DAVIS NEW YORK VENTURE FUND INC, 497, 1998-05-01

DAVIS NEW YORK VENTURE FUND INC
497, 1998-05-01

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<PAGE>

Filed Pursuant to Rule 497(e)
Registration File No.: 2-29858

PROSPECTUS DECEMBER 1, 1997
CLASS A, CLASS B AND CLASS C AS REVISED MAY 1, 1998

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 Accounts (IRAs)
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, 1997 as
revised May 1, 1998, 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.

<PAGE>

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, 1997. 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 (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%* 4.00% 1.00%*
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.............................................................. None None None

Annual Fund operating expenses (as a percentage of average net assets)
- ----------------------------------------------------------------------
Management fees..................................................... 0.57% 0.57% 0.57%
12b-1 fees**........................................................ 0.20% 1.00% 1.00%
Other expenses...................................................... 0.12% 0.22% 0.16%
----- ----- -----
Total Fund operating expenses.............................. 0.89% 1.79% 1.73%
</TABLE>

* On certain Class A shares purchased at net asset value without a sales
load 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.

** 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.

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 $75 $94 $152

Class B.......................................... $48 $76 $107 N/A
Class B (assuming no redemption at end of period) $18 $56 $97 N/A

Class C.......................................... $18 $54 $94 $204
Class C (assuming no redemption at end of period) $18 $54 $94 $204
</TABLE>

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<PAGE>

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 COMPANY. 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 Company currently
offers two portfolios, the Davis New York Venture Fund and the Davis Growth &
Income Fund. This prospectus describes only the Davis New York Venture Fund.
For a prospectus describing the Davis Growth & Income Fund call Davis
Distributors, LLC at 1-800-279-0279.

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 so purchased at net asset value without a sales load 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 eight years after the end of the
calendar month in which the shareholder's order to purchase was accepted, 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. 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. The Fund 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.

3
<PAGE>

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 for the Fund. Davis
Distributors, LLC (the "Distributor"), a subsidiary of the Adviser, serves as
the principal underwriter for the Fund. The Adviser has entered into a
Sub-Advisory Agreement with its wholly-owned subsidiary, Davis Selected
Advisers-NY, Inc. ("DSA-NY"). DSA-NY performs research and other services for
the Fund on behalf of the Adviser. For more information see "Adviser,
Sub-Advisers 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
by 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. 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 Distributors, LLC at 1-800-279-0279 or to your sales
representative. Written inquiries may be directed to State Street Bank & Trust
Co., c/o The Davis Funds, P.O. Box 8406, Boston, MA 02266-8406. During severe
market conditions, the Distributor may experience difficulty in accepting
telephone redemptions or exchanges. If you are unable to contact the
Distributor at the above telephone number, you should call 1-505-820-3000
Monday through Friday between 7:00 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, Class B and Class 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 1997 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, 1997 have been audited by Tait, Weller & Baker serving as independent
certified public accountants, whose opinion thereon is contained in the Annual
Report.

4
<PAGE>

<TABLE>
<CAPTION>
CLASS A
YEAR ENDED JULY 31,
------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period.................. $15.24 $14.56 $12.04 $12.08 $10.70 $ 9.85 $ 9.39 $ 9.72 $ 8.07 $10.88
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income From Investment
Operations

Net Investment
Income................. .18 .20 .14 .16 .10 .14 .16 .36 .21 .19

Net Gains on
Securities (both
realized and
unrealized)............ 8.37 1.64 2.95 .54 1.98 1.57 1.02 .38 2.22 (.64)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment
Operations......... 8.55 1.84 3.09 .70 2.08 1.71 1.18 .74 2.43 (.45)

Less Distributions

Dividends (from
net investment
income)................. (.18) (.15) (.12) (.16) (.10) (.21) (.18) (.37) (.22) (.22)

Distributions
from Realized Capital
Gains................... (.70) (1.01) (.45) (.58) (.59) (.55) (.50) (.70) (.34) (1.66)

Distributions
From Paid In Capital... - - - - (.01) (.10) (.04) - (.22) (.48)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions.. (.88) (1.16) (.57) (.74) (.70) (.86) (.72) (1.07) (.78) (2.36)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period........... $22.91 $15.24 $14.56 $12.04 $12.08 $10.70 $ 9.85 $ 9.39 $ 9.72 $ 8.07
====== ====== ====== ====== ====== ====== ====== ====== ====== ======

Total Return (1)............ 57.83% 13.04% 27.21% 5.99% 20.20% 18.62% 14.29% 8.12% 33.44% (3.30)%

Ratios/Supplemental Data

Net Assets, end of
Period (000,000
omitted)............... 4,055 2,151 1,595 1,077 739 494 421 345 319 168

Ratio of
Expenses
to Average
Net Assets............. .89% .87% .90% .87% .89% .91% .97% .97% .97% 1.01%

Ratio of Net
Income to
Average
Net Assets............. .98% 1.30% 1.11% 1.19% .85% 1.36% 1.84% 3.78% 2.45% 2.42%

Portfolio Turnover Rate. 24% 19% 15% 13% 24% 26% 52% 47% 58% 38%

Average Commission Rate
Per Share.............. $.0600 - - - - - - - - -
</TABLE>

(1) Sales charges are not reflected in calculation.

5
<PAGE>

<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------- -------------------------------
DECEMBER 1, 1994 DECEMBER 20, 1994
(COMMENCEMENT (COMMENCEMENT
YEAR ENDED OF OPERATIONS) YEAR ENDED OF OPERATIONS)
---------- THROUGH ---------- THROUGH
7/31/97 7/31/96 7/31/95 7/31/97 7/31/96 7/31/95
------- ------- ------- ------- ------- -------

<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 15.08 $ 14.43 $ 10.88 $ 15.12 $ 14.47 $ 11.16
------- ------- ------- ------- ------- -------
Income From Investment Operations

Net Investment Income (Loss).. .01 .04 (.01) .02 .04 (.01)

Net Gains on Securities
(both realized and
unrealized)................ 8.29 1.62 3.56 8.32 1.62 3.32
------- ------- ------- ------- ------- -------
Total From Investment
Operations............. 8.30 1.66 3.55 8.34 1.66 3.31

Less Distributions

Dividends (from net
investment income).......... (.04) - - (.04) - -

Distributions From Realized
Capital Gains............... (.70) (1.01) - (.70) (1.01) -
------- ------- ------- ------- ------- -------

Total Distributions........ (.74) (1.01) - (.74) (1.01) -
------- ------- ------- ------- ------- -------

Net Asset Value, End of Period.... $ 22.64 $ 15.08 $ 14.43 $ 22.72 $ 15.12 $ 14.47
======= ======= ======= ======= ======= =======

Total Return (1)................... 56.47% 11.81% 26.07%* 56.59% 11.78% 26.42%*
- -------------

Ratios/Supplemental Data

Net Assets, End of Period
(000 omitted)............... 1,196,250 288,835 39,857 573,309 117,255 11,729

Ratio of Expenses to Average
Net Assets.................. 1.79%(2) 1.73% 1.78%* 1.73% 1.73% 1.78%*

Ratio of Net Income to
Average Net Assets.......... .07% .44% .23%* .13%* .44% .23%*

Portfolio Turnover Rate....... 24% 19% 15% 24% 19% 15%

Average Commission Rate
par share.................. $.0600 - - $.0600 - -

(1) Contingent deferred sales charges are not reflected in calculation.
(2) Ratio of expenses to average net assets after the reduction of custodian
fees under a custodian agreement was 1.78%. Prior to 1996, such reductions
were reflected in the expense ratios.
* Annualized.

6
<PAGE>

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.

An investment in the Fund may not constitute a complete investment
program and may not be appropriate for all investors or for short-term
investing.

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

7
<PAGE>

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.

8
<PAGE>

LENDING OF PORTFOLIO SECURITIES. The Fund may lend securities to
broker/dealers or institutional investors for their use in connection with
short sales, arbitrages and other securities transactions. The Fund may earn
interest on cash collateral or receive a fee from broker/dealers for lending
its portfolio securities. The Fund will not lend portfolio securities unless
the loan is secured by collateral (consisting of any combination of cash,
United States Government securities or irrevocable letters of credit) in an
amount at least equal (on a daily market-to-market basis) to the current market
value of the securities loaned. In the event of a bankruptcy or breach of
agreement by the borrower of the securities, the Fund could experience delays
and costs in recovering the securities loaned. 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.

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 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".

9
<PAGE>

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

Davis Selected Advisers, L.P. (the "Adviser") whose principal office
is at 124 East Marcy Street, Santa Fe, New Mexico 87501, serves as the
investment adviser of the Fund. 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 investment and business operations of the
Fund. Davis Distributors, LLC ("the Distributor"), a subsidiary of the Adviser,
serves as the distributor or principal underwriter of the Fund's shares. Davis
Selected Advisers-NY, Inc., ("DSA-NY") a wholly owned subsidiary of the
Adviser, performs research and other services for the Fund on behalf of the
Adviser under a Sub-Advisory Agreement with the Adviser. The Adviser also acts
as investment adviser for Davis Growth & Income Fund, Davis High Income Fund,
Inc., Davis Tax-Free High Income Fund, Inc., Davis Series, Inc., Davis
International Series, Inc., (collectively with the Fund, the "Davis Funds"),
Selected American Shares, Inc., Selected Special Shares, Inc. and Selected
Capital Preservation Trust (collectively the "Selected Funds"). The Distributor
also acts as the principal underwriter for the Davis and Selected Funds.

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% on 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 with DSA-NY, the Adviser pays all of DSA-NY's direct and
indirect costs of operations. All the fees paid to DSA-NY are paid by the
Adviser and not the Fund.

PORTFOLIO MANAGEMENT. Effective May 1, 1998 Christopher C. Davis is a
co-portfolio manager for the Fund. He was portfolio manager of the Fund from
February 19, 1997 through April 30, 1998. He was co-portfolio manager of the
Fund, with Shelby M.C. Davis, from October 1, 1995 until February 19, 1997.
Prior thereto, Christopher C. Davis worked closely with Shelby M.C. Davis as an
assistant portfolio manager and research analyst beginning in September, 1989.
Christopher C. Davis also manages or co-manages other equity funds managed by
the Adviser.

Effective May 1, 1998, Kenneth Charles Feinberg is a co-portfolio
manager for the Fund. He also co-manages other equity funds managed by the
Adviser. He has been associated with the Adviser since December 1994 as a
research analyst. He previously served as Assistant Vice President of Investor
Relations for the Continental Corporation from 1988 to 1994.

Shelby M.C. Davis is Chief Investment Officer of the Adviser. As Chief
Investment Officer, he is active in providing investment themes, strategies and
individual stock selections to the Fund. He was the Fund's primary portfolio
manager from its inception in 1969 until February 19, 1997. He is an officer of
all investment companies managed by the Adviser and was the portfolio manager
of a growth and income fund managed by the Adviser from May 1, 1993 until
February 19, 1997. He has been a director of the Adviser's general partner
since 1969.

10
<PAGE>

DISTRIBUTION PLANS

Davis Distributors, LLC is 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 in accordance with Rule 12b-1 under the Investment Company
Act of 1940. Rule 12b-1 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. Where a commission is paid for purchases
of $1 million or more of Class A shares and as long as the limits of the
distribution plan have not been reached, such payment is also made from 12b-1
distribution fees received from the Fund. 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. The Distributor pays broker/dealers up to 4% in
commissions on new sales of Class B Shares. Up to an annual rate of 0.75% of
the average daily net assets is used to reimburse the Distributor for these
commission payments. 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 Distributor, the Adviser, the Adviser's
general partner, or DSA-NY. 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 Distributor 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. As of July 31, 1997, the Distributor paid $32,530,736 in commissions
for which the Distributor had not yet received reimbursement.

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 commissions and service and maintenance fees to
its salespersons and other firms for selling new Class C shares, shareholder
servicing and maintenance of shareholder accounts.

11
<PAGE>

In addition, 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 Fund shares within the meaning of
Rule 12b-1, the Plans authorize the payment of such 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 may 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 or personnel of dealers and other firms who provide sales or
other services in respect to the Fund and/or its shareholders, or to defray the
expenses of meetings, advertising or equipment. Any such amounts may be paid by
the Distributor from the fees it receives under the Class A, Class B and Class
C Distribution Plans.

In addition, the Distributor may, from time to time, pay additional
cash compensation or other promotional incentives to authorized dealers or
agents that sell shares of the Fund. In some instances, such cash compensation
or other incentives may be offered only to certain dealers or agents who employ
registered representatives who have sold or may sell significant amounts of
shares of the Fund and/or the other Davis Funds managed by the Adviser during a
specified period of time.

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. All purchases made by check f(minimum $1,000,
except $250 for retirement plans) should be in U.S. dollars and made payable to
THE DAVIS FUNDS, 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
Distributors, LLC 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

12
<PAGE>

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 "The Davis Funds" to State Street
Bank and Trust Company, c/o The Davis Funds, P.O. Box 8406, Boston, MA
02266-8406. For overnight delivery, please send your check to State Street Bank
and Trust Company, c/o the Davis Funds, 2 Heritage Drive, Fifth Floor N.
Quincy, MA. 02171. THIRD PARTY CHECKS WILL NOT BE ACCEPTED. 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 will
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 another. 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

13
<PAGE>

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>
<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%*
</TABLE>

* On purchases of $1 million or more, the investor pays no front-end sales
charge but a contingent deferred sales charge of 0.75% is imposed if shares
purchased at net asset value without a sales load are redeemed within the first
year after purchase. The Distributor may pay the financial service firm a
commission during the first year after such purchase at an annual rate as
follows:

<TABLE>
<CAPTION>
Purchase Amount Commission
--------------- ----------
<S> <C>
First $3,000,000................................................ .75%
Next $2,000,000................................................ .50%
Over $5,000,000................................................ .25%
</TABLE>

Where a commission is paid for 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.

14
<PAGE>

(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, B and C shares you already own
(except shares of Davis Government Money Market Fund) 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 Growth & Income Fund, 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,
Sub-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) Class A shares purchased by any
single account covering a minimum of 250 participants (this 250 participant
minimum may be waived for certain fee based mutual fund marketplace programs)
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 or
"rabbi trusts"; (6) 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 or by investment
advisors or financial planners who place trades for their own accounts or the
accounts of their clients and who charge a management, consulting or other fee
for their services; and clients of such investment advisors or financial
planners who place trades for their own accounts if the accounts are linked to
the master account of such investment advisor or financial planner on the books
and records of the broker or agent; and (7) Class A shares amounting to less
than $5,000,000 purchased by any state, county, city, department, authority or
similar agency. Investors may be charged a fee if they effect purchases in fund
shares through a broker or agent. 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. The Distributor receives and usually reallows
commissions to firms responsible for the sale of such shares. See

15
<PAGE>

"Distribution Plans." 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 in 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's average daily net asset
value. The Fund will not accept any purchase of Class B shares in the amount of
$250,000 or more per investor.

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. 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 a 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. In addition certain Class B shares held by certain defined
contribution plans automatically convert to Class A shares based on increases
of plan assets as described in the Statement of Additional Information.

CLASS C SHARES. Class C shares are offered at net asset value without
a sales charge at the time of purchase. Class C shares redeemed within one year
of purchase 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 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 commission 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 1% redemption charge will be paid to the Distributor. 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 average daily net asset value of such
shares for sales fees and 0.25% of the annual average daily net asset value of
such shares for service and maintenance fees.

CONTINGENT DEFERRED SALES CHARGES. Any contingent deferred sales
charge ("CDSC") imposed upon the redemption of Class A, Class B or Class C
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 CDSC is imposed when you
redeem amounts derived from (a) increases in the value of shares redeemed above
the net 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 CDSC will be redeemed first.
Thereafter, shares held the longest will be the first to be redeemed.

16
<PAGE>

The CDSC on Class A, B, and C Shares that are subject to a CDSC will
be waived if the redemption relates to the following: (a) in the event of the
total disability (as evidenced by a determination by the federal Social
Security Administration) of the shareholder (including registered joint owner)
occurring after the purchase of the shares being redeemed; (b) in the event of
the death of the shareholder (including a registered joint owner); (c) for
redemptions made pursuant to an automatic withdrawal plan in an amount, on an
annual basis, up to 12% of the value of the account at the time the shareholder
elects to participate in the automatic withdrawal plan; (d) for redemptions
from a qualified retirement plan or IRA that constitute a tax-free return of
contributions to avoid tax penalty; (e) on redemptions of shares sold to
directors, officers and employees of any Fund for which the Adviser acts as
investment adviser or officers and employees of the Adviser, Sub-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; (f) 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; (g) certain other exceptions related to defined contribution
plans as described in the Statement of Additional Information.

PROTOTYPE RETIREMENT PLANS. The Distributor and certain qualified
dealers have available prototype retirement plans (e.g. 401(k), profit sharing,
money purchase, Simplified Employee Pension ("SEP") plans, model 403(b) and 457
plans for charitable, educational and governmental entities) sponsored by the
Funds for corporations and self-employed individuals. The Distributor and
certain qualified dealers also have prototype Individual Retirement Account
("IRA") plans (deductible IRAs, non-deductible IRAs, including "Roth IRAs", and
educational IRAs) and SIMPLE IRA plans for both individuals and employers.
These plans utilize the shares of the Fund and other Davis Funds 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 social security number. Such fees will be redeemed automatically
at year end from your account, unless you elect to pay the fee directly.

AUTOMATIC INVESTMENT PLAN. You may arrange for automatic monthly
investing whereby State Street will be authorized to initiate a debit to your
bank account of a specific amount (minimum $25) each month which will be used
to purchase Fund shares. The account minimums of $1,000 for non-retirement
accounts and $250 for retirement accounts will be waived if, pursuant to the
automatic investment plan, the account balance will meet the minimum investment
requirements within twelve months of the initial investment. 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 4th and
28th day of each month. After each automatic investment, you will receive a
transaction confirmation and the debit should be reflected on your next bank
statement. You may terminate the Plan at any time. 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.

17
<PAGE>

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,
government 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, Class B and 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. 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
applicable at the time of exchange will continue to apply to any 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.

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

18
<PAGE>

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 you may exchange shares among the Davis Funds
within a specified period of time may be limited at the discretion of the
Distributor. Currently, more than four exchanges out of the Fund during a
twelve month period are not permitted without the prior written approval of the
Distributor. The Fund reserves the right to terminate or amend the exchange
privilege at any time upon 60 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.

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 fund's applicable price.
If you would like to participate in this program, you may use the appropriate
designation on the Application Form.

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. 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 correspond to the account from which the
shares are being redeemed.

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 Company also requires that
signatures appearing on a share certificate, stock power or redemption request
where the proceeds would be more than $50,000, must be guaranteed by a bank,
credit union, savings association, securities exchange, broker, dealer or other
guarantor institution. A signature guarantee is also required in the event that
any modification to the Company's application is made after the account is
established, including the selection of the Expedited Redemption Privilege. In
some situations such as where corporations, trusts or estates are involved,
additional documents may be necessary to effect the redemption. 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 $50,000 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. All notifications of address changes must be in writing.

19
<PAGE>

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 redemption delay by paying for your shares 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 redemptions 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 Distributors, LLC (1-800-279-0279), and (c) by
facsimile 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 Distributor, 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 you 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.

20
<PAGE>

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, any applicable
CDSCs will be imposed on such 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.

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 or all of 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 applicable CDSC assessed on such
shares will be returned to the account. 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

NET ASSET VALUE. 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 outstanding shares. The net asset value of
the Fund is determined daily as of the earlier of the close of the New York
Stock Exchange (the "Exchange") or 4:00 p.m., Eastern Time, on each day that
the Exchange is open for trading.

21
<PAGE>

receive the same day's net asset value. Note that in the case of redemptions
and repurchases of shares owned by corporations, trusts or estates, or of
shares represented by outstanding certificates, 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 or outstanding certificates. See "Redemption of Shares."

VALUATION OF PORTFOLIO SECURITIES. Portfolio securities are normally
valued using current market valuations. Securities traded on a national
securities exchange are valued at the last published sales price 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 Debt securities maturing in 60 days
or less are usually valued at amortized cost and longer term debt securities
may be valued by an independent pricing service. Securities for which market
quotations are not readily available and other assets will be valued at fair
value as determined by or at the direction of the Board of Directors.

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 confirmation statements for dividends declared and shares
purchased through reinvestment of dividends. You will also receive
confirmations after each purchase and after each redemption. Because Class B
and Class C shares incur higher distribution services fees and bear certain
other expenses, such shares 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 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 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.

22
<PAGE>

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. 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 that
period, then the loss is treated as a long-term capital loss to the extent of
such distribution.

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.)

FUND SHARES

The Company is a series investment company which may issue multiple
series, each of which would represent an interest in its separate portfolio.
Currently, the Company offers two series, Davis New York Venture Fund and Davis
Growth & Income Fund. Shares of a series may be issued in different classes.
Shares of 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.

In accordance with Maryland law and the Fund's By-laws, the Fund does
not hold regular annual shareholder meetings. Shareholder meetings are held
when they are required under the Investment Company Act of 1940 or when
otherwise called for special purposes. Special shareholder meetings may be
called upon the written request of shareholders holding at least 10% of the
voting power of the Fund.

23
<PAGE>

PERFORMANCE DATA

From time to time, the Fund may advertise information regarding its
performance. Such information may consist of "total return" and "average annual
total return" and will be calculated separately for each class. These
performance figures are based upon historical results and are not intended to
indicate future performance.

"Average annual total return" refers to the Fund's average annual
compounded rate of return over a stated period that would equate an initial
amount invested at the beginning of the period to the ending redeemable value
of the investment.

"Total return" refers to the Fund's compounded rate of return over a
stated period that would equate an initial amount invested at the beginning of
the period to the ending redeemable value of the investment. Total return is
not annualized. In the event the Fund advertises its total return or average
annual total return, the stated periods will be one, five and ten years, and
may also include longer or shorter periods, including the life of the Fund. The
computation of total and average annual total return assumes reinvestment of
all dividends and distributions, and deduction of all charges and expenses. 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 average annual total return on net asset
value. Such data will be calculated substantially as described above except
that sales charges will not be deducted.

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 1997 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 Distributors, LLC,
by writing to State Street Bank and Trust Company, c/o the Davis Funds, P.O.
Box 8406, Boston, MA 02266-8406 or by calling 1 800 279-0279. Davis Direct
Access is the Davis Funds' automated telephone system that enables shareholders
to perform a number of account transactions automatically by using a touch-tone
phone. Shareholders may obtain Fund and account specific information and make
purchases, exchanges and redemptions.

24
<PAGE>

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 Distributors, LLC, acts as distributor, 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 Distributors, LLC, 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 Distributors, LLC, 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.

25
<PAGE>

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., Davis Distributors, LLC, 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 Davis Distributors, LLC, 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)

===============================================================================

26
<PAGE>

TABLE OF CONTENTS

PAGE

Summary................................................................... 2
Financial Highlights...................................................... 4
Investment Objective and Policies......................................... 7
Adviser, Sub-Adviser and Distributor...................................... 10
Distribution Plans........................................................ 11
Purchase of Shares........................................................ 12
Telephone Privilege....................................................... 18
Exchange of Shares........................................................ 18
Redemption of Shares...................................................... 19
Determining the Price of Shares........................................... 21
Dividends and Distributions............................................... 22
Federal Income Taxes...................................................... 22
Fund Shares............................................................... 23
Performance Data.......................................................... 24
Shareholder Inquiries..................................................... 24

<PAGE>

PROSPECTUS DECEMBER 1, 1997
CLASS Y SHARES AS REVISED MAY 1, 1998

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, 1997, as amended May 1, 1998 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.

------------------------

<PAGE>

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. The information is based
on the Fund's fiscal year ended July 31, 1997. 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 Y
- -------------------------------- -------
<S> <C>
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........................................................ 0.57%
12b-1 fees............................................................. 0.00%
Other expenses......................................................... 0.05%
-----
Total Fund operating expenses................................. 0.62%
</TABLE>
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:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class Y................... $6 $20 $35 $77
</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 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
("Government

2
<PAGE>

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").

PURCHASES, EXCHANGES AND REDEMPTIONS. Class Y shares are sold at net
asset value without a sales charge. The initial minimum investment for
Institutions and Government 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 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.

SHAREHOLDER SERVICES. Questions regarding the Fund or your account may
be directed to Davis Distributor, LLC at 1-800-279-0279 or to your sales
representative. Written inquiries may be directed to State Street Bank and
Trust Co., c/o The Davis Funds, P.O. Box 8406, Boston, MA 02266-8406. During
drastic market conditions, the Distributor may experience difficulty in
accepting telephone redemptions or exchanges. If you are unable to contact the
Distributor at the above telephone number, you should call 1-505-820-3000
Monday through Friday between 7:00 a.m. and 4:00 p.m. Mountain Time.

3
<PAGE>

FINANCIAL HIGHLIGHTS

The table expresses the information in terms of a single Class Y share
for the period presented and is supplementary information to the Fund's
financial statements which are included in the 1997 Annual Report to
Shareholders. The Report may be obtained by writing or calling the Fund. The
Fund's financial statements and financial highlights for the period ended July
31, 1997 have been audited by Tait, Weller and Baker serving as the Fund's
independent certified public accountants, whose opinion thereon is contained in
the Annual Report.

<TABLE>
<CAPTION>
CLASS Y OCTOBER 2, 1996
(COMMENCEMENT
OF OPERATIONS)
THROUGH
7/31/97
-------

<S> <C>
Net Asset Value, Beginning of Period ........................ $ 16.66
--------
Income From Investment Operations
Net Investment Income (Loss) ........................... .15
Net Gains on Securities (both realized and unrealized) . 7.07
--------
Total From Investment Operations ..................... 7.22

Less Distributions
Dividends (from net investment income) ................. (.06)
Distributions From Realized Capital Gains .............. (.70)
--------
Total Distributions .................................. (.76)
--------
Net Asset Value, End of Period .............................. $ 23.12
========

Total Return ................................................ 44.71%
--------
Ratios/Supplemental Data
Net Assets, End of Period (000 omitted) ................ 533,585
Ratio of Expenses to Average Net Assets ................ .62%*
Ratio of Net Income to Average Net Assets .............. 1.19%*
Portfolio Turnover Rate ................................ 24%
Average Commission Rate par share ...................... $.0600
</TABLE>

* Annualized.

4
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

An investment in the Fund may not constitute a complete investment
program and may not be appropriate for all investors or for short-term
investing.

5
<PAGE>

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.

6
<PAGE>

earn interest on cash collateral or receive a fee from broker/dealers for
lending its portfolio securities. The Fund will not lend portfolio securities
unless the loan is secured by collateral (consisting of any combination of
cash, United States Government securities or irrevocable letters of credit) in
an amount at least equal (on a daily market-to-market basis) to the current
market value of the securities loaned. In the event of a bankruptcy or breach
of agreement by the borrower of the securities, the Fund could experience
delays and costs in recovering the securities loaned. The Fund may not lend
securities with an aggregate market value of more than 20 percent of the Fund's
total assets.

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.

7
<PAGE>

ADVISER, SUB-ADVISER AND DISTRIBUTOR

8
<PAGE>

PURCHASE OF SHARES

GENERAL. Class Y shares are offered through this Prospectus to (i)
trust companies, bank trusts, endowments, pension plans or foundations
("Institutions) 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; (ii) any state, county, city, department, authority
or similar agency which invests at least $5,000,000 ("Government 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 Distributors, LLC.

PURCHASE BY BANK WIRE. Shares may be purchased at any time by wiring
federal funds directly to State Street Bank and Trust Company. Prior to an
initial investment by wire, the institutional shareholder or wrap program
sponsor should telephone Davis Distributors, LLC 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:

You may make additional investments by wire or you may simply mail a
check payable to "The Davis Funds" to State Street Bank and Trust Company, c/o
The Davis Funds, P.O. Box 8406, Boston, MA 02266-8406. For overnight delivery,
please send your check to State Street Bank and Trust Company, c/o the Davis
Funds, 2 Heritage Drive, Fifth Floor N. Quincy, MA 02171. Where purchases are
made by checks, redemptions will not be allowed until the check has cleared,
usually about 15 calendar days. 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 Class Y 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 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.

9
<PAGE>

TELEPHONE 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, government 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 Government 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.

The number of times you 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 four exchanges out of the 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 days' notice.

10
<PAGE>

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 correspond to the
account from which the shares are registered.

For the protection of all shareholders, the Company also requires that
signatures appearing on a stock power or redemption request where the proceeds
would be more than $50,000, must be guaranteed by a bank, credit union, savings
association, securities exchange, broker, dealer or other guarantor
institution. A signature guarantee is also required in the event that any
modification to the Fund's application is made after the account is
established, including the selection of the Expedited Redemption Privilege. In
some situations such as where corporations, trusts or estates are involved,
additional documents may be necessary to effect the redemption. 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 $50,000 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. All notifications of address changes must be in writing.

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 other than in 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 brokers or
dealers. The Distributor may repurchase 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. Any 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.

11
<PAGE>

DETERMINING THE PRICE OF SHARES

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. In order for your purchase order or
redemption request to be effective on the day you place your order with your
broker-dealer or other financial institution, such broker-dealer or financial
institution must (i) receive your order before 4:00 p.m. Eastern time and (ii)
promptly transmit the order to State Street. The broker-dealer or financial
institution is responsible for promptly transmitting purchase orders or
redemption requests to State Street so that you may receive the same day's net
asset value. Note that in the case of redemptions and repurchases of shares
owned by corporations, trusts or estates, or of shares represented by
outstanding certificates, 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 or outstanding certificates. See "Redemption of Shares."

VALUATION OF PORTFOLIO SECURITIES. As more fully set forth in the
Statement of Additional Information, portfolio securities are normally valued
using current market valuations. Securities traded on a national securities
exchange are valued at the last published sales price 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. Debt securities maturing in 60 days or less are
usually valued at amortized cost and longer term debt securities may be valued
by an independent pricing service. Securities for which market quotations are
not readily available and other assets will be valued at fair value as
determined by or at the direction of the Board of Directors.

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 confirmation
statements for dividends declared and shares purchased through reinvestment of
dividends. You will also receive confirmations after each purchase and after
each redemption.

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 capital gain distributions
reinvested. The reinvestment of dividends and distributions is made at net
asset value on the payment date. Information concerning distributions will be
mailed annually to shareholders.

For the protection of shareholders, 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.

12
<PAGE>

FEDERAL INCOME TAXES

FUND 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,

13
<PAGE>

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

The Fund may also quote average annual total return on net asset
value. Such data will be calculated substantially as described above except
that sales charges will not be deducted.

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 similar 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 1997 Annual Report contains additional performance
information and will be made available upon request and without charge.

14
<PAGE>

SHAREHOLDER INQUIRIES

Shareholder inquiries should be directed to Davis Distributors, LLC,
by writing to State Street Bank and Trust Company, c/o The Davis Funds, P.O.
Box 8406, Boston, MA 02266-8406 or by calling 1-800-279-0279. Davis Direct
Access is the Davis Funds' automated telephone system that enables shareholders
to perform a number of account transactions automatically by using a touch-tone
phone. Shareholders may obtain Fund and account specific information and make
purchases, exchanges and redemptions.

15
<PAGE>

===============================================================================

TABLE OF CONTENTS

PAGE

Summary.................................................................... 2
Financial Highlights....................................................... 4
Investment Objective and Policies.......................................... 5
Adviser, Sub-Adviser and Distributor....................................... 8
Purchase of Shares......................................................... 9
Telephone Privilege........................................................ 10
Exchange of Shares......................................................... 10
Redemption of Shares....................................................... 11
Determining the Price of Shares............................................ 12
Dividends and Distributions................................................ 12
Federal Income Taxes....................................................... 13
Fund Shares................................................................ 13
Performance Data........................................................... 14
Shareholder Inquiries...................................................... 15

===============================================================================

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

DECEMBER 1, 1997
AS AMENDED MAY 1, 1998
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..................................................... 6
Directors Compensation Schedule............................................ 8
Certain Shareholders of the Fund........................................... 8
Investment Advisory Services............................................... 9
Custodian.................................................................. 10
Auditors................................................................... 10
Determining the Price of Shares............................................ 10
Reduction of Class A Sales Charge.......................................... 10
Special Distribution Arrangements.......................................... 12
Distribution of Fund Shares................................................ 13
Performance Data........................................................... 14

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, 1997 AS AMENDED MAY 1, 1998 AND THE CLASS Y PROSPECTUS DATED DECEMBER 1,
1997 AS AMENDED MAY 1, 1998. THE PROSPECTUSES MAY BE OBTAINED FROM THE FUND.

THE FUND'S AUDITED FINANCIAL STATEMENTS ARE INCLUDED IN THE ANNUAL REPORT TO
SHAREHOLDERS DATED JULY 31, 1997. THE ANNUAL REPORT AND THE SEMI-ANNUAL REPORT
DATED JANUARY 31, 1998 ARE EXPRESSLY INCORPORATED HEREIN BY REFERENCE.

<PAGE>

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

2
<PAGE>

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.

NON-FUNDAMENTAL POLICIES. In addition to the foregoing restrictions,
the Fund is subject to certain other non-fundamental policies which 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.

3
<PAGE>

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.

4
<PAGE>

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.

The Fund may enter into "tri-party repurchase agreements" either
separately or on a joint basis. A tri-party repurchase agreement is an
agreement between the Fund, the seller, and a third-party bank. Both the Fund
and the seller have accounts with the third-party bank which facilitates the
exchange of cash and securities. Tri-party repurchase agreements are subject to
the same risks and the Fund follows the same procedures as apply to regular
repurchase agreements.

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, 1997, 1996 and 1995,
the Fund paid brokerage commissions of $3,616,808, $1,315,346 and $929,980,
respectively. Of this amount, xx%, xx% and xx%, respectively was paid to
brokers providing research services to the Fund.

5
<PAGE>

During the years ended December 31, 1997, 1996, and 1995 the Fund paid
brokerage commissions to Shelby Cullom Davis & Co. (an affiliated person of the
Adviser) of $xxx, $xxx and $xxx respectively. During the year ended December
31, 1997 these commission represented xx% of total commissions paid and xx% of
the Fund's aggregate dollar amount of transactions involving the payment of
commissions.

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 asterisk following the names of
Christopher C. Davis, Andrew A. 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 Company and each of the Davis Funds except Davis International Series,
Inc.; President, Bass & Associates (a financial consulting firm); formerly,
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 Company and each of the Davis Funds;
Director of the Van Eck Funds; Consultant to the Adviser. 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 Company 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.

EUGENE M. FEINBLATT (10/28/19), 233 East Redwood Street, Baltimore, MD 21202.
Director of the Company 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 Company 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
Company and each of the Davis Funds except Davis International Series, Inc.;
Chairman, PLX Technology, Inc. (a manufacturer of semi-conductor circuits);
Director, Intel Corp. (a 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 Company and each of the Davis Funds; Managing General
Partner, Avanti Partners, L.P.

LEROY E. HOFFBERGER (6/8/25), The Exchange - Suite 215, 1112 Kenilworth Drive,
Towson, MD 21204. Director of the Company 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).

6
<PAGE>

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 Company and each of the
Davis Funds except Davis International Series, Inc.; Partner, Bigham, Englar,
Jones and Houston (attorneys); United States Counsel to Aerolineas Argentina;
Director, various private companies.

CHRISTIAN R. SONNE (5/6/30), P.O. Box 777, Tuxedo Park, NY 10987. Director of
the Company 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
(a private investment fund) until 1990; formerly, Vice President of Goldman
Sachs & Company (investment banker).

SHELBY M.C. DAVIS (3/20/37), 4135 North Steers Head Road, Jackson Hole, WY
83001. President of the Fund and each of the Davis Funds; President of Selected
American Shares, Inc., Selected Special Shares, Inc. and Selected Capital
Preservation Trust; Director, Chairman and Chief Executive Officer, Venture
Advisers, Inc.; Director, Davis Selected Advisers-NY, Inc.; Employee of Capital
Ideas, Inc. (financial consulting firm); Consultant to Fiduciary Trust Company
International; Director, Shelby Cullom Davis Financial Consultants, Inc.

ANDREW A. DAVIS (6/25/63),* 124 East Marcy Street, Santa Fe, NM 87501. Director
and Vice President of the Company and each of the Davis Funds (except Davis
International Series, Inc.), Selected American Shares, Inc., Selected Special
Shares, Inc. and Selected Capital Preservation Trust; Director and President,
Venture Advisers, Inc.; Director and Vice President, Davis Selected
Advisers-NY, Inc.; Consultant to Shelby Cullom Davis & Co.; Consultant to
Capital Ideas, a private financial consultant. Former Vice President and head
of convertible security research, PaineWebber, Incorporated.

CHRISTOPHER C. DAVIS (7/13/65),* 609 Fifth Ave, New York, NY 10017. Director
and Vice President of the Company and each of the Davis Funds; Selected
American Shares, Inc., Selected Special Shares, Inc. and Selected Capital
Preservation Trust; Director, Vice Chairman, Venture Advisers, Inc.; Director,
Chairman, Chief Executive Officer, Davis Selected Advisers-NY, Inc.; Chairman
and Director, Shelby Cullom Davis Financial Consultants, Inc.; employee of
Shelby Cullom Davis & Co., a registered broker/dealer; Director, Rosenwald,
Roditi and Company, Ltd., an offshore investment management company.

KENNETH C. EICH (8/14/53), 124 East Marcy Street, Santa Fe, NM 87501. Vice
President of the Fund and each of the Davis Funds, Selected American Shares,
Inc., Selected Special Shares, Inc. and Selected Capital Preservation Trust;
Chief Operating Officer, Venture Advisers, Inc.; Vice President, Davis Selected
Advisers-NY, Inc.; President, Davis Distributors, L.L.C. Former President and
Chief Executive Officer of First of Michigan Corporation. Former Executive Vice
President and Chief Financial Officer of Oppenheimer Management Corporation.

CAROLYN H. SPOLIDORO (11/19/52), 124 East Marcy Street, Santa Fe, NM 87501.
Vice President of the Company and each of the Davis Funds; Vice President,
Venture Advisers, Inc.

EILEEN R. STREET (3/11/62), 124 East Marcy Street, Santa Fe, NM 87501. Vice
President, Treasurer and Assistant Secretary of the Company and each of the
Davis Funds, Selected American Shares, Inc., Selected Special Shares, Inc. and
Selected Capital Preservation Trust; Senior Vice President and Chief Financial
Officer, Venture Advisers, Inc.; Vice President, Treasurer, and Assistant
Secretary, Davis Selected Advisers-NY, Inc.; Senior Vice President, Treasurer,
and Assistant Secretary, Davis Distributors, L.L.C.

SHARRA L. REED (9/25/66), 124 East Marcy Street, Santa Fe NM 87501. Assistant
Treasurer and Assistant Secretary of the Company and each of the Davis Funds,
Selected American Shares, Inc., Selected Special Shares, Inc. and Selected
Capital Preservation Trust; Vice President of Venture Advisers, Inc. Former
Unit Manager with Investors Fiduciary Trust Company.

THOMAS D. TAYS (3/7/57), 124 East Marcy Street, Santa Fe NM 87501.Vice
President and Secretary of the Company and each of the Davis Funds, Selected
American Shares, Inc. Selected Special Shares, Inc. and Selected Capital
Preservation Trust. Vice President and Secretary, Venture Advisers, Inc., Davis
Selected Advisers-NY, Inc., and Davis Distributors, L.L.C. Former Vice
President and Special Counsel of U.S. Global Investors, Inc.

7
<PAGE>

SHELDON R. STEIN (11/29/28), 30 North LaSalle Street, Suite 2900, Chicago, IL
60602, Assistant Secretary of the Company and each of the Davis Funds, Selected
American Shares, Inc., Selected Special Shares, Inc. and Selected Capital
Preservation Trust; Partner D'Ancona & Pflaum, the Company's legal counsel.

ARTHUR DON (9/24/53), 30 North LaSalle Street, Suite 2900, Chicago, IL 60602,
Assistant Secretary of the Company and each of the Davis Funds, Selected
American Shares, Inc., Selected Special Shares, Inc. and Selected Capital
Preservation Trust; Partner D'Ancona & Pflaum, the Company's legal counsel.

The Company does not pay salaries to any of its officers. The Adviser
performs certain services on behalf of the Company and is reimbursed by the
Company for the costs of providing these services. See "Investment Advisory
Services."

DIRECTORS' COMPENSATION SCHEDULE

During the fiscal year ended July 31, 1997, 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 $8,125 $26,875
Marc P. Blum 7,950 26,100
Eugene M. Feinblatt 7,050 23,200
Jerry D. Geist 7,050 23,050
D. James Guzy 8,000 26,250
G. Bernard Hamilton 7,100 24,700
LeRoy E. Hoffberger 7,900 26,050
Laurence W. Levine 7,150 23,550
Christian R. Sonne 7,950 26,100
Edwin R. Werner 7,850 25,700

* 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 November 21, 1997 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 193,940,634.339
Class A shares outstanding and the directors and officers of the Fund, as a
group, owned 4,282,247.427 Class A shares, or approximately 2.21% of the Fund's
outstanding Class A shares. As of such date, there were 69,634,776.776 Class B
and 32,372,123.682 Class C shares outstanding. The directors and officers of
the Fund do not own or intend to own any Class B or Class C shares of the Fund.
As of such date, there were 29,291,592.649 Class Y shares outstanding and the
directors and officers of the Fund, as a group, owned 879,911.748 Class Y
shares, or approximately 3.00% of the Fund's outstanding Class Y shares. 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
- ---------------- ------------ -----------

CLASS A SHARES

<S> <C> <C>
Shelby Cullom Davis & Co. 12,419,849.913 6.40%
609 5th Avenue
New York, New York 10017-1021

Merrill Lynch Pierce Fenner & Smith 16,223,235.229 8.37%

8
<PAGE>

4800 Deerlake Drive East, 3rd Floor
Jacksonville, FL 32246-6484

Merrill Lynch Pierce Fenner & Smith 16,712,258.036 8.62%
FBO: Qualified Retirement Plans
265 Davidson Avenue, 4th Floor
Somerset, NJ 08873-4102

CLASS B SHARES

Merrill Lynch Pierce Fenner & Smith 23,051,170.099 33.10%
4800 Deerlake Drive East, 3rd Floor
Jacksonville, FL 32246-6484

CLASS C SHARES

Merrill Lynch Pierce Fenner & Smith 15,509,899.471 47.91%
4800 Deerlake Drive East, 3rd Floor
Jacksonville, FL 32246-6484

CLASS Y SHARES

Merrill Lynch Pierce Fenner & Smith 20,203,960.000 68.98%
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 daily 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% 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, 1997, 1996 and 1995 were
$22,385,196, $12,351,657 and $7,587,812, 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.

The reimbursable costs for certain accounting and administrative
services for the fiscal years ended July 31, 1997, 1996 and 1995 were $127,087,
$65,004 and $51,668, respectively. The reimbursable costs for qualifying the
Fund's shares for sale with state agencies for such periods were $13,169,
$12,000 and $9,336, respectively, and the reimbursable costs for providing
shareholder services for such periods were $151,226, $141,804 and $77,178,
respectively.

9
<PAGE>

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"), One Heritage Drive, North Quincy, Massachusetts
02171. 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 KPMG Peat Marwick, 707 17th St. Suite 2300, Denver,
Colorado 80202. 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, Martin Luther King, Jr. Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.

Certain brokers and certain designated intermediaries on their behalf
may accept purchase and redemption orders. The Fund will be deemed to have
received such an order when the broker or the designee has accepted the order.
Customer orders are priced at the net asset value next computed after such
acceptance. Such order may be transmitted to the Fund or its agents several
hours after the time of the acceptance and pricing.

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,

10
<PAGE>

(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 Fund
shares (including Class A, B and C shares of all Davis Funds, except Davis
Government Money Market Fund) 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.

11
<PAGE>

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 Davis High Income
Fund, Inc. 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, Class B
and Class C 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.

SPECIAL DISTRIBUTION ARRANGEMENTS

Class B shares of the Davis New York Venture Fund, Inc. are made
available to Retirement Plan Participants such as 401K or 403B Plans at NAV
with the waiver of contingent deferred sales charge (CDSC) if:

(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch
and, on the date the Plan sponsor signs the Merrill Lynch
Recordkeeping Service Agreement, the Plan has less than $3 million in
assets invested in broker/dealer funds not advised or managed by
Merrill Lynch Asset Management, L.P. ("MLAM") that are made available
pursuant to a Services Agreement between Merrill Lynch and the fund's
principal underwriter or distributor and in funds advised or managed
by MLAM (collectively, the "Applicable Investments"); or

(ii) the Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract o alliance
arrangement with Merrill Lynch, and on the date the Plan Sponsor signs
the Merrill Lynch Recordkeeping Service Agreement, the Plan has less
than $3 million in assets, excluding money market funds, invested in
Applicable Investments; or

(iii) the Plan has less than 500 eligible employees, as determined by the
Merrill Lynch plan conversion manager, on the date the Plan Sponsor
signs the Merrill Lynch Recordkeeping Service Agreement.

Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing
in Class B shares of the Davis mutual funds convert to Class A shares once the
Plan has reached $5 million invested in Applicable Investments. The Plan will
receive a Plan level share

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conversion. The Fund may make similar exceptions for other financial
institutions sponsoring or administering similar benefit plans.

Under a program with Prudential Bache Securities, Inc. ("PruArray"),
the Distributor will not advance a 1% commission at the time of purchase, no
CDSC is assessed and the 12b-1 fee is paid directly to PruArray. Class C shares
of the Davis New York Venture Fund, Inc. are made available to PruArray
Retirement Plan Participants, such as 401(k) Plans, at NAV with the waiver of
contingent deferred sales charge (CDSC).

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DISTRIBUTION OF FUND SHARES

Davis Distributors, LLC, ("the Distributor"), acts as principal
underwriter of the Fund's shares on a continuing basis pursuant to a
Distributing Agreement. Pursuant to the 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, 1997, 1996 and 1995, the
Distributor or 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 $16,907,761, $11,092,007 and $5,230,889, respectively. Of this
amount, the Adviser or Distributor paid concessions to dealers of $14,249,725,
$9,343,681 and $4,404,100, 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.

KRC Investment Advisers, LLC ("KRC"), a registered investment adviser
owned and managed by members of the immediate and extended family of LeRoy E.
Hoffberger, a Director of the Company, has entered into a service agreement
(the "Services Agreement") with Davis Distributors, LLC (the "Distributor"),
which provides for payments to KRC under the Fund's Rule 12b-1 plan. Under the
Services Agreement, KRC will provide shareholder maintenance services to
clients in respect of shares of the Fund and the Distributor will pay KRC a fee
at the annual rate of 0.25% of average net assets of the accounts of clients
maintained and serviced by KRC. Payments made by the Distributor under the
Services Agreement will be reimbursed by the Fund under its Rule 12b-1 Plan. It
is expected that fees paid to KRC will be approximately $300,000 for fiscal
year ending 1998. Those payments will be made in connection with shareholder
maintenance services provided by that investment adviser to its clients that
are shareholders on the Fund which include, among others, Mr. Hoffberger and
members of his immediate and extended family and trusts of which they are
beneficiaries or trustees. The cost of these services and advisory services
provided by KRC are borne by the clients. Mr. Hoffberger does not have any
ownership interest in or otherwise have any control of KRC.

During the fiscal years ended July 31, 1997, 1996 and 1995, the
Distributor or the Adviser, in its capacity as distributor, received
$5,705,119, $2,614,412 and $1,514,686 under the Class A Distribution Plan,
$6,131,202, $1,561,856 and $94,221, under the Class B Distribution Plan and
$2,868,760, $570,693 and $20,342 under the Class C Distribution Plan. All of
these amounts were paid to dealers and sales personnel.

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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, 1997...................... 50.33%
Five years ended July 31, 1997.................... 22.46%
Ten years ended July 31, 1997..................... 17.94%

The average annual total return with respect to the Fund's Class B
shares for the one year ended July 31, 1997 and for the period beginning
December 1, 1994 and ended July 31, 1997 (life of class) were 53.47% and
36.48%, respectively. The average annual total return with respect to the
Fund's Class C shares for the year ended July 31, 1997 and for the period
beginning December 20, 1994 and ended July 31, 1997 (life of class) were 56.59%
and 36.84%, respectively. The average annual total return with respect to the
Fund's Class Y shares for the period beginning October 2, 1996 and ended July
31, 1997 (life of class) was 56.31%.

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 the 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, 1997...................... 50.33%
Five years ended July 31, 1997.................... 175.59%
Ten years ended July 31, 1997..................... 421.36%

The total return with respect to the Fund's Class B shares for the
year ended July 31, 1997 and for the period beginning December 1, 1994 and
ended July 31, 1997 (life of class) were 53.47% and 129.10%, respectively. The
total return with respect to the Fund's Class C shares for the year ended July
31, 1997 and for the period beginning December 20, 1994 and ended July 31, 1997
(life of class) were 56.59% and 127.01%, respectively. The

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<PAGE>

total return with respect to the Fund's Class Y shares for the period beginning
October 2, 1996 and ended July 31, 1997 (life of class) was 44.71%.

In advertising and sales literature the Fund may publish various
statistics describing its investment portfolio such as the Fund's average Price
to Book and Price to Earnings ratios, beta, alpha, R-squared, standard
deviation, etc.

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.

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DAVIS NEW YORK VENTURE FUND

RULE 497(e) "STICKER"

TO BE EFFECTIVE MAY 1, 1998

Ladies and Gentlemen:

Transmitted herewith pursuant to Rule 497 (j) under the Securities Act
of 1933 is a Rule 497 sticker. The Prospectuses and Statement of Additional
Information have been modified to reflect (1) the naming of a co-portfolio
manager; (2) immaterial changes to the "shareholder manual" and (3) correct
typographical errors.

Dated April 30, 1998
Very truly yours,

By: /s/ Thomas Tays
---------------------------
Thomas Tays
Secretary