[Insert Design]
Midas Fund, Inc.
Prospectus dated May 1, 1999
Midas Fund, Inc. seeks primarily capital appreciation and protection against
inflation and, secondarily, current income. The Fund pursues its objective by
investing primarily in companies involved with gold, silver, platinum or other
natural resources and gold, silver and platinum bullion. There can be no
assurance that the Fund will achieve its objective.
NEWSPAPER LISTING. Shares of the Fund are sold at the net
asset value per share which is shown daily in the mutual
fund section of newspapers nationwide under the heading
"Midas Fund."
This prospectus contains information you should know about the Fund before you
invest. Please keep it for future reference.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
CONTENTS
INVESTMENT OBJECTIVE AND STRATEGY.............................................2
MAIN RISKS....................................................................2
PAST PERFORMANCE..............................................................3
FEES AND EXPENSES OF THE FUND.................................................4
PORTFOLIO MANAGEMENT..........................................................4
DISTRIBUTION AND SHAREHOLDER SERVICES.........................................4
FINANCIAL HIGHLIGHTS..........................................................5
PURCHASING SHARES.............................................................5
REDEEMING SHARES..............................................................6
ACCOUNT AND TRANSACTION POLICIES..............................................7
DISTRIBUTIONS AND TAXES.......................................................8
FOR MORE INFORMATION.................................................Back Cover
1
<PAGE>
INVESTMENT OBJECTIVE AND STRATEGY
Midas Fund seeks primarily capital appreciation and protection against inflation
and, secondarily, current income. The Fund pursues its objective by investing
primarily in domestic or foreign companies involved with gold, silver, platinum
or other natural resources and gold, silver and platinum bullion.
The Fund will invest at least 65% of its total assets in (i) 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 (ii) gold, silver and platinum bullion.
Additionally, up to 35% of the Fund's total assets may be invested in securities
of companies that derive a portion of their gross revenues, directly or
indirectly, from the business of mining, processing, fabricating, distributing
or otherwise dealing in gold, silver, platinum or other natural resources, in
securities of selected growth companies, and in securities issued by the U.S.
Government, its agencies or instrumentalities.
In making investments for the Fund, management may consider, among other things,
the ore quality of metals mined by a company, a company's mining, processing and
fabricating costs and techniques, the quantity of a company's unmined reserves,
quality of management, and marketability of a company's equity or debt
securities. Management will emphasize the potential for growth of the proposed
investment, although it may also consider an investment's income generating
capacity as well. A stock is typically sold when, in the opinion of the
portfolio management team, its potential to meet the Fund's investment objective
is limited, or exceeded by another potential investment.
The Fund may borrow money to purchase securities and may engage in short selling
where risk of loss is potentially unlimited. The Fund may utilize other
investments and investment techniques that may impact Fund performance
including, but not limited to, options, futures and other derivatives (financial
instruments that derive their values from other securities or commodities or
that are based on indices). The Fund may also lend portfolio securities to other
parties. Additionally, the Fund may invest in special situations such as
liquidations and reorganizations.
The Fund may, from time to time, under adverse market conditions take temporary
defensive positions such as investing some or all of its assets in cash and cash
equivalents, money market securities, short-term bonds, repurchase agreements,
and convertible bonds. When the Fund takes such temporary defensive positions,
the Fund may not achieve its investment objective.
MAIN RISKS
Precious Metals Price. The primary risk affecting this Fund's performance is
that its investments are linked to the prices of gold, silver, platinum and
other resources. These prices can be influenced by a variety of global economic,
financial and political factors and may fluctuate substantially over short
periods of time and be more volatile than other types of investments. Economic,
political, or other conditions affecting one of the major sources of gold,
silver, platinum and other resources could have a substantial effect on supply
and demand in countries throughout the world.
Mining. Resource mining by its nature involves significant risks and hazards.
Even when a resource mineralization is discovered, there is no guarantee that
the actual reserves of a mine will increase. Exploratory mining can last over a
number of years, incur substantial costs, and not lead to any new commercial
mining. Resource mining runs the risk of increased environmental, labor or other
costs in mining due to environmental hazards, industrial accidents, labor
disputes, discharge of toxic chemicals, fire, drought, flooding and other
natural acts. Changes in laws relating to mining or resource production or sales
could also substantially affect resource values.
Market. The market risks associated with investing in the Fund are those related
to fluctuations in the value of the Fund's portfolio. A potential risk in
investing in stocks is that stock value will go up and down according to stock
market movements and you could lose money. However, you also have the potential
to make money. Also, investing in stocks involves a greater risk of loss of
income than bonds because stocks may not pay dividends.
Non-Diversification. The Fund is non-diversified which means that more than 5%
of the Fund's assets may be invested in the securities of one issuer. As a
result, the Fund may hold a smaller number of issuers than if it were
diversified. If this situation occurs, investing in the Fund could involve more
risk than investing in a fund that holds a broader range of securities because
changes in the financial condition of a single issuer could cause greater
fluctuation in the Fund's total return.
2
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Foreign Investment. The Fund can be exposed to the unique risks of foreign
investing. Political turmoil and economic instability in the countries in which
the Fund invests could adversely affect the value of your investment. Also, if
the value of any foreign currency in which the Fund's investments are
denominated declines relative to the U.S. dollar, the value and total return of
your investment in the Fund may decline as well. Foreign investments,
particularly investments in emerging markets, carry added risks due to
inadequate or inaccurate financial information about companies, potential
political disturbances and fluctuations in currency exchange rates.
Portfolio Management. The portfolio manager's skill in choosing appropriate
investments for the Fund will determine in large part whether the Fund achieves
its investment objectives.
Active Trading. The Fund expects to trade securities actively. This strategy
could increase transaction costs, reduce performance, and may result in taxable
distributions.
Illiquid Securities. The Fund may invest up to 15% of its assets in illiquid
securities. Potential risks from investing in illiquid securities are that
illiquid securities can be more difficult to value than more widely traded
securities and the prices realized from the sales of illiquid securities may be
less than if such securities were more widely traded.
Lending. The Fund may lend portfolio securities to borrowers for a fee.
Securities may only be lent if the Fund receives collateral equal to the market
value of the assets lent. Some risk is involved if the borrowers suffer
financial problems and are unable to return the assets lent.
Interest Rates. The Fund's bond investments are affected by interest rates. When
interest rates rise, the prices of bonds typically fall in proportion to their
duration. Duration, expressed in years, is based on the estimated payback
period, or "duration," of a bond and is the most widely used gauge of
sensitivity to interest rate change.
Year 2000. The Fund could be adversely affected if computer systems used by
Midas Management Corporation and the Fund's other service providers do not
properly process and calculate date-related information on and after January 1,
2000. Midas Management Corporation is working to avoid these problems and to
obtain assurances from other service providers that they are taking similar
steps. There could be a negative impact on the Fund. While the Fund cannot, at
this time, predict the degree of impact, it is possible that foreign markets
will be less prepared than U.S. markets.
PAST PERFORMANCE
The bar chart provides some indication of the risks of investing in the Fund by
showing changes in the Fund's performance from year to year. The table compares
the Fund's average annual returns for the 1, 5 and 10 year periods with those of
the Standard & Poor's 500 Stock Index ("S&P 500") and Morningstar Precious
Metals Fund Average ("PMFA"). The S&P 500 is an index that is unmanaged and
fully invested in common stocks. The PMFA is an equally weighted average of the
22 managed precious metals funds tracked by Morningstar. Both the bar chart and
the table assume reinvestment of dividends and distributions. As with all mutual
funds, past performance is not necessarily an indication of future performance.
YEAR-BY-YEAR TOTAL PERCENT RETURN AS OF 12/31 EACH YEAR
[GRAPHIC OMITTED]
1989: 21.88, 1990: (16.99), 1991: (0.20), 1992: (7.16), 1993: 99.24
1994: (17.27), 1995: 36.73, 1996: 21.22, 1997: (59.03), 1998: (28.44)
Best Quarter
(4/93 - 6/93) =
36.64%
Worst Quarter
(10/97 - 12/97) =
(40.90)%
Average annual total return for the periods ended 12/31/98
1 Year 5 Years 10 Years
------ ------- --------
Midas Fund (28.44)% (16.62)% (2.82)%
S&P 500 28.58% 24.05% 19.20%
PMFA (11.35)% (12.91)% (3.27)%
3
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FEES AND EXPENSES OF THE FUND
As an investor, you pay certain fees and expenses in connection with the Fund,
which are described in the following tables. Shareholder fees are paid out of
your account. Annual fund operating expenses are paid out of fund assets, so
their effect is included in the share price.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)........................................NONE
Maximum Deferred Sales Charge (Load)....................................... NONE
Maximum Sales Charge (Load) Imposed on Reinvested Dividends................ NONE
Redemption Fee within 30 days of purchase..................................1.00%
Annual Fund operating expenses
(expenses that are deducted from Fund assets)( as % of average daily net assets)
Management fees......................................................... 1.00%
Distribution and Service (12b-1) fees................................... 0.25%
Other expenses.......................................................... 1.08%
-----
Total Annual Fund Operating Expenses.................................... 2.33%
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds:
<TABLE>
<S> <C> <C> <C> <C>
One Three Five Ten
The example assumes that you invest $10,000 in the Fund for the Year Years Years Years
time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs
would be:................................................................ $ 236 $ 727 $ 1,245 $ 2,666
======================================
</TABLE>
PORTFOLIO MANAGEMENT
Midas Management Corporation is the investment manager. It regularly furnishes
advice with respect to portfolio transactions and provides all services
necessary for the proper conduct of the Fund's business and administration. It
is located at 11 Hanover Square, New York, New York 10005. Generally, the Fund
pays the investment manager a management fee based on the average daily net
assets of the Fund, at the annual rate of 1% on the first $200 million and
declining thereafter as a percentage of average daily net assets. During the
fiscal year ended December 31, 1998, investment management fees paid by the Fund
represented approximately 1.00% of average daily net assets.
Lion Resource Management Limited is the subadviser. Mr. Kjeld Thygesen, the
subadviser's Managing Director, has been the Fund's portfolio manager since
January 1992 and currently serves as the Fund's portfolio manager together with
the investment manager's Investment Policy Committee. Mr. Thygesen has been a
Managing Director of the subadviser since 1989. Its principal business address
is 7 - 8 Kendrick Mews, London, U.K. SW7 3HG. 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.
DISTRIBUTION AND SHAREHOLDER SERVICES
Investor Service Center, Inc. is the distributor of the Fund and services
shareholder accounts. The Fund has adopted a plan under Rule 12b-1 and pays the
distributor a distribution or 12b-1 fee in an amount of one-quarter of one
percent per annum of the Fund's average daily net assets as compensation for
distribution and service activities. These fees are paid out of the Fund's
assets on an ongoing-basis. Overtime these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
4
<PAGE>
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the past five years. The fiscal
year end is December 31. Certain information reflects financial results for a
single Fund share. Total return shows how much your investment in the Fund would
have increased (or decreased) during each period, assuming you had reinvested
all dividends and distributions. The figures for the periods shown, with the
exception of 1994, were audited by Tait, Weller & Baker, the Fund's independent
accountants, whose report, along with the Fund's financial statements, are
included in the Annual Report, which is available upon request.
<TABLE>
<CAPTION>
Years Ended December 31,
1998* 1997* 1996* 1995* 1994
----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period...................... $2.11 $5.15 $4.25 $3.32 $4.16
----- ----- ----- ----- -----
Income from investment operations:
Net investment loss....................................... - (0.03) (0.05) (0.06) (0.05)
Net realized and unrealized gain (loss) on investments.... (0.60) (3.01) 0.95 1.28 (0.67)
------ ------ ---- ---- ------
Total from investment operations........................ (0.60) (3.04) 0.90 1.22 (0.72)
Less distributions:
Distributions from net realized gains..................... - - - (0.29) (0.12)
Total distributions..................................... - - - (0.29) (0.12)
------ ------
Net asset value, end of period............................ $1.51 $2.11 $5.15 $4.25 $3.32
===== ===== ===== ===== =====
TOTAL RETURN.............................................. (28.44)% (59.03)% 21.22% 36.73% (17.27)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)...................... $87,841 $100,793 $200,457 $15,753 $7,052
Ratio of expenses to average net assets(a) (b):........... 2.33% 1.90% 1.63% 2.26% 2.15%
Ratio of net investment loss to average net assets(c):.... (0.02)% (0.72)% (0.92)% (1.47)% (1.26)%
Portfolio turnover rate .................................. 27% 50% 23% 48% 53%
<FN>
*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) Expense 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. (b) Expense ratio after
transfer agent and custodian credits was 2.30%, 1.88%, 1.61% and 2.25% for the
years ended December 31, 1998, 1997, 1996 and 1995. Prior to 1995, such credits
were reflected in the expense ratio. (c) Ratio prior to reimbursement by the
investment manager was (0.97)%, (1.12)%, and (1.73)% for the years ended
December 31, 1997, 1996, and 1995.
</FN>
</TABLE>
PURCHASING SHARES
Your price for Fund shares is the Fund's next calculation, after the order is
placed, of net asset value (NAV) per share which is determined as of the close
of regular trading on the New York Stock Exchange (currently, 4 p.m. eastern
time) each day the exchange is open. The Fund's shares will not be priced on the
days on which the exchange is closed for trading. The Fund's investments are
valued based on market value, or where market quotations are not readily
available, based on fair value as determined in good faith by the Fund's board.
Opening Your Account.
By check. Complete and sign the Account Application that accompanies this
prospectus and mail it, along with your check made payable to Midas Fund, to
Investor Service Center, Box 419789, Kansas City, MO 64141-6789 (see Minimum
Investments below).
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By wire. Call toll-free 1-800-400-MIDAS, to give the name(s) under which the
account is to be registered, tax identification number, the name of the bank
sending the wire, and to be assigned a Midas Fund account number. You may then
purchase shares by requesting your bank to transmit immediately available funds
("Federal funds") by wire to: United Missouri Bank NA, ABA #10-10-00695; for
Account 98-7052-724-3; Midas Fund. Your account number and name(s) must be
specified in the wire as they are to appear on the account registration. You
should then enter your account number on your completed Account Application and
promptly forward it to Investor Service Center, Box 419789, Kansas City, MO
64141-6789. This service is not available on days when the Federal Reserve wire
system is closed (see Minimum Investments below).
<TABLE>
<CAPTION>
Minimum Investments
Account Type Initial Subsequent Account Type Initial Subsequent
- ------------ ------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Regular account $1,000 $100 SIMPLE IRA $1,000 $100
Uniform Gifts/Transfers $1,000 $100 Rollover IRA $1,000 $100
to Minors Act custody
accounts
Traditional IRA $1,000 $100 403(b) plan $1,000 $100
Roth IRA $1,000 $100 Education IRA $500 N/A
SEP-IRA $1,000 $100 Automatic Investment $100 $100
Program
- ----------------------------- ---------- ----------- ---------------------- ---------- ------------
</TABLE>
Checks must be payable to Midas Fund in U.S. dollars. Third party checks cannot
be accepted. You may be charged a fee for any check that does not clear.
IRAs and retirement accounts. For more information about the IRAs and retirement
accounts listed above, please call toll-free 1-800- 400-MIDAS.
Automatic Investment Program. With the Automatic Investment Program, you can
establish a convenient and affordable long term investment program through one
or more of the plans explained below. Minimum investments described above are
waived for each plan since they are designed to facilitate an automatic monthly
investment of $100 or more into your Fund account.
.................................... ..........................................
Bank Transfer Plan For making automatic investments from a
designated bank account.
.................................... ..........................................
Salary Investing Plan For making automatic investments
through a payroll deduction.
.................................... ..........................................
Government Direct Deposit Plan For making automatic investments from
your federal employment, Social Secutity
or other regular federal government check.
.................................... ..........................................
The Fund reserves the right to redeem any account if participation in the
program ends and the account's value is less than $1,000 due to redemptions.
For more information, or to request the necessary authorization form, please
call toll-free 1-800-400-MIDAS. You may modify or terminate the Bank Transfer
Plan at any time by written notice received 10 days prior to the scheduled
investment date. To modify or terminate the Salary Investing Plan or Government
Direct Deposit Plan, you should contact your employer or the appropriate U.S.
Government agency, respectively.
Adding to Your Account.
By check. Complete a Midas FastDeposit form and mail it, along with your check,
made payable to Midas Fund, to Investor Service Center, Box 419789, Kansas City,
MO 64141-6789 (see Minimum Investments above). If you do not use that form,
include a letter indicating the account number to which the subsequent
investment is to be credited, and the name of the registered owner.
6
<PAGE>
By Electronic Funds Transfer (EFT). Call toll-free 1-800-400-MIDAS. The bank you
designate on your Account Application or Authorization Form will be contacted to
arrange for the EFT, which is done through the Automated Clearing House system,
to your Fund account. Requests received by 4 p.m., eastern time, will ordinarily
be credited to your Fund account on the next business day. Your designated bank
must be an Automated Clearing House member and any subsequent changes in bank
account information must be submitted in writing with a voided check (see
Minimum Investments above).
By wire. Subsequent investments by wire may be made at any time without having
to call by simply following the same wiring procedures above (see Minimum
Investments above).
REDEEMING SHARES
Generally, you may redeem by any of the methods explained below. Requests for
redemption should include the following information:
o name of the registered owner(s) of the account
o account number
o Fund name
o amount you want to sell
o name and address or wire information of person to receive proceeds
In some instances, a signature guarantee may be required. Signature guarantees
help prevent against fraud. You can obtain one from most banks or securities
dealers, but not from a notary public. For joint accounts, each signature must
be guaranteed. Please call us to ensure that your signature guarantee will be
processed correctly.
By mail. Write to Investor Service Center, Box 419789, Kansas City, MO
64141-6789, and request the specific amount to be redeemed. The request must be
signed by the registered owner(s) and additional documentation may be required.
By telephone. Call toll-free 1-800-400-MIDAS, to expedite redemption of Fund
shares.
By EFT. Call toll-free 1-800-400-MIDAS and request the specific amount to be
redeemed through EFT. You may redeem as little as $250 worth of shares by
requesting EFT service. EFT proceeds are ordinarily available in your bank
account within two business days.
By wire. Call toll-free 1-800-400-MIDAS and request the specific amount to be
redeemed by wire.
Systematic Withdrawal Plan. If your shares have a value of at least $20,000 you
may elect automatic withdrawals from your Fund account, subject to a minimum
withdrawal of $100. All dividends and distributions are reinvested in the Fund.
ACCOUNT AND TRANSACTION POLICIES
Order execution. Orders to buy and sell shares are executed at the next NAV
calculated after the order has been received in proper form. Orders received on
Fund business days by 4 p.m., eastern time, will be executed from your account
that day. Orders received after 4 p.m., eastern time, will be executed from your
account on the next Fund business day.
Redemption fee. The Fund is designed as a long term investment, and short term
trading is discouraged. If shares of the Fund held for 30 days or less are
redeemed or exchanged, the Fund will deduct a redemption fee equal to one
percent of the NAV of shares redeemed or exchanged. Redemption fees are paid to
the Fund.
Redemption payment. Payment for shares redeemed will ordinarily be made within
seven days after receipt of the redemption request in proper form.
Accounts with below-minimum balances. If your account balance falls below $500
as a result of selling shares and not because of market action, the Fund
reserves the right, upon 45 days' notice, to close your account or request that
you buy more shares.
Telephone privileges. The Fund accepts telephone orders from all shareholders
and guards against fraud by following reasonable precautions such as requiring
personal identification before carrying out shareholder requests. You could be
responsible for any loss caused by an order which later proves to be fraudulent.
The Fund is not liable as long as the Fund follows reasonable procedures.
Assignment. Fund shares may be transferred to another owner. Instructions are
available from by calling toll-free 1-800-400-MIDAS.
7
<PAGE>
DISTRIBUTIONS AND TAXES
Distributions. The Fund pays its shareholders dividends from its net investment
income and distributes net capital gains that it has realized, if any. Each of
these distributions, if any, is paid out once a year. Your distributions will be
reinvested in the Fund unless you instruct the Fund otherwise by calling
toll-free 1-800-400-MIDAS.
Taxes. Generally, you will be taxed when you sell shares, exchange shares and
receive distributions (whether reinvested or taken in cash). Typically, your tax
treatment will be as follows:
Transaction Tax treatment
Income dividends.............................................Ordinary income
Short-term capital gains distributions.......................Ordinary income
Long-term capital gains distributions........................Capital gains
Sales or exchanges of shares held for more than one year.....Capital gains or
losses
Sales or exchanges of shares held for one year or less.......Gains are treated
as ordinary income;
losses are subject
to special rules
Because income and capital gains distributions are taxable you may want to avoid
making a substantial investment in a taxable account when the Fund is about to
declare a long-term capital gains distribution. Each January, the Fund issues
tax information on its distributions for the previous year. Any investor for
whom the Fund does not have a valid taxpayer identification number will be
subject to backup withholding for taxes. The tax considerations described in
this section do not apply to tax-deferred accounts or other non-taxable
entities. Because everyone's tax situation is unique, please consult your tax
professional about your investment.
8
<PAGE>
[Insert Design]
Back Cover
FOR MORE INFORMATION
For investors who want more information on the Fund, the following documents are
available free upon request:
Annual/Semi-annual reports. Contains performance data, lists portfolio holdings
and contains a letter from the Fund's manager discussing recent market
conditions, economic trends and Fund strategies that significantly affected the
Fund's performance during the last fiscal year.
Statement of Additional Information (SAI). Provides a fuller technical and legal
description of the Fund's policies, investment restrictions, and business
structure. A current SAI is on file with the Securities and Exchange Commission
(SEC) and is incorporated by reference (is legally considered part of this
prospectus).
To Obtain Information
By telephone
call 1-800-400-MIDAS
By mail write to:
Midas Fund, Inc.
Box 419789
Kansas City, MO 64141-6789
By e-mail write to:
[email protected]
On the Internet Fund documents
can be viewed online or downloaded from:
SEC http://www.sec.gov
Midas http://www.mutualfunds.net
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009. The Fund's Investment Company Act file number is 811-4316.
9
