DAVIS HIGH INCOME FUND, INC.
DAVIS TAX-FREE HIGH INCOME FUND, INC.
124 East Marcy Street
Santa Fe, New Mexico 87501
1-800-279-0279
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD MARCH 25, 1997
Enclosed are your Proxy Statement and Proxy for the special
meetings (the "Special Meetings") of the shareholders of Davis High
Income Fund, Inc. ("Davis High Income") and Davis Tax-Free High Income
Fund, Inc. ("Davis Tax-Free")(each a "Fund" or collectively, the "Funds")
to be held at the office of the Funds, 124 East Marcy Street, Santa Fe, New
Mexico on Tuesday, March 25, 1997, at 9:30 a.m. Mountain Time, for the
following purposes and to transact such other business as may properly
come before the Special Meetings or any adjournment thereof:
1. To consider approval of a sub-advisory agreement with Davis
Selected Advisers-NY, Inc., an affiliate of the Adviser (the "Proposed
Sub-Advisory Arrangement") (Item 1 in the Proxy Statement);
2. To consider the election of Christian R. Sonne, LeRoy E.
Hoffberger and Jeremy H. Biggs as Directors of the Funds. (Item 2 in the
Proxy Statement).
These proposals are described in the attached Proxy Statement,
which should be read carefully. Only shareholders of record on January 31,
1997 will be entitled to vote at the Special Meetings.
BY ORDER OF THE BOARD OF DIRECTORS
__________________________________
February __, 1997 Secretary
SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON JANUARY
31, 1997 ARE ENTITLED TO VOTE AT THE SPECIAL MEETINGS. WHILE WE
WOULD LIKE VERY MUCH TO HAVE EACH OF YOU AT THE SPECIAL MEETINGS,
WE REALIZE THIS MAY NOT BE POSSIBLE. HOWEVER, WHETHER OR NOT YOU
ATTEND THE SPECIAL MEETINGS, YOUR VOTE IS IMPORTANT.
TO SECURE REPRESENTATION OF THE MOST SHARES POSSIBLE AND TO
SAVE THE EXPENSE OF FURTHER MAILINGS, PLEASE MARK YOUR
PREFERENCES, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE THE SPECIAL
MEETINGS OR VOTE IN PERSON IF YOU ATTEND THE SPECIAL MEETINGS.
DAVIS HIGH INCOME FUND, INC.
DAVIS TAX-FREE HIGH INCOME FUND, INC.
124 East Marcy Street
Santa Fe, New Mexico 87501
1-800-279-0279
______________________________
PROXY STATEMENT
March, 1997
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Davis High Income and
Davis Tax-Free High Income (the "Board"), to be used at the Special
Meetings of the shareholders of the Funds which will be held at 124 East
Marcy Street, Santa Fe, New Mexico on Tuesday, March 25, 1997 at 9:30
a.m. Mountain Time and at any adjournment thereof, for the purposes set
forth in the accompanying Notice.
This Proxy Statement and the accompanying Proxy are first being
sent to shareholders of the Funds on or about February ___, 1997. The
expenses of preparing, printing and mailing the Notice, Proxy Statement
and Proxy and of soliciting proxies and holding the Special Meetings will
be borne by the Funds.
Proxies are solicited by mail. Additional solicitations may be made
by telephone, telegraph or personal contact by officers of the Funds and by
officers and employees of the Adviser or its general partner. In addition,
__________ [or any agent appointed by the Adviser] may assist in
soliciting proxies for the meeting and will be paid a fee for such
assistance of approximately $ ____ (or such other fee as determined
necessary and appropriate by the Fund) plus out-of-pocket expenses. A
Proxy which has been executed and returned may be revoked by any
shareholder prior to the voting of the Proxy on any matter. Proxies may be
revoked by voting in person at the Special Meetings or by writing to the
Secretary of the Funds at 124 East Marcy Street, Santa Fe, New Mexico
87501 at any time before the Special Meetings.
Shares represented by Proxies that are executed and returned will be
voted on all matters presented at the Special Meetings in accordance with
the instructions contained therein. In the absence of any instructions,
such shares will be voted for the approval of the Proposed Sub-Advisory
Arrangement and for the election of Christian Sonne, LeRoy Hoffberger and
Jeremy Biggs as directors of the Funds. If a broker indicates on a proxy
that, as to certain shares, it does not have discretionary authority to vote
on a particular matter, those shares will not be considered present and
entitled to vote with respect to that matter. Abstentions will be treated
as present for quorum purposes but as not voted for purposes of
determining the approval of any matter submitted. Any adjournment will
be determined in a manner consistent with the shareholder votes on the
foregoing proposals.
As of the date of this Proxy Statement, the Board knows of no other
matters to be brought before the Special Meetings. If, however, other
matters are properly presented for consideration, Proxies not otherwise
limited will be voted in accordance with the judgment of the persons
named in the Proxy, acting pursuant to the discretionary authority
contained therein.
Shareholders of record at the close of business on January 31, 1997
(the "Record Date") will be entitled to vote at the Meeting or any
adjournment thereof. The holders of a majority of the votes eligible to be
cast at the close of business on the Record Date present in person or
represented by proxy will constitute a quorum for the Meeting. Each
outstanding dollar of net assets value per share is entitled to one vote.
As of the record date, there were ___________ shares outstanding of
which _______________ shares are Class A with a net asset value of
$_______ per share, ____________ shares outstanding of which
_______________ shares are Class B with a net asset value of
$_________per share of Davis High Income Fund. As of the record date,
there were ___________ shares outstanding of which _______________
shares are Class A with a net asset value of $_______ per share,
____________ shares outstanding of which _______________ shares
are Class B with a net asset value of $_________per share of Davis
Tax-Free High Income Fund.
ITEM 1: CONSIDERATION OF THE PROPOSED SUB-ADVISORY ARRANGEMENT
The Adviser and national distributor of the Funds is Davis Selected
Advisers, L.P, located at 124 East Marcy Street, Santa Fe, New Mexico
87501. Its sole General Partner is Venture Advisers, Inc. Shelby M.C.
Davis is the chief executive officer and controlling shareholder of the
General Partner.
Effective December 1, 1996, the Adviser entered into a
Sub-Advisory Agreement (the "Agreement") with Davis Selected Advisers
- - NY, Inc. ("DSA-NY"), an affiliate of the Adviser, under which DSA-NY
performs research and portfolio management functions for the Funds. The
Agreement is set forth in full as Exhibit A hereto. This arrangement will
not affect the Sub-Advisory Agreement between each of the Funds and
Stamper Capital & Investments, Inc. Stamper Capital & Investments will
continue to provide investment advisory services to the Fund and will
continue receiving fees from the Adviser for such services. Clark Stamper
will continue to provide portfolio management services for the Funds.
The Agreement was approved by the Board (including a majority of
the directors who are not parties to the Agreement, have no financial
interest in the Agreement and are not "interested persons" (as defined in
the Investment Company Act of 1940) of any party to the Agreement (the
"Independent Directors")) on __________, 1996. The continuation of the
Agreement beyond April 1, 1997 is subject to the affirmative vote of the
holders of the lesser of: (i) 67% or more of the shares of each Fund present
in person or represented by proxy at the Special Meetings if the holders of
more than 50% of the outstanding shares of each Fund entitled to vote are
present in person or represented by proxy or (ii) more than 50% of the
outstanding shares of each Fund entitled to vote at the Special Meetings.
Each Fund will vote separately with respect to the Proposed
Sub-Advisory Arrangement. In the event that the Proposed Sub-Advisory
Arrangement is not approved as to any Fund, it will continue until April 1,
1997 and the Board will take such action as they deem advisable under the
circumstances.
Under the Agreement, DSA-NY performs research and portfolio
management services as requested by the Adviser. DSA-NY is responsible
for complying with stated policies and applicable laws, including
compliance with the Adviser's Code of Ethics.
In lieu of a sub-advisory fee, the Adviser will pay DSA-NY all
reasonable direct and indirect costs associated with the maintenance of
an office and the performance of the terms of the Agreement. All
payments to DSA-NY will be made by the Adviser. Fees paid by the Funds
will not be affected in any way.
The Adviser is paid a fee based on each Funds' average daily net
assets at an annual rate as follows:
Davis High Income: 0.70% on average net assets up to $250 million, 0.60%
on the next $250 million of average net assets and 0.55% on average net
assets over $500 million.
Davis Tax-Free: 0.65% on the first $250 million, 0.60% on the next $250
million of average net assets and 0.55% on average net assets over $500
million.
If approved, the Agreement will initially remain in effect for a
period not exceeding two years. Thereafter, it continues in force
year-to-year provided that such continuance is approved by each Fund's
Board of Directors, including a majority of the Independent Directors. The
Agreement will terminate in the event of its assignment (as defined in the
Investment Company Act of 1940) or in the event of the termination of the
investment advisory agreement with the Adviser. It may be terminated,
without penalty upon 60 days prior written notice by the Adviser by the
Board of Directors of a Fund, by majority vote of the shareholders or by
DSA-NY. It will automatically terminate as to a Fund upon the termination
of the Adviser's Advisory Agreement with the Fund.
Under the Sub-Advisory Agreement, DSA-NY will not be subject to
liability to the Funds or their shareholders for any act or omission in the
course of, or connected with, rendering services under the Proposed
Sub-Advisory Agreement, or for any losses that may be sustained in the
purchase, holding or sale of any security, barring willful misfeasance, bad
faith or gross negligence, or reckless disregard of obligations or duties.
DSA-NY, a wholly-owned subsidiary of the Adviser, is a registered
investment adviser organized in 1996. DSA-NY's offices are located in
New York, New York. The Adviser's offices are located in Santa Fe, New
Mexico. The Adviser and the Board believes it is advantageous to the Funds
to have this Agreement, which will enable the Adviser, through DSA-NY,
to attract additional, experienced personnel to perform services on behalf
of the Funds but who desire to remain in the vicinity of New York City.
The Boards of Directors of the other funds managed by the Manager (Davis
New York Venture, Inc., Davis Series, Inc., Davis International Series, Inc.,
Selected American Shares, Inc., Selected Special Shares, Inc. and Selected
Capital Preservation Trust) have approved identical agreements and the
shareholders of such funds, with the exception of Davis New York Venture
Fund, Inc., will be voting on the agreements at meetings held on the same
day as the Special Meetings. The shareholders of Davis New York Venture
Fund, Inc. voted to approve the Sub-Advisory Agreement on October 16,
1996. The proposal does not involve any changes in the investment
objectives or policies of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS
APPROVAL OF THE SUB-ADVISORY AGREEMENT
ITEM 2: ELECTION OF DIRECTORS
There are currently nine directors, all of whom will serve until
their respective successors are elected and qualify or until a director's
earlier death, resignation, retirement or removal. Martin H. Proyect
resigned from the Board effective October 15, 1996.
At this Meeting, shareholders are being asked to vote on the election
of three directors: Christian Sonne, LeRoy Hoffberger and Jeremy Biggs.
All of the other directors have already been elected by the shareholders.
Mr. Sonne has served as a director since July __, 199_; Mr. Hoffberger
since _______, 199__ and Mr. Biggs since ______, 199__. Mr. Biggs has
been the Chairman of the Board since _______, 199__.
Directors are elected by a plurality of votes of each Fund cast at the
meeting.
The following table sets forth certain information as to each of the
directors of the Funds. All directors hold similar positions with each of
the Funds. In addition, Mr. Davis is a Director of five other mutual funds
managed by the Adviser: Davis New York Venture Fund, Inc., Davis Series,
Inc., Davis International Series, Inc., Selected American Shares, Inc.,
Selected Special Shares, Inc. and Selected Capital Preservation Trust.
Current Directors:
SHARES
Name, Date of Birth and Business OWNED AS % OF FUND
Experience During the Past 5 Years OF 1/31/97 OWNED
- --------------------------------------------------------------------------
*Shelby M.C. Davis 03/20/37
Employee of Capital Ideas, Inc. (financial
consulting firm); Director, Chief Executive
Officer and Chairman, Venture Advisers,
Inc.; Consultant to Fiduciary Trust
Company International; Director, Shelby
Cullom Davis Financial Consultants, Inc.;
Shareholder of 98% of Venture Advisers, Inc.
Wesley E. Bass, Jr. (8/21/31)
President, Bass & Associates (Financial Consulting
Firm); formerly, First Deputy City Treasurer, City
of Chicago, and Executive Vice President, Chicago
Title and Trust Company.
Marc P. Blum (9/9/42)
Chief Executive Officer, World Total Return Fund, L.P.
(a private investment fund); Member, Gordon, Feinblatt,
Rothman, Hoffberger and Hollander, LLC (attorneys);
Director, Mid-Atlantic Realty Trust.
Eugene M. Feinblatt (10/28/19)
Of Counsel to Gordon, Feinblatt, Rothman, Hoffberger
and Hollander, LLC (attorneys).
Jerry D. Geist (5/23/34)
Chairman, Santa Fe Center Enterprises; President and
Chief Executive Officer, Howard Energy International
Utilities; Directors, CH2M Hill, Inc.; Retired Chairman
and President, Public Service Company of New Mexico.
D. James Guzy (3/7/36)
Chairman, PLX Technology, Inc. (manufacturer of
semi-conductor circuits); Director, Intel Corp.
(manufacturer of semi-conductor circuits), Cirrus
Logic Corp. (manufacturer of semi-conductor circuits) and
Alliance Technology Fund (a mutual fund).
G. Bernard Hamilton (3/18/37)
Managing General Partner, Avanti Partners, L.P.
Lawrence W. Levine (4/9/31)
Partner, Bigham, Englar, Jones and Houston (attorneys);
United States Counsel to Aerolineas Argentina; Director
of various private companies.
Edwin R. Werner (4/1/22)
President, The Estate at North Hills New York; formerly, Chairman
and CEO, Empire Blue Cross and Blue Shield of New York.
Directors Being Considered for Election
Christian R. Sonne (5/6/36)
General Partner of Tuxedo Park Associates (a land holding and
development firm); President and Chief Executive Officer of Mulford
Securities Corporation (a private investment fund) until 1990; formerly,
Vice President of Goldman Sachs & Company (investment banking).
LeRoy Hoffberger (6/8/25)
Of Counsel to Gordon, Feinblatt, Rothman, Hoffberger and Hollander, LLC
(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).
*Jeremy Biggs (8/16/35)
Consultant to the Adviser; Director, Van Eck Funds; 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.
_________________________
*Mr. Davis is an "interested person" because of his position with the Fund
and his stock ownership in the sole general partner of the Fund's Manager.
The other directors are hereinafter referred to as the "Non-interested
Directors."
The directors considered by the Funds to be "interested persons" of
the Funds, as defined in the Investment Company Act of 1940, are each
noted above by a single asterisk. Messrs. Davis and Biggs are "interested
persons" because of their positions with the Funds and their affiliations
with and stock ownership in the sole general partner of the Fund's Adviser.
The other directors are hereinafter referred to as the "Non-interested
Directors."
As of ______________, 1997, the Fund's directors and officers as a
group were deemed to beneficially own (i) _____________ shares of
Davis High Income, constituting approximately __________% of such
Fund, including ____________ shares with respect to which certain
directors disclaim beneficial ownership; and (ii) _____________ shares
of Davis Tax-Free constituting approximately __________% of such Fund,
including ____________ shares with respect to which certain directors
disclaim beneficial ownership.
OTHER INFORMATION REGARDING DIRECTORS
Directors' Compensation Schedule
During the fiscal year ended September 30, 1996, the compensation
paid to the non-interested directors was as follows:
Davis Davis Tax-Free
High Income High Income
Fund Fund Total Complex
Name Compensation Compensation Compensation
- --------------------------------------------------------------------------------
Wesley E. Bass
Marc P. Blum
Eugene M. Feinblatt
Jerry D. Geist
D. James Guzy
G. Bernard Hamilton
LeRoy E. Hoffberger
Laurence W. Levine
Christian R. Sonne
Edwin R. Werner
Complex compensation is the aggregate compensation paid, for services
as a director, by all mutual funds with the same investment adviser.
During the last fiscal year, the Board of Directors held four
meetings. The Board of Directors has an Audit Committee, whose current
members are _______________. The functions of the Committee include
(i) making recommendations to the Board of Directors as to which firm of
independent public accountants will be selected by the Board of Directors
(subject to shareholder ratification); (ii) meeting with the auditors and
reviewing the methods, scope and results of audits and the fees charged;
and (iii) reviewing the adequacy of the Fund's internal accounting
procedures and controls. The Audit Committee met once in the Fund's last
fiscal year.
MISCELLANEOUS
Certain shareholders of the funds
Davis High Income:
As of the Record Date, ____________ held ___________ shares of
Davis High Income, constituting _____% of such Fund's total outstanding
shares.
Davis Tax-Free High Income:
As of the Record Date, ____________ held ___________ shares of
Davis Tax-Free High Income, constituting _____% of such Fund's total
outstanding shares.
Shareholder meetings
The Funds are not required to hold annual shareholder meetings but
do hold special meetings as required or deemed desirable. Since regular
meetings of shareholders are not held, the anticipated date of the next
shareholder meetings cannot be provided. Any shareholder proposal which
may properly be included in the proxy solicitation material for a
shareholder meeting must be received by a Fund within a reasonable time
prior to the date proxy statements are mailed to shareholders.
Submission of a proposal, however, does not guarantee its inclusion for
consideration at a meeting since certain requirements under the federal
securities laws apply.
Other matters
The Boards know of no matters which are to be brought before the
1997 Special Meetings other than as set forth above. However, if any
other matters properly come before the 1997 Special Meetings, the
persons named in the enclosed form of proxy intend to vote such proxy
with their best judgment on such matters.
Shareholder report
A shareholder may, without charge, receive a copy of the Annual
Report of Davis High Income Fund, Inc. for the fiscal year ended March 31,
1996 or the Annual Report of Davis Tax-Free High Income Fund, Inc. for the
fiscal year ended September 30, 1996 by calling toll free
1-800-279-0279 or writing to the Funds at the address noted above.
EXHIBIT A
Re: Sub-Advisory Agreement for Davis High Income Fund, Inc.
This is to confirm that Davis Selected Advisers, L.P. (the "Adviser") is
retaining Davis Selected Advisers - NY, Inc. ("DSA-NY") as investment
sub-adviser for the portfolio of Davis High Income Fund, Inc. (the "Fund").
The terms and conditions of your retention are as follows:
1. DSA-NY shall act as an investment sub-adviser for the Fund and will
provide such investment management and research services as the Adviser
shall request subject to the general supervision of the Board of Directors
of the Fund, Davis Selected 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. DSA-NY
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 DSA-NY any amendments, changes or additions of or to these
documents.
2. DSA-NY 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. DSA-NY shall be an independent contractor. Unless otherwise expressly
provided or authorized hereunder, or by the Board of Directors of the Fund,
DSA-NY 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 transactions with affiliated broker/dealers comply
with Rule 17e-1 of the 1940 Act.
4. DSA-NY shall provide the Adviser with any reports, analyses or other
documentation the Adviser requests 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.
DSA-NY agrees, directly or through an agent, to provide daily information
in respect to any portfolio transactions of the Fund to the Adviser. DSA-NY
agrees to provide all documentation reasonably required by the Adviser to
maintain the 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. DSA-NY 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. DSA-NY 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 independent public
accountants or appropriate regulatory authorities. DSA-NY 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 DSA-NY has authorized to
give written and/or oral instructions to the Adviser and the Fund
custodian.
5. DSA-NY 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. In addition, personnel of DSA-NY, at the request of the Adviser,
will attend other meetings to be scheduled at mutually convenient times.
6. DSA-NY agrees to provide all office facilities, equipment and personnel
needed for carrying out its duties hereunder at its own expense. In
addition, DSA-NY shall, if requested by the Adviser or the Fund, 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 DSA-NY's services are not to be deemed exclusive and
DSA-NY 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, DSA-NY, its
officers, directors and employees shall not be subject to liability for any
act or omission in the cause of, or connected with, rendering services
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 DSA-NY 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 such costs may be included in the arbitrator's award.
9. As investment sub-adviser, DSA-NY 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. DSA-NY agrees to adopt and comply with the "Code
of Ethics of and for Davis Selected 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 parties acknowledge that DSA-NY is controlled by or under
common control with the Adviser. The Adviser shall pay DSA-NY all
reasonable direct and indirect costs associated with the maintenance of
an office and the performance of the terms of this Agreement. The
Adviser shall also reimburse expenses expressly approved for
reimbursement by the Adviser. Payment for DSA-NY's services and
reimbursement of expenses approved by the Adviser shall be made
monthly, in arrears, by the 15th day of the following month.
11. This Agreement shall become effective on the later of December 1,
1996 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, DSA-NY 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
DSA-NY by the Adviser or upon such sixty (60) days' written notice to
DSA-NY 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 sixty (60) days' written notice by DSA-NY 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
DSA-NY's 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
DSA-NY shall immediately cease all activities in connection with the Fund
except as otherwise directed by the Adviser.
13. DSA-NY agrees that it shall abide by the terms of the agreement of the
Adviser with the Fund as to the names of the Fund and the Adviser and
shall not use the name of the Adviser or the Fund without the prior
written consent of the Adviser or the Fund.
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. This 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,
Davis Selected Advisers, L.P.
By Venture Advisers, Inc.,
General Partner
By:_________________________
Its:_________________________
Accepted and Approved this 1st day of December, 1996
Davis Selected Advisers - NY, Inc.
By:__________________________
Its:__________________________
DAVIS HIGH INCOME FUND, INC.
Proxy Solicited on Behalf of the Board of Directors
The undersigned acknowledges receipt of the Proxy Statement and
hereby appoints Carl Luff, Eileen Street, Andrew Davis and each of them,
the proxies of the undersigned with full power of substitution to vote at
the Special Meeting of Shareholders of Davis High Income Fund, Inc. to be
held at 124 East Marcy Street, Santa Fe, New Mexico on Thursday, March
25, 1997 at 9:30 A.M. Mountain time, and at any adjournments thereof, all
of said fund's shares the undersigned is entitled to vote as follows:
This proxy will be voted as specified herein. If no specification is
made, it will be voted FOR the proposals.
1. PROPOSED SUB-ADVISORY AGREEMENT.
FOR AGAINST ABSTAIN
2. ELECTION OF CHRISTIAN R. SONNE, LeROY E.
HOFFBERGER AND JEREMY H. BIGGS
FOR AGAINST ABSTAIN
TO VALIDATE YOUR PROXY, THIS CARD MUST BE PROPERLY SIGNED AND
DATED ON REVERSE SIDE AND RETURNED.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD, USING THE
ENCLOSED ENVELOPE.
Date:_____________________________, 1997
________________________________________
Signature
________________________________________
Signature
NOTE: Signature(s)
should match name(s) as printed on
this proxy. If shares are held in
name of custodian for a minor or as
trustee, executor, or administrator,
this proxy must be signed by such
custodian, trustee, executor or
administrator, as the case may be.
Please indicate such fiduciary title.
