Scudder
Gold
Fund
Annual Report
June 30, 1997
Pure No-Load(TM) Funds
A convenient and cost-effective way to broaden a portfolio of stocks, bonds, and
money market investments. Offers potential for maximum return from a portfolio
of gold and gold-related investments in exchange for above-average risk.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER [LOGO]
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
15 Financial Statements
18 Financial Highlights
19 Notes to Financial Statements
23 Report of Independent Accountants
24 Tax Information
24 Officers and Directors
25 Investment Products and Services
26 Scudder Solutions
In Brief
o Gold and gold stocks endured a difficult period during Scudder Gold Fund's
most recent fiscal year ended June 30, 1997. Large central bank gold reserve
sales and the Bre-X scandal drove down prices of gold and gold stocks.
Reflecting these events, Scudder Gold Fund's total return for the 12-month
period was -17.72%.
o Relative to its peers, the Fund's performance placed it in the top quintile of
46 similar funds tracked by Lipper Analytical Services, Inc., given their
average return of -24.36%.
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART TITLE: Total Returns for Gold and Gold Funds
Periods ended June 30, 1997
BAR CHART DATA:
Six months Twelve months
---------- -------------
Gold bullion, London p.m fix -9.40 -12.42
Platinum, free market price 16.37 9.69
Toronto Stock Exchange Gold Index -26.51 -24.89
Johannesburg (South Africa)
Stock Exchange Gold Index -35.93 -43.95
Lipper Average for Gold-Oriented Funds -19.20 -24.36
Scudder Gold Fund -17.19 -17.72
2 - SCUDDER GOLD FUND
<PAGE>
Letter From the Fund's President
Dear Shareholders,
The market for gold stocks and gold bullion weathered difficult times
during Scudder Gold Fund's most recent fiscal year. Typical drivers of the gold
marketplace were swept aside as the events surrounding the demise of Indonesia's
Bre-X stock unfolded and central banks from several nations sold huge stores of
gold bullion into a market already glutted with supply.
Despite these difficulties, we remain upbeat concerning the prospects for
Scudder Gold Fund's long-term performance for several reasons: First, we believe
that Scudder's portfolio management team and research analysts are well equipped
to evaluate the gold market in all its complexities. Second, despite recent
events in Indonesia, exciting, substantial gold finds still exist in several
regions of the world awaiting discovery and exploration by both large and small
companies. Third, gold reserve sales related to the European Monetary Union,
which have unsettled the market for gold bullion for the past 12 months, could
conclude by the end of 1997. Lastly, we believe Scudder Gold Fund is positioned
well relative to similar funds given its substantial outperformance over the
fiscal year. For further details, please see the Portfolio Management Discussion
beginning on page 6.
If you have any questions regarding Scudder Gold Fund or any other Scudder
fund, please do not hesitate to call Investor Relations at 1-800-225-2470. Or
visit Scudder's Website at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Gold Fund
3 - SCUDDER GOLD FUND
<PAGE>
PERFORMANCE UPDATE as of June 30, 1997
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/97 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER GOLD FUND
- --------------------------------------------
1 Year $ 8,228 -17.72% -17.72%
5 Year $ 16,999 69.99% 11.20%
Life of Fund $ 13,124 31.24% 3.13%
- --------------------------------------------
S & P INDEX
- --------------------------------------------
1 Year $ 13,472 34.72% 34.72%
5 Year $ 24,657 146.57% 19.77%
Life of Fund $ 42,026 320.26% 17.82%
- --------------------------------------------
*The Fund commenced operations on September 2, 1988.
Index comparisons begin September 30, 1998.
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Yearly periods ended June 30
SCUDDER GOLD FUND
Year Amount
- ----------------------
9/88* $10,000
'89 $ 9,256
'90 $ 9,005
'91 $ 8,705
'92 $ 8,106
'93 $10,699
'94 $11,378
'95 $12,231
'96 $16,746
'97 $13,779
S & P 500 INDEX
Year Amount
- ----------------------
9/88* $10,000
'89 $12,012
'90 $13,994
'91 $15,026
'92 $17,044
'93 $19,369
'94 $19,642
'95 $24,760
'96 $31,196
'97 $42,026
The Standard & Poor's (S&P) 500 Index is an unmanaged capitalization-
weighted measure of 500 widely held common stocks listed on the New York Stock
Exchange, American Stock Exchange, and Over-The-Counter market. Index returns
assume reinvestment of dividends and, unlike Fund returns, do not reflect any
fees or expenses.
- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods Ended June 30
<TABLE>
<CAPTION>
1989* 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------
NET ASSET VALUE... $ 10.58 $ 10.21 $ 9.87 $ 9.19 $ 12.13 $ 12.64 $ 12.86 $ 15.34 $ 10.49
INCOME DIVIDENDS.. $ - $ .01 $ - $ - $ - $ .24 $ .25 $ 1.08 $ 2.39
CAPITAL GAINS
& OTHER
DISTRIBUTIONS..... $ - $ .09 $ - $ - $ - $ - $ .47 $ .63 $ .26
FUND TOTAL
RETURN (%)........ -11.83 -2.71 -3.33 -6.89 31.99 6.35 7.50 36.91 -17.72
INDEX TOTAL
RETURN (%)........ 20.11 16.45 7.37 13.39 13.61 1.40 26.07 26.00 34.72
</TABLE>
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, so an investor's shares, when redeemed, may be
worth more or less than when purchased. If the Adviser had not maintained the
Fund's expenses, the average annual and cumulative total returns for the life of
Fund period would have been lower.
4 - SCUDDER GOLD FUND
PORTFOLIO SUMMARY as of June 30, 1997
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Equity Holdings 79%
Cash Equivalents, net 14%
Precious Metals 7%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
During a difficult period for gold
and gold stocks, the Fund
profited from our purchases of
platinum stocks as they tracked
platinum's steep rise.
- --------------------------------------------------------------------------
QUALITY DISTRIBUTION
- --------------------------------------------------------------------------
Tier breakdown of the Fund's common stocks
Tier I
Premier gold producing companies 30%
Tier II
Major established gold producers 14%
Tier III
Junior gold producers with
medium cost production 19%
Tier IV
Companies with some gold
production on stream or in startup 10%
Tier V
Primarily exploration companies
with or without mineral reserves 27%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
As Tier V stocks were set back by
the demise of Bre-X, we shifted
our usual Tier V focus and
purchased several Tier IV stocks.
- --------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
(28% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. NEWMONT MINING CORP.
International gold exploration and mining company
2. ASHANTI GOLDFIELDS CO., LTD.
Leading gold producer in Ghana
3. STILLWATER MINING CO.
Exploration and development of mines in Montana
producing platinum, palladium and associated
metals
4. FREEPORT MCMORAN COPPER & GOLD, INC.
U.S. Company mining in Indonesia
5. HOMESTAKE MINING CO.
Major international gold producer
6. CRYSTALLEX INTERNATIONAL CORP.
Junior company developing gold property in Venezuala
7. NORMANDY MINING LTD.
Invests in mining and oil enterprises in Australia
8. PLACER DOME INC.
International gold, silver and copper mining company
9. BATTLE MOUNTAIN CANADA
International gold and silver mining
10. ETRUSCAN ENTERPRISES LTD.
Exploration and development of gold prospects in Nigeria
The Fund benefitted from the
superior performance of
Crystallex, its sixth largest
holding, during the most recent
fiscal year.
For more complete details about the Fund's investment portfolio,
see page 9. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
5 - SCUDDER GOLD FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
From an absolute standpoint, Scudder Gold Fund was a disappointing investment
for the past year, but compared with other gold funds it performed relatively
well. The 12 months ended June 30, 1997, witnessed a major -- although temporary
- -- collapse in the prices of Tier V stocks stemming from the Bre-X scandal, as
well as huge sales of gold reserves that drove gold bullion's price to lows not
seen since March 1985.
Scudder Gold Fund's total return during the period was -17.72%, compared with
the -24.36% average of similar funds as tracked by Lipper. Scudder Gold Fund
posted average annual total returns in the top quintile of similar gold-oriented
funds over one-, three-, and five-year periods, as shown in the table below.
Investment returns for periods ended June 30, 1997
Rank/
Scudder Lipper Number Percentile
Period Gold Fund Average of Funds Rank
------------------------------------------------------
1 year -17.72% -24.36% 9/46 Top 20%
3 years* 6.59% -4.62% 2/33 Top 6%
5 years* 11.20% 4.15% 4/27 Top 15%
* Average annual total returns
Performance statistics compiled by Lipper Analytical Services, Inc.
Past performance does not guarantee future results.
Bre-X and EMU
Gold stocks and gold bullion faced major obstacles during Scudder Gold Fund's
most recent fiscal year. Although Scudder Gold Fund greatly profited from its
ownership of Bre-X's stock by having sold most of its shares in 1996, the
company's downfall inflicted major, though temporary, damage on Indonesian gold
stocks, Tier V stocks, and gold stocks in general. To review briefly the
unwinding of the stock, authorities believe that Bre-X's on-site geologist
perpetrated a $4.5 billion market capitalization fraud by falsifying tests for
gold ore. We are disappointed that sufficient due diligence was not performed
earlier by the parties responsible in order to thwart this fraud. We are also
confident that, over time, Indonesian and other Tier V gold exploration firms
will eventually win back the trust and confidence of the marketplace damaged by
the Bre-X affair.
Gold faced another challenge during the past 12 months in the form of large
sales of gold reserves by European central banks. As we mentioned in our last
report to you, these sales are designed to pay down debt and meet the 3%
debt-to-GDP ratio required at the close of 1997 for membership in the European
Monetary Union (EMU). When they sell, European central banks are collecting the
difference between gold's "reserve calculation price" as logged in their vaults
(as low as $90 per ounce) and the "spot price" of gold available in the
marketplace. Observers have deemed such sales politically necessary despite the
fact that on average they can only pay down approximately 10% of the amount
needed to meet strict EMU standards. Dramatic increases in the supply of gold
stemming from central bank sales -- and resulting price declines in the latter
6 - SCUDDER GOLD FUND
<PAGE>
part of 1996 -- were capped by the announcement of these sales in January 1997,
driving the price of gold bullion to as low as $318 from a 12-month high of $390
in July 1996. Adding substantially to oversupply during the period was the
Reserve Bank of Australia's decision to sell two thirds of its gold reserves --
5 to 10% of global annual production.
At the close of the Fund's fiscal year, gold began to advance from its lows as
short sellers of gold "covered" (buying back their short sales) and gold
producers bought back large forward sales. In "selling forward," gold producers
sell on the open market gold that will not be mined for between six months and
four years, similar to selling short in the stock market. As with short sales, a
forward sale can be canceled through a "buyback" transaction. Gold producers use
the forward markets to lock in profits for mining projects.
Our Strategy
In light of the events outlined above, we took several actions: We sold our
shares in Indonesian exploration stocks because of the toll taken by the Bre-X
scandal. To seek to profit from Tier I stocks' relative stability during this
period, we purchased shares of three stocks in this prime category: Freeport
McMoran, Newmont Mining, and Placer Dome. We also purchased several Tier IV
stocks -- exploration companies that have begun to mine gold -- as a temporary
alternative to our usual Tier V focus. Additionally, the Fund profited from our
purchase of platinum stocks during this period as these stocks tracked the
metal's steep rise. The Fund also benefited from the superior performance of
7 - SCUDDER GOLD FUND
<PAGE>
Crystallex (Venezuela), which has advanced from our purchase price of $1.50 per
share to over $5 per share.
A Wait-and-See Approach
We are optimistic concerning the long-term prospects for gold and gold stocks,
but continue to look for a divergence between the performance of these two asset
classes over the coming months. Gold bullion's near-term prospects depend on the
successful conclusion of EMU; whether debt standards are eased or not, we are
hopeful that a large number of European nations will enter the EMU next year
and, as a result, put an end to the market's concerns over continued large sales
of gold reserves.
Even if gold's recovery is delayed by holdups in the formation of the EMU, the
prospects for Tier IV and Tier V companies around the globe remain as attractive
as ever. Of course, excitement over new discoveries of gold will be tempered by
the hangover from the Bre-X affair, and such finds will need to be covered by
intensive due diligence. Even so, the Guyana Shield (stretching from South
America to West Africa), Indonesia, Russia, and the Commonwealth of Independent
States republics continue to draw our interest as potentially rich sites.
Looking ahead, we will continue to employ our expertise and considerable
resources to find companies that display exploration prowess in favorable
locations around the world. We believe Scudder Gold Fund remains an appropriate
investment for those seeking portfolio diversification, a hedge against
inflation, and participation in the world's gold and precious metals markets.
Thank you for investing with Scudder.
Sincerely,
Your Portfolio Management Team
/s/Clay L. Hoes /s/William J. Wallace
Clay L. Hoes William J. Wallace
Scudder Gold Fund:
A Team Approach to Investing
Scudder Gold Fund is managed by a team of Scudder investment professionals
who each play an important role in the Fund's management process. Team
members work together to develop investment strategies and select
securities for the Fund's portfolio. They are supported by Scudder's large
staff of economists, research analysts, traders, and other investment
specialists who work in Scudder's offices across the United States and
abroad. We believe our team approach benefits Fund investors by bringing
together many disciplines and leveraging Scudder's extensive resources.
Lead Portfolio Manager Clay L. Hoes assumed responsibility for the Fund's
day-to-day management in 1997. Mr. Hoes, who joined Scudder in 1996, has
been involved in the investment industry since 1987 and has worked as a
portfolio manager since 1996. William J. Wallace, Portfolio Manager, has
been a member of Scudder Gold Fund's team since 1991 and also serves as a
Portfolio Manager for Scudder Value Fund. Mr. Wallace, who has over 16
years of investment experience, contributes expertise in quantitative
analysis.
8 - SCUDDER GOLD FUND
<PAGE>
Investment Portfolio as of June 30, 1997
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 11.8%
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 6/30/97 at 5.9%, to be
repurchased at $19,351,171 on 7/1/97, collateralized by a $19,467,000 U.S. Treasury -----------
Note, 4.75%, 8/31/98 (Cost $19,348,000) ............................................... 19,348,000 19,348,000
-----------
Convertible Bonds 2.3%
- -------------------------------------------------------------------------------------------------------------------------------
Chile 1.7%
Bema Gold Corp., 7.5%, 2/28/00 .......................................................... 500,000 1,465,000
Dayton Mining Corp., 7%, 2/28/02 ........................................................ 1,500,000 1,398,750
-----------
2,863,750
-----------
Canada 0.6%
Kinross Gold, 5.5%, 12/05/06 ............................................................ CAD 1,500,000 961,295
- -------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $3,101,120) 3,825,045
- -------------------------------------------------------------------------------------------------------------------------------
Shares
- -------------------------------------------------------------------------------------------------------------------------------
Common Stocks 77.2%
- -------------------------------------------------------------------------------------------------------------------------------
Australia 7.4%
Acacia Resources, Ltd.* (Gold and mineral exploration and production company) ........... 600,000 788,690
Delta Gold NL* (Australian-based gold exploration and production company primarily in
Australia with important platinum property in Zimbabwe) ............................... 1,000,000 1,669,545
Great Central Mines, Ltd.* (Gold exploration and production company) .................... 800,000 1,524,196
Newcrest Mining, Ltd. (Australian-based gold production and global exploration company) . 700,000 1,934,935
Normandy Mining "New" (Newly merged Senior gold producer of Posgold Ltd. Gold Mines of
Kalgoorlie Ltd. and Normandy Ltd. with interests in Argentina) (k) .................... 3,000,000 3,376,862
Resolute Ltd. (Australian-based exploration and production of gold and other minerals) .. 850,000 1,515,433
Ross Mining NL (Australian-based exploration and production company in Soloman Islands) . 1,856,397 1,248,150
-----------
12,057,811
-----------
Bolivia 0.9%
Corriente Resources, Inc.* (Exploration and development company) ........................ 403,000 963,033
Jordex Resources, Inc.* (Operator of two mines producing zinc, lead and silver) ......... 700,000 511,966
-----------
1,474,999
-----------
Brazil 0.8%
Black Swan Gold Mines Ltd.* (Gold development projects in Brazil) ....................... 500,000 441,725
Black Swan Gold Mines Ltd., Purchase Warrants* (expire 8/20/98) (c) (i) ................. 100,000 5,069
Ourominas Minerals Inc.* (Exploration company operating solely in Brazil) ............... 1,080,000 797,712
Ourominas Minerals Inc., Purchase Warrants* (expire 8/14/97) (c) (i) .................... 250,000 0
-----------
1,244,506
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 -- SCUDDER GOLD FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Canada 6.2%
Agnico-Eagle Mines, Ltd.* (Silver and gold mining) ...................................... 150,000 1,439,227
Euro-Nevada Mining, Ltd.* (Large North American gold royalty company) ................... 100,000 3,077,591
Kinross Gold Corp.* (Gold mining company, with interest in Zimbabwe) .................... 100,000 445,346
Golden Knight Resources, Inc.* (Junior gold producer, with interest in Ghana) ........... 986,787 2,015,091
Redfern Resources Ltd.* (Exploration company in British Columbia) ....................... 300,000 304,138
Repadre Capital Corp.* (Junior gold royalty company) .................................... 502,700 2,930,399
-----------
10,211,792
-----------
Chile 1.3%
Bema Gold Corp.* (Partner in development of large Chilean gold deposit) ................. 141,500 855,588
Dayton Mining Corp.* (Junior company developing Chilean gold deposits) .................. 253,000 879,395
Minera Rayrock Inc. "A"* (Company developing a low cost property in Chile) .............. 550,000 143,380
Minera Rayrock Inc. "B"* ................................................................ 100,000 28,966
South American Gold and Copper* (Gold and copper exploration company in Chile
and Peru) ............................................................................. 400,000 202,759
-----------
2,110,088
-----------
China 0.2%
Zen International Resources Ltd. Units* (expire 11/30/98) (Exploration company
in China) (c) (d) ..................................................................... 110,000 287,556
-----------
Ecuador 0.2%
Ecuadorian Minerals Corp.* (Exploration company in Ecuador) ............................. 723,800 303,996
-----------
French Guiana 1.0%
Guyanor Resources S.A. "B"* (Company holding interests in mineral properties in
French Guiana) ........................................................................ 450,000 1,270,864
International Roraima Gold , Special Warrants* (expire 10/22/97) (c) (f) ................ 825,000 364,423
-----------
1,635,287
-----------
Ghana 7.1%
Ashanti Goldfields Co., Ltd. (GDR) (Leading gold producer) .............................. 542,332 6,338,505
Ashanti Goldfields (Preference shares)* (c) ............................................. 154,701 337,248
Pioneer Group Inc. (Fund management company owning major gold producer in Ghana) ........ 100,000 2,300,000
Ranger Minerals NL* (Gold producer and exploration company in Ghana) .................... 850,000 2,600,637
-----------
11,576,390
-----------
Indonesia 2.8%
Freeport McMoRan Copper & Gold, Inc. "A" (Mining company operating in Indonesia) ........ 150,000 4,387,500
Golden Bear Minerals, Inc.* (Gold exploration company) .................................. 500,000 119,483
Golden Bear Minerals, Inc., Special Warrants* (expire 8/16/98) (c) (g) .................. 300,000 65,172
South Pacific Resources* (Gold exploration company operating in Indonesia) .............. 75,000 32,043
-----------
4,604,198
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 -- SCUDDER GOLD FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Kazakhstan 0.3%
Kazakhstan Minerals Corp.* (Joint venture in Kazakhstan) ................................ 150,000 202,500
Steppe Gold Resources Ltd.* (Exploration company in Kazakhstan) ......................... 910,000 256,997
Steppe Gold Resources Ltd., Purchase Warrants "A"* (expire 6/10/98) (c) (h) ............. 140,000 5,069
Steppe Gold Resources Ltd., Purchase Warrants "B"* (expire 6/10/98) (c) (i) ............. 385,000 5,576
-----------
470,142
-----------
Mexico 0.1%
Northern Crown Mines* (Junior gold and silver exploration company in Mexico) ............ 150,000 119,483
Northern Crown Mines, Purchase Warrants* (expire 12/31/97) (c) (i) ...................... 50,000 2,534
-----------
122,017
-----------
Namibia 0.8%
Namibian Minerals Corp.* (Diamond exploration and development company, offshore
Namibia) .............................................................................. 300,000 1,303,451
-----------
Nicaragua 0.3%
Triton Mining Corp.* (Exploration and development of mineral properties in Central and
South America) ........................................................................ 311,600 485,130
-----------
Niger 1.9%
Etruscan Enterprise Company* (Junior exploration company) ............................... 600,000 2,563,453
Etruscan Enterprise Company, Purchase Warrants* (expire 9/30/97) (c) (h) ................ 400,000 541,656
-----------
3,105,109
-----------
Peru 0.6%
Southwestern Gold Corp.* (Multiple gold and gold/copper exploration properties in Peru) . 150,000 1,021,036
-----------
Philippines 0.7%
Chase Resource Corp.* (Acquisition, exploration and development of resource mineral
properties) ........................................................................... 400,000 217,242
Climax Mining Ltd.* (Gold exploration company in Australia and the Philippines Islands) . 1,000,000 800,777
TVI Pacific, Inc. *(Gold exploration and mining in the Philippines) ..................... 620,000 152,649
-----------
1,170,668
-----------
Sarawak 0.4%
Menzies Gold NL* (Junior exploration company in Sarawak) ................................ 2,500,000 755,450
-----------
South Africa 3.6%
Potgietersrust Platinum Holdings, Ltd.* (Leading platinum producer) ..................... 302,664 2,284,823
Rustenburg Platinum Holdings Ltd. (Platinum mining company) ............................. 110,813 2,027,216
Vaal Reefs Exploration & Mining Co., Ltd. (ADR) (Mining and exploration for gold, uranium
oxide and sulfuric acid in South Africa) .............................................. 350,000 1,684,375
-----------
5,996,414
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 -- SCUDDER GOLD FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Spain 1.3%
Rio Narcea* (Junior exploration company in Northern Spain) .............................. 700,000 2,103,624
-----------
Tanzania 0.7%
Pangea Goldfields Inc.* (Junior exploration company operating in Tanzania) .............. 400,000 1,158,623
-----------
United States 10.2%
Crown Butte Resources Ltd.* (Small exploration company holding an important gold
deposit in Montana) ................................................................... 250,000 389,225
Crown Resources Corp.* (Gold, silver, and mineral exploration company) .................. 304,000 1,938,000
Emperor Gold Corp. Units* (expire 11/14/97) (Junior mining company in California)
(c) (d) ............................................................................... 200,000 154,966
Emperor Gold Corp.* ..................................................................... 38,200 33,194
Getchell Gold Corp.* (Expanding gold mining project in Nevada) .......................... 60,000 2,115,000
Piedmont Mining Co.* (Gold and mining development company in the Carolinas) (m) ......... 1,024,000 307,200
Piedmont Mining Co.* (c) (l) (m) ........................................................ 700,000 168,000
Star Resources Corp.* (Diamond exploration company in Arkansas and Russia) .............. 1,000,000 130,345
Stillwater Mining Co.* (Exploration and development of mines in Montana producing
platinum, palladium and associated metals) ............................................ 300,000 6,431,250
Viceroy Resources Corp.* (Gold producer in California) .................................. 550,000 1,792,244
Vista Gold Corp.* (Merged junior exploration and development company of DaCapo
Resources Ltd. and Granges Inc.) ...................................................... 2,800,000 2,514,211
Vista Gold Corp., Purchase Warrants* (expire 10/31/97)(c)(i) ............................ 200,000 1,448
X-Cal Resources (Junior exploration company in Nevada) (c) (l) .......................... 714,286 312,673
X-Cal Resources Units* (expire 9/30/97) (c) (d) ......................................... 1,000,000 434,484
-----------
16,722,240
-----------
Venezuela 3.8%
Bolivar Goldfields Ltd.* (Gold exploration company in Venezuela) ........................ 229,520 149,584
Bolivar Goldfields Ltd., Purchase Warrants* (expire 9/24/97) (c) (i) .................... 150,000 0
Crystallex International Corp.* (Junior company developing gold property in
Venezuela) ............................................................................ 750,000 3,801,731
El Callao Mining Corp.* (Gold exploration and development company with interests
in Venezuela) ......................................................................... 1,124,000 936,022
Tombstone Exploration Co., Ltd.* (Junior exploration company in Venezuela and
Honduras) (m) ......................................................................... 1,100,000 1,314,313
-----------
6,201,650
-----------
West Africa 3.5%
Birim Goldfields* (Junior exploration company in Ghana) ................................. 350,000 152,069
Birim Goldfields, Purchase Warrants* (expire 5/5/98) (c) (i) ............................ 75,000 6,517
High River Gold Mines Ltd.* (Gold exploration and development) .......................... 200,000 434,483
Leo Shields Exploration NL* (Gold exploration in West Africa) ........................... 2,342,734 725,626
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 -- SCUDDER GOLD FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nevsun Resources Ltd.* (Holder of interests in gold prospects, junior exploration
company in Ghana and Mali) ............................................................ 295,000 886,527
Nevsun Resources Ltd., Purchase Warrants* (expire 1/24/98) (c) (i) ...................... 35,000 1,521
Oliver Gold Corp.* (Exploration and development company with interests in gold and
gold-copper prospects in British Columbia) ............................................ 200,000 159,311
Pan African Resources Corp.* (Gold exploration in West Africa) .......................... 800,040 150,628
Panorama Resources NL* (Junior exploration company in Congo and Kenya) .................. 1,250,000 198,306
Randgold Resources Ltd.* (Gold mining and exploration) .................................. 100,000 1,643,750
Samax Gold Inc.* (Gold exploration in Ghana and Tanzania) ............................... 325,000 1,353,235
-----------
5,711,973
-----------
International 21.1%
Battle Mountain Canada* (Exploration and production development company in North and
South America, Australia and Indonesia) ............................................... 549,228 3,141,968
Cambior, Inc.* (Medium-sized gold producer with a major mine in Guyana) ................. 225,000 2,558,022
Canarc Resources Corp.* (Exploration and development company in Canada, South
American and Indonesia) ............................................................... 775,600 527,944
Golden Star Resources Ltd.* (Junior company, with permits in North and South
America and West Africa) .............................................................. 125,000 1,031,898
Homestake Mining Co. (Major international gold producer) ................................ 310,000 4,049,375
Meridian Gold Inc.* (Exploration and development company) ............................... 398,000 1,794,091
Meridian Gold Inc.* ..................................................................... 127,600 558,250
Minefinders Corp., Ltd.* (Precious metals exploration and development) .................. 40,000 89,214
Minorca Resources Ltd.* (Owner of varied mineral property claims) ....................... 150,000 93,414
Minorca Resources Ltd., Special Warrants* (expire 3/13/99) (c) (j) ...................... 100,000 133,966
Newmont Mining Corp. (International gold exploration and mining company) ................ 200,000 7,800,017
Orvana Minerals Corp.* (International exploration and development company) .............. 390,000 1,623,882
Placer Dome Inc. (International gold, silver and copper mining) ......................... 200,000 3,244,144
Queenstake Resources Ltd.* (Gold mining company) ........................................ 700,000 1,029,002
Rayrock Yellowknife Resources, Inc.* (Junior diversified mineral producer with
operations in Nevada, Canada and Latin America) ....................................... 300,000 1,433,796
Rea Gold Corp.* (Gold exploration and mining company) ................................... 800,000 457,656
Solitario Resources Corp.* (Precious and base metals exploration company primarily
in Argentina and Peru) (m) ............................................................ 700,000 2,281,038
TVX Gold, Inc.* (International gold and silver mining) .................................. 400,000 2,114,486
Williams Resources, Inc.* (Natural resource precious metals producing company) .......... 433,333 674,656
-----------
34,636,819
- -------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $138,846,363) 126,470,969
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 -- SCUDDER GOLD FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total Investment Portfolio (Cost $161,295,483) (a) ...................................... 91.3 149,644,014
Scudder Precious Metals, Inc.:
Gold* (Cost $11,097,834)(b) ........................................................... 6.3 10,296,680
Platinum* (Cost $725,483)(b) .......................................................... 0.5 838,607
Other Assets and Liabilities, Net ....................................................... 1.9 3,153,510
------ ------------
Net Assets .............................................................................. 100.0 163,932,811
====== ============
</TABLE>
* Non-income producing security or commodity.
(a) The cost for federal income tax purposes was $171,787,209. At June 30,
1997, net unrealized depreciation for all investment securities based on
tax cost was $22,143,195. This consisted of aggregate gross unrealized
appreciation for all investments in which there was an excess of market
value over tax cost of $19,329,288 and aggregate gross unrealized
depreciation for all investment securities in which there was an excess of
tax cost over market value of $41,472,483.
(b) The cost of Gold for federal income tax purposes was $11,097,834. At June
30, 1997, gross and net unrealized depreciation based on tax cost was
$801,154. The cost of Platinum for federal income tax purposes was
$725,483. At June 30, 1997, gross and net unrealized appreciation based on
tax cost was $113,124.
(c) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $2,827,878 (1.7% of net assets). Their
values have been estimated by the Board of Directors in the absence of
readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of
these securities at June 30, 1997 aggregated $3,020,288. These securities
may also have certain restrictions as to resale.
(d) 1 Unit = 1 common share and 1 purchase warrant.
(e) 1 Special Warrant = 1 common share (not used).
(f) 1 Special Warrant = 1 common share and 1/2 purchase warrant.
(g) 1 Special Warrant = 1 common share and 1 purchase warrant.
(h) 1 Purchase Warrant = 1 common share.
(i) Two half Purchase Warrants = 1 common share.
(j) 1 Special Warrant = 2 common shares and 1/2 purchase warrant.
(k) New shares issued during 1996, eligible for a pro rata share of 1996
dividends.
(l) Restricted Securities -- securities which have not been registered with
the Securities and Exchange Commission under the Securities Act of 1933.
Information concerning such restricted securities at June 30, 1997 is as
follows:
Security Shares Acquisition Date Cost ($)
-------- --------------- ----------------- -----------------
Piedmont Mining Co. 700,000 12/20/96 280,000
X-Cal Resources 714,286 6/18/97 360,529
(m) Affiliated issuers (See Notes to Financial Statements).
Currency Abbreviations
----------------------------
CAD Canadian Dollars
The accompanying notes are an integral part of the financial statements.
14 -- SCUDDER GOLD FUND
<PAGE>
Financial Statements
Consolidated Statement of Assets and Liabilities
as of June 30, 1997
<TABLE>
<CAPTION>
Assets
----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market:
Unaffiliated issuers (identified cost $157,446,974) ................ $ 145,573,463
Affiliated issuers (identified cost $3,848,509) .................... 4,070,551
-------------
Total investments, at market (identified cost $161,295,483) .......... 149,644,014
Gold, at market, 30,777.702 oz. (identified cost $11,097,834) ......... 10,296,680
Platinum, at market 1,950.251 oz. (identified cost $725,483) .......... 838,607
Foreign currency holdings, at market (identified cost $119,417) ....... 119,619
Cash .................................................................. 83,849
Receivable for investments sold ....................................... 8,038,693
Receivable for Fund shares sold ....................................... 409,161
Dividends and interest receivable ..................................... 119,925
Other assets .......................................................... 5,988
-------------
Total assets .......................................................... 169,556,536
Liabilities
----------------------------------------------------------------------------------------------------------------------------
Investments purchased ................................................. 3,702,143
Payable for Fund shares sold .......................................... 1,413,082
Accrued management fee ................................................ 147,387
Other payables and accrued expenses ................................... 361,113
-------------
Total liabilities ..................................................... 5,623,725
----------------------------------------------------------------------------------------
Net assets, at market value $ 163,932,811
----------------------------------------------------------------------------------------
Net Assets
----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income ....... (13,939,198)
Net unrealized appreciation (depreciation) on:
Investment securities .............................................. (11,651,469)
Gold ............................................................... (801,154)
Platinum ........................................................... 113,124
Foreign currency related transactions .............................. (9,345)
Accumulated net realized gain (loss) .................................. (5,433,894)
Paid-in capital ....................................................... 195,654,747
----------------------------------------------------------------------------------------
Net assets, at market value $ 163,932,811
----------------------------------------------------------------------------------------
Net Asset Value
----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($163,932,811 / 15,622,172 shares of capital stock
outstanding, $.01 par value 100,000,000 shares -------------
of capital stock authorized) ....................................... $10.49
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 -- SCUDDER GOLD FUND
<PAGE>
Consolidated Statement of Operations
year ended June 30, 1997
<TABLE>
<CAPTION>
Investment Income
------------------------------------------------------------------------------------------------------------------------------
Income:
<S> <C>
Dividends (net of foreign taxes withheld of $63,735) .................. $ 976,437
Interest (net of foreign taxes withheld of $14,259) ................... 922,521
-------------
1,898,958
Expenses:
Management fee ........................................................ 1,948,814
Services to shareholders .............................................. 612,699
Custodian and accounting fees ......................................... 198,828
Directors' fees and expenses .......................................... 28,814
Auditing .............................................................. 74,384
Reports to shareholders ............................................... 113,031
Registration fees ..................................................... 78,789
Legal ................................................................. 17,781
Other ................................................................. 39,243
-------------
3,112,383
----------------------------------------------------------------------------------------
Net investment loss (1,213,425)
----------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments - Unaffiliated issuers .................................... 10,662,200
Investments - Affiliated issuers ...................................... 29,009
Gold .................................................................. (2,436,544)
Platinum .............................................................. 18,853
Foreign currency related transactions ................................. (1,242)
-------------
8,272,276
-------------
Net unrealized appreciation (depreciation) during the period on:
Investment securities ................................................. (46,923,326)
Gold .................................................................. (104,425)
Platinum .............................................................. 65,331
Foreign currency related transactions ................................. (9,155)
-------------
(46,971,575)
----------------------------------------------------------------------------------------
Net loss on investment transactions (38,699,299)
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $ (39,912,724)
----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 -- SCUDDER GOLD FUND
<PAGE>
Consolidated Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended June 30,
Increase (Decrease) in Net Assets 1997 1996
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment loss .......................................... $(1,213,425) $ (942,295)
Net realized gain from investment transactions ............... 8,272,276 24,235,298
Net unrealized appreciation (depreciation) on
investment transactions during the period .................... (46,971,575) 21,052,990
--------------- --------------
Net increase (decrease) in net assets resulting from
operations ................................................... (39,912,724) 44,345,993
--------------- --------------
Distributions to shareholders:
In excess of net investment income ........................... (32,213,271) (10,004,029)
--------------- --------------
From net realized gains from investment transactions ......... (3,509,513) (5,863,581)
--------------- --------------
Fund share transactions:
Proceeds from shares sold .................................... 449,808,600 245,536,569
Net asset value of shares issued to shareholders in
reinvestment of distributions ................................ 32,732,697 14,863,510
Cost of shares redeemed ...................................... (415,853,422) (242,408,708)
--------------- --------------
Net increase in net assets from Fund share transactions ...... 66,687,875 17,991,371
--------------- --------------
Increase (decrease) in net assets ............................ (8,947,633) 46,469,754
Net assets at beginning of period ............................ 172,880,444 126,410,690
Net assets at end of period (including accumulated
distributions in excess of net investment income of
$13,939,198 and undistributed net investment ---------------- ---------------
income of $4,078,347, respectively) ........................ $163,932,811 $172,880,444
---------------- ---------------
Other Information
-----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................... 11,273,441 9,826,603
--------------- --------------
Shares sold .................................................. 34,365,516 16,651,785
Shares issued to shareholders in reinvestment of ............. 2,401,703 1,267,675
distributions
Shares redeemed .............................................. (32,418,488) (16,472,622)
--------------- --------------
Net increase in Fund shares .................................. 4,348,731 1,446,838
---------------- ---------------
Shares outstanding at end of period .......................... 15,622,172 11,273,441
---------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 -- SCUDDER GOLD FUND
<PAGE>
Consolidated Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
September 2,
1988
(commencement
Years Ended June 30, of operations)
to June 30,
1997(a) 1996(a) 1995(a) 1994(a) 1993(a) 1992(a) 1991 1990 1989
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of ----------------------------------------------------------------------------------------------
period ....................... $15.34 $12.86 $12.64 $12.13 $ 9.19 $ 9.87 $10.21 $10.58 $12.00
----------------------------------------------------------------------------------------------
Income from investment
operations: .................. (.08) (.09) (.08) (.10) (.08) (.12) (.04) .07 (.06)
Net investment income (loss)
Net realized and unrealized
gain (loss) on investment
transactions ................. (2.12) 4.28 1.02 .85 3.02 (.56) (.30) (.34) (1.36)
Total from investment ----------------------------------------------------------------------------------------------
operations ................... (2.20) 4.19 .94 .75 2.94 (.68) (.34) (.27) (1.42)
----------------------------------------------------------------------------------------------
Less distributions:
From net investment income ...... -- -- -- -- -- -- -- (.01) --
In excess of net investment
income ....................... (2.39) (1.08) (.25) (.24) -- -- -- -- --
From net realized gains on
investment transactions ...... (.26) (.63) (.47) -- -- -- -- (.03) --
From paid-in capital ............ -- -- -- -- -- -- -- (.06) --
----------------------------------------------------------------------------------------------
Total distributions ............. (2.65) (1.71) (.72) (.24) -- -- -- (.10) --
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Net asset value, end of period .. $10.49 $15.34 $12.86 $12.64 $12.13 $ 9.19 $ 9.87 $10.21 $10.58
----------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ................ -17.72 36.91 7.50 6.35 31.99 (6.89)(c) (3.33)(c) (2.71)(c) (11.83)(c)**
Ratios and Supplemental Data
Net assets, end of period
($ millions) ................. 164 173 126 130 90 31 33 17 9
Ratio of operating expenses to
average net assets (%) ....... 1.60 1.50 1.65 1.69 2.17 2.54 2.54 2.60 3.00*
Ratio of operating expenses
before expense reductions,
to average daily net
assets (%) ................... 1.60 1.50 1.65 1.69 2.17 2.57 2.82 3.74 6.59*
Ratio of net investment income
(loss) to average net
assets (%) ................... (.62) (.61) (.69) (.81) (.81) (1.34) (.59) .34 (1.06)*
Portfolio turnover rate (%) ..... 38.9 29.7 42.0 50.8 59.2 57.5 71.4 80.6 34.5*
Average commission rate
paid (b) ..................... $.0213 $.0309 $ -- $ -- $ -- $ -- $ -- $ -- $ --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years ending on or after June 30, 1997.
(c) Total return would have been lower had certain expenses not been reduced.
* Annualized ** Not annualized
The accompanying notes are an integral part of the financial statements.
18 -- SCUDDER GOLD FUND
<PAGE>
Notes to Consolidated Financial Statements
A. Significant Accounting Policies
Scudder Gold Fund (the "Fund") is a non-diversified series of Scudder Mutual
Funds, Inc. (the "Corporation"). The Corporation is a Maryland corporation,
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Principles of Consolidation. The consolidated financial statements of the Fund
include the accounts of the Fund and Scudder Precious Metals, Inc., a
wholly-owned subsidiary of the Corporation, whose principal assets are precious
metals. All intercompany accounts and transactions have been eliminated.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq System, for which
there have been sales, are valued at the most recent sale price reported on such
system. If there are no such sales, the value is the high or "inside" bid
quotation. Securities which are not quoted on the Nasdaq System but are traded
in another over-the-counter market are valued at the most recent sale price on
such market. If no sale occurred, the security is then valued at the calculated
mean between the most recent bid and asked quotations. If there are no such bid
and asked quotations, the most recent bid quotation shall be used.
Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the Officers of the Fund, which prices
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost. All other securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
Restricted Securities. The Fund may not purchase restricted securities (for
these purposes, restricted security means a security which cannot be sold to the
public without registration under the Securities Act of 1933 or the availability
of an exemption from registration, or which is subject to other legal or
contractual delays in or restrictions on resale), if, as a result thereof, more
than 10% of the value of the Fund's total assets would be invested in restricted
securities. The aggregate fair value of restricted securities at June 30, 1997
amounted to $480,673 which represents 0.3% of net assets.
Precious Metals Valuation. Gold bullion will be valued on quotations obtained
from U.S. dealers and on the London afternoon gold price. Precious metals other
than gold will be valued on current prices provided by market makers.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the repurchase price.
19 -- SCUDDER GOLD FUND
<PAGE>
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at
the daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the rates of exchange prevailing on the
respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
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 the forward contract to buy and the 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 contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward 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 which are applicable to regulated investment
companies, and to distribute all of its taxable income to its shareholders. The
Fund paid no federal income taxes and no federal income tax provision was
required. In addition, from November 1, 1996 through June 30, 1997, the Fund
incurred approximately $3,385,000 in net realized capital losses. As permitted
by tax regulations, the Fund intends to elect to defer these losses and treat
them as arising in the fiscal year ending June 30, 1998.
Distribution of Income and Gains. Distributions of net investment income are
made annually. During any particular year 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. An additional distribution may be made to the extent necessary to
avoid the payment of a four percent federal excise tax. The Fund uses the
identified cost method for determining realized gain or loss on investments for
both financial and federal income tax reporting purposes.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences relate primarily to investments in Passive Foreign Investment
Companies. As a result, net investment income (loss) and net realized gain
(loss) on
20 -- SCUDDER GOLD FUND
<PAGE>
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.
Other. Investment security and precious metals transactions are accounted for on
a trade date basis. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. All original issue discounts are accreted for both tax and financial
reporting purposes.
B. Purchases and Sales
For the year ended June 30, 1997, purchases and sales of investment securities
(excluding short-term investments) aggregated $78,738,702 and $60,557,361,
respectively. During the year ended June 30, 1997, purchases and sales of gold
and platinum aggregated $47,882,036 and $57,771,809.
C. Related Parties
Under the Fund's Investment Advisory Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund agrees to pay to the Adviser a
fee equal to an annual rate of 1% of the Fund's average net assets, computed and
accrued daily and payable monthly. As manager of the assets of the Fund, the
Adviser directs the investments of the Fund in accordance with its investment
objectives, policies, and restrictions. The Adviser 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
Adviser provides certain administrative services in accordance with the
Agreement. For the year ended June 30, 1997, the fee pursuant to the Agreement
amounted to $1,948,814.
On June 26, 1997, the Adviser entered into an agreement with The Zurich
Insurance Company ("Zurich"), an international insurance and financial services
organization, pursuant to which Zurich will acquire a majority interest in the
Adviser, and the Adviser will form a new global investment organization by
combining with Zurich's subsidiary, Zurich Kemper Investments, Inc. and change
its name to Scudder Kemper Investments, Inc. Subject to the receipt of the
required regulatory and shareholder approvals, the transaction is expected to
close in the fourth quarter of 1997.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent. For the year ended June
30, 1997, the amount charged to the Fund by SSC aggregated $483,408, of which
$42,330 is unpaid at June 30, 1997.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the year ended June 30, 1997,
the amount charged to the Fund by STC aggregated $19,318, of which $1,908 is
unpaid at June 30, 1997.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the year ended
June 30, 1997, the amount charged to the Fund by SFAC aggregated $59,281, of
which $5,183 is unpaid at June 30, 1997.
The Fund pays each Director not affiliated with the Adviser $4,000 annually,
plus specified amounts for attended board and committee meetings. For the year
ended June 30, 1997, Directors' fees and expenses aggregated $28,814.
21 -- SCUDDER GOLD FUND
<PAGE>
D. Lines of Credit
The Fund and several affiliated Funds ("the Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.
E. Transactions in Securities of Affiliated Issuers
An affiliated issuer is a company in which the Fund has ownership of at least 5%
of the voting securities. A summary of the Fund's transactions with companies
which are or were affiliates for the year ended June 30, 1997 is as follows:
<TABLE>
<CAPTION>
Affiliate Purchases Sales Dividend Market
Cost ($) Cost ($) Income ($) Value ($)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Piedmont Mining Co. 293,125 -- -- 475,200
Solitario Resources Corp. 241,572 45,635 -- 2,281,038
Tombstone Exploration 769,977 -- -- 1,314,313
-----------------------------------------------------------------------------
1,304,674 45,635 -- 4,070,551
=============================================================================
</TABLE>
22 -- SCUDDER GOLD FUND
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder Mutual Funds, Inc. and the Shareholders of
Scudder Gold Fund:
We have audited the accompanying consolidated statement of assets and
liabilities of Scudder Gold Fund, including the investment portfolio, as of June
30, 1997, and the related consolidated statement of operations for the year then
ended, the consolidated statements of changes in net assets for each of the two
years in the period then ended, and the consolidated financial highlights for
each of the eight years in the period then ended and for the period September 2,
1988 (commencement of operations) to June 30, 1989. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities and precious
metals owned as of June 30, 1997, by correspondence with the custodians. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the consolidated financial
position of Scudder Gold Fund as of June 30, 1997, the consolidated results of
its operations for the year then ended, the consolidated changes in its net
assets for each of the two years in the period then ended and the consolidated
financial highlights for each of the eight years in the period then ended and
for the period September 2, 1988 (commencement of operations) to June 30, 1989
in conformity with generally accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
August 20, 1997
23 -- SCUDDER GOLD FUND
<PAGE>
Tax Information
The Fund paid distributions of $.23 per share from long-term capital gains
during its year ended June 30, 1997. Pursuant to section 852 of the Internal
Revenue Code, the Fund designates $972,953 as capital gain dividends for its
fiscal year ended June 30, 1997.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your Scudder Fund account, please call a Scudder Investors Relations
Representative at 1-800-225-5163.
Officers and Directors
Daniel Pierce*
President and Director
William T. Burgin
Director; General Partner, Bessemer Venture Partners
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; President, Exeter Capital Management Corporation
Dr. Gordon Shillinglaw
Director; Professor Emeritus of Accounting,
Columbia University Graduate School of Business
Robert G. Stone, Jr.
Honorary Director; Chairman of the Board and Director, Kirby Corporation
Jerard K. Hartman*
Vice President
Clay Hoes*
Vice President
Thomas W. Joseph*
Vice President
David S. Lee*
Director and Vice President
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Kathryn L. Quirk*
Vice President and Assistant Secretary
*Scudder, Stevens & Clark, Inc.
24 - SCUDDER GOLD FUND
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Investment Products and Services
The Scudder Family of Funds+++
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Money Market
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Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
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Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
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Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
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Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
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Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
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Scudder Balanced Fund
Scudder Growth and Income Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
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Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Retirement Programs
- -------------------
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Closed-End Funds#
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The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
Scudder World Income Opportunities
Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *A class of shares of
the Fund. **Not available in all states. +++ +++A no-load variable annuity
contract provided by Charter National Life Insurance Company and its affiliate,
offered by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised
by Scudder, Stevens & Clark, Inc., are traded on various stock exchanges.
25 - SCUDDER GOLD FUND
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which you designate Lets you purchase Scudder fund shares
the purchase details and the bank account, and money is electronically, avoiding potential mailing delays;
electronically debited from that account monthly to designate a bank account and the transaction
regularly purchase fund shares and "dollar cost average" details, and money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from that account.
fewer when it's higher, which can reduce your average
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
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Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
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Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you designate.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
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26 - SCUDDER GOLD FUND
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
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Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
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Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
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New From Scudder: Scudder International Growth and Income Fund
Scudder International Growth and Income Fund takes a yield-oriented approach to investing in international equities. The
Fund seeks to provide long-term growth of capital plus current income. Investors who desire international exposure but
who wish to take a more conservative approach may appreciate the Fund's emphasis on the dividend paying stocks of
well-established companies outside the United States.
- ------------------------------------------------------------------------------------------------------------------------------
The share price of Scudder International Growth and Income Fund will fluctuate. International investing involves special
risks including currency fluctuation and political instability. Contact Scudder Investor Services, Inc., Distributor,
for a prospectus which contains more complete information, including management fees and other expenses. Please read it
carefully before you invest or send money.
</TABLE>
27 - SCUDDER GOLD FUND
<PAGE>
Celebrating Over 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven Clark,
Scudder, Stevens & Clark was the first independent investment counsel firm in
the United States. Since its birth, Scudder's pioneering spirit and commitment
to professional long-term investment management have helped shape the investment
industry. In 1928, we introduced the nation's first no-load mutual fund. Today
we offer over 40 pure no load(TM) funds, including the first international
mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
This information must be preceded or accompanied by a
current prospectus.
Portfolio changes should not be considered recommendations
for action by individual investors.
SCUDDER
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