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 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 restatement of the fundamental policies 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 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 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
March, 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 25, 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 Selected
Funds and by officers and employees of the Manager 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 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 Barr, Marsha Williams, Richard
O'Brien, Jerome Hass and Katherine MacWilliams as directors of the Funds,
for the proposed restatement in fundamental policies 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 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
dollar of net asset value per share is entitled to one vote. As of the
Record Date, there were outstanding ________________ shares of Selected
American, ___________ shares of Selected Special, ____________ shares of
Selected Daily Government series of Selected Capital and __________ shares
of Selected U.S. Government Income series of Selected Capital.
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.
Effective December 1, 1996, the Manager entered into a
Sub-Advisory Agreement (the "Agreement") 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. 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")) on October 25, 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 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. 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 Manager. It 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. It will automatically terminate as to a Fund upon the termination
of the Manager'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 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 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. 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 MacWilliams and Jerome 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 Hass. All of the other directors have
already 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 but have not
served on the Board.
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 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 99% of Venture Advisers, Inc.
Floyd A. Brown 11/5/30
Staff announcer and program host for WGN Radio and
Television, Chicago, Illinois. Sole proprietor of The
Floyd Brown Co., Elgin, Illinois (advertising, media
production and mass media and marketing).
William G. Cole 3/7/17
Retired educator; writer.
Robert J. Greenebaum 7/30/17
Chairman of the Board. Retired. Engaged in investment
consulting and private investment activities. 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
Senior Vice President and General Counsel of
University Health System, Inc. and University
Hospitals of Cleveland. From 1976 to 1990,
Judge of the Court of Common Pleas, Cuyahoga
County, Ohio.
Larry J.B. Robinson 10/28/32
- -----------------------------
*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."
General Partner, Robinson Investment Company.
Management Consultant. Corporate Liaison 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
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
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
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
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
Professor of Finance and Business Planning,
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.
As of January 31, 1997, the Fund's directors and officers as a group
were deemed to beneficially own (i) _____________ shares of Selected
American, constituting approximately __________% of such Fund,
including ____________ shares with respect to which certain directors
disclaim beneficial ownership; (ii) _____________ shares of Selected
Special, constituting approximately __________% of such Fund, including
____________ shares with respect to which certain directors disclaim
beneficial ownership; and (iii) _____________ shares of Selected
Capital, 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 December 31, 1996, the compensation
paid to the non-interested directors was as follows:
Aggregate Fund Total
Name Complex Compensation Compensation
- --------------------------------------------------------------------------
William P. Barr
Floyd A. Brown
William G. Cole
Robert J. Greenebaum
Walter E. Hoadley*
James J. McMonagle
Richard C. O'Brien
Larry J.B. Robinson
Marsha Williams
Complex compensation is the aggregate compensation paid, for
services as a director, by all mutual funds with the same investment
adviser.
*Mr. Hoadley retired from the Board effective December 31, 1996.
During the last fiscal year, the Board of Directors held four
meetings. The Board of Directors has an Audit Committee, whose current
members are Dr. 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 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.
ITEM 3: AMENDMENT OF FUNDAMENTAL INVESTMENT POLICIES
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. As mutual funds need not 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 have been eliminated or revised, as
discussed in more detail below, pertaining to redundant constraints as to
permissible investments. None of the restrictions deleted or revised are
expected to have any material impact upon the continued operations of any
Fund.
The current fundamental investment restrictions are shown in
Exhibit B to these proxy materials. The proposed changes to the
fundamental investment restrictions are shown below. The proposed
non-fundamental investment restrictions are shown in Exhibit C.
Each Fund will vote separately with respect to the proposed changes
in Fundamental Policies. 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.
Selected Government Income:
Restrictions 1 (general investment restriction) and 11 (investing for
control) have been deleted because they are not mandated by the 1940 Act.
Restrictions 3 (borrowing), 4 (pledging of assets), 8 (real estate,
commodities, oil and gas investments), 9 (loans), 12 (purchase of other
investment companies), 13 (senior securities) and 14 (futures and
options) have been revised to eliminate redundancies and to remove or
liberalize restrictions that are not required by the 1940 Act. Restrictions
5 (purchases on margin), 6 (short sales), 10 (illiquid and restricted
securities) and 15 (illiquid securities) are being deleted as fundamental
restrictions but, as revised, will continue to be non-fundamental
investment restrictions which can be changed by the Board of Directors
without approval by the shareholders. In addition, the Fund's policy
(currently found in restriction 9) that it will not lend portfolio securities
amounting to more than 30% of its total assets will also become a
non-fundamental restriction. 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.
Selected Daily Government:
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. Restrictions 3
(borrowing), 4 (pledging of assets), 8 (real estate, commodities, oil and
gas investments), 9 (loans), 11 (investment companies), and 15 (senior
securities) have been revised to eliminate redundancies and to remove or
liberalize restrictions that are not required by the 1940 Act. Restrictions
5 (purchases on margin and short sales), 6 (options) and 12 (illiquid
securities) are being deleted as fundamental restrictions but, as revised,
will continue to be non-fundamental investment restrictions which can be
changed by the Board of Directors without approval by the shareholders.
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. Restrictions 1 (diversification), 3 (borrowing),
4 (pledging assets), 7 (investment companies), 10 (loans) and 13 (real
estate, commodities, oil and gas investments) have been revised to
eliminate redundancies and to remove or liberalize restrictions that are
not required by the 1940 Act. Restrictions 2 (short sales, margins and
options) and 9 (illiquid securities) are being deleted as fundamental
restrictions but, as revised, will continue to be non-fundamental
investment restrictions which can be changed by the Board of Directors
without approval by the shareholders. In addition, the Fund's policy
(currently found in restriction 10) that it will not lend portfolio
securities amounting to more than 10% of its total assets will also
become a non-fundamental restriction.
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. Restrictions 3 (real estate, commodities, oil and gas
investments), 5 (borrowing), 6 (pledging assets), 8 (investment
companies) and 11 (loans) have been revised to eliminate redundancies and
to remove or liberalize restrictions that are not required by the 1940 Act.
Restrictions 1 and 14 which both relate to diversification have been
combined. Restrictions 4 (short sales, margins and options) and 9 (illiquid
securities) are being deleted as fundamental restrictions but, as revised,
will continue to be non-fundamental investment restrictions which can be
changed by the Board of Directors without approval by the shareholders.
In addition, the Fund's policy (currently found in restriction 9) that it will
not lend portfolio securities amounting to more than 10% of its total
assets will also become a non-fundamental restriction.
Following are the restated fundamental investment restrictions for each
of the Funds.
Restated Fundamental Investment Restrictions for Selected Government
Income:
1. Diversification of Fund Investments.
(a) Fund Assets. The Fund may not 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 issued by the U.S. Government or its
agencies or instrumentalities and repurchase agreements involving such
securities ("U.S. Government Securities"), are not subject to this
limitation.
(b) Securities of Issuers. The Fund may not purchase the securities of any
company if after such purchase the Fund would then own more than 10% of
such company's voting securities. U.S. Government Securities are not
subject to this limitation.
2. Industries. The Fund may not 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. Senior Securities; Borrowing. The Fund may not issue senior
securities except as permitted under the Investment Company Act of
1940. The Fund may not pledge or hypothecate any of its assets, except in
connection with permitted borrowing in amounts not exceeding 33 1/3% of
the value of the Fund's total assets at the time of borrowing. Transfers of
assets in connection with currency transactions are not subject to these
limitations if appropriately covered.
4. Underwriting. The Fund may not 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.
5. Real Estate and Commodities. The Fund may not purchase real estate
or real estate mortgages as such, but may purchase the securities backed
by real estate or interests therein (including mortgage interests) and
securities of companies, including real estate investment trusts, holding
real estate or interests (including mortgage interests) therein. The Fund
may not purchase or sell commodities or commodity contracts except
contracts in respect to financial futures or currencies.
6. Lending Money or Securities. The Fund may not lend money, except
that it may buy debt securities publicly distributed or traded or privately
placed and may enter into repurchase agreements. The Fund may lend its
portfolio securities subject to having 100% collateral in cash or U.S.
Government Securities.
7. Investment Companies. The Fund may not purchase securities of
open-end or closed-end investment companies except in compliance with
the Investment Company Act of 1940.
Restated Fundamental Investment Restrictions for Selected Daily
Government:
1. Diversification of Fund Investments.
(a) Fund Assets. The Fund may not 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 issued by the U.S. Government or its
agencies or instrumentalities and repurchase agreements involving such
securities ("U.S. Government Securities"), are not subject to this
limitation.
(b) Securities of Issuers. The Fund may not purchase the securities of any
company if after such purchase the Fund would then own more than 10% of
such company's voting securities. U.S. Government Securities are not
subject to this limitation.
2. Industries. The Fund may not 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. Senior Securities; Borrowing. The Fund may not issue senior
securities except as permitted under the Investment Company Act of
1940. The Fund may not pledge or hypothecate any of its assets, except in
connection with permitted borrowing in amounts not exceeding 33 1/3% of
the value of the Fund's total assets at the time of borrowing. Transfers of
assets in connection with currency transactions are not subject to these
limitations if appropriately covered.
4. Underwriting. The Fund may not underwrite any securities issued by
others (except that it may technically be considered an underwriter if it
sells restricted securities);
5. Real Estate and Commodities. The Fund may not purchase real estate
or real estate mortgages as such, but may purchase the securities backed
by real estate or interests therein (including mortgage interests) and
securities of companies, including real estate investment trusts, holding
real estate or interests (including mortgage interests) therein. The Fund
may not purchase or sell commodities or commodity contracts except
contracts in respect to financial futures or currencies.
6. Lending Money or Securities. The Fund may not lend money, except
that it may buy debt securities publicly distributed or traded or privately
placed and may enter into repurchase agreements. The Fund may lend its
portfolio securities subject to having 100% collateral in cash or U.S.
Government Securities.
7. Investment Companies. The Fund may not purchase securities of
open-end or closed-end investment companies except in compliance with
the Investment Company Act of 1940.
Restated Fundamental Investment Restrictions for Selected American
Shares:
1. Diversification of Fund Investments.
(a) Fund Assets. The Fund may not 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 issued by the U.S. Government or its
agencies or instrumentalities and repurchase agreements involving such
securities ("U.S. Government Securities"), are not subject to this
limitation.
(b) Securities of Issuers. The Fund may not purchase the securities of any
company if after such purchase the Fund would then own more than 10% of
such company's voting securities. U.S. Government Securities are not
subject to this limitation.
2. Senior Securities; Borrowing. The Fund may not issue senior
securities except as permitted under the Investment Company Act of
1940. The Fund may not pledge or hypothecate any of its assets, except in
connection with permitted borrowing in amounts not exceeding 33 1/3% of
the value of the Fund's total assets at the time of borrowing. Transfers of
assets in connection with currency transactions are not subject to these
limitations if appropriately covered.
3. Investment Companies. The Fund may not purchase securities of
open-end or closed-end investment companies except in compliance with
the Investment Company Act of 1940.
4. Underwriting. Underwrite securities of other issuers (although the
Fund may technically be considered an underwriter if it sells restricted
securities).
5. Lending Money or Securities. The Fund may not lend money, except
that it may buy debt securities publicly distributed or traded or privately
placed and may enter into repurchase agreements. The Fund may lend its
portfolio securities subject to having 100% collateral in cash or U.S.
Government Securities.
6. Industries. The Fund may not invest 25% or more of its total assets
in any one industry, except that this restriction shall not apply to U.S.
Government Securities.
7. Real Estate and Commodities. The Fund may not purchase real estate
or real estate mortgages as such, but may purchase the securities backed
by real estate or interests therein (including mortgage interests) and
securities of companies, including real estate investment trusts, holding
real estate or interests (including mortgage interests) therein. The Fund
may not purchase or sell commodities or commodity contracts except
contracts in respect to financial futures or currencies.
Restated Fundamental Investment Restrictions for Selected Special
Shares:
1. Diversification of Fund Investments.
(a) Fund Assets. The Fund may not 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 issued by the U.S. Government or its
agencies or instrumentalities and repurchase agreements involving such
securities ("U.S. Government Securities"), are not subject to this
limitation.
(b) Securities of Issuers. The Fund may not purchase the securities of any
company if after such purchase the Fund would then own more than 10% of
such company's voting securities. U.S. Government Securities are not
subject to this limitation.
2. Real Estate and Commodities. The Fund may not purchase real estate
or real estate mortgages as such, but may purchase the securities backed
by real estate or interests therein (including mortgage interests) and
securities of companies, including real estate investment trusts, holding
real estate or interests (including mortgage interests) therein. The Fund
may not purchase or sell commodities or commodity contracts except
contracts in respect to financial futures or currencies.
3. Senior Securities; Borrowing. The Fund may not issue senior
securities except as permitted under the Investment Company Act of
1940. The Fund may not pledge or hypothecate any of its assets, except in
connection with permitted borrowing in amounts not exceeding 33 1/3% of
the value of the Fund's total assets at the time of borrowing. Transfers of
assets in connection with currency transactions are not subject to these
limitations if appropriately covered.
4. Underwriting. Underwrite securities of other issuers (although the
Fund may technically be considered an underwriter if it sells restricted
securities).
5. Investment Companies. The Fund may not purchase securities of
open-end or closed-end investment companies except in compliance with
the Investment Company Act of 1940.
6. Lending Money or Securities. The Fund may not lend money, except
that it may buy debt securities publicly distributed or traded or privately
placed and may enter into repurchase agreements. The Fund may lend its
portfolio securities subject to having 100% collateral in cash or U.S.
Government Securities.
7. Industries. The Fund may not invest 25% or more of its total assets
in any one industry, except that this restriction shall not apply to U.S.
Government Securities.
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 selected by the Board,
including a majority of the Non-interested 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 or rejection 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' post-effective 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, ____________ held ___________ shares of
Selected American, constituting _____% of such Fund's total outstanding
shares.
Selected Special:
As of the Record Date, ____________ held ___________ shares of
Selected Special, constituting _____% of such Fund's total outstanding
shares.
Selected Capital:
As of the Record Date, ____________ held ___________ shares of
Selected Capital, constituting _____% 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.
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 for the fiscal year ended December 31, 1996 by calling toll free
1-800-243-1575 or writing to the Funds at the address noted above.
Exhibit A
Re: Sub-Advisory Agreement for Selected Special 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
sub-adviser for the portfolio of Selected Special Shares, 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:__________________________
Exhibit B
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
Selected Government Income 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 Daily Government may not:
16. 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;
17. invest 25% or more of its total assets in any one industry, except that
this restriction shall not apply to U.S. Government Securities;
18. 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;
19. 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;
20. sell securities short or purchase any securities on margin, except for
such short-term credits as are necessary for clearance or portfolio
transactions;
21. write, purchase or sell put or call options;
22. underwrite any securities issued by others (except that it may
technically be considered an underwriter if it sells restricted securities);
23. purchase or sell real estate, real estate mortgage loans, commodities,
commodity contracts (including futures contracts) or oil and gas
interests;
24. 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;
25. invest in companies for the purpose of exercising control or
management of another company;
26. invest in securities of other investment companies, except as they may
be acquired as part of a merger, consolidation or acquisition of assets;
27. 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;
28. 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;
29. purchase from, or sell to, any of its officers or Trustees or the
officers or Directors of its manager, its portfolio securities; or
30. issue any class of securities senior to any other class of securities.
Selected American 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 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.
Exhibit C
Non-Fundamental Investment Restrictions
Non-Fundamental Investment Restrictions for Selected Government
Income:
1. Margin. The Fund may not purchase securities on margin, except (i)
for use of short-term credit necessary for clearance of purchases of
portfolio securities and (ii) it may make margin deposits in connection
with permissible investments.
2. Short Sales. The Fund may not effect short sales of securities.
3. Lending Portfolio Securities. The Fund may not loan its securities if
upon the making of that loan more than 30% of the Fund's total assets
would be the subject of such loans.
4. Illiquid and Restricted Securities.
(a) The Fund may not purchase illiquid securities (including restricted
securities which are illiquid and repurchase agreements maturing in more
than seven days) if, as a result, more than 10% of its net assets would be
invested in such securities.
(b) The Fund may not purchase a restricted security if it would cause more
than 5% of total assets to be invested in such securities. For this purpose
all securities eligible for resale under Rule 144A under the Securities Act
of 1933 are not included in this 5% limitation (but are subject to the
overall 15% limitation if they are illiquid as determined by the
Sub-Adviser under criteria established by the Board of Directors).
Non-Fundamental Investment Restrictions for Selected Daily Government:
1. Margin. The Fund may not purchase securities on margin, except (i)
for use of short-term credit necessary for clearance of purchases of
portfolio securities and (ii) it may make margin deposits in connection
with permissible investments.
2. Short Sales. The Fund may not effect short sales of securities.
3. Illiquid and Restricted Securities.
(a) The Fund may not purchase illiquid securities (including restricted
securities which are illiquid and repurchase agreements maturing in more
than seven days) if, as a result, more than 10% of its net assets would be
invested in such securities.
(b) The Fund may not purchase a restricted security if it would cause more
than 10% of total assets to be invested in such securities. For this
purpose all securities eligible for resale under Rule 144A under the
Securities Act of 1933 are not included in this 10% limitation (but are
subject to the overall 10% limitation if they are illiquid as determined by
the Sub-Adviser under criteria established by the Board of Directors).
Non-Fundamental Investment Restrictions for Selected American Shares:
1. Margin. The Fund may not purchase securities on margin, except (i)
for use of short-term credit necessary for clearance of purchases of
portfolio securities and (ii) it may make margin deposits in connection
with permissible investments.
2. Short Sales. The Fund may not effect short sales of securities.
3. Lending Portfolio Securities. The Fund may not loan its securities if
upon the making of that loan more than 10% of the Fund's total assets
would be the subject of such loans.
4. Illiquid and Restricted Securities.
(a) The Fund may not purchase illiquid securities (including restricted
securities which are illiquid and repurchase agreements maturing in more
than seven days) if, as a result, more than 10% of its net assets would be
invested in such securities.
(b) The Fund may not purchase a restricted security if it would cause more
than 10% of total assets to be invested in such securities. For this
purpose all securities eligible for resale under Rule 144A under the
Securities Act of 1933 are not included in this 10% limitation (but are
subject to the overall 10% limitation if they are illiquid as determined by
the Sub-Adviser under criteria established by the Board of Directors).
Non-Fundamental Investment Restrictions for Selected Special Shares:
1. Margin. The Fund may not purchase securities on margin, except (i)
for use of short-term credit necessary for clearance of purchases of
portfolio securities and (ii) it may make margin deposits in connection
with permissible investments.
2. Short Sales. The Fund may not effect short sales of securities.
3. Lending Portfolio Securities. The Fund may not loan its securities if
upon the making of that loan more than 10% of the Fund's total assets
would be the subject of such loans.
4. Illiquid and Restricted Securities.
(a) The Fund may not purchase illiquid securities (including restricted
securities which are illiquid and repurchase agreements maturing in more
than seven days) if, as a result, more than 10% of its net assets would be
invested in such securities.
(b) The Fund may not purchase a restricted security if it would cause more
than 10% of total assets to be invested in such securities. For this
purpose all securities eligible for resale under Rule 144A under the
Securities Act of 1933 are not included in this 10% limitation (but are
subject to the overall 10% limitation if they are illiquid as determined by
the Sub-Adviser under criteria established by the Board of Directors).
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.
