Scudder
Gold
Fund
Annual Report
June 30, 1998
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
6/30/98: $132.1 million
- --------------------------------------------------------------------------------
o The prices of gold and most gold stocks declined in response to uncertainty
about possible future European Central Bank sales during the 12-month period
ended June 30, 1998.
o Scudder Gold Fund's total return during its most recent fiscal year ended June
30 was -35.45%. This return is in keeping with the -35.01% return of the Fund's
peers as compiled 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 June 30, 1998
BAR CHART DATA:
- -----------------------------------------------------------------------------
Six months Twelve months
- -----------------------------------------------------------------------------
Gold bullion,London p.m. fix 2.10% -11.43%
Platinum, free market price -0.66 -15.25
Toronto Stock Exchange Gold Index -4.71 -26.82
Johannesburg (South Africa)
Stock Exchange Gold Index 8.81 -9.60
Lipper Average for Gold-Oriented Funds -8.98 -35.01
Scudder Gold Fund -9.65 -35.45
- -----------------------------------------------------------------------------
Table of Contents
3 Letter from the Fund's President 18 Financial Highlights
4 Performance Update 19 Notes to Financial Statements
5 Portfolio Summary 23 Report of Independent Accountants
6 Portfolio Management Discussion 24 Officers and Directors
9 Investment Portfolio 25 Investment Products and Services
15 Financial Statements 26 Scudder Solutions
2 - Scudder Gold Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
Gold and gold stocks delivered sub-par performance for the 12 months ended
June 30, 1998, as uncertainty over future European Central Bank gold sales
continued to unsettle market participants. The extraordinary events surrounding
European monetary union and the large central bank gold sales that began in 1997
have, for the time being, disrupted gold's typical supply and demand
relationship. Scudder Gold Fund's return over its most recent fiscal year ended
June 30, 1998, was -35.45% while gold bullion and gold stocks (as measured by
Lipper Analytical Services, Inc.) declined -11.43% and -35.01%, respectively.
For more information about Scudder Gold Fund's market environment, strategy, and
outlook, please read the Portfolio Management Discussion beginning on page 6.
For those of you interested in our newest Scudder offerings, we would like
to take this opportunity to highlight two upcoming additions to our
international category, both of which are scheduled to begin operations on
September 1st. Scudder International Growth Fund will seek long-term capital
appreciation by investing primarily in the equity securities of foreign
companies with high earnings growth potential, and Scudder International Value
Fund will seek long-term capital appreciation by investing primarily in
undervalued foreign equity securities. These two funds are among the first
international funds in the industry to pursue long-term growth of capital in
both the growth and value styles of investing. Please see page 25 for more
information on Scudder products and services.
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 June 30, 1998
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/98 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER GOLD FUND
- --------------------------------------------
1 Year $ 6,455 -35.45% -35.45%
5 Year $ 8,314 -16.86% -3.63%
Life of Fund* $ 8,472 -15.28% -1.67%
- --------------------------------------------
S & P INDEX
- --------------------------------------------
1 Year $ 13,017 30.17% 30.17%
5 Year $ 28,243 182.43% 23.06%
Life of Fund* $ 54,704 447.04% 19.03%
- --------------------------------------------
*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
'98 $ 8,895
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
'98 $54,704
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 1998
<S> <C> <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 $ 6.65
INCOME DIVIDENDS.. $ -- $ .01 $ -- $ -- $ -- $ .24 $ .25 $ 1.08 $ 2.39 $ .14
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 -35.45
INDEX TOTAL
RETURN (%)........ 20.11 16.45 7.37 13.39 13.61 1.40 26.07 26.00 34.72 30.17
</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 June 30, 1998
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
As a percentage of net assets
Equity Holdings 82%
Cash Equivalents, net 17%
Precious Metals 1%
- --------------------------------------
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 held a
significant cash position and sold
gold bullion into rallies.
- --------------------------------------------------------------------------
QUALITY DISTRIBUTION
- --------------------------------------------------------------------------
Tier breakdown of the Fund's common stocks
Tier I
Premier gold producing companies 46%
Tier II
Major established gold producers 17%
Tier III
Junior gold producers with
medium cost production 13%
Tier IV
Companies with some gold
production on stream or in startup 5%
Tier V
Primarily exploration companies
with or without mineral reserves 19%
- ---------------------------------------
100%
- ---------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund emphasized Tier 1
stocks for liquidity purposes and
reduced exposure to Tier V
exploration stocks over its most
recent fiscal year.
- --------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
(41% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. FREEPORT MCMORAN COPPER & GOLD, INC.
Mining company
2. STILLWATER MINING CO.
Exploring U.S. palladium and platinum producing
3. NEWMONT MINING CORP.
International gold exploration and mining company
4. HOMESTAKE MINING CO.
Major international gold producer
5. ASHANTI GOLDFIELDS CO., LTD.
Leading gold producer
6. BARRICK GOLD CORP.
Gold exploration and production in North and
South America
7. ANGLO AMERICAN PLATINUM CORP.
World's largest pure platinum producer
8. EURO-NEVADA MINING LTD.
Large gold royalty company
9. BATTLE MOUNTAIN CANADA
Exploration and production development company in North and South America,
Australia and Indonesia
10. SUTTON RESOURCES LTD.
Mineral exploration and development company in Tanzania and Guyana
Scudder Gold Fund made a
partial shift into platinum and
palladium stocks -- including
Anglo American Platinum
Corp., the Fund's seventh
largest holding -- during the
period based on positive
fundamentals.
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
For an overview of the investment environment, strategy, and outlook for Scudder
Gold Fund, we are pleased to once again present an interview with Scudder Gold
Fund's lead portfolio manager Clay Hoes.
Q: How did Scudder Gold Fund perform over the past 12 months?
The difficulties for gold and gold stocks have continued. Scudder Gold Fund's
total return for the 12 months ended June 30, 1998, was -35.45%, compared with
the Lipper Gold Fund Index's return of -35.01% and gold bullion's decline of
- -11.43%.
Q: Over recent months, gold seems to have been locked in a trading range.
Yes, it's been in a trading range between $285 and $315 for the past six months.
When it's going to break out of this is uncertain. Gold was priced at $297 at
the close of the period. Within this range, you buy at $285 and you sell at
$315.
Q: To what extent does low global inflation play a part in gold's current
pricing?
Because there's limited global inflation, many people don't feel the need to
hold gold. But for those around the world who are concerned about currency
volatility, holding gold can be beneficial because gold is denominated in
dollars. If you've bought a security in yen and the yen declines your gold
dollars will go up. Of course, holders of Treasury securities can obtain a
similar benefit, with interest added.
Q: Is gold still a viable investment?
What I think needs to be explained is that gold isn't dead. When we have an
inflationary environment again, gold will resurface. Recent economic statistics
have shown that inflation has been occurring from a wage point of view versus
goods. A lot of goods are not inflationary at the moment, but wages are
inflationary. And I still subscribe to the 5% theory: If you're going to have
100% invested in the market via bonds and equities, you should have 5% of that
total in gold or gold stocks.
Q: Have gold stocks continued to track gold?
Yes. Because gold has traded down, gold-related equities have traded down. The
movement in gold-related products has been greater than in gold itself.
Q: What effect have the actions of the European Central Bank (ECB) had on gold?
When Wim Duisenberg, the head of the ECB, came out recently with an unofficial
comment (still to be voted on and ratified by the ECB's board of directors) that
the ECB would hold between 10% and 15% of their reserves in the form of gold,
the market reacted somewhat negatively because the consensus expectation was
that the bank would hold about 20% of its reserves in gold. This was a bit of a
disappointment, but not overly so, because a lot of that news had already been
built into gold's price.
More important, though, is what mechanism the ECB sets up to dispose of a
portion of its existing gold reserves. If the ECB holds 10%-15% of reserves in
gold, that adds up to between $5 and $7.5 billion in value, or 17 million
ounces. Presently, gold reserves held by the 11 ECB countries number about 366
million ounces. So 17 million ounces is a drop in the bucket. Each country will
contribute a formula-based number of ounces to the ECB, with the remainder to be
6 - Scudder Gold Fund
<PAGE>
held at each individual country's central bank. It's theirs, so at present they
can do with it what they want. In the near future it will be up to the ECB to
tell them how they can dispose of it. If the ECB is smart, they're going to make
it very difficult for countries to sell their additional reserves. If the
individual countries draw down their gold reserves, it will create a perception
that the Euro (which is partially backed by gold) is less stable and hence less
desirable to hold. So I believe they're going to want to have a fairly rigorous
system of disposal that the ECB can control.
I believe the gold market has been focusing on the relatively small percentage
of reserves to be held at the ECB. But, again, I don't believe the reserves held
by the individual countries will actually be available for sale because of the
harm that would cause the Euro. Hence, we think that the markets oversold on
Duisenberg's comments, and that gold should trade higher off the current range
once everyone has figured this out.
Q: Have there been other significant factors affecting supply over the past six
months?
High cost mines have continued to close, though at a slower rate than before.
Gold mining companies are steadily driving down costs by freezing wages, cutting
personnel, and making capital investments to improve productivity. In addition,
a number of companies have bought back their forward sales, which is a favorable
development because it creates a support level for gold prices. We also haven't
seen as many large hedge funds taking short positions in gold as we did in 1997.
Most of the negative news on gold seems to be built into its price already.
Q: What about demand? Has fabrication demand had any positive effect?
Fabrication demand for gold jewelry has been increasing as the price has been
falling. Without the central bank sales, demand would have outstripped supply.
Q: What has the Fund's strategy been in light of the difficult supply situation?
We've made some geographic shifts and some commodity changes. The Fund purchased
more South African stocks on the weak rand, and Australian stocks on the weak
Aussie dollar during the period. We also made a partial shift into platinum and
palladium, with a smaller shift into silver based on positive fundamentals.
In terms of allocation, as mentioned six months ago, we have moved primarily
into Tier I (premier gold producing companies) stocks for liquidity purposes and
substantially reduced Tier V exploration names. We're beginning to look more at
the exploration names though, because if the projects are worthwhile, now is the
time to get in, when everybody is flat on their back.
Q: Were there positive stories amid the bad news?
The Fund realized substantial gains from the sale of Crystallex of Venezuela.
Australian gold stocks such as Delta Gold and Acacia have also performed well.
Another bright spot for the Fund in Australia was Niugini Mining, which has a
brand new mine now producing gold at a rate of 750,000 ounces annually. The Fund
took a position in this property early on. The mine was brought on below budget,
7 - Scudder Gold Fund
<PAGE>
ahead of schedule, and at a greater capacity than anticipated -- the most
amazing start-up that I've ever witnessed.
Q: What is your outlook for gold?
The sentiment on gold over the past twelve months has been as negative as it
probably ever has been. I think most of the negativity is behind us. Gold should
continue to trade in its current range over the next several months as we await
the definitive ECB reserve formula. If the market perceives the formula as
"weak" -- not adequately protecting European reserves -- then we could see one
last sell-off. But the market could pick up significantly once investors believe
gold has reached its bottom. Other positive factors for gold would be any
weakness in the U.S. dollar or any faltering by the U.S. stock market. In the
meantime, Scudder Gold Fund will continue to look to diversify and to search for
long-term capital appreciation opportunities in advance of a turnaround in gold
prices.
Scudder Gold Fund:
A Team Approach to Investing
Scudder Gold Fund is managed by a team of Scudder Kemper Investments, Inc.
(the "Adviser") 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 the Adviser's large staff of economists, research analysts, traders, and
other investment specialists who work in our offices across the United States
and abroad. We believe our team approach benefits Fund investors by bringing
together many disciplines and leveraging our extensive resources.
Lead Portfolio Manager Clay L. Hoes assumed responsibility for the Fund's
day-to-day management in 1997. Mr. Hoes, who joined the Adviser 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 17 years of
investment experience, contributes expertise in quantitative analysis.
8 - Scudder Gold Fund
<PAGE>
Investment Portfolio as of June 30, 1998
<TABLE>
<CAPTION>
Principal Market
Amount** Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 3.9%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 6/30/1998 at 5.75%,
to be repurchased at $5,130,819 on 7/1/1998, collateralized by a $4,996,000 -------------
U.S. Treasury Note, 7.5%, 10/31/1999 (Cost $5,130,000) ................................ 5,130,000 5,130,000
-------------
Short-Term Investments 5.4%
- ------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Association, 7/1/1998 ......................................... 7,000,000 7,000,000
United States Treasury Bill, 7/30/1998 (f) .............................................. 60,000 59,775
United States Treasury Bill, 8/6/1998 (f) ............................................... 100,000 99,516
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Bonds (Cost $7,159,260) 7,159,291
- ------------------------------------------------------------------------------------------------------------------------------
Convertible Bonds 1.4%
- ------------------------------------------------------------------------------------------------------------------------------
Chile 0.7%
Dayton Mining Corp., 7%, 4/1/2002 ....................................................... 1,500,000 952,500
-------------
Canada 0.7%
Kinross Gold, 5.5%, 12/05/2006 .......................................................... CAD 1,500,000 830,757
- ------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $2,601,119) 1,783,257
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 80.5%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Australia 6.9%
Acacia Resources, Ltd.* (Australian based Gold and mineral exploration and
production company) ................................................................... 2,000,000 2,135,381
Delta Gold NL* (Australian-based gold exploration and production company
primarily in Australia with important platinum property in Zimbabwe) .................. 1,400,000 1,720,720
Minorco Resources Corp., Ltd. (Exploration, mining and processing of metal and
industrial materials) ................................................................. 87,100 1,019,349
Newcrest Mining, Ltd.* (Australian-based gold production and global exploration
company) .............................................................................. 600,000 737,451
Normandy Mining* (Largest Australian gold production and global exploration
company) .............................................................................. 3,000,000 2,458,171
Resolute, Ltd. (Australian-based exploration and production of gold and other
minerals) ............................................................................. 600,000 365,001
Ross Mining NL (Australian-based exploration and production company in Soloman
Islands) .............................................................................. 500,000 238,989
Sons of Gwalia, Ltd. (Gold exploration and mining) ...................................... 200,000 496,600
-------------
9,171,662
-------------
Bolivia 0.3%
Corriente Resources, Inc.* (Exploration and development company) ........................ 303,000 195,610
Jordex Resources, Inc.* (Operator of two mines producing zinc, lead and silver) ......... 500,000 166,491
-------------
362,101
-------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
9 - Scudder Gold Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Brazil 0.9%
Black Swan Gold Mines, Ltd.* (Gold development projects) ................................ 300,000 44,851
Black Swan Gold Mines, Ltd. Warrants* (expire 8/27/1998) (c) ............................ 100,000 0
Boliden, Ltd.* (Mining and processing of zinc, copper and gold) ......................... 200,000 1,087,289
Ourominas Minerals, Inc.* (Exploration company) ......................................... 400,000 14,950
Ourominas Minerals, Inc., Purchase Warrants* (expire 2/14/1999) (c) ..................... 250,000 0
-------------
1,147,090
-------------
Canada 5.7%
Aber Resources* (Diamond exploration and development in the Northwest
Territories of Canada) ................................................................ 40,000 353,369
Agnico-Eagle Mines, Ltd. (Silver and gold mining) ....................................... 30,000 166,151
Cross Lake Minerals* (Mineral exploration and development) .............................. 100,000 48,928
Dia Met Minerals, Ltd. Class A* (Diamond and gold exploration and development
in the Northwest Territories of Canada and other parts of the world) .................. 21,200 316,224
Euro-Nevada Mining, Ltd. (Large gold royalty company) ................................... 250,000 3,406,272
Emgold Mining Corp., Purchase Warrants* (expire 11/14/1998) (c) ......................... 100,000 0
Golden Knight Resources, Inc.* (Junior gold producer, with interest in Ghana) (e) ....... 800,000 451,225
Kinross Gold Corp.* (International gold mining company) ................................. 350,000 1,177,330
Redfern Resources, Ltd.* (Exploration company in British Columbia) ...................... 250,000 190,276
Repadre Capital Corp.* (Junior gold royalty company) .................................... 502,700 1,417,692
-------------
7,527,467
-------------
Chile 0.1%
Dayton Mining Corp.* (Junior company developing Chilean gold deposits) .................. 200,000 129,116
-------------
China 0.0%
Zen International Resources, Ltd.* (Exploration company) ................................ 220,000 44,851
-------------
Congo 0.3%
Banro Resources Corp., Warrants* (expire 10/24/1998) (c) ................................ 150,000 399,579
-------------
Ecuador 0.3%
Ecuadorian Minerals Corp.* (Exploration company) ........................................ 700,000 356,767
-------------
French Guiana 0.2%
Guyanor Resources S.A. "B"* (Company holding interests in mineral properties) ........... 140,000 171,248
International Roraima Gold Corp.* (Gold and mineral exploration and mining in
South America and Africa) (e) ......................................................... 825,000 67,276
International Roraima Gold Corp., Purchased Warrants* (expire 10/22/1998) (c) ........... 412,500 2,803
-------------
241,327
-------------
Ghana 6.3%
Ashanti Goldfields Co., Ltd. (GDR) (Leading gold producer) .............................. 553,027 4,493,344
Ashanti Goldfields Co., Ltd.* (Preference shares) (c) ................................... 154,701 309,402
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
10 - Scudder Gold Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Golden Star Resources, Ltd.* (Junior exploration company) ............................... 16,000 33,162
Pioneer Group Inc. (Fund management company owning major gold producer) ................. 70,000 1,841,875
Ranger Minerals NL* (Gold producer and exploration company) ............................. 700,000 1,559,945
Tanganyika Gold NL* (Gold exploration company) .......................................... 937,500 81,473
-------------
8,319,201
-------------
Indonesia 6.5%
Augusta Gold Corp.* (Gold exploration company) .......................................... 200,000 17,668
Augusta Gold Corp., Inc. Warrants (expire 8/16/1998)* (c) ............................... 300,000 0
Freeport McMoRan Copper & Gold, Inc. "A" (Large gold and copper producer) ............... 560,000 7,980,000
Freeport McMoran Copper & Gold, Inc. "B" ................................................ 40,000 607,500
-------------
8,605,168
-------------
Kazakhstan 0.1%
Kazakhstan Minerals Corp.* (Mining company mining for copper, gold and other
minerals) ............................................................................. 75,000 21,750
Steppe Gold Resources, Ltd.* (Exploration company) ...................................... 700,000 111,787
-------------
133,537
-------------
Mexico 0.0%
Northern Crown Mines, Ltd.* (Junior gold and silver exploration company) ................ 150,000 13,251
Minefinders Corp., Ltd.* (Precious metals exploration and development) .................. 70,000 81,818
-------------
95,069
-------------
Namibia 0.5%
Namibian Minerals Corp.* (Diamond exploration and development company, offshore
Namibia) .............................................................................. 300,000 682,953
-------------
Niger 1.6%
Etruscan Resources Company* (Junior exploration company) ................................ 800,000 2,136,523
-------------
Peru 1.5%
Gitennes Exploration Inc. (Exploration company in Peru) ................................. 146,000 90,286
Gitennes Exploration Inc., Purchase Warrants* (expire 10/2/1998) (c) .................... 73,000 0
Minas Buenaventura (ADR) (Mining company in South America) .............................. 125,000 1,640,609
Southwestern Gold Corp.* (Multiple gold and gold/copper exploration properties) ......... 100,000 231,049
-------------
1,961,944
-------------
Philippines 0.1%
Climax Mining, Ltd.* (Gold exploration company in Australia and the Philippine
Islands) .............................................................................. 800,000 136,565
-------------
Sarawak 0.2%
Menzies Gold NL* (Junior exploration company) ........................................... 2,500,000 294,856
-------------
South Africa 6.9%
Anglo American Platinum Corp. (World's largest pure platinum producer) .................. 349,902 3,805,848
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
11 - Scudder Gold Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Anglogold Limited (ADR) (Exploration and mining of gold) ................................ 53,000 1,073,250
Driefontein Consolidated Ltd. (ADR) (Gold mining and company in South Africa) ........... 200,000 1,025,000
Gold Fields Ltd.* (Gold exploration and mining on the African continent) ................ 150,000 632,378
Harmony Gold Mining Co., Ltd.* (Gold mining company in South Africa) .................... 200,000 826,307
Impala Platinum Holdings Ltd. (Platinum, nickel and copper mining) ...................... 200,000 1,703,204
-------------
9,065,987
-------------
Spain 1.2%
Rio Narcea Gold Mines Inc.* (Junior exploration company in Northern Spain) .............. 700,000 1,550,746
-------------
Tanzania 0.3%
Pangea Goldfields Inc.* (Junior exploration company) .................................... 400,000 391,424
-------------
United States 9.7%
Crown Resources Corp.* (Gold, silver, and mineral exploration company) .................. 274,000 1,198,750
Getchell Gold Corp.* (Expanding gold mining project in Nevada) .......................... 75,000 1,153,125
Lazare Kaplan International* (Diamond cutter and wholesaler) ............................ 30,000 316,875
Piedmont Mining Co.* (Gold and mining development company in the Carolinas) (e) ......... 914,000 100,540
Piedmont Mining Co.* (c) (d) ............................................................ 700,000 69,300
Romarco Minerals, Inc.* (Junior exploration company with mineral resource
properties in Nevada) ................................................................. 250,000 322,789
Stillwater Mining Co.* (Exploring U.S. palladium and platinum producing) ................ 300,000 8,137,500
Viceroy Resources Corp. (Gold producer in California) ................................... 500,000 781,489
X-Cal Resources* (Junior exploration company in Nevada) (d) ............................. 714,286 242,698
X-Cal Resources Units (expire 3/15/1999)* (c) (d) ....................................... 500,000 159,696
X-Cal Resources* (d) .................................................................... 1,000,000 339,778
-------------
12,822,540
-------------
Venezuela 0.3%
El Callao Mining Corp.* (Gold exploration and development company) ...................... 1,000,000 271,822
Tombstone Exploration Co., Ltd.* (Junior exploration company in Venezuela and
Honduras) ............................................................................. 750,000 122,320
-------------
394,142
-------------
West Africa 5.9%
Birim Goldfields Inc.* (Junior exploration company in Ghana) ............................ 150,000 49,947
Birim Goldfields Inc., Purchase Warrants* (expire 5/5/1999) (c) ......................... 75,000 510
High River Gold Mines Ltd.* (Gold exploration and development) .......................... 1,050,000 820,563
IAMGOLD* (Development and funding of precious metal money in South America and
West Africa) .......................................................................... 450,000 1,146,750
Leo Shield Exploration NL* (Gold exploration) ........................................... 1,488,794 97,038
Novagold Resources Inc. (Exploration and development of mineral properties) ............. 250,000 118,922
</TABLE>
The accompanying notes are an integral part of the consolidated 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) ................................................ 345,000 445,449
Oliver Gold Corp.* (Exploration and development company with interests in gold
and gold-copper prospects in British Columbia) ........................................ 100,000 14,271
Samax Gold Inc.* (Gold exploration in Ghana and Tanzania) ............................... 599,000 2,177,738
Sutton Resources, Ltd.* (Mineral exploration and development company in Tanzania
and Guyana) ........................................................................... 500,000 2,837,145
-------------
7,708,333
-------------
International 24.7%
Barrick Gold Corp.* (Gold exploration and production in North and South America) ........ 200,000 3,837,500
Battle Mountain Canada (Exploration and production development company in North
and South America, Australia and Indonesia) ........................................... 496,000 2,898,712
Battle Mountain Gold Co. (Gold, silver and copper mining and processing in North
and South America, South Pacific, and Australia) ...................................... 350,000 2,078,125
DeBeers Consolidated Mines, Ltd. (ADR) (World's leading producer and marketer of
diamonds) ............................................................................. 100,000 1,750,000
DeBeers Consolidated Mines, Ltd. (Centenary Linked Shares) .............................. 80,000 1,405,734
First Quantum Minerals, Ltd.* (Diversified mining company) .............................. 350,700 536,220
Greenstone Resources, Ltd.* (Gold exploration and development in Central America) ....... 250,000 942,883
Homestake Mining Co. (Major international gold producer) ................................ 500,000 5,187,500
Indochina Goldfields Ltd.* (Gold and copper exploration and development in
Southeast Asia) ....................................................................... 100,000 105,331
Lihir Gold, Ltd.* (Gold exploration and development on Lihir Island in the New
Ireland Province of Papua New Guinea) ................................................. 1,000,000 1,235,293
Meridian Gold Inc.* (Exploration and development company) ............................... 450,000 932,690
Minorca Resources Ltd.* (Owner of varied mineral property claims) ....................... 300,000 122,320
Minorca Resources Ltd., Purchase Warrants* (expire 3/13/1999) (c) ....................... 25,000 0
Newmont Mining Corp. (International gold exploration and mining company) ................ 250,000 5,906,250
Niugini Mining Ltd.* (Gold exploration and mining in Queensland, Papua New
Guinea, Chile and Thailand) ........................................................... 1,200,000 1,787,761
Orvana Minerals Corp.* (Junior international exploration and development company) ....... 250,000 203,867
Placer Dome Inc. (International gold, silver and copper mining) ......................... 200,000 2,324,080
Queenstake Resources, Ltd.* (Junior international exploration company) .................. 200,000 42,132
Solitario Resources Corp.* (Precious and base metals exploration company
primarily in Argentina and Peru) ...................................................... 700,000 951,394
Trans Hex International, Ltd.* (Explores, develops and mines diamonds and
precious metals in Canada and emerging markets) ....................................... 350,000 80,867
Vengold Inc.* (Gold exploration and development company with interests in Papua
New Guinea, Venezuela and Indonesia) .................................................. 350,000 354,388
-------------
32,683,047
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $130,785,095) 106,361,995
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
13 - Scudder Gold Fund
<PAGE>
<TABLE>
<CAPTION>
% of Market
Net Assets Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total Investment Portfolio (Cost $145,675,474) (a) ...................................... 91.2 120,434,543
Scudder Precious Metals, Inc.:
Platinum* (Cost $725,483) (b) ......................................................... 0.5 696,727
Other assets and liabilities ............................................................ 8.3 11,000,275
------ -------------
Net Assets .............................................................................. 100.0 132,131,545
====== =============
</TABLE>
* Non-income producing security or commodity.
** Principal amount is stated in U.S. dollars unless otherwise specified.
(a) The cost for federal income tax purposes was $163,848,403. At June 30,
1998, net unrealized depreciation for all investment securities based on
tax cost was $43,413,860. This consisted of aggregate gross unrealized
appreciation for all investments in which there was an excess of market
value over tax cost of $8,185,169 and aggregate gross unrealized
depreciation for all investment securities in which there was an excess of
tax cost over market value of $51,599,029.
(b) The cost of Platinum for federal income tax purposes was $725,483. At June
30, 1998, gross and net unrealized depreciation based on tax cost was
$28,756.
(c) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $941,290 (.71% 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, 1998 aggregated $1,862,798. These securities
may also have certain restrictions as to resale.
(d) Restricted Securities are securities which have not been registered with
the Securities and Exchange Commission under the Securities Act of 1933.
The aggregate fair value of restricted securities at June 30, 1998,
amounted to $811,472 which represents .61% of net assets. Information
concerning such restricted securities at June 30, 1998 is as follows:
<TABLE>
<CAPTION>
Security Shares Acquisition Date Cost ($)
-------- -------------------- ------------------ -----------------
<S> <C> <C> <C>
Piedmont Mining Co. 700,000 12/20/96 280,000
X-Cal Resources 1,000,000 12/18/96 731,663
X-Cal Resources 714,286 6/18/97 360,529
X-Cal Resources 500,000 3/19/98 193,969
</TABLE>
(e) Affiliated issuers (See Notes to Consolidated Financial Statements).
(f) At June 30, 1998, these securities have been pledged to cover initial
margin requirements for open futures contracts. At June 30, 1998, open
futures contracts purchased long were as follows:
<TABLE>
<CAPTION>
Aggregate
Futures Expiration Contracts Face Value ($) Market Value ($)
------- ---------- --------- -------------- ----------------
<S> <C> <C> <C> <C>
Silver 5,000 oz. July 31, 1998 55 1,497,258 1,514,423
----------- -----------
Total unrealized appreciation on open futures contracts
purchased long ............................................... 17,165
===========
</TABLE>
Currency Abbreviations
----------------------------------------------------------------------
CAD Canadian Dollars
The accompanying notes are an integral part of the consolidated financial
statements.
14 - Scudder Gold Fund
<PAGE>
Financial Statements
Consolidated Statement of Assets and Liabilities
as of June 30, 1998
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market:
Unaffiliated issuers (identified cost $142,049,417) ................ $ 119,815,502
Affiliated issuers (identified cost $3,626,057) .................... 619,041
----------------
Total investments, at market (idenitified cost $145,675,474) ......... 120,434,543
Platinum, at market 1,950 oz. (identified cost $725,483) ............. 696,727
Cash ................................................................. 1,040
Foreign currency holdings, at market (identified cost $14,679) ....... 14,678
Receivable for Fund shares sold ...................................... 11,240,058
Dividends and interest receivable .................................... 132,340
Receivable for daily variation margin on open futures contracts ...... 55,550
Other assets ......................................................... 4,568
----------------
Total assets ......................................................... 132,579,504
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased .................................... 36,507
Payable for Fund shares sold ......................................... 160,106
Accrued management fee ............................................... 104,340
Other payables and accrued expenses .................................. 147,006
----------------
Total liabilities .................................................... 447,959
-------------------------------------------------------------------------------------------
Net assets, at market value $ 132,131,545
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income ......... (7,582,297)
Net unrealized appreciation (depreciation) on:
Investment securities .............................................. (25,240,931)
Platinum ........................................................... (28,756)
Futures ............................................................ 17,165
Foreign currency related transactions .............................. (7,976)
Accumulated net realized gain (loss) ................................. (62,364,808)
Paid-in capital ...................................................... 227,339,148
-------------------------------------------------------------------------------------------
Net assets, at market value $ 132,131,545
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($132,131,545 / 19,861,886 shares of capital stock
outstanding, $.01 par value, 100,000,000 shares of capital ----------------
stock authorized) .................................................. $6.65
----------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
15 - Scudder Gold Fund
<PAGE>
Consolidated Statement of Operations
year ended June 30, 1998
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $48,139) ................. $ 1,027,084
Interest (net of foreign taxes withheld of $1,829) ................... 1,708,512
----------------
2,735,596
Expenses:
Management fee ....................................................... 1,471,427
Services to shareholders ............................................. 636,904
Custodian and accounting fees ........................................ 177,735
Directors' fees and expenses ......................................... 47,652
Auditing ............................................................. 75,344
Reports to shareholders .............................................. 82,166
Registration fees .................................................... 64,049
Legal ................................................................ 96,191
Other ................................................................ 19,344
----------------
2,670,812
-------------------------------------------------------------------------------------------
Net investment income (loss) 64,784
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments - Unaffiliated issuers ................................... (45,510,841)
Investments - Affiliated issuers ..................................... (3,586,595)
Gold ................................................................. (1,252,102)
Futures .............................................................. (339,950)
Foreign currency related transactions ................................ (41,992)
----------------
(50,731,480)
----------------
Net unrealized appreciation (depreciation) during the period on:
Investment securities ................................................ (13,589,462)
Gold ................................................................. 801,154
Platinum ............................................................. (141,880)
Futures .............................................................. 17,165
Foreign currency related transactions ................................ 1,369
----------------
(12,911,654)
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions (63,643,134)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (63,578,350)
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated 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 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income (loss) ............................... $ 64,784 $ (1,213,425)
Net realized gain (loss) from investment transactions ...... (50,731,480) 8,272,276
Net unrealized appreciation (depreciation) on
investment transactions during the period ............... (12,911,654) (46,971,575)
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations .............................................. (63,578,350) (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 .................................. 749,811,359 449,808,600
Net asset value of shares issued to shareholders in
reinvestment of distributions ........................... 2,054,132 32,732,697
Cost of shares redeemed .................................... (717,824,287) (415,853,422)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................ 34,041,204 66,687,875
---------------- ----------------
Increase (decrease) in net assets .......................... (31,801,266) (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 $7,582,297 and $13,939,198, respectively) ............ $ 132,131,545 $ 163,932,811
---------------- ----------------
<CAPTION>
Other Information
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................. 15,622,172 11,273,441
---------------- ----------------
Shares sold ................................................ 92,092,490 34,365,516
Shares issued to shareholders in reinvestment of
distributions ........................................... 282,938 2,401,703
Shares redeemed ............................................ (88,135,714) (32,418,488)
---------------- ----------------
Net increase in Fund shares ................................ 4,239,714 4,348,731
---------------- ----------------
Shares outstanding at end of period ........................ 19,861,886 15,622,172
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
17 - Scudder Gold Fund
<PAGE>
Consolidated Financial Highlights
The following table includes selected data (a) for a share outstanding
throughout each period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
Years Ended June 30,
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<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) .............................. .00 (.08) (.09) (.08) (.10)
Net realized and unrealized gain (loss) on investment
transactions ............................................ (3.70) (2.12) 4.28 1.02 .85
--------------------------------------------------------
Total from investment operations .......................... (3.70) (2.20) 4.19 .94 .75
--------------------------------------------------------
Less distributions:
In excess of net investment income ........................ (.14) (2.39) (1.08) (.25) (.24)
From net realized gains on investment transactions ........ -- (.26) (.63) (.47) --
--------------------------------------------------------
Total distributions ....................................... (.14) (2.65) (1.71) (.72) (.24)
--------------------------------------------------------
--------------------------------------------------------
Net asset value, end of period ............................ $ 6.65 $ 10.49 $ 15.34 $ 12.86 $ 12.64
--------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Total Return (%) .......................................... -35.45 -17.72 36.91 7.50 6.35
Ratios and Supplemental Data
Net assets, end of period ($ millions) .................... 132 164 173 126 130
Ratio of operating expenses to average daily net
assets (%) .............................................. 1.82 1.60 1.50 1.65 1.69
Ratio of net investment income (loss) to average
daily net assets (%) .................................... .04 (.62) (.61) (.69) (.81)
Portfolio turnover rate (%) ............................... 68.3 38.9 29.7 42.0 50.8
</TABLE>
(a) Based on monthly average shares outstanding during the period.
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 Stock Market, Inc.
("Nasdaq"), for which there have been sales, are valued at the most recent sale
price reported on Nasdaq. If there are no such sales, the value is the most
recent bid quotation. Securities which are not quoted on Nasdaq 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 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 other than money market instruments with an original
maturity over sixty days are valued by pricing agents approved by the officers
of the Fund, which quotations 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 purchased with 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.
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.
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.
19 - Scudder Gold Fund
<PAGE>
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 precious metals futures as a temporary substitute for purchasing
precious metals.
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 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. At June 30, 1998, the Fund had a net tax basis capital
20 - Scudder Gold Fund
<PAGE>
loss carryforward of approximately $23,275,000, which may be applied against any
realized net taxable capital gains of each succeeding year until fully utilized
or until June 30, 2006, whichever occurs first. In addition, from November 1,
1997 through June 30, 1998, the Fund incurred approximately $27,220,000 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, 1999.
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 premiums and discounts are amortized or accreted for both tax and
financial reporting purposes.
B. Purchases and Sales
For the year ended June 30, 1998, purchases and sales of investment securities
(excluding short-term investments) aggregated $119,520,338 and $78,849,656,
respectively. During the year ended June 30, 1998, 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
twelve months ended June 30, 1998 was $11,257,108 and $9,759,850, respectively.
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 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.
21 - Scudder Gold Fund
<PAGE>
Under the Investment 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 Agreement. For the year ended June 30, 1998, the
fee pursuant to these agreements aggregated $1,471,427.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent. For the year ended June
30, 1998, the amount charged to the Fund by SSC aggregated $487,250, of which
$37,045 is unpaid at June 30, 1998.
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, 1998,
the amount charged to the Fund by STC aggregated $19,391, of which $1,627 is
unpaid at June 30, 1998.
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, 1998, the amount charged to the Fund by SFAC aggregated $67,605, of
which $5,332 is unpaid at June 30, 1998.
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, 1998, Directors' fees and expenses aggregated $47,652.
D. Lines of Credit
The Fund and several affiliated Funds (the "Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.
E. Transactions in Securities of Affiliated Issuers
An affiliated issuer is a company in which the Fund has ownership of at least 5%
of the voting securities. A summary of the Fund's transactions with companies
which are or were affiliates for the period ended June 30, 1998 is as follows:
<TABLE>
<CAPTION>
Affiliate Purchases Sales Dividend Market
Cost ($) Cost ($) Income ($) Value ($)
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Golden Knight Resources Inc. 1,336,405 4,985,092 -- 451,225
Piedmont Mining Co. -- 249,375 -- 100,540
International Roraima -- -- -- 67,276
-----------------------------------------------------------
1,336,405 5,234,467 -- 619,041
===========================================================
</TABLE>
22 - Scudder Gold Fund
<PAGE>
Report of Independent Accountants
Tax Information
To the Board of Directors of Scudder Mutual Funds, Inc. and the Shareholders of
Scudder Gold Fund:
In our opinion, the accompanying consolidated statement of assets and
liabilities, including the portfolio of investments, and the related
consolidated statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of Scudder Gold Fund (the "Fund") at June 30, 1998, the results of its
operations for the year then ended and the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles. These consolidated financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
August 19, 1998
23 - 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
and Director, Scientific Learning
Corporation
William T. Burgin
Director; General Partner, Bessemer
Venture Partners
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; Private Equity Investor
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
Emeritus and Director, Kirby
Corporation
Jerard K. Hartman*
Vice President
Clay L. Hoes*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
24 - 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 Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment 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 Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth 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.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
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. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++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.
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 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.
Distributions Direct
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
- ------------------------------------------------------------------------------------------------------------------------------
26 - 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 8,000 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 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>
27 - 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
United States.
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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