Midas FUND
1996 SEMI-ANNUAL REPORT
FUND FEATURES & SERVICES
Investment Objectives
The Fund seeks capital appreciation and protection against inflation, with
current income as a secondary goal.
Fund Management
Midas Management Corporation acts as general manager of the Fund and Lion
Resource Management Limited serves as subadviser. Kjeld Thygesen is the Fund's
portfolio manager. Mr. Thygesen has been Managing Director of the subadviser
since 1989 and portfolio manager of the Fund since 1992.
Investment Strategy
Midas Fund invests primarily in the equity securities of established mining
companies worldwide. The Fund also invests a smaller portion of its assets in
developing companies that offer strong growth potential.
Portfolio Benefits
o Long term growth potential through appreciation in the value of equity
securities held in its portfolio. o Diversification for overall stock and bond
portfolios seeking a growth investment that can capitalize on favorable trends
in the precious metals resource markets. o An inflation hedge is offered by the
Fund's international focus on resource opportunities.
Minimum Investments
o Regular Accounts, $500
o IRAs, $100
o Automatic Investment Program, $50
o Subsequent Investments, $50
Retirement Plans
Retirement plans available include No-Fee IRA, SEP-IRA, qualified profit-sharing
and money purchase plans, and 403(b) plans."Thygesen's Midas touch guides this
top performing gold fund."
"Thygesen's Midas touch guides his top performing gold fund." Boston Globe,
August 19, 1996. (See page 5 for complete write-up.)
A glittering track record."
Smart Money, August 1996
(See page 4 inside for full article.)
MORNINGSTAR ranks MIDAS Fund #1 for 5-year performance.*
* Source: Morningstar, Inc. for the period ending 6/30/96. Midas Fund was ranked
7 of 40 funds for the 1 year period, 1 of
<PAGE>
28 funds for the 5 year period, and 3 of 18 for the ten year period, of all
mutual funds in Morningstar's "precious metals" category. As of 6/30/96, the
Fund's average annual total return for the one, five and ten year periods was
26.70%, 21.40% and 13.62% respectively. Until 8/28/95, the maximum sales charge
imposed on purchases of Fund shares was 4.5%. This sales charge is not reflected
in the standardized returns set forth above since it has been discontinued. Past
performance is no guarantee of future results. 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. For more
information, including management fees and other charges and expenses, please
read the prospectus that accompanied or preceded this sales literature carefully
before you invest or send money and for a discussion of the risks associated
with investing globally and in precious metals, mining shares, and developing
companies. Such investments are considered speculative and subject to
substantial price fluctuations and risks. There can be no assurance that the
Fund will achieve its investment objectives. For more information, please call
1-800-400-MIDAS. Investor Service Center, Inc., Distributor.
Contents
Portfolio Manager's Report 2
Strategic Advisor's Comments 3
Smart Money Magazine Article Reprint 4
Boston Globe Article Reprint 5
FINANCIAL STATEMENTS
Schedule of Portfolio Investments 6
Statement of Assets & Liabilities 7
Statement of Operations 7
Statement of Changes in Net Assets 8
Notes to Financial Statements 8
Financial Highlights 10
ACCOUNTAPPLICATIONS
IRA Application & Transfer Form
Regular Account Application
REPORT FROM THE FUND MANAGER
Despite a lackluster gold market, the first half of 1996 proved eventful with
both gold producers and development project companies outperforming gold bullion
and relevant indices. Against a background of a decline of 1.9% in the gold
price for the six months, Midas Fund increased 25.9%. This also compares
favorably with a 14.1% gain for the Lipper Gold Fund Index. The early move in
gold to $417 proved short-lived as Far Eastern demand slackened and central bank
and producer forward sales added to supply. By late February the gold price had
fallen back under $400, only to drift lower towards $380 by mid-year. It was
therefore encouraging to attract a substantial flow of investments into Midas
from new and existing shareowners, resulting in net assets growing more than
tenfold to $180 million during this six month period. These additional assets
were effectively deployed over a range of producers and several interesting new
project companies.
The moderate performance of the gold stock indices and decline in price of gold
itself tend to mask some excellent performances from some of our new producers
and development project companies. Of the more noteworthy, Greenstone Resources
has appreciat ed fivefold since the beginning of the year as the potential of
its large Nicaraguan gold project unfolds. Another strong performer was Dayton
Mining, following the successful commencement of production from its Andacollo
Mine in Chile. Stocks such as these have been owned by the Fund for several
years, and are examples of companies that were invested in during their
development phase and held through to production. Midas continues to have a
strong focus on new project development companies, which has proven to be a
successful strategy. In periods of static gold prices, companies that are in the
process of developing new gold or other mineral reserves can appreciate
significantly irrespective of the underlying metal price. In recent years, the
number of these opportunities has grown considerably as emerging third world
countries have encouraged foreign investment. The Fund has a broad spread of
investments in companies in this category which are involved in promising new
projects. While the gold price has been disappointing, there are important
grounds for optimism. The mid-year correction has established a base in the
$380-$390 range, despite this being a seasonally quiet period in the market.
Demand continues to exceed gold mine output, as it has for the past six years,
and the jewelry trade will be restocking shortly for the holiday season. A
recovery in the gold price to the $400 level, or higher, would generate
potentially substantial returns for Midas Fund shareowners.
Sincerely,
Kjeld Thygesen
August 15, 1996
Comments from the Strategic Advisor
for the 6 months ended June 30, 1996
The 25.9% return earned by the Midas Fund for the six months ending June 30,
1996 significantly exceeded both the XAU Gold & Silver Index and the Toronto
Gold Stock Index, which increased for the period by only 2.7% and 6.2%,
respectively. The price of gold declined 1.9%. These dissimilar results
re-confirm the value and merit of the Fund's basic investment strategy. In
focusing on mining companies that present growth opportunities, the Fund is able
to seek capital appreciation from its investments regardless of fluctuations in
the price of gold. There are two important components to this strategy.
The Fund invests about 75% of its assets in companies producing mineral
resources, principally precious metals. While companies both large and small are
considered for this component of the portfolio, special emphasis is placed on
locating those newer - and still undiscovered - companies which represent good
asset value in addition to having a substantial potential for growth. The
remaining 25% of the portfolio is invested in carefully selected project
development companies.
The rising prices of commodities and loose monetary conditions worldwide suggest
that higher rates of inflation in the United
<PAGE>
States can be expected. Accordingly, we believe that gold and certain other
natural resources are presently undervalued and likely to experience an upward
adjustment in their prices. Reflecting this, we have made some changes to the
Fund's portfolio designed to take advantage of these trends.
The stocks of certain gold mining companies in South Africa historically have
performed very well when the price of gold increases. Given the recent weakness
in the South African rand, and the outlook for higher gold prices, these stocks
may show the greatest appreciation for the balance of the year. Accordingly, the
Fund has increased its weighting of South African investments from 5.2% as of
December 31, 1995 to 9.8% as of June 30, 1996, and further investments in this
area can be expected as we seek to participate in this opportunity.
Sincerely,
James Turk
August 15, 1996
ARTICLE REPRINT
reprinted from the August, 1996 Smart Money
STREET SMART
TOP OF THE CHARTS
How the Midas Fund
Is Going for the Gold
When Barton Biggs said in May that he was bullish on gold, it raised
eyebrows on Wall Street. Wasn't the run-up already over, after gold hit $415 an
ounce last January? Why would Biggs, chairman of Morgan Stanley Asset
Management, recommend what is generally considered a spectulative investment
that has trailed the market for years? And if he's right, which he usually is
(see "The Best Investment Advice Money Can Buy," April), how can you act on the
recommendation?
Kjeld Thygesen has the answers-and a glittering track record to back him
up. The London-based manager of the Midas fund has posted an average annual
return of 26.42 percent over the past five years, beating all other
precious-metals funds, and he's up another 49 percent so far this year.
Both men have zeroed in on gold's low price. "In a world where stock prices
have been rising for 15 years, here's an asset that is selling at half of what
it sold for in 1981," Biggs tells SmartMoney. Economies worldwide are going
through an inflation scare, which he says will drive the the price of gold as
high as $440 an ounce within a year from its current $385. "In an expensive
world, gold is relatively cheap," Biggs says.
Thygesen agrees-he says he uses Morgan's research-adding that gold's price
has not kept pace with the U.S. consumer price index and has lagged the rise in
commodity prices. He likes gold not as a way to beat the market over the long
term-gold funds are notorious under-performers in that regard-but as defensive
hedge against inflation, currency changes and general economic uncertainty.
Those are all valid concerns when you're investing this late in the economic
cycle.
Where Thygesen differs is on how much of your money should be in gold.
Biggs would keep it to 3 percent of assets; Thygesen pegs it at 5 to 10 percent.
Either way, the fund manager is the first to say that gold can be a volatile
investment, and Midas is no exception. The no load fund has lost money for three
straight years until 1993, when it nearly doubled in value, only to fall 17
percent the following year. Then in 1995, it matched the broad market with a 37
percent gain.
Thygesen, 48, has run Midas for the past four years. He sometimes invests
in a project even before the metal has been extracted, which give Midas a
growth-fund flavor. The rest of the fund's portfolio is in traditional companies
that already have a strong track record of actual production, cash flow and
experienced management.
Current favorites include Newmont Mining, a big U.S. company that is
rapidly expanding worldwide. He brought it in the low 30s in 1994. It now trades
at $50, and Thygesen expects it to climb higher when gold prices go up.
He also likes Dayton Mining of Canada, one of the lowest-cost producers of
gold, which he first bought at C$1.35 in 1992. He's been buying more from time
to time, and it's now at C$8; Thygesen has a price target of C$12.
Another Canadian favorite is Greenstone Resources, "a newer growth company"
with large projects in Latin America. The stock has risen to C$15 from C$1.50 in
1992 and could go to C$20, Thygesen says.
Precious Metals
Five-Year Ranking
Midas 26.42%
IDS Precious Metals A 25.26
United Services World Gold 21.01
Scudder Gold 18.53
Fidelity Select American Gold 18.43
AT A GLANCE
Average Annual Return*
1 Year 57.36%
3 Year 29.90
5 Year 26.42
Load None
Expense Ratio 1.5%
Top 3 Holdings
Greenstone Resources
Dayton Mining
Homestake Mining
Phone Number
800-400-6432
*As of 5/31/96.
Sources: Morningstar, Midas
- Namita Devidayal
ARTICLE REPRINT
reprinted from The Boston Globe
August 19, 1996
Marla Brill / THE MONEY MANAGERS
Thygesen's Midas touch guides this top-performing gold fund
Kjeld Thygesen's knack for spotting glitter still buried in the ground comes
from more than 25 years of mining-investment expertise. Born in South Africa to
a South African mother and Danish father, he began his career in that region as
a gold stock analyst for a mining company. He moved to London in 1972, and has
spent his career there as an analyst and portfolio manager specializing in the
international mining industry.
Thygesen, as portfolio manager of the Midas fund, a top-performing gold
fund, has more of a dirt-under-your-fingernails approach than most fund
managers.
Midas' marketing brochure - which shows Thygesen's craggy face in a hard
hat as he speaks on a cellular phone - projects an image of someone who views
evaluating companies as a hands-on task. For most portfolio managers who like to
visit the companies they invest in, business trips are a fairly cushy affair
conducted in big cities over spacious mahogany desks. For the London-based
Thygesen, such trips often involve visiting remote jungles and deserts where
mines are located, and sleeping in modest hotels or even a sleeping bag.
Thygesen, who spends about three months a year on the road, says he
"thoroughly enjoys getting to know an area and its people."
The glittery metal that is the object of Thygesen's attention has given
investors a heart-pounding ride this year. Gold stocks, and the funds that
invest in them, have had an up-and-down performance. The precious metal
reached
$414.70 an ounce in late 1995, a price not seen for years, then settled into the
$400 range. Cracking the magic $400 barrier sent stocks of gold mining companies
soaring, and by the end of the first quarter 1996 many gold funds had
year-to-date returns of 30 percent or more. Loads of investors jumped into
offerings like the Midas fund, which rose nearly 36 percent during that period.
Then, at the end of May, both gold prices and the stock market began to
slip, a deadly combination that sent gold stocks into a tailspin. From late May
through July, the value of Midas fund shares dipped 20 percent.
But Thygesen believes the worst is over, at least for now. Since late July,
gold prices have rebounded from the low $380s to $389 or so, he observes. And,
many gold stocks are up to 8 to 10 percent. "I see July as a healthy correction
that presents a buying opportunity," says Thygesen, who is managing director of
Lion Resource Management, the London-based subadviser to the Midas fund.
Thygesen views gold as fundamentally undervalued at current levels. "Gold
prices have not kept pace with the rise in the Consumer Price Index, as well as
prices of other commodities such as grains or oil," he says. "Once the election
is over, inflation and interest rates could go up." Gold prices and interest
rates generally rise during inflationary periods.
Those who subscribe to Thygesen's reasoning, and who can stomach the
dizzying ups and downs of a gold fund, may find Midas an interesting gold stock
play with a twist. Since Thygesen took over as portfolio manager in 1992, the
fund has consistently outperformed many of its competitors. Last year, its total
return of 36.7 percent made it the best-performing fund in the group. By
comparison, the Lipper Gold Fund Index declined 4.84 percent over the same
period.
About three-quarters of the fund's portfolio is invested in precious metals
mining companies with established reserves and proven production. Of these, 60
percent are located in the United States and Canada, with the remainder split
between Australia and South Africa.
Remaining fund assets go toward riskier prospectors in the process of
developing their mines, many of which have no more than $15 million to $25
million in market capitalization, and won't be producing anything but dust for a
year or more. Most are located in less developed countries in Latin America,
West Africa and the former Soviet Union. "The Third World has only recently
opened its doors" to investors, says Thygesen. "Many of these poorer countries
are mineral-rich."
The larger-producing mining stocks give the fund the historical
inflation-fighting advantages of gold and other precious metals, while the
riskier stocks in less developed countries provide a growth kicker that helps
the fund do better when gold prices are flat.
Finding up-and-coming precious
metals producers is a tricky business that few portfolio managers have mastered
as well as Thygesen. Last year's outstanding performance in the face of static
gold prices was largely due to the strong gains posted by several companies that
found new mineral reserves. Most notable among these was Diamond Fields
Resources, which discovered a huge mineral deposit in Canada, and accounted for
much of the fund's gain in 1995.
KJELD THYGESEN
Portfolio Manager, Midas Fund
(PHOTO)
Personal
Name: Kjeld Thygesen
Born: Durban, South Africa, June 5, 1947
Education: University of Natal, South Africa
Professional experience: Mining analyst, James Capel & Co., London; director,
Rothschild Asset Management; currently managing director, Lion Resource
Management; has managed the Midas Fund since 1992.
Interests: International politics, tennis, skiing, observing African wildlife.
Schedule of Portfolio Investments..............................................
June 30, 1996 (Unaudited)
Shares Market Value
Common Stocks and Warrants (98.6%)
North America (85.8%)
..300,000...Adrian Resources Ltd.*............................ 1,171,860
..150,000...African Minerals Corp.(1)......................... 107,162
...49,000...America Mineral Fields Inc. Special Warrants* (1)....232,507
1,000,000...AMT International Mining Corp.*......................659,000
..400,000...Argentina Gold Corp.*................................418,840
..646,200...Argosy Mining Corp.* ..............................1,277,602
..250,000...Argosy Mining Corp. Special Warrants* (1)............395,420
1,050,000...Armada Gold Corp.*.................................1,614,588
...70,000...ASA Ltd............................................2,730,000
..350,000...Attwood Gold Corporation * (1).......................799,634
..350,000...Attwood Gold Corporation Warrants*(1)................317,494
1,086,000...Aurizon Mines Ltd.*..................................874,664
..154,200...Barrick Gold Corp..................................4,182,675
..300,000...Battle Mountain Gold Co............................2,175,000
..300,000...Bresea Resources Ltd.*.............................2,800,920
1,700,000...B.Y.G. Natural Resources, Inc.*....................1,394,147
..500,000...B.Y.G. Natural Resources, Inc. Warrants*..............43,671
..130,000...Cambior, Inc.......................................1,738,750
1,100,000...Campbell Resources Inc.*.......................... 1,375,000
..731,000...Canyon Resources Corp.*............................2,043,438
..150,000...Central Asia Goldfields Corp.*.......................593,130
..129,000...CN Minas Buenaventura Sponsored ADR................2,563,875
..100,000...Colossal Resources Corp.*............................604,118
...50,000...Colossal Resources Corp. Warrants*...................184,821
1,075,000...Consolidated Nevada Goldfields Corp.*............. 1,343,750
..125,000...Consolidated Nevada Goldfields Corp. Warrants*........18,859
..300,000...Cornucopia Resources Ltd.*...........................437,160
..500,000...Cornucopia Resources Ltd. Units* (1).................473,603
1,733,500....Dayton Mining Corporation*.......................10,401,000
...262,500...Dayton Mining Corporation Warrants*.................324,771
....65,000...Eldorado Corporation Ltd.*..........................356,982
....35,000...Eldorado Corporation Ltd. Special Warrants* (1)......82,381
....40,000...Euro-Nevada Mining Corp. Ltd......................1,713,504
.1,300,000...Fairmile Gold Corp.*............................. 3,864,900
.1,000,000...Fairstar Explorations Inc.*.......................1,794,000
...375,000...First Dynasty Mines Ltd.*.........................2,141,850
...123,000...Firstmiss Gold Inc.*..............................4,059,000
...119,500...Freeport McMoran Copper & Gold, Inc...............3,570,063
...275,000...Glamis Gold Ltd...................................1,959,375
....75,000...Gold Capital Corp.*............................. 89,063
...185,500...Golden Cycle Gold Corporation* (1) (2)............1,163,750
...423,900...Golden Queen Mining Co. Ltd.*.......................698,418
...110,000...Gold Reserve Corp.*.................................838,750
...200,000...Goldstake Explorations, Inc.* ................ 140,580
...750,000...Goldstake Explorations, Inc. Units*(1)........ 342,645
...199,000...Gran Colombia Resources Inc.*................. 298,919
...195,000...Gran Colombia Resources Inc. Special Warrants*(1).. 351,493
....50,000...Gran Colombia Resources Inc. Warrants* ..............20,150
2,260,000 Granges Inc.* 3,248,750
...450,000...Granges Inc. Units* (1)........................... 517,512
...750,000...Greater Lenora Resources Corp.*.....................477,750
...935,000...Greenstone Resources Ltd.* (1)...................10,602,563
...263,800...High River Gold Mines Ltd.*.......................1,091,420
...454,500...Homestake Mining Co...............................7,783,313
...400,000...Indomin Resources Limited* .......................1,596,320
...100,000...Indomin Resources Limited Units*(1).................259,403
...125,000...Indomin Resources Limited Warrants..................199,572
.2,520,000...International All-North Resources Ltd.* (1)....... 151,184
...200,000...International Precious Metals Corp.*................900,000
...250,000...Jordex Resources Inc.*..............................221,353
...150,000...Jordex Resources Inc. Units* (1)....................207,033
....75,000...Jordex Resources Inc. Warrants*......................46,388
...400,000...Kenrich Mining Corporation* ...................... 336,840
...100,000...Kenrich Mining Corporation* (1)................... 54,735
...100,000...Kinross Gold Corp.*.................................750,000
....87,000...KWG Resources Inc.*.................................592,688
...204,167...Lytton Minerals Ltd.*...............................523,257
....52,083...Lytton Minerals Ltd. Warrants*.......................18,994
...800,000...Madsen Gold Corp. Units* (1)......................1,218,450
...240,000...Metallica Resources Inc.* ..........................869,928
....70,000...Metallica Resources Inc. Special Warrants* (1)......202,981
.1,064,285...Minorca Resources Inc.............................2,415,927
...689,000...Miramar Mining Corp.*.............................3,789,500
.1,000,000...Nelson Gold Corporation Limited*....................878,700
....75,000...Nevsun Resources Ltd.* .............................557,438
....25,000...Nevsun Resources Ltd. Special Warrants* (1).........148,650
...140,000...Newmont Gold Company..............................7,052,500
...120,000...Newmont Mining Corp...............................5,925,000
...885,000...Oliver Gold Corp.*................................2,203,377
...287,500...Oliver Gold Corp. Warrants*........................ 199,665
.1,000,000...Palmer Industries Ltd. Units* (1) (2).............1,189,888
...230,000...Pangea Goldfields Inc. Special Warrants* (1)........666,937
...350,000...Pioneer Group, Inc................................9,362,500
...900,000...REA Gold Corporation*.............................1,856,250
...703,000...Rio Narcea Gold Mines Ltd.*.......................2,162,077
...320,000...River Gold Mines Ltd.*..............................984,160
...400,000...Royal Oak Mines Inc.*.............................1,475,000
...300,000...Sedex Mining Corp. *................................123,000
...400,000...Sedex Mining Corp. Units*(1)........................123,012
...733,333...Sedex Mining Corp. Warrants* .......................131,438
...388,800...South American Gold & Copper Co. Ltd.*..............313,762
...135,200...Tombstone Explorations Co. Ltd.* ...................166,323
...825,000...Tombstone Explorations Co. Ltd. Special Warrants*(1)811,912
...200,000...Trillion Resources Ltd. Units* (1)..................644,382
...500,000...Trio Gold Corp.*....................................494,250
...270,000...Trio Gold Corp. Warrants*...........................128,417
...862,500...Venoro Gold Corp.* .................................303,083
...594,300...Viceroy Resource Corporation* ....................3,437,966
...140,000...Viceroy Resource Corporation Special Warrants* (1)..647,914
.2,477,800...William Resources Inc.*...........................2,921,078
........................................................................
.............................................................149,767,822
........
Australia (2.5%)
...700,000.........Emperor Mines Ltd.*...................... 1,652,770
.1,000,000.........Golden Shamrock Mines Ltd.*............. 897,200
...680,000.........Great Central Mines NL*................. 1,862,452
........................................................... 4,412,422
..........
Mexico (1.3%)
...500,000.........Industrias Penoles S.A.....................$2,288,945
........
South Africa (8.5%)
...786,703....East Daggafontein Mines Ltd. ADR....................2,202,767
...221,000....Free State Consolidated Gold Mines Ltd..............2,050,662
...300,000....Lydenburg Exploration Ltd.*......................... 553,889
.1,000,000....Oryx Gold Holdings Ltd.*............................2,216,900
...300,000....Randgold & Exploration Co. Ltd......................1,575,000
...431,000....Vaal Reefs Exploration & Mining Company, Ltd........3,448,000
....75,000....Western Deep Levels Ltd. ADR........................2,721,823
........ ........................................................14,769,041
United Kingdom (.5%)
.1,000,000.........Reunion Mining PLC*..............................932,200
........... Total Common Stocks and Warrants
........... (cost: $175,219,216) (98.6%)........... 172,170,430
.Par Value.Convertible Debentures (1.4%)..........................
$2,000,000.Golden Shamrock Mines Ltd. 7.50%, due 5/9/00 2,500,000
...........Total Investments
...........(cost: $177,469,216) (100.0%)............. $174,670,430
*Indicates non-income producing security.
(1)Restricted security (see note 5).
(2)Affiliated company.
Statement of Assets and Liabilities
June 30, 1996 (Unaudited)
Assets: ....
.........Investment at market value
..............(cost: $177,469,216) (note 1)...........$174,670,430
.........Foreign currencies..............................3,106,780
.........Receivables:...
..............Investment securities sold 6,500,347
..............Fund shares sold.............................839,532
Dividends and interest 55,547
.........Prepaid expenses..................................104,105
......... Total assets.............................. 185,276,741
Liabilities:......................................................
.........Payables:................................................
..............Investment securities purchased............3,581,070
..............Fund shares redeemed.......................2,806,390
..............Demand note payable to bank (note 4).......2,591,373
.........Accrued management and distribution fees 152,564
.........Accrued expenses......................... 50,537
.........
.........Total liabilities.......................... 9,181,934
Net Assets:
.........(Applicable to 32,925,933 outstanding shares:
.........250,000,000 shares of $.01 par value authorized)
......................................................$176,094,807
.........
.........
.........NET ASSET VALUE, OFFERING AND
.........REDEMPTION PRICE PER SHARE
.........($176,094,807 / 32,925,933).........................$5.35
......At June 30, 1996, net assets consisted of :..............
.........Paid-in capital..............................$182,347,781
.........Accumulated net realized loss on investments (3,078,853)
.........Net unrealized depreciation on investments
.............and foreign currencies............... (2,800,921)
.........Accumulated deficit in net investment income (373,200)
......................................................$176,094,807
.........Statement of Operations
.........Six Months ended June 30, 1996 (Unaudited)
Investment Income: .............................................
.........Dividends.................................. $ 233,628
.........Interest.................................... 277,106
......... Total investment income................... 510,734
.........
Expenses:
.........Investment Management (note 3)....................542,722
.........Distribution (note 3).............................135,712
.........Custodian..........................................64,664
.........Professional (note 3)..............................35,408
.........Shareholder administration (note 3)................33,692
.........Registration (note 3)..............................29,740
.........Transfer agent.....................................20,102
.........Printing...........................................14,958
.........Directors...........................................2,655
.........Other...................................... 15,334
.........Total expenses....................................894,987
.........Expenses reimbursed (note 3).....................(11,053)
.........Net expenses .....................................883,934
.........Net investment loss.............................(373,200)
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currencies:
.........
.........Net realized loss from security transactions..(3,161,991)
.........Unrealized depreciation of investments and
..............foreign currencies during the period... (4,498,984)
.........Net realized and unrealized loss on investments
..............and foreign currencies................. (7,660,975)
.........Net decrease in net assets resulting
..............from operations.........................$(8,034,175)
<TABLE>
Statement of Changes in Net Assets
For the Six Months Ended June 30, 1996 (Unaudited) and the Year Ended December
31, 1995
....... ........................................................................................June 30, .......December 31,
Operations:.........................................................................................1996..............1995
<S> <C> <C>
......Net investment loss..................................................................$ (373,200).....$ (136,744)
......Net realized gain (loss) from security transactions.......................................(3,161,991)........2,109,455
......Unrealized appreciation (depreciation) of investment during the period.............. (4,498,984) .........351,869
......Net increase (decrease) in net assets resulting from operations...........................(8,034,175)........2,324,580
Distributions to Shareholders:
......Distribution from net realized gains ($.29 per share).............................................._......... (974,250)
Capital Share Transactions:
......Increase in net assets resulting from capital share transactions (a).................. 168,375,939 ......7,350,963
...... Total increase in net assets..........................................................160,341,764........8,701,293
Net Assets:
......Beginning of period................................................................... 15,753,043 .......7,051,750
......End of period (including accumulated deficit in net investment income of $373,200 in 1996)176,094,807 $15,753,043
......(a) Transactions in capital shares were as follows:
.......................................................................June 30, 1996...................December 31, 1995
...................................................................Shares.........Value.........Shares..........Value
.........Shares sold............................................39,079,378...$224,723,294.....2,169,918.....$9,889,520
.........Shares issued in reinvestment of distributions..............._............_............212,371........904,700
.........Shares redeemed........................................(9,861,171)..(56,347,355)......(800,677) ...(3,443,257)
.........Net increase...........................................29,218,207...$168,375,939.....1,581,612.....$7,350,963
</TABLE>
Notes to Financial Statements
Midas Fund, Inc. (the "Fund") (formerly Excel Midas Gold Shares, Inc.) is a
Maryland corporation registered under the Investment Company Act of 1940, as
amended, as a non-diversified, open-end management investment company. The
investment objectives of the Fund 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. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. With respect to security valuation, investments in securities traded
on a national securities exchange and securities traded on the Nasdaq National
Market System ("NMS") are valued at the last quoted 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
bullion are valued at the mean between the last reported bid and asked prices.
Foreign securities, currencies, and gold, platinum and silver coins are valued
in U.S. dollars at prevailing exchange rates. Assets for which quotations are
not readily available are valued as determined in good faith by or under the
direction of the Board of Directors. Security transactions are accounted for on
the trade date (the date the order to buy or sell is executed). Dividend income
and distributions to shareholders are recorded on the ex-dividend date. Interest
income is recorded on an accrual basis. Debt securities with remaining
maturities of 60 days or less are valued at cost adjusted for amortization of
premiums and accretion of discounts. 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.
The Fund intends to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially all
its taxable investment income and net capital gains, if any, after utilization
of any capital loss carryforward, to its shareholders and therefore no Federal
income tax provision is required. Based upon Federal income tax cost of
$177,469,216, gross unrealized appreciation and gross unrealized depreciation
were $15,422,019 and $18,222,940, respectively, at June 30, 1996. Distributions
paid to shareholders during the year ended December 31, 1995 differ from net
realized gains from security transactions as determined for financial reporting
purposes principally as a result of utilization of capital loss carryforwards.
The Fund retains Midas Management Corporation (the "Investment Manager") as its
Investment Manager. Under the terms of the Investment Management Agreement,
dated August 25, 1995, 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% of assets up to $200 million, .95% over $200 million up to $400 million, .90%
over $400 million up to $600 million, .85% over $600 million up to $800 million,
.80% over $800 million up to $1 billion and .75% over $1 billion. The Investment
Manager has undertaken that certain operating expenses of the Fund for each
fiscal year will not exceed the lowest rate prescribed by any state in which
shares of the Fund are qualified for sale. Currently such limitation is 2.5% of
the first $30 million of its average daily net assets, 2% of the next $70
million and 1.5% of the remaining such assets. If the Fund's expenses exceed
such rates, the Investment Manager will reimburse the Fund for any excess.
Certain expenses, such as brokerage commissions, taxes, interest, distribution
fees, certain expenses attributable to investing outside the United States and
extraordinary items, are excluded from this limitation. In addition, the
Investment Manager also has agreed to be subject to the following expense
limitation for a period of two years from the date of the Investment Management
Agreement, which limitation is calculated as an amount not in excess of the fee
payable by the Fund if and to the extent that the aggregate operating expenses
of the Fund (excluding interest expense, Rule 12b-1 Plan of Distribution fees,
taxes and brokerage fees and commissions) are in excess of 2.0% of the first $10
million of average net assets of the Fund, plus 1.5% of the next $20 million of
average net assets, plus 1.25% of average net assets above $30 million.
Reimbursement for the six months ended June 30, 1996 was $11,053. Pursuant to
the Investment Management Agreement, the Investment Manager retains Lion
Resource Management Limited (the "Subadviser") regarding portfolio investments.
Pursuant to the Subadvisory agreement, the Subadviser advises and consults with
the Investment Manager regarding the selection, clearing and safekeeping of the
Fund's portfolio investments and assists in pricing and generally monitoring
such investments. The Subadviser also provides 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, pays the Subadviser monthly a percentage of the
Investment Manager's net fees based upon the Fund's performance and net assets.
Certain officers and directors of the Fund are officers and directors of the
Investment Manager and Investor Service Center, Inc. (the "Distributor"). For
the six months ended June 30, 1996, an affiliate of the Investment Manager
received commissions of $113,318 for brokerage services. The Fund reimbursed the
Investment Manager $23,795 for providing certain administrative and accounting
services at cost. The Fund has adopted a plan of distribution pursuant to Rule
12b-1 under the Investment Company Act of 1940 (the "Plan"). Pursuant to the
Plan, the Fund pays the Distributor an amount up to one-quarter of one percent
per annum of the Fund's average daily net assets as compensation for
distribution and service activities. The fee is intended to cover personal
services provided to shareholders in the Fund and maintenance of shareholder
accounts and all other activities and expenses primarily intended to result in
the sale of the Fund's shares. Investor Service Center also received $33,692 for
shareholder administration services which it provided to the Fund at cost during
the six months ended June 30, 1996. Prior to August 25, 1995, the Fund retained
Excel Advisors Inc. ("Excel") as its investment adviser. On that date at a
special meeting of the Fund's shareholders, a majority of the shareholders
approved the Investment Management Agreement with the Investment Manager, the
agreement with the Subadviser described above, the reorganization of the Fund,
including its reincorporation as a Maryland company named "Midas Fund, Inc.,"
the new plan of distribution with the Distributor, and elected a new board of
directors. The Fund's agreement with Excel terminated.
The Fund has a committed bank line of credit. At June 30, 1996, there was no
balance outstanding and the interest rate was equal to the Federal Reserve Funds
Rate plus 1.75 percent. For the six months ended June 30, 1996, the weighted
average interest rate was 7.12% based on the balances outstanding during the
period and the weighted average amount outstanding was $186,882.
Purchases and proceeds of sales of securities other than short term notes and
bullion aggregated $183,316,886 and $17,915,636, respectively, during the six
months ended June 30, 1996. On June 30, 1996, the Fund held certain securities
which are subject to restrictions on resale. Investments in restricted
securities are valued at fair value as determined in good faith by or under the
direction of the Board of Directors. At June 30, 1996, the total value of
restricted securities represented 6.54%
<PAGE>
of net assets. Dates of acquisition, cost, and value of such restricted
securities are as follows:
<TABLE>
...Shares......................................................Date of Acquisition..................Cost...................Value
<S> <C> <C> <C>
..150,000..African Minerals Corp..........................................11/21/95.............$ 166,328............$ 107,162
...49,000..America Mineral Fields Inc. Special Warrants....................4/19/96.................269,794................232,507
..250,000..Argosy Mining Corp. Special Warrants...................5/24/96 & 6/6/96.................455,993................395,420
..350,000..Attwood Gold Corporation Special Warrants............. 4/19/96 &5/15/96.................920,537..............1,117,128
..500,000..Cornucopia Resources Ltd. Units.................................3/18/96.................735,321................473,603
...35,000..Eldorado Corporation Ltd. Special Warrants.....................2/22/96 .................187,625.................82,381
..150,000..Golden Cycle Gold Corporation...................................5/15/96.................900,000................853,125
..750,000..Goldstake Explorations, Inc. Units..............................2/26/96.................817,795................342,645
..195,000..Gran Colombia Resources Inc. Special Warrants...................5/28/96.................510,082................351,493
..450,000..Granges Inc. Units..............................................4/19/96.................858,936................517,512
...80,000..Greenstone Resources Ltd........................................3/28/96.................586,833................823,500
..100,000..Indomin Resources Limited Units..................................5/9/96.................310,775................259,403
..920,000..International All-North Resources Ltd. .........................8/31/95.................100,000.................48,132
..150,000..Jordex Resources Inc. Units...................................11/20/95 ..................93,268................207,033
..100,000..Kenrich Mining Corporation Units...............................10/11/95..................97,265.................54,735
..800,000..Madsen Gold Corp. Units...............................3/13/96 & 5/13/96...............1,461,349..............1,218,450
...70,000..Metallica Resources Inc. Special Warrants.......................3/20/96.................257,343................202,981
...25,000..Nevsun Resources Ltd. Special Warrants...........................3/4/96.................109,373................148,650
1,000,000..Palmer Industries Ltd. Units....................................6/21/96...............2,196,917..............1,189,888
..230,000..Pangea Goldfields Inc. Special Warrants.........................5/15/96.................941,280................666,937
..400,000..Sedex Mining Corp. Units........................................8/24/95..................63,645................123,012
..825,000..Tombstone Explorations Co. Ltd. Special Warrants.................5/1/96.................908,357................811,912
..200,000..Trillion Resources Ltd. Units...................................5/24/96.................814,890................644,382
..140,000..Viceroy Resource Corporation Special Warrants...................5/22/96.......... 882,428......... 647,914
...............................................................................................$14,646,134............$11,519,905
</TABLE>
Financial Highlights
.<TABLE>
.............................................................................................Years Ended December 31,
...............................................................Six Months Ended
......................................................June 30, 1996 (Unaudited)*....1995*....1994........1993........1992......1991
Per Share Data
<S> <C> <C> <C> <C> <C> <C>
..........Net asset value at beginning of period..........................$4.25....$3.32....$4.16.......$2.35.......$2.55.....$2.59
..........Income from investment operations
..............Net investment income (loss).............................. (.02)....(.06)....(.05).......(.01)....... .01...... .03
..............Net realized and unrealized gain (loss) on investments.......1.12.....1.28 ....(.67) ......2.34 .(.19) (.04)
......Total from investment operations.................................1.10 ....1.22 .....(.72) .... 2.33 ... (.18) ...(.01)
..........Less distributions:
..............Distributions from net investment income....... - ....- .....- ........... -...... (.01)..... (.03)
..............Distributions from net realized gains.......... - ..(.29) ...(.12).......(.52).......(.01) -
..........Total distributions................................. - ....(.29)....(.12).......(.52).......(.02)..... (.03)
..........Net asset value at end of period................................$5.35...$4.25....$3.32.......$4.16.......$2.35.... .$2.55
..........TOTAL RETURN....................................................25.88%..36.73%..(17.27)%........99.24%...(7.16)%...(0.20)
Ratios/Supplemental Data
..........Net assets at end of period (000's omitted)..................$176,095.....$15,753......$7,052.....$10,357.$4,943....$6,202
..........Ratio of expenses to average net assets (a) (b)..................1.62%**.....2.26%.......2.15%.......2.18%.2.25%.....2.25%
..........Ratio of net investment income (loss) to average net assets (c).(0.69)%**...(1.47)%.....(1.26)%...(0.28)% 0.56% 1.10%
..........Portfolio turnover rate.........................................17.46%......47.72%......52.62%....63.44%..72.23%....77.26%
..........Average commission per share....................................$ .02
</TABLE>
................
..........*..Per share net investment income (loss) and net realized and
unrealized gain (loss) on investments have been
computed using the average number of sharesoutstanding. These
computations had no effect on net asset value per share.................
.** ..Annualized.........
(a)..........Ratio prior to reimbursement by the Investment Manager was 1.64%,
2.52%, 2.53% and 2.51% for the six months ended June
30, 1996 and for the period ended December 31, 1995, 1992, and 1991,
respectively.
(b)Ratio after custodian credits was 2.25%
for 1995. Prior to 1995, such credits were reflected in the ratio.............
(c)Ratio prior to reimbursement by the Investment Manager was (.71)%, (1.73)%,
0.28% and 0.83% for
the six months ended June 30, 1996 and for the periods ended December 31, 1995,
1992, and 1991, respectively.
<PAGE>
