DAVIS TAX-FREE HIGH INCOME FUND
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
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Dear Shareholder:
Davis Tax-Free High Income Fund had good performance over the twelve
months ending September 30, 1995. Davis Tax-Free's total return for that
period was 6.64% (1) compared to the 9.65% average total return of 36
funds in Lipper Analytical Inc.'s High Yield Debt Municipal fund category.
This performance was after Davis Tax-Free's number one calendar 1994
ranking as the strongest of all 82 intermediate, 184 general, and 36 high
yield municipal bond funds based on total return according to Lipper
Analytical Services, Inc. as reported in the January 17, 1995 edition of
The Bond Buyer. Davis Tax-Free's total return for that period was +2.29%;
only one other municipal bond fund in the three categories (above) had a
positive total return (+0.19%) over the period.
Davis Tax-Free continues to be one of the top risk-adjusted performers of
all municipal bond funds. Morningstar, Inc. gives Davis Tax-Free its
highest rating, PPPPP (five star) overall (historical profile), based on the
risk-adjusted performance over the life of the Fund. It also gives Davis
Tax-Free its PPPPP (five star) rating over the last three years and the
last five years (2).
Davis Tax-Free's top risk-adjusted performance has resulted from
following several strategies including being diversified with almost three
hundred positions, a continued focus on the upside potential and the
downside protection of each individual investment, and investing in less
followed situations that offer extra yield per credit quality and better
risk/reward ratios. We plan to continue following these and other
successful strategies.
The municipal bond market has under-performed the general bond market
since April of 1995 due to concerns about passage of the flat income tax
and the abolition of the Federal tax-free status of municipal bonds. The
under-performance can most easily be seen by looking at the AAA-rated
municipal bond yields as a percent of U.S. Treasury yields. Before the
concern this percentage was about 85%; it has since increased to between
95% and 97%. Thus, we believe passage of the flat tax is substantially "in
the price" of municipal bonds. On the other hand, if the flat tax does not
pass, we think municipal bonds should rally to a level where AAA-rated
municipal yields are back to around 85% of U.S. Treasury yields.
The other major undercurrent in the municipal bond market is that credit
quality yield spreads have remained tight. For example the yield spread
between a AAA-insured issue and the same issue that is uninsured and is
rated BBB is only about 35 to 40 basis points. Because you are not being
paid a lot to take credit risk, we are continuing to hold upgraded holdings
with an average rating (of the securities which are rated) of A+. Once
spreads widen we will reposition the Fund in lower quality credits.
In the middle of February 1995, we took profits on our aggressive interest
rate sensitive positions and went back to the more defensive posture of
the rest of the portfolio. We thought that we had caught most of the
upside from the rally we were fortunate to catch at the bottom in October
1994. Since that time U.S. Treasuries have rallied substantially but flat
tax concern limited the rise of the municipal bond market. We have
continued our posture of giving up some upside potential to pick up
increased downside protection both with respect to rising rates and to
weakening credit profiles that we adopted at that time. We think this
positioning should allow Davis Tax-Free to outperform in flat and hostile
(rising rate, declining credit quality) environments but under-perform in a
large market rally in absolute total return terms. We expect that our
posture should give us favorable risk-adjusted performance similar to
what we have achieved in the past (of course, past performance is no
guarantee of future success).
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
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In summary, your Fund performed well over the twelve months ending
September 30, 1995. After the large bond market rally, we are back to a
full defensive stance which should outperform in a stable or rising rate
environment but would probably under-perform if interest rates drop a lot.
We think this continuing defensive posture is appropriate after the recent
bond market rally. We believe our posture should continue to result in
high levels of tax-free income and strong relative returns over the next
year.
Respectfully submitted,
/s/ Shelby M.C. Davis /s/ B. Clark Stamper
Shelby M.C. Davis B. Clark Stamper
President Portfolio Manager
November 3, 1995
(1) Annual average rates of return for Davis Tax-Free High Yield B shares
for the one, five and ten year period ended March 1995 are 3.64%, 7.33%
and 7.81%, respectively after reduction of applicable contingent deferred
sales charge (see prospectus).
(2) The Morningstar proprietary ratings reflect historical risk-adjusted
performance as of 9/30/95. The ratings are subject to change every
month. Past performance is no guarantee of future results. Morningstar
ratings are calculated from the fund's three-, five- and ten-year (or life
of fund, which ever is shorter) average annual returns in excess of 90-day
Treasury Bill returns with appropriate fee adjustments and a risk factor
that reflects fund performance below 90-day T-bill returns. Davis
Tax-Free High Income B received 5 stars overall and, also, for the three-,
five- and ten-year periods. The fund was rated against 721, 486 and 167
municipal bond funds for the respective periods. Ten percent of the funds
in an investment category receive five stars, 22.5% receive four stars,
35% receive three stars, 22.5% receive two stars, and 10% receive one
star. Star ratings for the other classes may vary, and are available only
for classes with at least three years of performance history.
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
Comparison of Davis Tax-Free High Income Fund, Class B Shares and
Lehman Brothers 10 Year Revenue Bond Index
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Average Annual Total Return For the Periods ended September 30, 1995.
CLASS A SHARES (This calculation includes an
initial sales charge of 4 3/4%.)
Life of class (December 1, 1994
through September 30, 1995)..............2.85%
CLASS B SHARES (This calculation includes
applicable contingent deferred sales charges.)
One Year.............................. 3.64%
Five Years............................ 7.33%
Ten Years............................. 7.81%
$10,000 invested over ten years. Let's say you invested $10,000 in Davis
Tax-Free High Income Fund B shares on September 30, 1985. As the chart
below shows, by September 30, 1995 the value of your investment would
have grown to $21,222 - a 112.22% increase on your initial investment.
For comparison, the Lehman Brothers 10 Year Revenue Bond Index is also
presented on the chart below. Its value would have grown to $20,407 - a
104.07% increase. Investments cannot be made directly into an index.
<TABLE>
<CAPTION>
Measurement period Davis Tax-Free Lehman Brothers
High Income Fund 10-YR Rev. Bd.
------------------ ------------------- ---------------
<S> <C> <C>
FYE 9/30/85 $10,000 $10,000
FYE 9/30/86 11,383 12,237
FYE 9/30/87 11,457 13,267
FYE 9/30/88 12,899 15,022
FYE 9/30/89 14,011 16,210
FYE 9/30/90 14,763 17,305
FYE 9/30/91 16,253 19,735
FYE 9/30/92 17,703 21,779
FYE 9/30/93 19,314 24,662
FYE 9/30/94 19,857 17,575
FYE 9/30/95 21,222 20,407
</TABLE>
The performance data for Davis Tax-Free High Income Fund contained in
this report represents past performance and assumes that all
distributions were reinvested, and should not be considered as an
indication of future performance from an investment in the Fund today.
The investment return and principal value will fluctuate so that shares
may be worth more or less than their original cost when redeemed.
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
Management's Discussion of Fund Performance
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An interview with B. Clark Stamper, Portfolio Manager of Davis Tax-Free
High Income Fund
Q. How is the Fund positioned currently and why?
A. After the bond market rally from October/November 1994 and with
several stock market indices at or near record high levels, both the
stock and the bond market appear to be in positions similar to late
1993 from which they posted poor results. The key difference between the
two times is that, in 1993, short rates were very low. Short rates did
not rally with long rates and so they offer more value right now. Thus,
keeping a short duration makes more since if you believe that the bond
market will not rally forever and because the yield curve is relatively
flat. With respect to credit quality, credit quality yield spreads are
relatively tight at only a 35 basis point yield pick up from uninsured
BBB to insured AAA. Thus, we are not being paid much to take on credit
risk. This spread could widen out to as much as 150 basis points or more.
When it does, I will lower the Fund's credit quality from its current A+
to back below investment grade to take advantage of the opportunities.
Q. What would cause credit quality spreads to widen?
A. Weaker credit fundamentals. The economy is putting out mixed
signals. Some sectors appear to be getting stronger while others appear
to be getting weaker. I have noticed that consumer installment debt as a
percent of per capita income is at record levels. This could mean that
individuals' borrowing capacity is at its limit and that current levels
of purchasing will be curtailed in the future. Changes in spending habits
such as that would result in a slowdown in the economy and deteriorating
credit profiles. As credits weaken, investors will require more yield to
hold them; thus, credit quality spreads would widen.
Q. What about the flat tax?
A. I believe the potential impact of the flat tax and the abolition of
Federal tax-free status of municipal bonds and tax subsidies for real
estate and corporate debt and interest expense has already been reflected
in the prices and yields of municipal bonds. Basically, its passage is
already substantially "in the price" of municipal bonds. Thus, if it passes
municipal bonds will only trade off slightly; however, if it does not
pass, municipal bonds will outperform other fixed income investments,
just as they under-performed over the last six months.
Q. If the flat tax passes, will the municipal bond market disappear?
A. No, I do not think so. Municipalities will still need to finance
projects like water and sewer systems, utilities, schools, bridges, etc.
However, some municipal bonds such as industrial revenue bonds
(municipal bonds backed by corporations) and municipal housing bonds
could disappear or change their characteristics.
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
Management's Discussion of Fund Performance - Continued
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An interview with B. Clark Stamper, Portfolio Manager of Davis Tax-Free
High Income Fund _ Continued
Q. How would you describe your basic investment style?
A. I am a risk manager. My primary focus is on the tradeoffs between
the risks and rewards of different investments. The primary risks in the
high yield municipal category are: 1) credit risk, the risk that principal
and interest will not be paid on a timely basis due to deteriorating credit
quality, which would also cause the price of a security to drop, and 2)
interest rate risk, the risk that interest rates will rise, thus, causing
the value of a fixed coupon bond to drop. The reward is usually price
appreciating due to improving credit quality and/or falling interest rates,
in addition to a high current yield. Of course, there are other types of
risk and the tradeoffs among them can result in different positive or
negative returns depending upon the subtleties of the specific credit and
bond characteristics.
Q. How do you make your investment decisions?
A. My primary tool is bottom up credit research. My major concern is
that the credit quality of our investments does not deteriorate and that
we are paid back principal and interest on schedule. Purchasing high yield
bonds is like making a loan. There are numerous variables that you look
at to make sure you are going to be paid back. The potential return on
the investment is then compared to the credit quality of the investment
and the risk of something going wrong. I also apply this upside/downside
analysis to interest rate risk and call risk as well. In addition, I use
top-down management techniques where I look at the characteristics of
the portfolio as a whole. I use these techniques to monitor the proportion
of our stake in positions of similar type or strategy, and to make sure we
are properly diversified.
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments
At September 30, 1995
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<TABLE>
<CAPTION>
MUNICIPAL BONDS - (96.17%) Value
Principal (Note 1)
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<S> <C> <C>
ALABAMA - (0.47%)
$ 40,000 Alabama Hsg. Fin. Auth. Sngl. Fam. Mtg. Rev. Bds., Ser. B, Zero Cpn.,
10/01/14............................................................................................ $ 5,709
60,000 Baldwin Cnty., AL, Ind. Dev. Brd. IDR Bds., (Scott Paper Corp. Prj.)
Ser. '84, 10.50%, 09/01/11.......................................................................... 60,419
210,000 Ozark, AL, Medical Clinic Brd. 1st Mtg. Rev. Bds. (United States
Health & Hsg. Foundation, Inc. Prj.), 9.25%, 10/01/99............................................... 228,308
500,000 The Special Care Fac. Fin. Auth. of the City of Pell City, AL, 1st Mtg.
Rev. Bds. (The Village of Cook Springs, Inc. Prj.) Ser.'93-A,
8.50%, 07/01/18..................................................................................... 519,000
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813,436
ALASKA - (0.42%) ------------
690,000 Alaska Hsg. Fin. Corp., Insured Mtg. Prg. Bds., '90 1st Ser., 7.80%,
12/01/30............................................................................................. 726,156
ARIZONA - (2.38%) ------------
195,000 Chandler, AZ, Improvement Dist. No. 51, 7.875%, 01/01/99.............................................. 197,055
400,000 City of Tolleson Muni Fin. Corp. Rev. Bds., Ser. of '85, 9.20%, 09/01/05.............................. 409,976
230,000 Coconino & Mohave Cntys., AZ, Unified School Dist. No. 6, Cap.
Appreciation Ref. Bds., Zero Cpn., 07/01/02......................................................... 161,952
990,000 The IDA of the City of Casa Grande, AZ, Dev. Rev. Bds. (Five Points
Redevelopment Prj.), Sr. Bds., 8.25%, 12/01/15...................................................... 1,026,363
500,000 The IDA of the City of Sierra Vista, 1st Mtg. Nursing Home Ref. Rev. Bds.
(Sierra Vista Medical Investors, Ltd. Prj.) Ser. '94A, 8.50%, 08/01/10.............................. 518,190
5,000 The IDA of the Cnty. of Maricopa (Arizona) Statewide Sngl. Fam. Mtg. Rev.
Bds. (GNMA Mtg.-Backed Sec. Program) Ser. '90, 7.85%, 09/01/22...................................... 5,166
100,000 The IDA of the Cnty. of Pima, AZ, Sngl. Fam. Mtg. Rev. Bds. (GNMA
Mtg.-Backed Sec. Program) Ser. '88, 8.125%, 09/01/20................................................ 106,117
15,720,000 Phoenix, AZ, IDA Sngl. 0Fam. Mtg. Rev. Bds., Ser. '84, Zero Cpn.,
12/01/15............................................................................................ 1,679,368
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4,104,187
ARKANSAS - (0.33%) ------------
500,000 Independence Cnty., AR, PCR, (Mississippi Pwr. & Lt. Co. Prj.) '82-A
Ser. B, 9.50%, 07/01/14............................................................................. 562,085
CALIFORNIA _ (5.59%) ------------
380,000 California Hlth. Fac. Auth. Insured Hosp. Rev. Bds. (Victor Valley
Community Hosp.) '84 Ser. A, 9.875%, 07/01/12....................................................... 385,578
1,010,000 California Hlth. Fac. Auth. Hosp. Rev. Ref. Bds. (Valley Presbyterian Hosp.)
'83 Ser. A, 9.00%, 05/01/12......................................................................... 1,014,313
500,000 California Hlth. Fac. Auth., Fin. Auth., Kaiser Permanente, Medical Care
Prg., Rev. Bds., '85 Ser. A, 9.125%, 10/01/15....................................................... 512,135
105,000 California Hsg. Fin. Agy. Multi-Unit Rental Hsg. Rev. Bds. '80 Ser. A,
8.75%, 02/01/10..................................................................................... 106,911
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
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MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
CALIFORNIA - Continued
$12,950,000 California Hsg. Fin. Agy. Rev. Bds., Cap. Appreciation - Home Mtg. -
Ser. A, Zero Cpn., 08/01/23......................................................................... $ 1,502,459
100,000 The City of Los Angeles, Multi Fam. Hsg. Ref. Rev. Bds., '91 Ser. A,
7.00%, 05/01/21105,280
460,000 City of Modesto, CA, Econ. Dev. Rev. Bds. (FHA Insured Mtg. Loan -
Evergreen Convalescent Home Prj.), 10.50%, 08/01/19................................................. 476,022
950,000 City of Napa, CA, '92, Ind. Rev. Ref. Bds. (Napa Motel and Restaurant),
8.50%, 12/01/07..................................................................................... 973,959
50,000 Cnty. of Los Angeles, Sngl. Fam. Mtg. Rev. Sr. Bds., '86 Issue A, 7.33%,
08/01/10............................................................................................ 51,876
250,000 Cnty. of Marin, Mtg. Rev. Bds., Ser. '84A (FHA Insured Mtg. Loan -
Marion Park Apts. Prj.), Zero Cpn., 04/01/01........................................................ 144,000
1,000,000 Cnty. of Marin, Multifam. Hsg. Rev. Bds., Ser. '84B (Marion Park
Apts. Prj.), Zero Cpn., 04/21/07.................................................................... 315,350
250,000 Dept. of Veteran Affairs of the State of California, Home Purchase Rev.
Bds., '88 Ser. A, 7.40%, 08/01/97................................................................... 264,583
250,000 Harbor Dept. of the City of Los Angeles, Rev. Bds., Issue of '85, 8.70%,
09/01/15............................................................................................ 267,523
100,000 Hsg. Auth. of the Cnty. of Santa Clara, Multifam. Hsg. Rev. Bds.,
Ser. '85 C (Fannie Mae Prg./Amberwood Apts. Prj.),0%/9.375%, 10/01/07............................... 86,012
1,000,000 Loma Linda, CA, IDR Bds., Medical Pptys. Prj. - Loma Linda University,
10.625%, 11/01/12................................................................................... 1,012,920
295,000 Los Angeles, CA, Community Redevelopment Agy. Res. Mtg. Rev. Bds.,
'85 Ser. A, 8.875%, 05/01/18........................................................................ 313,706
1,170,000 Los Angeles, CA , Mtg. Rev. Bds., FHA Section 8 Insured Mtg. Loan
(Arleta Park Apts.) Ser. A, 9.75%, 03/01/06......................................................... 1,227,377
175,000 Los Angeles, CA, Multi. Fam. Rev. (FHA Insured Multi-Fam. Hsg. Mtg.
Rev. Bds.) Park Parthenia Prj., 7.30%, 07/20/11..................................................... 181,892
50,000 Los Angeles, CA, Reg'l. Airports Improvement Corp. Lease Rev. Bds.
(Los Angeles West Terminal Fuel Corp.), 10.00%, 01/01/01............................................ 56,773
355,000 Redevelopment Agy. of the City of Oakland, Central Dist. Redevelopment
Prj. Tax Allocation Bds., Ser. A, 7.20%, 02/01/09................................................... 368,788
250,000 San Francisco, CA, City & Cnty. Multi. Fam. Hsg. Rev. Bds. (FHA
Insured - Aspen South Hill Apts.) Ser. C, 9.00%, 12/01/26........................................... 259,738
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9,627,195
COLORADO - (1.36%) ------------
150,000 Arapahoe Cnty., CO, Sngl. Fam. Mtg. Rev. Multiplier Bds., Ser. '83A,
Zero Cpn., 12/01/09................................................................................. 32,886
2,125,000 Colorado Hlth. Fac. Auth., Retirement Hsg. Rev. Bds.(Liberty Heights
Prj.), '90 Subordinate Ser. B, Zero Cpn., 07/15/22.................................................. 338,003
575,000 Colorado Hlth Fac. Auth., Retirement Hsg. Rev. Bds. (Liberty Heights
Prj.), '91 Ser. B, Zero Cpn., 07/15/24.............................................................. 78,850
900,000 Colorado Hsg. Fin. Auth. (Sngl. Fam. Prg. Sr. Bds.), 8.07%, 08/01/19.................................. 937,071
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
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MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
COLORADO - Continued
$ 310,000 Denver (City & Cnty.), CO, Sngl. Fam. Mtg. Rev. Bds., Ser. '85A,
Zero Cpn., 09/01/16................................................................................. $ 34,323
180,000 Hamilton Creek Metro. Dist., Summit Cnty., CO, G.O.,11.25%, 12/01/04<F1> 112,950
770,000 Mesa Cnty., CO, IDR Ref. Bds. (Joy Tech. Inc. Prj.) Ser. '92, 8.50%,
09/15/06............................................................................................ 811,395
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2,345,478
CONNECTICUT - (0.35%) ------------
600,000 Connecticut Dev. Auth., Hlth. Care Rev. Bds. (Corp. for Independent Living
Prj.) Ser. '93B, 8.00%, 07/01/17.................................................................... 610,842
DELAWARE - (0.61%)
820,000 Delaware Econ. Dev. Rev. Ref. Bds. (Supermarkets General Corp. Prj.)
Ser. '83, 10.875%, 12/01/03......................................................................... 846,109
290,000 Delaware St. Econ. Dev. Community Multi-Fam. Mtg. Rev. Bds.,
Cadis-GNMA-Chestnut Cross, 0%/9.75%, 07/20/20....................................................... 210,131
------------
1,056,240
DISTRICT OF COLUMBIA - (0.16%) ------------
250,000 District of Columbia (Washington, D.C.) Rev. Bds. (The Howard University
Issue) Ser. A, 7.875%, 10/01/04..................................................................... 271,940
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FLORIDA - (6.61%)
1,750,000 Broward Cnty., FL, Hsg. Fin. Auth. Rev. Home Mtg., Ser. A, Cap.
Appreciation, Zero Cpn., 04/01/14................................................................... 272,318
25,000 Certificates of Participation, The School Brd. of Dade Cnty., FL, 7.00%,
02/01/98............................................................................................ 24,996
480,000 Charlotte Cnty., FL, IDR Ref. Bds. (Beverly Ent. - Florida, Inc. Prj.)
Ser. '87, 10.00%, 06/01/11.......................................................................... 562,056
6,945,000 City of Tampa, FL, Home Mtg. Rev. Bds., '83 Ser. A, Muni Multiplier
Bds., Zero Cpn., 10/01/14........................................................................... 944,381
725,000 Dade Cnty., FL, Special Hsg. Rev. Bds. (City of Miami Dev. - Indenture
VIII), Ser. A, 11.00%, 07/01/12..................................................................... 748,737
500,000 Dade Cnty. IDA IDR Bds., Ser. '95 (Miami Cerebral Palsy Res. Svcs., Inc.
Prj.), 8.00%, 06/01/22.............................................................................. 502,795
1,200,000 Florida Hsg. Fin. Agy. (Southlake Apartments Prj. - D), 8.10%, 10/01/02<F2>........................... 1,241,304
1,000,000 Hernando Cnty., FL, Secured IDR Ref. Bds. (Florida Crushed Stone Co.
Prj.) Ser. '93, 8.50%, 12/01/14..................................................................... 1,054,080
115,000 Highlands Cnty., FL, IDA (Beverly Ent. - Florida, Inc. Prj.) Ser. '91, 9.25%,
07/01/07.............................................................................................. 130,031
1,000,000 Highlands Cnty. IDA (Florida) 1st Mtg. Hlth. Care Rev. Bds., Ser. '91
(Church of All Faiths, Inc. Prj.), 9.375%, 10/01/21................................................. 800,000
250,000 The Hsg. Fin. Auth. of Dade Cnty. (Florida) Collateralized Mtg. Rev. Bds.,
'84 Ser. H (Lihud Ltd. Apts. Prj.), 10.50%, 06/01/00................................................ 255,615
240,000 Jacksonville Elec. Auth. (Jacksonville, Florida) St. Johns River Pwr. Park
Sys. Rev. Bds., Issue One, Ser. Seven, 8.875%,10/01/10.............................................. 244,843
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
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- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
FLORIDA - Continued
$ 460,000 Jacksonville Elec. Auth. (Jacksonville, Florida) St. Johns River Pwr. Park
Sys. Rev. Bds., Issue One, Ser. Two, 7.25%, 10/01/13................................................ $ 460,152
205,000 Jacksonville Hlth. Fac. Auth. Hosp. Rev. Ref. Bds., Ser.'89A (Methodist
Hosp. Prj..), 8.00%, 10/01/06....................................................................... 206,738
340,000 Jacksonville Hlth. Fac. Auth. Hosp. Rev. Ref. Bds., Ser. '89A (Methodist
Hosp. Prjs.), 8.00%, 10/01/15....................................................................... 342,397
250,000 Jacksonville Hlth. Fac. Auth. Hosp. Rev. Ref. Bds., Ser. '89B (Methodist
Hosp. Prjs.), 8.00%, 10/01/15....................................................................... 251,763
155,000 Leon Cnty., FL, Hsg. Fin. Auth. Sngl. Fam. Mtg. Rev. Bds., Cap.
Appreciation-Multi-Cnty. Prg. '84A, Zero Cpn., 03/01/02............................................. 80,333
155,000 Leon Cnty., FL, Hsg. Fin. Auth. Sngl. Fam. Mtg. Rev. Bds., Cap.
Appreciation-Multi-Cnty. Prg. '84A, Zero Cpn., 09/01/02............................................. 76,276
155,000 Leon Cnty., FL, Hsg. Fin. Auth. Sngl. Fam. Mtg. Rev. Bds., Cap.
Appreciation-Multi-Cnty. Prg. '84A, Zero Cpn., 09/01/03............................................. 68,916
655,000 Manatee Cnty., FL, Hsg. Fin. Auth. Mtg. Rev. Bds., Cap. Appreciation,
'83 Ser. A, Zero Cpn., 10/01/15..................................................................... 81,082
75,000 Marion Cnty., FL, IDR (Midland-Ross Corp. Prj.) Ser. '81, 11.875%,
08/01/11............................................................................................ 76,445
500,000 Ocean Highway & Port Auth. Solid Waste/PCR Bds. (Container Corp. of
America Prj.) Ser. '85, 9.375%, 11/01/04............................................................ 520,100
465,000 Orange Cnty., FL, IDA (Beverly Ent. - Florida, Inc. Prj.) Ser. '91, 9.25%,
08/01/10............................................................................................ 524,901
3,400,000 Palm Beach Cnty., FL, Hsg. Fin. Auth. Sngl. Fam. Mtg. Rev. Bds. Cap.
Appreciation, Zero Cpn., 07/01/14................................................................... 466,174
850,000 South Indian River Wtr. Control Dist., Sect. 15AImprovement Bds. (Egret
Landing - Phase I), 8.00%, 11/01/18................................................................. 926,925
470,000 Winter Garden, FL, IDR Ref. Bds. (Beverly Ent. - Florida, Inc. Prj.)
Ser. '91, 8.75%, 07/01/12........................................................................... 514,429
------------
11,377,787
GEORGIA - (1.72%) ------------
250,000 Atlanta Hsg. Dev. Corp., Mtg. Rev. Bds., Ser. '80A (Bedford Tower
Section 8 Assisted Prj./FHA Insured Mtg.), 10.375%, 02/01/23........................................ 253,863
420,000 Columbus, GA, Dev. Auth. 1st Mtg. Rev. Bds. (Colonial Homes Ltd.),
12.00%, 12/01/15.................................................................................... 437,464
4,060,000 Gwinnett Cnty., GA, Hsg. Auth. Sngl. Fam. Mtg. Rev. Bds. Cap.
Appreciation, Zero Cpn., 04/01/16................................................................... 483,587
1,000,000 The Hsg. Auth. of Columbus, GA, Multifamily Hsg. Rev. Bds. (Columbus
Gardens Elderly Hsg. Prj.) Ser. '94, 8.25%, 01/01/24................................................ 1,012,940
750,000 Macon Cnty., GA, Hosp. Ref. Rev. Bds. (Flint River Comm.
Hospital - Paracelsus Healthcare Corp. Prj.) Ser. '91, 9.00%, 03/01/11.............................. 781,650
------------
2,969,504
------------
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
ILLINOIS - (6.47%)
$ 1,025,000 Aurora, IL, Hosp. Fac. Rev. Bds. (Mercy Ctr. Hlth. Care Svcs.) Ser. A,
9.625%, 10/01/09.................................................................................... $ 1,075,348
350,000 Bensenville, IL, IDR Bds., Insured - Allied Roofers Supply Prj., 10.25%,
08/01/03............................................................................................ 358,775
900,000 Chicago, IL, G.O. Ref. Bds., Ser. B, 7.25%, 01/01/06.................................................. 939,771
200,000 Cook Cnty., IL, Community Cons. School Dist. No. 064 Park Ridge,
School Fire Prevention and Safety Bds., Utilities G.O., Ser. '88, 7.00%,
12/01/99............................................................................................ 200,940
325,000 Cnty. of Cook, IL, Sngl. Mtg. Rev. Bds., '83 Ser. A, Zero Cpn., 07/01/15 37,534
85,000 Illinois Educational Fac. Auth. Rev. Bds., Chicago College Osteopathic
Hlth. Sys., 9.30%, 07/01/98......................................................................... 87,104
105,000 Illinois Educational Fac. Auth. Rev. Bds., Chicago College Osteopathic
Hlth. Sys., 9.625%, 07/01/05107,550
150,000 Illinois Hlth. Fac. Auth. Rev. (Hlth. Fac. Rev. Ref. Bds.) Methodist Med.
Ctr. of Illinois, 8.00%, 10/01/14................................................................... 150,503
1,085,000 Illinois Hsg. Dev. Auth. Multi-Fam. Hsg. Rev. Bds., Ser. '82, 10.625%,
07/01/14............................................................................................ 1,119,080
40,000 Illinois Hsg. Dev. Auth. Residential Mtg. Rev. Bds., Zero Cpn., 02/01/15.............................. 5,457
1,100,000 Public Bldg. Commission of Chicago, Cook Cnty., IL, Bldg. Rev. Bds,
Ser. B of '87 Cmnty. College Dist. No. 508, 8.75%, 01/01/07......................................... 1,183,094
300,000 Rolling Meadows, IL, Multi-Fam. Mtg. Rev. Ref. Bds, Woodfield Gardens
Apartments, 7.75%, 02/01/04321,615
1,000,000 St. Clair Cnty., IL, Pub. Bldg., Community Bldg. Rev. Bds., 8.00%,
12/01/05............................................................................................ 1,063,500
1,435,000 Taylorville, IL, Econ. Dev. Rev. Bds. (Kroger Co. Prj.), 11.75%, 04/01/07............................. 1,458,261
1,360,000 Urbana, IL, Econ. Dev. Rev. Bds. (Kroger Co. Prj.), 11.50%, 03/01/07.................................. 1,382,930
191,000 Village of Sauget, IL, IDR Bds. (The Pillsbury Co. Prj.) Ser. '80, 8.375%,
05/01/05............................................................................................ 192,780
500,000 Village of Sherman, IL, 1st Mtg. Rev. Bds. (Villa Vianney, Inc.) Ser. '95A,
8.375%, 07/01/25.................................................................................... 501,155
1,000,000 Village of Wataga, IL, 1st Mtg. Hlth. Fac. Rev. Bds. (First Humanics Corp.
- Galesburg, IL Prj.) Ser. '86, 10.00%, 09/01/16<F1>................................................ 950,000
------------
11,135,397
INDIANA - (2.21%) ------------
615,000 Bloomington, IN, 1st Mtg. Rev. (Bloomington Plaza - Kroger Corp.), 12.25%,
06/01/07............................................................................................ 630,154
500,000 Carmel, IN, Retirement Rental Hsg. Rev. Ref. Bds. (Beverly Ent. - Indiana,
Inc. Prj.) Ser. '92, 8.75%, 12/01/08................................................................ 548,505
560,000 City of Bloomington, IN, Econ. Dev. 1st Mtg. Rev. Bds., Ser. '81A
(Bloomington Plaza Co. Prj. - SCOA Ind. Inc., Lessee and Guarantor),
12.375%, 06/01/11................................................................................... 573,871
394,072 Elwood, IN, Econ. Dev. Rev. (K-Mart Co. - S. S. Kresge Co. Prj.), 8.50.%,
10/15/00............................................................................................ 395,731
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
INDIANA - Continued
$ 570,000 Indiana Bond Bank, Ser. '85 A Bds., 9.625%, 02/01/06.................................................. $ 595,017
35,000 Indianapolis, IN, Econ. Dev. (GNMA Coll - Bethany Indpt. Care), 9.15%,
08/20/16............................................................................................ 39,782
1,000,000 Town of Shoals, IN, Solid Waste Disposal Rev. Bds. (U.S. Gypsum Co. Prj.)
Ser. '95, 7.375%, 06/01/20.......................................................................... 1,025,090
------------
3,808,150
IOWA - (0.58%) ------------
375,880 Creston, IA, IDR (S.S. Kresge Co. - K-Mart Inc.), 8.50%, 08/01/00..................................... 377,455
580,000 Muscatine, IA, Elec. Rev. (Elec. Rev. Ref. Bds.), 7.00%, 01/01/13..................................... 583,265
35,000 Muscatine, IA, IDR Bds. (Akzona Inc. Prj.), 8.00%, 03/01/09........................................... 34,826
------------
995,546
KANSAS - (3.02%) ------------
195,000 City of Wichita, KS, Sngl. Fam. Mtg. Rev. Bds., '85 Ser. A, 9.00%,
07/01/08............................................................................................ 204,941
1,660,000 Kansas City, KS, Crawford Cnty., Tax-Exempt MuniMultiplier Rev. Bds.,
Zero Cpn., 04/01/16................................................................................. 174,250
1,520,000 Kansas City, KS, Hosp. Rev. Bds., Ser. '74, 8.10%, 12/01/04........................................... 1,562,469
775,000 Saline Cnty., KS, Sngl. Fam. Mtg. Rev. Cap. Accumulator Bds.,
Ser. '82 A, Zero Cpn., 11/01/14..................................................................... 93,698
3,000,000 Wtr. Dist. No. 1 of Johnson Cnty., KS, Wtr. Rev. Ref. Bds., Ser. '86,
7.25%, 12/01/02..................................................................................... 3,136,500
25,000 Westwood, KS, Ind. Rev. Bds., Great Atlantic & Pacific Tea, 7.90%,
06/01/03............................................................................................ 25,145
------------
5,197,003
KENTUCKY - (1.29%) ------------
1,120,000 City of Grayson, KY, Ind. Bldg. 1st Mtg. Rev. Bds, Ser. A '83, K-Mart -
Tenant and Guarantor, 9.875%, 03/01/06.............................................................. 1,136,878
275,000 Cntys. of Jefferson, Oldham and Bullitt, KY, Home Mtg. Rev. Bds, Ser. '84,
10.75%, 11/01/14.................................................................................... 284,958
250,000 Floyd, KY, Gas Sys. Rev. Ref. Bds., Ser. '91A, 8.00%, 09/01/12........................................ 278,778
200,000 Jefferson Cnty., KY, Cap. Prjs. Corp. Rev. Bds. Lease - Ser. B, Zero Cpn.,
08/15/07............................................................................................ 86,812
1,100,000 Owensboro, KY, Elec. Light & Pwr. Rev. Bds., Ser. B, Zero Cpn.,
01/01/09............................................................................................ 284,691
500,000 Owensboro, KY, Elec. Light & Pwr. Rev. Bds., Ser. B, Zero Cpn.,
01/01/09............................................................................................ 143,750
------------
2,215,867
LOUISIANA - (1.87%) ------------
245,000 Jefferson Parish, LA, Home Mtg. Rev. Bds. Cap Appreciation, Zero Cpn.,
09/01/02............................................................................................ 117,041
245,000 Jefferson Parish, LA, Home Mtg. Rev. Bds. Cap Appreciation, Zero Cpn.,
03/01/03............................................................................................ 110,894
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
LOUISIANA - Continued
$ 1,000,000 Lake Charles Non-Profit Hsg. Dev. Corp. Mtg. Rev. Ref. Bds., Ser. '90A
and Ser. '90B, 7.875%, 02/15/25..................................................................... $ 1,010,000
1,100,000 Louisiana Hsg. Fin. Agy. Mtg. Rev. (Multi Fam. Mtg. Rev Bds.), Zero
Cpn., 01/01/26........................................................................................ 58,608
1,500,000 Louisiana Pub. Fac. Auth. Rev. Ref. Bds., Ser. '93 (Schwegmann Westside
Expressway, Inc. Prj.), 8.00%, 10/01/09<F2>......................................................... 1,614,420
235,000 Louisiana Pub. Fac. Auth. Supplemental Student Loan Rev. Variable Rate
Demand Bds., (Statewide Prg.) Ser. '84C, 8.125%, 12/01/99........................................... 253,800
50,000 Sales Tax School Bds., Parish School Brd. of the Parish of Jefferson, State of
LA, Ser. '86A, 7.00%, 02/01/08...................................................................... 50,239
------------
3,215,002
MAINE - (0.54%) ------------
885,000 Maine Pub. Utility Financing Bank, Pub. Utility Rev. Bds., Ser. '91 (Maine
Pub. Svc. Co. Prj.), 7.875%, 04/01/21............................................................... 924,542
MARYLAND - (0.43%)
600,000 Cmnty. Dev. Admin. of the State of MD, FHA-Insured Hsg. Mtg. Rev. Bds.,
'80 Ser. B, 10.625%, 01/01/24....................................................................... 609,648
25,000 Hsg. Auth. of Prince George's Cnty. (Maryland) GNMA Collateralized Sngl.
Fam. Mtg. Rev. Bds., '89 Ser. A, 8.10%, 10/01/20.................................................... 27,041
100,000 Maryland State Community Dev. Admin. Hsg. Mtg. Rev. Bds., FHA
Insured, 10.50%, 01/01/12........................................................................... 101,591
------------
738,280
MASSACHUSETTS - (2.02%) ------------
250,000 Lawrence, MA, IDR Bds., (New Balance Realty Trust Prj.), 10.00%,
10/01/03............................................................................................ 260,088
250,000 Massachusetts College Student Loan Auth., Educ. Loan Rev. Bds., 10.00%,
05/01/012........................................................................................... 53,968
115,000 Massachusetts Educ. Loan Auth., Educ. Loan Rev. Bds., Issue C, Ser. '85A,
7.875%, 06/01/03.................................................................................... 124,183
290,000 Massachusetts Educ. Loan Auth., Educ. Loan Rev. Bds., Issue D, Ser. '89A,
7.65%, 01/01/07..................................................................................... 318,464
705,000 Massachusetts Hsg. Fin. Agy. Multi-Fam. Hsg. Bds., '85 Ser. A, 0%/9.5%,
07/01/12............................................................................................ 675,030
425,000 Massachusetts Hsg. Fin. Agy. Sngl. Mtg. Purchase Bds., '85 Ser. A, 9.50%,
12/01/16............................................................................................ 440,105
600,000 Massachusetts State G.O., 10.50%, 08/01/03............................................................ 615,444
320,000 Massachusetts State G.O., 9.75%, 09/01/03............................................................. 326,416
125,000 Massachusetts State Hlth. & Educational Fac. Auth. Rev. Bds. (New England
School of Law), 8.30%, 07/01/03..................................................................... 124,955
125,000 Massachusetts State Hlth. & Educational Fac. Auth. Rev. Bds. (New England
School of Law), 8.30%, 07/01/04..................................................................... 124,955
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
MASSACHUSETTS - Continued
$ 185,000 Massachusetts State Ind. Fin. Agy., IDR Bds. (Boston Beer), 11.50%,
07/15/07............................................................................................ $ 211,133
------------
3,474,741
MICHIGAN - (3.56%) ------------
100,000 Cnty. of Oakland, State of Michigan Bds., Clinton-Oakland Sys., Paint
Creek Inceptor Sewage Disposal Bds., 7.00%, 05/01/01................................................ 102,333
750,000 The Econ. Dev. Corp. of the City of Westland, MI, Contract Sec'd. Rev. Bds.
(Weyerhauser Co. Contract Rev.), 9.80%, 12/01/00.................................................... 758,123
65,000 Kentwood, MI, Econ. Dev. Corp. Rev. Bds. (Hanover-Kent, Inc. - K-Mart
Corp.), 7.85%, 09/01/01............................................................................. 65,845
1,780,000 Michigan State Hosp. Fin. Auth. Hosp. Rev. Bds. (Daughters of Charity -
Saint Mary's Hosp.), 10.00%, 11/01/15............................................................... 1,829,039
500,000 Michigan State Hsg. Dev. Auth. Rev. Bds., Ser. D, 7.75%, 12/01/19..................................... 527,405
240,000 Michigan State Hsg. Dev. Auth., Sngl.-Fam. Insured Hsg. Bds., '86 Ser. A,
8.00%, 10/01/06..................................................................................... 252,674
2,345,000 Monroe Cnty., MI, PCR Insured Rev. Bds. (Detroit Edison Co.) Ser. A,
9.625% 12/01/15..................................................................................... 2,436,690
85,000 St. Clair Cnty., MI, Econ. Dev. Corp., Econ. Dev. Rev. Bds. (K-Mart Corp.
Prj.), 9.50%, 02/01/06.............................................................................. 85,643
75,000 Southgate, MI, Econ. Dev. Corp. Rev. Bds. (Syfield Dev. Prj. - Kroger Co.)
Ser. A, 10.50%, 11/15/05............................................................................ 77,525
------------
6,135,277
MINNESOTA - (1.99%) ------------
320,000 City of Coon Rapids, MN, Residential Mtg. Rev. Bds., Ser. '82, 7.25%,
05/01/14............................................................................................ 249,072
100,000 Hsg. and Redevelopment Auth. of the City of St. Paul, MN, Comm. Dev.
Rev. Ref. Bds., Ser. '92 (Beverly Enterprises-MN, Inc. Prj.), 7.75%,
11/01/02............................................................................................ 104,783
160,000 Minneapolis, MN, Community Dev. Agy. Rev. Bds. (River Bluff Prj.),
11.375%, 06/01/09................................................................................... 166,826
250,000 Minnesota Hsg. Fin. Agy. Sngl. Fam. Mtg. Bds., '87 Ser. C, 8.40%,
08/01/01............................................................................................ 262,340
1,715,000 Minnesota State Hsg. Fin. Agy. Hsg. Dev. Rev. Bds., 10.125%, 02/01/13................................. 1,759,882
880,000 Sandstone, MN, 1st Mtg. FHA (Sandstone Area Nursing Home), 10.00%, 01/15/13.......................... 887,216
------------
3,430,119
MISSISSIPPI - (3.45%) ------------
2,235,000 Claiborne Cnty., MS, PCR (Middle South Energy, Inc. Prj.) Ser. C,
9.875%, 12/01/14.................................................................................... 2,605,094
1,100,000 Claiborne Cnty., MS, PCR (Middle South Energy, Inc. Prj.) Ser. E,
9.50%, 04/01/16..................................................................................... 1,164,801
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
MISSISSIPPI - Continued
$ 810,000 Clarksdale, MS, Ind. Rev. Bds. (BAH Pptys/Archer-Daniels), 11.75%,
06/01/11........................................................................................... $ 854,258
210,000 Hattiesburg, MS, IDR, Ser. A - Scott Paper Co. Prj., 9.75%, 10/01/12................................. 214,278
1,000,000 Mississippi Hosp. Equip. & Fac. Auth. Rev. Bds. (Rush Medical
Foundation Prj.) Ser. '91A, 8.75%, 01/01/16........................................................ 1,099,320
------------
5,937,751
MISSOURI - (1.30%) ------------
1,000,000 The IDA of the City of Joplin, MO, Hosp. Fac. Ref. and Improvements Rev.
Bds. (Tri-State Osteopathic Hosp. Assoc. Prj.) Ser. '91, 8.25%, 12/15/14........................... 1,023,670
150,000 The Ind. Dev. Auth. of the City of Kansas City, MO, Econ. Dev. Rev. Ref.
Bds. (Encore Nursing Ctr. Partners, Ltd.-85 Prj.) Ser. '92, 8.00%,
12/01/02........................................................................................... 154,326
250,000 The IDA of the City of West Plains, MO, IDR Ref. Bds. (Beatrice Cos., Inc.
Prj.) Ser. '84, 8.75%, 08/01/07.................................................................... 250,415
235,000 Missouri Hsg. Dev. Commission, Hsg. Dev. Bds. (Federally Insured Mtg.
Loans) Ser. July 1, 1975, 8.00%, 07/01/17.......................................................... 240,725
75,000 State Environmental Improvement and Energy Res. Auth. (Missouri)
Floating/Fixed Rate PCR Bds. (Assoc. Elec. Cooperative Inc. Prj.)
Ser. '84G, 8.25%, 11/15/14......................................................................... 79,656
475,000 Stoddard Cnty., MO, IDA Ind. Rev. Bds (Wal-Mart Bldg. Prj. Gtd. -
Wal-Mart Stores Inc.), 11.75%, 06/01/06............................................................ 492,537
------------
2,241,329
MONTANA - (0.04%) ------------
75,000 Montana Brd. of Hsg., Sngl. Fam. Prg. Bds., '85 Ser. A (Federally Insured
or Guaranteed Mtg. Loans), 0%/9.75%, 06/01/13...................................................... 65,612
NEBRASKA - (0.32%) ------------
600,000 Nebraska Pub. Pwr. Dist. Elec. Sys. Rev. Bds., '95 Ser. A, 5.25%,
01/01/28........................................................................................... 549,600
NEVADA - (0.39%) ------------
150,000 Certificates of Participation, Clark Cnty., NV, Acting on Behalf of the
University Medical Ctr. of Southern NV, and Carlyle Capital
Markets Inc., 5.50%, 3/17/00....................................................................... 150,005
500,000 State of Nevada Muni Bd. Bank Prj. No. 18 & 19, 8.40%, 09/01/01...................................... 518,020
------------
668,025
NEW HAMPSHIRE - (0.53%) ------------
500,000 New Hampshire Higher Educ. & Hlth. Fac. Auth. Rev. Bds. (NH Catholic
Charities Issue) Ser. '91, 8.40%, 08/01/11......................................................... 535,950
360,000 New Hampshire, IDR (Rockingham Race Track), 13.50%, 11/01/99......................................... 371,470
------------
907,420
NEW JERSEY - (4.53%) ------------
725,000 The Mercer Cnty. Improvement Auth., Mercer Cnty., NJ, Solid Waste
Rev. Bds. (Res. Recovery Prj., Ref. Ser. B of '92), Zero Cpn., 04/01/16............................ 155,513
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments _ Continued
At September 30, 1995
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
NEW JERSEY - Continued
$ 450,000 New Jersey Econ. Dev. Auth., Econ. Dev. Bds. (Polymeric Resources Corp.
Prj. - '94 Ser.), 9.00%, 12/01/19.................................................................. $ 469,886
1,350,000 New Jersey Econ. Dev. Auth., Econ. Dev. Rev. Bds. (Borg-Warner - Baker
Protective Svcs. Prj.) Ser. '83, 9.95%, 12/01/03................................................... 1,350,000
3,000,000 New Jersey Econ. Dev. Auth., Econ. Dev. Rev. Ref. Bds. (Holt Hauling &
Warehousing) Ser. G, 8.40%, 12/15/15............................................................... 3,144,660
400,000 New Jersey Econ. Dev. Auth., Econ. Dev. Rev. Bds. (Sun Chemical Corp.),
7.50%, 11/01/09.................................................................................... 401,504
70,000 New Jersey Econ. Dev. Auth., Mtg. Rev. Ref. Bds. (Geriatric and Medical
Svcs., Inc. Prj.) Ser. '92, 9.00%, 07/01/96........................................................ 72,764
75,000 New Jersey Econ. Dev. Auth., Mtg. Rev. Ref. Bds. (Geriatric and Medical
Svcs., Inc. Prj.) Ser. '92, 9.00%, 07/01/97........................................................ 79,803
80,000 New Jersey Econ. Dev. Auth., Mtg. Rev. Ref. Bds. (Geriatric and Medical
Svcs., Inc. Prj.) Ser. '92, 9.00%, 07/01/98........................................................ 87,421
300,000 New Jersey Econ. Dev. Auth. Rev., Sr. Mtg. Bds. (Holt Hauling and
Warehousing) Ser. D, 10.25%, 09/15/14.............................................................. 327,273
1,000,000 New Jersey Econ. Dev. Auth. Rev., Sr. Mtg. Bds. (Sealy Mattress Mfg. Co.),
9.50%, 10/01/02.................................................................................... 1,101,730
395,000 New Jersey Hsg. and Mtg. Fin. Agy., Home Buyer Rev. Bds., '89 Ser. D,
7.70%, 10/01/29.................................................................................... 416,022
195,000 New Jersey Hsg. Fin. Agy., Multi-Fam. Mtg. Rev. Bds., '76-Ser. A,
8.25%, 11/01/20.................................................................................... 195,879
------------
7,802,455
NEW MEXICO - (0.20%) ------------
120,000 Albuquerque, NM, Hlth. Care Sys. Rev. Bds., (Lovelace Medical Foundation
Prj.), 12.00%, 03/01/11............................................................................ 120,736
20,000 City of Albuquerque, NM, Hlth. Care Sys. Rev. Bds. (Lovelace Medical
Foundation Prj.) Ser. '83A, 10.25%, 03/01/11........................................................ 20,140
40,000 Clovis, NM, Sngl. Fam. Mtg. Rev. Bds., 7.15%, 02/01/97............................................... 40,396
75,000 Clovis, NM, Sngl. Fam. Mtg. Rev. Bds., 7.15%, 02/01/98............................................... 75,734
120,000 New Mexico Mtg. Fin. Auth. Sngl. Fam. Mtg. Prg. Rev. Bds., 7.00%,
07/01/14........................................................................................... 86,447
------------
343,453
NEW YORK - (4.41%) ------------
500,000 Battery Park City Auth., POD III Hsg. Rev. Bds., Ser. '84 (FHA-Insured
Mtg.), 10.00%, 06/01/23............................................................................ 502,825
2,630,000 Clifton Park, NY, IDA IDR Bds. (Caldor Inc. Prj.) Ser. A, 11.25%,
12/01/12........................................................................................... 2,674,500
560,000 New York City Hsg. Dev. Corp. General Hsg. Rev. Bds., 7.50%, 05/01/23................................ 572,930
250,000 New York City IDA Civic Fac. Rev. Bds. (College of New Rochelle Prj.)
Ser. '95, 6.20%, 09/01/10.......................................................................... 248,543
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
NEW YORK - Continued
$ 925,000 New York State Hsg. Fin. Agy., Multi-Fam. Insured Mtg. Rev. Hsg. Bds.,
'85 Ser. A, 10.00%, 11/15/25....................................................................... $ 952,019
1,575,000 New York State Medical Care Fac. Fin. Agy. Rev. Bds.(Mercy Community
Hosp. - Sisters Mercy), 9.80%, 11/01/16............................................................ 1,586,687
290,000 New York State Mtg. Agy. Rev. Bds., 7th Ser., 8.625%, 04/01/11....................................... 297,427
35,000 Onondaga Cnty., NY, IDA PCR (Colt Ind., Inc. Prj.), 7.25%, 06/01/08.................................. 34,880
395,000 State of New York Mtg. Agy., Mtg. Rev. Bds. Tenth Ser. A, 8.10%,
04/01/14........................................................................................... 423,223
300,000 Steuben Cnty., NY, IDA Rev. Bds., Ser. '84 (Corning Glass Works),
9.00%, 11/01/04.................................................................................... 306,378
------------
7,599,412
NORTH CAROLINA - (0.36%) ------------
95,000 North Carolina Medical Care Comm. Hosp. Rev. Ref. Bds. (Duke University
Hosp. Prj.) Ser. '85A, 8.625%, 06/01/10............................................................ 97,233
500,000 Piedmont Hlth. Dev. Auth., Inc., 1st Mtg. Ref. Rev. Bds. (Nash Grove
Manor Inc. Fac., Nashville, North Carolina) Ser. '93A, 8.00%, 01/01/13............................. 519,585
------------
616,818
NORTH DAKOTA - (0.16%) ------------
400,000 North Dakota State Hsg. Fin. Agy., Sngl. Fam. Mtg. Rev. Bds., Cap.
Appreciation - Ser. A, Zero Cpn., 07/01/08......................................................... 147,428
150,000 North Dakota State Hsg. Fin. Agy., Sngl. Fam. Mtg. Rev. Bds., Pacs. -
Ser. A, 0%/9.625%, 07/01/17........................................................................ 124,325
------------
271,753
OHIO - (8.40%) ------------
865,000 Belmont Cnty., OH, Hlth. Sys. Rev. (East Ohio Reg'l Hosp.) Ser. '85,
9.50%, 01/01/05.................................................................................... 890,379
2,560,000 Cnty. of Clark, OH, Hosp. Ref. Rev. Bds., Ser. '85 (The Community Hosp.)
Ser. '85B, 9.375%, 04/01/08........................................................................ 2,620,646
1,000,000 Cnty. of Cuyahoga, OH, IDR Ref. Bds. (Joy Tech. Inc. Prj.) Ser. '92, 8.75%,
09/15/07........................................................................................... 1,070,670
4,475,000 Dayton, OH, Airport Rev. Bds. (James M. Cox Dayton Int'l. Airport), 8.25%,
01/01/16........................................................................................... 4,638,517
250,000 Licking Cnty., OH, Hosp. Improvement Rev. Bds. (Licking Memorial Hosp.
Prj.), 7.10%, 10/01/95............................................................................. 250,000
3,560,000 Ohio Hsg. Fin. Agy. Sngl. Fam. Mtg. Rev. Bds. Cap. Appreciation, Zero
Cpn., 08/01/15..................................................................................... 353,366
1,600,000 Ohio Hsg. Fin. Agy. Sngl. Fam. Mtg. Rev. Bds. Cap Appreciation,
Ser. '85 A, Zero Cpn., 01/15/15.................................................................... 244,816
75,000 Ohio Hsg. Fin. Agy. Sngl. Fam. Mtg. Rev. Bds. (GNMA Mtg.-Backed Sec.
Prg.) '90 Ser. C, Zero Cpn., 09/01/02.............................................................. 45,203
1,390,000 Ohio State IDA (K-Mart Corp. Prj.), 10.00%, 02/15/08................................................. 1,407,709
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
OHIO - Continued
$ 15,000 Ohio State Wtr. Dev. Auth. PCR (Collateralized PCR Bds.) Cleveland Elec.
Illumination Co., 6.20%, 05/01/13.................................................................. $ 14,410
615,000 Ohio Wtr. Dev. Auth., State of Ohio, Wtr. Dev. Rev. Ref. Bds., '85 Ref.
and Improvement Ser., 9.375%, 12/01/18............................................................. 638,794
1,800,000 Ohio Wtr. Dev. Auth., State of Ohio, Collateralized PCR Ref. Bds., Ser. '95
(The Cleveland Elec. Illuminating Co. Prj.), 7.70%, 08/01/25....................................... 1,853,244
510,000 State of Ohio Floating Rate Collateralized PCR Bds. (The Cleveland Elec.
Illuminating Co. Prj.) Ohio Wtr. Dev. Auth., '84 Ser. A Bds., 6.00%,
12/01/20........................................................................................... 442,425
------------
14,470,179
OKLAHOMA - (1.55%) ------------
395,000 Cherokee Nation of Oklahoma, Rev. Bds., Ser. '92, 7.75%, 07/01/12.................................... 411,788
1,000,000 Oklahoma City Muni Improvement Auth. (Oklahoma City, OK) Wtr. and
Sewer Sys. Rev. Bds., Ser. '86C, Zero Cpn., 07/01/13............................................... 310,850
1,500,000 Trustees of the Oklahoma Ordinance Works Auth. IDR Ref. Bds. (A.P.
Green Ind., Inc. Prj.) Ser. '92, 8.50%, 05/01/08................................................... 1,567,515
370,000 The Valley View Hosp. Auth. (Ada, OK) Hosp Rev. Bds., Ser. '84, 9.875%,
10/01/05........................................................................................... 371,765
------------
2,661,918
PENNSYLVANIA - (6.89%) ------------
285,000 Allegheny Cnty., PA, Residential. Fin. Auth. Sngl. Fam. Mtg. Rev. Bds.,
'83-Ser.-B, Zero Cpn., 10/01/15.................................................................... 33,904
495,000 Allegheny Cnty. Hosp. Dev. Auth. Hosp. Rev. Ref. Bds., Ser. '85-A (St.
Margaret Memorial Hosp. Prj.), 9.30%, 07/01/99..................................................... 506,939
140,000 Allegheny Cnty. Hosp. Dev. Auth. Hosp. Rev. Ref. Bds., Ser. '85-A (St.
Margaret Memorial Hosp. Prj.), 9.80%, 07/01/10..................................................... 143,368
3,000,000 Beaver Cnty., PA, IDA PCR (Ohio Edison Co.) Beaver Valley-Ser. A,
10.50%, 10/01/15................................................................................... 3,091,020
85,000 Berks Cnty., PA, IDA IDR (Borg-Warner/Baker Protection Svcs., Inc.)
Ser. '81, 11.10%, 07/01/01......................................................................... 89,990
2,035,000 Berks Cnty., PA, IDA (Supermarkets General Corp. Prj.),10.50%, 11/01/03.............................. 2,097,556
80,000 Bucks Cnty., PA, IDA Mtg. Rev. (Geriatric and Medical Svcs., Inc. Prj.)
Ser. '92, 9.00%, 07/01/98.......................................................................... 88,402
95,000 Chester Cnty., PA, IDA Mtg. Rev. Ref. Bds. (Geriatric and Medical
Svcs., Inc. Prj.) Ser. '92, 9.00%, 07/01/98........................................................ 103,330
50,000 Horsham Twp., PA, Sewer Rev. Ref. Bds., 6.00%, 01/01/9851,936
20,000 Indiana Cnty., PA, IDA PCR, Pennsylvania Elec. Co. Prj., Ser. A, 7.75%,
07/01/06............................................................................................ 20,070
1,000,000 Jefferson Cnty., PA, Hosp. Auth., Hosp. Rev. Ref. Bds (Brookville Hosp.),
7.00%, 08/01/02.................................................................................... 1,041,690
980,000 Lehigh Cnty., PA, IDA IDR Ref. Bds. (Allentown Interstate Motel Assoc.
Prj.), Ser. '93, 8.00%, 08/01/12................................................................... 1,021,082
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
PENNSYLVANIA - Continued
$ 810,000 Luzerne Cnty., PA, Hsg. Corp. Rev. Bds., 8.125%, 12/01/08............................................. $ 807,578
345,000 Mercer Cnty., PA, IDA, Gumberg Assoc. - Pine Grove Square, The Kroger
Co., Ind. Dev. 1st Mtg. Rev. Bds., 13.00%, 06/01/07.................................................. 358,579
180,000 Midland Boro, PA, G.O. Unlimited, Zero Cpn., 11/01/011................................................ 19,023
100,000 Montgomery Cnty. (Pennsylvania) IDA Mtg. Rev. Ref. Bds., Ser. '92A
(Geriatric and Medical Svcs., Inc. Prj.), 9.00%, 07/01/99............................................ 105,710
200,000 Northern Lehigh School Dist., Lehigh and Northampton Cntys., PA, G.O.
Bds., Ser. of '90, 6.85%, 09/01/02................................................................... 199,970
230,000 Pennsylvania Hsg. Fin. Agy., Moderate Rehab. Rev. Bds., 9.00%, 08/01/01............................... 238,121
100,000 Pennsylvania Hsg. Fin. Agy., Sngl. Fam. Mtg. Rev. Bds., Ser. K, 0%/7.9%,
10/01/13............................................................................................. 74,518
250,000 Pennsylvania Hsg. Fin. Agy., Sngl. Fam. Mtg. Rev. Bds., Ser. O, 8.125%,
10/01/07............................................................................................. 265,848
350,000 Pennsylvania Hsg. Fin. Agy., Sngl. Fam. Mtg. Rev. Bds., Ser. R, 8.125%,
10/01/19............................................................................................. 370,346
375,000 Somerset Cnty. IDA (Somerset Cnty., Pennsylvania) Comm. Dev. 1st Mtg.
Rev. Bds., Ser. A '82, The Kroger Co. Prj., 10.875%, 12/15/07........................................ 380,805
10,000 Uniontown Area, PA, School Auth., School Bldg. Rev. Bds., 10.50%,
10/01/00............................................................................................. 10,349
250,000 Warren Cnty., PA, IDA Specialized Dev. Rev. Ref. Bds. (Beverly Ent. -
Pennsylvania, Inc. Prj.) Ser. '91, 9.00%, 11/01/12................................................... 278,293
360,000 York Cnty., PA, IDA PCR Bds. (Atlantic City Elec. Co. - Peach Bottom
Prj.) Ser. 84-B, 10.50%, 07/15/12.................................................................... 363,726
------------
11,862,153
SOUTH CAROLINA - (2.05%) ------------
1,045,000 Berkeley Cnty., SC, PCR Fac. (Pollution Ctl. Fac. Rev. Bds.) Alumax Prj.,
7.25%, 12/01/08...................................................................................... 1,041,332
400,000 Certificates of Participation, Ser. '90A, South Carolina School Financing
Corp. (School Dist. No. 2 of Sumter Cnty., SC Prj.), 8.125%, 04/01/10................................ 431,356
2,000,000 City of Charleston, SC, Waterworks and Sewer Sys. Ref. Rev. Bds.,
Ser. '86A, 7.00%, 01/01/15........................................................................... 2,058,980
------------
3,531,668
SOUTH DAKOTA - (0.02%) ------------
30,000 South Dakota Bldg. Auth., Rev. Ref. Bds., Ser. of Feb. '84, 10.50%,
09/01/00............................................................................................. 34,955
------------
TENNESSEE - (2.80%)
200,000 Anderson Cnty., TN, Hlth. & Educational Fac. Bd., 1st Mtg. Ref. Rev. Bds.
(Lake City Hlth. Care Ctr. Ltd. Fac.) Ser. '91, 9.00%,11/01/11....................................... 208,526
365,000 Anderson Cnty., TN, Ind. Dev. Brd. Ref. Rev. Bds. (K-Mart Corp. Prj.),
10.00%, 06/01/08..................................................................................... 374,245
205,000 Dover, TN, Hlth. & Educ. Fac., IDR (Wessex Corp. Dover Prj.), 9.50%,
09/01/11............................................................................................. 216,537
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
TENNESSEE - Continued
$ 519,311 Dyer Cnty., TN, Ind. Dev. Brd. IDR Bds. (S.S. Kresge Co. - K-Mart Corp.),
8.10%, 11/01/00..................................................................................... $ 521,440
1,355,000 Lewisburg, TN, IDR Bds. (Mead Corp. Prj.), 7.875%, 02/01/00.......................................... 1,363,360
505,000 McMinn Cnty., TN, Ind. Dev. Brd. Rev. Bds., (S.S. Kresge Co.), 8.00%,
11/01/00............................................................................................ 507,146
470,000 New Tazewell, TN, Hlth. Educational & Hsg. Fac. Brd. IDR Bds. (Wessex
Corp. New Tazewell Prj.) Ser. '87, 10.00%, 06/01/17................................................. 487,508
725,000 Scott County, TN, IDR (Fruehauf Corp. Prj.) Ser. '88, 10.75%, 01/01/09............................... 748,925
395,000 Sevier Cnty., TN, Ind. Dev. Brd. IDR Bds. (The Kroger Co. and Super X
Prj.) Ser. A, 10.25%, 11/01/06...................................................................... 401,158
------------
4,828,845
------------
TEXAS - (9.96%)
2,000,000 Corpus Christi, TX, Ind. Dev. Corp. Rev. Ref. Bds. (Valero Refining Co.)
Ser. A, 10.25%, 06/01/17............................................................................. 2,247,760
310,000 Dallas Cnty., TX, Hsg. Fin. Corp., Sngl. Fam. Mtg. Rev. Bds., Cap.
Appreciation, Zero Cpn., 10/01/15.................................................................... 31,595
290,000 Grand Prairie Hsg. Fin. Corp., Grand Prairie, TX, Sngl. Fam. Mtg. Rev.
Bds., Ser. '85, Ryan Mtg. Co. - Admin.-Servicer, 9.875%, 09/01/05.................................... 302,119
1,200,000 Harris Cnty., TX, Hlth. Fac. Dev. Corp. Rev. Bds. (Adj. Conv. Extendable
Secs.), GTR Houston Pooled Htlh. Care, 7.375%, 12/01/25.............................................. 1,220,676
590,000 Harris Cnty., TX, Hsg. Fin. Corp., Mtg. Rev. FHA Insured Bds. (South
Lake Villas Apartments), 9.00%, 11/01/05............................................................. 604,662
30,000 Houston, TX, Hsg. Corp. No. 1 Rev. Bds., Long Drive Apartments - Section
8 Assisted, 9.00%, 02/01/20.......................................................................... 31,773
2,240,000 Houston Hsg. Fin. Corp. Sngl. Fam. Mtg. Rev. Bds., Ser. '83B (The Lomas
& Nettleton Co. - Admin.)10.375%, 12/15/13........................................................... 2,283,456
215,000 Houston Hsg. Fin. Corp. Sngl. Fam. Mtg. Rev. Bds., Ser. '84A, 10.875%,
02/15/16............................................................................................. 220,470
1,010,000 Jefferson Cnty., TX, Hlth. Fac. Dev. Corp. Hosp. Rev. Bds. (Baptist
Healthcare Sys. Prj.) Ser. '91, 8.875%, 06/01/21..................................................... 1,113,505
415,000 Matagorda Cnty., TX, Navigation Dist. No. 1, PCR (Central Pwr. & Light
Co. Prj.), 10.125%, 10/15/14......................................................................... 428,529
200,000 Matagorda Cnty., TX, Navigation Dist. No. 1 (Unlimited Tax Ref. Bds.),
8.50%, 02/01/98...................................................................................... 202,970
200,000 North Central Texas, Hlth. Fac. Dev. Corp. Rev. Bds. (Hosp. Ref. Rev.
Bds.) Methodist Hosp., Zero Cpn., 10/01/02........................................................... 107,750
1,000,000 Southeast TX, Hsg. Fin. Corp. Multi-Fam. Hsg. Rev., 1st Mtg. Rev. Bds.
(The Ridge Apartments Prj.), 8.30%, 11/01/23......................................................... 750,000
525,000 State of Texas, Veteran's Bds., Ser. '85, G.O. Bds., 8.00%, 12/01/04.................................. 539,364
3,900,000 State of Texas, Veteran's Bds., Ser. '85, G.O. Bds., 8.25%, 12/01/10.................................. 4,016,454
1,615,000 Texas Hsg. Agy., Residential Mtg. Rev. Bds., Ser. '87D, 8.40%, 01/01/21............................... 1,719,781
100,000 Texas Hsg. Agy., Sngl. Fam. Mtg. Rev. Bds., '85 Ser. A, 9.375%,
09/01/16............................................................................................. 102,608
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
TEXAS - Continued
$ 495,000 Texas Wtr. Res. Fin. Auth. Rev. Bds., Ser. '89, 7.20%, 02/15/96....................................... $ 500,529
50,000 Texas Wtr. Res. Fin. Auth. Rev. Bds., Ser. '89, 7.625%, 08/15/08...................................... 53,589
150,000 Texas Wtr. Res. Fin. Auth. Rev. Bds., Ser. '89, 7.50%, 08/15/13...................................... 161,255
500,000 Thomason Hlth. Fac. Dev. Corp., Hlth. Fac. Rev. Bds. (El Paso Cnty.
Hosp. Dist. Ltd. Tax Equip. Fin. Prg.) Ser. '90, 7.20%, 08/15/98..................................... 518,525
------------
17,157,370
UTAH - (0.50%) ------------
50,000 Ogden City (Utah) Neighborhood Dev. Agy. Tax Increment Rev. Ref. Bds.
(25th St. Washington Blvd. Prj.) Ser. '90 A and B, Zero Cpn., 12/30/05............................... 25,567
50,000 St. George, UT, IDR Bds. (K-Mart Corp.) Ser. A '84, 10.75%, 10/15/08.................................. 51,289
2,975,040 Utah State Hsg. Fin. Agy. Rev. Bds. Cap. Appreciation Residential Mtg.,
Ser. '83A, Zero Cpn., 07/01/16....................................................................... 359,177
400,000 West Valley City, UT, IDR, West Valley City Investments Ltd. Prj. (K-Mart
Corp.), 10.625%, 12/01/10............................................................................ 416,840
------------
852,873
VERMONT - (1.46%) ------------
1,500,000 Vermont Hsg. Fin. Agy. Multi-Fam. Hsg. Bds., '79 Ser. A, 8.50%,
02/15/21............................................................................................. 1,521,660
985,000 Vermont Muni Bd. Bank, General Purpose/Pub. Improvement Ser. A & B,
8.75%, 12/01/96...................................................................................... 993,648
------------
2,515,308
VIRGINIA - (0.89%) ------------
460,000 IDA of the City of Norfolk, IDR Bds. (Ralston Purina Co. Prj.) Ser. '81,
11.00%, 06/01/01..................................................................................... 467,480
365,000 IDA of Covington-Alleghany Cnty., VA, IDR Ref. Bds. (Beverly
Enterprises, Inc. Prj.) Ser. '91, 9.375%, 09/01/01................................................... 417,023
100,000 Virginia St. Hsg. Dev. Auth. Multi-Fam. Hsg. Rev. Bds., Ser. '85A, Zero
Cpn., 05/01/06....................................................................................... 36,561
100,000 Virginia State Res. Auth., Wtr. & Sewer Sys. Rev. Bds., '85 Ser. A, 8.75%,
11/01/10............................................................................................. 102,414
500,000 Virginia State Res. Auth., Wtr. & Sewer Sys. Rev. Bds., '85 Ser. B, 8.625%,
11/01/05............................................................................................. 512,015
------------
1,535,493
WEST VIRGINIA - (1.09%) ------------
180,000 Berkeley Brooke Fayette Etc. Cnty., WV, Sngl. Fam. Mtg. Rev. Bds., Ser. A,
9.10%, 08/01/11...................................................................................... 188,626
290,000 Ceredo, WV, Comm. Dev. Rev. Ref. Bds., (Big Bear Stores Prj.), 8.75%,
01/01/96............................................................................................. 293,758
360,000 Glasgow, WV, Hlth. Fac. Rev. Ref. Bds. (Beverly Enterprises, Inc. Prj.)
Ser. '91, 9.50%, 09/01/01 ........................................................................... 412,542
25,000 Putnam Cnty., WV, IDR (IDR Bds.) Rite Aid West Virginia Inc., 10.375%,
11/01/02............................................................................................. 25,641
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND, INC.
Schedule of Investments - Continued
At September 30, 1995
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Continued Value
Principal (Note 1)
- --------- ------
WEST VIRGINIA - Continued
$ 935,000 West Virginia Hsg. Dev. Fd., Rental Dev. Prg. Bds., Ser. C (Section 8
Assisted Dev.), 10.00%, 07/01/15..................................................................... $ 960,619
------------
1,881,186
WISCONSIN - (0.72%) ------------
300,000 Clear Lake, WI, Sewer Sys. Mtg. Rev. Bds., 8.00% 08/01/11............................................. 323,415
625,000 Wisconsin Hsg. Fin. Auth. Rev. Bds. (Hsg. Fac. Mtg. Rev. Bds.), 10.00%,
11/01/10............................................................................................. 631,425
280,000 Wisconsin Hsg. Fin. Auth. Rev. Hsg. Fac. Mtg. Rev. Bds., 9.875%,
11/01/03............................................................................................. 282,842
------------
1,237,682
WYOMING - (0.17%) ------------
360,000 Wyoming Community Dev. Auth., Cap. Appreciation Rev. Ref. Bds.,
Sngl. Fam. Mtg.-D, 0%/9%, 06/01/15................................................................... 289,523
------------
Total Municipal Bonds - (identified cost $162,720,753)............................................... 165,597,555
------------
SHORT TERM - (2.37%)
4,080,000 State Street Bank and Trust Company Repurchase Agreement, 6.00%,
10/02/95, dated 09/29/95, repurchase value of $4,082,040 (collateralized
by $4,130,000 par value U.S. Treasury Notes, 5.875%, 07/31/97, market
value $4,161,817) - (identified cost $4,080,000)..................................................... 4,080,000
------------
Total investments - (identified cost $166,800,753)(98.54%)<F3>..................................... 169,677,555
Other assets less liabilities - (1.46%)............................................................ 2,510,381
------------
Net assets - (100%)................................................................................. $172,187,936
------------
------------
<FN>
<F3> Aggregate cost for Federal income tax purposes is $166,800,753.
</FN>
At September 30, 1995 unrealized appreciation (depreciation) of securities for Federal income tax
purposes was as follows:
Unrealized appreciation............................................................................... $ 4,330,539
Unrealized depreciation............................................................................... (1,453,737)
------------
Net unrealized appreciation........................................................................ $ 2,876,802
------------
------------
<FN>
<F1> Security is paying less than stated interest rate.
<F2> Represents securities valued at fair value in good faith by the Board of Directors.
</FN>
</TABLE>
See Notes to Financial Statements
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
Statement of Assets and Liabilities
At September 30, 1995
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (identified cost $166,800,753) (Note 1)...................................... $169,677,555
Cash............................................................................................................. 9,382
Receivables:
Interest....................................................................................................... 4,151,250
Capital stock sold............................................................................................. 10,894
Investment securities sold..................................................................................... 494,917
Prepaid expenses................................................................................................. 37,268
------------
Total assets................................................................................................. 174,381,266
------------
LIABILITIES:
Payables:
Capital stock reacquired....................................................................................... 105,646
Investment securities purchased................................................................................ 1,688,122
Commissions payable to distributor (Note 4)...................................................................... 188,820
Accrued expenses................................................................................................. 210,742
------------
Total liabilities............................................................................................ 2,193,330
------------
NET ASSETS (Note 5)................................................................................................ $172,187,936
------------
------------
CLASS A SHARES
Net assets..................................................................................................... $ 45,461,206
Shares outstanding............................................................................................. 4,948,539
Net asset value and redemption price per share (net assets/shares outstanding)................................. $ 9.19
------
------
Maximum offering price per share (100/95.25 of $9.19).......................................................... $ 9.65
------
------
CLASS B SHARES
Net assets..................................................................................................... $126,726,730
Shares outstanding............................................................................................. 13,823,907
Net asset value, offering and redemption price per share (net assets/shares
outstanding)................................................................................................. $ 9.17
------
------
Net assets consist of:
Unrealized appreciation on investments........................................................................... $ 2,876,802
Accumulated net realized gain.................................................................................... 902,972
Paid-in capital.................................................................................................. 168,408,162
------------
Net assets................................................................................................... $172,187,936
------------
------------
See Notes to Financial Statements
</TABLE>
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
Statement of Operations
For the Year Ended September 30, 1995
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest....................................................................................................... $ 13,561,269
------------
Expenses:
Management fees (Note 3)....................................................................................... 1,360,042
Custodian fees................................................................................................. 197,952
Transfer agent fees............................................................................................ 196,150
Audit fees..................................................................................................... 30,450
Legal fees..................................................................................................... 61,915
Accounting fees (Note 3)....................................................................................... 37,998
Reports to shareholders........................................................................................ 35,778
Directors fees and expenses.................................................................................... 62,914
Registration and filing fees................................................................................... 57,904
Miscellaneous.................................................................................................. 47,730
Commissions paid under distribution plan (Note 4)
Class A...................................................................................................... 82,606
Class B...................................................................................................... 1,435,136
------------
Total expenses............................................................................................. 3,606,575
------------
Net investment income.................................................................................... 9,954,694
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investment transactions................................................................... 1,053,761
Net increase in unrealized appreciation of investments during the period......................................... 991,288
------------
Net realized and unrealized gain on investments.............................................................. 2,045,049
------------
Net increase in net assets resulting fromoperations.......................................................... $ 11,999,743
------------
------------
</TABLE>
See Notes to Financial Statements
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
Statement of Changes in Net Assets
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION> Year ended September 30,
------------------------
1995 1994
---- ----
<S> <C> <C>
Operations:
Net investment income.......................................................................... $ 9,954,694 $ 8,179,372
Net realized gain from investment transactions................................................. 1,053,761 1,538,520
Net increase (decrease) in unrealized appreciation
of investments............................................................................... 991,288 (4,964,841)
------------ ------------
Net increase in net assets resulting from
operations................................................................................... 11,999,743 4,753,051
Distributions to shareholders from:
Distribution from net investment income
Class A ($0.40 per share).................................................................... (1,972,849) _
Class B ($0.48 and $0.44 per share, respectively)............................................ (7,981,845) (8,179,372)
Distribution from gains from investment transactions
Class A ($0.01 per share).................................................................... (39,640) _
Class B ($0.01 and $0.28 per shares respectively)............................................ (111,149) (5,246,115)
Distribution in excess of net investment income
Class B ($0.01 and $0.07 per share, respectively)............................................ (235,293) (1,335,899)
Tax return of capital distribution
Class B ($0.03 per share).................................................................... _ (565,878)
Capital share transactions (Note 5).............................................................. (18,344,618) 35,429,929
------------ ------------
Total increase (decrease) in net assets...................................................... (16,685,651) 24,855,716
Net Assets:
Beginning of year.............................................................................. 188,873,587 164,017,871
------------ ------------
End of year.................................................................................... $172,187,936 $188,873,587
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
Notes to Financial Statement
September 30, 1995
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Note 1 - Summary of Significant Accounting Policies
Davis Tax-Free High Income Fund (formerly Venture Muni (+) Plus,
Inc.) is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end management investment company. The Fund's
investment objective is to provide current income free from federal
income tax by investing in municipal obligations. The Fund may invest in
high yield, high risk, low rated and unrated bonds commonly referred to as
"junk bonds." Such securities are speculative and subject to greater
market fluctuations and risk of loss of income and principal than higher
rated bonds. On December 1, 1994, the Company 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 and the Class B shares are sold at net asset
value and may be subject to a contingent deferred sales charge upon
redemption. All classes have identical rights with respect to voting
(exclusive of each Class's distribution arrangement), liquidation and
distributions. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial
statements.
Security Valuation
Municipal bonds are normally valued on the basis of prices provided
by a pricing service. Securities not priced in this manner are priced at the
last sales price if traded on that day and, if not traded, at the mean
between the most recent quoted bid and ask prices provided by investment
dealers. Short-term obligations are valued at amortized cost, which
approximates value. The pricing service and valuation procedures are
reviewed and subject to approval by the Board of Directors.
Federal Income Taxes
It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of its tax-exempt and taxable income to
shareholders. Therefore, no provision for federal income tax is required.
Securities Transactions
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.
Investment Income and Distributions to Shareholders
Interest income is recorded on the accrual basis. Dividends and
distributions to shareholders are recorded on the ex-dividend date.
Premiums on tax-exempt securities, original issue discounts and market
discounts are amortized to investment income for financial reporting and
tax purposes. Premiums are amortized over the life of the respective
securities or to the earliest call date, if applicable.
Note 2 - Purchases and Sales of Securities
Purchases and sales of investment securities (excluding short-term
securities) during the year ended September 30, 1995, were $226,443,790
and $239,610,177, respectively.
Note 3 - Investment Advisory Fees and Other Transactions with Affiliates
The Fund pays advisory fees for investment management and
advisory services under a management agreement with Davis Selected
Advisers, L.P. (formerly Selected/Venture Advisers, L.P.) (the "Adviser").
The agreement provides for a monthly fee of .0625 of 1% (equivalent to
.75 of 1% per annum) of the first $250 million of average daily net
assets of the Fund.
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
Notes to Financial Statements - Continued
September 30, 1995
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Note 3 - Investment Advisory Fees and Other Transactions with Affiliates
- - (continued)
Regardless of the above provision, the Adviser will pay or refund to the
Fund all expenses borne by the Fund in any fiscal year (including the
advisory fee, but excluding interest, taxes, brokerage fees, payments made
to the Distributor under any Rule 12b-1 Distribution Plan adopted by the
Fund and, where permitted, extraordinary expenses) that exceed
limitations imposed by the most restrictive state securities laws or
regulations. The Adviser must reimburse the Fund for any such excess at
least annually, up to the amount of its advisory fee. 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. The Adviser is paid for registering Fund shares for sale in various
states. The fee for the year ended September 30, 1995 amounted to
$10,002. The Adviser is paid for certain transfer agent services. The fee
for the year ended September 30, 1995 amounted to $17,914. The Adviser
is also paid for certain accounting services. The fee for the year ended
September 30, 1995 amounted to $37,998. Certain directors and the
officers of the Fund are also officers and directors of the general partner
of the Adviser.
Note 4 - Distribution and Underwriting Fees
Class A Shares
Class A shares of the Fund are sold at net asset value plus a sales
charge and are redeemed at net asset value (without a contingent deferred
sales charge).
During the ten months ended September 30, 1995, the Fund's
Underwriter, Davis Selected Advisers, L.P., received $30,731 from
commissions earned on sales of Class A shares of the Fund of which
$8,667 was retained by the Underwriter and the remaining $22,064 was
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
Fund'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 the Fund for the ten months ended
September 30, 1995 was $82,606.
Class B Shares
Class B shares of the Fund 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.
The Fund compensates the Distributor with a 4% commission on the
proceeds from the sale of the Fund's Class B shares (subject to the limits
described below) and the Distributor pays 4% to the qualified dealer
responsible for the sale of the shares. A rule implemented by the National
Association of Securities Dealers, Inc., ("NASD") limits the percentage of
the Fund's annual average net assets attributable to Class B shares which
may be paid to the Distributor in connection with the distribution of its
shares. The limit is 1%, of which 0.75% may be used to pay distribution
expenses and 0.25% may be used to pay shareholder service fees.
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
Notes to Financial Statements - Continued
September 30, 1995
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Note 4 - Distribution and Underwriting Fees - (Continued)
Class B Shares - (Continued)
The NASD rule also limits the aggregate amount the Fund may pay for
distribution-related services to 6.25% of gross Fund sales since inception
of the Rule 12b-1 plan plus interest at 1% over the prime rate on unpaid
amounts. 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.
During the year ended September 30, 1995, Class B shares of the
Fund made distribution plan payments which included commissions of
$1,077,229 and maintenance fees of $357,907.
Commissions earned by the Distributor during the year ended
September 30, 1995 on the sale of Class B shares of the Fund amounted to
$643,155 of which $633,786 was reallowed to qualified selling dealers.
The Distributor intends to seek payment from Class B shares of the
Fund in the amount of $2,767,373, representing the cumulative
commissions earned by the Distributor on the sale of the Fund's Class B
shares, plus interest, reduced by cumulative commissions paid by the Fund
and cumulative contingent deferred sales charge paid by redeeming
shareholders. The Fund has no contractual obligation to pay any such
distribution charges and the amount, if any, timing and condition of such
payment are solely within the discretion of the Directors who are not
interested persons of the Fund or the Distributor.
A contingent deferred sales charge is imposed upon redemption of
certain Class B shares of the Fund 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 year ended September 30, 1995 the Distributor
received contingent deferred sales charges from Class B shares of the
Fund of $667,459. (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 Fund within four calendar
years of the original purchase.)
Note 5 - Capital Stock
At September 30, 1995, there were 1,000,000,000 shares of capital
stock ($0.01 par value per share) authorized. Transactions in capital stock
were as follows:
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
Notes to Financial Statements - Continued
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
Note 5 - Capital Stock - (Continued)
<CAPTION>
For the Ten Months Ended
Class A September 30, 1995
------------------------
Shares Amount
------ ------
<S> <C> <C>
Shares sold...................................................................................... 5,537,144 $ 49,420,038
Shares issued to shareholders in connection with
reinvestment of distributions.................................................................. 115,852 1,057,589
---------- -------------
5,652,996 50,477,627
Shares reacquired................................................................................ (704,457) (6,432,629)
---------- -------------
Net increase............................................................................... 4,948,539 $ 44,044,998
---------- -------------
---------- -------------
For the Year Ended
Class B September 30, 1995
------------------
Shares Amount
------ ------
Shares sold...................................................................................... 2,538,110 $ 22,901,839
Shares issued to shareholders in connection with
reinvestment of distributions.................................................................. 453,075 4,103,609
---------- -------------
2,991,185 27,005,448
Shares reacquired................................................................................ (9,952,705) (89,395,064)
---------- -------------
Net decrease................................................................................. (6,961,520) $ (62,389,616)
---------- -------------
---------- -------------
For the Year Ended
September 30, 1994
------------------
Shares Amount
------ ------
Shares sold...................................................................................... 7,692,698 $ 71,879,239
Shares issued to shareholders in connection with
reinvestment of distributions.................................................................. 853,256 7,924,635
---------- -------------
8,545,954 79,803,874
Shares reacquired................................................................................ (4,752,445) (44,373,945)
---------- -------------
Net increase................................................................................. 3,793,509 $ 35,429,929
---------- -------------
---------- -------------
</TABLE>
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
The following financial information represents selected data for
each share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Class A --------------Class B-----------------
Ten Months
Ended
September 30, Year ended September 30,
------------------------------------------------
1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............................. $ 8.90 $ 9.09 $ 9.65 $ 9.49 $ 9.41 $ 9.30
------ ------ ------ ------ ------ ------
Income From Investment Operations
- ---------------------------------
Net Investment Income........................................... 40 .48 .44 .54 .54 .67
Net Gains or Losses on
Securities (both realized
and unrealized)............................................... .30 .10 (.18) .29 .27 .22
------ ------ ------ ------ ------ ------
Total From Investment Operations.............................. .70 .58 .26 .83 .81 .89
------ ------ ------ ------ ------ ------
Less Distributions
- ------------------
Dividends (from net
investment income)............................................ (.40) (.48) (.44) (.54) (.54) (.67)
Distribution from gains from
investment transactions....................................... (.01) (.01) (.28) _ _ _
Distribution in excess
of net investment income...................................... _ (.01) (.07) (.10) (.12) (.11)
Tax Return of capital
distributions................................................. _ _ (.03) (.03) (.07) _
------ ------ ------ ------ ------ ------
Total Distributions........................................... (.41) (.50) (.82) (.67) (.73) (.78)
------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period................................................... $ 9.19 $ 9.17 $ 9.09 $ 9.65 $ 9.49 $ 9.41
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Total Return <F1>................................................. 7.93% 6.64% 2.81% 9.10% 8.89% 10.09%
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000 omitted)................................................. $45,461 $126,727 $188,874 $164,018 $124,227 $91,718
Ratio of Expenses to
Average Net Assets............................................ 1.43%<F2> 2.14% 2.07% 2.26% 2.41% 2.41%
Ratio of Net Income to
Average Net Assets............................................ 5.95%<F2> 5.37% 4.59% 5.50% 5.53% 7.13%
Portfolio Turnover Rate......................................... 127.80% 127.80% 113.46% 107.80% 47.31% 55.07%
<FN>
<F1> Sales charges are not reflected in calculation.
<F2> Annualized
</FN>
</TABLE>
<PAGE>
DAVIS TAX-FREE HIGH INCOME FUND
Report of Independent Certified Public Accountants
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
of Davis Tax-Free High Income Fund
We have audited the accompanying statement of assets and
liabilities of Davis Tax-Free High Income Fund (formerly Venture Muni (+)
Plus, Inc.), including the schedule of portfolio investments, as of
September 30, 1995, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Company's management.
Our responsibility is to express an opinion on these fi-nancial statements
and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of September 30, 1995, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and signifi-cant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Davis Tax-Free High Income Fund as of September 30, 1995,
the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
November 3, 1995
<PAGE>
DAVIS TAX-FREE HIGH
INCOME FUND
124 East Marcy Street Santa Fe, New Mexico 87501
- -------------------------------------------------
- -------------------------------------------------
Directors Officers
Wesley E. Bass Jeremy H. Biggs
Jeremy H. Biggs 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 Treasurer
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 Louis R. Proyect
Vice President
Andrew A. Davis
Vice President
Christopher C. 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 Tax-Free
High Income Fund including management fee,
charges and expenses, see the current
prospectus which must precede or accompany
this report.
- ------------------------------------------
- ------------------------------------------
9511-15 VMP80
