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Midas Funds Annual Report -- December 31, 2008
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Seeks capital appreciation and protection against inflation and secondarily current income through investments primarily in precious metals and natural resources companies.

Invests aggressively for capital appreciation in any security in any sector.

Seeks to preserve and increase the purchasing power value of its shares over the long term by investing in gold, silver, Swiss franc assets, hard asset securities, large capitalization growth stocks, and dollar assets.

To Our Shareholders

In 2008 we witnessed the most severe bear market decline since 1931, as measured by the 37% decline in the Standard & Poor’s 500 Index. Many U.S. households experienced significant drops in net worth, not only from the downturn in financial markets but also from declining home prices. Business confidence is down on anticipated slumps in earnings and problems in accessing credit. Media stories on the economy seem relentlessly pessimistic. So what is the best path ahead for investors today?

Coping with the Markets

Emotional reactions to market disappointments can upset well considered, long term, financial planning. At Midas, how we deal with negative financial news and inevitable market volatility reflects three key principles: first, we seek to invest in quality; second, we invest for the long term; and third, we offer three separate investment options to provide overall portfolio diversity. What does this do for us and our investors? More than a financial strategy, it helps sustain the critical emotional stamina we need to ride out market lows and pursue our investing goals.

Investing peace of mind can be achieved by holding quality securities because they are more likely to weather a temporary market or economic downturn. Likewise, with a long term investing outlook we can keep our disciplined focus on companies with combinations of strength in operations, finances, and products that we find most attractive, even through volatile markets. Although it does not eliminate the risk of potential loss, a disciplined and flexible analytical process can reward Fund shareholders with investments that offer the potential for gratifying returns, even as economic activity and markets evolve in unpredictable patterns.

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Introducing . . . Midas Perpetual Portfolio

A lasting commitment to financial plans can also be assisted by portfolio diversification. For this reason, we offer three different Midas Funds: Midas Special Fund for a longer term, stock market oriented objective, Midas Fund for precious metals capital appreciation and as a hedge against inflation, and now . . . Midas Perpetual Portfolio (formerly Midas Dollar Reserves).

Midas Perpetual Portfolio seeks to preserve and increase the purchasing power value of its shares over the long term. The Fund invests a fixed target percentage of its total assets in set investment categories: gold, silver, Swiss franc assets, stocks of U.S. and foreign companies dealing primarily in real estate and natural resources, large capitalization growth stocks, and dollar assets. The investment strategy of the Fund acknowledges a broad range of economic possibilities and investment outlooks, and seeks to incorporate investments appropriate for each of them. Investors who wish to invest their capital for the long term that does not depend on any particular outcome for the economy should consider purchasing shares in Midas Perpetual Portfolio.

Discovering Opportunities Now For Your Future

Midas offers an excellent service - the Midas Bank Transfer Plan - which makes convenient regular investing to help you seek your future financial goals. With the free Midas Bank Transfer Plan, you decide now to invest a certain amount each month in the future for as long as you like, and Midas will transfer the money from your bank account for investment in your Midas Funds account. Periodically you should review your overall portfolio. For retirement investing goals, consider the tax-advantaged Midas Traditional, Roth, SEP, or SIMPLE IRA, as well as the Midas Education Savings Account. Forms for all of these plans may be found at www.midasfunds.com.

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.

If you have any questions, we will be happy to assist you without any obligation on your part. We look forward to hearing from you. Please call us at 1-800-400-MIDAS (6432), or visit www.MidasFunds.com.

Sincerely,

Thomas B. Winmill

President

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Midas Fund

C O M M E N T A R Y

We are very pleased to welcome our new shareholders attracted to Midas Fund by its 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, and its no-charge shareholder services.

Market Review, Strategies, and Outlook

The U.S. economic situation is grim. The Labor Department recently reported that claims for unemployment benefits have climbed over 4 million, the highest level since 1982. Reflecting the worsening employment situation, the Mortgage Bankers Association reports a record one in ten American homeowners with a mortgage was either at least a month behind on their payments or in foreclosure at the end of the third quarter. One bright spot for consumers – but not for Midas Fund investors – was the sharp drop in commodity and energy prices in the second half of 2008, dampening prior concerns of a growing near term inflation risk. In fact, consumer prices dropped 1.7% in November, the largest amount since 1947.

Notwithstanding current deflationary trends, considering the U.S. Government’s extreme monetary and fiscal policies, it seems reasonable for investors to anticipate not only future inflation in the United States but also U.S. dollar weakness versus other currencies, both of which are nor-

mally positive for gold prices. By “extreme monetary policy,” we mean the Federal Reserve’s repeated target interest rate cuts to an unprecedented, essentially 0%, rate. “Extreme fiscal policy” may be found in the multi-billion dollar stimulus packages favored by the U.S. legislative and executive branches. We note that the U.S. federal budget deficit is expected to reach at least $1.2 trillion in 2009, a substantial sum given that the annual U.S. economy is estimated at about only $14 trillion.

Quality with Growth

Given this market environment, and using its core strategy of “quality, with growth,” Midas Fund focused on premier quality gold mining companies in 2008. As the price of gold stabilized, Midas increased its core holdings of the world’s largest gold producers. The Fund’s holdings of smaller natural resource companies hurt performance as the collapse of general equity and debt markets reduced their prospects for advantageous financing of existing operations and new projects. In anticipation of rebounding prices and profits, the Fund boosted its holdings of top-tier platinum producers after metals prices sank below the costs of production. Midas Fund’s net asset value declined 60.89% in 2008, a disappointing result after having achieved total return gains of 31.70% for 2007, 44.02% in 2006, and 39.72% in 2005. Currently, the Fund is leveraged and positioned for rising gold prices with an increasing emphasis on larger companies with attractive combinations of free cash flow, operations in more politically stable areas, stable or growing gold production profiles, sizeable resources, exploration potential, or other special features.

In 2008, gold prices (based on the London p.m. fix) swung between approximately $712 and $1,011, averaging about $872 and ending the year at $870. Gold’s 2008 average price represents a 25% increase over the 2007 average ($695/oz), the highest annual average ever, and the 7th consecutive average price increase. We anticipate investment demand potentially driving the gold price over $1,000 if the U.S. dollar weakens or greater inflation appears on the horizon. A U.S. depression or increases in U.S. interest rates could be negative for gold prices. By seeking quality investments with solid growth potential, we seek to address the risks inherent in the sector, yet position Midas Fund to benefit from positive trends. Already in 2009 we are seeing the beneficial role for gold investing for U.S. investors, as at this writing the gold price has already climbed over $900 per ounce.

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Midas Special Fund

C O M M E N T A R Y

It is a pleasure to submit this 2008 Annual Report for Midas Special Fund, and to welcome new shareholders who find the Fund’s aggressive and flexible investment approach attractive. Midas Special Fund invests aggressively for capital appreciation, using a flexible strategy in the selection of securities, and is not limited by the issuer’s location, size, or industry sector. The Fund may invest in equity and fixed income securities of both new and seasoned U.S. and foreign issuers with no minimum rating, including securities convertible into common stock, debt securities, futures, options, derivatives, and other instruments. The Fund also may employ speculative investment techniques, such as selling securities short and borrowing money for investment purposes, a practice known as “leveraging,” and may invest defensively.

Markets and the Fund’s Capital Appreciation Strategies

The global economic contraction seen in the first half of 2008 accelerated as the year wore on. Amidst distressed housing markets and frozen credit conditions, both consumers and businesses cut spending. The U.S. Commerce Department reported that factory orders dropped 5.1% in October, the largest decrease since 2000. As many businesses stumbled, employers cut 533,000 jobs in November, the most in 34 years, taking the unemployment rate to a 15 year high of 6.7%, accordingly to the U.S. Labor Department. In these market conditions, the Fund’s strategy was to de-emphasize food service, resource, and credit companies, increase leverage slightly, and concentrate its holdings in quality companies with attractive valuations. By year end, Midas Special Fund’s holdings included the stocks of some of the largest and best known U.S. companies in insurance, technology, banking, and finance. The Fund’s total return in 2008 was (45.84)%, compared to the S&P 500 Index, which returned (37.00)% in the year, according to Morningstar, Inc.

To achieve its objective, Midas Special Fund may use a seasonal investing strategy to invest the Fund’s assets. For example, the Fund may increase its investments in stocks during periods anticipated to be favorable for stocks based on patterns of investor behavior related to accounting periods, tax events, holidays, and other factors. During periods anticipated to be less favorable, the Fund may take a defensive position by buying high grade, short term, liquid securities and by selling securities short.

2009 Outlook and Investing Discipline

Looking ahead, we note that when the Federal Reserve Open Market Committee (FOMC) recently lowered the key federal funds interest rate to a range of 0% to 0.25%, it cited deteriorating labor market conditions and declining consumer spending, business investment, and industrial production, as well as strained financial markets and tight credit conditions, with the outlook for weak economic activity. Although it does not eliminate the risk of potential loss, we believe during 2009 the Fund’s investing discipline of flexible and quality portfolio selection may offer attractive potential.

Tax Advantaged Retirement Accounts

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. Of course, we also would be very pleased to discuss with you any questions you may have. Just call us toll free at 1-800-400-MIDAS (6432) and a Shareholder Services Representative will be glad to assist you, as always, without obligation on your part.

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Midas Perpetual Portfolio

C O M M E N T A R Y

We are pleased to announce that on December 29, 2008 Midas Dollar Reserves, Inc. changed its name to Midas Perpetual Portfolio, Inc. and transformed from a money market fund to a fluctuating net asset value fund investing a fixed target percentage of its total assets in the following investment categories: gold, silver, Swiss franc assets, stocks of U.S. and foreign companies dealing primarily in real estate and natural resources, large capitalization growth stocks, and dollar assets. Midas Perpetual Portfolio seeks to preserve and increase the purchasing power value of its shares over the long term and its all-weather approach makes it an attractive vehicle for a program of steady monthly investing. To make regular investing in the Fund as easy, convenient, and affordable as possible, we offer the Midas Bank Transfer Plan. For information on this free service simply give us a call toll free 1-800-400-MIDAS (6432). We look forward to helping you get started.

Investment Strategy, Review, and Outlook

To combat the appearance of what could be a prolonged and severe recession in the United States, over the 2008 year the Federal Reserve Open Market Committee (FOMC) lowered the key federal funds interest rate repeatedly, culminating in the unprecedented December 16th decision to lower the rate to a range of 0% to 0.25%. As a money market fund, in 2008 the strategy of the Fund

was to invest in money market obligations of the U.S. Government, its agencies and instrumentalities, while maintaining an average maturity in the year through December 28, 2008 of approximately 38 days. The Fund’s 2008 return was a positive 1.22%.

As Midas Perpetual Portfolio, the Fund has broadened its investment horizons to now target a fixed percentage of its total assets as follows: gold, 20%; silver, 5%; Swiss franc assets, 10%; hard asset securities, 15%; large capitalization growth stocks, 15%; and, U.S. dollar assets, 35%. Gold and silver investments include bullion, coins, and exchange traded funds. Swiss franc assets include Swiss franc denominated deposits and bonds of the federal government of Switzerland of any maturity. Hard asset securities include those of U.S. and foreign companies dealing primarily in real estate and natural resources. Large capitalization growth stocks normally include U.S. and foreign companies with market capitalizations over $50 billion with growth in revenues, earnings, or other similar measures and may include options, warrants, and similar derivatives on such stocks. Dollar assets include cash, U.S. Treasury bills, notes, and bonds, obligations of U.S. government agencies, instrumentalities, and sponsored enterprises, and U.S. dollar denominated high grade, short term corporate bonds and banker’s acceptances. The average length to maturity of the Fund’s dollar assets will not exceed fifteen years and corporate bonds will have a rating of “A” or higher by Standard & Poor’s and a remaining time to maturity of 24 months or less.

The investment strategy of the Fund acknowledges a broad range of economic possibilities and investing outlooks, and seeks to incorporate investments appropriate for each of them. Investors who wish to invest all or a portion of their capital in a way that does not depend on any particular outcome for the economy should consider purchasing shares in the Fund.

Contact Us for Information and Services

If you have any questions or would like further information on the Midas Funds Family, our Traditional or Roth IRAs, and also our Education Savings Accounts, we would be very pleased to hear from you and provide such information to you or a friend or relative. Just call 1-800-400-MIDAS (6432) and a Shareholder Service Representative, who is here to serve you, will be very glad to help, as always, without obligation on your part.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Boards of Directors of

Midas Fund, Inc.

Midas Special Fund, Inc.

Midas Perpetual Portfolio, Inc.

We have audited the accompanying statements of assets and liabilities, including the schedule of portfolio investments, of Midas Fund, Inc., Midas Special Fund, Inc., and Midas Perpetual Portfolio, Inc. (formerly Midas Dollar Reserves, Inc.) as of December 31, 2008, the related statements of operations and of cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included considerations of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and broker. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Midas Fund, Inc., Midas Special Fund, Inc., and Midas Perpetual Portfolio, Inc. as of December 31, 2008, the results of their operations and cash flows for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for the five years presented in conformity with accounting principles generally accepted in the United States of America.

TAIT, WELLER & BAKER LLP

Philadelphia, Pennsylvania

February 26, 2009

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Midas Fund

Schedule of Portfolio Investments - December 31, 2008

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Midas Special Fund

Schedule of Portfolio Investments - December 31, 2008

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Midas Perpetual Portfolio

Schedule of Portfolio Investments - December 31, 2008

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Midas Perpetual Portfolio

Schedule of Portfolio Investments - December 31, 2008

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Midas Fund

Allocation of Portfolio Holdings on December 31, 2008

(UNAUDITED)

Midas Special Fund

Allocation of Portfolio Holdings on December 31, 2008

(UNAUDITED)

Midas Perpetual Portfolio

Allocation of Portfolio Holdings on December 31, 2008

(UNAUDITED)

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Statements of Assets and Liabilities

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Statements of Operations

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Statements of Changes in Net Assets

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Statements of Cash Flows

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Notes to Financial Statements

December 31, 2008

1 Organization and Significant Accounting Policies

The Midas Funds are 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 through investments primarily in precious metals and natural resource companies. Midas Special Fund’s investment objective is capital appreciation which it seeks by investing aggressively in any security in any sector. The investment objective of Midas Perpetual Portfolio (formerly Midas Dollar Reserves) is to preserve and increase the purchasing power value of its shares over the long term by investing a fixed target percentage of its total assets in gold, silver, Swiss franc assets, hard asset securities, large capitalization growth stocks, and dollar assets. Prior to December 12, 2008 Midas Perpetual Portfolio was a money market fund investing in securities issued by the U.S. Government, its agencies and instrumentalities. On December 29, 2008 Midas Dollar Reserves changed its name to Midas Perpetual Portfolio.

Midas Fund and Midas Perpetual Portfolio each has authorized capital of one billion shares of common stock, par value $0.01 per share. Midas Special Fund has authorized capital of 500 million shares of common stock, par value $0.01. The Funds each offer only one class of shares. Each Fund’s shareholders are entitled to one vote for each whole share owned and a fractional vote for each fraction of a share owned. Voting rights are not cumulative. All shares of a Fund are fully paid and non-assessable and have no preemptive or conversion rights.

The Funds impose a short term trading redemption fee on any Fund shares that are redeemed or exchanged within 30 days following their purchase date. The redemption fee is 1% of the amount redeemed. Such fees are retained by the Funds for the benefit of the remaining shareholders and are accounted for as an addition to paid in capital.

The following is a summary of significant accounting policies consistently followed by each Fund in the preparation of its financial statements.

Valuation of Investments - Securities traded on a U.S. national securities exchange (“USNSE”) are valued at the last reported sale price on the day the valuations are made. Securities traded primarily on the Nasdaq Stock Market (“Nasdaq”) are normally valued by the Funds at the Nasdaq 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., ET, 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. Securities that are not traded on a particular day, and securities traded in foreign and over-the-counter markets that are not also traded on a USNSE or Nasdaq, are valued at the mean between the last bid and asked prices. Gold and silver bullion is valued at 4:00 p.m., ET, at the mean between the last bid and asked quotations of the Bloomberg Composite (NY) Spot Price for that metal. Debt obligations with remaining maturities of 60 days or less are valued at cost adjusted for amortization of premiums and accretion of discounts. Certain of the securities in which the Funds may invest are priced through pricing services that may utilize a matrix pricing system which takes into consideration factors such as yields, prices, maturities, call features, and ratings on comparable securities. Bonds may be valued according to prices quoted by a bond dealer that offers pricing services. Open end investment companies are valued at their net asset value. Foreign securities markets may be open on days when the U.S. markets are closed. For this reason, the value of any foreign securities owned by the Fund could change on a day when stockholders cannot buy or sell shares of the Fund. Securities for which market quotations are not readily available or reliable and other assets may be valued as determined in good faith by the Investment Manager under the direction of or pursuant to procedures established by the Fund’s Board of Directors. Due to the inherent uncertainty of valuation, these values may differ from the values that would have been used had a readily available or reliable market quotation for the securities existed. These differences in valuation could be material. A security’s valuation may differ depending on the method used for determining value. The use of fair value pricing by a Fund may cause the net asset value of its shares to differ from the net asset value that would be calculated using market prices.

Foreign Currency Translation - Securities denominated in foreign currencies are translated into U.S. dollars at prevailing exchange rates. Realized gain or loss on sales of such investments in local currency terms is reported separately from gain or loss attributable to the change in foreign exchange rates for those investments.

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Notes to Financial Statements

Foreign Currency Contracts - Forward foreign currency contracts are marked to market and the change in market value is recorded by the Fund as an unrealized gain or loss. When a contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The Fund could be exposed to risk if the counterparties are unable to meet the terms of the contract or if the value of the currency changes unfavorably.

Futures Contracts - The Funds may engage in transactions in futures contracts. Upon entering into a futures contract, the Fund provides the broker/dealer 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 or 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.

Short Sales - Midas Fund and Midas Special Fund may sell a security it does not own in anticipation of a decline in the market 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. The Fund is liable for any dividends or interest paid on securities sold short. 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.

Investment Transactions - Investment transactions are accounted for on the trade date (the date the order to buy or sell is executed). Realized gains or losses are determined by specifically identifying the security sold.

Investment Income - Interest income is recorded on the accrual basis. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income is recorded on the ex-dividend date or in the case of certain foreign securities, as soon as the Fund is notified. Taxes witheld on foreign dividends have been provided for in accordance with a Fund’s understanding of the applicable country’s tax rules and rates.

Expenses - Estimated expenses are accrued daily. Expenses directly attributable to a Fund are charged to that Fund. Expenses borne by the complex of related investment companies, which includes open end and closed end investment companies for which Midas Management Corporation (the “Investment Manager”) and its affiliate serve as investment manager, that are not directly attributed to the Fund are allocated among the Fund and the other investment companies in the complex on the basis of relative net assets, except where a more appropriate allocation of expenses among investment companies in the complex can otherwise be made fairly.

Expense Reduction Arrangement - Through arrangements with the Funds’ custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce custodian and transfer agent expenses for Midas Fund, Midas Special Fund, and Midas Perpetual Portfolio by $981, $66, and $514, respectively, during the period.

Distributions - Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date.

Income Taxes - No provision has been made for U.S. income taxes because each Fund intends to qualify as a regulated investment company under the Internal Revenue Code and to distribute to shareholders substantially all taxable income and net realized gains. Foreign securities held by a Fund may be subject to foreign taxation. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests.

The Funds have reviewed their tax positions taken on federal, state, and local income tax returns for all open tax years (tax years ended December 31, 2005 - 2008) and have concluded that no provisions for income taxes are required in the Funds’ financial statements.

Use of Estimates - 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.

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Notes to Financial Statements

Indemnifications - The Funds indemnify officers and directors for certain liabilities that might arise from their performance of their duties for the Funds. Additionally, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties and which may provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as it involves future claims that may be made against the Funds under circumstances that have not occurred.

2 Fees and Transactions with Related Parties

Under the investment management agreement of Midas 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 $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 Perpetual Portfolio, 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.

Each Fund has adopted a plan of distribution pursuant to Rule 12b-1 under the Act. Under each plan, each Fund pays the Distributor, Investor Service Center, Inc., an affiliate of the Investment Manager, a fee of .25% (Midas Fund and Midas Perpetual Portfolio) 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’ shares. In addition, Midas Fund, Midas Special Fund, and Midas Perpetual Fund each reimbursed the Distributor $170,233, $1,453, and $6, respectively, for payments made to certain brokers for record keeping services for the year ended December 31, 2008.

The Investment Manager and the Distributor have each contractually agreed with Midas Perpetual Portfolio to waive their fees, respectively, for the period from April 29, 2008 to April 29, 2009. Prior to April 29, 2008, the Investment Manager and the Distributor voluntarily waived their fees. For the year ended December 31, 2008, the total fees waived through voluntary arrangements by the Investment Manager and the Distributor were $20,789 and $10,395, respectively. For the year ended December 31, 2008, the Investment Manager voluntarily reimbursed Midas Perpetual Portfolio in the amount of $41,398 for expenses incurred in connection with a special shareholder meeting.

Certain officers and directors of the Funds are officers and directors of the Investment Manager and 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 year ended December 31, 2008, the Funds incurred administrative services expenses as follows:

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Notes to Financial Statements

3 Distributions to Shareholders and Distributable Earnings

The tax character of distributions paid by the Funds for the years ended December 31, 2008 and 2007 are summarized as follows:

There were no distributions paid by Midas Special Fund for the years ended December 31, 2008 and 2007.

At December 31, 2008, the components of distributable earnings on a tax basis were as follows:

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 to be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. At December 31, 2008, permanent differences between book and tax accounting have been reclassified to paid in capital as follows:

At December 31, 2008, Midas Fund had net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes of $22,454,852, of which $6,800,444, $79,582, and $15,574,826 expire in 2009, 2010, and 2016, respectively.

At December 31, 2008, Midas Special Fund had net capital loss carryovers that may be used to offset future realized gains for federal income tax purposes of $6,635,080, of which $3,316,069, $1,823,745, $340,513, and $1,154,753 expire in 2009, 2011, 2014, and 2016, respectively.

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Notes to Financial Statements

4  Fair Value Measurements

The Funds adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), on January 1, 2008. FAS 157 defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 establishes a framework for measuring fair value and a three level hierarchy for fair value measurements based on the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Funds. Unobservable inputs reflect a Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. A Fund’s investment in its entirety is assigned a level based upon the inputs which are significant to the overall valuation. The hierarchy of inputs is summarized below.

 interest rates, prepayment speeds, credit risk, etc.)

The inputs or methodology used for valuing investments are not an indication of the risk associated with investing in those investments.

The following is a summary of the inputs used as of December 31, 2008 in valuing the Funds’ investments:

5  Investment Transactions

At December 31, 2008, the aggregate gross unrealized appreciation and depreciation of investments, based on cost for federal income tax purposes, are summarized as follows:

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Notes to Financial Statements

Purchases and sales of securities, excluding short sale transactions and short term investments, for the year ended December 31, 2008 were as follows:

6  Illiquid and Restricted Securities

Midas Fund owns securities which have a limited trading market and/or certain restrictions on trading and, therefore, may be illiquid and/or restricted. Such securities have been valued at fair value in accordance with the procedures described in Note 1. Due to the inherent uncertainty of valuation, these values may differ from the values that would have been used had a readily available market for the securities existed. These differences in valuation could be material. Illiquid and/or restricted securities owned at December 31, 2008, were as follows:

7  Affiliated Issuers

As defined under the Act, the Fund’s affiliates include, among others, companies in which the Funds have (a) direct or indirect ownership, control, or voting power over 5% or more of the outstanding voting shares of such company or (b) controls, is controlled by, or is under common control with such other company or person. Transactions with affiliates for the year ended December 31, 2008 were as follows:

Midas Fund

Midas Special Fund

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Notes to Financial Statements

8  Bank Credit Facilities

The Funds (except Midas Perpetual Portfolio), 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 (“SSB”), 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 credit facility is $25,000,000. The borrowing of each Borrower is collateralized by the underlying investments of such Borrower. SSB 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, the maximum amount permitted pursuant to each Borrower’s investment policies, 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 an uncommitted secured redemption facility with SSB with an aggregate amount available of $25,000,000. The borrowing of each Borrower is collateralized by the underlying investments of such Borrower. This facility carries no legal obligation on the part of SSB to lend any amount of money to the Funds at any time and the Borrower does not pay a commitment fee under this facility. SSB may 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, the maximum amount permitted pursuant to the Borrower’s investment policies, or as permitted under the Act. All loans under this facility will be available at the overnight Federal Funds rate 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 loan balance, the market value of eligible collateral investments at December 31, 2008, the weighted average interest rate, average daily amount outstanding under the committed and uncommitted facilities for the year ended December 31, 2008 were as follows:

9  Securities Lending

The Funds may lend their securities through an agreement with SSB that became effective June 23, 2008. In accordance with the Funds’ security lending procedures, the loans are collateralized at all times with cash or securities or both with a value at least equal to the securities on loan. The value of the loaned securities is determined each business day at the close of business of the Funds, in accordance with the Funds’ valuation policies or, if applicable, by the valuation procedures established by the Funds’ Boards of Directors, and any additional required collateral is delivered to the Funds on the next business day. As with other extensions of credit, the Funds bear the risk of delay on recovery or loss of rights in the collateral should the borrower of the securities default. The Funds bear the risk of loss from the investment of collateral. Both the Funds and SSB receive compensation relating to the lending of the Funds’ securities. The Funds had no securities on loan at December 31, 2008.

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Notes to Financial Statements

10  Off Balance Sheet Risks

Option contracts written and securities sold short result in off balance sheet risk as a Fund’s ultimate obligation to satisfy the terms of the contract or the sale of securities sold short may exceed the amount recognized in the Statement of Assets and Liabilities.

11  Recently Issued Accounting Standards

In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB statement No. 133 (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit risk related contingent features in derivative agreements. The application of FAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. The Funds do not expect FAS 161 to have a material impact on their financial statements.

In September 2008, Statement of Financial Accounting Standards No. 133-1, Disclosures about Credit Derivatives and Certain Guarantees (“FAS 133-1”) was issued and is effective for fiscal years ending after November 15, 2008. FAS 133-1 requires a seller of credit derivatives, including credit derivatives embedded in hybrid instruments, to provide certain disclosures for each credit derivative or group of credit derivatives presented on the Statement of Assets and Liabilities. The impact of FAS 133-1 on the Funds financial statement disclosures, if any, is currently being assessed.

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Financial Highlights - Midas Fund

Financial Highlights - Midas Special Fund