Seeking quality companies with growth potential, Midas Fund’s strategy in the current market environment is to construct its portfolio with companies of financial strength, strong management, and robust project development plans.

Midas broadened its metals focus to include silver and platinum companies judged more likely to achieve production growth objectives and deliver on promises of future profitability. The Fund sought to limit its holdings of smaller companies to those deemed attractive enough to receive a high bid in an acquisition by a larger company.

Large mining companies producing gold and platinum, as well as takeover targets, contributed most to returns, while smaller operations and base metal and uranium companies underperformed. The Fund is positioned for rising gold, silver, and platinum prices.

Employing flexible investment and seasonal timing strategies, Midas Special Fund maintained a leveraged position during the quarter.

Due to recent market fluctuations and the overall movement of equities this quarter, the Fund continued its strategy of holding blue chips and other well known companies. By the end of the quarter, Midas Special Fund’s holdings included the stocks of some of the largest and best known U.S. companies in consumer products, insurance, technology, and banking.

Over the course of future market fluctuations, the Fund may seek opportunities to use its flexible investment strategy and seek a defensive investment position. The Fund may narrow its focus in stocks to a small number of attractive companies and invest the balance of its assets in short term U.S. Treasury Bills and overnight repurchase agreements.

Midas Dollar Reserves positioned itself to take advantage of the interest rate during the quarter while obtaining the benefit of safety through investment in money market obligations of the U.S. Government, its agencies and instrumentalities.

Anticipating the Federal Reserve Board’s strategy to lower the short term interest rates to 2% in order to promote economic growth, the Fund maintained an average maturity in the quarter of approximately 35 days.

Looking forward, in view of the Federal Reserve Board’s decision to lower the target Federal Funds rate, the Fund will continue to invest only in U.S. Government securities as it seeks maximum current income consistent with preservation of capital and maintenance of liquidity.