EXCEL MIDAS GOLD SHARES, INC.
July __, 1995
Dear Shareholder:
Enclosed is a notice to shareholders of a special meeting of
shareholders of Excel Midas Gold Shares, Inc. ("Midas Gold") to be held on
August __, 1995. Also enclosed are a proxy card and a proxy statement describing
the matters to be considered at the meeting. After reviewing the attached
materials, please complete, date and sign the proxy card and mail it in the
enclosed envelope today. Your vote is important no matter how many or how few
shares you own. The Board of Directors recommends that you vote in favor of the
proposals.
The Board of Directors is asking shareholders to approve a
reorganization of Midas Gold whereby Midas Gold would be reorganized into a
newly formed Maryland corporation, Midas Fund, Inc. In addition, the Board of
Directors is asking shareholders to approve a new investment management
agreement pursuant to which Midas Management Corporation would become the
investment adviser to Midas Gold. Shareholders are also being asked to approve a
subadvisory agreement between Midas Management Corporation and Lion Resource
Management Limited ("Lion") pursuant to which Lion would serve as a subadviser
to the Fund.
The attached materials provide additional important information about
the proposed reorganization and Midas Fund, Inc. as well as important
information regarding the other proposals. None of the proposals will result in
any increase in fees. In addition, the proposed subadvisory agreement with Lion
would enable Kjeld Thygesen to continue to serve as portfolio manager of Midas
Gold.
Your vote is extremely important and I urge you to sign and return the
proxy card using the enclosed postage paid envelope today.
Sincerely,
Richard B. Muir
Secretary
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EXCEL MIDAS GOLD SHARES, INC.
16955 Via Del Campo, Suite 120
San Diego, California 92127
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held on
August __, 1995
NOTICE IS HEREBY GIVEN that the Special Meeting (the "Meeting") of Excel Midas
Gold Shares, Inc. ("Midas Gold") will be held at _____ a.m. local time on August
__, 1995, at its principal business office located at 16955 Via Del Campo, Suite
120, San Diego, California 92127, for the following purposes:
1. To approve or disapprove an Investment Management Agreement.
2. To approve or disapprove a Subadvisory Agreement.
3. To approve or disapprove an Agreement and Plan of Conversion and
Liquidation providing for Midas Gold becoming a part of Midas Fund, Inc., a
Maryland corporation.
4. To transact such other business as may properly come before the Meeting.
You are entitled to vote at the Meeting and any adjournment thereof if you owned
shares of Midas Gold at the close of business on _______, 1995. If you attend
the Meeting, you may vote your shares in person. If you do not expect to attend
the Meeting, please complete, date, sign and return the enclosed proxy card in
the enclosed postage paid envelope.
By Order of the Board of Directors,
Richard B. Muir
July __, 1995 Secretary
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
In order to avoid the additional expense of further
solicitations, we ask your cooperation in mailing in your
proxy card promptly if you do not expect to attend the
meeting. No postage is necessary.
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EXCEL MIDAS GOLD SHARES, INC.
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PROXY STATEMENT
Special Meeting of Shareholders
to be held on
August __, 1995
This proxy statement is being furnished to the shareholders of Excel
Midas Gold Shares, Inc. ("Midas Gold") in connection with the Board of
Directors' solicitation of proxies to be used at the special meeting of the
shareholders of Midas Gold to be held on August __, 1995, at its principal
office located at 16955 Via Del Campo, Suite 120, San Diego, California 92127,
or any adjournment or adjournments thereof (such meeting and any adjournment
being referred to as the "Meeting").
A majority of the shares outstanding on ________, 1995, the record
date, represented in person or by proxy, must be present for the transaction of
business at the meeting. In the event that a quorum is present at the meeting
but sufficient votes to approve any of the proposals are not received, the
persons named as proxies may propose one or more adjournments of the meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote for any such proposal in
favor of such adjournment and will vote those proxies required to be voted
against any such proposal against such adjournment. A shareholder vote may be
taken on one or more of the proposals in this proxy statement prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate. Each proposal contained in this proxy statement is considered a
"non-discretionary" proposal under the rules of the New York Stock Exchange,
Inc., which means that brokers who hold Midas Gold shares in street name for
their customers are NOT authorized to vote on such proposals without specific
voting instructions from such customers.
Broker non-votes are shares held by a broker or nominee as to which
instructions have not been received from the beneficial owners or persons
entitled to vote and the broker or nominee does not have discretionary voting
power. Abstentions and broker non-votes will be counted as shares present for
determining whether a quorum is present but will not be deemed to be represented
at the meeting for purposes of calculating the vote with respect to any of the
proposals herein or with respect to any vote for or against adjournment.
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The persons named as proxies on the enclosed proxy card will vote in
accordance with your direction as indicated thereon if your proxy card is
received properly executed. If you give no voting instructions, your shares will
be voted in favor of the proposals described in this proxy statement. The proxy
card may be revoked by giving another proxy, by letter or telegram revoking your
proxy, received by Midas Gold prior to the meeting, or by appearing and voting
at the meeting.
Midas Gold's amended annual report for its fiscal year ended December
31, 1994 is enclosed herewith. In addition to solicitations through the mails,
Midas Gold may, if necessary to obtain the requisite representation of
shareholders, solicit proxies by telephone, telegraph and personal interview by
employees or through securities dealers, and it is contemplated that
Shareholders Communication Corporation, 17 State Street, New York, New York
10004, will be retained specifically for this purpose, for a fee of $__________,
provided shareholder approval of the proposals is obtained and subject to
certain assumptions, plus out-of pocket expenses and disbursements. Excel
Advisors, Inc. ("Excel Advisors") and Midas Management Corporation (the
"Investment Manager") shall each pay one-half of the cost of Midas Gold's
shareholder meeting and adjournment, if any, called to obtain the approvals,
including all of the expenses incurred in the printing, postage and mailing of
the proxy solicitation materials to Midas Gold's shareholders and of any proxy
solicitation firm engaged to solicit shareholder votes.
As of the record date, ______________, Midas Gold had ____ shares of
common stock outstanding. As of the record date, the following persons owned
beneficially 5% or more of Midas Gold:
Name/Address Shares Owned % of Fund
------------ ------------ ---------
Required Votes
Approval of the Agreement and Plan of Conversion and Liquidation
("Conversion Plan") requires the affirmative vote of a majority of the
outstanding shares of Midas Gold entitled to vote at the meeting. Approval of
the Investment Management Agreement and the Subadvisory Agreement each requires
the affirmative vote of a "majority of the outstanding voting securities" of
Midas Gold. As defined in the Investment Company Act of 1940 ("1940 Act"),
"majority of the outstanding voting securities" means the lesser of (1) 67% of
Midas Gold's shares present at a meeting of shareholders if the owners of more
than 50% of Midas Gold's shares then outstanding are present in person or by
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proxy, or (2) more than 50% of Midas Gold's outstanding shares. Each full
outstanding share of Midas Gold is entitled to one vote, and each outstanding
fractional share of Midas Gold is entitled to a proportionate fractional share
of one vote.
PROPOSAL 1: APPROVAL OR DISAPPROVAL OF AN INVESTMENT MANAGEMENT AGREEMENT
Excel Advisors, the current investment adviser for Midas Gold, has
entered into an Asset Purchase Agreement with the Investment Manager, providing
for the Investment Manager's purchase from Excel Advisors of the assets that
relate to the management of Midas Gold for $182,500. The transfer of Excel
Advisors' assets will result in the assignment and automatic termination of the
current investment management agreement between Excel Advisors and Midas Gold
(the "Current Investment Management Agreement"). Accordingly, as a result of the
anticipated termination of the Current Investment Management Agreement,
shareholders of Midas Gold are being asked to consider a new investment
management agreement between Midas Gold and the Investment Manager (the "New
Investment Management Agreement") that would become effective upon the
termination of the Current Investment Management Agreement.
As described in Proposal 3, the asset purchase contemplated by the
Asset Purchase Agreement is contingent upon a number of conditions, including
approval of the reorganization described in Proposal 3. The New Investment
Management Agreement will only take effect if Proposal 3 is approved and will
remain in effect only until the closing of the reorganization. Following the
reorganization, the Investment Manager would serve as investment manager
pursuant to an identical investment management agreement with the surviving fund
(see Proposal 3).
The Current Investment Management Agreement
Excel Advisors currently furnishes advice with respect to Midas Gold's
portfolio transactions pursuant to the Current Investment Management Agreement
dated May 10, 1989 (the "Existing Agreement"), which was last submitted to
shareholders for approval at a meeting on May 10, 1989.
Pursuant to the Current Investment Management Agreement, Excel Advisors
has the sole and exclusive responsibility for the management of Midas Gold's
portfolio and the making and execution of all portfolio decisions subject to the
investment objectives and restrictions of Midas Gold and subject to the
supervision of Midas Gold's Board of Directors. Under the Current Investment
Management Agreement, Excel Advisors also furnishes, at its own expense, office
facilities, equipment and personnel for servicing the investments of Midas Gold.
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As compensation for its services, Excel Advisors receives a fee at the
annual rate of 1.00% of the first $200 million of Midas Gold's average daily net
assets; .95% of average daily net assets over $200 million up to $400 million;
.90% of average daily net assets over $400 million up to $600 million; .85% of
average daily net assets over $600 million up to $800 million; .80% of average
daily net assets over $800 million up to $1 billion; and .75% of average daily
net assets over $1 billion. The fee is calculated each business day and is
payable within five days after the end of each fiscal quarter. For the fiscal
year ended December 31, 1994, Midas Gold paid Excel Advisors fees in the amount
of $85,125.
The Current Management Agreement further provides that Excel Advisors
shall reimburse Midas Gold, in an amount not in excess of the fee payable by the
Midas Gold to Excel Advisors if and to the extent that the aggregate operating
expenses of Midas Gold (excluding interest expense, Rule 12b-1 Plan of
Distribution fees, taxes and brokerage fees and commissions) are in excess of
2.0% of the first $10 million of average net assets of Midas Gold, plus 1.5% of
the next $20 million of average net assets, plus 1.25% of average net assets
above $30 million.
Under the Current Investment Management Agreement all costs and
expenses (other than those specifically referred to above as being borne by
Excel Advisors) incurred in the operation of Midas Gold are borne by Midas Gold.
These expenses include, among others, interest, taxes, brokerage fees and
commissions, fees of the directors who are not full-time employees of Excel
Advisors, Warner Beck Incorporated ("Warner Beck") or any of their affiliates,
expenses of directors' and shareholders' meetings, including the cost of
printing and mailing proxies, expenses of insurance premiums for fidelity and
other coverage, expenses of repurchase and redemption of shares, expenses of
issue and sale of shares (to the extent not borne by Warner Beck under its
agreement with Midas Gold), expenses of printing and mailing stock certificates
representing shares of Midas Gold, association membership dues, charges of
custodians, transfer agents, dividend disbursing agents and accounting services
agents, and bookkeeping, auditing and legal expenses. Midas Gold will also pay
the fees and bear the expense of registering and maintaining the registration of
Midas Gold and its shares with the Securities and Exchange Commission and
registering or qualifying its shares under state or other securities laws and
the expense of preparing and mailing prospectuses and reports to existing Fund
shareholders.
Excel Advisors, Midas Gold's investment adviser, accounting services
agent, transfer agent, dividend disbursing agent and administrative services
agent, and Warner Beck, Midas Gold's Distributor, both of whose principal
business address is 16955 Via Del Campo, Suite 120, San Diego, California 92127,
are wholly owned by Excel Interfinancial Corporation ("EIC"). Gary Sabin may be
deemed a controlling person of EIC on the basis of his share ownership of EIC.
The principal executive officers and directors of Excel Advisors, their
respective offices and principal occupations are set forth below. The address of
each is 16955 Via Del Campo, San Diego, California 92127.
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Gary B. Sabin -- Chairman of the Board of Directors and Chief Executive
Officer. Chief Executive Officer of Excel Realty Trust, Inc.
Richard B. Muir -- President and Director. Executive Vice President and
Secretary of Excel Realty Trust, Inc.
Ronald H. Sabin -- Secretary and Director. Senior Vice President of Excel
Realty Trust, Inc.
Mark T. Burton -- Vice President and Director. Vice President - Acquisitions
of Excel Realty Trust, Inc.
The New Investment Management Agreement
Under the New Investment Management Agreement that is proposed to
replace the Current Investment Management Agreement, the Investment Manager
would act as general manager of Midas Gold, being responsible for the various
functions assumed by it, including regularly furnishing advice with respect to
portfolio transactions. The Investment Manager would manage the investment and
reinvestment of Midas Gold's assets, subject to the control and final direction
of the Board of Directors. As described below in Proposal 2, if shareholders
approve the New Investment Management Agreement, the Investment Manager intends
to enter into a sub- advisory agreement with Lion Resource Management Limited
for certain subadvisory services with respect to Midas Gold. The form of the New
Investment Management Agreement is attached as Exhibit A.
For its services, Midas Gold would pay the Investment Manager a fee in
accordance with a fee schedule identical to that set forth above with respect to
the Current Investment Management Agreement. The New Investment Management
Agreement further provides that the Investment Manager shall waive all or part
of its fee or reimburse Midas Gold monthly if and to the extent the aggregate
operating expenses of Midas Gold exceed the most restrictive limit imposed by
any state in which shares of Midas Gold are qualified for sale or such lesser
amount as may be agreed to by Midas Gold's Board of Directors and the Investment
Manager. Currently, the most restrictive state imposed limit applicable to Midas
Gold is 2.5% of the first $30 million of Midas Gold's average daily net assets,
2.0% of the next $70 million of its average daily net assets and 1.5% of its
average daily net assets in excess of $100 million. Certain expenses, such as
brokerage commissions, taxes, interest, distribution fees, certain expenses
attributable to investing outside the United States and extraordinary items, are
excluded from this limitation. In addition, to the extent that it may be lower,
the Investment Manager also has agreed to be subject to the expense limitation
contained in the Current Investment Management Agreement for a period of two
years from the effective date of the New Investment Management Agreement.
Under the New Investment Management Agreement, Midas Gold would assume
and pay all the expenses required for the conduct of its business including, but
not limited to, (a) salaries of administrative and clerical personnel; (b)
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brokerage commissions; (c) taxes and governmental fees; (d) costs of insurance
and fidelity bonds; (e) fees of the transfer agent, custodian, legal counsel and
auditors; (f) association fees; (g) costs of preparing, printing and mailing
proxy materials, reports and notices to shareholders; (h) costs of preparing,
printing and mailing the prospectus and statement of additional information and
supplements thereto; (i) payment of dividends and other distributions; (j) costs
of stock certificates; (k) costs of Board and shareholders meetings; (l) fees of
the independent directors; (m) necessary office space rental; (n) all fees and
expenses (including expenses of counsel) relating to the registration and
qualification of shares of Midas Gold under applicable federal and state
securities laws and maintaining such registrations and qualifications; and (o)
such non-recurring expenses as may arise, including, without limitation,
actions, suits or proceedings affecting Midas Gold and the legal obligation
which Midas Gold may have to indemnify its officers and directors with respect
thereto.
The New Investment Management Agreement further provides that the
Investment Manager shall not be liable to Midas Gold or any shareholder of Midas
Gold for any error of judgment or mistake of law or for any loss suffered by
Midas Gold or Midas Gold's shareholders in connection with the matters to which
the New Investment Management Agreement relates. Nothing contained in the New
Investment Management Agreement, however, shall be construed to protect the
Investment Manager against any liability to Midas Gold or Midas Gold's
shareholders by reason of the Investment Manager's willful misfeasance, bad
faith, or gross negligence or by reason of its reckless disregard of its
obligations and duties under the New Investment Management Agreement.
If approved by shareholders of Midas Gold, the New Investment
Management Agreement shall continue in effect, unless sooner terminated as
described below, for two years from the date of shareholder approval.
Thereafter, if not terminated, the New Investment Management Agreement will
continue automatically for successive annual periods, provided such continuance
is specifically approved at least annually by (a) the Board of Directors of
Midas Gold or by a vote of a majority of the outstanding voting securities of
Midas Gold as defined in the 1940 Act and (b) a vote of a majority of the
Directors of Midas Gold who are not parties to the New Investment Management
Agreement, or "interested persons" of any such party as defined in the 1940 Act.
The New Investment Management Agreement may be terminated without penalty at any
time either by a vote of the Board of Directors of Midas Gold or by a vote of a
majority of the outstanding voting securities of Midas Gold, as defined in the
1940 Act, on 60 days' written notice to the Investment Manager, or by the
Investment Manager on 60 days' written notice to Midas Gold, and shall
immediately terminate in the event of its assignment.
The Investment Manager, whose principal business address is 11 Hanover
Square, New York, New York 10005, is a wholly-owned subsidiary of Bull & Bear
Group, Inc. Bull & Bear Group is a publicly-owned company whose securities are
listed on the Nasdaq and traded in the over-the-counter market. Bassett S.
Winmill may be deemed a controlling person of Bull & Bear Group on the basis of
his ownership of 100% of Bull & Bear Group's voting stock and, therefore, of the
Investment Manager. The principal executive officer of the Investment Manager is
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Thomas B. Winmill. The Directors of the Investment Manager are Robert D.
Anderson, Mark C. Winmill and Thomas B. Winmill. Their respective principal
occupations are as officers of Bull & Bear Group and its subsidiaries. The
address of each Director is 11 Hanover Square, New York, New York 10005.
Evaluation by the Board
In considering adoption of the New Investment Management Agreement, the
Board of Directors of Midas Gold considered, among other things, the following
factors: (1) the nature, quality and scope of services to be provided by the
Investment Manager to Midas Gold; (2) the Investment Manager's capacity to
provide the advisory services to be performed including the financial condition
of the Investment Manager); (3) the fairness of all the contract terms; (4) the
extent to which economies of scale, if available, have been taken into account
in setting the fee schedule; (5) the existence of any "fall-out" benefits to the
Investment Manager; and (6) the comparison of the advisory fees to those of
similar funds. The Board also considered that, following the transfer of the
Excel Advisors assets, Excel Advisors would be unable to continue to provide
management services to Midas Gold and that the only proposal presented to the
Board was the assumption of management of Midas Gold by the Investment Manager.
The Board obtained assurances from the representatives of Excel Advisors that
the Investment Manager would provide satisfactory advisory and other services to
Midas Gold of a scope and quality at least equivalent, in the Board's judgment,
to the scope and quality of services previously provided to Midas Gold.
In considering the New Investment Management Agreement, the Board also
was informed that the Investment Manager would direct portfolio transactions to
broker/dealers for execution on terms and at rates which it believes, in good
faith, to be reasonable in view of the overall nature and quality of services
provided by a particular broker/dealer, including brokerage and research
services, sales of Fund shares, and allocation of commissions to Midas Gold's
Custodian. With respect to brokerage and research services, consideration could
be given in the selection of broker/dealers to brokerage or research provided
and payment could be made for a fee higher than that charged by another
broker/dealer which does not furnish brokerage or research services or which
furnishes brokerage or research services deemed to be of lesser value, so long
as the criteria of Section 28(e) of the Securities Exchange Act of 1934, as
amended, or other applicable law are met. Accordingly, although the Investment
Manager could direct portfolio transactions without necessarily obtaining the
lowest price at which such broker/dealer, or another, may be willing to do
business, the Investment Manager would seek the best value to the Fund on each
trade that circumstances in the market place permit, including the value
inherent in on-going relationships with quality brokers.
In reviewing the New Investment Management Agreement described above,
the Board considered that the New Investment Management Agreement with the
Investment Manager would have the same fees and substantively similar material
terms and conditions as the Current Investment Management Agreement. The Board
was informed that the differences between the New Investment Management
Agreement with the Investment Manager and the Current Investment Management
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Agreement arise from conforming the language of the New Investment Management to
that of the standard forms of contracts used with respect to funds advised by
subsidiaries of Group. On the basis of the foregoing, the Board approved, and
recommended that shareholders approve, the New Investment Management Agreement.
In connection with the New Investment Management Agreement, the Board
also approved an Agreement and Plan of Succession between the Investment Manager
and Midas Gold pursuant to which Midas Gold agrees to enter into: (i) an
Investment Management Agreement with the Investment Manager, (ii) a Plan of
Distribution, (iii) a Distribution Agreement and a Shareholder Administrative
Services Agreement with Investor Service Center, Inc., (iv) a Transfer Agency
Agreement and an Agency Agreement (for retirement account record keeping) with
DST Systems, Inc. or its successors or other agents agreed to by the parties,
and (v) a Custodian Agreement and a Service and Agency Agreement with Investors
Bank & Trust Company ("IBT").
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 1.
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PROPOSAL 2: APPROVAL OR DISAPPROVAL OF A SUBADVISORY AGREEMENT
Provided that shareholders approve the New Investment Management
Agreement described in Proposal 1 and the reorganization described in Proposal
3, the Investment Manager proposes to enter into a Subadvisory Agreement with
Lion Resource Management Limited (the "Subadviser"), under which the Subadviser
would advise and consult with the Investment Manager on investment activities of
Midas Gold. In addition to conditions noted above, the Subadvisory Agreement is
subject to, and contingent upon, the approval of the Subadvisory Agreement by
shareholders of Midas Gold. The Subadvisory Agreement will remain in effect
until the closing of the reorganization. Following the reorganization,
Subadviser would serve pursuant to an identical subadvisory agreement entered
into with the Investment Manager with respect to the surviving fund (see
Proposal 3). The form of the Subadvisory Agreement is attached as Exhibit B.
The Subadviser has not served directly as an investment adviser to a
U.S. mutual fund, although the Managing Director of the Subadviser, Kjeld
Thygesen, has been an employee of Excel Advisors since January 1992 and the
portfolio manager of Midas Gold since January 1992. Following approval, he will
no longer be associated with Excel Advisors. Approval of the Subadvisory
Agreement would enable Mr. Thygesen to continue to serve as the portfolio
manager of Midas Gold in the event the New Investment Management Agreement is
approved.
Under the terms of the Subadvisory Agreement, the Subadviser will
advise and consult with the Investment Manager regarding the selection, clearing
and safekeeping of Midas Gold's portfolio investments and assist in pricing and
generally monitoring such investments. The Subadviser also will provide the
Investment Manager with advice as to allocating Midas Gold's portfolio assets
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among various countries, including the United States, and among equities,
bullion, and other types of investments, including recommendations of specific
investments.
In consideration of the Subadviser's services, the Investment Manager,
and not Midas Gold, will pay to the Subadviser a percentage of the Investment
Manager's Net Fees. "Net Fees" are defined as the actual amounts received by the
Investment Manager as compensation less reimbursements, if any, pursuant to the
guaranty of the New Investment Management Agreement and waivers of such
compensation by the Investment Manager. The amount of the percentage is
determined by the grid and accompanying definitions set forth as follows:
===========================================================
RELATIVE PERFORMANCE a
- - - -------------------------------------------------------------------------------
TOTAL NET ASSETS b More than 50 Within 50 basis More than 50
basis points better points of BTR basis points below
than BTR BTR
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<=$15,000,000 30% 20% 10%
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> $15,000,000 and 40% 30% 20%
<=$50,000,000
- - - -------------------------------------------------------------------------------
> $50,000,000 50% 40% 30%
===============================================================================
a. "Relative Performance" is determined from comparing the total return
performance of Midas Gold and the total return performance of the
"Benchmark Performance" of the objective category of "precious metals"
funds ("BTR") as determined by Morningstar, Inc., or, if unavailable,
other similar service acceptable to the parties and Midas Gold. The
Relative Performance is determined as of the last calendar day of each
month ("Performance Determination Date") and measures the Relative
Performance for the most recent 12 month period ("Measurement
Period"), except that for the first 12 months of the Subadvisory
Agreement, Relative Performance is based upon annualized returns, the
first three Performance Determination Dates are the next three
calendar quarter ends after the effective date of the Subadvisory
Agreement, and the Measurement Periods are the most recent three
months and the fourth Performance Determination Date is the next
calendar quarter end and the Measurement Period is the most recent
twelve months.
b. "Total Net Assets" are the total net assets of Midas Gold as of the
Performance Determination Date.
The foregoing fee structure will result in the amount of the investment
management fee retained by the Investment Manager varying depending on the
performance, as well as the size, of Midas Gold. At each asset level on the fee
schedule, the Investment Manager will retain a greater portion of its fee when
the Fund underperforms the BTR by more than 50 basis points than when Midas Gold
outperforms the BTR by more than 50 basis points.
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The Subadvisory Agreement provides that it is not assignable and
automatically terminates in the event of its assignment, or in the event of the
termination of the New Investment Management Agreement. The Subadvisory
Agreement may also be terminated without penalty on 60 days' written notice at
the option of either party thereto or by Midas Gold, by the Board of Directors
of Midas Gold or by a vote of Midas Gold shareholders. The Subadvisory Agreement
further provides that the Subadviser shall not be liable to Midas Gold for any
error of judgment or mistake of law or for any loss suffered by Midas Gold in
connection with any investment policy or the purchase, sale or retention of any
security on the recommendation of the Subadviser. Nothing contained in the
Subadvisory Agreement, however, shall be construed to protect the Subadviser
against any liability to Midas Gold by reason of the Subadviser's willful
misfeasance, bad faith or gross negligence or by reason of its reckless
disregard of its obligations and duties under the Subadvisory Agreement.
If the New Investment Management Agreement and Subadvisory Agreement
are each approved by Midas Gold's shareholders, the Subadvisory Agreement shall
continue from year to year if approved annually by (a) the Board of Directors of
Midas Gold or by vote of a majority of the outstanding voting securities of
Midas Gold as defined in the 1940 Act and (b) by a vote of a majority of the
Directors of Midas Gold who are not parties to the Subadvisory Agreement or
"interested persons" of any such party as defined in the 1940 Act.
In considering the proposed Subadvisory Agreement for approval, the
Board of Directors reviewed, among other things, the nature, quality and scope
of the services currently provided to Midas Gold by Excel Advisors, the nature
and scope of the services to be provided to Midas Gold by the Investment Manager
and the Subadviser, and the ability of the Investment Manager and the Subadviser
to provide such services. In particular, the Board considered the positive
performance experienced by Midas Gold during the period that Kjeld Thygesen has
served as portfolio manager. The Board of Directors also reviewed the fees to be
paid to the Investment Manager by Midas Gold and to the Subadviser by the
Investment Manager in light of advisory fees paid for investment advisory
services by other funds with comparable investment objectives. The Board of
Directors determined that the rate of the subadvisory fee to be paid by the
Investment Manager pursuant to the Subadvisory Agreement is fair and reasonable
in light of the nature and quality of the services to be provided.
Additional Information About the Subadviser
The Subadviser, whose principal business address is 7-8 Kendrick Mews,
London, U.K. SW7 3HG, is controlled by Kjeld Thygesen and Lion Mining Finance
Limited ("Lion Mining") who own 40% and 60%, respectively, of the outstanding
voting securities of the Subadviser. Lion Mining is owned by Andrew F. Malim
(75%) and Jorge A. Nicanovich (25%). The address of Messrs. Thygesen and Malim
and Lion Mining is 7-8 Kendrick Mews, London, U.K. SW7 3HG. The address of Mr.
Nicanovich is _____________________.
The principal executive officer and directors of the Subadviser, their
respective offices and principal occupations are set forth below.
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Kjeld Thygesen -- Managing Director. Mr. Thygesen's principal occupation is as
an investment adviser.
Andrew F. Malim -- Director. Mr. Malim's principal occupation is as a corporate
finance adviser.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
Proposal 3: APPROVAL OR DISAPPROVAL OF THE PROPOSED REORGANIZATION
As discussed above under Proposal 1, the Investment Manager has entered
into an Asset Purchase Agreement with Excel Advisors providing for the
Investment Manager's purchase from Excel Advisors of the assets that relate to
the management of Midas Gold. The Investment Manager has also entered into an
Agreement and Plan of Succession with Midas Gold. The asset purchase
contemplated by the Asset Purchase Agreement is contingent upon a number of
conditions including shareholders of Midas Gold either (1) approving the New
Investment Management Agreement (described in Proposal 1), approving a new plan
of distribution (in the form described below), approving the Subadvisory
Agreement (described in Proposal 2), approving the change in Midas Gold's name
to Midas Fund, Inc., and electing new directors of Midas Gold (as set forth
below); or (2) approving a reorganization agreement whereby all, or
substantially all, of Midas Gold's assets would be transferred to another
open-end investment company ("New Fund") and authorizing the initial shareholder
of New Fund to approve an investment management agreement, plan of distribution
and subadvisory agreement with respect to New Fund and to elect the directors of
New Fund.
The Board of Directors of Midas Gold has approved, subject to
shareholder approval, the Agreement and Plan of Conversion and Liquidation (the
"Plan") in the form attached hereto as Exhibit C. The reorganization
contemplated by the Plan (the "Reorganization") is structured as a change of
domicile from a Minnesota corporation to a Maryland corporation which would
result, in substance, in Midas Gold becoming part of a recently formed Maryland
corporation named Midas Fund, Inc. ("Midas Fund"). The investment objectives,
policies and restrictions of Midas Fund would be identical to those of the Midas
Gold. Midas Fund would enter into an investment management agreement with the
Investment Manager, identical to the New Investment Management Agreement
described above under Proposal 1. The Investment Manager would in turn enter
into a subadvisory agreement with the Subadviser identical to the Subadvisory
Agreement described above under Proposal 2. Midas Fund would also enter into a
Distribution Agreement and Shareholder Administrative Services Agreement with
Investor Service Center, Inc., an affiliate of the Investment Manager, a
Transfer Agency Agreement and Agency Agreement with DST Systems, Inc., and a
Custodian Agreement and Service and Agency Agreement with Investors Bank & Trust
Company. Midas Fund would also adopt a plan of distribution pursuant to Rule
12b-1 under the 1940 Act ("Rule 12b-1 Plan").
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Reasons for the Reorganization
Reorganizing Midas Gold as a Maryland corporation is being proposed
because Maryland corporate law has been tailored to address issues unique to
mutual funds. As a result, Maryland law offers mutual funds certain advantages
not found in the corporate statutes of other states.
The Reorganization will also have certain other effects on Midas Gold,
its shareholders and management, which are described below under "Certain
Comparative Information About Midas Gold and Midas Fund."
The Board of Directors of Midas Gold recommends that shareholders vote
for the approval of the Plan described below. Such approval encompasses approval
of the reorganization of Midas Gold as a Maryland corporation; temporary
amendment of certain investment limitations of Midas Gold to permit the
Reorganization; and authorization of Midas Gold, as sole shareholder of Midas
Fund, to elect the directors of Midas Fund, to ratify the selection of Tait,
Weller & Baker as Midas Fund's independent certified public accountants for the
fiscal year ending December 31, 1995, to approve investment management and
subadvisory agreements between Midas Fund and the Investment Manager and between
the Investment Manager and the Subadviser, respectively, and to approve the Rule
12b-1 Plan.
Procedures for the Reorganization
In order to accomplish the Reorganization, Midas Fund has been formed
as a Maryland corporation pursuant to Articles of Incorporation dated June 1,
1995. The Reorganization will be accomplished by (i) Midas Gold, transferring
all of its portfolio securities and other assets to Midas Fund, (ii) Midas Fund,
in exchange for Midas Gold's assets, assuming all the liabilities of Midas Gold
and issuing to Midas Gold (a) a number of full and fractional shares of common
stock of Midas Fund ("Shares") equal to the number of shares of Midas Gold then
outstanding which are held by Midas Gold shareholders, and (iii) Midas Gold
distributing to each Midas Gold shareholder a number of full and fractional
Shares equal to the number of full and fractional Midas Gold shares held by that
shareholder. As soon as practicable after the foregoing transactions, Midas Gold
will take all steps necessary to liquidate and terminate its legal existence.
After approval of the Reorganization, but prior to the issuance of the
Midas Fund Shares referred to in (ii) above, one share of Midas Fund will be
issued to Midas Gold. Pursuant to the Plan and as the sole shareholder of shares
of Midas Fund, Midas Gold will approve the investment management agreement of
Midas Fund with the Investment Manager and the subadvisory agreement between the
Investment Manager and the Subadviser, elect directors of Midas Fund, ratify the
selection of Tait, Weller & Baker as independent certified public accountants of
Midas Fund, and approve the Rule 12b-1 Plan.
On consummation of the Reorganization, an open account will be
established on the records of Midas Fund in the name of each Midas Gold
shareholder representing a number of Shares equal to the number of shares of
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Midas Gold owned of record by the shareholder at the Closing Date. Certificates,
if any, for shares of Midas Gold issued prior to the Reorganization would
represent the same number of outstanding shares of Midas Fund following the
Reorganization. Shareholders with certificates should continue to safely discard
them, as they will be cancelled on the Closing Date in exchange for book shares
on the records of the transfer agent.
If the Plan is approved by shareholders, it is expected that the
Reorganization will be made effective at [INSERT TIME], on or about [INSERT
DATE], or at such other time or date as the parties may mutually agree (the
"Closing Date").
The obligations of Midas Gold and Midas Fund under the Plan are subject
to various conditions as stated herein. In order to provide against unforeseen
events, the Plan may be terminated or amended at any time prior to the closing
of the Reorganization by action of the Board of Directors of Midas Gold or Midas
Fund, notwithstanding the approval of the Plan by the shareholders of Midas
Gold. However, no amendments may be made that materially adversely affect the
interests of shareholders of Midas Gold. Midas Gold and Midas Fund may at any
time waive compliance with any of the covenants and conditions contained in the
Plan, provided that such waiver does not materially adversely affect the
interests of the shareholders of Midas Gold.
Temporary Amendment to Investment Restrictions
One or more of the investment restrictions of Midas Gold, which require
shareholder approval before they can be changed, might be construed as
restricting Midas Gold's ability to carry out the Reorganization. Such
restrictions may prohibit the purchase by Midas Gold of the share of Midas Fund
as contemplated by the Plan. Accordingly, a vote for the Plan will be deemed
also to be a vote to amend the investment restrictions to the extent necessary
to carry out the Reorganization in the manner described above. Such amendment
will only be for purposes of the Reorganization.
Federal Income Tax Consequences
It is anticipated that the Reorganization contemplated by the Plan will
be tax-free for federal tax purposes. It is a condition of the Plan that Midas
Gold and Midas Fund each receive an opinion of Kirkpatrick & Lockhart LLP to the
effect that for federal income tax purposes: (i) no gain or loss will be
recognized to Midas Fund on its receipt of such assets in exchange for the Midas
Fund Shares and its assumption of such liabilities; (ii) the basis of such
assets in the hands of Midas Fund will be the same as the basis of such assets
in the hands of Midas Gold immediately before the Reorganization; (iii) Midas
Fund's holding period for such assets will include the period during which such
assets were held by Midas Gold; (iv) no gain or loss will be recognized to the
shareholders of Midas Gold on the constructive transfer of their Midas Gold
Shares solely in exchange for the Midas Fund Shares; (v) the basis of the Midas
Fund Shares received by a shareholder of Midas Gold will be the same as the
adjusted basis of that shareholder's Midas Gold Shares constructively
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surrendered in exchange therefor; and (vi) the holding period of the Midas Fund
Shares received by a shareholder of Midas Gold will include that shareholder's
holding period the Midas Gold Shares constructively surrendered in exchange
therefor, provided such Midas Gold Shares were held as capital assets on the
date of the Reorganization; and (vii) as to such other matters as they may
reasonably request.
Certain Comparative Information About Midas Gold and Midas Fund
Structure of Midas Fund. Midas Fund has been established pursuant to
Articles of Incorporation under the laws of the State of Maryland. The
investment objectives, policies and limitations of Midas Fund will be the same
as those of Midas Gold. Midas Fund's fiscal year will be the same as that of
Midas Gold. Prior to the Reorganization, Midas Fund will have nominal assets and
no liabilities. Initially, Midas Gold will be the sole shareholder of Midas
Fund.
Operations will be governed by Midas Fund's Articles of Incorporation
and Maryland law rather than by Midas Gold's Articles of Incorporation and
Minnesota law. Certain differences between the two forms of organization are
summarized below. As is the case with Midas Gold, the operations of Midas Fund
will be subject to the provisions of the 1940 Act and the rules and regulations
of the SEC thereunder.
Directors of Midas Fund. Subject to the provisions of the Articles of
Incorporation, the business of Midas Fund is managed by its Directors who serve
indefinite terms and who have all powers necessary or convenient to carry out
that responsibility. Information concerning the nominees for election as
Directors of Midas Fund is set forth above under "Midas Fund's Directors and
Officers."
Shares of Midas Fund and Midas Gold. Midas Fund is authorized to issue
up to 1,000,000,000 shares of common stock ($.01 par value). Shares of Midas
Fund will be freely assignable by way of pledge (as, for example, for collateral
purposes), gift, settlement of an estate and also by an investor to another
investor. Each share will have equal dividend, voting, liquidation and
redemption rights with every other share. Midas Fund shares will have no
preemptive, conversion or cumulative voting rights and will not be subject to
further call or assessment. Share certificates will not be issued unless
requested in writing by a shareholder. The Directors of Midas Fund have the
power under the Articles of Incorporation to establish new series or classes of
shares. The Directors of Midas Fund have no present intention of establishing
any such new series or classes.
Midas Gold is authorized to issue up to 100,000,000 shares of common
stock ($.01 par value). Shares of Midas Gold may be freely transferred. Each
share has equal voting rights. Midas Gold shares have no preemptive or
cumulative voting right and are not subject to further call or assessment. Midas
Gold may have certificated or uncertificated shares, or both, as designated by
resolution of the Board of Directors.
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<PAGE>
Midas Gold's By-Laws do not require annual meetings of shareholders.
Under Minnesota law and Midas Gold's By-Laws, regular meetings of shareholders
are not required to be held. However, if a regular meeting has not been held
during the immediately preceding 15 months, holders of three percent or more of
the voting power of all shares entitled to vote may demand a regular meeting of
shareholders in writing.
Midas Fund's By-Laws provide that there will be no annual meeting of
shareholders in any year except as required by law. In practical effect, this
means that Midas Fund will not hold an annual meeting of shareholders in years
in which the only matters which would be submitted to shareholders for their
approval are the election of Directors and ratification of the Directors'
selection of accountants, although holders of 10% of the Fund's shares may call
a meeting at any time. There will normally be no meetings of shareholders for
the purpose of electing Directors unless fewer than a majority of the Directors
holding office have been elected by shareholders. Shareholder meetings will be
held in years in which shareholder vote on Midas Fund's investment management
agreement, plan of distribution, or fundamental investment objectives, policies
or restrictions is required by the 1940 Act. Midas Fund's By-Laws permit removal
of a director by the affirmative vote of a majority of all votes represented at
any stockholders' meeting duly called, provided a quorum is present.
Under Maryland law, the Articles of Incorporation generally may only be
amended upon adoption of a resolution to that effect by the Directors and
approval of such resolution by the holders of a majority of Midas Fund's
outstanding shares. Maryland law, however, permits the Directors to amend the
Articles of Incorporation without shareholder approval to change Midas Fund's
name or the name of any series of class of Midas Fund.
Midas Gold's By-Laws and Minnesota law provide that a special meeting
of shareholders may be called by one or more shareholders holding 10% or more of
the shares entitled to vote on the matters to be presented to the meeting. Midas
Gold's By-Laws permit removal of a director by a vote of the shareholders
holding a majority of the shares entitled to vote at an election of directors.
Under Midas Gold's Articles of Incorporation and Minnesota law, the
Articles of Incorporation generally may only be amended upon approval of a
resolution by (1) the affirmative vote of a majority of the directors present,
or proposed by a shareholder or shareholders holding 3% or more of the voting
power of the shares entitled to vote, and then (2) approved by the affirmative
vote of the holders of the greater of (a) a majority of the voting power of the
minimum number of the shares entitled to vote, or (b) a majority of the voting
power of the minimum number of the shares entitled to vote that would constitute
a quorum for the transaction of business at the meeting.
Shareholders' Rights of Inspection. Maryland law provides that any
shareholder may inspect and copy during normal business hours Midas Fund's
By-Laws, minutes of the proceedings of the shareholders, annual statements of
affair and voting trust agreements on file at Midas Fund's principal office.
Maryland law further provides that persons who have been shareholders of record
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for six months or more and who own at least 5% of Midas Fund's shares may
inspect Midas Fund's books of account and stock ledger.
Minnesota law provides that any shareholder has, upon proper written
demand stating the purpose, a right at any reasonable time to examine and copy
Midas Gold's share register and other corporate documents reasonably related to
the stated purpose and described with reasonable particularity in the written
demand upon demonstrating the stated purpose to be a proper purpose.
Shareholder Liability. With respect to Midas Fund, Maryland law
provides that a shareholder or subscriber for stock of a corporation is not
obligated to the corporation or its creditors with respect to the stock, except
to the extent that the subscription price or other agreed consideration for the
stock has not been paid, or liability is imposed under any other portion of
Maryland law.
With respect to Midas Gold, Minnesota law provides that a subscriber
for shares or a shareholder is under no obligation to the corporation or its
creditors with respect to the shares subscribed for or owned, except to pay to
the corporation the full consideration for which the shares are issued or to be
issued. Minnesota law also provides that a shareholder who receives a
distribution made in violation of Minnesota law is liable to the extent that the
distribution received by the shareholder exceeded the amount that properly could
have been paid under Minnesota law.
Liability of Directors. Midas Fund's Articles of Incorporation provide
that to the maximum extent permitted by law, no director shall be liable to
Midas Fund or its stockholders for monetary damages. Midas Fund's Articles of
Incorporation further provide for the indemnification of Midas Fund's Directors
to the full extent permitted by law and Midas Fund's By-Laws. Midas Fund's
By-Laws generally provide that in accordance with applicable law, Midas Fund
shall indemnify each person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative ("Proceeding"), by
reason of the fact that he or she is or was a director of Midas Fund, against
all reasonable expenses (including attorneys' fees) actually incurred, and
judgments, fines, penalties and amounts paid in settlement in connection with
such Proceeding to the maximum extent permitted by law, now existing or
hereafter adopted. Maryland law permits a corporation to indemnify any director
made a party to any proceeding by reason of service in that capacity unless it
is established that (1) the act or omission of the director was material to the
matter giving rise to the proceeding and (a) was committed in bad faith or (b)
was the result of active and deliberate dishonesty, (2) the director actually
received an improper personal benefit, or (3) in the case of any criminal
proceeding, the director had reasonable cause to believe that the act or
omission was unlawful. Maryland law further provides that under certain
conditions, reasonable expenses may be paid or reimbursed by Midas Fund in
advance of the final disposition of the proceeding.
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Midas Gold's Articles of Incorporation limit the liability of its
directors to the full extent permitted by the Minnesota Business Corporation
Act. Specifically, directors of Midas Gold will not be personally liable for
monetary damages for breach of fiduciary duty as directors except liability for
(i) any breach of the duty of loyalty to Midas Gold or its shareholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) dividends or other distributions of corporate
assets that are in contravention of certain statutory or contractual
restrictions, (iv) violations of certain Minnesota securities laws, or (v) any
transaction from which the director derives an improper personal benefit.
The Minnesota Business Corporation Act requires that Midas Gold
indemnify any director or officer made or threatened to be made a party to a
proceeding, by reason of the former or present official capacity of the person,
against judgments, penalties, fines, settlements and reasonable expenses
incurred in connection with the proceeding if certain statutory standards are
met. "Proceeding" means a threatened, pending or completed civil, criminal,
administrative, arbitration or investigative proceeding, including a derivative
action in the name of Midas Gold. Reference is made to the detailed terms of the
Minnesota indemnification statute (Minn. State, ss. 302A.521) for a complete
statement of such indemnification rights.
The foregoing is only a summary of certain differences between the
Articles of Incorporation and By-Laws of Midas Gold and Minnesota law and the
Articles of Incorporation and By-Laws of Midas Fund and Maryland law. It is not
a complete list of differences. Shareholders should refer to the provisions of
these documents and state law directly for a more thorough comparison. Copies of
the Articles of Incorporation and By-Laws of Midas Gold, and of the Articles of
Incorporation and the By-Laws of Midas Fund are available to shareholders
without charge upon written request to the Secretary of Midas Gold at 16955 Via
Del Campo, Suite 120, San Diego, California 92127.
Investment Management Agreement and Sub-advisory Agreement for Midas Fund
By voting in favor of the Plan, shareholders of Midas Gold will be
authorizing Midas Gold, as sole shareholder of the shares of Midas Fund prior to
its Reorganization, to vote such shares of Midas Fund in favor of approval of
Midas Fund's investment management agreement with the Investment Manager. The
terms of the investment management agreement will be identical to the New
Investment Management Agreement described in Proposal 1. By voting in favor of
the Plan, shareholders of Midas Gold will be authorizing Midas Gold, as sole
shareholder of Midas Fund prior to its Reorganization, to vote its shares of
Midas Fund in favor of approval of Midas Fund's subadvisory agreement with the
Subadviser. The terms of the subadvisory agreement will be identical to the
Subadvisory Agreement described in Proposal 2.
The following table reflects the anticipated effect of the
Reorganization on the operating expenses of Midas Gold, based on its expenses
for the fiscal year ended December 31, 1994.
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Annual Fund Operating Expenses
(as a percentage of average net assets)
Midas Gold
(fiscal year Midas Fund
Expenses ended 12/31/94) (estimated)
Management fee....................... 1.00% 1.00%
12b-1 fees........................... 0.25% 0.25%
Other expenses....................... 0.90% 0.90%
----- -----
Total operating expenses.... 2.15% 2.15%
Example
The following illustrates the expenses on a $1,000 investment under the existing
and estimated expenses stated above, assuming (1) a five percent annual return
and (2) redemption at the end of each time period:
1 year 3 years 5 years 10 years
Existing expenses $ 66 $113 $164 $315
Estimated expenses $ 66 $113 $164 $315
The Example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund Operating
Expenses remain the same in the years shown. The above tables and the assumption
in the Example of a 5% annual return are required by regulations of the SEC; the
assumed 5% annual return is not a prediction of, and does not represent, the
projected or actual performance of either Fund's shares.
The example should not be considered a representation of past or future
expenses, and a Fund's actual expenses may be more less than those shown. The
actual expenses attributable to a Fund's shares will depend upon, among other
things, the level of average net assets, and the extent to which a Fund incurs
variable expenses, such as transfer agency costs.
Midas Fund's Directors and Officers
Currently, John Mulder serves as the sole Director of Midas Gold. The
names of the Directors of Midas Fund, their respective offices, and principal
occupations during the last five years are set forth below. By voting in favor
of the Plan, shareholders will be authorizing Midas Gold, as sole shareholder of
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Midas Fund prior to its Reorganization to vote in favor of the following persons
as Directors of Midas Fund.
RUSSELL E. BURKE III -- 36 East 72nd Street, New York, NY 10021. He is President
of Russell E. Burke III, Inc. Fine Art, New York, New York. From 1988 to 1991,
he was President of Altman Burke Fine Arts, Inc. From 1983 to 1988, he was
Senior Vice President of Kennedy Galleries. He was born ____________.
BRUCE B. HUBER, CLU -- 298 Broad Street, Red Bank, NJ 07701. He is President of
Huber Hogan Knotts Consulting, Inc. -- financial consultants and insurance
planners. From 1988 to 1990, he was Chairman of Bruce Huber Associates. From
1987 to 1988, he was Chairman of Economic Benefits Corporation, and prior
thereto President of Bruce Huber Associates, Inc., a financial and insurance
consulting firm specializing in estate, corporate, and executive benefit
planning. He was born February 7, 1930.
JAMES E. HUNT -- One Dag Hammarskjold Plaza, New York, NY 10017. He is a
principal of Kenny, Kindler, Hunt & Howe, Inc., executive recruiting
consultants. From 1976 until 1983 he was Vice President of Russell Reynolds
Associates, Inc., also executive recruiting consultants.
He was born December 14, 1930.
FREDERICK A PARKER, JR. -- 219 East 69th Street, New York, NY 10021. He is
President and Chief Executive Officer of American Pure Water Corporation, a
manufacturer of water purifying equipment. He was born November 14, 1926.
JOHN B. RUSSELL -- 334 Carolina Meadows Villa, Chapel Hill, NC 27514. He was
Executive Vice President and a Director of Dan River, Inc., a diversified
textile company, from 1969 until he retired in 1981. He is a Director of
Wheelock, Inc., a manufacturer of signal products, and a consultant for the
National Executive Service Corps in the health care industry.
He was born February 9, 1923.
THOMAS B. WINMILL -- 11 Hanover Square, New York, NY 10005. He is President,
Chief Executive Officer, and General Counsel of the Investment Manager and
certain of its affiliates. He was associated with the law firm of Harris,
Mericle and Orr from 1984 to 1987. He is a member of the New York State Bar and
serves on the SEC Rules Committee of the Investment Company Institute. He was
born June 25, 1959.
The executive officers of Midas Fund, each of whom serves at the pleasure of the
Board of Directors, are as follows:
MARK C. WINMILL -- Co-President, Co-Chief Executive Officer, and Chief Financial
Officer. He is Chief Financial Officer of the Investment Manager and certain of
its affiliates. He was born November 26, 1957. He received his M.B.A. from the
Fuqua School of Business at Duke University in 1987. From 1983 to 1985 he was
Assistant Vice President and Director of Marketing of E.P. Wilbur & Co., Inc., a
real estate development and syndication firm and Vice President of E.P.W.
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Securities, its broker/dealer subsidiary. He is the brother of Thomas B.
Winmill.
THOMAS B. WINMILL -- Co-President, Co-Chief Executive Officer, and General
Counsel. (See biographical information above).
STEVEN A. LANDIS -- Senior Vice President. He is Senior Vice President of the
Investment Manager and certain of its affiliates. He was born March 1, 1955.
From 1993 to 1995, he was Associate Director -- Proprietary Trading at Barclays
De Zoete Wedd Securities Inc., from 1992 to 1993 he was Director, Bond Arbitrade
at WG Trading Company, and from 1989 to 1992 he was Vice President of Wilkinson
Boyd Capital Markets.
BRETT B. SNEED, CFA -- Senior Vice President. He is Senior Vice President of the
Investment Manager and certain of its affiliates. He was born June 11, 1941. He
is a Chartered Financial Analyst, a member of the Association for Investment
Management and Research, and a member of the New York Society of Security
Analysts. From 1986 to 1988, he managed private accounts, from 1981 to 1986, he
was Vice President of Morgan Stanley Asset Management, Inc. and prior thereto
was a portfolio manager and member of the Finance and Investment Committees of
American International Group, Inc., an insurance holding company.
WILLIAM K. DEAN, CPA -- Treasurer and Chief Accounting Officer. He is Treasurer
and Chief Accounting Officer of the Investment Manager and its affiliates. He
was born September 5, 1955. From 1984 to 1995 he held various positions with The
Dreyfus Corporation, a mutual fund company. He is a member of the American
Institute of Certified Public Accountants and the New York State Society of
Certified Public Accountants.
WILLIAM J. MAYNARD -- Vice President and Secretary. He is Vice President and
Secretary of the Investment Manager and its affiliates. He was born September
13, 1964. From 1991 to 1994 he was associated with the law firm of Skadden,
Arps, Slate, Meagher & Flom. He is a member of the New York State Bar.
Midas Fund's Auditors
Tait, Weller & Baker has been selected by the Board of Directors as
Midas Fund's independent public accountants for Midas Fund's current fiscal year
in the manner provided by the 1940 Act, subject to the right of Midas Fund to
terminate the employment at any time without penalty by a vote of a majority of
the outstanding shares of Midas Fund.
Tait, Weller & Baker also serves as independent public accountants for
the Investment Manager and its affiliates. Tait, Weller & Baker has advised
Midas Fund that neither it nor any of its partners has had or will have, during
the period in which it will serve as independent accountants for Midas Fund, any
direct financial interest or any material indirect financial interest in Midas
Fund or any of its affiliates. Tait, Weller & Baker has further advised Midas
Fund that neither it nor any of its partners has had or will have, during any
such period, any connection with Midas Fund as a promoter, underwriter, voting
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trustee, director, officer or employee. Services in connection with the audit
function include all services rendered in order to permit Tait, Weller & Baker
to render a formal opinion on Midas Fund's financial statements, assistance and
consultations with respect to filings with the SEC and preparation of Midas
Fund's tax returns. Tait, Weller & Baker has been given the opportunity to make
a statement if it so desires at the meeting. Tait, Weller & Baker will not have
a representative present at the meeting but will be available should any matter
arise requiring its presence.
Squire & Company was Midas Gold's independent accountants for the
fiscal year ended December 31, 1994 and currently serves as Midas Gold's
independent accountants.
By voting in favor of the Plan, shareholders of Midas Gold will be
authorizing Midas Gold, as sole shareholder of Midas Fund prior to its
Reorganization, to vote such shares of Midas Fund in favor of ratifying the
selection of Tait, Weller & Baker as the independent accountants for Midas Fund.
Plan of Distribution
Midas Fund's Board of Directors has adopted a Plan of Distribution
pursuant to Rule 12b- 1 under the 1940 Act ("Midas Fund 12b-1 Plan"). By voting
in favor of the Plan, shareholders of Midas Gold will be authorizing Midas Gold,
as sole shareholder of Midas Fund prior to its Reorganization, to vote such
shares of Midas Fund in favor of the approval of the Midas Fund 12b-1 Plan. The
Midas Fund 12b-1 Plan, if approved, will remain in effect for one year from the
date of such approval, and thereafter from year to year so long as it is
approved by a majority of Midas Fund's entire Board of Directors, including a
majority of those Directors who are not "interested persons" of Midas Fund as
defined in the 1940 Act, and who have no direct or indirect financial interest
in the operation of the Plan or any agreement related to the Plan (the "Plan
Directors"), unless sooner terminated according to its terms. The form of Midas
Fund 12b-1 Plan is attached as Exhibit D.
Midas Gold currently is subject to a plan of distribution adopted
pursuant to Rule 12b-1 under the 1940 Act ("Midas Gold 12b-1 Plan"). Pursuant to
the Midas Gold 12b-1 Plan, Warner Beck receives, as a compensation for
shareholder services it performs under its Distribution Agreement with Midas
Gold, a fee from Midas Gold equal to .25 of 1% per year of Midas Gold's average
daily net assets. Warner Beck uses the fee to compensate broker-dealers,
including Warner Beck, and Warner Beck's registered representatives, for their
sales of Midas Gold's shares, and to pay other advertising and promotional
expenses in connection with the distribution of Midas Gold's shares.
Under the Midas Fund 12b-1 Plan, Midas Fund would be authorized to pay
Investor Service Center, Inc. (the "Distributor"), the proposed distributor of
Midas Fund shares, as compensation for the Distributor's distribution and
service activities, as defined, a fee at the rate of 0.25% on an annualized
basis of its average daily net assets. All or a portion of such fee would be
designated by the Board of Directors as a fee for service activities or as a fee
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<PAGE>
for distribution activities. Under the Midas Fund 12b-1 Plan, if the
Distributor's expenses were less than the amounts it received, the Distributor
will thereby realize a profit.
The Midas Fund 12b-1 Plan provides for fees for service and
distribution activities. Service activities are intended to cover personal
services provided to shareholders in Midas Fund and the maintenance of
shareholder accounts. The fees for service activities may be retained by the
Distributor or passed through by the Distributor to brokers, banks and others
who provide services to Midas Fund shareholders. Distribution activities are
intended to cover all other activities intended to result in the sale of Midas
Fund shares.
In considering adoption of the Midas Fund 12b-1 Plan, the Board of
Directors considered, among other things, the following factors: (1) the need
for independent counsel for experts to assist the Directors in reaching their
determination; (2) the nature of the problems or circumstances which make
implementation of the Midas Fund 12b-1 Plan necessary or appropriate; (3) the
causes of such problems or circumstances; (4) the way in which the Midas Fund
12b-1 Plan addresses these problems or circumstances and how it can be expected
to resolve or alleviate them, the nature of the anticipated benefits, and the
time it would take for those benefits to be achieved; (5) the merits of possible
alternative plans; (6) the interrelationship between the Midas Fund 12b-1 Plan
and the activities of any other person who may finance distribution of Midas
Fund shares, including whether any payments by Midas Fund to such other person
are made in such a manner as to constitute the indirect financing of
distribution by Midas Fund; and (7) the possible benefits of the Midas Fund
12b-1 Plan to any other person relative to those expected to inure to Midas
Fund. Following their consideration, the Directors, including the Plan
Directors, concluded that the Midas Fund 12b-1 Plan is in the best interest of
Midas Fund and is reasonably likely to benefit the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 3.
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SHAREHOLDER PROPOSALS
Midas Gold is currently not required to hold an annual meeting in any
year in which the election of directors is not required to be acted upon by the
provisions of the 1940 Act. Any shareholder who wishes to submit proposals to be
considered at future meetings of shareholders should send such proposals to
Midas Fund at 11 Hanover Square, New York, New York 10005. Proposals must be
received a reasonable time prior to the date of a meeting of shareholders to be
considered for inclusion in the materials for that meeting. Timely submission of
a proposal does not necessarily mean that such proposal will be included.
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<PAGE>
OTHER BUSINESS
Management knows of no business to be presented to the meeting other
than the matters set forth in this proxy statement, but should any other matter
requiring a vote of shareholders arise, the proxies will vote thereon according
to their best judgment in the interest of Midas Gold.
By order of the Board of Directors,
Richard B. Muir
Secretary
July __, 1995
IT IS IMPORTANT THAT YOU EXECUTE AND RETURN YOUR PROXY PROMPTLY.
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