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[GRAPHIC]
MIDAS FUNDS
1999 ANNUAL REPORT
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MIDAS MAGIC
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MIDAS FUND
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MIDAS INVESTORS
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MIDAS U.S. AND OVERSEAS FUND
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MIDAS SPECIAL EQUITIES FUND
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DOLLAR RESERVES
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[LOGO]
MIDAS
FUNDS
Discovering Opportunities
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CONTENTS
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Letter to Our Shareholders 1
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PORTFOLIO COMMENTS
Midas Magic 3
Midas Fund and Midas Investors 5
Midas U.S. and Overseas Fund 8
Midas Special Equities Fund 10
Dollar Reserves 12
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SCHEDULE OF INVESTMENTS
Midas Magic 14
Midas Fund 15
Midas Investors 16
Midas U.S. and Overseas Fund 17
Midas Special Equities Fund 18
Dollar Reserves 19
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Consolidated Financial Statements 20-23
Notes to Financial Statements 24-29
Financial Highlights 30-32
Report of Independent Accountants 33
New Account Application 35
Additional Information Inside Back Cover
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TO OUR SHAREHOLDERS
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It is with great pleasure that we submit this first combined Annual Report
for the Midas Funds, a family of funds for all your investing needs. We also are
very pleased to welcome shareholders of the Funds who have joined us since our
last report either by opening accounts directly, or through a brokerage firm.
Although on June 30, 1999 the Bull & Bear Funds and Rockwood Fund became part of
the Midas Funds family, we want to assure you that while most of our Fund names
have changed, our commitment to investment performance and shareholder service
most certainly will not change!
Investing in the financial markets in 1999 required selectivity and
patience. In the last week of 1999, the Nasdaq, Dow Jones Industrial Average,
and the S&P 500 Index all reached new highs - but underneath these general
measures, the majority of stocks were in a bear market. On the New York Stock
Exchange, 61% of stocks were down for the year. On the Nasdaq, 49% of stocks
were down. Fifty-four percent of the stocks in the S&P 500 Index were down. Yet,
the Midas Funds benefitted with excellent returns from Midas Magic's focus on
technology companies with strong price and earnings momentum, Midas U.S. and
Overseas Fund's emphasis on telecommunications, and Midas Special Equities
Fund's aggressive investing approach. Midas' narrowly oriented, precious metals
Funds lagged the general equity markets, reflecting the muted price of gold.
What does the future hold? It's impossible to say with certainty - but we
think that investing in quality securities with attractive businesses that are
taking advantage of current economic and market trends will remain a beneficial
strategy, rewarding investors over the long term. As the financial landscape
changes, we will attempt to modify the Fund portfolios in an effort to capture
the investment opportunities that result from those changes. As in 1999, we
think that 2000 investing success will require selectivity and patience.
Certain basic principles can help investors plan for their future needs.
Most importantly, investors should feel encouraged to take a long-term view of
their portfolios. By planning to hold your investment through the inevitable up
and down cycles of the financial markets, you are less vulnerable to unnecessary
worry and may avoid "bailing out" during a temporary decline. Secondly,
diversification can help manage the risks and reduce overall portfolio
volatility. Investing among different Midas Funds - the equity funds for
longer-term horizons, Dollar Reserves money market fund for shorter term needs,
the precious metals Funds as a hedge against inflation - can help you achieve
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this diversification. Lastly, a regular investment strategy, investing a certain
amount of money in a Fund at the same time each month or quarter, with periodic
reviews of your overall portfolio, offers a sensible way to remain committed to
your investment goals.
If you have any questions, please call us at 1-800-400-MIDAS (6432) and an
Investor Service Representative will, as always, be more than happy to assist
you. For 24 hour automated services, call toll-free 1-888-503-VOICE (8642) or
visit www.midasfunds.com, where you can access your account online, purchase and
redeem shares, and exchange between Midas Funds. To make steady monthly
investing with Midas as easy, safe, convenient and affordable as possible, we
offer three different plans, the Midas Bank Transfer Plan, the Midas Salary
Investing Plan and the Midas Government Direct Deposit Plan. For information on
any of these free services simply give us a call and we will help you get
started. We look forward to hearing from you.
Sincerely,
/S/ THOMAS B. WINMILL
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THOMAS B. WINMILL
President
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FUND INVESTMENT OBJECTIVE
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MIDAS MAGIC SEEKS ITS OBJECTIVE OF LONG TERM CAPITAL
APPRECIATION BY INVESTING PRIMARILY IN ~EQUITY
SECURITIES THAT, IN THE OPINION OF THE INVESTMENT
MANAGER, ARE AVAILABLE ~AT PRICES LESS THAN THEIR
INTRINSIC VALUE. FORMERLY ROCKWOOD FUND.
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MIDAS FUND SEEKS PRIMARILY CAPITAL APPRECIATION AND PROTECTION
AGAINST INFLATION AND SECONDARILY CURRENT INCOME.
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MIDAS SEEKS LONG TERM CAPITAL APPRECIATION IN INVESTMENTS
INVESTORS WITH THE POTENTIAL TO PROVIDE A HEDGE AGAINST
INFLATION AND PRESERVE THE PURCHASING POWER OF THE
DOLLAR.~FORMERLY BULL & BEAR GOLD INVESTORS.
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MIDAS U.S. AND INVESTS WORLDWIDE FOR THE HIGHEST POSSIBLE TOTAL
OVERSEAS FUND RETURN. FORMERLY BULL & BEAR U.S. AND OVERSEAS FUND.
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MIDAS SPECIAL INVESTS AGGRESSIVELY FOR MAXIMUM CAPITAL
EQUITIES FUND APPRECIATION. FORMERLY BULL & BEAR SPECIAL
EQUITIES FUND.
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DOLLAR A HIGH QUALITY MONEY MARKET FUND INVESTING IN U.S.
RESERVES GOVERNMENT SECURITIES. INCOME IS GENERALLY FREE
FROM STATE TAXES. FREE, UNLIMITED CHECK WRITING
WITH ONLY A $250 MINIMUM PER CHECK. FORMERLY BULL &
BEAR DOLLAR RESERVES.
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MIDAS MAGIC
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COMMENTARY
While it is always a pleasure to submit our Annual Report and to welcome
our new shareholders, this year we have particularly noteworthy results to
report.
SOLID PERFORMANCE: OVER 70% RETURN IN 1999
Midas Magic appreciated 70.58% in the twelve months ending December 31, 1999.
Not only did this result achieve our long term capital appreciation objective
for the year, but it also represented significant outperformance of the major
indexes. The Fund's return more than tripled the return of the S&P 500 and the
Russell 2000 indices, which are unmanaged and fully invested in common stocks.
Midas Magic 70.58%
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S&P 500 Index 21.04%
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Russell 2000 Index 21.26%
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The Fund's results reflect a strategy combining investment in common stocks
of selected rapidly growing companies and patiently adopting a defensive
strategy when they appeared overpriced or vulnerable to an overall market
decline. In February, we concluded that internet-oriented businesses would
continue to attract investors of all types, individuals and institutional. We
disposed of our smaller capitalization, value oriented investments and made
substantial commitments to larger capitalization growth companies whose shares
were appreciating rapidly, reflecting not only significant improvements in
business prospects, but also increased investor willingness to ascribe higher
valuation multiples to those improving prospects. By late April, however we
determined that investor euphoria had reached unsustainable levels. Also, the
economy's performance strongly suggested higher interest rates. Anticipating the
trend of these developments, in April we eliminated the Fund's exposure to all
equities (except for one special situation).
In October, we determined that the financial markets had sufficiently
discounted potential inflationary pressures and additional increases in the
Federal Funds rate. Given building investor pessimism, we re-entered the
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PORTFOLIO INFORMATION
AS OF DECEMBER 31, 1999
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TOP 10 HOLDINGS:
1. Motorola Inc.
2. CMGI Inc.
3. Telefonaktieboleget LM Ericsson
4. Internet Capital Group, Inc.
5. America Online, Inc.
6. Oracle Corporation
7. Cisco Systems, Inc.
8. Infinity Broadcasting Corp.
9. China Telecom (Hong Kong) Ltd.
10. The News Corporation
TOP 3 SECTORS:
1. Communications Equipment
2. Telephone Communication
3. Computer Communication Equipment
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equity markets seeking the new market leaders whose earnings or revenue
prospects were improving fastest and with the most promising upward price
momentum. We found the greatest potential among blue chip telecommunications
equipment and service companies, and related technology companies, and sought to
enhance this investment strategy with leverage and futures transactions.
Currently, we have attempted to position the Fund to exploit the growth that
technology-oriented businesses will probably enjoy for the foreseeable future,
as well as investor enthusiasm for larger capitalization, globally recognized,
names.
[The following table represents a chart in the printed piece.]
MAGIC RUSSELL 2000
1990 6825 8049
1991 7261.12 11755
1992 9294.23 13919
1993 10623.31 16551
1994 10791.15 16250
1995 14334.97 20872
1996 17011.31 24324
1997 17613.51 29766
1998 15179.32 29007
1999 25893 35174
GROWTH OF $10,000 INVESTMENT
JANUARY 1, 1990 THROUGH DECEMBER 31, 1999
THE RUSSELL 2000 is a small company index that is unmanaged and fully invested
in common stocks. The Fund invests in common stocks and may also leverage and
own fixed income securities, options, and futures. The $10,000 Performance
Graphs are from January 1, 1990 through December 31, 1999 and results in each
case reflect reinvestment of dividends and distributions. Past performance is
not predictive of future performance.
$ FINAL % TOTAL % AVG.
FUND NAME VALUE RETURN ANN. RETURN
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Midas Magic 25,893 158.93 9.98
Russell 2000 35,171 251.71 13.40
Average annual total return for the periods ended 12/31/99 for one year was
70.58%, for the past five years was 19.13%, and for the past ten years was
9.98%.
SELECTION AND MARKET TIMING . . .
SO YOU DON'T HAVE TO!
Looking ahead, Midas Magic will continue to seek equity securities of
companies whose earnings or revenue prospects are improving as a result of
management, technology, regulation, financial structure, or other special
situations (e.g. liquidations and reorganizations) and in companies whose shares
have upward price momentum. Of course, past performance is no guarantee of
future results and the investment return and principal value of an investment
will fluctuate so that an investor's shares when redeemed, may be worth more or
less than their original cost. But, the Fund has the advantage of flexibility in
choice and timing, and can respond immediately to new investment opportunities
believed to have the potential for making your money grow.
Midas Magic does not just "buy and hold" stocks. The Fund may aggressively
use market timing and short term trading strategies employing leverage, futures,
options, and short selling to seek long term capital appreciation. Because
actively trading securities increases the Fund's transaction costs and results
in more taxable distributions, the Fund is uniquely suited to those investing
through the Midas Traditional or Roth IRA and not subject to taxes. So, while
these strategies sometimes may reduce returns and will increase volatility, they
can also increase returns.
We look forward to continuing to discover opportunities for above-average
capital appreciation on your behalf in the months and years ahead, and
appreciate your confidence and support.
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MIDAS FUND & MIDAS INVESTORS
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COMMENTARY
It is indeed a pleasure to submit our first combined Report for Midas Fund and
Midas Investors. Both Midas Fund and Midas Investors seek capital appreciation
and protection against inflation and invest primarily in companies involved in
mining, processing or dealing in gold or other precious metals. Importantly,
Midas Fund's primary focus can also include other natural resources companies as
well.
The price of gold started 1999 at $289.20 an ounce and ended at $289.60 on
the Nymex Commodity Exchange, but the 40(cent) net increase does not begin to
tell the year's story of critical news and developments or suggest the enormous
increase in volatility or interest in the precious metals area.
As we noted in our June 30, 1999 report to shareholders, early signs of a
recovery in the gold market were dashed in May by the Bank of England
announcement that it would auction 25 tons of gold every two months, for the
first year at least. Compounding the bearish sentiment was speculative and
producer forward selling, more central bank selling rumors, and gold lending
activity. Notwithstanding Latin American financial crises, military events in
Kosovo, and signs of inflation as oil prices surged from $11 to nearly $27 a
barrel, the price of gold staggered to twenty year lows, falling $36 for the
year through August 25, 1999, the bottom, at $253 per ounce.
On September 21, 1999, following its May 7 announcement to sell 415 tons of
Britain's gold reserves by April 2000, the Bank of England held its second
auction of 25 tons of UK gold reserves. The price achieved by the auction -
$255.75 per ounce - demonstrated the terrible weakness of the gold market.
Although the auction price was poor in comparison to that achieved at the first
auction on July 6, when the price for the 25 tons then sold was $261.20 an
ounce, interestingly each ounce drew 8 times as many bids. Immediately after the
auction concluded, the gold price began to rise.
Then on Sunday, September 26, 1999, 15 European central banks agreed to
limit sales of gold from official reserves to a maximum of 2,000 tons over the
next five years.
MIDAS FUND
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PORTFOLIO INFORMATION
AS OF DECEMBER 31, 1999
TOP 10 HOLDINGS:
1. AngloGold Ltd.
2. Barrick Gold Corporation
3. Meridian Gold Inc.
4. Placer Dome Inc.
5. Freeport-McMoRan Copper & Gold, Inc.
6. Newmont Mining Corporation
7. Gold Fields Ltd.
8. Rio Narcea Gold Mines, Ltd.
9. The Broken Hill Proprietary Company Limited
10. Rio Tinto plc
TOP 5 COUNTRIES:
1. United States
2. Canada
3. South Africa
4. Australia
5. Ghana
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The figure included the already announced potential sale of 1,300 tons by the
Bank of Switzerland and the current sales by the Bank of England. The sales
would be limited to a maximum of approximately 400 tons a year. The central
banks also agreed not to increase their gold lending arrangements and derivative
operations above current levels for the next five years. Including the other
major holders of gold - the United States with 8,137 tons, the International
Monetary Fund with 3,217 tons, and the Bank of Japan with 754 tons, which have
not been recent sellers of gold - this brings approximately 85% of official gold
holdings worldwide within the scope of a general restriction on gold sales and
lending. This set off an explosion in the price of gold, with the gold price
soaring to a high of $330 per ounce on October 5, representing a 30.4% increase
over the low just over a month earlier.
Subsequent developments led to a more cautious environment. On the one
hand, according to the World Gold Council's third quarter report, gold demand
climbed to 876.5 tons, 22% higher than the year ago period and 8% over the
second quarter. This and similar data give us confidence that gold supply may be
headed to a 1,000 ton deficit to demand in 1999. On the other hand, confidence
and gold prices fell on November 29, in the wake of limited bidding at the third
of five scheduled auctions when the Bank of England sold 25 tons of gold at an
allotment price of $293.50 per ounce. Each ounce drew 2.1 times as many bids,
versus 8 times at the auction in September. The fourth auction of a further 25
tons on January 25, 2000 achieved a price of $289.50. The remaining auction is
scheduled for March 21, 2000. After the March auction, the UK will have sold 125
of the 415 tons that it had planned to sell. Also, the Dutch Central Bank
announced it will sell 300 tons, or about 30% of its 1,000 ton reserve, over the
next five years, conforming to the September 26th accord by the European Central
Banks. The first Dutch sale of gold will be conducted in 2000 and is expected to
be about 100 tons. Currently, gold fluctuates in a $275 to $295 range.
In gold equities, large capitalization African and Australian producers
notched the best returns in 1999. Further, those companies with exposure to base
metals, such as Freeport Copper & Gold, benefitted particularly by sizable price
increases in those metals. We believe these trends will continue in 2000 and are
positioning the Funds accordingly. During the course of this challenging year,
the total return for Midas Investors and Midas Fund was, respectively, -6.03%
and -9.93%, due in part to lagging returns from their investments in smaller
North American producers and developing mining companies, versus a result of
+3.63% for the Lipper Gold Oriented mutual fund average for the same period.
Midas Fund's strategy over the year has been to restructure its portfolio
towards the largest mining companies in the world and to further reduce its
exposure to junior development and junior mining companies. In pursuit of this
new strategy, the majority of its mining portfolio is now in quality major and
medium size producing companies that have streamlined their operations and are
generating positive cash flow at current gold prices. Midas Fund's strategy also
included seeking more exposure to positive developments from rising base metal
prices by investing in companies involved in diamonds, zinc, nickel, oil, and
other natural resources. The Fund occasionally employed leverage and futures
strategies in an effort to enhance returns. To a limited extent, the Fund
invested in securities of selected growth companies and U.S. Government
securities.
Midas Investors' focused strategy in 1999 was to invest in equity
securities of large capitalization companies involved directly or indirectly in
mining, processing or dealing in gold and other precious metals. The Fund also
invested to a limited extent in companies that own or develop natural resources
and other
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MIDAS INVESTORS
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PORTFOLIO INFORMATION
AS OF DECEMBER 31, 1999
TOP 10 HOLDINGS:
1. Barrick Gold Corporation
2. AngloGold Ltd.
3. Golden Cycle Gold Corporation
4. Dallas Gold and Silver Exchange, Inc.
5. Rio Tinto plc
6. The Broken Hill Proprietary Company Limited
7. Newmont Mining Corporation
8. Freeport-McMoRan Copper & Gold
9. Homestake Mining Co.
10. Placer Dome Inc.
TOP 5 COUNTRIES:
1. United States
2. Canada
3. South Africa
4. Australia
5. United Kingdom
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basic commodities, in securities of selected growth companies, and U.S.
Government securities. In addition, the Fund selectively employed leverage and
futures strategies in attempting to enhance returns.
Looking ahead, we believe that the key fundamentals are positive for
improving gold prices. In what may be the most bullish development in the last
decade affecting gold supply and demand and long term investor psychology is the
September 26, 1999 statement of the 15 European central banks restricting gold
sales and lending for 5 years. Driving buying pressure, we see forecasts of
global gross domestic product, the total value of goods and services produced
world-wide, being revised upward, which should lead to higher industry and
jewelry demand, especially in the Asian economies. India is a particularly large
consumer of precious metals jewelry. Added to these fundamentals, speculative
and producer forward selling may be abated by the strength and force of the
recent gold price rise and the turmoil of two leading gold producers who engaged
in forward selling and related derivative transactions. At the same time, mining
companies are continuing their efforts to drive down further their costs of
production, increasing their margins even in a stable gold price environment.
The volatility seen last year in gold prices and resource related
securities suggests that no matter what an investor's time horizon or
diversification arrangements, dollar cost averaging could be a sound approach.
Dollar cost averaging involves regularly investing a certain amount of money at
the same time each month or quarter, and periodically reviewing the overall
investing results and goal. By regularly investing, you won't buy your shares at
a market high or a low, but it should help you lower the average cost of your
purchases. Before you begin, however, remember that this strategy will not
assure a profit or protect you from a loss in a declining market, and you should
consider your financial ability to continue your purchases through periods of
low price levels. To make steady monthly investing with Midas as easy, safe,
convenient and affordable as possible, the Funds offer three different plans,
the Midas Bank Transfer Plan, the Midas Salary Investing Plan and the Midas
Government Direct Deposit Plan. For information on any of these free services
simply give us a call and we will help you get started.
SEE PAGE 13 FOR PERFORMANCE GRAPHS AND TOTAL RETURNS FOR THESE FUNDS.
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MIDAS U.S. AND OVERSEAS FUND
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COMMENTARY
It is a pleasure to submit this Annual Report and to welcome our new
shareholders attracted to Midas U.S. and Overseas Fund's objective of seeking to
obtain the highest possible total return on its assets from long term growth of
capital and from income.
MIDAS U.S. AND OVERSEAS FUND UP MORE THAN 47%
It is also a pleasure to report that the Fund's investment strategy of seeking
its objective principally through a portfolio of securities of U.S. and overseas
issuers was successful in achieving a total return of +47.44% for the year ended
December 31, 1999. It is gratifying that this compares quite favorably with the
Morningstar World Stock Fund category total return of +38.56% and +24.93% for
the Morgan Stanley Capital International World ND, an index which includes all
23 MSCI developed market countries in U.S. dollars, with net dividends
reinvested.
REVIEW AND OUTLOOK
During the year, the U.S. economy performed exceedingly well with real GDP
growing at an annualized rate of 5.7% in the third quarter and 5.8% in the
fourth quarter. During this ~period inflation seems to have been kept in check.
Producer and consumer prices rose 3.1% and 2.6% year-over-year in November,
while the "core" producer and consumer prices, which excludes volatile food and
energy prices, rose just 1.8% and 2.1%. As Asian economies recover and the
recession in Latin America subsides, however, we now anticipate that
synchronized global economic growth could create excessive and inflationary
demand.
In the United States, economic growth caused the unemployment rate to
decline to 4.1% and new job growth to accelerate to an average rate of 274,000
per month in the fourth quarter. Yet, despite the low level of unemployment,
average wage growth - a prime catalyst ~for inflation - remains contained at a
moderate 3.7%. With higher employment, personal income grew about 5.9% last
year. Further, personal consumption rose by around 6.8%, as consumer credit grew
by over 6.5% and the savings rate declined. Over the past year, monetary
aggregates, such as bank lending and corporate and consumer debt, have all grown
at a rapid pace. In addition, the enormous equity market gains in the United
States, Asia, and Europe, represent a huge source of liquidity.
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PORTFOLIO INFORMATION
AS OF DECEMBER 31, 1999
TOP 10 HOLDINGS:
1. Motorola, Inc.
2. CMGI Inc.
3. Telefonaktieboleget LM Ericsson
4. Wal-Mart Stores, Inc.
5. WPP Group plc
6. Oracle Corporation
7. Nokia Oyj
8. Cisco Systems, Inc.
9. China Telecom (Hong Kong) Ltd.
10. Deutsche Telecom AG
TOP 5 COUNTRIES:
1. United States
2. United Kingdom
3. Sweden
4. Finland
5. Hong Kong
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[The following table represents a chart in the printed piece.]
US & OVERSEAS MSFA MSCI
1990 9139 8863 8298
1991 11212.64 10854.52 9814
1992 10912.14 10992.37 9301
1993 13826.77 14579.18 11394
1994 12012.7 14340.08 11973
1995 15029.09 16700.46 14454
1996 15831.64 19405.93 16042
1997 16724.55 21649.26 18987
1998 16921.9 24247.17 23609
1999 24951 33065.86 29494
GROWTH OF $10,000 INVESTMENT
JANUARY 1, 1990 THROUGH DECEMBER 31, 1999
MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX ND ("MSCI") includes all 23
MSCI developed market countries listed in U.S. dollars. MORNINGSTAR'S WORLD
STOCK FUND AVERAGE ("MSFA") is an equally weighted average of 25 world equity
mutual funds. The Fund may invest in any type of U.S. or foreign securities and
engage in leverage, options, futures and forward currency transactions. The
Performance Graphs cover January 1, 1990 to December 31, 1999, and reflect
reinvestment of dividends and distributions. Past performance is not predictive
of future performance.
$ FINAL % TOTAL % AVG.
FUND NAME VALUE RETURN ANN. RETURN
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Midas U.S. and Overseas Fund 24,951 149.51 9.57
MSCI 29,499 194.99 11.42
MSFA 33,066 230.66 12.70
Average annual total return for the periods ended 12/31/99 for one year was
47.44%, for the past five years was 15.74%, and for the past ten years was
9.57%.
The Fund's strategy in 1999 reflected our core belief that the biggest
driver of stock market gains would be the strength of the U.S. economy and,
globally, the technology and telecommunications sectors. Accordingly, the Fund
focused on leading cellular telecommunications companies, telecommunications
service providers, and telecommunications equipment manufacturers. The Fund also
benefitted by its investments in globally oriented companies in the advertising
and retail sectors, whose businesses grew from increasing worldwide consumer
spending. To enhance its returns, the Fund engaged in some market timing
strategies, which involved short term trading, as well as leverage and futures
transactions.
Looking ahead, while post-Y2K increases in spending will probably
jump-start growth in the business technology area, we expect advertising,
retailing and even some kinds of basic manufacturing will benefit from the
strength in the U.S. and many foreign economies. We will likely avoid most banks
and similar financial companies, whose businesses grow best in stable or
declining interest rate environments. As with last year, the Fund expects to
focus on globally-recognized industry leaders.
In the United States, we think that the ingredients for higher inflation
are in place, and we expect that interest rates will continue to rise. Although
the Federal Reserve increased the Fed Funds rate by 0.75% in 1999, enough
measures of inflation have increased by more than that to suggest that the Fed
is the most accommodative it has been in at least the past two years. We remain
concerned that the Fed is already "behind the curve" in not having been
sufficiently aggressive in raising rates. The rate of inflation can increase at
a pace that can appear glacially slow, but unless countered, still results in a
glacier sized problem. This slowness will probably keep the Fed operating in a
familiar .25% increment, wait-and-see mode in 2000.
Overseas, we believe that European and Japanese interest rates will
continue to rise as well, cooling their equity markets. In Europe, the business
expansion will most likely continue as the financial markets evolve towards the
more free wheeling U.S. model. Japan's nascent economic recovery seems to
persist, reflecting a turnaround throughout Asia last year. In emerging markets,
despite last year's sharp recovery in prices, further improvement towards
historical averages can be expected as their market economies continue to
improve. World economic growth will probably boost Latin America as well.
We believe Midas U.S. and Overseas Fund offers attractive advantages of
flexibility in investing globally, in selection and timing, which permits the
Fund to respond immediately to new opportunities worldwide. The year 2000 will
doubtless have periods of market volatility, but we think our focus on leading
companies worldwide will help the Fund over the long term as it seeks
investments offering the highest possible total return on its assets from long
term growth of capital and from income.
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MIDAS SPECIAL EQUITIES FUND
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COMMENTARY
It is a pleasure to submit this Annual Report for Midas Special Equities
Fund and to welcome our new shareholders who find appealing the Fund's
aggressive investment strategies for capital appreciation.
MIDAS SPECIAL EQUITIES FUND UP OVER +30% IN 1999
It is also a pleasure to report that the Fund's investment strategy for seeking
its capital appreciation objective was successful in achieving a +30.58% total
return for the year ending December 31, 1999. Of special interest is that this
compares quite favorably with the total return of +21.04% for the well-known S&P
500 Index and +21.26% for the small company Russell 2000 Index. The index in
each case is unmanaged, fully invested, and includes reinvestment of dividends.
REVIEW AND OUTLOOK
The general strategy of Midas Special Equities Fund in 1999 was to invest in
equity securities, often involving special situations (e.g. liquidations and
reorganizations) and emerging growth companies, and employ certain aggressive
investment strategies in order to enhance returns, including short term trading,
leverage and transactions in futures on the S&P 500 Index. To a limited extent,
the Fund also loaned portfolio securities to other parties to derive additional
income and sold short individual equities deemed overvalued. The Fund's
portfolio strategy in 1999 reflected our evolving belief that the best
opportunities for capital appreciation would be found in the global economy and,
particularly, in the high-growth technology and telecommunications sectors.
Accordingly, over the course of the year, the Fund sold most of its investments
in smaller capitalization, value-oriented companies, and ~repositioned the Fund
with stocks of larger capitalization, growth oriented firms. This realignment of
the portfolio paid off with the returns noted above.
Looking ahead, we continue to think that the highest returns will be
enjoyed by those companies with global reach, the greatest financial and market
strength, and a technology-based business that can participate in the rapid
globalization of most world markets and in the anticipated growth in consumer
and
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PORTFOLIO INFORMATION
AS OF DECEMBER 31, 1999
TOP 10 HOLDINGS:
1. Motorola, Inc.
2. CMGI Inc.
3. Telefonaktieboleget LM Ericsson
4. WPP Group plc
5. Oracle Corporation
6. The News Corporation
7. Nokia Oyj
8. Cisco Systems, Inc.
9. China Telecom (Hong Kong) Ltd.
10. J.P. Morgan & Company
PORTFOLIO STATISTICS:
Leverage 16%
Number of Holdings 24
Percent of Foreign Holdings 34%
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10
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business demand. Industries within the general technology area that the Fund
is focusing on include leading cellular telecommunications companies, internet
and telecommunications service providers, and telecommunications equipment
manufacturers. The Fund also is investing in companies benefiting by advances in
technology and globalization, such as globally oriented companies in the
advertising, banking, and retail industries, whose businesses can grow further
from increasing worldwide consumer and business spending.
In the United States, we anticipate inflation and higher interest rates
over the course of the year, which will likely restrain dramatic increases in
stock prices. Likewise, we believe that European and Japanese interest rates
will continue to rise as well, cooling their equity markets. In contrast, we see
the turnaround throughout Asia outside of Japan as continuing and offering some
excellent potential returns for aggressive investors. The Fund's investment in
companies in this region may increase depending on opportunities that arise.
AGGRESSIVELY SEEKING CAPITAL APPRECIATION
Midas Special Equities Fund evaluates investments solely by their potential to
offer capital appreciation. Importantly, the Fund may invest in any security, in
any industry, in any country, in special situations or reorganizations, in
growth companies and in "value" companies, in small, medium, or large companies,
and in companies with long or limited operating histories. Further, the Fund may
make just a small number of these investments perceived to have special capital
appreciation potential. The Fund also may employ aggressive and speculative
investment techniques and strategies, such as options, futures and forward
currency contracts and other derivatives, leverage by borrowing money for
investment purposes, and short-selling. Under adverse market conditions, the
Fund may take temporary defensive positions and invest some or all of its assets
in cash and cash equivalents. While not actively seeking its objective at these
times, the Fund's flexibility to turn toward a capital preservation strategy we
think is just as crucial to achieving longer term capital appreciation.
Investors should consider the Fund as a long term investment. Likewise, it
is important to remember that along with the Fund's style of investing comes
volatility and risk. Leveraging (buying securities using borrowed money)
exaggerates the effect on net asset value of any change in the market value of
an investment, and involves interest expense. Options and futures can be highly
sensitive to changes in their underlying security, interest rate or index, and
highly volatile. The Fund's active trading strategy increases transaction costs
and may result in taxable distributions. Our skill in choosing among these
investments and techniques for the Fund will determine in large part whether it
achieves its investment objective.
Investing in the financial markets in the year 2000 probably holds more
volatility ahead. For investors who can accept these short term swings for long
term appreciation potential, Midas Special Equities Fund has the flexibility to
adapt and attempt to obtain capital appreciation for its shareholders from
shifting market trends. We thank you for your support and confidence in 1999 and
look forward to discovering opportunities for above average capital appreciation
on your behalf in the months and years ahead.
SEE PAGE 13 FOR PERFORMANCE GRAPH AND TOTAL RETURNS FOR THIS FUND.
11
<PAGE>
- --------------------------------------------------------------------------------
DOLLAR RESERVES
- --------------------------------------------------------------------------------
COMMENTARY
The Fund's all-weather approach of investing exclusively in short term U.S.
Government securities, a portion of the income from which is generally free from
state income and personal property taxes, makes it a sound choice for safety
conscious investors, with the added convenience of free, unlimited check
writing. As always, there is no charge for your personalized checks.
DOLLAR RESERVES YIELD UP
It is a pleasure to report that the Fund's investment strategy for seeking its
objective of maximizing yield for shareholders consistent with preservation of
capital and maintenance of liquidity through U.S. Government and agency money
market securities was successful, achieving a 7.3% increase in its effective
yield to 4.65% over year-end 1998.
Effective Yield as of
December 31, 1999 4.65%
- --------------------------------------------------------------------------------
Effective Yield as of
December 31, 1998 4.33%
- --------------------------------------------------------------------------------
INCREASE .32%
REVIEW AND OUTLOOK
Three month Treasury bill yields rose over 1999 as did the Fed Funds rate. The
Federal Reserve raised this benchmark level by 0.25% at both its August and
November meetings, bringing the total increase for 1999 to 0.75%. Based on more
recent developments, we believe that a 0.25% increase can be expected at the
next Federal Reserve meeting in February. We do not doubt that the ingredients
for higher inflation are in place, and expect that interest rates will continue
to rise.
Although the Federal Reserve increased the Fed Funds rate by 0.75% in 1999,
enough measures of inflation have increased by more than that to suggest that
the Fed is the most accommodative it has been in at least the past two years. We
remain concerned that the Fed is already "behind the curve" in not having been
sufficiently aggressive in raising rates. The rate of inflation can increase at
a pace that can appear glacially slow, but unless countered, still results in a
glacier sized problem. This slowness will probably keep the Fed operating in a
familiar .25% increment, wait-and-see mode in 2000. Policy makers may still hope
that the rate increases of the past year might have some impact, or that simply
the longevity of the expansion may lead to its demise.
Going forward, the Fund will continue to invest opportunistically in short
term U.S. Government and U.S. Government agency securities to maintain a
portfolio that seeks to maximize yield for shareholders consistent with
preservation of capital and maintenance of liquidity. We expect the Fund to
maintain or increase its investments in U.S. Government agency obligations so
long as they offer in our judgment the best combination of yield and safety. In
any event, we will continue to scour the financial markets to find the most
attractive investments for the Fund and all of its shareholders.
12
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE GRAPHS/TOTAL RETURNS
- --------------------------------------------------------------------------------
MIDAS SPECIAL EQUITIES FUND o MIDAS FUND o MIDAS INVESTORS
[The following table represents a chart in the printed piece.]
SPECIAL EQUITIES RUSSELL 2000 S&P 500
1990 6361 8049 9688
1991 8939.75 11755 12640.9
1992 11476.85 13919 13604.14
1993 13353.32 16551 14972.72
1994 11144.68 16250 15168.86
1995 15654.93 20872 20861.73
1996 15819.3 24324 25649.5
1997 16646.65 29766 34203.61
1998 15779.36 29007 43979
1999 20604.69 35174 53232.18
INVESTORS PRECIOUS METALS S&P 500
1990 7786 7717 9688
1991 7694.24 7452.31 12640.9
1992 6374.85 6309.87 13604.14
1993 11961.14 11437.27 14972.72
1994 10306.91 10031.63 15168.86
1995 9747.25 10460.98 20861.73
1996 10162.48 11331.33 25649.5
1997 4502.99 6535.91 34203.61
1998 3052.58 5769.25 43979
1999 2868.51 6020.21 53232.18
MIDAS PRECIOUS METALS S&P 500
1990 8301 7717 9688
1991 8284.4 7452.31 12640.9
1992 7690.41 6309.87 13604.14
1993 15285.45 11437.27 14972.72
1994 12676.23 10031.63 15168.86
1995 17332.2 10460.98 20861.73
1996 21010.1 11331.33 25649.5
1997 8607.84 6535.91 34203.61
1998 6159.77 5769.25 43979
1999 5549 6020.21 53232.18
GROWTH OF $10,000 INVESTMENT
JANUARY 1, 1990 THROUGH DECEMBER 31, 1999
The performance graphs show returns of an initial investment of $10,000 in MIDAS
SPECIAL EQUITIES FUND, MIDAS FUND and MIDAS INVESTORS from 1/1/90 to 12/31/99.
MIDAS SPECIAL EQUITIES FUND is compared to the RUSSELL 2000. MIDAS FUND and
MIDAS INVESTORS are compared to the S&P 500 and the MORNINGSTAR SPECIALTY
FUND-PRECIOUS METALS AVERAGE ("PMA") of 21 funds. Results in each case reflect
reinvestment of dividends and distributions. THE RUSSELL 2000, a small company
index, and the S&P 500, a broad equity index, are unmanaged and fully invested
in common stocks. MIDAS SPECIAL EQUITIES FUND invests in common stocks and may
also leverage and own fixed income securities, options, and futures. MIDAS FUND
and MIDAS INVESTORS invest primarily in securities of companies involved in
mining, processing or dealing in precious metals and, in the case of Midas Fund,
other resources, and may invest in fixed income securities for temporary
defensive purposes and other securities. Past performance is not predictive of
future performance.
$ FINAL % TOTAL % AVG.
FUND NAME VALUE RETURN ANN. RETURN
- --------------------------------------------------------------------------------
Midas Special Equities Fund 20,604 106.04 7.50
Midas Fund 5,549 -44.51 -5.72
Midas Investors 2,869 -71.31 -11.74
PMA 6,020 -39.80 -4.95
Russell 2000 35,171 251.71 13.40
S&P 500 53,233 432.33 18.20
Average annual total return for the periods ended 12/31/99 for Midas Special
Equities Fund, Midas Fund and Midas Investors, respectively, for one year was
30.58%, -9.93%, and -6.03%, for the past five years was 13.08%, -15.23%, and
- -22.57%, and for the past ten years was 7.50%, -5.72%, and -11.74%.
13
<PAGE>
- --------------------------------------------------------------------------------
MIDAS MAGIC, INC.
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS - DECEMBER 31,1999
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS (100.00%) MARKET VALUE
- --------------------------------------------------------------------------------
COMPUTER COMMUNICATIONS EQUIPMENT (7.98%)
400 Cisco Systems, Inc.* $ 42,850
400 Lucent Technologies Inc. 29,925
--------
72,775
COMMUNICATIONS EQUIPMENT (21.43%)
600 Motorola, Inc. 88,350
200 NEXTLINK Communications, Inc.* 16,613
200 Nokia Oyj ADR 38,000
800 Telefonaktiebolaget LM Ericsson ADR 52,550
--------
195,513
ELECTRONIC COMPUTERS (3.40%)
400 Sun Microsystems, Inc.* 30,975
FIRE, MARINE & CASUALTY INSURANCE & BANKING (3.05%)
500 Citigroup Inc. 27,781
NEWSPAPER; PUBLISHING OR PUBLISHING & PRINTING (4.19%)
1,000 The News Corporation Limited ADR 38,250
RADIO & TV BROADCASTING & COMMUNICATION EQUIPMENT (4.36%)
1,100 Infinity Broadcasting Corp.* 39,806
RAILROAD, LINE-HAUL OPERATING (2.45%)
300 Kansas City Southern Industries, Inc. 22,388
RETAIL-CATALOG & MAIL-ORDER HOUSES (5.25%)
350 Amazon.com, Inc.* 26,655
800 uBid, Inc.* 21,200
--------
47,855
SAVINGS INSTITUTIONS, FEDERALLY CHARTERED (.67%)
3,890 Security Investments Group, Inc.* 6,078
SEMICONDUCTORS & RELATED DEVICES (6.52%)
400 Conexant Systems, Inc.* 26,550
400 Intel Corp. 32,925
--------
59,475
SERVICES-BUSINESS SERVICES (5.59%)
300 Internet Capital Group, Inc.* 50,972
SERVICES-COMPUTER PROGRAMMING SERVICES (1.81%)
1,900 garden.com, Inc.* 16,506
SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING (4.96%)
600 America Online, Inc.* 45,262
SERVICES-DIRECT MAIL ADVERTISING SERVICES (6.07%)
200 CMGI Inc.* 55,375
SERVICES-PREPACKAGED SOFTWARE (4.91%)
400 Oracle Corp.* 44,825
STATE COMMERICAL BANKS (3.47%)
250 J.P. Morgan & Co. Inc. 31,656
TELEPHONE COMMUNICATION (10.34%)
300 China Telecom (Hong Kong) Ltd. ADR* 38,569
400 Korea Telecom Corp. ADR* 29,900
300 Nippon Telegraph & Telephone Corp. ADR 25,837
--------
94,306
WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE (3.55%)
200 Safeguard Scientifics, Inc.* 32,413
--------
Total Investments (cost: $748,238) (100.00%) $912,211
- --------------------------------------------------------------------------------
* INDICATES NON-INCOME PRODUCING SECURITY.
14
<PAGE>
- --------------------------------------------------------------------------------
MIDAS FUND, INC.
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS - DECEMBER 31,1999
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS AND WARRANTS (98.91%) MARKET VALUE
- --------------------------------------------------------------------------------
PRECIOUS METALS AND RESOURCES (95.30%)
2,040,800 AMT International Mining Corp.* $ 98,862
60,000 AngloGold Limited 3,082,500
200,000 AngloGold Limited ADR 5,137,500
140,944 Ashanti Goldfields Co. Ltd. 369,978
259,056 Ashanti Goldfields Co. Ltd. GDR 680,022
400,000 Barrick Gold Corp. 7,075,000
250,000 Battle Mountain Gold Co.* 515,625
125,000 The Broken Hill Proprietary Company Limited 3,320,312
770,200 Canyon Resources Corp.* 240,687
45,000 Cominco Ltd. 950,625
100,000 De Beers Consolidated Mines Ltd. ADR 2,900,000
2,000,000 Delta Gold NL 3,053,423
743,500 Fairstar Explorations Inc.* 51,452
100,000 Franco-Nevada Mining Corp. Ltd. 1,532,872
200,000 Freeport-McMoRan Copper & Gold, Inc. Class A* 3,712,500
139,400 Freeport-McMoRan Copper & Gold, Inc. Class B* 2,944,825
328,900 Golden Cycle Gold Corp.* 2,096,738
647,600 Golden Queen Mining Co. Ltd.* 147,895
800,000 Gold Fields Limited 3,625,000
61,500 Greenstone Resources Ltd. Warrants* 851
56,250 Harmony Gold Mining Warrants, expire 7/31/01* 43,464
400,000 Homestake Mining Company 3,125,000
39,000 Inco Limited* 916,500
300,000 Kinross Gold Corp.* 556,401
1,200,000 Lyon Lake Mines Ltd. Units* 161,938
800,000 Meridian Gold Inc.* 5,425,606
318,500 Metallica Resources, Inc.* 88,166
305,000 Minera Andes Inc.* 37,993
224,400 Nevsun Resources Ltd.* 62,118
150,000 Newmont Mining Corp. 3,675,000
430,000 Placer Dome Inc. 4,622,500
200,000 Randgold Resources Ltd. 800,000
2,300,000 Rio Narcea Gold Mines, Ltd.* 3,501,730
35,000 Rio Tinto plc ADR 3,316,250
70,000 Stillwater Mining Company* 2,231,250
4,298,900 Vista Gold Corp.* 431,378
------------
70,531,961
PRECIOUS METALS AND RESOURCES RELATED (3.61%)
37,000 CRH plc ADR 814,000
32,500 The Shaw Group Inc. 822,656
17,500 Southwest Water Company 260,313
21,000 Whitehall Jewellers, Inc.* 774,375
------------
2,671,344
------------
Total Common Stocks and Warrants
(cost: $103,890,413) 73,203,305
PRINCIPAL
AMOUNT BONDS (1.09%)
- --------------------------------------------------------------------------------
$2,600,000 Greenstone Resources Ltd. 9%, due 2/28/02 809,689
------------
Total Bonds (cost: $1,687,622) 809,689
------------
Total Investments (cost: $105,578,035)(100.00%) $74,012,994
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
MIDAS INVESTORS LTD.
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS - DECEMBER 31,1999
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS (95.95%) MARKET VALUE
- --------------------------------------------------------------------------------
NORTH AMERICA (57.03%)
12,500 Agnico-Eagle Mines Ltd. $ 92,188
50,000 Barrick Gold Corp. 884,375
30,000 Battle Mountain Gold Co.* 61,875
45,000 Dallas Gold and Silver Exchange, Inc.* 270,000
6,000 Franco-Nevada Mining Corp. Ltd. 91,972
10,000 Freeport-McMoRan Copper & Gold, Inc. Class B* 211,250
70,500 Golden Cycle Gold Corp.* 449,437
19,200 Goldcorp. Inc. Class A* 110,400
25,000 Homestake Mining Company 195,313
17,000 Meridian Gold Inc.* 115,812
9,000 Newmont Mining Corp. 220,500
18,000 Placer Dome Inc. 193,500
----------
2,896,622
AUSTRALIA (14.10%)
8,400 The Broken Hill Proprietary Company Limited 223,125
50,000 Delta Gold NL ADR 68,750
3,200 Lihir Gold Ltd. ADR* 46,400
65,000 Normandy Mining Ltd.* 46,097
34,000 WMC Limited 187,539
6,600 WMC Limited ADR 144,375
----------
716,286
GHANA (.51%)
10,000 Ashanti Goldfields Co. Ltd. GDR 26,250
SOUTH AFRICA (17.29%)
25,000 AngloGold Limited ADR 642,187
5,000 De Beers Consolidated Mines Ltd. ADR 145,000
20,000 Gold Fields Limited ADR 90,938
----------
878,125
UNITED KINGDOM (7.02%)
1,970 Anglo American plc ADR 129,158
2,400 Rio Tinto plc ADR 227,400
----------
356,558
----------
Total Common Stocks (cost: $5,328,730) 4,873,841
PREFERRED STOCK (1.57%)
- --------------------------------------------------------------------------------
5,100 Freeport-McMoRan Copper & Gold, Inc.
Preferred Series C 79,688
----------
Total Preferred Stock (cost: $99,334) 79,688
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS (2.48%)
- --------------------------------------------------------------------------------
$125,803 State Street Bank & Trust Repurchase Agreement,
2.50%, December 31, 1999, ~due January 3, 2000
(collateralized by $105,000 U.S. Treasury Bonds
8.75%, due 8/15/20, market value $130,725,
proceeds at maturity: $125,829) 125,803
----------
Total Short Term Investments (cost: $125,803) 125,803
----------
Total Investments
(cost: $5,553,867) (100.00%) $5,079,332
- --------------------------------------------------------------------------------
* INDICATES NON-INCOME PRODUCING SECURITY.
16
<PAGE>
- --------------------------------------------------------------------------------
MIDAS U.S. AND OVERSEAS FUND LTD.
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS - DECEMBER 31,1999
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS (100.00%) MARKET VALUE
- --------------------------------------------------------------------------------
COMPUTER COMMUNICATIONS EQUIPMENT (7.29%)
4,700 Cisco Systems, Inc.* $ 503,488
4,700 Lucent Technologies Inc. 351,619
------------
855,107
COMMUNICATIONS EQUIPMENT (18.67%)
6,800 Motorola, Inc. 1,001,300
3,000 Nokia Oyj ADR 570,000
9,400 Telefonaktiebolaget LM Ericsson ADR 617,462
------------
2,188,762
ELECTRONIC COMPUTERS (6.17%)
3,300 CDW Computer Centers, Inc.* 259,462
6,000 Sun Microsystems, Inc.* 464,625
------------
724,087
FIRE, MARINE & CASUALTY INSURANCE & BANKING (2.89%)
6,100 Citigroup Inc. 338,931
NEWSPAPER; PUBLISHING OR PUBLISHING &
PRINTING (3.75%)
11,500 The News Corporation Limited ADR 439,875
PRINTED CIRCUIT BOARDS (3.42%)
5,500 Jabil Circuit, Inc.* 401,500
RADIOTELEPHONE COMMUNICATIONS (2.74%)
6,500 Vodafone AirTouch PLC ADR 321,750
RAILROAD, LINE-HAUL OPERATING (2.36%)
3,700 Kansas City Southern Industries, Inc. 276,113
RETAIL-VARIETY STORES (5.13%)
8,700 Wal-Mart Stores, Inc. 601,387
SEMICONDUCTORS & RELATED DEVICES (3.02%)
4,300 Intel Corp. 353,944
SERVICES-ADVERTISING AGENCIES (4.96%)
7,000 WPP Group plc ADR 581,875
SERVICES-DIRECT MAIL ADVERTISING SERVICES (6.37%)
2,700 CMGI Inc.* 747,562
SERVICES-PREPACKAGED SOFTWARE (4.87%)
5,100 Oracle Corp.* 571,519
STATE COMMERICAL BANKS (4.00%)
3,700 J.P. Morgan & Co. Inc. 468,513
TELEPHONE COMMUNICATION (22.01%)
3,900 China Telecom (Hong Kong) Ltd. ADR* 501,394
7,000 Deutsche Telekom AG ADR* 497,000
3,500 France Telecom S.A. ADR 467,250
6,400 Korea Telecom Corp. ADR* 478,400
2,700 Nippon Telegraph & Telephone Corp. ADR 232,537
3,600 Telefonos de Mexico S.A. ADR 405,000
------------
2,581,581
WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT &
& SOFTWARE (2.35%)
1,700 Safeguard Scientifics, Inc.* 275,506
------------
Total Investments (cost: $8,135,328) (100.00%) $11,728,012
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
MIDAS SPECIAL EQUITIES FUND, INC.
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS - DECEMBER 31,1999
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS AND WARRANTS (100.00%) MARKET VALUE
- --------------------------------------------------------------------------------
COMPUTER COMMUNICATIONS EQUIPMENT (8.05%)
19,600 Cisco Systems, Inc.* $ 2,099,650
24,000 Lucent Technologies Inc. 1,795,500
------------
3,895,150
COMMUNICATIONS EQUIPMENT (21.04%)
31,800 Motorola, Inc. 4,682,550
13,100 Nokia Oyj ADR 2,489,000
45,900 Telefonaktiebolaget LM Ericsson ADR 3,015,056
------------
10,186,606
ELECTRONIC COMPUTERS (4.00%)
25,000 Sun Microsystems, Inc.* 1,935,938
FIRE, MARINE & CASUALTY INSURANCE &
BANKING (3.30%)
28,800 Citigroup Inc. 1,600,200
NEWSPAPER; PUBLISHING OR PUBLISHING &
PRINTING (5.40%)
53,600 The News Corporation Limited ADR 2,050,200
40,000 The News Corporation Limited Preferred
ADS warrants* 567,680
------------
2,617,880
PRINTED CIRCUIT BOARDS (5.87%)
26,400 Jabil Circuit, Inc.* 1,927,200
9,600 Solectron Corp.* 913,200
------------
2,840,400
RAILROAD, LINE-HAUL OPERATING (2.74%)
17,800 Kansas City Southern Industries, Inc. 1,328,325
RETAIL-VARIETY STORES (2.95%)
20,700 Wal-Mart Stores, Inc. 1,430,888
SEMICONDUCTORS & RELATED DEVICES (5.61%)
20,200 Intel Corp. 1,662,713
8,000 Siliconix Inc.* 1,052,000
------------
2,714,713
SERVICES-ADVERTISING AGENCIES (6.01%)
35,000 WPP Group plc ADR 2,909,375
SERVICES-COMPUTER PROGRAMMING,
DATA PROCESSING (3.49%)
22,400 America Online, Inc.* 1,689,800
SERVICES-DIRECT MAIL ADVERTISING SERVICES (7.26%)
12,700 CMGI Inc.* 3,516,312
SERVICES-PREPACKAGED SOFTWARE (5.46%)
23,600 Oracle Corp.* 2,644,675
STATE COMMERICAL BANKS (4.18%)
16,000 J.P. Morgan & Co. Inc. 2,026,000
TELEPHONE COMMUNICATION (11.66%)
16,100 China Telecom (Hong Kong) Ltd. ADR* 2,069,856
27,100 Korea Telecom Corp. ADR 2,025,725
18,000 Nippon Telegraph & Telephone Corp. ADR 1,550,250
------------
5,645,831
WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT &
SOFTWARE (2.98%)
8,900 Safeguard Scientifics, Inc.* 1,442,356
------------
Total Investments (cost: $34,157,057) (100.00%) $48,424,449
- --------------------------------------------------------------------------------
* INDICATES NON-INCOME PRODUCING SECURITY.
18
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
DOLLAR RESERVES, INC.
- --------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS - DECEMBER 31,1999
- --------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT U.S. GOVERNMENT AGENCIES (100.00%) YIELD* VALUE**
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$684,000 Federal Agriculture Mortgage Corp., due 3/28/00 5.65% $ 674,660
759,000 Federal Agriculture Mortgage Corp., due 4/03/00 5.65% 747,922
900,000 Federal Farm Credit, due 2/07/00 5.52% 894,894
400,000 Federal Farm Credit, due 2/18/00 5.57% 397,029
260,000 Federal Farm Credit, due 2/25/00 5.62% 257,768
1,000,000 Federal Home Loan Banks, due 1/11/00 4.81% 999,747
1,000,000 Federal Home Loan Banks, due 1/19/00 4.93% 999,609
1,500,000 Federal Home Loan Banks, due 1/28/00 5.26% 1,499,998
162,000 Federal Home Loan Banks, due 2/04/00 5.55% 161,151
400,000 Federal Home Loan Banks, due 2/04/00 4.79% 399,552
592,000 Federal Home Loan Banks, due 2/09/00 5.50% 588,473
132,000 Federal Home Loan Banks, due 2/11/00 5.55% 131,166
500,000 Federal Home Loan Banks, due 2/17/00 4.95% 499,335
293,000 Federal Home Loan Banks, due 2/18/00 5.62% 290,804
1,400,000 Federal Home Loan Banks, due 2/22/00 4.95% 1,398,335
500,000 Federal Home Loan Banks, due 2/25/00 5.02% 499,511
570,000 Federal Home Loan Banks, due 2/25/00 5.65% 565,080
500,000 Federal Home Loan Banks, due 3/01/00 5.65% 495,292
450,000 Federal Home Loan Banks, due 3/08/00 5.16% 449,143
5,500,000 Federal Home Loan Banks, due 4/07/00 5.44% 5,498,517
2,500,000 Federal Home Loan Banks, due 4/12/00 5.35% 2,500,428
502,000 Federal Home Loan Banks, due 4/26/00 5.55% 493,023
1,500,000 Federal Home Loan Banks, due 4/28/00 5.46% 1,499,175
500,000 Federal Home Loan Banks, due 6/02/00 5.62% 501,006
1,000,000 Federal Home Loan Banks, due 6/14/00 5.41% 1,000,109
1,350,000 Federal Home Loan Mortgage Corp., due 1/10/00 5.56% 1,348,123
750,000 Federal Home Loan Mortgage Corp., due 1/12/00 5.57% 748,724
503,000 Federal Home Loan Mortgage Corp., due 1/14/00 5.54% 501,994
700,000 Federal Home Loan Mortgage Corp., due 1/25/00 5.62% 697,377
770,000 Federal Home Loan Mortgage Corp., due 2/02/00 5.62% 766,153
1,000,000 Federal Home Loan Mortgage Corp., due 2/03/00 5.53% 994,931
222,000 Federal Home Loan Mortgage Corp., due 2/17/00 5.62% 220,371
290,000 Federal Home Loan Mortgage Corp., due 2/25/00 5.62% 287,510
2,600,000 Federal Home Loan Mortgage Corp., due 3/09/00 5.70% 2,572,007
2,900,000 Federal Home Loan Mortgage Corp., due 3/21/00 5.63% 2,863,718
500,000 Federal Home Loan Mortgage Corp., due 4/28/00 4.98% 498,676
1,000,000 Federal National Mortgage Assn., due 1/20/00 5.53% 997,081
608,000 Federal National Mortgage Assn., due 2/08/00 5.53% 604,451
395,000 Federal National Mortgage Assn., due 2/10/00 6.10% 394,957
470,000 Federal National Mortgage Assn., due 2/14/00 7.59% 470,856
1,500,000 Federal National Mortgage Assn., due 2/24/00 5.56% 1,487,490
380,000 Federal National Mortgage Assn., due 3/03/00 5.65% 376,302
345,000 Federal National Mortgage Assn., due 3/24/00 4.98% 344,274
400,000 Federal National Mortgage Assn., due 3/27/00 5.60% 399,908
450,000 Federal National Mortgage Assn., due 3/27/00 5.77% 443,797
400,000 Federal National Mortgage Assn., due 4/14/00 6.60% 400,533
1,200,000 Federal National Mortgage Assn., due 4/20/00 4.98% 1,197,068
1,795,000 Federal National Mortgage Assn., due 5/19/00 5.10% 1,790,621
700,000 Student Loan Marketing Assn., due 1/20/00 5.14% 699,999
2,500,000 Student Loan Marketing Assn., due 1/20/00 5.09% 2,499,690
2,000,000 Student Loan Marketing Assn., due 2/14/00 5.04% 1,999,976
1,000,000 Student Loan Marketing Assn., due 2/22/00 5.85% 1,000,037
5,000,000 Student Loan Marketing Assn., due 3/08/00 5.42% 4,999,296
1,035,000 Student Loan Marketing Assn., due 3/08/00 7.50% 1,037,748
2,850,000 Student Loan Marketing Assn., due 5/18/00 5.80% 2,850,098
5,000,000 Student Loan Marketing Assn., due 8/04/00 6.11% 5,002,908
-----------
Total Investments (100.00%) $63,938,401
* Represents annualized yield at date of purchase
for discount securities, or coupon for
coupon-bearing securities.
** Cost of investments for financial reporting and
for Federal income tax purposes is the same as value.
- --------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
MIDAS MIDAS
U.S. AND SPECIAL
MIDAS MIDAS MIDAS OVERSEAS EQUITIES DOLLAR
DECEMBER 31, 1999 MAGIC FUND INVESTORS FUND FUND RESERVES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at cost $748,238 $105,578,035 $5,553,867 $ 8,135,328 $34,157,057 $63,938,401
- ------------------------------------------------------------------------------------------------------------------------------------
Investments at market value $912,211 $174,012,994 $5,079,332 $11,728,012 $48,424,449 $63,938,401
Collateral for securities loaned,
at market value (note 6) -- -- 46,312 2,492,629 7,649,275 --
Cash -- -- -- -- 75,281 --
Foreign currencies -- 16,478 -- -- -- --
Receivables:
Investment securities sold -- 217,953 -- -- -- --
Dividends 250 135,186 902 8,218 17,637 --
Fund shares sold -- 84,149 5,000 16,880 -- 33,644
Interest -- -- -- -- -- 552,774
Other assets 1,479 87,436 7,763 16,402 4,855 6,471
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 913,940 74,554,196 5,139,309 14,262,141 56,171,497 64,531,290
====================================================================================================================================
LIABILITIES
Collateral for securities loaned (note 6) -- -- 46,312 2,492,629 7,649,275 --
Payables:
Dividends -- -- -- -- -- 1,719
Demand notes payable to bank (note 5) 46,597 2,243,508 -- 1,812,871 6,744,177 79,202
Fund shares redeemed -- 211,854 1,276 30,339 -- 103,929
Accrued expenses 9,628 202,047 41,201 35,455 83,392 76,110
Accrued management and distribution fees 738 76,442 5,418 9,924 65,732 19,942
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 56,963 2,733,851 94,207 4,381,218 14,542,576 280,902
====================================================================================================================================
NET ASSETS $856,977 $171,820,345 $15,045,102 $19,880,923 $41,628,921 $64,250,388
- ------------------------------------------------------------------------------------------------------------------------------------
Shares outstanding, $0.01 par value 39,620 52,999,314 1,905,080 939,481 1,567,110 64,250,388
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $21.63 $1.36 $2.65 $10.52 $26.56 $1.00
At December 31, 1999, net assets
consisted of:
Paid-in capital $693,004 $263,616,640 $19,950,864 $15,962,776 $31,254,154 $64,261,250
Accumulated net realized gain (loss)
on investments -- (160,235,203) (14,431,227) 325,463 (3,892,625) (10,862)
Net unrealized appreciation (depreciation)
on investments 163,973 (31,561,092) (474,535) 3,592,684 14,267,392 --
- ------------------------------------------------------------------------------------------------------------------------------------
$856,977 $171,820,345 $15,045,102 $19,880,923 $41,628,921 $64,250,388
====================================================================================================================================
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
MIDAS MIDAS
U.S. AND SPECIAL
MIDAS MIDAS MIDAS OVERSEAS EQUITIES DOLLAR
YEAR ENDED DECEMBER 31, 1999 MAGIC FUND INVESTORS FUND FUND RESERVES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $1,060 $1,455,015 $ 84,739 $ 77,708 $ 450,234 $ --
Foreign taxes withheld (20) (77,701) (5,112) (3,422) (4,481) --
Interest 12,775 303,293 7,331 40,119 95,647 3,524,721
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income 13,815 1,680,607 86,958 114,405 541,400 3,524,721
====================================================================================================================================
EXPENSES
Distribution (note 3) 1,497 198,817 58,105 69,876 337,172 169,483
Investment management (note 3) 5,986 795,268 58,105 69,876 302,873 339,177
Interest (note 5) 790 207,789 7,732 18,750 141,415 10,309
Transfer agent 28,042 610,921 59,713 31,569 109,184 201,523
Custodian 2,672 151,121 12,242 12,913 57,211 46,961
Professional (note 3) 11,882 75,067 29,457 23,598 42,937 50,023
Registration (note 3) 15,807 63,002 20,007 20,746 30,424 46,421
Directors 322 15,576 4,581 3,037 7,503 8,779
Printing 6,255 98,031 12,220 5,544 18,338 20,909
Other 1,301 18,083 1,615 1,913 7,597 13,945
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 74,554 2,233,675 263,777 257,822 1,054,654 907,530
Expenses reimbursed (note 3) (52,668) -- -- -- -- --
Investment management and distribution
plan expenses waived (note 3) (7,483) -- (28,344) (34,839) -- (271,236)
Fee reduction (note 6) (1,663) (65,419) (14,682) (2,215) (28,574) (25,912)
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses 12,740 2,168,256 220,751 220,768 1,026,080 610,382
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1,075 (487,649) (133,793) (106,363) (484,680) 2,914,339
====================================================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, FOREIGN CURRENCIES AND FUTURES
Net realized gain (loss) from
security transactions 77,645 (103,922,952) (1,964,342) (20,342) (1,493,400) (5,449)
Net realized gain from foreign currency 18,479 297,062 132,273 370,754 2,019,595 --
and futures transactions
Unrealized appreciation of investments
during the period 222,497 94,780,730 1,618,749 2,867,544 9,684,689 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments, foreign currencies
and futures 318,621 (8,845,160) (213,320) 3,217,956 10,210,884 (5,449)
====================================================================================================================================
Net increase (decrease) in net assets
resulting from operations $319,696 $(9,332,809) $(347,113) $3,111,593 $19,726,204 $2,908,890
====================================================================================================================================
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
MIDAS MAGIC MIDAS FUND
-----------------------------------------------------------------------------
TWO MONTHS ENDED
FOR THE YEARS ENDED (UNLESS OTHERWISE INDICATED) 12/31/99 12/31/98 10/31/98 12/31/99 12/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss) $ 1,075 $ (1,484) $ (14,818) $ (487,649) $ 281,945
Net realized gain (loss) from foreign currency
and futures transactions 18,479 -- -- 297,062 (307,036)
Net realized gain (loss) from security transactions 77,645 (5,425) 66,114 (103,922,952) (28,397,116)
Unrealized appreciation (depreciation)
of investments and foreign currencies
during the period 222,497 42,907 (473,290) 94,780,730 (6,280,375)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 319,696 35,998 (421,994) (9,332,809) (34,702,582)
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income (1,300) -- -- -- --
Distributions from net realized gains (104,504) (65,967) (116,177) -- --
Distributions in excess of net realized gains -- -- -- -- --
Distributions from paid-in capital -- -- -- -- --
CAPITAL SHARE TRANSACTIONS
Change in net assets resulting from capital
share transactions (a) 94,929 (34,769) (619,870) (6,688,244) 21,722,639
- ------------------------------------------------------------------------------------------------------------------------------------
Total change in net assets 308,821 (64,738) (1,158,041) (16,021,053) (12,979,943)
NET ASSETS
Beginning of period 548,156 612,894 1,770,935 87,841,398 100,821,341
- ------------------------------------------------------------------------------------------------------------------------------------
End of period* $856,977 $548,156 $1,612,894 $71,820,345 $ 87,841,398
====================================================================================================================================
*Includes accumulated deficit in net investment
income$ $ -- $ -- $ -- $ -- $ --
====================================================================================================================================
(A) TRANSACTIONS IN CAPITAL SHARES WERE AS FOLLOWS:
VALUE
Shares sold $ 580,609 $ 15,252 $1,142,169 $ 31,700,935 $ 97,702,211
Shares issued in reinvestment of distributions 105,883 65,948 116,053 -- --
Shares redeemed (591,563) (115,969) (878,092) (38,389,179) (75,979,572)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) $ 94,929 $ (34,769) $ (619,870) $ (6,688,244) $ 21,722,639
NUMBER
Shares sold 30,673 1,035 7,020 22,242,244 53,935,734
Shares issued in reinvestment of distributions 4,856 4,704 5,973 -- --
Shares redeemed (33,520) (7,244) (44,937) (27,417,730) (43,523,746)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 2,009 (1,505) (31,944) (5,175,486) 10,411,988
====================================================================================================================================
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MIDAS U.S. AND MIDAS SPECIAL
MIDAS INVESTORS OVERSEAS FUND EQUITIES FUND DOLLAR RESERVES
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
12/31/99 12/31/98 6/30/98 12/31/99 12/31/98 12/31/99 12/31/98 12/31/99 12/31/98 6/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ (133,793) $ (85,918) $ (264,359) $ (106,363) $ (109,242)$ (484,680) $(1,088,343) $ 2,914,339 $ 1,395,986 $ 2,961,905
132,273 22,683 127,639 370,754 168,206 2,019,595 1,912,534 -- -- --
(1,964,342) (1,644,546) (11,052,895) (20,342) 91,573 (1,493,400) (2,540,433) (5,449) 2,607 774
1,618,749 (210,016) 4,613,405 2,867,544 (38,013) 9,684,689 11,710 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
(347,113) (1,917,797) (6,576,210) 3,111,593 112,524 9,726,204 (1,704,532) 2,908,890 1,398,593 2,962,679
-- -- -- -- -- -- -- (2,914,339) (1,395,986) (2,961,905)
-- -- (835,640) (31,369) (253,359) -- (2,995,505) -- -- --
-- -- -- -- -- -- -- -- (2,607) --
-- -- -- -- -- -- -- -- -- (70,279)
(901,019) (113,097) 519,320 (539,181) (964,930) (4,904,335) (3,266,312) (1,279,368) 3,932,762 (1,235,973)
- ------------------------------------------------------------------------------------------------------------------------------------
(1,248,132) (2,030,894) (6,892,530) 2,541,043 (1,105,765) 4,821,869 (7,966,349) (1,284,817) 3,932,762 (1,305,478)
6,293,234 8,324,128 15,216,658 7,339,880 8,445,645 36,807,052 44,773,401 65,535,205 61,602,443 62,907,921
- ------------------------------------------------------------------------------------------------------------------------------------
$5,045,102 $6,293,234 $ 8,324,128 $9,880,923 $7,339,880 $41,628,921 $36,807,052 $64,250,388 $65,535,205 $61,602,443
====================================================================================================================================
$ -- $ -- 3,506 $ -- $ -- $ -- $ -- $ -- $ -- $ --
====================================================================================================================================
$ 710,909 $1,002,041 $ 3,962,860 $9,967,721 $ 257,379 $ 1,609,739 $ 2,667,221 $60,416,438 $24,217,074 $49,705,407
-- -- 783,480 28,577 228,517 -- 2,794,520 2,880,221 1,381,063 2,981,463
(1,611,928) (1,115,138) (4,227,020) (1,535,479) (1,450,826) (6,514,074) (8,728,053) (64,576,027) (21,665,375)(53,922,843)
- ------------------------------------------------------------------------------------------------------------------------------------
$ (901,019) $ (113,097) $ 519,320 $ (539,181) $ (964,930)$(4,904,335) $(3,266,312) $1,279,368 $ 3,932,762 $(1,235,973)
245,435 332,400 808,491 116,171 33,554 75,136 109,718 60,416,438 24,217,074 49,705,407
-- -- 193,827 3,991 33,361 -- 144,137 2,880,221 1,381,063 2,981,463
(572,749) (371,213) (861,998) (205,037) (191,752) (317,290) (359,846) (64,576,027) (21,665,375)(53,922,843)
- ------------------------------------------------------------------------------------------------------------------------------------
(327,314) (38,813) 140,320 (84,875) (124,837) (242,154) (105,991) (1,279,368) 3,932,762 (1,235,973)
====================================================================================================================================
</TABLE>
23
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 The Midas Funds ("Funds") are all Maryland corporations registered under
the Investment Company Act of 1940, as amended, as open-end non-diversified
management investment companies.
Midas Magic, Inc.'s investment objective is capital appreciation. The
Fund seeks capital appreciation by investing in equity securities,
securities convertible into common stocks, and preferred stocks. On March
4, 1998 the Board of Directors of the Fund approved a change in the fiscal
year-end to December 31. Previously, the fiscal year end was October 31.
Midas Fund, Inc.'s investment objectives are primarily capital
appreciation and protection against inflation and, secondarily, current
income. The Fund seeks to achieve these objectives by investing 65% of its
total assets primarily in (1) securities of companies primarily involved,
directly or indirectly, in the business of mining, processing, fabricating,
distributing or otherwise dealing in gold, silver, platinum or other
natural resources and (2) gold, silver and platinum bullion, as set forth
in its prospectus.
Midas Investors Ltd.'s investment objective is long term capital
appreciation. The Fund seeks to achieve its investment objective by
investing primarily in securities of companies involved directly or
indirectly in mining, processing or dealing in gold or other precious
metals and in gold, platinum and silver bullion, as set forth in its
prospectus. Income is the secondary objective. On March 4, 1998, the Board
of Directors of the Fund approved a change in the fiscal year end to
December 31. Previously, the fiscal year end was June 30.
Midas U.S. and Overseas Fund Ltd.'s investment objective is to seek to
obtain the highest possible total return on its assets from long term
growth of capital and from income principally through a portfolio of
securities of U.S. and overseas issuers.
Midas Special Equities Fund, Inc.'s investment objective is capital
appreciation. The Fund seeks capital appreciation by investing aggressively
in equity securities, warrants, convertible securities and debt
instruments.
Dollar Reserves, Inc.'s investment objective is to provide its
shareholders maximum current income consistent with preservation of capital
and maintenance of liquidity. The Fund invests exclusively in obligations
of the U.S. Government, its agencies and instrumentalities. On March 4,
1998, the Board of Directors of the Fund approved a change in the fiscal
year end to December 31. Previously, the fiscal year end was June 30.
The following is a summary of significant accounting policies
consistently followed by each Fund in the preparation of its financial
statements. With respect to security valuation, investments in securities
traded on a national securities exchange, unless over-the-counter
quotations for such securities are believed to more closely reflect their
fair value, and securities traded on the Nasdaq National Market System
("NMS") are valued at the last reported sales price on the day the
valuations are made. Such securities that are not traded on a particular
day, securities traded in the over-the-counter market that are not on NMS,
and foreign securities are valued at the mean between the current bid and
asked prices. Securities of foreign issuers denominated in foreign
currencies are translated into U.S. dollars at prevailing exchange rates.
Futures and forward contracts are marked to market
- --------------------------------------------------------------------------------
24
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
CONTINUED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
daily and the change in market value is recorded by the Funds as an
unrealized gain or loss. When a contract is closed, a realized gain or loss
is recorded by the Funds equal to the difference between the opening and
closing value of the contract. A Fund could be exposed to risk if the
counterparties are unable to meet the terms of the contracts. Debt
obligations with remaining maturities of 60 days or less are valued at cost
adjusted for amortization of premiums and accretion of discounts.
Investment transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend
date and interest income is recorded on the accrual basis. In preparing
financial statements in conformity with generally accepted accounting
principles, management makes estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2 Each Fund intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all taxable investment income and net capital gains, if any,
after utilization of any capital loss carryforward, to shareholders and
therefore no Federal income tax provision is required.
Distributions from net realized gains, if any, are normally declared
and paid annually. Distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
capital loss carryforwards, post-October capital losses, net operating
losses and foreign currency transactions.
At December 31,1999, Midas Fund, Inc. had an unused capital loss
carryforward of approximately $128,264,500 of which $2,587,100,
$25,267,300, $12,176,100 and $88,234,000 expires in 2004, 2005, 2006 and
2007, respectively. At December 31, 1999, Midas Investors Ltd. had an
unused capital loss carryforward of approximately $14,431,200 of which
$3,474,200, $9,124,000 and $1,833,000 expires in 2005, 2006 and 2007
respectively. At December 31, 1999, Midas Special Equities Fund, Inc. had
an unused capital loss carryforward of approximately $3,892,600 which
expires in 2007. At December 31, 1999, Dollar Reserves, Inc. had an unused
capital loss carryforward of approximately $5,600 of which $5,200, $200 and
$200 expires in 2002, 2003 and 2007, respectively.
- --------------------------------------------------------------------------------
3 Effective June 30, 1999, the investment management agreement between Midas
Magic, Inc. and Rockwood Advisers, Inc. and the investment management
agreements between Bull & Bear Advisers, Inc. and Midas Special Equities
Fund, Inc., Midas U.S. and Overseas Fund Ltd., Midas Investors Ltd., and
Dollar Reserves, Inc. were transferred to Midas Management Corporation (the
"Investment Manager"). The terms of the investment management agreements,
other than the name of the investment manager, did not change.
- --------------------------------------------------------------------------------
25
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
CONTINUED
- --------------------------------------------------------------------------------
Under the investment management agreements of Midas Magic, Inc. and
Midas Fund, Inc., the Investment Manager receives a management fee, payable
monthly, based on the average daily net assets of each Fund at the annual
rate of 1% on the first $200 million, .95% from $200 million to $400
million, .90% from $400 million to $600 million, .85% from $600 million to
$800 million, .80% from $800 million to $1 billion and .75% over $1
billion. The Investment Manager has contractually agreed to reimburse Midas
Magic, Inc. expenses excluding taxes, etc., in excess of 1.90% of average
net assets until May 1, 2000. Pursuant to such contract and voluntary
reimbursements, the Investment Manager reimbursed the Fund $60,151 for the
year ended December 31, 1999. Pursuant to the investment management
agreement for Midas Fund, Inc., the Investment Manager retained Lion
Resource Management Limited (the "Subadviser") regarding portfolio
investments. Pursuant to the Subadvisory agreement, which terminated
November 30, 1999, the Subadviser advised and consulted with the Investment
Manager regarding the selection, clearing and safekeeping of the Fund's
portfolio investments and assisted in pricing and generally monitoring such
investments. The Subadviser also provided the Investment Manager with
advice as to allocating the Fund's portfolio assets among various
countries, including the United States and among equities, bullion and
other types of investments, including recommendations of specific
investments. The Investment Manager, not the Fund, paid the Subadviser
monthly a percentage of the Investment Manager's net fees based upon the
Fund's performance and net assets.
Under the terms of the investment management agreements of Midas
Special Equities Fund, Inc., Midas U.S. and Overseas Fund Ltd., and Midas
Investors Ltd., the Investment Manager receives a management fee, payable
monthly, based on the average daily net assets of the Fund at the annual
rate of 1% on the first $10 million, 7/8 of 1% from $10 million to $30
million, 3/4 of 1% from $30 million to $150 million, 5/8 of 1% from $150
million to $500 million, and 1/2 of 1% over $500 million.
Under the terms of the investment management agreement of Dollar
Reserves, Inc., the Investment Manager receives a management fee, payable
monthly, based on the average daily net assets of the Fund, at the annual
rate of .50 of 1% of the first $250 million, .45 of 1% from $250 million to
$500 million, and .40 of 1% over $500 million. The Investment Manager
voluntarily waived $164,026 of its management fee for the year ended
December 31, 1999.
Pursuant to the investment management agreements with each Fund, the
Investment Manager has agreed to waive all or part of its fee or reimburse
any Fund monthly if and to the extent the aggregate operating expenses of
the Fund exceed the most restrictive limit imposed by any state in which
shares of the Funds are qualified for sale, although currently the Funds
are not subject to any such limits. Each Fund has adopted a plan of
distribution pursuant to Rule 12b-1 under the 1940 Act. Under each Plan,
each Fund pays the Fund's Distributor, Investor Service Center, Inc., an
affiliate of the Investment Manager, a fee of
26
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
CONTINUED
- --------------------------------------------------------------------------------
.25% (Midas Magic, Inc., Midas Fund, Inc. and Dollar Reserves, Inc.) and
1.00% (Midas U.S. and Overseas Fund Ltd., Midas Special Equities Fund, Inc.
and Midas Investors Ltd.) for distribution and shareholder services. The
shareholder service fee is intended to cover personal services provided to
the shareholders of the Funds and the maintenance of shareholder accounts.
The distribution fee is to cover all other activities and expenses
primarily intended to result in the sale of the Funds' share. For Midas
U.S. and Overseas Fund Ltd., the Distributor has made a partial contractual
fee waiver that will continue through May 1, 2000 and has waived $34,839 in
distribution expenses for the year ended December 31, 1999. For Midas
Investors Ltd., the Distributor has made a partial contractual fee waiver
that will continue through May 1, 2000 and has waived $28,344 in
distribution expenses for the year ended December 31, 1999. For Dollar
Reserves, Inc., the Distributor has voluntarily waived $107,210 of its
distribution fee for the year ended December 31, 1999.
Certain officers and directors of the Fund are officers and directors
of the Investment Manager and the Fund's Distributor. For the year ended
December 31, 1999, certain Funds paid $17,030 to Bull & Bear Securities,
Inc., a former affiliate of the Investment Manager, commissions for
brokerage services and the Funds reimbursed the Investment Manager $125,031
for providing certain administrative and accounting services at cost during
the year ended December 31, 1999. In addition, Dollar Reserves, Inc. and
Midas Fund, Inc. paid the Distributor $95,804 and $133,269, respectively,
for payments made to certain brokers for transfer agent services.
- --------------------------------------------------------------------------------
4 At December 31, 1999, aggregate cost and net unrealized appreciation
(depreciation) of ~securities for federal income tax purposes were as
follows:
<TABLE>
<CAPTION>
FEDERAL INCOME GROSS UNREALIZED GROSS UNREALIZED NET APPRECIATION
DECEMBER 31, 1999 TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Midas Magic, Inc. $ 748,238 $ 198,511 $ 34,538 $ 163,973
Midas Fund, Inc. 105,578,035 8,052,744 39,617,785 (31,565,041)
Midas Investors Ltd. 5,553,867 500,736 975,271 (474,535)
Midas U.S. and Overseas Fund Ltd. 8,135,328 3,616,693 24,009 3,592,684
Midas Special Equities Fund, Inc. 34,157,057 14,627,695 360,303 14,267,392
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
CONTINUED
- --------------------------------------------------------------------------------
Purchases and sales of securities other than short term notes were as follows:
FOR THE YEAR ENDED PURCHASES PROCEEDS FROM THE
DECEMBER 31, 1999 OF SECURITIES SALE OF SECURITIES
- --------------------------------------------------------------------------------
Midas Magic, Inc. $ 1,222,331 $ 1,116,703
Midas Fund, Inc. 58,220,358 64,888,891
Midas Investors Ltd. 5,567,561 7,248,895
Midas U.S. and Overseas Fund Ltd. 13,957,540 12,026,482
Midas Special Equities Fund, Inc. 58,539,555 55,401,542
- --------------------------------------------------------------------------------
5 The Funds have a committed bank line of credit at an interest rate equal to
the Federal Reserve Funds Rate plus 1.00 percentage point for leveraging
and/or temporary or emergency purposes. At December 31, 1999, the
outstanding balance, and for the year ended December 31, 1999, the weighted
average interest rate and the weighted average amount outstanding were as
follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OUTSTANDING WEIGHTED AVERAGE WEIGHTED AVERAGE
DECEMBER 31, 1999 BALANCE INTEREST RATE AMOUNT OUTSTANDING
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Midas Magic, Inc. $ 46,597 5.96% $ 11,015
Midas Fund, Inc. 2,243,508 5.99% 3,188,985
Midas Investors Ltd. -- 5.88% 134,162
Midas U.S. and Overseas Fund Ltd. 1,812,871 6.20% 301,090
Midas Special Equities Fund, Inc. 6,744,177 5.86% 2,426,599
Dollar Reserves, Inc. 79,202 5.93% 167,073
</TABLE>
6 As of December 31, 1999, certain Funds loaned securities and received cash
collateral for the loans as follows:
VALUE OF CASH COLLATERAL
DECEMBER 31, 1999 SECURITIES LOANED OF LOAN
- --------------------------------------------------------------------------------
Midas Investors Ltd. $ 43,793 $ 46,312
Midas U.S. and Overseas Fund Ltd. 2,468,200 2,492,629
Midas Special Equities Fund, Inc. 7,622,062 7,649,275
The Funds receive compensation in the form of fees for the loans. The Funds
also continue to receive dividends on the securities loaned. The collateral for
such loans must be at least equal, at all times, to the fair market value of the
securities loaned, plus accrued interest.
28
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
CONTINUED
- --------------------------------------------------------------------------------
The Funds participate in repurchase agreements with the Funds' custodian.
The custodian takes possession of the underlying collateral securities which are
valued daily to ensure that the fair market value, including accrued interest is
at least equal, at all times, to the repurchase price. In the event of default
of the obligation to repurchase, the Funds have the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings.
The Funds have entered into an arrangement with its transfer agent and
custodian whereby interest earned on uninvested cash balances was used to offset
a portion of the Funds' expenses. During the period, the Funds' transfer agent
fees and custodian fees were reduced by $128,538 and $9,927, respectively, under
such arrangements.
- --------------------------------------------------------------------------------
29
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - MIDAS MAGIC, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
TWO
YEAR MONTHS YEARS ENDED OCTOBER 31,
ENDED ENDED
12/31/99 12/31/98 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA*
Net asset value at beginning of period $14.57 $15.67 $24.92 $24.24 $18.73 $16.61
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) .03 (.04) (.25) (.59) (.56) (.31)
Net realized and unrealized gain (loss) on investments 10.28 .98 (7.20) 6.17 6.07 2.43
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 10.31 .94 (7.45) 5.58 5.51 2.12
Less distributions:
Distributions from net investment income (.03) -- -- -- -- --
Distributions from net realized gain on investments (3.22) (2.04) (1.80) (4.90) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (3.25) (2.04) (1.80) (4.90) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $21.63 $14.57 $15.67 $24.92 $24.24 $18.73
====================================================================================================================================
Total return 70.58% 6.48% (31.29)% 27.55% 29.42% 12.76%
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $857 $548 $613 $1,771 $1,200 $774
====================================================================================================================================
Ratio of expenses to average net assets(a)(b) 2.40% 2.85%** 2.09% 2.81% 2.55% 2.30%
====================================================================================================================================
Ratio of net investment loss to average net assets 0.18% (1.54)%** (1.38)% (2.65)% (2.23%) (1.77%)
====================================================================================================================================
Portfolio turnover rate 357.71% 0% 207.02% 44.00% 42.48% 30.04%
====================================================================================================================================
</TABLE>
* Per share net investment income (loss) and net realized and unrealized gain
(loss) on investments have been computed using the average number of shares
outstanding. These computations had no effect on net asset value per share.
** Annualized.
(a) Ratio prior to reimbursement by the manager was 12.44%, 18.84%**, 9.27%,
10.47%, 4.44%, and 3.00% for the year ended December 31, 1999, the two
months ended December 31, 1998 and the years ended October 31, 1998, 1997,
1996, and 1995, respectively.
(b) Ratio after custodian fee credits was 2.13% for the year ended December 31,
1999 and 1.97% for the year ended October 31, 1998. There were no custodian
fee credits for prior years.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - MIDAS FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA*
Net asset value at beginning of period $1.51 $2.11 $5.15 $4.25 $3.32
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.01) -- (.03) (.05) (.06)
Net realized and unrealized gain (loss) on investments (.14) (.60) (3.01) .95 1.28
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (.15) (.60) (3.04) .90 1.22
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Distributions from net realized gains -- -- -- -- (.29)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $1.36 $1.51 $2.11 $5.15 $4.25
====================================================================================================================================
Total Return (9.93)% (28.44)% (59.03)% 21.22% 36.73%
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $71,820 $87,841 $100,793 $200,457 $15,753
====================================================================================================================================
Ratio of expenses to average net assets (a)(b) 2.81% 2.33% 1.90% 1.63% 2.26%
====================================================================================================================================
Ratio of net investment loss to average net assets(c) (.80)% (.02)% (.72)% (.92)% (1.47)%
====================================================================================================================================
Portfolio turnover rate 74% 27% 50% 23% 48%
====================================================================================================================================
</TABLE>
** Per share net investment loss and net realized and unrealized gain (loss)
on investments have been computed using the average number of shares
outstanding. These computations had no effect on net asset value per share.
(a) Ratio prior to reimbursement by the Investment Manager was 2.15%, 1.83%,
and 2.52% for the years ended December 31, 1997, 1996, and 1995,
respectively.
(b) Ratio after transfer agent and custodian credits was 2.73%, 2.30%, 1.88%,
1.61% and 2.25% for the years ended December 31, 1999, 1998, 1997, 1996 and
1995, respectively.
(c) Ratio prior to reimbursement by the Investment Manager was (.97)%, (1.12)%,
and (1.73)% for the years ended December 31, 1997, 1996, and 1995,
respectively.
- --------------------------------------------------------------------------------
30
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - MIDAS INVESTORS LTD.
- ------------------------------------------------------------------------------------------------------------------------------------
SIX
YEAR MONTHS YEARS ENDED JUNE 30,
ENDED ENDED
12/31/99 12/31/98 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA*
Net asset value at beginning of period $2.82 $3.67 $7.14 $14.02 $13.13 $15.71
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.06) (.04) (.12) (.25) (.22) --
Net realized and unrealized gain (loss) on investments (.11) (.81) (2.94) (4.36) 2.72 (1.13)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (.17) (.85) (3.06) (4.61) 2.50 (1.13)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Distributions from net realized gain on investments -- -- (.41) (2.27) (1.61) (1.45)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- (.41) (2.27) (1.61) (1.45)
====================================================================================================================================
Net asset value at end of period $2.65 $2.82 $3.67 $7.14 $14.02 $13.13
====================================================================================================================================
Total return (6.03)% (23.16)% (43.45)% (37.81)% 21.01% (8.01)%
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $5,045 $6,293 $8,234 $15,217 $27,485 $29,007
====================================================================================================================================
Ratio of expenses to average net assets(a) (b) (c) 4.05% 4.32%** 3.88% 2.94% 3.05% 2.93%
====================================================================================================================================
Ratio of net investment income (loss) to average net assets (2.29)% (2.50)%** (2.40)% (2.06%) (1.61%) .01%
====================================================================================================================================
Portfolio turnover rate 52% 36% 136% 37% 61% 158%
====================================================================================================================================
</TABLE>
** Per share net investment loss and net realized and unrealized gain (loss)
on investments have been computed using the average number of shares
outstanding. These computations had no effect on net asset value per share.
** Annualized.
(a) Ratios excluding interest expense were 3.92%, 3.96%**, 3.57%, 2.77%, 2.93%,
and 2.82% for the year ended December 31, 1999, the six months ending
December 31, 1998 and the years ending June 30, 1998, 1997, 1996 and 1995,
respectively.
(b) Ratio after transfer agent and custodian credits was 3.80%, 4.30%** and
3.82% for the year ended December 31, 1999, the six months ending December
31, 1998 and the year ended June 30, 1998, respectively. (c) -Ratio prior to
waiver by the Distributor was 4.54% for the year ended December 31, 1999.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - MIDAS U.S. AND OVERSEAS FUND LTD.
- ------------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA*
Net asset value at beginning of period $7.17 $7.35 $7.91 $8.36 $7.08
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.10) (.10) (.05) (.24) (.23)
Net realized and unrealized gain on investments 3.49 .18 .46 .68 2.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.39 .08 .41 .44 1.77
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Distributions from net realized gains on investments (.04) (.26) (.97) (.89) (.49)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $10.52 $7.17 $7.35 $7.91 $8.36
- ------------------------------------------------------------------------------------------------------------------------------------
Total return 47.44% 1.18% 5.64 5.34% 25.11%
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $9,881 $7,340 $8,446 $9,836 $9,808
====================================================================================================================================
Ratio of expenses to average net assets (a)(b)(c) 3.19% 3.33% 3.28% 3.20% 3.55%
====================================================================================================================================
Ratio of net investment loss to average net assets (1.52)% (1.38)% (0.63)% (2.74)% (2.85)%
====================================================================================================================================
Portfolio turnover rate 174% 69% 205% 255% 214%
====================================================================================================================================
</TABLE>
** Per share net investment loss and net realized and unrealized gain on
investments have been computed using the average number of shares
outstanding.These computations had no effect on net asset value per share.
(a) Ratio prior to reimbursement by the Investment Manager was 3.84% for the
year ended December 31, 1995.
(b) Ratio after the transfer agent and custodian fee credits was 3.16%, 3.22%
and 3.49% for 1999, 1997 and 1995, respectively. There were no custodian
credits for 1998 and 1996.
(c) Ratio prior to waiver by the Distributor was 3.69% for the year ended
December 31, 1999.
- --------------------------------------------------------------------------------
31
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - MIDAS SPECIAL EQUITIES FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA*
Net asset value at beginning of period $20.34 $23.38 $22.96 $25.42 $19.11
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.27) (.61) (.38) (.73) (.81)
Net realized and unrealized gain (loss) on investments 6.49 (.65) 1.55 .99 8.51
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 6.22 (1.26) 1.17 .26 7.70
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Distributions from net realized gain on investments -- (1.78) (.75) (2.72) (1.39)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value 6.22 (3.04) .42 (2.46) 6.31
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $26.56 $20.34 $23.38 $22.96 $25.42
====================================================================================================================================
Total return 30.6% (5.0)% 5.3% 1.0% 40.5%
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $41,629 $36,807 $44,773 $49,840 $56,340
====================================================================================================================================
Ratio of expenses to average net assets(a)(b) 3.13% 3.42% 2.81% 2.92% 3.67%
====================================================================================================================================
Ratio of net investment loss to average net assets (1.44)% (2.57)% (1.48)% (2.81%) (2.70%)
====================================================================================================================================
Portfolio turnover rate 159% 97% 260% 311% 319%
====================================================================================================================================
</TABLE>
** Per share net investment loss and net realized and unrealized gain (loss)
on investments have been computed using the average number of shares
outstanding. These computations had no effect on net asset value per share.
(a) Ratio excluding interest expense was 2.71%, 2.63%, 2.53%, 2.45%, and 2.88%
for the years ended December 31, 1999, 1998, 1997, 1996 and 1995,
respectively.
(b) Ratio after transfer agent and custodian fee credits was 3.04%, 3.41% and
2.79% for the year ended December 31, 1999, 1998 and 1997. There were no
custodian fee credits for 1996 and 1995.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - DOLLAR RESERVES, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
SIX
YEAR MONTHS YEARS ENDED JUNE 30,
ENDED ENDED
12/31/99 12/31/98 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .043 .022 .048 .047 .047 .044
Less distributions:
Distributions from net investment income (.043) (.022) (.047) (.047) (.047) (.044)
Distributions from paid-in capital -- -- (.001) -- -- --
====================================================================================================================================
Net asset value at end of period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====================================================================================================================================
Total return 4.38% 4.46%** 4.88% 4.83% 4.81% 4.53%
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $64,250 $65,535 $61,602 $62,908 $62,467 $65,278
====================================================================================================================================
Ratio of expenses to average net assets(a) .94% .93%** .86% .71% .90% .89%
====================================================================================================================================
Ratio of net investment income to average net assets(b) 4.30% 4.43%** 4.71% 4.73% 4.70% 4.41%
====================================================================================================================================
</TABLE>
** Annualized.
(a) Ratio prior to waiver by the Investment Manager and Distributor was 1.34%,
1.30%**, 1.20%, 1.21%, 1.40%, and 1.39% for the year ended December 31,
1999, the six months ended December 31, 1998 and the years ended June 30,
1998, 1997, 1996 and 1995, respectively.
(b) Ratio prior to waiver by the Investment Manager and Distributor was 3.90%,
4.06%**, 4.37%, 4.23%, 4.20%, and 3.91% for the year ended December 31,
1999, the six months ended December 31, 1998 and the years ended June 30,
1998, 1997, 1996 and 1995, respectively.
- --------------------------------------------------------------------------------
32
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
MIDAS MAGIC, INC.
MIDAS FUND, INC.
MIDAS INVESTORS LTD.
MIDAS U.S. AND OVERSEAS FUND LTD.
MIDAS SPECIAL EQUITIES FUND, INC.
DOLLAR RESERVES, INC.
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Midas Magic, Inc., Midas Fund, Inc.,
Midas Investors Ltd., Midas U.S. and Overseas Fund Ltd., Midas Special Equities
Fund, Inc. and Dollar Reserves, Inc. as of December 31, 1999, the related
statements of operations for the year then ended, the statements of changes in
net assets and the financial highlights for each of the periods indicated
thereon. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial statements of Midas Magic, Inc. as of October 31, 1995
which included financial highlights for the year then ended, were audited by
other auditors whose report dated December 13, 1995, expressed an unqualified
opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Midas Magic, Inc., Midas Fund, Inc., Midas Investors Ltd., Midas U.S. and
Overseas Fund Ltd., Midas Special Equities Fund, Inc. and Dollar Reserves, Inc.
as of December 31, 1999, the results of their operations for the year then
ended, changes in their net assets and the financial highlights for the periods
presented in conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
PHILADELPHIA, PENNSYLVANIA
JANUARY 14, 2000
- --------------------------------------------------------------------------------
33
<PAGE>
MIDAS
FUNDS
DISCOVERING OPPORTUNITIES
ACCOUNT
APPLICATION
USE THIS ACCOUNT APPLICATION TO OPEN A REGULAR MIDAS ACCOUNT. FOR A MIDAS IRA
APPLICATION, CALL TOLL-FREE 1-800-400-MIDAS (6432) OR ACCESS OUR WEB SITE AT
WWW.MIDASFUNDS.COM. RETURN THIS COMPLETED ACCOUNT APPLICATION IN THE ENCLOSED
ENVELOPE OR MAIL TO: MIDAS FUNDS, BOX 219789, KANSAS CITY, MO 64121-9789.
================================================================================
1.
REGISTRATION (PLEASE PRINT) FOR ASSISTANCE WITH THIS APPLICATION,
PLEASE CALL 1-800-400-MIDAS (6432) 9A.M. - 5P.M. EASTERN TIME.
INDIVIDUAL:
- --------------------------------------------------------------------------------
First Name Middle Initial Last Name Social Security Number
JOINT TENANT: NOTE: REGISTRATION WILL BE JOINT TENANTS WITH RIGHT OF
SURVIVORSHIP, UNLESS OTHERWISE SPECIFIED.
- --------------------------------------------------------------------------------
First Name Middle Initial Last Name Social Security Number
GIFT/TRANSFER TO A MINOR:
AS CUSTODIAN FOR
- --------------------------------------------------------------------------------
Name of Custodian (only one) Name of Minor (only one)
UNDER THE UNIFORM GIFTS/TRANSFERS TO MINORS ACT.
- --------------------------------------------------------------------------------
Custodian's Minor's Social Security Minor's Date of Birth
State of Residence Number
CORPORATIONS, PARTNERSHIPS, TRUSTS AND OTHERS:
- --------------------------------------------------------------------------------
Name of Corporation, Partnership, Name of Individual(s) Authorized to Act
or other Organization for the Corporation, Partnership, or
other Organization
- --------------------------------------------------------------------------------
Tax I.D. Number Name of Trustee(s) Date of Trust Instrument
================================================================================
2.
MAILING ADDRESS, TELEPHONE NUMBER, AND CITIZENSHIP
- --------------------------------------------------------------------------------
Street City State / Zip Daytime Telephone E-mail address
CITIZEN OF: ( )U.S. ( )OTHER: CITIZEN OF: ( )U.S. ( )OTHER:
- --------------------------------------------------------------------------------
Owner Joint Owner
================================================================================
3.
FUND(S) CHOSEN AND AMOUNT INVESTED ($1,000 MINIMUM PER FUND) NOTE: The $1,000
initial investment minimum is waived if you elect to invest $100 or more each
month through the Midas Automatic Investment Program (see Section 6).
MIDAS FUND / $ / MIDAS SPECIAL EQUITIES FUND / $ /
MIDAS INVESTORS / $ / MIDAS U.S. AND OVERSEAS FUND / $ /
MIDAS MAGIC / $ / DOLLAR RESERVES / $ /
TOTAL / $ /
BY CHECK: PLEASE DRAW YOUR CHECK TO THE ORDER OF MIDAS FUNDS AND ENCLOSE WITH
THIS APPLICATION. THIRD PARTY CHECKS WILL NOT BE ACCEPTED.
BY WIRE: PLEASE CALL 1-800-400-MIDAS (6432) 9A.M. - 5P.M. EASTERN TIME TO BE
ASSIGNED AN ACCOUNT NUMBER BEFORE MAKING AN INITIAL INVESTMENT BY WIRE.
PLEASE INDICATE THE ASSIGNED ACCOUNT NUMBER ____________________________________
AND THE DATE THE WIRE WAS SENT_________________________________________________.
================================================================================
4.
DISTRIBUTIONS IF NO CIRCLE IS CHECKED, THE AUTOMATIC COMPOUNDING OPTION
WILL BE ASSIGNED TO INCREASE THE SHARES YOU OWN.
/ / AUTOMATIC COMPOUNDING OPTION DIVIDENDS AND DISTRIBUTIONS REINVESTED IN
ADDITIONAL SHARES.
/ / PAYMENT OPTION / / DIVIDENDS IN CASH, DISTRIBUTIONS REINVESTED.
/ / DIVIDENDS AND DISTRIBUTIONS IN CASH.
================================================================================
5.
CHECK WRITING PRIVILEGE FOR DOLLAR RESERVES - SIGNATURE CARD
I am investing in Dollar Reserves and would like free check writing (minimum
$250 per check). Please send free personalized checks. I have read and agree to
the Check Writing Account Agreement on the reverse of this Signature Card.
Please permit a single signature on checks drawn on joint accounts,
corporations, trusts, etc., unless the following circle is checked t.
- --------------------------------------------------------------------------------
Signature Signature of Joint Owner (if any)
- --------------------------------------------------------------------------------
Print Name Print Name of Joint Owner (if any)
(PLEASE CONTINUE ON BACK)
<PAGE>
6.
MIDAS FUNDS AUTOMATIC INVESTMENT PROGRAM
/ / BANK TRANSFER PLAN AUTOMATICALLY PURCHASE SHARES EACH MONTH BY
TRANSFERRING THE DOLLAR AMOUNT YOU SPECIFY FROM YOUR
REGULAR CHECKING ACCOUNT, NOW ACCOUNT OR BANK MONEY
MARKET ACCOUNT. PLEASE ATTACH A VOIDED BANK
ACCOUNT CHECK.
FUND NAME:___________________________________________
AMOUNT ($100 MINIMUM): $_____________________________
DAY OF MONTH: / / 10th / / 15th / / 20th
/ / SALARY INVESTING PLAN THE ENROLLMENT FORM WILL BE SENT TO THE ADDRESS IN
SECTION 2 OR CALL TOLL-FREE 1-800-400-MIDAS (6432) TO HAVE THE FORM SENT TO
YOUR PLACE OF EMPLOYMENT.
/ / GOVERNMENT DIRECT DEPOSIT PLAN YOUR REQUEST WILL
BE PROCESSED AND YOU WILL RECEIVE THE ENROLLMENT FORM.
================================================================================
7.
INVESTMENTS AND REDEMPTIONS BY TELEPHONE
SHAREHOLDERS AUTOMATICALLY ENJOY THE PRIVILEGE OF CALLING TOLL-FREE
1-888-503-VOICE (8642) OR ACCESSING THEIR MIDAS FUNDS ACCOUNT ON THE WEB AT
WWW.MIDASFUNDS.COM TO PURCHASE ADDITIONAL SHARES OF A FUND OR TO EXPEDITE A
REDEMPTION AND HAVE THE PROCEEDS SENT DIRECTLY TO THEIR ADDRESS OR TO THEIR BANK
ACCOUNT, UNLESS DECLINED BY CHECKING THE FOLLOWING CIRCLE T. THE LINK WITH YOUR
BANK OFFERS FLEXIBLE ACCESS TO YOUR MONEY. TRANSFERS OCCUR ONLY WHEN YOU
INITIATE THEM AND MAY BE MADE BY EITHER BANK WIRE OR BANK CLEARINGHOUSE TRANSFER
WITH THE MIDAS ELECTRONIC FUNDS TRANSFER SERVICE.
TO ESTABLISH THE LINK TO YOUR BANK, PLEASE ATTACH A VOIDED CHECK FROM YOUR BANK
ACCOUNT. ONE COMMON NAME MUST APPEAR ON YOUR MIDAS FUNDS ACCOUNT AND BANK
ACCOUNT.
================================================================================
8.
SIGNATURE AND CERTIFICATION TO AVOID BACKUP WITHHOLDING
"I CERTIFY THAT I HAVE RECEIVED AND READ THE PROSPECTUS FOR THE MIDAS FUNDS,
AGREE TO ITS TERMS, AND HAVE THE LEGAL CAPACITY TO PURCHASE THEIR SHARES. I
UNDERSTAND TELEPHONE CONVERSATIONS WITH INVESTOR SERVICE CENTER, INC. ("ISC")
REPRESENTATIVES ARE RECORDED AND HEREBY CONSENT TO SUCH RECORDING. I AGREE THAT
NEITHER THE FUNDS NOR ISC WILL BE LIABLE FOR ACTING ON INSTRUCTIONS BELIEVED
GENUINE AND UNDER REASONABLE PROCEDURES DESIGNED TO PREVENT UNAUTHORIZED
TRANSACTIONS. I CERTIFY (1) THE SOCIAL SECURITY OR TAXPAYER IDENTIFICATION
NUMBER PROVIDED ABOVE IS CORRECT, AND (2) I AM NOT SUBJECT TO BACKUP WITHHOLDING
BECAUSE (A) I AM EXEMPT FROM BACKUP WITHHOLDING, OR (B) I HAVE NOT BEEN NOTIFIED
BY THE IRS THAT I AM SUBJECT TO BACKUP WITHHOLDING, OR (C) I HAVE BEEN ~NOTIFIED
BY THE IRS THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING." (PLEASE CROSS OUT
ITEM 2 IF IT DOES NOT APPLY TO YOU.) THE INTERNAL REVENUE SERVICE DOES NOT
REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
- --------------------------------------------------------------------------------
Signature of / / Owner / / Trustee / / Custodian Date
- --------------------------------------------------------------------------------
Signature of Joint Owner (if any) Date
MF-ARAPP-12/99
CHECK WRITING ACCOUNT AGREEMENT
The payment of money is authorized by the signature(s) appearing on the reverse
side. Each signatory guarantees the genuineness of the other signatures.
UMB Bank Warsaw (the "Bank") is hereby appointed agent by the person(s) signing
this card (the "Depositor(s)") and, as agent, is authorized and directed, upon
presentment of checks to the Bank to transmit such checks to the applicable
Midas mutual fund or its transfer agent as requests to redeem shares registered
in the name of the Depositor(s) in the amounts of such checks for deposit in
this checking account.
This checking arrangement is subject to the applicable terms and restrictions,
including charges, set forth in the current Prospectus for each Midas mutual
fund as to which the Depositor(s) has arranged to redeem shares by check
writing. The Bank is further authorized to effect redemptions to defray the
Bank's charges relating to this checking arrangement. The Depositor(s) agrees to
be subject to the rules and regulations of the Bank ~pertaining to this checking
arrangement as amended from time to time; that the Bank, Investor Service
Center, and Midas have the right to change, modify or terminate this check
writing service at any time; and that the Bank shall be liable for its own
negligence.
<PAGE>
SHAREHOLDER SERVICES
o Electronic Funds Transfers
o Automatic Investment Program
o Retirement Plans:~
Traditional Deductible IRA
Roth IRA
SEP-IRA
Simple IRA
403(b)
Education IRA
MINIMUM INVESTMENTS
o Regular Accounts: $1,000
o Retirement Plans, including Traditional Deductible IRA, Roth IRA,
SEP-IRA, Simple IRA, and 403(b): $1,000
o Education IRA: $500
o Automatic Investment Program: $100
o Subsequent Investments: $100
MIDAS FUNDS
P.O. Box 219789
Kansas City, MO 64121
1-800-400-MIDAS (6432) for Investment Information
1-888-503-VOICE (8642) for Shareholder Services
Call toll-free for Fund performance, telephone purchases and to obtain
information concerning your account. Or access Midas Funds on the Worldwide Web
at www.midasfunds.com.
Past performance does not guarantee future results. Investment return will
fluctuate, so shares when redeemed may be with more or less than their cost.
Dollar cost averaging does not assure a profit or protect against loss in a
declining market and investors should consider their ability to make purchases
when prices are low. Midas Funds
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Midas Funds. The report is not
authorized for distribution to prospective investors in the Funds unless
preceded or accompanied by an effective Prospectus. Investor Service Center,
Inc., Distributor.
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MIDAS FUNDS
P.O. BOX 219789
KANSAS CITY, MO 64121
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MIDAS
FUNDS
DISCOVERING OPPORTUNITIES
MF-AR-12/9
