DAVIS INTERNATIONAL SERIES INC, 485APOS, 2000-11-14

DAVIS INTERNATIONAL SERIES INC
485APOS, 2000-11-14

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<PAGE>
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. 14

AND

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-8870
AMENDMENT NO. 15

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-

Arthur Don, Esq.
D'Ancona & Pflaum
111 East Wacker Drive
Suite 2800
Chicago IL 60601-4205
(1-312-602-2048)

It is proposed that this filing will become effective:

[ ] Immediately upon filing pursuant to paragraph (b)

[ ] On __________, pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1)

[X] On February 1, 2001, pursuant to paragraph (a) of Rule 485

[ ] 75 days after filing pursuant to paragraph (a)(2)

[ ] On_________, pursuant to paragraph (a)(2) of Rule 485

Title of Securities being Registered: Common Stock of:

DAVIS INTERNATIONAL TOTAL RETURN FUND

<PAGE>

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

POST-EFFECTIVE AMENDMENT NO. 10 TO REGISTRATION
STATEMENT NO. 33-86578 UNDER THE SECURITIES ACT OF 1933
AND AMENDMENT NO. 11 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. 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. Annual Report
6. Who is Responsible for Your Davis Account

<PAGE>

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
ITEM NO. PART B CAPTION OR PLACEMENT: 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. Annual Report

<PAGE>
Draft 11/12/00

DAVIS INTERNATIONAL TOTAL RETURN FUND

Prospectus and Application Form

Class A shares
Class B shares
Class C shares

February 1, 2001

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(R)

<PAGE>

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 Davis Funds

Privacy Notice

How to Choose a Share Class

How to Open an Account

How to Buy, Sell and Exchange Shares

Davis Funds: Over 25 Years of Reliable Investing

Other Fund Documents

2
<PAGE>

OVERVIEW OF DAVIS INTERNATIONAL TOTAL RETURN FUND

INVESTMENT OBJECTIVE AND STRATEGY

Davis International Total Return Fund's investment objective is total return
through capital growth and/or income. We pursue this objective by investing
primarily in the common stock of foreign companies.

Fiduciary International, Inc. serves as sub-adviser for Davis International
Total Return Fund and manages its investment portfolio. The sub-adviser seeks to
build a diversified international equity portfolio focusing on growth in an
effort to deliver superior risk-adjusted returns.

The sub-adviser's investment process involves three steps:

1. REGIONAL ALLOCATION. The sub-adviser assesses regions, countries and
currencies on a top-down basis through the evaluation of specific
macro-economic fundamentals.

2. SECTOR AND THEME DEVELOPMENT. The sub-adviser seeks to identify secular and
thematic changes which highlight investment opportunities.

3. ISSUE SELECTION. The sub-adviser evaluates growth stocks within identified
sectors and themes to find those companies which meet its criteria for
investment.

The sub-adviser considers selling a company if the company no longer contributes
to the Fund's investment objective.

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

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

DETERMINING IF THIS FUND IS RIGHT FOR YOU

YOU SHOULD CONSIDER INVESTING IN THIS FUND IF:

>> You are seeking total return through capital growth or income or both.
>> You are seeking international diversification.
>> You are investing for the long-term (five years or more).

YOU SHOULD NOT INVEST IN THIS FUND IF:

>> You are worried about the possibility of sharp price swings and
dramatic market declines.
>> You are uncomfortable investing in foreign markets.
>> You are interested in earning current income.
>> You are investing for the short-term (less than five years).

PRINCIPAL RISKS

If you buy shares of Davis International Total Return Fund, you may lose some or
all of the money that you invest. The investment return and principal value of
an investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. This section
describes what we think are the most significant factors that can cause the
Fund's performance to suffer.

3
<PAGE>

>> MARKET RISK. The market value of shares of common stock can change rapidly
and unpredictably as a result of political or economic events having little
or nothing to do with the performance of the companies we invest in.

>> COMPANY RISK. The market values of a common stock vary with the success or
failure of the company issuing the stock. As a result, the success of the
companies in which the Fund invests largely determines the Fund's long term
performance. The Fund invests in large and small companies. Investing in
small companies carries greater risk than investing in the stock of larger
companies. Small companies often have less predictable earnings and the
market for their stocks may not be as well developed.

>> COUNTRY RISK. Investing in foreign countries involves risks that may cause
the Fund's performance to be more volatile than it would be if we invested
solely in the United States. Foreign economies may not be as strong or as
diversified, foreign political systems may not be as stable, and foreign
financial reporting standards may not be as rigorous as they are in the
United States. In addition, foreign capital markets may not be as well
developed, so securities may be less liquid, transaction costs may be
higher, and investments may be subject to government regulation.

>> CURRENCY RISK. The Fund often invests in securities denominated in foreign
currencies. Foreign currencies "float" in value against the U.S. dollar.
When foreign currencies lose value against the U.S. dollar, the value of
the Fund's investments denominated in foreign currencies will lose value
when they are converted to U.S. dollars.

An investment in Davis International Total Return Fund is not a bank deposit and
is not insured or guaranteed by any bank, the Federal Deposit Insurance
Corporation, or any other government agency.

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

PAST PERFORMANCE

The bar chart and the table below provide an indication of the risks of
investing in Davis International Total Return Fund by showing changes in the
Fund's year-to-year performance and by showing how the Fund's average annual
returns for one year, five years, and life of the class compare to those of the
Europe, Australia, and the Far East Index ("EAFE Index"), an unmanaged benchmark
of the total return performance of large capitalization stocks in selected
industrialized foreign countries. How the Fund has performed in the past is not
necessarily an indication of how the Fund will perform in the future.

DAVIS INTERNATIONAL TOTAL RETURN FUND
TOTAL RETURN
CLASS A SHARES
(As of December 31st of Each Year)

1996 1.51%
1997 (2.08)%
1998 4.16%
1999 18.66%
2000 xx%

During the period shown above, the highest quarterly return was xx% for the xx
quarter of xx, and the worst quarterly return was (xx)% for the xx quarter of
xx.

4
<PAGE>

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

DAVIS INTERNATIONAL TOTAL RETURN FUND AVERAGE ANNUAL TOTAL RETURNS

(For the Periods Ending December 31, 2000)
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------
Past 1 Year Past 5 Years Life of Fund
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares* Xx% Xx% Xx%
(Since 2/1/95)
--------------------------------------------------------------------------------
EAFE Index Xx% Xx% Xx%
--------------------------------------------------------------------------------
Class B Shares* Xx% Xx% Xx%
(Since 2/1/95)
--------------------------------------------------------------------------------
EAFE Index Xx% Xx% Xx%
--------------------------------------------------------------------------------
Class C Shares* Xx% Xx% Xx%
(Since 8/19/97)
--------------------------------------------------------------------------------
EAFE Index xx% xx% xx%
--------------------------------------------------------------------------------
</TABLE>

*Figures reflect sales charges.

FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS INTERNATIONAL TOTAL RETURN FUND SHAREHOLDER
(Paid Directly From Your Investment)
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.75% None None
--------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) Imposed
on Redemptions (as a percentage of the lesser of
the net asset value of the shares redeemed or
the total cost of such shares) 0.75% 4.00% 1.00%
--------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends None None None
--------------------------------------------------------------------------------
Exchange Fee None None None
--------------------------------------------------------------------------------

</TABLE>

5
<PAGE>

ANNUAL FUND OPERATING EXPENSES FOR FISCAL YEAR ENDING SEPTEMBER 30, 2000

(Deducted from Davis International Total Return Fund's Assets)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 1.00% 1.00% 1.00%
--------------------------------------------------------------------------------
Distribution (12b-1) Fees Xx% 1.00% 1.00%
--------------------------------------------------------------------------------
Other Expenses 0.xx% 0.xx% 0.xx%
--------------------------------------------------------------------------------
Total Annual Operating Expenses* Xx% xx% xx%
--------------------------------------------------------------------------------
</TABLE>

*We voluntarily waived a portion of our fees so that the Fund's actual Total
Annual Operating Expenses for the fiscal year ending September 30, 2000 were:
Class A shares--xx%, Class B shares--xx%, Class C shares--xx%. We may resume
collecting our full fees at any time.

EXAMPLE

This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund for the time periods
indicated. The example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, your costs--based on these
assumptions--would be:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
IF YOU SELL YOUR SHARES IN... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES $XX $XX $XX $XX
--------------------------------------------------------------------------------
CLASS B SHARES $XX $XX $XX $XX*
--------------------------------------------------------------------------------
CLASS C SHARES $XX $XX $XX $XX
--------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
IF YOU STILL HOLD
YOUR SHARES AFTER... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES $XX $XX $XX $XX
--------------------------------------------------------------------------------
CLASS B SHARES $XX $XX $XX $XX*
--------------------------------------------------------------------------------
CLASS C SHARES $XX $XX $XX $XX
--------------------------------------------------------------------------------
</TABLE>

*Class B shares expenses for the 10-year period include two years of Class A
shares expenses because Class B shares automatically convert to Class A shares
after eight years.

FINANCIAL HIGHLIGHTS

These tables are designed to show you the financial performance of Davis
International Total Return Fund from the time each Class of shares was first
offered to the public to September 30, 2000, assuming that all dividends and
capital gains have been reinvested. Some of the information reflects financial
results for a single Fund share. The total returns represent the rate that an
investor would have earned (or lost) money on an investment in the Fund.

KPMG LLP has audited the information for fiscal years 1998, 1999 and 2000. KPMG
LLP's report, along with the Fund's financial statements, is included in the
annual report, which is available upon request. Another accounting firm audited
the information for the previous fiscal years.

DAVIS INTERNATIONAL TOTAL RETURN FUND
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES

6
<PAGE>

WHO IS RESPONSIBLE FOR YOUR DAVIS ACCOUNT

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

INVESTMENT ADVISER

DAVIS SELECTED ADVISERS, L.P.
Referred to throughout this prospectus as "Davis Selected Advisers"
2949 East Elvira Road, Suite 101
Tucson Arizona 85706

o Provides investment advice for Davis International Total Return Fund's
portfolio.

o Manages the Fund's business affairs.

o Provides day-to-day administrative services.

o Serves as investment adviser for all of the Davis Funds, other mutual
funds, and other institutional clients.

o Annual Adviser Fee for fiscal year September 30, 2000(based on average net
assets): 1.00%.

INVESTMENT SUB-ADVISERS

DAVIS SELECTED ADVISERS-NY, INC.
609 Fifth Avenue
New York, NY 10017

o Performs investment management and research services for Davis
International Total Return Fund and other institutional clients.

o Wholly owned subsidiary of Davis Selected Advisers.

o Annual Fee: Davis Selected Advisers pays the fee, not the Fund.

FIDUCIARY INTERNATIONAL, INC.
A wholly owned subsidiary of Fiduciary Trust Company International
Two World Trade Center
New York, NY 10048

o Manages Davis International Total Return Fund's day-to-day investment
operations.

o Annual Fee: Davis Selected Advisers pays the fee, not the Fund.

CUSTODIAN AND TRANSFER AGENT

STATE STREET BANK AND TRUST COMPANY
Referred to throughout this prospectus as "State Street Bank and Trust"
PO Box 8406
Boston MA 02266-8406

o Prices Davis International Total Return Fund daily.

o Holds share certificates and other assets of the Fund.

o Maintains records of shareholders.

o Issues and cancels share certificates.

o Supervises the payment of dividends.

7
<PAGE>

BOARD OF DIRECTORS

Davis Funds' board of directors has general supervisory responsibilities of
Davis Funds. The directors monitor and supervise the performance of the
investment adviser, sub-advisers and other service providers, monitors Davis
Funds' business and investment activities, and determines whether to renew
agreements with the adviser and sub-adviser.

DISTRIBUTOR

DAVIS DISTRIBUTORS, LLC
Referred to throughout this prospectus as "Davis Distributors"
2949 East Elvira Road, Suite 101
Tucson Arizona 85706

o Oversees purchases of shares and promotional activities for Davis Funds and
other mutual funds managed by Davis Selected Advisers.

o Wholly owned subsidiary of Davis Selected Advisers.

SENIOR RESEARCH ADVISER AND FOUNDER OF THE ADVISER

SHELBY M.C. DAVIS
Responsibilities:

o Senior Research Adviser of Davis Selected Advisers.

o Founder of Davis Selected Advisers.

Other Experience:

o Served as a Portfolio Manager of Davis New York Venture Fund from its
inception in February 1969 until February 1997.

o Served as a Portfolio Manager of a growth and income fund managed by Davis
Selected Advisers from May 1993 until February 1997.

PORTFOLIO MANAGER

SHEILA HARTNETT-DEVLIN
Responsibilities:

o Portfolio Manager of Davis International Total Return Fund since March 1,
2000.

o Also serves as Portfolio Manager for other institutional global equity
accounts.

Other Experience:

Ms. Sheila Hartnett-Devlin serves as Chairman of Fiduciary Trust Company
International's Global Investment Committee and is a member of the Investment
Policy Committee. Ms. Hartnett-Devlin has been a research analyst and portfolio
manager with Fiduciary Trust Company International since 1980.

OUR CODE OF ETHICS

We allow the officers and employees of Davis Funds and their affiliates to buy
and sell securities for their own personal accounts. However, in order to do so,
they must agree to a number of restrictions listed in our Code of Ethics.

8
<PAGE>

HOW WE MANAGE THE FUND

WHAT WE INVEST IN AND WHY

While the Fund can invest in companies of any size operating anywhere in the
world, without limitation, we focus on companies doing substantial business in
developed markets outside of the United States. 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. 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.

For more details concerning current investments and market outlook, please see
the most recent annual or semi-annual report.

COMMON STOCK OF FOREIGN COMPANIES AND U.S. COMPANIES
DOING SUBSTANTIAL BUSINESS IN FOREIGN MARKETS

Common stock represents ownership of a company.

A company is considered to be either a foreign company or a U.S. company doing
substantial business in foreign markets if it meets at least one of the
following four criteria:

>> It is organized under the laws of a foreign country.

>> Its common stock is principally traded in securities markets outside of the
United States.

>> It earns at least 50% of its revenues or profits outside of the United
States.

>> It has at least 50% of its assets outside of the United States.

RISKS. The most significant risks of common stock of foreign companies are
discussed below.

>> COMPANY RISK. The price of a common stock varies with the success and
failure of the company issuing the stock. As a result, the success of the
companies in which the Fund invests largely determines the Fund's
performance. The Fund invests in large and small companies. Investing in
small companies carries greater risk than investing in stock of larger
companies. Small companies often have less predictable earnings and the
market for their stocks may not be as well developed.

9
<PAGE>

OTHER SECURITIES AND INVESTMENT STRATEGIES

The Fund invests primarily in the common stock of foreign companies and U.S.
companies doing substantial business in foreign markets. There are other
securities in which the Fund may invest, and other investment strategies that
the Fund may employ, but they are not principal investment strategies. The
Statement of Additional Information discusses these securities and investment
strategies.

Because of the Fund's investment policies, portfolio turnover rate will vary. At
times it could be high, which could increase trading costs, decrease investment
performance, and increase taxable distributions paid to shareholders. The Fund
anticipates that, during normal market conditions, its annual portfolio turnover
rate will be less than 100%.

The Fund uses short-term investments to maintain flexibility while we evaluate
long-term opportunities. We also may use short-term investments for temporary
defensive purposes; in the event our portfolio managers anticipate a decline in
the market values of common stock of foreign companies and U.S. companies doing
substantial business in foreign markets, we may reduce our risk by investing in
short-term securities until market conditions improve. Unlike common stocks,
these investments will not appreciate in value when the market advances and the
short-term investments will not contribute to the capital growth portion of the
Fund's investment objective.

RISK SPECTRUM

Davis Selected Advisers manages nine mutual funds in the Davis family. Each Fund
has a distinct investment objective and strategy. The following graph shows how
these Funds compare to each other in terms of risk.

--------------------------------------------------------------------------------
DAVIS FUNDS
LOW MED HIGH
--------------------------------------------------------------------------------
<S> <C> <C> <C>
DAVIS GROWTH OPPORTUNITY FUND O
--------------------------------------------------------------------------------
DAVIS INTERNATIONAL TOTAL RETURN FUND O
--------------------------------------------------------------------------------
DAVIS FINANCIAL FUND O
--------------------------------------------------------------------------------
DAVIS REAL ESTATE FUND O
--------------------------------------------------------------------------------
DAVIS NEW YORK VENTURE FUND O
--------------------------------------------------------------------------------
DAVIS GROWTH & INCOME FUND O
--------------------------------------------------------------------------------
DAVIS CONVERTIBLE SECURITIES FUND O
--------------------------------------------------------------------------------
DAVIS GOVERNMENT BOND FUND O
--------------------------------------------------------------------------------
DAVIS GOVERNMENT MONEY MARKET FUND O
--------------------------------------------------------------------------------
</TABLE>

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

ONCE YOU INVEST IN DAVIS FUNDS

This section describes how your investment is valued, how you earn money on your
investment, and how the government may tax these earnings.

HOW YOUR SHARES ARE VALUED

Once you open an account in Davis International Total Return Fund, you are
entitled to buy and sell shares on any business day. The share price of your
investment changes depending on the total value of the Fund's investments.

10
<PAGE>

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

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

The net asset values of all Davis Funds shares are published daily in the
business section of most major newspapers. If you have access to the Internet,
you can also check net asset value on our web site, www.davisfunds.com.

HOW SECURITIES IN THE PORTFOLIO ARE VALUED

We use current market valuations to price the securities in Davis International
Total Return Fund:

o Securities that trade on an organized exchange are valued at the last
published sales price on the exchange. If no sales are recorded, the
securities are valued at the average of the closing bid and asked prices on
the exchange.

o Over-the-counter securities are valued at the average of closing bid and
asked prices.

o Debt securities may be valued by an independent pricing service. In
particular, the Fund relies on a professional pricing service that has
experience in valuing securities with limited resale markets so as to
obtain prices that reflect the market as accurately as possible.

o Discount securities purchased with a maturity of one year or less are
usually valued at amortized cost.

o Securities with unavailable market quotations and other assets are valued
at "fair value"--which is determined by the Board of Directors.

Many of 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 and Trust. 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.

HOW WE PAY EARNINGS

There are two ways you can receive payments from Davis International Total
Return Fund:

11
<PAGE>

>> DIVIDENDS. Dividends are distributions to shareholders of net investment
income and short-term capital gains on investments.

>> CAPITAL GAINS. Capital gains are profits received by the Fund from the sale
of securities held for the long-term which are then distributed to
shareholders.

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

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

We also offer a DIVIDEND DIVERSIFICATION PROGRAM, which allows you to have your
dividends and capital gains reinvested in shares of another Davis Fund.

You will receive a statement each year detailing the amount of all dividends and
capital gains paid to you during the previous year. To ensure that these
distributions are reported properly to the U.S. Treasury, you must certify on
your Davis Funds Application Form or on the IRS Form W-9 that your Tax
Identification Number is correct and you are not subject to backup withholding.
Backup withholding is required for taxpayers who are subject to back taxes for
failure to report all interest and dividends.

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

HOW TO PUT YOUR DIVIDENDS AND CAPITAL GAINS TO WORK

You can have all dividends and capital gains automatically invested in the same
share class of this or other Davis Funds. To be eligible for this DIVIDEND
DIVERSIFICATION PROGRAM, all accounts involved must be registered under the same
name, the same class of shares, and have a minimum initial value of $250. Shares
are purchased at the chosen Fund's net asset value on the dividend payment date.
You can make changes to your selection or withdraw from the program with 10
days' notice. To participate in this program, fill out the cross-reinvest
information in the appropriate section of the Application Form. Once your
account has been opened and you wish to establish this program, call for more
information.

HOW YOUR DIVIDENDS AND CAPITAL GAINS ARE TAXED

>> If Davis International Total Return Fund pays dividends, the dividends are
taxable to shareholders as ordinary income. Dividends include both net
investment income and short-term capital gains.

>> If Davis International Total Return Fund pays net capital gains, the net
capital gains generally will be taxed as a long-term capital gain
distribution.

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

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

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

12
<PAGE>

Foreign Taxes on Fund Income. Income received by Davis International Total
Return Fund may be subject to foreign income taxes. Foreign taxes increase the
Fund's expenses and decrease the income available to the Fund to pay as
dividends. If it is practical, and if the dollar amount of foreign taxes is
significant, the Fund may "pass through" the amount of all foreign taxes to the
Fund's shareholders. Shareholders may then be able to claim a deduction or
credit against their federal income taxes for their proportionate share of the
Fund's foreign taxes.

We recommend that you consult with a tax adviser about dividends and capital
gains, which may be received from Davis International Total Return Fund.

PRIVACY NOTICE

We collect information about you from your account application and other forms
which you may deliver to us. We use this information to process your requests
and transactions, for example, to provide you with additional information about
our funds, to open an account for you, or to process a transaction. In order to
service your account and effect your transactions, we may provide your personal
information to firms that assist us in servicing your account, such as, our
transfer agent. We may also provide your name and address to one of our agents
for the purpose of mailing to you your account statement and other information
about our products and services. We require these outside firms and agents to
protect the confidentiality of your information and to use the information only
for the purpose for which the disclosure is made. We do not provide customer
names and addresses to outside firms, organizations or individuals except in
furtherance of our business relationship with you, or as otherwise allowed by
law.

We restrict access to nonpublic personal information about you to those
employees who need to know that information to provide products or services to
you. We maintain physical, electronic, and procedural safeguards that comply
with federal standards to guard your personal information.

HOW TO CHOOSE A SHARE CLASS

Before you can buy any shares in any Davis Fund, you need to decide which class
of shares best suits your needs. Davis Funds offer four classes of shares: A, B,
C and Y. Class Y shares, which are offered through a separate prospectus, are
available only to qualified institutional investors. Each class is subject to
different expenses and sales charges.

You may choose to buy one class of shares rather than another, depending on the
amount of the purchase and the expected length of time of investment. Long-term
shareholders of Class B or C shares may pay more than the maximum front-end
sales charge allowed by the National Association of Securities Dealers.

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

DISTRIBUTION FEES. The Fund has adopted plans under Rule 12b-1 that allow the
Fund to pay distribution and other fees for the distribution of its shares and
for services provided to shareholders. Class A shares pay up to 0.25% of average
annual net assets while Class B and C shares pay up to 1.00% of average annual
net assets. Because these fees are paid out of the Fund's assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges.

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CLASS A SHARES

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

o You buy Class A shares at their net asset value per share plus a sales
charge, which is 4.75% for any investment below $100,000 (see chart below).
The term "offering price" includes the front-end sales charge.

o There is no limit on how much you can invest in this share class.

o Davis Funds (other than Davis Government Money Market Fund) pay a
distribution fee--up to 0.25% of the average daily net asset value--each
year you hold the shares. This fee is lower than the fee you pay for the
other two classes of shares. Lower expenses translate into higher annual
return on net asset value.

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

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

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

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

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

YOU CAN COMBINE PURCHASES OF CLASS A SHARES

>> WITH OTHER FAMILY MEMBERS. If you buy shares for yourself, your spouse and
any children under the age of 21, all the shares you buy will be counted as
a single purchase.

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>> WITH CERTAIN GROUPS. If you buy shares through a group organized for a
purpose other than to buy mutual fund shares, the purchases will be treated
as a single purchase.

>> THROUGH EMPLOYEE BENEFIT PLANS. If you buy shares through trust or
fiduciary accounts and Individual Retirement Accounts (IRAs) of a single
employer, the purchases will be treated as a single purchase.

>> UNDER A STATEMENT OF INTENTION. If you enter a Statement of Intention and
agree to buy Class A shares of $100,000 or more over a 13-month period, all
of the shares you buy during that period will be counted as a single
purchase, with the exception of purchases into Davis Government Money
Market Fund. Before entering a Statement of Intention, please read the
terms and conditions in the Statement of Additional Information. Under a
Statement of Intention, you agree to permit our service provider, State
Street Bank and Trust, to hold fund shares in escrow to guarantee payment
of any sales charges that may be due if you ultimately invest less than you
agreed to invest over the covered 13-month period.

>> UNDER RIGHTS OF ACCUMULATION. If you notify your dealer or our distributor,
Davis Distributors, you can include the Class A, B and C shares you already
own when calculating the price for your current purchase.

>> WITH CLASS A SHARES OF OTHER DAVIS FUNDS. If you buy Class A shares of this
or any other Davis Fund, all of the shares you buy will be counted as a
single purchase. This includes shares purchased under a Statement of
Intention or Rights of Accumulation.

CLASS A SHARES FRONT-END SALES CHARGE WAIVERS

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

>> Investments in Davis Government Money Market Fund.

>> Shareholders making purchases with dividends or capital gains that are
automatically reinvested.

>> Purchases by directors, officers and employees of any Davis Fund, the
investment adviser of any Davis Fund or its affiliates, and their immediate
families.

>> Purchases by employees and people affiliated with broker-dealer firms
offering shares in any Davis Fund.

>> Financial institutions acting as fiduciaries making single purchases of
$250,000 or more.

>> Employee benefit plans making purchases through a single account covering
at least 250 participants.

>> Wrap accounts offered by securities firms, fee-based investment advisers or
financial planners.

>> State and local governments.

>> Shareholders making purchases in certain accounts offered by securities
firms that have entered into contracts with the Fund and which charge fees
based upon assets in the account.

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

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<PAGE>

CLASS B SHARES

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

>> You buy the shares at net asset value (no initial sales charge).

>> You can invest up to $250,000 in Class B shares.

>> If you sell Class B shares in any of the Davis Funds except Davis
Government Money Market Fund within six years of purchase, you must pay a
deferred sales charge. This charge decreases over time as you own the
shares (see chart below).

>> After you hold Class B shares for eight years, they are automatically
converted into Class A shares without paying a front-end sales charge.
Class A shares pay a lower distribution fee.

>> Davis Funds (other than Davis Government Money Market Fund) pay a
distribution fee of 1.00% of the average daily net asset value each year
you hold the shares. Higher expenses translate into lower annual return on
net asset value.

Investors who buy Class B shares of Davis Government Money Market Fund will not
pay deferred sales charges.

CLASS B SHARES DEFERRED SALES CHARGES
(FOR ALL DAVIS FUNDS EXCEPT DAVIS GOVERNMENT MONEY MARKET FUND)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
SALES MADE AFTER PURCHASE AMOUNT OF DEFERRED SALES CHARGE
--------------------------------------------------------------------------------
<S> <C>
Year 1 4%
--------------------------------------------------------------------------------
Years 2-3 3%
--------------------------------------------------------------------------------
Years 4-5 2%
--------------------------------------------------------------------------------
Year 6 1%
--------------------------------------------------------------------------------
Years 7-8 None
--------------------------------------------------------------------------------

</TABLE>

CLASS C SHARES

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

>> You buy the shares at net asset value (no initial sales charge).

>> You cannot invest more than $1 million in Class C shares.

>> If you sell Class C shares in any of the Davis Funds (other than Davis
Government Money Market Fund) within one year of purchase, you must pay a
deferred sales charge of 1.00%.

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<PAGE>

Investors who buy Class C shares of Davis Government Money Market Fund will not
pay deferred sales charges.

DEFERRED SALES CHARGE

As an investor in any Davis Fund (other than Davis Money Market Fund), you may
pay a deferred sales charge as a percentage of the net asset value of the shares
you sell or the total cost of the shares, whichever is lower. Davis Funds
investors pay a deferred sales charge in the following cases:

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

>> As a Class B shareholder, if you sell shares within six years of purchase.
The percentage decreases over the six-year period.

>> As a Class C shareholder, if you sell shares within one year of purchase.

To keep deferred sales charges as low as possible, we will first sell shares in
your account that are not subject to deferred sales charges (if any). We do not
impose a deferred sales charge on the amount of your account value represented
by an increase in net asset value over the initial purchase price, or on shares
acquired through dividend reinvestments or capital gain distributions.

To determine whether the deferred sales charge applies to a redemption, the
Funds redeem shares in the following order:

>> Shares acquired by reinvestment of dividends and capital gain
distributions.

>> Shares that are no longer subject to the deferred sales charge.

>> Shares that have increased in value beyond their original cost.

>> Shares held the longest, but still subject to the deferred sales charge.

DEFERRED SALES CHARGE WAIVERS

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

>> You sell Class A shares that were not subject to a commission at the time
of purchase (the amount of purchase totaled $1 million or more and the
shares were held for more than a year).

>> You (or a registered joint owner) die or have been determined to be totally
disabled after the purchase of shares.

>> You sell shares under the Automatic Withdrawal Plan if the aggregate value
of the redeemed shares does not exceed 12% of the account's value.*

>> You sell shares under a qualified retirement plan or IRA that constitute a
tax-free return of contributions to avoid a penalty.

>> Your Fund sells the remaining shares in your account under an Involuntary
Redemption

>> You qualify for an exception relating to defined contribution plans. These
exceptions are described in the Statement of Additional Information.

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<PAGE>

>> You are a director, officer or employee of Davis Selected Advisers or one
of its affiliates (or a family member of a director, officer or employee).

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

* An Automatic Withdrawal Plan may be established as either a percentage or a
fixed dollar amount. The shares that may be redeemed without a sales charge
are recalculated as a percentage of the current market value of the account
as of the date of each withdrawal. If established as a percentage no sales
charge will be incurred regardless of market fluctuations. If established
as a fixed dollar amount a sales charge may be incurred if the market value
of the account decreases. If you redeem shares in addition to those
redeemed pursuant to the Automatic Withdrawal Plan, a deferred sales charge
may be imposed on those shares and on any subsequent redemptions within a
12-month period, regardless of whether such redemptions are pursuant to an
Automatic Withdrawal Plan.

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

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HOW TO OPEN AN ACCOUNT

You can open an account if you invest at least:

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

o $250 for a retirement plan account.

THREE WAYS YOU CAN OPEN AN ACCOUNT

1. BY MAIL. Fill out the Application Form included in this prospectus and mail
it to our service provider, State Street Bank and Trust at the address stated
below. You must sign the Application Form. Include a check made payable to DAVIS
FUNDS or, in the case of a retirement account, the custodian or trustee. All
purchases by check should be in U.S. dollars. DAVIS FUNDS WILL NOT ACCEPT
THIRD-PARTY CHECKS.

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

3. BY WIRE. You may wire federal funds directly to our service provider, State
Street Bank and Trust. Before you wire an initial investment, you must call
Davis Distributors and obtain an account number and Application Form. A customer
service representative will assist you with your initial investment by wire.
After the initial wire purchase is made, you will need to return the Application
Form to State Street Bank and Trust. To ensure that the purchase is credited
properly, follow these wire instructions:

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

Generally, the Fund does not issue share certificates for purchases. You can
receive certificates for any Fund other than Davis Government Money Market Fund
if you are a Class A shareholder who is not participating in the Automatic
Withdrawal Plan. If you are eligible and wish to receive certificates, please
submit a letter of instruction with your Application Form. Once your account has
been established, the shareholder(s) may request that certificates be sent to
the address of record by calling our customer service department.

RETIREMENT PLAN ACCOUNTS

You can invest in Davis Funds using any of these types of retirement plan
accounts:

o Deductible IRAs
o Non-deductible IRAs
o Roth IRAs
o Educational IRAs
o Simple IRAs
o Simplified Employee Pension (SEP) IRAs
o 403(b) Plans

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<PAGE>

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

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<PAGE>

HOW TO BUY, SELL AND EXCHANGE SHARES

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

An exchange occurs when you sell shares in one Davis Fund to buy shares in
another Davis Fund in the same class of shares in response to changes in your
goals or in market conditions.

THREE WAYS TO BUY, SELL AND EXCHANGE SHARES

1. BY TELEPHONE. Call 1-800-279-0279. You can speak directly with a Davis Funds
representative during our business hours (9 a.m. to 6 p.m. Eastern Standard
Time) or use our automated telephone system any time, day or night.

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

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

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

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

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

WHEN YOUR TRANSACTIONS ARE PROCESSED

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

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

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

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<PAGE>

BUYING MORE SHARES

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

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

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

MAKING AUTOMATIC INVESTMENTS

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

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

To sign up for the Automatic Investment Plan, fill out the appropriate section
of the Application Form. After your account has been opened and you wish to
establish this plan, you must submit a letter of instruction signed by the
account owner(s). You can stop automatic investments at any time by calling
Davis Distributors.

You can also use our Dividend Diversification Program to buy more shares in any
Davis Fund. See ONCE YOU INVEST IN DAVIS FUNDS.

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

SELLING SHARES

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

When you sell shares by mail, indicate the number of shares or dollar amount you
wish to redeem and send the request to our service provider, State Street Bank
and Trust. If more than one person owns the shares you wish to sell, all owners
must sign the redemption request. You may be required to have the owners'
signatures medallion-guaranteed (see "Medallion Signature Guarantee" below).

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

22
<PAGE>

will be delayed until your purchase check has cleared, up to a maximum of 15
days from the date of purchase.

WHAT YOU NEED TO KNOW BEFORE YOU SELL YOUR SHARES

o You will always receive cash for sales that total less than $250,000 or
1.00% of the Fund's net asset value during any 90-day period. Any sales
above the cash limit may be paid in securities and would mean you would
have to pay brokerage fees.

o You will need a medallion signature guarantee on a stock power or
redemption request for sales paid by check totaling more than $100,000.
However, if your address of record has changed in the last 30 days, or if
you wish to send redemption proceeds to a third party, you will need a
medallion signature guarantee for all sales.

o If a certificate was issued for the shares you wish to sell, the
certificate must be sent by certified mail to State Street Bank and Trust
and accompanied by a letter of instruction signed by the owner(s).

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

MEDALLION SIGNATURE GUARANTEE. A written endorsement from an eligible guarantor
institution that the signature(s) on the written request is(are) valid. Eligible
guarantors include federally insured financial institutions, registered
broker-dealers, or participants in a recognized medallion signature guarantee
program. Davis Funds cannot accept guarantees from institutions that do not
provide reimbursement in cases of fraud. No other form of signature verification
can be accepted.

STOCK POWER. A letter of instruction signed by the owner of the shares that
gives State Street Bank and Trust permission to transfer ownership of the shares
to another person or group. Any transfer of ownership requires that all
shareholders have their signatures medallion-guaranteed.

SPECIAL SALE SITUATIONS

o The Securities and Exchange Commission can suspend payment of sales under
certain emergency circumstances if the New York Stock Exchange is closed
for reasons other than customary closings and holidays.

o Davis Funds may make sales payments in securities if the Board of Directors
decides that making cash payments would harm a Fund.

SPECIAL NOTE: When you make a sale or withdrawal, a deferred sales charge may be
imposed if:

o You buy $1 million or more of Class A shares and sell them within a year of
purchase,

o You sell Class B shares within six years of purchase,

o You sell Class C shares within one year of purchase.

IF YOU DECIDE TO BUY BACK SHARES YOU SOLD

If you decide to buy back some or all of the shares you sold in this Fund within
60 days of sale and notify us in writing, you can take advantage of the
SUBSEQUENT REPURCHASE PRIVILEGE. With this privilege, which you can use only
once, you will not be charged a sales charge, and any deferred sales charge you
paid on the original sale will be returned to your account. Shares will be
purchased at the current price, into the same

23
<PAGE>

Davis Fund, and into the same account. You must send a letter to our service
provider, State Street Bank and Trust, along with a check for the repurchased
shares.

IF YOUR ACCOUNT FALLS BELOW $250

If your account balance falls below $250 as a result of a redemption or
exchange, we may sell your remaining shares in this Fund at net asset value. We
will first notify you by mail, giving you at least 60 days' notice that an
INVOLUNTARY REDEMPTION may take place. If you can increase your account balance
to above $250 during the notice period, the Involuntary Redemption will be
canceled.

MAKING AUTOMATIC WITHDRAWALS

If your account balance is more than $10,000, you can sell a set dollar or
percentage amount each month or quarter. Because withdrawals are sales, they may
produce a gain or loss. If you purchase additional shares at the same time that
you make a withdrawal, you may have to pay taxes and a sales load. Gains may be
subject to tax. When you participate in this plan, known as the AUTOMATIC
WITHDRAWAL PLAN, shares are sold so that you will receive payment by one of
three methods:

o You may receive funds at the address of record provided that this address
has been unchanged for a period of not less than 30 days. These funds are
sent by check on or after the 25th day of the month.

o You may also choose to receive funds by Automated Clearing House (ACH), to
the banking institution of your choice. You may elect an ACH draft date
between the fifth and the 28th days of the month. You must complete the
appropriate section of the Application Form. Once your account has been
established, you must submit a letter of instruction with a medallion
signature guarantee to execute an Automatic Withdrawal Plan by ACH.

o You may have funds sent by check to a third party at an address other than
the address of record. You must complete the appropriate section of the
Application Form. Once your account has been established, you must submit a
letter of instruction with a medallion signature guarantee to designate a
third party payee.

You may stop automatic withdrawals at any time without charge or penalty by
calling Davis Distributors or by notifying the service agent in writing.

WIRING SALE PROCEEDS TO YOUR BANK ACCOUNT

You may be eligible to have your sale proceeds electronically transferred to a
commercial bank account. This is known as an ELECTRONIC WIRE PRIVILEGE. There is
a $5 charge by State Street Bank and Trust for wire service, and receiving banks
may also charge for this service. Payment through Automated Clearing House will
usually arrive at your bank two banking days after the sale. Payment by wire is
usually credited to your bank account on the next business day after the sale.

While State Street Bank and Trust will accept electronic wire sales by telephone
or dealer, you still need to fill out and submit the information under the
Electronic Wire Privilege section of the Application Form. Once your account has
been opened and you have not previously established the Electronic Wire
Privilege, you must submit a letter of instruction with a medallion signature
guarantee signed by all registered owners at the time of the wire sale. If you
are currently an investor with a non-retirement account and have already
established this privilege, you may call our customer service department to
execute a wire sale by telephone.

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<PAGE>

EXCHANGING SHARES

You can sell shares of any Davis Fund to buy shares in the same class of any
other Davis Fund without having to pay a sales charge. This is known as an
exchange. You can exchange shares by telephone, by mail or through a dealer. The
initial exchange must be for at least $1,000 for a non-retirement account
(unless you are participating in the Automatic Exchange Program). Exchanges are
normally performed on the same day of the request if received in good order by 4
p.m. Eastern Time.

Shares in different Davis Funds may be exchanged at relative net asset value.
However, if any Davis Fund shares being exchanged are subject to a deferred
sales charge, Statement of Intention, or other limitation, the limitation will
continue to apply to the shares received in the exchange. When you exchange
shares in a Davis Fund for shares in Davis Government Money Market Fund, the
holding period for any deferred sales charge does not continue during the time
that you own Davis Government Money Market Fund shares. For example, Class B
shares are subject to a declining sales charge for six years. Any period that
you are invested in shares of Davis Government Money Market Fund will be added
to the six-year declining sales charge period.

When you exchange shares by mail, you must send our service provider, State
Street Bank and Trust, a written request for the exchange. If you wish to
exchange shares for which you hold share certificates, these certificates must
be sent by certified mail to State Street Bank and Trust accompanied by a letter
of instruction signed by the owner(s). If your shares are being sold for cash,
this is known as a redemption. Please see the section WHAT YOU NEED TO KNOW
BEFORE YOU SELL YOUR SHARES for restrictions that might apply to this type of
transaction.

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

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

There are limits to the number of exchanges you can make each year. Currently,
four exchanges between Funds are allowed during a 12-month period. You may make
an unlimited number of exchanges out of Davis Government Money Market Fund.
Automatic exchanges are excluded from this provision. Davis Distributors must
approve any exchanges above the limit in writing.

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

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

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

GOVERNMENT BOND FUND
Davis Government Bond Fund

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<PAGE>

GOVERNMENT MONEY MARKET FUND
Davis Government Money Market Fund

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

MAKING AUTOMATIC EXCHANGES

You can elect to make automatic monthly exchanges if all accounts involved are
registered under the same name and have a minimum initial value of $250. You
must exchange at least $25 to participate in this program, known as the
AUTOMATIC EXCHANGE PROGRAM. To sign up for this program, fill out the
appropriate section of the Application Form. Once your account has been
established, you may contact our customer service department to establish this
program.

TELEPHONE TRANSACTIONS

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

When you call Davis Distributors, you can perform a transaction with Davis Funds
in two ways:

o Speak directly with a representative during business hours (9 a.m. to 6
p.m. Eastern Standard Time).

o If you have a TouchTone(TM) telephone, you can use the automated telephone
system, known AS DAvis DIRECT ACCESS, 24 hours a day, seven days a week.

If you wish to sell shares by telephone and receive a check in the mail:

o The maximum amount that can be issued is $100,000.
o The check can only be issued to the registered account owner.
o The check must be sent to the address on file with Davis Distributors.
o Your current address must be on file for 30 days.

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

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

INTERNET TRANSACTIONS

You can use our web site: www.davisfunds.com to review your account balance and
recent transactions. Your account may qualify for the privilege to purchase,
sell or exchange shares online through the Internet. You may also request
confirmation statements and tax summary information be mailed to the address on
file. Please review our web site for more complete information. If you do not
wish to have this option activated for your account, please contact our customer
service department.

26
<PAGE>

time you buy, sell or exchange shares. You must also establish a unique and
confidential Personal Identification Number (PIN). This PIN is required each
time you access your Davis account online.

When you transact over the Internet, you agree that Davis Funds are not liable
for processing instructions believed to be genuine.

YOU CAN USE DAVIS DIRECT ACCESS TO:

o GET THE PRICE, TOTAL RETURN, AND FUND DESCRIPTION FOR ANY DAVIS FUND.

o CHECK YOUR ACCOUNT BALANCE AND OTHER ACCOUNT INFORMATION.

o BUY, SELL AND EXCHANGE SHARES.

o GET THE MAILING ADDRESS AND WIRE INSTRUCTIONS FOR ANY DAVIS FUND.

o REQUEST LITERATURE ABOUT ANY DAVIS FUND.

27
<PAGE>

DAVIS FUNDS:

OVER 25 YEARS OF RELIABLE INVESTING(R)

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

WE ARE LONG-TERM INVESTORS. We analyze high-quality growth companies that have
been overlooked, buy their stock at value prices, and hold the shares for the
long term. This strategy was first developed by legendary Wall Street investor
Shelby Cullom Davis, a leading financial adviser to governors and presidents.

Our investment approach has been refined for more than 25 years by his son,
Shelby M.C. Davis, Senior Research Adviser and Founder of Davis Selected
Advisers. The Davis strategy is still followed today by the third generation of
family members: Christopher C. Davis and Andrew A. Davis serve as Portfolio
Managers for many funds and institutional accounts managed by Davis Selected
Advisers.

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

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

28
<PAGE>

ADDRESS AND TELEPHONE GUIDE

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

--------------------------------------------------------------------------------
OUR MAILING ADDRESS:
Davis Funds
2949 East Elvira Road
Suite 101
Tucson, Arizona 85706

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

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

29
<PAGE>

OTHER FUND DOCUMENTS

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

WHERE YOU CAN GET THESE DOCUMENTS:

o BY TELEPHONE. Call Davis Funds toll-free at 1-800-279-0279, Monday through
Friday, 9 a.m. to 6 p.m. Eastern Standard Time. You may also call this
number for account inquiries.

o VIA THE INTERNET. Visit the SEC web site (www.sec.gov).

o FROM THE SEC. The SEC's Public Reference Room in Washington DC. For more
information call 1-202-942-8090. Additional copies of this information can
be obtained, for a duplicating fee, by electronic request at
[email protected] or by writing the Public Reference Section of the SEC,
Washington D.C. 20549-6009.

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

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

Investment Company Act File No. 811-8870

<PAGE>

Draft 11/10/00

STATEMENT OF ADDITIONAL INFORMATION

FEBRUARY 1, 2001

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 FEBRUARY
1, 2001 AND THE CLASS Y PROSPECTUS DATED FEBRUARY 1, 2001. 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.

<PAGE>

TABLE OF CONTENTS

Section I: Investment Strategies and Restrictions...........................xx
-------------------------------------------------
Investment Objectives and Policies...................................xx
Portfolio Securities.................................................xx
Other Investment Policies............................................xx
Portfolio Transactions ..............................................xx
Investment Restrictions..............................................xx

Section II: Key Persons.....................................................xx
-----------------------
Organization of the Fund.............................................xx
Directors and Officers...............................................xx
Directors' Compensation Schedule.....................................xx
Certain Shareholders of the Fund.....................................xx
Investment Advisory Services.........................................xx
Distribution of Fund Shares..........................................xx
Other Important Service Providers....................................xx

Section III: Classes of Shares, Purchases, Exchanges and Redemptions........xx
--------------------------------------------------------------------
Selecting the Appropriate Class of Shares............................xx

Class A Shares
Class B Shares
Class C Shares
Class Y Shares

How to Purchase Shares................................................xx

Special Services.....................................................xx

Prototype Retirement Plans
Automatic Investment Program
Dividend Diversification Program
Telephone Privilege

Exchange of Shares...................................................xx

General
By Telephone
Automatic Exchange Program

Redemption of Shares.................................................xx

General
Electronic Wire Privilege
By Telephone
Automatic Withdrawal Plan
Involuntary Redemptions
Subsequent Repurchases

2
<PAGE>

Section IV: General Information.............................................xx
-------------------------------
Determining the Price of Shares......................................xx
Dividends and Distributions..........................................xx
Federal Income Taxes.................................................xx
Performance Data.....................................................xx

Appendix: Term and Conditions for a Statement of Intention..................xx

<PAGE>

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

INVESTMENT OBJECTIVE AND POLICIES

The investment objective, principal investment policies and the main risks of
Davis International Total Return Fund ("Fund") are described in the Fund's
prospectuses. This Statement of Additional Information contains supplemental
information about those policies and risks and the types of securities that
Davis Selected Advisers, L.P. (" Adviser") and/or Davis Selected Advisers - NY,
Inc., ("DSA-NY") and Fiduciary International, Inc. ("Sub-Adviser") can select
for the Fund. Additional information is also provided about the strategies that
the Fund may use to try to achieve its objectives.

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 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:

<PAGE>

(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.

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.

<PAGE>

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 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.

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.

6
<PAGE>

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

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. The Fund may also invest in
other investment companies (or companies exempted under section 3(c)(7) of the
Investment Company Act of 1940 ("1940 Act") which themselves primarily invest in
temporary defensive investments. Investments in other investment companies are
limited by the 1940 Act.

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements. Repurchase
agreements involve an agreement to purchase a security and to sell that security
back to the original owner at an agreed-upon price. The resale price reflects
the purchase price plus an agreed-upon incremental amount, which is unrelated to
the coupon rate or maturity of the purchased security. The repurchase obligation
of the seller is, in effect, secured by the underlying securities. In the event
of a bankruptcy or other default of a seller of a repurchase agreement, the Fund
could experience both delays in liquidating the underlying securities and
losses, including: (a) possible decline in the value of the collateral during
the period while the Fund seek to enforce its rights thereto; (b) possible loss
of all or a part of the income during this period; and (c) expenses of enforcing
its rights.

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 may enter into tri-party repurchase agreements in which a third party
custodian bank ensures the timely and accurate exchange of cash and collateral.
The majority of these transactions run from day to day and delivery pursuant to
the resale typically occurs within one to seven days of the purchase. The Fund
normally will not enter into repurchase agreements maturing in more than seven
days.

HEDGING FOREIGN CURRENCY RISKS. To attempt to reduce exposure to currency
fluctuations, the Fund may trade in forward foreign currency exchange contracts
(forward contracts), currency futures contracts and options thereon and
securities indexed to foreign securities. These techniques are not always
effective and its use may expose the Fund to other risks, such as liquidity and
counterparty risk. The Adviser or Sub-Adviser exercises its professional
judgement as to whether the reduction in currency risk justifies the expense and
exposure to liquidity and counterparty risk. In past years, the Adviser and
Sub-Adviser have typically not used these techniques to any significant extent.
These techniques may be used to lock in an exchange rate in connection with
transactions in securities denominated or traded in foreign currencies, to hedge
the currency risk in foreign securities held by the Fund and to hedge a currency
risk involved in an anticipated purchase of foreign securities. Cross-hedging
may also be utilized, that is, entering into a hedge transaction with respect to
a foreign currency different from the one in which a trade is to be made or in
which a portfolio security is principally traded. There is no limitation on the
amount of assets that may be committed to currency hedging. However, the Fund
will not engage in a futures transaction if it would cause the aggregate of
initial margin deposits and premiums paid on outstanding options on futures
contracts to exceed 5% of the value of its total assets (excluding in
calculating such 5% any in-the-money amount of any option). Currency hedging
transactions may be utilized as a tool to reduce currency fluctuation risks due
to a current or anticipated position in foreign securities. The successful use
of currency hedging transactions usually depends on the Adviser's or the
Sub-Adviser's ability to forecast interest rate and currency exchange rate
movements. Should interest or exchange rates move in an unexpected manner, the
anticipated benefits of futures contracts, options or forward contracts may not
be achieved or losses may be realized and thus the Fund could be in a worse
position than if such strategies had not been used. Unlike many exchange-traded
futures contracts, there are no daily price fluctuation limits with respect to
options on currencies and forward contracts, and adverse market movements could
therefore continue to an unlimited extent over a period of time. In addition,
the correlation

<PAGE>

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 are required to set aside cash or high-grade liquid
securities to fully secure the obligation.

A forward contract is an obligation to purchase or sell a specific currency for
an agreed price at a future date which is individually negotiated and privately
traded by currency traders and its customers. Such a contract gives the Fund a
position in a negotiated, currently non-regulated market. A Fund may enter into
a forward contract, for example, when it enters into a contract for the purchase
or sale of a security denominated in a foreign currency in order to "lock in"
the U.S. dollar price of the security ("transaction hedge"). Additionally, when
the Adviser or Sub-Adviser believes that a foreign currency may suffer a
substantial decline against the U.S. dollar, 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 Adviser or 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 with respect to a different foreign currency for a fixed U.S.
dollar amount ("cross hedge"). This may be done, for example, where the Adviser
or Sub-Adviser believes that the U.S. dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a decline in the
U.S. dollar value of the currency in which portfolio securities of the Fund are
denominated.

The Fund may purchase and write put and call options on foreign currencies for
the purpose of protecting against declines in the U.S. dollar value of foreign
currency-denominated portfolio securities and against increases in the U.S.
dollar cost of such securities to be acquired. As in the case of other kinds of
options, however, the writing of an option on a foreign currency constitutes
only a partial hedge, up to the amount of the premium received, and the Fund
could be required to purchase or sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses. The purchase of an option on a foreign
currency may constitute an effective hedge against fluctuations in exchange
rates although, in the event of rate movements adverse to 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 is 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.

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

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

8
<PAGE>

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

The Fund's transactions in forward contracts, options on foreign currencies and
currency futures contracts will be subject to special tax rules under the
Internal Revenue Code that, among other things, may affect the character of any
gains or losses of the Fund as ordinary or capital and the timing and amount of
any income or loss to the Fund. This in turn could affect the character, timing
and amount of distributions by the Fund to shareholders. The Fund may be limited
in its foreign currency transactions by tax considerations. Certain foreign
currency exchange contracts in which the Fund may invest are treated as "Section
1256 contracts" under the Internal Revenue Code. In general, the Internal
Revenue Code treats gains or losses relating to Section 1256 contracts as 60%
long-term and 40% short-term capital gains or losses. However, foreign currency
gains or losses arising from Section 1256 contracts that are forward contracts
generally are treated as ordinary income of loss. In addition, Section 1256
contracts held by the Fund at the end of each taxable year are
"marked-to-market" and unrealized gains or losses are treated as though they
were realized. These contracts also may be marked-to-market for purposes of
determining the excise tax applicable to investment company distributions and
for other purposes under rules prescribed pursuant to the Internal Revenue Code.
An election can by made by a Fund to exempt those transactions from this
marked-to-market treatment.

Certain forward contracts the Fund enters into may result in "straddles" for
federal income tax purposes. The straddle rules may affect the character and
timing of gains (or losses) recognized by a Fund on straddle positions.
Generally, a loss sustained on the disposition of a position making up a
straddle is allowed only to the extent that the loss exceeds any unrecognized
gains in the offsetting positions and making up the straddle. A disallowed loss
is generally allowed at the point where there is no unrecognized gain in the
offsetting positions making up the straddle, or the offsetting position is
disposed of.

Currency gains and losses are offset against market gains and losses on each
trade before determining a net "Section 988" gain or loss under the Internal
Revenue Code for that trade, which may increase or decrease the amount of a
Fund's investment income available for distribution to its shareholders.

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

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

9
<PAGE>

BORROWING. The Fund may borrow money 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." Borrowing may be useful in a number of situations,
such as to meet unanticipated redemptions without selling portfolio securities
at disadvantageous prices. However, borrowing money to meet redemptions or other
purposes would have the effect of temporarily leveraging a Fund's assets and
potentially exposing the Fund to leveraged losses.

LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities to
certain types of eligible borrowers approved by the Board of Directors. The Fund
may engage in securities lending to earn additional income or to raise cash for
liquidity purposes. The Fund must receive collateral for a loan. Under current
applicable regulatory requirements (which are subject to change), on each
business day the loan collateral must be at least equal to the value of the
loaned securities. The collateral must consist of cash, bank letters of credit,
securities of the U.S. government or its agencies or instrumentalities, or other
cash equivalents in which a Fund is permitted to invest.

Lending activities are strictly limited as described in the section entitled
"Investment Restrictions". Lending money or securities involves the risk that a
Fund may suffer a loss if a borrower does not repay a loan when due. To manage
this risk the Fund deal only with counter-parties they believe to be
creditworthy and require that the counter-party deposit collateral with the
Fund.

When they loan securities, the Fund still own the securities, receive amounts
equal to the dividends or interest on loaned securities, and are subject to
gains or losses on those securities. The Fund also receive one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral, and/or (c)
interest on any short-term debt instruments purchased with such loan collateral.
Either type of interest may be shared with the borrower. The Fund may also pay
reasonable finder's, custodian and administrative fees in connection with these
loans. The terms of the Fund's loans must meet applicable tests under the
Internal Revenue Code and must permit the Fund to reacquire loaned securities on
five days' notice or in time to vote on any important matter.

CALL OPTIONS. For income purposes, the Fund may write covered call options on
its portfolio securities and purchase call options in closing transactions. The
Fund may suffer an opportunity loss if the value of the underlying security
should rise above the strike price of the call option before the option expires.

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

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,

<PAGE>

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.

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 1940 Act. 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.

PORTFOLIO TRANSACTONS

The Sub-Adviser is responsible for the placement of portfolio transactions,
subject to the supervision of the Adviser and 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 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 its 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.

<PAGE>

The Fund paid the following brokerage commissions:
<TABLE>
<CAPTION>

Fiscal year ended September 30,

2000 1999 1998
---- ---- -----
<S> <C> <C> <C>
Davis International Total Return Fund
brokerage commissions paid $xx $284,731 $168,045
Amount paid to brokers providing research xx% 56% 68%
Brokerage commissions paid
to Shelby Cullom Davis & Co.: (1) $xx $ 1,080 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,
2000, commissions received represented 0.xx% of total commissions paid, and
0.xx% of the aggregate dollar amount of transactions involving the payment of
commissions by the Davis International Total Return Fund.

Portfolio Turnover 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 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, 2000 the Fund's turnover was xx%. Turnover was unusually
high because the Fund's investment portfolio was restructured after the
Sub-Adviser assumed responsibility for day to day management of the investment
portfolio. The Fund anticipates that, during normal market conditions, its
annual portfolio turnover rate will be less than 100%.

Investments in Certain Broker-Dealers As of September 30, 2000 the Fund owned
the following securities issued by the any of the ten broker-dealers with whom
it transacted the most business during the fiscal year: Donaldson, Lufkin &
Jenrette Securities Corp.: $xx, Morgan Stanley Dean Witter & Co: $ xx, and State
Street Bank & Trust Company: $xx.

INVESTMENT RESTRICTIONS

The Fund operates in accordance with the investment objectives, policies and
restrictions described in its prospectuses and this Statement of Additional
Information.

The Fund has adopted the fundamental investment policies set forth below, which
may not be changed without a shareholder vote. Where necessary, an explanation
beneath a fundamental policy describes the Fund's practices with respect to that
policy, as allowed by current law. If the law governing a policy changes, the
Fund's practices may change accordingly without a shareholder vote.

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.

Except for the fundamental investment policies regarding illiquid securities and
borrowing, all percentage restrictions apply as of the time of an investment
without regard to any later fluctuations in the value of portfolio securities or
other assets. All references to the assets of the Fund are in terms of current
market value.

(1) DIVERSIFICATION. The Fund may not make any investment that is inconsistent
with its classification as a diversified investment company under the 1940 Act.

Further Explanation of Diversification Policy. To remain classified as a
diversified investment company under the 1940 Act, the Fund must conform with
the following: With respect to 75% of its total assets, a diversified investment
company may not invest more than 5% of its total assets, determined at market or
other fair value at the

<PAGE>

time of purchase, in the securities of any one issuer, or invest in more than
10% of the outstanding voting securities of any one issuer, determined at the
time of purchase. These limitations do not apply to investments in securities
issued or guaranteed by the United States ("U.S.") government or its agencies or
instrumentalities.

(2) CONCENTRATION. The Fund may not concentrate its investments in the
securities of issuers primarily engaged in any particular industry.

Further Explanation of Concentration Policy. The Fund may not invest 25% or more
of its total assets, taken at market value, in the securities of issuers
primarily engaged in any particular industry (other than securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities). The
Fund generally uses BLP Equity Economic Sectors ("BLP Code") as published by
Bloomberg L.P. to determine industry classification. The Adviser may re-classify
a company if it believes that the BLP Code on a specific company does not
accurately describe the company.

(3) ISSUING SENIOR SECURITIES. The Fund may not issue senior securities, except
as permitted under applicable law, including the 1940 Act and published SEC
staff positions.

Further Explanation of Issuing Senior Securities. The Fund may not issue senior
securities nor sell short more than 5% of its total assets, except as provided
by the 1940 Act and any rules, regulations or orders issued thereunder. This
limitation does not apply to selling short against the box. The 1940 Act defines
a "Senior Security" as any bond, debenture, note or similar obligation
constituting a security and evidencing indebtedness.

(4) BORROWING. The Fund may not borrow money, except to the extent permitted by
applicable law, including the 1940 Act and published SEC staff positions.

Further Explanation of Borrowing Policy. The Fund may borrow from banks and
enter into reverse repurchase agreements in an amount up to 33 1/3% of its total
assets, taken at market value. The Fund may also borrow up to an additional 5%
of its total assets from banks or others. The Fund may borrow only as a
temporary measure for extraordinary or emergency purposes such as the redemption
of Fund shares. The Fund may purchase additional securities so long as
borrowings do not exceed 5% of its total assets. The Fund may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
of portfolio securities. In the event that market fluctuations cause borrowing
to exceed the limits stated above, the Adviser would act to remedy the situation
as promptly as possible (normally within 3 business days), although it is not
required to dispose of portfolio holdings immediately if the Fund would suffer
losses as a result.

(5) UNDERWRITING. The Fund may not underwrite securities of other issuers except
to the extent permitted by applicable law, including the 1940 Act and published
SEC staff positions.

Further Explanation of Underwriting Policy. The Fund may not underwrite
securities of other issuers, except insofar as the Fund may be deemed to be an
underwriter in connection with the disposition of its portfolio securities.

(6) INVESTMENTS IN COMMODITIES AND REAL ESTATE. The Fund may not purchase or
sell commodities or real estate, except to the extent permitted by applicable
law, including the 1940 Act and published SEC staff positions.

Further Explanation of Policy Restricting Investments in Commodities and Real
Estate. The Fund may purchase or sell financial futures contracts, options on
financial futures contracts, currency contracts, and options on currency
contracts as described in its prospectus and Statement of Additional
Information. The Fund may not purchase or sell real estate, except that the Fund
may invest in securities that are directly or indirectly secured by real estate,
or securities issued by issuers that invest in real estate.

(7) MAKING LOANS. The Fund may not make loans to other persons, except as
allowed by applicable law, including the 1940 Act and published SEC staff
positions.

Further Explanation of Lending Policy. The acquisition of investment securities
or other investment instruments is not deemed to be the making of a loan.

13
<PAGE>

To generate income and offset expenses, the Fund may lend portfolio securities
to broker-dealers and other financial institutions which the Adviser believes to
be creditworthy in an amount up to 33 1/3% of its total assets, taken at market
value. While securities are on loan, the borrower will pay the Fund any income
accruing on the security. The Fund may invest any collateral it receives in
additional portfolio securities, such as U.S. Treasury notes, certificates of
deposit, other high-grade, short-term obligations or interest-bearing cash
equivalents. The Fund is still subject to gains or losses due to changes in the
market value of securities which it has lent.

When the Fund lends its securities, it will require the borrower to give the
Fund collateral in cash or government securities. The Fund will require
collateral in an amount equal to at least 100% of the current market value of
the securities lent, including accrued interest. The Fund has the right to call
a loan and obtain the securities lent any time on notice of not more than five
business days. The Fund may pay reasonable fees in connection with such loans.

NON-FUNDAMENTAL RESTRICTIONS

In addition to the foregoing restrictions, the Fund has adopted the following
non-fundamental policies which may be changed without shareholder approval:

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

High-Yield, High Risk Securities. Davis New York Venture Fund will not purchase
securities rated BB or Ba or lower if the securities are in default at the time
of purchase or if such purchase would then cause 5% or more of the Fund's net
assets to be invested in such lower-rated securities. Davis Growth & Income Fund
will not purchase securities rated BB or Ba or lower if the securities are in
default at the time of purchase or if such purchase would then cause more than
35% of the Fund's net assets to be invested in such lower-rated securities.

Options The Fund will not purchase an option if the purchase would cause the
total premiums (at market) of all options then owned to exceed 5% of the Fund's
total assets. The Fund will not sell covered calls if the transaction would
cause the total premiums (at market) of all covered calls then written to exceed
25% of the Fund's total assets.

Futures Contracts. The Fund will not engage in a futures transaction if the
transaction would cause the nominal value of futures contracts then purchased or
sold to exceed 25% of the Fund's total assets.

Borrowing. Pursuant to the fundamental policy stated above, the Fund is allowed
to borrow in an amount up to 33 1/3% of its total assets, taken at market value.
The board of directors will be notified in the event borrowings exceed 10% of
the Fund's total assets.

Short Selling. The Fund will not sell any security short if it would cause more
than 5% of its total assets, taken at market value, to be sold short.

Section II: Key Persons

ORGANIZATION OF THE FUND

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

<PAGE>

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 Fund can
elect all of the directors of the Fund. Due to the differing expenses of the
classes, dividends of Class B and Class C shares are likely to be lower than for
Class A shares, and are likely to be higher for Class Y shares than for any
other class of shares. For more information about Class Y shares, call the
Distributor at 1-800-279-0279 to obtain the Class Y prospectus.

Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
under the provisions of the 1940 Act or applicable state law or otherwise to the
shareholders of the outstanding voting securities of an investment company, such
as the Fund, 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 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 Fund's By-laws, the Fund does not hold
regular annual shareholder meetings. Shareholder meetings are held when they are
required under the 1940 Act 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 Board of Directors supervises the business and management of the Fund. The
Board approves all significant agreements between the Fund, and those companies
that furnish services to the Fund. The names and addresses of the Directors and
officers are set forth below, together with their principal business
affiliations and occupations for the last five years. As indicated below,
certain Directors and officers hold similar positions with the following Fund
that are managed by the Adviser: Davis New York Venture Fund, Inc., Davis
Series, Inc., Davis International Series, Inc., and Davis Variable Account Fund,
Inc. (collectively the "Davis Funds"). As indicated below, certain Directors and
officers may also hold similar positions with the following funds that are
managed by the Adviser: Selected American Shares, Inc., Selected Special Shares,
Inc., and Selected Capital Preservation Trust (collectively the "Selected
Funds").

DIRECTORS

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

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

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

ANDREW A. DAVIS (6/25/63),* 124 East Marcy Street, Santa Fe, NM 87501. Director
of each of the Davis Funds and the Selected Funds; President or Vice President
of each of the Davis Funds and Selected Funds; President, Davis Selected
Advisers, L.P. and also serves as an executive officer in certain companies
affiliated with the Adviser.

<PAGE>

CHRISTOPHER C. DAVIS (7/13/65),* 609 Fifth Avenue, New York, NY 10017. Director
of each of the Davis Funds and the Selected Funds; Chief Executive Officer,
President, or Vice President of each of the Davis Funds and Selected Funds;
Chairman and Chief Executive Officer, Davis Selected Advisers, L.P. and also
serves as an executive officer in certain companies affiliated with the Adviser;
Chairman and Director, Shelby Cullom Davis Financial Consultants, Inc.; Employee
of Shelby Cullom Davis & Co., a registered broker/dealer; Director, Kings Bay
Ltd., an offshore investment management company.

JERRY D. GEIST (5/23/34), 931 San Pedro Drive S.E., Albuquerque, NM 87108.
Director of each of the Davis Funds; Chairman, Santa Fe Center Enterprises;
Chairman, Energy & Technology Company, Ltd.; Director, CH2M-Hill, Inc.; Member,
Investment Committee for Microgeneration Technology Fund, UTECH Funds; Retired
Chairman and President, Public Service Company of New Mexico.

D. JAMES GUZY (3/7/36), P.O. Box 128, Glenbrook, NV 89413. Director of each of
the Davis Funds; Chairman, PLX Technology, Inc. (a manufacturer of
semi-conductor circuits); Director, Intel Corp. (a manufacturer of
semi-conductor circuits), Cirrus Logic Corp. (a manufacturer of semi-conductor
circuits), Alliance Technology Fund (a mutual fund) and Micro Component
Technology, Inc.; Novellus Systems, Inc. (a manufacturer of semi-conductor
equipment).

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

LAURENCE W. LEVINE (4/9/31), Walsh & Levine, 40 Wall Street, 24th Floor, NY
10005. Director of each of the Davis Funds; Partner, Bigham, Englar, Jones and
Houston (attorneys); United States Counsel to Aerolineas Argentina; Director,
various private companies.

THEODORE B. SMITH, JR. (12/23/32), John Hassall, Inc., Westbury, Long Island NY
11590. Director of each of the Davis Funds; 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

CHRISTIAN R. SONNE (5/6/36), 207 West Lake Road, Tuxedo Park, NY 10987. Director
of each of the Davis Funds; General Partner of Tuxedo Park Associates (a land
holding and development firm); President and Chief Executive Officer of Mulford
Securities Corporation (a private investment fund) until 1990; formerly Vice
President of Goldman Sachs & Co. (investment banker).

MARSHA WILLIAMS (3/28/51), 725 Landwehr Road, Northbrook, IL 60062. Director of
each of the Davis Funds and the Selected Funds; Chief Administrative Officer of
Crate & Barrel; Director, Modine Manufacturing, Inc.; Director, Chicago Bridge &
Iron Company, M.V.; former Vice President and Treasurer, Amoco Corporation.

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

OFFICERS

KENNETH C. EICH (8/14/53), 2949 East Elvira Road, Suite 101Tucson, Arizona
85706. Vice President of each of the Davis Funds and Selected Funds; Chief
Operating Officer, Davis Selected Advisers, L.P. and also serves as an executive
officer in certain companies affiliated with the Adviser; 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 each of the Davis Funds and
Selected Funds; Vice President Davis Selected Advisers, L.P. and also serves as
an executive officer in certain companies affiliated with the Adviser.

THOMAS D. TAYS (3/7/57), 2949 East Elvira Road, Suite 101Tucson, Arizona 85706.
Vice President and Secretary of each of the Davis Funds and Selected Funds; Vice
President, General Counsel and Secretary, Davis Selected Advisers, L.P. and also
serves as an executive officer in certain companies affiliated with the Adviser.

ARTHUR DON (9/24/53), 111 East Wacker Drive, Suite 2800, Chicago IL 60601.
Assistant Secretary of each of the Davis Funds and Selected Funds; Member,
D'Ancona & Pflaum LLC, the Davis Fund's counsel.

<PAGE>

The Davis Funds do not pay salaries to any of their officers. The Adviser
performs certain services on behalf of the Davis Funds and is reimbursed by them
for the costs of providing these services.

DIRECTORS' COMPENSATION SCHEDULE

During the fiscal year ended September 30 , 2000, the compensation paid to the
Directors who are not considered to be interested persons of the Fund was as
follows:

AGGREGATE FUND TOTAL
NAME COMPENSATION COMPLEX COMPENSATION*
---- -------------- ---------------------
Wesley E. Bass $0 $xx
Marc P. Blum $0 $xx
Jerry D. Geist $0 $xx
D. James Guzy $0 $xx
G. Bernard Hamilton $xx $xx
Laurence W. Levine $0 $xx
Theodore B. Smith, Jr. $xx $xx
Christian R. Sonne $0 $xx
Marsha Williams $0 $xx

During the fiscal year ended September 30, 2000 the following persons were
directors who were not considered to be interested persons of the Fund:

AGGREGATE FUND TOTAL COMPLEX
NAME COMPENSATION COMPENSATION*
---- -------------- -------------
Keith R. Kroeger xx xx
The Very Reverend James R. Leo xx xx
Richard M. Murray xx xx

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

CERTAIN SHAREHOLDERS OF THE FUND

As of December 31, 2000 , officers and directors owned the following percentages
of each Class of shares issued by the Fund:

Class A Class B Class C Class Y
------- ------- ------- -------
Davis International Total Return Fund xx% * * *

* 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, 2000 the name and holdings of
each person known by the Fund to be a record owner of more than 5% of the
outstanding shares of any Class. Various entities controlled by the Davis family
control over 50% of the outstanding vote and may be considered a "controlling
person" under the 1940 Act.

PERCENT OF CLASS
NAME AND ADDRESS OUTSTANDING
---------------- ----------------

DAVIS INTERNATIONAL TOTAL RETURN FUND
Class A shares
--------------
Shelby Cullom Davis & Co. xx.xx%

<PAGE>

Investment #3
609 Fifth Avenue, 11th Floor
New York, NY 10017-1021

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

SAC & Co. xx.xx%
80452131 12E 49th Street, 41st Floor
New York, NY 10017

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

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

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

Laura A. H. Schechter xx.xx%
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 101, Tucson, Arizona 85706, serves as investment adviser
for Davis New York Venture Fund, Inc., Davis Series, Inc., Davis International
Series, Inc., Davis Variable Account Fund, Inc. (collectively with the Funds,
the "Davis Funds"), Selected American Shares, Inc., Selected Special Shares,
Inc. and Selected Capital Preservation Trust (collectively the "Selected
Funds"). The Adviser also provides advisory or sub-advisory services to other
parties including other registered investment companies, private accounts,
off-shore funds, a hedge fund and managed money/wrap accounts. Davis
Investments, LLC, is the Adviser's sole general partner. Christopher C. Davis is
Chief Executive Officer of the Adviser and as the sole member of the general
partner controls the Advise. Davis Distributors, LLC ("the Distributor"), a
subsidiary of the Adviser, serves as the distributor or principal underwriter of
the Davis Fund. Davis Selected Advisers - NY, Inc. ("Sub-Adviser"), a wholly
owned subsidiary of the Adviser, performs investment management, research and
other services for the Davis Funds on behalf of the Adviser under a sub-advisory
Agreement with the Adviser.

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 registered as an investment adviser under the Investment
Advisers Act of 1940. The Sub-Adviser wholly owned subsidiary of Fiduciary Trust
Company International ("FTCI"), which in turn is, or is expected to become, a
wholly owned subsidiary of Franklin Resources, Inc. (operating as Franklin
Templeton Investments) of San Mateo, California, a publically traded company.
Both the Sub-Adviser and FTCI maintain their principal offices at Two World
Trade

<PAGE>

Center, New York, New York, 10048. As of December 31, 2000, Franklin Resources,
Inc. served as the investment adviser to a number of institutional and private
accounts with aggregate assets of approximately $xx 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, 2000,
1999, and 1998 were $xx, $350,101, and $401,648, 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 1940 Act, 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:

Fiscal year ended September 30,
2000 1999 1998
---- ---- ----
Davis International Total Return Fund,
--------------------------------------
Accounting and administrative services $xx $ 8,004 $ 8,004
Qualifying shares for sale with state agencies $xx $12,000 $12,000
Shareholder services $xx $ 5,190 $ 7,890

CODE OF ETHICS. The Davis Funds, Adviser, DSA-NY, and the Sub-Adviser have each
adopted Codes of Ethics which regulates the personal securities transactions of
the Adviser's investment personnel, other employees, and affiliates with access
to information regarding securities transactions of the Fund. Such employees may
invest in securities, including securities which may be purchased or held by the
Fund. A copy of the Code of Ethics is on public file with, and available from,
the Securities and Exchange Commission.

DISTRIBUTION OF FUND SHARES

<PAGE>

DISTRIBUTION PLANS. Each of the Davis Funds have adopted Distribution Plans
under which Class A, Class B and Class C shares reimburse the Distributor for
some of its distribution expenses. The Distribution Plans were approved by the
Board of Directors of each Davis Fund in accordance with Rule 12b-1 under the
1940 Act. 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 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 Davis Funds. Normally, such fees
are at the annual rate of 0.25% of the average net asset value of the accounts
serviced and maintained on the books of each Davis Fund. Payments under the
Class A Distribution Plan may also be used to reimburse the Distributor for
other distribution costs (excluding overhead) not covered in any year by any
portion of the sales charges the Distributor retains.

CLASS B SHARES. Payments under the Class B Distribution Plan are limited to an
annual rate of 1% of the average daily net asset value of the Class B shares. In
accordance with current applicable rules, such payments are also limited to
6.25% of gross sales of Class B shares plus interest at 1% over the prime rate
on any unpaid amounts. The Distributor pays broker/dealers up to 4% in
commissions on new sales of Class B shares. Up to an annual rate of 0.75% of the
average daily net assets is used to reimburse the Distributor for these
commission payments. Most or all of such commissions are reallowed to
salespersons and to firms responsible for such sales. No commissions are paid by
the Davis Funds with respect to sales by the Distributor to officers, directors,
and full-time employees of the Davis Funds, the Distributor, the Adviser, the
Adviser's general partner, or the Sub-Adviser. 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, any Davis 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 each Davis 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. Davis
Funds are not obligated to make such payments; the amount (if any), timing and
condition of any such payments are solely within the discretion of the Directors
who are not interested persons of the Distributor or the Davis Funds, and have
no direct or indirect financial interest in the Class B or C Distribution Plans
(the "Independent Directors"). If any Davis 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 , 2000 the cumulative totals of
these carryover payments on Class B shares were $xx, representing xx% of Class
net assets.

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

<PAGE>

provides that as long as the Distribution Plans are in effect, the Davis Funds
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 with respect to the Davis Funds and/or their
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 Davis Funds. In some instances, such cash compensation or
other incentives may be offered only to certain dealers or agents who employ
registered representatives who have sold or may sell significant amounts of
shares of the Davis Funds during a specified period of time.

FUND SUPERMARKETS. The Davis 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 Davis Funds pay the supermarket sponsor
a negotiated fee for distributing the 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 shares) is paid with fees authorized under the
Distribution Plans.

A portion of the supermarket sponsor's fee (that portion related to shareholder
services such as new account set-up, shareholder accounting, shareholder
inquiries, transaction processing, and shareholder confirmations and reporting)
is paid as a shareholder servicing fee of each Davis Fund. Each Davis Fund 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 each Davis Fund. The amount of shareholder servicing fees which a Davis
Fund 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 Fund 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 servicing fees, then the Adviser pays the remainder out of
its profits.

THE DISTRIBUTOR. Davis Distributors, LLC ("the Distributor"), 2949 East Elvira
Road, Suite 101, Tucson, Arizona 85706, is a wholly owned subsidiary of the
Adviser, and pursuant to a Distributing Agreement acts as principal underwriter
of the Davis Fund's 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 Davis Fund's shares to the public, including reports to
shareholders to the extent they are used as sales literature. The Distributor
also pays for the preparation and printing of prospectuses other than those
forwarded to existing shareholders. The continuance and assignment provisions of
the Distributing Agreement are the same as those of the Advisory Agreement.

The Distributor received the following amounts in total sales charges (which the
Fund does not pay) on the sale of Class A shares:

Fiscal year ended September 30:
2000 1999 1998
---- ---- ----
Davis International Total Return Fund: $xx $xx $xx
Amount reallowed to dealers: $xx $xx $xx

The Distributor received compensation on redemptions and repurchases of shares
in the following amounts:

<PAGE>

Fiscal year ended September 30, 2000:

Davis International Total Return Fund

Class A shares $xx
Class B shares $xx
Class C shares $xx

The Distributor received the following amounts as reimbursements under the
Distribution plans:

FISCAL YEAR ENDED
SEPTEMBER 30:
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Davis International Total Return Fund
Class A shares $xx $xx $xx
Class B shares $xx $xx $xx
Class C shares $xx $xx $xx

</TABLE>

<PAGE>

OTHER IMPORTANT SERVICE PROVIDERS

CUSTODIAN. State Street Bank and Trust Company ("State Street" or "Custodian"),
66 Brooks Drive, Braintree, MA 02184, serves as custodian of each Davis Fund's
assets. The Custodian maintains all of the instruments representing the Davis
Fund' 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 Davis Fund's assets in payment of their 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 Davis 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 Davis Funds and also serves as counsel
for those members of the Board of Directors who are not affiliated with the
Adviser.

<PAGE>

SECTION III: CLASSES OF SHARES, PURCHASES, EXCHANGES AND REDEMPTIONS

SELECTING THE APPROPRIATE CLASS OF SHARES

Each of the Davis Funds offer 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, or
sales charge, 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 Davis Funds 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 Davis Funds will not accept any purchase of Class C shares when Class A
shares may be purchased at net asset value.

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

<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:
<TABLE>
<CAPTION>

Purchase Amount Commission
--------------- ----------
<S> <C> <C>

First $3,000,000................................ .75%
Next $2,000,000................................ .50%
Over $5,000,000................................ .25%
</TABLE>

Where a commission is paid for purchases of $1 million or more, such payment
will be made from 12b-1 distribution fees received from the Davis Funds 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 Davis Fund's Class A shares, as
described below. These reductions are based upon the fact that there

<PAGE>

is less sales effort and expense involved with 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 Bank and Trust if the investment is mailed to State Street Bank
and Trust) when the purchase is made. Enough information must be given to verify
that you are entitled to such right.

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

(2) STATEMENTS OF INTENTION. Another way to reduce the sales charge is by
signing a Statement of Intention ("Statement"). See Appendix B: "Terms and
Conditions of a Statement of Intention." If you enter into a Statement of
Intention you (or any "single purchaser") may state that you intend to
invest at least $100,000 in the Fund's Class A shares over a 13-month
period. The amount you say you intend to invest may include Class A shares
which you already own (except purchases into Davis Government Money Market
Fund) 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's 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 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), 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's Class A shares as well as
Class A shares of any of the other Davis Funds at the same time, these
purchases will be considered a single purchase for the purpose of
calculating the sales charge. For example, a single purchaser can invest at
the same time $100,000 in Davis New York Venture Fund's Class A shares and
$150,000 in the Class A shares of Davis Financial Fund and pay a sales
charge of 2-1/2%, not 3-1/2%.

25
<PAGE>

Similarly, a Statement of Intention for the Fund's Class A shares and for
the Class A shares of the other Davis Funds may be aggregated. In this
connection, the Fund'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 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.

In all of 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 Bank and Trust, if the
investment is mailed to State Street Bank and Trust) 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) PURCHASES FOR EMPLOYEE BENEFIT PLANS. Trustees 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.

(6) SALES AT NET ASSET VALUE. There are situations where the sales charge will
not apply to the purchase of Class A shares. A sales charge is not imposed
on these transactions either because 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. However, if investors effect purchases in
Fund shares through a broker or agent, the broker or agent may charge a
fee. The sales charge will not apply to: (1) Class A shares purchased
through the automatic reinvestment of dividends and distributions; (2)
Class A shares purchased by directors, officers, and employees of any fund
for which the Adviser acts as investment adviser, or officers and employees
of the Adviser, Sub-Adviser, or Distributor, including former directors and
officers and any spouse, child, parent, grandparent, brother or sister
("immediate family members") of all of the foregoing, and any employee
benefit or payroll deduction plan established by or for such persons; (3)
Class A shares purchased by any registered representatives, principals, and
employees (and any immediate family member) of securities dealers having a
sales agreement with the Distributor; (4) initial purchases of Class A
shares totaling at least $250,000 but less than $5,000,000, made at any one
time by banks, trust companies, and other financial institutions on behalf
of one or more clients for which such institution acts in a fiduciary
capacity; (5) Class A shares purchased by any single account covering a
minimum of 250 eligible employees or participants (the Fund may, at its
discretion, waive this 250 participant minimum; for example, the 250
participant minimum may be waived for certain financial institutions
providing transfer agent and/or administrative services, or for 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, "rabbi trusts", or other
nonqualified plans; (6) Class A shares purchased by persons participating
in a "wrap account" or similar fee-based program sponsored and maintained
by a registered broker-dealer approved by the Fund's Distributor or by
investment advisors or financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting, or other fee for their services; and clients of such investment
advisors or financial planners who place trades for their own accounts, if
the accounts are linked to the master account of such investment advisor or
financial planner on the books and records of the broker or agent; (7)
Class A shares amounting to less than $5,000,000 purchased by any state,
county, city, department, authority or similar agency. and (8) Shareholders
making purchases in certain accounts offered by securities firms which have
entered into contracts with the Fund and which charge fees based upon
assets in the account. 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. 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

<PAGE>

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.

SPECIAL NOTE FOR WRAP PROGRAM INVESTORS

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

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

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

CLASS B SPECIAL DISTRIBUTION ARRANGEMENTS. Class B shares of the Davis Funds are
made available to Retirement Plan Participants such as 401K or 403B Plans at net
asset value 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 Davis Funds'
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.

<PAGE>

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

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

The Distributor will pay a commission to the firm responsible for the sale of
Class C shares. No other fees will be paid by the Distributor during the
one-year period following purchase. The Distributor will be reimbursed for the
commission paid from 12b-1 fees paid by the 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 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 Fund to liquidate a shareholder's account if the aggregate net
asset value of the shares held in such account falls below an established
minimum amount.

Shares in different Davis Funds may be exchanged at relative net asset value;
however, if any Davis Fund shares being exchanged are subject to a sales charge,
Statement of Intention, or other limitation, the limitation will continue to
apply to the shares received in the exchange. When an investor exchanges Class B
or Class C shares in a Davis Fund for shares in Davis Government Money Market
Fund, the holding period for any deferred sales charge does not continue during
the time that the investor owns Davis Government Money Market Fund shares. For
example, Class B shares are subject to a declining sales charge for six years.
Any period that an investor owns shares of Davis Government Money Market Fund
will be added to the six-year declining sales charge period. Class A shares sold
at net asset value subject to a deferred sales charge will continue to age while
invested in Davis Government Money Market Fund shares.

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

<PAGE>

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

HOW TO PURCHASE SHARES

You can purchase Class A, Class B, or Class C shares of any Davis 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 Davis Funds. One way is to fill out the Application Form
included in the Prospectus and mail it to State Street Bank and Trust Company
("State Street Bank and Trust") 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.

The third way to purchase shares is by wire. Shares may be purchased at any time
by wiring federal funds directly to State Street Bank and Trust. 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 amount, class of shares
and obtain an account number. A completed Application Form should be mailed to
State Street Bank and Trust 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 purchase form
which State Street Bank and Trust will provide with each confirmation statement.
If you do not have a purchase form, include a letter with your check stating the
name of the Fund, the class of shares you wish to buy and your account number.

CERTIFICATES. The Davis Funds do 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

<PAGE>

Withdrawal Plan. The Davis Funds do not issue certificates for Class Y shares.
Instead, shares purchased are automatically credited to an account maintained
for you on the books of the Davis Funds by State Street Bank and Trust. 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. If you are eligible and wish to receive certificates, please
submit a letter of instruction with your Application Form. Once your account has
been established, the shareholder(s) may request that certificates be sent to
the address of record by calling our customer service department.

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 Davis Funds
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 Davis Funds as their investment vehicle. State
Street Bank and Trust acts as custodian or trustee for certain retirement plans,
and charges the participant an annual maintenance fee of $10 per social security
number regardless of the number of plans established. The maintenance fee will
be redeemed automatically at year-end from your account, unless you elect to pay
the fee directly prior to that time.

AUTOMATIC INVESTMENT PROGRAM. You may arrange for automatic monthly investing
whereby State Street Bank and Trust 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's 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 program the account balance will meet the
minimum investment requirements within twelve months of the initial investment.
For banking 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 5th and the 28th. After each automatic investment, you will receive
a transaction confirmation from State Street Bank and Trust and the debit should
be reflected on your next bank statement. You may terminate the Automatic
Investment Program at any time. If you desire to utilize this program, you may
complete the appropriate section of the Application Form. Once you have
established your account, you may use the Account Service Form to establish this
program or submit a letter of instruction signed by the account owner(s). Class
Y shares are not eligible to participate in the Automatic Investment Program.

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 Davis Funds
prior to investment. Shares will be purchased at the chosen Davis 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
complete the appropriate section of the Application Form. Once you have
established your account, you may use the Account Service Form to establish this
program or submit a letter of instruction signed by the account owner(s). Class
Y shares are not eligible to participate in the Dividend Diversification
Program.

TELEPHONE PRIVILEGE. Unless you have provided in your application that the
telephone privilege is not to be available, the telephone privilege is
automatically available under certain circumstances for exchanging shares and
for redeeming shares. BY EXERCISING THE TELEPHONE PRIVILEGE TO SELL OR EXCHANGE
SHARES, YOU AGREE THAT THE DISTRIBUTOR SHALL NOT BE LIABLE FOR FOLLOWING
TELEPHONE INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE. Reasonable procedures
will be employed to confirm that such instructions are genuine and if not
employed, the Davis Funds 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.

<PAGE>

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, call our customer service department for details.
However, the Davis Funds are intended as long-term investments and are not
intended for short-term trades. Shares of a particular class of a Davis Fund may
be exchanged only for shares of the same class of another Davis Fund, some Class
A shareholders maybe eligible to purchase Class Y shares and exchange their
shares for Class Y shares of the same 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 (and $250 for retirement accounts) 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 Bank and Trust a written
unconditional request for the exchange and follow the instructions regarding
delivery of share certificates contained in the section on "Redemption of
Shares." An unconditional request does not specify an exchange date, price or
other condition for the execution of the exchange. A medallion signature
guarantee is not required for such an exchange. However, if shares are also
redeemed for cash in connection with the exchange transaction, a medallion
signature guarantee may be required. A medallion signature guarantee is a
written confirmation from an eligible guarantor institution, such as a
securities broker-dealer or a commercial bank, that the signature(s) on the
account is (are) valid. Unfortunately, no other form of signature verification
can be accepted. Your dealer may charge an additional fee for handling an
exercise of the exchange privilege.

An exchange involves both a redemption and a purchase, and normally both are
done on the same day. However, in certain instances such as where a large
redemption is involved, the investment of redemption proceeds into shares of
other Davis Funds may take up to seven days. For federal income tax purposes,
exchanges between Davis 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
Davis Funds reserve 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 and the same share class. Please see the discussion of procedures
with respect to telephone instructions in the section entitled "Telephone
Privilege," as such procedures are also applicable to exchanges.

AUTOMATIC EXCHANGE PROGRAM. The Davis Funds also offers an automatic monthly
exchange program. All accounts established or utilized under this program must
have the same registration and the same share class, 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 complete the appropriate section of the Application Form. Once you have

<PAGE>

established your account, you may use the Account Service Form or a letter of
instruction signed by the account owner(s) to establish this program.

REDEMPTION OF SHARES

GENERAL. You can redeem, or sell back to any Davis Fund, 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 Bank and Trust 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 sent to State Street Bank and Trust with a letter of instruction signed by
all account owner(s).

For the protection of all shareholders, the Davis Funds also require that
signatures appearing on a letter of instruction, stock power or redemption
request where the proceeds would be more than $100,000 mailed to the address of
record, must be medallion signature-guaranteed by an eligible guarantor
institution, such as a securities broker-dealer, or a commercial bank. In some
situations where corporations, trusts, or estates are involved, additional
documents such as a certified copy of the corporate resolution, 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 or does not
reimburse in the case of fraud. 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 $100,000 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.

Redemption proceeds are normally paid to you within seven days after State
Street Bank and Trust 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 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 a
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 Bank and Trust rather than having a dealer arrange for a
repurchase.

ELECTRONIC WIRE PRIVILEGE. You may be eligible to have your sale proceeds
electronically transferred to a commercial bank account. This is known as an
ELECTRONIC WIRE PRIVILEGE. There is a $5 charge by State Street Bank and Trust
for wire service, and receiving banks may also charge for this service. Payment
through Automated

<PAGE>

Clearing House will usually arrive at your bank two banking days after the sale.
Payment by wire is usually credited to your bank account on the next business
day after the sale.

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 $100,000;
The check can only be issued to the registered owner(s);
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 WITHDRAWAL PLAN. Under the Automatic Withdrawal Plan, you can instruct
State Street Bank and Trust to sell a set dollar or percentage amount each month
or each quarter. Your account must have a value of at least $10,000 to start a
plan.

When you participate in this plan, shares are sold so that you will receive
payment by one of three methods:

First, you may receive funds at the address of record provided that this address
has been unchanged for a period of not less than 30 days. These funds are sent
by check on or after the 25th day of the month.

Second, you may also choose to receive funds by Automated Clearing House (ACH)
to the banking institution of your choice. You may elect an ACH draft date
between the 5th and the 28th days of the month. You must complete the
appropriate section of the Application Form. Once your account has been
established, you must submit a letter of instruction with a medallion signature
guarantee.

Third, you may have funds sent by check to a third party at an address other
than the address of record. You must complete the appropriate section of the
Application Form. Once your account has been established, you must submit a
letter of instruction with a medallion signature guarantee to designate a third
party payee.

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 Withdrawal Plan at any time without charge or penalty. The Davis Funds
reserve the right to terminate or modify the Automatic Withdrawal Plan at any
time. Class Y shares are not eligible for the Automatic Withdrawal Plan.

INVOLUNTARY REDEMPTIONS. To relieve the Davis Funds of the cost of maintaining
uneconomical accounts, the any Davis Fund may effect the redemption of shares at
net asset value in any account if the account, due to shareholder redemptions,
has a value of less than $250. At least 60 days prior to such involuntary
redemption, the Davis Funds 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 Bank and Trust or the
Distributor a letter of instruction signed by the account

<PAGE>

owner(s), 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.

<PAGE>

SECTION IV: GENERAL INFORMATION

DETERMINING THE PRICE OF SHARES

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

The price per share for purchases or redemptions made directly through State
Street Bank and Trust is generally the value next computed after State Street
Bank and Trust 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 Bank and
Trust. The broker-dealer or financial institution is responsible for promptly
transmitting purchase orders or redemption requests to State Street Bank and
Trust 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 Bank
and Trust 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 Davis Funds do not price its shares or accept orders for purchases or
redemptions on days when the New York Stock Exchange is closed. Such days
currently include New Year's Day, Martin Luther King, Jr. Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.

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

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

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.

<PAGE>

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
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 Withdrawal Plan. The reinvestment
of dividends and distributions is made at net asset value (without any initial
or contingent deferred sales charge) on the payment date.

For the protection of the shareholder, upon receipt of the second dividend check
which has been returned to State Street Bank and Trust 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.

The Fund usually pays dividends and distributions, if any, once a year. However,
the Board of Directors reserves the right to suspend payments or to make
additional payments.

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 Davis Funds.

Each of the Davis Funds intend 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. Each Davis 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 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.

<PAGE>

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, each of the Davis Funds may advertise information regarding
their 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:

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, 2000 xx% xx%
Period from February 1, 1995 through September 30, 2000 (life of class) xx% xx%

Class B Shares
One year ended September 30, 2000 xx% xx%
Period from February 1, 1995 through September 30, 2000 (life of class) xx% xx%

Class C Shares
One year ended September 30, 1999 xx% xx%
Period from August 19, 1997 through September 30, 1999 (life of class) xx% xx%
</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.

<PAGE>

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:

<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
</TABLE>

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.

PERFORMANCE RANKINGS

Lipper Rankings. From time to time the Fund may publish the ranking of the
performance of its classes of shares by Lipper Analytical Services, Inc. Lipper
is a widely-recognized independent mutual fund monitoring service. Lipper
monitors the performance of regulated investment companies, including the Fund,
and ranks their performance for various periods in categories based on
investment style. The Lipper performance rankings are based on total returns
that include the reinvestment of capital gain distributions and income dividends
but do not take sales charges or taxes into consideration. Lipper also publishes
"peer-group" indices of the performance of all mutual funds in a category that
it monitors and averages of the performance of the funds in particular
categories.

Morningstar Ratings and Rankings. From time to time the Fund may publish the
ranking and/or star rating of the performance of its classes of shares by
Morningstar, Inc., an independent mutual fund monitoring service. Morningstar
rates and ranks mutual funds in broad investment categories: domestic stock
funds, international stock funds, taxable bond funds and municipal bond funds.

Morningstar proprietary star ratings reflect historical risk-adjusted total
investment return. Investment return measures a fund's (or class's) one-,three-,
five- and ten-year average annual total returns (depending on the inception of
the fund or class) in excess of the 90-day U.S. Treasury bill returns after
considering the fund's sales charges and expenses. Risk is measured by a fund's
(or class's) performance below the 90-day U.S. Treasury bill returns. Risk and
investment return are combined to produce star ratings reflecting performance
relative to the other funds in the fund's category. Five stars is the "highest"
rating (top 10% of the funds in a category), four stars is "above average" (next
25%), three stars is "average" (next 35%), two stars is "below average" (next
22.5%) and one star is "lowest" (bottom 10%). The current star rating is the
fund's (or class's) overall rating, which is the fund's 3-year rating, or its
combined 3- and 5-year rating (weighted 60% 40% respectively), or its combined
3-, 5-, and 10-year rating (weighted 40% 30% 30% respectively), depending on the
inception date of the fund (or class). Ratings are subject to change monthly.

The Fund may also compare its total return ranking to that of other funds in its
Morningstar category, in addition to its star ratings. Those total return
rankings are percentages from one percent to one hundred percent and are not
risk adjusted. For example, if a fund is in the 94th percentile, that means that
94% of the funds in the same category performed better than it did.

Performance Rankings and Comparisons by Other Entities and Publications. From
time to time the Fund may include in its advertisements and sales literature
performance information about the Fund cited in newspapers and other periodicals
such as The New York Times, The Wall Street Journal, Barron's, or similar
publications. That information may include performance quotations from other
sources, including Lipper and Morningstar. The performance of the Fund's classes
of shares may be compared in publications to the performance of various market

<PAGE>

indices or other investments, and averages, performance rankings or other
benchmarks prepared by recognized mutual fund statistical services.

Investors may also wish to compare the returns on each Davis Fund's share
classes to the return on fixed-income investments available from banks and
thrift institutions. Those include certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed or
variable time deposits, and various other instruments such as Treasury bills.
However, none of the Davis Funds' returns and share price are guaranteed or
insured by the FDIC or any other agency and will fluctuate daily, while bank
depository obligations may be insured by the FDIC and may provide fixed rates of
return. Repayment of principal and payment of interest on Treasury securities is
backed by the full faith and credit of the U.S. government.

From time to time, the Fund may publish rankings or ratings of the Adviser or
Transfer Agent, and of the investor services provided by them to shareholders of
the Davis Funds, other than performance rankings of the Davis Funds themselves.
Those ratings or rankings of shareholder and investor services by third parties
may include comparisons of their services to those provided by other mutual fund
families selected by the rating or ranking services. They may be based upon the
opinions of the rating or ranking service itself, using its research or
judgment, or based upon surveys of investors, brokers, shareholders or others.

OTHER PERFORMANCE 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
Fund 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 Davis Funds may publish various
statistics describing its investment portfolio such as the Fund's average Price
to Book and Price to Earnings ratios, beta, alpha, R-squared, standard
deviation, etc.

The Fund's Annual Report and Semi-Annual Report contain 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.

<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.

<PAGE>

FORM N-1A

DAVIS INTERNATIONAL SERIES, INC.

POST-EFFECTIVE AMENDMENT NO. 14 UNDER THE SECURITIES ACT OF 1933

REGISTRATION STATEMENT NO. 33-86578

AND

AMENDMENT NO. 15 UNDER THE INVESTMENT COMPANY ACT OF 1940

REGISTRATION NO. 811-8870

PART C

OTHER INFORMATION
<TABLE>
<CAPTION>

Item 23. Exhibits:
<S> <C>
(a)(1) Articles of Incorporation. Articles of Incorporation incorporated by
reference to Exhibit 1 of Registrant's registration statement
33-86578, filed on Edgar February 1, 1996.

(a)(2) Articles Supplementary to Articles of Incorporation, redesignating
and classifying certain shares of stock, incorporated by reference to
Exhibit 1(b) of Registrant's registration statement 33-86578, filed
on Edgar August 18, 1997.

(a)(3) Articles Supplementary to Articles of Incorporation, designating
Davis International Growth Fund, incorporated by reference to Exhibit
23(a)(3) of Registrant's registration statement 33-86578, filed on
Edgar October 16, 1998.

(a)(4)* Articles of Amendment, renaming corporation Davis International
Series, Inc., and creating Davis International Total Return Fund,
dated September 7, 1995.

(b) By-laws. Amended and Restated Bylaws (as of 10/06/98), incorporated
by reference to Exhibit 23(b) of Registrant's registration statement
33-86578, filed on Edgar January 29, 1999.

(d)(1) Investment Advisory Contracts. Incorporated by reference to Exhibit
5(a) of Registrant's registration statement 33-86578, filed on Edgar
February 1, 1996.

1
<PAGE>

(d)(2) Sub-Advisory Agreement with Davis Selected Advisers-NY, Inc.,
incorporated by reference to Exhibit 5(c) of Registrant's
registration statement 33-86578, filed on Edgar January 31, 1997.

(d)(3) Sub-Advisory Agreement with Atlantic Advisers, incorporated by
reference to Exhibit 5(b) of Registrant's registration statement
33-86578, filed on Edgar February 1, 1996.

(d)(4) Sub-Advisory Agreement with Fiduciary International, Inc.,
incorporated by reference to Exhibit 23(d)(3) of Registrant's
registration statement 33-86578, filed on Edgar February 28, 2000.

(e)(1) Underwriting Contracts. Distributing Agreement, incorporated by
reference to Exhibit 6 of Registrant's registration statement
33-86578, filed on Edgar February 1, 1996.

(e)(2) Transfer and Assumption Agreement to the Underwriting Contract,
incorporated by reference to Exhibit 6(b) of Registrant's
registration statement 33-86578, filed on Edgar August 18, 1997.

(e)(3)* Form of Dealer Agreement between principal underwriter and
distributing broker-dealers.

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

(g)(1) Custodian Agreement. Custodian Contract incorporated by reference to
Exhibit 23(g) of Registrant's registration statement 33-86578, filed
on Edgar February 28, 2000.

(g)(2)* Amendment to Custodian Contract, regarding foreign custody.

(g)(3)* Amendment to Custodian Contract, regarding repurchase agreements,
dated July 28, 2000.

(h)(1) Other Material Contracts. Transfer Agency and Service Agreement,
incorporated by reference to Exhibit 23(h) of Registrant's
registration statement 33-86578, filed on Edgar February 28, 2000.

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

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

(k) Omitted Financial Statements. Not applicable.

2
<PAGE>

(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
registration statement 33-86578, filed on Edgar August 18, 1997.

(m)(2) Distribution Plan for Class B shares, incorporated by reference to
Exhibit 15(b) of Registrant's registration statement 33-86578, filed
on Edgar February 1, 1996.

(m)(3) Distribution Plan for Class C shares, as amended, incorporated by
reference to Exhibit 15(c) of Registrant's registration statement
33-86578, filed on Edgar August 18, 1997.

(n) Rule 18f-3 Plan. Plan pursuant to Rule 18f-3, as amended,
incorporated by reference to Exhibit 18(a) of Registrant's
registration statement 33-86578, filed on Edgar August 18, 1997.

(o) Reserved.

(p) Codes of Ethics. Code of Ethics as amended January 29, 2000,
incorporated by reference to Exhibit 23(p) of Registrant's
registration statement 33-86578, filed on Edgar February 28, 2000.

(q)(1) Other Exhibits. Powers of Attorney of the Registrant, Officers and
Board of Directors of Davis International Total Return Fund,
appointing Sheldon Stein and Arthur Don as attorneys-in-fact,
incorporated by reference to Exhibit 23(p) of Registrant's
registration statement 33-86578, filed on Edgar December 1, 1998.

(q)(2)* Other Exhibits. Powers of Attorney of Christopher C. Davis and Sharra
L. Reed as officers of the Registrant appointing Sheldon Stein and
Arthur Don as attorneys-in-fact, dated March 31, 2000.
</TABLE>

* Filed herein

** To be filed by amendment prior to being declared effective

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

Not applicable

Item 25. Indemnification

Registrant's Articles of Incorporation indemnifies its directors, officers and
employees to the full extent permitted by Section 2-418 of the Maryland General
Corporation Law, subject only to the

<PAGE>

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 affiliated 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 domestic and off-shore investment companies, and as an investment
adviser to institutional and individual accounts. DSA also serves as
sub-investment adviser to other investment companies. Affiliated companies
include:

Davis Investments, LLC: the sole general partner of DSA. Controlled by its sole
member, Christopher C. Davis.

Venture Advisers, Inc.: is a corporation whose primary purpose is to hold
limited partner units in DSA.

Davis Selected Advisers - NY, Inc.: a wholly-owned subsidiary of DSA, is a
federally registered investment adviser which serves as sub-adviser for may of
DSA's advisory clients.

Davis Distributors LLC: a wholly-owned subsidiary of DSA, is a registered
broker-dealer which serves as primary underwriter of the Davis Funds and
Selected Funds.

Davis Partners I, LLC: a wholly-owned subsidiary of DSA, serves as general
partner of Davis Partners I, L.P., an unregistered investment company.

4
<PAGE>

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

ANDREW A. DAVIS (6/25/63), 124 East Marcy Street, Santa Fe, NM 87501. Director
and President or Vice President of each of the Davis Funds (except Davis
International Series, Inc.) and the Selected Funds. President of Davis
Investments, LLC. Also serves as a director and/or senior officer for several
companies affiliated with DSA which are described above.

CHRISTOPHER C. DAVIS (7/13/65), 609 Fifth Avenue, New York, NY 10017. Director
and Chief Executive Officer, President, and/or Vice President of each of the
Davis Funds and the Selected Funds; Director, Chairman and Chief Executive
Officer of Davis Investments, LLC. Also serves as a director and/or senior
officer for several companies affiliated with DSA, which are described above.
Also serves as Chairman and Director of Shelby Cullom Davis Financial
Consultants, Inc. Is an employee of Shelby Cullom Davis & Co., a registered
broker/dealer. Is a director of Kings Bay Ltd., an offshore investment
management company.

KENNETH C. EICH (8/14/53), 2949 East Elvira Road, Suite 101, Tucson, AZ 85706.
Vice President of each of the Davis Funds and Selected Funds; Chief Operating
Officer of Davis Investments, LLC. Also serves as a senior officer for several
companies affiliated with DSA which are described above.

SHARRA L. REED (9/25/66), 2949 East Elvira Road, Suite 101Tucson, Arizona 85706.
Vice President, Treasurer and Assistant Secretary of each of the Davis Funds and
Selected Funds; Vice President of Davis Investments, LLC. Also serves as a
senior officer for several companies affiliated with DSA which are described
above.

THOMAS D. TAYS, 2949 East Elvira Road, Suite 101, Tucson, AZ 85706. Vice
President, Chief Legal Officer and Secretary, Davis Investments, LLC. Also
serves as a senior officer for several companies affiliated with DSA which are
described above.

GARY TYC (05/27/56), 2949 East Elvira Road, Suite 101, Tucson, AZ 85706. Vice
President, Chief Financial Officer Treasurer, and Assistant Secretary of Davis
Investments, LLC. Also serves as a senior officer for several companies
affiliated with DSA which are described above.

RUSSELL O. WIESE (05/18/66) 609 Fifth Avenue, New York, NY 10017. Chief
Marketing Officer of Davis Investments, LLC. Also serves as a director and/or
senior officer for several companies affiliated with DSA which are described
above.

Item 27. Principal Underwriter

(a) Davis Distributors, LLC, a wholly owned subsidiary of the Adviser,
located at 2949 East Elvira Road, Suite 101Tucson, Arizona 85706, is the
principal underwriter for the Registrant and also acts as principal
underwriter for Davis New York Venture Fund, Inc., Davis Series, Inc.,
Selected American Shares, Inc., Selected Special Shares, Inc. and Selected
Capital Preservation Trust.

<PAGE>

(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 None
2949 East Elvira Road, Suite 101 and Assistant Secretary
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

Accounts and records are maintained at the offices of Davis Selected Advisers,
L.P., 2949 East Elvira Road, Suite 101, Tucson, AZ 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,
Seventh Floor, North Quincy, Massachusetts 02107.

Item 29. Management Services

Not applicable

Item 30. Undertakings

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

<PAGE>

DAVIS 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 30th day of November, 2000.

DAVIS INTERNATIONAL SERIES, INC.

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

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

Signature Title Date
--------- ----- ----

Christopher C. Davis* President, Chief Executive November 30, 2000
--------------------- Officer
Shelby M.C. Davis

Sharra L. Reed* Principal Financial Officer
------------------------ and Treasurer November 30, 2000
Sharra L. Reed

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

*Arthur Don signs this document on behalf of the Registrant and each of the
foregoing officers pursuant to the powers of attorney filed as Exhibit (p) to
Registrant's Post-Effective Amendment No. 8 to Registrant's Registration
Statement filed on Edgar with this filing.

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

7
<PAGE>

DAVIS INTERNATIONAL SERIES, INC.

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed on November 30, 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.

*Arthur Don signs this document on behalf of each of the foregoing persons
pursuant to the powers of attorney filed as Exhibit (p) to Registrant's
Post-Effective Amendment No 8 to Registrant's Registration Statement filed on
Edgar December 1, 1998.

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

8
<PAGE>

EXHIBIT LIST

23(a)(4) Articles of Amendment regarding name change of registrant and
fund - Aug. 21, 1995

23(e)(3) Dealer Agreement - Davis Distributors, LLC

23(g)(2) Amendment to Custodian Contract

23(g)(3) Amendment to Custodian Contract regarding repurchase agreements
- July 28, 2000

23(q)(2) Powers of Attorney