MIDAS US & OVERSEAS FUND LTD
N-30D, 1999-09-17
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A Member of the Midas Funds Family
Semi-Annual Report
June 30, 1999
 
 

U.S. AND OVERSEAS FUND


11 Hanover Square, New York, NY 10005
1-800-400-MIDAS (6432) for Investment Information
1-888-503-VOICE (8642) for Shareholder Services
www.midasfunds.com
August 12, 1999
Fellow Shareholders:

 We are pleased to submit this Semi-Annual Report for the six months ended June 30, 1999, and to welcome our new shareholders who have opened their accounts since our last Report.

Review and Outlook

Domestic interest rates rose during the first half of 1999. Between the beginning of January and the end of June, thirty year Treasury bond yields rose from 5.10% to 5.96%, causing bond prices to decline and resulting in a total return of -10.40. Three month Treasury bills ended 1998 yielding 4.45% and rose to 4.78% by mid year. The U.S. dollar remained strong during this period relative to major U.S. trading partners, appreciating over the euro and yen by 11.28% and 6.60%, respectively. Emerging markets were volatile. The Emerging Market Bond Index, for example, generated year-to-date total returns of -11.32% for January and +13.14% in the five months through May. With more than 70% of the portfolio in U.S. dollar denominated investments at June 30, 1999, including 17% in short term investments, we continue to favor U.S. securities. In addition, the Fund had 21% in European securities with smaller amounts in Canadian and Japanese companies.

The domestic economy performed exceptionally well over the first six months, with real gross domestic product -- the total value of goods and services produced in the United States -- growing 4.3% for the first quarter, and 2.3% for the second quarter. The unemployment rate declined to as low as 4.2%, and new jobs were created at an average rate of 195,000 per month, down from the 275,000 pace at the end of last year. The new jobs total for July, however, jumped to 310,000. But, despite the robust economy, inflation as measured by the Consumer Price Index has remained in check -- it was unchanged in May and June after moving up 0.7% in April.

In deciding to raise short term rates pre-emptively by 0.25% on June 30 to avoid future inflationary pressures, the Federal Reserve recognized that some of the conditions which were responsible for the 0.75% decrease of last fall had abated. Financial markets have become, for now, more orderly and liquid. The economies of several countries which were in distress last fall and this winter have shown significant signs of improvement. A meaningful economic recovery in either Japan or industrial Europe remains the greatest uncertainty to the continuation of the benign inflationary environment of the last three years. While data in both areas suggest some improvement, it is unlikely that inflationary pressures will increase dramatically before year end.

 The Fund benefited during the first half of the year from having low foreign currency exposure, and by selectively increasing and decreasing weightings in certain emerging markets. The U.S. dollar, and the relative performance of the U.S. equity markets, remain vulnerable to economic recovery in Europe. The performance of Asian markets will depend on the extent of the turnaround in Japan's economy, and will be susceptible to a devaluation of the renminbi, the currency of the People's Republic of China, in the fourth quarter. Further, we believe that Latin American markets may be buffeted by political winds in the second half of the year. Under these circumstances, the Fund will continue to invest opportunistically during the second half of the year, maintaining a portfolio that seeks maximize total return for shareholders.

 The Morgan Stanley Capital International World Index in U.S. dollars showed a total return for the six months of 8.51%. Total return for the Fund was negative 3.91%, a disappointing result following the Fund's strong fourth quarter gain which we will continue to be seeking to build on over the balance of the year.

 Convenient Ways to Increase your Account

 Our strategy is to attempt to identify steadily growing companies with reasonable valuations, and to hold their securities for long term appreciation and/or income. To take advantage of this we recommend building your account on a regular basis, which can be down safely, automatically, and conveniently through the Midas Bank Transfer Plan, Midas Salary Investing Plan and Midas Government Direct Deposit Plan. For information on any of these free services, give us a call and we will help you get started.

 If you have any questions or would like information on any of the Midas Funds, or the Midas Traditional, Roth or Education IRA, we would be pleased to hear from you. Just call us at 1-800-400-MIDAS (6432) and an Investor Service Representative will be happy to assist you, as always, without any obligation on your part.
 

 Sincerely,
Thomas B. Winmill
President and
Portfolio Manager

 


 
 
 


For 24 hour automated service, visit www.midasfunds.com or call 1-888-503-VOICE (8642). For an account application and prospectus containing more complete information, including charges and expenses, call 1-800-400-MIDAS (6432). Please read the prospectus carefully before you invest or send money. Investor Service Center, Inc., Distributor.
 
 


 
 
 
 
 
MIDAS U.S. AND OVERSEAS FUND
Schedule of Portfolio Investments - June 30, 1999 (Unaudited)
 
Shares Market Value
COMMON STOCKS (80.25%)
Canada (3.72%)
10,900 Quebecor Printing Inc. $ 236,394
Ireland (5.65%)
19,700 CRH plc ADR 359,525
Japan (1.63%)
1,200 Honda Motor Co., Ltd. ADR 104,100
Netherlands (5.50%)
10,100 Koninklijke Ahold N.V. ADR 349,713
United Kingdom (9.44%)
7,000 WPP Group plc ADR 600,250
United States (54.31%)
5,300 Benchmark Electronics, Inc.*. 190,469
7,300 Bindley Western Industries, Inc. 168,364
3,300 CDW Computer Centers, Inc.* 145,200
12,800 Expeditors International of Washington, Inc. 348,800
5,700 Express Scripts, Inc. Class A* 343,069
900 Ingersoll-Rand Company 58,162
6,400 Jabil Circuit, Inc.* 288,800
1,700 Jacobs Engineering Group Inc. 64,600
4,000 Plexus Corp.* 120,500
3,500 Quiksilver, Inc.* 91,219
3,000 Quipp, Inc.* 39,000
1,700 Safeguard Scientifics, Inc.* 105,400
1,300 Safeway Inc.* 64,350
5,600 Tarrant Apparel Group * 126,875
5,800 United Technologies Corp. 415,787
9,600 URS Corp. 281,400
8,700 Wal-Mart Stores, Inc. 419,775
3,453,770
      Total Common Stocks (cost: $4,058,598) 5,103,752
Closed-End Funds (2.50%)
10,000 European Warrant Fund Inc.* (cost: $138,669) 158,750
Par Value
Short Term Investments (17.25%)
$1,075,000 U.S. Treasury Bill, due 8/19/99  $1,068,474
28,654  State Street Bank & Trust Repurchase Agreement, 3.5%, 6/30/99 due 7/1/99 (collateralized by $25,000 U.S. Treasury Bond 8%, due11/15/21, market value: $30,027, proceeds at maturity: $28,654)
28,654
Total Short Term Investments (cost: $1,097,128) 1,097,128
 
     Total Investment (cost: $5,294,395) (100.0%)
$6,359,630

* Indicates non-income producing security.
 
 

See accompanying notes to financial statements


 
 
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited) 
ASSETS:
Investments at market value (cost: $5,294,395) (note 1)
$6,359,630
Collateral for securities loaned, at market value (note 6) 
1,540,438
Receivable for investment securities sold 30,403
Dividend receivable  6,172 
Other assets  1,724 
  Total assets   7,938,367 
LIABILITIES:
Collateral for securities loaned (note 6)  1,540,438 
Accrued expenses  30,823 
Accrued management and distribution fees
6,844 
Payable for fund shares redeemed 5,990 
Total liabilities  1,584,095 
NET ASSETS: (applicable to 922,150 
outstanding shares: 250,000,000 shares 
of $.01 par value authorized)  $6,354,272 
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($6,354,272 ÷ 922,150)  $6.89
At June 30, 1999, net assets consisted of: 
Paid-in capital  $5,869,418 
Accumulated net realized loss on investments
(530,418)
Accumulated deficit in net investment income
(49,599)
Net unrealized appreciation on investments and foreign currencies
1,065,235 
$6,354,272 

 
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited) 
INVESTMENT INCOME:
Dividends (net of foreign taxes of $3,143)  $58,021 
Interest  8,571 
Total investment income 66,592 
EXPENSES:
Distribution (note 3)  34,449 
Investment management (note 3)  34,449 
Transfer agent  19,043 
Professional  12,199 
Registration (note 3)  10,563 
Printing  4,760 
Custodian  4,760 
Interest (note 5) 3,046 
Directors  595 
Other  596 
Total expenses 124,460
Distribution plan expenses waived (note 3) (8,269)
Net expenses  116,191 
     Net investment loss   (49,599) 
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS,
FOREIGN CURRENCIES AND FUTURES:
Net realized loss from security transactions
(702,823)
Net realized gain from futures transactions  143,899 
Unrealized appreciation of investments during the period
340,095 
Net realized and unrealized loss on investments, foreign currencies and futures   

(218,829)
Net decrease in net assets resulting from operations  $(268,428)
 

See accompanying notes to financial statements.
 


 
 
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1999 (Unaudited) and the Year Ended December 31, 1998
June 30,
1999		 December 31,
1998
OPERATIONS:
  Net investment loss  $ (49,599) $ (109,242)
Net realized gain from futures transactions  143,899  168,206 
Net realized gain (loss) from security transactions  (702,823) 91,573
Unrealized appreciation (depreciation) of investments and foreign currencies during the period 340,095  (38,013)
  Net increase (decrease) in net assets resulting from operations (268,428) 112,524 
DISTRIBUTIONS TO SHAREHOLDERS: 
Distribution from net realized gains ($.97 per share, respectively)  -  (253,359)
CAPITAL SHARE TRANSACTIONS: 
Change in net assets resulting from capital share transactions (a)  (717,180) (964,930)
Total change in net assets  (985,608) (1,105,765)
NET ASSETS: 
Beginning of period  7,339,880  8,445,645 
End of period (including accumulated deficit in net investment income of $49,599 in 1999) $6,354,272  $7,339,880 

(a) Transactions in capital shares were as follows:
 
June 30, 1999  December 31, 1998 
Shares  Value  Shares  Value
Shares sold  16,524  $117,660  33,554  $257,379 
Shares issued in reinvestment of distributions 
- 
- 
33,361 
228,517 
Shares redeemed  (118,730)  (834,840)  (191,752)  (1,450,826) 
Net decrease  (102,206)  $(717,180)  (124,837)  $(964,930) 

See accompanying notes to financial statements.
 

Notes to Financial Statements
(Unaudited)

(1) Midas U.S. and Overseas Fund Ltd. (formerly, Bull & Bear U.S. and Overseas Fund, a series of Bull & Bear Funds I, Inc.) (the "Fund") is a Maryland corporation registered under the Investment Company Act of 1940, as amended, as a non-diversified open-end management investment company. The Fund's investment objective is to seek to obtain the highest possible total return on its assets from long term growth of capital and from income principally through a portfolio of securities of U.S. and overseas issuers. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. With respect to security valuation, investments in securities traded on a national securities exchange, unless over-the-counter quotations for such securities are believed to more closely reflect their fair value, and securities traded on the Nasdaq National Market System ("NMS") are valued at the last reported sales price on the day the valuations are made. Such securities that are not traded on a particular day, securities traded in the over-the-counter market that are not on NMS, and foreign securities are valued at the mean between the current bid and asked prices. Securities of foreign issuers denominated in foreign currencies are translated into U.S. dollars at prevailing exchange rates. Futures contracts are marked to market daily and the variation margin is recorded as an unrealized gain or loss. When a contract is closed, a realized gain or loss is recorded equal to the difference between the opening and closing value of the contract. Forward contracts are marked to market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When a contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The Fund could be exposed to risk if the counterparties are unable to meet the terms of the contracts. Debt obligations with remaining maturities of 60 days or less are valued at cost adjusted for amortization of premiums and accretion of discounts. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed). Dividend income and distributions to shareholders are recorded on the ex-dividend date and interest income is recorded on the accrual basis. In preparing financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 (2) The Fund intends to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all its taxable investment income and net capital gains, if any, after utilization of any capital loss carryforward, to its shareholders and therefore no Federal income tax provision is required. Based on Federal income tax cost of $5,294,395, gross unrealized appreciation and gross unrealized depreciation were $1,171,466 and $106,231 at June 30, 1999. Distributions paid to shareholders during the year ended December 31, 1998 differ from net realized gains from security transactions as determined for financial reporting purposes principally as a result of the utilization of net operating losses to offset short-term capital gains.

 (3) The Fund retains Midas Management Corporation as its Investment Manager. Under the terms of the Investment Management Agreement, the Investment Manager receives a management fee, payable monthly, based on the average daily net assets of the Fund at the annual rate of 1% on the first $10 million, 7/8 of 1% from $10 million to $30 million, 3/4 of 1% from $30 million to $150 million, 5/8 of 1% from $150 million to $500 million, and 1/2 of 1% over $500 million. The Investment Manager has agreed to waive all or part of its fee or reimburse the Fund monthly if and to the extent the aggregate operating expenses of the Fund exceed the most restrictive limit imposed by any state in which shares of the Fund are qualified for sale, although currently the Fund is not subject to any such limits. Effective June 30, 1999, the investment management agreement with CEF Advisers, Inc. (formerly Bull & Bear Advisers, Inc.) ("CEF") was transferred to the Investment Manager. The terms of the investment management agreement, other than the name of the investment manager, did not change. Certain officers and directors of the Fund are officers and directors of the Investment Manager, CEF, and Investor Service Center, Inc., the Fund's Distributor. For the six months ended June 30, 1999, the Fund paid $1,754 to Bull & Bear Securities, Inc., an affiliate of the Investment Manager and CEF until March 31, 1999, as commissions for brokerage services. The Fund reimbursed the Investment Manager and CEF $2,099 for providing certain
administrative and accounting services at cost during the six months ended June 30, 1999.

The Fund has adopted a plan of distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Plan"). Pursuant to the Plan, the Fund pays the Distributor a distribution fee in an amount of three-quarters of one percent per annum of the Fund's average daily net assets and a service fee in an amount of one-quarter of one percent per annum of the Fund's average daily net assets. The fee for service activities is intended to cover personal services provided to shareholders in the Fund and the maintenance of shareholder accounts. The fee for distribution activities is to cover all other activities and expenses primarily intended to result in the sale of the Fund's shares. The Distributor has made a partial contractual fee waiver that will continue through May 1, 2000.

(4) Purchases and sales of securities other than short term notes aggregated $3,715,864 and $5,040,368, respectively, for the six months ended June 30, 1999.

(5) The Fund has a committed bank line of credit. At June 30, 1999, there was no balance outstanding and the interest rate was equal to the Federal Reserve Funds Rate plus 1.00 percentage point. For the six months ended June 30, 1999, the weighted average interest rate was 5.66% based on the balances outstanding during the period and the weighted average amount outstanding was $76,951.

 (6) As of June 30, 1999, the Fund loaned common stocks having a value of $1,366,801 and received cash collateral of $1,540,438 for the loan.

The Fund loaned securities to certain brokers who paid the Fund lenders' fees. These fees, less costs to administer the program, are included in interest income and amounted to $2,982 for the six months ended June 30, 1999. The loans are secured at all times by cash or U.S. Government obligations in an amount at least equal to the market value of the securities loaned, plus accrued interest, determined on a daily basis and adjusted accordingly. Although the Fund may regain record ownership of loaned securities to exercise certain beneficial rights, the Fund may bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower fail financially.

 The Fund participates in repurchase agreements with the Fund's custodian. The custodian takes possession of the collateral pledged for investments in repurchase agreements. The underlying collateral is valued daily on a mark-to market basis to ensure that the value, including the accrued interest, is at least equal to the repurchase price. In the event of default of the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. Under certain circumstances, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings.

 Year 2000. The Fund could be adversely affected if computer systems used by the Investment Manager and the Fund's other service providers do not properly process and calculate date-related information on and after January 1, 2000. The Investment Manager is working to avoid these problems and to obtain assurances from other service providers that they are taking similar steps. There could be a negative impact on the Fund. While the Fund cannot, at this time, predict the degree of impact, it is possible that foreign markets will be less prepared than U.S. markets.
 


 
 
 
FINANCIAL HIGHLIGHTS
 
 
Years Ended December 31,
Six Months
Ended June 30,
1999
(Unaudited)		 1998 1997 1996 1995 1994
PER SHARE DATA*
Net asset value at beginning of period $7.17 $7.35 $7.91 $8.36 $7.08 $8.71
Income from investment operations:
Net investment loss (.05) (.10) (.05) (.24) (.23) (.13)
Net realized and unrealized gain (loss) on investments (.23) .18 .46 .44 1.77 (1.14)
Total from investment operations (.28) .08 .41 .44 1.77 (1.14)
Less distributions:
Distributions from net realized gains on investments - (.26) (.97) (.89) (.49) (.49)
Net asset value at end of period  $6.89 $7.17 $7.35 $7.91 $8.36 $7.08
TOTAL RETURN (3.91)% 1.18% 5.64% 5.34% 25.11% (13.12)%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $6.324 $7,340 $8,446 $9,836 $9,808 $8,454
Ratio of expenses to average net assets (a) (b) (c) $8,719 $8,446 $9,836 $9,808 $8,454 $12,250
Ratio of net investment loss to average net assets (c) 3.38%** 3.33% 3.28% 3.20% 3.55% 3.53%
Portfolio turnover rate (1.44)%** (1.38)% (0.63)% (2.74)% (2.85)% (1.65)%

* Per share net investment loss and net realized and unrealized gain (loss) on investments have been computed using the average number of shares outstanding. These computations had no effect on net asset value per share.
** Annualized.
(a) Ratio prior to reimbursement by the Investment Manager was 3.84%, and 3.59%, for the years ended December 31, 1995, and 1994, respectively.
(b) Ratio prior to waiver by the Distributor was 3.62%** for the six months ended June 30, 1999.
(c) ratio after the custodian fee credits was 3.22% and 3.49% for 1997 and 1995, respectively. Prior to 1995, such reductions were refelcted in the expense ratios. There were no custodian fee credits for 1998 and 1996.
 

U.S. AND OVERSEAS FUND

For Fund prospectuses and other
investment information, call toll-free
1-800-400-MIDAS (6432)
 

For shareholder services by
Investor Access, call toll-free
1-888-503-VOICE (8642)
 

 Or, access the Fund on the web at
www.midasfunds.com


This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. The report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus.
 


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