MIDAS US & OVERSEAS FUND LTD
485BPOS, 1999-07-12
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       Filed with the Securities and Exchange Commission on July 12, 1999

                                                    1933 Act File No. 33-6898
                                                    1940 Act File No. 811-4741
- --------------------------------------------------------------------------------


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM N-1A
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                         Post-Effective Amendment No. 25
                                       and
                             REGISTRATION STATEMENT
                                      UNDER
                       THE INVESTMENT COMPANY ACT OF 1940
                                Amendment No. 25

                        MIDAS U.S. AND OVERSEAS FUND LTD.
               (Exact Name of Registrant as Specified in Charter)

                                11 Hanover Square
                            New York, New York 10005
                    (Address of Principal Executive Offices)

       Registrant's Telephone Number, including Area Code: 1-212-785-0900

                                   Copies to:


 Deborah A. Sullivan, Esq.                                Richard Horowitz, Esq.
 Midas Management Corporation                      Stroock & Stroock & Lavan LLP
 11 Hanover Square                                               180 Maiden Lane
 New York, NY 10005                                      New York, NY 10038-4982
(Name and Address of Agent for Service)


It is proposed that this filing will become  effective on July 25, 1999 pursuant
to paragraph (b) of Rule 485.

         The Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment  Company Act of 1940. The Registrant's  most recent Rule 24f-2 Notice
was filed March 25,1999.



<PAGE>



                        MIDAS U.S. AND OVERSEAS FUND LTD.

                       Contents of Registration Statement


         This  registration  statement  consists  of the  following  papers  and
documents.

         Cover Sheet

         Table of Contents

         Cross Reference Sheet - Midas U.S. and Overseas Fund Ltd.

         Midas U.S. and Overseas Fund Ltd.

         Part A - Prospectus

         Part B - Statement of Additional Information

         Part C - Other Information

         Signature Page

         Exhibits


<PAGE>



                        MIDAS U.S. AND OVERSEAS FUND LTD.

              CROSS REFERENCE SHEET FOR ITEMS REQUIRED BY FORM N-1A

Item No.
of Form N-lA                              Caption in Prospectus

      1        Front and Back Cover Pages
      2        "Investment Objective and Strategy", "Main Risks",
               "Past Performance"
      3        "Fees and Expenses of the Fund"
      4        "Investment Objective and Strategy", "Main Risks"
      5        not applicable
      6        "Management"
      7        "Purchasing Shares", "Redeeming Shares", "Account and Transaction
               Policies", "Distributions and Taxes"
      8        "Fees and Expenses of the Fund"
      9        "Financial Highlights"

               Caption in Statement of Additional Information

      10       Cover Page
      11       "Description of the Fund"
      12       "Investment Objective and Strategy", "Investment Restrictions"
      13       "Management of the Fund"
      14       "Management of the Fund"
      15       "Management of the Fund", "Investment Manager"
      16       "Allocation of Brokerage"
      17       Not Applicable
      18       "Determination of Net Asset Value", "Purchase of Shares"
      19       "Distributions and Taxes"
      20       "Distribution of Shares"
      21       "Calculation of Performance Data"
      22       "Financial Statements"


                                       3

<PAGE>


                                 [Logo Omitted]






                                MIDAS FUND, INC.
                              MIDAS INVESTORS LTD.
               MIDAS MAGIC, INC. MIDAS SPECIAL EQUITIES FUND, INC.
                        MIDAS U.S. AND OVERSEAS FUND LTD.
                              DOLLAR RESERVES, INC.


                         Prospectus dated June 30, 1999

Newspaper Listing The Funds' net asset values are shown daily in the mutual fund
section of newspapers nationwide under the heading "Midas Funds."

This prospectus contains  information you should know about the Funds before you
invest. Please keep it for future reference.

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.


                                TABLE OF CONTENTS

RISK/RETURN SUMMARY............................................................2

PAST PERFORMANCE...............................................................3

FEES AND EXPENSES OF THE FUNDS.................................................7

PRINCIPAL INVESTMENT OBJECTIVES, INVESTMENT STRATEGIES AND RISKS...............8

PORTFOLIO MANAGEMENT..........................................................12

MANAGEMENT FEES...............................................................13

DISTRIBUTION AND SHAREHOLDER SERVICES.........................................13

PURCHASING SHARES.............................................................13

REDEEMING SHARES..............................................................15

ACCOUNT AND TRANSACTION POLICIES..............................................15

DISTRIBUTIONS AND TAXES.......................................................16

FINANCIAL HIGHLIGHTS..........................................................16

<PAGE>

                               RISK/RETURN SUMMARY


What are the principal investment objectives of the Midas Funds?
- --------------------------------------------------------------------------------
MIDAS FUND seeks primarily capital appreciation and protection against inflation
and secondarily, current income.

MIDAS  INVESTORS seeks long term capital  appreciation  in investments  with the
potential to provide a hedge against inflation and preserve the purchasing power
of the dollar. Income is a second objective.

MIDAS MAGIC seeks long term capital appreciation.

MIDAS SPECIAL EQUITIES FUND seeks capital appreciation.

MIDAS U.S. AND OVERSEAS FUND seeks to obtain the highest  possible  total return
on its assets from long term growth of capital and from income.

DOLLAR RESERVES is a money market fund seeking maximum current income consistent
with preservation of capital and maintenance of liquidity.
================================================================================


What   are  the   principal   investment   strategies   of  the   Midas   Funds?
- --------------------------------------------------------------------------------
MIDAS  FUND  invests  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.
Up to 35% of the Fund's assets may be invested in securities of selected  growth
companies,  and in U.S.  Government  securities.  The Fund  will  emphasize  the
potential for growth when choosing  investments.  A stock is typically sold when
its potential to meet the Fund's investment objective is limited, or exceeded by
another potential investment.

MIDAS  INVESTORS  invests at least 65% of the Fund's  total assets in (i) equity
securities  (including  common stocks,  convertible  securities and warrants) of
companies involved,  directly or indirectly, in mining, processing or dealing in
gold or other precious metals, (ii) gold, platinum and silver bullion, and (iii)
gold coins.  Up to 35% of the Fund's  assets may be invested  in  securities  of
selected growth  companies,  and in U.S.  Government  securities.  The Fund will
invest in companies  whose earnings are expected to grow faster than the rate of
inflation.  A stock is  typically  sold when its  potential  to meet the  Fund's
investment objective is limited, or exceeded by another potential investment.

MIDAS MAGIC invests  primarily in equity  securities of companies whose earnings
or  revenue  prospects  are  improving  as a result of  management,  technology,
regulation,  financial structure, or other special situations (e.g. liquidations
and  reorganizations)  and in companies  whose shares have good relative  upward
price momentum.  The Fund will invest in companies whose improving prospects are
getting  increased market  recognition and whose shares are experiencing  upward
price momentum. The Fund will normally sell investments whose share price either
has risen to a valuation that unduly  increases risk levels or,  conversely,  no
longer has good relative upward price momentum.

MIDAS SPECIAL EQUITIES FUND invests aggressively primarily in equity securities,
often involving special situations (e.g.  liquidations and  reorganizations) and
emerging  growth  companies.  The Fund will normally sell  investments  when the
value or growth potential of the investment appears limited or exceeded by other
investment oppertunities.

MIDAS U.S. AND OVERSEAS FUND invests principally in a portfolio of securities of
U.S. and overseas  issuers with growth in earnings and reasonable  valuations in
terms of  price/earnings,  price/cash flow,  price/sales and similar ratios. The
Fund will normally sell  investments  when the value or growth  potential of the
investment appears limited or exceeded by other investment opportunities.

DOLLAR  RESERVES  invests  exclusively  in money market  obligations of the U.S.
Government, its agencies and instrumentalities.
================================================================================


What are the  principal  risks of investing  in the Midas Funds?
Midas Fund and Midas Investors are subject to the risks associated with:
- --------------------------------------------------------------------------------
PRECIOUS METALS PRICE.  The prices of gold,  silver,  platinum and other natural
resources  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.


<PAGE>



MINING.  Resource mining by its nature involves significant risks and hazards to
which  these  Funds  are  exposed.  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.
================================================================================


All of the Funds (except  Dollar  Reserves) are subject to the risks  associated
with:
- --------------------------------------------------------------------------------
Market.  The market risks  associated with investing in a Fund are those related
to  fluctuations  in the value of the Fund's  portfolio.  A risk of investing in
stocks is that their value will go up and down reflecting stock market movements
and you could lose money.

Small  Capitalization.  A Fund may invest in companies  that are small or thinly
capitalized,  and may have a limited operating history. Small-cap stocks is that
small-cap  stocks are likely more  vulnerable  than larger  companies to adverse
business or economic  developments.  During broad market downturns,  Fund values
may fall further than that of funds investing in larger companies.

Foreign  Investment.  A Fund can be  exposed  to the  unique  risks  of  foreign
investing.  Political turmoil and economic instability in the countries in which
some of the Funds invest could  adversely  affect the value of your  investment.
Also,  if the value of any foreign  currency in which a 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.

Non-Diversification. The Funds are non-diversified which means that more than 5%
of a Fund's assets may be invested in the securities of one issuer. As a result,
each Fund may hold a smaller number of issuers than if it were  diversified.  If
this  situation  occurs,  investing  in a 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 returns.
================================================================================


Dollar Reserves is subject to investment risk:
- --------------------------------------------------------------------------------
The  Fund's  yield  will vary in  response  to changes  in  interest  rates.  An
investment  in the Fund is not  insured or  guaranteed  by the  Federal  Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money           by           investing           in          the           Fund.
================================================================================


                                PAST PERFORMANCE

The bar charts provide some indication of the risks of investing in the Funds by
showing changes in each Fund's performance from year to year. The tables compare
the  Funds'  average  annual  returns  for  the 1, 5 and 10  year  periods  with
appropriate  broad-based securities market indexes (except in the case of Dollar
Reserves)  and in so doing,  also  reflects the risks of investing in the Funds.
The  Standard & Poor's 500 Stock Index ("S&P 500") is an index that is unmanaged
and fully  invested  in common  stocks.  The  Morningstar  Precious  Metals Fund
Average  ("PMFA")  is an equally  weighted  average  of the 22 managed  precious
metals funds tracked by Morningstar.  The Morgan Stanley  Capital  International
("MSCI")  World Index is an unmanaged  index which is derived  from  equities of
Europe, Australasia and Far East countries and equities from Canada and the U.S.
The  Russell  2000 Index is an index that is  unmanaged  and fully  invested  in
common  stocks of small  companies.  The Lipper  Analytical  Money  Market Index
("LAMMI") is an index that is unmanaged  and invested  principally  in financial
instruments  issued  or  guaranteed  by the U.S.  Government,  its  agencies  or
instrumentalities,  with dollar-weighted average maturities of less than 90 days
and which  intends to keep a constant net asset  value.  Both the bar charts and
the tables  assume  reinvestment  of dividends  and  distributions.  As with all
mutual  funds,  past  performance  is not  necessarily  an  indication of future
performance.


<PAGE>


MIDAS FUND
________________________________________________________________________________

                Year-by-year total return as of 12/31 each year


                                [Graph Omitted]

                                  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)%




MIDAS INVESTORS
________________________________________________________________________________

                Year-by-year total return as of 12/31 each year


                                [Graph Omitted]


                                  Best Quarter:
                                    4/93-6/93
                                     34.87%

                                 Worst Quarter:
                                   10/97-12/97
                                    (32.99)%


           Average annual total return for the periods ended 12/31/98

                            1 Year            5 Years            10 Years
                   -------------------------------------------------------------
Midas Investors            (32.21)%           (23.90)%            (9.61)%
S&P 500                     28.58%             24.05%             19.20%
PMFA                       (11.35)%           (12.91)%            (3.27)%



<PAGE>


MIDAS MAGIC
________________________________________________________________________________

                Year-by-year total return as of 12/31 each year


                                [Graph Omitted]

                                 Best Quarter:
                                   1/96-3/96
                                     24.77%

                                 Worst Quarter:
                                   7/90-9/90
                                    (19.47)%


           Average annual total return for the periods ended 12/31/98

                                 1 Year         5 Years           10 Years
                       ---------------------------------------------------------
Midas Magic                     (13.82)%         7.40%             6.10%
Russell 2000 Index              (2.57)%          11.87%            12.92%




MIDAS SPECIAL EQUITIES FUND
________________________________________________________________________________

                 Year-by-year total return as of 12/31 each year


                                [Graph omitted]


                                  Best Quarter:
                                   10/92-12/92
                                     24.29%

                                 Worst Quarter:
                                    7/90-9/90
                                    (43.75)%

           Average annual total return for the periods ended 12/31/98

                                      1 Year        5 Years           10 Years
                              --------------------------------------------------
Midas Special Equities Fund          (5.00)%         3.44%              8.42%
Russell 2000 Index                   (2.57)%        11.87%             12.92%





<PAGE>




MIDAS U.S. AND OVERSEAS FUND
________________________________________________________________________________

                 Year-by-year total return as of 12/31 each year


                                [Graph Omitted]


                                  Best Quarter:
                                   10/98-12/98
                                     18.99%

                                 Worst Quarter:
                                    7/98-9/98
                                    (24.43)%


           Average annual total return for the periods ended 12/31/98

                                 1 Year            5 Years          10 Years
                             ----------------  ---------------   --------------
Midas U.S. and Overseas Fund     1.18%              4.12%            6.94%
MSCI World Index                 24.34%            15.68%            10.66%



DOLLAR RESERVES
________________________________________________________________________________

                 Year-by-year total return as of 12/31 each year


                                [Graph Omitted]


                                  Best Quarter:
                                    1/89-3/89
                                      2.08%

                                 Worst Quarter:
                                    4/93-6/93
                                      0.58%


For information on the Fund's 7-day yield, call toll-free 1-800-400-MIDAS(6432).

           Average annual total return for the periods ended 12/31/98

                         1 Year              5 Years              10 Years
                ----------------------------------------------------------------
Dollar Reserves          4.69%                4.55%                 4.95%
LAMMI                    4.95%                4.79%                 5.19%



<PAGE>



                         FEES AND EXPENSES OF THE FUNDS

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..........................NONE
Maximum Deferred Sales Charge (Load)......................................NONE
Maximum Sales Charge (Load) Imposed on Reinvested Dividends...............NONE
Redemption Fee within 30 days of purchase
(all Funds except Dollar Reserves)........................................1.00%

                         Annual Fund Operating Expenses
 (expenses as % of average daily net assets that are deducted from Fund assets)

<TABLE>
<CAPTION>

                                                                                       Total          Fee Waiver
                                                   Distribution                       annual             and
                                                         and                          Fund             Expense
                                      Manage-          service          Other         operating        Reimburse-            Net
                                     ment fees      (12b-1) fees      expenses*        expenses            ment            Expenses
                                  ---------------  ---------------  --------------  --------------  --------------  ----------------
<S>                                    <C>              <C>             <C>             <C>                <C>               <C>
Midas Fund, Inc.                       1.00%            0.25%           1.08%           2.33%              N/A               N/A
Midas Investors Ltd.                   1.00%            0.25%**         2.32%           3.57%**            N/A               N/A
Midas Magic, Inc.                      1.00%            0.25%           8.02%           9.27%             7.29%             1.98%***
Midas Special Equities Fund, Inc.      0.87%            1.00%           1.55%           3.42%              N/A               N/A
Midas U.S. and Overseas Fund Ltd.      1.00%            0.25%**         1.33%           2.58%**            N/A               N/A
Dollar Reserves, Inc.                  0.50%            0.25%           0.55%           1.30%              N/A               N/A

<FN>
*    Includes the reimbursement by each Fund to Midas Management Corporation for
     accounting  and other  administrative  services which are authorized by the
     Board of  Directors.  These  services  may vary over time,  therefore,  the
     amount of the reimbursement may fluctuate.

**   Reflects a contractual  distribution  fee waiver that will continue through
     May 1, 2000.  Without such waiver,  distribution  and service fee and total
     annual  Fund   operating   expenses   would  have  been  1.00%  and  4.32%,
     respectively,  for Midas  Investors Ltd and 1.00% and 3.33%,  respectively,
     for Midas U.S. and Overseas Fund.

***  Reflects a contractual  obligation by Midas Management Corporation to waive
     and/or  reimburse  the Fund  through  December 31, 1999 to the extent total
     annual Fund  operating  expenses  exceed 1.90% of average daily net assets,
     excluding certain expenses which totaled 0.08% in 1998.
</FN>

</TABLE>

EXAMPLE:
This example  assumes that you invest  $10,000 in each of the Funds for the time
periods  indicated  and  then  redeem  all of your  shares  at the end of  those
periods.  This Example also  assumes that your  investment  has a 5% return each
year and that the Funds' operating expenses remain the same (except in the cases
footnoted  below).  Although your actual costs may be higher or lower,  based on
these assumptions your costs would be:

<TABLE>
<CAPTION>
                                      One Year       Three Years     Five Years    Ten Years
                                    -------------  ---------------  ------------  -----------
<S>                                     <C>              <C>           <C>           <C>
Midas Fund, Inc.                        $236             $727          $1,245        $2,666
Midas Investors Ltd.*                   $360           $1,242          $2,136        $4,426
Midas Magic, Inc.*                      $201           $2,030          $3,707        $7,310
Midas Special Equities Fund, Inc.       $345           $1,051          $1,779        $3,703
Midas U.S. and Overseas Fund Ltd.*      $261             $955          $1,672        $3,571
Dollar Reserves, Inc.                   $132             $412            $713        $1,568
<FN>
*    The first year expenses in each of the time periods  indicated are based on
     a contractual agreement.
</FN>
</TABLE>


<PAGE>


        PRINCIPAL INVESTMENT OBJECTIVES, INVESTMENT STRATEGIES AND RISKS

MIDASFUND 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 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, the investment  manager 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
     also may 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 invest in certain  derivatives  such as  options,  futures and
     forward  currency  contracts.  Derivatives are financial  instruments  that
     derive their values from other  securities or commodities or that are based
     on  indices.  The Fund may  engage  in  leverage  by  borrowing  money  for
     investment  purposes.  The Fund also may lend portfolio securities to other
     parties and may engage in short selling.  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 and invest some or all of its assets in cash
     and cash equivalents,  money market securities of U.S. and foreign issuers,
     short-term bonds,  repurchase  agreements,  and convertible bonds. When the
     Fund takes such a  temporary  defensive  position,  it may not  achieve its
     investment objective.


Principal Risks
- --------------------------------------------------------------------------------

     The Fund's investments are linked to the prices of gold,  silver,  platinum
     and other natural 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 or more of the  major  sources  of gold,  silver,  platinum  and  other
     natural  resources could have a substantial  effect on supply and demand in
     countries throughout the world.

     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.

     The Fund may  invest  up to 35% of its  assets in fixed  income  securities
     rated  below  investment  grade,  although it has no current  intention  of
     investing more than 5% of its assets in such  securities  during the coming
     year.  These securities may be subject to certain risks with respect to the
     issuing  entity and to  greater  market  fluctuations  than  certain  lower
     yielding, higher rated fixed income securities.

        For additional  principal risks associated with the Fund,  please read
        "Additional Principal Investment Risks" on page 11.


MIDAS INVESTORS seeks  long  term capital  appreciation in investments  with the
        potential  to  provide  a  hedge  against  inflation  and  preserve  the
        purchasing power of the dollar. Income is a secondary objective.

        The Fund pursues its objective by investing  primarily in gold, platinum
        and silver  bullion and a global  portfolio of  securities  of companies
        involved directly or indirectly in mining, processing or dealing in gold
        or other precious  metals.  Generally,  at least 65% of the Fund's total
        assets  will be  invested  in (i) equity  securities  (including  common
        stocks,  convertible  securities  and  warrants) of  companies  involved
        directly or indirectly in mining, processing or dealing in gold or other
        precious metals, (ii) gold, platinum and silver bullion,  and (iii) gold
        coins.  Additionally,  the Fund may invest up to 35% of its total assets
        in securities  of companies  that own or develop  natural  resources and
        other basic  commodities,  securities of selected growth companies,  and
        securities   issued   by  the   U.S.   Government,   its   agencies   or
        instrumentalities.

        Natural resources include ferrous and non-ferrous  metals (such as iron,
        aluminum and copper), strategic  metals (such as uranium and  titanium),



<PAGE>



          hydrocarbons (such as coal, oil and natural gases), chemicals,  forest
          products,  real estate,  food  products  and other basic  commodities,
          which  historically have been produced and marketed  profitably during
          periods of rising  inflation.  Selected growth  companies in which the
          Fund may invest  typically have earnings or tangible  assets which are
          expected  to grow faster than the rate of  inflation  over time.  When
          seeking to achieve its  secondary  objective of income,  the Fund will
          normally  invest in  investment  grade fixed income  securities  (junk
          bonds).


          The Fund may invest in certain  derivatives  such as options,  futures
          and forward currency contracts.  Derivatives are financial instruments
          that derive their values from other  securities or commodities or that
          are based on indices.  The Fund may engage in  leverage  by  borrowing
          money  for  investment  purposes.  The Fund  also  may lend  portfolio
          securities  to  other  parties  and  may  engage  in  short   selling.
          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  and invest some or all of its assets in
        cash and cash  equivalents,  money market securities of U.S. and foreign
        issuers, short-term bonds, repurchase agreements, and convertible bonds.
        When the Fund  takes such a  temporary  defensive  position,  it may not
        achieve its investment objective.


Principal Risks
- --------------------------------------------------------------------------------

        The  Fund's  investments  are  linked  to the  prices  of gold,  silver,
        platinum and other natural 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 or more of the major sources of gold,  silver,
        platinum and other natural resources could have a substantial  effect on
        supply and demand in countries throughout the world.

        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.

          The Fund may invest up to 35% of its assets in fixed income securities
          rated below investment grade,  although it has no current intention of
          investing  more than 5% of its  assets in such  securities  during the
          coming year.  These  securities  may be subject to certain  risks with
          respect to the issuing entity and to the greater  market  fluctuations
          and certain lower yielding, higher rated fixed income securities.

        For additional  principal risks associated with the Fund,  please read
        "Additional Principal Investment Risks" on page 11.


     MIDASMAGIC seeks long term capital appreciation.  The Fund seeks to achieve
          this objective by investing  primarily in equity securities.  The Fund
          will  purchase  primarily  common  stocks,   which  will  be  selected
          generally  for their  potential  for long term  capital  appreciation.
          Generally,  the Fund will  invest in  companies  expected  to  achieve
          above-average    growth,   which   have   small,   medium   or   large
          capitalizations  and whose earnings or revenue prospects are improving
          as  a  result  of  management,   technology,   regulation,   financial
          structure,  or other  special  situations.  The Fund  will  invest  in
          companies  whose  improving  prospects  are getting  increased  market
          recognition and whose shares have good relative upward price momentum.
          The Fund will  normally  sell  it's  investments  in a  company  whose
          prospects  fall  short or whose  share  price  either  has  risen to a
          valuation that unduly increases risk levels or, conversely,  no longer
          has good relative upward price momentum.

          In  attempting  to  achieve  capital  appreciation,  the Fund  employs
          aggressive and speculative investment strategies.  The Fund may invest
          in certain  derivatives such as options,  futures and forward currency
          contracts.  Derivatives  are financial  instruments  that derive their
          values  from  other  securities  or  commodities  or that are based on
          indices.  The Fund may  engage  in  leverage  by  borrowing  money for
          investment  purposes.  The Fund also may lend portfolio  securities to
          other parties and may engage in short selling.  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  and invest some or all of its assets in
        cash and cash  equivalents,  money market securities of U.S. and foreign
        issuers, short-term bonds, repurchase agreements, and convertible bonds.
        When the Fund  takes such a  temporary  defensive  position,  it may not
        achieve its investment objective.




<PAGE>




Principal Risks
- --------------------------------------------------------------------------------

        The Fund is subject to market risk related to  fluctuations in the value
        of the Fund's  portfolio.  A risk of  investing  in stocks is that their
        value will go up and down  reflecting  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 need not pay dividends.

          The  Fund  may  engage  in  short-selling   and  options  and  futures
          transactions  to  increase  returns.   There  is  a  risk  that  these
          transactions  sometimes may reduce returns or increase volatility.  In
          addition,  derivatives,  such as options and futures can be liquid and
          highly sensitive to changes in their underlying  securities,  interest
          rate  or  index,  and as a  result  may be  highly  volatile.  A small
          investment  in  certain  derivatives  could have a  potentially  large
          impact on the Fund's performance.

          For additional  principal risks associated with the Fund,  please read
          "Additional Principal Investment Risks" on page 11.


MIDAS SPECIAL  EQUITIES  FUND  seeks  capital  appreciation.  The  Fund  invests
        primarily in equity  securities,  often involving special situations and
        emerging growth companies. The Fund seeks to invest in equity securities
        of companies with optimal  combinations  of growth in earnings and other
        fundamental factors,  while also offering reasonable valuations in terms
        of price/earnings,  price/cash flow, price/sales and similar ratios. The
        Fund may invest in  domestic  or  foreign  companies  which have  small,
        medium or large capitalizations.

          In  attempting  to  achieve  capital  appreciation,  the Fund  employs
          aggressive and speculative investment strategies.  The Fund may invest
          in certain  derivatives such as options,  futures and forward currency
          contracts.  Derivatives  are financial  instruments  that derive their
          values  from  other  securities  or  commodities  or that are based on
          indices.  The Fund may  engage  in  leverage  by  borrowing  money for
          investment  purposes.  The Fund also may lend portfolio  securities to
          other parties and may engage in short selling.  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  and invest some or all of its assets in
        cash and cash  equivalents,  money market securities of U.S. and foreign
        issuers, short-term bonds, repurchase agreements, and convertible bonds.
        When the Fund  takes such a  temporary  defensive  position,  it may not
        achieve its investment objective.


Principal Risks
- --------------------------------------------------------------------------------

        The Fund is subject to market risk related to  fluctuations in the value
        of the Fund's  portfolio.  A risk of  investing  in stocks is that their
        value will go up and down  reflecting  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 need not pay dividends.

        The  Fund   may  engage  in  short-selling   and  options   and  futures
        transactions   to   increase  returns.   There  is  a  risk  that  these
        transactions  sometimes may  reduce returns or  increase volatility.  In
        addition,  derivatives,  such as options  and  futures,  can be illiquid
        and highly sensitive to  changes in their underlying  security, interest
        rate  or  index,  and  as a  result  can  be  highly  volatile.  A small
        investment  in  certain  derivatives  could  have  a  potentially  large
        impact on the Fund's performance.

        For additional  principal risks associated with the Fund,  please read
        "Additional Principal Investment Risks" on page 11.


MIDAS   U.S. AND OVERSEAS FUND seeks to obtain the highest possible total return
        on its assets from long term growth of capital and from income. The Fund
        may  invest  substantially  all of its  assets in equity  securities  of
        issuers  located in foreign  countries  with developed  and/or  emerging
        markets.  The Fund may invest a portion of its assets in debt securities
        and in a  combination  of countries  which  include the U.S. and foreign
        markets.   Generally,   the  Fund  pays   dividends   annually   to  its
        shareholders.

        The Fund seeks to invest in equity  securities of companies with optimal
        combinations of growth in earnings and other fundamental factors,  while
        also  offering   reasonable   valuations  in  terms  of  price/earnings,
        price/cash  flow,  price/sales and similar ratios.  The Fund may sell an
        investment when the value or growth potential of the investment  appears
        limited or exceeded by other investment opportunities, when the issuer's
        investment no longer appears to meet the Fund's investment objective, or
        when the Fund must meet redemptions.

          The Fund may invest in  companies  which have  small,  medium or large
          capitalizations.  The Fund may invest in certain  derivatives  such as
          options,  futures  and forward  currency  contracts.  Derivatives  are
          financial  instruments  that derive their values from other securities
          or  commodities  or that are based on indices.  The Fund may engage in
          leverage by borrowing money for investment purposes. The Fund also may
          lend  portfolio  securities  to other  parties and may engage in short
          selling.  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  and invest some or all of its assets in
        cash and cash  equivalents,  money market securities of U.S. and foreign
        issuers, short-term bonds, repurchase agreements, and convertible bonds.
        When the Fund  takes such a  temporary  defensive  position,  it may not
        achieve its investment objective.



<PAGE>


Principal Risks
- --------------------------------------------------------------------------------

        The Fund is subject to market risk related to  fluctuations in the value
        of the Fund's  portfolio.  A risk of  investing  in stocks is that their
        value will go up and down  reflecting  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 need not pay dividends.

        For additional  principal risks associated with the Fund,  please read
        "Additional Principal Investment Risks" on page 11.


DOLLAR RESERVES seeks maximum  current income  consistent  with  preservation of
        capital and  maintenance of liquidity.  The Fund invests  exclusively in
        obligations of the U.S. Government,  its agencies and  instrumentalities
        ("U.S. Government Securities").  The U.S. Government Securities in which
        the Fund may invest  include U.S.  Treasury  notes and bills and certain
        agency  securities  that are  backed by the full faith and credit of the
        U.S.  Government.  The Fund also may invest  without limit in securities
        issued by U.S. Government agencies and  instrumentalities  that may have
        different degrees of government  backing as to principal or interest but
        which  are  not  backed  by the  full  faith  and  credit  of  the  U.S.
        Government.

        The  Fund is a money  market  fund  and as such is  subject  to  certain
        specific SEC rule requirements.  Among other things, the Fund is limited
        to investing  in U.S.  dollar-denominated  instruments  with a remaining
        maturity of 397 days or less (as calculated  pursuant to Rule 2a-7 under
        the Investment Company Act of 1940).

        The Fund may invest in securities  which have variable or floating rates
        of interest.  These  securities  pay interest at rates that are adjusted
        periodically according to a specified formula, usually with reference to
        an interest rate index or market  interest  rate.  Variable and floating
        rate  securities  are  subject to  changes in value  based on changes in
        market  interest  rates  or  changes  in  the  issuer's  or  guarantor's
        creditworthiness.

        The Fund may borrow money from banks for temporary or emergency purposes
        (not for  leveraging or  investment) up to one-third of the Fund's total
        assets.

        Pursuant to an agency  arrangement  with an affiliate of its  Custodian,
        the Fund may lend  portfolio  securities  or other  assets  through such
        affiliate for a fee to other parties. The Fund's agreement requires that
        the  loans  be  continuously  secured  by  cash,  securities  issued  or
        guaranteed by the U.S. Government, its agencies or instrumentalities, or
        any combination of cash and such securities,  as collateral equal at all
        times  to at  least  the  market  value  of the  assets  lent.  Loans of
        portfolio  securities  may not  exceed  one-third  of the  Fund's  total
        assets.  Loans will be made only to borrowers deemed to be creditworthy.
        Any loan  made by the Fund will  provide  that it may be  terminated  by
        either party upon reasonable notice to the other party.


          For additional  principal risks associated with the Fund,  please read
          "Additional Principal Investment Risks" on page 11.


ADDITIONAL PRINCIPAL INVESTMENT RISKS

Some  additional  principal  risks that apply to all of the Funds (except Dollar
Reserves) are:

        SMALL  CAPITALIZATION.  Each Fund may invest in companies that are small
        or thinly  capitalized,  and may have a  limited  operating  history.  A
        potential risk in investing in small-cap stocks is that small-cap stocks
        are likely more vulnerable than larger  companies to adverse business or
        economic  developments.  During broad market downturns,  Fund values may
        fall further  than that of funds  investing  in larger  companies.  Full
        development of small-cap  companies takes time, and for this reason each
        Fund should be considered a long term  investment  and not a vehicle for
        seeking short term profit.

        FOREIGN INVESTMENT. Each  Fund  can be exposed  to  the unique  risks of
        foreign  investing. Political  turmoil  and economic instability  in the


<PAGE>



        countries in  which a Fund invests  could  adversely affect the value of
        your  investment.  Also, if the value of any foreign currency in which a
        Fund's  investment is 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  the potential for inadequate  or  inaccurate
        financial   information   about  companies, political  disturbances, and
        wider  fluctuations  in currency  exchange rates.

     NON-DIVERSIFICATION.  Each Fund is  non-diversified  which  means  that the
     proportion of the Fund's assets that may be invested in the securities of a
     single  issuer is not  limited  by the 40 Act. A  "diversified"  investment
     company is required by the 40 Act,  generally,  with  respect to 75% of its
     total assets, to invest not more than 5% of its assets in the securities of
     a single issuer.  As a result,  a 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.

     SHORT-SELLING AND OPTIONS AND FUTURES TRANSACTIONS. Each Fund may engage in
     short-selling  and options and futures  transactions  to increase  returns.
     There is a risk that these  transactions  sometimes  may reduce  returns or
     increase volatility. In addition, derivatives, such as options and futures,
     can be  illiquid  and  highly  sensitive  to  changes  in their  underlying
     security, interest rate or index, and as a result can be highly volatile. A
     small  investment in certain  derivatives  could have a  potentially  large
     impact on the Fund's performance.

     LEVERAGE.  Leveraging  (buying securities using borrowed money) exaggerates
     the effect on net asset  value of any  increase  or  decrease in the market
     value of a Fund's  investment.  Money borrowed for leveraging is limited to
     33 1/3% of the value of each Fund's total assets. These borrowings would be
     subject  to  interest   costs  which  may  or  may  not  be   recovered  by
     appreciation of the securities purchased.

        ACTIVE TRADING. Each Fund may trade  securities actively. This  strategy
        could increase transaction costs, reduce performance and may result in
        taxable distributions.

        ILLIQUID  SECURITIES.  Each Fund may invest up to 15% of their assets in
        illiquid  securities.  A  potential  risk  from  investing  in  illiquid
        securities is that illiquid  securities cannot be disposed of quickly in
        the normal course of business.  Also,  illiquid  securities  can be more
        difficult  to value than more widely  traded  securities  and the prices
        realized from their sale may be less than if such  securities  were more
        widely traded.


All of the Funds are subject to the principal risks associated with:

        Interest Rates.  Fixed-income investments are affected by interest rates
        to which each of the Funds is exposed.  When  interest  rates rise,  the
        prices of bonds typically fall in proportion to their maturities.

        Lending. All of the Funds may lend portfolio securities to borrowers for
        a fee.  Securities  may only be lent if the  Funds  received  collateral
        equal to the market value of the assets lent. Some risk is involved if a
        borrower suffers  financial  problems and is unable to return the assets
        lent.

        Portfolio   Management.   The  portfolio  manager's  skill  in  choosing
        appropriate  investments  for the Funds  will  determine  in large  part
        whether the Funds achieve their investment objectives.

        Year 2000.  Each 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 Funds. While the Funds cannot,  at this time,  predict the
        degree of impact,  it is  possible  that  foreign  markets  will be less
        prepared than U.S. markets.


                              PORTFOLIO MANAGEMENT

Midas Management  Corporation is the investment manager of each of the Funds. It
provides day-to-day advice regarding portfolio transactions for each Fund except
Midas Fund.  The  investment  manager also furnishes or obtains on behalf of the
Fund 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.

Steven  A.  Landis       is the portfolio manager of Dollar Reserves. He is also
                         a Senior Vice  President of the  investment manager and
                         the Fund. He has served  as  portfolio  manager  of the
                         Fund since April 1995. From 1993 to  1995,  he  was  an
                         Associate  Director of Proprietary  Trading at Barclays
                         de Zoete Wedd Securities Inc.


<PAGE>


Kjeld Thygesen           is the  portfolio manager of Midas  Fund together  with
                         the investment  manager's  Investment Policy Committee.
                         The investment  manager  has  retained  Lion   Resource
                         Management  Limited ("Lion") to serve as subadviser and
                         provide    day-to-day   advice   regarding    portfolio
                         transactions for Midas Fund. Mr. Thygesen has served as
                         a   Managing   Director   of  Lion  since   1989.   The
                         subadviser's  principal  business  address  is  7  -  8
                         Kendrick Mews, London, U.K. SW7 3HG.

Bassett S. Winmill       is the  portfolio  manager of  Midas Magic.  He  is the
                         Chief Investment Officer of the investment manager  and
                         a director of the Fund.  He has served as the portfolio
                         manager of the Fund  since  February  2, 1999.  He is a
                         member of the New York  Society of  Security  Analysts,
                         the Association for Investment  Management and Research
                         and the International Society of Financial Analysts.

Thomas  B.  Winmill      is  the  portfolio  manager  of Midas  Investors, Midas
                         Special  Equities Fund,  and  Midas U.S.  and  Overseas
                         Fund. He is the President and Chief  Executive  Officer
                         of the investment manager and the Funds.  He has served
                         as a member of  the  investment  manager's   Investment
                         Policy  Committee  since  1990.  As  a  member  of  the
                         Investment Policy Committee, he helps establish general
                         investment  guidelines.  He  has  served  as  portfolio
                         manager of the Funds since May 1, 1998.


                                 MANAGEMENT FEES

Each Fund pays a  management  fee to the  investment  manager  of the Fund at an
annual  rate based on its average  daily net assets.  Midas Fund and Midas Magic
pay 1.00% on the first  $200  million  of average  daily net  assets,  declining
thereafter.  Midas  Investors,  Midas Special  Equities Fund, and Midas U.S. and
Overseas  Fund pay 1.00% on the first $10  million of average  daily net assets,
declining  thereafter.  Dollar  Reserves pays 0.50% on the first $250 million of
average  daily net  assets,  declining  thereafter.  For the  fiscal  year ended
December 31, 1998,  Midas Fund,  Midas Magic,  Midas  Investors,  Midas  Special
Equities  Fund,  Midas  U.S.  and  Overseas  Fund and Dollar  Reserves  paid the
investment  manager a fee of  1.00%,  1.00%,  1.00%,  0.87%,  1.00%  and  0.38%,
respectively, of the Fund's average daily net assets.


                      DISTRIBUTION AND SHAREHOLDER SERVICES

Investor Service Center,  Inc.  provides the Funds  distribution and shareholder
services.  Each of the Funds has  adopted a plan  under  Rule 12b-1 and pays the
distributor  a  12b-1  fee as  compensation  for  distribution  and  shareholder
services  based on the Fund's  average daily net assets,  as shown below.  These
fees are paid out of the Fund's assets on an ongoing-basis. Over time these fees
will  increase  the cost of your  investment  and may cost you more than  paying
other types of sales charges.

Dollar Reserves, Midas Fund and Midas Magic each pays a 12b-1 fee equal to 0.25%
per  annum  of  the  Fund's  average  daily  net  assets.  Based  on a one  year
contractual  agreement which may be renewed,  Midas Investors and Midas U.S. and
Overseas  Fund each  pays a 12b-1  fee  equal to 0.25%  per annum of the  Fund's
average daily net assets. Without the agreement, each of these Funds would pay a
12b-1 fee equal to 1.00% per annum of the Fund's average daily net assets. Midas
Special  Equities  Fund pays a 12b-1 fee equal to 1.00% per annum of the  Fund's
average daily net assets.


                                PURCHASING SHARES

Your  price  for  Fund  shares  (except  Dollar  Reserves)  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. With respect to
Dollar Reserves,  orders are executed at the Fund's next calculation,  after the
order is placed, of net asset value (NAV) per share which is determined as of 11
a.m.  eastern time and 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.
Purchase  orders  submitted in proper form along with  payment in Federal  funds
available  to the  Fund  for  investment  by 11 a.m.  eastern  time on any  Fund
business day will be of record at the close of business that day and entitled to
receive that day's  dividends.  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 or under the direction of 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 drawn to the order of the Fund, to
Investor  Service  Center,  P.O. Box 219789,  Kansas City,  MO  64121-9789  (see
Minimum Investments below).  Checks must be payable to the Fund in U.S. dollars.
Third party checks  cannot be accepted.  You will be charged a fee for any check
that does not clear.


<PAGE>


By wire.  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 Fund account number, call 1-800-400-MIDAS  (6432) between 9 a.m. and 5 p.m. on
business  days,to speak with an Investor  Service  Representative.  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;  name of 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, P.O. Box 219789, Kansas City, MO
64121-9789.  This service is not available on days when the Federal Reserve wire
system is closed (see Minimum Investments below). For automated 24 hour service,
call toll-free 1-888-503-VOICE (8642) or visit www.midasfunds.com.

                               Minimum Investments


Account Type                           Initial                  Subsequent
=============================  ========================  =======================
Regular                                 $1,000                     $100
- -----------------------------  ------------------------  -----------------------
UGMA/UTMA                               $1,000                     $100
- -----------------------------  ------------------------  -----------------------
 403(b) plan                            $1,000                     $100
- -----------------------------  ------------------------  -----------------------
Automatic Investment
Program                                  $100                      $100
- -----------------------------  ------------------------  -----------------------

IRA Accounts                           Initial                  Subsequent
=============================  ========================  =======================
Traditional, Roth IRA                   $1,000                     $100
- -----------------------------  ------------------------  -----------------------
Spousal, Rollover IRA                   $1,000                     $100
- -----------------------------  ------------------------  -----------------------
Education                                $500                      N/A
- -----------------------------  ------------------------  -----------------------
IRA SEP/SAR-SEP IRA,
SIMPLE IRA                              $1,000                     $100
- -----------------------------  ------------------------  -----------------------



IRAs  and  retirement  accounts.  For more  information  about  IRAs and  403(b)
accounts,  please call  1-800-400-MIDAS  (6432).  For automated 24 hour service,
call toll-free 1-888-503-VOICE (8642) or visit www.midasfunds.com.

Midas  Funds  Automatic  Investment  Program.  With the  Midas  Funds  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 above are waived for each plan since they are designed to facilitate
an automatic monthly investment of $100 or more into your Fund account.


                    Midas Funds Automatic Investment Program

Plan                                                           Description
- ------------------------------------ -------------------------------------------
Midas Funds Bank Transfer Plan          For making automatic investments from a
                                        designated bank account.
- ------------------------------------ -------------------------------------------
Midas Funds Salary Investing Plan       For making automatic investments through
                                        a payroll deduction.
- ------------------------------------ -------------------------------------------
Midas Funds Government Direct           For  making  automatic  investments from
Deposit Plan                            your federal employment, Social Security
                                        or  other  regular   federal  government
                                        check.
- ------------------------------------ -------------------------------------------

Each of the Funds 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,  call
1-800-400-MIDAS  (6432) between 9 a.m. and 5 p.m. on business days,to speak with
an Investor Service Representative.  You may modify or terminate the Midas Funds
Bank Transfer Plan at any time by written  notice  received 10 days prior to the
scheduled  investment  date.  To modify or  terminate  the  Midas  Funds  Salary
Investing Plan or Midas Funds 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 Funds  FastDeposit form and mail it, along with your
check,  drawn to the order of the Fund,  to Investor  Service  Center,  P.O. Box
219789,  Kansas City, MO 64121-9789 (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,  the name of the Fund and the name of
the registered owner.

By  Electronic  Funds  Transfer  (EFT).  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).  To speak with an Investor Service  Representative  between 9 a.m. and 5
p.m. on business days, call 1-800-400-MIDAS (6432).


<PAGE>



By wire.  Subsequent  investments by wire may be made at any time without having
to call by simply  following  the same wiring  procedures  under  "Opening  Your
Account" (see Minimum Investments above).


                                REDEEMING SHARES

Generally,  you may redeem  shares of the Funds by any of the methods  explained
below. Requests for redemption should include the following information:

  o name(s) of the  registered  owner(s) of the account
  o account  number
  o Fund name
  o amount you want to sell (number of shares or dollar amount)
  o  name and address or wire information of person to receive proceeds

In some instances,  a signature guarantee may be required.  Signature guarantees
protect against  unauthorized  account transfers by assuring that a signature is
genuine.  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.  To
speak with an  Investor  Service  Representative  between 9 a.m.  and 5 p.m.  on
business days, call 1-800-400-MIDAS (6432).

By mail.  Write to Investor  Service  Center,  P.O. Box 219789,  Kansas City, MO
64121-9789,  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.  To speak with an Investor Service  Representative  between 9 a.m.
and 5 p.m.  on  business  days,  call  1-800-400-MIDAS  (6432) to  expedite  the
redemption  of Fund  shares.  For  automated  24 hour  service,  call  toll-free
1-888-503-VOICE (8642) or visit www.midasfunds.com.

By 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. To request the specific  amount to be redeemed  through EFT, call
1-800-400-MIDAS  (6432) between 9 a.m. and 5 p.m. on business days,to speak with
an  Investor  Service  Representative.  For  automated  24  hour  service,  call
toll-free 1-888-503-VOICE (8642) or visit www.midasfunds.com.

By  wire.  To  request  the  specific  amount  to  be  redeemed  by  wire,  call
1-800-400-MIDAS  (6432) to speak with an Investor Service Representative between
9 a.m.  and 5 p.m.  on  business  days.  For  automated  24 hour  service,  call
toll-free 1-888-503-VOICE (8642) or visit www.midasfunds.com.

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.

Check Writing Privilege for Easy Access.  Upon request,  you may establish free,
unlimited  check  writing  privileges  with only a $250  minimum  per check,  by
exchanging a minimum of $500 into Dollar Reserves. In addition to providing easy
access to your account,  it enables you to continue  receiving  dividends  until
your check is  presented  for  payment.  You will be subject to a $20 charge for
refused  checks,  which may change  without  notice.  To speak with an  Investor
Service  Representative  between  9  a.m.  and 5 p.m.  on  business  days,  call
1-800-400-MIDAS   (6432).   For  automated  24  hour  service,   call  toll-free
1-888-503-VOICE (8642) or visit www.midasfunds.com.


                        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. With respect to all
the Funds except  Dollar  Reserves,  orders  received on Fund business days by 4
p.m.,  eastern time,  will be executed that day.  Orders  received after 4 p.m.,
eastern  time,  will be executed on the next Fund  business day. With respect to
Dollar Reserves,  orders are executed at the Fund's next calculation,  after the
order is placed, of net asset value (NAV) per share which is determined as of 11
a.m.  eastern time and 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.
Purchase  orders  submitted in proper form along with  payment in Federal  funds
available  to the  Fund  for  investment  by 11 a.m.  eastern  time on any  Fund
business day will be of record at the close of business that day and entitled to
receive that day's dividends.

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 retained
by the Fund.



<PAGE>



Redemption  payment.  Payment for shares redeemed will ordinarily be made within
three  business  days after  receipt of the  redemption  request in proper form.
Redemption  proceeds  from  shares  purchased  by check or EFT  transfer  may be
delayed 15 business days to allow the check or transfer to clear.

Accounts with below-minimum balances. You will be charged a $2.00 account fee if
your  monthly  balance is less than $500,  unless you  participate  in the Midas
Funds Automatic  Investment Program. 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.  The Fund reserves the right to close your account if you terminate
your  participation  in the Midas Funds  Automatic  Investment  Program and your
account value is less than $1,000.

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
if the Fund followed reasonable procedures.

Assignment.   You  may  transfer  your  Fund  shares  to  another   owner.   For
instructions,  call 1-800-400-MIDAS (6432) between 9 a.m. and 5 p.m. on business
days to speak with an Investor Service Representative.


                             DISTRIBUTIONS AND TAXES

Distributions.  The Fund pays its shareholders dividends from any net investment
income and  distributes  net capital gains that it has realized,  if any. Income
dividends  are normally  declared and paid annually for each of the Funds except
Dollar Reserves.  Dollar Reserves  declares income dividends daily and pays them
monthly. Each of these distributions,  if any, is normally paid out once a year,
except  in the  case of  Dollar  Reserves,  which  is  paid  out  monthly.  Your
distributions  will be  reinvested  in the Fund  unless  you  instruct  the Fund
otherwise. To speak with an Investor Service Representative between 9 a.m. and 5
p.m. on business  days,  call  1-800-400-  MIDAS  (6432).  For automated 24 hour
service, call toll-free 1-888-503-VOICE (8642) or visit www.midasfunds.com.

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      Capital gains or losses
more than one year
- ------------------------------------------ -------------------------------------
Sales or exchanges of shares held for      Gains are treated as ordinary income;
one year or less                           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 distribution  which  normally  takes place in December.  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.


                              FINANCIAL HIGHLIGHTS

The following  tables describe the Funds'  performances for the past five years.
Each  Fund's  fiscal  year end is  December  31. The fiscal  year end for Dollar
Reserves,  Midas  Investors,  and Midas  Magic was changed to December 31 during
1998. Previously,  the fiscal year end for Dollar Reserves, Midas Investors, and
Midas  Magic  was  June  30,  June  30 and  October  31,  respectively.  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 for Midas Fund,
Inc., and 1996 through 1998 for Midas Magic,  Inc., were audited by Tait, Weller
& Baker, the Funds' independent accountants, whose report, along with the Funds'
financial  statements,  are included in the Annual Reports,  which are available
upon request.



<PAGE>

<TABLE>
<CAPTION>

                                   MIDAS FUND
______________________________________________________________________________________________________________________________
                                                                                Years Ended December 31,

                                                              1998*           1997*         1996*         1995*          1994
                                                              -----           -----         -----         -----          ----
PER SHARE DATA
<S>                                                           <C>             <C>           <C>           <C>           <C>
Net asset value at 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)                    (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 at 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 at end of period (000's omitted)...............   $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>


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


<TABLE>
<CAPTION>
                                 MIDAS INVESTORS
___________________________________________________________________________________________________________________________________
                                                    Six Months Ended
                                                     December 31,*                      Years Ended June 30,

                                                         1998          1998         1997           1996        1995          1994
                                                         ----          ----         ----           ----        ----          ----
PER SHARE DATA*
<S>                                                      <C>           <C>         <C>            <C>         <C>           <C>
Net asset value at beginning of period..............     $3.67         $7.14       $14.02         $13.13      $15.71        $16.98
                                                         -----         -----       ------         ------      ------        ------
Income from investment operations:
   Net investment loss..............................      (.04)         (.12)        (.25)          (.22)      --             (.11)
   Net realized and unrealized gain (loss)..........      (.81)        (2.94)       (4.36)          2.72       (1.13)        (1.05)
                                                          -----        ------       ------          ----       ------        ------
      Total from investment operations..............      (.85)        (3.06)       (4.61)          2.50       (1.13)        (1.16)
                                                          -----        ------       ------          ----       ------        ------
Less distributions:
   Distributions from net realized gains............     --             (.41)       (2.27)         (1.61)      (1.45)         (.11)
      Total distributions...........................     --             (.41)       (2.27)         (1.61)      (1.45)         (.11)
                                                                        -----       ------         ------      ------         -----
Net asset value at end of period....................     $2.82         $3.67        $7.14         $14.02      $13.13        $15.71
                                                         =====         =====        =====         ======      ======        ======
TOTAL RETURN........................................   (23.16)%      (43.45)%     (37.81)%        21.01%      (8.01)%       (6.92)%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted).........    $6,293        $8,324       $15,217        $27,485     $29,007       $36,603
Ratio of expenses to average net assets(a)(b).......    4.32%**        3.88%        2.94%          3.05%       2.93%         2.57%
Ratio of net investment income (loss) to
   average net assets...............................   (2.50)%**      (2.40)%      (2.06)%        (1.61)%      0.01%        (.68)%
Portfolio turnover rate.............................      36%          136%          37%            61%        158%          129%
<FN>
* Per share net investment  loss and unrealized  gain (loss) on investment  have
been computed using the average number of shares outstanding. These computations
had no effect on net asset value per share. ** Annualized.  (a) Ratios excluding
interest expense were 3.96%**,  3.57%,  2.77%,  2.93%, 2.82%, and 2.54%, for the
six months  ended  December  31, 1998 and the years ended June 30,  1998,  1997,
1996,  1995,  and 1994,  respectively.  (b) Ratio  after  custodian  credits was
4.30%** and 3.82% for the six months ended  December 31, 1998 and the year ended
June 30, 1998, respectively.
</FN>
</TABLE>



<PAGE>



<TABLE>
<CAPTION>

                                  MIDAS MAGIC
____________________________________________________________________________________________________________________________________
                                                  Two Months Ended
                                                    December 31,                             Years Ended October 31,

                                                        1998          1998         1997          1996          1995          1994
                                                        ----          ----         ----          ----          ----          ----
PER SHARE DATA*
<S>                                                     <C>          <C>           <C>           <C>           <C>          <C>
Net asset value at beginning of period............      $15.67       $24.92        $24.24        $18.73        $16.61       $16.32
                                                        ------       ------        ------        ------        ------       ------
Income from investment operations:
   Net investment loss............................        (.04)        (.25)         (.59)         (.56)         (.31)        (.22)
   Net realized and unrealized gain (loss)........         .98        (7.20)         6.17          6.07          2.43          .51
                                                           ---        ------         ----          ----          ----          ---
         Total from investment operations.........         .94        (7.45)         5.58          5.51          2.12          .29
                                                           ---        ------         ----          ----          ----         ----
Less distributions:
   Distributions from net realized gains..........       (2.04)       (1.80)        (4.90)          .00           .00          .00
                                                         ------       ------        ------          ---           ---          ---
      Total distributions.........................       (2.04)       (1.80)        (4.90)          .00           .00          .00
                                                         ------       ------        ------          ---           ---          ---
Net asset value at end of period..................      $14.57       $15.67        $24.92        $24.24        $18.73       $16.61
                                                        ======       ======        ======        ======        ======       ======
TOTAL RETURN......................................        6.48%      (31.29)%       27.55%        29.42%        12.76%        1.78%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted).......       $548          $613        $1,771        $1,200         $774          $714
Ratio of expenses to average net assets(a)(b).....      2.85%**        2.09%         2.81%         2.55%         2.30%        2.00%
Ratio of net investment loss to average net
   assets(c)......................................      (1.54)**      (1.38)%       (2.65%)       (2.23)%       (1.77)%      (1.38)%
Portfolio turnover rate...........................        0%           207%          44%           42%           30%          18%
<FN>
*Per  share  net  investment  loss  and  net  realized  and  unrealized  gain on
investments  have been computed using the average number of shares  outstanding.
These computations had no effect on net asset value per share. **Annualized. (a)
Ratio prior to  reimbursement  by the  investment  manager was 18.84%**,  9.27%,
10.47%,  4.44%, 3.00%, and 2.82%, for the two months ended December 31, 1998 and
the years ended October 31, 1998, 1997, 1996, 1995, and 1994, respectively.  (b)
Ratio after custodian fee credits was 1.97% for the year ended October 31, 1998.
There  were no  custodian  fee  credits  for prior  years.  (c)  Ratio  prior to
reimbursement  by  the  manager  was  (17.53)%**,  (8.56)%,  (10.31)%,  (4.12)%,
(2.47)%,  and (2.20)% for the two months  ended  December 31, 1998 and the years
ended October 31, 1998, 1997, 1996, 1995, and 1994, respectively.
</FN>
</TABLE>

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                          MIDAS SPECIAL EQUITIES FUND
____________________________________________________________________________________________________________________________________
                                                                                    Years Ended December 31,

                                                                  1998          1997           1996            1995           1994
                                                                  ----          ----           ----            ----           ----
PER SHARE DATA*
<S>                                                              <C>           <C>            <C>             <C>           <C>
Net asset value at beginning of period....................       $23.38        $22.96         $25.42          $19.11        $23.13
                                                                 ------        ------         ------          ------        ------
Income from investment operations:
   Net investment loss....................................        (.61)         (.38)          (.73)           (.81)         (.55)
   Net realized and unrealized gain (loss)................        (.65)         1.55           0.99            8.51         (3.28)
                                                                  -----         ----           ----            ----         ------
         Total from investment operations.................       (1.26)         1.17           0.26            7.70         (3.83)
                                                                 ------         ----           ----            ----         ------
Less distributions:
   Distributions from net realized gains..................       (1.78)         (.75)         (2.72)          (1.39)         (.19)
                                                                 ------         -----         ------          ------         -----
   Net increase (decrease) in net asset value.............       (3.04)          .42          (2.46)           6.31         (4.02)
Net asset value at end of period..........................      $20.34        $23.38         $22.96          $25.42        $19.11
                                                                ======        ======         ======          ======        ======
TOTAL RETURN..............................................       (5.00)%        5.23%          1.05%          40.47%        (16.54)%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted)...............       $36,807       $44,773        $49,840         $56,340       $45,614
Ratio of expenses to average net assets(a)(b).............        3.42%         2.81%          2.92%           3.67%         2.92%
Ratio of net investment loss to average net assets........       (2.57)%       (1.48)%        (2.81)%         (2.70)%       (2.43)%
Portfolio turnover rate...................................         97%          260%           311%            319%           309%
<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
excluding interest expense was 2.63%, 2.53%, 2.45% and 2.88% for the years ended
December 31, 1998,  1997,  1996 and 1995. (b) Expense ratio after  custodian fee
credits  was 3.41% and 2.79% for the years  ended  December  31,  1998 and 1997.
Prior to 1995,  such credits were reflected in the expense ratio.  There were no
custodian fee credits for 1996 and 1995.
</FN>
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                          MIDAS U.S. AND OVERSEAS FUND
____________________________________________________________________________________________________________________________________
                                                                                Years Ended December 31,

                                                                 1998          1997         1996         1995         1994
                                                                 ----          ----         ----         ----         ----
PER SHARE DATA*
<S>                                                             <C>           <C>           <C>         <C>           <C>
Net asset value at beginning of period.....................     $7.35         $7.91         $8.36       $7.08         $8.71
                                                                -----         -----         -----       -----         -----
Income from investment operations:
   Net investment loss.....................................      (.10)        (0.05)        (0.24)      (0.23)        (0.13)
   Net realized and unrealized gain (loss).................       .18          0.46          0.68        2.00         (1.01)
                                                                  ---          ----          ----        ----         ------
   Total from investment operations........................       .08          0.41          0.44        1.77         (1.14)
                                                                  ---          ----          ----        ----         ------
Less distributions:
   Distributions from net realized gains...................      (.26)        (0.97)        (0.89)      (0.49)        (0.49)
                                                                 -----        ------        ------      ------        ------
Net asset value at end of period...........................     $7.17         $7.35         $7.91       $8.36         $7.08
                                                                =====         =====         =====       =====         =====
TOTAL RETURN...............................................      1.18%         5.64%         5.34%      25.11%       (13.12)%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted)................     $7,340        $8,446       $9,836       $9,808       $8,454
Ratio of expenses to average net assets(a)(b)..............      3.33%         3.28%        3.20%        3.55%         3.53%
Ratio of net investment loss to average net assets(c)......     (1.38)%       (0.63)%      (2.74)%      (2.85)%       (1.65)%
Portfolio turnover rate....................................       69%           205%         255%         214%         212%
<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 3.84% and 3.59% for the
years ended  December 31, 1995 and 1994.  (b) Expense  ratio after the custodian
fee  credits  was  3.22%  and  3.49%  for 1997  and  1995.  Prior to 1995,  such
reductions  were  reflected in the expense  ratios.  There were no custodian fee
credits for 1998 and 1996.  (c) Ratio prior to  reimbursement  by the investment
manager was (3.14)% and (1.71)% for the years ended December 31, 1995 and 1994.
</FN>
</TABLE>


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

<TABLE>
<CAPTION>

                                 DOLLAR RESERVES
____________________________________________________________________________________________________________________________________
                                                   Six Months Ended
                                                      December 31,                             Years Ended June 30,

                                                           1998           1998        1997           1996        1995          1994
                                                           ----           ----        ----          ------      ------        -----
PER SHARE DATA
<S>                                                       <C>           <C>          <C>           <C>          <C>          <C>
Net asset value at beginning of period..............      $1.000        $1.000       $1.000        $1.000       $1.000       $1.000
Income from investment operations:
   Net investment income............................        .022          .048         .047          .047         .044         .026
Less distributions:
   Distributions from net investment income.........       (.022)        (.047)       (.047)         .047        (.044)       (.026)
   Distributions from paid-in capital                       --          ($.001)          --            --          --           --
                                                                       -------
Net asset value at end of period....................      $1.000        $1.000       $1.000        $1.000       $1.000       $1.000
                                                          ======        ======       ======        ======       ======       ======
TOTAL RETURN........................................       4.46%**       4.88%        4.83%         4.81%        4.53%        2.59%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted).........      $65,535       $61,602      $62,908       $62,467      $65,278      $76,351
Ratio of expenses to average net assets (a).........        .93%**        .86%         .71%          .90%         .89%         .89%
Ratio of net investment income to average net              4.43%**       4.71%        4.73%         4.70%        4.41%        2.56%
   assets (b).......................................
<FN>
**  Annualized.  (a)  Ratio  prior  to  waiver  by the  Investment  Manager  and
Distributor  was 1.30%**,  1.20%,  1.21%,  1.40%,  1.39%,  and 1.39% for the six
months ended  December 31, 1998 and the years ended June 30, 1998,  1997,  1996,
1995, 1994,  respectively.  (b) Ratio prior to waiver by the Investment  Manager
and Distributor was 4.06%**,  4.37%,  4.23%, 4.20%, 3.91%, and 2.06% for the six
months ended December 31, 1998, 1997, 1996, 1995, and 1994, respectively.
</FN>
</TABLE>



<PAGE>










                              FOR MORE INFORMATION

For  investors  who want more  information  on the Midas  Funds,  the  following
documents are available free upon request:

o  Annual/Semi-annual   reports.  Contains  performance  data,  lists  portfolio
   holdings and  contains a letter from the Funds'  managers  discussing  recent
   market  conditions,  economic trends and Fund  strategies that  significantly
   affected the Funds' performance during the last fiscal year.

o  Statement of Additional  Information  (SAI).  Provides a fuller technical and
   legal  description  of the  Funds'  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
- --------------------------------------------------------------------------------

o  By telephone, call
   1-800-400-MIDAS (6432)   to speak to an Investor Service Representative, 9:00
                             a.m. to 5:00 p.m. on business days, eastern time or
   1-888-503-VOICE (8642)   for 24 hour, 7 day a week automated shareholder
                              services.

o  By mail, write to:
   Midas Funds
   P.O. Box 219789
   Kansas City, MO 64121-9789

o  By e-mail, write to:
   [email protected]

o  On the Internet, Fund documents
   can be viewed online or downloaded from:
   SEC at http://www.sec.gov, or
   Midas Funds at http://www.midasfunds.com

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 Funds'  Investment  Company  Act file  numbers  are as follows:
811-04316 (Midas Fund);  811-00835 (Midas  Investors);  811-04534 (Midas Magic);
811-04625  (Midas Special  Equities  Fund);  811-04741  (Midas U.S. and Overseas
Fund) and 811-02474 (Dollar Reserves).





<PAGE>

Statement of Additional Information                                June 30, 1999









                        MIDAS U.S. AND OVERSEAS FUND LTD.
                                11 Hanover Square
                               New York, NY 10005
                             1-800-400-MIDAS (6432)





     Midas U.S. and Overseas Fund Ltd. ("Fund") is a  non-diversified,  open-end
management  investment  company  organized  as  a  Maryland  corporation.   This
Statement of Additional  Information  regarding the Fund is not a prospectus and
should be read in conjunction  with the Fund's  Prospectus  dated June 30, 1999.
The Prospectus is available to prospective investors without charge upon request
by calling 1-800-400-MIDAS (6432).






                                TABLE OF CONTENTS



THE FUND'S INVESTMENT PROGRAM..................................................2

INVESTMENT RESTRICTIONS........................................................3

OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT STRATEGIES......................4

THE INVESTMENT COMPANY COMPLEX................................................10

OFFICERS AND DIRECTORS........................................................10

INVESTMENT MANAGER............................................................11

INVESTMENT MANAGEMENT AGREEMENT...............................................11

DETERMINATION OF NET ASSET VALUE..............................................11

PURCHASE OF SHARES............................................................12

DISTRIBUTION OF SHARES........................................................14

ALLOCATION OF BROKERAGE.......................................................15

DISTRIBUTIONS AND TAXES.......................................................17

REPORTS TO SHAREHOLDERS.......................................................18

CUSTODIAN AND TRANSFER AGENT..................................................18

AUDITORS......................................................................18

FINANCIAL STATEMENTS..........................................................18

APPENDIX -- DESCRIPTIONS OF BOND RATINGS......................................19


                                        1

<PAGE>




                          THE FUND'S INVESTMENT PROGRAM

     The  following  information  supplements  the  information  concerning  the
investment  objective,  policies  and  limitations  of  the  Fund  found  in the
Prospectus.  The Fund is a Maryland corporation organized in 1986. Prior to June
30, 1999 and after  September 23, 1993,  the Fund operated under the name Bull &
Bear U.S.  and Overseas  Fund.  Prior to September  23,  1993,  the  Corporation
operated  under the name Bull & Bear U.S.  and  Overseas  Fund Ltd.  The Fund is
"non-diversified," as defined in the Investment Company Act of 1940

   Foreign  Securities.  Because  the Fund may  invest  in  foreign  securities,
investment  in the Fund  involves  investment  risks of  adverse  political  and
economic  developments  that are  different  from an  investment in a fund which
invests only in the securities of U.S.  issuers.  Such risks may include adverse
movements  in the market  value of foreign  securities  during days on which the
Fund's net asset value per share is not determined  (see  "Determination  of Net
Asset  Value"),   the  possible  imposition  of  withholding  taxes  by  foreign
governments on dividend or interest income payable on the securities held in the
portfolio, possible seizure or nationalization of foreign deposits, the possible
establishment   of  exchange   controls,   or  the  adoption  of  other  foreign
governmental  restrictions which might adversely affect the payment of dividends
or principal and interest on securities in the portfolio.

   The Fund may invest in foreign securities by purchasing  American  Depository
Receipts  ("ADRs"),  European  Depository  Receipts ("EDRs") or other securities
convertible  into  securities  of  issuers  based in  foreign  countries.  These
securities  may not  necessarily  be  denominated  in the same  currency  as the
securities  into which they may be  converted.  Generally,  ADRs,  in registered
form,  are  denominated  in U.S.  dollars and are  designed  for use in the U.S.
securities  markets,  while EDRs, in bearer form,  may be  denominated  in other
currencies  and are designed for use in European  securities  markets.  ADRs are
receipts typically issued by a U.S. bank or trust company  evidencing  ownership
of the underlying  securities.  EDRs are European receipts  evidencing a similar
arrangement.


Borrowing.  The  Fund  may  borrow  money  to the  extent  permitted  under  the
Investment  Company  Act of 1940,  as  amended,  ("40  Act")  which  permits  an
investment  company  to  borrow  in an  amount up to 33 1/3% of the value of its
total assets.  The Fund may incur  overdrafts at its custodian bank from time to
time in connection with redemptions and/or the purchase of portfolio securities.
In lieu of  paying  interest  to the  custodian  bank,  the  Fund  may  maintain
equivalent  cash balances prior or subsequent to incurring such  overdrafts.  If
cash  balances  exceed such  overdrafts,  the  custodian  bank credits  interest
thereon against fees.


   Illiquid Assets.  The Fund may not purchase or otherwise acquire any security
or invest in a repurchase agreement if, as a result, more than 15% of the Fund's
net assets would be invested in illiquid assets, including repurchase agreements
not  entitling  the holder to payment of principal  within seven days.  The term
"illiquid  assets" for this purpose includes  securities that cannot be disposed
of within seven days in the  ordinary  course of business at  approximately  the
amount at which the Fund has valued the securities.

   Illiquid  restricted  securities  may be sold by the Fund  only in  privately
negotiated  transactions  or in a  public  offering  with  respect  to  which  a
registration statement is in effect under the Securities Act of 1933, as amended
("1933 Act").  Such  securities  include those that are subject to  restrictions
contained in the  securities  laws of other  countries.  Where  registration  is
required,  the  Fund  may be  obligated  to pay all or part of the  registration
expenses and a  considerable  period may elapse between the time of the decision
to sell  and the time the Fund  may be  permitted  to sell a  security  under an
effective  registration  statement.  If,  during such a period,  adverse  market
conditions  were to develop,  the Fund might obtain a less favorable  price than
prevailed when it decided to sell.  Securities that are freely marketable in the
country where they are principally traded, but would not be freely marketable in
the U.S., are not included within the meaning of the term "illiquid assets."

   In recent  years a large  institutional  market  has  developed  for  certain
securities  that are not  registered  under  the  1933  Act,  including  private
placements,   repurchase  agreements,   commercial  paper,  foreign  securities,
municipal securities and corporate bonds and notes. Certain of these instruments
are often  restricted  securities  because the securities are either  themselves
exempt from  registration  or sold in transactions  not requiring  registration.
Institutional investors generally will not seek to sell these instruments to the
general   public,   but  instead  will  often  depend  either  on  an  efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment.  Therefore,  the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.

   Rule  144A  under  the  1933  Act   establishes  a  "safe  harbor"  from  the
registration  requirements of the 1933 Act for resales of certain  securities to
qualified  institutional buyers ("QIB's").  Institutional  restricted securities
markets may provide both readily  ascertainable values for restricted securities
and the ability to liquidate an investment in order to satisfy share  redemption
orders on a timely basis.  Such markets might include  automated systems for the
trading,  clearance and  settlement of  unregistered  securities of domestic and
foreign issuers, such as the PORTAL System sponsored by the National Association
of  Securities  Dealers,  Inc. An  insufficient  number of QIB's  interested  in
purchasing certain restricted securities held by the Fund, however, could affect
adversely the marketability of such portfolio securities,  and the Fund might be
unable to dispose of such securities  promptly or at favorable  prices resulting
in liquidity problems.

   The Board of  Directors  has  delegated  the  function  of making  day-to-day
determinations  of  liquidity  to  Midas  Management  Corporation   ("Investment
Manager")  pursuant to guidelines  approved by the Board. The Investment Manager
takes into  account a number of factors in  reaching  liquidity  determinations,
including  (1) the  frequency  of trades and quotes  for the  security,  (2) the
number of dealers  willing to  purchase or sell the  security  and the number of
other  potential  purchasers,  (3) dealer  undertakings  to make a market in the
security,  and the  nature of the  security  and the  nature of the  marketplace
trades  (e.g.,  the time  needed  to  dispose  of the  security,  the  method of
soliciting  offers  and the  mechanics  of  transfer).  The  Investment  Manager
monitors the  liquidity of  restricted  securities  in the Fund's  portfolio and
reports periodically on liquidity determinations to the Board of Directors.

   Lower Rated Debt  Securities.  The Fund is  authorized to invest up to 35% of
its total assets in debt securities  rated below investment  grade,  although it
has no current  intention of investing  more than 5% of its total assets in such
securities  during  the  coming  year.  Debt  securities  rated 'Ba' or lower by
Moody's  Investors  Service,  Inc.  ("Moody's")  and 'BB' or lower by Standard &
Poor's  Ratings  Group ("S&P") are  considered  below  investment  grade and are
commonly  referred to as "junk bonds".  Debt securities  rated below  investment
grade are deemed by these rating agencies to be  predominantly  speculative with
respect to the issuers'  capacity to pay interest  and repay  principal  and may
involve major risk exposure to adverse  conditions.  Debt securities rated lower
than B may  include  securities  that are in default or face the risk of default
with respect to principal or interest.

   Ratings of debt securities  represent the rating agencies' opinions regarding
their quality,  are not a guarantee of quality and may be reduced after the Fund
has acquired the security. The Investment Manager will consider such an event in
determining  whether the Fund should  continue to hold the  security  but is not
required to dispose of it.  Credit  ratings  attempt to  evaluate  the safety of
principal and interest payments and do not evaluate the risks of fluctuations in
market value.  Also,  rating  agencies may fail to make timely changes in credit
ratings in response to

                                        2

<PAGE>



subsequent events, so that an issuer's current financial condition may be better
or worse  than the rating  indicates.  See the  Appendix  to this  Statement  of
Additional  Information  for  further  information  regarding  S&P's and Moody's
ratings.

   Lower rated debt securities  generally offer a higher current yield than that
available  from higher grade issues.  However,  lower rated  securities  involve
higher risks, in that they are especially  subject to adverse changes in general
economic  conditions and in the industries in which the issuers are engaged,  to
adverse  changes  in the  financial  condition  of  the  issuers  and  to  price
fluctuations  in  response  to  changes in  interest  rates.  During  periods of
economic  downturn  or rising  interest  rates,  highly  leveraged  issuers  may
experience  financial  stress which could adversely affect their ability to make
payments of interest and principal and increase the  possibility of default.  In
addition,  the market for lower rated  securities has expanded rapidly in recent
years,  and its growth  paralleled a long economic  expansion.  In the past, the
prices of many lower rated debt securities declined substantially, reflecting an
expectation  that many issuers of such  securities  might  experience  financial
difficulties.  As a result,  the  yields on lower  rated  debt  securities  rose
dramatically,  but such  higher  yields did not  reflect the value of the income
stream  that  holders  of such  securities  expected,  but  rather the risk that
holders of such securities could lose a substantial  portion of their value as a
result of the  issuers'  financial  restructuring  or  default.  There can be no
assurance that such decline in price will not recur.  The market for lower rated
debt  securities  may be thinner and less  active  than that for higher  quality
securities,  which may limit the Fund's ability to sell such securities at their
fair  value in  response  to changes in the  economy or the  financial  markets.
Adverse publicity and investor perceptions,  whether or not based on fundamental
analysis,  may also decrease the values and liquidity of lower rated securities,
especially in a thinly traded market.

     U.S. Government  Securities.  The U.S.  government  securities in which the
Fund may invest  include  direct  obligations  of the U.S.  government  (such as
Treasury  bills,  notes and bonds)  and  obligations  issued by U.S.  government
agencies and  instrumentalities  backed by the full faith and credit of the U.S.
government,   such  as  those  issued  by  the  Government   National   Mortgage
Association.  In addition,  the U.S. government securities in which the Fund may
invest include securities  supported primarily or solely by the creditworthiness
of the  issuer,  such as  securities  issued by the  Federal  National  Mortgage
Association, the Federal Home Loan Mortgage Corporation and the Tennessee Valley
Authority. In the case of obligations not backed by the full faith and credit of
the  U.S.  government,   the  Fund  must  look  principally  to  the  agency  or
instrumentality  issuing or guaranteeing  the obligation for ultimate  repayment
and may not be able to assert a claim against the U.S.  government itself in the
event the agency or instrumentality does not meet its commitments.  Accordingly,
these  securities  may  involve  more  risk than  securities  backed by the U.S.
government's full faith and credit.

   Foreign Government Securities. The foreign government securities in which the
Fund may invest generally consist of obligations supported by national, state or
provincial  governments or similar political  subdivisions.  Foreign  government
securities  also include  debt  obligations  of  supranational  entities,  which
include  international  organizations  designated  or supported by  governmental
entities  to  promote  economic  reconstruction  or  development,  international
banking  institutions  and related  government  agencies.  Examples  include the
International  Bank for  Reconstruction  and Development  (the World Bank),  the
European  Coal  and  Steel  Community,   the  Asian  Development  Bank  and  the
Inter-American Development Bank. Foreign government securities also include debt
securities of  "quasi-governmental  agencies" and debt securities denominated in
multinational  currency units (such as the European  Currency Unit) of an issuer
(including supranational issuers).

   Preferred  Securities.  The Fund may invest in  preferred  stocks of U.S. and
foreign issuers.  Such equity securities  involve greater risk of loss of income
than debt  securities  because  issuers are not obligated to pay  dividends.  In
addition,  equity  securities are subordinate to debt  securities,  and are more
subject to changes in economic  and  industry  conditions  and in the  financial
conditions of the issuers of such securities.

   Reverse  Repurchase  Agreements.  Although  it has no  intention  of doing so
during its  current  fiscal  year,  the Fund may enter into  reverse  repurchase
agreements with banks.  Such  agreements  involve the sale of securities held by
the Fund subject to its agreement to repurchase the securities  held by the Fund
at an  agreed-upon  date and price  reflecting a market rate of  interest.  Such
agreements  are  considered  to be  borrowings.  All  borrowings by the Fund are
limited  to  one-third  of the Fund's  assets  and may be entered  into only for
temporary  or  emergency  purposes.  Additionally,  while a  reverse  repurchase
agreement  is  outstanding,  the Fund  will  maintain  with its  Custodian  in a
segregated  account  permissible  liquid assets,  marked to market daily,  in an
amount at least equal to the Fund's  obligations  under the  reverse  repurchase
agreement.

   Short  Sales.  The Fund may engage in short sales if it owns or, by virtue of
its ownership of other  securities,  has the right to obtain without  additional
cost  securities  equivalent  in kind or amount  to the  securities  sold.  This
investment  technique  is known as a short  sale  "against  the box." In a short
sale, the Fund sells a borrowed  security and has a corresponding  obligation to
the lender to return the  identical  security.  The Fund will not dispose of the
securities  underlying a short sale while a short sale is outstanding.  The Fund
intends to engage in short  sales  against  the box for  hedging  purposes.  The
Investment  Manager expects that the Fund will engage in short sales against the
box as a hedge when the Investment Manager believes that the price of a security
may decline,  or when the Fund wants to sell the security it owns at the current
price but wants to defer  recognition  of gain or loss for tax  purposes,  or to
satisfy  certain tests  applicable to regulated  investment  companies under the
Internal  Revenue Code of 1986,  as amended  ("Code").  The  Investment  Manager
currently  anticipates  that no more than 5% of the Fund's total assets would be
involved in short sales against the box.

   Year 2000 Risks.  Like other  investment  companies,  financial  and business
organizations  around  the world,  the Fund will be  adversely  affected  if the
computer  systems used by the  Investment  Manager and the Fund's other  service
providers do not properly  process and calculate  date-related  information  and
data from and after  January 1, 2000.  This is commonly  known as the "Year 2000
Problem." The Fund is taking steps that it believes are  reasonably  designed to
address the Year 2000 Problem  with respect to the computer  systems it uses and
to obtain satisfactory  assurances that comparable steps are being taken by each
of the Fund's  major  service  providers.  The Fund does not expect to incur any
significant  costs in order to address the Year 2000 Problem.  However,  at this
time there can be no assurances that these steps will be sufficient to avoid any
adverse impact on the Fund.  Additionally,  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.

                             INVESTMENT RESTRICTIONS

The Fund has adopted the following fundamental investment  restrictions that may
not be  changed  without  the  approval  of the lesser of (a) 67% or more of the
voting  securities  of the Fund present at a meeting if the holders of more than
50% of the outstanding  voting securities of the Fund are present or represented
by proxy or (b) more than 50% of the outstanding  voting securities of the Fund.
If a percentage  restriction  is adhered to at the time an investment is made, a
later change in percentage  resulting  from a change in value or assets will not
constitute  a  violation  of  that  restriction.   With  respect  to  investment
restriction (3), however,  if borrowings exceed 33 1/3% of the value of a Fund's
total  assets  as a result of a change  in value or  assets,  the Fund must take
steps to reduce such borrowings at least to the extent of such excess.  The Fund
may not:


                                        3

<PAGE>



1.             Purchase  securities of any one issuer if, as a result, more than
               5% of the Fund's total assets would be invested in such issuer or
               the Fund would own or hold 10% of the  outstanding  securities of
               that issuer, except that up to 50% of the Fund's total assets may
               be invested  without regard to this  limitation and provided that
               this limitation does not apply to securities issued or guaranteed
               by the U.S.  government,  its  agencies or  instrumentalities  or
               securities of other investment companies;

2.             Lend money or securities, provided that (i) the making of time or
               demand deposits with banks,  (ii) the purchase of debt securities
               such  as  bonds,   debentures,   commercial   paper,   repurchase
               agreements  and short term  obligations  in  accordance  with its
               investment   objective   and  policies  and  (iii)   engaging  in
               securities loan  transactions  limited to one-third of the Fund's
               total assets are not prohibited;

     3.   Borrow  money,  except to the extent  permitted by the 40 Act (which
          currently limits borrowing to no more than 33 1/3% of the value of the
          Fund's total assets);

4.             Concentrate  more than 25% of the value of its  assets in any one
               industry. Water, communications, electric and gas utilities shall
               each be considered a separate industry. This limitation shall not
               apply  to  obligations  issued  by  the  U.S.  government  or its
               agencies or instrumentalities;

5.             Invest in commodities or commodity futures contracts, although it
               may enter into financial and foreign currency  futures  contracts
               and options  thereon,  options on foreign  currencies and forward
               contracts on foreign currencies;

6.             Invest in real estate, although it may invest in securities which
               are secured by real estate and securities of issuers which invest
               or deal in real estate;

7.             Underwrite  the  securities of other issuers except to the extent
               the Fund may be deemed  to be an  underwriter  under the  Federal
               securities  laws in connection with the disposition of the Fund's
               securities.  The  Fund may buy and sell  securities  outside  the
               United States which are not  registered  with the  Securities and
               Exchange  Commission  ("SEC") or marketable in the United States;
               or

     8.   Issue senior securities as defined in the 1940 Act. The following will
          not be deemed to be senior securities for this purpose:  (i) evidences
          of indebtedness  that the Fund is permitted to incur under the 40 Act,
          (ii) the issuance of  additional  series or classes that the directors
          may establish,  (iii) the Fund's futures, options and forward currency
          transactions,  and (iv) to the extent consistent with the 1940 Act and
          applicable   rules  and   policies   adopted  by  the  SEC,   (A)  the
          establishment or use of a margin account with a broker for the purpose
          of effecting securities transactions on margin and (B) short sales;

9.             The  Fund,   notwithstanding   any  other  investment  policy  or
               restriction  (whether or not  fundamental)  may invest all of its
               assets in the  securities  or  beneficial  interests  of a single
               pooled investment fund having  substantially the same objectives,
               policies and limitations as the Fund.

   The Fund's Board of Directors has established  the following  non-fundamental
investment  limitations  that may be  changed by the Board  without  shareholder
approval:

               The Fund may:

(i)            Invest  up to 15% of the  value  of its net  assets  in  illiquid
               securities,   including   repurchase   agreements  providing  for
               settlement in more than seven days after notice.

(ii)           Purchase  securities issued by other investment  companies to the
               extent permitted under the 1940 Act.

(iii)          Pledge,  mortgage,  hypothecate or otherwise  encumber its assets
               to the extent permitted under the 1940 Act.

            OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACT STRATEGIES

   Regulation  of the Use of  Options,  Futures and  Forward  Currency  Contract
Strategies. As discussed in the Prospectus, the Investment Manager may engage in
certain options strategies to attempt to enhance return or for hedging purposes.
The Investment Manager also may use securities index futures contracts, interest
rate  futures  contracts,  foreign  currency  futures  contracts  (collectively,
"futures  contracts"  or  "futures"),  options on futures  contracts and forward
currency contracts for hedging purposes or in other  circumstances  permitted by
the CFTC.  Certain special  characteristics  of and risks  associated with using
these  instruments  are  discussed  below.  In addition  to the  non-fundamental
investment  restrictions 4 and 5 described  above,  the use of options,  forward
currency  contracts  and  futures  by the  Fund  is  subject  to the  applicable
regulations  of the SEC, the several  options and futures  exchanges  upon which
such instruments may be traded, and the CFTC.

   There can be no assurance that the techniques  described  herein will provide
adequate  hedging or that such techniques are or will be actually or effectively
available due to liquidity,  costliness, or other factors. Hedging maneuvers may
fail and  investors  should not assume the  availability  of any of the  hedging
opportunities  described herein.  In any event, the Investment  Manager will not
attempt perfect  balancing,  through hedging or otherwise and the Fund might not
use any hedging techniques, as described herein or otherwise.

   In addition to the products,  strategies and risks described below and in the
Prospectus,  the Investment  Manager may discover  additional  opportunities  in
connection  with  options,  futures and forward  currency  contracts.  These new
opportunities  may become  available  as the  Investment  Manager  develops  new
techniques,   as   regulatory   authorities   broaden  the  range  of  permitted
transactions  and as new options,  futures and forward  currency  contracts  are
developed.  The Investment Manager may utilize these opportunities to the extent
they are  consistent  with the Fund's  investment  objective,  permitted  by the
Fund's  investment  limitations  and  permitted  by  the  applicable  regulatory
authorities.  The Fund's  registration  statement  will be  supplemented  to the
extent that new products and strategies involve materially  different risks than
those described below and in the Prospectus.

   Cover for Options, Futures and Forward Currency Contract Strategies. The Fund
will not use  leverage in its  options,  futures and forward  currency  contract
strategies. Accordingly, the Fund will comply with guidelines established by the
SEC with  respect to coverage of these  strategies  by either (1) setting  aside
cash or  liquid  securities  whose  value is  marked  to the  market  daily in a
segregated  account  in  the  prescribed  amount,  or  (2)  holding  securities,
currencies  or other options or futures  contracts  whose values are expected to
offset ("cover") its

                                        4

<PAGE>



obligations  thereunder.  Securities,  currencies  or other  options  or futures
contracts used for cover and securities  held in a segregated  account cannot be
sold or closed out while the strategy is  outstanding,  unless they are replaced
with similar assets.  As a result,  there is a possibility that the use of cover
or  segregation  involving a large  percentage of the Fund's assets could impede
portfolio  management or the Fund's ability to meet redemption requests or other
current obligations.

   Option Income and Hedging Strategies.  The Fund may purchase and write (sell)
both exchange-traded options and options traded on the over-the-counter  ("OTC")
market.  Currently,  options on debt securities are primarily  traded on the OTC
market. Although many options on currencies are exchange-traded, the majority of
such options currently are traded on the OTC market.  Exchange-traded options in
the U.S. are issued by a clearing  organization  affiliated with the exchange on
which the option is listed,  which,  in effect,  guarantees  completion of every
exchange-traded  option  transaction.  In  contrast,  OTC options are  contracts
between the Fund and its contra-party with no clearing  organization  guarantee.
Thus, when the Fund purchases an OTC option,  it relies on the dealer from which
it has  purchased  the OTC  option to make or take  delivery  of the  securities
underlying  the option.  Failure by the dealer to do so would result in the loss
of any premium paid by the Fund as well as the loss of the  expected  benefit of
the transaction.

   The Fund may purchase call options on securities  (both equity and debt) that
the Investment  Manager  intends to include in the Fund's portfo lio in order to
fix the cost of a future  purchase.  The call option enables the Fund to buy the
underlying  security at the predetermined  exercise price. Call options also may
be used as a means of  enhancing  returns by, for example,  participating  in an
anticipated price increase of a security. In the event of a decline in the price
of the  underlying  security,  use of this  strategy  would  serve to limit  the
potential loss to the Fund to the option premium paid; conversely, if the market
price of the underlying security increases above the exercise price and the Fund
either sells or exercises the option,  any profit  eventually  realized would be
reduced by the premium paid.

   The Fund may purchase put options on  securities  in order to hedge against a
decline in the market value of securities held in its portfolio or to attempt to
enhance return. The put option enables the Fund to sell the underlying  security
at the  predetermined  exercise price;  thus, the potential for loss to the Fund
below the exercise  price is limited to the option  premium  paid. If the market
price of the  underlying  security is higher than the exercise  price of the put
option,  any  profit  the Fund  realizes  on the sale of the  security  would be
reduced by the premium paid for the put option less any amount for which the put
option may be sold.

   The Fund may on  certain  occasions  wish to hedge  against a decline  in the
market value of  securities  held in its portfolio at a time when put options on
those  particular  securities  are not  available  for  purchase.  The  Fund may
therefore  purchase  a put  option  on other  securities,  the  values  of which
historically  have a high  degree of positive  correlation  to the value of such
portfolio securities.  If the Investment Manager's judgment is correct,  changes
in the value of the put options should  generally offset changes in the value of
the portfolio securities being hedged.  However, the correlation between the two
values may not be as close in these transactions as in transactions in which the
Fund  purchases  a put  option  on a  security  held  in its  portfolio.  If the
Investment  Manager's  judgment  is not  correct,  the  value of the  securities
underlying  the put  option  may  decrease  less  than the  value of the  Fund's
portfolio  securities  and  therefore  the put option may not  provide  complete
protection  against a decline  in the value of the Fund's  portfolio  securities
below the level sought to be protected by the put option.

   The  Fund  may  write  covered  call  options  on  securities  in which it is
authorized  to invest for hedging or to increase  return in the form of premiums
received from the  purchasers of the options.  A call option gives the purchaser
of the option the right to buy, and the writer  (seller) the obligation to sell,
the  underlying  security at the exercise  price during the option  period.  The
strategy  may be used to provide  limited  protection  against a decrease in the
market price of the  security,  in an amount  equal to the premium  received for
writing the call option less any transaction costs. Thus, if the market price of
the underlying  security held by the Fund  declines,  the amount of such decline
will be offset  wholly or in part by the amount of the  premium  received by the
Fund.  If,  however,  there is an increase in the market price of the underlying
security  and the option is  exercised,  the Fund would be obligated to sell the
security at less than its market value.  The Fund would give up the ability sell
any portfolio securities used to cover the call option while the call option was
outstanding.  In addition,  the Fund could lose the ability to participate in an
increase in the value of such  securities  above the exercise  price of the call
option  because  such an increase  would  likely be offset by an increase in the
cost of closing  out the call  option (or could be negated if the buyer chose to
exercise the call option at an exercise  price below the current  market value).
Portfolio  securities  used to cover OTC options  written also may be considered
illiquid,  and therefore  subject to the Fund's  limitation on investing no more
than 15% of its net asset in  illiquid  securities,  unless the OTC  options are
sold to qualified dealers who agree that the Fund may repurchase any OTC options
it writes for a maximum  price to be  calculated  by a formula  set forth in the
option agreement.  The cover for an OTC option written subject to this procedure
would be  considered  illiquid  only to the extent that the  maximum  repurchase
price under the formula exceeds the intrinsic value of the option.

   The Fund also may write  covered  put  options on  securities  in which it is
authorized  to invest.  A put option gives the purchaser of the option the right
to sell, and the writer (seller) the obligation to buy, the underlying  security
at the exercise price during the option period. So long as the obligation of the
writer  continues,  the  writer  may  be  assigned  an  exercise  notice  by the
broker/dealer through whom such option was sold, requiring it to make payment of
the exercise price against delivery of the underlying security. The operation of
put options in other  respects,  including  their related risks and rewards,  is
substantially  identical  to that  of call  options.  If the put  option  is not
exercised,  the Fund will realize income in the amount of the premium  received.
This technique  could be used to enhance current return during periods of market
uncertainty.  The risk in such a  transaction  would be that the market price of
the underlying security would decline below the exercise price less the premiums
received, in which case the Fund would expect to suffer a loss.

   The Fund may  purchase  put and call  options and write  covered put and call
options on  securities  indexes in much the same manner as the more  traditional
securities  options  discussed  above,  except that index options may serve as a
hedge  against  overall  fluctuations  in the  securities  markets  (or a market
sector)  rather  than  anticipated  increases  or  decreases  in the  value of a
particular  security.  A  securities  index  assigns  values  to the  securities
included in the index and fluctuates with changes in such values. Settlements of
securities  index  options are  effected  with cash  payments and do not involve
delivery of securities.  Thus, upon settlement of a securities index option, the
purchaser  will  realize,  and the  writer  will  pay,  an  amount  based on the
difference  between the exercise  price and the closing price of the index.  The
effectiveness  of hedging  techniques using securities index options will depend
on the  extent  to  which  price  movements  in the  securities  index  selected
correlate with price movements of the securities in which the Fund invests.

   The Fund may purchase and write covered  straddles on securities  indexes.  A
long straddle is a combination  of a call and a put purchased on the same future
where the exercise  price of the put is less than or equal to the exercise price
on the call. The Fund would enter into a long

                                        5

<PAGE>



straddle  when the  Investment  Manager  believes that it is likely that futures
prices will be more  volatile  during the term of the options than is implied by
the  option  pricing.  A short  straddle  is a  combination  of a call and a put
written on the same future where the  exercise  price on the put is less than or
equal to the  exercise  price of the call  where the same issue of the future is
considered  "cover"  for both the put and the call.  The Fund would enter into a
short  straddle when the  Investment  Manager  believes that it is unlikely that
futures prices will be as volatile  during the term of the options as is implied
by the option pricing.  In such case, the Fund will set aside permissible liquid
assets in a segregated  account  equivalent  in value to the amount,  if any, by
which the put is  "in-the-money,"  that is,  that  amount by which the  exercise
price of the put exceeds the current market value of the underlying future.

   Foreign  Currency  Options and Related Risks.  The Fund may take positions in
options on foreign currencies to hedge against the risk of foreign exchange rate
fluctuations on foreign  securities that the Fund holds in its portfolio or that
it intends to  purchase.  For  example,  if the Fund  enters  into a contract to
purchase securities  denominated in a foreign currency, it could effectively fix
the maximum U.S.  dollar cost of the  securities by  purchasing  call options on
that foreign currency.  Similarly,  if the Fund held securities denominated in a
foreign currency and anticipated a decline in the value of that currency against
the U.S. dollar, the Fund could hedge against such a decline by purchasing a put
option on the currency  involved.  The Fund's ability to establish and close out
positions in such options is subject to the  maintenance  of a liquid  secondary
market.  Although many options on foreign  currencies are  exchange-traded,  the
majority are traded on the OTC market.  The Fund will not purchase or write such
options  unless,  in the Investment  Manager's  opinion,  the market for them is
sufficiently liquid to ensure that the risks in connection with such options are
not  greater  than the risks in  connection  with the  underlying  currency.  In
addition,  options on foreign  currencies  are affected by all of those  factors
that influence foreign exchange rates and investments generally.

   The  value  of a  foreign  currency  option  depends  upon  the  value of the
underlying  currency relative to the U.S. dollar. As a result,  the price of the
option  position may vary with changes in the value of either or both currencies
and may have no  relationship  to the investment  merits of a foreign  security.
Because foreign currency transactions  occurring in the interbank market involve
substantially  larger  amounts  than  those that may be  involved  in the use of
foreign currency options, investors may be disadvantaged by having to deal in an
odd lot market  (generally  consisting of  transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.

   There  is no  systematic  reporting  of last  sale  information  for  foreign
currencies or any  regulatory  requirement  that  quotations  available  through
dealers  and  other  market  resources  be firm or  revised  on a timely  basis.
Available  quotation  information  is  generally  representative  of very  large
transactions in the interbank market and thus may not reflect relatively smaller
transactions  (that is, less than $1 million) where rates may be less favorable.
The interbank market in foreign currencies is a global, around-the-clock market.
To the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying  markets that cannot be reflected in the options markets
until they reopen.

   Special   Characteristics  and  Risks  of  Options  Trading.   The  Fund  may
effectively terminate its right or obligation under an option by entering into a
closing transaction.  If the Fund wishes to terminate its obligation to purchase
or sell  securities or  currencies  under a put or a call option it has written,
the Fund may  purchase a put or a call  option of the same  series  (that is, an
option identical in its terms to the option previously  written);  this is known
as a closing purchase transaction.  Conversely,  in order to terminate its right
to purchase or sell  specified  se  curities or  currencies  under a call or put
option it has  purchased,  the Fund may sell an option of the same series as the
option held; this is known as a closing sale transaction.  Closing  transactions
essentially  permit the Fund to realize  profits or limit  losses on its options
positions prior to the exercise or expiration of the option.

   In considering  the use of options to enhance  returns or to hedge the Fund's
portfolio, particular note should be taken of the following:

   (1) The value of an option  position  will reflect,  among other things,  the
current market price of the underlying  security,  securities index or currency,
the time remaining until  expiration,  the relationship of the exercise price to
the market price, the historical  price  volatility of the underlying  security,
securities index or currency and general market conditions. For this reason, the
successful  use of options  depends  upon the  Investment  Manager's  ability to
forecast the direction of price  fluctuations  in the  underlying  securities or
currency  markets or, in the case of securities  index options,  fluctuations in
the market sector represented by the selected index.

   (2) Options normally have expiration dates of up to three years. The exercise
price of the options may be below, equal to or above the current market value of
the underlying  security,  securities index or currency.  Purchased options that
expire  unexercised  have no value.  Unless an option  purchased  by the Fund is
exercised  or unless a closing  transaction  is  effected  with  respect to that
position, the Fund will realize a loss in the amount of the premium paid and any
transaction costs.

   (3) A  position  in an  exchange-listed  option  may be closed out only on an
exchange  that  provides  a  secondary  market  for  identical   options.   Most
exchange-listed  options relate to stocks. Although the Fund intends to purchase
or write only those  exchange-traded  options  for which  there  appears to be a
liquid  secondary  market,  there is no assurance that a liquid secondary market
will  exist  for  any  particular   option  at  any  particular  time.   Closing
transactions  may be effected with respect to options  traded in the OTC markets
(currently the primary  markets for options on debt securities and a significant
market for foreign currencies) only by negotiating directly with the other party
to the option  contract or in a  secondary  market for the option if such market
exists. Although the Fund will enter into OTC options with dealers that agree to
enter  into,  and that are  expected  to be capable of  entering  into,  closing
transactions  with the Fund,  there can be no  assurance  that the Fund would be
able to  liquidate  an OTC  option  at a  favorable  price at any time  prior to
expiration.  In the event of  insolvency  of the  contra-party,  the Fund may be
unable to liquidate an OTC option. Accordingly, it may not be possible to effect
closing transactions with respect to certain options,  which would result in the
Fund having to exercise  those options that it has purchased in order to realize
any profit.  With respect to options written by the Fund, the inability to enter
into a closing  transaction  may  result  in  material  losses to the Fund.  For
example,  because the Fund must maintain a covered  position with respect to any
call option it writes on a security,  currency or securities index, the Fund may
not sell the  underlying  securities or currency (or invest any cash  securities
used to cover the option)  during the period it is obligated  under such option.
This  requirement may impair the Fund's ability to sell a portfolio  security or
make  an  investment  at a  time  when  such  a  sale  or  investment  might  be
advantageous.

   (4)  Securities  index options are settled  exclusively  in cash. If the Fund
writes a call  option  on an  index,  the Fund  will  not  know in  advance  the
difference,  if any, between the closing value of the index on the exercise date
and the  exercise  price of the call  option  itself  and thus will not know the
amount of cash payable upon  settlement.  In addition,  a holder of a securities
index  option who  exercises  it before the closing  index value for that day is
available, runs the risk that the level of the underlying index may subsequently
change.

                                        6

<PAGE>



   (5) The  Fund's  activities  in the  options  markets  may result in a higher
portfolio turnover rate and additional  brokerage costs and taxes;  however, the
Fund also may save on commissions by using options as a hedge rather than buying
or  selling  individual  securities  in  anticipation  or as a result  of market
movements.

   Futures  and  Related  Options  Strategies.  The Fund may  engage in  futures
strategies for hedging purposes to attempt to reduce the overall investment risk
that  would  normally  be  expected  to be  associated  with  ownership  of  the
securities  in which it invests.  This may involve,  among other  things,  using
futures  strategies  to  manage  the  effective  duration  of the  Fund.  If the
Investment  Manager  wishes to shorten the effective  duration of the Fund,  the
Fund may sell a futures  contract  or a call option  thereon,  or purchase a put
option on that futures  contract.  If the Investment  Manager wishes to lengthen
the  effective  duration of the Fund,  the Fund may buy a futures  contract or a
call option thereon, or sell a put option.

   The Fund may use interest rate futures contracts and options thereon to hedge
its  portfolio  against  changes in the general  level of interest  rates and in
other  circumstances  permitted  by the CFTC.  The Fund may purchase an interest
rate futures  contract when it intends to purchase debt  securities  but has not
yet done so. This strategy may minimize the effect of all or part of an increase
in the market  price of the debt  security  that the Fund intends to purchase in
the future.  A rise in the price of the debt security  prior to its purchase may
either be offset by an increase in the value of the futures  contract  purchased
by the Fund or  avoided  by taking  delivery  of the debt  securities  under the
futures contract.  Conversely, a fall in the market price of the underlying debt
security  may result in a  corresponding  decrease  in the value of the  futures
position.  The Fund may  sell an  interest  rate  futures  contract  in order to
continue to receive the income from a debt security,  while endeavoring to avoid
part or all of the decline in market value of that security that would accompany
an increase in interest rates.

   The Fund may purchase a call option on an interest  rate futures  contract to
hedge against a market advance in debt securities that the Fund plans to acquire
at a future  date.  The  purchase of a call option on an interest  rate  futures
contract is  analogous to the  purchase of a call option on an  individual  debt
security,  which can be used as a  temporary  substitute  for a position  in the
security  itself.  The Fund also may write  covered put options on interest rate
futures  contracts as a partial  anticipatory  hedge and may write  covered call
options on interest rate futures  contracts as a partial hedge against a decline
in the price of debt securities held in the Fund's portfolio.  The Fund may also
purchase  put  options on  interest  rate  futures  contracts  in order to hedge
against a decline in the value of debt securities held in the Fund's portfolio.

   The Fund may sell  securities  index futures  contracts in  anticipation of a
general market or market sector decline that could  adversely  affect the market
value of the  Fund's  portfolio.  To the  extent  that a portion  of the  Fund's
portfolio  correlates with a given index, the sale of futures  contracts on that
index could reduce the risks  associated  with a market decline and thus provide
an alternative to the liquidation of securities  positions.  For example, if the
Fund correctly  anticipates a general market decline and sells  securities index
futures to hedge  against  this risk,  the gain in the futures  position  should
offset  some or all of the decline in the value of the  portfolio.  The Fund may
purchase securities index futures contracts if a market or market sector advance
is anticipated. Such a purchase of a futures contract would serve as a temporary
substitute for the purchase of individual securities,  which securities may then
be purchased in an orderly fashion. This strategy may minimize the effect of all
or part of an increase in the market price of  securities  that the Fund intends
to purchase.  A rise in the price of the securities  should be in part or wholly
offset by gains in the futures position.

   As in the case of a purchase of a securities index futures contract, the Fund
may  purchase a call  option on a  securities  index  futures  contract to hedge
against a market  advance  in  securities  that the Fund  plans to  acquire at a
future date. The Fund may write covered put options on se curities index futures
as a partial anticipatory hedge and may write covered call options on securities
index  futures as a partial  hedge  against a decline in the price of securities
held in the Fund's portfolio.  This is analogous to writing covered call options
on  securities.  The Fund also may  purchase  put  options on  securities  index
futures  contracts.  The  purchase of put options on  securities  index  futures
contracts is analogous to the purchase of  protective  put options on individual
securities  where a level of  protection  is sought  below  which no  additional
economic loss would be incurred by the Fund.

   The  Fund  may sell  foreign  currency  futures  contracts  to hedge  against
possible  variations in the exchange rate of foreign currency in relation to the
U.S. dollar.  In addition,  the Fund may sell foreign currency futures contracts
when the  Investment  Manager  anticipates  a general  weakening  of the foreign
currency  exchange  rate that could  adversely  affect  the market  value of the
Fund's foreign  securities  holdings or interest payments to be received in that
foreign currency.  In this case, the sale of futures contracts on the underlying
currency  may reduce the risk to the Fund of a reduction  in market value caused
by foreign  currency  exchange  rate  variations  and,  by so doing,  provide an
alternative to the liquidation of securities positions and resulting transaction
costs. When the Investment  Manager  anticipates a significant  foreign exchange
rate  increase  while  intending  to invest in a  security  denominated  in that
currency,  the Fund may purchase a foreign  currency  futures  contract to hedge
against the increased rates pending  completion of the anticipated  transaction.
Such a purchase  would serve as a temporary  measure to protect the Fund against
any rise in the foreign currency  exchange rate that may add additional costs to
acquiring the foreign secur ity position. The Fund may also purchase call or put
options on foreign currency futures contracts to obtain a fixed foreign currency
exchange rate at limited risk.  The Fund may purchase a call option on a foreign
currency  futures  contract  to hedge  against  a rise in the  foreign  currency
exchange  rate  while  intending  to invest in a  security  denominated  in that
currency.  The Fund  may  purchase  put  options  on  foreign  currency  futures
contracts as a hedge against a decline in the foreign currency exchange rates or
the value of its foreign portfolio securities.  The Fund may write a covered put
option on a foreign currency futures  contract as a partial  anticipatory  hedge
and may write a covered call option on a foreign  currency futures contract as a
partial hedge against the effects of declining  foreign currency  exchange rates
on the value of foreign securities.

   The Fund may also write put options on  interest  rate,  securities  index or
foreign  currency  futures  contracts  while, at the same time,  purchasing call
options on the same interest rate,  securities index or foreign currency futures
contract in order to synthetically create an interest rate,  securities index or
foreign currency futures contract.  The options will have the same strike prices
and expiration dates. The Fund will only engage in this strategy when it is more
advantageous  to  the  Fund  to do so as  compared  to  purchasing  the  futures
contract.

   The Fund may also  purchase and write  covered  straddles on interest rate or
securities index futures  contracts.  A long straddle is a combination of a call
and a put purchased on the same security at the same  exercise  price.  The Fund
would  enter  into a long  straddle  when it  believes  that it is  likely  that
securities  prices will be more volatile  during the term of the options than is
implied by the option  pricing.  A short straddle is a combination of a call and
put written on the same futures  contract at the same  exercise  price where the
same security or futures contract is considered "cover" for both the put and the
call.  The Fund would enter into a short  straddle  when it believes  that it is
unlikely that

                                        7

<PAGE>



securities  prices  will be as  volatile  during  the term of the  options as is
implied by the option pricing. In such case, the Fund will set aside permissible
liquid assets in a segregated  account with its Custodian  equal in value to the
amount, if any, by which the put is "in-the-money,"  that is the amount by which
the exercise price of the put exceeds the current market value of the underlying
security.

   Special  Characteristics and Risks of Futures and Related Options Trading. No
price is paid upon entering into a futures contract. Instead, upon entering into
a futures  contract,  the Fund is required to deposit  with its  Custodian  in a
segregated  account  in  the  name  of  the  futures  broker  through  whom  the
transaction  is effected an amount of cash or liquid  securities  whose value is
marked to the market daily generally equal to 10% or less of the contract value.
This amount is known as "initial margin." When writing a call or a put option on
a futures contract,  margin also must be deposited in accordance with applicable
exchange  rules.  Unlike margin in securities  transactions,  initial  margin on
futures   contracts   does  not  involve   borrowing   to  finance  the  futures
transactions.  Rather, initial margin on futures contracts is in the nature of a
perfor mance bond or good-faith  deposit on the contract that is returned to the
Fund upon  termination of the  transaction,  assuming all obligations  have been
satisfied. Under certain circumstances,  such as periods of high volatility, the
Fund may be required by an exchange to increase the level of its initial  margin
payment. Additionally, initial margin requirements may be increased generally in
the future by regulatory action. Subsequent payments, called "variation margin,"
to and from the broker, are made on a daily basis as the value of the futures or
options  position  varies,  a process  known as  "marking  to the  market."  For
example, when the Fund purchases a contract and the value of the contract rises,
the Fund  receives  from the broker a  variation  margin  payment  equal to that
increase in value.  Conversely,  if the value of the futures position  declines,
the Fund is required to make a variation  margin  payment to the broker equal to
the decline in value. Variation margin does not involve borrowing to finance the
futures  transaction  but rather  represents  a daily  settlement  of the Fund's
obligations to or from a clearing organization.

   Buyers and sellers of futures  positions  and options  thereon can enter into
offsetting closing  transactions,  similar to closing transactions on options on
securities,  by selling or purchasing an offsetting contract or option.  Futures
contracts or options thereon may be closed only on an exchange or board of trade
providing a secondary market for such futures contracts or options.

   Under certain circumstances,  futures exchanges may establish daily limits on
the  amount  that the price of a futures  contract  or  related  option may vary
either up or down from the previous day's settlement price. Once the daily limit
has been reached in a particular  contract,  no trades may be made that day at a
price beyond that limit.  The daily limit governs only price movements  during a
particular  trading day and therefore does not limit potential  losses,  because
prices could move to the daily limit for several  consecutive  trading days with
little or no trading and  thereby  prevent  prompt  liquidation  of  unfavorable
positions.  In such  event,  it may not be  possible  for  the  Fund to  close a
position  and, in the event of adverse price  movements,  the Fund would have to
make daily cash  payments of variation  margin  (except in the case of purchased
options).  However,  if  futures  contracts  have been  used to hedge  portfolio
securities,  such  securities  will  not be  sold  until  the  contracts  can be
terminated.  In such circumstances,  an increase in the price of the securities,
if any,  may  partially or  completely  offset  losses on the futures  contract.
However,  there is no guarantee that the price of the securities  will, in fact,
correlate  with the price  movements in the contracts and thus provide an offset
to losses on the contracts.

   In  considering  the Fund's use of futures  contracts  and  related  options,
particular note should be taken of the following:

   (1) Successful use by the Fund of futures  contracts and related options will
depend  upon the  Investment  Manager's  ability  to  predict  movements  in the
direction of the overall securities, currencies and interest rate markets, which
requires  different skills and techniques than predicting  changes in the prices
of individual  securities.  Moreover,  futures  contracts relate not only to the
current  price level of the  underlying  instrument  or currency but also to the
anticipated price levels at some point in the future. There is, in addition, the
risk that the movements in the price of the futures  contract will not correlate
with the movements in the prices of the  securities or currencies  being hedged.
For example,  if the price of the securities  index futures  contract moves less
than the price of the  securities  that are the subject of the hedge,  the hedge
will not be fully effective, but if the price of the securities being hedged has
moved in an unfavorable  direction,  the Fund would be in a better position than
if it had not hedged at all.  If the price of the  securities  being  hedged has
moved in a favorable direction,  the advantage may be partially offset by losses
in the futures position.  In addition, if the Fund has insufficient cash, it may
have  to  sell  assets  from  its  portfolio  to  meet  daily  variation  margin
requirements.  Any such  sale of assets  may or may not be made at  prices  that
reflect a rising  market.  Consequently,  the Fund may need to sell  assets at a
time  when  such  sales are  disadvantageous  to the  Fund.  If the price of the
futures  contract  moves more than the price of the underlying  securities,  the
Fund will experience either a loss or a gain on the futures contract that may or
may not be completely  offset by movements in the price of the  securities  that
are the subject of the hedge.

   (2)  In  addition  to  the  possibility   that  there  may  be  an  imperfect
correlation,  or no correlation at all,  between price  movements in the futures
position and the securities or currencies being hedged,  movements in the prices
of futures contracts may not correlate perfectly with movements in the prices of
the hedged  securities or  currencies  due to price  distortions  in the futures
market.  There may be several  reasons  unrelated to the value of the underlying
securities or currencies  that cause this  situation to occur.  First,  as noted
above,  all  participants  in the  futures  market are  subject  to initial  and
variation margin  requirements.  If, to avoid meeting  additional margin deposit
requirements  or for other  reasons,  investors  choose  to close a  significant
number of futures contracts through offsetting transactions,  distortions in the
normal price  relationship  between the securities or currencies and the futures
markets  may occur.  Second,  because  the margin  deposit  requirements  in the
futures  market are less  onerous  than margin  requirements  in the  securities
market,  there may be  increased  participation  by  speculators  in the futures
market; such speculative activity in the futures market also may cause temporary
price distortions.  As a result, a correct forecast of general market trends may
not result in successful  hedging through the use of futures  contracts over the
short term.  In addition,  activities  of large  traders in both the futures and
securities  markets  involving  arbitrage and other  investment  strategies  may
result in temporary price distortions.

   (3)  Positions in futures  contracts may be closed out only on an exchange or
board of trade that  provides a  secondary  market for such  futures  contracts.
Although  the Fund  intends to purchase  and sell  futures  only on exchanges or
boards of trade where there appears to be an active secondary  market,  there is
no  assurance  that a liquid  secondary  market on an exchange or board of trade
will exist for any particular contract at any particular time. In such event, it
may not be  possible to close a futures  positions,  and in the event of adverse
price movements, the Fund would continue to be required to make variation margin
payments.

   (4) Like options on securities and currencies,  options on futures  contracts
have limited  life.  The ability to  establish  and close out options on futures
will be subject to the development and maintenance of liquid  secondary  markets
on the  relevant  exchanges or boards of trade.  There can be no certainty  that
such markets for all options on futures contracts will develop.


                                        8

<PAGE>



   (5)  Purchasers of options on futures  contracts pay a premium at the time of
purchase. This amount and the transaction costs are all that is at risk. Sellers
of options on  futures  contracts,  however,  must post  initial  margin and are
subject to  additional  margin calls that could be  substantial  in the event of
adverse price movements.  In addition,  although the maximum amount at risk when
the  Fund  purchases  an  option  is the  premium  paid for the  option  and the
transaction  costs, there may be circumstances when the purchase of an option on
a futures  contract would result in a loss to the Fund when the use of a futures
contract  would not, such as when there is no movement in the level of the under
lying securities index value or the securities or currencies being hedged.

   (6) As is the case with options, the Fund's activities in the futures markets
may result in a higher portfolio turnover rate and additional  transaction costs
in the form of added brokerage commissions and taxes; however, the Fund also may
save on  commissions  by using futures  contracts or options  thereon as a hedge
rather  than  buying  or  selling   individual   securities   or  currencies  in
anticipation or as a result of market movements.

   Special  Risks  Related to Foreign  Currency  Futures  Contracts  and Related
Options. Buyers and sellers of foreign currency futures contracts are subject to
the same risks that apply to the use of futures  generally.  In addition,  there
are risks associated with foreign currency futures  contracts and their use as a
hedging device similar to those  associated  with options on foreign  currencies
described above.

   Options on foreign currency futures contracts may involve certain  additional
risks.  The ability to  establish  and close out  positions  on such  options is
subject  to the  maintenance  of a  liquid  secondary  market.  Compared  to the
purchase or sale of foreign currency futures contracts,  the purchase of call or
put options thereon involves less potential risk to the Fund because the maximum
amount at risk is the  premium  paid for the option  (plus  transaction  costs).
However, there may be circumstances when the purchase of a call or put option on
a foreign  currency  futures contract would result in a loss, such as when there
is no movement in the price of the underlying currency or futures contract, when
the purchase of the underlying futures contract would not result in such a loss.

     Forward Currency Contracts.  The Fund may use forward currency contracts to
protect  against  uncertainty in the level of future foreign  currency  exchange
rates.

   The Fund may enter into forward  currency  contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the purchase
or sale of a security denominated in a foreign currency, or the Fund anticipates
the receipt in a foreign currency of dividend or interest payments on a security
that it holds or  anticipates  purchasing  the Fund may  desire to "lock in" the
U.S. dollar price of the security or the U.S. dollar equivalent of such payment,
as the case may be, by  entering  into a forward  contract  for the  purchase or
sale, for a fixed amount of U.S. dollars or foreign  currency,  of the amount of
foreign currency involved in the underlying  transaction.  The Fund will thereby
be able to protect  itself  against a possible  loss  resulting  from an adverse
change in the relationship between the currency exchange rates during the period
between the date on which the  security is  purchased  or sold,  or on which the
payment is declared, and the date on which such pay ments are made or received.

   The Fund also may hedge by using  forward  currency  contracts in  connection
with portfolio positions to lock in the U.S. dollar value of those positions, to
increase the Fund's exposure to foreign  currencies that the Investment  Manager
believes  may rise in value  relative to the U.S.  dollar or to shift the Fund's
exposure to foreign  currency  fluctuations  from one  country to  another.  For
example,  when the Investment Manager believes that the currency of a particular
foreign country may suffer a substantial  decline relative to the U.S. dollar or
another currency, it may enter into a forward contract to sell the amount of the
former  foreign  currency  approximating  the value of some or all of the Fund's
portfolio  securities  denominated  in such foreign  currency.  This  investment
practice  generally  is  referred to as  "cross-hedging"  when  another  foreign
currency is used.

   The precise  matching of the  forward  contract  amounts and the value of the
securities  involved will not generally be possible  because the future value of
such  securities in foreign  currencies  will change as a consequence  of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures.  Accordingly,  it may be necessary  for
the Fund to purchase  additional  foreign  currency on the spot (that is,  cash)
market  (and bear the  expense  of such  purchase)  if the  market  value of the
security is less than the amount of foreign  currency  the Fund is  obligated to
deliver and if a decision is made to sell the security and make  delivery of the
foreign  currency.  Conversely,  it may be  necessary to sell on the spot market
some of the foreign  currency  received upon the sale of the portfolio secur ity
if the market value of the security  exceeds the amount of foreign  currency the
Fund is obligated  to deliver.  The  projection  of short term  currency  market
movements is extremely  difficult and the  successful  execution of a short term
hedging strategy is highly  uncertain.  Forward  contracts involve the risk that
anticipated  currency  movements will not be accurately  predicted,  causing the
Fund to sustain losses on these  contracts and transaction  costs.  Under normal
circumstances,  consideration  of the  prospects  for currency  parities will be
incorporated  into the  longer  term  decisions  made  with  regard  to  overall
investment  strategies.  However,  the  Investment  Manager  believes that it is
important to have the  flexibility to enter into such forward  contracts when it
determines that the best interests of the Fund will be served.

   At or before the maturity  date of a forward  contract  requiring the Fund to
sell a currency,  the Fund may either sell a portfolio security and use the sale
proceeds to make  delivery of the currency or retain the security and offset its
contractual  obligation to deliver the currency by purchasing a second  contract
pursuant to which the Fund will  obtain,  on the same  maturity  date,  the same
amount of the currency that it is obligated to deliver.  Similarly, the Fund may
close out a forward  contract  requiring it to purchase a specified  currency by
entering into a second contract entitling it to sell the same amount of the same
currency on the maturity  date of the first  contract.  The Fund would realize a
gain or loss as a result of entering  into such an offsetting  forward  currency
contract  under either  circumstance  to the extent the  exchange  rate or rates
between the currencies  involved moved between the execution  dates of the first
contract and the offsetting contract.

   The cost to the Fund of engaging in forward  currency  contracts  varies with
factors such as the currencies  involved,  the length of the contract period and
the market  conditions then prevailing.  Because forward currency  contracts are
usually entered into on a principal  basis, no fees or commissions are involved.
The use of forward  currency  contracts does not eliminate  fluctuations  in the
prices of the underlying  securities the Fund owns or intends to acquire, but it
does fix a rate of exchange in advance.  In addition,  although forward currency
contracts  limit  the risk of loss due to a decline  in the value of the  hedged
currencies,  at the same time they limit any  potential  gain that might  result
should the value of the currencies increase.

   Although the Fund values  its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign  currencies into U.S. dollars on a
daily  basis.  The Fund may  convert  foreign  currency  from time to time,  and
investors should be aware of the costs of currency

                                        9

<PAGE>



conversion.   Although  foreign  exchange  dealers  do  not  charge  a  fee  for
conversion,  they do realize a profit based on the difference between the prices
at which they are buying and  selling  various  currencies.  Thus,  a dealer may
offer to sell a foreign  currency  to the Fund at one  rate,  while  offering  a
lesser  rate of exchange  should the Fund desire to resell that  currency to the
dealer.

                         THE INVESTMENT COMPANY COMPLEX

The  investment  companies  advised by affiliates of Winmill & Co.  Incorporated
(formerly Bull & Bear Group,  Inc.) ("Winmill")  ("Investment  Company Complex")
are:


               Bull & Bear U.S. Government Securities Fund, Inc.
               Dollar Reserves, Inc.
               Global Income Fund, Inc.
               Midas Fund, Inc.
               Midas Investors Ltd.
               Midas Magic, Inc.
               Midas Special Equities Fund, Inc.
               Midas U.S. and Overseas Fund Ltd.
               Tuxis Corporation


                             OFFICERS AND DIRECTORS

   The officers and Directors of the Corporation,  their respective  offices and
principal  occupations  during the last five years are set forth  below.  Unless
otherwise noted, the address of each is 11 Hanover Square, New York, NY 10005.

THOMAS B. WINMILL* -- Chairman, Chief Executive Officer,  President, and General
Counsel.  He is President of the Investment Manager and the Distributor,  and of
their  affiliates.  He is a member  of the New York  State Bar and the SEC Rules
Committee  of  the  Investment  Company  Institute.  He is a son of  Bassett  S.
Winmill.  He is also a  Director  of eight  other  investment  companies  in the
Investment Company Complex. He is 40 years old.

ROBERT D.  ANDERSON* -- Vice  Chairman and  Director.  He is Vice Chairman and a
Director of two other investment companies in the Investment Company Complex and
of the  Investment  Manager  and its  affiliates.  He is a former  member of the
District #12, District Business Conduct and Investment  Companies  Committees of
the NASD. He is 69 years old.

BRUCE B. HUBER, CLU, ChFC, MSFS -- Director. 3443 Highway 66, Neptune, NJ 07753.
He is a Financial  Representative  with New England  Financial,  specializing in
financial,  estate and insurance  matters.  From March 1995 to December 1995, he
was President of Huber Hogan Knotts Consulting,  Inc., financial consultants and
insurance  planners.  From  1988  to  1990,  he  was  Chairman  of  Bruce  Huber
Associates.  He is also a Director  of five other  investment  companies  in the
Investment Company Complex. He is 69 years old.

JAMES E. HUNT -- Director. One Dag Hammarskjold Plaza, New York, NY 10017. He is
a principal of Hunt & Howe Inc., executive recruiting consultants.  He is also a
Director of five other investment  companies in the Investment  Company Complex.
He is 68 years old.

JOHN B. RUSSELL -- Director.  334 Carolina Meadows Villa, Chapel Hill, NC 27514.
He is a Director of Wheelock,  Inc., a manufacturer  of signal  products,  and a
consultant for the National  Executive  Service Corps.  He is also a Director of
five other  investment  companies in the Investment  Company  Complex.  He is 76
years old.

* Thomas B. Winmill and Robert D. Anderson are "interested  persons" of the Fund
as  defined  by the 1940 Act,  because of their  positions  with the  Investment
Manager.

The executive  officers of the Fund,  each of whom serves at the pleasure of the
Board of Directors, are as follows:

THOMAS B. WINMILL -- Chairman,  Chief Executive Officer,  President, and General
Counsel. (See biographical information above.)

ROBERT D. ANDERSON -- Vice Chairman and Director. (See biographical  information
above.)

STEVEN A. LANDIS -- Senior Vice  President.  He is Senior Vice  President of the
Investment  Manager and  certain of its  affiliates.  From 1993 to 1995,  he was
Associate  Director -- Proprietary  Trading at Barclays de Zoete Wedd Securities
Inc.,  and from 1992 to 1993,  he was  Director,  Bond  Arbitrage  at WG Trading
Company. He is 44 years old.

JOSEPH LEUNG,  CPA -- Chief  Accounting  Officer,  Chief  Financial  Officer and
Treasurer.  He is  Treasurer  and Chief  Accounting  Officer  of the  Investment
Manager and its  affiliates.  From 1992 to 1995 he held various  positions  with
Coopers  &  Lybrand  L.L.P.,  a public  accounting  firm.  He is a member of the
American  Institute of Certified Public  Accountants.  He is 33 years old.

DEBORAH ANN  SULLIVAN,  ESQ. -- Chief  Compliance  Officer,  Secretary  and Vice
President. She is Chief Compliance Officer,  Secretary and Vice President of the
investment  companies in the  Investment  Company  Complex,  and the  Investment
Manager  and its  affiliates.  From  1993  through  1994,  she was the  Blue Sky
Paralegal for SunAmerica  Asset  Management  Corporation,  and from 1992 through
1993,  she  was  Compliance   Administrator  and  Blue  Sky  Administrator  with
Prudential  Securities,  Inc. and Prudential  Mutual Fund  Management,  Inc. She
earned her Juris  Doctor at Hofstra  University,  School of Law.  He is 30 years
old.


                                       10

<PAGE>




<TABLE>
<CAPTION>
Compensation Table



                                                   Pension or Retirement       Estimated Annual     Total Compensation From Fund and
Name of Person,        Aggregate Compensation     Benefits Accrued as Part      Benefits Upon        Investment Company Complex Paid
Position                    From Fund                 of Fund Expenses            Retirement                 to Directors
<S>                           <C>                        <C>                         <C>                  <C>
Bruce B. Huber,               $960                       None                        None                 $13,500 from 6
Director                                                                                                  Investment Companies
James E. Hunt,                $960                       None                        None                 $13,500 from 6
Director                                                                                                  Investment Companies
John B. Russell,              $960                       None                        None                 $13,500 from 6
Director                                                                                                  Investment Companies

</TABLE>

   Information  in the above  table is based on fees paid  during the year ended
December 31, 1998.

   No officer,  Director or employee of the Fund's  Investment  Manager receives
any compensation from the Fund for acting as an officer, Director or employee of
the Fund.  As of April 27, 1999,  officers and  Directors of the Fund owned less
than 1% of the  outstanding  shares  of the  Fund.  As of  April  27,  1999,  no
shareowner of record owned 5% or more of the Fund's outstanding shares.

                               INVESTMENT MANAGER

     The Fund's Investment Manager is Midas Management  Corporation,  11 Hanover
Square,  New York, NY 10005.  The Investment  Manager,  a registered  investment
adviser,  is a wholly-owned  subsidiary of the parent of the Investment Manager,
Winmill & Co.  Incorporated  ("Winmill").  The other  principal  subsidiaries of
Winmill  include  Investor  Service Center,  Inc., the Fund's  Distributor and a
registered broker/dealer and CEF Advisers, Inc. a registered investment adviser.

   Winmill is a publicly owned company whose securities are listed on The Nasdaq
Stock Market and traded in the over-the-counter  market.  Bassett S. Winmill may
be deemed a  controlling  person of Winmill  and the  Investment  Manager on the
basis of his  ownership  of 100% of  Winmill's  voting  stock.  The Fund and its
investment  company  affiliates had net assets in excess of  $254,000,000  as of
April 26, 1999.

                         INVESTMENT MANAGEMENT AGREEMENT

   Under the  Investment  Management  Agreement,  the Fund  assumes and pays all
expenses required for the conduct of its business including, but not limited to,
custodian  and  transfer  agency  fees,  accounting  and legal fees,  investment
management fees, fees of disinterested  Directors,  association fees,  printing,
salaries of certain  administrative  and clerical  personnel,  necessary  office
space, all expenses  relating to the registration or qualification of the shares
of the Fund under Blue Sky laws and  reasonable  fees and expenses of counsel in
connection with such registration and qualification,  miscellaneous expenses and
such  non-recurring   expenses  as  may  arise,   including  actions,  suits  or
proceedings  affecting the Fund and the legal obligation which the Fund may have
to indemnify its officers and  Directors  with respect  thereto.  For the fiscal
years ended  December 31, 1996,  1997 and 1998,  the Fund paid to the Investment
Manager aggregate investment management fees of $102,565,  $91,519, and $79,269,
respectively.

Pursuant to the Investment  Management  Agreement,  if requested by the Board of
Directors, the Investment Manager may provide other services to the Fund such as
the functions of billing,  accounting,  certain  shareholder  communications and
services,  administering state and Federal  registrations,  filings and controls
and other administrative  services. Any services so requested and performed will
be for the  account  of the Fund  and the  costs of the  Investment  Manager  in
rendering such services shall be reimbursed by the Fund,  subject to examination
by those directors of the Fund who are not interested  persons of the Investment
Manager or any affiliate  thereof.  For such services,  the Fund  reimbursed the
Investment Manager $6,275, $3,856 and $3,838 for the fiscal years ended December
31, 1996, 1997 and 1998, respectively.

   The  Investment   Management  Agreement  is  not  assignable  and  terminates
automatically  in  the  event  of  its  assignment.  The  Investment  Management
Agreement may also be terminated  without  penalty on 60 days' written notice at
the  option  of  either  party  thereto  or  by  a  vote  of  the  Corporation's
shareholders.  The Investment  Management Agreement provides that the Investment
Manager shall not be liable to the Corporation or the Fund or any shareholder of
the  Corporation  or the Fund for any error of judgment or mistake of law or for
any  loss  suffered  by  the  Corporation  or  the  Fund  or  the  Corporation's
shareholders in connection  with the matters to which the Investment  Management
Agreement  relates.  Nothing contained in the Investment  Management  Agreement,
however,  shall be  construed  to protect  the  Investment  Manager  against any
liability to the  Corporation or the Fund or the  Corporation's  shareholders by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its duties or by reason of its reckless  disregard of obligations  and duties
under the Investment Management Agreement.

   Winmill has granted the Fund a  non-exclusive  license to use various service
marks  including  "Performance  Driven" under certain terms and  conditions on a
royalty  free basis.  Such  license  will be  withdrawn  in the event the Fund's
investment  manager shall not be the Investment Manager or another subsidiary of
Winmill. If the license is terminated,  the Fund will eliminate all reference to
those marks in its corporate  name and cease to use any of such service marks or
any similar service marks in its business.

                        DETERMINATION OF NET ASSET VALUE

   The Fund's net asset value per share is calculated as of the close of regular
trading for equity securities on the New York Stock Exchange ("NYSE") (currently
4:00 p.m.  eastern time,  unless weather,  equipment  failure,  or other factors
contribute  to an earlier  closing)  each day the NYSE is open for trading.  The
NYSE is closed on the following holidays: New Year's Day, Washington's Birthday,
Presidents'  Day,  Good  Friday,  Memorial  Day,  Independence  Day,  Labor Day,
Thanksgiving Day and Christmas Day. Because a substantial  portion of the Fund's
net assets may be  invested in foreign  securities  and/or  foreign  currencies,
trading in each of which is conducted in foreign markets which are not

                                       11

<PAGE>



necessarily  closed  on U.S.  holidays,  the net  asset  value  per share may be
significantly  affected on days when a shareholder  has no access to the Fund or
its transfer agent.

   Securities  owned by the Fund are valued by various methods  depending on the
market or exchange on which they trade.  Securities traded on the New York Stock
Exchange,  the American Stock Exchange and The Nasdaq Stock Market are valued at
the last sale price, or if no sale has occurred, at the mean between the current
bid and asked prices.  Securities traded on other exchanges are valued as nearly
as possible in the same  manner.  Securities  traded only  over-the-counter  are
valued  at the  mean  between  the last  available  bid and ask  quotations,  if
available,  or at their fair value as  determined  in good faith by or under the
general  direction of the Board of Directors.  Short term  securities are valued
either at  amortized  cost or at original  cost plus accrued  interest,  both of
which approximate current value.

   Foreign  securities  are valued at the last sale price in a principal  market
where they are  traded,  or, if last sale  prices are  unavailable,  at the mean
between the last available bid and ask quotations.  Foreign  security prices are
expressed in their local  currency and translated  into U.S.  dollars at current
exchange  rates.  Any changes in the value of forward  contracts due to exchange
rate fluctuations are included in the determination of net asset value.  Foreign
currency  exchange rates are generally  determined prior to the close of trading
on the NYSE. Occasionally,  events affecting the value of foreign securities and
such exchange  rates occur between the time at which they are determined and the
close  of  trading  on  the  NYSE,  which  events  will  not be  reflected  in a
computation  of a Fund's  net  asset  value on that day.  If  events  materially
affecting the value of such  securities or currency  exchange rates occur during
such  time  period,  the  securities  will be  valued  at  their  fair  value as
determined in good faith by or under the direction of the Board of Directors.

   Price quotations generally are furnished by pricing services,  which may also
use a matrix system to determine valuations.  This system considers such factors
as security prices, yields, maturities, call features, ratings, and developments
relating to specific securities in arriving at valuations.

                               PURCHASE OF SHARES

   The Fund will only issue shares upon  payment of the purchase  price by check
made to the Fund's order in U.S. dollars and drawn on a U.S. bank, or by Federal
Reserve wire transfer.  Third party checks,  credit cards,  and cash will not be
accepted.  The Fund reserves the right to reject any order,  to cancel any order
due to nonpayment,  to accept  initial  orders by telephone or telegram,  and to
waive the limit on subsequent orders by telephone, with respect to any person or
class of persons.  Orders to  purchase  shares are not binding on the Fund until
they are confirmed by the Fund's transfer agent. If an order is canceled because
of non-payment or because the  purchaser's  check does not clear,  the purchaser
will be responsible for any loss the Fund incurs.  If the purchaser is already a
shareholder,  the  Fund  can  redeem  shares  from the  purchaser's  account  to
reimburse the Fund for any loss. In addition, the purchaser may be prohibited or
restricted  from placing future  purchase orders in the Fund or any of the other
Funds  in the  Investment  Company  Complex.  In  order  to  permit  the  Fund's
shareholder base to expand, to avoid certain shareholder  hardships,  to correct
transactional  errors, and to address similar exceptional  situations,  the Fund
may waive or lower the  investment  minimums with respect to any person or class
of persons.  The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption  orders.  Such brokers are authorized to designate other
intermediaries  to accept  purchase and redemption  orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption  order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. A  shareholder's  order will be priced at the Fund's net asset value next
computed  after such order is accepted by an  authorized  broker or the broker's
authorized designee.

                         CALCULATION OF PERFORMANCE DATA

   Advertisements  and  other  sales  literature  for the Fund may  refer to the
Fund's  "average  annual total return" and  "cumulative  total return." All such
quotations are based upon  historical  earnings and are not intended to indicate
future  performance.  The  investment  return  on  and  principal  value  of  an
investment  in the Fund  will  fluctuate,  so that the  investor's  shares  when
redeemed may be worth more or less than their original cost.

Average Annual Total Return

   Average  annual  total  return is  computed  by finding  the  average  annual
compounded rates of return over the periods indicated in the advertisement  that
would  equate  the  initial  amount  invested  to the ending  redeemable  value,
according to the following formula:


          P(1+T)n = ERV

Where:    P       =  a hypothetical initial payment of $1,000;
          T       =  average annual total return;
          n       =  number of years; and
          ERV     =  ending redeemable value at the end of the period of a
                     hypothetical $1,000 payment made at the beginning of such
                     period.

This calculation assumes all dividends and other distributions are reinvested at
net  asset  value on the  appropriate  reinvestment  dates as  described  in the
Prospectus,  and includes all recurring  fees,  such as investment  advisory and
Rule 12b-1 fees, charged to all shareholder accounts.


                                       12

<PAGE>

Average Annual Total Returns For Periods Ended December 31, 1998

One Year               1.18%
Five Years             4.12%
Ten Years              6.94%

Cumulative Total Return

   Cumulative  total return is calculated by finding the  cumulative  compounded
rate of return over the period indicated in the advertisement  that would equate
the initial amount  invested to the ending  redeemable  value,  according to the
following formula:

                                CTR=( ERV-P )100
                                        P

  CTR=Cumulative total return

  ERV=ending redeemable value at the end of the period of a hypothetical $1,000
      payment made at the beginning of such period

  P  =initial payment of $1,000

This calculation deducts the maximum sales charge from the initial  hypothetical
$1,000 investment,  assumes all dividends and other distributions are reinvested
at net asset value on the  appropriate  reinvestment  dates as  described in the
Prospectus,  and includes all recurring  fees,  such as investment  advisory and
management fees, charged to all shareholder accounts.

   The cumulative  return for the Fund for the one year,  five year and ten year
periods ending December 31, 1998 is 1.18%, 22.39%, and 95.61%, respectively.

Source Material

   From time to time, in marketing pieces and other Fund literature,  the Fund's
performance  may be compared to the  performance  of broad groups of  comparable
mutual funds or unmanaged indexes of comparable securities.  Evaluations of Fund
performance  made by  independent  sources  may  also be used in  advertisements
concerning the Fund. Sources for Fund performance  information may include,  but
are not limited to, the following:

Bank Rate Monitor,  a weekly  publication  which reports  yields on various bank
money market accounts and certificates of deposit.

Barron's,  a Dow Jones and  Company,  Inc.  business and  financial  weekly that
periodically reviews mutual fund performance and other data.

Bloomberg, a computerized market data source and portfolio analysis system.

Bond Buyer  Municipal Bond Index (20 year), an index of municipal bonds provided
by a national periodical reporting on municipal securities.

Business  Week,  a  national  business  weekly  that  periodically  reports  the
performance rankings and ratings of a variety of mutual funds.

CDA/Wiesenberger   Investment  Companies  Services,   an  annual  compendium  of
information  about  mutual  funds and other  investment  com  panies,  including
comparative data on funds' backgrounds,  management policies,  salient features,
management results, income and dividend records, and price ranges.

Consumer's  Digest,  a  bimonthly   magazine  that  periodically   features  the
performance of a variety of investments, including mutual funds.

Financial Times,  Europe's business  newspaper,  which from time to time reports
the performance of specific investment companies in the mutual fund industry.

Forbes,  a national  business  publication  that from time to time  reports  the
performance of specific investment companies in the mutual fund industry.

Fortune, a national business publication that periodically rates the performance
of a variety of mutual funds.

Goldman  Sachs  Convertible  Bond Index --  currently  includes  67 bonds and 33
preferred  shares.  The original  list of names was  generated by screening  for
convertible  issues of $100  million or greater  in market  capitalization.  The
index is priced monthly.

Global  Investor,   a  European   publication  that  periodically   reviews  the
performance of U.S. mutual funds.

Growth Fund Guide, a newsletter providing a mutual fund rating service published
for over 25 years.

IBC's Money Fund  Report,  a weekly  publication  of money market fund total net
assets, yield, and portfolio composition.

Individual   Investor,   a  newspaper  that  periodically  reviews  mutual  fund
performance and other data.

Investment Advisor, a monthly publication reviewing performance of mutual funds.

Investor's  Business Daily, a nationally  distributed  newspaper which regularly
covers financial news.

Kiplinger's  Personal  Finance  Magazine,  a  monthly  publication  periodically
reviewing mutual fund performance.

Lehman  Brothers,  Inc.  "The Bond  Market  Report"  reports on  various  Lehman
Brothers bond indices.

Lehman  Government/Corporate  Bond Index -- is a widely  used index  composed of
government, corporate, and mortgage backed securities.

Lehman Long Term Treasury Bond -- is composed of all bonds covered by the Lehman
Treasury Bond Index with maturities of 10 years or greater.

Lipper Analytical Services,  Inc., a publication  periodically  reviewing mutual
funds industry-wide by means of various methods of analysis.

                                       13

<PAGE>



Merrill Lynch Pierce Fenner & Smith Taxable Bond Indices reports on a variety of
bond indices.

Money,  a monthly  magazine that from time to time features both specific  funds
and the mutual fund industry as a whole.

Morgan Stanley  Capital  International  World Index measures the  performance of
stock markets in 16 nations, including Australia, Hong Kong, Germany, the United
Kingdom, Canada, and the United States.

Morningstar, Mutual Fund Values, publications of Morningstar, Inc., periodically
reviewing mutual funds industry-wide by means of various methods of analysis and
textual commentary.

Mutual Fund Forecaster, a newsletter providing a mutual fund rating service.

Nasdaq Industrial Index -- is composed of more than 3,000 industrial  issues. It
is a  value-weighted  index calculated on price change only and does not include
income.

New York Times,  a  nationally  distributed  newspaper  which  regularly  covers
financial news.

The No-Load  Fund  Investor,  a monthly  newsletter  that reports on mutual fund
performance,  rates funds, and discusses  investment  strategies for mutual fund
investors.

Personal  Investing  News,  a monthly  news  publication  that often  reports on
investment opportunities and market conditions.

Personal  Investor,  a monthly investment  advisory  publication that includes a
special  section  reporting on mutual fund  performance,  yields,  indices,  and
portfolio holdings.

Russell  3000 Index -- consists of the 3,000  largest  stocks of U.S.  domiciled
companies  commonly  traded on the New York and American Stock  Exchanges or the
Nasdaq over-the-counter  market,  accounting for over 90% of the market value of
publicly traded stocks in the U.S.

Russell 2000 Small Company Stock Index -- consists of the smallest  2,000 stocks
within the Russell 3000; a widely used benchmark for small capitalization common
stocks.

Salomon  Smith Barney GNMA Index -- includes  pools of mortgages  originated  by
private lenders and guaranteed by the mortgage pools of the Government  National
Mortgage Association.

Salomon  Smith Barney  High-Grade  Corporate  Bond Index -- consists of publicly
issued, non-convertible corporate bonds rated AA or AAA. It is a value-weighted,
total return index,  including  approximately  800 issues with  maturities of 12
years or greater.

Salomon Smith Barney Broad  Investment-Grade  Bond Index -- is a market-weighted
index that contains  approximately  4,700 individually  priced  investment-grade
corporate bonds rated BBB or better,  U.S.  Treasury/agency  issues and mortgage
pass-through securities.

Salomon  Smith Barney  Market  Performance  tracks the Salomon Smith Barney bond
index.

Standard  &  Poor's  500  Composite  Stock  Price  Index  -- is an  index of 500
companies representing the U.S. stock market.

Standard  &  Poor's  100  Composite  Stock  Price  Index  -- is an  index of 100
companies representing the U.S. stock market.

Standard & Poor's Preferred Index is an index of preferred securities.

Success,  a monthly magazine  targeted to the world of entrepreneurs and growing
businesses, often featuring mutual fund performance data.

USA  Today,  a  national   newspaper  that  periodically   reports  mutual  fund
performance data.

U.S. News and World Report, a national weekly that  periodically  reports mutual
fund performance data.

The Wall Street  Journal,  a nationally  distributed  newspaper  which regularly
covers financial news.

The Wall Street  Transcript,  a periodical  reporting  on financial  markets and
securities.

Wilshire  5000  Equity  Indexes  --  consists  of  nearly  5,000  common  equity
securities,  covering  all  stocks  in the  U.S.  for  which  daily  pricing  is
available.

Wilshire 4500 Equity Index -- consists of all stocks in the Wilshire 5000 except
for the 500 stocks in the Standard & Poor's 500 Index.

   Indices prepared by the research departments of such financial  organizations
as Salomon Smith Barney Holdings,  Inc., Merrill Lynch, Pierce,  Fenner & Smith,
Inc., Bear Stearns & Co., Inc., and Ibbotson  Associates may be used, as well as
information provided by the Federal Reserve Board.

                             DISTRIBUTION OF SHARES

   Pursuant to a Distribution  Agreement,  Investor Service Center, Inc. acts as
the  principal   Distributor  of  the  Fund's  shares.  Under  the  Distribution
Agreement,  the  Distributor  uses its best efforts,  consistent  with its other
businesses,  to sell shares of the Fund.  Fund shares are offered  continuously.
Pursuant to a Plan of Distribution ("Plan") adopted under Rule 12b-1 of the 1940
Act, the Fund pays the Distributor monthly a fee in the amount of one-quarter of
one percent per annum of the Fund's average daily net assets as compensation for
service  activities and a fee in the amount of three-quarters of one percent per
annum of the Fund's average daily net assets as  compensation  for  distribution
activities.

   In performing  distribution and service activities  pursuant to the Plan, the
Distributor may spend such amounts as it deems  appropriate on any activities or
expenses  primarily  intended to result in the sale of the Fund's  shares or the
servicing and maintenance of shareholder  accounts,  including,  but not limited
to:  advertising,  direct mail, and  promotional  expenses;  compensation to the
Distributor and its employees;  compensation to and expenses, including overhead
and  telephone  and  other  communication  expenses,  of  the  Distributor,  the
Investment  Manager,  the Fund,  and selected  dealers and their  affiliates who
engage in or support the distribution of shares or who service shareholder

                                       14

<PAGE>



accounts; fulfillment expenses, including the costs of printing and distributing
prospectuses,  statements of additional information,  and reports for other than
existing shareholders;  the costs of preparing,  printing and distributing sales
literature  and  advertising  materials;  and  internal  costs  incurred  by the
Distributor and allocated by the Distributor to its efforts to distribute shares
of the Fund such as  office  rent and  equipment,  employee  salaries,  employee
bonuses and other overhead expenses.

   Among other things, the Plan provides that (1) the Distributor will submit to
the Corporation's Board of Directors at least quarterly,  and the Directors will
review,  reports  regarding all amounts expended under the Plan and the purposes
for which such expenditures were made, (2) the Plan will continue in effect only
so long as it is approved  at least  annually,  and any  material  amendment  or
agreement  related  thereto is approved,  by the Board of  Directors,  including
those  Directors  who are not  "interested  persons" of the Fund and who have no
direct  or  indirect  financial  interest  in the  operation  of the Plan or any
agreement related to the Plan ("Plan Directors"),  acting in person at a meeting
called for that  purpose,  unless  terminated  by vote of a majority of the Plan
Directors,  or by vote of a majority of the outstanding voting securities of the
Fund, (3) payments by the Fund under the Plan shall not be materially  increased
without the  affirmative  vote of the  holders of a majority of the  outstanding
voting  securities  of the Fund and (4) while the Plan  remains in  effect,  the
selection and  nomination of Directors who are not  "interested  persons" of the
Fund  shall  be  committed  to the  discretion  of the  Directors  who  are  not
interested persons of the Fund.

   With the  approval of the vote of a majority of the entire Board of Directors
and of the Plan  Directors  of the Fund,  the  Distributor  has  entered  into a
related  agreement  with Hanover  Direct  Advertising  Company,  Inc.  ("Hanover
Direct"),  a wholly owned  subsidiary  of Winmill,  in an attempt to obtain cost
savings on the  marketing  of the Fund's  shares.  Hanover  Direct will  provide
services  to  the  Distributor  on  behalf  of the  Fund  and  other  affiliated
investment companies at standard industry rates, which includes commissions. The
amount of Hanover Direct's commissions over its cost of providing Fund marketing
will be credited to the Fund's distribution  expenses and represent a savings on
marketing  to the  benefit of the Fund.  To the extent  Hanover  Direct's  costs
exceed such commissions, Hanover Direct will absorb any such costs.

   It is the opinion of the Board of  Directors  that the Plan is  necessary  to
maintain a flow of  subscriptions to offset  redemptions.  Redemptions of mutual
fund shares are inevitable.  If redemptions are not offset by  subscriptions,  a
fund shrinks in size and its ability to maintain  quality  shareholder  services
declines.  Eventually,  redemptions  could  cause a fund to  become  uneconomic.
Furthermore,   an  extended   period  of  significant  net  redemptions  may  be
detrimental  to orderly  management  of the  portfolio.  Offsetting  redemptions
through sales efforts  benefits  shareholders  by maintaining the viability of a
fund. In periods where net sales are  achieved,  additional  benefits may accrue
relative to portfolio management and increased shareholder servicing capability.
In addition,  increased  assets enable the  establishment  and  maintenance of a
better  shareholder  servicing  staff which can  respond  more  effectively  and
promptly to shareholder inquiries and needs. While net increases in total assets
are  desirable,  the primary  goal of the Plan is to prevent a decline in assets
serious  enough to cause  disruption of portfolio  management  and to impair the
Fund's ability to maintain a high level of quality shareholder services.

   The Plan  increases  the  overall  expense  ratio  of the  Fund;  however,  a
substantial  decline in Fund  assets is likely to  increase  the  portion of the
Fund's expense ratio comprised of management  fees and fixed costs (i.e.,  costs
other  than the Plan)  while a  substantial  increase  in Fund  assets  would be
expected to reduce the portion of the expense ratio comprised of management fees
(reflecting  a larger  portion  of the  assets  falling  within  fee  scale-down
levels), as well as of fixed costs. Nevertheless,  the net effect of the Plan is
to  increase  overall  expenses.  To the  extent  the Plan  maintains  a flow of
subscriptions  to the Fund, there results an immediate and direct benefit to the
Investment   Manager  by   maintaining  or  increasing  its  fee  revenue  base,
diminishing the obligation, if any, of the Investment Manager to make an expense
reimbursement to the Fund, and eliminating or reducing any contribution  made by
the Investment Manager to marketing expenses. Other than as described herein, no
Director or interested  person of the Fund had any direct or indirect  financial
interest in the operation of the Plan or any related agreement.

   Of the amounts paid to the  Distributor  during the Fund's  fiscal year ended
December 31, 1998,  approximately  $110 represented  paid expenses  incurred for
advertising, $19,463 for printing and mailing prospectuses and other information
to other than current shareholders,  $46,001 for salaries of marketing and sales
personnel,  $4122 for payments to third  parties who sold shares of the Fund and
provided certain services in connection  therewith,  and $9,573 for overhead and
miscellaneous expenses. These amounts have been derived by determining the ratio
each  such  category  represents  to  the  total  expenditures  incurred  by the
Distributor in performing  services  pursuant to the Plan and then applying such
ratio to the total amount of compensation  received by the Distributor  pursuant
to the Plan.

   The  Glass-Steagall Act prohibits certain banks from engaging in the business
of underwriting,  selling, or distributing securities such as shares of a mutual
fund.  Although the scope of this prohibition under the  Glass-Steagall  Act has
not been fully  defined,  in the  Distributor's  opinion it should not  prohibit
banks from being paid for  shareholder  services  under the Plan. If, because of
changes in law or regulation, or because of new interpretations of existing law,
a bank or the Fund were  prevented from  continuing  these  arrangements,  it is
expected that other  arrangements  for these services will be made. In addition,
state  securities  laws on this  issue may  differ  from the  interpretation  of
Federal  law  expressed  herein  and banks  and  financial  institutions  may be
required to register as dealers pursuant to state law.

                             ALLOCATION OF BROKERAGE

   The Fund seeks to obtain prompt execution of orders at the most favorable net
prices. Fund transactions in debt and over-the-counter  securities generally are
with  dealers  acting as  principals  at net prices with little or no  brokerage
costs. In certain circumstances,  however, the Fund may engage a broker as agent
for a commission to effect  transactions for such  securities.  Transactions are
directed to brokers and dealers qualified to execute orders or provide research,
brokerage  or other  services,  and who may sell  shares of the Fund or of other
affiliated   funds.   The  Investment   Manager  may  also  allocate   portfolio
transactions to  broker/dealers  that remit a portion of their  commissions as a
credit against the Custodian's  charges. No formula exists and no arrangement is
made with or promised to any broker/dealer  which commits either a stated volume
or  percentage  of  brokerage  business  based on  research,  brokerage or other
services  furnished  to the  Investment  Manager  or upon  sale of Fund  shares.
Purchases of  securities  from  underwriters  include a commission or concession
paid by the issuer to the  underwriter,  and  purchases  from dealers  include a
spread between the bid and asked price.  While the Investment  Manager generally
seeks  competitive  spreads or  commissions,  the Fund will not  necessarily  be
paying the lowest spread or commission available.

   The Investment  Manager directs portfolio  transactions to broker/dealers for
execution  on  terms  and at rates  which  it  believes,  in good  faith,  to be
reasonable in view of the overall  nature and quality of services  provided by a
particular  broker/dealer,  including brokerage and research services,  sales of
shares of the Fund or other  Funds  advised  by the  Investment  Manager  or its
affiliates.  With respect to brokerage and research services,  consideration may
be given in the selection of  broker/dealers  to brokerage or research  services
provided and payment may be made

                                       15

<PAGE>



of a fee  higher  than that  charged  by  another  broker/dealer  which does not
furnish brokerage or research services or which furnishes  brokerage or research
services  deemed to be of lesser value, so long as the criteria of Section 28(e)
of the  Securities  Exchange  Act of 1934,  as amended  ("1934  Act"),  or other
applicable  law are met.  Section  28(e) of the 1934 Act was adopted in 1975 and
specifies that a person with investment  discretion shall not be "deemed to have
acted  unlawfully  or to have  breached a fiduciary  duty"  solely  because such
person  has  caused  the  account  to pay a higher  commission  than the  lowest
available under certain  circumstances.  To obtain the benefit of Section 28(e),
the  person  so  exercising   investment  discretion  must  make  a  good  faith
determination that the commissions paid are "reasonable in relation to the value
of the brokerage and research  services provided . . . viewed in terms of either
that particular transaction or his overall  responsibilities with respect to the
accounts as to which he exercises  investment  discretion."  Thus,  although the
Investment  Manager  may  direct  portfolio   transactions  without  necessarily
obtaining  the lowest  price at which such  broker/dealer,  or  another,  may be
willing to do business, the Investment Manager seeks the best value for the Fund
on each trade that circumstances in the market place permit, including the value
inherent in on-going relationships with quality brokers.

   Currently,  it is not possible to determine  the extent to which  commissions
that reflect an element of value for brokerage or research services might exceed
commissions  that would be payable for  execution  alone,  nor generally can the
value of such  services  to the Fund be  measured,  except  to the  extent  such
services have a readily  ascertainable  market value. There is no certainty that
services so purchased, or the sale of Fund shares, if any, will be beneficial to
the Fund, and it may be that other affiliated  investment  companies will derive
benefit therefrom.  Such services being largely intangible, no dollar amount can
be attributed to benefits  realized by the Fund or to  collateral  benefits,  if
any, conferred on affiliated entities. These services may include "brokerage and
research  services"  as  defined  in  Section  28(e)(3)  of the 1934 Act,  which
presently  include  (1)  furnishing  advice as to the value of  securities,  the
advisability  of  investing  in,  purchasing  or  selling   securities  and  the
availability  of  securities  or  purchasers  or  sellers  of  securities,   (2)
furnishing  analyses and reports  concerning  issuers,  industries,  securities,
economic  factors  and  trends,  portfolio  strategy,  and  the  performance  of
accounts,  and (3) effecting  securities  transactions and performing  functions
incidental  thereto (such as clearance,  settlement,  and custody).  Pursuant to
arrangements with certain  broker/dealers,  such broker/dealers  provide and pay
for  various   computer   hardware,   software  and  services,   market  pricing
information, investment subscriptions and memberships, and other third party and
internal research of assistance to the Investment  Manager in the performance of
its investment  decision-making  responsibilities  for transactions  effected by
such broker/dealers for the Fund. Commission "soft dollars" may be used only for
"brokerage  and  research  services"  provided  directly  or  indirectly  by the
broker/dealer  and under no  circumstances  will cash  payments  be made by such
broker/dealers  to the Investment  Manager.  To the extent that commission "soft
dollars" do not result in the provision of any "brokerage and research services"
by  a  broker/dealer  to  whom  such  commissions  are  paid,  the  commissions,
nevertheless,  are  the  property  of such  broker/dealer.  To the  extent  such
services are utilized by the Investment  Manager for other than the  performance
of its investment decision-making responsibilities, the Investment Manager makes
an appropriate allocation of the cost of such services according to their use.

   Until March 31,  1999,  Bull & Bear  Securities,  Inc.  ("BBSI") was a wholly
owned  subsidiary  of  Winmill  and the  Investment  Manager's  affiliate.  BBSI
provides  discount  brokerage  services to the public as an  introducing  broker
clearing through  unaffiliated  firms on a fully disclosed basis. The Investment
Manager was, until March 31, 1999,  authorized to place Fund  brokerage  through
BBSI at its posted  discount rates and indirectly  through a BBSI clearing firm.
The  Fund did not deal  with  BBSI in any  transaction  in  which  BBSI  acts as
principal.  The  clearing  firm  executed  trades in  accordance  with the fully
disclosed  clearing  agreement  between  BBSI and the  clearing  firm.  BBSI was
financially  responsible  to the clearing  firm for all trades of the Fund until
complete  payment was received by the Fund or the clearing  firm.  BBSI provided
order entry  services  or order  entry  facilities  to the  Investment  Manager,
arranged for execution and clearing of portfolio  transactions through executing
and clearing  brokers,  monitored  trades and settlements and performed  limited
back-office functions including the maintenance of all records required of it by
the National Association of Securities Dealers, Inc.

   In order for BBSI to effect  any  portfolio  transactions  for the Fund,  the
commissions,  fees or  other  remuneration  received  by  BBSI  must  have  been
reasonable and fair compared to the commissions, fees or other remuneration paid
to other brokers in connection with comparable  transactions  involving  similar
securities being purchased or sold on a securities  exchange during a comparable
period of time. The Fund's Board of Directors  adopted  procedures in conformity
with Rule 17e-1 under the 1940 Act to ensure that all brokerage commissions paid
to BBSI were  reasonable and fair.  Although BBSI's posted discount rates may be
lower than those  charged by full cost  brokers,  such rates may be higher  than
some other discount brokers and certain brokers may be willing to do business at
a lower  commission rate on certain trades.  The Board determined that portfolio
transactions  may have been  executed  through  BBSI if, in the  judgment of the
Investment Manager,  the use of BBSI was likely to result in price and execution
at least as  favorable  as those of other  qualified  broker/dealers  and if, in
particular  transactions,  BBSI  charged  the Fund a rate  consistent  with that
charged to comparable unaffiliated customers in similar transactions.  Brokerage
transactions  with BBSI were also subject to such fiduciary  standards as may be
imposed by applicable  law. The  Investment  Manager's  fees under its agreement
with the Fund were not reduced by reason of any  brokerage  commissions  paid to
BBSI.

   Investment  decisions  for the Fund and for the other  Funds  managed  by the
Investment Manager or its affiliates are made independently based on each Fund's
investment objectives and policies.  The same investment decision,  however, may
occasionally  be made  for two or more  Funds.  In such a case,  the  Investment
Manager may combine  orders for two or more Funds for a  particular  security (a
"bunched  trade") if it appears  that a combined  order would  reduce  brokerage
commissions  and/or result in a more favorable  transaction  price. All accounts
participating in a bunched trade shall receive the same execution price with all
transaction  costs (e.g.  commissions)  shared on a pro rata basis. In the event
that there are insufficient securities to satisfy all orders, the partial amount
executed shall be allocated among  participating  accounts pro rata on the basis
of order size. In the event of a partial fill and the portfolio manager does not
deem the pro rata  allocation  of a specified  number of shares to a  particular
account to be  sufficient,  the  portfolio  manager  may waive in  writing  such
allocation.   In  such  event,  the  account's  pro  rata  allocation  shall  be
reallocated  to the other  accounts  that  participated  in the  bunched  trade.
Following trade execution, portfolio managers may determine in certain instances
that it would be fair and equitable to allocate securities  purchased or sold in
such trade in a manner  other than that which  would  follow  from a  mechanical
application of the  procedures  outlined  above.  Such instances may include (i)
partial  fills and special  accounts  (In the event that there are  insufficient
securities  to  satisfy  all  orders,  it may be  fair  and  equitable  to  give
designated accounts with special investment  objectives and policies some degree
of priority over other types of  accounts.);  (ii)  unsuitable or  inappropriate
investment (It may be  appropriate to deviate from the allocation  determined by
application of these procedures if it is determined  before the final allocation
that the security in question  would be unsuitable or  inappropriate  for one or
more of the accounts originally  designated).  While in some cases this practice
could have a  detrimental  effect  upon the price or quantity  available  of the
security  with respect to the Fund,  the  Investment  Manager  believes that the
larger volume of combined  orders can generally  result in better  execution and
prices. The Fund is not obligated to deal with any particular broker,  dealer or
group  thereof.  Certain  broker/dealers  that  the  Fund  or  other  affiliated
investment

                                       16

<PAGE>



companies  do  business  with may,  from  time to time,  own more than 5% of the
publicly  traded Class A non-voting  Common Stock of Winmill,  the parent of the
Investment Manager, and may provide clearing services to BBSI.

   During the fiscal years ended December 31, 1996, 1997 and 1998, the Fund paid
total brokerage commissions of $106,792, $69,075, and $17,680, respectively. For
the fiscal year ended  December 31, 1998,  $9,288 in brokerage  commissions  was
allocated to broker/dealers that provided research, analytical, statistical, and
other  services  to  the  Fund,  including  third  party  research,  market  and
comparative  industry  information,  portfolio analysis  services,  computerized
market data and other services.  For the fiscal year ended December 31, 1998, no
brokerage commissions were allocated to broker/dealers for selling shares of the
Fund and other Funds advised by the Investment Manager or its affiliates. During
the Fund's fiscal years ended  December 31, 1996,  1997 and 1998,  the Fund paid
$9,291,  $23,672,  and $8,393  respectively,  in brokerage  commissions to BBSI,
which represented 8.70%, 34.27%, and 47.47% respectively, of the total brokerage
commissions paid by the Fund and 22.62%, 40.01%, and 57.00% respectively, of the
aggregate dollar amount of transactions involving the payment of commissions.

   The Fund's portfolio turnover rate may vary from year to year and will not be
a  limiting  factor  when  the  Investment   Manager  deems  portfolio   changes
appropriate. The portfolio turnover rate is calculated by dividing the lesser of
the Fund's  annual  sales or purchases of  portfolio  securities  (exclusive  of
purchases or sales of securities  whose  maturities  at the time of  acquisition
were one  year or  less) by the  monthly  average  value  of  securities  in the
portfolio during the year.

                             DISTRIBUTIONS AND TAXES

   If the U.S.  Postal  Service cannot deliver a  shareholder's  check,  or if a
shareholder's check remains uncashed for six months, the Fund reserves the right
to redeposit a shareholder  check,  thereby crediting the shareholder's  account
with  additional  Fund shares at the then current net asset value in lieu of the
cash  payment  and to  thereafter  issue  such  shareholder's  distributions  in
additional Fund shares.

   The Fund  intends  to  continue  to  qualify  for  treatment  as a  regulated
investment  company ("RIC") under the Code. To qualify for that  treatment,  the
Fund must distribute to its  shareholders  for each taxable year at least 90% of
its investment  company taxable income  (consisting  generally of net investment
income,  net short term capital gain and net gains from certain foreign currency
transactions)  ("Distribution  Requirement")  and must meet  several  additional
requirements.  Among these  requirements are the following:  (1) at least 90% of
the Fund's  gross  income  each  taxable  year must be derived  from  dividends,
interest,  payments with respect to securities loans, and gains from the sale or
other  disposition  of  securities  or  foreign  currencies,   or  other  income
(including  gains from  options,  futures,  or forward  contracts)  derived with
respect to its business of investing in securities or those currencies  ("Income
Requirement"),   and  (2)  the   Fund's   investments   must   satisfy   certain
diversification requirements. In any year during which the applicable provisions
of the Code are satisfied, the Fund will not be liable for Federal income tax on
net  income  and gains  that are  distributed  to its  shareholders.  If for any
taxable  year the Fund  does not  qualify  for  treatment  as a RIC,  all of its
taxable income would be taxed at corporate rates.

   A portion of the dividends from the Fund's investment  company taxable income
(whether  paid in cash or in  additional  Fund  shares) may be eligible  for the
dividends-received  deduction allowed to corporations.  The eligible portion may
not exceed the aggregate dividends received by the Fund from U.S.  corporations.
However,  dividends  received  by a  corporate  shareholder  and  deducted by it
pursuant  to the  dividends-received  deduction  are subject  indirectly  to the
alternative minimum tax.

   A loss on the sale of Fund  shares that were held for six months or less will
be treated as a long term (rather than a short term)  capital loss to the extent
the seller received any capital gain distributions attributable to those shares.

   Any dividend or other  distribution  will have the effect of reducing the net
asset  value of the Fund's  shares on the  payment  date by the amount  thereof.
Furthermore, any such dividend or other distribution, although similar in effect
to a  return  of  capital,  will  be  subject  to  taxes.  Dividends  and  other
distributions may also be subject to state and local taxes.

   The Fund will be subject to a  nondeductible  4% excise tax ("Excise Tax") to
the  extent it fails to  distribute  by the end of any  calendar  year an amount
equal to the sum of (1) 98% of its ordinary income,  (2) 98% of its capital gain
net income (determined on an October 31 fiscal year basis),  plus (3) generally,
income  and gain not  distributed  or  subject  to  corporate  tax in the  prior
calendar year. The Fund intends to avoid  imposition of the Excise Tax by making
adequate distributions.

   Dividends  and  interest  received  by the Fund  may be  subject  to  income,
withholding,  or other taxes imposed by foreign  countries and U.S.  possessions
that would reduce the yield on its securities.  Tax conventions  between certain
countries  and the United States may reduce or eliminate  these  foreign  taxes,
however,  and many foreign  countries  do not impose  taxes on capital  gains in
respect of  investments by foreign  investors.  If more than 50% of the value of
the Fund's total assets at the close of its taxable year  consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that would enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign and
U.S.  possessions'  income taxes paid by it. Pursuant to the election,  the Fund
would  treat  those  taxes  as  dividends  paid  to its  shareholders  and  each
shareholder would be required to (1) include in gross income,  and treat as paid
by the shareholder,  the shareholder's  proportionate  share of those taxes, (2)
treat the  shareholder's  share of those taxes and of any  dividend  paid by the
Fund that  represents  income from  foreign or U.S.  possessions  sources as the
shareholder's  own income from those  sources,  and (3) either  deduct the taxes
deemed paid by the shareholder in computing the shareholder's taxable income or,
alternatively,  use the foregoing  information  in  calculating  the foreign tax
credit against the shareholder's Federal income tax. The Fund will report to its
shareholders  shortly  after each  taxable year their  respective  shares of the
Fund's income from sources within, and taxes paid to, foreign countries and U.S.
possessions if it makes this election.

   The Fund may invest in the stock of "passive  foreign  investment  companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following  tests:  (1) at least 75% of its gross  income  is  passive  or (2) an
average of at least 50% of its assets  produce,  or are held for the  production
of, passive  income.  Under certain  circumstances,  the Fund will be subject to
Federal  income tax on a portion of any  "excess  distribution"  received on the
stock of a PFIC or of any gain from disposition of the stock (collectively "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC income as
a taxable dividend to its  shareholders.  The balance of the PFIC income will be
included in the Fund's taxable income and,  accordingly,  will not be taxable to
it to the extent that income is  distributed  to its  shareholders.  If the Fund
invests in a PFIC and elects to treat the PFIC as a "qualified  electing  fund",
then in lieu of the  foregoing  tax and interest  obligation,  the Fund would be
required  to  include in income  each year its pro rata  share of the  qualified
electing fund's annual ordinary earnings and net

                                       17

<PAGE>



capital  gain  (the  excess of net long term  capital  gain over net short  term
capital loss) even if they are not distributed to the Fund; those amounts likely
would have to be distributed to satisfy the  Distribution  Requirement and avoid
imposition of the Excise Tax. In most  instances it will be very  difficult,  if
not impossible, to make this election because of certain requirements thereof.

   For tax years beginning  after December 31, 1997,  open-end RICs, such as the
Fund,  are entitled to elect to  "mark-to-market"  their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess,  as of the end of that year,  of the fair market  value of each
such  PFIC's   stock  over  the   adjusted   basis  in  that  stock   (including
mark-to-market gain for each prior year for which an election was in effect).

   The Taxpayer  Relief Act of 1997 included  constructive  sale provisions that
generally  will  apply  if a Fund  either  (1)  holds an  appreciated  financial
position  with  respect  to stock,  certain  debt  obligations,  or  partnership
interests  ("appreciated financial position") and then enters into a short sale,
futures  or  forward  contract  or  offsetting   notional   principal   contract
(collectively, a "Contract") with respect to the same or substantially identical
property or (2) holds an appreciated  financial  position that is a Contract and
then acquires  property that is the same as, or  substantially  identical to the
underlying  property.  In each  instance,  with  certain  exceptions,  the  Fund
generally will be taxed as if the  appreciated  financial  position were sold at
its fair market value on the date the Fund enters into the financial position or
acquires the property, respectively. Transactions that are identified as hedging
or straddle  transactions  under other  provisions of the Code can be subject to
the constructive sale provisions.

   The foregoing  discussion of Federal tax consequences is based on the tax law
in effect on the date of this  Statement  of  Additional  Information,  which is
subject to change by legislative,  judicial, or administrative  action. The Fund
may be subject to state or local tax in  jurisdictions in which it may be deemed
to be doing business.

                             REPORTS TO SHAREHOLDERS

   The  Fund  issues,  at  least  semi-annually,  reports  to  its  shareholders
including a list of investments  held and statements of assets and  liabilities,
income and  expense,  and changes in net assets of the Fund.  The Fund's  fiscal
year ends on December 31.

                          CUSTODIAN AND TRANSFER AGENT

   Investors Fiduciary Trust Company,  801 Pennsylvania,  Kansas City, MO 64105,
("Custodian")  has been  retained to act as Custodian of the Fund's  investments
and  may  appoint  one  or  more  subcustodians.  The  Custodian  also  performs
accounting  services for the Fund. As part of its agreement  with the Fund,  the
Custodian  may  apply  credits  or  charges  for its  services  to the Fund for,
respectively,  positive or deficit cash balances maintained by the Fund with the
Custodian. DST Systems, Inc., Box 419789, Kansas City, MO 64141-6789 acts as the
Fund's Transfer and Dividend Disbursing Agent. The Distributor  provides certain
shareholder  administration  services  to the  Fund  pursuant  to a  Shareholder
Services  Agreement and is reimbursed by the Fund the actual costs incurred with
respect thereto.  For services  performed  pursuant to the Shareholder  Services
Agreement,  the Fund  reimbursed  the  Distributor  for the fiscal  years  ended
December 31, 1996, 1997, and 1998 approximately  $11,899,  $11,055,  and $10,478
respectively.

                                    AUDITORS

   Tait,  Weller & Baker,  8 Penn  Center  Plaza,  Suite 800,  Philadelphia,  PA
19103-2108,  are  the  Fund's  independent  accountants.  The  Fund's  financial
statements are audited annually.

                              FINANCIAL STATEMENTS

   The Fund's Financial  Statements for the fiscal year ended December 31, 1998,
together with the Report of the Fund's independent  accountants thereon,  appear
in the Fund's  Annual  Report to  Shareholders  and are  incorporated  herein by
reference.


                                       18

<PAGE>



                    APPENDIX -- DESCRIPTIONS OF BOND RATINGS

Moody's Investors Service, Inc.'s Corporate Bond Ratings

Aaa      Bonds  which are rated Aaa are judged to be of the best  quality.  They
         carry the smallest degree of investment risk and are generally referred
         to as "gilt  edged".  Interest  payments  are  protected  by a large or
         exceptionally  stable margin and principal is secure. While the various
         protective  elements  are  likely to  change,  such  changes  as can be
         visualized  are  most  unlikely  to  impair  the  fundamentally  strong
         position of such issues.

Aa       Bonds  which  are  rated Aa are  judged  to be of high  quality  by all
         standards. Together with the Aaa group they comprise what are generally
         known as high  grade  bonds.  They are rated  lower than the best bonds
         because  margins of protection may not be as large as in Aaa securities
         or  fluctuation of protective  elements may be of greater  amplitude or
         there  may be other  elements  present  which  make the long  term risk
         appear somewhat larger than the Aaa securities.

A        Bonds which are rated A possess many  favorable  investment  attributes
         and are to be considered as  upper-medium  grade  obligations.  Factors
         giving security to principal and interest are considered adequate,  but
         elements may be present  which suggest a  susceptibility  to impairment
         some time in the future.

Baa      Bonds which are rated Baa are  considered  as medium grade  obligations
         (i.e., they are neither highly protected nor poorly secured).  Interest
         payments and  principal  security  appear  adequate for the present but
         certain protective elements may be lacking or may be characteristically
         unreliable over any great length of time.  Such bonds lack  outstanding
         investment characteristics and in fact have speculative characteristics
         as well.

Ba       Bonds which are rated Ba are judged to have speculative elements; their
         future cannot be considered as  well-assured.  Often the protec tion of
         interest and principal  payments may be very moderate,  and thereby not
         well  safeguarded  during  both  good and bad  times  over the  future.
         Uncertainty of position characterizes bonds in this class.

B        Bonds which are rated B generally lack characteristics of the desirable
         investment.   Assurance  of  interest  and  principal  payments  or  of
         maintenance of other terms of the contract over any long period of time
         may be small.

Caa      Bonds which are rated Caa are of poor  standing.  Such issues may be in
         default  or there may be present  elements  of danger  with  respect to
         principal or interest.

Ca       Bonds which are rated Ca represent obligations which are speculative in
         a high  degree.  Such issues are often in default or have other  marked
         shortcomings.


Standard & Poor's Ratings Group Corporate Bond Ratings

AAA      An obligation  rated AAA has the highest rating  assigned by Standard &
         Poor's. The obligor's capacity to meet its financial  commitment on the
         obligation is extremely strong.

AA       An obligation rated AA differs from the highest rated  obligations only
         in  small  degree.   The  obligor's  capacity  to  meet  its  financial
         commitment on the obligation is very strong.

A        An  obligation  rated A is  somewhat  more  susceptible  to the adverse
         effects  of changes  in  circumstances  and  economic  conditions  than
         obligations in higher rated categories. However, the obligor's capacity
         to meet its financial commitments on the obligation is still strong.

BBB      An  obligation  rated  BBB  exhibits  adequate  protection  parameters.
         However, adverse economic conditions or changing circumstances are more
         likely  to lead to a  weakened  capacity  of the  obligor  to meet  its
         financial commitment on the obligation.

BB       An obligation  rated BB is less  vulnerable  to  nonpayment  than other
         speculative issues.  However,  it faces major ongoing  uncertainties or
         exposure to adverse business,  financial,  or economic conditions which
         could lead to the obligor's  inadequate  capacity to meet its financial
         commitment on the obligation.

B        An  obligation  rated  B is  more  vulnerable  to  nonpayment  than  an
         obligation rated BB, but the obligor currently has the capacity to meet
         its  financial   commitment  on  the  obligation.   Adverse   business,
         financial,  or economic  conditions  will likely  impair the  obligor's
         capacity  or  willingness  to  meet  its  financial  commitment  on the
         obligation.

CCC      An obligation  rated CCC is currently  vulnerable to nonpayment  and is
         dependent upon favorable business,  financial,  and economic conditions
         for the obligor to meet its financial commitment on the obligation.  In
         the event of adverse business,  financial, or economic conditions,  the
         obligor  is not  likely  to have the  capacity  to meet  its  financial
         commitment on the obligation.

CC An obligation rated CC is currently highly vulnerable to nonpayment.

C        The C  rating  may be used  to  cover a  situation  where a  bankruptcy
         petition has been filed or similar action has been taken,  but payments
         on the obligation are being continued.

                                       19





<PAGE>




                           MIDAS U.S. AND OVERSEAS FUND LTD.

                           Part C. Other Information

Item 23. Exhibits

     (a)  Articles  of  Amendment  of  Articles  of  Incorporation  and Articles
          Supplementary:  Filed herewith.

     (b)  By-Laws  as now in  effect:  Filed with the  Securities  and  Exchange
          Commission April  30, 1998, Accession Number 0000796532-98-000005

     (c)  Articles  of  Amendment  of Articles  of  Incorporation  and  Articles
          Supplementary:  Filed herewith.
          By-Laws  as now in  effect:  Filed with the  Securities  and  Exchange
          Commission  April  30, 1998, Accession Number 0000796532-98-000005

           (d)       Form of Investment  Management Agreement,  filed  herewith.

           (e)       (1)       Form of Distribution  Agreement, filed  with  the
                               Securities  and Exchange Commission  on April 30,
                               1998, accession  number 0000796532-98-000005.

                     (2)       Form of Related Agreement to Plan of Distribution
                               between Investor Service Center, Inc. and Hanover
                               Direct Advertising Company, Inc., filed with  the
                               Securities and Exchange  Commission on  April 30,
                               1998, Accession number 0000796532-98-000005.

           (f)       not applicable.

           (g)                 (1) Form of  Custody  and  Investment  Accounting
                               Agreement, filed with the Securities and Exchange
                               Commission on April 29, 1997, accession number
                               0000796532-97-000004

                     (2)       Form  of  Retirement   Plan  Custodial   Services
                               Agreement, filed with the Securities and Exchange
                               Commission on  April  30, 1998,  Accession Number
                               0000796532-98-000005.

           (h)                 (a) Form of Transfer Agency Agreement, filed with
                               the Securities and Exchange  Commission  on April
                               28, 1995,  accession number 0000796532-95-000003

                     (b)       Form  of  Agency   Agreement,   filed   with  the
                               Securities and Exchange  Commission on  April 30,
                               1998,  accession number 0000796532-98-000005

                     (c)       Form  of credit facilities agreement,  filed with
                               the   Securities   and  Exchange   Commission  on
                               April     30,     1998,      accession     number
                               0000796532-98-000005.

                     (d)       Form    of   Securities   Lending   Authorization
                               Agreement, filed with the Securities and Exchange
                               Commission on April  30,  1998,  accession number
                               0000796532-98-000005.

                     (e)       Form  of  Segregated   Account   Procedural   and
                               Safekeeping Agreement,  filed with the Securities
                               and  Exchange   Commission   on  April  30, 1998,
                               accession number 0000796532-98-000005.

           (i)       Opinion    of  Counsel  as  to   Legality  of
                     Securities,   filed  with   the  Securities   and  Exchange
                     Commission   on   April    30,   1998,   accession   number
                     0000796532-98-000005.

           (j)       (1)      Accountants consent: Filed herewith.

                     (2)      Opinion of Counsel with respect to eligibility for
                              effectiveness  under  paragraph  (b)  of  rule 485
                              Filed herewith.

Item 24.    Persons Controlled by or under Common Control with Registrant
            Not applicable.

Item 25. Indemnification

             The Registrant is incorporated under Maryland law. Section 2-418 of
the Maryland  General  Corporation  Law requires the Registrant to indemnify its
directors,  officers and employees against expenses,  including legal fees, in a
successful  defense  of a civil or  criminal  proceeding.  The law also  permits
indemnification of directors, officers, employees and agents unless it is proved
that (a) the act or omission of the person was material and was committed in bad
faith or was the  result of  active or  deliberate  dishonesty,  (b) the  person
received an improper  personal benefit in money,  property or services or (c) in
the case of a criminal  action,  the person had reasonable cause to believe that
the act or omission was unlawful.

             Registrant's  amended and restated Articles of  Incorporation:  (1)
provide that, to the maximum extent  permitted by applicable  law, a director or
officer will not be liable to the  Registrant or its  stockholders  for monetary
damages; (2) require the Registrant to indemnify and advance expense as provided
in the  By-laws to its  present  and past  directors,  officers,  employees  and
agents,  and  persons  who are  serving  or have  served at the  request  of the
Registrant  in  similar  capacities  for  other  entities  in  advance  of final
disposition  of any  action  against  that  person to the  extent  permitted  by
Maryland law and the 1940 Act; (3) allow the  corporation to purchase  insurance
for any present or past director,  officer,  employee, or agent; and (4) require
that any  repeal  or  modification  of the  amended  and  restated  Articles  of
Incorporation by the shareholders,  or adoption or modification of any provision
of  the  Articles  of  Incorporation   inconsistent  with  the   indemnification
provisions, be prospective only to the extent such repeal or modification would,
if applied retrospectively,  adversely affect any limitation on the liability of
or  indemnification  available  to any  person  covered  by the  indemnification
provisions of the amended and restated Articles of Incorporation.

             Section  11.01  of  Article  XI  of  the  By-Laws  sets  forth  the
procedures  by which the  Registrant  will  indemnify its  directors,  officers,
employees  and  agents.  Section  11.02 of  Article  XI of the  By-Laws  further
provides  that the  Registrant  may  purchase  and  maintain  insurance or other
sources of  reimbursement to the extent permitted by law on behalf of any person
who is or was a director or officer of the  Registrant,  or is or was serving at
the request of the  Registrant as a director or officer of another  corporation,
partnership,  joint  venture,  trust or other  enterprise  against any liability
asserted  against him or her and incurred by him or her in or arising out of his
or her position.

             Registrant's  amended Investment  Management  Agreement between the
Registrant and Midas Management Corporation ("Investment Manager") provides that
the  Investment  Manager shall not be liable to the  Registrant or its series or
any  shareholder  of the  Registrant  or its series for any error of judgment or
mistake of law or for


<PAGE>



any loss suffered by the Registrant in connection  with the matters to which the
Investment Management Agreement relates.  However, the Investment Manager is not
protected  against any liability to the Registrant or to the series by reason of
willful  misfeasance,  bad faith, or gross  negligence in the performance of its
duties or by reason of its  reckless  disregard  of its  obligations  and duties
under the Investment Management Agreement.

             Section 9 of the Distribution
Agreement  between the Registrant and Investor  Service Center,  Inc.  ("Service
Center")  provides that the  Registrant  will  indemnify  Service Center and its
officers, directors and controlling persons against all liabilities arising from
any alleged untrue statement of material fact in the  Registration  Statement or
from any alleged omission to state in the Registration Statement a material fact
required to be stated in it or necessary to make the  statements in it, in light
of the circumstances under which they were made, not misleading,  except insofar
as liability  arises from untrue  statements or omissions  made in reliance upon
and in conformity with information furnished by Service Center to the Registrant
for  use in  the  Registration  Statement;  and  provided  that  this  indemnity
agreement  shall not protect any such  persons  against  liabilities  arising by
reason of their bad faith,  gross negligence or willful  misfeasance;  and shall
not  inure to the  benefit  of any  such  persons  unless  a court of  competent
jurisdiction or controlling precedent determines that such result is not against
public  policy as  expressed  in the  Securities  Act of 1933.  Section 9 of the
Distribution  Agreement  also provides that Service  Center agrees to indemnify,
defend and hold the Registrant,  its officers and Directors free and harmless of
any claims arising out of any alleged untrue  statement or any alleged  omission
of material fact contained in information furnished by Service Center for use in
the  Registration  Statement  or arising out of any  agreement  between  Service
Center and any retail  dealer,  or arising out of  supplementary  literature  or
advertising   used  by  Service  Center  in  connection  with  the  Distribution
Agreement.

             The  Registrant   undertakes  to  carry  out  all   indemnification
provisions of its Articles of Incorporation and By-Laws and the  above-described
Investment  Management  Agreement  in  accordance  with  Investment  Company Act
Release No. 11330 (September 4, 1980) and successor releases.

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


Item 26.     Business and other Connections of  Investment Adviser

The directors and officers of the Investment Manager, a wholly-owned  subsidiary
of Winmill & Co. Incorporated (formerly Bull & Bear Group, Inc.)("Winmill"), are
also  directors  and officers of other Funds managed by the  Investment  Manager
("Funds").  In addition, such officers are officers and directors of Winmill and
its other subsidiaries Investor Service Center, Inc., the Funds' distributor and
a registered  broker/dealer,  and CEF  Advisers,  Inc., a registered  investment
advisers.  The principal business of the Investment  Manager,  and CEF Advisers,
Inc. since their founding has been to serve as investment managers to registered
investment  companies.  The Investment Manager also serves as investment manager
of Dollar  Reserves,  Inc.;  Midas Investors Ltd.;  Midas Special Equities Fund,
Inc.;  Midas Magic,  Inc., and Midas Fund,  Inc.. CEF Advisers,  Inc.  serves as
investment adviser to Bull & Bear U.S. Government  Securities Fund, Inc.; Global
Income Fund, Inc. and Tuxis Corporation.


<PAGE>

Item 27.     Principal  Underwriters

    a) In addition to the Registrant,  Investor  Service Center,  Inc. serves a
principal  underwriter of Midas Investors Ltd.,  Dollar  Reserves,  Inc.,  Midas
Special Equities Fund, Inc., Global Income Fund, Tuxis Corporation,  Midas Fund,
Inc., Midas Magic, Inc., and Bull & BEar U.S. Government Securities Fund, Inc..

    b) Service Center will serve as the Registrant's  principal underwriter with
respect to Midas U.S.  and  Overseas  Fund Ltd.  The  directors  and officers of
Service Center, their principal business addresses,  their positions and offices
with Service Center and their positions and offices with the Registrant (if any)
are set forth below.

Name and Principal         Position and Offices with        Position and Offices
Business Address           Investor Service Center, Inc.    with Registrant
- ------------------         -----------------------------    --------------------
Robert D. Anderson         Vice Chairman and Director       Vice Chairman
11 Hanover Square                                           and Director
New York, NY 10005

Steven A. Landis           Senior Vice President           Senior Vice President
11 Hanover Square
New York, NY 10005

Thomas B. Winmill       Chief Executive Officer,       Chairman, Chief Executive
11 Hanover Square       Director, General Counsel and  Officer,  President and
New York, NY 10005      President                        General Counsel

Deborah A. Sullivan      Chief Compliance Officer,     Chief Compliance Officer,
11 Hanover Square     Secretary and Vice President  Secretary and Vice President
New York, NY 10005        Assoc. General Counsel         Assoc. General Counsel

Irene K. Kawczynski        Vice President                     None
11 Hanover Square
New York, NY 10005

Joseph Leung           Chief Accounting Officer  Chief Accounting Officer, Chief
11 Hanover Square       and Treasurer            Financial Officer and Treasurer
New York, NY 10005

Item 28.     Location of Accounts
             and Records

             The minute books of  Registrant  and copies of its filings with the
Commission are located at 11 Hanover Square,  New York, NY 10005 (the offices of
Registrant and its Investment  Manager).  All other records  required by Section
31(a) of the Investment  Company Act of 1940 are located at Investors  Fiduciary
Trust  Company,  801  Pennsylvania,  Kansas  City,  MO  64105  (the  offices  of
Registrant's  custodian) and at DST Systems, Inc., P.O. Box 419789, Kansas City,
MO 64141-6789 (the offices of the Registrant's  transfer and dividend disbursing
agent).  Copies of certain of the records  located at Investors  Fiduciary Trust
Company and DST Systems, Inc. are kept at 11 Hanover Square, New York, NY 10005.

Item 29.     Management Services --  none

Item 30.     Undertakings -- The Registrant hereby undertakes to furnish
             each person to whom a prospectus is delivered with a copy
             of the Registrant's annual report to shareholders upon request and
             without charge.


<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company  Act  of  1940,  the  Registrant  certifies  that  it  meets  all of the
requirements for effectiveness of this Registration  Statement  pursuant to Rule
485(b) under the  Securities  Act of 1933 and has duly caused this  Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the City, County and State of New York on this 29th day of June,
1999.

            MIDAS U.S. AND OVERSEAS FUND LTD.

                Thomas B. Winmill
            By: Thomas B. Winmill

   Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following  persons in the  capacities and
on the dates indicated:


Thomas B. Winmill          Chairman, Chief Executive            July 12, 1999
- -----------------          Officer, President and
Thomas B. Winmill          General Counsel

Joseph Leung               Chief Accounting Officer,            July 12, 1999
- ------------               Chief Financial Officer
Joseph Leung               and Treasurer

Robert D. Anderson         Director and Vice                    July 12, 1999
- ------------------         Chairman
Robert D. Anderson

Bruce B. Huber             Director                             July 12, 1999
- --------------
Bruce B. Huber

James E. Hunt              Director                             July 12, 1999
- -------------
James E. Hunt

John B. Russell            Director                             July 12, 1999
- ---------------
John B. Russell

<PAGE>
                                  EXHIBIT INDEX


                                                                          PAGE
EXHIBIT                                                                  NUMBER


(23)(n)     Financial Data Schedule for the Fiscal Year ended December 31, 1998.
(23)(a)     Articles of Amendment of Articles of Incorporation
(23)(a)     Articles Supplementary.
(23)(d)     Investment Management Agreement.
(23)(j)     (1) Accountant's Consent.
            (2) Opinion of Counsel with  respect  to  eligibility
                for effectiveness under paragraph (b)of Rule 485.



                            BULL & BEAR FUNDS I, INC.

                              ARTICLES OF AMENDMENT

     Bull & Bear Funds I,  Inc.,  a Maryland  corporation  (the  "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:

     FIRST:  The  Corporation  hereby  amends its charter as currently in effect
(the  "Charter")  by  changing  the name of the  Corporation  to  Midas  U.S and
Overseas Fund Ltd.

     SECOND: The Corporation hereby amends its Charter as currently in effect by
redesignating  the  shares of the Bull & Bear U.S.  &  Overseas  Fund  series to
common stock of the  Corporation.  Subsequent  to the foregoing  amendment,  the
total  number of shares of capital  stock of all classes  which the  Corporation
shall have  authority  to issue is one billion  (1,000,000,000)  shares,  all of
which  shall  have a par value of $.01 per share and an  aggregate  par value of
$10,000,000.

     THIRD:  A majority of the entire Board of Directors of the  Corporation  by
unanimous written consent dated June 30, 1999,  adopted  resolution in which was
set forth,  and which  authorized  and approved the foregoing  amendments to the
Charter.

     FOURTH: The amendment to the Charter set forth above is expressly permitted
by ss.2-605 of the Maryland General  Corporation Law ("MGCL") to be made without
action by the stockholders of the Corporation.

     FIFTH: The Corporation is registered as an open-end  management  investment
company under the Investment Company Act of 1940.

     SIXTH:  The foregoing  amendment does not increase the authorized  stock of
the  Corporation,  and does not  change  the  preferences,  conversion  or other
rights, boring powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption of any class or series of authorized  stock
of the Corporation.

     SEVENTH:  The undersigned  President of the Corporation  acknowledges these
Articles Supplementary to be the corporate act of the Corporation and, as to all
matters or facts required to be verified under oath, the  undersigned  President
acknowledges  that to the best of his knowledge,  information and belief,  these
matters and facts are true in all material  respects and that this  statement is
made under the penalties for perjury.


                                        1


<PAGE>






     IN WITNESS WHEREOF,  the Corporation has caused these Articles of Amendment
to be  executed  under seal in its name and on its behalf by its  President  and
attested to by its Secretary on _______________, 1999.

WITNESS:                                       BULL & BEAR FUNDS I, INC.


_______________________________          By: ___________________________ (SEAL)



                                        2

                            BULL & BEAR FUNDS I, INC.

                             ARTICLES SUPPLEMENTARY

     Bull & Bear Funds I,  Inc.,  a Maryland  corporation  (the  "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:

     FIRST: Immediately prior to the filing of these Articles Supplementary, the
corporation had authority to issue one billion  (1,000,000,000) shares of Common
Stock,  $.01 par value per share,  having an aggregate par value of $10,000,000,
of  which  five   hundred   million   (500,000,000)   shares  are  unissued  and
unclassified,  two  hundred  fifty  million  (250,000,000)  unissued  shares are
classified  as Bull & Bear  Quality  Growth Fund  shares and two  hundred  fifty
million  (250,000,000)  shares are  classified  as Bull & Bear U.S. and Overseas
Fund shares.

     SECOND:  The Board of Directors of the Corporation,  by a unanimous written
consent  effective June 30, 1999 and adopted by at least a majority of the Board
of Directors, classified the unissued and unclassified shares of the Corporation
in the  amount of five  hundred  million  (500,000,000)  shares as five  hundred
million  (500,000,000)  shares of the Bull & Bear U.S. and Overseas Fund series,
and  reclassified two hundred fifty million  (250,000,000)  unissued shares that
were  classified  as the Bull & Bear  Quality  Growth Fund series as two hundred
fifty  million  (250,000,000)  shares of the Bull & Bear U.S. and Overseas  Fund
series,  with all of the  powers,  preferences,  participating,  voting or other
special rights and  qualifications,  restrictions  and limitations  thereof,  as
outlined in Article FIFTH of the Articles of Incorporation of the Corporation.

     THIRD:  As of the filing of these Articles  Supplementary,  the Corporation
shall  have  authority  to issue one  billion  (1,000,000,000)  shares of Common
Stock,  $.01 par value per share,  having an aggregate par value of $10,000,000,
all of which are classified as Bull & Bear U.S. and Overseas Fund series.

     FOURTH:  Shares of the foregoing  classes have been duly  classified by the
board of directors pursuant to authority and power contained in Article FIFTH of
the Articles of Incorporation of the Corporation.

     FIFTH: The Corporation is registered as an open-end  management  investment
company under the Investment Company Act of 1940.

     SIXTH:  The  undersigned  President of the Corporation  acknowledges  these
Articles Supplementary to be the corporate act of the Corporation and, as to all
matters or facts required to be verified under oath, the  undersigned  President
acknowledges  that to the best of his knowledge,  information and belief,  these
matters and facts are true in all material  respects and that this  statement is
made under the penalties for perjury.


                                        1


<PAGE>





     IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary
to be  executed  under seal in its name and on its behalf by its  President  and
attested to by its Secretary on _______________, 1999.

WITNESS:                                         BULL & BEAR FUNDS I, INC.


___________________________                 By: _________________________ (SEAL)


                                       2



                          INVESTMENT MANAGEMENT AGREEMENT


            AGREEMENT  made this 30th day of June,  1999,  by and between  MIDAS
U.S.  AND  OVERSEAS  FUND LTD.,  a Maryland  corporation  (the "Fund") and MIDAS
MANAGEMENT CORPORATION, a Delaware corporation (the "Investment Manager").

            WHEREAS the Fund is registered  under the Investment  Company Act of
1940, as amended (the "1940 Act") , as an open-end management investment company
and proposes to offer for public sale shares of common stock; and

            WHEREAS the Fund desires to retain the Investment Manager to furnish
certain investment  advisory and portfolio  management services to the Fund, and
the Investment Manager desires to furnish such services;

            NOW  THEREFORE,   in   consideration  of  the  mutual  promises  and
agreements  herein  contained  and other good and  valuable  consideration,  the
receipt of which is hereby acknowledged, it is hereby agreed between the parties
hereto as follows:

            1. The Fund  hereby  employs  the  Investment  Manager to manage the
investment  and  reinvestment  of the assets of the Fund,  including the regular
furnishing of advice with respect to the Fund's portfolio  transactions  subject
at all  times  to the  control  and  final  direction  of the  Fund's  Board  of
Directors,  for the  period  and on the terms set forth in this  Agreement.  The
Investment  Manager hereby accepts such employment and agrees during such period
to render the services and to assume the obligations  herein set forth,  for the
compensation  herein  provided.  The  Investment  Manager shall for all purposes
herein be deemed to be an  independent  contractor and shall,  unless  otherwise
expressly provided or authorized,  have no authority to act for or represent the
Fund or in any way, or otherwise be deemed an agent of the Fund.

            2. The Fund assumes and shall pay all the expenses  required for the
conduct  of  its   business   including,   but  not  limited  to,   salaries  of
administrative and clerical personnel, brokerage commissions,  taxes, insurance,
fees of the transfer agent, custodian,  legal counsel and auditors,  association
fees,  costs of filing,  printing  and mailing  proxies,  reports and notices to
shareholders,  preparing,  filing and printing the  prospectus  and statement of
additional information, payment of dividends, costs of stock certificates, costs
of shareholders meetings,  fees of the independent  directors,  necessary office
space rental,  all expenses  relating to the  registration or  qualification  of
shares  of the Fund  under  applicable  Blue Sky  laws and  reasonable  fees and
expenses  of counsel in  connection  with such  registration  and  qualification
ication  and  such  non-recurring  expenses  as may  arise,  including,  without
limitation, actions, suits or proceedings affecting the corporation or the


<PAGE>



Fund and the legal  obligation which the Fund may have to indemnify its officers
and directors with respect thereto.

            3. The Investment Manager may, but shall not be obligated to, pay or
provide for the payment of expenses  which are  primarily  intended to result in
the sale of the Fund's shares or the servicing and  maintenance  of  shareholder
accounts, including, without limitation,  payments for: advertising, direct mail
and promotional expenses;  compensation to and expenses,  including overhead and
telephone and other  communication  expenses,  of the Investment Manager and its
affiliates, the Fund, and selected dealers and their affiliates who engage in or
support  the  distribution  of  shares  or  who  service  shareholder  accounts;
fulfillment   expenses   including  the  costs  of  printing  and   distributing
prospectuses,  statements of additional information,  and reports for other than
existing shareholders;  the costs of preparing,  printing and distributing sales
literature  and  advertising  materials;  and,  internal  costs  incurred by the
Investment  Manager and its  affiliates  and  allocated to efforts to distribute
shares  of the Fund  such as  office  rent  and  equipment,  employee  salaries,
employee  bonuses and other  overhead  expenses.  Such  payments  may be for the
Investment  Manager's  own account or may be made on behalf of the Fund pursuant
to a written  agreement  relating to a plan of distribution  adopted pursuant to
Rule 12b-1 under the 1940 Act.

            4. If  requested by the Fund's Board of  Directors,  the  Investment
Manager may provide other services to the Fund such as, without limitation,  the
functions  of  billing,  accounting,   certain  shareholder  communications  and
services,  administering state and Federal  registrations,  filings and controls
and other administrative  services. Any services so requested and performed will
be for the  account  of the Fund  and the  costs of the  Investment  Manager  in
rendering such services shall be reimbursed by the Fund,  subject to examination
by those directors of the Fund who are not interested  persons of the Investment
Manager or any affiliate thereof.

            5. The  services  of the  Investment  Manager  are not to be  deemed
exclusive,  and the Investment  Manager shall be free to render similar services
to others in  addition  to the Fund so long as its  services  hereunder  are not
impaired thereby.

            6. The  Investment  Manager  shall create and maintain all necessary
books and records in accordance with all applicable laws, rules and regulations,
including  but not limited to records  required by Section 31(a) of the 1940 Act
and the  rules  thereunder,  as the  same  may be  amended  from  time to  time,
pertaining to the investment  management  services performed by it hereunder and
not otherwise  created and  maintained  by another  party  pursuant to a written
contract with the Fund.  Where  applicable,  such records shall be maintained by
the Investment  Manager for the periods and in the places required by Rule 3la-2
under the 1940 Act. The books and records pertaining to the Fund


<PAGE>



which are in the possession of the  Investment  Manager shall be the property of
the Fund. The Fund, or the Fund's authorized representatives,  shall have access
to such books and records at all times during the  Investment  Manager's  normal
business  hours.  Upon the  reasonable  request of the Fund,  copies of any such
books and records shall be provided by the Investment Manager to the Fund or the
Fund's authorized representatives.

            7. As compensation for its services,  the Investment Manager will be
paid by the Fund a fee payable  monthly and computed at the annual rate of 1% of
the first $10 million of average daily net assets of the Fund, 7/8 of 1% of such
net assets over $10 million up to $30 million, 3/4 of 1% of such net assets over
$30 million up to $150  million,  5/8 of 1% of such net assets over $150 million
up to  $500  million,  and 1/2 of 1% of  such  net  assets  over  $500  million;
provided,  however, that no such fee shall be paid if the Fund has net assets of
less than $5 million. The aggregate net assets for each day shall be computed by
subtracting  the  liabilities  of the Fund  from the value of its  assets,  such
amount to be computed as of the  calculation of the net asset value per share on
each business day.

            8. The Investment  Manager shall direct  portfolio  transactions  to
broker/dealers  for  execution on terms and at rates which it believes,  in good
faith,  to be reasonable  in view of the overall  nature and quality of services
provided  by  a  particular  broker/dealer,  including  brokerage  and  research
services  and sales of Fund  shares and  shares of the other  Midas  Funds.  The
Investment  Manager may also allocate  portfolio  transactions to broker/dealers
that remit a portion of their  commissions  as a credit  against Fund  expenses.
With respect to brokerage  and research  services,  the  Investment  Manager may
consider in the selection of  broker/dealers  brokerage or research provided and
payment may be made of a fee higher than that  charged by another  broker/dealer
which  does not  furnish  brokerage  or  research  services  or which  furnishes
brokerage  or research  services  deemed to be of lesser  value,  so long as the
criteria of Section 28(e) of the Securities Exchange Act of 1934, as amended, or
other  applicable  law are met.  Although  the  Investment  Manager  may  direct
portfolio  transactions without necessarily  obtaining the lowest price at which
such broker/dealer,  or another,  may be willing to do business,  the Investment
Manager shall seek the best value for the Fund on each trade that  circumstances
in  the  market  place  permit,   including  the  value   inherent  in  on-going
relationships with quality brokers. To the extent any such brokerage or research
services may be deemed to be additional  compensation to the Investment  Manager
from the Fund, it is authorized by this  Agreement.  The Investment  Manager may
place Fund brokerage  through an affiliate of the Investment  Manager,  provided
that:  the Fund not deal with such  affiliate in any  transaction  in which such
affiliate  acts  as  principal;  the  commissions,  fees or  other  remuneration
received by such affiliate be reasonable  and fair compared to the  commissions,
fees or other remuneration paid to other brokers in connection


<PAGE>



with comparable  transactions  involving  similar  securities being purchased or
sold on a  securities  exchange  during a  comparable  period of time;  and such
brokerage be  undertaken  in  compliance  with  applicable  law. The  Investment
Manager's  fees  under  this  Agreement  shall not be  reduced  by reason of any
commissions,  fees or other  remuneration  received by such  affiliate  from the
Fund.

            9. The  Investment  Manager  shall  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. In calculating the limit of operating
expenses,  all expenses  excludable under state regulation or otherwise shall be
excluded. If this Agreement is in effect for less than all of a fiscal year, any
such limit will be applied proportionately.

            10. Subject to and in accordance with the Articles of  Incorporation
and By-laws of the Fund and of the  Investment  Manager,  it is understood  that
directors,  officers,  agents  and  shareholders  of  the  Fund  are  or  may be
interested in the corporation as directors, officers, shareholders or otherwise,
that the  Investment  Manager is or may be  interested in the  corporation  as a
shareholder  or otherwise  and that the effect and nature of any such  interests
shall be governed  by law and by the  provisions,  if any,  of said  Articles of
Incorporation or By-laws.

            11. This Agreement shall become  effective upon the date hereinabove
written and, unless sooner  terminated as provided herein,  this Agreement shall
continue in effect for two years from the above written date. Thereafter, if not
terminated,  this Agreement shall continue  automatically for successive periods
of twelve months each,  provided that such continuance is specifically  approved
at least annually (a) by the Board of Directors of the Fund or by the holders of
a majority of the  outstanding  voting  securities of the Fund as defined in the
1940 Act and (b) by a vote of a majority  of the  Directors  of the Fund who are
not parties to this  Agreement,  or interested  persons of any such party.  This
Agreement  may be terminated  without  penalty at any time either by vote of the
Board of  Directors  of the Fund or by vote of the  holders of a majority of the
outstanding  voting  securities  of the Fund on 60 days'  written  notice to the
Investment  Manager,  or by the Investment Manager on 60 days, written notice to
the  Fund.  This  Agreement  shall  immediately  terminate  in the  event of its
assignment.

            12. The  Investment  Manager  shall not be liable to the Fund or any
shareholder  of the Fund for any error of  judgment or mistake of law or for any
loss  suffered by the Fund or the Fund's  shareholders  in  connection  with the
matters to which this Agreement  relates,  but nothing herein contained shall be
construed to protect the Investment Manager against any liability to the Fund or
the Fund's  shareholders by reason of willful  misfeasance,  bad faith, or gross
negligence in the performance of


<PAGE>


its duties or by reason of its reckless disregard of obligations
and duties under this Agreement.

            13.  As used in  this  Agreement,  the  terms  "interested  person,"
"assignment," and "majority of the outstanding voting securities" shall have the
meanings  provided  therefore  in the 1940 Act,  and the  rules and  regulations
thereunder.

            14. This  Agreement  constitutes  the entire  agreement  between the
parties hereto and  supersedes  any prior  agreement with respect to the subject
hereof whether oral or written. If any provision of this Agreement shall be held
or made  invalid by a court or  regulatory  agency  decision,  statute,  rule or
otherwise, the remainder of this Agreement shall not be affected thereby.

            15.  This  Agreement  shall  be  construed  in  accordance  with and
governed by the laws of the State of New York, provided,  however,  that nothing
herein shall be construed in a manner inconsistent with the 1940 Act or any rule
or regulation promulgated thereunder.

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






              CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


We consent to the use of our report  dated  January  15,  1999 on the  financial
statements   and   financial   highlights   of  Midas  U.S.  and  Overseas  Fund
Ltd.(formerly  U.S. and Overseas Fund). Such financial  statements and financial
highlights   appear  in  the  1998  Annual  Report  to  Shareholders   which  is
incorporated by reference in the Statement of Additional  Informantion  filed in
Post-Effective  Amendment No. 24 under the  Securities Act of 1933 and Amendment
No. 24 under the Investment Company Act of 1940 to the Registration Statement on
Form N-1A of Midas U.S. and Overseas Fund Ltd. We also consent to the references
to our Firm in the Registration Statement and Prospectus.

                                              TAIT, WELLER & BAKER

Philadelphia, Pennsylvania
June 28, 1999



June 29, 1999


Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549

Ladies and Gentlemen:

We are counsel to Midas U.S.  and Overseas  Fund Ltd.  (the  "Fund"),  and in so
acting  have  reviewed  Post-Effective  Amendment  No.  24 (the  "Post-Effective
Amendment") to the Fund's Registration Statement on Form N-1A, Registration File
No. 33-6898. Representatives of the Fund have advised us that the Fund will file
the Post-Effective  Amendment pursuant to paragraph (b) of Rule 485 ("Rule 485")
promulgated under the Securities Act of 1933. In connection therewith,  the Fund
has requested that we provide this letter.

In  our  examination  of the  Post-Effective  Amendment,  we  have  assumed  the
conformity to the originals of all documents submitted to us as copies.

Based upon the foregoing,  we hereby advise you that the prospectus  included as
part of the  Post-Effective  Amendment  does  not  include  disclosure  which we
believe would render it ineligible to become effective pursuant to paragraph (b)
of Rule 485.

Very truly yours,




STROOCK & STROOCK & LAVAN LLP


WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<TABLE> <S> <C>


<ARTICLE>                                            6
<LEGEND>
     This schedule contains summary financial  information extracted from Bull &
Bear U.S.  and Overseas  Fund Annual  Report and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK>                                         0000796532
<NAME>                                        Bull & Bear Funds I, Inc.
<SERIES>
   <NUMBER>                                   001
   <NAME>                                     Bull & Bear U.S. and Overseas Fund

<MULTIPLIER>                                   1
<CURRENCY>                                     U.S. Dollar

<S>                                           <C>
<PERIOD-TYPE>                                     YEAR
<FISCAL-YEAR-END>                           Dec-31-1998
<PERIOD-START>                              Jan-1-1998
<PERIOD-END>                                Dec-31-1998
<EXCHANGE-RATE>                                  1.000
<INVESTMENTS-AT-COST>                        6,261,318
<INVESTMENTS-AT-VALUE>                       6,964,736
<RECEIVABLES>                                    9,238
<ASSETS-OTHER>                                 404,571
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                               7,378,545
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                       38,665
<TOTAL-LIABILITIES>                             38,665
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                     6,586,598
<SHARES-COMMON-STOCK>                        1,024,356
<SHARES-COMMON-PRIOR>                        1,149,191
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                         28,142
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                       725,140
<NET-ASSETS>                                 7,339,880
<DIVIDEND-INCOME>                              132,873
<INTEREST-INCOME>                               21,737
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                 263,852
<NET-INVESTMENT-INCOME>                       (109,242)
<REALIZED-GAINS-CURRENT>                       259,779
<APPREC-INCREASE-CURRENT>                      (38,013)
<NET-CHANGE-FROM-OPS>                          112,524
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                      (253,359)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                         33,554
<NUMBER-OF-SHARES-REDEEMED>                    191,752
<SHARES-REINVESTED>                             33,361
<NET-CHANGE-IN-ASSETS>                      (1,105,765)
<ACCUMULATED-NII-PRIOR>                              0
<ACCUMULATED-GAINS-PRIOR>                            0
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                           79,269
<INTEREST-EXPENSE>                               1,677
<GROSS-EXPENSE>                                263,852
<AVERAGE-NET-ASSETS>                         7,923,672
<PER-SHARE-NAV-BEGIN>                             7.35
<PER-SHARE-NII>                                   (.10)
<PER-SHARE-GAIN-APPREC>                            .18
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                          .26
<RETURNS-OF-CAPITAL>                              0.00
<PER-SHARE-NAV-END>                               7.17
<EXPENSE-RATIO>                                   3.33
[AVG-DEBT-OUTSTANDING]                          11,858
[AVG-DEBT-PER-SHARE]                              0.01



</TABLE>


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