What are gold funds?
Morningstar, Inc., a mutual fund rating service, defines gold funds - those having a precious metals objective set out in the offering prospectus - as those "Funds that pursue capital appreciation by investing primarily in equity securities of companies engaged in the mining, distribution, or processing of precious metals." Likewise, Morningstar assigns gold funds to its "Specialty--Precious Metals Category" if its portfolio focuses on "mining stocks, though some do own small amounts of gold buillion.
Most portfolios concentrate on gold-mining stocks, but some have significant exposure to silver, platinum, and base metal mining stocks as well. Precious metals companies are typically based in North America, Australia, or South Africa." Midas Fund, included in Morningstar's group of gold funds, pursues gold investing by having at least 65% of its total assets in
(i) securities of companies primarily involved, directly or indirectly, in the business of mining, processing, fabricating, distributing or otherwise dealing in gold, silver, platinum or other natural resources ("Natural Resources Companies") and
(ii) gold, silver and platinum bullion.
Up to 35% of the Fund's assets may be invested in securities of companies that derive a portion of their gross revenues, directly or indirectly, from the business of mining, processing, fabricating, distributing or otherwise dealing in gold, silver, platinum or other natural resources, in securities of selected growth companies and fixed income securities of any issuers, including U.S. government securities.
Like many gold funds, Midas Fund may invest in domestic or foreign companies that have small, medium or large capitalizations and concentrates its investments by investing at least 25% of its total assets in Natural Resources Companies. Because gold funds typically concentrate investments in smaller companies and foreign securities, with mining and exploration risks of precious metals, gold funds are riskier and more speculative than general, diversified funds. Unlike some other gold funds, in seeking to enhance returns, Midas Fund may use futures, options, short sales, and leverage.
To learn more about gold investing and Midas Fund, we invite you to explore our web site or call 1-800-400-MIDAS (6432) to speak to a shareholder services representative. Thank you for investing with Midas!