DAVIS NEW YORK VENTURE FUND INC, 485APOS, 1998-02-13

DAVIS NEW YORK VENTURE FUND INC
485APOS, 1998-02-13

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

REGISTRATION NO. 2-29858

POST-EFFECTIVE AMENDMENT NO. 56

AND

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940

REGISTRATION NO. 811-1701

AMENDMENT NO. 31

DAVIS NEW YORK VENTURE FUND, INC.

124 East Marcy Street
Santa Fe, New Mexico 87501
(1-505-983-4335)

Agent For Service: Thomas D. Tays
124 East Marcy Street
Santa Fe, New Mexico 87501

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

It is proposed that this filing will become effective:

___ immediately upon filing pursuant to paragraph (b)
___ on ______________, 1998, pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ on ______________, pursuant to paragraph (a) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(2)
_X_ on May 1, 1998 , pursuant to paragraph (a)(2) of Rule 485

In accordance with Section 24(f) of the Investment Company Act of 1940 and
Rule 24f-2 thereunder, Registrant has previously elected to register an
indefinite number of shares of its Common Stock. The 24f-2 Notice was filed
on or about September 29, 1998.

The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said section 8(a), may determine.

<PAGE>

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

POST-EFFECTIVE AMENDMENT NO. 56 TO REGISTRATION STATEMENT NO. 2-29858
UNDER THE SECURITIES ACT OF 1933 AND AMENDMENT NO. 31 UNDER THE
INVESTMENT COMPANY ACT OF 1940 TO REGISTRATION STATEMENT NO. 811-1701.

CROSS REFERENCE SHEET
---------------------
<TABLE>
<CAPTION>
N-1A
ITEM NO. PART A CAPTION OR PLACEMENT
-------- ---------------------------
<S> <C>
1 Front Cover
2 Summary
3 Financial Highlights (NOT APPLICABLE)
4 Summary; Investment Objective and Policies
5 Adviser, Sub-Adviser and Distributor; Distribution Plans; Purchase of
Shares; Summary; Investment Objective and Policies
5A Management's Discussion of Fund Performance (NOT APPLICABLE)
6 Summary; Shareholder Inquiries; Purchase of Shares; Dividends and
Distributions; Exchange of Shares; Federal Income Taxes; Fund
Shares
7 Purchase of Shares; Adviser, Sub-Adviser and Distributor; Exchange
of Shares; Determining the Price of Shares; Dividends and
Distributions; Distribution Plan
8 Redemption of Shares; Exchange of Shares
9 (Not Applicable)

PART B CAPTION OR PLACEMENT

10 Cover Page
11 Table of Contents
12 (Not Applicable)
13 Investment Restrictions; Hedging of Foreign Currency Risks;
Repurchase Agreements; Portfolio Transactions
14 Directors and Officers; Investment Advisory Services
15 Certain Shareholders of the Fund
16 Investment Advisory Services; Directors and Officers; Custodian; Auditors;
Determining the Price of Shares; Distribution of Fund Shares
17 Portfolio Transactions
18 *
19 Determining the Price of Shares; Reduction of Class A Sales Charge; Special
Distribution Arrangements
20 *
21 *
22 Performance Data
23 Financial Statements (NOT APPLICABLE)
</TABLE>

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

* INCLUDED IN PROSPECTUS

<PAGE>

PROSPECTUS MAY 1, 1998

CLASS A, CLASS B AND CLASS C

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

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

MINIMUM INVESTMENT PLANS AVAILABLE

Initial Purchase $1,000 Individual Retirement Accounts (IRAs)
For Retirement Plans $250 Prototype Retirement Plans
Subsequent Investment $25 Exchange Privilege
Automatic Investment Plan
Automatic Withdrawals Plan

DAVIS GROWTH & INCOME FUND (THE "FUND") SEEKS BOTH CAPITAL GROWTH AND
INCOME. It invests primarily in equity securities including common stock,
preferred stock, and securities convertible into common stock.

The Fund offers four classes of shares, Class A, B, C and Y, each
having different expense levels and sales charges. These alternatives permit
you to choose the method of purchasing shares that is most beneficial to you,
depending on the amount of the purchase, the length of time you expect to hold
the shares and other circumstances. The Class Y shares, available only to
certain qualified institutional investors, are offered through a separate
prospectus. For more information about the Class Y shares, see "Purchase of
Shares--Alternative Purchase Arrangements."

This Prospectus concisely sets forth information about the Class A,
Class B and Class C shares of the Fund that prospective investors should know
before investing. It should be read carefully and retained for future
reference. A Statement of Additional Information dated May 1, 1998 has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference. A copy of this Statement and other information about the Fund may be
obtained without charge by writing to or calling the Fund at the above address
or telephone number.

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

SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

<PAGE>

SUMMARY

FUND EXPENSES. The following table is intended to assist you in
understanding the various costs and expenses that an investor in the Class A, B
and C shares of the Fund will bear directly or indirectly. You can refer to the
section "Adviser, Sub-Adviser and Distributor" and "Purchase of Shares" for
more information on transaction and operating expenses of the Fund.

<TABLE>
<S> <C> <C> <C>
Shareholder Transaction Expenses Class A Class B Class C
- - -------------------------------- ------- ------- -------
Maximum sales load imposed on purchases...................................... 4.75% None None
Maximum sales load imposed on reinvested dividends........................... None None None
Deferred sales load (a declining percentage of the
lesser of the net asset value of the shares
redeemed or the total cost of such shares)
Redeemed during first year............................................ 0.75%1 4.00% 1.00%1
Redeemed during second or third year.................................. None 3.00% None
Redeemed during fourth or fifth year.................................. None 2.00% None
Redeemed during sixth year............................................ None 1.00% None
Redeemed after sixth year............................................. None None None
Exchange Fee.............................................................. None None None

Annual Fund operating expenses (as a percentage of average net assets)
Management fees..................................................... 0.75% 0.75% 0.75%
12b-1 fees2......................................................... 0.25% 1.00% 1.00%
Other expenses*..................................................... 0.xx% 0.xx% 0.xx%
----- ----- -----
Total Fund operating expenses.............................. 0.xx% 1.xx% 1.xx%
</TABLE>

1 On certain Class A shares purchased at net asset value and redeemed during
the first year after purchase, there is a 0.75% deferred sales charge. On
Class C shares redeemed during the first year after purchase, there is a
1% deferred sales charge.

2 The effect of a Rule 12b-1 plan is that long-term shareholders may pay
more than the maximum front-end sales charge permitted under applicable
rules of the National Association of Securities Dealers, Inc.

Example*:

You would pay the following expenses on a $1,000 investment, assuming
a 5% annual return and (except as provided below) redemption at the end of each
time period:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A.......................................... $xx $xx $xx $xxx

Class B.......................................... $xx $xx $xx N/A
Class B (assuming no redemption at end of period) $xx $xx $xx
N/A

Class C.......................................... $xx $xx $xx $xxx
Class C (assuming no redemption at end of period) $xx $xx $xx $xxx
</TABLE>

THE 5% RATE USED IN THE EXAMPLE IS ONLY FOR ILLUSTRATION AND IS NOT
INTENDED TO BE INDICATIVE OF THE FUTURE PERFORMANCE OF THE FUND, WHICH MAY BE
MORE OR LESS THAN THE ASSUMED RATE. FUTURE EXPENSES MAY BE MORE OR LESS THAN
THOSE SHOWN.

"OTHER EXPENSES" IN ANNUAL FUND OPERATING EXPENSES, AND THE EXPENSES YOU
WOULD PAY IN THE EXAMPLE ARE BASED UPON ESTIMATED ANNUAL AVERAGE NET
ASSETS OF $50 MILLION. THE FUND'S ACTUAL AVERAGE NET ASSETS MAY BE EITHER
HIGHER OR LOWER, RESULTING IN ACTUAL EXPENSES WHICH MAY BE EITHER GREATER
OR LESS THAN THOSE ESTIMATED.

THE COMPANY AND THE FUND. Davis New York Venture Fund, Inc. (the
"Company") is an open-end, diversified, management investment company
incorporated in Maryland in 1968 and registered under the Investment Company
Act of 1940.

2
<PAGE>

The Company currently offers two investment portfolios, the Davis
Growth & Income Fund (the "Fund") described in this prospectus and the Davis
New York Venture Fund, described in a separate prospectus. The Fund offers four
classes of shares, Class A, B, C and Y. Class A shares may be purchased at a
price equal to their net asset value per share plus a front-end sales charge
imposed at the time of purchase. Purchases of $1 million or more of Class A
shares may be purchased at net asset value, but are subject to a 0.75%
contingent deferred sales charge ("CDSC") on redemptions made within one year
after purchase. Class B shares may be purchased at net asset value, with no
front-end sales charge, but are subject to a CDSC on most redemptions made
within six years after purchase. Class C shares may also be purchased at net
asset value but are subject to a CDSC of 1% on redemptions made within one year
after purchase. These alternatives permit an investor to choose the method of
purchasing shares that is most beneficial given the amount of the purchase, the
length of time the investor expects to hold the shares, and other
circumstances. Each class of shares pays a Rule 12b-1 distribution fee at an
annual rate not to exceed (i) for Class A shares, 0.25% of the Fund's aggregate
average daily net assets attributable to the Class A shares and (ii) for Class
B and C shares, 1.00% of the Fund's aggregate average daily net assets
attributable to each such class. The purpose and function of the deferred sales
charge, and distribution fees with respect to the Class B and Class C shares is
the same as those of the front-end sales charge and distribution fee with
respect to the Class A shares. The Class Y shares, available only to certain
qualified institutional investors, are offered through a separate prospectus.
For more information about the Class Y shares, see "Purchase of
Shares--Alternative Purchase Arrangements".

Each share of the Fund represents an identical interest in the
investment portfolio of the Fund. However, shares differ by class in important
respects. For example, Class B shares incur higher distribution services fees
and bear certain other expenses and will thus have a higher expense ratio and
pay correspondingly lower dividends than Class A shares. Class B shares will
automatically convert to Class A shares eight years after the end of the
calendar month in which the shareholder's order to purchase was accepted, in
the circumstances and subject to the qualifications described in this
Prospectus. Class C shares, like Class B shares, will also have a higher
expense ratio and pay correspondingly lower dividends than Class A shares, as a
result of higher distribution services fees and certain other expenses. Unlike
Class B shares, Class C shares do not have a conversion feature and therefore
will always be subject to higher distribution fees and other expenses than
Class A shares. The per share net asset value of the Class B and Class C shares
generally will be lower than the per share net asset value of the Class A
shares, reflecting the daily expense accruals of additional distribution fees
and certain other expenses applicable to Class B and C shares. The Fund may
offer additional classes of shares in the future and may at any time
discontinue the offering of any class of shares. See "Purchase of
Shares--Alternative Purchase Arrangements".

INVESTMENT OBJECTIVES. The Fund's investment objectives are both
long-term growth of capital and income. The Fund invests primarily in equity
securities, and during normal market conditions will invest the majority of its
assets in equity securities including common stock, preferred stock, and
securities convertible into common stock. Equity securities are subject to the
risk of price fluctuations reflecting both market evaluations of the businesses
involved and general changes in the equity markets. To increase current income
or to diversify its portfolio the Fund may also invest in bonds and other debt
securities, including high yield, high risk bonds, and may also invest in
foreign securities. The Fund may attempt to reduce market and currency
fluctuation risks by engaging in related hedging transactions. These
transactions involve risk considerations. There is no assurance that the
investment objectives of the Fund will be achieved. See "Investment Objectives
and Policies".

INVESTMENT ADVISER, SUB-ADVISER AND DISTRIBUTOR. Davis Selected
Advisers, L.P., (the "Adviser") is the investment adviser for the Fund. Davis
Selected Advisers, NY, Inc., a wholly owned subsidiary of the Adviser, performs
certain research and portfolio management services for the Fund under a
Sub-Advisory Agreement with the Adviser. Davis Distributors, LLC (the
"Distributor") serves as the principal underwriter for the Fund. For more
information, see "Adviser, Sub-Adviser and Distributor".

PURCHASES, EXCHANGES AND REDEMPTIONS. Initial and subsequent minimum
investments in the Class A, B and C shares may be made in amounts equal to
$1,000 and $25, respectively, except that the minimum initial investment for
retirement plans is $250. Shares may be exchanged under certain circumstances
at net asset value for the same class of shares of certain other funds managed
by the Adviser. Accounts with a market value of less than $250 caused by
shareholder redemptions are redeemable by the Fund. See "Purchase of Shares,"
"Exchange of

3
<PAGE>

Shares" and "Redemption of Shares". Class A shareholders who are
eligible to purchase Class Y shares may exchange their shares for Class Y
shares of the Fund. See "Purchase of Shares -- Alternative Purchase
Arrangements" for Class Y eligibility requirements.

SHAREHOLDER SERVICES. Questions regarding the Fund or your account may
be directed to Davis Distributors, LLC, at 1-800-279-0279 or to your sales
representative. Written inquiries may be directed to State Street Bank & Trust
Co., c/o The Davis Funds, P.O. Box 8406, Boston, MA 02266-8406. During severe
market conditions, the Distributor may experience difficulty in accepting
telephone redemptions or exchanges. If you are unable to contact the
Distributor at the above telephone number, you should call 1-505-820-3000
Monday through Friday between 8:00 a.m. and 4:00 p.m. Mountain Time.

INVESTMENT OBJECTIVES AND POLICIES

GENERAL. The Fund's investment objective is to seek both capital
growth and income. There is no assurance that such objectives will be achieved.
The Fund invests primarily in equity securities, and during normal market
conditions will invest the majority of its assets in equity securities
including common stock, preferred stock, and securities convertible into common
stock. To increase current income or to diversify its portfolio, the Fund may
also invest in bonds and other debt securities, including high yield, high risk
bonds, and may also invest in foreign securities. The Fund may attempt to
reduce market and currency fluctuation risks by engaging in related hedging
transactions. These transactions involve risk considerations. There is no
assurance that the investment objectives of the Fund will be achieved.

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

EQUITY SECURITIES. Equity securities represent an ownership position
in a company. These securities may include, without limitation, common stocks,
preferred stocks, real estate securities including REITs (see "Real Estate
Securities and REITs") and securities with equity conversion or purchase rights
(see "Convertible Securities"). The prices of equity securities fluctuate based
on changes in the financial condition of their issuers and on market and
economic conditions. The Fund's results will be related to the overall market
for these securities. There is no limit on the percentage of its assets which
the Fund may invest in equity securities.

While predominately investing in equity securities of companies with
market capitalizations of at least $250 million, the Fund may also invest in
issues with smaller capitalizations. Special risks associated with investing in
small cap issuers relative to larger cap issuers include high volatility of
valuations and less liquidity. Investments will consist of issues which the
Adviser or Sub-Adviser believes have the potential to provide capital growth or
income or both.

Risks. Because the Fund invests primarily in equity securities during
normal market conditions, the value of its portfolio will fluctuate in response
to stock market movements.

REAL ESTATE SECURITIES AND REITS Real estate securities and REITs are
a sub-category of equity securities. Real estate securities are issued by
companies which have at least 50% of the value of their assets, gross income,
or net profits attributable to ownership, financing, construction, management
or sale of real estate, or to products or services that are related to real
estate or the real estate industry. The Fund does not invest directly in real
estate. Real estate companies include real estate investment trusts ("REITs"),
or other securitized real estate investments, brokers, developers, lenders and
companies with substantial real estate holdings such as paper, lumber, hotel
and entertainment companies. REITs pool investors' funds for investment
primarily in income producing real estate or real estate related loans or
interests. A REIT is not taxed on income distributed to shareholders if it
complies with various requirements relating to its organization, ownership,
assets and income and with the requirement that it distribute to its
shareholders at least 95% of its taxable income (other than net capital gains)
for each taxable year. REITs can generally be classified as Equity REITs,
Mortgage REITs and Hybrid REITs. Equity REITs invest the majority of their
assets directly in real property and derive their income primarily from rents.
Equity REITs can also realize capital gains by selling property that has
appreciated in value. Mortgage REITs invest the majority of their

4
<PAGE>

assets in real estate mortgages and derive their income primarily from interest
payments. Hybrid REITs combine the characteristics of both Equity REITs and
Mortgage REITs.

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

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

CONVERTIBLE SECURITIES. Convertible securities are a sub-category of
equity securities. Generally, convertible securities are bonds, debentures,
notes, preferred stocks, warrants or other securities that convert or are
exchangeable into shares of the underlying common stock at a stated exchange
ratio. Usually, the conversion or exchange is solely at the option of the
holder. However, some convertible securities may be convertible or exchangeable
at the option of the issuer or are automatically converted or exchanged at a
time certain, or upon the occurrence of certain events, or have a combination
of these characteristics. Usually a convertible security provides a long-term
call on the issuer's common stock and therefore tends to appreciate in value as
the underlying common stock appreciates in value. A convertible security may
also be subject to redemption by the issuer after a date certain and under
certain circumstances (including a specified price) established on issue. If a
convertible security held by the Fund is called for redemption, the Fund could
be required to tender it for redemption, convert it into the underlying common
stock or sell it.

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

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

5
<PAGE>

interest, but are purchased at a discount form their face values. The prices of
debt securities fluctuate depending on such factors as interest rates, credit
quality and maturity. In general their prices decline when interest rates rise
and vice versa. While there is no limit on the percentage of its assets which
the Fund may invest in bonds and other debt securities, the Fund invests
primarily in equity securities under normal market conditions.

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

HIGH YIELD, HIGH RISK DEBT SECURITIES. The real estate securities,
convertible securities, bonds, and other debt securities which the Fund may
invest in may include high yield, high risk debt securities rated BBB or lower
by Standard & Poor's Corporation ("S&P") or Baa or lower by Moody's Investor
Services ("Moody's") or unrated securities. Securities rated BBB by S&P or Baa
by Moody's have speculative characteristics; changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity to make
principal and interest payments. Securities rated BB or lower by S&P and Ba or
lower by Moody's are referred to in the financial community as "junk bonds" and
may include D rated securities of issuers in default. Ratings assigned by
credit agencies do not evaluate market risks. The Adviser considers the ratings
assigned by S&P or Moody's as one of several factors in its independent credit
analysis of issuers. A brief description of the quality ratings of these two
services is contained in the Appendix. The Fund will not purchase securities
rated BB or Ba or lower if such purchase would then cause 35% or more of the
Fund's net assets to be invested in such securities.

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

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

6
<PAGE>

through U.S. registered investment companies investing primarily in foreign
securities. When the Fund is invested in foreign securities, the operating
expenses of the Fund are likely to be higher than that of an investment company
investing exclusively in U.S. securities, since the, custodial and certain
other expenses are expected to be higher.

Risks. Investments in foreign securities may involve a higher degree
of risk than investments in domestic issuers. Foreign securities are often
denominated in foreign currencies, which means that their value will be
affected by changes in exchange rates, as well as other factors that affect
securities prices. There is generally less publicly available information about
foreign securities and securities markets, and there may be less government
regulation and supervision of foreign issuers and securities markets. Foreign
securities and markets may also be affected by political and economic
instabilities, and may be more volatile and less liquid than domestic
securities and markets. Investment risks may include expropriation or
nationalization of assets, confiscatory taxation, exchange controls and
limitations on the use or transfer of assets, and significant withholding
taxes. Foreign economies may differ from the United States favorably or
unfavorably with respect to inflation rates, balance of payments, capital
reinvestment, gross national product expansion, and other relevant indicators.
The Fund may attempt to reduce exposure to market and currency fluctuations by
trading in currency futures contracts or options on futures contracts for
hedging purposes only.

OTHER INVESTMENT POLICIES

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

CURRENCY HEDGING. To attempt to reduce exposure to currency
fluctuations, the Fund may trade in forward foreign currency exchange contracts
(forward contracts), currency futures contracts and options thereon and
securities indexed to foreign securities. These techniques may be used to lock
in an exchange rate in connection with transactions in securities denominated
or traded in foreign currencies, to hedge the currency risk in foreign
securities held by the Fund and to hedge a currency risk involved in an
anticipated purchase of foreign securities. Cross-hedging may also be utilized,
that is, entering into a hedge transaction in respect to a different foreign
currency than the one in which a trade is to be made or in which a portfolio
security is principally traded. There is no limitation on the amount of assets
that may be committed to currency hedging. However, the Fund will not engage in
a futures transaction if it would cause the aggregate of initial margin
deposits and premiums paid on outstanding options on futures contracts to
exceed 5% of the value of its total assets (excluding in calculating such 5%
any in-the-money amount of any option). Currency hedging transactions may be
utilized as a tool to reduce currency fluctuation risks due to a current or
anticipated position in foreign securities. The successful use of currency
hedging transactions usually depends on the Adviser's or the Sub-Adviser's
ability to forecast interest rate and currency exchange rate movements. Should
interest or exchange rates move in an unexpected manner, the anticipated
benefits of futures contracts, options or forward contracts may not be achieved
or losses may be realized and thus the Fund could be in a worse position than
if such strategies had not been used. Unlike many exchange-traded futures
contracts, there are no daily price fluctuation limits with respect to options
on currencies and forward contracts, and adverse market movements could
therefore continue to an unlimited extent over a period of time. In addition,
the correlation between movements in the prices of such instruments and
movements in the price of the securities and currencies hedged or used for
cover will not be perfect and could produce unanticipated losses. Unanticipated
changes in currency prices may result in poorer overall performance for the
Fund than if it had not entered into such contracts. When taking a position in
an anticipatory hedge (when the Fund purchases a futures contract or other
similar instrument to gain market exposure in anticipation of purchasing the
underlying securities at a later date), the Fund is required to set aside cash
or high-grade liquid securities to fully secure the obligation.

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

7
<PAGE>

though such securities are not registered under the 1933 Act. The Adviser or
Sub-Adviser, under criteria established by the Fund's Board of Directors, will
consider whether Rule 144A securities being purchased or held by the Fund are
illiquid and thus subject to the Fund's policy limiting investments in illiquid
securities. In making this determination, the Adviser or Sub-Adviser will
consider the frequency of trades and quotes, the number of dealers and
potential purchasers, dealer undertakings to make a market, and the nature of
the security and the market place trades (for example, the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
transfer). The liquidity of Rule 144A Securities will also be monitored by the
Adviser and Sub-Adviser and, if as a result of changed conditions, it is
determined that a Rule 144A Security is no longer liquid, the Fund's holding of
illiquid securities will be reviewed to determine what, if any, action is
required in light of the policy limiting investments in such securities.
Investing in Rule 144A Securities could have the effect of increasing the
amount of investments in illiquid securities if qualified institutional buyers
are unwilling to purchase such securities.

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements,
but normally will not enter into repurchase agreements maturing in more than
seven days. A repurchase agreement, as referred to herein, involves a sale of
securities to the Fund, with the concurrent agreement of the seller (a bank or
securities dealer which the Adviser or Sub-Adviser determines to be financially
sound at the time of the transaction) to repurchase the securities at the same
price plus an amount equal to accrued interest at an agreed-upon interest rate,
within a specified time, usually less than one week, but, on occasion, at a
later time. The repurchase obligation of the seller is, in effect, secured by
the underlying securities. In the event of a bankruptcy or other default of a
seller of a repurchase agreement, the Fund could experience both delays in
liquidating the underlying securities and losses, including (a) possible
decline in the value of the collateral during the period while the Fund seeks
to enforce its rights thereto; (b) possible loss of all or a part of the income
during this period; and (c) expenses of enforcing its rights.

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

LENDING PORTFOLIO SECURITIES. The Fund may lend securities to
broker-dealers or institutional investors for their use in connection with
short sales, arbitrages and other securities transactions. The Fund will not
lend portfolio securities unless the loan is secured by collateral. The Fund
may not lend securities with an aggregate market value of more than one-half of
the Fund's total assets.

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

PORTFOLIO TRANSACTIONS. The Adviser and Sub-Adviser are responsible
for the placement of portfolio transactions, subject to the supervision of the
Board of Directors. It is the Fund's policy to seek to place portfolio
transactions with brokers or dealers who will execute transactions as
efficiently as possible and at the most favorable price. Subject to this
policy, research services and placement of orders by securities firms for Fund
shares may be taken into account as a factor in placement of portfolio
transactions. In seeking the Fund's investment objectives, the Fund may trade
to some degree in securities for the short term if the Adviser or Sub-Adviser
believes that the growth potential of a security no longer exists, considers
that other securities have more growth potential, or otherwise believes that
such trading is advisable. Because of the Fund's investment policies, portfolio
turnover rate will vary. At times it could be high, which could require the
payment of larger amounts in brokerage commissions. The Adviser and Sub-Adviser
are authorized to place portfolio transactions with Shelby Cullom Davis & Co.,
a member of the New York Stock Exchange, which may be deemed to be an affiliate
of the Adviser, if the commissions are fair and reasonable and comparable to
commissions charged by non-affiliated qualified brokerage firms for similar
services. The Fund anticipates that, during normal market conditions, its
annual portfolio turnover rate will be less than 100%.

8
<PAGE>

FUNDAMENTAL POLICIES. The Fund has adopted certain investment
restrictions set forth in the Statement of Additional Information. These
restrictions are fundamental policies and may not be changed unless authorized
by a vote of the shareholders. All other policies are non-fundamental and may
be changed without shareholder approval. Any percentage restrictions set forth
in the prospectus or in the Statement of Additional Information apply as of the
time of investment without regard to later increases or decreases in the values
of securities or total net assets.

ADVISER, SUB-ADVISER AND DISTRIBUTOR

Subject to the direction and supervision of the Fund's Board of
Directors, the Fund's affairs are managed by Davis Selected Advisers, L.P., 124
East Marcy Street, Santa Fe, New Mexico 87501. Venture Advisers, Inc. is the
Adviser's sole general partner. Shelby M.C. Davis is the controlling
shareholder of the general partner. The Adviser manages the Fund's investment
and business operations. Davis Distributors, LLC (the "Distributor"), a
subsidiary of the Adviser serves as the distributor or principal underwriter of
the Fund's shares. Davis Selected Advisers-NY, Inc., ("DSA-NY") a wholly owned
subsidiary of the Adviser, performs research and portfolio management services
for the Fund under a Sub-Advisory Agreement with the Adviser. The Adviser also
acts as investment adviser for the Davis New York Venture Fund, Davis High
Income Fund, Inc., Davis Tax-Free High Income Fund, Inc., Davis Series, Inc.
and Davis International Series, Inc. (collectively with the Fund, the "Davis
Funds"), Selected American Shares, Inc., Selected Special Shares, Inc. and
Selected Capital Preservation Trust (collectively, the "Selected Funds"). The
Distributor acts as the principal underwriter for the Davis and Selected Funds.

The Fund pays the Adviser a fee at the annual rate based on average
net assets, as follows: 0.75% on the first $250 million; 0.65% on the next $250
million; 0.55% on net assets over $500 million. This fee is higher than that of
most other mutual funds but is not necessarily higher than that paid by funds
with similar investment objectives. The Fund also reimburses the Adviser for
its costs of providing certain accounting and financial reporting, shareholder
services and compliance with state securities laws. Under the Sub-Advisory
Agreement with DSA-NY, the Adviser pays all of DSA-NY's direct and indirect
costs of operation. All the fees paid to DSA-NY are paid by the Adviser and not
the Fund.

Christopher C. Davis and Andrew A. Davis are the co-portfolio managers
for the Fund and other equity funds managed by the Adviser.

Christopher C. Davis was co-portfolio manager of the Davis New York
Venture Fund, with Shelby M.C. Davis, from October 1, 1995 until February 19,
1997 when he assumed full responsibility for the fund. Prior to his
responsibilities as co-portfolio manager, Christopher C. Davis worked closely
with Shelby M.C. Davis as an assistant portfolio manager and research analyst
beginning in September, 1989.

Andrew A. Davis is the primary portfolio manager of the Davis
Convertible Securities Fund and the Davis Real Estate Fund. He was the
co-portfolio manager of these funds with Shelby M.C. Davis from their inception
until December 1, 1994 when he assumed the duties of sole portfolio manager.
Until February 1993, he was the Vice President and head of convertible research
at Paine Webber, Incorporated.

Shelby M.C. Davis is Chief Investment Officer of the Adviser. As Chief
Investment Officer, he is active in providing investment themes, strategies and
individual stock selections to the Fund. He is an officer of all investment
companies managed by the Adviser.

Davis Distributors, LLC, in its capacity as distributor, is reimbursed
by the Fund for some of its distribution expenses through Distribution Plans
which have been adopted with respect to the Class A, Class B and Class C shares
and approved by the Fund's Board of Directors in accordance with Rule 12b-1
under the Investment Company Act of 1940. See "Distribution Plans" below for
more details.

DISTRIBUTION PLANS

The Fund bears some of the costs of selling its shares under
Distribution Plans adopted with respect to its Class A, Class B and Class C
shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. This
rule regulates the manner in which a mutual fund may assume costs of
distributing and promoting the sale of its shares.

9
<PAGE>

Payments under the Class A Distribution Plan are limited to an annual
rate of 0.25% of the average daily net asset value of the Class A shares. Such
payments are made to reimburse the Distributor for the fees it pays to its
salespersons and other firms for selling Fund shares, servicing shareholders
and maintaining shareholder accounts. Where a commission is paid for purchases
of $1 million or more of Class A shares and as long as the limits of the
distribution plan have not been reached, such payment is also made from 12b-1
distribution fees received from the Fund. Normally, such fees are at the annual
rate of 0.25% of the average net asset value of the accounts serviced and
maintained on the books of the Fund. Payments under the Class A Distribution
Plan may also be used to reimburse the Distributor for other distribution costs
(excluding overhead) not covered in any year by any portion of the sales
charges the Distributor retains. See "Purchase of Shares."

Payments under the Class B Distribution Plan are limited to an annual
rate of 1% of the average daily net asset value of the Class B shares. In
accordance with current applicable rules, such payments are also limited to
6.25% of gross sales of Class B shares plus interest at 1% over the prime rate
on any unpaid amounts. Up to 0.75% of the average daily net assets is used to
pay the Distributor a 4% commission on new sales of Class B shares. Most or all
of such commissions are reallowed to salespersons and to firms responsible for
such sales. No commissions are paid by the Fund with respect to sales by the
Distributor to officers, directors and full-time employees of the Fund, the
Distributor or the Adviser's General Partner. Up to 0.25% of average net assets
is used to reimburse the Distributor for the payment of service and maintenance
fees to its salespersons and other firms for shareholder servicing and
maintenance of shareholder accounts.

If, due to the foregoing payment limitations, the Fund is unable to
pay the Distributor the 4% commission on new sales of Class B shares, the
Distributor intends, but is not obligated, to accept new orders for shares and
pay commissions in excess of the payments it receives from the Fund. The
Distributor intends to seek full payment from the Fund of any excess amounts
with interest at 1% over the prime rate at such future date when and to the
extent such payments on new sales would not be in excess of the limitations.
The Fund is not obligated to make such payments; the amount (if any), timing
and condition of any such payments are solely within the discretion of the
directors of the Fund who are not interested persons of the Distributor or the
Fund and have no direct or indirect financial interest in the Class B
Distribution Plan (the "Independent Directors"). If the Class B Distribution
Plan is terminated, the Distributor will ask the Independent Directors to take
whatever action they deem appropriate with regard to the payment of any excess
amounts.

Payments under the Class C Distribution Plan are also limited to an
annual rate of 1% of the average daily net asset value of the Class C shares,
and are subject to the same 6.25% and 1% limitations applicable to the Class B
Distribution Plan. The entire amount of payments may be used to reimburse the
Distributor for the payments of commissions and service and maintenance fees to
its salespersons and other firms for selling new Class C shares, shareholder
servicing and maintenance of shareholder accounts.

In addition, to the extent that any investment advisory fees paid by
the Fund may be deemed to be indirectly financing any activity which is
primarily intended to result in the sale of Fund shares within the meaning of
Rule 12b-1, the Plans authorize the payment of such fees.

Each of the Distribution Plans may be terminated at any time by vote
of the Independent Directors or by vote of the respective class. Payments
pursuant to a Distribution Plan are included in the operating expenses of the
class.

As described herein, dealers or others may receive different levels of
compensation depending on which class of shares they sell. The Distributor may
make expense reimbursements for special training of a dealer's registered
representatives or personnel of dealers and other firms who provide sales or
other services in respect to the Fund and/or its shareholders, or to defray the
expenses of meetings, advertising or equipment. Any such amounts may be paid by
the Distributor from the fees it receives under the Class A, Class B and Class
C Distribution Plans.

In addition, the Distributor may, from time to time, pay additional
cash compensation or other promotional incentives to authorized dealers or
agents that sell shares of the Fund. In some instances, such cash compensation
or other incentives may be offered only to certain dealers or agents who employ
registered representatives who have

10
<PAGE>

sold or may sell significant amounts of shares of the Fund and/or the other
Davis Funds managed by the Adviser during a specified period of time.

Shares of the Fund may also be sold through banks or bank-affiliated
dealers. Any determination that such banks or bank-affiliated dealers are
prohibited from selling shares of the Fund under the Glass-Steagall Act would
have no material adverse effects on the Fund. State securities laws may require
such firms to be licensed as securities dealers in order to sell shares of the
Fund.

PURCHASE OF SHARES

GENERAL. You can purchase Class A, Class B or Class C shares of the
Fund from any dealer or other person having a sales agreement with the
Distributor.

There are three ways to make an initial investment in the Fund. One
way is to fill out the Application Form included in this Prospectus and mail it
to State Street Bank and Trust Company ("State Street") at the address on the
Form. The dealer must also sign the Form. Your dealer or sales representative
will help you fill out the Form. All purchases made by check should be in U.S.
dollars (minimum $1,000, except $250 for retirement plans) and made payable to
THE DAVIS FUNDS, or in the case of a retirement account, the custodian or
trustee. THIRD PARTY CHECKS WILL NOT BE ACCEPTED. When purchases are made by
check, redemptions will not be allowed until the investment being redeemed has
been in the account for 15 calendar days.

Another way to make an initial investment is to have your dealer order
and pay for the shares. In this case, you must pay your dealer. The dealer can
order the shares from the Distributor by telephone or wire. You can also use
this method for additional investments of at least $1,000.

The third way to purchase shares is by wire. Shares may be purchased
at any time by wiring federal funds directly to State Street. Prior to an
initial investment by wire, the shareholder should telephone Davis
Distributors, LLC at 1-800-279-0279 to advise them of the investment and class
of shares and to obtain an account number and instructions. A completed Plan
Adoption Agreement or Application Form should be mailed to State Street after
the initial wire purchase. To assure proper credit, the wire instructions
should be made as follows:

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

After your initial investment, you can make additional investments of
at least $25. Simply mail a check payable to "The Davis Funds" to State Street
Bank and Trust Company, c/o The Davis Funds, P.O. Box 8406, Boston, MA
02266-8406. The check should be accompanied by a form, which State Street will
provide after each purchase. If you do not have a form, you should tell State
Street that you want to invest the check in shares of the Fund.
If you know your account number, you should also give it to State Street.

The Fund does not issue certificates for Class A shares unless you
request a certificate each time you make a purchase. Certificates are not
issued for Class B or Class C shares or for accounts using the Automatic
Withdrawal Plan. Instead, shares purchased are automatically credited to an
account maintained for you on the books of the Fund by State Street. Each time
you add to or withdraw from your account, you will receive a statement showing
the details of the transaction and any other transactions you had during the
current year.

ALTERNATIVE PURCHASE ARRANGEMENTS. The Fund offers four classes of
shares. With certain exceptions described below, Class A shares are sold with a
front-end sales charge at the time of purchase and are not subject to a sales
charge when they are redeemed. Class B shares are sold without a sales charge
at the time of purchase, but

11
<PAGE>

are subject to a deferred sales charge if they are redeemed within six years
after purchase. Class B shares will automatically convert to Class A shares
eight years after the end of the calendar month in which the shareholder's
order to purchase was accepted. Class C shares are purchased at their net asset
value per share without the imposition of a front-end sales charge but are
subject to a 1% deferred sales charge if redeemed within one year after
purchase and do not have a conversion feature. Class Y shares are offered
through a separate prospectus to (i) trust companies, bank trusts, pension
plans, endowments or foundations acting on behalf of their own account or one
or more clients for which such institution acts in a fiduciary capacity and
investing at least $5,000,000 at any one time ("Institutions"); (ii) any state,
county, city, department, authority or similar agency which invests at least
$5,000,000 at any one time ("Governmental Entities"); and (iii) any investor
with an account established under a "wrap account" or other similar fee-based
program sponsored and maintained by a registered broker-dealer approved by the
Distributor ("Wrap Program Investors"). Class Y shares are sold at net asset
value without the imposition of Rule 12b-1 charges. For more information about
the Class Y shares, call the Fund at 1-800-279-0279.

Depending on the amount of the purchase and the anticipated length of
time of investment, investors may choose to purchase one class of shares rather
than another. Investors who would rather pay the entire cost of distribution at
the time of investment, rather than spreading such cost over time, might
consider Class A shares. Other investors might consider Class B or Class C
shares, in which case 100% of the purchase price is invested immediately. The
Fund will not accept any purchase of Class B shares in the amount of $250,000
or more per investor. Such purchase must be made in Class A shares. Class C
shares may be more appropriate for the short-term investor. The Fund will not
accept any purchase of Class C shares when Class A shares may be purchased at
net asset value. See also "Distribution Plans" for more information.

Wrap Program Investors should be aware that both Class A and Class Y
shares are made available by the Fund at net asset value to sponsors of wrap
programs. However, Class A shares are subject to additional expenses under the
Fund's Rule 12b-1 Plan and sponsors of wrap programs utilizing Class A shares
are generally entitled to payments under the Plan. If the sponsor has selected
Class A shares, investors should discuss these charges with their program's
sponsor and weigh the benefits of any services to be provided by the sponsor
against the higher expenses paid by Class A shareholders.

CLASS A SHARES. Class A shares are sold at their net asset value plus
a sales charge. The amounts of the sales charges are shown in the following
table.

<TABLE>
<CAPTION>
Customary
Sales Charge Charge as Concession to Your
as Percentage Approximate Percentage Dealer as Percentage
Amount of Purchase of Offering Price of Amount Invested of Offering Price
- - ------------------ ----------------- ------------------ -----------------
<S> <C> <C> <C>
$99,999 or less............................... 4-3/4% 5.0% 4%
$100,000 to $249,999.......................... 3-1/2% 3.6% 3%
$250,000 to $499,999.......................... 2-1/2% 2.6% 2%
$500,000 to $749,999........................... 2% 2.0% 1-3/4%
$750,000 to $999,999........................... 1% 1.0% 3/4 of 1%
$1,000,000 or more............................ 0% 0.0% 0%*
</TABLE>

* On purchases of $1 million or more, the investor pays no front-end sales
charge but a contingent deferred sales charge of 0.75% is imposed if shares
purchased at net asset value are redeemed within the first year after purchase.
The Distributor may pay the financial service firm a commission during the
first year after such purchase at an annual rate as follows:

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

Where a commission is paid for purchases of $1 million or more, such payment
will be made from 12b-1 distribution fees received from the Fund and, in cases
where the limits of the distribution plan in any year have been reached, from
the Distributor's own resources.

12
<PAGE>

There are a number of ways to reduce the sales charge on the purchase
of Class A shares, as set forth below.

(i) Family Purchases: Purchases made by an individual, such
individual's spouse and children under 21 are combined and treated as a
purchase of a single person.

(ii) Group Purchases: The purchases of an organized group, whether or
not incorporated, are combined and treated as the purchase of a single person.
The organization must have been organized for a purpose other than to purchase
shares of mutual funds.

(iii) Purchases for Employee Benefit Plans: Trusteed or other
fiduciary accounts and Individual Retirement Accounts ("IRA") of a single
employer are treated as purchases of a single person. Purchases of and
ownership by an individual and such individual's spouse under an IRA are
combined with their other purchases and ownership.

(iv) Purchases under a Statement of Intention: By executing the
"Statement of Intention" included in the Application Form at the back of the
Prospectus, purchases of Class A shares of $100,000 or more made over a
13-month period may be made at the applicable price for the aggregate shares
actually purchased during the period. Please see "Terms and Conditions" at the
back of this prospectus.

(v) Rights of Accumulation: If you notify your dealer or the
Distributor, you may include the Class A, B and C shares you already own
(except shares of Davis Government Money Market Fund) in calculating the price
applicable to your current purchase.

(vi) Combined Purchases with other Davis Funds: Purchases of Class A
shares of the Fund may be combined with your purchases of Class A shares of
other Davis Funds, including Davis New York Venture Fund, Davis High Income
Fund, Inc., Davis Tax-Free High Income Fund, Inc., Davis International Series,
Inc. and all funds offered by Davis Series, Inc. (other than Davis Government
Money Market Fund), separately or under combined Statements of Intention or
Rights of Accumulation to determine the price applicable to your purchases of
Class A shares of the Fund.

(vii) Sales at Net Asset Value: The sales charge will not apply to:
(1) Class A shares purchased through the automatic reinvestment of dividends
and distributions (see "Dividends and Distributions"); (2) Class A shares
purchased by directors, officers and employees of any fund for which the
Adviser acts as investment adviser or officers and employees of the Adviser,
Sub-Adviser or Distributor including former directors and officers and any
spouse, child, parent, grandparent, brother or sister ("immediate family
members") of all of the foregoing, and any employee benefit or payroll
deduction plan established by or for such persons; (3) Class A shares purchased
by any registered representatives, principals and employees (and any immediate
family member) of securities dealers having a sales agreement with the
Distributor; (4) initial purchases of Class A shares totaling at least $250,000
but less than $5,000,000, made at any one time by banks, trust companies and
other financial institutions on behalf of one or more clients for which such
institution acts in a fiduciary capacity; (5) Class A shares purchased by any
single account covering a minimum of 250 participants (this 250 participant
minimum may be waived for certain fee based mutual fund marketplace programs)
and representing a defined benefit plan, defined contribution plan, cash or
deferred plan qualified under 401(a) or 401(k) of the Internal Revenue Code or
a plan established under section 403(b), 457 or 501(c)(9) of such Code or
"rabbi trusts"; (6) Class A shares purchased by persons participating in a
"wrap account" or similar fee-based program sponsored and maintained by a
registered broker-dealer approved by the Fund's Distributor or by investment
advisors or financial planners who place trades for their own accounts or the
accounts of their clients and who charge a management, consulting or other fee
for their services; and clients of such investment advisors or financial
planners who place trades for their own accounts if the accounts are linked to
the master account of such investment advisor or financial planner on the books
and records of the broker or agent; and (7) Class A shares amounting to less
than $5,000,000 purchased by any state, county, city, department, authority or
similar agency. Investors may be charged a fee if they effect purchases in fund
shares through a broker or agent. The Fund may also issue Class A shares at net
asset value incident to a merger with or acquisition of assets of an investment
company.

13
<PAGE>

CLASS B SHARES. Class B shares are offered at net asset value, without
a front-end sales charge. The Distributor receives and usually reallows
commissions to firms responsible for the sale of such shares. See "Distribution
Plans." With certain exceptions described below, the Fund imposes a deferred
sales charge of 4% on shares redeemed during the first year after purchase, 3%
on shares redeemed during the second or third year after purchase, 2% on shares
redeemed during the fourth or fifth year after purchase and 1% on shares
redeemed during the sixth year after purchase. However, on Class B shares of
the Fund which are acquired upon exchange from Class B shares of other Davis
Funds which were purchased prior to December 1, 1994, the Fund will impose a
deferred sales charge of 4% on shares redeemed during the first calendar year
after purchase; 3% on shares redeemed during the second calendar year after
purchase; 2% on shares redeemed during the third calendar year after purchase;
and 1% on shares redeemed during the fourth calendar year after purchase, and
no deferred sales charge is imposed on amounts redeemed after four calendar
years from purchase. Class B shares will be subject to a maximum Rule 12b-1 fee
at the annual rate of 1% of the class' average daily net asset value. The Fund
will not accept any purchase of Class B shares in the amount of $250,000 or
more per investor.

Class B shares that have been outstanding for eight years will
automatically convert to Class A shares without imposition of a front-end sales
charge. The Class B shares so converted will no longer be subject to the higher
expenses borne by Class B shares. Because the net asset value per share of the
Class A shares may be higher or lower than that of the Class B shares at the
time of conversion, although the dollar value will be the same, a shareholder
may receive more or less Class A shares than the number of Class B shares
converted. Such a conversion will not constitute a taxable event under the
federal income tax law. In the event that this ceases to be the case, the Board
of Directors will consider what action, if any, is appropriate and in the best
interests of the Class B shareholders. In addition certain Class B shares held
by certain defined contribution plans automatically convert to Class A shares
based on increases of plan assets as described in the Statement of Additional
Information.

CLASS C SHARES. Class C shares are offered at net asset value without
a sales charge at the time of purchase. Class C shares redeemed within one year
of purchase will be subject to a 1% charge upon redemption. Class C shares do
not have a conversion feature. The Fund will not accept any purchases of Class
C shares when Class A shares may be purchased at net asset value.

The Distributor will pay a commission to the firm responsible for the
sale of Class C shares. No other fees will be paid by the Distributor during
the one-year period following purchase. The Distributor will be reimbursed for
the commission paid from 12b-1 fees paid by the Fund during the one-year
period. If Class C shares are redeemed within the one-year period after
purchase, the 1% redemption charge will be paid to the Distributor. After Class
C shares have been outstanding for more than one year, the Distributor will
make quarterly payments to the firm responsible for the sale of the shares in
amounts equal to 0.75% of the annual average daily net asset value of such
shares for sales fees and 0.25% of the annual average daily net asset value of
such shares for service and maintenance fees.

CONTINGENT DEFERRED SALES CHARGES. Any contingent deferred sales
charge imposed upon the redemption of Class A, Class B or Class C shares is a
percentage of the lesser of (i) the net asset value of the shares redeemed or
(ii) the original cost of such shares. No contingent deferred sales charge is
imposed when you redeem amounts derived from (a) increases in the value of
shares redeemed above the net cost of such shares or (b) certain shares with
respect to which the Fund did not pay a commission on issuance, including
shares acquired through reinvestment of dividend income and capital gains
distributions. Upon request for redemption, shares not subject to the
contingent deferred sales charge will be redeemed first. Thereafter, shares
held the longest will be the first to be redeemed.

The contingent deferred sales charge (CDSC) on Class A, B, and C
Shares that are subject to a CDSC will be waived if the redemption relates to
the following: (a) in the event of the total disability (as evidenced by a
determination by the federal Social Security Administration) of the shareholder
(including registered joint owner) occurring after the purchase of the shares
being redeemed; (b) in the event of the death of the shareholder (including a
registered joint owner); (c) for redemptions made pursuant to an automatic
withdrawal plan in an amount, on an annual basis, up to 12% of the value of the
account at the time the shareholder elects to participate in the automatic
withdrawal plan; (d) for redemptions from a qualified retirement plan or IRA
that constitute a tax-free return of contributions to avoid tax penalty; (e) on
redemptions of shares sold to directors, officers and employees of any

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<PAGE>

Fund for which the Adviser acts as investment adviser or officers and employees
of the Adviser, Sub-Adviser or Distributor including former directors and
officers and immediate family members of all of the foregoing, and any employee
benefit or payroll deduction plan established by or for such persons; (f) on
redemptions pursuant to the right of the Fund to liquidate a shareholder's
account if the aggregate net asset value of the shares held in such account
falls below an established minimum amount; (g) certain other exceptions related
to defined contribution plans as described in the Statement of Additional
Information.

PROTOTYPE RETIREMENT PLANS. The Distributor and certain qualified
dealers have available prototype retirement plans (e.g. 401(k), profit sharing,
money purchase, Simplified Employee Pension ("SEP") plans, model 403(b) and 457
plans for charitable, educational and governmental entities) sponsored by the
Funds for corporations and self-employed individuals and prototype Individual
Retirement Account ("IRA") plans (deductible IRAs, non-deductible IRAs
including "Roth IRAs", and educational IRAs) and SIMPLE IRA plans for both
individuals and employers. These plans utilize the shares of the Fund and other
Davis Funds as their investment vehicle. State Street acts as custodian or
trustee for the plans and charges the participant $10 to establish each account
and an annual maintenance fee of $10 per social security number. Such fees will
be redeemed automatically at year-end from your account, unless you elect to
pay the fee directly.

AUTOMATIC INVESTMENT PLAN. Shareholders may arrange for automatic
monthly investing whereby State Street will be authorized to initiate a debit
to the shareholder's bank account of a specific amount (minimum $25) each month
which will be used to purchase Fund shares. The account minimums of $1000 for
non-retirement accounts and $250 for retirement accounts will be waived if,
pursuant to the automatic investment plan, the account balance will meet the
minimum investment requirements within twelve months of the initial investment.
For institutions that are members of the Automated Clearing House system (ACH),
such purchases can be processed electronically on any day of the month between
the 3rd and 28th day of each month. After each automatic investment, the
shareholder will receive a transaction confirmation and the debit should be
reflected on the shareholder's next bank statement. The plan may be terminated
at any time by the shareholder. If you desire to utilize this plan, you may use
the appropriate designation on the Application Form.

DIVIDEND DIVERSIFICATION PROGRAM. You may also establish a dividend
diversification program which allows you to have all dividends and any other
distributions automatically invested in shares of one or more of the Davis
Funds, subject to state securities law requirements and the minimum investment
requirements set forth below. You must receive a current prospectus for the
other fund or funds prior to investment. Shares will be purchased at the chosen
fund's net asset value on the dividend payment date. A dividend diversification
account must be in the same registration as the distributing fund account and
must be of the same class of shares. All accounts established or utilized under
this program must have a minimum initial value of at least $250 and all
subsequent investments must be at least $25. This program can be amended or
terminated at any time, upon at least 60 days' notice. If you would like to
participate in this program, you may use the appropriate designation on the
Application Form.

TELEPHONE PRIVILEGE

Unless you have provided in your application that the telephone
privilege is not to be available, the telephone privilege is automatically
available under certain circumstances for exchanging shares and for redeeming
shares. BY EXERCISING THE TELEPHONE PRIVILEGE TO SELL OR EXCHANGE SHARES, YOU
AGREE THAT THE FUND SHALL NOT BE LIABLE FOR FOLLOWING TELEPHONE INSTRUCTIONS
REASONABLY BELIEVED TO BE GENUINE. Reasonable procedures will be employed to
confirm that such instructions are genuine and if not employed, the Fund may be
liable for unauthorized instructions. Such procedures will include a request
for personal identification (account or social security number) and tape
recording of the instructions. You should be aware that during unusual market
conditions we might have difficulty in accepting telephone requests, in which
case you should contact us by mail. See "Exchange of Shares - By Telephone",
"Redemption of Shares - By Telephone" and "Redemption of Shares - Expedited
Redemption Privilege".

EXCHANGE OF SHARES

GENERAL. The exchange privilege is a convenient way to buy shares in
other Davis Funds in order to respond to changes in your goals or in market
conditions. If such goals or market conditions change, the Davis Funds

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<PAGE>

offer a variety of investment objectives that includes common stock funds,
tax-exempt and corporate bond funds, and a money market fund. However, the Fund
is intended as a long-term investment and is not intended for short-term
trades. Shares of a particular class of the Fund may be exchanged only for
shares of the same class of another Davis Fund except that Class A shareholders
who are eligible to purchase Class Y shares may exchange their shares for Class
Y shares of the Fund. All of the Davis Funds offer Class A, Class B and Class C
shares. The shares to be received upon exchange must be legally available for
sale in your state. The net asset value of the initial shares being acquired
must be at least $1,000 unless such exchange is under the Automatic Exchange
Program described below.

Shares may be exchanged at relative net asset value without any
additional charge. However, if any shares being exchanged are subject to an
escrow or segregated account pursuant to the terms of a Statement of Intention
or a CDSC, such shares will be exchanged at relative net asset value, but the
escrow or segregated account will continue with respect to the shares acquired
in the exchange. In addition, the terms of any CDSC, or redemption fee
applicable at the time of exchange will continue to apply to any shares
acquired upon exchange.

Before you decide to make an exchange, you must obtain the current
prospectus of the desired fund. Call your broker or the Distributor for
information and a prospectus for any of the other Davis Funds registered in
your state. Read the prospectus carefully. If you decide to exchange your
shares, send State Street a written unconditional request for the exchange and
follow the instructions regarding delivery of share certificates contained in
the section on "Redemption of Shares". A signature guarantee is not required
for such an exchange. However, if shares are also redeemed for cash in
connection with the exchange transaction, a signature guarantee may be
required. See "Redemption of Shares". Your dealer may charge an additional fee
for handling an exercise of the exchange privilege.

AUTOMATIC EXCHANGE PROGRAM. The Fund also offers an automatic monthly
exchange program. All accounts established or utilized under this program must
have the same registration and a minimum initial value of at least $250. All
subsequent exchanges must have a value of at least $25. Each month, shares will
be simultaneously redeemed and purchased at the chosen Davis Fund's applicable
price. If you would like to participate in this program, you may use the
appropriate designation on the Application Form.

An exchange involves both a redemption and a purchase, and normally
both are done on the same day. However, in certain instances such as where a
large redemption is involved, the investment of redemption proceeds into shares
of other Davis Funds may take up to seven days. For federal income tax
purposes, exchanges between funds are treated as a sale and purchase.
Therefore, there will usually be a recognizable capital gain or loss due to an
exchange. An exchange between different classes of the same fund is not a
taxable event.

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

BY TELEPHONE. You may exchange shares by telephone into accounts with
identical registrations. Please see the discussion of procedures in respect to
telephone instructions in the section entitled "Telephone Privilege," as such
procedures are also applicable to exchanges.

REDEMPTION OF SHARES

GENERAL. You can redeem, or sell back to the Fund, all or part of your
shares at any time at net asset value less any applicable sales charges or
redemption fees. You can do this by sending a written request to State Street
Bank and Trust Company, c/o The Davis Funds, P.O. Box 8406, Boston, MA
02266-8406, indicating how many of your shares or what dollar amount you want
to redeem. If more than one person owns the shares to be redeemed, all owners
must sign the request. The signatures on the request must correspond to the
account from which the shares are being redeemed.

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<PAGE>

Sometimes State Street needs more documents to verify authority to
make a redemption. This usually happens when the owner is a corporation,
partnership or fiduciary (such as a trustee or the executor of an estate) or if
the person making the request is not the registered owner of the shares.

If shares to be redeemed are represented by a certificate, the
certificate, signed by the owner or owners, must be sent to State Street with
the request.

For the protection of all shareholders, the Company also requires that
signatures appearing on a share certificate, stock power or redemption request
where the proceeds would be more than $50,000, must be guaranteed by a bank,
credit union, savings association, securities exchange, broker, dealer or other
guarantor institution. A signature guarantee is also required in the event that
any modification to the Company's application is made after the account is
established, including the selection of the Expedited Redemption Privilege. In
some situations such as where corporations, trusts or estates are involved,
additional documents may be necessary to effect the redemption. The transfer
agent may reject a request from any of the foregoing eligible guarantors, if
such guarantor does not satisfy the transfer agent's written standards or
procedures or if such guarantor is not a member or participant of a signature
guarantee program. This provision also applies to exchanges when there is also
a redemption for cash. A signature guarantee on redemption requests where the
proceeds would be $50,000 or less is not required, provided that such proceeds
are being sent to the address of record and, in order to ensure authenticity of
an address change, such address of record has not been changed within the last
30 days. All notifications of address changes must be in writing.

Redemption proceeds are normally paid to you within seven days after
State Street receives your proper redemption request. Payment for redemptions
can be suspended under certain emergency conditions determined by the
Securities and Exchange Commission or if the New York Stock Exchange is closed
for other than customary or holiday closings. If any of the shares redeemed
were just bought by you, payment to you may be delayed until your purchase
check has cleared (which usually takes up to 15 days from the purchase date).

Redemptions are ordinarily paid to you in cash. However, the Company's
Board of Directors is authorized to decide that conditions exist making cash
payments undesirable, although the Board has never reached such a decision. If
the Board should decide to make payment in other than cash, redemptions could
be paid in securities, valued at the value used in computing the Fund's net
asset value. There would be brokerage costs incurred by the shareholder in
selling such redemption proceeds. We must, however, redeem shares solely in
cash up to the lesser of $250,000 or 1% of the Fund's net asset value;
whichever is smaller, during any 90-day period for any one shareholder.

Your shares may also be redeemed through participating brokers or
dealers. The Distributor may repurchase shares from your dealer, if your dealer
is a member of the Distributor's selling group. Your dealer may, but is not
required to, use this method in selling back your shares and may place any
repurchase request by telephone or wire. Your broker or dealer may charge you a
service fee or commission. No charge (other than any applicable CDSC) is
payable if you redeem your own shares through State Street rather than having a
dealer arrange for a repurchase.

EXPEDITED REDEMPTION PRIVILEGE. Investors with accounts other than
prototype retirement plans and IRAs may designate on the Expedited Redemption
Privilege Form (included in this prospectus), an account with any commercial
bank and have the cash proceeds from the redemption sent, by either wire or
electronically through the Automated Clearing House system ("ACH"), to a
pre-designated bank account. State Street will accept instructions to redeem
shares and make payment to a pre-designated commercial bank account by (a)
written request signed by the registered shareholder, (b) telephone request by
any Qualified Dealer to Davis Distributors, LLC (1-800-279-0279), and (c) by
facsimile request by the shareholder to State Street. At the time of
redemption, the shareholder must request that federal funds be wired or
transferred by ACH to the bank account designated on the application. The
redemption proceeds under this procedure may not be directed to a savings bank,
savings and loan or credit union account except by arrangement with its
correspondent bank or unless such institution is a member of the Federal
Reserve System. The Distributor, in its discretion, may limit the amount that
may be redeemed by a shareholder in any day under the Expedited Redemption
Privilege to $25,000. There is a $5 charge by State Street for wire service,
and receiving banks may also charge for this service. Payment by ACH will
usually arrive at your

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<PAGE>

bank two banking days after your call. Payment by wire is usually credited to
your bank account on the next business day after your call. The Expedited
Redemption Privilege may be terminated, modified or suspended by the Fund at
any time. See "Telephone Privilege".

The name of the registered shareholder and corresponding Fund account
number must be supplied. The Expedited Redemption Privilege Form provides for
the appropriate information concerning the commercial bank and account number.
Changes in ownership, account number (including the identity of your bank) or
authorized signatories of the pre-designated account may be made by written
notice to State Street with your signature, and those of new owners or signers
on the account, guaranteed by a commercial bank or trust company. Additional
documentation may be required to change the designated account when shares are
held by a corporation, partnership, executor, administrator, trustee or
guardian.

BY TELEPHONE. You can redeem shares by telephone and receive a check by mail,
but please keep in mind:

The check can only be issued for up to $25,000;
The check can only be issued to the registered owner (who must
be an individual);
The check can only be sent to the address of record; and
Your current address of record must have been on file for 30 days.

AUTOMATIC WITHDRAWALS PLAN. Under the Automatic Withdrawals Plan, you
can indicate to State Street how many dollars you would like to receive each
month or each quarter. Your account must have a value of at least $10,000 to
start a plan. Shares are redeemed so that you will receive the payment you have
requested approximately on the 25th day of the month. Withdrawals involve
redemption of shares and may produce gain or loss for income tax purposes.
Shares of the Fund initially acquired by exchange from any of the other Davis
Funds will remain subject to an escrow or segregated account to which any of
the exchanged shares were subject. If you utilize this program, any applicable
contingent deferred sales charges will be imposed on such shares redeemed.
Purchase of additional shares concurrent with withdrawals may be
disadvantageous to you because of tax and sales load consequences. If the
amount you withdraw exceeds the dividends on your shares, your account will
suffer depletion. Your Automatic Withdrawals Plan may be terminated by you at
any time without charge or penalty. The Fund reserves the right to terminate or
modify the Automatic Withdrawals Plan at any time. Call or write the Fund if
you want further information on the Automatic Withdrawals Plan.

INVOLUNTARY REDEMPTIONS. To relieve the Fund of the cost of
maintaining uneconomical accounts, the Fund may effect the redemption of shares
at net asset value in any account if the account, due to shareholder
redemptions, has a value of less than $250. At least 60 days prior to such
involuntary redemption, the Fund will mail a notice to the shareholder so that
an additional purchase may be effected to avoid such redemption.

SUBSEQUENT REPURCHASES. After some of or all your shares are redeemed
or repurchased, you may decide to put back all or part of your proceeds into
the same Class of the Fund's shares. Any such shares will be issued without
sales charge at the net asset value next determined after you have returned the
amount of your proceeds. In addition, any applicable CDSC assessed on such
shares will be returned to the account. Shares will be deemed to have been
purchased on the original purchase date for purposes of calculating the CDSC
and conversion period. This can be done by sending the Fund or the Distributor
a letter, together with a check for the reinstatement amount. The letter must
be received, together with the payment, within 30 days after the redemption or
repurchase. You can only use this privilege once.

DETERMINING THE PRICE OF SHARES

The net asset value per share of each class is determined daily by
dividing the total value of investments and other assets, less any liabilities,
by the total number of outstanding shares of each class. Valuation of the
Fund's portfolio securities is based upon their market value. Securities traded
on a national securities exchange are valued at the last published sales prices
on the exchange, or, in the absence of recorded sales, at the average of
closing bid and asked prices on such exchange. Over-the-counter securities are
valued at the average of closing bid and asked prices. Fixed-income securities
may be valued on the basis of prices provided by a pricing service. Investments
in short-term securities (maturing in sixty days or less) are valued at
amortized cost unless the Board of Directors determines that such cost is not a
fair value. Assets for which there are no quotations available will be valued
at a

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<PAGE>

fair value as determined by or at the direction of the Board of Directors.
Investments in short-term securities (maturing in sixty days or less) are
valued at amortized cost unless the Board of Directors determines that such
cost is not a fair value.

The net asset value per share is determined as of the earlier of the
close of the exchange or 4:00 p.m. Eastern Time on each day the New York Stock
Exchange is open. The price per share for purchases or redemptions made
directly through State Street normally is such value next computed after State
Street receives the purchase order or redemption request. In order for your
purchase order or redemption request to be effective on the day you place your
order with your broker-dealer or other financial institution, such
broker-dealer or financial institution must (i) receive your order before 4:00
p.m. Eastern time and (ii) promptly transmit the order to State Street. The
broker-dealer or financial institution is responsible for promptly transmitting
purchase orders or redemption requests to State Street so that you may receive
the same day's net asset value. Note that in the case of redemptions and
repurchases of shares owned by corporations, trusts or estates, or of shares
represented by outstanding certificates, State Street may require additional
documents to effect the redemption and the applicable price will be determined
as of the close of the next computation following the receipt of the required
documentation or outstanding certificates. See "Redemption of Shares."

DIVIDENDS AND DISTRIBUTIONS

There are two sources for the payments made to you by the Fund. The
first is net investment income (usually referred to as "dividends") and the
second source is realized capital gains. Dividends are usually paid in March,
June, September and December. Capital gains, if any, are usually distributed in
December. When a dividend or capital gain is distributed, the net asset value
per share is reduced by the amount of the payment. Because Class B and Class C
shares incur higher distribution services fees and bear certain other expenses,
such shares will have higher expense ratios and will pay correspondingly lower
dividends than Class A shares. For tax purposes, information concerning
distributions will be mailed annually to shareholders.

Shareholders have the option to receive all dividends and
distributions in cash, to have all dividends and distributions reinvested, or
to have income dividends paid in cash and capital gain distributions
reinvested. Reinvestment of all dividends and distributions is automatic for
accounts utilizing the Automatic Withdrawal Plan. The reinvestment of dividends
and distributions is made at net asset value (without any initial or contingent
deferred sales charge) on the payment date. For the protection of the
shareholder, upon receipt of the second dividend check which has been returned
to the State Street as undeliverable, undelivered dividends will be invested in
additional shares at the current net asset value and the account designated as
a dividend reinvestment account.

FEDERAL INCOME TAXES

This section is not intended to be a full discussion of all the
aspects of the federal income tax law and its effects on the Fund and its
shareholders. Shareholders may be subject to state and local taxes on
distributions. Each investor should consult his or her own tax adviser
regarding the effect of federal, state and local taxes on an investment in the
Fund.

The Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code (the "Code") and, if so qualified, will
not be liable for federal income tax to the extent its earnings are
distributed. If, for any calendar year, the distribution of earnings required
under the Code exceeds the amount distributed, an excise tax, equal to 4% of
the excess, will be imposed on the Fund. The Fund intends to make distributions
during each calendar year sufficient to prevent imposition of the excise tax.

Distributions of net investment income and net realized short-term
capital gains will be taxable to shareholders as ordinary income. Distributions
of net long-term capital gains will be taxable to shareholders as long-term
capital gain regardless of how long the shares have been held. Distributions
will be treated the same for tax purposes whether received in cash or in
additional shares. Dividends declared in the last calendar month to
shareholders of record in such month and paid by the end of the following
January are treated as received by the shareholder in the year in which they
are declared.

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<PAGE>

A gain or loss for tax purposes may be realized on the redemption of
shares. If the shareholder realizes a loss on the sale or exchange of any
shares held for six months or less and if the shareholder received a capital
gain distribution during such period, then such loss is treated as a long-term
capital loss to the extent of such capital gain distribution.

FUND SHARES

Shares issued by the Fund are currently divided into four classes,
Class A, Class B, Class C and Class Y shares. The Board of Directors may offer
additional classes in the future and may at any time discontinue the offering
of any class of shares. Each share, when issued and paid for in accordance with
the terms of the offering, is fully paid and non-assessable. Shares have no
preemptive or subscription rights and are freely transferable. Each share of
the Fund represents an interest in the assets of the Fund and has identical
voting, dividend, liquidation and other rights and the same terms and
conditions as any other shares except that (i) each dollar of net asset value
per share is entitled to one vote, (ii) the expenses related to a particular
class, such as those related to the distribution of each class and the transfer
agency expenses of each class are borne solely by each such class and (iii)
each class of shares votes separately with respect to provisions of the Rule
12b-1 Distribution Plan which pertains to a particular class and other matters
for which separate class voting is appropriate under applicable law. Each
fractional share has the same rights, in proportion, as a full share. Shares do
not have cumulative voting rights; therefore, the holders of more than 50% of
the voting power of the Fund can elect all of the directors of the Fund. Due to
the differing expenses of the classes, dividends of Class B and Class C shares
are likely to be lower than for Class A shares, and are likely to be higher for
Class Y shares than for any other class of shares. For more information about
Class Y shares, call the Fund at 1-800-279-0279 to obtain the Class Y
prospectus.

MAJOR SHAREHOLDERS. Shelby Cullom Davis & Co., which may be deemed to
be an affiliate of the Adviser, may be deemed to control the Company due to its
beneficial ownership of more than 25% of the Company's outstanding shares.

PERFORMANCE DATA

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

"Yield" is computed by dividing the net investment income per share
(as defined in applicable regulations of the Securities and Exchange
Commission) during a specified 30-day period by the maximum offering price per
share on the last day of such period. Yield is an annualized figure, in that it
assumes that the same level of net investment income is generated over a
one-year period. The yield formula annualizes net investment income by
providing for semi-annual compounding.

"Distribution rate" is determined by dividing the income dividends per
share for a stated period by the net asset value per share on the last day of
such period. Distribution rates published are measures of the level of income
dividends distributed during a specified period. Thus, such rates differ from
yield (which measures income actually earned by a Fund) and total return (which
measures actual income, plus realized and unrealized gains or losses of a
Fund's investments). Consequently, distribution rates alone should not be
considered complete measures of performance.

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

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<PAGE>

return is not annualized. In the event the Fund advertises its total return or
average annual total return, the stated periods will be one, five and ten
years, and may also include longer or shorter periods, including the life of
the Fund. The computation of total and average annual total return assumes
reinvestment of all dividends and distributions, and deduction of all charges
and expenses. In addition, a table showing the performance of an assumed
investment of $10,000 may be used from time to time.

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

In reports or other communications to shareholders and in advertising
material, the performance of the Fund may be compared to recognized unmanaged
indices or averages of the performance of similar securities. Also, the
performance of the Fund may be compared to that of other funds of comparable
size and objectives as listed in the rankings prepared by Lipper Analytical
Services, Inc., Morningstar, Inc. or similar independent mutual fund rating
services and the Fund may use evaluations published by nationally recognized
independent ranking services and publications.

Because the Fund is new it has not yet published an Annual or
Semi-Annual Report. Shareholders will be provided with copies of these reports
without charge when they become available.

SHAREHOLDER INQUIRIES

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

APPENDIX
QUALITY RATINGS OF DEBT SECURITIES

MOODY'S CORPORATE BOND RATINGS

Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are unlikely to impair
the fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than Aaa
securities.

A - Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium-grade-obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e. they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

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<PAGE>

Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any longer period of time may be small.

Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca - Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

C - Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

STANDARD & POOR'S CORPORATE BOND RATINGS

AAA - Debt rated 'AAA' has the highest rating assigned by Standard and Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA - Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

A - Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB - Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB - Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'BBB-' rating.

B - Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating.

CCC - Debt rated 'CCC' has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The 'CCC' rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'B' or 'B-' rating.

CC - The rating 'CC' is typically applied to debt subordinated to senior debt
that is assigned an actual or implied 'CCC' rating.

22
<PAGE>

C - The rating 'C' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.

CI - The rating 'CI' is reserved for income bonds on which no interest is being
paid.

D - Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The 'D' rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

MOODY'S COMMERCIAL PAPER RATINGS

Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. Moody's employs the following three designations, all
judged to be investment grade, to indicate the relative repayment capacity of
rated issuers: Prime-1 (superior capacity), Prime-2 (strong capacity) and
Prime-3 (acceptable capacity). In assigning ratings to an issuer which
represents that its commercial paper obligations are supported by the credit of
another entity or entities, Moody's evaluates the financial strength of the
indicated affiliated corporations, commercial banks, insurance companies,
foreign governments or other entities, but only as one factor in the total
rating assessment.

STANDARD & POOR'S COMMERCIAL PAPER RATINGS

The S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded into four categories, ranging from 'A' for the highest
quality to 'D' for the lowest. Issues assigned an 'A' rating are regarded as
having the greatest capacity for timely payment. Within the 'A' category, the
numbers 1, 2 and 3 indicate relative degrees of safety. The addition of a plus
sign to the category A-1 denotes that the issue is determined to possess
overwhelming safety characteristics.

23
<PAGE>

TERMS AND CONDITIONS FOR A STATEMENT OF INTENTION (CLASS A SHARES ONLY)

TERMS OF ESCROW:
1. Out of my initial purchase (or subsequent purchases if necessary) 5% of the
dollar amount specified in this Statement will be held in escrow by State
Street in the form of shares (computed to the nearest full share at the public
offering price applicable to the initial purchase hereunder) registered in my
name. For example, if the minimum amount specified under this statement is
$100,000 and the public offering price applicable to transactions of $100,000
is $10 a share, 500 shares (with a value of $5,000) would be held in escrow.

2. In the event I should exchange some or all of my shares to those of another
mutual fund for which Davis Distributors, LLC, acts as distributor, according
to the terms of this prospectus, I hereby authorize State Street to escrow the
applicable number of shares of the new fund, until such time as this Statement
is complete.

3. If my total purchases are at least equal to the intended purchases, the
shares in escrow will be delivered to me or to my order.

4. If my total purchases are less than the intended purchases, I will remit to
Davis Distributors, LLC, the difference in the dollar amount of sales charge
actually paid by me and the sales charge which I would have paid if the total
purchase had been made at a single time. If Davis Distributors, LLC, or my
dealer does not make remittance within 20 days after written request, State
Street will redeem an appropriate number of the escrowed shares in order to
realize such difference.

5. I hereby irrevocably constitute and appoint State Street my attorney to
surrender for redemption any or all escrowed shares with full power of
substitution in the premises.

6. Shares remaining after the redemption referred to in Paragraph No. 4 will be
credited to my account.

7. The duties of State Street are only such as are herein provided being purely
ministerial in nature, and it shall incur no liability whatever except for
willful misconduct or gross negligence so long as it has acted in good faith.
It shall be under no responsibility other than faithfully to follow the
instructions herein. It may consult with legal counsel and shall be fully
protected in any action taken in good faith in accordance with advice from such
counsel. It shall not be required to defend any legal proceedings which may be
instituted against it in respect of the subject matter of this Agreement unless
requested to do so and indemnified to its satisfaction against the cost and
expense of such defense.

8. If my total purchases are more than the intended purchases and such total is
sufficient to qualify for an additional quantity discount, a retroactive price
adjustment shall be made for all purchases made under such Statement to reflect
the quantity discount applicable to the aggregate amount of such purchases
during the thirteen-month period.

24
<PAGE>

EXPEDITED REDEMPTION PRIVILEGE

[ ] If you wish the Expedited Redemption Privilege please check the box to
the left and complete the following information.

I (we) hereby authorize State Street Bank and Trust Company, Davis Selected
Advisers, L.P., Davis Distributors, LLC, and/or the Davis Funds to act upon
instructions received by telephone or telegraph, believed by them to be
genuine, and to redeem shares in my (our) account in any of the Davis Funds and
to wire the proceeds of such redemption to the predesignated bank listed below.
I (we) hereby agree that neither State Street Bank and Trust Company, nor Davis
Selected Advisers, L.P., nor Davis Distributors, LLC, nor the Davis Funds nor
any of their officers or employees, will be liable for any loss, liability,
cost or expense for acting upon such instructions.

- - -------------------------------------------------------------------------------
Signature of Shareholder Signature of Co-Shareholder

- - -------------------------------------------------------------------------------
Name of Commercial Bank (Title of Account at Bank)

- - -------------------------------------------------------------------------------
(Street) (Account Number at Bank)

- - -------------------------------------------------------------------------------
(City) (State) (Zip) (ABA/Transit Routing Number)

25
<PAGE>

TABLE OF CONTENTS

PAGE

Summary................................................................... 2
Investment Objectives and Policies........................................ 4
Other Investment Policies................................................. 7
Adviser, Sub-Advisers and Distributor..................................... 9
Distribution Plans........................................................ 9
Purchase of Shares........................................................ 11
Telephone Privilege....................................................... 15
Exchange of Shares........................................................ 15
Redemption of Shares...................................................... 16
Determining the Price of Shares........................................... 18
Dividends and Distributions............................................... 19
Federal Income Taxes...................................................... 19
Fund Shares............................................................... 20
Performance Data.......................................................... 20
Appendix - Quality Ratings Of Debt Securities............................ 21
Shareholder Inquiries..................................................... 21

26
<PAGE>

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

CROSS REFERENCE SHEET
---------------------
<TABLE>
<CAPTION>
N-1A
ITEM NO. PART A CAPTION OR PLACEMENT
------- ---------------------------
<S> <C>
1 Front Cover
2 Summary
3 Financial Highlights (NOT APPLICABLE)
4 Summary; Investment Objective and Policies
5 Adviser, Sub-Adviser and Distributor; Distribution Plans; Purchase of
Shares; Summary; Investment Objective and Policies
5A Management's Discussion of Fund Performance (NOT APPLICABLE)
6 Summary; Shareholder Inquiries; Purchase of Shares; Dividends and
Distributions; Exchange of Shares; Federal Income Taxes; Fund
Shares
7 Purchase of Shares; Adviser, Sub-Adviser and Distributor; Exchange
of Shares; Determining the Price of Shares; Dividends and
Distributions; Distribution Plan
8 Redemption of Shares; Exchange of Shares
9 (Not Applicable)

PART B CAPTION OR PLACEMENT

* INCLUDED IN PROSPECTUS

27
<PAGE>

PROSPECTUS MAY 1, 1998
CLASS Y SHARES

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

MINIMUM INVESTMENT PLANS AVAILABLE
Initial Purchase $5,000,000 Exchange Privilege
Wrap Fee Program Minimum
Investment subject to
Sponsor's Minimums

The Fund offers four classes of shares, Class A, B, C and Y, each
having different expense levels and sales charges. This Prospectus provides
information regarding the Class Y shares offered by the Fund. Class Y shares
are offered only to certain qualified purchasers, as described in this
Prospectus. Class A, Class B and Class C shares are offered under a separate
prospectus.

This Prospectus concisely sets forth information about the Class Y
shares of the Fund that prospective investors should know before investing. It
should be read carefully and retained for future reference. A Statement of
Additional Information dated May 1, 1998, has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. A copy of this
Statement and other information about the Fund may be obtained without charge
by writing to or calling the Fund at the above address or telephone number.

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.

<PAGE>

SUMMARY

FUND EXPENSES. The following table is intended to assist you in
understanding the various costs and expenses that an investor in the Class Y
shares of the Fund will bear directly or indirectly. You can refer to "Adviser,
Sub-Advisers and Distributor" and "Purchase of Shares" for more information on
transaction and operating expenses of the Fund.

<TABLE>
<S> <C>
Shareholder Transaction Expenses Class Y
- - -------------------------------- -------
Maximum sales load imposed on purchases................................................. None
Maximum sales load imposed on reinvested dividends...................................... None
Deferred sales load (a declining percentage of the lesser of the net asset
value of the shares redeemed or the total cost of such shares)
Redeemed during first year....................................................... None
Redeemed during second or third year............................................. None
Redeemed during fourth or fifth year............................................. None
Redeemed during sixth year....................................................... None
Redeemed after sixth year........................................................ None
Exchange Fee......................................................................... None

Annual Fund operating expenses (as a percentage of average net assets)
- - ----------------------------------------------------------------------
Management fees.......................................................... 0.75%
12b-1 fees............................................................... 0.00%
Other expenses*.......................................................... 0.xx%
-----
Total Fund operating expenses................................... 0.xx%
</TABLE>

Example*:

You would pay the following expenses on a $1,000 investment, assuming
a 5% annual return and redemption at the end of each time period:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class Y.......................................... $xx $xx $xx $xxx
</TABLE>

* "OTHER EXPENSES" IN ANNUAL FUND OPERATING EXPENSES, AND THE EXPENSES
YOU WOULD PAY IN THE EXAMPLE ARE BASED UPON ESTIMATED ANNUAL AVERAGE NET ASSETS
OF $50 MILLION. THE FUND'S ACTUAL AVERAGE NET ASSETS MAY BE EITHER HIGHER OR
LOWER; RESULTING IN ACTUAL EXPENSES WHICH MAY BE EITHER GREATER OR LESS THAN
THOSE ESTIMATED.

2
<PAGE>

fee based program, sponsored and maintained by a registered broker-dealer
approved by the Distributor ("Wrap Program Investors").

INVESTMENT OBJECTIVES. The Fund's investment objective is to seek both
capital growth and income. The Fund invests primarily in equity securities, and
during normal market conditions will invest the majority of its assets in
equity securities including common stock, preferred stock, and securities
convertible into common stock. Equity securities are subject to the risk of
price fluctuations reflecting both market evaluations of the businesses
involved and general changes in the equity markets. To increase current income
or to diversify its portfolio the Fund may also invest in bonds and other debt
securities, including high yield, high risk bonds, and may also invest in
foreign securities. The Fund may attempt to reduce market and currency
fluctuation risks by engaging in related hedging transactions. These
transactions involve risk considerations. There is no assurance that the
investment objectives of the Fund will be achieved. See "Investment Objectives
and Policies".

PURCHASES, EXCHANGES AND REDEMPTIONS. Class Y shares are sold at net
asset value without a sales charge. The initial minimum investment for
Institutions and Government Entities is $5,000,000. The initial minimum
investment for Wrap Program Investors is set by the sponsor of the program.
Shares may be exchanged under certain circumstances at net asset value for the
same class of shares of certain other funds managed and distributed by the
Adviser. See "Purchase of Shares," "Exchange of Shares" and "Redemption of
Shares".

Class A shareholders who are eligible to purchase Class Y shares may
exchange their shares for Class Y shares of the Fund. There is no charge for
this service.

SHAREHOLDER SERVICES. Questions regarding the Fund or your account may
be directed to Davis Distributors, LLC at 1-800-279-0279 or to your sales
representative. Written inquiries may be directed to State Street Bank & Trust
Co., c/o The Davis Funds, P.O. Box 8406, Boston, MA 02266-8406. During drastic
market conditions, the Distributor may experience difficulty accepting
telephone redemptions or exchanges. If you are unable to contact the
Distributor at the above telephone number, you should call 1-505-820-3000
Monday through Friday between 8:00 a.m. and 4:00 p.m. Mountain Time.

INVESTMENT OBJECTIVES AND POLICIES

GENERAL. The Fund's investment objective is to seek both capital
growth and income. There is no assurance that such objectives will be achieved.
The Fund invests primarily in equity securities, and during normal market
conditions will invest the majority of its assets in equity securities
including common stock, preferred stock, and securities convertible into common
stock. To increase current income or to diversify its portfolio, the Fund may
also invest in bonds and other debt securities, including high yield, high-risk
bonds, and may also invest in foreign securities. The Fund may attempt to
reduce market and currency fluctuation risks by engaging in related hedging
transactions. These transactions involve risk considerations. There is no
assurance that the investment objectives of the Fund will be achieved.

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

3
<PAGE>

and on market and economic conditions. The Fund's results will be
related to the overall market for these securities. There is no limit on the
percentage of its assets, which the Fund may invest in equity securities.

Risks. Because the Fund invests primarily in equity securities during
normal market conditions, the value of its portfolio will fluctuate in response
to stock market movements.

4
<PAGE>

redemption by the issuer after a date certain and under certain circumstances
(including a specified price) established on issue. If a convertible security
held by the Fund is called for redemption, the Fund could be required to tender
it for redemption, convert it into the underlying common stock or sell it.

BONDS AND OTHER DEBT SECURITIES. Bonds and other debt securities may
be purchased by the Fund to increase current income or to diversify the
investment portfolio. The U.S. government, corporations and other issuers sell
bonds and other debt securities to borrow money. Issuers pay investors interest
and generally must repay the amount borrowed at maturity. Some debt securities,
such as zero coupon bonds, do not pay current interest, but are purchased at a
discount form their face values. The prices of debt securities fluctuate
depending on such factors as interest rates, credit quality and maturity. In
general their prices decline when interest rates rise and vice versa. While
there is no limit on the percentage of its assets which the Fund may invest in
bonds and other debt securities, the Fund invests primarily in equity
securities under normal market conditions.

Risks. While likely to have some quality and protective
characteristics, high yield, high-risk debt securities, whether or not
convertible into common stock, usually involve increased risk as to payment of
principal and interest. Issuers of such securities may be highly leveraged and
may not have available to them

5
<PAGE>

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

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

FOREIGN INVESTMENTS. The Fund may invest in securities of foreign
issuers or securities which are principally traded in foreign markets ("foreign
securities"). Investments in foreign securities may be made through the
purchase of individual securities on recognized exchanges and developed
over-the-counter markets, through American Depository Receipts ("ADRs") or
Global Depository Receipts ("GDRs") covering such securities, and through U.S.
registered investment companies investing primarily in foreign securities. When
the Fund is invested in foreign securities, the operating expenses of the Fund
are likely to be higher than that of an investment company investing
exclusively in U.S. securities, since the, custodial and certain other expenses
are expected to be higher.

OTHER INVESTMENT POLICIES

6
<PAGE>

in connection with transactions in securities denominated or traded in foreign
currencies, to hedge the currency risk in foreign securities held by the Fund
and to hedge a currency risk involved in an anticipated purchase of foreign
securities. Cross-hedging may also be utilized, that is, entering into a hedge
transaction in respect to a different foreign currency than the one in which a
trade is to be made or in which a portfolio security is principally traded.
There is no limitation on the amount of assets that may be committed to
currency hedging. However, the Fund will not engage in a futures transaction if
it would cause the aggregate of initial margin deposits and premiums paid on
outstanding options on futures contracts to exceed 5% of the value of its total
assets (excluding in calculating such 5% any in-the-money amount of any
option). Currency hedging transactions may be utilized as a tool to reduce
currency fluctuation risks due to a current or anticipated position in foreign
securities. The successful use of currency hedging transactions usually depends
on the Adviser's or the Sub-Adviser's ability to forecast interest rate and
currency exchange rate movements. Should interest or exchange rates move in an
unexpected manner, the anticipated benefits of futures contracts, options or
forward contracts may not be achieved or losses may be realized and thus the
Fund could be in a worse position than if such strategies had not been used.
Unlike many exchange-traded futures contracts, there are no daily price
fluctuation limits with respect to options on currencies and forward contracts,
and adverse market movements could therefore continue to an unlimited extent
over a period of time. In addition, the correlation between movements in the
prices of such instruments and movements in the price of the securities and
currencies hedged or used for cover will not be perfect and could produce
unanticipated losses. Unanticipated changes in currency prices may result in
poorer overall performance for the Fund than if it had not entered into such
contracts. When taking a position in an anticipatory hedge (when the Fund
purchases a futures contract or other similar instrument to gain market
exposure in anticipation of purchasing the underlying securities at a later
date), the Fund is required to set aside cash or high-grade liquid securities
to fully secure the obligation.

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

The restricted securities which the Fund may purchase include
securities which have not been registered under the 1933 Act but are eligible
for purchase and sale pursuant to Rule 144A ("Rule 144A Securities"). This Rule
permits certain qualified institutional buyers, such as the Fund, to trade in
privately placed securities even though such securities are not registered
under the 1933 Act. The Adviser or Sub-Adviser, under criteria established by
the Fund's Board of Directors, will consider whether Rule 144A securities being
purchased or held by the Fund are illiquid and thus subject to the Fund's
policy limiting investments in illiquid securities. In making this
determination, the Adviser or Sub-Adviser will consider the frequency of trades
and quotes, the number of dealers and potential purchasers, dealer undertakings
to make a market, and the nature of the security and the market place trades
(for example, the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer). The liquidity of Rule 144A
Securities will also be monitored by the Adviser and Sub-Adviser and, if as a
result of changed conditions, it is determined that a Rule 144A Security is no
longer liquid, the Fund's holding of illiquid securities will be reviewed to
determine what, if any, action is required in light of the policy limiting
investments in such securities. Investing in Rule 144A Securities could have
the effect of increasing the amount of investments in illiquid securities if
qualified institutional buyers are unwilling to purchase such securities.

7
<PAGE>

ADVISER, SUB-ADVISER AND DISTRIBUTOR

8
<PAGE>

investment objectives. The Fund also reimburses the Adviser for its costs of
providing certain accounting and financial reporting, shareholder services and
compliance with state securities laws. Under the Sub-Advisory Agreement with
DSA-NY, the Adviser pays all of DSA-NY's direct and indirect costs of
operation. All the fees paid to DSA-NY are paid by the Adviser and not the
Fund.

Christopher C. Davis and Andrew A. Davis are the co-portfolio managers
for the Fund and other equity funds managed by the Adviser.

PURCHASE OF SHARES

GENERAL. Class Y shares are offered through this Prospectus to (i)
trust companies, bank trusts, endowments, pension plans or foundations
("Institutions") acting on behalf of their own account or one or more clients
for which such Institution acts in a fiduciary capacity and investing at least
$5,000,000 at any one time; (ii) any state, county, city, department, authority
or similar agency which invests at least $5,000,000 ("Government Entities");
and (iii) any investor with an account established under a "wrap account" or
other similar fee-based program sponsored and maintained by a registered
broker-dealer approved by the Fund's Distributor ("Wrap Program Investors").
Wrap Program Investors may only purchase Class Y shares through the sponsors of
such programs who have entered into agreements with Davis Selected Advisers,
L.P.

PURCHASE BY BANK WIRE. Shares may be purchased at any time by wiring
federal funds directly to State Street. Prior to an initial investment by wire,
the institutional shareholder or wrap program sponsor should telephone Davis
Distributors, LLC at 1-800-279-0279 to advise them of the investment and class
of shares and to obtain an account number and instructions. To assure proper
credit, the wire instructions should be made as follows:

9
<PAGE>

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

You may make additional investments by wire or you may simply mail a
check payable to "The Davis Funds" to State Street Bank and Trust Company," c/o
The Davis Funds, P.O. Box 8406, Boston, MA 02266-8406. The check should be
accompanied by a form, which State Street will provide after each purchase. If
you do not have a form, you should tell State Street that you want to invest
the check in shares of the Fund. If you know your account number, you should
also give it to State Street.

The Fund does not issue certificates for Class Y shares. Each time you
add to or withdraw from your account, you will receive a statement showing the
details of the transaction and any other transactions you had during the
current year.

TELEPHONE PRIVILEGE

Unless you have provided in your application that the telephone
privilege is not to be available, the telephone privilege is automatically
available under certain circumstances for exchanging shares and for redeeming
shares. BY EXERCISING THE TELEPHONE PRIVILEGE TO SELL OR EXCHANGE SHARES, YOU
AGREE THAT THE FUND SHALL NOT BE LIABLE FOR FOLLOWING TELEPHONE INSTRUCTIONS
REASONABLY BELIEVED TO BE GENUINE. Reasonable procedures will be employed to
confirm that such instructions are genuine and if not employed, the Fund may be
liable for unauthorized instructions. Such procedures will include a request
for personal identification (account or social security number) and tape
recording of the instructions. You should be aware that during unusual market
conditions we may have difficulty in accepting telephone requests in which case
you should contact us by mail. See "Exchange of Shares - By Telephone",
"Redemption of Shares - By Telephone" and "Redemption of Shares - Expedited
Redemption Privilege".

EXCHANGE OF SHARES

GENERAL. You may exchange Class Y shares of the Fund for Class Y
shares of the other Davis Funds. The Davis Funds offer a variety of investment
objectives that includes common stock funds, tax-exempt and corporate bond
funds, and a money market fund. However, the Fund is intended as a long-term
investment and is not intended for short-term trades. The net asset value of
the initial shares being acquired must be at least $5,000,000 for Institutions
and Government Entities or minimums set by wrap program sponsors. Class A
shareholders who are eligible to purchase Class Y shares may exchange their
shares for Class Y shares of the Fund.

Before you decide to make an exchange, you must obtain the current
prospectus of the desired fund. Call the Distributor for information and a
prospectus for any of the other Davis Funds registered in your state. Read the
prospectus carefully. If you decide to exchange your shares, send State Street
a written unconditional request for the exchange and follow the instructions
regarding delivery of share certificates contained in the section on
"Redemption of Shares". A signature guarantee is not required for such an
exchange. However, if shares are also redeemed for cash in connection with the
exchange transaction, a signature guarantee may be required. See "Redemption of
Shares". Your dealer may charge an additional fee for handling an exercise of
the exchange privilege.

An exchange involves both a redemption and a purchase, and normally
both are done on the same day. However, in certain instances such as where a
large redemption is involved, the investment of redemption proceeds into shares
of other Davis Funds may take up to seven days. For federal income tax
purposes, exchanges are treated as a sale and purchase. Therefore, there will
usually be a recognizable capital gain or loss due to an exchange.

10
<PAGE>

The number of times a shareholder may exchange shares among the Davis
Funds within a specified period of time may be limited at the discretion of the
Distributor. Currently, more than four exchanges out of a fund during a twelve
month period are not permitted without the prior written approval of the
Distributor. The Fund reserves the right to terminate or amend the exchange
privilege at any time upon such notice as is required by applicable regulatory
authorities (currently 60 days).

BY TELEPHONE. You may exchange shares by telephone into accounts with
identical registrations. Please see the discussion of procedures in respect to
telephone instructions in the note under "Telephone Privilege" which is also
applicable to exchanges.

REDEMPTION OF SHARES

GENERAL. You can redeem, or sell back to the Fund, all or part of your
shares at any time. You can do this by sending a written request to State
Street Bank and Trust Company, c/o The Davis Funds, P.O. Box 8406, Boston, MA
02266-8406, indicating how many of your shares or what dollar amount you want
to redeem. If more than one person owns the shares to be redeemed, all of them
must sign the request. The signatures on the request must correspond to the
account from which the shares are being redeemed.

For the protection of all shareholders, the Fund also requires that
signatures appearing on a share certificate, stock power or redemption request
where the proceeds would be more than $50,000 must be guaranteed by a bank,
credit union, savings association, securities exchange, broker, dealer or other
guarantor institution. A signature guarantee is also required in the event that
any modification to the Company's application is made after the account is
established, including the selection of the Expedited Redemption Privilege. In
some situations such as where corporations, trusts or estates are involved,
additional documents may be necessary to effect the redemption. The transfer
agent may reject a request from any of the foregoing eligible guarantors, if
such guarantor does not satisfy the transfer agent's written standards or
procedures or if such guarantor is not a member or participant of a signature
guarantee program. This provision also applies to exchanges when there is also
a redemption for cash. A signature guarantee on redemption requests where the
proceeds would be $50,000 or less is not required, provided that such proceeds
are being sent to the address of record and, in order to ensure authenticity of
an address change, such address of record has not been changed within the last
30 days. All notifications of address changes must be in writing.

Redemptions are ordinarily paid to you in cash. However, the Fund's
Board of Directors is authorized to decide that conditions exist making cash
payments undesirable, although the Board has never reached such a decision. If
the Board should decide to make payment in other than cash, redemptions could
be paid in securities, valued at the value used in computing the Fund's net
asset value. There would be brokerage costs incurred by the shareholder in
selling such redemption proceeds. We must, however, redeem shares solely in
cash up to the lesser of $250,000 or 1% of the Fund's net asset value,
whichever is smaller, during any 90-day period for any one shareholder.

Your shares may also be redeemed through participating brokers or
dealers. The Distributor may repurchase shares from your dealer, if your dealer
is a member of the Distributor's selling group. Your dealer may, but is not
required to, use this method in selling back your shares and may place any
repurchase request by telephone or wire. Any broker may charge you a service
fee or commission. No charge is payable if you redeem your own shares through
State Street rather than having a dealer arrange for a repurchase.

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<PAGE>

DETERMINING THE PRICE OF SHARES

The net asset value per share is determined daily by dividing the
total value of investments and other assets, less any liabilities, by the
number of total outstanding shares. Fixed income securities may be valued on
the basis of prices provided by a pricing service when such prices are believed
to reflect the fair market value of such securities. (Pricing services
generally take into account institutional size trading in similar groups of
securities). Securities not priced in this manner will be priced at the last
published sales price if traded on that day and, if not traded, at the mean
between the most recent quoted bid and asked prices provided by investment
dealers. The pricing service and valuation procedures are reviewed and subject
to approval by the Board of Directors. Short-term securities maturing in 60
days or less will be valued at amortized cost (unless the Board of Directors
determines that amortized cost would not represent a fair value). If there is a
material difference in the market value and amortized cost value of short-term
securities, market value will be used. Assets for which there are no quotations
available will be valued at a fair value as determined by or at the direction
of the Board of Directors.

The price per share for purchases or redemptions made directly through
State Street normally is such value next computed after State Street receives
the purchase order or redemption request. In order for your purchase order or
redemption request to be effective on the day you place your order with your
broker-dealer or other financial institution, such broker-dealer or financial
institution must (i) receive your order before 4:00 p.m. Eastern time and (ii)
promptly transmit the order to State Street. The broker-dealer or financial
institution is responsible for promptly transmitting purchase orders or
redemption requests to State Street so that you may receive the same day's net
asset value. Note that in the case of redemptions and repurchases of shares
owned by corporations, trusts or estates, or of shares represented by
outstanding certificates, State Street may require additional documents to
effect the redemption and the applicable price will be determined as of the
close of the next computation following the receipt of the required
documentation or outstanding certificates. See "Redemption of Shares."

DIVIDENDS AND DISTRIBUTIONS

Shareholders have the option to receive all dividends and
distributions in cash, to have all dividends and distributions reinvested, or
to have income dividends and short-term capital gain distributions paid in cash
and long-term capital gain distributions reinvested. The reinvestment of
dividends and distributions is made at net asset value on the dividend payment
date. Upon receipt of the second dividend check which has been returned to
State Street as undeliverable, undelivered dividends will be invested in
additional shares at the current net asset value and the account designated as
a dividend reinvestment account.

FEDERAL INCOME TAXES

This section is not intended to be a full discussion of all the
aspects of the federal income tax law and its effects on the Fund and its
shareholders. Shareholders may be subject to state and local taxes on
distributions. Each investor should consult his or her own tax adviser
regarding the effects of federal, state and local tax laws on an investment in
the Fund.

The Fund intends to qualify, as it has since its inception, as a
regulated investment company under the Internal Revenue Code (the "Code") and,
if so qualified, will not be liable for federal income tax to the extent its
earnings are distributed. If for any calendar year the required distribution of
the Fund exceeds the amount distributed, an excise tax equal to 4% of the
excess will be imposed on the Fund. The Fund intends to make distributions
during each calendar year sufficient to prevent imposition of the excise tax.

12
<PAGE>

A gain or loss for tax purposes may be realized on the redemption of
shares. If a shareholder realizes a loss on the sale or exchange of any shares
held for six months or less and during such period the shareholder received any
exempt-interest dividends, then such loss is disallowed to the extent of the
amount of the exempt-interest dividends. If a shareholder realizes a loss on
the sale or exchange of any shares held for six months or less and during such
period the shareholder received any capital gains dividends, then such loss (to
the extent it is allowed) is treated as a long-term capital loss to the extent
of such capital gain dividends. Interest on indebtedness incurred by
shareholders to purchase or carry shares of the Fund will not be deductible for
federal income tax purposes. Dividends declared in the last calendar month to
shareholders of record in such month and paid by the end of the following
January are treated as received by the shareholder in the year in which they
are declared.

The Fund may not be an appropriate investment vehicle for entities
which are "substantial users" (or "related persons" thereto) of facilities
financed by "industrial development bonds" as such terms are defined in the
Internal Revenue Code. Such entities (or persons) should consult their own tax
advisers before investing.

FUND SHARES

Shares issued by the Fund are currently divided into four classes,
Class A, Class B, Class C and Class Y shares. Due to the differing expenses of
the classes, dividends of Class B and Class C shares are likely to be lower
than for Class A shares, and are likely to be higher for Class Y shares than
for any other class of shares. For more information regarding the Class A,
Class B and Class C shares, please call 1-800-279-0279 to request a prospectus
for those shares.

The Board of Directors may offer additional classes in the future and
may at any time discontinue the offering of any class of shares. Each share,
when issued and paid for in accordance with the terms of the offering, is fully
paid and non-assessable. Shares have no preemptive or subscription rights and
are freely transferable. Each share of the Fund represents an interest in the
assets of the Fund and has identical voting, dividend, liquidation and other
rights and the same terms and conditions as any other shares except that (i)
each dollar of net asset value per share is entitled to one vote irrespective
of the class or subclass thereof, (ii) the expenses related to a particular
class, such as those related to the distribution of each class and the transfer
agency expenses of each class are borne solely by each such class and (iii)
each class of shares votes separately with respect to provisions of the Rule
12b-1 Distribution Plan which pertains to a particular class and other matters
for which separate class voting is appropriate under applicable law. Each
fractional share has the same rights, in proportion, as a full share. Shares do
not have cumulative voting rights; therefore, the holders of more than 50% of
the voting power of the Fund can elect all of the directors of the Fund.

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

PERFORMANCE DATA

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<PAGE>

calculated separately for each class. These performance figures are based upon
historical results and are not intended to indicate future performance.

"Total return" refers to the Fund's compounded rate of return over a
stated period that would equate an initial amount invested at the beginning of
the period to the ending redeemable value of the investment. Total return is
not annualized. In the event the Fund advertises its total return or average
annual total return, the stated periods will be one, five and ten years, and
may also include longer or shorter periods, including the life of the Fund. The
computation of total and average annual total return assumes reinvestment of
all dividends and distributions, and deduction of all charges and expenses. In
addition, a table showing the performance of an assumed investment of $10,000
may be used from time to time.

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

Because the Fund is new it has not yet published an Annual or
Semi-Annual Report. Shareholders will be provided with copies of these reports
without charge when they become available.

14
<PAGE>

SHAREHOLDER INQUIRIES

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

APPENDIX
QUALITY RATINGS OF DEBT SECURITIES

MOODY'S CORPORATE BOND RATINGS

Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca - Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

C - Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

STANDARD & POOR'S CORPORATE BOND RATINGS

AAA - Debt rated 'AAA' has the highest rating assigned by Standard and Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA - Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

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<PAGE>

CC - The rating 'CC' is typically applied to debt subordinated to senior debt
that is assigned an actual or implied 'CCC' rating.

CI - The rating 'CI' is reserved for income bonds on which no interest is being
paid.

MOODY'S COMMERCIAL PAPER RATINGS

STANDARD & POOR'S COMMERCIAL PAPER RATINGS

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<PAGE>

TABLE OF CONTENTS

PAGE

Summary.................................................................... 3
Investment Objectives and Policies......................................... 6
Other Investment Policies.................................................. 8
Adviser, Sub-Advisers and Distributor...................................... 9
Purchase of Shares......................................................... 10
Telephone Privilege........................................................ 10
Exchange of Shares......................................................... 11
Redemption of Shares....................................................... 11
Determining the Price of Shares............................................ 12
Dividends and Distributions................................................ 12
Federal Income Taxes....................................................... 13
Fund Shares................................................................ 13
Performance Data........................................................... 14
Shareholder Inquiries...................................................... 15
Appendix - Quality Ratings of Debt Securities.............................. 15

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

MAY 1, 1998
DAVIS GROWTH & INCOME FUND
124 EAST MARCY STREET
SANTA FE, NEW MEXICO 87501
1-800-279-0279

TABLE OF CONTENTS
TOPIC PAGE

Investment Restrictions......................................... 2
High Yield, High-Risk Debt Securities........................... 3
Federal Tax Aspects Of Certain Mortgage REITs................... 4
Writing Covered Call Options.................................... 5
Hedging of Foreign Currency Risks............................... 5
Repurchase Agreements........................................... 6
Portfolio Transactions.......................................... 7
Directors and Officers.......................................... 7
Directors Compensation Schedule................................. 9
Certain Shareholders of the Fund................................ 10
Investment Advisory Services.................................... 10
Custodian....................................................... 11
Auditors........................................................ 11
Determining the Price of Shares................................. 11
Reduction of Class A Sales Charge............................... 11
Special Distribution Arrangements............................... 13
Distribution of Fund Shares..................................... 14
Performance Data................................................ 14

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
IN CONJUNCTION WITH THE CLASS A, CLASS B AND CLASS C PROSPECTUS DATED MAY 1,
1998 AND THE CLASS Y PROSPECTUS DATED MAY 1, 1998. THE PROSPECTUSES MAY BE
OBTAINED FROM THE FUND.

<PAGE>

INVESTMENT RESTRICTIONS

The investment restrictions set forth below may not be changed without
the approval of the holders of the lesser of (i) 67% of the eligible votes, if
the holders of more than 50% of the eligible votes are represented or (ii) more
than 50% of the eligible votes. All other investment restrictions or policies
are non-fundamental and may be changed without a vote of shareholders. All
percentage limitations set forth in these restrictions apply as of the time of
an investment without regard to later increases or decreases in the value of
securities or total or net assets.

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

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

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

4. Real Estate. The Fund may not purchase real estate or real estate
mortgages as such, but may purchase the liquid securities of
companies, including real estate investment trusts, holding real
estate or interests (including mortgage interests) therein.

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

6. Lending. The Fund may not lend money, except that it may buy debt
securities customarily acquired by institutional investors. These debt
securities may comprise all or a portion of an issue of "restricted"
debt securities. The Fund may also buy debt securities which have been
sold to the public and may enter into repurchase agreements. The Fund
may lend its portfolio securities subject to having 100% collateral in
cash, U.S. Government Securities, or other liquid securities. The Fund
will not lend securities if such a loan would cause more than 33 1/3%
of the total value of its assets (including collateral received) to
then be subject to such loans.

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

8. Concentration. The Fund does not concentrate its investments in any
one industry and may not buy the securities of companies in any one
industry if more than 25% of the value of the Fund's total assets
would then be invested in companies in that industry. (U.S. Government
Securities are not included in this limitation.)

NON-FUNDAMENTAL POLICIES. In addition to the foregoing restrictions,
the Fund is subject to certain other non-fundamental policies, which may be
changed without shareholder approval including the following:

1. Illiquid Securities. The Fund may not purchase illiquid securities if
more than 15% of the value of the Fund's net assets would be invested
in such securities.

2
<PAGE>

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

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

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

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

HIGH YIELD, HIGH RISK DEBT SECURITIES

As discussed in the prospectus, the real estate securities,
convertible securities, bonds, and other debt securities which the Fund may
invest in may include high yield, high risk debt securities rated BBB or lower
by Standard & Poor's Corporation ("S&P") or Baa or lower by Moody's Investor
Services ("Moody's") or unrated securities, commonly referred to as "junk
bonds." These lower rated securities are considered speculative with respect to
capacity to pay interest and repay principal in accordance with the terms of
the obligation and generally will involve more credit risk than securities in
the higher rating categories.

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

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

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

3
<PAGE>

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

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

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

FEDERAL TAX ASPECTS OF CERTAIN MORTGAGE REITS

The Fund may invest in real estate investment trusts ("REITs") that
hold residual interests in real estate mortgage investment conduits ("REMICs").
Under Treasury regulations that have not yet been issued, but may apply
retroactively, a portion of the Fund's income from a REIT that is attributable
to the REIT's residual interest in a REMIC (referred to in the Code as an
"excess inclusion") will be subject to Federal income tax. These regulations
are also expected to provide that excess inclusion income of a regulated
investment company, such as the Fund, will be allocated to shareholders of the
regulated investment company in proportion to the dividends received by such
shareholders, with the same consequences as if the shareholders held the
related REMIC residual interest directly. In general, excess inclusion income
allocated to shareholders (i) cannot be offset by net operating losses (subject
to a limited exception for certain thrift institutions), (ii) will constitute
unrelated business taxable income to entities (including a qualified pension
plan, an individual retirement account, a 401(k) plan, a Keogh plan or other
tax-exempt entity) subject to tax on unrelated business income, thereby
potentially requiring such an entity that is allocated excess inclusion income,
and otherwise might not be required to file a tax return, to file a tax return
and pay tax on such income, and (iii) in the case of a foreign shareholder,
will not qualify for any reduction in U.S. federal withholding tax. In
addition, if at any time during any taxable year a "disqualified organization"
(as defined in the Code) is a record holder of a share in a regulated
investment company, then the regulated investment company will be subject to a
tax equal to that portion of its excess inclusion income for the taxable year
that is allocable to the disqualified organization, multiplied by the highest
federal income tax rate imposed on corporations.

4
<PAGE>

WRITING COVERED CALL OPTIONS

The Fund may write covered call options on a portion of its portfolio
securities and purchase call options in closing transactions. The investment
restrictions provide that such an option may not be written if thereafter the
market value of the Fund's portfolio securities subject to options would exceed
10% of the value of the Fund's total assets. The Fund will only write options
on securities in its portfolios.

A covered call option gives the purchaser of the option the right to
buy the underlying security at the price specified in the option (the "exercise
price") at any time until the option expires, generally within three to nine
months, in return for the payment to the writer upon the issuance of the option
of an amount called the "premium." A commission may be charged in connection
with the writing of the option. The premium received for writing a call option
is determined by the option markets. The premium paid plus the exercise price
will always be greater than the market price of the underlying securities at
the time the option is written. By writing a covered call option, the Fund
foregoes, in exchange for the premium, the opportunity to profit from an
increase in the market value of the underlying security above the exercise
price, if the option is exercised.

The obligation is terminated upon exercise of the call option, its
expiration or when the Fund effects a closing purchase transaction. A closing
purchase transaction is one in which the writer purchases another call option
in the same underlying security (identical as to exercise price, expiration
date and number of shares). The writer thereby terminates its obligation and
substitutes the second writer as the obligor to the original option purchaser.
A closing purchase transaction would normally involve payment of a brokerage
commission. During the remaining term of the option, if the Fund cannot enter
into a closing purchase transaction, the Fund would lose the opportunity for
realizing any gain over and above the premium through sale of the underlying
security and if the security is declining in price the Fund would continue to
experience such decline.

HEDGING OF FOREIGN CURRENCY RISKS

The Fund may purchase or sell forward foreign currency exchange
contracts ("forward contracts") to attempt to minimize the risk to the Fund
from adverse changes in the relationship between the U.S. dollar and foreign
currencies. A forward contract is an obligation to purchase or sell a specific
currency for an agreed price at a future date which is individually negotiated
and privately traded by currency traders and their customers. Such a contract
gives the Fund a position in a negotiated, currently non-regulated market. The
Fund may enter into a forward contract, for example, when it enters into a
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of the security
("transaction hedge"). Additionally, for example, when the Adviser or
Sub-Adviser believes that a foreign currency may suffer a substantial decline
against the U.S. dollar, it may enter into a forward sale contract to sell an
amount of that foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency, or when the
Fund believes that the U.S. dollar may suffer a substantial decline against a
foreign currency, it may enter into a forward purchase contract to buy that
foreign currency for a fixed dollar amount in anticipation of purchasing
foreign traded securities ("position hedge"). In this situation the Fund may,
in the alternative, enter into a forward contract in respect to a different
foreign currency for a fixed U.S. dollar amount ("cross hedge"). This may be
done, for example, where the Adviser or Sub-Adviser believes that the U.S.
dollar value of the currency to be sold pursuant to the forward contract will
fall whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Fund are denominated.

The Fund may purchase and write put and call options on foreign
currencies for the purpose of protecting against declines in the U.S. dollar
value of foreign currency-denominated portfolio securities and against
increases in the U.S. dollar cost of such securities to be acquired. As in the
case of other kinds of options, however, the writing of an option on a foreign
currency constitutes only a partial hedge, up to the amount of the premium
received, and the Fund could be required to purchase or sell foreign currencies
at disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on a foreign currency may constitute an effective hedge against
fluctuations in exchange rates although, in the event of rate movements adverse
to the Fund's position, it may forfeit the entire amount of the premium plus
related transaction costs. Options on foreign currencies to be written or
purchased by the Fund are traded on U.S. and foreign exchanges or
over-the-counter. Currently, a significant portion or all of the value of an
over-the-counter option may be treated as an illiquid investment and subject to
the restriction on such investments as long as the SEC requires that
over-the-counter options be treated as illiquid. Generally, the Fund would
utilize options traded on exchanges where the options are standardized.

5
<PAGE>

The Fund may enter into contracts for the purchase or sale for future
delivery of foreign currencies ("currency futures contracts") and may purchase
and write put and call options to buy or sell currency futures contracts. A
"sale" of a currency futures contract means the acquisition of a contractual
obligation to deliver the foreign currencies called for by the contract at a
specified price on a specified date. A "purchase" of a currency futures
contract means the incurring of a contractual obligation to acquire the foreign
currencies called for by the contract at a specified price on a specified date.
Options on currency futures contracts to be purchased by the Fund will be
traded on U.S. or foreign exchanges or over-the-counter.

The Fund may also purchase securities (debt securities or deposits)
which have their coupon rate or value at maturity determined by reference to
the value of one or more foreign currencies. These strategies will be used for
hedging purposes only. The Fund will hold securities or other options or
futures positions whose values are expected to offset its obligations under the
hedge strategies. The Fund will not enter into a currency hedging position that
exposes the Fund to an obligation to another party unless it owns either (i) an
offsetting position in securities, options or futures positions or (ii) cash,
receivables and short-term debt securities with a value sufficient to cover its
potential obligations. The Fund will comply with requirements established by
the SEC with respect to coverage of options and futures strategies by mutual
funds, and, if so required, will set aside cash and high-grade liquid debt
securities in a segregated account with its custodian bank in the amount
prescribed. The Fund's custodian will maintain the value of such segregated
account equal to the prescribed amount by adding or removing additional cash or
liquid securities to account for fluctuations in the value of securities held
in such account. Securities held in a segregated account cannot be sold while
the futures or option strategy is outstanding, unless they are replaced with
similar securities.

The Fund's ability to dispose of its positions in futures contracts,
options and forward contracts will depend on the availability of liquid markets
in such instruments. Markets in options and futures with respect to currencies
are still developing. It is impossible to predict the amount of trading
interest that may exist in various types of futures contracts, options and
forward contracts. If a secondary market does not exist with respect to an
option purchased or written by the Fund over-the-counter, it might not be
possible to effect a closing transaction in the option ( i.e., dispose of the
option) with the result that (i) an option purchased by the Fund would have to
be exercised in order for the Fund to realize any profit and (ii) the Fund may
not be able to sell currencies covering an option written by the Fund until the
option expires or it delivers the underlying futures currency upon exercise.
Therefore, no assurance can be given that the Fund will be able to utilize
these instruments effectively for the purposes set forth above. The Fund's
ability to engage in currency hedging transactions may be limited by tax
considerations.

The Fund's transactions in forward contracts, options on foreign
currencies and currency futures contracts will be subject to special tax rules
under the Internal Revenue Code that, among other things, may affect the
character of any gains or losses of the Fund as ordinary or capital and the
timing and amount of any income or loss to the Fund. This, in turn, could
affect the character, timing and amount of distributions by the Fund to
shareholders. The Fund may be limited in its foreign currency transactions by
tax considerations.

REPURCHASE AGREEMENTS

A repurchase agreement involves a sale of securities to the Fund, with
the concurrent agreement of the seller (a member bank of the Federal Reserve
System or securities dealer which the Adviser or Sub-Adviser believes to be
financially sound) to repurchase the securities at the same price plus an
amount equal to accrued interest at an agreed-upon interest rate, within a
specified time, usually less than one week, but, on occasion, at a later time.
The repurchase obligation of the seller is, in effect, secured by the
underlying securities, which are securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. In the event of a bankruptcy or
other default of a seller of a repurchase agreement, the Fund could experience
both delays in liquidating the underlying securities and losses, including (a)
possible decline in the value of the collateral during the period while the
Fund seeks to enforce its rights thereto, (b) possible loss of all or a part of
the income during this period and (c) expenses of enforcing its rights.

6
<PAGE>

The Fund will enter into repurchase agreements only when the seller
agrees that the value of the underlying securities, including accrued interest
(if any), will at all times be equal to or exceed the value of the repurchase

agreement. The Fund will not enter into a repurchase agreement maturing in more
than seven days if it would cause more than 15% of the value of its total
assets to be invested in such transactions. Repurchase agreements maturing in
less than seven days are not deemed illiquid securities for the purpose of the
Fund's 15% limitation on illiquid securities.

PORTFOLIO TRANSACTIONS

Davis Selected Advisers, L.P. (the "Adviser") and Davis Selected
Advisers-NY, Inc. (the "Sub-Adviser") make investment decisions and arrange for
the placement of buy and sell orders and the execution of portfolio
transactions for the Fund, subject to review by the Board of Directors. In this
regard, the Adviser or Sub-Adviser will seek to obtain the most favorable price
and execution for the transaction given the size and risk involved. In placing
executions and paying brokerage commissions, the Adviser or Sub-Adviser
considers the financial responsibility and reputation of the broker or dealer,
the range and quality of the services made available to the Fund and the
professional services rendered, including execution, clearance procedures, wire
service quotations and ability to provide supplemental performance, statistical
and other research information for consideration, analysis and evaluation by
the Adviser's or Sub-Adviser's staff. In accordance with this policy, brokerage
transactions may not be executed solely on the basis of the lowest commission
rate available for a particular transaction. Research services provided to the
Adviser or Sub-Adviser by or through brokers who effect portfolio transactions
for the Fund may be used in servicing other accounts managed by the Adviser and
likewise research services provided by brokers used for transactions of other
accounts may be utilized by the Adviser or Sub-Adviser in performing services
for the Fund. Subject to the requirements of best execution, the placement of
orders by securities firms for shares of the Fund may be taken into account as
a factor in the placement of portfolio transactions.

On occasions when the Adviser or Sub-Adviser deems the purchase or
sale of a security to be in the best interests of the Fund as well as other
fiduciary accounts, the Adviser or Sub-Adviser may aggregate the securities to
be sold or purchased for the Fund with those to be sold or purchased for other
accounts in order to obtain the best net price and most favorable execution. In
such event, the allocation will be made by the Adviser or Sub-Adviser in the
manner considered to be most equitable and consistent with its fiduciary
obligations to all such fiduciary accounts, including the Fund. In some
instances, this procedure could adversely affect the Fund but the Fund deems
that any disadvantage in the procedure would be outweighed by the increased
selection available and the increased opportunity to engage in volume
transactions.

The Adviser and Sub-Adviser believe that research from brokers and
dealers is desirable, although not essential, in carrying out their functions,
in that such outside research supplements the efforts of the Adviser and
Sub-Adviser by corroborating data and enabling the Adviser and Sub-Adviser to
consider the views, information and analyses of other research staffs. Such
views, information and analyses include such matters as communicating with
persons having special expertise on certain companies, industries, areas of the
economy and/or securities prices, obtaining written materials on these or other
areas which might affect the economy and/or securities prices, obtaining
quotations on securities prices and obtaining information on the activities of
other institutional investors. The Adviser and Sub-Adviser research, at their
own expense, each security included in, or being considered for inclusion in,
the Fund's portfolio. As any particular research obtained by the Adviser or
Sub-Adviser may be useful to the Fund, the Board of Directors or its Committee
on brokerage, in considering the reasonableness of the commissions paid by the
Fund, will not attempt to allocate, or require the Adviser to allocate, the
relative costs or benefits of research.

DIRECTORS AND OFFICERS

The names and addresses of the directors and officers of the Company
are set forth below, together with their principal business affiliations and
occupations for the last five years. The asterisk following the names of
Christopher C. Davis, Andrew A. Davis and Jeremy H. Biggs indicates that they
are considered to be "interested persons" of the Fund, as defined in the
Investment Company Act. As indicated below, certain directors and officers of
the Fund hold similar positions with the following funds that are managed by
the Adviser: Davis High Income Fund, Inc., Davis Tax-Free High Income Fund,
Inc., Davis Series, Inc. and Davis International Series, Inc.
(collectively the "Davis Funds").

7
<PAGE>

WESLEY E. BASS, JR. (8/21/31), 710 Walden Road, Winnetka, IL 60093. Director of
the Company and each of the Davis Funds except Davis International Series,
Inc.; President, Bass & Associates (a financial consulting firm); formerly,
First Deputy City Treasurer, City of Chicago, and Executive Vice President,
Chicago Title and Trust Company.

JEREMY H. BIGGS (8/16/35),* Two World Trade Center, 94th Floor, New York, NY
10048. Director and Chairman of the Company and each of the Davis Funds;
Director of the Van Eck Funds; Consultant to the Adviser. Vice Chairman, Head
of Equity Research Department, Chairman of the U.S. Investment Policy Committee
and member of the International Investment Committee of Fiduciary Trust Company
International.

MARC P. BLUM (9/9/42), 233 East Redwood Street, Baltimore, MD 21202. Director
of the Company and each of the Davis Funds except Davis International Series,
Inc.; Chief Executive Officer, World Total Return Fund, L.P.; Member, Gordon,
Feinblatt, Rothman, Hoffberger and Hollander, LLC (attorneys); Director,
Mid-Atlantic Realty Trust.

EUGENE M. FEINBLATT (10/28/19), 233 East Redwood Street, Baltimore, MD 21202.
Director of the Company and each of the Davis Funds except Davis International
Series, Inc.; of Counsel, Gordon, Feinblatt, Rothman, Hoffberger and Hollander,
LLC (attorneys).

JERRY D. GEIST (5/23/34), 931 San Pedro Dr. S.E., Albuquerque, NM 87108.
Director of the Company and each of the Davis Funds except Davis International
Series, Inc.; Chairman, Santa Fe Center Enterprises; President and Chief
Executive Officer, Howard Energy International Utilities; Director, CH2M-Hill,
Inc.; Retired Chairman and President, Public Service Company of New Mexico.

D. JAMES GUZY (3/7/36), 508 Tasman Drive, Sunnyvale, CA 94089. Director of the
Company and each of the Davis Funds except Davis International Series, Inc.;
Chairman, PLX Technology, Inc. (a manufacturer of semi-conductor circuits);
Director, Intel Corp. (a manufacturer semi-conductor circuits), Cirrus Logic
Corp. (a manufacturer of semi-conductor circuits) and Alliance Technology Fund
(a mutual fund).

G. BERNARD HAMILTON (3/18/37), Avanti Partners, P.O. Box 1119, Richmond, VA
23218. Director of the Company and each of the Davis Funds; Managing General
Partner, Avanti Partners, L.P.

LEROY E. HOFFBERGER (6/8/25), The Exchange - Suite 215, 1112 Kenilworth Drive,
Towson, MD 21204. Director of the Company and each of the Davis Funds except
Davis International Series, Inc.; of Counsel to Gordon, Feinblatt, Rothman,
Hoffberger and Hollander, LLC (attorneys); Chairman, Mid-Atlantic Realty Trust;
Director and President, CPC, Inc. (a real estate company); Director and Vice
President, Merchant Terminal Corporation; formerly, Director of Equitable
Bancorporation, Equitable Bank and Maryland National Bank, and formerly,
Director and President, O-W Fund, Inc. (a private investment fund).

LAURENCE W. LEVINE (4/9/31), c/o Bigham Englar Jones & Houston, 14 Wall Street,
21st, Floor, New York, NY 10005-2140. Director of the Company and each of the
Davis Funds except Davis International Series, Inc.; Partner, Bigham, Englar,
Jones and Houston (attorneys); United States Counsel to Aerolineas Argentina;
Director, various private companies.

CHRISTIAN R. SONNE (5/6/30), P.O. Box 777, Tuxedo Park, NY 10987. Director of
the Company and each of the Davis Funds except Davis International Series,
Inc.; General Partner of Tuxedo Park Associates (a land holding and development
firm); President and Chief Executive Officer of Mulford Securities Corporation
(a private investment fund) until 1990; formerly, Vice President of Goldman
Sachs & Company (investment banker).

8
<PAGE>

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

ANDREW A. DAVIS (6/25/63),* 124 East Marcy Street, Santa Fe, NM 87501. Director
and Vice President of the Company and each of the Davis Funds except Davis
International Series, Inc. (for which he serves as Vice President); Director of
Selected American Shares, Inc., Selected Special Shares, Inc. and Selected
Capital Preservation Trust; Director and President, Venture Advisers, Inc.;
formerly, Vice President and head of convertible security research,
PaineWebber, Incorporated.

CHRISTOPHER C. DAVIS (7/13/65),* 609 5th Ave., New York, NY 1001770 Pine
Street, 43rd Floor, New York, NY 10270-0108. Director and Vice President of the
Company and each of the Davis Funds; Director of Selected American Shares,
Inc., Selected Special Shares, Inc. and Selected Capital Preservation Trust;
Director, Vice Chairman, Venture Advisers, Inc.

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

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

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

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

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

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

DIRECTORS' COMPENSATION SCHEDULE

During the fiscal year ended July 31, 1997, the compensation paid to the
directors who are not considered to be interested persons of the Company was as
follows:

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<PAGE>

AGGREGATE COMPANY TOTAL
NAME COMPENSATION* COMPLEX COMPENSATION**
---- ------------ ----------------------

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

* The Davis Growth & Income Fund did not make its initial public offer prior to
the date of this SAI, thus the Fund did not pay any compensation to directors.
The Davis New York Venture Fund was active prior to that date and the board of
directors rendered services, and were compensated for those services.

** Complex compensation is the aggregate compensation paid, for services as a
Director, by all mutual funds with the same investment adviser.

CERTAIN SHAREHOLDERS OF THE FUND

As of the date of this SAI Shelby Cullom Davis & Co. (an affiliate of
the Adviser) owned 100% of the Fund's outstanding shares.

INVESTMENT ADVISORY SERVICES

Davis Selected Advisers, L.P. serves as investment adviser for the
Fund pursuant to an investment advisory agreement (the "Advisory Agreement")
adopted in accordance with the requirements of the Investment Company Act of
1940. Pursuant to the Advisory Agreement, the Adviser, subject to the general
supervision of the Board of Directors, provides management and investment
advice, and furnishes statistical, executive and clerical personnel,
bookkeeping, office space, and equipment necessary to carry out its investment
advisory functions and such corporate managerial duties as are requested by the
Board of Directors. The Fund bears all expenses other than those specifically
assumed by the Adviser under the Advisory Agreement, including preparation of
its tax returns, financial reports to regulatory authorities, dividend
determinations and transaction and accounting matters related to its custodian
bank, transfer agency, custodial and shareholder services, and qualification of
its shares under federal and state securities laws.

Davis Selected Advisers-NY, Inc., a wholly owned subsidiary of the
Adviser, performs research and portfolio management services for the Fund under
a Sub-Advisory Agreement with the Adviser.

For the Adviser's services, the Fund pays the Adviser a monthly fee at
the annual rate based on average daily net assets, as follows: 0.75% on the
first $250 million; 0.65% on the next $250 million; 0.55% on net assets over
$500 million. Under the Sub-Advisory Agreement, the Adviser pays all of the
Sub-Adviser's direct and indirect costs of operations. All the fees paid to the
Sub-Adviser are paid by the Adviser and not the Fund.

The Adviser may also be reimbursed costs for certain accounting and
administrative services and for qualifying the Fund's shares for sale with
state agencies.

The Advisory Agreement also makes provisions for portfolio
transactions and brokerage policies of the Fund which are discussed above under
"Portfolio Transactions."

In accordance with the provisions of the Investment Company Act, the
Advisory Agreement will terminate automatically upon assignment and is subject
to cancellation upon 60 days' written notice by the Board of Directors, the
vote of the holders of a majority of the Fund's outstanding shares or the
Adviser. The continuance of the Agreement must be approved at least annually by
the Board of Directors or by the vote of holders of a majority of the
outstanding shares of the Fund. In addition, any new agreement or the
continuation of the existing agreement must be approved by a majority of
directors who are not parties to the agreement or interested persons of any
such party.

10
<PAGE>
The Adviser and Sub-Adviser have both adopted a Code of Ethics which
regulates the personal securities transactions of their investment personnel
and other employees and affiliates with access to information regarding
securities transactions of the Fund. Each Code of Ethics requires investment
personnel to disclose personal securities holdings upon commencement of
employment and all subsequent trading activity to the Adviser's Compliance
Officer. Investment personnel are prohibited from engaging in any securities
transactions, including the purchase of securities in a private offering,
without the prior consent of the Compliance Officer. Additionally, such
personnel are prohibited from purchasing securities in an initial public
offering and are prohibited from trading in any securities (i) for which the
Fund has a pending buy or sell order, (ii) which the Fund is considering buying
or selling, or (iii) which the Fund purchased or sold within seven calendar
days.

CUSTODIAN

The Custodian of the Fund's assets is State Street Bank and Trust
Company ("State Street"), One Heritage Drive, North Quincy, Massachusetts
02171. The Custodian maintains all of the instruments representing the
investments of the Fund and all cash. The Custodian delivers securities against
payment upon sale and pays for securities against delivery upon purchase. The
Custodian also remits Fund assets in payment of Fund expenses, pursuant to
instructions of officers or resolutions of the Board of Directors.

AUDITORS

The Fund's auditors are KPMG Peat Mawick, 707 17th St. Suite 2300,
Denver, Colorado 80202. The audit includes examination of annual financial
statements furnished to shareholders and filed with the Securities and Exchange
Commission, consultation on financial accounting and reporting matters, and
meeting with the Audit Committee of the Board of Directors. In addition, the
auditors review federal and state income tax returns and related forms.

DETERMINING THE PRICE OF SHARES

The Fund does not price its shares or accept orders for purchases or
redemptions on days when the New York Stock Exchange is closed. Such days
currently include New Year's Day, President's Day, Good Friday, Martin luth4er
King, Jr.' birthday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day.

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

SPECIAL DISTRIBUTION ARRANGEMENTS

Class B shares of the Davis Growth & Income Fund are made available to
Retirement Plan Participants such as 401K or 403B Plans at NAV with the waiver
of contingent deferred sales charge (CDSC) if:

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

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

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

Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing
in Class B shares of the Davis mutual funds convert to Class A shares once the
Plan has reached $5 million invested in Applicable Investments. The Plan will
receive a Plan level share conversion. The Fund may make similar exceptions for
other financial institutions sponsoring or administering similar benefit plans.

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

11
<PAGE>

DISTRIBUTION OF FUND SHARES

Davis Distributors, LLC, ("the Distributor"), acts as principal
underwriter of the Fund's shares on a continuing basis pursuant to a
Distributing Agreement. Pursuant to the Distributing Agreement, the Distributor
pays for all expenses in connection with the preparation, printing and
distribution of advertising and sales literature for use in offering the Fund's
shares to the public, including reports to shareholders to the extent they are
used as sales literature. The Distributor also pays for the preparation and
printing of prospectuses other than those forwarded to existing shareholders.
The continuance and assignment provisions of the Distributing Agreement are the
same as those of the Advisory Agreement.

The Distributor may receive sales charges (which the Fund does not
pay) on the sale of Class A shares of the Fund, for which it may pay
concessions to dealers.

In addition, the Fund has adopted distribution plans with respect to
each class of its shares pursuant to Rule 12b-1 under the Investment Company
Act (the "Distribution Plans"). Payments under the Class A Distribution Plan
are limited to an annual rate of 0.25% of the average daily net asset value of
the Class A shares. Payments under the Class B and Class C Distribution Plans
are limited to an annual rate of 1.00% of the average daily net asset value of
each such class of shares.

To the extent that any investment advisory fees paid by the Fund may
be deemed to be indirectly financing any activity which is primarily intended
to result in the sale of shares of the Fund within the meaning of Rule 12b-1,
the payments of such fees are authorized under the Plans.

The Distribution Plans continue annually so long as they are approved
in the manner provided by Rule 12b-1 or unless earlier terminated by vote of
the majority of the Fund's Independent Directors or a majority of the Fund's
outstanding shares. The Distributor is required to furnish quarterly written
reports to the Board of Directors detailing the amounts expended under the
Distribution Plans. The Distribution Plans may be amended provided that all
such amendments comply with the applicable requirements then in effect under
Rule 12b-1. Presently, Rule 12b-1 requires, among other procedures, that it be
continued only if a majority of the Independent Directors approve continuation
at least annually and that amendments materially increasing the amount to be
spent for distribution be approved by the Independent Directors and the
shareholders. As long as the Distribution Plans are in effect, the Fund must
commit the selection and nomination of candidates for new Independent Directors
to the sole discretion of the existing Independent Directors.

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

The Distributor may receive fees under the Class A, B, or C
Distribution Plans. It is expected that substantially all such fees will either
be paid to dealers and sales personnel or be used to reimburse the Distributor
for amounts previously paid to dealers and sales personnel.

12
<PAGE>

PERFORMANCE DATA

Average annual total return. Average annual total return measures both
the net investment income generated by, and the effect of any realized or
unrealized appreciation or depreciation of, the underlying investments in the
Fund's portfolio. Average annual total return is calculated separately for each
class in accordance with the standardized method prescribed by the Securities
and Exchange Commission by determining the average annual compounded rates of
return over the periods indicated, that would equate the initial amount
invested to the ending redeemable value, according to the following formula:

P(1+T)n = ERV

Where: P = hypothetical initial payment of $1,000

T = average annual total return

n = number of years

ERV = ending redeemable value at the
end of the period of a hypothetical
$1,000 payment made at the
beginning of such period

This calculation (i) assumes all dividends and distributions are reinvested at
net asset value on the appropriate reinvestment dates and (ii) deducts (a) the
maximum front-end or applicable contingent deferred sales charge from the
hypothetical initial $1,000 investment, and (b) all recurring fees, such as
advisory fees, charged as expenses to all shareholder accounts.

Total Return. Total return is the cumulative rate of investment
growth, which assumes that income dividends and capital gains are reinvested.
It is determined by assuming a hypothetical investment at the net asset value
at the beginning of the period, adding in the reinvestment of all income
dividends and capital gains, calculating the ending value of the investment at
the net asset value as of the end of the specified time period, subtracting the
amount of the original investment. This calculated amount is then expressed as
a percentage by multiplying by 100.

Yield. Yield is computed in accordance with a standardized method
prescribed by the rules of the Securities and Exchange Commission and is
calculated separately for each class. Yield is a measure of the net investment
income per share (as defined) earned over a specified 30-day period expressed
as a percentage of the maximum offering price of the Fund's shares at the end
of the period. Such yield figure was determined by dividing the net investment
income per share on the last day of the period, according to the following
formula:

Yield = 2 [(a - b + 1) 6 - 1]
cd

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period.

c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.

d = the maximum offering price per share on the last day of the period.

13
<PAGE>

In reports or other communications to shareholders and in advertising
material, the Fund may compare its performance to recognized averages and
indices of performance such as the Consumer Price Index, the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index and to the
performance of mutual fund indexes as reported by Lipper Analytical Services,
Inc. ("Lipper") or CDA Investment Technologies, Inc. ("CDA"), two widely
recognized independent mutual fund reporting services. Lipper and CDA
performance calculations include reinvestment of all capital gain and income
dividends for the periods covered by the calculations. The Consumer Price Index
is generally considered to be a measure of inflation. The Dow Jones Industrial
Average and the Standard & Poor's 500 Stock Index are unmanaged indices of
common stocks which are considered to be generally representative of the United
States stock market. The market prices and yields of these stocks will
fluctuate.

The Fund may also use evaluations of the Fund published by nationally
recognized ranking services and by financial publications. Any given
performance comparison should not be considered representative of the Fund's
performance for any future period.

<PAGE>

FORM N-1A

DAVIS NEW YORK VENTURE FUND, INC.

POST-EFFECTIVE AMENDMENT NO. 56 UNDER THE SECURITIES ACT OF 1933
REGISTRATION STATEMENT NO. 2-29858

AND

AMENDMENT NO. 31 UNDER THE INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-1701

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) The Fund was established as a separate series
of the Trust and does not yet have any
operating history.

(b) Exhibits:

(1)(a) Articles of Incorporation, incorporated
by reference to Exhibit (1) to
Registrant's Post-Effective Amendment No.
50, File No. 2-29858.

(1)(b) Articles Supplementary to Articles of
Incorporation, incorporated by reference
to Exhibit (1)(b) to Registrant's
Post-Effective Amendment No. 54, File No.
2-29858.

(1)(c) Articles Supplementary to Articles of
Incorporation, designating the Davis
Growth & Income Fund, to be filed by
Post-Effective Amendment.

(2) Amended and Restated Bylaws, incorporated
by reference to Exhibit (2) to
Registrant's Post-Effective Amendment No.
55. File 2-29858.

(3) Not applicable.

(4) Not applicable.

(5)(a) Investment Advisory Agreement,
incorporated by reference to Exhibit (5)
to Registrant's Post-Effective Amendment
No. 50, File No. 2-29858.

1
<PAGE>

(5)(b) Investment Advisory Agreement, as amended
effective December 1, 1996, incorporated
by reference to Exhibit 5(b) to
Registrant's Post Effective Amendment No.
52, File 2-29858.

(5)(c) Sub-Advisory Agreement between Davis
Selected Advisers, L.P. and Davis
Selected Advisers-NY, Inc., incorporated
by reference to Exhibit 5(c) to
Registrant's Post Effective Amendment No.
52, File 2-29858.

(5)(d)* Second Amendment of Investment Advisory
Agreement, adding the Davis Growth &
Income Fund.

(6)(a) Distributor's Agreement, incorporated by
reference to Exhibit (6) to Registrant's
Post-Effective Amendment No. 50, File No.
2-29858.

(6)(b) Transfer and Assumption Agreement dated
July 31, 1997, incorporated by reference
to Exhibit (6)(b) to Registrant's Post
Effective Amendment No. 54, File No.
2-29858.

(7) Not applicable.

(8)(a) Custodian Contract, incorporated by
reference to Exhibit (8) (a) to
Registrant's Post-Effective Amendment No.
44, File No. 2-29858.

(8)(b) Transfer Agency and Service Agreement,
incorporated by reference to Exhibit (8)
(b) to Registrant's Post-Effective
Amendment No. 44, File No. 2-29858.

(8)(c) Amendment to Custodian Contract, adding
the Davis Growth & Income Fund. To be
filed by post-effective amendment.

(8)(d) Amendment to Transfer Agency and Service
Agreement, adding the Davis Growth &
Income Fund. To be filed by
post-effective amendment.

(9) Not applicable.

(10) Opinion and Consent of Counsel (D'Ancona
& Pflaum), to be added by Post-Effective
Amendment.

2
<PAGE>

(11) Consent of Auditors. incorporated by
reference to Exhibit (2) to Registrant's
Post Effective Amendment No. 55. File
2-29858.

(12) Not applicable.

(13) Not applicable.

(14)(a) Prototype Retirement Plan, incorporated
by reference to Exhibit (1) to
Registrant's Post-Effective Amendment No.
38, File No. 2-29858.

(14)(b) Individual Retirement Account,
incorporated by reference to Exhibit (ii)
Registrant's Post-Effective Amendment No.
38, File No. 2-29858.

(15)(a) Distribution Plan for Class A shares, as
amended, incorporated by reference to
Exhibit (15)(a) to Registrant's Post
Effective Amendment No. 54, File No.
2-29858.

(15)(b) Distribution Plan for Class B shares,
incorporated by reference to Exhibit 15
(b) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.

(15)(c) Distribution Plan for Class C shares,
incorporated by reference to Exhibit 15
(c) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.

(16) Sample computation of average annual
total return, incorporated by reference
to Exhibit (16) of Registrant's
Post-Effective Amendment No. 40, File No.
2-29858.

(18)(a) Powers of Attorney, incorporated by
reference to Exhibit (18)(a) and 18(c) to
Registrant's Post-Effective Amendment
Nos. 48 and 54, respectively, File No.
2-29858.

(18)(b) Plan pursuant to Rule 18f-3, as amended,
incorporated by reference to Exhibit
(18)(b) to Registrant's Post Effective
Amendment No. 54, File No. 2-29858.

(18)(c)* Powers of Attorney of Andrew A. Davis and
Christopher C. Davis..

* Filed Herein

3
<PAGE>

Item 25. Persons Controlled by or Under Common Control With Registrant

Not applicable

Item 26. Number of Holders of Securities

Number of Record Holders
Title of Class as of January 31, 1998
-------------- -----------------------

Davis New York Venture Fund, Common Stock
Class A shares 102,552
Class B shares 86,228
Class C shares 23,093
Class Y shares 77

Davis Growth & Income Fund, Common Stock
Class A shares 0
Class B shares 0
Class C shares 0
Class Y shares 0

Item 27. Indemnification

Registrant's Articles of Incorporation indemnifies its directors,
officers and employees to the full extent permitted by Section 2-418 of the
Maryland General Corporation Law, subject only to the provisions of the
Investment Company Act of 1940. The indemnification provisions of the Maryland
General Corporation Law (the "Law") permit, among other things, corporations to
indemnify directors and officers unless it is proved that the individual (1)
acted in bad faith or with active and deliberate dishonesty, (2) actually
received an improper personal benefit in money, property or services, or (3) in
the case of a criminal proceeding, had reasonable cause to believe that his act
or omission was unlawful. The Law was also amended to permit corporations to
indemnify directors and officers for amounts paid in settlement of
stockholders' derivative suits.

In addition, the Registrant's directors and officers are covered under
a policy to indemnify them for loss (subject to certain deductibles) including
costs of defense incurred by reason of alleged errors or omissions, neglect or
breach of duty. The policy has a number of exclusions including alleged acts,
errors, or omissions which are finally adjudicated or established to be
deliberate, dishonest, malicious or fraudulent or to constitute willful
misfeasance, bad faith, gross negligence or reckless disregard of their duties
in respect to any registered investment company. This coverage is incidental to
a general policy carried by the Registrant's adviser.

In addition to the foregoing indemnification, Registrant's Articles of
Incorporation exculpate directors and officers with respect to monetary damages
except to the extent that an individual actually received an improper benefit
in money property or services or to the extent that a final adjudication finds
that the individual acted with active and deliberate dishonesty.

4
<PAGE>

Item 28. Business and Other Connections of Investment Adviser

Information pertaining to business and other connections of
Registrant's investment adviser is incorporated by reference to the Prospectus
and Statement of Additional Information contained in Parts A and B of this
Registration Statement at the sections entitled "Adviser, Sub-Adviser, and
Distributor" in the Prospectus and "Investment Advisory Services" in the
Statement of Additional Information.

Item 29. Principal Underwriter

(a) Davis Distributors, LLC, a wholly owned subsidiary of the Adviser,
located at 124 East Marcy Street, Santa Fe, NM 87501, is the principal
underwriter for the Registrant and also acts as principal underwriter for Davis
Tax-Free High Income Fund, Inc., Davis High Income Fund, Inc., Davis Series,
Inc., Davis International Series, Inc., Selected American Shares, Inc.,
Selected Special Shares, Inc. and Selected Capital Preservation Trust.

(b) Management of the Principal Underwriters:

<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES WITH POSITIONS AND OFFICES
BUSINESS ADDRESS UNDERWRITER WITH REGISTRANT
- - ---------------- ----------- ---------------
<S> <C> <C>

Kenneth C. Eich President Vice President
124 East Marcy Street
Santa Fe, NM 87501

Eileen R. Street Senior Vice President, Treasurer and Treasurer and Assistant Secretary
124 East Marcy Street Assistant Secretary
Santa Fe, NM 87501

Thomas D. Tays Senior Vice President and Secretary Vice President and Secretary
124 East Marcy Street
Santa Fe, NM 87501

Russell O. Wiese Senior Vice President None
124 East Marcy Street
Santa Fe, NM 87501

Sharra Reed Assistant Treasurer None
124 East Marcy Street
Santa Fe, NM 87501
</TABLE>

5
<PAGE>

Item 30. Location of Accounts and Records

Accounts and records are maintained at the offices of Davis Selected
Advisers, L.P., 124 East Marcy Street, Santa Fe, New Mexico 87501, and at the
offices of the Registrant's custodian, State Street Bank and Trust Company, One
Heritage Drive, North Quincy, Massachusetts 02107, and the Registrant's
transfer agent State Street Bank and Trust, c/o Service Agent, BFDS, Two
Heritage Drive, 7th Floor, North Quincy, Massachusetts 02107.

Item 31. Management Services

Not applicable

Item 32. Undertakings

Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders upon
request and without charge.

6
<PAGE>

DAVIS NEW YORK VENTURE FUND, INC.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the 13th day of
February, 1998.

DAVIS NEW YORK VENTURE FUND, INC.

*By: /s/ Arthur Don
-------------------------
Arthur Don,
Attorney-in-Fact

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated.

Signature Title Date
<S> <C> <C>
Shelby M.C. Davis* President, Chief Executive Officer February 13, 1998
------------------
Shelby M.C. Davis

Eileen R Street* Principal Financial Officer
--------------- and Treasurer February 13, 1998
Eileen R. Street

</TABLE>

*By: /s/ Arthur Don
---------------------
Arthur Don,
Attorney-in-Fact

*Arthur Don signs this document on behalf of the Registrant and each of the
foregoing officers pursuant to the powers of attorney filed as Exhibit 18(a) to
a Registrant's Post-Effective Amendments No. 48 and Exhibit 18(c) to this
Registration Statement..

/s/ Arthur Don
---------------------
Arthur Don,
Attorney-in-Fact

7
<PAGE>

DAVIS NEW YORK VENTURE FUND, INC.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on February 13, 1998 by the following
persons in the capacities indicated.

Signature Title

Wesley E. Bass. Jr.* Director
- - ----------------------------
Wesley E. Bass, Jr.

Jeremy H. Biggs* Director
- - ----------------------------
Jeremy H. Biggs

Marc P. Blum* Director
- - ----------------------------
Marc P. Blum

Andrew A. Davis* Director
- - ----------------------------
Andrew A. Davis

Christopher C. Davis* Director
- - ----------------------------
Christopher C. Davis

Eugene M. Feinblatt* Director
- - ----------------------------
Eugene M. Feinblatt

Jerry D. Geist* Director
- - ----------------------------
Jerry D. Geist

D. James Guzy* Director
- - ----------------------------
D. James Guzy

G. Bernard Hamilton* Director
- - ----------------------------
G. Bernard Hamilton

LeRoy E. Hoffberger* Director
- - ----------------------------
LeRoy E. Hoffberger

Laurence W. Levine* Director
- - ----------------------------
Laurence W. Levine

Christian R. Sonne* Director
- - ----------------------------
Christian R. Sonne

*Arthur Don signs this document on behalf of each of the foregoing
persons pursuant to the powers of attorney filed as Exhibit 18(a) and 18(c) to
Registrant's Post-Effective Amendment Nos. 48 and 54, respectively, and Exhibit
18(b) to this Registration Statement.

/s/Arthur Don
---------------------
Arthur Don,
Attorney-in-Fact

<PAGE>

EXHIBIT INDEX

(1)(a) Articles of Incorporation, incorporated by reference to
Exhibit (1) to Registrant's Post-Effective Amendment No. 50,
File No. 2-29858.

(1)(b) Articles Supplementary to Articles of Incorporation,
incorporated by reference to Exhibit (1)(b) to Registrant's
Post-Effective Amendment No. 54, File No. 2-29858.

(1)(c) Articles Supplementary to Articles of Incorporation,
designating the Davis Growth & Income Fund, to be filed by
Post-Effective Amendment.

(2) Amended and Restated Bylaws, incorporated by reference to
Exhibit (2) to Registrant's Post-Effective Amendment No. 55.
File 2-29858.

(3) Not applicable.

(4) Not applicable.

(5)(a) Investment Advisory Agreement, incorporated by reference to
Exhibit (5) to Registrant's Post-Effective Amendment No. 50,
File No. 2-29858.

(5)(b) Investment Advisory Agreement, as amended effective December
1, 1996, incorporated by reference to Exhibit 5(b) to
Registrant's Post Effective Amendment No. 52, File 2-29858.

(5)(c) Sub-Advisory Agreement between Davis Selected Advisers, L.P.
and Davis Selected Advisers-NY, Inc., incorporated by
reference to Exhibit 5(c) to Registrant's Post Effective
Amendment No. 52, File 2-29858.

(5)(d)* Second Amendment of Investment Advisory Agreement, adding the
Davis Growth & Income Fund.

(6)(a) Distributor's Agreement, incorporated by reference to Exhibit
(6) to Registrant's Post-Effective Amendment No. 50, File No.
2-29858.

(6)(b) Transfer and Assumption Agreement dated July 31, 1997,
incorporated by reference to Exhibit (6)(b) to Registrant's
Post Effective Amendment No. 54, File No. 2-29858.

(7) Not applicable.

(8)(a) Custodian Contract, incorporated by reference to Exhibit (8)
(a) to Registrant's Post-Effective Amendment No. 44, File No.
2-29858.

(8)(b) Transfer Agency and Service Agreement, incorporated by
reference to Exhibit (8) (b) to Registrant's Post-Effective
Amendment No. 44, File No. 2-29858.

(8)(c) Amendment to Custodian Contract, adding the Davis Growth &
Income Fund. To be filed by post-effective amendment.

(8)(d) Amendment to Transfer Agency and Service Agreement, adding
the Davis Growth & Income Fund. To be filed by post-effective
amendment.

(9) Not applicable.

(10) Opinion and Consent of Counsel (D'Ancona & Pflaum), to be
added by Post-Effective Amendment.

<PAGE>

(11) Consent of Auditors. incorporated by reference to Exhibit (2)
to Registrant's Post Effective Amendment No. 55. File
2-29858.

(12) Not applicable.

(13) Not applicable.

(14)(a) Prototype Retirement Plan, incorporated by reference to
Exhibit (1) to Registrant's Post-Effective Amendment No. 38,
File No. 2-29858.

(14)(b) Individual Retirement Account, incorporated by reference to
Exhibit (ii) Registrant's Post-Effective Amendment No. 38,
File No. 2-29858.

(15)(a) Distribution Plan for Class A shares, as amended,
incorporated by reference to Exhibit (15)(a) to Registrant's
Post Effective Amendment No. 54, File No. 2-29858.

(15)(b) Distribution Plan for Class B shares, incorporated by
reference to Exhibit 15 (b) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.

(15)(c) Distribution Plan for Class C shares, incorporated by
reference to Exhibit 15 (c) to Registrant's Post-Effective
Amendment No. 50, File No. 2-29858.

(16) Sample computation of average annual total return,
incorporated by reference to Exhibit (16) of Registrant's
Post-Effective Amendment No. 40, File No. 2-29858.

(18)(a) Powers of Attorney, incorporated by reference to Exhibit
(18)(a) and 18(c) to Registrant's Post-Effective Amendment
Nos. 48 and 54, respectively, File No. 2-29858.

(18)(b) Plan pursuant to Rule 18f-3, as amended, incorporated by
reference to Exhibit (18)(b) to Registrant's Post Effective
Amendment No. 54, File No. 2-29858.

(18)(c)* Powers of Attorney of Andrew A. Davis and Christopher C.
Davis..

* Filed Herein

<PAGE>

Exhibit (5)(d)

DAVIS NEW YORK VENTURE FUND, INC.
SECOND AMENDMENT OF INVESTMENT ADVISORY AGREEMENT

March 16, 1998

Davis Selected Advisers, L.P.
124 East Marcy Street
Santa Fe, New Mexico 87501

Gentlemen:

We hereby confirm that, as of the above date, paragraph 6 of our Investment
Advisory Agreement of April 15, 1993 is amended in its entirety to read as
follows:

6. the Company has formed two funds, consisting of separate
investment portfolios, and wishes to employ you to supervise
and assist in the management of both funds upon the terms and
conditions described in this Agreement.

In consideration of such services, we shall pay you a fee
calculated at the following annual rates based upon the daily
net asset value of each separate portfolio:

DAVIS NEW YORK VENTURE FUND

ANNUAL RATE DAILY NET ASSET VALUE

0.75% of First $250,000,000
0.65% of Next $250,000,000
0.55% of Next $2,500,000,000
0.54% of Next $1,000,000,000
0.53% of Next $1,000,000,000
0.52% of Next $1,000,000,000
0.51% of Next $1,000,000,000
0.50% of Amount in excess of $7,000,000,000

DAVIS GROWTH & INCOME FUND

ANNUAL RATE DAILY NET ASSET VALUE

0.75% of First $250,000,000
0.65% of Next $250,000,000
0.55% of Amount in excess of $500,000,000

For this purpose, the daily net asset value shall be computed
in the same manner as the value of such daily net assets are
computed in connection with the determination of the net
asset value of our shares. The fee shall be accrued daily and
paid monthly on the first business day following the end of
the month in which the services were rendered.

In all other respects, the Investment Advisory Agreement of April 15, 1993
remains in full force and effect.

If the foregoing is in accordance with your understanding, please indicate by
signing and returning to us the enclosed copy hereof.

Very truly yours,

Davis New York Venture Fund, Inc.
(f/k/a New York Venture Fund, Inc.)

By:
------------------------------
Its:
---------------------------

Accepted as of the day and year first above written.

Davis Selected Advisers, L.P.
(f/k/a/ Selected/Venture Advisers, L.P.)
By: Venture Advisers, Inc., General Partner

By:
------------------------------
Its:
---------------------------

<PAGE>

Exhibit 18(c)

DAVIS NEW YORK VENTURE FUND, INC.

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
constitutes and appoints Andrew A. Davis, Sheldon R. Stein and Arthur Don, and
each of them, his attorneys-in fact, each with the power of substitution, for
him in any and all capacities, to sign any post-effective amendments to the
registration statement under the Securities Act of 1933 (Registration No.
2-29858) and/or the Investment Company Act of 1940 (Registration No. 811-1701),
whether on Form N-1A or any successor forms thereof, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and all appropriate state or federal
regulatory authorities. The undersigned hereby ratifies and confirms all that
each of the aforenamed attorneys-in-fact, or his substitute or substitutes, may
do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney as of the 12th day of February, 1998.

/s/ Andrew Davis
- - ----------------------
Andrew Davis,
Director

/s/ Christopher Davis
- - ----------------------
Christopher Davis,
Director