Scudder
Gold
Fund
Semiannual Report
December 31, 1997
Pure No-Load(TM) Funds
A mutual fund which seeks maximum return consistent with investing primarily in
a portfolio of gold-related equity securities and gold.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder Gold Fund
- --------------------------------------------------------------------------------
Date of Inception: 9/2/88 Total Net Assets as of Ticker Symbol: SCDGX
12/31/97: $120 million
- --------------------------------------------------------------------------------
o Gold and gold stocks endured a difficult period during Scudder Gold
Fund's most recent semiannual period ended December 31, 1997, as central bank
sales continued to buffet gold prices.
o The Fund's total return for the six-month period was -28.55%. This return
is modestly more favorable than the -29.03% return of the Fund's peers as
tracked by Lipper Analytical Services, Inc.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART TITLE:
Total Returns for Gold and Gold Funds
Periods ended December 31 1997
BAR CHART DATA:
---------------------------------------------------------
Six months Twelve months
---------------------------------------------------------
Gold bullion,
London p.m. fix -13.26 -21.41
Platinum, free
market price -15.58 -1.76
Toronto Stock
Exchange Gold
Index -23.20 -43.56
Johannesburg
(South Africa)
Stock Exchange
Gold Index -16.92 -46.77
Lipper Average for
Gold-Oriented Funds -29.03 -42.02
Scudder
Gold Fund -28.55 -40.84
Table of Contents
3 Letter from the Fund's President 19 Financial Highlights
4 Performance Update 20 Notes to Financial Statements
5 Portfolio Summary 25 Report of Independent Accountants
6 Portfolio Management Discussion 26 Shareholder Meeting Results
9 Glossary of Investment Terms 28 Officers and Directors
10 Investment Portfolio 29 Investment Products and Services
16 Financial Statements 30 Scudder Solutions
2 - Scudder Gold Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
Gold and gold stocks endured a difficult period during Scudder Gold Fund's
most recent semiannual period ended December 31, 1997. The Fund's return for the
period was -28.55%, while gold bullion declined -13.26% and the Lipper Gold Fund
Index returned -29.03%. As outlined in the Portfolio Management Discussion
beginning on page, central bank sales of gold -- in particular by countries
attempting to meet European Monetary Union budget standards or seeking Holocaust
reparation funds -- have sent gold prices reeling. During the period, Scudder
Gold Fund moved substantially into established Tier I companies to increase
liquidity and diversification and reduced exposure to exploration (Tier IV and
V) stocks. The Fund diversified further by purchasing undervalued Australian
gold stocks.
There is evidence that gold continues to fulfill its historical function as
a portfolio diversifier. Despite the unfavorable conditions of the most recent
six-month period, it is instructive to note that when the Dow dipped sharply
last October, gold prices temporarily surged.
For those of you who are interested in new Scudder products, we recently
introduced a new industry sector fund, Scudder Financial Services Fund. One of
Scudder's Choice Series sector funds, the Fund seeks long-term growth by
investing in financial services companies in the U.S. and abroad. In addition,
two other Choice Series funds will be launched on March 2: Scudder Health Care
Fund, seeking long-term growth from health care companies located around the
world, and Scudder Technology Fund, pursuing long-term growth by investing in
companies that develop, produce, or distribute technology.
Finally, as you may know, the Fund's investment adviser has changed its
name to Scudder Kemper Investments, Inc. from Scudder, Stevens & Clark, Inc.,
pursuant to the acquisition of a majority interest in Scudder, Stevens & Clark
by Zurich Insurance Company, and the combining of Scudder's business with that
of Zurich Kemper Investments, Inc.
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 Web site at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Gold Fund
3 - Scudder Gold Fund
<PAGE>
PERFORMANCE UPDATE as of December 31, 1997
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
12/31/97 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER GOLD FUND
- --------------------------------------------
1 Year $ 5,916 -40.84% -40.84%
5 Year $ 13,055 30.55% 5.48%
Life of Fund $ 9,377 -6.23% -0.69%
- --------------------------------------------
S & P INDEX
- --------------------------------------------
1 Year $ 13,338 33.38% 33.38%
5 Year $ 25,160 151.60% 20.25%
Life of Fund $ 46,472 364.72% 18.05%
- --------------------------------------------
*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 December 31
SCUDDER GOLD FUND
Year Amount
- ----------------------
9/88* $10,000
'88 $ 9,659
'89 $10,690
'90 $ 8,908
'91 $ 8,291
'92 $ 7,541
'93 $12,026
'94 $11,129
'95 $12,595
'96 $16,640
'97 $ 9,845
S & P 500 INDEX
Year Amount
- ----------------------
9/88* $10,000
'88 $10,307
'89 $13,572
'90 $13,151
'91 $17,157
'92 $18,470
'93 $20,330
'94 $20,598
'95 $28,337
'96 $34,843
'97 $46,472
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 December 31
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------
NET ASSET VALUE... $ 12.12 $ 10.10 $ 9.40 $ 8.55 $ 13.36 $ 11.71 $ 11.53 $ 12.68 $ 7.36
INCOME DIVIDENDS.. $ .01 $ -- $ -- $ -- $ .24 $ .25 $ 1.08 $ 2.39 $ .14
CAPITAL GAINS
& OTHER
DISTRIBUTIONS..... $ .09 $ -- $ -- $ -- $ -- $ .47 $ .63 $ .26 $ --
FUND TOTAL
RETURN (%)........ 10.67 -16.67 -6.93 -9.04 59.47 -7.46 13.17 32.11 -40.84
INDEX TOTAL
RETURN (%)........ 31.63 -3.11 30.40 7.61 10.06 1.32 37.58 22.96 33.38
</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
<PAGE>
PORTFOLIO SUMMARY as of December 31, 1997
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Equity Holdings 81%
Cash Equivalents, net 18%
Precious Metals 1%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Over the Fund's most recent semiannual
period we increased the FUnd's cash
position and sold gold bullion into
rallies.
- --------------------------------------------------------------------------
QUALITY DISTRIBUTION
- --------------------------------------------------------------------------
Tier breakdown of the Fund's common stocks
Tier I
Premier gold producing companies 52%
Tier II
Major established gold producers 11%
Tier III
Junior gold producers with
medium cost production 8%
Tier IV
Companies with some gold
production on stream or in startup 6%
Tier V
Primarily exploration companies
with or without mineral reserves 23%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
We also moved substantially into
Tier I companies to increase the
Fund's liquidity and reduced Tier
IV and V holdings.
- --------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
(42% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. NEWMONT MINING CORP.
International gold exploration and mining company
2. FREEPORT MCMORAN COPPER & GOLD, INC.
U.S. Company mining in Indonesia
3. BARRICK GOLD CORP.
Gold exploration and production in North and
South America
4. STILLWATER MINING CO.
Exploration and development of mines in Montana
producing platinum, palladium and associated
metals
5. ASHANTI GOLDFIELDS CO., LTD.
Leading gold producer in Ghana
6. PLACER DOME INC.
International gold, silver and copper mining company
7. NORMANDY MINING LTD.
Invests in mining and oil enterprises in Australia
and Argentina
8. ANGLO AMERICAN PLATINUM CORP. LTD.
Holding company of a platinum mining operation
in South Africa
9. EURO-NEVADA MINING LTD.
Large North American royalty owner
10. GOLDEN KNIGHT RESOURCES, INC.
Junior gold producer, with interest in Ghana
The Fund increased its presence
in Australian gold stocks such as
Normandy Mining, its seventh largest
holding, because Australian stocks
were at attractive levels after being
hit hard during the second half of 1997
by selling related to Australia's
proximity to Asia.
For more complete details about the Fund's investment portfolio,
see page 10. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
5 - Scudder Gold Fund
<PAGE>
Portfolio Management Discussion
We are pleased to present an interview with Scudder Gold Fund lead portfolio
manager Clay Hoes, who has managed the Fund since January of 1997.
Q: The past six months were certainly rocky for gold investors. How did Scudder
Gold Fund perform?
Clay Hoes: The Fund's total return was -28.55%, compared with the Lipper Gold
Fund Index's return of -29.03% and gold bullion's decline of -13.26%.
Q: Can you sum up the major factors in gold's downturn?
CH: Much of the downturn was attributable to central bank announcements of gold
sales. The first such announcement by the Reserve Bank of Australia on July 3,
1997, was the one that initiated the decline. After that, gold's price appeared
to be bottoming out, particularly in light of the Asian currency crisis.
Momentum began to build into the gold funds, and gold bullion was beginning to
stage a rally. Then on Friday, October 24, 1997, an advisory panel for the Swiss
National Bank led by officials from the finance ministry and central bank
released a statement recommending that the bank sell half of its reserves (1,400
tons, 45 million ounces) for a fund to pay reparations to Holocaust victims and
to aid third world countries. At that point the gold market sank like a stone.
The following week the Swiss tried to exercise damage control, first saying that
1,400 tons was too much, that they would be selling only 300 tons -- a big
difference! Then later in that same week, they came back and said no, 300 tons
isn't realistic, 800 tons is. This series of announcements basically battered a
market that was ready to come back -- people were beginning to put money into
gold as a defensive measure because of the Asian crisis. The Swiss announcements
added further negative sentiment and uncertainty to an already exaggerated
situation. After each announcement, short sellers came in and pushed the market
down further.
Q: How dramatic has the decline in gold's price been over the last two years?
CH: Gold has gone from a high in February of 1996 of $414 to $290 at the close
of 1997. (On January 12, 1998, gold closed at $278 at the London Second Fix, the
lowest close since 1979).
Q: And gold stocks tracked gold in this case?
CH: For the most part, they followed right along.
Q: Back to gold bullion -- did fabrication demand from jewelry manufacturers
have any effect on gold's price?
CH: Fabrication demand probably helped to stem the tide because the demand up
through the third quarter of `97 still exceeded mine production. That was good,
but fabrication fell off after the Swiss National Bank made its announcement.
Q: Why is that?
CH: Because the fabricators are looking forward at a lower price. They're
saying, "We're holding off; we'll run down our inventory and come back into the
market at a lower price." Because of the Asian currency crisis, demand fell off
in the fourth quarter. A lot of Asians who owned gold were greatly relieved they
did because gold decreased less in value than any of the other assets in their
portfolios. They had to use some of their gold proceeds to meet debt payments
and margin calls.
6 - Scudder Gold Fund
<PAGE>
Q: Were there any bright spots in the metals markets?
CH: No, there really weren't. Platinum was hit hard -- I thought that platinum
might be a bright spot, but platinum was hurt because a third of mining
production goes to jewelry making and most of that goes into Japan. And because
of Japan's economic troubles, nobody has been buying. Japan's government enacted
a luxury tax in May, which really put a damper on their gold market. Platinum
was also hurt by the projected reduction of automobile demand in Asia: i.e.,
fewer platinum/palladium catalytic converters produced because of a reduction of
the number of cars manufactured in Asia as that region's economy slows.
We did purchase some diamond stocks, whose prices reacted the least to market
turmoil because the CSO (DeBeers-controlled Central Selling Organization) has
been able to regulate the supply of diamonds fairly well, so that when demand
contracts so does supply. The volatility in these stocks has been less than that
of the gold sector.
Q: What other actions did you take during the period?
CH: We moved substantially into Tier I companies to increase our liquidity and
reduced the number of Tier IV and V firms. We also increased our presence in
Australia.
Q: Why Australia?
CH: Because Australian stocks were at attractive levels after being hit hard
along with Asian stocks in the second half of 1997. A lot of the selling was
based on Australia's proximity to Asia, not fundamentals. Some of the Australian
gold stocks we invested in were Acacia Resources, Delta Gold (which has already
performed well for us), and Normandy Mining.
We'll probably do some continued selective selling in Tier V but we'll look at
it again soon as a potential purchasing strategy. We're beginning to reexamine
exploration companies that have favorable cash positions and have been
neglected. There will be a number of mines that have to close, so "exploration
quality" ought to increase -- in the current environment, a Tier V company will
only be able to bring in properties that have very low production costs. In
addition, we'll probably consider Indonesia now that nobody likes it -- that's
the time to start looking at it.
Q: Will you remain diversified in terms of metals?
CH: We plan to, but at present we're not holding any gold bullion. We hold some
platinum but that's it in terms of metals. As we indicated in the last report,
we sold bullion into the rallies -- all of it -- at a much higher price.
Q: Do you have a prediction for gold's price in the near future?
CH: I believe we're close to a bottom; you'll probably see additional short
sales to really push the price down to approximately $250. At $250 you'll have
to have mines closing rapidly, and I think that will occur. As I've said, you're
already seeing mines being closed -- Tiers I, II, and III.
Q: Including major firms?
CH: Yes. In fact, Barrick was the first to announce, at a much higher gold
price, that they were going to close five mines over the next two years. And
7 - Scudder Gold Fund
<PAGE>
Pegasus had a brand new project that was suspended and will be closed down with
a $400 million write-off. It was brand new -- it hadn't produced an ounce of
gold. And then there are a number of smaller companies that are beginning to
shut down mines. So you're going to see that, and that will be good for the
industry.
Q: Then when gold rebounds the shrinkage of supply should push the price up
further?
CH: Exactly. But more companies will have to close mines, sooner rather than
later.
Q: What effect will the Asian currency crisis have on the gold market?
CH: Korea will probably continue selling for a little bit, which will delay any
rebound. But I understand that the Middle East, which typically buys on lows,
has been buying. And I suspect there will be other pockets of buying. In
addition, the Indian government has continued to liberalize its gold market by
reducing tariffs and import duties and allowing the number of dealers to
increase. This has collapsed the premium on gold in India, and increased demand
by making it cheaper for the country's 900 million potential customers to
purchase gold.
Q: What about China?
CH: That's an interesting case. China has been buying, and I suspect that if
there's any indication of a devaluation of their currency (to compete with
devaluation of other currencies in Asia because they don't want to give up their
market share of exports), you'll see a flood of money from Chinese individuals
going into bullion so that they protect themselves against devaluation. So that
would be a positive too.
Q: Finally, how does the European Monetary Union (EMU) factor into the outlook
for gold?
CH: I think you'll see continued central bank selling ahead of EMU as countries
prepare to meet the fiscal targets for entry. Also, there will be an
announcement this spring by the European Central Bank-to-be indicating what
percentage of reserves they'll hold as gold. That's probably the bellwether
event. Meanwhile, Scudder Gold Fund will remain diversified, and we'll continue
to look for opportunities in advance of a turnaround in the gold and metals
markets.
8 - Scudder Gold Fund
<PAGE>
Glossary of Investment Terms
CENTRAL BANK A country's bank that issues currency,
administers monetary policy (including open
market operations), holds deposits
representing the reserves of other banks, and
engages in operations designed to facilitate
the conducting of business and the protection
of the public interest. In the United States,
central banking is a function of the Federal
Reserve system.
DIVERSIFICATION The spreading of risk by putting assets in
several categories of assets -- stocks,
bonds, money market instruments, and precious
metals, for example.
INFLATION An overall increase in the prices of goods
and services, as happens when business and
consumer spending increases relative to the
supply of goods available in the marketplace
-- in other words, when too much money is
chasing too few goods.
LIQUIDITY A stock that is liquid has enough shares
outstanding and a substantial enough market
capitalization to allow large purchases and
sales to occur without causing a significant
move in its market price.
MARKET CAPITALIZATION` The value of a company's outstanding shares
of common stock, determined by multiplying
the number of shares outstanding by the share
price (shares x price = market
capitalization).
NET ASSET VALUE (NAV) The price per share of a mutual fund based on
the sum of the market value of all the
securities owned by the fund divided by the
number of outstanding shares.
TOTAL RETURN The most common yardstick to measure the
performance of a fund. Total return --
annualized or compound -- is based on a
combination of share price changes plus
income and capital gain distributions, if
any, expressed as a percentage gain or loss
in value.
(Sources: SKI; Barron's Dictionary of Finance and Investment Terms)
9 - Scudder Gold Fund
<PAGE>
Investment Portfolio as of December 31, 1997
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 0.9%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 12/31/97 at 6.5%,
to be repurchased at $1,098,397 on 1/2/98, collateralized by a $843,000 U.S. ------------
Treasury Bond, 8.75%, 5/15/17 (Cost $1,098,000) ...................................... 1,098,000 1,098,000
------------
Short-Term Investments 21.6%
- ------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Discount Note, 1/2/98 ................................. 25,000,000 24,996,701
United States Treasury Bill, 1/22/98 ................................................... 860,000 857,575
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Bonds (Cost $25,854,198) 25,854,276
- ------------------------------------------------------------------------------------------------------------------------------
Convertible Bonds 1.5%
- ------------------------------------------------------------------------------------------------------------------------------
Chile 0.9%
Dayton Mining Corp., 7%, 2/28/02 ....................................................... 1,500,000 1,065,000
------------
Canada 0.6%
Kinross Gold, 5.5%, 12/05/06 ........................................................... CAD 1,500,000 776,740
- ------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $2,601,119) 1,841,740
- ------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 79.4%
- ------------------------------------------------------------------------------------------------------------------------------
Australia 6.2%
Acacia Resources, Ltd.* (Australian based Gold and mineral exploration and
production company) .................................................................. 1,000,000 912,450
Delta Gold NL (Australian-based gold exploration and production company
primarily in Australia with important platinum property in Zimbabwe) ................. 2,000,000 2,106,456
Newcrest Mining, Ltd. (Australian-based gold production and global exploration
company) ............................................................................. 200,000 217,684
Normandy Mining "New" (Largest Australian gold production and global exploration
company) ............................................................................. 3,565,217 3,462,208
Resolute Ltd. (Australian-based exploration and production of gold and other
minerals) ............................................................................ 300,000 218,988
Ross Mining NL (Australian-based exploration and production company in Soloman
Islands) ............................................................................. 1,119,400 561,768
------------
7,479,554
------------
Bolivia 0.6%
Corriente Resources, Inc.* (Exploration and development company) ....................... 303,000 362,570
Jordex Resources, Inc.* (Operator of two mines producing zinc, lead and silver) ........ 637,200 401,302
------------
763,872
------------
Brazil 0.1%
Black Swan Gold Mines Ltd.* (Gold development projects) ................................ 300,000 71,376
Ourominas Minerals Inc.* (Exploration company) ......................................... 500,000 76,974
Ourominas Minerals Inc., Purchase Warrants* (expire 2/14/99) (c) ....................... 250,000 1,749
------------
150,099
------------
</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>
Canada 7.0%
Agnico-Eagle Mines, Ltd. (Silver and gold mining) ...................................... 30,000 160,596
Cross Lake Minerals* (Mineral exploration and development) ............................. 200,000 272,909
Euro-Nevada Mining, Ltd. (Large gold royalty company) .................................. 200,000 2,708,091
Emgold Mining Corp., Purchase Warrants* (expire 11/14/98) (c) .......................... 100,000 6,298
Kinross Gold Corp.* (Gold mining company, with interest in Zimbabwe) ................... 200,000 678,773
Golden Knight Resources, Inc.* (Junior gold producer, with interest in Ghana)
(e) .................................................................................. 989,000 2,339,190
Redfern Resources Ltd.* (Exploration company in British Columbia) ...................... 250,000 209,930
Repadre Capital Corp.* (Junior gold royalty company) ................................... 502,700 2,022,690
------------
8,398,477
------------
Chile 0.4%
Dayton Mining Corp.* (Junior company developing Chilean gold deposits) ................. 225,500 426,052
------------
China 0.1%
Zen International Resources Ltd.* (Exploration company) ................................ 220,000 132,396
------------
Ecuador 0.1%
Ecuadorian Minerals Corp.* (Exploration company) ....................................... 723,800 151,947
------------
French Guiana 0.2%
Guyanor Resources S.A. "B"* (Company holding interests in mineral properties) .......... 140,000 137,154
International Roraima Gold Corp.* (Gold and mineral exploration and mining in
South America and Africa) ............................................................ 825,000 92,369
International Roraima Gold Corp., Purchased Warrants* (expire 4/30/98) (c) ............. 412,500 2,887
------------
232,410
------------
Ghana 6.3%
Ashanti Goldfields Co., Ltd. (GDR) (Leading gold producer) ............................. 500,000 3,750,000
Ashanti Goldfields Co., Ltd.* (Preference shares) (c) .................................. 154,701 337,248
Pioneer Group Inc. (Fund management company owning major gold producer) ................ 70,000 1,968,750
Ranger Minerals NL* (Gold producer and exploration company) ............................ 700,000 1,505,542
------------
7,561,540
------------
Indonesia 7.7%
Augusta Gold Corp., Inc.* (Gold exploration company) ................................... 200,000 29,390
Freeport McMoRan Copper & Gold, Inc. "A" (Mining company) .............................. 600,000 9,187,500
------------
9,216,890
------------
Kazakhstan 0.2%
Kazakhstan Minerals Corp.* (Joint venture) ............................................. 100,000 50,000
Steppe Gold Resources Ltd.* (Exploration company) ...................................... 700,000 176,341
------------
226,341
------------
</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>
Mexico 0.1%
Northern Crown Mines* (Junior gold and silver exploration company) ..................... 150,000 36,738
Northern Crown Mines, Purchase Warrants* (expire 1/16/98) (c) .......................... 50,000 2,449
------------
39,187
------------
Namibia 0.7%
Namibian Minerals Corp.* (Diamond exploration and development company, offshore
Namibia) ............................................................................. 300,000 892,201
------------
Niger 1.4%
Etruscan Enterprise Company* (Junior exploration company) .............................. 600,000 1,675,239
------------
Peru 1.2%
Gitennes Exploration Inc., Special Warrants* (expire 10/2/98) (c) ...................... 146,000 275,848
Minas Buenaventura (ADR) (Mining company in South America) ............................. 40,000 640,000
Southwestern Gold Corp.* (Multiple gold and gold/copper exploration properties) ........ 175,000 581,680
------------
1,497,528
------------
Philippines 0.2%
Climax Mining Ltd.* (Gold exploration company in Australia and the Philippine
Islands) ............................................................................. 1,000,000 283,511
------------
Sarawak 0.3%
Menzies Gold NL* (Junior exploration company) .......................................... 2,500,000 293,287
------------
South Africa 2.6%
Anglo American Platinum Corp. Ltd. (Largest South African platinum producer) ........... 234,905 3,137,537
------------
Spain 1.8%
Rio Narcea* (Junior exploration company in Northern Spain) ............................. 700,000 2,081,803
------------
Tanzania 0.4%
Pangea Goldfields Inc.* (Junior exploration company) ................................... 400,000 475,841
------------
United States 7.8%
Crown Resources Corp.* (Gold, silver, and mineral exploration company) ................. 274,000 1,147,375
Getchell Gold Corp.* (Expanding gold mining project in Nevada) ......................... 60,000 1,440,000
Lazare Kaplan International* (Diamond cutter and wholesaler) ........................... 30,000 405,000
Piedmont Mining Co.* (Gold and mining development company in the Carolinas) (e) ........ 914,000 114,250
Piedmont Mining Co.* (c) (d) (e) ....................................................... 700,000 70,000
Romarco Minerals, Inc.* (Junior exploration company with mineral resource
properties in Nevada) ................................................................ 100,000 213,429
Stillwater Mining Co.* (Exploration and development of mines in Montana
producing platinum, palladium and associated metals) ................................. 300,000 5,025,000
X-Cal Resources* (Junior exploration company in Nevada) (c) (d) ........................ 714,286 371,876
X-Cal Resources* ....................................................................... 1,000,000 559,812
------------
9,346,742
------------
</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>
Venezuela 0.7%
Crystallex International Corp.* (Junior company developing gold property) .............. 100,000 377,873
El Callao Mining Corp.* (Gold exploration and development company) ..................... 1,124,000 283,153
Tombstone Exploration Co., Ltd.* (Junior exploration company in Venezuela and
Honduras) (e) ........................................................................ 840,000 223,365
------------
884,391
------------
West Africa 2.6%
Birim Goldfields* (Junior exploration company in Ghana) ................................ 150,000 45,135
Birim Goldfields, Purchase Warrants* (expire 5/5/98) (c) ............................... 75,000 525
High River Gold Mines Ltd.* (Gold exploration and development) ......................... 200,000 132,955
Leo Shields Exploration NL* (Gold exploration) ......................................... 1,488,794 97,032
Nevsun Resources Ltd.* (Holder of interests in gold prospects, junior
exploration company in Ghana and Mali) ............................................... 345,000 878,766
Oliver Gold Corp.* (Exploration and development company with interests in gold
and gold-copper prospects in British Columbia) ....................................... 100,000 24,492
Pan African Resources Corp.* (Gold exploration) ........................................ 800,040 44,787
Panorama Resources NL* (Junior exploration company in Congo and Kenya) ................. 1,250,000 85,542
Randgold Resources Ltd.* (Gold mining and exploration) ................................. 65,000 325,000
Samax Gold Inc.* (Gold exploration in Ghana and Tanzania) .............................. 499,000 1,484,028
------------
3,118,262
------------
International 30.7%
Aber Resources* (Diamond exploration and development in the Northwest
Territories of Canada) ............................................................... 40,000 422,658
Barrick Gold Corp. (Exploration and production in North and South America) ............. 300,000 5,594,626
Battle Mountain Canada (Exploration and production development company in North
and South America, Australia and Indonesia) .......................................... 296,000 1,708,828
Battle Mountain Gold Co. (Gold, silver and copper mining and processing in
North and South America, South Pacific, and Australia) ............................... 200,000 1,175,000
Canarc Resources Corp.* (Exploration and development company in Canada, South
America and Indonesia) ............................................................... 305,600 160,386
DeBeers Consolidated Mines Ltd. (ADR) (Word's leading producer and marketer of
diamonds) ............................................................................ 50,000 1,021,875
Dia Met Minerals Ltd.* (Diamond and gold exploration and development in the
Northwest Territories of Canada and other parts of the world) ........................ 21,200 374,585
Greenstone Resources Ltd.* (Gold exploration and development in Central America) ....... 145,000 689,969
Homestake Mining Co. (Major international gold producer) ............................... 170,000 1,508,750
IAMGOLD* (Development and funding of precious metal money in South America and
West Africa) ......................................................................... 252,000 793,534
Indochina Goldfields Ltd.* (Gold and copper exploration and development in
Southeast Asia) ...................................................................... 100,000 203,632
Lihir Gold, Ltd.* (Gold exploration and development on Lihir Island in the New
Ireland Province of Papua New Guinea) ................................................ 800,000 834,240
</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>
Meridian Gold Inc.* (Exploration and development company) .............................. 398,000 1,114,027
Minefinders Corp., Ltd.* (Precious metals exploration and development) ................. 70,000 97,967
Minorca Resources Ltd.* (Owner of varied mineral property claims) ...................... 350,000 220,426
Minorca Resources Ltd., Purchase Warrants* (expire 3/13/99) (c) ........................ 25,000 875
Newmont Mining Corp. (International gold exploration and mining company) ............... 450,000 13,218,763
Orvana Minerals Corp.* (Junior international exploration and development
company) ............................................................................. 300,000 409,363
Placer Dome Inc. (International gold, silver and copper mining) ........................ 300,000 3,778,734
Queenstake Resources Ltd.* (Junior international exploration company) .................. 200,000 123,159
Sutton Resources, Ltd.* (Mineral exploration and development company in
Tanzania and Guyana) ................................................................. 250,000 1,688,184
Trans Hex International Ltd.* (Explores, develops and mines diamonds and
precious metals in Canada and emerging markets) ...................................... 350,000 104,090
Solitario Resources Corp.* (Precious and base metals exploration company
primarily in Argentina and Peru) (e) ................................................. 700,000 1,533,186
------------
36,776,857
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $110,245,573) 95,241,964
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of
Net Assets
--------------
<S> <C> <C>
Total Investment Portfolio (Cost $139,798,890) (a) ..................................... 103.4 124,035,980
Scudder Precious Metals, Inc.:
Platinum* (Cost $725,483)(b) ......................................................... 0.6 705,991
Other Assets and Liabilities, Net ...................................................... (4.0) (4,761,056)
------ ------------
Net Assets ............................................................................. 100.0 119,980,915
====== ============
</TABLE>
* Non-income producing security or commodity.
(a) The cost for federal income tax purposes was $147,398,158. At December 31,
1997, net unrealized depreciation for all investment securities based on
tax cost was $23,362,178. This consisted of aggregate gross unrealized
appreciation for all investments in which there was an excess of market
value over tax cost of $8,505,131 and aggregate gross unrealized
depreciation for all investment securities in which there was an excess of
tax cost over market value of $31,867,309.
(b) The cost of Platinum for federal income tax purposes was $725,483. At
December 31, 1997, gross and net unrealized depreciation based on tax cost
was $19,492.
(c) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $1,069,755 (0.9% 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 December 31, 1997 aggregated $1,505,141. These
securities may also have certain restrictions as to resale.
The accompanying notes are an integral part of the financial statements.
14 - Scudder Gold Fund
<PAGE>
- --------------------------------------------------------------------------------
(d) Restricted Securities -- securities which have not been registered with
the Securities and Exchange Commission under the Securities Act of 1933.
Information concerning such restricted securities at December 31, 1997 is
as follows:
Security Shares Acquisition Date Cost ($)
-------- -------------- ---------------- --------------
Piedmont Mining Co. 700,000 12/20/96 280,000
X-Cal Resources 714,286 6/18/97 360,529
(e) Affiliated issuers (See Notes to Financial Statements).
Currency Abbreviations
-------------------------------------
CAD Canadian Dollars
The accompanying notes are an integral part of the financial statements.
15 - Scudder Gold Fund
<PAGE>
Financial Statements
Consolidated Statement of Assets and Liabilities
as of December 31, 1997
<TABLE>
<CAPTION>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investments, at market:
Unaffiliated issuers (identified cost $133,903,549) .............. $ 119,755,989
Affiliated issuers (identified cost $5,895,341) .................. 4,279,991
----------------
Total investments, at market (identified cost $139,798,890) ........ 124,035,980
Platinum, at market 1,950 oz. (identified cost $725,483) ............ 705,991
Cash ................................................................ 1,351
Receivable for Fund shares sold ..................................... 787,079
Dividends and interest receivable ................................... 81,557
Other assets ........................................................ 5,273
----------------
Total assets ........................................................ 125,617,231
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares sold ........................................ 5,366,332
Accrued management fee .............................................. 107,671
Other payables and accrued expenses ................................. 162,313
----------------
Total liabilities ................................................... 5,636,316
--------------------------------------------------------------------------------------------
Net assets, at market value $ 119,980,915
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income......... (16,102,490)
Net unrealized appreciation (depreciation) on:
Investment securities ............................................ (15,762,910)
Platinum ......................................................... (19,492)
Foreign currency related transactions ............................ (991)
Accumulated net realized gain (loss) ................................ (53,374,519)
Paid-in capital ..................................................... 205,241,317
--------------------------------------------------------------------------------------------
Net assets, at market value $ 119,980,915
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($119,980,915 / 16,299,973 shares of capital stock
outstanding, $.01 par value, 100,000,000 shares of capital ----------------
stock authorized) ................................................ $7.36
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Gold Fund
<PAGE>
Consolidated Statement of Operations
six months ended December 31, 1997
<TABLE>
<CAPTION>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income:
Dividends (net of foreign taxes withheld of $27,537) ................ $ 480,510
Interest (net of foreign taxes withheld of $1,829) .................. 972,663
-----------------
1,453,173
Expenses:
Management fee ...................................................... 780,133
Services to shareholders ............................................ 323,288
Custodian and accounting fees ....................................... 93,104
Directors' fees and expenses ........................................ 11,960
Auditing ............................................................ 36,432
Reports to shareholders ............................................. 49,680
Registration fees ................................................... 34,337
Legal ............................................................... 7,728
Other ............................................................... 15,683
-----------------
1,352,345
---------------------------------------------------------------------------------------------
Net investment income (loss) 100,828
---------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments - Unaffiliated issuers .................................. (42,779,697)
Investments - Affiliated issuers .................................... (3,517,560)
Gold ................................................................ (1,252,102)
Futures ............................................................. (339,950)
Foreign currency related transactions ............................... (51,316)
-----------------
(47,940,625)
-----------------
Net unrealized appreciation (depreciation) during the
period on:
Investment securities ............................................... (4,111,441)
Gold ................................................................ 801,154
Platinum ............................................................ (132,616)
Foreign currency related transactions ............................... 8,354
-----------------
(3,434,549)
---------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions (51,375,174)
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (51,274,346)
---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Gold Fund
<PAGE>
Consolidated Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
December 31, June 30, 1997
Increase (Decrease) in Net Assets 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income (loss) .................................... $ 100,828 $ (1,213,425)
Net realized gain (loss) from investment transactions ........... (47,940,625) 8,272,276
Net unrealized appreciation (depreciation) on
investment transactions during the period .................... (3,434,549) (46,971,575)
---------------- ---------------
Net increase (decrease) in net assets resulting from
operations ................................................... (51,274,346) (39,912,724)
---------------- ---------------
Distributions to shareholders:
In excess of net investment income .............................. (2,264,120) (32,213,271)
---------------- ---------------
From net realized gains from investment transactions ............ -- (3,509,513)
---------------- ---------------
Fund share transactions:
Proceeds from shares sold ....................................... 337,074,601 449,808,600
Net asset value of shares issued to shareholders in
reinvestment of distributions ................................ 2,054,132 32,732,697
Cost of shares redeemed ......................................... (329,542,163) (415,853,422)
---------------- ---------------
Net increase (decrease) in net assets from Fund share
transactions ................................................. 9,586,570 66,687,875
---------------- ---------------
Increase (decrease) in net assets ............................... (43,951,896) (8,947,633)
Net assets at beginning of period ............................... 163,932,811 172,880,444
Net assets at end of period (including accumulated
distributions in excess of net investment income of ---------------- ---------------
$16,102,490 and $13,939,198, respectively) ................... $119,980,915 $163,932,811
Other Information ---------------- ---------------
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ....................... 15,622,172 11,273,441
---------------- ---------------
Shares sold ..................................................... 37,260,727 34,365,516
Shares issued to shareholders in reinvestment of
distributions ................................................ 282,938 2,401,703
Shares redeemed ................................................. (36,865,864) (32,418,488)
---------------- ---------------
Net increase in Fund shares ..................................... 677,801 4,348,731
---------------- ---------------
Shares outstanding at end of period ............................. 16,299,973 15,622,172
---------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - 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>
Six Months
Ended Years Ended June 30,
December 31,
1997(a) 1997(a) 1996(a) 1995(a) 1994(a)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning ------------------------------------------------------------------
of period .............. $ 10.49 $ 15.34 $ 12.86 $ 12.64 $ 12.13
Income from investment ------------------------------------------------------------------
operations:
Net investment income
(loss) ................. .01 (.08) (.09) (.08) (.10)
Net realized and unrealized
gain (loss) on
investment
transactions ........... (3.00) (2.12) 4.28 1.02 .85
Total from investment ------------------------------------------------------------------
operations ............. (2.99) (2.20) 4.19 .94 .75
------------------------------------------------------------------
Less distributions:
From net investment income -- -- -- -- --
In excess of net
investment income ...... (.14) (2.39) (1.08) (.25) (.24)
From net realized gains on
investment
transactions ........... -- (.26) (.63) (.47) --
From paid-in capital ...... -- -- -- -- --
------------------------------------------------------------------
Total distributions ....... (.14) (2.65) (1.71) (.72) (.24)
------------------------------------------------------------------
Net asset value, end of ------------------------------------------------------------------
period ................. $ 7.36 $ 10.49 $ 15.34 $ 12.86 $ 12.64
- ----------------------------------------------------------------------------------------------
Total Return (%) .......... (28.55)** (17.72) 36.91 7.50 6.35
Ratios and Supplemental
Data
Net assets, end of period
($ millions) ........... 120 164 173 126 130
Ratio of operating
expenses to average
daily net
assets (%) ............. 1.73* 1.60 1.50 1.65 1.69
Ratio of operating
expenses before
expense reductions,
to average daily
net assets (%) ......... 1.73* 1.60 1.50 1.65 1.69
Ratio of net investment
income (loss) to
average daily net
assets (%) ............. .13* (.62) (.61) (.69) (.81)
Portfolio turnover
rate (%) ............... 96.0* 38.9 29.7 42.0 50.8
Average commission rate
paid (b) ............... $ .0163 $ .0213 $ .0309 $ -- $ --
</TABLE>
<TABLE>
<CAPTION>
1993(a) 1992(a) 1991 1990 1989(d)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning -------------------------------------------------------------------
of period .............. $ 9.19 $ 9.87 $ 10.21 $ 10.58 $ 12.00
Income from investment -------------------------------------------------------------------
operations:
Net investment income
(loss) ................. (.08) (.12) (.04) .07 (.06)
Net realized and unrealized
gain (loss) on
investment
transactions ........... 3.02 (.56) (.30) (.34) (1.36)
Total from investment -------------------------------------------------------------------
operations ............. 2.94 (.68) (.34) (.27) (1.42)
Less distributions: -------------------------------------------------------------------
From net investment income -- -- -- (.01) --
In excess of net
investment income ...... -- -- -- -- --
From net realized gains on
investment
transactions ........... -- -- -- (.03) --
From paid-in capital ...... -- -- -- (.06) --
-------------------------------------------------------------------
Total distributions ....... -- -- -- (.10) --
-------------------------------------------------------------------
Net asset value, end of -------------------------------------------------------------------
period ................. $ 12.13 $ 9.19 $ 9.87 $ 10.21 $ 10.58
- ------------------------------------------------------------------------------------------------
Total Return (%) .......... 31.99 (6.89)(c) (3.33)(c) (2.71)(c) (11.83)(c)**
Ratios and Supplemental
Data
Net assets, end of period
($ millions) ........... 90 31 33 17 9
Ratio of operating
expenses to average
daily net
assets (%) ............. 2.17 2.54 2.54 2.60 3.00*
Ratio of operating
expenses before
expense reductions,
to average daily
net assets (%) ......... 2.17 2.57 2.82 3.74 6.59*
Ratio of net investment
income (loss) to
average daily net
assets (%) ............. (.81) (1.34) (.59) .34 (1.06)*
Portfolio turnover
rate (%) ............... 59.2 57.5 71.4 80.6 34.5*
Average commission rate
paid (b) ............... $ -- $ -- $ -- $ -- $ --
</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, 1996.
(c) Total return would have been lower had certain expenses not been reduced.
(d) For the Period September 2, 1988 (commencement of operations) to June 30,
1989.
* Annualized ** Not annualized
The accompanying notes are an integral part of the financial statements.
19 - 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 most recent 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 purchased with an original maturity 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.
Money market instruments having an original 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 December 31,
1997 amounted to $441,876 which represents 0.37% 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.
20 - 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.
Futures Contracts. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased gold bullion futures as a temporary substitute for purchasing
gold bullion.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to
21 - Scudder Gold Fund
<PAGE>
hedge, the Fund gives up the opportunity to profit from favorable price
movements in the hedged positions 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. 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 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 six months ended December 31, 1997, purchases and sales of investment
securities (excluding short-term investments) aggregated $71,686,893 and
$54,490,427, respectively. During the six months ended December 31, 1997,
purchases and sales of gold aggregated $11,473,455 and $21,319,187,
respectively.
The aggregate face value of futures contracts opened and closed during the six
months ended December 31, 1997 was $9,759,850.
C. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by
22 - Scudder Gold Fund
<PAGE>
the Fund's Board of Directors and by the Fund's Shareholders. The Management
Agreement, which is effective December 31, 1997, is the same in all material
respects as the corresponding previous Investment Management Agreement, except
that Scudder Kemper is the new investment adviser to the Fund.
Under the Management Agreement with Scudder Kemper, 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 Management Agreement. For the six months ended December 31, 1997, the
fee pursuant to these agreements aggregated $780,133.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent. For the six months
ended December 31, 1997, the amount charged to the Fund by SSC aggregated
$251,832, of which $36,356 is unpaid at December 31, 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 six months ended December
31, 1997, the amount charged to the Fund by STC aggregated $9,387, of which
$1,521 is unpaid at December 31, 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 six months
ended December 31, 1997, the amount charged to the Fund by SFAC aggregated
$36,348, of which $4,335 is unpaid at December 31, 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 six
months ended December 31, 1997, Directors' fees and expenses aggregated $11,960.
D. Lines of Credit
The Fund and several affiliated Funds (the "Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.
23 - Scudder Gold Fund
<PAGE>
E. Transactions in Securities of Affiliated Issuers
An affiliated issuer is a company in which the Fund has ownership of at least 5%
of the voting securities. A summary of the Fund's transactions with companies
which are or were affiliates for the period ended December 31, 1997 is as
follows:
<TABLE>
<CAPTION>
Purchases Sales Dividend Market
Affiliate Cost ($) Cost ($) Income ($) Value ($)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Golden Knight Resources Inc. 1,336,406 1,321,671 -- 2,339,190
Piedmont Mining Co. -- 13,750 -- 184,250
Solitario Resources Corp. -- -- -- 1,533,186
Tombstone Exploration -- 125,038 -- 223,365
-----------------------------------------------------------------------------
1,336,406 1,460,459 -- 4,279,991
=============================================================================
</TABLE>
24 - 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
December 31, 1997, and the related consolidated statement of operations for the
six-month period then ended, the consolidated statements of changes in net
assets for the six-month period then ended and for the year ended June 30, 1997,
and the consolidated financial highlights for the six-month period ended
December 31, 1997, for each of the eight years in the period ended June 30,
1997, 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 December 31, 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 December 31, 1997, the consolidated results
of its operations for the six-month period then ended, the consolidated changes
in its net assets for the six-month period then ended and for the year ended
June 30, 1997, and the consolidated financial highlights for the six-month
period ended December 31, 1997, for each of the eight years in the period ended
June 30, 1997, 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.
February 13, 1998
25 - Scudder Gold Fund
<PAGE>
Stockholder Meeting Results
A Special Meeting of Stockholders (the "Meeting") of Scudder Gold Fund (the
"Fund") was held on October 27, 1997, at the office of Scudder Kemper
Investments, Inc. (formerly Scudder, Stevens & Clark, Inc.), 25th Floor, 345
Park Avenue (at 51st Street), New York, New York 10154. At the Meeting, as
adjourned and reconvened, the following matters were voted upon by the
shareholders (the resulting votes for each matter are presented below). With
regard to certain proposals, it was recommended that the Meeting be reconvened
in order to provide shareholders with an additional opportunity to return their
proxies. The date of the reconvened meeting at which the matters were decided is
noted after the proposed matter.
1. To elect Directors.
Number of Votes:
----------------
Director For Withheld
-------- --- --------
Paul Bancroft III 8,101,881 728,802
Sheryle J. Bolton 8,094,164 736,519
William T. Burgin 8,106,234 724,449
Thomas J. Devine 8,116,606 714,077
Keith R. Fox 8,137,861 692,822
William H. Luers 8,110,553 720,130
Daniel Pierce 8,121,466 709,217
Kathryn L. Quirk 8,108,031 722,652
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
7,840,670 623,484 366,529 743,440
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise. (Approved on December 2, 1997.)
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
8,758,674 1,363,348 574,539 0
26 - Scudder Gold Fund
<PAGE>
4. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Broker
Fundamental Policies For Against Abstain Non-Votes*
-------------------- --- ------- ------- ----------
<S> <C> <C> <C> <C>
4.1 Diversification 6,738,131 941,179 407,933 743,440
4.2 Borrowing 6,647,528 1,025,452 414,263 743,440
4.3 Senior securities 6,729,519 940,818 416,906 743,440
4.4 Purchase of physical 6,709,669 961,017 416,557 743,440
commodities
4.5 Concentration 6,711,230 961,710 414,303 743,440
4.6 Underwriting of securities 6,722,065 840,911 524,267 743,440
4.7 Investment in real estate 6,717,290 854,319 515,634 743,440
4.8 Lending 6,716,831 859,849 510,563 743,440
</TABLE>
5. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
8,136,570 294,563 399,550
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
27 - Scudder Gold Fund
<PAGE>
Officers and Directors
Daniel Pierce*
President and Director
Paul Bancroft III
Director; Venture Capitalist and
Consultant
Sheryle J. Bolton
Director; Chief Executive Officer,
Scientific Learning Corporation
William T. Burgin
Director; General Partner, Bessemer
Venture Partners
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; President, Exeter Capital
Management Corporation
William H. Luers
Director; President, The
Metropolitan Museum of Art
Kathryn L. Quirk*
Director, Vice President and
Assistant Secretary
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
Thomas F. McDonough*
Vice President and Secretary
Edward J. O'Connell*
Vice President and Assistant
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
28 - Scudder Gold Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
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+
- ----------------------
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+
- ---------
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
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index 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
- -------------
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
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal 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. Certain Scudder funds may not be
available for purchase or exchange. +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 Kemper Investments, Inc., are traded on the New York Stock Exchange
and, in some cases, on various other stock exchanges.
29 - 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 money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
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:
- ------------------------------------------------------------------------------------------------------------------------------
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:
- ------------------------------------------------------------------------------------------------------------------------------
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 previously designated.
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
- ------------------------------------------------------------------------------------------------------------------------------
30 - Scudder Gold Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------
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
</TABLE>
31 - Scudder Gold Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
U.S.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
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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