DAVIS SERIES, INC.
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
==============================================================================
Dear Shareholder:
Investors have seen more volatility in the stock and bond markets in the
first half of 1996 compared with the first half of 1995. However, in the
midst of this volatility, we have steadfastly maintained our long-term
investment approach.
Market Volatility Predominated in the First Half
The greater market volatility during the first half of 1996 helps put the
market in perspective. Those who maintained a positive outlook on the
market saw signs that the economy was strong and that corporate
profitability may be safe for the time being. This provided support for
stock prices: despite market fluctuations, the Dow Jones Industrial
Average was hovering near record highs well into the second quarter.
Those who were negative about the market saw in the period's low
unemployment figures and rising commodity prices that the economy may
be too strong and that inflation might heat up.
This widening divergence of opinion over the direction of the economy and
its meaning for the market created the additional volatility we
experienced during the first half of 1996.
Davis Convertible Securities and Davis Real Estate Funds
Given the market conditions, our convertible and real estate funds
performed well, because both funds are designed to perform steadily in
volatile markets.
The Davis Convertible Securities Fund invests primarily in bonds
convertible into common stocks, and is designed to capture at least 80%
of the upside potential in the underlying common stocks while limiting
risk to 50% of any downside moves.
The fund was our strongest first-half performer. Its A shares returned
8.10%* -- well above its target of achieving 80% of the S&P 500's 9.24%
total return for the period -- with about half of the stock index's
volatility. Its essentially defensive nature was bolstered by its heavy
emphasis on convertible real estate securities: by the end of June, nearly
a third of its investments were in that asset class, which we believe is
inherently less volatile than common stocks.
The Davis Real Estate Fund avoids direct exposure to either the stock or
bond markets by investing in the huge, growing asset class of real estate.
The fund's performance is driven by investing in real estate stocks and
real estate investment trusts (REITs) that develop land and earn rents by
being in the landlord business, not the land appraisal or speculation
business.
The fund turned in a strong first half, with its A shares returning 7.23%*,
above the average achieved by real estate mutual funds. The fund is
currently emphasizing three promising themes: offices, industrial
properties, and emerging regional rental properties, especially in
California.
We have invested more than 90% of the Davis Real Estate fund in REITs
because their cash flows and profits are experiencing fast growth, and
they are diverting a healthy portion of their excess cash flows to finance
their external expansion plans. As long-term investors we feel this is a
major positive.
The Davis Financial Fund
During the first half of 1996, the Davis Financial Fund's A shares returned
6.14%*, outperforming nearly two-thirds of all financial sector mutual
funds for the first half of 1996.
We are excited about the long-term prospects of financial stock investing.
We feel financial stocks have replaced consumer stocks as the secular
investment of the 1990s, given the growing numbers of "baby boomers"
needing to save for retirement. We are emphasizing investments in major
diversified financial services firms with strong distribution capabilities
that are rapidly developing powerful brand franchises.
The Davis Financial Fund's biggest gainers included United Asset
Management, J.P. Morgan, the international money center bank based in
New York, and national discount broker Charles Schwab, each of which
gained more than 20% over the first six months of the year.
Although the Davis Financial Fund currently commits over 80% of its
investments to financial stocks, it also invests in other attractive growth
sectors. During the first six months of 1996, the fund's best single
performer was Intel, among the strongest of the technology stocks, which
appreciated nearly 30% through June 30.
While keeping about the same percentage of its assets in non-financial
stocks, the fund took profits by selling off positions in household products
maker Duracraft, BankAmerica Corp., and Electronic Arts. Among the new
positions it opened were those in Dean Witter Discover and Co., Novellus
Systems, software maker Adobe Systems, Guinness, the British beverage
company, and Cincinnati Financial Corp.
The Davis Growth Opportunity Fund
The Davis Growth Opportunity Fund was affected by the erratic
performance of small company stocks during the volatile market
conditions in the first half of 1996. The fund's A shares returned 5.39%*
during this period, after a banner year in 1995 in which the fund's A
shares returned 46.65%*.
During the first half of this year, the fund's biggest winners were
investments in consumer products maker Philip Morris, Thomas Group, a
business services company, Johnson & Johnson, pharmaceutical
manufacturer Pfizer, insurer AFLAC, and retailer Garden Ridge, as well as
in such high-technology companies as Intel, ASM Lithography, Adaptec and
NAI Technologies. One of the fund's biggest losses occurred in ValueJet
stock.
The fund is well-positioned to take advantage of attractive buying
opportunities in small company stocks, which represent a chance to
capitalize on the exciting new technologies and products that will drive
the future. Over the last three years, The Davis Growth Opportunity Fund
has been pursuing a strategy of "keeping the portfolio fresh" by
aggressively selling underperformers and more quickly cashing in on
gainers. The fund continues to seek undervalued growth companies selling
at half their projected growth rate, and is looking for such investments
among high-technology, financial, pharmaceutical, small- and mid-cap
energy and restaurant companies.
The Davis Government Bond Fund
During the first half of 1996, the Davis Government Bond Fund followed a
strategy that enabled it to outperform in a tough bond environment. The
fund prudently concentrated its investments in U.S. agency-backed
mortgage securities, including some older, higher-coupon issues less
prone to refinancings and less sensitive to changes in interest rates.
As a result, the Davis Government Bond Fund's A shares outperformed the
Lehman Brothers Aggregate Bond Index -- a widely accepted indicator of
broad bond market performance -- by nearly a third of a point, at minus
0.93% versus the index's minus 1.22%.
Our Market Outlook
Although we are long-term investors and do not react to short-term
market conditions, we do have an opinion on the overall market. We
believe that the economy is fundamentally sound, as interest rates are
currently stable, unemployment is relatively low, and earnings are in line
with expectations. Yet as seasoned, experienced investors, we know a
correction of 10-20% could occur at any time in any kind of market
environment, and we would view this as a buying opportunity.
Our Convertible Securities, Real Estate and Government Bond Funds are
currently positioned to perform well in volatile, uncertain market
conditions. We believe our Financial Fund will continue to perform well as
the needs of the aging Baby Boomers increase to save and invest both for
their retirement and their children's educations. And we believe that the
recent stock market pullback -- particularly among growth and small-
and mid-cap stocks -- has created a favorable environment over the next
one to two years for the kind of stock-picking our Growth Opportunity
Fund has specialized in for the last 12 years.
We appreciate your support, and look forward with confidence to
working together through the months and years ahead to build our
financial future.
Sincerely,
/s/ Shelby M.C. Davis
Shelby M.C. Davis
President
- ------------
* All performance figures cited in this letter exclude the effect of
payment of sales commissions. On A shares, the current maximum sales
commission is 4.75%, payable upon purchase. On B shares, the current
contingent deferred sales charge, payable when shares are redeemed, is
4% during the first year following purchase, 3% during the second or third
year, 2% during the fourth or fifth, 1% during the sixth, and 0% thereafter.
The average annual total return, including the effects of the maximum
front end sales charge of 4.75% for Class A shares and any applicable
contingent deferred sales charges for Class B shares, for the Davis Series
are as follows:
Class A Class B
------- -------
Davis Growth Opportunity Fund:
1 year ended 6/30/96 6.94% 8.50%
5 years ended 6/30/96 N/A 11.48%
10 years ended 6/30/96 N/A 12.24%
12/1/94-6/30/96 (Life of A shares) 25.45% N/A
Davis Government Bond Fund:
1 year ended 6/30/96 (1.70)% (0.42)%
5 years ended 6/30/96 N/A 4.77%
10 years ended 6/30/96 N/A 5.57%
12/1/94-6/30/96 (Life of A shares) 3.55% N/A
Davis Financial Fund:
1 year ended 6/30/96 22.15% 23.96%
5 years ended 6/30/96 21.52% N/A
5/1/91- 6/30/96 (Life of A shares) 21.44% N/A
12/27/94-6/30/96 (Life of B shares) N/A 32.57%
Davis Convertible Securities Fund:
1 year ended 6/30/96 12.97% 14.13%
5/1/92- 6/30/96 (Life of A shares) 12.14% N/A
2/3/95-6/30/96 (Life of B shares) N/A 19.55%
Davis Real Estate Fund:
1 year ended 6/30/96 16.09% 17.87%
1/3/94- 6/30/96 (Life of A shares) 11.14% N/A
12/27/94-6/30/96 (Life of B shares) N/A 14.56%
<TABLE>
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS GROWTH OPPORTUNITY FUND
<CAPTION>
VALUE
SHARES (NOTE 1)
================================================================================================================================
COMMON STOCK - (90.99%)
BUSINESS SERVICES - (3.29%)
<S> <C> <C>
113,000 Thomas Group, Inc.<F1>.......................................................................... $ 2,069,313
-------------
CAPITAL EQUIPMENT - (7.43%)
57,800 ASM Lithography Holdings N.V.<F1>............................................................... 2,362,575
38,000 Micro Component Technology Inc.<F1>............................................................. 135,375
60,100 Novellus Systems, Inc.<F1>...................................................................... 2,178,625
-------------
4,676,575
-------------
COMPUTER PRODUCTS - (0.12%)
20,000 NAI Technologies, Inc.<F1>...................................................................... 68,750
-------------
CONSUMER PRODUCTS - (6.39%)
28,300 Philip Morris Cos., Inc......................................................................... 2,943,200
230,000 Score Board, Inc.<F1>........................................................................... 1,078,125
-------------
4,021,325
-------------
ELECTRONICS - (17.09%)
83,400 Adaptec, Inc.<F1>............................................................................... 3,945,862
86,200 Intel Corp...................................................................................... 6,330,312
9,600 Texas Instruments, Inc.......................................................................... 478,800
-------------
10,754,974
-------------
ENERGY - (7.04%)
22,700 Anadarko Petroleum Corp......................................................................... 1,316,600
113,800 Seitel, Inc.<F1>................................................................................ 3,115,275
-------------
4,431,875
-------------
FINANCIAL SERVICES - (10.51%)
132,000 Arbatax International, Inc.<F1>................................................................. 668,250
2,000 Associates First Capital Corp., ClassA<F1>...................................................... 75,250
55,200 Federal National Mortgage Association........................................................... 1,849,200
57,625 IMC Mortgage Co.<F1>............................................................................ 1,310,969
94,550 Rac Financial Group, Inc.<F1>................................................................... 2,706,494
-------------
6,610,163
-------------
INSURANCE - (7.02%)
147,675 AFLAC Inc....................................................................................... 4,411,791
-------------
PHARMACEUTICALS _ (10.25%)
2,000 Johnson & Johnson............................................................................... 99,000
57,500 Pfizer, Inc..................................................................................... 4,104,062
415,000 Viragen Inc.<F1>................................................................................ 2,243,594
-------------
6,446,656
-------------
PULP AND PAPER - (5.61%)
264,000 Mercer International Inc........................................................................ 3,531,000
-------------
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS GROWTH OPPORTUNITY FUND - Continued
VALUE
SHARES/PRINCIPAL (NOTE 1)
================================================================================================================================
COMMON STOCK - Continued
RESTAURANT - (6.06%)
99,000 DAKA International, Inc.<F1>.................................................................... $ 2,314,125
56,000 IHOP Corp.<F1>.................................................................................. 1,501,500
-------------
3,815,625
-------------
RETAIL - (9.40%)
10,000 Garden Botanika Inc.<F1>........................................................................ 217,500
72,000 Garden Ridge Corp............................................................................... 3,640,500
133,600 REX Stores Corp.<F1>............................................................................ 2,054,100
-------------
5,912,100
-------------
TELECOMMUNICATIONS _ (0.78%)
70,000 TII Industries, Inc.<F1>........................................................................ 490,000
-------------
Total Common Stock - (identified cost$31,231,737).............................................................. 57,240,147
-------------
CONVERTIBLE BONDS - (1.65%)
$ 356,000 Iomega Corp. Conv., Sub. Notes, 6.75%, 03/15/01 (identified cost $356,000)...................... 1,038,701
-------------
SHORT TERM - (7.25%)
4,565,000 Federal Farm Credit Bank Discount Notes, 5.25%, 07/01/96
(identified cost $4,563,669).................................................................. 4,563,669
-------------
TOTAL INVESTMENTS - (99.89%) - (identified cost $36,151,406) - <F2>.................................. 62,842,517
OTHER ASSETS LESS LIABILITIES - (0.11%).............................................................. 71,984
-------------
NET ASSETS (100%).............................................................................. $ 62,914,501
=============
<FN>
<F1> Non-Income Producing Security.
<F2> Aggregate cost for Federal Income Tax purposes is $36,151,406. At June 30, 1996 unrealized appreciation (depreciation)
of securities for Federal Income Tax purposes is as follows:
Unrealized appreciation.............................................................................. $ 28,074,287
Unrealized depreciation.............................................................................. (1,383,842)
-------------
Net unrealized appreciation..................................................................... $ 26,691,111
=============
</FN>
</TABLE>
See Notes to Financial Statements.
<TABLE>
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS GOVERNMENT BOND FUND
<CAPTION>
VALUE
PRINCIPAL (NOTE 1)
================================================================================================================================
FEDERAL HOME LOAN MORTGAGE CORPORATION - MORTGAGE POOLS - (7.34%)
<S> <C> <C>
$ 67,622 10.00%, 12/01/00................................................................................ $ 69,145
51,352 9.00%, 07/01/01................................................................................ 52,010
520,585 8.50%, 08/01/01................................................................................ 527,255
115,905 9.00%, 08/01/02................................................................................ 118,491
49,288 8.50%, 12/01/02................................................................................ 49,197
43,825 9.00%, 06/01/03................................................................................ 44,195
127,941 9.25%, 01/01/04................................................................................ 131,659
8,042 9.25%, 11/01/07................................................................................ 8,162
139,414 9.25%, 09/01/08................................................................................ 146,102
117,521 10.00%, 07/01/09................................................................................ 126,629
60,619 9.00%, 07/01/16................................................................................ 63,556
302,539 9.00%, 08/01/16................................................................................ 317,382
297,486 9.00%, 01/01/17................................................................................ 311,151
229,154 9.00%, 03/01/17................................................................................ 238,894
86,837 9.00%, 08/01/17................................................................................ 91,044
49,845 9.50%, 12/01/19................................................................................ 53,257
147,753 9.50%, 02/01/20................................................................................ 157,404
-------------
Total FHLMC - (identified cost $2,525,622)................................................. 2,505,533
FEDERAL NATIONAL MORTGAGE ASSOCIATION - MORTGAGE POOLS - (3.10%)
47,073 12.00%, 12/01/00................................................................................ 48,921
127,219 9.75%, 02/01/04................................................................................ 130,720
201,948 10.25%, 10/01/09................................................................................ 219,013
67,322 10.75%, 07/01/13................................................................................ 74,423
388,110 9.25%, 10/01/16................................................................................ 412,980
123,536 8.059%, 09/01/19................................................................................ 127,576
44,383 7.730%, 03/01/24................................................................................ 45,901
-------------
Total FNMA - (identified cost $1,044,700).................................................. 1,059,534
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - MORTGAGE POOLS - (21.76%)
60,847 6.00% with various maturities to 2024.......................................................... 60,912
47,207 6.50% with various maturities to 2023.......................................................... 47,535
1,244,078 7.00% with various maturities to 2026.......................................................... 1,185,756
1,628,196 8.50% with various maturities to 2022.......................................................... 1,684,353
898,220 9.00% with various maturities to 2017.......................................................... 947,841
181,847 9.25% with various maturities to 2016.......................................................... 191,082
288,523 10.00% with various maturities to 2020.......................................................... 305,463
108,974 10.25% with various maturities to 2016.......................................................... 117,898
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS GOVERNMENT BOND FUND-Continued
VALUE
PRINCIPAL (NOTE 1)
================================================================================================================================
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - MORTGAGE POOLS -Continued
$ 391,488 10.50% with various maturities to 2016.......................................................... $ 429,621
913,950 11.00% with various maturities to 2020.......................................................... 1,017,916
396,873 11.25% with various maturities to 2011.......................................................... 431,600
593,225 11.50% with various maturities to 2015.......................................................... 669,314
64,275 12.25% with various maturities to 2013.......................................................... 72,411
118,017 13.00% with various maturities to 2014.......................................................... 136,609
82,852 14.25% with various maturities to 2014.......................................................... 94,840
34,950 14.75% with various maturities to 2001.......................................................... 36,207
-------------
Total GNMA - (identified cost $7,315,044).................................................. 7,429,358
-------------
MEDIUM TERM NOTES - (22.30%)
1,215,000 Federal Home Loan Mortgage Corporation, 6.615%,03/03/04......................................... 1,166,181
1,000,000 Federal Home Loan Mortgage Corporation, 7.225%,05/17/05......................................... 983,910
1,000,000 Federal National Mortgage Association, 6.850%,09/12/05.......................................... 965,190
1,000,000 Federal Home Loan Mortgage Corporation, 6.66%,12/05/05.......................................... 955,880
1,000,000 Federal Home Loan Mortgage Corporation, 6.63%,01/12/09.......................................... 930,380
1,000,000 Federal National Mortgage Association, 7.15%,11/03/10........................................... 950,210
800,000 Federal Home Loan Bank, 7.24%, 11/09/10......................................................... 759,600
900,000 Federal Home Loan Mortgage Corporation, 8.00%,06/20/11.......................................... 900,792
-------------
Total Medium Term Notes - (identified cost $7,877,947)..................................... 7,612,143
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS & REAL ESTATE MORTGAGE INVESTMENT CONDUITS - (43.14%)
500,000 Federal Home Loan Mortgage Corporation, FHG 32E, 7.50%,03/25/05................................. 495,955
66,496 Federal Home Loan Mortgage Corporation, 122 F, 8.75%,10/15/05................................... 67,599
1,000,000 Federal National Mortgage Association, 1995 D, 7.00%,10/25/07................................... 949,062
485,000 Federal National Mortgage Association, 1993-40K, 7.00%,04/25/08................................. 463,738
134,198 Federal Home Loan Mortgage Corporation, 1606 LC,6.984%, 05/15/08<F2>............................ 134,739
1,324,570 Federal Home Loan Mortgage Corporation, 1704 Z, 6.50%,02/15/09.................................. 1,121,500
1,027,378 Federal National Mortgage Association, 1996 EZ, 6.50%,03/25/09.................................. 898,635
1,000,000 Federal National Mortgage Association, 1994 VC, 7.00%,06/17/09.................................. 956,560
1,600,000 Federal National Mortgage Association, 1988-19J, 8.50%,07/25/18................................. 1,629,936
1,000,000 Federal National Mortgage Association, 1993 PL, 7.00%,07/25/2095................................ 6,890
64,288 Federal National Mortgage Association, 1991-115ZZ,8.50%, 10/25/20............................... 65,225
1,150,750 Federal Home Loan Mortgage Corporation, 1702 L, 7.00%,07/15/21.................................. 1,122,522
300,000 Federal National Mortgage Association, 1992 174, 7.25%,09/25/21................................. 289,521
1,000,000 Federal National Mortgage Association , 1995-25 A,7.00%, 10/25/21............................... 935,000
552,898 Federal Home Loan Mortgage Corporation, 1401 MA,5.991%, 10/15/22<F2>............................ 544,068
149,969 Federal Home Loan Mortgage Corporation, 1454 N, 7.00%,12/15/22.................................. 134,301
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS GOVERNMENT BOND FUND- Continued
VALUE
PRINCIPAL (NOTE 1)
================================================================================================================================
COLLATERALIZED MORTGAGE OBLIGATIONS & REAL ESTATE MORTGAGE
INVESTMENT CONDUITS - Continued
$ 393,471 Federal Home Loan Mortgage Corporation, 1487 H, 6.00%,03/15/23.................................. $ 374,832
1,000,000 Federal National Mortgage Association, 1993 TC, 7.00%,03/25/23.................................. 974,900
1,250,000 Federal National Mortgage Association, 1993 N, 7.00%,07/25/23................................... 1,197,975
1,500,000 Federal National Mortgage Association, 1994 N, 7.00%,04/25/24................................... 1,412,235
-------------
Total CMOs & REMICs - (identified cost $14,914,397)........................................ 14,725,193
-------------
SHORT TERM - (1.29%)
440,000 State Street Bank and Trust Company Repurchase Agreement, 5.05%,
07/01/96 dated 06/27/96, repurchased value of $440,247
(collateralized by $445,000 par value U.S. Treasury Notes, 5.875%,
08/15/98, market value $450,033) - (identified cost $ 440,000)................................ 440,000
-------------
TOTAL INVESTMENTS - (98.93%) - (identified cost $34,117,710) <F1>............................... 33,771,761
OTHER ASSETS LESS LIABILITIES - (1.07%)......................................................... 364,785
-------------
NET ASSETS - (100%)........................................................................ $ 34,136,546
=============
<FN>
<F1> Aggregate cost for Federal Income Tax purposes is $34,117,710. At June 30, 1996
unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation......................................................................... $ 524,814
Unrealized depreciation......................................................................... (870,763)
-------------
Net unrealized appreciation................................................................ $ (345,949)
=============
<F2> The interest rates on floating rate securities, shown as of June 30, 1996, may change monthly or less frequently and are
based on indices of market interest rates.
</FN>
</TABLE>
See Notes to Financial Statements.
<TABLE>
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS GOVERNMENT MONEY MARKET FUND
<CAPTION>
VALUE
PRINCIPAL (NOTE 1)
================================================================================================================================
FEDERAL FARM CREDIT BANK - (3.37%)
<S> <C> <C>
$ 5,995,000 5.22%, 07/09/96 Discount Note................................................................... $ 5,988,046
-------------
6,675,000 4.89%, 08/19/96 Discount Note................................................................... 6,630,572
Total Federal Farm Credit Bank - (identified cost $ 12,618,618)............................ 12,618,618
-------------
FEDERAL HOME LOAN BANK - (11.78%)
12,310,000 5.22%, 07/15/96 Discount Note................................................................... 12,285,011
5,330,000 5.24%, 07/29/96 Discount Note................................................................... 5,308,277
11,170,000 5.28%, 08/12/96 Discount Note................................................................... 11,101,193
4,325,000 5.29%, 08/14/96 Discount Note................................................................... 4,297,036
5,495,000 5.21%, 08/21/96 Discount Note................................................................... 5,454,442
5,685,000 5.32%, 09/18/96 Discount Note................................................................... 5,618,631
-------------
Total Federal Home Loan Bank - (identified cost $ 44,064,590).............................. 44,064,590
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION - (39.06%)
5,055,000 5.29%, 07/31/96 Discount Note................................................................... 5,032,716
15,435,000 5.25%, 08/05/96 Discount Note................................................................... 15,356,217
4,100,000 5.20%, 08/21/96 Discount Note................................................................... 4,069,797
5,035,000 5.24%, 09/03/96 Discount Note................................................................... 4,988,096
11,285,000 5.335%, 09/09/96 Discount Note.................................................................. 11,167,934
9,910,000 5.33%, 09/13/96 Discount Note................................................................... 9,801,425
3,105,000 5.34%, 09/16/96 Discount Note................................................................... 3,069,536
3,470,000 5.20%, 07/01/96 Discount Note................................................................... 3,470,000
9,815,000 5.26%, 07/03/96 Discount Note................................................................... 9,812,132
5,225,000 5.19%, 07/05/96 Discount Note................................................................... 5,221,987
1,095,000 5.24%, 07/08/96 Discount Note................................................................... 1,093,884
11,590,000 5.25%, 07/10/96 Discount Note................................................................... 11,574,788
14,075,000 5.21%, 07/11/96 Discount Note................................................................... 14,054,630
9,200,000 5.21%, 07/15/96 Discount Note................................................................... 9,181,360
21,905,000 5.25%, 07/18/96 Discount Note................................................................... 21,850,694
6,315,000 5.29%, 07/23/96 Discount Note................................................................... 6,294,585
6,170,000 5.27%, 07/24/96 Discount Note................................................................... 6,149,226
3,860,000 5.28%, 07/25/96 Discount Note................................................................... 3,846,413
-------------
Total Federal Home Loan Mortgage Corporation - (identified cost $146,035,420)............. 146,035,420
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - (44.36%)
44,000,000 5.21%, 06/30/96 Discount Note................................................................... 43,832,183
8,905,000 5.22%, 07/12/96 Discount Note................................................................... 8,890,797
1,780,000 5.23%, 07/16/96 Discount Note................................................................... 1,776,121
11,470,000 5.27%, 07/19/96 Discount Note................................................................... 11,439,777
840,000 5.20%, 07/29/96 Discount Note................................................................... 836,603
24,670,000 5.21%, 07/29/96 Discount Note................................................................... 24,570,032
810,000 5.24%, 08/06/96 Discount Note................................................................... 805,755
22,290,000 5.20%, 08/16/96 Discount Note................................................................... 22,141,895
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS GOVERNMENT MONEY MARKET FUND-Continued
VALUE
PRINCIPAL (NOTE 1)
================================================================================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION - continued
$ 4,570,000 5.30%, 08/20/96 Discount Note................................................................... $ 4,536,360
3,265,000 5.21%, 08/22/96 Discount Note................................................................... 3,240,429
14,540,000 5.14%, 08/29/96 Discount Note................................................................... 14,417,516
18,005,000 5.33%, 09/10/96 Discount Note................................................................... 17,815,732
11,680,000 5.345%, 09/12/96 Discount Note.................................................................. 11,553,407
-------------
Total Federal National Mortgage Association - (identified cost $165,856,607)............... 165,856,607
-------------
TENNESSEE VALLEY AUTHORITY - (1.41%)
1,365,000 5.26%, 07/22/96 Discount Note................................................................... 1,360,812
3,925,000 4.87%, 07/26/96 Discount Note................................................................... 3,911,726
-------------
Total Tennessee Valley Authority - (identified cost $ 5,272,538)........................... 5,272,538
-------------
TOTAL INVESTMENTS - (99.98%) - (identified cost $ 373,847,773 -<F1>............................. 373,847,773
OTHER ASSETS LESS LIABILITIES - (0.02%)......................................................... 74,397
-------------
NET ASSETS - (100%)................................................................... $ 373,922,170
=============
<FN>
<F1> Aggregate cost for Federal income tax purposes is $ 373,847,773.
</FN>
</TABLE>
See Notes to Financial Statements.
<TABLE>
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS FINANCIAL FUND
<CAPTION>
VALUE
PRINCIPAL (NOTE 1)
================================================================================================================================
COMMON STOCK - (98.63%)
AUTOMOBILES - (2.33%)
<S> <C> <C>
40,000 General Motors Corp............................................................................. $ 2,095,000
-------------
BANKS AND SAVINGS & LOAN ASSOCIATIONS - (21.14%)
208,942 Bank of East Asia Ltd........................................................................... 763,882
20,000 Bank of New York Co., Inc....................................................................... 1,025,000
23,400 Barnett Banks, Inc.............................................................................. 1,427,400
40,000 First Bank System, Inc.......................................................................... 2,320,000
24,000 Golden West Financial Corp...................................................................... 1,344,000
25,000 Greenpoint Financial Corp....................................................................... 706,250
302,630 Lloyds TSB Group PLC............................................................................ 1,480,485
29,000 Norwest Corp.................................................................................... 1,011,375
28,000 Republic New York Corp.......................................................................... 1,743,000
50,000 State Street Boston Corp........................................................................ 2,550,000
50,000 TCF Financial Corp.............................................................................. 1,662,500
12,333 Wells Fargo & Co................................................................................ 2,946,045
-------------
18,979,937
-------------
BEVERAGES - (1.85%)
228,000 Guinness PLC ORD................................................................................ 1,657,152
-------------
CONSUMER PRODUCTS - (1.87%)
50,000 Seagram Co. Ltd. (The).......................................................................... 1,681,250
-------------
ENERGY - (4.52%)
30,000 Amerada Hess Corp............................................................................... 1,608,750
57,000 Burlington Resources, Inc....................................................................... 2,451,000
-------------
4,059,750
-------------
FINANCIAL SERVICES - (59.36%)
2,206 Alleghany Corp.<F1>............................................................................. 423,552
74,000 American Express Co............................................................................. 3,302,250
15,375 American International Group, Inc............................................................... 1,516,359
47,000 Aon Corporation................................................................................. 2,385,250
30,000 Argonaut Group, Inc............................................................................. 926,250
47,000 Berkley (W.R.) Corp............................................................................. 1,979,875
20,000 Chubb Corp...................................................................................... 997,500
8,000 Cincinnati Financial Corp.<F1>.................................................................. 460,500
20,000 Dean Witter, Discover & Co...................................................................... 1,145,000
10,200 Donaldson, Lufkin Jenrette Inc.................................................................. 316,200
90,000 Equitable Cos. Inc.............................................................................. 2,238,750
30,000 Equitable of Iowa Cos........................................................................... 1,065,000
20,000 Executive Risk, Inc............................................................................. 765,000
74,400 Jefferies Group, Inc............................................................................ 2,306,400
80,000 Leucadia National Corp.......................................................................... 1,960,000
30,000 Mercury General Corp............................................................................ 1,323,750
18,000 Morgan (J.P.) & Co., Inc....................................................................... 1,523,250
63,000 Morgan Stanley Group Inc........................................................................ 3,094,875
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS FINANCIAL FUND-Continued
VALUE
PRINCIPAL (NOTE 1)
================================================================================================================================
COMMON STOCK - Continued
FINANCIAL SERVICES - Continued
38,000 NAC RE Corp..................................................................................... $ 1,273,000
80,000 National Re Corp................................................................................ 3,020,000
36,000 Orion Capital Corp.............................................................................. 1,836,000
45,000 Progressive Corp. (Ohio)........................................................................ 2,081,250
100,000 Risk Capital Holdings, Inc.<F1>................................................................. 1,943,750
13,333 Robert Plan Corp., Series A<F1>................................................................. 1,799,956
50,000 Schwab (Charles) Corp........................................................................... 1,225,000
21,000 State Auto Financial Corp....................................................................... 517,125
45,500 SunAmerica, Inc................................................................................. 2,570,750
33,000 Transatlantic Holdings, Inc..................................................................... 2,314,125
81,000 Travelers Group Inc............................................................................. 3,695,686
4,500 Trenwick Group Inc.............................................................................. 226,125
69,000 20th Century Industries<F1>..................................................................... 1,147,125
30,000 United Asset Management Corporation............................................................. 735,000
35,000 Vesta Insurance Group, Inc...................................................................... 1,168,125
-------------
53,282,778
-------------
RESTAURANT & FOOD - (2.61%)
50,000 McDonald's Corp................................................................................. 2,337,500
-------------
TECHNOLOGY - (4.95%)
30,000 Adobe Systems, Inc.............................................................................. 1,070,625
36,000 Intel Corp...................................................................................... 2,643,750
20,000 Novellus Systems, Inc.<F1>...................................................................... 725,000
-------------
4,439,375
-------------
Total Common Stock - (identified cost $63,288,491)........................................ 88,532,742
-------------
SHORT TERM - (0.91%)
$ 820,000 State Street Bank and Trust Company Repurchase Agreement, 5.10%,
07/02/96 dated 06/28/96, repurchased value of $820,465 (collateralized
by $805,000 par value U.S. Treasury Notes, 7.50%, 01/31/97, market
value $837,890) - (identified cost $ 820,000)................................................. 820,000
-------------
TOTAL INVESTMENTS - (99.54%) _ (identified cost $64,108,491) - <F2>............................. 89,352,742
OTHER ASSETS LESS LIABILITIES - (0.46%)......................................................... 411,339
-------------
NET ASSETS - (100%)........................................................................ $ 89,764,081
=============
<FN>
<F1> Non-Income Producing Security.
<F2> Aggregate cost for Federal Income Tax purposes is $64,108,491. At June 30, 1996
unrealized appreciation (depreciation) of securities for Federal Income Tax purposes is as follows:
Unrealized appreciation..................................................................... $ 26,177,955
Unrealized depreciation..................................................................... (933,704)
-------------
Net unrealized appreciation............................................................... $ 25,244,251
-------------
</FN>
</TABLE>
See Notes to Financial Statements.
<TABLE>
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS CONVERTIBLE SECURITIES FUND
<CAPTION>
VALUE
SHARES (NOTE 1)
================================================================================================================================
CONVERTIBLE PREFERRED STOCK - (41.31%)
BANKS AND SAVINGS & LOAN ASSOCIATIONS - ( 14.65%)
<S> <C> <C>
17,300 Banc One Corp., $3.50, Ser. C Conv.Pfd......................................................... $ 1,146,125
11,320 Barnett Banks Inc., $4.50, Ser. A Conv. Pfd.................................................... 690,520
38,800 First Bank System, Inc., $3.5625, Ser. '91-A Conv. Pfd......................................... 3,928,500
47,500 Morgan Stanley Group Inc. - Citicorp, Conv. Pfd................................................ 3,722,813
------------
9,487,958
------------
COMPUTER PRODUCTS - (1.67%)
10,400 Salomon Inc. - Hewlett-Packard Company, ELK, 5.25%, 01/01/97 Pfd............................... 1,081,600
------------
ENERGY - (1.74%)
20,000 Unocal Corp., $3.50, Conv. Pfd................................................................. 1,130,000
------------
INDUSTRIAL - (0.72%)
20,000 Security Capital Industrial Trust, 7.00%, Ser. B Cum. Conv. Pfd............................... 462,500
------------
INSURANCE - (7.45%)
5,200 Aon Corporation, 6.25% Ser. B Conv. Exch.Pfd................................................... 331,500
26,800 SunAmerica Inc., Depository Shares, $2.78, Ser. D Conv. Pfd.................................... 2,003,300
27,100 Travelers Group Inc., 5.50%, Ser. B Conv. Pfd.................................................. 2,493,200
------------
4,828,000
------------
MULTI-FAMILY HOUSING - (4.18%)
20,000 Merry Land & Investment Co., Inc., $1.75, Ser. A Conv. Pfd..................................... 562,500
58,300 Oasis Residential, Inc., $2.25, Ser. A Cum. Conv. Pfd.......................................... 1,486,650
25,000 Security Capital Pacific Trust Ser. A Conv. Pfd................................................ 656,250
------------
2,705,400
------------
OIL & GAS - (0.87%)
16,000 Noble Drilling Corp., $1.50, Conv. Pfd......................................................... 564,000
------------
PUBLISHING - (1.55%)
50,000 News Corp. Ltd., Sponsored ADR Pfd............................................................. 1,006,250
------------
PULP & PAPER _ (3.94%)
15,700 International Paper Capital Trust, 5.25%, Conv. Pfd............................................ 700,613
15,000 James River Corp. of Virginia, 9.00%, Ser. P Conv. Pfd......................................... 378,750
24,500 Sonoco Products Co., $2.25, Ser. A Conv. Pfd................................................... 1,476,126
------------
2,555,489
------------
RETAIL - (1.43%)
15,300 Rouse Co., 6.50%, Ser. A Conv. Pfd............................................................. 929,475
------------
TRANSPORTATION - (3.11%)
32,000 Delta Air Lines, Inc., Depository Shares, $3.50, Ser. C Conv. Pfd.............................. 2,016,000
------------
Total Convertible Preferred Stock - (identified cost $23,756,566).......................... 26,766,672
------------
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS CONVERTIBLE SECURITIES FUND-CONTINUED
VALUE
SHARES (NOTE 1)
================================================================================================================================
CONVERTIBLE BONDS - (26.02%)
AEROSPACE - (0.56%)
$ 300,000 Orbital Sciences Corp., Conv. Sub. Deb., 6.75%, 03/01/03........................................ $ 363,000
------------
BANKS - (2.84%)
700,000 Bank of New York Co., Inc., Conv. Sub. Deb., 7.50%, 08/15/01.................................... 1,841,000
------------
COMMUNICATIONS _ (0.56%)
297,000 General Instrument Corp., Conv. Jr. Sub., 5.00%, 06/15/00....................................... 363,825
------------
ELECTRONICS - (1.41%)
600,000 Texas Instruments, Inc., Conv. Sub. Deb., 2.75%, 09/29/02....................................... 738,000
200,000 VLSI Technology Inc., Conv. Sub. Note, 8.25%, 10/01/05.......................................... 176,750
------------
914,750
------------
ENERGY - (1.28%)
750,000 Noble Affiliates, Inc., Conv. Sub. Note, 4.25%, 11/01/03........................................ 826,875
------------
ENGINEERING - (0.96%)
500,000 Thermo Electron Corp., 4.25%, 01/01/03.......................................................... 620,625
------------
FINANCIAL SERVICES - (1.63%)
500,000 Alex Brown, Inc., Conv. Sub. Deb., 5.75%, 06/12/01.............................................. 1,058,850
------------
HOTELS - (0.95%)
600,000 Hilton Hotel Corp., Conv. Sub. Note, 5.00%, 05/15/06............................................ 631,500
------------
INDUSTRIAL - (1.11%)
700,000 Liberty Property Trust, Conv. Sub. Deb., 8.00%, 07/01/01........................................ 717,500
------------
INSURANCE - (11.11%)
900,000 American Travellers Corp., Conv. Sub. Deb., 6.50%, 10/1/05...................................... 1,415,250
3,803,000 Equitable Companies Inc., Conv. Sub. Deb., 6.125%, 12/15/24..................................... 4,311,651
1,400,000 Leucadia National Corp., Conv. Sub. Deb., 5.25%, 02/01/03....................................... 1,470,000
------------
7,196,901
------------
MACHINERY - (1.23%)
700,000 Raymond Corp., Conv. Sub. Deb., 6.50%, 12/15/03................................................. 797,125
------------
MEDICAL SERVICES _ (0.45%)
250,000 Phycor Inc., Conv. Sub. Deb., 4.50%, 2/15/03.................................................... 289,375
------------
MULTI-FAMILY HOUSING - (0.78%)
500,000 Camden Property Trust, Conv. Sub. Deb., 7.33%, 04/01/04......................................... 505,000
------------
OFFICE SUPPLIES - (0.56%)
250,000 U S Office Products Co., Conv. Sub. Note, 5.50%, 02/01/01....................................... 365,000
------------
RETAIL - (0.51%)
350,000 Mid-Atlantic Realty Trust, Conv. Sub. Deb., 7.625%, 09/15/03.................................... 331,188
------------
TRANSPORTATION - (0.08%)
500,000 Florida West Airlines, Inc., 8.00%, 03/25/99<F2>................................................ 50,000
------------
Total Convertible Bonds - (identified cost$15,510,462)..................................... 16,872,514
------------
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS CONVERTIBLE SECURITIES FUND-CONTINUED
VALUE
SHARES (NOTE 1)
================================================================================================================================
COMMON STOCK _ (31.84%)
BANKS AND SAVINGS & LOAN ASSOCIATIONS _ (1.58%)
29,206 Norwest Corp.................................................................................... $ 1,018,559
------------
COMMUNICATIONS _ (0.58%)
12,757 General Instruments Corp <F1>................................................................... 368,358
------------
ENERGY _ (2.85%)
14,847 Amoco Corp...................................................................................... 1,074,552
9,574 Burlington Northern Santa Fe Corp............................................................... 774,297
------------
1,848,849
------------
HOTELS - (1.82%)
63,000 Host Marriott Corp<F1>.......................................................................... 826,875
11,900 Patriot American Hospitality Inc................................................................ 352,537
------------
1,179,412
------------
INDUSTRIAL - (2.43%)
64,656 Centerpoint Properties Corp..................................................................... 1,567,908
------------
INSURANCE - (2.29%)
20,000 Leucadia National Corp.......................................................................... 490,000
10,000 NAC Re Corp..................................................................................... 335,000
13,000 Trenwick Group, Inc............................................................................. 653,250
------------
1,478,250
------------
MULTI-FAMILY HOUSING _ (5.95%)
61,300 Avalon Properties, Inc.......................................................................... 1,333,275
71,600 Bay Apartment Communities,Inc................................................................... 1,852,650
9,800 Camden Property Trust........................................................................... 232,750
21,700 Irvine Apartment Communities,Inc................................................................ 436,713
------------
3,855,388
------------
OFFICE - (1.88%)
30,000 Beacon Properties Corp.......................................................................... 768,750
18,600 Cali Realty Corp................................................................................ 451,050
------------
1,219,800
------------
RETAIL - (8.12%)
17,500 Debartolo Realty Corp........................................................................... 282,187
1,000 JDN Realty Corp................................................................................. 22,375
50,550 Kimco Realty Corp............................................................................... 1,428,037
72,900 Vornado Realty Trust............................................................................ 2,979,787
14,100 Weingarten Realty Investors..................................................................... 546,375
------------
5,258,761
------------
SELF STORAGE - (4.34%)
34,000 Public Storage, Inc............................................................................. 1,181,500
30,000 Sovran Self Storage Inc......................................................................... 795,000
40,900 Storage Trust Realty............................................................................ 838,450
------------
2,814,950
------------
Total Common Stock - (identified cost $16,811,655).................................... 20,610,235
------------
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS CONVERTIBLE SECURITIES FUND-CONTINUED
VALUE
SHARES (NOTE 1)
================================================================================================================================
PRINCIPAL (NOTE 1)
SHORT TERM - (0.59%)
$ 380,000 State Street Bank and Trust Company Repurchase Agreement, 5.05%, 07/01/96
dated 06/27/96, repurchased value of $380,213 (collateralized by $385,000
par value U.S. Treasury Notes, 5.875%, 08/15/98, market value
$389,354) - (identified cost $ 380,000)....................................................... $ 380,000
------------
TOTAL INVESTMENTS - (99.76%) - (identified cost $ 56,458,683) -<F3>........................... 64,629,421
OTHER ASSETS LESS LIABILITIES - (0.24%)....................................................... 158,591
------------
NET ASSETS _ (100%)........................................................................... $ 64,788,012
============
<FN>
<F1> Non-Income Producing Security.
<F2> This security is in default and is not currently paying interest.
<F3> Aggregate cost for Federal Income Tax purposes is $56,458,683. At June 30, 1996
unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes is as follows:
Unrealized appreciation....................................................................... $ 8,887,330
Unrealized depreciation....................................................................... (716,592)
------------
Net unrealized appreciation.............................................................. $ 8,170,738
============
</FN>
</TABLE>
See Notes to Financial Statements.
<TABLE>
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS REAL ESTATE FUND
<CAPTION>
VALUE
SHARES (NOTE 1)
================================================================================================================================
COMMON STOCK - (95.25%)
APARTMENTS (REITS) - (22.75%)
<S> <C> <C>
60,600 Avalon Properties, Inc.......................................................................... $ 1,318,050
63,900 Bay Apartment Communities, Inc.................................................................. 1,653,412
24,200 Camden Property Trust........................................................................... 574,750
20,000 Equity Residential Properties Trust............................................................. 657,500
27,000 Gables Residential Trust........................................................................ 634,500
57,200 Irvine Apartment Communities, Inc............................................................... 1,151,150
21,000 Merry Land & Investment Co., Inc................................................................ 441,000
22,000 Mid-American Apartment Communities, Inc......................................................... 558,250
22,000 Oasis Residential, Inc.......................................................................... 481,250
28,900 Security Capital Pacific Trust.................................................................. 628,575
------------
8,098,437
------------
BANKS AND SAVINGS & LOAN ASSOCIATIONS - (0.91%)
9,000 Bancorp Hawaii, Inc............................................................................. 324,000
------------
CONSTRUCTION - (0.77%)
19,000 Kaufman & Broad Home Corp....................................................................... 275,500
------------
HEALTHCARE (REITS) - (1.00%)
17,300 Capstone Capital Corp........................................................................... 354,650
------------
HOTELS & LODGING - (9.76%)
30,000 Bristol Hotel Co................................................................................ 975,000
25,000 FelCor Suite Hotels, Inc. (REIT)................................................................ 762,500
52,000 Host Marriot Corp.<F1>.......................................................................... 682,500
35,600 Patriot American Hospitality Inc. (REIT)........................................................ 1,054,650
------------
3,474,650
------------
INDUSTRIAL (REITS) - (14.24%)
56,600 Centerpoint Properties Corp..................................................................... 1,372,550
27,500 Duke Realty Investments, Inc.................................................................... 831,875
15,000 Liberty Property Trust.......................................................................... 298,125
52,400 Reckson Associates Realty Corp.................................................................. 1,729,200
20,952 Security Capital Industrial Trust............................................................... 369,279
18,000 Weeks Corp...................................................................................... 468,000
------------
5,069,029
------------
INSURANCE - (1.42%)
20,350 Equitable Cos. Inc.............................................................................. 506,206
------------
MANUFACTURED HOUSING (REITS) - (1.61%)
24,000 ROC Communities, Inc............................................................................ 573,000
------------
MORTGAGE (REITS) - (2.11%)
27,000 Capstead Mortgage Corp.......................................................................... 752,626
------------
OFFICE SPACE (REITS) _ (7.67%)
45,000 Beacon Properties Corp.......................................................................... 1,153,125
45,100 Cali Realty Corp................................................................................ 1,093,675
13,200 Crescent Real Estate Equities, Inc.............................................................. 485,100
------------
2,731,900
------------
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS REAL ESTATE FUND - Continued
VALUE
SHARES/PRINCIPAL (NOTE 1)
================================================================================================================================
COMMON STOCK - Continued
RETAIL (REITS) - (22.70%)
26,800 Chelsea GCA Realty Inc.......................................................................... $ 850,900
57,300 Debartolo Realty Corp........................................................................... 923,963
25,000 JDN Realty Corp................................................................................. 559,375
39,450 Kimco Realty Corp............................................................................... 1,114,463
35,000 Macerich Co. (The).............................................................................. 735,000
25,000 Regency Realty Corp............................................................................. 525,000
30,000 Simon Property Group, Inc....................................................................... 735,000
40,000 United Dominion Realty Trust Inc................................................................ 575,000
33,350 Vornado Realty Trust............................................................................ 1,363,181
18,000 Weingarten Realty Investors..................................................................... 697,500
------------
8,079,382
------------
STORAGE (REITS) - (10.31%)
66,300 Public Storage, Inc............................................................................. 1,367,437
21,500 Shurgard Storage Centers Inc., Class A.......................................................... 542,874
15,000 Sovran Self Storage Inc......................................................................... 397,500
50,800 Storage Trust Realty............................................................................ 1,041,400
10,000 Storage USA Inc................................................................................. 322,500
------------
3,671,711
------------
Total Common Stock - (identified cost $29,663,217).................................... 33,911,091
------------
CONVERTIBLE PREFERRED STOCK - (1.93%)
REAL ESTATE - (1.93%)
16,700 Oasis Residential, Inc., $2.25, Ser. A Cum. Conv. Pfd........................................... 425,850
10,000 Security Capital Pacific Trust, $1.75, Ser. A Conv. Pfd........................................ 262,500
------------
Total Preferred Stock - (identified cost $618,100).................................... 688,350
------------
CONVERTIBLE CORPORATE BONDS - (3.98%)
REAL ESTATE - (3.98%)
$ 500,000 Camden Property Trust, Conv. Sub. Deb., 7.33%, 04/01/01......................................... 505,000
576,000 Equitable Cos. Inc., Conv. Sub. Deb., 6.125%, 12/15/24......................................... 653,040
250,000 Liberty Property Trust, Conv. Sub. Deb., 8.00%, 07/01/01........................................ 256,250
------------
Total Convertible Corporate Bonds - (identified cost $1,407,360)...................... 1,414,290
------------
DAVIS SERIES, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 1996 (UNAUDITED)
DAVIS REAL ESTATE FUND - Continued
VALUE
PRINCIPAL (NOTE 1)
================================================================================================================================
SHORT TERM - (0.90%)
$ 320,000 State Street Bank and Trust Company Repurchase Agreement, 5.10%, 07/02/96
dated 06/28/96, repurchased value of $320,181 (collateralized by $315,000
par value U.S. Treasury Notes, 7.50%, 01/31/97, market value
$327,870) - (identified cost $ 320,000)....................................................... $ 320,000
------------
TOTAL INVESTMENTS - (102.06%) - (identified cost $32,008,677) - <F2>............................ 36,333,731
LIABILITIES LESS OTHER ASSETS - (2.06%)......................................................... (734,862)
------------
NET ASSETS - (100%)........................................................................ $ 35,598,869
============
<FN>
<F1> Non-Income Producing Security.
<F2> Aggregate cost for Federal Income Tax purposes is $32,008,677. At June 30, 1996
unrealized appreciation (depreciation) of securities for Federal Income Tax purposes
is as follows:
Unrealized appreciation......................................................................... $ 4,448,941
Unrealized depreciation......................................................................... (123,887)
------------
Net unrealized appreciation................................................................ $ 4,325,054
============
</FN>
</TABLE>
See Notes to Financial Statements.
<TABLE>
DAVIS SERIES, INC.
STATEMENT OF ASSETS AND LIABILITIES At June 30, 1996 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DAVIS
DAVIS DAVIS GOVERNMENT DAVIS DAVIS
GROWTH GOVERNMENT MONEY DAVIS CONVERTIBLE REAL
OPPORTUNITY BOND MARKET FINANCIAL SECURITIES ESTATE
FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities, at
value(see schedules of
investments).............................. $ 62,842,517 $ 33,771,761 $ 373,847,873 $ 89,352,742 $ 64,629,421 $ 36,333,731
Cash........................................ 27,517 141,485 31,484 37,163 114,494 71,980
Receivables:
Dividends and interest.................... 35,375 284,074 2,324 280,230 409,524 245,811
Capital stock sold........................ 121,197 17,321 1,774,822 203,662 72,142 159,397
Investment securites sold................. _ _ _ - _ 528,429
------------ ------------ ------------- ------------ ------------ ------------
Total assets........................... 63,026,606 34,214,641 375,656,503 89,873,797 65,225,581 37,339,348
------------ ------------ ------------- ------------ ------------ ------------
LIABILITIES:
Payables:
Investment securities
purchased............................... _ _ _ _ 387,125 1,663,212
Capital stock reacquired.................. - - 400,572 17,500 - -
Accrued expenses............................ 47,105 38,495 261,605 70,930 45,644 73,467
Commissions payable to
distributor (Note 3)...................... 65,000 39,600 _ 21,286 4,800 3,800
Distributions payable....................... _ _ 1,072,156 _ _ -
------------ ------------ ------------- ------------ ------------ ------------
Total liabilities...................... 112,105 78,095 1,734,333 109,716 437,569 1,740,479
------------ ------------ ------------- ------------ ------------ ------------
NET ASSETS (Note 5)......................... $ 62,914,501 $ 34,136,546 $ 373,922,170 $ 89,764,081 $ 64,788,012 $ 35,598,869
============ ============ ============= ============ ============ ============
Class A Shares
Net assets................................ $ 25,813,262 $ 20,531,382 $ 364,086,426 $ 85,842,054 $ 63,775,398 $ 34,056,130
Shares outstanding........................ 1,419,989 3,586,899 364,086,426 5,577,496 3,272,290 1,954,987
Net asset value and redemption
price per share (net
assets/shares outstanding).............. $ 18.18 $ 5.72 $ 1.00 $ 15.39 $ 19.49 $ 17,42
========= ======== ======== ========= ========= =========
Maximum offering price per
share (100/95.25 of net
asset value)............................ $ 19.09 $ 6.01 $ 1.00 $ 16.16 $ 20.46 $ 18.29
========= ======== ======== ========= ========= =========
Class B Shares
Net assets................................ $ 37,101,239 $ 13,605,164 $ 7,614,717 $ 3,922,027 $ 1,012,614 $ 1,542,739
Shares outstanding........................ 2,067,909 2,382,220 7,614,717 257,551 52,376 88,826
Net asset value, offering and
redemption price per share
(net assets/shares
outstanding)(Note 3)................... $ 17.94 $ 5.71 $ 1.00 $ 15.23 $ 19.33 $ 17.37
========= ======== ======== ========= ========= =========
CLASS C SHARES
Net assets................................ $ 2,221,027
Shares outstanding........................ 2,221,027
Net asset value, offering and
redemption price per share
(net assets/shares
outstanding)........................... $ 1.00
========
NET ASSETS CONSIST OF:
Undistributed net investment
income(deficit)......................... $ _ $ (320,377) $ _ $ 396,085 $ 531,842 $ 464,458
Paid-in capital........................... 33,008,898 39,249,783 373,922,170 62,450,608 53,280,838 30,624,116
Accumulated net realized gain
(loss).................................. 3,214,492 (4,446,911) _ 1,673,137 2,804,597 185,241
Unrealized appreciation
(depreciation) on
investments............................. 26,691,111 (345,949) _ 25,244,251 8,170,738 4,325,054
------------ ------------ ------------- ------------ ------------ ------------
$ 62,914,501 $ 34,136,546 $ 373,922,170 $ 89,764,081 $ 64,788,012 $ 35,598,869
============ ============ ============= ============ ============ ============
</TABLE>
See Notes to Financial Statements.
<TABLE>
DAVIS SERIES, INC.
STATEMENT OF OPERATIONS (Unaudited)
==========================================================================================================================
Six months ended June 30, 1996
---------------------------------------------------------------------------------
<CAPTION>
DAVIS
DAVIS DAVIS GOVERNMENT DAVIS DAVIS
GROWTH GOVERNMENT MONEY DAVIS CONVERTIBLE REAL ESTATE
OPPORTUNITY BOND MARKET FINANCIAL SECURITIES SECURITIES
FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME (LOSS):
Income:
Dividends (net of foreign taxes
withheld of $15,882 and $886
for Financial Fund and
Convertible Securities Fund,
respectively.................... $ 147,467 $ _ $ _ $ 673,205 $ 1,064,333 $ 982,851
Interest.......................... 69,472 1,380,496 9,860,224 220,313 411,244 62,386
----------- ---------- ----------- ----------- ----------- ----------
Total income.................. 216,939 1,380,496 9,860,224 893,518 1,475,577 1,045,237
----------- ---------- ----------- ----------- ----------- ----------
Expenses:
Management fees (Note 2).......... 229,424 118,263 891,090 322,009 231,624 120,520
Custodian fees.................... 35,264 43,475 80,266 45,337 34,291 32,136
Transfer agent fees............... 69,937 55,092 81,794 37,905 10,463 9,303
Audit fees........................ 6,086 9,504 7,538 5,409 4,007 5,003
Legalfees......................... 4,690 2,932 29,463 6,806 4,922 2,506
Accounting fees (Note 2).......... 7,998 8,502 6,000 7,998 7,998 6,000
Reports to shareholders........... 11,502 8,727 12,399 4,173 1,637 1,458
Directors fees and expenses....... 9,410 8,347 30,490 9,089 6,665 5,635
Registration and filing fees...... 21,244 20,019 80,120 15,172 15,459 20,540
Organization expense.............. _ _ _ 2,333 _ _
Miscellaneous..................... 8,662 11,683 53,275 2,262 1,702 4,360
Distribution plan payments
(Note 3)
Class A......................... 20,824 23,835 _ 35,035 8,664 5,063
Class B......................... 174,046 70,508 _ 15,192 3,544 4,693
----------- ---------- ----------- ----------- ----------- ----------
Total expenses................ 599,087 380,887 1,272,435 508,720 330,976 217,217
----------- ---------- ----------- ----------- ----------- ----------
Net investment
income (loss)............. (382,148) 999,609 8,587,789 384,798 1,144,601 828,020
----------- ---------- ----------- ----------- ----------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) from
investment transactions.. 3,214,492 229,303 _ 1,673,137 2,773,721 201,388
Net increase (decrease) in unrealized
appreciation/depreciation of
investments during the period..... 51,603 (1,577,174) _ 3,039,416 872,577 1,273,952
----------- ---------- ----------- ----------- ----------- ----------
Net realized and unrealized
gain (loss) on investments.... 3,266,095 (1,347,871) _ 4,712,553 3,646,298 1,475,340
----------- ---------- ----------- ----------- ----------- ----------
Net increase (decrease) in net
assets resulting from
operations.................... $12,883,947 $ (348,262) $ 8,587,789 $ 5,097,351 $ 4,790,899 $2,303,360
=========== ========== =========== =========== =========== ==========
</TABLE>
See Notes to Financial Statements.
<TABLE>
DAVIS SERIES, INC.
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
===================================================================================================================================
Six months ended June 30, 1996
-----------------------------------------------------------------------------------------
<CAPTION>
DAVIS
DAVIS DAVIS GOVERNMENT DAVIS DAVIS
GROWTH GOVERNMENT MONEY DAVIS CONVERTIBLE REAL
OPPORTUNITY BOND MARKET FINANCIAL SECURITIES ESTATE
FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)........ $ (382148) $ 999,609 $ 8,587,789 $ 384,798 $ 1,144,601 $ 828,020
Net realized gain from investment
transactions...................... 3,214,492 229,303 _ 1,673,137 2,773,721 201,388
Net increase (decrease) in
unrealized appreciation/
depreciation of investments....... 51,603 (1,577,174) _ 3,039,416 872,577 1,273,952
Net increase (decrease) in net ------------ ------------- ------------- ------------ ----------- -----------
assets resulting from
operations........................ 2,883,947 (348,262) 8,587,789 2,097,351 4,790,899 2,303,360
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A........................... _ (808,442) (8,473,803) - ( 646,342) (374,719)
Class B........................... _ (511,543) (90,809) - (7,315) (10,642)
Class C........................... - - (23,177) - - -
CAPITAL SHARE
TRANSACTIONS (NOTE 5)............... 1,814,668 (1,656,327) 13,632,382 3,030,214 516,278 3,947,078
------------ ------------- ------------- ------------ ----------- -----------
Total increase (decrease)
in net assets................. 4,698,615 (3,324,574) 13,632,382 8,127,565 4,653,520 5,865,077
NET ASSETS:
Beginning of period................. 51,762,061 37,461,120 360,289,788 81,636,516 60,134,492 2,733,792
------------ ------------- ------------- ------------ ----------- -----------
End of period (including
undistributed net investment
income (deficit) for the
Davis Government Bond, Davis
Financial, Davis Convertible
Securites and Davis Real
Estate Funds of ($320,377),
$396,085, $531,842 and
$464,458, respectively)........... $ 58,215,886 $ 34,136,546 $ 373,922,170 $ 81,636,516 $64,788,012 $35,598,869
============ ============= ============= ============ =========== ===========
</TABLE>
See Notes to Financial Statements.
<TABLE>
DAVIS SERIES, INC.
STATEMENT OF CHANGES IN NET ASSETS
===================================================================================================================================
Year ended December 31, 1995
-------------------------------------------------------------------------------------------
<CAPTION>
DAVIS
DAVIS DAVIS GOVERNMENT DAVIS DAVIS
GROWTH GOVERNMENT MONEY DAVIS CONVERTIBLE REAL ESTATE
OPPORTUNITY BOND MARKET FINANCIAL SECURITIES SECURITIES
FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ (678,520) $ 2,191,740 $ 15,438,495 $ 362,062 $ 2,065,758 $ 1,429,977
Net realized gain (loss) from....
investment transactions........ 4,837,350 (32,015) _ 7,641,002 2,889,149 (16,147)
Net increase in unrealized
appreciation/depreciation
of investments................. 15,832,681 1,884,744 _ 19,535,935 7,434,048 3,011,729
Net increase in net assets ------------ ------------ ------------- ----------- ------------ ------------
resulting from operations...... 19,991,511 4,044,469 15,438,495 27,538,999 12,388,955 4,425,559
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A........................ _ (1,257,060) (15,326,497) (357,170) (2,021,859 (1,399,690)
Class B........................ _ (934,680) (106,550) _ (3,002) (8,487)
Class C........................ _ _ (5,448) _ _ _
Realized gains from
investment transactions
Class A........................ (1,889,930) - - (7,475,056) (2,423,570) -
Class B........................ (2,947,420) - - (166,551) (15,365) -
Paid-in capital
Class A........................ - (315,408) - - - -
Class B........................ - (234,519) - - - -
CAPITAL SHARE
TRANSACTIONS (NOTE 5)............ (5,479,797) (3,118,148) 119,563,068 4,397,937 4,365,522 1,231,958
------------ ------------ ------------- ----------- ------------ ------------
Total increase (decrease)
in net assets................ 9,674,364 (1,815,346) 119,563,068 23,938,159 12,290,681 4,249,340
NET ASSETS:
Beginning of period.............. 48,541,522 39,276,466 240,726,720 57,698,357 47,843,811 25,484,452
------------ ------------ ------------- ----------- ------------ ------------
End of period (including
undistributed net investment
income for the Davis
Financial, Davis Convertible
Securities and Davis Real
Estate Funds of $11,287,
$40,897, and $21,800,
respectively)................... $ 58,215,886 $ 37,461,120 $ 360,289,788 $81,636,516 $ 60,134,492 $ 29,733,792
============ ============ ============= =========== ============ ============
</TABLE>
See Notes to Financial Statements.
DAVIS SERIES, INC.
NOTES TO FINANCIAL STATEMENTS
At June 30, 1996 (Unaudited)
===============================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Davis Series, Inc. (formerly, Retirement Planning Funds of America, Inc.,
the "Company") is registered under the Investment Company Act of 1940
as amended, as a diversified, open-end management investment company.
The Company operates as a series fund issuing shares of common stock in
the following six series:
Davis Growth Opportunity Fund (formerly, Growth Fund) seeks to achieve
growth of capital. It invests primarily in common stocks and other equity
securities, and may invest in both domestic and foreign issuers.
Davis Government Bond Fund (formerly, Bond Fund) seeks to achieve
current income. It invests in debt securities which are obligations of, or
which are guaranteed by, the U.S. Government, its agencies or
instrumentalities.
Davis Government Money Market Fund (formerly, Government Money Market
Fund) seeks to achieve as high a level of current income as is consistent
with the principle of preservation of capital and maintenance of liquidity.
It invests in debt securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities and repurchase agreements involving
such securities. There is no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
Davis Financial Fund (formerly, Financial Value Fund) seeks to achieve
growth of capital. It invests primarily in common stocks and other equity
securities, and will concentrate investments in companies principally
engaged in the banking and financial services industries.
Davis Convertible Securities Fund (formerly, Convertible Securities Fund)
seeks to achieve total return. The Fund invests primarily in convertible
securities, which combine fixed income with potential for capital
appreciation. It may invest in lower rated bonds commonly known as "junk
bonds," so long as no such investment would cause 35% or more of the
Funds net assets to be so invested.
Davis Real Estate Fund (formerly, Real Estate Securities Fund) seeks to
achieve total return through a combination of growth and income. It
invests primarily in securities of companies principally engaged in or
related to the real estate industry or which own significant real estate
assets or which primarily invest in real estate financial instruments.
Because of the risk inherent in any investment program. The Company
cannot ensure that the Investment objective of any of its series will be
achieved.
The Company accounts separately for the assets, liabilities and operations
of each series. On January 3, 1994, the Davis Real Estate Fund became a
new series of the Company. On December 1, 1994 each series commenced
the offering of shares in two classes, Class A and Class B. The Class A
shares are sold with a front-end sales charge, except for shares of Davis
Government Money Market Fund which are sold at net asset value and the
Class B shares are sold at net asset value and may be subject to a
contingent deferred sales charge upon redemption. The Davis Government
Money Market Fund offers Class C shares which are sold at net asset value.
All classes have identical rights with respect to voting (exclusive of each
Class distribution arrangement), liquidation and distributions. The
following is a summary of significant accounting policies followed by the
Company in the preparation of its financial statements.
DAVIS SERIES, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
At June 30, 1996 (Unaudited)
===============================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
A. VALUATION OF SECURITIES - Securities listed on national
securities exchanges are valued at the last reported sales price on the day
of valuation. Securities of the Davis Growth Opportunity and Davis
Government Bond Funds traded in the over the counter market and listed
securities for which no sale was reported on that date are stated at the
last quoted bid price. Securities of the Davis Financial, Davis Convertible
Securities and Davis Real Estate Funds traded in the over the counter
market and listed securities for which no sale was reported on that date
are stated at the average of closing bid and asked prices. Securities for
which market quotations are not readily available are valued at fair value
as determined by the Board of Directors. The Davis Government Money
Market Fund uses the amortized cost method of valuing investment
securities which represents fair value as determined by the Board of
Directors.
B. CURRENCY TRANSLATION. The market values of all assets and
liabilities denominated in foreign currencies are recorded in the financial
statements after translation to the U.S. dollar based upon the mean
between the bid and offered quotations of the currencies against U.S.
dollars on the date of valuation. The cost basis of such assets and
liabilities is determined based upon historical exchange rates. Income and
expenses are translated at average exchange rates in effect as accrued or
incurred.
C. FORWARD CURRENCY CONTRACTS. The Company may enter into
forward purchases or sales of foreign currencies to hedge certain foreign
currency denominated assets and liabilities against declines in market
value relative to the U.S. dollar. Forward currency contracts are
marked-to-market daily and the change in market value is recorded by the
Company as an unrealized gain or loss. When the forward currency contract
is closed, the Company records a realized gain or loss equal to the
difference between the value of the forward currency contract at the time
it was opened and value at the time it was closed. Investments in forward
currency contracts may expose the Company to risks resulting from
unanticipated movements in foreign currency exchange rates or failure of
the counterparty to the agreement to perform in accordance with the
terms of the contract.
D. FEDERAL INCOME TAXES - It is the Company's policy to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its income to
shareholders. Therefore, no provision for federal income tax is required.
At June 30, 1996, the Davis Government Bond Fund had approximately
$4,676,200 of capital loss carryovers available to offset future capital
gains, if any, of which $2,774,300, $1,110,900, $84,300, $376,100,
$298,600 and $32,000 expire in 1997, 1998, 1999, 2001, 2002 and 2003,
respectively. At June 30, 1996, the Davis Convertible Securities Fund
D. FEDERAL INCOME TAXES - continued
had approximately $16,000 of capital loss carryovers available to offset
future capital gains, if any, which expires in 2002.
E. ORGANIZATION COSTS - Expenses incurred in connection with Davis
Financial Fund's organization and initial public offering are being
amortized over a sixty-month period.
F. USE OF ESTIMATES IN FINANCIAL STATEMENTS - In preparing
financial statements in conformity with generally accepted accounting
principles, management makes estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements, as well as the reported amounts of income and expenses
during the reporting period. Actual results may differ from these
estimates.
DAVIS SERIES, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
At June 30, 1996 (Unaudited)
===============================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
G. OTHER - Securities transactions are accounted for on the trade
date (date the order to buy or sell is executed) with gain or loss on the
sale of securities being determined based upon identified cost. Interest
income is recorded on the accrual basis. Dividends and distributions to
shareholders are recorded on the ex-dividend date.
NOTE 2 - INVESTMENT ADVISORY FEES
Advisory fees are paid monthly to the investment adviser. The fee
for the Davis Government Money Market Fund is .50 of 1% of the first $250
million of average daily net assets, .45 of 1% of the next $250 million of
average daily net assets and .40 of 1% of average daily net assets in
excess of $500 million. The rate for the Davis Growth Opportunity Fund,
Davis Government Bond Fund, Davis Financial Fund, Davis Convertible
Securities Fund and Davis Real Estate Fund is .75 of 1% of the average
daily net assets for the first $250 million, .65 of 1% of the average net
assets on the next $250 million, and .55 of 1% of the av-erage daily net
assets in excess of $500 million. The Adviser will reimburse each Fund
for any expenses (including the fee under the agreement but excluding
interest, taxes, brokerage fees, payments made to the Distributor under
any Rule 12b-1 Distribution Plan and, where permitted, extraordinary
expenses) in excess of the most restrictive applicable expense limitation
prescribed by any statute or regulatory authority of any jurisdiction in
which each Funds' shares are qualified for offer and sale. The Adviser
believes that the most restrictive expense limitations presently
applicable are 2 1/2% for the first $30 million of average net assets, 2%
for the next $70 million of average net assets and 1 1/2% for any
additional average net assets. Davis Selected Advisers, L.P. is paid for
registering Fund shares for sale in various states. The fee for the six
months ended June 30, 1996 for the Davis Growth Opportunity, Davis
Government Bond, Davis Government Money Market, Davis Financial Value,
Davis Convertible Securities and Davis Real Estate Funds, amounted to
$4,500 for each fund.
Davis Selected Advisers, L.P. is paid for certain transfer agent
services. The fee for the six months ended June 30, 1996 for the Davis
Growth Opportunity, Davis Government Bond, Davis Government Money
Market, Davis Financial, Davis Convertible Securities and Davis Real
Estate Funds, amounted to $2,953, $2,251, $6,609, $1,896, $859 and $834,
respectively. Davis Selected Advisers, L.P. is also paid for certain
accounting services. The fee for the six months ended June 30, 1996 for
the Davis Growth Opportunity, Davis Government Bond, Davis Government
Money Market, Davis Financial, Davis Convertible Securities and Davis Real
Estate Funds amounted to $7,998 $8,502, $6,000, $7,998, $7,998 and
$6,000, respectively. Three directors and the officers of the Company are
also directors and officers of the general partner of Davis Selected
Advisers, L.P.
Tanaka Capital Management, Inc. (the "Sub-Adviser"), acts as the
sub-adviser of the Davis Growth Opportunity Fund. The Sub-Adviser
manages the day to day investment operations for the Davis Growth
Opportunity Fund. The Sub-Adviser also provides investment advisory
services to employee benefit plans, institutions, trusts and individuals.
Graham Y. Tanaka is the owner of the Sub-Adviser. The Company pays no
fees directly to the Sub-Adviser. The Sub-Adviser receives from the
Adviser a reallowed portion of its advisory fee equal to .30% of the first
$100 million of the Davis Growth Opportunity Fund's annual average net
assets and .25% of such Fund assets over $100 million with a minimum
annual fee of $100,000. However, the Sub-
Adviser's fees on Fund assets over $100 million may not exceed one-third
of the fees paid to the Adviser from the Davis Growth Opportunity Fund.
Class A shares of the Funds are sold at net asset value plus a sales
charge and are redeemed at net asset value (without a contingent deferred
sales charge).
DAVIS SERIES, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
At June 30, 1996 (Unaudited)
===============================================================================
NOTE 3 - DISTRIBUTION AND UNDERWRITING FEES - Continued
CLASS A SHARES OF DAVIS GROWTH OPPORTUNITY, DAVIS
GOVERNMENT BOND, DAVIS FINANCIAL , DAVIS CONVERTIBLE SECURITIES
AND DAVIS REAL ESTATE FUNDS
During the six months ended June 30, 1996, the Company's
Underwriter, Davis Selected Advisers, L.P., received $46,125, $9,536,
$69,845, $21,231 and $33,449 from commissions earned on sales of Class
A shares of Davis Growth Opportunty, Davis Government Bond, Davis
Financial, Davis Convertible Securities and Davis Real Estate Funds'
capital stock, respectively, of which $8,311, $1,979, $11,161, $3,804 and
$5,166 were retained by the Underwriter and the remaining $37,814,
$7,557, $58,684, $17,427 and $28,283 were reallowed to investment
dealers. Davis Selected Advisers, L.P. paid the costs of prospectuses in
excess of those required to be filed as part of the Company's registration
statement, sales literature and other expenses assumed or incurred by it
in connection with such sales.
The Underwriter is reimbursed for amounts paid to dealers as a
maintenance fee with respect to Class A shares sold by dealers and
remaining outstanding during the period. The maintenance fee is paid at
the annual rate of 1/4 of 1% of the average net assets maintained by the
responsible dealers. The Underwriter is not reimbursed for accounts in
which the Underwriter pays no service fees to other firms. The
maintenance fee for Class A shares of Davis Growth Opportunity Fund,
Davis Government Bond Fund, Davis Financial Fund, Davis Convertible Fund
and Davis Real Estate Fund for the six months ended June 30, 1996 was
$20,824, $23,835, $35,035, $8,664 and $5,063, respectively.
CLASS B SHARES OF DAVIS GROWTH OPPORTUNITY, DAVIS
GOVERNMENT BOND, DAVIS FINANCIAL , DAVIS CONVERTIBLE SECURITIES
AND DAVIS REAL ESTATE FUNDS
Class B shares of the Funds are sold at net asset value and are
redeemed at net asset value less a contingent deferred sales charge if
redeemed within six years of purchase.
Until May 1, 1993, Davis Selected Advisers, L.P., the Distributor was
paid a 5% commission on the proceeds from the sale of Class B shares of
the Funds, of which 4% was reallowed to the qualified dealers responsible
for the sale of shares. Additionally, the Distributor was reimbursed for
amounts paid to dealers as a maintenance fee with respect to Class B
shares sold of the Funds by dealers and remaining outstanding during the
period. The maintenance fee was paid at the annual rate of 1/4 of 1% of
the average net assets maintained by the responsible dealers. Under the
plan, no more than .3125% per quarter of the Fund's average net assets,
(approximately 1.25% per annum) may be paid to the Distributor.
Effective May 1, 1993, the Funds began compliance with a new rule
implemented by the National Association of Securities Dealers, Inc.,
("NASD"). The new rule changes the annual limit to 1% of the Fund's
annual average net assets attributable to Class B shares, of which 0.75%
may be used to pay distribution expenses and 0.25% may be used to pay
shareholder service fees. The new NASD rule also limits the aggregate
amount the Funds may pay for distribution to 6.25% of gross Funds sales
since inception of the Rule 12b-1 plans plus interest at 1% over the prime
rate on unpaid amounts. Effective May 1, 1993, the Funds pay the
Distributor a 4% commission on the proceeds from the sale of Funds' Class
B shares and the Distributor reallows 4% to the qualified dealer
responsible for the sale of the shares. The Distributor intends to seek full
payment (plus interest at prime plus 1%) of distribution charges that
exceed the new 1% annual limit in some future period or periods when the
plan limits have not been reached.
DAVIS SERIES, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
At June 30, 1996 (Unaudited)
===============================================================================
NOTE 3 - DISTRIBUTION AND UNDERWRITING FEES - Continued
CLASS B SHARES OF DAVIS GROWTH OPPORTUNITY, DAVIS GOVERNMENT
BOND, DAVIS FINANCIAL, DAVIS CONVERTIBLE SECURITIES AND DAVIS REAL
ESTATE FUNDS - Continued
During the six months ended June 30, 1996, Class B shares of the
Davis Growth Opportunity, Davis Government Bond, Davis Financial, Davis
Convertible Securities and Davis Real Estate Funds made distribution plan
payments which included commissions of $138,734, $54,707, $11,727,
$2,791 and $3,769, respectively and maintenance fees of $35,312,
$15,801, $3,465, $753 and $924, respectively.
Commissions earned by the Distributor during the six months ended
June 30, 1996 on the sale of Class B shares of the Davis Growth
Opportunity, Davis Government Bond, Davis Financial, Davis Convertible
Securities and Davis Real Estate Funds amounted to $128,900, $18,018,
$86,175, $18,180 and $40,133, of which $102,708, $17,790, $80,780,
$17,979 and $39,694 was reallowed to qualified selling dealers.
The Distributor intends to seek payment from Class B shares of the
Davis Growth Opportunity, Davis Government Bond, Davis Financial, Davis
Convertible Securities and Davis Real Estate Funds in the amounts of
$266,610, $408,278, $134,298, $29,858 and $47,713, respectively,
representing the cumulative commissions earned by the Distributor on the
sale of the Funds' Class B shares reduced by cumulative commissions paid
by the Funds and cumulative contingent deferred sales charges paid by
redeeming shareholders. The Funds have no contractual obligation to pay
any such distribution charges and the amounts, if any, timing and
condition of such payments are solely within the discretion of the
Directors who are not interested persons of the Funds or the Distributor.
A contingent deferred sales charge is imposed upon redemption of
certain Class B shares of the Funds within six years of the original
purchase. The charge is a declining percentage starting at 4% of the lesser
of net asset value of the shares redeemed or the total cost of such shares.
During the six months ended June 30, 1996 the Distributor received
contingent deferred sales charges from Class B shares of the Davis
Growth Opportunity, Davis Government Bond, Davis Financial, Davis
Convertible Securities and Davis Real Estate Funds of $32,863, $15,812,
$11,110, $40 and $400, respectively. (Prior to December 1, 1994, the
charge was a declining percentage starting at 4% of the lesser of net
asset value of the shares redeemed or the total cost of such shares. The
charge was imposed upon redemption of certain Class B shares of the
Funds within four calendar years of the original purchase.)
DAVIS GOVERNMENT MONEY MARKET FUND
All classes of shares of the Davis Government Money Market Fund are
sold to investors at net asset value. Until February 1, 1992, the Davis
Government Money Market Fund paid the Adviser an annual distribution fee
equal to .40 of 1% of the Fund's average net assets. Effective February 1,
1992, the shareholders of the Government Money Market Fund adopted a
Distribution expense plan in accordance with Rule 12b-1, which does not
provide for any amounts to be paid directly to the Distributor as either
compensation or reimbursement for distributing shares of the Fund, but
does authorize the use of the advisory fee to the extent such fee may be
considered to be indirectly financing any activity or expense which is
primarily intended to result in the sale of Fund shares. The Adviser has
entered into related service agreements with various firms which provide
cash management and other services to the Fund's shareholders. The
Adviser, at its sole discretion, currently pays
such firms a fee of .25 of 1% based on the average net assets of those
accounts serviced. The Adviser reallowed $5,655 to qualified dealers
responsible for the maintenance of shares of the Fund.
DAVIS SERIES, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
At June 30, 1996 (Unaudited)
===============================================================================
NOTE 4 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities) during the six months ended June 30, 1996 for the Davis
Growth Opprotuntiy , Davis Government Bond, Davis Financial, Davis
Convertible Securities and Davis Real Estate Funds were as follows:
<TABLE>
<CAPTION>
DAVIS DAVIS DAVIS
GROWTH GOVERNMENT DAVIS CONVERTIBLE DAVIS
OPPORTUNITY BOND FINANCIAL SECURITIES REAL ESTATE
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cost of purchases........ $11,534,688 $12,554,074 $10,947,998 $20,479,994 $8,258,411
Proceeds of sales........ $13,071,652 $12,517,820 $ 6,759,617 $17,429,614 $2,553,885
</TABLE>
NOTE 5 - CAPITAL STOCK
At June 30, 1996, there were 5 billion shares of capital stock ($0.01
par value per share) authorized of which 500 million shares each are
designated to the Davis Growth Opportunity, Davis Government Bond, Davis
Government Money Market, Davis Financial, Davis Convertible Securities
and Davis Real Estate Funds. Transactions in capital stock were as
follows:
<TABLE>
CLASS A Six Months ended June 30, 1996 (Unaudited)
------------------------------------------
<CAPTION>
DAVIS
DAVIS DAVIS GOVERNMENT DAVIS
GROWTH GOVERNMENT MONEY DAVIS CONVERTIBLE DAVIS
OPPORTUNITY BOND MARKET FINANCIAL SECURITIES REAL ESTATE
FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Shares sold............. 172,324 160,834 67,926,020 232,536 50,887 200,443
Shares issued in
reinvestment of
distributions......... 147 95,008 1,792,293 50 31,936 21,313
----------- ----------- ------------- ----------- ---------- -----------
172,471 255,842 69,718,313 232,586 82,823 221,756
Shares redeemed......... (79,718) (251,504) (62,749,908) (164,831) (89,733) (50,537)
----------- ----------- ------------- ----------- ---------- -----------
Net increase
(decrease)............ 92,753 4,338 6,968,405 67,755 (6,910) 171,219
=========== =========== ============= =========== ========== ===========
Proceeds from shares
sold.................. $ 3,163,279 $ 945,731 $ 67,926,020 $ 3,481,338 $ 965,870 $ 3,361,133
Proceeds from shares
issued in
reinvestment of
distributions......... 2,555 554,405 1,792,293 704 606,461 356,568
----------- ----------- ------------- ----------- ---------- -----------
3,165,834 1,500,136 69,718,313 3,482,042 1,572,331 3,717,701
Cost of shares redeemed. (1,412,077) (1,472,628) (62,749,908) (2,454,589) (1,649,543) (837,756)
----------- ----------- ------------- ----------- ---------- -----------
Net increase
(decrease)........... $ 1,753,757 $ 27,508 $ 6,968,405 $ 1,027,453 $ (77,212) $ 2,879,945
=========== =========== ============= =========== ========== ===========
</TABLE>
DAVIS SERIES, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
At June 30, 1996 (Unaudited)
===============================================================================
NOTE 5 - CAPITAL STOCK - Continued
<TABLE>
Year Ended December 31, 1995
-------------------------------------------------------------------------------------------
CLASS A
<CAPTION>
DAVIS
DAVIS DAVIS GOVERNMENT DAVIS
GROWTH GOVERNMENT MONEY DAVIS CONVERTIBLE DAVIS
OPPORTUNITY BOND MARKET FINANCIAL SECURITIES REAL ESTATE
FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Shares sold........................... 359,034 660,268 266,441,150 396,303 233,755 266,125
Shares issued in reinvestment
of distributions.................... 105,481 179,677 11,012,683 518,751 233,400 86,954
----------- ----------- ------------- ----------- ------------ -----------
464,515 839,945 277,453,833 915,054 467,155 353,079
Shares redeemed....................... (107,883) (714,819) (160,315,534) (804,015) (260,368) (298,037)
----------- ----------- ------------- ----------- ------------ -----------
Net increase (decrease)............. 356,632 125,126 117,138,299 (111,039) (206,787) 55,042
=========== =========== ============= =========== ============ ===========
Proceeds from shares sold............. $ 5,898,293 $ 3,901,967 $ 266,441,150 $ 5,245,284 $ 4,282,025 $ 4,010,602
Proceeds from shares issued in
reinvestment of distributions....... 1,800,883 1,059,274 11,012,683 7,501,765 4,174,785 1,334,734
----------- ----------- ------------- ----------- ------------ -----------
7,699,176 4,961,241 277,453,833 12,747,049 8,456,810 5,345,336
Cost of shares redeemed............... (1,869,087) (4,226,021) (160,315,534) (10,100,288) (4,477,654) (4,466,171)
----------- ----------- ------------- ----------- ------------ -----------
Net increase (decrease)............. $ 5,830,089 $ 735,220 $ 117,138,299 $(2,646,761) $ 3,979,156 $ 879,165
=========== =========== ============= =========== ============ ===========
</TABLE>
<TABLE>
CLASS B Six Months ended June 30, 1996 (Unaudited)
------------------------------------------
<CAPTION>
DAVIS
DAVIS DAVIS GOVERNMENT DAVIS
GROWTH GOVERNMENT MONEY DAVIS CONVERTIBLE DAVIS
OPPORTUNITY BOND MARKET FINANCIAL SECURITIES REAL ESTATE
FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Shares sold......................... 239,722 101,293 9,062,458 152,041 31,408 66,028
Shares issued in reinvestment
of distributions................. (2,701) 54,894 80,245 _ 370 370
----------- ----------- ------------- ----------- ------------ -----------
237,021 156,187 9,142,703 152,041 31,778 66,398
Shares redeemed..................... (237,243) (443,915) (4,224,565) (16,793) (220) (2,781)
----------- ----------- ------------- ----------- ------------ -----------
Net increase (decrease)........... (222) (287,728) 4,918,138 135,248 31,558 63,617
=========== =========== ============= =========== ============ ===========
Proceeds from shares sold........... $ 4,285,832 $ 595,030 $ 9,062,458 $ 2,253,252 $ 590,660 $ 1,107,689
Proceeds from shares issued in
reinvestment of distributions..... (45,682) 320,161 80,245 _ 6,985 6,181
----------- ----------- ------------- ----------- ------------ -----------
4,240,150 915,191 9,142,703 2,253,252 597,645 1,113,870
Cost of shares redeemed............. (4,179,239) (2,599,026) (4,224,565) (250,491) (4,155) (46,737)
----------- ----------- ------------- ----------- ------------ -----------
Net increase (decrease)........... $ 60,911 $(1,683,835) $ 4,918,138 $ 2,002,761 $ 593,490 $ 1,067,133
=========== =========== ============= =========== ============ ===========
</TABLE>
<TABLE>
DAVIS SERIES, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
AT June 30, 1996 (Unaudited)
==================================================================================================================================
NOTE 5 - CAPITAL STOCK - Continued
CLASS B Year ended December 31, 1995
----------------------------------------------------------------------------------------
<CAPTION>
DAVIS
DAVIS DAVIS GOVERNMENT DAVIS
GROWTH GOVERNMENT MONEY DAVIS CONVERTIBLE DAVIS
OPPORTUNITY BOND MARKET FINANCIAL SECURITIES REAL ESTATE
FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Shares sold........................... 270,466 286,256 10,318,022 126,655 25,669 24,891
Shares issued in reinvestment
of distributions................. 164,363 126,951 78,144 8,296 1,016 426
------------- ------------- ------------ ---------- ---------- --------
434,829 413,207 10,396,166 134,951 26,685 25,317
Shares redeemed....................... (1,180,563) (1,067,618) (8,446,585) (15,306) (5,867) (2,412)
------------- ------------- ------------ ---------- ---------- --------
Net increase (decrease).......... (745,734) (654,411) 1,949,581 119,645 20,818 22,905
============= ============= ============ ========== ========== ========
Proceeds from shares sold............. $ 4,609,337 $ 1,688,695 $ 10,318,022 $1,866,084 $ 477,808 $382,977
Proceeds from shares issued in
reinvestment of distributions... 2,779,819 746,462 78,144 119,292 18,368 6,693
------------- ------------- ------------ ---------- ---------- --------
7,389,156 2,435,157 10,396,166 1,985,376 496,176 389,670
Cost of shares redeemed............... (18,699,042) (6,288,525) (8,446,585) (234,200) (109,810) (36,877)
------------- ------------- ------------ ---------- ---------- --------
Net increase (decrease).......... $ (11,309,886) $ (3,853,368) $ 1,949,581 $1,751,176 $ 386,366 $352,793
============= ============= ============ ========== ========== ========
</TABLE>
<TABLE>
CLASS C - Government Money Market Fund
<CAPTION>
Six Months March 30, 1995
ended (commencement of operations)
June 30, 1996 through
(Unaudited) December 31, 1995
-----------------
<S> <C> <C>
Shares sold.................................. 2,550,876 677,165
Shares issued in reinvestment
of distributions........................ 21,668 4,412
------------ ------------
2,572,544 681,577
Shares redeemed.............................. (826,705) (206,389)
------------ ------------
Net increase............................ 1,745,839 475,188
============ ============
Proceeds from shares sold.................... $ 2,550,876 $ 677,165
Proceeds from shares issued in
reinvestment of distributions........... 21,668 4,412
------------ ------------
2,572,54 681,577
Cost of shares redeemed...................... (826,705) (206,389)
------------ ------------
Net increase............................ $ 1,745,839 $ 475,188
============ ============
</TABLE>
<TABLE>
DAVIS SERIES, INC.
FINANCIAL HIGHLIGHTS
DAVIS GROWTH OPPORTUNITY FUND
The following financial information represents selected data for
each share of capital stock outstanding throughout each period:
--------------------------CLASS A--------------------------
<CAPTION>
Six Month One Month
ended ended
June 30, 1996 Year ended December 31,
(Unaudited) 1995 1994
--------- ---- ----
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period................................. $17.25 $12.83 $13.70
------ ------ ------
Income (Loss) From Investment Operations
- ----------------------------------------
Net Investment
Income (Loss)........................... (0.07) (0.11) (0.01)
Net Gains or Losses
on Securities
(both realized and unrealized)........... 1.00 6.08 (0.29)
------ ------ ------
Total From Investment Operations...... 0.93 5.97 (0.30)
------ ------ ------
Less Distributions
- ------------------
Dividends (from net
investment income)...................... _ _ _
Distributions (from
capital gains).......................... _ (1.55) (0.57)
Distributions (from
paid-in capital)........................ _ _ _
------ ------ ------
Total Distributions................... _ (1.55) (0.57)
------ ------ ------
Net Asset Value,
End of Period............................. $18.18 $17.25 $12.83
====== ====== ======
Total Return<F1>............................ 5.39% 46.65% (2.21)%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted)........................... $ 25,813 $22,890 $12,455
Ratio of Expenses to
Average Net Assets...................... 1.49%<F2> 1.51% 1.42%<F2>
Ratio of Net Income to
Average Net Assets...................... (.78)%<F2> (0.71)% (0.08)%<F2>
Portfolio Turnover Rate................... 19.32% 30.07% 37.31%
<FN>
<F1> Sales charges are not reflected in calculation.
<F2> Annualized
</FN>
</TABLE>
<TABLE>
DAVIS SERIES, INC.
FINANCIAL HIGHLIGHTS
DAVIS GROWTH OPPORTUNITY FUND
The following financial information represents selected data for
each share of capital stock outstanding throughout each period:
-------------------------------CLASS B-------------------------------
Six Months
ended
June 31,
1996 Year ended December 31,
----------------------------------------------------------
<CAPTION>
(Unaudited) 1995 1994 1993<F1> 1992<F1> 1991<F1>
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................................. $ 17.08 $ 12.82 $ 14.67 $ 13.25 $13.73 $ 9.83
------- ------- ------- ------- ------ ------
Income (Loss) From Investment Operations
- ----------------------------------------
Net Investment
Income (Loss)........................... (0.14) (0.26) (0.12) (0.07) (0.07) (0.06)
Net Gains or Losses
on Securities
(both realized and unrealized)........... 1.00 6.07 (1.11) 1.54 (0.32) 4.07
------- ------- ------- ------- ------ ------
Total From Investment
Operations............................ 0.86 5.81 (1.23) 1.47 (0.39) 4.01
------- ------- ------- ------- ------ ------
Less Distributions
- ------------------
Dividends (from net
investment income)....................... _ _ _ (0.05) _ _
Distributions (from
capital gains)........................... _ (1.55) (0.62) _ _ _
Distributions (from
paid-in capital)......................... _ _ _ _ (0.09) (0.11)
------- ------- ------- ------- ------ ------
Total Distributions...................... _ (1.55) (0.62) (0.05) (0.09) (0.11)
------- ------- ------- ------- ------ ------
Net Asset Value,
End of Period.............................. $ 17.94 $ 17.08 $ 12.82 $ 14.67 $13.25 $13.73
======= ======= ======= ======= ====== ======
Total Return<F2>............................. 5.04% 45.44% (8.45)% 11.16% (2.86)% 40.93%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted)............................ $37,101 $35,326 $36,087 $51,762 $46,958 $43,419
Ratio of Expenses to
Average Net Assets....................... 2.27% 2.30% 2.15% 2.39% 2.55% 2.49%
<F3>
Ratio of Net Income to
Average Net Assets...................... (1.56)% (1.50)% (0.81)% (0.55)% (0.54)% (0.45)%
<F3>
Portfolio Turnover Rate.................... 19.32% 30.07% 37.31% 38.93% 39.01% 12.16%
<FN>
<F1> Per share data has been restated to give effect to a 2 for 1 stock split to shareholders of record as of the close
of business of January 7, 1994.
<F2> Sales charges are not reflected in calculation.
<F3> Annualized
</FN>
</TABLE>
<TABLE>
DAVIS SERIES, INC.
FINANCIAL HIGHLIGHTS
DAVIS GOVERNMENT BOND FUND
The following financial information represents selected data for
each share of capital stock outstanding throughout each period:
---------------------------CLASS A--------------------------------
<CAPTION>
Six Month Year One Month
ended ended ended
June 31, 1996 December 31, December 31,
(Unaudited) 1995 1994
--------- ---- ----
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period.................................... $ 6.00 $ 5.79 $ 5.78
------- ------- -------
Income (Loss) From Investment Operations
- -----------------------------------------
Net Investment
Income..................................... 0.17 0.39 0.02
Net Gains or Losses
on Securities
(both realized and unrealized).............. (0.22) 0.27 (0.01)
------- ------- -------
Total From Investment
Operations............................... (0.05) 0.66 0.01
------- ------- -------
Less Distributions
- ------------------
Dividends (from net
investment income)......................... (0.23) (0.36) _
Distributions (from
capital gains)............................. _ (0.09) (0.57)
Distributions (from
paid-in capital)........................... _ _ _
------- ------- -------
Total Distributions........................ (0.23) (0.45) _
------- ------- -------
Net Asset Value,
End of Period................................ $ 5.72 $ 6.00 $ 5.79
======= ======= =======
Total Return<F1>............................... (0.93)% 11.82% (0.97)%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted).............................. $20,531 $21,485 $20,035
Ratio of Expenses to
Average Net Assets......................... 1.85%<F2> 1.74% 1.64%<F2>
Ratio of Net Income to
Average Net Assets........................ 5.97%<F2> 6.54% 6.22%<F2>
Portfolio Turnover Rate...................... 35.81% 41.04% 62.17%
<FN>
<F1> Sales charges are not reflected in calculation.
<F2> Annualized
</FN>
</TABLE>
<TABLE>
DAVIS SERIES, INC.
FINANCIAL HIGHLIGHTS
DAVIS GOVERNMENT BOND FUND
The following financial information represents selected data for
each share of capital stock outstanding throughout each period:
----------------------------Class B---------------------------
<CAPTION>
Six Months
ended
June 30, Year ended December 31,
1996 --------------------------------------------------------------
(Unaudited) 1995 1994 1993<F1> 1992<F1> 1991<F1>
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period....... $ 5.98 $ 5.79 $ 6.33 $ 6.61 $ 6.88 $ 6.64
-------- -------- ------- -------- -------- --------
Income (Loss) From Investment
- -----------------------------
Operations
- ----------
Net Investment Income..... 0.15 0.34 0.31 0.36 0.37 0.43
Net Gains or Losses on
Securities (both realized
and unrealized)......... (0.22) 0.26 (0.37) (0.12) (0.10) 0.35
-------- -------- ------- -------- -------- --------
Total From Investment
Operations........... (0.07) 0.60 (0.06) 0.24 0.27 0.78
-------- -------- ------- -------- -------- --------
Less Distributions
- ------------------
Dividends (from net
investment income)...... (0.20) (0.33) (0.37) (0.42) (0.27) (0.43)
Distributions (from
paid-in capital)........ - (0.08) (0.11) (0.10) (0.27) (0.11)
-------- -------- ------- -------- -------- --------
Total Distributions..... (0.20) (0.41) (0.48) (0.52) (0.54) (0.54)
-------- -------- ------- -------- -------- --------
Net Asset Value,
End of Period............. $ 5.71 $ 5.98 $ 5.79 $ 6.33 $ 6.61 $ 6.88
======== ======== ======= ======== ======== ========
Total Return<F2>............ 1.15% 10.62% (0.97)% 3.69% 4.14% 12.36%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted)............. $ 13,605 $ 15,976 $ 19,241 $ 50,080 $ 54,422 $ 62,766
Ratio of Expenses to
Average Net Assets...... 2.59% 2.51% 2.38% 2.37% 2.51% 2.51%
<F3>
Ratio of Net Income to
Average Net Assets...... 5.23% 5.77% 5.48% 5.52% 5.83% 6.36%
<F3>
Portfolio Turnover Rate... 35.81% 41.04% 62.17% 42.82% 81.28% 28.14%
<FN>
<F1> Per share calculations other than distributions were based on
average shares outstanding during the period.
<F2> Sales charges are not reflected in calculation.
<F3> Annualized
</FN>
</TABLE>
<TABLE>
DAVIS SERIES, INC.
FINANCIAL HIGHLIGHTS
DAVIS GOVERNMENT MONEY MARKET FUND
=============================================================================================================================
The following financial information for each respective fund represents
selected data for each share of capital stock outstanding throughout each
period.
------------------------------------CLASS A -----------------------------------
<CAPTION>
Six months ended Year ended
June 30, December 31,
1996 ----------------------------------------------------
(unaudited) 1995 1994 1993 1992 1991
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period...................... $ 1.000 $1.000 $1.000 $1.000 $ 1.000 $ 1.000
------- ------ ------ ------ ------- -------
Income (Loss) From Investment Operations
- ----------------------------------------
Net Investment
Income................................. .023 .051 .034 .020 .027 .047
Less Distributions
- ------------------
Dividends (from net
investment income)..................... (.023) (.051) (.034) (.020) (.027) (.047)
------- ------- ------ ------ ------- -------
Net Asset Value, End of
Period................................... $ 1.000 $ 1.000 $1.000 $1.000 $ 1.000 $ 1.000
======= ======= ====== ====== ======= =======
Total Return............................... 2.34% 5.25% 3.48% 2.01% 2.70% 4.78%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of
Period (000 omitted)................... $364,086 $357,118 $239,980 $39,531 $42,410 $50,556
Ratio of Expenses
to Average Net Assets.................. 0.69% 0.73% 0.64% 1.15% 1.14% 1.25%
<F1>
Ratio of Net Income
to Average Net Assets................. 4.66% 5.13% 3.43% 1.98% 2.68% 4.72%
<F1>
<FN>
<F1> Annualized
</FN>
</TABLE>
<TABLE>
DAVIS SERIES, INC.
FINANCIAL HIGHLIGHTS
DAVIS GOVERNMENT MONEY MARKET FUND
=============================================================================================================================
The following financial information for each respective fund represents selected data for each share of capital stock
outstanding throughout each period.
---------------------CLASS B--------------------- ---------------CLASS C------------
<CAPTION>
December 8, 1994 March 30, 1995
Six Months (Commencement Six Months (Commencement
Ended Year of operations) Ended of operations)
June 30, Ended through June 30, through
1996 December 31, December 31, 1996 December 31,
(Unaudited) 1995 1994 (Unaudited) 1995
--------- ---- ---- --------- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.............. $ 1.000 $ 1.000 $ 1.000 $1.000 $ 1.000
------- ------- ------- ------ -------
Income (Loss) From Investment
Operations
- ----------
Net Investment
Income......................... .023 .051 .003 .023 .041
Less Distributions
- ------------------
Dividends (from net
investment income)............. (.023) (.051) (.003) (.023) (.041)
------- ------- ------- ------ -------
Net Asset Value, End of
Period........................... $ 1.000 $ 1.000 $ 1.000 $1.000 $ 1.000
======= ======= ======= ====== =======
Total Return....................... 2.34% 5.25% 0.34% 2.34% 4.21%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of
Period (000 omitted).......... $7,615 $2,697 $747 $2,221 $475
Ratio of Expenses
to Average Net Assets.......... 0.69%<F1> 0.73%<F1> 0.64%<F1> 0.69%<F1> 0.73%<F1>
Ratio of Net Income
to Average Net Assets.......... 4.66%<F1> 5.13%<F1> 3.43%<F1> 4.66%<F1> 5.13%<F1>
<FN>
<F1>Annualized
</FN>
</TABLE>
<TABLE>
DAVIS SERIES, INC.
FINANCIAL HIGHLIGHTS
DAVIS FINANCIAL FUND
=============================================================================================================================
The following financial information for each respective fund represents
selected data for each share of capital stock outstanding throughout each
period.
-----------------------------------CLASS A----------------------------------------------
<CAPTION>
May 1, 1991
Six months (Commencement
Ended of operation
June 30, through
1996 Year Ended December 31, December 31,
----------------------------------------------
(Unaudited) 1995 1994 1993<F3> 1992<F3> 1991<F3>
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period........... $ 14.50 $ 10.68 $ 11.70 $ 11.20 $ 8.76 $ 7.15
-------- ------- ------- ------- ------ ------
Income (Loss) From
Investment Operations
---------------------
Net Investment Income......... 0.07 0.07 0.08 0.07 0.05 0.01
Net Gains or Losses on
Securities (both realized
and unrealized)............. 0.82 5.32 (0.61) 1.59 2.79 1.65
-------- ------- ------- ------- ------ ------
Total From
Investment
Operations.............. 0.89 5.39 (0.53) 1.66 2.84 1.66
-------- ------- ------- ------- ------ ------
Less Distributions
- ------------------
Dividends (from net
investment income).......... - (0.07) (0.08) (0.08) (0.05) (0.02)
Distributions (from
capital gains).............. - (1.50) (0.39) (1.08) (0.35) (0.03)
Distributions (from
paid-in capital)............ - - (0.02) - - -
-------- ------- ------- ------- ------ ------
Total Distributions....... - (1.57) (0.49) (1.16) (0.40) (0.05)
-------- ------- ------- ------- ------ ------
Net Asset Value, End of
Period.......................... $ 15.39 $ 14.50 $ 10.68 $ 11.70 $11.20 $ 8.76
======== ======= ======= ======= ====== ======
Total Return<F1>................ 6.14% 50.51% (4.55)% 14.87% 32.67% 34.74%<F2><F4>
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted)............... $85,842 $79,874 $57,670 $50,778 $31,660 $9,221
Ratio of Expenses to
Average Net Assets.......... 1.15% 1.28% 1.24% 1.32% 1.68% 2.49%<F4><F2>
<F4>
Ratio of Net Income
to Average Net Assets....... .93% .53% 0.67% 0.57% 0.43% 0.51%<F2><F4>
<F4>
Portfolio Turnover Rate....... 7.92% 41.89% 43.95% 70.33% 49.64% 39.75%
<FN>
<F1> Sales charges are not reflected in calculation.
<F2> Reflects the reimbursement of certain expenses by the Fund's investment manager.
<F3> Per share data has been restated to give effect to a 2 for 1 stock split to shareholders of record as of the close of
business on January 7, 1994.
<F4> Annualized
</FN>
</TABLE>
<TABLE>
DAVIS SERIES, INC.
FINANCIAL HIGHLIGHTS
DAVIS FINANCIAL FUND
============================================================================================================================
The following financial information for each respective fund represents selected data for each share of capital stock
outstanding throughout each period.
--------------------------------CLASS B---------------------------------
<CAPTION>
December 27, 1994
(Commencement
Six Months Year of operations)
Ended Ended through
June 30, December 31, December 31,
1996 1995 1994
(Unaudited) ---- ----
---------
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period.......................... $ 14.41 $ 10.68 $ 11.22
------- ------- -------
Income (Loss) From Investment Operations
- ----------------------------------------
Net Investment Income........................ 0.01 0.01 0.03
Net Gains or Losses on
Securities (both realized
and unrealized)............................ 0.81 5.22 (0.13)
------- ------- -------
Total From Investment Operations......... 0.82 5.23 (0.10)
------- ------- -------
Less Distributions
- ------------------
Dividends (from net
investment income)......................... _ _ (0.03)
Distributions (from
capital gains)............................. _ (1.50) (0.39)
Distributions (from
paid-in capital)........................... _ _ (0.02)
------- ------- -------
Total Distributions...................... _ (1.50) (0.44)
------- ------- -------
Net Asset Value, End of Period................. $ 15.23 $ 4.41 $ 10.68
======= ======= =======
Total Return<F1>............................... 5.69% 49.00% (0.90)%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted).............................. $ 3,922 $ 1,762 $ 28
Ratio of Expenses to
Average Net Assets......................... 2.05%<F2> 2.09%<F2> 2.04%
Ratio of Net Income
to Average Net Assets...................... 0.03%<F2> (0.38)%<F2> (0.13)%
Portfolio Turnover Rate...................... 7.92% 41.89% 43.95%
<FN>
<F1> Sales charges are not reflected in calculation.
<F2> Annualized
</FN>
</TABLE>
<TABLE>
DAVIS SERIES, INC.
FINANCIAL HIGHLIGHTS
DAVIS CONVERTIBLE SECURITIES FUND
===========================================================================================================================
The following financial information represents selected data for each share of capital stock outstanding throughout the
period.
---------------------------------CLASS A-------------------------
<CAPTION>
Six Months May 1, 1992
Ended (Commencement
June 30, of operations)
1996 Year Ended December 31, through
(Unaudited) 1995 1994 1993 December 31, 1992
--------- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 18.22 $ 15.57 $ 17.45 $ 15.73 $ 14.29
------- ------- ------- ------- -------
Income From Investment Operations
- ---------------------------------
Net Investment Income........................... 0.35 0.67 0.67 0.67 0.40
Net Gains or Losses on Securities (both
realized and unrealized)...................... 1.12 3.42 (1.83) 2.02 1.44
------- ------- ------- ------- -------
Total From Investment Operations........... 1.47 4.09 (1.16) 2.69 1.84
------- ------- ------- ------- -------
Less Distributions
- ------------------
Dividends (from net investment income).......... (0.20) (0.66) (0.67) (0.67) (0.40)
Distributions (from capital gains).............. _ (0.78) (0.05) (0.30) _
------- ------- ------- ------- -------
Total Distributions......................... (0.20) (1.44) (0.72) (0.97) (0.40)
------- ------- ------- ------- -------
Net Asset Value, End of Period.................... $ 19.49 $ 18.22 $ 15.57 $ 17.45 $ 15.73
======= ======= ======= ======= =======
Total Return<F1>.................................. 8.10% 26.68% (6.72)% 17.26% 19.95%<F2>
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000omitted)......... $ 63,775 $ 59,757 $47,844 $ 44,730 $ 24,323
Ratio of Expenses to Average Net Assets......... 1.06% 1.14% 1.20% 1.21% 1.35%<F2>
<F2>
Ratio of Net Income to Average Net Assets....... 3.72% 3.87% 4.06% 3.89% 4.94%<F2>
<F2>
Portfolio Turnover Rate......................... 27.98% 53.58% 45.15% 62.17% 11.51%
<FN>
<F1> Sales charges are not reflected in calculation.
<F2> Annualized
</FN>
</TABLE>
<TABLE>
DAVIS SERIES, INC.
FINANCIAL HIGHLIGHTS
DAVIS CONVERTIBLE SECURITIES FUND
===========================================================================================================================
The following financial information represents selected data for each share of capital stock outstanding throughout the
period.
----------------------------------CLASS B---------------------------------
<CAPTION>
Six Months February 3, 1995
Ended (Commencement
June 30, of operations)
1996 through
(Unaudited) December 31, 1995
--------- -----------------
<S> <C> <C>
Net Asset Value, Beginning of Period.......... $ 18.14 $ 15.95
------- -------
Income From Investment Operations
- ---------------------------------
Net Investment Income....................... 0.24 0.54
Net Gains on Securities (both realized
and unrealized)........................... 1.12 2.97
------- -------
Total From Investment Operations....... 1.36 3.51
------- -------
Less Distributions
- ------------------
Dividends (from net investment income)...... (0.17) (0.54)
Distributions (from capital gains).......... _ (0.78)
------- -------
Total Distributions..................... (0.17) (1.32)
------- -------
Net Asset Value, End of Period................ $ 19.33 $ 18.14
======= =======
Total Return <F1>............................. 7.52% 25.31%<F2>
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000 omitted)..... $ 1,013 $378
Ratio of Expenses to Average Net Assets..... 1.99%<F2> 2.01%<F2>
Ratio of Net Income to Average Net Assets... 2.79%<F2> 3.00%<F2>
Portfolio Turnover Rate..................... 27.98% 53.58%
<FN>
<F1> Sales charges are not reflected in calculation.
<F2> Annualized
</FN>
</TABLE>
<TABLE>
DAVIS SERIES, INC.
FINANCIAL HIGHLIGHTS
DAVIS REAL ESTATE FUND
The following financial information represents selected data for each share of capital stock outstanding
throughout the period.
----------------Class A----------------- ------------------Class B-------------------
<CAPTION>
January 3,1994 December 27,1994
(Commencement Six Months (Commencement
Year of operations) Ended Year of operations)
Six Months Ended through June 30, Ended through
Ended December 31, December 31, 1996 December 31, December 31,
June 30, 1995 1994 (Unaudited) 1995 1994
1996 ---- ---- --------- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.................. $16.44 $14.72 $14.29 $16.41 $14.72 $14.73
------ ------ ------ ------ ------ ------
Income From Investment Operations
- ---------------------------------
Net Investment Income.............. 0.43 0.82 0.62 0.31 0.68 0.02
Net Gains on Securities (both
realized and unrealized)......... 0.75 1.71 0.55 0.82 1.70 0.11
------ ------ ------ ------ ------ ------
Total From Investment Operations. 1.18 2.53 1.17 1.13 2.38 0.13
------ ------ ------ ------ ------ ------
Less Distributions
- ------------------
Dividends (from net
investment income)............... (0.20) (0.81) (0.62) (0.17) (0.69) (0.02)
Distributions (from
capital gains)................... - _ (0.12) _ - (0.12)
------ ------ ------ ------ ------ ------
Total Distributions.............. (0.20) (0.81) (0.74) (0.17) (0.69) (0.14)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period....... $17.42 $16.44 $14.72 $17.37 $16.41 $14.72
====== ====== ====== ====== ====== ======
Total Return<F1> .................... 7.23% 17.70% 8.25% 6.73% 16.59% 8.29%
- ------------ <F2>
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted).................... $34,056 $29,320 $25,450 $1,543 $414 $34
Ratio of Expenses to
Average Net Assets............... 1.32% 1.43% 1.86% 2.23% 2.39% 2.64%
<F2> <F2> <F2>
Ratio of Net Income to
Average Net Assets............... 5.18% 5.44% 3.98% 4.27% 4.48% 3.20%
<F2> <F2> <F2>
Portfolio Turnover Rate............ 8.02% 38.82% 35.80% 8.02% 38.82% 35.80%
<FN>
<F1> Sales charges are not reflected in calculation.
<F2> Annualized
</FN>
</TABLE>
DAVIS SERIES, INC.
124 East Marcy Street Santa Fe, New Mexico 87501
Directors Officers
Jeremy B. Biggs Jeremy H. Biggs
Wesley E. Bass, Jr. Chairman
Marc P. Blum Shelby M.C. Davis
Shelby M.C. Davis President
Eugene M. Feinblatt Carl R. Luff
Jerry D. Geist Vice President, Treasurer
D. James Guzy & Assistant Secretary
G. Bernard Hamilton Raymond O. Padilla
LeRoy E. Hoffberger Vice President, Secretary
Laurence W. Levine & Assistant Treasurer
Martin H. Proyect Carolyn H. Spolidoro
Christian R. Sonne Vice President
Edwin R. Werner Christopher C. Davis
Vice President
Andrew A. Davis
Vice President
Eileen R. Street
Assistant Treasurer
& Assistant Secretary
Investment Adviser & Distributor
Davis Selected Advisers, L.P.
124 East Marcy Street
Santa Fe, New Mexico 87501
Transfer Agent & Custodian
State Street Bank and Trust Company
c/o The Davis Funds
P.O. Box 8406
Boston, MA 02266-8406
Counsel
D'Ancona & Pflaum
30 North LaSalle Street
Chicago, Illinois 60602
Auditors
Tait, Weller & Baker
Two Penn Center, Suite 700
Philadelphia, Pennsylvania 19102-1707
=============================================================================
For more information about Davis Series, Inc. including management fee,
charges and expenses, see the current prospectus which must precede or
accompany this report.
=============================================================================
9608-15 DS80
