[PHOTOGRAPH]
Gabelli
Gold
Fund,
Inc.
ANNUAL REPORT
DECEMBER 31, 1995
<PAGE>
Gabelli Gold Fund, Inc.
One Corporate Center
Rye, New York 10580-1434
Annual Report - 1995
To Our Shareholders:
1995 was a disappointing year for gold investors. Despite improving
fundamentals, the gold price traded for most of the year a few dollars on either
side of $385 per ounce. Largely due to the strength of Wall Street, the larger,
North American gold shares appreciated modestly during 1995, but the gold share
markets in Australia and South Africa actually declined.
For the fourth quarter of 1995 the Fund's net asset value declined by
7.0%. This compares with a fall of 5.6% for the average gold fund monitored by
Lipper Analytical Services, Inc. For the twelve-month period ended December 31,
1995, the Fund appreciated by 3.1% versus the 4.8% decrease in the average gold
fund tracked by Lipper. The Fund's total return from inception on July 11, 1994
through December 31, 1995, was 14.1%, which equates to an average annual return
of 9.3%. On December 31, 1995 our shareholder base was 1,865 and net assets of
the Fund were $14.5 million.
<TABLE>
<CAPTION>
INVESTMENT RESULTS (a)
- ---------------------------------------------------------------------------------------------------------------------------
Quarter
-------------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<C> <C> <C> <C> <C> <C>
1995: Net Asset Value .................... $11.00 $11.96 $12.27 $11.41 $11.41
Total Return ....................... (0.6)% 8.7% 2.6% (7.0)% 3.1%
- ---------------------------------------------------------------------------------------------------------------------------
1994: Net Asset Value .................... -- -- $12.37 $11.07 $11.07
Total Return ....................... -- -- 23.7%(b) (10.5)% 10.7%(b)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Average Annual Returns - December 31, 1995 (a)
----------------------------------------------
1 Year .............................. 3.1%
Life of Fund(b) ..................... 9.3%
- --------------------------------------------------------------------------------
(a) Total returns reflect changes in share price and are net of expenses. Of
course, returns represent past performance and do not guarantee future results.
Investment returns and the principal value of an investment will fluctuate. When
shares are redeemed they may be worth more or less than their original cost.
(b) From commencement of operations on July 11, 1994.
Note: Investing in foreign securities involves risks not ordinarily associated
with investments in domestic issues, including currency fluctuation, economic
and political risks. Investing in gold is considered speculative and is affected
by a variety of world-wide economic, financial and political factors.
Although the gold price rose marginally during the fourth quarter to end
the year at $386.75 per ounce, both the silver and platinum prices fell by more
than 5% during the fourth quarter. The Philadelphia Gold and Silver Index
declined 3.0% and the South African Gold Share Index fell over 10% during the
quarter.
Our Investment Objective
The Fund's objective is to obtain long-term capital appreciation by
investing in the equity securities of foreign and domestic issuers principally
engaged in gold and gold-related activities.
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI GOLD FUND, PHILADELPHIA GOLD & SILVER INDEX
AND THE LIPPER GOLD INDEX
[The following table is represented by a line chart in the printed material.]
Date Gold Fund Philadelphia Index Lipper Gold
---- --------- ------------------ -----------
7/11/94 $10,000 $10,000 $10,000
12/31/94 $11,070 $ 9,940 $10,040
12/31/95 $11,410 $10,994 $ 9,554
Our Approach
We look at a number of company specifics in order to determine which gold
stocks are relatively undervalued. Our primary focus is on capitalization per
ounce of production and, more importantly, on capitalization per ounce of
recoverable reserves. This determines how much gold actually backs every dollar
invested in a gold company. We appreciate that every mining company must replace
the gold that it mines, and we place a heavy emphasis on the quality of
management and their ability to create shareholder wealth. We invest globally
with an emphasis on gold-producing companies.
Global Allocation
The chart at the right presents the Fund's holdings by geographic region
as of December 31, 1995. The geographic allocation will change based on future
global market conditions.
Countries and/or regions or companies represented in the chart and below
may or may not be included in the Fund's portfolio in the future.
HOLDINGS BY GEOGRAPHIC REGION - 12/31/95
[The following table was represented by a pie graph in the printed material.]
South Africa 27.7%
North America 54.0%
Australia 13.1%
South America 2.3%
Cash 1.0%
Europe 1.9%
2
<PAGE>
Commentary
We have commented on a number of occasions about the growing gap between
fabrication demand and mine supply. For example, in our last letter we reported
on supply and demand trends for the first half of 1995 which showed demand up
21% and mine supply unchanged. Last week, Gold Fields Mineral Services released
their preliminary figures for 1995. They estimate that total fabrication demand
rose by 18% to 3,550 tonnes, a record high, while mine supply remained fixed at
2,268 tonnes. The deficit of well over 1,000 tonnes continues to be made good by
producer and central bank sales.
Producer sales (i.e. forward sales) are dependent upon central bank gold
loans, about which there is a paucity of information. However, in late November
the head of the Bank of England's foreign exchange division gave a speech
commenting that the volume of central bank gold lent to the London Market had
more than doubled in the past eighteen months. He also noted that central bank
activity in the market was now almost entirely focused on providing liquidity
for derivatives trading and opined that the capacity of the market to generate
increasing amounts of new metal (gold) may be declining.
We believe these comments are very significant and give credence to the
view that huge and unsustainable borrowing of gold from central banks is filling
the supply gap. At about the same time the lease rate which central banks charge
the borrowing institution shot up to record levels, resulting in the gold price
going into backwardation (when the spot price is higher than the price for
future delivery) for the first time since 1974.
The prime motivation for producers to sell forward is to garner the
`contango', which is the difference between the forward price and the spot
price. The contango can be roughly calculated by subtracting the lease rate from
the interest rate over the period. In the past, the lease rate has averaged
about 1%, but is now closer to 2.5%. In an environment of a flat or falling gold
price, this has been a good strategy for gold companies to follow.
If the ability or willingness of central banks to lend gold declines,
lease rates could rise. Higher lease rates, combined with lower short-term
interest rates, will reduce the contango and, with it, the motive for producers
to sell forward. This would remove a large source of gold supply. Apart from
forward sales by producers, outright sales of gold by central banks have also
been a source of supply. In an environment of higher gold prices, central banks
could turn out to be a source of demand for gold rather than supply.
We believe that the global investment environment in 1996 may be
supportive to increased investment demand for gold. Most major economies are
experiencing slow economic growth with low inflation. Fiscal reflation is
unlikely because governments are under pressure to reduce budget deficits. The
other policy option, monetary easing, will increasingly be used with interest
rates continuing to decline. Lower interest rates reduce the opportunity cost of
owning gold and should result in increased investment demand. The gold price did
not react to these conditions during the fourth quarter but, in early January,
the price has moved ahead and has been testing the critical $400 per ounce
level. Gold equities have responded to this move in the gold price and moved
sharply higher.
We believe that the portfolio is well-positioned to benefit from higher
bullion prices. About 54% of the Fund is invested in North American gold
companies with an emphasis on medium-sized growth companies. About 28% of the
3
<PAGE>
Fund is invested in South Africa in gold companies whose earnings and reserve
life are very sensitive to changes in the gold price and approximately 13% is
invested in Australia.
In each geographic area, we prefer companies which have not hedged their
production. It is now very difficult to build a portfolio of totally unhedged
producers in either North America or Australia. Even in South Africa, some
mining finance houses have undertaken massive hedging programs but, in general,
we have avoided those mines. Of course, any rally in gold equities will be
followed by equity issues of capital hungry North American gold companies. This
generally does not happen in the South African market.
Finally, we expect the industry to continue to consolidate. For example,
Homestake Mining Co., the parent company of our largest Australian holding,
Homestake Australia, recently purchased the remaining shares it did not own.
This is further evidence of the trend of North American companies seeking to
raise their overseas exposure.
Let's Talk Stocks
The following are stock specifics on selected holdings of our Fund's
investments. Favorable EBITDA (earnings before interest, taxes, depreciation and
amortization) prospects do not necessarily translate into higher stock prices,
but they do express a positive trend which we believe will develop over time.
Emperor Mines Limited (EMP. AX - $1.597 - Australian Stock Exchange) owns and
operates a gold mine on Viti Leru which is the largest island in Fiji. Gold has
been mined at this location since the 1930s and, over its life, the mine has
produced approximately 5 million ounces. The company recently increased its
total gold resource by over 30%, to 3.4 million ounces. This compares with
production of about 130,000 ounces per year. Last September, new management took
control of the company and we expect increased capital expenditures which will
raise production and lower costs. Emperor is cheap relative to its reserve base
and does not hedge its gold production.
Euro-Nevada Mining Corporation (EN.TO - $36.447 - Toronto Stock Exchange) is a
sister company of Franco-Nevada and shares the same management. However,
Euro-Nevada only invests in gold royalty properties. The company's flagship
royalty properties are its 4% net smelter return and 5% net profits interest
royalty on Barrick Gold's Meikle Mine in the Carlin Trend of Nevada. The company
has assembled a portfolio of over forty gold royalty properties, of which ten
are in production. Recently, the company purchased two royalties overseas: in
Indonesia, at Mt. Muro, and in Australia, at Cadia Hill. At the end of September
1995, the company had working capital of $110 million and no debt.
GoldCorp Inc. (GA.TO - $11.813 - Toronto Stock Exchange) was created by way of
reorganization at the end of March 1994. The reorganization combined the assets
of GoldCorp, Dickenson, Goldquest and CSA Management. The company has three gold
producing properties and two industrial mineral operations. We believe that the
company has the potential to increase reserves and production at each of the
three gold mines and production should rise from 125,000 ounces of gold in 1994
to well over 200,000 in 1997. The company's major asset, the Red Lake Mine,
which is part of a major producing camp in Canada, should be able to increase
production by 50,000 ounces following a $20 million capital outlay. The company
4
<PAGE>
has a strong balance sheet, with cash and short-term investments of $63 million
and long-term debt of $12 million. GoldCorp is undervalued relative to other
mid-sized producers and we expect the new management team to add significantly
to shareholder value.
Kloof Gold Mining Company Ltd. (KLOFY - $9.438 - NASDAQ) is the fourth largest
gold mine in South Africa with annual production of about 1.6 million ounces and
cash costs of $250 per ounce. The mine is managed by Goldfields of South Africa,
one of the largest mining finance companies in South Africa. The company has
enough reserves to last for forty years mining at the current rate. Assuming the
gold price remains unchanged, Kloof has a current yield of about 5%. Kloof has
some high cost shafts and will benefit substantially from a higher gold price.
Newmont Mining Corporation (NEM - $45.25 - NYSE) is entering an extended period
of high growth in gold production. Currently, Newmont has two producing
properties, namely Carlin, in Nevada, and Yannacocha, in Peru. The former
produces about 1.6 million ounces of gold annually and Yannacocha, of which
Newmont owns 38%, will produce about 400,000 ounces in 1996. Yannacocha is one
example of Newmont's recent overseas exploration success. During 1996, Newmont
will produce gold from two more properties, located in Uzbekistan and Indonesia.
We expect gold production to rise by 25% during the next three years. Continued
good exploration and development news will likely result in Newmont doubling its
production by the end of the decade.
Pegasus Gold Inc. (PGU - $13.919 - AMEX) is a medium-sized gold mining company
based in Spokane, Washington. The Company produces gold from six mines, five of
which are located in the United States and the other in Australia. Annual
production for 1995 totaled about 530,000 ounces and management expects this to
grow to over 725,000 ounces in 1998. This growth will come from the expansion of
existing mines especially at Mt. Todd in Australia, in which the company
increased its ownership in 1995 from 58% to 100%. Pegasus has a number of other
projects under development or evaluation, of which the Pullalli project in Chile
is probably the most interesting. A $150 million capital investment program has
been approved and it is expected that the mine will open in late 1997, producing
at an annual rate of 90,000 ounces per year.
The Pioneer Group Inc. (PIOG - $27.25 - NASDAQ), based in Boston, engages in two
main businesses: asset management and gold mining. The company owns 90% of the
Teberebie gold mine, which is Ghana's second largest mine. In 1995, production
is expected to total 235,000 ounces, rising to over 400,000 ounces in 1998. At
the end of August 1995, reserves at the mine totaled 9.2 million ounces which
would support further mine expansions. Cash costs are about $200 per ounce,
making Teberebie one of the most profitable gold mines in the world. Pioneer
also operates a successful mutual fund business in the United States with $13.3
billion under management at September 30, 1995. The company has also invested in
other natural resource businesses outside the United States. We expect
management to seek a separate stock market listing for the company's gold
assets.
Randgold and Exploration Company (RNGJ.J - $4.046 - Johannesburg Stock Exchange)
is a South African mining and finance company which has interests in gold mining
companies that are listed on the Johannesburg Stock Exchange. The company has
three divisions: the gold division, which provides services for a fee to five
managed mines; the finance division; and the exploration and new business
division. In August, Randgold acquired First Wesgold Mining, and shareholders
voted in a new board of directors. We believe that new management will be able
5
<PAGE>
to materially improve the profitability of the gold mining operations and
realize the value of the exploration properties which are located in West Africa
and South Africa. The Fund also has a holding in Harmony Gold Mining Company,
which is managed by Randgold.
Stillwater Mining Ltd. (PGMS - $19.25 - NASDAQ) is the only U.S. producer of
platinum and palladium, rare precious metals used in many industrial
applications and in the jewelry industry. The largest use for platinum is in
catalytic converters for the auto industry and about half of the supply of
palladium is consumed in the production of electric components for personal
computers and cellular telephones. Historically, the price of platinum has
traded at a premium to the gold price. The Stillwater mine has proven and
probable reserves of 18.0 million ounces of platinum and palladium. This is
equivalent to more than 10 million ounces of gold. The mine life at the current
rate of mining, is over 60 years and the company is currently undertaking an
expansion program which will double production within two years. This will lower
costs and improve profitability. Stillwater went public at the end of 1994 and
raised the necessary funds to finance the mine expansion.
TVX Gold, Inc. (TVX - $7.052 - NYSE) is a mid-sized gold producer with six
operating mines. Its largest mine is located in Chile and is a joint venture
with Placer Dome called La Coipa. Their other mines are located in Brazil,
Canada and the United States. The company has been very active in pursuing a
growth strategy, which includes acquisitions and exploration. In particular,
three new projects have the potential to add significantly to the company's
value. In Canada, TVX has a 32% interest in the exciting Mussellwhite project.
The Pachiatya property in Ecuador and the Kasperske deposit in the Czech
Republic both have tremendous potential. These projects and other development
work that the company is undertaking will probably result in a doubling of
reserves between the end of 1993 and December 1996.
Minimum Initial Investment - $1,000
The Fund's minimum initial investment for both regular and retirement
accounts is $1,000. There are no subsequent minimums. No initial minimum is
required for those establishing an Automatic Investment Plan.
Gabelli U.S. Treasury Money Market Fund
Shareholders of any of the Gabelli Funds may invest in The Gabelli U.S.
Treasury Money Market Fund with an initial investment of $3,000 or more. The
Fund provides checkwriting and exchange privileges. The Fund's expenses are
capped at .30% of average net assets, making it one of the most attractive U.S.
Treasury-only money market funds. With dividends that are exempt from state and
local income taxes in all states, the Fund is an excellent vehicle in which to
store idle cash. An investment in The Gabelli U.S. Treasury Money Market Fund is
neither insured nor guaranteed by the U.S. Government and there can be no
assurance that the Fund will maintain a stable $1 per share net asset value.
Call us at 1-800-GABELLI (1-800-422-3554) for a prospectus which gives a more
complete description of the Fund, including management fees and expenses. Read
it carefully before you invest or send money.
6
<PAGE>
In Conclusion
The Fund's daily net asset value is available in the financial press and
each evening after 6:00 PM (Eastern Time) by calling 1-800-GABELLI
(1-800-422-3554). The Fund's NASDAQ symbol is GOLDX. Please call us during the
day for further information.
We thank you for your confidence in our investing abilities and wish you a
productive and financially rewarding 1996.
Sincerely,
/s/ Caesar Bryan
Caesar Bryan
President and Portfolio Manager
January 31, 1996
- --------------------------------------------------------------------------------
Top Ten Holdings
December 30, 1995
-----------------
Stillwater Mining Ltd. Pioneer Group, Inc.
Randgold and Exploration Company Ltd. Euro-Nevada Mining Corp. Ltd.
Pegasus Gold Inc. Newmont Mining Corporation
Kloof Gold Mining Company Ltd. TVX Gold, Inc.
Gold Corp., Inc. Emperor Mines Ltd.
- --------------------------------------------------------------------------------
NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period of this report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
7
<PAGE>
Gabelli Gold Fund, Inc.
Portfolio of Investments -- December 31, 1995
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 92.34%
METALS AND MINING
AUSTRALIA -- 10.43%
230,000 Climax Mining Ltd.+ ............... $ 199,678 $ 211,902
250,000 Emperor Mines Ltd.+ ............... 298,691 399,363
102,000 Mount Edon Gold Mines Ltd. ........ 233,853 208,412
46,700 Newcrest Mining Limited ........... 224,692 196,391
80,000 Ranger Minerals N.L.+ ............. 235,400 169,404
140,000 Resolute Samantha Ltd. ............ 279,858 296,457
100,000 Rhodes Mining N.L.+ ............... 15,897 8,730
36,000 Saint Barbara Mines Ltd. .......... 39,677 22,201
---------- ----------
1,527,746 1,512,860
---------- ----------
EUROPE -- 1.90%
270,100 Glencar Explorations plc+ ......... 173,765 276,064
---------- ----------
NORTH AMERICA -- 50.99%
35,000 Colossal Resources
Company+ ........................ 113,288 192,308
87,000 Dayton Mining Corporation+ ........ 273,319 366,484
150,000 East Rand Proprietary Mines
-- Unsponsored ADR+ ............. 105,000 75,000
12,800 Euro-Nevada Mining
Corporation ..................... 328,855 466,520
15,000 FirstMiss Gold Inc.+ .............. 292,500 333,750
6,750 Franco-Nevada Mining
Corporation ..................... 371,603 394,368
250,000 Geddes Resources Limited+ ......... 297,794 238,095
44,800 Goldcorp Inc. Cl. A+ .............. 232,748 529,231
94,200 Guyanor Resources SA+ ............. 142,317 234,637
76,000 International Gold Resources
Corporation+ .................... 236,653 200,440
35,000 Kinross Gold Corporation+ ......... 187,760 272,436
40,000 Miramar Mining
Corporation+ .................... 177,877 197,802
10,000 Newmont Mining
Corporation ..................... 372,000 452,500
51,000 North American
Palladium Ltd.+ ................. 298,995 312,375
40,000 Pegasus Gold Inc.+ ................ 523,140 556,777
19,200 Pioneer Group, Inc. ............... 418,779 523,200
16,300 Placer Dome Inc. .................. 313,015 393,238
44,250 Stillwater Mining Ltd. (a)(b)+ .... 306,500 851,813
15,000 Stillwater Mining Ltd.+ ........... 195,000 288,750
64,000 TVXGold, Inc.+ .................... 413,574 451,282
400,000 Venoro Gold Corp. - A+ ............ 197,059 67,399
---------- ----------
5,797,776 7,398,405
---------- ----------
SOUTH AFRICA -- 26.76%
180,000 Deelkrall Gold ADR+ ............... 332,548 143,190
27,500 Durban Roodepoort
Deep, Ltd.+ ..................... 298,500 237,589
90,000 Grootvlei Proprietary Mines Ltd. .. 258,252 197,505
20,000 Harmony Gold Mining
Ltd. ADR ........................ 160,925 181,048
58,000 Kloof Gold Mining
Company Ltd. .................... 750,382 547,375
305,000 Lebowa Platinum Mines
Limited+ ........................ 354,700 253,051
20,000 Leslie Gold Mines Ltd. ADR ........ 180,475 101,496
80,100 Loraine Gold Mines Ltd. ADR+ ...... 362,363 230,712
367,750 Northam Platinum Limited+ ......... 452,320 272,333
40,000 Randfontein Estates Gold
Mining Company Ltd. ADR ......... 357,500 257,856
203,547 Randgold and Exploration
Company Ltd.+ ................... 585,331 823,455
20,407 Rustenberg Platinum
Holdings Ltd. ................... 496,204 335,877
56,700 Saint Helena Gold Mines Ltd. ...... 516,131 301,219
---------- ----------
5,105,631 3,882,706
---------- ----------
SOUTH AMERICA -- 2.26%
50,826 Cia De Minas
Buenaventura SA ................. 172,946 328,810
---------- ----------
TOTAL
COMMON STOCKS ................... 12,777,864 13,398,845
---------- ----------
PREFERRED STOCKS -- 0.66%
SOUTH AFRICA
11,000 Durban Roodepoort Deep,
Ltd. Pfd. ....................... 73,519 96,544
---------- ----------
TOTAL PREFERRED STOCKS ............ 73,519 96,544
---------- ----------
WARRANTS & OPTIONS
AUSTRALIA -- 0.36%
150,000 Lone Star Exploration+ ............ 35,149 52,382
---------- ----------
SOUTH AFRICA -- 0.28%
11,000 Durban Roodepoort Deep,
Ltd. Options+ ................... 16,940 36,630
19,750 Northam Platinum Limited+ ......... 2,497 3,521
---------- ----------
19,437 40,151
---------- ----------
TOTAL WARRANTS
& OPTIONS ....................... 54,586 92,533
---------- ----------
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Gabelli Gold Fund, Inc.
Portfolio of Investments -- December 31, 1995 (Continued)
================================================================================
Principal Market
Amount Cost Value
------ ---- -----
CONVERTIBLE CORPORATE BONDS -- 5.23%
AUSTRALIA -- 2.28%
$350,000 Golden Shamrock Mine
Limited Sub. Deb. Cv.
7.50%, 5/3/00 ................... $ 350,000 $ 330,750
---------- ----------
NORTH AMERICA -- 2.95%
200,000 Atlas Corporation Sub. Deb. Cv ....
7.00%, 10/25/00(d) .............. 200,000 200,000
200,000 Bema Gold Corporation Sub. ........
Deb. Cv. 7.50%, 2/28/00(a) ...... 200,000 228,000
---------- ----------
TOTAL CONVERTIBLE
CORPORATE BONDS ................. 750,000 758,750
---------- ----------
U.S. GOVERNMENT
OBLIGATIONS -- 1.38%
200,000 U.S. Treasury Bills, 4.60%,
Due 01/11/96(c) ................. 199,741 199,741
---------- ----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS ..................... 199,741 199,741
---------- ----------
TOTAL
INVESTMENTS -- 100.25% .......... $13,855,710 $14,546,413
===========
Liabilities in Excess of
Other Assets --0.25% ............ (36,218)
-----------
NET ASSETS -- 100.00% ............. $14,510,195
(1,272,161 shares outstanding) ===========
Net Asset Value and Redemption
Price Per Share ................. $11.41
======
- ----------
(a) Security is fair valued pursuant to procedures established by the Board of
Directors
(b) Security restricted as to resale. This investment was acquired on September
14, 1994 and represents 5.87% of net assets at December 31, 1995.
(c) Interest rate represents annualized yield on date of purchase.
(d) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1995, Rule 144A securities amounted to $200,000 or 1.4% of net assets.
ADR-- American Depositary Receipt
+ -- Non-income producing security
* For Federal income tax purposes:
Aggregate cost $13,855,710
===========
Gross unrealized appreciation $ 2,597,828
Gross unrealized depreciation (1,907,125)
-----------
Net unrealized appreciation $ 690,703
===========
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Gabelli Gold Fund, Inc.
Statement of Assets and Liabilities
December 31, 1995
================================================================================
Assets:
Investments in securities, at value
(Cost $13,855,710) ..................................... $ 14,546,413
Dividends and interest receivable ....................... 30,846
Other assets ............................................ 26,238
Deferred organizational expenses ........................ 64,843
------------
Total assets .......................................... 14,668,340
------------
Liabilities:
Payable to advisor ...................................... 12,721
Payable for distribution fees ........................... 6,085
Payable for Fund shares redeemed ........................ 110,706
Due to custodian ........................................ 25,738
Other accrued expenses .................................. 2,895
------------
Total liabilities ..................................... 158,145
------------
Net assets (applicable to 1,272,161
shares outstanding) ................................. $ 14,510,195
============
Net asset value, offering price and
redemption price per share .......................... $ 11.41
============
Net Assets Consist of:
Capital Stock, at par value ............................. $ 1,272
Additional paid-in capital .............................. 14,127,206
Accumulated net realized loss on investments
and foreign currency transactions ..................... (308,885)
Net unrealized appreciation on investments
and other assets and liabilities
denominated in foreign currencies ..................... 690,602
------------
Net assets ............................................ $ 14,510,195
============
Statement of Operations for the
Year Ended December 31, 1995
================================================================================
Income:
Dividends (net of foreign taxes of $27,689) ................ $ 147,849
Interest ................................................... 48,457
---------
Total income ............................................. 196,306
---------
Expenses:
Investment advisory fees ................................... 174,090
Legal and audit fees ....................................... 44,807
Distribution expenses ...................................... 43,519
Transfer and shareholder servicing agent ................... 40,238
Printing and mailing ....................................... 24,007
Amortization of organization expenses ...................... 18,190
Registration fees .......................................... 17,100
Custodian fees and expenses ................................ 14,428
Directors' fees and expenses ............................... 12,000
Miscellaneous .............................................. 3,450
---------
Total expenses ........................................... 391,829
---------
Investment loss - net ...................................... (195,523)
---------
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions:
Net realized loss on investments and
foreign currency transactions ............................ (299,054)
Net change in unrealized appreciation on
investments and other assets and liabilities
denominated in foreign currencies ........................ 703,796
---------
Net gain on investments .................................. 404,742
---------
Net increase in net assets resulting from
operations ............................................. $ 209,219
=========
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
====================================================================================================================================
July 11, 1994
(Commencement of Operations)
Year Ended through
December 31, 1995 December 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (decrease) in Net Assets:
Investment loss - net .......................................................... $ (195,523) $ (9,400)
Net realized loss on investments and foreign currency transactions ............. (299,054) (6,574)
Net change in unrealized appreciation (depreciation) on investments
and other assets and liabilities denominated in foreign currencies .......... 703,796 (13,193)
------------ ------------
Net increase (decrease) in net assets resulting from operations .............. 209,219 (29,167)
Share transactions -- net ...................................................... (3,333,607) 17,563,750
------------ ------------
Net increase (decrease) in net assets ........................................ (3,124,388) 17,534,583
Net Assets:
Beginning of period ............................................................ 17,634,583 100,000
------------ ------------
End of period .................................................................. $ 14,510,195 $ 17,634,583
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Gabelli Gold Fund, Inc.
Notes to Financial Statements
================================================================================
1. Significant Accounting Policies. The Gabelli Gold Fund, Inc. (the "Fund") was
incorporated in Maryland on May 13, 1994. The Fund is a no-load, open-end,
diversified management investment company whose objective is long-term capital
appreciation. Prior to July 11, 1994 (commencement of operations), the Fund had
no operations other than the sale of 10,000 shares of common stock at $10.00 per
share, to Gabelli Funds, Inc., the Fund's advisor, on June 14, 1994. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund.
Security Valuation. Portfolio securities listed or traded on the New York or
American Stock Exchanges, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") or traded on foreign exchanges are
valued at the last sale price on that exchange (if there were no sales that day,
the security is valued at the average of the bid and asked price). All other
portfolio securities for which over-the counter market quotations are readily
available are valued at the latest average of the bid and asked prices. When
market quotations are not readily available, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the Fund's Directors. Short-term debt
securities with remaining maturities of 60 days or less are valued at amortized
cost, unless the Directors determine such does not reflect the securities' fair
value, in which case these securities will be valued at their fair value as
determined by the Directors. Options are valued at the last price on the
exchange on which they are listed, unless no sales of such options have taken
place that day, in which case they will be valued at the mean between their
closing bid and asked prices.
Foreign Currency Transactions. The books and records of the Fund are maintained
in U.S. dollars as follows:
(i) market value of investment securities and other assets and liabilities are
translated at the exchange rate on the valuation date.
(ii) purchases and sales of investment securities, income and expenses are
translated at the exchange rate prevailing on the respective date of such
transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments. Net
realized and unrealized foreign exchange gains and losses which arise from
changes in exchange rates involving assets and liabilities other than
investments in securities were immaterial for the year ended December 31, 1995.
Forward Foreign Currency Contracts. The Fund may hold currencies to meet
settlement requirements for foreign securities and may engage in currency
exchange transactions to hedge against changes in exchange rates. Forward
foreign currency contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded by the Fund as an
unrealized gain or loss. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
currency contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts.
11
<PAGE>
Gabelli Gold Fund, Inc.
Notes to Financial Statements (Continued)
================================================================================
At December 31, 1995 the Fund had no forward foreign currency contracts
outstanding.
Security Transactions and Investment Income. Security transactions are accounted
for on the dates the securities are purchased or sold (the trade dates), with
realized gain and loss on investments determined by using specific
identification as the cost method. Interest income (including amortization of
premium and discount) is recorded as earned. Dividend income and dividend and
capital gain distributions to shareholders are recorded on the ex-dividend date.
Federal Income Taxes. The Fund has qualified and intends to continue to qualify
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986 and distribute all of its taxable income and capital gains, if any,
to its shareholders. Therefore, no Federal income tax provision is required.
Dividends and interest from non-U.S. sources received by the Fund are generally
subject to non-U.S. withholding taxes at rates ranging to 30%. Such withholding
taxes may be reduced or eliminated under the terms of applicable U.S. income tax
treaties, and the Fund intends to undertake any procedural steps required to
claim the benefits of such treaties. If more than 50% in value of the Fund's
total assets at the close of any taxable year consists of stocks or securities
of non-U.S. corporations, the Fund is permitted and may elect to treat any
non-U.S. taxes paid by it as paid by its shareholders.
The Fund has a net capital loss carryforward for Federal income tax purposes of
$314,698 at December 31, 1995. This loss carryforward is available to reduce
future distributions of net capital gains to shareholders. $6,761 of the loss
carryforward is available through 2002; $307,937 is available through 2003. The
Fund's net investment loss of $195,523 less $3,257 representing short-term
capital gains attributable to foreign currency transactions was charged against
additional paid-in capital as the loss cannot be carried forward for Federal
income tax purposes.
2. Capital Stock Transactions. The Articles of Incorporation, dated May 13,
1994, permit the Fund to issue 1,000,000,000 shares (par value $0.001) of common
stock. Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
July 11, 1994
(Commencement of Operations)
Year ended December 31, 1995 through December 31, 1994
---------------------------- -------------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold .............................. 2,241,792 $25,680,073 2,231,306 $25,119,891
Shares redeemed .......................... (2,563,349) (29,013,680) (647,588) (7,556,141)
--------- ----------- --------- -----------
Share transactions - net ................ (321,557) $(3,333,607) 1,583,718 $17,563,750
========= =========== ========= ===========
</TABLE>
3. Purchases and Sales of Securities. Purchases and sales of securities for the
year ended December 31, 1995, other than U.S. government obligations and
short-term securities, aggregated $6,285,052 and $8,042,374 respectively.
4. Investment Advisory Contract. The Fund employs Gabelli Funds, Inc. (the
"Advisor") to provide a continuous investment program for the Fund's portfolio,
provide all facilities and personnel, including officers, required for its
administrative management, and to pay the compensation of all officers and
Directors of the Fund who are affiliated with the Advisor. As compensation for
12
<PAGE>
Gabelli Gold Fund, Inc.
Notes to Financial Statements (Continued)
================================================================================
the services rendered and related expenses borne by the Advisor, the Fund pays
the Advisor a fee, computed and accrued daily and payable monthly, equal to
1.00% per annum of the Fund's average daily net assets. The Advisor is obligated
to reimburse the Fund in the event the Fund's expenses exceed the most
restrictive expense ratio limitation imposed by any state, currently believed to
be 2.5% of the first $30 million, 2% of the next $70 million and 1.5% of the
excess over $100 million of the Fund's average daily net assets (including
taxes, interest, distribution expenses and extraordinary items). No such
reimbursement was required during 1995.
5. Organization Expenses. The organization and start-up expenses of the Fund are
being amortized on a straight-line basis over a period of 60 months. The Advisor
has agreed that in the event that any of the initial 10,000 shares it owns are
redeemed during the period of amortization of the Fund's organization and
start-up expenses, the redemption proceeds will be reduced by any such
unamortized organization expenses in the same proportion as the number of shares
redeemed to the number of initial shares outstanding at the time of redemption.
6. Distribution Plan. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") under Section 12(b) of the Investment Company Act of 1940 and
Rule 12b-1 thereunder under which the Fund pays Gabelli & Company, Inc., the
distributor and an affiliate of the Advisor, an annual rate of up to 0.25% of
average net assets for the costs and expenses in connection with distributing
the Fund's shares. For the year ended December 31, 1995, the Fund has incurred
distribution costs of $43,519. The Board of Directors has approved that
Distribution costs incurred by Gabelli & Company, Inc., totalling $263,793 which
are in excess of the .25% limitation continue to be carried forward for possible
reimbursement by the Fund in future periods, subject to such limitation.
Financial Highlights
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
July 11, 1994
Year Ended (Commencement of Operations)
December 31, 1995 through December 31, 1994
----------------- -------------------------
<S> <C> <C>
Operating Performance:
Net Asset Value, Beginning of Period ..................................... $ 11.07 $ 10.00
Increase from Investment Operations:
Net investment loss .................................................... (0.15) 0.00
Net realized and unrealized gain on securities ......................... 0.49 1.07(a)
---------- ----------
Total from investment operations ....................................... 0.34 1.07
---------- ----------
Net Asset Value, End of Period ........................................... $ 11.41 $ 11.07
========== ==========
Total Return ........................................................... 3.07% 10.70%
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands) ............................... $ 14,510 $ 17,634
Ratio of Expenses to Average Net Assets ................................ 2.25% 2.04%(b)
Ratio of Net Investment Loss to Average Net Assets ..................... (1.12)% (0.26)%(b)
Portfolio Turnover Rate ................................................ 38% 12%
</TABLE>
- -----------
(a) Includes the effect of realized gains prior to significant increases in
shares outstanding.
(b) Annualized.
13
<PAGE>
Gabelli Gold Fund, Inc.
Report of Ernst & Young LLP, Independent Auditors
================================================================================
Shareholders and Board of Directors
Gabelli Gold Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Gabelli Gold Fund, Inc. as of December 31,
1995, and the related statement of operations for the year then ended, and the
statement of changes in net assets and the financial highlights for each of the
two years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Gabelli Gold Fund, Inc. at December 31, 1995, the results of its operations for
the year then ended, and the changes in its net assets and the financial
highlights for each of the two years in the period then ended, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
January 24, 1996
New York, New York
14
<PAGE>
<PAGE>
Gabelli Family of Funds
Distributed by Gabelli & Company, Inc.
One Corporate Center, Rye, NY 10580-1435
Gabelli Asset Fund-------------------------------
Invests in a diversified portfolio of companies
selling below their private market value. The
Fund's primary objective is to seek growth of
capital. (No-load)
Portfolio Manager: Mario J. Gabelli, CFA
Gabelli Growth Fund-------------------------------
Invests in a diversified portfolio of common
stocks that have favorable, yet undervalued,
prospects for earnings growth. The Fund's primary
objective is to seek capital appreciation by
employing an earnings-driven investment approach.
(No-load)
Portfolio Manager: Howard F. Ward, CFA
Gabelli Value Fund-------------------------------
Invests in a concentrated porfolio of securities
of companies which are selling below their private
market value. The Fund's primary objective is
long-term capital appreciation. $250 initial
minimum for IRAs.
Porfolio Manager: Mario J. Gabelli, CFA
Max. Sales charge: 5 1/2%
Gabelli Small Cap Growth Fund--------------------
Invests primarily in equity securities of smaller
companies (companies with a total market
capitalization of less than $500 million) which are
believed likely to have rapid gowth in revenues
and earnings. The Fund's primary objective is to
seek capital appreciation.
Porfolio Manager: Mario J. Gabelli, CFA
Max Sales charge: 4 1/2%
Gabelli Equity Income Fund-------------------------
Invests primarily in a portfolio of income
producing equity securities. Pays quarterly
dividends. The Fund's primary objective is to seek
a high level of total return.
Portfolio Manager: Mario J. Gabelli, CFA
Max. Sales charge: 4 1/2%
Gabelli's Westwood Funds------------------------
Three investment portfolios, designed to pursue a
variety of investment objectives: Equity Fund
seeks capital appreciation, Balanced Fund seeks
income and growth, and Intermediate Bond Fund seeks
current income. (No-load)
Portfolio Managers: Susan Byrne & Pat Fraze
Gabelli Global Series-------------------------------
Gabelli Global Telecommunications Fund
Invests in telecommunications companies throughout
the world. Targets undervalued companies with
strong earnings per share and cash flow dynamics.
The Fund's primary objective is to seek capital
appreciation. (No-load)
Team Manager: Mario J. Gabelli, CFA
Gabelli Global Convertible Securities Fund
Invests principally in bonds and preferred stocks
which are convertible into common stock of foreign
and domestic companies. The Fund's primary
objective is to seek a high level total return
through a combination of current income and
capital appreciation. (No-load)
Portfolio Manager: Hart Woodson
Gabelli Global Interactive Couch Potato(R) Fund
Invests in companies involved in communications,
creativity and copyright throughout the world. The
Fund will also invest in companies participating
in emerging technological advance in interactive
services and products. The Fund's primary
objective is to seek capital appreciation.
(No-load)
Portfolio Manager: Mario J. Gabelli, CFA
Gabelli Gold Fund--------------------------------
Invests in a global portfolio of equity securities
of gold mining and related companies. The Fund's
primary objective is to seek capital appreciation.
Investment in gold stocks is considered
speculative and is affected by a variey of
worldwide economic, financial and political factors.
(No-load)
Portfolio Manager: Caesar Bryan
Gabelli International Growth Fund-------------------
Invests in a diversified portfolio of equity
securities of companies outside of the U.S. Seeks
to achieve international diversification and
capital appreciation, and to serve as a complement
to a domestic investment portfolio. (No-load)
Portfolio Manager: Caesar Bryan
The five funds above invest in foreign securities
which involves risks not ordinarily associated
with investments in domestic issues, including
currency fluctuation, economic and political
risks.
Gabelli U. S. Treasury Money Market Fund-----------
Invests exclusively in short-term U.S. Treasury
securities. The Fund's primary objective is to
provide high current income consistent with the
preservation of principal and liquidity. Features
low expenses, free checkwriting, telephone
exchange and redemption priveleges.
Portfolio Manager: Ronald Eager.
To request a prospectus, call 1-800-GABELLI (1-800-422-3554)
Or vist our internet homepage at: http://www.gabelli.com
The prospectus(es) contain more complete information, including fees
and expenses, and should be read carefully prior to investing.
<PAGE>
Gabelli Gold Fund, Inc.
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
fax: 1-914-921-5118
http://www.gabelli.com
e-mail: [email protected]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
BOARD OF DIRECTORS
Mario J. Gabelli, CFA
Chairman and
Chief Investment Officer
Gabelli Funds, Inc.
E. Val Cerutti
Chief Executive Officer
Cerutti Consultants, Inc.
Anthony J. Colavita
Attorney-at-Law
Anthony J. Colavita, P.C.
Karl Otto Pohl
Former President
Deutsche Bundesbank
Werner J. Roeder, MD
Director of Surgery
Lawrence Hospital
Anthonie C. van Ekris
Managing Director
BALMAC International, Inc.
Daniel E. Zucchi
Senior Vice President
Hearst Magazines
OFFICERS
Caesar Bryan
President and
Portfolio Manager
James E. McKee
Secretary
Bruce N. Alpert
Vice President and Treasurer
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Willkie Farr & Gallagher
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of
Gabelli Gold Fund, Inc. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
