SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
REGISTRATION NO. 2-66935
POST-EFFECTIVE AMENDMENT NO. 22
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-3007
AMENDMENT NO. 21
VENTURE INCOME (+) PLUS, INC.
-----------------------------
124 East Marcy Street
Santa Fe, New Mexico 87501
(1-505-983-4335)
Agent For Service: Sheldon R. Stein
D'Ancona & Pflaum
30 North LaSalle Street
Suite 2900
Chicago, Illinois 60602
(1-312-580-2014)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
----
on ______________, pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)
----
x on October 1, 1995, pursuant to paragraph (a)
---- of Rule 485
In accordance with Section 24(f) of the Investment Company Act of 1940
and Rule 24f-2 thereunder, Registrant has previously elected to register
an indefinite number of shares of its Common Stock. The 24f-2 Notice
was filed on or about May 30, 1995.
<PAGE>
FORM N-1A
VENTURE INCOME (+) PLUS, INC.
-----------------------------
POST-EFFECTIVE AMENDMENT NO. 22 TO
REGISTRATION STATEMENT NO. 2-66935
UNDER THE SECURITIES ACT OF 1933 AND
AMENDMENT NO. 21 UNDER THE INVESTMENT
COMPANY ACT OF 1940 TO REGISTRATION
STATEMENT NO. 811-3007.
CROSS REFERENCE SHEET
---------------------
N-1A
Item No. Prospectus Caption or Placement
-------- -------------------------------
1 Front Cover
2 Summary
3 Financial Highlights
4 Summary; Investment Objectives and Policies
5 Adviser, Sub-Adviser and Distributor; Method of Distribution;
Purchase of Shares; Summary; Investment Objectives and Policies
5A Management's Discussion of Fund Performance (contained in
the 1994 Annual Report)
6 Summary; Shareholder Inquires; Dividends and Distributions;
Federal Income Taxes; Fund Shares
7 Purchase of Shares; Adviser and Distributor; Exchange of
Shares; Determining the Price of Shares; Dividends and
Distributions
8 Redemption of Shares; Exchange of Shares
9 (Not Applicable)
Part B Caption or Placement
---------------------------
10 Cover Page
11 Table of Contents
12 (Not Applicable)
13 Investment Restrictions; Foreign Securities; "When Issued"
Securities; Repurchase Agreements; Lending Portfolio
Securities; Writing Covered Call Options; Portfolio Transactions
14 Management of the Company
15 Certain Shareholders of the Company
16 Investment Advisory Services; Custodian; Auditors;
Determining the Price of Shares; Distribution of Fund Shares
17 Portfolio Transactions
18 Included in Prospectus
19 Determining the Price of Shares; Reduction of Class A Sales
Charges
20 Included in Prospectus
21 Included in Prospectus
22 Performance Data
23 Financial Statements are incorporated by reference
from the 1995 Annual Report to Shareholders.
<PAGE>
PROSPECTUS August 1, 1995
As revised October 1, 1995
DAVIS INCOME FUND, INC.
(formerly, VENTURE INCOME (+) PLUS, INC.)
124 East Marcy Street
Santa Fe, New Mexico 87501
1-800-279-0279
Minimum Investment Plans Available
Initial Purchase $1,000 Individual Retirement Account (IRA)
For Retirement Plans $250 Prototype Retirement Plans
Subsequent Investment $25 Exchange Privilege
Automatic Investment Plan
Automatic Withdrawals Plan
Davis High Income Fund, Inc. (the "Fund") seeks primarily to achieve
a high level of current income. The Fund also seeks to achieve capital
growth so long as such objective is consistent with its primary objective.
The Fund may invest up to 100% of its assets in lower rated bonds,
commonly known as "junk bonds," which entail greater risks, including
default risks, than those found in higher rated securities. Investors
should carefully consider these risks before investing. See "Investment
Objectives and Policies."
The Fund offers two classes of shares, each having different expense
levels and sales charges. You may choose to purchase Class A shares,
normally with a sales charge imposed at the time you purchase the shares
("front-end sales charge"), or Class B shares, on which no front-end sales
charge is imposed but upon which a deferred sales charge may be imposed
at the time of redemption depending on how long you have owned the
shares ("contingent deferred sales charge" or "CDSC"). On purchases of
Class A shares of $1 million or more, there is no initial or contingent
deferred sales charge. Class B shares have a higher level of expenses than
Class A shares, including higher Rule 12b-1 fees, and automatically
convert to Class A shares eight years after purchase. These alternatives
permit you to choose the method of purchasing shares that is most
beneficial to you, depending on the amount of the purchase, the length of
time you expect to hold the shares and other circumstances.
This Prospectus concisely sets forth information about the Fund that
prospective investors should know before investing. It should be read
carefully and retained for future reference.
A Statement of Additional Information dated August 1, 1995 as revised
October 1, 1995, has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. A copy of the Statement of Additional
Information and other information may be obtained without charge by
writing to or calling the Fund at the above address or telephone number.
---------------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
SUMMARY
Fund Expenses. The following table is intended to assist you in
understanding the various costs and expenses that an investor in each
class of the Fund will bear directly or indirectly. The information with
respect to Class A shares is based on the Fund's fiscal year ended March
31, 1995. The information concerning "other expenses" with respect to
the Fund's Class B shares is estimated based on the first year such shares
are offered and is not necessarily indicative of the first year or future
years. The 5% rate used in the example is only for illustration and is not
intended to be indicative of the future performance of the Fund, which may
be more or less than the assumed rate. Future expenses may be more or
less than those shown. You can refer to "Adviser and Distributor" and
"Sales Charges" for more information on transaction and operating
expenses of the Fund.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses Class A Class B
-------------------------------- ------- -------
<S> <C> <C>
Maximum sales load imposed on purchases............. 4.75% None
Maximum sales load imposed on reinvested dividends.. None None
Deferred sales load (a declining percentage of the
lesser of the net asset value of the shares
redeemed or the total cost of such shares)
Redeemed during first year...................... None 4.00%
Redeemed during second or third year............ None 3.00%
Redeemed during fourth or fifth year............ None 2.00%
Redeemed during sixth year...................... None 1.00%
Redeemed after sixth year....................... None None
Exchange Fee........................................ $5.00 $5.00
Annual Fund operating expenses (as a percentage of average net assets)
----------------------------------------------------------------------
Management fees............................... 0.75% 0.75%
12b-1 fees<F1>................................ 0.17% 1.00%
Other expenses................................ 0.61% 0.61%
----- -----
Total Fund operating expenses.............. 1.53% 2.36%
<FN>
<F1>
The effect of a Rule 12b-1 plan is that long-term shareholders may pay
more than the maximum front-end sales charge permitted under applicable
rules of the National Association of Securities Dealers, Inc.
</FN>
</TABLE>
Example:
You would pay the following expenses on a $1,000 investment,
assuming (i) 5% annual return and (ii) redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A..................... $62 $94 $127 $221
Class B..................... $54 $94 $136 N/A
</TABLE>
The Fund. Davis High Income Fund, Inc. is an open-end, diversified,
management investment company incorporated in Maryland in 1980 and is
registered under the Investment Company Act of 1940.
The Fund offers investors the choice between two classes of shares.
Class A shares may be purchased at a price equal to their net asset value
per share plus an initial sales charge imposed at the time of purchase.
Purchases of $1 million or more of Class A shares may be purchased at net
asset value. Class B shares may be purchased at net asset value but are
subject to a contingent deferred sales charge on most redemptions made
within six years after purchase. These alternatives permit an investor to
choose the method of purchasing shares that is most beneficial given the
amount of the purchase, the length of time the investor expects to hold
the shares, and other circumstances. Each class of shares
<PAGE>
pays a Rule 12b-1 distribution fee at an annual rate not to exceed (i) for
Class A shares, 0.25% of the Fund's aggregate average daily net assets
attributable to the Class A shares and (ii) for Class B Shares, 1.00% of the
Fund's aggregate average daily net assets attributable to the Class B
shares. Investors should understand that the purpose and function of the
deferred sales charge and distribution fee with respect to the Class B
shares is the same as those of the initial sales charge and distribution
services fee with respect to the Class A shares.
Each share of the Fund, whether Class A or Class B, represents an
identical interest in the investment portfolio of the Fund but differ in
important respects. For example, Class B shares incur higher distribution
services fees and bear certain other expenses and will thus have a higher
expense ratio and pay correspondingly lower dividends than Class A
shares. Class B shares will automatically convert to Class A shares eight
years after the end of the calendar month in which the shareholder's order
to purchase was accepted, in the circumstances and subject to the
qualifications described in this Prospectus. The per share net asset value
of the Class B shares generally will be lower than the per share net asset
value of the Class A shares, reflecting the daily expense accruals of
additional distribution fees and certain other expenses applicable to Class
B shares. It is expected, however, that the per share net asset value of
the classes, which differ by approximately the amount of the expense
accrual differential between the classes will tend to converge
immediately on the ex date of the dividends or distributions. The Board of
Directors may offer additional classes of shares in the future and may at
any time discontinue the offering of any class of shares. See "Purchase of
Shares--Alternative Purchase Arrangements".
Investment Objectives. The Fund's primary objective is to achieve a
high level of current income. The Fund also seeks capital growth so long
as such objective is consistent with its primary objective. The Fund
invests primarily in high yield, high risk, low rated and unrated bonds
commonly referred to as "junk bonds." Such securities are speculative and
subject to greater market fluctuations and risk of loss of income and
principal than higher rated bonds. See "Investment Objectives and
Policies".
Investment Adviser, Sub-Adviser and Distributor. Davis Selected
Advisers, L.P.(formerly, Selected/Venture Advisers, L.P.) (the "Adviser")
is the investment adviser and distributor for the Fund. Stamper Capital &
Investments, Inc., the ("Sub-Adviser") is employed by the Advisr to provide
day to day management of the Fund's portfolio. See "Adviser, Sub-Adviser
and Distributor".
Purchases, Exchanges and Redemptions. Class A shares are sold at
net asset value plus a sales charge, and are redeemed at net asset value.
Purchases of $1 million or more of Class A shares may be purchased at net
asset value. Class B shares are sold at net asset value without a
front-end sales charge but may be subject to a deferred sales charge at
the time of redemption depending on how long such shares have been
owned. Initial and subsequent minimum investments are $1,000 and $25,
respectively, except that the minimum initial investment for retirement
plans is $250. Shares may be exchanged under certain circumstances at
net asset value for the same class of shares of certain other funds
managed and distributed by the Adviser, with a $5 service fee for each
exchange payable to the Adviser. Accounts of less than $250 due to
shareholder redemptions are redeemable by the Fund. "See Purchase of
Shares," "Exchange of Shares" and "Redemption of Shares".
Shareholder Services. Questions regarding the Fund or your account
may be directed to Davis Selected Advisers, L.P. at 1-800-279-0279 or
to your sales representative. Written inquiries may be directed to
Davis Selected Advisers, L.P., P.O. Box 1688, Santa Fe, NM 87504-1688.
During drastic market conditions, the Adviser may experience difficulty in
accepting telephone redemptions. If you are unable to contact the Adviser
at the above telephone number, you should call 1-505-983-4335 Monday
through Friday between 8:00 a.m. and 4:00 p.m. Mountain Time.
FINANCIAL HIGHLIGHTS
The following table provides you with information about the
financial history of the Fund's Class A shares. The table expresses the
information in terms of a single Class A or Class B share for the
respective periods presented and is supplementary information to the
Fund's financial statements which are included in the March 31, 1995
Annual Report to Shareholders. Such Annual Report may be obtained by
writing or calling the Fund. The Fund's financial statements
<PAGE>
and financial highlights for the five years ended March 31, 1995, have been
audited by the Fund's independent certified public accountants, whose opinion
thereon is contained in the Annual Report.
<TABLE>
------------------------------------Class A------------------------------------------ Class B
Four Months
Year Ended March 31, ended
------------------------------------------------------------------------------------- March 31,
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1995<F3>
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period....... $ 5.14 $ 5.18 $ 4.92 $ 4.75 $ 6.07 $ 8.09 $ 8.59 $10.29 $10.70 $10.42 $ 4.80
Income From Investment
----------------------
Operations
----------
Net Investment Income..... 0.46 0.50 0.61 0.53 0.56 0.79 1.20 1.05 1.05 1.44 0.11
Net Gains or Losses on
Securities (both realized
and unrealized)......... (0.24) 0.06 0.25 0.43 (0.85) (1.63) (0.59) (1.37) 0.02 0.44 0.05
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From Investment
Operations............ 0.22 0.56 0.86 0.96 (0.29) (0.84) 0.61 (0.32) 1.07 1.88 0.16
Less Distributions
------------------
Dividends from net
investment income....... (0.46) (0.50) (0.60) (0.53) (0.56) (0.88) (1.11) (1.05) (1.11) (1.60) (0.11)
Distributions in excess of
realized gains.......... (0.04) (0.10) - - - - - - - - -
Returns of Capital........ - - - (0.26) (0.47) (0.30) - (0.33)<F1> (0.37) - -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (0.50) (0.60) (0.60) (0.79) (1.03) (1.18) (1.11) (1.38) (1.48) (1.60) (0.11)
Net Asset Value,
End of Period............. $ 4.86 $ 5.14 $ 5.18 $ 4.92 $ 4.75 $ 6.07 $ 8.09 $ 8.59 $10.29 $10.70 $ 4.85
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Return<F2>............ 4.69% 11.29% 18.81% 22.45% (5.32)% (11.69)% 7.24% (3.16)% 11.16% 18.94% 4.28%
------------
Ratios/Supplemental Data
------------------------
Net Assets, End of
Period (000 omitted).... 56,405 64,663 38,305 24,986 19,386 29,909 53,670 67,397 72,445 54,338 1,900
Ratio of Expenses to
Average Net Assets.... 1.53% 1.48% 1.81% 1.93% 2.09% 1.52% 1.26% 1.19% 1.14% 1.25% 2.36%<F4>
Ratio of Net Income to
Average Net Assets...... 9.49% 9.31% 11.91% 11.01% 10.43% 10.64% 14.18% 11.09% 10.19% 13.06% 8.66%<F4>
Portfolio Turnover Rate... 98.94% 98.31% 84.93% 93.78% 76.92% 39.91% 85.91% 107.52% 166.65% 155.35% 98.94%
<FN>
<F1> The distribution includes $0.10 which represents amounts required
to be distributed for tax purposes to avoid imposition of
excise taxes on realized capital gains.
<F2> Sales charges are not reflected in calculation.
<F3> Class B shares were initially issued December 1, 1994.
<F4> Annualized
</FN>
</TABLE>
INVESTMENT OBJECTIVES AND POLICIES
General. The Fund's primary investment objective is to achieve a
high level of current income. Secondarily, the Fund seeks capital growth
so long as such objective is consistent with the Fund's primary objective.
There is no assurance the Fund will succeed in achieving its objectives.
The Fund principally invests in securities having high yield, high risk
Fixed-income.
Consistent with the Fund's principal investment objective, it is
anticipated that under normal conditions at least 80% of the total value of
the Fund's assets will be invested in Fixed-Income securities.
Fixed-income securities include convertible and non-convertible debt
securities and preferred stock. The Fund's remaining assets may be held
in cash or short-term instruments, or invested in common stocks or other
equity securities when such investments are consistent
<PAGE>
with the Fund's investment objectives or are acquired as part of a unit
consisting of a combination of Fixed-income and equity securities. The
Fund may invest in zero coupon, pay-in-kind and deferred interest
bonds.
The market value of Fixed-income securities will generally be
affected by changes in the level of interest rates. Increases in interest
rates tend to reduce the market value of Fixed-income investments and
declines in interest rates tend to increase their value. Moreover, debt
issues with longer maturities, which tend to produce higher yields, are
subject to potentially greater capital appreciation or depreciation than
securities with shorter maturities. Low or unrated securities tend to
have a limited market other than institutional investors and therefore
may have less liquidity than higher rated securities. This could, at times,
cause the Fund difficulty in disposing of such securities at favorable
prices. Fluctuations in the market value of the Fund's portfolio securities
subsequent to their acquisition will not affect cash income from such
securities but will be reflected in the Fund's net asset value. In addition,
the future earning power of an issuer and its ability to service its debt
may affect the market price of higher yielding debt.
The average maturity and the mix of investments of the Fund will
vary as the Adviser seeks to provide a high level of income considering the
available alternatives in the market. Since interest rates vary with
changes in economic, market, political and other conditions, there can be
no assurance that historic interest rates are indicative of rates which
may prevail in the future. Since the values of securities in the Fund
fluctuate depending upon market factors, the credit of the issuer and
inversely with current interest rate levels, the net asset value of its
shares will fluctuate. Consequently, there can be no assurance that the
Fund's objectives can be achieved or that its shareholders will be
protected from the risk of loss inherent in security ownership. The
Adviser attempts to adjust investments as considered advisable in view
of prevailing or anticipated market and credit conditions as perceived by
the Adviser. Accordingly, certain portfolio securities may be purchased or
sold in anticipation of a rise or a decline in interest rates or of changes in
the credit quality of an issuer.
There are market and investment risks with any security and the
value of an investment in the Fund will fluctuate over time. In seeking to
achieve its investment objectives, the Fund will invest in Fixed-income
securities based on the Adviser's analysis without relying on any
published ratings. The Fund will invest in a particular security if, in the
Adviser's view, the increased yield offered, regardless of published
ratings, is sufficient to compensate for the assumed risk. Since
investments will be based upon the Adviser's analysis rather than on the
basis of published ratings, achievement of the Fund's goals may depend
more upon the abilities of the Adviser than would otherwise be the case.
The higher yield, higher risk securities the Fund seeks, whether rated or
unrated, are speculative and subject to greater market fluctuations and
risk of loss of income and principal than lower yielding, higher rated
Fixed-income securities. See "High Yield, High Risk Debt Securities" below
for a discussion of various risk factors related to high yield, high risk
Fixed-income securities.
High Yield, High Risk Debt Securities. As discussed above, the Fund
intends to invest a substantial portion of its assets in fixed-income
securities offering high current income. The higher yields that the Fund
seeks are generally obtainable from bonds rated in the lower categories by
recognized rating services and from unrated securities. The Fund expects
to invest principally in Fixed-income securities rated Baa or lower by
Moody's Investors Service, Inc. ("Moody's") or BBB or lower by Standard &
Poor's Corporation ("S&P"). A substantial portion of the Fund's portfolio is
usually invested in bonds rated Ba or BB or lower by these rating services
or which are unrated. The Fund may invest in D rated (defaulted)
obligations. Bonds rated Ba or BB or lower are known as "junk bonds." At
times the portfolio may contain a larger proportion of higher rated
securities when the Adviser deems such holdings to provide a more
advantageous return. A brief description of the bond ratings of these two
services is contained herein under "Portfolio Composition." A more
complete description is contained in the Appendix. An investment in the
Fund may not constitute a complete investment program and may not be
appropriate for all investors or for short-term investing.
High yield, high risk debt securities are considered speculative with
respect to capacity to pay interest and repay principal in accordance with
the terms of the obligation and generally will involve more credit risk
than securities in the higher rating categories. The market values of such
securities tend to reflect individual credit developments to a greater
<PAGE>
extent than do higher rated securities which react primarily to
fluctuations in the general level of interest rates. Such lower rated
securities also tend to be more sensitive to economic, political and
industry conditions than are higher rated securities. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis
regarding individual lower rated bonds and the high yield, high risk market
may depress the prices for such securities. If such negative factors
adversely impact the market value of high yield, high risk securities, the
portfolio's net asset value will be adversely affected.
High yield, high risk bonds may be issued in a variety of
circumstances. Some of the more common circumstances are issuance by
corporations in the growth stage of their development, in connection with
a corporate reorganization or as part of a corporate takeover. Companies
that issue such high yielding, high risk bonds often are highly leveraged
and may not have available to them more traditional methods of financing.
Therefore, the risk associated with acquiring the bonds of such issuers
generally is greater than is the case with higher rated bonds. For
example, during an economic downturn or recession, highly leveraged
issuers of high yield, high risk bonds may experience financial stress.
During such periods, such issuers may not have sufficient revenues to
meet their principal and interest payment obligations. The issuer's ability
to service its debt obligations may also be adversely affected by specific
corporate developments, the issuer's inability to meet specific projected
business forecasts or the unavailability of additional financing. The risk
of loss due to default by the issuer is significantly greater for the holders
of high yielding bonds because such bonds are generally unsecured and are
often subordinated to other creditors of the issuer. The costs associated
with recovering principal and interest once a security has defaulted may
impact the return to holders of the security. If the Fund experiences
unexpectedly large net redemptions, it may be forced to sell high yield,
high risk bonds out of the portfolio without regard to the investment
merits of such sales. This could decrease the Fund's net assets. Since
some of the Fund's expenses are fixed, this could also reduce the Fund's
rate of return.
The Fund may have difficulty disposing of certain high yield, high
risk bonds because there may be a thin trading market for such bonds.
Because not all dealers maintain markets in all high yield, high risk bonds,
the Fund anticipates that such bonds could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid
secondary market may have an adverse impact on market price and the
ability to dispose of particular issues and may also make it more difficult
for the Fund to obtain accurate market quotations or valuations for
purposes of valuing the Fund's assets. Market quotations generally are
available on many high yield issues only from a limited number of dealers
and may not necessarily represent firm bid prices of such dealers or
prices for actual sales. In addition, adverse publicity and investor
perceptions may decrease the values and liquidity of high yield, high risk
bonds regardless of a fundamental analysis of the investment merits of
such bonds. To the extent that the Fund purchases illiquid or restricted
bonds, it may incur special securities registration responsibilities,
liabilities and costs, and liquidity and valuation difficulties relating to
such bonds.
Bonds may be subject to redemption or call provisions. If an issuer
exercises these provisions when investment rates are declining, the Fund
will be likely to replace such bonds with lower yielding bonds, resulting
in a decreased return. Zero coupon, pay-in-kind and deferred interest
bonds involve additional special considerations. Zero coupon bonds are
debt obligations that do not entitle the holder to any periodic payments of
interest prior to maturity or a specified cash payment date when the
securities begin paying current interest (the "cash payment date") and
therefore are issued and traded at a discount from their face amount or
par value. The market prices of zero coupon securities are generally more
volatile than the market prices of securities that pay interest
periodically and are likely to respond to changes in interest rates to a
greater degree than securities paying interest currently having similar
maturities and credit quality. Pay-in-kind bonds pay interest in the form
of other securities rather than cash. Deferred interest bonds defer the
payment of interest to a later date. Zero coupon, pay-in-kind or deferred
interest bonds carry additional risk in that, unlike bonds which pay
interest in cash throughout the period to maturity, the Fund will realize
no cash until the cash payment date unless a portion of such securities are
sold. The Fund has no assurance of the value or the liquidity of securities
received from pay-in-kind bonds. If the issuer defaults, the Fund may
obtain no return at all on its investment. To the extent that the Fund
invests in bonds that are original issue discount, zero coupon, pay-in-kind
or deferred interest bonds, the Fund may have taxable interest income in
excess of the cash actually received on these issues. In order to
<PAGE>
distribute such income to avoid taxation to the Fund, the Fund may have to
sell portfolio securities to meet its taxable distribution requirements at
potentially adverse circumstances. See "Federal Income Taxes."
The investment philosophy of the Fund with respect to high yield,
high risk bonds is based on the premise that over the long term a broadly
diversified portfolio of high yield, high risk Fixed-income securities
should, even taking into account possible losses, provide a higher net
return than that achievable on a portfolio of higher rated securities. The
Fund seeks to achieve a high yield while reducing relative risk through (a)
diversification, (b) credit analysis of the issuers in which the Fund
invests, (c) purchasing high yield securities at discounts from par or
stated value when practicable and (d) monitoring and seeking to anticipate
changes and trends in the economy and financial markets that might affect
the prices of portfolio securities. Ratings assigned by credit agencies do
not evaluate market risks. The Sub- Adviser's judgment as to the
"reasonableness" of the risk involved in any particular investment will be
a function of its experience in managing Fixed-income investments and its
evaluation of general economic and financial conditions. This includes
analysis and evaluations of a specific issuer's business and management,
cash flow, earnings coverage of interest and dividends, ability to operate
under adverse economic conditions, fair market value assets and such
other considerations as the Sub-Adviser may deem appropriate. The Sub- Adviser,
while seeking to maximize current yield, will monitor current
developments with respect to portfolio securities, potential investments
and broad trends in the economy. Achievement of the Fund's investment
objectives will be more dependent upon the Sub- Adviser's credit analysis than
would be the case for funds predominately investing in higher rated bonds.
In some circumstances, defensive strategies may be implemented to
preserve or enhance capital even at the sacrifice of current yield. There
is, however, no assurance that the Fund's objectives will be achieved or
that the Fund's approach to risk management will protect the shareholders
against loss.
Portfolio Composition. The table below reflects the Fund's portfolio
composition by quality rating for the year ended March 31, 1995,
calculated on the basis of the average weighted ratings of all bonds held
during the year. The table reflects the percentage of total assets
represented by Fixed-income securities rated by Moody's or S&P, by
unrated Fixed-income securities and by other assets. The percentages
shown reflects the higher of the Moody's or S&P rating. U.S. Government
Securities, whether or not rated, are reflected as Aaa and AAA (highest
quality). Other assets may include money market instruments, repurchase
agreements, equity securities, net payables and receivables and cash. The
allocations in the table are not necessarily representative of the
composition of the Fund's portfolio at other times. Portfolio quality
ratings will change over time.
<TABLE>
Composition of the Fund's Portfolio by Quality Rating As a Percentage of
Total Assets at March 31, 1995
<CAPTION>
Fund's Assessment of General Definition
Moody's/S&P Rating Category Percentage Non-rated Securities of Bond Quality
--------------------------- ---------- -------------------- ---------------
<S> <C> <C> <C>
Aaa/AAA.................... 4.66% 0.00% Highest quality
Aa/AA...................... 5.57% 0.00% High quality
A/A........................ 0.41% 0.00% Upper medium grade
Baa/BBB.................... 7.63% 0.00% Medium grade
Ba/BB...................... 14.85% 0.00% Some speculative elements
B/B........................ 26.62% 16.72% Speculative
Caa/CCC.................... 4.40% 1.78% More speculative
Ca, C/CC, C, D............. 1.12% 3.00% Very speculative, may be in default
Non-Rated.................. 21.50% 0.00% Not rated by Moody's or S&P
Common and Preferred Stock. 3.52% 0.00%
Short-term Investments..... 9.72% 0.00%
------- ------
100.00% 21.50%
</TABLE>
The description of each bond quality category set forth in the table
above is intended to be a general guide and not a definitive statement as
to how Moody's and S&P define such rating category. A more complete
description of the
<PAGE>
rating categories is set forth in the Appendix. The ratings of Moody's and
S&P represent their opinions as to the quality of the securities that they
undertake to rate. It should be emphasized,however, that ratings are relative
and subjective and are not absolute standards of quality. There is
no assurance that a rating assigned initially will not change. The Fund may
retain a security whose rating has changed or has become unrated.
Restricted and Illiquid Securities. The Fund may invest in restricted
securities, i.e., securities which, if sold, would cause the Fund to be
deemed an "underwriter" under the Securities Act of 1933 (the "1933
Act") or which are subject to contractual restrictions on resale. The Fund
does not purchase or hold illiquid securities (which may include restricted
securities) if more than 15% of the Fund's net assets would be illiquid. If
at any time more than 15% of the Fund's net assets are illiquid, sales will
be made as soon as practicable to reduce the percentage of illiquid assets
to 15% or less.
The restricted securities which the Fund may purchase include
securities which have not been registered under the 1933 Act but are
eligible for purchase and sale pursuant to Rule 144A ("Rule 144-A
Securities"). This Rule permits certain qualified institutional buyers, such
as the Fund, to trade in privately placed securities even though such
securities are not registered under the 1933 Act. The Adviser, under
criteria established by the Fund's Board of Directors, will consider
whether Rule 144-A Securities being purchased or held by the Fund, are
illiquid and thus subject to the Fund's policy concerning illiquid
securities. In making this determination, the Adviser will consider the
frequency of trades and quotes, the number of dealers and potential
purchasers, dealer undertakings to make a market, and the nature of the
security and the market place trades (for example, the time needed to
dispose of the security, the method of soliciting offers and the mechanics
of transfer). The liquidity of Rule 144A Securities will also be monitored
by the Adviser and, if as a result of changed conditions, it is determined
that a Rule 144A Security is no longer liquid, the Fund's holding of illiquid
securities will be reviewed to determine what, if any, action is required
in light of the Fund's policy limiting investments in such securities.
Investing in Rule 144A Securities could have the effect of increasing the
amount of the Fund's investments in illiquid securities if qualified
institutional buyers are unwilling to purchase such securities.
Foreign Securities and "When Issued" Securities. The Fund may
invest in foreign securities which are payable in U.S. dollars. Also the
Fund may from time to time invest in securities on a "when issued" or a
"delayed delivery" basis (that is, delivery and payment therefor normally
take place more than 7 and less than 30 days after the transaction date).
It is the Fund's policy that any investment in foreign securities or on a
when issued or delayed delivery basis will not be made if such investment
would cause more than 5% of the value of the Fund's net assets to be
invested in either of such types of investments.
Repurchase Agreements. From time to time, the Fund may enter into
repurchase agreements whereby the Fund buys a security which is (i)
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government Securities"), or (ii) a bank obligation
or prime commercial paper, subject to the agreement of the seller to
repurchase the instrument and the Fund's agreement to resell it at a price
established to provide the Fund with the equivalent of a short-term
interest rate. These agreements are for short periods, normally a day, but
in no event longer than a week. These transactions are for the purpose of
efficiently utilizing cash awaiting investment and do not normally
represent any significant portion of the Fund's portfolio. The risk involved
is that if the seller were to default, the Fund would sustain a delay in its
ability to sell the instrument, additional expense, or a loss, particularly if
the seller was in bankruptcy proceedings. The Fund will monitor the
creditworthiness of the entities with which it makes such transactions.
Borrowing. The Fund may borrow money from banks for temporary or
emergency purposes in an amount not exceeding 10% of the value of its
total assets (excluding the amount borrowed), and may pledge an amount
not exceeding 15% of total assets (excluding the amount borrowed), to
secure such borrowing.
<PAGE>
Temporary Defensive Investments. When market conditions dictate a
more defensive strategy, the Fund may temporarily, without limitation,
hold cash or invest in short-term money market instruments. The yield on
these instruments will generally be lower than the yield on the Fund's
regular portfolio.
Portfolio Transactions. The Adviser is responsible for the
placement of portfolio transactions, subject to the supervision of the
Board of Directors. The Fund may trade to some degree in securities for
the short-term and may sell securities to buy others with greater income
or profit potential or when it has realized a profit and the proceeds can be
more advantageously utilized. The Fund may also sell a security when the
Adviser believes such security will no longer continue to provide a
relatively high current yield or involves undue risk, or when the Adviser
deems it advisable to take a more defensive position or return to a more
aggressive stance. Because of the Fund's policies, the Fund's portfolio
turnover rate will vary. A higher portfolio turnover rate could require the
payment of larger amounts in brokerage commissions. However, it is
anticipated that most securities transactions will be principal
transactions, predominantly with market makers and sometimes with
issuers, in which case no brokerage commissions are incurred. Research
services and placement of orders by securities firms for shares of the
Fund may be taken into account as a factor in placing portfolio
transactions. Portfolio turnover rates are set forth in "Financial
Highlights".
Fundamental and Non-Fundamental Policies. The Fund has adopted
certain investment restrictions which are described in the Statement of
Additional Information. These restrictions and the Fund's investment
objectives may not be changed unless authorized by a vote of the
shareholders. All other investment policies are non-fundamental and may
be changed without shareholder approval.
ADVISER, SUB-ADVISER AND DISTRIBUTOR
Subject to the direction and supervision of the Fund's Board of
Directors, the Fund's assets are managed by Davis Selected Advisers,
L.P., 124 East Marcy Street, Santa Fe, New Mexico 87501. Venture
Advisers, Inc. (the "General Partner") is the Adviser's sole general partner.
Shelby M.C. Davis is the Chief Executive Officer and controlling shareholder
of the General Partner. The Adviser manages the business operations of the
Davis High Income Fund, Inc. and also acts as the distributor of the Fund's
shares. The Adviser also acts as investment adviser and distributor for Davis
New York Venture Fund, Inc. (formerly, New York Venture Fund, Inc.), Davis
Tax-Free High Income Fund, Inc. (formerly, Venture Muni (+) Plus, Inc.), Davis
Series, Inc.(formerly, Retirement Planning Funds of America, Inc.), Davis
International Series, Inc. (formerly,Venture Series, Inc.) (collectively with
the Fund, the "Davis Funds"), Selected American Shares, Inc., Selected Special
Shares, Inc. and Selected Capital Preservation Trust.
The Adviser receives a fee at the annual rate of 0.75% on average net
assets up to $250 million, 0.65% on the next $250 million of average net
assets and 0.55% on average net assets over $500 million. This fee is
higher than that of most other mutual funds but is not necessarily higher
than that paid by funds with similar objectives. Prior to April 15, 1993,
the Fund paid the Adviser a fee at a flat rate of 0.75% of average net
assets. The Fund also reimburses the Adviser for its costs of providing
certain accounting and financial reporting, shareholder services and
compliance with state securities laws.
Portfolio Management. Stamper Capital & Investment, Inc. (the "Sub-
Adviser"), is the sub-adviser for the Davis High Income Fund, Inc. The Sub-
Adviser manages the day to day investment operations for the Fund and for
Davis Tax-Free High Income Fund, Inc. The Fund pays no fees directly to the
Sub-Adviser from the Fund. The Adviser is paid a fee at the annual rate of
0.55% of net assets over $500 million. All the fees paid to Stamper Capital
will be paid by the Adviser and not the Fund. The Sub-Adviser also provides
investment advisory services to employee benefit plans, institutions, trust and
individuals. The Sub-Adviser's offices are located at __________. B. Clark
Stamper is the controlling shareholder of the Sub-Adviser.
B. Clark Stamper has been the primary portfolio manager of the Fund
since June, 1990. He was a Senior Vice President of the Adviser's General
Partner and a Vice President of all of the Davis Funds. He has also been
the primary portfolio manager of Davis Tax-Free High Income Fund, Inc.,
(a high yield municipal bond fund) since June, 1990. He
was the primary portfolio manager of Davis Series, Inc's. Government Bond Fund
(formerly, Bond Fund).( a U. S. Government Securities income fund) from June,
1990 until April 30, 1995. He was the primary portfolio manager of Selected
Capital Preservation Trust's U.S. Government Income Fund from May 1, 1993,
until April 30, 1995. From July 199 through June 1990, Mr. Stamper was a senior
credit analyst at National Securities and Research Corporation, and served as a
portfolio manager for an institutional high-yield bond fund managed by an
affiliate. Prior there-to, he was an officer and credit manager of Dial
Capital Management, which managed high-yield funds for institutions.
Davis Selected Advisers, L.P., in its capacity as distributor, is
also reimbursed by the Fund for some of its distribution expenses through
Distribution Plans which have been adopted with respect to each class of
shares and
<PAGE>
approved by the Fund's Board of Directors and the shareholders
of each class in accordance with Rule 12b-1 under the Investment
Company Act of 1940. See "Distribution Plans" below for more details.
DISTRIBUTION PLANS
The Fund bears some of the costs of selling its shares under
Distribution Plans adopted with respect to its Class A and Class B shares
pursuant to Rule 12b-1 under the Investment Company Act of 1940. This
rule regulates the manner in which a mutual fund may assume costs of
distributing and promoting the sale of its shares.
Payments under the Class A Distribution Plan are limited to an
annual rate of 0.25% of the average daily net asset value of the Class A
shares. Such payments are made to reimburse the Adviser for the fees it
pays to its salespersons and other firms for selling Fund shares, servicing
shareholders and maintaining shareholder accounts. Normally, such fees
are at the annual rate of 0.25% of the average net asset value of the
accounts serviced and maintained on the books of the Fund. Payments
under the Class A Distribution Plan may also be used to reimburse the
Adviser for other distribution costs (excluding overhead) not covered in
any year by any portion of the sales charges the Adviser retains. See
"Purchase of Shares."
Payments under the Class B Distribution Plan are limited to an
annual rate of 1% of the average daily net asset value of the Class B
shares. In accordance with current applicable rules, such payments are
also limited to 6.25% of gross sales of Class B shares plus interest at 1%
over the prime rate on any unpaid amounts. Up to 0.75% of the average
daily net assets is used to pay the Adviser a 4% commission on new sales
of Class B Shares. Most or all of such commissions are reallowed to
salespersons and to firms responsible for such sales. No commissions are
paid by the Fund with respect to sales by the Adviser to officers,
directors and full-time employees of the Fund, the Adviser or the
Adviser's General Partner. Up to 0.25% of average net assets is used to
reimburse the Adviser for the payment of service and maintenance fees to
its salespersons and other firms for shareholder servicing and
maintenance of shareholder accounts.
If, due to the foregoing payment limitations, the Fund is unable to
pay the Adviser the 4% commission on new sales of Class B shares, the
Adviser intends, but is not obligated, to accept new orders for shares and
pay commissions in excess of the payments it receives from the Fund. The
Adviser intends to seek full payment from the Fund of any excess amounts
with interest at 1% over the prime rate at such future date when and to
the extent such payments on new sales would not be in excess of the
limitations. The Fund is not obligated to make such payments; the amount
(if any), timing and condition of any such payments are solely within the
discretion of the directors of the Fund who are not interested persons of
the Adviser or the Fund and have no direct or indirect financial interest in
the Class B Distribution Plan (the "Independent Directors"). If the Class B
Distribution Plan is terminated, the Adviser will ask the Independent
Directors to take whatever action they deem appropriate with regard to
the payment of any excess amounts.
In addition, the Plans provide that the Adviser, in its sole
discretion, may utilize its own resources for distributing and promoting
sales of Fund shares, including any profits from its advisory fees.
Each of the Distribution Plans may be terminated at any time by vote
of the Independent Directors or by vote of the respective class. Payments
pursuant to a Distribution Plan are included in the operating expenses of
the class.
As described above, dealers or others may receive different levels of
compensation depending on which class of shares they sell. The Adviser
may make expense reimbursements for special training of a dealer's
registered representatives, advertising or equipment, or to defray
the expenses of dealer meetings. Any such amounts
may be paid by the Adviser from the fees it receives under the Class A and
Class B Distribution Plans.
<PAGE>
Shares of the Fund may also be sold through banks or bank-affiliated
dealers. Any determination that such banks or bank-affiliated dealers are
prohibited from selling shares of the Fund under the Glass-Steagall Act
would have no material adverse effects on the Fund. State securities laws
may require such firms to be licensed as securities dealers in order to
sell shares of the Fund.
PURCHASE OF SHARES
General. You can purchase Class A or Class B shares of the Fund
from any dealer or other person having a sales agreement with the
Adviser.
There are three ways to make an initial investment in the Fund. One
way is to fill out the Application Form included in this Prospectus and
mail it to State Street Bank and Trust Company ("State Street") at the
address on the Form. The dealer must also sign the Form. Your dealer or
sales representative will help you fill out the Form. You should enclose a
check (minimum $1,000, except $250 for retirement plans) payable as
indicated on the Form.
Another way to make an initial investment is to have your dealer
order and pay for the shares. In this case, you must pay your dealer. The
dealer can order the shares from the Adviser by telephone or wire. You
can also use this method for additional investments of at least $1,000.
The third way to purchase shares is by wire. Shares may be
purchased at any time by wiring federal funds directly to State Street.
Prior to an initial investment by wire, the shareholder should telephone
Selected/Venture Advisers, L.P. at 1-800-279-0279 to advise them of the
investment and class of shares and to obtain an account number and
instructions. A completed Plan Adoption Agreement or Application Form
should be mailed to State Street after the initial wire purchase. To
assure proper credit, the wire instructions should be made as follows:
State Street Bank and Trust Company,
Boston, MA 02210
Attn.: Mutual Fund Services
VENTURE INCOME (+) PLUS, INC.
Shareholder Name,
Shareholder Account Number,
Federal Routing Number 011000028,
DDA Number 9904-947-0
After your initial investment, you can make additional investments
of at least $25. Simply mail a check payable to "State Street Bank and
Trust Company," c/o The Venture Funds, P.O. Box 8406, Boston, MA
02266-8406. The check should be accompanied by a form which State
Street will provide after each purchase. If you do not have a form, you
should tell State Street that you want to invest the check in shares of the
Fund. If you know your account number, you should also give it to State
Street.
The Fund does not issue certificates for Class A shares unless you
request a certificate each time you make a purchase. Certificates are not
issued for Class B shares. Instead, shares purchased are automatically
credited to an account maintained for you on the books of the Fund by
State Street. You receive a statement showing the details of the
transaction and any other transactions you had during the current year
each time you add to or withdraw from your account.
Alternative Purchase Arrangements. The Fund offers two classes of
shares. With certain exceptions described below, Class A shares are sold
with a front-end sales charge at the time of purchase and are not subject
to a sales charge when they are redeemed. Class B shares are sold
without a sales charge at the time of purchase, but are
<PAGE>
subject to a deferred sales charge if they are redeemed within six years after
purchase. Class B shares will automatically convert to Class A shares at
the end of eight years after purchase.
Depending on the amount of the purchase and the anticipated length
of time of investment, investors may choose to purchase one class of
shares rather than the other. Investors who would rather pay the entire
cost of distribution at the time of investment, rather than spreading such
cost over time, might consider Class A shares. Other investors might
consider Class B shares, in which case 100% of the purchase price is
invested immediately. The Fund will not accept any purchase of Class B
shares in the amount of $250,000 or more per investor. Such purchase
must be made in Class A shares.
Class A Shares. Class A shares are sold at their net asset value plus
a sales charge. The amounts of the sales charges are shown in the table
below.
<TABLE>
<CAPTION>
Customary
Sales Charge Charge as Concession to
as Approximate Your Dealer as
Percentage Percentage Percentage
of Offering of Amount of Offering
Amount of Purchase Price Invested Price
------------------ ---------- ---------- -------------
<S> <C> <C> <C>
$ 99,999 or less... 4-3/4% 5.0% 4%
$ 100,000 to $249,999... 3-1/2% 3.6% 3%
$ 250,000 to $499,999... 2-1/2% 2.6% 2%
$ 500,000 to $749,999... 2% 2.0% 1-3/4%
$ 750,000 to $999,999... 1% 1.0% 3/4 of 1%
$ 1,000,000 or more... 0% 0.0% 0%<F1>
<FN>
<F1>
On purchases of $1 million or more, the investor pays no initial or
contingent deferred sales charge. However, the Adviser may pay the
financial service firm a commission during the first year after such
purchase at an annual rate as follows:
Purchase Amount Commission
--------------- ----------
First $3,000,000............................. .75%
Next $2,000,000............................. .50%
Over $5,000,000............................. .25%
Such commission will be paid quarterly at the end of each fiscal quarter
for the first year after purchase. Where a commission is paid because of
purchases of $1 million or more, such payment will be made from 12b-1
distribution fees received from the Fund and, in cases where the limits of
the distribution plan in any year have been reached, from the distributor's
own profits or resources.
</FN>
</TABLE>
There are a number of ways to reduce the sales charge on the
purchase of Class A shares, as set forth below.
(i) Family Purchases: Purchases made by an individual, such
individual's spouse and children under 21 are combined and treated as a
purchase of a single person.
(ii) Group Purchases: The purchases of an organized group, whether
or not incorporated, are combined and treated as the purchase of a single
person. The organization must have been organized for a purpose other
than to purchase shares of mutual funds.
<PAGE>
(iii) Purchases for Employee Benefit Plans: Trusteed or other
fiduciary accounts and Individual Retirement Accounts ("IRA") of a single
employer are treated as purchases of a single person. Purchases of and
ownership by an individual and such individual's spouse under an IRA are
combined with their other purchases and ownership.
(iv) Purchases under a Statement of Intention: By executing the
"Statement of Intention" included in the Application Form at the back of
the Prospectus, purchases of Class A shares of $100,000 or more made
over a 13-month period may be made at the applicable price for the
aggregate shares actually purchased during the period. Please see "Terms
and Conditions" at back of this prospectus.
(v) Rights of Accumulation: If you notify your dealer or the Adviser
you may include the Class A shares you already own (valued at maximum
offering price) in calculating the price applicable to your current
purchase.
(vi) Combined Purchases with other Davis Funds: Purchases of
Class A shares of the Fund may be combined with your purchases of Class
A shares of other Davis Funds, including Davis New York Venture Fund, Inc.,
Davis Tax-Free High Income Fund, Inc., Davis International Series Inc.
and all funds offered by Davis Series, Inc. (other than Davis Government
Money Market Fund), separately or under combined Statements of Intention or
rights ofaccumulation to determine the price applicable to your purchases of
Class A shares of the Fund.
(vii) Sales at Net Asset Value: The sales charge will not apply to:
(1) Class A shares purchased through the automatic reinvestment of
dividends and distributions (see "Dividends and Distributions"); (2) Class A
shares purchased by directors, officers and employees of any Fund, supervised
and distributed by the
Adviser or the Adviser's General Partner, including former directors and
officers and any spouse, child, parent, grandparent, brother or sister of all
of the foregoing, and any employee benefit or payroll deduction plan
established by or for such persons; (3) Class A shares purchased by any
registered representatives, principals and employees (and any spouse,
child, parent, grandparent, brother or sister) of securities dealers having
a sales agreement with the Adviser; (4) initial purchases of Class A
shares totaling $250,000 or more, made at any one time by banks, trust
companies and other financial institutions (collectively "Institutions") on
behalf of one or more clients for which such Institution acts in a fiduciary
capacity; (5) initial purchases of Class A shares totaling $250,000 or
more by a registered investment adviser on behalf of a client for which
the adviser is authorized to make investment decisions or otherwise acts
in a fiduciary capacity; (6) Class A shares purchased by any single account
covering a minimum of 250 participants and representing a defined
benefit plan, defined contribution plan, cash or deferred plan qualified
under 401(a) or 401(k) of the Internal Revenue Code or a plan established
under section 403(b), 457 or 501(c)(9) of such Code; (7) Class A shares
purchased by persons participating in a "wrap account" or similar
fee-based program sponsored and maintained by a registered
broker-dealer approved by the Fund's Adviser; and (8) Class A shares
purchased by any state, county, city, department, authority or similar
agency prohibited by law from paying a sales charge. The Fund may also
issue Class A shares at net asset value incident to a merger with or
acquisition of assets of an investment company.
Class B Shares. Class B shares are offered at net asset value,
without a front-end sales charge. With certain exceptions described
below, the Fund imposes a deferred sales charge of 4% on shares redeemed
during the first year after purchase, 3% on shares redeemed during the
second or third year after purchase, 2% on shares redeemed during the
forth or fifth year after purchase and 1% on shares redeemed during the
sixth year after purchase. However, on Class B shares of the Fund which
are acquired upon exchange from Class B shares of other Davis Funds
which were purchased prior to December 1, 1994, the Fund will impose a
deferred sales charge of 4% on shares redeemed during the first calendar
year after purchase; 3% on shares redeemed during the second calendar
year after purchase; 2% on shares redeemed during the third calendar year
after purchase; and 1% on shares redeemed during the fourth calendar year
after purchase, and no deferred sales charge is imposed on amounts
redeemed after four calendar years from purchase. Class B shares will be
subject to a maximum Rule 12b-1 fee at the annual rate of 1% of the
class's average daily net asset value.
Class B shares that have been outstanding for eight years will
automatically convert to Class A shares without imposition of a front-end
sales charge or exchange fee. The Class B shares so converted will no
longer be subject to the
<PAGE>
higher expenses borne by Class B shares. Because the net asset value per
share of the Class A shares may be higher or lower than that of the Class B
shares at the time of conversion, although the dollar value will be the same,
a shareholder may receive more or less Class A shares than the number of
Class B shares converted. Under the Funds' private Internal Revenue Service
Ruling such a conversion will not constitute a taxable event under the federal
income tax law. In the event that this ceases to be the case, the Board of
Directors will consider what action, if any, is appropriate and in the best
interests of the Class B shareholders.
Any contingent deferred sales charge imposed upon the redemption
of Class B shares is a percentage of the lesser of (i) the net asset value of
the shares redeemed or (ii) the net cost of such shares. No contingent
deferred sales charge is imposed when you redeem amounts derived from
(a) increases in the value of shares above the net cost of such shares or
(b) certain shares with respect to which the Fund did not pay a
commission on issuance, including shares acquired through reinvestment
of dividend income and capital gains distributions. Upon request for
redemption, shares not subject to the contingent deferred sales charge
will be redeemed first. Thereafter, shares held the longest will be the
first to be redeemed.
The contingent deferred sales charge will be waived as follows: (1)
on redemptions following a shareholder's death or disability, as defined in
Section 72(m)(7) of the Internal Revenue Code of 1986, as amended (the
"Code"); (2) on taxable periodic distributions from a qualified retirement
plan or IRA upon retirement or attainment of age 59-1/2 (e.g. the applicable
contingent deferred sales charge, if any, is imposed upon a lump sum
redemption at any age whether or not it is taxable) or distribution necessary
to make a tax-free return of contributions to avoid tax penalty; (3) on
redemptions of shares sold to directors, officers and employees of the Fund, its
Adviser or the Adviser's General Partner, including former directors and
officers and immediate family members of all of the foregoing, and any employee
benefit or payroll deduction plan established by or for such persons; (4) on
redemptions made as tax-free returns of contributions to avoid tax
penalty; and (5) on redemptions pursuant to the right of the Fund to
liquidate a shareholder's account if the aggregate net asset value of the
shares held in such account falls below an established minimum amount.
Prototype Retirement Plans. The Adviser and certain qualified
dealers have available prototype retirement plans sponsored by the Fund
for corporations and self-employed individuals and prototype Individual
Retirement Account ("IRA") plans for both individuals and employers.
These plans utilize the shares of the Fund and other Funds managed and
distributed by the Adviser as their investment vehicle. State Street acts
as custodian or trustee for the plans and charges the participant $10 to
establish each account and an annual maintenance fee of $10 per account.
Such fees will be redeemed automatically at year end from your account,
unless you elect to pay the fee directly.
Automatic Investment Plan. Shareholders may arrange for automatic
monthly investing whereby State Street will be authorized to initiate a
debit to the shareholder's bank account of a specific amount (minimum
$25) each month which will be used to purchase Fund shares. For
institutions that are members of the Automated Clearing House system
(ACH), such purchases can be processed electronically on any day of the
month between the 3rd and 28th day of each month. After each automatic
investment, the shareholder will receive a transaction confirmation and
the debit should be reflected on the shareholder's next bank statement.
The plan may be terminated at any time by the shareholder. If you desire
to utilize this plan, you may use the appropriate designation on the
Application Form.
Dividend Diversification Program. You may also establish a dividend
diversification program which allows you to have all dividends and any
other distributions automatically invested in shares of one or more of the
Venture Funds subject to state securities law requirements and the
minimum investment requirements set forth below. You must receive a
current prospectus for a fund prior to investment. Shares will be
purchased at the chosen fund's net asset value on the dividend payment
date. A dividend diversification account must be in the same registration
as the distributing fund account and must be of the same class of shares.
All accounts established or utilized under this program must have a
minimum initial value of at least $250 and all subsequent investments
must be at least $25. This program can be amended or terminated at any
time, upon at least 60 days' notice. If you would like to participate in this
program, you may use the appropriate designation on the Application Form.
<PAGE>
TELEPHONE PRIVILEGE
Unless you have provided in your application that the telephone
privilege is not to be available, the telephone privilege is automatically
available under certain circumstances for exchanging shares and for
redeeming shares. By exercising the telephone privilege to sell or
exchange shares, you agree that the Fund shall not be liable for following
telephone instructions reasonably believed to be genuine. Reasonable
procedures will be employed to confirm that such instructions are genuine
and if not employed, the Fund may be liable for unauthorized instructions.
Such procedures will include a request for personal identification
(account or social security number) and tape recording of the instructions.
You should be aware that during unusual market conditions we may have
difficulty in accepting telephone requests in which case you should
contact us by mail. See "Exchange of Shares - By Telephone", "Redemption
of Shares - By Telephone" and "Redemption of Shares - Expedited
Redemption Privilege".
EXCHANGE OF SHARES
General. You may exchange shares of the Fund for shares of the same
class of the other Davis Funds. This exchange privilege is a convenient
way to buy shares in other Davis Funds in order to respond to changes in
your goals or in market conditions. If such goals or market conditions
change, the Davis Funds offer a variety of investment objectives that
includes common stock funds, tax-exempt and corporate bond funds, and
money market funds. However, the Fund is intended as a long-term
investment and is not intended for short-term trades. Shares of a
particular class of the Fund may be exchanged only for shares of the same
class of another Davis Fund. All of the Davis Funds offer Class A and
Class B shares. The shares to be received upon exchange must be legally
available for sale in your state. The net asset value of the initial shares
being acquired must be at least $1,000 unless such exchange is under the
Automatic Exchange Program described below. There is a $5 service
charge payable to the Distributor for each exchange other than an exchange
under the Automatic Exchange Program.
Class A shares on which you have already paid a sales charge and
shares acquired by reinvestment of dividends or distributions on such
shares may be exchanged into another Davis Fund at relative net asset
value without any additional charge. If any Davis Fund shares being
exchanged are subject to an escrow or segregated account pursuant to the
terms of a Statement of Intention or a CDSC, such shares will be
exchanged at relative net asset value, but the escrow or segregated
account will continue with respect to the Davis Fund shares acquired in
the exchange. The term of any CDSC to which any Class B shares are
subject at the time of exchange will continue to apply to any Class B
shares acquired upon exchange.
Before you decide to make an exchange, you must obtain the current
prospectus of the desired fund. Call your broker or the Adviser for
information and a prospectus for any of the other Venture Funds
registered in your state. Read the prospectus carefully. If you decide to
exchange your shares, send State Street a written unconditional request
for the exchange and follow the instructions regarding delivery of share
certificates contained in the section on "Redemption of Shares". A
signature guarantee is not required for such an exchange. However, if
shares are also redeemed for cash in connection with the exchange
transaction, a signature guarantee may be required. See "Redemption of
Shares". Your dealer may charge an additional fee for handling an exercise
of the exchange privilege.
An exchange involves both a redemption and a purchase, and normally
both are done on the same day. However, in certain instances such as
where a large redemption is involved, the investment of redemption
proceeds into shares of other Davis Funds may take up to seven days.
For federal income tax purposes, exchanges are treated as a sale and
purchase. Therefore, there will usually be a recognizable capital gain or
loss due to an exchange.
The number of times a shareholder may exchange shares among the
Davis Funds within a specified period of time may be limited at the
discretion of the Adviser. Currently, more than three exchanges out of a
fund during a twelve month period are not permitted without the prior
written approval of the Adviser. The Fund reserves the right to terminate
or amend the exchange privilege at any time upon 60 or more days'
notice.
<PAGE>
By Telephone. You may exchange shares by telephone into accounts
with identical registrations. Please see the discussion of procedures in
respect to telephone instructions in the note under "Telephone Privilege"
which is also applicable to exchanges.
Automatic Exchange Program. The Fund also offers an automatic
monthly exchange program. All accounts established or utilized under this
program must have the same registration and a minimum initial value of
at least $250 and all subsequent investments must be at least $25. Each
month shares will be simultaneously redeemed and purchased at the
chosen fund's applicable offering price. If you would like to participate in
this program, you may use the appropriate designation on the Application
Form.
REDEMPTION OF SHARES
General. You can redeem, or sell back to the Fund, all or part of your
shares at any time. You can do this by sending a written request to State
Street Bank and Trust Company, c/o The Davis Funds, P.O. Box 8406,
Boston, MA 02266-8406, indicating how many of your shares or what
dollar amount you want to redeem. If more than one person owns the
shares to be redeemed, all of them must sign the request. The signatures
on the request must be the same as the way in which the shares are
registered.
Sometimes State Street needs more documents to verify authority
to make a redemption. This usually happens when the owner is a
corporation, partnership or fiduciary (such as a trustee or the executor of
an estate) or if the person making the request is not the registered owner
of the shares.
If shares to be redeemed are represented by a certificate, the
certificate, signed by the owner or owners, must be sent to State Street
with the request.
For the protection of all shareholders, the Fund also requires that
signatures appearing on a share certificate, stock power or redemption
request where the proceeds would be more than $25,000 must be
guaranteed by a bank, credit union, savings association, securities
exchange, broker, dealer or other guarantor institution. The transfer agent
may reject a request from any of the foregoing eligible guarantors, if such
guarantor does not satisfy the transfer agent's written standards or
procedures or if such guarantor is not a member or participant of a
signature guarantee program. This provision also applies to exchanges
when there is also a redemption for cash. A signature guarantee on
redemption requests where the proceeds would be $25,000 or less is not
required, provided that such proceeds are being sent to the address of
record and, in order to ensure authenticity of an address change, such
address of record has not been changed within the last 30 days.
Redemption proceeds are normally paid to you within seven days
after State Street receives your proper redemption request. Payment for
redemptions can be suspended under certain emergency conditions
determined by the Securities and Exchange Commission or if the New York
Stock Exchange is closed for other than customary or holiday closings. If
any of the shares redeemed were just bought by you, payment to you may
be delayed until your purchase check has cleared (which usually takes up
to 15 days from the purchase date).You can avoid any such redemption
delay by paying for your shares with a certified or cashiers check or by
bank wire or federal funds.
Redemptions are ordinarily paid to you in cash. However, the Fund's
Board of Directors is authorized to decide that conditions exist making
cash payments undesirable, although the Board has never reached such a
decision. If the Board should decide to make payment in other than cash,
redemptions could be paid in securities, valued at the value used in
computing the Fund's net asset value. There would be brokerage costs
incurred by the shareholder in selling such redemption proceeds. We must,
however, redeem shares solely in cash up to the lesser of $250,000 or 1%
of the Fund's net asset value, whichever is smaller, during any 90-day
period for any one shareholder.
Your shares may also be redeemed through participating dealers.
Under this method, the Adviser repurchases the shares from your dealer if
your dealer is a member of the Adviser's selling group. Your dealer may,
but is not
<PAGE>
required to, use this method in selling back your shares. If your
dealer does this, the dealer may place the repurchase request by telephone
or wire. Your dealer may charge you a service fee or commission. No
charge is payable if you redeem your own shares through State Street
rather than having a dealer arrange for a repurchase.
Expedited Redemption Privilege. Accounts other than prototype
retirement plans and IRAs may designate on the Expedited Redemption
Privilege Form an account with any commercial bank and have the cash
proceeds from the redemption sent to a pre-designated bank account.
State Street will accept instructions to redeem shares and make payment
to a pre-designated commercial bank account by (a) written request
signed by the registered shareholder, (b) telephone request by any
Qualified Dealer to Davis Selected Advisers, L.P. (1-800-279-0279),
(c) by telegraphic request by the shareholder to State Street. At the time
of redemption, the shareholder must request that federal funds be wired
to the bank account he has designated on the application. Normally,
requests received before 3:00 p.m. are wired on the next business day and
requests received thereafter are paid on the second succeeding business
day, but in no event later than seven days following the redemption
request. The redemption proceeds under this procedure may not be
directed to a savings bank, savings and loan or credit union account except
by arrangement with its correspondent bank or unless such institution is a
member of the Federal Reserve System. The Adviser, in its discretion,
may limit the amount that may be redeemed by a shareholder in any day
under the Expedited Redemption Privilege to $25,000. There is a $5 charge
by State Street for this service, and receiving banks may also charge for
this service. The Expedited Redemption Privilege may be terminated,
modified or suspended by the Company at any time. See "Telephone
Privilege".
The name of the registered shareholder and corresponding Fund
account number must be supplied. The Expedited Redemption Privilege
Form provides for the appropriate information concerning the commercial
bank and account number. Changes in ownership, account number
(including the identity of your bank) or authorized signatories of the
pre-designated account may be made by written notice to State Street
with your signature and those of new owners or signers on the account
guaranteed by a commercial bank or trust company. Additional
documentation may be required to change the designated account where
shares are held by a corporation, partnership, executor, administrator,
trustee or guardian.
By Telephone. You can redeem shares by telephone and receive a
check by mail, but please keep in mind:
The check can only be issued for up to $25,000;
The check can only be issued to the registered owner
(who must be an individual);
The check can only be sent to the address of record; and
Your current address of record must have been on file for 30 days.
Automatic Withdrawals plan. Under the Automatic Withdrawals
plan, you can indicate to State Street how many dollars you would like to
receive each month or each quarter. Your account must have a value of at
least $10,000 to start a plan. Shares are redeemed so that you will
receive the payment you have requested approximately in the middle of the
month. Withdrawals involve redemption of shares and may produce gain or
loss for income tax purposes. Shares of the Fund initially acquired by
exchange from any of the other Davis Fund shares will remain subject to
an escrow or segregated account to which any of the exchanged shares
were subject. If you utilize this program using Class B shares, any
applicable contingent deferred sales charges will be imposed on such
Class B shares redeemed. Purchase of additional shares concurrent with
withdrawals may be disadvantageous to you owing to tax consequences. If
the amount you withdraw exceeds the dividends on your shares, your
account will suffer depletion. Your Automatic Withdrawals plan may be
terminated by you at any time without charge or penalty. The Fund
reserves the right to terminate or modify the Automatic Withdrawals plan
at any time. Call or write the Fund if you want further information on the
Automatic Withdrawals plan.
<PAGE>
Involuntary Redemptions. To relieve the Fund of the cost of
maintaining uneconomical accounts, the Fund may effect the redemption of
shares at net asset value in any account if the account, due to shareholder
redemptions, has a value of less than $250. At least 60 days prior to such
involuntary redemption, the Fund will mail a notice to the shareholder so
that an additional purchase may be effected to avoid such redemption.
Subsequent Repurchases. After some of or all your Class A or Class
B shares are redeemed or repurchased, you may decide to put back all or
part of your proceeds into the same Class of the Fund's shares. Any such
shares will be issued without sales charge at the net asset value next
determined after you have returned the amount of your proceeds. In
addition, any CDSC assessed on Class B shares will be returned to the
account. Class B shares will be deemed to have been purchased on the
original purchase date for purposes of calculating the CDSC and conversion
period. This can be done by sending the Fund or the Adviser a letter,
together with a check for the reinstatement amount. The letter must be
received, together with the payment, within 30 days after the redemption
or repurchase. You can only use this privilege once.
DETERMINING THE PRICE OF SHARES
The net asset value per share is determined daily by dividing the
total value of investments and other assets, less any liabilities, by the
number of total outstanding shares. Fixed-income securities may be
valued on the basis of prices provided by a pricing service when such
prices are believed to reflect the fair market value of such securities.
(Pricing services generally take into account institutional size trading in
similar groups of securities). Securities not priced in this manner will be
priced at the last published sales price if traded on that day and, if not
traded, at the mean between the most recent quoted bid and asked prices
provided by investment dealers. The pricing service and valuation
procedures are reviewed and subject to approval by the Board of Directors.
Short-term securities maturing in 60 days or less will be valued at
amortized cost (unless the Board of Directors determines that amortized
cost would not represent a fair value). If there is a material difference in
the market value and amortized cost value of short-term securities,
market value will be used. Assets for which there are no quotations
available will be valued at a fair value as determined by the Board of
Directors.
The net asset value per share is determined as of the earlier of
close of the exchange or 4:00 p.m. Eastern Time on each day the New York
Stock Exchange is open. The price per share for purchases or redemptions
made directly through State Street normally is such value next computed
after State Street receives the purchase order or redemption request. If
the purchase order or redemption request is placed with your dealer, then
the applicable price is normally computed as of 4:00 p.m. Eastern Time on
the day the dealer receives the order, provided that the dealer receives
the order before 4:00 p.m. Eastern Time. Otherwise, the applicable price
is the next determined net asset value. It is the responsibility of your
dealer to promptly forward purchase and redemption orders to the Adviser.
Note that in the case of redemptions and repurchases of shares owned by
corporations, trusts or estates, State Street may require additional
documents to effect the redemption and the applicable price will be
determined as of the close of the next computation following the receipt
of the required documentation. See "Redemption of Shares."
DIVIDENDS AND DISTRIBUTIONS
There are two sources for the payments made to you by the Fund.
The first is net investment income. Payments from this source are made
monthly. The second source is realized capital gains, distribution of
which are paid at least annually. You will receive quarterly confirmation
statements for dividends declared and shares purchased through
reinvestment of dividends. The source and federal income tax status of
all distributions will be reported to shareholders annually. You will also
receive confirmations after each purchase (other than through dividend
reinvestment) and after each redemption. Because Class B shares incur
higher distribution services fees and bear certain other expenses, such
class will have a higher expense ratio and will pay correspondingly lower
dividends than Class A shares. Information concerning distributions will
be mailed annually to shareholders.
<PAGE>
The Fund currently declares monthly distributions based on the
Adviser's projections of estimated net investment income. The amount of
each distribution may differ from actual net investment income
determined in accordance with generally accepted accounting principles.
The Fund at times may continue to pay distributions based on expectation
of future investment results and to provide stable distributions for its
shareholders even though, as a result of temporary market conditions or
other factors, the Fund may have failed to achieve projected investment
results for a given period. In such cases, the Fund's distributions may
include a return of capital to shareholders. Shareholders who reinvest
their distributions are largely unaffected by such returns of capital. In
the case of shareholders who do not reinvest, a return of capital is
equivalent to a partial redemption of the shareholder's investment. During
the last fiscal year, there were no distributions from capital.
Shareholders have the option to receive all dividends and
distributions in cash, to have all dividends and distributions reinvested,
or to have income dividends and short-term capital gain distributions paid
in cash and long-term capital gain distributions reinvested. The
reinvestment of dividends and distributions is made at net asset value
(without any sales charge) on the dividend payment date. For the
protection of the shareholder, upon receipt of the second dividend check
which has been returned to State Street as undeliverable, undelivered
dividends will be invested in additional shares at the current net asset
value and the account designated as a dividend reinvestment account.
FEDERAL INCOME TAXES
This section is not intended to be a full discussion of all the aspects
of the federal income tax law and its effects on the Fund and its
shareholders. Shareholders may be subject to state and local taxes on
distributions. Each investor should consult his or her own tax adviser
regarding the effect of federal, state and local taxes on an investment in
the Fund.
The Fund intends to continue to qualify, as it has since inception, as
a regulated investment company under the Internal Revenue Code (the
"Code") and, if so qualified, will not be liable for federal income tax to the
extent its earnings are distributed. If for any calendar year the
distributed earnings required under the Code exceed the amount
distributed, an excise tax equal to 4% of the excess will be imposed on the
Fund. The Fund intends to make distributions during each calendar year
sufficient to prevent imposition of the excise tax.
Distributions of net investment income and net realized short-term
capital gains will be taxable to shareholders as ordinary income.
Distributions of net long-term capital gains will be taxable to
shareholders as long-term capital gain regardless of how long the shares
have been held. Distributions will be treated the same for tax purposes
whether received in cash or in additional shares. Dividends declared in
the last calendar month to shareholders of record in such month and paid
by the end of the following January are treated as received by the
shareholder in the year in which they are declared.
A gain or loss for tax purposes may be realized on the redemption of
shares. If the shareholder realizes a loss on the sale or exchange of any
shares held for six months or less, and if the shareholder received a
capital distribution during such period, then such loss will be treated as a
long-term capital loss to the extent of any such capital gain distribution.
Interest on indebtedness incurred by non-corporate shareholders to
purchase or carry shares of the Fund will be deductible only up to the
amount of the shareholders' net investment income.
Backup Withholding. To avoid being subject to federal income tax
withholding at the rate of 31% on dividends, distributions and redemption
payments, shareholders must furnish the Fund with a correct tax
identification number. For individuals, this number is their social
security number. Shareholders must certify under penalty of perjury that
the number provided is correct and that they are not subject to backup
withholding for any reason.
<PAGE>
FUND SHARES
Shares issued by the Fund are currently divided into two classes,
Class A shares and Class B shares. The Board of Directors may offer
additional classes in the future and may at any time discontinue the
offering of any class of shares. Each share, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Shares have no preemptive or subscription rights and are
freely transferable. Each share of the Fund represents an interest in the
assets of the Fund and has identical voting, dividend, liquidation and other
rights and the same terms and conditions as any other shares except that
(i) each dollar of net asset value per share is entitled to one vote, (ii) the
expenses related to the distribution of each class and the transfer agency
expenses of each class are borne solely by each such class and (iii) each
class of shares votes separately with respect to provisions of the Rule
12b-1 Distribution Plan which pertains to a particular class and other
matters for which separate class voting is appropriate under applicable
law. Each fractional share has the same rights, in proportion, as a full
share. Shares do not have cumulative voting rights; therefore, the holders
of more than 50% of the voting power of the Fund can elect all of the
directors of the Fund.
In accordance with Maryland law and the Fund's By-laws, the Fund
does not hold regular annual shareholder meetings. Shareholder meetings
are held when they are required under the Investment Company Act of
1940 or when otherwise called for special purposes. Special shareholder
meetings may be called upon the written request of shareholders holding
at least 10% of the outstanding shares of the Fund.
PERFORMANCE DATA
From time to time, the Fund may advertise information regarding its
performance. Such information will consist of its "yield" and "total
return" and will be calculated separately for each class. These
performance figures are based upon historical results and are not intended
to indicate future performance.
"Yield" is computed by dividing the net investment income per share
(as defined in applicable regulations of the Securities and Exchange
Commission) during a specified 30-day period by the maximum offering
price per share on the last day of such period. Yield is an annualized
figure, in that it assumes that the same level of net investment income is
generated over a one year period. The yield formula annualizes net
investment income by providing for semi-annual compounding.
"Total return" refers to the Fund's average annual compounded rate
of return over a stated period that would equate an initial amount
invested at the beginning of the period to the ending redeemable value of
the investment. In the event the Fund advertises its total return, the
stated periods will be one, five and ten years, and may also include longer
or shorter periods, including the life of the Fund. The computation of total
return assumes reinvestment of all dividends and distributions, and
deduction of all charges and expenses.
The Fund's 1995 Annual Report contains additional performance
information and will be made available upon request and without charge.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to Davis Selected
Advisers, L.P., by writing to P.O. Box 1688, Santa Fe, NM 87504-1688 or by
calling 1-800-279-0279.
<PAGE>
APPENDIX
QUALITY RATINGS OF DEBT SECURITIES
Moody's Investors Service, Inc. Corporate Bond Ratings
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or
an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are unlikely to impair the fundamentally strong position of
such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long term risks appear
somewhat larger than Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, (i.e. they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect
to principal or interest.
Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Standard & Poor's Corporation Corporate Bond Ratings
AAA - Debt rated 'AAA' has the highest rating assigned by Standard
and Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA - Debt rated 'AA' has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher
rated categories.
BBB - Debt rated 'BBB' is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.
BB - Debt rated 'BB' has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties
or exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and principal
payments. The BB rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BBB- rating.
B - Debt rated 'B' has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal
repayments. Adverse business, financial or economic conditions will
likely impair capacity or willingness to pay interest and repay principal.
The B rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BB or BB- rating.
CCC - Debt rated 'CCC' has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal. The
'CCC' rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied 'B' or 'B_' rating.
CC - The rating 'CC' is typically applied to debt subordinated to
senior debt that is assigned an actual or implied 'CCC' rating.
C - The rating 'C' is typically applied to debt subordinated to senior
debt which is assigned an actual or implied 'CCC_' debt rating. The 'C'
rating may be used to cover a situation where a bankruptcy petition has
been filed, but debt service payments are continued.
CI - The rating 'CI' is reserved for income bonds on which no interest
is being paid.
D - Debt rated 'D' is in payment default. The 'D' rating category is
used when interest payments or principal payments are not made on the
date due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The 'D'
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
<PAGE>
Adviser and Distributor
Davis Selected Advisers, L.P.
124 East Marcy Street
Santa Fe, NM 87501
Transfer Agent and Custodian
State Street Bank and Trust Company
c/o The Venture Funds
P.O. Box 8406
Boston, MA 02266-8406
Legal Counsel
D'Ancona & Pflaum
30 North LaSalle Street
Chicago, IL 60602
Auditors
Tait, Weller & Baker
Two Penn Center, Suite 700
Philadelphia, PA 19102-1707
--------------------------------------------
TABLE OF CONTENTS
PAGE
Summary.................................2
Financial Highlights....................3
Investment Objectives and Policies......4
Adviser and Distributor.................9
Distribution Plans.....................10
Purchase of Shares.....................11
Telephone Privilege....................15
Exchange of Shares.....................15
Redemption of Shares...................16
Determining the Price of Shares........18
Dividends and Distributions............18
Federal Income Taxes...................19
Fund Shares............................20
Performance Data.......................20
Shareholder Inquiries..................20
Appendix - Quality Ratings of
Debt Securities........................21
-----------------------------------------
9508-10 VIP100
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
August 1, 1995
As revised October 1, 1995
Davis High Income Fund, Inc.
(formerly, Venture Income (+) Plus, Inc.)
124 East Marcy Street
Santa Fe, New Mexico 87501
1-800-279-0279
TABLE OF CONTENTS
Topic Page
Investment Restrictions............................ 2
Foreign Securities................................. 3
"When Issued" Securities........................... 3
Repurchase Agreements.............................. 3
Lending Portfolio Securities....................... 4
Writing Covered Call Options....................... 4
Portfolio Transactions............................. 6
Directors and Officers............................. 6
Certain Shareholders of the Fund................... 9
Investment Advisory Services....................... 9
Custodian.......................................... 10
Auditors........................................... 10
Determining the Price of Shares.................... 10
Reduction of Class A Sales Charge.................. 10
Distribution of Fund Shares........................ 12
Performance Data................................... 13
This Statement of Additional Information sets forth information
concerning Davis High Income Fund (the "Fund"). This Statement of
Additional Information is not a prospectus. Investors should read this
Statement of Additional Information in conjunction with the Fund's
Prospectus dated August 1, 1995, as revised October 1, 1995, which may be
obtained free of charge by writing to or calling the Fund at the above address
or telephone number.
The Fund's March 31, 1995 Annual Report to Shareholders accompanies
this Statement of Additional Information and the financial statements
appearing therein are incorporated herein by reference.
<PAGE>
INVESTMENT RESTRICTIONS
The investment restrictions set forth below and the Fund's
investment objectives set forth in the Prospectus may not be changed
without the approval of the holders of the lesser of (i) 67% of the eligible
votes, if the holders of more than 50% of the eligible votes are
represented or (ii) more than 50% of the eligible votes. All percentage
limitations set forth in these restrictions apply as of the time of an
investment without regard to later increases or decreases in the value of
securities or total or net assets.
1. The Fund may not buy or sell commodities or commodity contracts.
2. The Fund may not purchase real estate or real estate mortgages as
such, but the Fund may purchase the liquid securities of companies,
including real estate investment trusts, holding real estate or
interests (including mortgage interests) therein.
3. The Fund may not buy the securities of any company if the Fund
would then own more than 10% of such company's voting securities or any
class of such company's securities. For this purpose all debt
securities of an issuer are deemed to comprise a single class.
4. The Fund may not buy the securities of any company if more than 5%
of the value of its total assets would then be invested in that
company; the Fund may, however, without limitation, invest in
obligations issued or guaranteed by the U.S. Government, its agencies
and instrumentalities ("U.S. Government Securities") and repurchase
agreements with respect thereto.
5. The Fund may not buy the securities of companies in any one industry
if more than 25% of the value of the Fund's total assets would then be
invested in companies in that industry.
6. The Fund may not purchase or write put or call options, except that
it may write listed, covered call options and make closing transactions
in respect thereof, provided that no more than 20% of the value of the
Fund's total assets would be subject to such calls.
7. The Fund may not buy the securities of companies in continuous
operation for less than three years (including predecessors) if more
than 5% of the value of the Fund's total assets would then be invested
in such securities.
8. The Fund may not buy securities issued by other investment
companies except incident to an acquisition of assets or a merger.
9. The Fund may not sell short, buy on margin or engage in arbitrage
transactions.
10. The Fund does not invest for the purpose of exercising control or
management of other companies.
11. The Fund may not borrow money except from banks for extraordinary
or emergency purposes in amounts not exceeding 10% of the value of the
Fund's total assets (excluding the amount borrowed) at the time of such
borrowing. The Fund may not pledge or hypothecate any of its assets,
except in connection with permitted borrowing in amounts not exceeding
15% of the value of its total assets (excluding the amount borrowed) at
the time of such borrowing.
12. The Fund may not buy or continue to hold securities if any officer or
director of the Fund, the Adviser or the Adviser's General Partner own
too many of the same securities. This would happen if any of these
individuals own 1/2 of 1% or more of the securities and all such
individuals who own that much or more own 5% of such securities.
13. The Fund does not engage in the underwriting of securities; however,
if the Fund sells "restricted" securities it may technically be
considered an "underwriter."
14. The Fund may lend its securities provided that not more than 20% of
the value of the Fund's total assets are subject to such loans. The
Fund may not lend money except through the purchase of debt obligations
(including entering into repurchase agreements) in accordance with the
Fund's investment objectives.
<PAGE>
State Undertakings and Non-Fundamental Policies. In addition to the
foregoing restrictions, the Fund has voluntarily undertaken with certain
states, for so long as the Fund's shares are sold in such states, not to
invest in oil, gas or other mineral explorations or development programs.
This undertaking and all other non-fundamental policies may be changed
without shareholder approval.
FOREIGN SECURITIES
The Fund may invest in foreign securities without limitation as to
type and country. As a matter of non-fundamental policy, the Fund will
not make such an investment if it would cause more than 5% of the value
of the Fund's net assets to be invested in foreign securities. All the
Fund's investments in foreign securities must be dollar denominated.
Foreign securities will generally be purchased on domestic exchanges but
may also be purchased through domestic brokers on major world
exchanges. The Fund does not intend to emphasize the purchase of
securities related to any particular foreign nation. Foreign investments
involve certain considerations which are not typically associated with
investments in United States Entities. An investment in a foreign entity
may be affected by changes in currency rates and in currency exchange
controls. There may be less publicly available information about a foreign
entity than a United States entity. Foreign entities generally are not
subject to uniform accounting, auditing and financial reporting standards
comparable to those applicable to United States entities. Securities of
some foreign entities may be less liquid and more volatile than securities
of comparable United States entities. There is generally less government
regulation of stock exchanges, brokers and listed entities abroad than in
the United States. Additionally, with respect to certain foreign countries,
there is a possibility of expropriation or confiscatory taxation or social
instability or diplomatic developments which could affect investments in
entities in those countries. Foreign economies may differ favorably or
unfavorably from the economy of the United States in such respects as
growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments. If it should be
necessary, the Fund would generally encounter greater difficulties in
commencing and prosecuting successfully a lawsuit against a foreign
issuer than a United States issuer. The Fund's Adviser will consider these
and other factors before investing in foreign securities and will not make
such investments unless, in its opinion, the investments will be in
accordance with the Fund's objectives.
WHEN-ISSUED SECURITIES
New issues of fixed income securities of the type in which the Fund
will invest may be offered on a when-issued or delayed delivery basis
(that is, delivery and payment for the securities normally takes place
more than seven and less than 30 days after the date of the transaction).
In such offerings, the Fund's payment obligation and the interest rate the
Fund will receive are each fixed at the time the Fund enters into the
commitment. Offerings on a when-issued basis are not customary with
respect to the types of securities in which the Fund will invest, and it is
expected that the Fund will infrequently encounter offerings on such
basis. The Fund does not, as a matter of non-fundamental policy, commit
to purchase securities on a when-issued basis in an amount exceeding 5%
of the total value of the Fund's assets on the date on which a commitment
is made. Additionally, the Fund will only make commitments to purchase
securities offered on a when-issued basis with the intention of actually
acquiring the securities, but may sell those securities before the
settlement date if it is deemed advisable as a matter of investment
strategy. The Fund will establish at its custodian bank a separate account
consisting of cash or liquid debt securities (or a combination thereof)
equal at any given date to the amount of the Fund's outstanding
commitments, if any, to purchase when-issued securities. For the purpose
of determining the adequacy of the securities in such account, the
deposited securities will be valued at market. If the market values of
those securities decline, additional cash or sec-urities will be placed in
the account on a daily basis so that the market value of the account will
continue to equal the amount of the Fund's outstanding commitments.
When the time comes to pay for when-issued securities, the Fund will
meet its obligations from its then available cash flow, the sale of
securities held in the separate account, the sale of other securities or,
although the Fund would not normally expect to do so, the sale of the
when-issued securities themselves (which may have a market value
greater or less than the Fund's payment obligation). Securities purchased
on a when-issued basis and the securities held in the Fund's portfolio are
subject to changes in market value based upon the public's perception of
the credit worthiness of the issuer and changes in the level of interest
rates. Both types of securities generally respond in a similar manner to
these changes. That is, when interest rates decline, both types generally
appreciate in value, and when interest rates rise, both types generally
depreciate in value.
REPURCHASE AGREEMENTS
The Fund may from time to time enter into repurchase agreements
whereby the Fund buys a U.S. Government Security, bank obligation or
prime commercial paper, subject to the obligation of the seller to
repurchase the instrument and to the Fund's obligation to resell it at a
mutually agreed upon price. The transaction
<PAGE>
may be viewed as a loan of money by the Fund to the seller. The resale price
is normally in excess of the purchase price, reflecting an agreed upon
interest rate. Repurchase agreements will have short durations, normally a
day and no longer than a week. The Fund will always receive as collateral
securities whose market value, including accrued interest, will be at least
100% of the dollar amount invested in the agreement, and the Fund will make
payment for such securities only upon physical delivery or evidence of book
entry transfer to the account from the Fund's custodian bank. The principal
risk involved is that if the seller were to default and the Fund were not able
to sell the collateral securing the agreement for the purchase price the Fund
had paid, the Fund would sustain a loss equal to the difference. In
addition, liquidation of the underlying debt security by the Fund could be
delayed or otherwise adversely affected by a court handling bankruptcy or
reorganization proceedings with respect to the seller, thereby affecting
the Fund's liquidity and possibly affecting the value of the Fund's
portfolio.
LENDING PORTFOLIO SECURITIES
The Fund has never loaned its securities and does not intend to do so
during the ensuing year. However, the Fund is not prohibited from
engaging in such activity. If at any time in the future the Fund engages in
such activity, it would be the Fund's policy not to make any such loan if it
would cause more than 20% of the value of the Fund's total assets to be
subject to such loans.
If the Fund were to lend securities, the borrower would provide cash
collateral which the Fund could invest in order to receive short-term
interest income. The borrower also would pay the Fund an amount equal to
the dividends or interest which the Fund would have received if the Fund
had not loaned the securities. The cash collateral which the borrower
would provide must be equal to the market value of the securities loaned.
If this market value rises, the borrower would provide more cash on each
business day. If it declines, the borrower is entitled to be paid back some
of its cash. Determinations of market value are made at the end of each
business day. If the cash collateral drops below 100% and the required
additional cash is not immediately deposited by the borrower, the loan
would immediately become due and the Fund would be entitled to replace
the securities by purchase. There can be no assurance that the borrower
would be able to deposit any required additional cash. The Fund would
exercise its right to replace the securities within such reasonable time as
the Fund deemed appropriate under the circumstances.
There are other policies which would govern the Fund's lending of
securities. The borrower must agree to return the securities after notice,
within the normal settlement time of five business days. The Fund would
invest the cash collateral only in readily marketable short-term interest
bearing securities of prime quality so that the Fund could return the
borrower's cash when due. Part of the interest the Fund receives on these
investments may be paid to the borrower.
If the voting rights or rights to consent on securities loaned pass to
the borrower, the Fund would retain the right to cancel the loan and retain
its rights in time to vote upon or consent to a matter which the Fund
deems important.
The Fund would loan its portfolio securities only to brokers, dealers
and other financial institutions which have capital of not less than $10
million, and the Fund's loans would comply with applicable regulatory
requirements. The Fund may pay reasonable finder's, administrative and
custodian fees in connection with securities loans.
Some, but not all, of the Fund's policies are necessary to meet
certain requirements of the tax laws relating to the lending of securities.
The Fund's policies will not be changed unless the change is permitted
under these requirements. The Fund intends not to lend portfolio
securities if, or to the extent that, such activity would jeopardize its
qualification as a regulated investment company under the tax laws.
WRITING COVERED CALL OPTIONS
The Fund has not written covered call options for many years and
does not intend to do so during the ensuing year. However, the Fund is not
prohibited from engaging in such activity. If at any time in the future the
Fund would engage in such activity, it would be the Fund's policy not to
write a covered call option if it would cause more than 20% of the value
of the Fund's total assets to be subject to such calls.
<PAGE>
The Fund would only write "covered" calls. This means that the Fund
must own the securities which are subject to the call (or own other
securities which are acceptable for certain escrow arrangements
described below) when the call is written and until the call lapses or is
exercised or a closing purchase transaction is effected. Calls would be
purchased only to effect a closing purchase transaction.
If the Fund were to write a call option, the Fund would agree to sell
to a purchaser the securities subject to the call if the call is exercised on
or before a specified subsequent date. The price at which the Fund would
sell the security is fixed in the call; this price is referred to as the
exercise price. This price may be equal to, or more or less than, the
market price of the securities covered by the call at the time the call is
written. The period during which the Fund must sell at this price is also
fixed in the call. Most calls run for periods of three, six or nine months.
During the period of a call the Fund must, if the call is exercised, sell the
securities subject to the call at the exercise price regardless of market
price.
For entering into this contract, the Fund would receive an amount
called a premium. Should the market price of securities on which the Fund
has written calls decline during the call period, the premium would help
to offset that decline. The Fund expects that, if the market price for the
securities covered by the call remains below the exercise price during the
period when the call can be exercised, the purchaser would generally not
exercise the call. On the other hand, the Fund would not profit from an
increase in the market price of securities which are subject to a call over
the exercise price except to the extent that the premium represents such
a profit. The Fund would expect that, if the market price for the
securities covered by the call rises above the exercise price during the
period when the call can be exercised, the purchaser would generally
exercise the call. In addition, until and unless the call is exercised, the
Fund would retain current income from the security.
The Fund would purchase calls only to close out a position in a call
which the Fund has written. To do this, the Fund would make a "closing
purchase transaction." This involves buying a call on the same security
with the same exercise price and call period as the call the Fund has
written. When the Fund sells a security on which the Fund has written a
call, the Fund would effect a closing purchase transaction to avoid having
to sell a security on which it has written a call if the call is exercised.
The Fund would have a profit or loss from a closing purchase transaction
depending on whether the amount the Fund paid to purchase the call is less
or more than the premium the Fund received on the call which is closed
out. There is no assurance that the Fund would be able to effect a closing
purchase transaction due to the lack of a market in the call in question. If
the Fund could not do so, the Fund would be required to hold the security
on which the call was written until the call expires or is exercised. The
Fund would generally purchase an offsetting call only in instances in
which the value of the underlying security has risen since the Fund wrote
the call and the Fund believes either that the security should continue to
be held as part of the Fund's portfolio because it meets the Fund's
investment objectives or that it would be undesirable to realize the
capital gain at the time the call is exercised.
An example of writing a call is as follows. Assume the Fund owns
100 shares of stock and that, when the market price of the stock is $50
per share, the Fund writes a six-month call covering the 100 shares at an
exercise price of $50 per share for a premium of $500 (less commissions).
Should the market price of the stock decline to $40 per share, the call
would not be exercised. The 100 shares would decline $1,000 in value, but
would not be sold unless investment considerations had changed, and the
Fund would have received income in the amount of $500. On the other
hand, should the market price of the stock rise to $60 per share, the call
would be exercised, and in exchange for the $500 premium, the Fund would
have foregone the $1,000 appreciation on the shares.
When the Fund writes a call, the Fund's custodian bank (or a
depository acting for the bank) would act as the Fund's escrow agent as to
securities on which the Fund has written calls (or other securities which,
under the applicable rules, are acceptable for escrow). The securities
would not be released from the escrow until the call expires or the Fund
enters into a closing purchase transaction.
Writing calls may affect the Fund's turnover rate and the amount of
brokerage commissions paid. Calls may be exercised, causing the sale of
securities and thus increasing the Fund's turnover rate. The increase
would be beyond the Fund's control, since the Fund has no control over the
exercise of the calls it writes. The Fund would pay a brokerage
commission each time it writes a call, effects a closing purchase
transaction or sells securities on the exercise of a call. The brokerage
commissions associated with the buying and selling of calls are normally
proportionately higher than those associated with general securities
transactions.
A premium received by the Fund upon writing a call would be
included in the Fund's assets; an equal amount would be carried as a
liability. The liability would be subsequently adjusted to the current
value of the call.
<PAGE>
For example, if the current value of the call exceeds the premium received,
the excess would be an unrealized loss; if the premium exceeds the current
value of the call, the excess would be an unrealized gain. The current value
of a call would be the last sales price on the principal exchange in which
the call is traded or, in the absence of transactions, the mean between the
bid and asked prices.
PORTFOLIO TRANSACTIONS
Stamper Capital & Investment Inc., (the "Sub-Adviser") makes investment
decisions and arranges for the placement of buy and sell orders and the
execution of portfolio transactions for the Fund, subject to review by the
Board of Directors. In this regard, the Sub- Adviser will seek to obtain the
most favorable price and execution for the transaction given the size and
risk involved. In placing executions and paying brokerage commissions,
the Sub- Adviser considers the financial responsibility and reputation of the
broker or dealer, the range and quality of the services made available to
the Fund and the professional services rendered, including execution,
clearance procedures, wire service quotations and ability to provide
supplemental performance, statistical and other research information for
consideration, analysis and evaluation by the Sub- Adviser's staff. In
accordance with this policy, brokerage transactions are not executed
solely on the basis of the lowest commission rate available for a
particular transaction. Research services provided to the Sub- Adviser's staff
by or through brokers who effect portfolio transactions for the Fund may
be used in servicing other accounts managed by the Adviser and, likewise,
research services provided by brokers used for transactions of other
accounts may be utilized by the Sub- Adviser in performing services for the
Fund. Subject to the requirements of best execution, the placement of
orders by securities firms for shares of the Fund may be taken into
account as a factor in the placement of portfolio brokerage.
On occasions when the Sub- Adviser deems the purchase or sale of a
security to be in the best interests of the Fund as well as other fiduciary
accounts, the Sub-Adviser may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other
accounts in order to obtain the best net price and most favorable
execution. In such event, the allocation will be made by the Sub-Adviser in
the manner considered to be most equitable and consistent with its fiduciary
obligations to all such accounts, including the Fund. In some instances,
this procedure could adversely affect the Fund but the Board of Directors
deems that any disadvantage in the procedure is outweighed by the
increased selection available and the increased opportunity to engage in
volume transactions.
The Sub-Adviser believes that research from brokers and dealers is
desirable, although not essential, in carrying out its functions, in that
such outside research supplements the efforts of the Sub-Adviser by
corroborating data and enabling the Sub-Adviser to consider the views,
information and analyses of other research staffs. Such views,
information and analyses include such matters as communicating with
persons having special expertise on certain companies, industries, areas
of the economy and/or securities prices, obtaining written materials on
these or other areas which might affect the economy and/or securities
prices, obtaining quotations on securities prices and obtaining
information on the activities of other institutional investors. The
Sub-Advisers researches, at its own expense, each security included in, or being
considered for inclusion in, the Fund's portfolio. As any particular
research obtained by the Sub-Adviser may be useful to the Fund, the Board of
Directors or its Committee on brokerage, in considering the
reasonableness of the commissions paid by the Fund, will not attempt to
allocate, or require the Sub-Adviser to allocate, the relative costs or benefits
of research.
During the last three fiscal years ended March 31, 1995, 1994 and
1993, the Fund paid brokerage commissions of $7,297, $1,965, and $394,
respectively, all of which was related to best execution.
DIRECTORS AND OFFICERS
The names and addresses of the directors and officers of the Fund
are set forth below, together with their principal business affiliations
and occupations for the last five years. The asterisk
following the names of Martin H. Proyect, Shelby M.C. Davis
and Jeremy H. Biggs indicates that they are considered to be "interested
persons" of the Fund, as defined in the Investment Company Act, by reason
of their affiliation with the Fund's Adviser.
Martin H. Proyect (10/24/32),* P.O. Box 80176, Las Vegas, NV
89180-0176. Director of the Fund, Davis New York Venture Fund (formerly,
New York Venture Fund, Inc.), Davis Tax-Free High Income Fund, Inc. (formerly,
Venture Income (+) Plus, Inc.), Davis Series, Inc. (formerly, Retirement
Planning Funds of America, Inc.) and Davis International Series, Inc.
(formerly Venture Series, Inc.); Director/Trustee and President of Selected
American Shares, Inc., Selected Special Shares, Inc. and Selected Capital
Preservation Trust; formerly Chairman and Treasurer, Venture Advisers, Inc.;
formerly, Secretary and Treasurer, Venture Pension Advisers, Inc.
<PAGE>
Wesley E. Bass, Jr.(8/21/31), 710 Walden Road, Winnetka, IL 60093. Director
of the Fund, Davis New York Venture Fund, Inc., Davis Tax-Free High Income Fund,
Inc. and Davis Series Inc.; President, Bass & Associates (Financial Consulting
Firm); formerly, First Deputy City Treasurer, City of Chicago, and Executive
Vice President, Chicago Title and Trust Company.
Jeremy H. Biggs (8/16/35),* Two World Trade Center, 84th Floor, New York, NY
10048. Chairman of the Fund, Davis New York Venture Fund, Inc., Davis Tax-Free
High Income Fund, Inc., Davis Series, Inc. and Davis International Series, Inc.;
Consultant to the Adviser. Vice Chairman, Head of Equity Research
Department, Chairman of the U.S. Investment Policy Committee and
member of the International Investment Committee of Fiduciary Trust
Company International.
Marc P. Blum (9/9/42), 233 East Redwood Street, Baltimore, MD 21202. Director
of the Fund, Davis New York Venture Fund, Inc., Davis Tax-Free High Income Fund,
Inc. and Davis Series, Inc. Chief Executive Officer, World Total Return Fund,
L.P.; Partner, Gordon, Feinblatt, Rothman, Hoffberger and Hollander (attorneys);
Director, Mid-Atlantic Realty Trust.
Shelby M.C. Davis, (3/20/37)* P.O. Box 205, Hobe Sound, FL 33455.
Director, President and Chief Executive Officer of the Fund, Davis New
York Venture Fund, Inc., Davis Tax-Free High Income Fund, Inc., Davis Series,
Inc. and Davis International Series, Inc.; Director/Trustee and Executive
Vice President of Selected American Shares, Inc., Selected Special Shares,
Inc. and Selected Capital Preservation Trust; Chairman and Chief Executive
Officer, Venture Advisers, Inc.; Consultant to Fiduciary Trust Company
International; Director, Shelby Cullom Davis Financial Consultants, Inc.;
formerly, Chairman, Venture Pension Advisers, Inc.
Eugene M. Feinblatt (10/28/19), 233 East Redwood Street, Baltimore, MD 21202.
Director of the Fund, Davis New York Venture Fund Inc., Davis Tax-Free High
Income Fund, Inc. and Davis Series Inc. Senior Partner, Gordon, Feinblatt,
Rothman, Hoffberger and Hollander (attorneys).
Jerry D. Geist (5/23/34), 1650 University Blvd., N.E., Suite 207,
Albuquerque, NM, 87110. Director of the Fund, Davis New York Venture Fund Inc.,
Davis Tax-Free High Income Fund, Inc. and Davis Series Inc. Chairman Santa Fe
Center Enterprises; Consultant NYSE Energy Co., Major Venture Capital Co.;
Chairman, Biotechnology Company; Director, Environmental Mfg. Co.; Director,
CH2M-Hill, Inc.; Retired Chairman and President, Public Service Company
of New Mexico.
D. James Guzy (3/7/36), 508 Tasman Drive, Sunnyvale, CA 94089. Director of
the Fund, Davis New York Venture Fund, Inc., Davis Tax-Free High Income Fund,
Inc.and Davis Series Inc.; Chairman, NTX Communications Corp. (communications
products); Director, Intel Corp. (a manufacturer semi-conductor circuits),
Cirrus Logic Corp. (a manufacturer of semi-conductor circuits) and Alliance
Technology Fund (a mutual fund).
G. Bernard Hamilton (3/18/37), P.O. Box 544, Richmond, VA 23204-0544.
Director of the Fund, Davis New York Venture Fund, Inc., Davis Tax-Free High
Income Fund, Inc. and Davis Series, Inc.; Managing General partner, Avanti
Partners, L.P.; formerlyPresident, Venture Pension Advisers, Inc.
LeRoy E. Hoffberger (6/8/25), The Exchange - Suite 215, 1112 Kenilworth
Drive, Towson, MD 21204. Director of the Fund, Davis New York Venture Fund,
Inc., Davis Tax-Free High Income Fund, Inc., Davis Series Inc.; of Counsel to
Gordon, Feinblatt, Rothman, Hoffberger and Hollander (attorneys); Chairman,
Mid-Atlantic Realty Trust; Director and President, CPC, Inc. (a real estate
company); Director and Vice President, Merchant Terminal Corporation; formerly,
Director of Equitable Bancorporation, Equitable Bank and Maryland National
Bank, and formerly, Director and President, O-W Fund, Inc. (a private
investment fund).
Laurence W. Levine (4/9/31), c/o Bigham, Englar, Jones & Houston, 14 Wall
Street, 21st, Floor, New York, NY 10005-2140. Director of the Fund, Davis New
York Venture Fund, Inc., Davis Tax-Free High Income Fund, Inc., Davis Series
Inc.; Partner, Bigham, Englar, Jones and Houston (attorneys); United States
Counsel to Aerolineas Argentina; Director, various private companies.
Christian R. Sonne (5/6/36), P.O. Box 777, Tuxedo Park, NY 10987. Director
of the Fund, Davis New York Venture Fund, Inc., Davis Davis Tax-Free High Income
Fund, Inc., Davis Series, Inc.; General Partner of Tuxedo Park Associates (a
land holding and development firm); President and Chief Executive Officer of
Hulford Securities Corporation (a private investment fund) until 1990; formerly,
Vice President of Goldman Sachs & Company (investment banking).
Edwin R. Werner (4/1/22), 622 3rd Avenue, Suite 1200 New York, NY 10017.
Director of the Fund, Davis New York Venture Fund, Inc., Davis Tax-Free High
Income Fund, Inc., and Davis Series, Inc.; Director, Novacare, Inc. and New
York Blood Center; Chairman and CEO, Empire Blue Cross and Blue Shield of New
York.
Carl R. Luff, (4/30/54) 124 East Marcy Street, Santa Fe, NM 87501. Vice
President, Treasurer and Assistant Secretary of the Fund, Davis New York
Venture Fund, Inc., Davis Tax-Free High Income Fund, Inc., Davis Series, Inc.,
Davis International Series, Inc., Selected American Shares, Inc., Selected
Special Shares, Inc. and Selected Capital Preservation Trust; Director,
Co-President and Treasurer, Venture Advisers, Inc.
<PAGE>
Raymond O. Padilla (2/22/51), 124 East Marcy Street, Santa Fe, NM 87501.
Vice President, Secretary and Assistant Treasurer of the Fund, Davis New York
Venture Fund, Inc., Davis Tax-Free High Income Fund, Inc., Davis Series, Inc.
and Davis International Series, Inc.; Vice President and Assistant
Secretary of Selected American Shares, Inc., Selected Special Shares, Inc.
and Selected Capital Preservation Trust; Senior Vice President, Venture
Advisers, Inc.
Carolyn H. Spolidoro (11/19/52), 124 East Marcy Street, Santa Fe, NM 87501.
Vice President of the Fund, Davis New York Venture Fund, Inc., Davis Tax-Free
High Income Fund, Inc., Davis Series, Inc. and Davis International Series, Inc.;
Vice President, Venture Advisers, Inc.
Louis R. Proyect (3/7/45), 124 East Marcy Street, Santa Fe, NM 87501.
Vice President of the Fund, Davis New York Venture Fund, Inc., Davis Tax-Free
High Income Fund, Inc., Davis Series, Inc. and Davis International Series, Inc.;
Vice President and Secretary of Selected American Shares, Inc., Selected
Special Shares, Inc. and Selected Capital Preservation Trust; Director,
Executive Vice President and Secretary, Venture Advisers, Inc.; Secretary,
Shelby Cullom Davis Financial Consultants, Inc.; formerly, General Partner
and General Counsel of Spear, Leeds and Kellogg.
B. Clark Stamper (12/20/55), 124 East Marcy Street, Santa Fe, NM 87501. Vice
President of the Fund, Davis New York Venture Fund, Inc., Davis Tax-Free High
Income Fund, Inc., Davis Series, Inc. and Davis International Series, Inc.
Senior Vice President, Venture Advisers, Inc.; Formerly, Assistant Vice
President, Senior Credit Analyst, National Security and Research
Corporation; Vice President and Portfolio Manager, National Securities
Research Asset Management; Vice President, Senior Credit Analyst,
Treasury Portfolio Manager and Treasury Operations Manager, Far West
Savings and Loan.
Andrew A. Davis (6/25/63), 124 East Marcy Street, Santa Fe, NM 87501. Vice
President of the Fund, Davis New York Venture Fund, Inc., Davis Tax-Free
High Income Fund, Inc., Davis Series, Inc. and Davis International Series, Inc.;
Director and Co-President, Venture Advisers, Inc.; formerly, Vice President
and head of convertible security research, PaineWebber, Incorporated.
Christopher C. Davis (7/13/65), 70 Pine Street, 43rd Floor, New York, NY
10270-0108. Vice President of the Fund, Davis New York Venture Fund, Inc.,
Davis Tax-Free High Income Fund, Inc., Davis Series, Inc. Employee of Davis
Selected Advisers, L.P.
Eileen R. Street (3/11/62), 124 East Marcy Street, Santa Fe, NM 87501.
Assistant Treasurer and Assistant Secretary of the Fund, Davis Tax-
Free High Income Fund, Inc., Davis Series, Inc., Davis New York Venture Fund,
Inc., Davis International Series, Inc., Selected American Shares, Inc., Selected
Special Shares, Inc. and Selected Capital Preservation Trust; Senior Vice
President, Venture Advisers, Inc.
Sheldon R. Stein (11/29/28), 30 North LaSalle Street, Suite 2900, Chicago,
IL 60602. Assistant Secretary of the Fund, Davis New York Venture Fund, Inc.,
Davis Tax-Free High Income Fund, Inc., Davis Series, Inc., Davis International
Series, Inc., Selected American Shares, Inc., Selected Special Shares, Inc.
and Selected Capital Preservation Trust; Partner, D'Ancona & Pflaum, the
Fund's legal counsel.
Arthur Don (9/24/53), 30 North LaSalle Street, Suite 2900, Chicago, IL
60602. Assistant Secretary of the Fund, Davis New York Venture Fund, Inc.,
Davis Tax-Free High Income Fund, Inc., Davis Series, Inc., Davis International
Series, Inc.,Selected American Shares, Inc., Selected Special Shares, Inc.
and Selected Capital Preservation Trust; Partner, D'Ancona & Pflaum, the
Fund's legal counsel.
The Fund does not pay salaries to any of its officers. The Adviser
performs certain services on behalf of the Fund and is reimbursed by the
Fund for the costs of providing these services. See "Investment Advisory
Services."
DIRECTORS' COMPENSATION SCHEDULE
During the fiscal year ended March 31, 1995, the compensation paid
to the directors who are not considered to be interested persons of the
Fund was as follows:
<TABLE>
<CAPTION>
Aggregate Company Total
Name Compensation Complex Compensation<F1>
---- ------------ --------------------
<S> <C> <C>
Wesley E. Bass 2,250 24,375
Marc P. Blum 2,100 23,600
Eugene M. Feinblatt 2,150 23,700
Jerry D. Geist 2,000 23,050
D. James Guzy 2,100 23,600
G. Bernard Hamilton 2,050 23,200
<PAGE>
LeRoy E. Hoffberger 2,100 23,550
Laurence W. Levine 2,100 23,550
Christian R. Sonne - 7,200
Edwin R. Werner 1,800 20,700
<FN>
<F1>
Complex compensation is the aggregate compensation paid, for services
as a Director, by all mutual funds with the same investment adviser.
</FN>
</TABLE>
CERTAIN SHAREHOLDERS OF THE FUND
The following table sets forth, as of July 14, 1995, the name and
holdings of each person known by the Fund to be a record owner of more
than 5% percent of its outstanding Class A shares. As of such date, there
were ____________ Class A shares outstanding and the directors and
officers of the Fund, as a group, owned ____________ Class A shares, or
approximately ______% of the Fund's outstanding Class A shares. As of
such date, there were _____________ Class B shares outstanding and the
directors and officers of the Fund, as a group, owned ________________
Class B shares, or approximately _____% of the Fund's outstanding Class B
shares.
<TABLE>
<CAPTION>
Name Shares Owned Percent of Class
<S> <C> <C>
Integra Trust Service %
Trust Securities Sec
300 Fourth Ave
Pittsburgh, PA 15278-0001
</TABLE>
INVESTMENT ADVISORY SERVICES
Davis Selected Advisers, L.P. serves as investment adviser for the
Fund pursuant to an Advisory Agreement adopted in accordance with the
requirements of the Investment Company Act of 1940. Pursuant to the
Advisory Agreement, the Adviser, subject to the general supervision of
the Fund's Board of Directors, provides management and investment
advice, and furnishes statistical, executive and clerical personnel,
bookkeeping, office space, and equipment necessary to carry out its
investment advisory functions and such corporate managerial duties as
are requested by the Board of Directors of the Fund. The Fund bears all
expenses other than those specifically assumed by the Adviser under the
Agreement, including preparation of its tax returns, financial reports to
regulatory authorities, dividend determinations and transaction and
accounting matters related to its custodian bank, transfer agency,
custodial and shareholder services, and qualification of its shares under
federal and state laws.
For the Adviser's services, the Fund pays the Adviser a monthly fee
at the annual rate based on average net assets as follows: 0.75% on the
first $250 million of average net assets; 0.65% on the next $250 million
of average net assets; and 0.55% on average net assets in excess of $500
million. The aggregate advisory fees paid by the Fund to the Adviser
during the fiscal years ended March 31, 1995, 1994 and 1993 were
$453,243, $408,034 and $229,646, respectively.
Under the Advisory Agreement, if expenses borne by the Fund in any
fiscal year (including the advisory fee, but excluding interest, taxes,
brokerage fees and payments made under a Rule 12b-1 Distribution Plan
and, where permitted, extraordinary expenses) exceeds limitations
imposed by applicable state securities laws or regulations, the Adviser
must reimburse the Fund for any such excess at least annually, up to the
amount of its advisory fee. These expense limitations may be raised or
lowered from time to time. California and South Dakota are currently the
only states which have such limitations. California's limitation is 2.5% of
the first $30 million of average net assets, 2.0% of the next $70 million
of average net assets and 1.5% of the remaining average net assets. South
Dakota's limitation is 2.5% of average net assets.
Effective October 1, 1995, Stamper Capital & Investment, Inc., serves as
the Fund's Sub-Adviser under a Sub-Advisory Agreement with the Adviser. The
Fund pays no fees directly to the Sub-Adviser. The Sub-Adviser manages the
day to day investment operations of the Fund, subject to the Adviser's overall
supervision. For its services, the Sub-Adviser receives a fee from the Adviser
equal to 30% of the fees received by the Adviser from the Fund.
The reimbursable costs for certain accounting and administrative
services for the fiscal years ended March 31, 1995, 1994 and 1993 were
$11,004, $10,668 and $9,996, respectively. The reimbursable costs for
qualifying the Fund's shares for sale with state agencies for such periods
were $8,004, $8,004 and $8,004, respectively, and the reimbursable costs
for providing shareholder services for such periods were $7,749, $6,946,
and $6,589, respectively.
The Advisory Agreement also makes provisions for portfolio
transactions and brokerage policies of the Fund which are discussed above
under "Portfolio Transactions."
<PAGE>
In accordance with the provisions of the Investment Company Act,
the Advisory Agreement will terminate automatically upon assignment
and is subject to cancellation upon 60 days' written notice by the Fund's
Board of Directors, the vote of the holders of a majority of the Fund's
outstanding shares or the Adviser. The continuance of the Agreement
must be approved at least annually by the Fund's Board of Directors or by
the vote of holders of a majority of the outstanding shares of the Fund. In
addition, any new agreement or the continuation of the existing agreement
must be approved by a majority of directors who are not parties to the
agreement or interested persons of any such party.
The Adviser and the Sub-Adviser have both adopted a Code of Ethics which
regulates the personal securities transactions of the Adviser's investment
personnel and other employees and affiliates with access to information
regarding securities transactions of the Fund. Both Code of Ethics requires
investment personnel to disclose personal securities holdings upon
commencement of employment and all subsequent trading activity to the
Adviser's Compliance Officer. Investment personnel are prohibited from
engaging in any securities transactions, including the purchase of
securities in a private offering, without the prior consent of the
Compliance Officer. Additionally, such personnel are prohibited from
purchasing securities in an initial public offering and are prohibited from
trading in any securities (i) for which the Fund has a pending buy or sell
order, (ii) which the Fund is considering buying or selling, or (iii) which
the Fund purchased or sold within seven calendar days.
CUSTODIAN
The Custodian of the Fund's assets is State Street Bank and Trust
Company ("State Street"), Atlantic Division, 470 Atlantic Avenue, Boston,
Massachusetts 02210. The Custodian maintains all of the instruments
representing investments of the Fund and all cash. The Custodian delivers
securities against payment upon sale and pays for securities against
delivery upon purchase. The Custodian also remits Fund assets in payment
of Fund expenses pursuant to instructions of officers or resolutions of the
Board of Directors.
AUDITORS
The Fund's auditors are Tait, Weller & Baker, Two Penn Center, Suite
700, Philadelphia, PA 19102-1707. The audit includes examination of
annual financial statements furnished to shareholders and filed with the
Securities and Exchange Commission, consultation on financial accounting
and reporting matters, and meeting with the Audit Committee of the Board
of Directors. In addition, the auditors review federal and state income tax
returns and related forms.
DETERMINING THE PRICE OF SHARES
The Fund does not price its shares or accept orders for purchases or
redemptions on days when the New York Stock Exchange is closed. Such
days currently include New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
REDUCTION OF CLASS A SALES CHARGES
There are a number of ways to reduce the sales charge imposed on
the purchase of the Fund's Class A shares, as described below. These
reductions are based upon the fact that there is less sales effort and
expense involved in respect to purchases by affiliated persons and
purchases made in large quantities.
Family or Group Purchases. Certain purchases made by or for more
than one person may be considered to constitute a single purchase,
including (i) purchases for family members, including spouses and children
under 21, (ii) purchases by trust or other fiduciary accounts and purchases
by Individual Retirement Accounts for employees of a single employer and
(iii) purchases made by an organized group of persons, whether
incorporated or not, if the group has a purpose other than buying shares of
mutual funds. For further information on group purchase reductions,
contact the Adviser or your dealer.
Statements of Intention. Another way to reduce the sales charge is
by signing a Statement of Intention. A Statement is included in the
Application Form included in the Prospectus. Please read it carefully
before completing it.
If you enter into a Statement of Intention you (or any "single
purchaser") may state that you intend to invest at least $100,000 in the
Fund's Class A shares over a 13-month period. The amount you say you
intend to invest
<PAGE>
may include Class A shares which you already own, valued at the offering
price, at the end of the period covered by the Statement. A Statement may be
backdated up to 90 days to include purchases made during that period, but the
total period covered by the Statement may not exceed 13 months.
Shares having a value of 5% of the amount you state you intend to
invest will be held "in escrow" to make sure that any additional sales
charges are paid. If any of the Fund's shares are in escrow pursuant to a
Statement and such shares are exchanged for shares of another Venture
Fund, the escrow will continue with respect to the acquired shares.
No additional sales charge will be payable if you invest the amount
you have indicated. Each purchase under a Statement will be made as if
you were buying at one time the total amount indicated. For example, if
you indicate that you intend to invest $100,000, you will pay a sales
charge of 3-1/2% on each purchase.
If you buy additional amounts during the period to qualify for an even
lower sales charge, you will be charged such lower charge. For example,
if you indicate that you intend to invest $100,000 and actually invest
$250,000, you will, by retroactive adjustment, pay a sales charge of
2-1/2%.
If during the 13-month period you invest less than the amount you
have indicated, you will pay an additional sales charge. For example, if
you state that you intend to invest $250,000 and actually invest only
$100,000, you will, by retroactive adjustment, pay a sales charge of
3-1/2%. The sales charge you actually pay will be the same as if you had
purchased the shares in a single purchase.
A Statement does not bind you to buy, nor does it bind the Adviser to
sell, the shares covered by the Statement.
Rights of Accumulation. Another way to reduce the sales charge is
under a right of accumulation. This means that the larger purchase
entitled to a lower sales charge need not be in dollars invested at one
time. The larger purchases that you (or any "single purchaser") make at
any one time can be determined by adding to the amount of a current
purchase the value of Fund shares (at offering price) already owned by you.
For example, if you owned $100,000 worth (at offering price) of the
Fund's Class A shares and invest $5,000 in additional shares, the sales
charge on that $5,000 investment would be 3-1/2%, not 4-3/4%.
If you claim this right of accumulation, you or your dealer must so
notify the Adviser (or State Street, if the investment is mailed to State
Street) when the purchase is made. Enough information must be given to
verify that you are entitled to such right.
Combined Purchases with other Davis Funds. Your ownership or
purchase of Class A shares of certain other Funds advised and distributed
by the Adviser, including Davis New York Venture Fund, Inc., Davis Tax-Free
High Income Fund, Inc., Davis Series, Inc., and Davis International
Series, Inc. (collectively with the Fund, the
"Venture Funds") may also reduce your sales charges in connection with
the purchase of the Fund's Class A shares. This applies to all three
situations for reduction of sales charges discussed above.
If a "single purchaser" decides to buy the Fund's Class A shares as
well as Class A shares of any of the other Davis Funds (other than
shares of Davis Government Money Market Fund) at the same time, these
purchases will be considered a single purchase for the purpose of
calculating the sales charge. For example, a single purchaser can invest
at the same time $100,000 in the Fund's Class A shares and $150,000 in
the Class A shares of Davis Tax-Free High Income Fund, Inc.
and pay a sales charge of 2-1/2%, not 3-1/2%.
Similarly, a Statement of Intention for the Fund's Class A shares and
for the Class A shares of the other Davis Funds (other than Davis
Government Money Market Fund) may be aggregated. In this connection, the
Fund's Class A shares and the Class A shares of the other Davis Funds
which you already own, valued at the current offering price at the end of
the period covered by your Statement of Intention, may be included in the
amount you have stated you intend to invest pursuant to your Statement.
Lastly, the right of accumulation applies also to the Class A shares
of the other Davis Funds (other than Davis Government Money Market
Fund) which you own. Thus, the amount of current purchases of the Fund's
<PAGE>
Class A shares which you make may be added to the value of the Class A
shares of the other Davis Funds (valued at their current offering price)
already owned by you in determining the applicable sales charge. For
example, if you owned $100,000 worth of shares of Class A (valued at the
applicable current offering price) and invest $5,000 in the Fund's shares,
the sales charge on your investment would be 3-1/2%, not 4-3/4%.
In all the above instances where you wish to claim this right of
combining the Fund's shares you own of the other Davis Funds you or
your dealer must notify the Adviser (or State Street, if the investment is
mailed to State Street) of the pertinent facts. Enough information must
be given to permit verification as to whether you are entitled to a
reduction in sales charges.
Issuance of Shares at Net Asset Value. There are many situations
where the sales charge will not apply to the purchase of Class A shares,
as discussed in the Prospectus. In addition, the Fund occasionally may be
provided with an opportunity to purchase substantially all the assets of a
public or private investment company or to merge another such company
into the Fund. This offers the Fund the opportunity to obtain significant
assets. No dealer concession is involved. It is industry practice to effect
such transactions at net asset value as it would adversely affect the
Fund's ability to do such transactions if the Fund had to impose a sales
charge.
DISTRIBUTION OF FUND SHARES
The Adviser acts as principal underwriter of the Fund's shares on a
continuing basis pursuant to a Distributing Agreement. Pursuant to such
Distributing Agreement, the Adviser, in its capacity as distributor, pays
for all expenses in connection with the preparation, printing and
distribution of advertising and sales literature for use in offering the
Fund's shares to the public, including reports to shareholders to the extent
they are used as sales literature. The Adviser also pays for prospectuses
in excess of those which the Fund must file with the Securities and
Exchange Commission and other regulatory authorities or those forwarded
to existing shareholders. The continuance and assignment provisions of
the Distributing Agreement are the same as those of the Advisory
Agreement.
During the Fund's fiscal year ended March 31, 1995, the Adviser, in
its capacity as distributor, received total sales charges (which the Fund
does not pay) on the sale of Fund shares of $236,817. Of this amount, the
Adviser paid concessions to dealers of $199,230. For the two prior fiscal
years ended March 31, 1994 and 1993, the Adviser received total sales
charges on the sale of the Fund shares of $534,288 and $249,306,
respectively, and of those amounts paid concessions to dealers of
$452,892 and $205,029, respectively.
In addition, the Fund has adopted distribution plans with respect to
each class of its shares pursuant to Rule 12b-1 under the Investment
Company Act (the "Distribution Plans"). Payments under the Class A
Distribution Plan are limited to an annual rate of 0.25% of the average
daily net asset value of the Class A shares. Payments under the Class B
Distribution Plan are limited to an annual rate of 1.00% of the average
daily net asset value of the Class B shares.
To the extent that any investment advisory fees paid by the Company
may be deemed to be indirectly financing any activity which is primarily
intended to result in the sale of shares of the Company within the meaning
of Rule 12b-1, the payments of such fees are authorized under the Plans.
The Distribution Plans continue annually so long as they are
approved in the manner provided by Rule 12b-1 or unless earlier
terminated by vote of the majority of the Fund's Independent Directors or
a majority of the outstanding shares. The Adviser is required to furnish
quarterly written reports to the Board of Directors detailing the amounts
expended under the Distribution Plans. The Distribution Plans may be
amended provided that all such amendments comply with the applicable
requirements then in effect under Rule 12b-1. Presently, Rule 12b-1
requires, among other procedures, that it be continued only if a majority
of the Independent Directors approve continuation at least annually and
that amendments materially increasing the amount to be spent for
distribution be approved by the Independent Directors and the
shareholders. As long as the Distribution Plans are in effect, the Fund
must commit the selection and nomination of candidates for new
Independent Directors to the sole discretion of the existing Independent
Directors.
During the fiscal year ended March 31, 1995, the Adviser received
$114,490 under the Class A Distribution Plan, all of which was paid to
dealers and sales personnel. During the fiscal year ended March 31, 1995,
the Adviser received $3,302 under the Class B Distribution Plan, all of
which was paid to dealers and sales personnel.
<PAGE>
PERFORMANCE DATA
Yield. Yield is computed in accordance with a standardized method
prescribed by the rules of the Securities and Exchange Commission and is
calculated separately for each class. Yield is a measure of the net
investment income per share (as defined) earned over a specified 30-day
period expressed as a percentage of the maximum offering price of the
Fund's shares at the end of the period. For the 30-day period ended March
31, 19954, the yield for the Fund's Class A shares was 8.71%. Such yield
figure was determined by dividing the net investment income per share
earned during the specified 30-day period by the maximum offering price
per share on the last day of the period, according to the following formula:
Yield = 2 [(a - b + 1) 6 -1]
-----
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period.
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the maximum offering price per share on the last
day of the period.
Total Return. Average annual total return measures both the net
investment income generated by, and the effect of any realized or
unrealized appreciation or depreciation of, the underlying investments in
the Fund's portfolio. Average annual total return is calculated separately
for each class in accordance with the standardized method prescribed by
the Securities and Exchange Commission by determining the average
annual compounded rates of return over the periods indicated that would
equate the initial amount invested to the ending redeemable value,
according to the following formula:
P(1+T)^n = ERV
Where: P = hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the period of
a hypothetical $1,000 payment made at the beginning
of such period
This calculation (i) assumes all dividends and distributions are reinvested
at net asset value on the appropriate reinvestment dates and (ii) deducts
(a) the maximum front-end or applicable contingent deferred sales charge
from the hypothetical initial $1,000 investment, and (b) all recurring
fees, such as advisory fees, charged as expenses to all shareholder
accounts.
The average annual total return figures for the Fund's Class A shares
during the one, five and ten year periods ended March 31, 1995, were
(0.35)%, 8.92% and 6.39%, respectively.
<PAGE>
FORM N-1A
VENTURE INCOME (+) PLUS, INC.
----------------------------
POST-EFFECTIVE AMENDMENT NO. 22 UNDER THE SECURITIES ACT OF
1933
REGISTRATION STATEMENT No. 2-66935
AND
AMENDMENT NO. 21 UNDER THE INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-3007
PART C
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
Included in Part A:
(i) Financial Highlights
Included in Part B by incorporation from the 1995 Annual Report:
(i) Schedule of Investments at March 31, 1995.
(ii) Statement of Assets & Liabilities at March 31, 1995.
(iii) Statement of Operations for the year ended March 31,
1995.
(iv) Statement of Changes in Net Assets for the years ended
March 31,1994 and 1995.
(v) Notes to Financial Statements.
(vi) Financial Highlights.
(vii) Report of Independent Certified Public Accountants.
(b) Exhibits:
(1) Articles of Incorporation, incorporated by reference to
Exhibit (1) to Registrant's Post-Effective Amendment
No. 20, File No. 2-66935.
(2) Amended and Restated Bylaws, incorporated by reference
to Exhibit (2) to Registrant's Post-Effective Amendment
No. 20, File No. 2-66935.
(3) Not applicable.
<PAGE>
(4) Specimen Common Stock Certificate, incorporated by reference
to Exhibit (4) to Registrant's Pre-Effective Amendment
No. 1, File No.2-66935.
(5) Investment Advisory Agreement, incorporated by reference to
Exhibit 5(b) to Registrant's Post Effective Amendment
No. 17, File No.2-66935.
(5) (b) Sub-Advisory Agreement between Selected/Venture Advisers,
L.P. and Stamper Capital & Investments, Inc.
(6) Distributor's Agreement, incorporated by reference to
Exhibit 6(b) to Registrant's Post-Effective Amendment
No. 17, File No. 2-66935.
(7) Not applicable.
(8)(a) Custodian Contract incorporated by reference to Exhibit
No.8(a) of Registrant's Post-Effective Amendment No. 16,
File No. 2-66935.
(8)(b) Transfer Agency and Service Agreement incorporated by
reference to Exhibit 8 (b) of Registrant's Post-Effective
Amendment No.16, File No. 2-66935.
(9) Not applicable.
(10) Opinion and Consent of Counsel, incorporated by reference
to Exhibit (10) to Registrant's Post-Effective Amendment
No. 12, File No. 2-66935.
(11) Consent of Auditors.
(12) Financial Statements, included in Statement of Additional
Information.
(13) Not applicable.
(14)(a) Prototype Money Purchase Pension and Profit Sharing Plan,
Prototype Defined Contribution Trust and Adoption
Agreements,incorporated by reference to Exhibits (9)(b)
and (9) (c) to Registrant's Post-Effective Amendment
No. 12, File No. 2-66935.
(14)(b) Prototype Profit Sharing/401(k) Plan, Prototype Profit
Sharing/401(k) Trust and Adoption Agreements, incorporated
by reference to Exhibits (9) (b) and (9) (c) to
Registrant's Post-Effective Amendment No. 12, File No.
2-66935.
(14)(c) 403(b) (7) Retirement Plan Custodial Account, incorporated
by reference to Exhibits (9) (b) and (9) (c) to
Registrant's Post-Effective Amendment No. 12, File
No. 2-66935.
(15)(a) Distribution Plan for Class A shares, incorporated by
reference to Exhibit 15(a) of Registrant's Post-Effective
Amendment No. 20, File No.2-66935.
(15)(b) Distribution Plan for Class B shares, incorporated by
reference to Exhibit 15(b) of Registrant's Post-Effective
Amendment No. 20, File No.2-66935.
<PAGE>
(16) Sample computation of yield and average annual total
return,incorporated by reference to Exhibit (16) of
Registrant's Post-Effective Amendment No. 13, File
No. 2-66935.
(17)(a) Powers of Attorney, Incorporated by reference to Exhibit
(17) to Registrant's Post-Effective Amendment No. 21
File No. 2-66935.
(17)(b) Reistrant's Power of Attorney
(18) Plan pursuant to 18f-3, incorporated by reference to Exhibit
(18) to Registrant's Post-Effective Amendment No. 21
File No. 2-66935.
Item 25. Persons Controlled by or Under Common Control With Registrant
-------------------------------------------------------------
Not applicable
Item 26. Number of Holders of Securities
-------------------------------
Number of Record Holders
Title of Class as of June 14, 1995
-------------- -------------------
Common Stock Class A 4,074
Common Stock Class B 117
Item 27. Indemnification
---------------
Registrant's Articles of Incorporation indemnifies its directors,
officers and employees to the full extent permitted by Section 2-418 of
the Maryland General Corporation Law, subject only to the provisions of
the Investment Company Act of 1940. The indemnification provisions of
the Maryland General Corporation Law (the "Law") permit, among other
things, corporations to indemnify directors and officers unless it is
proved that the individual (1) acted in bad faith or with active and
deliberate dishonesty, (2) actually received an improper personal benefit
in money, property or services, or (3) in the case of a criminal proceeding,
had reasonable cause to believe that his act or omission was unlawful.
The Law was also amended to permit corporations to indemnify directors
and officers for amounts paid in settlement of stockholders' derivative
suits.
In addition, the Registrant's directors and officers are covered
under a policy to indemnify them for loss (subject to certain deductibles)
including costs of defense incurred by reason of alleged errors or
omissions, neglect or breach of duty. The policy has a number of
exclusions including alleged acts, errors, or omissions which are finally
adjudicated or established to be deliberate, dishonest, malicious or
fraudulent or to constitute willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties in respect to any
registered investment company. This coverage is incidental to a general
policy carried by the Registrant's adviser.
In addition to the foregoing indemnification, Registrant's Articles
of Incorporation exculpate directors and officers with respect to monetary
damages except to the extent that an individual actually received an
improper benefit in money property or services or to the extent that a
final adjudication finds that the individual acted with active and
deliberate dishonesty.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
The Investment Adviser of the Registrant, Selected/Venture
Advisers, L.P. is also the investment adviser for New York Venture Fund, Inc.,
Venture Muni (+) Plus, Inc., Retirement Planning Funds of America, Inc., Venture
Series, Inc., Selected American Shares, Inc., Selected Special Shares, Inc.
and Selected Capital Preservation Trust. It also may engage as an investment
adviser for accounts other than mutual funds.
<PAGE>
Martin H. Proyect is Chairman and Treasurer of the adviser's general
partner, Venture Advisers, Inc. (the "General Partner"), Shelby M.C. Davis is
a Director, President and principal owner of the General Partner and is a
Director of Shelby Cullom Davis Financial Consultants, Inc. ("SCDFC"), 70
Pine Street, New York, New York 10270. Louis R. Proyect is a Director and
Executive Vice President of the General Partner and is Secretary of SCDFC.
Carl R. Luff is a Director, Executive Vice President and Secretary of the
General Partner.
Item 29. Principal Underwriters
----------------------
(a) Selected/Venture Advisers, L.P., is the principal underwriter
for the Registrant and also acts as principal underwriter for New York
Venture Fund, Inc., Venture Muni (+) Plus, Inc., Retirement Planning Funds
of America, Inc., Venture Series, Inc., Selected American Shares, Inc.,
Selected Special Shares, Inc. and Selected Capital Preservation Trust.
(b) Management of the General Partner of the Principal Underwriters
Positions and Offices Positions and
Name and Principal with General Partner Offices with
Business Address of Underwriter Registrant
----------------- -------------------- --------------
Martin H. Proyect Chairman Chairman, Director
P.O. Box 80176 and Treasurer and President
Las Vegas, NV 89180-0176
Shelby M.C. Davis Director and Director
P.O. Box 205 President
Hobe Sound, FL 33455
Louis R. Proyect Director and Executive Vice President
124 East Marcy Street Vice President
Santa Fe, NM 87501
Carl R. Luff Executive Vice Vice President,
124 East Marcy Street President and Secretary Treasurer and Assistant
Santa Fe, NM 87501 Secretary
Raymond O. Padilla Senior Vice President Vice President, Secretary
124 East Marcy Street & Assistant Treasurer
Santa Fe, NM 87501
Carolyn H. Spolidoro Vice President Vice President
124 East Marcy Street
Santa Fe, NM 87501
B. Clark Stamper Senior Vice President Vice President
124 East Marcy Street
Santa Fe, NM 87501
Andrew A. Davis Senior Vice President Vice President
124 East Marcy Street
Santa Fe, NM 87501
Eileen R. Street Senior Vice President Assistant Treasurer and
124 East Marcy Street Assistant Secretary
Santa Fe, NM 87501
<PAGE>
(c) Not applicable
Item 30. Location of Accounts and Records
--------------------------------
Accounts and records are maintained at the offices of
Selected/Venture Advisers, L.P., 124 East Marcy Street, Santa Fe, New Mexico
87501, and the Registrant's custodian and transfer agent, State Street Bank
and Trust Company, 470 Atlantic Ave., Boston, MA 02210.
Item 31. Management Services
-------------------
Not applicable
Item 32. Undertakings
------------
Registrant undertakes to furnish each person, to whom a prospectus
is delivered, with a copy of Registrant's latest annual report to
shareholders upon request and without charge.
<PAGE>
VENTURE INCOME (+) PLUS, INC.
SIGNATURES
----------
Registrant certifies that this Amendment meets all of the
requirements for effectiveness pursuant to Rule 485 (b).
Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant has caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago and State of Illinois
on the 1st day of August, 1995.
VENTURE INCOME (+) PLUS,INC.
By:/s/ Sheldon R. Stein
------------------------
Sheldon R. Stein
Attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Shelby M.C. Davis Chief Executive August 1, 1995
--------------------- Officer & Director
Shelby M.C. Davis
/s/ Carl R. Luff Principal Financial August 1, 1995
---------------- and Accounting Officer
Carl R. Luff
<PAGE>
VENTURE INCOME (+) PLUS, INC.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Wesley E. Bass, Jr.* Director August 1, 1995
--------------------
Wesley E. Bass, Jr.
Jeremy H. Biggs* Director August 1, 1995
--------------------
Jeremy H. Biggs
Marc P. Blum* Director August 1, 1995
--------------------
Marc P. Blum
Martin H. Proyect* Director August 1, 1995
--------------------
Martin H. Proyect
Eugene M. Feinblatt* Director August 1, 1995
--------------------
Eugene M. Feinblatt
Jerry D. Geist* Director August 1, 1995
--------------------
Jerry D. Geist
D. James Guzy* Director August 1, 1995
--------------------
D. James Guzy
G. Bernard Hamilton* Director August 1, 1995
--------------------
G. Bernard Hamilton
LeRoy E. Hoffberger* Director August 1, 1995
--------------------
LeRoy E. Hoffberger
Laurence W. Levine* Director August 1, 1995
--------------------
Laurence W. Levine
Christian R. Sonne* Director August 1, 1995
--------------------
Christian R. Sonne
Edwin R. Werner* Director August 1, 1995
--------------------
Edwin R. Werner
*Sheldon Stein signs this document on behalf of each of the foregoing
persons pursuant to the Powers of Attorney filed as Exhibit 18 to this
Registration Statement.
/s/ Sheldon Stein
------------------
Sheldon Stein,
Attorney-in-Fact
EXHIBIT 5b
July 31, 1995
Stamper Capital & Investments, Inc.
129 Rio Vista Place
Santa Fe, NM 87501
Re: Sub-Advisory Agreement for Venture Income (+) Plus, Inc.
________________________________________________________
This is to confirm that Selected/Venture Advisers, L.P. (the "Adviser") is
retaining Stamper Capital & Investments, Inc. ("SCI") as investment
sub-adviser for the portfolio of Venture Income (+) Plus, Inc. (the "Fund").
The terms and conditions of your retention are as follows:
1. SCI shall act as the investment sub-adviser for the Fund and will
manage the investment and reinvestment of the assets of the Fund subject
to the supervision of the Board of Directors of the Fund, Selected/Venture
Advisers, L.P. (the "Adviser") and to any applicable provisions as in effect
from time to time of (a) the Articles of Incorporation and Bylaws of the
Fund, (b) the prospectus, statement of additional information and other
information set forth in the Fund's registration documents under the
Securities Act of 1933 and the Investment Company Act of 1940 ("1940
Act"), including any supplements thereto, (c) the Investment Advisory
Agreement between the Adviser and the Fund (the "Investment Advisory
Agreement"), the Adviser's and the Fund's Code of Ethics and (d) any
additional policies or guidelines established by the Fund's Board of
Directors or the Adviser. SCI acknowledges receipt of copies of the above
documents as in effect on the date of acceptance of this letter. The
Adviser agrees that it will promptly deliver to SCI any amendments,
changes or additions of or to these documents.
2. SCI agrees that all securities transactions will conform to (a) the
stated objectives and policies of the Fund, (b) the brokerage policies set
forth in the Investment Advisory Agreement (which are hereby
incorporated by reference herein) and the registration documents, and (c)
those investment and brokerage policies or guidelines directed by the
Board of Directors of the Fund, any committee thereof and the Adviser.
3. SCI shall be an independent contractor. Unless otherwise expressly
provided or authorized hereunder, or by the Board of Directors of the Fund,
SCI shall have no authority to represent the Fund or the Adviser in any way
or otherwise be an agent of the Adviser or the Fund, except with regard to
the execution of securities transactions on behalf of the Fund with
registered broker/dealers, including broker/dealers affiliated with the
Adviser, provided such transactions comply with Rule 17e-1 of the 1940
Act.
4. SCI shall provide the Adviser with any reports, analyses or other
documentation the Adviser reasonably requires to carry out its
responsibilities under its Investment Advisory Agreement with the Fund
including those related to placement of security transactions, its
administrative responsibilities and its responsibility to monitor
compliance with stated investment objectives, policies and limitations
and the investment performance of the Fund. SCI agrees, directly or
through an agent, to provide daily information in respect to the portfolio
transactions of the Fund to the Adviser. SCI agrees to provide all
documentation reasonably required by the Adviser to maintain Fund's
accounting records in accordance with the 1940 Act and the Investment
Advisers Act of 1940 and the regulations issued thereunder, and to
preserve copies of all documents and records related to asset
transactions, positions and valuations related to the Fund in the manner
and for the periods prescribed by such regulations. SCI further agrees that
all documents and records it maintains relating to the Fund, are the
property of the Fund and will be surrendered to the Adviser or the Fund
upon the request of either. SCI agrees to provide information and to allow
inspection of such documents and records at reasonable times by any
authorized representative of the Adviser, the Fund's Board of Directors or
any committee thereof, the Fund's
<PAGE>
independent public accountants or appropriate regulatory authorities. SCI
shall provide to the Adviser a copy of its Form ADV as filed with the SEC
and as amended from time to time and a written list of persons SCI has
authorized to give written and/or oral instructions to the Adviser and the
Fund custodian.
5. SCI agrees to make its personnel who are engaged in activities on
behalf of the Fund available at reasonable times for consultations with
the Adviser's personnel and the Fund's Board of Directors or any
committee thereof, including attendance at their meetings, wherever
situated. Reasonable expenses for travel, meals and lodging for such
purposes shall be reimbursed by the Adviser. In addition, personnel of SCI,
at the request of the Adviser, will attend other meetings to be scheduled
at mutually convenient times and shall be reimbursed for its reasonable
expenses in connection therewith.
6. SCI agrees to provide all office facilities, equipment and personnel for
carrying out its duties hereunder at its own expense. In addition, SCI shall
employ at its own expense and subject to the prior written approval of the
Adviser which approval shall not be unreasonably withheld (i) a public
auditing firm, (ii) attorneys and(iii) such other professional staff as in
the sole discretion of the Adviser are necessary to assure the fulfillment
of the terms and conditions of this agreement.
7. It is agreed that SCI's services are not to be deemed exclusive and SCI
shall be free to render similar services or other services to others
provided that (i) its services hereunder are not impaired and are not in
violation of federal or state securities laws and (ii) that it shall not
provide services to any registered investment company other than the
Fund or other investment companies managed by the Adviser without the
Adviser's prior express written permission.
8. In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations or duties hereunder, SCI, its officers,
directors and employees shall not be subject to liability for any act or
omission in the cause of, or connected with, rendering service hereunder
or for any losses that may be sustained in the purchase, holding or sale of
any security. In the event of any claim, arbitration, suit, or administrative
proceedings in which SCI or the Adviser is a party and in which it is
finally determined that there is liability or wrongdoing by only one of us,
the party liable or found to be the wrongdoer shall pay for all liability and
expenses of such claim or proceeding including reasonable attorneys' fees.
If it is determined that there is liability or wrongdoing by both or none of
us, then each shall pay their own liability and expenses. In the event of
any settlement of any such claim, arbitration, suit or proceeding before
final determination by a court or arbitrator(s), the liability and expenses
shall be assumed as agreed between the parties, but if there is no
agreement within thirty (30) days of such settlement, then the
assumption of liability and expenses shall be settled by arbitration, in
accordance with the then applicable rules of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator shall be
final and binding and may be entered in any court having jurisdiction. The
parties shall pay for their own costs and expenses in respect to any such
arbitration and may be included in the arbitrator's award.
9. As investment sub-adviser, SCI understands that it will be responsible
for complying with all provisions of applicable law, including the 1940
Act, the Investment Advisers Act of 1940, and the Insider Trading and
Securities Fraud Enforcement Act of 1988 and all rules and regulations
thereunder. SCI agrees to adopt and comply with the "Code of Ethics of and
for Selected/Venture Advisers, L.P. and the Companies For Which It Acts
As Investment Adviser" as in effect from time to time and to keep in
effect a policy and supervisory procedures designed to prevent insider
trading.
10. The Adviser shall pay SCI a portion of the fee it receives from the
Fund under the Investment Advisory Agreement, based on the attached fee
schedule. The Adviser shall also reimburse expenses expressly approved
for reimbursement by the Adviser. Payment for SCI's services and
reimbursement of expenses approved by the Adviser shall be made
monthly, in arrears, by the 15th business day of the following month. From
time to time, with SCI's prior express written approval, the Adviser may
waive any part or all of the fees due to it under the Investment Advisory
Agreement for the period specified in such writing. Such approval shall
constitute a waiver by SCI of its portion of the waived fees.
<PAGE>
11. This Agreement shall become effective on the later of October 1, 1995
or the first business day after the date this Agreement is approved in
accordance with the 1940 Act (provided that it is reflected in an
effective post-effective amendment under the Securities Act of 1933 and
the 1940 Act). Unless sooner terminated as hereunder provided, it shall
initially remain in effect for a period not exceeding two years.
Thereafter, subject to the termination provisions herein, this Agreement
shall continue in force from year to year thereafter, but only as long as
such continuance is specifically approved at least annually in the manner
required by the 1940 Act; provided, however, that if the continuation of
this Agreement is not approved, SCI may continue to serve in the manner
and to the extent permitted by the 1940 Act and the rules and regulations
thereunder.
12. This Agreement shall automatically terminate immediately in the
event of its assignment (except as otherwise permitted by the 1940 Act
or rules thereunder) or in the event of the termination of the Investment
Advisory Agreement. This Agreement may be terminated without payment
of any penalty at any time (a) upon sixty (60) days' written notice to SCI
by the Adviser or upon such sixty (60) days' written notice to SCI by the
Fund pursuant to action by its Board of Directors or by the vote of a
majority of the outstanding voting securities of the Fund, or (b) upon 60 or
more days' written notice by SCI to the Adviser. The terms "assignment"
and "vote of a majority of the outstanding voting securities" shall have
the meaning set forth in the 1940 Act and the rules and regulations
thereunder. Termination of this Agreement shall not affect SCIs right to
receive payments on any unpaid balance of the compensation earned and
reimbursable expenses incurred prior to such termination. Upon receipt of
notification of termination as provided above SCI shall immediately cease
all activities in connection with the Fund except as otherwise directed by
the Adviser.
13. SCI agrees and acknowledges that the Adviser and/or the Fund is the
owner of the name and mark "Venture" and Venture Income (+) Plus, Inc. or
any part thereof and of any successor mark(s) or name(s) of the Adviser or
the Fund or any part of such successor mark(s) or name(s). SCI agrees that
it shall not use any such name or mark in any advertisement, or sales
literature or other materials promoting itself or the Fund without the
Advisers prior written consent. SCI shall not make any representations
regarding the Adviser and the Fund in any disclosure document,
advertisement, sales literature or other materials without the Advisers
prior written consent.
14. If any provisions of this Agreement shall be held or made invalid by a
court decision, statute or rule or otherwise, the remainder shall not be
thereby affected.
15. The Agreement shall be construed according to the laws of the State
of New Mexico. It may be executed in counterparts each of which shall be
deemed an original and all of which together shall constitute one and the
same agreement
If the foregoing terms and conditions are acceptable to you, please
acknowledge in the space provided. Upon your acceptance, the retention
and the mutual obligations in respect thereto shall be effective as
provided herein.
Sincerely,
Selected/Venture Advisers, L.P.
By Venture Advisers, Inc.,
General Partner
Martin H. Proyect, Chairman
<PAGE>
Accepted and Approved this
_____ day of ________________, 1995
Stamper Capital & Investments, Inc.
___________________________
B. Clark Stamper
President
____________________________________________________________________________
SUB-ADVISORY FEE SCHEDULE FOR STAMPER CAPITAL & INVESTMENT, INC.
30% of total management fees paid by the Fund to Selected/Venture
Advisers, L.P.
Exhibit 11
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm in the Registration
Statement, (Form N-1A), and related Statement of Additional Information
of Davis High Income Fund (formerly Venture Income (+) Plus, Inc.), and
to the inclusion of our report dated May 5, 1995 to the Shareholders and
Board of Directors of Venture Income (+) Plus, Inc.
/s/ TAIT, WELLER & BAKER
-----------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 27, 1995
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, acting on
behalf of Venture Income (+) Plus, Inc., a Maryland corporation constitutes
and appoints Andrew Davis, Louis R. Proyect, Carl R. Luff, Raymond O.
Padilla, Sheldon R. Stein, Arthur Don and Jessica Randall, and each of
them, his attorneys-in-fact, each with the power of substitution, for
him in any and all capacities, to sign any post-effective amendments
to the registration statement under the Securities Act of 1933
(Registration No. 2-66935) and/or the Investment Company Act of
1940 (Registration No. 811-3007), whether on Form N-1A or any
successor forms thereof, and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and
Exchange Commission and all appropriate state or federal regulatory
authorities. Each of the undersigned hereby ratifies and confirms all that
each of the aforenamed attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
Dated this 31st day of July, 1995.
Venture Muni (+) Plus, Inc.
By: /s/ Shelby M.C. Davis
______________________________
Shelby M.C. Davis
President
<PAGE>
VENTURE INCOME (+) PLUS, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew Davis, Louis R. Proyect, Carl R. Luff, Raymond O. Padilla,
Sheldon R. Stein, Arthur Don and Jessica Randall, and each of them, his
attorneys-in-fact, each with the power of substitution, for him in any and
all capacities, to sign any post effective amendments to the registration
statement under the Securities Act of 1933 (Registration No. 2-66935) and/or
the Investment Company Act of 1940 (Registration No. 811-3007), whether on
Form N-1A or any successor forms thereof, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and all appropriate state or federal
regulatory authorities. Each of the undersigned hereby ratifies and
confirms all that each of the aforenamed attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 31st day of July, 1995.
/s/ Shelby M.C. Davis
_________________________________
Shelby M.C. Davis,
Chief Executive Officer and
Director
/s/ Jeremy H. Biggs
_________________________________
Jeremy H. Biggs, Director
/s/ Christian R. Sonne
_________________________________
Christian R. Sonne, Director
Exhibit 18
Venture Income (+) Plus, Inc.
Plan Pursuant to Rule 18f-3
-----------------------------
Registration to Rule 18f-3 under the following Plan.
1. Registrant's current Plan encompasses three classes of shares
that may be offered as follows:
(a) Class A shares with a front end sales charge ("FESC") subject
to certain exceptions and to Rule 12b-1 service and maintenance fees
("Rule 12b-1 fees"). The applicable FESC, including reductions and
exceptions and the Rule 12b-1 fees are set forth in Exhibit "A" hereto.
(b) Class B shares at net asset value subject to (i) Rule 12b-1
fees to provide an asset based sales charge and service and maintenance
fees (ii) a conditional deferred (back end) sales charge for redemptions or
repurchases by the Registrant effected within a certain period of time not
exceeding eight years from the date of purchase. Class B shares
outstanding will automatically convert to Class A shares within eight
years after the end of the month in which the shares were purchased.
(However, for shares purchased before December 1, 1994 which are
represented by stock certificates, the stock certificates must be returned
to the transfer agent to effect conversion.) Terms of the deferred sales
charges, conversion and Rule 12b-1 fees are set forth in Exhibit "B"
attached hereto.
(c) Class C shares at net asset value subject to a fee upon
redemption within one year of purchase and Rule 12b-1 fees covering an
asset based sales charge and maintenance and service fees. The
Registrant does not currently offer Class C shares outstanding and does
not currently offer Class C shares for sale.
(d) Exchange Privileges: The exchange privileges are set forth in
Exhibit "C" hereto. In summary, for a nominal exchange fee, shares of a
class may be exchanged for shares of the same class of certain other
registrants with the same investment adviser or distributor (or any series
issued by such registrants) at net asset value except that: (i) Any shares
issued in exchange for shares still subject to any unpaid FESC or
conditional deferred sales charge or other charge payable upon redemption
remain subject to such unpaid charges; and (ii) Money market series Class
A shares which were initially purchased from the money market series
may be exchanged for any class of shares at the public offering price of
the acquired shares (which may include a sales charge) and are subject to
any conditional deferred sales charge or other charge upon redemption
normally applicable to the acquired shares.
2. Income, realized and unrealized capital gains and losses and
expenses not allocated to a particular class are allocated to each class on
the basis of relative net assets.
Expenses allocable to a specific class are expenses specifically
incurred for such class including the following:
(a) Rule 12b-1 expenses
(b) Incremental transfer agency expenses
(c) Incremental costs of preparing, printing and mailing
shareholder reports, proxy materials and prospectuses related to such
class
<PAGE>
(d) Registration fees and other expenses of registration of the
shares of such class under laws or regulations of any jurisdiction in
which the class of shares is to be offered
(e) Directors' fees and expenses incurred as a result of issues
relating solely to such class
(f) Legal and accounting expenses relating solely to such class
3. Each class will vote separately with respect to any matter as
required by applicable law or which separately affects that class. As
provided in the Articles of Incorporation, each dollar of net asset value
per share is entitled to one vote.
<PAGE>
EXHIBIT (18) (a)
Class A Shares. Class A shares are sold at their net asset value plus
a sales charge. The amounts of the sales charges are shown in the table
below.
<TABLE>
<CAPTION>
Customary
Sales Charge Charge as Concession to
as Approximate Your Dealer as
Percentage Percentage Percentage
of Offering of Amount of Offering
Amount of Purchase Price Invested Price
------------------ ------------- ----------- -------------
<S> <C> <C> <C>
$ 99,999 or less....... 4-3/4% 5.0% 4%
$100,000 to $249,999....... 3-1/2% 3.6% 3%
$250,000 to $499,999....... 2-1/2% 2.6% 2%
$500,000 to $749,999....... 2% 2.0% 1-3/4%
$750,000 to $999,999....... 1% 1.0% 3/4 of 1%
$1,000,000 or more......... 0% 0.0% 0%<F1>
<FN>
<F1> On purchases of $1 million or more, the investor pays no initial or
contingent deferred sales charge. However, the Adviser may pay the
financial service firm a commission during the first year after such
purchase at an annual rate as follows:
Purchase Amount Commission
--------------- ----------
First $3,000,000................................ .75%
Next $2,000,000................................ .50%
Over $5,000,000................................ .25%
Such commission will be paid quarterly at the end of each fiscal quarter
for the first year after purchase. Where a commission is paid because of
purchases of $1 million or more, such payment will be made from 12b-1
distribution fees received from the Fund and, in cases where the limits of
the distribution plan in any year have been reached, from the distributor's
own profits or resources.
</FN>
</TABLE>
There are a number of ways to reduce the sales charge on the purchase of
Class A shares, as set forth below.
(i) Family Purchases: Purchases made by an individual, such
individual's spouse and children under 21 are combined and treated as a
purchase of a single person.
(ii) Group Purchases: The purchases of an organized group, whether
or not incorporated, are combined and treated as the purchase of a single
person. The organization must have been organized for a purpose other
than to purchase shares of mutual funds.
(iii) Purchases for Employee Benefit Plans: Trusteed or other
fiduciary accounts and Individual Retirement Accounts ("IRA") of a single
employer are treated as purchases of a single person. Purchases of and
ownership by an individual and such individual's spouse under an IRA are
combined with their other purchases and ownership.
(iv) Purchases under a Statement of Intention: By executing the
"Statement of Intention" included in the Application Form at the back of
the Prospectus, purchases of Class A shares of $100,000 or more made
over a 13-month period may be made at the applicable price for the
aggregate shares actually purchased during the period. Please see "Terms
and Conditions" at back of this prospectus.
(v) Rights of Accumulation: If you notify your dealer or the Adviser
you may include the Class A shares you already own (valued at maximum
offering price) in calculating the price applicable to your current
purchase.
(vi) Combined Purchases with other Venture Funds: Purchases of
Class A shares of the Fund may be combined with your purchases of Class
A shares of other Venture Funds, including New York Venture Fund, Inc.,
Venture Muni (+) Plus, Inc. and all funds offered by Retirement Planning
Funds of America, Inc. (other than
<PAGE>
Government Money Market Fund),separately or under combined Statements of
Intention or rights of accumulation to determine the price applicable to
your purchases of Class A shares of the Fund.
(vii) Sales at Net Asset Value: The sales charge will not apply to:
(1) Class A shares purchased through the automatic reinvestment of
dividends and distributions (see "Dividends and Distributions"); (2) Class A
shares purchased by directors, officers and employees of the Fund, its
Adviser or the Adviser's General Partner, including former directors and
officers and any spouse, child, parent, grandparent, brother or sister of all
of the foregoing, and any employee benefit or payroll deduction plan
established by or for such persons; (3) Class A shares purchased by any
registered representatives, principals and employees (and any spouse,
child, parent, grandparent, brother or sister) of securities dealers having
a sales agreement with the Adviser; (4) initial purchases of Class A
shares totaling $250,000 or more, made at any one time by banks, trust
companies and other financial institutions (collectively "Institutions") on
behalf of one or more clients for which such Institution acts in a fiduciary
capacity; (5) initial purchases of Class A shares totaling $250,000 or
more by a registered investment adviser on behalf of a client for which
the adviser is authorized to make investment decisions or otherwise acts
in a fiduciary capacity; (6) Class A shares purchased by any single account
covering a minimum of 250 participants and representing a defined
benefit plan, defined contribution plan, cash or deferred plan qualified
under 401(a) or 401(k) of the Internal Revenue Code or a plan established
under section 403(b), 457 or 501(c)(9) of such Code; (7) Class A shares
purchased by persons participating in a "wrap account" or similar
fee-based program sponsored and maintained by a registered
broker-dealer approved by the Fund's Adviser; and (8) Class A shares
purchased by any state, county, city, department, authority or similar
agency prohibited by law from paying a sales charge. The Fund may also
issue Class A shares at net asset value incident to a merger with or
acquisition of assets of an investment company.
<PAGE>
EXHIBIT (18) (b)
Class B Shares. Class B shares are offered at net asset value,
without a front-end sales charge. With certain exceptions described
below, the Fund imposes a deferred sales charge of 4% on shares redeemed
during the first year after purchase, 3% on shares redeemed during the
second or third year after purchase, 2% on shares redeemed during the
forth or fifth year after purchase and 1% on shares redeemed during the
sixth year after purchase. However, on Class B shares of the Fund which
are acquired upon exchange from Class B shares of other Venture Funds
which were purchased prior to December 1, 1994, the Fund will impose a
deferred sales charge of 4% on shares redeemed during the first calendar
year after purchase; 3% on shares redeemed during the second calendar
year after purchase; 2% on shares redeemed during the third calendar year
after purchase; and 1% on shares redeemed during the fourth calendar year
after purchase, and no deferred sales charge is imposed on amounts
redeemed after four calendar years from purchase. Class B shares will be
subject to a maximum Rule 12b-1 fee at the annual rate of 1% of the
class's average daily net asset value.
Class B shares that have been outstanding for eight years will
automatically convert to Class A shares without imposition of a front-end
sales charge or exchange fee. The Class B shares so converted will no
longer be subject to the higher expenses borne by Class B shares. Because
the net asset value per share of the Class A shares may be higher or lower
than that of the Class B shares at the time of conversion, although the
dollar value will be the same, a shareholder may receive more or less
Class A shares than the number of Class B shares converted. Under the
Funds' private Internal Revenue Service Ruling such a conversion will not
constitute a taxable event under the federal income tax law. In the event
that this ceases to be the case, the Board of Directors will consider what
action, if any, is appropriate and in the best interests of the Class B
shareholders.
Any contingent deferred sales charge imposed upon the redemption
of Class B shares is a percentage of the lesser of (i) the net asset value of
the shares redeemed or (ii) the net cost of such shares. No contingent
deferred sales charge is imposed when you redeem amounts derived from
(a) increases in the value of shares above the net cost of such shares or
(b) certain shares with respect to which the Fund did not pay a
commission on issuance, including shares acquired through reinvestment
of dividend income and capital gains distributions. Upon request for
redemption, shares not subject to the contingent deferred sales charge
will be redeemed first. Thereafter, shares held the longest will be the
first to be redeemed.
The contingent deferred sales charge will be waived as follows: (1)
on redemptions following a shareholder's death or disability, as defined in
Section 72(m)(7) of the Internal Revenue Code of 1986, as amended (the
"Code"); (2) on redemptions in connection with certain distributions from
individual retirement accounts and custodial accounts maintained
pursuant to Code Section 403(b)(7) or pension or profit-sharing plans
(collectively, "Retirement Plans"); (3) on redemptions of shares sold to
directors, officers and employees of the Fund, its Adviser or the Adviser's
General Partner, including former directors and officers and immediate
family members of all of the foregoing, and any employee benefit or
payroll deduction plan established by or for such persons; (4) on
redemptions made as tax-free returns of contributions to avoid tax
penalty; and (5) on redemptions pursuant to the right of the Fund to
liquidate a shareholder's account if the aggregate net asset value of the
shares held in such account falls below an established minimum amount.
<PAGE>
EXHIBIT (18) (c)
EXCHANGE PRIVILEGES
General. You may exchange shares of the Fund for shares of the same
class of the other Venture Funds. This exchange privilege is a convenient
way to buy shares in other Venture Funds in order to respond to changes in
your goals or in market conditions. If such goals or market conditions
change, the Venture Funds offer a variety of investment objectives that
includes common stock funds, tax-exempt and corporate bond funds, and
money market funds. However, the Fund is intended as a long-term
investment and is not intended for short-term trades. Shares of a
particular class of the Fund may be exchanged only for shares of the same
class of another Venture Fund. All of the Venture Funds offer Class A and
Class B shares. The shares to be received upon exchange must be legally
available for sale in your state. The net asset value of the initial shares
being acquired must be at least $1,000 unless such exchange is under the
Automatic Exchange Program described below. There is a $5 service
charge payable to the Distributor for each exchange other than an exchange
under the Automatic Exchange Program.
Class A shares on which you have already paid a sales charge and
shares acquired by reinvestment of dividends or distributions on such
shares may be exchanged into another Venture Fund at relative net asset
value without any additional charge. If any Venture Fund shares being
exchanged are subject to an escrow or segregated account pursuant to the
terms of a Statement of Intention or a CDSC, such shares will be
exchanged at relative net asset value, but the escrow or segregated
account will continue with respect to the Venture Fund shares acquired in
the exchange. The term of any CDSC to which any Class B shares are
subject at the time of exchange will continue to apply to any Class B
shares acquired upon exchange.
Before you decide to make an exchange, you must obtain the current
prospectus of the desired fund. Call your broker or the Adviser for
information and a prospectus for any of the other Venture Funds
registered in your state. Read the prospectus carefully. If you decide to
exchange your shares, send State Street a written unconditional request
for the exchange and follow the instructions regarding delivery of share
certificates contained in the section on "Redemption of Shares". A
signature guarantee is not required for such an exchange. However, if
shares are also redeemed for cash in connection with the exchange
transaction, a signature guarantee may be required. See "Redemption of
Shares". Your dealer may charge an additional fee for handling an exercise
of the exchange privilege.
An exchange involves both a redemption and a purchase, and normally
both are done on the same day. However, in certain instances such as
where a large redemption is involved, the investment of redemption
proceeds into shares of other Venture Funds may take up to seven days.
For federal income tax purposes, exchanges are treated as a sale and
purchase. Therefore, there will usually be a recognizable capital gain or
loss due to an exchange.
The number of times a shareholder may exchange shares among the
Venture Funds within a specified period of time may be limited at the
discretion of the Adviser. Currently, more than three exchanges out of a
fund during a twelve month period are not permitted without the prior
written approval of the Adviser. The Fund reserves the right to terminate
or amend the exchange privilege at any time upon 60 or more days' notice.
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By Telephone. You may exchange shares by telephone into accounts
with identical registrations. Please see the discussion of procedures in
respect to telephone instructions in the note under "Telephone Privilege"
which is also applicable to exchanges.
Automatic Exchange Program. The Fund also offers an automatic
monthly exchange program. All accounts established or utilized under this
program must have the same registration and a minimum initial value of
at least $250 and all subsequent investments must be at least $25. Each
month shares will be simultaneously redeemed and purchased at the
chosen fund's applicable offering price. If you would like to participate in
this program, you may use the appropriate designation on the Application
Form.
