Davis Variable Account Fund N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-09293

DAVIS VARIABLE ACCOUNT FUND, INC.

(Exact name of registrant as specified in charter)

2949 East Elvira Road, Suite 101

Tucson, AZ  85756

(Address of principal executive offices)

Thomas D. Tays

Davis Selected Advisers, L.P.

2949 East Elvira Road, Suite 101

Tucson, AZ  85756

(Name and address of agent for service)

Registrant’s telephone number, including area code: 520-806-7600

Date of fiscal year end: December 31, 2010

Date of reporting period: June 30, 2010

____________________

ITEM 1.  REPORT TO STOCKHOLDERS

DAVIS VARIABLE ACCOUNT FUND, INC. Table of Contents

Management’s Discussion of Fund Performance:
Davis Value Portfolio	2
Davis Financial Portfolio	4
Davis Real Estate Portfolio	6
Fund Overview:
Davis Value Portfolio	8
Davis Financial Portfolio	9
Davis Real Estate Portfolio	10
Expense Example	11
Schedule of Investments:
Davis Value Portfolio	12
Davis Financial Portfolio	17
Davis Real Estate Portfolio	19
Statements of Assets and Liabilities	22
Statements of Operations	23
Statements of Changes in Net Assets	24
Notes to Financial Statements	26
Financial Highlights:
Davis Value Portfolio	32
Davis Financial Portfolio	33
Davis Real Estate Portfolio	34
Director Approval of Advisory Agreements	35
Fund Information	38
Directors and Officers	39

This Semi-Annual Report is authorized for use by existing shareholders.  Prospective shareholders must receive a current Davis Variable Account Fund, Inc. prospectus, which contains more information about investment strategies, risks, charges, and expenses.  Please read the prospectus carefully before investing or sending money.

Shares of the Davis Variable Account Funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS VALUE PORTFOLIO

Performance Overview

Davis Value Portfolio delivered a negative return on net asset value of 7.16% for the six-month period ended June 30, 2010. Over the same time period, the Standard & Poor’s 500® Index(“Index”) declined 6.65%. Every sector1 within the Index delivered negative returns over the period. The sectorswithin the Index that turned in the strongest (but still negative) performance over the six-month period were industrials, consumer discretionary, and consumer staples. The sectors within the Index that turned in the weakest performance over the six-month period were materials, energy, and information technology.

Factors Impacting the Portfolio’s Performance

The Portfolio had more invested in financials than any other sector over the six-month period. Financial companies were the most important contributor2 relative to the Index. The Portfolio’s financial companies out-performed the corresponding sector within the Index (down 2% versus down 4% for the Index) and had a higher relative average weighting (29% versus 16% for the Index). Berkshire Hathaway3, Progressive, and Hang Lung Group were among the most important contributors to performance. Bank of New York Mellon and Julius Baer Group were among the most important detractors from performance.

Energy companies were the most important detractors from performance. The Portfolio’s energy companies out-performed the corresponding sector within the Index (down 10% versus down 12% for the Index), but had a higher relative average weighting (16% versus 11% for the Index) in this weaker performing sector. EOG Resources was among the most important contributors to performance. Devon Energy, Transocean, and China Coal Energy were among the most important detractors from performance.

Information technology companies were the second most important detractors from performance. The Portfolio’s information technology companies under-performed the corresponding sector within the Index (down 16% versus down 10% for the Index) and had a lower relative average weighting (7% versus 19% for the Index). Microsoft and Google were among the most important detractors from performance.

The Portfolio’s consumer discretionary companies were significant detractors from performance relative to the Index. The Portfolio’s consumer discretionary companies under-performed the corresponding sector within the Index (down 11% versus down 2% for the Index) and had a lower relative average weighting (7% versus 10% for the Index) in this stronger performing sector.

Other important contributors to performance included Express Scripts and Hershey.  Other important detractors from performance included Pfizer and Costco Wholesale.

The Portfolio ended the six-month period with approximately 15% of its net assets invested in foreign companies. As a whole these companies under-performed the domestic companies held by the Portfolio.

Davis Value Portfolio’s investment objective is long-term growth of capital.  There can be no assurance that the Portfolio will achieve its objective. Davis Value Portfolio’s principal risks are: market risk, company risk, financial services risk, foreign country risk, small- and medium-capitalization risk, fees and expenses risk, and headline risk. See the prospectus for a full description of each risk.

1     The companies included in the Standard & Poor’s 500® Index are divided into ten sectors.  One or more industry groups make up a sector.

2     A company’s or sector’s contribution to or detraction from the Portfolio’s performance is a product both of its appreciation or depreciation and its weighting within the portfolio.  For example, a 5% holding that rises 20% has twice as much impact as a 1% holding that rises 50%.

3     This Management Discussion of Fund Performance discusses a number of individual companies.  The information provided in this report does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security.  The Schedule of Investments lists the Portfolio’s holdings of each company discussed.

2

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS VALUE PORTFOLIO - (CONTINUED)

Comparison of a $10,000 investment in Davis Value Portfolio versus the Standard & Poor’s 500® Indexover 10 years for an investment made on June 30, 2000

Average Annual Total Return for periods ended June 30, 2010

Fund & Benchmark Index	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Value Portfolio	15.34%	(1.13)%	0.67%	1.47%	0.62%	0.62%
Standard & Poor’s 500® Index	14.43%	(0.79)%	(1.59)%	(0.87)%

The Standard & Poor’s 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.  Investments cannot be made directly in the Index.

The performance data for Davis Value Portfolio contained in this report represents past performance and assumes that all distributions were reinvested, and should not be considered as an indication of future performance from an investment in the Portfolio today.  The investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed.  Portfolio performance changes over time and current performance may be higher or lower than stated.  The operating expense ratio may vary in future years.  For more current information please call Davis Funds Investor Services at 1-800-279-0279.

Portfolio performance numbers are net of all Portfolio operating expenses, but do not include any insurance charges imposed by your insurance company’s separate account.  If performance included the effect of these additional charges, the return would be lower.

3

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS FINANCIAL PORTFOLIO

Performance Overview

Davis Financial Portfolio delivered a negative return on net asset value of 7.01% for the six-month period ended June 30, 2010.  Over the same time period, the Standard & Poor’s 500® Index(“Index”) declined 6.65%. The Index’s banking and insurance industry groups1 turned in positive performances, while the diversified financials industry group turned in a negative performance.

Factors Impacting the Portfolio’s Performance

The Portfolio’s financial sector holdings under-performed the corresponding sector within the Index (down 6% versus down 4% for the Index).  The Portfolio had a limited amount of assets invested in other sectors. These non-financial holdings, mostly in energy and industrials, overall detracted2 from performance.

The Portfolio’s diversified financial companies were the largest detractors from performance. The Portfolio’s diversified financialcompanies out-performed the corresponding industry group within the Index (down 8% versus down 10% for the Index). Brookfield Asset Management3, First Marblehead, Oaktree, and JPMorgan Chase were among the most important contributors to performance. Moody’s, Visa, Goldman Sachs, Julius Baer Group, and Bank of New York Mellon were among the most important detractors from performance. The Portfolio no longer owns JPMorgan Chase.

The Portfolio’s insurance companies were the second largest detractors from performance. The Portfolio’s insurance companies under-performed the corresponding industry group within the Index (down 6% versus up 2% for the Index).  Progressive, ACE, and FPIC Insurance Group were the most important contributors to performance. Transatlantic Holdings, Loews, and Everest Re Group were among the most important detractors from performance. The Portfolio no longer owns FPIC Insurance Group.

The Portfolio’s banking companies under-performed the corresponding industry group within the Index (down 1% versus up 3% for the Index).  State Bank of India was among the most important contributors to performance.

The Portfolio ended the six-month period with approximately 27% of its net assets invested in foreign companies. As a whole these companies out-performed the domestic companies held by the Portfolio.

Davis Financial Portfolio’s investment objective is long-term growth of capital.  There can be no assurance that the Portfolio will achieve its objective.  Davis Financial Portfolio’s principal risks are: market risk, company risk, concentrated financial services portfolio risk, foreign country risk, small- and medium-capitalization risk, fees and expenses risk, focused portfolio risk, and headline risk.  See the prospectus for a full description of each risk.

Davis Financial Portfolio concentrates its investments in the financial sector, and it may be subject to greater risks than a portfolio that does not concentrate its investments in a particular sector.  The Portfolio’s investment performance, both good and bad, is expected to reflect the economic performance of the financial sector more than a portfolio that does not concentrate its portfolio.

1     The companies included in the Standard & Poor’s 500® Index are divided into ten sectors.  One or more industry groups make up a sector.

2     A company’s or sector’s contribution to or detraction from the Portfolio’s performance is a product both of its appreciation or depreciation and its weighting within the portfolio.  For example, a 5% holding that rises 20% has twice as much impact as a 1% holding that rises 50%.

3     This Management Discussion of Fund Performance discusses a number of individual companies.  The information provided in this report does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security.  The Schedule of Investments lists the Portfolio’s holdings of each company discussed.

4

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS FINANCIAL PORTFOLIO - (CONTINUED)

Comparison of a $10,000 investment in Davis Financial Portfolio versus the Standard & Poor’s 500® Indexover 10 years for an investment made on June 30, 2000

Average Annual Total Return for periods ended June 30, 2010

Fund & Benchmark Index	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Financial Portfolio	16.40%	(2.68)%	1.15%	1.06%	0.68%	0.68%
Standard & Poor’s 500® Index	14.43%	(0.79)%	(1.59)%	(0.87)%

The Standard & Poor’s 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.  Investments cannot be made directly in the Index.

The performance data for Davis Financial Portfolio contained in this report represents past performance and assumes that all distributions were reinvested, and should not be considered as an indication of future performance from an investment in the Portfolio today.  The investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed.  Portfolio performance changes over time and current performance may be higher or lower than stated.  The operating expense ratio may vary in future years.  For more current information please call Davis Funds Investor Services at 1-800-279-0279.

Portfolio performance numbers are net of all Portfolio operating expenses, but do not include any insurance charges imposed by your insurance company’s separate account.  If performance included the effect of these additional charges, the return would be lower.

Davis Financial Portfolio received a favorable class action settlement from a company that it no longer owns.  This settlement had a material impact on the investment performance of the Portfolio in 2009.  This was a one-time event that is unlikely to be repeated.

5

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS REAL ESTATE PORTFOLIO

Performance Overview

Davis Real Estate Portfolio delivered a total return on net asset value of 4.03% for the six-month period ended June 30, 2010. Over the same time period, the Wilshire U.S. Real Estate Securities Index(“Index”) returned 5.40%. Industrial REITs was the only sub-industry1 within the Index to deliver a negative return, while specialized REITs, residential REITs, and real estate operating companies turned in the strongest performances.

Factors Impacting the Portfolio’s Performance

Residential REITs were the most important contributors2 to the Portfolio’s performance, but the most important detractors from performance relative to the Index. The Portfolio’s residential REITs under-performed the corresponding sub-industry within the Index (up 10% versus up 15% for the Index) and had a lower relative average weighting (11% versus 16% for the Index). Essex Property Trust3 and AvalonBay were among the most important contributors to performance. UDR was among the most important detractors from performance. The Portfolio no longer owns AvalonBay.

Specialized REITs were the second most important contributors to performance. The Portfolio’s specialized REITs out-performed the corresponding sub-industry within the Index (up 10% versus up 7% for the Index) and had a lower relative average weighting (11% versus 26% for the Index). Host Hotels & Resorts, Ventas, Cogdell Spencer, and Entertainment Properties were among the most important contributors to performance. The Portfolio no longer owns Host Hotels & Resorts.

The Portfolio had more invested in office REITs than in any other sub-industry and they were the third most important contributors to performance. The Portfolio’s office REITs out-performed the corresponding sector within the Index (up 6% versus up 3% for the Index) and had a higher relative average weighting (29% versus 17% for the Index). Digital Realty and Boston Properties were among the most important contributors to performance. Highwoods Properties and Alexandria Real Estate were among the most important detractors from performance.

Forest City Enterprises was the single most important detractor from the Portfolio’s performance. The Portfolio’s large investment in Forest City Enterprises (approximately 5%) together with its poor investment performance (down 4%) accounted for the majority of the Portfolio’s under-performance relative to the Index.

Industrial REITs were also important detractors from performance. The Portfolio’s industrial REITs out-performed the corresponding sub-industry within the Index (down 8% versus down 14% for the Index) and had approximately the same average weighting (both approximately 5%). DCT Industrial Trust and ProLogis were among the most important detractors from performance. The Portfolio no longer owns ProLogis.

Davis Real Estate Portfolio’s investment objective is total return through a combination of growth and income.  There can be no assurance that the Portfolio will achieve its objective.  Davis Real Estate Portfolio’s principal risks are: market risk, company risk, concentrated real estate services portfolio risk, focused portfolio risk, foreign country risk, small- and medium-capitalization risk, fees and expenses risk, and headline risk.  See the prospectus for a full description of each risk.

Davis Real Estate Portfolio concentrates its investments in the real estate sector, and it may be subject to greater risks than a portfolio that does not concentrate its investments in a particular sector.  The Portfolio’s investment performance, both good and bad, is expected to reflect the economic performance of the real estate sector much more than a portfolio that does not concentrate its portfolio.

Davis Real Estate Portfolio is allowed to focus its investments in fewer companies, and it may be subject to greater risks than a more diversified portfolio that is not allowed to focus its investments in a few companies.  Should the portfolio manager determine that it is prudent to focus the Portfolio’s portfolio in a few companies, the Portfolio’s investment performance, both good and bad, is expected to reflect the economic performance of its more focused portfolio.

1The companies included in the Wilshire U.S. Real Estate Securities Index are divided into eight sub-industries.

2     A company’s or sector’s contribution to or detraction from the Portfolio’s performance is a product both of its appreciation or depreciation and its weighting within the portfolio.  For example, a 5% holding that rises 20% has twice as much impact as a 1% holding that rises 50%.

3     This Management Discussion of Fund Performance discusses a number of individual companies.  The information provided in this report does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security.  The Schedule of Investments lists the Portfolio’s holdings of each company discussed.

6

DAVIS VARIABLE ACCOUNT FUND, INC.	Management’s Discussion of Fund Performance
DAVIS REAL ESTATE PORTFOLIO - (CONTINUED)

Comparison of a $10,000 investment in Davis Real Estate Portfolio versus the Standard & Poor’s 500® Index and the Wilshire U.S. Real Estate Securities Indexover 10 years for an investment made on June 30, 2000

Average Annual Total Return for periods ended June 30, 2010

Fund & Benchmark Indices	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Real Estate Portfolio	45.66%	(2.11)%	7.63%	6.96%	0.84%	0.84%
Standard & Poor’s 500® Index	14.43%	(0.79)%	(1.59)%	(0.87)%
Wilshire U.S. Real Estate      Securities Index	56.07%	(0.47)%	9.49%	9.03%

The Standard & Poor’s 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.  Investments cannot be made directly in the Index.

The Wilshire U.S. Real Estate Securities Index is a broad measure of the performance of publicly traded real estate securities. It reflects no deduction for fees or expenses.  Investments cannot be made directly in the Index.

The performance data for Davis Real Estate Portfolio contained in this report represents past performance and assumes that all distributions were reinvested, and should not be considered as an indication of future performance from an investment in the Portfolio today.  The investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed.  Portfolio performance changes over time and current performance may be higher or lower than stated.  The operating expense ratio may vary in future years.  For more current information please call Davis Funds Investor Services at 1-800-279-0279.

Portfolio performance numbers are net of all Portfolio operating expenses, but do not include any insurance charges imposed by your insurance company’s separate account.  If performance included the effect of these additional charges, the return would be lower.

7

DAVIS VARIABLE ACCOUNT FUND, INC.	Fund Overview
DAVIS VALUE PORTFOLIO	June 30, 2010 (Unaudited)

Portfolio Composition		Industry Weightings
(% of Fund’s Net Assets)		(% of Long Term Portfolio)
			Fund	S&P 500®
Common Stock (U.S.)	74.70%	Energy	17.19%	10.75%
Common Stock (Foreign)	15.25%	Diversified Financials	12.19%	7.74%
Corporate Bonds	0.55%	Insurance	11.58%	3.98%
Convertible Bonds (Foreign)	0.16%	Health Care	11.02%	12.09%
Convertible Bonds (U.S.)	0.09%	Food & Staples Retailing	8.05%	2.53%
Short Term Investments	3.90%	Information Technology	6.55%	18.76%
Other Assets & Liabilities	5.35%	Food, Beverage & Tobacco	6.19%	6.18%
	100.00%	Materials	6.12%	3.44%
		Banks	4.81%	3.20%
		Commercial & Professional Services	2.62%	0.64%
		Retailing	2.55%	3.46%
		Transportation	2.44%	1.93%
		Media	2.31%	3.14%
		Household & Personal Products	1.94%	2.82%
		Automobiles & Components	1.75%	0.64%
		Other	1.47%	10.94%
		Capital Goods	1.22%	7.76%
			100.00%	100.00%

Top 10 Holdings

(% of Fund’s Net Assets)

Occidental Petroleum Corp.	Energy	4.63%
Costco Wholesale Corp.	Food & Staples Retailing	4.41%
Wells Fargo & Co.	Commercial Banks	4.37%
American Express Co.	Consumer Finance	4.23%
EOG Resources, Inc.	Energy	3.97%
Berkshire Hathaway Inc., Class A	Property & Casualty Insurance	3.73%
Devon Energy Corp.	Energy	2.97%
CVS Caremark Corp.	Food & Staples Retailing	2.90%
Merck & Co., Inc.	Pharmaceuticals, Biotechnology & Life Sciences	2.87%
Loews Corp.	Multi-line Insurance	2.63%

8

DAVIS VARIABLE ACCOUNT FUND, INC.	Fund Overview
DAVIS FINANCIAL PORTFOLIO	June 30, 2010 (Unaudited)

Portfolio Composition		Industry Weightings
(% of Fund’s Net Assets)		(% of Stock Holdings)
			Fund	S&P 500®
Common Stock (U.S.)	72.31%	Diversified Financials	43.35%	7.74%
Common Stock (Foreign)	27.16%	Insurance	33.34%	3.98%
Short Term Investments	0.51%	Banks	14.90%	3.20%
Other Assets & Liabilities	0.02%	Energy	5.67%	10.75%
	100.00%	Commercial & Professional Services	2.74%	0.64%
		Information Technology	–	18.76%
		Health Care	–	12.09%
		Capital Goods	–	7.76%
		Food, Beverage & Tobacco	–	6.18%
		Other	–	28.90%
			100.00%	100.00%

Top 10 Holdings

(% of Fund’s Net Assets)

American Express Co.	Consumer Finance	10.15%
Transatlantic Holdings, Inc.	Reinsurance	9.16%
State Bank of India Ltd., GDR	Commercial Banks	6.87%
Loews Corp.	Multi-line Insurance	6.72%
Wells Fargo & Co.	Commercial Banks	6.17%
Oaktree Capital Group LLC, Class A	Diversified Financial Services	5.89%
Canadian Natural Resources Ltd.	Energy	5.64%
Markel Corp.	Property & Casualty Insurance	5.17%
Bank of New York Mellon Corp.	Capital Markets	4.90%
Progressive Corp.	Property & Casualty Insurance	3.92%

9

DAVIS VARIABLE ACCOUNT FUND, INC.	Fund Overview
DAVIS REAL ESTATE PORTFOLIO	June 30, 2010 (Unaudited)

Portfolio Composition		Industry Weightings
(% of Fund’s Net Assets)		(% of Long Term Portfolio)
				Wilshire U.S. Real Estate Securities Index
Common Stock	83.66%
Preferred Stock	8.73%		Fund
Convertible Bonds	2.89%	Office REITs	39.23%	16.63%
Short Term Investments	4.54%	Retail REITs	13.30%	23.89%
Other Assets & Liabilities	0.18%	Residential REITs	11.66%	17.01%
	100.00%	Specialized REITs	8.92%	25.71%
		Telecommunication Services	7.95%	–
		Real Estate Operating Companies	5.58%	2.06%
		Diversified REITs	5.56%	8.61%
		Industrial REITs	4.92%	5.42%
		Other	2.88%	0.67%
			100.00%	100.00%

Top 10 Holdings

(% of Fund’s Net Assets)

Corporate Office Properties Trust	Office REITs	5.63%
Digital Realty Trust, Inc.	Office REITs	5.44%
American Campus Communities, Inc.	Residential REITs	5.29%
Alexandria Real Estate Equities, Inc.	Office REITs	5.01%
Forest City Enterprises, Inc., Class A	Real Estate Operating Companies	4.95%
Essex Property Trust, Inc.	Residential REITs	4.10%
Federal Realty Investment Trust	Retail REITs	3.72%
Douglas Emmett, Inc.	Office REITs	3.66%
Vornado Realty Trust	Diversified REITs	3.59%
DCT Industrial Trust Inc.	Industrial REITs	3.55%

10

DAVIS VARIABLE ACCOUNT FUND, INC. Expense Example (Unaudited)

Example

As a shareholder of the Fund, you incur ongoing costs only, including advisory and administrative fees and other Fund expenses. The Expense Example is intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for each Fund is for the six-month period ended June 30, 2010. Please note that the Expense Example is general and does not reflect charges imposed by your insurance company’s separate account or account specific costs, which may increase your total costs of investing in the Funds. If these charges or account specific costs were included in the Expense Exam ple, the expenses would have been higher.

Actual Expenses

The information represented in the row entitled “Actual” provides information about actual account values and actual expenses.  You may use the information in this row, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The information represented in the row entitled “Hypothetical” provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.  You may use this information to compare the ongoing costs of investing in the Fund and other funds.  To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the information in the row entitled “Hypothetical” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value (01/01/10)	Ending Account Value  (06/30/10)	Expenses Paid During Period* (01/01/10-06/30/10)
Davis Value Portfolio
(annualized expense ratio 0.62%**)
Actual	$1,000.00	$928.37	$2.96
Hypothetical	$1,000.00	$1,021.72	$3.11
Davis Financial Portfolio
(annualized expense ratio 0.68%**)
Actual	$1,000.00	$929.86	$3.25
Hypothetical	$1,000.00	$1,021.42	$3.41
Davis Real Estate Portfolio
(annualized expense ratio 0.84%**)
Actual	$1,000.00	$1,040.26	$4.25
Hypothetical	$1,000.00	$1,020.63	$4.21
Hypothetical assumes 5% annual return before expenses.
*Expenses are equal to each Fund’s annualized operating expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
**The expense ratios reflect the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.

11

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS VALUE PORTFOLIO	June 30, 2010 (Unaudited)

Shares					Security			Value (Note 1)
COMMON STOCK – (89.95%)
	CONSUMER DISCRETIONARY – (5.63%)
		Automobiles & Components – (1.04%)
	225,000		Harley-Davidson, Inc.			$	5,001,750
		Consumer Durables & Apparel – (0.15%)
	20,299		Hunter Douglas NV  (Netherlands)				741,388
		Consumer Services – (0.02%)
	6,963		H&R Block, Inc.				109,249
		Media – (2.10%)
	117,070		Grupo Televisa S.A., ADR  (Mexico)				2,038,189
	8,506		Liberty Media - Starz, Series A  *				440,441
	296,325		News Corp., Class A				3,545,528
	130,600		Walt Disney Co.				4,113,900
							10,138,058
		Retailing – (2.32%)
	3,260		Amazon.com, Inc.  *				356,318
	167,915		Bed Bath & Beyond Inc.  *				6,225,449
	175,000		CarMax, Inc.  *				3,482,500
	107,765		Liberty Media Corp. - Interactive, Series A  *				1,132,071
							11,196,338
				Total Consumer Discretionary			27,186,783
	CONSUMER STAPLES – (14.69%)
		Food & Staples Retailing – (7.31%)
	388,390		Costco Wholesale Corp.				21,293,482
	477,398		CVS Caremark Corp.				13,997,309
							35,290,791
		Food, Beverage & Tobacco – (5.62%)
	111,940		Coca-Cola Co.				5,610,433
	99,233		Diageo PLC, ADR  (United Kingdom)				6,225,878
	141,621		Heineken Holding NV  (Netherlands)				5,173,724
	33,060		Hershey Co.				1,584,566
	39,065		Mead Johnson Nutrition Co.				1,957,938
	15,100		Nestle S.A.  (Switzerland)				728,104
	92,290		Philip Morris International Inc.				4,230,574
	60,000		Unilever NV, NY Shares  (Netherlands)				1,639,200
							27,150,417
		Household & Personal Products – (1.76%)
	31,800		Natura Cosmeticos S.A.  (Brazil)				704,709
	130,040		Procter & Gamble Co.				7,799,799
							8,504,508
				Total Consumer Staples			70,945,716
	ENERGY – (15.60%)
	324,800		Canadian Natural Resources Ltd.  (Canada)				10,793,104
	2,659,900		China Coal Energy Co. - H  (China)				3,309,571
	2,632		ConocoPhillips				129,205
	235,230		Devon Energy Corp.				14,330,212
	194,830		EOG Resources, Inc.				19,165,427
	289,560		Occidental Petroleum Corp.				22,339,554
	290,000		OGX Petroleo e Gas Participacoes S.A.  (Brazil)*				2,686,316

12

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS VALUE PORTFOLIO - (CONTINUED)	June 30, 2010 (Unaudited)

Shares						Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	ENERGY – (CONTINUED)
	4,100			Schlumberger Ltd.			$	226,894
	51,504			Transocean Ltd.  *				2,386,180
					Total Energy			75,366,463
	FINANCIALS – (26.63%)
		Banks – (4.37%)
			Commercial Banks – (4.37%)
	823,824			Wells Fargo & Co.				21,089,894
		Diversified Financials – (11.06%)
			Capital Markets – (5.85%)
	90,220			Ameriprise Financial, Inc.				3,259,649
	454,000			Bank of New York Mellon Corp.				11,209,260
	116,400			Brookfield Asset Management Inc., Class A  (Canada)				2,632,968
	221,460			GAM Holding Ltd.  (Switzerland)*				2,393,212
	18,660			Goldman Sachs Group, Inc.				2,449,498
	221,460			Julius Baer Group Ltd.  (Switzerland)				6,314,397
								28,258,984
			Consumer Finance – (4.23%)
	515,119			American Express Co.				20,450,225
			Diversified Financial Services – (0.98%)
	14,068			JPMorgan Chase & Co.				515,029
	148,230			Moody's Corp.				2,952,742
	17,900			Visa Inc., Class A				1,266,425
								4,734,196
								53,443,405
		Insurance – (10.51%)
			Multi-line Insurance – (3.21%)
	5,130			Fairfax Financial Holdings Ltd.  (Canada)				1,889,584
	2,490			Fairfax Financial Holdings Ltd., 144A  (Canada)(a)(b)				911,936
	381,190			Loews Corp.				12,697,439
								15,498,959
			Property & Casualty Insurance – (6.30%)
	150			Berkshire Hathaway Inc., Class A  *				18,000,000
	1,390			Markel Corp.  *				472,600
	638,720			Progressive Corp. (Ohio)				11,956,838
								30,429,438
			Reinsurance – (1.00%)
	100,907			Transatlantic Holdings, Inc.				4,839,500
								50,767,897
		Real Estate – (0.69%)
	623,000			Hang Lung Group Ltd.  (Hong Kong)				3,317,761
					Total Financials			128,618,957
	HEALTH CARE – (10.00%)
		Health Care Equipment & Services – (3.08%)
	57,900			Baxter International Inc.				2,353,056
	63,800			Becton, Dickinson and Co.				4,314,156
	7,350			Cardinal Health, Inc.				247,034
	17,950			CareFusion Corp.  *				407,465

13

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS VALUE PORTFOLIO - (CONTINUED)	June 30, 2010 (Unaudited)

Shares					Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	HEALTH CARE – (CONTINUED)
		Health Care Equipment & Services – (Continued)
	160,960		Express Scripts, Inc.  *			$	7,569,144
							14,890,855
		Pharmaceuticals, Biotechnology & Life Sciences – (6.92%)
	197,680		Johnson & Johnson				11,674,981
	395,855		Merck & Co., Inc.				13,843,049
	553,600		Pfizer Inc.				7,894,336
							33,412,366
				Total Health Care			48,303,221
	INDUSTRIALS – (5.69%)
		Capital Goods – (1.10%)
	111,180		ABB Ltd., ADR  (Switzerland)				1,921,190
	96,934		Tyco International Ltd.				3,414,985
							5,336,175
		Commercial & Professional Services – (2.38%)
	53,500		D&B Corp.				3,590,920
	350,897		Iron Mountain Inc.				7,881,147
							11,472,067
		Transportation – (2.21%)
	1,482,352		China Merchants Holdings International Co., Ltd.  (China)				4,874,758
	1,097,000		China Shipping Development Co. Ltd. - H  (China)				1,383,925
	466,804		Cosco Pacific Ltd.  (China)				553,296
	26,355		Kuehne & Nagel International AG  (Switzerland)				2,712,951
	63,000		LLX Logistica S.A.  (Brazil)*				256,886
	15,710		United Parcel Service, Inc., Class B				893,742
							10,675,558
				Total Industrials			27,483,800
	INFORMATION TECHNOLOGY – (5.95%)
		Semiconductors & Semiconductor Equipment – (1.49%)
	307,500		Texas Instruments Inc.				7,158,600
		Software & Services – (2.19%)
	210,600		Activision Blizzard, Inc.				2,210,247
	8,500		Google Inc., Class A  *				3,781,650
	199,410		Microsoft Corp.				4,587,427
							10,579,324
		Technology Hardware & Equipment – (2.27%)
	139,550		Agilent Technologies, Inc.  *				3,967,406
	161,870		Hewlett-Packard Co.				7,005,734
							10,973,140
				Total Information Technology			28,711,064
	MATERIALS – (5.39%)
	81,830		BHP Billiton PLC  (United Kingdom)				2,121,733
	42,380		Martin Marietta Materials, Inc.				3,594,248
	36,900		Monsanto Co.				1,705,518
	11,354		Potash Corp. of Saskatchewan Inc.  (Canada)				979,169
	10,800		Praxair, Inc.				820,692
	41,205		Rio Tinto PLC  (United Kingdom)				1,809,493
	503,895		Sealed Air Corp.				9,936,809

14

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS VALUE PORTFOLIO - (CONTINUED)	June 30, 2010 (Unaudited)

Shares/Principal									Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	MATERIALS – (CONTINUED)
	256,750				Sino-Forest Corp.  (Canada)*					$	3,649,079
	8,900				Sino-Forest Corp., 144A  (Canada)*(a)(b)						126,492
	29,790				Vulcan Materials Co.						1,305,696
								Total Materials			26,048,929
	TELECOMMUNICATION SERVICES – (0.37%)
	37,700				America Movil SAB de C.V., Series L, ADR  (Mexico)						1,790,750
								Total Telecommunication Services			1,790,750
					TOTAL COMMON STOCK – (Identified cost $344,964,079)						434,455,683
CONVERTIBLE BONDS – (0.25%)
	MATERIALS – (0.16%)
$	736,000				Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13   (Canada) (c)						754,860
								Total Materials			754,860
	TELECOMMUNICATION SERVICES – (0.09%)
	400,000				Level 3 Communications, Inc., Conv. Sr. Notes, 15.00%, 01/15/13    (c)						453,000
								Total Telecommunication Services			453,000
					TOTAL CONVERTIBLE BONDS – (Identified cost $1,136,000)						1,207,860
CORPORATE BONDS – (0.55%)
	CONSUMER DISCRETIONARY – (0.55%)
		Automobiles & Components – (0.55%)
	2,000,000				Harley-Davidson, Inc., Sr. Notes, 15.00%, 02/01/14    (c)						2,651,690
					TOTAL CORPORATE BONDS – (Identified cost $2,000,000)						2,651,690
SHORT TERM INVESTMENTS – (3.90%)
	3,323,000				Banc of America Securities LLC Joint Repurchase Agreement,
						0.03%, 07/01/10, dated 06/30/10, repurchase value of $3,323,003
						(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.00%, 12/08/10-07/15/20, total market value $3,389,460)					3,323,000
	4,848,000				Goldman, Sachs & Co. Joint Repurchase Agreement,
						0.01%, 07/01/10, dated 06/30/10, repurchase value of $4,848,001
						(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.05%, 08/30/10-01/26/15, total market value $4,944,960)					4,848,000
	10,632,000				Mizuho Securities USA Inc. Joint Repurchase Agreement,
						0.14%, 07/01/10, dated 06/30/10, repurchase value of $10,632,041
						(collateralized by: U.S. Government agency mortgages in a pooled cash account, 2.421%-6.229%, 09/01/19-07/01/40, total market value $10,844,640)					10,632,000
					TOTAL SHORT TERM INVESTMENTS – (Identified cost $18,803,000)						18,803,000
				Total Investments – (94.65%) – (Identified cost $366,903,079) – (d)							457,118,233
				Other Assets Less Liabilities – (5.35%)							25,863,305
							Net Assets – (100.00%)			$	482,981,538
	ADR: American Depositary Receipt
	*		Non-Income producing security.

15

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS VALUE PORTFOLIO - (CONTINUED)	June 30, 2010 (Unaudited)

	(a)	These securities are subject to Rule 144A.  The Board of Directors of the Fund has determined that there is sufficient liquidity in these securities to realize current valuations.  These securities amounted to $1,038,428 or 0.22% of the Fund's net assets as of June 30, 2010.
	(b)	Restricted Security – See Note 7 of the Notes to Financial Statements.
	(c)	Illiquid Security – See Note 7 of the Notes to Financial Statements.
	(d)	Aggregate cost for federal income tax purposes is $368,524,063.  At June 30, 2010 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:
			Unrealized appreciation		$	104,121,499
			Unrealized depreciation			(15,527,329)
				Net unrealized appreciation	$	88,594,170
See Notes to Financial Statements

16

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS FINANCIAL PORTFOLIO	June 30, 2010 (Unaudited)

Shares						Security			Value (Note 1)
COMMON STOCK – (99.47%)
	ENERGY – (5.64%)
	125,000			Canadian Natural Resources Ltd.  (Canada)			$	4,153,750
					Total Energy			4,153,750
	FINANCIALS – (91.10%)
		Banks – (14.82%)
			Commercial Banks – (14.82%)
	20,000			Banco Santander Brasil S.A., ADS  (Brazil)				206,600
	21,600			ICICI Bank Ltd., ADR  (India)				780,624
	50,948			State Bank of India Ltd., GDR  (India)				5,060,851
	14,500			U.S. Bancorp				324,075
	177,500			Wells Fargo & Co.				4,544,000
								10,916,150
		Diversified Financials – (43.12%)
			Capital Markets – (19.28%)
	41,860			Ameriprise Financial, Inc.				1,512,402
	146,200			Bank of New York Mellon Corp.				3,609,678
	100,300			Brookfield Asset Management Inc., Class A  (Canada)				2,268,786
	20,100			Charles Schwab Corp.				285,018
	93,910			GAM Holding Ltd.  (Switzerland)*				1,014,840
	19,520			Goldman Sachs Group, Inc.				2,562,390
	93,910			Julius Baer Group Ltd.  (Switzerland)				2,677,617
	6,060			T. Rowe Price Group Inc.				269,034
								14,199,765
			Consumer Finance – (10.77%)
	188,300			American Express Co.				7,475,510
	194,994			First Marblehead Corp.  *				458,236
								7,933,746
			Diversified Financial Services – (13.07%)
	14,486			Bank of America Corp.				208,164
	69,500			Cielo S.A.  (Brazil)				585,263
	122,000			Moody's Corp.				2,430,240
	126,700			Oaktree Capital Group LLC, Class A  (a)				4,339,475
	62,000			RHJ International  (Belgium)*				459,274
	22,600			Visa Inc., Class A				1,598,950
								9,621,366
								31,754,877
		Insurance – (33.16%)
			Life & Health Insurance – (3.79%)
	42,833			China Life Insurance Co., Ltd., ADR  (China)				2,792,712
			Multi-line Insurance – (6.72%)
	148,600			Loews Corp.				4,949,866
			Property & Casualty Insurance – (10.81%)
	24,600			ACE Ltd.				1,266,408
	11,200			Markel Corp.  *				3,808,000
	154,100			Progressive Corp. (Ohio)				2,884,752
								7,959,160

17

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS FINANCIAL PORTFOLIO - (CONTINUED)	June 30, 2010 (Unaudited)

Shares/Principal										Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	FINANCIALS – (CONTINUED)
		Insurance – (Continued)
			Reinsurance – (11.84%)
	27,900					Everest Re Group, Ltd.					$	1,973,088
	140,737					Transatlantic Holdings, Inc.						6,749,746
												8,722,834
												24,424,572
									Total Financials			67,095,599
	INDUSTRIALS – (2.73%)
		Commercial & Professional Services – (2.73%)
	29,900					D&B Corp.						2,006,888
									Total Industrials			2,006,888
						TOTAL COMMON STOCK – (Identified cost $64,591,482)						73,256,237
SHORT TERM INVESTMENTS – (0.51%)
$	67,000					Banc of America Securities LLC Joint Repurchase Agreement,
��							0.03%, 07/01/10, dated 06/30/10, repurchase value of $67,000
							(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.00%, 12/08/10-07/15/20, total market value $68,340)					67,000
	97,000					Goldman, Sachs & Co. Joint Repurchase Agreement,
							0.01%, 07/01/10, dated 06/30/10, repurchase value of $97,000
							(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.05%, 08/30/10-01/26/15, total market value $98,940)					97,000
	214,000					Mizuho Securities USA Inc. Joint Repurchase Agreement,
							0.14%, 07/01/10, dated 06/30/10, repurchase value of $214,001
							(collateralized by: U.S. Government agency mortgages in a pooled cash account, 2.421%-6.229%, 09/01/19-07/01/40, total market value $218,280)					214,000
						TOTAL SHORT TERM INVESTMENTS – (Identified cost $378,000)						378,000
					Total Investments – (99.98%) – (Identified cost $64,969,482) – (b)							73,634,237
					Other Assets Less Liabilities – (0.02%)							15,530
								Net Assets – (100.00%)			$	73,649,767
	ADR: American Depositary Receipt
	ADS: American Depositary Share
	GDR: Global Depositary Receipt
	*			Non-Income producing security.
	(a)			Illiquid Security – See Note 7 of the Notes to Financial Statements.
	(b)			Aggregate cost for federal income tax purposes is $65,123,027.  At June 30, 2010 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:
					Unrealized appreciation						$	15,419,557
					Unrealized depreciation							(6,908,347)
								Net unrealized appreciation			$	8,511,210
See Notes to Financial Statements

18

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS REAL ESTATE PORTFOLIO	June 30, 2010 (Unaudited)

Shares							Security			Value (Note 1)
COMMON STOCK – (83.66%)
	FINANCIALS – (73.35%)
		Real Estate – (73.35%)
			Real Estate Investment Trusts (REITs) – (68.40%)
				Diversified REITs – (5.30%)
	59,914				Cousins Properties, Inc.			$	403,821
	11,570				Vornado Realty Trust				844,031
									1,247,852
				Industrial REITs – (3.55%)
	184,900				DCT Industrial Trust Inc.				835,748
				Office REITs – (28.41%)
	18,600				Alexandria Real Estate Equities, Inc.				1,178,682
	10,900				Boston Properties, Inc.				777,606
	35,090				Corporate Office Properties Trust				1,324,998
	22,200				Digital Realty Trust, Inc.				1,280,496
	60,500				Douglas Emmett, Inc.				860,310
	33,200				DuPont Fabros Technology Inc.				815,392
	16,200				Highwoods Properties, Inc.				449,712
									6,687,196
				Residential REITs – (10.71%)
	45,600				American Campus Communities, Inc.				1,244,424
	9,890				Essex Property Trust, Inc.				964,671
	16,300				UDR, Inc.				311,819
									2,520,914
				Retail REITs – (11.93%)
	21,460				CBL & Associates Properties, Inc.				266,962
	12,450				Federal Realty Investment Trust				874,862
	23,600				Regency Centers Corp.				811,840
	6,292				Simon Property Group, Inc.				508,079
	9,160				Taubman Centers, Inc.				344,691
									2,806,434
				Specialized REITs – (8.50%)
	60,583				Cogdell Spencer, Inc.				409,541
	13,400				Entertainment Properties Trust				510,138
	16,400				LaSalle Hotel Properties				337,348
	15,820				Ventas, Inc.				742,749
									1,999,776
									16,097,920
			Real Estate Management & Development – (4.95%)
				Real Estate Operating Companies – (4.95%)
	102,980				Forest City Enterprises, Inc., Class A  *				1,165,734
									17,263,654
						Total Financials			17,263,654
	INDUSTRIALS – (2.74%)
		Transportation – (2.74%)
	21,700				Alexander & Baldwin, Inc.				646,226
						Total Industrials			646,226
	TELECOMMUNICATION SERVICES – (7.57%)
	12,300				American Tower Corp., Class A  *				547,350
	17,350				Crown Castle International Corp.  *				646,461

19

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS REAL ESTATE PORTFOLIO - (CONTINUED)	June 30, 2010 (Unaudited)

Shares/Principal								Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	TELECOMMUNICATION SERVICES – (CONTINUED)
	17,300				SBA Communications Corp., Class A  *				$	588,373
							Total Telecommunication Services			1,782,184
					TOTAL COMMON STOCK – (Identified cost $19,867,470)					19,692,064
PREFERRED STOCK – (8.73%)
	FINANCIALS – (8.73%)
		Real Estate – (8.73%)
			Real Estate Investment Trusts (REITs) – (8.73%)
				Industrial REITs – (1.14%)
	11,900				AMB Property Corp., 6.75%, Series M					267,809
				Office REITs – (6.44%)
	33,272				Alexandria Real Estate Equities, Inc., 7.00%, Series D, Conv. Pfd.					716,386
	5,700				Digital Realty Trust, Inc., 5.50%, Series D, Cum. Conv. Pfd.					197,363
	5,014				Digital Realty Trust, Inc., 8.50%, Series A					126,917
	19,930				SL Green Realty Corp., 7.625%, Series C					475,380
										1,516,046
				Residential REITs – (0.40%)
	2,000				Equity Residential, 7.00%, Series E, Cum. Conv. Pfd.					93,312
				Retail REITs – (0.75%)
	8,280				CBL & Associates Properties, Inc., 7.375%, Series D					176,799
							Total Financials			2,053,966
					TOTAL PREFERRED STOCK – (Identified cost $1,072,511)					2,053,966
CONVERTIBLE BONDS – (2.89%)
	FINANCIALS – (2.89%)
		Real Estate – (2.89%)
			Real Estate Investment Trusts (REITs) – (2.52%)
				Office REITs – (2.52%)
$	344,000				Digital Realty Trust, Inc., 144A Conv. Sr. Notes, 5.50%, 04/15/29    (a)					492,995
	104,000				SL Green Realty Corp., 144A Conv. Sr. Notes, 3.00%, 03/30/27    (a)					101,400
										594,395
			Real Estate Management & Development – (0.37%)
				Real Estate Operating Companies – (0.37%)
	80,000				Forest City Enterprises, Inc., 144A Conv. Sr. Notes, 5.00%, 10/15/16    (a)					86,000
							Total Financials			680,395
					TOTAL CONVERTIBLE BONDS – (Identified cost $526,520)					680,395
SHORT TERM INVESTMENTS – (4.54%)
	189,000				Banc of America Securities LLC Joint Repurchase Agreement,
						0.03%, 07/01/10, dated 06/30/10, repurchase value of $189,000
						(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.00%, 12/08/10-07/15/20, total market value $192,780)				189,000
	275,000				Goldman, Sachs & Co. Joint Repurchase Agreement,
						0.01%, 07/01/10, dated 06/30/10, repurchase value of $275,000
						(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.05%, 08/30/10-01/26/15, total market value $280,500)				275,000

20

DAVIS VARIABLE ACCOUNT FUND, INC.	Schedule of Investments
DAVIS REAL ESTATE PORTFOLIO - (CONTINUED)	June 30, 2010 (Unaudited)

Principal							Security			Value (Note 1)
SHORT TERM INVESTMENTS – (CONTINUED)
$	604,000			Mizuho Securities USA Inc. Joint Repurchase Agreement,
					0.14%, 07/01/10, dated 06/30/10, repurchase value of $604,002
					(collateralized by: U.S. Government agency mortgages in a pooled cash account, 2.421%-6.229%, 09/01/19-07/01/40, total market value $616,080)			$	604,000
				TOTAL SHORT TERM INVESTMENTS – (Identified cost $1,068,000)					1,068,000
			Total Investments – (99.82%) – (Identified cost $22,534,501) – (b)						23,494,425
			Other Assets Less Liabilities – (0.18%)						42,028
						Net Assets – (100.00%)		$	23,536,453
	*	Non-Income producing security.
	(a)	These securities are subject to Rule 144A.  The Board of Directors of the Fund has determined that there is sufficient liquidity in these securities to realize current valuations.  These securities amounted to $680,395 or 2.89% of the Fund's net assets as of June 30, 2010.
	(b)	Aggregate cost for federal income tax purposes is $23,958,696.  At June 30, 2010 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:
			Unrealized appreciation					$	3,160,262
			Unrealized depreciation						(3,624,533)
						Net unrealized depreciation		$	(464,271)
See Notes to Financial Statements

21

DAVIS VARIABLE ACCOUNT FUND, INC.	Statements of Assets and Liabilities
	At June 30, 2010 (Unaudited)

				Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio
ASSETS:
Investments in securities at value* (see accompanying Schedule of Investments)			$	457,118,233	$	73,634,237	$	23,494,425
Cash				6,640		2,736		2,091
Cash - foreign currencies**				168,794		–		–
Receivables:
	Capital stock sold			25,342,035		39,530		23
	Dividends and interest			797,344		174,040		105,483
	Investment securities sold			153,565		–		132,692
Prepaid expenses				2,683		469		211
		Total assets		483,589,294		73,851,012		23,734,925
LIABILITIES:
Payables:
	Investment securities purchased			–		–		117,025
	Capital stock redeemed			298,587		135,240		47,786
Accrued management fees				248,911		39,573		14,497
Other accrued expenses				60,258		26,432		19,164
		Total liabilities		607,756		201,245		198,472
NET ASSETS			$	482,981,538	$	73,649,767	$	23,536,453
SHARES OUTSTANDING				48,379,052		7,938,202		3,077,925
NET ASSET VALUE, offering, and redemption price per share (Net assets ÷ Shares outstanding)			$	9.98	$	9.28	$	7.65
NET ASSETS CONSIST OF:
Par value of shares of capital stock			$	48,379	$	7,938	$	3,078
Additional paid-in capital				420,135,917		76,172,454		37,261,446
Undistributed net investment income				2,674,377		974,606		166,647
Accumulated net realized losses from investments and foreign currency transactions				(30,093,599)		(12,170,192)		(14,854,174)
Net unrealized appreciation on investments and foreign currency transactions				90,216,464		8,664,961		959,456
		Net Assets	$	482,981,538	$	73,649,767	$	23,536,453
*Including:
	Cost of investments		$	366,903,079	$	64,969,482	$	22,534,501
**Cost of cash - foreign currencies				169,401		–		–
See Notes to Financial Statements

22

DAVIS VARIABLE ACCOUNT FUND, INC.	Statements of Operations
	For the six months ended June 30, 2010 (Unaudited)

							Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio
INVESTMENT INCOME:
Income:
		Dividends*				$	3,842,380	$	775,586	$	397,403
		Interest					279,830		2,100		19,307
			Total income				4,122,210		777,686		416,710
Expenses:
		Management fees (Note 3)					1,396,996		227,292		66,468
		Custodian fees					47,566		14,122		9,893
		Transfer agent fees					8,961		4,127		2,815
		Audit fees					10,200		9,000		9,000
		Legal fees					9,150		1,482		420
		Accounting fees (Note 3)					3,252		1,002		1,002
		Reports to shareholders					30,000		7,550		2,000
		Directors’ fees and expenses					58,417		11,886		5,638
		Registration and filing fees					150		27		7
		Miscellaneous					9,815		4,675		4,490
			Total expenses				1,574,507		281,163		101,733
			Expenses paid indirectly (Note 4)				(8)		(1)		(1)
				Net expenses			1,574,499		281,162		101,732
					Net investment income		2,547,711		496,524		314,978
REALIZED & UNREALIZED GAIN (LOSS) ON      INVESTMENTS AND FOREIGN CURRENCY      TRANSACTIONS:
Net realized gain (loss) from:
		Investment transactions					11,261,274		1,241,185		816,833
		Foreign currency transactions					(293)		(12,061)		–
Net decrease in unrealized appreciation							(49,199,383)		(7,482,629)		(198,556)
	Net realized and unrealized gain (loss) on investments and foreign currency transactions						(37,938,402)		(6,253,505)		618,277
	Net increase (decrease) in net assets resulting from operations					$	(35,390,691)	$	(5,756,981)	$	933,255
*Net of foreign taxes withheld as follows						$	64,686	$	18,596	$	395
See Notes to Financial Statements

23

DAVIS VARIABLE ACCOUNT FUND, INC.	Statements of Changes in Net Assets
	For the six months ended June 30, 2010 (Unaudited)

				Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio
OPERATIONS:
	Net investment income		$	2,547,711	$	496,524	$	314,978
	Net realized gain from investments and foreign currency transactions			11,260,981		1,229,124		816,833
	Net decrease in unrealized appreciation on investments and foreign currency transactions			(49,199,383)		(7,482,629)		(198,556)
		Net increase (decrease) in net assets resulting from operations		(35,390,691)		(5,756,981)		933,255
DIVIDENDS AND DISTRIBUTIONS TO      SHAREHOLDERS FROM:
	Net investment income			–		–		(155,619)
CAPITAL SHARE TRANSACTIONS:
	Net decrease in net assets resulting from capital share transactions (Note 5)			(1,031,735)		(8,430,473)		(807,536)
		Total decrease in net assets		(36,422,426)		(14,187,454)		(29,900)
NET ASSETS:
	Beginning of period			519,403,964		87,837,221		23,566,353
	End of period*		$	482,981,538	$	73,649,767	$	23,536,453
*Including undistributed net investment income of			$	2,674,377	$	974,606	$	166,647
See Notes to Financial Statements

24

DAVIS VARIABLE ACCOUNT FUND, INC.	Statements of Changes in Net Assets
	For the year ended December 31, 2009

				Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio
OPERATIONS:
	Net investment income		$	3,837,745	$	489,320	$	523,044
	Net realized loss from investments and foreign currency transactions			(40,978,639)		(8,123,742)		(12,772,190)
	Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions			155,373,588		34,312,747		17,711,950
		Net increase in net assets resulting from operations		118,232,694		26,678,325		5,462,804
DIVIDENDS AND DISTRIBUTIONS TO      SHAREHOLDERS FROM:
	Net investment income			(3,982,003)		(629,608)		(513,936)
CAPITAL SHARE TRANSACTIONS:
	Net increase (decrease) in net assets resulting from capital share transactions (Note 5)			72,001,466		4,467,751		(713,924)
		Total increase in net assets		186,252,157		30,516,468		4,234,944
NET ASSETS:
	Beginning of year			333,151,807		57,320,753		19,331,409
	End of year*		$	519,403,964	$	87,837,221	$	23,566,353
*Including undistributed net investment income of			$	126,666	$	478,082	$	7,288
See Notes to Financial Statements

25

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Davis Variable Account Fund, Inc. (a Maryland corporation), consists of three series of funds, Davis Value Portfolio, Davis Financial Portfolio, and Davis Real Estate Portfolio (collectively “Funds”).  Davis Value Portfolio and Davis Financial Portfolio are registered under the Investment Company Act of 1940 (“40 Act”), as amended, as diversified, open-end management investment companies.  Davis Real Estate Portfolio is registered under the 40 Act, as amended, as a non-diversified, open-end management investment company. Only insurance companies, for the purpose of funding variable annuity or variable life insurance contracts, may purchase shares of the Funds.  The Funds account separately for the assets, liabilities, and operations of each series.  The following is a summary of significant accounting policies followed by the Funds in the preparation of financial statements.

Security Valuation - The Funds calculate the net asset value of their shares as of the close of the New York Stock Exchange (“Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business.  Securities listed on the Exchange (and other national exchanges) are valued at the last reported sales price on the day of valuation.  Securities traded in the over-the-counter market (e.g. NASDAQ) and listed securities for which no sale was reported on that date are stated at the average of closing bid and asked prices.  Securities traded on foreign exchanges are valued based upon the last sales price on the principal exchange on which the security is traded prior to the time when the Funds’ assets are valued.  Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value.  Securities whose values have been materially affected by what Davis Selected Advisers, L.P. (“Davis Advisors” or “Adviser”), the Funds’ investment adviser, identifies as a significant event occurring before the Funds’ assets are valued but after the close of their respective exchanges will be fair valued.  Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Directors.  Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value.  These valuation procedures are reviewed and subject to approval by the Board of Directors.

Value Measurements - Fair value is defined as the price that the Funds would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. Various inputs are used to determine the fair value of the Funds’ investments. These inputs are summarized in the three broad levels listed below.

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment

                 speeds, credit risk, etc.)

        Level 3 – significant unobservable inputs (including Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

26

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Value Measurements – (Continued)

The following is a summary of the inputs used as of June 30, 2010 in valuing each Fund’s investments carried at value:

	Investments in Securities at Value
	Davis		Davis		Davis
	Value		Financial		Real Estate
	Portfolio		Portfolio		Portfolio
Valuation inputs
Level 1 – Quoted prices:
Equity securities:
Consumer discretionary	$	26,445,395	$	–	$	–
Consumer staples		65,043,888		–		–
Energy		72,056,892		4,153,750		–
Financials		116,593,587		53,543,542		19,120,257
Health care		48,303,221		–		–
Industrials		17,958,870		2,006,888		646,226
Information technology		28,711,064		–		–
Materials		22,117,703		–		–
Telecommunication services		1,790,750		–		1,782,184
Level 2 – Other Significant Observable Inputs:
Convertible debt securities		1,207,860		–		680,395
Corporate debt securities		2,651,690		–		–
Equity securities*:
Consumer discretionary		741,388		–		–
Consumer staples		5,901,828		–		–
Energy		3,309,571		–		–
Financials		12,025,370		13,552,057		197,363
Industrials		9,524,930		–		–
Materials		3,931,226		–		–
Short-term securities		18,803,000		378,000		1,068,000
Level 3 – Significant Unobservable Inputs:		–		–		–
Total	$	457,118,233	$	73,634,237	$	23,494,425
Level 1 to Level 2 transfers**	$	6,314,397	$	2,677,617	$	–

*Includes certain securities trading primarily outside the U.S. whose value the Fund adjusted as a result of significant market movements following the close of local trading.

**Application of standing Board valuation procedures related to non-U.S. securities triggered transfers between Level 1 and Level 2 assets during the six months ended June 30, 2010.

Master Repurchase Agreements - The Funds, along with other affiliated funds, may transfer uninvested cash balances into one or more master repurchase agreement accounts.  These balances are invested in one or more repurchase agreements, secured by U.S. Government securities.  A custodian bank holds securities pledged as collateral for repurchase agreements until the agreements mature.  Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

Currency Translation - The market values of all assets and liabilities denominated in foreign currencies are recorded in the financial statements after translation to the U.S. Dollar based upon the mean between the bid and offered quotations of the currencies against U.S. Dollars on the date of valuation.  The cost basis of such assets and liabilities is determined based upon historical exchange rates.  Income and expenses are translated at average exchange rates in effect as accrued or incurred.

27

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Foreign Currency- The Funds may enter into forward purchases or sales of foreign currencies to hedge certain foreign currency denominated assets and liabilities against declines in market value relative to the U.S. Dollar.  Forward currency contracts are marked-to-market daily and the change in market value is recorded by the Funds as an unrealized gain or loss.  When the forward currency contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the forward currency contract at the time it was opened and value at the time it was closed.  Investments in forward currency contracts may expose the Funds to risks resulting from unanticipated movements in foreign currency exchange rates or failure of the counter-party to the agreement to perform in accordance with the terms of the contract.

Reported net realized foreign exchange gains or losses arise from the sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds’ books, and the U.S. Dollar equivalent of the amounts actually received or paid.  Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.  The Funds include foreign currency gains and losses realized on the sale of investments together with market gains and losses on such investments in the Statements of Operations.

Federal Income Taxes- It is each 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, including any net realized gains on investments not offset by loss carryovers, to shareholders.  Therefore, no provision for federal income or excise tax is required.  The Adviser has analyzed the Funds’ tax positions taken on federal and state income tax returns for all open tax years and has concluded that as of June 30, 2010, no provision for income tax would be required in the Funds’ financial statements.  The Funds’ federal and st ate (Arizona and Maryland) income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.  The earliest tax year that remains subject to examination by these jurisdictions is 2006.  At December 31, 2009, Davis Value Portfolio and Davis Financial Portfolio had post October 2009 losses available to offset future capital gains, if any, which expire in 2018.  The Funds have available for federal income tax purposes unused capital loss carryforwards that expire in 2017.  Details of post October 2009 capital losses and capital loss carryforwards are as follows:

	Post October 2009 Capital Losses (expiring 12/31/2018)
Davis Value Portfolio	$	9,789,000
Davis Financial Portfolio		239,000

	Capital Loss Carryforwards
	Davis		Davis		Davis
	Value		Financial		Real Estate
	Portfolio		Portfolio		Portfolio
Expiring
12/31/2016	$	–	$	4,739,000	$	2,585,000
12/31/2017		30,445,000		8,267,000		11,662,000
	$	30,445,000	$	13,006,000	$	14,247,000

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.  Dividend income from REIT securities may include return of capital.  Upon notification from the issuer, the amount of the return of capital is reclassified to adjust dividend income, reduce the cost basis, and/or adjust realized gain/loss.  Interest income, which includes accretion of discount and amortization of premium, is accrued as earned.

28

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Dividends and Distributions to Shareholders - Dividends and distributions to shareholders are recorded on the ex-dividend date.  Net investment income (loss), net realized gains (losses), and net unrealized appreciation (depreciation) on investments may differ for financial statement and tax purposes primarily due to differing treatments of wash sales, foreign currency transactions, passive foreign investment company shares, and partnership income. The character of dividends and distributions made during the fiscal year from net investment income and net realized securities gains may differ from their ultimate characterization for federal income tax purposes.  Also, due to the timing of dividends and distributions, the fiscal year in which a mounts are distributed may differ from the fiscal year in which income or realized gain was recorded by the Funds.  The Funds adjust certain components of capital to reflect permanent differences between financial statement amounts and net income and realized gains/losses determined in accordance with income tax rules.

Indemnification - Under the Funds’ organizational documents, their officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Funds.  In addition, some of the Funds’ contracts with their service providers contain general indemnification clauses.  The Funds’ maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Funds cannot be determined and the Funds have no historical basis for predicting the likelihood of any such claims.

Use of Estimates in Financial Statements- In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, 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.

Directors Fees and Expenses - The Funds set up a Rabbi Trust to provide for the deferred compensation plan for Independent Directors that enables them to elect to defer receipt of all or a portion of annual fees they are entitled to receive. The value of an eligible Director’s account is based upon years of service and fees paid to each Director during the years of service. The amount paid to the Director under the plan will be determined based upon the performance of the Davis Funds.

NOTE 2 - PURCHASES AND SALES OF SECURITIES

Purchases and sales of investment securities (excluding short-term securities) during the six months ended June 30, 2010 were as follows:

	Davis		Davis		Davis
	Value		Financial		Real Estate
	Portfolio		Portfolio		Portfolio
Cost of purchases	$	43,291,970	$	760,892	$	6,777,818
Proceeds of sales		65,205,561		8,284,312		6,023,100

NOTE 3 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Advisory fees are paid monthly to the Adviser.  The annual rate for each of the Davis Value Portfolio, Davis Financial Portfolio, and Davis Real Estate Portfolio is 0.55% of the respective Fund’s average net assets.

Boston Financial Data Services, Inc. (“BFDS”) is the Funds’ primary transfer agent.  State Street Bank and Trust Company (“State Street Bank”) is the Funds’ primary accounting provider.  Fees for such services are included in the custodian fee as State Street Bank also serves as the Funds’ custodian.  The Adviser is also paid for certain accounting services.  The fee paid to the Adviser for these services for the six months ended June 30, 2010 for Davis Value Portfolio, Davis Financial Portfolio, and Davis Real Estate Portfolio amounted to $3,252, $1,002, and $1,002, respectively.  Certain directors and officers of the Funds 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 Funds.  DSA-NY performs research and portfolio management services for the Funds under a Sub-Advisory Agreement with the Adviser.  The Funds pay no fees directly to DSA-NY.

29

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 4 - EXPENSES PAID INDIRECTLY

Under an agreement with State Street Bank, custodian fees are reduced for earnings on cash balances maintained at the custodian by the Funds. Such reductions amounted to $8, $1, and $1 for Davis Value Portfolio, Davis Financial Portfolio, and Davis Real Estate Portfolio, respectively, during the six months ended June 30, 2010.

NOTE 5 - CAPITAL STOCK

At June 30, 2010, there were 5 billion shares of capital stock ($0.001 par value per share) authorized. Transactions in capital stock were as follows:

		Six months ended June 30, 2010 (Unaudited)
			Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio
Shares sold			4,127,801		870,632		183,797
Shares issued in reinvestment of distributions			–		–		19,501
			4,127,801		870,632		203,298
Shares redeemed			(4,051,841)		(1,730,799)		(312,081)
	Net increase (decrease)		75,960		(860,167)		(108,783)
Proceeds from shares sold		$	42,592,134	$	8,789,085	$	1,459,862
Proceeds from shares issued in reinvestment of distributions			–		–		155,619
			42,592,134		8,789,085		1,615,481
Cost of shares redeemed			(43,623,869)		(17,219,558)		(2,423,017)
	Net decrease	$	(1,031,735)	$	(8,430,473)	$	(807,536)
		Year ended December 31, 2009
			Davis Value Portfolio		Davis Financial Portfolio		Davis Real Estate Portfolio
Shares sold			16,029,614		3,303,661		708,612
Shares issued in reinvestment of distributions			368,022		63,087		102,105
			16,397,636		3,366,748		810,717
Shares redeemed			(8,410,774)		(2,616,379)		(956,040)
	Net increase (decrease)		7,986,862		750,369		(145,323)
Proceeds from shares sold		$	142,471,775	$	26,457,753	$	4,050,873
Proceeds from shares issued in reinvestment of distributions			3,982,003		629,608		513,936
			146,453,778		27,087,361		4,564,809
Cost of shares redeemed			(74,452,312)		(22,619,610)		(5,278,733)
	Net increase (decrease)	$	72,001,466	$	4,467,751	$	(713,924)

NOTE 6 - BANK BORROWINGS

Each Fund may borrow up to 5% of its assets from a bank to purchase portfolio securities, or for temporary and emergency purposes.  The purchase of securities with borrowed funds creates leverage in the Fund.  Each Fund has entered into an agreement, which enables it to participate with certain other funds managed by the Adviser in an unsecured line of credit with a bank, which permits borrowings up to $50 million, collectively.  Interest is charged based on its borrowings, at a rate equal to the higher of the Federal Funds Rate or the Overnight Libor Rate, plus 1.25%.  The Funds had no borrowings during the six months ended June 30, 2010.

30

DAVIS VARIABLE ACCOUNT FUND, INC.	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 7 - ILLIQUID AND RESTRICTED SECURITIES

Securities may be considered illiquid if they lack a readily available market or if valuation has not changed for a certain period of time.  Restricted securities are not registered under the Securities Act of 1933 and may have contractual restrictions on resale.  They are valued under methods approved by the Board of Directors as reflecting fair value. The aggregate value of illiquid securities in Davis Value Portfolio amounted to $3,859,550 or 0.80% of the Fund’s net assets as of June 30, 2010. The aggregate value of restricted securities in Davis Value Portfolio amounted to $1,038,428 or 0.22% of the Fund’s net assets as of June 30, 2010.   The aggregate value of illiquid securities in Davis Financial Portfolio amounted to $4,339,475 or 5.8 9% of the Fund’s net assets as of June 30, 2010.

Information regarding illiquid and restricted securities is as follows:

Fund	Security	Acquisition Date	Principal	Units/ Shares	Cost per Unit/Share		Valuation per Unit/Share as of June 30, 2010
Davis Value Portfolio	Fairfax Financial Holdings Ltd., 144A	02/23/10	NA	2,490	$	355.00	$	366.24
Davis Value Portfolio	Harley-Davidson, Inc., Sr. Notes, 15.00%, 02/01/14	02/03/09	$    2,000,000	20,000	$	100.00	$	132.58
Davis Value Portfolio	Level 3 Communications, Inc., Conv. Sr. Notes, 15.00%, 01/15/13	12/23/08	$    400,000	4,000	$	100.00	$	113.25
Davis Value Portfolio	Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13	07/17/08	$    736,000	7,360	$	100.00	$	102.56
Davis Value Portfolio	Sino-Forest Corp., 144A	12/11/09	NA	8,900	$	15.85	$	14.21
Davis Financial Portfolio	Oaktree CapitalGroup LLC, Class A	05/21/07	NA	126,700	$	23.84	$	34.25

NOTE 8 - SUBSEQUENT EVENTS

Fund management has determined that no material events or transactions occurred subsequent to June 30, 2010 and through the issuance of the financial statements, which required adjustments and/or additional disclosure.

31

DAVIS VARIABLE ACCOUNT FUND, INC.	Financial Highlights
DAVIS VALUE PORTFOLIO

The following financial information represents selected data for each share of capital stock outstanding throughout each period:
			Six months ended June 30, 2010				Year ended December 31,
				(Unaudited)			2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period				$	10.75		$	8.26		$	14.48		$	14.58		$	12.77		$	11.78
Income (Loss) from Investment Operations:
	Net Investment Income			0.05			0.08			0.13			0.17			0.11			0.12
	Net Realized and Unrealized Gains (Losses)			(0.82)			2.49			(6.00)			0.51			1.81			0.99
		Total from Investment Operations		(0.77)			2.57			(5.87)			0.68			1.92			1.11
Dividends and Distributions:
	Dividends from Net Investment Income			–			(0.08)			(0.12)			(0.17)			(0.11)			(0.11)
	Distributions from Realized Gains			–			–			(0.23)			(0.61)			–			–
	Distributions in Excess of Net Investment Income			–			–			–			–			–			(0.01)
		Total Dividends and Distributions		–			(0.08)			(0.35)			(0.78)			(0.11)			(0.12)
Net Asset Value, End of Period				$	9.98		$	10.75		$	8.26		$	14.48		$	14.58		$	12.77
Total Returna				(7.16)		%	31.16		%	(40.32)		%	4.64		%	15.00		%	9.44		%
Ratios/Supplemental Data:
	Net Assets, End of Period (in thousands)			$	482,982		$	519,404		$	333,152		$	658,699		$	771,828		$	620,369
	Ratio of Expenses to Average Net Assets:
		Gross		0.62		%b	0.71		%	0.82		%	0.81		%	0.81		%	0.81		%
		Netc		0.62		%b	0.71		%	0.82		%	0.81		%	0.81		%	0.81		%
Ratio of Net Investment Income to Average Net Assets				1.00		%b	0.97		%	0.98		%	1.11		%	0.83		%	0.87		%
Portfolio Turnover Rated				9		%	20		%	17		%	9		%	19		%	14		%

a	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 and do not reflect charges attributable to your insurance company’s separate account.  Inclusion of these charges would reduce the total returns shown.
b	Annualized.
c	The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.
d	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.
See Notes to Financial Statements

32

DAVIS VARIABLE ACCOUNT FUND, INC.	Financial Highlights – (Continued)
DAVIS FINANCIAL PORTFOLIO

The following financial information represents selected data for each share of capital stock outstanding throughout each period:
			Six months ended June 30, 2010				Year ended December 31,
				(Unaudited)			2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period				$	9.98		$	7.12		$	14.27		$	16.29		$	13.83		$	12.82
Income (Loss) from Investment Operations:
	Net Investment Income			0.07			0.05			0.08			0.17			0.09			0.07
	Net Realized and Unrealized Gains (Losses)			(0.77)			2.88			(6.76)			(1.12)			2.47			1.00
		Total from Investment Operations		(0.70)			2.93			(6.68)			(0.95)			2.56			1.07
Dividends and Distributions:
	Dividends from Net Investment Income			–			(0.07)			–			(0.17)			(0.09)			(0.06)
	Distributions from Realized Gains			–			–			(0.47)			(0.90)			(0.01)			–
		Total Dividends and Distributions		–			(0.07)			(0.47)			(1.07)			(0.10)			(0.06)
Net Asset Value, End of Period				$	9.28		$	9.98		$	7.12		$	14.27		$	16.29		$	13.83
Total Returna				(7.01)		%	41.18		%b	(46.36)		%	(6.05)		%	18.50		%	8.38		%
Ratios/Supplemental Data:
	Net Assets, End of Period (in thousands)			$	73,650		$	87,837		$	57,321		$	116,725		$	155,807		$	124,060
	Ratio of Expenses to Average Net Assets:
		Gross		0.68		%c	0.78		%	0.88		%	0.85		%	0.84		%	0.85		%
		Netd		0.68		%c	0.78		%	0.88		%	0.85		%	0.84		%	0.85		%
Ratio of Net Investment Income to Average Net Assets				1.20		%c	0.67		%	0.73		%	0.97		%	0.66		%	0.52		%
Portfolio Turnover Ratee				1		%	10		%	16		%	17		%	9		%	21		%

a	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 and do not reflect charges attributable to your insurance company’s separate account.  Inclusion of these charges would reduce the total returns shown.
b	Davis Financial Portfolio received a favorable class action settlement from a company that it no longer owns. This settlement had an approximate impact of 0.4% on the investment performance of the Fund in 2009. This was a one-time event that is unlikely to be repeated.
c	Annualized.
d	The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.
e	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.
See Notes to Financial Statements

33

DAVIS VARIABLE ACCOUNT FUND, INC.	Financial Highlights – (Continued)
DAVIS REAL ESTATE PORTFOLIO

The following financial information represents selected data for each share of capital stock outstanding throughout each period:
			Six months ended June 30, 2010				Year ended December 31,
				(Unaudited)			2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period				$	7.40		$	5.80		$	11.45		$	20.43		$	17.33		$	16.80
Income (Loss) from Investment Operations:
	Net Investment Income			0.10			0.16			0.19			0.42			0.34			0.30
	Net Realized and Unrealized Gains (Losses)			0.20			1.60			(5.50)			(3.40)			5.58			1.86
		Total from Investment Operations		0.30			1.76			(5.31)			(2.98)			5.92			2.16
Dividends and Distributions:
	Dividends from Net Investment Income			(0.05)			(0.16)			(0.22)			(0.64)			(0.60)			(0.54)
	Distributions from Realized Gains			–			–			(0.11)			(5.36)			(2.22)			(1.09)
	Return of Capital			–			–			(0.01)			–			–			–
		Total Dividends and Distributions		(0.05)			(0.16)			(0.34)			(6.00)			(2.82)			(1.63)
Net Asset Value, End of Period				$	7.65		$	7.40		$	5.80		$	11.45		$	20.43		$	17.33
Total Returna				4.03		%	31.73		%	(46.91)		%	(15.48)		%	34.37		%	13.14		%
Ratios/Supplemental Data:
	Net Assets, End of Period (in thousands)			$	23,536		$	23,566		$	19,331		$	49,548		$	89,738		$	64,556
	Ratio of Expenses to Average Net Assets:
		Gross		0.84		%b	0.98		%	0.98		%	0.88		%	0.86		%	0.87		%
		Netc		0.84		%b	0.98		%	0.98		%	0.87		%	0.86		%	0.87		%
Ratio of Net Investment Income to Average Net Assets				2.61		%b	2.81		%	1.84		%	1.92		%	1.63		%	1.71		%
Portfolio Turnover Rated				27		%	70		%	41		%	49		%	38		%	28		%

a	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 and do not reflect charges attributable to your insurance company’s separate account.  Inclusion of these charges would reduce the total returns shown.
b	Annualized.
c	The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.
d	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.
See Notes to Financial Statements

34

DAVIS VARIABLE ACCOUNT FUND, INC. Director Approval of Advisory Agreements

Process of Annual Review

The Board of Directors of the Davis Funds oversees the management of each Davis Fund and, as required by law, determines annually whether to approve the continuance of each Davis Fund’s advisory agreement with Davis Selected Advisers, L.P. and sub-advisory agreement with Davis Selected Advisers-NY, Inc. (jointly “Davis Advisors” and “Advisory Agreements”).

As a part of this process the Independent Directors, with the assistance of counsel for the Independent Directors, prepared questions submitted to Davis Advisors in anticipation of the annual contract review. The Independent Directors were provided with responsive background material (including recent investment performance data), and their counsel provided guidance, prior to a separate contract review meeting held in March 2010 where the Independent Directors reviewed and evaluated all information which they deemed reasonably necessary in the circumstances. Upon completion of this review, the Independent Directors found that the terms of the Advisory Agreements are fair and reasonable and that continuation of the Advisory Agreements was in the best interest of Davis Financial Portfolio and its shareholders.

Reasons the Independent Directors Approved Continuation of the Advisory Agreements

The Independent Directors’ determinations were based upon a comprehensive consideration of all information provided to the Independent Directors and were not the result of any single factor. The following facts and conclusions were important, but not exclusive, in the Independent Directors’ recommendation to renew the Advisory Agreements.

The Independent Directors considered not only the investment performance of each Fund, but also the full range and quality of services provided by Davis Advisors to each Fund and their shareholders, including whether it:

1.   Achieves satisfactory investment results over the long-term after all costs;

2.   Handles shareholder transactions, inquiries, requests, and records efficiently and effectively, and provides quality accounting, legal, and compliance services, and oversight of third party service providers; and

3.   Fosters healthy investor behavior.

Davis Advisors is reimbursed a portion of its costs in providing some, but not all, of these services.

A shareholder’s ultimate return is the product of a fund’s results as well as the shareholder’s behavior, specifically in selecting when to invest or redeem. The Independent Directors concluded that, through its actions and communications, Davis Advisors has attempted to have a meaningful, positive impact on investor behavior.

The Independent Directors noted the importance of reviewing quantitative measures, but also recognized that qualitative factors are also important in assessing whether Davis Fund shareholders are likely to be well served by the renewal of the Advisory Agreements. They noted both the value and shortcomings of purely quantitative measures, including the data provided by independent service providers, and concluded that while such measures and data may be informative, the judgment of the Independent Directors must take many factors, including those listed below, into consideration in representing the shareholders of the Davis Funds.  In connection with reviewing comparative performance information, the Independent Directors generally give weight to longer-term measurements.

The Independent Directors expect Davis Advisors to employ a disciplined, company-specific, research-driven, businesslike, long-term investment philosophy.

The Independent Directors recognized Davis Advisors’ (a) efforts to minimize transaction costs by generally having a long-term time horizon and low portfolio turnover; (b) record of generally producing satisfactory results over longer-term periods; (c) efforts towards fostering healthy investor behavior by, among other things, providing informative and substantial educational material; and (d) efforts to promote shareholder interests by actively speaking out on corporate governance issues.

35

DAVIS VARIABLE ACCOUNT FUND, INC. Director Approval of Advisory Agreements – (Continued)

Reasons the Independent Directors Approved Continuation of the Advisory Agreements – (Continued)

The Independent Directors reviewed (a) comparative fee and expense information for other funds, as selected and analyzed by a nationally recognized independent service provider; (b) information regarding fees charged by Davis Advisors to other advisory clients, including funds which it sub-advises and private accounts, as well as the differences in the services provided to such other clients; and (c) the fee schedules of each of the Funds, including an assessment of competitive fee schedules.

Effective July 1, 2009, Davis Advisors voluntarily and permanently reduced all management fee breakpoints above 0.55% to 0.55%. The former fee schedule for each Fund was a flat 0.75%.  Each Fund now has a flat fee of 0.55%, resulting in a fee which the Independent Directors noted was both lower than under its previous schedule and lower than the average fees of their peer groups as determined by an independent service provider.

The Independent Directors reviewed the fixed management fee for each Fund and the profitability of each Fund to Davis Advisors, the extent to which economies of scale might be realized if any of the Funds’ net assets increased, and whether the fixed fee reflected those potential economies of scale. The Independent Directors considered the nature, quality, and extent of the services being provided to each Fund and the costs incurred by Davis Advisors in providing such services. The Independent Directors considered various potential benefits that Davis Advisors may receive in connection with the services it provides under the Advisory Agreements with the Funds, including a review of portfolio brokerage practices. The Independent Directors noted that Davis Advisors does not use client commissions to pay for publications that are ava ilable to the general public or for third-party research services.

Davis Value Portfolio

The Independent Directors noted that Davis Value Portfolio had out-performed its benchmark, the Standard & Poor’s 500® Index, over the one- and ten-year time periods and under-performed over the three- and five-year time periods, all ended February 28, 2010. The Fund out-performed the average performance of its peer group as determined by an independent service provider over the one-, five-, and ten-year time periods and under-performed over the three-year time period, all ended December 31, 2009. The Independent Directors noted that the Fund out-performed the Standard & Poor’s 500® Index in 5 of the 6 rolling five calendar year time frames, and its p eer group in all of the 6 rolling five calendar year time frames ended December 31, 2009. The Fund out-performed both the Index and its peers in the 1 rolling ten calendar year time frame ended December 31, 2009.

The Independent Directors also considered the total expense ratio for Davis Value Portfolio, noting that the expenses were reasonable and below the average ratios of its peer group as determined by an independent service provider.

Davis Financial Portfolio

The Independent Directors noted that Davis Financial Portfolio had out-performed its benchmark, the Standard & Poor’s 500® Index, over the one- and ten-year time periods and under-performed over the three- and five-year time periods, all ended February 28, 2010. The Fund out-performed the average performance of its peer group as determined by an independent service provider over the one-, three-, five-, and ten-year time periods ended December 31, 2009. The Independent Directors noted that the Fund out-performed the Standard & Poor’s 500® Index in 3 of the 6 rolling five calendar year time frames, and its peer group in all of the 6 rolling five calend ar year time frames ended December 31, 2009. The Fund out-performed both the Index and its peers in the 1 rolling ten calendar year time frame ended December 31, 2009.

The Independent Directors also considered the total expense ratio for Davis Financial Portfolio, noting that the expenses were reasonable and below the average ratios of its peer group as determined by an independent service provider.

36

DAVIS VARIABLE ACCOUNT FUND, INC. Director Approval of Advisory Agreements – (Continued)

Davis Real Estate Portfolio

The Independent Directors noted that Davis Real Estate Portfolio had under-performed its benchmark, the Wilshire U.S. Real Estate Securities Index, over the one-, three-, five-, and ten-year time periods ended February 28, 2010. The Independent Directors also noted that the Fund had taken on less risk, as measured by the standard deviation, than the Index over the one-, three-, and five-year time periods ended February 28, 2010. The Fund out-performed the average performance of its peer group as determined by an independent service provider over the one-year time period and under-performed over the three-, five-, and ten-year time periods, all ended December 31, 2009. The Independent Directors noted that the Fund out-performed the Wilshire U.S. Real Estate Securities Index in 1 of the 6 rolling five calendar year time frames, and its p eer group in 4 of the 6 rolling five calendar year time frames ended December 31, 2009. The Fund under-performed both the Index and its peers in the 1 rolling ten calendar year time frame ended December 31, 2009.

The Independent Directors also considered the total expense ratio for Davis Real Estate Portfolio, noting that the expenses were reasonable and within the range of the ratios of its peer group as determined by an independent service provider.

Approval of Advisory Agreements

The Independent Directors concluded that Davis Advisors had provided Davis Value Portfolio, Davis Financial Portfolio, and Davis Real Estate Portfolio and their shareholders a reasonable level of both investment and non-investment services. The Independent Directors further concluded that shareholders have received a significant benefit from Davis Advisors’ shareholder oriented approach, as well as the execution of its investment discipline.

The Independent Directors determined that the advisory fees for Davis Value Portfolio, Davis Financial Portfolio, and Davis Real Estate Portfolio were reasonable in light of the nature, quality and extent of the services being provided to the Funds, the costs incurred by Davis Advisors in providing such service, and in comparison to the range of the average advisory fees of their peer groups as determined by an independent service provider. The Independent Directors found that the terms of the Advisory Agreements are fair and reasonable and that continuation of the Advisory Agreements was in the best interest of each Fund and their shareholders. The Independent Directors and the full Board of Directors therefore voted to continue the Advisory Agreements.

37

DAVIS VARIABLE ACCOUNT FUND, INC. Fund Information

Portfolio Proxy Voting Policies and Procedures

The Funds have adopted Portfolio Proxy Voting Policies and Procedures under which the Funds vote proxies relating to securities held by the Funds.  A description of the Funds’ Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Funds toll-free at 1-800-279-0279, (ii) on the Funds’ website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

In addition, the Funds are required to file Form N-PX, with their complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year.  The Funds’ Form N-PX filing is available (i) without charge, upon request, by calling the Funds toll-free at 1-800-279-0279, (ii) on the Funds’ website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

Form N-Q

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Funds’ Form N-Q is available without charge, upon request, by calling 1-800-279-0279 or on the Funds’ website at www.davisfunds.com or on the SEC’s website at www.sec.gov.  The Funds’ Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

38

DAVIS VARIABLE ACCOUNT FUND, INC. Directors and Officers

For the purposes of their service as directors to the Davis Funds, the business address for each of the directors is 2949 E. Elvira Road, Suite 101, Tucson, AZ 85756. Each Director serves until their retirement, resignation, death or removal. Subject to exceptions and exemptions, which may be granted by the Independent Directors, Directors must retire at the close of business on the last day of the calendar year in which the Director attains age seventy-four (74).

Name (birthdate) Position(s) Held With Fund Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years Number of Portfolios in Fund Complex Overseen by Director Other Directorships Held by Director

Independent Directors

Marc P. Blum (09/09/42)	Director	Director since 1986	Chief Executive Officer, World Total Return Fund, LLLP; of Counsel to Gordon, Feinblatt, Rothman, Hoffberger and Hollander, LLC (law firm).	13	Director, Legg Mason Investment Counsel & Trust Company N.A. (asset management company) and Rodney Trust Company (Delaware).
John S. Gates, Jr. (08/02/53)	Director	Director since 2007	Chairman and Chief Executive Officer of PortaeCo LLC, a private investment company (beginning in 2006); Co-founder of CenterPoint Properties Trust (REIT); Co-chairman and Chief Executive Officer for 22 years (until 2006).	13	Director, DCT Industrial Trust (REIT).
Thomas S. Gayner (12/16/61)	Director/ Chairman	Director since 2004	Executive Vice President and Chief Investment Officer, Markel Corporation (insurance company).	13	Director, Washington Post Co. (publishing company); Director, Colfax Corp. (engineering and manufacturer of pumps and fluid handling equipment).
G. Bernard Hamilton (03/18/37)	Director	Director since 1978	Managing General Partner, Avanti Partners, L.P. (investment partnership), retired 2005.	13	none
Samuel H. Iapalucci (07/19/52)	Director	Director since 2006	Former Executive Vice President and Chief Financial Officer, CH2M-HILL Companies, Ltd. (engineering).	13	Director, Trow Global Holdings Inc. (engineering & consulting).
Robert P. Morgenthau (03/22/57)	Director	Director since 2002	Chairman, NorthRoad Capital Management, LLC (investment management firm) since June 2002.	13	none
Christian R. Sonne (05/06/36)	Director	Director since 1990	General Partner, Tuxedo Park Associates (land holding and development firm).	13	none
Marsha Williams (03/28/51)	Director	Director since 1999	Senior Vice President and Chief Financial Officer, Orbitz Worldwide, Inc. (travel-services provider) since 2007; former Executive Vice President and Chief Financial Officer, Equity Office Properties Trust (REIT).	13	Director, Modine Manufacturing, Inc. (heat transfer technology); Director, Chicago Bridge & Iron Company, N.V. (industrial construction and engineering); Director, Fifth Third Bancorp (diversified financial services).

39

DAVIS VARIABLE ACCOUNT FUND, INC. Directors and Officers – (Continued)

Name (birthdate) Position(s) Held With Fund Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years Number of Portfolios in Fund Complex Overseen by Director Other Directorships Held by Director

Inside Directors*

Christopher C. Davis (07/13/65) Director Director since 1997 President or Vice President of each Davis Fund, Selected Fund, and Clipper Fund; Chairman, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser, including sole member of the Adviser’s general partner, Davis Investments, LLC; Employee of Shelby Cullom Davis & Co. (registered broker/dealer). 10 Director, Davis New York Venture Fund, Inc. (consisting of four portfolios); Director, the Selected Funds (consisting of three portfolios) since 1998; Director, Washington Post Co. (publishing company).

*      Christopher C. Davis owns partnership units (directly, indirectly, or both) of the Adviser and is considered to be an “interested person” of the Funds as defined in the Investment Company Act of 1940.

Officers

Christopher C. Davis (born 07/13/65, Davis Funds officer since 1997). See description in the section on Inside Directors.

Andrew A. Davis (born 06/25/63, Davis Funds officer since 1997). President or Vice President of each of the Davis Funds (consisting of 13 portfolios) and Selected Funds (consisting of three portfolios); President, Davis Selected Advisers, L.P., serves as an executive officer in certain companies affiliated with the Adviser; Director of Davis Series, Inc. (consisting of six portfolios) and the Selected Funds (consisting of three portfolios).

Kenneth C. Eich (born 08/14/53, Davis Funds officer since 1997). Executive Vice President and Principal Executive Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Chief Operating Officer, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Douglas A. Haines (born 03/04/71, Davis Funds officer since 2004). Vice President, Treasurer, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President and Director of Fund Accounting, Davis Selected Advisers, L.P.

Sharra L. Haynes (born 09/25/66, Davis Funds officer since 1997). Vice President, Chief Compliance Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President and Chief Compliance Officer, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Thomas D. Tays (born 03/07/57, Davis Funds officer since 1997). Vice President and Secretary of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President, Chief Legal Officer and Secretary, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Arthur Don (born 09/24/53, Davis Funds officer since 1991). Assistant Secretary (for clerical purposes only) of each of the Davis Funds and Selected Funds; Shareholder, Greenberg Traurig, LLP (law firm); counsel to the Independent Directors and the Davis Funds.

40

DAVIS VARIABLE ACCOUNT FUND, INC.

Investment Adviser

Davis Selected Advisers, L.P. (Doing business as “Davis Advisors”)

2949 East Elvira Road, Suite 101

Tucson, Arizona 85756

(800) 279-0279

Distributor

Davis Distributors, LLC

2949 East Elvira Road, Suite 101

Tucson, Arizona 85756

Transfer Agent

Boston Financial Data Services, Inc.

c/o The Davis Funds

P.O. Box 8406

Boston, Massachusetts 02266-8406

Custodian

State Street Bank and Trust Co.

One Lincoln Street

Boston, Massachusetts 02111

Counsel

Greenberg Traurig, LLP

77 West Wacker Drive, Suite 3100

Chicago, Illinois 60601

Independent Registered Public Accounting Firm

KPMG LLP

707 Seventeenth Street, Suite 2700

Denver, Colorado 80202

For more information about Davis Variable Account Fund, Inc., including management fee, charges, and expenses, see the current prospectus, which must precede or accompany this report.  The Funds’ Statement of Additional Information contains additional information about the Funds’ Directors and is available without charge upon request by calling 1-800-279-0279 and on the Funds’ website at www.davisfunds.com.  Quarterly Fact sheets are available on the Funds’ website at www.davisfunds.com.

41

DAVIS VALUE PORTFOLIO Table of Contents

Management's Discussion of Fund Performance	2
Fund Overview	4
Expense Example	5
Schedule of Investments	6
Statement of Assets and Liabilities	11
Statement of Operations	12
Statements of Changes in Net Assets	13
Notes to Financial Statements	14
Financial Highlights	19
Director Approval of Advisory Agreements	20
Fund Information	22
Directors and Officers	23

This Semi-Annual Report is authorized for use by existing shareholders.  Prospective shareholders must receive a current Davis Value Portfolio prospectus, which contains more information about investment strategies, risks, charges, and expenses.  Please read the prospectus carefully before investing or sending money.

Shares of the Davis Value Portfolio are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.

DAVIS VALUE PORTFOLIO Management’s Discussion of Fund Performance

Performance Overview

Davis Value Portfolio delivered a negative return on net asset value of 7.16% for the six-month period ended June 30, 2010. Over the same time period, the Standard & Poor’s 500® Index(“Index”) declined 6.65%. Every sector1 within the Index delivered negative returns over the period. The sectorswithin the Index that turned in the strongest (but still negative) performance over the six-month period were industrials, consumer discretionary, and consumer staples. The sectors within the Index that turned in the weakest performance over the six-month period were materials, energy, and information technology.

Factors Impacting the Portfolio’s Performance

The Portfolio had more invested in financials than any other sector over the six-month period. Financial companies were the most important contributor2 relative to the Index. The Portfolio’s financial companies out-performed the corresponding sector within the Index (down 2% versus down 4% for the Index) and had a higher relative average weighting (29% versus 16% for the Index). Berkshire Hathaway3, Progressive, and Hang Lung Group were among the most important contributors to performance. Bank of New York Mellon and Julius Baer Group were among the most important detractors from performance.

Energy companies were the most important detractors from performance. The Portfolio’s energy companies out-performed the corresponding sector within the Index (down 10% versus down 12% for the Index), but had a higher relative average weighting (16% versus 11% for the Index) in this weaker performing sector. EOG Resources was among the most important contributors to performance. Devon Energy, Transocean, and China Coal Energy were among the most important detractors from performance.

Information technology companies were the second most important detractors from performance. The Portfolio’s information technology companies under-performed the corresponding sector within the Index (down 16% versus down 10% for the Index) and had a lower relative average weighting (7% versus 19% for the Index). Microsoft and Google were among the most important detractors from performance.

The Portfolio’s consumer discretionary companies were significant detractors from performance relative to the Index. The Portfolio’s consumer discretionary companies under-performed the corresponding sector within the Index (down 11% versus down 2% for the Index) and had a lower relative average weighting (7% versus 10% for the Index) in this stronger performing sector.

Other important contributors to performance included Express Scripts and Hershey.  Other important detractors from performance included Pfizer and Costco Wholesale.

The Portfolio ended the six-month period with approximately 15% of its net assets invested in foreign companies. As a whole these companies under-performed the domestic companies held by the Portfolio.

Davis Value Portfolio’s investment objective is long-term growth of capital.  There can be no assurance that the Portfolio will achieve its objective. Davis Value Portfolio’s principal risks are: market risk, company risk, financial services risk, foreign country risk, small- and medium-capitalization risk, fees and expenses risk, and headline risk. See the prospectus for a full description of each risk.

1     The companies included in the Standard & Poor’s 500® Index are divided into ten sectors.  One or more industry groups make up a sector.

2     A company’s or sector’s contribution to or detraction from the Portfolio’s performance is a product both of its appreciation or depreciation and its weighting within the portfolio.  For example, a 5% holding that rises 20% has twice as much impact as a 1% holding that rises 50%.

3     This Management Discussion of Fund Performance discusses a number of individual companies.  The information provided in this report does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security.  The Schedule of Investments lists the Portfolio’s holdings of each company discussed.

2

DAVIS VALUE PORTFOLIO Management’s Discussion of Fund Performance – (Continued)

Comparison of a $10,000 investment in Davis Value Portfolio versus the Standard & Poor’s 500® Indexover 10 years for an investment made on June 30, 2000

Average Annual Total Return for periods ended June 30, 2010

Fund & Benchmark Index	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Value Portfolio	15.34%	(1.13)%	0.67%	1.47%	0.62%	0.62%
Standard & Poor’s 500® Index	14.43%	(0.79)%	(1.59)%	(0.87)%

The Standard & Poor’s 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.  Investments cannot be made directly in the Index.

The performance data for Davis Value Portfolio contained in this report represents past performance and assumes that all distributions were reinvested, and should not be considered as an indication of future performance from an investment in the Portfolio today.  The investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed.  Portfolio performance changes over time and current performance may be higher or lower than stated.  The operating expense ratio may vary in future years.  For more current information please call Davis Funds Investor Services at 1-800-279-0279.

Portfolio performance numbers are net of all Portfolio operating expenses, but do not include any insurance charges imposed by your insurance company’s separate account.  If performance included the effect of these additional charges, the return would be lower.

3

DAVIS VALUE PORTFOLIO	Fund Overview
	June 30, 2010 (Unaudited)

Portfolio Composition		Industry Weightings
(% of Fund’s Net Assets)		(% of Long Term Portfolio)
			Fund	S&P 500®
Common Stock (U.S.)	74.70%	Energy	17.19%	10.75%
Common Stock (Foreign)	15.25%	Diversified Financials	12.19%	7.74%
Corporate Bonds	0.55%	Insurance	11.58%	3.98%
Convertible Bonds (Foreign)	0.16%	Health Care	11.02%	12.09%
Convertible Bonds (U.S.)	0.09%	Food & Staples Retailing	8.05%	2.53%
Short Term Investments	3.90%	Information Technology	6.55%	18.76%
Other Assets & Liabilities	5.35%	Food, Beverage & Tobacco	6.19%	6.18%
	100.00%	Materials	6.12%	3.44%
		Banks	4.81%	3.20%
		Commercial & Professional Services	2.62%	0.64%
		Retailing	2.55%	3.46%
		Transportation	2.44%	1.93%
		Media	2.31%	3.14%
		Household & Personal Products	1.94%	2.82%
		Automobiles & Components	1.75%	0.64%
		Other	1.47%	10.94%
		Capital Goods	1.22%	7.76%
			100.00%	100.00%

Top 10 Holdings

(% of Fund’s Net Assets)

Occidental Petroleum Corp.	Energy	4.63%
Costco Wholesale Corp.	Food & Staples Retailing	4.41%
Wells Fargo & Co.	Commercial Banks	4.37%
American Express Co.	Consumer Finance	4.23%
EOG Resources, Inc.	Energy	3.97%
Berkshire Hathaway Inc., Class A	Property & Casualty Insurance	3.73%
Devon Energy Corp.	Energy	2.97%
CVS Caremark Corp.	Food & Staples Retailing	2.90%
Merck & Co., Inc.	Pharmaceuticals, Biotechnology & Life Sciences	2.87%
Loews Corp.	Multi-line Insurance	2.63%

4

DAVIS VALUE PORTFOLIO Expense Example (Unaudited)

Example

As a shareholder of the Fund, you incur ongoing costs only, including advisory and administrative fees and other Fund expenses. The Expense Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for the Fund is for the six-month period ended June 30, 2010. Please note that the Expense Example is general and does not reflect charges imposed by your insurance company’s separate account or account specific costs, which may increase your total costs of investing in the Fund. If these charges or account specific costs were included in the Expense Example , the expenses would have been higher.

Actual Expenses

The information represented in the row entitled “Actual” provides information about actual account values and actual expenses.  You may use the information in this row, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The information represented in the row entitled “Hypothetical” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.  You may use this information to compare the ongoing costs of investing in the Fund and other funds.  To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the information in the row entitled “Hypothetical” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning	Ending	Expenses Paid
	Account Value	Account Value	During Period*
	(01/01/10)	(06/30/10)	(01/01/10-06/30/10)
Actual	$1,000.00	$928.37	$2.96
Hypothetical	$1,000.00	$1,021.72	$3.11

Hypothetical assumes 5% annual return before expenses.

* Expenses are equal to the Fund’s annualized operating expense ratio (0.62%)**, multiplied by the average account valueover the period, multiplied by 181/365 (to reflect the one-half year period).

** The expense ratio reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.  

5

DAVIS VALUE PORTFOLIO	Schedule of Investments
	June 30, 2010 (Unaudited)

Shares					Security			Value (Note 1)
COMMON STOCK – (89.95%)
	CONSUMER DISCRETIONARY – (5.63%)
		Automobiles & Components – (1.04%)
	225,000		Harley-Davidson, Inc.			$	5,001,750
		Consumer Durables & Apparel – (0.15%)
	20,299		Hunter Douglas NV  (Netherlands)				741,388
		Consumer Services – (0.02%)
	6,963		H&R Block, Inc.				109,249
		Media – (2.10%)
	117,070		Grupo Televisa S.A., ADR  (Mexico)				2,038,189
	8,506		Liberty Media - Starz, Series A  *				440,441
	296,325		News Corp., Class A				3,545,528
	130,600		Walt Disney Co.				4,113,900
							10,138,058
		Retailing – (2.32%)
	3,260		Amazon.com, Inc.  *				356,318
	167,915		Bed Bath & Beyond Inc.  *				6,225,449
	175,000		CarMax, Inc.  *				3,482,500
	107,765		Liberty Media Corp. - Interactive, Series A  *				1,132,071
							11,196,338
				Total Consumer Discretionary			27,186,783
	CONSUMER STAPLES – (14.69%)
		Food & Staples Retailing – (7.31%)
	388,390		Costco Wholesale Corp.				21,293,482
	477,398		CVS Caremark Corp.				13,997,309
							35,290,791
		Food, Beverage & Tobacco – (5.62%)
	111,940		Coca-Cola Co.				5,610,433
	99,233		Diageo PLC, ADR  (United Kingdom)				6,225,878
	141,621		Heineken Holding NV  (Netherlands)				5,173,724
	33,060		Hershey Co.				1,584,566
	39,065		Mead Johnson Nutrition Co.				1,957,938
	15,100		Nestle S.A.  (Switzerland)				728,104
	92,290		Philip Morris International Inc.				4,230,574
	60,000		Unilever NV, NY Shares  (Netherlands)				1,639,200
							27,150,417
		Household & Personal Products – (1.76%)
	31,800		Natura Cosmeticos S.A.  (Brazil)				704,709
	130,040		Procter & Gamble Co.				7,799,799
							8,504,508
				Total Consumer Staples			70,945,716
	ENERGY – (15.60%)
	324,800		Canadian Natural Resources Ltd.  (Canada)				10,793,104
	2,659,900		China Coal Energy Co. - H  (China)				3,309,571
	2,632		ConocoPhillips				129,205
	235,230		Devon Energy Corp.				14,330,212
	194,830		EOG Resources, Inc.				19,165,427
	289,560		Occidental Petroleum Corp.				22,339,554
	290,000		OGX Petroleo e Gas Participacoes S.A.  (Brazil)*				2,686,316

6

DAVIS VALUE PORTFOLIO	Schedule of Investments – (Continued)
	June 30, 2010 (Unaudited)

Shares						Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	ENERGY – (CONTINUED)
	4,100			Schlumberger Ltd.			$	226,894
	51,504			Transocean Ltd.  *				2,386,180
					Total Energy			75,366,463
	FINANCIALS – (26.63%)
		Banks – (4.37%)
			Commercial Banks – (4.37%)
	823,824			Wells Fargo & Co.				21,089,894
		Diversified Financials – (11.06%)
			Capital Markets – (5.85%)
	90,220			Ameriprise Financial, Inc.				3,259,649
	454,000			Bank of New York Mellon Corp.				11,209,260
	116,400			Brookfield Asset Management Inc., Class A  (Canada)				2,632,968
	221,460			GAM Holding Ltd.  (Switzerland)*				2,393,212
	18,660			Goldman Sachs Group, Inc.				2,449,498
	221,460			Julius Baer Group Ltd.  (Switzerland)				6,314,397
								28,258,984
			Consumer Finance – (4.23%)
	515,119			American Express Co.				20,450,225
			Diversified Financial Services – (0.98%)
	14,068			JPMorgan Chase & Co.				515,029
	148,230			Moody's Corp.				2,952,742
	17,900			Visa Inc., Class A				1,266,425
								4,734,196
								53,443,405
		Insurance – (10.51%)
			Multi-line Insurance – (3.21%)
	5,130			Fairfax Financial Holdings Ltd.  (Canada)				1,889,584
	2,490			Fairfax Financial Holdings Ltd., 144A  (Canada)(a)(b)				911,936
	381,190			Loews Corp.				12,697,439
								15,498,959
			Property & Casualty Insurance – (6.30%)
	150			Berkshire Hathaway Inc., Class A  *				18,000,000
	1,390			Markel Corp.  *				472,600
	638,720			Progressive Corp. (Ohio)				11,956,838
								30,429,438
			Reinsurance – (1.00%)
	100,907			Transatlantic Holdings, Inc.				4,839,500
								50,767,897
		Real Estate – (0.69%)
	623,000			Hang Lung Group Ltd.  (Hong Kong)				3,317,761
					Total Financials			128,618,957
	HEALTH CARE – (10.00%)
		Health Care Equipment & Services – (3.08%)
	57,900			Baxter International Inc.				2,353,056
	63,800			Becton, Dickinson and Co.				4,314,156
	7,350			Cardinal Health, Inc.				247,034
	17,950			CareFusion Corp.  *				407,465

7

DAVIS VALUE PORTFOLIO	Schedule of Investments – (Continued)
	June 30, 2010 (Unaudited)

Shares					Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	HEALTH CARE – (CONTINUED)
		Health Care Equipment & Services – (Continued)
	160,960		Express Scripts, Inc.  *			$	7,569,144
							14,890,855
		Pharmaceuticals, Biotechnology & Life Sciences – (6.92%)
	197,680		Johnson & Johnson				11,674,981
	395,855		Merck & Co., Inc.				13,843,049
	553,600		Pfizer Inc.				7,894,336
							33,412,366
				Total Health Care			48,303,221
	INDUSTRIALS – (5.69%)
		Capital Goods – (1.10%)
	111,180		ABB Ltd., ADR  (Switzerland)				1,921,190
	96,934		Tyco International Ltd.				3,414,985
							5,336,175
		Commercial & Professional Services – (2.38%)
	53,500		D&B Corp.				3,590,920
	350,897		Iron Mountain Inc.				7,881,147
							11,472,067
		Transportation – (2.21%)
	1,482,352		China Merchants Holdings International Co., Ltd.  (China)				4,874,758
	1,097,000		China Shipping Development Co. Ltd. - H  (China)				1,383,925
	466,804		Cosco Pacific Ltd.  (China)				553,296
	26,355		Kuehne & Nagel International AG  (Switzerland)				2,712,951
	63,000		LLX Logistica S.A.  (Brazil)*				256,886
	15,710		United Parcel Service, Inc., Class B				893,742
							10,675,558
				Total Industrials			27,483,800
	INFORMATION TECHNOLOGY – (5.95%)
		Semiconductors & Semiconductor Equipment – (1.49%)
	307,500		Texas Instruments Inc.				7,158,600
		Software & Services – (2.19%)
	210,600		Activision Blizzard, Inc.				2,210,247
	8,500		Google Inc., Class A  *				3,781,650
	199,410		Microsoft Corp.				4,587,427
							10,579,324
		Technology Hardware & Equipment – (2.27%)
	139,550		Agilent Technologies, Inc.  *				3,967,406
	161,870		Hewlett-Packard Co.				7,005,734
							10,973,140
				Total Information Technology			28,711,064
	MATERIALS – (5.39%)
	81,830		BHP Billiton PLC  (United Kingdom)				2,121,733
	42,380		Martin Marietta Materials, Inc.				3,594,248
	36,900		Monsanto Co.				1,705,518
	11,354		Potash Corp. of Saskatchewan Inc.  (Canada)				979,169
	10,800		Praxair, Inc.				820,692
	41,205		Rio Tinto PLC  (United Kingdom)				1,809,493
	503,895		Sealed Air Corp.				9,936,809

8

DAVIS VALUE PORTFOLIO	Schedule of Investments – (Continued)
	June 30, 2010 (Unaudited)

Shares/Principal									Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	MATERIALS – (CONTINUED)
	256,750				Sino-Forest Corp.  (Canada)*					$	3,649,079
	8,900				Sino-Forest Corp., 144A  (Canada)*(a)(b)						126,492
	29,790				Vulcan Materials Co.						1,305,696
								Total Materials			26,048,929
	TELECOMMUNICATION SERVICES – (0.37%)
	37,700				America Movil SAB de C.V., Series L, ADR  (Mexico)						1,790,750
								Total Telecommunication Services			1,790,750
					TOTAL COMMON STOCK – (Identified cost $344,964,079)						434,455,683
CONVERTIBLE BONDS – (0.25%)
	MATERIALS – (0.16%)
$	736,000				Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13   (Canada) (c)						754,860
								Total Materials			754,860
	TELECOMMUNICATION SERVICES – (0.09%)
	400,000				Level 3 Communications, Inc., Conv. Sr. Notes, 15.00%, 01/15/13    (c)						453,000
								Total Telecommunication Services			453,000
					TOTAL CONVERTIBLE BONDS – (Identified cost $1,136,000)						1,207,860
CORPORATE BONDS – (0.55%)
	CONSUMER DISCRETIONARY – (0.55%)
		Automobiles & Components – (0.55%)
	2,000,000				Harley-Davidson, Inc., Sr. Notes, 15.00%, 02/01/14    (c)						2,651,690
					TOTAL CORPORATE BONDS – (Identified cost $2,000,000)						2,651,690
SHORT TERM INVESTMENTS – (3.90%)
	3,323,000				Banc of America Securities LLC Joint Repurchase Agreement,
						0.03%, 07/01/10, dated 06/30/10, repurchase value of $3,323,003
						(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.00%, 12/08/10-07/15/20, total market value $3,389,460)					3,323,000
	4,848,000				Goldman, Sachs & Co. Joint Repurchase Agreement,
						0.01%, 07/01/10, dated 06/30/10, repurchase value of $4,848,001
						(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.05%, 08/30/10-01/26/15, total market value $4,944,960)					4,848,000
	10,632,000				Mizuho Securities USA Inc. Joint Repurchase Agreement,
						0.14%, 07/01/10, dated 06/30/10, repurchase value of $10,632,041
						(collateralized by: U.S. Government agency mortgages in a pooled cash account, 2.421%-6.229%, 09/01/19-07/01/40, total market value $10,844,640)					10,632,000
					TOTAL SHORT TERM INVESTMENTS – (Identified cost $18,803,000)						18,803,000
				Total Investments – (94.65%) – (Identified cost $366,903,079) – (d)							457,118,233
				Other Assets Less Liabilities – (5.35%)							25,863,305
							Net Assets – (100.00%)			$	482,981,538
	ADR: American Depositary Receipt
	*		Non-Income producing security.

9

DAVIS VALUE PORTFOLIO	Schedule of Investments – (Continued)
	June 30, 2010 (Unaudited)

	(a)	These securities are subject to Rule 144A.  The Board of Directors of the Fund has determined that there is sufficient liquidity in these securities to realize current valuations.  These securities amounted to $1,038,428 or 0.22% of the Fund's net assets as of June 30, 2010.
	(b)	Restricted Security – See Note 7 of the Notes to Financial Statements.
	(c)	Illiquid Security – See Note 7 of the Notes to Financial Statements.
	(d)	Aggregate cost for federal income tax purposes is $368,524,063.  At June 30, 2010 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:
			Unrealized appreciation		$	104,121,499
			Unrealized depreciation			(15,527,329)
				Net unrealized appreciation	$	88,594,170
See Notes to Financial Statements

10

DAVIS VALUE PORTFOLIO	Statement of Assets and Liabilities
	At June 30, 2010 (Unaudited)

ASSETS:
Investments in securities at value* (see accompanying Schedule of Investments)			$	457,118,233
Cash				6,640
Cash - foreign currencies**				168,794
Receivables:
	Capital stock sold			25,342,035
	Dividends and interest			797,344
	Investment securities sold			153,565
Prepaid expenses				2,683
		Total assets		483,589,294
LIABILITIES:
Payables:
	Capital stock redeemed			298,587
Accrued management fee				248,911
Other accrued expenses				60,258
		Total liabilities		607,756
NET ASSETS			$	482,981,538
SHARES OUTSTANDING				48,379,052
NET ASSET VALUE, offering, and redemption price per share (Net assets ÷ Shares outstanding)			$	9.98
NET ASSETS CONSIST OF:
Par value of shares of capital stock			$	48,379
Additional paid-in capital				420,135,917
Undistributed net investment income				2,674,377
Accumulated net realized losses from investments and foreign currency transactions				(30,093,599)
Net unrealized appreciation on investments and foreign currency transactions				90,216,464
		Net Assets	$	482,981,538
*Including:
	Cost of Investments		$	366,903,079
**Cost of cash - foreign currencies				169,401
See Notes to Financial Statements

11

DAVIS VALUE PORTFOLIO	Statement of Operations
	For the six months ended June 30, 2010 (Unaudited)

INVESTMENT INCOME:
Income:
		Dividends*						$	3,842,380
		Interest							279,830
			Total income						4,122,210
Expenses:
		Management fees (Note 3)				$	1,396,996
		Custodian fees					47,566
		Transfer agent fees					8,961
		Audit fees					10,200
		Legal fees					9,150
		Accounting fees (Note 3)					3,252
		Reports to shareholders					30,000
		Directors’ fees and expenses					58,417
		Registration and filing fees					150
		Miscellaneous					9,815
			Total expenses						1,574,507
			Expenses paid indirectly (Note 4)						(8)
				Net expenses					1,574,499
					Net investment income				2,547,711
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
		Investment transactions							11,261,274
		Foreign currency transactions							(293)
Net decrease in unrealized appreciation									(49,199,383)
	Net realized and unrealized loss on investments and foreign currency transactions								(37,938,402)
		Net decrease in net assets resulting from operations						$	(35,390,691)
*Net of foreign taxes withheld as follows								$	64,686
See Notes to Financial Statements

12

DAVIS VALUE PORTFOLIO Statements of Changes in Net Assets

			Six months ended June 30, 2010 (Unaudited)		Year ended December 31, 2009
OPERATIONS:
	Net investment income		$	2,547,711	$	3,837,745
	Net realized gain (loss) from investments and foreign currency transactions			11,260,981		(40,978,639)
	Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions			(49,199,383)		155,373,588
	Net increase (decrease) in net assets resulting from operations			(35,390,691)		118,232,694
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
	Net investment income			–		(3,982,003)
CAPITAL SHARE TRANSACTIONS:
	Net increase (decrease) in net assets resulting from capital share   transactions (Note 5)			(1,031,735)		72,001,466
		Total increase (decrease) in net assets		(36,422,426)		186,252,157
NET ASSETS:
	Beginning of period			519,403,964		333,151,807
	End of period*		$	482,981,538	$	519,403,964
*Including undistributed net investment income of			$	2,674,377	$	126,666
See Notes to Financial Statements

13

DAVIS VALUE PORTFOLIO	Notes to Financial Statements
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Fund is a separate series of Davis Variable Account Fund, Inc. (a Maryland corporation), which is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company.  Only insurance companies, for the purpose of funding variable annuity or variable life insurance contracts, may purchase shares of the Fund.  The following is a summary of significant accounting policies followed by the Fund in the preparation of financial statements.

Security Valuation - The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (“Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business.  Securities listed on the Exchange (and other national exchanges) are valued at the last reported sales price on the day of valuation.  Securities traded in the over-the-counter market (e.g. NASDAQ) and listed securities for which no sale was reported on that date are stated at the average of closing bid and asked prices.  Securities traded on foreign exchanges are valued based upon the last sales price on the principal exchange on which the security is traded prior to the time when the Fund’s assets a re valued.  Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value.  Securities whose values have been materially affected by what Davis Selected Advisers, L.P. (“Davis Advisors” or “Adviser”), the Fund’s investment adviser, identifies as a significant event occurring before the Fund’s assets are valued but after the close of their respective exchanges will be fair valued.  Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Directors.  Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value.  These valuation procedures are reviewed and subject to approval by the Board of Directors.

Value Measurements - Fair value is defined as the price that the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. Various inputs are used to determine the fair value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

        Level 3 – significant unobservable inputs (including Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

14

DAVIS VALUE PORTFOLIO	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Value Measurements – (Continued)

The following is a summary of the inputs used as of June 30, 2010 in valuing the Fund’s investments carried at value:

	Investments in Securities at Value
	Valuation Inputs
			Level 2:		Level 3:
			Other Significant		Significant
	Level 1:		Observable		Unobservable
	Quoted Prices		Inputs*		Inputs		Total
Equity securities:
Consumer discretionary	$	26,445,395	$	741,388	$	–	$	27,186,783
Consumer staples		65,043,888		5,901,828		–		70,945,716
Energy		72,056,892		3,309,571		–		75,366,463
Financials		116,593,587		12,025,370		–		128,618,957
Health care		48,303,221		–		–		48,303,221
Industrials		17,958,870		9,524,930		–		27,483,800
Information technology		28,711,064		–		–		28,711,064
Materials		22,117,703		3,931,226		–		26,048,929
Telecommunication services		1,790,750		–		–		1,790,750
Convertible debt securities		–		1,207,860		–		1,207,860
Corporate debt securities		–		2,651,690		–		2,651,690
Short-term securities		–		18,803,000		–		18,803,000
Total	$	399,021,370	$	58,096,863	$	–	$	457,118,233

*Includes certain securities trading primarily outside the U.S. whose value the Fund adjusted as a result of significant market movements following the close of local trading.

Application of standing Board valuation procedures related to non-U.S. securities triggered transfers between Level 1 and Level 2 assets during the period. During the six months ended June 30, 2010, $6,314,397 transferred from Level 1 to Level 2.

Master Repurchase Agreements - The Fund, along with other affiliated funds, may transfer uninvested cash balances into one or more master repurchase agreement accounts.  These balances are invested in one or more repurchase agreements, secured by U.S. Government securities.  A custodian bank holds securities pledged as collateral for repurchase agreements until the agreements mature.  Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

Currency Translation - The market values of all assets and liabilities denominated in foreign currencies are recorded in the financial statements after translation to the U.S. Dollar based upon the mean between the bid and offered quotations of the currencies against U.S. Dollars on the date of valuation.  The cost basis of such assets and liabilities is determined based upon historical exchange rates.  Income and expenses are translated at average exchange rates in effect as accrued or incurred.

15

DAVIS VALUE PORTFOLIO	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Foreign Currency- The Fund may enter into forward purchases or sales of foreign currencies to hedge certain foreign currency denominated assets and liabilities against declines in market value relative to the U.S. Dollar.  Forward currency contracts are marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss.  When the forward currency contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the forward currency contract at the time it was opened and value at the time it was closed.  Investments in forward currency contracts may expose the Fund to risks resulting from una nticipated movements in foreign currency exchange rates or failure of the counter-party to the agreement to perform in accordance with the terms of the contract.

Reported net realized foreign exchange gains or losses arise from the sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books, and the U.S. Dollar equivalent of the amounts actually received or paid.  Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.  The Fund includes foreign currency gains and losses realized on the sale of investments together with market gains and losses on such investments in the Statement of Operations.

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, including any net realized gains on investments not offset by loss carryovers, to shareholders.  Therefore, no provision for federal income or excise tax is required.  The Adviser has analyzed the Fund’s tax positions taken on federal and state income tax returns for all open tax years and has concluded that as of June 30, 2010, no provision for income tax would be required in the Fund’s financial statements.  The Fund’s federal and state (Arizona and Maryland) income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.  The earliest tax year that remains subject to examination by these jurisdictions is 2006.  At December 31, 2009, the Fund had available for federal income tax purposes unused capital loss carryforwards and post October 2009 capital losses as follows:

	Capital Loss Carryforwards		Post October 2009 Capital Losses
Expiring
12/31/2017	$	30,445,000	$	–
12/31/2018		–		9,789,000
	$	30,445,000	$	9,789,000

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.  Interest income, which includes accretion of discount and amortization of premium, is accrued as earned.

Dividends and Distributions to Shareholders - Dividends and distributions to shareholders are recorded on the ex-dividend date.  Net investment income (loss), net realized gains (losses), and net unrealized appreciation (depreciation) on investments may differ for financial statement and tax purposes primarily due to differing treatments of wash sales, passive foreign investment company shares, and foreign currency transactions.  The character of dividends and distributions made during the fiscal year from net investment income and net realized securities gains may differ from their ultimate characterization for federal income tax purposes.  Also, due to the timing of dividends and distributions, the fiscal year in which amounts ar e distributed may differ from the fiscal year in which income or realized gain was recorded by the Fund.  The Fund adjusts certain components of capital to reflect permanent differences between financial statement amounts and net income and realized gains/losses determined in accordance with income tax rules.

Indemnification - Under the Fund’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund.  In addition, some of the Fund’s contracts with its service providers contain general indemnification clauses.  The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined and the Fund has no historical basis for predicting the likelihood of any such claims.

16

DAVIS VALUE PORTFOLIO	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Use of Estimates in Financial Statements- In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, 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.

Directors Fees and Expenses - The Fund set up a Rabbi Trust to provide for the deferred compensation plan for Independent Directors that enables them to elect to defer receipt of all or a portion of annual fees they are entitled to receive. The value of an eligible Director’s account is based upon years of service and fees paid to each Director during the years of service. The amount paid to the Director by the Trust under the plan will be determined based upon the performance of the Davis Funds.

NOTE 2 - PURCHASES AND SALES OF SECURITIES

Purchases and sales of investment securities (excluding short-term securities) during the six months ended June 30, 2010 were $43,291,970 and $65,205,561, respectively.

NOTE 3 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Advisory fees are paid monthly to the Adviser at an annual rate of 0.55% of the Fund’s average net assets.

Boston Financial Data Services, Inc. (“BFDS”) is the Fund’s primary transfer agent.  State Street Bank and Trust Company (“State Street Bank”) is the Fund’s primary accounting provider.  Fees for such services are included in the custodian fee as State Street Bank also serves as the Fund’s custodian.  The Adviser is also paid for certain accounting services.  The fee paid to the Adviser for these services for the six months ended June 30, 2010 amounted to $3,252.  Certain directors and 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.

NOTE 4 - EXPENSES PAID INDIRECTLY

Under an agreement with State Street Bank, custodian fees are reduced for earnings on cash balances maintained at the custodian by the Fund.  Such reductions amounted to $8 during the six months ended June 30, 2010.

NOTE 5 - CAPITAL STOCK

At June 30, 2010, there were 500 million shares of capital stock ($0.001 par value per share) authorized. Transactions in capital stock were as follows:

	Six months ended			Year ended
	June 30, 2010  (Unaudited)			December 31, 2009
	Shares	Amount		Shares	Amount
Shares sold	4,127,801	$	42,592,134	16,029,614	$	142,471,775
Shares issued in      reinvestment of      distributions	–		–	368,022		3,982,003
	4,127,801		42,592,134	16,397,636		146,453,778
Shares redeemed	(4,051,841)		(43,623,869)	(8,410,774)		(74,452,312)
Net increase (decrease)	75,960	$	(1,031,735)	7,986,862	$	72,001,466

17

DAVIS VALUE PORTFOLIO	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 6 - BANK BORROWINGS

The Fund may borrow up to 5% of its assets from a bank to purchase portfolio securities, or for temporary and emergency purposes.  The purchase of securities with borrowed funds creates leverage in the Fund.  The Fund has entered into an agreement, which enables it to participate with certain other funds managed by the Adviser in an unsecured line of credit with a bank, which permits borrowings up to $50 million, collectively.  Interest is charged based on its borrowings, at a rate equal to the higher of the Federal Funds Rate or the Overnight Libor Rate, plus 1.25%.  The Fund had no borrowings during the six months ended June 30, 2010.

NOTE 7 - ILLIQUID AND RESTRICTED SECURITIES

Securities may be considered illiquid if they lack a readily available market or if valuation has not changed for a certain period of time.  Restricted securities are not registered under the Securities Act of 1933 and may have contractual restrictions on resale.  They are valued under methods approved by the Board of Directors as reflecting fair value.  The aggregate value of illiquid securities amounted to $3,859,550 or 0.80% of the Fund’s net assets as of June 30, 2010.  The aggregate value of restricted securities amounted to $1,038,428 or 0.22% of the Fund’s net assets as of June 30, 2010.

Information regarding illiquid and restricted securities is as follows:

Security	Acquisition Date	Principal	Units/ Shares	Cost per Unit/Share		Valuation per Unit/Share as of June 30, 2010
Fairfax Financial Holdings Ltd., 144A	02/23/10	NA	2,490	$	355.00	$	366.24
Harley-Davidson, Inc., Sr. Notes, 15.00%, 02/01/14	02/03/09	$    2,000,000	20,000	$	100.00	$	132.58
Level 3 Communications, Inc., Conv. Sr. Notes, 15.00%, 01/15/13	12/23/08	$    400,000	4,000	$	100.00	$	113.25
Sino-Forest Corp., Conv. Sr. Notes, 5.00%, 08/01/13	07/17/08	$    736,000	7,360	$	100.00	$	102.56
Sino-Forest Corp., 144A	12/11/09	NA	8,900	$	15.85	$	14.21

NOTE 8 - SUBSEQUENT EVENTS

Fund management has determined that no material events or transactions occurred subsequent to June 30, 2010 and through the issuance of the financial statements, which required adjustments and/or additional disclosure.

18

DAVIS VALUE PORTFOLIO Financial Highlights

The following financial information represents selected data for each share of capital stock outstanding throughout each period:
			Six months ended June 30, 2010				Year ended December 31,
				(Unaudited)			2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period				$	10.75		$	8.26		$	14.48		$	14.58		$	12.77		$	11.78
Income (Loss) from Investment Operations:
	Net Investment Income			0.05			0.08			0.13			0.17			0.11			0.12
	Net Realized and Unrealized Gains (Losses)			(0.82)			2.49			(6.00)			0.51			1.81			0.99
		Total from Investment Operations		(0.77)			2.57			(5.87)			0.68			1.92			1.11
Dividends and Distributions:
	Dividends from Net Investment Income			–			(0.08)			(0.12)			(0.17)			(0.11)			(0.11)
	Distributions from Realized Gains			–			–			(0.23)			(0.61)			–			–
	Distributions in Excess of Net Investment Income			–			–			–			–			–			(0.01)
		Total Dividends and Distributions		–			(0.08)			(0.35)			(0.78)			(0.11)			(0.12)
Net Asset Value, End of Period				$	9.98		$	10.75		$	8.26		$	14.48		$	14.58		$	12.77
Total Returna				(7.16)		%	31.16		%	(40.32)		%	4.64		%	15.00		%	9.44		%
Ratios/Supplemental Data:
	Net Assets, End of Period (in thousands)			$	482,982		$	519,404		$	333,152		$	658,699		$	771,828		$	620,369
	Ratio of Expenses to Average Net Assets:
		Gross		0.62		%b	0.71		%	0.82		%	0.81		%	0.81		%	0.81		%
		Netc		0.62		%b	0.71		%	0.82		%	0.81		%	0.81		%	0.81		%
Ratio of Net Investment Income to Average Net Assets				1.00		%b	0.97		%	0.98		%	1.11		%	0.83		%	0.87		%
Portfolio Turnover Rated				9		%	20		%	17		%	9		%	19		%	14		%

a	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 and do not reflect charges attributable to your insurance company’s separate account.  Inclusion of these charges would reduce the total returns shown.
b	Annualized.
c	The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.
d	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.
See Notes to Financial Statements

19

DAVIS VALUE PORTFOLIO Director Approval of Advisory Agreements

Process of Annual Review

The Board of Directors of the Davis Funds oversees the management of each Davis Fund and, as required by law, determines annually whether to approve the continuance of each Davis Fund’s advisory agreement with Davis Selected Advisers, L.P. and sub-advisory agreement with Davis Selected Advisers-NY, Inc. (jointly “Davis Advisors” and “Advisory Agreements”).

As a part of this process the Independent Directors, with the assistance of counsel for the Independent Directors, prepared questions submitted to Davis Advisors in anticipation of the annual contract review. The Independent Directors were provided with responsive background material (including recent investment performance data), and their counsel provided guidance, prior to a separate contract review meeting held in March 2010 where the Independent Directors reviewed and evaluated all information which they deemed reasonably necessary in the circumstances. Upon completion of this review, the Independent Directors found that the terms of the Advisory Agreements are fair and reasonable and that continuation of the Advisory Agreements was in the best interest of Davis Value Portfolio and its shareholders.

Reasons the Independent Directors Approved Continuation of the Advisory Agreements

The Independent Directors’ determinations were based upon a comprehensive consideration of all information provided to the Independent Directors and were not the result of any single factor. The following facts and conclusions were important, but not exclusive, in the Independent Directors’ recommendation to renew the Advisory Agreements.

The Independent Directors considered not only the investment performance of the Fund, but also the full range and quality of services provided by Davis Advisors to the Fund and its shareholders, including whether it:

1.   Achieves satisfactory investment results over the long-term after all costs;

2.   Handles shareholder transactions, inquiries, requests, and records efficiently and effectively, and provides quality accounting, legal, and compliance services, and oversight of third party service providers; and

3.   Fosters healthy investor behavior.

Davis Advisors is reimbursed a portion of its costs in providing some, but not all, of these services.

A shareholder’s ultimate return is the product of a fund’s results as well as the shareholder’s behavior, specifically in selecting when to invest or redeem. The Independent Directors concluded that, through its actions and communications, Davis Advisors has attempted to have a meaningful, positive impact on investor behavior.

The Independent Directors noted the importance of reviewing quantitative measures, but also recognized that qualitative factors are also important in assessing whether Davis Fund shareholders are likely to be well served by the renewal of the Advisory Agreements. They noted both the value and shortcomings of purely quantitative measures, including the data provided by independent service providers, and concluded that while such measures and data may be informative, the judgment of the Independent Directors must take many factors, including those listed below, into consideration in representing the shareholders of the Davis Funds.  In connection with reviewing comparative performance information, the Independent Directors generally give weight to longer-term measurements.

The Independent Directors expect Davis Advisors to employ a disciplined, company-specific, research-driven, businesslike, long-term investment philosophy.

The Independent Directors recognized Davis Advisors’ (a) efforts to minimize transaction costs by generally having a long-term time horizon and low portfolio turnover; (b) record of generally producing satisfactory results over longer-term periods; (c) efforts towards fostering healthy investor behavior by, among other things, providing informative and substantial educational material; and (d) efforts to promote shareholder interests by actively speaking out on corporate governance issues.

20

DAVIS VALUE PORTFOLIO Director Approval of Advisory Agreements – (Continued)

Reasons the Independent Directors Approved Continuation of the Advisory Agreements – (Continued)

The Independent Directors reviewed (a) comparative fee and expense information for other funds, as selected and analyzed by a nationally recognized independent service provider; (b) information regarding fees charged by Davis Advisors to other advisory clients, including funds which it sub-advises and private accounts, as well as the differences in the services provided to such other clients; and (c) the fee schedule of the Fund, including an assessment of competitive fee schedules.

Effective July 1, 2009, Davis Advisors voluntarily and permanently reduced all management fee breakpoints above 0.55% to 0.55%. The former fee schedule for the Fund was a flat 0.75%.  The Fund now has a flat fee of 0.55%, resulting in a fee which the Independent Directors noted was both lower than under its previous schedule and lower than the average fees of its peer group as determined by an independent service provider.

The Independent Directors reviewed the fixed management fee for the Fund and the profitability of the Fund to Davis Advisors, the extent to which economies of scale might be realized if the Fund’s net assets increased, and whether the fixed fee reflected those potential economies of scale. The Independent Directors considered the nature, quality, and extent of the services being provided to the Fund and the costs incurred by Davis Advisors in providing such services. The Independent Directors considered various potential benefits that Davis Advisors may receive in connection with the services it provides under the Advisory Agreements with the Fund, including a review of portfolio brokerage practices. The Independent Directors noted that Davis Advisors does not use client commissions to pay for publications that are available to t he general public or for third-party research services.

The Independent Directors noted that Davis Value Portfolio had out-performed its benchmark, the Standard & Poor’s 500® Index, over the one- and ten-year time periods and under-performed over the three- and five-year time periods, all ended February 28, 2010. The Fund out-performed the average performance of its peer group as determined by an independent service provider over the one-, five-, and ten-year time periods and under-performed over the three-year time period, all ended December 31, 2009. The Independent Directors noted that the Fund out-performed the Standard & Poor’s 500® Index in 5 of the 6 rolling five calendar year time frames, and its p eer group in all of the 6 rolling five calendar year time frames ended December 31, 2009. The Fund out-performed both the Index and its peers in the 1 rolling ten calendar year time frame ended December 31, 2009.

The Independent Directors also considered the total expense ratio for Davis Value Portfolio, noting that the expenses were reasonable and below the average ratios of its peer group as determined by an independent service provider.

Approval of Advisory Agreements

The Independent Directors concluded that Davis Advisors had provided Davis Value Portfolio and its shareholders a reasonable level of both investment and non-investment services. The Independent Directors further concluded that shareholders have received a significant benefit from Davis Advisors’ shareholder oriented approach, as well as the execution of its investment discipline.

The Independent Directors determined that the advisory fee for Davis Value Portfolio was reasonable in light of the nature, quality, and extent of the services being provided to the Fund, the costs incurred by Davis Advisors in providing such service, and in comparison to the range of the average advisory fees of its peer group as determined by an independent service provider. The Independent Directors found that the terms of the Advisory Agreements are fair and reasonable and that continuation of the Advisory Agreements was in the best interest of the Fund and its shareholders. The Independent Directors and the full Board of Directors therefore voted to continue the Advisory Agreements.

21

DAVIS VALUE PORTFOLIO Fund Information

Portfolio Proxy Voting Policies and Procedures

The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities held by the Fund.  A description of the Fund’s Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1-800-279-0279, (ii) on the Fund’s website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

In addition, the Fund is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year.  The Fund’s Form N-PX filing is available (i) without charge, upon request, by calling the Fund toll-free at 1-800-279-0279, (ii) on the Fund’s website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

Form N-Q

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Fund’s Form N-Q is available without charge, upon request, by calling 1-800-279-0279 or on the Fund’s website at www.davisfunds.com or on the SEC’s website at www.sec.gov.  The Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

22

DAVIS VALUE PORTFOLIO Directors and Officers

For the purposes of their service as directors to the Davis Funds, the business address for each of the directors is 2949 E. Elvira Road, Suite 101, Tucson, AZ 85756. Each Director serves until their retirement, resignation, death or removal. Subject to exceptions and exemptions, which may be granted by the Independent Directors, Directors must retire at the close of business on the last day of the calendar year in which the Director attains age seventy-four (74).

Name (birthdate) Position(s) Held With Fund Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years Number of Portfolios in Fund Complex Overseen by Director Other Directorships Held by Director

Independent Directors

Marc P. Blum (09/09/42)	Director	Director since 1986	Chief Executive Officer, World Total Return Fund, LLLP; of Counsel to Gordon, Feinblatt, Rothman, Hoffberger and Hollander, LLC (law firm).	13	Director, Legg Mason Investment Counsel & Trust Company N.A. (asset management company) and Rodney Trust Company (Delaware).
John S. Gates, Jr. (08/02/53)	Director	Director since 2007	Chairman and Chief Executive Officer of PortaeCo LLC, a private investment company (beginning in 2006); Co-founder of CenterPoint Properties Trust (REIT); Co-chairman and Chief Executive Officer for 22 years (until 2006).	13	Director, DCT Industrial Trust (REIT).
Thomas S. Gayner (12/16/61)	Director/ Chairman	Director since 2004	Executive Vice President and Chief Investment Officer, Markel Corporation (insurance company).	13	Director, Washington Post Co. (publishing company); Director, Colfax Corp. (engineering and manufacturer of pumps and fluid handling equipment).
G. Bernard Hamilton (03/18/37)	Director	Director since 1978	Managing General Partner, Avanti Partners, L.P. (investment partnership), retired 2005.	13	none
Samuel H. Iapalucci (07/19/52)	Director	Director since 2006	Former Executive Vice President and Chief Financial Officer, CH2M-HILL Companies, Ltd. (engineering).	13	Director, Trow Global Holdings Inc. (engineering & consulting).
Robert P. Morgenthau (03/22/57)	Director	Director since 2002	Chairman, NorthRoad Capital Management, LLC (investment management firm) since June 2002.	13	none
Christian R. Sonne (05/06/36)	Director	Director since 1990	General Partner, Tuxedo Park Associates (land holding and development firm).	13	none
Marsha Williams (03/28/51)	Director	Director since 1999	Senior Vice President and Chief Financial Officer, Orbitz Worldwide, Inc. (travel-services provider) since 2007; former Executive Vice President and Chief Financial Officer, Equity Office Properties Trust (REIT).	13	Director, Modine Manufacturing, Inc. (heat transfer technology); Director, Chicago Bridge & Iron Company, N.V. (industrial construction and engineering); Director, Fifth Third Bancorp (diversified financial services).

23

DAVIS VALUE PORTFOLIO Directors and Officers – (Continued)

Name (birthdate) Position(s) Held With Fund Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years Number of Portfolios in Fund Complex Overseen by Director Other Directorships Held by Director

Inside Directors*

Christopher C. Davis (07/13/65) Director Director since 1997 President or Vice President of each Davis Fund, Selected Fund, and Clipper Fund; Chairman, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser, including sole member of the Adviser’s general partner, Davis Investments, LLC; Employee of Shelby Cullom Davis & Co. (registered broker/dealer). 10 Director, Davis New York Venture Fund, Inc. (consisting of four portfolios); Director, the Selected Funds (consisting of three portfolios) since 1998; Director, Washington Post Co. (publishing company).

*      Christopher C. Davis owns partnership units (directly, indirectly, or both) of the Adviser and is considered to be an “interested person” of the Funds as defined in the Investment Company Act of 1940.

Officers

Christopher C. Davis (born 07/13/65, Davis Funds officer since 1997). See description in the section on Inside Directors.

Andrew A. Davis (born 06/25/63, Davis Funds officer since 1997). President or Vice President of each of the Davis Funds (consisting of 13 portfolios) and Selected Funds (consisting of three portfolios); President, Davis Selected Advisers, L.P., serves as an executive officer in certain companies affiliated with the Adviser; Director of Davis Series, Inc. (consisting of six portfolios) and the Selected Funds (consisting of three portfolios).

Kenneth C. Eich (born 08/14/53, Davis Funds officer since 1997). Executive Vice President and Principal Executive Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Chief Operating Officer, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Douglas A. Haines (born 03/04/71, Davis Funds officer since 2004). Vice President, Treasurer, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President and Director of Fund Accounting, Davis Selected Advisers, L.P.

Sharra L. Haynes (born 09/25/66, Davis Funds officer since 1997). Vice President, Chief Compliance Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President and Chief Compliance Officer, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Thomas D. Tays (born 03/07/57, Davis Funds officer since 1997). Vice President and Secretary of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President, Chief Legal Officer and Secretary, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Arthur Don (born 09/24/53, Davis Funds officer since 1991). Assistant Secretary (for clerical purposes only) of each of the Davis Funds and Selected Funds; Shareholder, Greenberg Traurig, LLP (law firm); counsel to the Independent Directors and the Davis Funds.

24

DAVIS VALUE PORTFOLIO

Investment Adviser

Davis Selected Advisers, L.P. (Doing business as “Davis Advisors”)

2949 East Elvira Road, Suite 101

Tucson, Arizona 85756

(800) 279-0279

Distributor

Davis Distributors, LLC

2949 East Elvira Road, Suite 101

Tucson, Arizona 85756

Transfer Agent

Boston Financial Data Services, Inc.

c/o The Davis Funds

P.O. Box 8406

Boston, Massachusetts 02266-8406

Custodian

State Street Bank and Trust Co.

One Lincoln Street

Boston, Massachusetts 02111

Counsel

Greenberg Traurig, LLP

77 West Wacker Drive, Suite 3100

Chicago, Illinois 60601

Independent Registered Public Accounting Firm

KPMG LLP

707 Seventeenth Street, Suite 2700

Denver, Colorado 80202

For more information about Davis Value Portfolio, including management fee, charges, and expenses, see the current prospectus, which must precede or accompany this report.  The Fund’s Statement of Additional Information contains additional information about the Fund’s Directors and is available without charge upon request by calling 1-800-279-0279 and on the Fund’s website at www.davisfunds.com.  Quarterly Fact sheets are available on the Fund’s website at www.davisfunds.com.

25

DAVIS FINANCIAL PORTFOLIO Table of Contents

Management’s Discussion of Fund Performance	2
Fund Overview	4
Expense Example	5
Schedule of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	9
Statements of Changes in Net Assets	10
Notes to Financial Statements	11
Financial Highlights	15
Director Approval of Advisory Agreements	16
Fund Information	18
Directors and Officers	19

This Semi-Annual Report is authorized for use by existing shareholders.  Prospective shareholders must receive a current Davis Financial Portfolio prospectus, which contains more information about investment strategies, risks, charges, and expenses.  Please read the prospectus carefully before investing or sending money.

Shares of the Davis Financial Portfolio are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.

DAVIS FINANCIAL PORTFOLIO Management’s Discussion of Fund Performance

Performance Overview

Davis Financial Portfolio delivered a negative return on net asset value of 7.01% for the six-month period ended June 30, 2010.  Over the same time period, the Standard & Poor’s 500® Index(“Index”) declined 6.65%. The Index’s banking and insurance industry groups1 turned in positive performances, while the diversified financials industry group turned in a negative performance.

Factors Impacting the Portfolio’s Performance

The Portfolio’s financial sector holdings under-performed the corresponding sector within the Index (down 6% versus down 4% for the Index).  The Portfolio had a limited amount of assets invested in other sectors. These non-financial holdings, mostly in energy and industrials, overall detracted2 from performance.

The Portfolio’s diversified financial companies were the largest detractors from performance. The Portfolio’s diversified financialcompanies out-performed the corresponding industry group within the Index (down 8% versus down 10% for the Index). Brookfield Asset Management3, First Marblehead, Oaktree, and JPMorgan Chase were among the most important contributors to performance. Moody’s, Visa, Goldman Sachs, Julius Baer Group, and Bank of New York Mellon were among the most important detractors from performance. The Portfolio no longer owns JPMorgan Chase.

The Portfolio’s insurance companies were the second largest detractors from performance. The Portfolio’s insurance companies under-performed the corresponding industry group within the Index (down 6% versus up 2% for the Index).  Progressive, ACE, and FPIC Insurance Group were the most important contributors to performance. Transatlantic Holdings, Loews, and Everest Re Group were among the most important detractors from performance. The Portfolio no longer owns FPIC Insurance Group.

The Portfolio’s banking companies under-performed the corresponding industry group within the Index (down 1% versus up 3% for the Index).  State Bank of India was among the most important contributors to performance.

The Portfolio ended the six-month period with approximately 27% of its net assets invested in foreign companies. As a whole these companies out-performed the domestic companies held by the Portfolio.

Davis Financial Portfolio’s investment objective is long-term growth of capital.  There can be no assurance that the Portfolio will achieve its objective.  Davis Financial Portfolio’s principal risks are: market risk, company risk, concentrated financial services portfolio risk, foreign country risk, small- and medium-capitalization risk, fees and expenses risk, focused portfolio risk, and headline risk.  See the prospectus for a full description of each risk.

Davis Financial Portfolio concentrates its investments in the financial sector, and it may be subject to greater risks than a portfolio that does not concentrate its investments in a particular sector.  The Portfolio’s investment performance, both good and bad, is expected to reflect the economic performance of the financial sector more than a portfolio that does not concentrate its portfolio.

1     The companies included in the Standard & Poor’s 500® Index are divided into ten sectors.  One or more industry groups make up a sector.

2     A company’s or sector’s contribution to or detraction from the Portfolio’s performance is a product both of its appreciation or depreciation and its weighting within the portfolio.  For example, a 5% holding that rises 20% has twice as much impact as a 1% holding that rises 50%.

3     This Management Discussion of Fund Performance discusses a number of individual companies.  The information provided in this report does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security.  The Schedule of Investments lists the Portfolio’s holdings of each company discussed.

2

DAVIS FINANCIAL PORTFOLIO Management’s Discussion of Fund Performance - (Continued)

Comparison of a $10,000 investment in Davis Financial Portfolio versus the Standard & Poor’s 500® Indexover 10 years for an investment made on June 30, 2000

Average Annual Total Return for periods ended June 30, 2010

Fund & Benchmark Index	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Financial Portfolio	16.40%	(2.68)%	1.15%	1.06%	0.68%	0.68%
Standard & Poor’s 500® Index	14.43%	(0.79)%	(1.59)%	(0.87)%

The Standard & Poor’s 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.  Investments cannot be made directly in the Index.

The performance data for Davis Financial Portfolio contained in this report represents past performance and assumes that all distributions were reinvested, and should not be considered as an indication of future performance from an investment in the Portfolio today.  The investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed.  Portfolio performance changes over time and current performance may be higher or lower than stated.  The operating expense ratio may vary in future years.  For more current information please call Davis Funds Investor Services at 1-800-279-0279.

Portfolio performance numbers are net of all Portfolio operating expenses, but do not include any insurance charges imposed by your insurance company’s separate account.  If performance included the effect of these additional charges, the return would be lower.

Davis Financial Portfolio received a favorable class action settlement from a company that it no longer owns.  This settlement had a material impact on the investment performance of the Portfolio in 2009.  This was a one-time event that is unlikely to be repeated.

3

DAVIS FINANCIAL PORTFOLIO	Fund Overview
	June 30, 2010 (Unaudited)

Portfolio Composition		Industry Weightings
(% of Fund’s Net Assets)		(% of Stock Holdings)
			Fund	S&P 500®
Common Stock (U.S.)	72.31%	Diversified Financials	43.35%	7.74%
Common Stock (Foreign)	27.16%	Insurance	33.34%	3.98%
Short Term Investments	0.51%	Banks	14.90%	3.20%
Other Assets & Liabilities	0.02%	Energy	5.67%	10.75%
	100.00%	Commercial & Professional Services	2.74%	0.64%
		Information Technology	–	18.76%
		Health Care	–	12.09%
		Capital Goods	–	7.76%
		Food, Beverage & Tobacco	–	6.18%
		Other	–	28.90%
			100.00%	100.00%

Top 10 Holdings

(% of Fund’s Net Assets)

American Express Co.	Consumer Finance	10.15%
Transatlantic Holdings, Inc.	Reinsurance	9.16%
State Bank of India Ltd., GDR	Commercial Banks	6.87%
Loews Corp.	Multi-line Insurance	6.72%
Wells Fargo & Co.	Commercial Banks	6.17%
Oaktree Capital Group LLC, Class A	Diversified Financial Services	5.89%
Canadian Natural Resources Ltd.	Energy	5.64%
Markel Corp.	Property & Casualty Insurance	5.17%
Bank of New York Mellon Corp.	Capital Markets	4.90%
Progressive Corp.	Property & Casualty Insurance	3.92%

4

DAVIS FINANCIAL PORTFOLIO Expense Example (Unaudited)

Example

As a shareholder of the Fund, you incur ongoing costs only, including advisory and administrative fees and other Fund expenses. The Expense Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for the Fund is for the six-month period ended June 30, 2010. Please note that the Expense Example is general and does not reflect charges imposed by your insurance company’s separate account or account specific costs, which may increase your total costs of investing in the Fund. If these charges or account specific costs were included in the Expense Example , the expenses would have been higher.

Actual Expenses

The information represented in the row entitled “Actual” provides information about actual account values and actual expenses.  You may use the information in this row, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The information represented in the row entitled “Hypothetical” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.  You may use this information to compare the ongoing costs of investing in the Fund and other funds.  To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the information in the row entitled “Hypothetical” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning	Ending	Expenses Paid
	Account Value	Account Value	During Period*
	(01/01/2010)	(06/30/2010)	(01/01/2010-06/30/2010)
Actual	$1,000.00	$929.86	$3.25
Hypothetical	$1,000.00	$1,021.42	$3.41

Hypothetical assumes 5% annual return before expenses.

* Expenses are equal to the Fund’s annualized operating expense ratio (0.68%)**, multiplied by the average account valueover the period, multiplied by 181/365 (to reflect the one-half year period).

** The expense ratio reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.  

5

DAVIS FINANCIAL PORTFOLIO	Schedule of Investments
	June 30, 2010 (Unaudited)

Shares						Security			Value (Note 1)
COMMON STOCK – (99.47%)
	ENERGY – (5.64%)
	125,000			Canadian Natural Resources Ltd.  (Canada)			$	4,153,750
					Total Energy			4,153,750
	FINANCIALS – (91.10%)
		Banks – (14.82%)
			Commercial Banks – (14.82%)
	20,000			Banco Santander Brasil S.A., ADS  (Brazil)				206,600
	21,600			ICICI Bank Ltd., ADR  (India)				780,624
	50,948			State Bank of India Ltd., GDR  (India)				5,060,851
	14,500			U.S. Bancorp				324,075
	177,500			Wells Fargo & Co.				4,544,000
								10,916,150
		Diversified Financials – (43.12%)
			Capital Markets – (19.28%)
	41,860			Ameriprise Financial, Inc.				1,512,402
	146,200			Bank of New York Mellon Corp.				3,609,678
	100,300			Brookfield Asset Management Inc., Class A  (Canada)				2,268,786
	20,100			Charles Schwab Corp.				285,018
	93,910			GAM Holding Ltd.  (Switzerland)*				1,014,840
	19,520			Goldman Sachs Group, Inc.				2,562,390
	93,910			Julius Baer Group Ltd.  (Switzerland)				2,677,617
	6,060			T. Rowe Price Group Inc.				269,034
								14,199,765
			Consumer Finance – (10.77%)
	188,300			American Express Co.				7,475,510
	194,994			First Marblehead Corp.  *				458,236
								7,933,746
			Diversified Financial Services – (13.07%)
	14,486			Bank of America Corp.				208,164
	69,500			Cielo S.A.  (Brazil)				585,263
	122,000			Moody's Corp.				2,430,240
	126,700			Oaktree Capital Group LLC, Class A  (a)				4,339,475
	62,000			RHJ International  (Belgium)*				459,274
	22,600			Visa Inc., Class A				1,598,950
								9,621,366
								31,754,877
		Insurance – (33.16%)
			Life & Health Insurance – (3.79%)
	42,833			China Life Insurance Co., Ltd., ADR  (China)				2,792,712
			Multi-line Insurance – (6.72%)
	148,600			Loews Corp.				4,949,866
			Property & Casualty Insurance – (10.81%)
	24,600			ACE Ltd.				1,266,408
	11,200			Markel Corp.  *				3,808,000
	154,100			Progressive Corp. (Ohio)				2,884,752
								7,959,160

6

DAVIS FINANCIAL PORTFOLIO	Schedule of Investments – (Continued)
	June 30, 2010 (Unaudited)

Shares/Principal										Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	FINANCIALS – (CONTINUED)
		Insurance – (Continued)
			Reinsurance – (11.84%)
	27,900					Everest Re Group, Ltd.					$	1,973,088
	140,737					Transatlantic Holdings, Inc.						6,749,746
												8,722,834
												24,424,572
									Total Financials			67,095,599
	INDUSTRIALS – (2.73%)
		Commercial & Professional Services – (2.73%)
	29,900					D&B Corp.						2,006,888
									Total Industrials			2,006,888
						TOTAL COMMON STOCK – (Identified cost $64,591,482)						73,256,237
SHORT TERM INVESTMENTS – (0.51%)
$	67,000					Banc of America Securities LLC Joint Repurchase Agreement,
							0.03%, 07/01/10, dated 06/30/10, repurchase value of $67,000
							(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.00%, 12/08/10-07/15/20, total market value $68,340)					67,000
	97,000					Goldman, Sachs & Co. Joint Repurchase Agreement,
							0.01%, 07/01/10, dated 06/30/10, repurchase value of $97,000
							(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.05%, 08/30/10-01/26/15, total market value $98,940)					97,000
	214,000					Mizuho Securities USA Inc. Joint Repurchase Agreement,
							0.14%, 07/01/10, dated 06/30/10, repurchase value of $214,001
							(collateralized by: U.S. Government agency mortgages in a pooled cash account, 2.421%-6.229%, 09/01/19-07/01/40, total market value $218,280)					214,000
						TOTAL SHORT TERM INVESTMENTS – (Identified cost $378,000)						378,000
					Total Investments – (99.98%) – (Identified cost $64,969,482) – (b)							73,634,237
					Other Assets Less Liabilities – (0.02%)							15,530
								Net Assets – (100.00%)			$	73,649,767
	ADR: American Depositary Receipt
	ADS: American Depositary Share
	GDR: Global Depositary Receipt
	*			Non-Income producing security.
	(a)			Illiquid Security – See Note 7 of the Notes to Financial Statements.
	(b)			Aggregate cost for federal income tax purposes is $65,123,027.  At June 30, 2010 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:
					Unrealized appreciation						$	15,419,557
					Unrealized depreciation							(6,908,347)
								Net unrealized appreciation			$	8,511,210
See Notes to Financial Statements

7

DAVIS FINANCIAL PORTFOLIO	Statement of Assets and Liabilities
		At June 30, 2010 (Unaudited)

ASSETS:
Investments in securities at value* (see accompanying Schedule of Investments)			$	73,634,237
Cash				2,736
Receivables:
	Capital stock sold			39,530
	Dividends and interest			174,040
Prepaid expenses				469
		Total assets		73,851,012
LIABILITIES:
Payables:
	Capital stock redeemed			135,240
Accrued management fee				39,573
Other accrued expenses				26,432
		Total liabilities		201,245
NET ASSETS			$	73,649,767
SHARES OUTSTANDING				7,938,202
NET ASSET VALUE, offering, and redemption price per share (Net assets ÷ Shares outstanding)			$	9.28
NET ASSETS CONSIST OF:
Par value of shares of capital stock			$	7,938
Additional paid-in capital				76,172,454
Undistributed net investment income				974,606
Accumulated net realized losses from investments and foreign currency transactions				(12,170,192)
Net unrealized appreciation on investments and foreign currency transactions				8,664,961
		Net Assets	$	73,649,767
*Including:
	Cost of Investments		$	64,969,482
See Notes to Financial Statements

8

DAVIS FINANCIAL PORTFOLIO	Statement of Operations
For the six months ended June 30, 2010 (Unaudited)

INVESTMENT INCOME:
Income:
		Dividends*						$	775,586
		Interest							2,100
			Total income						777,686
Expenses:
		Management fees (Note 3)				$	227,292
		Custodian fees					14,122
		Transfer agent fees					4,127
		Audit fees					9,000
		Legal fees					1,482
		Accounting fees (Note 3)					1,002
		Reports to shareholders					7,550
		Directors’ fees and expenses					11,886
		Registration and filing fees					27
		Miscellaneous					4,675
			Total expenses						281,163
			Expenses paid indirectly (Note 4)						(1)
				Net expenses					281,162
					Net investment income				496,524
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
		Investment transactions							1,241,185
		Foreign currency transactions							(12,061)
Net decrease in unrealized appreciation									(7,482,629)
	Net realized and unrealized loss on investments and foreign currency transactions								(6,253,505)
		Net decrease in net assets resulting from operations						$	(5,756,981)
*Net of foreign taxes withheld as follows								$	18,596
See Notes to Financial Statements

9

DAVIS FINANCIAL PORTFOLIO Statements of Changes in Net Assets

			Six months ended June 30, 2010 (Unaudited)		Year ended December 31, 2009
OPERATIONS:
	Net investment income		$	496,524	$	489,320
	Net realized gain (loss) from investments and foreign currency transactions			1,229,124		(8,123,742)
	Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions			(7,482,629)		34,312,747
	Net increase (decrease) in net assets resulting from operations			(5,756,981)		26,678,325
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
	Net investment income			–		(629,608)
CAPITAL SHARE TRANSACTIONS:
	Net increase (decrease) in net assets resulting from capital share transactions (Note 5)			(8,430,473)		4,467,751
		Total increase (decrease) in net assets		(14,187,454)		30,516,468
NET ASSETS:
	Beginning of period			87,837,221		57,320,753
	End of period*		$	73,649,767	$	87,837,221
*Including undistributed net investment income of			$	974,606	$	478,082
See Notes to Financial Statements

10

DAVIS FINANCIAL PORTFOLIO	Notes to Financial Statements
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Fund is a separate series of Davis Variable Account Fund, Inc. (a Maryland corporation), which is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company.  Only insurance companies, for the purpose of funding variable annuity or variable life insurance contracts, may purchase shares of the Fund.  The following is a summary of significant accounting policies followed by the Fund in the preparation of financial statements.

Security Valuation - The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (“Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business.  Securities listed on the Exchange (and other national exchanges) are valued at the last reported sales price on the day of valuation.  Securities traded in the over-the-counter market (e.g. NASDAQ) and listed securities for which no sale was reported on that date are stated at the average of closing bid and asked prices.  Securities traded on foreign exchanges are valued based upon the last sales price on the principal exchange on which the security is traded prior to the time when the Fund’s assets a re valued.  Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value.  Securities whose values have been materially affected by what Davis Selected Advisers, L.P. (“Davis Advisors” or “Adviser”), the Fund’s investment adviser, identifies as a significant event occurring before the Fund’s assets are valued but after the close of their respective exchanges will be fair valued.  Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Directors.  Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value.  These valuation procedures are reviewed and subject to approval by the Board of Directors.

Value Measurements - Fair value is defined as the price that the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. Various inputs are used to determine the fair value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment

     speeds, credit risk, etc.)

        Level 3 – significant unobservable inputs (including Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used as of June 30, 2010 in valuing the Fund’s investments carried at value:

	Investments in Securities at Value
	Valuation Inputs
			Level 2:		Level 3:
			Other Significant		Significant
	Level 1:		Observable		Unobservable
	Quoted Prices		Inputs*		Inputs		Total
Equity securities:
Energy	$	4,153,750	$	–	$	–	$	4,153,750
Financials		53,543,542		13,552,057		–		67,095,599
Industrials		2,006,888		–		–		2,006,888
Short-term securities		–		378,000		–		378,000
Total	$	59,704,180	$	13,930,057	$	–	$	73,634,237

*Includes certain securities trading primarily outside the U.S. whose value the Fund adjusted as a result of significant market movements following the close of local trading.

Application of standing Board valuation procedures related to non-U.S. securities triggered transfers between Level 1 and Level 2 assets during the period. During the six months ended June 30, 2010, $2,677,617 transferred from Level 1 to Level 2.

11

DAVIS FINANCIAL PORTFOLIO	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Master Repurchase Agreements - The Fund, along with other affiliated funds, may transfer uninvested cash balances into one or more master repurchase agreement accounts.  These balances are invested in one or more repurchase agreements, secured by U.S. Government securities.  A custodian bank holds securities pledged as collateral for repurchase agreements until the agreements mature.  Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

Currency Translation - The market values of all assets and liabilities denominated in foreign currencies are recorded in the financial statements after translation to the U.S. Dollar based upon the mean between the bid and offered quotations of the currencies against U.S. Dollars on the date of valuation.  The cost basis of such assets and liabilities is determined based upon historical exchange rates.  Income and expenses are translated at average exchange rates in effect as accrued or incurred.

Foreign Currency- The Fund may enter into forward purchases or sales of foreign currencies to hedge certain foreign currency denominated assets and liabilities against declines in market value relative to the U.S. Dollar.  Forward currency contracts are marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss.  When the forward currency contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the forward currency contract at the time it was opened and value at the time it was closed.  Investments in forward currency contracts may expose the Fund to risks resulting from una nticipated movements in foreign currency exchange rates or failure of the counter-party to the agreement to perform in accordance with the terms of the contract.

Reported net realized foreign exchange gains or losses arise from the sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends interest, and foreign withholding taxes recorded on the Fund’s books, and the U.S. Dollar equivalent of the amounts actually received or paid.  Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.  The Fund includes foreign currency gains and losses realized on the sale of investments together with market gains and losses on such investments in the Statement of Operations.

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, including any net realized gains on investments not offset by loss carryovers, to shareholders.  Therefore, no provision for federal income or excise tax is required.  The Adviser has analyzed the Fund’s tax positions taken on federal and state income tax returns for all open tax years and has concluded that as of June 30, 2010, no provision for income tax would be required in the Fund’s financial statements.  The Fund’s federal and state (Arizona and Maryland) income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.  The earliest tax year that remains subject to examination by these jurisdictions is 2006. At December 31, 2009, the Fund had available for federal income tax purposes unused capital loss carryforwards and post October 2009 capital losses as follows:

	Capital Loss Carryforwards		Post October 2009  Capital Losses
Expiring
12/31/2016	$	4,739,000	$	–
12/31/2017		8,267,000		–
12/31/2018		–		239,000
	$	13,006,000	$	239,000

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.  Interest income, which includes accretion of discount and amortization of premium, is accrued as earned.

12

DAVIS FINANCIAL PORTFOLIO	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Dividends and Distributions to Shareholders - Dividends and distributions to shareholders are recorded on the ex-dividend date.  Net investment income (loss), net realized gains (losses), and net unrealized appreciation (depreciation) on investments may differ for financial statement and tax purposes primarily due to differing treatments of wash sales, foreign currency transactions, and partnership income.  The character of dividends and distributions made during the fiscal year from net investment income and net realized securities gains may differ from their ultimate characterization for federal income tax purposes.  Also, due to the timing of dividends and distributions, the fiscal year in which amounts are distributed may diffe r from the fiscal year in which income or realized gain was recorded by the Fund.  The Fund adjusts certain components of capital to reflect permanent differences between financial statement amounts and net income and realized gains/losses determined in accordance with income tax rules.

Indemnification - Under the Fund’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund.  In addition, some of the Fund’s contracts with its service providers contain general indemnification clauses.  The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined and the Fund has no historical basis for predicting the likelihood of any such claims.

Use of Estimates in Financial Statements- In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, 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.

Directors Fees and Expenses - The Fund set up a Rabbi Trust to provide for the deferred compensation plan for Independent Directors that enables them to elect to defer receipt of all or a portion of annual fees they are entitled to receive. The value of an eligible Director’s account is based upon years of service and fees paid to each Director during the years of service. The amount paid to the Director under the plan will be determined based upon the performance of the Davis Funds

NOTE 2 - PURCHASES AND SALES OF SECURITIES

Purchases and sales of investment securities (excluding short-term securities) during the six months ended June 30, 2010 were $760,892 and $8,284,312, respectively.

NOTE 3 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Advisory fees are paid monthly to the Adviser at an annual rate of 0.55% of the Fund’s average net assets.

Boston Financial Data Services, Inc. (“BFDS”) is the Fund’s primary transfer agent.  State Street Bank and Trust Company (“State Street Bank”) is the Fund’s primary accounting provider.  Fees for such services are included in the custodian fee as State Street Bank also serves as the Fund’s custodian.  The Adviser is also paid for certain accounting services.  The fee paid to the Adviser for these services for the six months ended June 30, 2010 amounted to $1,002.  Certain directors and 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.

NOTE 4 - EXPENSES PAID INDIRECTLY

Under an agreement with State Street Bank, custodian fees are reduced for earnings on cash balances maintained at the custodian by the Fund.  Such reductions amounted to $1 during the six months ended June 30, 2010.

13

DAVIS FINANCIAL PORTFOLIO	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 5 - CAPITAL STOCK

At June 30, 2010, there were 500 million shares of capital stock ($0.001 par value per share) authorized. Transactions in capital stock were as follows:

	Six months ended			Year ended
	June 30, 2010  (Unaudited)			December 31, 2009
	Shares	Amount		Shares	Amount
Shares sold	870,632	$	8,789,085	3,303,661	$	26,457,753
Shares issued in reinvestment of distributions	–		–	63,087		629,608
	870,632		8,789,085	3,366,748		27,087,361
Shares redeemed	(1,730,799)		(17,219,558)	(2,616,379)		(22,619,610)
Net increase (decrease)	(860,167)	$	(8,430,473)	750,369	$	4,467,751

NOTE 6 - BANK BORROWINGS

The Fund may borrow up to 5% of its assets from a bank to purchase portfolio securities, or for temporary and emergency purposes.  The purchase of securities with borrowed funds creates leverage in the Fund.  The Fund has entered into an agreement, which enables it to participate with certain other funds managed by the Adviser in an unsecured line of credit with a bank, which permits borrowings up to $50 million, collectively.  Interest is charged based on its borrowings, at a rate equal to the higher of the Federal Funds Rate or the Overnight Libor Rate, plus 1.25%.  The Fund had no borrowings during the six months ended June 30, 2010.

NOTE 7 - ILLIQUID SECURITIES

Securities may be considered illiquid if they lack a readily available market or if valuation has not changed for a certain period of time.  The aggregate value of illiquid securities amounted to $4,339,475 or 5.89% of the Fund’s net assets as of June 30, 2010.

Information regarding illiquid securities is as follows:

Security	Acquisition Date	Shares	Cost per Share		Valuation per  Share as of June 30, 2010
Oaktree Capital Group LLC, Class A	05/21/07	126,700	$	23.84	$	34.25

NOTE 8 - SUBSEQUENT EVENTS

Fund management has determined that no material events or transactions occurred subsequent to June 30, 2010 and through the issuance of the financial statements, which required adjustments and/or additional disclosure.

14

DAVIS FINANCIAL PORTFOLIO Financial Highlights

The following financial information represents selected data for each share of capital stock outstanding throughout each period:
			Six months ended June 30, 2010				Year ended December 31,
				(Unaudited)			2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period				$	9.98		$	7.12		$	14.27		$	16.29		$	13.83		$	12.82
Income (Loss) from Investment Operations:
	Net Investment Income			0.07			0.05			0.08			0.17			0.09			0.07
	Net Realized and Unrealized Gains (Losses)			(0.77)			2.88			(6.76)			(1.12)			2.47			1.00
		Total from Investment Operations		(0.70)			2.93			(6.68)			(0.95)			2.56			1.07
Dividends and Distributions:
	Dividends from Net Investment Income			–			(0.07)			–			(0.17)			(0.09)			(0.06)
	Distributions from Realized Gains			–			–			(0.47)			(0.90)			(0.01)			–
		Total Dividends and Distributions		–			(0.07)			(0.47)			(1.07)			(0.10)			(0.06)
Net Asset Value, End of Period				$	9.28		$	9.98		$	7.12		$	14.27		$	16.29		$	13.83
Total Returna				(7.01)		%	41.18		%b	(46.36)		%	(6.05)		%	18.50		%	8.38		%
Ratios/Supplemental Data:
	Net Assets, End of Period (in thousands)			$	73,650		$	87,837		$	57,321		$	116,725		$	155,807		$	124,060
	Ratio of Expenses to Average Net Assets:
		Gross		0.68		%c	0.78		%	0.88		%	0.85		%	0.84		%	0.85		%
		Netd		0.68		%c	0.78		%	0.88		%	0.85		%	0.84		%	0.85		%
Ratio of Net Investment Income to Average Net Assets				1.20		%c	0.67		%	0.73		%	0.97		%	0.66		%	0.52		%
Portfolio Turnover Ratee				1		%	10		%	16		%	17		%	9		%	21		%

a	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 and do not reflect charges attributable to your insurance company’s separate account.  Inclusion of these charges would reduce the total returns shown.
b	Davis Financial Portfolio received a favorable class action settlement from a company that it no longer owns. This settlement had an approximate impact of 0.4% on the investment performance of the Fund in 2009. This was a one-time event that is unlikely to be repeated.
c	Annualized.
d	The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.
e	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.
See Notes to Financial Statements

15

DAVIS FINANCIAL PORTFOLIO Director Approval of Advisory Agreements

Process of Annual Review

The Board of Directors of the Davis Funds oversees the management of each Davis Fund and, as required by law, determines annually whether to approve the continuance of each Davis Fund’s advisory agreement with Davis Selected Advisers, L.P. and sub-advisory agreement with Davis Selected Advisers-NY, Inc. (jointly “Davis Advisors” and “Advisory Agreements”).

As a part of this process the Independent Directors, with the assistance of counsel for the Independent Directors, prepared questions submitted to Davis Advisors in anticipation of the annual contract review. The Independent Directors were provided with responsive background material (including recent investment performance data), and their counsel provided guidance, prior to a separate contract review meeting held in March 2010 where the Independent Directors reviewed and evaluated all information which they deemed reasonably necessary in the circumstances. Upon completion of this review, the Independent Directors found that the terms of the Advisory Agreements are fair and reasonable and that continuation of the Advisory Agreements was in the best interest of Davis Financial Portfolio and its shareholders.

Reasons the Independent Directors Approved Continuation of the Advisory Agreements

The Independent Directors’ determinations were based upon a comprehensive consideration of all information provided to the Independent Directors and were not the result of any single factor. The following facts and conclusions were important, but not exclusive, in the Independent Directors’ recommendation to renew the Advisory Agreements.

The Independent Directors considered not only the investment performance of the Fund, but also the full range and quality of services provided by Davis Advisors to the Fund and its shareholders, including whether it:

1.   Achieves satisfactory investment results over the long-term after all costs;

2.   Handles shareholder transactions, inquiries, requests, and records efficiently and effectively, and provides quality accounting, legal, and compliance services, and oversight of third party service providers; and

3.   Fosters healthy investor behavior.

Davis Advisors is reimbursed a portion of its costs in providing some, but not all, of these services.

A shareholder’s ultimate return is the product of a fund’s results as well as the shareholder’s behavior, specifically in selecting when to invest or redeem. The Independent Directors concluded that, through its actions and communications, Davis Advisors has attempted to have a meaningful, positive impact on investor behavior.

The Independent Directors noted the importance of reviewing quantitative measures, but also recognized that qualitative factors are also important in assessing whether Davis Fund shareholders are likely to be well served by the renewal of the Advisory Agreements. They noted both the value and shortcomings of purely quantitative measures, including the data provided by independent service providers, and concluded that while such measures and data may be informative, the judgment of the Independent Directors must take many factors, including those listed below, into consideration in representing the shareholders of the Davis Funds.  In connection with reviewing comparative performance information, the Independent Directors generally give weight to longer-term measurements.

The Independent Directors expect Davis Advisors to employ a disciplined, company-specific, research-driven, businesslike, long-term investment philosophy.

The Independent Directors recognized Davis Advisors’ (a) efforts to minimize transaction costs by generally having a long-term time horizon and low portfolio turnover; (b) record of generally producing satisfactory results over longer-term periods; (c) efforts towards fostering healthy investor behavior by, among other things, providing informative and substantial educational material; and (d) efforts to promote shareholder interests by actively speaking out on corporate governance issues.

16

DAVIS FINANCIAL PORTFOLIO Director Approval of Advisory Agreements – (Continued)

Reasons the Independent Directors Approved Continuation of the Advisory Agreements – (Continued)

The Independent Directors reviewed (a) comparative fee and expense information for other funds, as selected and analyzed by a nationally recognized independent service provider; (b) information regarding fees charged by Davis Advisors to other advisory clients, including funds which it sub-advises and private accounts, as well as the differences in the services provided to such other clients; and (c) the fee schedule of the Fund, including an assessment of competitive fee schedules.

Effective July 1, 2009, Davis Advisors voluntarily and permanently reduced all management fee breakpoints above 0.55% to 0.55%. The former fee schedule for the Fund was a flat 0.75%.  The Fund now has a flat fee of 0.55%, resulting in a fee which the Independent Directors noted was both lower than under its previous schedule and lower than the average fees of its peer group as determined by an independent service provider.

The Independent Directors reviewed the fixed management fee for the Fund and the profitability of the Fund to Davis Advisors, the extent to which economies of scale might be realized if the Fund’s net assets increased, and whether the fixed fee reflected those potential economies of scale. The Independent Directors considered the nature, quality, and extent of the services being provided to the Fund and the costs incurred by Davis Advisors in providing such services. The Independent Directors considered various potential benefits that Davis Advisors may receive in connection with the services it provides under the Advisory Agreements with the Fund, including a review of portfolio brokerage practices. The Independent Directors noted that Davis Advisors does not use client commissions to pay for publications that are available to t he general public or for third-party research services.

The Independent Directors noted that Davis Financial Portfolio had out-performed its benchmark, the Standard & Poor’s 500® Index, over the one- and ten-year time periods and under-performed over the three- and five-year time periods, all ended February 28, 2010. The Fund out-performed the average performance of its peer group as determined by an independent service provider over the one-, three-, five-, and ten-year time periods ended December 31, 2009. The Independent Directors noted that the Fund out-performed the Standard & Poor’s 500® Index in 3 of the 6 rolling five calendar year time frames, and its peer group in all of the 6 rolling five calend ar year time frames ended December 31, 2009. The Fund out-performed both the Index and its peers in the 1 rolling ten calendar year time frame ended December 31, 2009.

The Independent Directors also considered the total expense ratio for Davis Financial Portfolio, noting that the expenses were reasonable and below the average ratios of its peer group as determined by an independent service provider

Approval of Advisory Agreements

The Independent Directors concluded that Davis Advisors had provided Davis Financial Portfolio and its shareholders a reasonable level of both investment and non-investment services. The Independent Directors further concluded that shareholders have received a significant benefit from Davis Advisors’ shareholder oriented approach, as well as the execution of its investment discipline.

The Independent Directors determined that the advisory fee for Davis Financial Portfolio was reasonable in light of the nature, quality and extent of the services being provided to the Fund, the costs incurred by Davis Advisors in providing such service, and in comparison to the range of the average advisory fees of its peer group as determined by an independent service provider. The Independent Directors found that the terms of the Advisory Agreements are fair and reasonable and that continuation of the Advisory Agreements was in the best interest of the Fund and its shareholders. The Independent Directors and the full Board of Directors therefore voted to continue the Advisory Agreements.

17

DAVIS FINANCIAL PORTFOLIO Fund Information

Portfolio Proxy Voting Policies and Procedures

The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities held by the Fund.  A description of the Fund’s Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1-800-279-0279, (ii) on the Fund’s website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

In addition, the Fund is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year.  The Fund’s Form N-PX filing is available (i) without charge, upon request, by calling the Fund toll-free at 1-800-279-0279, (ii) on the Fund’s website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

Form N-Q

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Fund’s Form N-Q is available without charge, upon request, by calling 1-800-279-0279 or on the Fund’s website at www.davisfunds.com or on the SEC’s website at www.sec.gov.  The Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

18

DAVIS FINANCIAL PORTFOLIO Directors and Officers

For the purposes of their service as directors to the Davis Funds, the business address for each of the directors is 2949 E. Elvira Road, Suite 101, Tucson, AZ 85756. Each Director serves until their retirement, resignation, death or removal. Subject to exceptions and exemptions, which may be granted by the Independent Directors, Directors must retire at the close of business on the last day of the calendar year in which the Director attains age seventy-four (74).

Name (birthdate) Position(s) Held With Fund Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years Number of Portfolios in Fund Complex Overseen by Director Other Directorships Held by Director

Independent Directors

Marc P. Blum (09/09/42)	Director	Director since 1986	Chief Executive Officer, World Total Return Fund, LLLP; of Counsel to Gordon, Feinblatt, Rothman, Hoffberger and Hollander, LLC (law firm).	13	Director, Legg Mason Investment Counsel & Trust Company N.A. (asset management company) and Rodney Trust Company (Delaware).
John S. Gates, Jr. (08/02/53)	Director	Director since 2007	Chairman and Chief Executive Officer of PortaeCo LLC, a private investment company (beginning in 2006); Co-founder of CenterPoint Properties Trust (REIT); Co-chairman and Chief Executive Officer for 22 years (until 2006).	13	Director, DCT Industrial Trust (REIT).
Thomas S. Gayner (12/16/61)	Director/ Chairman	Director since 2004	Executive Vice President and Chief Investment Officer, Markel Corporation (insurance company).	13	Director, Washington Post Co. (publishing company); Director, Colfax Corp. (engineering and manufacturer of pumps and fluid handling equipment).
G. Bernard Hamilton (03/18/37)	Director	Director since 1978	Managing General Partner, Avanti Partners, L.P. (investment partnership), retired 2005.	13	none
Samuel H. Iapalucci (07/19/52)	Director	Director since 2006	Former Executive Vice President and Chief Financial Officer, CH2M-HILL Companies, Ltd. (engineering).	13	Director, Trow Global Holdings Inc. (engineering & consulting).
Robert P. Morgenthau (03/22/57)	Director	Director since 2002	Chairman, NorthRoad Capital Management, LLC (investment management firm) since June 2002.	13	none
Christian R. Sonne (05/06/36)	Director	Director since 1990	General Partner, Tuxedo Park Associates (land holding and development firm).	13	none
Marsha Williams (03/28/51)	Director	Director since 1999	Senior Vice President and Chief Financial Officer, Orbitz Worldwide, Inc. (travel-services provider) since 2007; former Executive Vice President and Chief Financial Officer, Equity Office Properties Trust (REIT).	13	Director, Modine Manufacturing, Inc. (heat transfer technology); Director, Chicago Bridge & Iron Company, N.V. (industrial construction and engineering); Director, Fifth Third Bancorp (diversified financial services).

19

DAVIS FINANCIAL PORTFOLIO Directors and Officers – (Continued)

Name (birthdate) Position(s) Held With Fund Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years Number of Portfolios in Fund Complex Overseen by Director Other Directorships Held by Director

Inside Directors*

Christopher C. Davis (07/13/65) Director Director since 1997 President or Vice President of each Davis Fund, Selected Fund, and Clipper Fund; Chairman, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser, including sole member of the Adviser’s general partner, Davis Investments, LLC; Employee of Shelby Cullom Davis & Co. (registered broker/dealer). 10 Director, Davis New York Venture Fund, Inc. (consisting of four portfolios); Director, the Selected Funds (consisting of three portfolios) since 1998; Director, Washington Post Co. (publishing company).

*      Christopher C. Davis owns partnership units (directly, indirectly, or both) of the Adviser and is considered to be an “interested person” of the Funds as defined in the Investment Company Act of 1940.

Officers

Christopher C. Davis (born 07/13/65, Davis Funds officer since 1997). See description in the section on Inside Directors.

Andrew A. Davis (born 06/25/63, Davis Funds officer since 1997). President or Vice President of each of the Davis Funds (consisting of 13 portfolios) and Selected Funds (consisting of three portfolios); President, Davis Selected Advisers, L.P., serves as an executive officer in certain companies affiliated with the Adviser; Director of Davis Series, Inc. (consisting of six portfolios) and the Selected Funds (consisting of three portfolios).

Kenneth C. Eich (born 08/14/53, Davis Funds officer since 1997). Executive Vice President and Principal Executive Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Chief Operating Officer, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Douglas A. Haines (born 03/04/71, Davis Funds officer since 2004). Vice President, Treasurer, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President and Director of Fund Accounting, Davis Selected Advisers, L.P.

Sharra L. Haynes (born 09/25/66, Davis Funds officer since 1997). Vice President, Chief Compliance Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President and Chief Compliance Officer, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Thomas D. Tays (born 03/07/57, Davis Funds officer since 1997). Vice President and Secretary of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President, Chief Legal Officer and Secretary, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Arthur Don (born 09/24/53, Davis Funds officer since 1991). Assistant Secretary (for clerical purposes only) of each of the Davis Funds and Selected Funds; Shareholder, Greenberg Traurig, LLP (law firm); counsel to the Independent Directors and the Davis Funds.

DAVIS FINANCIAL PORTFOLIO

Investment Adviser

Davis Selected Advisers, L.P. (Doing business as “Davis Advisors”)

2949 East Elvira Road, Suite 101

Tucson, Arizona 85756

(800) 279-0279

Distributor

Davis Distributors, LLC

2949 East Elvira Road, Suite 101

Tucson, Arizona 85756

Transfer Agent

Boston Financial Data Services, Inc.

c/o The Davis Funds

P.O. Box 8406

Boston, Massachusetts 02266-8406

Custodian

State Street Bank and Trust Co.

One Lincoln Street

Boston, Massachusetts 02111

Counsel

Greenberg Traurig, LLP

77 West Wacker Drive, Suite 3100

Chicago, Illinois 60601

Independent Registered Public Accounting Firm

KPMG LLP

707 Seventeenth Street, Suite 2700

Denver, Colorado 80202

For more information about Davis Financial Portfolio, including management fee, charges, and expenses, see the current prospectus, which must precede or accompany this report.  The Fund’s Statement of Additional Information contains additional information about the Fund’s Directors and is available without charge upon request by calling 1-800-279-0279 and on the Fund’s website at www.davisfunds.com.  Quarterly Fact sheets are available on the Fund’s website at www.davisfunds.com.

20

DAVIS REAL ESTATE PORTFOLIO Table of Contents

Management’s Discussion of Fund Performance	2
Fund Overview	4
Expense Example	5
Schedule of Investments	6
Statement of Assets and Liabilities	9
Statement of Operations	10
Statements of Changes in Net Assets	11
Notes to Financial Statements	12
Financial Highlights	16
Director Approval of Advisory Agreements	17
Fund Information	19
Directors and Officers	20

This Semi-Annual Report is authorized for use by existing shareholders.  Prospective shareholders must receive a current Davis Real Estate Portfolio prospectus, which contains more information about investment strategies, risks, charges, and expenses.  Please read the prospectus carefully before investing or sending money.

Shares of the Davis Real Estate Portfolio are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.

DAVIS REAL ESTATE PORTFOLIO Management’s Discussion of Fund Performance

Performance Overview

Davis Real Estate Portfolio delivered a total return on net asset value of 4.03% for the six-month period ended June 30, 2010. Over the same time period, the Wilshire U.S. Real Estate Securities Index(“Index”) returned 5.40%. Industrial REITs was the only sub-industry1 within the Index to deliver a negative return, while specialized REITs, residential REITs, and real estate operating companies turned in the strongest performances.

Factors Impacting the Portfolio’s Performance

Residential REITs were the most important contributors2 to the Portfolio’s performance, but the most important detractors from performance relative to the Index. The Portfolio’s residential REITs under-performed the corresponding sub-industry within the Index (up 10% versus up 15% for the Index) and had a lower relative average weighting (11% versus 16% for the Index). Essex Property Trust3 and AvalonBay were among the most important contributors to performance. UDR was among the most important detractors from performance. The Portfolio no longer owns AvalonBay.

Specialized REITs were the second most important contributors to performance. The Portfolio’s specialized REITs out-performed the corresponding sub-industry within the Index (up 10% versus up 7% for the Index) and had a lower relative average weighting (11% versus 26% for the Index). Host Hotels & Resorts, Ventas, Cogdell Spencer, and Entertainment Properties were among the most important contributors to performance. The Portfolio no longer owns Host Hotels & Resorts.

The Portfolio had more invested in office REITs than in any other sub-industry and they were the third most important contributors to performance. The Portfolio’s office REITs out-performed the corresponding sector within the Index (up 6% versus up 3% for the Index) and had a higher relative average weighting (29% versus 17% for the Index). Digital Realty and Boston Properties were among the most important contributors to performance. Highwoods Properties and Alexandria Real Estate were among the most important detractors from performance.

Forest City Enterprises was the single most important detractor from the Portfolio’s performance. The Portfolio’s large investment in Forest City Enterprises (approximately 5%) together with its poor investment performance (down 4%) accounted for the majority of the Portfolio’s under-performance relative to the Index.

Industrial REITs were also important detractors from performance. The Portfolio’s industrial REITs out-performed the corresponding sub-industry within the Index (down 8% versus down 14% for the Index) and had approximately the same average weighting (both approximately 5%). DCT Industrial Trust and ProLogis were among the most important detractors from performance. The Portfolio no longer owns ProLogis.

Davis Real Estate Portfolio’s investment objective is total return through a combination of growth and income.  There can be no assurance that the Portfolio will achieve its objective.  Davis Real Estate Portfolio’s principal risks are: market risk, company risk, concentrated real estate services portfolio risk, focused portfolio risk, foreign country risk, small- and medium-capitalization risk, fees and expenses risk, and headline risk.  See the prospectus for a full description of each risk.

Davis Real Estate Portfolio concentrates its investments in the real estate sector, and it may be subject to greater risks than a portfolio that does not concentrate its investments in a particular sector.  The Portfolio’s investment performance, both good and bad, is expected to reflect the economic performance of the real estate sector much more than a portfolio that does not concentrate its portfolio.

Davis Real Estate Portfolio is allowed to focus its investments in fewer companies, and it may be subject to greater risks than a more diversified portfolio that is not allowed to focus its investments in a few companies.  Should the portfolio manager determine that it is prudent to focus the Portfolio’s portfolio in a few companies, the Portfolio’s investment performance, both good and bad, is expected to reflect the economic performance of its more focused portfolio.

1The companies included in the Wilshire U.S. Real Estate Securities Index are divided into eight sub-industries.

2   A company’s or sector’s contribution to or detraction from the Portfolio’s performance is a product both of its appreciation or depreciation and its weighting within the portfolio.  For example, a 5% holding that rises 20% has twice as much impact as a 1% holding that rises 50%.

3   This Management Discussion of Fund Performance discusses a number of individual companies.  The information provided in this report does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security.  The Schedule of Investments lists the Portfolio’s holdings of each company discussed.

2

DAVIS REAL ESTATE PORTFOLIO Management’s Discussion of Fund Performance – (Continued)

Comparison of a $10,000 investment in Davis Real Estate Portfolio versus the Standard & Poor’s 500® Index and the Wilshire U.S. Real Estate Securities Indexover 10 years for an investment made on June 30, 2000

Average Annual Total Return for periods ended June 30, 2010

Fund & Benchmark Indices	1-Year	5-Year	10-Year	Since Fund’s Inception (07/01/99)	Gross Expense Ratio	Net Expense Ratio
Davis Real Estate Portfolio	45.66%	(2.11)%	7.63%	6.96%	0.84%	0.84%
Standard & Poor’s 500® Index	14.43%	(0.79)%	(1.59)%	(0.87)%
Wilshire U.S. Real Estate Securities Index	56.07%	(0.47)%	9.49%	9.03%

The Standard & Poor’s 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.  Investments cannot be made directly in the Index.

The Wilshire U.S. Real Estate Securities Index is a broad measure of the performance of publicly traded real estate securities. It reflects no deduction for fees or expenses.  Investments cannot be made directly in the Index.

The performance data for Davis Real Estate Portfolio contained in this report represents past performance and assumes that all distributions were reinvested, and should not be considered as an indication of future performance from an investment in the Portfolio today.  The investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed.  Portfolio performance changes over time and current performance may be higher or lower than stated.  The operating expense ratio may vary in future years.  For more current information please call Davis Funds Investor Services at 1-800-279-0279.

Portfolio performance numbers are net of all Portfolio operating expenses, but do not include any insurance charges imposed by your insurance company’s separate account.  If performance included the effect of these additional charges, the return would be lower.

3

DAVIS REAL ESTATE PORTFOLIO	Fund Overview
	June 30, 2010 (Unaudited)

Portfolio Composition		Industry Weightings
(% of Fund’s Net Assets)		(% of Long Term Portfolio)
				Wilshire U.S. Real Estate Securities Index
Common Stock	83.66%
Preferred Stock	8.73%		Fund
Convertible Bonds	2.89%	Office REITs	39.23%	16.63%
Short Term Investments	4.54%	Retail REITs	13.30%	23.89%
Other Assets & Liabilities	0.18%	Residential REITs	11.66%	17.01%
	100.00%	Specialized REITs	8.92%	25.71%
		Telecommunication Services	7.95%	–
		Real Estate Operating Companies	5.58%	2.06%
		Diversified REITs	5.56%	8.61%
		Industrial REITs	4.92%	5.42%
		Other	2.88%	0.67%
			100.00%	100.00%

Top 10 Holdings

(% of Fund’s Net Assets)

Corporate Office Properties Trust	Office REITs	5.63%
Digital Realty Trust, Inc.	Office REITs	5.44%
American Campus Communities, Inc.	Residential REITs	5.29%
Alexandria Real Estate Equities, Inc.	Office REITs	5.01%
Forest City Enterprises, Inc., Class A	Real Estate Operating Companies	4.95%
Essex Property Trust, Inc.	Residential REITs	4.10%
Federal Realty Investment Trust	Retail REITs	3.72%
Douglas Emmett, Inc.	Office REITs	3.66%
Vornado Realty Trust	Diversified REITs	3.59%
DCT Industrial Trust Inc.	Industrial REITs	3.55%

4

DAVIS REAL ESTATE PORTFOLIO Expense Example (Unaudited)

Example

As a shareholder of the Fund, you incur ongoing costs only, including advisory and administrative fees and other Fund expenses. The Expense Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for the Fund is for the six-month period ended June 30, 2010. Please note that the Expense Example is general and does not reflect charges imposed by your insurance company’s separate account or account specific costs, which may increase your total costs of investing in the Fund. If these charges or account specific costs were included in the Expense Example , the expenses would have been higher.

Actual Expenses

The information represented in the row entitled “Actual” provides information about actual account values and actual expenses.  You may use the information in this row, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The information represented in the row entitled “Hypothetical” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.  You may use this information to compare the ongoing costs of investing in the Fund and other funds.  To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the information in the row entitled “Hypothetical” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning	Ending	Expenses Paid
	Account Value	Account Value	During Period*
	(01/01/10)	(06/30/10)	(01/01/10-06/30/10)
Actual	$1,000.00	$1,040.26	$4.25
Hypothetical	$1,000.00	$1,020.63	$4.21

Hypothetical assumes 5% annual return before expenses.

* Expenses are equal to the Fund’s annualized operating expense ratio (0.84%)**, multiplied by the average account valueover the period, multiplied by 181/365 (to reflect the one-half year period).

** The expense ratio reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.  

5

DAVIS REAL ESTATE PORTFOLIO	Schedule of Investments
	June 30, 2010 (Unaudited)

Shares							Security			Value (Note 1)
COMMON STOCK – (83.66%)
	FINANCIALS – (73.35%)
		Real Estate – (73.35%)
			Real Estate Investment Trusts (REITs) – (68.40%)
				Diversified REITs – (5.30%)
	59,914				Cousins Properties, Inc.			$	403,821
	11,570				Vornado Realty Trust				844,031
									1,247,852
				Industrial REITs – (3.55%)
	184,900				DCT Industrial Trust Inc.				835,748
				Office REITs – (28.41%)
	18,600				Alexandria Real Estate Equities, Inc.				1,178,682
	10,900				Boston Properties, Inc.				777,606
	35,090				Corporate Office Properties Trust				1,324,998
	22,200				Digital Realty Trust, Inc.				1,280,496
	60,500				Douglas Emmett, Inc.				860,310
	33,200				DuPont Fabros Technology Inc.				815,392
	16,200				Highwoods Properties, Inc.				449,712
									6,687,196
				Residential REITs – (10.71%)
	45,600				American Campus Communities, Inc.				1,244,424
	9,890				Essex Property Trust, Inc.				964,671
	16,300				UDR, Inc.				311,819
									2,520,914
				Retail REITs – (11.93%)
	21,460				CBL & Associates Properties, Inc.				266,962
	12,450				Federal Realty Investment Trust				874,862
	23,600				Regency Centers Corp.				811,840
	6,292				Simon Property Group, Inc.				508,079
	9,160				Taubman Centers, Inc.				344,691
									2,806,434
				Specialized REITs – (8.50%)
	60,583				Cogdell Spencer, Inc.				409,541
	13,400				Entertainment Properties Trust				510,138
	16,400				LaSalle Hotel Properties				337,348
	15,820				Ventas, Inc.				742,749
									1,999,776
									16,097,920
			Real Estate Management & Development – (4.95%)
				Real Estate Operating Companies – (4.95%)
	102,980				Forest City Enterprises, Inc., Class A  *				1,165,734
									17,263,654
						Total Financials			17,263,654
	INDUSTRIALS – (2.74%)
		Transportation – (2.74%)
	21,700				Alexander & Baldwin, Inc.				646,226
						Total Industrials			646,226
	TELECOMMUNICATION SERVICES – (7.57%)
	12,300				American Tower Corp., Class A  *				547,350
	17,350				Crown Castle International Corp.  *				646,461

6

DAVIS REAL ESTATE PORTFOLIO	Schedule of Investments – (Continued)
	June 30, 2010 (Unaudited)

Shares/Principal								Security			Value (Note 1)
COMMON STOCK – (CONTINUED)
	TELECOMMUNICATION SERVICES – (CONTINUED)
	17,300				SBA Communications Corp., Class A  *				$	588,373
							Total Telecommunication Services			1,782,184
					TOTAL COMMON STOCK – (Identified cost $19,867,470)					19,692,064
PREFERRED STOCK – (8.73%)
	FINANCIALS – (8.73%)
		Real Estate – (8.73%)
			Real Estate Investment Trusts (REITs) – (8.73%)
				Industrial REITs – (1.14%)
	11,900				AMB Property Corp., 6.75%, Series M					267,809
				Office REITs – (6.44%)
	33,272				Alexandria Real Estate Equities, Inc., 7.00%, Series D, Conv. Pfd.					716,386
	5,700				Digital Realty Trust, Inc., 5.50%, Series D, Cum. Conv. Pfd.					197,363
	5,014				Digital Realty Trust, Inc., 8.50%, Series A					126,917
	19,930				SL Green Realty Corp., 7.625%, Series C					475,380
										1,516,046
				Residential REITs – (0.40%)
	2,000				Equity Residential, 7.00%, Series E, Cum. Conv. Pfd.					93,312
				Retail REITs – (0.75%)
	8,280				CBL & Associates Properties, Inc., 7.375%, Series D					176,799
							Total Financials			2,053,966
					TOTAL PREFERRED STOCK – (Identified cost $1,072,511)					2,053,966
CONVERTIBLE BONDS – (2.89%)
	FINANCIALS – (2.89%)
		Real Estate – (2.89%)
			Real Estate Investment Trusts (REITs) – (2.52%)
				Office REITs – (2.52%)
$	344,000				Digital Realty Trust, Inc., 144A Conv. Sr. Notes, 5.50%, 04/15/29    (a)					492,995
	104,000				SL Green Realty Corp., 144A Conv. Sr. Notes, 3.00%, 03/30/27    (a)					101,400
										594,395
			Real Estate Management & Development – (0.37%)
				Real Estate Operating Companies – (0.37%)
	80,000				Forest City Enterprises, Inc., 144A Conv. Sr. Notes, 5.00%, 10/15/16    (a)					86,000
							Total Financials			680,395
					TOTAL CONVERTIBLE BONDS – (Identified cost $526,520)					680,395
SHORT TERM INVESTMENTS – (4.54%)
	189,000				Banc of America Securities LLC Joint Repurchase Agreement,
						0.03%, 07/01/10, dated 06/30/10, repurchase value of $189,000
						(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.00%, 12/08/10-07/15/20, total market value $192,780)				189,000
	275,000				Goldman, Sachs & Co. Joint Repurchase Agreement,
						0.01%, 07/01/10, dated 06/30/10, repurchase value of $275,000
						(collateralized by: U.S. Government agency obligations in a pooled cash account, 0.00%-5.05%, 08/30/10-01/26/15, total market value $280,500)				275,000

7

DAVIS REAL ESTATE PORTFOLIO	Schedule of Investments – (Continued)
	June 30, 2010 (Unaudited)

Principal							Security			Value (Note 1)
SHORT TERM INVESTMENTS – (CONTINUED)
$	604,000			Mizuho Securities USA Inc. Joint Repurchase Agreement,
					0.14%, 07/01/10, dated 06/30/10, repurchase value of $604,002
					(collateralized by: U.S. Government agency mortgages in a pooled cash account, 2.421%-6.229%, 09/01/19-07/01/40, total market value $616,080)			$	604,000
				TOTAL SHORT TERM INVESTMENTS – (Identified cost $1,068,000)					1,068,000
			Total Investments – (99.82%) – (Identified cost $22,534,501) – (b)						23,494,425
			Other Assets Less Liabilities – (0.18%)						42,028
						Net Assets – (100.00%)		$	23,536,453
	*	Non-Income producing security.
	(a)	These securities are subject to Rule 144A.  The Board of Directors of the Fund has determined that there is sufficient liquidity in these securities to realize current valuations.  These securities amounted to $680,395 or 2.89% of the Fund's net assets as of June 30, 2010.
	(b)	Aggregate cost for federal income tax purposes is $23,958,696.  At June 30, 2010 unrealized appreciation (depreciation) of securities for federal income tax purposes is as follows:
			Unrealized appreciation					$	3,160,262
			Unrealized depreciation						(3,624,533)
						Net unrealized depreciation		$	(464,271)
See Notes to Financial Statements

8

DAVIS REAL ESTATE PORTFOLIO	Statement of Assets and Liabilities
	At June 30, 2010 (Unaudited)

ASSETS:
Investments in securities at value* (see accompanying Schedule of Investments)			$	23,494,425
Cash				2,091
Receivables:
	Capital stock sold			23
	Dividends and interest			105,483
	Investment securities sold			132,692
Prepaid expenses				211
		Total assets		23,734,925
LIABILITIES:
Payables:
	Capital stock redeemed			47,786
	Investment securities purchased			117,025
Accrued management fee				14,497
Other accrued expenses				19,164
		Total liabilities		198,472
NET ASSETS			$	23,536,453
SHARES OUTSTANDING				3,077,925
NET ASSET VALUE, offering, and redemption price per share (Net assets ÷ Shares outstanding)			$	7.65
NET ASSETS CONSIST OF:
Par value of shares of capital stock			$	3,078
Additional paid-in capital				37,261,446
Undistributed net investment income				166,647
Accumulated net realized losses from investments				(14,854,174)
Net unrealized appreciation on investments and foreign currency transactions				959,456
		Net Assets	$	23,536,453
*Including:
	Cost of Investments		$	22,534,501
See Notes to Financial Statements

9

DAVIS REAL ESTATE PORTFOLIO	Statement of Operations
	For the six months ended June 30, 2010 (Unaudited)

INVESTMENT INCOME:
Income:
		Dividends*						$	397,403
		Interest							19,307
			Total income						416,710
Expenses:
		Management fees (Note 3)				$	66,468
		Custodian fees					9,893
		Transfer agent fees					2,815
		Audit fees					9,000
		Legal fees					420
		Accounting fees (Note 3)					1,002
		Reports to shareholders					2,000
		Directors’ fees and expenses					5,638
		Registration and filing fees					7
		Miscellaneous					4,490
			Total expenses						101,733
			Expenses paid indirectly (Note 4)						(1)
				Net expenses					101,732
					Net investment income				314,978
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from investment transactions									816,833
Net decrease in unrealized appreciation									(198,556)
	Net realized and unrealized gain on investments and foreign currency transactions								618,277
		Net increase in net assets resulting from operations						$	933,255
*Net of foreign taxes withheld as follows								$	395
See Notes to Financial Statements

10

DAVIS REAL ESTATE PORTFOLIO Statements of Changes in Net Assets

			Six months ended June 30, 2010 (Unaudited)		Year ended December 31, 2009
OPERATIONS:
	Net investment income		$	314,978	$	523,044
	Net realized gain (loss) from investments and foreign currency transactions			816,833		(12,772,190)
	Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions			(198,556)		17,711,950
	Net increase in net assets resulting from operations			933,255		5,462,804
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
	Net investment income			(155,619)		(513,936)
CAPITAL SHARE TRANSACTIONS:
	Net decrease in net assets resulting from capital share      transactions (Note 5)			(807,536)		(713,924)
		Total increase (decrease) in net assets		(29,900)		4,234,944
NET ASSETS:
	Beginning of period			23,566,353		19,331,409
	End of period*		$	23,536,453	$	23,566,353
*Including undistributed net investment income of			$	166,647	$	7,288
See Notes to Financial Statements

11

DAVIS REAL ESTATE PORTFOLIO	Notes to Financial Statements
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Fund is a separate series of Davis Variable Account Fund, Inc. (a Maryland corporation), which is registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management investment company.  Only insurance companies, for the purpose of funding variable annuity or variable life insurance contracts, may purchase shares of the Fund.  The following is a summary of significant accounting policies followed by the Fund in the preparation of financial statements.

Security Valuation - The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (“Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business.  Securities listed on the Exchange (and other national exchanges) are valued at the last reported sales price on the day of valuation.  Securities traded in the over-the-counter market (e.g. NASDAQ) and listed securities for which no sale was reported on that date are stated at the average of closing bid and asked prices.  Securities traded on foreign exchanges are valued based upon the last sales price on the principal exchange on which the security is traded prior to the time when the Fund’s assets a re valued.  Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value.  Securities whose values have been materially affected by what Davis Selected Advisers, L.P. (“Davis Advisors” or “Adviser”), the Fund’s investment adviser, identifies as a significant event occurring before the Fund’s assets are valued but after the close of their respective exchanges will be fair valued.  Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Directors.  Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value.  These valuation procedures are reviewed and subject to approval by the Board of Directors.

Value Measurements - Fair value is defined as the price that the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. Various inputs are used to determine the fair value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment

speeds, credit risk, etc.)

Level 3 – significant unobservable inputs (including Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used as of June 30, 2010 in valuing the Fund’s investments carried at value:

	Investments in Securities at Value
	Valuation Inputs
			Level 2:		Level 3:
			Other Significant		Significant
	Level 1:		Observable		Unobservable
	Quoted Prices		Inputs		Inputs		Total
Equity securities:
Financials	$	19,120,257	$	197,363	$	–	$	19,317,620
Industrials		646,226		–		–		646,226
Telecommunication services		1,782,184		–		–		1,782,184
Convertible debt securities		–		680,395		–		680,395
Short-term securities		–		1,068,000		–		1,068,000
Total	$	21,548,667	$	1,945,758	$	–	$	23,494,425

12

DAVIS REAL ESTATE PORTFOLIO	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Master Repurchase Agreements - The Fund, along with other affiliated funds, may transfer uninvested cash balances into one or more master repurchase agreement accounts.  These balances are invested in one or more repurchase agreements, secured by U.S. Government securities.  A custodian bank holds securities pledged as collateral for repurchase agreements until the agreements mature.  Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

Currency Translation - The market values of all assets and liabilities denominated in foreign currencies are recorded in the financial statements after translation to the U.S. Dollar based upon the mean between the bid and offered quotations of the currencies against U.S. Dollars on the date of valuation.  The cost basis of such assets and liabilities is determined based upon historical exchange rates.  Income and expenses are translated at average exchange rates in effect as accrued or incurred.

Foreign Currency- The Fund may enter into forward purchases or sales of foreign currencies to hedge certain foreign currency denominated assets and liabilities against declines in market value relative to the U.S. Dollar.  Forward currency contracts are marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss.  When the forward currency contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the forward currency contract at the time it was opened and value at the time it was closed.  Investments in forward currency contracts may expose the Fund to risks resulting from una nticipated movements in foreign currency exchange rates or failure of the counter-party to the agreement to perform in accordance with the terms of the contract.

Reported net realized foreign exchange gains or losses arise from the sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books, and the U.S. Dollar equivalent of the amounts actually received or paid.  Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.  The Fund includes foreign currency gains and losses realized on the sale of investments together with market gains and losses on such investments in the Statement of Operations.

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, including any net realized gains on investments not offset by loss carryovers, to shareholders.  Therefore, no provision for federal income or excise tax is required.  The Adviser has analyzed the Fund’s tax positions taken on federal and state income tax returns for all open tax years and has concluded that as of June 30, 2010, no provision for income tax would be required in the Fund’s financial statements.  The Fund’s federal and state (Arizona and Maryland) income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.  The earliest tax year that remains subject to examination by these jurisdictions is 2006.  At December 31, 2009, the Fund had available for federal income tax purposes unused capital loss carryforwards as follows:

	Capital Loss Carryforwards
Expiring
12/31/2016	$	2,585,000
12/31/2017		11,662,000
	$	14,247,000

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.  Dividend income from REIT securities may include return of capital.  Upon notification from the issuer, the amount of the return of capital is reclassified to adjust dividend income, reduce the cost basis, and/or adjust realized gain/loss.  Interest income, which includes accretion of discount and amortization of premium, is accrued as earned.

13

DAVIS REAL ESTATE PORTFOLIO	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (CONTINUED)

Dividends and Distributions to Shareholders - Dividends and distributions to shareholders are recorded on the ex-dividend date.  Net investment income (loss), net realized gains (losses), and net unrealized appreciation (depreciation) on investments may differ for financial statement and tax purposes primarily due to differing treatments of wash sales and foreign currency transactions.  The character of dividends and distributions made during the fiscal year from net investment income and net realized securities gains may differ from their ultimate characterization for federal income tax purposes.  Also, due to the timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal yea r in which income or realized gain was recorded by the Fund.  The Fund adjusts certain components of capital to reflect permanent differences between financial statement amounts and net income and realized gains/losses determined in accordance with income tax rules.

Indemnification - Under the Fund’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund.  In addition, some of the Fund’s contracts with its service providers contain general indemnification clauses.  The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined and the Fund has no historical basis for predicting the likelihood of any such claims.

Use of Estimates in Financial Statements- In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, 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.

Directors Fees and Expenses - The Fund set up a Rabbi Trust to provide for the deferred compensation plan for Independent Directors that enables them to elect to defer receipt of all or a portion of annual fees they are entitled to receive. The value of an eligible Director’s account is based upon years of service and fees paid to each Director during the years of service. The amount paid to the Director by the Trust under the plan will be determined based upon the performance of the Davis Funds.

NOTE 2 - PURCHASES AND SALES OF SECURITIES

Purchases and sales of investment securities (excluding short-term securities) during the six months ended June 30, 2010 were $6,777,818 and $6,023,100, respectively.

NOTE 3 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Advisory fees are paid monthly to the Adviser at an annual rate of 0.55% of the Fund’s average net assets.

Boston Financial Data Services, Inc. (“BFDS”) is the Fund’s primary transfer agent.  State Street Bank and Trust Company (“State Street Bank”) is the Fund’s primary accounting provider.  Fees for such services are included in the custodian fee as State Street Bank also serves as the Fund’s custodian.  The Adviser is also paid for certain accounting services.  The fee paid to the Adviser for these services for the six months ended June 30, 2010 amounted to $1,002.  Certain directors and 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.

NOTE 4 - EXPENSES PAID INDIRECTLY

Under an agreement with State Street Bank, custodian fees are reduced for earnings on cash balances maintained at the custodian by the Fund.  Such reductions amounted to $1 during the six months ended June 30, 2010.

14

DAVIS REAL ESTATE PORTFOLIO	Notes to Financial Statements – (Continued)
	June 30, 2010 (Unaudited)

NOTE 5 - CAPITAL STOCK

At June 30, 2010, there were 500 million shares of capital stock ($0.001 par value per share) authorized. Transactions in capital stock were as follows:

	Six months ended			Year ended
	June 30, 2010  (Unaudited)			December 31, 2009
	Shares	Amount		Shares	Amount
Shares sold	183,797	$	1,459,862	708,612	$	4,050,873
Shares issued in      reinvestment of      distributions	19,501		155,619	102,105		513,936
	203,298		1,615,481	810,717		4,564,809
Shares redeemed	(312,081)		(2,423,017)	(956,040)		(5,278,733)
Net decrease	(108,783)	$	(807,536)	(145,323)	$	(713,924)

NOTE 6 - BANK BORROWINGS

The Fund may borrow up to 5% of its assets from a bank to purchase portfolio securities, or for temporary and emergency purposes.  The purchase of securities with borrowed funds creates leverage in the Fund.  The Fund has entered into an agreement, which enables it to participate with certain other funds managed by the Adviser in an unsecured line of credit with a bank, which permits borrowings up to $50 million, collectively.  Interest is charged based on its borrowings, at a rate equal to the higher of the Federal Funds Rate or the Overnight Libor Rate, plus 1.25%.  The Fund had no borrowings during the six months ended June 30, 2010.

NOTE 7 - SUBSEQUENT EVENTS

Fund management has determined that no material events or transactions occurred subsequent to June 30, 2010 and through the issuance of the financial statements, which required adjustments and/or additional disclosure.

15

DAVIS REAL ESTATE PORTFOLIO Financial Highlights

The following financial information represents selected data for each share of capital stock outstanding throughout each period:
			Six months ended June 30, 2010				Year ended December 31,
				(Unaudited)			2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period				$	7.40		$	5.80		$	11.45		$	20.43		$	17.33		$	16.80
Income (Loss) from Investment Operations:
	Net Investment Income			0.10			0.16			0.19			0.42			0.34			0.30
	Net Realized and Unrealized Gains (Losses)			0.20			1.60			(5.50)			(3.40)			5.58			1.86
		Total from Investment Operations		0.30			1.76			(5.31)			(2.98)			5.92			2.16
Dividends and Distributions:
	Dividends from Net Investment Income			(0.05)			(0.16)			(0.22)			(0.64)			(0.60)			(0.54)
	Distributions from Realized Gains			–			–			(0.11)			(5.36)			(2.22)			(1.09)
	Return of Capital			–			–			(0.01)			–			–			–
		Total Dividends and Distributions		(0.05)			(0.16)			(0.34)			(6.00)			(2.82)			(1.63)
Net Asset Value, End of Period				$	7.65		$	7.40		$	5.80		$	11.45		$	20.43		$	17.33
Total Returna				4.03		%	31.73		%	(46.91)		%	(15.48)		%	34.37		%	13.14		%
Ratios/Supplemental Data:
	Net Assets, End of Period (in thousands)			$	23,536		$	23,566		$	19,331		$	49,548		$	89,738		$	64,556
	Ratio of Expenses to Average Net Assets:
		Gross		0.84		%b	0.98		%	0.98		%	0.88		%	0.86		%	0.87		%
		Netc		0.84		%b	0.98		%	0.98		%	0.87		%	0.86		%	0.87		%
Ratio of Net Investment Income to Average Net Assets				2.61		%b	2.81		%	1.84		%	1.92		%	1.63		%	1.71		%
Portfolio Turnover Rated				27		%	70		%	41		%	49		%	38		%	28		%

a	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 and do not reflect charges attributable to your insurance company’s separate account.  Inclusion of these charges would reduce the total returns shown.
b	Annualized.
c	The Net Ratio of Expenses to Average Net Assets reflects the impact, if any, of the reduction of expenses paid indirectly and of certain reimbursements from the Adviser.
d	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.
See Notes to Financial Statements

16

DAVIS REAL ESTATE PORTFOLIO Director Approval of Advisory Agreements

Process of Annual Review

The Board of Directors of the Davis Funds oversees the management of each Davis Fund and, as required by law, determines annually whether to approve the continuance of each Davis Fund’s advisory agreement with Davis Selected Advisers, L.P. and sub-advisory agreement with Davis Selected Advisers-NY, Inc. (jointly “Davis Advisors” and “Advisory Agreements”).

As a part of this process the Independent Directors, with the assistance of counsel for the Independent Directors, prepared questions submitted to Davis Advisors in anticipation of the annual contract review. The Independent Directors were provided with responsive background material (including recent investment performance data), and their counsel provided guidance, prior to a separate contract review meeting held in March 2010 where the Independent Directors reviewed and evaluated all information which they deemed reasonably necessary in the circumstances. Upon completion of this review, the Independent Directors found that the terms of the Advisory Agreements are fair and reasonable and that continuation of the Advisory Agreements was in the best interest of Davis Real Estate Portfolio and its shareholders.

Reasons the Independent Directors Approved Continuation of the Advisory Agreements

The Independent Directors’ determinations were based upon a comprehensive consideration of all information provided to the Independent Directors and were not the result of any single factor. The following facts and conclusions were important, but not exclusive, in the Independent Directors’ recommendation to renew the Advisory Agreements.

The Independent Directors considered not only the investment performance of the Fund, but also the full range and quality of services provided by Davis Advisors to the Fund and its shareholders, including whether it:

1.   Achieves satisfactory investment results over the long-term after all costs;

2.   Handles shareholder transactions, inquiries, requests, and records efficiently and effectively, and provides quality accounting, legal, and compliance services, and oversight of third party service providers; and

3.   Fosters healthy investor behavior.

Davis Advisors is reimbursed a portion of its costs in providing some, but not all, of these services.

A shareholder’s ultimate return is the product of a fund’s results as well as the shareholder’s behavior, specifically in selecting when to invest or redeem. The Independent Directors concluded that, through its actions and communications, Davis Advisors has attempted to have a meaningful, positive impact on investor behavior.

The Independent Directors noted the importance of reviewing quantitative measures, but also recognized that qualitative factors are also important in assessing whether Davis Fund shareholders are likely to be well served by the renewal of the Advisory Agreements. They noted both the value and shortcomings of purely quantitative measures, including the data provided by independent service providers, and concluded that while such measures and data may be informative, the judgment of the Independent Directors must take many factors, including those listed below, into consideration in representing the shareholders of the Davis Funds.  In connection with reviewing comparative performance information, the Independent Directors generally give weight to longer-term measurements.

The Independent Directors expect Davis Advisors to employ a disciplined, company-specific, research-driven, businesslike, long-term investment philosophy.

The Independent Directors recognized Davis Advisors’ (a) efforts to minimize transaction costs by generally having a long-term time horizon and low portfolio turnover; (b) record of generally producing satisfactory results over longer-term periods; (c) efforts towards fostering healthy investor behavior by, among other things, providing informative and substantial educational material; and (d) efforts to promote shareholder interests by actively speaking out on corporate governance issues.

17

DAVIS REAL ESTATE PORTFOLIO Director Approval of Advisory Agreements – (Continued)

Reasons the Independent Directors Approved Continuation of the Advisory Agreements – (Continued)

The Independent Directors reviewed (a) comparative fee and expense information for other funds, as selected and analyzed by a nationally recognized independent service provider; (b) information regarding fees charged by Davis Advisors to other advisory clients, including funds which it sub-advises and private accounts, as well as the differences in the services provided to such other clients; and (c) the fee schedule of the Fund, including an assessment of competitive fee schedules.

Effective July 1, 2009, Davis Advisors voluntarily and permanently reduced all management fee breakpoints above 0.55% to 0.55%. The former fee schedule for the Fund was a flat 0.75%.  The Fund now has a flat fee of 0.55%, resulting in a fee which the Independent Directors noted was both lower than under its previous schedule and lower than the average fees of its peer group as determined by an independent service provider.

The Independent Directors reviewed the fixed management fee for the Fund and the profitability of the Fund to Davis Advisors, the extent to which economies of scale might be realized if the Fund’s net assets increased, and whether the fixed fee reflected those potential economies of scale. The Independent Directors considered the nature, quality, and extent of the services being provided to the Fund and the costs incurred by Davis Advisors in providing such services. The Independent Directors considered various potential benefits that Davis Advisors may receive in connection with the services it provides under the Advisory Agreements with the Fund, including a review of portfolio brokerage practices. The Independent Directors noted that Davis Advisors does not use client commissions to pay for publications that are available to t he general public or for third-party research services.

The Independent Directors noted that Davis Real Estate Portfolio had under-performed its benchmark, the Wilshire U.S. Real Estate Securities Index, over the one-, three-, five-, and ten-year time periods ended February 28, 2010. The Independent Directors also noted that the Fund had taken on less risk, as measured by the standard deviation, than the Index over the one-, three-, and five-year time periods ended February 28, 2010. The Fund out-performed the average performance of its peer group as determined by an independent service provider over the one-year time period and under-performed over the three-, five-, and ten-year time periods, all ended December 31, 2009. The Independent Directors noted that the Fund out-performed the Wilshire U.S. Real Estate Securities Index in 1 of the 6 rolling five calendar year time frames, and its p eer group in 4 of the 6 rolling five calendar year time frames ended December 31, 2009. The Fund under-performed both the Index and its peers in the 1 rolling ten calendar year time frame ended December 31, 2009.

The Independent Directors also considered the total expense ratio for Davis Real Estate Portfolio, noting that the expenses were reasonable and within the range of the ratios of its peer group as determined by an independent service provider

Approval of Advisory Agreements

The Independent Directors concluded that Davis Advisors had provided Davis Real Estate Portfolio and its shareholders a reasonable level of both investment and non-investment services. The Independent Directors further concluded that shareholders have received a significant benefit from Davis Advisors’ shareholder oriented approach, as well as the execution of its investment discipline.

The Independent Directors determined that the advisory fee for Davis Real Estate Portfolio was reasonable in light of the nature, quality, and extent of the services being provided to the Fund, the costs incurred by Davis Advisors in providing such service, and in comparison to the range of the average advisory fees of its peer group as determined by an independent service provider. The Independent Directors found that the terms of the Advisory Agreements are fair and reasonable and that continuation of the Advisory Agreements was in the best interest of the Fund and its shareholders. The Independent Directors and the full Board of Directors therefore voted to continue the Advisory Agreements.

18

DAVIS REAL ESTATE PORTFOLIO Fund Information

Portfolio Proxy Voting Policies and Procedures

The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities held by the Fund.  A description of the Fund’s Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1-800-279-0279, (ii) on the Fund’s website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

In addition, the Fund is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year.  The Fund’s Form N-PX filing is available (i) without charge, upon request, by calling the Fund toll-free at 1-800-279-0279, (ii) on the Fund’s website at www.davisfunds.com, and (iii) on the SEC’s website at www.sec.gov.

Form N-Q

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Fund’s Form N-Q is available without charge, upon request, by calling 1-800-279-0279 or on the Fund’s website at www.davisfunds.com or on the SEC’s website at www.sec.gov.  The Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

19

DAVIS REAL ESTATE PORTFOLIO Directors and Officers

For the purposes of their service as directors to the Davis Funds, the business address for each of the directors is 2949 E. Elvira Road, Suite 101, Tucson, AZ 85756. Each Director serves until their retirement, resignation, death or removal. Subject to exceptions and exemptions, which may be granted by the Independent Directors, Directors must retire at the close of business on the last day of the calendar year in which the Director attains age seventy-four (74).

Name (birthdate) Position(s) Held With Fund Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years Number of Portfolios in Fund Complex Overseen by Director Other Directorships Held by Director

Independent Directors

Marc P. Blum (09/09/42)	Director	Director since 1986	Chief Executive Officer, World Total Return Fund, LLLP; of Counsel to Gordon, Feinblatt, Rothman, Hoffberger and Hollander, LLC (law firm).	13	Director, Legg Mason Investment Counsel & Trust Company N.A. (asset management company) and Rodney Trust Company (Delaware).
John S. Gates, Jr. (08/02/53)	Director	Director since 2007	Chairman and Chief Executive Officer of PortaeCo LLC, a private investment company (beginning in 2006); Co-founder of CenterPoint Properties Trust (REIT); Co-chairman and Chief Executive Officer for 22 years (until 2006).	13	Director, DCT Industrial Trust (REIT).
Thomas S. Gayner (12/16/61)	Director/ Chairman	Director since 2004	Executive Vice President and Chief Investment Officer, Markel Corporation (insurance company).	13	Director, Washington Post Co. (publishing company); Director, Colfax Corp. (engineering and manufacturer of pumps and fluid handling equipment).
G. Bernard Hamilton (03/18/37)	Director	Director since 1978	Managing General Partner, Avanti Partners, L.P. (investment partnership), retired 2005.	13	none
Samuel H. Iapalucci (07/19/52)	Director	Director since 2006	Former Executive Vice President and Chief Financial Officer, CH2M-HILL Companies, Ltd. (engineering).	13	Director, Trow Global Holdings Inc. (engineering & consulting).
Robert P. Morgenthau (03/22/57)	Director	Director since 2002	Chairman, NorthRoad Capital Management, LLC (investment management firm) since June 2002.	13	none
Christian R. Sonne (05/06/36)	Director	Director since 1990	General Partner, Tuxedo Park Associates (land holding and development firm).	13	none
Marsha Williams (03/28/51)	Director	Director since 1999	Senior Vice President and Chief Financial Officer, Orbitz Worldwide, Inc. (travel-services provider) since 2007; former Executive Vice President and Chief Financial Officer, Equity Office Properties Trust (REIT).	13	Director, Modine Manufacturing, Inc. (heat transfer technology); Director, Chicago Bridge & Iron Company, N.V. (industrial construction and engineering); Director, Fifth Third Bancorp (diversified financial services).

20

DAVIS REAL ESTATE PORTFOLIO Directors and Officers – (Continued)

Name (birthdate) Position(s) Held With Fund Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years Number of Portfolios in Fund Complex Overseen by Director Other Directorships Held by Director

Inside Directors*

Christopher C. Davis (07/13/65) Director Director since 1997 President or Vice President of each Davis Fund, Selected Fund, and Clipper Fund; Chairman, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser, including sole member of the Adviser’s general partner, Davis Investments, LLC; Employee of Shelby Cullom Davis & Co. (registered broker/dealer). 10 Director, Davis New York Venture Fund, Inc. (consisting of four portfolios); Director, the Selected Funds (consisting of three portfolios) since 1998; Director, Washington Post Co. (publishing company).

*      Christopher C. Davis owns partnership units (directly, indirectly, or both) of the Adviser and is considered to be an “interested person” of the Funds as defined in the Investment Company Act of 1940.

Officers

Christopher C. Davis (born 07/13/65, Davis Funds officer since 1997). See description in the section on Inside Directors.

Andrew A. Davis (born 06/25/63, Davis Funds officer since 1997). President or Vice President of each of the Davis Funds (consisting of 13 portfolios) and Selected Funds (consisting of three portfolios); President, Davis Selected Advisers, L.P., serves as an executive officer in certain companies affiliated with the Adviser; Director of Davis Series, Inc. (consisting of six portfolios) and the Selected Funds (consisting of three portfolios).

Kenneth C. Eich (born 08/14/53, Davis Funds officer since 1997). Executive Vice President and Principal Executive Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Chief Operating Officer, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Douglas A. Haines (born 03/04/71, Davis Funds officer since 2004). Vice President, Treasurer, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President and Director of Fund Accounting, Davis Selected Advisers, L.P.

Sharra L. Haynes (born 09/25/66, Davis Funds officer since 1997). Vice President, Chief Compliance Officer of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President and Chief Compliance Officer, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Thomas D. Tays (born 03/07/57, Davis Funds officer since 1997). Vice President and Secretary of each of the Davis Funds (consisting of 13 portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund, Inc. (consisting of one portfolio); Vice President, Chief Legal Officer and Secretary, Davis Selected Advisers, L.P., and also serves as an executive officer in certain companies affiliated with the Adviser.

Arthur Don (born 09/24/53, Davis Funds officer since 1991). Assistant Secretary (for clerical purposes only) of each of the Davis Funds and Selected Funds; Shareholder, Greenberg Traurig, LLP (law firm); counsel to the Independent Directors and the Davis Funds.

21

DAVIS REAL ESTATE PORTFOLIO

Investment Adviser

Davis Selected Advisers, L.P. (Doing business as “Davis Advisors”)

2949 East Elvira Road, Suite 101

Tucson, Arizona 85756

(800) 279-0279

Distributor

Davis Distributors, LLC

2949 East Elvira Road, Suite 101

Tucson, Arizona 85756

Transfer Agent

Boston Financial Data Services, Inc.

c/o The Davis Funds

P.O. Box 8406

Boston, Massachusetts 02266-8406

Custodian

State Street Bank and Trust Co.

One Lincoln Street

Boston, Massachusetts 02111

Counsel

Greenberg Traurig, LLP

77 West Wacker Drive, Suite 3100

Chicago, Illinois 60601

Independent Registered Public Accounting Firm

KPMG LLP

707 Seventeenth Street, Suite 2700

Denver, Colorado 80202

For more information about Davis Real Estate Portfolio, including management fee, charges, and expenses, see the current prospectus, which must precede or accompany this report.  The Fund’s Statement of Additional Information contains additional information about the Fund’s Directors and is available without charge upon request by calling 1-800-279-0279 and on the Fund’s website at www.davisfunds.com.  Quarterly Fact sheets are available on the Fund’s website at www.davisfunds.com.

22

ITEM 2. CODE OF ETHICS

Not Applicable

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

The registrant’s board of directors has determined that independent trustee Marsha Williams qualifies as the “audit committee financial expert”, as defined in Item 3 of form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not Applicable

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS

Not Applicable

ITEM 6. SCHEDULE OF INVESTMENTS

Not Applicable. The complete Schedule of Investments is included in Item 1 of this for N-CSR

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not Applicable

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not Applicable

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS

Not Applicable

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There have been no changes to the procedure by which shareholders may recommend nominees to the registrant’s Board of Trustees.

ITEM 11. CONTROLS AND PROCUDURES

(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3 (c) under the Investment Company Act of 1940, as amended) are effective as of a date within 90 days of the filing date of this report.

(b) There have been no significant changes in the registrant’s internal controls or in other factors that could significantly affect these controls.

ITEM 12. EXHIBITS

(a)(1) Not Applicable

(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached.

(a)(3) Not Applicable

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DAVIS VARIABLE ACCOUNT FUND, INC.

By	/s/ Kenneth C. Eich
	Kenneth C. Eich
	Principal Executive Officer

Date: August 18, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By	/s/ Kenneth C. Eich
	Kenneth C. Eich
	Principal Executive Officer

Date: August 18, 2010

By	/s/ Douglas A. Haines
	Douglas A. Haines
	Principal Financial Officer

Date: August 18, 2010