Scudder
Investments(SM)
[LOGO]
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SECTOR/SPECIALTY
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Scudder Gold Fund
Annual Report
October 31, 2000
The fund seeks maximum return consistent with investing primarily in a portfolio
of gold-related equity securities and gold.
<PAGE>
Contents
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4 Letter from the Fund's President
6 Performance Update
8 Portfolio Summary
10 Portfolio Management Discussion
14 Glossary of Investment Terms
15 Investment Portfolio
18 Consolidated Financial Statements
21 Consolidated Financial Highlights
23 Notes to Consolidated Financial
Statements
31 Report of Independent Accountants
32 Shareholder Meeting Results
33 Officers and Directors
34 Investment Products and Services
36 Account Management Resources
2
<PAGE>
Scudder Gold Fund
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Class AARP ticker symbol SGLDX fund number 119
Class S ticker symbol SCGDX fund number 019
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Date of o During a disappointing period for gold and gold
Inception: stocks, Class S shares of Scudder Gold Fund posted a
9/2/88 -20.08% total return over the most recent fiscal year
ended October 31, 2000. The fund outperformed the
-27.79% average return of its peers as
Total Net compiled by Lipper, Inc. during the period.
Assets as of
10/31/00 -- o Gold dipped below its recent $270-$300 trading
range at the close of the period, depressed by a
Class AARP: strong U.S. dollar and low inflation. Gold-related
$0.02 million equities continued to be weighed down by the low
level of gold prices.
Class S:
$82 million
----------------------------------------------------------
Total Returns for Gold, Gold Stocks, and Gold Funds
(Periods ended October31, 2000)
----------------------------------------------------------
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE ILLUSTRATING THE FUND TOTAL
RETURN (%) AND INDEX TOTAL RETURN (%)
--------------------------------------------------------------------------------
Six months Twelve months
Gold bullion, London p.m. fix -3.07 -11.38
Toronto Stock Exchange Gold Index -12.37 -33.41
Salomon/Smith Barney Gold Index -16.64 -33.31
Lipper Average for Gold-Oriented Funds -20.58 -27.79
Class S shares of Scudder Gold Fund -16.77 -20.08
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3
<PAGE>
Letter from the Fund's President
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Dear Shareholders,
In the face of a strong U.S. dollar and low inflation, gold and gold stocks
posted negative performance during Scudder Gold Fund's most recent fiscal year
ended October 31, 2000. Class S shares of the fund's -20.08% total return over
the period reflected the difficult environment for gold, though the Class S
shares outperformed the -27.79% average return of its peers as reported by
Lipper, Inc.
Although gold's long-depressed price levels -- and the resulting strain on
profitability for many gold producers -- have proved frustrating for many in our
market, even a small holding in gold can provide worthwhile "portfolio
insurance": In times of significant inflation, when stocks and bonds have
significantly underperformed, gold -- a hard asset -- has often maintained its
value and outperformed, though past performance doesn't predict what will happen
in the future. As a traditional hedge against inflation, gold investments can
provide an effective means for protecting the purchasing power of long-term
savings. And gold is often viewed as a diversifier because gold's price has not
always moved in tandem with other financial assets.
Scudder Gold Fund's portfolio management team, in deciding which types of
investments to buy and sell, first considers the relative attractiveness of gold
stocks, gold-related investments, and gold bullion, and decides on allocations
for each. Their
4
<PAGE>
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decisions are based on a number of factors, including changes in supply and
demand for gold and broad economic projections. In choosing gold stocks, the
fund's managers look for companies with strong management and highly liquid
securities. They also look closely at the quality of metals mined by a company,
and its production process, balance sheet, and unmined reserves, among other
factors. They prefer companies that offer the potential for sustainable
above-average revenues or earnings growth and whose market value appears
reasonable in light of their business prospects. For more information on Scudder
Gold Fund's performance, portfolio strategy, and outlook, please read the
Portfolio Management Discussion that begins on page 5.
If you'd like more information regarding Scudder Gold Fund or another Scudder
fund, please visit our Web site at www.scudder.com or call 1-800-SCUDDER.
Sincerely,
/s/ Lin Coughlin
Linda C. Coughlin
President
Scudder Gold Fund
5
<PAGE>
Performance Update
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October 31, 2000
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Growth of a $10,000 Investment
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A LINE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA POINTS IN THE TABLE
BELOW.
Scudder Gold Fund -- Class S S&P 500 Index*
90 10000 10000
91 9917 13349
92 9158 14681
93 12777 16874
94 13916 17527
95 13477 22160
96 19906 27498
97 13578 36332
98 9928 44323
99 10489 55707
00 8383 59107
Yearly periods ended October 31
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Fund Index Comparison
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Total Return
Period ended 10/31/2000 Growth of Average
$10,000 Cumulative Annual
--------------------------------------------------------------------------------
Scudder Gold Fund -- Class S
--------------------------------------------------------------------------------
1 year $ 7,992 -20.08% -20.08%
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5 year $ 6,220 -37.80% -9.06%
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10 year $ 8,383 -16.17% -1.75%
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S&P 500 Index*
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1 year $ 10,610 6.10% 6.10%
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5 year $ 26,673 166.73% 21.65%
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10 year $ 59,107 491.07% 19.43%
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6
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Returns and Per Share Information
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Scudder Gold Fund -- Class S
S&PC 500 Index*
Yearly periods ended October 31
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE ILLUSTRATING THE FUND TOTAL
RETURN (%) AND INDEX TOTAL RETURN (%)
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund Total
Return (%) -.82 -7.67 39.53 8.91 -3.16 47.71 -31.79 -26.88 5.65 -20.08
-----------------------------------------------------------------------------------------------------------
Index Total
Return (%) 33.48 9.98 14.94 3.87 26.44 24.09 32.12 21.99 25.68 6.10
-----------------------------------------------------------------------------------------------------------
Net Asset
Value ($) 9.65 8.91 12.27 12.74 11.81 13.64 8.88 6.37 6.73 5.31
-----------------------------------------------------------------------------------------------------------
Income
Dividends ($) -- -- .15 .34 .14 2.80 .53 .14 -- .09
-----------------------------------------------------------------------------------------------------------
Capital Gains
Distributions ($) -- -- -- .31 .40 .58 .07 -- -- --
-----------------------------------------------------------------------------------------------------------
</TABLE>
* The Standard & Poor's 500 Index is a capitalization-weighted index of
500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500
stocks representing all major industries. Index returns assume
reinvestment of dividends and, unlike Fund returns, do not reflect any
fees or expenses.
On October 2, 2000, existing shares of the Fund were redesignated as
Class S shares. In addition, the Fund commenced offering Class AARP
shares. The total return information provided is for the Fund's Class S
shares.
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.
7
<PAGE>
Portfolio Summary
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October 31, 2000
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Diversification
--------------------------------------------------------------------------------
The fund held a modest
cash position at the close
of the period.
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Equity Holdings 92%
Cash Equivalents 8%
--------------------------------------------------------------------------------
100%
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-------------------------------------------------
Quality Distributions
-------------------------------------------------
Tier breakdown of the Fund's common stocks During the period, the
fund continued to focus
on premier and major
established gold
producers with strong
balance sheets and low
production costs.
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Tier I
Premier gold producing companies 72%
Tier II
Major established gold
producers 11%
Tier III
Junior gold producers with
medium cost production 3%
Tier IV Companies with some gold
production on stream or
in startup 5%
Tier V
Primarily exploration
companies with or without
mineral reserves 9%
-------------------------------------------------
100%
-------------------------------------------------
8
<PAGE>
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Ten Largest Equity Holdings
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(68% of Portfolio) The fund continues to
emphasize companies
we feel are well
positioned to
withstand the
current low level of
gold prices.
1. Barrick Gold Corp.
Explorer and producer of gold in North and South America
2. De Beers
Diamond mining
3. Placer Dome, Inc.
Gold, silver and copper mining company
4. Anglo American Platinum Corp.
Producer of platinum
5. Kroondal Platinum Mines, Ltd.
Miner of platinum, palladium and rhodium
6. Newmont Mining Corp.
International gold exploration and mining company
7. Lonmin plc
Miner of platinum, gold and coal
8. Impala Platinum Holdings Ltd.
Platinum, nickel and copper mining
9. Homestake Mining Co.
International gold producer
10. Franco-Nevada Mining Corp., Ltd.
Gold mining company
For more complete details about the Fund's investment portfolio, see page 15. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
9
<PAGE>
Portfolio Management Discussion
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October 31, 2000
Dear Shareholders,
Scudder Gold Fund -- Class S posted a disappointing -20.08% total
return over the most recent fiscal year ended October 31, 2000, as the
price of gold declined from $299.10 to $264.50 during the period. Class
S shares of the fund outperformed the -27.79% return of similar gold
and precious metals funds as tracked by Lipper, Inc., as well as the
-33.31% return of the Salomon/Smith Barney Gold Index, during the
period. Over the 12 months ended October 31, Class S shares of the
fund's net asset value declined from $6.73 to $5.31 per share.
Strong Dollar Negative for Gold
The strong U.S. dollar was the most important factor weighing down the
price of gold during the fund's most recent fiscal year. Gold's weak
performance, in turn, was a strong negative for gold stocks. Continuing
strength in the dollar meant that there was less pressure on the supply
side for higher gold prices since gold producers (though under strain
with gold remaining below $300) could earn additional cash with
favorable currency exchange rates without increasing production. And
any increases in production would, of course, tend to depress already
low price levels. On the demand side, retail buyers in countries such
as India (traditionally a leading consumer market for gold) purchased
significantly less gold during the period because of the strong dollar,
putting additional downward pressure on gold prices.
By the close of the period, many gold stocks were trading at 52-week
lows, and gold dipped below its $270-$300 trading range. Over the
period, gold's trading range was based on the regular buildup and
unwinding of forward sales on commodities exchanges. (In "selling
forward," gold producers sell on the open market gold that will not be
mined for between six months and four years, similar to "short sales"
in the stock market; as with short sales, a forward sale can be
canceled through a "buyback"
10
<PAGE>
transaction. Gold producers use the forward sales to hedge against
falling gold prices and to lock in profits for mining projects.)
Emphasizing Tiers I and II
Scudder Gold Fund seeks maximum return by investing in a portfolio of
primarily gold-related investments. Over the fund's most recent fiscal
year, we continued to focus on Tier I and Tier II gold stocks (see page
8 for a breakdown of the fund's gold-producing companies) -- premier
and major established gold producers with strong balance sheets and low
production costs. We also continued to emphasize producers that we feel
are well positioned to withstand the current low level of gold prices.
Some Encouraging Signs
Though they did not have an immediate impact on the prices of gold and
gold stocks, we were encouraged by several developments in the gold
markets during the period. These include: 1) increasing signs that
central banks are curtailing major gold sales. Large gold sales (or
announcements of future sales) by central banks over the past several
years have repeatedly depressed prices; 2) a number of surprise
announcements of mine closures, which tend to decrease the supply of
gold and support its price; 3) Placer Dome's decision to discontinue
forward sales. Placer, a significant player, has repeatedly held large
short positions in the gold market over the years; and 4) several
important producers announced prospective mergers: Franco Nevada
announced plans to merge with Gold Fields Limited, and Newmont Mining
said that it would merge with Battle Mountain Gold. If they go forward,
these transactions could improve the performance of certain gold stocks
in the short term and lead to a shrinkage in supply and increased
efficiencies in the gold market for the future.
The recent collective effort by the G-7 to weaken the U.S. dollar
versus the euro -- if it succeeds -- could lend support to gold and
gold stock prices. In addition, the noncommercial short position in
gold was 1.9 million
11
<PAGE>
ounces as of the end of October. If the dollar falls significantly, we
look for a covering rally prompted by those holding significant short
positions in gold. Having stated the case for potential upside in gold
and gold stocks, we remain cautious, however. A significant upturn in
inflation or inflation worry would probably have to take place for gold
to rise substantially above its current trading range.
We believe Scudder Gold Fund remains an appropriate investment for
those seeking participation in the world's gold and precious metals
markets. Thank you for investing with Scudder.
Sincerely,
Your Portfolio Management Team
/s/ Joann M. Barry /s/ Robert D. Hardiman
Joann M. Barry Robert D. Hardiman
The opinions expressed are those of the portfolio management team as of
October 31, 2000, and may not actually come to pass.
12
<PAGE>
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Scudder Gold Fund:
A Team Approach to Investing
Scudder Gold Fund is managed by a team of Scudder Kemper Investments,
Inc. (the "Adviser") professionals, each of whom plays 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 offices across the United States and abroad.
The Adviser believes that a team approach benefits fund investors by
bringing together many disciplines and leveraging the firm's extensive
resources.
Lead portfolio manager Joann M. Barry joined the Adviser in 1995 and
assumed responsibility for the fund's day-to-day management and overall
investment strategies in 1999. Ms. Barry has 11 years of investment
industry experience as an analyst covering the energy, transports, and
insurance sectors.
Portfolio manager Robert D. Hardiman joined the Adviser in 1999. Mr.
Hardiman has 27 years of experience as an analyst specializing in the
chemical industry.
13
<PAGE>
Glossary of Investment Terms
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Central Bank A national 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
sufficiently substantial market capitalization to allow large
purchases and sales to occur without causing a significant
move in its market price.
Market The value of a company's outstanding shares of common stock,
Capitalization determined by multiplying the number of shares outstanding by
the share price (shares x price = market capitalization).
Net Asset The price per share of a mutual fund based on the sum of the
Value (NAV) 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.
(Source: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
14
<PAGE>
Investment Portfolio as of October 31, 2000
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<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
----------------------------------------------------------------------------------
<S> <C> <C>
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Short-Term Investments 7.6%
Student Loan Marketing Association, Discount Note, ----------
6.45%**, 11/1/2000 (Cost $6,254,000)................. 6,254,000 6,254,000
----------
Shares
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Common Stocks 92.4%
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Australia 3.6%
Delta Gold Ltd.* (Emerging junior exploration company
with important platinum property in Zimbabwe)........ 400,000 200,736
Newcrest Mining Ltd. (Senior gold producer and
exploration company)................................. 400,000 794,580
Normandy Mining Ltd. (Mining and oil enterprises)....... 4,010,214 1,949,596
Resolute Ltd.* (Exploration and production of gold and
other minerals)...................................... 700,000 47,570
----------
2,992,482
----------
Bolivia 0.2%
Corriente Resources, Inc.* (Mining and processing of
gold, bismuth, tin and tungsten in South America)........ 181,000 142,566
----------
Canada 5.6%
Franco-Nevada Mining Corp., Ltd. (Gold mining
company)............................................. 338,100 3,106,925
Goldcorp, Inc. "A"* (Owner and operator of gold mines).. 200,000 1,201,181
Kinross Gold Corp.* (Gold mining company with
interests in Zimbabwe)............................... 600,000 244,175
Repadre Capital Corp.* (Junior gold royalty company).... 50,000
63,997
----------
4,616,278
----------
Ghana 0.4%
Ranger Minerals Ltd.* (Gold producer and exploration
company in Ghana).................................... 394,238 340,045
----------
Indonesia 2.9%
Freeport-McMoRan Copper & Gold, Inc. "A"* (Mining
company operating in Indonesia)...................... 310,000 2,402,500
----------
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
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Shares Value ($)
----------------------------------------------------------------------------------
Niger 0.2%
Etruscan Resources, Inc.* (Exploration and development
of gold prospect in Niger).............................. 1,040,500 170,742
----------
Peru 0.1%
Compania de Minas Buenaventura S.A. "B" (ADR)
(Mining company)..................................... 5,400 69,525
----------
South Africa 37.0%
Anglo American Platinum Corp. Ltd. (Platinum mining
company)............................................. 145,000 5,654,329
AngloGold Ltd. (Holding company for a group of
companies that mine gold)............................ 28,000 795,770
AngloGold Ltd. (ADR).................................... 124,000 1,782,500
De Beers Centenary Linked Shares (Diamond mining)....... 293,700 8,075,294
Gold Fields Ltd. (Operator of gold mining,
development and exploration)......................... 697,500 2,074,521
Gold Fields Ltd. (ADR).................................. 150,000 445,313
Impala Platinum Holdings Ltd. (Platinum, nickel and
copper mining)....................................... 76,000 3,254,990
Kroondal Platinum Mines Ltd.* (Miner of platinum,
palladium, and rhodium).............................. 1,090,000 4,034,369
Kroondal Platinum Mines Ltd.* (Warrants)................ 450,000 1,055,849
Lonmin plc (Miner of platinum, gold and coal)........... 265,400 3,269,477
----------
30,442,412
----------
United States 3.0%
Piedmont Mining Co.* (Gold mining and development
company in the Carolinas) (b)........................ 1,500,000 135,000
Stillwater Mining Co.* (Mining company)................. 68,181 1,977,249
X-Cal Resources Ltd.* (Gold exploration and mining in
Nevada and British Columbia) (b)..................... 1,993,286 379,424
----------
2,491,673
----------
West Africa 2.3%
IAMGOLD Corp.* (Development and funding of precious
metal mining in West Africa)......................... 1,088,000 1,928,192
----------
Zimbabwe 0.1%
Zimbabwe Platinum Mines Ltd.* (Mining company which
explores for platinum)............................... 248,000 51,857
----------
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Shares Value ($)
----------------------------------------------------------------------------------
International 37.0%
Apex Silver Mines Ltd.* (Developer of silver properties
in South America, Central America and Central Asia).. 48,300 440,738
Barrick Gold Corp. (Explorer and producer of gold in
North and South America)............................. 1,048,800 14,027,700
Battle Mountain Gold Co.* (Gold, silver and copper
mining and processing)............................... 319,000 438,625
Homestake Mining Co. (International gold producer)...... 758,000 3,126,750
Itemus, Inc.* (Gold exploration and development
company with interests in Papua New Guinea,
Venezuela and Indonesia)............................. 283,400 146,955
Newmont Mining Corp. (International gold exploration
and mining company).................................. 285,000 3,865,313
Placer Dome, Inc. (Gold, silver and copper mining
company)............................................. 950,100 7,888,917
Solitario Resources Corp.* (Precious and base metals
exploration company primarily in Argentina and Peru). 462,247 306,445
TVX Gold, Inc.* (Explorer and miner of precious metals
properties).......................................... 140,000 215,031
----------
30,456,474
----------
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Total Common Stocks (Cost $86,957,079) 76,104,746
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Total Investment Portfolio-- 100.0% (Cost $93,211,079) (a) 82,358,746
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</TABLE>
* Non-income producing security.
** Annualized yield at time of purchase; not a coupon rate.
(a) The cost for federal income tax purposes was $100,987,468. At October
31, 2000, net unrealized depreciation for all investment securities
based on tax cost was $18,628,722. This consisted of aggregate gross
unrealized appreciation for all investments in which there was an
excess of value over tax cost of $12,546,558 and aggregate gross
unrealized depreciation for all investment securities in which there
was an excess of tax cost over value of $31,175,280.
(b) Affiliated issuers (see Notes to Consolidated Financial Statements).
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Consolidated Financial Statements
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Consolidated Statement of Assets and Liabilities as of October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
---------------------------------------------------------------------------------------------------
Investments in securities, at value:
Unaffiliated issuers (cost $90,867,515)......................................... $ 81,844,322
Affiliated issuers (cost $2,343,564)............................................ 514,424
----------------
Total investments, at value (cost $93,211,079).................................. 82,358,746
Cash............................................................................ 11,545
Receivable for investments sold................................................. 814,741
Receivable for Fund shares sold................................................. 615,609
Due from Adviser................................................................ 23,800
----------------
Total assets.................................................................... 83,824,441
Liabilities
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
Payable for investments purchased............................................... 895,067
Payable for Fund shares redeemed................................................ 561,417
Accrued Directors' fees and expenses............................................ 54,088
Accrued reorganization costs.................................................... 5,993
Accrued management fee.......................................................... 71,524
Other accrued expenses and payables............................................. 277,501
----------------
Total liabilities............................................................... 1,865,590
---------------------------------------------------------------------------------------------------
Net assets, at value $ 81,958,851
---------------------------------------------------------------------------------------------------
Net Assets
---------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income.................... (26,282)
Net unrealized appreciation (depreciation) on:
Investments................................................................... (10,852,333)
Foreign currency related transactions......................................... 110
Accumulated net realized gain (loss)............................................ (95,377,176)
Paid-in capital................................................................. 188,214,532
---------------------------------------------------------------------------------------------------
Net assets, at value $ 81,958,851
---------------------------------------------------------------------------------------------------
Net Asset Value
---------------------------------------------------------------------------------------------------
Class AARP
NetAsset Value, offering and redemption price per share ($22,191 / 4,185 shares
of capital stock outstanding, $.01 par value, 100,000,000 shares of capital ----------------
stock authorized)............................................................ $ 5.30
----------------
Class S
NetAsset Value, offering and redemption price per share ($81,936,660 /
15,441,851 shares of capital stock outstanding, $.01 par value, 100,000,000 ----------------
shares of capital stock authorized).......................................... $ 5.31
----------------
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
Consolidated Statement of Operations for the year ended October 31, 2000
---------------------------------------------------------------------------------------------------
Investment Income
---------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $84,156)............................ $ 1,637,598
Interest........................................................................ 426,463
----------------
Total Income.................................................................... 2,064,061
----------------
Expenses:
Management fee.................................................................. 974,563
Services to shareholders........................................................ 412,175
Custodian and accounting fees................................................... 92,886
Administrative fee.............................................................. 44,318
Auditing........................................................................ 54,458
Legal........................................................................... 14,308
Directors' fees and expenses.................................................... 78,803
Reports to shareholders......................................................... 42,259
Registration fees............................................................... 35,103
Reorganization fees............................................................. 30,353
Other........................................................................... 9,982
----------------
Total expenses, before expense reductions....................................... 1,789,208
Expense reductions.............................................................. (23,800)
----------------
Total expenses, after expense reductions........................................ 1,765,408
---------------------------------------------------------------------------------------------------
Net investment income (loss) 298,653
---------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
---------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments-- Unaffiliated issuers.............................................. 884,928
Foreign currency related transactions........................................... (39,086)
----------------
845,842
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments..................................................................... (23,658,348)
Foreign currency related transactions........................................... 4,005
----------------
(23,654,343)
---------------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 22,808,501)
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (22,509,848)
---------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Consolidated Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended October 31,
Increase (Decrease) in Net Assets 2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss).................................. $ 298,653 $ 58,939
Net realized gain (loss) on investment transactions........... 845,842 (5,180,473)
Net unrealized appreciation (depreciation) on
investment transactions during the period.................. (23,654,343) 11,324,886
--------------- ----------------
Net increase (decrease) in net assets resulting from
operations.................................................... (22,509,848) 6,203,352
--------------- ----------------
Distributions to shareholders from:
Net investment income -- Class S............................. (1,472,493) --
--------------- ----------------
Fund share transactions:
Proceeds from shares sold..................................... 177,226,990 441,850,053
Reinvestment of distributions................................. 1,377,082 --
Cost of shares redeemed........................................ (188,952,298) (462,160,899)
--------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions............................................... (10,348,226) (20,310,846)
--------------- ----------------
Increase (decrease) in net assets............................. (34,330,567) (14,107,494)
Net assets at beginning of period............................. 116,289,418 130,396,912
Net assets at end of period (including accumulated
distributions in excess of net investment income of
$26,282 and undistributed net investment income of --------------- ----------------
$1,191,886, respectively)................................. $ 81,958,851 $ 116,289,418
--------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
Consolidated Financial Highlights
--------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the financial
statements.
Class AARP
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
2000(a)
-----------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 5.73
----------
-----------------------------------------------------------------------------------
Income (loss) from investment operations:
-----------------------------------------------------------------------------------
Net investment income (loss) (b) .00(c)
-----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment transactions (.43)
----------
-----------------------------------------------------------------------------------
Total from investment operations (.43)
-----------------------------------------------------------------------------------
Less distributions from:
-----------------------------------------------------------------------------------
Net investment income --
-----------------------------------------------------------------------------------
Net asset value, end of period $ 5.30
----------
-----------------------------------------------------------------------------------
Total Return (%) (7.50)**
-----------------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
-----------------------------------------------------------------------------------
Net assets, end of period ($ millions) .02
-----------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 1.66*
-----------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.11)**
-----------------------------------------------------------------------------------
Portfolio turnover rate (%) 15
-----------------------------------------------------------------------------------
</TABLE>
(a) For the period from October 2, 2000 (commencement of sales of Class AARP
shares) to October 31, 2000.
(b) Based on monthly average shares outstanding during the period.
(c) Less than $.005 per share.
* Annualized
** Not annualized
21
<PAGE>
--------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the consolidated
financial statements.
Class S (a)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
2000(c) 1999(c) 1998(d) 1998(e) 1997(e) 1996(e)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 6.73 $ 6.37 $ 6.65 $10.49 $15.34 $12.86
--------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
--------------------------------------------------------------------------------------------------------------
Net investment income (loss) (b) .02 .00 .00 .00 (.08) (.09)
--------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investment transactions (1.35) .36 (.28) (3.70) (2.12) 4.28
-----------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total from investment operations (1.33) .36 (.28) (3.70) (2.20) 4.19
--------------------------------------------------------------------------------------------------------------
Less distributions from:
--------------------------------------------------------------------------------------------------------------
In excess of net investment income (.09) -- -- (.14) (2.39) (1.08)
--------------------------------------------------------------------------------------------------------------
Net realized gains on investment
transactions -- -- -- -- (.26) (.63)
-----------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total distributions (.09) -- -- (.14) (2.65) (1.71)
--------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.31 $ 6.73 $ 6.37 $ 6.65 $10.49 $15.34
-----------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total Return (%) (20.08) 5.65 (4.21)** (35.45) (17.72) 36.91
--------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
--------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 82 116 130 132 164 173
--------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 1.84(f) 2.01 2.13* 1.82 1.60 1.50
--------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 1.81(f) 2.01 2.13* 1.82 1.60 1.50
--------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) .31 .05 (.08)* .04 (.62) (.61)
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 15 91 154* 68 39 30
--------------------------------------------------------------------------------------------------------------
</TABLE>
(a) On October 2, 2000, existing shares of the Fund were redesignated as Class S
shares.
(b) Based on monthly average shares outstanding during the period.
(c) Years ended October 31.
(d) Four months ended October 31, 1998. On September 15, 1998, the Board of
Directors of the Fund changed the fiscal year end from June 30 to October
31.
(e) Years ended June 30.
(f) The ratios of operating expenses excluding costs incurred in connection with
the reorganization before and after expense reductions were 1.76% and 1.76%,
respectively (see Notes to Consolidated Financial Statements).
* Annualized
** Not annualized
22
<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") which is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management investment
company and is organized as a Maryland Corporation.
On October 2, 2000, the Fund commenced offering multiple classes of shares.
Existing shares of the Fund were redesignated as Class S and the Fund commenced
offering Class AARP shares. The two classes of shares provide investors with
different purchase options. Shares of Class AARP are especially designed for
members of AARP. Investment income, realized and unrealized gains and losses,
and certain fund-level expenses and expense reductions, if any, are borne pro
rata on the basis of relative net assets by the holders of both classes except
that each class bears certain expenses unique to that class such as
reorganization expenses (see Note G). Differences in class-level expenses may
result in payment of different per share dividends by class. All shares of the
Fund have equal rights with respect to voting subject to class-specific
arrangements. Effective October 2, 2000, there are no class-specific expenses.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America which require the
use of management estimates. 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. Investments are stated at value determined as of the close
of regular trading on the New York Stock Exchange. 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 ("Nasdaq"), for which there have been sales, are valued at
the most recent sale price reported. If there are no such sales, the value is
the most recent bid quotation. Securities which are not
23
<PAGE>
--------------------------------------------------------------------------------
quoted on Nasdaq but are traded in another over-the-counter market are valued at
the most recent sale price, or if no sale occurred, at the calculated mean
between the most recent bid and asked quotations on such market. If there are no
such bid and asked quotations, the most recent bid quotation 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, silver, platinum and palladium bullion are
valued based on the London Fixing or, if there is no London Fixing available, on
the last spot settlement; coins and precious metals other than gold, silver,
platinum and palladium bullion are valued at the calculated mean between the
most recent bid and asked market quotations or, if there are no such bid and ask
quotations available simultaneously, at the most recent bid quotation provided
by a bona fide market maker at the time of valuation.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, 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 is equal to at least the
principal amount of the repurchase price plus accrued interest.
24
<PAGE>
--------------------------------------------------------------------------------
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 against changes in the exchange rates
relating to foreign currency denominated assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Sales and
purchases of forward contracts having the same settlement date and broker are
offset and any gain (loss) is realized on the date of offset; otherwise, gain
(loss) is realized on settlement date. Realized and unrealized gains and losses
which represent the difference between the value of a forward contract to buy
and a forward contract to sell are included in net realized and unrealized gain
(loss) from foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes and no federal
income tax provision was required.
At October 31, 2000 the Fund had a net tax basis capital loss carryforward of
approximately $87,750,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until October 31,
2005 ($25,115,000), October 31, 2006 ($52,412,000) or October 31, 2007
($10,223,000), the respective expiration dates.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. Net realized gains from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed, and, therefore, will be distributed to shareholders at least
annually.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from accounting principles generally accepted in the United
States of America. These differences primarily relate to investments
25
<PAGE>
--------------------------------------------------------------------------------
in passive foreign investment companies and certain securities sold at a loss.
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.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Certain dividends
from foreign securities may be recorded subsequent to the ex-dividend date as
soon as the Fund is informed of such dividends. Realized gains and losses from
investment transactions are recorded on an identified cost basis.
B. Purchases and Sales
During the year ended October 31, 2000, purchases and sales of investment
securities (excluding short-term investments) aggregated $13,450,813 and
$14,314,013, respectively.
C. Related Parties
As described in Note G, Scudder Kemper Investments, Inc. has initiated a
restructuring program for most of its Scudder no-load, open-end funds. As part
of this reorganization, the Fund adopted a new Investment Management Agreement
and entered into an Administrative Agreement. Both of these agreements were
effective October 2, 2000. The terms of the newly adopted and the pre-existing
agreements are set out below.
Management Agreement. Under the Investment Management Agreement (the
"Agreement") with Scudder Kemper Investments, Inc. ("Scudder Kemper" or the
"Adviser"), 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. The management fee payable under the Agreement is equal to
an annual rate of 1.00% of the Fund's average net assets, computed and accrued
daily and payable monthly.
Effective October 2, 2000, the Fund, as approved by the Fund's Board of
Directors, adopted a new Investment Management Agreement (the "Management
Agreement") with Scudder Kemper. The Management
26
<PAGE>
--------------------------------------------------------------------------------
Agreement is identical to the pre-existing Agreement, except for the dates of
execution and termination and fee rate. The management fee payable under the
Management Agreement is equal to an annual rate of 1.00% of the first
$500,000,000 of average daily net assets and 0.95% of such net assets in excess
of $500,000,000, computed and accrued daily and payable monthly.
Accordingly, for the year ended October 31, 2000, the fees pursuant to the
Agreement and the Management Agreement amounted to $974,563. This was equivalent
to an effective annual rate of 1.00% of the Fund's average daily net assets.
Administrative Fee. Effective October 2, 2000, the Fund, as approved by the
Fund's Board of Directors, adopted an Administrative Agreement (the
"Administrative Agreement") with Scudder Kemper. Under the Administrative
Agreement, the Adviser provides or pays others to provide substantially all of
the administrative services required by the Fund (other than those provided by
Scudder Kemper under its Management Agreement with the Fund, as described above)
in exchange for the payment by the Fund of an administrative services fee (the
"Administrative Fee") of 0.65% of average daily net assets. As of the effective
date of the Administrative Agreement, each service provider will continue to
provide the services that it currently provides to the Fund (i.e., fund
accounting, shareholder services, custody, audit and legal), under the current
arrangements, except that Scudder Kemper will pay these entities for the
provision of their services to the Fund and will pay most other Fund expenses,
including insurance, registration, printing and postage fees. Certain expenses
of the Fund will not be borne by Scudder Kemper under the Administrative
Agreement, such as taxes, brokerage, interest and extraordinary expenses, and
the fees and expenses of the Independent Directors (including the fees and
expenses of their independent counsel). For the period October 2, 2000 through
October 31, 2000, the Administrative Agreement expense charged to the Fund
amounted to $44,318, all of which is unpaid at October 31, 2000.
Service Fees. Scudder Service Corporation ("SSC"), a subsidiary of the Adviser,
is the transfer, dividend-paying and shareholder service agent. Prior to October
2, 2000, the amount charged to the Fund by SSC aggregated $315,760, of which
$79,276 is unpaid at October 31, 2000.
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. Prior to October 2, 2000, the
27
<PAGE>
amount charged to the Fund by STC aggregated $18,226, of which $4,638 is unpaid
at October 31, 2000.
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. Prior to October 2,
2000, the amount charged to the Fund by SFAC aggregated $41,044, of which $3,216
is unpaid at October 31, 2000.
Effective October 2, 2000, the above fees will be paid by the Adviser in
accordance with the Administrative Agreement. Directors' Fees and Expenses. The
Fund pays each Director not affiliated with the Adviser an annual retainer plus
specified amounts for attended board and committee meetings. For the year ended
October 31, 2000, Directors' fees and expenses aggregated $31,206. In addition,
a one-time fee of $47,597 was accrued by Class S prior to October 2, 2000 for
payment to those Directors not affiliated with the Adviser who did not stand for
re-election under the reorganization discussed in Note F. Inasmuch as the
Adviser will also benefit from administrative efficiencies of a consolidated
Board, the Adviser has agreed to bear $23,800 of such costs.
Other Related Parties. Effective October 2, 2000, Scudder Kemper has agreed to
pay a fee to AARP and/or its affiliates in return for advice relating to
investments by AARP members in Class AARP shares of the Fund. This fee is
calculated on a daily basis as a percentage of the combined net assets of the
AARP classes of all funds managed by Scudder Kemper. The fee rates, which
decrease as the aggregate net assets of the AARP classes become larger, are as
follows: 0.07% for the first $6,000,000,000 of net assets, 0.06% for the next
$10,000,000,000 of such net assets and 0.05% of such net assets thereafter.
D. Line of Credit
The Fund and several affiliated Funds (the "Participants") share in a $1 billion
revolving credit facility with Chase Manhattan Bank for temporary or emergency
purposes, including the meeting of redemption requests that otherwise might
require the untimely disposition of securities. The Participants are charged an
annual commitment fee which is allocated, pro rata based upon net assets, among
each of the Participants. Interest is calculated based on the market rates at
the time of borrowing. The Fund may borrow up to a maximum of 33 percent of its
net assets under the agreement.
28
<PAGE>
--------------------------------------------------------------------------------
E. Transactions in Securities of Affiliated Issuers
An affiliated issuer is a company in which the Fund has ownership of at least 5%
of the voting securities. A summary of the Fund's transactions with companies
which are or were affiliates during the year ended October 31, 2000 is as
follows:
<TABLE>
<CAPTION>
Purchases Sales Dividend
Affiliate Cost ($) Proceeds ($) Income ($) Value ($)
--------------------------------- ----------- ------------ ------------ ----------------
<S> <C> <C> <C> <C>
Piedmont Mining Co. -- -- -- 135,000
X-Cal Resources Ltd. -- -- -- 379,424
-- -- -- 514,424
</TABLE>
F. Investing in Emerging Markets and Gold-Related Securities
Investing in gold-related stocks may involve special risks and considerations,
including volatility of gold prices, not typically associated with investing in
a wider diversification of industries. Investing in emerging markets may involve
special risks and considerations not typically associated with investing in the
United States of America. These risks include revaluation of currencies,
inflation, repatriation restrictions on income and capital, and future adverse
political and economic developments. Moreover, securities issued in these
markets may be less liquid, subject to government ownership controls, delayed
settlements and their prices more volatile than those of comparable securities
in the United States of America.
G. Reorganization
In early 2000, Scudder Kemper initiated a restructuring program for most of its
Scudder no-load open-end funds in response to changing industry conditions and
investor needs. The program proposes to streamline the management and operations
of most of the no-load open-end funds Scudder Kemper advises principally through
the liquidation of several small funds, mergers of certain funds with similar
investment objectives, the creation of one Board of Directors/Trustees and the
adoption of an administrative fee covering the provision of most of the services
currently paid for by the affected funds. Costs incurred in connection with this
restructuring initiative are being borne jointly by Scudder Kemper and certain
of the affected funds. These costs, including printing, shareholder meeting
expenses and professional fees, are presented as reorganization expenses in the
Statement of Operations
29
<PAGE>
--------------------------------------------------------------------------------
of the Fund. In addition, after December 29, 2000, Class S shares of the Fund
will generally not be available to new investors.
H. Share Transactions
The following table summarizes shares of capital stock and dollar activity in
the Fund:
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 2000 October 31, 1999
---------------------------------------------------------------
Shares Dollars Shares Dollars
<S> <C> <C> <C> <C>
Shares sold
------------------------------------------------------------------------------------------------------------------------------
Class AARP*........................ 4,636 $ 24,708 -- $ --
Class S**.......................... 28,585,777 177,202,282 68,747,856 441,850,053
--------------- --------------
$ 177,226,990 $ 441,850,053
--------------- --------------
Shares issued to shareholders in reinvestment of distributions
------------------------------------------------------------------------------------------------------------------------------
Class AARP*........................ -- $ -- -- $ --
Class S**.......................... 208,974 1,377,082 -- --
--------------- --------------
$ 1,377,082 $ --
--------------- --------------
Shares redeemed
------------------------------------------------------------------------------------------------------------------------------
Class AARP*........................ (451) $ (2,332) -- $ --
Class S**.......................... (30,622,041) (188,949,966) (71,948,981) (462,160,899)
--------------- ---------------
$ (188,952,298) $ (462,160,899)
--------------- ---------------
Net increase (decrease)
------------------------------------------------------------------------------------------------------------------------------
Class AARP*........................ 4,185 $ 22,376 -- $ --
Class S**.......................... (1,827,290) (10,370,602) (3,201,125) (20,310,846)
--------------- ---------------
$ (10,348,226) $ (20,310,846)
--------------- ---------------
</TABLE>
* For the period from October 2, 2000 (commencement of sales of Class AARP
shares) to October 31, 2000.
** On October 2, 2000, existing shares of the Fund were redesignated as Class S
shares.
30
<PAGE>
Report of Independent Accountants
--------------------------------------------------------------------------------
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 investment portfolio, and the related
consolidated statements of operations and of changes in net assets and
the consolidated financial highlights present fairly, in all material
respects, the financial position of Scudder Gold Fund (the "Fund") at
October 31, 2000, the results of its operations, the changes in its net
assets and the financial highlights for each of the periods indicated
therein, in conformity with accounting principles generally accepted in
the United States of America. 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 auditing standards generally accepted in
the United States of America 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 October
31, 2000 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
Boston, Massachusetts PricewaterhouseCoopers LLP
December 20, 2000
31
<PAGE>
Shareholder Meeting Results (Unaudited)
--------------------------------------------------------------------------------
A Special Meeting of Shareholders (the "Meeting") of Scudder Gold Fund (the
"fund"), a series of Scudder Mutual Funds, Inc., was held on July 13, 2000, at
the office of Scudder Kemper Investments, Inc., Two International Place, Boston,
Massachusetts 02110. At the Meeting the following matters were voted upon by the
shareholders (the resulting votes for each matter are presented below).
1. To elect Directors of Scudder Mutual Funds, Inc.
Number of Votes:
Director For Withheld
--------------------------------------------------------------------------------
Henry P. Becton, Jr. 9,233,760 393,126
Linda C. Coughlin 9,210,984 415,902
Dawn-Marie Driscoll 9,230,219 396,667
Edgar R. Fiedler 9,219,669 407,217
Keith R. Fox 9,233,871 393,015
Joan E. Spero 9,211,175 415,711
Jean Gleason Stromberg 9,221,755 405,131
Jean C. Tempel 9,224,753 402,133
Steven Zaleznick 9,216,751 410,135
--------------------------------------------------------------------------------
2. To ratify the selection of PricewaterhouseCoopers LLP as the independent
accountants for the fund for the fiscal year ending October 31, 2000.
Number of Votes:
Broker
For Against Abstain Non-Votes*
--------------------------------------------------------------------------------
9,271,117 152,416 203,353 0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
* 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.
32
<PAGE>
Officers and Directors
--------------------------------------------------------------------------------
Linda C. Coughlin*
o President and Director
Henry P. Becton, Jr.
o Director; President, WGBH
Educational Foundation
Dawn-Marie Driscoll
o Director; President, Driscoll
Associates; Executive Fellow,
Center for Business Ethics, Bentley
College
Edgar R. Fiedler
o Director; Senior Fellow and
Economic Counsellor, The
Conference Board, Inc.
Keith R. Fox
o Director; General Partner,
The Exeter Group of Funds
Joan E. Spero
o Director; President, The Doris
Duke Charitable Foundation
Jean Gleason Stromberg
o Director; Consultant
Jean C. Tempel
o Director; Managing Director,
First Light Capital, LLC
Steven Zaleznick
o Director; President and
Chief Executive Officer,
AARP Services, Inc.
Joann M. Barry*
o Vice President
Thomas V. Bruns*
o Vice President
William F. Glavin*
o Vice President
James E. Masur*
o Vice President
Howard S. Schneider*
o Vice President
John Millette*
o Vice President and Secretary
Kathryn L. Quirk*
o Vice President and
Assistant Secretary
John R. Hebble*
o Treasurer
Brenda Lyons*
o Assistant Treasurer
Caroline Pearson*
o Assistant Secretary
*Scudder Kemper Investments, Inc.
33
<PAGE>
Investment Products and Services
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Scudder Funds
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Money Market U.S. Growth
Scudder U.S. Treasury Money Fund Value
Scudder Cash Investment Trust Scudder Large Company Value Fund
Scudder Money Market Series -- Scudder Value Fund
Prime Reserve Shares Scudder Small Company Value Fund
Premium Shares
Managed Shares Growth
Scudder Tax Free Money Fund Scudder Classic Growth Fund
Scudder Capital Growth Fund
Tax Free Scudder Large Company Growth Fund
Scudder Medium Term Tax Free Fund Scudder Select 1000 Growth Fund
Scudder Managed Municipal Bonds Scudder Development Fund
Scudder High Yield Tax Free Fund Scudder Small Company Stock Fund
Scudder California Tax Free Fund Scudder 21st Century Growth Fund
Scudder Massachusetts Tax Free Fund
Scudder New York Tax Free Fund Global Equity
Worldwide
U.S. Income Scudder Global Fund
Scudder Short Term Bond Fund Scudder International Fund
Scudder GNMA Fund Scudder Global Discovery Fund
Scudder Income Fund Scudder Emerging Markets Growth Fund
Scudder Corporate Bond Fund Scudder Gold Fund
Scudder High Yield Bond Fund
Regional
Global Income Scudder Greater Europe Growth Fund
Scudder Global Bond Fund Scudder Pacific Opportunities Fund
Scudder Emerging Markets Income Fund Scudder Latin America Fund
The Japan Fund, Inc.
Asset Allocation
Scudder Pathway Conservative Portfolio Industry Sector Funds
Scudder Pathway Balanced Portfolio Scudder Health Care Fund
Scudder Pathway Growth Portfolio Scudder Technology Fund
U.S. Growth and Income
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder Select 500 Fund
Scudder S&P 500 Index Fund
34
<PAGE>
--------------------------------------------------------------------------------
Retirement Programs and Education Accounts
--------------------------------------------------------------------------------
Retirement Programs Education Accounts
Traditional IRA Education IRA
Roth IRA UGMA/UTMA
SEP-IRA IRA for Minors
Inherited IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
--------------------------------------------------------------------------------
Closed-End Funds
--------------------------------------------------------------------------------
The Argentina Fund, Inc. Montgomery Street Income Securities, Inc.
The Brazil Fund, Inc. Scudder Global High Income Fund, Inc.
The Korea Fund, Inc. Scudder New Asia Fund, Inc.
</TABLE>
Scudder funds are offered by prospectus only. For more complete information on
any fund or variable annuity registered in your state, including information
about a fund's objectives, strategies, risks, advisory fees, distribution
charges, and other expenses, please order a free prospectus. Read the prospectus
before investing in any fund to ensure the fund is appropriate for your goals
and risk tolerance. There is no assurance that the objective of any fund will be
achieved, and fund returns and net asset values fluctuate. Shares are redeemable
at current net asset value, which may be more or less than their original cost.
A money market mutual fund investment is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although a
money market mutual fund seeks to preserve the value of your investment at $1
per share, it is possible to lose money by investing in such a fund.
The services and products described should not be considered a solicitation to
buy or an offer to sell a security to any person in any jurisdiction where such
offer, solicitation, purchase, or sale would be unlawful under the securities
laws of such jurisdiction.
Scudder Investor Services, Inc.
35
<PAGE>
Account Management Resources
--------------------------------------------------------------------------------
For shareholders of Scudder funds including those in the AARP Investment Program
Convenient Automatic Investment Plan
ways to invest,
quickly and A convenient investment program in which money is
reliably electronically debited from your bank account monthly
to regularly purchase fund shares and "dollar cost
average" -- buy more shares when the fund's price is
lower and fewer when it's higher, which can reduce
your average purchase price over time.*
Automatic Dividend Transfer
The most timely, reliable, and convenient way to
purchase shares -- use distributions from one Scudder
fund to purchase shares in another, automatically
(accounts with identical registrations or the same
social security or tax identification number).
QuickBuy
Lets you purchase Scudder fund shares electronically,
avoiding potential mailing delays; money for each of
your transactions is electronically debited from a
previously designated bank account.
Payroll Deduction and Direct Deposit
Have all or part of your paycheck -- even government
checks -- invested in up to four Scudder funds at one
time.
* 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- Automated Information Lines
clock electronic
account Scudder Class S Shareholders:
service and Call SAIL(TM) -- 1-800-343-2890
information,
including some AARP Investment Program Shareholders:
transactions Call Easy-Access Line -- 1-800-631-4636
Personalized account information, the ability to
exchange or redeem shares, and information on other
Scudder funds and services via touchtone telephone.
Web Site
Scudder Class S Shareholders --
www.scudder.com
AARP Investment Program Shareholders --
aarp.scudder.com
Personal Investment Organizer: Offering account
information and transactions, interactive worksheets,
prospectuses and applications for all 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.
36
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Those who Automatic Withdrawal Plan
depend on
investment You designate the bank account, determine the
proceeds for schedule (as frequently as once a month) and amount
living expenses of the redemptions, and Scudder does the rest.
can enjoy these
convenient, Distributions Direct
timely, and
reliable Automatically deposits your fund distributions into
automated the bank account you designate within three business
withdrawal days after each distribution is paid.
programs
QuickSell
Provides speedy access to your money by
electronically crediting your redemption proceeds to
the bank account you previously designated.
For more Scudder Class S Shareholders:
information
about these Call a Scudder representative at
services 1-800-SCUDDER
AARP Investment Program Shareholders:
Call an AARP Investment Program representative at
1-800-253-2277
Please address For Scudder Class S Shareholders:
all written
correspondence The Scudder Funds
to PO Box 219669
Kansas City, MO
64121-9669
For AARP Investment Program Shareholders:
AARP Investment Program from Scudder
PO Box 219735
Kansas City, MO
64121-9735
37
<PAGE>
Notes
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<PAGE>
Notes
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<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc. is one of the largest and most experienced
investment management organizations worldwide, managing more than $290 billion
in assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded over 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services 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 Financial Services Group. The Zurich Financial Services 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
Investments(SM)
[LOGO]
AARP Investment
Program from Scudder
PO Box 219735
Kansas City, MO 64121-9735
1-800-253-2277
aarp.scudder.com
Scudder Funds
PO Box 219669
Kansas City, MO 64121-9669
1-800-SCUDDER
www.scudder.com
