UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-2474
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Midas Dollar Reserves, Inc.
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(Exact name of registrant as specified in charter)
11 Hanover Square, New York, NY 10005
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(Address of principal executive offices) (Zipcode)
Monica Pelaez, Secretary
11 Hanover Square
New York, NY 10005
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(Name and address of agent for service)
Registrant's telephone number, including area code: 212-480-6432
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Date of fiscal year end: 12/31/03
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Date of reporting period: 1/1/03 - 06/30/03
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Form N-CSRS is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policy making roles.
Item 1. Report to Shareholders
Midas Funds
JUNE 30, 2003
SEMI-ANNUAL REPORT
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MIDAS FUND
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MIDAS SPECIAL EQUITIES FUND
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MIDAS DOLLAR RESERVES
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[LOGO] Midas FUNDS
Discovering Opportunities
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Contents
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Letter to Our Shareholders 1
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PORTFOLIO COMMENTS
Midas Fund 2
Midas Special Equities Fund 3
Midas Dollar Reserves 4
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SCHEDULE OF INVESTMENTS
Midas Fund 5
Midas Special Equities Fund 6
Midas Dollar Reserves 7
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Consolidated Financial Statements 8
Notes to Financial Statements 11
Financial Highlights 13
New Account Application 15
Additional Information Inside Back Cover
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Fund Investment Objective
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Midas Fund Seeks primarily capital appreciation and protection against
inflation and secondarily current income by investing in gold,
silver, and platinum shares.
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Midas Special Invests aggressively in stocks, options, and futures for maximum
Equities Fund capital appreciation.
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Midas Dollar A high quality money market fund investing in U.S. Government
Reserves securities. Free, unlimited check writing with only a $250
minimum per check.
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To Our Shareholders
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What a difference six months make!
The Federal Reserve Bank, showing increasing vigilance against deflation,
and in recognition of slowing economic growth, continued its 2001 and 2002
series of Federal Funds target interest rate reductions - most recently on June
25, 2003 from 1.25% to 1.00%. Despite only a modest improvement in some economic
indicators, general equities markets have reacted strongly to the rate cuts so
far, particularly in the second quarter of 2003. After three down years, the
broad equity indexes in almost every sector are showing positive results so far
in 2003.
We have been focusing our efforts in sectors of the economy that we expect
will show continuing market leadership, looking for quality companies with
unique combinations of financial, product, and brand strength. More importantly,
notwithstanding any changes in the global economy, politics or financial
markets, we remain committed to our stock selection process based on fundamental
analysis with the objective to invest only in those companies we believe to be
best poised to meet the objectives of the Funds over the long term. At the same
time, we seek to take advantage of the investment flexibility offered by the
Midas Funds by using options, futures and leverage opportunistically to take
advantage of shorter term trends in the financial markets.
Although anticipating changes in financial markets and stock prices is a
difficult process, we think investors can plan for their future needs
successfully by following three basic rules. First, commit to an investment
program for the long term to reduce emotional vulnerability to what may be short
term swings. Second, seek to reduce overall portfolio volatility through
diversification. The three Midas Funds - Special Equities Fund for longer term,
stock market oriented objectives, money market fund Dollar Reserves for short
term needs, and Midas Fund for capital appreciation and a hedge against
inflation - can help. Third, invest a set amount of money in a Fund, or several
Funds, each month or quarter, with periodic reviews of overall results as part
of a long range plan to reach your investment goals.
In closing, we wish to extend a warm welcome to all those shareholders of
the Funds who have joined us since our last Report either by opening accounts
directly, or through a brokerage firm, and to express our gratitude to those who
have entrusted us with their investment over the past years. As always, please
call us at 1-800-400-MIDAS (6432) if you have any questions, and we will be
happy to assist you.
Sincerely,
/s/ Thomas B. Winmill
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Thomas B. Winmill
President
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1
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Midas Fund
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C O M M E N T A R Y
It is indeed a pleasure to submit our Semi-Annual Report for Midas Fund. It is
also very gratifying to welcome our many new shareholders attracted to the
Fund's policy of investing primarily in securities of companies principally
involved in mining, processing, fabricating, distributing or otherwise dealing
in gold, silver, platinum or other natural resources.
Although the 2003 opening London fix for gold was roughly $342 and the
closing fix on June 30, 2003 was $346, it should be noted that the first half
average in 2003 was approximately $349 versus $310 in for the first half of
2002, a significant improvement. Interestingly, while the average price of gold
is higher this year compared to last year, many gold mining companies with
operations outside the United States are reporting lower earnings because of the
weaker U.S. dollar. In effect, as the currency where their operations take place
strengthens, their costs in U.S. dollar terms rise and their profit margins are
reduced.
Gold's volatility in the first half of 2003, with prices ranging from
approximately $320 to $390, we believe reflects its continuing role as a safe
haven, as well as an accurate barometer of world events, ranging from Persian
Gulf violence and the North Korean crisis, to international trade, economies,
and currencies. Gold's price volatility did occasion some investor anxiety, but
also opportunity. At the price downturn, the share prices of most North American
gold producers were near 52-week lows and some major producers were close to 2
year lows. Midas Fund's total return in the first six months of 2003 was a
negative 1.96%, disappointing following a total return gain of +61.05% for the
year 2002.
During the first six months of the year, the Fund benefitted by positive
trends in the market for senior quality companies in which the Fund
predominately invests and appreciation in a number of special situation
investments, but lost ground when the mine development plans of a large holding
were delayed by local opposition in South America. Fund returns were also
restrained by the lackluster performance of its small allocation to platinum
companies, which now has been reduced from 2002 levels. In view of the volatile
market conditions, however, the Fund sought to utilize a flexible leveraging
strategy and attempted to engage in option strategies on an opportunistic basis.
Similarly, Midas Fund's emphasis on quality, global gold mining companies has
been enhanced with a larger allocation to junior gold producers with what we
consider to be exceptional prospects. Currently, the Fund is leveraged and
aggressively invested in gold stocks, reflecting an optimistic outlook for the
gold sector versus all other asset categories.
As we have stated in our prior Reports, it appears that a powerful,
pro-gold change in the world economies is occurring by virtue of the aggressive
cuts in interest rates by the Federal Reserve begun in 2001 and continued most
recently through June 2003. Moreover, after having endured a levitating U.S.
dollar and "bubble" stock market, increasing mine production, hedging, and
high-publicity central bank sales, gold would seem to be poised to benefit from
the weaker dollar, uncertain equity markets, and curtailed exploration activity.
Looking ahead, we believe factors that could lead to further increases in gold
prices are a declining dollar, weak general equity markets, and money supply
growth, which could cause increasing gold bullion demand for both investment and
inflation protection. The U.S. Government's ongoing drive to prop up the stock
market and economy with lower interest rates, plus money supply growth, may have
the unintended, or tolerated, effect to further decrease the attractiveness of
the U.S. dollar and, by stimulating the economy, heighten inflationary
expectations. Any of these events could cause strength in gold prices and, in
turn, gold stocks.
We think Midas Fund is well positioned to take advantage of these positive
trends.
TOP 10 HOLDINGS
AS OF JUNE 30, 2003
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1 Placer Dome Inc.
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2 Golden Cycle Gold Corporation
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3 Barrick Gold Corp.
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4 Meridian Gold Inc.
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5 Newcrest Mining Ltd.
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6 Newmont Mining Corp.
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7 Randgold Resources Limited
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8 Freeport-McMoRan Copper & Gold, Inc. Class B
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9 Gold Fields Limited
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10 Harmony Gold Mining Company Limited
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2
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Midas Special Equities Fund
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C O M M E N T A R Y
We are very pleased to submit this 2003 Semi-Annual Report for Midas Special
Equities Fund, and to welcome our new shareholders who find the Fund's
aggressive investment approach attractive. The Fund's strategy in the first half
of the year was to maintain a focused allocation in high quality companies with
solid financial strength and growth prospects, and employ leverage and futures
on a periodic basis reflecting a market timing strategy. As the Fund continues
to invest aggressively primarily in equity securities, often involving special
situations and emerging growth companies, we believe many future investment
opportunities for capital appreciation will become available. The Fund's
flexibility to invest in large or small capitalization companies, U.S. or
foreign, and in many kinds of securities, gives it the advantage of being able
to consider participating in an investment in whatever form it may take in our
pursuit of capital appreciation.
Market Review and Outlook
The second quarter of this year was good for stocks, and is mostly the
reason for the overall gains in the first half. For example, the S&P 500 was up
15.4% in the second quarter, but up only 11.8% in the first half; the Russell
2000 was up 23.4% in the second quarter, but up only 17.9% in the first half.
Somewhat differently, the Nasdaq Composite was up 21.1% in the second quarter,
and up 21.9% in the first half. The second quarter market rally was the best
quarter for the S&P 500 since 1998 and, for the first time since 1989, all 10
industry sectors in the S&P 500 showed gains greater than 5%. Interestingly,
since World War II the S&P 500 gained in more than 80% of the quarters that
followed the 27 quarters in which it had gained at least 10%.
Yet in the current post-bubble stock market cycle, normal equity valuations
are still elusive. The price/earnings multiple and dividend yield of the S&P
500, of approximately 22 and 1.6% respectively, are at levels more often seen at
bull market peaks. Also troubling, in June the ratio of insider sales to buys
reached six-year highs. Junk bonds and housing seem to be having their own
valuation bubbles, probably as a result of the extremely accommodative approach
of the Federal Reserve in cutting its target Federal Funds rate to only 1% on
June 25, 2003. We have become increasingly concerned about these developing
conditions and, although leveraged in our selected stocks during most of the
first half, we decided to hedge an otherwise overbought market by occasionally
taking short positions in S&P 500 futures, and thus did not fully participate in
the second quarter rally, leading to a first half return of -4.65%.
Looking ahead, we believe that equity markets may have overreacted to the
initial outcome in Iraq and falling interest rates, and have overlooked real
economic conditions. Industrial activity has remained subdued. The economy's
apparent strength seems to be largely the result of the record low interest
rates, which encourage the consumer to support the U.S. economy through new home
and automobile purchases, re-financing of mortgages, and other new household
debt, notwithstanding stubborn unemployment. Accordingly, we remain cautious
about the short term outlook.
Longer term, we remain optimistic about the future of the overall markets.
We are confident that the current cycle of deflation and economic weakness will
be ended by the Fed with its massive injection of monetary liquidity and the
Bush administration's ongoing fiscal stimulus and numerous proposals designed to
boost consumer confidence and consumption. Of interest to investors, the changes
to the tax treatment of dividends and capital gains could have a pronounced
influence on markets and public companies which may lead to attractive
opportunities for the Fund.
TOP 10 HOLDINGS
AS OF JUNE 30, 2003
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1 Mills Corp.
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2 Berkshire Hathaway Inc. Class B
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3 Hilton Hotels Corp.
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4 The Proctor & Gamble Company
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5 3M Co.
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6 J.P. Morgan Chase & Co.
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7 AT&T Wireless Services
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8 Johnson & Johnson
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9 Wal-Mart Stores, Inc.
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10 PepsiCo, Inc.
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3
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Midas Dollar Reserves
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C O M M E N T A R Y
We are very pleased to submit this Semi-Annual Report for the first half of the
2003 year, and to welcome our new shareholders who have made their investment
since our last Report. We note that the Fund's all-weather income and safety
conscious approach and free check writing have made it an attractive vehicle for
a program of steady monthly investing. To make investing in the Fund as easy,
safe, convenient and affordable as possible, we offer three different plans, the
Midas Bank Transfer Plan, the Midas Salary Investing Plan and the Midas
Government Direct Deposit Plan. For information on these free services simply
give us a call and we will help you get started.
Fund Investments, Review and Outlook
In conditions such as these of economic uncertainty, the Fund's objective
of seeking maximum current income consistent with preservation of capital and
maintenance of liquidity has great appeal to safety conscious investors. Midas
Dollar Reserves 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 bills and notes
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 U.S. backing as to principal or interest but which are not backed by
the full faith and credit of the U.S. Government.
In the first half of the year, corporate earnings improved moderately and
the consumer appeared to be regaining confidence in the markets. Yet,
unemployment remained above average and hiring was sluggish. In addition,
prospects for further improvements in the manufacturing sector from increased
productivity and cost cutting seemed unclear. In this environment, on June 25th
the Federal Reserve Bank lowered the Federal Funds rate from 1.25% to 1.00%, a
sign of the Bank's intention to maintain an accommodative rate environment and
prevent economic disinflation.
Looking ahead to the second half of the year, we believe the economy is
poised to grow. The second quarter was better than the first and the economy
could continue to strengthen in the second half of 2003. Our conclusion at this
time is that the Federal Reserve will remain cautious and that a move to raise
rates is unlikely through the end of the year.
Check Writing Privilege for Easy Access
Many shareholders are establishing free, unlimited check writing privileges
at Midas 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. The minimum amount each check may be for is only $250 and there is no
maximum to the number of checks you may write. Checkbooks are free and there is
no per check or any other charge to your account for this attractive service.
Contact Us for Information and Services
If you have any questions or would like further information on the Midas
Funds Family, or our Traditional or Roth IRAs, as well as our Education Savings
Accounts, we would be very pleased to hear from you. Just call 1-800-400-MIDAS
(6432) and an Investor Service Representative will be very glad to assist you,
as always, without obligation on your part.
TOP 10 HOLDINGS
AS OF JUNE 30, 2003
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1 Federal Home Loan Bank, 7/31/03
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2 Farmer Mac Discount Notes, due 7/24/03
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3 Freddie Mac Discount Notes, due, 8/11/03
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4 Freddie Mac Discount Notes, due, 8/18/03
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5 Freddie Mac Discount Notes, due, 10/20/03
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6 Federal National Mortgage Corp., 7/09/03
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7 Federal National Mortgage Corp., 8/13/03
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8 Freddie Mac Discount Notes, due 9/18/03
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9 Federal Home Loan Bank, 8/22/03
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10 Federal Home Loan Bank,7/18/03
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4
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Midas Fund, Inc.
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Schedule of Portfolio Investments - June 30, 2003 (Unaudited)
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Shares COMMON STOCKS AND WARRANTS (100.00%) Market Value
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Precious Metals and Resources (100.00%)
21,500 Anglo American Platinum Corporation Limited $ 675,033
92,000 Ashanti Goldfields Company Ltd.* 733,240
300,000 Barrick Gold Corp. 5,370,000
503,100 Claude Resources, Inc.* 427,635
54,000 Compania de Minas Buenaventura S.A.A. ADR 1,624,860
400,000 Eldorado Gold Corp.* 696,000
100,000 Freeport-McMoRan Copper & Gold, Inc. Class B 2,450,000
96,000 Gencor Limited 1,402
100,000 Glamis Gold Ltd.* 1,147,000
392,900 Golden Cycle Gold Corp.* (note 3) 5,893,500
200,000 Gold Fields Limited ADR 2,436,000
160,000 Harmony Gold Mining Company Limited ADR 2,155,200
750,000 High River Gold Mines Ltd* 943,848
400,000 IAMGOLD Corp.* 1,976,000
8,428 Impala Platinum Holdings Limited 499,064
52,000 Impala Platinum Holdings Limited ADR 1,544,072
1,752,000 Kenor ASA* 1,088,140
300,000 Kinross Gold Corporation* 2,025,000
600,000 Lihir Gold Limited 523,104
2,000 Lihir Gold Limited ADR 35,200
49,140 Lonmin PLC ADR 617,886
400,000 Meridian Gold Inc.* 4,596,000
285,000 Mvelaphanda Resources Ltd. 688,608
700,000 Newcrest Mining Limited* 3,591,308
94,000 Newmont Mining Corp. 3,051,240
380,000 Northgate Exploration Limited* 414,200
500,000 Placer Dome Inc. 6,135,000
150,000 Randgold Resources Limited* 2,550,000
128,524 Sons of Gwalia Limited* 198,246
230,000 SouthernEra Resources Ltd.* 895,422
1,600,000 Wheaton River Minerals Ltd.* 2,027,405
508,000 Wheaton River Minerals Ltd. warrants* 243,009
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57,252,622
Total Investments (cost: $41,732,540) (100%) $57,252,622
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*Indicates non-income producing security.
See accompanying notes to financial statements.
5
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Midas Special Equities Fund, Inc.
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Schedule of Portfolio Investments - June 30, 2003 (Unaudited)
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Shares COMMON STOCKS (100.00%) Market Value
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Beverages (4.64%)
19,000 PepsiCo, Inc. $ 845,500
Fire, Marine & Casualty Insurance (17.65%)
12,000 American International Group, Inc. 662,160
1,050 Berkshire Hathaway Inc. Class B* 2,551,500
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3,213,660
Hotels & Motels (6.67%)
95,000 Hilton Hotels Corp. 1,215,050
Motor Vehicle Parts & Accessories (4.42%)
30,000 Honeywell International Inc. 805,500
National Commercial Banks (5.97%)
31,800 J.P. Morgan Chase & Co. 1,086,924
Office Machines (6.02%)
8,500 3M Co. 1,096,330
Periodicals: Publishing or Publishing & Printing (4.07%)
79,000 Martha Stewart Living Omnimedia, Inc.* 741,810
Pharmaceutical Preparations (9.99%)
20,000 Johnson & Johnson 1,034,000
23,000 Pfizer Inc. 785,450
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1,819,450
Precious Metals and Resources (1.00%)
292,000 Kenor ASA* 182,035
Real Estate Investment Trusts (18.52%)
100,500 The Mills Corp. 3,371,775
Retail-Variety Stores (5.01%)
17,000 Wal-Mart Stores, Inc. 912,390
Security Brokers, Dealers & Flotation Companies (3.72%)
67,204 The Charles Schwab Corp. 678,088
Soap, Detergent, Cleaning Preparations, Perfumes, Cosmetics (6.37%)
13,000 The Procter & Gamble Company 1,159,340
Telephone Communications (5.93%)
131,500 AT&T Wireless Services Inc.* 1,079,616
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Total Investments (cost: $15,925,765) (100.00%) $18,207,468
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Contracts
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SHORT FUTURES POSITION (Note 6)
30 S&P 500 Futures, September 2003
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*Indicates non-income producing security.
See accompanying notes to financial statements.
6
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Midas Dollar Reserves, Inc.
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Schedule of Portfolio Investments - June 30, 2003 (Unaudited)
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Par Value U.S. GOVERNMENT AGENCIES (100.00%) Yield* Value**
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$ 645,000 Farmer Mac, due 9/10/03 1.08% $ 643,626
820,000 Federal Home Loan Bank, due 7/11/03 1.06% 819,738
925,000 Federal Home Loan Bank, due 7/18/03 1.12% 924,489
925,000 Federal Home Loan Bank, due 7/30/03 1.14% 924,136
735,000 Federal Home Loan Bank, due 8/01/03 1.12% 734,281
896,000 Federal Home Loan Bank, due 8/08/03 0.95% 895,094
975,000 Federal Home Loan Bank, due 8/22/03 1.16% 973,363
790,000 Federal Home Loan Bank, due 8/25/03 1.07% 788,709
450,000 Federal Home Loan Bank, due 12/23/03 0.97% 447,900
745,000 Federal National Mortgage Assn., due 7/02/03 0.49% 744,980
1,000,000 Federal National Mortgage Assn., due 7/09/03 1.05% 999,741
1,500,000 Federal National Mortgage Assn., due 7/31/03 1.17% 1,498,510
1,000,000 Federal National Mortgage Assn., due 8/13/03 1.15% 998,622
690,000 Freddie Mac, due 7/10/03 1.06% 689,800
1,200,000 Freddie Mac, due 7/24/03 1.16% 1,199,090
1,140,000 Freddie Mac, due 8/11/03 1.17% 1,138,473
840,000 Freddie Mac, due 8/14/03 1.01% 838,952
1,140,000 Freddie Mac, due 8/18/03 1.15% 1,138,252
900,000 Freddie Mac, due 9/04/03 0.95% 898,463
1,000,000 Freddie Mac, due 9/18/03 0.91% 998,005
710,000 Freddie Mac, due 9/30/03 1.60% 707,164
1,125,000 Freddie Mac, due 10/20/03 0.91% 1,121,879
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Total Investments (100.00%) $20,123,267
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* Represents annualized yield at date of purchase for discount securities, or
coupon for coupon-bearing securities.
** Cost of investments for financial reporting and for Federal income tax
purposes is the same as value.
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See accompanying notes to financial statements.
7
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Statements of Assets and Liabilities
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Midas
Special Midas
Midas Equities Dollar
June 30, 2003 (Unaudited) Fund Fund Reserves
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Assets
Investments at cost $ 41,732,540 $ 15,925,765 $20,123,267
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Investments at market value $ 57,252,622 $ 18,207,468 $20,123,267
Cash -- -- 9,778
Receivables:
Dividends and interest 120,344 1,530 --
Fund shares sold 66,172 -- 44,227
Other assets 23,779 6,667 6,471
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Total assets 57,462,917 18,215,665 20,183,743
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Liabilities
Payables:
Demand notes payable to bank (note 5) 7,617,896 1,007,994 --
Fund shares redeemed 88,597 5,315 1,326
Accrued expenses 72,249 54,319 47,416
Accrued management and distribution fees 47,274 23,308 --
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Total liabilities 7,826,016 1,090,936 48,742
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Net Assets $ 49,636,901 $ 17,124,729 $20,135,001
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Shares outstanding, $0.01 par value 33,038,088 1,391,499 20,135,038
Net Asset Value, Offering and
Redemption Price Per Share $ 1.50 $ 12.31 $ 1.00
At June 30, 2003, net assets consisted of:
Paid-in capital $ 240,884,539 $ 26,234,849 $20,135,037
Accumulated net realized loss on investments (206,767,720) (11,391,823) (36)
Net unrealized appreciation on investments
and futures 15,520,082 2,281,703 --
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$ 49,636,901 $ 17,124,729 $20,135,001
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See accompanying notes to financial statements.
8
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Statements of Operations
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Midas
Special Midas
For the Six Months Ended June 30, 2003 Midas Equities Dollar
(Unaudited) Fund Fund Reserves
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Investment Income
Dividends $ 331,775 $ 256,955 $ --
Interest 88 50 127,073
Other 3,376 -- --
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Total investment income 335,239 257,005 127,073
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Expenses
Investment management (note 3) 236,350 79,639 51,392
Transfer agent 111,450 50,695 21,720
Distribution (note 3) 59,088 84,633 25,696
Registration (note 3) 55,485 24,683 10,792
Professional (note 3) 30,541 24,935 41,617
Printing 23,850 9,050 8,730
Directors 8,950 10,860 7,792
Custodian 8,055 715 1,353
Other 9,123 6,335 9,006
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Total operating expenses 542,892 291,545 178,098
Loan interest and fees (note 5) 37,552 13,522 120
Investment management and distribution
plan expenses waived (note 3) -- -- (77,088)
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Net expenses 580,444 305,067 101,130
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Net investment income (loss) (245,205) (48,062) 25,943
========================================================================================
Realized and Unrealized Gain (Loss)
On Investments, Foreign Currencies and Futures
Net realized gain (loss) from
security transactions and futures transactions 1,657,065 (1,830,621) (36)
Unrealized appreciation (depreciation) of
investments during the period (2,461,818) 923,012 --
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Net realized and unrealized loss
on investments, foreign currencies
and futures (804,753) (907,609) (36)
========================================================================================
Net increase (decrease) in net assets
resulting from operations $(1,049,958) $ (955,671) $ 25,907
========================================================================================
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See accompanying notes to financial statements.
9
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Statements of Changes in Net Assets
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Midas Fund Midas Special Equities Fund Midas Dollar Reserves
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Six Months Six Months Six Months
Ended Ended Ended
For the Years Ended (unless otherwise 6/30/03 6/30/03 6/30/03
indicated) (Unaudited) 12/31/02 (Unaudited) 12/31/02 (Unaudited) 12/31/02
- ---------------------------------------------------------------------------------------------------------------------------------
Operations
Net investment income (loss) $ (245,205) $ (460,470) $ (48,062) $ (224,244) $ 25,943 $ 163,814
Net realized loss from foreign currency
and futures transactions -- -- (1,043,335) 1,332,105 -- --
Net realized gain (loss) from security
transactions 1,657,065 362,245 (787,286) 111,404 (36) (49)
Unrealized appreciation (depreciation)
of investments, futures and foreign
currencies during the period (2,461,818) 22,626,265 923,012 (3,522,382) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (1,049,958) 22,528,040 (955,671) (2,303,117) 25,907 163,765
Distributions to Shareholders
Distributions to shareholders -- -- -- -- (25,943) (163,814)
Capital Share Transactions
Change in net assets resulting from
capital share transactions (a) (4,101,878) (6,297,137) (803,746) (1,507,469) (834,547) (5,021,600)
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Total change in net assets (5,151,836) 16,230,903 (1,759,417) (3,810,586) (834,583) (5,021,649)
Net Assets
Beginning of period 54,788,737 38,557,834 18,884,146 22,694,732 20,969,584 25,991,233
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End of period $49,636,901 $ 54,788,737 $17,124,729 $18,884,146 $20,135,001 $ 20,969,584
=================================================================================================================================
(a)Capital Share Transactions were as follows:
Value
Shares sold $ 3,319,267 $ 16,450,942 $ 454,190 $ 450,198 $ 3,960,314 $ 7,437,116
Shares issued in reinvestment of
distributions -- -- -- -- 24,913 161,658
Shares redeemed (7,421,145) (22,748,079) (1,257,936) (1,957,667) (4,819,822) (12,620,374)
- ---------------------------------------------------------------------------------------------------------------------------------
Net decrease $(4,101,878) $ (6,297,137) $ (803,746) $(1,507,469) $ (834,547) $ (5,021,600)
Number
Shares sold 2,327,686 12,634,942 38,868 34,319 3,960,362 7,437,116
Shares issued in reinvestment of
distributions -- -- -- -- 24,913 161,658
Shares redeemed (5,188,239) (17,464,452) (110,493) (141,781) (4,819,822) (12,620,374)
- ---------------------------------------------------------------------------------------------------------------------------------
Net decrease (2,860,553) (4,829,510) (71,625) (107,462) (834,595) (5,021,600)
- ---------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
10
- --------------------------------------------------------------------------------
Notes to Financial Statements - Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 The Midas Funds are all Maryland corporations registered under the
Investment Company Act of 1940, as amended ("1940 Act"), as open-end
management investment companies. Midas Fund, Inc.'s investment objectives
are primarily capital appreciation and protection against inflation and,
secondarily, current income. The Fund seeks to achieve these objectives by
investing at least 65% of its total assets primarily in (1) securities of
companies primarily involved, directly or indirectly, in the business of
mining, processing, fabricating, distributing or otherwise dealing in gold,
silver, platinum or other natural resources and (2) gold, silver and
platinum bullion.
Midas Special Equities Fund, Inc.'s investment objective is capital
appreciation. The Fund seeks capital appreciation by investing aggressively
in equity securities, futures, options, and debt instruments.
Midas Dollar Reserves, Inc. seeks to provide its shareholders 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.
The following is a summary of significant accounting policies
consistently followed by each 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 and forward contracts are marked to market daily and the change in
market value is recorded by the Funds as an unrealized gain or loss. When a
contract is closed, a realized gain or loss is recorded by the Funds equal
to the difference between the opening and closing value of the contract. A
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. 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 accounting
principles generally accepted in the United States of America, 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 Each Fund intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all taxable income and net capital gains, if any, after
utilization of any capital loss carryforward, to shareholders and therefore
no Federal income tax provision is required.
Distributions from net realized gains, if any, are normally declared
and paid annually. Distributions are determined in accordance with income
tax regulations which may differ from accounting principles generally
accepted in the United States of America. These differences are primarily
due to differing treatments for capital loss carryforwards, post-October
capital losses, net operating losses and foreign currency transactions.
At December 31, 2002, Midas Fund, Inc. had an unused capital loss
carryforward of approximately $207,829,100 of which $2,304,400,
$25,267,300, $12,176,100, $88,953,000, $72,327,900 and $6,800,400 expires
in 2004, 2005, 2006, 2007, 2008 and 2009, respectively. At December 31,
2002, Midas Special Equities Fund, Inc. had an unused capital loss
carryforward of approximately $9,831,200 of which $789,400 and $9,041,800
expires in 2008 and 2009, respectively.
- --------------------------------------------------------------------------------
11
- --------------------------------------------------------------------------------
Notes to Financial Statements - Unaudited
C O N T I N U E D
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3 Under the investment management agreement of Midas Fund, Inc., Midas
Management Corporation (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 $200 million, .95% from $200 million to
$400 million, .90% from $400 million to $600 million, .85% from $600
million to $800 million, .80% from $800 million to $1 billion and .75% over
$1 billion. Under the investment management agreement of Midas Special
Equities Fund, Inc., 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. Under the
investment management agreement of Midas Dollar Reserves, Inc., the
Investment Manager receives a management fee, payable monthly, based on the
average daily net assets of the Fund at the annual rate of .50 of 1% of the
first $250 million, .45 of 1% from $250 million to $500 million, and .40 of
1% over $500 million. For Midas Dollar Reserves, Inc., the Investment
Manager voluntarily waived its $51,392 management fee for the six months
ended June 30, 2003.
Pursuant to the investment management agreements with each Fund, the
Investment Manager has agreed to waive its fee or reimburse any Fund to the
extent the aggregate operating expenses of the Fund exceed the most
restrictive limit imposed by any state in which shares of the Funds are
qualified for sale, although currently the Funds are not subject to any
such limits. Each Fund has adopted a plan of distribution pursuant to Rule
12b-1 under the 1940 Act. Under each Plan, each Fund pays the Fund's
Distributor, Investor Service Center, Inc., an affiliate of the Investment
Manager, a fee of .25% (Midas Fund, Inc. and Midas Dollar Reserves, Inc.)
and 1.00% (Midas Special Equities Fund, Inc.) for distribution and
shareholder services. The shareholder service fee is intended to cover
personal services provided to the shareholders of the Funds and the
maintenance of shareholder accounts. The distribution fee is to cover all
other activities and expenses primarily intended to result in the sale of
the Funds' shares. For Midas Dollar Reserves, Inc. the Distributor
voluntarily waived its $25,696 distribution fee for the six months ended
June 30, 2003.
Certain officers and directors of the Funds are officers and directors
of the Investment Manager and the Funds' Distributor. The Funds reimbursed
the Investment Manager $120,599 for providing certain administrative and
accounting services at cost during the six months ended June 30, 2003. In
addition, Midas Fund, Inc. paid the Distributor $19,474 for payments made
to certain brokers for record keeping services. An officer and director of
the Funds, the Distributor, and the Investment Manager was elected in June
2003 to the board of directors of Golden Cycle Gold Corporation ("GCC").
GCC comprised 10.29% of Midas Fund, Inc.'s total investments and is 20.59%
owned by Midas Fund, Inc. (therefore an "affiliate" under the 1940 Act).
Remuneration from GCC for such directorship is paid to Midas Fund, Inc. Due
to limited trading in GCC and the Fund's large position, a portion of the
position may be illiquid.
- --------------------------------------------------------------------------------
4 At June 30, 2003, aggregate cost and net unrealized appreciation
(depreciation) of securities for federal income tax purposes were as
follows:
Federal Income Gross Unrealized Gross Unrealized Net Unrealized
June 30, 2003 Tax Cost Appreciation Depreciation Appreciation
---------------------------------------------------------------------------------------------------------
Midas Fund, Inc. $41,732,540 $17,895,144 $2,375,062 $15,520,082
Midas Special Equities Fund, Inc. 15,925,765 3,460,771 1,179,068 2,281,703
Purchases and sales of securities other than short term notes were as
follows:
For the Six Months Ended Purchases Proceeds from the
June 30, 2003 of Securities Sale of Securities
---------------------------------------------------------------------------
Midas Fund, Inc. $20,047,874 $15,021,501
Midas Special Equities Fund, Inc. 2,790,135 4,432,085
- --------------------------------------------------------------------------------
12
- --------------------------------------------------------------------------------
Notes to Financial Statements - Unaudited
C O N T I N U E D
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5 The Funds have a committed bank line of credit at an interest rate equal to
the Federal Reserve Funds Rate plus 1.00 percentage point for leveraging
and/or temporary or emergency purposes. At June 30, 2003, the outstanding
balance, and for the six months ended June 30, 2003, the weighted average
interest rate and the weighted average amount outstanding were as follows:
For the Six Months Ended Outstanding Weighted Average Weighted Average
June 30, 2003 Balance Interest Rate Amount Outstanding
---------------------------------------------------------------------------------------
Midas Fund, Inc. $7,617,896 2.04% $3,660,243
Midas Special Equities Fund, Inc. $1,007,994 2.05% $1,321,361
Midas Dollar Reserves, Inc. -- 2.05% $ 12,475
The Funds participate in repurchase agreements with the Funds'
custodian. The custodian takes possession of the underlying collateral
securities which are valued daily to ensure that the fair market value,
including accrued interest, is at least equal, at all times, to the
repurchase price. In the event of default of the obligation to repurchase,
the Funds have 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.
- --------------------------------------------------------------------------------
6 The Fund may engage in transactions in futures contracts. Upon entering
into a futures contract, the Fund is required to segregate for the broker
at the custodian bank an amount of cash or cash equivalents equal to a
certain percentage of the contract amount. This is known as "initial
margin." Subsequent payments ("variation margin") are made or received by
the Fund each day, depending on the daily fluctuation of the value of the
contract. The daily change in the contract is included in unrealized
appreciation/depreciation on investments and futures contracts. The Fund
recognizes a realized gain or loss when the contract is closed. Futures
transactions sometimes may reduce returns or increase volatility. In
addition, 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 futures could have a potentially
large impact on a Fund's performance. At June 30, 2003, Midas Special
Equities Fund, Inc. has an open short position of 30 September 2003 S&P 500
futures contracts with an unrealized gain of $69,000.
- --------------------------------------------------------------------------------
Financial Highlights - Midas Fund, Inc.
- --------------------------------------------------------------------------------
Six Months
Ended Years Ended December 31,
6/30/03 ---------------------------------------------------
(Unaudited) 2002 2001 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
Per Share Data*
Net asset value at beginning of period $ 1.53 $ .95 $ .84 $ 1.36 $ 1.51 $ 2.11
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.01) (.01) (.01) (.02) (.01) --
Net realized and unrealized gain (loss) on investments (.02) .59 .12 (.50) (.14) (.60)
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations (.03) .58 .11 (.52) (.15) (.60)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period 1.50 $ 1.53 $ .95 $ .84 $ 1.36 $ 1.51
============================================================================================================================
Total Return (1.96)% 61.05% 13.10% (38.24)% (9.93)% (28.44)%
============================================================================================================================
Ratios/Supplemental Data
Net assets at end of period (000's omitted) $49,637 $54,789 $38,558 $34,820 $71,820 $87,841
============================================================================================================================
Ratio of total expenses to average net assets /(a)/ 2.40%** 2.58% 2.83% 3.48% 2.81% 2.33%
============================================================================================================================
Ratio of net investment loss to average net assets (1.02)%** (.93)% (.75)% (2.35)% (.80)% (.02)%
============================================================================================================================
Portfolio turnover rate 28% 45% 61% 109% 74% 27%
============================================================================================================================
* Per share net investment loss and net realized and unrealized gain (loss)
on investments are based on average shares outstanding and had no effect on
net asset value per share.
** Annualized
(a) Ratio after transfer agent and custodian credits was 2.81%, 3.40%, 2.73%,
and 2.30%, for the years ended December 31, 2001, 2000, 1999, and 1998
respectively.
- --------------------------------------------------------------------------------
13
- --------------------------------------------------------------------------------
Financial Highlights - Midas Special Equities Fund, Inc.
- --------------------------------------------------------------------------------
Six Months
Ended Years Ended December 31,
6/30/03 ---------------------------------------------------
(Unaudited) 2002 2001 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
Per Share Data*
Net asset value at beginning of period $ 12.91 $ 14.45 $ 20.02 $ 26.56 $ 20.34 $ 23.38
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.03) (.14) (.17) (.39) (.27) (.61)
Net realized and unrealized gain (loss) on investments (.58) (1.39) (5.40) (5.27) 6.49 (.65)
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations (.61) (1.53) (5.57) (5.66) 6.22 (1.26)
- ----------------------------------------------------------------------------------------------------------------------------
Less distributions:
Distributions to shareholders -- -- -- (.88) -- (1.78)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value (.61) (1.53) (5.57) (6.54) 6.22 (3.04)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 12.32 $ 12.92 $ 14.45 $ 20.02 $ 26.56 $ 20.34
============================================================================================================================
Total return (4.57)% (10.66)% (27.8)% (22.2)% 30.6% (5.0)%
============================================================================================================================
Ratios/Supplemental Data
Net assets at end of period (000's omitted) $17,125 $18,884 $22,695 $29,036 $41,629 $36,807
============================================================================================================================
Ratio of expenses before interest expense 3.40%** 3.41% 3.37% 2.77% 2.71% 2.63%
============================================================================================================================
Ratio of total expenses to average net assets /(a)/ 3.58%** 3.69% 3.81% 3.44% 3.13% 3.42%
============================================================================================================================
Ratio of net investment loss to average net assets (.56)% (1.08)% (1.12)% (1.77)% (1.44)% (2.57)%
============================================================================================================================
Portfolio turnover rate 15% 20% 102% 248% 159% 97%
============================================================================================================================
* Per share net investment loss and net realized and unrealized gain (loss)
on investments are based on average shares outstanding and had no effect on
net asset value per share.
** Annualized
(a) Ratio after transfer agent and custodian fee credits was 3.80%, 3.42%, and
3.04%, for the years ended December 31, 2001, 2000, and 1999 respectively.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Financial Highlights - Midas Dollar Reserves, Inc.
- --------------------------------------------------------------------------------
Six Months
Ended Years Ended Six Months Year
6/30/03 -------------------------------------- Ended Ended
(Unaudited) 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 6/30/98
- ----------------------------------------------------------------------------------------------------------------------------------
Per Share Data
Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .001 .007 .031 .056 .043 .022 .048
Less distributions:
Distributions to shareholders (.001) (.007) (.031) (.056) (.043) (.022) (.047)
Tax return of capital to shareholders -- -- -- -- -- -- (.001)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
==================================================================================================================================
Total return 0.12% 0.63% 3.11% 5.74% 4.38% 4.46%** 4.88%
==================================================================================================================================
Ratios/Supplemental Data
Net assets at end of period (000's omitted) $20,135 $20,970 $25,991 $58,502 $64,250 $65,535 $61,602
==================================================================================================================================
Ratio of total expenses to average net assets /(a)//(b)/ .96%** 1.09% 1.11% .84% .94% .93%** .86%
==================================================================================================================================
Ratio of net investment income to average net
assets /(c)/ .25%** .69% 3.51% 5.54% 4.30% 4.43%** 4.71%
==================================================================================================================================
** Annualized.
(a) Ratio prior to waiver by the Investment Manager and Distributor was 1.72%,
1.84%, 1.64%, 1.09%, 1.34%, and 1.30%** for the six months ended June 30,
2003, years ended December 31, 2002, 2001, 2000 and 1999, the six months
ended December 31, 1998 and the year ended June 30, 1998, respectively.
(b) Ratio after transfer agent and custodian fee credits was 1.06% and 0.80%
for the years ended December 31, 2001 and 2000, respectively.
(c) Ratio prior to waiver by the Investment Manager and Distributor was (.25)%,
(.06)%, 2.92%, 5.29%, 3.90%, 4.06%**, and 4.37% for the years ended
December 31, 2002, 2001, 2000 and 1999, the six months ended December 31,
1998 and the year ended June 30, 1998, respectively.
- --------------------------------------------------------------------------------
14
[LOGO] Midas FUNDS ACCOUNT Use this Account Application to open a regular Midas
account. Discovering Opportunities APPLICATION For a Midas IRA Application, call
toll-free 1-800-400-MIDAS (6432) or
access our web site at
www.midasfunds.com.
Return this completed
Account Application in
the enclosed envelope
or mail to: Midas
funds, Box 6110,
Indianapolis, IN
46206-6110.
==============================================================================================================================
1. Registration (Please Print) For assistance with this Application, please call 1-800-400-MIDAS (6432) 8a.m. - 6p.m.
eastern time.
Individual:
-------------------------------------------------------------------------------------------------------------------------
First Name Middle Initial Last Name Social Security Number Date of Birth
Joint Tenant: Note: Registration will be Joint Tenants with Right of Survivorship, unless otherwise specified.
-------------------------------------------------------------------------------------------------------------------------
First Name Middle Initial Last Name Social Security Number Date of Birth
Gift/Transfer to a Minor:
as Custodian for
-------------------------------------------------------------------------------------------------------------------------
Name of Custodian (only one) Name of Minor (only one)
under the Uniform Gifts/Transfers to Minors Act.
-------------------------------------------------------------------------------------------------------------------------
Custodian's State of Residence Minor's Social Security Number Minor's Date of Birth
Corporations, Partnerships, Trusts and others: Note: Please attach corporate/trust/other resolution.
-------------------------------------------------------------------------------------------------------------------------
Name of Corporation, Partnership, Name of Individual(s) Authorized to Act for the Corporation,
or other Organization Partnership, or other Organization
-------------------------------------------------------------------------------------------------------------------------
Tax I.D. Number Name of Trustee(s) Date of Trust Instrument
==============================================================================================================================
2. Mailing Address, Telephone Number, and Citizenship
-------------------------------------------------------------------------------------------------------------------------
Street City State / Zip Daytime Telephone E-mail address
Citizen of: ( )U.S. ( )Other: Citizen of: ( )U.S. ( )Other:
-------------------------------------------------------------------------------------------------------------------------
Owner If other, attach IRS Joint Owner If other, attach IRS
Form W-8 Form W-8
==============================================================================================================================
3. Fund(s) chosen and amount invested ($1,000 minimum per Fund) Note: The
$1,000 initial investment minimum is waived if you elect to invest $100 or
more each month through the Midas Automatic Investment Program (see Section
6).
Midas Dollar Reserves $ Midas Fund $
---------- ----------
Midas Special Equities Fund $ TOTAL $
---------- ----------
By Check: Please draw your check to the order of Midas Funds and enclose with this Application. Third party checks will
not be accepted.
By Wire: Please call 1-800-400-MIDAS (6432) 8a.m. - 6p.m. eastern time to be assigned an account number before making an
initial investment by wire.
Please indicate the assigned account number and the date the wire was sent .
------------------------ --------------------
==============================================================================================================================
4. Distributions If no circle is checked, the Automatic Compounding Option will
be assigned to increase the shares you own.
[ ] Automatic Compounding Option Dividends and distributions reinvested in
additional shares.
[ ] Payment Option [ ] Dividends in cash, distributions reinvested. [ ]
Dividends and distributions in cash.
To have distributions paid in cash by Midas Electronic Funds Transfer
service, please complete Section 7 below.
==============================================================================================================================
5. Check Writing Privilege for Midas Dollar Reserves - Signature Card
I am investing in Midas Dollar Reserves and would like free check writing
(minimum $250 per check). Please send free personalized checks. I have read
and agree to the Check Writing Account Agreement on the reverse of this
Signature Card.
Please permit a single signature on checks drawn on joint accounts,
corporations, trusts, etc., unless the following circle is checked [ ].
-------------------------------------------------------------------------------------------------------------------------
Signature Signature of Joint Owner (if any)
-------------------------------------------------------------------------------------------------------------------------
Print Name Print Name of Joint Owner (if any)
(please continue on back)
==============================================================================================================================
6. Midas Funds Automatic Investment Program
[ ] Bank Transfer Plan Automatically purchase shares each month by
transferring the dollar amount you specify from your regular checking
account, NOW account or bank money market account. Please attach a
voided bank account check.
Fund Name:
-------------------------------
Amount ($100 minimum): $ Day of month: [ ] 10th [ ] 15th [ ] 20th
------------------
[ ] Salary Investing Plan The enrollment form will be sent to the address
in Section 2 or call toll-free 1-800-400-MIDAS (6432) to have the form
sent to your place of employment.
[ ] Government Direct Deposit Plan Your request will be processed and you
will receive the enrollment form.
==============================================================================================================================
7. Investments and Redemptions by Telephone
Shareholders automatically enjoy the privilege of calling toll-free
1-800-400-MIDAS (6432) or accessing their Midas Funds account on the web at
www.midasfunds.com to purchase additional shares of a Fund or to expedite a
redemption and have the proceeds sent directly to their address or to their
bank account, unless declined by checking the following circle [ ]. The
link with your bank offers flexible access to your money. Transfers occur
only when you initiate them and may be made by either bank wire or bank
clearinghouse transfer with the Midas Electronic Funds Transfer service.
To establish the link to your bank, please attach a voided check from your
bank account. One common name must appear on your Midas Funds account and
bank account.
==============================================================================================================================
8. Signature and Certification to Avoid Backup Withholding
"I certify that I have received and read the prospectus for the Midas
Funds, agree to its terms, and have the legal capacity to purchase their
shares. I understand that no certificates will be issued and that my
confirmation statement will be evidence of my ownership of Fund shares. I
acknowledge receipt of the Fund's privacy policy notice. I understand
telephone conversations with representatives of the transfer agent and
Investor Service Center, Inc. (collectively "Service Agents") are recorded
and hereby consent to such recording. I agree that the Service Agents will
not be liable for acting on instructions believed genuine and under
reasonable procedures designed to prevent unauthorized transactions.
I certify (1) the Social Security or taxpayer identification number
provided above is correct, (2) I am not subject to backup withholding
because (a) I am exempt from backup withholding, or (b) I have not been
notified by the IRS that I am subject to backup withholding, or (c) I have
been notified by the IRS that I am no longer subject to backup withholding,
and (3) I am a U.S. person (including a U.S. resident alien)." (Please
cross out item 2 if it does not apply to you.) The Internal Revenue Service
does not require your consent to any provision of this document other than
the certifications required to avoid backup withholding.
-------------------------------------------------------------------------------------------------------------------------
Signature of [ ] Owner [ ] Trustee [ ] Custodian Date Signature of Joint Owner (if any) Date
--------------------------------------
--------------------------------------
MF-SARAPP-06/03
Please tell us how you heard about Midas:
--------------------------------------------------------------------------------
Check Writing Account Agreement
The payment of money is authorized by the signature(s) appearing on the reverse
side. Each signatory guarantees the genuineness of the other signatures.
The Bank whose name appears on the checks issued by the Midas Funds is hereby
appointed agent by the person(s) signing this card (the "Depositor(s)") and, as
agent, is authorized and directed, upon presentment of checks to the Bank to
transmit such checks to the applicable Midas mutual fund or its transfer agent
as requests to redeem shares registered in the name of the Depositor(s) in the
amounts of such checks for deposit in this checking account.
This checking arrangement is subject to the applicable terms and restrictions,
including charges, set forth in the current Prospectus for each Midas mutual
fund as to which the Depositor(s) has arranged to redeem shares by check
writing. The Bank is further authorized to effect redemptions to defray the
Bank's charges relating to this checking arrangement. The Depositor(s) agrees to
be subject to the rules and regulations of the Bank pertaining to this checking
arrangement as amended from time to time; that the Bank, Investor Service
Center, and Midas have the right to change, modify or terminate this check
writing service at any time; and that the Bank shall be liable for its own
negligence.
Shareholder Services
. Electronic Funds Transfers
. Automatic Investment Program . Retirement Plans:
Traditional Deductible IRA
Roth IRA
SEP-IRA
Simple IRA
403(b)
. Education Savings Account
Minimum Investments
. Regular Accounts: $1,000
. Retirement Plans, including Traditional Deductible
IRA, Roth IRA, SEP-IRA, Simple IRA, and 403 (b): $1,000
. Education Savings Account: $1,000 . Automatic
Investment Program: $100 . Subsequent Investments: $100
Midas Funds
P. O. Box 6110
Indianapolis, IN 46206-6110
[LOGO] The Midas Touch 1-800-400-MIDAS (6432) for Investment Information Account
Access
Access Midas Funds at www.midasfunds.com.
Past performance does not guarantee future results.
Investment return will fluctuate, so shares when
redeemed may be worth more or less than their cost.
Dollar cost averaging does not assure a profit or
protect against loss in a declining market and
investors should consider their ability to make
purchases when prices are low. One of Midas' guiding
principles is that we will communicate with our
shareholders as candidly as possible because we believe
shareholders benefit from understanding our investment
philosophy and approach. Our views and opinions
regarding the prospects of our portfolio holdings,
Funds and the economy are "forward looking statements"
which may or may not be accurate and may be materially
different over future periods. We disclaim any
obligation to update or alter any forward looking
statements, whether as a result of new information,
future events, or otherwise. Thus, you should not place
undue reliance on forward looking statements, which
also speak only as of the date of this Report. Current
performance may be lower or higher than the performance
of quoted herein. This Report and the financial
statements it contains are submitted for the general
information of the shareholders of the Midas Funds. The
Report is not authorized for distribution to
prospective investors in the Funds unless preceded or
accompanied by an effective Prospectus which contains
more complete information, including charges, risks and
expenses. Please read it carefully before you invest or
send money.
Investor Service Center, Inc., Distributor.
------------
[LOGO] Midas FUNDS PRSRT STD Discovering Opportunities US POSTAGE
PAID
LANCASTER PA
PERMIT 1762
------------
Midas Funds
P.O. Box 6110
Indianapolis, IN 46206-6110
Return Service Requested
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MF-SAR-06/03
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Reserved
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8. Reserved
Item 9. Controls and Procedures
(a)(i) The Principal Executive Officer and Principal Financial Officer have
concluded that Midas Dollar Reserves, Inc.'s disclosure controls and procedures
(as defined in Rule 30a-2(c) under the Investment Company Act) provide
reasonable assurances that material information relating to Midas Dollar
Reserves, Inc. is made known to them by the appropriate persons, based on their
evaluation of these controls and procedures as of a date within 90 days of the
filing date of this report.
(a)(ii) There were no significant changes in Midas Dollar Reserves, Inc.
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation referenced in (a)(i) above.
Item 10. Exhibits
(a) Not applicable.
(b) Certification pursuant to Rule 30a-2 under the Investment Company Act of
1940(17 CFR 270.360a-2) attached hereto as Exhibit 99.CERT.
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Midas Dollar Reserves, Inc.
By: /s/ Thomas B. Winmill
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Thomas B. Winmill, President
Date: September 8, 2003