GABELLI GOLD FUND, INC.
SEMI-ANNUAL REPORT - JUNE 30, 1997
[PICTURE]
CAESAR BRYAN
TO OUR SHAREHOLDERS:
The second quarter of 1997 has been extremely disappointing for gold
equity investors. A number of factors contributed to this poor performance.
First and most important, the gold price experienced slow but persistent price
erosion from $351 per ounce at the end of March to $334 per ounce at the end of
June. Secondly, the confidence of gold equity investors has been badly shaken by
a number of fraudulent discoveries, the largest of which concerned Bre-X.
For the second quarter ended June 30, 1997, the Gabelli Gold Fund's net
asset value declined 17.2%. The Lipper Analytical Services Gold Fund Index, XAU
Index of large North American gold companies, and Johannesburg Index of South
African gold companies declined by 12.2%, 8.2% and 20.3%, respectively, over the
same period. Each index is an unmanaged indicator of stock market performance.
The Fund is down 20.5% year-to-date. The Lipper Gold Fund Index, XAU Index and
Johannesburg Index declined 19.2%, 18.1% and 33.9%, respectively, over the same
six month period. Since inception on July 11, 1994 through June 30, 1997, the
Fund has a total return of -2.1%, which equates to an average annual return of
- -0.7%.
OUR INVESTMENT OBJECTIVE
The Fund's objective is to obtain long-term capital appreciation by
investing in equity securities of foreign and domestic issuers principally
engaged in gold and gold-related activities.
INVESTMENT RESULTS (a)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUARTER
------------------------------------------
1ST 2ND 3RD 4TH YEAR
<S> <C> <C> <C> <C> <C>
1997: Net Asset Value $11.83 $9.79 -- -- --
Total Return (4.0)% (17.2)% -- -- --
- --------------------------------------------------------------------------------------------------------------------------
1996: Net Asset Value $14.00 $13.40 $13.46 $12.32 $12.32
Total Return 22.7% (4.3)% 0.4% (8.5)% 8.0%
- --------------------------------------------------------------------------------------------------------------------------
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 - JUNE 30, 1997 (A)
- ------------------------------------------
1 Year ........................... (20.5)%
Life of Fund(b) .................. (0.7)%
(a) Total returns and average annual 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.
- --------------------------------------------------------------------------------
<PAGE>
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, so 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.
[THE FOLLOWING TABLE REPRESENTS A TABLE IN THE PRINTED PIECE]
NORTH AMERICA ......... 64.0%
SOUTH AFRICA .......... 22.0%
AUSTRALIA ............. 9.0%
OTHER ................. 5.0%
THE PORTFOLIO
GLOBAL ALLOCATION
The accompanying chart presents the Fund's holdings by geographic region
as of June 30, 1997. The geographic allocation will change based on current
global market conditions. Countries and/or regions represented in the chart and
below may or may not be included in the Fund's future portfolio.
COMMENTARY
Over the past few years, the gold market has been subjected to a constant
stream of news stories highlighting either central bank gold sales or rumors of
central bank sales. This kept investors away from gold as an asset class and
encouraged mining companies to sell their future production forward in order to
lock in the higher price available through the contango. Recently, speculators
have been selling large amounts of borrowed gold in the expectation of being
able to buy it back at a lower price.
Many central banks have questioned the need to own gold as a reserve asset
largely because gold produces no income. Central banks have monitored their gold
reserves in two ways, either by anticipated sales such as those undertaken by
the Australian, Belgian and Dutch central banks or by lending the gold to banks
for a fee called the gold lease rate. However, as inflation declines and
interest rates fall, the income loss is reduced. As it turns out, the major
reserve currency, the dollar, has relatively high short-term interest rates
(5.1%) compared to either Germany (3.0%) or Japan (0.7%).
Over the past month or so, there have been some signs that official
hostility towards gold has eased. First, the Bundesbank did not agree to the
German government's proposal that Germany's gold reserves be revalued. Secondly,
a senior official at the Bank of France said European central banks now feel
there is no longer an advantage in selling more gold.
Lastly, the Japanese Prime Minister, in response to a question about
Japan's foreign exchange reserves, said that exchange rate instability might
encourage Japan to sell some of her holdings of U.S. Treasury securities and buy
gold. Japan and other Far Eastern countries have a very low percentage of their
reserves in gold. Although these actions and comments appear positive, the gold
price continues to decline.
We believe that speculators, acting on the bark of fear of more central
bank sales, have been actively selling borrowed gold. Indeed, it is probably
this type of activity that caused the sharp fall in the gold price at the end of
the quarter. In the face of continued very strong demand for gold from
fabricators, we believe these short sellers will need to add to their positions
to keep the gold price depressed.
2
<PAGE>
Gold equities have been hit by both a poor gold price and the aftermath of
the Bre-X fraud. Not content with just one massive fraud, the gold equity market
was then hit by two others in short order. Although the Gabelli Gold Fund did
not own any of these companies, the fall out has been severe, not only for
exploration stocks but also for the mid-sized producers that the Fund owns. In
the current gold environment, South African gold producers with higher costs
have been very poor performers.
A number of factors give cause for optimism. The gold price is now
approaching the low established in 1993, which preceded a rally to $400 per
ounce. Sentiment is at record lows with MARKET VANE'S bullish consensus at 21%,
well below the reading of 36% when gold bottomed in early 1993.
Gold stocks are cheap relative to their history. North American gold
stocks, represented by the XAU Index, are trading on a market capitalization per
ounce of annual production at a level last reached in early 1993, which preceded
the rally in gold shares.
The portfolio contains a number of mid-sized producers that have
interesting development projects and current production to provide cash flow.
The Fund's South African stocks provide the portfolio with considerable leverage
in a gold price rally. Finally, about twelve percent of the portfolio is
invested in platinum producing stocks. These continue to benefit from the run up
in the platinum and palladium price resulting from the supply shortage.
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Fund.
Favorable earnings prospects do not necessarily translate into higher stock
prices, but they do express a positive trend which we believe will develop over
time.
STILLWATER MINING LTD. (PGMS - $21.4375 - NASDAQ) is the only U.S. producer of
platinum and palladium, which are rare precious metals used in many industrial
applications and the jewelry industry. The largest use for platinum is in
catalytic converters for the auto industry, while about half of the supply of
palladium is consumed in the production of electric components for personal
computers and cellular telephones. Historically, platinum has traded at a
premium to the gold price. The company's reserves of platinum and palladium at
year end 1996 totaled 21.6 million ounces, which is roughly equivalent to 12
million ounces of gold. In addition, Stillwater announced a total mineral
inventory of 25.4 million ounces, equivalent to 14 million ounces of gold. On a
market capitalization to reserves basis, this makes Stillwater very cheap
relative to North American gold companies. New management is concentrating on
improving profitability and expanding the operation. Stillwater went public at
the end of 1994 and raised the necessary funds to finance its mine expansion.
GOLDCORP INC. (GA.TO - $7.20 - TORONTO STOCK EXCHANGE) is a mid-sized Canadian
gold producer with two producing gold mines and two industrial mineral
operations. The company's most significant asset is the Red Lake Mine, which is
part of a major production camp in Canada. Recent exploration drilling revealed
previously unknown high grade ore zones, which will add significantly to the
mine's reserves. These new discoveries will necessitate capital expenditures,
which the company will easily be able to finance from its current cash position
of $50 million. GoldCorp is undervalued relative to other mid-sized producers
and we expect management to add significantly to shareholder value.
BEMA GOLD CORPORATION (7.50% SUB. DEB. CV. 2/28/00) is a Canada-based junior
growth gold mining company active in South America. In 1996, the company entered
the ranks of producing companies when its 50% owned Refugo Mine in Chile started
operations. This mine is expected to produce over 230,000 ounces per year. Cash
flow from this mine and a small operation in Venezuela will be used to carry out
an aggressive drilling program on a number of properties, of which the most
exciting is the Cerro Casale gold-copper porphyry deposit.
3
<PAGE>
RANDGOLD AND EXPLORATION COMPANY LTD. (RNGJN.J - $4.41 - JOHANNESBURG STOCK
EXCHANGE) owns stocks in a number of mines in South Africa, including Harmony
Gold Mines and Durban Roodepoort Mines, as well as exploration assets and gold
mines in the rest of Africa through a subsidiary called Randgold Resources. New
management joined the company in 1994 and has undertaken a comprehensive review
of the company's activities and structure. This resulted in a change in the
relationship between Randgold and its operating mines through reducing head
office staff and instituting productivity enhancing reforms that include buying
neighboring mines. Randgold Resources recently purchased an operating gold mine
from B.H.P., the large Australian metals company, and we expect Randgold
Resources will attempt to list its shares during 1997. Randgold offers investors
sensitivity to higher gold prices through its producing mines and to reserve
growth through Randgold Resources. Randgold Resources has a number of promising
exploration properties outside South Africa, the value of which we believe has
not been fully recognized by the market.
NEWMONT MINING CORPORATION (NEM - $39.00 - NYSE) is one of the premier gold
mining growth companies in North America. Until recently, the company's
operations were limited to the Carlin Trend in Nevada, which produced 1.7
million ounces of gold in 1996. However, the company is now beginning to benefit
from exploration expenditures outside the United States. In 1996, Newmont began
gold production at Minahasa in Indonesia, adding to its existing overseas
operations at Yanacocha in Peru and Zarafsham in Uzbekistan. In March 1997,
Santa Fe Gold accepted Newmont's merger offer. The combined company will have 55
million ounces of reserves and gold production of 4 million ounces by 1998. The
merged company will have an excellent land position in Nevada for further
exploration and the potential to cut costs at existing operations.
EURO-NEVADA MINING CORPORATION (EN.TO - $30.77 - 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 impressive royalty properties, many of which are in production.
Among a number of recent exciting developments is the continuing flow of news
from the company's Midas joint venture in Nevada with Franco-Nevada. Euro-Nevada
owns 50% of this project, which will be one of the lowest cost gold mines in the
world when it comes into production.
CIA DE MINAS BUENAVENTURA SA (BLE.LM - $9.32 - LIMA STOCK EXCHANGE) is one of
Peru's leading mining companies. Its major asset is a 43% stake in Yanacocha,
which is one of the most profitable gold operations in the world and South
America's largest gold mine. The operator is Newmont Mining and the mine
produced over 800,000 ounces at a cash cost of $107 per ounce in 1996. After
mine depletion, 1.2 million ounces of gold were added to reserves during 1996.
Newmont Mining, in its 1996 annual report, describes Yanacocha as "a gold
producer's dream." The company has interests in a number of other gold and
silver mines in Peru, as well as promising exploration properties.
Buenaventura's exploration joint venture partners include Barrick Resources,
Echo Bay and Cyprus Amex.
IAM (INTERNATIONAL AFRICAN MINING) GOLD (IMG.TO - $3.91 - TORONTO STOCK
EXCHANGE) is involved in the exploration and development of gold properties
primarily in West Africa. The company sought out interesting properties before
West Africa became popular among junior exploration companies. The company's
main asset is their 38% ownership of the Sadiola gold mine in Mali. The mine
recently began production at an annual rate of about 400,000 ounces and a very
low cash cost of less than $150 per ounce. IAM Gold's partner in this mine is
Anglo American. The company also has a joint venture with Ashanti Goldfields to
explore for gold in Ghana, Guinea, Niger and Senegal. More recently, IAM Gold
turned its attention to South America and obtained exploration concessions in
Ecuador.
FRANCO-NEVADA MINING CORPORATION (FN.TO - $50.14 - TORONTO STOCK EXCHANGE) is a
Canadian company which invests in gold and other natural resource royalty
properties. Its major assets are the royalties attached to the Goldstrike Mine
operated by Barrick Gold in the Carlin Trend of Nevada. The company's other main
gold interest is a joint venture with Euro-Nevada at Midas, also in Nevada,
4
<PAGE>
where exploration drilling is taking place. Recently, Franco-Nevada acquired a
5% net profit royalty on the Pandora platinum property owned by Rustenburg
Platinum in South Africa, which is estimated to contain 31 million ounces of
platinum group metal reserves. The company has a very strong balance sheet with
working capital of over $140 million and no debt.
TVX GOLD, INC. (TVX - $5.29 - NYSE) is a mid-sized gold producer with four
operating mines. Its largest mine is La Coipa in Chile, a joint venture with
Placer Dome Inc., one of the world's largest gold producers. The other mines are
located in Brazil and Canada. The company has been very actively pursuing a
growth strategy, which includes acquisitions and exploration. The single most
exciting project within the company is at Kassandra in Greece. This property was
sold to TVX by the Government of Greece and mining has been conducted there for
centuries. However, TVX discovered further resources and Kassandra will become a
significant producer of gold for the company. Another of TVX's development
properties, Mussellwhite, will begin operations this spring. We believe TVX is
one of the cheapest mid-capitalization gold stocks on a reserve basis in North
America.
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. Additionally, The
Gabelli Gold Fund and other Gabelli Funds are available through the
no-transaction fee programs at many major discount brokerage firms.
INTERNET
You can now visit us on the Internet. Our home page at http://www.gabelli.com
contains information about Gabelli Funds, Inc., the Gabelli Mutual Funds,
IRAs, 401(k)s, quarterly reports, closing prices and other current news. You can
send us e-mail at [email protected].
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
business day for further information.
As always, we thank you for your confidence in our investment abilities
and will work hard to preserve and enhance the assets you have entrusted to us.
Sincerely,
/s/CAESAR BRYAN
---------------
CAESAR BRYAN
President and Portfolio Manager
August 1, 1997
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.
5
<PAGE>
GABELLI GOLD FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 1997 (UNAUDITED)
================================================================================
MARKET
SHARES VALUE
------ -----
COMMON STOCKS -- 94.58%
METALS AND MINING -- 94.58%
AUSTRALIA -- 8.93%
21,658 AGSM............................... $ 2,166
230,000 Emperor Mines Ltd.+................ 320,826
60,000 Kimberley Diamond Co. NL+.......... 38,454
250,000 Menzies Gold NL+................... 75,400
60,000 Plutonic Resources Ltd............. 187,294
80,000 Ranger Minerals NL+................ 244,296
140,000 Resolute Samantha Ltd.............. 249,122
----------
1,117,558
----------
IRELAND -- 1.91%
347,271 Glencar Explorations plc+.......... 239,019
----------
NORTH AMERICA -- 59.23%
44,257 Avgold Ltd.+....................... 43,279
17,000 Casmyn Corp.+...................... 129,625
38,500 Dayton Mining Corporation+......... 133,816
17,600 Euro-Nevada Mining Corporation..... 541,637
9,500 Franco-Nevada Mining Corporation+.. 476,376
10,000 Getchell Gold Corp................. 352,500
89,600 GoldCorp Inc., Cl. A............... 645,561
30,000 Golden Star Resources Ltd.......... 247,647
5,000 Golden Star Resources Ltd. ADR+.... 40,625
25,000 Greenstone Resources Ltd.+......... 219,044
94,200 Guyanor Resources SA, Cl. B+....... 266,025
130,000 IAM Gold+.......................... 508,327
13,000 Lazare Kaplan International, Inc.+. 217,750
70,000 Meridian Gold Inc.+................ 190,080
45,000 Miramar Mining Corporation+........ 162,925
15,000 Newmont Mining Corporation......... 585,000
31,000 North American Palladium Ltd.+..... 124,000
16,200 Pioneer Group, Inc................. 372,600
21,300 Placer Dome Inc.................... 348,788
50,000 Prime Resources Group.............. 362,056
44,250 Stillwater Mining Ltd.+............ 948,610
90,000 TVX Gold, Inc.+.................... 475,742
379,500 Venoro Gold Corp., Cl. A+.......... 20,610
----------
7,412,623
----------
PERU -- 4.12%
55,301 Cia De Minas Buenaventura SA, Cl. C 515,447
----------
SOUTH AFRICA -- 20.39%
167,900 Blyvoorvitzicht Gold Mining Ltd.+.. 92,558
30,000 Blyvoorvitzicht Gold Mining Ltd.,
Unsponsored ADR+................. 46,875
100,000 Deelkraal Gold+.................... 70,562
130,000 Deelkraal Gold ADR+............... 91,715
27,500 Durban Roodepoort Deep, Ltd.+...... 104,603
34,000 Harmony Gold Mining Ltd. ADR+...... 155,547
25,000 Impala Platinum Holdings, Ltd. ADR. 279,735
128,355 Kalahari Goldridge Mining Company,
Ltd.+ ........................... 66,796
367,750 Northam Platinum Limited+.......... 186,510
31,195 Randfontein Estates Gold Mining
Company Ltd. ADR................. 65,338
143,547 Randgold and Exploration
Company Ltd.+ ................... 633,063
20,161 Randgold Resources Ltd.+(a)........ 514,361
36,700 Saint Helena Gold Mines Ltd........ 155,975
50,000 West Rand Consolidated Mines Ltd... 88,203
----------
2,551,841
----------
TOTAL COMMON STOCKS ............... 11,836,488
----------
PREFERRED STOCKS -- 0.39%
SOUTH AFRICA -- 0.39%
11,000 Durban Roodepoort Deep, Ltd. Pfd... 48,269
----------
TOTAL PREFERRED STOCKS ............ 48,269
----------
OPTIONS -- 0.35%
SOUTH AFRICA -- 0.35%
36,000 Durban Roodepoort Deep, Ltd........ 43,651
----------
TOTAL OPTIONS .................... 43,651
----------
WARRANTS -- 0.09%
AUSTRALIA -- 0.05%
180,500 Lone Star Exploration Exp. 07/31/97 6,124
----------
NORTH AMERICA -- 0.00%
4,000 Valerie Gold Resources Ltd.
Special Warrants ................ 0
----------
SOUTH AFRICA -- 0.04%
21,900 Blyvoorvitzicht Gold Mining Ltd.
Exp. 01/01/01 ................... 4,394
19,750 Northam Platinum Limited
Exp. 12/31/97 ................... 523
----------
4,917
----------
TOTAL WARRANTS .................... 11,041
----------
PRINCIPAL
AMOUNT
------
CONVERTIBLE CORPORATE BONDS -- 5.40%
NORTH AMERICA -- 5.40%
$200,000 Bema Gold Corporation Sub. Deb. Cv.
7.50%, 02/28/00.................. 612,317
100,000 William Resources Ltd. Sub. Deb. Cv.
1.00%, 01/23/02.................. 63,722
----------
676,039
----------
TOTAL CONVERTIBLE CORPORATE BONDS 676,039
----------
TOTAL INVESTMENTS -- 100.81%
(Cost -- $12,867,131).............. 12,615,488
LIABILITIES, IN EXCESS OF
OTHER ASSETS--(0.81%) (101,637)
----------
NET ASSETS -- 100.00% ..............$12,513,851
===========
(1,278,061 shares outstanding)
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE .................. $9.79
=====
- ----------
(a)--Security exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30,
1997, Rule 144A securities amounted to $514,361 or 4.11% of net assets.
+ --Non-income producing security
ADR--American Depositary Receipt For Federal income tax purposes:
Aggregate cost ............... $12,867,131
===========
Gross unrealized appreciation ............... $ 3,214,668
Gross unrealized depreciation ............... (3,466,311)
-----------
Net unrealized depreciation ............... $ (251,643)
===========
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
GABELLI GOLD FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
================================================================================
ASSETS:
Investments in securities, at value
(Cost $12,867,131) .................. $12,615,488
Cash .................................. 13,563
Receivable for investments sold ....... 681,456
Receivable for Fund shares sold ....... 42,825
Dividends and interest receivable ..... 31,124
Deferred organizational expenses ...... 37,558
-----------
TOTAL ASSETS 13,422,014
-----------
LIABILITIES:
Payable to Advisor .................... 11,620
Payable to Custodian .................. 792,013
Payable for Fund shares redeemed ...... 101,935
Other accrued expenses ................ 2,595
-----------
TOTAL LIABILITIES 908,163
-----------
NET ASSETS (applicable to 1,278,061
shares outstanding) ............... $12,513,851
===========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ................... $ 9.79
===========
NET ASSETS CONSIST OF:
Capital Stock, at par value ........... $ 1,278
Additional paid-in capital ............ 13,968,821
Accumulated net investment loss ....... (152,413)
Accumulated net realized loss on
investments and foreign currency
transactions ........................ (1,051,586)
Net unrealized depreciation
on investments and assets and
liabilities denominated in foreign
currencies .......................... (252,249)
-----------
NET ASSETS $12,513,851
===========
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
================================================================================
INCOME:
Dividends (net of foreign taxes
of $2,561) .......................... $ 20,882
Interest .............................. 23,232
-----------
Total Investment Income 44,114
-----------
EXPENSES:
Investment advisory fees .............. 81,486
Distribution expenses ................. 20,399
Transfer and shareholder servicing agent 20,883
Legal and audit fees .................. 16,853
Registration fees ..................... 12,138
Interest .............................. 10,955
Amortization of organization expenses . 9,045
Printing and mailing .................. 7,486
Custodian fees and expenses ........... 6,555
Directors' fees and expenses .......... 6,000
Miscellaneous 4,727
-----------
Total Expenses ...................... 196,527
-----------
NET INVESTMENT LOSS ................... (152,413)
-----------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS:
Net realized loss on investments ...... (357,326)
Net realized loss on foreign currency
transactions ........................ (2,608)
-----------
Net realized loss ..................... (359,934)
Net change in unrealized depreciation . (2,780,355)
-----------
Net loss on investments ............. (3,140,289)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS ............................ $(3,292,702)
===========
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Net investment loss............................................. $ (152,413) $ (291,200)
Net realized loss on investments and foreign currency transactions (359,934) (382,767)
Net change in unrealized appreciation (depreciation)............ (2,780,355) 1,837,504
----------- -----------
Net increase (decrease) in net assets resulting from operations (3,292,702) 1,163,537
Share transactions-- net........................................ (1,156,740) 1,289,561
----------- -----------
Net increase (decrease) in net assets......................... (4,449,442) 2,453,098
NET ASSETS:
Beginning of period............................................. 16,963,293 14,510,195
----------- -----------
End of period (including net investment loss of $(152,413) for
June 30, 1997)................................................ $12,513,851 $16,963,293
=========== ===========
</TABLE>
7
The accompanying notes are an integral part of the financial statements.
<PAGE>
GABELLI GOLD FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES. The primary investment objective of the
Gabelli Gold Fund, Inc. (the "Fund") is long-term capital appreciation. The Fund
is a no-load, open-end, diversified management investment company incorporated
in Maryland on May 13, 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 in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange, 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 prices). All other
portfolio securities for which over-the-counter market quotations are readily
available are valued at the latest average of their 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 Corporation'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 sale price on the
exchange on which they are listed. If no sales of such options have taken place
that day, 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 recorded at the exchange rate on the valuation date.
(ii) purchases and sales of investment securities, income and expenses are
recorded at the exchange rate prevailing on the respective date of such
transactions.
FORWARD FOREIGN CURRENCY CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Advisor. 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.
8
<PAGE>
GABELLI GOLD FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
================================================================================
At June 30, 1997, the Fund had short positions in the following forward foreign
currency contracts.
Settlement Unrealized
Amount/Foreign Currency Date Value Gain/(Loss)
- ----------------------- --------- ------- ---------
61,761 Sell Canadian Dollar 07/03/97 $ 44,722 ($289)
393,434 Sell Peruvian Sol 07/03/97 148,466 (168)
226,349 Sell South African Rand 07/02/97 49,912 171
-------- -----
$243,100 ($286)
======== =====
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date, with realized gain or loss on investments
determined using specific identification as the cost method. Interest income
(including amortization of premium and accretion of discount) is recorded as
earned. Dividend income and dividend and capital gain distributions to
shareholders are recorded on the ex-dividend date.
PROVISION FOR 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, as amended. As a result, a Federal income tax provision is
not 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 up 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 the value of more than 50%
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.
For the year ended December 31, 1996, the Fund reclassified $291,200 from
accumulated investment loss to paid-in-capital. Net assets were not affected by
this change.
The Fund has a net capital loss carryforward for Federal income tax purposes of
$805,822 from prior years. 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; and
$491,124 is available through 2004.
2. INVESTMENT ADVISORY AGREEMENT. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Advisor which provides
that the Fund will pay the Advisor a fee, computed daily and paid monthly, at
the annual rate of 1.00 percent of the value of the Fund's average daily net
assets. In accordance with the Advisory Agreement, the Advisor provides a
continuous investment program for the Fund's portfolio, oversees the
administration of all aspects of the Fund's business and affairs, and pays the
compensation of all Officers and Directors of the Fund who are its affiliates.
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 of the Fund's average
daily net assets (excluding taxes, interest, distribution expenses and
extraordinary items). No such reimbursement was required during the six months
ended June 30, 1997.
3. ORGANIZATION EXPENSES. The organization expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months.
9
<PAGE>
GABELLI GOLD FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
================================================================================
4. DISTRIBUTION PLAN. The Fund has adopted a plan of distribution (the "Plan")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Pursuant to
this Plan, the Distributor, Gabelli & Company, Inc. ("Gabelli & Company"), an
indirect wholly-owned subsidiary of the Advisor, is authorized to conduct
activities that are primarily intended to result in the sale and distribution of
shares of the Fund. The Fund pays Gabelli & Company as distribution payments
under this plan, an aggregate amount at a rate of 0.25 percent per year of the
average daily net assets of the Fund. Such payments are accrued daily and paid
monthly. For the six months ended June 30, 1997, the Fund incurred distribution
costs of $20,399, or 0.25% of average net assets.
5. PORTFOLIO SECURITIES. Purchases and sales of securities for the six months
ended June 30, 1997, other than U.S. government obligations and short-term
securities, aggregated $587,550 and $1,900,148, respectively.
6. BANK LOAN. The Fund has access to an unsecured line of credit from the
Custodian for temporary purposes. Borrowings under this arrangement bear
interest at 0.75% above the Federal Funds rate on outstanding balances. The
amount outstanding as of June 30, 1997 was $780,000, bearing interest at 7.00%.
No compensating balances are required.
The average daily amount of borrowings outstanding during the six months ended
June 30, 1997 was $663,077, with a related weighted average interest rate of
6.37%. The maximum amount borrowed at any time during the six months ended June
30, 1997 was $1,520,000.
7. CAPITAL STOCK TRANSACTIONS. Transactions in shares of common stock were as
follows:
Six Months Ended Year Ended
June 30, 1997 December 31, 1996
---------------------- ---------------------
Shares Amount Shares Amount
------- ------- ------- -------
Shares sold ...... 4,312,033 $51,397,884 5,950,581 $81,147,459
Shares redeemed .. (4,410,480) (52,554,624) (5,846,234) (79,857,898)
---------- ----------- ---------- -----------
Net increase
(decrease) ..... (98,447) $ (1,156,740) 104,347 $ 1,289,561
========== ============ ========== ===========
10
<PAGE>
GABELLI GOLD FUND, INC.
FINANCIAL HIGHLIGHTS
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months July 11, 1994
Ended For the Year (Commencement of
June 30, 1997 Ended December 31, Operations) through
(Unaudited) 1996 1995 December 31, 1994
------------- ---- ---- ------------------
<S> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period ................. $12.32 $11.41 $11.07 $10.00
------ ------ ------ ------
Net investment loss .................................. (0.11) (0.19) (0.15) 0.00
Net realized and unrealized gain/(loss) on
investments ........................................ (2.42) 1.10 0.49 1.07
------ ------ ------ ------
Total from investment operations ..................... (2.53) 0.91 0.34 1.07
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ......................... $9.79 $12.32 $11.41 $11.07
====== ====== ====== ======
Total Return (a) ..................................... (20.5)% 8.0% 3.1% 10.7%
RATIO TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ............. $12,514 $16,963 $14,510 $17,634
Ratio of operating expenses to average
net assets ......................................... 2.41%(b) 2.17% 2.25% 2.04%(b)
Ratio of net investment loss to average
net assets ......................................... (1.87)%(b) (1.41)% (1.12)% (0.26)%(b)
Portfolio turnover rate .............................. 3.72% 53.74% 37.94% 12.00%
Average commission rate (c) .......................... $0.0157 $0.0241 -- --
- -------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported. Total return for the
period of less than one year is not annualized.
(b) Annualized.
(c) For the fiscal years beginning on or after September 1, 1995, the SEC
requires the Fund to disclose its average commission rate paid per share of
security.
</TABLE>
================================================================================
TOP TEN HOLDINGS
JUNE 30, 1997
- -------------------------------------
Stillwater Mining Ltd.
GoldCorp Inc.
Randgold and Exploration Company Ltd.
Bema Gold Corporation
Newmont Mining Corporation
Euro-Nevada Mining Corporation
Cia de Minas Buenaventura SA
Randgold Resources Ltd.
IAM Gold
Franco-Nevada Mining Corporation
================================================================================
11
<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
PRESIDENT
DANIEL E. ZUCCHI ASSOCIATES
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.
- --------------------------------------------------------------------------------
[PICTURE]
GABELLI
GOLD
FUND,
INC.
SEMI-ANNUAL REPORT
JUNE 30, 1997
