[PHOTO]
Mario J. Gabelli
Gabelli
Gold
Fund,
Inc.
ANNUAL REPORT
DECEMBER 31, 1996
<PAGE>
Gabelli Gold Fund, Inc.
Annual Report - December 31, 1996
[PHOTO]
Caesar Bryan
To Our Shareholders:
1996 started well for gold and finished poorly. The gold price began the
year at $386.75 per ounce and moved sharply higher to exceed $415 per ounce by
early February. However since then, apart from some short lived rallies, the
price declined to finish the year at $368.05 per ounce, which is a fall of over
$18 per ounce for the year.
Gold equities, helped by the strong performance of Wall Street, performed
well relative to gold. The Philadelphia index of gold and silver stocks fell by
just 3.0% for the year. Low inflation, a strengthening dollar and the continuing
bull market in equities reduced investment interest in gold while continuing
strong jewelry demand was met with further central bank sales.
For the twelve months ended December 31, 1996, the Gabelli Gold Fund
appreciated by 8.0% compared with a rise of 7.5% for the average gold fund
monitored by Lipper Analytical Services Inc. For the fourth quarter, the Fund
declined by 8.5% which compares with a loss of 4.6% for the average gold fund
tracked by Lipper. Since its inception on July 11, 1994 through December 31,
1996, the Fund has returned 23.2%, which equates to an average annual return of
8.8%.
INVESTMENT RESULTS (a)
- --------------------------------------------------------------------------------
Quarter
-----------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
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)
- --------------------------------------------------------------------------------
- ----------------------------------------------
Average Annual Returns - December 31, 1996 (a)
- ----------------------------------------------
1 Year ............................. 8.0%
Life of Fund(b) .................... 8.8%
- ----------------------------------------------
(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.
- --------------------------------------------------------------------------------
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI GOLD FUND AND THE PHILADELPHIA GOLD & SILVER INDEX
[The following table was represented as a line graph in the printed material]
Gabelli Phil. Gold &
Gold Fund Silver Index
--------- ------------
7/11/94 $10,000 $10,000
12/31/94 $11,070 $ 9,940
12/31/95 $11,410 $10,944
12/31/96 $12,323 $10,616
* Past performance is not predictive of future performance.
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.
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 its ability to create shareholder wealth. We invest globally with
an emphasis on gold-producing companies.
THE PORTFOLIO
Global Allocation
The chart at the right presents the Fund's holdings by geographic region
as of December 31, 1996. 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.
[The following table was represented as a pie graph in the printed material]
HOLDINGS BY GEOGRAPHIC REGION - 12/31/96
North America 59.2%
South Africa 26.7%
Australia 9.4%
Other 4.7%
2
<PAGE>
Commentary
Apart from the spike in the gold price at the start of 1996, gold has
mostly traded in a narrow range between $380 and $390 per ounce for the past two
years. However, at the beginning of December 1996 the price fell through the
lower end of this range to end the year below $370 per ounce. This recent
downward move in the gold price was disappointing since we had been expecting
higher gold prices based on attractive supply/demand fundamentals and the
potential for increased investment demand.
It appears that the price weakness was due to increased central bank
selling followed by significant disinvestment and shorting of gold by investment
funds. The gold market is not particularly transparent but observers have come
to this conclusion by talking to market participants and analyzing option
transactions.
Gold Fields Mineral Services has recently released its initial estimates
of gold flows for 1996. This shows that jewelry and other fabrication demand
rose by 0.6% to about 3,280 tons and mine supply by 2.5% to 2,300 tons. At least
half of this shortfall is comprised of sales of scrap and the rest by central
bank sales and hedging activity.
Although these figures are only estimates, they do confirm that demand
actually increased in a year in which the price moved sharply higher, albeit for
a short period, and the U.S. dollar was strong. At current prices, which have
not been seen since 1993, we expect physical demand to increase sharply
particularly following the Chinese New Year in early February.
This anticipated extra demand in the absence of higher prices will have to
be met by increased central bank sales or commodity fund shorting of gold.
Although possible, this is unlikely. Recent central bank sales have emanated
from European countries which are preparing for European Monetary Union. Both
the French and German central banks, the largest owners of gold in Europe, have
stated that they will not sell gold. Of greater interest is the very large short
position in gold that many commodity funds are now carrying. If large physical
demand causes the gold price to rise, short covering could turn a mild recovery
into a squeeze that pushes the price sharply higher.
Although the XAU index of gold stocks declined by 3.0% and the
Johannesburg index of gold stocks fell by 10%, a number of gold stocks performed
very well. These tended to be exploration companies with no production which are
very high risk investments. The Fund continues to emphasize gold companies which
have gold production. The Fund's concentration is in medium-sized gold producers
with good growth prospects, primarily in North America but also in Australia. We
also have a commitment to a number of South African mines which would do well in
a higher gold price environment.
We believe that the consolidation in the gold mining industry will
continue and many of the Fund's holdings could be attractive to larger companies
looking to grow their reserves.
3
<PAGE>
Let's Talk Stocks
The following are stock specifics on selected holdings of our Fund.
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.
Bema Gold Corporation (7.5%, Sub. Deb. Cv. 2/28/00) is a junior Canadian-based
growth gold mining company in South America. In 1996, the company entered the
ranks of production 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.
Cia de Minas Buenaventura S.A. (BLE.LM - $8.30 - Lima Stock Exchange) is one of
Peru's leading mining companies. Its major asset is a 32.3% stake in Yannacocha
which is one of the most profitable gold operations in the world and is South
America's largest gold mine. The operator of the mine is Newmont Mining and
Buenaventura is attempting to increase its ownership in Yannacocha to over 43%
as it has good potential for further growth. 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.
Euro-Nevada Mining Corporation (EN.TO - $29.83 - 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 good
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.
GoldCorp Inc. (GA.TO - $8.57 - 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 has
revealed high grade ore zones, previously unknown, which should add
significantly to the mine's reserves. These new discoveries will necessitate
some 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.
Guyanor Resources SA (GRE.TO - $6.75 - Toronto Stock Exchange) is a 70%-owned
subsidiary of Golden Star Resources and was launched as a public company in
March 1995. The company was formed to hold Golden Star's interests in mineral
deposits in French Guiana in South America. French Guiana offers an excellent
combination of prospective geology, skilled work force and political stability.
4
<PAGE>
The company intends to be a leader in the development of the gold mining
industry in French Guiana. Guyanor owns a number of potentially significant
exploration targets containing both gold and diamonds and has joint venture
agreements with major companies such as BHP Minerals, Cambior and Asarco.
IAM Gold (IMG.TO - $4.85 - Toronto Stock Exchange) International African Mining
Corporation 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 has
just begun production at an annual rate of about 400,000 ounces at 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 has
turned its attention to South America and has obtained concessions in Ecuador.
Newmont Mining Corporation (NEM - $44.75 - NYSE) is one of the premier growth
gold mining 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 to add to existing overseas operations at Yanacocha in
Peru and Zarafsham in Uzbekistan. Two properties currently in development will
be in production within the next three years. One is in Indonesia and the second
is in Mexico.
Randgold and Exploration Company Ltd. (RNGJn.J - $6.79 - 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 named Randgold Resources. New
management joined the company in 1994 and has undertaken a comprehensive review
of the company's activities and structure. This has resulted in a change in the
relationship between Randgold and its operating mines, reducing head office
staff and instituting productivity enhancing reforms including 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.
Stillwater Mining Ltd. (PGMS - $18.125 - 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, while 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 company's reserves of platinum and
palladium at year end 1996 totaled 21.6 million ounces which is roughly
equivalent to
5
<PAGE>
twelve million ounces of gold. In addition to this, Stillwater announced a total
mineral inventory of 25.4 million ounces equivalent to 14 million ounces of
gold. Based on a market capitalization to reserves, this makes Stillwater very
cheap relative to other 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 the
mine expansion.
TVX Gold, Inc. (TVX - $7.80 - NYSE) is a mid-sized gold producer with four
operating mines. Its largest mine in La Coipa, Chile is a joint venture with
Placer Dome and has a cash cost of less than $90 per ounce. The other mines are
located in Brazil and Canada. The company has been actively pursuing a growth
strategy, which includes acquisitions and exploration. The single most exciting
project within the company is in Greece at Kassandra. This property was sold to
TVX by the Government of Greece and mining has been conducted there for
centuries. However, TVX has discovered further resources and Kassandra will
become a significant producer of gold for the company. This spring another of
TVX's development properties, Mussellwhite, will begin operations. 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. Furthermore,
Gabelli Gold Fund and many of our other Funds are available through the
no-transaction fee programs at many major discount brokerage firms.
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>
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, quarterly reports, closing prices, IRAs, 401(k)s and other
current news. You can also 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
day for further information.
We thank you for your confidence in our investing abilities and wish you a
productive and financially rewarding 1997.
Sincerely,
/s/ Caesar Bryan
Caesar Bryan
President and Portfolio Manager
February 3, 1997
- --------------------------------------------------------------------------------
Top Ten Holdings
December 31, 1996
Randgold and Exploration Company Ltd. Guyanor Resources SA
Stillwater Mining Ltd. IAM Gold
GoldCorp Inc. Bema Gold Corp.
TVX Gold, Inc. Euro-Nevada Mining Corporation
Newmont Mining Corporation Placer Dome, Inc.
- --------------------------------------------------------------------------------
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, 1996
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 93.45%
METALS AND MINING -- 93.45%
AUSTRALIA -- 8.83%
100,000 Climax Mining Ltd.+ ................ $ 94,438 $ 92,104
200,000 Emperor Mines Ltd.+ ................ 265,613 389,060
250,000 Menzies Gold NL+ ................... 121,917 113,145
60,000 Plutonic Resources Ltd. ............ 278,784 278,694
80,000 Ranger Minerals N.L.+ .............. 235,400 244,552
140,000 Resolute Samantha Ltd. ............. 279,858 291,239
15,000 Sons of Gwalia Ltd. ................ 113,302 88,491
----------- -----------
1,389,312 1,497,285
----------- -----------
IRELAND -- 1.73%
347,271 Glencar Explorations plc+ .......... 239,247 293,965
----------- -----------
NORTH AMERICA -- 54.38%
17,000 Casmyn Corp. ....................... 273,190 157,250
50,000 Dayton Mining Corporation .......... 157,080 331,875
17,600 Euro-Nevada Mining
Corporation ....................... 219,367 525,047
9,500 Franco-Nevada Mining
Corporation ....................... 262,948 434,810
10,000 Getchell Gold Corp.+ ............... 270,625 383,750
89,600 GoldCorp Inc. Cl. A ................ 232,748 767,907
30,000 Golden Star Resources Ltd.+ ........ 203,512 394,967
5,000 Golden Star Resources Ltd.+
ADR ............................... 70,250 65,000
25,000 Greenstone Resources Ltd. .......... 97,792 290,846
94,200 Guyanor Resources SA+ .............. 142,317 635,558
130,000 IAM Gold+ .......................... 543,676 630,562
23,000 Lazare Kaplan International
Inc + ............................. 391,000 393,875
70,000 Meridian Gold Inc.+ ................ 127,180 165,937
70,000 Miramar Mining Corporation+ ........ 346,359 306,346
15,000 Newmont Mining
Corporation ....................... 786,000 671,250
51,000 North American
Palladium Ltd + .................... 298,995 184,875
19,200 Pioneer Group, Inc. ................ 418,778 456,000
21,300 Placer Dome Inc. ................... 531,653 463,275
50,000 Prime Resources Group .............. 369,310 353,756
44,250 Stillwater Mining Ltd.(a)(b)+ ...... 306,500 802,031
90,000 TVX Gold, Inc.+ .................... 673,399 702,407
8,000 Valerie Gold Resources Ltd. ........ 81,366 46,098
400,000 Venoro Gold Corp. - A+ ............. 197,059 61,269
----------- -----------
7,001,104 9,224,691
----------- -----------
PERU -- 3.06%
55,301 Cia De Minas Buenaventura
SA - Class C ...................... 172,946 404,745
13,825 Cia De Minas Buenaventura
SA - Class B ...................... 112,389 114,765
----------- -----------
285,335 519,510
----------- -----------
SOUTH AFRICA -- 25.45%
24,664 Ashanti Goldfields Co. Ltd. ........ 356,108 305,223
167,900 Blyvooruitzicht Gold
Mining Ltd. ....................... 342,016 170,484
30,000 Blyvooruitzicht Gold Mining
Ltd. Unsponsored ADR .............. 188,200 88,125
130,000 Deelkraal Gold+ .................... 249,773 90,324
100,000 Deelkraal Gold ADR+ ................ 110,000 69,474
27,500 Durban Roodepoort Deep,
Ltd + ............................. 298,500 206,926
100,000 East Rand Proprietary Mines
Unsponsored ADR+ .................. 70,000 34,500
21,658 Golden Shamrock Mines
Preference Shares (AGS) ........... 1,896 2,166
34,000 Harmony Gold Mining
Ltd. ADR .......................... 359,375 267,750
25,000 Impala Platinum Holdings
Ltd ............................... 562,500 249,865
50,000 Kalahari Goldridge Mining
Co., Ltd. ......................... 28,800 27,683
40,000 Loraine Gold Mines
Ltd. ADR+ ......................... 191,888 110,000
367,750 Northam Platinum Limited+ .......... 452,320 235,838
31,141 Randfontein Estates Gold
Mining Company Ltd. ADR ........... 237,876 161,114
203,547 Randgold and Exploration
Company Ltd.+ ..................... 585,331 1,381,492
20,161 Randgold Resources, Ltd.+ .......... 281,606 514,106
36,700 Saint Helena Gold Mines Ltd. ....... 313,412 211,025
100,000 West Rand Consolidated
Mines Ltd. ........................ 253,451 191,383
----------- -----------
4,883,052 4,317,478
----------- -----------
TOTAL COMMON STOCKS ................ 13,798,050 15,852,929
----------- -----------
PREFERRED STOCKS -- 0.56%
SOUTH AFRICA -- 0.56%
11,000 Durban Roodepoort Deep,
Ltd. Pfd. ......................... 73,519 94,057
----------- -----------
TOTAL PREFERRED STOCKS ............. 73,519 94,057
----------- -----------
OPTIONS -- 0.74%
SOUTH AFRICA -- 0.74%
36,000 Durban Roodepoort
Deep, Ltd.+ ....................... 129,440 125,053
----------- -----------
TOTAL OPTIONS ...................... 129,440 125,053
----------- -----------
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Gabelli Gold Fund, Inc.
Portfolio of Investments (Continued) -- December 31, 1996
================================================================================
Principal
Amount Market
or Shares Cost Value
- --------- ---- -----
WARRANTS -- 0.64%
AUSTRALIA -- 0.55%
180,500 Lone Star Exploration+ ............. $ 47,626 $ 93,156
----------- -----------
NORTH AMERICA -- 0.00%
4,000 Valerie Gold Resources Ltd.
Special Warrants+ ................. 0 0
----------- -----------
SOUTH AFRICA -- 0.09%
21,900 Blyvooruitzicht Gold
Mining Ltd.+ ...................... 11,798 15,496
19,750 Northam Platinum Limited+ .......... 2,495 253
----------- -----------
14,293 15,749
----------- -----------
TOTAL WARRANTS ..................... 61,919 108,905
----------- -----------
CONVERTIBLE CORPORATE BONDS -- 5.22%
NORTH AMERICA
$200,000 Atlas Corporation Sub. Deb. Cv .....
7.00%, 10/25/00(c) ................ 200,000 200,000
200,000 Bema Gold Corporation Sub. .........
Deb. Cv. 7.50%, 02/28/00 .......... 200,000 605,660
100,000 William Resources Ltd. Sub. ........
Deb. Cv. 8.00%, 11/21/00 .......... 75,182 80,233
----------- -----------
TOTAL CONVERTIBLE
CORPORATE BONDS ................... 475,182 885,893
----------- -----------
TOTAL
INVESTMENTS -- 100.61% ............ $14,538,110* 17,066,837
===========
Liabilities in excess of Other
Assets -- (0.61%).................. (103,544)
-----------
NET ASSETS -- 100.00%
(1,376,508 shares
outstanding)....................... $16,963,293
===========
Net Asset Value and Redemption
Price Per Share ................... $12.32
===========
----------
(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 4.73% of net assets at December 31,
1996.
(c) 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,
1996, Rule 144A securities amounted to $200,000 or 1.2% of net assets.
ADR -- American Depositary Receipt
+ -- Non-income producing security
* For Federal income tax purposes:
Aggregate cost ................................ $ 14,538,110
============
Gross unrealized appreciation ................. $ 4,810,931
Gross unrealized depreciation ................. (2,282,204)
------------
Net unrealized appreciation ................... $ 2,528,727
============
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Gabelli Gold Fund, Inc.
Statement of Assets and Liabilities
December 31, 1996
================================================================================
Assets:
Investments in securities, at value
(Cost $14,538,110) ..................................... $ 17,066,837
Cash ..................................................... 10,190
Receivable for investments sold .......................... 1,124,271
Receivable for Fund shares sold .......................... 312,212
Dividends and interest receivable ........................ 23,754
Deferred organizational expenses ......................... 46,603
------------
Total assets ........................................... 18,583,867
Liabilities:
Payable to Advisor ....................................... 15,155
Payable to custodian ..................................... 1,014,265
Payable for Fund shares redeemed ......................... 579,666
Other accrued expenses ................................... 11,488
------------
Total liabilities ...................................... 1,620,574
------------
Net assets (applicable to 1,376,508
shares outstanding) .................................. $ 16,963,293
============
Net asset value and redemption price
per share ............................................ $ 12.32
============
Net Assets Consist of:
Capital Stock, at par value .............................. $ 1,377
Additional paid-in capital ............................... 15,125,461
Accumulated net realized loss on investments
and foreign currency transactions ...................... (691,652)
Net unrealized appreciation on
investments and assets and liabilities
denominated in foreign currencies ...................... 2,528,107
------------
Net assets ............................................. $ 16,963,293
============
Statement of Operations for the
Year Ended December 31, 1996
================================================================================
Income:
Dividends (net of foreign taxes of $4,544) ................ $ 96,491
Interest .................................................. 59,881
-----------
Total income ............................................ 156,372
-----------
Expenses:
Investment advisory fees .................................. 205,967
Distribution expenses ..................................... 51,492
Transfer and shareholder servicing agent .................. 43,314
Legal and audit fees ...................................... 39,210
Printing and mailing ...................................... 24,609
Amortization of organization expenses ..................... 18,240
Registration fees ......................................... 18,165
Custodian fees and expenses ............................... 20,894
Directors' fees ........................................... 11,994
Miscellaneous ............................................. 13,687
-----------
Total expenses .......................................... 447,572
-----------
Investment loss - net ..................................... (291,200)
-----------
Net Realized and Unrealized Gain (Loss) on
Investments:
Net realized loss on investments .......................... (381,958)
Net realized loss on foreign currency
transactions ............................................ (809)
-----------
Net realized loss ....................................... (382,767)
-----------
Net change in unrealized appreciation on
investments and other assets and liabilities
denominated in foreign currencies ....................... 1,837,504
-----------
Net realized and unrealized gain on
investments ........................................... 1,454,737
-----------
Net increase in net assets resulting
from operations ............................................. $ 1,163,537
===========
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Increase (decrease) in Net Assets:
Investment loss - net ....................................... $ (291,200) $ (195,523)
Net realized loss on investments and
foreign currency transactions ........................... (382,767) (299,054)
Net change in unrealized appreciation
on investments and other assets and
liabilities denominated in foreign currencies ........... 1,837,504 703,796
------------ ------------
Net increase in net assets resulting from operations .... 1,163,537 209,219
Share transactions -- net ................................... 1,289,561 (3,333,607)
------------ ------------
Net increase (decrease) in net assets ................... 2,453,098 (3,124,388)
Net Assets:
Beginning of year ........................................... 14,510,195 17,634,583
------------ ------------
End of year ................................................. $ 16,963,293 $ 14,510,195
============ ============
</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. The Fund is a no-load, open-end, diversified
management investment company whose objective is long-term capital appreciation.
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 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, 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
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.
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, 1996.
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.
At December 31, 1996, the Fund had short positions in the following forward
foreign currency contracts:
11
<PAGE>
Gabelli Gold Fund, Inc.
Notes to Financial Statements (Continued)
================================================================================
Settlement Unrealized
Amount/Currency Date Value Gain
------------------------------- ---------- -------- ---------
8,693 Sell Australian Dollar 1/7/97 $ 7,117 $ 13
20,863 Sell Australian Dollar 1/8/97 16,565 38
259,461 Sell Canadian Dollar 1/6/97 189,249 97
-------- ----
$212,931 $148
======== ====
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 or 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 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 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 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 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.
For the years ended December 31, 1996 and 1995, the Fund reclassified $291,200
and $195,523, respectively, 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. 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).
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1996 Year Ended December 31, 1995
---------------------------- ----------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold ................... 5,950,581 $ 81,147,459 2,241,792 $ 25,680,073
Shares issued upon reinvestment -- -- -- --
Shares redeemed ............... (5,846,234) (79,857,898) (2,563,349) (29,013,680)
---------- ------------ ---------- ------------
Net increase (decrease) ...... 104,347 $ 1,289,561 (321,557) $ (3,333,607)
========== ============ ========== ============
</TABLE>
3. Purchases and Sales of Securities. Purchases and sales of securities for the
year ended December 31, 1996, other than U.S. government obligations and
short-term securities, aggregated $12,017,381 and $10,753,151, 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,
12
<PAGE>
Gabelli Gold Fund, Inc.
Notes to Financial Statements (Continued)
================================================================================
required for its administrative management, and to pay the compensation of all
officers and Directors of the Fund who are its affiliates. As compensation for
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.
5. Organization Expenses. The organization expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months.
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. For the year ended December 31, 1996, the Fund has
incurred distribution costs of $51,492, or 0.25% of average net assets, the
annual limitation under the Plan. The Board of Directors has approved that
Distribution costs incurred by Gabelli & Co., Inc., of $306,818, which are in
excess of the 0.25% limitation, may be recovered from 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 December 31, (Commencement of
----------------------- Operations) through
1996 1995 December 31, 1994
------- ------- -----------------
<S> <C> <C> <C>
Operating Performance:
Net Asset Value, Beginning of Period ............... $ 11.41 $ 11.07 $ 10.00
------- ------- -------
Increase from Investment Operations:
Net investment loss(e) ........................... (0.19) (0.15) 0.00
Net realized and unrealized gain on securities ... 1.10 0.49 1.07(a)
------- ------- -------
Total from investment operations ................. 0.91 0.34 1.07
------- ------- -------
Net Asset Value, End of Period ..................... $ 12.32 $ 11.41 $ 11.07
======= ======= =======
Total Return(b) .................................. 8.0% 3.1% 10.7%
Ratios of Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands) ......... $16,963 $14,510 $17,634
Ratio of Operating Expenses to Average Net Assets 2.17% 2.25% 2.04%(c)
Ratio of Net Investment Loss to Average Net Assets (1.41)% (1.12)% (0.26)%(c)
Portfolio Turnover Rate .......................... 53.74% 37.94% 12.00%
Average Commission Rate(d) ....................... $0.0241 -- --
</TABLE>
- ----------
(a) Includes the effect of realized gains prior to significant increases in
shares outstanding.
(b) Total return is calculated assuming a purchase of shares at the net asset
value on the first day and a sale on the last day of each year reported
and inclues reinvestment of dividends and distributions.
(c) Annualized.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate paid per share for
purchases and sales of investment securities.
(e) Based on average month-end shares outstanding.
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,
1996, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of periods indicated therein. 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 and the financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1996 by correspondence with the custodian
and brokers. 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, 1996, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the indicated
periods, in conformity with generally accepted accounting principles.
February 20, 1997
New York, New York
/S/ Ernst & Young LLP
14
<PAGE>
GABELLI'S FAMILY OF FUNDS
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/Westwood Funds _________________________________________________________
Three investment portfolios designed to pursue a variety of investment
objectives. Equity Fund seeks growth, Balanced Fund seeks income and growth,
Intermediate Bond Fund seeks current income. (No-load)
Portfolio Manager: Susan Byrne
Gabelli Small Cap Growth Fund __________________________________________________
Invests primarily in equity securities of smaller companies (total market
capitalization of less than $500 million) which are believed likely to have
rapid growth in revenues and earnings. The Fund's primary objective is to seek
capital appreciation. (No-load)
Portfolio Manager: Mario J. Gabelli, CFA
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. (No-load)
Portfolio Manager: Mario J. Gabelli, CFA
Gabelli Value Fund _____________________________________________________________
Invests in a concentrated portfolio of securities of companies which are selling
below their private market value. The Fund's primary objective is long-term
capital appreciation. Max. Sales charge: 511/42%
Portfolio Manager: Mario J. Gabelli, CFA
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. An investment in the Fund is neither insured nor
guaranteed by the U.S. Government and there can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share.
Portfolio Manager: Ronald Eaker
- --------------------------------------------------------------------------------
GABELLI FUNDS
Searching for Opportunities [GRAPHIC OMITTED]
WORLD-WIDE
- --------------------------------------------------------------------------------
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 of 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 advances in interactive services and products. The
Fund's primary objective is to seek capital appreciation. (No-load)
Portfolio Manager: Marc J. Gabelli
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 variety
of world-wide 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. (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.
Distributed by Gabelli & Company, Inc.
<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.
- --------------------------------------------------------------------------------
