UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09261
---------------------------------
Foxby Corp.
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(Exact name of registrant as specified in charter)
11 Hanover Square, New York, NY 10005
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(Address of principal executive offices) (Zipcode)
Thomas B. Winmill, President
11 Hanover Square
New York, NY 10005
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-212-344-6310
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Date of fiscal year end: 12/31
------------------
Date of reporting period: 1/1/04 - 12/31/04
---------------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policy making roles.
Item 1. Report to Shareholders
FOXBY
CORP.
--------------------------------------------------------------------------------
ANNUAL REPORT
December 31, 2004
American Stock
Exchange Symbol:
FXX
11 Hanover Square
New York, NY 10005
www.foxbycorp.com
[CHART APPEARS HERE]
TOTAL INVESTMENTS BY INDUSTRY
Gold Ore Mining 11.67%
Department Stores 6.36%
Commercial Banking 6.17%
Direct Property and Casualty Insurance Carriers 3.79%
Metal Coating and Allied Services to Manufacturers 3.49%
Medical and Hospital Equipment 3.41%
Tobacco and Tobacco Products 3.34%
Cable and Other Pay TV Services 3.31%
Breweries 3.27%
Soap and Other Detergent Manufacturing 3.17%
Credit Card Issuing 3.17%
Air Purification Equipment Manufacturing 3.16%
Trust, Fiduciary, and Custody Activities 3.15%
Veterinary Services 3.14%
Radio & TV Communications Equipment 3.12%
Paint and Coating Manufacturing 3.08%
Crude Petroleum and Natural Gas Extraction 3.08%
Pharmacies and Drug Stores 3.06%
Semiconductor and Related Device Manufacturing 3.03%
Insurance Agencies and Brokerages 3.02%
Jewelry Stores 3.01%
All Other Miscellaneous Manufacturing 3.01%
Real Estate Investment Trusts 2.95%
Toilet Preparation Manufacturing 2.94%
Miscellaneous Business Services 2.78%
Pharmaceutical Preparation Manufacturing 2.71%
Copper Ore and Nickel Ore Mining 1.66%
Natural Gas Transmission 1.62%
Gold Ore Mining Warrants 0.19%
Copper Ore and Nickel Ore Mining Warrants 0.14%
------
100.00%
PORTFOLIO ANALYSIS*
U.S. Equities 94%
Foreign Equities 21%
* Shown are approximate percentages of total net assets, and do not add up to
100%, due to leverage,other assets, rounding, and other factors.
American Stock
FOXBY CORP. Exchange Symbol: FXX
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11 Hanover Square, New York, NY 10005
www.foxbycorp.com
January 28, 2005
Fellow Shareholders:
It is a pleasure to submit this Annual Report for Foxby Corp., and to
welcome our new shareholders who find the Fund's flexible total return
investment approach attractive. As a non-diversified, closed-end fund seeking
total return, the Fund uses a flexible strategy in the selection of securities,
and is not limited by the issuer's location, size, or market capitalization. The
Fund may invest in equity and fixed income securities of both new and seasoned
U.S. and foreign issuers, including securities convertible into common stock,
debt securities, futures, options, derivatives, and other instruments. The Fund
also may employ aggressive and speculative investment techniques, such as
selling securities short and borrowing money for investment purposes, an
approach known as "leveraging," and may invest defensively in high grade money
market instruments.
At December 31, the Fund's top ten holdings comprised approximately 33% of
total assets. As a percent of net assets, investments in U.S. equities accounted
for about 94% and foreign equities about 21%, reflecting leverage of about 14%.
Precious metals, our largest industry sector investment, accounted for about 14%
of net assets. As the Fund pursues its total return objective through this
flexible approach, these holdings and allocations are, of course, subject to
change at any time.
Market Report
The Federal Reserve Bank initiated its current credit tightening policy on
June 30, 2004, when the federal funds rate stood at 1%. At the next five
consecutive meetings of the Federal Open Market Committee (FOMC) of the Federal
Reserve Bank, the FOMC raised the federal funds rate by 0.25% at each meeting,
bringing it to 2.25% at December 31, 2004. Despite the fact that the growth in
the U.S. economy (GDP) in the fourth quarter slowed to an annualized pace of
3.1%, following a 4% gain in the third quarter, the 2004 annualized growth rate
of 4.4% was the largest U.S. economic gain since 1999.Year over year, job
growth, though moderate, was increasing, consumer confidence was growing, and
many corporate sectors reported an increase in buying power. The Fund's strategy
in view of these conditions was to remain largely unhedged in the first quarter
and thereafter more defensively invested with short sales positions up to the
presidential election. Assessing oversold conditions at that time, the Fund
changed from substantially hedged to leveraged long, improving returns, although
ending the year with a somewhat disappointing negative 6.55% net asset value
return.
Looking ahead, however, we remain somewhat cautious. Manufacturing is
showing signs of strength and demand for consumer goods, especially those deemed
durable goods, is strong, but at the same time workers wages, in the 4th quarter
of 2004, grew at the slowest pace in almost six years. Combining this with the
rising cost of health benefits, the result could lead to a slowdown in consumer
spending. We expect that the economy could continue to grow at a slower pace
than is reflected by the improving economic numbers, until more of the
"fragility" in the economy is removed or we find ourselves in a much more robust
economy than we are in now.We think the Federal Reserve will continue to
increase
rates at a very measured pace, and closely watch the weekly economic numbers for
signs of weakness. In these changing economic conditions, the Fund's flexibility
to invest in large or small capitalization companies, U.S. or foreign, and in
virtually any kind of security, gives it the advantage of being able to consider
participating in an investment in whatever form it may take in seeking to
achieve an attractive total return for our shareholders.
Foxby Corp. previously announced that all directors were elected as
proposed by the Board of Directors at its Annual Meeting held on September 7,
2004. Elected at the meeting were James E. Hunt as a Class I Director, Bruce B.
Huber as a Class II Director, and John B. Russell as a Class V Director, each to
hold office until, respectively, the 2008 annual meeting, 2009 annual meeting,
and 2007 annual meeting, and until his successor is duly elected and qualifies.
Directors whose term of office continued after the meeting are Peter K.Werner as
a Class III director and Thomas B. Winmill as a Class IV director. We regret to
note that Shaker and three other plaintiffs filed a lawsuit in Maryland Circuit
Court about a month after the Annual Meeting. Foxby has asked that the claims
against the Fund and the director defendants be dismissed or that a summary
judgment be entered in its favor. The Fund's motion to dismiss is currently
scheduled for a hearing on March 7.
We appreciate your support and look forward to serving your investment
needs in the years ahead.
Sincerely,
/s/ Thomas B. Winmill /s/ Marion E. Morris
Thomas B. Winmill Marion E. Morris
President Senior Vice President
--------------------------------------------------------------------------------
TOP TEN HOLDINGS
(at December 31, 2004)
1. PMA Capital Corp. 6. Comcast Corp.
2. SurModics, Inc. 7. Adolph Coors Company Class B
3. Patterson Companies Inc. 8. MBNA Corp.
4. The Neiman Marcus Group Inc. Class A 9. The Procter & Gamble Company
5. DIMON Incorporated 10. U.S. Bancorp
Top ten holdings comprise approximately 33% of total assets. This portfolio
information should not be considered as a recommendation to purchase or sell a
particular security and there is no assurance that any securities will remain in
or out of the Fund.
FOXBY CORP. 2
Schedule of Portfolio Investments - December 31, 2004
Shares Market Value
------- ------------
COMMON STOCKS (99.67%)
Air Purification Equipment Manufacturing (3.16%)
7,400 Donaldson Company, Inc. ..................................... $ 241,092
------------
All Other Miscellaneous Manufacturing (3.01%)
2,800 3M Co. ...................................................... 229,796
------------
Breweries (3.27%)
3,300 Adolph Coors Company Class B ................................ 249,711
------------
Cable and Other Pay TV Services (3.31%)
7,600 Comcast Corp./(2)/ .......................................... 252,928
------------
Commercial Banking (6.17%)
7,700 U.S. Bancorp ................................................ 241,164
3,700 Wells Fargo & Company ....................................... 229,955
------------
471,119
------------
Copper Ore and Nickel Ore Mining (1.66%)
110,000 Peru Copper Inc./(2)/ ....................................... 126,690
------------
Credit Card Issuing (3.17%)
8,600 MBNA Corporation ............................................ 242,434
------------
Crude Petroleum and Natural Gas Extraction (3.08%)
5,400 Burlington Resources Inc. ................................... 234,900
------------
Department Stores (6.36%)
4,400 Target Corporation .......................................... 228,492
3,600 The Neiman Marcus Group, Inc. Class A ....................... 257,544
------------
486,036
------------
Direct Property and Casualty Insurance Carriers (3.79%)
28,000 PMA Capital Corporation/(2)/................................. 289,800
------------
Gold Ore Mining (11.67%)
40,000 Bolivar Gold Corp./(2)/ ..................................... 65,598
29,000 Dundee Precious Metals Inc./(2)/............................. 181,038
35,000 Gammon Lake Resources Inc./(2)/.............................. 186,900
127,500 Guinor Gold Corporation/(2))/................................ 106,410
55,000 Highland Gold Mining Ltd. ................................... 198,503
50,000 Jaguar Mining Inc./(2)/...................................... 152,312
------------
890,761
------------
Insurance Agencies and Brokerages (3.02%)
5,300 Brown & Brown, Inc. ......................................... 230,815
------------
Jewelry Stores (3.01%)
7,700 Zale Corporation/(2)/........................................ 229,999
------------
Medical and Hospital Equipment (3.41%)
6,000 Patterson Companies Inc./(2)/................................ 260,340
------------
Metal Coating and Allied Services to Manufacturers (3.49%)
8,200 SurModics, Inc./(2)/......................................... 266,582
------------
Miscellaneous Business Services (2.78%)
75,000 Safety Intelligence Systems Corp./(1)(2)/.................. 212,145
------------
See accompanying notes to financial statements. 3 FOXBY CORP.
Schedule of Portfolio Investments - December 31, 2004
Shares Market Value
------- ------------
COMMON STOCKS - continued
Natural Gas Transmission (1.62%)
29,000 MetroGAS S.A. ADR/(2)/ ...................................... 123,540
------------
Paint and Coating Manufacturing (3.08%)
4,700 The Valspar Corporation ..................................... 235,047
------------
Pharmaceutical Preparation Manufacturing (2.71%)
7,700 Pfizer Inc. ................................................. 207,053
------------
Pharmacies and Drug Stores (3.06%)
6,100 Walgreen Co. ................................................ 234,057
------------
Radio & TV Communications Equipment (3.12%)
12,800 NTT DoCoMo, Inc. ADR ........................................ 238,336
------------
Real Estate Investment Trusts (2.95%)
35,000 Prime Group Realty Trust/(2)/ ............................... 225,050
------------
Semiconductor and Related Device Manufacturing (3.03%)
9,900 Intel Corporation ........................................... 231,561
------------
Soap and Other Detergent Manufacturing (3.17%)
4,400 The Procter & Gamble Company ................................ 242,352
------------
Tobacco and Tobacco Products (3.34%)
38,000 DIMON Incorporated .......................................... 255,360
------------
Toilet Preparation Manufacturing (2.94%)
5,800 Avon Products, Inc. ......................................... 224,460
------------
Trust, Fiduciary, and Custody Activities (3.15%)
4,900 State Street Corporation .................................... 240,688
------------
Veterinary Services (3.14%)
4,400 IDEXX Laboratories, Inc./(2)/ ............................... 240,196
------------
Total Common Stocks (cost: $7,199,071) ................... 7,612,848
------------
WARRANTS (0.33%)
Copper Ore and Nickel Ore Mining (0.14%)
55,000 Peru Copper Inc. Warrants expiring 3/18/06/(2)/ ............. 10,557
------------
Gold Ore Mining (0.19%)
25,000 Jaguar Mining Inc. Warrants expiring 12/31/07/(2)/ .......... 14,605
------------
Total Warrants (cost: $0) ................................ 25,162
------------
Total Investments (cost: $7,199,071) (100.00%) ........ $ 7,638,010
============
/(1)/ Security is not publicly traded. This security is valued by the Board of
Directors and represents 2.78% of total investments.
/(2)/ Non-income producing security.
ADR American Depository Receipt
FOXBY CORP. 4 See accompanying notes to financial statements.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2004
ASSETS:
Investments at market value
(cost: $7,199,071) (Note 2) .............................. $ 7,638,010
Dividend receivable ...................................... 5,574
Other assets ............................................. 2,725
---------------
Total assets ........................................... 7,646,309
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LIABILITIES:
Note payable (Note 7)....................................... 909,500
Accrued expenses ........................................... 32,052
Accrued management fees (Note 4) ........................... 5,584
---------------
Total liabilities ...................................... 947,136
---------------
NET ASSETS: (applicable to 2,602,847 shares
outstanding: 500,000,000 shares of $.01
par value authorized) ...................................... $ 6,699,173
===============
NET ASSET VALUE PER SHARE
($6,699,173 / 2,602,847 shares outstanding) ................ $ 2.57
===============
At December 31, 2004, net assets consisted of:
Paid-in capital ............................................ $ 23,268,722
Net unrealized appreciation on investments ................. 438,939
Accumulated net realized loss on investments
and futures .............................................. (17,008,488)
---------------
$ 6,699,173
===============
STATEMENT OF OPERATIONS
Year Ended December 31, 2004
INVESTMENT INCOME:
Dividends (net of foreign tax of $478) .................... $ 46,298
Interests ................................................. 14,777
---------------
Total investment income ................................. 61,075
---------------
EXPENSES:
Legal and compliance (Note 4) ............................. 105,069
Accounting and auditing (Note 4) .......................... 70,268
Investment management (Note 4) ............................ 67,655
Printing .................................................. 65,850
Directors ................................................. 10,454
Transfer agent ............................................ 7,816
Custodian ................................................. 7,500
Dividend expense .......................................... 5,705
Registration .............................................. 3,716
Other ..................................................... 3,649
---------------
Total expenses excluding interest expense 347,682
Interest expense ........................................ 5,152
---------------
Total operating expenses ................................ 352,834
---------------
Net investment loss ................................... (291,759)
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments .......................... 1,153,414
Unrealized depreciation on investments
during the period ....................................... (1,313,471)
---------------
Net realized and unrealized loss
on investments .......................................... (160,057)
---------------
Net decrease in net assets resulting
from operations ......................................... $ (451,816)
===============
See accompanying notes to financial statements. 5 FOXBY CORP.
STATEMENTS OF CHANGES IN NET ASSETS Years Ended December 31, 2004 and 2003
2004 2003
-------------- --------------
OPERATIONS:
Net investment loss ................................................ $ (291,759) $ (264,845)
Net realized gain (loss) on:
Investment transactions .......................................... 1,153,414 88,319
Futures transactions ............................................. - (1,331,563)
Change in unrealized appreciation (depreciation) on investments .... (1,313,471) 1,927,762
-------------- --------------
Net increase (decrease) in net assets resulting from operations .... (451,816) 419,673
-------------- --------------
Total change in net assets ....................................... (451,816) 419,673
NET ASSETS:
Beginning of year .................................................. 7,150,989 6,731,316
-------------- --------------
End of year ........................................................ $ 6,699,173 $ 7,150,989
============== ==============
FOXBY CORP. 6 See accompanying notes to financial statements.
Notes to Financial Statements
(1) Foxby Corp., formerly Internet Growth Fund, Inc. (the "Fund"), was
incorporated under the laws of the state of Maryland on August 24, 1998 and is
registered under the Investment Company Act of 1940 as a non-diversified,
closed-end management investment company. The Fund commenced operations on
October 29, 1999. On December 11, 2002, the Board of Directors of the Fund
approved a change in the fiscal year end to December 31.
(2) The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. With
respect to security valuation, securities traded on a national securities
exchange or the Nasdaq National Market System ("NMS") are valued at the last
reported sales price on the day the valuations are made. Such securities that
are not traded on a particular day and securities traded in the over-the-counter
market that are not on NMS are valued at the mean between the current bid and
asked prices. Certain of the securities in which the Fund invests are priced
through pricing services which may utilize a matrix pricing system which takes
into consideration factors such as yields, prices, maturities, call features and
ratings on comparable securities. Bonds may be valued according to prices quoted
by a dealer in bonds which offers pricing services. Debt obligations with
remaining maturities of 60 days or less are valued at cost adjusted for
amortization of premiums and accretion of discounts. Securities denominated in
foreign currencies are translated into U.S. dollars at prevailing exchange
rates. Securities for which quotations are not readily available or reliable and
other assets may be valued as determined in good faith by or under the direction
of the Board of Directors. Investment transactions are accounted for on the
trade date (the date the order to buy or sell is executed). Interest income is
recorded on the accrual basis. In preparing financial statements in conformity
with accounting principles generally accepted in the United States of America,
management makes estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(3) It is the Fund's current intention to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable net income to its shareholders. In addition, the Fund intends to
pay distributions as required to avoid imposition of excise tax. Therefore, no
federal income tax provision is required. At December 31, 2004, the Fund had a
capital loss carryforward of approximately $16,581,400 of which $8,986,200
expires in 2009, $6,757,800 expires in 2010, and $837,400 expires in 2011. No
capital gain will be distributed until the capital loss carryforwards have been
exhausted.
As of December 31, 2004, the components of distributable earnings on a tax basis
were as follows:
Capital loss carryforward $ (16,581,367)
Post-October loss* (427,121)
Unrealized appreciation 438,939
---------------
$ (16,569,549)
===============
* Under the current tax law, capital losses realized after October 31st and
prior to the Fund's fiscal year are deferred as occurring on the first day
of the following year.
Accounting principles generally accepted in the United States of America require
certain components of net assets to be reclassified between financial and tax
reporting. These reclassifications have no effect on
7 FOXBY CORP.
net assets or net asset value per share. For the year ended December 31, 2004,
the Fund reclassified $291,759 from accumulated investment loss to paid-in
capital.
(4) Effective July 12, 2002, the Fund retained CEF Advisers, Inc. as its
Investment Manager. Previously, LCM Capital Management, Inc. ("LCM") was the
manager. Under the terms of the Investment Management Agreement, the Fund pays
the Investment Manager a fee for its services at the annual rate of 1.00% of the
Fund's average daily net assets. The fee is accrued each calendar day and the
sum of the daily fee accruals is paid monthly. The daily fee accrual is computed
by multiplying 1/366 by the annual rate and multiplying the product by the net
asset value of the Fund as of the close of business on the previous day. LCM's
fee was substantially similar. Certain officers and directors of the Fund are
officers and directors of the Investment Manager. The Fund reimbursed the
Investment Manager $38,322 for providing at cost certain compliance services of
$12,644 and accounting services of $25,678 during the year ended December 31,
2004.
(5) The Fund has an arrangement with its custodian and transfer agent whereby
interest earned on uninvested cash balances was used to offset a portion of the
Fund's expenses. There were no credits during the year ended December 31, 2004.
Purchases and sales of investment securities (excluding shortterm investments)
aggregated $8,687,199 and $8,518,739, respectively, for the year ended December
31, 2004. At December 31, 2004, gross unrealized appreciation and depreciation
of investments for tax purposes were as follows:
Appreciation 520,738
Depreciation (81,799)
--------------
Net appreciation on investments $ 438,939
==============
At December 31, 2004, the cost of investments for federal income tax purposes
was $7,199,071.
(6) The Fund may engage in transactions in futures contracts. Upon entering into
a futures contract, the Fund is required to deposit with the broker an amount of
cash or cash equivalents equal to a certain percentage of the contract amount.
This is known as the "initial margin." Subsequent payments ("variation margin")
are made or received by the Fund each day, depending on the daily fluctuation of
the value of the contract. The daily change in the contract is included in
unrealized appreciation/depreciation on investments and futures contracts. The
Fund realizes a gain or loss when the contract is closed. Futures transactions
sometimes may reduce returns or increase volatility. In addition, futures can be
illiquid and highly sensitive to changes in their underlying security, interest
rate or index, and as a result can be highly volatile. A small investment in
certain futures could have a potentially large impact on a Fund's performance.
At December 31, 2004 the Fund had no open future contracts.
(7) The Fund may borrow through a committed bank line of credit. At December 31,
2004, there was $909,500 outstanding and the interest rate was at the borrower's
option of (i) overnight federal funds or (ii) LIBOR (30, 60, 90 days), each as
in effect from time to time, plus 0.75% per annum, calculated on the basis of
actual days elapsed for a 360-day year. For the year ended December 31, 2004,
the weighted average interest rate was 2.13% based on the balances outstanding
during the period and the weighted average amount outstanding was $112,554.
(8) Of the 2,602,847 shares of common stock outstanding at December 31, 2004,
Investor Service Center, Inc. ("ISC"), an affiliate of the Fund's Investment
Manager, owned 236,900 shares. Certain officers and directors of ISC are also
officers and directors of the Fund and the Investment Manager.
FOXBY CORP. 8
(9) In the Circuit Court for Baltimore City, Maryland, Civil Action No.
24-C-04-007613 filed on October 4, 2004, a group comprised of Richard J. Shaker,
Phillip Goldstein, Rajeev Das, and Andrew Dakos have sued the Fund and its
Directors, alleging various breaches by the Directors of fiduciary duty under
Maryland law and seeking declaratory and injunctive relief. This suit generally
arises out of the Fund's 2004 annual meeting of stockholders and the Fund's
Bylaws. The Fund has filed a motion to dismiss the suit or, in the alternative,
for summary judgment. In connection with these and other legal matters in the
year ended December 31, 2004, legal expenses incurred by the Fund were
approximately $83,200.
FINANCIAL HIGHLIGHTS
Year Year Nine Months Year Year Period
Ended Ended Ended Ended Ended Ended
12/31/04 12/31/03 12/31/02 3/31/02 3/31/01 3/31/00*
--------- --------- ----------- -------- --------- --------
PER SHARE DATA ...............................
Net asset value at beginning of period ....... $ 2.75 $ 2.59 $ 3.27 $ 3.77 $ 14.81 $ 9.35
--------- --------- ----------- -------- --------- --------
Income from investment operations:
Net investment (loss) ...................... (.11) (.10) (0.04) (0.08) (0.09) (0.05)
Net realized and unrealized gain (loss) on
investments .............................. (.07) .26 (0.64) (0.16) (10.45)/(c)/ 5.51
--------- --------- ----------- -------- --------- --------
Total from investment operations ............. (.18) .16 (0.68) (0.24) (10.54) 5.46
--------- --------- ----------- -------- --------- --------
Less distributions:
Distributions to shareholders .............. - - - (0.26) (0.50) -
--------- --------- ----------- -------- --------- --------
Net asset value at end of period ............. $ 2.57 $ 2.75 $ 2.59 $ 3.27 $ 3.77 $ 14.81
========= ========= =========== ======== ========= ========
TOTAL RETURN ON NET ASSET
VALUE BASIS (a) ............................ (6.55)% 6.18% (20.80)% (6.65)% (73.46)% 58.40%
========= ========= =========== ======== ========= ========
TOTAL RETURN ON MARKET
VALUE BASIS (a) ............................ (7.50)% 15.94% (31.00)% (2.06)% (71.89)% 24.38%
========= ========= =========== ======== ========= ========
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) .. $ 6,699 $ 7,151 $ 6,731 $ 8,503 $ 9,735 $ 39,105
========= ========= =========== ======== ========= ========
Ratio of expenses to average net assets ...... 5.27% 4.39% 4.70%/(b)/ 3.17% 2.19% 1.78%/(b)/
========= ========= =========== ======== ========= ========
Ratio of net investment income (loss) to
average net assets ......................... (4.31)% (3.91)% (3.30)%/(b)/ (2.41)% (0.93)% (0.94)%/(b)/
========= ========= =========== ======== ========= ========
Portfolio turnover rate ...................... 164.08% 75.39% 267.87% 89.31% 550.56% 168.62%
========= ========= =========== ======== ========= ========
* From commencement of operations on October 29, 1999.
(a) Total return on market value basis is calculated assuming a purchase of
common stock on the opening of the first day and sale on the closing of the
last day of each period reported. Dividends and distributions, if any, are
assumed for purposes of this calculation, to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. Generally, tota
return on net asset value basis will be higher than total return on market
value basis in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total return on net asset
value basis will be lower than total return on market value basis in
periods where there is a decrease in the discount or an increase in the
premium of the market value to the net asset value from the beginning to
the end of such periods. Total return calculated for a period of less than
one year is not annualized. The calculation does not reflect brokerage
commissions, if any.
(b) Annualized.
(c) Includes $0.06 of gains resulting from the buy back of treasury shares at a
discount to net asset value.
9 FOXBY CORP.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Foxby Corp.:
We have audited the accompanying statement of assets and liabilities of Foxby
Corp. (formerly Internet Growth Fund, Inc.) (the "Fund"), including the schedule
of investments as of December 31, 2004, the related statement of operations for
the year then ended and the statement of changes in net assets for the two years
then ended, and the financial highlights for the two years then ended, the nine
months ended December 31, 2002 and the year ended March 31, 2002. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
highlights for the year ended March 31, 2001 and the period March 31, 2000 were
audited by other auditors whose report dated May 14, 2001 expressed an
unqualified opinion on the statement of changes in net assets and the financial
highlights.
We conducted our audits in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 2004 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation.We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Foxby
Corp. as of December 31, 2004, the results of its operations, the changes in its
net assets, and the financial highlights for the periods noted above, in
conformity with accounting principles generally accepted in the United States of
America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 15, 2005
FOXBY CORP. 10
PRIVACY POLICY
The Fund recognizes the importance of protecting the personal and financial
information of its shareholders. We consider each shareholder's personal
information to be private and confidential. This describes the practices
followed by us to protect our shareholders' privacy. We may obtain information
about you from the following sources: (1) information we receive from you on
forms and other information you provide to us whether in writing, by telephone,
electronically or by any other means; (2) information regarding your
transactions with us, our corporate affiliates, or others. We do not sell
shareholder personal information to third parties. We will collect and use
shareholder personal information only to service shareholder accounts. This
information may be used by us in connection with providing services or financial
products requested by shareholders. We will not disclose shareholder personal
information to any nonaffiliated third party except as permitted by law. We take
steps to safeguard shareholder information. We restrict access to nonpublic
personal information about you to those employees and service providers who need
to know that information to provide products or services to you. With our
service providers we maintain physical, electronic, and procedural safeguards to
guard your nonpublic personal information. Even if you are no longer a
shareholder, our Privacy Policy will continue to apply to you. We reserve the
right to modify, remove or add portions of this Privacy Policy at any time.
WWW.FOXBYCORP.COM
Visit us on the Internet at www.foxbycorp. The site provides information about
the Fund including market performance, net asset value (NAV), dividends, press
releases, and shareholder reports. For further information, you can email us at
info@foxbycorp.com. The Fund is a member of the Closed-End Fund Association
(CEFA). Its website address is www.cefa.com. CEFA is solely responsible for the
content of its website.
QUARTERLY HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available on the SEC's Internet site at http://www.sec.gov and may be
reviewed and copied at the SEC's Public Reference Room. Copies of this
information can be obtained, after paying a duplicating fee, by e-mail request
to publicinfo@sec.gov, or by writing to the SEC's Public Reference Section,
Washington, DC 20549-0102. The Fund's Investment Company Act file number is
811-09261. The Fund makes the information on Form N-Q available to shareholders
upon request free of charge by e-mail request to info@foxbycorp.com or by
calling toll-free 1-800-472-4160.
PROXY VOTING
The Fund's Proxy Voting Guidelines (the "Guidelines") as well as its voting
record for the 12 months ended December 31, 2004, are available without charge,
by calling the Fund collect at 1-212-344-6310 and on the SEC's website at
http://www.sec.gov. The Guidelines are also posted on the Fund's website at
http://www.foxbycorp.com.
DIVIDEND REINVESTMENT PLAN
The Fund has adopted a Dividend Reinvestment Plan (the "Plan"). Under the Plan,
each dividend and capital gain distribution, if any, declared by the Fund on
outstanding shares will, unless elected otherwise by each shareholder by
notifying the Fund in writing at any time prior to the record date for a
particular dividend or distribution, be paid on the payment date fixed by the
Board of Directors or a committee thereof in additional shares. If the Market
Price (as defined below) per share is equal to or exceeds the net asset value
per share at the time shares are valued for the purpose of determining the
number of shares equivalent to the cash dividend or capital gain distribution
(the "Valuation Date"), participants will be issued additional shares equal to
the amount of such dividend divided by the greater of that net asset value per
share or 95% of that Market Price per share. If the Market Price per share is
less than such net asset value on the Valuation Date, participants will be
issued additional shares equal to the amount of such dividend divided by the
Market Price. The Valuation Date is the day before the dividend or distribution
payment date or, if that day is not an American Stock Exchange trading day, the
next trading day. For all purposes of the Plan: (a) the Market Price of the
shares on a particular date shall be the average closing market price on the
five trading days the shares traded ex-dividend on the Exchange prior to such
date or, if no sale occurred on any of these days, then the mean between the
closing bid and asked quotations, for the shares on the Exchange on such day,
and (b) net asset value per share on a particular date shall be as determined by
or on behalf of the Fund.
Unaudited 11 FOXBY CORP.
FUND INFORMATION
Investment Manager Custodian
CEF Advisers, Inc. State Street Bank & Trust Co.
11 Hanover Square 801 Pennsylvania Avenue
New York, NY 10005 Kansas City, MO 64105
Independent Registered Public Stock Transfer Agent and Registrar
Accounting Firm American Stock Transfer & Trust Co.
Tait, Weller & Baker 59 Maiden Lane
1818 Market St., Suite 2400 New York, NY 10038
Philadelphia, PA 19103 1-800-278-4353
www.amstock.com
Internet
www.foxbycorp.com
email: info@foxbycorp.com
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RESULTS OF THE ANNUAL MEETING
The Fund's Annual Meeting was held on September 7, 2004 at the office of the
Fund at 11 Hanover Square, New York, New York for the purpose of electing the
following directors to serve as follows with the votes received as set forth
below:
Director Class Term Expiring* Votes For Votes Withheld
--------------- ----- ------- --------- --------- --------------
James E. Hunt I 4 years 2008 744,695 16,387
Bruce B. Huber II 5 years 2009 744,695 16,387
John B. Russell V 2 years 2007 744,695 16,387
* And until his successor is duly elected and qualifies. Directors whose term
of office continued after the meeting are Peter K.Werner and Thomas B.
Winmill.
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DIRECTORS AND OFFICERS
The following table sets forth certain information concerning the other
Directors currently serving on the Board of the Fund. Each Director who is
deemed to be an "interested person" because he is an "affiliated person" as
defined in the Investment Company Act of 1940, as amended (the "1940 Act"), is
indicated by an asterisk.
Number of Portfolios Other Public
in Investment Company
Name, Principal Occupation, Business Experience for Past Five Years, Company Complex Directorships
Address, and Age Director Since Overseen by Director Held by Director
-------------------------------------------------------------------- -------------- -------------------- ----------------
Class I:
JAMES E. HUNT - He is a Managing Director of Hunt Howe Partners LLC 2004 5 0
executive recruiting consultants. He was born on December 14, 1930.
Class II:
BRUCE B. HUBER, CLU, ChFC, MSFS - He is a Financial Representative 2004 5 0
with New England Financial, specializing in financial, estate and
insurance matters. He was born on February 7, 1930.
Class III:
PETER K. WERNER - Since 1996 he has taught and directed 2002 5 0
many programs at The Governor Dummer Academy. Previously he was
Vice President of Money Market Trading at Lehman Brothers. He was
born on August 16, 1959.
FOXBY CORP. 12 Unaudited
Class IV:
THOMAS B. WINMILL* - He is President, Chief Executive Officer, and 2002 5 Bexil Corporation
General Counsel of the Fund, as well as the other investment and Tuxis
companies (collectively, the "Investment Company Complex") advised Corporation
by CEF Advisers, Inc. (the "Investment Manager") and its
affiliates, and of Winmill & Co. Incorporated ("WCI"). He also is
President of the Investment Manager. He is a member of the New York
State Bar and the SEC Rules Committee of the Investment Company
Institute. He was born on June 25, 1959.
Class V:
JOHN B. RUSSELL - He is a Director of Wheelock, Inc., a manu- 2004 5 0
facturer of signal products, and a consultant for the National
Executive Service Corps. He was born on February 9, 1923.
* He is an "interested person" of the Fund as defined in the 1940 Act due to
his affiliation with the Investment Manager.
Messrs. Huber, Hunt, Russell and Werner also serve on the Audit and Nominating
Committees of the Board. Mr. Winmill also serves on the Executive Committee of
the Board.
The executive officers, other than those who serve as Directors, and their
relevant biographical information are set forth below. Unless otherwise noted,
the address of record for the officers is 11 Hanover Square, New York, New York
10005
Name and Age Principal Occupation During Past 5 years
------------------------------------------------------------------ -------------------------------------------------
William G. Vohrer Chief Accounting Officer, Chief Financial Officer, Treasurer
Born on August 17, 1950 and Vice President since 2002. He also is Chief Accounting
Officer, Chief Financial Officer, Treasurer and Vice
President of the other investment companies in the
Investment Company Complex, the Investment Manager and WCI
and its affiliates. From 1999 to 2001, he consulted on
accounting matters.
Marion E. Morris Senior Vice President since 2002. She is also a Senior Vice
Born on June 17, 1945 President of the other investment companies in the
Investment Company Complex, the Investment Manager and WCI
and its affiliates. She is Director of Fixed Income and a
member of the Investment Policy Committee of the Investment
Manager. Previously, she served as Vice President of Salomon
Brothers, The First Boston Corporation, and Cantor
Fitzgerald.
Monica Pelaez Vice President, Secretary and Chief Compliance Officer since
Born on November 5, 1971 2002. She also is Vice President, Secretary and Chief
Compliance Officer of the other investment companies in the
Investment Company Complex, the Investment Manager, and WCI
and its affiliates. She is a member of the New York State
Bar.
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This report, including the financial statements herein, is transmitted to the
shareholders of the Fund for their information. The financial information
included herein is taken from the records of the Fund. This is not a
prospectus, circular or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in this report. Pursuant to
Section 23 of the Investment Company Act of 1940, notice is hereby given that
the Fund may in the future, purchase shares of its common stock in the open
market. These purchases may be made from time to time, at such times, and in
such amounts, as may be deemed advantageous to the Fund, although nothing
herein shall be considered a commitment to purchase such shares.
================================================================================
Unaudited 13 FOXBY CORP.
FOXBY CORP.
--------------------------------------------------------------------------------
11 Hanover Square
New York, NY 10005
Printed on recycled paper [GRAPHIC APPEARS HERE]
FXX-AR-12/04
Item 2. Code of Ethics
(a) The registrant has adopted a code of ethics (the "Code") that applies to
its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or a
third party.
(b) No information need be disclosed pursuant to this paragraph.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) (1) The Code is attached hereto as Exhibit 99.CODE ETH.
(2) The text of the Code can be on the registrant's website,
www.foxbycorp.com.
(3) A copy of the Code may be obtained free of charge by calling collect
1-212-344-6310.
Item 3. Audit Committee Financial Expert
The registrant's Board of Directors has determined that it has four "audit
committee financial experts" serving on its audit committee, each of whom are
"independent" Directors: Bruce B. Huber, James E. Hunt, John B. Russell and
Peter K. Werner. Under applicable securities laws, a person who is determined to
be an audit committee financial expert will not be deemed an "expert" for any
purpose, including without limitation for the purposes of Section 11 of the
Securities Act of 1933, as a result of being designated or identified as an
audit committee financial expert. The designation or identification of a person
as an audit committee financial expert does not impose on such person any
duties, obligations, or liabilities that are greater than the duties,
obligations, and liabilities imposed on such person as a member of the audit
committee and Board of Directors in the absence of such designation or
identification.
Item 4. Principal Accountant Fees and Services
(a) Disclose, under the caption Audit Fees, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the
principal accountant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those
fiscal years.
AUDIT FEES
2003 - $9,500
2004 - $9,000
(b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed
in each of the last two fiscal years for assurance and related services by
the principal accountant that are reasonably related to the performance of
the audit of the registrant's financial statements and are not reported
under paragraph (a) of this Item. Registrants shall describe the nature of
the services comprising the fees disclosed under this category.
AUDIT RELATED FEES
2003 - $1,000
2004 - $1,000
Audit-related fees include amounts reasonably related to the performance of
the audit of the registrant's financial statements, including the issuance
of a report on internal controls and review of periodic reporting.
(c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax planning.
Registrants shall describe the nature of the services comprising the fees
disclosed under this category.
TAX FEES
2003 - $2,500
2004 - $3,000
Tax fees include amounts related to tax compliance, tax planning, and tax
advice.
(d) Disclose, under the caption All Other Fees, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a)
through (c) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
ALL OTHER FEES
2003 - N/A
2004 - N/A
(e) (1) The registrant's audit committee has adopted a policy to consider for
pre-approval any non-audit services proposed to be provided by the
auditors to the registrant, and any non-audit services proposed to be
provided by such auditors to the registrant's investment manager, if
any, which have a direct impact on registrant operations or financial
reporting. Such pre-approval of non-audit services proposed to be
provided by the auditors to the registrant is not necessary, however,
under the following circumstances: (1) all such services do not
aggregate to more than 5% of total revenues paid by the registrant to
the auditor in the fiscal year in which services are provided, (2)
such services were not recognized as non-audit services at the time of
the engagement, and (3) such services are brought to the attention of
the audit committee, and approved by the audit committee, prior to the
completion of the audit.
(2) No services included in (b) - (d) above were approved pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees proposed to be billed or billed for the most recent
fiscal year and the preceding fiscal year by the registrant's principal
accountant for non-audit services rendered to the registrant, its
investment manager, and any entity controlling, controlled by, or under
common control with the investment manager that provides ongoing services
to the registrant were $38,750 and $41,000, respectively.
(h) The registrant's audit committee has considered the provision of non-audit
services that were rendered by accountant to the registrant's investment
manager and its affiliates, including, if applicable, any that were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation
S-X, to be compatible with maintaining the independence of the accountant,
taking into account representations from the accountant, in accordance with
Independence Standards Board requirements and the meaning of the Securities
laws administered by the SEC, regarding its independence from the
registrant, its investment manager and the investment manager's affiliates.
Item 5. Audit Committee of Listed Registrants
The registrant has a standing audit committee. The members of the audit
committee are Bruce B. Huber, James E. Hunt, John B. Russell and Peter K.
Werner.
Item 6. Schedule of Investments
Included as part of the report to shareholders filed under Item 1 of this
Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Amended Proxy Voting Policies and Procedures
Foxby Corp.
Global Income Fund, Inc.
Midas Fund, Inc.
Midas Special Equities Fund, Inc.
Tuxis Corporation
Foxby Corp., Global Income Fund, Inc., Midas Fund, Inc., Midas Special Equities
Fund, Inc. and Tuxis Corporation (the "Funds") delegate the responsibility for
voting proxies of portfolio companies held in each Fund's portfolio to
Institutional Shareholder Services, Inc. ("ISS"). The Proxy Voting Guidelines of
ISS are incorporated by reference herein as each Fund's proxy voting policies
and procedures, as supplemented by the terms hereof. Each Fund retains the right
to override the delegation to ISS on a case-by-case basis, in which case the
ADDENDUM -- NON-DELEGATED PROXY VOTING POLICIES AND PROCEDURES supercede the
Proxy Voting Guidelines of ISS in their entirety. In all cases, a Fund's proxies
will be voted in the best interests of the Fund.
With respect to a vote upon which a Fund overrides the delegation to ISS,
to the extent that such vote presents a material conflict of interest between
the Fund and its investment adviser, distributor, or any affiliated person of
the Fund's investment adviser or distributor, the Fund will disclose such
conflict to, and obtain consent from, its Independent Directors, or a committee
thereof, prior to voting the proxy.
January 1, 2004
--------
1 For the open-end investment companies, Midas Fund, Inc. and Midas Special
Equities Fund, Inc., the investment adviser is Midas Management Corporation and
the distributor is Investor Service Center, Inc. For Foxby Corp. and Global
Income Fund, Inc., the investment adviser is CEF Advisers, Inc. Tuxis
Corporation is internally managed. The closed-end funds, Foxby Corp., Global
Income Fund, Inc. and Tuxis Corporation, do not have a distributor.
2 Each Fund's Independent Directors are those directors who are not interested
persons of the Fund, its investment adviser and distributor.
ADDENDUM --
NON-DELEGATED PROXY VOTING POLICIES AND PROCEDURES
These proxy voting policies and procedures are intended to provide general
guidelines regarding the issues they address. As such, they cannot be
"violated." In each case the vote will be based on maximizing shareholder value
over the long term, as consistent with overall investment objectives and
policies.
BOARD AND GOVERNANCE ISSUES
o Board of Director Composition
Typically, we will not object to slates with at least a majority of independent
directors.
We generally will not object to shareholder proposals that request that the
board audit, compensation and/or nominating committees include independent
directors exclusively.
o Approval of Independent Auditors
We will evaluate on a case-by-case basis instances in which the audit firm has a
significant audit relationship with the company to determine whether we believe
independence has been compromised.
We will review and evaluate the resolutions seeking ratification of the auditor
when fees for financial systems design and implementation substantially exceed
audit and all other fees, as this can compromise the independence of the
auditor.
We will carefully review and evaluate the election of the audit committee chair
if the audit committee recommends an auditor whose fees for financial systems
design and implementation substantially exceed audit and all other fees, as this
can compromise the independence of the auditor.
o Increase Authorized Common Stock
We will generally support the authorization of additional common stock necessary
to facilitate a stock split.
We will generally support the authorization of additional common stock.
o Blank Check Preferred Stock
Blank check preferred is stock with a fixed dividend and a preferential claim on
company assets relative to common shares. The terms of the stock (voting,
dividend and conversion rights) are determined at the discretion of the Board
when the stock is issued. Although such an issue can in theory be used for
financing purposes, often it has been used in connection with a takeover
defense. Accordingly, we will generally evaluate the creation of blank check
preferred stock.
o Classified or "Staggered" Board
On a classified (or staggered) board, directors are divided into separate
classes (usually three) with directors in each class elected to overlapping
three-year terms. Companies argue that such Boards offer continuity in direction
which promotes long-term planning. However, in some instances they may serve to
deter unwanted takeovers since a potential buyer would have to wait at least two
years to gain a majority of Board seats.
We will vote on a case-by-case basis on issues involving classified boards.
o Supermajority Vote Requirements
Supermajority vote requirements in a company's charter or bylaws require a level
of voting approval in excess of simple majority. Generally, supermajority
provisions require at least 2/3 affirmative vote for passage of issues.
We will vote on a case-by-case basis regarding issues involving supermajority
voting.
o Restrictions on Shareholders to Act by Written Consent
Written consent allows shareholders to initiate and carry out a shareholder
action without waiting until the annual meeting or by calling a special meeting.
It permits action to be taken by the written consent of the same percentage or
outstanding shares that would be required to effect the proposed action at a
shareholder meeting.
We will generally not object to proposals seeking to preserve the right of
shareholders to act by written consent.
o Restrictions on Shareholders to Call Meetings
We will generally not object to proposals seeking to preserve the right of the
shareholders to call meetings.
o Limitations, Director Liability and Indemnification
Because of increased litigation brought against directors of corporations and
the increase costs of director's liability insurance, many states have passed
laws limiting director liability for those acting in good faith. Shareholders,
however, often must opt into such statutes. In addition, many companies are
seeking to add indemnification of directors to corporate bylaws.
We will generally support director liability and indemnification resolutions
because it is important for companies to be able to attract the most qualified
individuals to their Boards.
o Reincorporation
Corporations are in general bound by the laws of the state in which they are
incorporated. Companies reincorporate for a variety of reasons including
shifting incorporation to a state where the company has its most active
operations or corporate headquarters, or shifting incorporation to take
advantage of state corporate takeovers laws.
We typically will not object to reincorporation proposals.
o Cumulative Voting
Cumulative voting allows shareholders to cumulate their votes behind one or a
few directors running for the board - that is, cast more than one vote for a
director thereby helping a minority of shareholders to win board representation.
Cumulative voting generally gives minority shareholders an opportunity to effect
change in corporate affairs.
We typically will not object to proposals to adopt cumulative voting in the
election of directors.
o Dual Classes of Stock
In order to maintain corporate control in the hands of a certain group of
shareholders, companies may seek to create multiple classes of stock with
differing rights pertaining to voting and dividends.
We will vote on a case-by-case basis dual classes of stock. However, we will
typically not object to dual classes of stock.
o Limit Directors' Tenure
In general, corporate directors may stand for re-election indefinitely.
Opponents of this practice suggest that limited tenure would inject new
perspectives into the boardroom as well as possibly creating room for directors
from diverse backgrounds; however, continuity is important to corporate
leadership and in some instances alternative means may be explored for injecting
new ideas or members from diverse backgrounds into corporate boardrooms.
Accordingly, we will vote on a case-by-case basis regarding attempts to limit
director tenure.
o Minimum Director Stock Ownership
The director share ownership proposal requires that all corporate directors own
a minimum number of shares in the corporation. The purpose of this resolution is
to encourage directors to have the same interest as other shareholders.
We normally will not object to resolutions that require corporate directors to
own shares in the company.
EXECUTIVE COMPENSATION
o Disclosure of CEO, Executive, Board and Management Compensation
On a case-by-case basis, we will support shareholder resolutions requesting
companies to disclose the salaries of top management and the Board of Directors.
o Compensation for CEO, Executive, Board and Management
We typically will not object to proposals regarding executive compensation if we
believe the compensation clearly does not reflect the current and future
circumstances of the company.
o Formation and Independence of Compensation Review Committee
We normally will not object to shareholder resolutions requesting the formation
of a committee of independent directors to review and examine executive
compensation.
o Stock Options for Board and Executives
We will generally review the overall impact of stock option plans that in total
offer greater than 25% of shares outstanding because of voting and earnings
dilution.
We will vote on a case-by-case basis option programs that allow the repricing of
underwater options.
In most cases, we will oppose stock option plans that have option exercise
prices below the marketplace on the day of the grant.
Generally, we will support options programs for outside directors subject to the
same constraints previously described.
o Employee Stock Ownership Plan (ESOPs)
We will generally not object to ESOPs created to promote active employee
ownership. However, we will generally oppose any ESOP whose purpose is to
prevent a corporate takeover.
o Changes to Charter or By-Laws
We will conduct a case-by-case review of the proposed changes with the voting
decision resting on whether the proposed changes are in shareholder's best
interests.
o Confidential Voting
Typically, proxy voting differs from voting in political elections in that the
company is made aware of shareholder votes as they are cast. This enables
management to contact dissenting shareholders in an attempt to get them to
change their votes.
We generally will not object to confidential voting.
o Equal Access to Proxy
Equal access proposals ask companies to give shareholders access to proxy
materials to state their views on contested issues, including director
nominations. In some cases they would actually allow shareholders to nominate
directors. Companies suggest that such proposals would make an increasingly
complex process even more burdensome.
In general, we will not oppose resolutions for equal access proposals.
o Golden Parachutes
Golden parachutes are severance payments to top executives who are terminated or
demoted pursuant to a takeover. Companies argue that such provisions are
necessary to keep executives from "jumping ship" during potential takeover
attempts.
We will not object to the right of shareholders to vote on golden parachutes
because they go above and beyond ordinary compensation practices. In evaluating
a particular golden parachute, we will examine if considered material total
management compensation, the employees covered by the plan, and the quality of
management and all other factors deemed pertinent.
MERGERS AND ACQUISITIONS
o Mergers, Restructuring and Spin-offs
A merger, restructuring, or spin-off in some way affects a change in control of
the company's assets. In evaluating the merit of each issue, we will consider
the terms of each proposal. This will include an analysis of the potential
long-term value of the investment.
On a case by case basis, we will review management proposals for merger or
restructuring to determine the extent to which the transaction appears to offer
fair value and other proxy voting policies stated are not violated.
o Poison Pills
Poison pills (or shareholder rights plans) are triggered by an unwanted takeover
attempt and cause a variety of events to occur which may make the company
financially less attractive to the suitor. Typically, directors have enacted
these plans without shareholder approval. Most poison pill resolutions deal with
putting poison pills up for a vote or repealing them altogether.
We typically will not object to most proposals to put rights plans up for a
shareholder vote. In general, poison pills will be reviewed for the additional
value provided to shareholders, if any.
o Anti-Greenmail Proposals
Greenmail is the payment a corporate raider receives in exchange for his/her
shares. This payment is usually at a premium to the market price, so while
greenmail can ensure the continued independence of the company, it discriminates
against other shareholders.
We generally will support anti-greenmail provisions.
o Opt-Out of State Anti-takeover Law
A strategy for dealing with anti-takeover issues has been a shareholder
resolution asking a company to opt-out of a particular state's anti-takeover
laws.
We generally will not object to bylaws changes requiring a company to opt out of
state anti-takeover laws. Resolutions requiring companies to opt into state
anti-takeover statutes generally will be subject to further review for
appropriateness.
o Other Situations
In the event an issue is not addressed in the above guidelines, we will
determine on a case-by-case basis any proposals that may arise from management
or shareholders. To the extent that a proposal from management does not infringe
on shareholder rights, we will generally support management's position. We may
also elect to abstain or not vote on any given matter.
January 1, 2004
ISS Proxy Voting Guidelines Summary
Following is a concise summary of ISS's proxy voting policy guidelines.
1. Auditors
Vote CASE-BY-CASE on shareholder proposals on auditor rotation, taking into
account these factors:
o Tenure of the audit firm
o Establishment and disclosure of a renewal process whereby the auditor is
regularly evaluated for both audit quality and competitive price
o Length of the rotation period advocated in the proposal
o Significant audit-related issues
2. Board of Directors
Voting on Director Nominees in Uncontested Elections
Generally, vote CASE-BY-CASE. But WITHHOLD votes from:
o Insiders and affiliated outsiders on boards that are not at least majority
independent
o Directors who sit on more than six boards
o Compensation Committee members if there is a disconnect between the CEO's pay
and performance
Classification/Declassification of the Board
Vote AGAINST proposals to classify the board.
Vote FOR proposals to repeal classified boards and to elect all directors
annually.
Independent Chairman (Separate Chairman/CEO)
Vote FOR shareholder proposals asking that the chairman and CEO positions be
separated (independent chairman), unless the company has a strong countervailing
governance structure, including a lead director, two-thirds independent board,
all independent key committees, and established governance guidelines.
Majority of Independent Directors/Establishment of Committees
Vote FOR shareholder proposals asking that a majority or more of directors be
independent unless the board composition already meets the proposed threshold by
ISS's definition of independence.
Open Access (shareholder resolution)
Vote CASE-BY-CASE basis, taking into account the ownership threshold proposed in
the resolution and the proponent's rationale.
3. Shareholder Rights
Shareholder Ability to Act by Written Consent
Vote against proposals to restrict or prohibit shareholder ability to take
action by written consent. Vote for proposals to allow or make easier
shareholder action by written consent.
Shareholder Ability to Call Special Meetings
Vote against proposals to restrict or prohibit shareholder ability to call
special meetings. Vote for proposals that remove restrictions on the right of
shareholders to act independently of management.
Supermajority Vote Requirements
Vote AGAINST proposals to require a supermajority shareholder vote.
Vote FOR proposals to lower supermajority vote requirements.
Cumulative Voting
Vote against proposals to eliminate cumulative voting. Vote proposals to restore
or permit cumulative voting on a case-by-case basis relative to the company's
other governance provisions.
Confidential Voting
Vote FOR shareholder proposals requesting that corporations adopt confidential
voting, use independent vote tabulators and use independent inspectors of
election. In proxy contests, support confidential voting proposals only if
dissidents agree to the same policy that applies to management.
4. Proxy Contests
Voting for Director Nominees in Contested Elections
Votes in a contested election of directors must be evaluated on a CASE-BY-CASE
basis, considering the factors that include the long-term financial performance,
management's track record, qualifications of director nominees (both slates),
and an evaluation of what each side is offering shareholders.
Reimbursing Proxy Solicitation Expenses
Vote CASE-BY-CASE. Where ISS recommends in favor of the dissidents, we also
recommend voting for reimbursing proxy solicitation expenses.
5. Poison Pills
Vote for shareholder proposals that ask a company to submit its poison
pill for shareholder ratification. Review on a case-by-case basis shareholder
proposals to redeem a company's poison pill and management proposals to ratify a
poison pill.
6. Mergers and Corporate Restructurings
Vote CASE-BY-CASE on mergers and corporate restructurings based on such features
as the fairness opinion, pricing, strategic rationale, and the negotiating
process.
7. Reincorporation Proposals
Proposals to change a company's state of incorporation should be evaluated on a
CASE-BY-CASE basis, giving consideration to both financial and corporate
governance concerns, including the reasons for reincorporating, a comparison of
the governance provisions, and a comparison of the jurisdictional laws.
Vote FOR reincorporation when the economic factors outweigh any neutral or
negative governance changes.
8. Capital Structure
Common Stock Authorization
Votes on proposals to increase the number of shares of common stock authorized
for issuance are determined on a CASE-BY-CASE basis using a model developed by
ISS.
Vote AGAINST proposals at companies with dual-class capital structures to
increase the number of authorized shares of the class of stock that has superior
voting rights.
Vote FOR proposals to approve increases beyond the allowable increase when a
company's shares are in danger of being delisted or if a company's ability to
continue to operate as a going concern is uncertain.
Dual-class Stock
Vote AGAINST proposals to create a new class of common stock with superior
voting rights.
Vote FOR proposals to create a new class of nonvoting or
subvoting common stock if:
o It is intended for financing purposes with minimal or no dilution to current
shareholders
o It is not designed to preserve the voting power of an insider or significant
shareholder
9. Executive and Director Compensation
ISS applies a quantitative methodology, but for Russell 3000 companies will also
apply a pay-for-performance overlay in assessing equity-based compensation
plans.
Vote AGAINST a plan if the cost exceeds the allowable cap.
Vote FOR a plan if the cost is reasonable (below the cap) unless either of the
following conditions apply:
o The plan expressly permits repricing without shareholder approval for listed
companies; or
o There is a disconnect between the CEO's pay and performance (an increase in
pay and a decrease in performance), the main source for the pay increase is
equity-based, and the CEO participates in the plan being voted on.
Management Proposals Seeking Approval to Reprice Options
Votes on management proposals seeking approval to reprice options are evaluated
on a CASE-BY-CASE basis giving consideration to the following:
o Historic trading patterns
o Rationale for the repricing
o Value-for-value exchange
o Option vesting
o Term of the option
o Exercise price
o Participation
Employee Stock Purchase Plans
Votes on employee stock purchase plans should be determined on a CASE-BY-CASE
basis.
Vote FOR employee stock purchase plans where all of the following apply:
o Purchase price is at least 85 percent of fair market value
o Offering period is 27 months or less, and
o Potential voting power dilution (VPD) is 10 percent
or less.
Vote AGAINST employee stock purchase plans where any of the opposite
conditions obtain.
Shareholder Proposals on Compensation
Generally vote CASE-BY-CASE, taking into account company performance, pay level
versus peers, pay level versus industry, and long term corporate outlook. But
generally vote FOR shareholder proposals that:
o Advocate performance-based equity awards (indexed options, premium-priced
options, performance-vested awards), unless the proposal is overly restrictive
or the company already substantially uses such awards
o Call for a shareholder vote on extraordinary benefits contained in
Supplemental Executive Retirement Plans (SERPs).
10. Social and Environmental Issues
These issues cover a wide range of topics, including consumer and public safety,
environment and energy, general corporate issues, labor standards and human
rights, military business, and workplace diversity.
In general, vote CASE-BY-CASE. While a wide variety of factors goes into each
analysis, the overall principal guiding all vote recommendations focuses on how
the proposal will enhance the economic value of the company.
Vote:
o FOR proposals for the company to amend its Equal Employment Opportunity (EEO)
Statement to include reference to sexual orientation, unless the change would
result in excessive costs for the company.
o AGAINST resolutions asking for the adopting of voluntary labeling of
ingredients or asking for companies to label until a phase out of such
ingredients has been completed.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not required at this time.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's board of directors made or
implemented after the registrant last provided disclosure in response to the
requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or
this Item.
Item 11. Controls and Procedures
(a) The Principal Executive Officer and Principal Financial Officer have
concluded that the registrant's disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances
that material information relating to the registrant is made known to them by
the appropriate persons, based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) There were no significant changes in the registrant's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of the evaluation referenced in (a)(i) above.
Item 12. Exhibits
(a)(1) Code of Ethics for Principal Executive and Senior Financial Officers
attached hereto as Exhibit 99.CODE ETH.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940(17 CFR 270.360a-2) attached hereto as Exhibits
EX-31 and EX-32.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Foxby Corp.
By: /s/ Thomas B. Winmill
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Thomas B. Winmill, President
Date: March 11, 2005
By: /s/ William G. Vohrer
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William G. Vohrer, Treasurer
Date: March 11, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: /s/ Thomas B. Winmill
---------------------------------------------
Thomas B. Winmill, President
Date: March 11, 2005
By: /s/ William G. Vohrer
---------------------------------------------
William G. Vohrer, Treasurer
Date: March 11, 2005