DAVIS NEW YORK VENTURE FUND INC, 485APOS, 1998-09-29

DAVIS NEW YORK VENTURE FUND INC
485APOS, 1998-09-29

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
REGISTRATION NO. 2-29858
POST-EFFECTIVE AMENDMENT NO. 58

AND

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-1701
AMENDMENT NO. 33

DAVIS NEW YORK VENTURE FUND, INC.

124 East Marcy Street
Santa Fe, New Mexico 87501
(1-505-820-3000)

Agents For Service: Thomas D. Tays, Esq.
Davis Selected Advisers, L.P.
124 East Marcy Street
Santa Fe, New Mexico 87501
1-505-820-3055

-or-

Sheldon R. Stein, Esq.
D'Ancona & Pflaum
30 North LaSalle Street
Suite 2900
Chicago, Illinois 60602
(1-312-580-2014)

It is proposed that this filing will become effective:

Immediately upon filing pursuant to paragraph (b)
------
On , pursuant to paragraph (b)
------
60 days after filing pursuant to paragraph (a)(1)
------
X On December 1, 1998, pursuant to paragraph (a) of Rule 485
------
75 days after filing pursuant to paragraph (a)(2)
------
On , pursuant to paragraph (a)(2) of Rule 485
------

<PAGE>

Title of Securities being Registered: Common Stock of:

(1) DAVIS NEW YORK VENTURE FUND
(2) DAVIS GROWTH & INCOME FUND

FORM N-1A
DAVIS GROWTH & INCOME FUND
AN AUTHORIZED PORTFOLIO OF
DAVIS NEW YORK VENTURE FUND, INC.
CLASS A, CLASS B AND CLASS C SHARES

POST-EFFECTIVE AMENDMENT NO. 58 TO REGISTRATION
STATEMENT NO. 2-29858 UNDER THE SECURITIES ACT OF 1933
AND AMENDMENT NO. 33 UNDER THE INVESTMENT COMPANY ACT
OF 1940 TO REGISTRATION STATEMENT NO. 811-1701.

CROSS REFERENCE SHEET

N-1A
ITEM NO. PART A CAPTION OR PLACEMENT: PROSPECTUS FOR CLASS ABC SHARES
- -------- -------------------------------------------------------------
(Both Davis New York Venture Fund and Davis Growth & Income
Fund prospectuses are organized in the same manner.)

1 Front and Back Cover pages
2, 4 Risk Spectrum;
Overview of the Fund:
Investment Objective and Strategy
Principal Risks
Fund Performance
3 Overview of the Fund: Fees and Expenses
5 1998 Annual Report
6. Who is Responsible for Your Davis Account
7. Once You Invest in the Fund
How to Open an Account
How to Buy, Sell and Exchange Shares
8 How to Choose a Share Class
9 Overview of the Fund: Financial Highlights

N-1A
ITEM NO. PART A CAPTION OR PLACEMENT: PROSPECTUS FOR CLASS Y SHARES
- -------- -----------------------------------------------------------
(Both Davis New York Venture Fund and Davis Growth & Income Fund
prospectuses are organized in the same manner.)

1 Front and Back Cover pages
2, 4 Risk Spectrum;

<PAGE>

Overview of the Fund:
Investment Objective and Strategy
Principal Risks
Fund Performance
3 Overview of the Fund: Fees and Expenses
5 1998 Annual Report
6 Who is Responsible for Your Davis Account
7 Once You Invest in the Fund
How to Open an Account
How to Buy, Sell and Exchange Shares
8 Not Applicable
9 Overview of the Fund: Financial Highlights

N-1A PART B CAPTION OR PLACEMENT:
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
- -------- -----------------------------------
(a single SAI covers both Davis New York Venture Fund and Davis
Growth & Income Fund. The single SAI covers Class A, B, C and Y
shares)

10 Cover Page
11 Organization of the Company
12 Portfolio Securities
Other Investment Practices
Investment Restrictions
13 Directors and Officers
Directors Compensation Table
14 Certain Shareholders of the Fund
15 Investment Advisory Services
Distribution of Company Shares
Other Important Service Providers
16 Portfolio Transactions
17 Organization of the Company
18 Purchase of Shares
Telephone Privilege
Exchange of Shares
Redemption of Shares
19 Federal Income Taxes
20 Distribution of Company Shares
21 Performance Data
22 Annual Report Incorporated by Reference

<PAGE>

[COVER PAGE]

DAVIS NEW YORK VENTURE FUND

Prospectus and Application Form

Class A
Class B
Class C

December 1, 1998

The Securities and Exchange Commission has not approved or disapproved of the
shares of Davis New York Venture Fund-or any other mutual fund-as an
investment. The Securities and Exchange Commission has not determined whether
this prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.

(Davis logo)

Over 25 years of Reliable Investing

1
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[INSIDE FRONT COVER]

RISK SPECTRUM

Davis Selected Advisers manages eleven mutual funds in the Davis family. Each
fund has a distinct investment objective and strategy. The following graph
shows how these funds compare to each other in terms of risk. Davis New York
Venture Fund has a risk level we characterize as "medium to high."

[INSERT RISK SPECTRUM GRAPHIC]

[IN BLACK AREA BELOW GRAPHIC]
For more information about any of the other Davis Funds, including charges and
expenses, ask for a prospectus. Read it carefully before investing or sending
money.

2
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TABLE OF CONTENTS

SNAPSHOT OF DAVIS NEW YORK VENTURE FUND

OVERVIEW OF THE FUND
INVESTMENT OBJECTIVE AND STRATEGY
PRINCIPAL RISKS
FUND PERFORMANCE
FEES AND EXPENSES
FINANCIAL HIGHLIGHTS

WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT

HOW WE MANAGE THE FUND

ONCE YOU INVEST IN THE FUND

HOW TO CHOOSE A SHARE CLASS

HOW TO OPEN AN ACCOUNT

HOW TO BUY, SELL AND EXCHANGE SHARES

THE DAVIS FUNDS: OVER 25 YEARS OF RELIABLE INVESTING

OTHER FUND DOCUMENTS

3
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SNAPSHOT OF DAVIS NEW YORK VENTURE FUND

This section provides you with basic information about Davis New York Venture
Fund that can help you decide if the Fund suits your needs.

(graphic)
TYPE OF FUND
Equity fund

INVESTMENT OBJECTIVE
Growth of capital

RISK SPECTRUM LEVEL
Medium to high

YOU SHOULD CONSIDER INVESTING IN THIS FUND IF you are seeking long-term
o growth of capital.
o you are more comfortable with established, well-known companies.
o you are investing for the long-term (five years or more).

YOU SHOULD NOT INVEST IN THIS FUND IF
o you are worried about the possibility of sharp price swings and dramatic
market declines.
o you are interested in earning current income.
o you are investing for the short-term (less than five years).

MINIMUM INITIAL INVESTMENT
$1,000 for a non-retirement plan account.
$250 for retirement plans.

If, after reading this section, you think that the Fund may suit your
investment goals, you should read the rest of this prospectus for more detailed
information.

4
<PAGE>

OVERVIEW OF DAVIS NEW YORK VENTURE FUND

INVESTMENT OBJECTIVE AND STRATEGY

Davis New York Venture Fund's investment objective is growth of capital. The
Fund invests primarily in equity securities of U.S. companies with market
capitalizations of at least $5 billion.

Our portfolio managers use the Davis investment philosophy to select common
stocks of quality overlooked growth companies at value prices and to hold them
for the long-term. Our approach centers on the recognition that managing risk
is the key to delivering superior long-term investment results. We always
consider how much could potentially be lost on an investment before considering
how much might be gained.

[SIDEBAR: ]
Please see the inside back cover page of this prospectus to learn about the
Davis investment philosophy.

You can find more detailed information about the types of securities that the
Fund buys in the section called HOW WE MANAGE THE FUND.

PRINCIPAL RISKS

If you buy shares of Davis New York Venture Fund, you may lose some or all of
the money that you invest. This section describes what we think are the two
most significant factors that can cause the Fund's performance to suffer.

o MARKET RISK. The market value of shares of common stock can change
rapidly and unpredictably as a result of political or economic events
having little or nothing to do with the issuer.

o COMPANY RISK. The price of an equity security varies with the success and
failure of its issuer. As a result, the success of the companies in which
the Fund invests largely determines the Fund's performance. Investing in
small capitalization companies carries greater risk than investing in the
stock of larger companies.

An investment in Davis New York Venture Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

5
<PAGE>

You can find more detailed information about the risks of the Fund's particular
investments in the section called HOW WE MANAGE THE FUND.

FUND PERFORMANCE

Davis New York Venture Fund began selling shares to the public on February 17,
1969. The following charts and tables will help you understand the Fund's
financial condition--including the returns that investors have earned and the
cost of an investment. These historical results do not necessarily indicate the
performance that investors can expect in the future. The value of the Fund's
shares may go up or down.

TOTAL RETURN

Total return measures how much the price of an investment in a mutual fund
changes, assuming that all dividend income and capital gain distributions are
reinvested. For any fund, you should evaluate total return in light of the
fund's particular investment objectives and policies, as well as general market
conditions during the reported time periods.

Davis New York Venture Fund's investment performance will vary from year to
year. This chart shows the results that we achieved in the Fund's Class A
shares from year to year over the last ten-year period.

6
<PAGE>

DAVIS NEW YORK VENTURE FUND
TOTAL RETURN OVER THE LAST 10-YEAR PERIOD

1988 21.38%
1989 34.63%
1990 (2.90%)
1991 40.55%
1992 12.18%
1993 16.09%
1994 (1.93%)
1995 40.56%
1996 26.54%
1997 33.68%

Davis New York Venture Fund's year-to-date return as of July 31, 1998, was
8.87%. During the ten-year period shown in the chart, the highest quarterly
return was 16.10% (for the quarter ended June 30, 1997) and the lowest
quarterly return was (12.15)% (for the quarter ended September 30, 1990).

The chart does not reflect any sales charges. Total return would have been less
if it reflected those charges. The return for the other classes of shares
offered by this prospectus will differ from the Class A returns shown in the
chart, depending on the expenses of that class.

7
<PAGE>

AVERAGE ANNUAL TOTAL RETURN

The tables below show Davis New York Venture Fund's average annual returns for
the following periods: Life, fifteen years, ten years, five years, and one
year. It also compares these returns to those earned during the same periods
for the Standard & Poor's 500 Composite Index, an unmanaged benchmark of the
total return performance of large capitalization stocks. The Fund invests
primarily in large capitalization common stocks, but may also buy smaller
capitalization stocks and foreign securities.

DAVIS NEW YORK VENTURE FUND
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIODS ENDING JULY 31, 1998)
WITHOUT MAXIMUM SALES CHARGE

- -------------- ------------- ------------- ------------- ------------- ------------- -------------
CLASS A S&P 500 CLASS B S&P 500 CLASS C S&P 500
(since Index (since Index (since Index
2/17/69) 12/1/94) 12/20/94)
- -------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Life of Fund 15.07% 12.75% 29.21% 30.62% 28.91% 30.76%
- -------------- ------------- ------------- ------------- ------------- ------------- -------------
15 Years 18.59% 17.34% NA NA NA NA
- -------------- ------------- ------------- ------------- ------------- ------------- -------------
10 Years 20.18% 18.43% NA NA NA NA
- -------------- ------------- ------------- ------------- ------------- ------------- -------------
5 Years 21.73% 22.86% NA NA NA NA
- -------------- ------------- ------------- ------------- ------------- ------------- -------------
1 Year 11.16% 19.28% 10.22% 19.28% 10.27% 19.28%
- -------------- ------------- ------------- ------------- ------------- ------------- -------------

DAVIS NEW YORK VENTURE FUND
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIODS ENDING JULY 31, 1998)
WITH MAXIMUM SALES CHARGE

- --------------- ------------- ------------- ------------- ------------- ------------- -------------
CLASS A S&P 500 CLASS B S&P 500 CLASS C S&P 500
(since Index (since Index (since Index
2/17/69) 12/1/94) 12/20/94)
- --------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Life of Fund 14.88% 12.75% 28.93% 30.62% 28.91% 30.76%
- --------------- ------------- ------------- ------------- ------------- ------------- -------------
15 Years 18.21% 17.34% NA NA NA NA
- --------------- ------------- ------------- ------------- ------------- ------------- -------------
10 Years 19.59% 18.43% NA NA NA NA
- --------------- ------------- ------------- ------------- ------------- ------------- -------------
5 Years 20.55% 22.86% NA NA NA NA
- --------------- ------------- ------------- ------------- ------------- ------------- -------------
1 Year 5.88% 19.28% 7.22% 19.28% 10.27% 19.28%
- --------------- ------------- ------------- ------------- ------------- ------------- -------------
</TABLE>

"Standard & Poor's 500," "S&P 500(R)" "S&P(R)" and "500" are registered
trademarks of The McGraw-Hill Companies, Inc.

8
<PAGE>

FEES AND EXPENSES

FRONT-END SALES CHARGE. A fee you may pay when you buy shares of a mutual fund.
As an investor in the Fund, you pay this sales charge when you buy Class A
shares, as a percentage of the offering price.

DEFERRED SALES CHARGE. A fee you may pay when you sell shares of a mutual fund.
As an investor in the Fund, you may pay a deferred sales charge as a percentage
of the net asset value of the shares you sell or the total cost of the shares,
whichever is lower. Fund investors pay a deferred sales charge in the following
cases:

o As a Class A shareholder, only if you buy shares valued at $1 million or more
without a sales charge and sell the shares within one year of purchase.
o As a Class B shareholder, if you sell shares within six years of purchase.
o As a Class C shareholder, if you sell shares within one year of purchase.

To keep deferred sales charges as low as possible, we will first sell shares in
your account that are not subject to deferred sales charges (if any). We do not
impose a deferred sales charge on shares acquired through dividend
reinvestments or capital gain distributions.

EXCHANGE FEES. The fees some mutual funds charge to sell shares in one fund and
to buy another fund. This Fund, like all other Davis Funds, does not charge an
exchange fee.

MANAGEMENT FEES. Costs to manage a mutual fund's portfolio and to administer
its business affairs. This fee is a percentage of the Fund's net asset value.

DISTRIBUTION FEES. Fees the Fund pays to sell and distribute shares and to
provide services to shareholders (also known as a 12b-1 fee). These fees are
paid out of the Fund's net assets on an ongoing basis. See "About the
Distributor" in the section WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT.

OTHER EXPENSES. The most significant fees in this category are those to
attorneys, accountants, directors, and the custodian and transfer agent (State
Street Bank and Trust Company).

TOTAL ANNUAL OPERATING EXPENSES. The percentage of the Fund's average net
assets that are used each year to pay expenses (also known as the expense
ratio).

9
<PAGE>

FEES YOU MAY PAY AS A DAVIS NEW YORK VENTURE FUND SHAREHOLDER
(PAID DIRECTLY FROM YOUR INVESTMENT)

- -------------------------------------------------------------- ---------------- ----------------- ----------------
CLASS A CLASS B CLASS C
- -------------------------------------------------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
Maximum sales charge you pay when you buy shares 4.75% None None
- -------------------------------------------------------------- ---------------- ----------------- ----------------
Maximum deferred sales charge you pay when you sell shares 0.75% 4.00% 1.00%
- -------------------------------------------------------------- ---------------- ----------------- ----------------
Maximum sales charge you pay on reinvested dividends None None None
- -------------------------------------------------------------- ---------------- ----------------- ----------------
Exchange Fee None None None
- -------------------------------------------------------------- ---------------- ----------------- ----------------

ANNUAL FUND OPERATING EXPENSES
FOR FISCAL YEAR ENDED JULY 31, 1998
(DEDUCTED FROM DAVIS NEW YORK VENTURE FUND'S ASSETS)

- -------------------------------------------------------------- ---------------- ----------------- ----------------
CLASS A CLASS B CLASS C
- -------------------------------------------------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
Management Fees 0.54% 0.54% 0.54%
- -------------------------------------------------------------- ---------------- ----------------- ----------------
Distribution (12b-1) Fees 0.23% 1.00% 1.00%
- -------------------------------------------------------------- ---------------- ----------------- ----------------
Other Expenses 0.14% 0.25% 0.17%
----- ----- -----
- -------------------------------------------------------------- ---------------- ----------------- ----------------
Total Annual Operating Expenses 0.91% 1.79% 1.71%
- -------------------------------------------------------------- ---------------- ----------------- ----------------

</TABLE>

10
<PAGE>

IF I INVEST IN THIS FUND, WHAT WILL IT COST ME?

Here is an example of what your costs might be if you invest in Davis New York
Venture Fund. It is designed to help you compare investing costs with other
mutual funds.

This example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. It also
assumes that your investment has a 5% return each year and that the Fund's
operating expenses remain the same.

COST OF INVESTING $10,000 IN DAVIS NEW YORK VENTURE FUND

The top chart assumes that you sell your shares at various times--based on
these assumptions--would be:

- ------------------------------ -------------------------- -------------------------- --------------------------
IF YOU SELL YOUR SHARES IN... CLASS A CLASS B CLASS C
- ------------------------------ -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
1 Year $56 $58 $27
- ------------------------------ -------------------------- -------------------------- --------------------------
3 Years $75 $86 $54
- ------------------------------ -------------------------- -------------------------- --------------------------
5 Years $95 $117 $93
- ------------------------------ -------------------------- -------------------------- --------------------------
10 Years $154 $176 $202
- ------------------------------ -------------------------- -------------------------- --------------------------

- ------------------------------ -------------------------- -------------------------- --------------------------
IF YOU STILL HOLD YOUR CLASS A CLASS B CLASS C
SHARES AFTER...
- ------------------------------ -------------------------- -------------------------- --------------------------
<C> <C> <C> <C>
1 Year $56 $18 $17
- ------------------------------ -------------------------- -------------------------- --------------------------
3 Years $75 $56 $54
- ------------------------------ -------------------------- -------------------------- --------------------------
5 Years $95 $97 $93
- ------------------------------ -------------------------- -------------------------- --------------------------
10 Years $154 $176 $202
- ------------------------------ -------------------------- -------------------------- --------------------------

</TABLE>

11
<PAGE>

FINANCIAL HIGHLIGHTS

This table is designed to show you the financial performance of Davis New York
Venture Fund for the past five years. Some of the information reflects
financial results for a single Fund share. The total returns represent the rate
that an investor would have earned (or lost) money on an investment in the
Fund. It assumes that all dividends and capital gains have been reinvested.

KPMG Peat Marwick LLP has audited the information for fiscal year 1998. KPMG
Peat Marwick's report, along with the Fund's financial statements, is included
in the annual report, which is available by request. Another firm audited the
information for the previous fiscal years.

12
<PAGE>

DAVIS NEW YORK VENTURE FUND
FINANCIAL HIGHLIGHTS
CLASS A

Financial Highlights for a share of capital stock outstanding throughout each
period.

- ------------------------------------------------- -------------------------------------------------------------
YEAR ENDED JULY 31
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
1998 1997 1996 1995 1994
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $22.91 $15.24 $14.56 $12.04 $12.08

- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Income From Investment Operations
- ---------------------------------
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Net Investment Income .20 .18 .20 .14 .16
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Net Realized and Unrealized Gains 2.26 8.37 1.64 2.95 .54
---- ---- ---- ---- ----
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Total from Investment Operations 2.46 8.55 1.84 3.09 .70

- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Dividends and Distributions
- ---------------------------
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Dividends from Net Investment Income (.23) (.18) (.15) (.12) (.16)
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Distributions from Realized Gains (.83) (.70) (1.01) (.45) (.58)
----- ----- ------ ----- -----
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Total Dividends and Distributions (1.06) (.88) (1.16) (.57) (.74)
------ ----- ------ ----- -----

- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Net Asset Value, End of Period $24.31 $22.91 $15.24 $14.56 $12.04
------ ------ ------ ------ ------

- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Total Return(1) 11.16% 57.83% 13.04% 27.21% 5.99%
- ------------
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Ratios/Supplemental Data
- ------------------------
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Net Assets, End of Period (000,000 omitted) $6,458 $4,055 $2,151 $1,595 $1,077

- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Ratio of Expenses to Average Net Assets .91% .89% .87% .90% .87%
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Ratio of Net Investment Income to Average .80% .98% 1.30% 1.11% 1.19%
Net Assets
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------
Portfolio Turnover Rate(2) 11% 24% 19% 15% 13%
- ------------------------------------------------- ------------ ----------- ----------- ------------ -----------

</TABLE>

(1) Assumes hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns.

(2) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.

13
<PAGE>

DAVIS NEW YORK VENTURE FUND
FINANCIAL HIGHLIGHTS
CLASS B

Financial Highlights for a share of capital stock outstanding throughout each
period.

- ------------------------------------------------- ----------------------------------------- --------------
DECEMBER 1,
1994
YEAR ENDED JULY 31 (INCEPTION
- ------------------------------------------------- ------------- ------------- ------------- OF CLASS
1998 1997 1996 THROUGH
---- ---- ---- 7/31/95)
- ------------------------------------------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $22.64 $15.08 $14.43 $10.88

- ------------------------------------------------- ------------- ------------- ------------- --------------
Income From Investment Operations
- ---------------------------------
- ------------------------------------------------- ------------- ------------- ------------- --------------
Net Investment Income (Loss) .01 .01 .04 (.01)
- ------------------------------------------------- ------------- ------------- ------------- --------------
Net Realized and Unrealized Gains 2.23 8.29 1.62 3.56
---- ----- ---- ----
- ------------------------------------------------- ------------- ------------- ------------- --------------
Total from Investment Operations 2.24 8.30 1.66 3.55

- ------------------------------------------------- ------------- ------------- ------------- --------------
Dividends and Distributions
- ---------------------------
- ------------------------------------------------- ------------- ------------- ------------- --------------
Dividends from Net Investment Income (.05) (.04) -- --
- ------------------------------------------------- ------------- ------------- ------------- --------------
Distributions from Realized Gains (.83) (.70) (1.01) --
----- ----- ------ --
- ------------------------------------------------- ------------- ------------- ------------- --------------
Total Dividends and Distributions (.88) (.74) (1.01) --
----- ----- ------

- ------------------------------------------------- ------------- ------------- ------------- --------------
Net Asset Value, End of Period $24.00 $22.64 $15.08 $14.43
------ ------ ------ ------

- ------------------------------------------------- ------------- ------------- ------------- --------------
Total Return (1) 10.22% 56.47% 11.81% 32.63%
- -------------
- ------------------------------------------------- ------------- ------------- ------------- --------------
Ratios/Supplemental Data
- ------------------------
- ------------------------------------------------- ------------- ------------- ------------- --------------
Net Assets, End of Period (000,000 omitted) $3,123 $1,196 $289 $40

- ------------------------------------------------- ------------- ------------- ------------- --------------
Ratio of Expenses to Average Net Assets 1.79% 1.79%(2) 1.73% 1.78%*
- ------------------------------------------------- ------------- ------------- ------------- --------------
Ratio of Net Investment Income to Average (.08)% .07% .44% .23%*
Net Assets
- ------------------------------------------------- ------------- ------------- ------------- --------------
Portfolio Turnover Rate(3) 11% 24% 19% 15%
- ------------------------------------------------- ------------- ------------- ------------- --------------

</TABLE>

(2) Ratio of expenses to average net assets after the reduction of custodian
fees under a custodian agreement was 1.78% for 1997. Prior to 1996, such
reductions were reflected in the expense ratios.

(3) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.

* Annualized.

14
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DAVIS NEW YORK VENTURE FUND
FINANCIAL HIGHLIGHTS
CLASS C

Financial Highlights for a share of capital stock outstanding throughout each
period.

- ------------------------------------------------- ----------------------------------------- --------------
DECEMBER 20,
1994
YEAR ENDED JULY 31 (INCEPTION
- ------------------------------------------------- ----------------------------------------- OF CLASS)
1998 1997 1996 THROUGH
---- ---- ---- 7/31/95
- ------------------------------------------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $22.72 $15.12 $14.47 $11.16

- ------------------------------------------------- ------------- ------------- ------------- --------------
Income From Investment Operations
- ---------------------------------
- ------------------------------------------------- ------------- ------------- ------------- --------------
Net Investment Income (Loss) .02 .02 .04 (.01)
- ------------------------------------------------- ------------- ------------- ------------- --------------
Net Realized and Unrealized Gains 2.24 8.32 1.62 3.32
---- ----- ---- ----
- ------------------------------------------------- ------------- ------------- ------------- --------------
Total from Investment Operations 2.26 8.34 1.66 3.31

- ------------------------------------------------- ------------- ------------- ------------- --------------
Dividends and Distributions
- ---------------------------
- ------------------------------------------------- ------------- ------------- ------------- --------------
Dividends from Net Investment Income (.06) (.04) -- --
- ------------------------------------------------- ------------- ------------- ------------- --------------
Distributions from Realized Gains (.83) (.70) (1.01) --
----- ----- ------ --
- ------------------------------------------------- ------------- ------------- ------------- --------------
Total Dividends and Distributions (.89) (.74) (1.01) --
----- ----- ------

- ------------------------------------------------- ------------- ------------- ------------- --------------
Net Asset Value, End of Period $24.09 $22.72 $15.12 $14.47
------ ------ ------ ------

- ------------------------------------------------- ------------- ------------- ------------- --------------
Total Return (1) 10.27% 56.59% 11.78% 29.66%
- -------------
- ------------------------------------------------- ------------- ------------- ------------- --------------
Ratios/Supplemental Data
- ------------------------------------------------- ------------- ------------- ------------- --------------
Net Assets, End of Period (000,000 omitted) $1,391 $573 $117 $12

- ------------------------------------------------- ------------- ------------- ------------- --------------
Ratio of Expenses to Average Net Assets 1.71% 1.73% 1.73% 1.78%*
- ------------------------------------------------- ------------- ------------- ------------- --------------
Ratio of Net Investment Income to Average 0.00% .13% .44% .23%*
Net Assets
- ------------------------------------------------- ------------- ------------- ------------- --------------
Portfolio Turnover Rate(2) 11% 24% 19% 15%
- ------------------------------------------------- ------------- ------------- ------------- --------------

</TABLE>

* Annualized.

15
<PAGE>

WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT

A number of entities provide services to Davis New York Venture Fund. This
section shows how the Fund is organized, the entities that perform these
services, and how these entities are compensated. Additional information on the
organization of the Fund is provided in the Fund's Statement of Additional
Information. For information on how to receive this document, see the back
cover of this prospectus.

INVESTMENT ADVISER

DAVIS SELECTED ADVISERS, LP
Referred to throughout this prospectus as "Davis Selected Advisers"
124 East Marcy Street
Santa Fe, NM 87501
o Provides investment advice for Davis New York Venture Fund's portfolio.
o Manages Davis New York Venture Fund's business affairs.
o Provides day-to-day administrative services.
o Serves as investment adviser for all of the Davis Funds, other mutual funds,
and other institutional clients.
o Annual Adviser Fee for fiscal year July 31, 1998 (based on average net
assets): 0.54%

INVESTMENT SUB-ADVISER

DAVIS SELECTED ADVISERS-NY, INC.
Referred to throughout this prospectus as "Davis Selected Advisers-NY"
609 Fifth Avenue
New York, NY 10017
o Performs investment management and research services for Davis New York
Venture Fund and other institutional clients.
o Wholly owned subsidiary of Davis Selected Advisers.
o Annual Fee: Davis Selected Advisers pays the fee, not the Fund.

16
<PAGE>

CUSTODIAN AND TRANSFER AGENT

STATE STREET BANK AND TRUST COMPANY
Also referred to as "State Street Bank and Trust"
P.O. Box 8406
Boston, MA 02266-8406
o Prices the Fund daily.
o Holds share certificates and other assets of the Fund.
o Maintains records of shareholders.
o Issues and cancels share certificates.
o Supervises the payment of dividends.

BOARD OF DIRECTORS

The Fund's Board of Directors has general supervisory responsibilities of the
Fund and supervises the investment adviser's duties.

DISTRIBUTOR

DAVIS DISTRIBUTORS, LLC
Referred to throughout this prospectus as "Davis Distributors"
124 East Marcy Street
Santa Fe, NM 87501
o Oversees purchases of shares and promotional activities for Davis New York
Venture Fund.
o Wholly owned subsidiary of Davis Selected Advisers.
o Serves as distributor for all of the Davis Funds and other mutual funds
managed by Davis Selected Advisers.

17
<PAGE>

[SET OFF]
ABOUT THE DISTRIBUTOR

Many mutual funds, including Davis New York Venture Fund, have adopted plans
under Rule 12b-1 of the Investment Company Act of 1940--the key law that
regulates mutual funds--which allows the fund to charge a fee to cover
promotional costs. Under this rule, the Fund is allowed to reimburse Davis
Distributors for its expenses for all three classes of shares. This fee
includes costs for sales and marketing activities.

Distribution fees for Class A shares are limited to an annual rate of 0.25% of
the average daily net asset value of the Fund's Class A shares. Distribution
fees for Class B and Class C shares-primarily to compensate dealers for selling
the shares-are limited to an annual rate of 1% of the average daily net asset
value of Class B and C shares.

Davis Distributors also uses part of the fee for all three share classes to
compensate brokers for providing account services to shareholders, including
maintaining shareholder accounts, answering shareholder inquiries and providing
other personal services to shareholders.

Distribution fees may also be used to reimburse Davis Distributors for specific
expenses incurred to market the Fund if these expenses exceed the portion of
the sales load that Davis Distributors retains.

Long-term shareholders of mutual funds that pay distribution fees may pay more
than the maximum front-end sales charge allowed by the National Association of
Securities Dealers.

18
<PAGE>

WHO THE PORTFOLIO MANAGERS ARE

SHELBY M.C. DAVIS
Responsibilities:
o Chief Investment Officer of Davis Selected Advisers.
o President of all the Davis Funds.

Other Experience:
o Served as Davis New York Venture Fund's Portfolio Manager from its
inception in 1969 until February 1997.
o Served as Portfolio Manager of a growth and income fund managed by Davis
Selected Advisers from May 1993 until February 1997.

CHRISTOPHER C. DAVIS
Responsibilities:
o Vice President of Davis New York Venture Fund.
o Co-Portfolio Manager of the Fund with Kenneth Charles Feinberg since May 1998.
o Also manages or co-manages other equity funds advised by Davis
Selected Advisers.

Other Experience:
o Portfolio Manager of Davis New York Venture Fund from February 1997 to
April 1998.
o Co-Portfolio Manager of Davis New York Venture Fund with Shelby M.C.
Davis from October 1995 to February 1997.
o Assistant portfolio manager and research analyst working with Shelby M.C.
Davis from September 1989 to September 1995.

KENNETH CHARLES FEINBERG
Responsibilities:
o Co-Portfolio Manager of Davis New York Venture Fund since May 1998.
o Also co-manages other equity funds advised by Davis Selected Advisers.

Other Experience:
o Research analyst at Davis Selected Advisers since December 1994.
o Assistant Vice President of Investor Relations for Continental Corp. from
1988 to 1994.

[BOXED]
OUR CODE OF ETHICS

We allow the officers and employees of Davis New York Venture Fund, Davis
Selected Advisers and its affiliates to buy and sell securities for their own
personal accounts. However, in order to do so they must agree to a number of
restrictions, listed in our company Code of Ethics.

19
<PAGE>

HOW WE MANAGE THE FUND

This section provides an overview of the types of securities the Fund invests
in and details the strategies the Fund uses to minimize the risk of investing
in these securities.

WHAT WE INVEST IN AND WHY

Davis New York Venture Fund's investment objective is growth of capital. In
keeping with the Davis investment philosophy, our portfolio managers select
equity securities that offer the potential for capital growth over the
long-term. The Fund invests primarily in equity securities of U.S. companies
with market capitalizations of at least $5 billion, but we may also invest in
foreign companies and U.S. companies with smaller capitalizations. Generally,
there is no restriction on how much of the Fund's assets our portfolio managers
can invest in any particular type of security.

EQUITY SECURITIES

WHAT THEY ARE. Equity securities represent ownership of a company. Equity
securities come in many forms, but the form that this Fund typically holds is
common stock.

Most of Davis New York Venture Fund's common stock is issued by U.S. companies
with large market capitalizations (that is, the market value of all of their
outstanding stock exceeds $5 billion). The Fund may also invest in stock of
smaller U.S. companies and in securities of foreign issuers or securities that
are principally traded in foreign markets.

HOW WE PICK THEM. The Davis investment philosophy stresses a back-to-basics
approach: we use extensive research to buy growing companies at value prices
and hold on to them for the long-term. Over the years, Davis Selected Advisers
has developed a list of ten characteristics that we believe foster sustainable
long-term growth, minimize risk and enhance the potential for superior
long-term returns. While very few companies have all ten, we search for
companies that demonstrate several of the characteristics that are listed in
the following chart.

20
<PAGE>

[SET OFF OR BOXED]

WHAT WE LOOK FOR IN A COMPANY

1. FIRST-CLASS MANAGEMENT. We believe that great companies are created by
great managers. In visiting companies, we look for managers with a record
of doing what they say they are going to do.
2. MANAGEMENT OWNERSHIP. Just as we invest heavily in our own funds, we look
for companies where individual managers own a significant stake.
3. STRONG RETURNS ON CAPITAL. We want companies that invest their capital
wisely and reap superior returns on those investments.
4. LEAN EXPENSE STRUCTURE. Companies that can keep costs low are able to
compete better, especially in difficult times. A low cost structure
sharply reduces the risk of owning a company's shares.
5. DOMINANT OR GROWING MARKET SHARE IN A GROWING MARKET. A company that is
increasing its share of a growing market has the best of both worlds.
6. PROVEN RECORD AS AN ACQUIRER. When an industry or market downturn occurs,
it is a good idea to own companies that can take advantage of attractive
prices to expand operations through inexpensive acquisitions.
7. STRONG BALANCE SHEET. Strong finances give a company staying power to
weather difficult economic cycles.
8. COMPETITIVE PRODUCTS OR SERVICES. We invest in companies with products that
are not vulnerable to obsolescence.
9. SUCCESSFUL INTERNATIONAL OPERATIONS. A proven ability to expand
internationally reduces the risk of being tied too closely to the U.S.
economic cycle.
10. INNOVATION. The savvy use of technology in any business, from a food
company to an investment bank, can help reduce costs and increase sales.

WHY WE BUY THEM. Davis New York Venture Fund buys common stock to take an
ownership position in companies with growth potential, and then holds that
position long enough to realize the benefits of growth.

The Fund may also invest in foreign securities, primarily as a way of providing
additional opportunities to invest in quality overlooked growth stocks.
Investment in foreign securities can also offer the Fund the potential for
economic diversification.

RISKS. Factors that influence the value of a share of common stock are
primarily the financial condition and performance of the issuer, and general
market and economic conditions.

21
<PAGE>

o MARKET RISK. The market value of shares of common stock can change
rapidly and unpredictably as a result of political or economic events
having little or nothing to do with the issuer.

Investments in foreign securities involve additional risk. Foreign securities
are often denominated in foreign currencies, which means their value will be
affected by changes in exchange rates. In many foreign jurisdictions, there is
less publicly available information about-and less government regulation
of-securities, securities markets and issuers. The Fund may attempt to reduce
exposure to market and currency fluctuations by trading in currency futures
contracts or options on futures contracts for hedging purposes. When the Fund
invests in foreign securities, our operating expenses are likely to be higher
than if we invested exclusively in U.S. securities.

SHORT-TERM INVESTMENTS

WHAT THEY ARE. Short-term investments are fixed-income securities (such as U.S.
government securities, repurchase agreements and commercial paper) that will
only be outstanding for one year or less after Davis New York Venture Fund buys
them.

[SIDEBAR]
A repurchase agreement is a type of short-term investment that uses securities
as collateral. Like a short-term loan, the borrower sells securities to the
lender. The borrower agrees to buy back the securities at a certain time--at a
higher price that incorporates an "interest payment."

HOW WE PICK THEM. Most of the Fund's short-term investments are high-grade
money market instruments and repurchase agreements. The Fund may also hold cash
in interest-bearing bank deposits.

WHY WE BUY THEM. The Fund uses short-term investments to earn interest and
maintain flexibility while we evaluate long-term opportunities. We also may use
short-term investments for "defensive" purposes; in the event our portfolio
managers anticipate a substantial drop in the stock market, we may reduce our
risk by investing in short-term securities until market conditions improve.

22
<PAGE>

RISKS. Short-term investments do not present a lot of risk: issuers are
generally stable, and the time period between the security's purchase and the
payoff date is relatively short, offering little chance for conditions to
deteriorate. However, these investments will not appreciate in value as common
stocks do when the market advances.

23
<PAGE>

HOW WE MANAGE RISK

Risks are inherent in all investments. Investing in a mutual fund, even the
most conservative, involves risk, including the risk that you may receive
little or no return on your investment or even that you may lose part or all of
your investment. Davis New York Venture Fund has six strategies to minimize the
risk assumed when we invest.

[SET OFF OR BOXED]
SIX STRATEGIES WE USE TO MINIMIZE RISK

1. WE PURCHASE HIGH-QUALITY GROWTH COMPANIES. Our focus on high-quality
growth companies reduces the likelihood that your investment will be tied
up in a failing company.

2. WE USE A CONSERVATIVE VALUATION STRATEGY. Once we find companies that meet
our business criteria, we determine how much to pay for their shares. We
follow a price discipline that tells us how much we can reasonably pay for
a stock. While no system can prevent all losses, this conservative
approach helps us avoid the calamitous losses that occur in bear markets.

3. WE HAVE A LONG-TERM VISION. We get to know the managers of the companies
we invest in and understand their goals. We view temporary setbacks as
buying opportunities: when other managers sell stocks in response to bad
news, we evaluate the issuer's long-term prospects.

4. WE EMPHASIZE DIVERSIFICATION. We diversify the Fund across both individual
companies and industry sectors. This reduces price volatility and
minimizes the losses the Fund experiences when a company or industry
sector declines in market value.

5. WE DO NOT USE MARKET TIMING. We do not base our decisions to buy and sell
securities on whether we believe the stock market will rise or fall (known
as market timing). However, we can raise the level of cash in the Fund
when stock prices get too high and it becomes difficult to purchase
quality undervalued growth companies.

6. WE MAY MAKE TEMPORARY DEFENSIVE INVESTMENTS. From time to time, Davis New
York Venture Fund may take temporary defensive positions in response to
adverse market, economic or political conditions.

<PAGE>

ONCE YOU INVEST IN THE FUND

This section describes what happens to your money once it is invested: how your
investment is valued, how you earn money on your investment, and how the
government may tax these earnings.

HOW YOUR SHARES ARE VALUED

As an investor in Davis New York Venture Fund, you are entitled to buy and sell
shares on any business day. The share price of your investment changes
depending on the total value of the Fund's investments.

Each business day, we determine the value of Fund shares by adding up the total
value of investments plus other assets (such as cash), subtracting liabilities,
and dividing the result by the total number of shares outstanding. This share
figure is known as the net asset value (NAV).

Net asset values for all the Davis Funds is determined each day the Funds are
open for business. A business day is defined as any day the New York Stock
Exchange is open for trading. We calculate net asset value either at the close
of the Exchange or at 4 p.m. Eastern Time, whichever comes first.

The net asset values of all Davis Fund shares are published daily in the
business section of most major newspapers. If you have access to the Internet,
you can also check net asset value on our web site (WWW.DAVISFUNDS.COM).

HOW SECURITIES IN THE PORTFOLIO ARE VALUED

We use current market valuations to value the securities in Davis New York
Venture Fund:

o Securities that trade on an organized exchange are valued at the last
published sales price on the exchange. If no sales are recorded, the
securities are valued at the average of the closing bid and asked prices
on the exchange.
o Over-the-counter securities are valued at the average of closing bid and
asked prices.
o Debt securities maturing in 60 days or less are usually valued at an amortized
(gradually reduced) cost.
o Longer-term debt securities may be valued by an independent pricing service.
o Securities with unavailable market quotations and other assets are valued at
"fair value"--which is determined or directed by the Board of Directors.

25
<PAGE>

HOW WE PAY EARNINGS

There are two ways you can receive payments from Davis New York Venture Fund:

o DIVIDENDS. Distributions to shareholders of net investment income and
short-term capital gains on investments.

o CAPITAL GAINS. Profits received by the Fund from the sale of securities
held for the long-term, which are then distributed to shareholders.

Davis New York Venture Fund usually pays dividends once a year. Dividends are
declared in November or December and capital gains, if any, are distributed in
November or December. Unless you choose otherwise, the Fund automatically
reinvests your dividends and capital gains in additional Fund shares.

You can request to have your dividends and capital gains paid to you by check,
deposited directly into your bank account, paid to a third party, or sent to an
address other than your address of record.

We also offer a Dividend Diversification Program, which allows you to have your
dividends and capital gains reinvested in shares of another Davis Fund.

[SIDEBAR]
QUOTATIONS
The bid price is the highest price a prospective buyer is prepared to pay for a
security.
The asked price is the lowest price acceptable to a prospective seller. The
average of these two prices is known as a quote or quotation.

OVER THE COUNTER SECURITIES
Over the counter securities are not listed or traded on an organized exchange.
They are bought and sold by dealers connected by telephones and computer
networks.

NET INVESTMENT INCOME
Net investment income is income received by the Fund from company dividends and
interest on securities investments, minus management fees and all other
expenses.

26
<PAGE>

You will receive a statement each year detailing the amount of all dividends
and capital gains paid to you during the previous year. To ensure that these
distributions are reported properly to the U.S. Treasury, you must certify on
your Application Form (or on Form W-9) that your Taxpayer Identification Number
is correct and you are not subject to backup withholding (which means that you
are paying back taxes for failing to report all interest and dividends).

If you fail to report a correct Taxpayer I.D. Number, under-reported dividend
or interest income, or are already subject to backup withholding, Davis New
York Venture Fund is required by law to withhold a portion of any distributions
you may receive--and send it to the U.S. Treasury.

(set off)
HOW TO PUT YOUR DIVIDENDS AND CAPITAL GAINS TO WORK

You can have all dividends and capital gains automatically invested in the same
share class of this or other Davis Funds. To be eligible for this DIVIDEND
DIVERSIFICATION PROGRAM, all accounts involved must be registered under the
same name and have a minimum initial value of $250. All future investments must
total $25 or more. Shares are purchased at the chosen fund's net asset value on
the dividend payment date. You can make changes to your selection or withdraw
from the program with 60 days notice. To participate in this program, fill out
the cross-reinvest information in the appropriate section of the Application
Form.

HOW YOUR DIVIDENDS AND CAPITAL GAINS ARE TAXED

o If Davis New York Venture Fund pays dividends, they are taxable to
shareholders as ordinary income. Dividends include both net investment
income and short-term capital gains.
o If Davis New York Venture Fund pays net capital gains, they generally
will be taxed as a long-term capital-gain distributions.

These payments may be taxed at different rates, depending on the length of time
the Fund holds its assets. More information is provided in the instructions
that come with your tax return.

Investment earnings (dividends and capital gains) are taxable in the year in
which they were declared, not paid--whether they are received in cash or
reinvested in shares.

Also, keep in mind that when you sell or exchange shares of the Fund, it may
result in a taxable gain or loss.

27
<PAGE>

We recommend that you consult with a tax adviser about any dividends and
capital gains you may receive from Davis New York Venture Fund.

28
<PAGE>

HOW TO CHOOSE A SHARE CLASS

Before you can buy any shares in Davis New York Venture Fund, you need to
decide which class of shares best suits your needs. The Fund offers three
classes of shares: A, B and C. Each class is subject to different expenses and
sales charges.

You may choose to buy one class of shares rather than another, depending on the
amount of the purchase and the expected length of time of investment.

SPECIAL NOTE: Institutions buying $5 million or more may be eligible to buy
Class Y shares of Davis New York Venture Fund, offered through a separate
prospectus. With Class Y shares, you pay no sales charges or distribution fees.
To find out more about Class Y shares, contact your sales representative or our
distributor, Davis Distributors, at 1-800-279-0279.

CLASS A SHARES

Class A shares may be best for you if you are a long-term investor who is
willing to pay the entire sales charge at the time of purchase. In return, you
pay a lower distribution fee than the two other share classes.

o You buy Class A shares at their net asset value per share plus a sales
charge, which is 4.75% for any investment below $100,000 (see chart on the
following page).
o There is no limit on how much you can invest in this share class.
o The Fund pays a distribution fee--up to 0.25% of the average daily net
asset value--each year you hold the shares. This fee is lower than the fee
you pay for the other two classes of shares. Lower expenses translate into
higher annual return on your investment. More information on distribution
fees is provided under WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT.

29
<PAGE>

CLASS A SALES CHARGES

- ------------------------------------- ------------------------ ----------------------- ------------------------
AMOUNT OF PURCHASE SALES CHARGE SALES CHARGE AMOUNT OF SALES CHARGE
(PERCENTAGE OF (PERCENTAGE OF RETAINED BY
OFFERING PRICE) AMOUNT INVESTED) THE DEALER
(PERCENTAGE OF
OFFERING PRICE)
- ------------------------------------- ------------------------ ----------------------- ------------------------
<S> <C> <C> <C>
Under $100,000 4.75% 5.0% 4.0%
- ------------------------------------- ------------------------ ----------------------- ------------------------
$100,000 to under $250,000 3.5% 3.6% 3.0%
- ------------------------------------- ------------------------ ----------------------- ------------------------
$250,000 to under $500,000 2.5% 2.6% 2.0%
- ------------------------------------- ------------------------ ----------------------- ------------------------
$500,000 to under $750,000 2.0% 2.0% 1.75%
- ------------------------------------- ------------------------ ----------------------- ------------------------
$750,000 to under $1 million 1.0% 1.0% 0.75%
- ------------------------------------- ------------------------ ----------------------- ------------------------
$1 million or more* None None 0%
- ------------------------------------- ------------------------ ----------------------- ------------------------

* You pay no front-end sales charge on purchases of $1 million or more, but if
you sell those shares within the first year you may pay a deferred sales charge
of 0.75%. Davis Distributors may pay the dealer a commission during the first
year after purchase at the following rates:

- ------------------------------------------------------ -----------------------------------------------------
PURCHASE AMOUNT COMMISSION
- ------------------------------------------------------ -----------------------------------------------------
<S> <C>
First $3 million 0.75%
- ------------------------------------------------------ -----------------------------------------------------
Next $2 million 0.50%
- ------------------------------------------------------ -----------------------------------------------------
Over $5 million 0.25%
- ------------------------------------------------------ -----------------------------------------------------

</TABLE>

If a commission is paid for purchases of $1 million or more, the dealer will be
paid with distribution fees received from the Fund. If distribution fee limits
have already been reached for the year, Davis Distributors itself will pay the
commissions.

As the chart above shows, the sales charge gets smaller as your purchase amount
increases. There are several ways you may combine purchases to qualify for a
lower sales charge.

30
<PAGE>

YOU CAN COMBINE PURCHASES OF CLASS A SHARES
o WITH OTHER FAMILY MEMBERS. If you buy shares for yourself, your spouse
and any children under the age of 21, all the shares you buy will be
counted as a single purchase.
o WITH CERTAIN GROUPS. If you buy shares through a group organized for a
purpose other than to buy mutual fund shares, the purchases will be
treated as a single purchase.
o THROUGH EMPLOYEE BENEFIT PLANS. If you buy shares through trusteed or
fiduciary accounts and Individual Retirement Accounts (IRAs) of a single
employer, the purchases will be treated as a single purchase.
o UNDER A STATEMENT OF INTENTION. If you enter a Statement of Intention and
agree to buy Class A shares of $100,000 or more over a 13-month period,
all of the shares you buy during that period will be counted as a single
purchase. Before entering a Statement of Intention, please read the terms
and conditions in the Statement of Additional Information. Under a
Statement of Intention, you agree to permit our service provider, State
Street Bank and Trust, to hold fund shares in escrow to guarantee payment
of any sales charges that may be due if you ultimately invest less than
you agreed to invest over the covered 13-month period.
o UNDER RIGHTS OF ACCUMULATION. If you notify your dealer or our
distributor, Davis Distributors, you can include the Class A, B and C
shares you already own (except shares of Davis Government Money Market
Fund) when calculating the price for your current purchase.
o WITH CLASS A SHARES OF OTHER DAVIS FUNDS. If you buy Class A shares of
this or any other Davis Fund except Davis Government Money Market Fund,
all of the shares you buy will be counted as a single purchase. This
includes shares purchased under a Statement of Intention or Rights of
Accumulation.

CLASS A FRONT-END SALES CHARGE WAIVERS

We will not charge a sales charge on purchases of Class A shares for:

o Shareholders making purchases with dividends or capital gains that are
automatically reinvested.
o Purchases by directors, officers and employees of Davis New York Venture Fund,
its investment adviser or its affiliates, and their immediate families.
o Purchases by employees and people affiliated with broker-dealer firms
offering Fund shares.
o Financial institutions acting as fiduciaries making single purchases of
$250,000 or more.
o Employee benefit plans making purchases through a single account covering at
least 250 participants.
o Wrap accounts offered by securities firms, fee-based investment advisers
or financial planners.

31
<PAGE>

o State and local governments.

[sidebar]
Wrap accounts are investment programs offered by broker-dealers who place a
client's funds with one or more investment advisers and charge a fee for their
services.

CLASS B SHARES

Class B shares may be best for you if you are willing to pay a higher
distribution fee than Class A shares for eight years in order to avoid paying a
front-end sales charge.

o You buy the shares at net asset value (no sales charge).
o You can invest up to $250,000 in Class B shares.
o If you sell Class B shares within six years of purchase, you must pay a
deferred sales charge. This charge decreases over time as you own the
shares (see chart below).
o After you hold Class B shares for eight years, they are automatically
converted into Class A shares without paying a front-end sales charge.
Class A shares pay a lower distribution fee.
o The Fund pays a distribution fee of 1% of the average daily net asset
value each year you hold the shares. Higher expenses translate into lower
annual return on your investment. More information on distribution fees is
provided under WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT.

CLASS B DEFERRED SALES CHARGES

- ------------------------------------------------------ -----------------------------------------------------
SALES MADE AFTER PURCHASE AMOUNT OF DEFERRED SALES CHARGE
- ------------------------------------------------------ -----------------------------------------------------
<S> <C>
Year 1 4%
- ------------------------------------------------------ -----------------------------------------------------
Years 2-3 3%
- ------------------------------------------------------ -----------------------------------------------------
Years 4-5 2%
- ------------------------------------------------------ -----------------------------------------------------
Year 6 1%
- ------------------------------------------------------ -----------------------------------------------------
Years 7-8 None
- ------------------------------------------------------ -----------------------------------------------------

</TABLE>

32
<PAGE>

CLASS C SHARES

Class C shares may be best for you if you are willing to pay a higher
distribution fee than Class A shares pay in order to avoid paying a sales
charge.

o You buy the shares at net asset value (no sales charge).
o You cannot invest more than $1 million in Class C shares.
o If you sell the shares within one year of purchase, you must pay a
deferred sales charge of 1%.
o The Fund pays a distribution fee of 1% of the average daily net asset value
each year you hold the shares. Higher expenses translate into lower annual
return on your investment. More information on distribution fees is provided
under WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT.

DEFERRED SALES CHARGE WAIVERS

We will waive deferred sales charges on sales of Class A, B and C shares if:

o You sell shares that were acquired through reinvestment of dividends or
capital gains.
o You sell shares that were not subject to a commission at the time of purchase
(the amount of purchase totaled $1 million or more and the shares were held
for more than a year).
o You (or a registered joint owner) die or have been determined to be
totally disabled sometime after the purchase of shares.
o You sell shares under the Automatic Withdrawals Plan amounting to, in a
12-month period, up to 12% of the value of the account when you began
participating in the Plan.
o You sell shares under a qualified retirement plan or IRA that constitute
a tax-free return of contributions to avoid a penalty.
o Your fund sells the remaining shares in your account under an Involuntary
Redemption.
o You qualify for an exception relating to defined contribution plans.
These exceptions are described in the Statement of Additional Information.
You are a director, officer or employee of Davis Selected Advisers or one
of its affiliates (or a family member of a director, officer or employee).

If the net asset value of the shares that you sell has increased since you
purchased them, any deferred sales charge will be based on the original cost of
the shares.

[boxed]

33
<PAGE>

If you have any additional questions about choosing a share class, please call
us toll-free at 1-800-279-0279, Monday through Friday, 7 a.m. to 4 p.m.
Mountain Time. If you still are not sure about which class is best for you,
contact your financial adviser.

34
<PAGE>

HOW TO OPEN AN ACCOUNT

You can open an account if you invest at least:

o $1,000 for a non-retirement plan account.
o $250 for a retirement plan account.

(chart)
THREE WAYS YOU CAN OPEN AN ACCOUNT

2. BY DEALER. You may have your dealer order and pay for the shares. In this
case, you must pay your dealer directly. Your dealer will then order the shares
from our distributor, Davis Distributors. Please note that your dealer may
charge a service fee or commission for buying these shares.

3. BY WIRE. You may wire federal funds directly to our service provider, State
Street Bank and Trust. Before you wire an initial investment, you must call our
distributor, Davis Distributors, at 1-800-279-0279 to let them know the fund
and share class you will be buying. After the initial wire purchase is made,
you will need to fill out a Plan Adoption Agreement or Application Form and
return it to State Street. To ensure that the purchase is credited properly,
follow these wire instructions:

State Street Bank and Trust Company
Boston, MA 02210
Attn: Mutual Fund Services
DAVIS NEW YORK VENTURE FUND
Shareholder Name
Shareholder Account Number
Federal Routing Number 011000028
DDA Number 9904-606-2

35
<PAGE>

Generally, the Fund does not issue share certificates for purchases. You can
receive certificates if you are a Class A shareholder who is not participating
in the Automatic Withdrawal Plan. If you are eligible and wish to receive
certificates, you must make the request at the time of purchase.

RETIREMENT PLAN ACCOUNTS

You can invest in Davis New York Venture Fund using any of these types of
retirement plan accounts:

o Deductible IRAs
o Non-deductible IRAs
o Roth IRAs
o Educational IRAs
o Simple IRAs
o Profit-Sharing Plans
o Money-Purchase Plans
o Simplified Employee Pension Plans
o 403(b) Plans

State Street Bank and Trust acts as custodian (service provider) for the
retirement plans and charges the participant $10 to open each account and a
maintenance fee of $10 each year (per Social Security number). These fees are
automatically deducted from each account, unless you elect to pay the fee
directly. To open a retirement plan account, you must fill out a special
application form. You can request this form by calling 1-800-279-0279.

36
<PAGE>

HOW TO BUY, SELL AND EXCHANGE SHARES

Once you have opened an account with Davis, you can add to--or subtract
from--your initial purchase. This section provides an overview of the types of
transactions you can perform as a shareholder of Davis New York Venture Fund.
This includes how to initiate these transactions, and the charges that you may
incur (if any) when buying, selling and exchanging shares.

EXCHANGE
When you sell shares in one Davis Fund to buy shares in another Davis Fund in
response to changes in your goals or in market conditions.

(chart)
THREE WAYS TO BUY, SELL AND EXCHANGE SHARES

1. BY TELEPHONE. Call 1-800-279-0279. You can speak directly with a Davis
representative during our business hours or use our automated telephone system
any time, day or night.

2. BY MAIL. Send the request to our service provider, State Street Bank and
Trust.

Regular Mail
------------
State Street Bank and Trust Company
c/o Davis Funds
P.O. Box 8406
Boston, MA 02266-8406

Overnight Mail
--------------
State Street Bank and Trust Company
c/o Davis Funds
66 Brooks Drive
Braintree, MA 02184

3. BY DEALER. Contact a dealer, who will then make the transaction through our
distributor, Davis Distributors. Please note that your dealer may charge a
service fee or commission for each transaction.

37
<PAGE>

WHEN YOUR TRANSACTIONS ARE PROCESSED

The per-share price for purchases or sales made through our distributor, Davis
Distributors, will be processed on the same day if the order is received before
4 p.m. Eastern Time. If State Street Bank and Trust requires additional
documents to complete the purchase or sale, the transaction price will be
determined at the close of business after all required documents are received.

For your transaction to be counted on the day you place your order with your
broker-dealer or other financial institution, they must:

o Receive your order before 4 p.m. Eastern Time.
o Promptly transmit the order to State Street Bank and Trust.

BUYING MORE SHARES

You can buy more shares at any time, either by telephone, by mail or through a
dealer. The minimum purchase amount is $25.

When you purchase shares by mail, send a check made payable to the DAVIS FUNDS
for the amount of purchase to our service provider, State Street Bank and
Trust. If you have the purchase form from your most recent statement, include
it with the check. If you do not have a purchase form, include a letter with
your check stating the name of the fund and the class of shares you wish to
buy. If you know your account number, include it on the check.

When you buy shares through a dealer, you may be charged a service fee or
commission for performing the transaction.

[SET OFF - SPECIAL PROGRAM]
MAKING AUTOMATIC INVESTMENTS

An easy way to increase your investments in this or other Davis Funds is to
sign up for the AUTOMATIC INVESTMENT PLAN. Under this plan, you arrange for a
set amount of money to be taken from your bank account and invested in Fund
shares. The minimum amount you can invest each month is $25. The account
minimums of $1,000 for non-retirement accounts and $250 for retirement accounts
will be waived if you meet the minimum requirement within a year.

Purchases can be processed electronically on any day of the month between the
4th and 28th days if the institution that services your bank account is a
member of the Automated

38
<PAGE>

Clearing House system. After each automatic investment, you will receive a
transaction confirmation, and the debit should show up on your next bank
statement.

To sign up for the Automatic Investment Plan, fill out the appropriate section
of the Application Form. You can stop automatic investments at any time by
calling the Davis Funds at 1-800-279-0279.

You can also use our Dividend Diversification Program to buy more shares in
this or another Davis Fund. See ONCE YOU INVEST IN THE FUND.

[SIDEBAR]
The Automated Clearing House system is used by most banks for electronic
transfers of money into and out of your bank account - and is regulated by the
Federal Reserve.

SELLING SHARES

You may sell back all or part of your shares to Davis New York Venture Fund
(known as a redemption) at any time, at net asset value minus any sales charges
that may be due. You can sell the shares by telephone, by mail, or through a
dealer.

When you sell shares by mail, indicate the number of shares or dollar amount
you wish to redeem and send the request to our service provider, State Street
Bank and Trust. If more than one person owns the shares you wish to sell, all
owners must sign a request.

When you sell shares through a dealer, you may be charged a service fee or
commission for performing the transaction.

Redemption proceeds are usually paid to you in cash within seven days after
State Street Bank and Trust receives your proper sale request. You will not be
allowed to sell shares that have been paid for by check until the shares have
been in your account for fifteen days.

39
<PAGE>

WHAT YOU NEED TO KNOW BEFORE YOU SELL YOUR SHARES

o You will always receive cash for sales that total less than $250,000 or
1% of the Fund's net asset value during any 90-day period. Any sales above
the cash limit may be paid in securities and would mean you would have to
pay brokerage fees.
o Ordinarily, you only need a medallion signature guarantee on a share
certificate, stock power, or redemption request for sales of more than
$50,000. However, if you have made any changes to the Application Form
since your account was opened, or if your address of record has changed in
the last 30 days, you will need a medallion signature for all sales.
o If a certificate was issued for the shares you wish to sell, the
certificate must by signed by the owner(s) and sent to State Street Bank
and Trust along with the redemption request.
o A sale may produce a gain or loss. Gains may be subject to tax.

MEDALLION SIGNATURE GUARANTEE
A written confirmation from an eligible guarantor institution, such as a
securities broker-dealer or a commercial bank, that the signature(s) on the
account is(are) valid. Unfortunately, no other form of signature verification
can be accepted.

STOCK POWER
A letter signed by the owner of the shares that gives State Street Bank and
Trust permission to transfer ownership of the shares to another person or
group.

SPECIAL SALE SITUATIONS

o The Securities and Exchange Commission can suspend payment of sales under
certain emergency circumstances if the New York Stock Exchange is closed
for reasons other than customary closings and holidays.
o Davis New York Venture Fund may make sales payments in securities if
Davis New York Venture Fund's Board of Directors decides that making cash
payments would harm the Fund.

40
<PAGE>

[SET OFF - SPECIAL PROGRAM]
MAKING AUTOMATIC WITHDRAWALS

If you hold more than $10,000 in your account, you can sell a set dollar amount
each month or quarter. When you participate in this program, known as the
AUTOMATIC WITHDRAWALS PLAN, shares are sold so that you will receive the
payment around the 25th day of the month. Note that because withdrawals are
sales, they may produce a gain or loss. If you purchase additional shares at
the same time that you make a withdrawal, you may have to pay taxes and a sales
load. Gains may be subject to tax. To sign up for the Automatic Withdrawals
Plan, fill out the appropriate section of the Application Form.

You may stop automatic withdrawals at any time without charge or penalty by
calling the Davis Funds at 1-800-279-0279.

SPECIAL NOTE: WHEN YOU MAKE A SALE OR WITHDRAWAL, A DEFERRED SALES CHARGE MAY BE
IMPOSED IF:
o YOU BUY $1 MILLION OR MORE OF CLASS A SHARES AND SELL THEM WITHIN A YEAR OF
PURCHASE.
o YOU SELL CLASS B SHARES WITHIN SIX YEARS OF PURCHASE.
o YOU SELL CLASS C SHARES WITHIN ONE YEAR OF PURCHASE.

[SET OFF - SPECIAL SHAREHOLDER PROGRAM]
WIRING SALE PROCEEDS TO YOUR BANK ACCOUNT

If you are an investor with a non-retirement account, you can have your sale
proceeds electronically transferred to a commercial bank account. This is known
as an ELECTRONIC WIRE PRIVILEGE. To sign up for this option, simply fill out
the appropriate section of the Application Form. There is a $5 charge by State
Street Bank and Trust for wire service, and receiving banks may also charge for
this service. Payment by Automated Clearing House will usually arrive at your
bank two banking days after your call. Payment by wire is usually credited to
your bank account on the next business day after you call. While State Street
Bank and Trust will also accept electronic wire sales by telephone, fax or
dealer, you still need to fill out and submit the information under the
Electronic Wire Privilege section of the Application Form.

41
<PAGE>

IF YOU DECIDE TO BUY BACK SHARES YOU SOLD

If you decide to buy back some or all of the shares you sold in this Fund
within 30 days of sale and notify us in writing, you can take advantage of the
SUBSEQUENT REPURCHASE PRIVILEGE. With this privilege, which you can use only
once, you will not be charged a sales charge, and any deferred sales charge you
paid on the original sale will be returned to your account. You must send a
letter to our service provider, State Street Bank and Trust, along with a check
for the repurchased shares.

IF YOUR ACCOUNT FALLS BELOW $250

If your account balance falls below $250, we may sell your remaining shares in
Davis New York Venture Fund at net asset value. We will first notify you by
mail, giving you at least 60 days notice that an INVOLUNTARY REDEMPTION may
take place. If you can increase your account balance to above $250 during the
notice period, the involuntary redemption will be canceled.

EXCHANGING SHARES

You can transfer shares of Davis New York Venture Fund to shares in the same
class of any other Davis Fund without having to pay a sales charge. This is
known as an exchange. You can exchange shares by telephone, by mail or through
a dealer. The initial exchange must be for at least $1,000 (unless you are
participating in the Automatic Exchange Program). Exchanges are normally
performed on the same day of the request if received by 4 p.m. Eastern Time.
However, if your exchange involves a large sale, the transfer may take one to
seven days.

When you exchange shares by mail, you must send our service provider, State
Street Bank and Trust, a written request for the exchange. If you hold share
certificates, the certificates must by signed by the owner(s) and sent to State
Street Bank and Trust along with the exchange request. No medallion signature
guarantee is required unless shares are also being sold for cash and would
otherwise require a medallion signature guarantee.

When you exchange shares through a dealer, you may be charged a service fee or
commission for performing the transaction.

Before you decide to make an exchange, you must obtain the current prospectus
of the desired fund. For federal income tax purposes, exchanges between funds
are treated as a sale and a purchase. Therefore, there will usually be a
recognizable capital gain or loss due to an exchange.

42
<PAGE>

There are limits to the number of exchanges you can make each year. Currently,
four exchanges are allowed during a 12-month period. Davis Distributors must
approve any exchanges above the limit in writing.

YOU CAN MAKE EXCHANGES AMONG ANY OF THE DAVIS FUNDS WITHOUT HAVING TO PAY ANY
SALES CHARGE.

EQUITY FUNDS
- ------------
Davis New York Venture Fund
Davis Growth Opportunity Fund
Davis Financial Fund
Davis International Total Return Fund

GROWTH & INCOME FUNDS
- ---------------------
Davis Growth & Income Fund
Davis Real Estate Fund
Davis Convertible Securities Fund

BOND FUNDS
- ----------
Davis Intermediate Investment Grade Bond Fund
Davis Tax-Free High-Income Fund
Davis Government Bond Fund

GOVERNMENT MONEY MARKET FUND
- ----------------------------
Davis Government Money Market Fund

[SET OFF - SPECIAL SHAREHOLDER PROGRAM]
MAKING AUTOMATIC EXCHANGES

You can elect to make automatic monthly exchanges if all accounts involved are
registered under the same name and have a minimum initial value of $250. You
must exchange at least $25 to participate in this program, known as the
AUTOMATIC EXCHANGE PROGRAM. To sign up for this program, fill out the
appropriate section of the Application Form.

43
<PAGE>

TRANSACTIONS BY TELEPHONE

A benefit of investing through Davis Funds is that you can use our telephone
system to buy, sell or exchange shares. If you do not wish to have this option
activated for your account, mark in the box in the appropriate section of the
Application Form.

When you call 1-800-279-0279, you can perform a transaction with Davis Funds in
two ways:

o Speak directly with a representative during business hours (7 a.m. to 4 p.m.
Mountain Time).
o If you have a TouchTone(TM) telephone, you can use the automated telephone
system, known as DAVIS DIRECT Access, 24 hours a day, seven days a week.

[SET OFF]
YOU CAN USE DAVIS DIRECTACCESS TO:

o GET THE PRICE, TOTAL RETURN, AND FUND DESCRIPTION FOR ANY DAVIS FUND.
o CHECK YOUR ACCOUNT BALANCE AND OTHER ACCOUNT INFORMATION.
o BUY, SELL AND EXCHANGE SHARES.
o GET THE MAILING ADDRESS AND WIRE INSTRUCTIONS FOR ANY DAVIS FUND. REQUEST
o LITERATURE ABOUT ANY DAVIS FUND.

If you wish to sell shares by phone and receive a check in the mail:
o The maximum amount that can be issued is $25,000.
o The check can only be issued to the registered account owner.
o The check must be sent to the address on file with Davis.o
o Your current address must be on file for 30 days.

When you buy, sell or exchange shares over the telephone, you agree that Davis
New York Venture Fund is not liable for following telephone instructions
believed to be genuine (that is, directed by the account holder). We use
certain procedures to confirm that your instructions are genuine, including a
request for personal identification (your account or Social Security number)
and a tape recording of the conversation. If these procedures are not used, the
Fund may be liable for unauthorized instructions.

Be aware that during unusual market conditions, Davis Funds may not be able to
accept all requests by phone.

44
<PAGE>

[INSIDE BACK COVER]

THE DAVIS FUNDS:
OVER 25 YEARS OF RELIABLE INVESTING

Davis Selected Advisers, investment adviser of the Davis Funds, has a history
of investing for the long-term. Since our founding in 1969, we have been
dedicated to delivering superior investment performance and service to our
clients.

Our investment approach has been refined for more than 25 years by his son,
Shelby M.C. Davis, who is now Chief Investment Officer of Davis Selected
Advisers. The Davis strategy is still followed today by the third generation of
family members: Christopher C. Davis and Andrew A. Davis serve as either
Portfolio Manager or Co-Portfolio Manager for many Davis Funds.

WE ARE FELLOW SHAREHOLDERS. The Davis family, directors and employees not only
manage the company's mutual funds but also invest in them. Together, we have
invested over $1 billion of our own money side-by-side with our shareholders.

Please take the time to read this prospectus carefully and, if you decide to
invest with us, keep it as a reference guide. If you need more information
about the Davis Funds, please call us or visit our Web site.

45
<PAGE>

[DESIGN ISSUE: WILL THE SECTION BELOW BE PERFED?]

ADDRESS AND PHONE GUIDE

OUR TELEPHONE NUMBER OUR SERVICE PROVIDER'S REGULAR MAILING ADDRESS
1-800-279-0279 State Street Bank and Trust Company
c/o Davis Funds
P.O. Box 8406
Boston, MA 02266-8406

OUR MAILING ADDRESS
Davis Funds
124 East Marcy Street
Santa Fe, New Mexico 87501

OUR INTERNET ADDRESS OUR SERVICE PROVIDER'S OVERNIGHT MAILING ADDRESS
http://www.davisfunds.com State Street Bank and Trust Company
c/o Davis Funds
66 Brooks Drive
Braintree, MA 02184

46
<PAGE>

[BACK COVER]

OTHER FUND DOCUMENTS

For more information about Davis New York Venture Fund, request a free copy of
the Statement of Additional Information or the Annual and Semi-Annual Reports.
The STATEMENT OF ADDITIONAL INFORMATION provides more detailed information
about the Fund and its management and operations. The ANNUAL REPORT discusses
the market conditions and investment strategies that significantly affected
fund performance during the last year. The SEMI-ANNUAL REPORT updates
information provided in the Annual Report for the next six months.

Davis New York Venture Fund's Statement of Additional Information and Annual
Report have been filed with the Securities and Exchange Commission, are
incorporated by reference, and are legally a part of this prospectus.

WHERE YOU CAN GET THESE DOCUMENTS:

o BY TELEPHONE. Call Davis Funds toll-free at 1-800-279-0279, Monday-Friday,
7 a.m. to 4 p.m. Mountain Time.

o VIA THE INTERNET. Visit the SEC web site (WWW.SEC.GOV).

o FROM THE SEC. The SEC's Public Reference Room in Washington, D.C. For
more information call 1-800-SEC-0330. Additional copies of this
information can be obtained, for a duplicating fee, by writing the Public
Reference Section of the SEC, Washington, D.C., 20549-6009.

o BY MAIL. Specify the document you are requesting when writing to us.

DAVIS NEW YORK VENTURE FUND
124 EAST MARCY STREET
SANTA FE, NEW MEXICO 87501
1-800-279-0279

Investment Company Act File No. 811-1701

<PAGE>

[cover page]

DAVIS NEW YORK VENTURE FUND

Prospectus

Class Y

December 1, 1998

(Davis logo)

Over 25 years of Reliable Investing

1
<PAGE>

[INSIDE FRONT COVER]

RISK SPECTRUM

[INSERT RISK SPECTRUM GRAPHIC]

[IN BLACK AREA BELOW GRAPHIC]
For more information about any of the other Davis Funds, including charges and
expenses, ask for a prospectus. Read it carefully before investing or sending
money.

2
<PAGE>

TABLE OF CONTENTS

SNAPSHOT OF DAVIS NEW YORK VENTURE FUND

OVERVIEW OF THE FUND
INVESTMENT OBJECTIVE AND STRATEGY
PRINCIPAL RISKS
FUND PERFORMANCE
FEES AND EXPENSES
FINANCIAL HIGHLIGHTS

WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT

HOW WE MANAGE THE FUND

ONCE YOU INVEST IN THE FUND

HOW TO BUY, SELL AND EXCHANGE SHARES

THE DAVIS FUNDS: OVER 25 YEARS OF RELIABLE INVESTING

OTHER FUND DOCUMENTS

3
<PAGE>

SNAPSHOT OF DAVIS NEW YORK VENTURE FUND

This section provides you with basic information about Davis New York Venture
Fund that can help you decide if the Fund suits your needs.

(graphic)
TYPE OF FUND
Equity fund

INVESTMENT OBJECTIVE
Growth of capital

RISK SPECTRUM LEVEL
Medium to high

YOU SHOULD CONSIDER INVESTING IN THIS FUND IF
o you are seeking long-term growth of capital.
o you are more comfortable with established, well-known companies.
o you are investing for the long-term (five years or more).

MINIMUM INITIAL INVESTMENT
o institutions and government entities: $5 million
o wrap fee program investors: minimums set by your sponsor

If, after reading this section, you think that the Fund may suit your
investment goals, you should read the rest of this prospectus for more detailed
information.

4
<PAGE>

OVERVIEW OF DAVIS NEW YORK VENTURE FUND

INVESTMENT OBJECTIVE AND STRATEGY

Davis New York Venture Fund's investment objective is growth of capital. The
Fund invests primarily in equity securities of U.S. companies with market
capitalizations of at least $5 billion.

[SIDEBAR: ]
Please see the inside back cover page of this prospectus to learn about the
Davis investment philosophy.

You can find more detailed information about the types of securities that the
Fund buys in the section called HOW WE MANAGE THE FUND.

PRINCIPAL RISKS

o MARKET RISK. The market value of shares of common stock can change
rapidly and unpredictably as a result of political or economic events
having little or nothing to do with the issuer.

An investment in Davis New York Venture Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

5
<PAGE>

You can find more detailed information about the risks of the Fund's particular
investments in the section called HOW WE MANAGE THE FUND.

FUND PERFORMANCE

Davis New York Venture Fund began selling Class Y shares to the public on
October 2, 1996. The following charts and tables will help you understand the
Fund's financial condition--including the returns that investors have earned
and the cost of an investment. These historical results do not necessarily
indicate the performance that investors can expect in the future. The value of
the Fund's shares may go up or down.

TOTAL RETURN

Davis New York Venture Fund's investment performance will vary from year to
year. This chart shows the results that we achieved in the Fund's Class Y
shares since the Fund opened.

DAVIS NEW YORK VENTURE FUND
TOTAL RETURN FROM OCTOBER 2, 1996 THROUGH JULY 31, 1998

(bar chart)

1996 10.35%*
1997 34.04%

* For the period October 2, 1996 to December 31, 1996, unannualized.

Davis New York Venture Fund's year-to-date return as of July 31, 1998, was
9.06%. During the period shown in the chart, the highest quarterly return was
16.80% (for the quarter ended June 30, 1997) and the lowest quarterly return
was 0.47% (for the quarter ended December 31, 1997).

6
<PAGE>

AVERAGE ANNUAL TOTAL RETURN

The table below shows Davis New York Venture Fund's average annual returns for
the following periods: one year and life of fund (known as the inception date).
It also compares these returns to those earned during the same periods for the
Standard & Poor's 500 Composite Index, an unmanaged benchmark of the total
return performance of large capitalization stocks. The Fund invests primarily
in large capitalization common stocks, but may also buy smaller capitalization
stocks and foreign securities.

DAVIS NEW YORK VENTURE FUND
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIOD ENDING DECEMBER 31, 1997)

- --------------------------- ------------------------- -------------------------
CLASS Y S&P 500 Index
(since 10/2/96)
- --------------------------- ------------------------- -------------------------
1 Year 34.04% 33.35%
- --------------------------- ------------------------- -------------------------
Life of Fund 36.89% 33.14%
- --------------------------- ------------------------- -------------------------

"Standard & Poor's 500," "S&P 500(R)" "S&P(R)" and "500" are registered
trademarks of The McGraw-Hill Companies, Inc.

7
<PAGE>

FEES AND EXPENSES

[DESIGN NOTE: the following explanations to be next to fee chart]

FRONT-END SALES CHARGE. A fee some mutual funds charge to buy shares of a
mutual fund.

DEFERRED SALES CHARGE. A fee some mutual funds charge to sell shares of a
mutual fund.

EXCHANGE FEE. A fee some mutual funds charge to sell shares in one fund and to
buy another fund.

FEES YOU MAY PAY AS A DAVIS NEW YORK VENTURE FUND SHAREHOLDER
(PAID DIRECTLY FROM YOUR INVESTMENT)

- -------------------------------------------------------------- ----------------
CLASS Y
- -------------------------------------------------------------- ----------------
Maximum sales charge you pay when you buy shares None
- -------------------------------------------------------------- ----------------
Maximum deferred sales charge you pay when you sell shares None
- -------------------------------------------------------------- ----------------
Maximum sales charge you pay on reinvested dividends None
- -------------------------------------------------------------- ----------------
Exchange Fee None
- -------------------------------------------------------------- ----------------

[DESIGN NOTE: the following explanations to be next to table of operating
expenses]

MANAGEMENT FEES. Costs to manage a mutual fund's portfolio and to administer
its business affairs. This fee is a percentage of the Fund's net asset value.

DISTRIBUTION FEES. Fees some mutual funds pay to a distributor to sell and
distribute shares and to provide services to shareholders (also known as a
12b-1 fee).

OTHER EXPENSES. The most significant fees in this category are those to
attorneys, accountants, directors, and the custodian and transfer agent (State
Street Bank and Trust Company).

TOTAL ANNUAL OPERATING EXPENSES. The percentage of the Fund's average net
assets that are used each year to pay expenses (also known as the expense
ratio).

8
<PAGE>

ANNUAL FUND OPERATING EXPENSES
FOR FISCAL YEAR ENDED JULY 31, 1998
(DEDUCTED FROM DAVIS NEW YORK VENTURE FUND'S ASSETS)

- -------------------------------------------------------------- ----------------
CLASS Y
- -------------------------------------------------------------- ----------------
Management Fees 0.54%
- -------------------------------------------------------------- ----------------
Distribution (12b-1) Fees None
- -------------------------------------------------------------- ----------------
Other Expenses 0.05%
- -------------------------------------------------------------- ----------------
Total Annual Operating Expenses 0.59%
- -------------------------------------------------------------- ----------------

9
<PAGE>

IF I INVEST IN THIS FUND, WHAT WILL IT COST ME?

Here is an example of what your costs might be if you invest in Davis New York
Venture Fund. It is designed to help you compare investing costs with other
mutual funds.

COST OF INVESTING $10,000 IN DAVIS NEW YORK VENTURE FUND

- ---------------------------------------- ---------------------------------------
IF YOU SELL YOUR CLASS Y SHARES IN... YOU WOULD PAY...
- ---------------------------------------- ---------------------------------------
1 Year $ 6
- ---------------------------------------- ---------------------------------------
3 Years $19
- ---------------------------------------- ---------------------------------------
5 Years $33
- ---------------------------------------- ---------------------------------------
10 Years $74
- ---------------------------------------- ---------------------------------------

10
<PAGE>

FINANCIAL HIGHLIGHTS

This table is designed to show you the financial performance of Davis New York
Venture Fund for the period from October 2, 1996 (when the Fund began selling
shares to the public) through July 31, 1998. Some of the information reflects
financial results for a single Fund share. The total returns represent the rate
that an investor would have earned (or lost) money on an investment in the
Fund. It assumes that all dividends and capital gains have been reinvested.

11
<PAGE>

DAVIS NEW YORK VENTURE FUND
FINANCIAL HIGHLIGHTS
CLASS Y

Financial Highlights for a share of capital stock outstanding throughout each
period.

- ------------------------------------------------- ------------- --------------
YEAR OCTOBER 2,
ENDED 1996
7/31/98 (INCEPTION
OF CLASS)
THROUGH
7/31/97
- ------------------------------------------------- ------------- --------------
Net Asset Value, Beginning of Period $23.12 $16.66
------ ------

- ------------------------------------------------- ------------- --------------
Income From Investment Operations
- ------------------------------------------------- ------------- --------------
Net Investment Income (Loss) .24 .15
- ------------------------------------------------- ------------- --------------
Net Realized and Unrealized Gains 2.31 7.07
---- ----
- ------------------------------------------------- ------------- --------------
Total from Investment Operations 2.55 7.22

- ------------------------------------------------- ------------- --------------
Dividends and Distributions
- ------------------------------------------------- ------------- --------------
Dividends from Net Investment Income (.29) (.06)
- ------------------------------------------------- ------------- --------------
Distributions from Realized Gains (.83) (.70)
----- -----
- ------------------------------------------------- ------------- --------------
Total Dividends and Distributions (1.12) (.76)
------ -----

- ------------------------------------------------- ------------- --------------
Net Asset Value, End of Period $24.55 $23.12
------ - ------

- ------------------------------------------------- ------------- --------------
Total Return (1) 11.48% 44.71%
- -------------

- ------------------------------------------------- ------------- --------------
Ratios/Supplemental Data
- ------------------------------------------------- ------------- --------------
Net Assets, End of Period (000,000 omitted) $735 $534
- ------------------------------------------------- ------------- --------------
Ratio of Expenses to Average Net Assets .59% .62%*
- ------------------------------------------------- ------------- --------------
Ratio of Net Investment Income to Average 1.12% 1.19%*
Net Assets
- ------------------------------------------------- ------------- --------------
Portfolio Turnover Rate(3) 11% 24%
- ------------------------------------------------- ------------- --------------

(1) Assumes hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Total returns are not annualized for periods of less than one
full year.

* Annualized.

12
<PAGE>

WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT

INVESTMENT ADVISER

DAVIS SELECTED ADVISERS, LP
Referred to throughout this prospectus as "Davis Selected Advisers"
124 East Marcy Street
Santa Fe, NM 87501
o Provides investment advice for Davis New York Venture Fund's portfolio.
o Manages Davis New York Venture Fund's business affairs.
o Provides day-to-day administrative services.
o Serves as investment adviser for all of the Davis Funds, other mutual
funds, and other institutional clients.
o Annual Adviser Fee for 1998 (based on average net assets): 0.54%

INVESTMENT SUB-ADVISER

13
<PAGE>

BOARD OF DIRECTORS

The Fund's Board of Directors has general supervisory responsibilities of the
Fund and supervises the investment adviser's duties.

CUSTODIAN AND TRANSFER AGENT

DISTRIBUTOR

DAVIS DISTRIBUTORS, LLC
Referred to throughout this prospectus as "Davis Distributors"
124 East Marcy Street
Santa Fe, NM 87501
o Oversees purchases of shares and promotional activities for Davis New
York Venture Fund.
o Wholly owned subsidiary of Davis Selected Advisers.
o Serves as distributor for all of the Davis Funds and other mutual funds
managed by Davis Selected Advisers.

14
<PAGE>

WHO THE PORTFOLIO MANAGERS ARE

SHELBY M.C. DAVIS
Responsibilities:
o Chief Investment Officer of Davis Selected Advisers.
o President of all the Davis Funds.

CHRISTOPHER C. DAVIS
Responsibilities:
o Vice President of Davis New York Venture Fund.
o Co-Portfolio Manager of the Fund with Kenneth Charles Feinberg since May
1998.
o Also manages or co-manages other equity funds advised by Davis Selected
Advisers.

KENNETH CHARLES FEINBERG
Responsibilities:
o Co-Portfolio Manager of Davis New York Venture Fund since May 1998.
o Also co-manages other equity funds advised by Davis Selected Advisers.

Other Experience:
o Research analyst at Davis Selected Advisers since December 1994.
o Assistant Vice President of Investor Relations for Continental Corp. from
1988 to 1994.

[BOXED]
OUR CODE OF ETHICS

15
<PAGE>

HOW WE MANAGE THE FUND

This section provides an overview of the types of securities the Fund invests
in and details the strategies the Fund uses to minimize the risk of investing
in these securities.

WHAT WE INVEST IN AND WHY

EQUITY SECURITIES

WHAT THEY ARE. Equity securities represent ownership of a company. Equity
securities come in many forms, but the form that this Fund typically holds is
common stock.

16
<PAGE>

[SET OFF OR BOXED]

WHAT WE LOOK FOR IN A COMPANY

RISKS. Factors that influence the value of a share of common stock are
primarily the financial condition and performance of the issuer, and general
market and economic conditions.

17
<PAGE>

o MARKET RISK. The market value of shares of common stock can change
rapidly and unpredictably as a result of political or economic events
having little or nothing to do with the issuer.

SHORT-TERM INVESTMENTS

HOW WE PICK THEM. Most of the Fund's short-term investments are high-grade
money market instruments and repurchase agreements. The Fund may also hold cash
in interest-bearing bank deposits.

WHY WE BUY THEM. The Fund uses short-term investments to earn interest and
maintain flexibility while we evaluate long-term opportunities. We also may use
short-term investments for "defensive" purposes. In the event our portfolio
managers anticipate a substantial drop in the stock market, we may reduce our
risk by investing in short-term securities until market conditions improve.

18
<PAGE>

19
<PAGE>

HOW WE MANAGE RISK

[SET OFF OR BOXED]
SIX STRATEGIES WE USE TO MINIMIZE RISK

1. WE PURCHASE HIGH-QUALITY GROWTH COMPANIES. Our focus on high-quality
growth companies reduces the likelihood that your investment will be tied
up in a failing company.

6. WE MAY MAKE TEMPORARY DEFENSIVE INVESTMENTS. From time to time, Davis New
York Venture Fund may take temporary defensive positions in response to
adverse market, economic or political conditions.

<PAGE>

ONCE YOU INVEST IN THE FUND

This section describes what happens to your money once it is invested: how your
investment is valued, how you earn money on your investment, and how the
government may tax these earnings.

HOW YOUR SHARES ARE VALUED

HOW SECURITIES IN THE PORTFOLIO ARE VALUED

We use current market valuations to value the securities in Davis New York
Venture Fund:

o Securities that trade on an organized exchange are valued at the last
published sales price on the exchange. If no sales are recorded, the
securities are valued at the average of the closing bid and asked prices
on the exchange.
o Over-the-counter securities are valued at the average of closing bid and
asked prices.
o Debt securities maturing in 60 days or less are usually valued at an
amortized (gradually reduced) cost.
o Longer-term debt securities may be valued by an independent pricing service.
o Securities with unavailable market quotations and other assets are valued at
"fair value"--which is determined or directed by the Board of Directors.

21
<PAGE>

HOW WE PAY EARNINGS

There are two ways you can receive payments from Davis New York Venture Fund:

o DIVIDENDS. Distributions to shareholders of net investment income and
short-term capital gains on investments.

o CAPITAL GAINS. Profits received by the Fund from the sale of securities
held for the long-term, which are then distributed to shareholders.

QUOTATIONS
The bid price is the highest price a prospective buyer is prepared to pay for a
security.
The asked price is the lowest price acceptable to a prospective seller. The
average of these two prices is known as a quote or quotation.

OVER THE COUNTER SECURITIES
Over the counter securities are not listed or traded on an organized exchange.
They are bought and sold by dealers connected by telephones and computer
networks.

NET INVESTMENT INCOME
Net investment income is income received by the Fund from company dividends and
interest on securities investments, minus management fees and all other
expenses.

22
<PAGE>

HOW YOUR DIVIDENDS AND CAPITAL GAINS ARE TAXED

These payments may be taxed at different rates, depending on the length of time
the Fund holds its assets. More information is provided in the instructions
that come with your tax return.

Investment earnings (dividends and capital gains) are taxable in the year in
which they were declared, not paid--whether they are received in cash or
reinvested in shares.

Also, keep in mind that when you sell or exchange shares of the Fund, it may
result in a taxable gain or loss.

We recommend that you consult with a tax adviser about any dividends and
capital gains you may receive from Davis New York Venture Fund.

23
<PAGE>

HOW TO BUY, SELL AND EXCHANGE SHARES

Once you have opened an account with Davis, you can add to--or withdraw
from--your initial purchase. This section provides an overview of the types of
transactions you can perform as a shareholder of Davis New York Venture Fund.
This includes how to initiate these transactions, and the charges that you may
incur (if any) when buying, selling and exchanging shares.

YOU CAN OPEN AN ACCOUNT IF:
o You invest at least $5 million for an institution (trust company, bank
trust, endowment, pension plan, foundation) acting on behalf of its own
account or one or more clients.
o You invest at least $5 million for a government entity (a state, county,
city, department, authority or similar government agency).
o You invest with an account established under a "wrap account" or other
fee-based program that is sponsored and maintained by a registered
broker-dealer approved by our distributor, Davis Distributors.

(chart)
BUYING SHARES

There are several ways you can buy Fund shares:

1. BY WIRE. You may buy shares at any time by wiring federal funds directly to
our service provider, State Street. Before wiring an initial investment, the
institutional shareholder or wrap program sponsor must call our distributor,
Davis Distributors, at 1-800-279-0279 to let them know the fund and share class
you will be buying. To ensure that the purchase is credited properly, follow
these wire instructions:

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

2. BY MAIL. Send the request to our service provider, State Street Bank and
Trust. If you have a purchase form provided by State Street, include it with
the check. If you do not have a form, include a letter with your check stating
the name of the fund and that the investment should be made in Class Y shares.
If you know your account number, include it on the check.

24
<PAGE>

Regular Mail
-------------
State Street Bank and Trust Company
c/o Davis Funds
P.O. Box 8406
Boston, MA 02266-8406

Overnight Mail
--------------
State Street Bank and Trust Company
c/o Davis Funds
66 Brooks Drive
Braintree, MA 02184

3. BY DEALER. You may have your dealer order and pay for the shares. In this
case, you must pay your dealer directly. Your dealer will then order the shares
from our distributor, Davis Distributors. Please note that your dealer may
charge a service or commission for buying these shares.

Generally, the Fund does not issue share certificates for purchases. Each time
to add to or withdraw from your account, you will receive a statement showing
the details of the transaction--along with any other transactions you made
during the current year.

WHEN YOUR TRANSACTIONS ARE PROCESSED

For your transaction to be counted on the day you place your order with your
broker-dealer or other financial institution, they must:

o Receive your order before 4 p.m. Eastern Time.
o Promptly transmit the order to State Street Bank and Trust.

BUYING MORE SHARES

You can buy more shares at any time, either by telephone, by mail or through a
dealer. The minimum purchase amount is $25.

When you purchase shares by mail, send a check payable to the DAVIS FUNDS for
the amount of purchase to our service provider, State Street Bank and Trust. If
you have the purchase

25
<PAGE>

form from your most recent statement, include it with the check. If you do not
have a purchase form, include a letter with your check stating the name of the
fund and the class of shares you wish to buy. If you know your account number,
include it on the check.

When you buy shares through a dealer, you may be charged a service fee or
commission for performing the transaction.

26
<PAGE>

SPECIAL NOTE FOR WRAP PROGRAM INVESTORS

Be aware that both Class A and Class Y shares are available by the Fund at net
asset value to your sponsor. However, Class A shares are subject to additional
expenses, and sponsors of wrap programs who buy Class A shares are generally
entitled to commissions. If your sponsor has selected Class A shares, you
should discuss these charges and weigh the benefits of any services to be
provided by the sponsor against the higher expenses paid by Class A
shareholders. For more information on these fees and expenses, you can request
the prospectus covering Class A shares by calling Davis Distributors at
1-800-279-0279.

27
<PAGE>

SELLING SHARES

You may sell back all or part of your shares to Davis New York Venture Fund
(known as a redemption) at any time, at net asset value. You can sell the
shares by telephone, by mail or through a dealer.

For more information on selling shares by telephone, see "Transactions By
Telephone" at the end of this section.

When you sell shares through a dealer, you may be charged a service fee or
commission for performing the transaction.

WHAT YOU NEED TO KNOW BEFORE YOU SELL YOUR SHARES

28
<PAGE>

signature verification can be accepted.

STOCK POWER
A letter signed by the owner of the shares that gives State Street Bank and
Trust permission to transfer ownership of the shares to another person or
group.

SPECIAL SALE SITUATIONS

29
<PAGE>

EXCHANGING SHARES

You can transfer Class Y shares of Davis New York Venture Fund to Class Y
shares in any other Davis Fund. This is known as an exchange. You can exchange
shares by telephone (to accounts with identical registrations), by dealer or by
mail. The initial exchange must be for at least $5 million for institutions or
government entities or minimums set by wrap program sponsors. Class A
shareholders who are eligible to buy Class Y shares may also exchange their
shares for Class Y shares of the Fund. Exchanges are normally performed on the
same day of the request if received by 4 p.m. Eastern Time. However, if your
exchange involves a large sale, the transfer may take one to seven days.

For more information on exchanging shares by telephone, see "Transactions By
Telephone" at the end of this section.

When you exchange shares by mail, you must send our service provider, State
Street Bank and Trust, a written request for the exchange. No medallion
signature guarantee is required unless shares are also being sold for cash and
would otherwise require a medallion signature guarantee.

When you exchange shares through a dealer, you may be charged a service fee or
commission for performing the transaction.

30
<PAGE>

YOU CAN MAKE EXCHANGES AMONG ANY OF THE FOLLOWING DAVIS FUNDS:
EQUITY FUNDS
- ------------
Davis New York Venture Fund
Davis Growth Opportunity Fund
Davis Financial Fund
Davis International Total Return Fund

GROWTH & INCOME FUNDS
- ---------------------
Davis Growth & Income Fund
Davis Real Estate Fund
Davis Convertible Securities Fund

BOND FUNDS
- ----------
Davis Intermediate Investment Grade Bond Fund
Davis Tax-Free High Yield Fund
Davis Government Bond Fund

GOVERNMENT MONEY MARKET FUND
Davis Government Money Market Fund

TRANSACTIONS BY TELEPHONE

A benefit of investing through Davis Funds is that you can use our telephone
system to sell or exchange shares. If you do not wish to have this option
activated for your account, you must note this on your Application Form.

When you call 1-800-279-0279, you can make a sale or exchange in two ways:
o You can speak directly with a representative during business hours (7 a.m.
to 4 p.m. Mountain Time).
o If you have a TouchTone(TM) telephone, you can use the automated telephone
system, known as DAVIS DIRECT Access, 24 hours a day, seven days a week.

[SET OFF]
YOU CAN USE DAVIS DIRECTACCESS TO:

o GET THE PRICE, TOTAL RETURN AND FUND DESCRIPTION FOR ANY DAVIS FUND.
o CHECK YOUR ACCOUNT BALANCE AND OTHER ACCOUNT INFORMATION.
o SELL AND EXCHANGE SHARES.
o GET THE MAILING ADDRESS AND WIRE INSTRUCTIONS FOR ANY DAVIS FUND. REQUEST
o LITERATURE ABOUT ANY DAVIS FUND.

31
<PAGE>

If you wish to sell shares by phone and receive a check in the mail:
o The maximum amount that can be issued is $25,000.
o The check can only be issued to the registered account owner.
o The check must be sent to the address on file with Davis.
o Your current address must be on file for 30 days.

When you sell or exchange shares over the telephone, you agree that Davis New
York Venture Fund is not liable for following telephone instructions believed
to be genuine (that is, directed by the account holder). We use certain
procedures to confirm that your instructions are genuine, including a request
for personal identification (your account or Social Security number) and a tape
recording of the conversation. If these procedures are not used, the Fund may
be liable for unauthorized instructions.

Be aware that during unusual market conditions, Davis Funds may not be able to
accept all requests by phone.

32
<PAGE>

[INSIDE BACK COVER]

THE DAVIS FUNDS:
OVER 25 YEARS OF RELIABLE INVESTING

OUR STORY. Davis Selected Advisers, investment adviser of the Davis Funds, has
a history of investing for the long-term. Since our founding in 1969, we have
been dedicated to delivering superior investment performance and service to our
clients.

WE ARE LONG-TERM INVESTORS. We analyze high-quality growth companies that have
been overlooked, buy their stock at value prices, and hold the shares for the
long-term. This strategy was first developed by legendary Wall Street investor
Shelby Cullom Davis, a leading financial adviser to governors and presidents.
P. Our investment approach has been refined over the last 25 years by his son,
Shelby M.C. Davis, who is now Chief Investment Officer of Davis Selected
Advisers. The Davis strategy is still followed today by the third generation of
family members: Christopher C. Davis and Andrew A. Davis serve as Portfolio
Manager or Co-Portfolio Manager for many Davis Funds.

33
<PAGE>

[DESIGN ISSUE: WILL THE SECTION BELOW BE PERFED?]

ADDRESS AND PHONE GUIDE

OUR TELEPHONE NUMBER OUR INTERNET ADDRESS
1-800-279-0279 http://www.davisfunds.com

OUR MAILING ADDRESS
Davis Distributors
124 East Marcy Street
Santa Fe, New Mexico 87501

<S> <C>
OUR SERVICE PROVIDER'S REGULAR MAILING ADDRESS OUR SERVICE PROVIDER'S OVERNIGHT MAILING ADDRESS
State Street Bank and Trust Company State Street Bank and Trust Company
c/o Davis Funds c/o. Davis Funds
P.O. Box 8406 66 Brooks Drive
Boston, MA 02266-8406 Braintree, MA 02184

</TABLE>

34
<PAGE>

[BACK COVER]

OTHER FUND DOCUMENTS

WHERE YOU CAN GET THESE DOCUMENTS:

o BY TELEPHONE. Call Davis Funds toll-free at 1-800-279-0279, Monday-Friday,
7 a.m. to 4 p.m. Mountain Time.

o VIA THE INTERNET. Visit the SEC web site (WWW.SEC.GOV).

o BY MAIL. Specify the document you are requesting when writing to us.

DAVIS NEW YORK VENTURE FUND, INC.
124 EAST MARCY STREET
SANTA FE, NEW MEXICO 87501
1-800-279-0279

Investment Company Act File No. 811-1701

<PAGE>

[COVER PAGE]

DAVIS GROWTH & INCOME FUND

December 1, 1998

Prospectus and Application Form
Class A
Class B
Class C

The Securities and Exchange Commission has not approved or disapproved of the
shares of Davis Growth & Income Fund-or any other mutual fund-as an investment.
The Securities and Exchange Commission has not determined whether this
prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.

(Davis logo)

Over 25 Years of Reliable Investing

1
<PAGE>

[INSIDE FRONT COVER]

RISK SPECTRUM

Davis Selected Advisers manages eleven mutual funds in the Davis family. Each
fund has a distinct investment objective and strategy. The following graph
shows how these funds compare to each other in terms of risk. Davis Growth &
Income Fund is approximately in the middle, with a risk level that we
characterize as "medium."

[INSERT GRAPHIC]

For more information about any of the other Davis Funds, including charges and
expenses, ask for a prospectus. Read it carefully before investing or sending
money.

2
<PAGE>

TABLE OF CONTENTS

SNAPSHOT OF DAVIS GROWTH & INCOME FUND

OVERVIEW OF THE FUND
Investment Objective and Strategy
Principal Risks
Fund Performance
Fees and Expenses
Financial Highlights

WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT

HOW WE MANAGE THE FUND

ONCE YOU INVEST IN THE FUND

HOW TO CHOOSE A SHARE CLASS

HOW TO OPEN AN ACCOUNT

HOW TO BUY, SELL AND EXCHANGE SHARES

THE DAVIS FUNDS: OVER 25 YEARS OF RELIABLE INVESTING

OTHER FUND DOCUMENTS

3
<PAGE>

SNAPSHOT OF DAVIS GROWTH & INCOME FUND

This section provides you with basic information about Davis Growth & Income
Fund that can help you decide if the Fund suits your needs.

TYPE OF FUND. Growth and income.

INVESTMENT OBJECTIVE. Capital growth and income.

YOU SHOULD CONSIDER INVESTING IN THIS FUND IF
o You are risk-sensitive, but would like to invest in growing companies.
o You are primarily interested in growth-oriented investments, but want
current income.
o You are looking for a diversified fund to weather varied market cycles.
o You are investing for the long-term (five years or more).

YOU SHOULD NOT INVEST IN THIS FUND IF
o You are worried about the possibility of sharp price swings and dramatic
market declines.
o You are investing for the short term (less than five years).
o You are primarily interested in current income with minimal risk.

MINIMUM INITIAL INVESTMENT
$1,000 for a non-retirement plan account,
$250 for retirement plans

If, after reading this section, you think that the Fund may suit your
investment goals, you should read the rest of this prospectus for more detailed
information.

4
<PAGE>

OVERVIEW OF DAVIS GROWTH & INCOME FUND

INVESTMENT OBJECTIVE AND STRATEGY

Davis Growth & Income Fund's investment objectives are capital growth and
income. We strive to meet these objectives by using a conservative investment
strategy. Ordinarily, most of the Fund's assets are invested in the common
stock of growing companies. However, since the stock market can decline and the
value of individual stocks can suffer in response to uncontrollable and
unpredictable events, we balance Davis Growth & Income Fund's portfolio by
buying real estate securities, convertible securities and bonds. These
investments may not respond to changes in market and general economic
conditions in the same ways that common stocks respond. As a result, they may
retain their value better than stocks, particularly during a general decline in
the stock market. In addition, real estate securities, convertible securities
and bonds may earn more income than common stock.

[SIDEBAR: ]
Please see the inside back cover page of this prospectus to learn about the
Davis investment philosophy.

Davis Growth & Income Fund's portfolio managers constantly evaluate market
conditions and the Fund's mix of assets to ensure that the Fund owns an
appropriate blend of growth-oriented and income-oriented investments.

You can find more detailed information about the types of securities that Davis
Growth & Income Fund buys in the section called HOW WE MANAGE THE FUND.

PRINCIPAL RISKS

If you buy shares of Davis Growth & Income Fund, you may lose some or all of
the money that you invest. The two most significant risks of the Fund are
market risk and company risk.

o MARKET RISK. The price of Davis Growth & Income Fund's shares, and the
value of your investment in the Fund, will vary with the value of the
assets that we hold. The values of common stocks, real estate securities,
convertible securities and bonds fluctuate in response to movements in the
stock market and market interest rates.

5
<PAGE>

o COMPANY RISK. The values of individual securities fluctuate in response
to market evaluations of the businesses that issue them. These evaluations
may change rapidly and unpredictably due to corporate developments (such
as disappointing earnings news or delays in new products), which may cause
the market price of securities to decline from the Fund's purchase price.

An investment in Davis Growth & Income Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

You can find more detailed information about the risks of the Fund's particular
investments, as well as the role of credit rating agencies, in the section
called HOW WE MANAGE THE FUND.

FUND PERFORMANCE

Davis Growth & Income Fund began selling shares to the public on May 1, 1998.
The following charts and tables will help you understand the Fund's financial
condition--including the returns that investors have earned and the cost of an
investment. These historical results do not necessarily indicate the
performance that investors can expect in the future. The value of the Fund's
shares may go up or down.

TOTAL RETURN

Davis Growth & Income Fund's investment performance will vary from year to
year. This chart shows the results that we achieved in the Fund's Class A
shares since inception.

DAVIS GROWTH & INCOME FUND
TOTAL RETURN FROM MAY 1, 1998 THROUGH JULY 31, 1998

(1.90%)

6
<PAGE>

AVERAGE ANNUAL TOTAL RETURN

The tables below show Davis Growth & Income Fund's average annual total returns
for the three-month period between May 1, 1998 (inception date) and July 31,
1998. The tables also compare these returns to those earned during the same
period for the Standard & Poor's 500 Composite Index, an unmanaged benchmark of
the total return performance of large capitalization stocks, and the Lipper
Growth & Income Index, which tracks the largest funds that pursue a mix of
growth and income as their investment objective. Davis Growth & Income Fund is
not completely comparable to the Standard & Poor's 500 Composite Index because,
although the Fund invests in large capitalization common stocks, we also buy
several other types of securities.

DAVIS GROWTH & INCOME FUND
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIOD FROM MAY 1, 1998 THROUGH JULY 31, 1998)
WITHOUT MAXIMUM SALES CHARGE

- ------------------ ----------------- ----------------- ----------------- ----------------- -----------------
CLASS A CLASS B CLASS C S&P 500 INDEX* LIPPER GROWTH &
(since (since (since INCOME INDEX
5/1/98) 5/4/98) 5/4/98)
- ------------------ ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
May 1, 1998 (1.90%) (2.10%) (2.10%) 1.18% (2.79%)
through July 31,
1998 (life of
fund)
- ------------------ ----------------- ----------------- ----------------- ----------------- -----------------

DAVIS GROWTH & INCOME FUND
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIOD FROM MAY 1, 1998 THROUGH JULY 31, 1998)
WITH MAXIMUM SALES CHARGE

- ------------------ ----------------- ----------------- ----------------- ----------------- -----------------
CLASS A CLASS B CLASS C S&P 500 INDEX* LIPPER GROWTH &
(since 5/1/98) (since 5/4/98) (since 5/4/98) INCOME INDEX
- ------------------ ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
May 1, 1998 (6.57%) (6.02%) (3.08%) 1.18% (2.79%)
through July 31,
1998 (life of
fund)
- ------------------ ----------------- ----------------- ----------------- ----------------- -----------------
</TABLE>

*"Standard & Poor's 500," "S&P 500(R)," "S&P(R)," and "500" are registered
trademarks of The McGraw-Hill Companies, Inc.

7
<PAGE>

FEES AND EXPENSES

[DESIGN NOTE: the following explanations to be next to fee chart]

o As a Class A shareholder, only if you buy shares valued at $1 million or
more without a sales charge and sell shares within one year of purchase.
o As a Class B shareholder, if you sell shares within six years of purchase.
o As a Class C shareholder, if you sell shares within one year of purchase.

EXCHANGE FEE. The fees some mutual funds charge to sell shares in one fund and
to buy another fund. This Fund, like all other Davis Funds, does not charge an
exchange fee.

FEES YOU MAY PAY AS A DAVIS GROWTH & INCOME FUND SHAREHOLDER
(PAID DIRECTLY FROM YOUR INVESTMENT)

</TABLE>

[DESIGN NOTE: the following explanations to be next to table of operating
expenses]

MANAGEMENT FEES. Costs to manage a mutual fund's portfolio and to administer
its business affairs. This fee is a percentage of the Fund's net asset value.

8
<PAGE>

DISTRIBUTION FEES. Fees the Fund pays to sell and distribute shares and to
provide services to shareholders (also known as a 12b-1 fee). These fees are
paid out of the Fund's assets on an ongoing basis. See "About the Distributor"
in the section WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT.

OTHER EXPENSES. The most significant fees in this category are those to
attorneys, accountants, directors, and the custodian and transfer agent (State
Street Bank and Trust Company).

TOTAL ANNUAL OPERATING EXPENSES. The percentage of the Fund's average net
assets that are used each year to pay expenses (also known as the expense
ratio).

ANNUAL FUND OPERATING EXPENSES
FOR FISCAL YEAR ENDED JULY 31, 1998
(DEDUCTED FROM DAVIS GROWTH & INCOME FUND'S ASSETS)

- -------------------------------------------------------------- ---------------- ----------------- ----------------
CLASS A CLASS B CLASS C
- -------------------------------------------------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
Management Fees 0.75% 0.75% 0.75%
- -------------------------------------------------------------- ---------------- ----------------- ----------------
Distribution (12b-1) Fees 0.25% 1.00% 1.00%
- -------------------------------------------------------------- ---------------- ----------------- ----------------
Other Expenses 0.44% 0.57% 0.57%
----- ----- -----
- -------------------------------------------------------------- ---------------- ----------------- ----------------
Total Annual Operating Expenses 1.44% 2.32% 2.32%
- -------------------------------------------------------------- ---------------- ----------------- ----------------
</TABLE>

IF I INVEST IN THIS FUND, WHAT WILL IT COST ME?

Here is an example of what your costs might be if you invest in Davis Growth &
Income Fund. It is designed to help you compare investing costs with other
mutual funds.

COST OF INVESTING $10,000 IN DAVIS GROWTH & INCOME FUND

The top chart assumes that you sell your shares at various times, and the
bottom chart assumes that you continue to hold your shares, avoiding a possible
deferred sales charge. Although your actual costs may be higher or lower, your
costs-based on these assumptions-would be:

9
<PAGE>

- ------------------------------ -------------------------- -------------------------- --------------------------
IF YOU SELL YOUR SHARES IN... CLASS A CLASS B CLASS C
- ------------------------------ -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
1 Year $61 $64 $34
- ------------------------------ -------------------------- -------------------------- --------------------------
3 Years $91 $102 $72
- ------------------------------ -------------------------- -------------------------- --------------------------
5 Years $122 $144 $124
- ------------------------------ -------------------------- -------------------------- --------------------------
10 Years $212 $233 $266
- ------------------------------ -------------------------- -------------------------- --------------------------

- ------------------------------ -------------------------- -------------------------- --------------------------
IF YOU STILL HOLD YOUR CLASS A CLASS B CLASS C
SHARES AFTER...
- ------------------------------ -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
1 Year $61 $24 $24
- ------------------------------ -------------------------- -------------------------- --------------------------
3 Years $91 $72 $72
- ------------------------------ -------------------------- -------------------------- --------------------------
5 Years $122 $124 $124
- ------------------------------ -------------------------- -------------------------- --------------------------
10 Years $212 $233 $266
- ------------------------------ -------------------------- -------------------------- --------------------------

</TABLE>

FINANCIAL HIGHLIGHTS

This table is designed to show you the financial performance of Davis Growth &
Income Fund for the period from May 1, 1998 (when the Fund began selling shares
to the public) through July 31, 1998. Some of the information reflects
financial results for a single Fund share. The total returns represent the rate
that an investor would have earned (or lost) money on an investment in the
Fund. It assumes that all dividends and capital gains have been reinvested.

KPMG Peat Marwick LLP has audited this information. KPMG Peat Marwick's report,
along with the Fund's financial statements, is included in the annual report,
which is available by request.

10
<PAGE>

DAVIS GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
CLASS A, B, C

Financial Highlights for a share of capital stock outstanding throughout each
period.

- ------------------------------------------------- -------------------- -------------------- ---------------------
CLASS A CLASS B CLASS C
- ------------------------------------------------- -------------------- -------------------- ---------------------
MAY 1, 1998 MAY 4, 1998 MAY 4, 1998
(COMMENCEMENT (INCEPTION (INCEPTION
OF OPERATIONS) OF CLASS) OF CLASS)
THROUGH THROUGH THROUGH
- ------------------------------------------------- -------------------- -------------------- ---------------------
JULY 31, 1998 JULY 31, 1998 JULY 31, 1998
------------- ------------- -------------
- ------------------------------------------------- -------------------- -------------------- ---------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $10.00 $10.00 $10.00
------ ------ ------

- ------------------------------------------------- -------------------- -------------------- ---------------------
Income From Investment Operations
- ------------------------------------------------- -------------------- -------------------- ---------------------
Net Investment Income 0.03 0.01 0.01
- ------------------------------------------------- -------------------- -------------------- ---------------------
Net Realized and Unrealized Gains (.22) (.22) (.22)
----- ----- -----
- ------------------------------------------------- -------------------- -------------------- ---------------------
Total from Investment Operations (0.19) (0.21) (0.21)

- ------------------------------------------------- -------------------- -------------------- ---------------------
Net Asset Value, End of Period $9.81 $9.79 $9.79
----- ----- -----

- ------------------------------------------------- -------------------- -------------------- ---------------------
Total Return (1) (1.90)% (2.10)% (2.10)%
- -------------

- ------------------------------------------------- -------------------- -------------------- ---------------------
Ratios/Supplemental Data
- ------------------------------------------------- -------------------- -------------------- ---------------------
Net Assets, End of Period (000,000 omitted) $49,715 $19,571 $5,512
- ------------------------------------------------- -------------------- -------------------- ---------------------
Ratio of Expenses to Average Net Assets 1.44%* 2.32%* 2.32%*
- ------------------------------------------------- -------------------- -------------------- ---------------------
Ratio of Net Investment Income to Average 1.87%* 0.99%* 0.99%*
Net Assets
- ------------------------------------------------- -------------------- -------------------- ---------------------
Portfolio Turnover Rate(2) 0% 0% 0%
- ------------------------------------------------- -------------------- -------------------- ---------------------

</TABLE>

* Annualized.

11
<PAGE>

WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT

A number of entities provide services to Davis Growth & Income Fund. This
section shows how the Fund is organized, the entities that perform these
services, and how these entities are compensated. Additional information on the
organization of the Fund is provided in the Fund's Statement of Additional
Information. For information on how to receive this document, see the back
cover of this prospectus.

INVESTMENT ADVISER

DAVIS SELECTED ADVISERS, LP
Referred to throughout this prospectus as "Davis Selected Advisers"
124 East Marcy Street
Santa Fe, NM 87501
o Provides investment advice for Davis Growth & Income Fund's portfolio.
o Manages Davis Growth & Income Fund's business affairs.
o Provides day-to-day administrative services.
o Serves as investment adviser for all of the Davis Funds, other mutual
funds, and other institutional clients.
o Annual Adviser Fee for the period May 1, 1998 through July 31, 1998 (based on
average net assets): 0.75%

INVESTMENT SUB-ADVISER

DAVIS SELECTED ADVISERS-NY, INC.
Referred to throughout this prospectus as "Davis Selected Advisers-NY"
609 Fifth Avenue
New York, NY 10017
o Performs investment management and research services for Davis Growth &
Income Fund and other institutional clients.
o Wholly owned subsidiary of Davis Selected Advisers.
o Annual Fee: Davis Selected Advisers pays the fee, not the Fund.

12
<PAGE>

CUSTODIAN AND TRANSFER AGENT

STATE STREET BANK AND TRUST COMPANY
Also referred to as "State Street Bank and Trust"
P.O. Box 8406
Boston, MA 02266-8406
o Prices the Fund daily.
o Holds share certificates and other assets of the Fund.
o Maintains records of shareholders. Issues and cancels share certificates.
o Supervises the payment of dividends.

BOARD OF DIRECTORS

The Fund's Board of Directors has general supervisory responsibilities of the
Fund and supervises the investment adviser's duties.

DISTRIBUTOR

DAVIS DISTRIBUTORS, LLC
Referred to throughout this prospectus as "Davis Distributors"
124 East Marcy Street
Santa Fe, NM 87501
o Oversees purchases of shares and promotional activities for Davis Growth
& Income Fund.
o Wholly owned subsidiary of Davis Selected Advisers.
o Serves as distributor for all of the Davis Funds and other mutual funds
managed by Davis Selected Advisers.

[SET OFF]
ABOUT THE DISTRIBUTOR

Many mutual funds, including Davis Growth & Income Fund, have adopted plans
under Rule 12b-1 of the Investment Company Act of 1940 - the key law that
regulates mutual funds-which allows the fund to charge a fee to cover
promotional costs. Under this rule, the Fund is allowed to reimburse Davis
Distributors for its expenses for all three classes of shares. This fee
includes costs for sales and marketing activities.

Distribution fees for Class A shares are limited to an annual rate of 0.25% of
the average daily net asset value of the Fund's Class A shares. Distribution
fees for Class B and Class

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<PAGE>

C shares-primarily to compensate dealers for selling the shares-are limited to
an annual rate of 1% of the average daily net asset value of Class B and C
shares.

Long-term shareholders of mutual funds that pay distribution fees may pay more
than the maximum front-end sales charge allowed by the National Association of
Securities Dealers.

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<PAGE>

WHO THE PORTFOLIO MANAGERS ARE

SHELBY M.C. DAVIS
Responsibilities:
o Chief Investment Officer of Davis Selected Advisers
o President of all the Davis Funds.

CHRISTOPHER C. DAVIS
Responsibilities:
o Vice President and Co-Portfolio Manager of the Fund since its inception.
o Also manages or co-manages other equity funds advised by Davis Selected
Advisers.
o Portfolio Manager or Co-Portfolio Manager of Davis New York Venture Fund from
October 1995 to the present.

Other Experience:
o Assistant portfolio manager and research analyst working with Shelby M.C.
Davis from September 1989 to September 1995.

ANDREW A. DAVIS
Responsibilities:
o Vice President and Co-Portfolio Manager of the Fund since its inception.
o Portfolio Manager or Co-Portfolio Manager of Davis Convertible Securities
Fund and Davis Real Estate Fund since inception of each in 1994.

Other Experience:
o Vice President and head of convertible securities research at
PaineWebber, Incorporated for six years.

[BOXED]
OUR CODE OF ETHICS

We allow the officers and employees of Davis Growth & Income Fund, Davis
Selected Advisers and its affiliates to buy and sell securities for their own
personal accounts. However, in order to do so, they must agree to a number of
restrictions, listed in our company Code of Ethics.

15
<PAGE>

HOW WE MANAGE THE FUND

This section provides an overview of the types of securities the Fund invests
in and details the strategies the Fund uses to minimize the risk of investing
in these securities.

WHAT WE INVEST IN AND WHY

Davis Growth & Income Fund's investment objectives are capital growth and
income. In keeping with the Fund's conservative approach to investing, our
portfolio managers balance the Fund's holdings of common stocks with real
estate securities, convertible securities and bonds.

Real estate securities, convertible securities and bonds may be less
susceptible to changes in the stock market than common stocks are. As a result,
these securities may retain their value better than stocks, particularly during
a general decline in the stock market. An additional benefit of the Fund's
asset mix is that the Fund's common stocks offer the potential for capital
growth over the long-term, while the real estate securities, convertible
securities and bonds generate current income.

During normal market conditions, approximately 60% of Davis Growth & Income
Fund's assets are equity securities. Most of the remaining 40% of the Fund's
holdings generally are real estate securities, convertible securities, bonds
and cash equivalents. The Fund may vary these percentages as market conditions
dictate.

[BOXED]
In this section, we tell you about the Fund's five different types of
investments. For each type of security, we:

o explain what it is (next to the heading WHAT THEY ARE)
o explain how we select particular investments (next to the heading HOW WE PICK
THEM)
o explain how the security contributes to the Fund's investment objectives
(next to the heading WHY WE BUY THEM)
o describe the risks (next to the heading RISKS)

Generally, there is no restriction on how much of the Fund's assets our
portfolio managers can invest in any particular type of security. However, some
of the securities that the Fund buys are considered "high yield, high risk"
investments because they do not have favorable credit ratings. The Fund cannot
devote more than 35% of its assets to such investments.

16
<PAGE>

EQUITY SECURITIES

WHAT THEY ARE. Equity securities represent ownership of a company. Equity
securities come in many forms, but the form that this Fund typically holds is
common stock.

Most of Davis Growth & Income Fund's common stock is issued by U.S. companies
with large market capitalizations (that is, the market value of all of their
outstanding stock exceeds $5 billion). The Fund may also invest in stock of
smaller U.S. companies and in securities of foreign issuers or securities that
are principally traded in foreign markets.

[SET OFF OR BOXED]

WHAT WE LOOK FOR IN A COMPANY

1. FIRST-CLASS MANAGEMENT. We believe that great companies are created by
great managers. In visiting companies, we look for managers with a record
of doing what they say they are going to do.
2. MANAGEMENT OWNERSHIP. Just as we invest heavily in our own funds, we look
for companies where individual managers own a significant stake.
3. STRONG RETURNS ON CAPITAL. We want companies that invest their capital
wisely and reap superior returns on those investments.
4. LEAN EXPENSE STRUCTURE. Companies that can keep costs low are able to
compete better, especially in difficult times. A low cost structure
sharply reduces the risk of owning a company's shares.
5. DOMINANT OR GROWING MARKET SHARE IN A GROWING MARKET. A company that is
increasing its share of a growing market has the best of both worlds.
6. PROVEN RECORD AS AN ACQUIRER. When an industry or market downturn occurs,
it is a good idea to own companies that can take advantage of low prices
to expand operations through inexpensive acquisitions.
7. STRONG BALANCE SHEET. Strong finances give a company staying power to
weather difficult economic cycles.
8. COMPETITIVE PRODUCTS OR SERVICES. We invest in companies with products that
are not vulnerable to obsolescence.
9. SUCCESSFUL INTERNATIONAL OPERATIONS. A proven ability to expand
internationally reduces the risk of being tied too closely to the U.S.
economic cycle.
10. INNOVATION. The savvy use of technology in any business, from a food
company to an investment bank, can help reduce costs and increase sales.

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<PAGE>

WHY WE BUY THEM. Davis Growth & Income Fund buys common stock to take an
ownership position in companies with growth potential, and then holds that
position long enough to realize the benefits of growth.

RISKS. Factors that influence the value of a share of common stock are
primarily general market and economic conditions, and the financial condition
and performance of the issuer.

o MARKET RISK. The market value of shares of common stock can change
rapidly and unpredictably as a result of political or economic events
having little or nothing to do with the issuer.

o COMPANY RISK. The price of an equity security varies with the success and
failure of its issuer. As a result, the success of the companies invested
in by the Fund largely determines the Fund's performance. Investing in
small capitalization companies carries greater risk than investing in the
stock of larger companies.

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<PAGE>

REAL ESTATE SECURITIES

WHAT THEY ARE. Real estate securities are issued by companies that are
"principally engaged" in the real estate industry. A company is "principally
engaged" in the real estate industry if it owns real estate or real
estate-related assets that constitute at least 50% of the value of all of its
assets, or if it derives at least 50% of its revenues or net profits from
owning, financing, developing, managing, or selling real estate, or from
offering products or services that are related to real estate. Issuers of real
estate securities include real estate investment trusts (known as "REITs"),
brokers, developers, lenders and companies with substantial real estate
holdings such as paper, lumber, hotel and entertainment companies.

Most of the Fund's real estate securities are, and likely will continue to be,
interests in REITs. REITs pool investors' funds to make real estate-related
investments, such as buying interests in income-producing property or making
loans to real estate developers. The Fund does not invest directly in real
estate.

HOW WE PICK THEM. Davis Growth & Income Fund focuses on REITs and other
companies with first-class management teams who view real estate as a means of
producing steady increases in income and strong returns on capital. We
concentrate heavily on valuation, looking for companies that sell at less than
the present value of their expected cash flow over the next few years.

WHY WE BUY THEM. Real estate securities contribute to both pieces of the Fund's
investment goals because they offer both growth potential and current income.
These securities also contribute to the Fund's diversification strategy. The
values of real estate securities typically do not fluctuate at the same time or
for the same reasons as values of traditional equity securities, so real estate
investments may offer a cushion when the stock market is in a slump. Similarly,
the price (and market value) of a real estate security that promises regular
payments may be more stable than the price of a common stock that pays little
or no dividends.

RISKS. Real estate securities are susceptible to the many risks associated with
the direct ownership of real estate, including:

o declines in property values - because of changes in the economy or the
surrounding area or because a particular region has become less appealing
to tenants
o increases in property taxes, operating expenses, interest rates, or
competition
o overbuilding
o changes in zoning laws losses from casualty or condemnation

In addition, since many real estate securities are common stocks, they present
the risks that we discuss under the heading Equity Securities - Risks.

19
<PAGE>

Many real estate debt securities are assigned ratings by agencies that evaluate
the quality of publicly offered debt. Davis Growth & Income Fund may buy some
real estate securities that have low ratings. These securities are considered
"high yield, high risk" debt, and present more risk than so-called "investment
grade" securities. For information about high yield, high risk debt, please see
"Additional Information about High Yield, High Risk Debt Securities."

20
<PAGE>

CONVERTIBLE SECURITIES

WHAT THEY ARE. Convertible securities are securities that can be converted into
or exchanged for other securities. The most common types of convertible
securities are bonds and preferred stock that the holder can exchange for
common stock of the same issuer.

HOW WE PICK THEM. First, the Fund's portfolio managers identify attractive
issuers using the ten desired characteristics that we discuss under the heading
Equity Securities - How We Pick Them. Then we identify securities issued by
those companies that have the potential to deliver 80% of the amount that the
issuer's common stock appreciates when market conditions are favorable, but
will not drop in value by more than 50% of the amount that the issuer's common
stock declines when market conditions are bad.

WHY WE BUY THEM. Convertible securities contribute to both pieces of the Fund's
investment goals because they offer both current income and growth potential.
These securities also contribute to the Fund's strategy of holding assets other
than common stocks.

For current income, Davis Growth & Income Fund buys convertible debt
instruments like bonds, notes and debentures that entitle the Fund to receive
regular interest payments. Similarly, we buy preferred stock that entitles the
Fund to receive regular dividend payments. These interest and dividend payments
generally exceed the dividend payments that the issuers of our convertible
securities make to holders of their common stock.

Convertible securities have growth potential because if the underlying common
stock begins to increase in value, the holder of the convertible security can
exchange it for common stock and enjoy the benefits of that growth.

RISKS. Convertible securities have characteristics of both equity and debt, so
they present the risks of common stock ownership (discussed in the section
called Equity Securities - Risks) as well as the risks that traditional lenders
face. The debt component of a convertible security poses three types of risk:

o INTEREST RATE SENSITIVITY. If a security pays a fixed interest rate, and
market rates increase, the value of the fixed-rate security should
decline.
o CHANGES IN DEBT RATING. If a rating agency gives a debt security a low
rating, the value of the security will decline because investors will
demand a higher rate of return. Davis Growth & Income Fund may buy some
convertible securities that are rated lower than "investment grade."
o CREDIT RISK. Like any borrower, the issuer of a debt security may be
unable to make its payments. Securities issued by financially troubled
companies are considered "high yield, high risk debt," and present more
risk than securities with higher ratings. For information about high
yield, high risk debt, please see "Additional Information about High
Yield, High Risk Debt Securities."

21
<PAGE>

BONDS AND OTHER DEBT SECURITIES

WHAT THEY ARE. Issuers such as corporations and federal, state and local
governments sell bonds and other debt securities to borrow money. Some debt
securities (often referred to as "coupon bonds") give the holder current
income. Like the borrower on an ordinary loan, the issuer of a coupon bond
makes periodic interest payments to the holders (i.e., the lenders), and agrees
to repay the principal amount borrowed (the price of the bond) when the
security matures. Other debt securities (referred to as "zero coupon bonds") do
not require periodic interest payments, but have the equivalent of a balloon
interest payment when the security matures. In other words, when a zero coupon
bond matures, the issuer pays the holder more money than the issuer borrowed.

HOW WE PICK THEM. Davis Growth & Income Fund searches for debt securities that
are issued by government agencies or by corporations offering maximum yield
relative to credit quality.

WHY WE BUY THEM. The Fund buys debt securities primarily for current income
from regular interest payments. An additional advantage of these securities is
that they diversify the Fund's portfolio, providing some cushion against a fall
in the value of our common stock holdings.

RISKS. The prices (and market value) of debt securities fluctuate primarily in
response to two factors:

o INTEREST RATE SENSITIVITY. In general, bond prices decline when interest
rates rise, and rise when interest rates fall. If a bond pays a fixed
interest rate, and market rates increase, the value of the bond should
decline. When interest rates are falling, the value of the bond should
increase.
o CREDIT QUALITY. Some issuers of debt are considered a better credit risk
than others. For example, a security issued by the U.S. Government is
virtually certain to be paid in full and on time. These securities
typically offer lower interest rates to reflect their relative safety. In
contrast, bonds issued by corporate issuers usually involve increased risk
as to the payment of principal and interest.

The Fund may buy "pure debt" securities that have low ratings. By "pure debt"
we mean securities that are exclusively evidence of a loan; they are not also
real estate securities or convertible securities. Securities with low ratings
are considered "high yield, high risk debt," and present more risk than
so-called "investment grade" securities. For information about high yield, high
risk debt, please see--Additional Information about High Yield, High Risk Debt
Securities.

22
<PAGE>

ADDITIONAL INFORMATION ABOUT HIGH YIELD, HIGH RISK DEBT SECURITIES

WHAT THEY ARE. There are several agencies that evaluate and rate debt
securities. Two of the most prominent are Standard & Poor's and Moody's
Investors Service.

When they evaluate the quality of a debt instrument, rating agencies look at
factors like the issuer's current financial condition and business prospects,
the value of any collateral that secures the debt and the issuer's history of
paying other debt. Each agency has its own system for "grading" debt. Standard
& Poor's has eleven ratings, ranging from D for securities that are in default
to AAA for securities that are almost certain to be repaid. Moody's Investors
Service has nine ratings, with C being the lowest and Aaa being the highest.

A security is called "investment grade" if a respected agency assigns it a
favorable credit rating. In contrast, a debt security is considered "high
yield, high risk" if it is rated BB or lower by Standard and Poor's or Ba or
lower by Moody's Investor Services. Securities with these low ratings are also
referred to as "junk bonds." Many institutional investors, such as pension
plans and municipal governments, are only permitted to buy investment grade
debt.

HOW WE PICK THEM. Davis Growth & Income Fund does not specifically seek out
high yield, high-risk debt. However, some of the real estate securities,
convertible securities and bonds that we identify as good investments may
happen to fall into that category.

WHY WE BUY THEM. Some of the real estate securities, convertible securities and
bonds that we identify as good investments may happen to be high yield, high
risk debt.

RISKS. There are four principal risks of owning high yield, high-risk debt
securities:

o OVERBURDENED ISSUERS. Many issuers only resort to offering junk bonds
when they cannot get financing from more traditional sources, like banks.
These issuers are unlikely to have a cushion from which to make their
payments when their earnings are poor or when the economy in general is in
decline. The Fund will not purchase junk bonds that are in default at the
time of purchase, but there is no guarantee that issuers will always be
able to make their payments.
o PRIORITY. Issuers of high yield, high-risk securities are likely to have
a substantial amount of other debt. Most, if not all, of this other debt
will be "senior" to the junk bonds; an issuer must be current on its
senior obligations before it can pay bondholders. In addition, some of the
other debt may be secured by the issuer's primary operating assets. If the
issuer defaults on those obligations, the lenders may seize their
collateral - possibly forcing the issuer out of business and into
bankruptcy.
o DIFFICULT TO RESELL. Many investors simply do not want junk bonds, and
others are prohibited from buying them.

23
<PAGE>

o VOLATILE PRICES. Prices of high yield, high-risk debt securities are more
volatile than prices of higher rated securities. In periods of economic
difficulty or rising interest rates, prices of junk bonds decline more
than prices of investment grade securities.

24
<PAGE>

SHORT-TERM INVESTMENTS

[SIDEBAR]
A repurchase agreement is a type of short-term investment that uses securities
as collateral. Like a short-term loan, the borrower sells securities to the
lender. The borrower agrees to buy back the securities at a certain time - at a
higher price that incorporates an "interest payment."

HOW WE PICK THEM. Most of the Fund's short-term investments are high-grade
money market instruments and repurchase agreements. The Fund also may hold cash
in interest-bearing bank deposits.

WHY WE BUY THEM. The Fund uses short-term investments to earn interest and
maintain flexibility while we evaluate long-term opportunities. We also may use
short-term investments for "defensive" purposes; in the event our portfolio
managers anticipate a decline in the stock market, we may reduce our risk by
investing in short-term securities until market conditions improve.

25
<PAGE>

HOW WE MANAGE RISK

Risks are inherent in all investments. Investing in a mutual fund, even the
most conservative, involves risk, including the risk that you may receive
little or no return on your investment or even that you may lose part or all of
your investment. Davis Growth & Income Fund has six strategies to minimize the
risk assumed when we invest.

[SET OFF OR BOXED]
SIX STRATEGIES WE USE TO MINIMIZE RISK

1. WE PURCHASE HIGH-QUALITY GROWTH COMPANIES. Our focus on high-quality
growth companies reduces the likelihood that your investment will be tied
up in a failing company.

3. WE HAVE LONG-TERM VISION. We get to know the managers of the companies we
invest in and understand their goals. We view temporary setbacks as buying
opportunities: when other managers sell stocks in response to bad news, we
evaluate the issuer's long-term prospects.

6. WE MAY MAKE TEMPORARY DEFENSIVE INVESTMENTS. From time to time, Davis
Growth & Income Fund may take temporary defensive positions in response to
adverse market, economic or political conditions.

26
<PAGE>

ONCE YOU INVEST IN THE FUND

This section describes what happens to your money once it is invested: how your
investment is valued, how you earn money on your investment and how the
government may tax these earnings.

HOW YOUR SHARES ARE VALUED

As an investor in Davis Growth & Income Fund, you are entitled to buy and sell
shares on any business day. The share price of your investment changes
depending on the total value of the Fund's investments.

HOW SECURITIES IN THE PORTFOLIO ARE VALUED

We use current market valuations to value the securities in Davis Growth &
Income Fund:

o Securities that trade on an organized exchange are valued at the last
published sales price on the exchange. If no sales are recorded, the
securities are valued at the average of the closing bid and asked prices
on the exchange.
o 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 an amortized (gradually reduced) cost.
o Longer-term debt securities may be valued by an independent pricing service.
o Securities with unavailable market quotations and other assets are valued at
"fair value"-which is determined or directed by the Board of Directors.

HOW WE PAY EARNINGS

There are two ways you can receive payments from Davis Growth & Income Fund:

27
<PAGE>

o DIVIDENDS. Distributions to shareholders of net investment income and
short-term capital gains on investments.

o CAPITAL GAINS. Profits received by the Fund from the sale of securities
held for the long-term, which are then distributed to shareholders.

Davis Growth & Income Fund usually pays quarterly dividends and generally
distributes capital gains, if any, in November or December. Unless you choose
otherwise, Davis Growth & Income Fund automatically reinvests your dividends
and capital gains in additional Fund shares.

We also offer a Dividend Diversification Program, which allows you to have your
dividends and capital gains reinvested in shares of another Davis Fund.

SIDEBAR
QUOTATIONS
The bid price is the highest price a prospective buyer is prepared to pay for a
security. The asked price is the lowest price acceptable to a prospective
seller. The average of these two prices is known as a quote or quotation.

OVER THE COUNTER SECURITIES
Over the counter securities are not listed or traded on an organized exchange.
They are bought and sold by dealers connected by telephones and computer
networks.

NET INVESTMENT INCOME
Income received by the Fund from company dividends and interest on securities
investments, minus management fees and all other expenses.

If you fail to report a correct Taxpayer I.D. Number, under-reported dividend
or interest income, or are already subject to backup withholding, Davis Growth
& Income Fund is required by law to withhold a portion of any distributions you
may receive-and send it to the U.S. Treasury.

28
<PAGE>

(SET OFF)
HOW TO PUT YOUR DIVIDENDS AND CAPITAL GAINS TO WORK

HOW YOUR DIVIDENDS AND CAPITAL GAINS ARE TAXED

o If Davis Growth & Income Fund pays dividends, they are taxable to
shareholders as ordinary income. Dividends include both net investment
income and short-term capital gains.
o If Davis Growth & Income Fund pays net capital gains, they generally will
be taxed as a long-term capital-gains distribution.

These payments may be taxed at different rates, depending on the length of time
the Fund holds its assets. More information is provided in the instructions
that come with your tax return.

Investment earnings (dividends and capital gains) are taxable in the year in
which they were declared, not paid-whether they are received in cash or
reinvested in shares.

Also, keep in mind that when you sell or exchange shares of the Fund, it may
result in a taxable gain or loss.

We recommend that you consult with a tax adviser about any dividends and
capital gains you may receive from Davis Growth & Income Fund.

29
<PAGE>

HOW TO CHOOSE A SHARE CLASS

Before you can buy any shares in Davis Growth & Income Fund, you need to decide
which class of shares best suits your needs. The Fund offers three classes of
shares: A, B and C. Each class is subject to different expenses and sales
charges.

You may choose to buy one class of shares rather than another, depending on the
amount of the purchase and the expected length of time of investment.

SPECIAL NOTE: Institutions buying $5 million or more may be eligible to buy
Class Y shares of Davis Growth & Income Fund, offered through a separate
prospectus. With Class Y shares, you pay no sales charges or distribution fees.
To find out more about Class Y shares, contact your sales representative or our
distributor, Davis Distributors, at 1-800-279-0279.

CLASS A SHARES

o You buy Class A shares at their net asset value per share plus a sales
charge, which is 4.75% for any investment below $100,000 (see chart on
following page).
o There is no limit on how much you can invest in this share class.
o The Fund pays a distribution fee - up to 0.25% of the average daily net
asset value - each year you hold the shares. This fee is lower than the
fee you pay for the other two classes of shares. Lower expenses translate
into higher annual return on your investment. More information on
distribution fees is provided under WHO IS RESPONSIBLE FOR YOUR DAVIS
ACCOUNT.

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<PAGE>

CLASS A SALES CHARGES

- ------------------------------------- ---------------------- ----------------------- -------------------------------
AMOUNT OF PURCHASE SALES CHARGE SALES CHARGE AMOUNT OF SALES CHARGE
(PERCENTAGE OF (PERCENTAGE OF AMOUNT RETAINED BY THE DEALER
OFFERING PRICE) INVESTED) (PERCENTAGE OF OFFERING PRICE)
- ------------------------------------- ---------------------- ----------------------- -------------------------------
<S> <C> <C> <C>
Under $100,000 4.75% 5.0% 4.0%
- ------------------------------------- ---------------------- ----------------------- -------------------------------
$100,000 to under $250,000 3.5% 3.6% 3.0%
- ------------------------------------- ---------------------- ----------------------- -------------------------------
$250,000 to under $500,000 2.5% 2.6% 2.0%
- ------------------------------------- ---------------------- ----------------------- -------------------------------
$500,000 to under $750,000 2.0% 2.0% 1.75%
- ------------------------------------- ---------------------- ----------------------- -------------------------------
$750,000 to under $1 million 1.0% 1.0% 0.75%
- ------------------------------------- ---------------------- ----------------------- -------------------------------
$1 million or more* None None 0%
- ------------------------------------- ---------------------- ----------------------- -------------------------------

</TABLE>

As the chart above shows, the sales charge gets smaller as your purchase amount
increases. There are several ways you may combine purchases to qualify for a
lower sales charge.

31
<PAGE>

permit our service provider, State Street Bank and Trust, to hold fund shares
in escrow to guarantee payment of any sales charges that may be due if you
ultimately invest less than you agreed to invest over the covered 13-month
period.
o UNDER RIGHTS OF ACCUMULATION. If you notify your dealer or our
distributor, Davis Distributors, you can include the Class A, B and C
shares you already own (except shares of Davis Government Money Market
Fund) when calculating the price for your current purchase.
o WITH CLASS A SHARES OF OTHER DAVIS FUNDS. If you buy Class A shares of
this or any other Davis Fund except Davis Government Money Market Fund,
all of the shares you buy will be counted as a single purchase. This
includes shares purchased under a Statement of Intention or Rights of
Accumulation.

CLASS A FRONT-END SALES CHARGE WAIVERS

We will not charge a sales charge on purchases of Class A shares for:

o Shareholders making purchases with dividends or capital gains that are
automatically reinvested.
o Purchases by directors, officers and employees of Davis Growth & Income Fund,
its investment adviser or its affiliates, and their immediate families.
o Purchases by employees and people affiliated with broker-dealer firms
offering Fund shares.
o Financial institutions acting as fiduciaries making single purchases of
$250,000 or more.
o Employee benefit plans making purchases through a single account covering at
least 250 participants.
o Wrap accounts offered by securities firms, fee-based investment advisers
or financial planners.
o State and local governments.

[sidebar]
Wrap accounts are investment programs offered by broker-dealers who place a
client's funds with one or more investment advisers and charge a fee for their
services.

CLASS B SHARES

Class B shares may be best for you if you are willing to pay a higher
distribution fee than Class A shares for eight years in order to avoid paying a
front-end sales charge.

32
<PAGE>

o After you hold Class B shares for eight years, they are automatically
converted into Class A shares without paying a front-end sales charge.
Class A shares pay a lower distribution fee.
o The Fund pays a distribution fee of 1% of the average daily net asset
value each year you hold the shares. Higher expenses translate into lower
annual return on your investment. More information on distribution fees is
provided under WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT.

CLASS B DEFERRED SALES CHARGES

</TABLE>

CLASS C SHARES MAY BE BEST FOR YOU IF
YOU ARE WILLING TO PAY A HIGHER DISTRIBUTION FEE THAN CLASS A SHARES PAY IN
ORDER TO AVOID PAYING A SALES CHARGE.

o You buy the shares at net asset value (no sales charge).
o You cannot invest more than $1 million in Class C shares.
o If you sell the shares within one year of purchase, you must pay a deferred
sales charge of 1%.
o The Fund pays a distribution fee of 1% of the average daily net asset value
each year you hold the shares. Higher expenses translate into lower annual
return on your investment. More information on distribution fees is provided
under WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT.

DEFERRED SALES CHARGE WAIVERS

We will waive deferred sales charges on sales of Class A, B and C shares if:

33
<PAGE>

o You sell shares under the Automatic Withdrawal Plan amounting to, in a
12-month period, up to 12% of the value of the account when you began
participating in the Plan.
o You sell shares under a qualified retirement plan or IRA that constitute
a tax-free return of contributions to avoid a penalty.
o Your fund sells the remaining shares in your account under an Involuntary
Redemption.
o You qualify for an exception relating to defined contribution plans.
These exceptions are described in the Statement of Additional Information.
o You are a director, officer or employee of Davis Selected Advisers or one
of its affiliates (or a family member of a director, officer or employee).

If the net asset value of the shares that you sell has increased since you
purchased them, any deferred sales charge will be based on the original cost of
the shares.

[BOXED]
If you have any additional questions about choosing a share class, please call
us toll-free at 1-800-279-0279, Monday through Friday, 7 a.m. to 4 p.m.
Mountain Time. If you still are not sure about which class is best for you,
contact your financial adviser.

34
<PAGE>

HOW TO OPEN AN ACCOUNT

You can open an account if you invest at least:

o $1,000 for a non-retirement plan account.
o $250 for a retirement plan account.

[CHART]
Three ways you can open an account:

1. BY MAIL. Fill out the Application Form included in this prospectus and
mail it to our service provider, State Street Bank and Trust. Both you and
your dealer must sign the form. Include a check made payable to the DAVIS
FUNDS or, in the case of a retirement account, the custodian or trustee.
All purchases by check should be in U.S. dollars, and Davis Growth &
Income Fund will not accept third-party checks.
2. BY DEALER. You may have your dealer order and pay for the shares. In this
case, you must pay your dealer directly. Your dealer will then order the
shares from our distributor, Davis Distributors. Please note that your
dealer may charge a service or commission for buying these shares.
3. BY WIRE. You may wire federal funds directly to our service provider,
State Street. Before you wire an initial investment, you must call our
distributor, Davis Distributors, at 1-800-279-0279 to let them know the
fund and share class you will be buying. After the initial wire purchase
is made, you will need to fill out a Plan Adoption Agreement or
Application Form and return it to State Street. To ensure that the
purchase is credited properly, follow these wire instructions:

State Street Bank and Trust Company,
Boston, MA 02210
Attn.: Mutual Fund Services
DAVIS GROWTH & INCOME FUND, INC.
Shareholder Name,
Shareholder Account Number,
Federal Routing Number 011000028,
DDA Number 9904-606-2

RETIREMENT PLAN ACCOUNTS

You can invest in Davis Growth & Income Fund using any of these types of
retirement plan accounts:

35
<PAGE>

o Deductible IRAs
o Non-deductible IRAs
o Roth IRAs
o Educational IRAs
o Simple IRAs
o Profit-Sharing Plans
o Money-Purchase Plans
o Simplified Employee Pension Plans
o 403(b) Plans

36
<PAGE>

HOW TO BUY, SELL AND EXCHANGE SHARES

Once you have opened an account with Davis, you can add to--or subtract
from--your initial purchase. This section provides an overview of the types of
transactions you can perform as a shareholder of Davis Growth & Income Fund.
This includes how to initiate these transactions and the charges that you may
incur (if any) when buying, selling and exchanging shares.

[SIDEBAR:]
An exchange is when you sell shares in one Davis Fund to buy shares in another
Davis Fund in response to changes in your goals or in market conditions.

(CHART)
THREE WAYS TO BUY, SELL AND EXCHANGE SHARES

1. BY TELEPHONE. Call 1-800-279-0279. You can speak directly with a Davis
representative during our business hours or use our automated telephone system
any day or night.

2. BY MAIL. Send the request to our service provider, State Street Bank and
Trust.

Regular Mail
------------
State Street Bank and Trust Company
c/o Davis Funds
P.O. Box 8406
Boston, MA 02266-8406

Overnight Mail
--------------
State Street Bank and Trust Company
c/o Davis Funds
66 Brooks Drive
Braintree, MA 02184

WHEN YOUR TRANSACTIONS ARE PROCESSED

37
<PAGE>

For your transaction to be counted on the day you place your order with your
broker-dealer or other financial institution, they must:

o Receive your order before 4 p.m. Eastern Time.
o Promptly transmit the order to State Street Bank and Trust.

BUYING MORE SHARES

You can buy more shares at any time, either by telephone, by mail or through a
dealer. The minimum purchase amount is $25.

When you purchase shares by mail, send a check payable to the DAVIS FUNDS for
the amount of purchase to our service provider, State Street Bank and Trust. If
you have the purchase form from your most recent statement, include it with the
check. If you do not have a purchase form, include a letter with your check
stating the name of the fund and the class of shares you wish to buy. If you
know your account number, include it on the check.

When you buy shares through a dealer, you may be charged a service fee or
commission for performing the transaction.

[SET OFF - SPECIAL PROGRAM]
MAKING AUTOMATIC INVESTMENTS

Purchases can be processed electronically on any day of the month between the
fourth and 28th days if the institution that services your bank account is a
member of the Automated Clearing House system. After each automatic investment,
you will receive a transaction confirmation, and the debit should show up on
your next bank statement.

To sign up for the Automatic Investment Plan, fill out the appropriate section
of the Application Form. You can stop automatic investments at any time by
calling the Davis Funds at 1-800-279-0279.

You can also use our Dividend Diversification Program to buy more shares in
this or another Davis Fund. See ONCE YOU INVEST IN THE FUND.

38
<PAGE>

[SIDEBAR]
The Automated Clearing House system is used by most banks for electronic
transfers of money into and out of your bank account - and is regulated by the
Federal Reserve.

SELLING SHARES

You may sell back all or part of your shares to Davis Growth & Income Fund
(known as a redemption) at any time, at net asset value minus any sales charges
that may be due. You can sell the shares by telephone, by mail, or through a
dealer.

When you sell shares through a dealer, you may be charged a service fee or
commission for performing the transaction.

WHAT YOU NEED TO KNOW BEFORE YOU SELL YOUR SHARES

[SIDEBAR]
A medallion signature guarantee is a written confirmation from an eligible
guarantor institution, such as a securities broker-dealer or a commercial bank,
that the signature(s) on the account is (are) valid.
Unfortunately, no other form of signature verification can be accepted.

A stock power is a letter signed by the owner of the shares that gives State
Street Bank and Trust permission to transfer ownership of the shares to another
person or group.

o You will always receive cash for sales that total less than $250,000 or
1% of the Fund's net asset value during any 90-day period. Any sales above
the cash limit may be paid in securities and would mean you would have to
pay brokerage fees.
o If a certificate was issued for the shares you wish to sell, the
certificate must by signed by the owner(s) and sent to State Street Bank
and Trust along with the redemption request.
o Ordinarily, you only need a medallion signature guarantee on a share
certificate, stock power, or redemption request for sales of more than
$50,000. However, if you have made any changes to the Application Form
since your account was opened, or if your

39
<PAGE>

address of record has changed in the last 30 days, you will need a medallion
signature guarantee for all sales.

o A sale may produce a gain or loss. Gains may be subject to tax.

SPECIAL SALE SITUATIONS

o The Securities and Exchange Commission can suspend payment of sales under
certain emergency circumstances if the New York Stock Exchange is closed
for reasons other than customary closings and holidays.
o Davis Growth & Income Fund may make sales payments in securities if the
Fund's Board of Directors decides that making cash payments would harm the
Fund.

[SET OFF - SPECIAL PROGRAM]
MAKING AUTOMATIC WITHDRAWALS

You may stop automatic withdrawals at any time without charge or penalty by
calling the Davis Funds at 1-800-279-0279.

[BOXED]
SPECIAL NOTE: WHEN YOU MAKE A SALE OR WITHDRAWAL, A DEFERRED SALES CHARGE MAY
BE IMPOSED IF:
o YOU BUY $1 MILLION OR MORE OF CLASS A SHARES AND SELL THEM WITHIN A YEAR OF
PURCHASE.
o YOU SELL CLASS B SHARES WITHIN SIX YEARS OF PURCHASE.
o YOU SELL CLASS C SHARES WITHIN ONE YEAR OF PURCHASE.

[SET OFF - SPECIAL SHAREHOLDER PROGRAM]
WIRING SALE PROCEEDS TO YOUR BANK ACCOUNT

40
<PAGE>

Application Form. There is a $5 charge by State Street Bank and Trust for wire
service, and receiving banks may also charge for this service. Payment by
Automated Clearing House system will usually arrive at your bank two banking
days after your call. Payment by wire is usually credited to your bank account
on the next business day after you call. While State Street Bank and Trust will
also accept electronic wire sales by telephone, fax or dealer, you still need
to fill out and submit the information under the Electronic Wire Privilege
section of the Application Form.

IF YOU DECIDE TO BUY BACK SHARES YOU SOLD

IF YOUR ACCOUNT FALLS BELOW $250

If your account balance falls below $250, we may sell your remaining shares in
Davis Growth & Income Fund at net asset value. We will first notify you by
mail, giving you at least 60 days notice that an INVOLUNTARY REDEMPTION may
take place. If you can increase your account balance to above $250 during the
notice period, the involuntary redemption will be canceled.

EXCHANGING SHARES

You can transfer shares of Davis Growth & Income Fund to shares in the same
class of any other Davis Fund without having to pay a sales charge. This is
known as an exchange. You can exchange shares by telephone, by mail or through
a dealer. The initial exchange must be for at least $1,000 (unless you are
participating in the Automatic Exchange Program). Exchanges are normally
performed on the same day of the request if received by 4 p.m. Eastern Time.
However, if your exchange involves a large sale, the transfer may take one to
seven days.

41
<PAGE>

When you exchange shares through a dealer, you may be charged a service fee or
commission for performing the transaction.

YOU CAN MAKE EXCHANGES AMONG ANY OF THE DAVIS FUNDS WITHOUT HAVING TO PAY ANY
SALES CHARGE.

EQUITY FUNDS
- ------------
Davis New York Venture Fund
Davis Growth Opportunity Fund
Davis Financial Fund
Davis International Total Return Fund

GROWTH & INCOME FUNDS
- ---------------------
Davis Growth & Income Fund
Davis Real Estate Fund
Davis Convertible Securities Fund

BOND FUNDS
- ----------
Davis Intermediate Investment Grade Bond Fund
Davis Tax-Free High Income Fund
Davis Government Bond Fund

GOVERNMENT MONEY MARKET FUND
- ----------------------------
Davis Government Money Market Fund

[SET OFF - SPECIAL SHAREHOLDER PROGRAM]
MAKING AUTOMATIC EXCHANGES

42
<PAGE>

TRANSACTIONS BY TELEPHONE

A benefit of investing through Davis Funds is that you can use our telephone
system to sell or exchange shares. If you do not wish to have this option
activated for your account, mark in the box in the appropriate section of the
Application Form.

When you call 1-800-279-0279, you can perform a transaction with Davis Funds in
two ways:
o Speak directly with a representative during business hours (7 a.m. to 4 p.m.
Mountain Time).
o If you have a TouchTone(TM) telephone, you can use the automated telephone
system, known as Davis Direct Access, 24 hours a day, seven days a week.

[SET OFF]
YOU CAN USE DAVIS DIRECTACCESS TO:

If you wish to sell shares by phone and receive a check in the mail:
o The maximum amount that can be issued is $25,000.
o The check can only be issued to the registered account owner.
o The check must be sent to the address on file with Davis.
o Your current address must be on file for 30 days.

When you buy, sell or exchange shares over the telephone, you agree that Davis
Growth & Income Fund is not liable for following telephone instructions
believed to be genuine (that is, directed by the account holder). We use
certain procedures to confirm that your instructions are genuine, including a
request for personal identification (your account or Social Security number)
and a tape recording of the conversation. If these procedures are not used, the
Fund may be liable for unauthorized instructions.

Be aware that during unusual market conditions, Davis Funds may not be able to
accept all requests by phone.

43
<PAGE>

[INSIDE BACK COVER]

THE DAVIS FUNDS:
OVER 25 YEARS OF RELIABLE INVESTING

Our investment approach has been refined for more than 25 years by his son,
Shelby M.C. Davis, who is now Chief Investment Officer of Davis Selected
Advisers. The Davis strategy is still followed today by the third generation of
family members. Christopher C. Davis and Andrew A. Davis serve as either
Portfolio Manager or Co-Portfolio Manager for many Davis Funds.

44
<PAGE>

[DESIGN ISSUE: WILL THE SECTION BELOW BE PERFED?]

ADDRESS AND PHONE GUIDE

OUR TELEPHONE NUMBER OUR INTERNET ADDRESS
1-800-279-0279 http://www.davisfunds.com

OUR MAILING ADDRESS
Davis Funds
124 East Marcy Street
Santa Fe, New Mexico 87501

<S> <C>
OUR SERVICE PROVIDER'S REGULAR MAILING ADDRESS OUR SERVICE PROVIDER'S OVERNIGHT MAILING ADDRESS
State Street Bank and Trust Company State Street Bank and Trust Company
c/o Davis Funds c/o Davis Funds
P.O. Box 8406 66 Brooks Drive
Boston, MA 02266-8406 Braintree, MA 02184

</TABLE>

45
<PAGE>

[BACK COVER]

OTHER FUND DOCUMENTS

For more information about Davis Growth & Income Fund, request a free copy of
the Statement of Additional Information or the Annual and Semi-Annual Reports.
The STATEMENT OF ADDITIONAL INFORMATION provides more detailed information
about the Fund and its management and operations. The ANNUAL REPORT discusses
the market conditions and investment strategies that significantly affected
fund performance during the last year. The SEMI-ANNUAL REPORT updates
information provided in the Annual Report for the next six months.

Davis Growth & Income Fund's Statement of Additional Information and Annual
Report have been filed with the Securities and Exchange Commission, are
incorporated by reference, and are legally a part of this prospectus.

WHERE YOU CAN GET THESE DOCUMENTS:

o BY TELEPHONE. Call Davis Funds toll-free at 1-800-279-0279, Monday-Friday,
7 a.m. to 4 p.m. Mountain Time.

o VIA THE INTERNET. Visit the SEC web site (WWW.SEC.GOV).

o BY MAIL. Specify the document you are requesting when writing to us.

DAVIS GROWTH & INCOME FUND, INC.
124 EAST MARCY STREET
SANTA FE, NEW MEXICO 87501
1-800-279-0279

Investment Company Act File No. 811-1701

<PAGE>

[COVER PAGE]

DAVIS GROWTH & INCOME FUND

December 1, 1998

Prospectus and Application Form
Class Y

(Davis logo)

Over 25 Years of Reliable Investing

1
<PAGE>

[INSIDE FRONT COVER]

RISK SPECTRUM

Davis Selected Advisers manages eleven mutual funds in the Davis family. Each
fund has a distinct investment objective and strategy. The following graph
shows how these funds compare to each other in terms of risk. Davis Growth &
Income Fund is approximately in the middle, with a risk level that we
characterize as "medium."

[INSERT GRAPHIC]

For more information about any of the other Davis Funds, including charges and
expenses, ask for a prospectus. Read it carefully before investing or sending
money.

2
<PAGE>

TABLE OF CONTENTS

SNAPSHOT OF DAVIS GROWTH & INCOME FUND

OVERVIEW OF THE FUND
Investment Objective and Strategy
Principal Risks
Fund Performance
Fees and Expenses
Financial Highlights

WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT

HOW WE MANAGE THE FUND

ONCE YOU INVEST IN THE FUND

HOW TO CHOOSE A SHARE CLASS

HOW TO BUY, SELL AND EXCHANGE SHARES

THE DAVIS FUNDS: OVER 25 YEARS OF RELIABLE INVESTING

OTHER FUND DOCUMENTS

3
<PAGE>

SNAPSHOT OF DAVIS GROWTH & INCOME FUND

This section provides you with basic information about Davis Growth & Income
Fund that can help you decide if the Fund suits your needs.

TYPE OF FUND. Growth and income.

INVESTMENT OBJECTIVE. Capital growth and income.

MINIMUM INITIAL INVESTMENT
o institutions and government entities: $5 million
o wrap fee program investors: minimums set by your sponsor

If, after reading this section, you think that the Fund may suit your
investment goals, you should read the rest of this prospectus for more detailed
information.

4
<PAGE>

OVERVIEW OF DAVIS GROWTH & INCOME FUND

INVESTMENT OBJECTIVE AND STRATEGY

[SIDEBAR: ]
Please see the inside back cover page of this prospectus to learn about the
Davis investment philosophy.

You can find more detailed information about the types of securities that Davis
Growth & Income Fund buys in the section called HOW WE MANAGE THE FUND.

PRINCIPAL RISKS

If you buy shares of Davis Growth & Income Fund, you may lose some or all of
the money that you invest. The two most significant risks of the Fund are
market risk and company risk.

5
<PAGE>

An investment in Davis Growth & Income Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

You can find more detailed information about the risks of the Fund's particular
investments, as well as the role of credit rating agencies, in the section
called HOW WE MANAGE THE FUND.

FUND PERFORMANCE

Davis Growth & Income Fund Class Y began selling shares to the public on May 4,
1998. The following charts and tables will help you understand the Fund's
financial condition--including the returns that investors have earned and the
cost of an investment. These historical results do not necessarily indicate the
performance that investors can expect in the future. The value of the Fund's
shares may go up or down.

TOTAL RETURN

Davis Growth & Income Fund's investment performance will vary from year to
year. This chart shows the results that we achieved in the Fund's Class Y
shares since inception.

DAVIS GROWTH & INCOME FUND
TOTAL RETURN FROM MAY 4, 1998 THROUGH JULY 31, 1998

(bar chart)

(1.80%)*

* Unannualized

6
<PAGE>

AVERAGE ANNUAL TOTAL RETURN

The table below shows Davis Growth & Income Fund's average annual total returns
for the three-month period between May 4, 1998 (inception date) and July 31,
1998. The table also compares these returns to those earned during the same
period for the Standard & Poor's 500 Composite Index, an unmanaged benchmark of
the total return performance of large capitalization stocks, and the Lipper
Growth & Income Index, which tracks the largest funds that pursue a mix of
growth and income as their investment objective. Davis Growth & Income Fund is
not completely comparable to the Standard & Poor's 500 Composite Index because,
although the Fund invests in large capitalization common stocks, we also buy
several other types of securities.

DAVIS GROWTH & INCOME FUND
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIOD FROM MAY 4, 1998 THROUGH JULY 31, 1998)

- ------------------ ----------------- ----------------- -----------------
CLASS Y S&P 500 INDEX* LIPPER GROWTH &
(SINCE INCOME INDEX
5/4/98)
- ------------------ ----------------- ----------------- -----------------
May 4, 1998 (1.80%) 0.35% (2.79%)
through July 31,
1998 (life of
fund)
- ------------------ ----------------- ----------------- -----------------

*"Standard & Poor's 500," "S&P 500(R)," "S&P(R)," and "500" are registered
trademarks of The McGraw-Hill Companies, Inc.

7
<PAGE>

FEES AND EXPENSES

[DESIGN NOTE: the following explanations to be next to fee chart]

FRONT-END SALES CHARGE. A fee some mutual funds charge to buy shares of a
mutual fund.

DEFERRED SALES CHARGE. A fee some mutual funds charge to sell shares of a
mutual fund.

EXCHANGE FEE. A fee some mutual funds charge to sell shares in one fund and to
buy another fund.

FEES YOU MAY PAY AS A DAVIS GROWTH & INCOME FUND SHAREHOLDER
(PAID DIRECTLY FROM YOUR INVESTMENT)

8
<PAGE>

[DESIGN NOTE: the following explanations to be next to table of operating
expenses]

MANAGEMENT FEES. Costs to manage a mutual fund's portfolio and to administer
its business affairs. This fee is a percentage of the Fund's net asset value.

DISTRIBUTION FEES. Fees some mutual funds pay to a distributor to sell and
distribute shares and to provide services to shareholders (also known as a
12b-1 fee).

OTHER EXPENSES. The most significant fees in this category are those to
attorneys, accountants, directors, and the custodian and transfer agent (State
Street Bank and Trust Company).

TOTAL ANNUAL OPERATING EXPENSES. The percentage of the Fund's average net
assets that are used each year to pay expenses (also known as the expense
ratio).

ANNUAL FUND OPERATING EXPENSES
FOR FISCAL YEAR ENDED JULY 31, 1998
(DEDUCTED FROM DAVIS GROWTH & INCOME FUND'S ASSETS)

- -------------------------------------------------------------- ----------------
CLASS Y
- -------------------------------------------------------------- ----------------
Management Fees 0.75%
- -------------------------------------------------------------- ----------------
Distribution (12b-1) Fees None
- -------------------------------------------------------------- ----------------
Other Expenses 0.39%
- -------------------------------------------------------------- ----------------
Total Annual Operating Expenses* 1.14%
- -------------------------------------------------------------- ----------------

*Annualized

9
<PAGE>

IF I INVEST IN THIS FUND, WHAT WILL IT COST ME?

Here is an example of what your costs might be if you invest in Davis Growth &
Income Fund. It is designed to help you compare investing costs with other
mutual funds.

COST OF INVESTING $10,000 IN DAVIS GROWTH & INCOME FUND

- ------------------------------ --------------------------
IF YOU SELL YOUR SHARES IN... CLASS Y
- ------------------------------ --------------------------
1 Year $12
- ------------------------------ --------------------------
3 Years $36
- ------------------------------ --------------------------
5 Years $63
- ------------------------------ --------------------------
10 Years $139
- ------------------------------ --------------------------

10
<PAGE>

FINANCIAL HIGHLIGHTS

This table is designed to show you the financial performance of Davis Growth &
Income Fund for the period from May 4, 1998 (when the Fund began selling shares
to the public) through July 31, 1998. Some of the information reflects
financial results for a single Fund share. The total returns represent the rate
that an investor would have earned (or lost) money on an investment in the
Fund. It assumes that all dividends and capital gains have been reinvested.

KPMG Peat Marwick LLP has audited this information. KPMG Peat Marwick's report,
along with the Fund's financial statements, is included in the annual report,
which is available by request.

DAVIS GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
CLASS Y

Financial Highlights for a share of capital stock outstanding throughout each
period.

- ---------------------------------------------------------- --------------------
MAY 4, 1998
(INCEPTION
OF CLASS)
THROUGH
JULY 31, 1998
- ---------------------------------------------------------- --------------------
Net Asset Value, Beginning of Period $10.00
------

- ---------------------------------------------------------- --------------------
Income From Investment Operations
- ---------------------------------------------------------- --------------------
Net Investment Income 0.04
- ---------------------------------------------------------- --------------------
Net Realized and Unrealized Gains (.22)
- ---------------------------------------------------------- --------------------
Total from Investment Operations (0.18)

- ---------------------------------------------------------- --------------------
Net Asset Value, End of Period $9.82
-----

- ---------------------------------------------------------- --------------------
Total Return (1) (1.80)%
- -------------

- ---------------------------------------------------------- --------------------
Ratios/Supplemental Data
- ---------------------------------------------------------- --------------------
Net Assets, End of Period (000,000 omitted) $6
- ---------------------------------------------------------- --------------------
Ratio of Expenses to Average Net Assets 1.14%*
- ---------------------------------------------------------- --------------------
Ratio of Net Investment Income to Average Net Assets 2.17%*
- ---------------------------------------------------------- --------------------
Portfolio Turnover Rate(2) 0%
- ---------------------------------------------------------- --------------------

(1) Assumes hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total returns
are not annualized for periods of less than one year.

* Annualized

11
<PAGE>

WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT

INVESTMENT ADVISER

DAVIS SELECTED ADVISERS, LP
Referred to throughout this prospectus as "Davis Selected Advisers"
124 East Marcy Street
Santa Fe, NM 87501
o Provides investment advice for Davis Growth & Income Fund's portfolio.
o Manages Davis Growth & Income Fund's business affairs.
o Provides day-to-day administrative services.
o Serves as investment adviser for all of the Davis Funds, other mutual
funds, and other institutional clients.
o Annual Adviser Fee for the period May 4, 1998 through July 31, 1998 (based
on average net assets): 0.75%

INVESTMENT SUB-ADVISER

DAVIS SELECTED ADVISERS-NY, INC.
Referred to throughout this prospectus as "Davis Selected Advisers-NY"
609 Fifth Avenue
New York, NY 10017
o Performs investment management and research services for Davis Growth &
Income Fund and other institutional clients.
o Wholly owned subsidiary of Davis Selected Advisers.
o Annual Fee: Davis Selected Advisers pays the fee, not the Fund.

BOARD OF DIRECTORS

The Fund's Board of Directors has general supervisory responsibilities of the
Fund and supervises the investment adviser's duties.

12
<PAGE>

CUSTODIAN AND TRANSFER AGENT

DISTRIBUTOR

DAVIS DISTRIBUTORS, LLC
Referred to throughout this prospectus as "Davis Distributors"
124 East Marcy Street
Santa Fe, NM 87501
o Oversees purchases of shares and promotional activities for Davis Growth
& Income Fund.
o Wholly owned subsidiary of Davis Selected Advisers.
o Serves as distributor for all of the Davis Funds and other mutual funds
managed by Davis Selected Advisers.

13
<PAGE>

WHO THE PORTFOLIO MANAGERS ARE

SHELBY M.C. DAVIS
Responsibilities:
o Chief Investment Officer of Davis Selected Advisers
o President of all the Davis Funds.

Other Experience:
o Assistant portfolio manager and research analyst working with Shelby M.C.
Davis from September 1989 to September 1995.

Other Experience:
o Vice President and head of convertible securities research at
PaineWebber, Incorporated for six years.

[BOXED]
OUR CODE OF ETHICS

14
<PAGE>

HOW WE MANAGE THE FUND

This section provides an overview of the types of securities the Fund invests
in and details the strategies the Fund uses to minimize the risk of investing
in these securities.

WHAT WE INVEST IN AND WHY

[BOXED]
In this section, we tell you about the Fund's five different types of
investments. For each type of security, we:

15
<PAGE>

EQUITY SECURITIES

WHAT THEY ARE. Equity securities represent ownership of a company. Equity
securities come in many forms, but the form that this Fund typically holds is
common stock.

[SET OFF OR BOXED]

WHAT WE LOOK FOR IN A COMPANY

1. FIRST-CLASS MANAGEMENT. We believe that great companies are created by
great managers. In visiting companies, we look for managers with a record
of doing what they say they are going to do.
2. MANAGEMENT OWNERSHIP. Just as we invest heavily in our own funds, we look
for companies where individual managers own a significant stake.
3. STRONG RETURNS ON CAPITAL. We want companies that invest their capital
wisely and reap superior returns on those investments.
4. LEAN EXPENSE STRUCTURE. Companies that can keep costs low are able to
compete better, especially in difficult times. A low cost structure
sharply reduces the risk of owning a company's shares.
5. DOMINANT OR GROWING MARKET SHARE IN A GROWING MARKET. A company that is
increasing its share of a growing market has the best of both worlds.
6. PROVEN RECORD AS AN ACQUIRER. When an industry or market downturn occurs,
it is a good idea to own companies that can take advantage of low prices
to expand operations through inexpensive acquisitions.
7. STRONG BALANCE SHEET. Strong finances give a company staying power to
weather difficult economic cycles.
8. COMPETITIVE PRODUCTS OR SERVICES. We in companies with products that are
not vulnerable to obsolescence.
9. SUCCESSFUL INTERNATIONAL OPERATIONS. A proven ability to expand
internationally reduces the risk of being tied too closely to the U.S.
economic cycle.
10. INNOVATION. The savvy use of technology in any business, from a food
company to an investment bank, can help reduce costs and increase sales.

16
<PAGE>

RISKS. Factors that influence the value of a share of common stock are
primarily general market and economic conditions, and the financial condition
and performance of the issuer.

o MARKET RISK. The market value of shares of common stock can change
rapidly and unpredictably as a result of political or economic events
having little or nothing to do with the issuer.

Investments in foreign securities involve additional risk. Foreign securities
are often denominated in foreign currencies, which means their value will be
affected by changes in exchange rates. In many foreign jurisdictions, there is
less publicly available information about - and less government regulation
of-securities, securities markets and issuers. The Fund may attempt to reduce
exposure to market and currency fluctuations by trading in currency futures
contracts or options on futures contracts for hedging purposes. When the Fund
invests in foreign securities, our operating expenses are likely to be higher
than if we invested exclusively in U.S.
securities.

17
<PAGE>

REAL ESTATE SECURITIES

RISKS. Real estate securities are susceptible to the many risks associated with
the direct ownership of real estate, including:

In addition, since many real estate securities are common stocks, they present
the risks that we discuss under the heading Equity Securities-Risks.

18
<PAGE>

19
<PAGE>

CONVERTIBLE SECURITIES

20
<PAGE>

BONDS AND OTHER DEBT SECURITIES

HOW WE PICK THEM. Davis Growth & Income Fund searches for debt securities that
are issued by government agencies or by corporations offering maximum yield
relative to credit quality.

RISKS. The prices (and market value) of debt securities fluctuate primarily in
response to two factors:

The Fund may buy "pure debt" securities that have low ratings. By "pure debt"
we mean securities that are exclusively evidence of a loan; they are not also
real estate securities or convertible securities. Securities with low ratings
are considered "high yield, high risk debt," and present more risk than
so-called "investment grade" securities. For information about high yield, high
risk debt, please see "Additional Information about High Yield, High Risk Debt
Securities."

21
<PAGE>

ADDITIONAL INFORMATION ABOUT HIGH YIELD, HIGH RISK DEBT SECURITIES

WHAT THEY ARE. There are several agencies that evaluate and rate debt
securities. Two of the most prominent are Standard & Poor's and Moody's
Investors Service.

HOW WE PICK THEM. Davis Growth & Income Fund does not specifically seek out
high yield, high risk debt. However, some of the real estate securities,
convertible securities and bonds that we identify as good investments may
happen to fall into that category.

WHY WE BUY THEM. Some of the real estate securities, convertible securities and
bonds that we identify as good investments may happen to be high yield, high
risk debt.

22
<PAGE>

RISKS. There are four principal risks of owning high yield, high risk debt
securities:

o OVERBURDENED ISSUERS. Many issuers only resort to offering junk bonds
when they cannot get financing from more traditional sources, like banks.
These issuers are unlikely to have a cushion from which to make their
payments when their earnings are poor or when the economy in general is in
decline. The Fund will not purchase junk bonds that are in default at the
time of purchase, but there is no guarantee that issuers will always be
able to make their payments.
o PRIORITY. Issuers of high yield, high risk securities are likely to have
a substantial amount of other debt. Most, if not all, of this other debt
will be "senior" to the junk bonds; an issuer must be current on its
senior obligations before it can pay bondholders. In addition, some of the
other debt may be secured by the issuer's primary operating assets. If the
issuer defaults on those obligations, the lenders may seize their
collateral - possibly forcing the issuer out of business and into
bankruptcy.
o DIFFICULT TO RESELL. Many investors simply do not want junk bonds, and
others are prohibited from buying them.
o VOLATILE PRICES. Prices of high yield, high risk debt securities are more
volatile than prices of higher rated securities. In periods of economic
difficulty or rising interest rates, prices of junk bonds decline more
than prices of investment grade securities.

23
<PAGE>

SHORT-TERM INVESTMENTS

[SIDEBAR]
A repurchase agreement is a type of short-term investment that uses securities
as collateral. Like a short-term loan, the borrower sells securities to the
lender. The borrower agrees to buy back the securities at a certain time-at a
higher price that incorporates an "interest payment."

HOW WE PICK THEM. Most of the Fund's short-term investments are high-grade
money market instruments and repurchase agreements. The Fund also may hold cash
in interest-bearing bank deposits.

WHY WE BUY THEM. The Fund uses short-term investments to earn interest and
maintain flexibility while we evaluate long-term opportunities. We also may use
short-term investments for "defensive" purposes. In the event our portfolio
managers anticipate a decline in the stock market, we may reduce our risk by
investing in short-term securities until market conditions improve.

24
<PAGE>

HOW WE MANAGE RISK

Risks are inherent in all investments. Investing in a mutual fund, even the
most conservative, involves risk, including the risk that you may receive
little or no return on your investment or even that you may lose part or all of
your investment. Davis Growth & Income Fund has six strategies to minimize the
risk assumed when we invest.

[SET OFF OR BOXED]
SIX STRATEGIES WE USE TO MINIMIZE RISK

1. WE PURCHASE HIGH-QUALITY GROWTH COMPANIES. Our focus on high-quality
growth companies reduces the likelihood that your investment will be tied
up in a failing company.

6. WE MAY MAKE TEMPORARY DEFENSIVE INVESTMENTS. From time to time, Davis
Growth & Income Fund may take temporary defensive positions in response to
adverse market, economic or political conditions.

25
<PAGE>

ONCE YOU INVEST IN THE FUND

This section describes what happens to your money once it is invested: how your
investment is valued, how you earn money on your investment and how the
government may tax these earnings.

HOW YOUR SHARES ARE VALUED

HOW SECURITIES IN THE PORTFOLIO ARE VALUED

We use current market valuations to value the securities in Davis Growth &
Income Fund:

o Securities that trade on an organized exchange are valued at the last
published sales price on the exchange. If no sales are recorded, the
securities are valued at the average of the closing bid and asked prices
on the exchange.
o Over-the-counter securities are valued at the average of closing bid and
asked prices.
o Debt securities maturing in 60 days or less are usually valued at an
amortized (gradually reduced) cost.
o Longer-term debt securities may be valued by an independent pricing service.
o Securities with unavailable market quotations and other assets are valued at
"fair value"-which is determined or directed by the Board of Directors.

26
<PAGE>

HOW WE PAY EARNINGS

There are two ways you can receive payments from Davis Growth & Income Fund:

o DIVIDENDS. Distributions to shareholders of net investment income and
short-term capital gains on investments.

o CAPITAL GAINS. Profits received by the Fund from the sale of securities
held for the long-term, which are then distributed to shareholders.

OVER THE COUNTER SECURITIES
Over the counter securities are not listed or traded on an organized exchange.
They are bought and sold by dealers connected by telephones and computer
networks.

NET INVESTMENT INCOME
Income received by the Fund from company dividends and interest on securities
investments, minus management fees and all other expenses.

27
<PAGE>

HOW YOUR DIVIDENDS AND CAPITAL GAINS ARE TAXED

These payments may be taxed at different rates, depending on the length of time
the Fund holds its assets. More information is provided in the instructions
that come with your tax return.

Investment earnings (dividends and capital gains) are taxable in the year in
which they were declared, not paid-whether they are received in cash or
reinvested in shares.

Also, keep in mind that when you sell or exchange shares of the Fund, it may
result in a taxable gain or loss.

We recommend that you consult with a tax adviser about any dividends and
capital gains you may receive from Davis Growth & Income Fund.

28
<PAGE>

HOW TO BUY, SELL AND EXCHANGE SHARES

Once you have opened an account with Davis, you can add to--or withdraw
from--your initial purchase. This section provides an overview of the types of
transactions you can perform as a shareholder of Davis Growth & Income Fund.
This includes how to initiate these transactions and the charges that you may
incur (if any) when buying, selling and exchanging shares.

29
<PAGE>

(chart)
BUYING SHARES

There are several ways you can buy Fund shares:

State Street Bank and Trust Company,
Boston, MA 02210
Attn.: Mutual Fund Services
DAVIS GROWTH & INCOME FUND
Shareholder Name,
Shareholder Account Number,
Federal Routing Number 011000028,
DDA Number 9904-606-2

Regular Mail
------------
State Street Bank and Trust Company
c/o Davis Funds
P.O. Box 8406
Boston, MA 02266-8406

Overnight Mail
--------------
State Street Bank and Trust Company
c/o Davis Funds
66 Brooks Drive
Braintree, MA 02184

30
<PAGE>

WHEN YOUR TRANSACTIONS ARE PROCESSED

For your transaction to be counted on the day you place your order with your
broker-dealer or other financial institution, they must:

o Receive your order before 4 p.m. Eastern Time.
o Promptly transmit the order to State Street Bank and Trust.

SPECIAL NOTE FOR WRAP PROGRAM INVESTORS

31
<PAGE>

SELLING SHARES

For more information on selling shares by telephone, see "Transactions By
Telephone" at the end of this section.

When you sell shares through a dealer, you may be charged a service fee or
commission for performing the transaction.

WHAT YOU NEED TO KNOW BEFORE YOU SELL YOUR SHARES

o You will always receive cash for sales that total less than $250,000 or
1% of the Fund's net asset value during any 90-day period. Any sales above
the cash limit may be paid in securities and would mean you would have to
pay brokerage fees.
o If a certificate was issued for the shares you wish to sell, the
certificate must by signed by the owner(s) and sent to State Street Bank
and Trust along with the redemption request.
o Ordinarily, you only need a medallion signature guarantee on a share
certificate, stock power, or redemption request for sales of more than
$50,000. However, if you have made any changes to the Application Form
since your account was opened, or if your address of record has changed in
the last 30 days, you will need a medallion signature guarantee for all
sales.
o A sale may produce a gain or loss. Gains may be subject to tax.

32
<PAGE>

A stock power is a letter signed by the owner of the shares that gives State
Street Bank and Trust permission to transfer ownership of the shares to another
person or group.

SPECIAL SALE SITUATIONS

o The Securities and Exchange Commission can suspend payment of sales under
certain emergency circumstances if the New York Stock Exchange is closed
for reasons other than customary closings and holidays.
o Davis Growth & Income Fund may make sales payments in securities if the
Fund's Board of Directors decides that making cash payments would harm the
Fund.

33
<PAGE>

EXCHANGING SHARES

You can transfer Class Y shares of Davis Growth & Income Fund to Class Y shares
in any other Davis Fund. This is known as an exchange. You can exchange shares
by telephone (to accounts with identical registrations), by dealer or by mail.
The initial exchange must be for at least $5 million for institutions or
government entities or minimums set by wrap program sponsors. Class A
shareholders who are eligible to buy Class Y shares may also exchange their
shares for Class Y shares of the Fund. Exchanges are normally performed on the
same day of the request if received by 4 p.m. Eastern Time. However, if your
exchange involves a large sale, the transfer may take one to seven days.

For more information on exchanging shares by telephone, see "Transactions By
Telephone" at the end of this section.

When you exchange shares through a dealer, you may be charged a service fee or
commission for performing the transaction.

34
<PAGE>

GROWTH & INCOME FUNDS
- ---------------------
Davis Growth & Income Fund
Davis Real Estate Fund
Davis Convertible Securities Fund

BOND FUNDS
- ----------
Davis Intermediate Investment Grade Bond Fund
Davis Tax-Free High Yield Fund
Davis Government Bond Fund

GOVERNMENT MONEY MARKET FUND
- ----------------------------
Davis Government Money Market Fund

TRANSACTIONS BY TELEPHONE

When you call 1-800-279-0279, you can make a sale or exchange with Davis Funds
in two ways:
o Speak directly with a representative during business hours (7 a.m. to 4 p.m.
Mountain Time).
o If you have a TouchTone(TM) telephone, you can use the automated telephone
system, known as DAVIS DIRECT Access, 24 hours a day, seven days a week.

[SET OFF]
YOU CAN USE DAVIS DIRECTACCESS TO:

35
<PAGE>

When you sell or exchange shares over the telephone, you agree that Davis
Growth & Income Fund is not liable for following telephone instructions
believed to be genuine (that is, directed by the account holder). We use
certain procedures to confirm that your instructions are genuine, including a
request for personal identification (your account or Social Security number)
and a tape recording of the conversation. If these procedures are not used, the
Fund may be liable for unauthorized instructions.

Be aware that during unusual market conditions, Davis Funds may not be able to
accept all requests by phone.

36
<PAGE>

[INSIDE BACK COVER]

THE DAVIS FUNDS:
OVER 25 YEARS OF RELIABLE INVESTING

37
<PAGE>

[DESIGN ISSUE: WILL THE SECTION BELOW BE PERFED?]

ADDRESS AND PHONE GUIDE

OUR TELEPHONE NUMBER OUR INTERNET ADDRESS
1-800-279-0279 http://www.davisfunds.com

OUR MAILING ADDRESS
Davis Funds
124 East Marcy Street
Santa Fe, New Mexico 87501

<S> <C>
OUR SERVICE PROVIDER'S REGULAR MAILING ADDRESS OUR SERVICE PROVIDER'S OVERNIGHT MAILING ADDRESS
State Street Bank and Trust Company State Street Bank and Trust Company
c/o Davis Funds c/o Davis Funds
P.O. Box 8406 66 Brooks Drive
Boston, MA 02266-8406 Braintree, MA 02184

</TABLE>

38
<PAGE>

[BACK COVER]

OTHER FUND DOCUMENTS

WHERE YOU CAN GET THESE DOCUMENTS:

o BY TELEPHONE. Call Davis Funds toll-free at 1-800-279-0279, Monday-Friday,
7 a.m. to 4 p.m. Mountain Time.

o VIA THE INTERNET. Visit the SEC web site (WWW.SEC.GOV).

o BY MAIL. Specify the document you are requesting when writing to us.

DAVIS GROWTH & INCOME FUND, INC.
124 EAST MARCY STREET
SANTA FE, NEW MEXICO 87501
1-800-279-0279

Investment Company Act File No. 811-1701

39
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 1, 1998

DAVIS NEW YORK VENTURE FUND
AND
DAVIS GROWTH & INCOME FUND

PART OF
DAVIS NEW YORK VENTURE FUND, 964952529INC
124 EAST MARCY STREET
SANTA FE, NEW MEXICO 87501
1-800-279-0279

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
IN CONJUNCTION WITH THE CLASS A, CLASS B AND CLASS C PROSPECTUSES DATED
DECEMBER 1, 1998 AND THE CLASS Y PROSPECTUS DATED DECEMBER 1, 1998 FOR THE
DAVIS NEW YORK VENTURE FUND AND DAVIS GROWTH & INCOME FUND. THE PROSPECTUSES
MAY BE OBTAINED FROM THE 964952633FUND.

EACH FUND'S MOST RECENT ANNUAL 965891325REPORT AND SEMI-ANNUAL REPORT TO
SHAREHOLDERS ARE SEPARATE DOCUMENTS SUPPLIED WITH THIS STATEMENT OF ADDITIONAL
INFORMATION. THE ANNUAL REPORT, ACCOMPANYING NOTES AND REPORT OF INDEPENDENT
AUDITORS APPEARING IN THE ANNUAL REPORT ARE INCORPORATED BY REFERENCE IN THIS
STATEMENT OF ADDITIONAL 964952740INFORMATION.

<PAGE>

TABLE OF CONTENTS

PAGE

Section I: Investment Strategies and Restrictions........................ 4

Investment Objective and Policies............................ 4
Portfolio Securities......................................... 4

Equity Securities
Foreign Securities
Real Estate Securities and REITs
Convertible Securities
Bonds & Other Debt Securities
High Yield, High Risk Debt Securities
Repurchase Agreements

Other Investment Practices................................... 9
Portfolio Transactions....................................... 11
Investment Restrictions...................................... 13

Section II: Key Persons.................................................. 16

Organization of the Company.................................. 16
Directors and Officers....................................... 16
Directors Compensation Schedule.............................. 18
Certain Shareholders of the Fund............................. 19
Investment Advisory Services................................. 20
Distribution of Company Shares............................... 22
Other Important Service Providers............................ 24

Section III: Purchase, Exchange and Redemption of Shares................. 25

Purchase of Shares........................................... 25
General
Alternative Purchase Arrangements
Class A Shares
Class B Shares
Class C Shares
Class Y Shares

Telephone Privilege.......................................... 31
Exchange of Shares........................................... 31
Redemption of Shares......................................... 32

2
<PAGE>

Section IV: General Information.......................................... 35
- --------------------------------

Determining the Price of Shares.............................. 35
Year 2000 and Euro Conversion Issues......................... 35
Dividends and Distributions.................................. 36
Federal Income Taxes......................................... 36
Performance Data............................................. 37

Appendix A: Quality Ratings of Debt Securities............................ 41
Appendix B: Term and Conditions for a Statement of Intention.............. 43

3
<PAGE>

Section I: Investment Strategies and Restrictions

INVESTMENT OBJECTIVES AND POLICIES

Davis New York Venture Fund's investment objective is growth of
capital. Davis Growth & Income Fund's investment objectives are capital growth
and income. There is no assurance that either Fund will achieve its investment
objectives. An investment in the Funds may not be appropriate for all investors
and short-term investing is discouraged.

During normal market conditions Davis New York Venture Fund seeks
growth of capital by investing primarily in equity securities of domestic
companies with market capitalizations of at least $5 billion. The Fund may also
invest in foreign companies and in companies with smaller market
capitalizations.

During normal market conditions Davis Growth & Income Fund seeks
growth of capital by investing approximately 60% of its assets in a manner
similar to Davis New York Venture Fund. To increase current income and to
diversify its portfolio, the remaining 40% of Davis Growth & Income Fund's
assets are invested in a combination of real estate securities, convertible
securities, bonds, and cash. The Adviser may vary these asset allocations in
response to market conditions. Davis Growth & Income Fund's investments may
include high yield, high risk bonds, and may also invest in foreign securities.

Either Fund may attempt to reduce market and currency fluctuation
risks by engaging in related hedging transactions. These transactions involve
additional risk considerations.

PORTFOLIO SECURITIES

Both Davis New York Venture Fund and Davis Growth & Income Fund
(collectively as the "Funds") may invest in each of the securities described
below. Davis New York Venture Fund focuses its investments in equity
securities. Davis Growth & Income Fund builds a core of equity securities but
also makes substantial investments in the other types of securities.

EQUITY SECURITIES. Equity securities represent an ownership position
in a company. These securities may include, without limitation, common stocks,
preferred stocks, and securities with equity conversion or purchase rights. The
Funds usually purchase common stock. The prices of equity securities fluctuate
based on changes in the financial condition of their issuers and on market and
economic conditions. The Funds' results will be related to the overall market
for these securities. There is no limit on the percentage of its assets which
the Funds may invest in equity securities.

While predominately investing in the common stock of companies with
market capitalizations of at least $5 billion, the Funds may also invest in
issues with smaller capitalizations. The equity of smaller companies are
subject to additional risks. Smaller companies are usually less established and
less diversified than larger companies, and have fewer resources available to
take advantage of opportunities or overcome challenges.

Primary Risks. Events which have a negative impact on a business will
probably be reflected in a decline in their equity securities. Furthermore,
when the stock market declines most equity securities, even those issued by
strong companies, are likely to decline in value.

FOREIGN INVESTMENTS. Foreign securities are either issued by foreign
companies or are principally traded in foreign markets ("foreign securities").
Foreign securities include equity securities, real estate securities,
convertible securities, and bonds. 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") or Global Depository Receipts ("GDRs") covering such securities, and
through U.S. registered investment companies investing primarily in foreign
securities. When the Funds invest in foreign securities, their

4
<PAGE>

operating expenses are likely to be higher than that of an investment company
investing exclusively in U.S. securities, since the, custodial and certain
other expenses are expected to be higher.

Primary Risks. 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.
The Fund may attempt to reduce exposure to market and currency fluctuations by
trading in currency futures contracts or options on futures contracts for
hedging purposes only.

REAL ESTATE SECURITIES AND REITS. Real estate securities are issued by
companies which have at least 50% of the value of their assets, gross income,
or net profits attributable to ownership, financing, construction, management
or sale of real estate, or to products or services that are related to real
estate or the real estate industry. Neither Davis New York Venture Fund nor
Davis Growth & Income Fund invest directly in real estate. Real estate
companies include real estate investment trusts ("REITs"), or other securitized
real estate investments, brokers, developers, lenders and companies with
substantial real estate holdings such as paper, lumber, hotel and entertainment
companies. REITs pool investors' funds for investment primarily in income
producing real estate or real estate related loans or interests. A REIT is not
taxed on income distributed to shareholders if it complies with various
requirements relating to its organization, ownership, assets and income and
with the requirement that it distribute to its shareholders at least 95% of its
taxable income (other than net capital gains) for each taxable year. REITs can
generally be classified as Equity REITs, Mortgage REITs and Hybrid REITs.
Equity REITs invest the majority of their assets directly in real property and
derive their income primarily from rents. Equity REITs can also realize capital
gains by selling property that has appreciated in value. Mortgage REITs invest
the majority of their assets in real estate mortgages and derive their income
primarily from interest payments. Hybrid REITs combine the characteristics of
both Equity REITs and Mortgage REITs.

Primary Risks. Real estate securities and REITs are subject to risks
associated with the direct ownership of real estate. The Funds could also be
subject to such risks by reason of direct ownership as a result of a default on
a debt security it may own. These risks include declines in the value of real
estate, risks related to general and local economic conditions, over building
and increased competition, increases in property taxes and operating expenses,
changes in zoning laws, casualty or condemnation losses, fluctuations in rental
income, changes in neighborhood values, the appeal of properties to tenants and
increases in interest rates.

Equity REITs may be affected by changes in the value of the underlying
property owned by the trusts, while mortgage REITs may be affected by the
quality of credit extended. Equity and mortgage REITs are dependent upon
management skill, may not be diversified and are subject to project financing
risks. Such trusts are also subject to heavy cash flow dependency, defaults by
borrowers, self-liquidation and the possibility of failing to qualify for
tax-free pass-through of income under the Internal Revenue Code and failing to
maintain exemption from registration under the Investment Company Act of 1940.
Changes in interest rates may also affect the value of the debt securities in
the Fund's portfolio. By investing in REITs indirectly through either of the
Funds, a shareholder will bear not only his proportionate share of the expense
of the Fund, but also, indirectly, similar expenses of the REITs, including
compensation of management. Some real estate securities may be rated less than
investment grade by rating services. Such securities may be subject to the
risks of high yield, high risk securities discussed below.

CONVERTIBLE SECURITIES. Generally, convertible securities are bonds,
debentures, notes, preferred stocks, warrants or other securities that convert
or are exchangeable into shares of the underlying common stock at a stated
exchange ratio. Usually, the conversion or exchange is solely at the option of
the holder. However, some convertible securities may be convertible or
exchangeable at the option of the issuer or are automatically converted or
exchanged at a time certain, or upon the occurrence of certain events, or have
a combination of these characteristics. Usually a

5
<PAGE>

convertible security provides a long-term call on the issuer's common stock and
therefore tends to appreciate in value as the underlying common stock
appreciates in value. A convertible security may also be subject to redemption
by the issuer after a certain date and under certain circumstances (including a
specified price) established on issue. If a convertible security held by one of
the Funds is called for redemption, that Fund could be required to tender it
for redemption, convert it into the underlying common stock or sell it.

Primary Risks. Convertible bonds, debentures, and notes are varieties
of debt securities, and as such are subject to many of the same risks,
including interest rate sensitivity, changes in debt rating, and credit risk.
In addition, convertible securities are often viewed by the issuer as future
common stock subordinated to other debt and carry a lower rating than the
issuer's non-convertible debt obligations. Thus, convertible securities are
subject to many of the same risks as high yield, high risk securities. A more
complete discussion of these risks is provided below in the sections entitled
"Bonds and Other Debt Securities" and "High Yield, High Risk Debt Securities."

Due to its conversion feature, the price of a convertible security
will normally vary in some proportion to changes in the price of the underlying
common stock. A convertible security will normally also provide a higher yield
than the underlying common stock (but generally lower than comparable
non-convertible securities). Due to their higher yield, convertible securities
generally sell above there "conversion value," which is the current market
value of the stock to be received upon conversion. The difference between this
conversion value and the price of convertible securities will vary over time
depending on the value of the underlying common stocks and interest rates. When
the underlying common stocks decline in value, convertible securities will tend
not to decline to the same extent because the yield acts as a price support.
When the underlying common stocks rise in value, the value of convertible
securities may also be expected to increase but will generally not increase to
the same extent as the underlying common stocks.

BONDS AND OTHER DEBT SECURITIES. Bonds and other debt securities may
be purchased by the Funds to increase current income or to diversify their
investment portfolios. The U.S. government, corporations and other issuers sell
bonds and other debt securities to borrow money. Issuers pay investors interest
and generally must repay the amount borrowed at maturity. Some debt securities,
such as zero coupon bonds, do not pay current interest, but are purchased at a
discount from their face values. The prices of debt securities fluctuate
depending on such factors as interest rates, credit quality and maturity. While
there is no limit on the percentage of its assets which the Fund may invest in
bonds and other debt securities, both Funds invest primarily in equity
securities under normal market conditions. Davis Growth & Income Fund will
typically make larger investments in bonds and other debt securities than will
Davis New York Venture Fund.

Primary Risks. Bonds and other debt securities are generally
considered to be interest rate sensitive. The market value of the Funds'
investments will change in response to changes in interest rates. During
periods of falling interest rates, the value of debt securities held by the
Funds generally rises. Conversely, during periods of rising interest rates, the
value of such securities generally declines. Changes by recognized rating
services in their ratings of debt securities and changes in the ability of an
issuer to make payments of interest and principal will also affect the value of
these investments.

HIGH YIELD, HIGH RISK DEBT SECURITIES. The real estate securities,
convertible securities, bonds, and other debt securities which the Funds may
invest in may include high yield, high risk debt securities rated BB or lower
by Standard & Poor's Corporation ("S&P") or Ba or lower by Moody's Investor
Services ("Moody's") or unrated securities. Securities rated BB or lower by S&P
and Ba or lower by Moody's are referred to in the financial community as "junk
bonds" and may include D rated securities of issuers in default. Ratings
assigned by credit agencies do not evaluate market risks. The Adviser considers
the ratings assigned by S&P or Moody's as one of several factors in its
independent credit analysis of issuers. A brief description of the quality
ratings of these two services is contained in the section entitled "Quality
Ratings of Debt Securities." Davis New York Venture Fund will not purchase
securities rated BB or Ba or lower if the securities are in default at the time
of purchase or if such purchase would then cause 5% or more of the Fund's net
assets to be invested in such lower rated securities. Davis Growth & Income
Fund will not purchase securities rated BB or Ba or lower if the securities are
in default at the time of purchase or if such purchase would then cause more
than 35% of the Fund's net assets to be invested in such lower rated
securities.

Primary Risks. While likely to have some quality and protective
characteristics, high yield, high risk debt securities, whether or not
convertible into common stock, usually involve increased risk as to payment of
principal and

6
<PAGE>

interest. Issuers of such securities may be highly leveraged and may not have
available to them traditional methods of financing. Therefore, the risks
associated with acquiring the securities of such issuers generally are greater
than is the case with higher rated securities. For example, during an economic
downturn or a sustained period of rising interest rates, issuers of high yield
securities may be more likely to experience financial stress, especially if
such issuers are highly leveraged. During such periods, such issuers may not
have sufficient revenues to meet their principal and interest payment
obligations. The issuer's ability to service its debt obligations also may be
adversely affected by specific issuer developments, or the issuer's inability
to meet specific projected business forecasts, or the unavailability of
additional financing. The risk of loss due to default by the issuer is
significantly greater for the holders of high yield securities because such
securities may be unsecured and may be subordinated to other creditors of the
issuer.

High yield, high risk debt securities are subject to greater price
volatility than higher rated securities, tend to decline in price more steeply
than higher rated securities in periods of economic difficulty or accelerating
interest rates and are subject to greater risk of non-payment in adverse
economic times. There may be a thin trading market for such securities. This
may have an adverse impact on market price and the ability of the Funds to
dispose of particular issues and may cause the Funds to incur special
securities registration responsibilities, liabilities and costs and liquidity
and valuation difficulties. Unexpected net redemptions may force the Funds to
sell high yield, high risk debt securities without regard to investment merit,
thereby possibly reducing return rates. Such securities may be subject to
redemptions or call provisions which, if exercised when investment rates are
declining, could result in the replacement of such securities with lower
yielding securities, resulting in a decreased return. To the extent that the
Funds invests in bonds that are original issue discount, zero coupon,
pay-in-kind or deferred interest bonds, the Funds may have taxable interest
income in excess of the cash actually received on these issues. In order to
avoid taxation to the Funds, the Funds may have to sell portfolio securities to
meet taxable distribution requirements.

The market values of such securities tend to reflect individual
corporate developments to a greater extent than do higher rated securities,
which react primarily to fluctuations in the general level of interest rates.
Such lower rated securities also tend to be more sensitive to economic and
industry conditions than are higher rated securities. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis regarding
individual lower rated bonds and the high yield, high risk market may depress
the prices for such securities. If the negative factors such as the
aforementioned adversely impact the market value of high yield, high risk
securities, net asset value will be adversely affected.

The high yield, high risk bond market comprised a small piece of the
general bond market until the middle 1980's when issuance increased
dramatically. Since that time, the high yield, high risk bond market has
experienced only one recessionary environment but never has been exposed to a
significant increase in interest rates. During the economic downturn that was
experienced, prices of high yield, high risk bonds declined and defaults rose.
Future economic downturns and/or significant increases in interest rates are
likely to have a negative effect on the high yield, high risk bond market and
consequently on the value of these bonds, as well as increase the incidence of
defaults on such bonds.

High yield, high risk bonds may be issued in a variety of
circumstances. Some of the more common circumstances are issuance by
corporations in the growth stage of their development, in connection with a
corporate reorganization or as part of a corporate takeover. Companies that
issue such high yielding, high risk bonds often are highly leveraged and may
not have available to them more traditional methods of financing. Therefore,
the risk associated with acquiring the bonds of such issuers generally is
greater than is the case with higher rated bonds. For example, during an
economic downturn or recession, highly leveraged issuers of high yield, high
risk bonds may experience financial stress. During such periods, such issuers
may not have sufficient revenues to meet their principal and interest payment
obligations. The issuer's ability to service its debt obligations may also be
adversely affected by specific corporate developments, or the issuer's
inability to meet specific projected business forecasts, or the unavailability
of additional financing. The risk of loss due to default by the issuer is
significantly greater for the holders of high yielding bonds because such bonds
are generally unsecured and are often subordinated to other creditors of the
issuer. The costs associated with recovering principal and interest once a
security has defaulted may impact the return to holders of the security. If the
Funds experiences unexpectedly large net redemptions, it may be forced to sell
high yield, high risk bonds out of the portfolio without regard to the
investment merits of such sales. This could decrease the Fund's net assets.
Since some of the Fund's expenses are fixed, this could also reduce the Fund's
rate of return.

7
<PAGE>

The Funds may have difficulty disposing of certain high yield, high
risk bonds because there may be a thin trading market for such bonds. Because
not all dealers maintain markets in all high yield, high risk bonds, the Funds
anticipate that such bonds could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market may have an
adverse impact on market price and the ability to dispose of particular issues
and may also make it more difficult to obtain accurate market quotations or
valuations for purposes of valuing the Funds' assets. Market quotations
generally are available on many high yield issues only from a limited number of
dealers and may not necessarily represent firm bid prices of such dealers or
prices for actual sales. In addition, adverse publicity and investor
perceptions may decrease the values and liquidity of high yield, high risk
bonds regardless of a fundamental analysis of the investment merits of such
bonds. To the extent that the Funds purchase illiquid or restricted bonds, it
may incur special securities registration responsibilities, liabilities and
costs, and liquidity and valuation difficulties relating to such bonds.

Bonds may be subject to redemption or call provisions. If an issuer
exercises these provisions when investment rates are declining, the Funds will
be likely to replace such bonds with lower yielding bonds resulting in a
decreased return. Zero coupon, pay-in-kind and deferred interest bonds involve
additional special considerations. Zero coupon bonds are debt obligations that
do not entitle the holder to any periodic payments of interest prior to
maturity or a specified cash payment date when the securities begin paying
current interest (the "cash payment date") and therefore are issued and traded
at a discount from their face amount or par value. The market prices of zero
coupon securities are generally more volatile than the market prices of
securities that pay interest periodically and are likely to respond to changes
in interest rates to a greater degree than do securities paying interest
currently having similar maturities and credit quality. Pay-in-kind bonds pay
interest in the form of other securities rather than cash. Deferred interest
bonds defer the payment of interest to a later date. Zero coupon, pay-in-kind
or deferred interest bonds carry additional risk in that, unlike bonds which
pay interest in cash throughout the period to maturity, the Funds will realize
no cash until the cash payment date unless a portion of such securities are
sold. There is no assurance of the value or the liquidity of securities
received from pay-in-kind bonds. If the issuer defaults, the Funds may obtain
no return at all on its investment. To the extent that the Funds invest in
bonds that are original issue discount, zero coupon, pay-in-kind or deferred
interest bonds, the Funds may have taxable interest income in excess of the
cash actually received on these issues. In order to distribute such income to
avoid taxation to the Funds, the Funds may have to sell portfolio securities to
meet its taxable distribution requirements under circumstances that could be
adverse.

Federal tax legislation limits the tax advantages of issuing certain
high yield, high risk bonds. This could have a materially adverse effect on the
market for high yield, high risk bonds.

REPURCHASE AGREEMENTS. The Funds may enter into repurchase agreements,
but normally will not enter into repurchase agreements maturing in more than
seven days. A repurchase agreement, as referred to herein, involves a sale of
securities to a 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 Funds 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 Funds seek
to enforce their rights thereto; (b) possible loss of all or a part of the
income during this period; and (c) expenses of enforcing its rights.

The Funds 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 Funds will not enter into a repurchase agreement maturing in
more than seven days if it would cause more than 15% of the value of their net
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
Funds' 15% limitation on illiquid securities.

8
<PAGE>

OTHER INVESTMENT POLICIES
(DAVIS NEW YORK VENTURE FUND AND DAVIS GROWTH & INCOME FUND)

TEMPORARY DEFENSIVE INVESTMENTS. For defensive purposes or to
accommodate inflows of cash awaiting more permanent investment, the Funds may
temporarily and without limitation hold high-grade short-term money market
instruments, cash and cash equivalents, including repurchase agreements.

HEDGING FOREIGN CURRENCY RISKS. To attempt to reduce exposure to
currency fluctuations, the Funds 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 Funds and to hedge a currency risk involved in
an anticipated purchase of foreign securities. Cross-hedging may also be
utilized, that is, entering into a hedge transaction in respect to a different
foreign currency than the one in which a trade is to be made or in which a
portfolio security is principally traded. There is no limitation on the amount
of assets that may be committed to currency hedging. However, the Funds 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 Funds 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
Funds than if they had not entered into such contracts. When taking a position
in an anticipatory hedge (when the Funds purchase a futures contract or other
similar instrument to gain market exposure in anticipation of purchasing the
underlying securities at a later date), the Funds are required to set aside
cash or high-grade liquid securities to fully secure the obligation.

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 Funds a position in a negotiated, currently non-regulated market. A
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, when the Adviser or Sub-Adviser believes
that a foreign currency may suffer a substantial decline against the U.S.
dollar, either Fund 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. When the Adviser or
Sub-Adviser believes that the U.S. dollar may suffer a substantial decline
against a foreign currency, either Fund 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 Funds 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 Funds 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 Funds 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 a Fund's position, it may forfeit the entire amount of the premium
plus related transaction costs. Options on foreign currencies to be written or

9
<PAGE>

purchased by the Funds 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 Funds would
utilize options traded on exchanges where the options are standardized.

The Funds 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 Funds will be
traded on U.S. or foreign exchanges or over-the-counter.

The Funds 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. These strategies will be used for
hedging purposes only. The Funds will hold securities or other options or
futures positions whose values are expected to offset its obligations under the
hedge strategies. Neither Fund will 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 Funds 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 liquid securities in a segregated
account with its custodian bank in the amount prescribed. The Funds' custodian
will maintain the value of such segregated account equal to the prescribed
amount by adding or removing additional 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 Funds' 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 Funds 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 Funds would have to
be exercised in order for the Funds to realize any profit and (ii) the Funds
may not be able to sell currencies covering an option written by the Funds
until the option expires or it delivers the underlying futures currency upon
exercise. Therefore, no assurance can be given that the Funds will be able to
utilize these instruments effectively for the purposes set forth above. The
Funds' ability to engage in currency hedging transactions may be limited by tax
considerations.

The Funds' 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 Funds as ordinary or capital and the
timing and amount of any income or loss to the Funds. This, in turn, could
affect the character, timing and amount of distributions by the Funds to
shareholders. The Funds may be limited in its foreign currency transactions by
tax considerations.

RESTRICTED AND ILLIQUID SECURITIES. The Funds may invest in restricted
securities which are subject to contractual restrictions on resale. The Funds'
policy is to not purchase or hold illiquid securities (which may include
restricted securities) if more than 15% of the Funds' net assets would then be
illiquid.

The restricted securities which the Funds 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 Funds, 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 Funds' Board of Directors, will consider whether Rule 144A securities being
purchased or held by the Funds are illiquid and thus subject to the Funds'
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

10
<PAGE>

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 Funds' 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.

BORROWING. The Funds may borrow money in for temporary or emergency
purposes. Neither Fund will borrow money with the intent of leveraging their
investments. Borrowing activities are strictly limited as described in the
section entitled, "Investment Restrictions".

LENDING PORTFOLIO SECURITIES. The Funds may lend securities to
broker-dealers or institutional investors for their use in connection with
short sales, arbitrages and other securities transactions. The Funds will not
lend portfolio securities unless the loan is secured by collateral. The Davis
New York Venture 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. The
Davis Growth & Income Fund will not lend securities if such a loan would cause
more than 33 1/3% of the total value of its assets (including collateral
received) to then be subject to such loans.

WRITING COVERED OPTIONS. For income purposes, the Funds may write
covered call options on their portfolio securities and purchase call options in
closing transactions. The Funds may suffer an opportunity loss if the value of
the underlying security should rise above the strike price of the call option
before the option expires. The Funds do not currently intend to engage in any
such transaction if it would cause more than 10% of total assets to be subject
to options.

A covered call option gives the purchaser of the option the right to
buy the underlying security at the price specified in the option (the "exercise
price") at any time until the option expires, generally within three to nine
months, in return for the payment to the writer upon the issuance of the option
of an amount called the "premium." A commission may be charged in connection
with the writing of the option. The premium received for writing a call option
is determined by the option markets. The premium paid plus the exercise price
will always be greater than the market price of the underlying securities at
the time the option is written. By writing a covered call option, a Fund
foregoes, in exchange for the premium, the opportunity to profit from an
increase in the market value of the underlying security above the exercise
price, if the option is exercised. The call obligation is terminated upon
exercise of the call option, expiration of the call or when the Fund effects a
closing purchase transaction. A closing purchase transaction is one in which
the writer purchases another call option in the same underlying security
(identical as to exercise price, expiration date and number of shares). The
writer thereby terminates its obligation and substitutes the second writer as
the obligor to the original option purchaser. A closing purchase transaction
would normally involve payment of a brokerage commission. During the remaining
term of the option, if a Fund cannot enter into a closing purchase transaction,
that Fund would lose the opportunity for realizing any gain over and above the
premium through sale of the underlying security and if the security is
declining in price that Fund would continue to experience such decline.

PORTFOLIO TRANSACTIONS.

The Adviser and Sub-Adviser are responsible for the placement of
portfolio transactions, subject to the supervision of the Board of Directors.
Both Funds have adopted a 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
Funds' investment objectives, the Funds may trade to some degree in securities
for the short term if the Adviser or Sub-Adviser believes that such trading is
advisable.

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 Funds
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

11
<PAGE>

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 Funds 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 Funds. Subject to the requirements of best execution, the
placement of orders by securities firms for shares of the Funds 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 a Fund as well as other
fiduciary accounts, the Adviser or Sub-Adviser may aggregate the securities to
be sold or purchased for a 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 involved. In
some instances, this procedure could adversely affect a Fund but the Adviser
and Sub-Adviser deem 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 Funds' portfolios. As any particular research obtained by the Adviser or
Sub-Adviser may be useful to the Funds, the Board of Directors or its Committee
on Brokerage, in considering the reasonableness of the commissions paid by the
Funds, will not attempt to allocate, or require the Adviser to allocate, the
relative costs or benefits of research.

The Funds paid the following brokerage commissions:

Fiscal year ended July 31
1998 1997 1996
<S> <C> <C> <C>
Davis New York Venture Fund
brokerage commissions paid $5,092,961 $3,616,808 $1,315,346
amount paid to brokers providing research 86% 87% 97%
brokerage commissions paid
to Shelby Cullom Davis & Co.(1) $ 441,042 $ 238,363 $97,362

Davis Growth & Income Fund
brokerage commissions paid $56,658(2) NA NA
amount paid to brokers providing research 96%(2) NA NA
brokerage commissions paid
to Shelby Cullom Davis & Co. (1) $13,500 NA NA

</TABLE>

(1) Shelby Cullom Davis & Co. is a broker-dealer who may be considered an
affiliated person of the Adviser. During the fiscal year ended July 31, 1998,
commissions received represented 8.65% of total commissions paid and 12.64% of
the aggregate dollar amount of transactions involving the payment of
commissions by the Davis New York Venture Fund. During the period from May 1,
1998 (commencement of operations) through July 31, 1998 commissions received
represented 23.83% of total commissions paid and 32.75% of the aggregate dollar
amount of transactions involving the payment of commissions by the Davis Growth
& Income Fund.

(2) For the period from May 1, 1998 (commencement of operations) through July
31, 1998.

12
<PAGE>

Because of the Funds' 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. The
Funds anticipate that, during normal market conditions, their annual portfolio
turnover rate will be less than 100%.

INVESTMENT RESTRICTIONS

The fundamental investment restrictions set forth below 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 964958160votes. 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.

Davis New York Venture Fund and Davis Growth & Income Fund have
different fundamental investment restrictions and non-fundamental policies
which are listed below.

DAVIS NEW YORK VENTURE FUND FUNDAMENTAL INVESTMENT RESTRICTIONS
- ---------------------------------------------------------------

1. Investment Objective. The Fund's investment objective is growth of
capital.

2. Diversification. 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.)

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.

3. 964957580Concentration. 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.)

4. Commodities and Futures 964957766Contracts. The Fund may not buy or sell
commodities or commodity contracts, except contracts in respect to
foreign currencies for hedging (risk reduction) purposes.

5. Options. 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.

6. Real 964957673Estate. 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.

7. Unseasoned Issuers. 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. Other Investment Companies. 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

13
<PAGE>

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. Short Selling, Margin, and Arbitrage. 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. Illiquid Securities. 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. Investing for Control. The Fund does not invest for the purpose of
exercising control or management of other companies.

12. 964957261Borrowing. The Fund may not borrow money except from banks for
extraordinary or emergency purposes in amounts not exceeding 10% of the
value of the Fund's total assets (excluding the amount borrowed) at the
time of borrowing. The Fund may not pledge or hypothecate any of its
assets, except in connection with permitted borrowing in amounts not
exceeding 15% of the value of the Fund's total assets (excluding the
amount borrowed) at the time of such borrowing. (These restrictions do
not apply to the use of margin deposits in connection with transactions
in foreign currencies for hedging purposes.)

13. Affiliated Ownership. 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. 964957364Underwriting. 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. Lending Money or 964957879Securities. 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.

DAVIS NEW YORK VENTURE FUND NON-FUNDAMENTAL POLICIES. In addition to the
foregoing restrictions, Davis New York Venture Fund is subject to certain other
non-fundamental policies which may be changed without shareholder approval
including the following:

1. Senior Securities. The Fund may not issue senior securities nor sell
short more than 5% of its total assets. This limitation does not apply
to selling short against the box. .

DAVIS GROWTH & INCOME FUND FUNDAMENTAL INVESTMENT RESTRICTIONS
- --------------------------------------------------------------

1. Senior 964957517Securities. The Fund may not issue senior securities
nor sell short more than 5% of its total assets. This limitation does
not apply to selling short against the box.

2. Borrowing. 964957298The Fund may borrow money from any source for
temporary purposes in an amount not exceeding 5% of total assets. The
Fund may borrow money from banks as a temporary measure in amounts not
exceeding 33 1/3% of the amount of its total assets (reduced by the
amount of all liabilities and indebtedness other than such borrowing)
when deemed desirable or appropriate to effect redemptions. The Fund
will not purchase portfolio securities on margin and will not purchase
additional portfolio securities while borrowings exceed 5% of the
total assets of the Fund.

14
<PAGE>

3. Underwriting. The Fund does not engage in the underwriting of
securities; however, the Fund may technically be considered an
"underwriter" if it sells restricted securities.

4. Real Estate. 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.

5. Commodities, Futures Contracts, and 964957814Options. The Fund may not
purchase or sell futures contracts, forward contracts, options, and
other derivative investments except for the sole purpose of hedging
the portfolio against market, currency, interest rate, and other
risks. Hedging transactions include, but are not limited to, writing
covered calls, purchasing protective puts, selling futures to hedge
existing positions, and buying futures in anticipation of purchasing
the underlying securities. This prohibition does not limit the Fund's
ability to purchase warrants, or adjustable rate debt obligations.

6. Lending. 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, U.S. Government Securities, or other liquid securities. The Fund
will not lend securities if such a loan would cause more than 33 1/3%
of the total value of its assets (including collateral received) to
then be subject to such loans.

7. Diversification. With respect to 75% of its total assets the Fund will
not: (a) make an investment that will cause more than 5% of the value
of its total assets to be invested in securities of any one issuer,
except such limitation shall not apply to obligations issued or
guaranteed by the United States ("U.S.") Government, its agencies or
instrumentalities, or (b) acquire more than 10% of the voting
securities of any one issuer.

8. 964957621Concentration. The Fund does not concentrate its investments
in any one industry and may not buy the securities of companies in any
one industry if 25% or more 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.)

DAVIS GROWTH & INCOME FUND NON-FUNDAMENTAL POLICIES. In addition to the
foregoing restrictions, Davis Growth & Income Fund is subject to certain other
non-fundamental policies, which may be changed without shareholder approval
including the following:

1. Illiquid Securities. 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.

2. Pledging Assets. The Fund may not pledge or hypothecate any of its
assets, except in connection with permitted borrowing. This
restriction does not apply to the use of margin deposits in connection
with futures or options transactions.

3. High Yield, High Risk Securities. The Fund may not purchase securities
rated BB or Ba or lower if such purchase would then cause more than
35% of the Fund's net assets to be invested in such securities.

4. Covered Calls. The Fund may not sell covered calls if, after giving
effect to the sale, the market value of the Fund's portfolio
securities subject to options would exceed 10% of the value of the
Fund's total assets.

5. Warrants. The Fund may not purchase warrants if, after giving effect
to the purchase, more than 5% of total assets would be invested in
warrants.

15
<PAGE>

Section II: Key Persons
- ------------------------

ORGANIZATION OF THE COMPANY

THE COMPANY. 964952876Davis New York Venture Fund, Inc. ("Company") is
an open-end, diversified, management investment company incorporated in
Maryland in 1968 and registered under the Investment Company Act of 1940. The
Company is a series investment company which may issue multiple series, each of
which would represent an interest in its separate portfolio. The Company
currently offers two series, the Davis New York Venture Fund and the Davis
Growth & Income Fund (a "Fund" or the "Funds"). On November 1, 1995 the Company
changed its name from New York Venture Fund, Inc., to Davis New York Venture
Fund, Inc.

FUND SHARES. The Funds may issue shares in different classes. The
Funds shares 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 of the funds' shares
represent an interest in the assets of the fund issuing the share and have
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 Company can elect all of the directors of
the Company. 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 Distributor at 1-800-279-0279
to obtain the Class Y prospectus.

Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the shareholders of the outstanding voting securities of an
investment company, such as the Company, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2 further
provides that a series shall be deemed to be affected by a matter unless it is
clear that the interests of each series in the matter are identical or that
that the matter does not affect any interest of such series. Rule 18f-2 exempts
the selection of independent accountants and the election of Board members from
the separate voting requirements of the Rule.

In accordance with Maryland law and the Company's By-laws, the Company
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 of at least 25% of the voting
power that could be cast at the meeting.

DIRECTORS AND OFFICERS

The Company's Board of Directors is responsible for the management and
supervision of the Funds. The Board approves all significant agreements between
the Company, on behalf of the Funds, and those companies that furnish services
to the Funds. The names and addresses of the directors and officers of the
Funds are set forth below, together with their principal business affiliations
and occupations for the last five years. The asterisk following the names of
Jeremy H. Biggs, Andrew A. Davis and Christopher C. Davis indicates that they
are considered to be "interested persons" of the Company, as defined in the
Investment Company Act. As indicated below, certain directors and officers of
the Company 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").

16
<PAGE>

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.

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).

LAURENCE W. LEVINE (4/9/31), Walsh & Levine 40 Wall Street, 21st, Floor, New
York, NY 10005. 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 Capital Ideas, a private financial consultant.
Former Vice President and head of convertible security research, PaineWebber,
Incorporated.

17
<PAGE>

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.965742481C. 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.

SHARRA L. REED (9/25/66), 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; 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.

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.

DIRECTORS COMPENSATION 965742428SCHEDULE

During the fiscal year ended July 31, 1998, the compensation paid to
the directors who are not considered to be interested persons of the Company
was as follows:

AGGREGATE COMPANY TOTAL
NAME COMPENSATION COMPLEX COMPENSATION*

Wesley E. Bass $20,400 $45,600
Marc P. Blum 18,600 42,000
Jerry D. Geist 18,600 42,000
D. James Guzy 18,600 42,000
G. Bernard Hamilton 18,600 47,000
LeRoy E. Hoffberger 18,600 42,000
Laurence W. Levine 18,600 42,000
Christian R. Sonne 18,600 42,000

18
<PAGE>

* 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 965805289FUND

The following table sets forth, as of September 2, 1998 the name and
holdings of each person known by the Company to be a record owner of more than
5% of the outstanding shares of any Class of either of its Funds. The Fund is
not aware of any shareholder that beneficially owns in excess of 25% of the
Fund's total outstanding shares.

PERCENT OF CLASS
NAME AND ADDRESS OUTSTANDING
- ---------------- -----------

DAVIS NEW YORK VENTURE FUND
CLASS A SHARES

Merrill Lynch Pierce Fenner & Smith 19.58%
4800 Deerlake Drive East, 2nd Floor
Jacksonville, FL 32246-6484

DAVIS NEW YORK VENTURE FUND
CLASS B SHARES

Merrill Lynch Pierce Fenner & Smith 31.84%
4800 Deerlake Drive East, 2nd Floor
Jacksonville, FL 32246-6484

DAVIS NEW YORK VENTURE FUND
CLASS C SHARES

Merrill Lynch Pierce Fenner & Smith 47.84%
4800 Deerlake Drive East, 2nd Floor
Jacksonville, FL 32246-6484

DAVIS NEW YORK VENTURE FUND
CLASS Y SHARES

Merrill Lynch Pierce Fenner & Smith 60.61%
4800 Deerlake Drive East, 2nd Floor
Jacksonville, FL 32246-6484

DAVIS GROWTH & INCOME FUND
CLASS A SHARES
Shelby Cullom Davis & Co. 49.24%
Investment #3
609 5th Avenue, 11th Floor
New York, New York 10017-1021

Christopher C. Davis 9.84%
9 East 81st Street
New York, New York 10028-0205

19
<PAGE>

DAVIS GROWTH & INCOME FUND
CLASS B SHARES
Merrill Lynch Pierce Fenner & Smith 16.59%
4800 Deerlake Drive East, 2nd Floor
Jacksonville, FL 32246-6484

DAVIS GROWTH & INCOME FUND
CLASS C SHARES
Merrill Lynch Pierce Fenner & Smith 21.19%
4800 Deerlake Drive East, 2nd Floor
Jacksonville, FL 32246-6484

DAVIS GROWTH & INCOME FUND
CLASS Y SHARES
Merrill Lynch Pierce Fenner & Smith 99.49%
4800 Deerlake Drive East, 2nd Floor
Jacksonville, FL 32246-6484

The Directors and Officers of the funds as a group, owned the following
percentages of the outstanding shares of each Class of both Funds'
965814938shares965814938:

DAVIS NEW YORK VENTURE FUND
CLASS A SHARES 1.08%
CLASS B SHARES under 1%
CLASS C SHARES under 1%
CLASS Y SHARES under 2.89%

DAVIS GROWTH & INCOME FUND
CLASS A SHARES 60.13%
CLASS B SHARES under 1%
CLASS C SHARES under 1%
CLASS Y SHARES under 1%

INVESTMENT ADVISORY SERVICES

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 both Funds. Venture Advisers, Inc. is the Adviser's sole
general partner. Shelby M.C. Davis is the controlling shareholder of the
general 965815574partner. Subject to the direction and supervision of the Board
of Directors, the Adviser manages the investment and business operations of the
Funds. Davis Distributors, LLC ("the Distributor"), a subsidiary of the
Adviser, serves as the distributor or principal underwriter of the Funds'
shares. Davis Selected Advisers-NY, Inc., ("DSA-NY") a wholly owned subsidiary
of the Adviser, performs research and other services for the Funds on behalf of
the Adviser under a Sub-Advisory Agreement with the 965815664Adviser. The
Adviser also acts as investment adviser for 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 Funds and the Selected Funds.

ADVISORY AGREEMENT. Pursuant to the Advisory Agreement, each fund pays
the Adviser a fee according to a separate negotiated fee schedule. Advisory
fees are allocated among each Class of shares in proportion to each Classes'
relative total net assets.

20
<PAGE>

The Davis New York Venture 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. The aggregate advisory fees paid by the Davis New York Venture Fund to
the Adviser for fiscal years ended July 31, 1998, 1997, and 1996, were
$47,535,606, $22,385,196, and $12,351,657 965816499respectively

The Davis Growth & Income 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 total net assets over $500 million.
The aggregate advisory fees paid by Davis Growth & Income Fund to the Adviser
for the period May 1, 1998 (inception of operations) through July 31, 1998, was
$102,832.

These fees are higher than that of most other mutual funds but is not
necessarily higher than that paid by funds with similar objectives. The Company
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 Funds.

The Advisory Agreement also makes provisions for portfolio
transactions and brokerage policies of the Funds which are discussed above
under "Portfolio Transactions."

In accordance with the provisions of the Investment Company Act of
1940, the Advisory Agreement will terminate automatically upon assignment and
is subject to cancellation upon 60 days' written notice by the Company's Board
of Directors, the vote of the holders of a majority of the Funds outstanding
shares, or the Adviser. The continuance of the Advisory Agreement must be
approved at least annually by the Funds 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.

Pursuant to the Advisory Agreement, the Adviser, subject to the
general supervision of the Funds' 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 requested by the
Board of Directors of the Funds. The Funds bear 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, 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 965816929laws.
Each fund reimburses the Adviser for providing certain services. Such
reimbursements are detailed 965819756below:

Fiscal year ended July 31st
1998 1997 1996
<S> <C> <C> <C>
Davis New York Venture Fund
accounting and administrative services $ 416,664 $127,087 $ 65,004
qualifying shares for sale with state agencies $ 14,004 $ 13,169 $ 12,000
shareholder services $1,024,000 $151,226 $141,804

For the period from May 1, 1998 (inception of
operations) through July 31, 1998:
Davis Growth & Income Fund
accounting and administrative services $1,500
qualifying shares for sale with state agencies $3,249
shareholder services $1,649
</TABLE>

CODE OF ETHICS. The Adviser has adopted a Code of Ethics which
regulates the personal securities transactions of the Adviser's investment
personnel, other employees, and affiliates, with access to information
regarding securities transactions of the Funds. The Code of Ethics requires
investment personnel to disclose

21
<PAGE>

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.

DISTRIBUTION OF COMPANY SHARES

DISTRIBUTION PLANS. Class A, Class B, and Class C shares have each
adopted Distribution Plans under which each fund 966504436reimburses the
Distributor for some of its distribution expenses. The Distribution Plans were
approved by the Funds' 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 pursuant to a Distribution Plan are included in the operating
expenses of the Class.

CLASS A 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 the Funds' Class A
shares, servicing its shareholders and maintaining its 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 Funds. 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 each
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.

CLASS B 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 Company 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
its shareholder accounts.

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

CARRYOVER PAYMENTS. If, due to the foregoing payment limitations,
either fund is unable to pay the Distributor the 4% commission on new sales of
Class B shares, or the 1% commission on new sales of Class C 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 Funds 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 Funds are 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 Company, who are not interested persons of the Distributor or
the Company and have no direct or indirect financial interest in the Class B
Distribution Plan (the "Independent Directors"). If either Fund terminates its
Class B share or Class C share Distribution Plan, 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, 1998, the Distributor paid

22
<PAGE>

$93,577.161 in commissions on behalf of the Company for which the Distributor
had not yet received reimbursement.

ADDITIONAL INFORMATION CONCERNING THE DISTRIBUTION PLANS. In addition,
to the extent that any investment advisory fees paid by the Company may be
deemed to be indirectly financing any activity which is primarily intended to
result in the sale of Company shares within the meaning of Rule 12b-1, the
Distribution Plans authorize the payment of such fees.

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 Independent Directors or a majority of a Fund's outstanding
Class of 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. Currently, Rule 12b-1 provides that as long as the Distribution
Plans are in effect, the Company must commit the selection and nomination of
candidates for new Independent Directors to the sole discretion of the existing
Independent Directors.

DEALER COMPENSATION. 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 funds 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 965888799Plans.

In addition, the Distributor may, from time to time, pay additional
cash compensation or other promotional incentives to authorized dealers or
agents who sell shares of the Funds. 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 Funds and/or the other Davis Funds managed by the Adviser during
a specified period of time.

Shares of the Funds 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 Funds under the Glass-Steagall Act would
have no material adverse effects on the funds. State securities laws may
require such firms to be licensed as securities dealers in order to sell shares
of the Fund.

KRC INVESTMENT ADVISERS, LLC. KRC Investment Advisers, LLC
("965824813KRC"), 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
the Distributor which provides payments to KRC under the Funds Rule 12b-1 Plan.
Under the Services Agreement, KRC will provide shareholder maintenance services
to clients, in respect of shares of the Company, 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 Company under its Rule 12b-1
Plan. Those payments will be made in connection with shareholder maintenance
services provided by that investment adviser to its clients who are
shareholders of the Company 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.

THE DISTRIBUTOR. Davis Distributors, LLC, ("the Distributor"), 124
East Marcy, Santa Fe, New Mexico, 87501 is a wholly owned subsidiary of the
Adviser and pursuant to a Distributing Agreement acts as principal underwriter
of the funds shares on a continuing basis pursuant to a Distributing
965818002Agreement. 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 funds
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

23
<PAGE>

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.

The Distributor or the Adviser, in its capacity as distributor,
received total sales charges (which the Funds do not pay) on the sale of Class
A 965887241shares:

Fiscal year ended July 31st
1998 1997 1996

<S> <C> <C> <C>
Davis New York Venture Fund $38,272,705 $16,907,761 $11,092,007
Amount reallowed to dealers $32,490,924 $14,249,725 $ 9,343,681
Davis Growth & Income Fund $ 360,457* NA NA
Amount reallowed to dealers $ 303,403* NA NA

</TABLE>

*for the period from May 1, 1998 (inception of operations) through July 31,
1998.

The Distributor or the Adviser, in its capacity as distributor, also
received compensation on redemptions and repurchases of shares. For the fiscal
year ended July 31, 1998, the Distributor received $2,999 for Class A shares,
$2,310,146 for Class B shares, and $311,622 for Class C shares as compensation
on redemptions and repurchases from the Davis New York Venture Fund. For the
period from May 1, 1998 (commencement of operations) through July 31, 1998, the
Distributor received $704 for Class B shares and $258 for Class C shares as
compensation on redemptions and repurchases from the Davis Growth & Income
965888089Fund.

The Distributor or the Adviser, in its capacity as distributor,
received the following amounts as reimbursements under the Distribution plans:

Fiscal year ended
1998 1997 1996
<S> <C> <C> <C>
Davis New York Venture Fund
Class A Shares $11,710,409 $5,705,119 $2,614,412
Class B Shares $20,695,694 $6,131,202 $1,561,856
Class C Shares $ 9,471,710 $2,868,760 $ 570,693

Davis Growth & Income Fund
Class A Shares $25,387* NA NA
Class B Shares $28,141* NA NA
Class C Shares $ 6,973* NA NA

</TABLE>

* For the period from May 1, 1998 (inception of operations) through July 31,
1998.

OTHER IMPORTANT SERVICE PROVIDERS

965819879CUSTODIAN. State Street Bank and Trust Company ("State
Street" or "Custodian"), One Heritage Drive, North Quincy, Massachusetts 02171,
serves as custodian of the Company's assets. The Custodian maintains all of the
instruments representing the Company's investments and all cash. The Custodian
delivers securities against payment upon sale and pays for securities against
delivery upon purchase. The Custodian also remits the Company assets in payment
of the Fund's expenses, pursuant to instructions of officers or resolutions of
the Board of Directors. The Custodian also provides certain fund accounting and
transfer agent services.

AUDITORS. KPMG Peat Marwick, 707 17th St. Suite 2300, Denver, Colorado
80202, serves as independent auditors for each of the funds. 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.

24
<PAGE>

COUNSEL. D'Ancona & Pflaum, 30 N. LaSalle Street, Suite 2900, Chicago,
IL. 60602, serves as counsel to the Company and also serves as counsel for
those members of the Board of Directors who are not affiliated with the
Adviser.

Section III: Purchase, Redeem and Exchanging Shares
- ---------------------------------------------------

PURCHASE OF SHARES

GENERAL. You can purchase Class A, Class B, or Class C shares of
either fund from any dealer or other person having a sales agreement with the
Distributor. Class Y shares are offered only to certain qualified purchasers,
as described below.

There are three ways to make an initial investment of Class A, Class
B, or Class C shares in the Funds. One way is to fill out the Application Form
included in the 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 (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.

The second way to make an initial investment is to have your dealer
order and remit payment for the shares on your behalf. The dealer can also
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 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; or
DAVIS GROWTH & INCOME FUND 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, 66 Brooks Drive, Braintree, MA. 02184.
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 applicable fund. If you know your account number, you should also
provide it to State Street.

The Company 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. The Company does not issue certificates for Class Y shares.
Instead, shares purchased are automatically credited to an account maintained
for you on the books of the Company 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.

25
<PAGE>

ALTERNATIVE PURCHASE ARRANGEMENTS. Each 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 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.

Wrap Program Investors should be aware that both Class A and Class Y
shares are made available by the Company at net asset value to sponsors of wrap
programs. However, Class A shares are subject to additional expenses under the
Company's Class A Distribution 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.

Depending on the amount of the purchase and the anticipated length of
time of the 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 invested
immediately. The Company 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
Company will not accept any purchase of Class C shares when Class A shares may
be purchased at net asset value.

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.

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:

Purchase Amount Commission
First $3,000,000........................................ .75%
Next $2,000,000........................................ .50%
Over $5,000,000........................................ .25%

26
<PAGE>

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 Company
and, in cases where the limits of the distribution plan in any year have been
reached, from the Distributor's own resources.

REDUCTION OF CLASS A SALES CHARGE. There are a number of ways to reduce the
sales charge imposed on the purchase of the funds' 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. If you claim any reduction of sales
charges, 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.

(1) FAMILY OR GROUP PURCHASES. Certain purchases made by or for more
than one person may be considered to constitute a single purchase, including
(i) purchases for family members, including spouses and children under 21, (ii)
purchases by trust or other fiduciary accounts and purchases by Individual
Retirement Accounts for employees of a single employer and (iii) purchases made
by an organized group of persons, whether incorporated or not, if the group has
a purpose other than buying shares of mutual funds. For further information on
group purchase reductions, contact the Adviser or your dealer.

(2) STATEMENTS OF INTENTION. Another way to reduce the sales charge is
by signing a Statement of Intention ("Statement"). See Appendix B: "Terms and
Conditions of a Statement of Intention." 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 funds 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 funds 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 the total amount indicated at one time. 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.

(3) 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 does not have to 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 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%.

27
<PAGE>

(4) COMBINED PURCHASES WITH OTHER DAVIS FUNDS. Your ownership or
purchase of Class A shares of other Davis Funds may also reduce your sales
charges in connection with the purchase of the Fund's Class A shares. This
applies to all three situations for reduction of sales charges discussed above.

If a "single purchaser" decides to buy a funds 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 Davis
New York Venture 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 Company'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 also applies 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 assert 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.

(5) 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. A sales charge is not imposed on these
transactions either because of the purchaser deals directly with the funds (as
in employee purchases) or because a responsible party (such as a financial
institution) is providing the necessary services usually provided by a
registered 965805141representative. 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.

(6) 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.

(7) 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; (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

28
<PAGE>

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 Funds 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 Funds may also issue Class A shares at
net asset value incident to a merger with or acquisition of assets of an
investment 965886572company.

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. With certain
exceptions described below, the Funds impose 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 Funds which are
acquired in exchange from Class B shares of other Davis Funds which were
purchased prior to December 1, 1994, the Funds 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 Funds 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.

CLASS B SPECIAL DISTRIBUTION ARRANGEMENTS. Class B shares of the Fund
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 Retirement Plan is recordkept on a daily valuation basis by
Merrill Lynch and, on the date the Retirement Plan sponsor signs the
Merrill Lynch Recordkeeping Service Agreement, the Retirement 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 Retirement Plan is recordkept on a daily valuation basis by an
independent recordkeeper whose services are provided through a
contract of alliance arrangement with Merrill Lynch, and on the date
the Retirement Plan Sponsor signs the Merrill Lynch Recordkeeping
Service Agreement, the Retirement Plan has less than $3 million in
assets, excluding money market funds, invested in Applicable
Investments; or

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

29
<PAGE>

Retirement 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 Retirement Plan has reached $5 million invested in Applicable
Investments. The Retirement Plan will receive a Retirement Plan level share
conversion. The Funds may make similar exceptions for other financial
institutions sponsoring or administering similar benefit plans.

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 Funds 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 Funds 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.

Under a program with Prudential Securities, Inc. ("PruArray"), the
Distributor will not advance a 1% commission at the time of purchase, no
contingent deferred sales charge is assessed and the 12b-1 fee is paid directly
to PruArray. Class C shares of the Davis New York Venture Fund are made
available to PruArray Retirement Plan Participants, such as 4019k) Plans, at
NAV wit the waiver of contingent deferred sales charge.

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
Funds did not pay a commission on issuance, including shares acquired through
reinvestment of dividend income and capital gains distributions. Upon request
for a redemption, shares not subject to the CDSC will be redeemed first.
Thereafter, shares held the longest will be the first to be redeemed.

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; and (f) on redemptions pursuant to the
right of the Company to liquidate a shareholder's account if the aggregate net
asset value of the shares held in such account falls below an established
minimum amount.

CLASS Y SHARES. Class Y shares are offered 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
Institutions act 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 Funds 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.

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<PAGE>

Wrap Program Investors should be aware that both Class A and Class Y
shares are made available by the Funds at net asset value to sponsors of wrap
programs. However, Class A shares are subject to additional expenses under the
Funds Rule 12b-1 Plan and sponsors of wrap programs utilizing Class A shares
are generally entitled to payments under such 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 provided by the sponsor against
the higher expenses paid by Class A shareholders.

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
Company 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 Company and other Davis Funds as their
investment vehicle. State Street acts as custodian or trustee for such 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 prior to such time.

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 the Funds 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 Automatic Investment Plan at any time. If you
desire to utilize this plan, you may use the appropriate designation on the
Application Form. Class Y shares are not eligible to participate in the
Automatic Investment Plan.

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, 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. Class
Y shares are not eligible to participate in the Dividend Diversification
Program.

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 DISTRIBUTOR 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
Company 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 might have difficulty in accepting telephone
requests, in which case you should contact us by mail.

EXCHANGE OF SHARES

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<PAGE>

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
Funds are intended as long-term investments and are not intended for short-term
trades. Shares of a particular class of a 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, Class C and
Class Y shares. The shares to be received upon exchange must be legally
available for sale in your state. For Class A, Class B or Class C shares the
net asset value of the initial shares being acquired must meet the required
minimum of $1,000 unless such exchange is under the Automatic Exchange Program
described below. For Class Y shares 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.

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, contact your broker/dealer, the Distributor, or 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 medallion signature guarantee is not required for
such an exchange. However, if shares are also redeemed for cash in connection
with the exchange transaction, a medallion signature guarantee may be required.
A medallion signature guarantee is a written confirmation from an eligible
guarantor institution, such as a securities broker-dealer or a commercial bank,
that the signature(s) on the account is (are) valid. Unfortunately, no other
form of signature verification can be accepted. Your dealer may charge an
additional fee for handling an exercise of the exchange privilege.

An exchange involves both a redemption and a purchase, and normally
both are done on the same day. However, in certain instances such as where a
large redemption is involved, the investment of redemption proceeds into shares
of other Davis Funds may take up to seven days. For federal income tax
purposes, exchanges between funds are treated as a sale and purchase.
Therefore, there will usually be a recognizable capital gain or loss due to an
exchange. An exchange between different classes of the same fund is not a
taxable event.

The number of times 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 a fund during a
twelve-month period are not permitted without the prior written approval of the
Distributor. The Company 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 Company 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 Company, 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

32
<PAGE>

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 must be signed by the owner or owners and 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 medallion signature
guaranteed by an eligible guarantor institution, such as a securities
broker-dealer, or a commercial bank. A medallion 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 medallion signature guarantee program. This provision also
applies to exchanges when there is also a redemption for cash. A medallion
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.

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 with a bank wire
or federal funds.

Redemptions are ordinarily paid to you in cash. However, the Company's
Board of Directors is authorized to decide if conditions exist making cash
payments undesirable, (although the Board has never reached such a decision).
If the Board of Directors should decide to make payments other than in cash,
redemptions could be paid in securities, valued at the value used in computing
a 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
repurchase request by telephone or wire. Your dealer may charge you a service
fee or commission. No such charge is incurred 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 the application), 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. Class Y shareholders are not eligible for the
expedited redemption privilege. 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 a
facsimile request signed 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

33
<PAGE>

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. Payments by ACH will usually arrive at your bank
two banking days after you call. Payments by wire are 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.

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, medallion guaranteed by an eligible financial institution.
Additional documentation may also be required to change the designated account
when shares are held by a corporation, partnership, executor, administrator,
trustee, or guardian.

BY TELEPHONE. You can redeem shares by telephone and receive a check
by mail, but please keep in mind:

The check can only be issued for up to $25,000;
The check can only be issued to the registered owner (who
must be an individual); The check can only be sent to the
address of record; and Your current address of record must
have been on file for 30 days.

AUTOMATIC WITHDRAWALS PLAN. Under the Automatic Withdrawals Plan, you
can indicate to State Street how many dollars you would like to receive each
month or each quarter. Your account must have a value of at least $10,000 to
start a plan. On shares that are redeemed 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 funds 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. You may terminate your
Automatic Withdrawals Plan at any time without charge or penalty. The Company
reserves the right to terminate or modify the Automatic Withdrawals Plan at any
time. Class Y shares are not eligible for the Automatic Withdrawal Plan.

INVOLUNTARY REDEMPTIONS. To relieve the Company of the cost of
maintaining uneconomical accounts, the Company 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 Company 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 a 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 the conversion period. This can be done by sending State Street 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.

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<PAGE>

Section IV: General Information
- --------------------------------

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
each 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.

The price per share for purchases or redemptions made directly through
State Street is generally the 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."

The Company 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 Distributor 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.

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. Fixed-income securities may be
valued on the basis of prices provided by a pricing service. Investments in
short-term securities (maturing in sixty days or less) are valued at amortized
cost unless the Board of Directors determines that such cost is not a fair
value. Assets for which there are no quotations available will be valued at a
fair value as determined by or at the direction of the Board of Directors.

YEAR 2000 AND EURO CONVERSION ISSUES

Like all financial service providers, the Adviser, Sub-Adviser,
Distributor, and third parties providing investment advisory, administrative,
transfer agent, custodial and other services (jointly the "Service Providers")
utilize systems that may be affected by Year 2000 transition issues and/or by
Euro Conversion issues.

YEAR 2000 ISSUES. The services provided to the Funds and the
shareholders by the Service Providers depend on the smooth functioning of their
computer systems and those of other parties they deal with. Many computer
software systems in use today cannot distinguish the year 2000 from the year
1900 because of the way dates are encoded and calculated.

EURO CONVERSION ISSUES. Accurate pricing of the Company's assets
depends upon accurate valuation of securities denominated in foreign
currencies. On January 1, 1999, eleven of the fifteen member states of the
European Union are scheduled to convert to a common currency, the "euro."
Conversion to the euro may present Service Providers with technical challenges
to adapt information technology and other systems to accommodate

35
<PAGE>

euro-denominated transactions. The euro conversion also may affect market risk
with respect to the foreign securities which the Company invests in.

Difficulties with Year 2000 or Euro Conversion issues could have a
negative impact on handling securities trades, payments of interest and
dividends, pricing and account services. Although, at this time, there can be
no assurance that there will be no adverse impact on the Funds, the Service
Providers have advised the Funds that they have been actively working on
necessary changes to their computer systems to prepare for the Year 2000 and
the Euro Conversion and expect that their systems, and those of other parties
they deal with, will be adapted in time for these events. In addition, there
can be no assurance that the companies which the Funds invest in will not
experience difficulties with Year 2000 or Euro Conversion issues which may
negatively effect the market value of those companies.

DIVIDENDS AND DISTRIBUTIONS

There are two sources of income, net income and realized capital gains
made to you by the Funds. 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.
Different classes of shares may be expected to have different expense ratios
due to differing distribution services fees and certain other expenses. Classes
with higher expense ratios will pay correspondingly lower dividends than
Classes with lower expense ratios. 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 Withdrawals 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 Funds and their
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 any investment in
the Funds.

The Funds intend to continue to qualify as a regulated investment
company under the Internal Revenue Code (the "965886950Code"), 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 applicable fund. The Funds intend to
make distributions during each calendar year sufficient to prevent imposition
of the excise tax.

Distributions of net investment income and net realized short-term
capital gains will be taxable to shareholders as ordinary income. Distributions
of net long-term capital gains (other than the built-in gains as discussed
below) will be taxable to shareholders as long-term capital gain regardless of
how long the shares have been held. Distributions will be treated the same for
tax purposes whether received in cash or in additional shares. Dividends
declared in the last calendar month to shareholders of record in such month and
paid by the end of the following January are treated as received by the
shareholder in the year in which they are declared. 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.

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<PAGE>

On October 12, 1990, Davis New York Venture 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 965886999merger.)

PERFORMANCE DATA

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

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

"Total return" refers to a Fund's compounded rate of return over a
stated period that would equate to 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 funds advertise their 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 funds.

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 Funds 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 Funds may be compared to recognized unmanaged
indices or averages of the performance of similar securities. Also, the
performance of the Funds 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 Funds may use evaluations published by nationally recognized
independent ranking services and publications.

The Funds' 1998 Annual Report contains additional performance
information and will be made available upon request and without charge by
calling Davis Funds toll-free at 1-800-279-0279, Monday-Friday, 7 a.m. to 4
p.m. Mountain Time.

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<PAGE>

TOTAL RETURN AND AVERAGE ANNUAL TOTAL 965890592RETURN

The total return and the average annual total return (each is defined
below) with respect to each class of shares for each fund for the periods
indicated below is as follows:

Davis New York Venture Fund Total Return 1 Average Annual Total Return 2
- --------------------------- ------------- ----------------------------
<S> <C> <C>
Class A Shares
One year ended July 31, 1998.........................................5.88% 5.88%
Five years ended July 31, 1998.....................................154.58% 20.55%
Ten years ended July 31, 1998......................................499.28% 19.59%

Class B Shares
One year ended July 31, 1998.........................................7.22% 7.22%
Period from December 1, 1994 through July 31, 1998 (life of class).153.82% 28.93%

Class C Shares
One year ended July 31, 1998........................................10.27% 10.27%
Period from December 20, 1994 through July 31, 1998 (life of class)150.34% 28.91%

Class Y Shares
One year ended July 31, 1998........................................11.48% 11.48%
Period from October 2, 1996 through July 31, 1998 (life of class)...61.32% 29.91%

Davis Growth & Income Fund
- --------------------------

Class A Shares
Period from May 1, 1998 through July 31, 1998 (life of class)......(6.57%) (6.57%)

Class B Shares
Period from May 4, 1998 through July 31, 1998 (life of class)......(6.02%) (6.02%)

Class C Shares
Period from May 4, 1998 through July 31, 1998 (life of class)......(3.08%) (3.08%)

Class Y Shares
Period from May 4, 1998 through July 31, 1998 (life of class)......(1.80%) (1.80%)

</TABLE>

1. "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.

2. "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:

38
<PAGE>

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.

YIELD

The yield (each is defined below) with respect to each class of shares
of the Davis Growth & Income Fund for the period ended June 30, 1998, is as
follows:

Davis Growth & Income Fund
Class A shares 1.92%
Class B shares 1.33%
Class C shares 1.37%
Class Y shares 2.44%

"Yield" is computed in accordance with a standardized method
prescribed by the rules of the Securities and Exchange Commission and is
calculated separately for each class. Yield is a measure of the net investment
income per share (as defined) earned over a specified 30-day period expressed
as a percentage of the maximum offering price of the Funds shares at the end of
the period. Such yield figure was determined by dividing the net investment
income per share on the last day of the period, according to the following
formula:

Yield = 2 [(a - b + 1) 6 - 1]
-----
cd

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period.

c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.

d = the maximum offering price per share on the last day of
the period.

OTHER FUND STATISTICS

In advertising and sales literature the Funds may publish various
statistics describing its investment portfolio such as the Funds 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 Funds may compare their 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

39
<PAGE>

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 U.S.
stock market. The market prices and yields of these stocks will fluctuate.

The Funds may also use evaluations of the Funds published by
nationally recognized ranking services and by financial publications. Any given
performance comparison should not be considered representative of the Funds'
performance for any future period.

40
<PAGE>

APPENDIX A

QUALITY RATINGS OF DEBT SECURITIES

MOODY'S CORPORATE BOND RATINGS

Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are unlikely to impair
the fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than Aaa
securities.

A - Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium-grade-obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e. they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba - Bonds which are rated Ba are judged to have speculative elements as their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments, or of maintenance of
other terms of the contract over any longer period of time, may be small.

Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca - Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

C - Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

STANDARD & POOR'S CORPORATE BOND RATINGS

AAA - Debt rated `AAA' has the highest rating assigned by Standard and Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA - Debt rated `AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

A - Debt rated `A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB - Debt rated `BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

41
<PAGE>

BB - Debt rated `BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The `BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied `BBB-' rating.

B - Debt rated `B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The `B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied `BB' or `BB-'
rating.

CCC - Debt rated `CCC' has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The `CCC' rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied `B' or `B-' rating.

CC - The rating `CC' is typically applied to debt subordinated to senior debt
that is assigned an actual or implied `CCC' rating.

C - The rating `C' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied `CCC-' debt rating. The `C' rating may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.

CI - The rating `CI' is reserved for income bonds on which no interest is being
paid.

D - Debt rated `D' is in payment default. The `D' rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The `D' rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

MOODY'S COMMERCIAL PAPER RATINGS

Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. Moody's employs the following three designations, all
judged to be investment grade, to indicate the relative repayment capacity of
rated issuers: Prime-1 (superior capacity), Prime-2 (strong capacity) and
Prime-3 (acceptable capacity). In assigning ratings to an issuer which
represents that its commercial paper obligations are supported by the credit of
another entity or entities, Moody's evaluates the financial strength of the
indicated affiliated corporations, commercial banks, insurance companies,
foreign governments or other entities, but only as one factor in the total
rating assessment.

STANDARD & POOR'S COMMERCIAL PAPER RATINGS

The S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded into four categories, ranging from `A' for the highest
quality to `D' for the lowest. Issues assigned an `A' rating are regarded as
having the greatest capacity for timely payment. Within the `A' category, the
numbers 1, 2 and 3 indicate relative degrees of safety. The addition of a plus
sign to the category A-1 denotes that the issue is determined to possess
overwhelming safety characteristics.

42
<PAGE>

APPENDIX B

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.

<PAGE>

FORM N-1A

DAVIS NEW YORK VENTURE FUND, INC.

POST-EFFECTIVE AMENDMENT NO. 58 UNDER THE SECURITIES ACT OF 1933
REGISTRATION STATEMENT NO. 2-29858

AND

AMENDMENT NO. 33 UNDER THE INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-1701

PART C

OTHER INFORMATION

Item 23. Exhibits:
- ------------------

(a)(1) Articles of Incorporation. Articles of Incorporation,
incorporated by reference to Exhibit (1) to Registrant's
Post-Effective Amendment No. 50, File No. 2-29858.

(a)(2) Articles Supplementary to Articles of Incorporation,
incorporated by reference to Exhibit (1)(b) to Registrant's
Post-Effective Amendment No. 54, File No. 2-29858.

(a)(3) Articles Supplementary to Articles of Incorporation,
designating the Davis Growth & Income Fund, incorporated by
reference to Exhibit (1)(c) to Registrant's Post-Effective
Amendment No. 57, File No. 2-29858.

(b) By-laws. Amended and Restated Bylaws, incorporated by
reference to Exhibit (2) to Registrant's Post-Effective
Amendment No. 55. File 2-29858.

(d)(1) Investment Advisory Contracts. Investment Advisory Agreement,
incorporated by reference to Exhibit (5) to Registrant's
Post-Effective Amendment No. 50, File No. 2-29858.

(d)(2) Investment Advisory Agreement, as amended effective December
1, 1996, incorporated by reference to Exhibit 5(b) to
Registrant's Post Effective Amendment No. 52, File 2-29858.

<PAGE>

(d)(3) Sub-Advisory Agreement between Davis Selected Advisers, L.P.
and Davis Selected Advisers-NY, Inc., incorporated by
reference to Exhibit 5(c) to Registrant's Post Effective
Amendment No. 52, File 2-29858.

(d)(4) Second Amendment of Investment Advisory Agreement, adding the
Davis Growth & Income Fund, incorporated by reference to
Exhibit 5(d) to Registrant's Post-Effective Amendment No. 56,
File No. 2-29858.

(e)(1) Underwriting Contracts. Distributor's Agreement, incorporated
by reference to Exhibit (6) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.

(e)(2) Transfer and Assumption Agreement dated July 31, 1997,
incorporated by reference to Exhibit (6)(b) to Registrant's
Post Effective Amendment No. 54, File No. 2-29858.

(f) Bonus or Profit Sharing Contracts. Not applicable.

(g)(1) Custodian Agreements Custodian Contract incorporated by
reference to Exhibit (8)(a) to Registrant's Post-Effective
Amendment No. 44, File No. 2-29858.

(g)(2) Amendment to Custodian Contract, incorporated by reference to
Exhibit (8)(c) to Registrant's Post-Effective Amendment No.
57, File No. 2-29858.

(h)(1) Other Material Contracts. Transfer Agency and Service
Agreement incorporated by reference to Exhibit (8)(b) to
Registrant's Post-Effective Amendment No. 44, File No.
2-29858.

(h)(2) Amendment to Transfer Agency and Service Agreement, adding
the Davis Growth & Income Fund, incorporated by reference to
Exhibit (8)(d) to Registrant's Post-Effective Amendment No.
57, File No. 2-29858.

(i)* Legal Opinion. Opinion and Consent of Counsel, (D'Ancona &
Pflaum).

(j)(1)* Other Opinions. Consent of Current Auditors. KPMG Peat
Marwick LLP

(j)(2)* Consent of Former Auditors. Tait, Weller & Baker

2
<PAGE>

(k) Omitted Financial Statements, incorporated from the Annual
Report.

(l) Initial Capital Agreements. Not Applicable

(m)(1) Rule 12b-1 Plan. Distribution Plan for Class A shares, as
amended, incorporated by reference to Exhibit (15)(a) to
Registrant's Post Effective Amendment No. 54, File No.
2-29858.

(m)(2) Distribution Plan for Class B shares, incorporated by
reference to Exhibit 15 (b) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.

(m)(3) Distribution Plan for Class C shares, incorporated by
reference to Exhibit 15 (c) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.

(n) Financial Data Schedule. Not applicable

(o) Rule 18f-3 Plan. Plan pursuant to Rule 18f-3, as amended,
incorporated by reference to Exhibit (18)(b) to Registrant's
Post Effective Amendment No. 54, File No. 2-29858.

(p)* Other Exhibits. Powers of Attorney of the Registrant,
Officers and Board of Directors of Davis New York Venture
Fund, and Davis Growth & Income Fund appointing Sheldon Stein
and Arthur Don as attorneys-in-fact.

* Filed Herein

Item 24. Persons Controlled by or Under Common Control With Registrant

Not applicable

Item 25. Indemnification

Registrant's Articles of Incorporation indemnifies its directors,
officers and employees to the full extent permitted by Section 2-418 of the
Maryland General Corporation Law, subject only to the provisions of the
Investment Company Act of 1940. The indemnification provisions of the Maryland
General Corporation Law (the "Law") permit, among other things, corporations to
indemnify directors and officers unless it is proved that the individual (1)
acted in bad faith or with active and deliberate dishonesty, (2) actually
received an improper personal benefit in money, property or services, or (3) in
the case of a criminal proceeding, had reasonable cause to believe that his act
or omission was unlawful. The Law was also amended to permit

3
<PAGE>

corporations to indemnify directors and officers for amounts paid in settlement
of stockholders' derivative suits.

In addition, the Registrant's directors and officers are covered under
a policy to indemnify them for loss (subject to certain deductibles) including
costs of defense incurred by reason of alleged errors or omissions, neglect or
breach of duty. The policy has a number of exclusions including alleged acts,
errors, or omissions which are finally adjudicated or established to be
deliberate, dishonest, malicious or fraudulent or to constitute willful
misfeasance, bad faith, gross negligence or reckless disregard of their duties
in respect to any registered investment company. This coverage is incidental to
a general policy carried by the Registrant's adviser.

In addition to the foregoing indemnification, Registrant's Articles of
Incorporation exculpate directors and officers with respect to monetary damages
except to the extent that an individual actually received an improper benefit
in money property or services or to the extent that a final adjudication finds
that the individual acted with active and deliberate dishonesty.

Item 26. Business and Other Connections of Investment Adviser

Information pertaining to business and other connections of
Registrant's investment adviser is incorporated by reference to the Prospectus
and Statement of Additional Information contained in Part B of this
Registration Statement at the section entitled "Investment Advisory Services"
in the Statement of Additional Information.

Item 27. Principal Underwriter

(a) Davis Distributors, LLC, a wholly owned subsidiary of the Adviser,
located at 124 East Marcy Street, Santa Fe, NM 87501, is the principal
underwriter for the Registrant and also acts as principal underwriter for
Davis Tax-Free High Income Fund, Inc., Davis Intermediate Investment Grade
Bond Fund, Inc., Davis Series, Inc., Davis International Series, Inc.,
Selected American Shares, Inc., Selected Special Shares, Inc. and Selected
Capital Preservation Trust.

(b) Management of the Principal Underwriters:

NAME AND PRINCIPAL POSITIONS AND OFFICES WITH POSITIONS AND OFFICES
BUSINESS ADDRESS UNDERWRITER WITH REGISTRANT
- ------------------ -------------------------- ----------------------
<S> <C> <C>
Kenneth C. Eich President Vice President
124 East Marcy Street
Santa Fe, NM 87501

Gary P. Tyc Vice President, Treasurer and None
124 East Marcy Street Assistant Secretary
Santa Fe, NM 87501

Thomas D. Tays Vice President and Secretary Vice President and Secretary
124 East Marcy Street
Santa Fe, NM 87501

4
<PAGE>

Russell O. Wiese Senior Vice President None
124 East Marcy Street
Santa Fe, NM 87501

Sharra Reed Assistant Treasurer Vice President, Treasurer and
124 East Marcy Street Assistant Secretary.
Santa Fe, NM 87501
</TABLE>

Item 28. Location of Accounts and Records

Accounts and records are maintained at the offices of Davis Selected
Advisers, L.P., 124 East Marcy Street, Santa Fe, New Mexico 87501, and at the
offices of the Registrant's custodian, State Street Bank and Trust Company, One
Heritage Drive, North Quincy, Massachusetts 02107, and the Registrant's
transfer agent State Street Bank and Trust, c/o Service Agent, BFDS, Two
Heritage Drive, 7th Floor, North Quincy, Massachusetts 02107.

Item 29. Management Services

Not applicable

Item 30. Undertakings

Registrant undertakes to furnish each person to whom a prospectus is delivered
with a copy of Registrant's latest annual report to shareholders upon request
and without charge.

<PAGE>

DAVIS NEW YORK VENTURE FUND, INC.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the 28th day of
September, 1998.

DAVIS NEW YORK VENTURE FUND, INC.

*By: /s/ Arthur Don
----------------------------
Arthur Don
Attorney-in-Fact

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Shelby M.C. Davis* President, Chief Executive Officer September 28, 1998
------------------
Shelby M.C. Davis

Sharra L. Reed* Principal Financial Officer
------------------ and Treasurer September 28, 1998
Sharra L. Reed
</TABLE>

*By: /s/ Arthur Don
----------------------
Arthur Don
Attorney-in-Fact

* Arthur Don signs this document on behalf of the Registrant and each of the
foregoing officers pursuant to the powers of attorney filed as Exhibit (p)
to Registrant's current Post-Effective Amendment number 58 to Registrant's
Registration Statement.

/s/ Arthur Don
----------------------
Arthur Don
Attorney-in-Fact
6

<PAGE>

DAVIS NEW YORK VENTURE FUND, INC.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on September 28, 1998 by the following
persons in the capacities indicated.

Signature Title
--------- -----
Wesley E. Bass. Jr.* Director
- ------------------------------
Wesley E. Bass, Jr.

Jeremy H. Biggs* Director
- ------------------------------
Jeremy H. Biggs

Marc P. Blum* Director
- ------------------------------
Marc P. Blum

Andrew A. Davis* Director
- ------------------------------
Andrew A. Davis

Christopher C. Davis* Director
- ------------------------------
Christopher C. Davis

Jerry D. Geist* Director
- ------------------------------
Jerry D. Geist

D. James Guzy* Director
- ------------------------------
D. James Guzy

G. Bernard Hamilton* Director
- ------------------------------
G. Bernard Hamilton

LeRoy E. Hoffberger* Director
- ------------------------------
LeRoy E. Hoffberger

Laurence W. Levine* Director
- ------------------------------
Laurence W. Levine

Christian R. Sonne* Director
- ------------------------------
Christian R. Sonne

* Arthur Don signs this document on behalf of each of the foregoing persons
pursuant to the powers of attorney filed as Exhibit (p) to Registrant's
current Post-Effective Amendment No 58 to Registrant's Registration
Statement.

/s/Arthur Don
----------------
Arthur Don
Attorney-in-Fact

<PAGE>

EXHIBIT INDEX
-------------

(a)(1) Articles of Incorporation. Articles of Incorporation,
incorporated by reference to Exhibit (1) to Registrant's
Post-Effective Amendment No. 50, File No. 2-29858.

(a)(2) Articles Supplementary to Articles of Incorporation,
incorporated by reference to Exhibit (1)(b) to Registrant's
Post-Effective Amendment No. 54, File No. 2-29858.

(b) By-laws. Amended and Restated Bylaws, incorporated by
reference to Exhibit (2) to Registrant's Post-Effective
Amendment No. 55. File 2-29858.

(d)(1) Investment Advisory Contracts. Investment Advisory Agreement,
incorporated by reference to Exhibit (5) to Registrant's
Post-Effective Amendment No. 50, File No. 2-29858.

(d)(2) Investment Advisory Agreement, as amended effective December
1, 1996, incorporated by reference to Exhibit 5(b) to
Registrant's Post Effective Amendment No. 52, File 2-29858.

<PAGE>

(e)(1) Underwriting Contracts. Distributor's Agreement, incorporated
by reference to Exhibit (6) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.

(e)(2) Transfer and Assumption Agreement dated July 31, 1997,
incorporated by reference to Exhibit (6)(b) to Registrant's
Post Effective Amendment No. 54, File No. 2-29858.

(f) Bonus or Profit Sharing Contracts. Not applicable.

(g)(1) Custodian Agreements Custodian Contract incorporated by
reference to Exhibit (8)(a) to Registrant's Post-Effective
Amendment No. 44, File No. 2-29858.

(g)(2) Amendment to Custodian Contract, incorporated by reference to
Exhibit (8)(c) to Registrant's Post-Effective Amendment No.
57, File No. 2-29858.

(h)(1) Other Material Contracts. Transfer Agency and Service
Agreement incorporated by reference to Exhibit (8)(b) to
Registrant's Post-Effective Amendment No. 44, File No.
2-29858.

(i)* Legal Opinion. Opinion and Consent of Counsel, (D'Ancona &
Pflaum).

(j)(1)* Other Opinions. Consent of Current Auditors. KPMG Peat
Marwick LLP

(j)(2)* Consent of Former Auditors. Tait, Weller & Baker

<PAGE>

(k) Omitted Financial Statements, incorporated from the Annual
Report.

(l) Initial Capital Agreements. Not Applicable

(m)(1) Rule 12b-1 Plan. Distribution Plan for Class A shares, as
amended, incorporated by reference to Exhibit (15)(a) to
Registrant's Post Effective Amendment No. 54, File No.
2-29858.

(m)(2) Distribution Plan for Class B shares, incorporated by
reference to Exhibit 15 (b) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.

(m)(3) Distribution Plan for Class C shares, incorporated by
reference to Exhibit 15 (c) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.

(n) Financial Data Schedule. Not applicable

(o) Rule 18f-3 Plan. Plan pursuant to Rule 18f-3, as amended,
incorporated by reference to Exhibit (18)(b) to Registrant's
Post Effective Amendment No. 54, File No. 2-29858.

* Filed Herein

<PAGE>

EXHIBIT
ITEM 23 (I)

[LETTERHEAD OF D'ANCONA & PFLAUM]

September 28, 1998

Davis New York Venture Fund, Inc.
124 East Marcy Street
Santa Fe, New Mexico 87501

Ladies and Gentlemen:

We have acted as counsel for Davis New York Venture Fund, Inc. (the
"Company") in connection with the registration under the Securities Act of 1933
(the "Act") of an indefinite number of shares of beneficial interest in the
series of the Company designated as Davis New York Venture Fund and Davis
Growth & Income Fund (collectively, the "Shares") in registration statement No.
2-29858 on Form N-1A (the "Registration Statement").

In this connection we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate and
other records, certificates and other papers as we deemed it necessary to
examine for the purpose of this opinion, including the Articles of
Incorporation and bylaws of the Company, actions of the Board of Directors
authorizing the issuance of Shares and the Registration Statement.

Based on the foregoing examination, we are of the opinion that upon the
issuance and delivery of the Shares in accordance with the Articles of
Incorporation and the actions of the Board of Directors authorizing the
issuance of the Shares, and the receipt by the Company of the authorized
consideration therefor, the Shares so issued will be validly issued, fully paid
and nonassessable.

We consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not admit that we are in the category
of persons whose consent is required under section 7 of the Act.

Very truly yours,

D'Ancona & Pflaum
By
-------------------------
Sheldon R. Stein, Partner

<PAGE>

EXHIBIT
ITEM 23 (J)(1)

CONSENT OF INDEPENDENT ACCOUNTANTS

The Shareholders and Board of Directors

We consent to the use of our reports dated 1998, on the financial
statements of Davis New York Venture Fund, Inc., incorporated herein by
reference and to the references to our firm under the headings "Financial
Highlights" in the prospectus and "Independent Auditors" in the statement of
additional information.

--------------------------
/s/ KPMG Peat Marwick LLP

<PAGE>

EXHIBIT
ITEM 23(J)(2)

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to the reference to our firm in the Registration Statement, (Form
N-1A), and related Statement of Additional Information of Davis New York
Venture Fund, Inc. and to the inclusion of our report dated August 21, 1997 to
the Shareholders and Board of Directors of Davis New York Venture Fund, Inc.

/s/ Tait, Weller & Baker
-------------------------
Tait, Weller & Baker

Philadelphia, Pennsylvania
September 28, 1998

<PAGE>

EXHIBIT
ITEM 23(P)

DAVIS NEW YORK VENTURE FUND, INC.

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
constitutes and appoints Sheldon R. Stein and Arthur Don, and each of them, as
the undersigned's attorneys-in-fact, each with the power of substitution, for
him or her in any and all capacities, to sign any post-effective amendments to
the registration statement under the Securities Act of 1933 (Registration No.
2-29858) and/or the Investment Company Act of 1940 (Registration No. 811-1701),
whether on Form N-1A or any successor forms thereof, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and all other applicable state or federal
regulatory authorities. Each of the undersigned hereby ratifies and confirms
all that each of the aforenamed attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney as of the date listed below.

REGISTRANT:

Davis New York Venture Fund, Inc. (Registrant)

By: /s/Jeremy H. Biggs Date: July 28, 1998
----------------------------------------
Jeremy H. Biggs
Chairman of the Board of Directors

OFFICERS:

/s/Shelby M.C. Davis Date: July 28, 1998
- ------------------------------------------
Shelby M.C. Davis
President

/s/Sharra L. Reed Date: July 28, 1998
- ------------------------------------------
Sharra L. Reed
Treasurer, Chief Financial Officer, and
Chief Accounting Officer

<PAGE>

DIRECTORS:

Wesley E. Bass, Jr. Date: July 28, 1998
- ------------------------------------------
Wesley E. Bass, Jr.

/s/ Jeremy H. Biggs Date: July 28, 1998
- ------------------------------------------
Jeremy H. Biggs

Marc P.Blum Date: July 28, 1998
- ------------------------------------------
Marc P. Blum

Andrew A. Davis Date: July 28, 1998
- ------------------------------------------
Andrew A. Davis

/s/ Christopher C. Davis Date: July 28, 1998
- ------------------------------------------
Christopher C. Davis

/s/ Jerry D. Geist Date: July 28, 1998
- ------------------------------------------
Jerry D. Geist

/s/ D. James Guzy Date: July 28, 1998
- ------------------------------------------
D. James Guzy

/s/ G. Bernard Hamilton Date: July 28, 1998
- ------------------------------------------
G. Bernard Hamilton

LeRoy E. Hoffberger Date: July 28, 1998
- ------------------------------------------
LeRoy E. Hoffberger

/s/ Laurence W. Levine Date: July 28, 1998
- ------------------------------------------
Laurence W. Levine

/s/ Christian R. Sonne Date: July 28, 1998
- ------------------------------------------
Christian R. Sonne

/s/ Marsha Williams Date: July 28, 1998
- ------------------------------------------
Marsha Williams