<PAGE>
SEMI-ANNUAL REPORT January 31, 1999
Davis New York Venture Fund
Davis
Funds
"Over 25 years of Reliable Investing"
<PAGE>
DAVIS NEW YORK VENTURE FUND
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
Dear Fellow Shareholder:
MARKET OVERVIEW
1998 was a year when no one, including ourselves, seemed capable of consistently
predicting the trend of the market. What lessons did we learn as managers (and
the largest investors in our funds) from the market's volatile performance last
year? The first lesson is that it pays to stay aboard for the long voyage with
stocks inspite of occasional financial hurricanes. It is like being in a
sailboat circling the globe. Most of the time you can not get off because you
are in the middle of the ocean. You have got to ride out whatever storms may
come your way.
The second lesson we learned is that to stay invested during turbulent times
requires keeping within a circle of competence. Our expertise is buying growth
at a value price based on rigorous research. Research is the North Star that
guides us and gives us the conviction to hold fast even when we are bombarded
with negative information.
The third lesson is that buying on market dips worked again. This suggests that
rather than panicking and selling, it is better to keep on a steady course. One
of the easiest ways to do this is to make investing a regular habit through up
and down markets with a program of dollar cost averaging.(1)
The fourth lesson is that the Federal Reserve Board (the "Fed") really is the
investor's friend. After the market declined 20% last year, the Fed moved
aggressively to reduce interest rates.(2) With inflation low, the Fed appears to
prefer nurturing slow, continuous growth through attempts to moderate the
business cycle rather than driving the economy into recession. This reduces the
risk that corporate earnings might collapse and may help avoid a big collapse in
the stock market. Still, we have to keep in mind that the Fed was prepared to
have a 20% market drop before it acted last year, and it might be willing to let
the market drop 20% again.
Looking ahead, we are neither totally bearish nor euphorically bullish in the
short run. Stock valuations are currently high but, at the same time, nothing
succeeds like success. Financial assets have been successful for investors and
are still benefiting from that momentum. In addition, huge money flows are being
created by baby boomers saving for their retirement and by central banks around
the world stimulating money-supply growth. A good bit of this money is spilling
into the financial markets and marking prices up.
At the end of the day, we believe the strength and direction of earnings are
likely to determine the market outlook in 1999. But the crosscurrents and
variables that could affect earnings are numerous. What will happen to the U.S.
dollar? Will the Euro be strong or weak? Will China devalue? Will Japan turn
around? Will the Asian nations find the legal and political resolve to deal with
their huge overhang of debt? Will the Fed raise interest rates or lower them
further? What will happen on the American political scene? What about the
potential for year 2000 computer disruptions?
While the market does face a number of potentially troublesome problems, there
are few attractive alternatives to equities. Moreover, it is still possible to
find good stocks to put on our shopping list because we live in a dynamic,
constantly changing economy and the American business model still works. U.S.
companies are undergoing another round of restructuring, consolidation and
cost-cutting in order to concentrate on core businesses, improve bottom-line
earnings and raise returns on capital.
<PAGE>
DAVIS NEW YORK VENTURE FUND
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
We approach the job of investing shareholders' money and our own pragmatically
with the long-term in mind. We intend to remain fairly fully invested--trying
every day to make sensible decisions, rather than getting carried away with an
overly bullish or bearish stance. We emphasize firsthand research and meeting
with company managements so we are prepared to act when opportunities arise. And
we seek to buy stocks at pressure points when their prices have dipped
temporarily.
If you take a 30-year view of the market, assume a starting level of 9,000 for
the Dow and compound that figure at 7% annually, the Dow would be at 72,000 in
three decades. Even if the Dow dropped to 6,000 and you compound that amount at
7% a year, the Dow would reach 48,000 in 30 years. Given those possibilities, we
are not going to make market calls, we are just going to stay aboard for the
long voyage.(3)
Sincerely,
/s/ Shelby M.C. Davis
Shelby M.C. Davis
Chief Investment Officer
March 15, 1999
2
<PAGE>
DAVIS NEW YORK VENTURE FUND
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS
PERFORMANCE OVERVIEW
+ The Davis New York Venture Fund's Class A shares delivered a total return
(based on net asset value) of 6.90% for the six-month period and 18.34% for
the one-year period ended January 31, 1999.(4) This compares with returns
of 15.03% and 32.59%, respectively, for the S&P 500 Index during the same
time periods.(5)
+ As long-term investors, our objective is to build wealth through multiyear
compounding of growth. The Fund's 10-year average annual total return has
beaten the S&P 500 for all rolling 10-year time periods (calendar years)
since the Fund's inception on February 17, 1969. (6)
+ According to The Value Line Mutual Fund Survey, the Fund continues to
provide "superior returns over the short and long hauls....Investors
seeking long-term capital growth have a superb choice in this offering.
Prospective shareholders will also appreciate its extremely low turnover,
which diminishes capital-gains tax liability."(7)
+ In addition, as of January 31, 1998, the Fund's Class A shares held
Morningstar's highest overall rating of ***** (five stars) for
risk-adjusted performance out of 2,859 domestic equity funds.(8)
AN INTERVIEW WITH CHRISTOPHER C. DAVIS AND KENNETH CHARLES FEINBERG, PORTFOLIO
MANAGERS
Q. How would you describe the Fund's performance last year?
A. Investors often measure performance on both an absolute and a relative basis.
After several years of strong performance on both counts, the Davis New York
Venture Fund fired on only one cylinder in 1998, as our solid absolute return
was overshadowed by the roaring performance of the S&P 500. Ken and I view this
as a disappointing result, and while we do not judge ourselves and our
shareholders do not judge us on short-term performance, we can still learn
important lessons by taking a closer look at the factors that contributed to
last year's results.
The first contributor to the Fund's disappointing short-term results was
mistakes. My grandfather Shelby Cullom Davis once said, "If you do not admit you
make mistakes you do not learn from them." It is worth examining mistakes so
that if similar circumstances arise in the future, hopefully the errors will not
be repeated.
For us as long-term investors, it is not a mistake if we buy a stock and it
subsequently goes down. Ken and I recognize that every stock we purchase will
probably trade lower at some point in the future than on the day we bought it.
No one we know is gifted enough to buy the bottom tick in every stock. But it is
a mistake if we buy a stock that subsequently goes down and we do not want to
add to our position--or worse, we want to sell it. If we were not mistaken in
our judgment about management or our judgment about the business, any stock that
we initially bought at price of $100 a share, for example, would be much more
attractive a price of $75 a share.
3
<PAGE>
DAVIS NEW YORK VENTURE FUND
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
AN INTERVIEW WITH CHRISTOPHER C. DAVIS AND KENNETH CHARLES FEINBERG, PORTFOLIO
MANAGERS - CONTINUED
Our biggest mistake last year involved the Fund's holdings in the energy
category. The energy-services companies we own are among the market leaders in
that industry. However, we overestimated how much control a well-run company can
have over its own destiny in an industry with deteriorating fundamentals. As
Asian economies slowed, the demand for oil fell far below levels that we had
anticipated. As a result, oil companies were caught with excess inventory and
capacity, putting even more pressure on energy prices. In such an environment,
major oil companies dramatically reduced their exploration and production
budgets and, therefore, their need for the equipment and services provided by
the type of companies that we own.
Although many of these stocks have fallen significantly, we do not see the
outlook brightening for some time, and we have sold many of our positions at
prices well below what we paid. While we continue to own some of these
companies, such as Schlumberger and Halliburton, as core names, we have not
added to them even at these low prices.(9) We will continue to closely monitor
them for signs of change, but we must put our holdings in this sector into the
category of mistakes.
Q. What other factors affected portfolio performance last year?
A. A second factor contributing to our disappointing relative performance was
not a mistake, but instead was a direct result of our investment philosophy.
This philosophy includes a strict price discipline that prevents us from buying
high-flying glamorous growth companies--not because we do not like the
companies, but because we do not like their high valuations. In particular, we
see a speculative bubble developing in Internet stocks where valuations have
inflated to levels reminiscent of the biotech craze of the early 1990s and the
emerging markets craze of the mid-1990s.
Unfortunately, the outstanding performance of just these kinds of glamour stocks
drove the market last year, and not owning them hurt our relative performance.
Nevertheless, we think that our price discipline has served us well over the
years and it will remain at the heart of our investment philosophy.
Another aspect of our investment philosophy that contributed to our mixed
short-term results was our fundamental belief in the importance of companies
having successful international operations. Last year, it was not fashionable to
have significant operations outside the United States, and that hurt the
performance of portfolio holdings such as American Express and
Hewlett-Packard.(9) But the fact that 95% of the world's population lives
outside the United States should make it obvious that the ability to operate
globally is a big long-term advantage.(10)
Unlike the category of mistakes discussed above, our belief in being global and
our price discipline are central to our investment process, for better or for
worse. We believe that price must always be an essential factor in deciding
which businesses to buy, just as we think the competitive advantage of being
global is a vital consideration. So even if we had last year to live over again,
we would still stick with our price discipline and still value global expertise.
Q. Could you comment on the Fund's holdings of financial stocks?
4
<PAGE>
DAVIS NEW YORK VENTURE FUND
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
AN INTERVIEW WITH CHRISTOPHER C. DAVIS AND KENNETH CHARLES FEINBERG, PORTFOLIO
MANAGERS - CONTINUED
A. Given the poor relative showing of financial stocks last year, some investors
have asked if we consider the Fund's ownership of many high-quality financial
companies to be a mistake. We do not. First, we always remember that financial
stocks rarely perform in a uniform way. For example, while companies such as
BankAmerica and Allstate were down 1% and almost 14%, respectively, the shares
of Progressive surged 41%.(9) More generally, however, Ken and I continue to
think that favorable demographics, a benign interest-rate environment, ongoing
consolidation and the globalization of the financial industry combined with
reasonable valuations make this diverse sector an attractive area to be invested
in.
Another question we often receive concerns the large position we held in General
Re, which was purchased by Berkshire Hathaway last year. Our current intention
is to keep the Berkshire Hathaway shares we received from this merger.(9) We
have attended Berkshire's annual meeting in Omaha for many years and have long
admired CEO Warren Buffett and his partner Charles Munger.
Q. What is your outlook as we move into the next century?
A. Looking ahead, if the market euphoria leading up to the new millennium
continues, it is likely that we will again lag behind funds that do not use a
price discipline in choosing their stocks. In such an environment, we would be
pleased to again achieve good absolute results even if relative results lag.
Our price discipline is an important element in controlling risk and avoiding
big losses, such as those investors experienced in 1973 and 1974 when a similar
bubble in growth stock valuations burst. Because our family and employees remain
among the largest shareholders of the Davis New York Venture Fund, we feel it is
vital to control risk. We have often said that a successful long-term investment
record is built as much by avoiding the big losses as by picking the big
winners. In the coming years, that theory may again be put to the test.(11)
In addition to euphoria, the approaching millennium may begin to increase
investor anxiety regarding possible year 2000 computer problems. Such
uncertainty combined with such euphoria promises to create another year of
exceptional volatility that will again test investors' nerves. Although
short-term results may be extremely volatile, we feel confident that the Fund is
positioned to weather any storm.(11) We appreciate shareholders' trust in
investing with us.
- ----------
This Semi-Annual Report is furnished to you by Davis Distributors, LLC, which
acts as the distributor for the Davis New York Venture Fund. This Semi-Annual
Report is authorized for distribution only when accompanied or preceded by a
current prospectus for the Davis New York Venture Fund, which contains more
information about fees and expenses. Please read the prospectus carefully before
investing or sending money.
5
<PAGE>
DAVIS NEW YORK VENTURE FUND
P.O. Box 1688, 124 East Marcy Street
Santa Fe, New Mexico 87501
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
(1) Neither dollar cost averaging nor any other mechanical system can guarantee
a profit. Such a plan does not protect against loss in declining markets.
(2) There can be no assurance that the Federal Reserve Board will act to support
stock prices or that the Federal Reserve Board's actions in the future might not
hurt stock prices.
(3) This example illustrates the power of compounding over a 30-year period, and
is not intended to be indicative of future investment results which may be
higher or lower than the assumed rate.
(4) Total return assumes reinvestment of dividends and capital gain
distributions. Past performance is not a guarantee of future results. Investment
return and principal value will vary so that, when redeemed, an investor's
shares may be worth more or less than when purchased. The following table lists
the average annual total returns for the Davis New York Venture Fund's Class A
shares for periods ended January 31, 1999. Returns for other classes of shares
will vary from the following returns
*(Without a 4.75% sales charge taken into consideration)
<TABLE>
<CAPTION>
FUND NAME 1 YEAR 5 YEAR 10 YEAR INCEPTION
- --------- ------ ------ ------- ---------
<S> <C> <C> <C> <C>
New York Venture A 18.34% 20.71% 19.87% 15.06% - 02/17/69
**(With a 4.75% sales charge taken into consideration)
FUND NAME 1 YEAR 5 YEAR 10 YEAR INCEPTION
- --------- ------ ------ ------- ---------
New York Venture A 12.70% 19.54% 19.29% 14.87% - 02/17/69
</TABLE>
(5) The S&P 500 Index is an unmanaged index of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The index is adjusted for
dividends, weighted towards stocks with large market capitalizations and
represents approximately two-thirds of the total market value of all domestic
common stocks.
(6) Past performance is not a guarantee of future results.
(7) Source: THE VALUE LINE MUTUAL FUND SURVEY, December 8, 1998.
(8) Morningstar proprietary ratings reflect historical risk-adjusted performance
as of January 31, 1999. Morningstar ratings are subject to change every month.
The ratings are calculated from a fund's three-, five- and 10-year average
annual returns (based on available track records) in excess of 90-day Treasury
bill (T-bill) returns, with appropriate fee adjustments and a risk factor that
reflects fund performance below 90-day T-bill returns. Ten percent of the funds
in an investment category receive five stars, the next 22.5% receive four stars,
the next 35% receive three stars, the next 22.5% receive two stars, and the next
10% receive one star. The Class A shares of the Davis New York Venture Fund
received five stars among 741 domestic equity funds for the 10-year period, four
stars among 1,734 funds for the five-year period, and four stars among 2,859
funds for the three-year period. Star ratings for the fund's other classes of
shares may vary and are available only for those classes with at least three
years of performance history. Past performance is no guarantee of future
results.
(9) Portfolio holdings and portfolio manager opinions cited in this material are
current at the time of printing but are subject to change. See Schedule of
Investments for a detailed list of portfolio holdings.
(10) Source: U.S. Census Bureau.
(11) No price discipline or other method of controlling risk can guarantee
shareholders will not experience a loss. Past performance is not a guarantee of
future results.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
6
<PAGE>
DAVIS NEW YORK VENTURE FUND
SCHEDULE OF INVESTMENTS
January 31, 1999 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
VALUE
SHARES SECURITY (NOTE 1)
- ---------------------------------------------------------------------------------
COMMON STOCK - (95.54%)
<S> <C> <C>
ADVERTISING AGENCIES - (0.05%)
880,000 WPP Group PLC ...................................... $ 6,632,831
-------------
BANKS AND SAVINGS & LOANS - (13.32%)
2,704,125 Banc One Corp. ..................................... 141,628,547
4,451,852 BankAmerica Corp. .................................. 297,717,603
30,000 First Union Corp. (b) .............................. 1,578,750
774,400 Golden West Financial Corp. ........................ 72,696,800
7,065,600 Household International, Inc. ...................... 310,444,800
1,035,100 State Street Corp. ................................. 74,009,650
800,000 SunTrust Banks, Inc. ............................... 56,350,000
3,534,700 U.S. Bancorp ....................................... 119,075,206
17,501,000 Wells Fargo & Co. .................................. 611,441,188
-------------
1,684,942,544
-------------
BUILDING MATERIALS - (5.19%)
4,036,700 Martin Marietta Material, Inc. ..................... 211,926,750
9,355,200 Masco Corp. (b) .................................... 302,289,900
1,037,300 Vulcan Materials Co. ............................... 142,693,581
-------------
656,910,231
-------------
CHEMICALS - (0.00%)
6,000 Dow Chemical Co. ................................... 528,375
-------------
COMMERCIAL SERVICES - (0.00%)
1,666 Nielsen Media Research ............................. 31,446
-------------
CONSUMER PRODUCTS - (4.00%)
80,200 Coca-Cola Co........................................ 5,248,088
30,000 Fortune Brands, Inc. ............................... 997,500
30,000 Gallaher Group PLC - ADR ........................... 834,375
1,020,000 Gillette Co. (b) ................................... 59,925,000
9,343,800 Philip Morris Cos., Inc. ........................... 439,158,600
-------------
506,163,563
-------------
DIVERSIFIED - (5.57%)
8,522 Berkshire Hathaway, Inc. - Class A* ................ 553,930,000
4 Berkshire Hathaway, Inc. - Class B* ................ 8,600
80,240 General Electric Co. ............................... 8,415,170
1,840,000 Tyco International Ltd. (b) ........................ 141,795,000
-------------
704,148,770
-------------
DIVERSIFIED FINANCIAL SERVICES - (10.26%)
6,607,000 American Express Co. ............................... 679,695,125
8,578,108 Citigroup, Inc...................................... 480,910,180
2,205,600 Freddie Mac (b) .................................... 136,747,200
-------------
1,297,352,505
-------------
</TABLE>
7
<PAGE>
DAVIS NEW YORK VENTURE FUND
SCHEDULE OF INVESTMENTS - Continued
January 31, 1999 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
VALUE
SHARES SECURITY (NOTE 1)
- ---------------------------------------------------------------------------------
COMMON STOCK - CONTINUED
<S> <C> <C>
ELECTRONICS - (6.60%)
3,723,600 Applied Materials, Inc.* .......................... $ 235,168,613
2,313,474 Molex Inc. ......................................... 68,898,148
5,363,000 Texas Instruments Inc. (b) ......................... 530,266,625
-------------
834,333,386
ENERGY - (3.15%)
13,200 Amerada Hess Corp. (b) ............................. 627,000
32,200 Atlantic Richfield Co. ............................. 1,847,475
558,906 BP Amoco PLC - ADR ................................. 45,341,249
5,000 Burlington Resources, Inc. ......................... 151,250
52,200 Chevron Corp. ...................................... 3,901,950
1,045,700 Cooper Cameron Corp.* .............................. 24,443,238
2,063,300 Devon Energy Corp. (b) ............................. 54,032,669
12,000 Duke Energy Corp. (b) .............................. 741,750
160,800 Exxon Corp. ........................................ 11,326,350
3,040,700 Halliburton Co. .................................... 90,270,781
16,000 Mobil Corp. ........................................ 1,403,000
842,970 Noble Affiliates, Inc. ............................. 16,595,972
2,680,200 Schlumberger Ltd. .................................. 127,644,525
8,000 Sempra Energy ...................................... 184,000
782,600 Smith International Inc.* .......................... 19,809,563
16,000 Sonat, Inc. ........................................ 412,000
-------------
398,732,772
-------------
FOOD & RESTAURANT - (4.60%)
7,385,400 McDonald's Corp. ................................... 582,061,838
-------------
HOTELS - (0.04%)
160,000 Marriott International, Inc. ....................... 5,622,263
-------------
INDUSTRIAL - (1.25%)
2,973,700 Sealed Air Corp.* (b) .............................. 157,791,956
-------------
INTERNATIONAL CLOSED-END INVESTMENT COMPANY - (0.33%)
5,484,900 Morgan Stanley Asia Pacific Fund Inc. 41,136,750
-------------
INVESTMENT FIRMS - (2.91%)
1,585,000 Donaldson, Lufkin & Jenrette, Inc. .................. 79,051,875
24,000 J.P. Morgan & Co., Inc. ............................. 2,532,000
3,294,190 Morgan Stanley, Dean Witter & Discover Co............ 285,976,869
-------------
367,560,744
LIFE INSURANCE - (0.15%)
447,800 ReliaStar Financial Corp. ........................... 18,555,713
-------------
MACHINERY - (0.92%)
3,762,600 Dover Corp. ......................................... 116,875,763
-------------
</TABLE>
8
<PAGE>
DAVIS NEW YORK VENTURE FUND
SCHEDULE OF INVESTMENTS - Continued
January 31, 1999 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
VALUE
SHARES SECURITY (NOTE 1)
- ---------------------------------------------------------------------------------
COMMON STOCK - CONTINUED
<S> <C> <C>
30,000 Maytag Corp. ....................................... $ 1,895,625
-------------
MARKETING - (0.00%)
1,666 ACNielsen Corp.* ................................... 38,110
-------------
PAPER PRODUCTS - (0.01%)
12,000 International Paper Co. ............................ 474,750
16,300 Union Camp Corp. ................................... 1,005,506
-------------
1,480,256
-------------
PHARMACEUTICAL AND HEALTH CARE - (5.52%)
2,665,000 American Home Products Corp. ....................... 156,402,188
435,000 Bristol-Myers Squibb Co. ........................... 55,761,563
391,200 Eli Lilly & Co. .................................... 36,650,550
200,000 Glaxo Wellcome PLC - ADR (b) ....................... 13,575,000
10,000 IMS Health, Inc. ................................... 366,250
564,900 Johnson & Johnson .................................. 48,016,500
364,500 Merck & Co., Inc. .................................. 53,490,375
820,300 Novartis AG - ADR .................................. 76,750,549
303,200 Pfizer, Inc. ....................................... 38,999,100
3,217,600 SmithKline Beecham PLC - ADR ....................... 218,193,500
-------------
698,205,575
-------------
PROPERTY/CASUALTY INSURANCE - (10.28%)
3,060,716 The Allstate Corp. ................................. 114,968,145
2,761,766 American International Group, Inc. ................. 284,289,288
4,044,800 Chubb Corp. ........................................ 237,632,000
2,260,900 Progressive Corp. (Ohio) ........................... 282,471,194
3,309,300 Transatlantic Holdings Inc. ........................ 247,990,669
629,600 20th Century Industries, Inc. ...................... 13,339,650
1,782,700 UNUM Corp. ......................................... 107,741,931
454,950 W.R. Berkley Corp.. ................................ 11,914,003
-------------
1,300,346,880
PUBLISHING - (2.74%)
708,500 Dow Jones & Company, Inc. .......................... 31,705,375
5,000 Dun & Bradstreet Corp. ............................. 152,500
1,598,000 Gannett Co., Inc. .................................. 105,168,375
2,815,300 Harcourt General, Inc. ............................. 135,134,400
237,000 The New York Times Co. - Class A ................... 8,132,063
1,000 R. H. Donnelley Corp. .............................. 16,313
721,600 Tribune Co. ........................................ 46,137,300
35,400 Washington Post Co., Class B (b) ................... 20,142,600
-------------
346,588,926
</TABLE>
9
<PAGE>
DAVIS NEW YORK VENTURE FUND
SCHEDULE OF INVESTMENTS - Continued
January 31, 1999 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
VALUE
SHARES SECURITY (NOTE 1)
- ----------------------------------------------------------------------------------
COMMON STOCK - CONTINUED
<S> <C> <C>
356,600 Boardwalk Equities, Inc.* .......................... $ 3,429,983
387,100 CenterPoint Properties Corp. ....................... 12,629,138
3,819,700 Crescent Real Estate Equities, Inc. ................ 80,929,894
1,210,800 Equity Office Properties Trust ..................... 30,875,400
529,300 Equity Residential Properties Trust ................ 21,535,894
310,000 Federal Realty Investment Trust .................... 7,130,000
270,000 Gables Residential Trust ........................... 6,193,125
2,313,100 General Growth Properties .......................... 80,091,088
236,900 Home Properties of New York, Inc. .................. 6,144,594
70,700 Kimco Realty Corp. ................................. 2,757,300
784,000 Mack-Cali Realty Corp. ............................. 23,422,000
692,300 Reckson Associates Realty Corp. .................... 15,230,600
4,322,700 Rouse Co. .......................................... 102,123,788
344,300 United Dominion Realty Trust, Inc. ................. 3,399,963
1,852,200 Vornado Realty Trust ............................... 65,405,813
100,700 Weingarten Realty, Investors. ...................... 3,965,063
--------------
465,263,643
SATELLITE TELECOMMUNICATIONS - (0.14%)
288,512 Global Star Telecommunications* (b) ................ 5,535,824
546,000 Loral Space & Communications* ...................... 12,012,000
--------------
17,547,824
--------------
STORAGE - (0.18%)
885,200 Public Storage, Inc. ............................... 22,517,275
--------------
TECHNOLOGY - (12.32%)
9,252,725 Hewlett-Packard Co. ................................ 725,182,322
2,334,700 Intel Corp. ........................................ 328,827,903
2,754,400 International Business Machines Corp. .............. 504,743,800
--------------
1,558,754,025
--------------
TELECOMMUNICATIONS - (1.55%)
1,557,000 AirTouch Communications, Inc.* (b) ................. 150,347,813
620,000 Motorola, Inc. ..................................... 44,795,000
20,000 SBC Communications, Inc. ........................... 1,080,000
--------------
196,222,813
--------------
TRANSPORTATION - (0.47%)
1,661,700 Burlington Northern Santa Fe Corp. ................. 57,536,363
30,016 Canadian National Railway Co. ...................... 1,605,856
--------------
59,142,219
--------------
UTILITIES - (0.01%)
10,000 Carolina Power & Light Co. ......................... 416,250
12,000 Edison International . ............................. 333,750
</TABLE>
10
<PAGE>
DAVIS NEW YORK VENTURE FUND
SCHEDULE OF INVESTMENTS - Continued
January 31, 1999 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
VALUE
SHARES SECURITY (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCK - CONTINUED
<S> <C> <C>
UTILITIES - CONTINUED
6,000 New England Electric System ........................ $ 293,625
16,800 Southern Co. ....................................... 452,550
9,000 Wisconsin Energy Corp. ............................. 234,000
---------------
1,730,175
---------------
WASTE MANAGEMENT - (0.29%)
728,700 Waste Management Inc. .............................. 36,389,455
---------------
Total Common Stocks - (identified cost
$8,797,306,566) ............................. 12,085,504,251
---------------
PREFERRED STOCK - (0.67%)
130,856 AirTouch Communications, Inc.,
4.25%, Ser. C Conv. Pfd. ......................... 17,567,418
200,600 Devon Financing Trust, 6.50%, Conv. Pfd. ........... 10,381,050
2,000,000 General Growth Properties, 7.25%, Conv. Pfd........ 48,500,000
131,900 Rouse Co., Ser. B Conv. Pfd ........................ 5,407,900
60,200 Vornado Realty Trust, 6.50%, Ser. A Conv. Pfd. 3,130,400
---------------
Total Preferred Stocks - (identified cost
$79,486,493) ................................ 84,986,768
---------------
SHORT TERM INVESTMENTS - (4.64%)
$ 9,525,000 Federal Farm Credit Bank Discount Note, 4.98%,
02/11/99 ......................................... 9,509,189
13,110,000 Federal Home Loan Bank Discount Note, 4.74%,
02/03/99 ......................................... 13,103,095
41,735,000 Federal Home Loan Bank Discount Note, 4.60%,
02/09/99 ......................................... 41,681,672
25,620,000 Freddie Mac Discount Note, 5.01%, 02/02/99 ......... 25,609,304
13,890,000 Freddie Mac Discount Note, 4.82%, 02/04/99 ......... 13,880,701
23,325,000 Freddie Mac Discount Note, 4.76%, 02/08/99 ......... 23,297,243
2,085,000 Freddie Mac Discount Note, 5.05%, 02/10/99 ......... 2,081,783
22,845,000 Freddie Mac Discount Note, 5.06%, 02/10/99 ......... 22,809,679
9,485,000 Freddie Mac Discount Note, 5.09%, 02/12/99 ......... 9,467,566
20,355,000 Freddie Mac Discount Note, 4.72%, 02/16/99 ......... 20,309,631
24,278,000 Freddie Mac Discount Note, 5.05%, 02/17/99 ......... 24,216,698
25,000,000 Freddie Mac Discount Note, 4.73%, 02/18/99 ......... 24,937,590
40,000,000 Freddie Mac Discount Note, 5.02%, 02/19/99 ......... 39,888,445
20,705,000 Freddie Mac Discount Note, 5.025%, 02/22/99 ........ 20,638,528
30,755,000 Freddie Mac Discount Note, 4.70%, 02/23/99 ......... 30,658,634
38,000,000 Freddie Mac Discount Note, 4.70%, 02/24/99 ......... 37,875,972
28,685,000 Freddie Mac Discount Note, 4.76%, 02/26/99 ......... 28,582,595
</TABLE>
11
<PAGE>
DAVIS NEW YORK VENTURE FUND
SCHEDULE OF INVESTMENTS - Continued
January 31, 1999 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
VALUE
PRINCIPAL SECURITY (NOTE 1)
- ---------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS - CONTINUED
<S> <C> <C>
$ 14,140,000 Freddie Mac Discount Note, 4.68%, 03/09/99 ................... $ 14,070,148
35,530,000 Freddie Mac Discount Note, 4.673%, 03/15/99 .................. 35,327,072
35,075,000 Freddie Mac Discount Note, 4.70%, 03/22/99 ................... 34,841,460
114,096,000 Lehman Brothers Repurchase Agreement, 4.74%, 02/01/99,
dated 01/29/99, repurchase value $114,097,696
(collateralized by: $11,545,000 par value Fannie Mae,
5.98%, 11/12/27, market value $11,873,455, $45,000,000
par value Federal Home Loan Bank, 6.375%-6.83%,
02/21/06-01/29/18, market value $33,906,290, $46,100,000
par value Freddie Mac, 6.17%-6.70%, 12/08/08-01/22/14,
market value $46,001,292, $5,769,000 par value Tennessee
Valley Authority, 6.75%, 11/01/25, market value
$6,339,439, $25,234,000 par value Tennessee Valley
Authority-Gen. Strip, Zero Cpn., 11/12/27, market value
$19,400,151) ................................................. 114,096,000
----------------
Total Short Term Investments - (identified cost
$586,883,005) ............................................ 586,883,005
----------------
Total Investments - (identified cost $9,463,676,064)
(100.85%)(a) ............................................. 12,757,374,024
Liabilities Less Other Assets - (0.85%) .................... (107,420,991)
----------------
Net Assets - (100%) ..................................... $ 12,649,953,033
================
</TABLE>
(a) Aggregate cost for Federal Income Tax purposes is $9,463,648,772. At January
31, 1999 unrealized appreciation (depreciation) of securities for Federal Income
Tax purposes was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation ................................. $ 3,584,728,152
Unrealized depreciation ................................. (291,002,900)
---------------
Net appreciation ........................................ $ 3,293,725,252
===============
</TABLE>
(b) Loaned security - See Note 7 of Notes to Financial Statements.
* Non-Income Producing Security
See Notes to Financial Statements.
12
<PAGE>
DAVIS NEW YORK VENTURE FUND
STATEMENT OF ASSETS AND LIABILITIES
At January 31, 1999 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value (including repurchase
agreement of $114,096,000) (identified cost $9,463,676,064)
(see accompanying Schedule of Investments) ................ $ 12,643,424,096
Collateral for securities loaned (Note 7) ................... 113,949,928
Cash ........................................................ 65,110
Receivables:
Investment securities sold .............................. 22,041,358
Capital stock sold ...................................... 45,411,560
Dividends ............................................... 8,628,997
Prepaid expenses ............................................ 1,050,261
Other assets ................................................ 51,143
----------------
Total assets ....................................... 12,834,622,453
----------------
LIABILITIES:
Return of collateral for securities loaned (Note 7) ......... 113,949,928
Payables:
Investment securities purchased ......................... 33,527,531
Capital stock redeemed .................................. 23,187,060
Accrued expenses ............................................ 13,911,675
Other liabilities ........................................... 93,226
----------------
Total liabilities .................................. 184,669,420
----------------
NET ASSETS ....................................................... $ 12,649,953,033
================
NET ASSETS CONSIST OF:
Par value of shares of capital stock ........................ $ 25,045,367
Additional paid-in capital .................................. 9,180,277,099
Deficit in undistributed net investment income .............. (8,075,426)
Net unrealized appreciation on investments .................. 3,293,697,960
Accumulated net realized gains from investments and foreign
currency transactions ..................................... 159,008,033
----------------
Net assets ......................................... $ 12,649,953,033
================
CLASS A SHARES
Net assets .............................................. $ 6,845,471,107
Shares outstanding ...................................... 269,788,976
Net asset value and redemption price per share .......... $ 25.37
================
Maximum offering price per share (100/95.25 of $25.37) .. $ 26.64
================
CLASS B SHARES
Net assets .............................................. $ 3,733,520,243
Shares outstanding ...................................... 149,095,936
Net asset value and redemption price per share .......... $ 25.04
================
CLASS C SHARES
Net assets .............................................. $ 1,605,917,627
Shares outstanding ...................................... 63,853,137
Net asset value and redemption price per share .......... $ 25.15
================
CLASS Y SHARES
Net assets .............................................. $ 465,044,056
Shares outstanding ...................................... 18,169,281
Net asset value and redemption price per share .......... $ 25.60
================
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
DAVIS NEW YORK VENTURE FUND
STATEMENT OF OPERATIONS
For the six months ended January 31, 1999 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends..................................................................... $ 72,922,498
Interest ..................................................................... 15,362,924
Lending Fees.................................................................. 126,206
------------
Total income.......................................................... 88,411,628
Expenses:
Management fees (Note 3)........................................ $ 30,077,710
Custodian fees.................................................. 765,012
Transfer agent fees
Class A.................................................... 2,481,267
Class B.................................................... 2,707,579
Class C.................................................... 1,089,831
Class Y.................................................... 154,616
Audit fees...................................................... 31,408
Legal fees...................................................... 81,131
Accounting fees (Note 3)........................................ 199,998
Reports to shareholders......................................... 822,649
Directors' fees and expenses.................................... 137,575
Registration and filing fees.................................... 849,644
Miscellaneous................................................... 69,164
Payments under distribution plan (Note 4)
Class A.................................................... 7,021,231
Class B.................................................... 16,133,004
Class C.................................................... 7,047,794
------------
Total expenses....................................................... 69,669,613
Expenses paid indirectly (Note 6)................................... (9,377)
-------------
Net expenses......................................................... 69,660,236
-------------
Net investment income............................................ 18,751,392
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from:
Investment transactions....................................................... 372,908,680
Foreign currency transactions................................................. 1,899,814
Net increase in unrealized appreciation of investments........................... 372,819,620
-------------
Net realized and unrealized gain on investments................................... 747,628,114
-------------
Net increase in net assets resulting from operations................. $ 766,379,506
=============
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
DAVIS NEW YORK VENTURE FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
SIX
MONTHS ENDED
JANUARY 31, YEAR ENDED
1999 JULY 31,
(UNAUDITED) 1998
----------- ----
OPERATIONS:
<S> <C> <C>
Net investment income ............................. $ 18,751,392 $ 46,466,636
Net realized gain from investments and
foreign currency transactions ................ 374,808,494 103,979,812
Increase in unrealized appreciation of investments 372,819,620 760,284,850
---------------- ----------------
Net increase in net assets resulting
from operations .......................... 766,379,506 910,731,298
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income:
Class A ....................................... (28,345,761) (44,770,305)
Class B ....................................... -- (3,420,374)
Class C ....................................... -- (1,903,619)
Class Y ....................................... (3,078,525) (8,520,851)
Realized gains from investment transactions:
Class A ....................................... (129,418,490) (161,900,484)
Class B ....................................... (67,969,607) (58,984,889)
Class C ....................................... (29,414,174) (27,202,211)
Class Y ....................................... (7,965,994) (24,556,619)
CAPITAL SHARE TRANSACTIONS (NOTE 5) .................... 441,810,042 4,770,571,698
---------------- ----------------
Total increase in net assets .................. 941,996,997 5,350,043,644
NET ASSETS:
Beginning of year ................................. 11,707,956,036 6,357,912,392
---------------- ----------------
End of year (including undistributed net investment
income (deficit) of $(8,075,427) and $4,597,468,
respectively) ................................... $ 12,649,953,033 $ 11,707,956,036
================ ================
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
DAVIS NEW YORK VENTURE FUND
NOTES TO FINANCIAL STATEMENTS
January 31, 1999 (Unaudited)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a separate series of Davis New York Venture Fund, Inc., which
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Fund's investment
objective is growth of capital. The Fund offers shares in four classes, Class A,
Class B, Class C and Class Y. The Class A shares are sold with a front-end sales
charge and the Class B and Class C shares are sold at net asset value and may be
subject to a contingent deferred sales charge upon redemption. Class Y shares
are sold at net asset value and are not subject to any contingent deferred sales
charge. Class Y shares are only available to certain qualified investors.
Income, expenses (other than those attributable to a specific class) and gains
and losses are allocated daily to each class of shares based upon the relative
proportion of net assets represented by each class. Operating expenses directly
attributable to a specific class are charged against the operations of that
class. All classes have identical rights with respect to voting (exclusive of
each Class's distribution arrangement), liquidation and distributions. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
SECURITY VALUATION - Portfolio securities traded on national securities
exchanges are valued at the published last sales prices on the exchange, or, in
the absence of recorded sales, at the average of closing bid and asked prices on
such exchange. Over-the-counter securities are valued at the average of closing
bid and asked prices. If no quotations are available, the fair value of the
investment is determined by or at the direction of the Board of Directors.
Investments in short-term securities (maturing in sixty days or less) are valued
at amortized cost unless the Board of Directors determines that such cost is not
a fair value. The valuation procedures are reviewed and subject to approval by
the Board of Directors.
FEDERAL INCOME TAXES - It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to shareholders. Therefore,
no provision for federal income or excise tax is required.
SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME - Securities transactions
are accounted for on the trade date (date the order to buy or sell is executed)
with realized gain or loss on the sale of securities being determined based upon
identified cost. Dividend income is recorded on the ex-dividend date and
interest income is recorded on the accrual basis.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions to
shareholders are recorded on the ex-dividend date. The character of the
distributions made during the year from net investment income may differ from
its ultimate characterization for federal income tax purposes. Also, due to the
timing of distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which income or gain was recorded by the Fund.
The Fund adjusts the classification of distributions to shareholders to reflect
the differences between financial statement amounts and distributions determined
in accordance with income tax regulations.
USE OF ESTIMATES IN FINANCIAL STATEMENTS - In preparing financial statements in
conformity with generally accepted accounting principals, management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of income and expenses
during the reporting period. Actual results may differ from these estimates.
16
<PAGE>
DAVIS NEW YORK VENTURE FUND
NOTES TO FINANCIAL STATEMENTS - Continued
January 31, 1999 (Unaudited)
================================================================================
NOTE 2 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities) for the six months ended January 31, 1999, were $2,393,569,106 and
$1,780,863,081, respectively.
NOTE 3 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Advisory fees are paid to Davis Selected Advisers, L.P. (the "Adviser")
at the annual rate of 0.75% of the average net assets for the first $250
million, 0.65% of the average net assets on the next $250 million, 0.55% of the
average net assets on the next $2.5 billion, 0.54% of the average net assets on
the next $1 billion, 0.53% of the average net assets on the next $1 billion,
0.52% of the average net assets on the next $1 billion, 0.51% of the average net
assets on the next $1 billion and 0.50% of the average net assets in excess of
$7 billion.
The Adviser is paid for registering Fund shares for sale in various
states. The fee for the six months ended January 31, 1999 amounted to $7,002.
Boston Financial Data Services is the Fund's primary transfer agent. The Adviser
is also paid for certain transfer agent services. The fee for the these services
for the six months ended January 31, 1999 amounted to $729,104. State Street
Bank & Trust Co. is the Fund's primary accounting provider, fees for such
services are included in the custodian fee. The Adviser is also paid for certain
accounting services. The fee amounted to $199,998 for the six months ended
January 31, 1999. Certain directors and the officers of the Fund are also
directors and officers of the general partner of the Adviser.
Davis Selected Advisers-NY, Inc. ("DSA-NY"), a wholly-owned subsidiary of
the Adviser, acts as sub-adviser to the Fund. DSA-NY performs research and
portfolio management services for the Fund under a Sub-Advisory Agreement with
the Adviser. The Fund pays no fees directly to DSA-NY.
The Fund has adopted procedures to treat Shelby Cullom Davis & Co.
("SCD") as an affiliate of the Adviser. During the six months ended January 31,
1999, SCD received $317,556 in commission on the purchases and sales of
portfolio securities in the Fund.
NOTE 4 - DISTRIBUTION AND UNDERWRITING FEES
CLASS A SHARES
Class A shares of the Fund are sold at net asset value plus a sales
charge and are redeemed at net asset value (without a contingent deferred sales
charge).
During the six months ended January 31, 1999, Davis Distributors, LLC,
the Fund's Underwriter (the "Underwriter" or "Distributor") received $9,131,066
from commissions earned on sales of Class A shares of the Fund, of which
$1,416,932 was retained by the Underwriter and the remaining $7,714,134 was
reallowed to investment dealers. The Underwriter paid the costs of prospectuses
in excess of those required to be filed as part of the Fund's registration
statement, sales literature and other expenses assumed or incurred by it in
connection with such sales.
17
<PAGE>
DAVIS NEW YORK VENTURE FUND
NOTES TO FINANCIAL STATEMENTS - Continued
January 31, 1999 (Unaudited)
================================================================================
NOTE 4 - DISTRIBUTION AND UNDERWRITING FEES - CONTINUED
CLASS A SHARES - CONTINUED
The Underwriter is reimbursed for amounts paid to dealers as a service
fee with respect to Class A shares sold by dealers which remain outstanding
during the period. The service fee is paid at the annual rate of 1/4 of 1% of
the average net assets maintained by the responsible dealers. The Underwriter is
not reimbursed for accounts for which the Underwriter pays no service fees to
other firms. The service fee for Class A shares of the Fund for the six months
ended January 31, 1999 was $7,021,231.
CLASS B SHARES
Class B shares of the Fund are sold at net asset value and are redeemed
at net asset value less a contingent deferred sales charge if redeemed within
six years of purchase.
The Fund pays a distribution fee to reimburse the Distributor for
commission advances on the sale of the Fund's Class B shares. The National
Association of Securities Dealers, Inc., ("NASD") limits the percentage of the
Fund's average annual net assets attributable to Class B shares which may be
used to reimburse the Distributor. The limit is 1%, of which 0.75% may be used
to pay distribution expenses and 0.25% may be used to pay shareholder service
fees. The NASD rule also limits the aggregate amount the Fund may pay for
distribution to 6.25% of gross Fund sales since inception of the Rule 12b-1
plan, plus interest, at 1% over the prime rate on unpaid amounts. The
Distributor intends to seek full payment (plus interest at prime plus 1%) of
distribution charges that exceed the 1% annual limit in some future period or
periods when the plan limits have not been reached.
During the six months ended January 31, 1999, Class B shares of the Fund
made distribution plan payments which included distribution fees of $12,071,546
and service fees of $4,061,458.
Commission advances by the Distributor during the six months ended
January 31, 1999 on the sale of Class B shares of the Fund amounted to
$21,746,464, of which $20,342,686 was reallowed to qualified selling dealers.
The Distributor intends to seek payment from Class B shares of the Fund
in the amount of $104,292,469, representing the cumulative commission advances
by the Distributor on the sale of the Fund's Class B shares, plus interest,
reduced by cumulative distribution fees paid by the Fund and cumulative
contingent deferred sales charges paid by redeeming shareholders. The Fund has
no contractual obligation to pay any such distribution charges and the amount,
if any, timing and condition of such payment are solely within the discretion of
the Directors who are not interested persons of the Fund or the Distributor.
A contingent deferred sales charge is imposed upon redemption of
certain Class B shares of the Fund within six years of the original purchase.
The charge is a declining percentage starting at 4% of the lesser of net asset
value of the shares redeemed or the total cost of such shares. During the six
months ended January 31, 1999 the Distributor received $3,527,133 in contingent
deferred sales charges from Class B shares of the Fund.
18
<PAGE>
DAVIS NEW YORK VENTURE FUND
NOTES TO FINANCIAL STATEMENTS - Continued
January 31, 1999 (Unaudited)
================================================================================
NOTE 4 - DISTRIBUTION AND UNDERWRITING FEES - CONTINUED
CLASS C SHARES
Class C shares of the Fund are sold at net asset value and are redeemed
at net asset value less a contingent deferred sales charge of 1% if redeemed
within one year of purchase. The Fund pays the Distributor 1% of the Fund's
average annual net assets attributable to Class C shares, of which 0.75% may be
used to pay distribution expenses and 0.25% may be used to pay shareholder
service fees.
During the six months ended January 31, 1999, Class C shares of the
Fund made distribution payments of $7,047,794. During the six months ended
January 31, 1999, the Distributor received $454,105 in contingent deferred sales
charges from Class C shares of the Fund.
NOTE 5 - CAPITAL STOCK
At January 31, 1999, there were 3,000,000,000 shares of capital stock
($0.05 par value per share) authorized, 2,000,000,000 of which shares are
classified as Davis New York Venture Fund. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
CLASS A SIX MONTHS ENDED
JANUARY 31, 1999 YEAR ENDED
(UNAUDITED) JULY 31, 1998
---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares subscribed ................ 42,809,085 $ 992,598,602 110,409,208 $ 2,590,265,386
Shares issued in reinvestment of
distributions .................. 5,789,805 139,065,715 8,251,609 183,685,625
----------- --------------- ------------ ---------------
48,598,890 1,131,664,317 118,660,817 2,773,951,011
Shares redeemed .................. (44,497,013) (1,037,374,987) (29,994,547) (707,226,321)
----------- --------------- ------------ ---------------
Net increase .................. 4,101,877 $ 94,289,330 88,666,270 $ 2,066,724,690
=========== =============== ============ ===============
CLASS B SIX MONTHS ENDED
JANUARY 31, 1999 YEAR ENDED
(UNAUDITED) JULY 31, 1998
---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Shares subscribed ................ 25,965,262 $ 594,055,926 80,387,670 $ 1,868,220,520
Shares issued in reinvestment of
distributions .................. 2,706,143 64,242,559 2,676,634 59,180,842
---------- ------------- ------------ ---------------
28,671,405 658,298,485 83,064,304 1,927,401,362
Shares redeemed .................. (9,738,642) (219,708,712) (5,734,058) (134,504,472)
---------- ------------- ------------ ---------------
Net increase .................. 18,932,763 $ 438,589,773 77,330,246 $ 1,792,896,890
========== ============= ============ ===============
</TABLE>
19
<PAGE>
DAVIS NEW YORK VENTURE FUND
NOTES TO FINANCIAL STATEMENTS - Continued
January 31, 1999 (Unaudited)
================================================================================
NOTE 5 - CAPITAL STOCK - CONTINUED
<TABLE>
<CAPTION>
CLASS C SIX MONTHS ENDED
JANUARY 31, 1999 YEAR ENDED
(UNAUDITED) JULY 31, 1998
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares subscribed .............. 11,089,284 $ 254,776,337 35,113,179 $ 818,643,623
Shares issued in reinvestment of
distributions ................ 1,147,080 27,346,184 1,216,430 26,983,778
------------ ------------- ------------ -------------
12,236,364 282,122,521 36,329,609 845,627,401
Shares redeemed ................ (6,144,819) (139,777,143) (3,800,574) (89,212,903)
------------ ------------- ------------ -------------
Net increase ................ 6,091,545 $ 142,345,378 32,529,035 $ 756,414,498
============ ============= ============ =============
CLASS Y SIX MONTHS ENDED
JANUARY 31, 1999 YEAR ENDED
(UNAUDITED) JULY 31, 1998
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Shares subscribed .............. 4,953,050 $ 117,993,616 21,252,293 $ 497,339,664
Shares issued in reinvestment of
distributions ................ 354,266 8,580,309 1,277,781 28,673,414
------------ ------------- ------------ -------------
5,307,316 126,573,925 22,530,074 526,013,078
Shares redeemed ................ (17,090,962) (359,988,364) (15,658,979) (371,477,458)
------------ ------------- ------------ -------------
Net increase (decrease) ..... (11,783,646) $(233,414,439) 6,871,095 $ 154,535,620
============ ============= ============ =============
</TABLE>
NOTE 6 - CUSTODIAN FEES
Under an agreement with the custodian bank, custodian fees are reduced
for earnings on cash balances maintained at the custodian by the Fund. Such
reductions amounted to $9,377 during the six months ended January 31, 1999.
NOTE 7 - SECURITIES LOANED
Davis New York Venture Fund (the "Fund") has entered into a securities
lending arrangement with PaineWebber, Inc. Under the terms of the agreement, the
Fund receives fee income from lending transactions; in exchange for such fees,
PaineWebber, Inc. is authorized to loan securities on behalf of the Fund,
against receipt of collateral at least equal to the value of the securities
loaned. Cash collateral is invested by the Adviser in money market instruments.
As of January 31, 1999, the Fund had on loan securities valued at $112,324,300;
cash of $113,949,928 was received as collateral for the loans and has been
invested in approved instruments. The Fund bears the risk of any deficiency in
the amount of the collateral available for return to a borrower due to a loss in
an approved investment.
20
<PAGE>
DAVIS NEW YORK VENTURE FUND
FINANCIAL HIGHLIGHTS
CLASS A
================================================================================
Financial Highlights for a share of capital stock outstanding throughout each
period.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED JULY 31,
1/31/99 ------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...... $ 24.31 $ 22.91 $ 15.24 $ 14.56 $ 12.04 $ 12.08
------- ------- ------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................ .08 .20 .18 .20 .14 .16
Net Realized and Unrealized Gains.... 1.57 2.26 8.37 1.64 2.95 .54
------- ------- ------- -------- ------- -------
Total From Investment Operations... 1.65 2.46 8.55 1.84 3.09 .70
DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment Income. (.11) (.23) (.18) (.15) (.12) (.16)
Distributions from Realized Gains.... (.48) (.83) (.70) (1.01) (.45) (.58)
------- ------- ------- -------- ------- -------
Total Dividends and Distributions.. (.59) (1.06) (.88) (1.16) (.57) (.74)
------- ------- ------- -------- ------- -------
Net Asset Value, End of Period........... $ 25.37 $ 24.31 $ 22.91 $ 15.24 $ 14.56 $ 12.04
======= ======= ======= ======== ======= =======
TOTAL RETURN (1).......................... 6.90% 11.16% 57.83% 13.04% 27.21% 5.99%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
(000,000 omitted).................. $ 6,845 $ 6,458 $ 4,055 $ 2,151 $ 1,595 $ 1,077
Ratio of Expenses to Average Net
Assets............................. .88%* .91% .89% .87% .90% .87%
Ratio of Net Investment Income to
Average Net Assets................. .68%* .80% .98% 1.30% 1.11% 1.19%
Portfolio Turnover Rate(2)........... 16% 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. Total returns
are not annualized for periods of less than one year.
(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.
* Annualized
21
<PAGE>
DAVIS NEW YORK VENTURE FUND
FINANCIAL HIGHLIGHTS
CLASS B
================================================================================
Financial Highlights for a share of capital stock outstanding throughout each
period.
<TABLE>
<CAPTION>
DECEMBER 1, 1994
SIX MONTHS (INCEPTION
ENDED YEAR ENDED JULY 31, OF CLASS)
1/31/99 ------------------------------ THROUGH
(UNAUDITED) 1998 1997 1996 7/31/95
----------- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $ 24.00 $ 22.64 $ 15.08 $ 14.43 $ 10.88
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) ........... (.02) .01 .01 .04 (.01)
Net Realized and Unrealized Gains ...... 1.54 2.23 8.29 1.62 3.56
------- ------- ------- ------- -------
Total From Investment Operations ..... 1.52 2.24 8.30 1.66 3.55
DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment Income ... -- (.05) (.04) -- --
Distributions from Realized Gains ...... (.48) (.83) (.70) (1.01) --
------- ------- ------- ------- -------
Total Dividends and Distributions ... (.48) (.88) (.74) (1.01) --
------- ------- ------- ------- -------
Net Asset Value, End of Period ............. $ 25.04 $ 24.00 $ 22.64 15.08 $ 14.43
======= ======= ======= ===== =======
TOTAL RETURN(1).............................. 6.44% 10.22% 56.47% $ 11.81% 32.63%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
(000,000 omitted) .................... $ 3,734 $ 3,123 $ 1,196 $ 289 $ 40
Ratio of Expenses to Average Net
Assets ............................... 1.75%* 1.79% 1.79%(2) 1.73% 1.78%*
Ratio of Net Investment Income (Loss)
to Average Net Assets ................ (.19)%* (.08)% .07% .44% .23%*
Portfolio Turnover Rate(3) ............. 16% 11% 24% 19% 15%
</TABLE>
(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. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less
than one full year.
(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.
22
<PAGE>
DAVIS NEW YORK VENTURE FUND
FINANCIAL HIGHLIGHTS
CLASS C
================================================================================
Financial Highlights for a share of capital stock outstanding throughout each
period.
<TABLE>
<CAPTION>
DECEMBER 20, 1994
SIX MONTHS (INCEPTION
ENDED YEAR ENDED JULY 31, OF CLASS)
1/31/99 --------------------------- THROUGH
(UNAUDITED) 1998 1997 1996 7/31/95
----------- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ..... $ 24.09 $ 22.72 $ 15.12 $ 14.47 $ 11.16
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) ........ (.01) .02 .02 .04 (.01)
Net Realized and Unrealized Gains ... 1.55 2.24 8.32 1.62 3.32
------- ------- ------- ------- -------
Total From Investment Operations .. 1.54 2.26 8.34 1.66 3.31
DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment Income -- (.06) (.04) -- --
Distributions from Realized Gains ... (.48) (.83) (.70) (1.01) --
------- ------- ------- ------- -------
Total Dividends and Distributions . (.48) (.89) (.74) (1.01) --
------- ------- ------- ------- -------
Net Asset Value, End of Period .......... $ 25.15 $ 24.09 $ 22.72 $ 15.12 $ 14.47
======= ======= ======= ======= =======
TOTAL RETURN(1) .......................... 6.50% 10.27% 56.59% 11.78% 29.66%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000,000
omitted) .......................... $ 1,606 $ 1,391 $ 573 $ 117 $ 12
Ratio of Expenses to Average Net
Assets ............................ 1.74%* 1.71% 1.73% 1.73% 1.78%*
Ratio of Net Investment Income (Loss)
to Average Net Assets ............. (.18)%* 0.00% .13% .44% .23%*
Portfolio Turnover Rate(2) .......... 16% 11% 24% 19% 15%
</TABLE>
(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. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less
than one full year.
(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.
* Annualized.
23
<PAGE>
DAVIS NEW YORK VENTURE FUND
FINANCIAL HIGHLIGHTS
CLASS Y
================================================================================
Financial Highlights for a share of capital stock outstanding throughout each
period.
<TABLE>
<CAPTION>
SIX MONTHS OCTOBER 2, 1996
ENDED YEAR (INCEPTION OF CLASS)
1/31/99 ENDED THROUGH
(UNAUDITED) 7/31/98 7/31/98
----------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .................... $ 24.55 $ 23.12 $ 16.66
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. .16 .24 .15
Net Realized and Unrealized Gains .................. 1.56 2.31 7.07
------- ------- -------
Total From Investment Operations ................. 1.72 2.55 7.22
DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment Income ............... (.19) (.29) (.06)
Distributions from Realized Gains .................. (.48) (.83) (.70)
------- ------- -------
Total Dividends and Distributions ............... (.67) (1.12) (.76)
------- ------- -------
Net Asset Value, End of Period ......................... $ 25.60 $ 24.55 $ 23.12
======= ======= =======
TOTAL RETURN(1) ......................................... 7.14% 11.48% 44.71%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000,000 omitted) ........ $ 465 $ 735 $ 534
Ratio of Expenses to Average Net Assets ........... .65%* .59% .62%*
Ratio of Net Investment Income to Average
Net Assets ....................................... .91%* 1.12% 1.19%*
Portfolio Turnover Rate(2) ......................... 16% 11% 24%
</TABLE>
(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.
(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.
* Annualized.
24
<PAGE>
DAVIS NEW YORK
VENTURE FUND
124 East Marcy Street, Santa Fe, New Mexico 87501
================================================================================
DIRECTORS OFFICERS
Wesley E. Bass, Jr. Jeremy H. Biggs
Jeremy H. Biggs CHAIRMAN
Marc P. Blum Shelby M. C. Davis
Andrew A. Davis PRESIDENT
Christopher C. Davis Kenneth C. Eich
Jerry D. Geist VICE PRESIDENT
D. James Guzy Sharra L. Reed
G. Bernard Hamilton VICE PRESIDENT,
LeRoy E. Hoffberger TREASURER & ASSISTANT SECRETARY
Laurence W. Levine Thomas D. Tays
Christian R. Sonne VICE PRESIDENT& SECRETARY
Marsha Williams Christopher C. Davis
VICE PRESIDENT
Andrew A. Davis
VICE PRESIDENT
Carolyn H. Spolidoro
VICE PRESIDENT
INVESTMENT ADVISER
Davis Selected Advisers, L.P.
124 East Marcy Street
Santa Fe, New Mexico 87501
(800) 279-2279
DISTRIBUTOR
Davis Distributors, LLC
124 East Marcy Street
Santa Fe, New Mexico 87501
TRANSFER AGENT & CUSTODIAN
State Street Bank and Trust Company
c/o The Davis Funds
P.O. Box 8406
Boston, Massachusetts 02266-8406
COUNSEL
D'Ancona & Pflaum
111 E. Wacker Drive, Suite 2800
Chicago, Illinois 60601-4205
AUDITORS
KPMG LLP
707 Seventeenth Street
Suite 2300
Denver, Colorado 80202
================================================================================
FOR MORE INFORMATION ABOUT DAVIS NEW YORK VENTURE FUND INCLUDING MANAGEMENT
FEES, CHARGES AND EXPENSES, SEE THE CURRENT PROSPECTUS WHICH MUST PRECEDE OR
ACCOMPANY THIS REPORT.
================================================================================
25
<PAGE>
Davis Selected Advisors, L.P.
124 East Marcy Street
Santa Fe, New Mexico 87501
1-800-279-0279
Davis
Funds
"Over 25 years of Reliable Investing"
