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Previous: RESCON TECHNOLOGY CORP, DEF 14C, 1999-09-20 |
Next: ADVANCED DIGITAL INFORMATION CORP, 8-K, 1999-09-20 |
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F U N D |
Semi-Annual Report
The promising signs of recovery in the gold market in the early months of the year were dashed by the early May announcement that the Bank of England would sell slightly more than half of its gold reserves over the next few years. This would take place in the form of auctions of 25 tons of gold every two months, for the first year at least. The amount, in itself, is tiny relative to the total size of the market. But the unexpected nature of the news, plus the fact that, oddly, it was announced before rather than after the sale, knocked the price down from $290 to $260.
Although gold stocks weakened during the period, it is encouraging that they remained well above the lows of late August last year, despite gold falling to a new low. The larger, quality companies have been successful in reducing costs to weather the current low price environment. Forward sales hedge positions have helped protect revenues for a number of producers. The Fund's holdings in platinum companies have performed against the trend, as increased demand for platinum group metals for auto catalysts boosted prices.
The most recent report from the World Gold Council confirms the strong fundamentals of the market. Gold demand in the second quarter rose 16% from the corresponding quarter last year to reach a record quarterly high of 810 tons, just above the previous peak quarter. This resulted from a rise of 13% in worldwide jewelry demand, and a 32% increase in investment demand compared with last year. Overall, gold demand in the first half of the year was 35% higher than the first half of 1998, which was adversely affected by the Asian economic and currency crisis. The statistics indicate that recovery in Asia, the most important gold consuming region, is well underway.
Since mid year, gold has recovered from a twenty year low of $253 to around $260, reflecting increased investment demand in anticipation of possible Y2K problems and a stock market correction. Gold stocks are demonstrating relative strength, with the ratio between the stocks and the metal continuing to expand. Any meaningful recovery in the gold price could generate significant returns in the stocks.
Of interest is that the Fund's price at June 30, 1999 was up 5.30% above its six month low, although 9.27% below year end. To take advantage of the investment background and currently low prices, we recommend building your account on a regular basis, automatically and conveniently through our Midas Bank Transfer Plan, Midas Salary Investing Plan and Midas Government Direct Deposit Plan. For information on any of these free services, give us a call or visit our web site and we will help you get started.
If you have any questions or would like information on any of
the Midas Funds, or the Midas Traditional, Roth or Education IRA, we would
be pleased to hear from you. Just call us toll-free at
1-800-400-MIDAS (6432) and an Investor Service Representative will
be happy to assist you, as always, without any obligation on your part.
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| Kjeld Thygesen |
James Turk
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1) Anglogold
2) Stillwater Mining
3) Meridian Gold
4) Homestake Mining
5) Placer Dome
6) Newmont Mining Corp.
7) Freeport Copper & Gold
8) Gold Fields
9) Normandy Mining
10) Ashanti Goldfields
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| Holdings by Type
of Company
Major Producing Companies 68.2%
|
Holdings by Operations
United States 32.7%
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| Schedule
of Portfolio Investments
June 30, 1999 (Unaudited) |
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| Shares | Market Value | ||
| Common Stocks and Warrants (98.6%) | |||
| North America (52.1%) | |||
| 2,445,800 | AMT International Mining Corp.* | 299,465 | |
| 537,720 | Argosy Minerals Inc.* | 43,892 | |
| 3,114,600 | Armada Gold Corp.* (2) | 84,745 | |
| 50,000 | ASA Limited | 831,250 | |
| 385,000 | Attwood Gold Corp.* | 117,849 | |
| 1,186,000 | Aurizon Mines Ltd.* | 564,723 | |
| 208,000 | Battle Mountain Gold Co. | 507,000 | |
| 430,000 | Boliden Ltd.* | 1,000,340 | |
| 2,600,000 | B.Y.G. Natural Resources Inc.* (2) | 371,846 | |
| 230,000 | Cambior Inc. | 743,147 | |
| 850,000 | Campbell Resources Inc.* | 265,625 | |
| 228,572 | Claude Resources, Inc.* | 228,555 | |
| 2,079,500 | Dayton Mining Corporation* (2) | 120,235 | |
| 459,300 | Eldorado Gold Corp.* | 203,078 | |
| 1,259,500 | Fairstar Explorations Inc.* | 184,200 | |
| 108,000 | Franco-Nevada Mining Corp. Ltd. | 1,682,335 | |
| 200,000 | Freeport-McMoRan Copper & Gold A | 2,850,000 | |
| 300,000 | Glamis Gold Ltd.* | 543,750 | |
| 328,900 | Golden Cycle Gold Corp.* (2) | 2,281,744 | |
| 749,000 | Golden Queen Mining Co. Ltd.* | 247,102 | |
| 370,000 | Golden Star Resources Ltd.* | 300,625 | |
| 120,000 | Gold Reserve Corp.* | 136,875 | |
| 1,525,000 | Goldstake Explorations Inc.* | 186,722 | |
| 3,285,000 | Greenstone Resources Ltd.* | 107,031 | |
| 170,000 | Greenstone Resources Ltd. Warrants* | 4,626 | |
| 523,800 | High River Gold Mines Ltd.* | 195,966 | |
| 281,800 | Homestake Mining Co. | 2,307,238 | |
| 400,000 | Jordex Resources, Inc.* | 209,510 | |
| 330,000 | Kinross Gold Corp.* | 558,942 | |
| 1,225,000 | Lyon Lake Mines Ltd.* Units | 208,319 | |
| 359,163 | McWatters mining, Inc.* | 61,078 | |
| 972,000 | Meridian Gold Inc.* | 4,529,080 | |
| 460,000 | Metallica Resources, Inc.* | 234,678 | |
| 500,000 | Minera Andes Inc. Special Warrants* | 170,056 | |
| 647,142 | Minorca Resources, Inc.* | 264,436 | |
| 590,830 | Miramar Mining Corp.* | 361,708 | |
| 1,000,000 | Nelson Gold Corporation Ltd.* | 40,814 | |
| 412,400 | Nevsun Resources Ltd.* | 145,873 | |
| 193,775 | Newmont Gold Company | 3,851,278 | |
| 71,000 | Newmont Mining Corp. | 1,677,375 | |
| 805,000 | Oliver Gold Corp.* | 46,544 | |
| 330,000 | Pangea Goldfields, Inc.* | 439,970 | |
| 65,250 | Pioneer Group, Inc. | 1,716,891 | |
| 345,000 | Placer Dome Inc. | 4,075,313 | |
| 62,500 | Repadre Capital Corp.* | 93,531 | |
| 2,318,330 | Rio Narcea Gold Mines, Ltd.* 92) | 1,340,440 | |
| 375,500 | River Gold Mines Ltd.* | 702,418 | |
| 430,000 | South American Gold & Copper Ltd.* | 20,475 | |
| 175,000 | Stillwater Mining Company* | 5,720,313 | |
| 2,000,000 | Sunshine Mining and Refining Co.* | 750,000 | |
| 56,000 | Tenke Mining Corp.* | 51,425 | |
| 80,000 | Thistle Mining Inc.* | 34,283 | |
| 1,552,500 | Tombstone Explorations Co. Ltd.* | 73,924 | |
| 1,000,000 | Vengold Inc.* | 54,418 | |
| 680,947 | Viceroy Resource Corp.* | 583,629 | |
| 4,437,400 | Vista Gold Corp.* (2) | 694,240 | |
| 3,055,333 | William Resources Inc.* (2) | 124,696 | |
| 41,907,417 | |||
| Australia (15.1%) | |||
| 2,000,000 | Delta Gold NL | 2,841,225 | |
| 700,000 | Emperor Mines Ltd.* | 175,760 | |
| 255,000 | Homestake Mining Co. | 2,087,812 | |
| 1,000,000 | Newcrest Mining Ltd. | 2,241,264 | |
| 4,000,000 | Normandy Mining Ltd. | 2,685,858 | |
| 7,000,000 | Normandy Mining Ltd. Warrants expires 4/30/01* | 379,271 | |
| 3,500,000 | Resolute Limited* | 1,757,595 | |
| 12,141,785 | |||
| China (0.4%) | |||
| 400,000 | San Kung Investment Corp. Units (1) | 333,333 | |
| Ghana (3.6%) | |||
| 416,962 | Ashanti Goldfields Co. Ltd. GDS | 2,892,674 | |
| Mexico (3.1%) | |||
| 850,000 | Industrias Penoles S.A. | 2,463,376 | |
| South Africa (24.3%) | |||
| 121,012 | Anglogold Ltd. | 5,188,390 | |
| 56,891 | Anglogold Ltd. ADR | 1,223,157 | |
| 170,000 | Durban Roodeport Deep Ltd.ADR | 297,500 | |
| 430,000 | Durban Rodeport Deep Ltd.* | 752,500 | |
| 668,380 | Durban Roodeport Deep Ltd. Warrants, | ||
| expires 12/31/99* | 189,526 | ||
| 856,117 | Gold Fields Ltd.* | 2,924,905 | |
| 119,905 | Gold Fields Ltd. ADR | 404,679 | |
| 210,700 | Harmony Gold Mining Warrants, expires 7/31/01 | 138,788 | |
| 500,000 | Harmony Gold Mining Co. Ltd.* | 2,353,234 | |
| 75,000 | Impala Platinum Holdings Ltd. ADR | 1,856,250 | |
| 582,000 | New East Daggafontein Mines Ltd. | 125,384 | |
| 500,000 | Randfontein Estates Ltd. | 861,748 | |
| 253,145 | Randgold Resources Ltd. | 1,012,580 | |
| 700,000 | Western Areas Ltd.* | 2,204,085 | |
| 19,550,726 | |||
| Total Common Stocks and Warrants | |||
| (cost: $205,683,867) | 79,289,311 | ||
| Contracts | Options (0.4%) | ||
| 5,500 | Harmony Gold Mining Co., expires 7/30/99 | ||
| (cost: $610,333) | 362,285 | ||
| Par Value | Bonds (1.0%) | ||
| $2,600,000 | Greenstone Resources Ltd. 9% due 2/28/02
(Cost $1,659,277) |
795,864 |
|
| Total Investments (100.0%) | $80,447,460 | ||
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*Indicates non-income producing security (1) Security is not publicly traded (see note 5) (2) Affiliated company |
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|
1999 |
December 31,
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| Operations: | ||||||
| Net investment loss | $ (201,640) | $ 281,945 | ||||
| Net realized loss from foreign currency and futures transactions | (31,220) | (307,036) | ||||
| Net realized loss from security transactions | (6,744,109) | (28,397,116) | ||||
| Unrealized depreciation of investments and foreign currencies during the period | (1,182,045) | (6,280,375) | ||||
| Net decrease in net assets resulting from operations |
(8,159,014) |
(34,702,582) |
||||
|
Capital Share Transactions: |
||||||
| Increase in net assets resulting from capital share transactions (a) |
(1,434,969) |
21,722,639 |
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| Total decrease in net assets | (9,593,983) | (12,979,943) | ||||
| Net Assets: | ||||||
| Beginning of period | 87,841,398 | 100,821,341 | ||||
| End of period (including accumulated deficit in net investment income of $201,640 in 1999) | $78,247,41 5 | $87,841,398 | ||||
| (a) Transactions in capital shares were as follows: | ||||||
| June 30, 1999 | December 31, 1998 | |||
| Shares | Value | Shares | Value | |
| Shares Sold | 10,510,129 | $15,398,844 | 53,935,734 | $97,702,211 |
| Shares redeemed | (11,565,264) | (16,833,813) | (43,523,746) | (75,979,572) |
| Net increase (decrease) |
(1,055,135) |
$(1,434,969) |
10,411,988 |
$21,722,639 |
1.Midas Fund, Inc. (the "Fund") 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,
as set forth in its prospectus. 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. Futures contracts are marked to market daily and the variation
margin is recorded as an unrealized gain or loss. When a contract is closed,
a realized gain or loss is recorded equal to the difference between the
opening and closing value of the contract. Forward contracts are marked
to market daily and the change in market value is recorded by the Fund
as an unrealized gain or loss. When a contract is closed, the Fund records
a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
The Fund could be exposed to risk if the counterparties are unable to meet
the terms of the contracts. 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. Premiums and discounts
are amortized in accordance with income tax regulations. 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.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 $207,953,477, gross unrealized appreciation and gross unrealized depreciation were $6,388,404 and $133,912,271, respectively, at June 30, 1999. At December 31, 1998, the Fund had an unused capital loss carryforward of approximately $40,030,500 of which $2,587,100, $25,267,300, and $12,176,100 expires in 2004, 2005, and 2006, respectively.
3. The Fund retains Midas Management Corporation (the "Investment Manager") as its Investment Manager. Under the terms of the Investment Management Agreement, 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 net 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 agreed to waive all or part of its fee or reimburse the 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 Fund are qualified for sale, although currently the Fund is not subject to any such limits. 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 six months ended June 30, 1999, an affiliate of the Investment Manager received commissions of $2,510 for brokerage services. The Fund reimbursed the Investment Manager $24,949 for providing certain administrative and accounting services at cost during the six months ended June 30, 1999. 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. In addition, the Fund paid $62,928 to Investor Service Center, which paid such amount to certain no-transaction fee brokers for transfer agent services.
4.The Fund has a bank line of credit for leveraging and temporary or
emergency purposes. At June 30, 1999, the balance outstanding was $4,027,458
and the interest rate was equal to the Federal Reserve Funds Rate plus
1.00 percentage point. For the six months ended June 30, 1999, the weighted
average interest rate was 5.63% based on the balances outstanding during
the period and the weighted average amount outstanding was $3,294,158.
5.The Fund has 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 Fund's expenses. During the period, the Fund's transfer agent fees were reduced by $4,062 under such arrangements. Purchases and proceeds of sales of securities other than short term investments and bullion aggregated $7,024,405 and $5,581,567, respectively, during the six months ended June 30, 1999.
On June 30, 1999, the Fund held certain securities which are not publicly
traded and valued at fair value as determined in good faith by or under
the direction of the Board of Directors. Dates of acquisition and cost
of such securities are as follows:
| Units |
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| 400,000 | San Kung Investment Corp. Units |
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At June 30, 1999, the total value of such securities represented 0.43% of net assets.
Statement of Assets and Liabilities
June 30, 1999 (Unaudited)
| Assets: | |||
| Investments at market value | |||
| (Cost: $207,953,477) (note 1) | $80,447,460 | ||
| Cash | 2,095 | ||
| Foreign currencies | 1,427,879 | ||
| Receivables: | |||
| Fund shares sold | 515,361 | ||
| Interest | 82,096 | ||
| Investment securities sold | 8,655 | ||
| Other assets | 21,052 | ||
| Total assets | 82,504,598 | ||
| Liabilities: | |||
| Payables: | |||
| Demand note payable to bank (note 4) | 4,027,458 | ||
| Fund shares redeemed | 114,870 | ||
| Accrued management and distribution fees | 80,911 | ||
| Accrued expenses | 33,944 | ||
| Total liabilities | 4,257,183 | ||
| Net Assets | |||
| (Applicable to 57,119,665 outstanding shares:
250,000,000 of $.01 par value authorizes) |
$78,247,415 |
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| NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE ($78,247,415 divided by 57,119,665) |
$1.37 | ||
| At June 30, 1999, net assets consisted of: | |||
| Paid-in capital | $269,507,900 | ||
| Accumulated net realized loss on investments | (63,534,978) | ||
| Net unrealized depreciation on investments | |||
| and foreign currencies | (127,523,867) | ||
| Accumulated deficit in net investment income | (201,640) | ||
| $78,247,415 | |||
Statement of operations
Six Months Ended June 30, 1999 (Unaudited)
| Investment income | |||
| Dividends (net of $52,652 foreign tax expense) | $ 770,459 | ||
| Interest | 122,562 | ||
| Total investment income | 893,021 | ||
| Expenses: | |||
| Investment management (note 3) | 413,245 | ||
| Distribution (note 3) | 103,311 | ||
| Transfer agent | 289,694 | ||
| Interest | 97,885 | ||
| Custodian | 61,888 | ||
| Registration (note 3) | 59,507 | ||
| Professional (note 3) | 44,036 | ||
| Printing | 14,876 | ||
| Directors | 7,736 | ||
| Other | 6,545 | ||
| Total expenses | 1,098,723 | ||
| Transfer agent credits (note 5) | (4,062) | ||
| Net expenses | 1,094,661 | ||
| Net investment loss | (201,640) | ||
| Realized and Unrealized Loss on
Investments, Foreign Currencies, and Futures: |
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| Net realized loss from foreign currency and | |||
| Future transactions | (31,220) | ||
| Net realized loss from security transactions | (6,744,109) | ||
| Unrealized depreciation of investments and | |||
| foreign currencies during the period | (1,182,045) | ||
| Net realized and unrealized loss of investments | |||
| And foreign currencies | (7,957,374) | ||
| Net decrease in net assets resulting | |||
| From operations | $(8, 159,014) | ||
See accompanying notes to financial statements.
| Financial
Highlights
|
||||||||
| Years Ended December 31, | ||||||||
|
Ended June 30, 1999 (Unaudited)* |
1998* | 1997* | 1996* | 1995* | 1994* | |||
| Per Share Data | ||||||||
| Net asset value at beginning of period | $1.51 | $2.11 | $5.15 | $4.25 | $3.32 | $4.16 | ||
| Income from investment operations: | ||||||||
| Net investment loss | - |
|
(.03) | (.05) | (.06) | (.05) | ||
| Net realized and unrealized gain (loss) on investments |
(.14) |
(.60) |
(3.01) |
.95 |
1.28 |
(.67) |
||
| Total from investment operations | (.14) | (.60) | (3.04) | .90 | 1.22 | (.72) | ||
| Less distributions: | ||||||||
| Distributions from net investment income |
-
|
|
|
|
(.29) | (.12) | ||
| Total distributions | - |
|
|
|
(.29) | (.12) | ||
| Net asset value at end of period | $1.37 | $1.51 | $2.11 | $5.15 | $4.25 | $3.32 | ||
| TOTAL RETURN | (9.27)% | (28.44%) | (59.03%) | 21.22% | 36.73% | (17.27%) | ||
| Ratios/Supplemental Data | ||||||||
| Net assets at end of period (000's omitted) | $78,247 | $87,841 | $100,793 | $200,457 | $15,753 | $7,052 | ||
| Ratio of expenses to average net assets (a) (b) | 2.65%** | 2.33% | 1.90% | 1.63% | 2.26% | 2.15% | ||
| Ratio of net investment loss to average net
assets (c) |
(.49)%** |
(.02)% |
(.72)% |
(.92)% |
(1.47)% |
(1.26)% |
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| Portfolio turnover rate | 7% | 27% | 50% | 23% | 48% | 53% | ||
|
*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. |
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| **Annualized | ||||||||
| (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 were 2.66%**, 2.30%, 1.88%, 1.61% and 2.25% for the six months ended June 30, 1999 and the years ended December 31, 1998, 1997, 1996 and 1995, respectively. Prior to 1995, such credits were reflected in the ratio. There were no custodian credits for 1996. | ||||||||
| (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. | ||||||||
| FUND
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Investment Objectives
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ACCOUNT ACCESS
For shareholder services by Investor Access, call
toll-free
Or, access the Fund on the the web at
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