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
Midas Dollar Reserves, Inc.
(Exact name of registrant as specified in charter)
11 Hanover Square, New York, NY 10005
--------------------------------------------------------------
(Address of principal executive offices) (Zipcode)
Thomas B. Winmill, President
11 Hanover Square
New York, NY 10005
--------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-212-480-6432
Date of fiscal year end: 12/31
Date of reporting period: 1/1/06 - 06/30/06
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-CSRS in its
regulatory, disclosure review, inspection, and policy making roles.
A registrant is required to disclose the information specified by Form N-CSRS
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSRS
unless the Form displays a current valid Office of Management and Budget ("OMB")
control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under clearance requirements of 44 U.S.C. sec. 3507.
Item 1. Report to Stockholders
Midas Funds
JUNE 30, 2006
SEMI - ANNUAL REPORT
MIDAS FUND
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MIDAS SPECIAL FUND
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MIDAS DOLLAR RESERVES
[GRAPHIC APPEARS HERE]
MIDAS
FUNDS
Discovering Opportunities (R)
APPLICATION INSIDE
Contents
Letter to Our Shareholders 1
PORTFOLIO COMMENTS
Midas Fund 3
Midas Special Fund 4
Midas Dollar Reserves 5
SCHEDULE OF INVESTMENTS
Midas Fund 6
Midas Special Fund 8
Midas Dollar Reserves 9
FINANCIAL STATEMENTS
Financial Statements 10
Notes to Financial Statements 14
Financial Highlights 17
SUPPLEMENTAL INFORMATION
Board Approval of Agreements 19
About Your Fund's Expenses 21
Allocations of Portfolio Holdings 22
New Account Application 23
Additional Information Inside Back Cover
Fund Investment Objective
Midas Fund Seeks primarily capital appreciation and protection
against inflation and secondarily current income
through investments in precious metals companies.
Midas Special Invests aggressively for capital appreciation.
Fund
Midas Dollar A money market fund investing in securities issued
Reserves by the U.S. Government, and by its agencies and
instrumentalities. Free, unlimited check writing
with only a $250 minimum per check.
To Our Shareholders
Midas Fund was up +104.55% for the 12 months ended June 30, 2006, making it #1
among not only all 66 gold funds but all 22,456 funds monitored by Morningstar
as well. We are delighted to have been able to provide this benefit to so many
of our shareholders. It is important to remember, however, that behind these
numbers is significant volatility and risk and that it required staying the
course during many market swings over the full 12 month period to obtain these
results. Future one year performance over 100% is not likely.
More Volatility to Come
Financial markets are reacting strongly to all sorts of economic and
political news. The Federal Reserve recently announced that the growth of the
U.S. economy appeared to be slowing, and that inflation was not too threatening,
suggesting that the trend of interest rate increases may slow or stop. On that
day the stock market rose. Later, other economic data was released, suggesting
more inflation than originally supposed, and the stock markets slumped.
Globally, some investors are concerned by the "competition" among several
countries to depreciate their currency to maintain their export businesses,
while others focus on rising global interest rates and a worldwide reduction in
financial market liquidity. Yet others seek a safe haven amidst international
geopolitical tension in the Middle East, North Korea, and elsewhere.
As the impact of these and countless other economic factors work their
way through the financial markets, at Midas we seek to remain focused on quality
companies with unique combinations of strength in operations, finances, and
products. We are committed to our stock selection process based on fundamental
analysis to meet the objectives of the Funds over the long term and are
convinced that successful investing requires both careful analysis and patience.
Finding the pockets of strength -- in gold, silver or platinum companies, growth
or established companies, large or small companies whose securities in each case
can appreciate in value -- can be a difficult and sometimes frustrating task,
but rewarding as well.
Start Investing Now ... and Build For Your Future
Volatility in the markets is a fact of life and, yet, gives many investors
pause, causing them to miss opportunities. When markets are trending down, how
does one know whether the market has further to decline? Conversely, after a
strong upward move, has one already missed all potential gains? At Midas, we
suggest following a regular investment plan by investing a fixed amount of money
in a Fund at the same time each month and periodically reviewing your overall
portfolio. Investing the same amount regularly, known as "dollar cost
averaging," can reduce the anxiety of investing in a rising or falling market or
buying all your shares at market highs. Although this strategy cannot assure a
profit or protect against loss in a declining market, it can result in a lower
average cost for your purchases. Of course, you should consider your financial
ability to continue your purchases through periods of low price levels when
undertaking such a strategy. Volatility in markets also reinforces our message
in prior Reports about the importance of diversifying your portfolio across the
Midas Funds Family to balance the returns offered by precious metals, general
equities, and money market investments.
1
Interestingly, the Bureau of Economic Analysis of the U.S. Commerce
Department recently reported that the U.S. personal savings rate was a negative
1.7% in May 2006. Unfortunately, this trend is worsening: in December 2005 the
rate was a negative 0.7%, and for all of 2005 was a negative 0.5%. Savings rates
are negative when consumers borrow to spend (for example, through credit cards
or home equity loans), by selling investments or other assets, or by using
savings from previous periods. Prior to 2005, the savings rate had been negative
for a full year only in 1932 and 1933, during the Great Depression. What is the
future for Americans with no long term investing plan?
Discovering Opportunities with Midas
Fortunately, the Midas Funds have a flexible investing approach, which can
be an important advantage in seeking a superior strategy in volatile markets.
While adapting to evolving markets can be a challenging process, personal
investment planning for the future can be successful by following three simple
rules. First, commit to a long term investing approach. Second, follow a regular
investment plan as described above. Third, manage your investing risk by
diversifying among the three Midas Funds: Midas Special Fund for longer term,
stock market oriented objectives, money market fund Midas Dollar Reserves for
income and short term liquidity, and Midas Fund for precious metals capital
appreciation and a hedge against inflation. 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
Thomas B. Winmill
President
As of June 30, 2006, Midas Fund ranked #1 of 66, #13 of 62, and #61 of 61 among
precious metals funds for total return for the 1-, 5 - and 10-year periods.
Midas Fund's average annual total return in the 1-, 5- and 10- year periods
ended June 30, 2006 was 104.55%, 35.71%, and -2.74%. According to Morningstar's
Principia ranking for all mutual funds, Midas Fund ranked #1 of 22,456, #17 of
16,943, and #10,520 of 10,564 funds for the 1-, 5- and 10-year periods as of
June 30, 2006. Performance data quoted above is historical. Past performance is
no guarantee of future results. Future performance may be higher or lower than
the performance data quoted. The principal value and investment return of an
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Performance does not include the effect of any
fees described in the Fund's prospectus (e.g. short-term trading fees) which, if
applicable, would lower your total returns. Obtain performance data current to
the most recent month-end at www.midasfunds.com. Midas Fund invests in foreign
and emerging markets, which involve special risks such as currency fluctuation
and less public disclosure, as well as economic and political risk. Gold funds
may be susceptible to adverse economic, political or regulatory developments due
to concentrating in a single sector. The price of gold is subject to substantial
price fluctuations over short periods of time and may be affected by
unpredictable international monetary and political policies. Please consider
carefully the Fund's investment objectives, risks, charges and expenses. For
this and other important information, obtain a fund prospectus by visiting
www.midasfunds.com or by calling 1-800-400-MIDAS (6432). Read it carefully
before investing. Distributed by Investor Service Center, Inc.
2
Midas Fund
COMMENTARY
It is a pleasure to submit our Semi-Annual Report for Midas Fund. It is also
gratifying to welcome our many new shareholders, attracted both by the returns
the Fund has enjoyed over recent years and 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.
Gold Report
Starting 2006 at $513 per ounce, by June 30, 2006 the gold price had
reached $614 per ounce (using London p.m. fix and rounded prices per ounce) for
a gain of about 19.6%. Interestingly, while averaging $590 per ounce in the
first half of 2006, gold fluctuated from a low of $411 in January to a euphoric
high of $720 in May -- a surprising $309 range! Midas Fund's six month gain was
35.45%, about 80% better than the gold price (and well above the 22.30% total
return in the period of the average gold fund monitored by Morningstar). Of
note, in the first half of 2006 gold gained only 10.8% against the Euro,
suggesting that gold's role as an alternative currency to the U.S. dollar (like
the Euro) is returning in importance.
Market Review and Outlook
Midas Fund's strategy at the beginning of the year was to broaden its
precious metals focus to include more silver, platinum, and base metal
companies. As gold and silver prices rose strongly and many base metal prices
reached medium and long term highs in February 2006, stock prices of many
intermediate and emerging gold producers and large diversified miners also
performed well. During the following period of consolidation, Midas Fund's
strategy evolved to reduce or eliminate silver, platinum, and diversified mining
company positions and increasingly emphasize gold. In addition, a limited
holding of natural gas companies underperformed and was sold. Currently, the
Fund is leveraged and aggressively positioned for a rising gold price with an
emphasis on larger companies with diversified operations in more politically
stable areas, attractive gold production growth profiles, substantial gold
resources, exploration potential, or other special features. Among smaller
companies the Fund is seeking those whose gold production or projects would
attract a premium valuation in a merger or acquisition.
Looking ahead, we anticipate some further volatility in the gold markets as
speculative euphoria and fear recede and normal supply and demand factors
return. According to the World Gold Council (WGC), the total demand for physical
gold fell in the first quarter of 2006, due in large part to declining jewelry
demand. The WGC points out, however, that due to the higher prices paid for
gold, there was an increase in dollars spent on gold in the period of 9% for
total demand and 2% for jewelry. As price swings moderate, we expect normal
fabrication demand for gold to resume.
Demand for gold as an alternative currency may surge. China's foreign
exchange reserves, the world's largest at an estimated $875 billion, may grow to
exceed $1 trillion. Even a modest 5% to 10% allocation by China of new reserves
to gold could increase gold prices. We expect gold demand from geopolitical
crises will be limited since the extended period of Mideast and North Korean
tensions has presumably already attracted much of that source of demand --
unless events take a distinctly sharp turn for the worse.
Longer term we are increasingly concerned by higher U.S. interest rates
which can be negative for both the economy and gold. Moreover, monetary policies
of many governments around the world also appear to be leaning towards higher
rates, citing inflation and credit growth. Unfortunately, the United States has
a heavy burden of public and private sector debt and trade deficits, which may
limit the viability of further U.S. interest rate increases. If other countries
raise their interest rates and the United States does not, the U.S. dollar may
fall. Our strategy will be to position Midas Fund to benefit from these trends.
TOP 10 HOLDINGS
AS OF JUNE 30, 2006
1 Golden Cycle Gold Corporation
2 Glamis Gold Ltd.
3 Newmont Mining Corp.
4 Randgold Resources Ltd.
5 Miramar Mining Corp.
6 Yamana Gold Inc.
7 Agnico-Eagle Mines Ltd.
8 Meridian Gold Inc.
9 IAMGOLD Corp.
10 Barrick Gold Corp.
3
Midas Special Fund
COMMENTARY
It is a pleasure to submit the 2006 Semi-Annual Report for Midas Special Fund,
and to welcome our new shareholders who find the Fund's aggressive and flexible
investment approach attractive. As we announced in our recent mailing, on May 1,
2006 Midas Special Fund became the new name for Midas Special Equities Fund.
Although its name is changed, Midas Special Fund will continue its aggressive
and flexible investment policy in seeking its primary objective of capital
appreciation. The Fund's investment strategies and techniques include market
timing and short term trading strategies involving leverage, futures, options
and short selling. These and other risks reflecting Midas Special Fund's
policies are more fully described in the Fund's new prospectus dated May 1,
2006.
Market Review and Outlook
The economy is showing signs of having slowed down in the second quarter,
and consumers appear to be struggling under current economic conditions. Rising
interest rates and persistently high gasoline prices may even further pinch
consumer spending and weaken the U.S. economy for the rest of the year. Other
indicators point towards a decline of consumer confidence and to a slowdown in
the housing markets. The Conference Board said that in the first half of 2006
its leading index fell by 0.3%, a 0.6% annual rate of decline. Yet, unemployment
is only 4.6% and the U.S. economy is growing in terms of U.S. industrial
production. In fact, the Federal Reserve recently reported that industrial
capacity utilization reached its highest level since June 2000.
The wild card in the markets, however, is the heightened geopolitical
tension in the world today-from the Middle East to North Korea, Russia to South
America. Further, other important players are seeking a role on the global
financial stage: the Bank of Japan, China's central bank, Russia's Industry and
Energy Ministry, and OPEC. Their influence on global economics may be seen as
becoming increasingly significant, particularly as mid-year negotiations at the
World Trade Organization led to no agreement on how to increase trade in
manufactured and farm goods.
In view of the appreciably cooling economy and volatile markets, the Fund's
strategy during the first half of the year was to reduce leverage and build up
its focused allocation in high quality companies with fortress-like financial
strength, global franchises, or "hard assets." Using its investment flexibility,
by June 30, Midas Special Fund's holdings included the stocks of some of the
largest and best known U.S companies and U.S. Treasury bills. From an industry
sector viewpoint, the Fund sold some of its consumer-oriented and
economically-sensitive holdings and replaced them with pre-eminent technology,
oil, and gold mining companies.
Objective: Capital Appreciation
Midas Special Fund will pursue its capital appreciation objective
aggressively as financial market conditions evolve, seeking to discover long
term opportunities for attractive investment-whether due to a changing outlook
for the prospects of a particular company or an industry sector generally. Since
these strategies may reflect longer term wealth building goals, we believe the
Fund can be especially appropriate for tax advantaged retirement accounts. For
long term investing goals, consider the tax-advantaged Midas Traditional, Roth,
SEP, or SIMPLE IRA, as well as the Midas Education Savings Account and 403(b)(7)
Account. Forms for all these plans may be found at www.midas-funds.com - click
on the link to "IRA Application & Transfer Forms" on the left. Of course, we
also would be very pleased to discuss with you any questions you may have. Call
us at 1-800-400-MIDAS (6432) and a Shareholder Service Representative will be
glad to assist you, as always, without obligation on your part.
TOP 10 HOLDINGS
AS OF JUNE 30, 2006
1 Berkshire Hathaway Inc. Class B
2 Hilton Hotels Corp.
3 Reynolds American, Inc.
4 U.S. Treasury Bill, due 7/27/06
5 PNC Financial Services Group, Inc.
6 Newmont Mining Corp.
7 JPMorgan Chase & Co.
8 Google, Inc.
9 United Parcel Services, Inc.
10 ConocoPhillips
4
Midas Dollar Reserves
COMMENTARY
We are pleased to submit this Semi-Annual Report for the period ending June 30,
2006 and to welcome our new shareholders who have made their investment since
our last Report.
The Fund's all-weather income and safety conscious approach, plus free
check writing, make it an ideal vehicle for a program of steady monthly
investing, or as a temporary and easily accessible haven for proceeds from sales
of other assets. 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
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. Also of note,
the Fund's attractive services for shareholders are intended to make investing
in the Fund easy, safe, and convenient.
Investment Strategy, Review and Outlook
Under the new leadership of Federal Reserve Chairman Bernanke, the Federal
Open Market Committee (FOMC) increased the Federal funds target rate by a
quarter of one percent at each of its four meetings since the beginning of 2006,
when it stood at 4.25%, so that on June 30th it had climbed to 5.25%. When the
FOMC raised interest rates for the 17th time in June 2006, it signaled that
future increases would depend on current data regarding inflation and economic
growth. The FOMC, in its comments, has moved from a somewhat obscure "balanced"
approach to a "statistic" sensitive approach. In view of these conditions, the
strategy of Midas Dollar Reserves was to position itself to take advantage of
possible interest rate increases while obtaining the benefit of relative safety
through investment in money market obligations of the U.S. Government, its
agencies and instrumentalities. Anticipating the FOMC's separate moves to
counter inflationary pressures by raising short term interest rates, the Fund
maintained an average maturity in the first half of the year of approximately 59
days.
As we look ahead we might expect the FOMC to consider continuing to raise
short term interest rates to address fears of accelerating inflation. The Bureau
of Labor Statistics of the U.S. Department of Labor recently reported that
consumer prices increased at a 5.1% annualized rate in the second quarter of
2006, up from a 4.3% rate in the first three months of 2006, as compared in each
case to 3.4% for 2005. Raising interest rates too high, however, could result in
a "hard landing" for the economy. The Federal Reserve noted in June that
consumer spending continued to increase, but that the growth rate slowed.
Likewise, although manufacturing activity has expanded, other reports indicate
areas of weakness in the economy. Similarly, the Federal Reserve reported that
residential real estate markets have slowed.
Shareholder Services
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. To help
investors get started with a regular plan of setting amounts aside to meet long
term financial goals, the Fund offers automatic investing under three different
plans: the Midas Bank Transfer Plan, the Midas Salary Investing Plan, and the
Midas Government Direct Deposit Plan. Forms for all three may be found at
www.midasfunds.com -- click on the link to "Automatic Investing" on the left.
For further information and assistance with any of these free services simply
give us a call at 1-800-MIDAS (6432) and we will help you get started.
TOP 10 HOLDINGS
AS OF JUNE 30, 2006
1 Federal National Mortgage Association, due 8/09/06
2 Freddie Mac Discount Notes, due 8/28/06
3 Freddie Mac Discount Notes, due 8/21/06
4 Federal National Mortgage Association, due 8/14/06
5 Federal National Mortgage Association, due 8/02/06
6 Federal National Mortgage Association, due 9/29/06
7 Federal National Mortgage Association, due 9/20/06
8 Freddie Mac Discount Notes, due 7/24/06
9 Federal Home Loan Bank, due 7/03/06
10 Federal National Mortgage Association, due 10/04/06
5
Midas Fund, Inc.
Schedule of Portfolio Investments - June 30, 2006 (Unaudited)
Shares COMMON STOCKS AND WARRANTS (107.77%) Market Value
- ----------------------------------------------------------------------------
Common Stocks (107.25%)
Major Precious Metals Producers (22.87%)
85,000 AngloGold Ashanti Ltd. ADR $ 4,090,200
150,000 Barrick Gold Corp. 4,440,000
50,000 Freeport-McMoRan Copper & Gold, Inc. 2,770,500
175,000 Gold Fields Ltd. 4,025,820
381,200 Kinross Gold Corp.* 4,151,268
43,191 Lonmin PLC 2,249,415
200,000 Newcrest Mining Limited* 3,132,244
100,000 Newmont Mining Corp. 5,293,000
------------
30,152,447
Intermediate Precious Metals Producers (26.88%)
150,000 Agnico-Eagle Mines Ltd. 4,962,000
220,000 Cambior, Inc.* 591,800
355,000 Coeur d'Alene Mines Corp.* 1,707,550
150,000 Glamis Gold Ltd.* 5,679,000
105,500 Goldcorp, Inc. 3,188,210
1,000,000 Golden Star Resources Ltd.* 2,960,000
500,000 IAMGOLD Corp. 4,450,000
17,000 Lihir Gold Ltd.* 755,820
150,000 Meridian Gold, Inc.* 4,752,000
250,000 Randgold Resources Limited* 5,250,000
121,000 Silver Wheaton Corp.* 1,139,820
------------
35,436,200
Junior Precious Metals Producers (34.19%)
200,000 Alamos Gold Inc.* 1,612,000
800,000 Eldorado Gold Corp.* 3,864,000
1,964,500 Golden Cycle Gold Corp.* 14,890,910
345,000 Highland Gold Mining Ltd.* 1,465,947
750,000 High River Gold Mines Ltd.* 1,551,119
274,800 Jaguar Mining, Inc.* 1,130,483
570,000 Mexgold Resources, Inc.* 3,685,190
435,000 Northgate Minerals Corp.* 1,600,800
1,506,321 Oceana Gold Ltd.* 934,456
1,000,000 SEMAFO, Inc.* 1,996,223
268,700 Silvercorp Metals, Inc.* 3,466,230
1,050,000 Sino Gold Ltd.* 3,900,446
504,080 Yamana Gold, Inc.* 4,975,270
------------
45,073,074
Exploration and Project Development Companies
(23.31%)
500,000 Bear Creek Mining Corp.* 2,745,000
745,000 Cumberland Resources, Ltd.* 3,576,000
270,000 Entree Gold, Inc.* 259,200
137,800 Gammon Lake Resources, Inc.* 1,900,262
225,000 IMA Exploration Mining Corp.* 670,500
1,000,000 Metallica Resources, Inc.* 3,090,000
100,000 Minefinders Corporation Ltd.* 817,000
1,400,000 Miramar Mining Corp.* 5,180,000
100,000 New Gold, Inc.* 894,000
300,000 NovaGold Resources Inc.* 3,846,000
See notes to financial statements.
6
Midas Fund, Inc.
(Continued)
Schedule of Portfolio Investments - June 30, 2006 (Continued)
Shares Market Value
- ----------------------------------------------------------------------------
1,400,000 Olympus Pacific Minerals,Inc.* /(1)/ $ 621,887
600,000 Peru Copper, Inc.* 3,096,000
343,600 Viceroy Exploration Ltd.* 2,583,872
580,000 Western Goldfields Inc.* 1,461,600
-------------
30,741,321
Total Common Stocks (cost: $ 100,662,940) 141,403,042
Number Warrants (0.52%)
- ---------
100,000 Cambior Inc. warrants expiring 8/12/08 78,230
125,000 Jaguar Mining Inc. warrants expiring 12/31/07 148,930
50,000 New Gold, Inc. warrants expiring 2/23/08 85,424
84,375 Yamana Gold Inc. warrants expiring 11/0/08 379,350
-------------
Total Warrants (cost: $129,310) 691,934
-------------
Total Investments (cost: $100,792,250) (107.77%) $ 142,094,976
Liabilities in Excess of Cash and Other
Assets (-7.77%) (10,247,638)
-------------
Net Assets (100.00%) $ 131,847,338
=============
* Indicates non-income producing security.
/(1)/Valued as determined in good faith under the direction of
and pursuant to procedures established by the Fund's Board
of Directors. ADR means "American Depositary Receipt".
See notes to financial statements.
7
Midas Special Fund, Inc.
Schedule of Portfolio Investments - June 30, 2006 (Unaudited)
Shares COMMON STOCKS AND SHORT TERM INVESTMENTS (99.86%) Market Value
- ----------------------------------------------------------------------------
Common Stocks (93.31%)
Cigarettes (6.89%)
9,100 Reynolds American Inc. $ 1,049,230
Drawing & Insulating of Nonferrous Wiring (4.23%)
26,600 Corning Inc.* 643,454
Fire, Marine & Casualty Insurance (20.98%)
1,050 Berkshire Hathaway, Inc.* 3,195,150
Gold and Silver Ores (9.86%)
23,200 Barrick Gold Corp. 686,720
15,400 Newmont Mining Corp. 815,122
------------
1,501,842
Hotels and Motels (17.65%)
95,000 Hilton Hotels Corp. 2,686,600
National Commercial Banks (10.74%)
11,700 PNC Financial Services Group, Inc. 820,989
19,400 JP Morgan Chase & Co. 814,800
------------
1,635,789
Petroleum Refining (4.65%)
10,800 ConocoPhillips 707,724
Pharmaceutical Preparation Manufacturing (4.33%)
11,000 Johnson & Johnson 659,120
Services - Computer Programming, Data Processing,
Etc. (5.23%)
1,900 Google, Inc.* 796,727
Services - Specialty Outpatient Facilities (4.10%)
163,000 HealthSouth Corp.* 624,290
Trucking & Courier Services (No Air) (4.65%)
8,600 United Parcel Service, Inc. 708,038
------------
Total Common Stocks (cost: $10,387,374) 14,207,964
Par Value Short Term Investments (6.55%)
- ---------
1,000,000 U.S. Treasury Bill, due 7/27/06 /(a)/ 996,660
------------
Total Short Term Investments (cost $996,660) 996,660
------------
Total Investments (cost: $11,384,034) (99.86%) 15,204,624
------------
Cash and Other Assets, Less Liabilities (.14%) 21,593
Net Assets (100.00%) $ 15,226,217
============
* Indicates non-income producing security.
/(a)/ This security is traded on a discount basis with no stated
coupon rate.
See notes to financial statements.
8
Midas Dollar Reserves, Inc.
Schedule of Portfolio Investments - June 30, 2006 (Unaudited)
Par Value U.S. GOVERNMENT AGENCIES (98.12%) Yield* Value**
- ----------------------------------------------------------------------------------------
$ 875,000 Federal Home Loan Bank, due 7/03/06 4.62% $ 874,775
700,000 Federal Home Loan Bank, due 9/08/06 5.09% 693,171
640,000 Federal Home Loan Bank, due 9/15/06 5.21% 632,961
560,000 Freddie Mac, due 7/11/06 4.83% 559,249
125,000 Freddie Mac, due 7/11/06 4.82% 124,832
960,000 Freddie Mac, due 7/24/06 4.73% 957,063
1,050,000 Freddie Mac, due 8/21/06 4.93% 1,042,664
1,150,000 Freddie Mac, due 8/28/06 4.93% 1,140,866
445,000 Federal National Mortgage Association, due 7/17/06 4.83% 444,045
1,020,000 Federal National Mortgage Association, due 8/02/06 4.76% 1,015,685
1,220,000 Federal National Mortgage Association, due 8/09/06 4.80% 1,213,656
1,035,000 Federal National Mortgage Association, due 8/14/06 4.82% 1,028,902
550,000 Federal National Mortgage Association, due 9/01/06 5.00% 545,220
100,000 Federal National Mortgage Association, due 9/01/06 5.30% 99,131
975,000 Federal National Mortgage Association, due 9/20/06 5.01% 964,001
1,025,000 Federal National Mortgage Association, due 9/29/06 4.96% 1,012,290
850,000 Federal National Mortgage Association, due 10/04/06 5.27% 838,186
------------
Total Investments (cost: $13,073,635) (98.12%) $ 13,186,697
Cash and Other Assets, Less Liabilities (1.88%) 252,783
------------
Net Assets (100.00%) $ 13,439,480
============
* Represents discount rate 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.
See notes to financial statements.
9
Statements of Assets and Liabilities
Midas Midas
Midas Special Dollar
June 30, 2006 (Unaudited) Fund Fund Reserves
- --------------------------------------------------------------------------------------
Assets
Investments at cost
Non-affiliated $ 97,732,218 $ 11,384,034 $ 13,186,697
Affiliated 3,060,032 - -
------------- ------------- ------------
Total investments at cost 100,792,250 11,384,034 13,186,697
------------- ------------- ------------
Investments at market value
Non-affiliated 127,204,066 15,204,624 13,186,697
Affiliated 14,890,910 - -
------------- ------------- ------------
Total investments at market value 142,094,976 15,204,624 13,186,697
Cash 15,272 89,985 305,756
Receivables:
Dividends and interest - 11,394 -
Fund shares sold 871,999 14,495 -
Other assets 28,969 8,592 8,596
------------- ------------- ------------
Total assets 143,011,216 15,329,090 13,501,049
----------- ---------- ----------
Liabilities
Payable for investments purchased 10,755,608 - -
Fund shares redeemed 179,428 14,084 -
Management and distribution fees payable 118,619 19,766 -
Accrued expenses 89,428 62,896 36,750
Administrative services payable 20,795 6,127 20,020
Distribution payable - - 4,799
------------- ------------- ------------
Total liabilities 11,163,878 102,873 61,569
---------- ------- ------
Net Assets $ 131,847,338 $ 15,226,217 $ 13,439,480
============= ============= ============
Shares outstanding, $0.01 par value 32,546,759 1,019,979 13,439,430
Net Asset Value, Offering and
Redemption Price Per Share $ 4.05 $ 14.93 $ 1.00
At June 30, 2006, net assets consisted of:
Paid-in capital $ 254,041,312 $ 20,048,561 $ 13,439,420
Accumulated undistributed net
investment income (loss) (2,059,866) (154,230) 553
Accumulated net realized loss
on investments (161,436,834) (8,488,704) (493)
Net unrealized appreciation
on investments and foreign currencies 41,302,726 3,820,590 -
------------- ------------- ------------
$ 131,847,338 $ 15,226,217 $ 13,439,480
============= ============= ============
See notes to financial statements.
10
Statements of Operations
Midas Midas
For the Six Months Ended June 30, 2006 Midas Special Dollar
(Unaudited) Fund Fund Reserves
- --------------------------------------------------------------------------------------
Investment Income
Dividends $ 239,546 $ 119,757 $ -
Foreign tax withholding (3,116) - -
Interest 37,355 22,861 306,996
------------- ------------- ------------
Total investment income 273,785 142,618 306,996
============= ============= ============
Expenses
Investment management 535,801 74,363 33,066
Transfer agent 146,482 30,007 15,539
Distribution 133,950 77,980 16,533
Loan interest and fees 90,692 38,726 174
Administrative services 72,349 5,115 6,915
Bookkeeping and pricing 28,258 12,530 13,575
Printing & postage 26,571 4,779 2,543
Registration 17,325 18,210 11,670
Custodian 16,975 2,450 2,120
Auditing 12,670 10,740 8,507
Insurance 10,136 3,760 3,982
Directors 9,955 5,370 2,353
Legal 6,100 13,030 7,460
Other 1,916 - -
------------- ------------- ------------
Total expenses 1,109,180 297,060 124,437
Expense reductions (1,877) (212) (589)
Investment management and
distribution fees waived - - (49,599)
Net expenses 1,107,303 296,848 74,249
------------- ------------- ------------
Net investment income (loss) (833,518) (154,230) 232,747
-------- -------- -------
Realized and Unrealized Gain (Loss)
On Investments and Foreign Currencies
Net realized gain (loss):
Sale of investments 12,043,848 (244,111) (26)
Foreign currencies 213,478 - -
Unrealized appreciation of investments
during the period 15,271,238 540,622 -
------------- ------------- ------------
Net realized and unrealized gain
on investments and foreign currencies 27,528,564 296,511 (26)
---------- ------- ---
Net increase in net assets
resulting from operations $ 26,695,046 $ 142,281 $ 232,721
============= ============= ============
See notes to financial statements.
11
Statements of Changes in Net Assets
Midas Fund Midas Special Fund Midas Dollar Reserves
- ------------------------------------------------------------------------------------------------------------------------------
Six Months Six Months Six Months
Ended Ended Ended
6/30/06 6/30/06 6/30/06
For the Period Ended (Unaudited) 12/31/05 (Unaudited) 12/31/05 (Unaudited) 12/31/05
- ------------------------------------------------------------------------------------------------------------------------------
Operations
Net investment income (loss) $ (833,518) $ (1,299,838) $ (154,230) $ (356,484) $ 232,747 $ 230,306
Net realized gain (loss) from sale of
investments and foreign currencies 12,257,326 12,941,403 (244,111) 1,912,494 (26) (407)
Unrealized appreciation (depreciation)
of investments, and foreign
currencies during the period 15,271,238 9,032,381 540,622 (1,800,123) - -
------------- ------------- ------------ ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations 26,695,046 20,673,946 142,281 (244,113) 232,721 229,899
Distributions to Shareholders
Distributions to shareholders - - - - (232,754) (230,397)
Capital Share Transactions
Change in net assets resulting from
capital share transactions (a) 30,420,576 (2,712,078) (1,347,520) (1,434,562) 550,673 (2,653,365)
------------- ------------- ------------ ------------ ----------- -----------
Total change in net assets 57,115,622 17,961,868 (1,205,239) (1,678,675) 550,640 (2,653,863)
Net Assets
Beginning of period 74,731,716 56,769,848 16,431,456 18,110,131 12,888,840 15,542,703
------------- ------------- ------------ ------------ ----------- -----------
End of period (b) $ 131,847,338 $ 74,731,716 $ 15,226,217 $ 16,431,456 $13,439,480 $12,888,840
============= ============= ============ ============ =========== ===========
(a) Capital Share Transactions
were as follows:
Value
Shares sold $ 71,549,977 $ 10,066,256 $ 803,842 $ 504,266 $ 5,546,414 $ 3,600,029
Shares issued in reinvestment of
distributions - - - - 220,654 228,111
Shares redeemed (41,129,401) (12,778,334) (2,151,362) (1,938,828) (5,216,395) (6,481,505)
------------- ------------- ------------ ------------ ----------- -----------
Net increase (decrease) $ 30,420,576 $ (2,712,078) $ (1,347,520) $ (1,434,562) $ 550,673 $(2,653,365)
============= ============= ============ ============ =========== ===========
Number
Shares sold 18,196,132 4,220,438 54,911 33,754 5,546,414 3,600,029
Shares issued in reinvestment of
distributions - - - - 220,654 228,111
Shares redeemed (10,649,314) (5,766,365) (145,035) (134,738) (5,216,395) (6,481,505)
------------- ------------- ------------ ------------ ----------- -----------
Net increase (decrease) 7,546,818 (1,545,927) (90,124) (98,984) 550,673 (2,653,365)
========= ========== ======= ======= ======= ==========
(b) End of period net assets
include undistributed net
investment income (loss) (2,059,866) (1,226,348) (154,230) - 553 560
========== ========== ======== ======= === ===
See notes to financial statements.
12
Statements of Cash Flows
Midas Midas
For the Six Months Ended June 30, 2006 Midas Special Dollar
(Unaudited) Fund Fund Reserves
- --------------------------------------------------------------------------------------
Cash flows from operating activities
Net increase in net assets
resulting from operations $ 26,695,046 $ 142,281 $ 232,721
Adjustments to reconcile net increase in
net assets resulting from operations to
net cash provided by (used in) operating
activities:
Net increase in unrealized appreciation
of investments (15,271,238) (540,622) -
Net realized (gain) loss on sales of
investments (12,257,326) 244,111 26
Purchase of long term securities (120,674,202) (5,514,320) -
Proceeds from sales of long term
securities 84,538,999 11,124,330 -
Increase in payable for securities
purchased 10,755,608 - -
Net purchases of short term securities (97,378) (996,852) (416,003)
Increase (decrease) in accrued fees and
expenses payable 27,270 (54,170) (20,838)
Decrease in receivables
and other assets 10,137 12,869 3,982
------------- ------------- ------------
Net cash (used in) provided by
operating activities (26,273,084) 4,417,627 (200,112)
============= ============= ============
Cash flows from financing activities
Repayment of bank line of credit (3,705,831) (2,796,946) -
Net shares sold (redeemed) 29,994,187 (1,530,696) 330,019
Distribution paid to shareholders - - (7,429)
Net cash provided by (used in)
financing activities 26,288,356 (4,327,642) 322,590
------------- ------------- ------------
Net increase in cash 15,272 89,985 122,478
============= ============= ============
Cash
Beginning of period - - 183,278
------------- ------------- ------------
End of period $ 15,272 $ 89,985 $ 305,756
============= ============= ============
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 91,417 $ 28,476 $ 138
Noncash financing activities not included
herein consisting of reinvestment of
distributions $ - $ - $ 220,654
See notes to financial statements.
13
Notes to Financial Statements
June 30, 2006 (Unaudited)
1 The Midas Funds are all Maryland corporations registered under the
Investment Company Act of 1940, as amended (the "Act"), as open-end
management investment companies. Midas Fund'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 Fund's
investment objective is capital appreciation. The Fund seeks capital
appreciation by investing aggressively in all types of securities,
futures and options. Midas Dollar Reserves 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, except for Midas Dollar
Reserves, securities traded on a national securities exchange, unless
over-the-counter quotations for such securities are believed to more
closely reflect their fair value, are valued at the last reported sales
price on the day the valuations are made. Securities traded primarily on
the NAS-DAQ Stock Market ("NASDAQ") are normally valued by the Funds at
the Official Closing Price ("NOCP") provided by NASDAQ each business
day. The NOCP is the most recently reported price as of 4:00:02 p.m.,
Eastern time, unless that price is outside the range of the "inside" bid
and asked prices (i.e., the bid and asked prices that dealers quote to
each other when trading for their own accounts); in that case, NASDAQ
will adjust the price to equal the inside bid or asked price, whichever
is closer. Because of delays in reporting trades, the NOCP may not be
based on the price of the last trade to occur before the market closes.
Such securities that are not traded on a particular day, securities
traded in the over-the-counter market that are not on NASDAQ, 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. Securities for which quotations are not readily available or
reliable and other assets may be valued as determined in good faith
under the direction of and pursuant to procedures established by the
Fund's Board of Directors. Realized gain or loss on the sale of
investments denominated in foreign currencies is reported separately
from gain or loss attributable to the change in foreign exchange rates
for those investments. 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. For financial reporting purposes, investment transactions
are accounted for on the trade date (the date the order to buy or sell
is executed). Dividend income and distributions to shareholders are
recorded on the ex-dividend date and interest income is recorded on the
accrual basis. Midas Dollar Reserves values its portfolio securities
using the amortized cost method of valuation, under which the market
value is approximated by amortizing the difference between acquisition
cost and value at maturity of an instrument on a straight-line basis
over its remaining life. Midas Fund and Midas Special Fund 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. Midas
Fund and Midas Special Fund may engage in short sales transactions under
which a Fund sells a security it does not own in anticipation of a
decline in the fair value of the security. When a Fund sells a security
short, it must borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale. A gain, limited to
the price at which the Fund sold the security short, or a loss,
unlimited in size, will be recognized upon the termination of a short
sale.
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. Certain expenses are applicable to multiple funds. Expenses
directly attributable to a Fund are charged to that Fund. Expenses borne
by the complex of related funds, which includes open-end and closed-end
funds for which the Investment Manager or its affiliate serves as
investment manager, that are not directly attributed to the Fund are
allocated among the Fund and the other funds in the complex on the basis
of relative net assets, except where a more appropriate allocation of
expenses to each fund in the complex otherwise can be made fairly.
14
Notes to Financial Statements
CONTINUED
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, 2005, Midas Fund had net capital loss carryovers
that may be used to offset future realized capital gains for federal
income tax purposes of $173,222,425, of which $6,162,204, $87,852,811,
$72,327,384, $6,800,444 and $79,582 expires in 2006, 2007, 2008, 2009,
and 2010, respectively. For Midas Fund, $471,735 of capital loss
carryover related to the acquisition of the Midas Gold Investors Fund in
November 2001 is remaining to be recognized over the next three years.
This amount is subject to an annual limitation of $157,245 under tax
rules.
At December 31, 2005, Midas Special Fund had net capital loss
carryovers that may be used to offset future realized gains for federal
income tax purposes of $7,780,009, of which $5,956,264 and $1,823,745
expires in 2009 and 2011, respectively. For Midas Special Fund, $394,695
of capital loss carryover related to the acquisition of the Midas U.S.
and Overseas Fund in November 2001 is remaining to be recognized over
the next three years. This amount is subject to an annual limitation of
$131,565 under tax rules.
3 Under the investment management agreement of Midas Fund, 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 Fund, 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, 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, the Investment Manager voluntarily waived its
management fee of $33,066 for the six months ended June 30, 2006.
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 and Midas Dollar Reserves)
or 1.00% (Midas Special Fund) 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' share. For Midas Dollar Reserves, the Distributor voluntarily
waived $16,533 of its distribution fee for the six months ended June
30, 2006.
Certain officers and directors of the Funds are officers and
directors of the Investment Manager and the Funds' Distributor. Pursuant
to the investment management agreements, the Funds reimburse the
Investment Manager for providing certain administrative services at cost
comprised of compliance and accounting services. For the six months
ended June 30, 2006 the Funds incurred total administrative costs of
$84,379 comprised of $48,784 and $35,595 for compliance and accounting
services, respectively. In addition, Midas Fund paid the Distributor
$32,333 for payments made to certain brokers for record keeping
services.
4 At June 30, 2006, aggregate cost and net unrealized appreciation of
securities for federal income tax purposes were as follows:
Federal Income Gross Unrealized Gross Unrealized Net Unrealized
Tax Cost Appreciation Depreciation Appreciation
- ------------------------------------------------------------------------------------
Midas Fund $ 100,792,250 $ 43,129,923 $ (1,827,197) $ 41,302,726
Midas Special Fund $ 11,384,034 $ 4,002,906 $ (182,316) $ 3,820,590
15
Notes to Financial Statements
CONTINUED
Purchases and sales of securities other than short term notes for the
period ended June 30, 2006 were as follows:
Purchases Proceeds from
of Securities the Sale of Securities
------------------------------------------------------------------------
Midas Fund $ 120,674,202 $ 84,538,999
Midas Special Fund $ 5,514,320 $ 11,124,330
Midas Fund had the following investment in a company deemed to
be affiliated due to Midas Fund's ownership of greater than 5% of the
company's outstanding voting securities:
June 30, 2006 December 31, 2005
Number of Market Number of Market
Shares Held Value Shares Held Value
- --------------------------------------------------------------------------
Golden Cycle Gold Corp. 1,964,500 $ 14,890,910 1,964,500 $ 6,826,637
There were no purchase or sale transactions by Midas Fund of securities
of the affiliated company during the six months ended June 30, 2006.
As of December 31, 2005, the components of distributable earnings on a
tax basis were as follows:
Midas Midas Dollar
Midas Fund Special Reserves
- --------------------------------------------------------------------------------------------
Accumulated undistributed net investment income $ - $ - $ 560
Accumulated net realized losses (173,222,425) (7,780,009) (43)
Capital loss carryover limitation (471,735) (394,695) -
Post-October losses - (69,890) (424)
Unrealized appreciation 24,805,140 3,279,969 -
-------------- ------------ --------
$ (148,889,020) $ (4,964,625) $ 93
============== ============ ========
Federal income tax regulations permit "Post-October" net capital losses
to be deferred and recognized on the tax return of the next succeeding
taxable year. The differences between book-basis and tax-basis
unrealized appreciation is attributable primarily to the Passive Foreign
Investment Company (PFIC) mark to market adjustments. Accounting
principles generally accepted in the United States of America require
certain components of net assets be reclassified between financial and
tax reporting. These reclassifications have no effect on net assets or
net asset value per share. For the year ended December 31, 2005,
permanent differences between book and tax accounting have been
reclassified as follows:
Increase (Decrease) Increase in Accumulated Increase (Decrease)
in Undistributed Net Realized Loss in Paid-in
Net Investment Loss On Investments Capital
- --------------------------------------------------------------------------------------
Midas Fund $ (788,752) $ 54,192 $ 734,560
Midas Special Fund $ 358,513 $ (2,029) $ (356,484)
5 The Funds (except Midas Dollar Reserves), Global Income Fund, Inc., and
Foxby Corp. (the "Borrowers") have entered into a committed secured line
of credit facility with State Street Bank and Trust Company ("Bank") the
Funds' custodian. Global Income Fund, Inc. and Foxby Corp. are
closed-end investment companies advised by CEF Advisers, Inc., an
affiliate of the Investment Manager. The aggregate amount of the line of
credit is $25,000,000 which was renewed from $9,000,000 effective June
15, 2006. The borrowing of each Borrower is collaterized by the
underlying investments of such Borrower. The Bank will make revolving
loans to a Borrower not to exceed in the aggregate outstanding at any
time with respect to any one Borrower the least of $25,000,000 or the
maximum amount permitted pursuant to each Borrowers prospectus or as
permitted under the Act. The commitment fee on this facility is 0.10%
per annum on the unused portion of the commitment, based on a 360-day
year. All loans under this facility will be available at the Borrower's
option of (i) overnight Federal funds or (ii) LIBOR (30, 60, 90 days),
each as in effect from time to time, plus 0.75% per annum, calculated on
the basis of actual days elapsed for a 360-day year.
The Funds have also entered into a secured redemption facility
with the Bank with an aggregate amount available of $10,000,000 which
was renewed from $9,000,000 effective June 15, 2006. The facility is
collaterized by the underlying investments of each Fund. This facility
carries no legal obligation on the part of the Bank to lend any amount
of money to the Funds at any time, and therefore the Funds will not pay
a commitment fee under this facility. The Bank will make revolving loans
to a Fund not to exceed in the aggregate outstanding at any time with
respect to any one Fund the least of $10,000,000 or the maximum amount
permitted pursuant to the prospectus or as permitted under the Act. All
loans under this facility will be available at the overnight Federal
Funds in effect from time to time plus a spread to be determined at the
time of borrowing, calculated on the basis of actual days elapsed for a
360-day year. The outstanding balance
16
Notes to Financial Statements
CONTINUED
at June 30, 2006, and the weighted average interest rate and weighted
average amount outstand-ing for the six months ended June 30, 2006 were
as follows:
Outstanding Weighted Average Weighted Average
Balance Interest Rate Amount Outstanding
------------------------------------------------------------------------
Midas Fund $ - 5.60% $ 3,220,837
Midas Special Fund $ - 5.26% $ 1,481,542
Midas Dollar Reserves $ - 5.67% $ 4,913
6 Midas Fund and Midas Special Fund may engage in transactions in futures
contracts. Upon entering into a futures contract, the Fund provides the
broker an amount of cash or securities at least equal to a certain
percentage of the contract amount. This is known as "initial margin."
Subsequent payments ("variation margin") are credited to or debited from
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
futures could have a large impact on a Fund's performance. There were no
transactions in futures contracts during the six months ended June 30,
2006.
7 Through arrangements with the Funds' custodian and transfer agent,
credits realized as a result of uninvested cash balances were used to
reduce custody and transfer agency expenses, respectively. For
financial reporting purposes, the Funds include these credits as an
expense offset in the Statement of Operations.
8 The Fund indemnifies its officers and directors for certain liabilities
that might arise from the performance of their duties to the Fund.
Additionally, in the normal course of business the Fund enters into
contracts that contain a variety of representations and warranties and
which provide general indemnifications. The Funds' maximum exposure
under these arrangements is unknown, as this would involve future
claims that may be made against the Fund that have not occurred. The
risk of material loss from such claims is considered by management to be
remote.
Financial Highlights - Midas Dollar Reserves, Inc.
Six Months
Ended Years Ended December 31,
June 30, 2006 -------------------------------------------------------------------
(Unaudited) 2005 2004 2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Per Share Data
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 .018 .016 .003 .002 .007 .031
Less distributions:
Distributions to shareholders (.018) (.016) (.003) (.002) (.007) (.031)
------------ ----------- ----------- ----------- ----------- -----------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
============ =========== =========== =========== =========== ===========
Total return 1.76% 1.61% 0.29% 0.15% 0.63% 3.11%
============ =========== =========== =========== =========== ===========
Ratios/Supplemental Data
Net assets at end of period (000's
omitted) $ 13,439 $ 12,889 $ 15,543 $ 18,638 $ 20,970 $ 25,991
============ =========== =========== =========== =========== ===========
Ratio of total expenses to average net
assets 1.87%* 2.34% 1.97% 1.75% 1.84% 1.64%
============ =========== =========== =========== =========== ===========
Ratio of net expenses to average net
assets 1.11%* 1.59% 1.12% 0.99% 1.09% 1.11%
============ =========== =========== =========== =========== ===========
Ratio of net investment income to
average net assets 3.49%* 1.58% 0.24% 0.16% 0.69% 3.51%
============ =========== =========== =========== =========== ===========
* Annualized.
17
Financial Highlights - Midas Fund, Inc.
Six Months
Ended Years Ended December 31,
June 30, 2006 -------------------------------------------------------------------
(Unaudited) 2005 2004 2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Per Share Data
Net asset value at beginning of period $ 2.99 $ 2.14 $ 2.20 $ 1.53 $ .95 $ .84
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment loss/(a)/ (.03) (.05) (.05) (.02) (.01) (.01)
Net realized and unrealized gain
(loss) on investments 1.09 .90 (.01) .69 .59 .12
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 1.06 .85 (.06) .67 .58 .11
----------- ----------- ----------- ----------- ----------- -----------
Paid-in capital from redemption fees/(b)/ - - - - - -
----------- ----------- ----------- ----------- ----------- -----------
Net asset value at end of period $ 4.05 $ 2.99 $ 2.14 $ 2.20 $ 1.53 $ .95
=========== =========== =========== =========== =========== ===========
Total return 35.45% 39.72% (2.72)% 43.79% 61.05% 13.10%
=========== =========== =========== =========== =========== ===========
Ratios/Supplemental Data
Net assets at end of period (000's
omitted) $ 131,847 $ 74,732 $ 56,770 $ 67,123 $ 54,789 $ 38,558
=========== =========== =========== =========== =========== ===========
Ratio of total expenses to average net
assets 2.12%* 2.79% 2.58% 2.44% 2.58% 2.83%
=========== =========== =========== =========== =========== ===========
Ratio of net expenses to average net
assets 2.11%* 2.78% 2.58% 2.44% 2.58% 2.81%
=========== =========== =========== =========== =========== ===========
Ratio of net expenses excluding loan
interest and fees to average net assets 1.94%* 2.44% 2.39% 2.27% - -
=========== =========== =========== =========== =========== ===========
Ratio of net investment loss to
average net assets (1.59)%* (2.39)% (2.40)% (1.28)% (.93)% (.75)%
=========== =========== =========== =========== =========== ===========
Portfolio turnover rate 75% 63% 34% 54% 45% 61%
=========== =========== =========== =========== =========== ===========
* Annualized
(a) Computed using average shares outstanding throughout the period.
(b) Less than $.01 per share.
Financial Highlights - Midas Special Fund, Inc.
Six Months
Ended Years Ended December 31,
June 30, 2006 -------------------------------------------------------------------
(Unaudited) 2005 2004 2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Per Share Data
Net asset value at beginning of period $ 14.80 $ 14.98 $ 13.54 $ 12.91 $ 14.45 $ 20.02
------------ ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment loss/(a)/ (.15) (.32) (.26) (.12) (.15) (.17)
Net realized and unrealized gain
(loss) on investments .28 .14 1.70 .75 (1.39) (5.40)
------------ ----------- ----------- ----------- ----------- -----------
Total from investment operations .13 (.18) 1.44 .63 (1.54) (5.57)
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net asset
value .13 (.18) 1.44 .63 (1.54) (5.57)
------------ ----------- ----------- ----------- ----------- -----------
Net asset value at end of period $ 14.93 $ 14.80 $ 14.98 $ 13.54 $ 12.91 $ 14.45
============ =========== =========== =========== =========== ===========
Total return 0.88% (1.20)% 10.63% 4.88% (10.66)% (27.82)%
============ =========== =========== =========== =========== ===========
Ratios/Supplemental Data
Net assets at end of period (000's
omitted) $ 15,226 $ 16,431 $ 18,110 $ 18,044 $ 18,884 $ 22,695
============ =========== =========== =========== =========== ===========
Ratio of total expenses to average
net assets 3.74%* 4.03% 3.49% 3.67% 3.69% 3.81%
============ =========== =========== =========== =========== ===========
Ratio of net expenses to average net
assets 3.73%* 4.03% 3.49% 3.67% 3.69% 3.80%
============ =========== =========== =========== =========== ===========
Ratio of net expenses excluding loan
interest and fees to average net assets 3.25%* 3.83% 3.39% 3.47% 3.41% 3.37%
============ =========== =========== =========== =========== ===========
Ratio of net investment loss to
average net assets (1.94)%* (2.15)% (1.82)% (0.99)% (1.08)% (1.12)%
============ =========== =========== =========== =========== ===========
Portfolio turnover rate 34% 118% 9% 29% 20% 102%
============ =========== =========== =========== =========== ===========
* Annualized.
(a) Computed using average shares outstanding throughout the period.
18
Board Approval of Agreements
The investment management agreements (each individually, an
"Agreement," and collectively, the "Agreements") between each of the
Midas Funds and the investment manager, Midas Management Corporation,
generally provide that each Agreement shall continue automatically for
successive periods of twelve months each, provided that such continuance
is specifically approved at least annually (i) by a vote of a majority
of the Directors of each Fund who are not parties to the Agreement, or
interested persons of any such party and (ii) by the Board of Directors
of each Fund or by the vote of the holders of a majority of the
outstanding voting securities of each Fund.
In considering the annual approval of the Agreements, the Boards
of Directors considered information that had been provided throughout
the year at regular Board meetings, as well as information furnished to
the Boards for the meeting held in March 2006 to specifically consider
the renewal of the Agreements. Such information included, among other
things, the following: information comparing the management fees of each
Fund with those of comparable funds; information regarding Fund
investment performance in comparison to a relevant peer group of funds;
the economic outlook and the general investment outlook in relevant
investment markets; the investment manager's results and financial
condition and the overall organization of the investment manager; the
allocation of brokerage and the benefits received by the investment
manager as a result of brokerage allocation; the investment manager's
management of relationships with the custodian, transfer agents, and
fund accountants; the resources devoted to the investment manager's
compliance efforts undertaken on behalf of the funds it manages and the
record of compliance with the investment policies and restrictions and
with policies on personal securities transactions; the quality, nature,
cost and character of the administrative and other non-investment
management services provided by the investment manager and its
affiliates; and the terms of the Agreements and the reasonableness and
appropriateness of the particular fee paid by a Fund for the services
described therein.
The Boards of Directors also considered the nature, extent and
quality of the management services provided by the investment manager.
In so doing, the Boards considered the investment manager's management
capabilities with respect to the types of investments held by each Fund,
including information relating to the education, experience and number
of investment professionals and other personnel who provide services
under the Agreements. The Boards also took into account the time and
attention to be devoted by management to each Fund and the other funds
in the complex. The Boards evaluated the level of skill required to
manage each Fund and concluded that the human resources available at the
investment manager were appropriate to fulfill effectively its duties on
behalf of each Fund. The Directors also noted that the investment
manager has managed the Funds since 1995 and the Directors believe that
a long-term relationship with a capable, conscientious investment
manager is in the best interests of the Funds.
The Boards received information concerning the investment
philosophy and investment process applied by the investment manager in
managing each Fund. In this regard, the Boards considered the investment
manager's in-house research capabilities as well as other resources
available to the investment manager personnel, including research
services that may be available to the investment manager as a result of
securities transactions effected for the Funds. The Boards concluded
that the investment manager's investment process, research capabilities
and philosophy were well suited to each Fund, given each Fund's
investment objective and policies.
In its review of comparative information with respect to Fund
investment performance, the Boards received comparative information,
comparing the Funds' performance to that of similar peer groups. After
reviewing this information, the Boards concluded that each Fund has
performed within a range that the Boards deemed competitive. With
respect to their review of investment management fees, the Boards
considered information comparing the Funds' management fees and expense
ratios to those of comparable funds with similar management fee
characteristics. The Boards noted that economies of scale may develop
for each Fund as its assets increase and fund-level expenses decline as
a percentage of assets, but that fund-level economies of scale may not
necessarily result in investment manager-level economies of scale. This
information assisted the Boards in concluding that the fees paid by each
Fund are within the range of those paid by comparable funds within the
mutual fund industry.
19
Board Approval of Agreements
(Continued)
In reviewing the information regarding the expense ratio of the
Funds, the Boards concluded that although the Funds' expense ratios are
within a higher range, they are competitive with comparable funds in
light of the quality of services received.
In addition to the factors mentioned above, the Boards reviewed
the level of the investment manager's profits in providing investment
management and related services for each Fund and for all the funds in
the complex. The Boards considered the fiduciary duty assumed by the
investment manager in connection with the services rendered to the Funds
and the business reputation of the investment manager and its financial
resources. The Boards also considered information regarding the
character and amount of other incidental benefits received by the
investment manager and its affiliates from their association with the
Funds. The Boards concluded that potential "fall-out" benefits that the
investment manager and its affiliates may receive, such as greater name
recognition, affiliated brokerage commissions or increased ability to
obtain research services, appear to be reasonable, and may, in some
cases, benefit the Funds. The Boards concluded that in light of the
services rendered, the profits realized by the investment manager are
not unreasonable.
The Boards did not consider any single factor as controlling in
determining whether or not to renew the Agreements. Nor are the items
described herein all the matters considered by the Boards. In assessing
the information provided by the investment manager and its affiliates,
the Boards also took into consideration the benefits to shareholders of
investing in a fund that is part of a family of funds which provides a
large variety of shareholder services.
Based on its consideration of the foregoing factors and
conclusions, and such other factors and conclusions as it deemed
relevant, and assisted by counsel, the Boards concluded that the
approval of each Agreement, including the fee structure, is in the
interests of shareholders.
Quarterly Portfolio and Proxy Voting
The Funds file their complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on
Form N-Q. The Funds' Forms N-Q are available on the SEC's web site at
www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington, DC. Information on the operation of the
Public Reference Room may be obtained by calling 1-800-SEC-0330. The
Funds' Investment Company Act file numbers are as follows: 811-04625
(Midas Special Fund); 811-04316 (Midas Fund); and 811-02474 (Midas
Dollar Reserves). The Funds make the information on Form N-Q available
to shareholders at www.midasfunds.com. The Funds' proxy voting policies
and procedures and proxy voting record are available (i) without charge,
upon request, by calling 1-800-400-MIDAS (6432); (ii) on the Funds'
website at www.midasfunds.com and (iii) on the SEC's website at
www.sec.gov.
20
About Your Fund's Expenses
Fund shareholders may incur two types of costs: (1) transaction
costs, including redemption or small account fees; and (2) ongoing
costs, including management fees, distribution and service 12b-1 fees,
and other fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in your Fund
and to compare these costs with the ongoing cost of investing in other
mutual funds. The example is based on an investment of $1,000 made at
the beginning of the period and held for the entire period from
January 1, 2006 to June 30, 2006.
Actual Expenses
The table provides information about actual account values and
actual expenses for each Fund. You may use the information, together
with the amount you invested, to estimate the expenses that you paid
over the period. First, identify the Fund you own. Then simply divide
your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number under
the heading "Expenses Paid During Period" to estimate the expenses you
paid on your account during this period. The Fund may charge you a
$20.00 annual small account fee if the value of those shares is less
than $500. We will redeem shares automatically in one of your accounts
to pay the $20.00 fee. In determining your total eligible investment
amount, we will include your investments in all personal accounts
registered under your Social Security number. Personal accounts
include individual accounts, joint accounts, UGMA/UTMA accounts,
personal trusts, Education Savings Accounts, 403(b) accounts, and IRAs
(including Traditional, Roth, Rollover, SEP-, SARSEP and SIMPLE-IRAs),
and certain other retirement accounts.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account
values and hypothetical expenses based on the actual expense ratio of
each Fund and an assumed rate of return of 5% per year before expenses,
which is not the actual return of a Fund. The hypothetical account
values and expenses may not be used to estimate the actual ending
account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in your Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the
other funds.
Expense Analysis Tables
Beginning Ending Expenses Paid
Account Value Account Value During Period*
Midas Fund January 1, 2006 June 30, 2006 January 1, 2006-June 30, 2006
- ------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,354.52 $ 12.32
Hypothetical (5% return
before expenses) $ 1,000.00 $ 1,014.33 $ 10.54
* Expenses are equal to the Fund's annualized expense ratio of 2.11%,
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half year period.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
Midas Special Fund January 1, 2006 June 30, 2006 January 1, 2006-June 30, 2006
- ------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,004.39 $ 18.58
Hypothetical (5% return
before expenses) $ 1,000.00 $ 1,006.30 $ 18.55
* Expenses are equal to the Fund's annualized expense ratio of 3.73%,
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half year period.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
Midas Dollar Reserves January 1, 2006 June 30, 2006 January 1, 2006-June 30, 2006
- ------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,017.44 $ 5.55
Hypothetical (5% return
before expenses) $ 1,000.00 $ 1,019.29 $ 5.56
* Expenses are equal to the Fund's annualized expense ratio of 1.11%,
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half year period.
21
Midas Fund - Allocation of Portfolio Holdings on June 30, 2006
[GRAPH]
Junior Precious Metals Producers 34.19%
Intermediate Precious Metals Producers 26.88%
Exploration and Development Companies 23.31%
Major Precious Metals Producers 22.87%
Warrants 0.52%
Midas Special Fund - Allocation of Portfolio Holdings on June 30, 2006
[GRAPH]
Fire, Marine & Casualty Insurance 20.98%
Hotels & Motels 17.65%
National Commercial Banks 10.74%
Gold and Silver Ores 9.86%
Cigarettes 6.89%
Short Term Investments 6.55%
Services - Computer Prog., Data Proc., Etc. 5.23%
Petroleum Refining 4.65%
Tracking & Courier Services 4.65%
Pharmaceutical Preparation Manufacturing 4.33%
Drawing & Insulating of Nonferrous Wiring 4.23%
Services-Specialty Outpatient Facilities 4.10%
Midas Dollar Reserves - Allocation of Portfolio Holdings on June 30, 2006
[GRAPH]
Federal Home Loan Bank 16.69%
Freddie Mac 29.00%
Federal National Mortgage Association 54.31%
22
Use this Account Application to open a regular Midas
account. For a Midas IRA Application, call toll-free
MIDAS 1-800-400-MIDAS (6432) or access our web site at
FUNDS ACCOUNT www.midasfunds.com. Return this completed Account
Discovering Opportunities APPLICATION Application in the enclosed envelope or mail to:
MIDAS FUNDS, Box 6110, Opportunities Indianapolis,
IN 46206-6110.
====================================================================================================================================
1. Registration (Please Print) For assistance with this Application, please call 1-800-400-MIDAS (6432) 8 a.m. - 6 p.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 dated within 60 days.
-------------------------------------------------------------------------------------------------------------------------------
Name of Corporation, Partnership, or other Organization Name of Authorized Individual(s)
-------------------------------------------------------------------------------------------------------------------------------
Tax I.D. Number Name of Trustee(s) Date of Trust Instrument
-------------------------------------------------------------------------------------------------------------------------------
Address Social Security Number Date of Birth
-------------------------------------------------------------------------------------------------------------------------------
If a publicly traded company, provide ticker symbol and exchange where traded; otherwise provide social security numbers and
dates of births for all authorized signers and traders.
====================================================================================================================================
2. Mailing Address, Telephone Number, and Citizenship
-------------------------------------------------------------------------------------------------------------------------------
Street City State / Zip Daytime Telephone
Citizen of: ( )U.S. ( )Other: Citizen of: ( )U.S. ( )Other:
-------------------------------------------------------------------------------------------------------------------------------
Email address Owner If other, attach IRS Form W-8 Joint Owner If other, attach IRS 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 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) 8 a.m. - 6 p.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 person-
alized 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
====================================================================================================================================
7. The Midas Touch (R) through 1-800-400-MIDAS (6432) and www.midasfunds.com
Shareholders automatically enjoy telephone and web purchases and redemptions of Fund shares, unless declined by checking the
following circle [ ].
To link your bank, attach a voided check from your bank account. One common name must appear on your Midas Funds account and
bank account.
====================================================================================================================================
8. Electronic Documents - Account statements, confirmations, prospectus updates, semi-annual and annual reports will be provided
electronically in lieu of mailed printed documents, unless declined by checking the following circle [ ].
To receive account documents electronically, please provide your email address: ______________________________________________.
====================================================================================================================================
9. 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 with-holding, 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
The application must be signed and completed for all authorized signers and corporate account traders.
MF-APP-6/06
Optional:
Please tell us how you heard about Midas:
IMPORTANT: In compliance with the USA PATRIOT Act, Federal Law requires all financial institutions (including mutual funds) to
obtain, verify, and record information that identifies each person who opens an account. WHAT THIS MEANS FOR YOU: When you open
an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may
also ask for additional identifying documents. The information is required for all owners, co-owners, or anyone who will be
signing or transacting on behalf of a legal entity that will own the account. We will return your application if this
information is missing. If we are unable to verify this information, your account may be closed and you will be subject to all
applicable costs. If you have any questions regarding this application or how to invest, please call us at 1-800-400-MIDAS
(6432).
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
[GRAPHIC APPEARS
HERE] 1-800-400-MIDAS (6432) for Investment Information
THE MIDASTOUCH Access Midas Funds at www.midasfunds.com.
ACCOUNT ACCESS
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
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.
[GRAPHIC APPEARS HERE]
MIDAS PRSRT STD
FUNDS US POSTAGE
Discovering Opportunities PAID
LANCASTER PA
PERMIT 1762
Midas Funds
P.O. Box 6110
Indianapolis, IN 46206-6110
Return Service Requested
MF-APP-6/06
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. Schedule of Investments.
Included as part of the report to shareholders filed under Item 1 of
this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a- 3(c) under the Investment Company Act
of 1940, as amended (the "1940 Act")) are effective as of a date within 90
days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the disclosure
controls and procedures required by Rule 30a-3(b) under the 1940 Act and
15d-15(b) under the Securities Exchange Act of 1934.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred
during the registrant's last fiscal half-year (the registrant's second
fiscal half-year in the case of an annual report) that have materially
affected, or are likely to materially affect the registrant's internal
control over financial reporting.
Item 12. Exhibits.
(a) The certifications required by Rule 30a-2 of the Investment Company Act
of 1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 are attached as exhibits hereto.
SIGNATURES
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
---------------------------------------------
Thomas B. Winmill, President
Date: September 6, 2006
By: /s/ Thomas O'Malley
---------------------------------------------
Thomas O'Malley, Chief Financial Officer
Date: September 6, 2006
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 below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: /s/ Thomas B. Winmill
---------------------------------------------
Thomas B. Winmill, President
Date: September 6, 2006
By: /s/ Thomas O'Malley
---------------------------------------------
Thomas O'Malley, Chief Financial Officer
Date: September 6, 2006