[GRAPHIC OMITTED]
Dear Fellow Shareholder:
Attached are proxy materials for a Special Meeting of Shareholders of
Midas Fund, Inc. (the "Fund"). Please take this opportunity to review the proxy
statement and sign and return the proxy card in the special window pouch inside
the large mailing envelope. Your vote is important and must be counted, no
matter how many or how few shares you own. THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE IN FAVOR OF THE PROPOSAL.
About the Proposal
The Board of Directors is asking shareholders to approve a proposal to
simplify and modernize the Fund's current fundamental investment limitation
provisions which are required to be fundamental and to reclassify as
non-fundamental and to amend or eliminate, if appropriate, provisions which are
not required to be fundamental. The Board of Directors believes that adoption of
this proposal will maximize the Fund's flexibility to respond to changes in
regulatory, business or industry conditions.
IMPORTANTLY, THE FUND'S FUNDAMENTAL INVESTMENT OBJECTIVES REMAIN
UNCHANGED. As in the past, the Fund will seek primarily capital appreciation and
protection against inflation and, secondarily, current income. The Fund will
continue to attempt to achieve these objectives by investing primarily in (i)
securities of United States and Canadian companies primarily involved, directly
or indirectly, in the business of mining, processing, fabricating, distributing
or otherwise dealing in gold, silver, platinum or other natural resources and
(ii) gold, silver and platinum bullion. Likewise, the Fund's investment approach
and existing portfolio management will be unaffected by the proposal submitted
to shareholders. The Board of Directors recommends the proposal, however, in
view of changing regulatory, business or industry conditions to enhance the
existing investment strategies.
Your Vote is Important - Please Return the Proxy Card Promptly
Your vote is extremely important and you are urged to promptly complete
and return the proxy card using the enclosed postage-paid envelope. If you have
any questions, please call our Investor Service Representatives at
1-800-400-MIDAS, who will be happy to assist you.
Sincerely,
The Board of Directors
PLEASE VOTE IMMEDIATELY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD.
Otherwise, your Fund may incur needless expense to solicit
sufficient votes for the meeting.
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MIDAS FUND, INC.
11 Hanover Square
New York, New York 10005
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NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
to be held on April 25, 1996
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TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of Midas Fund, Inc. (the "Fund") will be held at the offices of the
Fund at 11 Hanover Square, New York, New York 10005, on April 25, 1996 at [10:00
a.m. Eastern time], for the following purposes:
1.To consider approval of the amendment, reclassification, or elimination of
certin of the Fund's fundamental investment provisions (Proposal 1);
2.To transact such other business as may properly come before the Meeting or any
adjournment thereof.
Shareholders of record at the close of business on February 15, 1996,
are entitled to notice of, and to vote at, the Meeting. We sincerely hope that
you can attend the Meeting. However, whether or not you will attend, we urge you
to promptly complete, sign and return the enclosed proxy card, so that a quorum
will be present and a maximum number of shares may be voted.
By order of the Board of Directors,
WILLIAM J. MAYNARD
Secretary
March __, 1996
YOUR VOTE IS VERY IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
In order to avoid the additional expense of further solicitations, we ask your
cooperation in mailing your proxy card promptly if you do not expect to attend
the Meeting. No postage is necessary.
<PAGE>
PROXY STATEMENT
MIDAS FUND, INC.
11 HANOVER SQUARE
NEW YORK, NEW YORK 10005
1-800-400-MIDAS
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SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
APRIL 25, 1996
-----------
This proxy statement is being furnished to shareholders in connection
with the solicitation of proxies by the Board of Directors of Midas Fund, Inc.
(the "Fund"). These proxies are to be used at a Special Meeting of Shareholders
and at any adjournment thereof (the "Meeting") to be held at the offices of the
Fund, 11 Hanover Square, New York, New York 10005, on April 25, 1996 at [10:00
a.m. Eastern time]. Copies of this proxy statement will first be mailed to
shareholders on or about _____ __, 1996.
At least one-third of the shares outstanding on February 15, 1996, the
record date, represented in person or by proxy, must be present to form a quorum
for the transaction of business at the Meeting. If a quorum is not present at
the Meeting or a quorum is present 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. The persons named as proxies
will vote those proxies which they are entitled to vote for any such proposal in
favor of such an 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.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other person entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted for or against any adjournment or proposal. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment
or against any proposal where the required vote is a percentage of the shares
present or outstanding. Abstentions and broker non-votes will not be counted,
however as votes cast for purposes of determining whether sufficient votes have
been received to approve a proposal.
The individuals 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 by you or your duly appointed agent or
attorney-in-fact. If you sign, date and return the proxy card, but give no
voting instructions, your shares will be voted in favor of the proposals
described in the proxy statement. In addition, if you sign, date and return the
enclosed proxy card, but give no voting instructions, the duly appointed proxies
may, in their discretion, vote upon such other matters as may come before the
Meeting. The proxy card may be revoked by giving another proxy or by letter or
telegram revoking such proxy. To be effective, such revocation must be received
by the Fund prior to the Meeting and must indicate your name and account number.
In addition, if you attend the Meeting in person you may, if you wish, vote by
ballot at the Meeting, thereby canceling any proxy previously given.
As of February 15, 1996, the record date, there were ________ shares of
common stock outstanding. Shareholders will be entitled to one vote for each
share held on that date. [Management does not know of any single shareholder or
"group" (as that term is used in Section 13(d) of the Securities Exchange Act of
1934) who beneficially owns 5% or more of the shares of the Fund.] [Directors
and officers of the Fund own in the aggregate less than 1% of the outstanding
shares of the Fund.] The Fund will furnish, without charge, a copy of the annual
report and the most recent semi-annual report succeeding the annual report, to
shareholders upon request who Write Midas Fund, Inc., 11 Hanover Square, New
York, New York 10005 or call 1-800-400-MIDAS.
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Midas Management Corporation (the "Investment Manager") serves as the
Fund's Investment Manager. Investor Service Center, Inc. (the
"Distributor") acts as the Fund's principal agent for the sale of Fund
shares. The principal business address of the Investment Manager and the
Distributor is 11 Hanover Square, New York, New York 10005.
THE BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE
PROPOSAL AND RECOMMENDS THAT YOU VOTE IN FAVOR OF IT.
PROPOSAL 1: APPROVAL OF THE AMENDMENT, RECLASSIFICATION,
OR ELIMINATION OF CERTAIN OF THE FUND'S FUNDAMENTAL
INVESTMENT PROVISIONS
The Investment Company Act of 1940 ("1940 Act") requires an investment
company such as the Fund to have certain specific investment limitations that
can be changed only by a shareholder vote. Investment companies may also elect
to designate other limitations as changeable only by a shareholder vote. Both
types of limitations are often referred to as "fundamental" provisions. Some
fundamental provisions have been adopted in the past by the Fund to reflect
certain regulatory, business, or industry conditions which are no longer in
effect or valid. Accordingly, the Board of Directors has reviewed the Fund's
fundamental provisions with the following goals: (i) to simplify and modernize
the Fund's provisions which are required to be fundamental; and (ii) to
reclassify as non-fundamental and to amend or eliminate, if appropriate,
provisions which are not required to be fundamental under state securities laws
or the 1940 Act. Non-fundamental provisions can be changed by the Board of
Directors without shareholder approval. For example, the Board is eliminating
the current restriction providing that no more than 20% of the value of the
Fund's total assets will be invested in mining securities (as defined in the
prospectus) of issuers domiciled or having principal operations in countries
other than Canada and the United States, effective with the next amendment of
the Fund's registration statement.
Proposal 1 seeks shareholder approval of changes which are intended to
accomplish the foregoing goals. The proposed changes to the fundamental
provisions are discussed in detail below and the proposed fundamental and non-
fundamental limitations are stated in full in Exhibit A. By reducing to a
minimum those provisions which can be changed only by shareholder vote, the Fund
would be able to avoid the costs and delay associated with another shareholder
meeting, and the Board of Directors believes that the Investment Manager's
ability to manage the Fund's portfolio in a changing regulatory or investment
environment will be enhanced. The favorable vote of a majority of the
outstanding voting securities of the Fund, as defined in the 1940 Act, is
required for the approval of Proposal 1. As defined in the 1940 Act, a majority
of the outstanding voting securities means the lesser of (a) 67% of the Fund's
shares present at a meeting of shareholders if the owners of more than 50% of
the shares of the Fund then outstanding are present in person or by proxy or (b)
more than 50% of the Fund's outstanding shares. A vote "for" Proposal 1 will
reflect approval of all of the proposed changes; if you oppose any or all of the
changes, you must vote "against" Proposal 1.
Amendment of Certain Provisions
A. PROPOSED AMENDMENT, IN PART, AND AMENDMENT AND RECLASSIFICATION, IN
PART, OF THE FUND'S FUNDAMENTAL INVESTMENT PROVISION REGARDING LENDING
AND INVESTMENTS IN REPURCHASE AGREEMENTS WHICH MATURE IN MORE THAN
SEVEN DAYS.
The Fund currently has a fundamental restriction prohibiting the Fund
from making cash loans. The Fund is also subject to a non-fundamental investment
policy that permits the Fund to lend securities representing up to 25% of its
net assets. The Board of Directors proposes to amend the Fund's fundamental
restriction to permit the Fund to engage in securities, precious metals or other
asset loan transactions to the extent permitted by the 1940 Act. Currently, the
1940 Act permits a Fund to lend up to one-third of its total assets. In
connection with this change the Fund's non-fundamental investment policy would
also be amended to permit the Fund to lend assets representing up to one-third
of its total assets.
The Fund has no current intention of engaging in lending transactions.
If the Fund engages in such transactions, it will enter into lending agreements
that require that the loans be continuously secured by cash, securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities, or any
combination of cash and such securities, as collateral equal at all times to at
least the market value of the assets lent. The Fund typically will receive the
dividends and interest, if any, paid on the assets lent, while simultaneously
earning interest on the collateral comprised of cash and fees
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to the extent of non-cash collateral. The Fund, in turn, may pay lending fees to
broker/dealers to effect such transactions. There are risks to the Fund of delay
in receiving additional collateral and risks of delay in recovery of, and
failure to recover, the assets lent should the borrower fail financially or
otherwise violate the terms of the lending agreement. However, loans will be
made only to borrowers deemed by the Investment Manager to be of good standing
and when, in the judgment of the Investment Manager, the consideration which can
be earned currently from such lending transactions justifies the attendant risk.
Any loan made by the Fund will provide that it may be terminated by either party
upon reasonable notice to the other party.
The Fund's current fundamental investment provision regarding lending
also provides that not more than 10% of the Fund's net assets will, at any time,
be subject to repurchase agreements which mature in more than seven days. The
Board of Directors proposes to amend and reclassify, as non-fundamental, this
part of the current provision. As discussed below, in connection with the
amendment and reclassification of the Fund's fundamental limitation regarding
restricted securities, the Board proposes to adopt a non-fundamental limitation
regarding illiquid securities. Such limitation would cover repurchase agreements
not entitling the holder to payment of principal within seven days. For
discussion of this proposal, see Section 1L below.
B.PROPOSED AMENDMENT OF THE FUND'S FUNDAMENTAL INVESTMENT PROVISION REGARDING
BORROWING AND THE ISSUANCE OF SENIOR SECURITIES.
The Board of Directors proposes to amend the Fund's fundamental
investment provision regarding borrowing to expand the Fund's borrowing
abilities. In connection with this amendment, the Board also proposes the
addition of a fundamental limitation concerning the issuance of senior
securities.
(a) Borrowing. Currently, the Fund may not borrow money or property
(for example, securities), except that as a temporary measure for extraordinary
purposes or emergencies the Fund may borrow from banks up to 5% of the value of
its total assets. Occasionally, the Fund may need to borrow money in excess of
this amount in unusual circumstances, such as to satisfy substantial shareholder
redemption or exchange requests when available cash is insufficient. The Fund's
current fundamental limitation provision unduly restricts the Fund's ability to
borrow in these circumstances. Moreover, the Fund's current fundamental
limitation provision is more restrictive than the 1940 Act's requirements for
borrowing by open-end investment companies. The Board of Directors believes that
the Fund should have additional flexibility, should circumstances warrant, to
consider borrowing money. The proposed amendment to the fundamental limitation
provision thus would permit the Fund to borrow money to the extent permitted by
the 1940 Act. Although this limitation provision would permit the Fund to use
borrowing for leveraging or investment purposes, the Fund has no intention of
doing so. Accordingly, if the proposed amendment is approved by the
shareholders, the Board of Directors also intends to adopt a non-fundamental
limitation provision that would provide that the Fund may only borrow from a
bank for temporary or emergency purposes or engage in reverse repurchase
agreements in an amount up to one-third of its assets and that the Fund may not
purchase securities for investment while any bank borrowing equaling 5% or more
of its total assets is outstanding. If the Board were to change this
non-fundamental limitation to enable the Fund to borrow for leveraging or
investment, it would do so only after notice to shareholders.
(b) Senior Securities. The Board of Directors proposes to add a new
fundamental investment provision that would specify that certain activities of
the Fund do not constitute the prohibited issuance of senior securities by the
Fund. If this proposal is approved by the Fund's shareholders, a new provision
will be added to provide that none of the following would be prohibited senior
securities: (i) evidences of indebtedness that the Fund is permitted to incur,
(ii) the issuance of additional series or classes of securities that the Board
of Directors may establish, (iii) the Fund's futures, options and forward
transactions, and (iv) to the extent consistent with the 1940 Act and applicable
rules and policies adopted by the Securities and Exchange Commission, (A) the
establishment or use of a margin account with a broker for the purpose of
effecting securities transactions on margin and (B) short sales. For additional
discussion of the Fund's present and proposed authority with respect to futures,
options and forward transactions, see Section 1E, below. The Fund does not
believe it is currently prohibited from engaging in any of these activities.
Nevertheless, the Board of Directors believes that the addition of this
provision would remove any potential uncertainty in this regard.
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<PAGE>
C. PROPOSED AMENDMENT OF THE FUND'S FUNDAMENTAL INVESTMENT PROVISION REGARDING
UNDERWRITING SECURITIES.
The Board of Directors proposes to amend the Fund's fundamental
investment provision which prohibits the underwriting of securities to clarify
that this provision does not apply to the extent the Fund may be deemed an
underwriter under the Federal securities laws in connection with the disposition
of the Fund's authorized investments. The Fund does not interpret the current
provision as prohibiting the Fund from disposing of any of its investments.
Nevertheless, the Board of Directors believes that the proposed amendment of
this provision would remove any potential uncertainty in this regard.
D. PROPOSED AMENDMENT OF THE FUND'S FUNDAMENTAL INVESTMENT PROVISION REGARDING
THE PURCHASE OR SALE OF REAL ESTATE.
The Board of Directors proposes to amend the Fund's fundamental
investment provision which prohibits the purchase or sale by the Fund of real
estate to clarify that the Fund would not be prohibited from investing in
securities, excluding limited partnership interests, secured by real estate or
interests therein or issued by companies which invest in real estate or
interests therein. This provision has been adopted to address the "blue sky"
requirements of certain states in connection with the registration of shares of
the Fund for sale, as well as certain requirements of the 1940 Act. However, the
Fund's current restriction is more restrictive than what is required by the 1940
Act and the "blue sky" provisions. Accordingly, the Board of Directors proposes
amending the Fund's fundamental investment provision to maximize the Fund's
flexibility, consistent with the 1940 Act and the various states' "blue sky"
requirements.
Amendment and Reclassification of Certain Provisions
E. PROPOSED AMENDMENT AND RECLASSIFICATION OF THE FUND'S FUNDAMENTAL
INVESTMENT PROVISION REGARDING COMMODITIES.
The Board of Directors proposes to amend in part and reclassify in part
as non-fundamental the Fund's fundamental investment provision regarding
commodities to provide the Fund with greater flexibility in connection with
options, futures and forward contract transactions. The provision would be
amended to expressly permit the Fund to enter into commodity and other futures
contracts and options thereon, options on commodities, including foreign
currencies and precious metals, and forward contracts on commodities, including
foreign currencies and precious metals. In conjunction with shareholder approval
of such amendment, the Board of Directors intends to adopt, as non-fundamental
investment provisions, the following provisions with respect to futures
contracts and options. To the extent that the Fund enters into futures
contracts, options on futures contracts and options on foreign currencies traded
on a CFTC-regulated exchange, in each case that are not for bona fide hedging
purposes (as defined by the CFTC), the aggregate initial margin and premiums
required to establish these positions (excluding the amount by which options are
"in-the-money") may not exceed 5% of the liquidation value of the Fund's
portfolio, after taking into account unrealized profits and unrealized losses on
any contracts the Fund has entered into. The aggregate value of securities
underlying put options on securities written by the Fund, determined as of the
date the put options are written, will not exceed 50% of the Fund's net assets.
The Fund may purchase a put or call option on a security or security index,
including any straddles or spreads, only if the value of its premium, when
aggregated with the premiums on all other such instruments held by the Fund,
does not exceed 5% of the Fund's total assets. As with other non-fundamental
provisions, these may be changed by the Board of Directors without shareholder
vote.
If shareholders approve Proposal 1, the Fund may use its options,
futures and forward contract strategies for hedging and yield or income
enhancement purposes. For example, the Fund could purchase call options on
securities that the Investment Manager intends to include in the Fund's
portfolio in order to fix the cost of a future purchase or to attempt to enhance
return by, for example, participating in an anticipated price increase of a
security. The Fund could purchase put options on securities to hedge against a
decline in the market value of securities held in the Fund's portfolio or to
attempt to enhance yield or income. The Fund could write (sell) put and call
options on securities to enhance yield or income or as a limited hedge. The Fund
could purchase and sell these instruments in order to attempt to hedge against
changes in securities prices, interest rate or foreign currency exchange rates
or precious metal prices or to enhance yield or income.
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Transactions using these instruments, other than purchased options,
expose the Fund to an obligation to another party. The Fund will not enter into
any such transactions unless it owns either (1) an offsetting ("covered")
position in securities, currencies or other options, futures contracts or
forward contracts, or (2) cash, receivables and short-term debt securities, with
a value sufficient at all times to cover its potential obligations to the extent
not covered as provided in (1) above. The Fund would comply with SEC guidelines
regarding cover for these instruments and will, if the guidelines so require,
set aside cash, U.S. Government securities or other liquid, high-grade debt
securities in a segregated account with its custodian in the prescribed amount
as determined daily on a mark-to-market basis.
Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding instrument is open, unless they are
replaced with other appropriate assets. As a result, the commitment of a large
portion of the Fund's assets to cover or segregate accounts could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
The Fund's ability to use options, forward contracts and futures may be
limited by market conditions, regulatory limits and tax considerations, and the
Fund might not employ any of the strategies described above. There can be no
assurance that any hedging or yield or income enhancement strategy used will be
successful. The Fund's ability to successfully utilize these instruments will
depend on the Investment Manager's ability to predict accurately movements in
the prices of the assets being hedged and movements in securities, interest
rates, foreign currency exchange rates and precious metals prices. There is no
assurance that a liquid secondary market for options and futures will always
exist, and the correlation between hedging instruments and the assets being
hedged may be imperfect. It also may be necessary to defer closing out hedged
positions to avoid adverse tax consequences.
F. PROPOSED AMENDMENT AND RECLASSIFICATION OF THE FUND'S FUNDAMENTAL
RESTRICTION REGARDING INVESTMENTS IN EXPLORATION OR DEVELOPMENT PROGRAMS,
SUCH AS OIL OR GAS PROGRAMS.
The Board of Directors proposes to amend and reclassify, as
non-fundamental, the Fund's fundamental investment provision regarding
investments in exploration or development programs, such as oil or gas programs.
The Fund is not required to have a fundamental restriction with respect to oil,
gas or mineral investments, but certain state securities rules require that the
Fund establish at least a non-fundamental restriction on this subject. In order
to maximize the Fund's flexibility in the event of future changes in state
securities rules or policies, the Board believes that the Fund's restrictions on
oil, gas and mineral investments should be made non-fundamental.
The non-fundamental restriction adopted by the Board will establish
exceptions that serve to clarify the limited scope of the restriction by
expressly excepting out certain investments. Also, since the applicable state
requirements relate only to oil, gas and mineral leases and development
programs, the non-fundamental restriction applies only to them and not to other
investments relating to oil, gas or minerals.
G.PROPOSED AMENDMENT AND RECLASSIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT
PROVISION REGARDING MARGIN PURCHASES AND SHORT SALES.
The Board of Directors proposes to amend and reclassify, as
non-fundamental, the Fund's fundamental investment provision which prohibits the
Fund from purchasing securities on margin or making short sales. Margin
purchases involve the purchase of securities with money borrowed from a broker.
"Margin" is the cash or eligible securities that the borrower places with the
broker as collateral against the borrowed money. In a short sale, the Fund sells
a borrowed security and has a corresponding obligation to the lender to return
the identical security. A short sale against the box is a short sale where, at
the time of the sale, the Fund owns or has an immediate and unconditional right
to acquire securities identical in kind and amount to the securities sold.
If the Fund's shareholders approve this proposal, the Board of
Directors intends to adopt two non-fundamental policies that would: (a) prohibit
margin purchases generally, but would permit the purchase of securities on
margin to obtain such short term credits as are necessary for the clearance of
transactions; and (b) prohibit short sales generally, but would permit the Fund
to engage in short sales under certain circumstances such as (i) buying and
selling options, futures contracts, options on futures contracts, and forward
contracts, and (ii) short sales against the box, where the Fund owns or, by
virtue of its ownership of other securities, has the unconditional right to
obtain securities equivalent in kind or amount.
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<PAGE>
The Fund does not intend to dispose of the securities underlying a
short sale while a short sale is outstanding. The Fund also does not intend to
engage in short sales against the box for investment purposes, but rather to
defer recognition of gain or loss for tax purposes, or to satisfy certain
requirements applicable to regulated investment companies under the Internal
Revenue Code. The Board of Directors currently expects that the Fund will engage
in short sales against the box as a hedge when the Investment Manager believes
that the price of a security may decline, or when the Fund wants to sell the
security it owns at the current price. The Investment Manager currently
anticipates that no more than 5% of the Fund's total assets would be involved in
short sales against the box.
The Board of Directors believes authority to sell short against the box
may enhance the Investment Manager's flexibility to time the disposition of
portfolio securities. The amendment to the Fund's investment provisions
regarding purchasing securities on margin does not reflect a change in the
Fund's operations but is intended merely to clarify the Fund's existing policy
with regard to this practice.
H. PROPOSED AMENDMENT AND RECLASSIFICATION OF THE FUND'S FUNDAMENTAL
INVESTMENT PROVISION REGARDING INVESTMENTS IN OTHER INVESTMENT COMPANIES.
The Board of Directors proposes to amend and reclassify, as
non-fundamental, the Fund's fundamental investment provision which prohibits the
Fund's investments in other investment companies, except as a part of a plan of
merger, acquisition or consolidation. This provision is not required to be
fundamental. Furthermore, the Fund's current restriction limits the Fund's
investments in such securities to an extent that is more restrictive than that
required by the 1940 Act and the applicable rules and policies adopted by the
SEC. If the shareholders approve this proposal, the Board of Directors intends
to adopt a non-fundamental provision that would expand the Fund's ability to
acquire securities of other investment companies to a limited extent, consistent
with the 1940 Act and the various states' "blue sky" requirements. Accordingly,
the non-fundamental restriction would prohibit the Fund's acquisition of the
securities of any investment company except (a) by purchase in the open market
where no commission or profit to a sponsor or dealer results from such purchase,
provided that immediately after such purchase no more than: 10% of the Fund's
total assets are invested in securities issued by investment companies, 5% of
the Fund's total assets are invested in securities issued by any one investment
company, or 3% of the voting securities of any one such investment company are
owned by the Fund, and (b) when such purchase is part of a plan of merger,
consolidation, reorganization or acquisition of assets.
I. PROPOSED AMENDMENT AND RECLASSIFICATION OF THE FUND'S FUNDAMENTAL
INVESTMENT PROVISION REGARDING PLEDGING OR MORTGAGING ITS ASSETS.
The Board of Directors proposes to amend and reclassify, as
non-fundamental, the Fund's investment provision which provides that the Fund
may not pledge or mortgage its assets, except to the extent that writing covered
call options may be deemed to be pledging or mortgaging assets. This provision
is not required to be fundamental. Furthermore, the Fund's current restriction
limits the Fund's pledging or mortgaging of its assets to an extent that is more
restrictive than that required by the "blue sky" provisions. If the shareholders
approve this proposal, the Board of Directors intends to adopt a non-fundamental
provision that would expand the Fund's ability to pledge and mortgage its
assets. Accordingly, the non-fundamental restriction would provide that the Fund
may not mortgage, pledge or hypothecate any assets in excess of one-third of the
Fund's total assets.
J. PROPOSED AMENDMENT AND RECLASSIFICATION OF THE FUND'S FUNDAMENTAL
INVESTMENT PROVISION REGARDING INVESTMENTS IN SECURITIES OF UNSEASONED
ISSUERS.
The Board of Directors proposes to amend and reclassify, as
non-fundamental, the Fund's fundamental investment provision which limits the
Fund's investments in securities of companies, including any predecessors, less
than three years old. This provision has been adopted by the Fund to address the
"blue sky" requirements of certain states in connection with the registration of
shares of the Fund for sale. Those states do not require the provision to be
fundamental. In order to maximize the Fund's flexibility in the event of future
changes in state securities rules or policies, the Board believes that the
Fund's restriction on investments in securities of unseasoned issuers should be
made non-fundamental. In connection with the reclassification of this provision,
certain editorial changes will be made to conform it to the restrictions of
other funds managed by affiliates of the Investment Manager.
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K. PROPOSED AMENDMENT AND RECLASSIFICATION OF THE FUND'S FUNDAMENTAL
INVESTMENT PROVISION REGARDING INVESTMENTS IN SECURITIES OF A COMPANY
IF THE FUND KNOWS THAT THE OFFICERS OR DIRECTORS OF THE FUND, WHO OWN
1/2 OF 1% OR MORE OF THE COMPANY'S SECURITIES, TOGETHER OWN MORE THAN
5% OF THE COMPANY'S SECURITIES.
The Board of Directors proposes to amend and reclassify, as
non-fundamental, the Fund's fundamental investment provision which prohibits the
Fund from buying any securities of a company if the officers or directors of the
Fund, who own 1/2 of 1% or more of the company's securities, together own more
than 5% of the company's securities. This provision has been adopted by the Fund
to address the "blue sky" requirements of certain states in connection with the
registration of shares of the Fund for sale. Those states do not require the
provision to be fundamental. In order to maximize the Fund's flexibility in the
event of future changes in state securities rules or policies, the Board
believes that the Fund's restriction on investments in such purchases should be
made non-fundamental. In connection with the reclassification of this provision,
the provision will be amended to cover the Fund's sub-adviser as well as the
Investment Manager. In addition, certain editorial changes will be made to
conform it to the restrictions of other funds managed by affiliates of the
Investment Manager.
L. PROPOSED AMENDMENT AND RECLASSIFICATION OF THE FUND'S FUNDAMENTAL
INVESTMENT PROVISION REGARDING THE PURCHASE OF RESTRICTED SECURITIES.
The Board of Directors proposes to amend and reclassify, as
non-fundamental, the Fund's fundamental investment provision which limits the
Fund's investments in restricted securities. Restricted securities are
securities which may not be offered or sold to the public without prior
registration under the Securities Act of 1933 ("1933 Act"). The provision has
been adopted by the Fund to address the "blue sky" requirements of certain
states in connection with the registration of share of the Fund for sale. Those
states do not require the provision to be fundamental. In order to maximize the
Fund's flexibility in the event of future changes in state securities rules or
policies, the Board believes that the Fund's investment provision on restricted
securities should be made non-fundamental. In connection with the
reclassification of its provision, and if this proposal is approved by
shareholders, the Board of Directors intends to adopt a non-fundamental
investment provision regarding the purchase of illiquid assets. An open-end
investment company may not hold a significant amount of illiquid assets because
such assets may present problems of accurate valuation and because it is
possible that the investment company would have difficulty satisfying
redemptions within seven days, as required by law. Accordingly, if this proposal
is approved by shareholders, the Board of Directors intends to adopt a
non-fundamental limitation provision that would limit the amount the Fund may
invest in (a) illiquid assets (a term which means assets that cannot be disposed
of within seven days in the ordinary course of business at approximately the
amount at which the Fund has valued the assets), including repurchase agreements
not entitling the holder to payment of principal within seven days, to 15% of
the Fund's net assets and (b) securities that are illiquid by virtue of
restrictions on the sale of such securities to the public without registration
under the 1933 Act to 10% of the Fund's total assets.
For purposes of the proposed non-fundamental limitation on investments
in illiquid assets, the Fund would be permitted to exclude restricted securities
that are liquid from its 15% limit on investment in illiquid assets. The Board
of Directors has ultimate responsibility for determining whether specific
securities are liquid or illiquid. The Board intends to delegate the function of
making day-to-day determinations of liquidity to the Investment Manager,
pursuant to guidelines approved by the Board.
Elimination of Certain Provision
M. PROPOSED ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT PROVISION
REGARDING THE FUND'S INVESTMENTS IN A SINGLE ISSUER.
The Board of Directors proposes to eliminate the Fund's fundamental
investment provision which relates to the Fund's investments in a single issuer,
so that the Fund would be subject to less restrictive diversification
requirements. Currently, the Fund is prohibited from investing more than 5% of
its net assets (taken at the lower of cost or value) in securities of any one
company. The Fund is also limited in its investment in a single company to not
more than 10% of that company's outstanding voting securities. The Fund is
non-diversified as defined in the 1940 Act. As a non-diversified investment
company, the 1940 Act does not limit the amount the Fund may invest in the
securities of a single issuer. Upon elimination of the fundamental provision,
however, the Fund intends to continue to qualify as a "regulated investment
company" for Federal income tax purposes. This means, in general, that more than
5% of the Fund's total assets may be
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invested in the securities of one issuer (including a foreign government), but
only if at the close of each quarter of the Fund's taxable year, the aggregate
amount of such holdings does not exceed 50% of the value of its total assets and
no more than 25% of the value of its total assets is invested in the securities
of a single issuer. The elimination of this provision would provide the
Investment Manager with greater investment flexibility in managing the Fund's
portfolio. However, to the extent that the Fund's portfolio at times might
include the securities of a smaller number of issuers than if it were subject to
the provision, the Fund will at such times be subject to greater risk with
respect to its portfolio securities than a fund that invests in a broader range
of securities, in that changes in the financial condition or market assessment
of a single issuer may cause greater fluctuation in the Fund's total return and
the price of the Fund's shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 1.
ADDITIONAL INFORMATION
On or about August 28, 1995, the Investment Manager purchased from
Excel Advisors, Inc. the assets that related to the management of Excel Midas
Gold Shares, Inc. ("Midas Gold") (the Fund's predecessor) for $182,500 and in
connection therewith paid Lion Resource Management Limited, the Fund's
Subadviser, a finder's fee of $10,000. In connection with this sale of assets,
shareholders of Midas Gold approved a reorganization agreement whereby all, or
substantially all, of Midas Gold's assets were transferred to the Fund. The
reorganization was structured as a change in domicile from a Minnesota
corporation to a Maryland corporation. Currently, the Investment Manager does
not beneficially own, directly or indirectly, any voting securities of the Fund.
SHAREHOLDER PROPOSALS
Under Maryland law and the Fund's By-Laws, the Fund 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 a meeting of
shareholders should send such proposals to the 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.
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 the Fund. In addition to solicitations
through the mails, the Fund 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, 40 Exchange Place, New
York, New York, will be retained specially 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. The cost of
soliciting proxies, including the preparation and mailing of the proxy and proxy
statement and including reimbursement to dealers and others who forward proxy
material to their clients, will be borne by the Fund.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED,
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A
SELF-ADDRESSED, POSTAGE- PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By order of the Board of Directors,
WILLIAM J. MAYNARD
Secretary
March __, 1996
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EXHIBIT A
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment restrictions
that may not be changed without the approval of the lesser of (a) 67% or more of
the voting securities of the Fund present at a 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. Any investment restriction which involves a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after, and is caused by, an acquisition
of securities or assets of, or borrowing by, the Fund. The Fund may not:
1. Borrow money, except to the extent permitted by the Investment Company Act
of 1940 ("1940 Act");
2. Engage in the business of underwriting the securities of other issuers,
except to the extent that the Fund may be deemed to be an underwriter under
the Federal securities laws in connection with the disposition of the
Fund's authorized investments;
3. Purchase or sell real estate, provided that the Fund may invest in
securities (excluding limited partnership interests) secured by real
estate or interests therein or issued by companies which invest in real
estate or interests therein;
4. 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
financial contracts or derivative instruments;
5. Lend its assets, provided however, that the following are not
prohibited: (a) the making of time or demand deposits with banks, (b)
the purchase of debt securities such as bonds, debentures, commercial
paper, repurchase agreements and short term obligations in accordance
with the Fund's investment objectives and policies, and (c) engaging in
securities, precious metals, and other asset loan transactions to the
extent permitted by the 1940 Act; or
6. Issue senior securities as defined in the 1940 Act. The following will
not be deemed to be senior securities prohibited by this provision: (a)
evidences of indebtedness that the Fund is permitted to incur, (b) the
issuance of additional series or classes of securities that the Board
of Directors may establish, (c) the Fund's futures, options, and
forward transactions, and (d) to the extent consistent with the 1940
Act and applicable rules and policies adopted by the Securities and
Exchange Commission, (i) the establishment or use of a margin account
with a broker for the purpose of effecting securities transactions on
margin and (ii) short sales.
The Fund's Board of Directors has established the following
non-fundamental investment limitations that may be changed by the Board without
shareholder approval:
(i) The Fund's investments in warrants, valued at the lower of cost or
market, may not exceed 5% of the value of its net assets, which amount
may include warrants which are not listed on the New York or American
Stock Exchange provided that such warrants, valued at the lower of cost
or market, do not exceed 2% of the Fund's net assets, and further
provided that this restriction does not apply to warrants attached to,
or sold as a unit with, other securities;
(ii) The Fund may not invest in interests in oil, gas or other mineral
exploration or development programs or leases, although it may invest
in the securities of issuers which invest in or sponsor such programs
or such leases;
(iii) The Fund may not invest more than 5% of its assets in securities of
companies having a record of less than three years continuous
operations (including operations of predecessors);
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(iv) The Fund may not purchase or otherwise acquire any security or invest
in a repurchase agreement if, as a result, (a) more than 15% of the
Fund's net assets (taken at current value) would be invested in
illiquid assets, including repurchase agreements not entitling the
holder to payment of principal within seven days, or (b) more that 10%
of the Fund's total assets would be invested in securities that are
illiquid by virtue of restrictions on the sale of such securities to
the public without registration under the 1933 Act;
(v) The Fund may not make short sales of securities or maintain a short
position, except (a) the Fund may buy and sell options, futures
contracts, options on futures contracts, and forward contracts, and (b)
the Fund may sell "short against the box" where, by virtue of its
ownership of other securities, the Fund owns or has the right to obtain
securities equivalent in kind and amount to the securities sold and, if
the right is conditional, the sale is made upon the same conditions;
(vi) The Fund may not purchase securities on margin, except that the Fund
may obtain such short term credits as are necessary for the clearance
of transactions, and provided that margin payments and other deposits
made in connection with transactions in options, futures contracts,
forward contracts and other derivative instruments shall not be deemed
to constitute purchasing securities on margin;
(vii) The Fund may not purchase or retain securities of any issuer if those
officers or Directors of the Fund, its investment manager or its
subadviser who each own beneficially more that 1/2% of 1% of the
securities of an issuer own beneficially more than 5% of the securities
of that issuer;
(viii) The Fund may not purchase the securities of any investment company
except (a) by purchase in the open market where no commission or profit
to a sponsor or dealer results from such purchase, provided that
immediately after such purchase no more than: 10% of the Fund's total
assets are invested in securities issued by investment companies, 5% of
the Fund's total assets are invested in securities issued by any one
investment company, or 3% of the voting securities of any one such
investment company are owned by the Fund, and (b) when such purchase is
part of a plan of merger, consolidation, reorganization or acquisition
of assets;
(ix) The aggregate value of securities underlying put options on securities
written by the Fund, determined as of the date the put options are
written, will not exceed 50% of the Fund's net assets;
(x) The Fund may purchase a put or call option on a security or a security
index, including any straddles or spreads, only if the value of its
premium, when aggregated with the premiums on all other such
instruments held by the Fund, does not exceed 5% of the Fund's total
assets;
(xi) To the extent that the Fund enters into futures contracts, options on
futures contracts and options on foreign currencies traded on a
CFTC-regulated exchange, in each case that are not for bona fide
hedging purposes (as defined by the CFTC), the aggregate initial margin
and premiums required to establish these positions (excluding the
amount by which options are "in-the-money") may not exceed 5% of the
liquidation value of the Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Fund has
entered into; and
(xii) The Fund may not mortgage, pledge or hypothecate any assets in excess of
one-third of the Fund's total assets.
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PROXY
MIDAS FUND, INC.
The undersigned hereby appoints Thomas B. Winmill and Robert D. Anderson, and
each of them, with full power of substitution, to vote as designated below all
shares of common stock of Midas Fund, Inc. (the "Fund") which the undersigned is
entitled to vote at the Special Meeting of Shareholders to be held on April 25,
1996 and any adjournment thereof, revoking all proxies heretofore given, upon
the proposals described in the proxy statement.
Note: A vote "for" Proposal 1 will reflect approval of all of the proposed
changes; if you oppose any or all of the changes, you must vote
"against" Proposal 1.
1. The approval of the amendment, reclassification, or elimination of certain
of the Fund's fundamental investment provisions (Proposal 1).
|-| |-| |-|
FOR ABSTAIN AGAINST
2. To transact such other business as may properly come before the meeting.
<PAGE>
THIS PROXY, IF PROPERLY EXECUTED WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED.
IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR PROPOSAL 1. THIS PROXY IS
SOLICITED ON BEHALF OF THE FUND'S BOARD OF DIRECTORS.
__________________________(L.S.)
Signature
__________________________(L.S.)
Signature
Dated _________________, 1996
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON.
IF SHARES ARE REGISTERED IN MORE THAN ONE NAME,
ALL SHOULD SIGN BUT IF ONE SIGNS, IT BINDS THE
OTHERS. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, AGENT, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY AN AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AN AUTHORIZED PERSON.
TO AVOID EXPENSES OF ADJOURNING THE MEETING, PLEASE RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE>
