UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSR
Investment Company Act file number 811-8382
SCUDDER STRATEGIC INCOME TRUST
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(Exact Name of Registrant as Specified in Charter)
222 S. RIVERSIDE PLAZA
CHICAGO, IL 60606
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 295-1000
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John Millette
Deutsche Investment Management Americas Inc.
Two International Place, Boston, MA 02110
---------------------------------------
(Name and Address of Agent for Service)
Date of fiscal year end: 11/30
Date of reporting period: 5/31/03
ITEM 1. REPORT TO STOCKHOLDERS
[Scudder Investments logo]
Scudder Strategic
Income Trust
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Semiannual Report to Shareholders
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May 31, 2003
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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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Performance Summary May 31, 2003
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Average Annual Total Returns
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Scudder Strategic Income Trust
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6-Month++
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1-Year
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3-Year
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5-Year
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Life of
Class*
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Based on Net Asset Value(a)
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17.56%
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15.40%
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11.76%
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7.28%
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10.34%
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Based on Market Price
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19.30%
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13.90%
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6.88%
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2.44%
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9.38%
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CS First Boston High Yield Index(b)
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15.37%
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13.25%
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6.71%
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3.30%
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6.98%
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CS First Boston High Yield Index
(50%), Lehman Brothers Treasury
Index (25%), Citigroup Non-USD
World Government Bond Currency
Hedged Index (15%), J.P. Morgan
Emerging Markets Bond Index
Plus (10%)(b)
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12.39%
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14.57%
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8.86%
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6.01%
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8.51%
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+ Total returns for periods less than one year are not annualized.
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Net Asset Value and Market Price
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As of 5/31/03
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As of 11/30/02
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Net Asset Value
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$ 12.45
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$ 11.10
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Market Price
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$ 12.35
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$ 10.85
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Distribution Information
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Six Months:
Income Dividends
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$ .54
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May Income Dividend
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$ .09
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Current Annualized Distribution Rate (based on net asset value)+
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8.67%
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Current Annualized Distribution Rate (based on market price)+
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8.74%
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Notes to Performance Summary
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* The Fund commenced operations on April 24, 1994. Index comparisons begin April 30, 1994.
a Total investment returns reflect changes in net asset value per share during each period and
assume that dividends and capital gains distributions, if any, were reinvested. These percentages
are not an indication of the performance of a shareholder's investment in the Fund based on
market price.
b CS First Boston High Yield Index is an unmanaged trader-priced portfolio constructed to mirror the
global high-yield debt market. Lehman Brothers Treasury Index is an unmanaged index reflecting
the performance of all public obligations and does not focus on one particular segment of the
Treasury market. Citigroup Non-USD World Government Bond Currency Hedged Index is an
unmanaged foreign securities index representing major government bond markets other than the
US. J.P. Morgan Emerging Markets Bond Index Plus is an unmanaged index tracking total returns
for traded external currency-denominated debt instruments in the emerging markets: Brady bonds,
loans, Eurobonds and US dollar-denominated local market instruments. 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.
+ Current annualized distribution rate is the latest monthly dividend shown as an annualized
percentage of net asset value/market price on May 31, 2003. Distribution rate simply measures the
level of dividends and is not a complete measure of performance. Distribution rates are historical
and will fluctuate.
All performance is historical, assumes reinvestment of all dividends and capital gains, and is not
indicative of future results. Investment return and principal value will fluctuate.
Investments in funds involve risk. Some funds have more risk than others. These include funds that
allow exposure to or otherwise concentrate investments in certain sectors, geographic regions, security
types, market capitalization or foreign securities (e.g., political or economic instability, which can be
accentuated in emerging market countries).
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Portfolio Management Review
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In the following interview, Jan C. Faller, lead portfolio manager of Scudder Strategic
Income Trust, discusses market conditions and the Trust's investment strategy during
the six-month period ended May 31, 2003.
Q: How did the Trust perform over the six months ended
May 31, 2003?
A: On a total-return market price basis, the Trust rose
19.30% during the period. Also for the six months ended
May 31, 2003, the Trust's total return on the net asset
value basis was 17.56%, versus the 13.93% return of its
average peer in the closed-end Lipper Flexible Income
Funds category.1
1 Flexible income funds, as defined by Lipper Inc., are those that emphasize income generation by
investing at least 85% of assets in debt issues and preferred and convertible securities. Common
stocks and warrants cannot exceed 15%. Lipper figures represent the average of the total returns
reported by all mutual funds designated by Lipper Inc. as falling into the category indicated.
Q: How would you characterize the market environment
during the period?
A: At a time when central banks around the world have
changed interest rates very little, both emerging-market
and high-yield debt provided strong returns. In emerging
markets, the biggest story - and, by far, the best
performer - was Brazil. At the beginning of the period,
the country elected a new president, Luiz Inacio Lula da
Silva. Since then, the new government has pleasantly
surprised investors with its political appointments and
statements relating to economic stimulus and debt
management. As a result, prices of Brazilian debt rose
substantially, while other emerging markets rallied in
sympathy with Brazil.
The high-yield market, meanwhile, benefited from the
fact that investors saw it as an opportunity to earn higher
yields than they could get from Treasury securities or
investment-grade corporate bonds, albeit with greater risk.
Also, an increase in popularity of these securities helped
to fuel the high-yield market and suggested that investors
now believed that prices of high-yield debt had been
depressed to the point that it had become a good value.
Moreover, as people became concerned that interest rates
might rise, they did not want to be in Treasuries, because
they believed Treasury prices might decline more
dramatically than prices on high-yield securities. We have
seen some evidence of this increase in popularity in the
past several months as mutual fund companies have
reported relatively large inflows into high-yield funds.
Q: What impact have your stakes in various asset classes
had on the Trust's performance?
A: At the end of the period, the Trust's emerging-markets
and high-yield allocations were each about 50% of assets.
In the period from February through April, we sold our
stake in mortgage-backed bonds, which had amounted to
about 25% of assets, and shifted that investment into
high-yield bonds to reach the current 50% weighting.
This reallocation aided returns, since high-yield bonds
rallied as investors sought out the higher yields offered by
such securities. In emerging markets, Brazil made an
important positive contribution to performance. We also
had some exposure to Argentina. Last year, the Argentine
economy was so weak that it seemed that it could only
improve. In fact, we finally did begin to see some signs of
stability, and our position in Argentina worked in our
favor. Overall, we believe the environment for most
emerging markets has been relatively positive. Two
exceptions were Venezuela and Turkey. Venezuela
continued to experience political turmoil and sharply
reduced oil exports. Turkey refused to allow US troops to
use the country as a staging area prior to the war with
Iraq. This move resulted in an aid package from the
International Monetary Fund that was much smaller than
investors expected. However, we think both of these are
isolated situations and expect them to have almost no
impact on other emerging markets.
The views expressed in this report reflect those of the portfolio managers only through the end of the
period of the report as stated on the cover. The managers' views are subject to change at any time
based on market and other conditions and should not be construed as a recommendation.
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Portfolio Summary May 31, 2003
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Portfolio Composition
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5/31/03
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11/30/02
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Emerging Market Bonds
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48%
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44%
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High-Yield Corporate Bonds
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46%
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30%
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Cash and Equivalents
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4%
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3%
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US Treasury Obligations
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1%
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3%
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Convertible Bonds
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1%
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-
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Government National Mortgage Association
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-
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14%
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US Agency Obligations
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-
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5%
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US Government Agency Pass-Thrus
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-
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1%
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100%
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100%
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Quality
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5/31/03
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11/30/02
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Government and Agency
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1%
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23%
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A
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1%
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-
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BBB
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12%
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11%
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BB
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34%
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24%
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B
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35%
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35%
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Below B
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16%
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6%
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Not rated
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1%
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1%
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100%
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100%
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Interest Rate Sensitivity
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5/31/03
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11/30/02
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Average Maturity
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12.0 years
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11.2 years
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Duration
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6.4 years
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5.3 years
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Portfolio composition, quality and interest rate sensitivity are subject to change.
For more complete details about the fund's investment portfolio, see page 10. A quarterly Fund
Summary and Portfolio Holdings are available upon request.
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Investment Portfolio as of May 31, 2003 (Unaudited)
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Principal
Amount ($) (b)
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Value ($)
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Corporate Bonds 45.5%
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Consumer Discretionary 14.4%
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American Achieve Corp., 11.625%, 1/1/2007
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85,000
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91,906
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American Lawyer Media, Inc., Series B, 9.75%, 12/15/2007
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90,000
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76,050
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Ameristar Casino, Inc., 10.75%, 2/15/2009
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95,000
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105,450
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Avondale Mills, Inc., 10.25%, 5/1/2006
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120,000
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121,200
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Boca Resorts, Inc., 9.875%, 4/15/2009
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165,000
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176,550
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Buffets, Inc., 11.25%, 7/15/2010
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75,000
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71,250
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Central Garden & Pet Co., 9.125%, 2/1/2013
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50,000
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52,875
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Charter Communications Holdings LLC:
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8.25%, 4/1/2007
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80,000
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58,400
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8.625%, 4/1/2009
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100,000
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72,000
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Choctaw Resort Development Enterprises, 9.25%, 4/1/2009
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50,000
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53,625
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Chumash Casino & Resort Enterprise, 9.0%, 7/15/2010
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50,000
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53,625
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Cinemark USA, Inc.:
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8.5%, 8/1/2008
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50,000
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51,500
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9.0%, 2/1/2013
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145,000
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155,875
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Circus & Eldorado, 10.125%, 3/1/2012
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110,000
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104,913
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CKE Restaurants, Inc., 9.125%, 5/1/2009
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65,000
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61,100
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CSC Holdings, Inc., 7.875%, 12/15/2007
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50,000
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51,375
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Dex Media East LLC, 12.125%, 11/15/2012
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75,000
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87,750
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Dex Media East LLC/Financial, 9.875%, 11/15/2009
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55,000
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62,150
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DIMON, Inc.:
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7.75%, 6/1/2013
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60,000
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60,450
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Series B, 9.625%, 10/15/2011
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195,000
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214,013
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EchoStar Communications Corp., 9.375%, 2/1/2009
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135,000
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144,619
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Eldorado Resorts LLC, 10.5%, 8/15/2006
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115,000
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115,288
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Farmers Exchange Capital, 7.2%, 7/15/2048
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50,000
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40,361
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Finlay Fine Jewelry Corp., 8.375%, 5/1/2008
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85,000
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86,700
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Guitar Center Management, 11.0%, 7/1/2006
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90,000
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92,025
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Herbst Gaming, Inc.:
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Series B, 10.75%, 9/1/2008
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65,000
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71,013
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Series 144A, 10.75%, 9/1/2008
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105,000
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114,713
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Hines Horticulture, Inc., Series B, 12.75%, 10/15/2005
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115,000
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121,325
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HLI Operating Co., Inc., 10.5%, 6/15/2010
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75,000
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76,875
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Insight Communications Co., Inc., Step-up Coupon, 0%
to 2/15/2006, 12.25% to 2/15/2011
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50,000
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38,500
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Interep National Radio Sales, Inc., 10.0%, 7/1/2008
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130,000
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105,300
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International Game Technology, 8.375%, 5/15/2009
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125,000
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150,313
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Intrawest Corp., 10.5%, 2/1/2010
|
60,000
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64,200
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Jacobs Entertainment Co., 11.875%, 2/1/2009
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65,000
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68,250
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Jafra Cosmetics International, Inc., 10.75%, 5/15/2011
|
100,000
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102,000
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Kellwood Co., 7.625%, 10/15/2017
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50,000
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46,750
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Kindercare Learning Centers, Inc., 9.5%, 2/15/2009
|
130,000
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130,000
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Laidlaw International, Inc., 10.75%, 6/15/2011
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55,000
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56,100
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Levi Strauss & Co., 12.25%, 12/15/2012
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80,000
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66,800
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MGM Mirage, Inc., 9.75%, 6/1/2007
|
105,000
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115,631
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National Vision, Inc., 12.0%, 3/30/2009
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97,357
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52,938
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Old Evangeline Downs, 13.0%, 3/1/2010
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50,000
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50,625
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Park Place Entertainment Corp.:
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7.0%, 4/15/2013
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50,000
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51,625
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8.875%, 9/15/2008
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65,000
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70,525
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9.375%, 2/15/2007
|
75,000
|
81,563
|
Petro Stopping Centers, 10.5%, 2/1/2007
|
220,000
|
222,200
|
PRIMEDIA, Inc.:
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|
8.0%, 5/15/2013
|
65,000
|
65,325
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8.875%, 5/15/2011
|
50,000
|
52,250
|
Remington Arms Co., 10.5%, 2/1/2011
|
75,000
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75,188
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Remington Product Co.LLC, Series D, 11.0%, 5/15/2006
|
50,000
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50,250
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Renaissance Media Group, 10.0%, 4/15/2008
|
115,000
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108,388
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Rent-A-Center, Inc., 7.5%, 5/1/2010
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50,000
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51,125
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Rent-Way, Inc., 11.875%, 6/15/2010
|
50,000
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50,125
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Restaurant Co., 11.25%, 5/15/2008
|
28,954
|
22,331
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Rite Aid Corp., 6.875%, 8/15/2013
|
145,000
|
122,163
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Samsonite Corp., 10.75%, 6/15/2008
|
210,000
|
210,000
|
Schuler Homes, Inc.:
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9.375%, 7/15/2009
|
140,000
|
153,300
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10.5%, 7/15/2011
|
50,000
|
56,000
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Scientific Games Corp., 12.5%, 8/15/2010
|
50,000
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57,250
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Sealy Mattress Co., 9.875%, 12/15/2007
|
50,000
|
47,750
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Service Corp. International, 7.7%, 4/15/2009
|
85,000
|
85,850
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Sinclair Broadcast Group, Inc., 8.0%, 3/15/2012
|
155,000
|
164,107
|
Six Flags, Inc.:
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|
8.875%, 2/1/2010
|
100,000
|
95,375
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9.75%, 4/15/2013
|
60,000
|
60,150
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Sonic Automotive, Inc., 11.0%, 8/1/2008
|
75,000
|
79,125
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Tenneco Automotive, Inc., 11.625%, 10/15/2009
|
100,000
|
89,500
|
Transwestern Publishing, Series F, 9.625%, 11/15/2007
|
95,000
|
98,681
|
Turning Stone Casino Entertainment, 9.125%, 12/15/2010
|
50,000
|
52,688
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Unisys Corp., 6.875%, 3/15/2010
|
50,000
|
51,500
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Venetian Casino Resort LLC, 11.0%, 6/15/2010
|
100,000
|
109,375
|
Wheeling Island Gaming, Inc., 10.125%, 12/15/2009
|
95,000
|
95,950
|
XM Satellite Radio, Inc., Step-up Coupon, 0% to
12/31/2005, 14.0% to 12/31/2009
|
50,000
|
36,125
|
|
6,258,167
|
Consumer Staples 1.6%
|
Agrilink Foods, Inc., 11.875%, 11/1/2008
|
90,000
|
97,425
|
Burns, Philp & Co., Ltd., 9.75%, 7/15/2012
|
100,000
|
96,500
|
Elizabeth Arden, Inc., Series B, 11.75%, 2/1/2011
|
115,000
|
126,500
|
Michael Foods, Inc., Series B, 11.75%, 4/1/2011
|
50,000
|
56,500
|
Salton, Inc., 10.75%, 12/15/2005
|
75,000
|
71,250
|
Smithfield Foods, Inc., 7.75%, 5/15/2013
|
50,000
|
51,250
|
Stater Brothers Holdings, Inc., 10.75%, 8/15/2006
|
155,000
|
163,525
|
Swift & Co., 10.125%, 10/1/2009
|
50,000
|
49,250
|
|
712,200
|
Energy 5.3%
|
Avista Corp., 9.75%, 6/1/2008
|
255,000
|
281,775
|
Citgo Petroleum Corp., 11.375%, 2/1/2011
|
205,000
|
228,575
|
Coastal Corp., 6.5%, 6/1/2008
|
60,000
|
50,475
|
Continental Resources, Inc., 10.25%, 8/1/2008
|
120,000
|
118,200
|
Edison Mission Energy, 7.73%, 6/15/2009
|
220,000
|
180,400
|
El Paso Corp., 7.375%, 12/15/2012
|
50,000
|
41,500
|
Frontier Escrow Corp., 8.0%, 4/15/2013
|
50,000
|
51,375
|
Newpark Resources, Inc., 8.625%, 12/15/2007
|
70,000
|
70,350
|
On Semiconductor Corp., 12.0%, 5/15/2008
|
65,000
|
63,050
|
Panhandle Eastern Pipe Line, 7.95%, 3/15/2023
|
50,000
|
51,125
|
Parker Drilling Co., Series B, 10.125%, 11/15/2009
|
100,000
|
107,250
|
Pemex Project Funding Master Trust, 8.625%, 2/1/2022
|
200,000
|
232,500
|
Pioneer Natural Resources Co.:
|
|
|
|
7.5%, 4/15/2012
|
105,000
|
119,551
|
|
9.625%, 4/1/2010
|
85,000
|
104,651
|
Southern Natural Gas, 8.875%, 3/15/2010
|
60,000
|
65,100
|
Stone Energy Corp., 8.75%, 9/15/2007
|
60,000
|
62,400
|
Transocean, Inc., 9.5%, 12/15/2008
|
60,000
|
78,395
|
Trico Marine Services, 8.875%, 5/15/2012
|
115,000
|
97,750
|
Westar Energy, Inc., 7.875%, 5/1/2007
|
60,000
|
66,900
|
Westport Resources Corp., 8.25%, 11/1/2011
|
155,000
|
168,175
|
Williams Holdings of Delaware, Inc., 6.5%, 12/1/2008
|
65,000
|
59,800
|
|
2,299,297
|
Financials 3.4%
|
Ahold Finance USA, Inc., 6.25%, 5/1/2009
|
135,000
|
123,525
|
Americredit Corp.:
|
|
|
|
9.25%, 5/1/2009
|
50,000
|
44,000
|
|
9.875%, 4/15/2006
|
50,000
|
46,000
|
Avecia Group PLC, 11.0%, 7/1/2009
|
50,000
|
44,000
|
CBRE Escrow, Inc., 9.75%, 5/15/2010
|
75,000
|
78,000
|
Corrections Corp. of America:
|
|
|
|
7.5%, 5/1/2011
|
55,000
|
56,238
|
|
9.875%, 5/1/2009
|
55,000
|
60,913
|
Farmers Insurance Exchange, 8.625%, 5/1/2024
|
50,000
|
46,000
|
Global Exchange Services, LIBOR plus 9.0%, 10.286%**,
7/15/2008
|
80,000
|
76,000
|
LaBranche & Co., Inc., 12.0%, 3/2/2007
|
130,000
|
148,200
|
PCA LLC/ PCA Finance Corp., 11.875%, 8/1/2009
|
50,000
|
54,500
|
PEI Holdings, Inc., 11.0%, 3/15/2010
|
65,000
|
70,850
|
Qwest Capital Funding, Inc.:
|
|
|
|
5.875%, 8/3/2004
|
50,000
|
47,875
|
|
7.0%, 8/3/2009
|
50,000
|
42,250
|
|
7.75%, 8/15/2006
|
50,000
|
45,250
|
R.H. Donnelly Finance Corp., 10.875%, 12/15/2012
|
115,000
|
130,238
|
Tech Olympic USA, Inc., 10.375%, 7/1/2012
|
50,000
|
52,250
|
Thornburg Mortgage, Inc., 8.0%, 5/15/2013
|
105,000
|
104,475
|
Trump Holdings & Funding, 11.625%, 3/15/2010
|
50,000
|
46,000
|
Universal City Development, 11.75%, 4/1/2010
|
100,000
|
106,500
|
Xerox Credit Corp., 7.0%, 6/9/2003
|
50,000
|
50,000
|
|
1,473,064
|
Health Care 1.3%
|
Ameripath, Inc., 10.5%, 4/1/2013
|
50,000
|
52,000
|
AmerisourceBergen Corp., 7.25%, 11/15/2012
|
50,000
|
54,000
|
HEALTHSOUTH Corp., 7.625%, 6/1/2012
|
60,000
|
40,500
|
HMP Equity Holdings Corp., Zero Coupon, 5/15/2008
|
55,000
|
26,125
|
Magellan Health Services, Inc., 9.375%, 11/15/2007*
|
55,000
|
50,738
|
Mariner Post-Acute Network, Inc., Series B, 10.5%,
8/1/2006
|
125,000
|
125,313
|
Sybron Dental Specialties, 8.125%, 6/15/2012
|
50,000
|
52,000
|
Tenet Healthcare Corp.:
|
|
|
|
6.375%, 12/1/2011
|
50,000
|
48,625
|
|
7.375%, 2/1/2013
|
65,000
|
66,463
|
Vanguard Health Systems, Inc., 9.75%, 8/1/2011
|
50,000
|
52,375
|
|
568,139
|
Industrials 6.6%
|
Allied Waste Industries, Inc., 9.25%, 5/1/2021
|
50,000
|
53,500
|
Allied Waste North America, Inc.:
|
|
|
|
7.875%, 4/15/2013
|
50,000
|
50,500
|
|
9.25%, 9/1/2012
|
100,000
|
107,250
|
|
Series B, 10.0%, 8/1/2009
|
265,000
|
278,581
|
AutoNation, Inc., 9.0%, 8/1/2008
|
105,000
|
114,450
|
Buckeye Technologies, Inc., 8.25%, 12/15/2005
|
65,000
|
63,375
|
Collins & Aikman Floor Cover, Series B, 9.75%, 2/15/2010
|
50,000
|
51,000
|
Collins & Aikman Products, 10.75%, 12/31/2011
|
65,000
|
55,900
|
CP Ships Ltd., 10.375%, 7/15/2012
|
50,000
|
55,750
|
Dana Corp.:
|
|
|
|
7.0%, 3/1/2029
|
65,000
|
54,925
|
|
9.0%, 8/15/2011
|
50,000
|
52,250
|
|
10.125%, 3/15/2010
|
55,000
|
59,950
|
Day International Group, Inc., 11.125%, 6/1/2005
|
50,000
|
50,875
|
DeCrane Aircraft Holdings, Inc., Series B, 12.0%, 9/30/2008
|
85,000
|
29,750
|
Delta Air Lines, Inc., 7.9%, 12/15/2009
|
50,000
|
36,000
|
Eagle-Picher Industries, Inc., 9.375%, 3/1/2008
|
50,000
|
45,500
|
Evergreen International Aviation, 12.0%, 5/15/2010
|
50,000
|
48,125
|
Flextronics International Ltd., 6.5%, 5/15/2013
|
100,000
|
97,250
|
Flowserve Corp., 12.25%, 8/15/2010
|
50,000
|
57,500
|
Goodyear Tire & Rubber Co., 7.857%, 8/15/2011
|
50,000
|
36,000
|
GS Technologies, 12.25%, 10/1/2005*
|
100,000
|
5,500
|
Hercules, Inc., 11.125%, 11/15/2007
|
160,000
|
182,400
|
Hornbeck Offshore Services, Inc., 10.625%, 8/1/2008
|
50,000
|
54,250
|
ISP Chemco, Inc., Series B, 10.25%, 7/1/2011
|
75,000
|
82,125
|
Kansas City Southern:
|
|
|
|
7.5%, 6/15/2009
|
80,000
|
80,800
|
|
9.5%, 10/1/2008
|
50,000
|
53,500
|
Lyondell Chemicals Co., 10.5%, 6/1/2013
|
50,000
|
49,625
|
Meritage Corp., 9.75%, 6/1/2011
|
50,000
|
55,250
|
Metaldyne Corp., 11.0%, 6/15/2012
|
50,000
|
38,500
|
Millennium America, Inc.:
|
|
|
|
7.0%, 11/15/2006
|
175,000
|
175,000
|
|
7.625%, 11/15/2026
|
80,000
|
75,200
|
|
9.25%, 6/15/2008
|
100,000
|
108,000
|
Overseas Shipholding Group, 8.75%, 12/1/2013
|
50,000
|
52,750
|
Republic Engineered Products LLC, 10.0%, 8/16/2009*
|
96,000
|
24,000
|
Resolution Performance Products LLC, 13.5%, 11/15/2010
|
205,000
|
206,025
|
The Brickman Group LTD., 11.75%, 12/15/2009
|
50,000
|
55,625
|
United Rentals, Inc., Series B, 9.0%, 4/1/2009
|
50,000
|
46,750
|
Xerox Corp.:
|
|
|
|
5.5%, 11/15/2003
|
50,000
|
49,875
|
|
9.75%, 1/15/2009
|
60,000
|
65,550
|
|
2,859,156
|
Information Technology 1.2%
|
Lucent Technologies, Inc., 5.5%, 11/15/2008
|
315,000
|
270,900
|
Riverwood International Corp., 10.875%, 4/1/2008
|
160,000
|
164,600
|
Titan Corp., 8.0%, 5/15/2011
|
60,000
|
61,650
|
|
497,150
|
Materials 6.0%
|
Abitibi-Consolidated Finance, 7.875%, 8/1/2009
|
70,000
|
77,335
|
ARCO Chemical Co.:
|
|
|
|
9.8%, 2/1/2020
|
145,000
|
127,600
|
|
10.25%, 11/1/2010
|
60,000
|
57,900
|
Caraustar Industries, Inc., 9.875%, 4/1/2011
|
105,000
|
107,100
|
Cascades, Inc., 7.25%, 2/15/2013
|
65,000
|
67,113
|
Crown Cork & Seal, 8.0%, 4/15/2023
|
50,000
|
35,250
|
Dan River, Inc., 12.75%, 4/15/2009
|
50,000
|
50,000
|
Dayton Superior Corp., 13.0%, 6/15/2009
|
100,000
|
85,500
|
Dimac Corp., 12.5%, 10/1/2008*
|
600,000
|
6,000
|
Equistar Chemical/ Funding Corp., 10.625%, 5/1/2011
|
50,000
|
50,750
|
Equistar Chemicals LP, 8.75%, 2/15/2009
|
440,000
|
418,000
|
Fibermark, Inc., 10.75%, 4/15/2011
|
105,000
|
107,100
|
Foamex LP, 10.75%, 4/1/2009
|
75,000
|
60,000
|
Georgia-Pacific Corp.:
|
|
|
|
8.875%, 2/1/2010
|
95,000
|
98,800
|
|
8.875%, 5/15/2031
|
95,000
|
88,350
|
|
9.375%, 2/1/2013
|
205,000
|
217,300
|
|
7.7%, 6/15/2015
|
220,000
|
200,200
|
Hexcel Corp., 9.75%, 1/15/2009
|
50,000
|
48,125
|
Louisiana Pacific Corp., 10.875%, 11/15/2008
|
50,000
|
55,875
|
MMI Products, Inc., Series B, 11.25%, 4/15/2007
|
115,000
|
87,400
|
Owens-Brockway Glass Container, 8.25%, 5/15/2013
|
70,000
|
70,700
|
Pliant Corp.:
|
|
|
|
11.125%, 9/1/2009
|
75,000
|
77,250
|
|
13.0%, 6/1/2010
|
50,000
|
45,500
|
Sweetheart Cup Co., Inc., 12.0%, 7/15/2004
|
50,000
|
43,500
|
Texas Industries, Inc., 10.25%, 6/15/2011
|
125,000
|
125,000
|
Toll Corp.:
|
|
|
|
8.0%, 5/1/2009
|
50,000
|
52,875
|
|
8.25%, 2/1/2011
|
55,000
|
59,400
|
United States Steel LLC, 9.75%, 5/15/2010
|
50,000
|
49,500
|
US Can Corp., Series B, 12.375%, 10/1/2010
|
60,000
|
42,000
|
|
2,611,423
|
Telecommunication Services 3.8%
|
Alamosa Holdings, Inc., Step-up Coupon, 0% to 2/15/2005,
12.875% to 2/15/2010
|
50,000
|
26,750
|
American Tower Corp., 9.375%, 2/1/2009
|
90,000
|
88,650
|
American Tower Escrow, Zero Coupon, 8/1/2008
|
60,000
|
37,500
|
Avaya, Inc., 11.125%, 4/1/2009
|
70,000
|
76,300
|
Century Communications Corp., 8.375%, 11/15/2017*
|
50,000
|
24,750
|
Crown Castle International Corp.:
|
|
|
|
9.375%, 8/1/2011
|
50,000
|
50,000
|
|
10.625%, 11/15/2007
|
80,000
|
84,600
|
Level 3 Communications, Inc., 11.0%, 3/15/2008
|
50,000
|
43,500
|
Millicom International Cellular SA, 2.0%, 6/1/2006
|
945
|
2,044
|
Nextel Communications, Inc.:
|
|
|
|
9.375%, 11/15/2009
|
50,000
|
53,625
|
|
9.5%, 2/1/2011
|
145,000
|
158,050
|
Nextel Partners, Inc.:
|
|
|
|
11.0%, 3/15/2010
|
50,000
|
53,750
|
|
Step-up Coupon, 0% to 2/1/2004, 14.0% to 2/1/2009
|
50,000
|
50,625
|
Nortel Networks Corp., 7.4%, 6/15/2006
|
75,000
|
73,500
|
Qwest Corp., 5.625%, 11/15/2008
|
100,000
|
96,500
|
Qwest Services Corp.:
|
|
|
|
13.5%, 12/15/2010
|
150,000
|
170,625
|
|
14.0%, 12/15/2014
|
70,000
|
81,375
|
Shaw Communications, Inc., 8.25%, 4/11/2010
|
65,000
|
70,525
|
Sprint Capital Corp., 8.375%, 3/15/2012
|
115,000
|
134,254
|
Triton PCS, Inc., 8.5%, 6/1/2013
|
50,000
|
50,000
|
US West Communication, Inc., 7.25%, 9/15/2025
|
245,000
|
221,113
|
|
1,648,036
|
Utilities 1.9%
|
AES Corp., 9.0%, 5/15/2015
|
50,000
|
51,000
|
Calpine Corp., 8.5%, 2/15/2011
|
165,000
|
112,200
|
CMS Energy Corp.:
|
|
|
|
7.5%, 1/15/2009
|
215,000
|
202,100
|
|
8.5%, 4/15/2011
|
155,000
|
150,738
|
El Paso Production Holding Corp., 7.75%, 6/1/2013
|
85,000
|
84,363
|
TNP Enterprises, Inc., Series B, 10.25%, 4/1/2010
|
80,000
|
76,400
|
Western Resources, Inc., 9.75%, 5/1/2007
|
115,000
|
126,213
|
|
803,014
|
Total Corporate Bonds (Cost $19,542,314)
|
19,729,646
|
|
|
Foreign Bonds - US$ Denominated 63.9%
|
Antenna TV SA, 9.0%, 8/1/2007
|
50,000
|
45,000
|
Bluewater Finance Ltd.:
|
|
|
|
10.25%, 2/15/2012
|
100,000
|
101,000
|
British Sky Broadcasting PLC:
|
|
|
|
6.875%, 2/23/2009
|
110,000
|
121,000
|
|
8.2%, 7/15/2009
|
55,000
|
64,213
|
Central European Media Enterprises Ltd., 9.375%,
8/15/2004
|
85,000
|
85,425
|
Corp Durango SA, 13.75%, 7/15/2009*
|
50,000
|
26,500
|
Crown Euro Holdings SA, 10.875%, 3/1/2013
|
70,000
|
73,850
|
Euramax International PLC, 11.25%, 10/1/2006
|
85,000
|
87,550
|
Fage Dairy Industry SA, 9.0%, 2/1/2007
|
50,000
|
48,750
|
Federative Republic of Brazil:
|
|
|
|
8.0%, 4/15/2014
|
757,317
|
674,012
|
|
10.125%, 5/15/2027
|
400,000
|
353,600
|
|
11.0%, 1/11/2012
|
100,000
|
99,000
|
|
11.0%, 8/17/2040
|
700,000
|
649,250
|
|
Floating Rate Bond, LIBOR plus .875%, 2.188%**,
4/15/2009
|
705,886
|
584,120
|
|
Series L, LIBOR plus .875%, 2.188%**, 4/15/2012
|
1,400,000
|
1,029,000
|
Government of Ukraine, 11.0%, 3/15/2007
|
298,666
|
333,311
|
Grupo Elektra SA de CV, 12.0%, 4/1/2008
|
55,000
|
54,450
|
Innova S de R.L., 12.875%, 4/1/2007
|
105,000
|
106,050
|
Ivory Coast, Step-up Coupon, 2.0% to 3/31/2005, 4.0% to
3/29/2018*
|
1,060,000
|
196,100
|
LeGrand SA, 8.5%, 2/15/2025
|
50,000
|
49,500
|
Luscar Coal Ltd., 9.75%, 10/15/2011
|
50,000
|
56,000
|
Millicom International Cellular, 11.0%, 6/1/2006
|
39,000
|
36,660
|
Ministry Finance Russia, Series V, 3.0%, 5/14/2008
|
400,000
|
368,000
|
Norske Skog Canada, 8.625%, 6/15/2011
|
50,000
|
51,250
|
Nortel Networks Corp., 6.125%, 2/15/2006
|
140,000
|
135,800
|
OAO Gazprom, 9.625%, 3/1/2013
|
95,000
|
107,588
|
Ocean Rig Norway AS, 10.25%, 6/1/2008
|
50,000
|
41,500
|
Petronas Capital Ltd.:
|
|
|
|
7.0%, 5/22/2012
|
200,000
|
231,910
|
|
7.875%, 5/22/2022
|
200,000
|
238,104
|
|
Series 144A, 7.875%, 5/22/2022
|
600,000
|
714,311
|
Republic of Argentina:
|
|
|
|
9.75%, 9/19/2027*
|
1,110,000
|
321,900
|
|
11.375%, 3/15/2010*
|
640,000
|
185,600
|
|
11.75%, 4/7/2009*
|
1,845,000
|
553,500
|
|
11.75%, 6/15/2015*
|
660,000
|
198,000
|
|
12.375%, 2/21/2012*
|
100,000
|
31,000
|
|
Zero Coupon, 3/15/2010*
|
350,000
|
101,500
|
|
Series BGL4, 11.0%, 10/9/2006*
|
250,000
|
75,000
|
|
Series BGL5, 11.375%, 1/30/2017*
|
260,000
|
79,950
|
Republic of Bulgaria, 8.25%, 1/15/2015
|
1,960,000
|
2,324,560
|
Republic of Colombia:
|
|
|
|
7.625%, 2/15/2007
|
370,000
|
389,425
|
|
8.625%, 4/1/2008
|
200,000
|
217,000
|
|
9.75%, 4/9/2011
|
434,082
|
489,645
|
|
10.5%, 7/9/2010
|
300,000
|
342,750
|
Republic of El Salvador:
|
|
|
|
8.25%, 4/10/2032
|
230,000
|
230,000
|
|
Series 144A, 8.25%, 4/10/2032
|
500,000
|
500,000
|
Republic of Panama, 8.875%, 9/30/2027
|
400,000
|
432,000
|
Republic of Philippines:
|
|
|
|
8.375%, 3/12/2009
|
200,000
|
213,000
|
|
9.5%, 10/21/2024
|
400,000
|
454,500
|
|
9.875%, 1/15/2019
|
300,000
|
329,250
|
Republic of Turkey:
|
|
|
|
11.0%, 1/14/2013
|
700,000
|
719,950
|
|
11.5%, 1/23/2012
|
50,000
|
52,625
|
|
11.875%, 1/15/2030
|
790,000
|
842,338
|
Republic of Venezuela:
|
|
|
|
9.25%, 9/15/2027
|
1,560,000
|
1,115,400
|
|
Series DL, Floating Rate Debt Conversion Bond, LIBOR
plus .875%, 2.313%**, 12/18/2007
|
1,190,476
|
962,054
|
Rhodia SA, 8.875%, 6/1/2011
|
50,000
|
50,250
|
Royal Caribbean Cruises Ltd., 7.25%, 3/15/2018
|
55,000
|
47,300
|
Russian Federation:
|
|
|
|
11.0%, 7/24/2018
|
100,000
|
143,875
|
|
Step-up Coupon, 5.0% to 3/31/2007, 7.5% to 3/31/2030
|
2,140,000
|
2,097,200
|
Russian Ministry of Finance, Series VI, 3.0%, 5/14/2006
|
1,350,000
|
1,316,250
|
Stagecoach Holdings PLC, 8.625%, 11/15/2009
|
75,000
|
78,938
|
State of Qatar, 9.75%, 6/15/2030
|
400,000
|
573,000
|
Stena AB, 9.625%, 12/1/2012
|
95,000
|
103,194
|
Stone Container Corp., 11.5%, 8/15/2006
|
70,000
|
74,550
|
Telus Corp., 8.0%, 6/1/2011
|
110,000
|
126,087
|
Tembec Industries, Inc., 8.625%, 6/30/2009
|
85,000
|
84,150
|
TFM SA de CV:
|
|
|
|
10.25%, 6/15/2007
|
65,000
|
65,000
|
|
11.75%, 6/15/2009
|
155,000
|
156,550
|
|
12.5%, 6/15/2012
|
50,000
|
53,750
|
Tyco International Group SA:
|
|
|
|
5.8%, 8/1/2006
|
90,000
|
90,900
|
|
6.125%, 11/1/2008
|
585,000
|
592,313
|
|
6.125%, 1/15/2009
|
155,000
|
156,938
|
|
6.375%, 10/15/2011
|
50,000
|
50,125
|
|
6.75%, 2/15/2011
|
60,000
|
61,350
|
United Mexican States:
|
|
|
|
4.625%, 10/8/2008
|
300,000
|
308,700
|
|
6.375%, 1/16/2013
|
290,000
|
312,040
|
|
8.125%, 12/30/2019
|
1,450,000
|
1,685,625
|
|
9.875%, 2/1/2010
|
530,000
|
686,350
|
|
Series A, Value Recovery Rights*
|
2,500,000
|
10,500
|
|
Series XW, 10.375%, 2/17/2009
|
320,000
|
417,600
|
Vicap SA, 11.375%, 5/15/2007
|
200,000
|
177,000
|
Vivendi Universal SA, 9.25%, 4/15/2010
|
175,000
|
198,844
|
Yell Finance BV, Step-up Coupon, 0% to 8/1/2006, 13.5%
to 8/1/2011
|
50,000
|
40,375
|
Total Foreign Bonds - US$ Denominated (Cost $25,364,880)
|
27,682,505
|
|
|
Foreign Bonds - Non US$ Denominated 6.4%
|
Banque Cent de Tunisie, 6.25%, 2/20/2013 EUR
|
570,000
|
714,953
|
Ivory Coast, LIBOR plus .8125%, 2.0%, 3/29/2018* EUR
|
579,306
|
127,927
|
Pemex Project Funding Master Trust, 6.625%,
4/4/2010 EUR
|
160,000
|
199,464
|
Prosieben Media AG, 11.25%, 7/31/2009 EUR
|
50,000
|
56,532
|
Republic of Argentina:
|
|
|
|
Series FEB, 8.0%, 2/26/2008* EUR
|
250,000
|
86,123
|
|
9.0%, 5/24/2005* EUR
|
50,000
|
17,845
|
|
EURIBOR plus 5.1%, 7.628%, 12/22/2004* EUR
|
400,000
|
134,713
|
Romania:
|
|
|
|
8.5%, 5/8/2012 EUR
|
687,000
|
936,549
|
|
10.625%, 6/27/2008 EUR
|
100,000
|
143,685
|
Ukraine Government, 10.0%, 3/15/2007 EUR
|
283,735
|
360,902
|
Total Foreign Bonds - Non US$ Denominated (Cost $2,420,354)
|
2,778,693
|
|
|
Convertible Bonds 0.8%
|
Aether Systems, 6.0%, 3/22/2005
|
50,000
|
46,875
|
DIMON, Inc., 6.25%, 3/31/2007
|
50,000
|
46,500
|
Infineon Techonologies AG, Series IFX, 4.25%, 2/6/2007
|
50,000
|
50,131
|
Nortel Networks Corp., 4.25%, 9/1/2008
|
55,000
|
47,410
|
Parker Drilling Co., 5.5%, 8/1/2004
|
120,000
|
115,200
|
Royal Numico NV, 1.5%, 9/22/2004
|
50,000
|
59,771
|
Total Convertible Bonds (Cost $355,800)
|
365,887
|
|
|
US Treasury Obligations 1.5%
|
US Treasury Bond:
|
|
|
|
5.375%, 2/15/2031
|
75,000
|
87,141
|
|
10.75%, 8/15/2005
|
440,000
|
529,495
|
US Treasury STRIPS, Principal Only, 3.719%***, 5/15/2013
|
75,000
|
51,969
|
Total US Treasury Obligations (Cost $667,883)
|
668,605
|
|
Shares
|
Value ($)
|
|
|
|
Common Stocks 0.0%
|
National Vision, Inc.* (Cost $32,544)
|
9,040
|
3,616
|
|
|
Warrants 0.0%
|
American Tower Corp.*
|
60
|
6,750
|
Empire Gas Corp.*
|
359
|
0
|
Republic Technologies International LLC*
|
510
|
5
|
UIH Australia Pacific, Inc.*
|
280
|
0
|
Total Warrants (Cost $3,621)
|
6,755
|
|
|
Preferred Stocks 0.2%
|
Paxson Communications Corp.
|
5
|
47,375
|
Sinclair Capital
|
165
|
17,160
|
Total Preferred Stocks (Cost $64,763)
|
64,535
|
|
|
Convertible Preferred Stocks 0.1%
|
Hercules Trust II (Cost $30,700)
|
50
|
32,456
|
|
|
Cash Equivalents 5.3%
|
Scudder Cash Management QP Trust, 1.32% (c)
(Cost $2,283,515)
|
2,283,515
|
2,283,515
|
|
% of Net
Assets
|
Value ($)
|
|
|
Total Investment Portfolio (Cost $50,766,374) (a)
|
123.7
|
53,616,213
|
Notes payable
|
(24.8)
|
(10,750,000)
|
Other Assets and Liabilities, Net
|
1.1
|
472,543
|
Net Assets
|
100.0
|
43,338,756
|
* Non-income producing security. In the case of a bond, generally denotes that the issuer has
defaulted on the payment of principal or interest or has filed for bankruptcy.
** These securities are shown at their current rate as of May 31, 2003.
*** Bond equivalent yield to maturity; not a coupon rate.
(a) The cost for federal income tax purposes was $50,803,487. At May 31, 2003, net unrealized
appreciation for all securities based on tax cost was $2,812,726. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of value over tax cost of
$3,800,818 and aggregate gross unrealized depreciation for all securities in which there was an
excess of tax cost over value of $988,092.
(b) Principal amount stated in US dollars unless otherwise noted.
(c) Scudder Cash Management QP Trust is also managed by Deutsche Investment Management
Americas Inc. The rate shown is the annualized seven-day yield at period end.
Currency Abbreviations
|
EUR
|
Euro
|
The accompanying notes are an integral part of the financial statements.
|
Statement of Assets and Liabilities as of May 31, 2003 (Unaudited)
|
Assets
|
Investments in unaffiliated securities, at value (cost $48,482,859)
|
$ 51,332,698
|
Investment in Scudder Cash Management QP Trust, at value (cost
$2,283,515)
|
2,283,515
|
Cash
|
9,560
|
Receivable for investments sold
|
600,385
|
Dividends receivable
|
479
|
Interest receivable
|
1,003,135
|
Unrealized appreciation on forward currency exchange contracts
|
69,481
|
Total assets
|
55,299,253
|
Liabilities
|
Notes payable
|
10,750,000
|
Payable for investments purchased
|
859,849
|
Interest payable on notes
|
10,356
|
Unrealized depreciation on forward currency exchange contracts
|
264,334
|
Accrued management fee
|
30,948
|
Other accrued expenses and payables
|
45,010
|
Total liabilities
|
11,960,497
|
Net assets, at value
|
$ 43,338,756
|
Net Assets
|
Net assets consist of:
Accumulated distributions in excess of net investment income
|
(104,546)
|
Net unrealized appreciation (depreciation) on:
Investments
|
2,849,839
|
Foreign currency related transactions
|
(192,654)
|
Accumulated net realized gain (loss)
|
(6,970,680)
|
Paid-in capital
|
47,756,797
|
Net assets, at value
|
$ 43,338,756
|
Net Asset Value
|
Net asset value per share ($43,338,756 / 3,481,751 outstanding shares
of beneficial interest, $.01 par value, unlimited number of shares
authorized)
|
$ 12.45
|
The accompanying notes are an integral part of the financial statements.
|
Statement of Operations for the six months ended May 31, 2003 (Unaudited)
|
Investment Income
|
Interest
|
$ 2,223,536
|
Interest - Scudder Cash Management QP Trust
|
12,057
|
Dividends
|
1,784
|
Total Income
|
2,237,377
|
Expenses:
Management fee
|
170,306
|
Services to shareholders
|
5,057
|
Custodian fees
|
14,624
|
Auditing
|
20,565
|
Legal
|
1,046
|
Trustees' fees and expenses
|
5,256
|
Reports to shareholders
|
20,567
|
Interest expense
|
104,813
|
Other
|
32,480
|
Total expenses, before expense reductions
|
374,714
|
Expense reductions
|
(668)
|
Total expenses, after expense reductions
|
374,046
|
Net investment income
|
1,863,331
|
Realized and Unrealized Gain (Loss) on Investment Transactions
|
Net realized gain (loss) from:
Investments
|
2,767,955
|
Foreign currency related transactions
|
(167,471)
|
|
2,600,484
|
Net unrealized appreciation (depreciation) during the period on:
Investments
|
2,310,593
|
Foreign currency related transactions
|
(206,462)
|
|
2,104,131
|
Net gain (loss) on investment transactions
|
4,704,615
|
Net increase (decrease) in net assets resulting from operations
|
$ 6,567,946
|
The accompanying notes are an integral part of the financial statements.
|
Statement of Changes in Net Assets
|
Increase (Decrease) in Net Assets
|
Six Months
Ended May 31,
2003
(Unaudited)
|
Year Ended
November 30,
2002
|
Operations:
Net investment income
|
$ 1,863,331
|
$ 3,736,213
|
Net realized gain (loss) on investment transactions
|
2,600,484
|
(2,783,755)
|
Net unrealized appreciation (depreciation) on
investment transactions during the period
|
2,104,131
|
761,447
|
Net increase (decrease) in net assets resulting from
operations
|
6,567,946
|
1,713,905
|
Distributions to shareholders from:
Net investment income
|
(1,879,705)
|
(3,965,889)
|
Fund share transactions:
Reinvestment of distributions
|
15,784
|
47,529
|
Net increase (decrease) in net assets from Fund share
transactions
|
15,784
|
47,529
|
Increase (decrease) in net assets
|
4,704,025
|
(2,204,455)
|
Net assets at beginning of period
|
38,634,731
|
40,839,186
|
Net assets at end of period (including accumulated
distributions in excess of net investment income of
$104,546 and $88,172, respectively)
|
$ 43,338,756
|
$ 38,634,731
|
Other Information
|
Shares outstanding at beginning of period
|
3,480,351
|
3,476,354
|
Shares issued to shareholders in reinvestment of
distributions
|
1,400
|
3,997
|
Net increase in Fund shares
|
1,400
|
3,997
|
Shares outstanding at end of period
|
3,481,751
|
3,480,351
|
The accompanying notes are an integral part of the financial statements.
|
Statement of Cash Flows for the six months ended May 31, 2003 (Unaudited)
|
Cash Flows from Operating Activities:
|
Investment income received
|
$ 1,752,307
|
Payment of interest expense
|
(146,212)
|
Payment of operating expenses
|
(327,299)
|
Proceeds from sales and maturities of investments
|
60,611,358
|
Purchases of investments
|
(61,449,792)
|
Net purchases, sales and maturities of short term investments
|
(1,118,881)
|
Cash used by operating activities
|
$ (678,519)
|
Cash Flows from Financing Activities:
|
Net increase (decrease) in reverse repurchase agreements
|
$ (8,208,000)
|
Net increase (decrease) in notes payable
|
10,750,000
|
Distributions paid (net of reinvestment of distributions)
|
(2,177,153)
|
Cash provided by financing activities
|
364,847
|
Increase (decrease) in cash
|
(313,672)
|
Cash at beginning of period
|
323,232
|
Cash at end of period
|
$ 9,560
|
Reconciliation of Net (Increase) Decrease in Net Assets
from Operations to Cash used by Operating Activities:
|
Net (increase) decrease in net assets resulting from operations
|
$ 6,567,946
|
Net (increase) decrease in cost of investments
|
(5,707,312)
|
Net increase (decrease) in unrealized appreciation (depreciation) on
investments
|
(2,310,593)
|
(Increase) decrease in dividends and interest receivable
|
(220,270)
|
(Increase) decrease in receivable for investments sold
|
815,399
|
Increase (decrease) in payable for investments purchased
|
67,500
|
Increase (decrease) in appreciation (depreciation) on forward
currency contracts
|
208,276
|
Increase (decrease) in other accrued expenses and payables
|
(58,066)
|
Increase (decrease) in interest payable on notes
|
(41,399)
|
Cash used by operating activities
|
$ (678,519)
|
Non-Cash Financing Activities
|
Reinvestment of distributions
|
$ 15,784
|
The accompanying notes are an integral part of the financial statements.
|
Years Ended November 30,
|
2003a
|
2002b
|
2001
|
2000
|
1999
|
1998
|
Selected Per Share Data
|
Net asset value, beginning of
period
|
$ 11.10
|
$ 11.75
|
$ 11.97
|
$ 12.88
|
$ 13.68
|
$ 15.39
|
Income (loss) from investment operations:
|
Net investment income
|
.54c
|
1.07c
|
1.23c
|
1.59c
|
1.69c
|
1.77
|
Net realized and unrealized gain
(loss) on investment transactions
|
1.35
|
(.58)
|
(.01)
|
(.80)
|
(.69)
|
(1.68)
|
|
Total from investment
operations
|
1.89
|
.49
|
1.22
|
.79
|
1.00
|
.09
|
Less distributions from:
Net investment income
|
(.54)
|
(1.14)
|
(1.24)
|
(1.70)
|
(1.80)
|
(1.80)
|
Tax return of capital
|
-
|
-
|
(.20)
|
-
|
-
|
-
|
|
Total distributions
|
(.54)
|
(1.14)
|
(1.44)
|
(1.70)
|
(1.80)
|
(1.80)
|
Net asset value, end of period
|
$ 12.45
|
$ 11.10
|
$ 11.75
|
$ 11.97
|
$ 12.88
|
$ 13.68
|
Market value, end of period
|
$ 12.35
|
$ 10.85
|
$ 12.09
|
$ 12.44
|
$ 14.19
|
$ 16.94
|
Total Return
|
Based on net asset value (%)d
|
17.56**
|
4.49
|
9.89
|
5.55
|
6.03
|
.48
|
Based on market value (%)d
|
19.30**
|
(.74)
|
8.73
|
(.35)
|
(5.67)
|
(5.28)
|
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period
($ millions)
|
43
|
39
|
41
|
42
|
45
|
47
|
Ratio of expenses before expense
reductions (%)
|
1.87*
|
1.74
|
2.80
|
3.22
|
3.21
|
3.94
|
Ratio of expenses after expense
reductions (%)
|
1.87*
|
1.74
|
2.79
|
3.21
|
3.21
|
3.94
|
Ratio of expenses excluding interest
expense (%)
|
1.34*
|
1.32
|
1.40
|
1.28
|
1.40
|
1.20
|
Ratio of net investment income (%)
|
9.30*
|
9.40
|
10.23
|
12.52
|
12.94
|
12.05
|
Portfolio turnover rate (%)
|
251*
|
184
|
19
|
8
|
19
|
13
|
a For the six months ended May 31, 2003 (Unaudited).
b As required, effective December 1, 2001, the Fund has adopted the provisions of the AICPA Audit
and Accounting Guide for Investment Companies and began amortizing premium on debt
securities. In addition, paydowns on mortgage-backed securities which were included in realized
gain (loss) on investment transactions are now included as interest income. The effect of these
changes for the year ended November 31, 2002 was to decrease net investment income per share
by $.02, increase net realized and unrealized gain (loss) per share by $.02, and decrease the ratio
of net investment income to average net assets from 9.58% to 9.40%. Per share data and ratios
for periods prior to December 1, 2001 have not been restated to reflect this change in
presentation.
c Based on average shares outstanding during the period.
d Total return based on net asset value reflects changes in the Fund's net asset value during the
period. Total return based on market value reflects changes in market value. Each figure includes
reinvestment of dividends. These figures will differ depending upon the level of any discount from
or premium to net asset value at which the Fund's shares trade during the period.
* Annualized ** Not annualized
|
|
Notes to Financial Statements (Unaudited)
|
|
|
A. Significant Accounting Policies
Scudder Strategic Income Trust (the ``Fund'') is registered under the Investment
Company Act of 1940, as amended (the ``1940 Act''), as a closed-end, diversified
management investment company organized as a Massachusetts business trust.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America which require the use of
management estimates. Actual results could differ from those estimates. The policies
described below are followed consistently by the Fund in the preparation of its
financial statements.
Security Valuation. Investments are stated at value determined as of the close of
regular trading on the New York Stock Exchange on each day the exchange is open
for trading. Debt securities are valued by independent pricing services approved by
the Trustees of the Fund. If the pricing services are unable to provide valuations, the
securities are valued at the most recent bid quotation or evaluated price, as applicable,
obtained from one or more broker-dealers. Such services may use various pricing
techniques which take into account appropriate factors such as yield, quality, coupon
rate, maturity, type of issue, trading characteristics and other data, as well as broker
quotes.
Equity securities are valued at the most recent sale price reported on the exchange
(US or foreign) or over-the-counter market on which the security is traded most
extensively. Securities for which no sales are reported are valued at the calculated
mean between the most recent bid and asked quotations on the relevant market or, if
a mean cannot be determined, at the most recent bid quotation.
Money market instruments purchased with an original or remaining maturity of sixty
days or less, maturing at par, are valued at amortized cost. Investments in open-end
investment companies and Scudder Cash Management QP Trust are valued at their
net asset value each business day.
Securities and other assets for which market quotations are not readily available or for
which the above valuation procedures are deemed not to reflect fair value are valued
in a manner that is intended to reflect their fair value as determined in accordance
with procedures approved by the Trustees.
Foreign Currency Translations. The books and records of the Fund are maintained
in US dollars. Investment securities and other assets and liabilities denominated in a
foreign currency are translated into US dollars at the prevailing exchange rates at
period end. Purchases and sales of investment securities, income and expenses are
translated into US dollars at the prevailing exchange rates on the respective dates of
the transactions.
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment income
accrued and the US dollar amount actually received. That portion of both realized
and unrealized gains and losses on investments that results from fluctuations in
foreign currency exchange rates is not separately disclosed but is included with net
realized and unrealized gains and losses on investment securities.
Reverse Repurchase Agreements. Prior to January 10, 2003, the Fund borrowed
through the use of reverse repurchase agreements whereby the Fund agrees to sell and
simultaneously agrees to repurchase certain securities at a mutually agreed date and
price. At the time the Fund enters into a reverse repurchase agreement, it is required
to pledge securities subject to repurchase. The sale of these securities is not recorded
and the Fund agrees to later repay the amount borrowed plus interest. Should the
securities' value decline below the repurchase price, the Fund may be obligated to
pledge additional collateral to the lender in the form of cash or securities. Reverse
repurchase agreements involve the risk that the market value of the securities
purchased with the proceeds from the sale of securities subject to reverse repurchase
agreements may decline below the amount the Fund is obligated to pay to repurchase
these securities. The risk in borrowing, as with any extension of credit, consists of the
possible delay in the recovery of securities or possible loss of rights in the collateral
should the counterparty fail financially. Additionally, there is the risk that the expense
associated with the transaction may be greater than the income earned from the
investment of the proceeds of the transaction. Effective January 10, 2003 the Fund
entered into a loan agreement with a Bank not to exceed $13,000,000 and no longer
participates in the $1.3 billion revolving credit facility. This lending arrangement will
be used by the Fund for leverage funding replacing the Fund's use of Reverse
Repurchase Agreements.
Forward Foreign Currency Exchange Contracts. A forward foreign currency
exchange contract ("forward currency contract") is a commitment to purchase or sell
a foreign currency at the settlement date at a negotiated rate. The Fund may enter
into forward currency contracts in order to hedge its exposure to changes in foreign
currency exchange rates on its foreign currency denominated portfolio holdings and
to facilitate transactions in foreign currency denominated securities.
Forward currency contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain (loss) is recorded daily. Sales and purchases
of forward currency contracts having the same settlement date and broker are offset
and any gain (loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of a forward currency contract to buy and a forward
contract to sell are included in net realized and unrealized gain (loss) from foreign
currency related transactions.
Certain risks may arise upon entering into forward currency contracts from the
potential inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward currency contracts to hedge, the Fund gives up the
opportunity to profit from favorable exchange rate movements during the term of the
contract.
Federal Income Taxes. The Fund's policy is to comply with the requirements of the
Internal Revenue Code, as amended, which are applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
At November 30, 2002 the Fund had a net tax basis capital loss carryforward of
approximately $8,785,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until November 30, 2003
($5,154,000), November 30, 2006 ($630,000), November 30, 2008 ($173,000),
November 30, 2009 ($443,000) and November 30, 2010 ($2,385,000), the
respective expiration dates, whichever occurs first.
In addition, from November 1, 2002 through November 30, 2002, the Fund
incurred approximately $708,000 of net realized capital losses. As permitted by tax
regulations, the Fund intends to elect to defer these losses and treat them as arising in
the fiscal year ended November 30, 2003.
Distribution of Income and Gains. All of the net investment income of the Fund is
declared 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. These
differences primarily relate to certain securities sold at a loss and premium
amortization on debt securities. As a result, net investment income (loss) and net
realized gain (loss) on investment transactions for a reporting period may differ
significantly from distributions during such period. Accordingly, the Fund may
periodically make reclassifications among certain of its capital accounts without
impacting the net asset value of the Fund.
At November 30, 2002, the Fund's components of distributable earnings
(accumulated losses) on a tax-basis were as follows:
Undistributed ordinary income*
|
$ 250,939
|
Undistributed net long-term capital gains
|
$ -
|
Capital loss carryforwards
|
$ (8,785,000)
|
Net unrealized appreciation (depreciation) on investments
|
$ 460,487
|
In addition, during the year ended November 30, 2002 the tax character of
distributions paid to shareholders by the Fund is summarized below:
Distributions from ordinary income*
|
$ 3,965,889
|
* For tax purposes short-term capital gains distributions are considered ordinary income distributions.
The tax character of current year distributions, if any, will be determined at the end
of the current fiscal year.
Other. Investment transactions are accounted for on the trade date. Interest income
is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date
net of foreign withholding taxes. Realized gains and losses from investment
transactions are recorded on an identified cost basis. All premiums and discounts are
amortized/accreted for financial reporting purposes, with the exception of securities
bought in default.
Statement of Cash Flows. Information of financial transactions which have been
settled through the receipt and disbursement of cash is presented in the Statement of
Cash Flows. The cash amount shown in the Statement of Cash Flows represents the
cash position in its custodian bank at May 31, 2003. Significant non-cash activity
from market discount accretion has been excluded from the Statement of Cash
Flows.
B. Purchases and Sales of Securities
During the six months ended May 31, 2003, purchases and sales of investment
securities (excluding short-term investments and US Treasury obligations) aggregated
$57,251,546 and $54,937,418, respectively. Purchases and sales of US Treasury
obligations aggregated $4,267,289 and $5,026,013, respectively.
C. Related Parties
Management Agreement. Under the Management Agreement with Deutsche
Investment Management Americas Inc. ("DeIM" or the "Advisor"), the Advisor
directs the investments of the Fund in accordance with its investment objectives,
policies and restrictions. The Advisor determines the securities, instruments and
other contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Advisor provides certain
administrative services in accordance with the Management Agreement. The
management fee payable under the Management Agreement is equal to 1/12 of the
annual rate of 0.85% of average weekly net assets. Deutsche Asset Management
Investment Services Limited ("DeAMIS"), an affiliate of the Advisor, serves as
sub-advisor to the Fund with respect to a portion of the Fund's portfolio that is
allocated to it by the Advisor for management. The Advisor compensates DeAMIS
out of the management fee it receives from the Fund.
Service Provider Fees. Scudder Investments Service Company ("SISC"), an affiliate
of the Advisor, is the transfer, dividend-paying and shareholder service agent for the
Fund. Effective January 15, 2003, pursuant to a sub-transfer agency agreement
between SISC and DST Systems, Inc. ("DST"), SISC has delegated certain transfer
agent and dividend paying agent functions to DST. SISC compensates DST out of
the shareholder servicing fee it receives from the Fund. For the six months ended
May 31, 2003, the amount charged to the Fund by SISC aggregated $5,057, of
which $4,295 is unpaid at May 31, 2003.
Trustees' Fees and Expenses. The Fund pays each Trustee not affiliated with the
Advisor retainer fees plus specified amounts for attended board and committee
meetings.
Scudder Cash Management QP Trust. Pursuant to an Exemptive Order issued by
the SEC, the Fund may invest in the Scudder Cash Management QP Trust (the ``QP
Trust'') and other affiliated funds managed by the Advisor. The QP Trust seeks to
provide as high a level of current income as is consistent with the preservation of
capital and the maintenance of liquidity. The QP Trust does not pay the Advisor a
management fee for the affiliated funds' investments in the QP Trust.
D. Expense Off-Set Arrangements
The Fund has entered into arrangements with its custodian and transfer agent
whereby credits realized as a result of uninvested cash balances were used to reduce a
portion of the Fund's expenses. During the six months ended May 31, 2003, the
Fund's custodian and transfer agent fees were reduced by $668 under these
arrangements.
E. Forward Foreign Currency Exchange Contracts
As of May 31, 2003, the Fund had the following open forward foreign currency
exchange contracts:
|
Contracts to Deliver
|
|
In Exchange For
|
|
Settlement
Date
|
|
Net Unrealized
Appreciation
|
USD
|
58,668
|
|
EUR
|
53,578
|
|
6/13/2003
|
|
$ 4,415
|
USD
|
479,451
|
|
EUR
|
420,000
|
|
7/31/2003
|
|
14,360
|
USD
|
415,744
|
|
EUR
|
363,000
|
|
7/31/2003
|
|
11,049
|
USD
|
186,469
|
|
EUR
|
163,000
|
|
7/31/2003
|
|
5,177
|
ZAR
|
4,000,000
|
|
USD
|
517,130
|
|
8/14/2003
|
|
34,283
|
ZAR
|
80,000
|
|
USD
|
9,854
|
|
8/14/2003
|
|
197
|
|
Total Appreciation
|
$ 69,481
|
|
Contracts to Deliver
|
|
In Exchange For
|
|
Settlement
Date
|
|
Net Unrealized
Depreciation
|
EUR
|
52,156
|
|
USD
|
57,235
|
|
6/13/2003
|
|
(4,174)
|
EUR
|
80,000
|
|
USD
|
87,520
|
|
7/31/2003
|
|
(6,539)
|
EUR
|
2,725,000
|
|
USD
|
2,981,150
|
|
7/31/2003
|
|
(222,740)
|
EUR
|
60,000
|
|
USD
|
66,921
|
|
7/31/2003
|
|
(3,623)
|
EUR
|
53,797
|
|
USD
|
61,059
|
|
6/13/2003
|
|
(2,281)
|
EUR
|
42,684
|
|
USD
|
49,014
|
|
6/13/2003
|
|
(1,242)
|
EUR
|
8,621
|
|
USD
|
9,967
|
|
6/27/2003
|
|
(180)
|
EUR
|
600,000
|
|
USD
|
699,300
|
|
7/31/2003
|
|
(6,144)
|
EUR
|
139,000
|
|
USD
|
162,264
|
|
7/31/2003
|
|
(1,163)
|
EUR
|
50,957
|
|
USD
|
59,916
|
|
6/27/2003
|
|
(57)
|
USD
|
711,180
|
|
EUR
|
600,000
|
|
7/31/2003
|
|
(5,736)
|
USD
|
502,959
|
|
ZAR
|
4,080,000
|
|
8/14/2003
|
|
(10,455)
|
|
Total Depreciation
|
$ (264,334)
|
|
Currency Abbreviations
|
|
|
EUR
|
Euro
|
|
USD
|
US Dollar
|
ZAR
|
South African
Rand
|
|
|
|
F. Investing in Emerging Markets
Investing in emerging markets may involve special risks and considerations not
typically associated with investing in the United States of America. These risks
include revaluation of currencies, high rates of inflation, repatriation restrictions on
income and capital, and future adverse political and economic developments.
Moreover, securities issued in these markets may be less liquid, subject to government
ownership controls, delayed settlements and their prices more volatile than those of
comparable securities in the United States of America.
G. Investing in High Yield Securities
Investing in high yield securities may involve greater risks and considerations not
typically associated with investing in US Government bonds and other high quality
fixed-income securities. These securities are non-investment grade securities, often
referred to as "junk bonds". Economic downturns may disrupt the high yield market
and impaired the ability of issuers to repay principal and interest. Also, an increase in
interest rates would likely have an adverse impact on the value such obligations.
Moreover, high yield securities may be less liquid due to extent that there is no
established retail secondary market and because of a decline in the value of such
securities.
H. Line of Credit
Prior to January 10, 2003, the Fund and several other affiliated funds (the
``Participants'') shared in a $1.3 billion revolving credit facility administered by J.P.
Morgan Chase Bank for temporary or emergency purposes that otherwise might
require the untimely disposition of securities. The Participants are charged an annual
commitment fee which is allocated, pro rata based upon net assets, among each of
the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. The
Fund may borrow up to a maximum of 33 percent of its net assets under the
agreement. Effective January 10, 2003 the Fund entered into a loan agreement with a
Bank not to exceed $13,000,000 and is no longer a participant in the $1.3 billion
revolving credit facility.
I. Borrowings
The notes payable represents a secured loan of $10,750,000 from State Street Bank
and Trust Company at May 31, 2003. The note bears interest at the 90-day LIBOR
rate plus 0.75% plus dealer fees (2.04% at May 31, 2003) which is payable at
maturity. The loan amounts and rates are reset periodically under a revolving credit
agreement obtained by the Fund in an amount not to exceed $13,000,000 at any one
time and which is renewable annually until January 10, 2004.
The weighted average outstanding daily balance of all loans (based on the number of
days the loans were outstanding) during the six months ended May 31, 2003 was
$10,750,000 with a weighted average interest rate of 2.10%.
|
Shareholder Meeting Results
|
|
|
A Special Meeting of Shareholders of Scudder Strategic Income Trust (the
"fund") was held on May 29, 2003, at the office of Deutsche Investment
Management Americas Inc., Two International Place, Boston, Massachusetts.
At the meeting, the following matters were voted upon by the shareholders:
1. To elect eleven Trustees to the Board of Trustees of the fund.
|
Number of Votes:
|
|
For
|
Withheld
|
John W. Ballantine
|
2,952,018
|
35,059
|
Lewis A. Burnham
|
2,952,018
|
35,059
|
Donald L. Dunaway
|
2,952,018
|
35,059
|
James R. Edgar
|
2,952,018
|
35,059
|
Paul K. Freeman
|
2,952,018
|
35,059
|
Richard T. Hale
|
2,952,018
|
35,059
|
Robert B. Hoffman
|
2,952,018
|
35,059
|
Shirley D. Peterson
|
2,952,018
|
35,059
|
Fred B. Renwick
|
2,952,018
|
35,059
|
William P. Sommers
|
2,952,018
|
35,059
|
John G. Weithers
|
2,952,018
|
35,059
|
2. To ratify the selection of Ernst & Young LLP as the independent auditors
for the fund for the current fiscal year.
|
Affirmative
|
Against
|
Abstain
|
|
2,953,136
|
19,266
|
14,675
|
|
Dividend Reinvestment Plan
|
|
|
A. Participation
We invite you to review the description of the Dividend Reinvestment Plan (the
``Plan'') which is available to you as a shareholder of Scudder Strategic Income Trust
(the ``Fund''). If you wish to participate and your shares are held in your own name,
simply contact Scudder Investments Service Company, whose address and phone
number are provided in Paragraph E for the appropriate form. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you must instruct that
nominee to re-register your shares in your name so that you may participate in the
Plan, unless your nominee has made the Plan available on shares held by them.
Shareholders who so elect will be deemed to have appointed UMB Bank, N.A.
("United Missouri Bank" or "UMB") as their agent and as agent for the Fund under
the Plan.
B. Dividend Investment Account
The Fund's transfer agent and dividend disbursing agent or its delegate (the ``Transfer
Agent'') will establish a Dividend Investment Account (the ``Account'') for each
shareholder participating in the Plan. The Transfer Agent will credit to the Account
of each participant funds it receives from the following sources: (a) cash dividends
and capital gains distributions paid on shares of beneficial interest (the ``Shares'') of
the Fund registered in the participant's name on the books of the Fund; and (b) cash
dividends and capital gains distributions paid on Shares registered in the name of the
Transfer Agent but credited to the participant's Account. Sources described in clauses
(a) and (b) of the preceding sentence are hereinafter called ``Distributions.''
C. Investment of Distribution Funds held in each account
If on the record date for a Distribution (the ``Record Date''), Shares are trading at a
discount from net asset value per Share (according to the evaluation most recently
made on Shares of the Fund), funds credited to a participant's Account will be used
to purchase Shares (the ``Purchase''). UMB will attempt, commencing five days prior
to the Payment Date and ending at the close of business on the Payment Date
(``Payment Date'' as used herein shall mean the last business day of the month in
which such Record Date occurs), to acquire Shares in the open market. If and to the
extent that UMB is unable to acquire sufficient Shares to satisfy the Distribution by
the close of business on the Payment Date, the Fund will issue to UMB Shares valued
at net asset value per Share (according to the evaluation most recently made on
Shares of the Fund) in the aggregate amount of the remaining value of the
Distribution. If, on the Record Date, Shares are trading at a premium over net asset
value per Share, the Fund will issue on the Payment Date, Shares valued at net asset
value per Share on the Record Date to the Transfer Agent in the aggregate amount of
the funds credited to the participants' accounts.
D. Voluntary Cash Contributions
A participant may from time to time make voluntary cash contributions to his
Account by sending to Transfer Agent a check or money order, payable to Transfer
Agent, in a minimum amount of $100 with appropriate accompanying instructions.
(No more than $500 may be contributed per month.) Transfer Agent will inform
UMB of the total funds available for the purchase of Shares and UMB will use the
funds to purchase additional Shares for the participant's Account the earlier of: (a)
when it next purchases Shares as a result of a Distribution or (b) on or shortly after
the first day of each month and in no event more than 30 days after such date except
when temporary curtailment or suspension of purchases is necessary to comply with
applicable provisions of federal securities laws. Cash contributions received more than
fifteen calendar days or less than five calendar days prior to a Payment Date will be
returned uninvested. Interest will not be paid on any uninvested cash contributions.
Participants making voluntary cash investments will be charged a $.75 service fee for
each such investment and will be responsible for their pro rata share of brokerage
commissions.
E. Additional Information
Address all notices, correspondence, questions, or other communication regarding
the Plan, or if you would like a copy of the Plan, to:
Scudder Investments Service Company
P.O. Box 219066
Kansas City, Missouri 64121-9066
1-800-294-4366
F. Adjustment of Purchase Price
The Fund will increase the price at which Shares may be issued under the Plan to
95% of the fair market value of the shares on the Record Date if the net asset value
per Share of the Shares on the Record Date is less than 95% of the fair market value
of the Shares on the Record Date.
G. Determination of Purchase Price
The cost of Shares and fractional Shares acquired for each participant's Account in
connection with a Purchase shall be determined by the average cost per Share,
including brokerage commissions as described in Paragraph G hereof, of the Shares
acquired by UMB in connection with that Purchase. Shareholders will receive a
confirmation showing the average cost and number of Shares acquired as soon as
practicable after the Transfer Agent has received or UMB has purchased Shares. The
Transfer Agent may mingle the cash in a participant's account with similar funds of
other participants of the Fund for whom UMB acts as agent under the Plan.
H. Brokerage Charges
There will be no brokerage charges with respect to Shares issued directly by the Fund
as a result of Distributions. However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to UMB's open market purchases in
connection with the reinvestment of Distributions. Brokerage charges for purchasing
small amounts of Shares for individual Accounts through the Plan can be expected to
be less than the usual brokerage charges for such transactions, as UMB will be
purchasing Shares for all participants in blocks and prorating the lower commission
thus attainable.
I. Service Charges
There is no service charge by the Transfer Agent or UMB to shareholders who
participate in the Plan other than service charges specified in Paragraphs D and M
hereof. However, the Fund reserves the right to amend the Plan in the future to
include a service charge.
J. Transfer of Shares Held by Agent
The Transfer Agent will maintain the participant's Account, hold the additional
Shares acquired through the Plan in safekeeping and furnish the participant with
written confirmation of all transactions in the Account. Shares in the Account are
transferable upon proper written instructions to the Transfer Agent. Upon request to
the Transfer Agent, a certificate for any or all full Shares in a participant's Account
will be sent to the participant.
K. Shares Not Held in Shareholder's Name
Beneficial owners of Shares which are held in the name of a broker or nominee will
not be automatically included in the Plan and will receive all distributions in cash.
Such shareholders should contact the broker or nominee in whose name their Shares
are held to determine whether and how they may participate in the Plan.
L. Amendments
Experience under the Plan may indicate that changes are desirable. Accordingly, the
Fund reserves the right to amend or terminate the Plan, including provisions with
respect to any Distribution paid, subsequent to notice thereof sent to participants in
the Plan at least ninety days before the record date for such Distribution, except
when such amendment is necessary or appropriate to comply with applicable law or
the rules or policies of the Securities and Exchange Commission or any other
regulatory authority, in which case such amendment shall be effective as soon as
practicable. The amendment shall be deemed to be accepted by each participant
unless, prior to the effective date thereof, the Transfer Agent receives notice of the
termination of such participant's account under the Plan in accordance with the
terms hereof. The Plan may be terminated by the Fund.
M. Withdrawal from Plan
Shareholders may withdraw from the Plan at any time by giving the Transfer Agent a
written notice. If the proceeds are $100,000 or less and the proceeds are to be
payable to the shareholder of record and mailed to the address of record, a signature
guarantee normally will not be required for notices by individual account owners
(including joint account owners), otherwise a signature guarantee will be required. In
addition, if the certificate is to be sent to anyone other than the registered owner(s) at
the address of record, a signature guarantee will be required on the notice. A notice of
withdrawal will be effective for the next Distribution following receipt of the notice
by the Transfer Agent provided the notice is received by the Transfer Agent at least
ten days prior to the Record Date for the Distribution. When a participant
withdraws from the Plan, or when the Plan is terminated in accordance with
Paragraph L hereof, the participant will receive a certificate for full Shares in the
Account, plus a check for any fractional Shares based on market price; or if a
Participant so desires, the Transfer Agent will notify UMB to sell his Shares in the
Plan and send the proceeds to the participant, less brokerage commissions and a
$2.50 service fee.
N. Tax Implications
Shareholders will receive tax information annually for personal records and to assist
in preparation of their Federal income tax returns. If Shares are purchased at a
discount, the amount of the discount is considered taxable income and is added to
the cost basis of the purchased shares.
|
Automated
Information Lines
|
Scudder Closed-End Fund Info Line
(800) 349-4281
|
|
Web Site
|
www.scudder.com
or visit our Direct Link:
CEF.Scudder.com (Do not use www.)
Obtain monthly fact sheets, financial reports, press releases and
webcasts when available.
|
|
Written
correspondence
|
Deutsche Investment Management Americas Inc.
222 South Riverside
Chicago, IL 60606
|
|
Legal Counsel
|
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, IL 60601
|
|
Dividend
Reinvestment
Plan Agent
|
UMB Bank
P.O. Box 410064
Kansas City, MO 64141-0064
|
|
Shareholder
Service Agent
|
Scudder Investments Service Company
P.O. Box 219066
Kansas City, MO 64121-9066
(800) 294-4366
|
|
Custodian and
Transfer Agent
|
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
|
|
Independent
Auditors
|
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
|
|
NYSE Symbol
|
KST
|
|
CUSIP Number
|
81123W-101
|
This privacy statement is issued by Scudder Distributors, Inc., Scudder Financial
Services, Inc., Scudder Investor Services, Inc., Scudder Trust Company and the
Scudder Funds.
We consider privacy fundamental to our client relationships and adhere to the
policies and practices described below to protect current and former clients'
information.
We never sell customer lists or individual client 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 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 Web sites, and through transactions with us or
our affiliates. To be able to serve our clients, information is shared with affiliates and
other companies. Specifically, we disclose client information to parties that perform
various services for us, such as transfer agents, custodians, and broker-dealers.
Limited information also may be shared with affiliates, with companies with which
we have joint marketing agreements, or with other parties as required by law. Any
organization receiving client information may only use it for the purpose designated
by the entities listed above.
Questions on this policy may be sent to:
Scudder Investments
Attention: Correspondence - Chicago
P.O. Box 219415
Kansas City, MO 64121-9415
July 2002
ITEM 2. CODE OF ETHICS.
Not currently applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not currently applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not currently applicable.
ITEM 5. [RESERVED]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIERS AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Chief Executive and Financial Officers concluded that the
Registrant's Disclosure Controls and Procedures are effective based on the
evaluation of the Disclosure Controls and Procedures as of a date within 90 days
of the filing date of this report.
(b) During the six month period ended May 31, 2003, management identified
an issue related to a different registrant within the Scudder fund complex.
Management discussed the issue with the Registrant's Audit Committee and
auditors and instituted additional procedures to enhance its internal controls
over financial reporting.
Form N-CSR Item F
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: Scudder Strategic Income Trust
By: /s/Richard T. Hale
---------------------------
Richard T. Hale
Chief Executive Officer
Date: July 25, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Registrant: Scudder Strategic Income Trust
By: /s/Richard T. Hale
---------------------------
Richard T. Hale
Chief Executive Officer
Date: July 25, 2003
By: /s/Charles A. Rizzo
---------------------------
Charles A. Rizzo
Chief Financial Officer
Date: July 25, 2003
