SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ] Confidential, for use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (ss.) 240.14a-11(c) or
(ss.) 240.14a-12
Midas Dollar Reserves, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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[Midas Funds Logo]
MIDAS DOLLAR RESERVES, INC.
Dear Fellow Stockholders,
You are cordially invited to attend a Special Meeting of Stockholders
of Midas Dollar Reserves, Inc. (the "Fund") which will be held on December [ ],
2008 at [ ] a.m., ET, at 11 Hanover Square, 12th Floor, New York, New York
10005.
The Fund's Board of Directors (the "Board"), including the independent
directors, after careful consideration of the investment objective, strategies,
and restrictions of the Fund and the Fund's current and potential yields as a
money market fund, is recommending that the Fund move in an entirely new
direction. The accompanying Notice of Meeting and Proxy Statement for Midas
Dollar Reserves, Inc. present a proposal for the election of Directors and
proposals which would modify the Fund's fundamental investment objective and
modify or eliminate certain of the Fund's fundamental investment restrictions.
THE BOARD IS RECOMMENDING CHANGING THE FUND FROM A MONEY MARKET FUND THAT SEEKS
TO MAINTAIN A NET ASSET VALUE OF $1.00 PER SHARE BY INVESTING IN SECURITIES
ISSUED OR GUARANTEED BY THE U.S. GOVERNMENT, ITS AGENCIES OR INSTRUMENTALITIES
TO A FLUCTUATING NET ASSET VALUE FUND INVESTING A FIXED TARGET PERCENTAGE OF ITS
TOTAL ASSETS IN A BROAD ARRAY OF ASSET CATEGORIES INCLUDING THE FOLLOWING
INVESTMENT CATEGORIES: GOLD, SILVER, SWISS FRANC ASSETS, STOCK OF U.S. AND
FOREIGN COMPANIES DEALING PRIMARILY IN REAL ESTATE AND NATURAL RESOURCES, LARGE
CAPITALIZATION GROWTH STOCKS, AND DOLLAR ASSETS.
In order to implement this new investment strategy, you are being asked
to consider and act upon the following proposals:
1. To change the Fund's current fundamental investment objective and
reclassify its new investment objective as "non-fundamental." The Fund's new
investment objective would be "to preserve and increase the purchasing power
value of its shares over the long term."
2. To revise the Fund's fundamental investment restriction on
investments in commodities to permit the purchase of gold and silver.
3. To eliminate the Fund's fundamental investment restriction on
diversification in order to provide the Fund greater investment flexibility.
The Fund's assets have been steadily declining over the years and,
under current and foreseeable market conditions, the Fund's asset base will
likely remain stagnant or experience further outflows if it maintains its
current investment objective and strategies. Given its current size, the Fund
also has become increasingly expensive to operate which has negatively impacted
stockholders' yield. We believe that changing the Fund's investment objective
and strategy would provide the opportunity to deliver better returns over the
long term which could make the Fund more attractive to both current and new
investors resulting in an increase in the Fund's assets. Of course, there can be
no assurance that the Fund will achieve these goals.
If the proposals changing the investment objective and restrictions are
approved by stockholders, the Board will authorize and direct that the Fund
change its name to Midas Perpetual Portfolio, Inc.
THE BOARD HAS UNANIMOUSLY APPROVED EACH OF THE PROPOSALS AND RECOMMENDS THAT
STOCKHOLDERS VOTE FOR EACH PROPOSAL OUTLINED IN THE ACCOMPANYING NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT.
Sincerely,
Thomas B. Winmill
President
[Midas Funds Logo]
MIDAS DOLLAR RESERVES, INC.
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
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To the Stockholders:
Notice is hereby given that a Special Meeting of Stockholders of Midas
Dollar Reserves, Inc. (the "Fund") will be held at the offices of the Fund at 11
Hanover Square, 12th Floor, New York, New York 10005 on December [ ], 2008 at []
a.m., ET, for the following purposes:
1. To elect to the Board of Directors the Nominee, Peter K. Werner, to
serve as a Director until his successor is duly elected and qualifies.
2. To change the Fund's fundamental investment objective.
3. To modify the Fund's fundamental investment restriction on investment
in commodities.
4. To eliminate the Fund's fundamental investment restriction on
diversification.
5. Such other business as may properly come before the meeting or any
postponement or adjournment thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR EACH PROPOSAL.
Stockholders of record at the close of business on [ ], 2008 are
entitled to receive notice of and to vote at the meeting and any adjournment or
postponement thereof.
By Order of the Board of Directors
John F. Ramirez
Secretary
[ ], 2008
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY
STOCKHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND
SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO
POSTAGE IF MAILED IN THE UNITED STATES. TO AVOID THE ADDITIONAL EXPENSE
OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING
YOUR PROXY CARD PROMPTLY.
MIDAS DOLLAR RESERVES, INC.
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PROXY STATEMENT
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SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER [ ], 2008
This Proxy Statement is being furnished in connection with a
solicitation of proxies by the Board of Directors (the "Board") of Midas Dollar
Reserves, Inc. (the "Fund") to be voted at the Special Meeting of Stockholders
of the Fund to be held at the offices of the Fund at 11 Hanover Square, 12th
Floor, New York, New York 10005 on December [ ], 2008 at [ ] a.m., ET, and at
any postponement or adjournment thereof (the "Meeting") for the purposes set
forth in the accompanying Notice of Special Meeting of Stockholders. Only
stockholders of record at the close of business on [ ], 2008 (the "Record Date")
are entitled to be present and to vote at the Meeting. As of the Record Date,
the Fund had [ ] shares of common stock issued and outstanding.
The expense of preparing, assembling, printing, and mailing the proxy
statement, proxy card, and any other material used for the solicitation of
proxies will be paid by the Fund. It is estimated that proxy materials will be
mailed to stockholders on or about [ ], 2008. The Fund's principal executive
offices are located at 11 Hanover Square, New York, New York 10005. COPIES OF
THE FUND'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS ARE AVAILABLE WITHOUT
CHARGE UPON WRITTEN REQUEST TO THE FUND AT 11 HANOVER SQUARE, NEW YORK, NEW YORK
10005, OR BY CALLING TOLL-FREE 1-800-400-MIDAS (6432).
VOTING AND QUORUM
Stockholders are entitled to one vote for each Fund share held, and a
fractional vote for each fractional Fund share held. Shares represented by
executed and unrevoked proxies will be voted in accordance with the instructions
on the Proxy Card. A stockholder may revoke a proxy by delivering to the
Secretary of the Fund a signed proxy with a date later than the previously
delivered proxy or by sending a written revocation to the Fund. To be effective,
such revocation must be received prior to the Meeting. In addition, any
stockholder who attends the Meeting in person may vote by ballot at the Meeting,
thereby canceling any proxy previously given.
The presence at any stockholders' meeting, in person or by proxy, of
stockholders entitled to cast one-third of all votes entitled to be cast thereat
shall be necessary and sufficient to constitute a quorum for the transaction of
business. In the absence of a quorum, the stockholders present in person or by
proxy or, if no stockholder entitled to vote is present in person or by proxy,
any officer present entitled to preside or act as secretary of such meeting may
adjourn the meeting without determining the date of the new meeting or from time
to time without further notice to a date not more than 120 days after the
original record date. Any business that might have been transacted at the
meeting originally called may be transacted at any such adjourned meeting at
which a quorum is present. Notice of adjournment of a stockholders' meeting to
another time or place need not be given if such time and place are announced at
the meeting. A stockholder vote may be taken for one or more proposals prior to
any adjournment if sufficient votes have been received for approval. If a
properly executed and returned proxy is accompanied by instructions to withhold
authority to vote, represents a broker "non-vote" (that is, a proxy from a
broker, bank, or other nominee indicating that such person has not received
instructions from the beneficial owner or other person entitled to vote shares
of the Fund on a particular matter with respect to which the broker, bank, or
other nominee does not have discretionary power), or is marked with an
abstention (collectively, "abstentions"), the Fund's shares represented thereby
will be considered to be present at the Meeting for purposes of determining the
existence of a quorum for the transaction of business. Under Maryland law,
abstentions do not constitute a vote "for" or "against" a matter and will be
disregarded in determining "votes cast" on an issue.
PROPOSAL 1: TO ELECT TO THE BOARD OF DIRECTORS THE NOMINEE, PETER K. WERNER, TO
SERVE AS A DIRECTOR UNTIL HIS SUCCESSOR IS DULY ELECTED AND QUALIFIES.
At the Board meeting held on October 2, 2008, the Fund's Board approved
the selection and nomination by the disinterested directors of Peter K. Werner
as a Director to hold office until his successor is duly elected and qualifies.
Mr. Werner was appointed to serve as a Director by the Board in 2004 and is the
only Director who has not been elected by stockholders. The Fund is taking this
opportunity to submit Mr. Werner for election by stockholders. The persons
named in the accompanying form of proxy intend to vote each such proxy FOR the
election of this Nominee, unless a stockholder specifically indicates on a proxy
the desire to withhold authority to vote for the Nominee. It is not contemplated
that the Nominee will be unable to serve as a director for any reason, but if
that should occur prior to the Meeting, the proxy holders reserve the right to
substitute another person or persons of their choice as Nominee. The Nominee has
consented to being named in this Proxy Statement and has agreed to serve as a
director if elected. In the event Peter K. Werner is not duly elected, as
proposed and qualifies, he shall be deemed holding over and shall
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continue to manage the business and affairs of the Fund as a member of the Board
until his successor is duly elected and qualifies. Unless otherwise noted, the
address of record for the Nominee and other directors and officers is 11 Hanover
Square, New York, New York 10005. The following table sets forth certain
information concerning the Nominee.
NUMBER OF PORTFOLIOS OTHER PUBLIC
IN INVESTMENT COMPANY
NAME, POSITION(S) HELD WITH FUND, TERM OF OFFICE, DIRECTOR COMPANY COMPLEX DIRECTORSHIPS
PRINCIPAL OCCUPATION(S) FOR PAST FIVE YEARS, AND AGE SINCE OVERSEEN BY DIRECTOR HELD BY DIRECTOR
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INDEPENDENT NOMINEE 1:
PETER K. WERNER - Since 1996, he has been teaching, 2004 5 0
coaching, and directing a number of programs at The Governor's
Academy of Byfield, MA. Currently, he serves as chair of the
History Department. Previously, he held the position of Vice
President in the Fixed Income Departments of Lehman Brothers
and First Boston. His responsibilities included trading sovereign
debt instruments, currency arbitrage, syndication, medium term
note trading, and money market trading. He was born on August
16, 1959.
1 Not an "interested person" of the Fund as such term is defined in the
Investment Company Act of 1940, as amended ("1940 Act").
The persons named in the accompanying form of proxy intend to vote each
such proxy "FOR" the election of the Nominee listed above, unless a stockholder
specifically indicates on a proxy the desire to withhold authority to vote for
the Nominee. It is not contemplated that the Nominee will be unable to serve as
a director for any reason, but if that should occur prior to the Meeting, the
proxy holders reserve the right to substitute another person or persons of their
choice as Nominee. The Nominee listed above has consented to being named in this
Proxy Statement and has agreed to serve as a director if elected. See pages [ ]
of this Proxy Statement for additional information regarding the Fund's
directors and officers.
VOTE REQUIRED AND THE BOARD'S RECOMMENDATION
As set forth in the Fund's Bylaws, the election of directors shall be
decided by a vote of the majority of the votes validly cast at a meeting at
which a quorum is present.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE FOR THE NOMINEE.
IMPORTANT INFORMATION REGARDING PROPOSALS 2, 3, and 4
WHAT CHANGES ARE BEING PROPOSED FOR THE FUND?
The investment objective of the Fund, a money market fund, is "to seek
maximum current income consistent with preservation of capital and maintenance
of liquidity." The Board, after careful consideration of the investment
objective, strategies, and restrictions of the Fund and the Fund's current and
potential yields as a money market fund, recommends changing the Fund from a
money market fund that seeks to maintain a net asset value of $1.00 per share by
investing in securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities ("U.S. Government Securities") to a fluctuating
net asset value fund with a new investment objective of seeking "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 a broad array of
asset classes including the following investment categories: gold; silver; Swiss
franc assets; hard asset securities; large capitalization growth stocks; and
dollar assets. Gold and silver investments may include bullion, bullion type
coins, and exchange traded funds ("ETFs"). Swiss franc assets may include Swiss
franc denominated deposits and bonds of the federal government of Switzerland of
any maturity. Hard asset securities may include securities of U.S. and foreign
companies dealing primarily in real estate (such as timberland, ranching and
farm land, raw land, and land with improvements and structures) and natural
resources such as oil, gas, coal, precious and non-precious metals, and
minerals. Large capitalization growth stocks normally include U.S. and foreign
companies with market capitalizations over $100 billion with growth in revenues,
earnings, or other similar measure and may include options, warrants, and
similar derivatives on such stocks. Dollar assets may include cash, U.S.
Treasury bills and notes and U.S. Treasury bonds, and may include other U.S.
dollar denominated assets such as the obligations of U.S. government agencies
and instrumentalities, 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 Standard & Poor's rating of
"A" or higher and a remaining time to maturity of twenty four months or less.
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For current investors in the Fund, the most important change may be
that the Fund will change from one investing exclusively in U.S. Government
Securities to a broad array of riskier asset classes. Also, as a money market
fund, the Fund is subject to specific Securities and Exchange Commission ("SEC")
rules. Among other restrictions, the Fund is limited to investing in U.S.
dollar-denominated instruments with a remaining maturity of 397 days or less (as
calculated pursuant to Rule 2a-7 under the 1940 Act). Likewise, currently the
Fund seeks to preserve the value of shareholder investments at $1.00 per share,
although it is possible to lose money by investing in the Fund. If the
stockholders approve the following proposals, the net asset value fluctuations
should be expected daily and the possibility of losing money will increase.
The Fund's current investment objective is fundamental which means that
it may not be changed without shareholder approval. The Fund is also subject to
certain investment restrictions, set forth in the Statement of Additional
Information, that are fundamental and cannot be changed without shareholder
approval. The Fund's other investment policies are not fundamental which means
that they may be changed by the Board without shareholder approval. The Fund
currently operates in accordance with a non-fundamental policy which complies
with Rule 2a-7 under the 1940 Act that provides that the Fund may not purchase
the securities of any one issuer if as a result more than 5% of its total assets
would be invested in the securities of such issuer, provided that this
limitation does not apply to U.S. Government Securities.
Accordingly, in order to implement the proposed investment strategy,
the Board recommends: (1) changing the Fund's investment objective from a
fundamental one seeking maximum current income consistent with preservation of
capital and maintenance of liquidity to a non-fundamental objective of seeking
to preserve and increase the purchasing power value of its shares over the long
term (as set forth in Proposal 2); (2) modifying the Fund's fundamental
investment restriction on investment in commodities (as set forth in Proposal 3)
to pursue the proposed investment allocations set forth above; and (3)
eliminating the Fund's fundamental investment restriction on diversification in
order to provide greater investment flexibility (as set forth in Proposal 4).
HOW DOES THE BOARD RECOMMEND THAT STOCKHOLDERS VOTE?
The Board, including all of the directors who are not "interested
persons" (as defined in the 1940 Act) has unanimously approved the proposals and
recommended that stockholders vote FOR all of the proposals. If no instructions
are indicated on your proxy, the representatives holding proxies will vote in
accordance with the recommendations of the Board.
WHY IS THE BOARD RECOMMENDING THE PROPOSED CHANGES?
The Board approved the proposed changes at a meeting held on October 2,
2008. The Board reviewed materials describing the new investment objective,
strategies, and restrictions, the types of investments the Fund may make, and
the risk and return characteristics of those investments, and related matters.
At the meeting, Midas Management Corporation (the "Investment Manager"),
informed the Board that it believed that if the proposed changes were approved
and implemented, the Fund's new investment objective and strategy could be more
attractive to investors than the Fund's current investment objective and
strategy and, as a result, the Fund's assets may increase. The Board considered
that over time the Fund's assets had steadily declined and that, under current
and foreseeable market conditions, the Fund's asset base would likely remain
stagnant or experience further outflows if it maintains its current investment
objective and strategies. The Board noted that, given its current size, the Fund
had become increasingly expensive to operate which negatively impacted
stockholders' yield. To the extent the Fund's assets increase as a result of the
proposed changes, the Board noted that the Fund could potentially achieve some
economies of scale because its expenses would be spread over a larger asset base
and see a reduction in the expense ratio, which should help sustain the long
term viability of the Fund. The Board concluded that adopting the proposed
changes would give the Fund the opportunity to deliver better returns for its
stockholders in the long term, although they agreed that there could be no
assurance that the Fund will achieve its new investment objective.
WHAT DOES IMPLEMENTATION OF THE PROPOSED CHANGES MEAN FOR THE FUND?
If stockholders approve the change to the Fund's fundamental investment
objective, the proposed investment strategy will be implemented and will
fundamentally change the nature and risk profile of the Fund. The Fund will:
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o change its name to Midas Perpetual Portfolio, Inc.;
o cease to be an investment vehicle designed to provide monthly
current income and will be managed with the goal of preserving
and increasing the purchasing power value of its shares over the
long term;
o change from investing exclusively in U.S. Government Securities
to investing in a broad array of asset categories; and
o cease to seek to maintain the value of stockholder investments at
$1.00 per share and will allow the Fund's NAV to fluctuate. The
Fund's NAV will be determined daily as of the close of trading on
the New York Stock Exchange.
WILL THE FUND CONTINUE TO PAY MONTHLY DIVIDENDS?
No. If the Fund implements the proposed investment strategy, it will no
longer make monthly distributions to stockholders. Instead the Fund may declare
and pay distributions from any net investment income and capital gain
distributions once a year. Thus, the Fund should not be relied upon as a source
for regular cash flow.
If the Fund implements the proposed investment strategy, it may require
redeeming stockholders to accept readily tradable gold or silver bullion or
coins from the Fund's holdings in complete or partial payment of redemptions, if
it can satisfy a provision of the Internal Revenue Code ("Code") that permits it
to do so without recognizing gain, where doing so would be advantageous to the
Fund in pursuit of its tax planning objectives. For stockholders, the tax
consequences of an in-kind redemption generally would be the same as those of a
cash redemption. Although the Investment Manager believes it is unlikely that
the Fund would ever use an asset other than gold or silver bullion or bullion
type coins, the assets used for an in-kind redemption would be selected by the
Fund. In order to reduce the possibility of inconvenience or loss to such
redeeming stockholders, the Fund will require a redeeming stockholder to accept
an in-kind redemption only if it has arranged a convenient opportunity for the
stockholder promptly to sell the assets through a qualified broker or dealer at
a cost not to exceed 2% of their value at the time of the redemption. If a
stockholder elects not to use this service, the Fund, at its own expense, would
deliver the assets to the stockholder or, at his or her request, to his or her
local bank.
WILL THE FUND CONTINUE TO PROVIDE CHECK WRITING PRIVILEGES?
Yes. You will continue to have free, unlimited check writing privileges
with a $250 minimum per check. Since the value of your account will change
everyday, you should verify the current value of your account prior to writing a
check and should not attempt to close an account by writing a check.
WILL THE PROPOSED CHANGES AFFECT THE FUND'S OPERATING EXPENSES?
It is anticipated that the Fund's expense ratio will not materially
increase as a result of the proposed changes. However, the Fund will incur
brokerage costs during the transition investment period while it becomes
invested in accordance with the proposed investment strategy and will continue
to incur brokerage costs in connection with trading by the Fund. The Investment
Manager has contractually agreed to waive the fees payable under the investment
management agreement for the period from April 29, 2008 to April 29, 2009.
Investor Service Center, Inc., the distributor, has also contractually agreed to
waive the fees payable under the distribution agreement and the Rule 12b-1 plan
of distribution for the period from April 29, 2008 to April 29, 2009. Both the
Investment Manager and the Distributor may continue such waivers after April 29,
2009 but are not contractually obligated to do so.
WHAT WILL HAPPEN IF STOCKHOLDERS OF THE FUND DO NOT APPROVE A PROPOSAL?
Proposals 2, 3, and 4 must all be approved for the proposed investment
strategy to be implemented.
IF THE PROPOSALS ARE APPROVED, WHEN WILL THE CHANGES BE IMPLEMENTED?
If the Proposals are approved, the proposed investment strategy will
take effect on or about [ ]. The Fund expects that there will be a transition
investment period of up to three months from the date the proposed investment
strategy takes effect before it is fully invested in accordance with its
investment objective and strategies.
ARE OTHER MATERIAL CHANGES CONTEMPLATED THAT WILL NOT BE SUBMITTED TO
STOCKHOLDERS?
Yes. If stockholders approve Proposals 2, 3, and 4, the Fund's name
will change to "Midas Perpetual Portfolio."
PROPOSAL 2: TO CHANGE THE FUND'S FUNDAMENTAL INVESTMENT OBJECTIVE.
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The Board recommends changing the Fund's investment objective as set
forth below.
Current fundamental investment objective:
"To seek maximum current income consistent with preservation
of capital and maintenance of liquidity."
Proposed non-fundamental investment objective:
"To seek to preserve and increase the purchasing power value
of its shares over the long term."
If stockholders approve the Fund's adoption of the proposed
non-fundamental investment objective of seeking to preserve and increase the
purchasing power value of its shares over the long term, the Fund will attempt
to achieve its objective by maintaining a combination of investments, the
purchasing power of which as a whole are intended to increase over the long term
through a variety of economic environments, although there can be no assurance
that the Fund will achieve the proposed investment objective. In pursuit of its
investment objective, the Fund will invests a fixed "Target Percentage" of its
net assets in each of the following categories:
Investment Category Target Percentage
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Gold 20%
Silver 5%
Swiss Franc Assets 10%
Hard Asset Securities 15%
Large Capitalization Growth Stocks 15%
Dollar Assets 35%
Total 100%
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Gold and silver investments may include bullion, bullion type coins,
and ETFs. Swiss franc assets may include Swiss franc denominated deposits and
bonds of the federal government of Switzerland of any maturity. Hard asset
securities may include securities of U.S. and foreign companies dealing
primarily in real estate (such as timberland, ranching and farm land, raw land,
and land with improvements and structures) and natural resources such as oil,
gas, coal, precious and non-precious metals, and minerals. Large capitalization
growth stocks normally include U.S. and foreign companies with market
capitalizations over $100 billion with growth in revenues, earnings, or other
similar measure and may include options, warrants, and similar derivatives on
such stocks. Dollar assets may include cash, U.S. Treasury bills and notes and
U.S. Treasury bonds, and may include other U.S. dollar denominated assets such
as the obligations of U.S. government agencies and instrumentalities, 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 Standard & Poor's rating of "A" or higher and a
remaining time to maturity of twenty four months or less.
The Fund will buy or sell investments as needed to correct any
discrepancy between its actual holdings in a given category and the Target
Percentage for that category if such a discrepancy exceeds one-tenth of the
Target Percentage. Portfolio adjustments will normally be made within the fiscal
quarter following the quarter in which the deviation occurred (unless corrected
by changes in market prices). The Investment Manager may delay making portfolio
adjustments if, in its opinion, circumstances make it desirable to do so. The
Investment Manager does not attempt to anticipate short term changes in the
general price level of any investment category.
PRINCIPAL RISKS. If stockholders approve the proposed change in
investment objective and the proposed investment strategy is implemented, the
Fund will be exposed to the following principal risks, most of which will be new
risks for the Fund.
INVESTMENTS IN GOLD AND SILVER. Investment in gold and silver are
considered speculative. The price of gold has fluctuated widely over the past
several years and may be affected by global supply and demand, which is
influenced by such factors as forward selling by gold producers, purchases made
by gold producers to unwind gold hedge positions, central bank purchases and
sales, and production and cost levels in major gold producing countries;
investors' expectations with respect to the rate of inflation; currency exchange
rates; interest rates; investment and trading activities of hedge funds and
commodity funds; and global or regional political, economic or financial events
and situations. The price of silver has also fluctuated widely over the past
several years. Factors that may affect the price of silver include changes in
economic conditions, which may affect the demand for silver for industrial
applications; a significant change in the attitude of speculators and investors
towards silver; and any significant increase in silver price hedging activity by
silver producers.
Bullion and coins do not generate income, unless loaned and their
returns to the Fund are from gains or losses realized upon
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sale. Furthermore, the Fund may encounter storage and transaction costs in
connection with their ownership of bullion and coins that may be higher than
those attendant to the purchase, holding, and disposition of securities.
There is no assurance that gold or silver will maintain its long-term
value in terms of purchasing power in the future. In the event that the price of
gold or silver declines, the Fund expects the value of its investments to
decline proportionately.
NATURAL RESOURCE COMPANIES. Natural resource companies can be
significantly affected by the supply of and demand for the indicated commodities
and related services, exploration and production spending, government
regulation, world events, and economic conditions. The oil, gas, coal, metals,
and minerals industries can be significantly affected by events relating to
international political developments, the success of exploration projects,
commodity prices, and tax and government regulations. The operations and
financial performance of natural resources companies may be directly affected by
the prices of the indicated commodities, especially those natural resources
companies for whom the commodities they own are significant assets. Sustained
declines in demand for the indicated commodities could adversely affect the
financial performance of natural resources companies over the long term. The
value of securities issued by natural resources companies may also be affected
by changes in overall market movements, changes in interest rates, or factors
affecting a particular industry or commodity, such as weather, embargoes,
tariffs, policies of commodity cartels, and international economic, political,
and regulatory developments. The stock prices of natural resources companies may
experience greater price volatility than other types of common stocks. It is
possible that the performance of securities of natural resources companies may
lag the performance of other industries or the broader market as a whole.
DEPLETION AND EXPLORATION RISK. Many natural resources companies are
either engaged in the production or exploitation of the particular commodities
or are engaged in transporting, storing, distributing, and processing such
commodities. To maintain or increase their revenue level, these companies or
their customers need to maintain or expand their reserves through exploration of
new sources of supply, through the development of existing sources, through
acquisitions, or through long term contracts to acquire reserves. The financial
performance of natural resources companies may be adversely affected if they, or
the companies to whom they provide products or services, are unable to
cost-effectively acquire additional products or reserves sufficient to replace
the natural decline.
FOREIGN INVESTMENT. Investments in the securities of foreign issuers
involve certain considerations and risks not ordinarily associated with
investments in securities of domestic issuers. Foreign companies are not
generally subject to the same accounting, auditing and financial standards and
requirements as those applicable to U.S. companies. There may be less publicly
available information about a foreign company than a U.S. company. Investments
in foreign securities will expose the Fund to the direct or indirect
consequences of political, social or economic changes in the countries that
issue the securities or in which the issuers are located. With respect to
certain countries, there are risks of expropriation, confiscatory taxation,
political or social instability, or diplomatic developments that could affect
assets of the Fund held in foreign countries. If the value of any foreign
currency in which the Fund's investments are denominated declines relative to
the U.S. dollar, the Fund expects the value of its investments to decline
proportionately. In addition, a portfolio that includes foreign securities can
expect to have a higher expense ratio because of the increased transaction costs
on non-U.S. securities markets and the increased costs of maintaining the
custody of foreign securities.
FIXED INCOME SECURITIES. The Fund would be able to invest in dollar
assets and Swiss franc assets that are affected by interest rates. When interest
rates rise, the prices of bonds typically fall. Longer term bonds are generally
more sensitive interest rate changes than shorter term bonds. Fixed income
securities are also subject to credit risk, i.e. the risk that an issuer of
securities will be unable to pay principal and interest when due, or that the
value of the security will suffer because investors believe the issuer is less
able to pay. This is broadly gauged by the credit ratings of the securities in
which the Fund invests. Ratings are only the opinions of the agencies issuing
them, however, are not absolute guarantees as to quality. Generally, investments
in securities issued by U.S. government agencies and instrumentalities may have
different degrees of government backing as to principal or interest, but are not
backed by the full faith and credit of the U.S. government. These issues may be
chartered or sponsored by Acts of Congress, but their securities are neither
insured nor guaranteed by the U.S. Treasury.
Many fixed income securities, especially those issued at high interest
rates, provide that the issuer may repay them early. Issuers often exercise this
right when interest rates are low. Accordingly, holders of callable securities
may not benefit fully from the increase in value that other fixed income
securities experience when rates decline. Furthermore, the Fund may reinvest the
proceeds of the payoff at current yields, which may be lower than those paid by
the security that was paid off.
REAL ESTATE COMPANIES. Any decline in the general level of prices of
real estate would be expected to have an adverse impact on these stocks. The
prices of such stocks are particularly vulnerable to decline in the event of
deflationary economic conditions.
IN-KIND REDEMPTIONS. To avoid liability for corporate federal income
tax, the Fund must, among other things, derive at least 90% of its gross income
each taxable year from sources including interest, dividends, and gains on sales
of securities. Gains
- 6 -
on sales of gold and silver by the Fund would not qualify as "gains on sales of
securities." Consequently, profitable sales of gold and silver (as might be
required for the Fund to adhere to its Target Percentages) could subject the
Fund to liability for corporate federal income tax. To try to reduce sales of
gold and silver and this potential adverse tax result, the Fund may require
redeeming shareholders to accept readily tradeable gold or silver bullion or
coins from the Fund's holdings in complete or partial payment of redemptions, if
it can satisfy a federal tax law provision that permits it to do so without
recognizing gain.
MARKET. The Fund will be subject to market risk related to fluctuations
in the value of the Fund's portfolio. A risk of investing in stocks is that
their value will go up and down reflecting stock market movements and you could
lose money.
GROWTH STOCKS. Due to their relatively high valuations, growth stocks
are typically more volatile than value stocks. For instance, the price of a
growth stock may experience a larger decline on a forecast of lower earnings, a
negative fundamental development, or an adverse market development. Further,
growth stocks may not pay dividends or may pay lower dividends than value
stocks. This means they depend more on price changes for returns and may be more
adversely affected in a down market compared to value stocks.
NON-DIVERSIFICATION. The Fund will be non-diversified which means that
more than 5% of the Fund's assets may be invested in the securities of one
issuer. As a result, the Fund may invest its assets in a smaller number of
issuers than if it were diversified. Investing in the Fund could involve more
risk than investing in a fund that holds a broader range of securities because
changes in the financial condition of a single issuer could cause greater
fluctuation in the Fund's total returns.
SWISS FRANC ASSETS. The Swiss franc is subject to the risk that
inflation will decrease in the United States, or rise in Switzerland. Swiss
government bonds are subject to some risk of default and their credit quality is
not rated by U.S. rating agencies.
VOTE REQUIRED AND THE BOARD'S RECOMMENDATION
Approval of this Proposal requires the affirmative vote of the lesser
of (a) 67% or more of the voting securities of the Fund present at the Meeting
if the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy or (b) more than 50% of the outstanding
voting securities of the Fund.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE FOR THE PROPOSAL TO
CHANGE THE FUND'S FUNDAMENTAL INVESTMENT OBJECTIVE.
PROPOSAL 3: TO MODIFY THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION ON
INVESTMENT IN COMMODITIES.
The Fund has adopted certain investment restrictions that are
"fundamental," meaning that as a matter of law they cannot be changed without
stockholder approval ("fundamental restrictions"). The Fund's Board, together
with the Fund's officers and the Investment Manager, have reviewed the Fund's
current fundamental investment restrictions and concluded that the restriction
regarding commodities should be revised in order to allow the Fund greater
investment flexibility to pursue its proposed investment objective. The Board
unanimously recommends that stockholders vote to amend the Fund's fundamental
restrictions, as discussed below. At the Meeting, stockholders will be asked to
approve the revised restriction. If approved by the Fund's stockholders at the
Meeting, the proposed change in the Fund's fundamental restrictions will be
adopted by the Fund.
The Fund's current fundamental restriction on commodities is as
follows:
The Fund may not purchase or sell commodities or commodity
futures contracts, although it may enter into (i) financial
and foreign currency futures contracts and options thereon,
(ii) options on foreign currencies, and (iii) forward
contracts on foreign currencies.
The Board recommends that stockholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not purchase or sell physical commodities (other
than precious metals), although it may enter into (a)
commodity and other futures contracts and options thereon, (b)
options on commodities, including foreign currencies and
precious metals, (c) forward contracts on commodities,
including foreign currencies and precious metals, and (d)
other commodity contracts or derivative instruments.
The primary purpose of this proposal is to permit the Fund to invest in
precious metals, such as gold and silver, and otherwise to permit the Fund to
enter into commodity instruments that may be developed in the future. The Fund's
proposed modified investment objective (see Proposal 2) is to preserve and
increase the purchasing power value of its shares over the long
- 7 -
term by investing a fixed target percentage of its net assets in a broad array
of asset classes. In pursuit of the proposed investment objective, the Fund
would invest a fixed target percentage of its net assets in each of the
following investment categories: gold; silver; Swiss franc assets; hard asset
securities; large capitalization growth stocks; and dollar assets. Gold and
silver investments would include bullion, bullion type coins, and ETFs.
VOTE REQUIRED AND THE BOARD'S RECOMMENDATION
Approval of this Proposal requires the affirmative vote of the lesser
of (a) 67% or more of the voting securities of the Fund present at the Meeting
if the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy or (b) more than 50% of the outstanding
voting securities of the Fund.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE
FOR THE PROPOSAL TO MODIFY THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION ON INVESTMENT IN COMMODITIES.
PROPOSAL 4: TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION ON
DIVERSIFICATION.
The Fund currently has a fundamental investment restriction on
diversification that provides that the Fund may not purchase the securities of
any one issuer if, as a result, more than 5% of the Fund's total assets would be
invested in the securities of such issuer, or the Fund would own or hold 10% or
more of the outstanding voting securities of that issuer, except that up to 25%
of the Fund's total assets may be invested without regard to these limitations
and provided that these limitations do not apply to securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. Further,
the Fund's Board adopted a non-fundamental investment restriction in order to
meet the requirements of Rule 2a-7 under the 1940 Act that provides that the
Fund may not purchase the securities of any one issuer if as a result more than
5% of its total assets would be invested in the securities of such issuer,
provided that this limitation does not apply to securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities.
The Fund's Board, together with the Fund's officers and the Investment
Manager, have reviewed these current fundamental and non-fundamental investment
restrictions and concluded that they should be eliminated in order to allow the
Fund greater investment flexibility to pursue its proposed investment objective.
The Board unanimously recommends that stockholders vote to remove the Fund's
fundamental restriction and at the Meeting stockholders will be asked to do so.
If approved by the Fund's stockholders at the Meeting, the Fund's fundamental
investment restriction on diversification will be eliminated and the non-
fundamental restriction described above will also be eliminated.
By approving the Proposal, stockholders would authorize the
reclassification of the Fund to a "non-diversified" investment company, which
means that the portion of the Fund's assets that may be invested in the
securities of a single issuer would not be limited and the amount of the
outstanding voting securities of a particular issuer held by the Fund would not
be limited by the 1940 Act. The Board of the Fund believes that changing the
classification of the Fund from a diversified to a non-diversified investment
company would give the Investment Manager more flexibility to focus the Fund's
investments in companies that it views as offering the best opportunities to
achieve the Fund's proposed investment objective. If the Proposal is approved, a
higher percentage of the Fund's assets then could be invested in the securities
of a limited number of issuers and in more than 10% of the outstanding voting
securities of issuers. Therefore, the Fund's net asset value per share would be
more sensitive to changes in the market value of a single issuer and its
portfolio could be less liquid where the Fund takes larger positions in issuers.
The Fund, however, currently intends to continue to conduct its
operations so as to qualify as a "regulated investment company" for purposes of
the Code, which currently requires that, at the end of each quarter of the
taxable year, (i) at least 50% of the market value of the Fund's total assets be
invested in cash, U.S. Government securities, the securities of other regulated
investment companies and other securities, with such other securities of any one
issuer limited for the purposes of this calculation to an amount not greater
than 5% of the value of the Fund's total assets, and (ii) not more than 25% of
the value of its total assets be invested in the securities of any one issuer
(other than U.S. Government securities or the securities of other regulated
investment companies). Compliance with the Code's requirements to qualify as a
"regulated investment company" is not necessary except at the end of each
quarter of the taxable year and, in any event, there can be no assurance that
the Fund will so qualify as a "regulated investment company" for purposes of the
Code.
The change in the Fund's status from diversified to non-diversified
will allow the Investment Manager more flexibility in determining the size of
the Fund's investments. Subject to the foregoing discussion, if the Fund becomes
non-diversified, the Fund, with respect to 50% of its assets, will be able to
invest over 5% of its assets in a single issuer. Thus, a change in status from
diversified to non-diversified would enable the Fund generally to commit larger
portions of its assets to a limited number of
- 8 -
investments deemed attractive by the Investment Manager. The change from
diversified to non-diversified would increase the Fund's investment risk. To the
extent that a non-diversified company invests in fewer issuers than a
diversified company, the performance of any one portfolio security is likely to
have a greater impact on the performance of a non-diversified company than would
be the case for a diversified company.
VOTE REQUIRED AND THE BOARD'S RECOMMENDATION
Approval of this Proposal requires the affirmative vote of the lesser
of (a) 67% or more of the voting securities of the Fund present at the Meeting
if the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy or (b) more than 50% of the outstanding
voting securities of the Fund.
THE FUND'S BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION ON DIVERSIFICATION.
INFORMATION ABOUT THE FUND'S DIRECTORS AND OFFICERS
The following table sets forth certain information concerning the other
directors currently serving on the Board of the Fund. Unless otherwise noted,
the address of record for the Nominee and other directors and officers is 11
Hanover Square, New York, New York 10005.
NUMBER OF PORTFOLIOS OTHER PUBLIC
IN INVESTMENT COMPANY
NAME, POSITION(S) HELD WITH FUND, TERM OF OFFICE, DIRECTOR COMPANY COMPLEX DIRECTORSHIPS
PRINCIPAL OCCUPATION(S) FOR PAST FIVE YEARS, AND AGE SINCE OVERSEEN BY DIRECTOR HELD BY DIRECTOR
- --------------------------------------------------------------- -------------- ---------------------------- -----------------------
INDEPENDENT DIRECTORS 1:
BRUCE B. HUBER, CLU, ChFC, MSFS - Retired. He is a 1981 5 0
former Financial Representative with New England Financial,
specializing in financial, estate and insurance matters. He is a
member of the Board, emeritus, of the Millbrook School, and
Chairman of the Endowment Board of the Community YMCA
of Red Bank, NJ. He was born on February 7, 1930.
JAMES E. HUNT - He is a Limited Partner of Hunt Howe 1980 5 0
Partners LLC, executive recruiting consultants. He was born on
December 14,1930.
INTERESTED DIRECTORS 2:
ROBERT D. ANDERSON - Since 1988, Vice Chairman of the 1980 3 0
Investment Manager and its affiliates. Other capacities since 1974.
He is a former member of the District #12, District Business
Conduct and Investment Company Committees of FINRA. He was born on
December 7, 1929.
THOMAS B. WINMILL, ESQ. - He is President, Chief 1993 5 0
Executive Officer, and General Counsel of the Fund, the
Investment Manager, as well as the other investment companies
(collectively, the "Investment Company Complex") advised by
the Investment Manager and its affiliates, and of Winmill & Co.
Incorporated and its affiliates ("WCI"). He is a member of the
New York State Bar and the SEC Rules Committee of the Investment
Company Institute. He was born on June 25, 1959.
1 Not "interested persons" of the Fund as such term is defined in the 1940
Act.
2 "Interested persons" of the Fund as defined in the 1940 Act due to their
affiliation with the Investment Manager.
The following table sets forth certain information concerning the
Fund's executive officers other than those who serve as directors. The address
of record for the officers is 11 Hanover Square, New York, New York 10005.
- 9 -
NAME AND AGE POSITION(S) HELD WITH FUND, TERM OF OFFICE, PRINCIPAL OCCUPATION FOR PAST FIVE YEARS*
- ----------------------------- ------------------------------------------------------------------------------------------------------
Thomas O'Malley Chief Accounting Officer, Chief Financial Officer, Treasurer, and Vice President since 2005. He
Born on July 22, 1958 also is Chief Accounting Officer, Chief Financial Officer, Treasurer, and Vice President of each
Fund in the Investment Company Complex, the Investment Manager, and WCI. Previously, he
served as Assistant Controller of Reich & Tang Asset Management, LLC, Reich & Tang Services,
Inc., and Reich & Tang Distributors, Inc. He is a certified public accountant.
John F. Ramirez Secretary, Chief Compliance Officer, and Vice President since 2005. He is also Secretary, Chief
Born on April 29, 1977 Compliance Officer, and Vice President of each Fund in the Investment Company Complex, the
Investment Manager, and WCI. He previously served as Compliance Administrator and Assistant
Secretary of the Investment Company Complex, the Investment Manager, and WCI. He earned his Juris
Doctor from Fordham University School of Law in 2008. He is a member of the Society of Corporate
Secretaries and Governance Professionals and the Chief Compliance Officer Committee and the
Compliance Advisory Committee of the Investment Company Institute.
* Officers hold their positions with the Fund until a successor has been duly
elected and qualifies. Officers are generally elected annually at the
December meeting of the Board. The officers were last elected on December
5, 2007.
OWNERSHIP OF FUND SHARES
The following table sets forth information regarding beneficial
ownership of the Fund's outstanding shares as of the Record Date by (i) each
director, executive officer, and the Nominee and (ii) all directors, executive
officer, and the Nominee as a group. As of the Record Date, directors, executive
officer, and the Nominee of the Fund as a group beneficially owned an aggregate
of less than one percent of the Fund's outstanding shares. Each director,
executive officer, and the Nominee has sole voting and investment power over the
shares opposite his name.
NAME OF DIRECTOR, NOMINEE, OR OFFICER NUMBER OF SHARES
- --------------------------------------------------------------- -----------------------------
INDEPENDENT NOMINEE:
Peter K. Werner [ ]
INDEPENDENT DIRECTORS:
Bruce B. Huber [ ]
James E. Hunt [ ]
INTERESTED DIRECTORS:
Robert D. Anderson [ ]
Thomas B. Winmill [ ]
OFFICERS:
Thomas O'Malley [ ]
John F. Ramirez [ ]
Total shares held by directors and officers as a group: [ ]
Based on the filings with the U.S. Securities and Exchange Commission,
the following stockholders owned beneficially or of record more than 5% of the
outstanding shares of the Fund as of the Record Date:
APPROXIMATE PERCENTAGE OF THE
NAME AND ADDRESS COMMON STOCK FUND'S TOTAL OUTSTANDING SHARES
- ------------------------------------------------ ------------------------------ -------------------------------------------------
The following table sets forth information describing the dollar range
of equity securities beneficially owned by each director and the Nominee of the
Fund and, on an aggregate basis, the Investment Company Complex as of the Record
Date:
- 10 -
AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN
DOLLAR RANGE OF EQUITY SECURITIES ALL REGISTERED INVESTMENT COMPANIES OVERSEEN
NAME OF DIRECTOR OR NOMINEE IN THE FUND BY DIRECTOR IN INVESTMENT COMPANY COMPLEX
- ------------------------------------- ---------------------------------------- -----------------------------------------------------
INDEPENDENT NOMINEE:
Peter K. Werner [ ] [ ]
INDEPENDENT DIRECTORS:
Bruce B. Huber [ ] [ ]
James E. Hunt [ ] [ ]
INTERESTED DIRECTORS:
Robert D. Anderson [ ] [ ]
Thomas B. Winmill [ ] [ ]
As of the Record Date, no independent director or his immediate family
members owned beneficially or of record any securities of, or had any direct or
indirect material interest in, the Investment Manager, or any person
controlling, controlled by or under common control with the Investment Manager.
The Investment Manager, located at 11 Hanover Square, New York, New
York 10005, is a wholly owned subsidiary of Winmill & Co. Incorporated, a
publicly owned company whose securities are traded over the counter. As of [ ],
the Investment Manager and its affiliates and WCI owned beneficially or of
record [ ]% of the Fund's outstanding shares and anticipate voting such shares
for all of the proposals described above. During the fiscal year ended December
31, 2007, the Fund paid the Investment Manager investment management fees of $[
]. The Investment Manager also provides at cost certain administrative services
to the Fund. During the fiscal year ended December 31, 2007, the Fund incurred
expenses of $[ ] due to the Investment Manager for providing at cost certain
administrative services.
COMPENSATION OF FUND DIRECTORS
Currently, the Fund pays its independent directors, a per meeting
retainer of $[ ], a per meeting fee of $[ ] for each meeting attended, and
reimburses them for their meeting expenses. The Fund also pays such directors $[
] per special telephonic meeting or committee meeting attended, and $[ ] per
joint meeting of the Audit Committees of the Investment Company Complex
attended. No interested director or executive officer receives any compensation
for their services as directors and/or officers of the Fund. Pursuant to the
investment management agreement, the Fund pays compensation of the Fund's chief
compliance officer to the extent determined by the independent directors of the
Fund. The Fund has no bonus, pension, profit sharing, or retirement plan.
The aggregate amount of compensation paid to each director and nominee
by the Fund and by the other investment companies in the Investment Company
Complex for which such director or nominee was a Board member for the year ended
December 31, 2007, is as follows:
NAME OF DIRECTOR OR NOMINEE
(CURRENT TOTAL NUMBER OF AGGREGATE COMPENSATION TOTAL COMPENSATION FROM THE FUND AND
INVESTMENT COMPANIES) FROM THE FUND INVESTMENT COMPANY COMPLEX
- -------------------------------------------- ------------------------------------- ------------------------------------------------
Independent Nominee:
Peter K. Werner (5) [ ] [ ]
Independent Directors:
Bruce B. Huber (5) [ ] [ ]
James E. Hunt (5) [ ] [ ]
Interested Directors:
Robert D. Anderson (3) [ ] [ ]
Thomas B. Winmill (5) [ ] [ ]
BOARD COMMITTEES
The Audit Committee of the Board was established in accordance with
Section 3(a)(58)(A) of the 1934 Act and is comprised of Messrs. Bruce B. Huber,
James E. Hunt, and Peter K. Werner (Chair), each of whom is an independent
director. The Board has determined that each member of the Audit Committee
qualifies as an "audit committee financial expert" as defined in
- 11 -
item 401(h) of Regulation S-K. The purposes of the Audit Committee are (i) to
oversee the Fund's accounting and financial reporting policies and practices,
its internal controls and, as appropriate, the internal controls of certain
service providers; (ii) to oversee the quality and objectivity of the Fund's
financial statements and the independent audit thereof; and (iii) to act as a
liaison between the Fund's independent registered public accounting firm
("IRPAF") Tait, Weller & Baker LLP ("Tait,Weller") and the full Board. The Audit
Committee Charter may be found at www.midasfunds.com.
The Fund has an Executive Committee comprised of Thomas B. Winmill, the
function of which is to exercise the powers of the Board between meetings of the
Board to the extent permitted by law to be delegated and not delegated by the
Board to any other committee.
The Fund has no standing compensation committee or any committee
performing similar functions.
DIRECTOR ATTENDANCE AT MEETINGS
The Fund had [ ] regular Board meetings, [ ] special Board meetings, [
] Audit Committee meetings, [ ] special committee meetings, and [ ] Executive
Committee meeting during the Fund's most recently completed fiscal year ended
December 31, 2007. Each director attended all Board and committee meetings held
during such period during the time such director was in office. The Fund
currently has no policies regarding director attendance at stockholder meetings.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Tait, Weller has been selected as the IRPAF for the Fund for the fiscal
period commencing January 1, 2008. Tait, Weller also acts as the IRPAF for the
Investment Manager and each Fund in the Investment Company Complex and as
Independent Certified Public Accountants for WCI. Apart from its fees received,
neither Tait, Weller nor any of its partners has a direct, or material indirect,
financial interest in the Fund or its affiliates.
Representatives of Tait, Weller are not expected to be present at the
Meeting but have been given the opportunity to make a statement if they so
desire and are expected to be available to respond to appropriate questions.
AUDIT AND NON-AUDIT FEES
The SEC's auditor independence rules require the Audit Committee of the
Fund to pre-approve (a) all audit and permissible non-audit services provided by
the Fund's IRPAF directly to the Fund and (b) those permissible non-audit
services provided by the Fund's IRPAF to the Investment Manager and any entity
controlling, controlled by, or under common control with the Investment Manager
that provides ongoing services to the Fund ("Affiliated Service Providers"), if
the services relate directly to the operations and financial reporting of the
Fund. The Fund had no Affiliated Service Providers other than the Investment
Manager.
The following table sets forth the aggregate fees billed for
professional services rendered by Tait, Weller to the Fund for the fiscal years
ended December 31, 2006 and 2007:
FISCAL YEAR ENDED ALL
DECEMBER 31 AUDIT FEES AUDIT RELATED FEES TAX FEES OTHER FEES
- ------------------------ ------------------------- ---------------------- -------------------- --------------------
2006 $[ ] $[ ] $[ ] $[ ]
2007 $[ ] $[ ] $[ ] $[ ]
- ------------------------ ------------------------- ---------------------- -------------------- --------------------
AUDIT FEES include the aggregate fees billed for professional services rendered
by Tait, Weller for the audit of the Fund's annual financial statements and
services rendered in connection with statutory or regulatory filings.
AUDIT RELATED FEES include the aggregate fees billed for assurance and related
services by Tait, Weller that are reasonably related to the performance of the
audit or review of the annual financial statements and review of the semi-annual
financial statements.
TAX FEES include the aggregate fees billed for professional services rendered by
Tait, Weller in connection with tax compliance, tax advice, and tax planning.
ALL OTHER FEES include the aggregate non-audit fees not disclosed above that
were billed for projects and services provided by Tait, Weller.
For the Fund's fiscal years ended December 31, 2006 and 2007, there
were no Non-Audit Fees billed for professional services rendered by Tait, Weller
to the Investment Manager for which pre-approval by the Fund's Audit Committee
was required.
- 12 -
For the Fund's fiscal years ended December 31, 2006 and 2007, Aggregate
Non-Audit Fees billed for professional services rendered by Tait, Weller (i) to
the Investment Manager, regardless of whether pre-approval was required, were $[
] and $[ ] respectively and (ii) to the Fund and the Investment Manager were $[
] and $[ ], respectively.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
Pursuant to the Fund's Audit Committee Charter, the Audit Committee
shall consider for pre-approval any audit and non-audit services proposed to be
provided by the IRPAF to the Fund, and any non-audit services proposed to be
provided by such IRPAF to the Fund's Investment Manager, if the engagement
relates directly to the Fund's operations or financial reporting. During the
fiscal years ended December 31, 2006 and 2007, there were no services included
in Audit Related Fees, Tax Fees, and All Other Fees that were approved by the
Audit Committee pursuant to the de minimis exception provided by paragraphs
(c)(7)(i)(C) or (c)(7)(ii) of Rule 2-01 of Regulations S-X. In those situations
when it is not convenient to obtain full Audit Committee approval, the Chairman
of the Audit Committee is delegated the authority to grant pre-approvals of
audit, audit related, tax, and all other services so long as all such
pre-approved decisions are reviewed with the full Audit Committee at its next
scheduled meeting.
The Audit Committee has considered the provision of non-audit services
by Tait, Weller to the Investment Manager that were not pre-approved by the
Audit Committee during the fiscal years ended December 31, 2006 and 2007 and has
determined such services to be compatible with maintaining Tait, Weller's
independence.
INFORMATION REGARDING THE FUND'S PROCESS FOR NOMINATING DIRECTOR CANDIDATES
The disinterested directors of the Fund select and nominate any other
disinterested director of the Fund. The Board may consider candidates as
interested directors submitted by current directors, the Investment Manager,
Fund stockholders, and other appropriate sources. The Board will consider and
evaluate candidates submitted by stockholders on the basis of the same criteria
as those used to consider and evaluate candidates submitted from other sources.
These criteria include the candidate's relevant knowledge, experience, and
expertise, the candidate's ability to carry out his or her duties in the best
interests of the Fund, and the candidate's ability to qualify as a disinterested
director. Currently, the Fund does not hold annual meetings for the election of
directors except as required by law or the Fund's Bylaws.
STOCKHOLDER COMMUNICATIONS
The Fund's Board has adopted a process for stockholders to send
communications to the Board. To communicate with the Board or an individual
director of the Fund, a stockholder must send a written communication to the
Fund's principal office at the address listed in the Notice of Special Meeting
of Stockholders accompanying this Proxy Statement, addressed to the Board of the
Fund or the individual director. Such communications must be signed by the
stockholder and identify the number of shares held by the stockholder. All
stockholder communications received in accordance with this process will be
forwarded to the Board or the individual director. Any stockholder proposal
submitted pursuant to Rule 14a-8 under the 1934 Act must continue to meet all
the requirements of Rule 14a-8.
ADDITIONAL INFORMATION
In addition to the use of the mails, proxies may be solicited
personally, by telephone, or by other means, and the Fund may pay persons
holding its shares in their names or those of their nominees for their expenses
in sending soliciting materials to their principals. The Fund will bear the cost
of soliciting proxies. Authorizations to execute proxies may be obtained by
telephonic instructions in accordance with procedures designed to authenticate
the stockholder's identity. In all cases where a telephonic proxy is solicited,
the stockholder will be asked to provide his or her address, social security
number (in the case of an individual), or taxpayer identification number (in the
case of an entity), or other identifying information, and the number of shares
owned and to confirm that the stockholder has received the Fund's Proxy
Statement and proxy card in the mail. Within 48 hours of receiving a
stockholder's telephonic voting instructions and prior to the Meeting, a
confirmation will be sent to the stockholder to ensure that the vote has been
taken in accordance with the stockholder's instructions and to provide a
telephone number to call immediately if the stockholder's instruction are not
correctly reflected in the confirmation. Stockholders requiring further
information with respect to telephonic voting instructions or the proxy
generally should contact the Fund's transfer agent at 1-800-400-MIDAS (6432).
Any stockholder giving a proxy may revoke it at any time before it is exercised
by submitting to the Fund a written notice of revocation or a subsequently
executed proxy or by attending the meeting and voting in person.
DISCRETIONARY AUTHORITY; SUBMISSION DEADLINES FOR STOCKHOLDER PROPOSALS
Although no business may come before the Meeting other than that
specified in the Notice of Special Meeting of Stockholders, shares represented
by executed and unrevoked proxies will confer discretionary authority to vote on
matters which
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the Fund did not have notice of a reasonable time prior to mailing this Proxy
Statement to stockholders.
NOTICE TO BANKS, BROKER/DEALERS, AND VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Fund's transfer agent, Unified Fund Services, Inc.,
at 1-800-400-MIDAS (6432) whether other persons are the beneficial owners of the
shares for which proxies are being solicited and, if so, the number of copies of
this Proxy Statement and other soliciting material you wish to receive in order
to supply copies to the beneficial owners of shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS WHO
DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO COMPLETE, SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
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PROXY CARD
MIDAS DOLLAR RESERVES, INC.
This Proxy is solicited by and on behalf of the Board of Directors of Midas
Dollar Reserves, Inc. (the Fund) for a Special Meeting of Stockholders to be
held on December [ ], 2008 and at any postponements or adjournments thereof.
The undersigned stockholder of the Fund hereby appoints Thomas B. Winmill and
John F. Ramirez, and each of them, the attorneys and proxies of the undersigned,
with full power of substitution in each of them, to attend the Special Meeting
of Stockholders to be held at the offices of the Fund at 11 Hanover Square, 12th
Floor, New York, New York 10005 on [ ], December [ ], 2008, at [ ] a.m. and at
any postponements or adjournments thereof ("Meeting") to cast on behalf of the
undersigned all votes that the undersigned is entitled to cast at the Meeting
and otherwise to represent the undersigned at the Meeting with all of the powers
possessed by the undersigned if personally present at the Meeting. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting and the
accompanying Proxy Statement and revokes any proxy heretofore given for the
Meeting.
The votes entitled to be cast by the undersigned will be cast as instructed on
the reverse side hereof. If this Proxy is executed but no instruction is given,
the votes entitled to be cast by the undersigned will be cast FOR each proposal
as set forth in the Proxy Statement and in the discretion of the Proxy holder on
any other matter that may properly come before the Meeting.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
(Continued and to be signed on the reverse side)
SPECIAL MEETING OF STOCKHOLDERS OF MIDAS DOLLAR RESERVES, INC.
December [ ], 2008
Please detach along perforated line and mail in the envelope provided.
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE AS
SOON AS POSSIBLE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
1. To elect to the Board of Directors the Nominee, Peter K. Werner, to serve
as a Director until his successor is duly elected and qualifies.
NOMINEE:
[ ] FOR the Nominee Peter K. Werner
[ ] WITHHOLD AUTHORITY
for the Nominee
2. To change the Fund's fundamental investment objective.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. To modify the Fund's fundamental investment restriction on investment in
commodities.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
4. To eliminate the Fund's fundamental investment restriction on
diversification.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
Your vote is important! Please sign and date the proxy/voting instructions card
on the reverse side hereof and return it promptly in the enclosed postage-paid
envelope or otherwise to Midas Dollar Reserves, Inc. c/o Unified Fund Services,
Inc., P.O. Box 6110, Indianapolis, IN 46206-6110 so that your shares can be
represented at the Meeting. If no instructions are given on the proposals, the
proxies will vote FOR each proposal.
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method.
Signature of Stockholder ______________Date:_____ Signature of Stockholder
_______________Date:_____
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee, or guardian, please give full title as such.
If the signer is a corporation, please sign full corporate name by duly
authorized officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.