UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSRS
Investment Company Act file number 811-07347
ADVISOR FUNDS II
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(Exact Name of Registrant as Specified in Charter)
One South Street, Baltimore, Maryland 21202
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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: 12/31
Date of reporting period: 06/30/2005
ITEM 1. REPORT TO STOCKHOLDERS
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| Semiannual Report to Shareholders | |
| June 30, 2005 | |
Contents |
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Click Here Performance Summary Click Here Information About Your Fund's Expenses Click Here Portfolio Management Review Click Here Portfolio Summary Scudder US Bond Index Fund Click Here Financial Statements Click Here Financial Highlights Click Here Notes to Financial Statements US Bond Index Portfolio 22 Investment Portfolio Click Here Financial Statements Click Here Financial Highlights Click Here Notes to Financial Statements Click Here Account Management Resources Click Here Privacy Statement |
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. The fund may not be able to mirror the Lehman Brothers Aggregate Bond Index closely enough to track its performance for several reasons, including the fund's cost to buy and sell securities, the flow of money into and out of the fund and the potential underperformance of securities selected. Additionally, the fund invests in individual bonds whose yields and market values fluctuate so that your investment may be worth more or less than its original cost. Bond investments are subject to interest-rate risk such that when interest rates rise, the prices of the bonds, and thus the value of the bond fund, can decline and the investor can lose principal value. 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.
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All performance shown is historical, assumes reinvestment of all dividend and capital gain distributions, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when 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.
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 reflect a fee waiver and/or expense reimbursement. Without this waiver/reimbursement, returns and rankings would have been lower.
Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns and rankings may differ by share class.
Average Annual Total Returns as of 6/30/05 | |||||
Scudder US Bond Index Fund | 6-Month* | 1-Year | 3-Year | 5-Year | Life of Fund* |
Institutional Class | 2.52% | 6.83% | 5.56% | 7.24% | 6.76% |
Lehman Brothers Aggregate Bond Index | 2.51% | 6.80% | 5.76% | 7.40% | 6.89% |
Sources: Lipper Inc. and Deutsche Asset Management, Inc.
* Total returns shown for periods less than one year are not annualized.
* The Fund commenced operations on June 30, 1997. Index returns begin June 30, 1997.
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Net Asset Value and Distribution Information | |
| Institutional Class |
Net Asset Value: 6/30/05 | $ 10.44 |
12/31/04 | $ 10.41 |
Distribution Information: Six Months: Income Dividends as of 6/30/05 | $ .21 |
Capital Gains as of 6/30/05 | $ .02 |
June Income Dividend | .0365 |
SEC 30-day Yield as of 6/30/05++ | 3.98% |
Current Annualized Distribution Rate as of 6/30/05++ | 4.25% |
++ The SEC yield is net investment income per share earned over the month ended June 30, 2005, shown as an annualized percentage of the maximum offering price per share on the last day of the period. The SEC yield is computed in accordance with a standardized method prescribed by the Securities and Exchange Commission. The SEC yield would have been 3.66% had certain expenses not been reduced. Current annualized distribution rate is the latest monthly dividend shown as an annualized percentage of net asset value on June 30, 2005. Distribution rate simply measures the level of dividends and is not a complete measure of performance. The current annualized distribution rate would have been 3.93% had certain expenses not been reduced. Yields and distribution rates are historical and will fluctuate.
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Institutional Class Lipper Rankings — Intermediate Investment Grade Debt Funds Category as of 6/30/05 | ||||
Period | Rank |
| Number of Funds Tracked | Percentile Ranking |
1-Year | 99 | of | 451 | 22 |
3-Year | 163 | of | 392 | 42 |
5-Year | 64 | of | 273 | 24 |
Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings are based on total returns with distributions reinvested.
Growth of an Assumed $1,000,000 Investment |
[] Scudder US Bond Index Fund — Institutional Class [] Lehman Brothers Aggregate Bond Index+ |
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Yearly periods ended June 30 |
Comparative Results as of 6/30/05 | |||||
Scudder US Bond Index Fund | 1-Year | 3-Year | 5-Year | Life of Fund* | |
Institutional Class | Growth of $1,000,000 | $1,068,300 | $1,176,300 | $1,418,200 | $1,687,100 |
Average annual total return | 6.83% | 5.56% | 7.24% | 6.76% | |
Lehman Brothers Aggregate Bond Index+ | Growth of $1,000,000 | $1,068,000 | $1,182,900 | $1,429,200 | $1,703,900 |
Average annual total return | 6.80% | 5.76% | 7.40% | 6.89% | |
The growth of $1,000,000 is cumulative.
The minimum initial investment for Institutional Class is $1,000,000.
* The Fund commenced operations on June 30, 1997. Index returns begin June 30, 1997.
+ Lehman Brothers Aggregate Bond Index is an unmanaged index representing domestic taxable investment grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with an average maturity of one year or more. 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.
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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 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, the Fund limited these expenses; had it 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 June 30, 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 are equal to the Fund's annualized expense ratio for the share class, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.
Annualized Expense Ratio | Institutional Class |
Scudder US Bond Index Fund | .15% |
For more information, please refer to the Fund's prospectus.
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In the following interview, Lead Portfolio Manager Louis D'Arienzo discusses the market environment, fund performance and his strategy in managing Scudder US Bond Index Fund during the six-month period ended June 30, 2005.
Q: How did Scudder US Bond Index Fund perform during the first half of 2005?
A: Scudder US Bond Index Fund tracked the performance of its benchmark, the Lehman Brothers Aggregate Bond Index, for the six-month period ended June 30, 2005.1 The fund produced a return of 2.52% (Institutional Class shares) for the semiannual period, compared with 2.51% for the benchmark. The fund outperformed the 2.00% average return of the 467 funds in its Lipper category, Intermediate Investment Grade Debt Funds.2 (Past performance is no guarantee of future results. Please see pages 3 through 5 for more complete performance information.)
1 The Lehman Brothers Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities with an average maturity of one year or more. Index returns assume reinvestment of all dividends and, unlike fund returns, do not reflect any fees or expenses. It is not possible to invest directly in an index.
2 The Lipper Intermediate Investment Grade Debt Funds category comprises funds that invest primarily in investment-grade debt issues (rated in the top 48 grades) with dollar-weighted average maturities of five to 10 years.
Q: What were the primary factors affecting the US bond market during the period?
A: The semiannual period featured two surprises within the fixed-income markets: (1) the Treasury's announcement in May of a possible reintroduction of 30-year bonds (whose issuance had been suspended in 2002); and (2) very disappointing earnings reports from General Motors and Ford Motor Co., which devolved quickly into the downgrades of both credits to high yield status and led to the reevaluation of the creditworthiness of a host of non-Treasury fixed-income issues.
In general, the period was characterized by solid economic growth accompanied by contained increases in inflation, as open markets and excess economic capacity continued to put downward pressure on consumer prices. While the price of oil reached $60 a barrel, the market, for the most part, chose to view this development as a check on economic growth rather than a potential source of inflation. This environment permitted the Federal Reserve Board (the Fed) to maintain its policy of increasing short-term rates in a measured fashion. Over the period, the Fed raised the federal funds rate on four occasions by 0.25% to its current level of 3.25%.3 Despite the rise in short-term interest rates, longer-term rates actually declined over the period, as the financial markets displayed confidence that the Fed was pursuing a policy which would continue to curtail long-term inflationary pressures.
3 Federal funds rate — the overnight rate charged by banks when they borrow money from each other. Set by the Federal Open Market Committee (FOMC), the fed funds rate is the most sensitive — and closely watched — indicator concerning the direction of short-term interest rates. The FOMC is a key committee within the US Federal Reserve System, and meets every six weeks to review Fed policy on short-term rates. Based on current Fed policy, the FOMC may choose to raise or lower the fed funds rate to either add liquidity to the economy or remove it.
US Treasury Bond Yield Curve (12/31/04 versus 6/30/05) |
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Past performance is no guarantee of future results.
Source: Bloomberg
Q: How did government bonds perform in this environment?
A: Led by the Fed tightening, the yield curve's continued flattening had the strongest influence on relative returns.4 The two-year Treasury bond yield rose 57 basis points over the first six months of 2005, while the 10-year yield fell 31 basis points, for a total flattening of 88 basis points. (100 basis points equals 1.00%.) Since a bond's price moves in the opposite direction of its yield, this meant that longer-term bonds provided the best performance over the period. The market appears to have taken comfort in the view that higher oil prices could result in slower growth and therefore lower inflation. Furthermore, foreign central banks have continued to support the market by adding to their Treasury holdings.
4 Yield curve — The yield curve is a graph with a left to right line that shows how high or low yields are, from the shortest to the longest maturities. Typically the line rises from left to right as investors who are willing to tie up their money for a longer period of time are rewarded with higher yields. Yield curve "flattening" means that the "spread" or difference between short- and long-term interest rates is declining.
5 Duration is a measure of bond price volatility. Duration can be defined as the approximate percentage change in price for a 100-basis-point (one single percentage point) change in market interest rate levels. A duration of 1.25, for example, means that the price of a bond or bond portfolio should rise by approximately 1.25% for a one-percentage-point drop in interest rates and that it should fall by 1.25% for a one-percentage-point rise in interest rates.
Q: Which sectors within the Lehman Brothers Aggregate Bond Index were the best and worst performers?
A: Overall, on a duration-adjusted basis, the Lehman Brothers Aggregate Bond Index underperformed US Treasury securities for the six months ended June 30, 2005 by -0.12%.5 Corporate bonds turned in the most disappointing performance compared with Treasuries, underperforming them by a -0.89% margin due to concerns over slower economic growth and market disruptions induced by the GM and Ford credit downgrades.
During the period, US Treasury bonds produced a total return of 3.20%. Mortgage-backed securities and asset-backed securities outperformed duration-adjusted Treasuries by 0.13% and 0.29%, respectively, for the period, while commercial mortgage-backed securities outperformed duration-adjusted Treasuries by 0.35%.
Q: What investment strategies do you intend to pursue within the fund?
A: This is an index fund, and we seek to replicate as closely as possible (before deduction of expenses) the investment performance of the Lehman Brothers Aggregate Bond Index. Thus, we neither evaluate short-term fluctuations in the fund's performance nor manage according to a given outlook for the bond market or the economy in general. Still, we will continue to monitor economic conditions and how they affect the financial markets, as we seek to closely track the performance of the broad US bond market.
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 management team's views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
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Asset Allocation (Excludes Securities Lending Collateral) | 6/30/05 | 12/31/04 |
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US Government Agency Sponsored Pass-Throughs | 30% | 31% |
US Treasury Obligations | 29% | 27% |
Corporate Bonds | 17% | 19% |
US Government Sponsored Agencies | 9% | 10% |
Foreign Bonds — US$ Denominated | 5% | 4% |
Government National Mortgage Association | 4% | 3% |
Commercial and Non-Agency Mortgage-Backed Securities | 3% | 3% |
Cash Equivalents & Other, net | 2% | 2% |
Asset Backed | 1% | 1% |
| 100% | 100% |
Corporate and Foreign Bonds Diversification (Excludes Cash Equivalents and Securities Lending Collateral) | 6/30/05 | 12/31/04 |
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Financials | 46% | 45% |
Sovereign Bonds | 8% | 7% |
Consumer Discretionary | 8% | 8% |
Utilities | 7% | 7% |
Telecommunication Services | 7% | 7% |
Energy | 6% | 7% |
Consumer Staples | 6% | 6% |
Industrials | 4% | 5% |
Materials | 4% | 4% |
Health Care | 3% | 3% |
Information Technology | 1% | 1% |
| 100% | 100% |
Quality | 6/30/05 | 12/31/04 |
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US Government Obligations | 62% | 71% |
AAA | 19% | 8% |
AA | 5% | 2% |
A | 9% | 10% |
BBB | 5% | 9% |
| 100% | 100% |
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Effective Maturity | 6/30/05 | 12/31/04 |
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Under 1 year | 3% | 5% |
1 < 5 years | 47% | 39% |
5 < 10 years | 41% | 45% |
10 < 15 years | 4% | 2% |
15 years or greater | 5% | 9% |
| 100% | 100% |
Weighted average effective maturity: 6.45 years and 7.34 years, respectively.
Asset allocation, corporate and foreign bonds diversification, quality and effective maturity are subject to change.
For more complete details about the Fund's investment portfolio, see page 22. 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.
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Statement of Assets and Liabilities as of June 30, 2005 (Unaudited) | |
Assets | |
Investments in US Bond Index Portfolio, at value | $ 172,381,512 |
Receivable for Fund shares sold | 127,193 |
Other assets | 12,938 |
Total assets | 172,521,643 |
Liabilities | |
Dividends payable | 80,423 |
Payable for Fund shares redeemed | 101,731 |
Other accrued expenses and payables | 40,031 |
Total liabilities | 222,185 |
Net assets, at value | $ 172,299,458 |
Net Assets | |
Net assets consist of: Accumulated distributions in excess of net investment income | (21,866) |
Net unrealized appreciation (depreciation) on investments | 3,945,352 |
Accumulated net realized gain (loss) | 496,641 |
Paid-in capital | 167,879,331 |
Net assets, at value | $ 172,299,458 |
Net Asset Value | |
Net Asset Value and redemption price(a) per share ($172,299,458 ÷ 16,510,821 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 10.44 |
(a) Redemption price per share for shares held less then 15 days is equal to net asset value less a 2% redemption fee.
The accompanying notes are an integral part of the financial statements.
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Statement of Operations for the six months ended ended June 30, 2005 (Unaudited) | |
Investment Income | |
Interest | $ 2,960,050 |
Interest — Cash Management Fund Institutional | 294,926 |
Interest — Scudder Cash Management QP Trust | 138,330 |
Securities lending income, including income from Scudder Daily Assets Fund Institutional, net of borrower rebates | 55,115 |
Less allocated expensesa | (80,258) |
Net investment income allocated from US Bond Index Portfolio | 3,368,163 |
Expenses: Administrator service fee | 163,409 |
Auditing | 8,712 |
Legal | 6,820 |
Reports to shareholders | 12,252 |
Registration fee | 13,511 |
Trustees' fees and expenses | 2,128 |
Other | 271 |
Total expenses, before expense reductions | 207,103 |
Expense reductions | (162,925) |
Total expenses, after expense reductions | 44,178 |
Net investment income | 3,323,985 |
Realized and Unrealized Gain (Loss) on Investment Transactions | |
Net realized gain (loss) from Investments | 538,238 |
Net unrealized appreciation (depreciation) during the period on investments | 358,100 |
Net gain (loss) on investment transactions | 896,338 |
Net increase (decrease) in net assets resulting from operations | $ 4,220,323 |
a For the six months ended June 30, 2005, the Advisor to the US Bond Index Portfolio waived fees in the amount of $113,018 which was allocated to the Fund.
The accompanying notes are an integral part of the financial statements.
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Statement of Changes in Net Assets | ||
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2005 (Unaudited) | Year Ended December 31, 2004 |
Operations: Net investment income | $ 3,323,985 | $ 5,477,652 |
Net realized gain (loss) on investment transactions | 538,238 | 1,599,547 |
Net unrealized appreciation (depreciation) during the period on investment transactions | 358,100 | (792,294) |
Net increase (decrease) in net assets resulting from operations | 4,220,323 | 6,284,905 |
Distributions to shareholders from: Net investment income | (3,346,537) | (5,476,966) |
Net realized gains | (285,778) | (1,731,958) |
Fund share transactions: Proceeds from shares sold | 17,179,691 | 39,856,929 |
Reinvestment of distributions | 3,061,306 | 6,642,496 |
Cost of shares redeemed | (8,316,447) | (28,945,322) |
Redemption fees | 826 | — |
Net increase (decrease) in net assets from Fund share transactions | 11,925,376 | 17,554,103 |
Increase (decrease) in net assets | 12,513,384 | 16,630,084 |
Net assets at beginning of period | 159,786,074 | 143,155,990 |
Net assets at end of period (including accumulated distributions in excess of net investment income and undistributed net investment income of $21,866 and $686, respectively) | $ 172,299,458 | $ 159,786,074 |
The accompanying notes are an integral part of the financial statements.
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Years Ended December 31, | 2005a | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per Share Data | ||||||
Net asset value, beginning of period | $ 10.41 | $ 10.46 | $ 10.60 | $ 10.42 | $ 10.24 | $ 9.76 |
Income (loss) from investment operations: Net investment income | .21b | .37b | .44b | .52b | .59 | .62 |
Net realized and unrealized gain (loss) on investment transactions | .05 | .06 | (.05) | .50 | .23 | .48 |
Total from investment operations | .26 | .43 | .39 | 1.02 | .82 | 1.10 |
Less distributions from: Net investment income | (.21) | (.37) | (.42) | (.52) | (.59) | (.62) |
Net realized gains on investment transactions | (.02) | (.11) | (.11) | (.32) | (.05) | — |
Total distributions | (.23) | (.48) | (.53) | (.84) | (.64) | (.62) |
Redemption fees | .00*** | — | — | — | — | — |
Net asset value, end of period | $ 10.44 | $ 10.41 | $ 10.46 | $ 10.60 | $ 10.42 | $ 10.24 |
Total Return (%)c | 2.52** | 4.27 | 3.75 | 10.04 | 8.19 | 11.72 |
Ratios to Average Net Assets and Supplemental Data | ||||||
Net assets, end of period ($ millions) | 172 | 160 | 143 | 100 | 110 | 116 |
Ratio of expenses before expense reductions, including expenses allocated from the US Bond Index Portfolio (%) | .49* | .48 | .50 | .52 | .53 | .57 |
Ratio of expenses after expense reductions, including expenses allocated from the US Bond Index Portfolio (%) | .15* | .15 | .15 | .15 | .15 | .15 |
Ratio of net investment income (%) | 4.07* | 3.57 | 4.27 | 4.94 | 5.68 | 6.33 |
a For the six months ended June 30, 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. | ||||||
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A. Significant Accounting Policies
US Bond Index Fund — Institutional Class ("Scudder US Bond Index Fund" or the "Fund") is a diversified series of the Scudder Advisor Funds II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.
The Fund seeks to achieve its investment objective by investing substantially all of its assets in the US Bond Index Portfolio (the "Portfolio"), a diversified, open-end management investment company advised by Deutsche Asset Management, Inc. ("DeAM, Inc.").
On June 30, 2005, the Fund owned approximately 100% of the US Bond Index Portfolio. The financial statements of the Portfolio, including the Investment Portfolio, are contained elsewhere in this report and should be read in conjunction with the Fund's financial statements.
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. The Fund determines the valuation of its investment in the Portfolio by multiplying its proportionate ownership of the Portfolio by the total value of the Portfolio's net assets.
The Portfolio's policies for determining the value of its net assets are discussed in the Portfolio's Financial Statements, which accompany this report.
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.
Distribution of Income and Gains. Net investment income is declared as a daily dividend and distributed to shareholders monthly. 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. 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 net unrealized appreciation/depreciation of the Fund's investment in the Portfolio consists of an allocated portion of the Portfolio's appreciation/depreciation. Please refer to the Portfolio's financial statements for a breakdown of the appreciation/depreciation from investments.
The tax character of current year distributions will be determined at the end of the current fiscal year.
Redemption Fees. Effective February 1, 2005, the Fund imposes a redemption fee of 2% of the total redemption amount on the 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.
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. The Fund receives a daily allocation of the Portfolio's income, expenses and net realized and unrealized gains and losses in proportion to its investment in the Portfolio. Expenses directly attributed to a fund are charged to that fund, while expenses which are attributable to the Trust are allocated among the funds in the Trust on the basis of relative net assets.
B. Related Parties
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 Asset Management, Inc. (the "Advisor") is the Advisor for the Portfolio and Investment Company Capital Corp. ("ICCC" or the "Administrator") is the Administrator for the Fund, both wholly owned subsidiaries of Deutsche Bank AG.
Administrator Service Fee. For its services as Administrator, ICCC receives a fee (the "Administrator Service Fee") of 0.20% of the Fund's average daily net assets, computed and accrued daily and payable monthly.
For the six months ended June 30, 2005, the Advisor and Administrator contractually agreed to waive a portion of its fees and reimburse expenses of the Fund to the extent necessary to maintain the annualized expenses at 0.15% including expenses allocated from the Portfolio.
Accordingly, for the six months ended June 30, 2005, the Administrator waived a portion of its Administrative Service Fee aggregating $162,925 and the amount charged aggregated $484, which was equivalent to an annualized effective rate 0.00% of the Fund's average daily net assets.
Typesetting and Filing Service 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 June 30, 2005, the amount charged to the Fund by DeIM aggregated $16,760, of which $7,200 is unpaid at June 30, 2005.
Trustees' Fees and Expenses. As compensation for his or her services, each Independent Trustee receives an aggregate annual fee, plus a fee for each meeting attended (plus reimbursement for reasonable out-of-pocket expenses incurred in connection with his or her attendance at board and committee meetings) from each Fund in the Fund Complex for which he or she serves. In addition, the Chairman of the Fund Complex's Audit Committee receives an annual fee for their services. Payment of such fees and expenses is allocated among all such Funds described above in direct proportion to their relative net assets.
C. Share Transactions
The following table summarizes share and dollar activity in the Fund:
| Six Months Ended | Year Ended December 31, 2004 | ||
| Shares | Dollars | Shares | Dollars |
Shares sold | ||||
| 1,658,734 | $ 17,179,691 | 3,794,638 | $ 39,856,929 |
Shares issued to shareholders in reinvestment of distributions | ||||
| 296,622 | $ 3,061,306 | 634,674 | $ 6,642,496 |
Shares redeemed | ||||
| (800,654) | $ (8,316,447) | (2,757,859) | $ (28,945,322) |
Redemption fees | $ 826 |
| $ — | |
Net increase (decrease) | ||||
| 1,154,702 | $ 11,925,376 | 1,671,453 | $ 17,554,103 |
D. 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.
 | |
|
| Principal Amount ($) | Value ($) |
|
| |
Corporate Bonds 16.6% | ||
Consumer Discretionary 1.6% | ||
Albertson's, Inc.: |
|
|
7.25%, 5/1/2013 (d) | 25,000 | 28,209 |
7.5%, 2/15/2011 (d) | 50,000 | 56,317 |
Comcast Cable Communications Holdings, Inc.: |
|
|
6.2%, 11/15/2008 | 100,000 | 105,754 |
6.875%, 6/15/2009 | 60,000 | 65,359 |
8.375%, 3/15/2013 | 90,000 | 109,742 |
Comcast Corp., 5.85%, 1/15/2010 (d) | 25,000 | 26,439 |
Cox Communications, Inc., 7.875%, 8/15/2009 | 50,000 | 56,023 |
DaimlerChrysler NA Holding Corp.: |
|
|
7.2%, 9/1/2009 | 150,000 | 163,278 |
8.0%, 6/15/2010 | 150,000 | 169,552 |
Federated Department Stores, Inc., 7.45%, 7/15/2017 | 300,000 | 361,581 |
Ford Motor Co.: |
|
|
6.625%, 10/1/2028 | 75,000 | 58,834 |
8.875%, 1/15/2022 | 200,000 | 197,187 |
Fred Meyer, Inc., 7.45%, 3/1/2008 | 50,000 | 53,784 |
Gannett Co., Inc., 6.375%, 4/1/2012 | 50,000 | 55,552 |
Gillette Co., 2.5%, 6/1/2008 | 50,000 | 48,058 |
Kimberly-Clark Corp., 5.625%, 2/15/2012 | 50,000 | 53,799 |
News America Holdings, Inc., 9.25%, 2/1/2013 | 100,000 | 126,388 |
News America, Inc., 5.3%, 12/15/2014 | 25,000 | 25,650 |
Northwest Airlines Corp., 8.072%, 4/1/2021 | 21,581 | 23,581 |
Target Corp., 5.875%, 3/1/2012 | 200,000 | 217,160 |
TCI Communications, Inc., 7.125%, 2/15/2028 | 100,000 | 116,704 |
Time Warner Entertainment Co. LP, 7.25%, 9/1/2008 | 100,000 | 108,303 |
Time Warner, Inc.: |
|
|
6.625%, 5/15/2029 | 10,000 | 11,143 |
6.875%, 5/1/2012 | 100,000 | 112,842 |
6.95%, 1/15/2028 | 30,000 | 34,560 |
7.7%, 5/1/2032 | 25,000 | 31,625 |
Viacom, Inc., 7.7%, 7/30/2010 | 200,000 | 223,221 |
Walt Disney Co., 6.2%, 6/20/2014 | 75,000 | 83,259 |
2,723,904 | ||
Consumer Staples 1.3% | ||
Anheuser Busch Companies, Inc., 4.95%, 1/15/2014 (d) | 100,000 | 103,874 |
Bottling Group LLC, 5.0%, 11/15/2013 (d) | 50,000 | 51,723 |
Campbell Soup Co., 5.5%, 3/15/2007 (d) | 20,000 | 20,479 |
Coca-Cola Co., 5.75%, 3/15/2011 (d) | 25,000 | 26,827 |
Coca-Cola Enterprises, Inc., 8.5%, 2/1/2022 | 250,000 | 341,891 |
ConAgra Foods, Inc., 7.125%, 10/1/2026 | 100,000 | 120,984 |
Coors Brewing Co., 6.375%, 5/15/2012 (d) | 10,000 | 10,847 |
Fortune Brands, Inc., 4.875%, 12/1/2013 | 50,000 | 49,912 |
General Mills, Inc.: |
|
|
5.125%, 2/15/2007 | 10,000 | 10,156 |
6.0%, 2/15/2012 | 48,000 | 52,184 |
H.J. Heinz Finance Co.: |
|
|
6.0%, 3/15/2012 | 25,000 | 27,106 |
6.625%, 7/15/2011 | 25,000 | 27,829 |
Kellogg Co., 6.6%, 4/1/2011 | 50,000 | 55,412 |
Kraft Foods, Inc.: |
|
|
4.0%, 10/1/2008 | 100,000 | 99,214 |
5.25%, 6/1/2007 | 20,000 | 20,389 |
5.625%, 11/1/2011 | 50,000 | 53,041 |
6.25%, 6/1/2012 | 40,000 | 43,973 |
Kroger Co.: |
|
|
7.5%, 4/1/2031 | 50,000 | 60,213 |
7.8%, 8/15/2007 | 50,000 | 53,418 |
McDonald's Corp., 8.875%, 4/1/2011 | 300,000 | 369,586 |
Procter & Gamble Co., 6.875%, 9/15/2009 | 200,000 | 221,737 |
Safeway, Inc.: |
|
|
6.5%, 11/15/2008 (d) | 90,000 | 95,064 |
6.5%, 3/1/2011 | 80,000 | 86,465 |
Unilever Capital Corp., 7.125%, 11/1/2010 | 50,000 | 56,524 |
Wal-Mart Stores, Inc.: |
|
|
4.375%, 7/12/2007 (d) | 20,000 | 20,178 |
6.875%, 8/10/2009 | 100,000 | 110,204 |
2,189,230 | ||
Energy 1.0% | ||
Alabama Power Co.: |
|
|
5.5%, 10/15/2017 | 100,000 | 106,966 |
5.7%, 2/15/2033 | 50,000 | 54,658 |
Amoco Co., 6.5%, 8/1/2007 | 250,000 | 261,940 |
Anadarko Petroleum Corp., 7.5%, 10/15/2026 | 60,000 | 74,845 |
Burlington Resources, Inc., 7.375%, 3/1/2029 | 50,000 | 62,240 |
ChevronTexaco Capital Co., 3.5%, 9/17/2007 | 20,000 | 19,806 |
Conoco Funding Co., 6.35%, 10/15/2011 | 200,000 | 221,459 |
Conoco, Inc., 6.95%, 4/15/2029 | 150,000 | 188,447 |
Devon Financing Corp., 6.875%, 9/30/2011 | 100,000 | 111,897 |
Duke Capital Corp., 7.5%, 10/1/2009 | 150,000 | 166,811 |
Exelon Generation Co. LLC, 6.95%, 6/15/2011 | 25,000 | 28,045 |
Kinder Morgan Energy Partners LP, 6.75%, 3/15/2011 | 60,000 | 65,986 |
Marathon Oil Corp., 5.375%, 6/1/2007 | 50,000 | 50,993 |
MidAmerican Energy Holdings Co.: |
|
|
3.5%, 5/15/2008 | 75,000 | 73,089 |
5.875%, 10/1/2012 | 25,000 | 26,555 |
Occidental Petroleum Corp., 7.375%, 11/15/2008 | 100,000 | 109,995 |
Phillips Petroleum Co., 8.75%, 5/25/2010 | 50,000 | 59,562 |
PPL Energy Supply LLC, 6.4%, 11/1/2011 | 25,000 | 27,378 |
Transocean Sedco Forex, Inc., 6.625%, 4/15/2011 | 50,000 | 56,159 |
Valero Energy Corp., 6.125%, 4/15/2007 | 25,000 | 25,737 |
1,792,568 | ||
Financials 8.0% | ||
ABN Amro Bank NV, 7.125%, 6/18/2007 | 540,000 | 569,575 |
Allstate Corp.: |
|
|
5.35%, 6/1/2033 | 50,000 | 50,304 |
7.2%, 12/1/2009 | 100,000 | 111,656 |
American Express Credit Corp., 3.0%, 5/16/2008 | 50,000 | 48,490 |
American General Finance Corp.: |
|
|
Series I, 3.875%, 10/1/2009 | 200,000 | 195,340 |
Series G, 5.75%, 3/15/2007 | 75,000 | 76,740 |
American International Group, Inc.: |
|
|
2.875%, 5/15/2008 | 50,000 | 48,052 |
4.25%, 5/15/2013 | 100,000 | 96,988 |
Assurant, Inc., 5.625%, 2/15/2014 | 25,000 | 26,310 |
Avalonbay Communities, 6.125%, 11/1/2012 | 30,000 | 32,473 |
AXA Financial, Inc., 7.75%, 8/1/2010 | 100,000 | 114,986 |
Bank of America Corp.: |
|
|
4.875%, 1/15/2013 | 200,000 | 205,160 |
5.125%, 11/15/2014 | 100,000 | 104,510 |
5.375%, 6/15/2014 (d) | 50,000 | 53,127 |
5.875%, 2/15/2009 | 50,000 | 52,845 |
6.625%, 8/1/2007 | 100,000 | 104,623 |
Bank of New York Co., Inc.: |
|
|
5.2%, 7/1/2007 | 25,000 | 25,476 |
7.3%, 12/1/2009 | 65,000 | 72,838 |
Bank One Corp.: |
|
|
5.5%, 3/26/2007 | 20,000 | 20,479 |
7.625%, 10/15/2026 | 100,000 | 127,948 |
7.875%, 8/1/2010 | 50,000 | 57,806 |
Bear Stearns Companies, Inc.: |
|
|
4.0%, 1/31/2008 | 150,000 | 149,338 |
5.7%, 11/15/2014 | 150,000 | 160,846 |
Boeing Capital Corp.: |
|
|
5.75%, 2/15/2007 (d) | 100,000 | 102,683 |
6.1%, 3/1/2011 | 110,000 | 119,586 |
6.35%, 11/15/2007 | 50,000 | 52,315 |
Boston Properties, Inc., 6.25%, 1/15/2013 | 25,000 | 27,240 |
Caterpillar Financial Services Corp., Series F, 4.75%, 2/17/2015 | 25,000 | 25,242 |
Charter One Bank Financial, Inc., 6.375%, 5/15/2012 | 10,000 | 11,136 |
Chubb Corp., 6.0%, 11/15/2011 | 10,000 | 10,824 |
CIT Group, Inc.: |
|
|
3.875%, 11/3/2008 | 125,000 | 123,265 |
7.75%, 4/2/2012 | 100,000 | 117,283 |
Citigroup, Inc.: |
|
|
5.0%, 9/15/2014 | 150,000 | 153,442 |
5.875%, 2/22/2033 | 100,000 | 109,054 |
6.0%, 10/31/2033 | 200,000 | 221,967 |
6.5%, 1/18/2011 | 150,000 | 165,614 |
6.625%, 6/15/2032 | 50,000 | 59,688 |
7.25%, 10/1/2010 | 50,000 | 56,613 |
8.625%, 2/1/2007 | 200,000 | 213,731 |
Countrywide Home Loans, Inc., 4.0%, 3/22/2011 | 100,000 | 96,442 |
Donaldson, Lufkin & Jenrette, Inc.: |
|
|
4.875%, 1/15/2015 | 150,000 | 151,787 |
5.125%, 1/15/2014 (d) | 100,000 | 103,395 |
6.125%, 11/15/2011 | 100,000 | 108,777 |
6.5%, 1/15/2012 | 100,000 | 111,139 |
EOP Operating LP: |
|
|
7.0%, 7/15/2011 | 100,000 | 110,887 |
7.75%, 11/15/2007 | 45,000 | 48,319 |
First Chicago NBD Corp., 7.125%, 5/15/2007 | 200,000 | 210,385 |
FleetBoston Financial Corp.: |
|
|
6.875%, 1/15/2028 | 45,000 | 55,340 |
7.375%, 12/1/2009 | 65,000 | 72,955 |
Ford Motor Credit Co.: |
|
|
7.0%, 10/1/2013 (d) | 100,000 | 95,948 |
7.25%, 10/25/2011 | 100,000 | 96,227 |
7.375%, 10/28/2009 | 150,000 | 146,578 |
Fund American Co., Inc., 5.875%, 5/15/2013 | 50,000 | 52,078 |
General Electric Capital Corp.: |
|
|
4.625%, 9/15/2009 (d) | 63,000 | 64,078 |
Series A, 5.0%, 2/15/2007 (d) | 40,000 | 40,615 |
Series A, 5.375%, 3/15/2007 | 200,000 | 204,335 |
5.45%, 1/15/2013 | 200,000 | 212,155 |
6.0%, 6/15/2012 | 400,000 | 436,247 |
6.75%, 3/15/2032 | 50,000 | 61,699 |
6.875%, 11/15/2010 | 50,000 | 55,871 |
Hartford Financial Services Group, Inc., 4.625%, 7/15/2013 (d) | 50,000 | 50,038 |
HSBC Bank USA, 4.625%, 4/1/2014 | 50,000 | 49,915 |
HSBC Finance Corp.: |
|
|
4.75%, 7/15/2013 | 100,000 | 100,151 |
5.0%, 6/30/2015 | 50,000 | 50,390 |
6.375%, 10/15/2011 | 50,000 | 54,667 |
6.4%, 6/17/2008 | 100,000 | 105,913 |
6.75%, 5/15/2011 | 25,000 | 27,749 |
7.0%, 5/15/2012 | 100,000 | 113,438 |
8.0%, 7/15/2010 | 150,000 | 173,079 |
International Lease Finance Corp.: |
|
|
3.5%, 4/1/2009 | 25,000 | 24,074 |
5.625%, 6/1/2007 (d) | 10,000 | 10,251 |
5.7%, 7/3/2006 | 50,000 | 50,678 |
John Deere Capital Corp.: |
|
|
6.0%, 2/15/2009 | 35,000 | 36,932 |
7.0%, 3/15/2012 | 100,000 | 114,729 |
John Hancock Financial Services, Inc., 5.625%, 12/1/2008 | 25,000 | 26,120 |
JPMorgan Chase & Co.: |
|
|
6.375%, 4/1/2008 | 100,000 | 105,453 |
6.75%, 2/1/2011 | 100,000 | 110,590 |
7.125%, 6/15/2009 | 300,000 | 330,207 |
KFW International Finance, Inc., 7.0%, 3/1/2013 | 275,000 | 322,892 |
Lehman Brothers Holdings, Inc.: |
|
|
3.5%, 8/7/2008 | 50,000 | 48,964 |
4.0%, 1/22/2008 | 50,000 | 49,821 |
Series G, 4.8%, 3/13/2014 (d) | 100,000 | 101,047 |
7.0%, 2/1/2008 | 50,000 | 53,385 |
8.25%, 6/15/2007 | 50,000 | 53,855 |
Marsh & McLennan Companies, Inc., 5.375%, 7/15/2014 | 50,000 | 49,805 |
Marshall & Ilsley Corp., 4.375%, 8/1/2009 | 50,000 | 50,392 |
MBIA, Inc., 9.375%, 2/15/2011 | 125,000 | 156,388 |
MBNA America Bank NA, 4.625%, 8/3/2009 | 50,000 | 50,712 |
Merrill Lynch & Co., Inc.: |
|
|
5.0%, 2/3/2014 | 25,000 | 25,612 |
Series C, 5.0%, 1/15/2015 (d) | 25,000 | 25,599 |
6.0%, 2/17/2009 | 250,000 | 263,728 |
MetLife, Inc., 6.125%, 12/1/2011 | 25,000 | 27,151 |
Morgan Stanley, 4.75%, 4/1/2014 | 325,000 | 320,180 |
Morgan Stanley Dean Witter & Co.: |
|
|
5.3%, 3/1/2013 | 100,000 | 103,924 |
6.6%, 4/1/2012 | 50,000 | 55,590 |
National Rural Utilities Cooperative Finance Corp., 5.75%, 11/1/2008 | 100,000 | 104,693 |
Nationwide Financial Services, 5.9%, 7/1/2012 | 25,000 | 27,000 |
PNC Funding Corp., 6.875%, 7/15/2007 | 300,000 | 315,629 |
Principal Life Income Fundings, 5.1%, 4/15/2014 (d) | 25,000 | 26,022 |
ProLogis: |
|
|
5.5%, 3/1/2013 | 20,000 | 20,908 |
7.1%, 4/15/2008 | 10,000 | 10,718 |
Protective Life Secured Trust, Series 2004-A, 4.0%, 4/1/2011 | 25,000 | 24,589 |
Prudential Financial, Inc., Series B, 5.1%, 9/20/2014 | 100,000 | 102,928 |
Sanwa Bank Ltd., 7.4%, 6/15/2011 | 10,000 | 11,321 |
Simon Property Group LP, 6.35%, 8/28/2012 | 100,000 | 109,062 |
SLM Corp.: |
|
|
4.0%, 1/15/2009 | 150,000 | 148,800 |
Series A, 5.0%, 10/1/2013 | 100,000 | 102,433 |
Swiss Bank Corp., 7.0%, 10/15/2015 | 100,000 | 119,580 |
The Goldman Sachs Group, Inc.: |
|
|
5.125%, 1/15/2015 | 50,000 | 50,927 |
5.15%, 1/15/2014 | 100,000 | 102,475 |
5.25%, 4/1/2013 | 50,000 | 51,697 |
5.5%, 11/15/2014 | 200,000 | 209,001 |
6.6%, 1/15/2012 | 50,000 | 55,571 |
6.65%, 5/15/2009 | 15,000 | 16,243 |
6.875%, 1/15/2011 | 100,000 | 111,503 |
7.35%, 10/1/2009 | 50,000 | 55,679 |
Toyota Motor Credit Corp.: |
|
|
5.5%, 12/15/2008 | 30,000 | 31,305 |
5.65%, 1/15/2007 | 25,000 | 25,582 |
US Bancorp: |
|
|
Series N, 3.95%, 8/23/2007 | 20,000 | 19,969 |
Series N, 5.1%, 7/15/2007 | 20,000 | 20,394 |
US Bank National Association: |
|
|
4.8%, 4/15/2015 (d) | 100,000 | 101,574 |
6.3%, 2/4/2014 | 100,000 | 112,916 |
6.375%, 8/1/2011 | 100,000 | 110,329 |
Verizon Global Funding Corp.: |
|
|
7.25%, 12/1/2010 | 150,000 | 170,026 |
7.75%, 12/1/2030 | 50,000 | 64,563 |
7.75%, 6/15/2032 | 100,000 | 129,734 |
Verizon Wireless Capital LLC, 5.375%, 12/15/2006 | 50,000 | 50,956 |
Wachovia Bank NA: |
|
|
4.875%, 2/1/2015 | 75,000 | 76,313 |
5.0%, 8/15/2015 | 200,000 | 205,118 |
Wachovia Corp.: |
|
|
4.875%, 2/15/2014 | 50,000 | 50,824 |
7.5%, 7/15/2006 | 100,000 | 103,208 |
Washington Mutual, Inc., 4.375%, 1/15/2008 | 150,000 | 150,421 |
Wells Fargo & Co.: |
|
|
4.95%, 10/16/2013 | 50,000 | 51,347 |
5.0%, 11/15/2014 | 50,000 | 51,480 |
5.125%, 9/15/2016 | 100,000 | 103,868 |
6.45%, 2/1/2011 | 75,000 | 82,726 |
7.55% , 6/21/2010 | 200,000 | 229,483 |
Wells Fargo Financial, Inc., 5.5%, 8/1/2012 | 100,000 | 105,790 |
13,728,974 | ||
Health Care 0.6% | ||
Aetna, Inc., 7.125%, 8/15/2006 | 50,000 | 51,615 |
Amgen, Inc., 4.85%, 11/18/2014 | 25,000 | 25,681 |
Bristol-Myers Squibb Co., 5.75%, 10/1/2011 | 150,000 | 160,483 |
Merck & Co, Inc., 6.4%, 3/1/2028 | 500,000 | 582,214 |
Schering-Plough Corp.: |
|
|
5.55%, 12/1/2013 | 50,000 | 53,013 |
6.75%, 12/1/2033 | 25,000 | 30,126 |
UnitedHealth Group, Inc.: |
|
|
4.875%, 4/1/2013 (d) | 25,000 | 25,629 |
5.0%, 8/15/2014 | 50,000 | 51,736 |
Wyeth, 4.375%, 3/1/2008 | 100,000 | 99,925 |
1,080,422 | ||
Industrials 0.9% | ||
Burlington North Santa Fe, 5.9%, 7/1/2012 | 100,000 | 107,936 |
Caterpillar, Inc., 7.3%, 5/1/2031 | 70,000 | 92,329 |
Cendant Corp., 6.25%, 1/15/2008 | 25,000 | 26,078 |
CRH America, Inc., 5.3%, 10/15/2013 | 100,000 | 103,512 |
CSX Corp., 7.45%, 5/1/2007 | 115,000 | 121,416 |
FedEx Corp., 9.65%, 6/15/2012 | 50,000 | 64,280 |
General Dynamics Corp., 5.375%, 8/15/2015 (d) | 100,000 | 107,039 |
Honeywell International, Inc., 7.5%, 3/1/2010 | 25,000 | 28,486 |
M.D.C. Holdings, Inc., 5.375%, 7/1/2015 | 25,000 | 24,962 |
Norfolk Southern Corp.: |
|
|
5.64%, 5/17/2029 | 96,000 | 100,399 |
6.2%, 4/15/2009 | 50,000 | 53,306 |
7.8%, 5/15/2027 | 4,000 | 5,305 |
Northrop Grumman Corp., 7.125%, 2/15/2011 | 200,000 | 226,193 |
R.R. Donnelley & Sons Co., 144A, 5.5%, 5/15/2015 | 25,000 | 25,379 |
Raytheon Co., 6.75%, 8/15/2007 | 117,000 | 122,742 |
Republic Services, Inc., 7.125%, 5/15/2009 | 10,000 | 11,007 |
Union Pacific Corp.: |
|
|
6.65%, 1/15/2011 | 50,000 | 55,625 |
6.79%, 11/9/2007 | 16,000 | 16,931 |
United Technologies Corp.: |
|
|
6.1%, 5/15/2012 | 50,000 | 54,904 |
7.0%, 9/15/2006 | 50,000 | 51,754 |
7.125%, 11/15/2010 | 50,000 | 56,933 |
Waste Management, Inc.: |
|
|
6.5%, 11/15/2008 | 50,000 | 53,113 |
7.0%, 7/15/2028 | 50,000 | 57,992 |
1,567,621 | ||
Information Technology 0.3% | ||
Hewlett-Packard Co.: |
|
|
5.75%, 12/15/2006 | 20,000 | 20,465 |
6.5%, 7/1/2012 | 100,000 | 110,720 |
International Business Machines Corp.: |
|
|
4.75%, 11/29/2012 | 100,000 | 102,196 |
6.5%, 1/15/2028 (d) | 100,000 | 118,022 |
Motorola, Inc., 7.625%, 11/15/2010 | 50,000 | 57,211 |
Scana Corp.: |
|
|
6.25%, 2/1/2012 | 60,000 | 65,400 |
6.875%, 5/15/2011 | 25,000 | 27,898 |
501,912 | ||
Materials 0.5% | ||
Alcoa, Inc.: |
|
|
6.0%, 1/15/2012 | 25,000 | 27,075 |
7.375%, 8/1/2010 | 100,000 | 113,754 |
Dow Chemical Co., 6.0%, 10/1/2012 | 100,000 | 109,584 |
E.I. du Pont de Nemours, 6.875%, 10/15/2009 | 150,000 | 166,283 |
International Paper Co.: |
|
|
5.85%, 10/30/2012 | 100,000 | 104,543 |
6.75%, 9/1/2011 | 40,000 | 43,602 |
Meadwestvaco Corp., 6.85%, 4/1/2012 (d) | 70,000 | 78,562 |
Praxair, Inc., 3.95%, 6/1/2013 | 50,000 | 47,876 |
Weyerhaeuser Co., 6.75%, 3/15/2012 | 150,000 | 165,036 |
856,315 | ||
Telecommunication Services 1.0% | ||
Ameritech Capital Funding, 6.55%, 1/15/2028 | 100,000 | 110,435 |
AT&T Wireless Services, Inc.: |
|
|
7.875%, 3/1/2011 | 200,000 | 232,433 |
8.125%, 5/1/2012 | 35,000 | 41,935 |
BellSouth Capital Funding, 7.75%, 2/15/2010 | 100,000 | 113,910 |
BellSouth Corp.: |
|
|
5.2%, 9/15/2014 | 50,000 | 51,529 |
5.2%, 12/15/2016 | 50,000 | 51,107 |
6.0%, 10/15/2011 | 100,000 | 108,034 |
6.0%, 11/15/2034 | 100,000 | 106,338 |
Cingular Wireless, 6.5%, 12/15/2011 | 75,000 | 82,851 |
Clear Channel Communications, Inc.: |
|
|
4.4%, 5/15/2011 | 50,000 | 47,006 |
7.65%, 9/15/2010 | 50,000 | 54,155 |
GTE North, Inc., 5.65%, 11/15/2008 | 100,000 | 103,095 |
SBC Communications, Inc.: |
|
|
5.1%, 9/15/2014 | 25,000 | 25,562 |
5.875%, 8/15/2012 (d) | 150,000 | 161,062 |
6.25%, 3/15/2011 | 50,000 | 54,232 |
Sprint Capital Corp.: |
|
|
6.875%, 11/15/2028 | 120,000 | 137,746 |
8.375%, 3/15/2012 | 175,000 | 210,494 |
Verizon New York, Inc., Series A, 6.875%, 4/1/2012 | 25,000 | 27,629 |
Verizon Virginia, Inc., 4.625%, 3/15/2013 | 100,000 | 98,412 |
1,817,965 | ||
Utilities 1.4% | ||
American Electric Power Co., Inc., 5.25%, 6/1/2015 | 100,000 | 103,318 |
Arizona Public Service, 6.5%, 3/1/2012 | 25,000 | 27,779 |
Boston Edison Co., 4.875%, 4/15/2014 | 25,000 | 25,646 |
Columbia Energy Group, 7.62%, 11/28/2025 | 25,000 | 26,153 |
Consolidated Edison Co. of New York, Inc., 4.875%, 2/1/2013 | 50,000 | 51,145 |
Consolidated Natural Gas Corp., 6.625%, 12/1/2008 | 200,000 | 214,093 |
Constellation Energy Group, Inc., 7.0%, 4/1/2012 (d) | 25,000 | 28,202 |
Dominion Resources, Inc., 8.125%, 6/15/2010 | 90,000 | 103,697 |
DTE Energy Co., 7.05%, 6/1/2011 | 50,000 | 55,982 |
Exelon Corp., 6.75%, 5/1/2011 | 50,000 | 55,527 |
FirstEnergy Corp., Series B, 6.45%, 11/15/2011 | 50,000 | 54,631 |
Florida Power & Light Co., 4.95%, 6/1/2035 | 100,000 | 49,254 |
FPL Group Capital, Inc., 7.625%, 9/15/2006 | 50,000 | 52,046 |
General Electric Co., 5.0%, 2/1/2013 | 400,000 | 413,004 |
Kansas City Power & Light Co., Series B, 6.0%, 3/15/2007 | 25,000 | 25,654 |
KeySpan Corp.: |
|
|
7.875%, 2/1/2010 | 25,000 | 28,624 |
8.0%, 11/15/2030 (d) | 50,000 | 69,872 |
Kinder Morgan, Inc., 6.5%, 9/1/2012 | 50,000 | 55,077 |
National Rural Utilities, 8.0%, 3/1/2032 | 100,000 | 138,861 |
Pacific Gas & Electric Co., 6.05%, 3/1/2034 | 100,000 | 110,209 |
Potomac Electric Power, 6.25%, 10/15/2007 | 100,000 | 104,363 |
PP&L Capital Funding, Inc., 8.375%, 6/15/2007 (d) | 25,000 | 26,829 |
Progress Energy, Inc.: |
|
|
5.85%, 10/30/2008 | 25,000 | 26,013 |
6.85%, 4/15/2012 | 35,000 | 38,883 |
7.1%, 3/1/2011 | 90,000 | 100,257 |
PSE&G Power LLC, 7.75%, 4/15/2011 | 70,000 | 80,704 |
PSI Energy, Inc., 5.0%, 9/15/2013 | 50,000 | 51,198 |
Public Service Co. of Colorado, 4.875%, 3/1/2013 | 75,000 | 76,585 |
Sempra Energy: |
|
|
6.0%, 2/1/2013 | 25,000 | 26,649 |
7.95%, 3/1/2010 | 25,000 | 28,389 |
Southern California Edison Co., 6.0%, 1/15/2034 | 50,000 | 56,001 |
Virginia Electric & Power Co., Series D, 7.625%, 7/1/2007 | 100,000 | 106,235 |
Wisconsin Energy Corp., 6.5%, 4/1/2011 | 50,000 | 54,943 |
2,465,823 | ||
Total Corporate Bonds (Cost $27,308,964) | 28,724,734 | |
| ||
Foreign Bonds — US$ Denominated 4.7% | ||
Energy 0.3% | ||
Alberta Energy Co., Ltd., 7.65%, 9/15/2010 | 10,000 | 11,442 |
Canadian National Resources Ltd., 5.45%, 10/1/2012 | 25,000 | 26,068 |
EnCana Corp., 4.75%, 10/15/2013 | 50,000 | 49,848 |
Pemex Project Funding Master Trust: |
|
|
7.375%, 12/15/2014 | 100,000 | 112,150 |
7.875%, 2/1/2009 | 50,000 | 54,625 |
9.125%, 10/13/2010 | 150,000 | 175,650 |
429,783 | ||
Financials 1.8% | ||
Apache Finance Canada, 7.75%, 12/15/2029 | 25,000 | 34,371 |
Asian Development Bank, 4.5%, 9/4/2012 | 250,000 | 257,328 |
Axa, 8.6%, 12/15/2030 | 50,000 | 68,089 |
Barclays Bank PLC, 7.4%, 12/15/2009 | 60,000 | 67,569 |
British Transco Finance, Inc., 6.625%, 6/1/2018 | 100,000 | 114,855 |
Corp. Andina De Fomento: |
|
|
5.2%, 5/21/2013 | 25,000 | 25,575 |
6.875%, 3/15/2012 | 10,000 | 11,197 |
Deutsche Telekom International Finance BV: |
|
|
5.25%, 7/22/2013 | 100,000 | 103,823 |
8.0%, 6/15/2010 | 150,000 | 173,840 |
Dow Capital BV, 9.2%, 6/1/2010 | 50,000 | 60,514 |
European Investment Bank, 4.625%, 3/1/2007 | 400,000 | 405,156 |
HSBC Holding PLC, 7.5%, 7/15/2009 | 150,000 | 167,620 |
Inter-American Development Bank, 6.625%, 3/7/2007 (d) | 300,000 | 313,630 |
Koninklijke (Royal) KPN NV: |
|
|
8.0%, 10/1/2010 | 25,000 | 28,948 |
8.375%, 10/1/2030 | 50,000 | 68,037 |
Korea Development Bank, 5.25%, 11/16/2006 | 50,000 | 50,728 |
Kreditanstalt fuer Wiederaufbau: |
|
|
3.5%, 3/14/2008 (d) | 200,000 | 197,921 |
4.125%, 10/15/2014 | 100,000 | 99,652 |
Landwirtschaftliche Rentenbank, 3.875%, 3/15/2010 | 250,000 | 248,220 |
National Australia Bank Ltd., Series A, 8.6%, 5/19/2010 | 50,000 | 59,171 |
National Westminster Bank PLC, 7.375%, 10/1/2009 | 50,000 | 56,127 |
Royal Bank of Scotland Group PLC, 7.648%, 8/31/2049 | 50,000 | 63,584 |
Santander Central Hispano Issuances, 7.625%, 9/14/2010 | 50,000 | 57,637 |
Svensk Exportkredit AB, 2.875%, 1/26/2007 | 25,000 | 24,601 |
The International Bank for Reconstruction & Development: |
|
|
4.375%, 9/28/2006 | 250,000 | 251,912 |
8.625%, 10/15/2016 | 100,000 | 137,060 |
3,147,165 | ||
Industrials 0.1% | ||
Canadian National Railway Co., 4.4%, 3/15/2013 | 50,000 | 49,375 |
Tyco International Group SA: |
|
|
6.0%, 11/15/2013 | 20,000 | 21,750 |
6.375%, 10/15/2011 | 40,000 | 43,932 |
115,057 | ||
Materials 0.3% | ||
Alcan, Inc.: |
|
|
4.5%, 5/15/2013 | 100,000 | 98,292 |
4.875%, 9/15/2012 | 10,000 | 10,081 |
5.2%, 1/15/2014 | 25,000 | 25,622 |
Potash Corp. of Saskatchewan, Inc., 7.125%, 6/15/2007 | 300,000 | 315,529 |
449,524 | ||
Sovereign Bonds 1.7% | ||
Canadian Government, 5.25%, 11/5/2008 | 100,000 | 104,644 |
Government of Malaysia, 8.75%, 6/1/2009 | 10,000 | 11,593 |
Kingdom of Sweden, 12.0%, 2/1/2010 | 220,000 | 292,411 |
Province of British Columbia, 5.375%, 10/29/2008 | 50,000 | 52,393 |
Province of Manitoba, 5.5%, 10/1/2008 | 200,000 | 208,873 |
Province of Nova Scotia, 5.75%, 2/27/2012 | 50,000 | 54,466 |
Province of Ontario: |
|
|
4.375%, 2/15/2013 (d) | 100,000 | 101,687 |
4.5%, 2/3/2015 (d) | 150,000 | 152,400 |
Province of Quebec: |
|
|
5.75%, 2/15/2009 | 50,000 | 52,838 |
7.0%, 1/30/2007 | 200,000 | 209,228 |
Republic of Chile, 6.875%, 4/28/2009 (d) | 10,000 | 10,900 |
Republic of Italy: |
|
|
3.625%, 9/14/2007 | 20,000 | 19,877 |
4.5%, 1/21/2015 | 400,000 | 404,825 |
6.0%, 2/22/2011 | 225,000 | 246,610 |
6.875%, 9/27/2023 | 200,000 | 252,586 |
Republic of Korea, 8.875%, 4/15/2008 (d) | 50,000 | 56,274 |
United Mexican States: |
|
|
4.625%, 10/8/2008 | 25,000 | 25,162 |
6.375%, 1/16/2013 | 250,000 | 268,375 |
8.375%, 1/14/2011 | 50,000 | 58,200 |
8.625%, 3/12/2008 (d) | 40,000 | 44,300 |
9.875%, 1/15/2007 (d) | 100,000 | 109,050 |
Series A, 9.875%, 2/1/2010 (d) | 190,000 | 229,805 |
2,966,497 | ||
Telecommunication Services 0.4% | ||
British Telecommunications PLC: |
|
|
8.375%, 12/15/2010 | 50,000 | 59,199 |
8.875%, 12/15/2030 | 70,000 | 98,816 |
France Telecom SA: |
|
|
8.0%, 3/1/2011 | 75,000 | 87,036 |
8.75%, 3/1/2031 | 75,000 | 104,565 |
Nippon Telegraph & Telephone Corp., 6.0%, 3/25/2008 (d) | 10,000 | 10,455 |
Telecom Italia Capital, 5.25%, 11/15/2013 | 100,000 | 101,521 |
Telefonica Europe BV, 7.75%, 9/15/2010 | 125,000 | 144,223 |
Vodafone Group PLC: |
|
|
5.0%, 12/16/2013 | 100,000 | 102,883 |
7.75%, 2/15/2010 | 50,000 | 57,089 |
765,787 | ||
Utilities 0.1% | ||
Hydro-Quebec, Series HY, 8.4%, 1/15/2022 | 100,000 | 142,201 |
Ontario Electricity Financial Corp., 6.1%, 1/30/2008 | 35,000 | 36,785 |
United Utilities PLC, 5.375%, 2/1/2019 | 30,000 | 30,377 |
209,363 | ||
Total Foreign Bonds — US$ Denominated (Cost $7,607,116) | 8,083,176 | |
| ||
Asset Backed 1.2% | ||
Automobile Receivables 0.2% | ||
Daimler Chrysler Auto Trust, "A3", Series 2004-C, 2.98%, 8/8/2008 | 100,000 | 98,771 |
Honda Auto Receivables Owner Trust: |
|
|
"A3", Series 2004-2, 3.3%, 6/16/2008 | 100,000 | 99,274 |
"A4", Series 2004-2, 3.81%, 10/15/2009 | 100,000 | 99,509 |
Nissan Auto Receivables Own Trust, "A3", Series 2004-B, 3.35%, 5/15/2008 | 100,000 | 99,310 |
396,864 | ||
Credit Card Receivables 0.4% | ||
Citibank Credit Card Master Trust I, "A", Series 1999-2, 5.875%, 3/10/2011 | 100,000 | 106,125 |
Discover Card Master Trust I, "A", Series 2002-2, 5.15%, 10/15/2009 | 200,000 | 204,140 |
MBNA Credit Card Master Note Trust: |
|
|
"A1", Series 2005-A1, 4.2%, 9/15/2010 | 100,000 | 100,568 |
"A", Series 1999-J, 7.0%, 2/15/2012 | 200,000 | 222,055 |
MBNA Master Credit Card Trust, "A", Series 1999-B, 5.9%, 8/15/2011 | 50,000 | 53,185 |
686,073 | ||
Home Equity Loans 0.3% | ||
Chase Funding Mortgage Loan, "1A4", Series 2004-2, 5.323%, 5/25/2031 | 100,000 | 102,270 |
Citifinancial Mortgage Securities, Inc., "AF2", Series 2004-1, 2.645%, 4/25/2034 | 100,000 | 96,718 |
GMAC Mortgage Corp. Loan Trust, "A5", Series 2004-HE5, 4.865%*, 9/25/2034 | 100,000 | 100,424 |
Residential Asset Securities Corp., "AI3", Series 2004-KS6, 4.16%*, 7/25/2030 | 100,000 | 99,517 |
398,929 | ||
Industrials 0.0% | ||
Delta Air Lines, Inc., "G-2", Series 2002-1, 6.417%, 7/2/2012 | 50,000 | 52,602 |
Miscellaneous 0.3% | ||
Detroit Edison Securitization, "A3", Series 2001-1, 5.875%, 3/1/2010 | 100,000 | 102,623 |
Oncor Electric Delivery Transition Bond Co., "A3", Series 2003-1, 4.95%, 2/15/2015 | 100,000 | 103,458 |
PECO Energy Transition Trust, "A7", Series 1999-A, 6.13%, 3/1/2009 | 50,000 | 52,540 |
West Penn Funding LLC, "A4", Series 1999-A, 6.98%, 12/26/2008 | 250,000 | 265,475 |
524,096 | ||
Total Asset Backed (Cost $2,004,205) | 2,058,564 | |
| ||
US Government Sponsored Agencies 9.4% | ||
Federal Home Loan Bank: |
|
|
2.75%, 3/14/2008 (d) | 625,000 | 608,146 |
3.875%, 6/14/2013 | 1,000,000 | 980,911 |
4.5%, 11/15/2012 | 1,000,000 | 1,022,146 |
Federal Home Loan Mortgage Corp.: |
|
|
2.75%, 10/15/2006 (d) | 2,000,000 | 1,974,464 |
2.875%, 12/15/2006 (d) | 1,000,000 | 987,033 |
3.5%, 9/15/2007 (d) | 1,700,000 | 1,689,560 |
4.25%, 7/15/2009 | 2,000,000 | 2,021,862 |
4.5%, 1/15/2013 (d) | 500,000 | 511,753 |
6.75%, 9/15/2029 | 3,000 | 3,941 |
7.0%, 3/15/2010 | 450,000 | 507,540 |
Federal National Mortgage Association: |
|
|
4.25%, 5/15/2009 | 750,000 | 758,112 |
4.375%, 10/15/2006 | 1,600,000 | 1,612,840 |
5.25% with various maturities from 4/15/2007 until 1/15/2009 | 1,500,000 | 1,546,250 |
6.25%, 5/15/2029 | 450,000 | 556,878 |
6.96%, 4/2/2007 | 500,000 | 526,376 |
7.125%, 1/15/2030 (d) | 50,000 | 68,362 |
7.25%, 5/15/2030 (d) | 650,000 | 902,371 |
Total US Government Sponsored Agencies (Cost $16,029,318) | 16,278,545 | |
| ||
US Government Agency Sponsored Pass-Throughs 30.1% | ||
Federal Home Loan Mortgage Corp.: |
|
|
4.0%, 1/1/2020 | 978,766 | 957,449 |
4.5%, 2/1/2018 (f) | 2,000,000 | 1,990,624 |
5.0% with various maturities from 12/1/2017 until 9/1/2033 (f) | 6,439,903 | 6,457,695 |
5.5% with various maturities from 11/1/2013 until 3/1/2035 | 5,028,637 | 5,101,109 |
6.0%, 10/1/2034 | 859,265 | 881,650 |
6.5% with various maturities from 12/1/2014 until 9/1/2034 | 1,655,953 | 1,715,024 |
7.0% with various maturities from 12/1/2024 until 12/1/2026 | 156,092 | 165,107 |
7.5% with various maturities from 5/1/2024 until 7/1/2027 | 39,404 | 42,287 |
Federal National Mortgage Association: |
|
|
4.5% with various maturities from 2/1/2020 until 6/1/2033 | 4,889,849 | 4,852,227 |
5.0% with various maturities from 2/1/2018 until 1/1/2034 (f) | 8,426,164 | 8,476,684 |
5.5% with various maturities from 4/1/2017 until 2/1/2035 (f) | 9,921,876 | 10,075,472 |
6.0% with various maturities from 10/1/2009 until 7/1/2032 (f) | 6,091,297 | 6,251,314 |
6.5% with various maturities from 1/1/2018 until 10/1/2034 | 2,364,754 | 2,454,673 |
7.0% with various maturities from 6/1/2012 until 12/1/2033 | 2,086,570 | 2,197,779 |
7.5% with various maturities from 1/1/2024 until 4/1/2028 | 60,572 | 64,863 |
8.0% with various maturities from 12/1/2021 until 11/1/2031 | 114,879 | 123,600 |
8.5% with various maturities from 12/1/2025 until 8/1/2031 | 56,053 | 61,035 |
Total US Government Agency Sponsored Pass-Throughs (Cost $51,767,796) | 51,868,592 | |
| ||
Commercial and Non-Agency Mortgage-Backed Securities 3.3% | ||
Banc of America Commercial Mortgage, Inc.: |
|
|
"A4", Series 2004-1, 4.76%, 11/10/2039 | 200,000 | 202,696 |
"A3", Series 2003-2, 4.873%, 3/11/2041 | 300,000 | 308,428 |
Bear Stearns Commercial Mortgage Securities, Inc.: |
|
|
"A2", Series 1999-WF2, 7.08%, 7/15/2031 | 400,000 | 437,841 |
"A1", Series 2000-WF2, 7.11%, 10/15/2032 | 263,606 | 277,670 |
"A2", Series 2000-WF8, 7.78%, 2/15/2032 | 150,000 | 169,576 |
Capco America Securitization Corp., "A1B", Series 1998-D7, 6.26%, 10/15/2030 | 100,000 | 106,102 |
Citigroup Commercial Mortgage Trust, "A4", Series 2004-C1, 5.463%*, 4/15/2040 | 100,000 | 106,039 |
Commercial Mortgage Pass-Through Certificate, "A2", Series 2004-LB4A, 4.049%, 10/15/2037 | 200,000 | 197,847 |
Countrywide Asset-Backed Certificates, "AF3", Series 2005-1, 4.575%*, 7/25/2035 | 100,000 | 100,468 |
CS First Boston Mortgage Securities Corp.: |
|
|
"A2", Series 2003-CPN1, 4.597%, 3/15/2035 | 215,000 | 217,783 |
"A3", Series 2001-CF2, 6.238%, 2/15/2034 | 250,000 | 260,759 |
DLJ Commercial Mortgage Corp., "A1B", Series 1998-CG1, 6.41%, 6/10/2031 | 93,527 | 98,588 |
First Union National Bank Commercial Mortgage: |
|
|
"A2", Series 2001-C4, 6.223%, 12/12/2033 | 150,000 | 164,034 |
"A1", Series 1999-C4, 7.184%, 12/15/2031 | 35,203 | 36,512 |
First Union-Lehman Brothers-Bank of America, "A2", Series 1998-C2, 6.56%, 11/18/2035 | 99,558 | 104,863 |
GE Capital Commercial Mortgage Corp., "A4", Series 2003-C2, 5.145%, 7/10/2037 | 337,000 | 351,361 |
GMAC Commercial Mortgage Securities, Inc., "A4", Series 2003-C3, 5.023%, 4/10/2040 | 200,000 | 206,492 |
Greenwich Capital Commercial Funding Corp., "A7", Series 2004-GG1, 5.317%*, 6/10/2036 | 200,000 | 210,895 |
GS Mortgage Securities Corp. II, "A6", Series 2004-GG2, 5.396%*, 8/10/2038 | 100,000 | 105,995 |
JPMorgan Chase Commercial Mortgage Securities: |
|
|
"A2", Series 2004-C1, 4.302%, 1/15/2038 | 300,000 | 297,938 |
"A2", Series 2002-CIB5, 5.161%, 10/12/2037 | 200,000 | 209,560 |
LB Commercial Conduit Mortgage Trust: |
|
|
"A2", Series 1999-C1, 6.78%, 6/15/2031 | 150,000 | 162,219 |
"A1", Series 1999-C2, 7.105%, 10/15/2032 | 70,161 | 72,396 |
LB-UBS Commercial Mortgage Trust: |
|
|
"A2", Series 2002-C1, 5.969%, 3/15/2026 | 100,000 | 103,822 |
"A4", Series 2002-C1, 6.462%, 3/15/2031 | 200,000 | 223,363 |
"A2", Series 2001-C2, 6.653%, 11/15/2027 | 100,000 | 110,947 |
Morgan Stanley Capital I, "A4', Series 2005-HQ5, 5.168%, 1/14/2042 | 250,000 | 260,695 |
Morgan Stanley Dean Witter Capital I: |
|
|
"A2", Series 2002-TOP7, 5.98%, 1/15/2039 | 185,000 | 201,423 |
"A2", Series 1999-LIFE, 7.11%, 4/15/2033 | 100,000 | 109,766 |
Nomura Asset Securities Corp., "A1B", Series 1998-D6, 6.59%, 3/15/2030 | 100,000 | 106,138 |
Wachovia Bank Commercial Mortgage Trust, "A3", Series 2003-C9, 4.608%, 12/15/2035 | 100,000 | 100,875 |
Total Commercial and Non-Agency Mortgage-Backed Securities (Cost $5,378,700) | 5,623,091 | |
| ||
Municipal Bonds and Notes 0.1% | ||
Illinois, State General Obligation, Taxable Pension, 5.1%, 6/1/2033 | 75,000 | 78,071 |
Oregon, State General Obligation, Taxable Pension, 5.892%, 6/1/2027 | 25,000 | 28,880 |
Total Municipal Bonds and Notes (Cost $94,374) | 106,951 | |
Government National Mortgage Association 3.5% | ||
Government National Mortgage Association: |
|
|
5.0%, 4/1/2033 (f) | 1,000,000 | 1,007,500 |
5.5% with various maturities from 9/15/2033 until 3/15/2035 | 2,889,058 | 2,951,358 |
6.0% with various maturities from 2/15/2029 until 1/1/2032 (f) | 1,313,746 | 1,355,495 |
6.5% with various maturities from 11/15/2023 until 8/20/2032 | 282,095 | 294,673 |
7.5% with various maturities from 8/15/2029 until 6/15/2032 | 165,670 | 177,562 |
8.0% with various maturities from 7/15/2022 until 3/15/2032 | 249,252 | 269,548 |
8.5%, 11/15/2029 | 24,461 | 26,668 |
9.0%, 1/15/2023 | 29,913 | 32,990 |
Total Government National Mortgage Association (Cost $6,059,635) | 6,115,794 | |
| ||
US Treasury Obligations 28.9% | ||
US Treasury Bond: |
|
|
5.25%, 11/15/2028 | 675,000 | 770,950 |
5.375%, 2/15/2031 (d) | 2,320,000 | 2,737,600 |
6.0%, 2/15/2026 (d) | 300,000 | 369,633 |
6.25%, 8/15/2023 (d) | 700,000 | 872,348 |
6.875%, 8/15/2025 (d) | 795,000 | 1,070,145 |
7.25%, 8/15/2022 (d) | 565,000 | 768,841 |
7.625%, 11/15/2022 | 90,000 | 126,854 |
7.875%, 2/15/2021 (d) | 300,000 | 424,652 |
8.0%, 11/15/2021 | 1,000,000 | 1,440,898 |
8.75%, 5/15/2020 | 300,000 | 449,883 |
8.75%, 8/15/2020 (d) | 450,000 | 677,110 |
11.25%, 2/15/2015 (d) | 1,150,000 | 1,815,338 |
US Treasury Note: |
|
|
2.25%, 2/15/2007 (d) | 3,000,000 | 2,935,665 |
2.375%, 8/15/2006 (d) | 2,000,000 | 1,973,906 |
3.0%, 11/15/2007 (d) | 1,500,000 | 1,478,203 |
3.0%, 2/15/2008 (d) | 2,500,000 | 2,459,472 |
3.125%, 1/31/2007 (d) | 2,200,000 | 2,182,640 |
3.125%, 9/15/2008 (d) | 2,525,000 | 2,482,194 |
3.375%, 2/15/2008 (d) | 4,225,000 | 4,194,301 |
3.375%, 11/15/2008 | 1,000,000 | 989,883 |
3.5%, 8/15/2009 (d) | 1,500,000 | 1,487,167 |
3.5%, 11/15/2009 (d) | 1,750,000 | 1,734,619 |
3.5%, 12/15/2009 (d) | 1,250,000 | 1,238,233 |
3.625%, 7/15/2009 | 500,000 | 498,340 |
3.875%, 5/15/2010 (d) | 375,000 | 377,139 |
4.0%, 3/15/2010 (d) | 1,700,000 | 1,718,527 |
4.0%, 2/15/2014 | 2,965,000 | 2,982,837 |
4.0%, 2/15/2015 (d) | 2,125,000 | 2,132,554 |
4.125%, 5/15/2015 (d) | 240,000 | 243,506 |
4.25%, 8/15/2013 (d) | 650,000 | 666,250 |
4.25%, 11/15/2014 (d) | 1,000,000 | 1,023,477 |
4.25%, 8/15/2014 (d) | 2,000,000 | 2,047,812 |
4.75%, 5/15/2014 (d) | 975,000 | 1,034,567 |
5.0%, 2/15/2011 (d) | 320,000 | 339,988 |
6.875%, 5/15/2006 (d) | 2,000,000 | 2,057,344 |
Total US Treasury Obligations (Cost $48,432,016) | 49,802,876 | |
| Shares | Value ($) |
|
| |
Securities Lending Collateral 24.4% | ||
Scudder Daily Assets Fund Institutional, 3.19% (c)(e) (Cost $42,104,453) | 42,104,453 | 42,104,453 |
| ||
Cash Equivalents 16.0% | ||
Scudder Cash Management QP Trust, 3.14% (b) (Cost $27,573,358) | 27,573,358 | 27,573,358 |
| % of Net Assets | Value ($) |
|
| |
Total Investment Portfolio (Cost $234,359,935) (a) | 138.2 | 238,340,134 |
Other Assets and Liabilities, Net | (38.2) | (65,958,622) |
Net Assets | 100.0 | 172,381,512 |
* 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, 2005.
(a) The cost for federal income tax purposes was $234,368,171. At June 30, 2005, net unrealized appreciation for all securities based on tax cost was $3,971,963. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $4,665,144 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $693,181.
(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 Americas Inc. The rate shown is the annualized seven-day yield at period end.
(d) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2005 amounted to $41,305,277 which is 24.0% of net assets.
(e) Represents collateral held in connection with securities lending.
(f) Mortgage dollar roll included.
144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
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 Home Loan Mortgage Corp., the Federal National Mortgage Association and the Government National Mortgage Association issues which have similar coupon rates have been aggregated for presentation purposes in the investment portfolio.
The accompanying notes are an integral part of the financial statements.
|
Statement of Assets and Liabilities as of June 30, 2005 (Unaudited) | |
Assets | |
Investments: Investments in securities, at value (cost $164,682,124) — including $41,305,277 of securities loaned | $ 168,662,323 |
Investment in Scudder Cash Management QP Trust (cost $27,573,358) | 27,573,358 |
Investment in Scudder Daily Assets Fund Institutional (cost $42,104,453)* | 42,104,453 |
Total investments in securities, at value (cost $234,359,935) | 238,340,134 |
Receivable for investments sold | 324,450 |
Interest receivable | 1,660,065 |
Due from Advisor | 21,495 |
Other assets | 1,664 |
Total assets | 240,347,808 |
Liabilities | |
Payable for investments purchased | 340,812 |
Payable for investments purchased — mortgage dollar rolls | 25,489,163 |
Payable upon return of securities loaned | 42,104,453 |
Other accrued expenses and payables | 31,868 |
Total liabilities | 67,966,296 |
Net assets, at value | $ 172,381,512 |
* Represents collateral on securities loaned.
The accompanying notes are an integral part of the financial statements.
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Statement of Operations for the six months ended June 30, 2005 (Unaudited) | |
Investment Income | |
Interest | $ 2,960,050 |
Interest — Cash Management Fund Institutional | 294,926 |
Interest — Scudder Cash Management QP Trust | 138,330 |
Securities lending income, including income from Scudder Daily Assets Fund Institutional, net of borrower rebates | 55,115 |
Total income | 3,448,421 |
Expenses: Investment advisory fee | 103,771 |
Auditing | 27,418 |
Legal fees | 10,908 |
Trustees' fees and expenses | 4,110 |
Administrative fee | 41,104 |
Other | 5,965 |
Total expenses, before expense reductions | 193,276 |
Expense reductions | (113,018) |
Total expenses, after expense reductions | 80,258 |
Net investment income (loss) | 3,368,163 |
Realized and Unrealized Gain (Loss) on Investment Transactions | |
Net realized gain (loss) from investments | 538,238 |
Net unrealized appreciation (depreciation) during the period on investments | 357,933 |
Net gain (loss) on investment transactions | 896,171 |
Net increase (decrease) in net assets resulting from operations | $ 4,264,334 |
The accompanying notes are an integral part of the financial statements.
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Statement of Changes in Net Assets | ||
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2005 (Unaudited) | Year Ended December 31, 2004 |
Operations: Net investment income | $ 3,368,163 | $ 5,554,330 |
Net realized gain (loss) on investment transactions | 538,238 | 1,599,547 |
Net unrealized appreciation (depreciation) during the period on investment transactions | 357,933 | (791,570) |
Net increase (decrease) in net assets resulting from operations | 4,264,334 | 6,362,307 |
Capital transaction in shares of beneficial interest: Proceeds from capital invested | 16,991,180 | 40,932,264 |
Value of capital withdrawn | (8,315,621) | (30,831,392) |
Net increase (decrease) in net assets from capital transactions in shares of beneficial interest | 8,675,559 | 10,100,872 |
Increase (decrease) in net assets | 12,939,893 | 16,463,179 |
Net assets at beginning of period | 159,441,619 | 142,978,440 |
Net assets at end of period | $ 172,381,512 | $ 159,441,619 |
The accompanying notes are an integral part of the financial statements.
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Years Ended December 31, | 2005a | 2004 | 2003 | 2002 | 2001 | 2000 |
Ratios to Average Net Assets and Supplemental Data | ||||||
Net assets, end of period ($ millions) | 172 | 159 | 143 | 100 | 130 | 130 |
Ratio of expenses before expense reductions (%) | .24* | .22 | .23 | .25 | .24 | .28 |
Ratio of expenses after expense reductions (%) | .10* | .10 | .10 | .10 | .10 | .10 |
Ratio of net investment income (loss) (%) | 4.11* | 3.62 | 4.31 | 4.98 | 5.70 | 6.34 |
Portfolio turnover rate (%) | 25b* | 71b | 173b | 235b | 232 | 221 |
Total Investment Return (%)c,d | 2.55** | 4.32 | 3.80 | 10.09 | — | — |
a For the six months ended June 30, 2005 (Unaudited). b The portfolio turnover rates including mortgage dollar roll transactions were 234%, 341%, 271% and 266% for the periods ended June 30, 2005, December 31, 2004, December 31, 2003 and December 31, 2002, respectively. c Total return would have been lower had certain expenses not been reduced. d Total investment return for the Portfolio was derived from the performance of the Institutional Class of the Scudder US Bond Index Fund. * Annualized ** Not annualized | ||||||
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A. Significant Accounting Policies
The US Bond Index Portfolio (the "Portfolio"), a series of the Scudder Investment Portfolios (the "Trust"), is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end management investment company organized as a New York business trust.
The Portfolio's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those estimates. The policies described below are followed consistently by the Portfolio in the preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading. Debt securities are valued by independent pricing services approved by the Trustees of the Portfolio. 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 a broker-dealer. 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 investments companies and Cash Management Fund Institutional 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.
Securities Lending. The Portfolio may lend securities to financial institutions. The Portfolio retains beneficial ownership of the securities it has loaned and continues to receive interest and dividends paid by the securities and to participate in any changes in their market value. The Portfolio requires the borrowers of the securities to maintain collateral with the Portfolio consisting of liquid, unencumbered assets having a value at least equal to the value of the securities loaned. The Portfolio may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Portfolio receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of fees paid to a lending agent. Either the Portfolio or the borrower may terminate the loan. The Portfolio is subject to all investment risks associated with the value of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.
Mortgage Dollar Rolls. The Portfolio may enter into mortgage dollar rolls in which the Portfolio sells to a bank or broker/dealer (the "counterparty") mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase similar, but not identical, securities on a fixed date. The counterparty receives all principal and interest payments, including prepayments, made on the security while it is the holder. 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.
Mortgage dollar rolls may be treated for purposes of the 1940 Act as borrowings by the Portfolio because they involve the sale of a security coupled with an agreement to repurchase. A mortgage dollar roll involves costs to the Portfolio. For example, while the Portfolio receives compensation as consideration for agreeing to repurchase the security, the Portfolio forgoes the right to receive all principal and interest payments while the counterparty holds the security. These payments to the counterparty may exceed the compensation received by the Portfolio, thereby effectively charging the Portfolio interest on its borrowing. Further, although the Portfolio can estimate the amount of expected principal prepayment over the term of the mortgage dollar roll, a variation in the actual amount of prepayment could increase or decrease the cost of the Portfolio's borrowing.
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. There can be no assurance that the Portfolio's use of the cash that it receives from a mortgage dollar roll will provide a return that exceeds its borrowing costs.
When-Issued/Delayed Delivery Securities. The Portfolio may purchase securities with delivery or payment to occur at a later date beyond the normal settlement period. At the time the 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 into 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. The Portfolio is considered a partnership under the Internal Revenue Code. Therefore, no federal income tax provision is necessary.
Contingencies. In the normal course of business, the Portfolio may enter into contracts with service providers that contain general indemnification clauses. The Portfolio's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet been made. However, based on experience, the Portfolio expects the risk of loss to be remote.
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. Realized gains and losses from investment transactions are recorded on an identified cost basis. All premiums and discounts are amortized/accreted for both tax and financial reporting purposes.
The Portfolio makes a daily allocation of its income, expenses and realized and unrealized gains and losses from securities and foreign currency transactions to its investors in proportion to their investment in the Portfolio.
B. Purchases and Sales of Securities
During the six months ended June 30, 2005, purchases and sales of investment securities (excluding short-term investments, mortgage dollar rolls and US Treasury obligations) aggregated $28,064,513 and $14,524,721, respectively. Purchases and sales of US Treasury obligations aggregated $11,708,146 and $5,572,295, respectively. Mortgage dollar rolls aggregated $162,455,702 and $168,009,394, respectively.
C. Related Parties
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 Asset Management, Inc. ("DeAM, Inc." or the "Advisor") is the Advisor for the Portfolio and Investment Company Capital Corp. ("ICCC" or the "Administrator") is the Administrator for the Portfolio, both wholly owned subsidiaries of Deutsche Bank AG.
Investment Advisory Agreement. Under the Investment Advisory Agreement, the Advisor directs the investments of the Portfolio in accordance with its investment objectives, policies and restrictions. The advisory fee payable under the Investment Advisory Agreement is equal to an annual rate of 0.15% of the Portfolio's average daily net assets, computed and accrued daily and payable monthly. Northern Trust Investments, N.A. ("NTI") serves as sub-advisor to the Portfolio and is paid by the Advisor for its services. NTI is responsible for the day to day management of the Portfolio. The Advisor did not impose advisory fees for the portion of assets invested in the affiliated money market fund, Cash Management Fund Institutional.
In addition, for the six months ended June 30, 2005, the Advisor and Administrator maintained the annualized expenses of the Portfolio at not more than 0.10% of the Portfolio's average daily net assets. The amount of the waiver and whether the Advisor waives its fees may vary at any time without notice to shareholders.
Accordingly, for the six months ended June 30, 2005, the Advisor waived all of its advisory fee pursuant to the Investment Advisory Agreement aggregating $103,771, which was equivalent to an annualized effective rate of 0.00% of the Portfolio's average daily net assets.
Administrator Service Fee. For its services as Administrator, ICCC receives a fee (the "Administrator Service Fee") of 0.05% of the Portfolio's average daily net assets, computed and accrued daily and payable monthly. Accordingly, for the six months ended June 30, 2005, the Administrator waived a portion of its Administrative Service Fee aggregating $7,473 and the amount charged aggregated $33,459, which was equivalent to an annualized effective rate of 0.04% of the Portfolio's average daily net assets. At June 30, 2005, $25,941 was unpaid.
Trustees' Fees and Expenses. As compensation for his or her services, each Independent Trustee receives an aggregate annual fee, plus a fee for each meeting attended (plus reimbursement for reasonable out-of-pocket expenses incurred in connection with his or her attendance at board and committee meetings) from each Fund in the Fund Complex for which he or she serves. In addition, the Chairman of the Fund Complex's Audit Committee receives an annual fee for their services. Payment of such fees and expenses is allocated among all such Funds described above in direct proportion to their relative net assets.
Scudder Cash Management QP Trust. Pursuant to an Exemptive Order issued by the SEC, the Portfolio may invest in the Scudder Cash Management QP Trust (the "QP Trust") and other affiliated funds managed by the Manager or Advisor. The QP Trust seeks to provide as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. The QP Trust does not pay the Manager or Advisor a management fee for the affiliated funds' investments in the QP Trust.
D. Expense Reductions
For the six months ended June 30, 2005, the Advisor agreed to reimburse the Portfolio $1,602, 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 Portfolio has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Portfolio's custodian expenses. During the six months ended June 30, 2005, the custodian fees were reduced by $172 for custody credits earned.
E. Line of Credit
The Portfolio 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 emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated, based upon net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. The Portfolio may borrow up to a maximum of 33 percent of its net assets under this agreement.
F. 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.
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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 |
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 (800) 621-1148 |
| Institutional Class |
Nasdaq Symbol | BTUSX |
CUSIP Number | 81111W 204 |
Fund Number | 548 |
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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.
Questions on this policy may be sent to:
Scudder Investments
Attention: Correspondence — Chicago
P.O. Box 219415
Kansas City, MO 64121-9415
September 2004
Notes |
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Notes |
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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 Nominating and Governance Committee evaluates and nominates Board member
candidates. Fund shareholders may also submit nominees that will be considered
by the Committee when a Board vacancy occurs. Submissions should be mailed to
the attention of the Secretary of the Fund, One South Street, Baltimore, MD
21202.
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: US Bond Index Fund, a series of Scudder
Advisor Funds II
By: /s/ Julian Sluyters
---------------------------
Julian Sluyters
Chief Executive Officer
Date: August 26, 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: US Bond Index Fund, a series of Scudder
Advisor Funds II
By: /s/ Julian Sluyters
---------------------------
Julian Sluyters
Chief Executive Officer
Date: August 26, 2005
By: /s/ Paul Schubert
---------------------------
Paul Schubert
Chief Financial Officer
Date: August 26, 2005