DAVIS INTERNATIONAL SERIES INC, 485APOS, 2000-02-28

DAVIS INTERNATIONAL SERIES INC
485APOS, 2000-02-28

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 205410

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

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
REGISTRATION NO. 33-86578
POST-EFFECTIVE AMENDMENT NO. 12

AND

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-8870
AMENDMENT NO. 13

DAVIS INTERNATIONAL SERIES, INC.
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
(1-505-820-3000)

Agents For Service: Thomas D. Tays, Esq.
Davis Selected Advisers, L.P.
2949 East Elvira Road, Suite 101
Tucson, Arizona 85706
1-505-820-3055

-or-

Sheldon R. Stein, Esq.
D'Ancona & Pflaum
111 East Wacker Drive
Suite 2800
Chicago IL 60601-4205
(1-312-602-2014)

It is proposed that this filing will become effective:

_____ Immediately upon filing pursuant to paragraph (b)
_____ On _______________, pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ On March 1, 2000, pursuant to paragraph (a)(1) of Rule 485
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ On________________, pursuant to paragraph (a)(2) of Rule 485

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RULE 461 REQUEST FOR ACCELERATION: Attached to this Filing is a transmittal
letter in which the Registrant and the Principal Underwriter request accelerated
effectiveness to March 1, 2000.

Title of Securities being Registered: Common Stock of:
----------------

DAVIS INTERNATIONAL TOTAL RETURN FUND

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FORM N-1A
DAVIS INTERNATIONAL TOTAL RETRUN FUND
AN AUTHORIZED PORTFOLIO OF
DAVIS INTERNATIONAL SERIES, INC.
CLASS A, CLASS B CLASS C AND CLASS Y SHARES

POST-EFFECTIVE AMENDMENT NO. 12 TO REGISTRATION
STATEMENT NO. 33-86578 UNDER THE SECURITIES ACT OF 1933
AND AMENDMENT NO. 13 UNDER THE INVESTMENT COMPANY ACT
OF 1940 TO REGISTRATION STATEMENT NO. 811-8870.

CROSS REFERENCE SHEET
---------------------

N-1A
ITEM NO. PART A CAPTION OR PLACEMENT: PROSPECTUS FOR CLASS ABC SHARES
- -------- -------------------------------------------------------------
1. Front and Back Cover pages
2. Overview of the Fund:
Investment Objective and Strategy
Determining if this Fund is Right for You
Principal Risks
Past Performance
3. Overview of the Fund: Fees and Expenses of the Fund
4. How We Manage the Fund
5. 1999 Annual Report
6. Who is Responsible for Your Davis Account
7. Once You Invest in the Fund
How to Open an Account
How to Buy, Sell and Exchange Shares
8. How to Choose a Share Class
9. Overview of the Fund: Financial Highlights

N-1A
ITEM NO. PART A CAPTION OR PLACEMENT: PROSPECTUS FOR CLASS Y SHARES
- -------- -----------------------------------------------------------
1. Front and Back Cover pages
2. Overview of the Fund:
Investment Objective and Strategy
Determining if this Fund is Right for You
Principal Risks
Past Performance
3. Overview of the Fund: Fees and Expenses of the Fund
4. How We Manage the Fund
5. 1999 Annual Report
6. Who is Responsible for Your Davis Account

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7. Once You Invest in the Fund
How to Open an Account
How to Buy, Sell and Exchange Shares
8. Not Applicable
9. Overview of the Fund: Financial Highlights

N-1A PART B CAPTION OR PLACEMENT:
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
- -------- -----------------------------------
10. Cover Page
11. Organization of the Company
12. Portfolio Securities
13. Other Investment Practices
14. Investment Restrictions
15. Directors and Officers
16. Directors Compensation Table
17. Certain Shareholders of the Fund
18. Investment Advisory Services
19. Distribution of Company Shares
20. Other Important Service Providers
21. Portfolio Transactions
22. Organization of the Company
23. Purchase of Shares
24. Special Services
25. Exchange of Shares
26. Redemption of Shares
27. Federal Income Taxes
28. Distribution of Company Shares
29. Performance Data
30. 1999 Annual Report

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DAVIS INTERNATIONAL TOTAL RETURN FUND

Prospectus and Application Form

Class A Shares
Class B Shares
Class C Shares

March 1, 2000

The Securities and Exchange Commission has not approved or disapproved of these
securities. The Securities and Exchange Commission has not determined whether
this prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.

Over 25 Years of Reliable Investing

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TABLE OF CONTENTS

Overview of the Fund
Investment Objective and Strategy
Determining If This Fund Is Right for You
Principal Risks
Past Performance
Fees and Expenses of the Fund
Financial Highlights

Who Is Responsible for Your Davis Account

How We Manage the Fund

Once You Invest in the Davis Funds

How to Choose a Share Class

How to Open an Account

How to Buy, Sell and Exchange Shares

The Davis Funds: Over 25 Years of Reliable Investing

OTHER FUND DOCUMENTS

WHERE YOU CAN GET THESE DOCUMENTS:

o BY TELEPHONE. Call Davis Funds toll-free at 1-800-279-0279, Monday through
Friday, 7 a.m. to 4 p.m. Mountain Time. You may also call this number for
account inquiries.

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

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

DAVIS FUNDS
2949 EAST ELVIRA ROAD, SUITE 101
TUCSON, ARIZONA 85706
1-800-279-0279

Investment Company Act File No. 811-8870

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STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 2000

DAVIS INTERNATIONAL TOTAL RETURN FUND

PART OF
DAVIS INTERNATIONAL SERIES, INC.
2949 EAST ELVIRA ROAD, SUITE 101
TUCSON, ARIZONA 85706
1-800-279-0279

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
IN CONJUNCTION WITH THE CLASS A, CLASS B AND CLASS C PROSPECTUS DATED MARCH 1,
2000 AND THE CLASS Y PROSPECTUS DATED MARCH 1, 2000. THE PROSPECTUSES MAY BE
OBTAINED FROM THE FUND.

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

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Section I: Investment Strategies and Restrictions..................................................4
- --------------------------------------------------

Investment Objective and Policies......................................................4
Portfolio Securities...................................................................4
Other Investment Policies..............................................................8
Portfolio Transactions................................................................13
Investment Restrictions...............................................................15

Section II: Key Persons...........................................................................18
- ------------------------

Organization of the Company...........................................................18
Directors and Officers................................................................19
Directors' Compensation Schedule......................................................21
Certain Shareholders of the Fund......................................................21
Investment Advisory Services..........................................................23
Distribution of Company Shares........................................................24
Other Important Service Providers.....................................................28

Section III: Purchase, Exchange and Redemption of Shares..........................................29
- ---------------------------------------------------------

Purchase of Shares....................................................................29
Alternative Purchase Arrangements....................................30
Class A Shares.......................................................31
Class B Shares.......................................................34
Class C Shares.......................................................35
Class Y Shares.......................................................36

Special Services......................................................................37
Prototype Retirement Plans...............................................37
Automatic Investment Privilege...........................................37
Dividend Diversification Program.........................................37
Telephone Privilege......................................................38

Exchange of Shares....................................................................38
General..................................................................38
By Telephone.............................................................39
Automatic Exchange Program...............................................39
</TABLE>

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<TABLE>
<CAPTION>
<S> <C>
Redemption of Shares..................................................................39
General..................................................................39
Expedited Redemption Privilege...........................................40
By Telephone.............................................................41
Automatic Withdrawals Plan...............................................41
Involuntary Redemptions..................................................42
Subsequent Repurchases...................................................42

Section IV: General Information...................................................................42
- --------------------------------

Determining the Price of Shares.......................................................42
Dividends and Distributions...........................................................44
Federal Income Taxes..................................................................44
Performance Data......................................................................46

Appendix: Term and Conditions for a Statement of Intention.........................................48
</TABLE>

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Section I: Investment Strategies and Restrictions
- --------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES

Davis International Total Return Fund ("Fund") is managed by Davis
Selected Advisers, L.P. ("Adviser") and sub-advised by Davis Selected
Advisers-NY, Inc. ("DSA-NY") and Fiduciary International, Inc. ("Sub-Adviser").
The Adviser pays all of the sub-advisory fees.

The Fund's investment objective is total return through capital growth
and/or income. The Fund pursues this objective by investing primarily in common
stocks of foreign companies. The Fund may also make significant investments in
U.S. companies doing substantial business in foreign markets and has the ability
to invest in fixed-income securities to earn current income or diversify the
Fund's assets. There is no assurance that the Fund will achieve its investment
objective. An investment in the Fund may not be appropriate for all investors,
investing in international markets involves special risks, and short-term
investing is discouraged.

The Fund has the flexibility to invest on a worldwide basis in
companies of any size, regardless of country of organization or place of
principal business activity. During normal market conditions, at least 65% of
the Fund's total assets are invested in the common stock of foreign companies
and in common stock issued by U.S. companies doing substantial business in
foreign markets. At the current time the Fund expects to invest primarily in
foreign companies. Normally, the Fund invests in securities issued by companies
from at least three different non-U.S. countries; however, the Fund may vary
that percentage and invest in companies from fewer than three countries,
depending upon market conditions.

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

While the Fund may at times invest in companies doing significant
business in lesser-developed emerging markets or in the U.S., its focus is upon
companies doing substantial business in developed markets outside of the U.S.

PORTFOLIO SECURITIES

EQUITY SECURITIES. Equity securities represent an ownership position in
a company. These securities may include, without limitation, common stocks,
preferred stocks, and securities with equity conversion or purchase rights. The
Fund usually purchases common stock. The prices of equity securities fluctuate
based on changes in the financial condition of their issuers and on market and
economic conditions. The 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.

The Fund may invest in issues with smaller capitalizations. The equity
of smaller companies are subject to additional risks. Smaller companies are
usually less established and

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less diversified than larger companies, and have fewer resources available to
take advantage of opportunities or overcome challenges.

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

INTERNATIONAL EQUITY SECURITIES. International equity securities
represent ownership of a company. International equity securities come in many
forms, but the form that the Fund typically owns is common stock. International
equity securities are equity securities issued either by foreign companies or by
U.S. companies doing substantial business in foreign markets. International
equity securities are:

(1) Issued by companies organized under the laws of a foreign country;
(2) Principally traded in securities markets outside of the U.S.;
(3) Issued by companies earning at least 50% of their revenues or
profits outside of the U.S.; or
(4) Issued by companies having at least 50% of their assets outside of
the U.S.

Investments in international equity 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
investment companies investing primarily in international equity securities.

Primary Risks. Investments in international equity securities may
involve a higher degree of risk than investments in domestic issuers.
International equity 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 international equity securities and
securities markets, and there may be less government regulation and supervision
of foreign issuers and securities markets. International equity 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.

Foreign Currencies. International equity 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. The U.S. dollar value of a foreign security denominated in a foreign
currency decreases when the value of the U.S. dollar rises against the foreign
currency, and, conversely, the U.S. dollar value of the security rises when the
value of the U.S. dollar falls against such currency. The Fund may invest in
foreign currency contracts in an attempt to hedge against such currency
fluctuations.

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Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. It will do so from time to time, and investors should be aware
of the costs of currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(commonly known as the "spread") between the price at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to the Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to resell that currency to the dealer.

Less Developed Trading Markets. The markets for trading international
equity securities are generally not as developed or efficient as those in the
United States. While growing in volume, they usually have substantially less
volume than the New York Stock Exchange, and securities of some foreign
companies are less liquid and more volatile than securities of comparable United
States companies. Similarly, volume and liquidity in most foreign
over-the-counter markets is less than in the United States and, at times,
volatility of price can be greater than in the United States. Commissions on
foreign stock exchanges are generally higher than negotiated commissions on
United States exchanges, although the Fund will endeavor to achieve the most
favorable net results on its portfolio transactions. There is generally less
government supervision and regulation of stock exchanges, brokers and listed
companies than in the United States.

Foreign Withholding Taxes. The dividends and interest payable on
certain of the Fund's foreign portfolio securities may be subject to foreign
withholding taxes, thus reducing the net amount of income available for
distribution to the Fund's shareholders.

Higher Expenses. Investors should understand that the expense ratio of
the Fund can be expected to be higher than investment companies investing in
domestic securities since, among other things, the cost of maintaining the
custody of international equity securities is higher and the purchase and sale
of portfolio securities may be subject to higher transaction charges, such as
stamp duties and taxes.

Developing and Emerging Markets. Although the Fund focuses upon
companies doing substantial business in developed markets outside of the U.S.,
the Fund may make investments in companies doing substantial business in
developing or emerging market countries, which involve exposure to economic
structures that are generally less diverse and mature than in developed
countries such as the United States and Western Europe, and to political systems
that may be less stable. A "developing country" can be considered to be a
country that is in a less mature stage of the industrialization cycle than
countries with more developed markets. An "emerging market country" can be
considered to be a country that is in a less mature stage of the
industrialization cycle than developing countries. Currently, investing in many
emerging markets may not be desirable or feasible because of the lack of
adequate custody arrangements for the Fund's assets, overly burdensome
repatriation and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or other reasons. As
opportunities to invest in securities in emerging markets develop, the Fund may
expand and further broaden the group of emerging markets in which it invests. In
the past, markets of developing countries have been

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more volatile than the markets of developed countries; however, such markets
have often provided higher rates of return to investors.

Many of the risks described above relating to international equity
securities generally will be greatest for emerging markets, lesser for
developing markets and least for developed countries. For instance, economies in
individual emerging or developing markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource,
self-sufficiency and balance of payments positions. Many emerging and developing
markets have experienced substantial rates of inflation for many years.
Inflation and rapid fluctuations in inflation rates have had and may continue to
have very negative effects on the economies and securities markets of certain
developing markets. Economies in emerging and developing markets are generally
heavily dependent upon international trade and, accordingly, have been and may
continue to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. These economies also have
been and may continue to be affected adversely by economic conditions in the
countries with which they trade.

The securities markets of emerging and developing countries, if
existent, are substantially smaller, less developed, less liquid and more
volatile than the securities markets of the United States and other more
developed countries. Disclosure, regulatory and accounting standards in many
respects are less stringent than in the United States and other developed
markets. There also may be a lower level of monitoring and regulation of
developing markets and the activities of investors in such markets, and
enforcement of existing regulations has been extremely limited.

Brokerage commissions, custodial services and other costs relating to
investment in foreign markets are generally more expensive than in the United
States; this is particularly true with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
Such settlement problems may cause emerging market securities to be illiquid.
The inability of the Fund to make intended securities purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, in possible liability to the purchaser. Emerging markets may
lack clearing facilities equivalent to those in developed countries.
Accordingly, settlements can pose additional risks in such markets and
ultimately can expose the Fund to the risk of losses resulting from the Fund's
inability to recover from a counterparty.

The risk also exists that an emergency situation may arise in one or
more emerging markets. In the event of such an emergency, trading of securities
may cease or may be substantially curtailed and prices for the Fund's portfolio
securities in such markets may not be readily available. The Fund's portfolio
securities in the affected markets will be valued at fair market value as
determined in good faith by, or under the direction of, the Board of Directors.

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Investment in certain emerging market securities is restricted or
controlled to varying degrees. These restrictions or controls may at times limit
or preclude foreign investment in certain emerging market securities and
increase the costs and expenses of the Fund. Emerging markets may require
governmental approval for the repatriation of investment income or the proceeds
of sales of securities by foreign investors. In addition, if a deterioration
occurs in an emerging market's balance of payments, the market could impose
temporary restrictions on foreign capital remittances.

Investments may include securities issued by companies which have
undergone or are currently undergoing privatization.

Due to changes in the world economy and the political, economic and
investment climate in particular countries, the status of a country or its
securities markets as emerging, developing or developed can be expected to
change over time, sometimes rapidly. The Sub-Adviser will consider such changes
in determining the potential risks and rewards of investing in a given country.

OTHER INVESTMENT POLICIES

DEBT SECURITIES. Usually the Fund will be invested principally in
international equity securities. However, there is no limitation on the type of
securities in which the Fund may invest, nor on the amount of assets that may be
invested for growth or income or both. At times when the Sub-Adviser believes
the Fund's objective would be better achieved by holding a larger proportion of
debt securities, holdings of such securities will be increased and may represent
a larger portion of the portfolio. The value of debt securities is sensitive to
interest rate changes as well as the financial strength of the debtor. When
interest rates go down, debt securities in the portfolio tend to appreciate in
value. Conversely, when interest rates go up, such securities tend to depreciate
in value. Generally, the debt securities in which the Fund invests are
investment-grade securities, but it may invest up to 5% of net assets in
securities below investment-grade (so called "junk bonds"). Debt securities
issued by foreign companies and U.S. companies doing substantial business in
foreign markets are subject to the foreign market and currency risks discussed
above.

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.

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 a Fund, with the concurrent agreement of the seller (a bank or
securities dealer which the 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

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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
seek to enforce their rights thereto; (b) possible loss of all or a part of the
income during this period; and (c) expenses of enforcing its rights.

The 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 net assets
to be invested in such transactions. Repurchase agreements maturing in less than
seven days are not deemed illiquid securities for the purpose of the Fund's 15%
limitation on illiquid securities.

FOREIGN 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 international equity securities. These techniques may only
be used for hedging purposes and not for speculation. For example, 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 international equity securities held by the Fund, or to
hedge a currency risk involved in an anticipated purchase of international
equity 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.

Currency hedging transactions may be utilized as a tool to reduce
currency fluctuation risks due to a current or anticipated position in
international equity securities. The successful use of currency hedging
transactions usually depends on the Sub-Adviser's ability to forecast currency
exchange rate movements. Should 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 they had not entered into such contracts. When taking a position in an
anticipatory hedge (when the Fund purchase 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.

FORWARD CONTRACTS. 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

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negotiated, currently non-regulated market. A Fund may enter into a forward
contract, for example, when it enters into a contract for the purchase or sale
of a security denominated in a foreign currency in order to "lock in" the U.S.
dollar price of the security ("transaction hedge"). Additionally, when the
Sub-Adviser believes that a foreign currency may suffer a substantial decline
against the U.S. dollar, the Fund may enter into a forward sale contract to sell
an amount of that foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency. When the
Sub-Adviser believes that the U.S. dollar may suffer a substantial decline
against a foreign currency, the Fund may enter into a forward purchase contract
to buy that foreign currency for a fixed dollar amount in anticipation of
purchasing foreign traded securities ("position hedge"). In this situation the
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 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.

CURRENCY FUTURES CONTRACTS. 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.

FOREIGN CURRENCY OPTIONS. 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 a Fund's position, it may forfeit the entire amount of the premium
plus related transaction costs. Options on foreign currencies to be written or
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.

LIQUIDITY RISKS. 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

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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.

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.

LIMITATIONS ON CURRENCY HEDGING TRANSACTIONS. Currency hedging
transactions will be used for hedging purposes only. The Fund may either hedge
its existing investments ("true hedging") or lock in an exchange rate on
anticipated purchases ("anticipatory hedging"). The Fund will comply with
requirements established by the SEC with respect to coverage of options and
futures strategies by registered investment companies, and, if so required, will
designate liquid securities or cash on its books or in a segregated account with
its custodian bank in the amount prescribed.. Securities designated on the
Fund's books or held in a segregated account cannot be sold while the futures or
option strategy is outstanding, unless they are replaced with similar
securities.

INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest up to 10%
of its total assets through other listed and unlisted investment companies. The
Fund will comply with applicable investment limitations imposed by the
Investment Company Act of 1940. Such investments may involve the payment of
premiums above the value of the portfolio securities held by such other
investment companies. The return on such investment may be reduced both by the
Fund's own expenses, including its Advisory fees, and the management fees and
expenses of the other investment company. However, due to legal currency,
liquidity or other restrictions, investments in some countries may be currently
limited and marketable investments may be made more readily by investing in
investment companies primarily investing in securities of these countries.

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

11
<PAGE>

("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 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 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 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.

BORROWING. The Fund may borrow money in for temporary or emergency
purposes. The Fund will not borrow money with the intent of leveraging its
investments. Borrowing activities are strictly limited as described in the
section entitled, "Investment Restrictions."

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 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.

WARRANTS. The Fund may invest up to 5% of its net assets in warrants. A
warrant is an option to buy a stated number of shares of common stock at a
specified price any time during the life of the warrant. If the stock underlying
the warrant is trading at a higher price than the warrant exercise price, the
warrant has value; if the stock is trading at a lower price, it has no value and
if such lower price exists at expiration of the warrant, it will expire
worthless.

PURCHASING AND SELLING EQUITY OPTIONS. The Fund may purchase and sell
equity options for the solely for hedging purposes. Hedging transactions
include, but are not limited to, writing covered calls, purchasing protective
puts, and buying calls in anticipation of purchasing the underlying securities.

WRITING COVERED CALLS. The Fund may write covered call options on a
portion of its portfolio securities and purchase call options in closing
transactions. As a matter of current operating policy, the Fund does not intend
to write a covered call option on its portfolio securities if it would cause
more than 5% of the Fund's net assets to be subject to such options.

A covered call option gives the purchaser of the option the right to
buy the underlying security at the price specified in the option (the "exercise
price") at any time until the option expires, generally within three to nine
months, in return for the payment to the writer upon the issuance of the option
of an amount called the "premium." A commission may be charged in

12
<PAGE>

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 forgoes, 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 the payment of a brokerage
commission. During the remaining term of the option, if the Fund cannot enter
into a closing purchase transaction, it 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.

PURCHASING CALL AND/OR PUT OPTIONS. Purchasing a call on a stock would
give the Fund the right to buy the stock as described above. This would give the
Fund a position in a security for a significantly lower price than purchasing
the stock outright. Purchasing a put would give the Fund a right to sell the
stock at a specified price at any time until the option expires. Ownership of a
put can be a hedge against a decline in the price of a security which the Fund
owns. However, the risk of purchasing an option, whether a call or a put, is
that the option could expire without any gain to the Fund. The Fund would then
have lost the premium it paid for the option and any related brokerage expense.

PORTFOLIO TRANSACTIONS

The Sub-Adviser is responsible for the placement of portfolio
transactions, subject to the supervision of the Board of Directors. The Fund has
adopted a policy of seeking 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 Sub-Adviser believes that such trading is advisable.

In placing executions and paying brokerage commissions, the 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
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 Sub-Adviser by or
through brokers who effect portfolio transactions for

13
<PAGE>

the Fund may be used in servicing other accounts managed by the Sub-Adviser and
likewise research services provided by brokers used for transactions of other
accounts may be utilized by the 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 Sub-Adviser deems the purchase or sale of a
security to be in the best interests of a Fund as well as other fiduciary
accounts, the Sub-Adviser may aggregate the securities to be sold or purchased
for a Fund with those to be sold or purchased for other accounts in order to
obtain the best net price and most favorable execution. In such event, the
allocation will be made by the Sub-Adviser in the manner considered to be most
equitable and consistent with its fiduciary obligations to all such fiduciary
accounts, including the Fund involved. In some instances, this procedure could
adversely affect a Fund but the Sub-Adviser 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 Sub-Adviser believes 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 Sub-Adviser by corroborating
data and enabling the 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 Sub-Adviser
researches, at its own expense, each security included in, or being considered
for inclusion in, the Fund's portfolios. As any particular research obtained by
the 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 Sub-Adviser to
allocate, the relative costs or benefits of research.

The Fund paid the following brokerage commissions:

<TABLE>
<CAPTION>
Fiscal year ended September 30,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Davis International Total Return Fund
brokerage commissions paid $284,731 $168,045 $315,153
Amount paid to brokers providing research 56% 68% 97%
Brokerage commissions paid
to Shelby Cullom Davis & Co.: (1) $ 1,080 N/A N/A
</TABLE>

(1) Shelby Cullom Davis & Co. is a broker-dealer who may be considered an
affiliated person of the Adviser. During the fiscal year ended September 30,
1999, commissions received represented 0.38% of total commissions paid, and
0.54% of the aggregate dollar amount of transactions involving the payment of
commissions by the Davis International Total Return Fund.

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 is 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

14
<PAGE>

Adviser, if the commissions are fair and reasonable and comparable to
commissions charged by non-affiliated qualified brokerage firms for similar
services. In fiscal year ended September 30, 1999 the Fund's turnover was 154%.
Turnover was unusually high because the Fund's investment portfolio was
restructured after the Adviser assumed responsibility for day to day management
of the investment portfolio. In fiscal year September 30, 2000 turnover may
again be high as the Sub-Adviser restructures the portfolio. The Fund
anticipates that, during normal market conditions, its annual portfolio turnover
rate will be less than 100%.

15
<PAGE>

INVESTMENT RESTRICTIONS

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

DAVIS INTERNATIONAL TOTAL RETURN FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS
- ---------------------------------------------------------------------------

1. Commodities. The Fund may not purchase or sell commodities or
commodity contracts, except contracts in respect to financial
futures or currencies.

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

3. Diversification of Fund Investments.

(a) Fund Assets. With respect to 75% of the value of its total
assets, the Fund may not buy the securities of any company if
more than 5% of the value of the Fund's total assets would
then be invested in that company. Securities issued by the
U.S. Government or its agencies or instrumentalities and
repurchase agreements involving such securities ("U.S.
Government Securities"), are not subject to this limitation.

(b) Securities of Issuers. With respect to 75% of the value of
its total assets, the Fund may not purchase the securities of
any company if after such purchase the Fund would then own
more than 10% of such company's voting securities. U.S.
Government Securities are not subject to this limitation.

4. Industries. The Fund may not purchase the securities of
companies in any one industry if 25% or more of the value of
the Fund's total assets would then be invested in companies
having their principal business activity in the same industry.
U.S. Government Securities are not subject to this limitation.
Securities issued by foreign governments and their agencies
and instrumentalities will be subject to this limitation only
so long as and to the extent that the Securities and Exchange
Commission requires their inclusion in such industry
investment limitations.

5. Senior Securities; Borrowing. The Fund may not issue senior
securities except as permitted under the Investment Company
Act of 1940. The Fund may not pledge or hypothecate any of its
assets, except in connection with permitted borrowing in

16
<PAGE>

amounts not exceeding 33 1/3% of the value of the Fund's total
assets at the time of borrowing. Transfers of assets in
connection with currency transactions are not subject to these
limitations if appropriately covered.

6. Underwriting. The Fund does not engage in the underwriting of
securities. (This does not preclude it from selling restricted
securities in its portfolio.)

7. Lending Money or Securities. The Fund may not lend money,
except that it may buy debt securities publicly distributed or
traded or privately placed and may enter into repurchase
agreements. The Fund may lend its portfolio securities subject
to having 100% collateral in cash or U.S. Government
Securities. The Fund will not lend securities if such a loan
would cause more than 20% of the total value of its net assets
to then be subject to such loans.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
- ---------------------------------------

These policies and the Fund's investment objective set forth in the
Prospectus may be changed by the Board of Directors without shareholder
approval.

1. Borrowing. The Fund may not purchase securities when money
borrowed exceeds 5% of its total assets.

2. Futures Contracts. The Fund may not purchase a futures
contract or an option thereon, except in respect to currencies
and then only if, with respect to positions in futures or
options on futures which do not represent bona fide hedging,
the aggregate initial margin and premiums on such positions
would not exceed 5% of the Fund's total assets (excluding from
such calculation any in-the-money amount of any option).

3. Illiquid and Restricted Securities.

(a) The Fund may not purchase illiquid securities (including
restricted securities which are illiquid and repurchase
agreements maturing in more than seven days) if, as a result,
more than 15% of its net assets would be invested in such
securities.
`
(b) The Fund may not purchase a restricted security if it
would cause more than 10% of total assets to be invested in
such securities. For this purpose all securities eligible for
resale under Rule 144A under the Securities Act of 1933 are
not included in this 10% limitation (but are subject to the
overall 15% limitation if they are illiquid as determined by
the Sub-Adviser under criteria established by the Board of
Directors).

4. Investment Companies. The Fund may not purchase securities of
open-end or closed-end investment companies except in
compliance with the Investment Company Act of 1940.

17
<PAGE>

5. Margin. The Fund may not purchase securities on margin, except
(i) for use of short-term credit necessary for clearance of
purchases of portfolio securities, and (ii) it may make margin
deposits in connection with currency transactions or other
permissible investments.

6. Mortgaging. The Fund may not mortgage, pledge, hypothecate or,
in any manner, transfer any security owned by the Fund as
security for indebtedness except as may be necessary in
connection with permissible borrowings and other permissible
investments or investments for currency transactions and then
such mortgaging, pledging or hypothecating may not exceed 33
1/3% of the Fund's total assets at the time of borrowing or
investment.

7. Oil and Gas Programs; Real Estate Limited Partnership. The
Fund may not purchase participations or other direct interests
or enter into leases with respect to oil, gas, or other
mineral exploration or development programs. The Fund may not
purchase real estate limited partnership interests.

8. Ownership of Portfolio Securities by Officers and Directors.
The Fund may not purchase or retain the securities of any
issuer if those officers and directors of the Fund, and of the
Adviser or Sub-Adviser, who each own beneficially more than
0.5% of the outstanding securities of such issuer, together
own beneficially more than 5% of such securities.

9. Short Sales. The Fund may not effect short sales of
securities. This restriction does not apply to currency
transactions.

10. Unseasoned Issuers. The Fund may not purchase a security
(other than obligations issued or guaranteed by the U.S., any
state or local government, or any foreign government, their
agencies or instrumentalities) if, as a result, more than 5%
of the value of the Fund's total assets would be invested in
the securities of issuers which at the time of purchase had
been in operation for less than three years (for this purpose,
the period of operation of any issuer shall include the period
of operation of any predecessor or unconditional guarantor of
such issuer). This restriction does not apply to securities of
pooled investment vehicles or mortgage or asset-backed
securities.

11. Warrants. The Fund may not invest in warrants if, as a result
thereof, more than 2% of the value of the total assets of the
Fund would be invested in warrants which are not listed on the
New York Stock Exchange, the American Stock Exchange, or a
recognized foreign exchange, or more than 5% of the value of
the total assets of the Fund would be invested in warrants
whether or not so listed. For purposes of these percentage
limitations, the warrants will be valued at the lower of cost
or market and warrants acquired by the Fund in units or
attached to securities may be deemed to be without value.

18
<PAGE>

12. Options. The Fund may not purchase or write options except
that the Fund may (i) write listed covered call options on
portfolio securities and purchase call options to close such
transactions (provided that no such call is written if it
would cause more than 25% of the value of the Fund's total
assets to be subject to such calls), (ii) purchase options
(provided that no such transaction would cause more than 2% of
its total assets or more than 5% of its net assets to be
invested in premiums for such options) or, (iii) engage in
option transactions in respect to foreign currencies.

PLEASE NOTE: Except for limitations on borrowing and illiquid securities, all
percentage restrictions, whether fundamental or non-fundamental, apply as of the
time of an investment without regard to any later fluctuations in the value of
portfolio securities or other assets.

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

ORGANIZATION OF THE COMPANY

THE COMPANY. Davis International Series, Inc. ("Company") is an
open-end, diversified, management investment company incorporated in Maryland in
1994 and registered under the Investment Company Act of 1940. The Company is a
series investment company which may issue multiple series, each of which would
represent an interest in its separate portfolio. The Company currently offers
one series, Davis International Total Return Fund (the "Fund").

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

19
<PAGE>

Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the shareholders of the outstanding voting securities of an
investment company, such as the Company, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2 further
provides that a series shall be deemed to be affected by a matter unless it is
clear that the interests of each series in the matter are identical or that that
the matter does not affect any interest of such series. Rule 18f-2 exempts the
selection of independent accountants and the election of Board members from the
separate voting requirements of the Rule.

In accordance with Maryland law and the Company's By-laws, the Company
does not hold regular annual shareholder meetings. Shareholder meetings are held
when they are required under the Investment Company Act of 1940 or when
otherwise called for special purposes. Special shareholder meetings may be
called upon the written request of shareholders of at least 25% of the voting
power that could be cast at the meeting.

DIRECTORS AND OFFICERS

The Company's Board of Directors is responsible for the management and
supervision of the Company and the Fund. The Board approves all significant
agreements between the Company, on behalf of the Fund, and those companies that
furnish services to the Fund. 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.

As indicated below, certain directors and officers of the Company hold
similar positions with the following Funds that are managed by the Adviser:
Davis New York Venture Fund, Inc., and Davis Series, Inc. (collectively the
"Davis Funds.")

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;
Consultant to the Adviser; Director of the Van Eck Funds; 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. The Sub-Adviser is a wholly owned subsidiary of Fiduciary Trust
Company International.

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

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.

KEITH R. KROEGER (5/13/36), 255 King Street, Chappaqua, NY 10514.
Director of the Company, Partner, Kroeger, Woods Associates, Architects.

THE VERY REVEREND JAMES R. LEO (8/24/33), 2121 Alpine Place, #201,
Cincinnati OH 45206. Director of the Company; Executive Director of Capital
Ideas, Inc.; formerly Dean of Christ Church Cathedral from 1991 until 1998;
formerly Dean of the American Cathedral in Paris from 1980 until 1991.

20
<PAGE>

RICHARD M. MURRAY (11/21/22), La Prov Corporation, Liaison Office of
Grupo Nacional Provincial, Mexico, One Penn Plaza, New York NY 10019. Director
of the Company; Retired since 1987; Liaison Office of Grupo Nacional Provincial,
Mexico; currently Vice Chairman, La Prov Corporation; Director, United Americas
Insurance Company, N.Y.; Director, Firemark Global Insurance Fund; Director,
International Insurance Society, Inc.

THEODORE B. SMITH, JR. (12/23/32), John Hassall, Inc., Westbury, Long
Island NY 11590. Director of the Company; Chairman, President and CEO of John
Hassall, Inc.; Managing Director John Hassall, Ltd.; Chairman of John Hassall
Japan, Ltd.; Chairman of Cantrock Realty; Chairman of McCallum Die; Trustee,
Deputy Mayor and Commissioner of Public Services for the Incorporated Village of
Mill Neck.

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; Director,
Senior Research Adviser, and Founder, Venture Advisers, Inc.; Employee of
Capital Ideas, Inc. (financial consulting firm); Director, Shelby Cullom Davis
Financial Consultants, Inc.

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

KENNETH C. EICH (8/14/53), 2949 East Elvira Road, Suite 101Tucson,
Arizona 85706. 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, Venture Advisers, Inc.;
Vice President, Davis Selected Advisers - NY, Inc.; President of Davis
Distributors, LLC; former President and Chief Executive Officer of First of
Michigan Corporation; former Executive Vice President and Chief Financial
Officer of Oppenheimer Management Corporation.

SHARRA L. REED (9/25/66), 2949 East Elvira Road, Suite 101Tucson,
Arizona 85706. Vice President, Treasurer and Assistant Secretary of the Company
and each of the Davis Funds, Selected American Shares, Inc., Selected Special
Shares, Inc. and Selected Capital Preservation Trust; Vice President of Venture
Advisers, Inc.

THOMAS D. TAYS (3/7/57), 2949 East Elvira Road, Suite 101Tucson,
Arizona 85706. Vice President and Secretary of the Company and each of the Davis
Funds, Selected American Shares, Inc. Selected Special Shares, Inc. and Selected
Capital Preservation Trust; Vice President and Secretary, Venture Advisers,
Inc., Davis Selected Advisers-NY, Inc., and Davis Distributors, LLC; former Vice
President and Special Counsel of U.S. Global Investors, Inc.

SHELDON R. STEIN (11/29/28), 111 East Wacker Drive, Suite 2800, Chicago
IL 60601-4205. Assistant Secretary of the Company and each of the Davis Funds,
Selected American Shares, Inc., Selected Special Shares, Inc. and Selected
Capital Preservation Trust; Member, D'Ancona & Pflaum LLC, the Company's
counsel.

ARTHUR DON (9/24/53), 111 East Wacker Drive, Suite 2800, Chicago IL
60601-4205. Assistant Secretary of the Company and each of the Davis Funds,
Selected American Shares, Inc., Selected Special Shares, Inc. and Selected
Capital Preservation Trust; Member, D'Ancona & Pflaum LLC, the Company's
counsel.

* Jeremy H. Biggs, and Christopher C. Davis are considered to be "interested
persons" of the Company, as defined in the Investment Company Act.
** Shelby M.C. Davis is the father of Andrew A. Davis and Christopher C. Davis.

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.

21
<PAGE>

DIRECTORS' COMPENSATION SCHEDULE

During the fiscal year ended September 30, 1999, the compensation paid
to the directors who are not considered to be interested persons of the Company
was as follows:

AGGREGATE FUND TOTAL COMPLEX
NAME COMPENSATION COMPENSATION*
- ---- ------------ -------------
G. Bernard Hamilton $ 6,250 $ 74,250
Keith R. Kroeger 6,250 6,250
The Very Reverend James R. Leo 6,250 6,250
Richard M. Murray 6,250 6,250
Theodore B. Smith, Jr. 6,250 6,250

* Complex Compensation is the aggregate compensation paid, for service as a
Director, by all mutual funds with the same investment adviser. There are eight
registered investment companies in the complex.

CERTAIN SHAREHOLDERS OF THE FUND

As of December 31, 1999, officers and directors owned the following
percentages of each Class of shares issued by the Fund:

<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Davis International Total Return
Fund 4.18% * * *
</TABLE>

* Indicates that officers and directors owned less than 1% of the outstanding
shares of the indicated Class of shares.

The following table sets forth, as of December 31, 1999 the name and
holdings of each person known by the Company to be a record owner of more than
5% of the outstanding shares of any Class of either of its Funds. Various
entities controlled by the Davis family control over 50% of the outstanding vote
and may be considered a "controlling person" under the Investment Company Act of
1940.
PERCENT OF CLASS
NAME AND ADDRESS OUTSTANDING
- ---------------- -----------
DAVIS INTERNATIONAL TOTAL RETURN FUND
Class A shares
- --------------
Shelby Cullom Davis & Co. 47.29%
Investment #3
609 Fifth Avenue, 11th Floor
New York, NY 10017-1021

Davis Selected Advisers, L.P. 10.26%
Attn: John Gilding
2949 East Elvira Road
Tucson, AZ 85706

SAC & Co. 10.44%
80452131

22
<PAGE>

12E 49th Street, 41st Floor
New York, NY 10017

Class B shares N/A
- --------------

Class C shares
- --------------
State Street Bank & Trust Co. 16.26%
Custodian for IRA of Robert C. Mann
4916 Westbriar Drive
Fort Worth, TX 76109-3217

Shirlieann Adams 9.71%
119 Heritage Lane
Madison, AL 35758-7974

Laura A. H. Schechter 16.76%
Steven A. Schechter JT TEN
217 Seaway Ct.
Longmont, CO 80503-7871

INVESTMENT ADVISORY SERVICES

Davis Selected Advisers, L.P. (the "Adviser") whose principal office is
at 2949 East Elvira Road, Suite 101Tucson, Arizona 85706, serves as the
investment adviser of the Fund. Venture Advisers, Inc. is the Adviser's sole
general partner. Shelby M.C. Davis is Senior Research Adviser and Founder of the
Adviser and the controlling shareholder of the general partner. Subject to the
direction and supervision of the Board of Directors, the Adviser manages the
investment and business operations of the Fund. Davis Distributors, LLC ("the
Distributor"), a subsidiary of the Adviser, serves as the distributor or
principal underwriter of the Fund's shares. Davis Selected Advisers-NY, Inc.,
("DSA-NY") a wholly owned subsidiary of the Adviser, performs research and other
services for the Fund on behalf of the Adviser under a Sub-Advisory Agreement
with the Adviser. The Adviser also acts as investment adviser for Davis New York
Venture Fund, Inc., Davis Series, Inc., (collectively with the Fund, the "Davis
Funds"), Selected American Shares, Inc., Selected Special Shares, Inc. and
Selected Capital Preservation Trust (collectively the "Selected Funds"). The
Distributor also acts as the principal underwriter for the Davis Funds and the
Selected Funds.

Fiduciary International, Inc. ("Sub-Adviser") serves as Sub-Adviser to
the Fund under a Sub-Advisory Agreement with the Adviser. The Sub-Adviser
manages the day to day investment operations of the Fund, subject to the
Adviser's overall supervision. All of the fees paid to the Sub-Adviser are paid
by the Adviser and not the Fund. The Sub-Adviser is a is a wholly owned
subsidiary of Fiduciary Trust Company International ("FTCI") and is registered
as an investment adviser under the Investment Advisers Act of 1940. Both the
Sub-Adviser and FTCI maintain their principal offices at Two World Trade Center,
New York, New York, 10048.

23
<PAGE>

As of December 31, 1999, FTCI served as the investment adviser to a number of
institutional and private accounts with aggregate assets of approximately $50
billion.

ADVISORY AND SUB-ADVISORY AGREEMENTS. Pursuant to the Advisory
Agreement, the Fund pays the Adviser a fee according to a separate negotiated
fee schedule. Advisory fees are allocated among each Class of shares in
proportion to each Class's relative total net assets.

The Fund pays the Adviser a fee at the annual rate based on average net
assets, as follows: 1.00% on the first $250 million; 0.90% on the next $250
million; and 0.80% of average net assets in excess of $500 million. The
aggregate advisory fees paid by the Fund to the Adviser for the years ended
September 30, 1999, 1998 and 1997 were $350,101, $401,648 and $471,571,
respectively.

These fees may be higher than that of most other mutual Fund but are
not necessarily higher than that paid by funds with similar objectives. Under
the Sub-Advisory Agreement with DSA-NY, the Adviser pays all of DSA-NY's direct
and indirect costs of operations. All the fees paid to DSA-NY and the
Sub-Adviser are paid by the Adviser and not the Fund.

The Advisory Agreement and sub-advisory agreements also make 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 of
1940, the Advisory Agreement and sub-advisory agreements will terminate
automatically upon assignment and is subject to cancellation upon 60 days'
written notice by the Company's Board of Directors, the vote of the holders of a
majority of the Fund outstanding shares, or the Adviser. The continuance of the
Advisory Agreement and sub-advisory agreements must be approved at least
annually by the Fund's Board of Directors or by the vote of holders of a
majority of the outstanding shares of the Fund. In addition, any new agreement
or the continuation of the existing agreement must be approved by a majority of
Directors who are not parties to the agreement or interested persons of any such
party.

Pursuant to the Advisory Agreement, the Adviser, subject to the general
supervision of the Fund's Board of Directors, provides management and investment
advice, and furnishes statistical, executive and clerical personnel,
bookkeeping, office space, and equipment necessary to carry out its investment
advisory functions and such corporate managerial duties as requested by the
Board of Directors of the Fund. The Fund bears all expenses other than those
specifically assumed by the Adviser under the Advisory Agreement, including
preparation of its tax returns, financial reports to regulatory authorities,
dividend determinations, 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. The Fund
reimburses the Adviser for providing certain services including accounting and
administrative services, qualifying shares for sale with state agencies and
shareholder services. Such reimbursements are detailed below:

24
<PAGE>

Fiscal year ended September 30,
1999 1998 1997
---- ---- ----
Davis International Total Return Fund,
Accounting and administrative services $ 8,004 $ 8,004 $ 7,337
Qualifying shares for sale with state
agencies $12,000 $12,000 $12,000
Shareholder services $ 5,190 $ 7,890 $ 3,336

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

DISTRIBUTION OF COMPANY SHARES

DISTRIBUTION PLANS. Class A, Class B, and Class C shares have each
adopted Distribution Plans under which the Fund reimburses the Distributor for
some of its distribution expenses. The Distribution Plans were approved by the
Fund's Board of Directors in accordance with Rule 12b-1 under the Investment
Company Act of 1940. Rule 12b-1 regulates the manner in which a mutual fund may
assume costs of distributing and promoting the sale of its shares. Payments
pursuant to a Distribution Plan are included in the operating expenses of the
Class.

CLASS A SHARES. Payments under the Class A Distribution Plan may be up
to an annual rate of 0.25% of the average daily net asset value of the Class A
shares. Such payments are made to reimburse the Distributor for the fees it pays
to its salespersons and other firms for selling the Fund's Class A shares,
servicing its shareholders and maintaining its shareholder accounts. Where a
commission is paid for purchases of $1 million or more of Class A shares and as
long as the limits of the Distribution Plan have not been reached, such payment
is also made from 12b-1 distribution fees received from the 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.

CLASS B SHARES. Payments under the Class B Distribution Plan are
limited to an annual rate of 1% of the average daily net asset value of the
Class B shares. In accordance with current applicable rules, such payments are
also limited to 6.25% of gross sales of Class B shares plus interest at 1% over
the prime rate on any unpaid amounts. The Distributor pays broker/dealers up to
4% in commissions on new sales of Class B shares. Up to an annual rate of 0.75%
of the average daily net assets is used to reimburse the Distributor for these
commission payments. Most or all of such commissions are reallowed to
salespersons and to firms responsible for such

25
<PAGE>

sales. No commissions are paid by the Company with respect to sales by the
Distributor to officers, directors, and full-time employees of the Fund, the
Distributor, the Adviser, the Adviser's general partner, or DSA-NY. Up to 0.25%
of average net assets is used to reimburse the Distributor for the payment of
service and maintenance fees to its salespersons and other firms for shareholder
servicing and maintenance of its shareholder accounts.

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

CARRYOVER PAYMENTS. If, due to the foregoing payment limitations, the
Fund is unable to pay the Distributor the 4% commission on new sales of Class B
shares, or the 1% commission on new sales of Class C shares, the Distributor
intends, but is not obligated, to accept new orders for shares and pay
commissions in excess of the payments it receives from the Fund. The Distributor
intends to seek full payment from the 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
Company, who are not interested persons of the Distributor or the Company and
have no direct or indirect financial interest in the Class B or C Distribution
Plans (the "Independent Directors"). If the Fund terminates its Class B share or
Class C share Distribution Plan, the Distributor will ask the Independent
Directors to take whatever action they deem appropriate with regard to the
payment of any excess amounts. As of September 30, 1999 the cumulative totals of
these carryover payments were:

Percent of Class
Dollar Amount Net Assets
------------- ----------
Davis International Total Return Fund
Class B shares $238,725 5.15%

26
<PAGE>

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

The Distribution Plans continue annually so long as they are approved
in the manner provided by Rule 12b-1 or unless earlier terminated by vote of the
majority of the Independent Directors or a majority of a Fund's outstanding
Class of shares. The Distributor is required to furnish quarterly written
reports to the Board of Directors detailing the amounts expended under the
Distribution Plans. The Distribution Plans may be amended provided that all such
amendments comply with the applicable requirements then in effect under Rule
12b-1. Currently, Rule 12b-1 provides that as long as the Distribution Plans are
in effect, the Company must commit the selection and nomination of candidates
for new Independent Directors to the sole discretion of the existing Independent
Directors.

DEALER COMPENSATION. As described herein, dealers or others may receive
different levels of compensation depending on which class of shares they sell.
The Distributor may make expense reimbursements for special training of a
dealer's registered representatives or personnel of dealers and other firms who
provide sales or other services in respect to the 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 who sell shares of the Fund. In some instances, such cash compensation or
other incentives may be offered only to certain dealers or agents who employ
registered representatives who have sold or may sell significant amounts of
shares of the Fund and/or the other Davis Funds managed by the Adviser during a
specified period of time.

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

FUND SUPERMARKETS. The Funds participate in various "Fund Supermarkets"
in which a broker-dealer offers many mutual funds to the sponsor's clients
without charging the clients a sales charge. The Funds pay the supermarket
sponsor a negotiated fee for distributing the Funds' shares and for continuing
services provided to their shareholders.

A portion of the supermarket sponsor's fee (that portion related to
sales, marketing, or distribution of Fund shares) is paid with fees authorized
under the Distribution Plans.

27
<PAGE>

A portion of the supermarket sponsor's fee (that portion related to
shareholder services such as new account set-up, shareholder accounting,
shareholder inquires, transaction processing, and shareholder confirmations and
reporting) is paid as a shareholder servicing fee of the Funds. The Funds would
typically be paying these shareholder servicing fees directly, were it not that
the supermarket sponsor holds all customer accounts in a single omnibus account
with the Funds. The amount of shareholder servicing fees which the Funds may pay
to supermarket sponsors may not exceed the lesser of (a) 1/10 of 1 percent of
net assets held by such supermarket sponsors per year, or (b) the shareholder
servicing costs saved by the Funds with the omnibus account (determined in the
reasonable judgement of the Adviser).

If the supermarket sponsor's fees exceed the sum available from the
Distribution Plans and shareholder serving fees, then the Adviser pays the
remainder out of its profits.

THE DISTRIBUTOR. Davis Distributors, LLC, ("the Distributor"), 2949
East Elvira Road, Suite 101Tucson, Arizona 85706 is a wholly owned subsidiary of
the Adviser and pursuant to a Distributing Agreement acts as principal
underwriter of the Fund shares on a continuing basis. By the terms of 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 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.

28
<PAGE>

The Distributor or the Adviser, in its capacity as distributor,
received total sales charges (which the Funds do not pay) on the sale of Class A
shares:

<TABLE>
<CAPTION>
Fiscal year ended September 30,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Davis International Total Return Fund $9,425 $50,573 $67,467
Amount reallowed to dealers $7,787 $42,471 $57,120
</TABLE>

The Distributor or the Adviser, in its capacity as distributor,
received compensation on redemptions and repurchases of shares:

<TABLE>
<CAPTION>
Fiscal year ended September 30, 1999
<S> <C>
Davis International Total Return Fund
Class A shares N/A
Class B shares $21,271
Class C shares $ 79
</TABLE>

The Distributor or the Adviser, in its capacity as distributor,
received the following amounts as reimbursements under the Distribution plans.

<TABLE>
<CAPTION>
Fiscal year ended September 30,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Davis International Total Return Fund
Class A shares $ 21,977 $ 46,112 $ 57,960
Class B shares $ 56,168 $ 67,266 $ 79,903
Class C shares $ 2,934 $ 1,804 $ 59
</TABLE>

OTHER IMPORTANT SERVICE PROVIDERS

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

AUDITORS. KPMG LLP ("KPMG"), 707 17th Street, Suite 2300, Denver,
Colorado 80202, serves as independent auditors for each of the Funds. The
auditors consult on financial accounting and reporting matters, and meet with
the Audit Committee of the Board of Directors. In addition, KPMG reviews federal
and state income tax returns and related forms.

COUNSEL. D'Ancona & Pflaum LLC, 111 East Wacker Drive, Suite 2800,
Chicago, Illinois 60601, serves as counsel to the Company and also serves as
counsel for those members of the Board of Directors who are not affiliated with
the Adviser.

29
<PAGE>

Section III: Purchase, Exchange and Redemption of Shares
- ---------------------------------------------------------

PURCHASE OF SHARES

CLASS A, B, AND C SHARES. 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. Class Y shares are offered only to certain qualified
purchasers, as described below.

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

The second way to make an initial investment is to have your dealer
order and remit payment for the shares on your behalf. The dealer can also order
the shares from the Distributor by telephone or wire. You can also use this
method for additional investments of at least $1,000.

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

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

After your initial investment, you can make additional investments of
at least $25. Simply mail a check payable to "The Davis Funds" to State Street
Bank and Trust Company, c/o The Davis Funds, P.O. Box 8406, Boston, MA
02266-8406. For overnight delivery, please send your check to State Street Bank
and Trust Company, c/o The Davis Funds, 66 Brooks Drive, Braintree, MA. 02184.
THIRD PARTY CHECKS WILL NOT BE ACCEPTED. The check should be accompanied by a
form which State Street will provide after each purchase. If you do not have a
form, you should tell State Street that you want to invest the check in shares
of the applicable Fund. If you know your account number, you should also provide
it to State Street.

30
<PAGE>

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

ALTERNATIVE PURCHASE ARRANGEMENTS

The Fund offers four classes of shares. With certain exceptions
described below, Class A shares are sold with a front-end sales charge at the
time of purchase and are not subject to a sales charge when they are redeemed.
Class B shares are sold without a sales charge at the time of purchase, but are
subject to a deferred sales charge if they are redeemed within six years after
purchase. Class B shares will automatically convert to Class A shares eight
years after the end of the calendar month in which the shareholder's order to
purchase was accepted. Class C shares are purchased at their net asset value per
share without the imposition of a front-end sales charge but are subject to a 1%
deferred sales charge if redeemed within one year after purchase and do not have
a conversion feature. Class Y shares are offered 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.

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

31
<PAGE>

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 without a sales load are redeemed within the first
year after purchase. The Distributor may pay the financial service firm a
commission during the first year after such purchase at an annual rate as
follows:

Purchase Amount Commission
--------------- ----------
First $3,000,000................................................ .75%
Next $2,000,000................................................ .50%
Over $5,000,000................................................ .25%

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

REDUCTION OF CLASS A SALES CHARGE. There are a number of ways to reduce
the sales charge imposed on the purchase of the Fund's Class A shares, as
described below. These reductions are based upon the fact that there is less
sales effort and expense involved in respect to purchases by affiliated persons
and purchases made in large quantities. If you claim any reduction of sales
charges, you or your dealer must so notify the Distributor (or State Street, if
the investment is mailed to State Street) when the purchase is made. Enough
information must be given to verify that you are entitled to such right.

(1) FAMILY OR GROUP PURCHASES. Certain purchases made by or for more
than one person may be considered to constitute a single purchase, including (i)
purchases for family members, including spouses and children under 21, (ii)
purchases by trust or other fiduciary accounts and purchases by Individual
Retirement Accounts for employees of a single employer, and (iii) purchases made
by an organized group of persons, whether incorporated or not, if the group has
a purpose other than buying shares of mutual funds. For further information on
group purchase reductions, contact the Adviser or your dealer.

(2) STATEMENTS OF INTENTION. Another way to reduce the sales charge is
by signing a Statement of Intention ("Statement"). See the Appendix: "Terms and
Conditions of a Statement of Intention." If you enter into a Statement of
Intention you (or any "single purchaser") may state that you intend to invest at
least $100,000 in the Fund Class A shares over a 13-month period. The amount you
say you intend to invest may include Class A shares which you already

32
<PAGE>

own, valued at the offering price, at the end of the period covered by the
Statement. A Statement may be backdated up to 90 days to include purchases made
during that period, but the total period covered by the Statement may not exceed
13 months.

Shares having a value of 5% of the amount you state you intend to
invest will be held "in escrow" to make sure that any additional sales charges
are paid. If any of the Fund shares are in escrow pursuant to a Statement and
such shares are exchanged for shares of another Davis Fund, the escrow will
continue with respect to the acquired shares.

No additional sales charge will be payable if you invest the amount you
have indicated. Each purchase under a Statement will be made as if you were
buying the total amount indicated at one time. For example, if you indicate that
you intend to invest $100,000, you will pay a sales charge of 3-1/2% on each
purchase.

If you buy additional amounts during the period to qualify for an even
lower sales charge, you will be charged such lower charge. For example, if you
indicate that you intend to invest $100,000 and actually invest $250,000, you
will, by retroactive adjustment, pay a sales charge of 2-1/2%.

If during the 13-month period you invest less than the amount you have
indicated, you will pay an additional sales charge. For example, if you state
that you intend to invest $250,000 and actually invest only $100,000, you will,
by retroactive adjustment, pay a sales charge of 3-1/2%. The sales charge you
actually pay will be the same as if you had purchased the shares in a single
purchase.

A Statement does not bind you to buy, nor does it bind the Adviser or
Distributor to sell, the shares covered by the Statement.

(3) RIGHTS OF ACCUMULATION. Another way to reduce the sales charge is
under a right of accumulation. This means that the larger purchase entitled to a
lower sales charge does not have to be in dollars invested at one time. The
larger purchases that you (or any "single purchaser") make at any one time can
be determined by adding to the amount of a current purchase the value of Fund
shares (at offering price) already owned by you.

For example, if you owned $100,000 worth (at offering price) of shares
(including Class A, B and C shares of all Davis Funds, except Davis Government
Money Market Fund) and invest $5,000 in additional shares, the sales charge on
that $5,000 investment would be 3-1/2%, not 4-3/4%.

(4) COMBINED PURCHASES WITH OTHER DAVIS FUNDS. Your ownership or
purchase of Class A shares of other Davis Funds may also reduce your sales
charges in connection with the purchase of the Fund's Class A shares. This
applies to all three situations for reduction of sales charges discussed above.

If a "single purchaser" decides to buy a Fund Class A shares as well as
Class A shares of any of the other Davis Funds (other than shares of Davis
Government Money Market Fund) at

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<PAGE>

the same time, these purchases will be considered a single purchase for the
purpose of calculating the sales charge. For example, a single purchaser can
invest at the same time $100,000 in Davis International Total Return Fund's
Class A shares and $150,000 in the Class A shares of Davis New York Venture Fund
and pay a sales charge of 2-1/2%, not 3-1/2%.

Similarly, a Statement of Intention for the Fund's Class A shares and
for the Class A shares of the other Davis Funds (other than Davis Government
Money Market Fund) may be aggregated. In this connection, the Company's Class A
shares and the Class A shares of the other Davis Funds which you already own,
valued at the current offering price at the end of the period covered by your
Statement of Intention, may be included in the amount you have stated you intend
to invest pursuant to your Statement.

Lastly, the right of accumulation also applies to the Class A, Class B
and Class C shares of the other Davis Funds (other than Davis Government Money
Market Fund) which you own. Thus, the amount of current purchases of the Fund's
Class A shares which you make may be added to the value of the Class A shares of
the other Davis Funds (valued at their current offering price) already owned by
you in determining the applicable sales charge. For example, if you owned
$100,000 worth of shares of Davis New York Venture Fund and Davis Financial Fund
and Davis Convertible Securities Fund, (valued at the applicable current
offering price) and invest $5,000 in the Fund's shares, the sales charge on your
investment would be 3-1/2%, not 4-3/4%.

In all the above instances where you wish to assert this right of
combining the shares you own of the other Davis Funds, you or your dealer must
notify the Distributor (or State Street, if the investment is mailed to State
Street) of the pertinent facts. Enough information must be given to permit
verification as to whether you are entitled to a reduction in sales charges.

(5) ISSUANCE OF SHARES AT NET ASSET VALUE. There are many situations
where the sales charge will not apply to the purchase of Class A shares, as
discussed in the Prospectus. A sales charge is not imposed on these transactions
either because of the purchaser deals directly with the Fund (as in employee
purchases) or because a responsible party (such as a financial institution) is
providing the necessary services usually provided by a registered
representative. In addition, the Fund occasionally may be provided with an
opportunity to purchase substantially all the assets of a public or private
investment company or to merge another such company into the Fund. This offers
the Fund the opportunity to obtain significant assets. No dealer concession is
involved. It is industry practice to effect such transactions at net asset value
as it would adversely affect the Fund's ability to do such transactions if the
Fund had to impose a sales charge.

(6) PURCHASES FOR EMPLOYEE BENEFIT PLANS. Trusteed or other fiduciary
accounts and Individual Retirement Accounts ("IRA") of a single employer are
treated as purchases of a single person. Purchases of and ownership by an
individual and such individual's spouse under an IRA are combined with their
other purchases and ownership.

(7) SALES AT NET ASSET VALUE. The sales charge will not apply to: (1)
Class A shares purchased through the automatic reinvestment of dividends and
distributions; (2) Class A shares

34
<PAGE>

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 Distributor or by investment advisors or
financial planners who place trades for their own accounts or the accounts of
their clients and who charge a management, consulting, or other fee for their
services; and clients of such investment advisors or financial planners who
place trades for their own accounts if the accounts, are linked to the master
account of such investment advisor or financial planner, on the books and
records of the broker or agent; and (7) Class A shares amounting to less than
$5,000,000 purchased by any state, county, city, department, authority or
similar agency. Investors may be charged a fee if they effect purchases in Fund
shares through a broker or agent. The Fund may also issue Class A shares at net
asset value incident to a merger with or acquisition of assets of an investment
company.

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

Class B shares that have been outstanding for eight years will
automatically convert to Class A shares without imposition of a front-end sales
charge. The Class B shares so converted will no longer be subject to the higher
expenses borne by Class B shares. Because the net asset value per share of the
Class A shares may be higher or lower than that of the Class B shares at

35
<PAGE>

the time of conversion, although the dollar value will be the same, a
shareholder may receive more or less Class A shares than the number of Class B
shares converted. Under a private Internal Revenue Service Ruling, such a
conversion will not constitute a taxable event under the federal income tax law.
In the event that this ceases to be the case, the Board of Directors will
consider what action, if any, is appropriate and in the best interests of the
Class B shareholders. In addition, certain Class B shares held by certain
defined contribution plans automatically convert to Class A shares based on
increases of plan assets.

CLASS B SPECIAL DISTRIBUTION ARRANGEMENTS. Class B shares of the Fund
are made available to Retirement Plan Participants such as 401K or 403B Plans at
NAV with the waiver of Contingent Deferred Sales Charge ("CDSC") if:

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

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

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

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

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

36
<PAGE>

the Fund during the one-year period. If Class C shares are redeemed within the
one-year period after purchase, the 1% redemption charge will be paid to the
Distributor. After Class C shares have been outstanding for more than one year,
the Distributor will make quarterly payments to the firm responsible for the
sale of the shares in amounts equal to 0.75% of the annual average daily net
asset value of such shares for sales fees and 0.25% of the annual average daily
net asset value of such shares for service and maintenance fees.

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

The CDSC on Class A, B, and C shares that are subject to a CDSC will be
waived if the redemption relates to the following: (a) in the event of the total
disability (as evidenced by a determination by the federal Social Security
Administration) of the shareholder (including registered joint owner) occurring
after the purchase of the shares being redeemed; (b) in the event of the death
of the shareholder (including a registered joint owner); (c) for redemptions
made pursuant to an automatic withdrawal plan in an amount, on an annual basis,
up to 12% of the value of the account at the time the shareholder elects to
participate in the automatic withdrawal plan; (d) for redemptions from a
qualified retirement plan or IRA that constitute a tax-free return of excess
contributions to avoid tax penalty; (e) on redemptions of shares sold to
directors, officers, and employees of any fund for which the Adviser acts as
investment adviser, or officers and employees of the Adviser, Sub-Adviser, or
Distributor, including former directors and officers and immediate family
members of all of the foregoing, and any employee benefit or payroll deduction
plan established by or for such persons; and (f) on redemptions pursuant to the
right of the Company to liquidate a shareholder's account if the aggregate net
asset value of the shares held in such account falls below an established
minimum amount.

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

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

37
<PAGE>

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.

SPECIAL SERVICES

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

AUTOMATIC INVESTMENT PLAN. You may arrange for automatic monthly
investing whereby State Street will be authorized to initiate a debit to your
bank account of a specific amount (minimum $25) each month which will be used to
purchase the Fund shares. The account minimums of $1,000 for non-retirement
accounts and $250 for retirement accounts will be waived, if pursuant to the
automatic investment plan, the account balance will meet the minimum investment
requirements within twelve months of the initial investment. For institutions
that are members of the Automated Clearing House system (ACH), such purchases
can be processed electronically on any day of the month between the 4th and the
28th. After each automatic investment, you will receive a transaction
confirmation, and the debit should be reflected on your next bank statement. You
may terminate the Automatic Investment Plan at any time. If you desire to
utilize this plan, you may use the appropriate designation on the Application
Form. Class Y shares are not eligible to participate in the Automatic Investment
Plan.

DIVIDEND DIVERSIFICATION PROGRAM. You may also establish a dividend
diversification program which allows you to have all dividends and any other
distributions automatically invested in shares of one or more of the Davis
Funds, subject to state securities law requirements and the minimum investment
requirements. You must receive a current prospectus for the other Fund or Funds
prior to investment. Shares will be purchased at the chosen Fund's net asset
value on the dividend payment date. A dividend diversification account must be
in the same registration as the distributing fund account and must be of the
same class of shares. All accounts established or utilized under this program
must have a minimum initial value, and all subsequent investments must be at
least $25. This program can be amended or terminated at any time, upon at least
60 days' notice. If you would like to participate in this program, you may use
the appropriate designation on the Application Form. Class Y shares are not
eligible to participate in the Dividend Diversification Program.

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<PAGE>

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

EXCHANGE OF SHARES

GENERAL. The exchange privilege is a convenient way to buy shares in
other Davis Funds in order to respond to changes in your goals or in market
conditions. If such goals or market conditions change, the Davis Funds offer a
variety of investment objectives that includes common stock funds, tax-exempt,
government and corporate bond funds, and a money market fund. However, the Fund
is intended as long-term investments and is not intended for short-term trades.
Shares of a particular class of a Fund may be exchanged only for shares of the
same class of another Davis Fund except that Class A shareholders who are
eligible to purchase Class Y shares may exchange their shares for Class Y shares
of the Fund. All of the Davis Funds offer Class A, Class B, Class C and Class Y
shares. The shares to be received upon exchange must be legally available for
sale in your state. For Class A, Class B or Class C shares the net asset value
of the initial shares being acquired must meet the required minimum of $1,000
unless such exchange is under the Automatic Exchange Program described below.
For Class Y shares the net asset value of the initial shares being acquired must
be at least $5,000,000 for Institutions and Government Entities or minimums set
by wrap program sponsors.

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

Before you decide to make an exchange, you must obtain the current
prospectus of the desired fund. Call your broker or the Distributor for
information and a prospectus for any of the other Davis Funds registered in your
state. Read the prospectus carefully. If you decide to exchange your shares,
contact your broker/dealer, the Distributor, or send State Street a written
unconditional request for the exchange and follow the instructions regarding
delivery of share certificates contained in the section on "Redemption of
Shares." A medallion signature guarantee is not required for such an exchange.
However, if shares are also redeemed for cash in connection with the exchange
transaction, a medallion signature guarantee may be required. A medallion
signature guarantee is a written confirmation from an eligible guarantor
institution, such as a securities broker-dealer or a commercial bank, that the
signature(s) on the account is

39
<PAGE>

(are) valid. Unfortunately, no other form of signature verification can be
accepted. Your dealer may charge an additional fee for handling an exercise of
the exchange privilege.

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

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

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

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

REDEMPTION OF SHARES

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

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

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

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<PAGE>

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

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

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

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

EXPEDITED REDEMPTION PRIVILEGE. Investors with accounts other than
prototype retirement plans and IRAs may instruct State Street to establish
banking instructions for the purpose of a future expedited redemption. Class Y
shareholders are not eligible for the expedited redemption privilege. Expedited
redemption privilege allows the shareholder to instruct State

41
<PAGE>

Street to forward redemption proceeds to their checking or savings account at
the their commercial banking institution.

Shareholders may establish expedited redemption privilege by (a)
completion of the expedited redemption privilege section at the time the account
is established, (b) written instruction signed by all shareholders with their
signature medallion-guaranteed, or (c) completion of the Davis Funds Account
Service Form by all shareholders with their signature(s) medallion-guaranteed.
In each case, the shareholders must submit a copy of a voided check or encoded
deposit slip. With the voided check or encoded deposit slip, State Street can
verify the correct banking instructions.

Once the expedited redemption privilege is established, proceeds may be
sent via expedited redemption privilege by notifying Davis Distributors by (a)
telephone request from the registered shareholder(s), (b) telephone request from
the registered representative of a Qualified Dealer, or (c) written request
signed by the registered shareholder.

Redemption proceeds may be delivered by federal funds wire or by
Automated Clearing House (ACH). Proceeds delivered by federal funds wire should
be received the business day following the redemption transaction. There is a
$5.00 charge by State Street for federal funds wire service and the receiving
bank may charge for this service. Proceeds delivered by ACH should be received
within two business days following the redemption transaction. State Street does
not charge for this service. Certain financial institutions may not accept
proceeds by either of these methods except by arrangement with its correspondent
bank or unless such institution is a member of the Federal Reserve System.

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

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

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

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<PAGE>

right to terminate or modify the Automatic Withdrawals Plan at any time. Class Y
shares are not eligible for the Automatic Withdrawals Plan.

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

SUBSEQUENT REPURCHASES. After some or all of your shares are redeemed
or repurchased, you may decide to put back all or part of your proceeds into the
same Class of a Fund's shares. Any such shares will be issued without sales
charge at the net asset value next determined after you have returned the amount
of your proceeds. In addition, any applicable CDSC assessed on such shares will
be returned to the account. Shares will be deemed to have been purchased on the
original purchase date for purposes of calculating the CDSC and the conversion
period. This can be done by sending State Street or the Distributor a letter,
together with a check for the reinstatement amount. The letter must be received,
together with the payment, within 60 days after the redemption or repurchase.
You can only use this privilege once.

Section IV: General Information
- --------------------------------

DETERMINING THE PRICE OF SHARES

NET ASSET VALUE. The net asset value per share of each class is
determined daily by dividing the total value of investments and other assets,
less any liabilities, by the total outstanding shares. The net asset value of
the Fund is determined daily as of the earlier of the close of the New York
Stock Exchange (the "Exchange") or 4:00 p.m., Eastern time, on each day that the
Exchange is open for trading.

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

The Company does not price its shares or accept orders for purchases or
redemptions on days when the New York Stock Exchange is closed. Such days
currently include New Year's

43
<PAGE>

Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

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

VALUATION OF PORTFOLIO SECURITIES. Portfolio securities are normally
valued using current market valuations. Securities traded on a national
securities exchange are valued at the last published sales price on the
exchange, or in the absence of recorded sales, at the average of closing bid and
asked prices on such exchange. Over-the-counter securities are valued at the
average of closing bid and asked prices. Fixed-income securities may be valued
on the basis of prices provided by a pricing service.

Because the Fund's securities are traded in markets that close at different
times, events affecting portfolio values that occur between the time that their
prices are determined and the time the Fund's shares are priced will generally
not be reflected in the Fund's share price. However, if the Adviser believes
that extraordinary circumstances have occurred in a foreign market which render
the reported prices unreliable then the Fund may price some portfolio securities
at a "fair value" as determined in conformance with procedures adopted by the
Board of Directors. The net asset value of the Fund's shares may change on days
when shareholders will not be able to purchase or redeem the Fund's shares.

The value of securities denominated in foreign currencies and traded in
foreign markets will have their value converted into the U.S. dollar equivalents
at the prevailing market rate as computed by State Street Bank & Trust Company.
Fluctuation in the value of foreign currencies in relation to the U.S. dollar
may affect the net asset value of the Fund's shares even if there has not been
any change in the foreign currency price of the Fund's investments.

Investments in short-term securities (maturing in one year or less) are
valued at amortized cost unless the Board of Directors determines that such cost
is not a fair value. Assets for which there are no quotations available will be
valued at a fair value as determined by or at the direction of the Board of
Directors.

DIVIDENDS AND DISTRIBUTIONS

There are two sources of income, net income and realized capital gains
paid to you by the Fund. You will receive confirmation statements for dividends
declared and shares purchased through reinvestment of dividends. You will also
receive confirmations after each purchase and after each redemption. Different
classes of shares may be expected to have different expense ratios due to
differing distribution services fees and certain other expenses. Classes with
higher

44
<PAGE>

expense ratios will pay correspondingly lower dividends than Classes with lower
expense ratios. For tax purposes, information concerning distributions will be
mailed annually to shareholders.

Shareholders have the option of receiving all dividends and
distributions in cash, of having all dividends and distributions reinvested, or
of having income dividends paid in cash and capital gain distributions
reinvested. Reinvestment of all dividends and distributions is automatic for
accounts utilizing the Automatic Withdrawals Plan. The reinvestment of dividends
and distributions is made at net asset value (without any initial or contingent
deferred sales charge) on the payment date.

For the protection of the shareholder, upon receipt of the second
dividend check which has been returned to State Street as undeliverable,
undelivered dividends will be invested in additional shares at the current net
asset value and the account designated as a dividend reinvestment account.

FEDERAL INCOME TAXES

This section is not intended to be a full discussion of all the aspects
of the federal income tax law and its effects on the 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 any 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 applicable 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. A gain or
loss for tax purposes may be realized on the redemption of shares. If the
shareholder realizes a loss on the sale or exchange of any shares held for six
months or less and if the shareholder received a capital gain distribution
during that period, then the loss is treated as a long-term capital loss to the
extent of such distribution.

FOREIGN TAXES ON FUND INCOME. Income received by the Fund from its
foreign investments may be subject to withholding and other foreign taxes. If
the Fund is liable for foreign income taxes, and if the dollar amount of such
taxes is significant, the Fund intends to meet the requirements of the Code to
"pass through" the amount of such taxes to the Fund's shareholders, but there
can be no assurance that the Fund will be able to do so or will elect to do

45
<PAGE>

so. To the extent that foreign taxes are passed through to shareholders of the
Fund, shareholders will be required to treat as amounts distributed to them, and
may be able to claim a deduction or credit for, their pro rata share of such
taxes. Each shareholder will be notified within 60 days after the close of each
taxable year of the Fund whether the foreign taxes paid by the Fund will "pass
through" for that year, and, if so, the amount of each shareholder's pro-rata
share (by country) of the foreign taxes paid by the Fund and the dividend paid
by the Fund which represents income derived from foreign sources.

The United States has entered into tax treaties with many foreign
countries which may reduce or eliminate these taxes. It is impossible to
determine in advance the effective rate of foreign tax to which the Fund will be
subject, since the amount of the Fund's assets to be invested in foreign
countries will vary.

If the Fund is liable for foreign income taxes and if more than 50% of
the value of the Fund's total assets at the close of its taxable year consists
of the stock or securities of foreign corporations, the Fund may elect to "pass
through" to the Fund's shareholders the amount of foreign income taxes paid by
the Fund. Pursuant to such election, shareholders would be required to (i)
include in gross income their pro-rata shares of foreign taxes paid by the Fund,
and (ii) treat their pro-rata share of these taxes as paid by them. Shareholders
would then be permitted to either deduct their pro-rata share of foreign taxes
in computing their taxable income or use it as a foreign tax credit against
Federal income taxes. No deduction for foreign taxes could be claimed by a
shareholder who does not itemize deductions, and the amount of foreign taxes for
which any shareholder may claim a credit in any year may be subject to
limitations under the Code. Shareholders who are not liable for Federal income
taxes, such as retirement plans qualified under Section 401 of the Code, will
not be affected by any "pass through" of foreign tax payments.

TAXATION OF FOREIGN SHAREHOLDERS. The foregoing discussion relates only
to U.S. Federal income tax law as it affects shareholders who are U.S. citizens
or residents or U.S. corporations. The effects of Federal income tax law on
shareholders who are non-resident aliens or foreign corporations may be
substantially different. Foreign investors should consult their counsel for
further information as to the particular U.S. tax consequences to them of an
investment in the Fund.

PERFORMANCE DATA

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

CUMULATIVE TOTAL RETURN AND AVERAGE ANNUAL TOTAL RETURN

The cumulative total return and the average annual total return (each
is defined below) with respect to each class of shares for the periods indicated
below is as follows:

46
<PAGE>

<TABLE>
<CAPTION>
Cumulative Average Annual
Davis International Total Return Fund Total Return (1) Total Return (2)
- ------------------------------------- ------------- ----------------
<S> <C> <C>
Class A Shares
One year ended September 30, 1999 9.98% 9.98%
Period from February 1, 1995 through September 30, 1999 (life of class) 17.47% 3.51%

Class B Shares
One year ended September 30, 1999 10.25% 10.25%
Period from February 1, 1995 through September 30, 1999 (life of class) 16.25% 3.28%

Class C Shares
One year ended September 30, 1999 13.83% 13.83%
Period from August 19, 1997 through September 30, 1999 (life of class) (8.43)% (4.08)%
</TABLE>

(1) "Cumulative Total Return" is a measure of a fund's performance
encompassing all elements of return. Total return reflects the change
in share price over a given period and assumes all distributions are
taken in additional fund shares. Total return is determined by assuming
a hypothetical investment at the beginning of the period, deducting a
maximum front-end or applicable contingent deferred sales charge,
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 and subtracting the amount
of the original investment, and by dividing the original investment.
This calculated amount is then expressed as a percentage by multiplying
by 100. Periods of less than one year are not annualized.

(2) "Average Annual Total Return" represents the average annual
compounded rate of return for the periods presented. Periods of less
than one year are not annualized. 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:

47
<PAGE>

P(1+T)n = ERV

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

T = average annual total return

n = number of years

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

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

OTHER FUND STATISTICS

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

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

The Fund's Annual Report contains additional performance information
and will be made available upon request and without charge by calling Davis
Funds toll-free at 1-800-279-0279, Monday through Friday, 7 a.m. to 4 p.m.
Mountain Time.

48
<PAGE>

APPENDIX

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

TERMS OF ESCROW:

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

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

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

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

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

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

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

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

49
<PAGE>

FORM N-1A

DAVIS INTERNATONAL SERIES, INC.

POST-EFFECTIVE AMENDMENT NO. 12 UNDER THE SECURITIES ACT OF 1933
REGISTRATION STATEMENT NO. 33-86578

AND

AMENDMENT NO. 12 UNDER THE INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-8870

PART C

OTHER INFORMATION
-----------------

Item 23. Exhibits:
---------

(a)(1) Articles of Incorporation. Articles of Incorporation.
Incorporated by reference to exhibit 1 of Registrant's
Post-Effective Amendment filed on Edgar 02/01/96.

(a)(2) Articles Supplementary to Articles of Incorporation.
Increasing authorized shares. Incorporated by
reference to exhibit 1(b) of Registrant's Post-
Effective Amendment filed on Edgar 08/18/97.

(a)(3) Articles Supplementary to Articles of Incorporation,
designating the Davis International Growth Fund.
Incorporated by reference to exhibit (a)(3) of
Registrant's Post-Effective Amendment filed on Edgar
10/16/98.

(b) By-laws. Amended and Restated Bylaws (as of 10/06/98).
Incorporated by reference to exhibit 23(b) of
Registrant's Post-Effective Amendment filed on Edgar
01/29/99.

(d)(1) Investment Advisory Contracts. Agreement with Davis
Selected Advisers. Incorporated by reference to
exhibit 5(a) of Registrant's Post-Effective Amendment
filed on Edgar 02/01/96.

(d)(2) Sub-Advisory Agreement with Davis Selected Advisers-
NY, Inc. Incorporated by reference to exhibit (5)(c)
of Registrant's Post-Effective Amendment filed on
Edgar 01/31/97.

(d)(3)* Sub-Advisory Agreement with Fiduciary International,
Inc.

1
<PAGE>

(e)(1) Underwriting Contracts. Distributor's Agreement.
Incorporated by reference to exhibit 6 of Registrant's
Post-Effective Amendment filed on Edgar 02/01/96.

(e)(2) Transfer and Assumption Agreement to the Underwriting
Contract (Transfer from DSA to DD-LLC). Incorporated
by reference to exhibit No.6(b) of Registrant's Post-
Effective Amendment filed on Edgar 08/18/97.

(f) Bonus or Profit Sharing Contracts. Not applicable.

(g)* Custodian Agreement. Custodian Agreement with State
Street Bank.

(h)* Other Material Contracts. Transfer Agency and Service
Agreement with State Street Bank.

(i)* Legal Opinion. Opinion and Consent of Counsel,
(D'Ancona & Pflaum).

(j)* Other Opinions. Consent of Auditors. KPMG, LLP.

(k) Omitted Financial Statements. Not Applicable.

(l) Initial Capital Agreements. Not Applicable

(m)(1) Rule 12b-1 Plan. Distribution Plan for Class A shares,
as amended, incorporated by reference to exhibit 15(a)
of Registrant's Post-Effective Amendment filed on
Edgar 08/18/97.

(m)(2) Distribution Plan for Class B shares, incorporated by
reference to Exhibit 15(b) of Registrant's Post-
Effective Amendment filed on Edgar 02/01/96.

(m)(3) Distribution Plan for Class C shares, incorporated by
reference to exhibit 15(c) of Registrant's Post-
Effective Amendment filed on Edgar 08/18/97.

(n) Rule 18f-3 Plan. Plan pursuant to Rule 18f-3, as
amended, incorporated by reference to exhibit 18(a) of
Registrant's Post-Effective Amendment filed on Edgar
08/18/97.

(o) Reserved

(p)* Code of Ethics. Code of Ethics.

2
<PAGE>

(q) Other Exhibit. Powers of Attorney of the Registrant,
Officers and Board of Directors appointing Sheldon
Stein and Arthur Don as attorneys-in-fact.
Incorporated by reference to exhibit 23(p) of
Registrant's Post-Effective Amendment filed on Edgar
12/01/98

* Filed Herein

Item 24. Persons Controlled by or Under Common Control With Registrant
-------------------------------------------------------------

Members of the Davis family and entities which they control
may exercise in excess of 25% of the Fund's outstanding voting power. The
principal shareholders are listed in response to Item 17 of the Statement of
Additional Information.

Item 25. Indemnification
---------------

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

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

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

Item 26. Business and Other Connections of Investment Adviser
----------------------------------------------------

Davis Selected Advisers, L.P. ("DSA ") and subsidiary companies
comprise a financial services organization whose business consists primarily of
providing investment management services as the investment adviser and manager
for investment companies registered under the Investment Company Act of 1940,
unregistered off-shore investment companies, and as an investment adviser to
institutional and individual accounts. DSA also serves as sub-investment

3
<PAGE>

adviser to other investment companies. Davis Distributors, L.L.C., a
wholly-owned subsidiary of DSA, is a registered broker-dealer. Davis Selected
Advisers--NY, Inc., another wholly-owned subsidiary, provides investment
management services to various registered and unregistered investment companies,
pension plans, institutions and individuals.

Other business of a substantial nature that directors or officers of DSA are or
have been engaged in the last two years:

SHELBY M.C. DAVIS, 4135 North Steers Head Road, Jackson Hole, WY 83001.
Director, Chairman and Chief Executive Officer, Venture Advisers, Inc.;
Director, Davis Selected Advisers--NY, Inc.; Employee of Capital Ideas, Inc.
(financial consulting firm); Consultant to Fiduciary Trust Company
International; Director, Shelby Cullom Davis Financial Consultants, Inc.

ANDREW A. DAVIS, 124 East Marcy Street, Santa Fe, NM 87501. Director and
President, Venture Advisers, Inc.; Director and Vice President, Davis Selected
Advisers--NY, Inc.; Consultant to Capital Ideas, a private financial
consultant.

CHRISTOPHER C. DAVIS, 609 Fifth Ave, New York, NY 10017. Vice Chairman, Venture
Advisers, Inc.; Director, Chairman, Chief Executive Officer, Davis Selected
Advisers--NY, Inc.; Chairman and Director, Shelby Cullom Davis Financial
Consultants, Inc.; employee of Shelby Cullom Davis & Co., a registered
broker/dealer; Director, Rosenwald, Roditi and Company, Ltd., an offshore
investment management company.

KENNETH C. EICH, 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706. Chief
Operating Officer, Venture Advisers, Inc.; Vice President, Davis Selected
Advisers--NY, Inc.; President, Davis Distributors, L.L.C. Former President and
Chief Executive Officer of First of Michigan Corporation. Former Executive Vice
President and Chief Financial Officer of Oppenheimer Management Corporation.

GARY TYC, 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706. Vice
President, Chief Financial Officer Treasurer, and Assistant Secretary of Venture
Advisers, Inc.; Vice President, Treasurer, & Assistant Secretary of Davis
Selected Advisers--NY, Inc.; Vice President, Treasurer, & Assistant Secretary
of Davis Distributors, L.L.C. Former Vice President of Oppenheimer Management
Corporation.

THOMAS D. TAYS, 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706. Vice
President and Secretary, Venture Advisers, Inc., Davis Selected Advisers--NY,
Inc., and Davis Distributors, L.L.C. Former Vice President and Special Counsel
of U.S. Global Investors, Inc.

Item 27. Principal Underwriter
---------------------

(a) Davis Distributors, LLC, a wholly owned subsidiary of the Adviser,
located at 2949 East Elvira Road, Suite 101 Tucson, Arizona 85706, is the
principal underwriter for the Registrant and also acts as principal underwriter
for Davis New York Venture Fund, Inc., Davis Tax-Free High Income Fund, Inc.,
Davis Intermediate Investment Grade Bond Fund,

4
<PAGE>

Inc., Davis 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
2949 East Elvira Road, Suite
101
Tucson, Arizona 85706

Gary P. Tyc Vice President, Treasurer and None
2949 East Elvira Road, Suite Assistant Secretary
101
Tucson, Arizona 85706

Thomas D. Tays Vice President and Secretary Vice President and Secretary
2949 East Elvira Road, Suite
101
Tucson, Arizona 85706
</TABLE>

Item 28. Location of Accounts and Records
--------------------------------0

Accounts and records are maintained at the offices of Davis Selected
Advisers -- NY, Inc., 124 East Marcy Street, Santa Fe, New Mexico 87501, after
April 1, 2000 they will be maintained at the offices of Davis Selected Advisers,
L.P., 2949 East Elvira Road, Suite 101, Tucson, Arizona 85706, and at the
offices of the Registrant's custodian, State Street Bank and Trust Company, One
Heritage Drive, North Quincy, Massachusetts 02107, and the Registrant's transfer
agent State Street Bank and Trust, c/o Service Agent, BFDS, Two Heritage Drive,
7th Floor, North Quincy, Massachusetts 02107.

Item 29. Management Services
-------------------

Not applicable

Item 30. Undertakings
------------

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

5
<PAGE>

DAVIS INTERNATIONAL SERIES, 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 25th day of
February, 2000.

DAVIS INTERNATIONAL SERIES, INC.

*By: /s/ Sheldon Stein
-------------------------
Sheldon Stein
Attorney-in-Fact

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

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Shelby M.C. Davis* President, Chief Executive Officer February 25, 2000
- ------------------
Shelby M.C. Davis

Sharra L. Reed* Principal Financial Officer
- ------------------
Sharra L. Reed and Treasurer February 25, 2000
</TABLE>

*By: /s/ Sheldon Stein
-----------------------
Sheldon Stein
Attorney-in-Fact

*Sheldon Stein signs this document on behalf of the Registrant and each of the
foregoing officers pursuant to the powers of attorney filed as Exhibit 23(p) of
Registrant's Post-Effective Amendment filed on Edgar 12/01/98

/s/ Sheldon Stein
-----------------------
Sheldon Stein
Attorney-in-Fact

6
<PAGE>

DAVIS INTERNATONAL SERIES, INC.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on February 25, 2000 by the following
persons in the capacities indicated.

Signature Title
--------- -----
Jeremy H. Biggs* Director
- ---------------------------------
Jeremy H. Biggs

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

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

Keith R. Kroeger* Director
- ---------------------------------
Keith R. Kroeger

The Very Reverend James R. Leo* Director
- ---------------------------------
The Very Reverend James R. Leo

Richard M. Murray* Director
- ---------------------------------
Richard M. Murray

Theodore B. Smith, Jr.* Director
- ---------------------------------
Theodore B. Smith, Jr.

/s/Sheldon Stein
---------------------------------
Sheldon Stein
Attorney-in-Fact

7
<PAGE>

EXHIBIT LIST

(d)(3) Sub-Advisory Agreement with Fiduciary International, Inc.

(g) Custodian Agreement with State Street Bank.

(h) Transfer Agency and Service Agreement with State Street Bank.

(i) Opinion and Consent of Counsel, (D'Ancona & Pflaum LLC).

(j) Consent of Auditors. KPMG, LLP.

(p) Code of Ethics

<PAGE>

Exhibit 23(d)(3)

SUB-ADVISORY AGREEMENT

March 1, 2000

Fiduciary International, Inc.
Two World Trade Center
New York, New York, 10048

Re: Sub-Advisory Agreement for Davis International Total Return Fund,
An Authorized Series of Davis International Series, Inc.

Gentlemen:

This is to confirm that Davis Selected Advisers, L.P. ("DSA") is
retaining you as Investment Sub-Adviser for the portfolio of the International
Total Return Fund (the "Fund") of Davis International Series, Inc. (the
"Company").

This letter sets forth the terms and conditions of your retention. If
they are acceptable to you, please acknowledge in the space provided. Upon your
acceptance, the retention and the mutual obligations in respect thereto shall be
effective as provided herein. The terms and conditions are as follows:

1. Investment Services. You shall act as the Investment Sub-Adviser for
the Fund and will manage the investment and reinvestment of the assets of the
Fund subject to the supervision of the Board of Directors of the Company, DSA,
which serves as Adviser to the Company, and to any applicable provisions as in
effect from time to time of (a) the Articles of Incorporation and Bylaws of the
Company, (b) the prospectus, statement of additional information, and other
information set forth in the Fund's registration documents under the Securities
Act of 1933 (the "1933 Act") and the Investment Company Act of 1940 (the "1940
Act"), including any supplements thereto, and (c) the Investment Advisory
agreement between DSA and the Company (the "Investment Advisory Agreement") in
respect to the Fund and the Company's Code of Ethics. You acknowledge that you
have received copies of the above documents as in effect on the date of your
acceptance of this letter. The undersigned agrees that it will promptly deliver
to you any amendments, changes or additions of or to these documents. Without
limitation, you agree that all securities transactions will conform to (a) the
stated objectives and policies of the Fund, (b) the brokerage policies set forth
in the Investment Advisory Agreement (which are hereby incorporated by reference
herein) and the registration documents, and (c) those investment and brokerage
policies directed by the Board of Directors of the Company or any committee
thereof, that have been provided to you.

2. Independent Contractor. You shall be an independent contractor.
Unless otherwise expressly provided or authorized hereunder, or by the Board of
Directors of Company, you have no authority to represent the Company or the Fund
in any way or otherwise be an agent of the

<PAGE>

Company or the Fund. You shall also not represent or be the agent of the
undersigned except as expressly provided or authorized hereunder, or as
authorized by the undersigned in any other writing.

3. Reports and Records. You agree to provide DSA with any reasonable
reports, analyses or other documentation DSA requires to carry out its
responsibilities under its Investment Advisory Agreement with the Fund,
including those related to the placement of security transactions, its
administrative responsibilities, and its responsibility to monitor compliance
with stated investment objectives, policies and limitations and the investment
performance of the Fund. You agree, directly or through an agent, to provide
daily information with respect to the portfolio transactions of the Fund to DSA.
You agree to provide all documentation reasonably required by DSA to maintain
the Fund's accounting records in accordance with the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act") and the regulations issued thereunder,
and to preserve copies of all documents and records related to asset
transactions, positions and valuations related to the Fund in the manner and for
the periods prescribed by such regulations. You agree that all documents and
records maintained by you with respect to the Fund, exclusively relating to the
Fund, are the property of the Company and will be surrendered to DSA or the
Company upon the request of either. You agree to provide information and to
allow inspection of such documents and records at reasonable times by any
authorized representative of DSA, the Company's Board of Directors or any
committee thereof, the Company's independent public accountants, or appropriate
regulatory authorities.

4. Make Personnel Available. You agree to make your personnel engaged
in activities on behalf of the Fund available at reasonable times for
consultations with DSA personnel and the Company's Board of Directors, or any
committee thereof, including attendance at their meetings, wherever situated.
Travel, meals and lodging expenses for such purposes shall be reimbursed.

5. Facilities, Equipment, and Personnel. You agree to provide office
facilities, equipment and personnel for carrying out your duties hereunder at
your own expense except as specifically provided hereunder.

6. Non-Exclusive Agreement. It is agreed that your services are not to
be deemed exclusive and you shall be free to render similar or other services to
others.

7. Standard of Care and Liability (a) Neither DSA nor you, nor any
officers, directors, employees, agents, controlling persons, assigns or
directors of the Company shall be liable for any error of judgment or law, or
for any loss suffered by the Company or its shareholders in connection with the
matters to which this Agreement relates, except that no provision of this
Agreement shall be deemed to protect DSA or you against any liability to the
Company or its shareholders to which DSA or you might otherwise be subject by
reason of any willful misconduct, gross negligence, or actions taken in bad
faith in the discharge of your respective obligations and performance of your
respective duties under this Agreement.

(b) Notwithstanding Section 7(a) of this Agreement, DSA agrees to
indemnify and hold harmless you and any affiliated person (except the Company),
and each person, if any, who, within the meaning of Section 15 of the 1933 Act
controls ("Controlling Person") you (all of such persons

<PAGE>

being referred to as "Sub-Adviser Indemnified Persons") against any and all
losses, claims, damages, liabilities (excluding salary charges of your
employees, officers or partners), or litigation (including legal and other)
expenses to which a Sub-Adviser Indemnified Person may become subject under the
1933 Act, the 1940 Act, the Advisers Act, any other statute, common law or
otherwise, arising out of DSA's responsibilities to the Company which (1) may be
based upon any untrue statement or alleged untrue statement of a material fact
supplied by or which is the responsibility of DSA and contained in the
Registration Statement or prospectus or statement of additional information
covering shares of the Fund, or any amendment thereof or any supplement thereto,
or the omission or alleged omission or failure to state therein a material fact
known or which should have been known to DSA and was required to be stated
therein or necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon information furnished to DSA or
the Company or to any person affiliated with DSA by a Sub-Adviser Indemnified
Person, in writing, for inclusion in the Registration Statement or prospectus or
statement of additional information; or (2) may be based upon a failure by DSA
to comply with, or a breach of, any provision of this Agreement or any other
agreement with the Fund; or (3) may be based upon misfeasance or negligence by
DSA in the discharge of its duties and performance of its obligations under this
Agreement or any other agreement with the Fund; provided, however, that in no
case shall the indemnity in favor of the Sub-Adviser Indemnified Person be
deemed to protect such person against any liability to which any such person
would otherwise be subject by reason of any misfeasance or negligence in the
discharge of its obligations and the performance of its duties under this
Agreement.

(c) Notwithstanding Section 7(a) of this Agreement, you agree to
indemnify and hold harmless DSA, any person affiliated with DSA (except the
Company), and each person, if any, who, within the meaning of the 1933 Act
controls ("Controlling Person") DSA (all of such persons being referred to as
"Adviser Indemnified Persons") against any and all losses, claims, damages,
liabilities (excluding salary charges of employees, officers or partners of
DSA), or litigation (including legal and other) expenses to which an Adviser
Indemnified Person may become subject under the 1933 Act, the 1940 Act, the
Advisers Act, any other statute, common law or otherwise, arising out of your
responsibilities as a sub-investment adviser to the Fund which (1) may be based
upon any untrue statement or alleged untrue statement of a material fact
supplied by you for inclusion in the Registration Statement or prospectus or
statement of additional information covering shares of the Fund, or any
amendment thereof or any supplement thereto, or, with respect to a material fact
supplied by you for inclusion in the Registration Statement or prospectus or
statement of additional information, the omission or alleged omission or failure
to state therein a material fact known or which should have been known to you
and was required to be stated therein or necessary to make the statements
therein not misleading, unless such statement or omission was made in reliance
upon information furnished to you, or the Company, or to any person affiliated
with you or the Company by an Adviser Indemnified Person; or (2) may be based
upon a failure by you to comply with, or a breach of, any provision of this
Agreement or any other agreement with the Fund; or (3) may be based upon
misfeasance or negligence by you in the discharge of your duties and performance
of your obligations under this Agreement or any other agreement with the Fund;
provided, however, that in no case shall the indemnity in favor of the Adviser
Indemnified Person be deemed to protect such person against any liability to
which any such person would otherwise be subject by reason of any misfeasance or
negligence in the discharge of its obligations and the performance of its duties
under this Agreement.

<PAGE>

(d) Neither DSA nor you shall be liable under this Section with respect
to any claim made against an Indemnified Person unless such Indemnified Person
shall have notified the indemnifying party in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Person (or such
Indemnified Person shall have received notice of such service on any designated
agent), but failure to notify the indemnifying party of any such claim shall not
relieve the indemnifying party from any liability which it may have to the
Indemnified Person against whom such action is brought otherwise than on account
of this section. In case any such action is brought against the Indemnified
Person, the indemnifying party will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Indemnified Person, to
assume the defense thereof, with counsel satisfactory to the Indemnified Person.
If the indemnifying party assumes the defense and the selection of counsel by
the indemnifying party to represent both the Indemnified Person and the
indemnifying party would result in a conflict of interest and would not, in the
reasonable judgment of the Indemnified Person, adequately represent the
interests of the Indemnified Person, the indemnifying party will, at its own
expense, assume the defense with counsel to the indemnifying party and, also at
its own expense, with separate counsel to the Indemnified Person which counsel
shall be satisfactory to the indemnifying party and the Indemnified Person. The
Indemnified Person will bear the fees and expenses of any additional counsel
retained by it, and the indemnifying party shall not be liable to the
Indemnified Person under this Agreement for any legal or other expenses
subsequently incurred by the Indemnified Person independently in connection with
the defense thereof other than reasonable costs of investigation. The
indemnifying party shall not have the right to compromise or settle the
litigation without the prior written consent of the Indemnified Person of the
compromise or settlement results, or may result, in a finding of wrongdoing on
the part of the Indemnified Person.

8. Compensation. DSA shall pay you a portion of the fee it receives
from the Company with respect to the Fund under the Investment Advisory
Agreement based upon the attached fee schedule, and shall reimburse expenses
expressly approved for reimbursement by DSA. You agree that neither the Company
nor the Fund is responsible or paying your sub-advisory fees. Payment for your
services and reimbursement of expenses approved by DSA shall be made monthly.
From time to time, with your express written approval, DSA may waive any part or
all of the fees due to it under the Investment Advisory Agreement for the period
specified in such writing. Such approval shall constitute a waiver by you of
your portion of the waived fees.

9. Effective Date. This Agreement shall become effective on the later
of _________________, 2000, or the first business day after the date this
Agreement is approved in accordance with the 1940 Act. Unless sooner terminated
as hereunder provided, it shall initially remain in effect for a period of two
years. Thereafter, subject to the termination provisions herein, this Agreement
shall continue in force from year to year thereafter, but only as long as such
continuance is specifically approved, at least annually, in the manner required
by the 1940 Act; provided, however, that if the continuation of this Agreement
is not approved, you may continue to serve in the manner and to the extent
permitted by the 1940 Act and the rules and regulations thereunder.

<PAGE>

10. Termination. This Agreement shall automatically terminate
immediately in the event of its assignment (except as otherwise permitted by the
1940 Act or rules thereunder) or in the event of the termination of the
Investment Advisory Agreement. This Agreement may be terminated without penalty
at any time (a) upon sixty (60) days' written notice to you by DSA, or upon such
sixty (60) days' written notice to you by the Company pursuant to action by the
Board of Directors of the Company, or by the vote of a majority of the
outstanding voting securities of the Fund, or (b) upon sixty (60) or more days'
written notice by you to DSA and the Company. The terms "assignment" and "vote
of a majority of the outstanding voting securities" shall have the meaning set
forth in the 1940 Act and the rules and regulations thereunder. Termination of
this Agreement shall not affect your right to receive payments of the unpaid
balance of the compensation earned and reimbursable expenses incurred prior to
such termination.

11. Severability. If any provisions of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
shall not be thereby affected.

11. Choice of Law. This Agreement shall be construed according to the
laws of the State of New York. It may be executed in counterparts each of which
shall be deemed an original and all of which together shall constitute one and
the same agreement.

Yours very truly,

Davis Selected Advisers, L.P., by
Venture Advisers, Inc., General Partner

-------------------------------
Kenneth Eich, Chief Operating Officer

ACCEPTED AND APPROVED this _______ day of _________________, _______.

Fiduciary International, Inc.

By
-------------------------------

<PAGE>

SUB-ADVISORY FEE SCHEDULE FOR
FIDUCIARY INTERNATINAL, INC.

A monthly fee as of the last day of each month in each year based upon the
average daily value of net assets during a month for which the monthly fee is
calculated as follows:

Value of Average Daily Net
Assets of the Total Return
Monthly Rate Fund During the Month
- ------------ ---------------------
1/12 of 0.50% of First $250 Million
1/12 of 0.45% of Next $250 Million
1/12 of 0.40% of Amount in excess of $500 Million

<PAGE>

Exhibit 23(g)

CUSTODIAN CONTRACT
BETWEEN
VENTURE INTERNATIONAL SERIES, INC.
AND
STATE STREET BANK AND TRUST COMPANY

<PAGE>

TABLE OF CONTENTS

1. Employment of Custodian and Property to be Held By It.................4

2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States................5

2.1 Holding Securities...........................................5
2.2 Delivery of Securities.......................................5
2.3 Registration of Securities...................................8
2.4 Bank Accounts................................................8
2.5 Availability of Federal Funds................................8
2.6 Collection of Income.........................................9
2.7 Payment of Fund Monies.......................................9
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased.............................11
2.9 Appointment of Agents.......................................11
2.10 Deposit of Fund Assets in Securities System.................11
2.10A Fund Assets Held in the Custodian's Direct Paper System.....12
2.11 Segregated Account..........................................13
2.12 Ownership Certificates for Tax Purposes.....................14
2.13 Proxies ...................................................14
2.14 Communications Relating to Portfolio Securities.............14

3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States...........................15

3.1 Appointment of Foreign Sub-Custodians.......................15
3.2 Assets to be Held...........................................15
3.3 Foreign Securities Depositories.............................15
3.4 Agreements with Foreign Banking Institutions................15
3.5 Access of Independent Accountants of the Fund...............16
3.6 Reports by Custodian........................................16
3.7 Transactions in Foreign Custody Account.....................16
3.8 Liability of Foreign Sub-Custodians.........................17
3.9 Liability of Custodian......................................17
3.10 Reimbursement for Advances..................................17
3.11 Monitoring Responsibilities.................................18
3.12 Branches of U.S. Banks......................................18
3.13 Tax Law ....................................................18

2
<PAGE>

4. Payments for Sales or Repurchase or Redemptions of Shares of the
Fund.................................................................19

5. Proper Instructions..................................................19

6. Actions Permitted Without Express Authority..........................20

7. Evidence of Authority................................................20

8. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income .......................21

9. Records..............................................................21

10. Opinion of Fund's Independent Accountants............................21

11. Reports to Fund by Independent Public Accountants....................22

12. Compensation of Custodian............................................22

13. Responsibility of Custodian..........................................22

14. Effective Period, Termination and Amendment..........................23

15. Successor Custodian..................................................24

16. Interpretive and Additional Provisions...............................25

17. Additional Funds ....................................................25

18. Massachusetts Law to Apply...........................................25

19. Prior Contracts .....................................................26

20. Shareholder Communications...........................................26

3
<PAGE>

CUSTODIAN CONTRACT

This Contract between Venture International Series, Inc., a corporation
organized and existing under the laws of Maryland, having its principal place of
business at 124 East Marcy Street, Santa Fe, New Mexico 87501 hereinafter called
the "Fund", and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",

WITNESSETH:

WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and

WHEREAS, the Fund intends to initially offer shares in one series, the
Total Return Fund (such series together with all other series subsequently
established by the Fund and made subject to this Contract in accordance with
paragraph 17, being herein referred to as the "Portfolio(s)");

NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:

1. Employment of Custodian and Property to be Held by It

The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund representing interests in the Portfolios, ("Shares") as may be issued
or sold from time to time. The Custodian shall not be responsible for any
property of a Portfolio held or received by the Portfolio and not delivered to
the Custodian.

Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the

4
<PAGE>

Board of Directors of the Fund on behalf of the applicable Portfolio(s), and
provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian. The
Custodian may employ as sub-custodian for the Fund's foreign securities on
behalf of the applicable Portfolio(s) the foreign banking institutions and
foreign securities depositories designated in Schedule A hereto but only in
accordance with the provisions of Article 3.

2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States

2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as "Securities System" and
(b) commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in the Direct Paper System of the Custodian
pursuant to Section 2.11.

2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in a
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only
upon receipt of Proper Instructions from the Fund on behalf of the
applicable Portfolio, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:

1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;

2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;

3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;

5
<PAGE>

4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;

5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;

6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.9 or into the name
or nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;

7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;

8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;

9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;

10) For delivery in connection with any loans of securities made
by the Portfolio, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to

6
<PAGE>

be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;

11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed;

12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;

13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
the Portfolio of the Fund;

14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and

15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund on behalf
of the applicable Portfolio, a certified copy of a resolution
of the Board of Directors or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a

7
<PAGE>

proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made.

2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized
in writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as
the Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain securities in
"street name", the Custodian shall utilize its best efforts only to
timely collect income due the Fund on such securities and to notify the
Fund on a best efforts basis only of relevant corporate actions
including, without limitation, pendency of calls, maturities, tender or
exchange offers.

2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the funds to
be deposited with each such bank or trust company shall on behalf of
each applicable Portfolio be approved by vote of a majority of the
Board of Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.

2.5 Availability of Federal Funds. Upon mutual agreement between the Fund
on behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf
of a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the

8
<PAGE>

Custodian in the amount of checks received in payment for Shares of
such Portfolio which are deposited into the Portfolio's account.

2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income
and other payments with respect to bearer domestic securities if, on
the date of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such income, as
collected, to such Portfolio's custodian account. Without limiting the
generality of the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring presentation as
and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of the income to
which the Portfolio is properly entitled.

2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:

1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth
in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of

9
<PAGE>

NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or
(ii) against delivery of the receipt evidencing purchase by
the Portfolio of securities owned by the Custodian along with
written evidence of the agreement by the Custodian to
repurchase such securities from the Portfolio or (e) for
transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from the Fund
as defined in Article 5;

2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;

3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;

4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;

5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;

6) For payment of the amount of dividends received in respect of
securities sold short;

7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a certified copy of a resolution of the Board of
Directors or of the Executive Committee of the Fund signed by
an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be
made.

2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in

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<PAGE>

advance of receipt of the securities purchased in the absence of
specific written instructions from the Fund on behalf of such Portfolio
to so pay in advance, the Custodian shall be absolutely liable to the
Fund for such securities to the same extent as if the securities had
been received by the Custodian.

2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.

2.10 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by a Portfolio in a clearing agency
registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in accordance with applicable
Federal Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:

1) The Custodian may keep securities of the Portfolio in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;

2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a Securities System shall
identify by book-entry those securities belonging to the
Portfolio;

3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon (i)
receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio.

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<PAGE>

Copies of all advices from the Securities System of transfers
of securities for the account of the Portfolio shall identify
the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio in the form of a written advice or notice and
shall furnish to the Fund on behalf of the Portfolio copies of
daily transaction sheets reflecting each day's transactions in
the Securities System for the account of the Portfolio.

4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;

5) The Custodian shall have received from the Fund on behalf of
the Portfolio the initial or annual certificate, as the case
may be, required by Article 14 hereof;

6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting
from use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of
the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claim against
the Securities System or any other person which the Custodian
may have as a consequence of any such loss or damage if and to
the extent that the Portfolio has not been made whole for any
such loss or damage.

2.10A Fund Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following
provisions:

1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;

2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in
an account ("Account") of the Custodian in the

12
<PAGE>

Direct Paper System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;

3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;

4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;

5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio, in the form of a written advice or notice,
of Direct Paper on the next business day following such
transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Securities System for the account of
the Portfolio;

6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal accounting
control as the Fund may reasonably request from time to time.

2.11 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the Fund on
behalf of the Portfolio, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options

13
<PAGE>

purchased, sold or written by the Portfolio or commodity futures
contracts or options thereon purchased or sold by the Portfolio, (iii)
for the purposes of compliance by the Portfolio with the procedures
required by Investment Company Act Release No. 10666, or any subsequent
release or releases of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of Directors or of the
Executive Committee signed by an officer of the Fund and certified by
the Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.

2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Portfolio held by
it and in connection with transfers of securities.

2.13 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall promptly deliver to the Portfolio such proxies, all proxy
soliciting materials and all notices relating to such securities.

2.14 Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise
of call and put options written by the Fund on behalf of the Portfolio
and the maturity of futures contracts purchased or sold by the
Portfolio) received by the Custodian from issuers of the securities
being held for the Portfolio. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer, exchange offer
or any other similar transaction, the Portfolio shall notify the
Custodian at least three business days prior to the date on which the
Custodian is to take such action.

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<PAGE>

3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States

3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Section 5 of this
Contract, together with a certified resolution of the Fund's Board of
Directors, the Custodian and the Fund may agree to amend Schedule A
hereto from time to time to designate additional foreign banking
institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Proper Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Portfolio's assets.

3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund may determine
to be reasonably necessary to effect the Portfolio's foreign securities
transactions. The Custodian shall identify on its books as belonging to
the Fund, the foreign securities of the Fund held by each foreign
sub-custodian.

3.3 Foreign Securities Depositories. Except as may otherwise be agreed upon
in writing by the Custodian and the Fund, assets of the Portfolios
shall be maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.4 hereof.

3.4 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the assets of
each Portfolio will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of payment for
their safe custody or administration; (b) beneficial ownership for the
assets of each Portfolio will be freely transferable without the
payment of money or value other than for custody or administration; (c)
adequate records will be maintained identifying the assets as belonging
to each applicable Portfolio; (d) officers of or auditors employed by,
or other representatives of the Custodian, including to the extent

15
<PAGE>

permitted under applicable law the independent public accountants for
the Fund, will be given access to the books and records of the foreign
banking institution relating to its actions under its agreement with
the Custodian; and (e) assets of the Portfolios held by the foreign
sub-custodian will be subject only to the instructions of the Custodian
or its agents.

3.5 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.

3.6 Reports by Custodian. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio(s) held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio(s) securities and other
assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio, the identity of
the entity having physical possession of such securities.

3.7 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to
the foreign securities of the Fund held outside the United States by
foreign sub-custodians. (b) Notwithstanding any provision of this
Contract to the contrary, settlement and payment for securities
received for the account of each applicable Portfolio and delivery of
securities maintained for the account of each applicable Portfolio may
be effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or
to a dealer therefor (or an agent for such purchaser or dealer) against
a receipt with the expectation of receiving later payment for such
securities from such purchaser or dealer. (c) Securities maintained in
the custody of a foreign sub-custodian may be maintained in the name of
such entity's nominee to the same extent as set forth in Section 2.3 of
this Contract, and the Fund agrees to hold any such nominee harmless
from any liability as a holder of record of such securities.

3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the

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<PAGE>

institution to exercise reasonable care in the performance of its
duties and to indemnify, and hold harmless, the Custodian and each Fund
from and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the institution's performance of
such obligations. At the election of the Fund, it shall be entitled to
be subrogated to the rights of the Custodian with respect to any claims
against a foreign banking institution as a consequence of any such
loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.

3.9 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.12 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.9, in delegating custody duties to State
Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except
such loss as may result from (a) political risk (including, but not
limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or
(b) other losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts of God, nuclear
incident or other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.

3.10 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a
Portfolio including the purchase or sale of foreign exchange or of
contracts for foreign exchange, or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance
of this Contract, except such as may arise from its or its nominee's
own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable
Portfolio shall be security therefor and should the Fund fail to repay
the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of such Portfolios assets to the extent
necessary to obtain reimbursement.

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<PAGE>

3.11 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Custodian
will promptly inform the Fund in the event that the Custodian learns of
a material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million (U.S. dollars
or the equivalent thereof) or that its shareholders' equity has
declined below $200 million (in each case computed in accordance with
generally accepted U.S. accounting principles).

3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract. (b)
Cash held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with
the Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.

3.13 Tax Law. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Custodian
as custodian of the Fund by the tax law of the United States of America
or any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations
imposed on the Fund or the Custodian as custodian of the Fund by the
tax law of jurisdictions other than those mentioned in the above
sentence, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the Custodian with
regard to such tax law shall be to use reasonable efforts to assist the
Fund with respect to any claim for exemption or refund under the tax
law of jurisdictions for which the Fund has provided such information.

4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund

The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received

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<PAGE>

for Shares of that Portfolio issued or sold from time to time by the Fund. The
Custodian will provide timely notification to the Fund on behalf of each such
Portfolio and the Transfer Agent of any receipt by it of payments for Shares of
such Portfolio.

From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.

5. Proper Instructions

Proper Instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of Directors
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of the
Fund accompanied by a detailed description of procedures approved by the Board
of Directors, Proper Instructions may include communications effected directly
between electromechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.12.

6. Actions Permitted without Express Authority

The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:

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<PAGE>

1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund on behalf of the Portfolio;

2) surrender securities in temporary form for securities in
definitive form;

3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and

4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board of
Directors of the Fund.

7. Evidence of Authority

The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.

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<PAGE>

8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income

The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Directors of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Portfolio as
described in the Fund's currently effective prospectus related to such Portfolio
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of each Portfolio shall be made at the time or times
described from time to time in the Fund's currently effective prospectus related
to such Portfolio.

9. Records

The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund
and shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of the Fund
and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by each Portfolio and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed upon
between the Fund and the Custodian, include certificate numbers in such
tabulations.

10. Opinion of Fund's Independent Accountant

The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder in connection with the preparation of the Fund's
Form N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.

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<PAGE>

11. Reports to Fund by Independent Public Accountants

The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Custodian under
this Contract; such reports, shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies would be disclosed by such examination,
and, if there are no such inadequacies, the reports shall so state.

12. Compensation of Custodian

The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.

13. Responsibility of Custodian

So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.

The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Article 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody of

22
<PAGE>

any securities or cash of the Fund in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism.

If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.

If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement)
for the benefit of a Portfolio including the purchase or sale of foreign
exchange or of contracts for foreign exchange or in the event that the Custodian
or its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security therefor and
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's assets to
the extent necessary to obtain reimbursement.

14. Effective Period, Termination and Amendment

This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors of the Fund has
approved the initial use of a particular Securities System by such Portfolio, as
required by Rule 17f-4 under the Investment Company Act of 1940, as amended and
that the Custodian shall not with respect to a Portfolio act under Section 2.11
hereof in the absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Directors has approved the initial use
of the Direct Paper System by such Portfolio; provided further, however, that
the Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of one or more of
the Portfolios may at any time by action of its Board of Directors (i)

23
<PAGE>

substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.

Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.

15. Successor Custodian

If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Directors of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.

If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.

In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.

In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the

24
<PAGE>

Custodian shall be entitled to fair compensation for its services during such
period as the Custodian retains possession of such securities, funds and other
properties and the provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and effect.

16. Interpretive and Additional Provisions

In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Articles of Incorporation
of the Fund. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.

17. Additional Funds

In the event that the Fund establishes one or more series of Shares in
addition to Total Return Fund with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.

18. Massachusetts Law to Apply

This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.

25
<PAGE>

19. Prior Contracts

This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.

20. Shareholder Communications

Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether the Fund authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose stock the Fund owns. If the Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If the Fund tells the Custodian "yes" or do not check either "yes" or "no"
below, the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any funds
or accounts established by the Fund. For the Fund's protection, the Rule
prohibits the requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate below whether the
Fund consent or object by checking one of the alternatives below.

YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.

NO [X] The Custodian is not authorized to release the Fund's name,
address, and share positions.

26
<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 16th day of December, 1994.

ATTEST VENTURE INTERNATIONAL SERIES, INC.

By:
- ------------------------------ ----------------------------------

ATTEST STATE STREET BANK AND TRUST COMPANY

By:
- ------------------------------ ----------------------------------
Executive Vice President

27
<PAGE>

Schedule A

The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of Venture
International Series, Inc., for use as sub-custodians for the Fund's securities
and other assets:

(Insert banks and securities depositories)

Certified:

- -------------------------
Fund's Authorized Officer

Date:_________________

<PAGE>

Exhibit 23(h)

TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
VENTURE INTERNATIONAL SERIES, INC.
AND
STATE STREET BANK AND TRUST COMPANY

<PAGE>

TABLE OF CONTENTS

Page
----
Article 1 Terms of Appointment; Duties of the Bank..................3

Article 2 Fees and Expenses.........................................6

Article 3 Representations and Warranties of the Bank................6

Article 4 Representations and Warranties of the Fund................7

Article 5 Data Access and Proprietary Information...................7

Article 6 Indemnification...........................................9

Article 7 Standard of Care..........................................10

Article 8 Covenants of the Fund and the Bank........................11

Article 9 Termination of Agreement..................................12

Article 10 Additional Funds..........................................12

Article 11 Assignment................................................12

Article 12 Amendment.................................................13

Article 13 Massachusetts Law to Apply................................13

Article 14 Force Majeure.............................................13

Article 15 Consequential Damages.....................................13

Article 16 Merger of Agreement.......................................13

Article 17 Counterparts..............................................13

2
<PAGE>

TRANSFER AGENCY AND SERVICE AGREEMENT

AGREEMENT made as of the ____ day of ____________, 199___, by and
between Venture International Series, Inc., a Maryland corporation, having its
principal office and place of business at 124 East Marcy Street, Santa Fe, New
Mexico 87501 (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company having its principal office and place of business at
225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").

WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and

WHEREAS, the Fund intends to initially offer shares in one series,
the Total Return Fund (each such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with Article 10, being herein referred to, as a "Portfolio", and
collectively as the "Portfolios");

WHEREAS, the Fund on behalf of the Portfolios desires to appoint the
Bank as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities and the
Bank desires to accept such appointment;

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

Article 1 Terms of Appointment; Duties of the Bank
----------------------------------------

1.01 Subject to the terms and conditions set forth in this Agreement,
the Fund, on behalf of the Portfolios, hereby employs and appoints
the Bank to act as, and the Bank agrees to act as its transfer agent
for the authorized and issued shares of capital stock of the Fund
representing interests in each of the respective Portfolios
("Shares"), dividend disbursing agent, custodian of certain
retirement plans and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of each of
the respective Portfolios of the Fund ("Shareholders") and set out in
the currently effective prospectus and statement of additional
information ("prospectus") of the Fund on behalf of the applicable
Portfolio, including without limitation any periodic investment plan
or periodic withdrawal program.

3
<PAGE>

1.02 The Bank agrees that it will perform the following services:

(a) In accordance with procedures established from time to
time by agreement between the Fund on behalf of each of the
Portfolios, as applicable and the Bank, the Bank shall:

(i) Receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation thereof to the Custodian of the Fund
authorized pursuant to the Articles of Incorporation
of the Fund (the "Custodian");

(ii) Pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the
appropriate Shareholder account;

(iii) Receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;

(iv) In respect to the transactions in items (i), (ii) and
(iii) above, the Bank shall execute transactions
directly with broker-dealers authorized by the Fund
who shall thereby be deemed to be acting on behalf of
the Fund;

(v) At the appropriate time as and when it receives
monies paid to it by the Custodian with respect to
any redemption, pay over or cause to be paid over in
the appropriate manner such monies as instructed by
the redeeming Shareholders;

(vi) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;

(vii) Prepare and transmit payments for dividends and
distributions declared by the Fund on behalf of the
applicable Portfolio;

(viii) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon
receipt by the Bank of indemnification satisfactory
to the Bank and protecting the Bank and the Fund, and
the Bank at its option, may issue replacement
certificates in place of mutilated stock certificates
upon presentation thereof and without such indemnity;

4
<PAGE>

(ix) Maintain records of account for and advise the Fund
and its Shareholders as to the foregoing; and

(x) Record the issuance of Shares of the Fund and
maintain pursuant to SEC Rule 17Ad-10(e) a record of
the total number of Shares of the Fund which are
authorized, based upon data provided to it by the
Fund, and issued and outstanding. The Bank shall also
provide the Fund on a regular basis with the total
number of Shares which are authorized and issued and
outstanding and shall have no obligation, when
recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any
laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of
the Fund.

(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall:
(i) perform the customary services of a transfer agent,
dividend disbursing agent, custodian of certain retirement
plans and, as relevant, agent in connection with accumulation,
open-account or similar plans (including without limitation
any periodic investment plan or periodic withdrawal program),
including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing
proxies, mailing Shareholder reports and prospectuses to
current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and
mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and
other confirmable transactions in Shareholder accounts,
preparing and mailing activity statements for Shareholders,
and providing Shareholder account information and (ii) provide
a system which will enable the Fund to monitor the total
number of Shares sold in each State.

(c) In addition, the Fund shall (i) identify to the Bank in
writing those transactions and assets to be treated as exempt
from blue sky reporting for each State and (ii) verify the
establishment of transactions for each State on the system
prior to activation and thereafter monitor the daily activity
for each State. The responsibility of the Bank for the Fund's
blue sky State registration status is solely limited to the
initial establishment of transactions subject to blue sky
compliance by the Fund and the reporting of such transactions
to the Fund as provided above.

5
<PAGE>

(d) Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by agreement
between the Fund on behalf of each Portfolio and the Bank per
the attached service responsibility schedule. The Bank may at
times perform only a portion of these services and the Fund or
its agent may perform these services on the Fund's behalf.

(e) The Bank shall provide additional services on behalf of the
Fund (i.e., escheatment services) which may be agreed upon in
writing between the Fund and the Bank.

Article 2 Fees and Expenses
-----------------

2.01 For the performance by the Bank pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Bank an annual
maintenance fee for each Shareholder account as set out in the initial
fee schedule attached hereto. Such fees and out-of-pocket expenses and
advances identified under Section 2.02 below may be changed from time
to time subject to mutual written agreement between the Fund and the
Bank.

2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees
on behalf of each of the Portfolios to reimburse the Bank for
out-of-pocket expenses, including but not limited to confirmation
production, postage, forms, telephone, microfilm, microfiche,
tabulating proxies, records storage or advances incurred by the Bank
for the items set out in the fee schedule attached hereto. In addition,
any other expenses incurred by the Bank at the request or with the
consent of the Fund, will be reimbursed by the Fund on behalf of the
applicable Portfolio.

2.03 The Fund agrees on behalf of each of the Portfolios to pay all fees and
reimbursable expenses within five days following the receipt of the
respective billing notice. Postage for mailing of dividends, proxies,
Fund reports and other mailings to all Shareholder accounts shall be
advanced to the Bank by the Fund at least seven (7) days prior to the
mailing date of such materials.

Article 3 Representations and Warranties of the Bank
------------------------------------------

The Bank represents and warrants to the Fund that:

3.01 It is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.

6
<PAGE>

3.02 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.

3.03 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.

3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.

3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.

Article 4 Representations and Warranties of the Fund
------------------------------------------

The Fund represents and warrants to the Bank that:

4.01 It is a corporation duly organized and existing and in good standing
under the laws of Maryland.

4.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.

4.03 All corporate proceedings required by said Articles of Incorporation
and By-Laws have been taken to authorize it to enter into and perform
this Agreement.

4.04 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940, as amended.

4.05 A registration statement under the Securities Act of 1933, as amended
on behalf of each of the Portfolios is currently effective and will
remain effective, and appropriate state securities law filings have
been made and will continue to be made, with respect to all Shares of
the Fund being offered for sale.

Article 5 Data Access and Proprietary Information
---------------------------------------

5.01 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and
documentation manuals furnished to the Fund by the Bank as part of the
Fund's ability to access certain Fund-related data ("Customer Data")
maintained by the Bank on data bases under the control and ownership of
the Bank or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information
(collectively, "Proprietary

7
<PAGE>

Information") of substantial value to the Bank or other third party. In
no event shall Proprietary Information be deemed Customer Data. The
Fund agrees to treat all Proprietary Information as proprietary to the
Bank and further agrees that it shall not divulge any Proprietary
Information to any person or organization except as may be provided
hereunder. Without limiting the foregoing, the Fund agrees for itself
and its employees and agents:

(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in accordance
with the Bank's applicable user documentation;

(b) to refrain from copying or duplicating in any way the
Proprietary Information;

(c) to refrain from obtaining unauthorized access to any portion
of the Proprietary Information, and if such access is
inadvertently obtained, to inform in a timely manner of such
fact and dispose of such information in accordance with the
Bank's instructions;

(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer
facility or other location, except with the prior written
consent of the Bank;

(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;

(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law, under federal copyright
law and under other federal or state law.

Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Article 5. The obligations of this Article
shall survive any earlier termination of this Agreement.

5.02 If the Fund notifies the Bank that any of the Data Access Services do
not operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely
manner to correct such failure. Organizations from which the Bank may
obtain certain data included in the Data Access Services are solely
responsible for the contents of such data and the Fund agrees to make
no claim against the Bank arising out of the contents of such
third-party data, including, but not limited to, the accuracy
thereof. DATA ACCESS SERVICES AND ALL COMPUTER

8
<PAGE>

PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE
PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS
ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.

5.03 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i) effect
the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information (such transactions constituting a
"COEFI"), then in such event the Bank shall be entitled to rely on the
validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity
with security procedures established by the Bank from time to time.

Article 6 Indemnification
---------------

6.01 The Bank shall not be responsible for, and the Fund shall on behalf of
the applicable Portfolio indemnify and hold the Bank harmless from and
against, any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or attributable to:

(a) All actions of the Bank or its agent or subcontractors
required to be taken pursuant to this Agreement, provided that
such actions are taken in good faith and without negligence or
willful misconduct.

(b) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation
or warranty of the Fund hereunder.

(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are received by the Bank or its agents or
subcontractors, and (ii) have been prepared, maintained or
performed by the Fund or any other person or firm on behalf of
the Fund including but not limited to any previous transfer
agent or registrar.

(d) The reliance on, or the carrying out by the Bank or its agents
or subcontractors of any instructions or requests of the Fund
on behalf of the applicable Portfolio.

(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state

9
<PAGE>

that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or
any state with respect to the offer or sale of such Shares in such
state.

6.02 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the
Bank under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemnified by the Fund
on behalf of the applicable Portfolio for any action taken or omitted
by it in reliance upon such instructions or upon the opinion of such
counsel. The Bank, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on
behalf of the Fund, reasonably believed to be genuine and to have been
signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank or its agents
or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to
have notice of any change of authority of any person, until receipt of
written notice thereof from the Fund. The Bank, its agents and
subcontractors shall also be protected and indemnified in recognizing
stock certificates which are reasonably believed to bear the proper
manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.

6.03 In order that the indemnification provisions contained in this Article
6 shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund
of such assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank. The Bank
shall in no case confess any claim or make any compromise in any case
in which the Fund may be required to indemnify the Bank except with the
Fund's prior written consent.

Article 7 Standard of Care
----------------

7.01 The Bank shall at all times act in good faith and agrees to use its
best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility
and shall not be liable for loss or damage due to errors unless said
errors are caused by its negligence, bad faith, or willful misconduct
of that of its employees.

10
<PAGE>

Article 8 Covenants of the Fund and the Bank
----------------------------------

8.01 The Fund shall on behalf of each of the Portfolios promptly furnish to
the Bank the following:

(a) A certified copy of the resolution of the Directors of the
Fund authorizing the appointment of the Bank and the execution
and delivery of this Agreement.

(b) A copy of the Articles of Incorporation and By-Laws of the
Fund and all amendments thereto.

8.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices,
if any; and for the preparation or use, and for keeping account of,
such certificates, forms and devices.

8.03 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as
amended, and the Rules thereunder, the Bank agrees that all such
records prepared or maintained by the Bank relating to the services to
be performed by the Bank hereunder are the property of the Fund and
will be preserved, maintained and made available in accordance with
such Section and Rules, and will be surrendered promptly to the Fund on
and in accordance with its request.

8.04 The Bank and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged
or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily
disclosed to any other person, except as may be required by law.

8.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the
Fund and to secure instructions from an authorized officer of the Fund
as to such inspection. The Bank reserves the right, however, to exhibit
the Shareholder records to any person whenever it is advised by its
counsel that it may be held liable for the failure to exhibit the
Shareholder records to such person.

11
<PAGE>

Article 9 Termination of Agreement
------------------------

9.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.

9.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be
borne by the Fund on behalf of the applicable Portfolio(s).
Additionally, the Bank reserves the right to charge for any other
reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) months' fees.

Article 10 Additional Funds
----------------

10.01 In the event that the Fund establishes one or more series of Shares in
addition to Total Return Fund with respect to which it desires to have
the Bank render services as transfer agent under the terms hereof, it
shall so notify the Bank in writing, and if the Bank agrees in writing
to provide such services, such series of Shares shall become a
Portfolio hereunder.

Article 11 Assignment
----------

11.01 Except as provided in Section 11.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party
without the written consent of the other party.

11.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.

11.03 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section 17A(c)(1) of the
Securities Exchange Act of 1934, as amended ("Section 17A(c)(1)"), (ii)
a BFDS subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(1) or (iii) a BFDS affiliate; provided, however, that
the Bank shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.

12
<PAGE>

Article 12 Amendment
---------

12.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of
the Directors of the Fund.

Article 13 Massachusetts Law to Apply
--------------------------

13.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth
of Massachusetts.

Article 14 Force Majeure
-------------

14.01 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment
or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be
liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.

Article 15 Consequential Damages
---------------------

15.01 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act
hereunder.

Article 16 Merger of Agreement
-------------------

16.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.

Article 17 Counterparts
------------

17.01 This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.

13
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.

VENTURE INTERNATIONAL SERIES, INC.

By:
------------------------------------

ATTEST:

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

STATE STREET BANK AND TRUST COMPANY

By:
------------------------------------
Executive Vice President

ATTEST:

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

14
<PAGE>

STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*

<TABLE>
<CAPTION>
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
<S> <C> <C>
1. Receives orders for the purchase
of Shares.

2. Issue Shares and hold Shares in Shareholders accounts.

3. Receive redemption requests.

4. Effect transactions 1-3 above directly with broker-dealers.

5. Pay over monies to redeeming Shareholders.

6. Effect transfers of Shares.

7. Prepare and transmit dividends and distributions.

8. Issue Replacement Certificates.

9. Reporting of abandoned property.

10. Maintain records of account.

11. Maintain and keep a current and accurate control book for each issue
of securities.

12. Mail proxies.

13. Mail Shareholder reports.

14. Mail prospectuses to current Shareholders.

15. Withhold taxes on U.S. resident and non-resident alien
accounts.
</TABLE>

15
<PAGE>

<TABLE>
<CAPTION>
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
<S> <C> <C>
16. Prepare and file U.S. Treasury Department forms.

17. Prepare and mail account and confirmation statements for Shareholders.

18. Provide Shareholder account information.

19. Blue sky reporting.
</TABLE>

* Such services are more fully described in Article 1.02 (a), (b) and (c)
of the Agreement.

VENTURE INTERNATIONAL SERIES, INC.

By:
-------------------------------

ATTEST:

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

STATE STREET BANK AND TRUST COMPANY

By:
-------------------------------

ATTEST:

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

<PAGE>

EXHIBIT
ITEM 99 (i)

[LETTERHEAD OF D'ANCONA & PFLAUM]

February 24, 2000

Davis New York Venture Fund, Inc.
124 East Marcy Street
Santa Fe, New Mexico 87501

Ladies and Gentlemen:

We have acted as counsel for Davis New York Venture Fund, Inc. (the
"Company") in connection with the registration under the Securities Act of 1933
(the "Act") of an indefinite number of shares of beneficial interest in the
series of the Company designated as Davis New York Venture Fund and Davis Growth
& Income Fund (collectively, the "Shares") in registration statement No. 2-29858
on Form N-1A (the "Registration Statement").

In this connection we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate and other
records, certificates and other papers as we deemed it necessary to examine for
the purpose of this opinion, including the Articles of Incorporation and bylaws
of the Company, actions of the Board of Directors authorizing the issuance of
Shares and the Registration Statement.

Based on the foregoing examination, we are of the opinion that upon the
issuance and delivery of the Shares in accordance with the Articles of
Incorporation and the actions of the Board of Directors authorizing the issuance
of the Shares, and the receipt by the Company of the authorized consideration
therefor, the Shares so issued will be validly issued, fully paid and
nonassessable.

We consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under section 7 of the Act.

Very truly yours,

D'Ancona & Pflaum

By
-------------------------------
Sheldon R. Stein, Partner

<PAGE>

EXHIBIT
ITEM 99 (j)

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Davis New York Venture Fund, Inc.

We consent to the use of our report dated September 3, 1999 incorporated by
reference in this Registration Statement of Davis New York Venture Fund, Inc.
and to the references to our firm under the headings "Financial Highlights" in
the Prospectuses for Davis New York Venture Fund and Davis Growth & Income Fund
Class A, Class B and Class C and for Class Y shares and "Auditors" in the
Statement of Additional Information.

/s/ KPMG LLP
-----------------------------
/s/ KPMG LLP

Denver, Colorado
November 29, 1999

<PAGE>

Exhibit 23(p)

CODE OF ETHICS

DAVIS SELECTED ADVISERS, L.P.
DAVIS SELECTED ADVISERS--NY, INC.
DAVIS DISTRIBUTORS, LLC
AND THE CLIENTS FOR WHICH THEY SERVE AS INVESTMENT ADVISER

AS AMENDED JANUARY 29, 2000

PREAMBLE
- --------

The interests of our clients, and the interests of shareholders of the funds we
advise, are, at all times, our highest priority. In order to maintain this
priority, all personal securities transactions are conducted in a manner
consistent with this Code of Ethics (the "Code"). We are committed to
maintaining the integrity of our business by exercising vigilance in the
avoidance of all actual or potential conflicts of interest or abuses of our
position of trust and responsibility. The Code should be read in conjunction
with this Preamble.

SECTION 1: DEFINITIONS
- -----------------------

All definitions shall be interpreted pursuant to the Investment Company Act of
1940 (the "1940 Act") and its Rule 17j-1, and the Investment Advisers Act and
its Rule 204-(2).

(A) "Adviser" means Davis Selected Advisers, L.P. ("DSA"), Davis Selected
Advisers -- NY, Inc. ("DSANY"), and Davis Distributors, LLC ("DDLLC"), and
any firm which controls, is controlled by, or is under common control with
DSA, and any other firm adopting this Code.

(B) "Access Person" means any director, officer, general partner, or Advisory
Person of the Adviser or a Fund. Access Person shall not include:

(1) disinterested Directors who are Access Persons solely by reason of
being a Director of a Fund; or

(2) Officers of a Fund who are Access Persons solely by reason of
being an Officer of a Fund;

if such Disinterested Directors and Officers do not, in connection with
their regular functions or duties, obtain information regarding the purchase
or sale of a security by that Fund prior to disclosure in a regular meeting
of Directors.*

(1) any employee of the Adviser or a Fund who, in connection with
his/her regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of a Covered Security by a Client, or
whose functions relate to the making of any recommendations with respect to such
purchases or sales;

Page 1 of 10

<PAGE>

(2) any natural person in a control relationship to the Adviser or a
Fund who obtains information concerning recommendations made to such company
with regard to the purchase of a Covered Security; or

(3) any person who obtains information concerning any recommendations
or executions of Client transactions in Covered Securities and has been
designated by the Compliance Officer as an Advisory Person.*

* This Code requires the Compliance Officer to maintain a list of all Access
Persons and Advisory Persons and to provide these persons with notice of their
status.

(D) "Security held or to be Acquired by a Client" means:

(1) any Covered Security which, within the most recent 15 days:

(a) is or has been held by a Client; or
(b) is being or has been seriously considered for purchase by a
Client; and

(2) any option to purchase or sell, and any security convertible into or
exchangeable for, a Covered Security described in part (i) of this section.

A Covered Security is seriously considered for purchase by a Client when a
recommendation to purchase or sell a Covered Security has been communicated to a
portfolio manager for a Client and the portfolio manager is considering the
recommendation. A Covered Security is not being seriously considered for
purchase by a Client solely by reason of that Covered Security being subject to
normal review procedures applicable to portfolio securities of the Client, or
normal review procedures which are part of a general industrial or business
study, review, survey or research or monitoring of securities markets.

(E) "Beneficial Owner" shall be determined in the same manner as it would be in
determining whether a person is subject to the provisions of Section 16 of the
Securities Exchange Act of 1934 and the rules and regulations thereunder. (The
meaning of the term "Beneficial Owner" is summarized and illustrated in Appendix
A attached to this Code.)

(F) "Client" means any party for whom the Adviser provides investment advisory
services. Clients include Funds, whether or not the Adviser serves as the
primary investment adviser or serves as sub-adviser.

(G) "Compliance Officer" shall mean an Adviser's designated Compliance Officer
or, in the case of such designated Compliance Officer's unavailability or
inability to act, any officer of the Adviser designated to act in such
circumstances.

(H) "Control" shall have the same meaning as set forth in Section 2(a)(9) of
the 1940 Act.

(I) "Covered Security" means a security as defined in Section 2(a)(36) of the
1940 Act , except that it does not include: (1) direct obligations of the
Government of the United States, (2) banker's acceptances, bank certificates of
deposit, commercial paper, and high quality short-term debt instruments,
including repurchase agreements; and (3) shares issued by open-end funds
registered under the 1940 Act.

(J) "Disinterested Director" means a director of a Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19) of the
1940 Act.

Page 2 of 10
<PAGE>

(K) "Fund" means each investment company for whom the Adviser serves as the
primary investment adviser and manages the investment company's daily business
affairs. Currently, this includes the Davis Funds and the Selected Funds.

(L) "Limited Offering" means an offering that is exempt from registration under
the Securities Act of 1933 pursuant to Section 4(2), Section 4(6), Rule 505, or
Rule 506,

(M) "Purchase or Sale of a Covered Security" includes, inter alia, the writing
of an option to purchase or sell a Covered Security.

SECTION 2: UNLAWFUL ACTIONS
- ----------------------------

No Access Person, in connection with the purchase or sale of any Security Held
or to be acquired by a Client shall

(A) employ any device, scheme or artifice to defraud a Client;

(B) make any untrue statement of a material fact (or omit to state a material
fact necessary in order to make the statements made not misleading) to a DSA
employee making investment decisions or to a DSA officer investigating
securities transactions;

(C) engage in any act, practice or course of business that operates or would
operate as a fraud or deceit to a Client; or

(D) engage in any manipulative practice with respect to a Client.

SECTION 3: PROHIBITED PURCHASES AND SALES
- ------------------------------------------

(A) Pre-Clearing. No Access Person shall, directly or indirectly, purchase or
sell any Covered Security (or any security sold in a Limited Offering) in which
such person has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership without the prior approval of the Compliance
Officer. The Compliance Officer shall pre-clear his personal transactions in any
Covered Security (or any security sold in a Limited Offering) with a senior
officer designated by DSA.

(B) Initial Public Offerings. No Access Person shall acquire any Securities in
an initial public offering.

(C) Seven Day Trading Window. No Access Person shall, directly or indirectly,
purchase or sell any Covered Security in which he or she has, or by reason of
such transaction acquires, any direct or indirect beneficial ownership, and
which to his or her actual knowledge at the time of such purchase or sale is
being seriously considered for purchase or sale by or for a Client, or is the
subject of a pending buy or sell order by a Client, or is programmed for
purchase or sale by or for a Client; or was purchased or sold by or for a Client
within the seven (7) calendar day period preceding or following the purchase or
sale by such Access Person.

(D) Sanctions. Upon discovering a violation of Section 3(A) of this Code, the
Compliance Officer shall impose a fine in an amount he or she deems appropriate.
Upon discovering a violation of Sections 2, 3(B) or 3(C) of this Code, the
Adviser and the Board of Directors of any Fund affected by such violation may
impose such sanctions as each deems appropriate, including, inter alia, monetary
sanctions, a letter of censure or suspension or termination of the

Page 3 of 10
<PAGE>

employment of the violator, civil referral to the SEC or other civil regulatory
authorities, or criminal referral.

(E) For purposes of the prohibitions in Section 3 of this Code on purchases and
sales of certain Securities, "directly or indirectly" shall be deemed to include
within such prohibitions any transaction involving any other substantially
similar Covered Securities of the same issuer, and any derivatives of such
Covered Security.

SECTION 4: EXEMPTED TRANSACTIONS
- ---------------------------------

(A) Blue Chip Exemption. The prohibitions of Section 3(A) of this Code shall not
apply to any purchase or sale, or series of related transactions, involving less
than $50,000 of the securities of a company listed either on a national
securities exchange or traded over the counter and having a market
capitalization exceeding $5 billion. A series of transactions in the securities
of a company shall be deemed to be related if occurring within seven days, and
shall be deemed not to be related if occurring more than 14 days apart.

(B) The prohibitions of Section 3 of this Code shall not apply to:

(1) No Control. Purchases or sales effected for any account over which
the Access Person has no direct or indirect influence or control.

(2) Automatic Dividend Reinvestment Plan. Purchases that are part of an
automatic dividend reinvestment plan.

(3) Pro Rata Rights. Purchases effected upon the exercise of rights
issued by an issuer pro rata to all holders of a class of its securities, to the
extent such rights were acquired from such issuer, and sales of such rights so
acquired.

(4) Systematic Investment Plan. Purchases effected through a systematic
investment plan involving the automatic investment of a predetermined amount on
predetermined dates, provided the Compliance Officer has been previously
notified by the employee that he or she (or his or her spouse) will be
participating in the plan.

(5) Gifts. Subject to the provisions of Section 7, the giving or
receiving of any security as a gift.

(6) Futures Contracts, Options on Futures Contracts. Any purchase or
sale involving futures contracts on broad securities indices, such as the S&P,
or interest rate futures contracts, or options on such futures contracts.

SECTION 5: LIMITED OFFERINGS
- ----------------------------

In reviewing requests for approval of a transaction by an Access Person
involving a limited offering, the Compliance Officer shall take into account,
among other factors, whether the investment opportunity should be reserved for a
Client, and whether the opportunity is being offered to such Access Person by
virtue of his or her position with the Adviser.

An Advisory Person who has been authorized to acquire Securities in a limited
offering shall be required to disclose such investment when that Advisory Person
plays a part in any Fund's subsequent consideration of an investment in the
issuer. Any such consideration of an

Page 4 of 10
<PAGE>

investment in the issuer shall be subject to review by Advisory Persons with no
personal interest in the issuer.

SECTION 6: DISGORGEMENT BY ACCESS PERSONS OF CERTAIN SHORT-TERM TRADING PROFITS
- -------------------------------------------------------------------------------

(A) No Access Person shall profit from the purchase and sale, or sale and
purchase, of the same (or equivalent) securities within 60 calendar days. Any
profits realized by such Access Person on such short-term trades shall be
disgorged.

(B) Any profits realized by an Access Person on trades made in violation of
Section 3(C) of this Code (the Seven Day Trading Window) shall be disgorged.

SECTION 7: GIFTS
- ----------------

In addition to those provisions of the NASD Rules of Fair Practice or similar
ethical rules relating to the receipt of gifts and other benefits, all Access
Persons are prohibited from receiving any gift, gratuity, favor award or other
item or benefit having a market value in excess of $100 per person, per year,
from or on behalf of any person or entity that does, or seeks to do, business
with or on behalf of the Adviser or its Clients. Business-related entertainment
such as meals, tickets to the theater or a sporting event which are infrequent
and of a non-lavish nature are excepted from this prohibition.

SECTION 8: SERVICE AS A DIRECTOR
- --------------------------------

Access Persons are prohibited from serving on the boards of directors of
publicly traded companies unless the Compliance Officer determines, in writing,
that such service is not inconsistent with the interests of the Clients and
their shareholders. If the Compliance Officer has approved such service, and
such Access Person is also an Advisory Person, that Advisory Person shall be
isolated, through "Chinese Wall" procedures, from persons making investment
decisions with respect to such issuer.

SECTION 9: REPORTING
- --------------------

(A) Initial and Annual Disclosure. Except as provided in paragraph (e), every
Access Person shall:

(1) Report all personal holdings of Covered Securities within 10 days
of becoming an Access person; and

(2) Report all personal holdings of Covered Securities as of December
31st (or other date acceptable to the Compliance Officer) within 30 days of
calendar year-end.

(B) Duplicate Confirmation Statements. Every Access Person shall instruct the
broker, dealer or bank with or through whom a Covered Security transaction is
effected in which every Access Person has, or by reason of such transaction
acquires or sells, any direct or indirect beneficial ownership in the Covered
Security, to furnish the Compliance Officer duplicate copies of transaction
confirmations and statements of account at the same time such confirmations and
statements of account are sent to the Access Person.

(C) Quarterly Reporting. Every Access Person shall report within 10 days after
the end of each calendar quarter to the Compliance Officer all Covered
Securities transactions taking

Page 5 of 10
<PAGE>

place during the preceding calendar quarter in an account of which the Access
Person is a Beneficial Owner. If the Access Person did not execute any such
transactions during the preceding calendar quarter, he shall report such fact to
the Compliance Officer.

(D) Opening Brokerage Accounts. Prior to the opening of an account for the
purpose of executing transactions in Covered Securities, every Access Person
shall obtain the written consent of the Compliance Officer.

(E) Non-Discretionary Accounts. No person shall be required to make a report
with respect to any account over which such person does not have any direct or
indirect influence or control.

(F) Non-Admission Statement. Any such disclosure report may contain a statement
that the report shall not be construed as an admission by the person making such
report that he or she has any direct or indirect beneficial ownership in the
Covered Security to which the report relates.

SECTION 10: ADMINISTRATION OF THE CODE
- ---------------------------------------

(A) Appointment of a Compliance Officer. DSA shall appoint a Compliance Officer
and shall keep a record for five years of the persons serving as Compliance
Officer and their dates of service.

(B) Administration of the Code. The Compliance Officer shall administer the Code
and shall use reasonable diligence and institute procedures reasonably necessary
to review reports submitted by Access Persons and to prevent violations of the
Code.

(C) Record of Violations of the Code. The Compliance Officer shall maintain a
record of all violations of the Code, and of any action taken as a result of the
violation, which shall be maintained for five years in an easily accessible
place.

(D) List of Access and Advisory Persons. The Compliance Officer shall prepare a
list of the Access Persons and Advisory Persons, shall update the list as
necessary, and shall maintain a record (for 5 years) of former lists of Access
and Advisory Persons.

(E) Notice of Status as Access or Advisory Person. The Compliance Officer shall
notify each Access and Advisory Person of their status, provide them with a copy
of this Code, and obtain an acknowledgment from such person of receipt thereof.

(F) Notice of Amendments to the Code. Amendments to this Code shall be provided
to each Access and Advisory Person, who shall acknowledge receipt thereof.

(G) Exemptions to the Code. The Board of Directors of the Funds may exempt any
person from application of any Section(s) of this Code. A written memorandum
shall specify the Section(s) of this Code from which the person is exempted and
the reasons therefore.

(H) Quarterly Directors' Report. The Compliance Officer shall compile a
quarterly report to be presented to the Board of Directors of each of the Funds.
Such report shall discuss compliance with this Code, and shall provide details
with respect to any failure to comply and the actions taken by the Adviser upon
discovery of such failure.

(I) Annual Directors' Report. Not less than once a year the Compliance Officer
shall furnish to Directors of each of the Funds, and the Directors shall
consider, a written report that:

Page 6 of 10
<PAGE>

(1) Describes any issues arising under the Code since the last report
to the Directors, including, but not limited to, information about material
violations of the Code and sanctions imposed in response to the material
violations. The annual written report may incorporate by reference information
included in written quarterly reports previously presented to the Directors; and

(2) Certifies that DSA has adopted procedures reasonably necessary to
prevent Access Persons from violating the Code.

SECTION 11: ADOPTION OF CODE BY ENTITIES OTHER THAN DSA
- --------------------------------------------------------

The Compliance Officer of DSA shall ensure that all firms controlling,
controlled by, or under common control with DSA that employ persons who obtain
information concerning recommendations or executions of Covered Security
transactions of any Client have adopted the Code or have imposed similar ethical
constraints on their personnel.

SECTION 12: MATERIAL CHANGES TO THE CODE
- -----------------------------------------

(A) All material changes to the Code must be approved by a majority of the Board
of Directors (including independent directors voting separately) of Funds at
their next regular meeting (and in no event more than 6 months after material
change). DSA shall provide the Directors with a certification that DSA has
adopted procedures reasonably necessary to prevent Access Persons from violating
the Code. The Directors shall base their approval on a determination that the
Code contains provisions reasonably necessary to prevent Access persons from
violating Section 2 of this Code.

(B) A copy of each version of the Code shall be maintained for five years in an
easily accessible place.

Page 7 of 10

<PAGE>

CODE OF ETHICS

DAVIS SELECTED ADVISERS, L.P.
DAVIS SELECTED ADVISERS--NY, INC.
DAVIS DISTRIBUTORS, LLC
AND THE CLIENTS FOR WHICH THEY SERVE AS INVESTMENT ADVISER

AS AMENDED JANUARY 29, 2000

INITIAL & ANNUAL CODE OF ETHICS CERTIFICATION
- ---------------------------------------------

I acknowledge that I have received a copy and read the Code of Ethics, as
amended January 29, 2000, for Davis Selected Advisers, L.P., Davis Selected
Advisers--NY, Inc., Davis Distributors, LLC, other entities adopting this Code
and the Funds and clients for which they serve as investment adviser. I
understand my responsibilities under this Code of Ethics and agree to comply
with all of its terms and conditions. I will retain a copy of this Code of
Ethics for future reference.

I hereby certify that I have complied with the requirements of the Code of
Ethics of Davis Selected Advisers, L.P., Davis Selected Advisers--NY, Inc.,
Davis Distributors, LLC, and the clients for which they serve as investment
adviser, as amended January 29, 2000, and that I have disclosed or reported all
personal securities transactions required to be disclosed or reported pursuant
to such Code of Ethics.

- ----------------------------- ------------------------------
Print Name Signature

- -----------------------------
Date

RETURN TO HUMAN RESOURCES DEPARTMENT.

Page 8 of 10

<PAGE>

CODE OF ETHICS

DAVIS SELECTED ADVISERS, L.P.
DAVIS SELECTED ADVISERS--NY, INC.
DAVIS DISTRIBUTORS, LLC
AND THE CLIENTS FOR WHICH THEY SERVE AS INVESTMENT ADVISER

AS AMENDED JANUARY 29, 2000

INITIAL & ANNUAL CODE OF ETHICS CERTIFICATION
- ---------------------------------------------

I acknowledge that I have received a copy and read the Code of Ethics, as
amended January 29, 2000, for Davis Selected Advisers, L.P., Davis Selected
Advisers--NY, Inc., Davis Distributors, LLC, other entities adopting this
Code, and the Funds and clients for which they serve as investment adviser. I
understand my responsibilities under this Code of Ethics and agree to comply
with all of its terms and conditions. I will retain a copy of this Code of
Ethics for future reference.

- ----------------------------- ------------------------------
Print Name Signature

- -----------------------------
Date

EMPLOYEE COPY.

Page 9 of 10
<PAGE>

CODE OF ETHICS

DAVIS SELECTED ADVISERS, L.P.
DAVIS SELECTED ADVISERS--NY, INC.
DAVIS DISTRIBUTORS, LLC
AND THE CLIENTS FOR WHICH THEY SERVE AS INVESTMENT ADVISER

AS AMENDED JANUARY 29, 2000

BENEFICIAL OWNERSHIP
- --------------------

For purposes of the Code of Ethics, a beneficial owner of a security includes
any person who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares a direct or indirect
pecuniary interest in such security.

You have a pecuniary interest in a security if you have the opportunity,
directly or indirectly, to profit or share in the profit derived from a
transaction in such security. You are deemed to have a pecuniary interest in any
securities held by members of your immediate family sharing your household.
"Immediate family" means your son or daughter (including any legally adopted
child) or any descendants of either, your stepson or stepdaughter, your father
or mother or any ancestor of either, your stepfather or stepmother, and your
spouse. Also, you are deemed to have a pecuniary interest in securities held by
a partnership of which you are a general partner, and beneficial ownership of
the securities held by such partnership will be attributed to you in proportion
to the greater of your capital account or interest in the partnership at the
time of any transaction in such securities. You are also deemed to have a
pecuniary interest in the portfolio securities held by a corporation if you are
a controlling shareholder of such corporation and have or share investment
control over such portfolio securities. Additionally, certain
performance-related fees received by brokers, dealers, banks, insurance
companies, investment companies, investment advisors, trustees and others may
give rise to pecuniary interests in securities over which such persons have
voting or investment control.

Securities owned of record or held in your name are generally considered to be
beneficially owned by you if you have a pecuniary interest in such securities.
Beneficial ownership may include securities held by others for your benefit
regardless of record ownership (e.g., securities held for you or members of your
immediate family by agents, custodians, brokers, trustees, executors or other
administrators; securities owned by you but which have not been transferred into
your name on the books of a company; and securities which you have pledged) if
you have or share a pecuniary interest in such securities.

With respect to ownership of securities held in trust, beneficial ownership
includes the ownership of securities as a trustee in instances either where you
as trustee have, or where a member of your immediate family has, a pecuniary
interest in the securities held by the trust (e.g., by virtue of being a
beneficiary of the trust).

The final determination of beneficial ownership is a question to be determined
in light of the facts of a particular case. Thus, while you may include security
holdings of other members of your family, you may nonetheless disclaim
beneficial ownership of such securities. Any uncertainty as to whether you are
the beneficial owner of a security should be brought to the attention of the
Compliance Officer.

Page 10 of 10