SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
REGISTRATION NO. 2-29858
POST-EFFECTIVE AMENDMENT NO. 53
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-1701
AMENDMENT NO. 28
DAVIS NEW YORK VENTURE FUND, INC.
124 East Marcy Street
Santa Fe, New Mexico 87501
(1-505-983-4335)
Agent For Service: Sheldon R. Stein
D'Ancona & Pflaum
30 North LaSalle Street
Suite 2900
Chicago, Illinois 60602
(1-312-580-2014)
It is proposed that this filing will become effective:
----- immediately upon filing pursuant to paragraph (b)
--X-- on December 1, 1996, pursuant to paragraph (b)
----- 60 days after filing pursuant to paragraph (a)
----- on __________________, pursuant to paragraph (a) of Rule 485
In accordance with Section 24(f) of the Investment Company Act of 1940
and Rule 24f-2 thereunder, Registrant has previously elected to register
an indefinite number of shares of its Common Stock. The 24f-2 Notice
was filed on or about September 27, 1996.
<PAGE>
FORM N-1A
DAVIS NEW YORK VENTURE FUND, INC. - CLASS A,
CLASS B AND CLASS C SHARES
POST-EFFECTIVE AMENDMENT NO. 52 TO REGISTRATION STATEMENT NO.
2-29858 UNDER THE SECURITIES ACT OF 1933 AND AMENDMENT NO. 27
UNDER THE INVESTMENT COMPANY ACT OF 1940 TO REGISTRATION
STATEMENT NO. 811-1701.
CROSS REFERENCE SHEET
---------------------
N-1A
Item No. Prospectus Caption or Placement
- ------- -------------------------------
1 Front Cover
2 Summary
3 Financial Highlights
4 Summary; Investment Objective and Policies
5 Adviser, Sub-Adviser and Distributor; Distribution Plans;
Purchase of Shares; Summary; Investment Objective and Policies
5A Management's Discussion of Fund Performance (contained in
the 1996 Annual Report)
6 Summary; Shareholder Inquiries; Dividends and Distributions;
Federal Income Taxes; Fund Shares
7 Purchase of Shares; Adviser, Sub-Adviser and Distributor;
Exchange of Shares; Determining the Price of Shares; Dividends
and Distributions
8 Redemption of Shares; Exchange of Shares
9 (Not Applicable)
Part B Caption or Placement
---------------------------
10 Cover Page
11 Table of Contents
12 (Not Applicable)
13 Investment Restrictions; Hedging of Foreign Currency Risks;
Repurchase Agreements Portfolio Transactions
14 Directors and Officers
15 Certain Shareholders of the Fund
16 Investment Advisory Services; Custodian; Auditors; Determining
the Price of Shares; Distribution of Fund Shares
17 Portfolio Transactions
18 *
19 Determining the Price of Shares; Reduction of Class A Sales
Charge
20 *
21 *
22 Performance Data
23 Financial Statements are incorporated by reference
from the 1996 Annual Report to Shareholders.
____________________
* Included in Prospectus
FORM N-1A
DAVIS NEW YORK VENTURE FUND, INC. - CLASS Y SHARES
POST-EFFECTIVE AMENDMENT NO. 52 TO REGISTRATION STATEMENT NO.
2-29858 UNDER THE SECURITIES ACT OF 1933 AND AMENDMENT NO. 27
UNDER THE INVESTMENT COMPANY ACT OF 1940 TO REGISTRATION
STATEMENT NO. 811-1701.
CROSS REFERENCE SHEET
---------------------
N-1A
Item No. Prospectus Caption or Placement
- ------- -------------------------------
1 Front Cover
2 Summary
3 Financial Highlights
4 Summary; Investment Objective and Policies
5 Adviser, Sub-Adviser and Distributor; Purchase of Shares;
Summary; Investment Objective and Policies
5A Management's Discussion of Fund Performance (contained in
the 1996 Annual Report)
6 Summary; Shareholder Inquiries; Dividends and Distributions;
Federal Income Taxes; Fund Shares
7 Purchase of Shares; Adviser, Sub-Adviser and Distributor;
Exchange of Shares; Determining the Price of Shares; Dividends
and Distributions
8 Redemption of Shares; Exchange of Shares
9 (Not Applicable)
Part B Caption or Placement
10 Cover Page
11 Table of Contents
12 (Not Applicable)
13 Investment Restrictions; Hedging of Foreign Currency Risks;
Repurchase Agreements Portfolio Transactions
14 Directors and Officers
15 Certain Shareholders of the Fund
16 Investment Advisory Services; Custodian; Auditors; Determining
the Price of Shares; Distribution of Fund Shares
17 Portfolio Transactions
18 *
19 Determining the Price of Shares; Reduction of Class A Sales
Charge
20 *
21 *
22 Performance Data
23 Financial Statements are incorporated by reference from the 1996
Annual Report to Shareholders.
____________________
* Included in Prospectus
<PAGE>
PROSPECTUS December 1, 1996
Class A, Class B and Class C
Davis New York Venture Fund, Inc.
124 East Marcy Street
Santa Fe, New Mexico 87501
1-800-279-0279
________________________
Minimum Investment Plans Available
Initial Purchase $1,000 Individual Retirement Account (IRA)
For Retirement Plans $250 Prototype Retirement Plans
Subsequent Investment $25 Exchange Privilege
Automatic Investment Plan
Automatic Withdrawals Plan
Davis New York Venture Fund, Inc. (the "Fund") seeks to achieve
growth of capital. It invests primarily in common stocks.
The Fund offers four classes of shares, Class A, B, C and Y, each
having different expense levels and sales charges. These alternatives
permit you to choose the method of purchasing shares that is most
beneficial to you, depending on the amount of the purchase, the length of
time you expect to hold the shares and other circumstances. The Class Y
shares, available only to certain qualified institutional investors, are
offered through a separate prospectus. For more information about the
Class Y shares, see "Purchase of Shares--Alternative Purchase
Arrangements."
This Prospectus concisely sets forth information about the Class A,
Class B and Class C shares of the Fund that prospective investors should
know before investing. It should be read carefully and retained for future
reference. A Statement of Additional Information dated December 1,
1996, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. A copy of this Statement and other
information about the Fund may be obtained without charge by writing to
or calling the Fund at the above address or telephone number.
________________________
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SUMMARY
Fund Expenses. The following table is intended to assist you in
understanding the various costs and expenses that an investor in the Class
A, B and C shares of the Fund will bear directly or indirectly. The
information is based on the Fund's fiscal year ended July 31, 1996. The
expenses have been restated to reflect the effect of exchanges from Class
A shares to Class Y shares. You can refer to the section "Adviser,
Sub-Adviser and Distributor" and "Purchase of Shares" for more
information on transaction and operating expenses of the Fund.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses Class A Class B Class C
- -------------------------------- ------- ------- -------
<S> <C> <C> <C>
Maximum sales load imposed on purchases..................... 4.75% None None
Maximum sales load imposed on reinvested dividends.......... None None None
Deferred sales load or redemptions (a declining
percentage of the lesser of the net asset value
of the shares redeemed or the total cost of such shares)
Redeemed during first year.............................. 0.75%<F1> 4.00% 1.00%<F1>
Redeemed during second or third year.................... None 3.00% None
Redeemed during fourth or fifth year.................... None 2.00% None
Redeemed during sixth year.............................. None 1.00% None
Redeemed after sixth year............................... None None None
Exchange Fee.............................................. $5.00 $5.00 $5.00
Annual Fund operating expenses (as a percentage of average net assets)
- ---------------------------------------------------------------------
Management fees........................................ 0.59% 0.59% 0.59%
12b-1 fees<F2>......................................... 0.14% 1.00% 1.00%
Other expenses......................................... 0.14% 0.14% 0.14%
---- ---- ----
Total Fund operating expenses..................... 0.87% 1.73% 1.73%
<FN>
<F1>On certain Class A shares purchased after December 1, 1996 and
redeemed during the first year after purchase, there is a 0.75% deferred
sales charge. On Class C shares redeemed during the first
year after purchase, there is a 1% deferred sales charge.
<F2>The effect of a Rule 12b-1 plan is that long-term shareholders may
pay more than the maximum front-end sales charge permitted under
applicable rules of the National Association of Securities Dealers, Inc.
</FN>
</TABLE>
Example:
You would pay the following expenses on a $1,000 investment,
assuming a 5% annual return and (except as provided below) redemption at
the end of each time period:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A.......................................................... $56 $74 $93 $150
Class B.......................................................... $48 $74 $104 N/A
Class B (assuming no redemption at end of period)................ $18 $54 $94 N/A
Class C.......................................................... $18 $54 $94 $204
Class C (assuming no redemption at end of period)................ $18 $54 $94 $204
</TABLE>
The 5% rate used in the example is only for illustration and is
not intended to be indicative of the future performance of the Fund, which
may be more or less than the assumed rate. Future expenses may be more
or less than those shown.
The Fund. Davis New York Venture Fund, Inc. is an open-end,
diversified, management investment company incorporated in Maryland in
1968 and registered under the Investment Company Act of 1940.
The Fund offers four classes of shares, Class A, B, C and Y. Class A
shares may be purchased at a price equal to their net asset value per share
plus a front-end sales charge imposed at the time of purchase. Purchases
of $1 million or more of Class A shares may be purchased at net asset
value, but shares purchased after December 1, 1996 are subject to a
.75% contingent deferred sales charge ("CDSC") on redemptions made within
one year after purchase. Class B shares may be purchased at net asset
value, with no front-end sales charge, but are subject to a CDSC on
most redemptions made within six years after purchase. Class C shares
may also be purchased at net asset value but are subject to a CDSC of 1%
on redemptions made within one year after purchase. These alternatives
permit an investor to choose the method of purchasing shares that is most
beneficial given the amount of the purchase, the length of time the
investor expects to hold the shares, and other circumstances. Each class
of shares pays a Rule 12b-1 distribution fee at an annual rate not to
exceed (i) for Class A shares, 0.25% of the Fund's aggregate average daily
net assets attributable to the Class A shares and (ii) for Class B and C
shares, 1.00% of the Fund's aggregate average daily net assets
attributable to each such class. The purpose and function of the deferred
sales charge, and distribution fees with respect to the Class B and Class C
shares is the same as those of the front-end sales charge and distribution
services fee with respect to the Class A shares. The Class Y shares,
available only to certain qualified institutional investors, are offered
through a separate prospectus. For more information about the Class Y
shares, see "Purchase of Shares--Alternative Purchase Arrangements".
Each share of the Fund represents an identical interest in the
investment portfolio of the Fund. However, shares differ by class in
important respects. For example, Class B shares incur higher distribution
services fees and bear certain other expenses and will thus have a higher
expense ratio and pay correspondingly lower dividends than Class A
shares. Class B shares will automatically convert to Class A shares at the
end of eight years after purchase, in the circumstances and subject to the
qualifications described in this Prospectus. Class C shares, like Class B
shares, will also have a higher expense ratio and pay correspondingly
lower dividends than Class A shares, as a result of higher distribution
services fees and certain other expenses. Unlike Class B shares, Class C
shares do not have a conversion feature and therefore will always be
subject to higher distribution fees and other expenses than Class A
shares. In addition, Class C shares are subject to a CDSC fee for the first
year such shares are owned. The per share net asset value of the Class B
and Class C shares generally will be lower than the per share net asset
value of the Class A shares, reflecting the daily expense accruals of
additional distribution fees and certain other expenses applicable to Class
B and C shares. It is expected, however, that the per share net asset value
of the classes, which differ by approximately the amount of the expense
accrual differential among the classes, will tend to converge immediately
on the ex date of the dividends or distributions. The Board of Directors
may offer additional classes of shares in the future and may at any time
discontinue the offering of any class of shares. See "Purchase of
Shares--Alternative Purchase Arrangements".
Investment Objective. The Fund's investment objective is growth of
capital. The Fund invests primarily in common stocks. These securities
are subject to the risk of price fluctuations reflecting both market
evaluations of the businesses involved and general changes in the equity
markets. The Fund may invest in foreign securities and attempt to reduce
currency fluctuation risks by engaging in related hedging transactions.
These transactions involve special risk factors. There is no assurance
that the investment objective of the Fund will be achieved. See
"Investment Objective and Policies".
Investment Adviser, Sub-Adviser and Distributor. Davis Selected
Advisers, L.P., (the "Adviser") is the investment adviser and distributor
for the Fund. Davis Selected Advisers-NY, Inc., a wholly-owned subsidiary
of the Adviser, performs certain research and portfolio management services
for the Fund under a Sub-Advisory Agreement with the Adviser. See "Adviser,
Sub-Adviser and Distributor".
Purchases, Exchanges and Redemptions. Initial and subsequent
minimum investments in the Class A, B and C shares may be made in
amounts equal to $1,000 and $25, respectively, except that the minimum
initial investment for retirement plans is $250. Shares may be exchanged
under certain circumstances at net asset value for the same class of
shares of certain other funds managed and distributed by the Adviser,
with a $5 service fee for each exchange payable to the Adviser. Accounts
with a market value of less than $250 caused by shareholder redemptions
are redeemable by the Fund. See "Purchase of Shares," "Exchange of
Shares" and "Redemption of Shares". Class A shareholders who are
eligible to purchase Class Y shares may exchange their shares for Class Y
shares of the Fund. There is no charge for this service. See "Purchase of
Shares--Alternative Purchase Arrangements" for Class Y eligibility
requirements.
Shareholder Services. Questions regarding the Fund or your account
may be directed to Davis, Selected Adviser, L.P. at 1-800-279-0279 or to
your sales representative. Written inquiries may be directed to Davis,
Selected Advisers, L.P., P.O. Box 1688, Santa Fe, NM 87504-1688. During
severe market conditions, the Adviser may experience difficulty in
accepting telephone redemptions or exchanges. If you are unable to contact
the Adviser at the above telephone number, you should call 1-505-820-3000
Monday through Friday between 8:00 a.m. and 4:00 p.m. Mountain Time.
FINANCIAL HIGHLIGHTS
The following table provides you with information about the
financial history of the Fund's Class A, B and C shares. The table
expresses the information in terms of a single Class A, Class B or Class C
share for the respective periods presented and is supplementary
information to the Fund's financial statements which are included in the
1996 Annual Report to Shareholders. Such Report may be obtained by
writing or calling the Fund. The Fund's financial statements and financial
highlights for the five years ended July 31, 1996 have been audited by the
Fund's independent certified public accountants, whose opinion thereon is
contained in the Annual Report.
<TABLE>
-----------------------------------------------CLASS A--------------------------------------------
Year ended July 31,
--------------------------------------------------------------------------------------
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period............. $14.56 $12.04 $12.08 $10.70 $ 9.85 $9.39 $9.72 $8.07 $10.88 $10.41
------ ------ ------ ------ ------ ----- ----- ----- ------ ------
Income From
- -----------
Investment Operations
- ---------------------
Net Investment
Income........... .20 .14 .16 .10 .14 .16 .36 .21 .19 .15
Net Gains on
Securities (both
realized and
unrealized)...... 1.64 2.95 .54 1.98 1.57 1.02 .38 2.22 (.64) 2.10
------ ------ ------ ------ ------ ----- ----- ----- ------ ------
Total From
Investment
Operations....... 1.84 3.09 .70 2.08 1.71 1.18 .74 2.43 (.45) 2.25
Less Distributions
- ------------------
Dividends (from
net investment
income).......... (.15) (.12) (.16) (.10) (.21) (.18) (.37) (.22) (.22) (.10)
Distributions
From Real-
ized Capital
Gains............ (1.01) (.45) (.58) (.59) (.55) (.50) (.70) (.34) (1.66) (1.68)
Distributions
From Paid In
Capital.......... _ _ _ (.01) (.10) (.04) _ (.22) (.48) _
------ ------ ------ ------ ------ ----- ----- ----- ------ ------
Total Dis-
tributions....... (1.16) (.57) (.74) (.70) (.86) (.72) (1.07) (.78) (2.36) (1.78)
------ ------ ------ ------ ------ ----- ----- ----- ------ ------
Net Asset Value,
End of Period.... $15.24 $14.56 $12.04 $12.08 $10.70 $9.85 $9.39 $9.72 $ 8.07 $10.88
====== ====== ====== ====== ====== ===== ===== ===== ====== ======
Total Return<F1>..... 13.04% 27.21% 5.99% 20.20% 18.62% 14.29% 8.12% 33.44% (3.30)% 25.22%
- ------------
Ratios/Supplemental
- -------------------
Data
- ----
Net Assets, End of
Period (000,000
omitted)......... 2,151 1,595 1,077 739 494 421 345 319 168 232
Ratio of
Expenses
to Average
Net Assets....... .87% 90% .87% .89% .91% .97% .97% .97% 1.01% .93%
Ratio of Net
Income to Average
Net Assets....... 1.30% 1.11% 1.19% .85% 1.36% 1.84% 3.78% 2.45% 2.42% 1.48%
Portfolio Turnover
Rate............. 19% 15% 13% 24% 26% 52% 47% 58% 38% 55%
<FN>
<F1> Sales charges are not reflected in calculation.
</FN>
</TABLE>
<TABLE>
---------CLASS B------------ ----------CLASS C-----------
<CAPTION>
December 1, 1994 December 20, 1994
(Commencement (Commencement
Year of operations) Year of operations)
Ended through Ended through
7/31/96 7/31/95 7/31/96 7/31/95
--------- ------- --------- -------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $ 14.43 $ 10.88 $ 14.47 $ 11.16
------- ------- ------- -------
Income From Investment Operations
- ---------------------------------
Net Investment Income....................... .04 (.01) .04 (.01)
Net Gains on Securities
(both realized and unrealized)............ 1.62 3.56 1.62 3.32
------- ------- ------- -------
Total From Investment Operations.......... 1.66 3.55 1.66 3.31
Less Distributions
- ------------------
Distributions From Realized Capital Gains... (1.01) _ (1.01) _
------- ------- ------- -------
Total Distributions....................... (1.01) _ (1.01) _
------- ------- ------- -------
Net Asset Value, End of Period............... $15.08 $14.43 $15.12 $14.47
======= ======= ======= =======
Total Return<F1>.............................. 11.81% 26.07%<F2> 11.78% 26.42%<F2>
- ------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000 omitted)..... 288,835 39,857 117,255 11,729
Ratio of Expenses to Average Net Assets..... 1.73% 1.78%<F2> 1.73% 1.78%<F2>
Ratio of Net Income to Average Net Assets... .44% .23%<F2> .44% .23%<F2>
Portfolio Turnover Rate..................... 19% 15% 19% 15%
<FN>
<F1> Contingent deferred sales charges are not reflected in calculation.
<F2> Annualized.
</FN>
</TABLE>
INVESTMENT OBJECTIVE AND POLICIES
General. The Fund's investment objective is growth of capital.
There is no assurance that such objective will be achieved. The Fund
ordinarily invests in securities which the Adviser or Sub-Adviser believes
have above-average appreciation potential. Usually these securities are
common stocks. Income is not a significant factor in selecting the Fund's
investments.
Generally, the Fund invests predominantly in equity securities of
companies with market capitalizations of at least $250 million. It also
will invest in issues with smaller capitalizations. Special risks
associated with investing in small cap issuers relative to larger cap
issuers include high volatility of valuations and less liquidity.
Investments will consist of issues which the Adviser or Sub-Adviser
believes have capital growth potential due to factors such as undervalued
assets or earnings potential, product development and demand, favorable
operating ratios, resources for expansion, management abilities,
reasonableness of market price, and favorable overall business prospects.
Foreign Investments. The Fund may invest in securities of foreign
issuers or securities which are principally traded in foreign markets
("foreign securities"). Investments in foreign securities may be made
through the purchase of individual securities on recognized exchanges and
developed over-the-counter markets, through American Depository
Receipts ("ADRs") covering such securities, and through U.S. registered
investment companies investing primarily in foreign securities. The Fund,
however, may not invest in the securities of other investment companies
if more than 10% of the Fund's total assets would then be invested in such
companies. Other registered investment companies usually have their own
management costs or fees and the Adviser will also earn its regular fee on
Fund assets invested in such other companies. When the Fund is invested
in foreign securities, the operating expenses of the Fund are likely to be
higher than that of an investment company investing exclusively in U.S.
securities, since the management, custodial and certain other expenses
are expected to be higher.
Investments in foreign securities may involve a higher degree of
risk than investments in domestic issuers. Foreign securities are often
denominated in foreign currencies, which means that their value will be
affected by changes in exchange rates, as well as other factors that
affect securities prices. There is generally less publicly available
information about foreign securities and securities markets, and there
may be less government regulation and supervision of foreign issuers and
securities markets. Foreign securities and markets may also be affected
by political and economic instabilities, and may be more volatile and less
liquid than domestic securities and markets. Investment risks may
include expropriation or nationalization of assets, confiscatory taxation,
exchange controls and limitations on the use or transfer of assets, and
significant withholding taxes. Foreign economies may differ from the
United States favorably or unfavorably with respect to inflation rates,
balance of payments, capital reinvestment, gross national product
expansion, and other relevant indicators.
To attempt to reduce exposure to currency fluctuations, the Fund
may trade in forward foreign currency exchange contracts (forward
contracts), currency futures contracts and options thereon and securities
indexed to foreign securities. These techniques may be used to lock in an
exchange rate in connection with transactions in securities denominated
or traded in foreign currencies, to hedge the currency risk in foreign
securities held by the Fund and to hedge a currency risk involved in an
anticipated purchase of foreign securities. Cross-hedging may also be
utilized, that is, entering into a hedge transaction in respect to a
different foreign currency than the one in which a trade is to be made or
in which a portfolio security is principally traded. There is no limitation
on the amount of assets that may be committed to currency hedging.
However, the Fund will not engage in a futures transaction if it would
cause the aggregate of initial margin deposits and premiums paid on
outstanding options on futures contracts to exceed 5% of the value of its
total assets (excluding in calculating such 5% any in-the-money amount of
any option). Currency hedging transactions may be utilized as a tool to
reduce currency fluctuation risks due to a current or anticipated position
in foreign securities. The successful use of currency hedging transactions
usually depends on the Adviser's or the Sub-Adviser's ability to forecast
interest rate and currency exchange rate movements. Should interest or
exchange rates move in an unexpected manner, the anticipated benefits of
futures contracts, options or forward contracts may not be achieved or
losses may be realized and thus the Fund could be in a worse position than
if such strategies had not been used. Unlike many exchange-traded futures
contracts, there are no daily price fluctuation limits with respect to
options on currencies and forward contracts, and adverse market
movements could therefore continue to an unlimited extent over a period
of time. In addition, the correlation between movements in the prices of
such instruments and movements in the price of the securities and
currencies hedged or used for cover will not be perfect and could produce
unanticipated losses. Unanticipated changes in currency prices may result
in poorer overall performance for the Fund than if it had not entered into
such contracts. When taking a position in an anticipatory hedge, the Fund
is required to set aside cash or high grade liquid securities to fully secure
the obligation.
Temporary Defensive Investments. For defensive purposes or to
accommodate inflows of cash awaiting more permanent investment, the
Fund may temporarily and without limitation hold high-grade short-term
money market instruments, cash and cash equivalents, including
repurchase agreements.
Restricted and Illiquid Securities. The Fund may invest in restricted
securities, i.e., securities which, if sold, would cause the Fund to be
deemed an "underwriter" under the Securities Act of 1933 (the "1933
Act") or which are subject to contractual restrictions on resale. The
Fund's policy is to not purchase or hold illiquid securities (which may
include restricted securities) if more than 15% of the Fund's net assets
would then be illiquid. If at any time more than 15% of the Fund's net
assets are illiquid, steps will be taken as soon as practicable to reduce
the percentage of illiquid assets to 15% or less.
The restricted securities which the Fund may purchase include
securities which have not been registered under the 1933 Act but are
eligible for purchase and sale pursuant to Rule 144A ("Rule 144A
Securities"). This Rule permits certain qualified institutional buyers,
such as the Fund, to trade in privately placed securities even though such
securities are not registered under the 1933 Act. The Adviser or
Sub-Adviser, under criteria established by the Fund's Board of Directors,
will consider whether Rule 144A securities being purchased or held by the
Fund are illiquid and thus subject to the Fund's policy limiting
investments in illiquid securities. In making this determination, the
Adviser or Sub-Adviser will consider the frequency of trades and quotes,
the number of dealers and potential purchasers, dealer undertakings to
make a market, and the nature of the security and the market place trades
(for example, the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer). The liquidity of Rule
144A Securities will also be monitored by the Adviser and Sub-Adviser
and, if as a result of changed conditions, it is determined that a Rule
144A Security is no longer liquid, the Fund's holding of illiquid securities
will be reviewed to determine what, if any, action is required in light of
the policy limiting investments in such securities. Investing in Rule 144A
Securities could have the effect of increasing the amount of investments
in illiquid securities if qualified institutional buyers are unwilling to
purchase such securities.
Repurchase Agreements. The Fund may enter into repurchase
agreements, but normally will not enter into repurchase agreements
maturing in more than seven days, and may make repurchase agreement
transactions through a joint account with other funds which have the
same investment adviser. A repurchase agreement, as referred to herein,
involves a sale of securities to the Fund, with the concurrent agreement
of the seller (a bank or securities dealer which the Adviser or Sub-Adviser
determines to be financially sound at the time of the transaction) to
repurchase the securities at the same price plus an amount equal to accrued
interest at an agreed-upon interest rate, within a specified time, usually
less than one week, but, on occasion, at a later time. The repurchase
obligation of the seller is, in effect, secured by the underlying securities.
In the event of a bankruptcy or other default of a seller of a repurchase
agreement, the Fund could experience both delays in liquidating the
underlying securities and losses, including (a) possible decline in the
value of the collateral during the period while the Fund seeks to enforce
its rights thereto; (b) possible loss of all or a part of the income during
this period; and (c) expenses of enforcing its rights.
Borrowing. The Fund may not borrow money except from banks for
extraordinary or emergency purposes in amounts not exceeding 10% of the
value of the Fund's total assets (excluding the amount borrowed) at the
time of borrowing. The Fund may not pledge or hypothecate any of its
assets, except in connection with permitted borrowing in amounts not
exceeding 15% of the value of the Fund's total assets (excluding the
amount borrowed) at the time of such borrowing.
Portfolio Transactions. The Adviser and the Sub-Adviser are
responsible for the placement of portfolio transactions, subject to the
supervision of the Board of Directors. It is the Fund's policy to seek to
place portfolio transactions with brokers or dealers who will execute
transactions as efficiently as possible and at the most favorable price.
Subject to this policy, research services and placement of orders by
securities firms for Fund shares may be taken into account as a factor in
placement of portfolio transactions. In seeking the Fund's investment
objective, the Fund may trade to some degree in securities for the short
term if the Adviser or Sub-Adviser believes that the growth potential of a
security no longer exists, considers that other securities have more
growth potential, or otherwise believes that such trading is advisable.
Because of the Fund's investment policies, portfolio turnover rate will
vary. At times it could be high, which could require the payment of larger
amounts in brokerage commissions. The Adviser and Sub-Adviser are
authorized to place portfolio transactions with Shelby Cullom Davis & Co.,
a member of the New York Stock Exchange, which may be deemed to be an
affiliate of the Adviser, if the commissions are fair and reasonable and
comparable to commissions charged by non-affiliated qualified brokerage
firms for similar services. Portfolio turnover rates are set forth in
"Financial Highlights".
Fundamental Policies. The Fund has adopted certain investment
restrictions set forth in the Statement of Additional Information. These
restrictions and the Fund's investment objective are fundamental policies
and may not be changed unless authorized by a vote of the shareholders.
All other policies are non-fundamental and may be changed without
shareholder approval. Except for the restriction with respect to illiquid
securities, any percentage restrictions set forth in the prospectus or in
the Statement of Additional Information apply as of the time of
investment without regard to later increases or decreases in the values of
securities or total net assets.
ADVISER, SUB-ADVISER AND DISTRIBUTOR
Subject to the direction and supervision of the Fund's Board of
Directors, the Fund's affairs are managed by Davis Selected Advisers, L.P.,
124 East Marcy Street, Santa Fe, New Mexico 87501. Venture Advisers,
Inc. is the Adviser's sole general partner. Shelby M.C. Davis is the
controlling shareholder of the general partner. The Adviser manages the
Fund's investment and business operations and acts as the distributor of the
Fund's shares. Davis Selected Advisers-NY, Inc., a wholly-owned subsidiary
of the Adviser, performs research and portfolio management services for the
Fund under a Sub-Advisory Agreement with the Adviser. The Adviser also acts
as investment adviser and distributor for Davis High Income Fund, Inc.,
Davis Tax-Free High Income Fund, Inc., Davis Series, Inc. and Davis
International Series, Inc. (collectively with the Fund, the "Davis Funds"),
Selected American Shares, Inc., Selected Special Shares, Inc. and Selected
Capital Preservation Trust.
The Fund pays the Adviser a fee at the annual rate based on average
net assets, as follows: 0.75% on the first $250 million; 0.65% on the next
$250 million; 0.55% on the next $2.5 billion; 0.54% on the next $1 billion;
0.53% on the next $1 billion; 0.52% on the next $1 billion; 0.51% oo the
next $1 billion; and 0.50% of average net assets in excess of $7 billion.
This fee is higher than that of most other mutual funds but is not
necessarily higher than that paid by funds with a similar objective. The
Fund also reimburses the Adviser for its costs of providing certain
accounting and financial reporting, shareholder services and compliance
with state securities laws. Under the Sub-Advisory Agreement, the
Adviser pays all of the Sub-Adviser's direct and indirect costs of
operation. All the fees paid to the Sub-Adviser are paid by the Adviser
and not the Fund.
Shelby M.C. Davis, an employee of the Adviser, has been the
Fund's primary portfolio manager since its inception in 1969. Since 1969,
he has been a director of the Adviser's general partner. He is a director
and officer of all investment companies managed by the Adviser and has
been the portfolio manager of Selected American Shares, Inc. since May 1,
1993.
Christopher C. Davis, an employee of the Sub-Adviser, is the
portfolio co-manager for the Fund and Selected American Shares, Inc., and
the portfolio manager of the Davis Series, Inc., Davis Financial Fund. He
was co-portfolio manager of the Davis Financial Fund, with Shelby M.C.
Davis, from its inception on May 1, 1991 until December 1, 1994. He was
employed by the Adviser from September, 1989 through November, 1996 as an
assistant portfolio manager and research analyst.
Davis Selected Advisers, L.P., the Fund's distributor, is also
reimbursed by the Fund for some of its distribution expenses through
Distribution Plans which have been adopted with respect to the Class A,
Class B and Class C shares and approved by the Fund's Board of Directors
and the shareholders of such classes in accordance with Rule 12b-1 under the
Investment Company Act of 1940. See "Distribution Plans" below for more
details.
DISTRIBUTION PLANS
The Fund bears some of the costs of selling its shares under
Distribution Plans adopted with respect to its Class A, Class B and Class
C shares pursuant to Rule 12b-1 under the Investment Company Act of
1940. This rule regulates the manner in which a mutual fund may assume
costs of distributing and promoting the sale of its shares.
Payments under the Class A Distribution Plan are limited to an
annual rate of 0.25% of the average daily net asset value of the Class A
shares. Such payments are made to reimburse the Distributor for the fees
it pays to its salespersons and other firms for selling Fund shares,
servicing shareholders and maintaining shareholder accounts. Normally,
such fees are at the annual rate of 0.25% of the average net asset value of
the accounts serviced and maintained on the books of the Fund. Payments
under the Class A Distribution Plan may also be used to reimburse the
Distributor for other distribution costs (excluding overhead) not covered
in any year by any portion of the sales charges the Distributor retains.
See "Purchase of Shares."
Payments under the Class B Distribution Plan are limited to an
annual rate of 1% of the average daily net asset value of the Class B
shares. In accordance with current applicable rules, such payments are
also limited to 6.25% of gross sales of Class B shares plus interest at 1%
over the prime rate on any unpaid amounts. Up to 0.75% of the average
daily net assets is used to pay the Distributor a 4% commission on new
sales of Class B Shares. Most or all of such commissions are reallowed to
salespersons and to firms responsible for such sales. No commissions are
paid by the Fund with respect to sales by the Distributor to officers,
directors and full-time employees of the Fund, the Adviser, the Adviser's
general partner, the Sub-Adviser or the Distributor. Up to 0.25% of
average net assets is used to reimburse the Distributor for the payment of
service and maintenance fees to its salespersons and other firms for
shareholder servicing and maintenance of shareholder accounts.
If, due to the foregoing payment limitations, the Fund is unable to
pay the Adviser the 4% commission on new sales of Class B shares, the
Distributor intends, but is not obligated, to accept new orders for shares
and pay commissions in excess of the payments it receives from the Fund.
The Distributor intends to seek full payment from the Fund of any excess
amounts with interest at 1% over the prime rate at such future date when
and to the extent such payments on new sales would not be in excess of
the limitations. The Fund is not obligated to make such payments; the
amount (if any), timing and condition of any such payments are solely
within the discretion of the directors of the Fund who are not interested
persons of the Distributor or the Fund and have no direct or indirect
financial interest in the Class B Distribution Plan (the "Independent
Directors"). If the Class B Distribution Plan is terminated, the Distributor
will ask the Independent Directors to take whatever action they deem
appropriate with regard to the payment of any excess amounts.
Payments under the Class C Distribution Plan are also limited to an
annual rate of 1% of the average daily net asset value of the Class C
shares, and are subject to the same 6.25% and 1% limitations applicable to
the Class B Distribution Plan. The entire amount of payments may be used
to reimburse the Distributor for the payments of an initial commission
and service and maintenance fees to its salespersons and other firms for
selling new Class C shares, shareholder servicing and maintenance of
shareholder accounts.
In addition, the Plans provide that the Adviser, in its sole
discretion, may utilize its own resources for distributing and promoting
sales of Fund shares, including any profits from its advisory fees.
Each of the Distribution Plans may be terminated at any time by vote
of the Independent Directors or by vote of the respective class. Payments
pursuant to a Distribution Plan are included in the operating expenses of
the class.
As described herein, dealers or others will receive different levels
of compensation depending on which class of shares they sell. The
Distributor may make expense reimbursements for special training of a
dealer's registered representatives, advertising or equipment, or to defray
the expenses of dealer meetings.
Shares of the Fund may also be sold through banks or bank-affiliated
dealers. Any determination that such banks or bank-affiliated dealers are
prohibited from selling shares of the Fund under the Glass-Steagall Act
would have no material adverse effects on the Fund. State securities laws
may require such firms to be licensed as securities dealers in order to
sell shares of the Fund.
PURCHASE OF SHARES
General. You can purchase Class A, Class B or Class C shares of the
Fund from any dealer or other person having a sales agreement with the
Distributor.
There are three ways to make an initial investment in the Fund. One
way is to fill out the Application Form included in this Prospectus and
mail it to State Street Bank and Trust Company ("State Street") at the
address on the Form. The dealer must also sign the Form. Your dealer or
sales representative will help you fill out the Form. You should enclose a
check (minimum $1,000, except $250 for retirement plans) payable as
indicated on the Form. All purchases made by check should be in U.S.
dollars and made payable to State Street Bank and Trust Company, or in
the case of a retirement account, the custodian or trustee. Third party
checks will not be accepted. When purchases are made by check,
redemptions will not be allowed until the investment being redeemed has
been in the account for 15 calendar days.
Another way to make an initial investment is to have your dealer
order and pay for the shares. In this case, you must pay your dealer. The
dealer can order the shares from the Distributor by telephone or wire. You
can also use this method for additional investments of at least
$1,000.
The third way to purchase shares is by wire. Shares may be
purchased at any time by wiring federal funds directly to State Street.
Prior to an initial investment by wire, the shareholder should telephone
Davis Selected Advisers, L.P. at 1-800-279-0279 to advise them of the
investment and class of shares and to obtain an account number and
instructions. A completed Plan Adoption Agreement or Application Form
should be mailed to State Street after the initial wire purchase. To
assure proper credit, the wire instructions should be made as follows:
State Street Bank and Trust Company,
Boston, MA 02210
Attn.: Mutual Fund Services
DAVIS NEW YORK VENTURE FUND, INC.
Shareholder Name,
Shareholder Account Number,
Federal Routing Number 011000028,
DDA Number 9904-606-2
After your initial investment, you can make additional investments
of at least $25. Simply mail a check payable to "State Street Bank and
Trust Company," c/o The Davis Funds, P.O. Box 8406, Boston, MA
02266-8406. The check should be accompanied by a form which State
Street will provide after each purchase. If you do not have a form, you
should tell State Street that you want to invest the check in shares of the
Fund. If you know your account number, you should also give it to State
Street.
The Fund does not issue certificates for Class A shares unless you
request a certificate each time you make a purchase. Certificates are not
issued for Class B or Class C shares or for accounts using the Automatic
Withdrawal Plan. Instead, shares purchased are automatically credited to
an account maintained for you on the books of the Fund by State Street.
You receive a statement showing the details of the transaction and any
other transactions you had during the current year each time you add to or
withdraw from your account.
Alternative Purchase Arrangements. The Fund offers four classes of
shares. With certain exceptions described below, Class A shares are sold
with a front-end sales charge at the time of purchase and are not subject
to a sales charge when they are redeemed. Class B shares are sold
without a sales charge at the time of purchase, but are subject to a
deferred sales charge if they are redeemed within six years after
purchase. Class B shares will automatically convert to Class A shares
eight years after the end of the calendar month in which the shareholder's
order to purchase was accepted. Class C shares are purchased at their net
asset value per share without the imposition of a front-end sales charge
but are subject to a 1% deferred sales charge if redeemed within one year
after purchase and do not have a conversion feature. Class Y shares are
offered through a separate prospectus to (i) trust companies, bank trusts,
pension plans, endowments or foundations acting on behalf of their own
account or one or more clients for which such institution acts in a
fiduciary capacity and investing at least $5,000,000 at any one time
("Institutions"); (ii) any state, county, city, department, authority or
similar agency which invests at least $5,000,000 at any one time
("Governmental Entities"); and (iii) any investor with an account
established under a "wrap account" or other similar fee-based program
sponsored and maintained by a registered broker-dealer approved by the
Distributor ("Wrap Program Investors"). Class Y shares are sold at net
asset value without the imposition of Rule 12b-1 charges. For more
information about the Class Y shares, call the Fund at 1-800-279-0279.
Depending on the amount of the purchase and the anticipated length
of time of investment, investors may choose to purchase one class of
shares rather than the other. Investors who would rather pay the entire
cost of distribution at the time of investment, rather than spreading such
cost over time, might consider Class A shares. Other investors might
consider Class B or Class C shares, in which case 100% of the purchase
price is invested immediately. The Fund will not accept any purchase of
Class B shares in the amount of $250,000 or more per investor. Such
purchase must be made in Class A shares. Class C shares may be more
appropriate for the short-term investor. The Fund will not accept any
purchase of Class C shares when Class A shares may be purchased at net
asset value. See also "Distribution Plans" for more information.
Wrap Program Investors should be aware that both Class A and Class
Y shares are made available by the Fund at net asset value to sponsors of
wrap programs. However, Class A shares are subject to additional
expenses under the Fund's Rule 12b-1 Plan and sponsors of wrap programs
utilizing Class A shares are generally entitled to payments under the Plan.
If the sponsor has selected Class A shares, investors should discuss these
charges with their program's sponsor and weigh the benefits of any
services to be provided by the sponsor against the higher expenses paid by
Class A shareholders.
Class A Shares. Class A shares are sold at their net asset value plus
a sales charge. The amounts of the sales charges are shown in the
following table.
<TABLE>
<CAPTION>
Customary
Sales Charge Charge as Concession to Your
as Percentage Approximate Percentage Dealer as Percentage
Amount of Purchase of Offering Price of Amount Invested of Offering Price
- ------------------ ----------------- ------------------ -----------------
<S> <C> <C> <C>
$ 99,999 or less............. 4-3/4% 5.0% 4%
$100,000 to $249,999............. 3-1/2% 3.6% 3%
$250,000 to $499,999............. 2-1/2% 2.6% 2%
$500,000 to $749,999............. 2% 2.0% 1-3/4%
$750,000 to $999,999............. 1% 1.0% 3/4 of 1%
$ 1,000,000 or more............. 0% 0.0% 0%<F1>
<FN>
<F1> On purchases of $1 million or more, the investor pays no front-end
sales charge but a contingent deferred sales charge of 0.75% may be
imposed if shares purchased after December 1, 1996 are redeemed within
the first year after purchase. The Adviser may pay the financial service
firm a commission during the first year after such purchase at an annual
rate as follows:
</FN>
</TABLE>
<TABLE>
<CAPTION>
Purchase Amount Commission
--------------- ----------
<S> <C>
First $3,000,000................................... .75%
Next $2,000,000................................... .50%
Over $5,000,000................................... .25%
</TABLE>
Such commission will be paid at the time of purchase. Where a commission
is paid because of purchases of $1 million or more, such payment will be made
from 12b-1 distribution fees received from the Fund and, in cases where the
limits of the distribution plan in any year have been reached, from the
distributor's own resources.
There are a number of ways to reduce the sales charge on the
purchase of Class A shares, as set forth below.
(i) Family Purchases: Purchases made by an individual, such
individual's spouse and children under 21 are combined and treated as a
purchase of a single person.
(ii) Group Purchases: The purchases of an organized group, whether
or not incorporated, are combined and treated as the purchase of a single
person. The organization must have been organized for a purpose other
than to purchase shares of mutual funds.
(iii) Purchases for Employee Benefit Plans: Trusteed or other
fiduciary accounts and Individual Retirement Accounts ("IRA") of a single
employer are treated as purchases of a single person. Purchases of and
ownership by an individual and such individual's spouse under an IRA are
combined with their other purchases and ownership.
(iv) Purchases under a Statement of Intention: By executing the
"Statement of Intention" included in the Application Form at the back of
the Prospectus, purchases of Class A shares of $100,000 or more made
over a 13-month period may be made at the applicable price for the
aggregate shares actually purchased during the period. Please see "Terms
and Conditions" at the back of this prospectus.
(v) Rights of Accumulation: If you notify your dealer or the
Distributor, you may include the Class A shares you already own (valued at
maximum offering price) in calculating the price applicable to your
current purchase.
(vi) Combined Purchases with other Davis Funds: Purchases of Class
A shares of the Fund may be combined with your purchases of Class A
shares of other Davis Funds, including Davis High Income Fund, Inc., Davis
Tax-Free High Income Fund, Inc., Davis International Series, Inc. and all
funds offered by Davis Series, Inc. (other than Davis Government Money
Market Fund), separately or under combined Statements of Intention or
rights of accumulation to determine the price applicable to your purchases
of Class A shares of the Fund.
(vii) Sales at Net Asset Value: The sales charge will not apply to:
(1) Class A shares purchased through the automatic reinvestment of
dividends and distributions (see "Dividends and Distributions"); (2) Class A
shares purchased by directors, officers and employees of any fund for
which the Adviser acts as investment adviser or officers and employees of
the Adviser or Distributor including former directors and officers and any
spouse, child, parent, grandparent, brother or sister ("immediate family
members") of all of the foregoing, and any employee benefit or payroll
deduction plan established by or for such persons; (3) Class A shares
purchased by any registered representatives, principals and employees
(and any immediate family member) of securities dealers having a sales
agreement with the Distributor; (4) initial purchases of Class A shares
totaling at least $250,000 but less than $5,000,000, made at any one
time by banks, trust companies and other financial institutions on behalf
of one or more clients for which such institution acts in a fiduciary
capacity; (5) initial purchases of Class A shares totaling $250,000 or
more by a registered investment adviser on behalf of a client for which
the adviser is authorized to make investment decisions or otherwise acts
in a fiduciary capacity; (6) Class A shares purchased by any single account
covering a minimum of 250 participants and representing a defined
benefit plan, defined contribution plan, cash or deferred plan qualified
under 401(a) or 401(k) of the Internal Revenue Code or a plan established
under section 403(b), 457 or 501(c)(9) of such Code; (7) Class A shares
purchased by persons participating in a "wrap account" or similar
fee-based program sponsored and maintained by a registered
broker-dealer approved by the Fund's Distributor; and (8) Class A shares
amounting to less than $5,000,000 purchased by any state, county, city,
department, authority or similar agency. The Fund may also issue Class A
shares at net asset value incident to a merger with or acquisition of
assets of an investment company.
Class B Shares. Class B shares are offered at net asset value,
without a front-end sales charge. With certain exceptions described
below, the Fund imposes a deferred sales charge of 4% on shares redeemed
during the first year after purchase, 3% on shares redeemed during the
second or third year after purchase, 2% on shares redeemed during the
fourth or fifth year after purchase and 1% on shares redeemed during the
sixth year after purchase. However, on Class B shares of the Fund which
are acquired upon exchange from Class B shares of other Davis Funds
which were purchased prior to December 1, 1994, the Fund will impose a
deferred sales charge of 4% on shares redeemed during the first calendar
year after purchase; 3% on shares redeemed during the second calendar
year after purchase; 2% on shares redeemed during the third calendar year
after purchase; and 1% on shares redeemed during the fourth calendar
year after purchase, and no deferred sales charge is imposed on amounts
redeemed after four calendar years from purchase. Class B shares will be
subject to a maximum Rule 12b-1 fee at the annual rate of 1% of the
class' average daily net asset value.
Class B shares that have been outstanding for eight years will
automatically convert to Class A shares without imposition of a front-end
sales charge or exchange fee. The Class B shares so converted will no
longer be subject to the higher expenses borne by Class B shares. Because
the net asset value per share of the Class A shares may be higher or lower
than that of the Class B shares at the time of conversion, although the
dollar value will be the same, a shareholder may receive more or less
Class A shares than the number of Class B shares converted. Under the
Funds' private Internal Revenue Service Ruling, such a conversion will not
constitute a taxable event under the federal income tax law. In the event
that this ceases to be the case, the Board of Directors will consider what
action, if any, is appropriate and in the best interests of the Class B
shareholders.
Any contingent deferred sales charge imposed upon the redemption
of Class B shares is a percentage of the lesser of (i) the net asset value of
the shares redeemed or (ii) the original cost of such shares. No contingent
deferred sales charge is imposed when you redeem amounts derived from
(a) increases in the value of shares above the original cost of such shares
or (b) certain shares with respect to which the Fund did not pay a
commission on issuance, including shares acquired through reinvestment
of dividend income and capital gains distributions. Upon request for
redemption, shares not subject to the contingent deferred sales charge
will be redeemed first. Thereafter, shares held the longest will be the
first to be redeemed.
The contingent deferred sales charge will be waived as follows: (1)
on redemptions following a shareholder's death or disability, as defined in
Section 72(m)(7) of the Internal Revenue Code of 1986, as amended (the
"Code"); (2) on taxable periodic distributions from a qualified retirement
plan or IRA upon retirement or attainment of age 59 1/2 (e.g. the
applicable contingent deferred sales charge, if any, is imposed upon a
lump sum redemption at any age whether or not it is taxable) or
distributions to make a tax-free return of contributions to avoid tax
penalty; (3) on redemptions of shares sold to directors, officers and
employees of the Fund, its Adviser or Distributor, including former
directors and officers and immediate family members of all of the foregoing,
and any employee benefit or payroll deduction plan established by or for
such persons; (4) on redemptions pursuant to the right of the Fund to
liquidate a shareholder's account if the aggregate net asset value of the
shares held in such account falls below an established minimum amount.
Class C Shares. Class C shares are offered at net asset value
without a sales charge at the time of purchase. Class C shares purchased
after February 8, 1995 and redeemed within one year thereafter will be
subject to a 1% charge upon redemption. Class C shares do not have a
conversion feature. The Fund will not accept any purchases of Class C
shares when Class A shares may be purchased at net asset value.
The Distributor will pay a 1% commission to the firm responsible
for the sale of Class C shares. No other fees will be paid by the
Distributor during the one-year period following purchase. The
Distributor will be reimbursed for the commissions paid from 12b-1 fees
paid by the Fund during the one-year period. If Class C shares are
redeemed within the one-year period after purchase, the difference
between the 1% commission paid to the dealer and the 12b-1 fees paid to
the Distributor during that period will be reimbursed to the Distributor
out of the 1% redemption charge. The remainder of the charge will be paid
to the Fund. After Class C shares have been outstanding for more than one
year, the Distributor will make quarterly payments to the firm responsible
for the sale of the shares in amounts equal to 0.75% of the annual daily
net asset value of such shares for sales fees and 0.25% of the average daily
asset value of such shares for service and maintenance fees.
Prototype Retirement Plans. The Adviser and certain qualified
dealers have available prototype retirement plans sponsored by the Fund
for corporations and self-employed individuals and prototype Individual
Retirement Account ("IRA") plans for both individuals and employers.
These plans utilize the shares of the Fund and other Funds managed by the
Adviser as their investment vehicle. State Street acts as custodian or
trustee for the plans and charges the participant $10 to establish each
account and an annual maintenance fee of $10 per account. Such fees will
be redeemed automatically at year end from your account, unless you elect
to pay the fee directly.
Automatic Investment Plan. Shareholders may arrange for automatic
monthly investing whereby State Street will be authorized to initiate a
debit to the shareholder's bank account of a specific amount (minimum
$25) each month which will be used to purchase Fund shares. For
institutions that are members of the Automated Clearing House system
(ACH), such purchases can be processed electronically on any day of the
month between the 3rd and 28th day of each month. After each automatic
investment, the shareholder will receive a transaction confirmation and
the debit should be reflected on the shareholder's next bank statement.
The plan may be terminated at any time by the shareholder. If you desire
to utilize this plan, you may use the appropriate designation on the
Application Form.
Dividend Diversification Program. You may also establish a dividend
diversification program which allows you to have all dividends and any
other distributions automatically invested in shares of one or more of the
Davis Funds, subject to state securities law requirements and the
minimum investment requirements set forth below. You must receive a
current prospectus for the other fund or funds prior to investment. Shares
will be purchased at the chosen fund's net asset value on the dividend
payment date. A dividend diversification account must be in the same
registration as the distributing fund account and must be of the same
class of shares. All accounts established or utilized under this program
must have a minimum initial value of at least $250 and all subsequent
investments must be at least $25. This program can be amended or
terminated at any time, upon at least 60 days' notice. If you would like to
participate in this program, you may use the appropriate designation on
the Application Form.
TELEPHONE PRIVILEGE
Unless you have provided in your application that the telephone
privilege is not to be available, the telephone privilege is automatically
available under certain circumstances for exchanging shares and for
redeeming shares. By exercising the telephone privilege to sell or
exchange shares, you agree that the Fund shall not be liable for following
telephone instructions reasonably believed to be genuine. Reasonable
procedures will be employed to confirm that such instructions are genuine
and if not employed, the Fund may be liable for unauthorized instructions.
Such procedures will include a request for personal identification
(account or social security number) and tape recording of the instructions.
You should be aware that during unusual market conditions we may have
difficulty in accepting telephone requests, in which case you should
contact us by mail. See "Exchange of Shares - By Telephone", "Redemption
of Shares - By Telephone" and "Redemption of Shares - Expedited
Redemption Privilege".
EXCHANGE OF SHARES
General. The exchange privilege is a convenient way to buy shares
in other Davis Funds in order to respond to changes in your goals or in
market conditions. If such goals or market conditions change, the Davis
Funds offer a variety of investment objectives that includes common stock
funds, tax-exempt and corporate bond funds, and a money market fund.
However, the Fund is intended as a long-term investment and is not intended
for short-term trades. Shares of a particular class of the Fund may be
exchanged only for shares of the same class of another Davis Fund except
that Class A shareholders who are eligible to purchase Class Y shares may
exchange their shares for Class Y shares of the Fund. All of the Davis Funds
offer Class A and Class B shares. Only the Fund and Davis Series, Inc.,
Davis Government Money Market Fund offer Class C shares. The shares to
be received upon exchange must be legally available for sale in your state.
The net asset value of the initial shares being acquired must be at least
$1,000 unless such exchange is under the Automatic Exchange Program
described below. There is a $5 service charge payable to the Adviser for
each exchange other than an exchange under the Automatic Exchange
Program or exchanges involving Class Y shares. See "Purchase of Shares--
Alternative Purchase Arrangements" for Class Y eligibility requirements.
Shares may be exchanged at relative net asset value without any
additional charge. However, if any shares being exchanged are subject to
an escrow or segregated account pursuant to the terms of a Statement of
Intention or a CDSC, such shares will be exchanged at relative net asset
value, but the escrow or segregated account will continue with respect to
the shares acquired in the exchange. In addition, the terms of any CDSC, or
redemption fee, to which any Class B or Class C shares are subject at the
time of exchange will continue to apply to any Class B shares acquired
upon exchange.
Before you decide to make an exchange, you must obtain the current
prospectus of the desired fund. Call your broker or the Distributor for
information and a prospectus for any of the other Davis Funds registered
in your state. Read the prospectus carefully. If you decide to exchange
your shares, send State Street a written unconditional request for the
exchange and follow the instructions regarding delivery of share
certificates contained in the section on "Redemption of Shares". A
signature guarantee is not required for such an exchange. However, if
shares are also redeemed for cash in connection with the exchange
transaction, a signature guarantee may be required. See "Redemption of
Shares". Your dealer may charge an additional fee for handling an exercise
of the exchange privilege.
Automatic Exchange Program. The Fund also offers an automatic
monthly exchange program. All accounts established or utilized under this
program must have the same registration and a minimum initial value of
at least $250. All subsequent exchanges must have a value of at least
$25. Each month, shares will be simultaneously redeemed and purchased
at the chosen Davis Fund's applicable offering price. If you would like to
participate in this program, you may use the appropriate designation on
the Application Form.
An exchange involves both a redemption and a purchase, and normally
both are done on the same day. However, in certain instances such as
where a large redemption is involved, the investment of redemption
proceeds into shares of other Davis Funds may take up to seven days. For
federal income tax purposes, exchanges between funds are treated as a
sale and purchase. Therefore, there will usually be a recognizable capital
gain or loss due to an exchange. An exchange between different classes of
the same fund is not a taxable event.
The number of times a shareholder may exchange shares among the
Davis Funds within a specified period of time may be limited at the
discretion of the Adviser. Currently, more than three exchanges out of a
fund during a twelve month period are not permitted without the prior
written approval of the Adviser. The Fund reserves the right to terminate
or amend the exchange privilege at any time upon 60 or more days' notice.
By Telephone. You may exchange shares by telephone into accounts
with identical registrations. Please see the discussion of procedures in
respect to telephone instructions in the section entitled "Telephone
Privilege," as such procedures are also applicable to exchanges.
REDEMPTION OF SHARES
General. You can redeem, or sell back to the Fund, all or part of your
shares at any time at net asset value less any applicable sales charges or
redemption fees. You can do this by sending a written request to State
Street Bank and Trust Company, c/o The Davis Funds, P.O. Box 8406,
Boston, MA 02266-8406, indicating how many of your shares or what
dollar amount you want to redeem. If more than one person owns the
shares to be redeemed, all owners must sign the request. The signatures
on the request must be the same as the way in which the shares are
registered.
Sometimes State Street needs more documents to verify authority
to make a redemption. This usually happens when the owner is a
corporation, partnership or fiduciary (such as a trustee or the executor of
an estate) or if the person making the request is not the registered owner
of the shares.
If shares to be redeemed are represented by a certificate, the
certificate, signed by the owner or owners, must be sent to State Street
with the request.
For the protection of all shareholders, the Fund also requires that
signatures appearing on a share certificate, stock power or redemption
request where the proceeds would be more than $25,000, must be
guaranteed by a bank, credit union, savings association, securities
exchange, broker, dealer or other guarantor institution. The transfer agent
may reject a request from any of the foregoing eligible guarantors, if such
guarantor does not satisfy the transfer agent's written standards or
procedures or if such guarantor is not a member or participant of a
signature guarantee program. This provision also applies to exchanges
when there is also a redemption for cash. A signature guarantee on
redemption requests where the proceeds would be $25,000 or less is not
required, provided that such proceeds are being sent to the address of
record and, in order to ensure authenticity of an address change, such
address of record has not been changed within the last 30 days.
Redemption proceeds are normally paid to you within seven days
after State Street receives your proper redemption request. Payment for
redemptions can be suspended under certain emergency conditions
determined by the Securities and Exchange Commission or if the New York
Stock Exchange is closed for other than customary or holiday closings. If
any of the shares redeemed were just bought by you, payment to you may
be delayed until your purchase check has cleared (which usually takes up
to 15 days from the purchase date). You can avoid any such redemption
delay by paying for your shares with a certified or cashier's check or by
bank wire or federal funds.
Redemptions are ordinarily paid to you in cash. However, the Fund's
Board of Directors is authorized to decide that conditions exist making
cash payments undesirable, although the Board has never reached such a
decision. If the Board should decide to make payment in other than cash,
redemptions could be paid in securities, valued at the value used in
computing the Fund's net asset value. There would be brokerage costs
incurred by the shareholder in selling such redemption proceeds. We must,
however, redeem shares solely in cash up to the lesser of $250,000 or 1%
of the Fund's net asset value, whichever is smaller, during any 90-day
period for any one shareholder.
Your shares may also be redeemed through participating dealers.
Under this method, the Distributor repurchases the shares from your
dealer, if your dealer is a member of the Distributor's selling group. Your
dealer may, but is not required to, use this method in selling back your
shares and may place any repurchase request by telephone or wire. Your
dealer may charge you a service fee or commission. No charge is payable
if you redeem your own shares through State Street rather than having a
dealer arrange for a repurchase.
Expedited Redemption Privilege. Investors with accounts other than
prototype retirement plans and IRAs may designate on the Expedited
Redemption Privilege Form (included in this prospectus), an account with
any commercial bank and have the cash proceeds from the redemption
sent, by either wire or electronically through the Automated Clearing
House system ("ACH"), to a pre-designated bank account. State Street will
accept instructions to redeem shares and make payment to a pre-designated
commercial bank account by (a) written request signed by the registered
shareholder, (b) telephone request by any Qualified Dealer to Davis Selected
Advisers, L.P., (1-800-279-0279), and (c) by telegraphic request by the
shareholder to State Street. At the time of redemption, the shareholder must
request that federal funds be wired or transferred by ACH to the bank account
designated on the application. The redemption proceeds under this procedure
may not be directed to a savings bank, savings and loan or credit union
account except by arrangement with its correspondent bank or unless such
institution is a member of the Federal Reserve System. The Adviser, in its
discretion, may limit the amount that may be redeemed by a shareholder in any
day under the Expedited Redemption Privilege to $25,000.
There is a $5 charge by State Street for wire service, and receiving banks
may also charge for this service. Payment by ACH will usually arrive at
your bank two banking days after your call. Payment by wire is usually
credited to your bank account on the next business day after your call. The
Expedited Redemption Privilege may be terminated, modified or suspended by
the Fund at any time. See "Telephone Privilege".
The name of the registered shareholder and corresponding Fund
account number must be supplied. The Expedited Redemption Privilege
Form provides for the appropriate information concerning the commercial
bank and account number. Changes in ownership, account number
(including the identity of your bank) or authorized signatories of the
pre-designated account may be made by written notice to State Street
with your signature, and those of new owners or signers on the account,
guaranteed by a commercial bank or trust company. Additional
documentation may be required to change the designated account when
shares are held by a corporation, partnership, executor, administrator,
trustee or guardian.
By Telephone. You can redeem shares by telephone and receive a
check by mail, but please keep in mind:
The check can only be issued for up to $25,000;
The check can only be issued to the registered owner (who must be an
individual);
The check can only be sent to the address of record; and
Your current address of record must have been on file for 30 days.
Automatic Withdrawals Plan. Under the Automatic Withdrawals
Plan, you can indicate to State Street how many dollars you would like to
receive each month or each quarter. Your account must have a value of at
least $10,000 to start a plan. Shares are redeemed so that you will
receive the payment you have requested approximately on the 25th day of
the month. Withdrawals involve redemption of shares and may produce
gain or loss for income tax purposes. Shares of the Fund initially acquired
by exchange from any of the other Davis Funds, will remain subject to an
escrow or segregated account to which any of the exchanged shares were
subject. If you utilize this program using Class B shares, any applicable
contingent deferred sales charges will be imposed on Class B shares
redeemed. Purchase of additional shares concurrent with withdrawals may
be disadvantageous to you because of tax and sales load consequences. If
the amount you withdraw exceeds the dividends on your shares, your account
will suffer depletion. Your Automatic Withdrawals Plan may be terminated
by you at any time without charge or penalty. The Fund reserves the right
to terminate or modify the Automatic Withdrawals Plan at any time. Call or
write the Fund if you want further information on the Automatic
Withdrawals Plan.
Involuntary Redemptions. To relieve the Fund of the cost of
maintaining uneconomical accounts, the Fund may effect the redemption of
shares at net asset value in any account if the account, due to shareholder
redemptions, has a value of less than $250. At least 60 days prior to such
involuntary redemption, the Fund will mail a notice to the shareholder so
that an additional purchase may be effected to avoid such redemption.
Subsequent Repurchases. After some of or all your shares are
redeemed or repurchased, you may decide to put back all or part of your
proceeds into the same Class of the Fund's shares. Any such shares will
be issued without sales charge at the net asset value next determined
after you have returned the amount of your proceeds. In addition, any
CDSC assessed on Class B shares, or any redemption fee assessed on Class
C shares, will be returned to the account. Class B shares will be deemed
to have been purchased on the original purchase date for purposes of
calculating the CDSC and conversion period. This can be done by sending
the Fund or the Distributor a letter, together with a check for the
reinstatement amount. The letter must be received, together with the
payment, within 30 days after the redemption or repurchase. You can only
use this privilege once.
DETERMINING THE PRICE OF SHARES
The net asset value per share of each class is determined daily by
dividing the total value of investments and other assets, less any
liabilities, by the total number of outstanding shares of each class.
Valuation of the Fund's portfolio securities is based upon their market
value. Securities traded on a national securities exchange are valued at
the last published sales prices on the exchange, or, in the absence of
recorded sales, at the average of closing bid and asked prices on such
exchange. Over-the-counter securities are valued at the average of
closing bid and asked prices. Assets for which there are no quotations
available will be valued at a fair value as determined by or at the
direction of the Board of Directors. Investments in short-term securities
(maturing in sixty days or less) are valued at amortized cost unless the
Board of Directors determines that such cost is not a fair value.
The net asset value per share is determined as of the earlier of the
close of the exchange or 4:00 p.m. Eastern Time on each day the New York
Stock Exchange is open. The price per share for purchases or redemptions
made directly through State Street normally is such value next computed
after State Street receives the purchase order or redemption request. If
the purchase order or redemption request is placed with your dealer, then
the applicable price is normally computed as of 4:00 p.m. Eastern Time on
the day the dealer receives the order, provided that the dealer receives
the order before 4:00 p.m. Eastern Time. Otherwise, the applicable price is
the next determined net asset value. It is the responsibility of your
dealer to promptly forward purchase and redemptions orders to the
Distributor. Note that in the case of redemptions and repurchases of
shares owned by corporations, trusts or estates, State Street may require
additional documents to effect the redemption and the applicable price
will be determined as of the close of the next computation following the
receipt of the required documentation. See "Redemption of Shares."
DIVIDENDS AND DISTRIBUTIONS
There are two sources for the payments made to you by the Fund.
The first is net investment income and the second source is realized
capital gains. You will receive quarterly confirmation statements for
dividends declared and shares purchased through reinvestment of
dividends. You will also receive confirmations after each purchase (other
than through dividend reinvestment) and after each redemption. Because
Class B and Class C shares incur higher distribution services fees and bear
certain other expenses, such classes will have higher expense ratios and
will pay correspondingly lower dividends than Class A shares. For tax
purposes, information concerning distributions will be mailed annually to
shareholders.
Shareholders have the option to receive all dividends and
distributions in cash, to have all dividends and distributions reinvested,
or to have income dividends paid in cash and short-term and long-term
capital gain distributions reinvested. Reinvestment of all dividends and
distributions is automatic for accounts utilizing the Automatic
Withdrawal Plan. The reinvestment of dividends and distributions is made
at net asset value (without any initial or contingent deferred sales charge)
on the payment date. For the protection of the shareholder, upon receipt of
the second dividend check which has been returned to the State Street as
undeliverable, undelivered dividends will be invested in additional shares
at the current net asset value and the account designated as a dividend
reinvestment account.
FEDERAL INCOME TAXES
This section is not intended to be a full discussion of all the aspects
of the federal income tax law and its effects on the Fund and its
shareholders. Shareholders may be subject to state and local taxes on
distributions. Each investor should consult his or her own tax adviser
regarding the effect of federal, state and local taxes on an investment in
the Fund.
The Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code (the "Code") and, if so qualified,
will not be liable for federal income tax to the extent its earnings are
distributed, except in respect to realization of the "built-in gains" as
described below. If, for any calendar year, the distribution of earnings
required under the Code exceeds the amount distributed, an excise tax,
equal to 4% of the excess, will be imposed on the Fund. The Fund intends to
make distributions during each calendar year sufficient to prevent
imposition of the excise tax.
Distributions of net investment income and net realized short-term
capital gains will be taxable to shareholders as ordinary income.
Distributions of net long-term capital gains (other than the built-in gains
as discussed below) will be taxable to shareholders as long-term capital
gain regardless of how long the shares have been held. Distributions will
be treated the same for tax purposes whether received in cash or in
additional shares. Dividends declared in the last calendar month to
shareholders of record in such month and paid by the end of the following
January are treated as received by the shareholder in the year in which
they are declared.
On October 12, 1990, the Fund acquired by merger the investment
portfolio of Mulford Securities Corp., a private investment company which,
on the date of the merger, owned securities with a fair market value in
excess of their cost ("Mulford built-in gains"). For a period of ten years
after the merger, to the extent that the Fund realizes any net Mulford
built-in gains in any year, the Fund will incur a capital gains tax and will
distribute to shareholders only the excess of the amount of the net gains
realized over the amount of the tax. Such distributions will be taxable as
ordinary income. (The Fund will be reimbursed for the tax it pays through
an escrow established for this purpose under the terms of the merger.)
A gain or loss for tax purposes may be realized on the redemption of
shares. If the shareholder realizes a loss on the sale or exchange of any
shares held for six months or less and if the shareholder received a
capital gain distribution during such period, then such loss is treated as a
long-term capital loss to the extent of such capital gain distribution.
FUND SHARES
Shares issued by the Fund are currently divided into four classes,
Class A, Class B, Class C and Class Y shares. The Board of Directors may
offer additional classes in the future and may at any time discontinue the
offering of any class of shares. Each share, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Shares have no preemptive or subscription rights and are
freely transferable. Each share of the Fund represents an interest in the
assets of the Fund and has identical voting, dividend, liquidation and other
rights and the same terms and conditions as any other shares except that
(i) each dollar of net asset value per share is entitled to one vote, (ii) the
expenses related to a particular class, such as those related to the
distribution of each class and the transfer agency expenses of each class
are borne solely by each such class and (iii) each class of shares votes
separately with respect to provisions of the Rule 12b-1 Distribution Plan
which pertains to a particular class and other matters for which separate
class voting is appropriate under applicable law. Each fractional share
has the same rights, in proportion, as a full share. Shares do not have
cumulative voting rights; therefore, the holders of more than 50% of the
voting power of the Fund can elect all of the directors of the Fund. Due to
the differing expenses of the classes, dividends of Class B and Class C
shares are likely to be lower than for Class A shares, and are likely to be
higher for Class Y shares than for any other class of shares. For more
information about Class Y shares, call the Fund at 1-800-279-0279 to
obtain the Class Y prospectus.
PERFORMANCE DATA
When the Fund's performance is advertised, performance will consist
of total return, which is the average annual compounded rate of return of
an initial investment for periods of one, five and ten years and may
include such return for shorter or longer periods up to and including the
life of the Fund. Total return is calculated separately for each class.
This calculation assumes reinvestment of all dividends and distributions
and deduction of all charges and expenses, including the maximum
front-end or applicable contingent deferred sales charge. In addition, a
table showing the performance of an assumed investment of $10,000 may
be used from time to time. The Fund may also quote total return and
aggregate total return performance data for various other specified time
periods. Such data will be calculated substantially as described above,
except that (1) the rates of return calculated will not be average annual
rates, but rather, actual annual, annualized or aggregate rates of return
and (2) sales charges will not be included with respect to annual or
annualized rates of return calculations. Aside from the impact on the
performance data calculations of including or excluding the sales charges,
actual annual or annualized total return data generally will be lower than
average annual total return data since the average annual rates of return
reflect compounding; aggregate total return data generally will be higher
than average annual total return data since the aggregate rates of return
reflect compounding over a longer period of time.
In reports or other communications to shareholders and in
advertising material, the performance of the Fund may be compared to
recognized unmanaged indices or averages of the performance of similar
securities. Also, the performance of the Fund may be compared to that of
other funds of comparable size and objectives as listed in the rankings
prepared by Lipper Analytical Services, Inc., Morningstar, Inc. or similar
independent mutual fund rating services, and the Fund may use evaluations
published by nationally recognized independent ranking services and
publications.
The Fund's 1996 Annual Report contains additional performance
information and will be made available upon request and without
charge.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to Davis Selected Advisers,
L.P., by writing to P. O. Box 1688, Santa Fe, NM 87504-1688 or calling
(800) 279-0279.
TERMS AND CONDITIONS FOR A STATEMENT OF INTENTION (CLASS A SHARES ONLY)
TERMS OF ESCROW:
1. Out of my initial purchase (or subsequent purchases if necessary) 5%
of the dollar amount specified in this Statement will be held in escrow by
State Street in the form of shares (computed to the nearest full share at
the public offering price applicable to the initial purchase hereunder)
registered in my name. For example, if the minimum amount specified
under this statement is $100,000 and the public offering price applicable
to transactions of $100,000 is $10 a share, 500 shares (with a value of
$5,000) would be held in escrow.
2. In the event I should exchange some or all of my shares to those of
another mutual fund for which Davis Selected Advisers, L.P. acts as
adviser, according to the terms of this prospectus, I hereby authorize
State Street to escrow the applicable number of shares of the new fund,
until such time as this Statement is complete.
3. If my total purchases are at least equal to the intended purchases,
the shares in escrow will be delivered to me or to my order.
4. If my total purchases are less than the intended purchases, I will
remit to Davis Selected Advisers, L.P., the difference in the dollar amount
of sales charge actually paid by me and the sales charge which I would have
paid if the total purchase had been made at a single time. If remittance is
not made within 20 days after written request by Davis Selected Advisers,
L.P., or my dealer, State Street will redeem an appropriate number of the
escrowed shares in order to realize such difference.
5. I hereby irrevocably constitute and appoint State Street my
attorney to surrender for redemption any or all escrowed shares with full
power of substitution in the premises.
6. Shares remaining after the redemption referred to in Paragraph
No. 4 will be credited to my account.
7. The duties of State Street are only such as are herein provided being
purely ministerial in nature, and it shall incur no liability whatever
except for willful misconduct or gross negligence so long as it has acted
in good faith. It shall be under no responsibility other than faithfully to
follow the instructions herein. It may consult with legal counsel and
shall be fully protected in any action taken in good faith in accordance
with advice from such counsel. It shall not be required to defend any legal
proceedings which may be instituted against it in respect of the subject
matter of this Agreement unless requested to do so and indemnified to its
satisfaction against the cost and expense of such defense.
8. If my total purchases are more than the intended purchases and such
total is sufficient to qualify for an additional quantity discount, a
retroactive price adjustment shall be made for all purchases made under
such Statement to reflect the quantity discount applicable to the
aggregate amount of such purchases during the thirteen-month period.
EXPEDITED REDEMPTION PRIVILEGE
/_/ If you wish the Expedited Redemption Privilege please check the box
to the left and complete the following information.
I (we) hereby authorize State Street Bank and Trust Company, Davis
Selected Advisers, L.P., and/or the Davis Funds to act upon instructions
received by telephone or telegraph, believed by them to be genuine, and to
redeem shares in my (our) account in any of the Davis Funds and to wire the
proceeds of such redemption to the predesignated bank listed below. I (we)
hereby agree that neither State Street Bank and Trust Company, nor Davis
Selected Advisers, L.P., nor the Davis Funds nor any of their officers or
employees, will be liable for any loss, liability, cost or expense for
acting upon such instructions.
__________________________________ __________________________________
Signature of Shareholder Signature of Co-Shareholder
__________________________________ __________________________________
Name of Commercial Bank (Title of Account at Bank)
__________________________________ __________________________________
(Street) (Account Number at Bank)
__________________________________ __________________________________
(City) (State) (Zip) (ABA/Transit Routing Number)
TABLE OF CONTENTS
PAGE
Summary............................................................... 2
Financial Highlights.................................................. 4
Investment Objective and Policies..................................... 6
Adviser, Sub-Adviser and Distributor.................................. 9
Distribution Plans.................................................... 10
Purchase of Shares.................................................... 11
Telephone Privilege................................................... 15
Exchange of Shares.................................................... 16
Redemption of Shares.................................................. 17
Determining the Price of Shares....................................... 19
Dividends and Distributions........................................... 19
Federal Income Taxes.................................................. 20
Fund Shares........................................................... 20
Performance Data...................................................... 21
Shareholder Inquiries................................................. 21
<PAGE>
PROSPECTUS December 1, 1996
Class Y Shares
Davis New York Venture Fund, Inc.
124 East Marcy Street
Santa Fe, New Mexico 87501
1-800-279-0279
________________________
Minimum Investment Plans Available
Initial Purchase $5,000,000 Exchange Privilege
Wrap Fee Program Minimum
Investment subject to
Sponsor's Minimums
Davis New York Venture Fund, Inc. (the "Fund") seeks to achieve
growth of capital. It invests primarily in common stocks.
The Fund offers four classes of shares, Class A, B, C and Y, each
having different expense levels and sales charges. This Prospectus
provides information regarding the Class Y shares offered by the Fund.
Class Y shares are offered only to certain qualified purchasers, as
described in this Prospectus. Class A, Class B and Class C shares are
offered under a separate prospectus.
This Prospectus concisely sets forth information about the Class Y
shares of the Fund that prospective investors should know before
investing. It should be read carefully and retained for future reference. A
Statement of Additional Information dated December 1, 1996, has been
filed with the Securities and Exchange Commission and is incorporated
herein by reference. A copy of this Statement and other information about
the Fund may be obtained without charge by writing to or calling the Fund
at the above address or telephone number.
________________________
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SUMMARY
Fund Expenses. The following table is intended to assist you in
understanding the various costs and expenses that an investor in the Class
Y shares of the Fund will bear directly or indirectly. Because the Class Y
shares were not offered prior to September 1, 199, the information is
based on the expenses of the Class A shares for Fund's fiscal year ended
July 31, 1995. Expenses have been restated to give effect to the
elimination of 12b-1 fees and the reduction of transfer agent fees for
Class Y shares. You can refer to the section "Adviser, Sub-Adviser and
Distributor" and "Purchase of Shares" for more information on transaction
and operating expenses of the Fund.
Shareholder Transaction Expenses Class Y
- -------------------------------- -------
Maximum sales load imposed on purchases............................. None
Maximum sales load imposed on reinvested dividends.................. None
Deferred sales load (a declining percentage of the
lesser of the net asset value of the shares
redeemed or the total cost of such shares)
Redeemed during first year...................................... None
Redeemed during second or third year............................ None
Redeemed during fourth or fifth year............................ None
Redeemed during sixth year...................................... None
Redeemed after sixth year....................................... None
Exchange Fee...................................................... None
Annual Fund operating expenses (as a percentage of average net assets)
- ---------------------------------------------------------------------
Management fees............................................... 0.59%
12b-1 fees.................................................... 0.00%
Other expenses................................................ 0.06%
-----
Total Fund operating expenses............................. 0.65%
Example:
You would pay the following expenses on a $1,000 investment,
assuming a 5% annual return and redemption at the end of each time
period:
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class Y........................... $7 $21 $36 $81
The 5% rate used in the example is only for illustration and is
not intended to be indicative of the future performance of the Fund, which
may be more or less than the assumed rate. Future expenses may be more
or less than those shown.
The Fund. Davis New York Venture Fund, Inc. is an open-end,
diversified, management investment company incorporated in Maryland in
1968 and registered under the Investment Company Act of 1940.
The Fund offers four classes of shares. Class A, B and C shares are
sold through a separate Prospectus. Class Y shares are offered through
this Prospectus to (i) trust companies, bank trusts, endowments, pension
plans or foundations acting on behalf of their own account or one or more
clients for which such institution acts in a fiduciary capacity and
investing at least $5,000,000 at any one time ("Institutions"); (ii) any
state, county, city, department, authority or similar agency which invests
at least $5,000,000 ("Governmental Entities"); and (iii) any investor with
an account established under a "wrap account" or other fee based program,
sponsored and maintained by a registered broker-dealer approved by the
Distributor ("Wrap Program Investors").
Investment Objective. The Fund's investment objective is growth of
capital. The Fund invests primarily in common stocks. These securities
are subject to the risk of price fluctuations reflecting both market
evaluations of the businesses involved and general changes in the equity
markets. The Fund may invest in foreign securities and attempt to reduce
currency fluctuation risks by engaging in related hedging transactions.
These transactions involve special risk factors. There is no assurance
that the investment objective of the Fund will be achieved. See
"Investment Objective and Policies".
Investment Adviser, Sub-Adviser and Distributor. Davis Selected
Advisers, L.P., (the "Adviser") is the investment adviser and distributor
for the Fund. Davis Selected Advisers-NY, Inc., a wholly-owned subsidiary
of the Adviser, performs certain research and portfolio management services
for the Fund under a Sub-Advisory Agreement with the Adviser. See "Adviser,
Sub-Adviser and Distributor".
Purchases, Exchanges and Redemptions. Class Y shares are sold at
net asset value without a sales charge. The initial minimum investment
for Institutions and Governmental Entities is $5,000,000. The initial
minimum investment for Wrap Program Investors is set by the sponsor of
the program. Shares may be exchanged under certain circumstances at net
asset value for the same class of shares of certain other funds managed
and distributed by the Adviser. See "Purchase of Shares," "Exchange of
Shares" and "Redemption of Shares".
Class A shareholders who are eligible to purchase Class Y shares
may exchange their shares for Class Y shares of the Fund. There is no
charge for this service.
Shareholder Services. Questions regarding the Fund or your account
may be directed to Davis Selected Advisers, L.P., at 1-800-279-0279 or to
your sales representative. Written inquiries may be directed to Davis
Selected Advisers, L.P., P.O. Box 1688, Santa Fe, NM 87504-1688. During
severe market conditions, the Adviser may experience difficulty in accepting
telephone redemptions or exchanges. If you are unable to contact the Adviser
at the above telephone number, you should call 1-505-820-3000 Monday
through Friday between 8:00 a.m. and 4:00 p.m. Mountain Time.
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial
statements of the Fund and have been audited by Tait, Weller and Baker,
independent auditors. The table expresses the information in terms of a
single Class A share for the respective periods presented and is
supplementary information to the Fund's financial statements which are
included in the 1996 Annual Report to Shareholders. Such Reports may be
obtained by writing or calling the Fund. The Fund's financial statements
and financial highlights for the five years ended July 31, 1996 have been
audited by the Fund's independent certified public accountants, whose
opinion thereon is contained in the Annual Report. No information is
presented for the Class Y shares as they were not offered until September
1, 1996.
<TABLE>
-----------------------------------------------CLASS A---------------------------------
Year ended July 31,
--------------------------------------------------------------------------------------
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<F2> <F2> <F2> <F2> <F2> <F2> <F2> <F2> <F2>
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period............. $14.56 $12.04 $12.08 $10.70 $ 9.85 $9.39 $9.72 $8.07 $10.88 $10.41
------ ------ ------ ------ ------ ----- ----- ----- ------ ------
Income From
- -----------
Investment Operations
- ---------------------
Net Investment
Income........... .20 .14 .16 .10 .14 .16 .36 .21 .19 .15
Net Gains on
Securities (both
realized and
unrealized)...... 1.64 2.95 .54 1.98 1.57 1.02 .38 2.22 (.64) 2.10
------ ------ ------ ------ ------ ----- ----- ----- ------ ------
Total From
Investment
Operations....... 1.84 3.09 .70 2.08 1.71 1.18 .74 2.43 (.45) 2.25
Less Distributions
- ------------------
Dividends (from
net investment
income).......... (.15) (.12) (.16) (.10) (.21) (.18) (.37) (.22) (.22) (.10)
Distributions
From Real-
ized Capital
Gains............ (1.01) (.45) (.58) (.59) (.55) (.50) (.70) (.34) (1.66) (1.68)
Distributions
From Paid In
Capital.......... _ _ _ (.01) (.10) (.04) _ (.22) (.48) _
------ ------ ------ ------ ------ ----- ----- ----- ------ ------
Total Dis-
tributions....... (1.16) (.57) (.74) (.70) (.86) (.72) (1.07) (.78) (2.36) (1.78)
------ ------ ------ ------ ------ ----- ----- ----- ------ ------
Net Asset Value,
End of Period.... $15.24 $14.56 $12.04 $12.08 $10.70 $9.85 $9.39 $9.72 $ 8.07 $10.88
====== ====== ====== ====== ====== ===== ===== ===== ====== ======
Total Return<F1>..... 13.04% 27.21% 5.99% 20.20% 18.62% 14.29% 8.12% 33.44% (3.30)% 25.22%
- ------------
Ratios/Supplemental
- -------------------
Data
- ----
Net Assets, End of
Period (000,000
omitted)......... 2,151 1,595 1,077 739 494 421 345 319 168 232
Ratio of
Expenses
to Average
Net Assets....... .87% 90% .87% .89% .91% .97% .97% .97% 1.01% .93%
Ratio of Net
Income to Average
Net Assets....... 1.30% 1.11% 1.19% .85% 1.36% 1.84% 3.78% 2.45% 2.42% 1.48%
Portfolio Turnover
Rate............. 19% 15% 13% 24% 26% 52% 47% 58% 38% 55%
<FN>
<F1> Sales charges are not reflected in calculation.
<F2> Data are derived from data of the Class A shares of the Fund and
reflect the impact of Rule 12b-1 distribution expenses paid by the Class A
shares. The Class Y shares are not subject to Rule 12b-1 distribution
expenses and per share data for periods beginning on and after September
1, 1996, will not reflect the deduction of such expenses.
</FN>
</TABLE>
INVESTMENT OBJECTIVE AND POLICIES
General. The Fund's investment objective is growth of capital.
There is no assurance that such objective will be achieved. The Fund
ordinarily invests in securities which the Adviser or Sub-Adviser believes
have above-average appreciation potential. Usually these securities are
common stocks. Income is not a significant factor in selecting the Fund's
investments.
Generally, the Fund invests predominantly in equity securities of
companies with market capitalizations of at least $250 million. It also
will invest in issues with smaller capitalizations. Special risks
associated with investing in small cap issuers relative to larger cap
issuers include high volatility of valuations and less liquidity.
Investments will consist of issues which the Adviser or Sub-Adviser
believes have capital growth potential due to factors such as undervalued
assets or earnings potential, product development and demand, favorable
operating ratios, resources for expansion, management abilities,
reasonableness of market price, and favorable overall business
prospects.
Foreign Investments. The Fund may invest in securities of foreign
issuers or securities which are principally traded in foreign markets
("foreign securities"). Investments in foreign securities may be made
through the purchase of individual securities on recognized exchanges and
developed over-the-counter markets, through American Depository
Receipts ("ADRs") covering such securities, and through U.S. registered
investment companies investing primarily in foreign securities. The Fund,
however, may not invest in the securities of other investment companies
if more than 10% of the Fund's total assets would then be invested in such
companies. Other registered investment companies usually have their own
management costs or fees and the Adviser will also earn its regular fee on
Fund assets invested in such other companies. When the Fund is invested
in foreign securities, the operating expenses of the Fund are likely to be
higher than that of an investment company investing exclusively in U.S.
securities, since the management, custodial and certain other expenses
are expected to be higher.
Investments in foreign securities may involve a higher degree of
risk than investments in domestic issuers. Foreign securities are often
denominated in foreign currencies, which means that their value will be
affected by changes in exchange rates, as well as other factors that
affect securities prices. There is generally less publicly available
information about foreign securities and securities markets, and there
may be less government regulation and supervision of foreign issuers and
securities markets. Foreign securities and markets may also be affected
by political and economic instabilities, and may be more volatile and less
liquid than domestic securities and markets. Investment risks may
include expropriation or nationalization of assets, confiscatory taxation,
exchange controls and limitations on the use or transfer of assets, and
significant withholding taxes. Foreign economies may differ from the
United States favorably or unfavorably with respect to inflation rates,
balance of payments, capital reinvestment, gross national product
expansion, and other relevant indicators.
To attempt to reduce exposure to currency fluctuations, the Fund
may trade in forward foreign currency exchange contracts (forward
contracts), currency futures contracts and options thereon and securities
indexed to foreign securities. These techniques may be used to lock in an
exchange rate in connection with transactions in securities denominated
or traded in foreign currencies, to hedge the currency risk in foreign
securities held by the Fund and to hedge a currency risk involved in an
anticipated purchase of foreign securities. Cross-hedging may also be
utilized, that is, entering into a hedge transaction in respect to a
different foreign currency than the one in which a trade is to be made or
in which a portfolio security is principally traded. There is no limitation
on the amount of assets that may be committed to currency hedging.
However, the Fund will not engage in a futures transaction if it would
cause the aggregate of initial margin deposits and premiums paid on
outstanding options on futures contracts to exceed 5% of the value of its
total assets (excluding in calculating such 5% any in-the-money amount of
any option). Currency hedging transactions may be utilized as a tool to
reduce currency fluctuation risks due to a current or anticipated position
in foreign securities. The successful use of currency hedging transactions
usually depends on the Adviser's or the Sub-Adviser's ability to forecast
interest rate and currency exchange rate movements. Should interest or
exchange rates move in an unexpected manner, the anticipated benefits of
futures contracts, options or forward contracts may not be achieved or
losses may be realized and thus the Fund could be in a worse position than
if such strategies had not been used. Unlike many exchange-traded futures
contracts, there are no daily price fluctuation limits with respect to
options on currencies and forward contracts, and adverse market
movements could therefore continue to an unlimited extent over a period
of time. In addition, the correlation between movements in the prices of
such instruments and movements in the price of the securities and
currencies hedged or used for cover will not be perfect and could produce
unanticipated losses. Unanticipated changes in currency prices may result
in poorer overall performance for the Fund than if it had not entered into
such contracts. When taking a position in an anticipatory hedge, the Fund
is required to set aside cash or high grade liquid securities to fully secure
the obligation.
Temporary Defensive Investments. For defensive purposes or to
accommodate inflows of cash awaiting more permanent investment, the
Fund may temporarily and without limitation hold high-grade short-term
money market instruments, cash and cash equivalents, including
repurchase agreements.
Restricted and Illiquid Securities. The Fund may invest in restricted
securities, i.e., securities which, if sold, would cause the Fund to be
deemed an "underwriter" under the Securities Act of 1933 (the "1933
Act") or which are subject to contractual restrictions on resale. The
Fund's policy is to not purchase or hold illiquid securities (which may
include restricted securities) if more than 15% of the Fund's net assets
would then be illiquid. If at any time more than 15% of the Fund's net
assets are illiquid, steps will be taken as soon as practicable to reduce
the percentage of illiquid assets to 15% or less.
The restricted securities which the Fund may purchase include
securities which have not been registered under the 1933 Act but are
eligible for purchase and sale pursuant to Rule 144A ("Rule 144A
Securities"). This Rule permits certain qualified institutional buyers,
such as the Fund, to trade in privately placed securities even though such
securities are not registered under the 1933 Act. The Adviser or
Sub-Adviser, under criteria established by the Fund's Board of Directors,
will consider whether Rule 144A securities being purchased or held by the
Fund are illiquid and thus subject to the Fund's policy limiting
investments in illiquid securities. In making this determination, the
Adviser or Sub-Adviser will consider the frequency of trades and quotes,
the number of dealers and potential purchasers, dealer undertakings to make
a market, and the nature of the security and the market place trades (for
example, the time needed to dispose of the security, the method of soliciting
offers and the mechanics of transfer). The liquidity of Rule 144A Securities
will also be monitored by the Adviser and Sub-Adviser and, if as a result of
changed conditions, it is determined that a Rule 144A Security is no longer
liquid, the Fund's holding of illiquid securities will be reviewed to
determine what, if any, action is required in light of the policy limiting
investments in such securities. Investing in Rule 144A Securities could have
the effect of increasing the amount of investments in illiquid securities if
qualified institutional buyers are unwilling to purchase such securities.
Repurchase Agreements. The Fund may enter into repurchase
agreements, but normally will not enter into repurchase agreements
maturing in more than seven days, and may make repurchase agreement
transactions through a joint account with other funds which have the
same investment adviser. A repurchase agreement, as referred to herein,
involves a sale of securities to the Fund, with the concurrent agreement
of the seller (a bank or securities dealer which the Adviser or
Sub-Adviser determines to be financially sound at the time of the
transaction) to repurchase the securities at the same price plus an amount
equal to accrued interest at an agreed-upon interest rate, within a
specified time, usually less than one week, but, on occasion, at a later
time. The repurchase obligation of the seller is, in effect, secured by the
underlying securities. In the event of a bankruptcy or other default of a
seller of a repurchase agreement, the Fund could experience both delays in
liquidating the underlying securities and losses, including (a) possible
decline in the value of the collateral during the period while the Fund
seeks to enforce its rights thereto; (b) possible loss of all or a part of the
income during this period; and (c) expenses of enforcing its rights.
Borrowing. The Fund may not borrow money except from banks for
extraordinary or emergency purposes in amounts not exceeding 10% of the
value of the Fund's total assets (excluding the amount borrowed) at the
time of borrowing. The Fund may not pledge or hypothecate any of its
assets, except in connection with permitted borrowing in amounts not
exceeding 15% of the value of the Fund's total assets (excluding the
amount borrowed) at the time of such borrowing.
Portfolio Transactions. The Adviser and the Sub-Adviser are
responsible for the placement of portfolio transactions, subject to the
supervision of the Board of Directors. It is the Fund's policy to seek to
place portfolio transactions with brokers or dealers who will execute
transactions as efficiently as possible and at the most favorable price.
Subject to this policy, research services and placement of orders by
securities firms for Fund shares may be taken into account as a factor in
placement of portfolio transactions. In seeking the Fund's investment
objective, the Fund may trade to some degree in securities for the short
term if the Adviser or Sub-Adviser believes that the growth potential of a
security no longer exists, considers that other securities have more
growth potential, or otherwise believes that such trading is advisable.
Because of the Fund's investment policies, portfolio turnover rate will
vary. At times it could be high, which could require the payment of larger
amounts in brokerage commissions. The Adviser and Sub-Adviser are
authorized to place portfolio transactions with Shelby Cullom Davis & Co.,
a member of the New York Stock Exchange, which may be deemed to be an
affiliate of the Adviser, if the commissions are fair and reasonable and
comparable to commissions charged by non-affiliated qualified brokerage
firms for similar services. Portfolio turnover rates are set forth in
"Financial Highlights".
Fundamental Policies. The Fund has adopted certain investment
restrictions set forth in the Statement of Additional Information. These
restrictions and the Fund's investment objective are fundamental policies
and may not be changed unless authorized by a vote of the shareholders.
All other policies are non-fundamental and may be changed without
shareholder approval. Except for the restriction with respect to illiquid
securities, any percentage restrictions set forth in the prospectus or in
the Statement of Additional Information apply as of the time of
investment without regard to later increases or decreases in the values of
securities or total net assets.
ADVISER , SUB-ADVISER AND DISTRIBUTOR
Subject to the direction and supervision of the Fund's Board of
Directors, the Fund's affairs are managed by Davis Selected Advisers, L.P.,
124 East Marcy Street, Santa Fe, New Mexico 87501. Venture Advisers,
Inc. is the Adviser's sole general partner. Shelby M.C. Davis is the
controlling shareholder of the general partner. Subject to the direction
and supervision of the Board of Directors, the Adviser manages the Fund's
investment and business operations and acts as the distributor of the Fund's
shares. Davis Selected Advisers-NY, Inc., a wholly-owned subsidiary of the
Adviser, performs research and portfolio management services for the Fund
under a Sub-Advisory Agreement with the Adviser. The Adviser also acts as
investment adviser and distributor for Davis High Income Fund, Inc., Davis
Tax-Free High Income Fund, Inc., Davis Series, Inc. and Davis International
Series, Inc. (collectively with the Fund, the "Davis Funds"), Selected
American Shares, Inc., Selected Special Shares, Inc. and Selected Capital
Preservation Trust.
The Fund pays the Adviser a fee at the annual rate based on average
net assets, as follows: 0.75% on the first $250 million; 0.65% on the next
$250 million; 0.55% on the next $2.5 billion; 0.54% on the next $1 billion;
0.53% on the next $1 billion; 0.52% on the next $1 billion; 0.51% oo the
next $1 billion; and 0.50% of average net assets in excess of $7 billion.
This fee is higher than that of most other mutual funds but is not
necessarily higher than that paid by funds with a similar objective. The
Fund also reimburses the Adviser for its costs of providing certain
accounting and financial reporting, shareholder services and compliance
with state securities laws. Under the Sub-Advisory Agreement, the
Adviser pays all of the Sub-Adviser's direct and indirect costs of
operation. All the fees paid to the Sub-Adviser are paid by the Adviser
and not the Fund.
Shelby M.C. Davis, an employee of the Adviser, has been the
Fund's primary portfolio manager since its inception in 1969. Since 1969,
he has been a director of the Adviser's general partner. He is a director
and officer of all investment companies managed by the Adviser and has
been the portfolio manager of Selected American Shares, Inc. since May 1,
1993.
Christopher C. Davis, an employee of the Sub-Adviser, is the
portfolio co-manager for the Fund and Selected American Shares, Inc., and
the portfolio manager of the Davis Series, Inc., Davis Financial Fund. He
was co-portfolio manager of the Davis Financial Fund, with Shelby M.C.
Davis, from its inception on May 1, 1991 until December 1, 1994. He was
employed by the Adviser from September, 1989 through November, 1996 as an
assistant portfolio manager and research analyst.
Davis Selected Advisers, L.P., the Fund's distributor, is reimbursed
by the Fund for some of its distribution expenses through Distribution Plans
which have been adopted with respect to Class A, Class B and Class C shares
and approved by the Fund's Board of Directors and the shareholders of such
classes in accordance with Rule 12b-1 under the Investment Company Act
of 1940. The Class Y shares are not subject to Rule 12b-1 fees.
PURCHASE OF SHARES
General. Class Y shares are offered through this Prospectus to (i)
trust companies, bank trusts, endowments, pension plans or foundations
acting on behalf of their own account or one or more clients for which
such institution acts in a fiduciary capacity and investing at least
$5,000,000 at any one time ("Institutions"); (ii) any state, county, city,
department, authority or similar agency which invests at least
$5,000,000 ("Governmental Entities"); and (iii) any investor with an
account established under a "wrap account" or other similar fee-based
program sponsored and maintained by a registered broker-dealer approved
by the Fund's Distributor ("Wrap Program Investors"). Wrap Program
Investors may only purchase Class Y shares through the sponsors of such
programs who have entered into agreements with Davis Selected Advisers,
L.P.
Wrap Program Investors should be aware that both Class A and Class
Y shares are made available by the Fund at net asset value to sponsors of
wrap programs. However, Class A shares are subject to additional
expenses under the Fund's Rule 12b-1 Plan and sponsors of wrap programs
utilizing Class A shares are generally entitled to payments under the Plan.
If the sponsor has selected Class A shares, investors should discuss these
charges with their program's sponsor and weigh the benefits of any
services to be provided by the sponsor against the higher expenses paid by
Class A shareholders.
Purchase by Bank Wire. Shares may be purchased at any time by
wiring federal funds directly to State Street. Prior to an initial
investment by wire, the institutional shareholder or wrap program
sponsor should telephone Davis Selected Advisers, L.P., at 1-800-279-0279 to
advise them of the investment and class of shares and to obtain an account
number and instructions. To assure proper credit, the wire instructions
should be made as follows:
State Street Bank and Trust Company,
Boston, MA 02210
Attn.: Mutual Fund Services
DAVIS NEW YORK VENTURE FUND, INC.
Shareholder Name,
Shareholder Account Number,
Federal Routing Number 011000028,
DDA Number 9904-606-2
You may make additional investments by wire or you may simply
mail a check payable to "State Street Bank and Trust Company," c/o The
Davis Funds, P.O. Box 8406, Boston, MA 02266-8406. The check should be
accompanied by a form which State Street will provide after each
purchase. If you do not have a form, you should tell State Street that you
want to invest the check in shares of the Fund. If you know your account
number, you should also give it to State Street. All purchases made by
check should be in U.S. dollars. Third party checks will not be accepted.
When purchases are made by check, redemptions will not be allowed until
the investment being redeemed has been in the account for 15 days.
The Fund does not issue certificates for Class Y shares. Each time
you add to or withdraw from your account, you will receive a statement
showing the details of the transaction and any other transactions you had
during the current year.
TELEPHONE PRIVILEGE
Unless you have provided in your application that the telephone
privilege is not to be available, the telephone privilege is automatically
available under certain circumstances for exchanging shares and for
redeeming shares. By exercising the telephone privilege to sell or
exchange shares, you agree that the Fund shall not be liable for following
telephone instructions reasonably believed to be genuine. Reasonable
procedures will be employed to confirm that such instructions are genuine
and if not employed, the Fund may be liable for unauthorized instructions.
Such procedures will include a request for personal identification
(account or social security number) and tape recording of the instructions.
You should be aware that during unusual market conditions we may have
difficulty in accepting telephone requests, in which case you should
contact us by mail. See "Exchange of Shares - By Telephone", "Redemption
of Shares - By Telephone" and "Redemption of Shares - Expedited
Redemption Privilege".
EXCHANGE OF SHARES
General. You may exchange Class Y shares of the Fund for Class Y
shares of the other Davis Funds. The Davis Funds offer a variety of
investment objectives that includes common stock funds, tax-exempt and
corporate bond funds, and a money market fund. However, the Fund is
intended as a long-term investment and is not intended for short-term
trades. The net asset value of the initial shares being acquired must be at
least $5,000,000 for Institutions and Governmental Entities or minimums
set by wrap program sponsors. Class A shareholders who are eligible to
purchase Class Y shares may exchange their shares for Class Y shares of
the Fund.
Before you decide to make an exchange, you must obtain the current
prospectus of the desired fund. Call the Distributor for information and a
prospectus for any of the other Davis Funds registered in your state. Read
the prospectus carefully. If you decide to exchange your shares, send
State Street a written unconditional request for the exchange and follow
the instructions regarding delivery of share certificates contained in the
section on "Redemption of Shares". A signature guarantee is not required
for such an exchange. However, if shares are also redeemed for cash in
connection with the exchange transaction, a signature guarantee may be
required. See "Redemption of Shares". Your dealer may charge an
additional fee for handling an exercise of the exchange privilege.
An exchange involves both a redemption and a purchase, and normally
both are done on the same day. However, in certain instances such as
where a large redemption is involved, the investment of redemption
proceeds into shares of other Davis Funds may take up to seven days. For
federal income tax purposes, exchanges between funds are treated as a
sale and purchase. Therefore, there will usually be a recognizable capital
gain or loss due to an exchange. An exchange between different classes of
the same fund is not a taxable event.
The number of times a shareholder may exchange shares among the
Davis Funds within a specified period of time may be limited at the
discretion of the Adviser. Currently, more than three exchanges out of a
fund during a twelve month period are not permitted without the prior
written approval of the Adviser. The Fund reserves the right to terminate
or amend the exchange privilege at any time upon 60 or more days' notice.
By Telephone. You may exchange shares by telephone into accounts
with identical registrations. Please see the discussion of procedures in
respect to telephone instructions in the section entitled "Telephone
Privilege," as such procedures are also applicable to exchanges.
REDEMPTION OF SHARES
General. You can redeem, or sell back to the Fund, all or part of your
shares at any time. You can do this by sending a written request to State
Street Bank and Trust Company, c/o The Davis Funds, P.O. Box 8406,
Boston, MA 02266-8406, indicating how many of your shares or what
dollar amount you want to redeem. If more than one person owns the
shares to be redeemed, all owners must sign the request. The signatures
on the request must be the same as the way in which the shares are
registered.
Sometimes State Street needs more documents to verify authority
to make a redemption. This usually happens when the owner is a
corporation, partnership or fiduciary (such as a trustee or the executor of
an estate) or if the person making the request is not the registered owner
of the shares.
For the protection of all shareholders, the Fund also requires that
signatures appearing on a stock power or redemption request where the
proceeds would be more than $25,000, must be guaranteed by a bank,
credit union, savings association, securities exchange, broker, dealer or
other guarantor institution. The transfer agent may reject a request from
any of the foregoing eligible guarantors, if such guarantor does not satisfy
the transfer agent's written standards or procedures or if such guarantor
is not a member or participant of a signature guarantee program. This
provision also applies to exchanges when there is also a redemption for
cash. A signature guarantee on redemption requests where the proceeds
would be $25,000 or less is not required, provided that such proceeds are
being sent to the address of record and, in order to ensure authenticity of
an address change, such address of record has not been changed within the
last 30 days.
Redemption proceeds are normally paid to you within seven days
after State Street receives your proper redemption request. Payment for
redemptions can be suspended under certain emergency conditions
determined by the Securities and Exchange Commission or if the New York
Stock Exchange is closed for other than customary or holiday closings. If
any of the shares redeemed were just bought by you, payment to you may
be delayed until your purchase check has cleared (which usually takes up
to 15 days from the purchase date). You can avoid any such redemption
delay by paying for your shares with a certified or cashier's check or by
bank wire or federal funds.
Redemptions are ordinarily paid to you in cash. However, the Fund's
Board of Directors is authorized to decide that conditions exist making
cash payments undesirable, although the Board has never reached such a
decision. If the Board should decide to make payment in other than cash,
redemptions could be paid in securities, valued at the value used in
computing the Fund's net asset value. There would be brokerage costs
incurred by the shareholder in selling such redemption proceeds. We must,
however, redeem shares solely in cash up to the lesser of $250,000 or 1%
of the Fund's net asset value, whichever is smaller, during any 90-day
period for any one shareholder.
Your shares may also be redeemed through participating dealers.
Under this method, the Distributor repurchases the shares from your dealer,
if your dealer is a member of the Distributor's selling group. Your
dealer may, but is not required to, use this method in selling back your
shares and may place any repurchase request by telephone or wire. Your
dealer may charge you a service fee or commission. No charge is payable
if you redeem your own shares through State Street rather than having a
dealer arrange for a repurchase.
DETERMINING THE PRICE OF SHARES
The net asset value per share of each class is determined daily by
dividing the total value of investments and other assets, less any
liabilities, by the total number of outstanding shares of each class.
Valuation of the Fund's portfolio securities is based upon their market
value. Securities traded on a national securities exchange are valued at
the last published sales prices on the exchange, or, in the absence of
recorded sales, at the average of closing bid and asked prices on such
exchange. Over-the-counter securities are valued at the average of
closing bid and asked prices. Investments in short-term securities
(maturing in sixty days or less) are valued at amortized cost unless the
Board of Directors determines that such cost is not a fair value. Assets
for which there are no quotations available will be valued at a fair value
as determined by or at the direction of the Board of Directors.
The net asset value per share is determined as of the earlier of the
close of the exchange or 4:00 p.m. Eastern Time on each day the New York
Stock Exchange is open. The price per share for purchases or redemptions
made directly through State Street normally is such value next computed
after State Street receives the purchase order or redemption request. If
the purchase order or redemption request is placed with your dealer, then
the applicable price is normally computed as of 4:00 p.m. Eastern Time on
the day the dealer receives the order, provided that the dealer receives
the order before 4:00 p.m. Eastern Time. Otherwise, the applicable price is
the next determined net asset value. It is the responsibility of your
dealer to promptly forward purchase and redemptions orders to the
Distributor. Note that in the case of redemptions and repurchases of
shares owned by corporations, trusts or estates, State Street may require
additional documents to effect the redemption and the applicable price
will be determined as of the close of the next computation following the
receipt of the required documentation. See "Redemption of Shares."
DIVIDENDS AND DISTRIBUTIONS
There are two sources for the payments made to you by the Fund.
The first is net investment income and the second source is realized
capital gains. Distributions are made at least annually. You will receive
quarterly confirmation statements for dividends declared and shares
purchased through reinvestment of dividends. You will also receive
confirmations after each purchase (other than through dividend
reinvestment) and after each redemption. For tax purposes, information
concerning distributions will be mailed annually to shareholders.
Shareholders have the option to receive all dividends and
distributions in cash, to have all dividends and distributions reinvested,
or to have income dividends paid in cash and short-term and long-term
capital gain distributions reinvested. The reinvestment of dividends and
distributions is made at net asset value on the payment date. Upon receipt
of the second dividend check which has been returned to State Street as
undeliverable, undelivered dividends will be invested in additional shares
at the current net asset value and the account designated as a dividend
reinvestment account.
FEDERAL INCOME TAXES
This section is not intended to be a full discussion of all the aspects
of the federal income tax law and its effects on the Fund and its
shareholders. Shareholders may be subject to state and local taxes on
distributions. Each investor should consult his or her own tax adviser
regarding the effect of federal, state and local taxes on an investment in
the Fund.
The Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code (the "Code") and, if so qualified,
will not be liable for federal income tax to the extent its earnings are
distributed, except in respect to realization of the "built-in gains" as
described below. If for any calendar year the distribution of earnings
required under the Code exceeds the amount distributed, an excise tax,
equal to 4% of the excess, will be imposed on the Fund. The Fund intends to
make distributions during each calendar year sufficient to prevent
imposition of the excise tax.
Distributions of net investment income and net realized short-term
capital gains will be taxable to shareholders as ordinary income.
Distributions of net long-term capital gains (other than the built-in gains
as discussed below) will be taxable to shareholders as long-term capital
gain regardless of how long the shares have been held. Distributions will
be treated the same for tax purposes whether received in cash or in
additional shares. Dividends declared in the last calendar month to
shareholders of record in such month and paid by the end of the following
January are treated as received by the shareholder in the year in which
they are declared.
On October 12, 1990, the Fund acquired by merger the investment
portfolio of Mulford Securities Corp., a private investment company which,
on the date of the merger, owned securities with a fair market value in
excess of their cost ("Mulford built-in gains"). For a period of ten years
after the merger, to the extent that the Fund realizes any net Mulford
built-in gains in any year, the Fund will incur a capital gains tax and will
distribute to shareholders only the excess of the amount of the net gains
realized over the amount of the tax. Such distributions will be taxable as
ordinary income. (The Fund will be reimbursed for the tax it pays through
an escrow established for this purpose under the terms of the merger.)
A gain or loss for tax purposes may be realized on the redemption of
shares. If the shareholder realizes a loss on the sale or exchange of any
shares held for six months or less and if the shareholder received a
capital gain distribution during such period, then such loss is treated as a
long-term capital loss to the extent of such capital gain distribution.
FUND SHARES
Shares issued by the Fund are currently divided into four classes,
Class A, Class B, Class C and Class Y shares. Class Y shares are sold with
no front-end or deferred sales charge and no Rule 12b-1 charges. Class A,
B and C shares are subject to Rule 12b-1 charges. With certain
exceptions, Class A shares are sold with a front-end sales charge at the
time of purchase and are not subject to a sales charge when they are
redeemed. Class B shares are sold without a sales charge at the time of
purchase, but are subject to a deferred sales charge if they are redeemed
within six years after purchase. Class B shares will automatically convert
to Class A shares at the end of eight years after the end of the calendar
month in which the shareholder's order to purchase was accepted. Class
C shares are sold with no front-end sales charge but have no conversion
feature and are subject to a 1% fee on redemptions made within one year
of purchase. Due to the differing expenses of the classes, dividends of
Class B and Class C shares are likely to be lower than for Class A shares,
and are likely to be higher for Class Y shares than for any other class of
shares. For more information regarding the Class A, B and C shares,
please call 1-800-279-0279 to request a prospectus for those shares.
The Board of Directors may offer additional classes in the future and
may at any time discontinue the offering of any class of shares. Each
share, when issued and paid for in accordance with the terms of the
offering, is fully paid and non-assessable. Shares have no preemptive or
subscription rights and are freely transferable. Each share of the Fund
represents an interest in the assets of the Fund and has identical voting,
dividend, liquidation and other rights and the same terms and conditions
as any other shares except that (i) each dollar of net asset value per share
is entitled to one vote, (ii) the expenses related to a particular class, such
as those related to the distribution of each class and the transfer agency
expenses of each class are borne solely by each such class and (iii) each
class of shares votes separately with respect to provisions of the Rule
12b-1 Distribution Plan which pertains to a particular class and other
matters for which separate class voting is appropriate under applicable
law. Each fractional share has the same rights, in proportion, as a full
share. Shares do not have cumulative voting rights; therefore, the holders
of more than 50% of the voting power of the Fund can elect all of the
directors of the Fund.
PERFORMANCE DATA
When the Fund's performance is advertised, performance will consist
of total return, which is the average annual compounded rate of return of
an initial investment for periods of one, five and ten years and may
include such return for shorter or longer periods up to and including the
life of the Fund. Total return is calculated separately for each class.
This calculation assumes reinvestment of all dividends and distributions
and deduction of all charges and expenses, including the maximum
front-end or applicable contingent deferred sales charge. In addition, a
table showing the performance of an assumed investment of $10,000 may
be used from time to time. The Fund may also quote total return and
aggregate total return performance data for various other specified time
periods. Such data will be calculated substantially as described above,
except that (1) the rates of return calculated will not be average annual
rates, but rather, actual annual, annualized or aggregate rates of return
and (2) sales charges will not be included with respect to annual or
annualized rates of return calculations. Aside from the impact on the
performance data calculations of including or excluding the sales charges,
actual annual or annualized total return data generally will be lower than
average annual total return data since the average annual rates of return
reflect compounding; aggregate total return data generally will be higher
than average annual total return data since the aggregate rates of return
reflect compounding over a longer period of time.
In reports or other communications to shareholders and in
advertising material, the performance of the Fund may be compared to
recognized unmanaged indices or averages of the performance of similar
securities. Also, the performance of the Fund may be compared to that of
other funds of comparable size and objectives as listed in the rankings
prepared by Lipper Analytical Services, Inc., Morningstar, Inc. or similar
independent mutual fund rating services, and the Fund may use evaluations
published by nationally recognized independent ranking services and
publications.
The Fund's 1996 Annual Report contains additional performance
information and will be made available upon request and without charge.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to Davis Selected Advisers,
L.P., by writing to P. O. Box 1688, Santa Fe, NM 87504-1688 or calling
(800) 279-0279.
===============================================================================
TABLE OF CONTENTS
PAGE
Summary................................................................. 2
Financial Highlights.................................................... 3
Investment Objective and Policies....................................... 5
Adviser, Sub-Adviser and Distributor.................................... 7
Purchase of Shares...................................................... 8
Telephone Privilege..................................................... 9
Exchange of Shares...................................................... 9
Redemption of Shares.................................................... 10
Determining the Price of Shares......................................... 11
Dividends and Distributions............................................. 11
Federal Income Taxes.................................................... 11
Fund Shares............................................................. 12
Performance Data........................................................ 13
Shareholder Inquiries................................................... 13
==============================================================================
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
December 1, 1996
Davis New York Venture Fund, Inc.
124 East Marcy Street
Santa Fe, New Mexico 87501
1-800-279-0279
TABLE OF CONTENTS
Topic Page
Investment Restrictions................................................. 2
Hedging of Foreign Currency Risks....................................... 3
Repurchase Agreements................................................... 4
Portfolio Transactions.................................................. 5
Directors and Officers.................................................. 5
Directors Compensation Schedule......................................... 7
Certain Shareholders of the Fund........................................ 8
Investment Advisory Services............................................ 8
Custodian............................................................... 9
Auditors................................................................ 9
Determining the Price of Shares......................................... 10
Reduction of Class A Sales Charge....................................... 10
Distribution of Fund Shares............................................. 11
Performance Data........................................................ 12
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Class A, Class B and Class C Prospectus
dated December 1, 1996, and the Class Y Prospectus dated December 1,
1996. The Prospectuses may be obtained from the Fund.
The Fund's audited financial statements included in the Annual Report to
Shareholders dated July 31, 1996 are expressly incorporated herein by
reference.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below and the Fund's
investment objective set forth in the Prospectus may not be changed
without the approval of the holders of the lesser of (i) 67% of the eligible
votes, if the holders of more than 50% of the eligible votes are
represented or (ii) more than 50% of the eligible votes. All percentage
limitations set forth in these restrictions apply as of the time of an
investment without regard to later increases or decreases in the value of
securities or total or net assets.
1. The Fund may not buy or sell commodities or commodity contracts,
except contracts in respect to foreign currencies for hedging (risk
reduction) purposes.
2. The Fund may not purchase real estate or real estate mortgages as
such, but may purchase the liquid securities of companies, including real
estate investment trusts, holding real estate or interests (including
mortgage interests) therein.
3. The Fund may not buy the securities of any company if after such
purchase the Fund would then own more than 10% of such company's voting
securities or any class of such company's securities. For this purpose
all debt securities are deemed to comprise a single class.
4. The Fund may not buy the securities of any company if more than 5%
of the value of the Fund's total assets would then be invested in that
company. (U.S. Government Securities, i.e. securities issued by the U.S.
Government or its agencies or instrumentalities and repurchase
agreements involving such securities, are not included in this
limitation.)
5. The Fund does not concentrate its investments in any one industry
and may not buy the securities of companies in any one industry if more
than 25% of the value of the Fund's total assets would then be invested in
companies in that industry. (U.S. Government Securities are not included
in this limitation.)
6. The Fund may not purchase or write puts, calls, or a combination
thereof ("option transactions"), except that the Fund may (i) write listed
covered call options ("calls") on portfolio securities and purchase call
options to close such transactions (provided that no such call is written
if it would cause more than 25% of the value of the Fund's total assets to
be subject to calls), (ii) purchase warrants issued by a company relating
to its own securities or those of a company it is controlled by or
controls or with which it is under common control and (iii) engage in
option transactions in respect to foreign currencies for hedging purposes.
7. The Fund may not buy the securities of companies in continuous
operation for less than three years (including predecessors) if more than
5% of the value of the Fund's total assets would then be invested in such
securities.
8. The Fund may not buy securities of other registered investment
companies, except: (i) shares of investment companies investing primarily
in foreign securities so long as such purchase does not cause the Fund to
(a) have more than 5% of the value of its total assets invested in any one
such company, (b) have more than 10% of the value of its total assets
invested in the aggregate of all such companies, or (c) own more than 3%
of the total outstanding voting stock of any such company; or (ii) as a
part of a merger, consolidation, reorganization or acquisition of assets.
An investor of the Fund may incur duplicate fees if shares of investment
companies are purchased.
9. The Fund may not sell short, buy on margin or engage in arbitrage
transactions. This restriction does not apply to transactions in respect
to foreign currencies for hedging purposes.
10. The Fund may not purchase illiquid securities if more than 15% of
the value of the Fund's net assets would be invested in such securities.
11. The Fund does not invest for the purpose of exercising control or
management of other companies.
12. The Fund may not borrow money except from banks for extraordinary
or emergency purposes in amounts not exceeding 10% of the value of the
Fund's total assets (excluding the amount borrowed) at the time of
borrowing. The Fund may not pledge or hypothecate any of its assets,
except in connection with permitted borrowing in amounts not exceeding
15% of the value of the Fund's total assets (excluding the amount
borrowed) at the time of such borrowing. (These restrictions do not
apply to the use of margin deposits in connection with transactions in
foreign currencies for hedging purposes.)
13. The Fund may not buy or continue to hold securities if any officers
or directors of the Fund, the Adviser or the Adviser's General Partner
own too many of the same securities. This would happen if any of these
individuals own 1/2 of 1% or more of the securities and all such
individuals who own that much or more own 5% of such securities.
14. The Fund does not engage in the underwriting of securities; however,
the Fund may technically be considered an "underwriter" if it sells
restricted securities.
15. The Fund may not lend money, except that it may buy debt securities
customarily acquired by institutional investors. These debt securities
may comprise all or a portion of an issue of "restricted" debt securities.
The Fund may also buy debt securities which have been sold to the public
and may enter into repurchase agreements. The Fund may lend its
portfolio securities subject to having 100% collateral in cash or U.S.
Government Securities. The Fund will not lend securities if such a loan
would cause more than 20% of the total value of its assets to then be
subject to such loans.
State Undertakings and Non-Fundamental Policies. In addition to the
foregoing restrictions, the Fund has voluntarily undertaken with various
states, for so long as the Fund's shares are sold in such states, (1) not to
invest in oil, gas or other mineral exploration or development programs
and (2) to limit its investments in restricted securities to 10% of its
total assets, excluding restricted securities eligible for resale pursuant
to Rule 144A of the Securities Act of 1933. These undertakings and all
other non-fundamental policies may be changed without shareholder
approval.
HEDGING OF FOREIGN CURRENCY RISKS
The Fund may purchase or sell forward foreign currency exchange
contracts ("forward contracts") to attempt to minimize the risk to the
Fund from adverse changes in the relationship between the U.S. dollar and
foreign currencies. A forward contract is an obligation to purchase or sell
a specific currency for an agreed price at a future date which is
individually negotiated and privately traded by currency traders and their
customers. Such a contract gives the Fund a position in a negotiated,
currently non-regulated market. The Fund may enter into a forward
contract, for example, when it enters into a contract for the purchase or
sale of a security denominated in a foreign currency in order to "lock in"
the U.S. dollar price of the security ("transaction hedge"). Additionally,
for example, when the Adviser or Sub-Adviser believes that a foreign currency
may suffer a substantial decline against the U.S. dollar, it may enter into
a forward sale contract to sell an amount of that foreign currency
approximating the value of some or all of the Fund's portfolio securities
denominated in such foreign currency, or when the Fund believes that the U.S.
dollar may suffer a substantial decline against a foreign currency, it may
enter into a forward purchase contract to buy that foreign currency for a
fixed dollar amount in anticipation of purchasing foreign traded securities
("position hedge"). In this situation the Fund may, in the alternative,
enter into a forward contract in respect to a different foreign currency
for a fixed U.S. dollar amount ("cross hedge"). This may be done, for
example, where the Adviser or Sub-Adviser believes that the U.S. dollar
value of the currency to be sold pursuant to the forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Fund are denominated.
The Fund may purchase and write put and call options on foreign
currencies for the purpose of protecting against declines in the U.S. dollar
value of foreign currency-denominated portfolio securities and against
increases in the U.S. dollar cost of such securities to be acquired. As in
the case of other kinds of options, however, the writing of an option on a
foreign currency constitutes only a partial hedge, up to the amount of the
premium received, and the Fund could be required to purchase or sell
foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the
event of rate movements adverse to the Fund's position, it may forfeit the
entire amount of the premium plus related transaction costs. Options on
foreign currencies to be written or purchased by the Fund are traded on
U.S. and foreign exchanges or over-the-counter. Currently, a significant
portion or all of the value of an over-the-counter option may be treated as
an illiquid investment and subject to the restriction on such investments
as long as the SEC requires that over-the-counter options be treated as
illiquid. Generally, the Fund would utilize options traded on exchanges
where the options are standardized.
The Fund may enter into contracts for the purchase or sale for future
delivery of foreign currencies ("currency futures contracts") and may
purchase and write put and call options to buy or sell currency futures
contracts. A "sale" of a currency futures contract means the acquisition
of a contractual obligation to deliver the foreign currencies called for by
the contract at a specified price on a specified date. A "purchase" of a
currency futures contract means the incurring of a contractual obligation
to acquire the foreign currencies called for by the contract at a specified
price on a specified date. Options on currency futures contracts to be
purchased by the Fund will be traded on U.S. or foreign exchanges or
over-the-counter. The Fund will not enter into any futures contracts or
options on currency futures contracts if immediately thereafter the
aggregate of initial margin deposits on all the outstanding currency
futures contracts of the Fund and premiums paid on outstanding options on
currency futures contracts would exceed 5% of the market value of the
total assets of the Fund (excluding in such market value any in-the-money
amount of any option).
The Fund may also purchase securities (debt securities or deposits)
which have their coupon rate or value at maturity determined by reference
to the value of one or more foreign currencies. The Fund will not use
leverage. These strategies will be used for hedging purposes only. The
Fund will hold securities or other options or futures positions whose
values are expected to offset its obligations under the hedge strategies.
The Fund will not enter into a currency hedging position that exposes the
Fund to an obligation to another party unless it owns either (i) an
offsetting position in securities, options or futures positions or (ii) cash,
receivables and short-term debt securities with a value sufficient to
cover its potential obligations. The Fund will comply with requirements
established by the SEC with respect to coverage of options and futures
strategies by mutual funds, and, if so required, will set aside cash and
high grade liquid debt securities in a segregated account with its
custodian bank in the amount prescribed. The Fund's custodian will
maintain the value of such segregated account equal to the prescribed
amount by adding or removing additional cash or liquid securities to
account for fluctuations in the value of securities held in such account.
Securities held in a segregated account cannot be sold while the futures
or option strategy is outstanding, unless they are replaced with similar
securities.
The Fund's ability to dispose of its positions in futures contracts,
options and forward contracts will depend on the availability of liquid
markets in such instruments. Markets in options and futures with respect
to currencies are still developing. It is impossible to predict the amount
of trading interest that may exist in various types of futures contracts,
options and forward contracts. If a secondary market does not exist with
respect to an option purchased or written by the Fund over-the-counter, it
might not be possible to effect a closing transaction in the option ( i.e.,
dispose of the option) with the result that (i) an option purchased by the
Fund would have to be exercised in order for the Fund to realize any profit
and (ii) the Fund may not be able to sell currencies covering an option
written by the Fund until the option expires or it delivers the underlying
futures currency upon exercise. Therefore, no assurance can be given that
the Fund will be able to utilize these instruments effectively for the
purposes set forth above. The Fund's ability to engage in currency hedging
transactions may be limited by tax considerations.
The Fund's transactions in forward contracts, options on foreign
currencies and currency futures contracts will be subject to special tax
rules under the Internal Revenue Code that, among other things, may affect
the character of any gains or losses of the Fund as ordinary or capital and
the timing and amount of any income or loss to the Fund. This, in turn,
could affect the character, timing and amount of distributions by the Fund
to shareholders. The Fund may be limited in its foreign currency
transactions by tax considerations.
REPURCHASE AGREEMENTS
A repurchase agreement involves a sale of securities to the Fund,
with the concurrent agreement of the seller (a member bank of the Federal
Reserve System or securities dealer which the Adviser or Sub-Adviser believes
to be financially sound) to repurchase the securities at the same price plus
an amount equal to accrued interest at an agreed-upon interest rate, within a
specified time, usually less than one week, but, on occasion, at a later
time. The repurchase obligation of the seller is, in effect, secured by the
underlying securities, which are securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. In the event of a
bankruptcy or other default of a seller of a repurchase agreement, the
Fund could experience both delays in liquidating the underlying securities
and losses, including (a) possible decline in the value of the collateral
during the period while the Fund seeks to enforce its rights thereto, (b)
possible loss of all or a part of the income during this period and (c)
expenses of enforcing its rights.
The Fund will enter into repurchase agreements only when the seller
agrees that the value of the underlying securities, including accrued
interest (if any), will at all times be equal to or exceed the value of the
repurchase agreement. The Fund will not enter into a repurchase
agreement maturing in more than seven days if it would cause more than
10% of the value of its total assets to be invested in such transactions.
Repurchase agreements maturing in less than seven days are not deemed
illiquid securities for the purpose of the Fund's 15% limitation on illiquid
securities.
PORTFOLIO TRANSACTIONS
Davis Selected Advisers, L.P. (the "Adviser") and Davis Selected
Advisers-NY, Inc. (the "Sub-Adviser") make investment decisions and arrange
for the placement of buy and sell orders and the execution of portfolio
transactions for the Fund, subject to review by the Board of Directors. In
this regard, the Adviser or Sub-Adviser will seek to obtain the most
favorable price and execution for the transaction given the size and risk
involved. In placing executions and paying brokerage commissions, the
Adviser or Sub-Adviser considers the financial responsibility and
reputation of the broker or dealer, the range and quality of the services
made available to the Fund and the professional services rendered,
including execution, clearance procedures, wire service quotations and
ability to provide supplemental performance, statistical and other research
information for consideration, analysis and evaluation by the Adviser's or
Sub-Adviser's staff. In accordance with this policy, brokerage transactions
may not be executed solely on the basis of the lowest commission rate
available for a particular transaction. Research services provided to the
Adviser or Sub-Adviser by or through brokers who effect portfolio
transactions for the Fund may be used in servicing other accounts managed
by the Adviser and likewise research services provided by brokers used for
transactions of other accounts may be utilized by the Adviser or Sub-
Adviser in performing services for the Fund. Subject to the requirements
of best execution, the placement of orders by securities firms for shares
of the Fund may be taken into account as a factor in the placement of
portfolio transactions.
On occasions when the Adviser or Sub-Adviser deems the purchase or
sale of a security to be in the best interests of the Fund as well as other
fiduciary accounts, the Adviser or Sub-Adviser may aggregate the securities
to be sold or purchased for the Fund with those to be sold or purchased for
other accounts in order to obtain the best net price and most favorable
execution. In such event, the allocation will be made by the Adviser or
Sub-Adviser in the manner considered to be most equitable and consistent
with its fiduciary obligations to all such fiduciary accounts, including
the Fund. In some instances, this procedure could adversely affect the
Fund but the Fund deems that any disadvantage in the procedure would be
outweighed by the increased selection available and the increased
opportunity to engage in volume transactions.
The Adviser and Sub-Adviser believe that research from brokers
and dealers is desirable, although not essential, in carrying out their
functions, in that such outside research supplements the efforts of the
Adviser and Sub-Adviser by corroborating data and enabling the Adviser
and Sub-Adviser to consider the views, information and analyses of
other research staffs. Such views, information and analyses include
such matters as communicating with persons having special expertise on
certain companies, industries, areas of the economy and/or securities
prices, obtaining written materials on these or other areas which might
affect the economy and/or securities prices, obtaining quotations on
securities prices and obtaining information on the activities of other
institutional investors. The Adviser and Sub-Adviser research, at their
own expense, each security included in, or being considered for
inclusion in, the Fund's portfolio. As any particular research obtained
by the Adviser or Sub-Adviser may be useful to the Fund, the Board of
Directors or its Committee on brokerage, in considering the
reasonableness of the commissions paid by the Fund, will not attempt to
allocate, or require the Adviser to allocate, the relative costs or
benefits of research.
During the last three fiscal years ended July 31, 1996, 1995 and
1994, the Fund paid brokerage commissions of $1,315,346, $929,980 and
$750,697, respectively.
DIRECTORS AND OFFICERS
The names and addresses of the directors and officers of the Fund
are set forth below, together with their principal business affiliations
and occupations for the last five years. The Fund's directors are divided
into five classes, three of which are each comprised of two directors
and two of which are comprised of three directors. Directors in each class
generally serve five-year terms. As these terms are staggered, our
shareholders generally elect two or three directors at each annual
meeting. The asterisk following the names of Shelby M.C. Davis and
Jeremy H. Biggs indicates that they are considered to be "interested
persons" of the Fund, as defined in the Investment Company Act. As
indicated below, certain directors and officers of the Fund hold similar
positions with the following funds that are managed by the Adviser:
Davis High Income Fund, Inc., Davis Tax-Free High Income Fund, Inc.,
Davis Series, Inc. and Davis International Series, Inc. (collectively
the "Davis Funds").
Wesley E. Bass, Jr. (8/21/31), 710 Walden Road, Winnetka, IL 60093.
Director of the Fund and each of the Davis Funds except Davis
International Series, Inc.; President, Bass & Associates (Financial
Consulting Firm); First Deputy City Treasurer, City of Chicago, and
Executive Vice President, Chicago Title and Trust Company.
Jeremy H. Biggs, (8/16/35)* Two World Trade Center, 94th Floor, New
York, NY 10048. Director and Chairman of the Fund and each of the Davis
Funds; Consultant to the Adviser; Director Van Eck Funds; Vice Chairman,
Head of Equity Research Department, Chairman of the U.S. Investment
Policy Committee and member of the International Investment Committee
of Fiduciary Trust Company International.
Marc P. Blum (9/9/42), 233 East Redwood Street, Baltimore, MD 21202.
Director of the Fund and each of the Davis Funds except Davis
International Series, Inc.; Chief Executive Officer, World Total Return
Fund, L.P.; Member, Gordon, Feinblatt, Rothman, Hoffberger and Hollander,
LLC (attorneys); Director, Mid-Atlantic Realty Trust.
Shelby M.C. Davis (3/20/37),* P.O. Box 205, Hobe Sound, FL 33455.
Director and President of the Fund and each of the Davis Funds;
Director/Trustee and Executive Vice President of Selected American
Shares, Inc., Selected Special Shares, Inc. and Selected Capital
Preservation Trust; Director, Chairman and Chief Executive Officer,
Venture Advisers, Inc. effective August 15, 1995; Director, Davis Selected
Advisers-NY, Inc.: Employee of Capital Ideas, Inc. (financing consulting
firm); Consultant to Fiduciary Trust Company International; Director,
Shelby Cullom Davis Financial Consultants, Inc.; formerly, Chairman,
Venture Pension Advisers, Inc.
Eugene M. Feinblatt (10/28/19), 233 East Redwood Street, Baltimore, MD
21202. Director of the Fund and each of the Davis Funds except Davis
International Series, Inc.; of Counsel, Gordon Feinblatt, Rothman,
Hoffberger and Hollander, LLC (attorneys).
Jerry D. Geist (5/23/34), 931 San Pedro Dr. S.E., Albuquerque, NM 87108.
Director of the Fund and each of the Davis Funds except Davis
International Series, Inc.; Chairman, Santa Fe Center Enterprises;
President and Chief Executive Officer, Howard Energy International
Utilities; Director, CH2M-Hill, Inc., Retired Chairman and President, Public
Service Company of New Mexico.
D. James Guzy (3/7/36), 508 Tasman Drive, Sunnyvale, CA 94089. Director
of the Fund and each of the Davis Funds except Davis International Series,
Inc.; Chairman, PLX Technology, Inc. (manufacturer of semi-conductor
circuits); Director, Intel Corp. (manufacturer semi-conductor circuits),
Cirrus Logic Corp. (a manufacturer of semi-conductor circuits) and
Alliance Technology Fund (a mutual fund).
G. Bernard Hamilton (3/18/37), Avanti Partners, P.O. Box 1119, Richmond,
VA 23218. Director of the Fund and each of the Davis Funds except Davis
International Series, Inc.; Managing General Partner, Avanti Partners, III,
L.P.
LeRoy E. Hoffberger (6/8/25), The Exchange-Suite 215, 1112 Kenilworth
Drive, Towson, MD 21204. Director of the Fund and each of the Davis Funds
except Davis International Series, Inc.; of Counsel to Gordon, Feinblatt,
Rothman, Hoffberger and Hollander, LLC (attorneys); Chairman,
Mid-Atlantic Realty Trust; Director and President, CPC, Inc. (a real estate
company); Director and Vice President, Merchant Terminal Corporation;
formerly, Director of Equitable Bancorporation, Equitable Bank and
Maryland National Bank, and formerly, Director and President, O-W Fund,
Inc. (a private investment fund).
Laurence W. Levine (4/9/31), c/o Bigham, Englar, Jones & Houston, 14 Wall
Street, 21st Floor, New York, NY 10005-2140. Director of the Fund and
each of the Davis Funds except Davis International Series, Inc.; Partner,
Bigham, Englar, Jones and Houston (attorneys); United States Counsel to
Aerolineas Argentina; Formerly a Director of Alaska Airlines, Stanley
Aviation. The foothill Financial Group, and Security National Bank of
Washington D.C.; Director, various private companies.
Christian R. Sonne (5/6/36), P.O. Box 777, Tuxedo Park, NY 10987. Director
of the Fund and each of the Davis Funds except Davis International Series,
Inc.; General Partner of Tuxedo Park Associates (a land holding and
development firm); President and Chief Executive Officer of Mulford
Securities Corporation (private investment fund) until 1990; formerly
Vice President of Goldman Sachs & Company (investment bankers).
Edwin R. Werner (4/1/22), 207 Gosling Hill Drive, Manhasset, NY 11030.
Director of the Fund and each of the Davis Funds except Davis
International Series, Inc.; President, The Estates at North Hills New York;
Formerly, Chairman and CEO, Empire Blue Cross and Blue Shield of New
York.
Carl R. Luff (4/30/54), 124 East Marcy Street, Santa Fe, New Mexico
87501. Vice President, Treasurer and Assistant Secretary of the Fund and
each of the Davis Funds, Selected American Shares, Inc., Selected Special
Shares, Inc. and Selected Capital Preservation Trust; Director,
Co-President and Treasurer, Venture Advisers, Inc. effective
August 15,1995.; Director, Vice President and Treasurer, Davis Selected
Advisers-NY, Inc.
Raymond O. Padilla (2/22/51), 124 East Marcy Street, Santa Fe, NM 87501.
Vice President, Secretary and Assistant Treasurer of the Fund and each of
the Davis Funds; Vice President and Secretary of Selected American
Shares, Inc., Selected Special Shares, Inc. and Selected Capital
Preservation Trust; Senior Vice President, Venture Advisers, Inc.
Carolyn H. Spolidoro (11/19/52), 124 East Marcy Street, Santa Fe, NM
87501. Vice President of the Fund and each of the Davis Funds; Vice
President, Venture Advisers, Inc.
Andrew A. Davis (6/25/63), 124 East Marcy Street, Santa Fe, NM 87501.
Vice President of the Fund and each of the Davis Funds; Director and
Co-President, Venture Advisers, Inc. effective August 15, 1995; Director
and Vice President, Davis Selected Adviser-NY, Inc.; formerly,
Vice President and head of convertible security research, PaineWebber,
Incorporated.
Christopher C. Davis (7/13/65), 609 5th Avenue, New York, NY
10017-1021. Vice President of the Fund and each of the Davis Funds
except Davis International Series, Inc.; Director, Venture Advisers, Inc.;
Director President and Chief Executive Officer, Davis Selected Advisers-
NY, Inc.
Eileen R. Street (3/11/62), 124 East Marcy Street, Santa Fe, NM 87501.
Assistant Treasurer and Assistant Secretary of the Fund and each of the
Davis Funds, Selected American Shares, Inc., Selected Special Shares, Inc.
and Selected Capital Preservation Trust; Senior Vice President and
Secretary, Venture Advisers, Inc.; Vice President and Secretary, Davis
Selected Advisers-NY, Inc.
Sheldon R. Stein (11/29/28), 30 North LaSalle Street, Suite 2900,
Chicago, IL 60602. Assistant Secretary of the Fund and each of the Davis
Funds, Selected American Shares, Inc., Selected Special Shares, Inc. and
Selected Capital Preservation Trust; Partner, D'Ancona & Pflaum, the
Fund's legal counsel.
Arthur Don (9/24/53), 30 North LaSalle Street, Suite 2900, Chicago, IL
60602. Assistant Secretary of the Fund and each of the Davis Funds,
Selected American Shares, Inc., Selected Special Shares, Inc. and Selected
Capital Preservation Trust; Partner, D'Ancona & Pflaum, the Fund's legal
counsel.
The Fund does not pay salaries to any of its officers. Davis Selected
Advisers, L.P. performs certain services on behalf of the Fund. The
Adviser is reimbursed by the Fund for the costs of providing these
services. See "Investment Advisory Services."
DIRECTORS' COMPENSATION SCHEDULE
During the fiscal year ended July 31, 1996, the compensation paid to
the directors who are not considered to be interested persons of the Fund
was as follows:
Aggregate Fund Total
Name Compensation Complex Compensation*
- ---- ------------ ---------------------
Wesley E. Bass 7,375 24,250
Marc P. Blum 7,200 23,550
Eugene M. Feinblatt 6,400 20,900
Jerry D. Geist 6,300 20,550
D. James Guzy 7,250 23,700
G. Bernard Hamilton 7,150 23,300
LeRoy E. Hoffberger 7,150 23,500
Laurence W. Levine 7,150 23,500
Christian R. Sonne 7,250 23,450
Edwin R. Werner 7,150 23,300
* Complex compensation is the aggregate compensation paid, for services
as a Director, by all mutual funds with the same investment adviser.
CERTAIN SHAREHOLDERS OF THE FUND
The following table sets forth, as of September 6, 1996 the name
and holdings of each person known by the Fund to be a record owner of
more than 5% of its outstanding Class A shares. As of such date, there
were 140,638,003.152 Class A shares outstanding and the directors and
officers of the Fund, as a group, owned 4,138,999.966 Class A shares, or
approximately 2.94% of the Fund's outstanding Class A shares. As of such
date, there were 19,214,983.241 Class B and 7,795,062.420 Class C
shares outstanding. The directors and officers of the Fund do not
presently own or intend to own any Class B or C shares of the Fund.
The Fund is not aware of any shareholder who beneficially owns in excess of
25% of the Fund's total outstanding shares.
<TABLE>
<CAPTION>
Number of Percent of Class
Name and Address Shares Owned Outstanding
- ---------------- ------------ -----------
<S> <C> <C>
Class A shares
Shelby Cullom Davis & Co. 12,401,196.138 8.70%
70 Pine Street, 43rd Floor
New York, New York 10270-0108
Merrill Lynch Pierce Fenner & Smith 10,694,199.994 7.50%
4800 Deerlake Drive East, 3rd Floor
Jacksonville, FL 32246-6484
Merrill Lynch Pierce Fenner & Smith 7,725,237.281 5.42%
FBO: Qualified Retirement Plans
400 Strium Drive 4th Floor
Somerset, NJ 08873-4102
Class B shares
Merrill Lynch Pierce Fenner & Smith 6,742,724.860 32.60%
4800 Deerlake Drive East, 3rd Floor
Jacksonville, FL 32246-6484
Class C shares
Merrill Lynch Pierce Fenner & Smith 3,639,104.000 41.93%
4800 Deerlake Drive East, 3rd Floor
Jacksonville, FL 32246-6484
</TABLE>
INVESTMENT ADVISORY SERVICES
Davis Selected Advisers, L.P. serves as investment adviser for the
Fund pursuant to an investment advisory agreement (the "Advisory
Agreement") adopted in accordance with the requirements of the
Investment Company Act of 1940. Pursuant to the Advisory Agreement,
the Adviser, subject to the general supervision of the Fund's Board of
Directors, provides management and investment advice, and furnishes
statistical, executive and clerical personnel, bookkeeping, office space,
and equipment necessary to carry out its investment advisory functions
and such corporate managerial duties as are requested by the Board of
Directors of the Fund. The Fund bears all expenses other than those
specifically assumed by the Adviser under the Advisory Agreement,
including preparation of its tax returns, financial reports to regulatory
authorities, dividend determinations and transaction and accounting
matters related to its custodian bank, transfer agency, custodial and
shareholder services, and qualification of its shares under federal and
state securities laws.
Davis Selected Advisers-NY, Inc., a wholly-owned subsidiary of the
Adviser, performs research and portfolio management services for the Fund
under a Sub-Advisory Agreement with the Adviser.
For the Adviser's services, the Fund pays the Adviser a monthly fee
at the annual rate based on average net assets, as follows: 0.75% on the
first $250 million; 0.65% on the next $250 million; 0.55% on the next $2.5
billion; 0.54% on the next $1 billion; 0.53% on the next $1 billion; 0.52% on
the next $1 billion; 0.51% oo the next $1 billion; and 0.50% of average net
assets in excess of $7 billion. The aggregate advisory fees paid by the
Fund to the Adviser for the fiscal years ended July 31, 1996, 1995 and
1994 were $12,351,657, $7,587,812 and $6,021,981, respectively. Under the
Sub-Advisory Agreement, the Adviser pays all of the Sub-Adviser's direct
and indirect costs of operations. All the fees paid to the Sub-Adviser are
paid by the Adviser and not the Fund.
Under the Advisory Agreement, if expenses borne by the Fund in any
fiscal year (including the advisory fee, but excluding interest, taxes,
brokerage fees and payments made under a Rule 12b-1 Distribution Plan
and, where permitted, extraordinary expenses) exceed limitations imposed
by applicable 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. These expense limitations may be raised or lowered
from time to time. The present maximum operating expense limitations
are 2-1/2% of the first $30 million of average net assets, 2% of the next
$70 million of average net assets and 1-1/2% of average net assets over
$100 million.
The reimbursable costs for certain accounting and administrative
services for the fiscal years ended July 31, 1996, 1995 and 1994 were
$65,004, $51,668 and $45,000, respectively. The reimbursable costs for
qualifying the Fund's shares for sale with state agencies for such periods
were $12,000, $9,336 and $8,004, respectively, and the reimbursable
costs for providing shareholder services for such periods were $141,804,
$77,178 and $77,856, respectively.
The Advisory Agreement also makes provisions for portfolio
transactions and brokerage policies of the Fund which are discussed above
under "Portfolio Transactions."
In accordance with the provisions of the Investment Company Act,
the Advisory Agreement will terminate automatically upon assignment
and is subject to cancellation upon 60 days' written notice by the Fund's
Board of Directors, the vote of the holders of a majority of the Fund's
outstanding shares or the Adviser. The continuance of the Agreement
must be approved at least annually by the Fund's Board of Directors or by
the vote of holders of a majority of the outstanding shares of the Fund. In
addition, any new agreement or the continuation of the existing
agreement must be approved by a majority of directors who are not
parties to the agreement or interested persons of any such party.
The Adviser has adopted a Code of Ethics which regulates the
personal securities transactions of the Adviser's investment personnel
and other employees and affiliates with access to information regarding
securities transactions of the Fund. The Code of Ethics requires
investment personnel to disclose personal securities holdings upon
commencement of employment and all subsequent trading activity to the
Adviser's Compliance Officer. Investment personnel are prohibited from
engaging in any securities transactions, including the purchase of
securities in a private offering, without the prior consent of the
Compliance Officer. Additionally, such personnel are prohibited from
purchasing securities in an initial public offering and are prohibited from
trading in any securities (i) for which the Fund has a pending buy or sell
order, (ii) which the Fund is considering buying or selling, or (iii) which
the Fund purchased or sold within seven calendar days.
CUSTODIAN
The Custodian of the Fund's assets is State Street Bank and Trust
Company ("State Street"), Atlantic Division, 470 Atlantic Avenue, Boston,
Massachusetts 02210. The Custodian maintains all of the instruments
representing the investments of the Fund and all cash. The Custodian
delivers securities against payment upon sale and pays for securities
against delivery upon purchase. The Custodian also remits Fund assets in
payment of Fund expenses, pursuant to instructions of officers or
resolutions of the Board of Directors.
AUDITORS
The Fund's auditors are Tait, Weller & Baker, Two Penn Center, Suite
700, Philadelphia, Pennsylvania 19102-1707. The audit includes
examination of annual financial statements furnished to shareholders and
filed with the Securities and Exchange Commission, consultation on
financial accounting and reporting matters, and meeting with the Audit
Committee of the Board of Directors. In addition, the auditors review
federal and state income tax returns and related forms.
DETERMINING THE PRICE OF SHARES
The Fund does not price its shares or accept orders for purchases or
redemptions on days when the New York Stock Exchange is closed. Such
days currently include New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
REDUCTION OF CLASS A SALES CHARGE
There are a number of ways to reduce the sales charge imposed on
the purchase of the Fund's Class A shares, as described below. These
reductions are based upon the fact that there is less sales effort and
expense involved in respect to purchases by affiliated persons and
purchases made in large quantities.
Family or Group Purchases. Certain purchases made by or for more
than one person may be considered to constitute a single purchase,
including (i) purchases for family members, including spouses and children
under 21, (ii) purchases by trust or other fiduciary accounts and purchases
by Individual Retirement Accounts for employees of a single employer and
(iii) purchases made by an organized group of persons, whether
incorporated or not, if the group has a purpose other than buying shares of
mutual funds. For further information on group purchase reductions,
contact the Adviser or your dealer.
Statements of Intention. Another way to reduce the sales charge is
by signing a Statement of Intention. A Statement is included in the
Application Form included in the Prospectus. Please read it carefully
before completing it.
If you enter into a Statement of Intention you (or any "single
purchaser") may state that you intend to invest at least $100,000 in the
Fund's Class A shares over a 13-month period. The amount you say you
intend to invest may include Class A shares which you already own, valued
at the offering price, at the end of the period covered by the Statement. A
Statement may be backdated up to 90 days to include purchases made
during that period, but the total period covered by the Statement may not
exceed 13 months.
Shares having a value of 5% of the amount you state you intend to
invest will be held "in escrow" to make sure that any additional sales
charges are paid. If any of the Fund's shares are in escrow pursuant to a
Statement and such shares are exchanged for shares of another Davis Fund,
the escrow will continue with respect to the acquired shares.
No additional sales charge will be payable if you invest the amount
you have indicated. Each purchase under a Statement will be made as if
you were buying at one time the total amount indicated. For example, if
you indicate that you intend to invest $100,000, you will pay a sales
charge of 3-1/2% on each purchase.
If you buy additional amounts during the period to qualify for an even
lower sales charge, you will be charged such lower charge. For example,
if you indicate that you intend to invest $100,000 and actually invest
$250,000, you will, by retroactive adjustment, pay a sales charge of
2-1/2%.
If during the 13-month period you invest less than the amount you
have indicated, you will pay an additional sales charge. For example, if
you state that you intend to invest $250,000 and actually invest only
$100,000, you will, by retroactive adjustment, pay a sales charge of
3-1/2%. The sales charge you actually pay will be the same as if you had
purchased the shares in a single purchase.
A Statement does not bind you to buy, nor does it bind the Adviser to
sell, the shares covered by the Statement.
Rights of Accumulation. Another way to reduce the sales charge is
under a right of accumulation. This means that the larger purchase
entitled to a lower sales charge need not be in dollars invested at one
time. The larger purchases that you (or any "single purchaser") make at
any one time can be determined by adding to the amount of a current
purchase the value of Fund shares (at offering price) already owned by you.
For example, if you owned $100,000 worth (at offering price) of the
Fund's Class A shares and invest $5,000 in additional shares, the sales
charge on that $5,000 investment would be 3-1/2%, not 4-3/4%.
If you claim this right of accumulation, you or your dealer must so
notify the Distributor (or State Street, if the investment is mailed to
State Street) when the purchase is made. Enough information must be
given to verify that you are entitled to such right.
Combined Purchases with other Davis Funds. Your ownership or
purchase of Class A shares of Davis High Income Fund, Inc., Davis Tax-Free
High Income Fund, Inc., Davis Series, Inc. and Davis International Series,
Inc. (collectively with the Fund, the "Davis Funds") may also reduce your
sales charges in connection with the purchase of the Fund's Class A
shares. This applies to all three situations for reduction of sales charges
discussed above.
If a "single purchaser" decides to buy the Fund's Class A shares as
well as Class A shares of any of the other Davis Funds (other than shares
of Davis Government Money Market Fund) at the same time, these
purchases will be considered a single purchase for the purpose of
calculating the sales charge. For example, a single purchaser can invest
at the same time $100,000 in the Fund's Class A shares and $150,000 in
the Class A shares of VIP and pay a sales charge of 2-1/2%, not 3-1/2%.
Similarly, a Statement of Intention for the Fund's Class A shares and
for the Class A shares of the other Davis Funds (other than Davis
Government Money Market Fund) may be aggregated. In this connection, the
Fund's Class A shares and the Class A shares of the other Davis Funds
which you already own, valued at the current offering price at the end of
the period covered by your Statement of Intention, may be included in the
amount you have stated you intend to invest pursuant to your Statement.
Lastly, the right of accumulation applies also to the Class A shares
of the other Davis Funds (other than Davis Government Money Market Fund)
which you own. Thus, the amount of current purchases of the Fund's Class
A shares which you make may be added to the value of the Class A shares
of the other Davis Funds (valued at their current offering price) already
owned by you in determining the applicable sales charge. For example, if
you owned $100,000 worth of shares of Davis High Income Fund, Inc. and
Davis Financial Fund and Davis Convertible Securities Fund, (valued at the
applicable current offering price) and invest $5,000 in the Fund's shares,
the sales charge on your investment would be 3-1/2%, not 4-3/4%.
In all the above instances where you wish to claim this right of
combining the shares you own of the other Davis Funds, you or your dealer
must notify the Distributor (or State Street, if the investment is mailed
to State Street) of the pertinent facts. Enough information must be given
to permit verification as to whether you are entitled to a reduction in
sales charges.
Issuance of Shares at Net Asset Value. There are many situations
where the sales charge will not apply to the purchase of Class A shares,
as discussed in the Prospectus. In addition, the Fund occasionally may be
provided with an opportunity to purchase substantially all the assets of a
public or private investment company or to merge another such company
into the Fund. This offers the Fund the opportunity to obtain significant
assets. No dealer concession is involved. It is industry practice to effect
such transactions at net asset value as it would adversely affect the
Fund's ability to do such transactions if the Fund had to impose a sales
charge.
DISTRIBUTION OF FUND SHARES
Davis Selected Advisers, L.P., ("the Distributor"), acts as
principal underwriter of the Fund's shares on a continuing basis pursuant
to a Distributing Agreement. Pursuant to Distributing Agreement, the
Distributor pays for all expenses in connection with the preparation,
printing and distribution of advertising and sales literature for use in
offering the Fund's shares to the public, including reports to shareholders
to the extent they are used as sales literature. The Distributor also pays
for the preparation and printing of prospectuses other than those
forwarded to existing shareholders. The continuance and assignment
provisions of the Distributing Agreement are the same as those of the
Advisory Agreement.
During the Fund's fiscal years ended July 31, 1996, 1995 and 1994,
the Adviser, in its capacity as distributor, received total sales charges
(which the Fund does not pay) on the sale of Class A shares of the Fund of
$11,092,007, $5,230,889 and $7,256,343, respectively. Of this amount,
the Adviser paid concessions to dealers of $9,343,681, $4,404,100 and
$6,104,072, respectively.
In addition, the Fund has adopted distribution plans with respect to
each class of its shares pursuant to Rule 12b-1 under the Investment
Company Act (the "Distribution Plans"). Payments under the Class A
Distribution Plan are limited to an annual rate of 0.25% of the average
daily net asset value of the Class A shares. Payments under the Class B
and Class C Distribution Plans are limited to an annual rate of 1.00% of
the average daily net asset value of each such class of shares.
To the extent that any investment advisory fees paid by the Fund
may be deemed to be indirectly financing any activity which is primarily
intended to result in the sale of shares of the Fund within the meaning of
Rule 12b-1, the payments of such fees are authorized under the Plans.
The Distribution Plans continue annually so long as they are
approved in the manner provided by Rule 12b-1 or unless earlier
terminated by vote of the majority of the Fund's Independent Directors or
a majority of the Fund's outstanding shares. The Distributor is required to
furnish quarterly written reports to the Board of Directors detailing the
amounts expended under the Distribution Plans. The Distribution Plans
may be amended provided that all such amendments comply with the
applicable requirements then in effect under Rule 12b-1. Presently, Rule
12b-1 requires, among other procedures, that it be continued only if a
majority of the Independent Directors approve continuation at least
annually and that amendments materially increasing the amount to be
spent for distribution be approved by the Independent Directors and the
shareholders. As long as the Distribution Plans are in effect, the Fund
must commit the selection and nomination of candidates for new
Independent Directors to the sole discretion of the existing Independent
Directors.
During the fiscal years ended July 31, 1996 and 1995, the Adviser
received $2,614,412 and $1,514,686 under the Class A Distribution Plan,
$1,561,856 and $94,221 under the Class B Distribution Plan and $570,693
and $20,342 under the Class C Distribution Plan. All of which these
amounts were paid to dealers and sales personnel.
PERFORMANCE DATA
The average annual total return (as defined below) with respect to
the Fund's Class A shares for each of the periods indicated below is as
follows:
One year ended July 31, 1996........................... 7.66%
Five years ended July 31, 1996......................... 15.67%
Ten years ended July 31, 1996......................... 15.24%
The average annual total return with respect to the Fund's Class B
shares for the one year ended July 31, 1996 and for the period beginning
December 1, 1994 and ended July 31, 1996 (life of class) were 8.82% and
25.16%, respectively. The average annual total return with respect to the
Fund's Class C shares for the year ended July 31, 1996 and for the period
beginning December 20, 1994 and ended July 31, 1996 (life of class) were
11.78% and 25.88%, respectively.
Average annual total return measures both the net investment
income generated by, and the effect of any realized or unrealized
appreciation or depreciation of, the underlying investments in the Fund's
portfolio. Average annual total return is calculated separately for each
class in accordance with the standardized method prescribed by the
Securities and Exchange Commission by determining the average annual
compounded rates of return over the periods indicated, that would equate
the initial amount invested to the ending redeemable value, according to
the following formula:
P(1+T)^n = ERV
Where: P = hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of such
period
This calculation (i) assumes all dividends and distributions are reinvested
at net asset value on the appropriate reinvestment dates and (ii) deducts
(a) the maximum front-end or applicable contingent deferred sales charge
from the hypothetical initial $1,000 investment, and (b) all recurring
fees, such as advisory fees, charged as expenses to all shareholder
accounts.
Total return is the cumulative rate of investment growth which
assumes that income dividends and capital gains are reinvested. It is
determined by assuming a hypothetical investment at the net asset value
at the beginning of the period, adding in the reinvestment of all income
dividends and capital gains, calculating the ending value of the investment
at the net asset value as of the end of the specified time period,
subtracting he amount of the original investment. This calculated amount
is then expressed as a percentage by multiplying by 100.
The total return (as defined above) for the Fund's Class A shares for
each of the periods indicated below is as follows:
One year ended July 31, 1996............................. 7.66%
Five years ended July 31, 1996........................... 107.18%
Ten years ended July 31, 1996............................ 313.52%
The total return with respect to the Fund's Class B shares for the
year ended July 31, 1996 and for the period beginning December 1, 1994
and ended July 31, 1996 (life of class) were 8.82% and 45.34%,
respectively. The total return with respect to the Fund's Class C shares
for the year ended July 31, 1996 and for the period beginning December
20, 1994 and ended July 31, 1996 (life of class) were 11.78% and 44.97%,
respectively.
In reports or other communications to shareholders and in
advertising material, the Fund may compare its performance to recognized
averages and indices of performance such as the Consumer Price Index, the
Dow Jones Industrial Average, the Standard & Poor's 500 Stock Index and
to the performance of mutual fund indexes as reported by Lipper
Analytical Services, Inc. ("Lipper") or CDA Investment Technologies, Inc.
("CDA"), two widely recognized independent mutual fund reporting
services. Lipper and CDA performance calculations include reinvestment
of all capital gain and income dividends for the periods covered by the
calculations. The Consumer Price Index is generally considered to be a
measure of inflation. The Dow Jones Industrial Average and the Standard &
Poor's 500 Stock Index are unmanaged indices of common stocks which are
considered to be generally representative of the United States stock
market. The market prices and yields of these stocks will fluctuate.
The Fund may also use evaluations of the Fund published by
nationally recognized ranking services and by financial publications. Any
given performance comparison should not be considered representative of
the Fund's performance for any future period.
<PAGE>
FORM N-1A
DAVIS NEW YORK VENTURE FUND, INC.
POST-EFFECTIVE AMENDMENT NO. 53 UNDER THE SECURITIES ACT OF 1933
REGISTRATION STATEMENT No. 2-29858
AND
AMENDMENT NO. 28 UNDER THE INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-1701
PART C
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
Included in Part A:
(i) Financial Highlights.
Included in Part B by incorporation from the 1996 Annual Report:
(i) Schedule of Investments at July 31, 1996.
(ii) Statement of Assets & Liabilities at July 31,1996.
(iii) Statement of Operations for the year ended July 31, 1996.
(iv) Statement of Changes in Net Asset Value for the years
ended July 31, 1996 and 1995.
(v) Notes to Financial Statements.
(vi) Financial Highlights.
(vii) Report of Independent Certified Public Accountants.
(b) Exhibits:
(1) Articles of Incorporation, incorporated by reference to
Exhibit (1) to Registrant's Post-Effective Amendment
No. 50, File No. 2-29858.
(2) Amended and Restated Bylaws, incorporated by reference to
Exhibit to Registrant's Post-Effective Amendment No. 50, File
No. 2-29858.
(3) Not applicable.
(4) Not applicable.
(5)(a) Investment Advisory Agreement, incorporated by reference
to Exhibit (5) to Registrant's Post-Effective Amendment
No. 50, File No. 2-29858.
(5)(b) Investment Advisory Agreement, as amended effective
December 1, 1996, incorporated by reference to Registrant's
Post-Effective Amendment No. 52, File No. 2-29858.
(5)(c) Sub-Advisory Agreement between Davis Selected Adviser,
L.P. and Davis Selected Adviser-NY, Inc., incorporated by
reference to Registrant's Post-Effective Amendment No. 52,
File No. 2-29858.
(6) Distributor's Agreement, incorporated by reference to
Registrant's Post-Effective Amendment No. 52, File No.
2-29858.
(7) Not applicable.
(8)(a) Custodian Contract, incorporated by reference to Exhibit
(8) (a) to Registrant's Post-Effective Amendment No. 44,
File No. 2-29858.
(8)(b) Transfer Agency and Service Agreement, incorporated by
reference to Exhibit (8) (b) to Registrant's Post-
Effective Amendment No. 44, File No. 2-29858.
(9) Not applicable.
(10) Opinion and Consent of Counsel (Reavis & McGrath),
incorporated by reference to Exhibit 10 to Registrant's
Post-Effective Amendment No. 35, File No. 2-29858.
(11) Consent of Auditors.
(12) Not applicable.
(13) Not applicable.
(14)(a) Prototype Retirement Plan, incorporated by reference to
Exhibit (1) to Registrant's Post-Effective Amendment
No. 38, File No. 2-29858.
(14)(b) Individual Retirement Account, incorporated by reference
to Exhibit (ii) Registrant's Post-Effective Amendment No.
38, File No. 2-29858.
(15)(a) Distribution Plan for Class A shares, incorporated by
reference to Exhibit 15 (a) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.
(15)(b) Distribution Plan for Class B shares, incorporated by
reference to Exhibit 15 (b) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.
(15)(c) Distribution Plan for Class C shares, incorporated by
reference to Exhibit 15 (c) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.
(16) Sample computation of average annual total return,
incorporated by reference to Exhibit (16) of Registrant's
Post-Effective Amendment No. 40, File No. 2-29858.
(18)(a) Powers of Attorney, incorporated by reference to Exhibit
(18)(a) to Registrant's Post-Effective Amendment No. 48,
File No. 2-29858.
(18)(b) Plan pursuant to Rule 18f-3, incorporated by reference to
Registrant's Post-Effective Amendment No. 52, File No.
2-29858.
Item 25. Persons Controlled by or Under Common Control With Registrant
--------------------------------------------------------------
Not applicable
Item 26. Number of Holders of Securities
-------------------------------
Number of Record Holders
Title of Class as of September 6,1996
-------------- ----------------------
Common Stock
Class A shares 57,213
Class B shares 19,012
Class C shares 5,395
Class Y shares _____
Item 27. Indemnification
Registrant's Articles of Incorporation indemnifies its directors,
officers and employees to the full extent permitted by Section 2-418 of
the Maryland General Corporation Law, subject only to the provisions of
the Investment Company Act of 1940. The indemnification provisions of
the Maryland General Corporation Law (the "Law") permit, among other
things, corporations to indemnify directors and officers unless it is
proved that the individual (1) acted in bad faith or with active and
deliberate dishonesty, (2) actually received an improper personal benefit
in money, property or services, or (3) in the case of a criminal proceeding,
had reasonable cause to believe that his act or omission was unlawful. The
Law was also amended to permit corporations to indemnify directors and
officers for amounts paid in settlement of stockholders' derivative suits.
In addition, the Registrant's directors and officers are covered under
a policy to indemnify them for loss (subject to certain deductibles)
including costs of defense incurred by reason of alleged errors or
omissions, neglect or breach of duty. The policy has a number of
exclusions including alleged acts, errors, or omissions which are finally
adjudicated or established to be deliberate, dishonest, malicious or
fraudulent or to constitute willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties in respect to any
registered investment company. This coverage is incidental to a general
policy carried by the Registrant's adviser.
In addition to the foregoing indemnification, Registrant's Articles of
Incorporation exculpate directors and officers with respect to monetary
damages except to the extent that an individual actually received an
improper benefit in money property or services or to the extent that a
final adjudication finds that the individual acted with active and
deliberate dishonesty.
Item 28. Business and Other Connections of Investment Adviser
The Investment Adviser of the Registrant, Davis Selected Advisers,
L.P, is also the investment adviser for Davis High Income Fund, Inc., Davis
Tax-Free High Income Fund, Inc., Davis Series, Inc., Davis International
Series, Inc., Selected American Shares, Inc., Selected Special Shares Inc.
and Selected Capital Preservation Trust. It also may engage as an
investment adviser for accounts other than mutual funds, although this is
not presently business of a substantial nature.
Shelby M.C. Davis is a Director, Chairman, Chief Executive Officer
and principal owner of Venture Advisers, Inc. (the "General Partner") and
is a Director of Shelby Cullom Davis Financial Consultants, Inc., 70 Pine
Street, New York, New York 10270. Carl R. Luff is a Director,
Co-President and Secretary of the General Partner.
Item 29. Principal Underwriters
(a) Davis Selected Advisers, L.P., located at 124 East Marcy Street,
Santa Fe, NM 87501, is the principal underwriter for the Registrant also
acts as principal underwriter for Davis High Income Fund, Inc., Davis
Tax-Free High Income Fund, Inc., Davis Series, Inc. and Davis International
Series, Inc., Selected American Shares, Inc., Selected Special Shares, Inc.
and Selected Capital Preservation Trust.
(b) Management of the General Partner of the Principal
Underwriters.
<TABLE>
<CAPTION>
Positions and
Name and Principal Positions and Offices with the Offices with
Business Address general partner of the Underwriter Registrant
- ---------------- ---------------------------------- ----------
<S> <C> <C>
Shelby M.C. Davis Director, Chairman and Director and President
P.O. Box 205 Chief Executive Officer
Hobe Sound, FL 33455
Carl R. Luff Director, Co-President Vice President,
124 East Marcy Street and Treasurer Treasurer and Assistant
Santa Fe, NM 87501 Secretary
Raymond O. Padilla Senior Vice President Vice President,
124 East Marcy Street Secretary & Assistant
Santa Fe, NM 87501 Treasurer
Carolyn H. Spolidoro Vice President Vice President
124 East Marcy Street
Santa Fe, NM 87501
Andrew A. Davis Co-President Vice President
124 East Marcy Street
Santa Fe, NM 87501
Christopher C. Davis Director Vice President
70 Pine Street, 43rd Floor
New York, NY 10270-0108
Eileen R. Street Senior Vice President Assistant Treasurer and
124 East Marcy Street and Secretary Assistant Secretary
Santa Fe, NM 87501
</TABLE>
Item 30. Location of Accounts and Records
--------------------------------
Accounts and records are maintained at the offices of Davis
Selected Advisers, L.P., 124 East Marcy Street, Santa Fe, New Mexico
87501, and at the offices of the Registrant's custodian, State Street Bank
and Trust Company, One Heritage Drive, North Quincy, Massachusetts
02107, and the Registrant's transfer agent State Street Bank and Trust,
c/o Service Agent, BFDS, Two Heritage Drive, 7th Floor, North Quincy,
Massachusetts 02107.
Item 31. Management Services
-------------------
Not applicable
Item 32. Undertakings
------------
Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of Registrant's latest annual report to
shareholders upon request and without charge.
<PAGE>
DAVIS NEW YORK VENTURE FUND, INC.
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant has caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago and State of Illinois on
the 29th day of November, 1996.
DAVIS NEW YORK VENTURE FUND, INC.
*By: /s/ Sheldon R. Stein
-----------------------------------
Sheldon R. Stein,
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Shelby M.C. Davis* President November 29, 1996
Shelby M.C. Davis (Chief Executive
Officer) and
Director
Carl R. Luff* Vice President, November 29, 1996
Carl R. Luff Treasurer and
Assistant Secretary
*By: /s/ Sheldon R. Stein
-----------------------------
Sheldon R. Stein,
Attorney-in-Fact
* Sheldon R. Stein signs this document on behalf of the Registrant
and the foregoing officers pursuant to the powers of attorney filed as
Exhibit (18)(a) to this Registrant's Post-Effective Amendment No. 48.
DAVIS NEW YORK VENTURE FUND, INC.
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment has been signed on November 29, 1996 by the
following persons in the capacities indicated.
Signature Title
--------- -----
Wesley E. Bass. Jr.* Director
- ---------------------------------------
Wesley E. Bass, Jr.
Jeremy H. Biggs* Director
- ---------------------------------------
Jeremy H. Biggs
Marc P. Blum* Director
- ---------------------------------------
Marc P. Blum
Eugene M. Feinblatt* Director
- ---------------------------------------
Eugene M. Feinblatt
Jerry D. Geist* Director
- ---------------------------------------
Jerry D. Geist
D. James Guzy* Director
- ---------------------------------------
D. James Guzy
G. Bernard Hamilton* Director
- ---------------------------------------
G. Bernard Hamilton
LeRoy E. Hoffberger* Director
- ---------------------------------------
LeRoy E. Hoffberger
Laurence W. Levine* Director
- ---------------------------------------
Laurence W. Levine
Martin H. Proyect* Director
- ---------------------------------------
Martin H. Proyect
Christian R. Sonne* Director
- ---------------------------------------
Christian R. Sonne
Edwin R. Werner* Director
- ---------------------------------------
Edwin R. Werner
*Sheldon R. Stein signs this document on behalf of each of the
foregoing persons pursuant to the powers of attorney filed as Exhibit
18(a) to Registrant's Post-Effective Amendment No. 48.
/s/Sheldon R. Stein
Sheldon R. Stein,
Attorney-in-Fact
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm in the Registration Statement,
(Form N-1A), and related Statement of Additional Information of Davis
New York Venture Fund, Inc. and to the inclusion of our report dated
August 29, 1996 to the Shareholders and Board of Directors of Davis
New York Venture Fund, Inc.
/s/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
December 2, 1996
