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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (ss.) 240.14a-11(c) or
(ss.) 240.14a-12
Midas Dollar Reserves, Inc.
--------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
---------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[GRAPHIC OMITTED]
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 12,
2008 at 9 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 Special Meeting of Stockholders and Proxy
Statement for the Fund present a proposal for the election of Directors and
proposals which would change the Fund's fundamental investment objective and
revise 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 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," which means that
it can be changed without stockholder approval. 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 fundamental
investment restrictions are approved by stockholders, the Fund will 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 DOLLAR RESERVES, INC.
------------------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
------------------------------------
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 12, 2008 at 9
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 current fundamental investment objective and
reclassify its new investment objective as "non-fundamental," which
means that it can be changed without stockholder approval. The Fund's
new investment objective would be "to preserve and increase the
purchasing power value of its shares over the long term."
3. To revise the Fund's fundamental investment restriction on investments
in commodities to permit the purchase of gold and silver.
4. To eliminate the Fund's fundamental investment restriction on
diversification in order to provide the Fund greater investment
flexibility.
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 October 30, 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
November 6, 2008
MIDAS DOLLAR RESERVES, INC.
------------------------------------
PROXY STATEMENT
------------------------------------
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 12, 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 12, 2008 at 9 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 October 30, 2008 (the "Record Date") are
entitled to be present and to vote at the Meeting. As of the Record Date, the
Fund had 17,315,529 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 November 10, 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
-1-
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 Mr.
Werner is not duly elected, as proposed and qualifies, he shall be deemed
holding over and shall 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. See pages
10 to 14 of this Proxy Statement for additional information regarding the Fund's
directors and officers.
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 NOMINEE1:
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").
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: 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 $50 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, notes, and
bonds, and may include other U.S. dollar denominated assets such as other U.S.
Government Securities,
-2-
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, a
division of the McGraw- Hill Companies, Inc. ("S&P") and a remaining time to
maturity of twenty four months or less.
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 stockholder 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, stockholders can expect the Fund's
net asset value fluctuate 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 stockholder approval. The Fund is also
subject to certain fundamental investment restrictions, that cannot be changed
without stockholder approval. The Fund's other investment policies are
non-fundamental, which means that they may be changed by the Board without
stockholder 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 investment 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) revising the Fund's
fundamental investment restriction on investment in commodities (as set forth in
Proposal 3) to pursue the proposed investment allocations set forth below; and
(3) eliminating the Fund's fundamental investment restriction on diversification
in order to provide greater investment flexibility (as set forth in Proposal 4).
WHAT ARE THE TAX CONSEQUENCES OF THE PROPOSED CHANGES?
As a stockholder of a money market fund that invests in U.S. Government
Securities, a stockholder's return consists entirely of dividends attributable
to interest on those securities, which are taxable at the federal level as
ordinary income and generally are not subject to state and local taxation.
Pursuant to the proposed change in the Fund's investment objective and policies,
a stockholder's return would consist of gain or loss upon sale of fund shares
and distributions, if any, that would consist of (1) distributions of net
investment income, if any, taxable as ordinary income at all levels but subject
to a maximum federal tax rate of 15% for individuals to the extent the
distributions consist of "qualified dividend income," and (2) distributions of
net realized capital gains, if any, taxable as ordinary income at all levels to
the extent they are attributable to the excess of net short-term capital gain
over net long-term capital loss and also subject to a maximum federal tax rate
of 15% for individuals to the extent they are attributable to net capital gain
(i.e., the excess of net long-term capital gain over net short-term capital
loss). The tax considerations described above do not apply to tax deferred
accounts or other nontaxable entities. Because everyone's tax situation is
unique, stockholders are advised to consult their tax professional about their
investment.
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) of the Fund ("Independent Directors"), has
unanimously approved the proposals and recommended that stockholders vote FOR
all of the proposals. If no instructions are indicated on your proxy, the proxy
holders 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
-3-
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 changes proposed in Proposals 2, 3 and 4,
the proposed investment strategy will be implemented and will fundamentally
change the nature and risk profile of the Fund. The Fund will:
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 riskier 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 normally as of the close of trading on
the New York Stock Exchange.
WILL THE FUND CONTINUE TO MAKE MONTHLY DISTRIBUTIONS?
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.
WILL THE FUND CONTINUE TO PROVIDE CHECK WRITING PRIVILEGES?
No. At this time, the Fund does not anticipate continuing to offer
check writing privileges.
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.
ARE THERE OTHER MATERIAL CHANGES TO THE FUND'S OPERATIONS?
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
-4-
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 for an in-kind redemption, the assets used
therefor 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.
WHAT WILL HAPPEN IF STOCKHOLDERS OF THE FUND DO NOT APPROVE A PROPOSAL?
If Proposals 2, 3, and 4 are not all approved, none of the proposed
changes to the Fund discussed in this Proxy Statement will be implemented and
the Fund will continue to operate as a money market fund.
IF THE PROPOSALS ARE APPROVED, WHEN WILL THE CHANGES BE IMPLEMENTED?
If the Proposals are approved, the changes to the Fund's investment
objective and fundamental investment limitations will take effect on or about
December 29, 2008 and the Fund will begin to implement its proposed new
investment strategy. 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 new 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, Inc."
PROPOSAL 2: TO CHANGE THE FUND'S CURRENT FUNDAMENTAL INVESTMENT OBJECTIVE AND
RECLASSIFY ITS NEW INVESTMENT OBJECTIVE AS "NON-FUNDAMENTAL," WHICH MEANS
THAT IT CAN BE CHANGED WITHOUT STOCKHOLDER APPROVAL. THE FUND'S NEW
INVESTMENT OBJECTIVE WOULD BE "TO PRESERVE AND INCREASE THE PURCHASING
POWER VALUE OF ITS SHARES OVER THE LONG TERM."
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:
-5-
Investment Category Target Percentage
- ----------------------------------------------- ----------------------------
Gold 20%
Silver 5%
Swiss Franc Assets 10%
Hard Asset Securities 15%
Large Capitalization Growth Stocks 15%
Dollar Assets 35%
Total 100%
- ----------------------------------------------- ----------------------------
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 $50 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, notes, and
bonds, and may include other U.S. dollar denominated assets such as other U.S.
Government Securities, 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
S&P 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.
Limitations on the amount of gross income the Fund - which seeks to
qualify each taxable year as a "regulated investment company" for federal tax
purposes ("RIC") so as to avoid corporate level income tax - may earn from,
among other things, direct investments in commodities, as well as derivatives
thereon, also may affect the amount of its gold and silver investments. To
continue to qualify as a RIC, the Fund will not be able to earn more than 10% of
its gross income in any taxable year from direct investments in commodities and
derivatives thereon, in addition to certain types of non-passive income. If the
Fund generates such gains, it may pay such taxes or, to reduce such income, hold
its precious metals or sell them at a loss, or sell securities at a gain, when
for investment reasons it would not otherwise do so.
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
-6-
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 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 resource 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, and 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
-7-
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 on sales of gold and silver, and options and futures
thereon, by the Fund would not qualify as "gains on sales of securities."
Consequently, sales of gold and silver (as might be required for the Fund to
adhere to its Target Percentages) at a gain could subject the Fund to liability
for corporate federal income tax. To try to reduce such sales and this potential
adverse tax result, the Fund 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 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 AND RECLASSIFY ITS NEW
INVESTMENT OBJECTIVE AS "NON-FUNDAMENTAL," WHICH MEANS THAT IT CAN BE CHANGED
WITHOUT STOCKHOLDER APPROVAL. THE FUND'S NEW INVESTMENT OBJECTIVE WOULD BE "TO
PRESERVE AND INCREASE THE PURCHASING POWER VALUE OF ITS SHARES OVER THE LONG
TERM."
PROPOSAL 3: TO REVISE THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION ON
INVESTMENTS IN COMMODITIES TO PERMIT THE PURCHASE OF GOLD AND SILVER.
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 strategy. The Board
unanimously recommends that stockholders vote to amend the Fund's fundamental
restrictions, as discussed below.
-8-
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.
As discussed in Proposal 2, subject to stockholder approval of
Proposals 2, 3 and 4, the Fund intends to 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. 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.
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
REVISE THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION ON INVESTMENTS IN
COMMODITIES TO PERMIT THE PURCHASE OF GOLD AND SILVER.
PROPOSAL 4: TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION ON
DIVERSIFICATION IN ORDER TO PROVIDE THE FUND GREATER INVESTMENT
FLEXIBILITY.
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 U.S. Government Securities.
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 U.S. Government
Securities.
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. 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 and the amount of the outstanding voting
securities of a particular issuer held by the Fund would not be limited by the
1940 Act . 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.
-9-
The Fund, however, currently intends to continue to conduct its
operations so as to qualify as a RIC, which currently requires that, at the end
of each quarter of its 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 RICs 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 RICs).
Compliance with this requirement 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 RIC.
The change in the Fund's status from diversified to non-diversified
will allow 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. 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
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 IN
ORDER TO PROVIDE THE FUND GREATER INVESTMENT FLEXIBILITY.
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 DIRECTORS1:
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.
-10-
NUMBER OF PORTFOLIOS OTHER PUBLIC
INTERESTED DIRECTORS2:
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.
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.
-11-
NAME OF DIRECTOR, NOMINEE, OR OFFICER NUMBER OF SHARES
- --------------------------------------------------------------- -----------------------------
INDEPENDENT NOMINEE:
Peter K. Werner 12,910.61
INDEPENDENT DIRECTORS:
Bruce B. Huber 0
James E. Hunt 17,997.11
INTERESTED DIRECTORS:
Robert D. Anderson 0
Thomas B. Winmill 590.90
OFFICERS:
Thomas O'Malley 0
John F. Ramirez 0
Total shares held by directors and officers as a group: 31,498.62
The following affiliated stockholders owned beneficially the following
shares of the Fund as of the Record Date and have indicated that they will vote
in favor of all proposals. The Fund is not aware of any stockholders who owned
beneficially or of record more than 5% of the outstanding shares of the Fund as
of Record Date.
APPROXIMATE PERCENTAGE OF THE
NAME AND ADDRESS COMMON STOCK FUND'S TOTAL OUTSTANDING SHARES
- --------------------------------------------------- ------------------------------ ---------------------------------------------
Bassett S. Winmill 7,588,201.17 shares1 43.82%
11 Hanover Square
New York, New York 10005
Thomas B. Winmill 7,588,773.22 shares2 43.83%
11 Hanover Square
New York, New York 10005
Bexil Corporation** 3,506,798.08 shares 20.25%
11 Hanover Square
New York, New York 10005
Midas Fund, Inc.*, ** 2,941,984.88 shares 16.99%
11 Hanover Square
New York, New York 10005
Midas Management Corporation**
11 Hanover Square 577,637.07 shares 3.34%
New York, New York 10005
Investor Service Center, Inc.**
11 Hanover Square 452,784.38 shares 2.61%
New York, New York 10005
Tuxis Corporation**
11 Hanover Square 106,469.96 shares Less than 1%
New York, New York 10005
CEF Advisers, Inc.**
11 Hanover Square 1,078.66 shares Less than 1%
New York, New York 10005
-12-
APPROXIMATE PERCENTAGE OF THE
NAME AND ADDRESS COMMON STOCK FUND'S TOTAL OUTSTANDING SHARES
- --------------------------------------------------- ------------------------------ ---------------------------------------------
Winmill & Co. Incorporated ("WCI")**
11 Hanover Square 1,011.11 shares Less than 1%
New York, New York 10005
Performance Driven Properties, Inc.**
11 Hanover Square 419.08 shares Less than 1%
New York, New York 10005
1 Bassett S. Winmill has indirect beneficial ownership of 7,588,201.17 of
these shares, as a result of his status as a controlling person of WCI,
Bexil Corporation, Midas Fund, Inc., Midas Management Corporation, Investor
Service Center, Inc., Tuxis Corporation, CEF Advisers, Inc., and
Performance Driven Properties, Inc. and of 17.95 of these shares of his
spouse. Mr. Bassett S. Winmill disclaims beneficial ownership of these
shares.
2 Thomas B. Winmill has indirect beneficial ownership of 7,588,183.22 of
these shares, as a result of his status as a controlling person of WCI,
Bexil Corporation, Midas Fund, Inc., Midas Management Corporation, Investor
Service Center, Inc., Tuxis Corporation, CEF Advisers, Inc., and
Performance Driven Properties, Inc. Mr. Thomas B. Winmill disclaims
beneficial ownership of these shares. He owns 590.90 shares held directly.
* The Investment Manager also manages Midas Fund, Inc. Midas Fund, Inc. is
authorized to invest daily available cash balances in the Fund, although it
will discontinue doing so should the Fund no longer operate as a money
market fund.
** WCI, parent of the Investment Manager and the Distributor, is also the
parent of CEF Advisers, Inc. and Performance Driven Properties, Inc and
owner of approximately 25% and 24% of, respectively, Bexil Corporation and
Tuxis Corporation. These entities invest cash balances in the Fund,
although they may discontinue doing so should the Fund no longer operate as
a money market fund
As of October 30, 2008, the Investment Manager and its affiliates and
WCI owned beneficially or of record 43.83% of the Fund's outstanding shares and
anticipate voting such shares for all of the Proposals described above.
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:
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 $10,001 - $50,000 $10,001 - $50,000
Independent Directors:
Bruce B. Huber None $10,001 - $50,000
James E. Hunt $10,001 - $50,000 over $100,000
Interested Directors:
Robert D. Anderson None $1 - $10,000
Thomas B. Winmill $1 - $10,000 $10,001 - $50,000
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 WCI, a publicly owned company whose
securities are traded over the counter. For the fiscal year ended December 31,
2007, the Investment Manager voluntarily waived its management fee of $68,436.
The Investment Manager also provides at cost certain
-13-
administrative services to the Fund. During the fiscal year ended December 31,
2007, the Fund incurred expenses of $12,070 due to the Investment Manager for
providing at cost certain administrative services.
The Distributor, located at 11 Hanover Square, New York, New York
10005, is a wholly owned subsidiary of WCI, a publicly owned company whose
securities are traded over the counter. For the fiscal year ended December 31,
2007, the Distributor voluntarily waived its distribution fee of $34,218.
COMPENSATION OF FUND DIRECTORS AND OFFICERS
Currently, the Fund pays its independent directors, a quarterly
retainer of $50, a per meeting fee of $200 for each meeting attended, and
reimburses them for their meeting expenses. The Fund also pays such directors
$250 per special telephonic meeting or committee meeting attended, and $250 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, although 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) $1,065 $17,375
INDEPENDENT DIRECTORS:
Bruce B. Huber (5) $1,065 $17,375
James E. Hunt (5) $1,065 $17,375
INTERESTED DIRECTORS:
Robert D. Anderson (3) 0 0
Bassett S. Winmill (2) Not applicable. 0
Thomas B. Winmill (5) 0 0
BOARD COMMITTEES
The Audit Committee of the Board was established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (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 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.
-14-
DIRECTOR ATTENDANCE AT MEETINGS
The Fund had four regular Board meetings, no special Board meetings,
two Audit Committee meetings, no special committee meetings, and one 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 each
investment company in the Investment Company Complex and as Independent
Certified Public Accountants for WCI and the Distributor. 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 and the Distributor.
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 $14,000 $1,000 $3,500 $0
2007 $14,000 $1,500 $3,500 $0
- ------------------------ ------------------------- ---------------------- -------------------- --------------------
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 Affiliated Service Providers for which pre-approval by the Fund's Audit
Committee was required. 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 Affiliated Service Providers, regardless of whether
pre-approval was required, were $19,000 and $20,000, respectively and (ii) to
the Fund and the Affiliated Service Providers were $22,000 and $23,500,
respectively.
-15-
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 Affiliated Service Providers , 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.
The Audit Committee has considered the provision of non-audit services
by Tait, Weller to the Affiliated Service Providers 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 proxy tabulator, Illinois Stock Transfer
Company at 1-800-757-5755. 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 OF 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 the Fund did not have notice of a reasonable time prior to mailing
this Proxy Statement to stockholders.
-16-
The Fund does not hold regular annual meetings of stockholders.
Stockholders wishing to submit proposals or nominations for inclusion in a proxy
statement and form of proxy for a subsequent stockholders' meeting should send
their written proposals or nominations to the Secretary of the Fund at 11
Hanover Square, 12th Floor, New York, New York 10005. Stockholder proposals must
be received within a reasonable time before the Fund begins to print and send
its proxy materials relating to a particular meeting to be considered for
inclusion in the Fund's proxy statement and form of proxy relating to the
meeting. Stockholder proposals that are not received within a reasonable time
before the Fund begins to print and send its proxy materials relating to a
particular meeting will be considered untimely. Stockholder proposals that are
submitted in a timely manner will not necessarily be included in the Fund's
proxy materials. Inclusion of such proposals is subject to limitations under the
federal securities laws.
NOTICE TO BANKS, BROKER/DEALERS, AND VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Fund's proxy tabulator, at 1-800-757-5755 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.
-17-
PROXY CARD PROXY CARD
SPECIAL MEETING OF STOCKHOLDERS OF
MIDAS DOLLAR RESERVES, INC.
December 12, 2008
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE AS
SOON AS POSSIBLE.
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 12, 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 12, 2008, at 9 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 below. 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.
YOUR VOTE IS IMPORTANT! PLEASE MARK YOUR VOTE AS SHOWN HERE [x]
FOR WITHHOLD AUTHORITY FOR NOMINEE
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.
FOR AGAINST ABSTAIN
2. To change the Fund's current fundamental investment objective and [ ] [ ] [ ]
reclassify its new investment objective as "non-fundamental," which
means that it can be changed without stockholder approval. The Fund's
new investment objective would be "to preserve and increase the
purchasing power value of its shares over the long term."
3. To revise the Fund's fundamental investment restriction on [ ] [ ] [ ]
investments in commodities to permit the purchase of gold and silver.
4. To eliminate the Fund's fundamental investment restriction on
diversification in order to provide the Fund greater investment
flexibility.
Please sign and date below and return this Proxy Card promptly in the enclosed
postage-paid envelope or otherwise to Midas Dollar Reserves, Inc. c/o Illinois
Stock Transfer Company, 209 West Jackson Boulevard, Suite 903, Chicago, IL 60606
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.
Signature of Stockholder _______________________________ Date:___________
Signature of Stockholder (if jointly held) _____________ Date:___________
Note: Please sign exactly as your name or names appear on the left. 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.