class shares, respectively (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, Rule 12b-1 distribution and/or service fees, director and director counsel fees, organizational and offering expenses). For Class R shares, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay operating expenses of the Fund to the extent necessary to maintain the Fund's operating expenses at 1.99%, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, director and director counsel fees and organizational and offering expenses.
In addition to the contractual expense limitation described above, from October 1, 2003 through December 19, 2004, the Advisor, principal underwriter, and transfer agent have each contractually agreed to limit their respective fees or reimburse expenses to the extent necessary to maintain the Fund's total operating expenses at 1.21%, 1.96% and 1.96% of the average daily net assets for Class A, B and C shares, respectively (excluding certain expenses such as extraordinary expenses, taxes, brokerage and transaction costs). For Institutional Class shares, from October 1, 2004 through December 19, 2004, the Advisor, principal underwriter and transfer agent have each contractually agreed to limit their respective fees or reimburse expenses to the extent necessary to maintain the Fund's operating expenses at 0.859% (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest and organizational and offering expenses).
Effective December 20, 2004 through March 31, 2008, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses of the Fund to the extent necessary to maintain the operating expenses of each class at 0.90%, 0.90%, 0.90%, 0.90%, 0.80% and 0.65% of average daily net assets for Class A, B, C, AARP, S and Institutional Class shares, respectively (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, Rule 12b-1 distribution and/or service fees, director and director counsel fees, organizational and offering expenses). For Class R shares, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay operating expenses of the Fund to the extent necessary to maintain the Fund's operating expenses at 1.40%, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, director and director counsel fees and organizational and offering expenses. This expense cap will remain in effect until March 31, 2008.
Service Provider Fees. Scudder Investments Service Company ("SISC"), an affiliate of the Advisor, is the Fund's transfer, dividend-paying agent and shareholder service agent for Class A, B, C, R and Institutional Class shares of the Fund. Scudder Service Corporation ("SSC"), a subsidiary of the Advisor, is the transfer, dividend-paying agent and shareholder service agent for Class AARP and S shares of the Fund. Pursuant to a sub-transfer agency agreement among SISC, SSC and DST Systems, Inc. ("DST"), SISC and SSC have delegated certain transfer agent and dividend-paying agent functions to DST. SISC and SSC compensate DST out of the shareholder servicing fee they receive from the Fund. For the six months ended May 31, 2005, the amounts charged to the Fund by SISC and SSC were as follows:
Services to Shareholders | Total Aggregated | Waived | Unpaid at
May 31, 2005 |
Class A | $ 389,304 | $ 25,400 | $ 158,753 |
Class B | 116,674 | 23,852 | 58,581 |
Class C | 49,616 | 2,119 | 21,045 |
Class R | 2,086 | 587 | 1,499 |
Class AARP | 54,824 | 1,094 | 20,013 |
Class S | 773,816 | — | 686,725 |
Institutional Class | 11,277 | 368 | 1,858 |
| $ 1,397,597 | $ 53,420 | $ 948,474 |
Distribution Service Agreement. Under the Distribution Service Agreement, in accordance with Rule 12b-1 under the 1940 Act, Scudder Distributors, Inc. ("SDI"), an affiliate of the Advisor, receives a fee ("Distribution Fee") of 0.25% of the average daily net assets of Class R shares and 0.75% of average daily net assets of Class B and C shares. Pursuant to the agreement, SDI enters into related selling group agreements with various firms at various rates for sales of Class B, C and R shares. For the six months ended May 31, 2005, the Distribution Fee was as follows:
Distribution Fee | Total Aggregated | Unpaid at May 31, 2005 |
Class B | $ 230,323 | $ 36,105 |
Class C | 174,916 | 28,529 |
Class R | 1,009 | 344 |
| $ 406,248 | $ 64,978 |
In addition, SDI provides information and administrative services ("Service Fee") to Class A, B, C and R shareholders at an annual rate of up to 0.25% of average daily net assets for each such class. SDI in turn has various agreements with financial services firms that provide these services and pays these fees based upon the assets of shareholder accounts the firms service. For the six months ended May 31, 2005, the Service Fee was as follows:
Service Fee | Total Aggregated | Unpaid at May 31, 2005 | Annualized
Effective Rate |
Class A | $ 458,225 | $ 104,280 | .25% |
Class B | 75,175 | 15,028 | .24% |
Class C | 56,669 | 12,911 | .24% |
Class R | 992 | 361 | .25% |
| $ 591,061 | $ 132,580 | |
Underwriting Agreement and Contingent Deferred Sales Charge. SDI is the principal underwriter for the Fund. Underwriting commissions paid by shareholders in connection with the distribution of Class A shares for the six months ended May 31, 2005 aggregated $31,016, respectively.
In addition, SDI receives any contingent deferred sales charge ("CDSC") from Class B share redemptions occurring within six years of purchase and Class C share redemptions occurring within one year of purchase. There is no such charge upon redemption of any share appreciation or reinvested dividends. The CDSC is based on declining rates ranging from 4% to 1% for Class B and 1% for Class C, of the value of the shares redeemed. For the six months ended May 31, 2005 the CDSC for Class B and C shares aggregated $14,120 and $1,654, respectively. A deferred sales charge of up to 1% is assessed on certain redemptions of Class A shares. For the six months ended May 31, 2005, SDI received $107.
Typesetting and Filing Fees. Under an agreement with Deutsche Investment Management Americas Inc. ("DeIM"), an indirect, wholly owned subsidiary of Deutsche Bank AG, DeIM is compensated for providing typesetting and regulatory filing services to the Fund. For the six months ended May 31, 2005, the amount charged to the Fund by DeIM included in reports to shareholders aggregated $13,440, of which $6,720 is unpaid at May 31, 2005.
Directors' Fees and Expenses. The Fund pays each Director not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
Scudder Cash Management QP Trust. Pursuant to an Exemptive Order issued by the SEC, the Fund may invest in the Scudder Cash Management QP Trust (the ``QP Trust'') and other affiliated funds managed by the Advisor. The QP Trust seeks to provide as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. The QP Trust does not pay the Advisor a management fee for the affiliated funds' investments in the QP Trust.
Insurance Brokerage Commissions. The Fund paid insurance premiums to an unaffiliated insurance broker in 2002 and 2003. This broker in turn paid a portion of its commissions to an affiliate of the Advisor, which performed certain insurance brokerage services for the broker. The Advisor has reimbursed the Fund for the portion of commissions (plus interest) paid to the affiliate of the Advisor attributable to the premiums paid by the Fund. The amounts for 2002 and 2003 were $64 and $63, respectively.
D. Expense Reductions
For the six months ended May 31, 2005, the Advisor agreed to reimburse the Fund $7,295, which represents a portion of the fee savings expected to be realized by the Advisor related to the outsourcing by the Advisor of certain administrative services to an unaffiliated service provider.
In addition, the Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund's custodian expenses. During the six months ended May 31, 2005, the custodian fee was reduced by $422 for custodian credits earned.
E. Line of Credit
The Fund and several other affiliated funds (the ``Participants'') share in a $1.1 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. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.
F. Share Transactions
The following table summarizes share and dollar activity in the Fund:
| Six Months Ended May 31, 2005 | Year Ended November 30, 2004 |
| Shares | Dollars | Shares | Dollars |
Shares sold |
Class A | 3,055,207 | $ 68,225,723 | 7,288,506 | $ 154,757,964 |
Class B | 161,164 | 3,595,345 | 820,999 | 17,354,180 |
Class C | 238,740 | 5,327,909 | 1,006,933 | 21,327,289 |
Class R | 18,523 | 408,641 | 36,946 | 787,749 |
Class AARP** | 150,870 | 3,372,921 | — | — |
Class S** | 2,067,429 | 46,043,839 | — | — |
Institutional Class | 31,224 | 698,947 | 416,036 | 8,494,439 |
| | $ 127,673,325 | | $ 202,721,621 |
Shares issued in tax-free reorganization* |
Class A | 3,903,385 | $ 86,693,237 | — | $ — |
Class B | 837,357 | 18,631,445 | — | — |
Class C | 499,057 | 11,098,912 | — | — |
Class AARP** | 1,554,184 | 34,517,886 | — | — |
Class S** | 72,194,140 | 1,603,419,636 | — | — |
Institutional Class | 835,154 | 18,565,423 | — | — |
| | $ 1,772,926,539 | | $ — |
Shares issued to shareholders in reinvestment of dividends |
Class A | 136,922 | $ 3,053,087 | 97,043 | $ 2,032,849 |
Class B | 15,729 | 352,441 | 6,269 | 131,564 |
Class C | 11,033 | 246,939 | 4,101 | 86,108 |
Class R | 274 | 6,123 | 129 | 2,737 |
Class AARP** | 5,970 | 131,527 | — | — |
Class S** | 268,732 | 5,920,227 | — | — |
Institutional Class | 7,734 | 171,809 | 7,363 | 153,277 |
| | $ 9,882,153 | | $ 2,406,535 |
Shares redeemed |
Class A | (2,928,945) | $ (64,765,459) | (2,232,658) | $ (47,438,223) |
Class B | (717,683) | (16,015,360) | (1,051,101) | (22,252,937) |
Class C | (390,994) | (8,702,077) | (387,081) | (8,175,845) |
Class R | (1,508) | (33,340) | (8,288) | (175,466) |
Class AARP** | (219,026) | (4,861,601) | — | — |
Class S** | (5,973,493) | (133,241,536) | — | — |
Institutional Class | (152,789) | (3,450,936) | (743,288) | (15,512,133) |
| | $ (231,070,309) | | $ (93,554,604) |
Redemption fees | $ 610 | | — |
Net increase (decrease) |
Class A | 4,166,569 | $ 93,206,622 | 5,152,891 | $ 109,352,590 |
Class B | 296,567 | 6,563,873 | (223,833) | (4,767,193) |
Class C | 357,836 | 7,971,686 | 623,953 | 13,237,552 |
Class R | 17,289 | 381,424 | 28,787 | 615,020 |
Class AARP** | 1,491,998 | 33,160,745 | — | — |
Class S** | 68,556,808 | 1,522,142,719 | — | — |
Institutional Class | 721,323 | 15,985,249 | (319,890) | (6,864,417) |
| | $ 1,679,412,318 | | $ 111,573,552 |
* On December 17, 2004, the Scudder Large Company Value Fund was acquired by the Fund through a tax-free reorganization.
** For the period of December 20, 2004 (commencement of operations of Class AARP and S shares) to May 31, 2005.
G. Regulatory Matters and Litigation
Since at least July 2003, federal, state and industry regulators have been conducting ongoing inquiries and investigations ("inquiries") into the mutual fund industry, and have requested information from numerous mutual fund companies, including Scudder Investments. It is not possible to determine what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors. Publicity about mutual fund practices arising from these industry-wide inquiries serves as the general basis of a number of private lawsuits against the Scudder funds. These lawsuits, which previously have been reported in the press, involve purported class action and derivative lawsuits, making various allegations and naming as defendants various persons, including certain Scudder funds, the funds' investment advisors and their affiliates, certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each Scudder fund's investment advisor has agreed to indemnify the applicable Scudder funds in connection with these lawsuits, or other lawsuits or regulatory actions that may be filed making allegations similar to these lawsuits regarding market timing, revenue sharing, fund valuation or other subjects arising from or related to the pending inquiries. Based on currently available information, the funds' investment advisors believe the likelihood that the pending lawsuits will have a material adverse financial impact on a Scudder fund is remote and such actions are not likely to materially affect their ability to perform under their investment management agreements with the Scudder funds.
H. Acquisition of Assets
On December 17, 2004, the Fund acquired all of the net assets of Scudder Large Company Value Fund pursuant to a plan of reorganization approved by shareholders on December 10, 2004. The acquisition was accomplished by a tax-free exchange of 3,491,791 Class A shares, 750,139 Class B shares, 446,641 Class C shares, 1,392,434 Class AARP shares, 64,717,528 Class S shares and 749,787 Institutional Class shares of Scudder Large Company Value Fund, respectively for 3,903,385 Class A shares, 837,357 Class B shares, 499,057 Class C shares, 1,554,184 Class AARP shares, 72,194,140 Class S shares and 835,154 Institutional Class shares of Scudder Large Cap Value Fund, respectively, outstanding on December 17, 2004. Scudder Large Company Value Fund net assets at that date $1,772,926,539, including $355,242,207 of net unrealized appreciation, were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $385,243,107. The combined net assets of the Fund immediately following the acquisition were $2,158,169,646.
Account Management Resources |
|
For shareholders of Classes A, B, C and Institutional Class
Automated Information Lines | ScudderACCESS (800) 972-3060 Personalized account information, information on other Scudder funds and services via touchtone telephone and for Classes A, B, and C only, the ability to exchange or redeem shares. |
Web Site | scudder.com View your account transactions and balances, trade shares, monitor your asset allocation, and change your address, 24 hours a day. Obtain prospectuses and applications, blank forms, interactive worksheets, news about Scudder funds, subscription to fund updates by e-mail, retirement planning information, and more. |
For More Information | (800) 621-1048 To speak with a Scudder service representative. |
Written Correspondence | Scudder Investments PO Box 219356
Kansas City, MO 64121-9356 |
Proxy Voting | A description of the fund's policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — scudder.com (type "proxy voting" in the search field) — or on the SEC's Web site — www.sec.gov. To obtain a written copy of the fund's policies and procedures without charge, upon request, call us toll free at (800) 621-1048. |
Principal Underwriter | If you have questions, comments or complaints, contact: Scudder Distributors, Inc. 222 South Riverside Plaza
Chicago, IL 60606-5808 (800) 621-1148 |
| Class A | Class B | Class C | Institutional Class |
Nasdaq Symbol | KDCAX | KDCBX | KDCCX | KDCIX |
CUSIP Number | 81123U-105 | 81123U-402 | 81123U-501 | 81123U-600 |
Fund Number | 086 | 286 | 386 | 1486 |
For shareholders of Class R
Automated Information Lines | Scudder Flex Plan Access (800) 532-8411 24-hour access to your retirement plan account. |
Web Site | scudder.com Click "Retirement Plans" to reallocate assets, process transactions and review your funds through our secure online account access. Obtain prospectuses and applications, blank forms, interactive worksheets, news about Scudder funds, subscription to fund updates by e-mail, retirement planning information, and more. |
For More Information | (800) 543-5776 To speak with a Scudder service representative. |
Written Correspondence | Scudder Retirement Services 222 South Riverside Plaza
Chicago, IL 60606-5806 |
Proxy Voting | A description of the fund's policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — scudder.com (type "proxy voting" in the search field) — or on the SEC's Web site — www.sec.gov. To obtain a written copy of the fund's policies and procedures without charge, upon request, call us toll free at (800) 621-1048. |
Principal Underwriter | If you have questions, comments or complaints, contact: Scudder Distributors, Inc. 222 South Riverside Plaza
Chicago, IL 60606-5808 (800) 621-1148 |
Nasdaq Symbol | KDCRX |
CUSIP Number | 811123U-816 |
Fund Number | 1505 |
For shareholders of Class AARP and Class S
| AARP Investment Program Shareholders | Scudder Class S Shareholders |
Automated Information Lines | Easy-Access Line (800) 631-4636 | SAILTM (800) 343-2890 |
| Personalized account information, the ability to exchange or redeem shares, and information on other Scudder funds and services via touchtone telephone. |
Web Sites | aarp.scudder.com | myScudder.com |
| View your account transactions and balances, trade shares, monitor your asset allocation, and change your address, 24 hours a day. Obtain prospectuses and applications, blank forms, interactive worksheets, news about Scudder funds, subscription to fund updates by e-mail, retirement planning information, and more. |
For More Information | (800) 253-2277 To speak with an AARP Investment Program service representative. | (800) SCUDDER To speak with a Scudder service representative. |
Written Correspondence | AARP Investment Program from Scudder Investments PO Box 219735
Kansas City, MO 64121-9735 | Scudder Investments PO Box 219669
Kansas City, MO 64121-9669 |
Proxy Voting | A description of the fund's policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web sites — aarp.scudder.com or myScudder.com (type "proxy voting" in the search field) — or on the SEC's Web site — www.sec.gov. To obtain a written copy of the fund's policies and procedures without charge, upon request, call your service representative. |
Principal Underwriter | If you have questions, comments or complaints, contact: Scudder Distributors, Inc. 222 South Riverside Plaza
Chicago, IL 60606-5808 (800) 621-1148 |
| Class AARP | Class S |
Nasdaq Symbol | 212 | 312 |
Fund Number | KDCPX | KDCSX |
This privacy statement is issued by Deutsche Investment Management Americas Inc., Deutsche Asset Management, Inc., Scudder Distributors, Inc., Scudder Investor Services, Inc., Scudder Trust Company and the Scudder Funds.
We never sell customer lists or individual client information. We consider privacy fundamental to our client relationships and adhere to the policies and practices described below to protect current and former clients' information. Internal policies are in place to protect confidentiality, while allowing client needs to be served. Only individuals who need to do so in carrying out their job responsibilities may access client information. We maintain physical, electronic and procedural safeguards that comply with federal and state standards to protect confidentiality. These safeguards extend to all forms of interaction with us, including the Internet.
In the normal course of business, clients give us nonpublic personal information on applications and other forms, on our websites, and through transactions with us or our affiliates. Examples of the nonpublic personal information collected are name, address, Social Security number and transaction and balance information. To be able to serve our clients, certain of this client information is shared with affiliated and nonaffiliated third party service providers such as transfer agents, custodians, and broker-dealers to assist us in processing transactions and servicing your account with us. In addition, we may disclose all of the information we collect to companies that perform marketing services on our behalf or to other financial institutions with which we have joint marketing agreements. The organizations described above that receive client information may only use it for the purpose designated by the Scudder Companies listed above.
We may also disclose nonpublic personal information about you to other parties as required or permitted by law. For example, we are required or we may provide information to government entities or regulatory bodies in response to requests for information or subpoenas, to private litigants in certain circumstances, to law enforcement authorities, or any time we believe it necessary to protect the firm.
For AARP shareholders only: Certain investors in the AARP Investment Program are advised that limited nonpublic personal information is shared with AARP and its subsidiary AARP Services Inc. (ASI). This includes an investor's status as a current or former Program participant, name, address, and type of account maintained (i.e. IRA or non-IRA). This information must be shared so that ASI can provide quality control services, such as monitoring satisfaction with the Program. However, AARP and ASI may also use this information for other purposes such as member research, and may share this information with other AARP providers to inform members of AARP benefits and services. Shareholders residing in states with certain state specific privacy restrictions are excluded from this information sharing. All other shareholders may instruct us in writing not to share information regarding themselves or joint account holders with AARP or ASI for any purposes unrelated to the AARP Investment Program. With respect to accounts that are jointly held, an opt-out request received from any of the joint account holders will be applied to the entire account.
Questions on this policy may be sent to:
For Class AARP:
AARP Investment Program, Attention: Correspondence,
P.O. Box 219735, Kansas City, MO 64121-9735
For Class S:
Scudder Investments, Attention: Correspondence,
P.O. Box 219669, Kansas City, MO 64121-9669
For all other classes:
Scudder Investments, Attention: Correspondence — Chicago
P.O. Box 219415, Kansas City, MO 64121-9415
September 2004
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable
ITEM 6. SCHEDULE OF INVESTMENTS
Not Applicable
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The primary function of the Nominating and Governance Committee is to identify
and recommend individuals for membership on the Board and oversee the
administration of the Board Governance Procedures and Guidelines. Shareholders
may recommend candidates for Board positions by forwarding their correspondence
by U.S. mail or courier service to the Fund's Secretary for the attention of the
Chairman of the Nominating and Governance Committee, Two International Place,
Boston, MA 02110. Suggestions for candidates must include a resume of the
candidate.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Chief Executive and Financial Officers concluded that the Registrant's
Disclosure Controls and Procedures are effective based on the evaluation of the
Disclosure Controls and Procedures as of a date within 90 days of the filing
date of this report.
(b) There have been no changes in the registrant's internal control over
financial reporting that occurred during the registrant's last half-year (the
registrant's second fiscal half-year in the case of the annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal controls over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Certification pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as
Exhibit 99.CERT.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as
Exhibit 99.906CERT.
Form N-CSR Item F
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: Scudder Large Cap Value Fund, a series of
Scudder Value Series, Inc.
By: /s/ Julian Sluyters
---------------------------
Julian Sluyters
Chief Executive Officer
Date: August 2, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Registrant: Scudder Large Cap Value Fund, a series of
Scudder Value Series, Inc.
By: /s/ Julian Sluyters
---------------------------
Julian Sluyters
Chief Executive Officer
Date: August 2, 2005
By: /s/ Paul Schubert
---------------------------
Paul Schubert
Chief Financial Officer
Date: August 2, 2005
