5 Star Funds

Morningstar Rating Methodology for Determining 5 Star Funds

In June 2002, Morningstar revised its rating methodology for determining 5 star funds and below. The universe of mutual funds was segregated into 48 categories instead of four broad asset class categories and 5 star funds are now a subset of those 48 categories. Morningstar did this to facilitate the comparison of 5 star funds against more relevant peer groups so funds would become 5 star funds when their managers added value rather than when their category performed well. Morningstar also sought to incorporate the risks of 5 star funds in the 5 star funds rating calculation so it adopted a utility function of risk measure that identifies 5 star funds based on volatility. Additionally, the risk measure of 5 star funds is more heavily weighted relative to the returns of 5 star funds in the 5 star funds rating calculation.

The 5 star funds rating is a quick way to gauge whether a fund has added value over time on a risk adjusted basis. The 5 star funds rating should only be one of many factors considered by investors when evaluating and selecting funds for investment. The 5 star funds rating is objective, based entirely on a mathematical evaluation of past performance. The 5 star funds rating is a useful tool for identifying 5 star funds worthy of further research but should not be considered buy or sell recommendations.

For more information regarding Morningstar ratings for 5 star funds, please visit http://quicktake.morningstar.com/DataDefs/CEFRatings.html.

On December 8, 2009, Advisor Perspectives published an article titled "Morningstar Ratings Fail over a Full Market Cycle." Using data for the three years ending September 30, 2009, Advisor Perspectives found that Morningstar's ratings lost virtually all of their predictive ability when measured over a full market cycle.

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For investment risks associated with the Funds, please read "Principal Investment Objectives, Strategies and Risks," and "Additional Investment Risks" in the free prospectus, which contains this and other important information about the Midas Funds. You can obtain a prospectus by contacting us at 1-800-400-MIDAS (6432) or downloading it below.

The Midas Funds are managed by Midas Management Corporation, a wholly owned subsidiary of Winmill & Co. Incorporated. Winmill & Co. is engaged through subsidiaries in stock market and gold investing through its investment management of mutual funds and closed end funds.

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