GABELLI GOLD FUND INC, 485BPOS, 1997-04-30

GABELLI GOLD FUND INC
485BPOS, 1997-04-30

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1997

SECURITIES ACT FILE NO. 33-79180
INVESTMENT COMPANY ACT FILE NO. 811-8518

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 4 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 5 [X]

(Check appropriate box or boxes)

GABELLI GOLD FUND, INC.
(Exact Name of Registrant as Specified in Charter)

One Corporate Center, Rye, New York 10580-1434
(Address of Principal Executive Office)
Registrant's Telephone Number (800) 422-3554

Bruce N. Alpert
Gabelli Funds, Inc.
One Corporate Center, Rye, New York 10580-1434
(Name and Address of Agent for Service)

COPIES TO:
James E. McKee, Esq. Daniel Schloendorn, Esq.
Gabelli Funds, Inc. Willkie Farr & Gallagher
One Corporate Center One Citicorp Center
Rye, New York 10580-1434 153 East 53rd Street
New York, New York 10022

It is proposed that this filing will be effective (check appropriate
box):
[ ] immediately upon filing pursuant to paragraph (b)

[X] on May 1, 1997 pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a) of Rule 485(a)(2)
If appropriate, check the following box:
[ ] This post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.

Pursuant to Rule 24f-2(a)(1) under the Investment Company Act of 1940,
Registrant has previously filed a declaration of registration of an indefinite
number of securities under the Securities Act of 1933. Registrant's 24f-2
Notice for the fiscal year ended December 31, 1996 was filed on February 28,
1997.

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GABELLI GOLD FUND, INC.
FORM N-1A
CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
PART A
ITEM NO. LOCATION IN PROSPECTUS
- -------- ----------------------
<S> <C>
Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . Table of Fees and Expenses for the Fund
Item 3. Condensed Financial Information . . . . . . . . . . . . General Information
Item 4. General Description of Registrant . . . . . . . . . . . Cover Page; Investment Objective and Policies; Additional
Investment Policies; General Information
Item 5. Management of the Fund . . . . . . . . . . . . . . . . Management of the Fund
Item 5(a) Management's Discussion of Fund Performance . . . . . . Not Applicable
Item 6. Capital Stock and Other Securities . . . . . . . . . . Management of the Fund; Dividends, Distributions and Taxes;
General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . Management of the Fund; Distribution Plan; Purchase of Shares;
Retirement Plans
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . Redemption of Shares
Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . Not Applicable
</TABLE>

<TABLE>
<CAPTION>
LOCATION IN
PART B STATEMENT OF
ITEM NO. ADDITIONAL INFORMATION
- -------- ----------------------
<S> <C>
Item 10. Cover . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . . . . . . . . . . Notes to Financial Statements; See Prospectus -- "General
Information"
Item 13. Investment Objective and Policies . . . . . . . . . . . Investments; Investment Restrictions; See Prospectus --
"Investment Objective and Policies" and "Additional Investment
Policies"
Item 14. Management of the Fund . . . . . . . . . . . . . . . . The Adviser; The Distributor; Directors and Officers; See
Prospectus -- "Management of the Fund"
Item 15. Control Persons and Principal Holders of
Securities . . . . . . . . . . . . . . . . . . . . . Management of the Fund; See Prospectus -- "Management of the
Fund"
Item 16. Investment Advisory and Other Services . . . . . . . . The Adviser; The Distributor; Directors and Officers; See
Prospectus -- "Management of the Fund"
Item 17. Brokerage Allocation and Other Practices . . . . . . . Portfolio Transactions and Brokerage
Item 18. Capital Stock and Other Securities . . . . . . . . . . Dividends, Distributions and Taxes; Notes to Financial
Statements; See Prospectus -- "Dividends, Distributions and
Taxes" and "General Information"
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . . . . . . Purchase and Redemption of Shares
Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . . Dividends, Distributions and Taxes; See Prospectus --
"Dividends, Distributions and Taxes"
Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . Purchase and Redemption Information; See Prospectus --
"Management of the Fund"
Item 22. Condensed Financial Information . . . . . . . . . . . . Investment Performance Information
Item 23. Financial Statements . . . . . . . . . . . . . . . . . Incorporated by reference
</TABLE>

Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.

<PAGE> 3

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GABELLI GOLD FUND, INC.
ONE CORPORATE CENTER, RYE, NEW YORK 10580-1434
TELEPHONE: 1-800-GABELLI (1-800-422-3554)
HTTP://WWW.GABELLI.COM

================================================================================

PROSPECTUS

MAY 1, 1997

Gabelli Gold Fund, Inc. (the "Fund") is a no load, open-end, diversified
investment management company which seeks to provide long-term capital
appreciation. The Fund will seek to achieve its objective by investing primarily
in the equity securities of foreign and domestic issuers engaged in principally
gold-related activities. See "Investment Objective and Policies". Because the
securities in which the Fund invests may involve risks not associated with more
traditional investments, an investment in the Fund by itself should not be
considered a balanced investment program. See "Risk Factors".

----------------------

The Fund has a distribution plan which permits it to pay up to .25% per year of
its average daily net assets for marketing and shareholder services and
expenses. Shares of the Fund may be purchased without a sales load at net asset
value. The minimum initial investment in the Fund is currently $1,000. The Fund
will increase its minimum initial investment to $10,000 when it has either
10,000 shareholders or over $100,000,000 of assets under management. See
"Purchase of Shares". For further information, contact Gabelli & Company, Inc.
at the address or telephone number shown above.
----------------------

Part B (also known as the Statement of Additional Information ("Additional
Statement")), dated May 1, 1997, which may be revised from time to time,
provides a further discussion of certain areas in this Prospectus and other
matters which may be of interest to some investors. It has been filed with the
Securities and Exchange Commission (the "SEC") and is available for reference,
along with other materials on the SEC Internet Web Site (http://www.sec.gov) and
is incorporated herein by reference. For a free copy, write to Gabelli Gold
Fund, Inc. at One Corporate Center, Rye, New York 10580-1434 or call 1-(800)
GABELLI (1-800-422-3554). Purchase orders and redemption requests may be
directed to the Gabelli Funds at P.O. Box 8308, Boston, Massachusetts
02266-8909.

----------------------

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, AND ARE NOT
INSURED OR GUARANTEED BY ANY BANK, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN INVESTMENT IN THE FUND
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

----------------------

This Prospectus should be retained by investors for future reference.
----------------------

- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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TABLE OF FEES AND EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases.................................................................. None
Maximum Sales Load Imposed on Reinvested Dividends....................................................... None
Deferred Sales Load...................................................................................... None
Redemption Fees (a)...................................................................................... None
Exchange Fees............................................................................................ None
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets):
Management Fees.......................................................................................... 1.00%
12b-1 Expenses (b)....................................................................................... .25%
Other Expenses (c)....................................................................................... .92%
-----
Total Fund Operating Expenses...................................................................... 2.17%
=====
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming a 5%
annual return:.............................................................. $22.01 $67.91 $116.44 $250.03
</TABLE>

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The amounts listed in this example should not be considered as representative of
future expenses, and actual expenses may be greater or less than those
indicated. Other expenses set forth above are based on estimated amounts for the
current fiscal year. Moreover, while the example assumes a 5% annual return, the
Fund's actual performance will vary and may result in an actual return greater
or less than 5%.
- --------------------------------------------------------------------------------
The information contained in the foregoing table is provided to assist you in
understanding the various direct and indirect costs and expenses that an
investor in the Fund would bear.
- --------------------------------------------------------------------------------
(a) Does not include any service fee on wire redemptions that may be imposed by
a shareholder's agent or predesignated bank.

(b) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the rules of the National
Association of Securities Dealers.

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Management's Discussion and Analysis of the Fund's performance during the fiscal
year ended December 31, 1996 is included in the Fund's Annual Report to
Shareholders dated December 31, 1996. The Fund's Annual Report to Shareholders
may be obtained upon request and without charge by writing or calling the Fund
at the address or telephone number listed on the Prospectus cover.

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FINANCIAL HIGHLIGHTS

The following table has been audited by Ernst & Young LLP, the Fund's
independent auditors, whose unqualified report thereon appears in the Additional
Statement. This information should be read in conjunction with the financial
statements of the Fund incorporated by reference in the Additional Statement.
Selected data for a share of capital stock outstanding throughout the periods:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994(d)
-------- -------- --------
<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(f)............................................................. 8.00% 3.07% 10.70%
======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands).................................... $ 16,963 $ 14,510 $ 17,634
Ratio of Expenses to Average Net Assets................................... 2.17% 2.25% 2.04%(b)
Ratio of Net Investment Loss to Average Net Assets........................ (1.41) (1.12)% (0.26%)(b)
Portfolio Turnover Rate................................................... 54% 38% 12%
Average Commission Rate(c).................................................. $ 0.0241 -- --
</TABLE>

- ------------

<TABLE>
<C> <S>
(a) Includes the effect of realized gains prior to significant increases in shares outstanding.
(b) Annualized.
(c) 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.
(d) From July 11, 1994 (Commencement of Operations).
(e) Based on average month-end shares outstanding.
(f) 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 includes reinvestment of dividends and distributions.
</TABLE>

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3
<PAGE> 6

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INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is long-term capital appreciation. The
production of any current income is incidental to this objective. As further
described below, the Fund will seek to achieve its objective by investing
primarily in the equity securities of foreign and domestic issuers principally
engaged in gold-related activities. There can be no assurance that the Fund's
investment objective will be achieved. The Fund's investment objective and
policy regarding concentration described below are fundamental policies which
may not be changed without the approval of a majority of the Fund's outstanding
voting securities.

The Fund intends to provide investors with the opportunity to invest in gold and
gold-related securities. An investment in the Fund may offer better opportunity
for capital growth for the long-term investor willing to accept above-average
risk. Since, historically, gold as a tangible asset has not always moved in
close correlation with financial assets, an investment in the Fund may be used
to diversify an existing portfolio of non-gold-related securities and other
investments.

Under normal circumstances, the Fund will invest at least 65% of its total
assets in equity securities of companies principally engaged in the exploration,
mining, fabrication, processing, distribution or trading of gold or the
financing, managing, controlling or operating of companies engaged in such
activities. (Such activities and the activities of such related financing,
managing, controlling or operating of companies are referred to herein as
"gold-related" activities.) For these purposes, a company will be considered to
be principally engaged in such activities if it derives more than 50% of its
income or devotes 50% or more of its assets to such activities. The Fund may
also invest in equity securities of companies engaged in similar activities with
respect to silver, platinum or other precious metals or minerals ("precious
metals-related" activities) or of companies in other industries. Equity
securities in which the Fund may invest include common stocks, preferred stocks,
securities convertible into common stock and securities having common stock
characteristics, such as rights and warrants.

The Fund will invest more than 25% of its total assets in securities of
companies in the group of industries involved in gold-related or precious
metals-related activities, as described above. Potential investors in the Fund
should consider the possibly greater risk arising from the concentration of the
Fund's investments in such group of industries.

Because most of the world's gold production is outside of the United States, the
Fund expects that a significant portion of its assets may be invested in
securities of foreign issuers. The percentage of assets invested in particular
countries or regions will change from time to time in accordance with the
judgment of Gabelli Funds, Inc. (the "Adviser"), which may be based on, among
other things, consideration of the political stability and economic outlook of
these countries or regions.

The Fund expects to invest in the securities of companies located in developed
countries as well as those located in emerging markets. Investing in securities
issued by companies located in emerging markets involves not only the risks
discussed below with respect to investing in foreign securities, but also other
risks, including exposure to economic structures that are generally less diverse
and mature than, and to political systems that can be expected to have less
stability than, those of developed countries. Other characteristics of emerging
countries that may affect investment in their markets include certain national
policies that may restrict investment by foreigners in issuers or industries
deemed sensitive to relevant national interests and the absence of developed
legal structures governing private and foreign investments and private property.

The typically small size of the markets for securities issued by companies
located in emerging countries and the possibility of a low or nonexistent volume
of trading in those securities may also result in a lack of liquidity and in
price volatility of those securities.

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4
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The Fund may also invest up to 10% of its total assets in bullion of gold and
other precious metals ("bullion"). Bullion will only be bought and sold through
U.S. and foreign banks, regulated U.S. commodities exchanges, exchanges
affiliated with a regulated U.S. stock exchange and dealers who are members of,
or affiliated with members of, a regulated U.S. commodities exchange, in
accordance with applicable investment laws. Investors should note that bullion
offers the potential for capital appreciation or depreciation, but unlike other
investments does not generate income, and in these transactions the Fund may
encounter higher custody and other costs (including shipping and insurance) than
costs normally associated with ownership of securities. The Fund may attempt to
minimize the costs associated with the actual custody of bullion by the use of
receipts or certificates representing ownership interests in bullion.

Subject to the Fund's policy of investing at least 65% of its total assets in
securities of companies engaged principally in gold-related activities, the Fund
may invest in money market instruments. In cases of abnormal market or economic
conditions, the Fund may invest up to 100% of its assets in money market
instruments for defensive purposes, although the Fund intends to stay invested
in securities satisfying its investment objective to the fullest extent
practicable. Money market instruments include obligations of the U.S. government
and its agencies and instrumentalities, commercial paper including bank
obligations, certificates of deposit (including Eurodollar certificates of
deposit) and repurchase agreements. The Fund intends to invest only in
short-term and medium-term debt securities that the Adviser believes to be of
high quality, i.e., rated in one of the two highest categories by Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's Rating Services ("S&P")
or, if unrated, determined to be equivalent in credit quality by the Adviser.
For liquidity purposes in meeting redemption requests or paying dividends or
expenses, the Fund may also invest its assets in such instruments.

As a diversified investment company, the Fund is subject to the following
limitations as to 75% of its total assets: (a) the Fund may not invest more than
5% of its total assets in the securities of any one issuer, except obligations
of the U.S. government and its agencies and instrumentalities, and (b) the Fund
may not own more than 10% of the outstanding voting securities of any one
issuer.

For hedging purposes only, the Fund may enter into forward foreign currency
exchange transactions, currency swaps, covered call and put options (listed on a
U.S. securities exchange or written in the over-the-counter market), futures
contracts and options on futures. The Fund may also enter into repurchase
agreements, purchase securities on a when-issued or delayed delivery basis and
lend its portfolio securities. For more information on these practices, see
"Additional Investment Policies" below and "Investments" in the Additional
Statement.

Although the Fund will generally invest for the long term, investment securities
may be sold from time to time without regard to the length of time they have
been held. It is anticipated that the annual turnover rate for the Fund will not
exceed 75% under normal circumstances.

Mr. Caesar M.P. Bryan is primarily responsible for the day-to-day management of
the Fund. Mr. Bryan has been a Senior Vice President of GAMCO Investors, Inc., a
wholly-owned subsidiary of the Adviser, since May 1994 and has been the
Portfolio Manager of the Gabelli International Growth Fund since its inception.
Mr. Bryan served as Senior Vice President and Portfolio Manager of Lexington
Management Corporation from 1986 until May 1994.

ADDITIONAL INVESTMENT POLICIES

GENERAL. Subject to the Fund's policy of investing at least 65% of its total
assets in securities of companies engaged principally in gold-related
activities, the Fund may invest in common stocks, preferred stocks, convertible
securities, depository receipts, bonds, notes and other debt obligations of any
maturity, warrants, options and futures contracts on securities and securities
indices, and securities of companies in bank-

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5
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ruptcy or reorganization. Such securities may be issued by domestic or foreign
corporations or other types of entities, governments or agencies or
instrumentalities of governments or supranational agencies. There is no minimum
rating or credit quality of fixed income securities in which the Fund may
invest. Although up to 25% of the Fund's assets may be invested in lower quality
debt securities, the Fund currently does not expect to invest in excess of 5% of
its assets in fixed income securities rated, at the time of investment, lower
than BBB by S&P or Baa by Moody's or unrated but determined by the Adviser to be
of equivalent quality. Securities rated BBB by S&P or Baa by Moody's, while
considered investment-grade, may have speculative characteristics. The Fund also
does not expect to invest in excess of 5% of its assets in securities of
unseasoned issuers (companies that have operated less than three years), which,
due to their short operating history, may have less information available and
may not be as liquid as other securities, or of companies in bankruptcy or
reorganization. The Fund may also utilize other investment strategies such as
short selling, buying or selling when-issued securities, entering into forward
commitments and engaging in various hedging strategies such as the use of
futures and options and repurchase agreements, and foreign currency
transactions, including currency swaps.

Common stocks represent the residual ownership interest in an issuer and are
entitled to the income and increase in the value of the assets and business of
the entity after all of its obligations and preferred stock are satisfied.
Common stocks fluctuate in price in response to many factors, including
historical and prospective earnings of the issuer, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. Preferred stock has a preference over common stock in liquidation
(and generally dividends as well) but is subordinated to the liabilities of the
issuer in all respects. As a general rule the market value of preferred stock
with a fixed dividend rate and no conversion element varies inversely with
interest rates and perceived credit risk, while the market price of convertible
preferred stock generally also reflects some element of conversion value. Bonds,
debentures, notes and money market instruments such as commercial paper and
bankers' acceptances represent obligations of the issuer. Debt securities that
are convertible into or exchangeable for common or preferred stock are
liabilities of the issuer but are generally subordinated to more senior elements
of the issuer's balance sheet. Although such securities also generally reflect
an element of conversion value, their market value also varies with interest
rates and perceived risk. Depositary receipts and shares are utilized to make
investing in a particular security (usually foreign) more convenient for
investors.

INVESTMENTS IN OPTIONS, WARRANTS AND INVESTMENT COMPANIES. The Fund may invest
up to 5% of its assets in options and up to 5% of its assets in warrants to buy
securities. The Fund may also invest up to 10% of its assets (5% per issuer) in
securities issued by other unaffiliated investment companies, although the Fund
may not acquire more than 3% of the voting securities of any investment company.
To the extent the Fund invests in other investment funds, the Fund's
shareholders will incur certain duplicative fees and expenses, including
advisory fees.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Fund may enter into forward
commitments for the purchase or sale of securities, including on a "when-issued"
or "delayed delivery" basis. In such transactions, instruments are

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6
<PAGE> 9

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bought with payment and delivery taking place in the future in order to secure
what is considered to be an advantageous yield or price at the time of the
transaction. Securities purchased under a forward commitment are subject to
market fluctuation, and no interest (or dividends) accrues to the Fund prior to
the settlement date.

SHORT SALES. The Fund may make short sales of securities. A short sale is a
transaction in which a Fund sells a security it does not own in anticipation
that the market price of that security will decline. The market value of the
securities sold short of any one issuer will not exceed either 5% of the Fund's
total assets or 5% of such issuer's voting securities. The Fund will not make a
short sale, if, after giving effect to such sale, the market value of all
securities sold short exceeds 25% of the value of its assets or the Fund's
aggregate short sales of a particular class of securities exceeds 25% of the
outstanding securities of that class. Short sales may only be made in securities
listed on a national securities exchange. The Fund may also make short sales
"against the box" without respect to such limitations. In this type of short
sale, at the time of the sale the Fund owns or has the immediate and
unconditional right to acquire at no additional cost the identical security.

If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a capital gain.
Although the Fund's gain is limited to the price at which it sold the security
short, its potential loss is theoretically unlimited.

REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements with
respect to any securities it owns. Repurchase agreements are considered loans to
the counterparty, and will be fully collateralized at all times with liquid
securities and will only be entered into with financial institutions approved by
the Board of Directors. Repurchase agreements have the risk that collateral may
not be able to be disposed of at a desirable price, delays as a result of
bankruptcy of the counterparty or encumbrances of collateral or restrictions on
its disposition. The term of such agreements is usually from overnight to one
week.

BORROWINGS. The Fund may borrow from banks for temporary or emergency purposes
or to satisfy redemption requests in amounts not in excess of 15% of the Fund's
total assets, with such borrowing not to exceed 5% of the Fund's total assets
for purposes other than satisfying redemption requests. The Fund will not
purchase securities when borrowings exceed 5%.

FORWARD CURRENCY EXCHANGE CONTRACTS AND CURRENCY SWAPS. The Fund may enter into
forward currency exchange contracts and currency swaps to protect against the
effects of fluctuating rates of currency exchange and exchange control
regulations. Forward currency exchange contracts provide for the purchase or
sale of an amount of a specified currency at a future date. Currency swaps are
agreements to exchange cash flows based on changes in the values of the
reference indices. Purposes for which such currency transactions may be used
include protecting against a decline in a foreign currency against the U.S.
dollar between the trade date and the settlement date when the Fund purchases or
sells non-U.S. dollar-denominated securities, locking in the U.S. dollar value
of dividends and interest on securities held by the Fund and generally
protecting the U.S. dollar value of securities held by the Fund against exchange
rate fluctuation. While such forward contracts and currency swaps may limit
losses to the Fund as a result of exchange rate fluctuation, they will also
limit any gains that may otherwise have been realized. In addition to the
hedging risks discussed below, currency transactions include the risk securities
losses could be magnified by changes in the value of the currency in which a
security is denominated relative to the U.S. dollar.

PRECIOUS METALS FUTURES AND FORWARD CONTRACTS. The Fund may enter into futures
and forward contracts on precious metals as a hedge against changes in the
prices of precious metals held or intended to be acquired by the Fund, but not
for speculation or for achieving leverage. The

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7
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Fund's hedging activities may include purchases of futures and forward contracts
as an offset against the effect of anticipated increases in the price of a
precious metal which the Fund intends to acquire or sales of futures and forward
contracts as an offset against the effect of anticipated declines in the price
of precious metals which the Fund owns. Precious metals futures and forward
contract prices can be volatile and are influenced principally by changes in
spot market prices, which in turn are affected by a variety of political and
economic factors. While the correlation between changes in prices of futures and
forward contracts and prices of the precious metals being hedged by such
contracts has historically been very strong, the correlation may at times be
imperfect and even a well-conceived hedge may be unsuccessful to some degree
because of market behavior or unexpected precious metals price trends.

The Fund may also purchase and write covered call or put options on precious
metals futures contracts. Such options would be purchased solely for hedging
purposes. Call options might be purchased to hedge against an increase in the
price of precious metals the Fund intends to acquire, and put options may be
purchased to hedge against a decline in the price of precious metals owned by
the Fund. As is the case with futures contracts, options on precious metals
futures may facilitate the Fund's acquisition of precious metals or permit the
Fund to defer disposition of precious metals for tax or other purposes.

ILLIQUID AND RESTRICTED SECURITIES. The Fund may invest up to 15% of its net
assets in illiquid securities as to which market quotations are not readily
available, including repurchase agreements with more than seven days to
maturity. Up to 5% of the Fund's net assets may be invested in the securities of
issuers which, together with any predecessor, have been in continuous operation
for less than three years. Nevertheless, to the extent it can do so consistent
with the foregoing limitations, the Fund may invest in non-publicly traded
securities, including securities that are not registered under the Securities
Act of 1933, as amended, but that can be offered and sold to qualified
institutional buyers under Rule 144A under that Act. The Board of Directors has
adopted guidelines and delegated to the Adviser, subject to the supervision of
the Board of Directors, the daily function of determining and monitoring the
liquidity of Rule 144A securities. Rule 144A securities may become illiquid if
qualified institutional buyers are not interested in acquiring the securities.

Disposition of illiquid securities often takes more time than for more liquid
securities, may result in higher selling expenses and may not be able to be made
at desirable prices.

See the Additional Statement for more information about these securities and
investment practices.

RISK FACTORS

ALL SECURITIES INVESTMENTS ARE SUBJECT TO RISKS. The equity securities in which
the Fund may invest are generally subordinated to the claims of creditors, and
market prices are subject to the performance of the issuer, its financial health
and market perceptions. In addition, as further described below, there are
special risks inherent in the Fund's policies of investing in gold and
gold-related securities. For certain additional risks relating to the Fund's
investment policies, see "Additional Investment Policies" above.

GOLD-RELATED RISKS. The Fund intends to invest at least 65% of its total assets
in securities of companies engaged in gold-related activities. As a result of
this policy, which is a fundamental policy of the Fund, the Fund's investments
may be subject to greater risk and market fluctuation than a fund that invests
in securities representing a broader range of investment alternatives.
Historically, stock prices of companies involved in precious metals-related
industries have been volatile. Investments related to gold and other precious
metals and minerals are considered speculative and are affected by a variety of
world-wide economic, financial and political factors. Prices of gold and other
precious metals may fluctuate sharply over short periods of time due to changes
in inflation or expectations

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regarding inflation in various countries, the availability of supplies of
precious metals, changes in industrial and commercial demand, metal sales by
governments, central banks or international agencies, investment speculation,
monetary and other economic policies of various governments and government
restrictions on private ownership of certain precious metals and minerals.

FOREIGN SECURITIES. Investments in foreign securities involve certain risks not
ordinarily associated with investments in securities of domestic issuers,
including fluctuations in foreign exchange rates, future political and economic
developments, and the possible imposition of exchange controls or other foreign
governmental laws or restrictions. In addition, with respect to certain
countries, there is the possibility of expropriation of assets, confiscatory
taxation, political or social instability or diplomatic developments which could
adversely affect investments in those countries.

There may be less publicly available information about a foreign company than
about a U.S. company, and accounting, auditing and financial reporting standards
and requirements may not be comparable. Securities of many foreign companies are
less liquid and their prices more volatile than securities of comparable U.S.
companies. Transaction costs of investing in non-U.S. securities markets are
generally higher than markets in the U.S. There is generally less government
supervision and regulation of exchanges, brokers and issuers than there is in
the U.S. The Fund might have greater difficulty taking appropriate legal action
in non-U.S. courts. Depositary receipts that are not sponsored by the issuer may
be less liquid.

Dividend and interest income from non-U.S. securities will generally be subject
to withholding taxes by the country in which the issuer is located and may not
be recoverable by the Fund or the investor.

Such investments in securities of foreign issuers are frequently denominated in
foreign currencies and because the Fund may temporarily hold uninvested reserves
in bank deposits in foreign currencies, the value of the Fund's assets as
measured in U.S. dollars may be affected favorably or unfavorably by changes in
currency rates and exchange control regulations, and the Fund may incur costs in
connection with conversions between various currencies.

The Adviser will attempt to manage these risks so that such strategies and
investments benefit the Fund, but no assurance can be given that they will be
successfully managed.

DERIVATIVE TRANSACTIONS. As described above, the Fund may invest in options and
warrants, forward foreign currency exchange contracts, currency swaps, precious
metals futures and forward contracts, options on futures and other transactions
using derivative instruments. Derivative transactions have certain risks,
including imperfect market correlations, dependence on the credit of the
counterparty, possible inability to enter into offsetting transactions and
market fluctuations, that can result in the Fund being in a worse position than
if the transaction had not occurred. The loss from the Fund's investing in
futures and other derivative transactions is potentially unlimited.

MANAGEMENT OF THE FUND

The Fund's Board of Directors (who, with its officers, are described in the
Additional Statement) has overall responsibility for the management of the Fund.
The Board of Directors decides upon matters of general policy and reviews the
actions of Gabelli & Company, Inc. (the "Distributor") and the Adviser. Pursuant
to an Investment Advisory Contract with the Fund, the Adviser, under the
supervision of the Fund's Board of Directors, provides a continuous investment
program for the Fund's portfolio; provides investment research and makes and
executes recommendations for the purchase and sale of securities and gold and
other precious metals; provides facilities and personnel, and the exercise of
all voting and other rights appertaining thereto required for the Fund's
administrative management; supervises the performance of administrative and
professional services provided by others; and pays the compensation of the
Administrator and all officers and directors of

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the Fund who are its affiliates. As compensation for its services and the
related expenses borne by the Adviser, the Fund pays the Adviser a fee, computed
daily and payable monthly, equal, on an annual basis, to 1.00% of the Fund's
average daily net assets.

The Adviser is located at One Corporate Center, Rye, New York 10580-1434.

The Adviser was formed in 1980 and as of March 31, 1997 acts as investment
adviser to the following funds with aggregate assets in excess of $4.0 billion:

<TABLE>
<CAPTION>
NET ASSETS
3/31/97
(in
OPEN-END FUNDS: millions)
----------
<S> <C>
Gabelli Asset Fund $1,027.1
Gabelli Growth Fund 612.5
Gabelli Value Fund Inc. 436.8
Gabelli Small Cap Growth Fund 205.3
Gabelli Equity Income Fund 60.1
Gabelli U.S. Treasury Money Market Fund 237.8
Gabelli ABC Fund 22.7
Gabelli Global Telecommunications Fund 99.3
Gabelli Global Interactive Couch Potato(R)
Fund 29.4
Gabelli Global Convertible Securities Fund 11.4
Gabelli Gold Fund, Inc. 16.9
Gabelli International Growth Fund, Inc. 17.8
Gabelli Capital Asset Fund 52.4
CLOSED-END FUNDS:
Gabelli Equity Trust Inc. 1,006.2
Gabelli Global Multimedia Trust Inc. 91.5
Gabelli Convertible Securities Fund, Inc. 90.1
</TABLE>

Gabelli & Company, Inc., the Distributor of each open-end fund's respective
shares, is an indirect majority owned subsidiary of the Adviser. GAMCO
Investors, Inc. ("GAMCO"), a wholly owned subsidiary of the Adviser, acts as
investment adviser for individuals, pension trusts, profit sharing trusts and
endowments. As of March 31, 1997, GAMCO had aggregate assets in excess of $5.0
billion under its management. Teton Advisers LLC, an affiliate of the Adviser,
acts as Investment Adviser of The Westwood Funds with assets under management in
excess of $125 million as of March 31, 1997. Mr. Mario J. Gabelli may be deemed
a "controlling person" of the Adviser and the Distributor on the basis of his
ownership of stock of the Adviser.

In addition to the fee of the Adviser, the Fund is responsible for the payment
of all its other operating expenses, which include, among other things, expenses
for legal and independent auditor services, costs of printing all materials sent
to shareholders, charges of State Street Bank and Trust Company (the
"Custodian", "Transfer Agent" and "Dividend Paying Agent") and any other persons
hired by the Fund, securities registration fees, fees and expenses of
unaffiliated directors, accounting and printing costs for reports and similar
materials sent to shareholders, membership fees in trade organizations, fidelity
bond and liability coverage for the Fund's directors, officers and employees,
interest, brokerage and other trading costs, taxes, expenses of qualifying the
Fund for sale in various jurisdictions, expense of its distribution plan adopted
under Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"), expenses of personnel performing shareholder servicing functions,
litigation and other extraordinary or nonrecurring expenses and other expenses
properly payable by the Fund.

The Additional Statement contains further information about the Investment
Advisory Contract, including a more complete description of the advisory and
expense arrangements and administrative provisions.

Affiliates of the Adviser may, in the ordinary course of their business, acquire
for their own account or for the accounts of their advisory clients, significant
(and possibly controlling) positions in the securities of companies that may
also be suitable for investment by the Fund. The securities in which the Fund
might invest may thereby be limited to some extent. However, the Adviser does
not believe that the investment activities of its affiliates will have a
material adverse effect upon the Fund in seeking to achieve its investment
objective. The Adviser may on occasion give advice or take action with respect
to other clients that differs from the actions taken with respect to the Fund.

The Adviser has entered into a Sub-Administration Contact with BISYS Fund
Services L.P. (the "Sub-Administrator") pursuant to which the Sub-Administrator
provides certain administrative services necessary for the Fund's operations.
These services include the preparation and dis-

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tribution of materials for meetings of the Fund's Board of Directors, compliance
testing of Fund activities and assistance in the preparation of proxy
statements, reports to shareholders and other documentation. The Adviser pays
the Sub-Administrator a monthly fee at the annual rate of .10% of the average
daily net assets of the Gabelli funds under its administration (with a minimum
annual fee of $40,000 per portfolio and subject to reduction to .075% on assets
in excess of $350 million and subject to further reduction to .06% on assets in
excess of $600 million) for such services, which, together with the services to
be rendered, are subject to negotiation between the parties and both parties
retain the right unilaterally to terminate the arrangement on not less than 60
days' notice. The Sub-Administrator has its office at 3435 Stelzer Road,
Columbus, Ohio 43219.

DISTRIBUTION PLAN

The Board of Directors of the Fund has approved on behalf of the Fund as being
in the best interests of the Fund and its shareholders have approved, a
Distribution Plan which authorizes payments by the Fund in connection with the
distribution of its shares at an annual rate, as determined from time to time by
the Board of Directors, of up to .25% of the Fund's average daily net assets.
Payments may be made in subsequent years for expenses incurred in prior years.
The potential for such subsequent payments is a contingent liability for which
no amount is currently being recorded because the Fund does not have a
reasonable basis on which to conclude that the Board of Directors will approve
such payment. Interest, carrying or other financing charges on unreimbursed
amounts could also be considered a distribution expense if the Board so
determined and would in such event also potentially be subject to carry-over to
a future year upon specific approval by the Board.

Payments may be made by the Fund under its Distribution Plan for the purpose of
financing any activity primarily intended to result in the sale of shares as
determined by the Board of Directors. Such activities typically include
advertising; compensation for sales and marketing activities of the Distributor,
banks, broker-dealers and service providers; shareholder account servicing;
production and dissemination of prospectus and sales and marketing materials;
and capital or other expenses of associated equipment, rent, salaries, bonuses,
interest and other overhead. To the extent any activity is one which the Fund
may finance without its Distribution Plan, the Fund may also make payments to
finance such activity outside of the Plan and not be subject to its limitations.

The Plan has been implemented by written agreements between the Fund and/or the
Distributor and each person (including the Distributor) to which payments may be
made. Administration of the Plan is regulated by Rule 12b-1 of the 1940 Act,
which includes requirements that the Board of Directors receive and review, at
least quarterly, reports concerning the nature and qualification of expenses for
which payments are made, that the Board of Directors approve all agreements
implementing the Plan and that the Plan may be continued from year to year only
if the Board of Directors concludes at least annually that continuation of such
Plan is likely to benefit shareholders.

The Board of Directors has initially implemented the Plan by having the Fund
enter into an agreement with the Distributor authorizing reimbursement of
expenses (including overhead) incurred by the Distributor and its affiliates up
to the .25% rate authorized by the Plan for distribution activities of the types
listed above. To the extent any of these payments are based on allocations by
the Distributor, the Fund may be considered to be participating in joint
distribution activities with other funds distributed by the Distributor. Any
such allocations would be subject to approval by the Fund's non-interested
Directors and would be based on such factors as the net assets of the Fund, the
number of shareholder inquiries and similar pertinent criteria.

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PURCHASE OF SHARES

Shares of the Fund are currently offered without a sales load as an investment
vehicle for individuals, institutions, fiduciaries and retirement plans. The
minimum initial investment in the Fund is currently $1,000. The Fund will
increase its minimum initial investment to $10,000 when it has either 10,000
shareholders or over $100,000,000 of assets under management. There is no
minimum for subsequent investments in the Fund. Investments through an
Individual Retirement Account ("IRA") or other retirement plans, however, have
different requirements (see "Retirement Plans"). Shares of the Fund are sold at
the net asset value per share next determined after receipt of an order by the
Fund's Distributor or transfer agent in proper form with accompanying check or
bank wire or other payment arrangements satisfactory to the Fund. Although most
shareholders elect not to receive stock certificates, certificates for whole
shares only can be obtained on specific written request to the transfer agent.

Shares of the Fund may also be purchased through shareholder agents that are not
affiliated with the Fund or the Distributor. There is no sales or service charge
imposed by the Fund other than as described, but agents who do not receive
distribution payments or sales charges may impose a charge to the investor for
their services. Such fees may vary among agents, and such agents may impose
higher initial or subsequent investment requirements than those established by
the Fund. Services provided by broker-dealers may include allowing the investor
to establish a margin account and to borrow on the value of the Fund's shares in
that account. It is the responsibility of the shareholder's agent to establish
procedures which would assure that upon receipt of an order to purchase shares
of the Fund the order will be transmitted so that it will be received by the
Distributor before the time when the price applicable to the buy order expires.

Prospectuses, sales material and applications may be obtained from the
Distributor. The Fund and its Distributor reserve the right in their sole
discretion (1) to suspend the offering of the Fund's shares and (2) to reject
purchase orders when, in the judgment of the Fund's management, such rejection
is in the best interests of the Fund.

The net asset value per share of the Fund is determined as of the close of the
regular session of the New York Stock Exchange ("NYSE"), which is generally 4:00
p.m., Eastern time, on each day that trading is conducted on the NYSE, by
dividing the value of the Fund's net assets (i.e., the value of its securities
and other assets less its liabilities, including expenses payable or accrued but
excluding capital stock and surplus) by the number of shares outstanding at the
time the determination is made. Foreign securities are valued as of the close of
trading on the primary exchange on which they trade. Fund securities for which
market quotations are readily available are valued at market value as determined
by the last quoted sale price prior to the valuation time on the valuation date
in the case of securities traded on securities exchanges or other markets for
which such information is available. Other readily marketable securities are
valued at the average of the latest bid and asked quotations for such securities
prior to the valuation time. Debt securities with remaining maturities of 60
days or less are valued at amortized cost, which the Board of Directors believes
represents fair value. Gold and other precious metals held by the Fund are
valued daily at fair market value, based upon price quotations in common use, in
such manner as the Board of Directors from time to time determines in good faith
to reflect most accurately their fair market value. All other assets are valued
at fair value as determined by or under the supervision of the Board of
Directors. See "Determination of Net Asset Value" in the Additional Statement.

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MAIL. To make an initial purchase by mail, send a completed subscription order
form with a check for the amount of the investment payable to the Fund to:

THE GABELLI FUNDS
P.O. BOX 8308
BOSTON, MA 02266-8308

Subsequent purchases do not require a completed application and can be made by
(1) mailing a check to the same address noted above or (2) bank wire, as
indicated below. The exact name and number of the shareholder's account should
be clearly indicated.

Checks will be accepted if drawn in U.S. currency on a domestic bank for less
than $100,000. U.S. dollar checks drawn against a non-U.S. bank may be subject
to collection delays and will be accepted only upon actual receipt of funds by
the Transfer Agent. Bank collection fees may apply. The Fund will not accept
checks made payable to a third party.

BANK WIRE. To initially purchase shares of the Fund using the wire system for
transmittal of money among banks, an investor should first telephone the Fund at
1-800-422-3554 to obtain a new account number. The investor should then instruct
a Federal Reserve System member bank to wire funds to:

State Street Bank and Trust Company
ABA # 011-0000-28 REF DDA # 99046187
Attn: Shareholder Services
Re: The Gabelli Gold Fund

A/C# (Registered Owner)
- -----------------------------------------------------------
Account of
- -----------------------------------------
225 Franklin Street, Boston, MA 02110

For initial purchases, the investor should promptly complete and mail the
subscription order form to the address shown above for mail purchases. There may
be a charge by your bank for transmitting the money by bank wire but State
Street Bank and Trust Company does not charge investors in the Fund for the
receipt of wire transfers. If you are planning to wire funds, it is suggested
that you instruct your bank early in the day so the wire transfer can be
accomplished the same day.

OVERNIGHT MAIL OR PERSONAL DELIVERY. Deliver a check made payable to the Fund
in which you wish to invest along with a completed subscription order form to:

THE GABELLI FUNDS
THE BFDS BUILDING, 6TH FLOOR
TWO HERITAGE DRIVE
NORTH QUINCY, MA 02171

TELEPHONE INVESTMENT PLAN. You may purchase additional shares of the Fund by
telephone through the Automated Clearing House (ACH) system as long as your bank
is a member of the ACH system and you have a completed, approved Investment Plan
application on file with our Transfer Agent. The funding for your purchase will
be automatically deducted from the ACH eligible account you designate on the
application. Your investment will normally be credited to your Mutual Fund
account on the first business day following your telephone request. Your request
must be received no later than 4:00 p.m. eastern time. There is a minimum of
$100 for each telephone investment. Any subsequent changes in banking
information must be submitted in writing and accompanied by a sample voided
check. To initiate an ACH purchase, please call 1-800-GABELLI (1-800-422-3554)
or 1-800-872-5365. Fund shares purchased through the Telephone or Automatic
Investment Plan will not be available for redemption for up to fifteen (15) days
following the purchase date.

AUTOMATIC INVESTMENT PLAN. The Fund offers an automatic monthly investment
plan, details of which can be obtained from the Distributor. There is no minimum
initial investment for accounts establishing an automatic investment plan.

SYSTEMATIC WITHDRAWAL PLAN. The Fund offers a systematic withdrawal program for
shareholders whereby they can authorize an automatic redemption on a monthly,
quarterly or annual basis. Details can be obtained from the Distributor.

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OTHER INVESTORS. No minimum initial investment is required for officers,
directors or full-time employees of the Fund, other investment companies managed
by the Adviser, the Adviser, the Administrator, the Transfer Agent, the
Distributor or their affiliates, including members of the "immediate family" of
such individuals and retirement plans and trusts for their benefit. The term
"immediate family" refers to spouses, children and grandchildren (adopted or
natural), parents, grandparents, siblings, a spouse's siblings, a sibling's
spouse and a sibling's children.

REDEMPTION OF SHARES

Upon receipt by the Distributor or the Transfer Agent of a redemption request in
proper form, shares of the Fund will be redeemed at their next determined net
asset value. Redemption requests received after the time as of which the Fund's
net asset value is determined on a particular day will be redeemed at the net
asset value of the Fund determined on the next day that net asset value is
determined. Checks for redemption proceeds will normally be mailed to the
shareholder's address of record within seven days, but will not be mailed until
all checks in payment for the purchase of the shares to be redeemed have been
honored, which may take up to 15 days. Redemption requests may be made by letter
to the Transfer Agent, specifying the name of the Fund, the dollar amount or
number of shares to be redeemed and the account number. The letter must be
signed in exactly the same way the account is registered (if there are more than
one owner of the shares, all must sign) and, if any certificates for the shares
to be redeemed are outstanding, presentation of such certificates properly
endorsed is also required. Signatures on the redemption request and/or
certificates must be guaranteed by an "eligible guarantor institution," which
includes certain banks, brokers, dealers, credit unions, securities exchanges
and associations, clearing agencies and savings associations (signature
guarantees by notaries public are not acceptable). Shareholders may also redeem
the Fund's shares through shareholder agents, who have made arrangements with
the Fund permitting them to redeem shares by telephone or facsimile transmission
and who may charge shareholders a fee for this service if they have not received
any payments under the appropriate Distribution Plan. It is the responsibility
of the shareholder's agent to establish procedures which would assure that upon
receipt of a shareholder's order to redeem shares of the Fund the order will be
transmitted so that it will be received by the Fund before the time when the
price applicable to the order expires.

Further documentation, such as copies of corporate resolutions and instruments
of authority, are normally requested from corporations, administrators,
executors, personal representatives, trustees or custodians to evidence the
authority of the person or entity making the redemption request.

The Fund may suspend the right of redemption or postpone the date of payment for
more than seven days during any period when (1) trading on the NYSE is
restricted or the NYSE is closed, other than customary weekend and holiday
closings; (2) the SEC has by order permitted such suspension or (3) an
emergency, as defined by rules of the SEC, exists, making disposal of portfolio
investments or determination of the value of the net assets of the Fund not
reasonably practicable.

To minimize expenses, the Fund reserves the right to redeem, upon not less than
30 days' notice, all shares of the Fund in an account (other than an IRA) which
as a result of shareholder redemption has a value below $500. However, a
shareholder will be allowed to make additional investments prior to the date
fixed for redemption to avoid liquidation of the account.

TELEPHONE REDEMPTION BY CHECK. Each Fund accepts telephone requests for
redemption of unissued shares, subject to a $25,000 limitation. By calling
either 1-800-GABELLI (422-3554) or 1-800-872-5365, you may request that a check
be mailed to the address of record on the account, provided that the address has
not changed within thirty (30) days prior to your request. The check will be
made payable to the person in whose name the account is registered

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and will normally be mailed within seven (7) days.

BY BANK WIRE. The Fund accepts telephone requests from any investor for wire
redemption in excess of $1,000 (but subject to a $25,000 limitation) to a
predesignated bank either on the subscription order form or in a subsequent
written authorization with the signature guaranteed. The Fund accepts signature
guaranteed written requests for redemption by bank wire without limitation. The
proceeds are normally wired on the following business day. Your bank must be
either a member of the Federal Reserve System or have a correspondent bank which
is a member. Any change to the banking information made at a later date must be
submitted in writing with a signature guarantee. The Fund will not impose a wire
service fee. A shareholder's agent or the predesignated bank, however, may
impose its own service fee on wire transfers.

Requests for telephone redemption must be received between 9:00 a.m. and 4:00
p.m. Eastern time. If your telephone call is received after this time or on a
day when the NYSE is not open, the request will be entered the following
business day. Shares are redeemed at the net asset value next determined
following your request. The Fund's shares purchased by check or through the
automatic purchase plan will not be available for redemption for up to fifteen
(15) days following the purchase. Shares held in certificate form must be
returned to the Transfer Agent for redemption of shares. Telephone redemption is
not available for IRAs.

The proceeds of a telephone redemption may be directed to an account in another
mutual fund advised by the Adviser provided the account is registered in the
redeeming shareholder's name. Such purchase will be made at the respective net
asset value plus any applicable sales charge with credit given for any sales
charge previously paid to the Distributor.

The Fund and its transfer agent will not be liable for following telephone
instructions reasonably believed to be genuine. In this regard, the Fund and its
transfer agent require personal identification information before accepting a
telephone redemption. If the Fund or its transfer agent fail to use reasonable
procedures, the Fund may be liable for losses due to fraudulent instructions. A
shareholder may redeem shares by telephone unless he elects in the subscription
order form not to have such ability.

RETIREMENT PLANS

The Fund has available a form of IRA for investment in shares which may be
obtained from the Distributor. The minimum investment required to open an IRA
for investment in shares of the Fund is $1,000 for an individual, except that
both the individual and his or her spouse may establish separate IRAs if their
combined investment is $1,250. There is no minimum for additional investment in
an IRA.

Investors who are self-employed may purchase shares of the Fund through
tax-deductible contributions to retirement plans for self-employed persons,
known as Keogh or H.R. 10 plans. The Fund does not currently act as a Sponsor
for such plans. The Fund's shares may also be a suitable investment for other
types of qualified pension or salary reduction plans known as "401(k) Plans"
which give participants the right to defer portions of their compensation for
investment on a tax-deferred basis until distributions are made from the plans.
The minimum initial investment for an individual under such plans is $1,000, and
there is no minimum for additional investments.

Under the Internal Revenue Code of 1986, as amended (the "Code"), individuals
may make wholly or partly tax deductible IRA contributions of up to $2,000
annually, depending on whether they are active participants in an
employer-sponsored retirement plan and on their income level. However, dividends
and distributions held in the account are not taxed until withdrawn in
accordance with the provisions of the Code. An individual with a non-working
spouse may establish a separate IRA for the spouse under the same conditions and
contribute a maximum of $4,000 annually to either or both IRAs, provided that no
more than $2,000 may be contributed to the IRA of either spouse.

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Investors should be aware that they may be subject to penalties or additional
tax on contributions to or withdrawals from IRAs or other retirement plans which
are not permitted by the applicable provisions of the Code. Persons desiring
information concerning investments through IRA accounts or other retirement
plans should write or telephone the Distributor.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each dividend and capital gains distribution, if any, declared by the Fund on
its outstanding shares will, unless the shareholder elects otherwise, be paid on
the payment date fixed by the Board of Directors in additional shares of the
Fund having an aggregate net asset value as of the ex-dividend date of such
dividend or distribution equal to the cash amount of such distribution. An
election to receive dividends and distributions may be changed by notifying the
Fund in writing at any time prior to the record date for a particular dividend
or distribution. There are no sales or other charges in connection with the
reinvestment of dividends and capital gains distributions. There is no fixed
dividend rate, and there can be no assurance that the Fund will pay any
dividends or realize any capital gains. However, the Fund currently intends to
pay dividends and capital gains distributions, if any, on an annual basis.

The Fund has qualified and intends to continue to qualify for tax treatment as a
"Regulated Investment Company" under the Code in order to be relieved of federal
income tax on that part of its net investment income and realized capital gains
which it pays out to its shareholders.

To qualify, the Fund must meet certain relatively complex tests, including the
requirement that less than 30% of its gross income (exclusive of losses) must be
derived from the sale or other disposition of securities held for less than
three months. The loss of such status by the Fund would result in the Fund being
subject to Federal income tax on its taxable income and gains.

Dividends out of net investment income and distributions of realized short-term
capital gains are taxable to the recipient shareholders as ordinary income. In
the case of corporate shareholders, such distributions are eligible for the
dividends received deduction subject to proportionate reduction if the aggregate
qualifying dividends received by the Fund from domestic corporations in any year
are less than its "gross income" as defined by the Code. Distributions out of
long-term capital gains are taxable to the recipient as long-term capital gains.
Dividends and distributions declared by the Fund may also be subject to state
and local taxes. Prior to investing in shares of the Fund, prospective
shareholders may wish to consult their tax advisers concerning the federal,
state and local tax consequences of such investment.

GENERAL INFORMATION

DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES. The Fund was organized as
a Maryland corporation on May 13, 1994. Its authorized capital stock consists of
1,000,000,000 shares of stock having a par value of one tenth of one cent
($.001) per share. The Fund is not required, and does not intend, to hold
regular annual shareholder meetings, but may hold special meetings for
consideration of proposals requiring shareholder approval, such as changing
fundamental policies or upon the written request of 10% of the Fund's shares to
replace its Directors. The Fund's Board of Directors is authorized to divide the
unissued shares into separate series of stock, each series representing a
separate, additional portfolio.

There are no conversion or preemptive rights in connection with any shares of
the Fund. All shares, when issued in accordance with the terms of the offering,
will be fully paid and nonassessable. Shares will be redeemed at net asset
value, at the option of the shareholder.

The Fund sends semi-annual and annual reports to all shareholders which include
lists of portfolio securities and other assets and the Fund's financial
statements, which shall be audited annually. Unless it is clear that a
shareholder is a nominee for the account of an unrelated person or a shareholder
otherwise specifically requests in writing, the Fund may send a single copy of
semi-annual, annual and other reports to share-

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16
<PAGE> 19

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holders to all accounts at the same address and all accounts of any person at
that address.

The shares of the Fund have noncumulative voting rights which means that the
holders of more than 50% of the shares can elect 100% of the Directors if the
holders choose to do so, and, in that event, the holders of the remaining shares
will not be able to elect any person or persons to the Board of Directors.
Unless specifically requested by an investor who is a shareholder of record, the
Fund does not issue certificates evidencing shares.

PORTFOLIO TURNOVER. The investment policies of the Fund may lead to frequent
changes in investments, particularly in periods of rapidly fluctuating interest
or currency exchange rates. The portfolio turnover may be higher than that of
other investment companies. During the fiscal years ended December 31, 1995 and
December 31, 1996, the portfolio turnover rates were 38% and 54%, respectively.

Portfolio turnover generally involves some expense to the Fund, including
brokerage commissions or dealer mark-ups and other transaction costs on the sale
of securities and reinvestment in other securities. Rapid turnover makes it more
difficult to qualify as a pass through entity for federal tax purposes in view
of a requirement that the Fund obtain less than 30% of its gross income in any
tax year from gains on the sale of securities held less than three months.
Failure of the Fund to qualify as a pass through entity would result in federal
taxation of the Fund at the standard corporate rate of 34% and may adversely
affect returns to shareholders. The portfolio turnover rate is computed by
dividing the lesser of the amount of the securities and other assets purchased
or securities and other assets sold by the average monthly value of securities
and other assets owned during the year (excluding securities whose maturities at
acquisition were one year or less).

PERFORMANCE INFORMATION. The Fund may furnish data about its investment
performance in advertisements, sales literature and reports to shareholders.
"Total return" represents the annual percentage change in value of $1,000
invested at the net asset value for the one, five and ten year periods (if
applicable) and the life of the Fund through the most recent calendar quarter,
assuming reinvestment of all dividends and distributions. The Fund may also
furnish total return calculations for other periods based on investments at
various net asset values.

CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. State Street Bank and
Trust Company is the Custodian for the Fund's cash and securities and other
assets as well as the Transfer and Dividend Disbursing Agent for its shares.
Boston Financial Data Services, Inc., an affiliate of State Street Bank and
Trust Company, performs the shareholder services on behalf of State Street and
is located at the BFDS Building, Two Heritage Drive, North Quincy, Massachusetts
02171. State Street Bank and Trust Company does not assist in and is not
responsible for investment decisions involving assets of the Fund.

INFORMATION FOR SHAREHOLDERS. All shareholder inquiries regarding
administrative procedures, including the purchase and redemption of shares,
should be directed to the Distributor, Gabelli & Company, Inc., One Corporate
Center, Rye, New York 10580-1434. For assistance, call 1-800-GABELLI
(1-800-422-3554).

Upon request, Gabelli & Company, Inc. will provide without charge, a paper copy
of this Prospectus to investors or their representatives who received this
Prospectus in an electronic format.

This Prospectus omits certain information contained in the Registration
Statement filed with the SEC. Copies of the Registration Statement, including
items omitted herein, may be obtained from the SEC by paying the charges
prescribed under its rules and regulations. The Statement of Additional
Information included in such Registration Statement may be obtained without
charge from the Fund or its Distributor.

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17
<PAGE> 20

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Table of Fees and Expenses........... 2
Financial Highlights................. 3
Investment Objective and Policies.... 4
Additional Investment Policies....... 5
Risk Factors......................... 8
Management of the Fund............... 9
Distribution Plan.................... 11
Purchase of Shares................... 12
Redemption of Shares................. 14
Retirement Plans..................... 15
Dividends, Distributions and Taxes... 16
General Information.................. 16
</TABLE>

- ------------------------------------------------------

No dealer, salesman or other person has been authorized to give any information
or to make any representation other than those contained in this Prospectus, and
if given or made, such information or representation may not be relied upon as
being authorized by the Fund, the Adviser, the Administrator, the Distributor or
any affiliate thereof.

- ------------------------------------------------------

GABELLI
GOLD
FUND,
INC.
PROSPECTUS

MAY 1, 1997

GABELLI FUNDS, INC.
INVESTMENT ADVISER

GABELLI & COMPANY, INC.

DISTRIBUTOR

- --------------------------------------------------------------------------------
<PAGE> 21

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GABELLI GOLD FUND, INC.
ONE CORPORATE CENTER, RYE, NEW YORK 10580-1434
TELEPHONE 1-800-GABELLI (1-800-422-3554)

HTTP://WWW.GABELLI.COM

================================================================================
STATEMENT OF ADDITIONAL INFORMATION

MAY 1, 1997

This Statement of Additional Information ("Additional Statement") relates to
Gabelli Gold Fund, Inc., a Maryland Corporation (the "Fund"), and is not a
prospectus and is only authorized for distribution when preceded or accompanied
by the Fund's prospectus dated May 1, 1997, as supplemented from time to time
(the "Prospectus"). This Statement of Additional Information contains
information in addition to that set forth in the Prospectus into which this
document is incorporated by reference and should be read in conjunction with the
Prospectus. Additional copies of this document may be obtained without charge by
writing or telephoning the Fund at the address and telephone number set forth
above.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investments....................................................... B- 2
The Adviser....................................................... B-10
The Distributor................................................... B-12
Directors and Officers............................................ B-12
Investment Restrictions........................................... B-15
Portfolio Transactions and Brokerage.............................. B-16
Purchase and Redemption of Shares................................. B-17
Dividends, Distributions and Taxes................................ B-18
Investment Performance Information................................ B-20
Counsel and Independent Auditors.................................. B-21
Shares of Beneficial Interest..................................... B-22
Appendix -- Description of Ratings................................ B-23
</TABLE>

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<PAGE> 22

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THE FOLLOWING INFORMATION SUPPLEMENTS THAT IN THE PROSPECTUS

INVESTMENTS

Subject to the Fund's policy of investing at least 65% of its assets in the
equity securities of foreign and domestic companies engaged principally in
gold-related activities, the Fund may invest in any of the securities described
below.

EQUITY SECURITIES

Because the Fund in seeking to achieve its investment objective may invest
in the common stocks of both domestic and foreign issuers, an investment in the
Fund should be made with an understanding of the risks inherent in any
investment in common stocks including the risk that the financial condition of
the issuers of the Fund's portfolio securities may become impaired or that the
general condition of the stock market may worsen (both of which may contribute
directly to a decrease in the value of the securities and thus in the value of
the Fund's shares). Additional risks include risks associated with the right to
receive payments from the issuer which is generally inferior to the rights of
creditors of, or holders of debt obligations or preferred stock issued by, the
issuer.

Moreover, common stocks do not represent an obligation of the issuer and
therefore do not offer any assurance of income or provide the degree of
protection of debt securities. The issuance of debt securities or even preferred
stock by an issuer will create prior claims for payment of principal, interest
and dividends which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the economic interest
of holders of common stock with respect to assets of the issuer upon liquidation
or bankruptcy. Further, unlike the debt securities which typically have a stated
principal amount payable at maturity (which value will be subject to market
fluctuations prior thereto), common stocks have neither a fixed principal amount
nor a maturity and have values which are subject to market fluctuations for as
long as the common stocks remain outstanding. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. The value of the common stocks
in the Fund's portfolio thus may be expected to fluctuate.

Preferred stocks are usually entitled to rights on liquidation which are
senior to those of common stocks. For these reasons, preferred stocks generally
entail less risk than common stocks. Such securities may pay cumulative
dividends. Because the dividend rate is pre-established, and they are senior to
common stocks, such securities tend to have less possibility of capital
appreciation.

Some of the securities in the Fund may be in the form of depositary
receipts. Depositary receipts usually represent common stock or other equity
securities of non-U.S. issuers deposited with a custodian in a depository. The
underlying securities are usually withdrawable at any time by surrendering the
depository receipt. Depositary receipts are usually denominated in U.S. dollars
and dividends and other payments from the issuer are converted by the custodian
into U.S. dollars before payment to receipt holders. In other respects
depositary receipts for foreign securities have the same characteristics as the
underlying securities. Depositary receipts that are not sponsored by the issuer
may be less liquid and there may be less readily available public information
about the issuer.

BULLION OF GOLD AND OTHER PRECIOUS METALS

The Fund may also invest up to 10% of its total assets in bullion of gold
and other precious metals ("bullion"). Bullion will only be bought and sold
through U.S. and foreign banks, regulated

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B-2
<PAGE> 23

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U.S. commodities exchanges, exchanges affiliated with a regulated U.S. stock
exchange, and dealers who are members of, or affiliated with members of, a
regulated U.S. commodities exchange, in accordance with applicable investment
laws. Investors should note that bullion offers the potential for capital
appreciation or depreciation, but unlike other investments does not generate
income, and in these transactions the Fund may encounter higher custody and
other costs (including shipping and insurance) than costs normally associated
with ownership of securities. The Fund may attempt to minimize the costs
associated with the actual custody of bullion by the use of receipts or
certificates representing ownership interests in bullion.

NONCONVERTIBLE FIXED INCOME SECURITIES

The category of fixed income securities which are not convertible or
exchangeable for common stock includes preferred stocks, bonds, debentures,
notes and money market instruments such as commercial paper and bankers
acceptances. There is no minimum credit rating for these securities in which the
Fund may invest. Accordingly, the Fund could invest in securities in default
although the Fund will not invest more than 5% of its assets in such securities.

Up to 25% of the Fund's assets may be invested in lower quality debt
securities although the Fund currently does not expect to invest more than 5% of
its assets in such securities. The market values of lower quality fixed income
securities tend to be less sensitive to changes in prevailing interest rates
than higher-quality securities but more sensitive to individual corporate
developments than higher-quality securities. Such lower-quality securities also
tend to be more sensitive to economic conditions than are higher-quality
securities. Accordingly, these lower-quality securities are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation and will
generally involve more credit risk than securities in the higher-quality
categories. Even securities rated Baa or BBB by Moody's Investors Service, Inc.
("Moody's") and Standard and Poor's Rating Services ("S&P"), respectively, which
ratings are considered investment grade, possess some speculative
characteristics. See "Appendix -- Description of Ratings." There are risks
involved in applying credit ratings as a method of evaluating high yield
obligations in that credit ratings evaluate the safety of principal and interest
payments, not market value risk. In addition, credit rating agencies may not
change credit ratings on a timely basis to reflect changes in economic or
company conditions that affect a security's market value. The Fund will rely on
the judgment, analysis and experience of its adviser, Gabelli Funds, Inc. (the
"Adviser"), in evaluating the creditworthiness of an issuer. In this evaluation,
the Adviser will take into consideration, among other things, the issuer's
financial resources and ability to cover its interest and fixed charges, factors
relating to the issuer's industry and its sensitivity to economic conditions and
trends, its operating history, the quality of the issuer's management and
regulatory matters.

The risk of loss due to default by the issuer is significantly greater for
the holders of lower quality securities because such securities are generally
unsecured and are often subordinated to other obligations of the issuer. During
an economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of lower quality securities may experience financial stress
and may not have sufficient revenues to meet their interest payment obligations.
An issuer's ability to service its debt obligations may also be adversely
affected by specific corporate developments, its inability to meet specific
projected business forecasts, or the unavailability of additional financing.

Factors adversely affecting the market value of high yield and other fixed
income securities will adversely affect the Fund's net asset value. In addition,
the Fund may incur additional expenses to the extent that it is required to seek
recovery upon a default in the payment of principal of or interest on its
portfolio holdings.

From time to time, proposals have been discussed regarding new legislation
designed to limit the use of certain high yield debt securities by issuers in
connection with leveraged buy-outs, mergers and

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B-3
<PAGE> 24

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acquisitions, or to limit the deductibility of interest payments on such
securities. Such proposals, if enacted into law, could reduce the market for
such debt securities generally, could negatively affect the financial condition
of issuers of high yield securities by removing or reducing a source of future
financing, and could negatively affect the value of specific high yield issues
and the high yield market in general. For example, under a provision of the
Internal Revenue Code enacted in 1989, a corporate issuer may be limited from
deducting all of the original issue discount on high-yield discount obligations
(i.e., certain types of debt securities issued at a significant discount to
their face amount). The likelihood of passage of any additional legislation or
the effect thereof is uncertain.

The secondary trading market for lower-quality fixed income securities is
generally not as liquid as the secondary market for higher-quality securities
and is very thin for some securities. The relative lack of an active secondary
market may have an adverse impact on market price and the Fund's ability to
dispose of particular issues when necessary to meet liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The relative lack of an active secondary market
for certain securities may also make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing its portfolio. Market
quotations are generally available on many high yield issuers only from a
limited number of dealers and may not necessarily represent firm bids of such
dealers or prices for actual sales. During such times, the responsibility of the
Board of Directors to value the securities becomes more difficult and judgment
plays a greater role in valuation because there is less reliable, objective data
available.

CONVERTIBLE SECURITIES

The Fund may invest up to 25% of its assets in convertible securities
rated, at the time of investment, less than BBB by S&P or Baa by Moody's or
unrated but of equivalent credit quality in the judgment of the Adviser.

Some of the convertible securities in the Fund's portfolio may be
"Pay-in-Kind" securities. During a designated period from original issuance, the
issuer or such a security may pay dividends or interest to the holder by issuing
additional fully paid and nonassessable shares or units of the same or another
specified security.

SOVEREIGN DEBT SECURITIES

The Fund may invest in securities issued or guaranteed by any country and
denominated in any currency. The Fund expects to invest in the securities of
companies located in developed countries as well as those located in emerging
markets. Developed markets include Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, the Netherlands,
New Zealand, Norway, Spain, Sweden, Switzerland, the United Kingdom and the
United States. An emerging country is any country which is generally considered
to be an emerging or developing country by the International Bank for
Reconstruction and Development (more commonly referred to as the World Bank) and
the International Finance Corporation, as well as countries that are classified
by the United Nations or otherwise regarded by its authorities as emerging or
developing, at the time of the Fund's investment. The obligations of
governmental entities have various kinds of government support and include
obligations issued or guaranteed by governmental entities with taxing power.
These obligations may or may not be supported by the full faith and credit of a
government. Debt securities issued or guaranteed by foreign governmental
entities have credit characteristics similar to those of domestic debt
securities but include additional risks. These additional risks include those
resulting from devaluation of currencies, future adverse political and economic
developments and other foreign governmental laws.

The Fund may also purchase securities issued by semi-governmental or
supranational agencies such as the Asian Development Bank, the International
Bank for Reconstruction and Development, the Export-Import Bank and the European
Investment Bank. The governmental members, or "stockhold-

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B-4
<PAGE> 25

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ers," usually make initial capital contributions to the supranational entity and
in many cases are committed to make additional capital contributions if the
supranational entity is unable to repay its borrowings. The Fund will not invest
more than 25% of its assets in the securities of such supranational entities.

The Fund may invest in securities denominated in a multi-national currency
unit. An illustration of a multi-national currency unit is the European Currency
Unit (the "ECU"), which is a "basket" consisting of specified amounts of the
currencies of the member states of the European Community, a Western European
economic cooperative organization that includes France, Germany, the
Netherlands, the United Kingdom and other countries. The specific amounts of
currencies comprising the ECU may be adjusted by the Council of Ministers of the
European Community to reflect changes in relative values of the underlying
currencies. Such investments involve credit risks associated with the issuer and
currency risks associated with the currency in which the obligation is
denominated.

SECURITIES SUBJECT TO REORGANIZATION

The Fund may invest without limit in securities for which a tender or
exchange offer has been made or announced and in securities of companies for
which a merger, consolidation, liquidation or reorganization proposal has been
announced if, in the judgment of the Adviser, there is a reasonable prospect of
capital appreciation significantly greater than the brokerage and other
transaction expenses involved.

In general, securities which are the subject of such an offer or proposal
sell at a premium to their historic market price immediately prior to the
announcement of the offer or may also discount what the stated or appraised
value of the security would be if the contemplated transaction were approved or
consummated. Such investments may be advantageous when the discount
significantly overstates the risk of the contingencies involved; significantly
undervalues the securities, assets or cash to be received by shareholders of the
prospective portfolio company as a result of the contemplated transaction; or
fails adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value. The evaluation
of such contingencies requires unusually broad knowledge and experience on the
part of the Adviser which must appraise not only the value of the issuer and its
component businesses as well as the assets or securities to be received as a
result of the contemplated transaction but also the financial resources and
business motivation of the offeror and the dynamics and business climate when
the offer or proposal is in process. Since such investments are ordinarily
short-term in nature, they will tend to increase the turnover ratio of the Fund
thereby increasing its brokerage and other transaction expenses as well as make
it more difficult for the Fund to meet the tests for favorable tax treatment as
a "Regulated Investment Company" under the Internal Revenue Code of 1986, as
amended (the "Code") (see "Dividends, Distributions and Taxes" in the
Prospectus). The Adviser intends to select investments of the type described
which, in its view, have a reasonable prospect of capital appreciation which is
significant in relation to both risk involved and the potential of available
alternate investments as well as to monitor the effect of such investments on
the tax qualification test of the Code.

OPTIONS

The Fund may purchase or sell options on individual securities as well as
on indices of securities as a means of achieving additional return or of hedging
the value of its portfolio.

A call option is a contract that gives the holder of the option the right,
in return for a premium paid, to buy from the seller the security underlying the
option at a specified exercise price at any time during the term of the option
or, in some cases, only at the end of the term of the option. The seller of the
call option has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price. A put option is a
contract that gives the holder of the option the right in return for a premium
to sell to the seller the underlying security at a specified price. The seller
of the put option, on

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B-5
<PAGE> 26

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the other hand, has the obligation to buy the underlying security upon exercise
at the exercise price. The Fund's transactions in options may be subject to
specific segregation requirements. See "Hedging Transactions" below.

If the Fund has sold an option, it may terminate its obligation by
effecting a closing purchase transaction. This is accomplished by purchasing an
option of the same series as the option previously sold. There can be no
assurance that a closing purchase transaction can be effected when the Fund so
desires.

The purchaser of an option risks a total loss of the premium paid for the
option if the price of the underlying security does not increase or decrease
sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
forgoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of the current market
value in the case of a put option. Options purchased and sold other than on an
exchange in private transactions also impose on the Fund the credit risk that
the counterparty will fail to honor its obligations. The Fund will not purchase
options if, as a result, the aggregate cost of all outstanding options exceeds
5% of the Fund's assets. To the extent that puts, straddles and similar
investment strategies involve instruments regulated by the Commodity Futures
Trading Commission, the Fund is limited to investments not in excess of 5% of
the its total assets.

WARRANTS AND RIGHTS

The Fund may invest up to 5% of its total assets in warrants or rights
(other than those acquired in units or attached to other securities) which
entitle the holder to buy equity securities at a specific price for or at the
end of a specific period of time.

INVESTMENTS IN INVESTMENT COMPANIES

The Fund may invest up to 10% of its assets (5% per issuer) in securities
issued by other unaffiliated investment companies, although the Fund may not
acquire more than 3% of the voting securities of any investment company.

WHEN ISSUED, DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS

The Fund may enter into forward commitments for the purchase or sale of
securities, including on a "when issued" or "delayed delivery" basis. In such
transactions, instruments are bought with payment and delivery taking place in
the future in order to secure what is considered to be an advantageous yield or
price at the time of the transaction. In some cases, a forward commitment may be
conditioned upon the occurrence of a subsequent event, such as approval and
consummation of a merger, corporate reorganization or debt restructuring, i.e.,
a when, as and if issued security. When such transactions are negotiated, the
price is fixed at the time of the commitment, with payment and delivery taking
place in the future, generally a month or more after the date of the commitment.
While the Fund will only enter into a forward commitment with the intention of
actually acquiring the security, the Fund may sell the security before the
settlement date if it is deemed advisable.

Securities purchased under a forward commitment are subject to market
fluctuation, and no interest (or dividends) accrues to the Fund prior to the
settlement date. The Fund will segregate with its custodian cash or liquid
securities in an aggregate amount at least equal to the amount of its
outstanding forward commitments.

SHORT SALES

The Fund may make short sales of securities. A short sale is a transaction
in which the Fund sells a security it does not own in anticipation that the
market price of that security will decline. The Fund

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B-6
<PAGE> 27

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expects to make short sales both to obtain capital gains from anticipated
declines in securities and as a form of hedging to offset potential declines in
long positions in the same or similar securities. The short sale of a security
is considered a speculative investment technique.

When the Fund makes a short sale, it must borrow the security sold short
and deliver it to the broker-dealer through which it made the short sale in
order to satisfy its obligation to deliver the security upon conclusion of the
sale. The Fund may have to pay a fee to borrow particular securities and is
often obligated to pay over any payments received on such borrowed securities.

The Fund's obligation to replace the borrowed security will be secured by
collateral deposited with the broker-dealer, usually cash, U.S. government
securities or other liquid securities. The Fund will also be required to deposit
similar collateral with its Custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
the greater of the price at which the security is sold short or 100% of the
current market value of the security sold short. Depending on arrangements made
with the broker-dealer from which it borrowed the security regarding payment
over of any payments received by the Fund on such security, the Fund may not
receive any payments (including interest) on its collateral deposited with such
broker-dealer. If the price of the security sold short increases between the
time of the short sale and the time the Fund replaces the borrowed security, the
Fund will incur a loss; conversely, if the price declines, the Fund will realize
a capital gain. Any gain will be decreased, and any loss increased, by the
transaction costs described above. Although the Fund's gain is limited to the
price at which it sold the security short, its potential loss is theoretically
unlimited.

The market value of the securities sold short of any one issuer will not
exceed either 5% of the Fund's total assets or 5% of such issuer's voting
securities. The Fund will not make a short sale, if, after giving effect to such
sale, the market value of all securities sold short exceeds 25% of the value of
its assets or the Fund's aggregate short sales of a particular class of
securities exceeds 25% of the outstanding securities of that class. The Fund may
also make short sales "against the box" without respect to such limitations. In
this type of short sale, at the time of the sale, the Fund owns or has the
immediate and unconditional right to acquire at no additional cost the identical
security.

RESTRICTED AND ILLIQUID SECURITIES

The Fund may invest up to a total of 15% of its net assets in securities
that are subject to restrictions on resale and securities the markets for which
are illiquid, including repurchase agreements with more than seven days to
maturity. Illiquid securities include securities the disposition of which is
subject to substantial legal or contractual restrictions. The sale of illiquid
securities often requires more time and results in higher brokerage charges or
dealer discounts and other selling expenses than does the sale of securities
eligible for trading on national securities exchanges or in the over-the-counter
markets. Restricted securities may sell at a price lower than similar securities
that are not subject to restrictions on resale. Unseasoned issuers are companies
(including predecessors) that have operated less than three years. The continued
liquidity of such securities is not as well assured as that of publicly traded
securities, and accordingly the Board of Directors will monitor their liquidity.
The Board will review pertinent factors such as trading activity, reliability of
price information and trading patterns of comparable securities in determining
whether to treat any such security as liquid for purposes of the foregoing 15%
test. To the extent the Board treats such securities as liquid, temporary
impairments to trading patterns of such securities may adversely affect the
Fund's liquidity.

To the extent it can do so consistent with the foregoing limitations, the
Fund may invest in non-publicly traded securities, including securities that are
not registered under the Securities Act of 1933, as amended, but that can be
offered and sold to qualified institutional buyers under Rule 144A under that
Act. The Board of Directors has adopted guidelines and delegated to the Adviser,
subject to the supervision of the Board of Directors, the daily function of
determining and monitoring the liquidity of

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B-7
<PAGE> 28

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Rule 144A securities. Rule 144A securities may become illiquid if qualified
institutional buyers are not interested in acquiring the securities.

REPURCHASE AGREEMENTS

The Fund may invest in repurchase agreements, which are agreements pursuant
to which securities are acquired by the Fund from a third party with the
understanding that they will be repurchased by the seller at a fixed price on an
agreed date. These agreements may be made with respect to any of the portfolio
securities in which the Fund is authorized to invest. Repurchase agreements may
be characterized as loans secured by the underlying securities. The Fund may
enter into repurchase agreements with (i) member banks of the Federal Reserve
System having total assets in excess of $500 million and (ii) securities
dealers, provided that such banks or dealers meet the creditworthiness standards
established by the Fund's Board of Directors ("Qualified Institutions"). The
Adviser will monitor the continued creditworthiness of Qualified Institutions,
subject to the supervision of the Board of Directors. The resale price reflects
the purchase price plus an agreed upon market rate of interest which is
unrelated to the coupon rate or date of maturity of the purchased security. The
collateral is marked to market daily. Such agreements permit the Fund to keep
all its assets earning interest while retaining "overnight" flexibility in
pursuit of investment of a longer-term nature.

THE USE OF REPURCHASE AGREEMENTS INVOLVES CERTAIN RISKS. For example, if
the seller of securities under a repurchase agreement defaults on its obligation
to repurchase the underlying securities, as a result of its bankruptcy or
otherwise, the Fund will seek to dispose of such securities, which action could
involve costs or delays. If the seller becomes insolvent and subject to
liquidation or reorganization under applicable bankruptcy or other laws, the
Fund's ability to dispose of the underlying securities may be restricted.
Finally, it is possible that the Fund may not be able to substantiate its
interest in the underlying securities. To minimize this risk, the securities
underlying the repurchase agreement will be held by the Fund's custodian at all
times in an amount at least equal to the repurchase price, including accrued
interest. If the seller fails to repurchase the securities, the Fund may suffer
a loss to the extent proceeds from the sale of the underlying securities are
less than the repurchase price. The Fund will not enter into repurchase
agreements of a duration of more than seven days if, taken together with all
other illiquid securities in the Fund's portfolio, more than 15% of its net
assets would be so invested.

LOANS OF PORTFOLIO SECURITIES

To increase income, the Fund may lend its portfolio securities to
securities broker-dealers or financial institutions if (1) the loan is
collateralized in accordance with applicable regulatory requirements including
collateralization continuously at no less than 100% by marking to market daily,
(2) the loan is subject to termination by the Fund at any time, (3) the Fund
receives reasonable interest or fee payments on the loan, (4) the Fund is able
to exercise all voting rights with respect to the loaned securities and (5) the
loan will not cause the value of all loaned securities to exceed 33 1/3% of the
value of the Fund's assets.

If the borrower fails to maintain the requisite amount of collateral, the
loan automatically terminates and the Fund could use the collateral to replace
the securities while holding the borrower liable for any excess of replacement
cost over the value of the collateral. As with any extension of credit, there
are risks of delay in recovery and in some cases even loss of rights in
collateral should the borrower of the securities fail financially.

BORROWING

The Fund may not borrow money except for (1) short-term credits from banks
as may be necessary for the clearance of portfolio transactions, and (2)
borrowings from banks for temporary or emergency

- --------------------------------------------------------------------------------

B-8
<PAGE> 29

- --------------------------------------------------------------------------------

purposes, including the meeting of redemption requests, which would otherwise
require the untimely disposition of its portfolio securities. Borrowing may not,
in the aggregate, exceed 15% of assets after giving effect to the borrowing, and
borrowing for purposes other than meeting redemptions may not exceed 5% of the
value of the Fund's assets after giving effect to the borrowing. The Fund will
not make additional investments when borrowings exceed 5% of assets. The Fund
may mortgage, pledge or hypothecate assets to secure such borrowings.

HEDGING TRANSACTIONS

FUTURES AND FORWARD CONTRACTS. The Fund may enter into futures and forward
contracts only for certain bona fide hedging, yield enhancement and risk
management purposes. The Fund may enter into futures and forward contracts on
precious metals as a hedge against changes in the prices of precious metals held
or intended to be acquired by the Fund, but not for speculation or for achieving
leverage. The Fund's hedging activities may include purchases of futures and
forward contracts as an offset against the effect of anticipated increases in
the price of a precious metal which the Fund intends to acquire or sales of
futures and forward contracts as an offset against the effect of anticipated
declines in the price of precious metals which the Fund owns. Precious metals
futures and forward contract prices can be volatile and are influenced
principally by changes in spot market prices, which in turn are affected by a
variety of political and economic factors. While the correlation between changes
in prices of futures and forward contracts and prices of the precious metals
being hedged by such contracts has historically been very strong, the
correlation may at times be imperfect and even a well conceived hedge may be
unsuccessful to some degree because of market behavior or unexpected precious
metals price trends. The Fund may also enter into futures and forward contracts
for the purchase or sale of debt securities, debt instruments, or indices of
prices thereof, stock index futures, other financial indices, and U.S.
Government Securities.

A "sale" of a futures contract (or a "short" futures position) means the
assumption of a contractual obligation to deliver the securities underlying the
contract at a specified price at a specified future time. A "purchase" of a
futures contract (or a "long" futures position) means the assumption of a
contractual obligation to acquire the securities underlying the contract at a
specified price at a specified future time.

Certain futures contracts are settled on a net cash payment basis rather
than by the sale and delivery of the securities underlying the futures
contracts. U.S. futures contracts have been designed by exchanges that have been
designated as "contract markets" by the Commodity Futures Trading Commission, an
agency of the U.S. Government, and must be executed through a futures commission
merchant (i.e., a brokerage firm) which is a member of the relevant contract
market. Futures contracts trade on these contract markets and the exchange's
affiliated clearing organization guarantees performance of the contracts as
between the clearing members of the exchange.

The Fund may also purchase and write covered call or put options on
precious metals futures contracts. Such options would be purchased solely for
hedging purposes. Call options might be purchased to hedge against an increase
in the price of precious metals the Fund intends to acquire, and put options may
be purchased to hedge against a decline in the price of precious metals owned by
the Fund. As is the case with futures contracts, options on precious metals
futures may facilitate the Fund's acquisition of precious metals or permit the
Fund to defer disposition of precious metals for tax or other purposes.

These contracts entail certain risks, including but not limited to the
following: no assurance that futures contracts transactions can be offset at
favorable prices, possible reduction of the Fund's yield due to the use of
hedging, possible reduction in value of both the securities hedged and the
hedging instrument, possible lack of liquidity due to daily limits on price
fluctuation, imperfect correlation between the contracts and the securities
being hedged, and potential losses in excess of the amount invested in the
futures contracts themselves.

- --------------------------------------------------------------------------------

B-9
<PAGE> 30

- --------------------------------------------------------------------------------

CURRENCY TRANSACTIONS. The Fund may enter into various currency
transactions, including forward foreign currency contracts, currency swaps,
foreign currency or currency index futures contracts and put and call options on
such contracts or on currencies. A forward foreign currency contract involves an
obligation to purchase or sell a specific currency for a set price at a future
date. A currency swap is an arrangement whereby each party exchanges one
currency for another on a particular day and agrees to reverse the exchange on a
later date at a specific exchange rate. Forward foreign currency contracts and
currency swaps are established in the interbank market conducted directly
between currency traders (usually large commercial banks or other financial
institutions) on behalf of their customers. Futures contracts are similar to
forward contracts except that they are traded on an organized exchange and the
obligations thereunder may be offset by taking an equal but opposite position to
the original contract, with profit or loss determined by the relative prices
between the opening and offsetting positions. The Fund expects to enter into
these currency contracts and swaps in primarily the following circumstances: to
"lock in" the U.S. dollar equivalent price of a security the Fund is
contemplating to buy or sell that is denominated in a non-U.S. currency; or to
protect against a decline against the U.S. dollar of the currency of a
particular country to which the Fund's portfolio has exposure. The Fund
anticipates seeking to achieve the same economic result by utilizing from time
to time for such hedging a currency different from the one of the given
portfolio security as long as, in the view of the Adviser, such currency is
essentially correlated to the currency of the relevant portfolio security based
on historic and expected exchange rate patterns.

The Adviser may choose to use such instruments on behalf of the Fund
depending upon market conditions prevailing and the perceived instrument needs
of the Fund. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively broad and deep as compared to the markets for
similar instruments which are established in the interbank market. In accordance
with the current position of the Securities and Exchange Commission, the Fund
will treat swap transactions as illiquid for purposes of the Fund's policy
regarding illiquid securities. Futures contracts, interest rate swaps, and
options on securities, indices and futures contracts and certain currency
contracts sold by the Fund are generally subject to segregation and coverage
requirements with the result that, if the Fund does not hold the security or
futures contract underlying the instrument, the Fund will be required to
segregate on an ongoing basis with its custodian, cash, U.S. government
securities, or other high grade liquid debt obligations in an amount at least
equal to the Fund's obligations with respect to such instruments. Such amounts
fluctuate as the obligations increase or decrease. The segregation requirement
can result in the Fund maintaining securities positions it would otherwise
liquidate or segregating assets at a time when it might be disadvantageous to do
so.

THE ADVISER

The Adviser is a New York corporation with principal offices located at One
Corporate Center, Rye, New York 10580-1434.

Pursuant to an Investment Advisory Contract, which was approved by the
Fund's sole shareholder on June 15, 1994, the Adviser furnishes a continuous
investment program for the Fund's portfolio, makes the day-to-day investment
decisions for the Fund, arranges the portfolio transactions for the Fund and
generally manages the Fund's investments in accordance with the stated policies
of the Fund, subject to the general supervision of the Board of Directors of the
Fund.

Under the Investment Advisory Contract, the Adviser also (1) provides the
Fund with the services of persons competent to perform such supervisory,
administrative, and clerical functions as are necessary to provide efficient
administration of the Fund, including maintaining certain books and records and
overseeing the activities of the Fund's Custodian and Transfer Agent; (2)
oversees the performance of

- --------------------------------------------------------------------------------

B-10
<PAGE> 31

- --------------------------------------------------------------------------------

administrative and professional services provided to the Fund by others,
including the Fund's Custodian, Transfer Agent and Dividend Disbursing Agent, as
well as legal, accounting, auditing and other services performed for the Fund;
(3) provides the Fund, if requested, with adequate office space and facilities;
(4) prepares, but does not pay for, periodic updating of the Fund's registration
statement, Prospectus and Statement of Additional Information, including the
printing of such documents for the purpose of filings with the SEC; (5)
supervises the calculation of the net asset value of shares of the Fund; (6)
prepares, but does not pay for, all filings under state "Blue Sky" laws of such
states or countries as are designated by the Distributor, which may be required
to register or qualify, or continue the registration or qualification, of the
Fund and/or its shares under such laws; and (7) prepares notices and agendas for
meetings of the Fund's Board of Directors and minutes of such meetings in all
matters required by the Investment Company Act of 1940 as amended (the "1940
Act") to be acted upon by the Board.

The Adviser has entered into a Sub-Administration Contract with BISYS Fund
Services L.P. (the "Sub-Administrator") pursuant to which the Sub-Administrator
provides certain administrative services necessary for the Fund's operations but
which do not concern the investment advisory and portfolio management services
provided by the Adviser. For such services and the related expenses borne by the
Sub-Administrator, the Adviser pays a monthly fee at the annual rate of .10% of
the average net assets of the Gabelli funds under its administration (with a
minimum annual fee of $40,000 per portfolio and subject to reduction to .075% on
assets in excess of $350 million and subject to further reduction to .06% on
assets in excess of $600 million) which, together with the services to be
rendered, is subject to negotiation between the parties and both parties retain
the right unilaterally to terminate the arrangement on not less than 60 days'
notice.

The Investment Advisory Contract provides that absent willful misfeasance,
bad faith, gross negligence or reckless disregard of its duty, the Adviser and
its employees, officers, directors and controlling persons are not liable to the
Fund or any of its investors for any act or omission by the Adviser or for any
error of judgment or for losses sustained by the Fund. However, the Contract
provides that the Fund is not waiving any rights it may have with respect to any
violation of law which cannot be waived. The Contract also provides
indemnification for the Adviser and each of these persons for any conduct for
which they are not liable to the Fund. The Investment Advisory Contract in no
way restricts the Adviser from acting as adviser to others. The Fund has agreed
by the terms of its Investment Advisory Contract that the word "Gabelli" in its
name is derived from the name of the Adviser which in turn is derived from the
name of Mario J. Gabelli; that such name is the property of the Adviser for
copyright and/or other purposes; and that, therefore, such name may freely be
used by the Adviser for other investment companies, entities or products. The
Fund has further agreed that in the event that for any reason the Adviser ceases
to be its investment adviser, it will, unless the Adviser otherwise consents in
writing, promptly take all steps necessary to change its name to one which does
not include "Gabelli."

The Investment Advisory Contract is terminable without penalty by the Fund
on not more than sixty days' written notice when authorized by the Directors of
the Fund, by the holders of a majority, as defined in the Act, of the
outstanding shares of the Fund, or by the Adviser. The Investment Advisory
Contract will automatically terminate in the event of its assignment, as defined
in the 1940 Act and rules thereunder, except to the extent otherwise provided by
order of the Securities and Exchange Commission or any rule under the 1940 Act
and except to the extent the 1940 Act no longer provides for automatic
termination, in which case the approval of a majority of the disinterested
directors is required for any "assignment." The Investment Advisory Contract
provides that unless terminated it will remain in effect from year to year so
long as continuance of the Investment Advisory Contract is approved annually by
the Directors, or the shareholders of the Fund and in either case, by a majority
vote of the Directors who are not parties to the Investment Advisory Contract or
"interested persons" as defined in the 1940 Act of any such person cast in
person at a meeting called specifically for the purpose of voting

- --------------------------------------------------------------------------------

B-11
<PAGE> 32

- --------------------------------------------------------------------------------

on the continuance of the Investment Advisory Contract. For the fiscal years
ended December 31, 1994, 1995 and 1996, the Adviser earned and received fees of
$37,607, $174,090, and $205,967, respectively.

THE DISTRIBUTOR

The Fund has entered into a Distribution Agreement with Gabelli & Company,
Inc. (the "Distributor"), a New York corporation which is a subsidiary of
Gabelli Funds, Inc., having principal offices located at One Corporate Center,
Rye, New York 10580-1434. The Distributor acts as agent of the Fund for the
continuous offering of its shares on a best efforts basis.

The Distribution Agreement is terminable by the Distributor or the Fund at
any time without penalty on not more than sixty nor less than thirty days'
written notice, provided, that termination by the Fund must be directed or
approved by the Board of Directors of the Fund, by the vote of the holders of a
majority of the outstanding securities of the Fund, or by written consent of a
majority of the directors who are not interested persons of the Fund or the
Distributor. The Distribution Agreement will automatically terminate in the
event of its assignment, as defined in the 1940 Act. The Distribution Agreement
provides that, unless terminated, it will remain in effect from year to year, so
long as continuance of the Distribution Agreement is approved annually by the
Fund's Board of Directors or by a majority of the outstanding voting securities
of the Fund, and in either case, also by a majority of the Directors who are not
interested persons of the Fund or the Distributor.

During the fiscal year ended December 31, 1996, the Distributor paid
distribution expenses under the Distribution Plan of $94,400. Of this amount
$27,600 was spent on printing, postage and stationery, $38,200 on overhead
support expenses and $28,500 on salaries of personnel of the Distributor.
Pursuant to the Distribution Plan, the Fund paid the Distributor $51,500, or
.25% of its average net assets.

DIRECTORS AND OFFICERS

The Directors and Executive Officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Adviser or the Administrator, are shown below. Directors deemed to be
"interested persons" of the Fund for purposes of the Investment Company Act of
1940 are indicated by an asterisk.

<TABLE>
<CAPTION>
NAME, POSITION WITH FUND AND PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS;
ADDRESS AFFILIATIONS WITH THE ADVISER OR ADMINISTRATOR
- ----------------------------------- --------------------------------------------------------
<S> <C>
Mario J. Gabelli* Chairman, President, Chief Executive Officer and a
Chairman of the Board Director of Gabelli Funds, Inc., the Adviser and the
One Corporate Center indirect parent of Gabelli & Company, Inc., the
Rye, New York 10580 Distributor; Chief Investment Officer of GAMCO
Age: 54 Investors, Inc.; President and Chairman of The Gabelli
Equity Trust Inc. and Gabelli Global Multimedia Trust
Inc., Director of Gabelli International Growth Fund,
Inc., Gabelli Investor Funds, Inc. and The Treasurer's
Fund, Inc.; President, Chief Investment Officer and
Director of Gabelli Equity Series Funds, Inc., Gabelli
Global Series Funds, Inc., The Gabelli Capital Series
Funds, Inc., The Gabelli Value Fund Inc., The Gabelli
Convertible Securities Fund, Inc., and Trustee of The
Gabelli Asset Fund, The Gabelli Growth Fund and The
Gabelli Money Market Funds; Chairman and Director of
Lynch Corporation; Director and Adviser of Gabelli
International Ltd.
</TABLE>

- --------------------------------------------------------------------------------

B-12
<PAGE> 33

- --------------------------------------------------------------------------------

E. Val Cerutti Chief Executive Officer of Cerutti Consultants, Inc.;
Director Former President and Chief Operating Officer of Stella
227 McLain Street D'oro Biscuit Company (through 1992); Adviser, Iona
Mount Kisco, New York 10549 College School of Business; Director of Lynch
Age: 58 Corporation and The Gabelli Convertible Securities Fund,
Inc.

Anthony J. Colavita President and Attorney at Law in the law firm of Anthony
Director J. Colavita, P.C. since 1961; Director of The Gabelli
575 White Plains Road Value Fund Inc., Gabelli Global Series Funds, Inc., The
Eastchester, New York 10709 Gabelli Convertible Securities Fund, Inc., The Gabelli
Age: 62 Capital Series Funds, Inc., Gabelli International Growth
Fund, Inc., Gabelli Investor Funds, Inc., The
Treasurer's Fund, Inc. and Gabelli Equity Series Funds,
Inc.; Trustee of The Gabelli Asset Fund, The Gabelli
Money Market Funds, The Gabelli Growth Fund and The
Westwood Funds.

Karl Otto Pohl* Partner of Sal Oppenheim Jr. & Cie. (Private investment
Director bank); Former President of the Deutsche Bundesbank
One Corporate Center (Germany's Central Bank) and Chairman of its Central
Rye, New York 10580 Bank Council (1980-1991); Currently board member of IBM
Age: 67 World Trade Europe/Middle East/Africa Corp.; Bertlesmann
AG; Zurich Versicherungs-Gesellshaft (insurance); the
International Advisory Board of General Electric
Company; the International Council for JP Morgan & Co.;
the Board of Supervisory Directors of ROBECo/o Group;
and the Supervisory Board of Royal Dutch (petroleum
company); Advisory Director of Unilever N.V. and
Unilever Deutschland; German Governor, International
Monetary Fund (1980-1991); Board Member, Bank for
International Settlements (1980-1991); Director/Trustee
of all Funds managed by the Adviser and The Treasurer's
Fund, Inc.

Werner Roeder, M.D. Director of Surgery, Lawrence Hospital and practicing
Director private physician. Director, Gabelli Global Series
One Corporate Center Funds, Inc., The Gabelli Capital Series Fund, Inc.,
Rye, New York 10580 Gabelli Investor Funds, Inc., The Treasurer's Fund, Inc.
Age: 56 and Gabelli International Growth Fund, Inc.; Trustee of
the Westwood Funds.

Anthonie C. van Ekris Managing Director of Balmac International. Director of
Director Stahal Hardmayer A.Z. (through present). Director,
LeColumbia Gabelli Equity Series Funds, Inc., The Treasurer's Fund,
11 Blvd. Princess Grace Inc., Gabelli Global Series Funds, Inc., Gabelli
Monaco, MC 98000 International Growth Fund, Inc., The Gabelli Capital
Age: 63 Series Fund, Inc., and The Gabelli Convertible
Securities Fund, Inc.; Trustee of The Gabelli Asset
Fund, The Gabelli Growth Fund, and The Gabelli Money
Market Funds.
</TABLE>

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B-13
<PAGE> 34

- --------------------------------------------------------------------------------

Daniel E. Zucchi President of Daniel E. Zucchi Associates. Formerly
Director Senior Vice President and Director of Consumer Marketing
One Corporate Center of Hearst Magazines (through 1995).
Rye, New York 10580
Age: 56

Bruce N. Alpert Vice President and Chief Operating Officer of the
Vice President and Treasurer investment advisory division of the Adviser; Vice
One Corporate Center President and Treasurer of The Gabelli Equity Trust
Rye, New York 10580 Inc., The Gabelli Global Multimedia Trust Inc., The
Age: 45 Gabelli Convertible Securities Fund, Inc.; Gabelli
Equity Series Funds, Inc.; Gabelli Gold Fund, Inc.;
Gabelli Capital Series Funds; Gabelli Global Series
Funds, Inc., The Gabelli Money Market Funds; The Gabelli
Value Fund Inc.; President and Treasurer of The Gabelli
Asset Fund and The Gabelli Growth Fund. Vice President
of The Westwood Funds and Manager of Teton Advisers LLC.

James E. McKee Vice President and General Counsel of GAMCO Investors,
Secretary Inc. since 1993 and of Gabelli Funds, Inc. since August
One Corporate Center 1995; Secretary of all Funds Advised by Gabelli Funds,
Rye, New York 10580 Inc. and Teton Advisers LLC since August 1995. Branch
Age: 33 Chief with the U.S. Securities and Exchange Commission
in New York 1992 through 1993. Staff attorney with the
U.S. Securities and Exchange Commission in New York from
1989 through 1992.
</TABLE>

The Fund pays each Director who is not an employee of the Adviser or an
affiliated company an annual fee of $1,000 and $250 for each meeting of the
Board of Directors attended by the Director, and reimburses Directors for
certain travel and other out-of-pocket expenses incurred by them in connection
with attending such meetings. Directors and officers of the Fund who are
employed by the Adviser or an affiliated company receive no compensation or
expense reimbursement from the Fund.

The following table sets forth certain information regarding the
compensation of the Fund's directors and officers. Except as disclosed below, no
executive officer or person affiliated with the Fund received compensation from
the Fund for the calendar year ended December 31, 1996 in excess of $60,000.

- --------------------------------------------------------------------------------

B-14
<PAGE> 35

- --------------------------------------------------------------------------------

COMPENSATION TABLE

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
TOTAL COMPENSATION
FROM THE FUND AND
NAME OF PERSON, AGGREGATE COMPENSATION FUND COMPLEX
POSITION FROM THE FUND PAID TO DIRECTORS*
- ---------------------------------------------------------------------------------------------------

<S> <C> <C>
Mario J. Gabelli................................... 0 0
Chairman of the Board
E. Val Cerutti..................................... $2,000 $ 8,000(2)
Director
Anthony J. Colavita................................ $2,000 $70,000(14)
Director
Karl Otto Pohl..................................... $1,750 $77,750(16)
Director
Werner Roeder, M.D. ............................... $2,000 $14,500(7)
Director
Anthonie C. van Ekris.............................. $2,000 $49,000(12)
Director
Daniel E. Zucchi................................... $1,750 $ 1,750(1)
Director
</TABLE>

- ------------

* Represents the total compensation paid to such persons during the calendar
year ended December 31, 1996. The parenthetical number represents the number
of investment companies (including the Fund) from which such person receives
compensation that are considered part of the same fund complex as the Fund,
because, among other things, they have a common investment adviser.

INVESTMENT RESTRICTIONS

The Fund's investment objective and the following investment restrictions
are fundamental and cannot be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities (defined in the 1940 Act as
the lesser of (a) more than 50% of the outstanding shares or (b) 67% or more of
the shares represented at a meeting at which more than 50% of the outstanding
shares are represented). All other investment policies or practices are
considered by the Fund not to be fundamental and accordingly may be changed
without stockholder approval. If a percentage restriction on investment or use
of assets set forth below is adhered to at the time a transaction is effected,
later changes in percentage resulting from changing market values or total
assets of the Fund will not be considered a deviation from policy. The Fund may
not:

(1) issue senior securities, except that the Fund may borrow money
from a bank, including on margin if margin securities are owned,
in an amount up to 33 1/3% of its total assets (including the
amount of such enumerated senior securities issued but excluding
any liabilities and indebtedness not constituting senior
securities) and except that the Fund may borrow up to an
additional 5% of its total assets for temporary purposes; or
pledge its assets other than to secure such issuances or in
connection with hedging transactions, short sales, when-issued and
forward commitment transactions and similar investment strategies;

(2) make loans of money or property to any person, except through
loans of portfolio securities, the purchase of fixed income
securities or the acquisition of securities subject to repurchase
agreements;

- --------------------------------------------------------------------------------

B-15
<PAGE> 36

- --------------------------------------------------------------------------------

(3) underwrite the securities of other issuers, except to the extent
that in connection with the disposition of portfolio securities or
the sale of its own shares the Fund may be deemed to be an
underwriter;

(4) invest for the purpose of exercising control over management of
any company;

(5) purchase real estate or interests therein, including limited
partnerships that invest primarily in real estate equity
interests, other than publicly traded real estate investment
trusts and publicly traded master limited partnership interests;
or

(6) purchase or sell commodities or commodity contracts except for
certain bona fide hedging, yield enhancement and risk management
purposes or invest in any oil, gas or mineral interests, provided
that the Fund may invest in bullion.

In addition, as a diversified investment company, the Fund is subject to
the following limitations as to 75% of its total assets: (a) the Fund may not
invest more than 5% of its total assets in the securities of any one issuer,
except obligations of the U.S. Government and its agencies and
instrumentalities, and (b) the Fund may not own more than 10% of the outstanding
voting securities of any one issuer.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Adviser is authorized on behalf of the Fund to employ brokers to effect
the purchase or sale of portfolio securities with the objective of obtaining
prompt, efficient and reliable execution and clearance of such transactions at
the most favorable price obtainable ("best execution") at reasonable expense.
Transactions in securities other than those for which a securities exchange is
the principal market are generally done through a principal market maker.
However, such transactions may be effected through a brokerage firm and a
commission paid whenever it appears that a broker can obtain a more favorable
overall price. In general, there may be no stated commission in the case of
securities traded on the over-the-counter markets, but the prices of those
securities may include undisclosed commissions or markups. Options transaction
will usually be effected through a broker and a commission will be charged. The
Fund also expects that securities will be purchased at times in underwritten
offerings where the price includes a fixed amount of compensation generally
referred to as the underwriter's concession or discount.

The Adviser currently serves as Adviser to a number of investment company
clients and may in the future act as adviser to others. Affiliates of the
Adviser act as investment adviser to numerous private accounts. It is the
practice of the Adviser and its affiliates to cause purchase and sale
transactions to be allocated among the Fund and others whose assets they manage
in such manner as it deems equitable. In making such allocations among the Fund
and other client accounts, the main factors considered are the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the persons
responsible for managing the portfolios of the Fund and other client accounts.

The policy of the Fund regarding purchases and sales of securities and
options for its portfolio is that primary consideration will be given to
obtaining the most favorable prices and efficient execution of transactions. In
seeking to implement the Fund's policies, the Adviser effects transactions with
those brokers and dealers who the Adviser believes provide the most favorable
prices and are capable of providing efficient executions. If the Adviser
believes such price and execution are obtainable from more than one broker or
dealer, it may give consideration to placing portfolio transactions with those
brokers and dealers who also furnish research and other services to the Fund or
the Adviser of the type described in Section 28(e) of the Securities Exchange
Act of 1934. In doing so, the Fund may also pay higher commission rates than the
lowest available when the Adviser believes it is reasonable to do so in

- --------------------------------------------------------------------------------

B-16
<PAGE> 37

- --------------------------------------------------------------------------------

light of the value of the brokerage and research services provided by the broker
effecting the transaction. Such services may include, but are not limited to,
any one or more of the following: information as to the availability of
securities for purchase or sale; statistical or factual information or opinions
pertaining to investment; wire services; and appraisals or evaluations of
portfolio securities.

The Adviser may also place orders for the purchase or sale of portfolio
securities with Gabelli & Company, Inc. ("Gabelli"), a broker-dealer member of
the National Association of Securities Dealers, Inc. and an affiliate of the
Adviser, when it appears that, as an introducing broker or otherwise, Gabelli
can obtain a price and execution which is at least as favorable as that
obtainable by other qualified brokers. The Adviser may also consider sales of
shares of the Fund and any other registered investment companies managed by the
Adviser and its affiliates by brokers and dealers other than the Distributor as
a factor in its selection of brokers and dealers to execute portfolio
transactions for the Fund.

As required by Rule 17e-1 under the 1940 Act, the Board of Directors of the
Fund has adopted "Procedures" which provide that the commissions paid to Gabelli
on stock exchange transactions may not exceed that which would have been charged
by another qualified broker or member firm able to effect the same or a
comparable transaction at an equally favorable price. Rule 17e-1 and the
Procedures contain requirements that the Board, including independent Directors,
conduct periodic compliance reviews of such brokerage allocations and review
such schedule at least annually for its continuing compliance with the foregoing
standard. The Adviser and Gabelli are also required to furnish reports and
maintain records in connection with such reviews.

The following table sets forth certain information regarding the brokerage
commissions paid and the brokerage commissions paid to Gabelli affiliates for
the period from July 11, 1994 (commencement of operations) through December 31,
1994, and the fiscal years ended December 31, 1995, and 1996.

<TABLE>
<CAPTION>
TOTAL BROKERAGE COMMISSIONS PAID TO
PERIOD BROKERAGE COMMISSIONS PAID GABELLI AFFILIATES
----------------------- -------------------------- -----------------------------
<S> <C> <C>
1994................... $ 53,398 $ 0
1995................... $ 58,454 $ 0
1996................... $ 49,039 $ 0
</TABLE>

To obtain the best execution of portfolio trades on the New York Stock
Exchange ("NYSE"), Gabelli controls and monitors the execution of such
transactions on the floor of the NYSE through independent "floor brokers" or
through the Designated Order Turnaround ("DOT") System of the NYSE. Such
transactions are then cleared, confirmed to the Fund for the account of Gabelli,
and settled directly with the Custodian of the Fund by a clearing house member
firm which remits the commission less its clearing charges to Gabelli. Gabelli
may also effect portfolio transactions on behalf of the Fund in the same manner
and pursuant to the same arrangements on other national securities exchanges
which adopts direct access rules similar to those of the NYSE.

PURCHASE AND REDEMPTION OF SHARES

Cancellation of purchase orders for shares of the Fund (as, for example,
when checks submitted to purchase shares are returned unpaid) cause a loss to be
incurred when the net asset value of the Fund's shares on the date of
cancellation is less than on the original date of purchase. The investor is
responsible for such loss, and the Fund may redeem shares from any account
registered in that shareholder's name, or by seeking other redress. If the Fund
is unable to recover any loss to itself, it is the position of the SEC that the
Distributor will be immediately obligated to make the Fund whole.

To minimize expenses, the Fund reserves the right to redeem, upon not less
than 30 days notice, all shares of the Fund in an account (other than an
Individual Retirement Account ("IRA")) which as a

- --------------------------------------------------------------------------------

B-17
<PAGE> 38

- --------------------------------------------------------------------------------

result of shareholder redemption has a value below $500 and has reserved the
ability to raise this amount to up to $10,000. However, a shareholder will be
allowed to make additional investments prior to the date fixed for redemption to
avoid liquidation of the account.

DIVIDENDS, DISTRIBUTIONS AND TAXES

GENERAL

The Fund will determine either to distribute or to retain all or part of
any net long-term capital gains in any year for reinvestment. If any such gains
are retained, the Fund will be subject to a tax of 35% of such amount. In that
event, the Fund expects that it will designate the retained amount as
undistributed capital gains in a notice to its shareholders, each of whom (1)
will be required to include in income for tax purposes as long-term capital
gains, its share of undistributed amount, (2) will be entitled to credit its
proportionate share of the tax paid by the Fund against its federal income tax
liability and to claim refunds to the extent the credit exceeds such liability,
and (3) will increase its basis in its shares of the Fund by an amount equal to
65% of the amount of undistributed capital gains included in such shareholder's
gross income.

Under the Code, amounts not distributed on a timely basis in accordance
with a calendar year distribution requirement are subject to a nondeductible 4%
excise tax. To avoid the tax, the Fund must distribute during each calendar
year, an amount equal to, at the minimum, the sum of (1) 98% of its ordinary
income (not taking into account any capital gains or losses) for the calendar
year, (2) 98% of its capital gains in excess of its capital losses for the
twelve-month period ending on October 31 of the calendar year (unless an
election is made by the Fund with a November or December year-end to use the
Fund's fiscal year), and (3) all ordinary income and net capital gains for
previous years that were not previously distributed. A distribution will be
treated as paid during the calendar year if it is paid during the calendar year
or declared by the Fund in October, November or December of the year, payable to
shareholders of record on a date during such month and paid by the Fund during
January of the following year. Any such distributions paid during January of the
following year will be deemed to be received on December 31 of the year the
distributions are declared, rather than when the distributions are received.

Gains or losses on the sales of securities by the Fund will be long-term
capital gains or losses if the securities have been held by the Fund for more
than twelve months. Gains or losses on the sale of securities held for twelve
months or less will be short-term capital gains or losses.

The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Code. If so qualified, the Fund
will not be subject to Federal income tax on its net investment income and net
short-term capital gains, if any, realized during any fiscal year in which it
distributes such income and capital gains to its shareholders.

HEDGING TRANSACTIONS

Certain options, futures contracts and options on futures contracts are
"section 1256 contracts." Any gains or losses on section 1256 contracts are
generally considered 60% long-term and 40% short-term capital gains or losses
("60/40"). Also, section 1256 contracts held by the Fund at the end of each
taxable year are "marked-to-market" with the result that unrealized gains or
losses are treated as though they were realized and the resulting gain or loss
is treated as 60/40 gain or loss.

Generally, the hedging transactions undertaken by the Fund may result in
"straddles" for U.S. federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by the Fund. In addition, losses
realized by the Fund on positions that are part of a straddle

- --------------------------------------------------------------------------------

B-18
<PAGE> 39

- --------------------------------------------------------------------------------

may be deferred under the straddle rules, rather than being taken into account
in calculating the taxable income for the taxable year in which such losses are
realized.

Further, the Fund may be required to capitalize, rather than deduct
currently, any interest expense on indebtedness incurred or continued to
purchase or carry any positions that are a part of a straddle. Because only a
few regulations implementing the straddle rules have been promulgated, the tax
consequences of hedging transactions to the Fund are not entirely clear.

The Fund may make one or more of the elections available under the Code
which are applicable to straddles. If the Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
accelerate the recognition of gains or losses from the affected straddle
positions.

Because application of the straddle rules may affect the character of gains
or losses, defer losses and/or accelerate the recognition of gains or losses
from the affected straddle positions, and require the capitalization of interest
expense, the amount which must be distributed to shareholders, and which will be
taxed to shareholders as ordinary income or long-term capital gain, may be
increased or decreased substantially as compared to a fund that did not engage
in such hedging transactions.

The 30% limitation and the diversification requirements applicable to the
Fund's assets may limit the extent to which the Fund will be able to engage in
transactions in options, futures contracts and options on futures contracts.

DISTRIBUTIONS

Distributions of investment company taxable income (which includes taxable
interest income and the excess of net short-term capital gains over long-term
capital losses) are taxable to a U.S. shareholder as ordinary income, whether
paid in cash or shares. Dividends paid by the Fund will qualify for the 70%
deduction for dividends received by corporations to the extent the Fund's income
consists of qualified dividends received from U.S. corporations. Distributions
of net capital gains (which consists of the excess of long-term capital gains
over net short-term capital losses), if any, are taxable as long-term capital
gains, whether paid in cash or in shares, and are not eligible for the dividends
received deduction. Shareholders receiving distributions in the form of newly
issued shares will have a basis in such shares of the Fund equal to the fair
market value of such shares on the distribution date. If the net asset value of
shares is reduced below a shareholder's cost as a result of a distribution by
the Fund, such distribution will be taxable even though it represents a return
of invested capital. The price of shares purchased at this time may reflect the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will receive a distribution which will nevertheless be taxable to
them.

SALES OF SHARES

Upon a sale or exchange of his or her shares, a shareholder will realize a
taxable gain or loss depending upon his or her basis in the shares. Such gain or
loss will be treated as a long-term capital gain or loss if the shares have been
held for more than one year. Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced, including
replacement through reinvestment of dividends and capital gains distributions in
the Fund, within a period of 61 days beginning 30 days before and ending 30 days
after the shares are disposed of. In such case, the basis of the shares acquired
will be adjusted to reflect the disallowed loss.

Any loss realized by a shareholder on the sale of the Fund's shares held by
the shareholder for six months or less will be treated for tax purposes as a
long-term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.

- --------------------------------------------------------------------------------

B-19
<PAGE> 40

- --------------------------------------------------------------------------------

BACKUP WITHHOLDING

The Fund may be required to withhold federal income tax at the rate of 31%
of all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against a shareholder's federal income
tax liability.

FOREIGN WITHHOLDING TAXES

Income received by the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the rate of foreign tax in
advance since the amount of the Fund's assets to be invested in various
countries is not known. Because the Fund may have more than 50% of its total
assets invested in securities of foreign governments or corporations, the Fund
may be entitled to "pass-through" to shareholders the amount of foreign taxes
paid by the Fund. Shareholders are urged to consult their attorneys or tax
advisers regarding specific questions as to federal, state or local taxes.

CREATION OF ADDITIONAL SERIES

The Fund reserves the right to create and issue a number of series shares,
in which case the shares of each series would participate equally in the
earnings, dividends, and assets of the particular series and would vote
separately to approve management agreements or changes in investment policies,
but shares of all series would vote together in the election or selection of
Directors, principal underwriters and auditors and on any proposed material
amendment to the Fund's Certificate of Incorporation.

Upon liquidation of the Fund or any series, shareholders of the affected
series would be entitled to share pro rata in the net assets of their respective
series available for distribution to such shareholder.

INVESTMENT PERFORMANCE INFORMATION

The Fund may furnish data about its investment performance in
advertisements, sales literature and reports to shareholders. "Total return"
represents the annual percentage change in value of $1,000 invested at the
maximum public offering price for the one year period and the life of the Fund
through the most recent calender quarter, assuming reinvestment of all dividends
and distributions. The Fund may also furnish total return calculations for these
and other periods, based on investments at various sales charge levels or net
asset value. Any performance data which is based on the Fund's net asset value
per share would be reduced if a sales charge were taken into account.

Quotations of yield will be based on the investment income per share earned
during a particular 30 day period, less expenses accrued during the period ("net
investment income") and will be computed by dividing net investment income by
the maximum offering price per share on the last day of the period, according to
the following formula:

(a - b)
-------
YIELD = 2[(cd + 1)(6) - 1]

where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of any reimbursements), c = the average daily number of
shares outstanding during the period that were entitled to receive dividends,
and d = the maximum offering price share on the last day of the period. For the
one-month period ended December 31, 1996, the Fund's current yield was (1.99)%.

- --------------------------------------------------------------------------------

B-20
<PAGE> 41

- --------------------------------------------------------------------------------

Quotations of total return will reflect only the performance of a
hypothetical investment in the Fund during the particular time period shown. The
Fund's total return and current yield may vary from time to time depending on
market conditions, the compositions of its portfolio and operating expenses.
These factors and possible differences in the methods used in calculating yield
should be considered when comparing the Fund's current yield to yields published
for other investment companies and other investment vehicles. Total return and
yield should also be considered relative to changes in the value of the Fund's
shares and the risks associated with the Fund's investment objectives and
policies. At any time in the future, total return and yield may be higher or
lower than past total return and yield and there can be no assurance that any
historical return or yield will continue.

From time to time evaluations of performance are made by independent
sources that may be used in advertisements concerning the Fund. These sources
include: Lipper Analytical Services, CDA/Weisenberger Investment Company
Service, Barron's, Business Week, Changing Times, Financial World, Forbes,
Fortune, Money, Personal Investor, Sylvia Porter's Personal Finance, Bank Rate
Monitor, Morningstar and The Wall Street Journal.

In connection with communicating its yield or total return to current or
prospective shareholders, the Fund may also compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indexes which may assume reinvestment of dividends but generally
do not reflect deductions for administrative and management costs.

Quotations of the Fund's total return will represent the average annual
compounded rate of return of a hypothetical investment in the Fund over periods
of 1, 5, and 10 years (up to the life of the Fund), and are calculated pursuant
to the following formula:

P (1+T)(n) = ERV

where P = a hypothetical initial payment of $1,000, T = the average annual total
return, n = the number of years, and ERV = the redeemable value at the end of
the period of a $1,000 payment made at the beginning of the period. All total
return figures will reflect the deduction of Fund expenses (net of certain
expenses reimbursed by the Adviser) on an annual basis, and will assume that all
dividends and distributions are reinvested and will deduct the maximum sales
charge, if any is imposed.

For the year ended December 31, 1996, the Fund's cumulative total return
was 8.00% and since inception it was 23.20%. The average annual return since
inception was 8.80%.

COUNSEL AND INDEPENDENT AUDITORS

Willkie Farr & Gallagher, 153 East 53rd Street, New York, New York 10022,
serves as counsel for the Fund.

Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, has been
appointed independent auditors for the Fund.

- --------------------------------------------------------------------------------

B-21
<PAGE> 42

- --------------------------------------------------------------------------------

SHARES OF BENEFICIAL INTEREST

As of April 2, 1997, the Officers and Directors of the Fund as a group
owned 2.6% of the outstanding shares. As of April 2, 1997, the following persons
were 5% or greater shareholders of the Fund:

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
SHAREHOLDER OUTSTANDING(1)
--------------------------------------------------------- --------------------
<S> <C>
Sidney Kimmel............................................ 5.36%
c/o Jones Apparel
1411 Broadway, 21st Floor
New York, NY 10018
National Financial Services Group........................ 11.19%
One World Financial Center
200 Liberty Street
New York, NY 10281
Charles Schwab & Co. Inc................................. 10.76%
101 Montgomery Street
San Francisco, CA 94104
</TABLE>

- ------------

(1) Based on 1,314,400.423 shares outstanding as of April 2, 1997.

- --------------------------------------------------------------------------------

B-22
<PAGE> 43

- --------------------------------------------------------------------------------

DESCRIPTION OF STANDARD & POOR'S RATINGS SERVICES ("S&P's") CORPORATE DEBT
RATINGS

AAA: Debt rated AAA has the highest rating assigned by S&P's. Capacity to pay
interest and repay principal is extremely strong. AA: Debt rated AA has a very
strong capacity to pay interest and repay principal and differs from the highest
rated issues only in small degrees. A: Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher-rated categories. BBB: Debt rated BBB is regarded as having adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than for debt in higher rated categories. BB, B, CCC,
CC, C: Debt rated BB, B, CCC, CC and C is regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. CI: The rating CI
is reserved for income bonds on which no interest is being paid. D: Debt rated D
is in payment default. The D rating category is used when interest payments or
principal payments are not made on the date due even if the applicable grace
period has not expired, unless S&P's believes that such payments will be made
during such grace period. The D rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized. Plus (+) or Minus
(-): The ratings from "AA" to "CCC" may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.

r: The "r" symbol is attached to derivative, hybrid and certain other
obligations that S&P believes may experience high volatility or high variability
in expected returns due to non-credit risks created by the terms of the
obligation.

DESCRIPTION OF MOODY'S PREFERRED STOCK RATINGS

aaa: An issue which is rated aaa is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of preferred stocks. aa: An issue which
is rated aa is considered a high-grade preferred stock. This rating indicates
that there is reasonable assurance that earnings and asset protection will
remain relatively well maintained in the foreseeable future. a: An issue which
is rated a is considered to be an upper medium grade preferred stock. While
risks are judged to be somewhat greater than in the aaa and aa classifications,
earnings and asset protection are, nevertheless, expected to be maintained at
adequate levels. baa: An issue which is rated baa is considered to be medium
grade, neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present but may be questionable over any great
length of time. ba: An issue which is rated ba is considered to have speculative
elements and its future cannot be considered well assured. Earnings and asset
protection may be very moderate and not well safeguarded during adverse periods.
Uncertainty of position characterizes preferred stocks in this class. b: An
issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of the
issue over any long period of time may be small. caa: An issue which is rated
caa is likely to be in arrears on dividend payments. This rating designation
does not purport to indicate the future status of payment. ca: An issue which is
rated ca is speculative in a high degree and is likely to be in arrears on
dividends with little likelihood of eventual

B-23
<PAGE> 44

- --------------------------------------------------------------------------------

payment. c: This is the lowest rated class of preferred or preference stock.
Issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Note: Moody's may apply numerical modifiers 1, 2 and 3 in each rating
classification from "aa" through "b" in its preferred stock rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

DESCRIPTION OF S&P'S PREFERRED STOCK RATINGS

AAA: This is the highest rating that may be assigned by S&P's to a preferred
stock issue and indicates an extremely strong capacity to pay the preferred
stock obligations. AA: A preferred stock issue rated AA also qualifies as a
high-quality fixed income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues rated
AAA. A: An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effect of changes in circumstances and economic conditions. BBB: An issue rated
BBB is regarded as backed by an adequate capacity to pay the preferred stock
obligations. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to make payments for a preferred stock in this category than
for issues in the A category. BB, B, CCC: Preferred stock rated BB, B, and CCC
are regarded, on balance, as predominantly speculative with respect to the
issuer's capacity to pay preferred stock obligations. BB indicates the lowest
degree of speculation and CCC the highest degree of speculation. While such
issues will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
CC: The rating CC is reserved for a preferred stock in arrears on dividends or
sinking fund payments but that is currently paying. C: A preferred stock rated C
is a non-paying issue. D: A preferred stock rated D is a non-paying issue with
the issuer in default on debt instruments.

Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

FINANCIAL STATEMENTS

The Fund's Financial Statements for the period ended December 31, 1996,
including the Report of Ernst & Young LLP, independent auditors, are included
herein.

B-24
<PAGE> 45
PART C: OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(A) Financial Statements:
(1) Financial Statements included in Part A, the Prospectus:

(a) Financial Highlights for the period from July 11, 1994
(commencement of operations) through December 31, 1994 and for the
fiscal years ended December 31, 1995 and December 31, 1996.

(2) Financial Statements included in Part B, the Statement of Additional
Information:
(a) Report of Independent Auditors*****

(b) Statement of Assets and Liabilities, December 31, 1996****

(d) Statement of Operations for the fiscal year ended December 31,
1996.****

(e) Statement of Changes in Net Assets for each of the years ended
December 31, 1995 and December 31, 1996.****

(f) Financial Highlights for the period from July 11, 1994
(commencement of operations) through December 31, 1994 and for the
fiscal years ended December 31, 1995 and December 31, 1996.****

(g) Notes to the Financial Statements****

(B) Exhibits:

<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits
----------- -----------------------
<S> <C>
1 Articles of Incorporation of Registrant***
2 By-Laws of Registrant***
3 Not applicable
4 Specimen copies of certificates for shares issued by Registrant*
5 Form of Investment Advisory Agreement***
6 Form of Distribution Agreement***
7 Not applicable
8(a) Form of Custodian Contract**
8(b) Form of Subcustodian Agreement (for precious metals)*
9(a) Form of Transfer Agency and Service Agreement*
9(b) Sub-Administration Agreement
10(a) Opinion and consent of Willkie Farr & Gallagher***
10(b) Consent of Willkie Farr & Gallagher***
11 Consent of Independent Auditors
12 Not applicable
13 Subscription Agreement***
14 Not applicable
15 Distribution Plan under Rule 12b-1***
16 Computation of Performance Quotations
17 Financial Data Schedule
24(a) Power of Attorney***
24(b) Additional Power of Attorney***
24(c) Additional Power of Attorney**
- -----------------
</TABLE>

* Previously filed as an exhibit to the Pre-Effective Amendment No. 1 to
Registration Statement No. 33-79180 filed on June 24, 1994.
** Previously filed as an exhibit to the Post-Effective Amendment No. 2 to
Registration Statement No. 33-79180 filed on April 28, 1995.

*** Previously filed as an exhibit to the Post-Effective Amendment No. 3 to
Registration Statement No. 33-79180 filed on April 26, 1996.

**** Previously filed with the annual report filed on February 28, 1996.

<PAGE> 46
Item 25. Persons Controlled by or Under Common Control with Registrant

None

Item 26. Number of Holders of Securities

As of April 2, 1997, the approximate number of holders of securities of the
registrant were:

Title of Class Number of Record Holders

Common Stock, par value $.001 per share 1,829

Item 27. Indemnification

Under Article V, Section 1, of the registrant's By-Laws, any past or present
director or officer of registrant is indemnified to the fullest extent
permitted by law against liability and all expenses reasonably incurred by him
in connection with any action, suit or proceeding to which he may be a party or
otherwise involved by reason of his being or having been a director or officer
of registrant. This provision does not authorize indemnification when it is
determined, in the manner specified in the By-Laws, that such director or
officer would otherwise be liable to registrant or its shareholders by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
his duties. In addition, Section 1 provides that to the fullest extent
permitted by Maryland General Corporation Law, as amended from time to time, no
director or officer of the Fund shall be personally liable to the Fund or its
stockholders for money damages, except to the extent such exemption from
liability or limitation thereof is not permitted by the Investment Company Act
of 1940, as amended from time to time. Under Article V, Section 2, of the
registrant's By-Laws, expenses may be paid by registrant in advance of the
final disposition of any action, suit or proceeding upon receipt of an
undertaking by such director or officer to repay such expenses to registrant in
the event that it is ultimately determined that indemnification of the advanced
expenses is not authorized under the By-Laws.

Insofar as indemnification for liability arising under the Securities Act of
1933 (the "1933 Act") may be permitted to directors, officers and controlling
persons of registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by registrant
of expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.

Item 28. Business and Other Connections of Investment Adviser

Gabelli Funds, Inc. is the investment adviser of the registrant (the
"Adviser"). For a list of officers and directors of the Adviser, together with
information as to any other business, profession, vocation or employment of a
substantial nature engaged in by the Adviser or such officers and directors
during the past two years, reference is made to Form ADV filed by it under the
Investment Advisers Act of 1940.

Item 29. Principal Underwriters

(A) The Distributor, Gabelli and Company, Inc., is also the principal
underwriter for The Gabelli ABC Fund, The Gabelli Growth Fund, The
Gabelli Asset Fund, The Gabelli Value Fund, The Gabelli Capital Asset
Fund, The Gabelli Small Cap Growth Fund, Gabelli Equity Income Fund, The
Gabelli Global Series Funds, Inc., Gabelli International Growth Fund,
Inc., The Westwood Funds and The Gabelli U.S. Treasury Money Market Fund.

<PAGE> 47
(B) For information with respect to each director and officer of Gabelli &
Company, Inc., reference is made to Form BD filed by Gabelli & Company,
Inc. under the Securities Exchange Act of 1934.

Item 30. Location of Accounts and Records

All such accounts, books and other documents are maintained at the offices of:
Gabelli Funds, Inc., One Corporate Center, Rye, New York, 10580-1434; BISYS
Fund Services L.P., 3435 Stelzer Rd, Columbus, Ohio 43219 and State Street
Bank and Trust Company, 1776 Heritage Drive, North Quincy, Massachusetts 02171.

Item 31. Management Services

Not applicable.

Item 32. Undertakings

(A) Registrant hereby undertakes to call a meeting of shareholders to remove
and elect directors at the request of shareholders entitled to cast 10%
or more of the votes entitled to be cast at the meeting.

(B) Registrant hereby undertakes to assist in shareholder communications
pursuant to Section 16(c) of the Investment Company Act of 1940.

<PAGE> 48
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement and pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment No. 4 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Rye and State of New York on the 28th day of
April, 1997.

GABELLI GOLD FUND, INC.

/s/Bruce N. Alpert
-----------------------------------------
By: Bruce N. Alpert
Title: Vice President

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 4 to the Registration Statement has been signed below by the
following persons in the capacity and on the date indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ------ ----
<S> <C> <C>
* Chairman of the Board April 28, 1997
- -------------------------------------
Mario J. Gabelli

/s/Caesar Bryan President April 28, 1997
- -------------------------------------
Caesar Bryan

/s/Bruce N. Alpert Vice President, Treasurer April 28, 1997
- ------------------------------------- and Chief Financial Officer
Bruce N. Alpert

* Director April 28, 1997
- -------------------------------------
E. Val Cerutti

* Director April 28, 1997
- -------------------------------------
Anthony Colavita

Director April 28, 1997
- -------------------------------------
Karl Otto Pohl

* Director April 28, 1997
- -------------------------------------
Werner Roeder, M.D.

* Director April 28, 1997
- -------------------------------------
Anthonie Van Ekris

* Director April 28, 1997
- -------------------------------------
Daniel E. Zucchi

*By: /s/Bruce N. Alpert
-------------------------------
Bruce N. Alpert
Attorney-in-Fact
</TABLE>

<PAGE> 49
EXHIBIT INDEX

(B) Exhibits:

<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits
----------- -----------------------
<S> <C>
1 Articles of Incorporation of Registrant***
2 By-Laws of Registrant***
3 Not applicable
4 Specimen copies of certificates for shares issued by Registrant*
5 Form of Investment Advisory Agreement***
6 Form of Distribution Agreement***
7 Not applicable
8(a) Form of Custodian Contract**
8(b) Form of Subcustodian Agreement (for precious metals)*
9(a) Form of Transfer Agency and Service Agreement*
9(b) Sub-Administration Agreement
10(a) Opinion and consent of Willkie Farr & Gallagher***
10(b) Consent of Willkie Farr & Gallagher*
11 Consent of Independent Auditors
12 Not applicable
13 Subscription Agreement***
14 Not applicable
15 Distribution Plan under Rule 12b-1***
16 Computation of Performance Quotations to be filed by
Post-Effective Amendment
17 Financial Data Schedule
24(a) Power of Attorney***
24(b) Additional Power of Attorney***
24(c) Additional Power of Attorney**
- -----------------
</TABLE>

*** Previously filed as an exhibit to the Post-Effective Amendment No. 3 to
Registration Statement No. 33-79180 filed on April 26, 1996.

**** Previously filed with the annual report filed on February 28, 1996.

<PAGE> 1
EXHIBIT 9B

SUB-ADMINISTRATION AGREEMENT

THIS AGREEMENT is made as of this 1st day of October, 1996, by and
between GABELLI FUNDS, INC. (the "Administrator"), and BISYS FUND SERVICES
LIMITED PARTNERSHIP, d/b/a BISYS FUND SERVICES ("BISYS").

WHEREAS, the Administrator is the investment adviser for the
registered investment companies (hereinafter referred to individually as a
"Company" and collectively as the "Companies") set forth in Schedule B attached
hereto and is responsible for the provision of administrative services to such
Companies and each of the Portfolios (hereinafter referred to individually as a
"Portfolio" and collectively as the "Portfolios") of such Companies;

WHEREAS, each Company is a management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Administrator desires to retain BISYS to assist it in
performing administrative services with respect to each Portfolio and BISYS is
willing to perform such services on the terms and conditions set forth in this
Agreement.

NOW, THEREFORE, in consideration of the premises and the convenants
hereinafter contained, the Administrator and BISYS hereby agree as follows:

ARTICLE 1. Retention of BISYS; Conversion to the Services. The
Administrator hereby engages BISYS to furnish each Portfolio with the
administrative services as set forth in Article 2 below (collectively, the
"Services"), and, in connection therewith, the Administrator agrees to cause
each Portfolio to convert to BISYS' data processing systems and software (the
"BISYS System") as necessary in order to receive the Services. The
Administrator shall cooperate with BISYS to provide BISYS with all necessary
information and assistance required to successfully convert to the BISYS
System. BISYS shall provide the Administrator with a schedule relating to such
conversion and the parties agree that the conversion may progress in stages.
The date upon which all Services shall have been converted to the BISYS System
shall be referred to herein as the "Conversion Date." The parties hereby
agree that the Conversion Date shall be no later than January 1, 1997. BISYS
hereby accepts such engagement and agrees to perform the Services commencing,
with respect to each individual Service, on the date that the conversion of
such Service to the BISYS System has been completed. BISYS shall determine in
accordance with its normal acceptance procedures when the applicable Service
has been successfully converted.

BISYS shall, for all purposes herein, be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized, shall have
no authority to act for or represent the Administrator or the Companies in any
way.

<PAGE> 2
ARTICLE 2. Administrative Services. BISYS shall perform or
supervise the performance by others of administrative services in connection
with the operations of the Portfolios, and, on behalf of the Companies, will
investigate, assist in the selection of and conduct relations with custodians,
depositories, accountants, legal counsel, underwriters, brokers and dealers,
corporate fiduciaries, insurers, banks and persons in any other capacity deemed
to be necessary or desirable for the Portfolios' operations. BISYS shall
provide the Directors'/Trustees (hereafter, the "Directors") of the Companies
with such reports regarding investment performance as they may reasonably
request but shall have no responsibility for supervising the performance by any
investment adviser or sub-adviser of its responsibilities.

BISYS shall provide the Companies with regulatory reporting, all
necessary office space, equipment, personnel, compensation and facilities
(including facilities for meetings of shareholders ("Shareholders") and
Directors of the Companies) for handling the affairs of the Portfolios and such
other services as BISYS and the Administrator shall, from time to time,
determine to be necessary to perform BISYS' obligations under this Agreement.
In addition, at the request of the Boards of Directors, BISYS shall make
reports to the Companies' Directors concerning the performance of its
obligations hereunder.

Without limiting the generality of the foregoing, BISYS shall:

(a) calculate contractual Company expenses and provide
necessary instructions for all disbursements for the
Companies, and as appropriate compute each Company's
yields, total return, expense ratios, portfolio
turnover rate, average commission rate and, if
required, portfolio average dollar-weighted maturity;

(b) assist Company counsel with the preparation of
prospectuses, statements of additional information,
registration statements and proxy materials;

(c) prepare such reports, applications and documents
(including reports regarding the sale and redemption
of Shares as may be required in order to comply with
Federal and state securities law) as may be
necessary or desirable to register each Company's
Shares with state securities authorities, monitor the
sale of Company Shares for compliance with state
securities laws, and file with the appropriate state
securities authorities the registration statements
and reports for each Company and each Company's
Shares and all amendments thereto, as may be
necessary or convenient to register and keep
effective each Company and its Shares with state
securities authorities to enable each Company to make
a continuous offering of its Shares;

(d) develop and prepare, with the assistance of the
Administrator, communications to Shareholders,
including the annual report to Shareholders,
coordinate the mailing of prospectuses, notices, proxy
statements, proxies and other reports to
Shareholders, and supervise and facilitate the proxy
solicitation process for all shareholder meetings,
including the tabulation of shareholder votes;

<PAGE> 3
(e) administer contracts on behalf of each Company with,
among others, each Company's investment adviser,
distributor, custodian, transfer agent and fund
accountant;

(f) supervise the Companies' transfer agent with respect
to the payment of dividends and other distributions
to Shareholders;

(g) calculate performance data of the Portfolios for
dissemination to information services covering the
investment company industry;

(h) prepare or cause to be prepared at its expense the
filing of each Company's tax returns;

(i) examine and review the operations and performance of
the various organizations providing services to the
Companies or any Portfolio, including, without
limitation, the investment adviser, distributor,
custodian, fund accountant, transfer agent, outside
legal counsel and independent public accountants,
and, at the request of a Company's Board of
Directors, report to the Board on the performance of
such organizations;

(j) assist with the layout and printing of publicly
disseminated prospectuses and assist with and
coordinate layout and printing of each Company's
quarterly, semi-annual and annual reports to
Shareholders;

(k) assist with the design, development, and operation of
the Portfolios, including new classes, investment
objectives, policies and structure;

(l) provide individuals reasonably acceptable to each
Company's Board of Directors to serve as officers of
the Company, who will be responsible for the
management of certain of the Company's affairs as
determined by the Company's Board of Directors;

(m) advise each Company and its Board of Directors on
matters concerning the Company and its affairs;

(n) obtain and keep in effect fidelity bonds and
directors and officers/errors and omissions insurance
policies for each Company in accordance with the
requirements of Rules 17g-1 and 17d-1(7) under the
1940 Act as such bonds and policies are approved by
the Company's Board of Directors;

(o) monitor and advise each Company and its Portfolios on
their regulated investment company status under the
Internal Revenue Code of 1986, as amended;

<PAGE> 4
(p) perform all administrative services and functions of
each Company and each Portfolio to the extent
administrative services and functions are not
provided to the Company or such Portfolio pursuant to
the Company's or such Portfolio's administration
agreement, investment advisory agreement,
distribution agreement, custodian agreement, transfer
agent agreement and fund accounting agreement;

(q) furnish advice and recommendations with respect to
other aspects of the business and affairs of the
Portfolios as the Administrator and BISYS shall
determine desirable;

(r) prepare and file with the SEC the semi-annual report
for each Company on Form N-SAR and all required
notices pursuant to Rule 24f-2;

(s) assist each Company with respect to SEC examinations,
including the furnishing of documents and
information, as appropriate, and responding to SEC
examination letters; and

(t) assist each Company in preparing for Board meetings
by (i) coordinating board book production and
distribution, (ii) preparing Board agendas, (iii)
preparing the BISYS section of Board materials, (iv)
preparing special Board meeting materials, including
but not limited to, materials relating to annual
contract approvals and 12b-1 plan approvals, as
agreed upon by the parties, and (v) such other Board
meeting functions that are agreed upon by the
parties.

BISYS shall perform such other services for each Company that are
mutually agreed upon by the parties from time to time. Such services may
include performing internal audit examinations; mailing the annual reports of
the Portfolios; preparing an annual list of Shareholders; and mailing notices
of Shareholders' meetings, proxies and proxy statements, for all of which the
Administrator will pay or cause to be paid BISYS' reasonable out-of-pocket
expenses.

ARTICLE 3. Allocation of Charges and Expenses.

(A) BISYS. BISYS shall furnish at its own expense the executive,
supervisory and clerical personnel necessary to perform its obligations under
this Agreement. BISYS shall also provide the items which it is obligated to
provide under this Agreement, and shall pay all compensation, if any, of
officers of each Company as well as all Directors of each Company who are
affiliated persons of BISYS or any affiliated company of BISYS; provided,
however, that unless otherwise specifically provided, BISYS shall not be
obligated to pay the compensation of any employee of a Company retained by the
Directors of such Company to perform services on behalf of the Company.

(B) The Administrator. The Administrator hereby represents that
each Company has undertaken to pay or cause to be paid all other expenses of
the Company not otherwise allocated herein, including, without limitation,
organization costs, taxes, expenses for legal and auditing

<PAGE> 5
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of
custodial services, the cost of initial and ongoing registration of the Shares
under Federal and state securities laws, fees and out-of-pocket expenses of
Directors who are not affiliated persons of the Administrator or the Investment
Adviser to the Company or any affiliated corporation of the Administrator or
the Investment Adviser, insurance, interest, brokerage costs, litigation and
other extraordinary or nonrecurring expenses, and all fees and charges of
investment advisers to the Company.

ARTICLE 4. Compensation of BISYS.

(A) Sub-Administration Fee. Commencing on the Conversion Date, for
the services rendered, the facilities furnished and the expenses assumed by
BISYS pursuant to this Agreement, the Administrator shall pay to BISYS
compensation at an annual rate specified in Schedule A attached hereto. Such
compensation shall be calculated and accrued daily, and paid to BISYS monthly.

If the Conversion Date occurs subsequent to the first day of a
month or termination of this Agreement occurs before the last day of a month,
BISYS' compensation for that part of the month in which this Agreement is in
effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above. Payment of BISYS' compensation for the preceding
month shall be made promptly.

(B) Survival of Compensation Rights. All rights of compensation
under this Agreement for services performed as of the termination date shall
survive the termination of this Agreement.

ARTICLE 5. Limitation of Liability of BISYS. The duties of BISYS
shall be confined to those expressly set forth herein, and no implied duties
are assumed by or may be asserted against BISYS hereunder. BISYS shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any act or omission in carrying out its duties hereunder, except a loss
resulting from willful misfeasance, bad faith or negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 5, the
term "BISYS" shall include partners, officers, employees and other agents of
BISYS as well as BISYS itself.)

So long as BISYS acts in good faith and with due diligence and without
negligence, the Administrator assumes full responsibility and shall indemnify
BISYS and hold it harmless from and against any and all actions, suits and
claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation
expenses) arising directly or indirectly out of BISYS' actions taken or
nonactions with respect to the performance of services hereunder.

<PAGE> 6

The indemnity and defense provisions set forth herein shall indefinitely
survive the termination of this Agreement.

The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Administrator may be asked to indemnify or
hold BISYS harmless, the Administrator shall be fully and promptly advised of
all pertinent facts concerning the situation in question, and it is further
understood that BISYS will use all reasonable care to identify and notify the
Administrator promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Administrator, but failure to do so in good faith shall not affect the
rights hereunder.

The Administrator shall be entitled to participate at its own expense
or, if it so elects, to assume the defense of any suit brought to enforce any
claims subject to this indemnity provision. If the Administrator elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Administrator and satisfactory to BISYS, whose approval shall not
be unreasonably withheld. In the event that the Administrator elects to assume
the defense of any suit and retain counsel, BISYS shall bear the fees and
expenses of any additional counsel retained by it. If the Administrator does
not elect to assume the defense of a suit, it will reimburse BISYS for the
reasonable fees and expenses of any counsel retained by BISYS.

BISYS may apply to the Administrator at any time for instructions and
may consult counsel for the Administrator or its own counsel and with
accountants and other experts with respect to any matter arising in connection
with BISYS' duties, and BISYS shall not be liable or accountable for any action
taken or omitted by it in good faith in accordance with such instruction or with
the opinion of such counsel, accountants or other experts.

Also, BISYS shall be protected in acting upon any document which it
reasonably believes to be genuine and to have been signed or presented by the
proper person or persons. BISYS will not be held to have notice of any change
of authority of any officers, employees or agents of the Administrator until
receipt of written notice thereof from the Administrator.

ARTICLE 6. Activities of BISYS. The services of BISYS rendered
hereunder are not to be deemed to be exclusive. BISYS is free to render such
services to others and to have other businesses and interests. It is understood
that directors, officers, employees and Shareholders are or may be or become
interested in BISYS, as officers, employees or otherwise and that partners,
officers and employees of BISYS and its counsel are or may be or become
similarly interested in the Companies, and that BISYS may be or become
interested in the Companies as a Shareholder or otherwise.

ARTICLE 7. Duration of this Agreement. The Term of this Agreement
shall be as specified in Schedule A hereto.

<PAGE> 7
ARTICLE 8. Assignment. This Agreement shall not be assignable by
either party without the written consent of the other party; provided, however,
that BISYS may, with the prior consent of the Administrator, at its expense,
subcontract with any entity or person concerning the provision of the services
contemplated hereunder. BISYS shall not, however, be relieved of any of its
obligations under this Agreement by the appointment of such subcontractor and
provided further, that BISYS shall be responsible, to the extent provided in
Article 5 hereof, for all acts of such subcontractor as if such acts were its
own. This Agreement shall be binding upon, and shall inure to the benefit of,
the parties hereto and their respective successors and permitted assigns.

ARTICLE 9. Amendments. This Agreement may be amended if such
amendment is specifically approved in writing by the parties hereto.

ARTICLE 10. Certain Records. BISYS shall maintain customary records
in connection with its duties as specified in this Agreement. Any records
required to be maintained and preserved pursuant to Rules 31a-1 and 31a-2 under
the 1940 Act which are prepared or maintained by BISYS on behalf of each
Company shall be prepared and maintained at the expense of BISYS, but shall be
the property of each Company and will be made available to or surrendered
promptly to each Company on request.

In case of any request or demand for the inspection of such records by
another party, BISYS shall notify the Administrator and follow the
Administrator's instructions as to permitting or refusing such inspection;
provided that BISYS may exhibit such records to any person in any case where it
is advised by its counsel that it may be held liable for failure to do so,
unless (in cases involving potential exposure only to civil liability) the
Administrator or the appropriate Company has agreed to indemnify BISYS against
such liability.

ARTICLE 11. Definitions of Certain Terms. The terms "interested
person" and "affiliated person," when used in this Agreement, shall have the
respective meanings specified in the 1940 Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission.

ARTICLE 12. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the following address: if to BISYS, to it at 3435 Stelzer Road,
Columbus, Ohio 43219; if to the Administrator, to it at One Corporate Center,
Rye, New York 10580-1434, or at such other address as such party may from time
to time specify in writing to the other party pursuant to this Section.

ARTICLE 13. Confidential Information. Each party acknowledges that
it may acquire knowledge and information relating to the other party and its
affiliates or the Companies including, but not limited to, information
pertaining to business plans, employees, customers and/or suppliers, and that
all such knowledge and information acquired or developed is and shall be
confidential and proprietary information (all such confidential and proprietary
information is herein collectively

<PAGE> 8
referred to as the "Confidential Information"). Each party agrees to hold the
Confidential Information in strict confidence, to refrain from directly or
indirectly disclosing it to others or using it in any way except for purposes of
performing services hereunder, and to prevent any unauthorized person access to
it either before or after termination of this Agreement, without the prior
written consent of the other party. Both parties further agree to take all
action reasonable and necessary to the protect the confidentially of the
Confidential Information. The parties shall use their best efforts to have
their directors, officers, employees and agents agree to the terms of this
Section. The obligations of the parties contained in this section shall
survive termination of this Agreement. Neither party's confidentiality
obligations under this provision shall apply to such information that (i) was
in the public domain or available to a third party without restrictions at or
prior to the time such information was made know to such party, (ii) had been
independently know to such party at the time of disclosure for persons who
where not subject to similar confidentiality obligations, or (iii) is required
to be disclosed by law (except that each party will use best efforts to give
the other party written notice prior to any such disclosure).

ARTICLE 14. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Ohio and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the State of Ohio, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.

ARTICLE 15. Multiple Originals. This Agreement may be executed in
two or more counterparts, each of which when so executed shall be deemed to be
an original, but such counterparts shall together constitute but one and the
same instrument.

IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.

GABELLI FUNDS, INC.

By: /s/ [SIG]
----------------------------------

Title: VP & CEO Gabelli Funds Division
---------------------------------

BISYS FUND SERVICES LIMITED
PARTNERSHIP

BY: BISYS FUND SERVICES, INC.
GENERAL PARTNER

By: /s/ [SIG]
----------------------------------

Title: Executive Vice President
--------------------------------

<PAGE> 9

SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF OCTOBER 1, 1996
BETWEEN GABELLI FUNDS, INC.
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP

Portfolios: This Agreement shall apply to all Portfolios, either now or
hereafter created of the Companies set forth below. The
current Portfolios of such Companies are also set forth below.

GABELLI CONVERTIBLE SECURITIES FUND, INC.
Gabelli Convertible Securities Fund

GABELLI EQUITY SERIES FUNDS, INC.
Gabelli Small Cap Fund
Gabelli Equity Income Fund

GABELLI GLOBAL SERIES FUNDS, INC.
Gabelli Global Telecommunications Fund
Gabelli Global Convertible Securities Fund
Gabelli Global Interactive Couch Potato Fund
Gabelli Global Entertainment & Media Fund
Gabelli Global Growth Fund

GABELLI GOLD FUND, INC.
Gabelli Gold Fund

GABELLI INTERNATIONAL GROWTH FUND, INC.
Gabelli International Growth Fund

GABELLI INVESTOR FUNDS, INC.
Gabelli ABC Fund

Fees: Pursuant to Article 4, in consideration of services rendered and
expenses assumed pursuant to this Agreement, the Administrator will
pay BISYS on the first business day of each month, or at such time(s)
as BISYS shall request and the parties hereto shall agree, a fee based
upon the assets of all registered management investment companies for
which BISYS serves as Subadministrator that are advised by Gabelli
Funds, Inc. or its affiliates ("BISYS-administered Investment
Companies"). Such fee shall be computed daily at the annual rate of:

A-1

<PAGE> 10
Ten one-hundredths of one percent (.10%) of the
BISYS-administered Investment Companies' average daily net
assets up to $350 million.

Seven and one-half one-hundredths of one percent (.075%) of
the BISYS-administered Investment Companies' average daily net
assets in excess of $350 million up to $600 million.

Six one-hundredths of one percent (.06%) of the
BISYS-administered Investment Companies' average daily net
assets in excess of $600 million.

The fees set forth, above shall be subject to a minimum annual fee
amount of $40,000 for each Portfolio. Such minimum annual fee amount
shall be payable to BISYS on the first business day of each month or
at such other time(s) as the parties may agree upon.

The fee for the period for the day of the month upon which the
Conversion Date occurs until the end of that month shall be prorated
according to the proportion which such period bears to the full
monthly period. Upon any termination of this Agreement before the end
of any month, the fee for such part of a month shall be prorated
according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination of
this Agreement.

For purposes of determining the fees payable to BISYS, the value of
the net assets of a particular Portfolio shall be computed in the
manner described in each Company's Articles of Incorporation or in the
Prospectus or Statement of Additional Information respecting that
Portfolio as from time to time is in effect for the computation of
the value of such net assets in connection with the determination of
the liquidating value of the shares of such Portfolio.

The parties hereby confirm that the fees payable hereunder shall be
applied to each Portfolio as a whole, and not to separate classes of
shares within the Portfolios.

Terms: The initial term of this Agreement (the "Initial Term") shall be for a
period commencing on the date this Agreement is executed by both
parties and ending on the date that is one year after the Conversion
Date. This Agreement shall be renewed automatically for successive
periods of one year after the Initial Term, unless written notice of
nonrenewal is provided by either party not less than 90 days prior to
the end of the Initial Term or 90 days advance written notice of
termination is provided by either party at any time following the
Initial Term. In the event of any breach of this Agreement by either
party, the non-breaching party shall notify the breaching party in
writing of such breach and upon receipt of such notice, the breaching
party shall

A-2

<PAGE> 11
have 45 days to remedy the breach. In the event any material breach
is not remedied within such time period, the nonbreaching party may
immediately terminate this Agreement.

Notwithstanding the foregoing, after such termination for so long as
BISYS, with the written consent of the Administrator, in fact
continues to perform any one or more of the service contemplated by
this Agreement or any schedule or exhibit hereto, the provisions of
this Agreement, including without limitation the provisions dealing
with indemnification, shall continue to full force and effect.
Compensation due BISYS and unpaid by the Administrator upon such
termination shall be immediately due and payable upon and
notwithstanding such termination. BISYS shall be entitled to collect
for the Administrator, in addition to the compensation described in
this Schedule A, all costs reasonably incurred in connection with the
Administrator's activities in effecting such termination, including
without limitation, the delivery to each Company and/or its designees
of the Company's property, records, instruments and documents, or any
copies thereof. To the extent that BISYS may retain in its possession
copies of any Company documents or records subsequent to such
termination which copies had not been requested by or on behalf of a
Company in connection with the termination process described above,
BISYS will provide such Company with reasonable access to such copies;
provided, however, that, in exchange therefor, the Company shall
reimburse BISYS for all costs reasonably incurred in connection
therewith.

If, during the Initial Term, as defined above, for any reason other
than a breach of this Agreement, BISYS is replaced as
sub-administrator, then the Administrator shall make a one-time cash
payment, as liquidated damages, to BISYS equal to the balance due
BISYS for the remainder of the Initial Term of this Agreement, assuming
for purposes of calculation of the payment that the asset level of
each Company on the date BISYS is replaced, or a third party is
added, will remain constant for the balance of such term.

A-3

<PAGE> 1
EXHIBIT 11

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Financial
Highlights" and "Counsel and Independent Auditors" and to the use of our report
dated February 20, 1997 in this Registration Statement (Form N-1A No. 33-79180)
of Gabelli Gold Fund, Inc.

/s/ ERNST & YOUNG LLP
-------------------------
ERNST & YOUNG LLP

New York, New York
April 24, 1997

<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> GABELLI GOLD FUND, INC
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 14538
<INVESTMENTS-AT-VALUE> 17067
<RECEIVABLES> 1460
<ASSETS-OTHER> 57
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18584
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1621
<TOTAL-LIABILITIES> 1621
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15127
<SHARES-COMMON-STOCK> 1377
<SHARES-COMMON-PRIOR> 1272
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (692)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2528
<NET-ASSETS> 16963
<DIVIDEND-INCOME> 96
<INTEREST-INCOME> 60
<OTHER-INCOME> 0
<EXPENSES-NET> 447
<NET-INVESTMENT-INCOME> (291)
<REALIZED-GAINS-CURRENT> (383)
<APPREC-INCREASE-CURRENT> 1838
<NET-CHANGE-FROM-OPS> 1164
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5951
<NUMBER-OF-SHARES-REDEEMED> 5846
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2453
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (309)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 206
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 447
<AVERAGE-NET-ASSETS> 19242
<PER-SHARE-NAV-BEGIN> 11.41
<PER-SHARE-NII> (.19)
<PER-SHARE-GAIN-APPREC> 1.10
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.31
<EXPENSE-RATIO> .022
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>