SELECTED AMERICAN SHARES, INC.
SELECTED SPECIAL SHARES, INC.
SELECTED CAPITAL PRESERVATION TRUST
124 East Marcy Street
Santa Fe, New Mexico 87501
1-800-243-1575
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 Selected
American Shares, Inc. ("Selected American"), Selected Special Shares, Inc.
("Selected Special") and Selected Capital Preservation Trust ("Selected
Capital")(each a "Fund" or collectively, the "Funds" or the "Selected
Funds") to be held at the office of the Funds, 124 East Marcy Street, Santa
Fe, New Mexico on Tuesday, March 25, 1997, at 10:00 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 Manager (the "Proposed
Sub-Advisory Arrangement") (Item 1 in the Proxy Statement);
2. To consider the election of William P. Barr, Marsha Williams,
Richard C. O'Brien, Jerome E. Hass and Katherine L. MacWilliams as
directors/trustees (hereinafter referred to as "directors") of the Funds.
(Item 2 in the Proxy Statement).
3. To consider the amendment of the fundamental restrictions of
each of the Funds (Item 3 in the Proxy Statement).
4. To consider ratification of the selection of Tait, Weller & Baker
as the Funds' independent auditors (Item 4 in the Proxy Statement).
These proposals are described in the attached Proxy Statement,
which should be read carefully. Only shareholders of record on February
21, 1997 will be entitled to vote at the Special Meetings.
BY ORDER OF THE BOARD OF DIRECTORS
Eileen R. Street
Secretary
February 28, 1997
SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON FEBRUARY 21,
1997 ARE ENTITLED TO VOTE AT THE SPECIAL MEETING. WHILE WE WOULD
LIKE VERY MUCH TO HAVE EACH OF YOU AT THE SPECIAL MEETING, WE
REALIZE THIS MAY NOT BE POSSIBLE. HOWEVER, WHETHER OR NOT YOU
ATTEND THE SPECIAL MEETING, 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 MEETING OR
VOTE IN PERSON IF YOU ATTEND THE SPECIAL MEETING.
SELECTED AMERICAN SHARES, INC.
SELECTED SPECIAL SHARES, INC.
SELECTED CAPITAL PRESERVATION TRUST
124 East Marcy Street
Santa Fe, New Mexico 87501
1-800-243-1575
______________________________
PROXY STATEMENT
February 28, 1997
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Selected American,
Selected Special and Selected Capital (the "Selected 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 10:00 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 Selected Funds on or about February 28, 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 Davis Selected Advisers, not the Funds.
Proxies are solicited by mail. Additional solicitations may be made
by telephone, telegraph or personal contact by officers of the Selected
Funds and by officers and employees of Davis Selected Advisers, (the
"Manager") or its general partner. In addition, Shareholders
Communications Corporation or any agent appointed by the Adviser may
assist in soliciting proxies for the meeting and will be paid a fee for such
assistance plus out-of-pocket expenses (any such fees or expenses will be
paid by Davis Selected Advisers; not the Funds). 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
Selected 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, for the election of William P. Barr, Marsha Williams, Richard
L. O'Brien, Jerome E. Hass and Katherine L. MacWilliams as directors of the
Funds, for the proposed amendment of the fundamental restrictions of
each Fund and for the ratification of the selection of Tait, Weller & Baker
as the independent auditors 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 Selected 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 February 21, 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.
Shareholders will be entitled to one vote for each share and a fractional
vote for each fractional share held. As of the Record Date, there were
outstanding 67,115,346.736 shares of Selected American, 5,634,954.803
shares of Selected Special, 112,770,016.873 shares of Selected Daily
Government series of Selected Capital and 677,493.342 shares of Selected
U.S. Government Income series of Selected Capital. The two series of
Selected Capital will vote together on proposals 2 and 4 and separately on
proposals
1 and 3.
ITEM 1: CONSIDERATION OF THE PROPOSED SUB-ADVISORY ARRANGEMENT
The Manager 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.
The Manager entered into a Sub-Advisory Agreement (the
"Agreement"), dated December 1, 1996 with Davis Selected Advisers - NY,
Inc. ("DSA-NY"), an affiliate of the Manager, 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 Selected Special and
Bramwell Capital Management, Inc. Bramwell Capital Management, Inc.
will continue to provide investment advisory services to the Fund and will
continue receiving fees from the Manager for such services pursuant to
the terms of its existing contract. Elizabeth Bramwell, Shelby and
Christopher Davis and Carolyn Spolidoro will continue to provide portfolio
management services for the respective Funds.
The Agreement was approved by the Selected 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")) at a meeting on October 25,
1996 with respect to each Fund. 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 and each series of Selected Capital 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 it
deems advisable under the circumstances.
Under the Agreement, DSA-NY performs research and portfolio
management services as requested by the Manager. DSA-NY is responsible
for complying with stated policies and applicable laws, including
compliance with the Manager's Code of Ethics.
In lieu of a sub-advisory fee, the Manager 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 Manager. Fees paid by the Funds
will not be affected in any way.
The Manager is paid a fee based on each Funds' average daily net
assets as follows:
Selected American: 0.65% on the first $500 million, 0.60% on the next
$500 million, and 0.55% on amounts over $1 billion
Selected Special: 0.70% on the first $50 million, 0.675% on the next $100
million, 0.65% on the next $100 million and 0.60% on amounts over
$250 million
Selected Capital:
Selected U.S. Government Income Fund: 0.50% on all amounts
Selected Daily Government: 0.30% on all amounts
If approved, the Agreement will initially remain in effect for a
period not exceeding two years from the date of execution. Thereafter, it
continues in force yeartoyear 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
Manager. The Agreement may be terminated, without penalty, upon 60
days prior written notice by the Manager, by the Board of Directors of a
Fund, by a majority vote of the shareholders or by DSA-NY.
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 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 Manager, is a registered
investment adviser organized in 1996. DSA-NY's offices are located in
New York, New York. The Manager's offices are located in Santa Fe, New
Mexico. The Manager and the Selected Board believes it is advantageous to
the Funds to have this Agreement, which will enable the Manager, 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 High Income Fund,
Inc., Davis Tax-Free High Income Fund, Inc., and Davis International Series,
Inc.) 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 special meetings on the same date 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 SUBADVISORY AGREEMENT
ITEM 2: ELECTION OF DIRECTORS
There are currently nine directors of the Selected Funds, all of
whom will serve until their respective successors are elected and qualify
or until a director's earlier death, resignation, retirement or removal.
Because the Funds do not have annual meetings, directors serve for an
indefinite period. Walter Hoadley retired under the Board's retirement
policy effective December 31, 1996. Martin H. Proyect resigned effective
October 15, 1996. Marsha Williams and Richard O'Brien have been elected
to replace Mr. Hoadley and Mr. Proyect.
Historically, the Board has operated with nine members. Under the
Board's retirement policy, two more directors will be retiring at the end
of 1997. The Board has nominated Katherine L. MacWilliams and Jerome E.
Hass to replace these two directors before their retirement. This will
give these new members an opportunity to become familiar with the work
of the Board and assist in a smooth transition. Therefore, until the
beginning of 1998, there will be eleven directors after which the Board
will again consist of nine members.
At this Meeting, shareholders are being asked to vote on the election
of five directors: William P. Barr, Marsha Williams, Richard C. O'Brien,
Katherine L. MacWilliams and Jerome E. Hass. Each of the other directors
has previously been elected by the shareholders. Mr. Barr has served as a
director since January 27, 1994; Ms. Williams since January 27, 1996. Mr.
O'Brien was elected by the directors in October, 1996. Ms. MacWilliams
and Mr. Hass were nominated by the directors on January 25, 1997 and will
take office upon their election by shareholders.
Directors are elected by a plurality of votes cast at each Special
Meeting. Selected U.S. Government Income Fund and Selected Daily
Government Fund will vote together on this proposal.
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 Manager: Davis New York Venture Fund, Inc., Davis High
Income Fund, Inc., Davis Tax-Free High Income Fund, Inc., Davis Series, Inc.
and Davis International Series, Inc.
Current Directors:
SHARES
Name, Date of Birth and Business OWNED AS % OF FUND
Experience During the Past 5 Years OF 2/21/97 OWNED
- -------------------------------------------------------------------------------
*Shelby M.C. Davis 03/20/37 SAS=21,775.660 0.032
Employee of Capital Ideas, Inc. (financial SSS=22,484.134 0.399
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 99% of Venture Advisers, Inc.
Floyd A. Brown 11/5/30 SAS=7,825.264 0.012
Staff announcer and program host for WGN SSS=20,493.312 0.364
Radio and Television, Chicago, SUSG=121.789 0.081
Illinois. Sole proprietor of The SDG=12,518.140 0.011
Floyd Brown Co., Elgin, Illinois
(advertising, media production and
mass media and marketing).
William G. Cole 3/7/17 SAS=1,706.086 0.003
Retired educator; writer. SSS= 859.031 0.015
Formerly, President of Lake Forest SUSG= 135,534 0.020
College and President of the
Counsel on Foreign Relations
of Chicago
Robert J. Greenebaum 7/30/17 SAS=16,451.973 0.024
Chairman of the Board. Retired. SSS=13,425.633 0.238
Engaged in investment consulting SUSG=202.975 0.030
and private investment activities. SDG=223.300 0.000
Director, Blue Chip Value Fund, Inc.
and United Asset Management Corporation
(a holding company in the investment
management field).
James J. McMonagle 10/1/44 SAS=4,582.974 0.007
Senior Vice President and General Counsel SSS=122.562 0.002
of University Health System, Inc. and SUSG=122.143 0.018
University Hospitals of Cleveland. From SDG=24,930.140 0.022
1976 to 1990, Judge of the Court of Common
Pleas, Cuyahoga County, Ohio.
Larry J.B. Robinson 10/28/32 SAS=8,101.479 0.012
General Partner, Robinson Investment Company. SSS=6,312.030 0.112
Management Consultant. Corporate Liaison SUSG=20,448.434 3.018
for Mayor Michael R. White of Cleveland, Ohio.
Adjunct Professor at Weatherhead School of
Management, Case Western Reserve University.
Directors Being Considered for Election
William P. Barr 05/23/50 SAS=1,060.338 0.002
Senior Vice President, General Counsel,
GTE Corporation since July 1994. Attorney
General of the United States from August 1991
to January 1993. Deputy Attorney General
from May 1990 to August 1991. Assistant
Attorney General from April 1989 to May 1990.
Partner with the law firm of Shaw, Pittman,
Potts & Trowbridge from 1984 to April 1989
and January 1993 to August 1994.
Richard C. O'Brien 09/12/45 SAS=2,652.260 0.004
Corporate Economist for Hewlett-Packard
Company. Director, National Association
of Business Economists, former President
of the Northern California High Technology
Council and former Chairman of the Economic
Advisory Council of the California Chamber
of Commerce.
Marsha Williams 3/28/51 -0- -0-
Treasurer, Amoco Corporation. Director,
Illinois Benedictine College, The Conference
Board Council of Corporate Treasurers,
Illinois Council on Economic Education,
Chicagoland Chamber of Commerce; Formerly,
Director, (i) Fertilizers of Trinidad and
Tobago from 1989 to 1993, (ii) OK Tedi Mining
Limited from 1992 to 1993, and (iii) Just
Jobs from 1988 to 1992.
Katherine L. MacWilliams 1/19/56 -0- -0-
Vice President, Treasurer
Coors Brewing Company and
Adolph Coors Company.
Formerly Vice President of Capital Markets
for UBS Securities in New York.
Former member of the Board of International
Swaps and Derivatives Association, Inc.
Jerome E. Hass 6/1/40 -0- -0-
Professor of Finance and Business Strategy
Johnson Graduate School of Management,
Cornell University. Consultant
National Economic Research Associates.
Formerly Chief of Research of the Federal
Power Commission and Special Assistant
to James R. Schlesinger at the Executive Office
of the President of the United States
Legend: Selected American Shares, Inc.- "SAS"
Selected Special Shares, Inc.- "SSS"
Selected U.S. Government Income Fund-"SUSG"
Selected Daily Government Fund- "SDG"
As of February 21, 1997, the Fund's directors and officers as a group
were deemed to beneficially own; (i) 64,156.034 shares of Selected
American, constituting approximately .095% of such Fund; (ii) 63,766.890
shares of Selected Special, constituting approximately 1.132% of such
Fund; and (iii) 58,702.455 shares of Selected Capital, constituting
approximately 3.137% of such Fund.
OTHER INFORMATION REGARDING DIRECTORS
Directors' Compensation Schedule
During the fiscal year ended December 31, 1996, the compensation
paid to the non-interested directors was as follows:
<TABLE>
<CAPTION>
Selected
Capital
Selected Selected Preservaion Aggregate Fund
American Special Trust Complex Compensation
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
William P. Barr 25,078.22 1,405.59 3,516.19 30,000
Floyd A. Brown 26,750.10 1,499.30 3,750.60 32,000
William G. Cole 28,839.95 1,616.43 4,043.62 34,500
Robert J. Greenebaum 44,722.82 2,506.64 6,270.54 53,500
Walter E. Hoadley<F1> 26,750.10 1,499.30 3,750.60 32,000
James J. McMonagle 23,406.34 1,311.89 3,281.78 28,000
Richard C. O'Brien 2,089.85 117.13 293.02 2,500
Larry J.B. Robinson 23,406.34 1,311.89 3,281.78 28,000
Marsha Williams 23,406.34 1,311.89 3,281.78 28,000
Complex compensation is the aggregate compensation paid, for
services as a director, by all mutual funds with the same investment
adviser.
<FN>
<F1> Mr. Hoadley retired from the Board effective December 31, 1996.
</FN>
</TABLE>
During the last fiscal year, the Board of Directors held four
meetings. The Board of Directors has an Audit Committee, whose current
members are William G. Cole, William P. Barr, James J. McMonagle and
Robert J. Greenebaum. The functions of the Committee include (i) making
recommendations to the Board of Directors regarding the selection of
independent public accountants (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. The selection and nomination of
directors is the responsiblilty of the Independent Directors. The Board
does not have a compensation committee.
ITEM 3: AMENDMENT OF FUNDAMENTAL INVESTMENT RESTRICTIONS
The Funds each have fundamental investment restrictions set forth
as "Investment Restrictions" in each Fund's Statement of Additional
Information. These restrictions currently contain numerous restrictions
against making certain types of investments based upon prohibitions found
in the Investment Company Act of 1940, as amended (the "1940 Act") as
well as various state blue sky laws. On October 11, 1996, President
Clinton signed the National Securities Markets Improvement Act of 1996.
This new legislation created a national system of regulating mutual funds
by pre-empting state blue sky laws in most respects. As mutual funds are
no longer required to comply with state blue sky laws involving
investment restrictions, the Funds desire to eliminate all restrictions
other than those mandated by the 1940 Act. Accordingly, restrictions that
were only required by various states but that are not required by the 1940
Act have been eliminated. None of the restrictions deleted are expected to
have any material impact upon the continued operations of any Fund.
Each Fund will vote separately with respect to the proposed changes
in Fundamental Restrictions. In order for the proposal to be approved with
respect to a Fund it must be approved by the holders of the lesser (a)67%
of the shares of the Fund if more than 50% of the outstanding shares are
present at the Special Meeting in person or by proxy, or (b) more than 50%
of the outstanding shares of the Fund.
The current fundamental investment restrictions of each Fund are
shown in Exhibit B to these proxy materials. The proposed changes to the
fundamental investment restrictions are shown below.
Selected American Shares:
Restrictions 5 (purchase of securities held by insiders), 6 (unseasoned
issuers) and 12 (investing for control) are being deleted because they are
not mandated by the 1940 Act. Restriction 14 (use of inside information)
is being deleted because it is unnecessary due to restrictions contained in
the Fund's Code of Ethics.
Selected Special Shares:
Restrictions 2 (investing for control), 10 (unseasoned issuers) and 12
(investing for control) are being deleted because they are not mandated by
the 1940 Act. Restriction 13 (use of inside information) is being deleted
because it is unnecessary due to restrictions contained in the Fund's Code
of Ethics.
Selected Daily Government Fund:
Restrictions 10 (investing for control), 13 (purchase of securities held by
insiders), 14 (purchase of securities from or sales to insiders) have been
deleted because they are not mandated by the 1940 Act.
Selected U.S. Government Income Fund:
Restrictions 1 (general investment restriction) and 11 (investing for
control) have been deleted because they are not mandated by the 1940 Act.
We are also adding a new restriction (Restriction 1 on the proposed
restatement) that is required by the 1940 Act with respect to
diversification of the Fund's assets.
Following are the restated fundamental investment restrictions for each
of the Funds
Restated Fundamental Investment Restrictions For Selected American
Shares
Selected American Shares may not:
1. Purchase securities of any one issuer (excluding U.S. Government
Securities) if, as a result of such purchase, the Fund would own more than
10% of the total outstanding securities or voting stock of the issuer or
more than 5% of the value of the Fund's total assets would be invested in
the securities of the issuer.
2. Sell short, buy on margin, or deal in options, except that the Fund
may write call options against its portfolio securities which are traded
on a national securities exchange and purchase call options in closing
transactions. (When permitted by applicable federal and state authorities
and when there exists an established market for call options written on
securities traded otherwise than on a national securities exchange, the
Fund may also issue call options on such portfolio securities and purchase
such call options on such securities in closing transactions). The Fund
will not write a covered option if following issuance of the option the
market value of the Fund's portfolio securities underlying such options
would be in excess of 20% of the value of the Fund's net assets.
3. Borrower money, except for temporary or emergency purposes,
and then only from banks, in an amount not exceeding 10% of the value of
the Fund's total assets. The Fund will not borrower money for the purpose
of investing in securities, and the Fund will not purchase any portfolio
securities for so long as any borrowed amounts remaining outstanding.
4. Pledge or hypothecate its assets, except in an amount not
exceeding 15% of its total assets, and then only to secure borrowings for
temporary or emergency purposes.
5. Invest in other investment companies (as defined in the
Investment Company Act of 1940), except as part of a merger,
consolidation, reorganization or acquisition of assets.
6. Underwrite securities of other issuers (although the Fund may
technically be considered an underwriter if it sells restricted securities).
7. Purchase illiquid securities (including restricted securities that
are illiquid) purchase would cause more than 15% of the value of the
Fund's net assets to be invested in such securities.
8. Make loans, except it may acquire debt securities from the issuer
or others which are publicly distributed or are of a type normally acquired
by institutional investors and except that it may make loans of portfolio
securities if any such loans are secured continuously by collateral at
least equal to the market value of the securities loaned in the form of
cash and/or securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities and provided that no such loan will be made
if upon the making of that loan more than 10% of the value of the Fund's
total assets would be the subject of such loans.
9. Concentrate more than 25% of its assets in securities of any one
industry.
10. Purchase or sell real estate or interests in real estate,
commodities or commodity contracts or interests in oil, gas or other
mineral exploration or development programs. It may, however, purchase
marketable securities of companies which may make such investments.
11. Allow any person associated with the Fund or its investment
manager who is an officer or director of another issuer to participate in
any decision to purchase or sell any securities of such other issuer.
Restated Fundamental Investment Restrictions For Selected Special
Shares
Selected Special Shares may not:
1. Purchase securities of any one issuer (excluding U.S. Government
Securities) if, as a result of such purchase, the Fund would own more than
10% of the total outstanding securities or voting stock of the issuer or
more than 5% of the value of the Fund's total assets would be invested in
the securities of the issuer.
2. Purchase or sell real estate, commodities or commodity
contracts, or oil, gas or other mineral exploration or development
programs, or any direct interests therein. It may, however, purchase
marketable securities of companies which may make such investments.
3. Sell short, buy or margin, or deal in options, except that the Fund
may write call options against its portfolio securities which are traded
on a national securities exchange and purchase call options in closing
transactions. (When permitted by applicable federal and state authorities
and when there exists an established market for call options written on
securities traded otherwise than on a national securities exchange, the
Fund may also issue call options on such portfolio securities and purchase
such call options on such securities in closing transactions). The Fund
will not write a covered option if following issuance of the option the
market value of the Fund's portfolio securities underlying such options
would be in excess of 10% of the value of the Fund's net assets.
4. Borrow money, except for temporary or emergency purposes, and
then only from banks, in an amount not exceeding 10% of the value of the
Fund's total assets. The Fund will not borrow money for the purpose of
investing in securities, and the Fund will not purchase any portfolio
securities for so long as any borrowed amounts remain outstanding.
5. Pledge or hypothecate its assets, except in an amount not
exceeding 15% of its total assets, and then only to secure borrowings for
temporary or emergency purposes.
6. Underwrite securities of other issuers (although the Fund may
technically be considered an underwriter if it sells restricted securities).
7. Purchase securities of any other investment company (as defined
in the Investment Company Act of 1940) except: (i) shares of investment
companies investing primarily in foreign securities provided that such
purchase does not cause the Fund to (a) have more than 5% of its total
assets invested in any one such company, (b) have more than 10% of its
total assets invested in the aggregate of all such companies, or (c) own
more than 3% of the total outstanding voting stock of any such company;
and (ii) as a part of a merger, consolidation, reorganization or acquisition
of assets.
8. Purchase illiquid securities (including restricted securities that
are illiquid) if such purchase would cause more than 15% of the value of
the Fund's net assets to be invested in such securities.
9. Make loans, except it may acquire debt securities from the issuer
or others which are publicly distributed or are of a type normally acquired
by institutional investors and except that it may make loans of portfolio
securities if any loans are secured continuously by collateral at least
equal to the market value of the securities loaned in the form of cash
and/or securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities and provided that no such loan will be made
if upon the making of that loan more than 10% of the value of the Fund's
total assets would be the subject of such loans.
10. Concentrate more than 25% of its assets in securities of any one
industry.
Restated Fundamental Investment Restrictions For Selected Daily
Governmend Fund
Selected Daily Government Fund may not:
1. Purchase securities, if immediately after such purchase more than 5%
of its total assets would be invested in the securities of any one issuer
excluding U.S. Government Securities, and repurchase agreements with
respect to such securities;
2. Invest 25% or more of its total assets in any one industry, except that
this restriction shall not apply to U.S. Government Securities;
3. Borrow money, except for temporary or emergency non-investment
purposes such as to accommodate abnormally heavy redemption requests,
and then only in an amount not exceeding 10% of the value of its total
assets at the time of borrowing;
4. Pledge, mortgage or hypothecate its assets, except that to secure
borrowings permitted by (3) above, it may pledge securities having a
market value at the time of pledge not exceeding 15% of its total assets;
5. Sell securities short or purchase any securities on margin, except for
such short-term credits as are necessary for clearance or portfolio
transactions;
6. Write, purchase or sell put or call options;
7. Underwrite any securities issued by others (except that it may
technically be considered an underwriter if it sells restricted securities);
8. Purchase or sell real estate, real estate mortgage loans, commodities,
commodity contracts (including futures contracts) or oil and gas
interests;
9. Make loans, other than by entering into repurchase agreements and
through the purchase of other permitted investments in accordance with
its investment objective and policies;
10. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of
assets;
11. Enter into a repurchase agreement maturing in more than seven
days or knowingly purchase securities that are subject to restrictions on
resale or for which there are no readily available market quotations if, as
a result of such purchase more than 10% of a Fund's assets would be
invested in such securities;
12. Issue any class of securities senior to any other class of securities.
Restated Fundamental Investment Restrictions For Selected U.S.
Government Income Fund
Selected U.S. Government Income Fund may not:
1. Buy the securities of any company if more than 5% of the value of the
Fund's total assets would then be invested in that company. Securities
issues by the U.S. Government or its agencies or instrumentalities and
repurchase agreements involving such securities ("U.S. Government
Securities"),
2. Invest 25% or more of its total assets in any one industry, except that
this restriction shall not apply to securities issued or guaranteed by the
U.S. Government, its agencies or instrumentality's (U.S. Government
Securities");
3. Borrow money except for temporary or emergency non-investment
purposes, such as to accommodate abnormally heavy redemption requests,
and then only in an amount not exceeding 10% of the value of Selected
Government Income's total assets at the time of borrowing;
4. Pledge, mortgage or hypothecate its assets, except that to secure
borrowings permitted by (3) above, it may pledge securities having a
market value at the time of pledge not exceeding 15% of Selected
Government Income's total assets; provided, however, that the deposit of
underlying securities and other assets in escrow in connection with the
writing of put or call options and collateral arrangements with respect to
margin for futures contracts and options thereon are not to be considered
pledges or other encumbrances;
5. Purchase securities on margin except that Selected Government Income
may obtain such short-term credits as may be necessary for the clearance
of purchases and sales of securities and further excepting that the deposit
or payment by Selected Government Income of initial or variation margin
in connection with futures contracts or related options transactions is
not to be considered the purchase of a security on margin;
6. Make short sales of securities;
7. Underwrite any securities issued by others except to the extent that, in
connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under certain Federal securities laws;
8. Purchase or sell real estate, real estate mortgage loans, commodities
or commodity futures contracts, or oil, gas, or mineral exploration or
development interests except that Selected Government Income may
invest in futures contracts and related options as described in the
Prospectus and Statement of Additional Information;
9. Make loans, other than (a) by entering into repurchase agreements, (b)
through the purchase of other permitted investments in accordance with
its investment objective and policies; and (c) through the lending of
portfolio securities with respect to not more than 30% of its assets;
10. Enter into a repurchase agreement maturing in more than seven days,
or knowingly purchase securities that are subject to restrictions on
resale or for which there are no readily available market quotations if, as
a result, more than 10% of the value of Selected Government Income's
total assets (taken at current value) at the time would be invested in such
securities;
11. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of
assets;
12. Issue senior securities as defined in the 1940 Act, except insofar as
Selected Government Income may be deemed to have issued a senior
security by reason of (a) entering into any repurchase agreements; (b)
permitted borrowings of money; (c) purchasing securities on a
"when-issued" or delayed delivery basis; or (d) purchasing options,
futures contracts and related options;
13. Purchase or sell futures contracts or options on futures contracts if,
as a result, the sum of the initial margin deposits on Selected Government
Income's existing futures contracts and related options positions and the
premiums paid for options on futures contracts would exceed 5% of the
fair market value of Selected Government Income's assets after taking
into account unrealized profits and unrealized losses on any such
contracts it has entered into; provided, however, that in the case of an
option that is "in-the-money" at the time of the purchase, the
"in-the-money" amount may be excluded in computing such 5%; or
14. Invest more than 10% of its total assets (determined at the time of
investment) in illiquid securities, securities which are not readily
marketable and repurchase agreements which have a maturity of longer
than seven days. In addition, Selected Government Income will not invest
more than 5% of its total assets in securities the disposition of which is
restricted under federal securities laws. The staff of the SEC has taken
the position that OTC Options and the assets used as "cover" for written
OTC Options should generally be treated as illiquid securities. However, if
a dealer recognized by the Federal Reserve Bank as a "primary dealer" in
U.S. Government Securities is the other party to an option contract
written by a fund, and that fund has the absolute right to repurchase the
option from the dealer at a formula price established in a contract with
the dealer, the SEC staff has agreed that fund only needs to treat as
illiquid that amount of the "cover" amount equal to the amount by which
(a) the formula price exceeds (b) any amount by which the market value of
the security subject to the option exceeds the exercise price of the option
(the amount by which the option is "in-the-money"). Although the Manager
does not believe that OTC Options are generally illiquid, it has agreed that
pending resolution of this issue, Selected Government Income will conduct
its operations in conformity with the views of the staff.
THE BOARD OF DIRECTORS RECOMMENDS
APPROVAL OF THE PROPOSED CHANGES TO
THE FUNDAMENTAL POLICIES OF EACH FUND
ITEM 4: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Tait, Weller & Baker (the "Firm") was recommended to the Board by
the Audit Committee and was selected by the Board, including a majority
of the Noninterested Directors, as the certified public accountants and
auditors of the Funds for the fiscal year ending December 31, 1997, and
such selection is being submitted to the shareholders for ratification at
the Meetings. The Firm also acts as independent certified public
accountants and auditors of the Manager and of Davis New York Venture
Fund, Inc., Davis High Income Fund, Inc., Davis Series, Inc., Davis Tax-Free
High Income, Inc., and Davis International Series, Inc., the other mutual
funds which the Manager manages and for which it serves as distributor.
The Firm has informed the Board of Directors that it has no direct or
indirect financial interest in the Funds or any of the above named
companies. A representative of the Firm is expected to be available by
telephone for the Meetings and will have the opportunity to make a
statement and to respond to appropriate questions. In connection with its
audit function, the Firm will audit the annual report and review the Funds'
posteffective amendment to its registration statement filed with the
Securities and Exchange Commission (the "SEC"). In addition, the Firm may
review the Funds' federal, state and local tax returns and the Funds'
annual report filed with the SEC.
The ratification of the selection of auditors requires the vote of the
holders of a majority of the shares present or represented at the Meeting.
The firm has audited the Funds' financial statements since 1993.
THE BOARD OF DIRECTORS RECOMMENDS
RATIFICATION OF THE SELECTION OF
TAIT, WELLER & BAKER AS INDEPENDENT AUDITORS
MISCELLANEOUS
Certain shareholders of the funds
Selected American:
As of the Record Date, Shelby Cullom Davis & Co., 609 5th Avenue,
Floor 11, New York, NY 10017-1021 held 25,864,323.528 shares of
Selected American, constituting 38.47% of such Fund's total outstanding
shares. As of such date, Charles Schwab & Co. Inc., 101 Montgomery St.,
San Francisco, CA 94104 held 12,865,857.638 shares of Selected
American, constituting 19.14% of such Fund's total outstanding shares.
Selected Special:
As of the Record Date, Shelby Cullom Davis & Co., 609 5th Avenue,
Floor 11, New York, NY 10017-1021 held 413,124.470 shares of Selected
Special, constituting 7.33% of such Fund's total outstanding shares.
Selected Capital:
As of the Record Date, Shelby Cullom Davis & Co., 609 5th Avenue,
Floor 11, New York, NY 10017-1021 held 95,805,252.650 shares of
Selected Daily Government, constituting 8.49% of such Fund's total
outstanding shares.
Shareholder meetings
The Fund is not required to hold annual shareholder meetings but
does hold special meetings as required or deemed desirable. Since regular
meetings of shareholders are not held, the anticipated date of the next
shareholder meeting cannot be provided. Any shareholder proposal which
may properly be included in the proxy solicitation material for a
shareholder meeting must be received by the 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.
Affiliated Broker
The Manager, Bramwell Capital Managemnet, Inc. and DSA-NY are
authorized to place portfolio transactions with Shelby Cullom Davis & Co.
("SCD"), a member of the New York Stock Exchange, which may be deemed
to be an affiliate of the Manager, if the commissions are fair and
reasonable and comparable to commissions charged by non-affiliated
qualified brokerage firms for similar service. SCD may be deemed to be
affiliated with the Funds because Shelby Davis' mother is the beneficial
owner of the majority shareholder of SCD. The aggregate amount of
commissions paid by Selected American Shares to SCD in the last fiscal
year was $10,800. The percentage of Selected American's aggregate
brokerage commissions paid to SCD during such fiscal year was .0135%.
The other Selected Funds did not place any trades with SCD in the last
fiscal year.
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 copy of the Annual Report for the fiscal year ended December 31,
1996 will be mailed to all shareholders on or about February 28, 1997. A
shareholder may, without charge, receive a copy of the Annual Report of
any Fund for the fiscal year ended December 31, 1996 by calling toll free
18002431575 or writing to the Funds at the address noted above.
EXHIBIT A
Re: SubAdvisory Agreement for Selected American Shares, Inc.
This is to confirm that Davis Selected Advisers, L.P. (the "Adviser") is
retaining Davis Selected Advisers - NY, Inc. ("DSA-NY") as investment
subadviser for the portfolio of Selected American Shares, Inc. (the
"Fund").
The terms and conditions of your retention are as follows:
1. DSA-NY shall act as an investment subadviser 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 17e1 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 subadviser, 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 posteffective 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: ------------------------------------
EXHIBIT B
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
Selected American Shares may not:
1. Purchase securities of any one issuer (excluding U.S. Government
Securities) if, as a result of such purchase, the Fund would own more than
10% of the total outstanding securities or voting stock of the issuer or
more than 5% of the value of the Fund's total assets would be invested in
the securities of the issuer.
2. Sell short, buy on margin, or deal in options, except that the Fund
may write call options against its portfolio securities which are traded
on a national securities exchange and purchase call options in closing
transactions. (When permitted by applicable federal and state authorities
and when there exists an established market for call options written on
securities traded otherwise than on a national securities exchange, the
Fund may also issue call options on such portfolio securities and purchase
such call options on such securities in closing transactions). The Fund
will not write a covered option if following issuance of the option the
market value of the Fund's portfolio securities underlying such options
would be in excess of 20% of the value of the Fund's net assets.
3. Borrower money, except for temporary or emergency purposes,
and then only from banks, in an amount not exceeding 10% of the value of
the Fund's total assets. The Fund will not borrower money for the purpose
of investing in securities, and the Fund will not purchase any portfolio
securities for so long as any borrowed amounts remaining outstanding.
4. Pledge or hypothecate its assets, except in an amount not
exceeding 15% of its total assets, and then only to secure borrowings for
temporary or emergency purposes.
5. Purchase or retain securities of an issuer if, to the Fund's
knowledge, any officer, director or security owner of such issuer is an
officer or director of the Fund or of the Fund's Manager, and one or more of
such persons owns beneficially more than 0.5% of such securities and
those persons owning more than 0.5% together own more than 5% of such
securities.
6. Purchase securities of any company which (with its
predecessors) has a record of less than 3 years' continuous operation if,
as a result of such purchase, more than 5% of the value of the Fund's total
assets would be invested, in such companies.
7. Invest in other investment companies (as defined in the
Investment Company Act of 1940), except as part of a merger,
consolidation, reorganization or acquisition of assets.
8. Underwrite securities of other issuers (although the Fund may
technically be considered an underwriter if it sells restricted securities).
9. Purchase illiquid securities (including restricted securities that
are illiquid) purchase would cause more than 15% of the value of the
Fund's net assets to be invested in such securities.
10. Make loans, except it may acquire debt securities from the
issuer or others which are publicly distributed or are of a type normally
acquired by institutional investors and except that it may make loans of
portfolio securities if any such loans are secured continuously by
collateral at least equal to the market value of the securities loaned in
the form of cash and/or securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities and provided that no such
loan will be made if upon the making of that loan more than 10% of the
value of the Fund's total assets would be the subject of such loans.
11. Concentrate more than 25% of its assets in securities of any one
industry.
12. Invest for the purpose of exercising control or management.
13. Purchase or sell real estate or interests in real estate,
commodities or commodity contracts or interests in oil, gas or other
mineral exploration or development programs. It may, however, purchase
marketable securities of companies which may make such investments.
14. Allow any person associated with the Fund or its investment
manager who is an officer or director of another issuer to participate in
any decision to purchase or sell any securities of such other issuer.
Selected Special Shares may not:
1. Purchase securities of any one issuer (excluding U.S. Government
Securities) if, as a result of such purchase, the Fund would own more than
10% of the total outstanding securities or voting stock of the issuer or
more than 5% of the value of the Fund's total assets would be invested in
the securities of the issuer.
2. Invest for the purpose of exercising management or control.
3. Purchase or sell real estate, commodities or commodity
contracts, or oil, gas or other mineral exploration or development
programs, or any direct interests therein. It may, however, purchase
marketable securities of companies which may make such investments.
4. Sell short, buy or margin, or deal in options, except that the Fund
may write call options against its portfolio securities which are traded
on a national securities exchange and purchase call options in closing
transactions. (When permitted by applicable federal and state authorities
and when there exists an established market for call options written on
securities traded otherwise than on a national securities exchange, the
Fund may also issue call options on such portfolio securities and purchase
such call options on such securities in closing transactions). The Fund
will not write a covered option if following issuance of the option the
market value of the Fund's portfolio securities underlying such options
would be in excess of 10% of the value of the Fund's net assets.
5. Borrow money, except for temporary or emergency purposes, and
then only from banks, in an amount not exceeding 10% of the value of the
Fund's total assets. The Fund will not borrow money for the purpose of
investing in securities, and the Fund will not purchase any portfolio
securities for so long as any borrowed amounts remain outstanding.
6. Pledge or hypothecate its assets, except in an amount not
exceeding 15% of its total assets, and then only to secure borrowings for
temporary or emergency purposes.
7. Underwrite securities of other issuers (although the Fund may
technically be considered an underwriter if it sells restricted securities).
8. Purchase securities of any other investment company (as defined
in the Investment Company Act of 1940) except: (i) shares of investment
companies investing primarily in foreign securities provided that such
purchase does not cause the Fund to (a) have more than 5% of its total
assets invested in any one such company, (b) have more than 10% of its
total assets invested in the aggregate of all such companies, or (c) own
more than 3% of the total outstanding voting stock of any such company;
and (ii) as a part of a merger, consolidation, reorganization or acquisition
of assets.
9. Purchase illiquid securities (including restricted securities that
are illiquid) if such purchase would cause more than 15% of the value of
the Fund's net assets to be invested in such securities.
10. Purchase securities of any company which (with its
predecessors) has a record of less than 3 years' continuous operation if,
as a result of such purchase, more than 5% of the value of the Fund's total
assets would be invested in such companies.
11. Make loans, except it may acquire debt securities from the
issuer or others which are publicly distributed or are of a type normally
acquired by institutional investors and except that it may make loans of
portfolio securities if any loans are secured continuously by collateral at
least equal to the market value of the securities loaned in the form of
cash and/or securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities and provided that no such loan will be made
if upon the making of that loan more than 10% of the value of the Fund's
total assets would be the subject of such loans.
12. Purchase for or retain in the Fund's portfolio the securities of an
issuer if, to the Fund's knowledge, any officer, director or security owner
of such issuer is an officer or director of the Fund or of the Fund's
Manager and one or more of such persons owns beneficially more than 0.5%
of such securities and those persons owning more than 0.5% of such
securities together own more than 5% of such securities.
13. Allow any person associated with the Fund or its investment
manager who is an officer or director of another issuer to participate in
any decision to purchase or sell any securities of such other issuer.
14. Concentrate more than 25% of its assets in securities of any one
industry.
Selected Daily Government Fund may not:
1. Purchase securities, if immediately after such purchase more than 5%
of its total assets would be invested in the securities of any one issuer
excluding U.S. Government Securities, and repurchase agreements with
respect to such securities;
2. Invest 25% or more of its total assets in any one industry, except that
this restriction shall not apply to U.S. Government Securities;
3. Borrow money, except for temporary or emergency non-investment
purposes such as to accommodate abnormally heavy redemption requests,
and then only in an amount not exceeding 10% of the value of its total
assets at the time of borrowing;
4. Pledge, mortgage or hypothecate its assets, except that to secure
borrowings permitted by (3) above, it may pledge securities having a
market value at the time of pledge not exceeding 15% of its total assets;
5. Sell securities short or purchase any securities on margin, except for
such short-term credits as are necessary for clearance or portfolio
transactions;
6. Write, purchase or sell put or call options;
7. Underwrite any securities issued by others (except that it may
technically be considered an underwriter if it sells restricted securities);
8. Purchase or sell real estate, real estate mortgage loans, commodities,
commodity contracts (including futures contracts) or oil and gas
interests;
9. Make loans, other than by entering into repurchase agreements and
through the purchase of other permitted investments in accordance with
its investment objective and policies;
10. Invest in companies for the purpose of exercising control or
management of another company;
11. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of
assets;
12. Enter into a repurchase agreement maturing in more than seven days
or knowingly purchase securities that are subject to restrictions on
resale or for which there are no readily available market quotations if, as
a result of such purchase more than 10% of a Fund's assets would be
invested in such securities;
13. Purchase or retain securities of any issuer if its officers and
Trustees, or the officers and Directors of its Manager, who individually
own more than 1/2 of 1% of the outstanding securities of such issuer,
together beneficially own more than 5% of such outstanding securities;
14. Purchase from, or sell to, any of its officers or Trustees or the
officers or Directors of its manager, its portfolio securities; or
15. Issue any class of securities senior to any other class of securities.
Selected U.S. Government Income Fund may not:
1. Purchase securities or make any investments other than those
described in the Prospectus and/or Statement of Additional Information;
2. Invest 25% or more of its total assets in any one industry, except that
this restriction shall not apply to securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities (U.S. Government
Securities");
3. Borrow money except for temporary or emergency non-investment
purposes, such as to accommodate abnormally heavy redemption requests,
and then only in an amount not exceeding 10% of the value of Selected
Government Income's total assets at the time of borrowing;
4. Pledge, mortgage or hypothecate its assets, except that to secure
borrowings permitted by (3) above, it may pledge securities having a
market value at the time of pledge not exceeding 15% of Selected
Government Income's total assets; provided, however, that the deposit of
underlying securities and other assets in escrow in connection with the
writing of put or call options and collateral arrangements with respect to
margin for futures contracts and options thereon are not to be considered
pledges or other encumbrances;
5. Purchase securities on margin except that Selected Government Income
may obtain such short-term credits as may be necessary for the clearance
of purchases and sales of securities and further excepting that the deposit
or payment by Selected Government Income of initial or variation margin
in connection with futures contracts or related options transactions is
not to be considered the purchase of a security on margin;
6. Make short sales of securities;
7. Underwrite any securities issued by others except to the extent that, in
connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under certain Federal securities laws;
8. Purchase or sell real estate, real estate mortgage loans, commodities
or commodity futures contracts, or oil, gas, or mineral exploration or
development interests except that Selected Government Income may
invest in futures contracts and related options as described in the
Prospectus and Statement of Additional Information;
9. Make loans, other than (a) by entering into repurchase agreements, (b)
through the purchase of other permitted investments in accordance with
its investment objective and policies; and (c) through the lending of
portfolio securities with respect to not more than 30% of its assets;
10. Enter into a repurchase agreement maturing in more than seven days,
or knowingly purchase securities that are subject to restrictions on
resale or for which there are no readily available market quotations if, as
a result, more than 10% of the value of Selected Government Income's
total assets (taken at current value) at the time would be invested in such
securities;
11. Invest in securities for the purpose of exercising control;
12. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of
assets;
13. Issue senior securities as defined in the 1940 Act, except insofar as
Selected Government Income may be deemed to have issued a senior
security by reason of (a) entering into any repurchase agreements; (b)
permitted borrowings of money; (c) purchasing securities on a
"when-issued" or delayed delivery basis; or (d) purchasing options,
futures contracts and related options;
14. Purchase or sell futures contracts or options on futures contracts if,
as a result, the sum of the initial margin deposits on Selected Government
Income's existing futures contracts and related options positions and the
premiums paid for options on futures contracts would exceed 5% of the
fair market value of Selected Government Income's assets after taking
into account unrealized profits and unrealized losses on any such
contracts it has entered into; provided, however, that in the case of an
option that is "in-the-money" at the time of the purchase, the
"in-the-money" amount may be excluded in computing such 5%; or
15. Invest more than 10% of its total assets (determined at the time of
investment) in illiquid securities, securities which are not readily
marketable and repurchase agreements which have a maturity of longer
than seven days. In addition, Selected Government Income will not invest
more than 5% of its total assets in securities the disposition of which is
restricted under federal securities laws. The staff of the SEC has taken
the position that OTC Options and the assets used as "cover" for written
OTC Options should generally be treated as illiquid securities. However, if
a dealer recognized by the Federal Reserve Bank as a "primary dealer" in
U.S. Government Securities is the other party to an option contract
written by a fund, and that fund has the absolute right to repurchase the
option from the dealer at a formula price established in a contract with
the dealer, the SEC staff has agreed that fund only needs to treat as
illiquid that amount of the "cover" amount equal to the amount by which
(a) the formula price exceeds (b) any amount by which the market value of
the security subject to the option exceeds the exercise price of the option
(the amount by which the option is "in-the-money"). Although the Manager
does not believe that OTC Options are generally illiquid, it has agreed that
pending resolution of this issue, Selected Government Income will conduct
its operations in conformity with the views of the staff.
SELECTED SPECIAL SHARES, 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 Selected Special Shares, Inc. to be
held at 124 East Marcy Street, Santa Fe, New Mexico on March 25, 1997 at
10:00 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 WILLIAM G. BARR, RICHARD C.
O'BRIEN, MARSHA WILLIAMS, JEROME HASS,
KATHERINE MacWILLIAMS
FOR AGAINST ABSTAIN
3. AMENDMENT OF FUNDAMENTAL INVESTMENT
POLICIES
FOR AGAINST ABSTAIN
4. RATIFICATION OF THE SELECTION OF TAIT,
WELLER & BAKER AS THE FUND'S INDEPENDENT
AUDITORS
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:_____________________________, 199_
________________________________________
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.
