485BPOS 1 file1.htm



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM N-1A

                        REGISTRATION STATEMENT UNDER THE
                             SECURITIES ACT OF 1933
                            REGISTRATION NO. 2-57209
                         POST-EFFECTIVE AMENDMENT NO. 52

                                       AND

                        REGISTRATION STATEMENT UNDER THE
                         INVESTMENT COMPANY ACT OF 1940
                            REGISTRATION NO. 811-2679
                                AMENDMENT NO. 48

                               DAVIS SERIES, INC.

                        2949 East Elvira Road, Suite 101
                              Tucson, Arizona 85706
                                (1-520-434-3771)

      Agents For Service:   Thomas D. Tays, Esq.
                            Davis Selected Advisers, L.P.
                            2949 East Elvira Road, Suite 101
                            Tucson, AZ 85706
                            (520) 434-3771

                                    -or-

                            Arthur Don, Esq.
                            Seyfarth Shaw LLP
                            55 E. Monroe St., Suite 4200
                            Chicago, IL 60603-5803
                            (1-312-602-2048)

It is proposed that this filing will become effective:

[_]  Immediately upon filing pursuant to paragraph (b)

[X]  On May 1, 2006 pursuant to paragraph (b)

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

[_]  On __, pursuant to paragraph (a) of Rule 485

[_]  75 days after filing pursuant to paragraph (a)(2) of Rule 485

[_]  On ___, pursuant to paragraph (a)(2) of Rule 485

Title of Securities Being Registered: Common Stock of:

                                      1. Davis Opportunity Fund
                                      2. Davis Financial Fund
                                      3. Davis Real Estate Fund
                                      4. Davis Appreciation & Income Fund
                                      5. Davis Government Bond Fund
                                      6. Davis Government Money Market Fund


                                       1



                                EXPLANATORY NOTE

This Post-Effective Amendment No. 52 to the Registration Statement contains:

   Davis Series ABC Prospectus
   Davis Series Y Prospectus
   Davis Series SAI
   Part C and Signature Pages
   Exhibits:


                                        2

DAVIS SERIES, INC.

Davis Opportunity Fund
Davis Financial Fund
Davis Real Estate Fund
Davis Appreciation & Income Fund
Davis Government Bond Fund
Davis Government Money Market Fund
--------------------------------------------------------------------------------

PROSPECTUS

Class A shares
Class B shares
Class C shares

May 1, 2006

The Securities and Exchange Commission has neither approved nor disapproved of
these securities, nor has it determined whether this prospectus is accurate or
complete. Anyone who tells you otherwise is committing a crime.

[Davis Funds logo and "Over 35 Years of Reliable Investing" tagline]

This prospectus contains important information. Please read it carefully before
investing and keep it for future reference.

No financial adviser, dealer, salesperson or any other person has been
authorized to give any information or to make any representations, other than
those contained in this Prospectus, in connection with the offer contained in
this Prospectus and, if given or made, such other information or representations
must not be relied on as having been authorized by the Funds, the Funds'
investment adviser or the Funds' distributor. This Prospectus does not
constitute an offer by the Funds or by the Funds' distributor to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful for the Funds to make such an
offer in such jurisdiction.

TABLE OF
CONTENTS
--------------------------------------------------------------------------------

OVERVIEWS OF THE DAVIS SERIES FUNDS:

5 DAVIS OPPORTUNITY FUND
Investment Objective and Principal Investment Strategies
Determining If This Fund Is Right for You
Principal Risks of Investing in the Fund
Performance Information
Fees and Expenses of the Fund

12 DAVIS FINANCIAL FUND
Investment Objective and Principal Investment Strategies
Determining If This Fund Is Right for You
Principal Risks of Investing in the Fund
Performance Information
Fees and Expenses of the Fund

19 DAVIS REAL ESTATE FUND
Investment Objective and Principal Investment Strategies
Determining If This Fund Is Right for You
Principal Risks of Investing in the Fund
Performance Information
Fees and Expenses of the Fund

26 DAVIS APPRECIATION & INCOME FUND
Investment Objective and Principal Investment Strategies
Determining If This Fund Is Right for You
Principal Risks of Investing in the Fund
Performance Information
Fees and Expenses of the Fund

35 DAVIS GOVERNMENT BOND FUND
Investment Objective and Principal Investment Strategies
Determining If This Fund Is Right for You
Principal Risks of Investing in the Fund
Performance Information
Fees and Expenses of the Fund

44 DAVIS GOVERNMENT MONEY MARKET FUND
Investment Objective and Principal Investment Strategies
Determining If This Fund Is Right for You
Principal Risks of Investing in the Fund
Performance Information
Fees and Expenses of the Fund

TABLE OF
CONTENTS (CONTINUED)
--------------------------------------------------------------------------------

49 DAVIS MANAGEMENT
Davis Advisors
Investment Professionals
The Davis Investment Discipline
Additional Information About Investments

57 ONCE YOU INVEST IN DAVIS FUNDS
How Your Shares Are Valued
Portfolio Holdings
How We Pay Earnings
Federal Income Taxes
Fees and Expenses of the Funds
Compensation Earned by Broker-Dealers and Other Financial Intermediaries

66 HOW TO CHOOSE A SHARE CLASS
Class A Shares
Class B Shares
Class C Shares
Deferred Sales Charge

74 HOW TO OPEN AN ACCOUNT
Two Ways You Can Open An Account
Anti-Money Laundering Compliance
Retirement Plan Accounts

76 HOW TO BUY, SELL AND EXCHANGE SHARES
Right to Reject or Restrict any Purchase or Exchange Order
Four Ways to Buy, Sell and Exchange Shares
When Your Transactions Are Processed
Buying More Shares
Selling Shares
Exchanging Shares
Market Timing
Telephone Transactions
Internet Transactions

88 OTHER INFORMATION
Dividends and Distributions
Financial Highlights
Householding
Privacy Notice

B/C OBTAINING ADDITIONAL INFORMATION

OVERVIEW OF DAVIS
OPPORTUNITY FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Opportunity Fund's investment objective is long-term growth of capital.
Davis Advisors uses the Davis Investment Discipline to invest the majority of
the Fund's assets in equity securities issued by medium and small companies with
market capitalizations of less than $20 billion. See "The Davis Investment
Discipline."

The Fund has the flexibility to invest a limited portion of its assets in
companies of any size, to invest in companies whose shares may be subject to
controversy, to invest in foreign securities, and to invest in non-equity
securities. See "Additional Information About Investments."

DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o You are seeking long-term growth of capital.

o You want to invest in a mixture of large, medium, and small capitalization
companies, with a focus primarily in medium capitalization companies.

o You are willing to accept higher risk for the opportunity to pursue higher
returns.

o You are investing for the long term.

You should not invest in this Fund if:

o You are worried about the possibility of sharp price swings and dramatic
market declines.

o You prefer to invest in larger, more established companies.

o You are interested in earning current income.

o You are investing for the short term.

PRINCIPAL RISKS OF INVESTING IN THE FUND

If you buy shares of Davis Opportunity 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 (but not the only
factors) that could cause the value of your investment in the Fund to decline,
and which could prevent the Fund from achieving its stated objective.

o 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 in which we invest.

o COMPANY RISK. The market values of common stock vary with the success or
failure of the company issuing the stock. Many factors can negatively
affect a particular company's stock price, such as poor earnings reports,
loss of major customers, major litigation against the company or changes in
government regulations affecting the company or its industry. The success
of the companies in which the Fund invests largely determines the Fund's
long-term performance.

o SMALL- AND MEDIUM-CAPITALIZATION RISK. Investing in small- and
medium-capitalization companies may be more risky than investing in
large-capitalization companies. Small and mid-size companies typically have
more limited product lines, markets and financial resources than larger
companies, and their securities may trade less frequently and in more
limited volume than those of larger, more mature companies.

o FOREIGN COUNTRY RISK. The Fund may invest a portion of its assets in
companies operating, incorporated, or principally traded in foreign
countries. 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. Securities
issued by foreign companies are frequently denominated in foreign
currencies. The change in value of a foreign currency against the U.S.
dollar will result in a change in the U.S. dollar value of securities
denominated in that foreign currency. The Fund generally does not hedge its
currency risk. When the value of a foreign currency declines

against the U.S. dollar, the value of the Fund's shares will tend to
decline.

o HEADLINE RISK. We seek to acquire companies with durable business models
that can be purchased at attractive valuations relative to their intrinsic
value. We may make such investments when a company becomes the center of
controversy after receiving adverse media attention. The company may be
involved in litigation, the company's financial reports or corporate
governance may be challenged, the company's annual report may disclose a
weakness in internal controls, investors may question the company's
published financial reports, greater government regulation may be
contemplated, or other adverse events may threaten the company's future.
While we research companies subject to such contingencies, we cannot be
correct every time, and the company's stock may never recover.

o SELECTION RISK. The securities we select for the Fund may underperform the
Russell 3000 Index or other funds with similar investment objectives and
strategies.

The Fund's shares are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency, and
involve investment risks, including possible loss of the principal amount
invested.

PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Opportunity Fund by showing changes in the Fund's
year-to-year performance and by showing how the Fund's average annual returns
compare to those of the Russell 3000 Index, a widely recognized unmanaged index
of stock performance. The Fund is not managed to track any particular index and,
consequently, the performance of the Fund may deviate significantly from the
performance of the Index. The Fund's past performance (before and after taxes)
is not necessarily an indication of how the Fund will perform in the future.

DAVIS OPPORTUNITY FUND
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES

YEAR RETURN
---- -------
1996 18.73%
1997 27.70%
1998 2.32%
1999 31.45%
2000 11.49%
2001 (8.06)%
2002 (13.56)%
2003 40.88%
2004 13.34%
2005 8.33%

During the period shown above, the highest quarterly return was 26.48% for the
quarter ended December 31, 1999, and the lowest quarterly return was (20.44)%
for the quarter ended September 30, 1998. Total return for the three months
ended March 31, 2006, (not annualized) was 8.77%.

Investments in initial public offerings (IPOs) had a favorable impact on Davis
Opportunity Fund's performance in 1999 and 2000. This was a time when the IPO
market was very active. No assurance can be given that Davis Opportunity Fund
will continue to invest in IPOs to the same extent in the future or that such
investments would be profitable.

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

DAVIS OPPORTUNITY FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005

PAST 1 PAST 5 PAST 10 LIFE OF
YEAR YEARS YEARS CLASS*
------ ------ ------- -------
Class A shares 3.17% 5.53% 11.53% 13.92%
return before taxes
Class A shares 2.62% 5.30% 9.56% N/A
return after taxes on
distributions
Class A shares 2.71% 4.69% 9.17% N/A
return after taxes on
distributions and sale of
fund shares
Class B shares** 3.49% 5.39% 11.37% 13.61%
return before taxes
Class C shares 6.48% 5.71% N/A 7.40%
return before taxes
Russell 3000*** 6.12% 1.58% 9.20% 11.52%
reflects no deduction for
fees, expenses or taxes
Dow Jones Wilshire 5000(R) Index*** 6.32% 2.12% 9.16% 11.54%
reflects no deduction for
fees, expenses or taxes

Average Annual Total Returns for each class of shares reflect sales charges.

* Average annual total returns for life are for the periods from the
commencement of each class's investment operations: Class A shares, 12/1/94;
Class B shares, 5/1/84; and Class C shares, 8/15/97. Index average annual total
return for life is from 12/1/94.

** Class B shares automatically convert to Class A shares after eight years.
Class B share performance for the past 10 years and the life of class include
the first eight years of Class B share performance and Class A share performance
thereafter. However, since the inception date for Class A shares is 12/1/94,
Class B shares could not be converted prior to that date. Therefore, the
performance for the life of class includes Class B share performance until
12/1/94, and Class A share performance thereafter.

*** The Russell 3000 Index is a more appropriate index than the Dow Jones
Wilshire 5000 Index because it more accurately reflects the universe of
securities which Davis Opportunity Fund actually invest in. The Russell 3000
Index eliminates the 2000 smallest companies found in the Dow Jones Wilshire
5000, those with market capitalizations of under $200 million.

After-tax returns are calculated using the highest historical individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes.

Actual after-tax returns depend on an investor's tax situation and may differ
from those shown. After-tax returns shown are not relevant to investors who hold
their Fund shares through tax-deferred arrangements, such as 401(k) plans or
individual retirement accounts.

Class A, B, and C shares are offered by this prospectus. After-tax returns are
shown only for Class A shares and will vary for other classes.

If returns are negative, returns after taxes on distributions and sale of fund
shares may be higher than returns before taxes, as the resulting capital losses
from the sale of fund shares would be available to offset capital gains from
other investments.

FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
Maximum sales charge (load) imposed on
purchases 4.75% None None
as a percentage of offering price(1)
Maximum deferred sales charge (load) imposed
on redemptions 0.75%(2) 4.00% 1.00%
as a percentage of the lesser of the net
asset value of the shares redeemed or the
total cost of such shares
Maximum sales charge (load) imposed on
reinvested dividends None None None
Exchange fee None None None

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."

(1.) See "How to Choose a Share Class" to determine whether you may qualify for
a reduced sales charge.

(2.) 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.

DAVIS OPPORTUNITY FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
Management Fees 0.67% 0.67% 0.67%
Distribution (12b-1) Fees 0.25% 1.00% 1.00%
Other Expenses 0.23% 0.25% 0.24%
Total Annual Operating Expenses 1.15% 1.92% 1.91%

Expenses may vary in future years.

The difference in the fee structures between the classes is primarily the result
of their separate arrangements for shareholder and distribution services and is
not the result of any difference in the amounts charged by Davis Advisors for
investment advisory services. Accordingly, the investment advisory expenses do
not vary by class. Different fees and expenses will affect performance.

EXPENSE 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:

IF YOU SELL YOUR SHARES IN... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------- ------ ------- ------- --------
Class A shares $587 $823 $1,078 $1,806
Class B shares $595 $903 $1,237 $2,043*
Class C shares $294 $600 $1,032 $2,233

IF YOU STILL HOLD YOUR SHARES
AFTER... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------- ------ ------- ------- --------
Class A shares $587 $823 $1,078 $1,806
Class B shares $195 $603 $1,037 $2,043*
Class C shares $194 $600 $1,032 $2,233

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

OVERVIEW OF DAVIS
FINANCIAL FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Financial Fund's investment objective is long-term growth of capital.
Davis Advisors uses the Davis Investment Discipline to invest at least 80% of
the Fund's net assets, plus any borrowing for investment purposes, in securities
issued by companies principally engaged in the financial services sector. See
"The Davis Investment Discipline."

A company is principally engaged in financial services if it owns financial
services-related assets that constitute at least 50% of the value of all of its
assets, or if it derives at least 50% of its revenues from providing financial
services. Companies in the financial services sector include commercial banks,
industrial banks, savings institutions, finance companies, diversified financial
services companies, investment banking firms, securities brokerage houses,
investment advisory companies, leasing companies, insurance companies and
companies providing similar services.

The Fund has the flexibility to invest a limited portion of its assets in
non-financial companies, to invest in companies of any size, to invest in
companies whose shares may be subject to controversy, to invest in foreign
securities, and to invest in non-equity securities. See "Additional Information
About Investments."

DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o You are seeking long-term growth of capital.

o You believe that the financial services sector offers attractive long-term
growth opportunities.

o You are investing for the long term.

You should not invest in this Fund if:

o You are worried about the possibility of sharp price swings and dramatic
market declines.

o You are interested in earning current income.

o You do not wish to invest in a concentrated portfolio of financial services
companies.

o You are investing for the short term.

PRINCIPAL RISKS OF INVESTING IN THE FUND

If you buy shares of Davis Financial 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 (but not the only factors) that could
cause the value of your investment in the Fund to decline, and which could
prevent the Fund from achieving its stated objective.

o CONCENTRATED FINANCIAL SERVICES PORTFOLIO RISK. Davis Financial Fund
invests principally in a single market sector, and any fund that has a
concentrated portfolio is particularly vulnerable to the risks of its
target sector. Risks of investing in the financial services sector
include:(i) Regulatory actions: financial services companies may suffer a
setback if regulators change the rules under which they operate; (ii)
Changes in interest rates: unstable interest rates, and/or rising interest
rates, may have a disproportionate effect on the financial services sector;
(iii) Non-diversified loan portfolios: financial services companies whose
securities the Fund purchases may themselves have concentrated portfolios,
such as a high level of loans to real estate developers, which makes them

vulnerable to economic conditions that affect that industry; and (iv)
Competition: the financial services sector has become increasingly
competitive.

o SELECTION RISK. The securities we select for the Fund may underperform the
S&P 500(R) Index or other funds with similar investment objectives and
strategies.

The Fund's shares are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency and
involve investment risks, including possible loss of the principal amount
invested.

PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Financial Fund by showing changes in the Fund's year-to-year
performance and by showing how the Fund's average annual returns compare to
those of the S&P 500(R) Index, a widely recognized unmanaged index of stock
performance. The Fund is not managed to track any particular index and,
consequently, the performance of the Fund may deviate significantly from the
performance of the Index. The Fund's past performance (before and after taxes)
is not necessarily an indication of how the Fund will perform in the future.

DAVIS FINANCIAL FUND
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES

YEAR RETURN
---- ------
1996 31.50%
1997 44.53%
1998 14.17%
1999 (0.85)%
2000 32.16%
2001 (9.15)%
2002 (18.98)%
2003 36.86%
2004 12.11%
2005 8.03%

During the period shown above, the highest quarterly return was 21.77% for the
quarter ended June 30, 2003, and the lowest quarterly return was (16.66)% for
the quarter ended September 30, 2002. Total return for the three months ended
March 31, 2006, (not annualized) was 2.15%.

DAVIS FINANCIAL FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005

PAST 1 PAST 5 PAST 10 LIFE OF
YEAR YEARS YEARS CLASS*
------ ------ ------- -------
Class A shares 2.91% 3.05% 12.70% 16.09%
return before taxes
Class A shares 2.25% 2.92% 12.25% N/A
return after taxes on
distributions
Class A shares 2.78% 2.62% 11.20% N/A
return after taxes on
distributions and sale of fund
shares
Class B shares** 3.08% 2.81% 12.45% 15.34%
return before taxes
Class C shares 6.07% 3.16% N/A 7.72%
return before taxes
S&P 500(R) Index 4.91% 0.54% 9.07% 10.64%
reflects no deduction for fees,
expenses or taxes

Average Annual Total Returns for each class of shares reflect sales charges.

* Average annual total returns for life are for the periods from the
commencement of each class's investment operations: Class A shares, 5/1/91;
Class B shares, 12/27/94; and Class C shares, 8/12/97. Index average annual
total return for life is from 5/1/91.

**Class B shares automatically convert to Class A shares after eight years.
Class B shares' performance for the past 10 years and the life of class
includes, the first eight years of Class B share performance and Class A share
performance thereafter.

After-tax returns are calculated using the highest historical individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes.

Class A, B and C shares are offered by this prospectus. After-tax returns are
shown only for Class A shares and will vary for other classes.

FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."

(1.) See "How to Choose a Share Class" to determine whether you may qualify for
a reduced sales charge.

(2.) 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.

DAVIS FINANCIAL FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
Management Fees 0.63% 0.63% 0.63%
Distribution (12b-1) Fees 0.19% 1.00% 1.00%
Other Expenses 0.17% 0.25% 0.24%
Total Annual Operating Expenses 0.99% 1.88% 1.87%

Expenses may vary in future years.

EXPENSE 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.

IF YOU SELL YOUR SHARES IN... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------- ------ ------- ------- --------
Class A shares $571 $775 $ 996 $1,630
Class B shares $591 $891 $1,216 $1,969*
Class C shares $290 $588 $1,011 $2,190

IF YOU STILL HOLD YOUR SHARES
AFTER... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------- ------ ------- ------- --------
Class A shares $571 $775 $ 996 $1,630
Class B shares $191 $591 $1,016 $1,969*
Class C shares $190 $588 $1,011 $2,190

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

OVERVIEW OF DAVIS
REAL ESTATE FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Real Estate Fund's investment objective is total return through a
combination of growth and income. Davis Advisors uses the Davis Investment
Discipline to invest at least 80% of the Fund's net assets, plus any borrowing
for investment purposes, in securities issued by companies principally engaged
in the real estate industry. See "The Davis Investment Discipline."

A company is principally engaged in the real estate industry if it owns real
estate or real estate-related assets that constitute at least 50% of the value
of all of its assets or if it derives at least 50% of its revenues or net
profits from owning, financing, developing, managing or selling real estate, or
from offering products or services that are related to real estate. Issuers of
real estate securities include real estate investment trusts (REITs), brokers,
developers, lenders, and companies with substantial real estate holdings such as
paper, lumber, hotel, and entertainment companies. Most of Davis Real Estate
Fund's real estate securities are, and will likely continue to be, interests in
REITs. REITs pool investors' funds to make real estate-related investments, such
as buying interests in income-producing property or making loans to real estate
developers.

The Fund has the flexibility to invest a limited portion of its assets in
non-real estate companies, to invest in companies of any size, to invest in
companies whose shares may be subject to controversy, to invest in foreign
securities, and to invest in non-equity securities. See "Additional Information
About Investments."

DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o You are seeking total return through a combination of growth and income.

o You believe that the real estate sector offers attractive long-term growth
opportunities.

o You want to diversify your traditional stock and bond portfolio with real
estate securities.

o You are investing for the long term.

You should not invest in this Fund if:

o You are worried about the possibility of sharp price swings and dramatic
market declines.

o You do not wish to invest in a concentrated portfolio of real estate
companies.

o You are investing for the short term.

PRINCIPAL RISKS OF INVESTING IN THE FUND

If you buy shares of Davis Real Estate 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 (but not the only
factors) that could cause the value of your investment in the Fund to decline,
and which could prevent the Fund from achieving its stated objective.

o CONCENTRATED REAL ESTATE PORTFOLIO RISK. Davis Real Estate Fund invests
principally in a single market sector, and any fund that has a concentrated
portfolio is particularly vulnerable to the risks of its selected industry.
Real estate securities are susceptible to the many risks associated with
the direct ownership of real estate, including (i) declines in property
values, because of changes in the economy or the surrounding area or
because a particular region has become less appealing to tenants; (ii)
increases in property taxes, operating expenses, interest rates or
competition; (iii) overbuilding; (iv) changes in zoning laws; or (v) losses
from casualty or condemnation.

o FOCUSED PORTFOLIO RISK. Davis Real Estate Fund is classified as a
nondiversified fund and is allowed to focus its investments in fewer
companies than a diversified fund. Should the portfolio managers determine
that it is prudent to focus the Fund's portfolio in a few

companies, the portfolio may be subject to greater volatility and risk and
the Fund's investment performance, both good and bad, is expected to
reflect the economic performance of the few companies on which the Fund
focuses.

o SMALL- AND MEDIUM-CAPITALIZATION RISK. Many real estate companies are
small- and medium-capitalization companies. Investing in these companies
may be more risky than investing in large-capitalization companies. Smaller
companies typically have more limited product lines, markets and financial
resources than larger companies, and their securities may trade less
frequently and in more limited volume than those of larger, more mature
companies.

o SELECTION RISK. The securities we select for the Fund may underperform the
Dow Jones Wilshire Real Estate Securities Index or other funds with similar
investment objectives and strategies.

PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Real Estate Fund by showing changes in the Fund's
year-to-year performance and by showing how the Fund's average annual returns
compare to those of the S&P 500(R) Index and the Dow Jones Wilshire Real Estate
Securities Index. The S&P 500(R) Index is a widely recognized, unmanaged index
of stock performance. The Dow Jones Wilshire Real Estate Securities Index is a
measure of the performance of publicly traded real estate securities, such as
Real Estate Investment Trusts and Real Estate Operating Companies. The Fund is
not managed to track any particular index and, consequently, the performance of
the Fund may deviate significantly from the performance of the Indices. The
Fund's past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future.

DAVIS REAL ESTATE FUND
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES

YEAR RETURN
---- ------
1996 37.05%
1997 25.08%
1998 (15.56)%
1999 (7.55)%
2000 25.76%
2001 5.66%
2002 5.89%
2003 37.52%
2004 33.22%
2005 12.76%

During the period shown above, the highest quarterly return was 19.22% for the
quarter ended December 31,1996, and the lowest quarterly return was (11.43)% for
the quarter ended September 30, 1998. Total return for the three months ended
March 31, 2006, (not annualized) was 15.49%.

The bar chart does not reflect any sales charges. Total return would have been
less if it reflected those charges. The returns for the other classes of

shares offered by this prospectus will differ from the Class A returns shown in
the chart, depending upon the expenses of that class.

DAVIS REAL ESTATE FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005

PAST 1 PAST 5 PAST 10 LIFE OF
YEAR YEARS YEARS CLASS*
------ ------ ------- -------
Class A shares 7.40% 17.10% 13.99% 13.82%
return before taxes
Class A shares 5.33% 15.54% 12.27% N/A
return after taxes on distributions
Class A shares 6.39% 14.16% 11.39% N/A
return after taxes on distributions
and sale of fund shares
Class B shares** 7.92% 17.14% 13.77% 14.17%
return before taxes
Class C shares 10.93% 17.37% N/A 10.84%
return before taxes
S&P 500(R) Index 4.91% 0.54% 9.07% 10.55%
Reflect no deductions for fees,
expenses or taxes
Dow Jones Wilshire Real Estate
Securities Index 14.06% 19.04% 15.14% 13.92%
Reflect no deductions for fees,
expenses or taxes

Average Annual Total Returns for each class of shares reflect sales charges.

* Average annual total returns for life are for the periods from the
commencement of each class's investment operations: Class A shares, 1/3/94;
Class B shares, 12/27/94; and Class C shares, 8/13/97. Index average annual
total return for life is from 1/3/94.

** Class B shares automatically convert to Class A shares after eight years.
Class B shares' performance for the past 10 years and the life of class includes
the first eight years of Class B share performance and Class A share performance
thereafter.

After-tax returns are calculated using the highest historical individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes.

Class A, B, and C shares are offered by this prospectus. After-tax returns are
shown only for Class A shares and will vary for other classes.

If returns are negative, returns after taxes on distributions and sale of fund
shares may be higher than returns before taxes, as the resulting capital

losses from the sale of fund shares would be available to offset capital gains
from other investments.

DAVIS REAL ESTATE FUND YIELD, CLASS A SHARES
30-Day SEC Yield, as of December 31, 2005
2.64%

You may obtain Davis Real Estate Fund's most recent 30-day SEC Yield by calling
us toll-free at 1-800-279-0279, Monday through Friday, 9 a.m. to 6 p.m. Eastern
time.

FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."

(1.) See "How to Choose a Share Class" to determine whether you may qualify for
a reduced sales charge.

(2.) 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.

DAVIS REAL ESTATE FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
Management Fees 0.67% 0.67% 0.67%
Distribution (12b-1) Fees 0.24% 1.00% 1.00%
Other Expenses 0.19% 0.22% 0.21%
Total Annual Operating Expenses 1.10% 1.89% 1.88%

Expenses may vary in future years.

EXPENSE 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.

IF YOU SELL YOUR SHARES IN... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------- ------ ------- ------- --------
Class A shares $582 $808 $1,052 $1,752
Class B shares $592 $894 $1,221 $2,006*
Class C shares $291 $591 $1,016 $2,201

IF YOU STILL HOLD YOUR SHARES
AFTER... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------- ------ ------- ------- --------
Class A shares $582 $808 $1,052 $1,752
Class B shares $192 $594 $1,021 $2,006*
Class C shares $191 $591 $1,016 $2,201

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

OVERVIEW OF DAVIS
APPRECIATION & INCOME FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Appreciation & Income Fund's investment objective is total return through
a combination of growth and income. Davis Advisors uses the Davis Investment
Discipline to invest the Fund's assets in a diversified portfolio of convertible
securities, common stock, and fixed income securities. See "The Davis Investment
Discipline." The portion of the Fund's assets invested in convertible
securities, common stock, and fixed income securities will vary from time to
time consistent with the Fund's investment objective, changes in equity prices
and changes in interest rates and other economic and market factors.

Common stock issued by large-, medium-, and small-capitalization companies are
purchased for their growth potential. Fixed income securities, including both
investment grade and high-yield, high-risk debt securities, are purchased both
for current income and to provide diversification. Convertible securities, which
include both preferred stock and bonds may be "converted" into common stock if
the company grows, offer both growth potential and downside protection. In the
current market, our portfolio managers expect to continue investing a
significant portion of the Fund's assets in convertible securities.

DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o You are seeking total return through a combination of growth and income.

o You want to diversify a common stock portfolio.

o You are principally interested in growth-oriented investments but want
current income.

o You are investing for the long term.

You should not invest in this Fund if:

o You are worried about the possibility of sharp price swings and dramatic
market declines.

o You do not wish to invest in a portfolio that has some of the
characteristics of both common stocks and bonds.

o You are investing for the short term.

PRINCIPAL RISKS OF INVESTING IN THE FUND

If you buy shares of Davis Appreciation & Income 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 (but not the only
factors) that could cause the value of your investment in the Fund to decline,
and which could prevent the Fund from achieving its stated objective.

EQUITY RISKS

o MARKET RISK. The market value of shares of equity securities, including
common and preferred stock and convertible securities, 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 in which we invest.

o COMPANY RISK. The market values of common stock vary with the success or
failure of the company issuing the security. Many factors can negatively
affect a particular company's equity price, such as poor earnings reports,
loss of major customers, major litigation against the company or changes in
government regulations affecting the company or its industry. The success
of the companies in which the Fund invests largely determines the Fund's
long-term performance.

o SMALL- AND MEDIUM-CAPITALIZATION RISK. Many convertible securities are
issued by small- and medium-capitalization companies. Investing in these
companies may be more risky than investing in large-capitalization
companies. Smaller companies typically have more limited product lines,
markets and financial resources than larger companies, and their securities
may trade less frequently and in more limited volume than those of larger,
more mature companies.

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. Securities
issued by foreign companies are frequently denominated in foreign
currencies. The change in value of a foreign currency against the U.S.
dollar will result in a change in the U.S. dollar value of securities
denominated in that foreign currency. The Fund generally does not hedge its
currency risk. When the value of a foreign currency declines against the
U.S. dollar, the value of the Fund's shares will tend to decline.

o SELECTION RISK. The securities we select for the Fund may underperform the
S&P 500(R) Index or other funds with similar investment objectives and
strategies.

DEBT RISKS

o INTEREST RATE SENSITIVITY. If a security pays a fixed interest rate, and
market rates increase, the value of the fixed-rate security should decline.

o CHANGES IN DEBT RATING. If a rating agency gives a fixed income security a
low rating, the value of the security will decline because investors will
demand a higher rate of return.

o CREDIT RISK. Like any borrower, the issuer of a fixed income security may
be unable to make its payments. The Fund is not limited as to the amount of
its assets, which may be invested in high-yield, high-risk debt securities.

HIGH-YIELD, HIGH-RISK DEBT SECURITIES

There are several agencies that evaluate and rate debt securities. Two of the
most prominent are Standard & Poor's and Moody's Investors Service.

When evaluating the quality of a debt instrument, rating agencies look at
factors like the issuer's current financial condition and business prospects,
the value of any collateral that secures the debt and the issuer's history of
paying other debt. Each agency has its own system for grading debt. Standard &
Poor's has 11 ratings, ranging from "D" for securities that are in default to
"AAA" for securities that are almost certain to be repaid. Moody's Investors
Service has nine ratings, with "C" being the lowest and "Aaa" being the highest.

A debt security is called investment-grade if a respected agency assigns it a
favorable credit rating ("BBB" or higher by Standard and Poor's, or "Baa" or
higher by Moody's). In contrast, a debt security is considered high-yield,
high-risk if it is rated "BB" or lower by Standard and Poor's or "Ba" or lower
by Moody's Investors Service. Securities with these low ratings are also
referred to as junk bonds. Many institutional investors, such as pension plans
and municipal governments, are only permitted to buy investment-grade debt.

There are four principal risks of owning high-yield, high-risk debt securities:

o OVERBURDENED ISSUERS. Many issuers only resort to offering high-yield,
high-risk debt securities when they cannot get financing from more
traditional sources, such as banks. These issuers are unlikely to have a
cushion from which to make their payments when their earnings are poor or
when the economy in general is in decline.

o PRIORITY. Issuers of high-yield, high-risk debt securities are likely to
have a substantial amount of other debt. Most, if not all, of this other
debt will

be senior to the high-yield, high-risk debt securities; an issuer must be
current on its senior obligations before it can pay bondholders. In
addition, some of the other debt may be secured by the issuer's primary
operating assets. If the issuer defaults on those obligations, the lenders
may seize their collateral--possibly forcing the issuer out of business and
into bankruptcy.

o DIFFICULT TO RESELL. Many investors simply do not want high-yield,
high-risk debt securities, and others are prohibited from buying them.

o VOLATILE PRICES. Prices of high-yield, high-risk debt securities are more
volatile than prices of higher-rated securities. In periods of economic
difficulty or rising interest rates, prices of high-yield, high-risk debt
securities decline more than prices of investment-grade securities.

PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Appreciation & Income Fund by showing changes in the Fund's
year-to-year performance and by showing how the Fund's average annual returns
compare to those of the S&P 500(R) Index, a widely recognized unmanaged index of
stock performance. The Fund is not managed to track any particular index and,
consequently, the performance of the Fund may deviate significantly from the
performance of the Index. The Fund's past performance (before and after taxes)
is not necessarily an indication of how the Fund will perform in the future.

DAVIS APPRECIATION & INCOME FUND
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES

YEAR RETURN
---- ------
1996 29.46%
1997 28.68%
1998 (1.79)%
1999 12.97%
2000 (0.97)%
2001 (7.56)%
2002 (1.21)%
2003 26.94%
2004 13.08%
2005 6.29%

During the period shown above, the highest quarterly return was 14.33% for the
quarter ended September 30, 1997, and the lowest quarterly return was (13.20)%
for the quarter ended September 30, 2001. Total return for the three months
ended March 31, 2006, (not annualized) was 4.90%.

From inception (May 1, 1992) until July 1, 2003, Davis Appreciation & Income
Fund was named Davis Convertible Securities Fund and invested primarily in
convertible securities.

DAVIS APPRECIATION & INCOME FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005

PAST 1 PAST 5 PAST 10 LIFE OF
YEAR YEARS YEARS CLASS*
------ ------ ------- -------
Class A shares 1.24% 5.83% 9.28% 10.27%
return before taxes
Class A shares 0.29% 4.71% 7.48% N/A
return after taxes on distributions
Class A shares 1.41% 4.37% 7.04% N/A
return after taxes on distributions
and sale of fund shares
Class B shares** 1.30% 5.56% 9.00% 10.32%
return before taxes
Class C shares 4.34% 5.89% N/A 5.20%
return before taxes
S&P 500(R) Index 4.91% 0.54% 9.07% 10.56%
reflects no deduction for fees,
expenses or taxes

Average Annual Total Returns for each class of shares reflect sales charges.

* Average annual total returns for life are for the periods from the
commencement of each class's investment operations: Class A shares, 5/1/92;
Class B shares, 2/3/95; and Class C shares, 8/12/97. Index average annual total
return for life is from 5/1/92.

** Class B shares automatically convert to Class A shares after eight years.
Class B shares' performance for the life of class includes the first eight years
of Class B share performance and Class A share performance thereafter.

After-tax returns are calculated using the highest historical individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes.

Class A, B, and C shares are offered by this prospectus. After-tax returns are
shown only for Class A shares and will vary for other classes.

DAVIS APPRECIATION & INCOME FUND YIELD, CLASS A SHARES
30-Day SEC Yield, as of December 31, 2005
1.92%

You may obtain Davis Appreciation & Income Fund's most recent 30-day SEC Yield
by calling us toll-free at 1-800-279-0279, Monday through Friday, 9 a.m. to 6
p.m. Eastern time.

FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
Maximum sales charge (load) imposed on
purchases 4.75% None None
as a percentage of offering price(1)
Maximum deferred sales charge (load)
imposed on redemptions 0.75%(2) 4.00% 1.00%
as a percentage of the lesser of the net asset
value of the shares redeemed or the total cost
of such shares
Maximum sales charge (load) imposed on
reinvested dividends None None None
Exchange fee None None None

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."

(1.) See "How to Choose a Share Class" to determine whether you may qualify for
a reduced sales charge.

(2.) 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.

DAVIS APPRECIATION & INCOME FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
Management Fees 0.72% 0.72% 0.72%
Distribution (12b-1) Fees 0.18% 1.00% 1.00%
Other Expenses 0.17% 0.22% 0.21%
Total Annual Operating Expenses 1.07% 1.94% 1.93%

Expenses may vary in future years.

EXPENSE 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.

IF YOU SELL YOUR SHARES IN 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------- ------ ------- ------- --------
Class A shares $579 $799 $1,037 $1,719
Class B shares $597 $909 $1,247 $2,038*
Class C shares $296 $606 $1,042 $2,254

IF YOU STILL HOLD YOUR SHARES AFTER 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------- ------ ------- ------- --------
Class A shares $579 $799 $1,037 $1,719
Class B shares $197 $609 $1,047 $2,038*
Class C shares $196 $606 $1,042 $2,254

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

OVERVIEW OF DAVIS
GOVERNMENT BOND FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Government Bond Fund's investment objective is current income. In order to
achieve this objective while minimizing volatility and preserving capital, the
Fund invests exclusively, under normal circumstances, in U.S. Government
Securities and repurchase agreements collateralized by U.S. Government
Securities with a weighted average maturity of three years or less.

GOVERNMENT SECURITIES

There are two basic types of U.S. Government Securities: (1) direct obligations
of the U.S. Treasury and (2) obligations issued or guaranteed by an agency or
instrumentality of the U.S. government. U.S. Government Securities represent
debt obligations (unlike equity securities, which represent ownership of the
issuer). Obligations that the U.S. Treasury issues or guarantees are generally
considered to offer the highest credit quality available in any security. Many
securities issued by government agencies are not fully guaranteed by the U.S.
government and in unusual circumstances may present credit risk.

U.S. Government Securities include mortgage-related securities issued by an
agency or instrumentality of the U.S. government. At times, a significant
portion of Davis Government Bond Fund's securities are mortgage-backed
securities and collateralized mortgage obligations. A mortgage-backed security
represents ownership of a pool of mortgage loans. As the mortgages are paid off,
a portion of the principal and interest payments are passed through to the
owners of the securities. Davis Government Bond Fund buys only mortgage-backed
securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities. A collateralized mortgage obligation is a debt security that
is secured by a pool of mortgages, mortgage-backed securities, U.S. Government
Securities or corporate debt obligations. Davis Government Bond Fund only
invests in collateralized mortgage obligations that are issued or guaranteed by
the U.S. government or its agencies or instrumentalities.

INVESTMENT STRATEGY

In selecting U.S. Government Securities for the Fund, Davis Advisors uses
fundamental research to attempt to achieve competitive returns over the long
term. Unlike many government bond funds that invest a portion of their assets in
riskier corporate paper, Davis Government Bond Fund invests only in U.S.
Treasury securities, U.S. government agency securities and U.S. government
agency mortgage securities. The Fund emphasizes undervalued sectors of the
market, which our research leads us to believe offer superior potential returns.
The Fund seeks to maintain a weighted average maturity of three years or less.
In general, longer weighted average maturities result in greater changes in the
price of the Fund's shares when prevailing interest rates change.

BUY STRATEGY

Davis Advisors continuously analyzes how interest rates, movements in various
market sectors and the economy as a whole could impact the types of debt
instruments the Fund targets.

o The Fund buys securities based on their price, coupon and yield spreads
relative to other securities.

o Treasuries are included for their high credit quality.

o Government and agency mortgage-backed securities are included when they
offer adequate premiums to compensate for additional risk.

o Davis Advisors assesses the short- and long-term interest-rate environment
to properly position the portfolio along the yield curve.

SELL STRATEGY

Although the Fund often holds securities until their date of maturity, it will
sell a security before it matures when:

o Davis Advisors determines that future interest-rate moves could
significantly diminish its value.

o Its risk-reward tradeoff is no longer attractive.

o Davis Advisors finds other securities that appear to offer better value.

DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o You are seeking current income.

o You are more comfortable investing in high-quality U.S. Government
Securities.

o You want to diversify a common stock portfolio.

You should not invest in this Fund if:

o You cannot accept moderate price swings or market declines.

o You are seeking the higher, but more volatile, returns historically
achieved by stocks.

PRINCIPAL RISKS OF INVESTING IN THE FUND

If you buy shares of Davis Government Bond 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 (but not the only
factors) that could cause the value of your investment in the Fund to decline,
and which could prevent the Fund from achieving its stated objective.

o PRICE VOLATILITY RISK. Most of the Fund's U.S. Government Securities pay a
fixed interest rate. When interest rates increase, the value and price of
U.S. Government Securities usually decline. When interest rates are
falling, the value and price of U.S. Government Securities usually
increase. As a result, an increase in market rates should reduce the value
of the Fund's portfolio and a decrease in rates should have the opposite
effect.

o EXTENSION AND PREPAYMENT RISK. Market prices of the mortgage-backed
securities and collateralized mortgage obligations that Davis Government
Bond Fund owns are affected by how quickly borrowers elect to prepay the
mortgages underlying the securities. Changes in market interest rates
affect borrowers' decisions about whether to prepay their mortgages. Rising
interest rates lead to extension risk, which occurs when borrowers maintain
their existing mortgages until they come due instead of choosing to prepay
them. Falling interest rates lead to prepayment risk, which occurs when
borrowers prepay their mortgages more quickly than usual so that they can
refinance at a lower rate. A government agency that has the right to call
(prepay) a fixed-rate security may respond the same way. The pace at which
borrowers

prepay affects the yield and the cash flow to holders of securities and the
market value of those securities.

o CREDIT RISK. Davis Government Bond Fund seeks to manage credit risk by
investing exclusively, under normal circumstances, in U.S. Government
Securities and repurchase agreements collateralized by U.S. Government
Securities. Many of the agency-issued securities in the Fund's portfolio
(as opposed to the Treasury-issued securities) are not guaranteed by the
U.S. government and in unusual circumstances may present credit risk.
Although an issuer may be chartered or sponsored by Acts of Congress, their
securities are neither issued nor guaranteed by the United States Treasury.
These include direct obligations and mortgage-related securities that have
different levels of credit support from the U.S. government. Some are
supported by the full faith and credit of the U.S. government, such as
Government National Mortgage Association ("Ginnie Mae") pass-through
mortgage certificates. Some are supported by the right of the issuer to
borrow from the U.S. Treasury under certain circumstances, such as Federal
National Mortgage Association ("Fannie Mae") bonds. Others are supported
only by the credit of the entity that issued them, such as Federal Home
Loan Mortgage Corporation ("Freddie Mac") obligations. There is always some
risk, even for U.S. Government Securities that the issuer of a security
held by the Fund will fail to make a payment when it is due.

PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Government Bond Fund by showing changes in the Fund's
year-to-year performance and by showing how the Fund's average annual returns
compare to those of the Citigroup U.S. Treasury/Agency 1-3 Year Index, a widely
recognized unmanaged index of U.S. Government Securities performance. The Fund
is not managed to track any particular index and, consequently, the performance
of the Fund may deviate significantly from the performance of the Index. The
Fund's past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future.

DAVIS GOVERNMENT BOND FUND
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES

YEAR RETURN
---- ------
1996 3.40%
1997 7.92%
1998 6.31%
1999 (3.47)%
2000 9.81%
2001 6.27%
2002 8.66%
2003 0.10%
2004 0.17%
2005 0.98%

During the period shown above, the highest quarterly return was 4.51% for the
quarter ended September 30, 2001, and the lowest quarterly return was (2.77)%
for the quarter ended June 30, 2004. Total return for the three months ended
March 31, 2006, (not annualized) was 0.42%.

Prior to February 1, 2005, Davis Government Bond Fund pursued an investment
strategy of maintaining a weighted average maturity of between three and ten
years.

DAVIS GOVERNMENT BOND FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005

PAST 1 PAST 5 PAST 10 LIFE OF
YEAR YEARS YEARS CLASS*
------ ------ ------- -------
Class A shares (3.82)% 2.18% 3.42% 4.14%
return before taxes
Class A shares (4.76)% 0.90% 1.68% N/A
return after taxes on
distributions
Class A shares (2.49)% 1.08% 1.82% N/A
return after taxes on
distributions and sale of fund
shares
Class B shares** (3.60)% 2.13% 3.30% 5.88%
return before taxes
Class C shares (0.69)% 2.46% N/A 2.97%
return before taxes
Citigroup U.S.
Treasury/Agency
1-3 Year Index 1.74% 3.82% 4.89% 5.39%
reflects no deduction for fees,
expenses or taxes

Average Annual Total Returns for each class of shares reflect sales charges.

* Average annual total returns for life are for the periods from the
commencement of each class's investment operations: Class A shares, 12/1/94;
Class B shares, 5/1/84; and Class C shares, 8/19/97. Index average annual total
return for life is from 12/1/94.

After-tax returns are calculated using the highest historical individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes.

Class A, B and C shares are offered by this prospectus. After-tax returns are
shown only for Class A shares and will vary for other classes.

DAVIS GOVERNMENT BOND FUND YIELD, CLASS A SHARES
30-Day SEC Yield, as of December 31, 2005
3.90%

You can obtain Davis Government Bond Fund's most recent 30-day SEC Yield by
calling us toll-free at 1-800-279-0279, Monday through Friday, 9 a.m. to 6 p.m.
Eastern time.

FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."

(1.) See "How to Choose a Share Class" to determine whether you may qualify for
a reduced sales charge.

(2.) 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.

DAVIS GOVERNMENT BOND FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
Management Fees 0.30% 0.30% 0.30%
Distribution (12b-1) Fees 0.22% 1.00% 1.00%
Other Expenses 0.56% 0.47% 0.52%
Total Annual Operating Expenses 1.08% 1.77% 1.82%

Management Fees and Total Annual Operating Expenses have been restated to
reflect a reduction in Management Fees which went into effect on February 1,
2005.

EXPENSE 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.

IF YOU SELL YOUR SHARES IN... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------- ------ ------- ------- --------
Class A shares $580 $802 $1,042 $1,730
Class B shares $580 $857 $1,159 $1,902*
Class C shares $285 $573 $ 985 $2,137

IF YOU STILL HOLD YOUR SHARES AFTER... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------- ------ ------- ------- --------
Class A shares $580 $802 $1,042 $1,730
Class B shares $180 $557 $ 959 $1,902*
Class C shares $185 $573 $ 985 $2,137

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

OVERVIEW OF DAVIS
GOVERNMENT MONEY MARKET FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Government Money Market Fund is a money market fund. Its investment
objective is to achieve as high a level of current income as is consistent with
the principle of preservation of capital and maintenance of liquidity. The Fund
maintains liquidity and preserves capital by carefully monitoring the maturity
of our investments. Our portfolio has a dollar-weighted average maturity of
ninety days or less. Under normal circumstances, the Fund invests exclusively in
U.S. Government Securities and repurchase agreements collateralized by U.S.
Government Securities.

GOVERNMENT SECURITIES

A repurchase agreement is a type of short-term investment that uses securities
as collateral. Like a short-term loan, the borrower sells securities to the
lender. The borrower agrees to buy back the securities at a certain time--at a
higher price that incorporates an interest payment.

DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o You are seeking current income.

o You are most comfortable investing in high-quality U.S. Government
Securities.

o You want a safe haven in times of market turmoil.

o You want easy access to your money.

You should not invest in this Fund if:

o You need a high total return to achieve your investment goals.

o Your primary investment goal is capital growth.

PRINCIPAL RISKS OF INVESTING IN THE FUND

This section describes what we think are the most significant factors (but not
the only factors) that could prevent the Fund from achieving its stated
objective.

o VARIABLE CURRENT INCOME. The income which Davis Government Money Market
Fund pays to investors is not stable. When interest rates increase, the
Fund's income distributions should increase. When interest rates decrease,
the Fund's income distributions should decrease.

o CREDIT RISK. Davis Government Money Market Fund seeks to manage credit risk
by investing exclusively, under normal circumstances, in U.S. Government
Securities and repurchase agreements collateralized by U.S. Government
Securities. Many of the agency-issued securities in the Fund's portfolio
(as opposed to the Treasury-issued securities) are not guaranteed by the
U.S. government and in unusual circumstances may present credit risk.
Although an issuer may be chartered or sponsored by Acts of Congress, their
securities are neither issued nor guaranteed by the United States Treasury.
These include direct obligations and mortgage-related securities that have
different levels of credit support from the U.S. government. Some are
supported by the full faith and credit of the U.S. government, such as
Government National Mortgage Association ("Ginnie Mae") pass-through
mortgage certificates. Some are supported by the right of the issuer to
borrow from the U.S. Treasury under certain circumstances, such as Federal
National Mortgage Association ("Fannie Mae") bonds. Others are supported
only by the credit of the entity that issued them, such as Federal Home
Loan Mortgage Corporation ("Freddie Mac") obligations. There is always some
risk, even for U.S. Government Securities that the issuer of a security
held by the Fund will fail to make a payment when it is due.

Although Davis Government Money Market Fund seeks to preserve the value of your
investment at $1 per share, investors can lose money. Shares of Davis Government
Money Market Fund are not deposits or obligations of any bank, are not
guaranteed by the U.S. government or any bank, are not insured by the FDIC or
any other agency and involve investment risks, including possible loss of the
principal amount invested.

PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Government Money Market Fund by showing changes in the Fund's
year-to-year performance. The Fund's past performance is not necessarily an
indication of how the Fund will perform in the future.

DAVIS GOVERNMENT MONEY MARKET FUND
CALENDAR YEAR TOTAL RETURNS FOR CLASS A, B, AND C SHARES

YEAR RETURN
---- ------
1996 4.80%
1997 5.02%
1998 4.94%
1999 4.51%
2000 5.91%
2001 3.77%
2002 1.38%
2003 0.62%
2004 0.83%
2005 2.68%

During the period shown above, the highest quarterly return was 1.52% for the
quarter ended September 30, 2000, and the lowest quarterly return was 0.12% for
the quarter ended September 30, 2003.Total return for the three months ended
March 31, 2006, (not annualized) was 0.96%.

DAVIS GOVERNMENT MONEY MARKET FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005

PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
----------- ------------ -------------
Class A shares 2.68% 1.85% 3.44%
Class B shares 2.68% 1.85% 3.44%
Class C shares 2.68% 1.85% 3.44%

DAVIS GOVERNMENT MONEY MARKET FUND YIELD
CLASS A, B AND C SHARES
7-Day SEC Yield, as of December 31, 2005
3.65%

You can obtain Davis Government Money Market Fund's most recent 7-day SEC Yield
by calling us toll-free at 1-800-279-0279, Monday through Friday, 9 a.m. to 6
p.m. Eastern time.

FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
Maximum sales charge (load) imposed on
purchases None None None
as a percentage of offering price
Maximum deferred sales charge (load) imposed
on redemptions None None None
as a percentage of the lesser of the net
asset value of the shares redeemed or the
total cost of such shares
Maximum sales charge (load) imposed on
reinvested dividends None None None
Exchange fee None None None

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."

DAVIS GOVERNMENT MONEY MARKET FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
Management Fees 0.47% 0.47% 0.47%
Distribution (12b-1) Fees 0.00% 0.00% 0.00%
Other Expenses 0.10% 0.10% 0.10%
Total Annual Operating Expenses 0.57% 0.57% 0.57%

Expenses may vary in future years.

EXPENSE 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.

IF YOU SELL YOUR SHARES IN... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------- ------ ------- ------- --------
Class A shares $58 $183 $318 $714
Class B shares $58 $183 $318 $714
Class C shares $58 $183 $318 $714

IF YOU STILL HOLD YOUR SHARES AFTER... 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------- ------ ------- ------- --------
Class A shares $58 $183 $318 $714
Class B shares $58 $183 $318 $714
Class C shares $58 $183 $318 $714

DAVIS
MANAGEMENT
--------------------------------------------------------------------------------

DAVIS ADVISORS

Davis Selected Advisers, L.P., ("Davis Advisors") serves as the investment
adviser for each of the Davis Funds. Davis Advisors' offices are located at 2949
East Elvira Road, Suite 101, Tucson, Arizona 85706. Davis Advisors provides
investment advice for the Davis Funds, manages their business affairs and
provides day-to-day administrative services. Davis Advisors also serves as
investment adviser for other mutual funds and institutional and individual
clients.

For the fiscal year ended December 31, 2005, Davis Advisors' compensation for
its services (based on average net assets) was: Davis Opportunity Fund, 0.67%
Davis Financial Fund, 0.63%; Davis Real Estate Fund, 0.67%; Davis Appreciation &
Income Fund, 0.72%; Davis Government Bond Fund, 0.32%; and Davis Government
Money Market Fund, 0.47%. As of February 1, 2005, the management fee for Davis
Government Bond Fund was reduced to 0.30%.

Davis Selected Advisers-NY, Inc., serves as the sub-adviser for each of the
Davis Funds. Davis Selected Advisers-NY, Inc.'s offices are located at 609 Fifth
Avenue, New York, New York 10017. Davis Selected Advisers-NY, Inc., provides
investment management and research services for the Davis Funds and other
institutional clients, and is a wholly owned subsidiary of Davis Advisors. Davis
Selected Advisers-NY, Inc.'s fee is paid by Davis Advisors, not the Davis Funds.

Every year the Directors consider whether to re-approve the advisory and
sub-advisory agreements. The basis for their decision is included in the Fund's
Semi-Annual Report.

INVESTMENT PROFESSIONALS

DAVIS OPPORTUNITY FUND

Investment Team. Davis Advisors uses a system of multiple portfolio managers to
manage Davis Opportunity Fund. Under this approach, the portfolio of the Fund is
divided into segments managed by individual portfolio managers. Portfolio
managers decide how their respective segments will be invested, within the
limits provided by the Fund's investment objectives, strategies, restrictions,
and by senior portfolio managers. The primary individual portfolio managers
responsible for Davis Opportunity Fund are:

o CHRISTOPHER DAVIS has served as the research adviser of Davis Opportunity
Fund since January 1999, and also manages other equity funds advised by
Davis Advisors. Mr. Davis has served as an analyst and portfolio manager
for Davis Advisors since 1989. As research adviser, Mr. Davis oversees the
Portfolio Managers of Davis Opportunity Fund and allocates segments of the
Fund to each of them to invest. Among other factors, Mr. Davis considers
the portfolio managers' experience, results achieved, and the number of
investment opportunities which they have identified within their areas of
expertise.

o KENNETH CHARLES FEINBERG has served as a Portfolio Manager of Davis
Opportunity Fund since January 1999, and also manages other equity funds
advised by Davis Advisors. Mr. Feinberg started with Davis Advisors as a
research analyst in December 1994.

o CHIP TUCKER, CFA, has served as a Portfolio Manager of Davis Opportunity
Fund since May 2004, manages other equity funds advised by Davis Advisors,
and also serves as research analyst for Davis Advisors. Mr. Tucker joined
Davis Advisors in April 2002 and previously served as a portfolio manager
for US Trust Company from April 2001 to April 2002.

o DANTON GOEI has served as a Portfolio Manager of Davis Opportunity Fund
since May 2004, manages other equity funds advised by Davis Advisors, and
also serves as research analyst for Davis Advisors. Mr. Goei joined Davis
Advisors in November 1998.

o TANIA POUSCHINE has served as a Portfolio Manager of Davis Opportunity Fund
since May 2004, manages other equity funds advised by Davis Advisors, and
also serves as research analyst for Davis Advisors. Ms. Pouschine joined
Davis Advisors in July 2003. From 1993 to 2003, Ms. Pouschine worked as an
analyst and portfolio manager at Ruane Cunniff.

o JAE CHUNG has served as a Portfolio Manager of Davis Opportunity Fund since
May 2004, manages other equity funds advised by Davis Advisors, and also
serves as research analyst for Davis Advisors. Mr. Chung joined Davis
Advisors in September 2003. From 2000 to September 2003, Mr. Chung served
as a portfolio manager for Marcstone Capital Management. From 1996 to 2000,
Mr. Chung served as a portfolio manager and analyst with Franklin Mutual
Advisers.

o DWIGHT BLAZIN, PHD, has served as a Portfolio Manager of Davis Opportunity
Fund since May 2004, manages other equity funds advised by Davis Advisors,
and also serves as research analyst for Davis Advisors. Mr. Blazin joined
Davis Advisors in 1997.

DAVIS FINANCIAL FUND

o CHRISTOPHER C. DAVIS has served as a Portfolio Manager of Davis Financial
Fund since inception in May 1991, and also manages other equity funds
advised by Davis Advisors. Mr. Davis served as Assistant Portfolio Manager
and research analyst working with Shelby M.C. Davis from September 1989
through September 1995.

o KENNETH CHARLES FEINBERG has served as a Portfolio Manager of Davis
Financial Fund since May 1997, and also manages other equity funds advised
by Davis Advisors. Mr. Feinberg started with Davis Advisors as a research
analyst in December 1994.

DAVIS REAL ESTATE FUND

o ANDREW A. DAVIS has served as a Portfolio Manager of Davis Real Estate Fund
since inception in January 1994, and also manages other equity funds
advised by Davis Advisors. Mr. Davis has served as a portfolio manager for
Davis Advisors since 1993.

o CHANDLER SPEARS has served as a Portfolio Manager of Davis Real Estate Fund
since August 2002, and also manages other equity funds advised by Davis
Advisors. Mr. Spears has served as a research analyst at Davis Advisors
since November 2000. Before joining Davis Advisors, Mr. Spears was employed
as the director of investor relations for Charles E. Smith Residential
Realty, Inc., in Arlington, Virginia. Prior to that he was a principal and
director of real estate research of SNL Securities, LC, in Charlottesville,
Virginia.

DAVIS APPRECIATION & INCOME FUND

o ANDREW A. DAVIS has served as a Portfolio Manager of Davis Appreciation &
Income Fund since February 1993, and also manages other equity funds
advised by Davis Advisors. Mr. Davis has served as a portfolio manager for
Davis Advisors since 1993.

o KEITH J. SABOL, CFA, has served as a Portfolio Manager of Davis
Appreciation & Income Fund since September 2005. Mr. Sabol has served as a
research analyst at Davis Advisors since July 2005. Before joining Davis
Advisors, Mr. Sabol was a principal with Quantanium, LLC where he served as
a portfolio manager from June 2002 through June 2005. Prior to that he
served as a portfolio manager for Federated Investors from 1996 to 2002.

DAVIS GOVERNMENT BOND FUND AND
DAVIS GOVERNMENT MONEY MARKET FUND

CRESTON KING, CFA, has served as a Portfolio Manager of Davis Government Bond
Fund and Davis Government Money Market Fund since August 1999. Mr. King also
manages other government money market funds advised by Davis Advisors.

The Statement of Additional Information provides additional information about
the Portfolio Managers' compensation, other accounts managed by the Portfolio
Managers, and the Portfolio Managers' ownership of securities in the Funds.

THE DAVIS INVESTMENT DISCIPLINE

Davis Advisors manages equity funds using the Davis Investment Discipline. We
conduct extensive research to try to identify businesses that possess
characteristics we believe foster the creation of long-term value, such as
proven management, a durable franchise and business model, and sustainable
competitive advantages. We aim to invest in such businesses when they are
trading at a discount to their intrinsic worth. We emphasize individual stock
selection and believe that the ability to evaluate management is critical. We
routinely visit managers at their places of business in order to gain insight
into the relative value of different businesses. Such research, however
rigorous, involves predictions and forecasts that are inherently uncertain.

Over the years, Davis Advisors has developed a list of characteristics that we
believe help companies to create shareholder value over the long term and manage
risk. While few companies possess all of these characteristics at any given
time, Davis Advisors searches for companies that demonstrate a majority or an
appropriate mix of these characteristics.

FIRST CLASS MANAGEMENT

o Proven track record

o Significant personal ownership in business

o Intelligent allocation of capital

o Smart application of technology to improve business and lower costs

STRONG FINANCIAL CONDITION AND SATISFACTORY PROFITABILITY

o Strong balance sheet

o Low cost structure

o High after-tax returns on capital

o High quality of earnings

STRONG COMPETITIVE POSITIONING

o Non-obsolescent products / services

o Dominant or growing market share

o Participation in a growing market

o Global presence and brand names

After determining which companies we wish to own, we then turn our analysis to
determining the intrinsic value of those companies' common stock. We seek common
stock which can be purchased at attractive valuations relative to their
intrinsic value. Our goal is to invest in companies for the long term. We
consider selling a company if we believe the stock's market price exceeds the
Adviser's estimates of intrinsic value, or if the ratio of the risks and rewards
of continuing to own the company is no longer attractive.

ADDITIONAL INFORMATION ABOUT INVESTMENTS

Each Fund's investment objectives are described in its respective Overview. The
Funds' investment objectives are not fundamental policies and may be changed by
the Board of Directors without a vote of shareholders. A Fund's prospectus would
be amended before any change in investment objective, and shareholders would be
promptly notified of the change.

Each Fund's principal investment strategies and main risks are also described in
its Overview. The Funds are not limited to investing in the securities and using
the principal investment strategies described in the Overviews. Each Fund may
also purchase other kinds of securities; engage in active trading (which would
increase portfolio turnover and commission expenses and may increase taxable
distributions); or employ

other investment strategies that are not principal investment strategies, if, in
Davis Advisors' professional judgment, the securities or investment strategies
are appropriate. Factors that Davis Advisors considers in pursuing these other
strategies include whether (i) purchasing such securities would be consistent
with shareholders' reasonable expectations; (ii) they may assist a Fund in
pursuing its investment objective; (iii) they are consistent with the Fund's
investment strategy; (iv) they will cause the Fund to violate any of its
investment restrictions; or (v) they will materially change the Fund's risk
profile as described in the Fund's prospectuses and Statement of Additional
Information, as amended from time to time. The Statement of Additional
Information discusses these securities and investment strategies.

SHORT-TERM INVESTMENTS. Each Fund uses short-term investments, such as treasury
bills and repurchase agreements, to maintain flexibility while evaluating
long-term opportunities. A Fund may also use short-term investments for
temporary defensive purposes. At such times a Fund will not be pursuing its
normal investment policies. In the event that our portfolio managers anticipate
a decline in the market values of the companies in which a Fund invests (due to
economic, political or other factors), we may reduce a Fund's risk by investing
in short-term securities until market conditions improve. Unlike equity
securities, these investments will not appreciate in value when the market
advances and will not contribute to long-term growth of capital.

For more details concerning current investments and market outlook, please see
the most recent shareholder report.

EXECUTION OF PORTFOLIO TRANSACTIONS. The Adviser places orders with
broker-dealers for Davis Funds' portfolio transactions. The Adviser seeks to
place portfolio transactions with brokers or dealers who will execute
transactions as efficiently as possible and at the most favorable net price. In
placing executions and paying brokerage commissions or dealer markups, the
Adviser considers price, commission, timing, competent block trading coverage,
capital strength and stability, research resources, and other factors. Subject
to best price and execution, the Adviser may place orders for Davis Funds'
portfolio transactions with broker-dealers who have sold shares of Davis Funds.
In placing orders for Davis Funds' portfolio transactions, the Adviser does not
commit to any specific amount of business with any particular broker-dealer.
Further, when the Adviser places orders for Davis Funds portfolio transactions,
it does not give any consideration to whether a broker-dealer has sold shares of
Davis Funds.

Over the last three years the Fund paid the following brokerage commissions:

FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
2005 2004 2003
-------- -------- --------

DAVIS OPPORTUNITY FUND
Brokerage commissions paid: $825,222 $454,386 $445,405
Brokerage as a percentage of average net
assets: 0.13% 0.10% 0.17%

DAVIS FINANCIAL FUND
Brokerage commissions paid: $217,636 $119,670 $388,455
Brokerage as a percentage of average net
assets 0.02% 0.01% 0.05%

DAVIS REAL ESTATE FUND
Brokerage commissions paid: $314,379 $274,239 $211,025
Brokerage as a percentage of average net
assets 0.05% 0.06% 0.06%

DAVIS APPRECIATION & INCOME FUND
Brokerage commissions paid: $ 40,725 $ 54,291 $ 60,407
Brokerage as a percentage of average net
assets 0.01% 0.02% 0.03%

DAVIS GOVERNMENT BOND FUND N/A N/A N/A

DAVIS GOVERNMENT MONEY MARKET FUND N/A N/A N/A

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 your Davis Funds account, you may buy or sell shares on any
business day. The price of your shares in a Davis Fund is based upon the total
value of the Fund's investments. Your account balance may change daily because
the share price may change daily.

The value of one share of a Davis Fund, also known as the net asset value, or
NAV, is calculated at 4 p.m. Eastern time on each day the New York Stock
Exchange is open or as of the time the Exchange closes, if earlier.

The business sections of many, but not all, major newspapers publish Davis
Funds' net asset values. If you have access to the Internet, you can also check
the net asset value on our website (www.davisfunds.com).

VALUATION OF PORTFOLIO SECURITIES

Your shares will be purchased at the net asset value, or sold at the net asset
value next determined after Davis Funds' transfer agent receives your request in
good order. A contingent deferred sales charge may apply at the time you sell.

Securities are valued primarily on the basis of market quotations. However,
Davis Funds have adopted procedures for making "fair value" determinations if
market quotations are not readily available. The Fund uses fair value prices any
time the Adviser concludes that reliable market quotations for its portfolio
securities are not readily available from an approved third party pricing
service or from independent brokers. Examples of when fair value pricing may be
used include illiquid or thinly traded securities, and securities whose values
have been affected by a significant event occurring after the close of their
primary markets. Davis

Funds use an independent vendor to assist in fair value pricing of foreign
securities when deemed appropriate. The use of fair value pricing by the Fund
may cause the net asset value of its shares to differ significantly from the net
asset value that would be calculated using last reported prices.

Some of the Funds' securities may be traded in markets that close at a different
time than when the Funds' shares are priced. Events affecting portfolio values
that occur after the time that such markets close and the time Funds' shares are
priced may result in the use of fair value pricing, as described above.
Likewise, because foreign securities trade in markets and exchanges that operate
on U.S. holidays and weekends, the value of some of the Funds' foreign
investments might change significantly on those days when investors cannot buy
or redeem shares. Davis Funds have adopted procedures designed to identify and
react to significant events in foreign markets that would have a material effect
on a Fund's net asset value. Notwithstanding, the net asset value of a Fund's
shares may change on days when shareholders will not be able to purchase or
redeem Fund shares.

Securities denominated in foreign currencies and traded in foreign markets will
have their value converted into U.S. dollar equivalents at the prevailing
exchange 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 a Fund's shares even if there has not been any change in the
foreign currency price of that Fund's investments.

Davis Government Money Market Fund typically values all of its securities at
amortized cost. Normally, the share price of Davis Government Money Market Fund
does not fluctuate. However, if there are unusually rapid changes in interest
rates that the Fund's Board of Directors believes will cause a material
deviation between the amortized cost of the Fund's debt securities and the
market value of those securities, the Board will consider taking temporary
action to maintain a fixed price or to prevent material dilution or other
unfavorable consequences to Fund shareholders. This temporary action could
include withholding dividends, paying dividends out of surplus, realizing gains
or losses, or using market valuation to calculate net asset value rather than
amortized cost.

PORTFOLIO HOLDINGS

A description of Davis Funds' policies and procedures with respect to the
disclosure of the Fund's portfolio holdings is available in the Statement of
Additional Information.

Each Fund's portfolio holdings are published and mailed to shareholders twice a
year in the annual and semi-annual reports which are mailed approximately 60
days after the end of the Fund's second and fourth fiscal quarters. In addition,
each Fund publishes its portfolio holdings on the Davis Funds' website (and the
SEC website) approximately sixty days after the end of each fiscal quarter.
Other information concerning the Funds' portfolio holdings may also be published
on the Davis Funds' website from time to time.

HOW WE PAY EARNINGS

There are two ways you can receive payments from the Davis Fund you invest in:

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

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

If you would like information about when a particular Davis Fund pays dividends
and distributes capital gains, please call 1-800-279-0279. Unless you choose
otherwise, the Davis Funds will automatically reinvest 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 IRS Form W-9 that your Taxpayer
Identification Number is correct and you are not subject to backup withholding.
If you are subject to backup withholding, or you did not certify your Taxpayer
Identification Number, the IRS requires the Davis Funds to withhold a percentage
of any dividends paid and redemption or exchange proceeds received.

HOW TO PUT YOUR DIVIDENDS AND CAPITAL GAINS TO WORK

You can have all of your dividends and capital gains automatically invested in
the same Fund or the same share Class of any other Davis Fund. To be eligible
for this Dividend Diversification Program, all accounts involved must be
registered under the same name and same Class of shares and have a minimum
initial value of $1,000. 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 at any time. To participate in this program, fill out
the cross-reinvest information in the appropriate section of the Application
Form. If you wish to establish this program after your account has been opened,
call for more information.

FEDERAL INCOME TAXES

TAXES ON DISTRIBUTIONS

Distributions you receive from a Fund may be subject to income tax and may also
be subject to state or local taxes unless you are exempt from taxation.

For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. A Fund's distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from a fund will normally be taxable to you
when made, regardless of whether you reinvest distributions or receive them in
cash.

Davis Funds will send you a statement each year showing the tax status of all
your distributions.

TAXES ON TRANSACTIONS

Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment is the
difference between the cost of your shares, including any sales charges, and the
price you receive when you sell them.

More information concerning federal taxes is available in the Statement of
Additional Information. We recommend that you consult with a tax advisor about
dividends and capital gains that may be received from the Davis Funds.

FEES AND EXPENSES OF THE FUNDS

Each Fund must pay operating fees and expenses.

MANAGEMENT FEE

The management fee covers the normal expenses of managing the Fund, including
compensation, research costs, corporate overhead expenses and related expenses.
The difference in the fee structures between the Classes is primarily the result
of their separate arrangements for shareholder and distribution services and is
not the result of any difference in the amounts charged by Davis Advisors for
core investment advisory services. Accordingly, the core investment advisory
expenses do not vary by Class. Different fees and expenses will affect
performance.

12B-1 FEES

The Davis Funds have Plans of Distribution or "12b-1 Plans" under which the
Funds may finance activities to sell shares. The 12b-1 Plans provide for annual
distribution expenses of up to 0.25% of the average daily net asset value of the
Class A shares; and up to the lesser of 1.25% of the average daily net asset
value of the Class B or C shares or the maximum amount provided by applicable
rule or regulation of the National Association of Securities Dealers, which is
1.00% at present.

For all share classes, up to 0.25% of distribution expenses may be used to pay
service fees to qualified dealers providing certain shareholder services.
Because distribution expenses are paid out of a Fund's assets on an ongoing
basis, these fees will increase the cost of your investment over time and may
cost you more than paying other types of sales charges. Thus, the higher fees
for Class B and C shares may cost you more over time than paying the initial
sales charge for Class A shares.

OTHER EXPENSES

Other expenses include miscellaneous fees from affiliated and outside service
providers. These fees may include legal, audit, custodial, the printing and
mailing of reports and statements, automatic reinvestment of distributions and
other conveniences, and payments to third parties that provide recordkeeping
services or administrative services for investors in the Fund.

TOTAL FUND OPERATING EXPENSES

The total cost of running a mutual fund is reflected in its expense ratio. A
shareholder does not pay operating costs directly; instead, operating costs are
taken out before the Fund's NAV is calculated and are expressed as a percentage
of the Fund's average daily net assets. The effect of these fees is reflected in
the performance results for that Class of shares. Investors should examine them
closely in the prospectus, especially when comparing one fund with another fund
in the same investment category.

COMPENSATION EARNED BY BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

Broker-dealers and other financial intermediaries ("Qualifying dealers") may
earn substantial compensation by selling Davis Funds' shares. Qualifying dealers
may receive (i) sales commissions from sales charges paid by purchasing
shareholders; (ii) distribution and service fees from the Funds' 12b-1
distribution plans; (iii) record-keeping fees from the Funds for providing
record-keeping services to investors who hold Davis Funds shares through
dealer-controlled omnibus accounts; and (iv) other compensation, described
below, paid by Davis Distributors, LLC (the "Distributor") from its own
resources.

Qualifying dealers may, as a condition to distributing Davis Funds, request that
the Distributor, pay or reimburse the Qualifying dealer for (i) marketing
support payments including business planning assistance, educating personnel
about the Davis Funds, and shareholder financial planning needs, placement on
the dealer's list of offered funds, and access to sales meetings, sales
representatives and management representatives of the dealer; and (ii) financial
assistance paid to dealers that enable the Distributor to participate in and/or
present at conferences or seminars, sales or training programs for invited
registered representatives and other employees, client and investor events and
other dealer-sponsored events. These additional payments are sometimes referred
to as "revenue sharing" payments. A number of factors are considered in
determining payments,

including the dealer's sales and assets, and the quality of the dealer's
relationship with the Distributor. Payments are generally based on the value of
shares of the Fund held by the dealer or financial institution for its customers
or based on sales of Fund shares by the dealer or financial institution, or a
combination thereof. The Adviser may use its profits from the advisory fee it
receives from the Fund. Some dealers may also choose to pay additional
compensation to their registered representatives who sell the Funds. Such
payments may be associated with the status of a Fund on a financial
intermediary's preferred list of funds or otherwise associated with the
financial intermediary's marketing and other support activities. The foregoing
arrangements may create an incentive for the brokers, dealers or other financial
institutions, as well as their registered representatives, to sell the Davis
Funds rather than other funds.

In 2005, the Adviser and Distributor made payments from their own resources to
the Qualifying dealers listed below. These Qualifying dealers may provide the
Davis Funds enhanced sales and marketing support and financial advisers employed
by the Qualifying dealers may recommend the Davis Funds rather than other funds.
Qualifying dealers may be added or deleted at any time.

Ameriprise Financial Services, Inc.; Charles Schwab & Co., Inc.; Fidelity
Brokerage Services, Inc.; John Hancock Life Insurance Company (U.S.A.) (name
change from Manufacturers Life Insurance Company U.S.A.); John Hancock Life
Insurance Company of New York (name change from Manufacturers Life Insurance
Company of New York); Merrill Lynch, Pierce, Fenner & Smith, Inc.; Metropolitan
Life Insurance Company; T. Rowe Price Investment Services, Inc.; AG Edwards &
Sons; Citistreet Associates; Citigroup Global Markets, Inc.; Morgan Stanley,
Inc.; Piper Jaffray, Inc.; UBS Financial Services, Inc.; Wachovia Securities,
Inc.; Merrill Lynch Life Insurance Co.; ADP Broker Dealer, Inc.; HSBC Bank USA;
Mercer HR Services LLC (name change from Putnam Fiduciary Trust Company);
Nationwide Financial Services, Inc.; New York Life Distribution; Cigna Financial
Services, Inc. (name change to Prudential Retirement Insurance & Annuity Co.);
Wachovia Bank N.A.; Wells Fargo Bank, N.A.; The Vanguard Group, Inc.; and Union
Bank of California.

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.

Although Davis Funds may use brokers who sell shares of the Funds to effect
portfolio transactions, the Funds do not consider the sale of fund shares as a
factor when selecting brokers to effect portfolio transactions.

Investors should consult their financial intermediary regarding the details of
the payments they receive in connection with the sale of Fund shares.

DUE DILIGENCE MEETINGS. The Distributor routinely sponsors due diligence
meetings for registered representatives during which they receive updates on
various Davis Funds and are afforded the opportunity to speak with portfolio
managers. Invitation to these meetings is not conditioned on selling a specific
number of shares. Those who have shown an interest in Davis Funds, however, are
more likely to be considered. To the extent permitted by their firm's policies
and procedures, registered representatives' expenses in attending these meetings
may be covered by the Distributor.

SEMINARS AND EDUCATIONAL MEETINGS. The Distributor may defray certain expenses
of Qualified dealers incurred in connection with seminars and other educational
efforts subject to the Distributor's policies and procedures governing payments
for such seminars. The Distributor may share expenses with Qualifying dealers
for costs incurred in conducting training and educational meetings about various
aspects of the Funds for the employees of Qualifying dealers. In addition, the
Distributor may share expenses with Qualifying dealers for costs incurred in
hosting client seminars where the Fund is discussed.

RECORDKEEPING FEES. Certain Qualifying dealers have chosen to maintain omnibus
accounts with the Davis Funds. In an "omnibus account" the Fund maintains a
single account in the name of the dealer and the dealer maintains all of the
individual shareholder accounts. Likewise, for many retirement plans, a third
party administrator may open an omnibus account with the Davis Funds and the
administrator will then maintain all of the participant accounts. The Adviser,
on behalf of the Funds, enters into agreements whereby the Funds compensate the
dealer or administrator for recordkeeping services.

Recordkeeping services typically include (i) establishing and maintaining
shareholder accounts and records; (ii) recording shareholder account balances
and changes thereto; (iii) arranging for the wiring of funds; (iv) providing
statements to shareholders; (v) furnishing proxy materials, periodic Davis Funds
reports, prospectuses and other communications to shareholders as required; (vi)
transmitting shareholder transaction information; and (vii) providing
information in order to assist Davis Funds in their compliance with state
securities laws. Each Davis Fund typically

would be paying these shareholder servicing fees directly, were it not that the
Qualifying dealer holds all customer accounts in a single omnibus account with
each Davis Fund.

OTHER COMPENSATION. The Distributor may, from its own resources and not the
Funds, offer other compensation to the extent not prohibited by state or federal
laws, the Securities and Exchange Commission, or any self-regulatory agency,
such as the NASD.

HOW TO
CHOOSE A SHARE CLASS
--------------------------------------------------------------------------------

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

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.

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 other two share classes:

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

o There is no limit to 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 assets--each year
you hold the shares. This fee is lower than the fee you pay for the other
two classes of shares. Lower expenses of Class A shares translate into
higher annual return on net asset value than Class B or C shares.

CLASS A SHARES SALES CHARGES
for all Davis Funds except Davis Government Money Market Fund

SALES CHARGE AMOUNT OF SALES
SALES CHARGE approximate CHARGE RETAINED
approximate percentage of BY DEALER
percentage of net amount percentage of
AMOUNT OF PURCHASE offering price invested offering price
--------------------- -------------- ------------- ---------------
Under $100,000 4.75% 5.00% 4.00%
$100,000 - $250,000 3.50% 3.60% 3.00%
$250,000 - $500,000 2.50% 2.60% 2.00%
$500,000 - $750,000 2.00% 2.04% 1.75%
$750,000 - $1 million 1.00% 1.01% 0.75%
$1 million or more* None None None

* 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, a deferred sales charge of 0.75% may be
deducted from the redemption proceeds.

The Distributor may pay the dealer of record commissions (on Davis Funds other
than Davis Government Money Market Fund) on purchases at the annual rate
described in the table below. Commissions may be paid on either (i) Class A
purchases of $1 million or more; or (ii) Class A purchases (net of redemptions)
in retirement plans which qualify for sales at net asset value. The commission
will be paid only on purchases that were not previously subject to a front-end
sales charge or dealer concession.

PURCHASE AMOUNT COMMISSION
-------------------- ----------
First $3 million 0.75%
Next $2 million 0.50%
More than $5 million 0.25%

The Fund may reimburse the Distributor for these payments through its Plans of
Distribution. If distribution fee limits already have been reached for the year,
the Distributor itself will pay the commissions.

REDUCTION OF CLASS A SHARES INITIAL SALES CHARGE

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. To receive a reduction in your Class A initial sales charge,
you must let your dealer or Davis Funds know at the time you purchase shares
that you qualify for such a reduction. If you do not let your dealer or Davis
Funds know you are eligible for a reduction, you may not receive a sales charge
discount to which you are otherwise entitled. To qualify for a reduction in
Class A shares initial sales charge you must provide records (generally account
statements are sufficient; your broker may require additional documents) of all
Davis Funds shares owned which you wish to count towards the sales charge
reduction.

YOU CAN COMBINE PURCHASES OF CLASS A SHARES

o WITH OTHER FAMILY MEMBERS. To receive a reduced Class A sales charge,
investments made by yourself, your spouse, and any children under the age
of 21, may be aggregated if made for your own account(s) and/or certain
other accounts, such as:

a) trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, then the trust
account may only be aggregated with accounts of the primary
beneficiary of the trust;

b) solely controlled business accounts; or

c) single-participant retirement plans.

o 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.

o 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 thirteen-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 thirteen-month period. Money Market Fund
accounts do not count toward a Statement of Intention.

o UNDER RIGHTS OF ACCUMULATION. If you notify your dealer or our Distributor,
you can include the Class A, B and C shares in Davis Funds you already own
(excluding shares in Davis Government Money Market Fund) when calculating
the price for your current purchase. These shares are valued at current
offering price value to determine whether or not you qualify for a
reduction in the sales charge. Money Market Fund accounts do not count
toward Rights of Accumulation.

o COMBINING RIGHTS OF ACCUMULATION (ROA) WITH LETTER OF INTENT (LOI). A
shareholder can use a Statement of Intent and Rights of Accumulation in
conjunction with one another; the Statement of Intent will take precedence
over the Rights of Accumulation. Once the Statement of Intent has been
satisfied any new purchases into any of the linked Class A share accounts
will receive the reduced sales charge.

For more information about how to reduce Class A shares initial sales charge,
please visit Davis Funds' website free of charge at WWW.DAVISFUNDS.COM, (which
includes additional information in a clear and prominent format that includes
hyperlinks), consult your broker, or financial intermediary, or refer to the
Fund's Statement of Additional Information which is available through your
financial intermediary or from the Fund by calling shareholder services at
1-800-279-0279.

CLASS A SHARES FRONT-END SALES CHARGE WAIVERS

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

o Investments in Davis Government Money Market Fund.

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

o Directors, officers and employees of any Davis Fund, the investment adviser
of any Davis Fund or its affiliates, and their immediate families.

o Registered representatives, principals, and employees (and any immediate
family member) of securities dealers having a sales agreement with the
Distributor.

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

o Employee benefit plans making purchases through a single account covering
at least fifty participants.

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

o State and local governments.

o Shareholders making purchases in certain accounts offered by securities
firms that have entered into contracts with the Davis Funds and which
charge fees based on assets in the account.

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:

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

o You can invest up to $50,000 in Class B shares.

o If you sell Class B shares in any of the Davis Funds within six years of
purchase, you must pay a deferred sales charge. This charge decreases over
time as you own the shares (see chart following).

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

o Investors in Class B shares (other than Davis Government Money Market Fund)
pay a distribution fee of one percent of the average daily net asset value
each year they hold the shares. Higher expenses translate into lower annual
return on net asset value.

o At redemption, the deferred sales charge for each purchase will be
calculated from the date of purchase, excluding any time the shares were
held in a money market fund.

Note: Investors who buy Class B shares of Davis Government Money Market Fund
will not pay deferred sales charges unless the money market fund shares were
received in exchange for shares of other Davis Funds (see "Exchanging Shares").

CLASS B SHARES DEFERRED SALES CHARGES

for all Davis Funds except Davis Government Money Market Fund

SALES MADE AFTER PURCHASE AMOUNT OF DEFERRED SALES CHARGE
------------------------- -------------------------------
Year 1 4%
Years 2-3 3%
Years 4-5 2%
Year 6 1%
Years 7-8 None

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 in order to avoid paying a front-end sales
charge:

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

o You can invest up to $500,000 in Class C shares.

o 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 one percent. At redemption, the deferred sales
charge for each purchase will be calculated from the date of purchase,
excluding any time the shares were held in a money market fund.

o Investors in Class B or C shares (other than Davis Government Money Market
Fund) pay a distribution fee of one percent of the average daily net asset
value each year they hold the shares. Higher expenses translate into lower
annual return on net asset value.

DEFERRED SALES CHARGE

If you purchase shares subject to a contingent deferred sales charge and redeem
any of those shares during the applicable holding period for the class of shares
you own, the contingent deferred sales charge will be deducted from the
redemption proceeds unless you are eligible for one of the waivers described
below. At redemption, the deferred sales charge will be calculated from the date
of each purchase, excluding any time that shares were held in a money market
fund. You will pay a deferred sales charge in the following cases:

o 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.

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

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

To keep deferred sales charges as low as possible, we first will 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 gains distributions. To
determine whether the deferred sales charge applies to a redemption, we redeem
shares in the following order:

o Shares in your account represented by an increase in NAV over the initial
purchase price (appreciation).

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

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

o Shares held the longest, but which are still subject to the deferred sales
charge.

Note: Investors who buy Class B or C shares of Davis Government Money Market
Fund will not pay deferred sales charges unless the money market fund shares
were received in exchange for shares of other Davis Funds (see "Exchanging
Shares").

DEFERRED SALES CHARGE WAIVERS

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

o 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.

o You die and are the sole owner of the account. Otherwise, shares can be
redeemed without a contingent deferred sales charge following the death or
disability of the last surviving shareholder, including a trustee of a
grantor trust or revocable living trust for which the trustee is also the
sole beneficiary. The death or disability must have occurred after the
account was established. If you claim a disability you must provide
evidence of a determination of disability by the Social Security
Administration.

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

o Your Fund redeems the remaining shares in your account under an Involuntary
Redemption.

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

o You are a director, officer or employee of Davis Advisors or one of its
affiliates (or a family member of a director, officer or employee).

o You sell shares under the Systematic Withdrawal Plan if the aggregate value
of the redeemed shares does not exceed twelve percent of the account's
value.*

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.

* A Systematic 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 Systematic Withdrawal Plan, a deferred sales charge may be imposed on
those shares and on any subsequent redemptions within a twelve-month period,
regardless of whether such redemptions are pursuant to a Systematic 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, 9 a.m. to 6 p.m.
Eastern time. If you still are not sure about which class is best for you,
contact your financial adviser.

HOW TO
OPEN AN ACCOUNT
--------------------------------------------------------------------------------

You can open an account if you initially invest at least $1,000 per fund.

TWO WAYS YOU CAN OPEN AN ACCOUNT

o BY MAIL. Complete and sign the Application Form and mail it to our service
provider, State Street Bank and Trust. Include a check made payable to
DAVIS FUNDS. All purchases by check should be in U.S. dollars. DAVIS FUNDS
WILL NOT ACCEPT THIRD-PARTY CHECKS, STARTER CHECKS, TRAVELER'S CHECKS OR
MONEY ORDERS.

o 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. Please note that your dealer may charge a
service fee or commission for these transactions.

ANTI-MONEY LAUNDERING COMPLIANCE

Davis Funds and the Distributor are required to comply with various anti-money
laundering laws and regulations. Consequently, the Funds or the Distributor may
request additional information from you to verify your identity and source of
funds. If you do not provide the information, the Davis Funds may not be able to
open your account. If at any time the Funds believe an investor may be involved
in suspicious activity or if certain account information matches information on
government lists of suspicious persons, they may choose not to establish a new
account or may be required to "freeze" a shareholder's account. They may also be
required to provide a government agency or another financial institution with
information about transactions that have occurred in a shareholder's account or
to transfer monies received to establish a new account, transfer an existing
account or transfer the proceeds of an existing account to a governmental
agency. In some circumstances, the law may not permit the Funds or the
Distributor to inform the shareholder that it has taken the actions described
above.

RETIREMENT PLAN ACCOUNTS

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

o IRAs

o Roth IRAs

o Coverdell Education Savings Accounts

o Simple IRAs

o Simplified Employee Pension (SEP) IRAs

o 403(b) Plans

State Street Bank and Trust acts as custodian (service provider) for the
retirement plans and charges the participant a $15 maintenance fee each year
regardless of the number of plans established per Social Security Number. This
fee will be waived for accounts sharing the same Social Security Number if the
accounts total at least $50,000 at Davis Funds. This maintenance fee is
automatically deducted from each account unless you elect to pay the fee
directly. There is also a $15 fee for closing retirement plan accounts. To open
a retirement plan account, you must fill out a special application form. You can
request this form by calling Shareholder Services.

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 prospectus describes the types of
transactions you can perform as a Davis Funds shareholder including how to
initiate these transactions and the charges that you may incur (if any) when
buying, selling or exchanging shares. A transaction will not be executed until
all required documents have been received in a form meeting all legal
requirements. Legal requirements vary depending upon the type of transaction and
the type of account. Call Shareholder Services for instructions. These
procedures and charges may change over time and the prospectus in effect at the
time a transaction is initiated will determine the procedures and charges which
will apply to the transaction.

RIGHT TO REJECT OR RESTRICT ANY PURCHASE OR EXCHANGE ORDER

Purchases and exchanges should be made for investment purposes only. Davis Funds
and the Distributor reserve the right to reject or restrict any purchase or
exchange order for any reason. Davis Funds are not designed to serve as a
vehicle for frequent trading in response to short-term fluctuations in the
securities markets. Accordingly, purchases or exchanges that are part of
activity that Davis Funds or the Distributor have determined may involve actual
or potential harm to a Fund may be rejected.

FOUR WAYS TO BUY, SELL AND EXCHANGE SHARES

o 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
time) or use our automated telephone system at any time, day or night.

o BY ONLINE ACCOUNT ACCESS. You may initiate most account transactions
through online account access on our website, www.davisfunds.com. Please
note that certain account types may be restricted from online access.

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

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

Express shipping:
State Street Bank and Trust Company
c/o Davis Funds
66 Brooks Drive, Braintree, MA 02184

o BY DEALER. Contact a dealer who then will make the transaction through our
Distributor. Please note that your dealer may charge a service fee or
commission for these transactions.

The Davis Funds do not issue certificates for any class of 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. Transactions in the
account, such as additional investments, will be reflected on regular
confirmation statements from the Transfer Agent. Dividend and capital gain
distributions, purchases through automatic investment plans and certain
retirement plans, and automatic exchanges and withdrawals will be confirmed at
least quarterly.

WHEN YOUR TRANSACTIONS ARE PROCESSED

The per-share price for purchases or sales made through our Distributor 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.

BUYING MORE SHARES

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

o BY MAIL. 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.

o THROUGH A DEALER. When you buy shares through a dealer, you may be charged
a service fee or commission for these transactions.

o BY WIRE. You may wire federal funds directly to our service provider, 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
[NAME OF DAVIS FUND AND CLASS OF SHARES THAT YOU ARE BUYING]
Shareholder Name
Shareholder Account Number
Federal Routing Number 011000028
DDA Number 9904-606-2

MAKING AUTOMATIC INVESTMENTS

An easy way to increase your investment in any Davis Fund 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 under the plan each month is $25. The account
minimum of $1,000 must be met prior to establishing an automatic investment
plan. The account minimum of $1,000 will be waived if you meet the $1,000
minimum requirement within one year and purchases are made automatically every
month through your employer as part of a qualified plan.

Purchases can be processed electronically on any day of the month between the
5th and 28th if the institution that services your bank account is a member of
the Automated Clearing House system. 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. If you wish to establish this plan after your account
has been opened, you must submit a letter of instruction signed by the account
owner(s). You can stop automatic investments at any time by calling Shareholder
Services.

You can also use our Dividend Diversification Program to buy more shares in any
Davis Fund. See "Once You Invest in Davis Funds."

Note: 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) on any business day at net asset value minus any
sales charges that may be due. You can sell the shares by telephone, by
internet, by mail or through a dealer.

When you sell shares by mail, indicate the number of shares or the 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 these transactions.

Redemption proceeds are usually paid to you by check within seven days after
State Street Bank and Trust receives your proper sale request. You may redeem
shares on any business day. Redemption proceeds may be withheld until a
sufficient period of time has passed for State Street Bank and Trust to be
reasonably sure that all checks or drafts (including certified or cashier's
checks) for shares purchased have cleared, normally not exceeding fifteen
calendar days.

CHECK WRITING PRIVILEGE FOR DAVIS GOVERNMENT MONEY MARKET FUND

You can request the ability to use your Davis Government Money Market Fund
account as a checking account if you hold Class A shares and are not investing
through a retirement plan or an IRA. Davis Government Money Market Fund
investors with check writing privileges can write checks:

a) For $250 or more from their accounts. Checks written for less than
$250 will be honored and a $20 service free will be debited from the
account;

b) So long as the account balance is at least $1,000 after the check has
been paid. If a check is presented for payment which would bring the
account balance to less than $1,000 a $20 service fee

will be debited from the account and check writing privileges may be
suspended; and

c) Subject to the rules prescribed by State Street Bank and Trust. Davis
Funds and State Street Bank and Trust reserve the right to modify
these rules at any time.

Writing a check is a way of selling shares and directing the proceeds to a third
party. When a Davis Government Money Market Fund check is presented to State
Street Bank and Trust for payment, the bank will redeem a sufficient number of
shares in your account to cover the amount of the check. If you have had recent
activity in your Davis Government Money Market Fund account, funds may not be
available to cover your checks. For example: (1) If you have redeemed or
exchanged funds out of your Davis Government Money Market Fund account, there
may not be sufficient funds remaining to cover your check; (2) If you have
recently purchased shares in your Davis Government Money Market Fund account,
the funds may still be within the fifteen-day uncollected status; or (3) If
funds were exchanged into your Davis Government Money Market Fund account from
another Davis Fund, those funds may still be within the fifteen-day uncollected
status.

To qualify for CHECK WRITING PRIVILEGES, fill out the appropriate section in
your Application Form.

If you write a check on your Davis Government Money Market Fund account and you
do not have sufficient shares in your account to cover the check, or if your
check is presented for payment before your purchase check has cleared, the check
will be returned and your account will be assessed an insufficient funds fee of
$20.00. You can find more information about check writing privileges in the
Statement of Additional Information. Davis Funds and State Street Bank and Trust
reserve the right to modify or terminate the check writing service at any time.

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 one
percent of a Fund's net asset value during any ninety-day period. Any sales
above the cash limit may be paid in securities and would mean you would
have to pay brokerage fees if you sold the securities.

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 thirty days, or
if you wish to send redemption proceeds to a third party, you will need a
medallion signature guarantee for all sales.

o In the past, the Davis Funds issued certificates. 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.

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

MEDALLION SIGNATURE GUARANTEE

To protect you and the Davis Funds against fraud, certain redemption requests
must be made in writing with your signature guaranteed. A medallion signature
guarantee is a written endorsement from an eligible guarantor institution that
the signature(s) on the written request is (are) valid. Certain commercial
banks, trust companies, savings associations, credit unions and members of a
United States stock exchange participate in the medallion signature guarantee
program. No other form of signature verification will be accepted.

STOCK POWER

This is 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.

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 sold Class A or Class B shares on which you have paid a sales charge
(other Classes of shares are not entitled to this privilege) and decide to
repurchase some or all shares within sixty days of sale, you may notify us in
writing of your intent to exercise the SUBSEQUENT REPURCHASE PRIVILEGE. This
privilege can only be exercised once. With this privilege you may purchase Class
A shares at current net asset value without a sales charge. If you redeemed
Class B shares and paid a contingent

deferred sales charge on redemption, it will not be refunded or returned to your
account. You may purchase Class A shares of the same fund in an amount up to,
but not exceeding, the dollar amount of Class A or Class B shares which you
previously redeemed. To exercise this privilege, you must send a letter to our
service provider, State Street Bank and Trust, along with a check for the
repurchased shares.

INVOLUNTARY REDEMPTION

If your account balance declines to less than $1,000 in any Fund as a result of
a redemption, exchange, or transfer, or if your account has not met the $1,000
minimum investment requirement, we may sell your remaining shares in the Fund at
net asset value. We first will notify you, giving you at least sixty days'
notice that an INVOLUNTARY REDEMPTION may take place. If you increase your
account balance to above $1,000 during the notice period, the Involuntary
Redemption will be canceled.

MAKING SYSTEMATIC WITHDRAWALS

If your fund/account balance is more than $10,000, you can sell a set dollar or
percentage amount each month or quarter (for retirement accounts or IRAs,
withdrawals may be established on an annual basis). 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. When you participate in this plan, known as the SYSTEMATIC 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 thirty days. These funds
are sent by check between the 5th and 28th days 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 5th and the 28th days of the month. You must complete the
appropriate section of the Application Form. If you wish to execute an
Systematic Withdrawal Plan by ACH after your account has been established,
you must submit a letter of instruction with a medallion signature
guarantee.

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. If you wish to designate a third-party payee after your
account has been established, you must submit a letter of instruction with
a medallion signature guarantee.

You may stop systematic withdrawals at any time without charge or penalty by
calling Shareholder Services.

WIRING SALE PROCEEDS TO YOUR BANK ACCOUNT

You may be eligible to have your redemption proceeds electronically transferred
to a commercial bank account by federal funds wire. There is a $5 charge by
State Street Bank and Trust for wire service and receiving banks may also charge
for this service. Redemption by federal funds wire is usually credited to your
bank account on the next business day after the sale. Alternatively, redemption
through Automated Clearing House will usually arrive at your bank two banking
days after the sale. To have redemption proceeds sent by federal funds wire to
your bank, you must first fill out the Banking Instructions section on the
account application form and attach a voided check or deposit slip. If the
account has already been established, an Account Service Form or letter of
instruction must be submitted with a medallion guarantee and a copy of a voided
check or deposit slip.

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 only exchange shares from your account within the same class
and under the same registration. You can exchange shares by telephone, by
internet, by mail or through a dealer. The initial exchange must be for at least
$1,000. Exchanges are normally performed on the same day of the request if
received in proper form (all necessary documents, signatures, etc.) 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. In the

past, the Davis Funds issued certificates. 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 each transaction.

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

MARKET TIMING

Davis Funds discourage short-term or excessive trading, often referred to as
"market timing," and intend to seek to restrict or reject such trading or take
other action if in the judgment of the Adviser such trading may be detrimental
to the interests of a Fund and its long-term shareholders. Market timing
strategies may dilute the value of fund shares held by long-term shareholders,
interfere with the efficient management of the Fund's portfolio, and increase
brokerage and administrative costs.

The Board of Directors has adopted policies and procedures with respect to the
frequent purchases and redemption of fund shares. Currently, four round-trip
exchanges between Davis Funds are allowed during a calendar year. You may make
an unlimited number of exchanges out of Davis Government Money Market Fund.
Automatic exchanges are excluded from this provision. Certain financial
intermediaries, such as 401(k) plan administrators, may apply purchase and
exchange limitations which are different than the limitations discussed above.
These limitations may be more or less restrictive than the limitations imposed
by the Davis Funds, but are designed to detect and prevent excessive trading.
Shareholders should consult their financial intermediaries to determine what
purchase and exchange limitations may be applicable to their transactions in the
Davis Funds through that financial intermediary. To the extent reasonably
feasible, the Funds' market timing procedures apply to all shareholder accounts
and neither Davis Funds nor the Adviser have entered into agreements to exempt
any shareholder from application of either the Davis Funds' or a financial
intermediary's market-timing procedures, as applicable.

Davis Funds use several methods to reduce the risk of market timing. These
methods include (i) limiting annual exchange activity per fund account; and (ii)
committing staff to selectively review on a continuing basis recent trading
activity in order to identify trading activity that may be contrary to the
Funds' market timing policy. If Davis Funds determine that your purchase or
exchange patterns reflect a market timing strategy, Davis Funds reserve the
right to take any action permitted under applicable rules and standards,
including but not limited to (i) refusing to accept your orders to purchase Fund
shares; and/or (ii) restricting the availability of exchanges through telephone
requests, facsimile transmissions, automated telephone services, internet
services or any electronic transfer services.

Davis Funds receive purchase exchange and redemption orders from many financial
intermediaries which maintain omnibus accounts with the Funds. Omnibus account
arrangements permit financial intermediaries to aggregate their clients'
transaction and ownership positions. In these circumstances, the identity of the
particular shareholder(s) is not known to Davis Funds. While Davis Funds
encourages financial intermediaries to apply the Funds' marketing timing policy
to their customers who invest indirectly in the Funds, Davis Funds are limited
in their ability to monitor the trading activity or enforce the Funds' market
timing policy with respect to customers of financial intermediaries.
Shareholders seeking to engage in excessive trading practices may employ a
variety of strategies to avoid detection. The ability of Davis Funds to detect
and curtail excessive trading practices may also be limited by operational
systems and technological limitations.

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 $1,000. 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. If your account has already been
established, you may contact Shareholder Services to set up 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 Funds you can perform a transaction in one of two ways:

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

o If you have a TouchTone(TM) telephone, you can use Davis Funds' 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 be issued only to the registered account owner(s).

o The check must be sent to the address on file with the Distributor.

o Your current address must be on file for at least thirty days.

When you buy, sell or exchange shares over the telephone, you agree that the
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 any
loss from 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 website--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. You may also request confirmation statements and
tax summary information to be mailed to the address on file. Please review our
website for more complete information. If you do not wish to have this option
activated for your account, please contact Shareholder Services.

To access your accounts, you will need the name of the Fund(s) in which you are
invested, your account number and your Social Security Number. 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 buy, sell or exchange shares over the Internet, you agree that the
Davis Funds are not liable for following 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. If
these procedures are not used, the Funds may be liable for any loss from
unauthorized instructions.

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

DIVIDENDS AND DISTRIBUTIONS

o The Davis Long-Term Growth Funds (i.e. Davis New York Venture Fund, Davis
Opportunity Fund, and Davis Financial Fund) ordinarily distribute their
dividends and capital gains, if any, in December.

o The Davis Growth & Income Funds (i.e. Davis Real Estate Fund and Davis
Appreciation & Income Fund) ordinarily distribute dividends quarterly and
capital gains, if any, in December.

o Davis Government Bond Fund and Davis Government Money Market Fund
ordinarily distribute dividends monthly. Davis Government Bond Fund
ordinarily distributes capital gains, if any, in December. Davis Government
Money Market Fund does not ordinarily distribute capital gains.

o When a dividend or capital gain is distributed, the net asset value per
share is reduced by the amount of the payment. Davis Government Bond Fund's
and Davis Government Money Market Fund's net asset values are not affected
by dividend payments.

o You may elect to reinvest dividend and/or capital gain distributions to
purchase additional shares of any Davis Fund, or you may elect to receive
them in cash. Many shareholders do not elect to take capital gain
distributions in cash because these distributions reduce principal value.

o If a dividend or capital gain distribution is for an amount less than $10,
then the Fund will not issue a check. Instead, the dividend or capital gain
distribution will be automatically reinvested in additional shares of the
Fund.

o If a dividend or capital gain distribution check remains uncashed for six
months or is undeliverable by the Post Office, we will reinvest the
dividend or distribution promptly after making this determination; and
future dividends and capital gains distributions will be automatically
reinvested.

FINANCIAL HIGHLIGHTS

These tables are designed to show you the financial performance of each of the
Funds in this prospectus for the past five years, 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
at which an investor would have earned (or lost) money on an investment in the
Fund.

This information has been audited by KPMG LLP. KPMG LLP's report, along with
each Fund's financial statements, is included in the annual report, which is
available upon request.

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS OPPORTUNITY FUND
CLASS A

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
----------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------

NET ASSET VALUE, BEGINNING OF
PERIOD $ 23.20 $ 20.47 $ 14.53 $ 16.81 $ 18.60

INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss) 0.05(3) 0.08 (0.07) (0.07) (0.07)
Net Realized and Unrealized Gains
(Losses) 1.88 2.65 6.01 (2.21) (1.44)
Total From Investment Operations 1.93 2.73 5.94 (2.28) (1.51)

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment
Income (0.24) -- -- -- --
Distributions from Realized Gains (0.60) -- -- -- (0.27)
Distributions in Excess of Net
Realized Gains -- -- -- -- (0.01)
Total Dividends and Distributions (0.84) -- -- -- (0.28)

NET ASSET VALUE, END OF PERIOD 24.29 $ 23.20 $ 20.47 $ 14.53 $ 16.81

TOTAL RETURN(1) 8.33% 13.34% 40.88% (13.56)% (8.06)%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $446,794 $314,526 $204,015 $111,685 $101,057
Ratio of Expenses to Average Net
Assets 1.15% 1.20% 1.30% 1.31% 1.23%
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.18% 0.39% (0.47)% (0.49)% (0.50)%
Portfolio Turnover Rate(2) 35.77% 22.22% 42.34% 42.74% 40.96%

(1.) Assumes hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at
the net asset value calculated on the last business day of the fiscal
period. Sales charges are not reflected in the total returns.

(2.) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation.

(3.) Per share calculations were based on average shares outstanding for the
period.

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS OPPORTUNITY FUND
CLASS B

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
----------------------------------------------------
2005 2004 2003 2002 2001
------- -------- ------- ------- -------

NET ASSET VALUE, BEGINNING OF PERIOD $ 20.55 $ 18.28 $ 13.07 $ 15.24 $ 17.05

INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Loss (0.13)(3) (0.08) (0.19) (0.17) (0.18)
Net Realized and Unrealized Gains
(Losses) 1.66 2.35 5.40 (2.00) (1.35)
Total From Investment Operations 1.53 2.27 5.21 (2.17) (1.53)

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment Income (0.04) -- -- -- --
Distributions from Realized Gains (0.60) -- -- -- (0.27)
Distributions in Excess of Net
Realized Gains -- -- -- -- (0.01)
Total Dividends and Distributions (0.64) -- -- -- (0.28)

NET ASSET VALUE, END OF PERIOD $ 21.44 $ 20.55 $ 18.28 $ 13.07 $ 15.24

TOTAL RETURN(1) 7.49% 12.42% 39.86% (14.24)% (8.92)%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $96,501 $105,077 $96,854 $68,895 $69,903
Ratio of Expenses to Average Net
Assets 1.90%(4,5) 1.97% 2.06% 2.09% 2.06%
Ratio of Net Investment Loss to
Average Net Assets (0.57)% (0.38)% (1.23)% (1.27)% (1.33)%
Portfolio Turnover Rate(2) 35.77% 22.22% 42.34% 42.74% 40.96%

(3.) Per share calculations were based on average shares outstanding for the
period.

(4.) Ratio of expenses to average net assets before the reduction of expenses
paid indirectly was 1.91% for 2005.

(5.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 1.92%.

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS OPPORTUNITY FUND
CLASS C

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
------------------------------------------------------
2005 2004 2003 2002 2001
-------- ------- ------- ------- -------

NET ASSET VALUE, BEGINNING OF PERIOD $ 21.42 $ 19.05 $ 13.62 $ 15.89 $ 17.76

INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Loss (0.13)(3) (0.06) (0.17) (0.16) (0.13)
Net Realized and Unrealized Gains
(Losses) 1.73 2.43 5.60 (2.11) (1.46)
Total From Investment Operations 1.60 2.37 5.43 (2.27) (1.59)

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment Income (0.05) -- -- -- --
Distributions from Realized Gains (0.60) -- -- -- (0.27)
Distributions in Excess of Net
Realized Gains -- -- -- -- (0.01)
Total Dividends and Distributions (0.65) -- -- -- (0.28)

NET ASSET VALUE, END OF PERIOD $ 22.37 $ 21.42 $ 19.05 $ 13.62 $ 15.89

TOTAL RETURN(1) 7.48% 12.44% 39.87% (14.29)% (8.90)%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $150,844 $93,149 $59,174 $38,793 $30,879
Ratio of Expenses to Average Net
Assets 1.90%(4) 1.97% 2.05% 2.06% 2.08%
Ratio of Net Investment Loss to
Average Net Assets (0.57)% (0.38)% (1.22)% (1.24)% (1.35)%
Portfolio Turnover Rate(2) 37.77% 22.22% 42.34% 42.74% 40.96%

(3.) Per share calculations were based on average shares outstanding for the
period.

(4.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 1.91%.

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS FINANCIAL FUND
CLASS A

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------

NET ASSET VALUE, BEGINNING OF
PERIOD $ 41.00 $ 36.57 $ 26.72 $ 32.98 $ 36.30

INCOME (LOSS) FROM
INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.04 0.02 0.08 0.06 (0.06)
Net Realized and Unrealized
Gains (Losses) 3.27 4.41 9.77 (6.32) (3.26)
Total From Investment Operations 3.31 4.43 9.85 (6.26) (3.32)

DIVIDENDS AND DISTRIBUTIONS
Distributions from Realized Gains (1.91) -- -- -- --
Total Dividends and Distributions (1.91) -- -- -- --

NET ASSET VALUE, END OF PERIOD $ 42.40 $ 41.00 $ 36.57 $ 26.72 $ 32.98

TOTAL RETURN(1) 8.03% 12.11% 36.86% (18.98)% (9.15)%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $613,683 $583,387 $535,300 $415,641 $600,540
Ratio of Expenses to Average Net
Assets 0.98%(3) 1.01% 1.10% 1.11% 1.08%
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.10% 0.05% 0.27% 0.18% (0.20)%
Portfolio Turnover Rate(2) 5.17% -- 9.29% 14.88% 17.80%

(3.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 0.99%.

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS FINANCIAL FUND
CLASS B

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
----------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------

NET ASSET VALUE, BEGINNING OF
PERIOD $ 38.03 $ 34.22 $ 25.21 $ 31.39 $ 34.85

INCOME (LOSS) FROM
INVESTMENT OPERATIONS
Net Investment Loss (0.29)(3) (0.33) (0.18) (0.21) (0.33)
Net Realized and Unrealized
Gains (Losses) 3.00 4.14 9.19 (5.97) (3.13)
Total From Investment Operations 2.71 3.81 9.01 (6.18) (3.46)

DIVIDENDS AND DISTRIBUTIONS
Distributions from Realized Gains (1.91) -- -- -- --
Total Dividends and Distributions (1.91) -- -- -- --

NET ASSET VALUE, END OF PERIOD $ 38.83 $ 38.03 $ 34.22 $ 25.21 $ 31.39

TOTAL RETURN(1) 7.08% 11.13% 35.74% (19.69)% (9.93)%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $192,049 $276,945 $304,513 $270,645 $415,607
Ratio of Expenses to Average Net
Assets 1.85%(4) 1.88% 1.98% 1.95% 1.90%
Ratio of Net Investment Loss to
Average Net Assets (0.77)% (0.82)% (0.61)% (0.66)% (1.02)%
Portfolio Turnover Rate(2) 5.17% -- 9.29% 14.88% 17.80%

(3.) Per share calculations were based on average shares outstanding for the
period.

(4.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 1.88%.

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS FINANCIAL FUND
CLASS C

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2005 2004 2003 2002 2001
------- -------- -------- ------- --------

NET ASSET VALUE, BEGINNING OF
PERIOD $ 38.62 $ 34.75 $ 25.61 $ 31.88 $ 35.40

INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Loss (0.30)(3) (0.32) (0.18) (0.21) (0.32)
Net Realized and Unrealized Gains
(Losses) 3.05 4.19 9.32 (6.06) (3.20)
Total From Investment Operations 2.75 3.87 9.14 (6.27) (3.52)

DIVIDENDS AND DISTRIBUTIONS
Distributions from Realized Gains (1.91) -- -- -- --
Total Dividends and Distributions (1.91) -- -- -- --

NET ASSET VALUE, END OF PERIOD $ 39.46 $ 38.62 $ 34.75 $ 25.61 $ 31.88

TOTAL RETURN(1) 7.07% 11.14% 35.69% (19.67)% (9.94)%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $94,512 $104,508 $108,557 $94,557 $145,817
Ratio of Expenses to Average Net
Assets 1.85%(4) 1.89% 1.99% 1.96% 1.90%
Ratio of Net Investment Loss to
Average Net Assets (0.77)% (0.83)% (0.62)% (0.67)% (1.02)%
Portfolio Turnover Rate(2) 5.17% -- 9.29% 14.88% 17.80%

(2.) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation.

(3.) Per share calculations were based on average shares outstanding for the
period.

(4.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 1.87%.

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS REAL ESTATE FUND
CLASS A

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
-------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------

NET ASSET VALUE, BEGINNING OF
PERIOD $ 39.52 $ 30.32 $ 22.79 $ 22.29 $ 22.06

INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.59 0.64 0.90 0.82 0.77
Net Realized and Unrealized
Gains 4.37 9.32 7.53 0.50 0.45
Total From Investment Operations 4.96 9.96 8.43 1.32 1.22

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment
Income (0.83) (0.76) (0.90) (0.82) (0.77)
Distributions from Realized
Gains (3.42) -- -- -- --
Distribution in Excess of Net
Investment Income -- -- -- -- (0.22)
Total Dividends and
Distributions (4.25) (0.76) (0.90) (0.82) (0.99)

NET ASSET VALUE, END OF PERIOD $ 40.23 $ 39.52 $ 30.32 $ 22.79 $ 22.29

TOTAL RETURN(1) 12.76% 33.22% 37.52% 5.89% 5.66%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $372,571 $313,378 $190,505 $143,585 $167,043
Ratio of Expenses to Average
Net Assets 1.09%(3) 1.26% 1.30% 1.28% 1.19%
Ratio of Net Investment Income
to Average Net Assets 1.48% 1.93% 3.40% 3.17% 3.41%
Portfolio Turnover Rate(2) 24.86% 31.37% 25.93% 52.57% 34.91%

(3.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 1.10%.

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS REAL ESTATE FUND
CLASS B

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
----------------------------------------------------
2005 2004 2003 2002 2001
------- -------- -------- ------- -------

NET ASSET VALUE, BEGINNING OF
PERIOD $ 39.36 $ 30.20 $ 22.71 $ 22.21 $ 21.99

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.30 0.43 0.72 0.65 0.56
Net Realized and Unrealized Gains 4.34 9.26 7.49 0.50 0.45
Total From Investment Operations 4.64 9.69 8.21 1.15 1.01

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment
Income (0.53) (0.53) (0.72) (0.65) (0.56)
Distributions from Realized Gains (3.42) -- -- -- --
Distributions in Excess of Net
Investment Income -- -- -- -- (0.23)
Total Dividends and Distributions (3.95) (0.53) (0.72) (0.65) (0.79)

NET ASSET VALUE, END OF PERIOD $ 40.05 $ 39.36 $ 30.20 $ 22.71 $ 22.21

TOTAL RETURN(1) 11.91% 32.34% 36.52% 5.13% 4.70%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $87,039 $125,550 $110,303 $91,740 $87,899
Ratio of Expenses to Average Net
Assets 1.88%(3) 1.94% 1.99% 2.00% 1.99%
Ratio of Net Investment Income to
Average Net Assets 0.69% 1.25% 2.71% 2.45% 2.61%
Portfolio Turnover Rate(2) 24.86% 31.37% 25.93% 52.57% 34.91%

(3.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 1.89%.

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS REAL ESTATE FUND
CLASS C

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
-----------------------------------------------------
2005 2004 2003 2002 2001
---------- ------- ------- ------- ----------

NET ASSET VALUE, BEGINNING OF PERIOD $ 39.63 $ 30.41 $ 22.87 $ 22.37 $ 22.14

INCOME FROM INVESTMENT OPERATIONS
Dividends from Net Investment Income 0.31 0.43 0.72 0.65 0.56
Net Realized and Unrealized Gains 4.37 9.33 7.54 0.50 0.47
Total From Investment Operations 4.68 9.76 8.26 1.15 1.03

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment Income (0.54) (0.54) (0.72) (0.65) (0.56)
Distributions from Realized Gains (3.42) -- -- -- --
Distributions in Excess of Net
Investment Income -- -- -- -- (0.24)
Total Dividends and Distributions (3.96) (0.54) (0.72) (0.65) (0.80)

NET ASSET VALUE, END OF PERIOD $ 40.35 $ 39.63 $ 30.41 $ 22.87 $ 22.37

TOTAL RETURN(1) 11.93% 32.37% 36.52% 5.11% 4.75%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $95,229 $86,835 $57,657 $38,299 $39,165
Ratio of Expenses to Average Net
Assets 1.87%(4) 1.93% 1.97% 1.97% 1.96%(3)
Ratio of Net Investment Income to
Average Net Assets 0.70% 1.26% 2.73% 2.48% 2.64%
Portfolio Turnover Rate(2) 24.86% 31.37% 25.93% 52.57% 34.91%

(3.) Ratio of expenses to average net assets before the reduction of expenses
paid indirectly was 1.97% for 2001.

(4.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 1.88%.

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS APPRECIATION & INCOME FUND
CLASS A

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
--------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- ------- -------

NET ASSET VALUE, BEGINNING OF
PERIOD $ 27.50 $ 24.95 $ 20.30 $ 21.36 $ 23.96

INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Income 0.59 0.65 0.74 0.80 0.76
Net Realized and Unrealized Gains
(Losses) 1.11 2.57 4.65 (1.06) (2.57)
Total From Investment Operations 1.70 3.22 5.39 (0.26) (1.81)

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment
Income (0.62) (0.67) (0.74) (0.80) (0.76)
Distributions from Realized Gains (0.64) -- -- -- --
Return of Capital -- -- -- -- (0.03)
Total Dividends and Distributions (1.26) (0.67) (0.74) (0.80) (0.79)

NET ASSET VALUE, END OF PERIOD $ 27.94 $ 27.50 $ 24.95 $ 20.30 $ 21.36

TOTAL RETURN(1) 6.29% 13.08% 26.94% (1.21)% (7.56)%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $224,600 $149,687 $114,003 $80,751 $89,077
Ratio of Expenses to Average Net
Assets 1.07% 1.08% 1.10% 1.09% 1.09%
Ratio of Net Investment Income to
Average Net Assets 2.12% 2.52% 3.38% 3.69% 3.31%
Portfolio Turnover Rate(2) 16.64% 21.26% 33.35% 34.26% 20.38%

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS APPRECIATION & INCOME FUND
CLASS B

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
--------------------------------------------------
2005 2004 2003 2002 2001
------- ------- ------- ------- -------

NET ASSET VALUE, BEGINNING OF PERIOD $ 27.25 $ 24.72 $ 20.13 $ 21.16 $ 23.74

INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Income 0.35 0.41 0.52 0.60 0.54
Net Realized and Unrealized Gains
(Losses) 1.08 2.54 4.59 (1.03) (2.55)
Total From Investment Operations 1.43 2.95 5.11 (0.43) (2.01)

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment Income (0.37) (0.42) (0.52) (0.60) (0.54)
Distributions from Realized Gains (0.64) -- -- -- --
Return of Capital -- -- -- -- (0.03)
Total Dividends and Distributions (1.01) (0.42) (0.52) (0.60) (0.57)

NET ASSET VALUE, END OF PERIOD $ 27.67 $ 27.25 $ 24.72 $ 20.13 $ 21.16

TOTAL RETURN(1) 5.30% 12.06% 25.71% (2.01)% (8.47)%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
(000 omitted) $75,289 $80,729 $72,181 $53,326 $57,692
Ratio of Expenses to Average Net
Assets 1.93%(4) 1.99% 2.03% 2.03% 2.00%(3)
Ratio of Net Investment Income to
Average Net Assets 1.26% 1.61% 2.45% 2.75% 2.40%
Portfolio Turnover Rate(2) 16.64% 21.26% 33.35% 34.26% 20.38%

(3.) Ratio of expenses to average net assets before the reduction of expenses
paid indirectly was 2.01% for 2001.

(4.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 1.94%.

100

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS APPRECIATION & INCOME FUND
CLASS C

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
--------------------------------------------------
2005 2004 2003 2002 2001
------- ------- ------- ------- -------

NET ASSET VALUE, BEGINNING OF PERIOD $ 27.62 $ 25.06 $ 20.40 $ 21.45 $ 24.06

INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Income 0.36 0.42 0.53 0.61 0.55
Net Realized and Unrealized Gains
(Losses) 1.10 2.57 4.66 (1.05) (2.58)
Total From Investment operations 1.46 2.99 5.19 (0.44) (2.03)

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment Income (0.38) (0.43) (0.53) (0.61) (0.55)
Distributions from Realized Gains (0.64) -- -- -- --
Return of Capital -- -- -- -- (0.03)
Total Dividends and Distributions (1.02) (0.43) (0.53) (0.61) (0.58)

NET ASSET VALUE, END OF PERIOD $ 28.06 $ 27.62 $ 25.06 $ 20.40 $ 21.45

TOTAL RETURN(1) 5.34% 12.05% 25.75% (2.04)% (8.44)%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
(000 omitted) $55,395 $34,627 $24,531 $14,428 $12,717
Ratio of Expenses to Average Net
Assets 1.93% 1.98% 2.02% 2.04%(3) 2.02%
Ratio of Net Investment Income to
Average Net Assets 1.26% 1.62% 2.46% 2.74% 2.38%
Portfolio Turnover Rate(2) 16.64% 21.26% 33.35% 34.26% 20.38%

(3.) Ratio of expenses to average net assets before the reduction of expenses
paid indirectly was 2.05% for 2002.

101

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS GOVERNMENT BOND FUND
CLASS A

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
--------------------------------------------------
2005 2004 2003 2002 2001
------- ------- ------- ------- -------

NET ASSET VALUE, BEGINNING OF PERIOD $ 5.60 $ 5.73 $ 5.92 $ 5.68 $ 5.60

INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Income 0.15 0.14 0.09 0.21 0.26
Net Realized and Unrealized Gains
(Losses) (0.10) (0.13) (0.08) 0.27 0.08
Total From Investment Operations 0.05 0.01 0.01 0.48 0.34

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment Income (0.15) (0.14) (0.17) (0.23) (0.26)
Return of Capital -- -(3) (0.03) -- --
Distributions in Excess of Net
Investment Income -- -- -- (0.01) --
Total Dividends and Distributions (0.15) (0.14) (0.20) (0.24) (0.26)

NET ASSET VALUE, END OF PERIOD $ 5.50 $ 5.60 $ 5.73 $ 5.92 $ 5.68

TOTAL RETURN(1) 0.98% 0.17% 0.10% 8.66% 6.27%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $19,340 $19,025 $25,168 $29,892 $18,198
Ratio of Expenses to Average Net
Assets 1.08%(4) 1.25% 1.13% 1.08% 1.22%
Ratio of Net Investment Income to
Average Net Assets 2.52% 1.84% 1.96% 3.40% 4.59%
Portfolio Turnover Rate(2) 55.46% 165.17% 121.61% 69.89% 149.03%

(3.) Less than $0.005 per share.

(4.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 1.10%.

102

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS GOVERNMENT BOND FUND
CLASS B

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
-----------------------------------------------------
2005 2004 2003 2002 2001
------- ------- ------- ------- -------

NET ASSET VALUE, BEGINNING OF PERIOD $ 5.59 $ 5.71 $ 5.91 $ 5.66 $ 5.58

INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Income 0.12 0.10 0.03 0.17 0.23
Net Realized and Unrealized Gains
(Losses) (0.10) (0.12) (0.08) 0.28 0.07
Total From Investment Operations 0.02 (0.02) (0.05) 0.45 0.30

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment Income (0.12) (0.10) (0.12) (0.19) (0.22)
Return of Capital -- --(3) (0.03) -- --
Distributions in Excess of Net
Investment Income -- -- -- (0.01) --
Total Dividends and Distributions (0.12) (0.10) (0.15) (0.20) (0.22)

NET ASSET VALUE, END OF PERIOD $ 5.49 $ 5.59 $ 5.71 $ 5.91 $ 5.66

TOTAL RETURN(1) 0.33% (0.33)% (0.80)% 8.05% 5.48%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $25,208 $34,921 $62,549 $99,461 $37,541
Ratio of Expenses to Average Net
Assets 1.77%(4) 1.89% 1.82% 1.82% 1.94%
Ratio of Net Investment Income to
Average Net Assets 1.83% 1.20% 1.27% 2.66% 3.87%
Portfolio Turnover Rate(2) 55.46% 165.17% 121.61% 69.89% 149.03%

(3.) Less than $0.005 per share.

(4.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 1.79%.

103

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS GOVERNMENT BOND FUND
CLASS C

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
---------------------------------------------------
2005 2004 2003 2002 2001
------ ------- ------- ------- -------

NET ASSET VALUE, BEGINNING OF PERIOD $ 5.61 $ 5.73 $ 5.93 $ 5.68 $ 5.60

INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Income 0.12 0.10 0.01 0.17 0.23
Net Realized and Unrealized Gains
(Losses) (0.10) (0.12) (0.06) 0.28 0.07
Total From Investment Operations 0.02 (0.02) (0.05) 0.45 0.30

NET ASSET VALUE, END OF PERIOD $ 5.51 $ 5.61 $ 5.73 $ 5.93 $ 5.68

TOTAL RETURN(1) 0.29% (0.34)% (0.80)% 8.03% 5.44%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $5,358 $ 6,688 $12,955 $25,107 $12,335
Ratio of Expenses to Average Net
Assets 1.82%(4) 1.93% 1.85% 1.83% 1.96%
Ratio of Net Investment Income to
Average Net Assets 1.78% 1.16% 1.24% 2.65% 3.85%
Portfolio Turnover Rate(2) 55.46% 165.17% 121.61% 69.89% 149.03%

(3.) Less than $0.005 per share.

(4.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 1.84%.

104

DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
DAVIS GOVERNMENT MONEY MARKET FUND
CLASSES A, B & C

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.

YEAR ENDED DECEMBER 31,
-------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------

NET ASSET VALUE, BEGINNING OF
PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000

INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.026 0.008 0.006 0.014 0.037

DIVIDENDS
Dividends from Net Investment
Income (0.026) (0.008) (0.006) (0.014) (0.037)

NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000

TOTAL RETURN(1) 2.68% 0.83% 0.62% 1.38% 3.77%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000
omitted) $513,221 $572,381 $571,431 $600,912 $505,713
Ratio of Expenses to Average
Net Assets 0.56%(2) 0.58% 0.60% 0.59% 0.59%
Ratio of Net Investment Income
to Average Net Assets 2.65% 0.83% 0.62% 1.35% 3.75%

(2.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
average net assets for 2005 would have been 0.57%.

105

HOUSEHOLDING

To avoid sending duplicate copies of materials to households, the Fund will mail
only one copy of each prospectus, annual and semi-annual report to shareholders
having the same last name and address on the Fund's records. The consolidation
of these mailings, called householding, benefits the Fund through reduced
mailing expense. If you do not want the mailing of these documents to be
combined with those to other members of your household, please contact the Davis
Funds in writing at 2949 E. Elvira Road, Suite 101, Tucson, Arizona 85706.
Individual copies of prospectuses and reports will be sent to you within thirty
days after the Fund receives your request to stop householding.

PRIVACY NOTICE

While you generally will be dealing with a broker-dealer or other financial
adviser, we may collect information about you from your account application and
other forms that 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.

106

OBTAINING
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------

Additional information about the Fund's investments is available in the Funds'
ANNUAL AND SEMI-ANNUAL REPORTS to shareholders. In the Funds' Annual Report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. The
STATEMENT OF ADDITIONAL INFORMATION provides more detailed information about
Davis Funds and their management and operations. The Statement of Additional
Information and the Funds' Annual and Semi-Annual Reports are available, without
charge, upon request.

The Davis Funds' Statement of Additional Information and Annual Report have been
filed with the Securities and Exchange Commission, are incorporated by
reference, and are legally a part of this prospectus.

HOW TO GET MORE INFORMATION (Including Annual Report, Semi-Annual Report and
Statement of Additional Information)

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

o BY MAIL. Write to State Street Bank and Trust Company, c/o Davis Funds,
P.O. Box 8406, Boston, MA 02266-8406.

o ON THE INTERNET. WWW.DAVISFUNDS.COM.

o FROM THE SEC. Additional copies of the registration statement can be
obtained, for a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, DC 20549-0102, or by sending an electronic request to
publicinfo@sec.gov. Reports and other information about the Funds are also
available by visiting the SEC website (WWW.SEC.GOV). For more information
on the operations of the Public Reference Room, call 1-202-942-8090.

Investment Company Act File No. 811-2679

107



DAVIS SERIES, INC.

Davis Opportunity Fund
Davis Financial Fund
Davis Real Estate Fund
Davis Appreciation & Income Fund
Davis Government Bond Fund
Davis Government Money Market Fund
--------------------------------------------------------------------------------

PROSPECTUS

Class Y shares

May 1, 2006

The Securities and Exchange Commission has neither approved nor disapproved of
these securities, nor has it determined whether this prospectus is accurate or
complete. Anyone who tells you otherwise is committing a crime.

[Davis Funds logo and "Over 35 Years of Reliable Investing" tagline]


                                        1



This prospectus contains important information. Please read it carefully before
investing and keep it for future reference.

No financial adviser, dealer, salesperson or any other person has been
authorized to give any information or to make any representations, other than
those contained in this Prospectus, in connection with the offer contained in
this Prospectus and, if given or made, such other information or representations
must not be relied on as having been authorized by the Funds, the Funds'
investment adviser or the Funds' distributor. This Prospectus does not
constitute an offer by the Funds or by the Funds' distributor to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful for the Funds to make such an
offer in such jurisdiction.


                                        2



TABLE OF CONTENTS
--------------------------------------------------------------------------------

OVERVIEWS OF THE DAVIS SERIES FUNDS:

5    DAVIS OPPORTUNITY FUND
     Investment Objective and Principal Investment Strategies
     Determining If This Fund Is Right for You
     Principal Risks of Investing in the Fund
     Performance Information
     Fees and Expenses of the Fund

12   DAVIS FINANCIAL FUND
     Investment Objective and Principal Investment Strategies
     Determining If This Fund Is Right for You
     Principal Risks of Investing in the Fund
     Performance Information
     Fees and Expenses of the Fund

18   DAVIS REAL ESTATE FUND
     Investment Objective and Principal Investment Strategies
     Determining If This Fund Is Right for You
     Principal Risks of Investing in the Fund
     Performance Information
     Fees and Expenses of the Fund

26   DAVIS APPRECIATION & INCOME FUND
     Investment Objective and Principal Investment Strategies
     Determining If This Fund Is Right for You
     Principal Risks of Investing in the Fund
     Performance Information
     Fees and Expenses of the Fund

36   DAVIS GOVERNMENT BOND FUND
     Investment Objective and Principal Investment Strategies
     Determining If This Fund Is Right for You
     Principal Risks of Investing in the Fund
     Performance Information
     Fees and Expenses of the Fund

44   DAVIS GOVERNMENT MONEY MARKET FUND
     Investment Objective and Principal Investment Strategies
     Determining If This Fund Is Right for You
     Principal Risks of Investing in the Fund
     Performance Information
     Fees and Expenses of the Fund


                                        3



TABLE OF CONTENTS (CONTINUED)
--------------------------------------------------------------------------------

49   DAVIS MANAGEMENT
     Davis Advisors
     Investment Professionals
     The Davis Investment Discipline
     Additional Information About Investments

57   ONCE YOU INVEST IN DAVIS FUNDS
     How Your Shares Are Valued
     Portfolio Holdings
     How We Pay Earnings
     Federal Income Taxes
     Fees and Expenses of the Funds
     Compensation Earned by Broker-Dealers and Other Financial Intermediaries

65   HOW TO OPEN AN ACCOUNT
     Three Ways You Can Open An Account
     Anti-Money Laundering Compliance

68   HOW TO BUY, SELL AND EXCHANGE SHARES
     Right to Reject or Restrict any Purchase or Exchange Order
     Three Ways to Buy, Sell and Exchange Shares
     When Your Transactions Are Processed
     Buying More Shares
     Selling Shares
     Exchanging Shares
     Market Timing
     Telephone Transactions
     Internet Transactions

76   OTHER INFORMATION
     Dividends and Distributions
     Financial Highlights
     Privacy Notice

B/C  OBTAINING ADDITIONAL INFORMATION


                                        4



OVERVIEW OF DAVIS
OPPORTUNITY FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Opportunity Fund's investment objective is long-term growth of capital.
Davis Advisors uses the Davis Investment Discipline to invest the majority of
the Fund's assets in equity securities issued by medium and small companies with
market capitalizations of less than $20 billion. See "The Davis Investment
Discipline."

The Fund has the flexibility to invest a limited portion of its assets in
companies of any size, to invest in companies whose shares may be subject to
controversy, to invest in foreign securities, and to invest in non-equity
securities. See "Additional Information About Investments."

DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o    You are seeking long-term growth of capital.

o    You want to invest in a mixture of large, medium, and small capitalization
     companies, with a focus primarily in medium capitalization companies.

o    You are willing to accept higher risk for the opportunity to pursue higher
     returns.

o    You are investing for the long term.

You should not invest in this Fund if:

o    You are worried about the possibility of sharp price swings and dramatic
     market declines.

o    You prefer to invest in larger, more established companies.

o    You are interested in earning current income.

o    You are investing for the short term.


                       PROSPECTUS o DAVIS SERIES, INC. o 5



PRINCIPAL RISKS OF INVESTING IN THE FUND

If you buy shares of Davis Opportunity 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 (but not the only
factors) that could cause the value of your investment in the Fund to decline,
and which could prevent the Fund from achieving its stated objective.

o    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 in which we invest.

o    COMPANY RISK. The market values of common stock vary with the success or
     failure of the company issuing the stock. Many factors can negatively
     affect a particular company's stock price, such as poor earnings reports,
     loss of major customers, major litigation against the company or changes in
     government regulations affecting the company or its industry. The success
     of the companies in which the Fund invests largely determines the Fund's
     long-term performance.

o    SMALL- AND MEDIUM-CAPITALIZATION RISK. Investing in small- and
     medium-capitalization companies may be more risky than investing in
     large-capitalization companies. Small and mid-size companies typically have
     more limited product lines, markets and financial resources than larger
     companies, and their securities may trade less frequently and in more
     limited volume than those of larger, more mature companies.

o    FOREIGN COUNTRY RISK. The Fund may invest a portion of its assets in
     companies operating, incorporated, or principally traded in foreign
     countries. 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. Securities
     issued by foreign companies are frequently denominated in


                       PROSPECTUS o DAVIS SERIES, INC. o 6



     foreign currencies. The change in value of a foreign currency against the
     U.S. dollar will result in a change in the U.S. dollar value of securities
     denominated in that foreign currency. The Fund generally does not hedge its
     currency risk. When the value of a foreign currency declines against the
     U.S. dollar, the value of the Fund's shares will tend to decline.

o    HEADLINE RISK. We seek to acquire companies with durable business models
     that can be purchased at attractive valuations relative to their intrinsic
     value. We may make such investments when a company becomes the center of
     controversy after receiving adverse media attention. The company may be
     involved in litigation, the company's financial reports or corporate
     governance may be challenged, the company's annual report may disclose a
     weakness in internal controls, investors may question the company's
     published financial reports, greater government regulation may be
     contemplated, or other adverse events may threaten the company's future.
     While we research companies subject to such contingencies, we cannot be
     correct every time, and the company's stock may never recover.

o    SELECTION RISK. The securities we select for the Fund may underperform the
     Russell 3000 Index or other funds with similar investment objectives and
     strategies.

The Fund's shares are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency, and
involve investment risks, including possible loss of the principal amount
invested.

PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Opportunity Fund by showing changes in the Fund's
year-to-year performance and by showing how the Fund's average annual returns
compare to those of the Russell 3000 Index, a widely recognized unmanaged index
of stock performance. The Fund is not managed to track any particular index and,
consequently, the performance of the Fund may deviate significantly from the
performance of the Index. The Fund's past performance (before and after taxes)
is not necessarily an indication of how the Fund will perform in the future.


                       PROSPECTUS o DAVIS SERIES, INC. o 7



                             DAVIS OPPORTUNITY FUND
                  CALENDAR YEAR TOTAL RETURNS FOR CLASS Y SHARES

YEAR   RETURN
----   ------
1998     2.18%
1999    32.16%
2000    11.83%
2001   (7.81)%
2002   (13.30)%
2003    41.42%
2004    13.76%
2005     8.70%

During the period shown above, the highest quarterly return was 26.63% for the
quarter ended December 31, 1999, and the lowest quarterly return was (20.22)%
for the quarter ended September 30, 1998. Total return for the three months
ended March 31, 2006, (not annualized) was 8.82%.

Investments in initial public offerings (IPOs) had a favorable impact on Davis
Opportunity Fund's performance in 1999 and 2000. This was a time when the IPO
market was very active. No assurance can be given that Davis Opportunity Fund
will continue to invest in IPOs to the same extent in the future or that such
investments would be profitable.


                       PROSPECTUS o DAVIS SERIES, INC. o 8



DAVIS OPPORTUNITY FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005

                               PAST 1 YEAR   PAST 5 YEARS   LIFE OF CLASS*
                               -----------   ------------   --------------
Class Y shares                    8.70%          6.93%           7.91%
   return before taxes
Class Y shares                    8.06%          6.69%           5.95%
   return after taxes on
   distributions
Class Y shares                    6.38%          5.91%           5.86%
   return after taxes on
   distributions and sale
   of fund shares
Russell 3000**                    6.12%          1.58%           5.36%
   Reflects no deduction for
   fees, expenses or taxes
Dow Jones Wilshire                6.32%          2.12%           5.36%
   5000(R) Index
   reflects no deduction
   for fees, expenses or
   taxes

* The inception of Class Y shares was 09/18/97.

** The Russell 3000 Index is a more appropriate index than the Dow Jones
Wilshire 5000 Index because it more accurately reflects the universe of
securities which Davis Opportunity Fund actually invest in. The Russell 3000
Index eliminates the 2000 smallest companies found in the Dow Jones Wilshire
5000, those with market capitalizations of under $200 million.

After-tax returns are calculated using the highest historical individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes.

Actual after-tax returns depend on an investor's tax situation and may differ
from those shown. After-tax returns shown are not relevant to investors who hold
their Fund shares through tax-deferred arrangements, such as 401(k) plans or
individual retirement accounts.

If returns are negative, returns after taxes on distributions and sale of fund
shares may be higher than returns before taxes as the resulting capital losses
from the sale of fund shares would be available to offset capital gains from
other investments.


                       PROSPECTUS o DAVIS SERIES, INC. o 9



FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

                                                                      CLASS Y
                                                                       SHARES
                                                                      -------
Maximum sales charge (load) imposed on purchases                        None
   as a percentage of offering price
Maximum deferred sales charge (load) imposed on redemptions             None
   as a percentage of the lesser of the net asset value of the
   shares redeemed or the total cost of such shares
Maximum sales charge (load) imposed on reinvested dividends             None
Exchange fee                                                            None

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."

DAVIS OPPORTUNITY FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

                                  CLASS Y SHARES
                                  --------------
Management Fees                        0.67%
Distribution (12b-1) Fees              0.00%
Other Expenses                         0.18%
Total Annual Operating Expenses        0.85%

Expenses may vary in future years.


                      PROSPECTUS o DAVIS SERIES, INC. o 10



EXPENSE 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:

IF YOU SELL YOUR SHARES IN...   1 YEAR   3 YEARS   5 YEARS   10 YEARS
-----------------------------   ------   -------   -------   --------
Class Y Shares                    $87      $271      $471     $1,049


                      PROSPECTUS o DAVIS SERIES, INC. o 11



OVERVIEW OF DAVIS
FINANCIAL FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Financial Fund's investment objective is long-term growth of capital.
Davis Advisors uses the Davis Investment Discipline to invest at least 80% of
the Fund's net assets, plus any borrowing for investment purposes, in securities
issued by companies principally engaged in the financial services sector. See
"The Davis Investment Discipline."

A company is principally engaged in financial services if it owns financial
services-related assets that constitute at least 50% of the value of all of its
assets, or if it derives at least 50% of its revenues from providing financial
services. Companies in the financial services sector include commercial banks,
industrial banks, savings institutions, finance companies, diversified financial
services companies, investment banking firms, securities brokerage houses,
investment advisory companies, leasing companies, insurance companies and
companies providing similar services.

The Fund has the flexibility to invest a limited portion of its assets in
non-financial companies, to invest in companies of any size, to invest in
companies whose shares may be subject to controversy, to invest in foreign
securities, and to invest in non-equity securities. See "Additional Information
About Investments."

DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o    You are seeking long-term growth of capital.

o    You believe that the financial services sector offers attractive long-term
     growth opportunities.

o    You are investing for the long term.


                      PROSPECTUS o DAVIS SERIES, INC. o 12



You should not invest in this Fund if:

o    You are worried about the possibility of sharp price swings and dramatic
     market declines.

o    You are interested in earning current income.

o    You do not wish to invest in a concentrated portfolio of financial services
     companies.

o    You are investing for the short term.

PRINCIPAL RISKS OF INVESTING IN THE FUND

If you buy shares of Davis Financial 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 (but not the only factors) that could
cause the value of your investment in the Fund to decline, and which could
prevent the Fund from achieving its stated objective.

o    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 in which we invest.

o    COMPANY RISK. The market values of common stock vary with the success or
     failure of the company issuing the stock. Many factors can negatively
     affect a particular company's stock price, such as poor earnings reports,
     loss of major customers, major litigation against the company or changes in
     government regulations affecting the company or its industry. The success
     of the companies in which the Fund invests largely determines the Fund's
     long-term performance.

o    CONCENTRATED FINANCIAL SERVICES PORTFOLIO RISK. Davis Financial Fund
     invests principally in a single market sector, and any fund that has a
     concentrated portfolio is particularly vulnerable to the risks of its
     target sector. Risks of investing in the financial services sector include:
     (i) Regulatory actions: financial services companies may suffer a setback
     if regulators change the rules under which they operate; (ii) Changes in
     interest rates: unstable interest rates, and/or rising interest rates, may
     have a disproportionate effect on the financial services sector; (iii)
     Non-diversified loan portfolios: financial services companies whose
     securities


                      PROSPECTUS o DAVIS SERIES, INC. o 13



     the Fund purchases may themselves have concentrated portfolios, such as a
     high level of loans to real estate developers, which makes them vulnerable
     to economic conditions that affect that industry; and (iv) Competition: the
     financial services sector has become increasingly competitive.

o    FOREIGN COUNTRY RISK. The Fund may invest a portion of its assets in
     companies operating, incorporated, or principally traded in foreign
     countries. 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. Securities
     issued by foreign companies are frequently denominated in foreign
     currencies. The change in value of a foreign currency against the U.S.
     dollar will result in a change in the U.S. dollar value of securities
     denominated in that foreign currency. The Fund generally does not hedge its
     currency risk. When the value of a foreign currency declines against the
     U.S. dollar, the value of the Fund's shares will tend to decline.

o    HEADLINE RISK. We seek to acquire companies with durable business models
     that can be purchased at attractive valuations relative to their intrinsic
     value. We may make such investments when a company becomes the center of
     controversy after receiving adverse media attention. The company may be
     involved in litigation, the company's financial reports or corporate
     governance may be challenged, the company's annual report may disclose a
     weakness in internal controls, investors may question the company's
     published financial reports, greater government regulation may be
     contemplated, or other adverse events may threaten the company's future.
     While we research companies subject to such contingencies, we cannot be
     correct every time, and the company's stock may never recover.

o    SELECTION RISK. The securities we select for the Fund may underperform the
     S&P 500(R) Index or other funds with similar investment objectives and
     strategies.


                      PROSPECTUS o DAVIS SERIES, INC. o 14



The Fund's shares are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency and
involve investment risks, including possible loss of the principal amount
invested.

PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Financial Fund by showing changes in the Fund's year-to-year
performance and by showing how the Fund's average annual returns compare to
those of the S&P 500(R) Index, a widely recognized unmanaged index of stock
performance. The Fund is not managed to track any particular index and,
consequently, the performance of the Fund may deviate significantly from the
performance of the Index. The Fund's past performance (before and after taxes)
is not necessarily an indication of how the Fund will perform in the future.

                              DAVIS FINANCIAL FUND
                 CALENDAR YEAR TOTAL RETURNS FOR CLASS Y SHARES

YEAR   RETURN
----   ------
1998    14.58%
1999    (0.65)%
2000    32.42%
2001    (9.00)%
2002   (18.85)%
2003    37.15%
2004    12.31%
2005     8.18%

During the period shown above, the highest quarterly return was 21.84% for the
quarter ended June 30, 2003, and the lowest quarterly return was (16.63)% for
the quarter ended September 30, 2002. Total return for the three months ended
March 31, 2006, (not annualized) was 2.18%.


                      PROSPECTUS o DAVIS SERIES, INC. o 15



DAVIS FINANCIAL FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005

                            PAST 1 YEAR   PAST 5 YEARS   LIFE OF CLASS*
                            -----------   ------------   --------------
Class Y shares                 8.18%          4.24%          10.38%
   return before taxes
Class Y shares                 7.50%          4.10%          10.08%
   return after taxes on
   distributions
Class Y shares                 6.24%          3.64%           9.12%
   return after taxes on
   distributions and sale
   of fund shares
S&P 500(R) Index               4.91%          0.54%           6.62%
   reflects no deduction
   for fees, expenses or
   taxes

* The inception of Class Y shares was 03/10/97.

After-tax returns are calculated using the highest historical individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes.

Actual after-tax returns depend on an investor's tax situation and may differ
from those shown. After-tax returns shown are not relevant to investors who hold
their Fund shares through tax-deferred arrangements, such as 401(k) plans or
individual retirement accounts.

If returns are negative, returns after taxes on distributions and sale of fund
shares may be higher than returns before taxes, as the resulting capital losses
from the sale of fund shares would be available to offset capital gains from
other investments.


                      PROSPECTUS o DAVIS SERIES, INC. o 16



FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

                                                                  CLASS Y SHARES
                                                                  --------------
Maximum sales charge (load) imposed on purchases                       None
   as a percentage of offering price
Maximum deferred sales charge (load) imposed on redemptions            None
   as a percentage of the lesser of the net asset value of the
   shares redeemed or the total cost of such shares
Maximum sales charge (load) imposed on reinvested dividends            None
Exchange fee                                                           None

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."

DAVIS FINANCIAL FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

                                     CLASS Y SHARES
                                     --------------
Management Fees                           0.63%
Distribution (12b-1) Fees                 0.00%
Other Expenses                            0.22%
Total Annual Operating Expenses           0.85%

Expenses may vary in future years.

EXPENSE 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:

IF YOU SELL YOUR SHARES IN...   1 YEAR   3 YEARS   5 YEARS   10 YEARS
-----------------------------   ------   -------   -------   --------
Class Y Shares                    $87      $271      $471     $1,049


                      PROSPECTUS o DAVIS SERIES, INC. o 17



OVERVIEW OF DAVIS
REAL ESTATE FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Real Estate Fund's investment objective is total return through a
combination of growth and income. Davis Advisors uses the Davis Investment
Discipline to invest at least 80% of the Fund's net assets, plus any borrowing
for investment purposes, in securities issued by companies principally engaged
in the real estate industry. See "The Davis Investment Discipline."

A company is principally engaged in the real estate industry if it owns real
estate or real estate-related assets that constitute at least 50% of the value
of all of its assets or if it derives at least 50% of its revenues or net
profits from owning, financing, developing, managing or selling real estate, or
from offering products or services that are related to real estate. Issuers of
real estate securities include real estate investment trusts (REITs), brokers,
developers, lenders, and companies with substantial real estate holdings such as
paper, lumber, hotel, and entertainment companies. Most of Davis Real Estate
Fund's real estate securities are, and will likely continue to be, interests in
REITs. REITs pool investors' funds to make real estate-related investments, such
as buying interests in income-producing property or making loans to real estate
developers.

The Fund has the flexibility to invest a limited portion of its assets in
non-real estate companies, to invest in companies of any size, to invest in
companies whose shares may be subject to controversy, to invest in foreign
securities, and to invest in non-equity securities. See "Additional Information
About Investments."

DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o    You are seeking total return through a combination of growth and income.

o    You believe that the real estate sector offers attractive long-term growth
     opportunities.


                      PROSPECTUS o DAVIS SERIES, INC. o 18



o    You want to diversify your traditional stock and bond portfolio with real
     estate securities.

o    You are investing for the long term.

You should not invest in this Fund if:

o    You are worried about the possibility of sharp price swings and dramatic
     market declines.

o    You do not wish to invest in a concentrated portfolio of real estate
     companies.

o    You are investing for the short term.

PRINCIPAL RISKS OF INVESTING IN THE FUND

If you buy shares of Davis Real Estate 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 (but not the only
factors) that could cause the value of your investment in the Fund to decline,
and which could prevent the Fund from achieving its stated objective.

o    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 in which we invest.

o    COMPANY RISK. The market values of common stock vary with the success or
     failure of the company issuing the stock. Many factors can negatively
     affect a particular company's stock price, such as poor earnings reports,
     loss of major customers, major litigation against the company or changes in
     government regulations affecting the company or its industry. The success
     of the companies in which the Fund invests largely determines the Fund's
     long-term performance.

o    CONCENTRATED REAL ESTATE PORTFOLIO RISK. Davis Real Estate Fund invests
     principally in a single market sector, and any fund that has a concentrated
     portfolio is particularly vulnerable to the risks of its selected industry.
     Real estate securities are susceptible to the many risks associated with
     the direct ownership of real estate, including (i) declines in property
     values, because of changes in the economy or the surrounding area or
     because a particular region has become less appealing to tenants; (ii)
     increases in property taxes, operating


                      PROSPECTUS o DAVIS SERIES, INC. o 19



     expenses, interest rates or competition; (iii) overbuilding; (iv) changes
     in zoning laws; or (v) losses from casualty or condemnation.

o    FOCUSED PORTFOLIO RISK. Davis Real Estate Fund is classified as a
     nondiversified fund and is allowed to focus its investments in fewer
     companies than a diversified fund. Should the portfolio managers determine
     that it is prudent to focus the Fund's portfolio in a few companies, the
     portfolio may be subject to greater volatility and risk and the Fund's
     investment performance, both good and bad, is expected to reflect the
     economic performance of the few companies on which the Fund focuses.

o    SMALL- AND MEDIUM-CAPITALIZATION RISK. Many real estate companies are
     small- and medium-capitalization companies. Investing in these companies
     may be more risky than investing in large-capitalization companies. Smaller
     companies typically have more limited product lines, markets and financial
     resources than larger companies, and their securities may trade less
     frequently and in more limited volume than those of larger, more mature
     companies.

o    FOREIGN COUNTRY RISK. The Fund may invest a portion of its assets in
     companies operating, incorporated, or principally traded in foreign
     countries. 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. Securities
     issued by foreign companies are frequently denominated in foreign
     currencies. The change in value of a foreign currency against the U.S.
     dollar will result in a change in the U.S. dollar value of securities
     denominated in that foreign currency. The Fund generally does not hedge its
     currency risk. When the value of a foreign currency declines against the
     U.S. dollar, the value of the Fund's shares will tend to decline.

o    HEADLINE RISK. We seek to acquire companies with durable business models
     that can be purchased at attractive valuations relative to their intrinsic
     value. We may make such investments when a company becomes the center of
     controversy after receiving adverse media attention. The company may be
     involved in litigation, the company's financial reports or corporate
     governance may be challenged, the company's annual report may disclose a
     weakness in internal controls,


                      PROSPECTUS o DAVIS SERIES, INC. o 20



     investors may question the company's published financial reports, greater
     government regulation may be contemplated, or other adverse events may
     threaten the company's future. While we research companies subject to such
     contingencies, we cannot be correct every time, and the company's stock may
     never recover.

o    SELECTION RISK. The securities we select for the Fund may underperform the
     Dow Jones Wilshire Real Estate Securities Index or other funds with similar
     investment objectives and strategies.

The Fund's shares are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency and
involve investment risks, including possible loss of the principal amount
invested.

PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Real Estate Fund by showing changes in the Fund's
year-to-year performance and by showing how the Fund's average annual returns
compare to those of the S&P 500(R) Index and the Dow Jones Wilshire Real Estate
Securities Index. The S&P 500(R) Index is a widely recognized, unmanaged index
of stock performance. The Dow Jones Wilshire Real Estate Securities Index is a
measure of the performance of publicly traded real estate securities, such as
Real Estate Investment Trusts and Real Estate Operating Companies. The Fund is
not managed to track any particular index and, consequently, the performance of
the Fund may deviate significantly from the performance of the Indices. The
Fund's past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future.


                      PROSPECTUS o DAVIS SERIES, INC. o 21



                             DAVIS REAL ESTATE FUND
                 CALENDAR YEAR TOTAL RETURNS FOR CLASS Y SHARES

YEAR   RETURN
----   ------
1997    25.29%
1998   (15.20)%
1999    (7.21)%
2000    26.24%
2001     5.95%
2002     6.33%
2003    38.10%
2004    33.85%
2005    13.20%

During the period shown above, the highest quarterly return was 15.16% for the
quarter ended December 31, 2004, and the lowest quarterly return was (11.36)%
for the quarter ended September 30, 1998. Total return for the three months
ended March 31, 2006, (not annualized) was 15.57%.


                      PROSPECTUS o DAVIS SERIES, INC. o 22



DAVIS REAL ESTATE FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005

                                         PAST 1   PAST 5   LIFE OF
                                          YEAR     YEARS    CLASS*
                                         ------   ------   -------
Class Y shares                           13.20%   18.71%    13.98%
   return before taxes
Class Y shares                           10.89%   16.97%    12.16%
   return after taxes on distributions
Class Y shares                           10.23%   15.50%    11.27%
   return after taxes on distributions
   and sale of fund shares
S&P 500(R) Index                          4.91%    0.54%     7.70%
   reflects no deduction for fees,
   expenses or taxes
Dow Jones Wilshire Real Estate
   Securities Index                      14.06%   19.04%    14.16%
   reflects no deduction for fees,
   expenses or taxes

* The inception of Class Y shares was 11/08/96.

After-tax returns are calculated using the highest historical individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes.

Actual after-tax returns depend on an investor's tax situation and may differ
from those shown. After-tax returns shown are not relevant to investors who hold
their Fund shares through tax-deferred arrangements, such as 401(k) plans or
individual retirement accounts.

If returns are negative, returns after taxes on distributions and sale of fund
shares may be higher than returns before taxes as the resulting capital losses
from the sale of fund shares would be available to offset capital gains from
other investments.


                      PROSPECTUS o DAVIS SERIES, INC. o 23



                  DAVIS REAL ESTATE FUND YIELD, CLASS Y SHARES
                    30-Day SEC Yield, as of December 31, 2005
                                      3.08%

You may obtain Davis Real Estate Fund's most recent 30-day SEC Yield by calling
us toll-free at 1-800-279-0279, Monday through Friday, 9 a.m. to 6 p.m. Eastern
time.

FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

                                                    CLASS Y
                                                     SHARES
                                                    -------
Maximum sales charge (load) imposed on purchases      None
   as a percentage of offering price
Maximum deferred sales charge (load) imposed on
   redemptions                                        None
   as a percentage of the lesser of the net asset
   value of the shares redeemed or the total cost
   of such shares
Maximum sales charge (load) imposed on reinvested
   dividends                                          None
Exchange fee                                          None

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."

DAVIS REAL ESTATE FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

                                  CLASS Y
                                   SHARES
                                  -------
Management Fees                    0.67%
Distribution (12b-1) Fees          0.00%
Other Expenses                     0.10%
Total Annual Operating Expenses    0.77%

Expenses may vary in future years.


                      PROSPECTUS o DAVIS SERIES, INC. o 24



EXPENSE 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:

IF YOU SELL YOUR SHARES IN...   1 YEAR   3 YEARS   5 YEARS   10 YEARS
-----------------------------   ------   -------   -------   --------
Class Y Shares                    $79      $246      $428      $954


                      PROSPECTUS o DAVIS SERIES, INC. o 25



OVERVIEW OF DAVIS
APPRECIATION & INCOME FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Appreciation & Income Fund's investment objective is total return through
a combination of growth and income. Davis Advisors uses the Davis Investment
Discipline to invest the Fund's assets in a diversified portfolio of convertible
securities, common stock, and fixed income securities. See "The Davis Investment
Discipline." The portion of the Fund's assets invested in convertible
securities, common stock, and fixed income securities will vary from time to
time consistent with the Fund's investment objective, changes in equity prices
and changes in interest rates and other economic and market factors.

Common stock issued by large-, medium-, and small-capitalization companies are
purchased for their growth potential. Fixed income securities, including both
investment grade and high-yield, high-risk debt securities, are purchased both
for current income and to provide diversification. Convertible securities, which
include both preferred stock and bonds may be "converted" into common stock if
the company grows, offer both growth potential and downside protection. In the
current market, our portfolio managers expect to continue investing a
significant portion of the Fund's assets in convertible securities.

The Fund has the flexibility to invest a limited portion of its assets in
companies of any size, to invest in companies whose shares may be subject to
controversy, to invest in foreign securities, and to invest in non-equity
securities. See "Additional Information About Investments."

DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o    You are seeking total return through a combination of growth and income.

o    You want to diversify a common stock portfolio.

o    You are principally interested in growth-oriented investments but want
     current income.


                      PROSPECTUS o DAVIS SERIES, INC. o 26



o    You are investing for the long term.

You should not invest in this Fund if:

o    You are worried about the possibility of sharp price swings and dramatic
     market declines.

o    You do not wish to invest in a portfolio that has some of the
     characteristics of both common stocks and bonds.

o    You are investing for the short term.

PRINCIPAL RISKS OF INVESTING IN THE FUND

If you buy shares of Davis Appreciation & Income 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 (but not the only
factors) that could cause the value of your investment in the Fund to decline,
and which could prevent the Fund from achieving its stated objective.

EQUITY RISKS

o    MARKET RISK. The market value of shares of equity securities, including
     common and preferred stock and convertible securities, 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 in which we invest.

o    COMPANY RISK. The market values of common stock vary with the success or
     failure of the company issuing the security. Many factors can negatively
     affect a particular company's equity price, such as poor earnings reports,
     loss of major customers, major litigation against the company or changes in
     government regulations affecting the company or its industry. The success
     of the companies in which the Fund invests largely determines the Fund's
     long-term performance.

o    SMALL- AND MEDIUM-CAPITALIZATION RISK. Many convertible securities are
     issued by small- and medium-capitalization companies. Investing in these
     companies may be more risky than investing in large-capitalization
     companies. Smaller companies typically have more limited product lines,
     markets and financial resources than larger companies, and their


                      PROSPECTUS o DAVIS SERIES, INC. o 27



     securities may trade less frequently and in more limited volume than those
     of larger, more mature companies.

o    FOREIGN COUNTRY RISK. The Fund may invest a portion of its assets in
     companies operating, incorporated, or principally traded in foreign
     countries. 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. Securities
     issued by foreign companies are frequently denominated in foreign
     currencies. The change in value of a foreign currency against the U.S.
     dollar will result in a change in the U.S. dollar value of securities
     denominated in that foreign currency. The Fund generally does not hedge its
     currency risk. When the value of a foreign currency declines against the
     U.S. dollar, the value of the Fund's shares will tend to decline.

o    HEADLINE RISK. We seek to acquire companies with durable business models
     that can be purchased at attractive valuations relative to their intrinsic
     value. We may make such investments when a company becomes the center of
     controversy after receiving adverse media attention. The company may be
     involved in litigation, the company's financial reports or corporate
     governance may be challenged, the company's annual report may disclose a
     weakness in internal controls, investors may question the company's
     published financial reports, greater government regulation may be
     contemplated, or other adverse events may threaten the company's future.
     While we research companies subject to such contingencies, we cannot be
     correct every time, and the company's stock may never recover.

o    SELECTION RISK. The securities we select for the Fund may underperform the
     S&P 500(R) Index or other funds with similar investment objectives and
     strategies.


                      PROSPECTUS o DAVIS SERIES, INC. o 28



DEBT RISKS

o    INTEREST RATE SENSITIVITY. If a security pays a fixed interest rate, and
     market rates increase, the value of the fixed-rate security should decline.

o    CHANGES IN DEBT RATING. If a rating agency gives a fixed income security a
     low rating, the value of the security will decline because investors will
     demand a higher rate of return.

o    CREDIT RISK. Like any borrower, the issuer of a fixed income security may
     be unable to make its payments. The Fund is not limited as to the amount of
     its assets, which may be invested in high-yield, high-risk debt securities.

HIGH-YIELD, HIGH-RISK DEBT SECURITIES

There are several agencies that evaluate and rate debt securities. Two of the
most prominent are Standard & Poor's and Moody's Investors Service.

When evaluating the quality of a debt instrument, rating agencies look at
factors like the issuer's current financial condition and business prospects,
the value of any collateral that secures the debt and the issuer's history of
paying other debt. Each agency has its own system for grading debt. Standard &
Poor's has 11 ratings, ranging from "D" for securities that are in default to
"AAA" for securities that are almost certain to be repaid. Moody's Investors
Service has nine ratings, with "C" being the lowest and "Aaa" being the highest.

A debt security is called investment-grade if a respected agency assigns it a
favorable credit rating ("BBB" or higher by Standard and Poor's, or "Baa" or
higher by Moody's). In contrast, a debt security is considered high-yield,
high-risk if it is rated "BB" or lower by Standard and Poor's or "Ba" or lower
by Moody's Investors Service. Securities with these low ratings are also
referred to as junk bonds. Many institutional investors, such as pension plans
and municipal governments, are only permitted to buy investment-grade debt.


                      PROSPECTUS o DAVIS SERIES, INC. o 29



There are four principal risks of owning high-yield, high-risk debt securities:

o    OVERBURDENED ISSUERS. Many issuers only resort to offering high-yield,
     high-risk debt securities when they cannot get financing from more
     traditional sources, such as banks. These issuers are unlikely to have a
     cushion from which to make their payments when their earnings are poor or
     when the economy in general is in decline.

o    PRIORITY. Issuers of high-yield, high-risk debt securities are likely to
     have a substantial amount of other debt. Most, if not all, of this other
     debt will be senior to the high-yield, high-risk debt securities; an issuer
     must be current on its senior obligations before it can pay bondholders. In
     addition, some of the other debt may be secured by the issuer's primary
     operating assets. If the issuer defaults on those obligations, the lenders
     may seize their collateral--possibly forcing the issuer out of business and
     into bankruptcy.

o    DIFFICULT TO RESELL. Many investors simply do not want high-yield,
     high-risk debt securities, and others are prohibited from buying them.

o    VOLATILE PRICES. Prices of high-yield, high-risk debt securities are more
     volatile than prices of higher-rated securities. In periods of economic
     difficulty or rising interest rates, prices of high-yield, high-risk debt
     securities decline more than prices of investment-grade securities.

The Fund's shares are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency and
involve investment risks, including possible loss of the principal amount
invested.


                      PROSPECTUS o DAVIS SERIES, INC. o 30



PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Appreciation & Income Fund by showing changes in the Fund's
year-to-year performance and by showing how the Fund's average annual returns
compare to those of the S&P 500(R) Index, a widely recognized unmanaged index of
stock performance. The Fund is not managed to track any particular index and,
consequently, the performance of the Fund may deviate significantly from the
performance of the Index. The Fund's past performance (before and after taxes)
is not necessarily an indication of how the Fund will perform in the future.


                      PROSPECTUS o DAVIS SERIES, INC. o 31



                        DAVIS APPRECIATION & INCOME FUND
                 CALENDAR YEAR TOTAL RETURNS FOR CLASS Y SHARES

YEAR   RETURN
----   ------
1997   28.80%
1998   (1.46)%
1999   13.30%
2000   (0.70)%
2001   (7.43)%
2002   (0.96)%
2003   27.13%
2004   13.35%
2005    6.52%

During the period shown above, the highest quarterly return was 14.39% for the
quarter ended September 30, 1997, and the lowest quarterly return was (13.19)%
for the quarter ended September 30, 2001. Total return for the three months
ended March 31, 2006, (not annualized) was 4.96%.


                      PROSPECTUS o DAVIS SERIES, INC. o 32



DAVIS APPRECIATION & INCOME FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005



                                              PAST 1 YEAR   PAST 5 YEARS   LIFE OF CLASS*
                                              -----------   ------------   --------------

Class Y shares                                   6.52%          7.07%           8.75%
   return before taxes
Class Y shares                                   5.43%          5.87%           6.86%
   return after taxes on distributions
Class Y shares                                   4.86%          5.41%           6.48%
   return after taxes on distributions and
   sale of fund shares
S&P 500(R) Index                                 4.91%          0.54%           7.72%
   reflects no deduction for fees, expenses
   or taxes


* The inception of Class Y shares was 11/13/96.

From inception (November 13, 1996) until July 1, 2003, Davis Appreciation &
Income Fund was named Davis Convertible Securities Fund and invested primarily
in convertible securities.

After-tax returns are calculated using the highest historical individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes.

Actual after-tax returns depend on an investor's tax situation and may differ
from those shown. After-tax returns shown are not relevant to investors who hold
their Fund shares through tax-deferred arrangements, such as 401(k) plans or
individual retirement accounts.

If returns are negative, returns after taxes on distributions and sale of fund
shares may be higher than returns before taxes as the resulting capital losses
from the sale of fund shares would be available to offset capital gains from
other investments.

             DAVIS APPRECIATION & INCOME FUND YIELD, CLASS Y SHARES
                    30-Day SEC Yield, as of December 31, 2005
                                      2.27%


                      PROSPECTUS o DAVIS SERIES, INC. o 33



You may obtain Davis Appreciation & Income Fund's most recent 30-day SEC Yield
by calling us toll-free at 1-800-279-0279, Monday through Friday, 9 a.m. to 6
p.m. Eastern time.

FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

                                                              CLASS Y
                                                               SHARES
                                                              -------
Maximum sales charge (load) imposed on purchases                None
   as a percentage of offering price
Maximum deferred sales charge (load) imposed on redemptions     None
   as a percentage of the lesser of the net asset value of
   the shares redeemed or the total cost of such shares
Maximum sales charge (load) imposed on reinvested dividends     None
Exchange fee                                                    None

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."

DAVIS APPRECIATION & INCOME FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

                                  CLASS Y SHARES
                                  --------------
Management Fees                       0.72%
Distribution (12b-1) Fees             0.00%
Other Expenses                        0.11%
Total Annual Operating Expenses       0.83%

Expenses may vary in future years.


                       PROSPECTUS o DAVIS SERIES, INC. o 34



EXPENSE 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:

IF YOU SELL YOUR SHARES IN...   1 YEAR   3 YEARS   5 YEARS   10 YEARS
-----------------------------   ------   -------   -------   --------
Class Y Shares                    $85      $265      $460     $1,025


                      PROSPECTUS o DAVIS SERIES, INC. o 35



OVERVIEW OF DAVIS
GOVERNMENT BOND FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Government Bond Fund's investment objective is current income. In order to
achieve this objective while minimizing volatility and preserving capital, the
Fund invests exclusively, under normal circumstances, in U.S. Government
Securities and repurchase agreements collateralized by U.S. Government
Securities with a weighted average maturity of three years or less.

GOVERNMENT SECURITIES

There are two basic types of U.S. Government Securities: (1) direct obligations
of the U.S. Treasury and (2) obligations issued or guaranteed by an agency or
instrumentality of the U.S. government. U.S. Government Securities represent
debt obligations (unlike equity securities, which represent ownership of the
issuer). Obligations that the U.S. Treasury issues or guarantees are generally
considered to offer the highest credit quality available in any security. Many
securities issued by government agencies are not fully guaranteed by the U.S.
government and in unusual circumstances may present credit risk.

U.S. Government Securities include mortgage-related securities issued by an
agency or instrumentality of the U.S. government. At times, a significant
portion of Davis Government Bond Fund's securities are mortgage-backed
securities and collateralized mortgage obligations. A mortgage-backed security
represents ownership of a pool of mortgage loans. As the mortgages are paid off,
a portion of the principal and interest payments are passed through to the
owners of the securities. Davis Government Bond Fund buys only mortgage-backed
securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities. A collateralized mortgage obligation is a debt security that
is secured by a pool of mortgages, mortgage-backed securities, U.S. Government
Securities or corporate debt obligations. Davis Government Bond Fund only
invests in collateralized mortgage obligations that are issued or guaranteed by
the U.S. government or its agencies or instrumentalities.


                      PROSPECTUS o DAVIS SERIES, INC. o 36



INVESTMENT STRATEGY

In selecting U.S. Government Securities for the Fund, Davis Advisors uses
fundamental research to attempt to achieve competitive returns over the long
term. Unlike many government bond funds that invest a portion of their assets in
riskier corporate paper, Davis Government Bond Fund invests only in U.S.
Treasury securities, U.S. government agency securities and U.S. government
agency mortgage securities. The Fund emphasizes undervalued sectors of the
market which our research leads us to believe offer superior potential returns.
The Fund seeks to maintain a weighted average maturity of three years or less.
In general, longer weighted average maturities result in greater changes in the
price of the Fund's shares when prevailing interest rates change.

BUY STRATEGY

Davis Advisors continuously analyzes how interest rates, movements in various
market sectors and the economy as a whole could impact the types of debt
instruments the Fund targets.

o    The Fund buys securities based on their price, coupon and yield spreads
     relative to other securities.

o    Treasuries are included for their high credit quality.

o    Government and agency mortgage-backed securities are included when they
     offer adequate premiums to compensate for additional risk.

o    Davis Advisors assesses the short- and long-term interest-rate environment
     to properly position the portfolio along the yield curve.

SELL STRATEGY

Although the Fund often holds securities until their date of maturity, it will
sell a security before it matures when:

o    Davis Advisors determines that future interest-rate moves could
     significantly diminish its value.

o    Its risk-reward tradeoff is no longer attractive.

o    Davis Advisors finds other securities that appear to offer better value.


                      PROSPECTUS o DAVIS SERIES, INC. o 37



DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o    You are seeking current income.

o    You are more comfortable investing in high-quality U.S. Government
     Securities.

o    You want to diversify a common stock portfolio.

You should not invest in this Fund if:

o    You cannot accept moderate price swings or market declines.

o    You are seeking the higher, but more volatile, returns historically
     achieved by stocks.

PRINCIPAL RISKS OF INVESTING IN THE FUND

If you buy shares of Davis Government Bond 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 (but not the only
factors) that could cause the value of your investment in the Fund to decline,
and which could prevent the Fund from achieving its stated objective.

o    PRICE VOLATILITY RISK. Most of the Fund's U.S. Government Securities pay a
     fixed interest rate. When interest rates increase, the value and price of
     U.S. Government Securities usually decline. When interest rates are
     falling, the value and price of U.S. Government Securities usually
     increase. As a result, an increase in market rates should reduce the value
     of the Fund's portfolio and a decrease in rates should have the opposite
     effect.

o    EXTENSION AND PREPAYMENT RISK. Market prices of the mortgage-backed
     securities and collateralized mortgage obligations that Davis Government
     Bond Fund owns are affected by how quickly borrowers elect to prepay the
     mortgages underlying the securities. Changes in market interest rates
     affect borrowers' decisions about whether to prepay their mortgages. Rising
     interest rates lead to extension risk, which occurs when borrowers maintain
     their existing mortgages until they come due instead of choosing to prepay
     them. Falling interest rates lead to


                      PROSPECTUS o DAVIS SERIES, INC. o 38



     prepayment risk, which occurs when borrowers prepay their mortgages more
     quickly than usual so that they can refinance at a lower rate. A government
     agency that has the right to call (prepay) a fixed-rate security may
     respond the same way. The pace at which borrowers prepay affects the yield
     and the cash flow to holders of securities and the market value of those
     securities.

o    CREDIT RISK. Davis Government Bond Fund seeks to manage credit risk by
     investing exclusively, under normal circumstances, in U.S. Government
     Securities and repurchase agreements collateralized by U.S. Government
     Securities. Many of the agency-issued securities in the Fund's portfolio
     (as opposed to the Treasury-issued securities) are not guaranteed by the
     U.S. government and in unusual circumstances may present credit risk.
     Although an issuer may be chartered or sponsored by Acts of Congress, their
     securities are neither issued nor guaranteed by the United States Treasury.
     These include direct obligations and mortgage-related securities that have
     different levels of credit support from the U.S. government. Some are
     supported by the full faith and credit of the U.S. government, such as
     Government National Mortgage Association ("Ginnie Mae") pass-through
     mortgage certificates. Some are supported by the right of the issuer to
     borrow from the U.S. Treasury under certain circumstances, such as Federal
     National Mortgage Association ("Fannie Mae") bonds. Others are supported
     only by the credit of the entity that issued them, such as Federal Home
     Loan Mortgage Corporation ("Freddie Mac") obligations. There is always some
     risk, even for U.S. Government Securities that the issuer of a security
     held by the Fund will fail to make a payment when it is due.

The Fund's shares are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency and
involve investment risks, including possible loss of the principal amount
invested.


                      PROSPECTUS o DAVIS SERIES, INC. o 39



PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Government Bond Fund by showing changes in the Fund's
year-to-year performance and by showing how the Fund's average annual returns
compare to those of the Citigroup U.S. Treasury/Agency 1-3 Year Index, a widely
recognized unmanaged index of U.S. Government Securities performance. The Fund
is not managed to track any particular index and, consequently, the performance
of the Fund may deviate significantly from the performance of the Index. The
Fund's past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future.

                           DAVIS GOVERNMENT BOND FUND
                 CALENDAR YEAR TOTAL RETURNS FOR CLASS Y SHARES

YEAR   RETURN
----   ------
1999   (2.73)%
2000   10.08%
2001    6.54%
2002    9.05%
2003    0.17%
2004    0.61%
2005    1.22%

During the period shown above, the highest quarterly return was 4.55% for the
quarter ended September 30, 2001, and the lowest quarterly return was (2.51)%
for the quarter ended June 30, 2004. Total return for the three months ended
March 31, 2006, (not annualized) was 0.28%.


                      PROSPECTUS o DAVIS SERIES, INC. o 40



DAVIS GOVERNMENT BOND FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005

                                                                      LIFE OF
                                         PAST 1 YEAR   PAST 5 YEARS    CLASS*
                                         -----------   ------------   -------
Class Y shares                              1.22%          3.46%       3.53%
   return before taxes
Class Y shares                              0.16%          2.08%       1.90%
   return after taxes on distributions
Class Y shares                              0.78%          2.12%       2.00%
   return after taxes on distributions
   and sale of fund shares
Citigroup U.S. Treasury/Agency
1-3 Year Index                              1.74%          3.82%       4.42%
   reflects no deduction for fees,
   expenses or taxes

* The inception of Class Y shares was 09/01/98.

After-tax returns are calculated using the highest historical individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes.

Actual after-tax returns depend on an investor's tax situation and may differ
from those shown. After-tax returns shown are not relevant to investors who hold
their Fund shares through tax-deferred arrangements, such as 401(k) plans or
individual retirement accounts.

If returns are negative, returns after taxes on distributions and sale of fund
shares may be higher than returns before taxes as the resulting capital losses
from the sale of fund shares would be available to offset capital gains from
other investments.


                      PROSPECTUS o DAVIS SERIES, INC. o 41



                DAVIS GOVERNMENT BOND FUND YIELD, CLASS Y SHARES
                    30-Day SEC Yield, as of December 31, 2005
                                      4.21%

You can obtain Davis Government Bond Fund's most recent 30-day SEC Yield by
calling us toll-free at 1-800-279-0279, Monday through Friday, 9 a.m. to 6 p.m.
Eastern time.

FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

                                                                   CLASS Y
                                                                    SHARES
                                                                   -------
Maximum sales charge (load) imposed on purchases                     None
   as a percentage of offering price
Maximum deferred sales charge (load) imposed on redemptions          None
   as a percentage of the lesser of the net asset value of the
   shares redeemed or the total cost of such shares
Maximum sales charge (load) imposed on reinvested dividends          None
Exchange fee                                                         None

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."

DAVIS GOVERNMENT BOND FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

                                  CLASS Y SHARES
                                  --------------
Management Fees                        0.30%
Distribution (12b-1) Fees              0.00%
Other Expenses                         0.66%
Total Annual Operating Expenses        0.96%

Management Fees and Total Annual Operating Expenses have been restated to
reflect a reduction in Management Fees, which went into effect on February 1,
2005.


                      PROSPECTUS o DAVIS SERIES, INC. o 42



EXPENSE 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:

IF YOU SELL YOUR SHARES IN...   1 YEAR   3 YEARS   5 YEARS   10 YEARS
-----------------------------   ------   -------   -------   --------
Class Y Shares                    $98      $306      $531     $1,178


                      PROSPECTUS o DAVIS SERIES, INC. o 43



OVERVIEW OF DAVIS
GOVERNMENT MONEY MARKET FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

Davis Government Money Market Fund is a money market fund. Its investment
objective is to achieve as high a level of current income as is consistent with
the principle of preservation of capital and maintenance of liquidity. The Fund
maintains liquidity and preserves capital by carefully monitoring the maturity
of our investments. Our portfolio has a dollar-weighted average maturity of
ninety days or less. Under normal circumstances, the Fund invests exclusively in
U.S. Government Securities and repurchase agreements collateralized by U.S.
Government Securities.

GOVERNMENT SECURITIES

There are two basic types of U.S. Government Securities: (1) direct obligations
of the U.S. Treasury and (2) obligations issued or guaranteed by an agency or
instrumentality of the U.S. government. U.S. Government Securities represent
debt obligations (unlike equity securities, which represent ownership of the
issuer). Obligations that the U.S. Treasury issues or guarantees are generally
considered to offer the highest credit quality available in any security. Many
securities issued by government agencies are not fully guaranteed by the U.S.
government and in unusual circumstances may present credit risk.

A repurchase agreement is a type of short-term investment that uses securities
as collateral. Like a short-term loan, the borrower sells securities to the
lender. The borrower agrees to buy back the securities at a certain time--at a
higher price that incorporates an interest payment.

DETERMINING IF THIS FUND IS RIGHT FOR YOU

You should consider investing in this Fund if:

o    You are seeking current income.

o    You are most comfortable investing in high-quality U.S. Government
     Securities.

o    You want a safe haven in times of market turmoil.


                      PROSPECTUS o DAVIS SERIES, INC. o 44



o    You want easy access to your money.

You should not invest in this Fund if:

o    You need a high total return to achieve your investment goals.

o    Your primary investment goal is capital growth.

PRINCIPAL RISKS OF INVESTING IN THE FUND

This section describes what we think are the most significant factors (but not
the only factors) that could prevent the Fund from achieving its stated
objective.

o    VARIABLE CURRENT INCOME. The income which Davis Government Money Market
     Fund pays to investors is not stable. When interest rates increase, the
     Fund's income distributions should increase. When interest rates decrease,
     the Fund's income distributions should decrease.

o    CREDIT RISK. Davis Government Money Market Fund seeks to manage credit risk
     by investing exclusively, under normal circumstances, in U.S. Government
     Securities and repurchase agreements collateralized by U.S. Government
     Securities. Many of the agency-issued securities in the Fund's portfolio
     (as opposed to the Treasury-issued securities) are not guaranteed by the
     U.S. government and in unusual circumstances may present credit risk.
     Although an issuer may be chartered or sponsored by Acts of Congress, their
     securities are neither issued nor guaranteed by the United States Treasury.
     These include direct obligations and mortgage-related securities that have
     different levels of credit support from the U.S. government. Some are
     supported by the full faith and credit of the U.S. government, such as
     Government National Mortgage Association ("Ginnie Mae") pass-through
     mortgage certificates. Some are supported by the right of the issuer to
     borrow from the U.S. Treasury under certain circumstances, such as Federal
     National Mortgage Association ("Fannie Mae") bonds. Others are supported
     only by the credit of the entity that issued them, such as Federal Home
     Loan Mortgage Corporation ("Freddie Mac") obligations. There is always some
     risk, even for U.S. Government Securities that the issuer of a security
     held by the Fund will fail to make a payment when it is due.

Although Davis Government Money Market Fund seeks to preserve the value of your
investment at $1 per share, investors can lose money. Shares of Davis Government
Money Market Fund are not deposits or obligations of any bank, are not
guaranteed by the U.S. government or any


                      PROSPECTUS o DAVIS SERIES, INC. o 45



bank, are not insured by the FDIC or any other agency and involve investment
risks, including possible loss of the principal amount invested.

PERFORMANCE INFORMATION

The bar chart and table that follow provide an indication of the risks of
investing in Davis Government Money Market Fund by showing changes in the Fund's
year-to-year performance. The Fund's past performance is not necessarily an
indication of how the Fund will perform in the future.

As of December 31, 2005, there were no Davis Government Money Market Fund Class
Y shares outstanding. The bar chart and table that follow present the returns
for Class A shares (not Class Y shares), which are offered to the public in a
separate prospectus. Class Y shares and Class A shares would have had
substantially similar annual returns because both Classes of shares are invested
in the same portfolio of securities and pay the same expenses.

                       DAVIS GOVERNMENT MONEY MARKET FUND
                 CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES

YEAR   RETURN
----   ------
1996    4.80%
1997    5.02%
1998    4.94%
1999    4.51%
2000    5.91%
2001    3.77%
2002    1.38%
2003    0.62%
2004    0.83%
2005    2.68%

During the period shown above, the highest quarterly return was 1.52% for the
quarter ended September 30, 2000, and the lowest quarterly return was 0.12% for
the quarter ended September 30, 2003. Total return for the three months ended
March 31, 2006, (not annualized) was 0.96%.


                      PROSPECTUS o DAVIS SERIES, INC. o 46



DAVIS GOVERNMENT MONEY MARKET FUND AVERAGE ANNUAL TOTAL RETURNS
for the periods ended December 31, 2005

                 PAST 1 YEAR   PAST 5 YEARS   PAST 10 YEARS
                 -----------   ------------   -------------
Class A Shares      2.68%          1.85%          3.44%

            DAVIS GOVERNMENT MONEY MARKET FUND YIELD, Class A Shares
                    7-Day SEC Yield, as of December 31, 2005
                                      3.65%

You can obtain Davis Government Money Market Fund's most recent 7-day SEC Yield
by calling us toll-free at 1-800-279-0279, Monday through Friday, 9 a.m. to 6
p.m. Eastern time.

FEES AND EXPENSES OF THE FUND

FEES YOU MAY PAY AS A DAVIS FUNDS SHAREHOLDER
paid directly from your investment

                                                                        CLASS Y
                                                                         SHARES
                                                                        -------
Maximum sales charge (load) imposed on purchases                          None
   as a percentage of offering price
Maximum deferred sales charge (load) imposed on redemptions               None
   as a percentage of the lesser of the net asset value of the shares
   redeemed or the total cost of such shares
Maximum sales charge (load) imposed on reinvested dividends               None
Exchange fee                                                              None

A Wire Fee of $5 for domestic transfers may be deducted from sale proceeds. See
"Wiring Sale Proceeds to Your Bank Account."


                      PROSPECTUS o DAVIS SERIES, INC. o 47



DAVIS GOVERNMENT MONEY MARKET FUND ANNUAL OPERATING EXPENSES
deducted from the fund's assets

                                  CLASS Y
                                   SHARES
                                  -------
Management Fees                    0.47%
Distribution (12b-1) Fees          0.00%
Other Expenses                     0.10%
Total Annual Operating Expenses    0.57%

Expenses may vary in future years.

EXPENSE 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:

IF YOU SELL YOUR SHARES IN...   1 YEAR   3 YEARS   5 YEARS   10 YEARS
-----------------------------   ------   -------   -------   --------
Class Y Shares                    $58      $183      $318      $714


                      PROSPECTUS o DAVIS SERIES, INC. o 48



DAVIS
MANAGEMENT
--------------------------------------------------------------------------------

DAVIS ADVISORS

Davis Selected Advisers, L.P., ("Davis Advisors") serves as the investment
adviser for each of the Davis Funds. Davis Advisors' offices are located at 2949
East Elvira Road, Suite 101, Tucson, Arizona 85706. Davis Advisors provides
investment advice for the Davis Funds, manages their business affairs and
provides day-to-day administrative services. Davis Advisors also serves as
investment adviser for other mutual funds and institutional and individual
clients.

For the fiscal year ended December 31, 2005, Davis Advisors' compensation for
its services (based on average net assets) was: Davis Opportunity Fund, 0.67%
Davis Financial Fund, 0.63%; Davis Real Estate Fund, 0.67%; Davis Appreciation &
Income Fund, 0.72%; Davis Government Bond Fund, 0.32%; and Davis Government
Money Market Fund, 0.47%. As of February 1, 2005, the management fee for Davis
Government Bond Fund was reduced to 0.30%.

Davis Selected Advisers-NY, Inc., serves as the sub-adviser for each of the
Davis Funds. Davis Selected Advisers-NY, Inc.'s offices are located at 609 Fifth
Avenue, New York, New York 10017. Davis Selected Advisers-NY, Inc., provides
investment management and research services for the Davis Funds and other
institutional clients, and is a wholly owned subsidiary of Davis Advisors. Davis
Selected Advisers-NY, Inc.'s fee is paid by Davis Advisors, not the Davis Funds.

Every year the Directors consider whether to re-approve the advisory and
sub-advisory agreements. The basis for their decision is included in the Fund's
Semi-Annual Report.


                      PROSPECTUS o DAVIS SERIES, INC. o 49



INVESTMENT PROFESSIONALS

DAVIS OPPORTUNITY FUND

INVESTMENT TEAM. Davis Advisors uses a system of multiple portfolio managers to
manage Davis Opportunity Fund. Under this approach, the portfolio of the Fund is
divided into segments managed by individual portfolio managers. Portfolio
managers decide how their respective segments will be invested, within the
limits provided by the Fund's investment objectives, strategies, restrictions,
and by senior portfolio managers. The primary individual portfolio managers
responsible for Davis Opportunity Fund are:

o    CHRISTOPHER DAVIS has served as the research adviser of Davis Opportunity
     Fund since January 1999, and also manages other equity funds advised by
     Davis Advisors. Mr. Davis has served as an analyst and portfolio manager
     for Davis Advisors since 1989. As research adviser, Mr. Davis oversees the
     Portfolio Managers of Davis Opportunity Fund and allocates segments of the
     Fund to each of them to invest. Among other factors, Mr. Davis considers
     the portfolio managers' experience, results achieved, and the number of
     investment opportunities which they have identified within their areas of
     expertise.

o    KENNETH CHARLES FEINBERG has served as a Portfolio Manager of Davis
     Opportunity Fund since January 1999, and also manages other equity funds
     advised by Davis Advisors. Mr. Feinberg started with Davis Advisors as a
     research analyst in December 1994.

o    CHIP TUCKER, CFA, has served as a Portfolio Manager of Davis Opportunity
     Fund since May 2004, manages other equity funds advised by Davis Advisors,
     and also serves as research analyst for Davis Advisors. Mr. Tucker joined
     Davis Advisors in April 2002 and previously served as a portfolio manager
     for US Trust Company from April 2001 to April 2002.

o    DANTON GOEI has served as a Portfolio Manager of Davis Opportunity Fund
     since May 2004, manages other equity funds advised by Davis Advisors, and
     also serves as research analyst for Davis Advisors. Mr. Goei joined Davis
     Advisors in November 1998.

o    TANIA POUSCHINE has served as a Portfolio Manager of Davis Opportunity Fund
     since May 2004, manages other equity funds advised by Davis Advisors, and
     also serves as research analyst for Davis Advisors. Ms. Pouschine joined
     Davis Advisors in July 2003.


                      PROSPECTUS o DAVIS SERIES, INC. o 50



     From 1993 to 2003, Ms. Pouschine worked as an analyst and portfolio manager
     at Ruane Cunniff.

o    JAE CHUNG has served as a Portfolio Manager of Davis Opportunity Fund since
     May 2004, manages other equity funds advised by Davis Advisors, and also
     serves as research analyst for Davis Advisors. Mr. Chung joined Davis
     Advisors in September 2003. From 2000 to September 2003 Mr Chung served as
     a portfolio manager for Marcstone Capital Management. From 1996 to 2000 Mr.
     Chung served as a portfolio manager and analyst with Franklin Mutual
     Advisers.

o    DWIGHT BLAZIN, PHD, has served as a Portfolio Manager of Davis Opportunity
     Fund since May 2004, manages other equity funds advised by Davis Advisors,
     and also serves as research analyst for Davis Advisors. Mr. Blazin joined
     Davis Advisors in 1997.

DAVIS FINANCIAL FUND

o    CHRISTOPHER C. DAVIS has served as a Portfolio Manager of Davis Financial
     Fund since inception in May 1991, and also manages other equity funds
     advised by Davis Advisors. Mr. Davis served as Assistant Portfolio Manager
     and research analyst working with Shelby M.C. Davis from September 1989
     through September 1995.

o    KENNETH CHARLES FEINBERG has served as a Portfolio Manager of Davis
     Financial Fund since May 1997, and also manages other equity funds advised
     by Davis Advisors. Mr. Feinberg started with Davis Advisors as a research
     analyst in December 1994.


                      PROSPECTUS o DAVIS SERIES, INC. o 51



DAVIS REAL ESTATE FUND

o    ANDREW A. DAVIS has served as a Portfolio Manager of Davis Real Estate Fund
     since inception in January 1994, and also manages other equity funds
     advised by Davis Advisors. Mr. Davis has served as a portfolio manager for
     Davis Advisors since 1993.

o    CHANDLER SPEARS has served as a Portfolio Manager of Davis Real Estate Fund
     since August 2002, and also manages other equity funds advised by Davis
     Advisors. Mr. Spears has served as a research analyst at Davis Advisors
     since November 2000. Before joining Davis Advisors, Mr. Spears was employed
     as the director of investor relations for Charles E. Smith Residential
     Realty, Inc., in Arlington, Virginia. Prior to that he was a principal and
     director of real estate research of SNL Securities, LC, in Charlottesville,
     Virginia.

DAVIS APPRECIATION & INCOME FUND

o    ANDREW A. DAVIS has served as a Portfolio Manager of Davis Appreciation &
     Income Fund since February 1993, and also manages other equity funds
     advised by Davis Advisors. Mr. Davis has served as a portfolio manager for
     Davis Advisors since 1993.

o    KEITH J. SABOL, CFA, has served as a Portfolio Manager of Davis
     Appreciation & Income Fund since September 2005. Mr. Sabol has served as a
     research analyst at Davis Advisors since July 2005. Before joining Davis
     Advisors, Mr. Sabol was a principal with Quantanium, LLC where he served as
     a portfolio manager from June 2002 through June 2005. Prior to that he
     served as a portfolio manager for Federated Investors from 1996 to 2002.

DAVIS GOVERNMENT BOND FUND AND
DAVIS GOVERNMENT MONEY MARKET FUND

CRESTON KING, CFA, has served as a Portfolio Manager of Davis Government Bond
Fund and Davis Government Money Market Fund since August 1999. Mr. King also
manages other government money market funds advised by Davis Advisors.

The Statement of Additional Information provides additional information about
the Portfolio Managers' compensation, other accounts managed by the Portfolio
Managers, and the Portfolio Managers' ownership of securities in the Funds.


                      PROSPECTUS o DAVIS SERIES, INC. o 52



THE DAVIS INVESTMENT DISCIPLINE

Davis Advisors manages equity funds using the Davis Investment Discipline. We
conduct extensive research to try to identify businesses that possess
characteristics we believe foster the creation of long-term value, such as
proven management, a durable franchise and business model, and sustainable
competitive advantages. We aim to invest in such businesses when they are
trading at a discount to their intrinsic worth. We emphasize individual stock
selection and believe that the ability to evaluate management is critical. We
routinely visit managers at their places of business in order to gain insight
into the relative value of different businesses. Such research, however
rigorous, involves predictions and forecasts that are inherently uncertain.

Over the years, Davis Advisors has developed a list of characteristics that we
believe help companies to create shareholder value over the long term and manage
risk. While few companies possess all of these characteristics at any given
time, Davis Advisors searches for companies that demonstrate a majority or an
appropriate mix of these characteristics.


                      PROSPECTUS o DAVIS SERIES, INC. o 53



FIRST CLASS MANAGEMENT

     o    Proven track record

     o    Significant personal ownership in business

     o    Intelligent allocation of capital

     o    Smart application of technology to improve business and lower costs

STRONG FINANCIAL CONDITION AND SATISFACTORY PROFITABILITY

     o    Strong balance sheet

     o    Low cost structure

     o    High after-tax returns on capital

     o    High quality of earnings

STRONG COMPETITIVE POSITIONING

     o    Non-obsolescent products / services

     o    Dominant or growing market share

     o    Participation in a growing market

     o    Global presence and brand names

After determining which companies we wish to own, we then turn our analysis to
determining the intrinsic value of those companies' common stock. We seek common
stock which can be purchased at attractive valuations relative to their
intrinsic value. Our goal is to invest in companies for the long term. We
consider selling a company if we believe the stock's market price exceeds the
Adviser's estimates of intrinsic value, or if the ratio of the risks and rewards
of continuing to own the company is no longer attractive.

ADDITIONAL INFORMATION ABOUT INVESTMENTS

Each Fund's investment objectives are described in its respective Overview. The
Funds' investment objectives are not fundamental policies and may be changed by
the Board of Directors without a vote of shareholders. A Fund's prospectus would
be amended before any change in investment objective, and shareholders would be
promptly notified of the change.

Each Fund's principal investment strategies and main risks are also described in
its Overview. The Funds are not limited to investing in the securities and using
the principal investment strategies described in the Overviews. Each Fund may
also purchase other kinds of securities;


                      PROSPECTUS o DAVIS SERIES, INC. o 54



engage in active trading (which would increase portfolio turnover and commission
expenses and may increase taxable distributions); or employ other investment
strategies that are not principal investment strategies, if, in Davis Advisors'
professional judgment, the securities or investment strategies are appropriate.
Factors that Davis Advisors considers in pursuing these other strategies include
whether (i) purchasing such securities would be consistent with shareholders'
reasonable expectations; (ii) they may assist a Fund in pursuing its investment
objective; (iii) they are consistent with the Fund's investment strategy; (iv)
they will cause the Fund to violate any of its investment restrictions; or (v)
they will materially change the Fund's risk profile as described in the Fund's
prospectuses and Statement of Additional Information, as amended from time to
time. The Statement of Additional Information discusses these securities and
investment strategies.

SHORT-TERM INVESTMENTS. Each Fund uses short-term investments, such as treasury
bills and repurchase agreements, to maintain flexibility while evaluating
long-term opportunities. A Fund may also use short-term investments for
temporary defensive purposes. At such times a Fund will not be pursuing its
normal investment policies. In the event that our portfolio managers anticipate
a decline in the market values of the companies in which a Fund invests (due to
economic, political or other factors), we may reduce a Fund's risk by investing
in short-term securities until market conditions improve. Unlike equity
securities, these investments will not appreciate in value when the market
advances and will not contribute to long-term growth of capital.

For more details concerning current investments and market outlook, please see
the most recent shareholder report.

EXECUTION OF PORTFOLIO TRANSACTIONS. The Adviser places orders with
broker-dealers for Davis Funds' portfolio transactions. The Adviser seeks to
place portfolio transactions with brokers or dealers who will execute
transactions as efficiently as possible and at the most favorable net price. In
placing executions and paying brokerage commissions or dealer markups, the
Adviser considers price, commission, timing, competent block trading coverage,
capital strength and stability, research resources, and other factors. Subject
to best price and execution, the Adviser may place orders for Davis Funds'
portfolio transactions with broker-dealers who have sold shares of Davis Funds.
In placing orders for Davis Funds' portfolio transactions, the Adviser does not
commit to any specific amount of business with any particular broker-dealer.
Further, when the Adviser


                      PROSPECTUS o DAVIS SERIES, INC. o 55



places orders for Davis Funds portfolio transactions, it does not give any
consideration to whether a broker-dealer has sold shares of Davis Funds.

Over the last three years the Fund paid the following brokerage commissions:

                                           FOR THE YEAR ENDED DECEMBER 31,
                                           -------------------------------
                                              2005       2004        2003
                                            --------   --------   --------
DAVIS OPPORTUNITY FUND
Brokerage commissions paid:                 $825,222   $454,386   $445,405
Brokerage as a percentage of average net
   assets:                                      0.13%      0.10%      0.17%

DAVIS FINANCIAL FUND
Brokerage commissions paid:                 $217,636   $119,670   $388,455
Brokerage as a percentage of average net
   assets:                                      0.02%      0.01%      0.05%

DAVIS REAL ESTATE FUND
Brokerage commissions paid:                 $314,379   $274,239   $211,025
Brokerage as a percentage of average net
   assets:                                      0.05%      0.06%      0.06%

DAVIS APPRECIATION & INCOME FUND
Brokerage commissions paid:                 $ 40,725   $ 54,291   $ 60,407
Brokerage as a percentage of average net
   assets:                                      0.01%      0.02%      0.03%
DAVIS GOVERNMENT BOND FUND                       N/A        N/A        N/A
DAVIS GOVERNMENT MONEY MARKET FUND               N/A        N/A        N/A


                      PROSPECTUS o DAVIS SERIES, INC. o 56



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 your Davis Funds account, you may buy or sell shares on any
business day. The price of your shares in a Davis Fund is based upon the total
value of the Fund's investments. Your account balance may change daily because
the share price may change daily.

The value of one share of a Davis Fund, also known as the net asset value, or
NAV, is calculated at 4 p.m. Eastern time on each day the New York Stock
Exchange is open or as of the time the Exchange closes, if earlier.

The business sections of many, but not all, major newspapers publish Davis
Funds' net asset values. If you have access to the Internet, you can also check
the net asset value on our website (www.davisfunds.com).

VALUATION OF PORTFOLIO SECURITIES

Your shares will be purchased at the net asset value, or sold at the net asset
value next determined after Davis Funds' transfer agent receives your request in
good order.

Securities are valued primarily on the basis of market quotations. However,
Davis Funds have adopted procedures for making "fair value" determinations if
market quotations are not readily available. The Fund uses fair value prices any
time the Adviser concludes that reliable market quotations for its portfolio
securities are not readily available from an approved third party pricing
service or from independent brokers. Examples of when fair value pricing may be
used include illiquid or thinly traded securities, and securities whose values
have been affected by a significant event occurring after the close of their
primary markets. Davis Funds use an independent vendor to assist in fair value
pricing of foreign


                      PROSPECTUS o DAVIS SERIES, INC. o 57



securities when deemed appropriate. The use of fair value pricing by the Fund
may cause the net asset value of its shares to differ significantly from the net
asset value that would be calculated using last reported prices.

Some of the Funds' securities may be traded in markets that close at a different
time than when the Funds' shares are priced. Events affecting portfolio values
that occur after the time that such markets close and the time Funds' shares are
priced may result in the use of fair value pricing, as described above.
Likewise, because foreign securities trade in markets and exchanges that operate
on U.S. holidays and weekends, the value of some of the Funds' foreign
investments might change significantly on those days when investors cannot buy
or redeem shares. Davis Funds have adopted procedures designed to identify and
react to significant events in foreign markets that would have a material effect
on a Fund's net asset value. Notwithstanding, the net asset value of a Fund's
shares may change on days when shareholders will not be able to purchase or
redeem Fund shares.

Securities denominated in foreign currencies and traded in foreign markets will
have their value converted into U.S. dollar equivalents at the prevailing
exchange 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 a Fund's shares even if there has not been any change in the
foreign currency price of that Fund's investments.

Davis Government Money Market Fund typically values all of its securities at
amortized cost. Normally, the share price of Davis Government Money Market Fund
does not fluctuate. However, if there are unusually rapid changes in interest
rates that the Fund's Board of Directors believes will cause a material
deviation between the amortized cost of the Fund's debt securities and the
market value of those securities, the Board will consider taking temporary
action to maintain a fixed price or to prevent material dilution or other
unfavorable consequences to Fund shareholders. This temporary action could
include withholding dividends, paying dividends out of surplus, realizing gains
or losses, or using market valuation to calculate net asset value rather than
amortized cost.

PORTFOLIO HOLDINGS

A description of Davis Funds' policies and procedures with respect to the
disclosure of the Fund's portfolio holdings is available in the Statement of
Additional Information.


                      PROSPECTUS o DAVIS SERIES, INC. o 58



Each Fund's portfolio holdings are published and mailed to shareholders twice a
year in the annual and semi-annual reports which are mailed approximately 60
days after the end of the Fund's second and fourth fiscal quarters. In addition,
each Fund publishes its portfolio holdings on the Davis Funds' website (and the
SEC website) approximately sixty days after the end of each fiscal quarter.
Other information concerning the Funds' portfolio holdings may also be published
on the Davis Funds' website from time to time.

HOW WE PAY EARNINGS

There are two ways you can receive payments from the Davis Fund you invest in:

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

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

If you would like information about when a particular Davis Fund pays dividends
and distributes capital gains, please call 1-800-279-0279. Unless you choose
otherwise, the Davis Funds will automatically reinvest 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 IRS Form W-9 that your Taxpayer
Identification Number is correct and you are not subject to backup withholding.
If you are subject to backup withholding, or you did not certify your Taxpayer
Identification Number, the IRS requires the Davis Funds to withhold a percentage
of any dividends paid and redemption or exchange proceeds received.


                      PROSPECTUS o DAVIS SERIES, INC. o 59



HOW TO PUT YOUR DIVIDENDS AND CAPITAL GAINS TO WORK

You can have all of your dividends and capital gains automatically invested in
the same Fund or the same share Class of any other Davis Fund. To be eligible
for this DIVIDEND DIVERSIFICATION PROGRAM, all accounts involved must be
registered under the same name and same Class of shares. 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 ten days' notice. To
participate in this program, fill out the cross-reinvest information in the
appropriate section of the Application Form. If you wish to establish this
program after your account has been opened, call for more information.

FEDERAL INCOME TAXES

TAXES ON DISTRIBUTIONS

Distributions you receive from a Fund may be subject to income tax and may also
be subject to state or local taxes unless you are exempt from taxation.

For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. A Fund's distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from a fund will normally be taxable to you
when made, regardless of whether you reinvest distributions or receive them in
cash.

Davis Funds will send you a statement each year showing the tax status of all
your distributions.

TAXES ON TRANSACTIONS

Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment is the
difference between the cost of your shares and the price you receive when you
sell them.


                      PROSPECTUS o DAVIS SERIES, INC. o 60



More information concerning federal taxes is available in the Statement of
Additional Information. We recommend that you consult with a tax advisor about
dividends and capital gains that may be received from the Davis Funds.

FEES AND EXPENSES OF THE FUNDS

Each Fund must pay operating fees and expenses.

MANAGEMENT FEE

The management fee covers the normal expenses of managing the Fund, including
compensation, research costs, corporate overhead expenses and related expenses.
Davis Funds offer different Classes of shares in other prospectuses. The
difference in the fee structures between the Classes is primarily the result of
their separate arrangements for shareholder and distribution services and is not
the result of any difference in the amounts charged by Davis Advisors for core
investment advisory services. Accordingly, the core investment advisory expenses
do not vary by Class. Different fees and expenses will affect performance.

OTHER EXPENSES

Other expenses include miscellaneous fees from affiliated and outside service
providers. These fees may include legal, audit, custodial, the printing and
mailing of reports and statements, automatic reinvestment of distributions and
other conveniences and payments to third parties that provide recordkeeping
services or administrative services for investors in the Fund.

TOTAL FUND OPERATING EXPENSES

The total cost of running a mutual fund is reflected in its expense ratio. A
shareholder does not pay operating costs directly; instead operating costs are
taken out before the Fund's NAV is calculated and are expressed as a percentage
of the Fund's average daily net assets. The effect of these fees is reflected in
the performance results for that Class of shares. Investors should examine them
closely in the prospectus, especially when comparing one fund with another fund
in the same investment category.


                      PROSPECTUS o DAVIS SERIES, INC. o 61



COMPENSATION EARNED BY BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

Broker-dealers and other financial intermediaries ("Qualifying dealers") may
earn substantial compensation by selling Davis Funds' shares. Qualifying dealers
may receive (i) sales commissions from sales charges paid by purchasing
shareholders; (ii) distribution and service fees from the Funds' 12b-1
distribution plans (Class Y shares do not have a Rule 12b-1 plan and do not make
these payments); (iii) record-keeping fees from the Funds for providing
record-keeping services to investors who hold Davis Funds shares through
dealer-controlled omnibus accounts; and (iv) other compensation, described
below, paid by Davis Distributors, LLC (the "Distributor") from its own
resources.

Qualifying dealers may, as a condition to distributing Davis Funds, request that
the Distributor, pay or reimburse the Qualifying dealer for (i) marketing
support payments including business planning assistance, educating personnel
about the Davis Funds, and shareholder financial planning needs, placement on
the dealer's list of offered funds, and access to sales meetings, sales
representatives and management representatives of the dealer; and (ii) financial
assistance paid to dealers that enable the Distributor to participate in and/or
present at conferences or seminars, sales or training programs for invited
registered representatives and other employees, client and investor events and
other dealer-sponsored events. These additional payments are sometimes referred
to as "revenue sharing" payments. A number of factors are considered in
determining payments, including the dealer's sales and assets, and the quality
of the dealer's relationship with the Distributor. Payments are generally based
on the value of shares of the Fund held by the dealer or financial institution
for its customers or based on sales of Fund shares by the dealer or financial
institution, or a combination thereof. The Adviser may use its profits from the
advisory fee it receives from the Fund. Some dealers may also choose to pay
additional compensation to their registered representatives who sell the Funds.
Such payments may be associated with the status of a Fund on a financial
intermediary's preferred list of funds or otherwise associated with the
financial intermediary's marketing and other support activities. The foregoing
arrangements may create an incentive for the brokers, dealers or other financial
institutions, as well as their registered representatives, to sell the Davis
Funds rather than other funds.


                      PROSPECTUS o DAVIS SERIES, INC. o 62



In 2005, the Adviser and Distributor made payments from their own resources to
the Qualifying dealers listed below. These Qualifying dealers may provide the
Davis Funds enhanced sales and marketing support and financial advisers employed
by the Qualifying dealers may recommend the Davis Funds rather than other funds.
Qualifying dealers may be added or deleted at any time.

Ameriprise Financial Services, Inc.; Charles Schwab & Co., Inc.; Fidelity
Brokerage Services, Inc.; John Hancock Life Insurance Company (U.S.A.) (name
change from Manufacturers Life Insurance Company U.S.A.); John Hancock Life
Insurance Company of New York (name change from Manufacturers Life Insurance
Company of New York); Merrill Lynch, Pierce, Fenner & Smith, Inc.; Metropolitan
Life Insurance Company; T. Rowe Price Investment Services, Inc.; AG Edwards &
Sons; Citistreet Associates; Citigroup Global Markets, Inc.; Morgan Stanley,
Inc.; Piper Jaffray, Inc.; UBS Financial Services, Inc.; Wachovia Securities,
Inc.; Merrill Lynch Life Insurance Co.; ADP Broker Dealer, Inc.; HSBC Bank USA;
Mercer HR Services LLC (name change from Putnam Fiduciary Trust Company);
Nationwide Financial Services, Inc.; New York Life Distribution; Cigna Financial
Services, Inc. (name change to Prudential Retirement Insurance & Annuity Co.);
Wachovia Bank N.A.; Wells Fargo Bank, N.A.; The Vanguard Group, Inc.; and Union
Bank of California.

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.

Although Davis Funds may use brokers who sell shares of the Funds to effect
portfolio transactions, the Funds do not consider the sale of fund shares as a
factor when selecting brokers to effect portfolio transactions.

Investors should consult their financial intermediary regarding the details of
the payments they receive in connection with the sale of Fund shares.

DUE DILIGENCE MEETINGS. The Distributor routinely sponsors due diligence
meetings for registered representatives during which they receive updates on
various Davis Funds and are afforded the opportunity to speak with portfolio
managers. Invitation to these meetings is not conditioned on selling a specific
number of shares. Those who have shown an interest in


                      PROSPECTUS o DAVIS SERIES, INC. o 63



Davis Funds, however, are more likely to be considered. To the extent permitted
by their firm's policies and procedures, registered representatives' expenses in
attending these meetings may be covered by the Distributor.

SEMINARS AND EDUCATIONAL MEETINGS. The Distributor may defray certain expenses
of Qualified dealers incurred in connection with seminars and other educational
efforts subject to the Distributor's policies and procedures governing payments
for such seminars. The Distributor may share expenses with Qualifying dealers
for costs incurred in conducting training and educational meetings about various
aspects of the Funds for the employees of Qualifying dealers. In addition, the
Distributor may share expenses with Qualifying dealers for costs incurred in
hosting client seminars where the Fund is discussed.

RECORDKEEPING FEES. Certain Qualifying dealers have chosen to maintain omnibus
accounts with the Davis Funds. In an "omnibus account" the Fund maintains a
single account in the name of the dealer and the dealer maintains all of the
individual shareholder accounts. Likewise, for many retirement plans, a third
party administrator may open an omnibus account with the Davis Funds and the
administrator will then maintain all of the participant accounts. The Adviser,
on behalf of the Funds, enters into agreements whereby the Funds compensate the
dealer or administrator for recordkeeping services.

Recordkeeping services typically include (i) establishing and maintaining
shareholder accounts and records; (ii) recording shareholder account balances
and changes thereto; (iii) arranging for the wiring of funds; (iv) providing
statements to shareholders; (v) furnishing proxy materials, periodic Davis Funds
reports, prospectuses and other communications to shareholders as required; (vi)
transmitting shareholder transaction information; and (vii) providing
information in order to assist Davis Funds in their compliance with state
securities laws. Each Davis Fund typically would be paying these shareholder
servicing fees directly, were it not that the Qualifying dealer holds all
customer accounts in a single omnibus account with each Davis Fund.

OTHER COMPENSATION. The Distributor may, from its own resources and not the
Funds, offer other compensation to the extent not prohibited by state or federal
laws, the Securities and Exchange Commission, or any self-regulatory agency,
such as the NASD.


                      PROSPECTUS o DAVIS SERIES, INC. o 64



HOW TO
OPEN AN ACCOUNT
--------------------------------------------------------------------------------

YOU CAN OPEN AN ACCOUNT IF YOU INVEST:

o    At least $5 million for an institution (trust company, bank trust,
     endowment, pension plan, foundation) acting on behalf of its own account or
     one or more clients.

o    At least $5 million for a government entity (a state, county, city,
     department, authority or similar government agency).

o    With an account established under a "wrap account" or other fee-based
     program that is sponsored and maintained by a registered broker-dealer
     approved by the Distributor.

o    At least $500,000 for a 401(k) plan, 457 plan, employer sponsored 403(b)
     plan, profit sharing and money purchase pension plan, defined benefit plan,
     or non-qualified deferred compensation plan where plan level or omnibus
     accounts are held on the books of the Fund.

The Distributor may waive the investment minimums at its discretion. For
purposes of the minimums, the Distributor may treat appropriately related
investors (for example, trust funds of the same bank, separate accounts of the
same insurance company, clients whose funds are managed by a single bank,
insurance company, investment adviser, broker-dealer, or institutional clients
of a financial intermediary that maintains an omnibus account with the fund) as
a single investor.


                      PROSPECTUS o DAVIS SERIES, INC. o 65



     THREE WAYS YOU CAN OPEN AN ACCOUNT

o    BY MAIL. Fill out the Application Form and mail it to our service provider,
     State Street Bank and Trust. 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, STARTER CHECKS, TRAVELER'S
     CHECKS OR MONEY ORDERS.

o    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. Please note that your dealer may charge a
     service fee or commission for these transactions.

o    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
     the Distributor 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
          [NAME OF DAVIS FUND THAT YOU ARE BUYING]
          Shareholder Name
          Shareholder Account Number
          Federal Routing Number 011000028
          DDA Number 9904-606-2


                      PROSPECTUS o DAVIS SERIES, INC. o 66



ANTI-MONEY LAUNDERING COMPLIANCE

Davis Funds and the Distributor are required to comply with various anti-money
laundering laws and regulations. Consequently, the Funds or the Distributor may
request additional information from you to verify your identity and source of
funds. If you do not provide the information the Davis Funds may not be able to
open your account. If at any time the Funds believe an investor may be involved
in suspicious activity, or if certain account information matches information on
government lists of suspicious persons, they may choose not to establish a new
account or may be required to "freeze" a shareholder's account. They may also be
required to provide a government agency or another financial institution with
information about transactions that have occurred in a shareholder's account or
to transfer monies received to establish a new account, transfer an existing
account or transfer the proceeds of an existing account to a governmental
agency. In some circumstances, the law may not permit the Funds or the
Distributor to inform the shareholder that it has taken the actions described
above.


                      PROSPECTUS o DAVIS SERIES, INC. o 67



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 prospectus describes the types of
transactions you can perform as a Davis Funds shareholder including how to
initiate these transactions and the charges that you may incur (if any) when
buying, selling or exchanging shares. A transaction will not be executed until
all required documents have been received in a form meeting all legal
requirements. Legal requirements vary depending upon the type of transaction and
the type of account. Call Shareholder Services for instructions. These
procedures and charges may change over time and the prospectus in effect at the
time a transaction is initiated will determine the procedures and charges which
will apply to the transaction.

RIGHT TO REJECT OR RESTRICT ANY PURCHASE OR EXCHANGE ORDER

Purchases and exchanges should be made for investment purposes only. Davis Funds
and the Distributor reserve the right to reject or restrict any purchase or
exchange order for any reason. Davis Funds are not designed to serve as a
vehicle for frequent trading in response to short-term fluctuations in the
securities markets. Accordingly, purchases or exchanges that are part of
activity that Davis Funds or the Distributor have determined may involve actual
or potential harm to a Fund may be rejected.

THREE WAYS TO BUY, SELL AND EXCHANGE SHARES

     o    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 time) or use our automated telephone system at any time, day
          or night.

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

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


                      PROSPECTUS o DAVIS SERIES, INC. o 68



               Express shipping:
               State Street Bank and Trust Company
               c/o Davis Funds
               66 Brooks Drive, Braintree, MA 02184

     o    BY DEALER. Contact a dealer who then will make the transaction through
          our Distributor. Please note that your dealer may charge a service fee
          or commission for these transactions.

The Davis Funds do not issue certificates for any class of 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. Transactions in the
account, such as additional investments, will be reflected on regular
confirmation statements from the Transfer Agent. Dividend and capital gain
distributions, purchases through automatic investment plans and certain
retirement plans, and automatic exchanges and withdrawals will be confirmed at
least quarterly.

WHEN YOUR TRANSACTIONS ARE PROCESSED

The per-share price for purchases or sales made through our Distributor 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.

BUYING MORE SHARES

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 and your account number, indicating that the
investment should be made in Class Y shares.


                      PROSPECTUS o DAVIS SERIES, INC. o 69



When you buy shares through a dealer, you may be charged a service fee or
commission for these transactions.

SELLING SHARES

You may sell back all or part of your shares in any Davis Fund in which you
invest (known as a redemption) on any business day, at net asset value. You can
sell the shares by telephone, by Internet, by mail or through a dealer.

When you sell shares by mail, indicate the number of shares or the 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 these transactions.

Redemption proceeds are usually paid to you by check within seven days after
State Street Bank and Trust receives your proper sale request. You may redeem
shares on any business day. Redemption proceeds may be withheld until a
sufficient period of time has passed for State Street Bank and Trust to be
reasonably sure that all checks or drafts (including certified or cashier's
checks) for shares purchased have cleared, normally not exceeding fifteen
calendar days.

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 one
     percent of a Fund's net asset value during any ninety-day period. Any sales
     above the cash limit may be paid in securities and would mean you would
     have to pay brokerage fees if you sold the securities.

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 thirty days, or
     if you wish to send redemption proceeds to a third party, you will need a
     medallion signature guarantee for all sales.

o    In the past, the Davis Funds issued certificates. If a certificate was
     issued for the shares you wish to sell, the certificate must be sent by


                      PROSPECTUS o DAVIS SERIES, INC. o 70



     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.

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

MEDALLION SIGNATURE GUARANTEE

To protect you and the Davis Funds against fraud, certain redemption requests
must be made in writing with your signature guaranteed. A medallion signature
guarantee is a written endorsement from an eligible guarantor institution that
the signature(s) on the written request is (are) valid. Certain commercial
banks, trust companies, savings associations, credit unions and members of a
United States stock exchange participate in the medallion signature guarantee
program. No other form of signature verification will be accepted.

STOCK POWER

This is 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.

WIRING SALE PROCEEDS TO YOUR BANK ACCOUNT

You may be eligible to have your redemption proceeds electronically transferred
to a commercial bank account by federal funds wire. There is a $5 charge by
State Street Bank and Trust for wire service, and receiving banks may also
charge for this service. Redemption by federal funds wire is usually credited to
your bank account on the next business day after the sale. Alternatively,
redemption through Automated Clearing House will usually arrive at your bank two
banking days after the sale. To have redemption proceeds sent by federal funds
wire to your bank, you must first fill out the Banking Instructions section on
the account application form and attach a voided check or deposit slip. If the
account has already been established, an Account Service Form or letter of
instruction must be submitted with a medallion guarantee and a copy of a voided
check or deposit slip.


                      PROSPECTUS o DAVIS SERIES, INC. o 71



EXCHANGING SHARES

You can sell Class Y shares of any Davis Fund to buy Class Y shares in any other
Davis Fund. This is known as an exchange. You can only exchange shares from your
account within the same class and under the same registration. You can exchange
shares by telephone, by internet, by mail or through a dealer. The initial
exchange must be for at least $5 million for institutions or government entities
or minimums set by wrap program sponsors. Class A shareholders who are eligible
to buy Class Y shares may also exchange their shares for Class Y shares of the
Fund. Exchanges are normally performed on the same day of the request if
received in proper form (all necessary documents, signatures, etc.) by 4 p.m.
Eastern time.

When you exchange shares by mail, you must send our service provider, State
Street Bank and Trust, a written request for the exchange. In the past, the
Davis Funds issued certificates. 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 each transaction.

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

MARKET TIMING

Davis Funds discourage short-term or excessive trading, often referred to as
"market timing," and intend to seek to restrict or reject such trading or take
other action if in the judgment of the Adviser such trading may be detrimental
to the interests of a Fund and its long-term shareholders. Market timing
strategies may dilute the value of fund shares held by long-term shareholders,
interfere with the efficient management of the Fund's portfolio, and increase
brokerage and administrative costs.


                      PROSPECTUS o DAVIS SERIES, INC. o 72



The Board of Directors has adopted policies and procedures with respect to the
frequent purchases and redemption of fund shares. Currently, four round-trip
exchanges between Davis Funds are allowed during a calendar year. You may make
an unlimited number of exchanges out of Davis Government Money Market Fund.
Automatic exchanges are excluded from this provision. Certain financial
intermediaries, such as 401(k) plan administrators, may apply purchase and
exchange limitations which are different than the limitations discussed above.
These limitations may be more or less restrictive than the limitations imposed
by the Davis Funds, but are designed to detect and prevent excessive trading.
Shareholders should consult their financial intermediaries to determine what
purchase and exchange limitations may be applicable to their transactions in the
Davis Funds through that financial intermediary. To the extent reasonably
feasible, the Funds' market timing procedures apply to all shareholder ac counts
and neither Davis Funds nor the Adviser have entered into agreements to exempt
any shareholder from application of either the Davis Funds' or a financial
intermediary's market-timing procedures, as applicable.

Davis Funds use several methods to reduce the risk of market timing. These
methods include (i) limiting annual exchange activity per fund account; and (ii)
committing staff to selectively review on a continuing basis recent trading
activity in order to identify trading activity that may be contrary to the
Funds' market timing policy. If Davis Funds determine that your purchase or
exchange patterns reflect a market timing strategy, Davis Funds reserve the
right to take any action permitted under applicable rules and standards,
including but not limited to (i) refusing to accept your orders to purchase Fund
shares; and/or (ii) restricting the availability of exchanges through telephone
requests, facsimile transmissions, automated telephone services, internet
services or any electronic transfer services.

Davis Funds receive purchase, exchange and redemption orders from many financial
intermediaries which maintain omnibus accounts with the Funds. Omnibus account
arrangements permit financial intermediaries to aggregate their clients'
transaction and ownership positions. In these circumstances, the identity of the
particular shareholder(s) is not known to Davis Funds. While Davis Funds
encourages financial intermediaries to apply the Funds' marketing timing policy
to their customers who invest indirectly in the Funds, Davis Funds are limited
in their ability to monitor the trading activity or enforce the Funds' market
timing policy with respect to customers of financial intermediaries.
Shareholders seeking to engage in


                      PROSPECTUS o DAVIS SERIES, INC. o 73



excessive trading practices may employ a variety of strategies to avoid
detection. The ability of Davis Funds to detect and curtail excessive trading
practices may also be limited by operational systems and technological
limitations.

               YOU CAN MAKE EXCHANGES AMONG ANY OF THE DAVIS FUNDS
                     WITHOUT PAYING ADDITIONAL SALES CHARGES

               EQUITY FUNDS

               o    Davis New York Venture Fund

               o    Davis Opportunity Fund

               o    Davis Financial Fund

               GROWTH & INCOME FUNDS

               o    Davis Real Estate Fund

               o    Davis Appreciation & Income Fund

               GOVERNMENT BOND FUND

               o    Davis Government Bond Fund

               GOVERNMENT MONEY MARKET FUND

               o    Davis Government Money Market Fund

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

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 the Distributor, you can perform a transaction with Davis Funds in
one of two ways:

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

o    If you have a TouchTone(TM) telephone, you can use Davis Funds' automated
     telephone system, known as Davis Direct Access, 24 hours a day, seven days
     a week.

When you buy, sell or exchange shares over the telephone, you agree that the
Davis Funds are not liable for following telephone instructions believed to be
genuine (that is, directed by the account holder or registered


                      PROSPECTUS o DAVIS SERIES, INC. o 74



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 any loss from 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 website--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. You may also request confirmation statements and
tax summary information to be mailed to the address on file. Please review our
website for more complete information. If you do not wish to have this option
activated for your account, please contact our customer service department.

To access your accounts, you will need the name of the Fund(s) in which you are
invested, your account number and your Social Security Number. Davis Funds
provides written confirmation of your initial access and any 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 buy, sell or exchange shares over the Internet, you agree that the
Davis Funds are not liable for following 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. If
these procedures are not used, the Funds may be liable for any loss from
unauthorized instructions.

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.

* Retirement Accounts may be subject to restrictions.


                      PROSPECTUS o DAVIS SERIES, INC. o 75



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

DIVIDENDS AND DISTRIBUTIONS

o    The Davis Long-Term Growth Funds (i.e. Davis New York Venture Fund, Davis
     Opportunity Fund, and Davis Financial Fund) ordinarily distribute their
     dividends and capital gains, if any, in December.

o    The Davis Growth & Income Funds (i.e. Davis Real Estate Fund and Davis
     Appreciation & Income Fund) ordinarily distribute dividends quarterly and
     capital gains, if any, in December.

o    Davis Government Bond Fund and Davis Government Money Market Fund
     ordinarily distribute dividends monthly. Davis Government Bond Fund
     ordinarily distributes capital gains, if any, in December. Davis Government
     Money Market Fund does not ordinarily distribute capital gains.

o    When a dividend or capital gain is distributed, the net asset value per
     share is reduced by the amount of the payment. Davis Government Bond Fund's
     and Davis Government Money Market Fund's net asset values are not affected
     by dividend payments.

o    You may elect to reinvest dividend and/or capital gain distributions to
     purchase additional shares of any Davis Fund, or you may elect to receive
     them in cash. Many shareholders do not elect to take capital gain
     distributions in cash because these distributions reduce principal value.

o    If a dividend or capital gain distribution is for an amount less than $10,
     then the Fund will not issue a check. Instead, the dividend or capital gain
     distribution will be automatically reinvested in additional shares of the
     Fund.

o    If a dividend or capital gain distribution check remains uncashed for six
     months or is undeliverable by the Post Office, we will reinvest the
     dividend or distribution promptly after making this determination; and
     future dividends and capital gains distributions will be automatically
     reinvested.


                      PROSPECTUS o DAVIS SERIES, INC. o 76



FINANCIAL HIGHLIGHTS

These tables are designed to show you the financial performance of each of the
Funds in this prospectus for the past five years, 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
at which an investor would have earned (or lost) money on an investment in the
Fund.

This information has been audited by KPMG LLP. KPMG LLP's report, along with
each Fund's financial statements, is included in the annual report, which is
available upon request.


                      PROSPECTUS o DAVIS SERIES, INC. o 77



DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
Davis Opportunity Fund
Class Y

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.



                                                YEAR ENDED DECEMBER 31,
                                    -----------------------------------------------
                                      2005        2004     2003      2002     2001
                                    -------     -------   ------   -------   ------

NET ASSET VALUE, BEGINNING OF
   PERIOD                           $ 23.81     $ 20.93   $14.80   $ 17.07   $18.83

INCOME (LOSS) FROM INVESTMENT
   OPERATIONS
Net Investment Income (Loss)           0.13(3)     0.17    (0.02)    (0.02)   (0.03)
Net Realized and Unrealized Gains
   (Losses)                            1.93        2.71     6.15     (2.25)   (1.45)
Total From Investment Operations       2.06        2.88     6.13     (2.27)   (1.48)

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment
   Income                             (0.32)         --       --        --       --
Distributions from Realized Gains     (0.60)         --       --        --    (0.27)
Distributions in Excess of Net
   Realized Gains                        --          --       --        --    (0.01)
Total Dividends and Distributions     (0.92)         --       --        --    (0.28)

NET ASSET VALUE, END OF PERIOD      $ 24.95     $ 23.81   $20.93   $ 14.80   $17.07

TOTAL RETURN(1)                        8.70%      13.76%   41.42%   (13.30)%  (7.81)%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
   (000 omitted)                    $50,142     $17,287   $6,577   $ 4,353   $4,309
Ratio of Expenses to Average Net
   Assets                              0.85%       0.86%    0.93%     0.93%    0.91%
Ratio of Net Investment Income
   (Loss) to Average Net Assets        0.48%       0.73%   (0.10)%   (0.11)%  (0.18)%
Portfolio Turnover Rate(2)            35.77%      22.22%   42.34%    42.74%   40.96%


(1.) Assumes hypothetical initial investment on the business day before the
     first day of the fiscal period, with all dividends and distributions
     reinvested in additional shares on the reinvestment date, and redemption at
     the net asset value calculated on the last business day of the fiscal
     period. Sales charges are not reflected in the total returns.

(2.) The lesser of purchases or sales of portfolio securities for a period,
     divided by the monthly average of the market value of portfolio securities
     owned during the period. Securities with a maturity or expiration date at
     the time of acquisition of one year or less are excluded from the
     calculation.

(3.) Per share calculations were based on average shares outstanding for the
     period.


                      PROSPECTUS o DAVIS SERIES, INC. o 78



DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
Davis Financial Fund
Class Y
The following financial information represents selected data for each share of
capital stock outstanding throughout each period.



                                                 YEAR ENDED DECEMBER 31,
                                    -------------------------------------------------
                                      2005        2004      2003      2002      2001
                                    -------      ------   -------   -------   -------

NET ASSET VALUE, BEGINNING OF
   PERIOD                           $ 41.59      $37.03   $ 27.00   $ 33.27   $ 36.56

INCOME (LOSS) FROM INVESTMENT
   OPERATIONS
Net Investment Income                  0.09        0.09      0.17      0.14        --(3)
Net Realized and Unrealized
   Gains (Losses)                      3.33        4.47      9.86     (6.41)    (3.29)
Total From Investment Operations       3.42        4.56     10.03     (6.27)    (3.29)

DIVIDENDS AND DISTRIBUTIONS
Distributions from Realized Gains     (1.91)         --        --        --        --
Total Dividends and Distributions     (1.91)         --        --        --        --

NET ASSET VALUE, END OF PERIOD      $ 43.10      $41.59   $ 37.03   $ 27.00   $ 33.27

TOTAL RETURN(1)                        8.18%      12.31%    37.15%   (18.85)%   (9.00)%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
   (000 omitted)                    $11,815      $9,980   $11,563   $12,727   $23,266
Ratio of Expenses to Average Net
   Assets                              0.84%(4)    0.85%     0.91%     0.88%     0.87%
Ratio of Net Investment Income
   to Average Net Assets               0.24%       0.21%     0.46%     0.41%     0.01%
Portfolio Turnover Rate(2)             5.17%         --      9.29%    14.88%    17.80%


(1.) Assumes hypothetical initial investment on the business day before the
     first day of the fiscal period, with all dividends and distributions
     reinvested in additional shares on the reinvestment date, and redemption at
     the net asset value calculated on the last business day of the fiscal
     period. Sales charges are not reflected in the total returns.

(2.) The lesser of purchases or sales of portfolio securities for a period,
     divided by the monthly average of the market value of portfolio securities
     owned during the period. Securities with a maturity or expiration date at
     the time of acquisition of one year or less are excluded from the
     calculation.

(3.) Less than $0.005 per share.

(4.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
     average net assets for 2005 would have been 0.85%.


                      PROSPECTUS o DAVIS SERIES, INC. o 79



DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
Davis Real Estate Fund
Class Y

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.



                                               YEAR ENDED DECEMBER 31,
                                   -----------------------------------------------
                                     2005      2004      2003      2002      2001
                                   -------   -------   -------   -------   -------

NET ASSET VALUE, BEGINNING OF
   PERIOD                          $ 39.78   $ 30.51   $ 22.93   $ 22.42   $ 22.20

INCOME FROM INVESTMENT
   OPERATIONS
Net Investment Income                 0.74      0.82      1.02      0.91      0.85
Net Realized and Unrealized
   Gains                              4.42      9.37      7.58      0.51      0.44
Total From Investment Operations      5.16     10.19      8.60      1.42      1.29

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment
   Income                            (0.99)    (0.92)    (1.02)    (0.91)    (0.85)
Distributions from Realized
   Gains                             (3.42)       --        --        --        --
Distributions in Excess of Net
   Investment Income                    --        --        --        --     (0.22)
Total Dividends and
   Distributions                     (4.41)    (0.92)    (1.02)    (0.91)    (1.07)

NET ASSET VALUE, END OF PERIOD     $ 40.53   $ 39.78   $ 30.51   $ 22.93   $ 22.42

TOTAL RETURN(1)                      13.20%    33.85%    38.10%     6.33%     5.95%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
   (000 omitted)                   $79,156   $69,241   $53,740   $39,456   $39,203
Ratio of Expenses to Average
   Net Assets                         0.77%     0.80%     0.84%     0.84%     0.85%
Ratio of Net Investment Income
   to Average Net Assets              1.80%     2.39%     3.86%     3.61%     3.75%
Portfolio Turnover Rate(2)           24.86%    31.37%    25.93%    52.57%    34.91%


(1.) Assumes hypothetical initial investment on the business day before the
     first day of the fiscal period, with all dividends and distributions
     reinvested in additional shares on the reinvestment date, and redemption at
     the net asset value calculated on the last business day of the fiscal
     period. Sales charges are not reflected in the total returns.

(2.) The lesser of purchases or sales of portfolio securities for a period,
     divided by the monthly average of the market value of portfolio securities
     owned during the period. Securities with a maturity or expiration date at
     the time of acquisition of one year or less are excluded from the
     calculation.


                      PROSPECTUS o DAVIS SERIES, INC. o 80



DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
Davis Appreciation & Income Fund
Class Y

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.



                                                 YEAR ENDED DECEMBER 31,
                                    ------------------------------------------------
                                      2005      2004      2003      2002       2001
                                    -------   -------   -------   -------    -------

NET ASSET VALUE, BEGINNING OF
   PERIOD                           $ 27.61   $ 25.04   $ 20.38   $ 21.43    $ 24.05

INCOME (LOSS) FROM INVESTMENT
   OPERATIONS
Net Investment Income                  0.66      0.71      0.78      0.84       0.82
Net Realized and Unrealized
   Gains (Losses)                      1.11      2.58      4.66     (1.05)     (2.61)
Total From Investment Operations       1.77      3.29      5.44     (0.21)     (1.79)

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment
   Income                             (0.69)    (0.72)    (0.78)    (0.84)     (0.82)
Distributions from Realized Gains     (0.64)       --        --        --         --
Return of Capital                        --        --        --        --      (0.01)
Total Dividends and Distributions     (1.33)    (0.72)    (0.78)    (0.84)     (0.83)

NET ASSET VALUE, END OF PERIOD      $ 28.05   $ 27.61   $ 25.04   $ 20.38    $ 21.43

TOTAL RETURN(1)                        6.52%    13.35%    27.13%    (0.96)%    (7.43)%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
   (000 omitted)                    $37,110   $30,260   $25,892   $19,445    $20,865
Ratio of Expenses to Average Net
   Assets                              0.83%     0.86%     0.88%     0.88%      0.88%
Ratio of Net Investment Income
   to Average Net Assets               2.36%     2.74%     3.60%     3.90%      3.52%
Portfolio Turnover Rate(2)            16.64%    21.26%    33.35%    34.26%     20.38%


(1.) Assumes hypothetical initial investment on the business day before the
     first day of the fiscal period, with all dividends and distributions
     reinvested in additional shares on the reinvestment date, and redemption at
     the net asset value calculated on the last business day of the fiscal
     period. Sales charges are not reflected in the total returns.

(2.) The lesser of purchases or sales of portfolio securities for a period,
     divided by the monthly average of the market value of portfolio securities
     owned during the period. Securities with a maturity or expiration date at
     the time of acquisition of one year or less are excluded from the
     calculation.


                      PROSPECTUS o DAVIS SERIES, INC. o 81



DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
Davis Government Bond Fund
Class Y

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.



                                                   YEAR ENDED DECEMBER 31,
                                    ----------------------------------------------------
                                     2005         2004        2003     2002        2001
                                    ------      -------     -------   ------     -------

NET ASSET VALUE, BEGINNING OF
   PERIOD                           $ 5.65      $  5.77     $  5.97   $ 5.72     $  5.64

INCOME (LOSS) FROM INVESTMENT
   OPERATIONS
Net Investment Income                 0.17         0.15        0.11     0.22        0.29
Net Realized and Unrealized
   Gains (Losses)                    (0.10)       (0.12)      (0.10)    0.28        0.07
Total From Investment Operations      0.07         0.03        0.01     0.50        0.36

DIVIDENDS AND DISTRIBUTIONS
Dividends from Net Investment
   Income                            (0.17)       (0.15)      (0.18)   (0.25)      (0.28)
Return of Capital                       --           --(3)    (0.03)      --          --
Distributions in Excess of Net
   Investment Income                    --           --          --       --(3)       --
Total Dividends and Distributions    (0.17)       (0.15)      (0.21)   (0.25)      (0.28)

NET ASSET VALUE, END OF PERIOD      $ 5.55      $  5.65     $  5.77   $ 5.97     $  5.72

TOTAL RETURN(1)                       1.22%        0.61%       0.17%    9.05%       6.54%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
   (000 omitted)                    $  115      $   219     $   263   $  296     $   438
Ratio of Expenses to Average Net
   Assets                             0.97%(4)     1.02%       0.92%    0.88%       0.96%
Ratio of Net Investment Income
   to Average Net Assets              2.63%        2.07%       2.17%    3.60%       4.85%
Portfolio Turnover Rate(2)           55.46%      165.17%     121.61%   69.89%     149.03%


(1.) Assumes hypothetical initial investment on the business day before the
     first day of the fiscal period, with all dividends and distributions
     reinvested in additional shares on the reinvestment date, and redemption at
     the net asset value calculated on the last business day of the fiscal
     period. Sales charges are not reflected in the total returns.

(2.) The lesser of purchases or sales of portfolio securities for a period,
     divided by the monthly average of the market value of portfolio securities
     owned during the period. Securities with a maturity or expiration date at
     the time of acquisition of one year or less are excluded from the
     calculation.

(3.) Less than $0.005 per share.

(4.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
     average net assets for 2005 would have been 0.98%.


                      PROSPECTUS o DAVIS SERIES, INC. o 82



DAVIS SERIES, INC., FINANCIAL HIGHLIGHTS
Davis Government Money Market Fund
Class Y

The following financial information represents selected data for each share of
capital stock outstanding throughout each period.



                                             YEAR ENDED DECEMBER 31,
                             -------------------------------------------------------
                               2005          2004       2003       2002       2001
                             --------      --------   --------   --------   --------

NET ASSET VALUE, BEGINNING
   OF PERIOD                 $  1.000      $  1.000   $  1.000   $  1.000   $  1.000

INCOME FROM INVESTMENT
   OPERATIONS
Net Investment Income           0.026         0.008      0.006      0.014      0.037

DIVIDENDS
Dividends from Net
   Investment Income           (0.026)       (0.008)    (0.006)    (0.014)    (0.037)

NET ASSET VALUE, END OF
   PERIOD                    $  1.000      $  1.000   $  1.000   $  1.000   $  1.000

TOTAL RETURN(1)                  2.68%         0.83%      0.62%      1.38%      3.77%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
   (000 omitted)             $513,221      $572,381   $571,431   $600,912   $505,713
Ratio of Expenses to
   Average Net Assets            0.56%(2)      0.58%      0.60%      0.59%      0.59%
Ratio of Net Investment
   Income (Loss) to
   Average Net Assets            2.65%         0.83%      0.62%      1.35%      3.75%


(1.) Assumes hypothetical initial investment on the business day before the
     first day of the fiscal period, with all dividends and distributions
     reinvested in additional shares on the reinvestment date, and redemption at
     the net asset value calculated on the last business day of the fiscal
     period. Sales charges are not reflected in the total returns.

(2.) Had the Adviser not reimbursed certain expenses, the ratio of expenses to
     average net assets for 2005 would have been 0.57%.


                      PROSPECTUS o DAVIS SERIES, INC. o 83



PRIVACY NOTICE

While you generally will be dealing with a broker-dealer or other financial
adviser, we may collect information about you from your account application and
other forms that 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.


                      PROSPECTUS o DAVIS SERIES, INC. o 84



OBTAINING
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------

Additional information about the Fund's investments is available in the Funds'
ANNUAL AND SEMI-ANNUAL REPORTS to shareholders. In the Funds' Annual Report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. The
STATEMENT OF ADDITIONAL INFORMATION provides more detailed information about
Davis Funds and their management and operations. The Statement of Additional
Information and the Funds' Annual and Semi-Annual Reports are available, without
charge, upon request.

The Davis Funds' Statement of Additional Information and Annual Report have been
filed with the Securities and Exchange Commission, are incorporated by
reference, and are legally a part of this prospectus.

HOW TO GET MORE INFORMATION (Including Annual Report, Semi-Annual Report and
Statement of Additional Information)

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

o    BY MAIL. Write to State Street Bank and Trust Company, c/o Davis Funds,
     P.O. Box 8406, Boston, MA 02266-8406.

o    ON THE INTERNET. WWW.DAVISFUNDS.COM.

o    FROM THE SEC. Additional copies of the registration statement can be
     obtained, for a duplicating fee, by writing the Public Reference Section of
     the SEC, Washington, DC 20549-0102, or by sending an electronic request to
     publicinfo@sec.gov. Reports and other information about the Funds are also
     available by visiting the SEC website (WWW.SEC.GOV). For more information
     on the operations of the Public Reference Room, call 1-202-942-8090.

                                        Investment Company Act File No. 811-2679


                      PROSPECTUS o DAVIS SERIES, INC. o 85

STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2006

DAVIS OPPORTUNITY FUND
DAVIS FINANCIAL FUND
DAVIS REAL ESTATE FUND
DAVIS APPRECIATION & INCOME FUND
DAVIS GOVERNMENT BOND FUND
DAVIS GOVERNMENT MONEY MARKET FUND

EACH AN AUTHORIZED SERIES OF
DAVIS 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 AND THE CLASS Y
PROSPECTUS EACH DATED MAY 1, 2006 FOR THE DAVIS SERIES FUNDS. THIS STATEMENT OF
ADDITIONAL INFORMATION INCORPORATES THE PROSPECTUSES BY REFERENCE. THE
PROSPECTUSES MAY BE OBTAINED FROM THE FUNDS.

THE FUNDS' MOST RECENT ANNUAL REPORT AND SEMI-ANNUAL REPORT TO SHAREHOLDERS ARE
SEPARATE DOCUMENTS THAT ARE AVAILABLE ON REQUEST AND WITHOUT CHARGE BY CALLING
SHAREHOLDER SERVICES. THE ANNUAL REPORT, ACCOMPANYING NOTES AND REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM APPEARING IN THE ANNUAL REPORT ARE
INCORPORATED BY REFERENCE IN THIS STATEMENT OF ADDITIONAL INFORMATION.

Davis Series, Inc., Statement of Additional Information 1

TABLE OF CONTENTS

PAGE
----
SECTION I: INVESTMENT STRATEGIES, RISKS AND RESTRICTIONS................. 3

Additional Information About the Funds' Investment Strategies
and Risks............................................................. 3
Portfolio Transactions................................................ 22
Investment Restrictions............................................... 26

SECTION II: KEY PERSONS.................................................. 30

Organization of the Funds............................................. 30
Directors and Officers................................................ 31
Directors............................................................. 31
Independent Directors' Compensation .................................. 35
Officers.............................................................. 35
Standing Committees of the Board of Directors......................... 36
Directors' Fund Holdings.............................................. 37
Independent Directors' Affiliations and Transactions.................. 38
Certain Shareholders of the Funds..................................... 39
Investment Advisory Services.......................................... 45
Portfolio Managers.................................................... 48
Disclosure of Portfolio Holdings...................................... 52
Distribution of Fund Shares........................................... 53
Other Important Service Providers..................................... 56

SECTION III: CLASSES OF SHARES, PURCHASES, EXCHANGES AND REDEMPTIONS..... 57

Selecting the Appropriate Class of Shares............................. 57
How to Purchase Shares................................................ 62
Special Services...................................................... 63
Exchange of Shares.................................................... 64
Redemption of Shares.................................................. 64

SECTION IV: GENERAL INFORMATION.......................................... 65

Determining the Price of Shares....................................... 65
Dividends and Distributions........................................... 66
Federal Income Taxes.................................................. 67
Performance Data...................................................... 67

APPENDIX A: QUALITY RATINGS OF DEBT SECURITIES........................... 79

APPENDIX B: TERMS AND CONDITIONS FOR A STATEMENT OF INTENTION............ 81

APPENDIX C: SUMMARY OF PROXY VOTING PROCEDURES AND POLICIES.............. 82

Davis Series, Inc., Statement of Additional Information 2

SECTION I: INVESTMENT STRATEGIES, RISKS AND RESTRICTIONS

This Statement of Additional Information should be read in conjunction with the
prospectuses. This Statement of Additional Information supplements the
information available in the prospectuses.

ADDITIONAL INFORMATION ABOUT THE FUNDS'
INVESTMENT STRATEGIES AND RISKS

THE ADVISER. Davis Opportunity Fund, Davis Financial Fund, Davis Real Estate
Fund, Davis Appreciation & Income Fund, Davis Government Bond Fund, and Davis
Government Money Market Fund (each a "Fund") are managed by Davis Selected
Advisers, L.P. ("Adviser").

PRINCIPAL INVESTMENT STRATEGIES AND ADDITIONAL INVESTMENT STRATEGIES. The
investment objectives, principal investment strategies and the main risks of
each Fund are described in the Funds' prospectuses. The Funds are not limited to
just investing in the securities and using the principal investment strategies
described in the prospectuses. The Funds may invest in other securities and use
additional investment strategies if, in the Adviser's professional judgment, the
securities or investment strategies are appropriate. Factors which the Adviser
considers include whether: (i) purchasing such securities would be consistent
with shareholders' reasonable expectations; (ii) they may assist the Fund in
pursuing its investment objective; (iii) they are consistent with the Fund's
investment strategy; (iv) they will cause the Fund to violate any of its
investment restrictions; or (v) they will materially change the Fund's risk
profile as described in the Fund's prospectuses and Statement of Additional
Information, as amended from time to time. This section of the Statement of
Additional Information contains supplemental information about the Funds'
principal investment strategies and also describes additional investment
strategies that the Adviser and/or Davis Selected Advisers - NY, Inc.
("Sub-Adviser") may use to try to achieve the Funds' objectives. The composition
of the Funds' portfolios and the strategies that the Adviser may use to try to
achieve the Funds' investment objectives may vary depending on market conditions
and available investment opportunities. The Funds are not required to use any of
the investment strategies described below in pursuing their investment
objectives. The Funds may use some of the investment strategies rarely or not at
all. Whether a Fund uses a given investment strategy at a given time depends on
the professional judgment of the Adviser.

There is no assurance that the Funds will achieve their investment objectives.
An investment in the Funds may not be appropriate for all investors, and
short-term investing is discouraged. The Funds' investment objectives are not
fundamental policies and may be changed by the Board of Directors without a vote
of shareholders. The Funds' prospectuses would be amended prior to any change in
investment objective and shareholders would be promptly notified of the change.

In the discussions that follow, "Fund" applies equally to Davis Opportunity
Fund, Davis Financial Fund, Davis Real Estate Fund, Davis Appreciation & Income
Fund, Davis Government Bond Fund and Davis Government Money Market Fund, unless
the context indicates otherwise.

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
prices of equity securities fluctuate based on changes in the financial
condition of their issuers and on market and economic conditions. Events that
have a negative impact on a business probably will be reflected in a decline in
their equity securities. Furthermore, when the stock market declines, most
equity securities, even those issued by strong companies, likely will decline in
value.

RIGHTS AND WARRANTS. Rights and warrants are forms of equity securities.
Warrants basically are options to purchase equity securities at specific prices
valid for a specific period of time. Their prices do not necessarily move
parallel to the prices of the underlying securities. Rights are similar to
warrants, but normally have a shorter maturity and are distributed directly by
the issuer to its shareholders. Rights and warrants have no voting rights,
receive no dividends and have no rights with respect to the assets of the
issuer.

INITIAL PUBLIC OFFERINGS ("IPOS"). IPOs are a form of equity security. IPOs can
have a dramatic impact on Fund performance and assumptions about future
performance based on that impact may not be warranted. Investing in IPOs
involves risks. Many, but not all, of the companies issuing IPOs are small,
unseasoned companies. These are companies that have been in operation for a
short period of time. Small company securities, including IPOs, are subject to
greater

Davis Series, Inc., Statement of Additional Information 3

volatility in their prices than are securities issued by more established
companies. If the Fund does not intend to make a long-term investment in the IPO
(it is sometimes possible to immediately sell an IPO at a profit) the Adviser
may not perform the same detailed research on the company that it does for core
holdings.

SMALL- AND MID-CAPITALIZATION COMPANIES. Companies with less than $10 billion in
market capitalization are considered by the Adviser to be mid- or
small-capitalization companies. Investing in mid- and small-capitalization
companies may be more risky than investing in large-capitalization companies.
Smaller companies typically have more limited product lines, markets and
financial resources than larger companies, and their securities may trade less
frequently and in more limited volume than those of larger, more mature
companies. Securities of these companies may be subject to volatility in their
prices. They may have a limited trading market, which may adversely affect the
Fund's ability to dispose of them and can reduce the price the Fund might be
able to obtain for them. Other investors that own a security issued by a mid- or
small-capitalization company for whom there is limited liquidity might trade the
security when the Fund is attempting to dispose of its holdings in that
security. In that case the Fund might receive a lower price for its holdings
than otherwise might be obtained. Small-capitalization companies also may be
unseasoned. These include companies that have been in operation for less than
three years, including the operations of any predecessors.

FINANCIAL SERVICES SECTOR. The Adviser has developed a special expertise in
financial services companies and Davis equity funds may, from time to time,
invest a significant portion of its assets in the financial services sector if
the Adviser believes that such investments are consistent with the Fund's
investment strategy, may contribute to the Fund achieving its investment
objectives and will not cause the Fund to violate any of its investment
restrictions.

A company is "principally engaged" in financial services if it owns financial
services related assets constituting at least 50% of the total value of its
assets, or if at least 50% of its revenues are derived from its provision of
financial services. The financial services sector consists of several different
industries that behave differently in different economic and market
environments; for example, banking, insurance and securities brokerage houses.
Companies in the financial services sector include commercial banks, industrial
banks, savings institutions, finance companies, diversified financial services
companies, investment banking firms, securities brokerage houses, investment
advisory companies, leasing companies, insurance companies and companies
providing similar services.

Due to the wide variety of companies in the financial services sector, they may
react in different ways to changes in economic and market conditions.

Banking. Commercial banks (including "money center" regional and community
banks), savings and loan associations and holding companies of the foregoing are
especially subject to adverse effects of volatile interest rates, concentrations
of loans in particular industries (such as real estate or energy) and
significant competition. The profitability of these businesses is to a
significant degree dependent on the availability and cost of capital funds.
Economic conditions in the real estate market may have a particularly strong
effect on certain banks and savings associations. Commercial banks and savings
associations are subject to extensive federal and, in many instances, state
regulation. Neither such extensive regulation nor the federal insurance of
deposits ensures the solvency or profitability of companies in this industry,
and there is no assurance against losses in securities issued by such companies.

Insurance. Insurance companies are particularly subject to government regulation
and rate setting, potential anti-trust and tax law changes, and industry-wide
pricing and competition cycles. Property and casualty insurance companies also
may be affected by weather, terrorism and other catastrophes. Life and health
insurance companies may be affected by mortality and morbidity rates, including
the effects of epidemics. Individual insurance companies may be exposed to
reserve inadequacies, problems in investment portfolios (for example, due to
real estate or "junk" bond holdings) and failures of reinsurance carriers.

Other Financial Services Companies. Many of the investment considerations
discussed in connection with banks and insurance companies also apply to other
financial services companies. These companies are all subject to extensive
regulation, rapid business changes, and volatile performance dependent on the
availability and cost of capital and prevailing interest rates and significant
competition. General economic conditions significantly affect these companies.
Credit and other losses resulting from the financial difficulty of borrowers or
other third parties have a potentially adverse effect on companies in this
industry. Investment banking, securities brokerage and investment advisory
companies are particularly subject to government regulation and the risks
inherent in securities trading and underwriting activities.

Davis Series, Inc., Statement of Additional Information 4

Other Considerations. Regulations of the Securities and Exchange Commission
("SEC") impose limits on: (1) investments in the securities of companies that
derive more than 15% of their gross revenues from the securities or investment
management business. Although there are exceptions, a Fund is prohibited from
investing more than 5% of its total assets in a single company that derives more
than 15% of its gross revenues from the securities or investment management
business, and (2) investments in insurance companies. A Fund generally is
prohibited from owning more than 10% of the outstanding voting securities of an
insurance company.

REAL ESTATE SECURITIES, INCLUDING REITS. Real estate securities are a form of
equity security. Real estate securities are issued by companies that have at
least 50% of the value of their assets, gross income or net profits attributable
to ownership, financing, construction, management or sale of real estate, or to
products or services that are related to real estate or the real estate
industry. Davis Funds do not invest directly in real estate. Real estate
companies include real estate investment trusts ("REITs") or other securitized
real estate investments, brokers, developers, lenders and companies with
substantial real estate holdings such as paper, lumber, hotel and entertainment
companies. REITs pool investors' funds for investment primarily in
income-producing real estate or real estate-related loans or interests. A REIT
is not taxed on income distributed to shareholders if it complies with various
requirements relating to its organization, ownership, assets and income, and
with the requirement that it distribute to its shareholders at least 95% of its
taxable income (other than net capital gains) each taxable year. REITs generally
can be classified as Equity REITs, Mortgage REITs and Hybrid REITs. Equity REITs
invest the majority of their assets directly in real property and derive their
income primarily from rents. Equity REITs also can realize capital gains by
selling property that has appreciated in value. Mortgage REITs invest the
majority of their assets in real estate mortgages and derive their income
primarily from interest payments. Hybrid REITs combine the characteristics of
both Equity REITs and Mortgage REITs. To the extent that the management fees
paid to a REIT are for the same or similar services as the management fees paid
to the Fund, there will be a layering of fees, which would increase expenses and
decrease returns.

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

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

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

Convertible bonds, debentures and notes are varieties of debt securities, and as
such are subject to many of the same risks, including interest rate sensitivity,
changes in debt rating and credit risk. In addition, convertible securities are
often viewed by the issuer as future common stock subordinated to other debt and
carry a lower rating than the issuer's non-convertible

Davis Series, Inc., Statement of Additional Information 5

debt obligations. Thus, convertible securities are subject to many of the same
risks as high-yield, high-risk securities. A more complete discussion of these
risks is provided below in the sections titled "Bonds and Other Debt Securities"
and "High-Yield, High-Risk Debt Securities."

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

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

FOREIGN SECURITIES. Equity securities are issued by both domestic and foreign
companies. Sometimes a company may be classified as either "domestic" or
"foreign" depending upon which factors are considered most important for a given
company. Factors which the Adviser considers include: (1) was the company
organized under the laws of the United States or a foreign country; (2) are the
company's securities principally traded in securities markets outside of the
United States, (3) where does the company earn the majority of its revenues or
profits; and (4) where does the company have the majority of its assets.

Foreign securities include, but are not limited to, equity securities, real
estate securities, convertible securities and bonds. Investments in foreign
securities may be made through the purchase of individual securities on
recognized exchanges and developed over-the-counter markets, through American
Depository Receipts ("ADRs") or Global Depository Receipts ("GDRs") covering
such securities, and through U.S.-registered investment companies investing
primarily in foreign securities. To the extent that the management fees paid to
an investment company are for the same or similar services as the management
fees paid to the Fund, there would be a layering of fees that would increase
expenses and decrease returns. When the Fund invests in foreign securities,
their operating expenses are likely to be higher than that of an investment
company investing exclusively in U.S. securities, since the custodial and
certain other expenses are expected to be higher.

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

PASSIVE FOREIGN INVESTMENT COMPANIES. Some securities of companies domiciled
outside the U.S. which the Fund may purchase, may be considered passive foreign
investment companies ("PFICs") under U.S. tax laws. PFICs are those foreign
corporations which generate primarily passive income. They tend to be growth
companies or "start-up" companies. For federal tax purposes, a corporation is
deemed a PFIC if 75% or more of the foreign corporation's gross income for the
income year is passive income or if 50% or more of its assets are assets that
produce or are held to produce passive income. Passive income is further defined
as any income to be considered foreign personal holding company income within
the subpart F provisions defined by Internal Revenue Code section 954.

Davis Series, Inc., Statement of Additional Information 6

Investing in PFICs involves the risks associated with investing in foreign
securities, as described above. There is also the risk that the Fund may not
realize that a foreign corporation it invests in is a PFIC for federal tax
purposes. Federal tax laws impose severe tax penalties for failure to properly
report investment income from PFICs. Following industry standards, the Fund
makes efforts to ensure compliance with federal tax reporting of these
investments.

SPECIAL RISKS OF EMERGING MARKETS. Emerging and developing markets abroad may
offer special opportunities for growth investing but have greater risks than
more developed foreign markets, such as those in Europe, Canada, Australia, New
Zealand and Japan. Securities in emerging market countries may be more difficult
to sell at an acceptable price and their prices may be more volatile than
securities of companies in more developed markets. There may be even less
liquidity in their securities markets, and settlements of trades may be subject
to greater delays so that the Fund may not receive the proceeds of a sale of a
security on a timely basis. They are subject to greater risks of limitations on
the repatriation of income and profits because of currency restrictions imposed
by local governments. Those countries also may be subject to the risk of greater
political and economic instability, which can greatly affect the volatility of
prices of securities in those countries. Emerging countries may have less
developed trading markets and exchanges. They may have less developed legal and
accounting systems.

BONDS AND OTHER DEBT SECURITIES. Bonds and other debt securities may be
purchased by the Fund if the Adviser believes that they are consistent with the
Fund's investment strategies, may contribute to the Fund's investment objective
and will not cause the Fund to violate any of its investment restrictions. The
U.S. government, corporations and other issuers sell bonds and other debt
securities to borrow money. Issuers pay investors interest and generally must
repay the amount borrowed at maturity. Some debt securities, such as zero-coupon
bonds, do not pay current interest, but are purchased at a discount from their
face values. The prices of debt securities fluctuate, depending on such factors
as interest rates, credit quality and maturity.

Bonds and other debt securities generally are subject to credit risk and
interest rate risk. While debt securities issued by the U.S. Treasury generally
are considered free of credit risk, debt issued by agencies and corporations all
entail some level of credit risk. Investment grade debt securities have less
credit risk than do high-yield, high-risk debt securities. Credit risk is
described more fully in the section titled "High-Yield, High-Risk Debt
Securities."

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

AVERAGE MATURITIES. Davis Government Money Market Fund limits the average
maturity of its investment portfolio to 90 days or less. Davis Government Bond
Fund seeks to maintain a weighted average maturity of three years or less. The
Adviser may adjust the average maturity of Davis Government Money Market Fund's
portfolio and Davis Government Bond Fund's portfolio from time to time,
depending on the Adviser's assessment of the relative yields available on
securities of different maturities, and its assessment of future interest rate
patterns and market risk. Thus, at various times, the average maturity of the
portfolio may be relatively short (as short as one day for either Davis
Government Money Market Fund or Davis Government Bond Fund), and at other times
may be relatively long (up to 90 days for Davis Government Money Market Fund and
up to three years for Davis Government Bond Fund). Davis Government Money Market
Fund strives to maintain a constant net asset value per share of $1. There is no
guarantee that the Fund will be successful. Davis Government Bond Fund does not
attempt to maintain a fixed net asset value per share. Fluctuations in portfolio
values and therefore fluctuations in the net asset value of its shares are more
likely to be greater when Davis Government Bond Fund's average portfolio
maturity is longer. The portfolio is likely to be principally invested in
securities with short-term maturities in periods when the Adviser deems a more
defensive position is advisable. Davis Government Bond Fund may invest a
substantial portion of its assets in short-term money market instruments,
including repurchase agreements.

GOVERNMENT SECURITIES. U.S. Government Securities are debt securities that are
obligations of or guaranteed by the U.S. government, its agencies or
instrumentalities. There are two basic types of U.S. Government Securities: (1)
direct obligations of the U.S. Treasury, and (2) obligations issued or
guaranteed by an agency or instrumentality of the U.S. government. Agencies and
instrumentalities include the Federal Farm Credit System ("FFCS"), Student Loan
Marketing Association ("SLMA"), Federal Home Loan Mortgage Corporation
("FHLMC"), Federal Home Loan Banks ("FHLB"), Federal National Mortgage
Association ("FNMA") and Government National Mortgage Association ("GNMA"). Some

Davis Series, Inc., Statement of Additional Information 7

obligations issued or guaranteed by agencies or instrumentalities, such as those
issued by GNMA, are fully guaranteed by the U.S. government. Others, such as
FNMA bonds, rely on the assets and credit of the instrumentality with limited
rights to borrow from the U.S. Treasury. Still other securities, such as
obligations of the FHLB, are supported by more extensive rights to borrow from
the U.S. Treasury.

U.S. Government Securities include mortgage-related securities issued by an
agency or instrumentality of the U.S. government. GNMA Certificates are
mortgage-backed securities representing part ownership of a pool of mortgage
loans. These loans issued by lenders such as mortgage bankers, commercial banks
and savings and loan associations are either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration. A "pool" or group
of such mortgages is assembled and, after being approved by GNMA, is offered to
investors through securities dealers. Once approved by GNMA, the timely payment
of interest and principal on each mortgage is guaranteed by GNMA and backed by
the full faith and credit of the U.S. government. GNMA Certificates differ from
bonds in that principal is paid back monthly by the borrower over the term of
the loan rather than returned in a lump sum at maturity. GNMA Certificates are
called "pass-through" securities because both interest and principal payments
(including prepayments) are passed through to the holder of the Certificate.

Pools of mortgages also are issued or guaranteed by other agencies of the U.S.
government. The average life of pass-through pools varies with the maturities of
the underlying mortgage instruments. In addition, a pool's term may be shortened
or lengthened by unscheduled or early payment, or by slower than expected
prepayment of principal and interest on the underlying mortgages. The occurrence
of mortgage prepayments is affected by the level of interest rates, general
economic conditions, the location and age of the mortgage and other social and
demographic conditions. As prepayment rates of individual pools vary widely, it
is not possible to accurately predict the average life of a particular pool.

A collateralized mortgage obligation ("CMO") is a debt security issued by a
corporation, trust or custodian, or by a U.S. government agency or
instrumentality that is collateralized by a portfolio or pool of mortgages,
mortgage-backed securities, U.S. Government Securities or corporate debt
obligations. The issuer's obligation to make interest and principal payments is
secured by the underlying pool or portfolio of securities. CMOs are most often
issued in two or more classes (each of which is a separate security) with
varying maturities and stated rates of interest. Interest and principal payments
from the underlying collateral (generally a pool of mortgages) are not
necessarily passed directly through to the holders of the CMOs; these payments
typically are used to pay interest on all CMO classes and to retire successive
class maturities in a sequence. Thus, the issuance of CMO classes with varying
maturities and interest rates may result in greater predictability of maturity
with one class and less predictability of maturity with another class than a
direct investment in a mortgage-backed pass-through security (such as a GNMA
Certificate). Classes with shorter maturities typically have lower volatility
and yield while those with longer maturities typically have higher volatility
and yield. Thus, investments in CMOs provide greater or lesser control over the
investment characteristics than mortgage pass-through securities and offer more
defensive or aggressive investment alternatives.

Investments in mortgage-related U.S. Government Securities, such as GNMA
Certificates and CMOs, also involve other risks. The yield on a pass-through
security typically is quoted based on the maturity of the underlying instruments
and the associated average life assumption. Actual prepayment experience may
cause the yield to differ from the assumed average life yield. Accelerated
prepayments adversely impact yields for pass-throughs purchased at a premium;
the opposite is true for pass-throughs' purchased at a discount. During periods
of declining interest rates, prepayment of mortgages underlying pass-through
certificates can be expected to accelerate. When the mortgage obligations are
prepaid, the Fund reinvests the prepaid amounts in securities, the yields of
which reflect interest rates prevailing at that time. Therefore, the Fund's
ability to maintain a portfolio of high-yielding, mortgage-backed securities
will be adversely affected to the extent that prepayments of mortgages must be
reinvested in securities that have lower yields than the prepaid mortgages.
Moreover, prepayments of mortgages that underlie securities purchased at a
premium could result in capital losses. Investment in such securities also could
subject the Fund to "maturity extension risk," which is the possibility that
rising interest rates may cause prepayments to occur at a slower than expected
rate. This particular risk may effectively change a security that was considered
a short or intermediate-term security at the time of purchase into a long-term
security. Long-term securities generally fluctuate more widely in response to
changes in interest rates than short or intermediate-term securities.

The guarantees of the U.S. government, its agencies and instrumentalities are
guarantees of the timely payment of principal and interest on the obligations
purchased. The value of the shares issued by the Fund is not guaranteed and will

Davis Series, Inc., Statement of Additional Information 8

fluctuate with the value of the Fund's portfolio. Generally, when the level of
interest rates rise, the value of the Fund's investment in government securities
is likely to decline and, when the level of interest rates decline, the value of
the Fund's investment in government securities is likely to rise.

The Fund may engage in portfolio trading primarily to take advantage of yield
disparities. Such trading strategies may result in minor temporary increases or
decreases in the Fund's current income and in its holding of debt securities
that sell at substantial premiums or discounts from face value. If expectations
of changes in interest rates or the price of the securities prove to be
incorrect, the Fund's potential income and capital gain will be reduced or its
potential loss will be increased.

HIGH-YIELD, HIGH-RISK DEBT SECURITIES. The real estate securities, convertible
securities, bonds and other debt securities in which the Equity Funds may invest
may include high-yield, high-risk debt securities rated BB or lower by Standard
& Poor's Corporation ("S&P") or Ba or lower by Moody's Investors Service
("Moody's") or unrated securities. Securities rated BB or lower by S&P and Ba or
lower by Moody's are referred to in the financial community as "junk bonds" and
may include D-rated securities of issuers in default. See Appendix A for a more
detailed description of the rating system. Ratings assigned by credit agencies
do not evaluate market risks. The Adviser considers the ratings assigned by S&P
or Moody's as one of several factors in its independent credit analysis of
issuers. A brief description of the quality ratings of these two services is
contained in the section titled "Quality Ratings of Debt Securities."

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

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

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

The Fund may have difficulty disposing of certain high-yield, high-risk bonds
because there may be a thin trading market for such bonds. Because not all
dealers maintain markets in all high-yield, high-risk bonds, the Fund
anticipates that such bonds could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market may have an
adverse impact on market price and the ability to dispose of particular issues
and also may make it more difficult to obtain accurate market quotations or
valuations for purposes of valuing the Fund's assets.

Davis Series, Inc., Statement of Additional Information 9

Market quotations generally are available on many high-yield issues only from a
limited number of dealers and may not necessarily represent firm bid prices of
such dealers or prices for actual sales. In addition, adverse publicity and
investor perceptions may decrease the values and liquidity of high-yield,
high-risk bonds regardless of a fundamental analysis of the investment merits of
such bonds. To the extent that the Fund purchases illiquid or restricted bonds,
it may incur special securities' registration responsibilities, liabilities and
costs, and liquidity and valuation difficulties relating to such bonds.

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

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

A description of each bond quality category is set forth in Appendix A. The
ratings of Moody's and S&P represent their opinions as to the quality of the
securities that they undertake to rate. It should be emphasized, however, that
ratings are relative and subjective and are not absolute standards of quality.
There is no assurance that a rating assigned initially will not change. The Fund
may retain a security whose rating has changed or has become unrated.

CASH MANAGEMENT. 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 also may invest in other
investment companies (or companies exempted under Section 3(c)(7) of the 1940
Act) that themselves primarily invest in temporary defensive investments,
including commercial paper. To the extent that the management fees paid to the
other investment companies are for the same or similar services as the
management fees paid to the Fund, there will be a layering of fees that would
increase expenses and decrease returns. 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-on price. The resale price reflects the
purchase price plus an agreed-on 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 seeks to enforce its rights thereto, (b) possible loss
of all or a part of the income during this period, and (c) expenses of enforcing
its rights.

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.

Davis Series, Inc., Statement of Additional Information 10

BORROWING. 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 also may borrow up to an additional 5% of its total assets from
banks or others. 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 three business days), although it is
not required to dispose of portfolio holdings immediately if the Fund would
suffer losses as a result. Borrowing money to meet redemptions or other purposes
would have the effect of temporarily leveraging the 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 the Fund is permitted to invest.

Lending activities are strictly limited as described in the section titled
"Investment Restrictions." Lending money or securities involves the risk that
the Fund may suffer a loss if a borrower does not repay a loan when due. To
manage this risk the Fund deals only with counterparties it believes to be
creditworthy and requires that the counterparty deposit collateral with the
Fund.

When it loans securities, the Fund still owns the securities, receives amounts
equal to the dividends or interest on loaned securities and is subject to gains
or losses on those securities. The Fund also receives 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 also may 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.

HEADLINE RISK. We seek to acquire companies with expanding earnings at value
prices. We may make such investments when a company becomes the center of
controversy after receiving adverse media attention. The company may be involved
in litigation, the company's financial reports or corporate governance may be
challenged, the company's annual report may disclose a weakness in internal
controls, investors may question the company's published financial reports,
greater government regulation may be contemplated, or other adverse events may
threaten the company's future. While we research companies subject to such
contingencies, we cannot be correct every time, and the company's stock may
never recover.

SHORT SALES. When the Fund believes that a security is overvalued, it may sell
the security short and borrow the same security from a broker or other
institution to complete the sale. If the price of the security decreases in
value, the Fund may make a profit and, conversely, if the security increases in
value, the Fund will incur a loss because it will have to replace the borrowed
security by purchasing it at a higher price. There can be no assurance that the
Fund will be able to close out the short position at any particular time or at
an acceptable price. Although the Fund's gain is limited to the amount at which
it sold a security short, its potential loss is not limited. A lender may
request that the borrowed securities be returned on short notice, if that occurs
at a time when other short sellers of the subject security are receiving similar
requests, a "short squeeze" can occur. This means that the Fund might be
compelled, at the most disadvantageous time, to replace borrowed securities
previously sold short with purchases on the open market at prices significantly
greater than those at which the securities were sold short. Short selling also
may produce higher than normal portfolio turnover and result in increased
transaction costs to the Fund. If the Fund sells a security short it will either
own an off-setting "long position" (an economically equivalent security which is
owned) or establish a "Segregated Account" as described in this Statement of
Additional Information.

The Fund also may make short sales "against-the-box," in which it sells short
securities it owns. The Fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining and closing short sales
against-the-box, which result in a "constructive sale," requiring the Fund to
recognize any taxable gain from the transaction.

Davis Series, Inc., Statement of Additional Information 11

The Fund has adopted a non-fundamental investment limitation that prevents it
from selling any security short if it would cause more than 5% of its total
assets, taken at market value, to be sold short. This limitation does not apply
to selling short against the box.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted securities
that 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 that the Fund may purchase include securities that
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, 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 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
marketplace 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 also will be monitored by the 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.

WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS. The Fund can invest in securities
on a "when-issued" basis and can purchase or sell securities on a
"delayed-delivery" basis. When-issued and delayed-delivery are terms that refer
to securities whose terms and indenture are available and for which a market
exists but that are not available for immediate delivery.

When such transactions are negotiated, the price (which generally is expressed
in yield terms) is fixed at the time the commitment is made. Delivery and
payment for the securities take place at a later date (generally within 45 days
of the date the offer is accepted). The securities are subject to change in
value from market fluctuations during the period until settlement. The value at
delivery may be less than the purchase price. For example, changes in interest
rates in a direction other than that expected by the Adviser before settlement
will affect the value of such securities and may cause a loss to the Fund.
During the period between purchase and settlement, no payment is made by the
Fund to the issuer and no interest accrues to the Fund from the investment.

The Fund may engage in when-issued transactions to secure what the Adviser
considers to be an advantageous price and yield at the time of entering into the
obligation. When the Fund enters into a when-issued or delayed-delivery
transaction, it relies on the other party to complete the transaction. Its
failure to do so may cause the Fund to lose the opportunity to obtain the
security at a price and yield the Adviser considers to be advantageous. When the
Fund engages in when-issued and delayed-delivery transactions, it does so for
the purpose of acquiring or selling securities consistent with its investment
objective and strategies or for delivery pursuant to options contracts it has
entered into, and not for the purpose of investment leverage. Although the Fund
will enter into delayed-delivery or when-issued purchase transactions to acquire
securities, it can dispose of a commitment before settlement. If the Fund
chooses to dispose of the right to acquire a when-issued security before its
acquisition or to dispose of its right to delivery or receive against a forward
commitment, it may incur a gain or loss.

At the time the Fund makes the commitment to purchase or sell a security on a
when-issued or delayed-delivery basis, it records the transaction on its books
and reflects the value of the security purchased in determining the Fund's net
asset value. In a sale transaction, it records the proceeds to be received. The
Fund will identify on its books liquid securities of any type at least equal in
value to the value of the Fund's purchase commitments until the Fund pays for
the investment.

When issued and delayed-delivery transactions can be used by the Fund as a
defensive technique to hedge against anticipated changes in interest rates and
prices. For instance, in periods of rising interest rates and falling prices,
the Fund might sell securities in its portfolio on a forward commitment basis to
attempt to limit its exposure to anticipated falling prices. In periods of
falling interest rates and rising prices, the Fund might sell portfolio
securities and purchase the same or similar securities on a when-issued or
delayed-delivery basis to obtain the benefit of currently higher cash yields.

Davis Series, Inc., Statement of Additional Information 12

A segregated account is not required when the Fund holds securities, options or
futures positions whose values are expected to offset its obligations that would
otherwise require a segregated account.

SEGREGATED ACCOUNTS. A number of the Fund's investment strategies require it to
establish segregated accounts. When the Fund enters into an investment strategy
that would result in a "senior security" as that term is defined in the 1940
Act, the Fund will either: (i) own an off-setting position in securities,
options or futures positions; or (ii) set aside liquid securities in a
segregated account with its custodian bank (or designated in the Fund's books
and records) in the amount prescribed. The Fund 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 senior security is outstanding, unless they are replaced with
similar securities.

DERIVATIVES. The Fund can invest in a variety of derivative investments to
pursue its investment objective or for hedging purposes. Some derivative
investments the Fund can use are the hedging instruments described below.

Hedging. The Fund can use hedging to attempt to protect against declines in the
market value of the Fund's portfolio, to permit the Fund to retain unrealized
gains in the value of portfolio securities that have appreciated or to
facilitate selling securities for investment reasons. To do so, the Fund could:

o sell futures contracts;

o buy puts on such futures or on securities; or

o write covered calls on securities or futures.

The Fund can use hedging to establish a position in the securities market as a
temporary substitute for purchasing particular securities. In that case, the
Fund would normally seek to purchase the securities and then terminate that
hedging position. The Fund might also use this type of hedge to attempt to
protect against the possibility that its portfolio securities would not be fully
included in a rise in value of the market. To do so the Fund could:

o buy futures;

o buy calls on such futures or on securities; or

o sell puts on such futures or on securities.

The Fund is not obligated to use hedging instruments, even though it is
permitted to use them in the Adviser's discretion, as described below. The
Fund's strategy of hedging with futures and options on futures will be
incidental to the Fund's activities in the underlying cash market. The
particular hedging instruments the Fund can use are described below. The Fund
can employ new hedging instruments and strategies when they are developed, if
those investment methods are consistent with the Fund's investment objective and
are permissible under applicable regulations governing the Fund.

Futures. The Fund can buy and sell futures contracts that relate to: (1)
broad-based stock indices ("stock index futures"), (2) debt securities (these
are referred to as "interest rate futures"), (3) other broad-based securities
indices (these are referred to as "financial futures"), (4) foreign currencies
(these are referred to as "forward contracts"), or (5) commodities (these are
referred to as "commodity futures").

A broad-based stock index is used as the basis for trading stock index futures.
They may in some cases be based on stocks of issuers in a particular industry or
group of industries. A stock index assigns relative values to the common stocks
included in the index and its value fluctuates in response to the changes in
value of the underlying stocks. A stock index cannot be purchased or sold
directly. Financial futures are similar contracts based on the future value of
the basket of securities that comprise the index. These contracts obligate the
seller to deliver, and the purchaser to take, cash to settle the futures
transaction. There is no delivery made of the underlying securities to settle
the futures obligation. Either party also may settle the transaction by entering
into an off-setting contract.

An interest rate future obligates the seller to deliver (and the purchaser to
take) cash or a specified type of debt security to settle the futures
transaction. Either party also could enter into an off-setting contract to close
out the position.

Davis Series, Inc., Statement of Additional Information 13

No money is paid or received by the Fund on the purchase or sale of a future. On
entering into a futures transaction, the Fund will be required to deposit an
initial margin payment with the futures commission merchant (the "futures
broker"). Initial margin payments will be deposited with the Fund's custodian
bank in an account registered in the futures broker's name. However, the futures
broker can gain access to that account only under specified conditions. As the
future is marked to market (that is, its value on the Fund's books is changed)
to reflect changes in its market value, subsequent margin payments, called
variation margin, will be paid to or by the futures broker daily.

At any time before expiration of the future, the Fund can elect to close out its
position by taking an opposite position, at which time a final determination of
variation margin is made and any additional cash must be paid by or released to
the Fund. Any loss or gain on the future is then realized by the Fund for tax
purposes. All futures transactions, except forward contracts, are effected
through a clearinghouse associated with the exchange on which the contracts are
traded.

Put and Call Options. The Fund can buy and sell (and sell short) certain kinds
of put options ("puts") and call options ("calls"). The Fund can buy and sell
exchange-traded and over-the-counter put and call options, including index
options, securities options, currency options, commodities options and options
on the other types of futures described above.

Writing Covered Call Options. The Fund can write (that is, sell) covered calls.
If the Fund sells a call option, it must be covered. That means the Fund must
own the security subject to the call while the call is outstanding or, for
certain types of calls, the call can be covered by identifying liquid assets on
the Fund's books to enable the Fund to satisfy its obligations if the call is
exercised.

When the Fund writes a call on a security, it receives cash (a premium). The
Fund agrees to sell the underlying security to a purchaser of a corresponding
call on the same security during the call period at a fixed exercise price
regardless of market price changes during the call period. The call period is
usually not more than nine months. The exercise price may differ from the market
price of the underlying security. The Fund has the risk of loss that the price
of the underlying security may decline during the call period. That risk may be
offset to some extent by the premium the Fund receives. If the value of the
investment does not rise above the call price, it is likely that the call will
lapse without being exercised. In that case, the Fund would keep the cash
premium and the investment.

When the Fund writes a call on an index, it receives cash (a premium). If the
buyer of the call exercises it, the Fund will pay an amount of cash equal to the
difference between the closing price of the call and the exercise price,
multiplied by a specified multiple that determines the total value of the call
for each point of difference. If the value of the underlying investment does not
rise above the call price, it is likely that the call will lapse without being
exercised. In that case, the Fund would keep the cash premium.

The Fund's custodian bank, or a securities depository acting for the custodian
bank, will act as the Fund's escrow agent, through the facilities of the Options
Clearing Corporation ("OCC"), as to the investments on which the Fund has
written calls traded on exchanges or as to other acceptable escrow securities.
In that way, no margin will be required for such transactions. OCC will release
the securities on the expiration of the option or when the Fund enters into a
closing transaction.

When the Fund writes an over-the-counter ("OTC") option, it will treat as
illiquid (for purposes of its restriction on holding illiquid securities) the
marked-to-market value of any OTC option it holds, unless the option is subject
to a buy-back agreement by the executing broker. To terminate its obligation on
a call it has written, the Fund can purchase a corresponding call in a "closing
purchase transaction." The Fund will then realize a profit or loss, depending on
whether the net of the amount of the option transaction costs and the premium
received on the call the Fund wrote is more or less than the price of the call
the Fund purchases to close out the transaction. The Fund may realize a profit
if the call expires unexercised, because the Fund will retain the underlying
security and the premium it received when it wrote the call. Any such profits
are considered short-term capital gains for federal income tax purposes, as are
the premiums on lapsed calls. When distributed by the Fund, they are taxable as
ordinary income. If the Fund cannot effect a closing purchase transaction due to
the lack of a market, it will have to hold the callable securities until the
call expires or is exercised.

The Fund also can write calls on a futures contract without owning the futures
contract or securities deliverable under the contract. To do so, at the time the
call is written, the Fund must cover the call by identifying an equivalent
dollar amount of liquid assets on the Fund's books. The Fund will identify
additional liquid assets on its books if the value of the segregated assets
drops below 100% of the current value of the future. Because of this segregation
requirement, in no

Davis Series, Inc., Statement of Additional Information 14

circumstances would the Fund's receipt of an exercise notice as to that future
require the Fund to deliver a futures contract. It would simply put the Fund in
a short futures position, which is permitted by the Fund's hedging policies.

Writing Put Options. The Fund can write/sell put options. A put option on
securities gives the purchaser the right to sell, and the writer the obligation
to buy, the underlying investment at the exercise price during the option
period.

If the Fund writes a put, the put must be covered by liquid assets identified on
the Fund's books. The premium the Fund receives from writing a put represents a
profit, as long as the price of the underlying investment remains equal to or
above the exercise price of the put. However, the Fund also assumes the
obligation during the option period to buy the underlying investment from the
buyer of the put at the exercise price, even if the value of the investment
falls below the exercise price. If a put the Fund has written expires
unexercised, the Fund realizes a gain in the amount of the premium less the
transaction costs incurred. If the put is exercised, the Fund must fulfill its
obligation to purchase the underlying investment at the exercise price. The
price usually will exceed the market value of the investment at that time. In
that case, the Fund may incur a loss if it sells the underlying investment. That
loss will be equal to the sum of the sale price of the underlying investment and
the premium received minus the sum of the exercise price and any transaction
costs the Fund incurred.

When writing a put option on a security, to secure its obligation to pay for the
underlying security the Fund will deposit in escrow liquid assets with a value
equal to or greater than the exercise price of the underlying securities. The
Fund therefore foregoes the opportunity of investing the segregated assets or
writing calls against those assets.

As long as the Fund's obligation as the put writer continues, it may be assigned
an exercise notice by the broker-dealer through which the put was sold. That
notice will require the Fund to take delivery of the underlying security and pay
the exercise price. The Fund has no control over when it may be required to
purchase the underlying security, since it may be assigned an exercise notice at
any time prior to the termination of its obligation as the writer of the put.
That obligation terminates on expiration of the put. It also may terminate if,
before it receives an exercise notice, the Fund effects a closing purchase
transaction by purchasing a put of the same series as it sold. Once the Fund has
been assigned an exercise notice, it cannot effect a closing purchase
transaction.

The Fund can decide to effect a closing purchase transaction to realize a profit
on an outstanding put option it has written or to prevent the underlying
security from being exercised. Effecting a closing purchase transaction also
will permit the Fund to write another put option on the security or to sell the
security and use the proceeds from the sale for other investments. The Fund will
realize a profit or loss from a closing purchase transaction depending on
whether the cost of the transaction is less or more than the premium received
from writing the put option. Any profits from writing puts are considered
short-term capital gains for federal tax purposes and, when distributed by the
Fund, are taxable as ordinary income.

Purchasing Calls and Puts. The Fund can purchase calls to protect against the
possibility that the Fund's portfolio will not participate in an anticipated
rise in the securities market. When the Fund buys a call (other than in a
closing purchase transaction), it pays a premium. The Fund then has the right to
buy the underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. The Fund benefits
only if it sells the call at a profit or if, during the call period, the market
price of the underlying investment is above the sum of the call price plus the
transaction costs and the premium paid for the call and the Fund exercises the
call. If the Fund does not exercise the call or sell it (whether or not at a
profit), the call will become worthless at its expiration date. In that case,
the Fund will have paid the premium but lost the right to purchase the
underlying investment.

The Fund can buy puts whether it holds the underlying investment in its
portfolio. When the Fund purchases a put, it pays a premium and, except as to
puts on indices, has the right to sell the underlying investment to a seller of
a put on a corresponding investment during the put period at a fixed exercise
price. Buying a put on securities or futures the Fund owns enables the Fund to
attempt to protect itself during the put period against a decline in the value
of the underlying investment below the exercise price by selling the underlying
investment at the exercise price to a seller of a corresponding put. If the
market price of the underlying investment is equal to or above the exercise
price and, as a result, the put is not exercised or resold, the put will become
worthless at its expiration date. In that case, the Fund will have paid the
premium but lost the right to sell the underlying investment. However, the Fund
can sell the put prior to its expiration. That sale may or may not be at a
profit.

Davis Series, Inc., Statement of Additional Information 15

When the Fund purchases a call or put on an index or future, it pays a premium,
but settlement is in cash rather than by delivery of the underlying investment
to the Fund. Gain or loss depends on changes in the index in question (and thus
on price movements in the securities market generally) rather than on price
movements in individual securities or futures contracts.

Forward Contracts. Forward contracts are foreign currency exchange contracts.
They are used to buy or sell foreign currency for future delivery at a fixed
price. The Fund uses them to "lock in" the U.S. dollar price of a security
denominated in a foreign currency that the Fund has bought or sold, or to
protect against possible losses from changes in the relative values of the U.S.
dollar and a foreign currency. The Fund limits its exposure in foreign currency
exchange contracts in a particular foreign currency to the amount of its assets
denominated in that currency or a closely correlated currency. The Fund also can
use "cross-hedging" where the Fund hedges against changes in currencies other
than the currency in which a security it holds is denominated.

Under a forward contract, one party agrees to purchase, and another party agrees
to sell, a specific currency at a future date. That date may be any fixed number
of days from the date of the contract agreed on by the parties. The transaction
price is set at the time the contract is entered into. These contracts are
traded in the inter-bank market conducted directly among currency traders
(usually large commercial banks) and their customers.

The Fund can use forward contracts to protect against uncertainty in the level
of future exchange rates. The use of forward contracts does not eliminate the
risk of fluctuations in the prices of the underlying securities the Fund owns or
intends to acquire, but it does fix a rate of exchange in advance. Although
forward contracts may reduce the risk of loss from a decline in the value of the
hedged currency, at the same time they limit any potential gain if the value of
the hedged currency increases.

When the Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, or when it anticipates receiving dividend
payments in a foreign currency, the Fund might desire to "lock in" the U.S.
dollar price of the security or the U.S. dollar equivalent of the dividend
payments. To do so, the Fund might enter into a forward contract for the
purchase or sale of the amount of foreign currency involved in the underlying
transaction, in a fixed amount of U.S. dollars per unit of the foreign currency.
This is called a "transaction hedge." The transaction hedge will protect the
Fund against a loss from an adverse change in the currency exchange rates during
the period between the date on which the security is purchased or sold or on
which the payment is declared and the date on which the payments are made or
received.

The Fund also could use forward contracts to lock in the U.S. dollar value of
portfolio positions. This is called a "position hedge." When the Fund believes
that foreign currency might suffer a substantial decline against the U.S.
dollar, it could enter into a forward contract to sell an amount of that foreign
currency approximating the value of some or all of the Fund's portfolio
securities denominated in that foreign currency. When the Fund believes that the
U.S. dollar may suffer a substantial decline against a foreign currency, it
could enter into a forward contract to buy that foreign currency for a fixed
dollar amount. Alternatively, the Fund could enter into a forward contract to
sell a different foreign currency for a fixed U.S. dollar amount if the Fund
believes that the U.S. dollar value of the foreign currency to be sold pursuant
to its 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.
That is referred to as a "cross hedge."

The Fund will cover its short positions in these cases by identifying to its
custodian bank assets having a value equal to the aggregate amount of the Fund's
commitment under forward contracts. The Fund will not enter into forward
contracts or maintain a net exposure to such contracts if the consummation of
the contracts would obligate the Fund to deliver an amount of foreign currency
in excess of the value of the Fund's portfolio securities or other assets
denominated in that currency or another currency that is the subject of the
hedge. However, to avoid excess transactions and transaction costs, the Fund can
maintain a net exposure to forward contracts in excess of the value of the
Fund's portfolio securities or other assets denominated in foreign currencies if
the excess amount is "covered" by liquid securities denominated in any currency.
The cover must be at least equal at all times to the amount of that excess. As
one alternative, the Fund can purchase a call option permitting the Fund to
purchase the amount of foreign currency being hedged by a forward sale contract
at a price no higher than the forward contract price. As another alternative,
the Fund can purchase a put option permitting the Fund to sell the amount of
foreign currency subject to a forward purchase contract at a price as high as or
higher than the forward contact price.

Davis Series, Inc., Statement of Additional Information 16

The precise matching of the amounts under forward contracts and the value of the
securities involved generally will not be possible because the future value of
securities denominated in foreign currencies will change as a consequence of
market movements between the date the forward contract is entered into and the
date it is sold. In some cases, the Adviser might decide to sell the security
and deliver foreign currency to settle the original purchase obligation. If the
market value of the security is less than the amount of foreign currency that
the Fund is obligated to deliver, the Fund might have to purchase additional
foreign currency on the "spot" (that is, cash) market to settle the security
trade. If the market value of the security instead exceeds the amount of foreign
currency the Fund is obligated to deliver to settle the trade, the Fund might
have to sell on the spot market some of the foreign currency received on the
sale of the security. There will be additional transaction costs on the spot
market in those cases.

The projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Forward contracts involve the risk that anticipated currency
movements would not be accurately predicted, causing the Fund to sustain losses
on these contracts and to pay additional transactions costs. The use of forward
contracts in this manner might reduce the Fund's performance if there are
unanticipated changes in currency prices to a greater degree than if the Fund
had not entered into such contracts.

At or before the maturity of a forward contract requiring the Fund to sell a
currency, the Fund might sell a portfolio security and use the sale proceeds to
make delivery of the currency. In the alternative, the Fund might retain the
security and offset its contractual obligation to deliver the currency by
purchasing a second contract. Under that contract the Fund will obtain, on the
same maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Fund might close out a forward contract requiring it to
purchase a specified currency by entering into a second contract entitling it to
sell the same amount of the same currency on the maturity date of the first
contract. The Fund would realize a gain or loss as a result of entering into
such an off-setting forward contract under either circumstance. The gain or loss
will depend on the extent to which the exchange rate or rates between the
currencies involved moved between the execution dates of the first and
off-setting contracts.

The cost to the Fund of engaging in forward contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because forward contracts usually are entered into
on a principal basis, no brokerage fees or commissions are involved. Because
these contracts are not traded on an exchange, the Fund must evaluate the credit
and performance risk of the counterparty under each forward contract.

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. The Fund can convert foreign currency from time to time and will
incur costs in doing so. Foreign exchange dealers do not charge a fee for
conversion, but they do seek to realize a profit based on the difference between
the prices at which they buy and sell various currencies. Thus, a dealer might
offer to sell a foreign currency to the Fund at one rate, while offering a
lesser rate of exchange if the Fund desires to resell that currency to the
dealer.

Index-Linked Notes. Principal and/or interest payments on these notes depend on
the performance of an underlying index. Currency-indexed securities are another
derivative the Fund can use. Typically these are short-term or intermediate-term
debt securities. Their value at maturity or the rates at which they pay income
are determined by the change in value of the U.S. dollar against one or more
foreign currencies or an index. In some cases, these securities may pay an
amount at maturity based on a multiple of the amount of the relative currency
movements. This type of index security offers the potential for increased income
or principal payments but at a greater risk of loss than a typical debt security
of the same maturity and credit quality.

Debt Exchangeable for Common Stock of an Issuer or "Equity-Linked Debt
Securities" of an Issuer. At maturity, the debt security is exchanged for common
stock of the issuer or it is payable in an amount based on the price of the
issuer's common stock at the time of maturity. Both alternatives present a risk
that the amount payable at maturity will be less than the principal amount of
the debt because the price of the issuer's common stock might not be as high as
the Adviser expected.

Interest Rate Swap Transactions. The Fund can enter into interest rate swap
agreements. In an interest rate swap, the Fund and another party exchange their
right to receive or their obligation to pay interest on a security. For example,
they might swap the right to receive floating rate payments for fixed rate
payments. The Fund can enter into swaps only on securities that it owns. Also,
the Fund will identify liquid assets on its books (such as cash or U.S.
government securities)

Davis Series, Inc., Statement of Additional Information 17

to cover any amounts it could owe under swaps that exceed the amounts it is
entitled to receive, and it will adjust that amount daily as needed.

Swap agreements entail both interest rate risk and credit risk. There is a risk
that based on movements of interest rates in the future; the payments made by
the Fund under a swap agreement will be greater than the payments it received.
Credit risk arises from the possibility that the counterparty will default. If
the counterparty defaults, the Fund's loss will consist of the net amount of
contractual interest payments that the Fund has not yet received. The Adviser
will monitor the creditworthiness of counterparties to the Fund's interest rate
swap transactions on an ongoing basis.

The Fund can enter into swap transactions with certain counterparties pursuant
to master netting agreements. A master netting agreement provides that all swaps
done between the Fund and that counterparty shall be regarded as parts of an
integral agreement. If amounts are payable on a particular date in the same
currency in respect of one or more swap transactions, the amount payable on that
date in that currency shall be the net amount. In addition, the master netting
agreement may provide that if one party defaults generally or on one swap, the
counterparty can terminate all of the swaps with that party. Under these
agreements, if a default results in a loss to one party, the measure of that
party's damages is calculated by reference to the average cost of a replacement
swap for each swap. It is measured by the mark-to-market value at the time of
the termination of each swap. The gains and losses on all swaps are then netted,
and the result is the counterparty's gain or loss on termination. The
termination of all swaps and the netting of gains and losses on termination
generally is referred to as "aggregation."

Hedging Foreign Currency. 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 their use may expose the Fund to other risks, such as liquidity
and counterparty risk. The Adviser exercises its professional judgment as to
whether the reduction in currency risk justifies the expense and exposure to
liquidity and counterparty risk. 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 also may 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 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 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 therefore could continue to an unlimited
extent over a period of time. In addition, the correlation between movements in
the prices of such instruments and movements in the prices of the securities and
currencies hedged or used for cover will not be perfect and could produce
unanticipated losses. Unanticipated changes in currency prices may result in
poorer overall performance for the Fund than if it had not entered into such
contracts. When taking a position in an anticipatory hedge (when the Fund
purchases a futures contract or other similar instrument to gain market exposure
in anticipation of purchasing the underlying securities at a later date), the
Fund is required to set aside cash or high-grade liquid securities to fully
secure the obligation.

A forward contract is an obligation to purchase or sell a specific currency for
an agreed price at a future date that is individually negotiated and privately
traded by currency traders and their customers. Such a contract gives the Fund a
position in a negotiated, currently non-regulated market. The Fund may enter
into a forward contract; for example, when it enters into a contract for the
purchase or sale of a security denominated in a foreign currency in order to
"lock in" the U.S. dollar price of the security ("transaction hedge").
Additionally, when the 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 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 believes that
the U.S. dollar value of the currency to be sold pursuant

Davis Series, Inc., Statement of Additional Information 18

to the forward contract will fall whenever there is a decline in the U.S. dollar
value of the currency in which portfolio securities of the Fund are denominated.

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

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 still are
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 on 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.

Risks of Hedging With Options and Futures. The use of hedging instruments
requires special skills and knowledge of investment techniques that are
different than what is required for normal portfolio management. If the Adviser
uses a hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's return. The Fund also
could experience losses if the prices of its futures and options positions were
not correlated with its other investments.

The Fund's option activities could affect its portfolio turnover rate and
brokerage commissions. The exercise of calls written by the Fund might cause the
Fund to sell related portfolio securities, thus increasing its turnover rate.
The exercise by the Fund of puts on securities will cause the sale of underlying
investments, increasing portfolio turnover. Although the decision whether to
exercise a put it holds is within the Fund's control, holding a put might cause
the Fund to sell the related investments for reasons that would not exist in the
absence of the put.

The Fund could pay a brokerage commission each time it buys a call or put, sells
a call or put, or buys or sells an underlying investment in connection with the
exercise of a call or put. Those commissions could be higher on a relative basis
than the commissions for direct purchases or sales of the underlying
investments. Premiums paid for options are

Davis Series, Inc., Statement of Additional Information 19

small in relation to the market value of the underlying investments.
Consequently, put and call options offer large amounts of leverage. The leverage
offered by trading in options could result in the Fund's net asset value being
more sensitive to changes in the value of the underlying investment.

If a covered call written by the Fund is exercised on an investment that has
increased in value, the Fund will be required to sell the investment at the call
price. It will not be able to realize any profit if the investment has increased
in value above the call price.

An option position may be closed out only on a market that provides secondary
trading for options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option. The Fund might experience
a loss if it could not close out a position because of an illiquid market for
the future or option.

There is a risk in using short hedging by selling futures or purchasing puts on
broad-based indices or futures to attempt to protect against declines in the
value of the Fund's portfolio securities. The risk is that the prices of the
futures or the applicable index will correlate imperfectly with the behavior of
the cash prices of the Fund's securities. For example, it is possible that while
the Fund has used hedging instruments in a short hedge, the market might advance
and the value of the securities held in the Fund's portfolio might decline. If
that occurred, the Fund would lose money on the hedging instruments and also
experience a decline in the value of its portfolio securities. However, while
this could occur for a very brief period or to a very small degree, over time
the value of a diversified portfolio of securities will tend to move in the same
direction as the indices on which the hedging instruments are based. The risk of
imperfect correlation increases as the composition of the Fund's portfolio
diverges from the securities included in the applicable index. To compensate for
the imperfect correlation of movements in the price of the portfolio securities
being hedged and movements in the price of the hedging instruments, the Fund
might use hedging instruments in a greater dollar amount than the dollar amount
of portfolio securities being hedged. It might do so if the historical
volatility of the prices of the portfolio securities being hedged is more than
the historical volatility of the applicable index.

The ordinary spreads between prices in the cash and futures markets are subject
to distortions, due to differences in the nature of those markets. First, all
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through off-setting transactions that
could distort the normal relationship between the cash and futures markets.
Second, the liquidity of the futures market depends on participants entering
into off-setting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced, thus producing distortion. Third, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities markets. Therefore, increased
participation by speculators in the futures market may cause temporary price
distortions.

The Fund can use hedging instruments to establish a position in the securities
markets as a temporary substitute for the purchase of individual securities
(long hedging) by buying futures and/or calls on such futures, broad-based
indices or on securities. It is possible that when the Fund does so the market
might decline. If the Fund then concludes not to invest in securities because of
concerns that the market might decline further or for other reasons, the Fund
will realize a loss on the hedging instruments that is not offset by a reduction
in the price of the securities purchased.

Regulatory Aspects of Hedging Instruments. When using futures and options on
futures, the Fund is required to operate within certain guidelines and
restrictions with respect to the use of futures as established by the
Commodities Futures Trading Commission (the "CFTC"). In particular, the Fund is
exempted from registration with the CFTC as a "commodity pool operator" if the
Fund complies with the requirements of Rule 4.5 adopted by the CFTC. The Rule
does not limit the percentage of the Fund's assets that may be used for futures
margin and related options premiums for a bona fide hedging position. However,
under the Rule, the Fund must limit its aggregate initial futures margin and
related options premiums to not more than 5% of the Fund's net assets for
hedging strategies that are not considered bona fide hedging strategies under
the Rule. Under the Rule, the Fund also must use short futures and options on
futures solely for bona fide hedging purposes within the meaning and intent of
the applicable provisions of the Commodity Exchange Act.

Transactions in options by the Fund are subject to limitations established by
the option exchanges. The exchanges limit the maximum number of options that may
be written or held by a single investor or group of investors acting in concert.
Those limits apply regardless of whether the options were written or purchased
on the same or different exchanges or are held in one or more accounts or
through one or more different exchanges or through one or more brokers. Thus,
the

Davis Series, Inc., Statement of Additional Information 20

number of options that the Fund can write or hold may be affected by options
written or held by other entities, including other investment companies having
the same adviser as the Fund (or an adviser that is an affiliate of the Fund's
adviser). The exchanges also impose position limits on futures transactions. An
exchange may order the liquidation of positions found to be in violation of
those limits and may impose certain other sanctions.

Under the Investment Company Act, when the Fund purchases a future, it must
maintain cash or readily marketable short-term debt instruments in an amount
equal to the market value of the securities underlying the future, less the
margin deposit applicable to it.

Tax Aspects of Certain Hedging Instruments. Certain foreign currency exchange
contracts in which the Fund can invest are treated as "Section 1256 contracts"
under the Internal Revenue Code. In general, gains or losses relating to Section
1256 contracts are characterized as 60% long-term and 40% short-term capital
gains or losses under the Code. However, foreign currency gains or losses
arising from Section 1256 contracts that are forward contracts generally are
treated as ordinary income or 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 be made by the 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 the 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
gain in the off-setting positions making up the straddle. A previously
disallowed loss generally is allowed at the point when there is no unrecognized
gain in the off-setting positions making up the straddle or the off-setting
position is disposed of.

Under the Internal Revenue Code, the following gains or losses are treated as
ordinary income or loss: (1) gains or losses attributable to fluctuations in
exchange rates that occur between the time the Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects such receivables or pays such
liabilities, and (2) gains or losses attributable to fluctuations in the value
of a foreign currency between the date of acquisition of a debt security
denominated in a foreign currency or foreign currency forward contracts and the
date of disposition.

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 the
Fund's investment income available for distribution to its shareholders.

Davis Series, Inc., Statement of Additional Information 21

PORTFOLIO TRANSACTIONS

The Adviser is responsible for the placement of portfolio transactions, subject
to the supervision of the Board of Directors. Following is a summary of the
Adviser's trading policies, which are, described in Part II of its Form ADV. The
Adviser is a discretionary investment adviser. Accordingly, the Adviser
determines the securities and quantities to be bought and sold for each client's
account.

BEST EXECUTION. The Adviser follows procedures intended to provide reasonable
assurance of best execution. However, there can be no assurance that best
execution will in fact be achieved in any given transaction. Best execution can
only be verified after the fact. The Adviser seeks to place portfolio
transactions with brokers or dealers who will execute transactions as
efficiently as possible and at the most favorable net price. In placing
executions and paying brokerage commissions or dealer markups, the Adviser
considers, among other factors, price, commission, timing, aggregated trades,
capable floor brokers or traders, competent block trading coverage, ability to
position, capital strength and stability, reliable and accurate communication
and settlement processing, use of automation, knowledge of other buyers or
sellers, arbitrage skills, administrative ability, underwriting and provision of
information on the particular security or market in which the transaction is to
occur, research, the range and quality of the services made available to
clients, and the payment of bona fide client expenses. To the extent that
Clients direct brokerage, the Adviser cannot be responsible for achieving best
execution. The applicability of specific criteria will vary depending on the
nature of the transaction, the market in which it is executed and the extent to
which it is possible to select from among multiple broker-dealers.

CROSS TRADES. When the Adviser deems it to be advantageous, one fund may
purchase or sell securities directly from or to another client account which is
managed by the Adviser. This may happen due to a variety of circumstances,
including situations when one fund must purchase securities due to holding
excess cash and, at the same time, a different fund must sell securities in
order to increase its cash position. Cross trades are only executed when deemed
beneficial to both funds. The Adviser has adopted written procedures to ensure
fairness to both funds.

INVESTMENT ALLOCATIONS. The Adviser considers many factors when allocating
securities among clients, including but not limited to the client's investment
style, applicable restrictions, availability of securities, available cash and
other current holdings. The Adviser employs several portfolio managers, each of
whom performs independent research and develops different levels of conviction
concerning potential investments. Clients managed by the portfolio manager
performing the research may receive priority allocations of limited investment
opportunities that are in short supply, including initial public offerings
("IPOs").

Clients are not assured of participating equally or at all in particular
investment allocations. The nature of a client's investment style may exclude it
from participating in many investment opportunities, even if the client is not
strictly precluded from participation based on written investment restrictions.
For example, (i) large cap equity clients are unlikely to participate in initial
public offerings of small-capitalization companies; (ii) the Adviser is likely
to allocate short-term trading opportunities to clients pursuing active trading
strategies rather than clients pursing long-term buy-and-hold strategies; and
(iii) private accounts generally do not participate in purchases of foreign
securities.

The Adviser attempts to allocate limited investment opportunities, including
IPOs, among clients in a manner that is fair and equitable when viewed over a
considerable period of time and involving many allocations. When the Adviser is
limited in the amount of a particular security it can purchase, due to a limited
supply, limited liquidity, or other reason, the Adviser may allocate the limited
investment opportunity to a subset of eligible clients. The Adviser would then
allocate the next limited investment opportunity to a different subset of
eligible clients, rotating among subsets as limited investment opportunities are
identified.

The Adviser serves as investment adviser for a number of clients and may deal
with conflicts of interest when allocating investment opportunities among its
various clients. For example, (i) the Adviser receives different advisory fees
from different clients; (ii) the performance records of some clients are more
public than the performance records of other clients; and (iii) the Adviser and
its affiliates, owners, officers and employees have invested substantial amounts
of their own capital in some client accounts (notably the Davis Funds and
Selected Funds), but do not invest their own capital in every client's account.
The majority of the Adviser's clients pursue specific investment strategies,
many of which are similar. The Adviser expects that, over long periods of time,
most clients pursuing similar investment strategies should experience similar,
but not identical, investment performance. Many factors affect investment
performance, including but not limited to: (i) the timing of cash deposits and
withdrawals to and from an account; (ii) the fact that the Adviser

Davis Series, Inc., Statement of Additional Information 22

may not purchase or sell a given security on behalf of all clients pursuing
similar strategies; (iii) price and timing differences when buying or selling
securities; and (iv) the clients' own different investment restrictions. The
Adviser's trading policies are designed to minimize possible conflicts of
interest in trading for its clients.

ORDER PRIORITY. The Adviser's trading desk prioritizes incoming orders of
similar purchases and sales of securities between institutional and managed
accounts/wrap orders. The Adviser's trading desk typically executes orders for
institutional clients, including investment companies, institutional private
accounts, sub-advised accounts and others. Managed account/wrap program sponsors
typically execute orders for managed account/wrap clients. The Adviser's trading
desk attempts to coordinate the timing of orders to prevent the Adviser from
"bidding against itself" on such orders.

PATTERN ACCOUNTS. The Adviser serves as investment adviser for a number of
clients, which are patterned after model portfolios or designated mutual funds
managed by the Adviser. For example, a client pursuing Davis Large Cap Value
investment strategy may be patterned after Davis New York Venture Fund. The
client portfolio would be expected to own many, but not all, of the same
portfolio securities as Davis New York Venture Fund. Davis New York Venture Fund
usually owns more securities positions than the Adviser's typical Large Cap
Value client. New portfolio holdings are not usually added to a client account
pursuing a Large Cap Value strategy until the Adviser makes it a significant
holding in Davis New York Venture Fund. The Adviser may not purchase or sell a
given security on behalf of all clients (even clients managed in a similar
style), and it may not execute a purchase of securities or a sale of securities
for all participating clients at the same time.

The Adviser generally attempts to aggregate trades for accounts that are
purchasing or selling the same security at approximately the same time. However,
at times the Adviser executes trades for patterned client accounts after the
trade has been executed for the designated mutual fund or the model portfolio
that the client account is patterned after. Since most of the Adviser's
transactions are in large capitalization exchange-traded equities, the Adviser
believes that this does not usually impact the long-term performance of these
clients.

Orders for accounts which are not patterned after model portfolios or designated
mutual funds are generally executed in the order received by the trading desk,
with the following exceptions: (i) the execution of orders for clients that have
directed that particular brokers be used may be delayed until the orders which
do not direct a particular broker have been filled; (ii) the execution of orders
may be delayed when the client (or responsible portfolio manager) requests such
delay due to market conditions in the security to be purchased or sold; and
(iii) the execution of orders which are to be bunched or aggregated.

AGGREGATED TRADES. The Adviser frequently follows the practice of aggregating
orders of various institutional clients for execution, if the Adviser believes
that this will result in the best net price and most favorable execution. In
some instances, aggregating trades could adversely affect a given client.
However, the Adviser believes that aggregating trades generally benefits clients
because larger orders tend to have lower execution costs, and the Adviser
clients do not compete with one another trading in the market. Directed
brokerage trades in a particular security are typically executed separately
from, and possibly after, the Adviser's other client trades.

In general, all the Adviser clients (excluding clients who are directing
brokerage and managed money/wrap accounts) seeking to purchase or sell a given
security at approximately the same time will be aggregated into a single order.
When that order is filled, all participating clients receive the price at which
the order was executed. If, at a later time, the participating clients wish to
purchase or sell additional shares of the same security, or if additional
clients seek to purchase or sell the same security, then the Adviser will issue
a new order and the clients participating in the new order will receive the
price at which the new order was executed.

In the event that an aggregated order is not entirely filled, the Adviser will
allocate the purchases or sales among participating clients in the manner it
considers to be most equitable and consistent with its fiduciary obligations to
all such clients. Generally, partially-filled orders are allocated pro rata
based on the initial order submitted by each participating client.

In accordance with the various managed account/wrap programs in which the
Adviser participates, the Adviser typically directs all trading to the
applicable program sponsor unless, in the Adviser's reasonable discretion, doing
so would adversely affect the client. Clients typically pay no commissions on
trades executed through program sponsors. In the

Davis Series, Inc., Statement of Additional Information 23

event that an order to the sponsor of a managed account/wrap program is not
entirely filled, the Adviser will allocate the purchases or sales among the
clients of that sponsor in the manner it considers to be most equitable and
consistent with its fiduciary obligations to all such clients. Generally,
partially-filled orders are allocated among the particular sponsor's
participating clients on a random basis that is anticipated to be equitable over
time.

TRADING ERROR CORRECTION. In the course of managing client accounts, it is
possible that trading errors will occur from time to time. The Adviser has
adopted Trading Error Correction Policies & Procedures which, when the Adviser
is at fault, seeks to place a client's account in the same position it would
have been had there been no error. The Adviser retains flexibility in attempting
to place a client's account in the same position it would have been had there
been no error. The Adviser attempts to treat all material errors uniformly,
regardless of whether they would result in a profit or loss to the client. For
example, The Adviser may purchase securities from a client account at cost if
they were acquired due to a trading error. If more than one trading error, or a
series of trading errors, is discovered in a client account, then gains and
losses on the erroneous trades may be netted.

RESEARCH PAID FOR WITH COMMISSIONS, "SOFT DOLLARS." The Adviser does not use
client commissions, "soft dollars", to pay for (i) computer hardware or
software, or other electronic communications facilities; (ii) publications, both
paper based or electronic that are available to the general public, and (iii)
third-party research services. If the Adviser determines to purchase such
services, it pays for them using its own resources.

The Adviser's portfolio managers may take into account the research resources,
as well as the execution capacity, of a brokerage firm in selecting brokers.
Thus, transactions may be directed to a brokerage firm which provides: (i)
important information concerning a company; (ii) introductions to key company
officers; (iii) industry and company conferences; and (iv) other value added
research services.

The Adviser follows the concepts of Section 28(e) of the Securities Exchange Act
of 1934. Subject to the criteria of Section 28(e), the Adviser may pay a broker
a brokerage commission in excess of that which another broker might have charged
for effecting the same transactions, in recognition of the value of the
brokerage and research services provided by or through the broker. The Adviser
believes it is important to its investment decision-making to have access to
independent research.

EXCEPTIONS. There are occasions when the Adviser varies the trading procedures
and considerations described above. The Adviser exercises its best judgment in
determining whether clients should execute portfolio transactions simultaneously
with, prior to, or subsequent to the model portfolio or designated mutual fund
that they are patterned after. The factors that the Adviser considers in
exercising its judgment include, but are not limited to, the need for
confidentiality of the purchase or sale, market liquidity of the securities in
issue, the particular events or circumstances that prompt the purchase or sale
of the securities, and operational efficiencies. Even when transactions are
executed on the same day, clients may not receive the same prices as the model
portfolios or designated mutual funds they are patterned after. If the
transactions are not aggregated, such prices may be better or worse.

Portfolio Turnover. Because the equity Funds' portfolios are managed using the
Davis Investment Discipline, portfolio turnover is expected to be low. The Funds
anticipate that, during normal market conditions, their annual portfolio
turnover rate will be less than 100%. However, depending upon market conditions,
portfolio turnover rate will vary. At times, it could be high, which could
require the payment of larger amounts in brokerage commissions and possibly more
taxable distributions.

When the Adviser deems it to be appropriate, a Fund may engage in active and
frequent trading to achieve its investment objectives. Active trading may
include participation in initial public offerings. Active trading may result in
the realization and distribution to shareholders of higher capital gains
compared with a fund with less active trading strategies, which would increase
shareholder tax liability. Frequent trading also increases transaction costs,
which could detract from a Fund's performance.

Davis Series, Inc., Statement of Additional Information 24

Portfolio Commissions
The Funds paid the following brokerage commissions:

FISCAL YEAR ENDED DECEMBER 31,
------------------------------
2005 2004 2003
-------- -------- --------

DAVIS OPPORTUNITY FUND
Brokerage commissions paid: $825,222 $454,386 $445,405
Amount paid to brokers providing research: 0% 0% 5%
Amount paid to brokers providing services to
Funds: 1% 0% 0%

DAVIS FINANCIAL FUND
Brokerage commissions paid: $217,636 $119,670 $388,455
Amount paid to brokers providing research: 0% 0% 21%
Amount paid to brokers providing services to
Funds: 3% 0% 0%

DAVIS REAL ESTATE FUND
Brokerage commissions paid: $314,379 $274,239 $211,025
Amount paid to brokers providing research: 0% 0% 0%
Amount paid to brokers providing services to
Funds: 3% 1% 0%

DAVIS APPRECIATION & INCOME FUND
Brokerage commissions paid: $ 40,725 $ 54,291 $ 60,407
Amount paid to brokers providing research: 0% 0% 0%
Amount paid to brokers providing services to
Funds: 0% 0% 0%

Davis Government Bond Fund and Davis Government Money Market Fund did not pay an
commissions in the preceding three years.

In 2003, the Adviser reimbursed Davis Opportunity Fund and Davis Financial Fund
for commissions paid to certain broker-dealers, which received brokerage, which
was directed for sale of fund shares from January 1, 2000 to July 31, 2003. The
amount paid to the Funds was: Davis Opportunity Fund $1,022, Davis Financial
Fund $53,899.

Investments in Certain Broker-Dealers. As of December 31, 2005, the Funds owned
the following securities (excluding repurchase agreements) issued by any of the
10 broker-dealers with whom they transacted the most business during the fiscal
year ended December 31, 2005:

FUND BROKER-DEALER $ VALUE
---------------------------------- ------------------------ -----------
Davis Opportunity Fund N/A N/A
Davis Financial Fund JP Morgan Chase Co. $40,466,336
Davis Real Estate Fund N/A N/A
Davis Appreciation & Income Fund Citigroup, Inc. $ 5,411,095
Davis Appreciation & Income Fund Lehman Brothers Holdings $19,946,640
Conv. Notes 8/23/11
Davis Government Bond Fund N/A N/A
Davis Government Money Market Fund N/A N/A

Davis Series, Inc., Statement of Additional Information 25

INVESTMENT RESTRICTIONS

The Funds follow investment strategies developed in accordance with the
investment objective, policies and restrictions described in their prospectuses
and this Statement of Additional Information.

The Funds have 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 Funds' practices with
respect to that policy, as allowed by current law. If the law governing a policy
changes, the Funds' 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.

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 a Fund are in terms of current
market value.

(1) DIVERSIFICATION (ALL FUNDS EXCEPT DAVIS REAL ESTATE FUND). 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 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.

DIVERSIFICATION (DAVIS REAL ESTATE FUND). The Fund is not required to diversify
its investments.

Further Explanation of Diversification Policy. The Fund intends to remain
classified as a regulated investment company under the Internal Revenue Code.
This requires the Fund to conform to the following: at the end of each quarter
of the taxable year, at least 50% of the value of the Fund's total assets must
be represented by: cash and cash items, U.S. government securities, securities
of other regulated investment companies and "other securities." For this
purpose, "other securities" does not include investments in the securities of
any one issuer that represent more than 5% of the value of the Fund's total
assets or more than 10% of the issuer's outstanding voting securities.

(2) CONCENTRATION (DAVIS OPPORTUNITY FUND, DAVIS APPRECIATION & INCOME FUND,
DAVIS GOVERNMENT BOND FUND, AND DAVIS GOVERNMENT MONEY MARKET FUND). 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).

CONCENTRATION (DAVIS FINANCIAL FUND). The Fund concentrates its investments in
the financial services industry.

Further Explanation of Concentration Policy. Financial services are a "sector"
composed of a number of "industries", examples of which are included in the
following paragraph. The concentration policy requires the Fund to invest at
least 25% of its assets in securities principally engaged in the financial
services group of industries which together makeup the financial services
sector. Due to the non-fundamental Name Policy, under normal circumstances the
Fund invests at least 80% of its net assets, plus any borrowing for investment
purposes, in securities issued by companies principally engaged in the financial
services sector.

A company is "principally engaged" in financial services if it owns financial
services related assets constituting at least 50% of the total value of the
company's assets, or if at least 50% of the company's revenues are derived from
its

Davis Series, Inc., Statement of Additional Information 26

provision of financial services. The financial services sector consists of
several different industries that behave differently in different economic and
market environments; for example, banking, insurance and securities brokerage
houses. Companies in the financial services sector include commercial banks,
industrial banks, savings institutions, finance companies, diversified financial
services companies, investment banking firms, securities brokerage houses,
investment advisory companies, leasing companies, insurance companies and
companies providing similar services.

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 issuers in the financial services sector or securities issued or guaranteed
by the U.S. government or its agencies or instrumentalities).

CONCENTRATION (DAVIS REAL ESTATE FUND). The Fund concentrates its investments in
real estate securities.

Further Explanation of Concentration Policy. Real estate is a "sector" composed
of a number of "industries", examples of which are included in the following
paragraph. The concentration policy requires the Fund to invest at least 25% of
its assets in securities principally engaged in the real estate group of
industries which together makeup the real estate sector. Due to the
non-fundamental Name Policy, under normal circumstances the Fund invests at
least 80% of its net assets plus any borrowing for investment purposes in
securities issued by companies principally engaged in the real estate industry.

Real estate securities are issued by companies that have at least 50% of the
value of their assets, gross income, or net profits attributable to ownership,
financing, construction, management or sale of real estate, or to products or
services that are related to real estate or the real estate industry. Real
estate companies include real estate investment trusts or other securitized real
estate investments, brokers, developers, lenders and companies with substantial
real estate holdings such as paper, lumber, hotel and entertainment companies.

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 real estate securities or securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities).

Industry Classification for Concentration Policies (for all Davis Series Funds
except Davis Real Estate Fund). The Funds generally use Global Industry
Classification Standard ("GICS") as developed by Morgan Stanley Capital
International and Standard & Poor's Corporation to determine industry
classification. GICS presents industry classification as a series of levels
(i.e. sector, industry group, industry, and sub-industry). For purposes of
measuring concentration, the Funds generally classify companies at the "industry
group" or "industry" level, however, further analysis may lead the Adviser to
classify companies at the sub-industry level. In addition, the Adviser may
reclassify a company in to an entirely different sector if it believes that the
GICS classification on a specific company does not accurately describe the
company.

Industry Classification for Concentration Policies (for Davis Real Estate Fund).
Davis Real Estate Fund generally uses the BLP Equity Industry Sub-Group ("BLP"
Code) as published by Bloomberg L.P. to determine industry classification. The
Adviser may re-classify a company if it believes that the classification 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, except as provided by the 1940 Act and any rules, regulations,
orders or letters 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 provided
that, immediately thereafter the Fund has 300% asset coverage for all
borrowings. 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

Davis Series, Inc., Statement of Additional Information 27

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 three
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 prospectuses 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 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, entering into repurchase agreements, leaving
cash on deposit with the Fund's custodian, and similar actions are not deemed to
be the making of a loan.

To generate income and offset expenses, the Fund may lend portfolio securities
to broker-dealers and other financial institutions that 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 that 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 Funds each have adopted the
following non-fundamental policies that may be changed without shareholder
approval:

1. Illiquid Securities. The Fund may not purchase illiquid securities if more
than 15% of the value of the Fund's net assets would be invested in such
securities. Davis Government Money Market Fund may not purchase illiquid
securities if more than 10% of the value of the Fund's net assets would be
invested in such securities.

2. High-Yield, High-Risk Securities. The Fund will not purchase debt
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.

3. 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. For additional
information concerning option strategies and their risks, see the section
entitled "Derivatives."

Davis Series, Inc., Statement of Additional Information 28

4. 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.

5. Borrowing. The Fund will not borrow in excess of 35% of net assets. The
Board of Directors will be notified in the event borrowings exceed 10% of
the Fund's total assets.

6. 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.
This limitation does not apply to selling short against the box.

7. Investing For Control. The Fund does not invest for the purpose of
exercising control or management of other companies.

8. Name Policy (All Funds Except Davis Opportunity Fund and Davis Appreciation
& Income Fund). Under normal circumstances, Davis Financial Fund invests at
least 80% of net assets plus any borrowing for investment purposes in
securities issued by companies in the financial services sector, and Davis
Real Estate Fund invests at least 80% of net assets plus any borrowing for
investment purposes in securities issued by companies in the real estate
sector.

Each Fund will comply with the Name Policy as of the time an investment is made.
In the event that market fluctuations or shareholder actions cause a Fund's
investments to fall below the Name Policy limits, the Fund would act to remedy
the situation as promptly as possible, normally within three business days. No
Fund will be required to dispose of portfolio holdings or purchase additional
investments immediately if the Adviser believes such action would subject the
Fund to losses or unreasonable risks of loss.

Under normal circumstances, Davis Government Bond Fund and Davis Government
Money Market Fund invest exclusively in U.S. Government Securities and
repurchase agreements collateralized by U.S. Government Securities. The Funds
also own other assets that are not investments, such as cash and receivables.

The Funds comply with the Name Policy under normal circumstances. However, each
Fund may depart from the Name Policy from time to time. For example, a Fund may
depart from the Name Policy in response to unusually large cash inflows or
redemptions, or to avoid losses in response to adverse market, economic,
political, or other conditions.

Davis Financial Fund, Davis Real Estate Fund, Davis Government Bond Fund and
Davis Government Money Market Fund will provide the Fund's shareholders with at
least 60 days' prior notice before changing their Name Policies such that they
would invest, under normal circumstances, less than 80% of their net assets plus
any borrowing for investment purposes in financial companies, real estate
companies, and U.S. Government Securities and repurchase agreements
collateralized with U.S. Government Securities (both Davis Government Bond Fund
and Davis Government Money Market Fund), respectively.

Davis Series, Inc., Statement of Additional Information 29

SECTION II: KEY PERSONS

This Statement of Additional Information should be read in conjunction with the
prospectus. This Statement of Additional Information supplements the information
available in the prospectus.

ORGANIZATION OF THE FUNDS

THE FUNDS. Davis Series, Inc., is an open-end, diversified management investment
company incorporated in Maryland in 1976 and registered under the 1940 Act.
Davis Series, Inc., is a series investment company that may issue multiple
series, each of which would represent an interest in its separate portfolio.
Davis Series, Inc., currently offers six series, Davis Opportunity Fund, Davis
Financial Fund, Davis Real Estate Fund, Davis Appreciation & Income Fund, Davis
Government Bond Fund and Davis Government Money Market Fund (a "Fund" or the
"Funds"). On November 1, 1995, Davis Series, Inc., changed its name from
Retirement Planning Funds of America, Inc., to Davis Series, Inc.

FUND SHARES. The Funds may issue shares in different classes. The Funds' shares
currently are divided into four classes of shares: A, B, C and Y. The Board of
Directors may offer additional series or classes in the future and may at any
time discontinue the offering of any series or 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 Funds' shares represents an interest in the
assets of the Fund issuing the share and has identical voting, dividend,
liquidation and other rights and the same terms and conditions as any other
shares except that: (i) each dollar of net asset value per share is entitled to
one vote; (ii) the expenses related to a particular class, such as those related
to the distribution of each class and the transfer agency expenses of each class
are borne solely by each such class; (iii) each class of shares votes separately
with respect to provisions of the Rule 12b-1 Distribution Plan that pertain to a
particular class; and (iv) 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. Due to the differing expenses of the classes,
dividends are likely to be lower for Class B and C shares than for Class A
shares and are likely to be higher for Class Y shares than for any other class
of shares.

For some issues, such as the election of directors, all of Davis Series, Inc.'s
authorized series vote together. For other issues, such as approval of the
advisory agreement, each authorized series votes separately. Shares do not have
cumulative voting rights; therefore, the holders of more than 50% of the voting
power can elect all of the directors. 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 will not be deemed to have been effectively
acted on 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 Davis Series, Inc.'s bylaws, the Funds do
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 on the written request of
shareholders of at least 25% of the voting power that could be cast at the
meeting. The Funds will provide assistance in calling and holding such special
meeting to the extent required by Maryland statutes or SEC rules and regulations
then in effect.

Davis Series, Inc., Statement of Additional Information 30

DIRECTORS AND OFFICERS

Each of the directors and officers holds identical offices with each of the
Davis Funds (three registrants, a total of 12 separate series): Davis New York
Venture Fund, Inc., Davis Series, Inc., and Davis Variable Account Fund, Inc. As
indicated below, certain directors and officers also may hold similar positions
with Selected American Shares, Inc., Selected Special Shares, Inc., and Selected
Capital Preservation Trust (collectively the "Selected Funds"), mutual funds
that are managed by the Adviser.

The Board of Directors supervises the business and management of the Davis
Funds. The Board approves all significant agreements between the Davis Funds and
those companies that furnish services to the Davis Funds. 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.

DIRECTORS

For the purposes of their service as directors to the Davis Funds, the business
address for each of the directors is: 2949 E. Elvira Road, Suite 101, Tucson, AZ
85706.

TERM OF NO. OF PORTFOLIOS
POSITION(S) OFFICE AND IN FUND COMPLEX
NAME HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN
(birth date) FUNDS TIME SERVED DURING PAST FIVE YEARS BY DIRECTOR
----------------------------------------------------------------------------------------------------

INDEPENDENT DIRECTORS:

MARC P. BLUM Director Since 1986 Chief Executive Officer, 12
(9/9/42) World Total Return Fund,
LLLP; Of Counsel to Gordon,
Feinblatt, Rothman,
Hoffberger and Hollander,
LLC (law firm).

OTHER DIRECTORSHIP CURRENTLY SERVING: Director, Legg Mason Trust (asset management company) and
Rodney Trust Company (Delaware).

THOMAS GAYNER Director Since 2004 Executive Vice President 12
(12/16/61) and Chief Investment
Officer, Markel Corporation
(Markel Corporation Markets
and underwrites specialty
insurance products).

OTHER DIRECTORSHIPS CURRENTLY SERVING: First Market Bank

JERRY D. GEIST Director Since 1986 Chairman, Santa Fe Center 12
(5/23/34) Enterprises (energy project
development); retired
Chairman and President,
Public Service Company of
New Mexico.

OTHER DIRECTORSHIPS CURRENTLY SERVING: Director, CH2M Hill, Inc. (engineering); Chairman, Santa Fe
Center Enterprises, Member, Investment Committee for Microgeneration Technology Fund, UTECH Funds.

Davis Series, Inc., Statement of Additional Information 31

D. JAMES GUZY Director Since 1982 Chairman, PLX Technology, 12
(3/7/36) Inc. (semi-conductor
manufacturer).

OTHER DIRECTORSHIPS CURRENTLY SERVING: Director, Intel Corp. (semi-conductor manufacturer), Cirrus
Logic Corp. (semi-conductor manufacturer), Alliance Technology Fund (a mutual fund), Micro Component
Technology, Inc. (micro-circuit handling and testing equipment manufacturer), LogicVision, Inc.
(semi-conductor software company) and Tessera Technologies, Inc. (semi-conductor packaging company).

G. BERNARD HAMILTON Director Since 1978 Retired from 1990-2005, 12
(3/18/37) Managing General Partner,
Avanti Partners, L.P.
(investment partnership).

OTHER DIRECTORSHIP CURRENTLY SERVING: None

SAMUEL H. IAPALUCCI Director Since 2006 Executive Vice President 12
(07/19/52) and Chief Financial
Officer, CH2M-Hill, Ltd.,
(engineering)

OTHER DIRECTORSHIP CURRENTLY SERVING: None

ROBERT P. MORGENTHAU Director Since 2002 Chairman, Northroad Capital 12
(3/22/57) Management, LLC (an
investment management firm)
since June 2002; President
of Private Advisory
Services of Bank of America
(an investment management
firm) from 2001 until 2002;
prior to that a managing
director and global head of
marketing and distribution
for Lazard Asset Management
(an investment management
firm) for ten years.

OTHER DIRECTORSHIPS CURRENTLY SERVING: None

THEODORE B. SMITH, JR. Director Since 1994 Chairman of John Hassall, 12
(12/23/32) Inc. (fastener
manufacturing); Chairman of
Cantrock Realty. Mayor,
Incorporated Village of
Mill Neck, NY

OTHER DIRECTORSHIPS CURRENTLY SERVING: None.

Davis Series, Inc., Statement of Additional Information 32

CHRISTIAN R. SONNE Director Since 1990 General Partner of Tuxedo 12
(5/6/36) Park Associates (land
holding and development
firm); President and Chief
Executive Officer of
Mulford Securities
Corporation (private
investment fund) until
1990; formerly Vice
President of Goldman Sachs
& Co. (investment banking).
Chairman of Board of
Trustees, American
Scandinavian Foundation

OTHER DIRECTORSHIPS CURRENTLY SERVING: None

MARSHA WILLIAMS Director Since 1999 Chief Financial Officer of 15
(3/28/51) Equity Office Properties
Trust (a real estate
investment trust); former
Chief Administrative
Officer of Crate & Barrel
(home furnishings
retailer); former Vice
President and Treasurer,
Amoco Corporation (oil &
gas company).

OTHER DIRECTORSHIPS CURRENTLY SERVING: Director of the Selected Funds (consisting of 3 portfolios);
Director, Modine Manufacturing, Inc. (heat transfer technology); Chicago Bridge & Iron Company, N.V.
(industrial construction and engineering).

INSIDE DIRECTORS*:

JEREMY H. BIGGS Director/ Since 1994 Vice Chairman of Fiduciary 12
(8/16/35) Chairman Trust Company International
(money management firm);
member of the Investment
Policy Committee, and
member of the International
Investment Committee;
Consultant to Davis
Selected Advisers, L.P.

OTHER DIRECTORSHIPS CURRENTLY SERVING: None

Davis Series, Inc., Statement of Additional Information 33

ANDREW A. DAVIS Director Since 1997; President or Vice President 15
(6/25/63) Davis Funds of each Davis Fund and
officer Selected Fund; President,
since 1997 Davis Selected Advisers,
L.P., and also serves as an
executive officer in
certain companies
affiliated with the
Adviser.

OTHER DIRECTORSHIPS CURRENTLY SERVING: Director of the Selected Funds (consisting of 3 portfolios)
since 1998.

CHRISTOPHER C. DAVIS Director Since 1997; Chief Executive Officer, 15
(7/13/65) Davis Funds President or Vice President
officer of each Davis Fund,
since 1997 Selected Fund, and Clipper
Fund; Chairman and Chief
Executive Officer, Davis
Selected Advisers, L.P.,
and also serves as an
executive officer in
certain companies
affiliated with the
Adviser, including sole
member of the Adviser's
general partner, Davis
Investments, LLC; Employee
of Shelby Cullom Davis &
Co. (registered
broker/dealer).

OTHER DIRECTORSHIPS CURRENTLY SERVING: Director of the Selected Funds (consisting of 3 portfolios)
since 1998. Director of the Washington Post (media and publishing)

o Jeremy H. Biggs, Andrew A. Davis and Christopher C. Davis own partnership
units (directly, indirectly or both) of the Adviser and are considered to
be "interested persons" of the Funds as defined in the Investment Company
Act of 1940. Andrew A. Davis and Christopher C. Davis are brothers.

Davis Series, Inc., Statement of Additional Information 34

INDEPENDENT DIRECTORS' COMPENSATION

During the fiscal year ended December 31, 2005, the compensation paid to the
Directors who are not considered to be interested persons of the Funds was as
follows:

AGGREGATE FUND TOTAL COMPLEX
NAME DOF DFF DREF DAIF DGBF DGMMF COMPENSATION(1) COMPENSATION(2)
------------------- ------ ------ ------ ------ ---- ------ --------------- ---------------

Wesley Bass(3) $5,350 $7,478 $5,081 $2,945 $457 $4,489 $25,800 $ 79,000
Marc Blum $5,350 $7,478 $5,081 $2,945 $457 $4,489 $25,800 $ 79,000
Thomas Gayner $5,350 $7,478 $5,081 $2,945 $457 $4,489 $25,800 $ 79,000
Jerry Geist $5,350 $7,478 $5,081 $2,945 $457 $4,489 $25,800 $ 79,000
James Guzy $5,350 $7,478 $5,081 $2,945 $457 $4,489 $25,800 $ 79,000
Bernard Hamilton $5,350 $7,478 $5,081 $2,945 $457 $4,489 $25,800 $ 79,000
Samuel Iapalucci(4) NA NA NA NA NA NA NA NA
Robert Morgenthau $5,350 $7,478 $5,081 $2,945 $457 $4,489 $25,800 $ 79,000
Theodore Smith $5,350 $7,478 $5,081 $2,945 $457 $4,489 $25,800 $ 79,000
Christian Sonne $5,350 $7,478 $5,081 $2,945 $457 $4,489 $25,800 $ 79,000
Marsha Williams $5,574 $7,791 $5,293 $3,068 $477 $4,677 $26,880 $125,488

(1.) "Aggregate Fund compensation" is the aggregate compensation paid for
service as a director by all series of Davis Series, Inc.

(2.) "Total complex compensation" is the aggregate compensation paid for service
as a director by all mutual funds with the same investment adviser. There
are six registered investment companies in the complex.

(3.) Mr. Bass retired in December 2005 and now serves as Director Emeritus.

(4.) Mr. Iapalucci became a Director in January 2006.

OFFICERS

All Davis Funds officers (including some Inside Directors) hold positions as
executive officers with the Adviser and its affiliates, including Davis Selected
Advisers, L.P. (Adviser), Davis Selected Advisers - NY, Inc. (sub-adviser),
Davis Distributors, LLC (the principal underwriter), Davis Investments, LLC (the
sole general partner of the Adviser), and other affiliated companies. The Davis
Funds do not pay salaries to any of their officers. Each of the Davis Funds'
officers serves for one year and until his or her successor is chosen and
qualifies.

CHRISTOPHER C. DAVIS (BORN 7/13/65, DAVIS FUNDS OFFICER SINCE 1997). See
description in the section on Inside Directors.

ANDREW A. DAVIS (BORN 6/25/63, DAVIS FUNDS OFFICER SINCE 1997). See description
in the section on Inside Directors.

KENNETH C. EICH (BORN 8/14/53, DAVIS FUNDS OFFICER SINCE 1997). Executive Vice
President and Principal Executive Officer of each of the Davis Funds (consisting
of 12 portfolios), Selected Funds (consisting of three portfolios), and Clipper
Fund, Inc. (consisting of one portfolio); Chief Operating Officer, Davis
Selected Advisers, L.P.; and also serves as an executive officer in certain
companies affiliated with the Adviser. Mr. Eich serves on the board of governors
of the Investment Company Institute and on the board of directors of ICI Mutual.

DOUGLAS A. HAINES, CPA, (BORN 3/4/71, DAVIS FUNDS OFFICER SINCE 2004). Vice
President, Treasurer, Chief Financial Officer, Principal Financial Officer, and
Principal Accounting Officer of each of the Davis Funds (consisting of 12
portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund,
Inc. (consisting of one portfolio); Vice president and Director of Fund
Accounting, Davis Selected Advisers, L.P.

SHARRA L. REED (BORN 9/25/66, DAVIS FUNDS OFFICER SINCE 1997). Vice President,
Chief Compliance Officer of each of the Davis Funds (consisting of 12
portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund,
Inc.

Davis Series, Inc; Statement of Additional Information 35

(consisting of one portfolio); Vice President and Chief Compliance Officer,
Davis Selected Advisers, L.P.; and also serves as an executive officer in
certain companies affiliated with the Adviser.

THOMAS D. TAYS, CPA, CFA, (BORN 3/7/57, DAVIS FUNDS OFFICER SINCE 1997). Vice
President and Secretary of each of the Davis Funds (consisting of 12
portfolios), Selected Funds (consisting of three portfolios), and Clipper Fund,
Inc. (consisting of one portfolio); Vice President, Chief Legal Officer and
Secretary, Davis Selected Advisers, L.P.; and also serves as an executive
officer in certain companies affiliated with the Adviser.

ARTHUR DON (BORN 9/24/53, DAVIS FUNDS OFFICER SINCE 1991). Assistant Secretary
(for clerical purposes only) of each of the Davis Funds and Selected Funds;
Partner, Seyfarth Shaw, LLP (a law firm); counsel to the Independent Directors
and the Davis Funds.

STANDING COMMITTEES OF THE BOARD OF DIRECTORS

AUDIT COMMITTEE. The Davis Funds have an Audit Committee, which is comprised
entirely of Independent Directors (Marsha Williams, Chair; Samuel H. Iapalucci;
Robert Morgenthau; and Christian R. Sonne). The Audit Committee reviews
financial statements and other audit-related matters for the Davis Funds. The
Audit Committee also holds discussions with management and with the Independent
Accountants concerning the scope of the audit and the auditor's independence.
The Audit Committee meets as often as deemed appropriate by the Audit Committee.
The Audit Committee met four times during calendar year 2005.

The Board of Directors has determined that Marsha Williams is an independent
Audit Committee Financial Expert pursuant to Section 407 of the Sarbanes-Oxley
Act and as defined by Item 3 of Form N-CSR of the Investment Company Act of
1940. In their deliberations the Board of Directors considered Ms. Williams' (i)
professional experience; (ii) independence as defined in Item 3 of Form N-CSR;
and (iii) integrity and absence of disciplinary history.

NOMINATING COMMITTEE. The Davis Funds have a Nominating Committee, which is
comprised entirely of Independent Directors (Jerry D. Geist, Chair; Marc P.
Blum; G. Bernard Hamilton; Theodore B. Smith Jr., and Christian R. Sonne), which
meets as often as deemed appropriate by the Nominating Committee. The Funds do
not elect Directors annually. Each director serves until his or her retirement,
resignation, death or removal. Subject to exceptions and exemptions which may be
granted by the Independent Directors, effective January 1, 2006, Directors must
retire at the close of business on the last day of the calendar year in which
the Director attains age seventy-four (74). The Nominating Committee met four
times during calendar year 2005. The Nominating Committee reviews and nominates
persons to serve as members of the Board of Directors, and reviews and makes
recommendations concerning the compensation of the Independent Directors. The
chairperson of the Nominating Committee also serves as the Lead Independent
Director. The Nominating Committee does not have a charter. When the board of
directors is seeking a candidate to become a Director, qualified candidates will
be men or women of proven character and talent who have achieved notable success
in their professional careers. The specific talents, which the Nominating
Committee seeks in a candidate, depends upon the board of directors' needs at
the time a vacancy occurs. When the board of directors is seeking a candidate to
become a director, it considers qualified candidates received from a variety of
sources, including having authority to retain third parties that may receive
compensation related to identifying and evaluating candidates. Shareholders may
propose nominees by writing to the Nominating Committee, in care of the
Secretary of the Davis Funds, at 2949 East Elvira, Suite 101, Tucson, Arizona
85706.

BROKERAGE COMMITTEE. The Davis Funds have a Brokerage Committee, which is
comprised entirely of Independent Directors (D. James Guzy, Chair; Thomas S.
Gayner, and G. Bernard Hamilton), which meets as often as deemed appropriate by
the Brokerage Committee. The Brokerage Committee met once during calendar year
2005. The Brokerage Committee reviews and makes recommendations concerning Davis
Funds portfolio brokerage and trading practices.

PRICING COMMITTEE. The Davis Funds have a Pricing Committee (Marc P. Blum,
Chair, Independent Director, Kenneth C. Eich; an officer of the Fund, and
Douglas A. Haines, an officer of the Fund) that meets as often as deemed
appropriate by the Pricing Committee. The Pricing Committee met more than 50
times during calendar year 2005. The Pricing Committee reviews and makes
recommendations concerning pricing of the Fund's portfolio securities.

Davis Series, Inc; Statement of Additional Information 36

DIRECTORS' FUND HOLDINGS

As of December 31, 2005, the Directors had invested the following amounts in all
Funds managed by the Adviser. Investments are listed in the following ranges:
none, $1-10,000, $10,001-50,000, $50,001-100,000 and over $100,000:

DAVIS OPPORTUNITY DAVIS FINANCIAL DAVIS REAL DAVIS APPRECIATION
FUND FUND ESTATE FUND & INCOME FUND
----------------- --------------- -------------- ------------------

INDEPENDENT DIRECTORS:
Marc P. Blum over $100,000 over $100,000 over $100,000 over $100,000
Thomas Gayner $ 10,001-50,000 $ 10,001-50,000 none none
Jerry D. Geist over $100,000 over $100,000 $10,001-50,000 $ 10,001-50,000
D. James Guzy over $100,000 none none none
G. Bernard Hamilton over $100,000 over $100,000 $ 1-10,000 $ 10,001-50,000
Samuel H. Iapalucci none none none none
Robert P. Morgenthau over $100,000 over $100,000 none none
Theodore B. Smith, Jr. $50,001-100,000 over $100,000 $10,001-50,000 none
Christian R. Sonne over $100,000 $50,001-100,000 over $100,000 $50,001-100,000
Marsha Williams $50,001-100,000 $50,001-100,000 over $100,000 $50,001-100,000
INSIDE DIRECTORS(1):
Jeremy H. Biggs over $100,000 over $100,000 over $100,000 over $100,000
Andrew Davis $ 1-10,000 over $100,000 over $100,000 over $100,000
Christopher Davis over $100,000 over $100,000 over $100,000 over $100,000

DAVIS
DAVIS GOVERNMENT
GOVERNMENT MONEY MARKET TOTAL INVESTED IN
BOND FUND FUND ALL FUNDS(2)
---------- --------------- -----------------
INDEPENDENT DIRECTORS:
Marc P. Blum $1-10,000 over $100,000 over $100,000
Thomas Gayner none none over $100,000
Jerry D. Geist $1-10,000 $50,001-100,000 over $100,000
D. James Guzy none none over $100,000
G. Bernard Hamilton none $1-10,000 over $100,000
Samuel H. Iapalucci(3) none none $10,001-50,000
Robert P. Morgenthau none none over $100,000
Theodore B. Smith, Jr. none $ 10,001-50,000 over $100,000
Christian R. Sonne none $ 10,001-50,000 over $100,000
Marsha Williams none $ 10,001-50,000 over $100,000
INSIDE DIRECTORS:
Jeremy H. Biggs $1-10,000 $ 10,001-50,000 over $100,000
Andrew Davis none $ 10,001-50,000 over $100,000
Christopher Davis none over $100,000 over $100,000

(1) Andrew A. Davis and Christopher C. Davis are employed by and own shares in
the Adviser. Jeremy Biggs owns shares of the Adviser. All three are
considered to be "interested persons" of the Funds as defined in the
Investment Company Act of 1940.

(2) Total Invested in All Funds is the aggregate dollar range of investments in
all Funds overseen by the individual director and managed by Davis Selected
Advisers, L.P. This includes the Davis Funds for all directors and also the
Selected Funds for Andrew Davis, Christopher Davis and Marsha Williams.

(3) Mr. Iapalucci became a director on January 1, 2006

Davis Series, Inc; Statement of Additional Information 37

INDEPENDENT DIRECTORS' AFFILIATIONS AND TRANSACTIONS

None of the Independent Directors (or their immediate family members) owns any
securities issued by the Davis Funds' investment adviser, sub-adviser, principal
underwriter or any company (other than a registered investment company) directly
or indirectly controlling, controlled by or under common control with the above
listed companies (hereafter referred to as the "Adviser and its affiliates").
Jeremy H. Biggs, Andrew A. Davis and Christopher C. Davis own partnership units
(directly, indirectly, or both) in the Adviser and are considered Inside
Directors.

In October 2004, Christopher Davis, an officer and controlling person of the
Adviser and an officer and director of each of the Davis Funds, sold a
residential house to Robert Morgenthau, an Independent Director, for
approximately $375,000, which represented fair market value as determined by
Bunce Realty, a licensed real estate agent employing generally accepted methods
of real estate appraisal. Christopher Davis had owned the house for more than
two years prior to the date of sale. As part of the same transaction,
Christopher Davis sold the furnishings of the house to Robert Morgenthau for
approximately $75,000, which was equivalent to fair market value as determined
by invoices for the furniture.

Other than as described above, none of the Independent Directors (or their
immediate family members) have had any direct or indirect interest, the value of
which exceeds $60,000, during the last two calendar years in the Adviser and its
affiliates.

None of the Independent Directors (or their immediate family members) have had
any material interest in any transaction, or series of transactions, during the
last two years, in which the amount involved exceeds $60,000 and to which any of
the following persons was a party: any Davis Fund, an officer of the Davis
Funds, or any fund managed by the Adviser or the Adviser and its affiliates.

None of the Independent Directors (or their immediate family members) have had
any direct or indirect relationships during the last two years, in which the
amount involved exceeds $60,000 and to which any of the following persons was a
party: any Davis Fund, an officer of the Davis Funds, or any fund managed by the
Adviser, or the Adviser and its affiliates.

None of the officers of the Adviser and its affiliates have served during the
last two years on the board of directors of a company where an Independent
Director (or their immediate family members) served as an officer.

CERTAIN SHAREHOLDERS OF THE FUNDS

As of March 31, 2006, officers and directors owned the following percentages of
each class of shares issued by the Funds(1):

Class A Class B Class C Class Y
------- ------- ------- -------
Davis Opportunity Fund 2.0% * * *
Davis Government Bond Fund * * * *
Davis Government Money Market Fund 1.1% * * *
Davis Financial Fund 5.0% * * *
Davis Appreciation & Income Fund 2.2% * * *
Davis Real Estate Fund 8.0% * * *

(1) This percentage does not include investments controlled indirectly,
including holdings by Davis Selected Advisers, L.P, which is listed below.

* Indicates that officers and directors as a group owned less than 1% of the
outstanding shares of the indicated class of shares.

Davis Series, Inc., Statement of Additional Information 38

The following table sets forth as of March 31, 2006, the name and holdings of
each person known by Davis Series, Inc., to be a record owner of more than 5% of
the outstanding shares of any class of any of the Funds. Other than as indicated
below, the Funds are not aware of any shareholder who beneficially owns more
than 25% of the Funds' total outstanding shares.

CLASS OF SHARES NAME AND ADDRESS OF SHAREHOLDER(S) PERCENT OF CLASS
OWNING MORE THAN 5% OF DAVIS SERIES OUTSTANDING
--------------- ------------------------------------------ -----------------
CLASS A SHARES DAVIS OPPORTUNITY FUND

State Street Bank and Trust Company 9.11%
FBO ADP MSDW Alliance
Westwood, MA

Hartford Life Insurance Co. Separate Acct 5.04%
Hartford, CT

CLASS A SHARES DAVIS FINANCIAL FUND

Shelby Cullom Davis & Co. 21.79%
New York, NY

John Hancock Life Insurance 11.06%
Toronto, Ontario, Canada

Merrill Lynch Pierce Fenner & Smith 5.34%
Jacksonville, FL

CLASS A SHARES DAVIS REAL ESTATE FUND

Morgan Stanley DW 26.92%
Jersey City, NJ

Charles Schwab and Co. Inc. 6.40%
San Francisco, CA

CLASS A SHARES DAVIS APPRECIATION & INCOME FUND

Charles Schwab and Co. Inc. 13.16%
San Francisco, CA

Shelby Cullom Davis & Co. 10.60%
New York, NY

Bank of New York 8.22%
Loan Collateral Account / SCD
New York, NY

Davis Series, Inc., Statement of Additional Information 39

Merrill Lynch Pierce Fenner & Smith 22.23%
Jacksonville, FL

CLASS A SHARES DAVIS GOVERNMENT MONEY MARKET FUND

Shelby Cullom Davis & Co. 34.93%
New York, NY

Davis Selected Advisers, L.P. 30.13%
Tucson, AZ

Davis Distributors, LLC 9.13%
Tucson, AZ

Capital Ideas, Inc. 7.49%
Jackson, WY

CLASS B SHARES DAVIS OPPORTUNITY FUND

Merrill Lynch Pierce Fenner & Smith 17.07%
Jacksonville, FL

Citigroup Global Markets 8.16%
New York, NY

Morgan Stanley DW 6.83%
Jersey City, NJ

CLASS B SHARES DAVIS FINANCIAL FUND

Merrill Lynch Pierce Fenner & Smith 14.38%
Jacksonville, FL

Citigroup Global Markets, Inc. 9.89%
New York, NY

Davis Series, Inc., Statement of Additional Information 40

Citigroup Global Markets, Inc. 12.81%
New York, NY

Merrill Lynch Pierce Fenner & Smith 12.50%
Jacksonville, FL

Morgan Stanley DW 6.79%
Jersey City, NJ

CLASS B SHARES DAVIS APPRECIATION & INCOME FUND

Merrill Lynch Pierce Fenner & Smith 15.02%
Jacksonville, FL

Citigroup Global Markets, Inc. 13.49%
New York, NY

CLASS B SHARES DAVIS GOVERNMENT BOND FUND

Merrill Lynch Pierce Fenner & Smith 29.74%
Jacksonville, FL

Morgan Stanley DW 6.93%
Jersey City, NJ

CLASS B SHARES DAVIS GOVERNMENT MONEY MARKET FUND

Morgan Stanley DW 12.10%
Jersey City, NJ

Citigroup Global Markets, Inc. 6.25%
New York, NY

Davis Series, Inc., Statement of Additional Information 41

Citigroup Global Markets, Inc. 24.89%
New York, NY

Merrill Lynch Pierce Fenner & Smith 20.11%
Jacksonville, FL

CLASS C SHARES DAVIS FINANCIAL FUND

Merrill Lynch Pierce Fenner & Smith 23.17%
Jacksonville, FL

Citigroup Global Markets, Inc.
New York, NY 9.81%

CLASS C SHARES DAVIS REAL ESTATE FUND

Merrill Lynch Pierce Fenner & Smith 12.63%
Jacksonville, FL

Citigroup Global Markets, Inc. 9.80%
New York, NY

Morgan Stanley DW 6.18%
Jersey City, NJ

CLASS C SHARES DAVIS APPRECIATION & INCOME FUND

Merrill Lynch Pierce Fenner & Smith 16.95%
Jacksonville, FL

Citigroup Global Markets, Inc. 11.47%
New York, NY

CLASS C SHARES DAVIS GOVERNMENT BOND FUND

Merrill Lynch Pierce Fenner & Smith 34.04%
Jacksonville, FL

Davis Series, Inc., Statement of Additional Information 42

Morgan Stanley DW 8.46%
Jersey City, NJ

Citigroup Global Markets, Inc. 8.04%
New York, NY

State Street Bank & Trust Company, 5.64%
Customer for Linda Pettis IRA
Kent, WA

CLASS Y SHARES DAVIS OPPORTUNITY FUND

Wells Fargo Bank, Nuclear Management, 401K 32.04%
Minneapolis, MN

Merrill Lynch Pierce Fenner & Smith 21.32%
Jacksonville, FL

Nationwide Trust Company 14.80%
Custodian - Legg Mason
Profit Sharing & 401K
Austin, TX

Naidot & Co. 10.44%
Woodbridge, NJ

Wells Fargo Bank - Retirement Plan 6.44%
Minneapolis, MN

CLASS Y SHARES DAVIS FINANCIAL FUND

Merrill Lynch Pierce Fenner & Smith 77.92%
Jacksonville, FL

Davis Series, Inc., Statement of Additional Information 43

Naidot & Co. 64.70%
Woodbridge, NJ

Armand Hammer United World College 18.25%
Montezuma, NM

Merrill Lynch Pierce Fenner & Smith 9.21%
Jacksonville, FL

CLASS Y SHARES DAVIS APPRECIATION & INCOME FUND

Naidot & Co. 70.43%
Woodbridge, NJ

Merrill Lynch Pierce Fenner & Smith 11.61%
Jacksonville, FL

CLASS Y SHARES DAVIS GOVERNMENT BOND FUND

Merrill Lynch Pierce Fenner & Smith 76.81%
Jacksonville, FL

Pershing, LLC 13.47%
Jersey City, NJ

Ferris Baker Watts, Inc., Peggy Gessner 7.79%
Waldorf, MD

Davis Series, Inc., Statement of Additional Information 44

INVESTMENT ADVISORY SERVICES

DAVIS SELECTED ADVISERS, L.P. AND DAVIS SELECTED ADVISERS-NY, INC. 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 Variable Account
Fund, Inc. (collectively 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, offshore funds, and managed money/wrap accounts.
Davis Investments, LLC, an entity controlled by Christopher C. Davis 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
Adviser. Davis Distributors, LLC (the "Distributor"), a subsidiary of the
Adviser, serves as the distributor or principal underwriter of the funds that
the Adviser administers, including Davis Funds, Selected Funds, and offshore
funds. 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 sub-advisory
agreements with the Adviser.

ADVISORY AGREEMENT WITH DAVIS SELECTED ADVISERS, L.P. AND SUB-ADVISORY AGREEMENT
WITH DAVIS SELECTED ADVISERS-NY, INC. Pursuant to the Advisory Agreement, each
Fund pays the Adviser a fee according to the following schedule:

Davis Opportunity Fund, Davis Financial Fund, Davis Real Estate Fund and Davis
Appreciation & Income Fund

Annual Rate Net Assets of Fund
----------- ------------------
0.75% of... First $250 million
0.65% of... Next $250 million
0.55% of... Over $500 million

Fee expressed as a percentage of net assets

Davis Government Bond Fund pays the Adviser a fee at the annual rate of 0.30% of
average net assets.

Davis Government Money Market Fund

Annual Rate Net Assets of Fund
----------- ------------------
0.50% of... First $250 million
0.45% of... Next $250 million
0.40% of... Over $500 million

Fee expressed as a percentage of net assets

Advisory fees are allocated among each class of shares in proportion to each
class' relative total net assets. These fees may be higher than those of most
other mutual funds but are not necessarily higher than those paid by funds with
similar objectives.

The Funds paid the following aggregate advisory fees to the Adviser:

FISCAL YEAR ENDED DECEMBER 31,
------------------------------------
2005 2004 2003
---------- ---------- ----------
DAVIS OPPORTUNITY FUND $4,163,731 $3,121,121 $1,956,402
DAVIS FINANCIAL FUND 5,701,681 6,018,955 5,250,471
DAVIS REAL ESTATE FUND 4,057,068 3,305,744 2,487,850
DAVIS APPRECIATION & INCOME FUND 2,472,975 1,907,038 1,501,968
DAVIS GOVERNMENT BOND FUND 176,711 384,443 728,912
DAVIS GOVERNMENT MONEY MARKET FUND 2,572,834 2,708,986 2,761,970

Davis Series, Inc., Statement of Additional Information 45

In accordance with the provisions of the 1940 Act, the Advisory Agreement and
Sub-Advisory Agreement will terminate automatically on assignment and are
subject to cancellation on 60 days' written notice by the Board of Directors,
the vote of the holders of a majority of the Funds' outstanding shares or the
Adviser. The continuance of the Advisory Agreement and Sub-Advisory Agreement
must be approved at least annually by the Funds' Board of Directors or by the
vote of holders of a majority of the outstanding shares of the Funds. 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 agreements or
interested persons of any such party. The Advisory Agreement also makes
provisions for portfolio transactions and brokerage policies of the Fund, which
are discussed above under "Portfolio Transactions."

The Adviser has entered into a Sub-Advisory Agreement with its wholly owned
subsidiary, Davis Selected Advisers - NY, Inc., where the Sub-Adviser performs
research and other services on behalf of the Adviser. Under the Agreement, the
Adviser pays all of the Sub-Adviser's direct and indirect costs of operation.
All of the fees paid to the Sub-Adviser are paid by the Adviser and not the
Funds.

Pursuant to the Advisory Agreement, the Adviser, subject to the general
supervision of the Funds' 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 Funds. The Funds bear 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 Funds
reimburse the Adviser for providing certain services, including accounting and
administrative services, and shareholder services (in the past these services
included qualifying shares for sale with state agencies). Such reimbursements
are detailed below:

FISCAL YEAR ENDED DECEMBER 31,
------------------------------
2005 2004 2003
------- -------- --------
DAVIS OPPORTUNITY FUND
Accounting and Administrative Services $ 6,504 $ 6,504 $ 6,504
Qualifying Shares for Sale With State Agencies $ 0 $ 3,332 $ 9,996
Shareholder Services $52,663 $ 53,804 $ 42,263

DAVIS FINANCIAL FUND
Accounting and Administrative Services $14,496 $ 14,496 14,496
Qualifying Shares for Sale With State Agencies $ 0 $ 3,332 9,996
Shareholder Services $86,137 $126,628 142,944

DAVIS REAL ESTATE FUND
Accounting and Administrative Services $ 9,504 $ 9,504 9,504
Qualifying Shares for Sale With State Agencies $ 0 $ 3,332 9,996
Shareholder Services $40,068 $ 78,649 66,899

DAVIS APPRECIATION & INCOME FUND
Accounting and Administrative Services $ 7,500 $ 7,500 7,500
Qualifying Shares for Sale With State Agencies $ 0 $ 3,332 9,996
Shareholder Services $24,344 $ 23,200 19,516

DAVIS GOVERNMENT BOND FUND
Accounting and Administrative Services $ 2,496 $ 2,496 2,496
Qualifying Shares for Sale With State Agencies $ 0 $ 3,332 9,996
Shareholder Services $ 6,865 $ 11,657 19,342

DAVIS GOVERNMENT MONEY MARKET FUND
Accounting and Administrative Services $37,500 $ 37,500 37,500
Qualifying Shares for Sale With State Agencies $ 0 $ 3,332 9,996
Shareholder Services $12,397 $ 20,456 29,634

Davis Series, Inc., Statement of Additional Information 46

APPROVAL OF THE ADVISORY AND SUB-ADVISORY AGREEMENTS. The Board of Directors is
scheduled to meet four times a year. The Directors, including the Independent
Directors, believe that matters bearing on the Advisory and Sub-Advisory
Agreements are considered at most, if not all, of their meetings. The
Independent Directors are advised by independent legal counsel selected by the
Independent Directors. A discussion of the Directors considerations is included
in the semi-annual report.

UNIQUE NATURE OF EACH FUND. The Adviser may serve as the investment adviser or
sub-adviser to other funds that have investment objectives and principal
investment strategies similar to those of the Davis Funds. While the Davis Funds
may have many similarities to these other funds, the investment performance of
each fund will be different due to a number of differences between the funds,
including differences in sales charges, expense ratios and cash flows.

CODE OF ETHICS. The Adviser, Sub-Adviser, Distributor and the Davis Funds have
adopted a Code of Ethics meeting the requirements of Rule 17j-1 that regulate
the personal securities transactions of the Adviser's investment personnel,
other employees and affiliates with access to information regarding securities
transactions of the Davis Funds. Such employees may invest in securities,
including securities that may be purchased or held by the Davis Funds. A copy of
the Code of Ethics is on public file with, and available from, the Securities
and Exchange Commission.

CONTINUING REGULATION. Davis Advisors, like most other asset managers, is
subject to ongoing inquiries from the SEC and/or NASD regarding industry
practices.

LITIGATION. In June 2004, a proposed class action lawsuit was filed in the
United States District Court for the Southern District of New York on behalf of
investors in certain mutual funds ("Funds") managed by Davis Selected Advisers
L.P. ("Davis Advisors") including the Davis Funds. The plaintiffs claim that
Davis Advisors and its affiliates, and the individual directors of the Funds
(collectively the "Defendants") used Fund assets to pay brokers to market the
Funds and that the Defendants disguised such payments as brokerage commissions
and further failed to disclose such payments in public filings or elsewhere. The
lawsuit seeks damages of unspecified amounts. Three substantially identical
proposed class action lawsuits were filed against the Defendants later in June
and July 2004 in the United States District Court for the Southern District of
New York. All four suits were consolidated into a single action. In October
2005, the District Court issued an order dismissing the consolidated amended
class action complaint. The plaintiffs subsequently sought a motion for
reconsideration which was denied in November 2005. In December 2005, the
plaintiffs filed an appeal with the United States Court of Appeals for the
Second Circuit. In April 2006, the plaintiffs notified the Defendants that they
are withdrawing the appeal.

PROXY VOTING POLICIES. The Board has directed the Adviser to vote the Fund's
portfolio securities in conformance with the Adviser's Proxy Voting Policies and
Procedures. These procedures are summarized in Appendix B.

Davis Series, Inc., Statement of Additional Information 47

PORTFOLIO MANAGERS

DAVIS FINANCIAL FUND

The Portfolio Managers of Davis Financial Fund are Christopher Davis and Kenneth
Feinberg. They are the persons primarily responsible for investing the Fund's
assets on a daily basis.

Other Accounts Managed. As of December 31, 2005, Christopher Davis and Kenneth
Feinberg served as portfolio manager for (i) 24 registered investment companies
with approximately $57 billion in total net assets; (ii) 10 other pooled
investment vehicles with approximately $1 billion in total net assets; and (iii)
approximately 38 thousand other accounts (primarily managed money/wrap accounts)
with approximately $11 billion in total net assets.

Structure of Compensation Kenneth Feinberg's compensation for services provided
to the Adviser consists of (i) a base salary; (ii) an annual bonus equal to a
percentage of growth in the Adviser's profits; (iii) awards of equity ("Units")
in the Adviser including Units, options on Units, and/or phantom Units, and (iv)
an incentive plan whereby the Adviser purchases shares in selected funds managed
by the Adviser. At the end of specified periods, generally five-years following
the date of purchase, some, all, or none of the fund shares will be registered
in the employee's name based on fund performance, after expenses on a pre-tax
basis, versus the S&P 500 Index, and versus peer groups as defined by
Morningstar or Lipper. The Adviser's portfolio managers are provided benefits
packages including life insurance, health insurance, and participation in
company 401(k) plan comparable to that received by other company employees.

Christopher Davis' compensation for services provided to the Adviser consists of
a base salary. The Adviser's portfolio managers are provided benefits packages
including life insurance, health insurance, and participation in company 401(k)
plan comparable to that received by other company employees.

Ownership of Fund Shares

As of December 31, 2005, the Portfolio Managers of Davis Financial Fund had
invested the following amounts in the Fund.

DAVIS $1 TO $10K TO $50K TO $100K TO $500K TO OVER
FINANCIAL NONE $10K $50K $100K $500K $1 MILL $1 MILL
----------- ---- ----- ------- ------- -------- -------- -------
C. DAVIS X
K. FEINBERG X

DAVIS OPPORTUNITY FUND

The Portfolio Managers of Davis Opportunity Fund are Christopher Davis (who
serves as research adviser), Kenneth Feinberg, Chip Tucker, CFA, Danton Goei,
Jae Chung, Tania Poushine, and Dwight Blazin. They are the persons primarily
responsible for investing the Fund's assets on a daily basis.

Other Accounts Managed as of December 31, 2005

Christopher Davis and Kenneth Feinberg
See description above for Davis Financial Fund.

Chip Tucker, CFA, Danton Goei, Jae Chung, Tania Poushine and Dwight Blazin

Served as portfolio managers for (i) four registered investment companies with
approximately $922 million in total net assets; (ii) one other pooled investment
vehicles with approximately $21 million in total net assets; and (iii)
approximately 330 other accounts with approximately $42 million in total net
assets.

Davis Series, Inc., Statement of Additional Information 48

Structure of Compensation

Christopher Davis and Kenneth Feinberg
See description above for Davis Financial Fund.

Chip Tucker, CFA, Danton Goei, Jae Chung, Tania Poushine, and Dwight Blazin
Compensation for services provided to the Adviser consists of (i) a base salary;
(ii) an annual discretionary bonus; (iii) awards of equity ("Units") in Davis
Selected Advisers, L.P. including Units, options on Units, and/or phantom Units,
and (iv) an incentive plan whereby the Adviser purchases shares in selected
funds managed by the Adviser. At the end of specified periods, generally
five-years following the date of purchase, some, all, or none of the fund shares
will be registered in the employee's name based on fund performance, after
expenses on a pre-tax basis, versus an appropriate index, and versus peer groups
as defined by Morningstar or Lipper. The Adviser's portfolio managers are
provided benefits packages including life insurance, health insurance, and
participation in company 401(k) plan comparable to that received by other
company employees.

Ownership of Fund Shares

As of December 31, 2005, the Portfolio Managers of Davis Opportunity Fund had
invested the following amounts in the Fund.

$1 $10K $50K $100K $500K
TO TO TO TO TO OVER
DAVIS OPPORTUNITY FUND NONE $10K $50K $100K $500K $1 MILL $1 MILL
---------------------- ---- ---- ---- ----- ----- ------- -------
C. DAVIS X
K. FEINBERG X
C. TUCKER X
D. GOEI X
J. CHUNG X
T. POUSHINE X
D. BLAZIN X

DAVIS REAL ESTATE FUND

The Portfolio Managers of Davis Real Estate Fund are Andrew Davis and Chandler
Spears. They are the persons primarily responsible for investing the Fund's
assets on a daily basis.

Other Accounts Managed As of December 31, 2005

Andrew Davis served as portfolio manager for (i) 4 registered investment
companies with approximately $1.3 billion in total net assets; (ii) 2 other
pooled investment vehicles with approximately $552 million in total net assets;
and (iii) two other accounts with approximately $55 million in total net assets.

Chandler Spears served as portfolio manager for (i) 3 registered investment
companies with approximately $937 million in total net assets; (ii) 2 other
pooled investment vehicles with approximately $552 million in total net assets;
and (iii) two other accounts with approximately $55 million in total net assets.

Structure of Compensation. Mr. Spears' compensation for services provided to the
Adviser consists of (i) a base salary; (ii) an annual discretionary bonus; (iii)
awards of equity ("Units") in the Adviser including options on Units, and/or
phantom Units; and (iv) an incentive plan whereby the Adviser purchases shares
in selected funds managed by the Adviser. At the end of specified periods,
generally five-years following the date of purchase, some, all, or none of the
fund shares will be registered in the employee's name based on fund performance,
after expenses on a pre-tax basis, versus an appropriate index, and versus peer
groups as defined by Morningstar or Lipper. The Adviser's portfolio managers are
provided benefits packages including life insurance, health insurance, and
participation in company 401(k) plan comparable to that received by other
company employees.

Davis Series, Inc., Statement of Additional Information 49

Andrew Davis' compensation for serves provided to the Adviser consists of a base
salary. The Adviser's portfolio managers are provided benefits packages
including life insurance, health insurance, and participation in company 401(k)
plan comparable to that received by other company employees.

Ownership of Fund Shares As of December 31, 2005, the Portfolio Managers of
Davis Real Estate Fund had invested the following amounts in the Fund.

$1 $10K $50K $100K $500K
TO TO TO TO TO OVER
DAVIS REAL ESTATE NONE $10K $50K $100K $500K $1 MILL $1 MILL
----------------- ---- ---- ---- ----- ----- ------- -------
A. DAVIS X
C. SPEARS X

DAVIS APPRECIATION & INCOME FUND

The Portfolio Managers of Davis Appreciation & Income Fund are Andrew Davis and
Keith Sabol. They re the persons primarily responsible for investing the Fund's
assets on a daily basis.

Other Accounts Managed As of December 31, 2005

Andrew Davis

See description above for Davis Real Estate Fund.

Keith Sabol served as portfolio manager for (i) 1 registered investment company
with approximately $392 million in total net assets; (ii) no other pooled
investment vehicles; and (iii) no other accounts.

Structure of Compensation

Andrew Davis

See description above for Davis Real Estate Fund.

Structure of Compensation. Mr. Sabol's compensation for services provided to the
Adviser consists of (i) a base salary; (ii) an annual discretionary bonus; (iii)
awards of equity ("Units") in the Adviser including options on Units, and/or
phantom Units; and (iv) an incentive plan whereby the Adviser purchases shares
in selected funds managed by the Adviser. At the end of specified periods,
generally five-years following the date of purchase, some, all, or none of the
fund shares will be registered in the employee's name based on fund performance,
after expenses on a pre-tax basis, versus an appropriate index, and versus peer
groups as defined by Morningstar or Lipper. The Adviser's portfolio managers are
provided benefits packages including life insurance, health insurance, and
participation in company 401(k) plan comparable to that received by other
company employees.

Ownership of Fund Shares

As of December 31, 2005, the Portfolio Managers of Davis Appreciation & Income
Fund had invested the following amounts in the Fund.

$1 $10K $50K $100K $500K
DAVIS APPRECIATION TO TO TO TO TO OVER
& INCOME NONE $10K $50K $100K $500K $1 MILL $1 MILL
------------------ ---- ---- ---- ----- ----- ------- -------
A. DAVIS X
K. SABOL X

Davis Series, Inc., Statement of Additional Information 50

DAVIS GOVERNMENT BOND FUND AND DAVIS GOVERNMENT MONEY MARKET FUND

The Portfolio Manager of Davis Government Bond Fund and Davis Government Money
Market Fund is Creston King. CFA. Mr. King is the person primarily responsible
for investing the Funds' assets on a daily basis.

Other Accounts Managed as of December 31, 2005

Served as portfolio manager for (i) three registered investment companies (two
of which are money market funds) with approximately $642 million in total net
assets; (ii) no other pooled investment vehicles; and (iii) no other accounts.
In addition, Mr. King managed the cash positions of other registered investment
companies and pooled investment vehicles managed or sub-advised by the Adviser.

Structure of Compensation

Mr. King's compensation for services provided to the Adviser consists of (i) a
base salary; (ii) an annual bonus based principally upon short- and long-term
fund performance relative to similar funds; and (iii) awards of equity ("Units")
in the Adviser including options on Units, and/or phantom Units.

Ownership of Fund Shares

As of December 31, 2005, the Portfolio Manager of Davis Government Bond Fund and
Davis Government Money Market Fund had invested the following amounts in the
Funds.

$10K $50K $100K $500K
$1 TO TO TO TO OVER
DAVIS GOVERNMENT BOND FUND NONE TO $10K $50K $100K $500K $1 MILL $1 MILL
-------------------------- ---- ------- ---- ----- ----- ------- -------

C. KING X

$10K $50K $100K $500K
DAVIS GOVERNMENT MONEY $1 TO TO TO TO OVER
MARKET FUND NONE TO $10K $50K $100K $500K $1 MILL $1 MILL
---------------------- ---- ------- ---- ----- ----- ------- -------

C. KING X

POTENTIAL CONFLICTS OF INTEREST. Actual or apparent conflicts of interest may
arise when a portfolio manager has day-to-day management responsibilities with
respect to more than one portfolio or other account. More specifically,
portfolio managers who manage multiple portfolios and /or other accounts are
presented with the following potential conflicts:

The management of multiple portfolios and/or other accounts may result in a
portfolio manager devoting unequal time and attention to the management of each
portfolio and/or other account. The Adviser seeks to manage such competing
interests for the time and attention of portfolio managers by having portfolio
managers focus on a particular investment discipline. Most other accounts
managed by a portfolio manager are managed using the same investment weightings
that are used in connection with the management of the portfolios.

If a portfolio manager identifies a limited investment opportunity, which may be
suitable for more than one portfolio or other account, a portfolio may not be
able to take full advantage of that opportunity due to an allocation of filled
purchase or sale orders across all eligible portfolios and other accounts. To
deal with these situations, the Adviser has adopted procedures for allocating
portfolio transactions across multiple accounts.

With respect to securities transactions for the portfolios, the Adviser
determines which broker to use to execute each order, consistent with its duty
to seek best execution of the transaction. However, with respect to certain
other accounts (such as mutual funds, other pooled investment vehicles that are
not registered mutual funds, and other accounts managed for organizations and
individuals), the Adviser may be limited by the client with respect to the
selection of brokers or may be instructed to direct trades through a particular
broker. In these cases, the Adviser may place separate, non-simultaneous,
transactions for a portfolio and another account, which may temporarily affect
the market price of the security or the execution of the transaction, or both,
to the detriment of the portfolio or the other account.

Finally, substantial investment of the Adviser or Davis Family assets in certain
mutual funds may lead to conflicts of interest. To mitigate these potential
conflicts of interest, the Adviser has adopted policies and procedures intended
to ensure that all clients are treated fairly over time. The Adviser does not
receive an incentive based fee on any account.

Davis Series, Inc., Statement of Additional Information 51

DISCLOSURE OF PORTFOLIO HOLDINGS

PORTFOLIO HOLDINGS INFORMATION IS PROTECTED. Davis Funds' portfolio holdings are
proprietary information which the Adviser is committed to protecting. Davis
Funds have adopted procedures reasonably designed to ensure that portfolio
holdings are not released on a selective basis except to qualified persons
rendering services to the Funds which require that they receive information
concerning portfolio holdings. Neither the Funds, nor the Adviser receives
compensation with respect to the disclosure of portfolio holdings.

HOW PORTFOLIO HOLDINGS INFORMATION IS RELEASED. Davis Funds may disclose
portfolio holdings to outside persons in a number of situations, including the
following: (1) disclosure to a broker-dealer of one or more securities in
connection with the purchase or sale by a Fund of such securities; (2) requests
for price quotations on individual securities from a broker-dealer for the
purpose of calculating the Fund's net asset value; (3) requests for bids on one
or more securities; (4) disclosures in connection with litigation involving Fund
portfolio securities; (5)disclosure to regulatory authorities; (6) Davis Funds'
portfolio managers may from time to time make statements to the press about a
Fund's portfolio and the securities subject to these statements may or may not
have been previously disclosed; and (7) employees of the Adviser may attend due
diligence meetings with existing or potential investors in which specific Fund
holdings are discussed and other information which the employee reasonably
believes cannot be used in a manner which would be harmful to the Funds; and the
Adviser may provide a wide variety of information about Davis Funds (other than
portfolio holdings) to existing and potential investors and intermediaries
working on behalf of such investors. Such information may not be available from
publicly available information and may consist of statistical and analytical
information concerning the portfolio as a whole and how it has performed,
without naming specific portfolio securities.

Davis Funds' portfolio holdings procedures prohibit release of information
concerning portfolio holdings which have not previously been made public to
individual investors, institutional investors, intermediaries which distribute
the Funds' shares and other parties which are not employed by the Adviser or its
affiliates. Portfolio holdings may be reviewed by third parties for legitimate
business purposes, but only if: (1) the Chief Operating Officer, or his
designee, currently the Funds' Chief Compliance Officer, considers the
application for review and, in his or her business judgment, the requesting
third party (i) has a legitimate business purpose for reviewing the portfolio
holdings and (ii) does not pose a material risk to the client(s) whose
portfolios will be reviewed; and (2) the third party enters into an acceptable
Confidentiality Agreement (including a duty not to trade). Davis Funds' Board of
Directors are notified of the addition of new third parties at the next
scheduled quarterly meeting of the Board of Directors. The Directors review the
addition of new third parties, considering whether or not the release of
information to the third parties is in the best interest of the Funds and
shareholders.

PUBLIC DISCLOSURE OF PORTFOLIO HOLDINGS. Information about portfolio holdings,
which has previously been made public, may be freely shared. Information about
portfolio holdings may become "public" by (1) publication on the Davis Funds'
website, (2) filing with the SEC on Form N-CSR or Form N-Q (only quarterly
filings, not voluntary filings), or (3) other publication determined by the
Adviser's Chief Legal Officer or his designee, in writing stating his rational,
to be public.

Davis Funds generally publish their portfolio holdings at the end of each fiscal
quarter with a 60-day lag. Davis Funds' Executive Vice President, or his
designee, currently the Funds' Chief Compliance Officer, may authorize
publication portfolio holdings on a more frequent basis. Portfolio holdings will
then be published on the Davis Funds' website.

THIRD PARTIES RECEIVING PORTFOLIO HOLDINGS INFORMATION. As of December 1, 2005,
each of the below listed third party service providers have been approved to
receive information concerning Davis Funds' portfolio holdings: (1) KPMG LLP
(serves the as the Fund's Independent Registered Public Accounting Firm); (2)
IRRC (provides proxy voting services); (3) UBS (provides securities lending
services); (4) Wilshire Associates (provides investment performance attribution
reports); and (5) State Street Bank and Trust (serves as the Funds' custodian
bank).

ADMINISTRATION. The Fund's Chief Compliance Officer oversees the release of
portfolio holdings information, including authorizing the release of portfolio
holdings.

Davis Series, Inc., Statement of Additional Information 52

DISTRIBUTION OF FUND SHARES

DISTRIBUTION PLANS. Class A, B, and C shares all use distribution plans to pay
asset-based sales charges or distribution and/or services fees in connection
with the distribution of shares, including payments to financial intermediaries
for providing distribution assistance. Financial intermediaries that receive
these fees may pay some or all of them to their investment professionals.
Because these fees are paid out of a Class's assets on an on-going basis, over
time these fees will increase the cost of an investment and may cost more than
other types of sales and marketing charges.

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.

HOW SHARE CLASSES AFFECT PAYMENTS TO BROKERS. A financial advisor may receive
different compensation for selling one class of shares than for selling another
class. It is important to remember that Class B and C contingent deferred sales
charges and/or asset-based sales charges have the same purpose as the front-end
sales charge on sales of Class A shares: to compensate the Distributor for
concessions and expenses it pays to dealers and financial institutions for
selling shares.

RECORDKEEPING FEES. Certain dealers have chosen to maintain omnibus accounts
with the Davis Funds. In an "omnibus account", the Fund maintains a single
account in the name of the dealer and the dealer maintains all of the individual
shareholder accounts. Likewise, for many retirement plans, a third party
administrator may open an omnibus account with the Davis Funds and the
administrator will then maintain all of the participant accounts. The Adviser,
on behalf of the Funds, enters into agreements whereby the Funds compensate the
dealer or administrator for recordkeeping services.

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. Normally, servicing fees
are paid at an annual rate of 0.25% of the average net asset value of the
accounts serviced and maintained on the books of each Davis Fund. In addition,
when the Distributor pays a commission to a broker-dealer for qualifying
purchases of Class A Shares at net asset value, the Fund may reimburse the
Distributor for this commission. The Fund will not reimburse this commission if
the result would be that Class A shares would pay Distribution Plan fees in
excess of 0.25% of average assets. Payments under the Class A Distribution Plan
also may 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 equal to the lesser of 1.25% of the average daily net asset value of
the Class B shares or the maximum amount provided by applicable rule or
regulation of the National Association of Securities Dealers, Inc., which
currently is 1%. Therefore, the effective rate of the Class B Distribution Plan
at present is 1%. In accordance with current applicable rules, such payments
also are 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 limited to an
annual rate equal to the lesser of 1.25% of the average daily net asset value of
the Class C shares or the maximum amount provided by applicable rule or
regulation of the National Association of Securities Dealers, Inc., which
currently is 1%. Therefore, the effective rate of the Class C Distribution Plan
at present is 1%. Class C shares 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.

Davis Series, Inc., Statement of Additional Information 53

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 or 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 December 31, 2005, the cumulative totals of these
carryover payments were:

CLASS B SHARES DOLLARS % OF CLASS NET ASSETS
-------------- ----------- ---------------------
Davis Opportunity Fund $ 2,616,863 2.71%
Davis Financial Fund $24,727,987 12.88%
Davis Real Estate Fund $14,192,884 16.31%
Davis Appreciation & Income Fund $ 7,338,529 9.75%
Davis Government Bond Fund $ 4,906,444 19.46%

DAVIS GOVERNMENT MONEY MARKET FUND. With respect to Davis Government Money
Market Fund, the Distribution Plan for each class of shares does not provide for
any amounts to be paid by the Fund directly to the Distributor as either
compensation or reimbursement for distributing shares of the Fund, but does
authorize the use of the advisory fee for distribution to the extent such fee
may be considered to be indirectly financing any activity or expense that
primarily is intended to result in the sale of Fund shares.

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 that primarily is 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 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. 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, B, and C
Distribution Plans.

FUND SUPERMARKETS. The Davis Funds participate in various "Fund Supermarkets" in
which a supermarket sponsor (usually a registered broker-dealer) offers many
mutual funds to the supermarket sponsor's clients. The Davis Funds pay the
supermarket sponsor a negotiated fee for distributing the shares and for
continuing services provided to their shareholders.

Davis Series, Inc., Statement of Additional Information 54

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 setup, 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
typically would 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. 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 Funds' 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 Funds' 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
Funds do not pay) on the sale of Class A shares:

FISCAL YEAR ENDED DECEMBER 31,
--------------------------------
2005 2004 2003
---------- -------- --------
DAVIS OPPORTUNITY FUND $1,298,668 $788,110 $244,392
Amount Reallowed to Dealers $1,101,472 $664,432 $206,390

DAVIS FINANCIAL FUND $ 346,408 $431,279 $261,889
Amount Reallowed to Dealers $ 296,952 $368,488 $226,980

DAVIS REAL ESTATE FUND $ 714,325 $634,609 $221,635
Amount Reallowed to Dealers $ 602,051 $524,193 $186,873

DAVIS APPRECIATION & INCOME FUND $ 725,777 $383,432 $167,499
Amount Reallowed to Dealers $ 612,428 $324,292 $141,354

DAVIS GOVERNMENT BOND FUND $ 28,072 $ 26,856 $ 28,604
Amount Reallowed to Dealers $ 23,469 $ 22,741 $ 24,232

Davis Government Money Market Fund does not charge a sales load for any class of
shares.

For the year ended December 31, 2005, the Distributor received compensation on
redemptions and repurchases of shares in the following amounts:

CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------

Davis Opportunity Fund N/A $112,625 $17,764
Davis Financial Fund N/A $273,124 $ 3,755
Davis Real Estate Fund N/A $ 89,414 $13,193
Davis Appreciation & Income Fund N/A $ 88,409 $ 7,281
Davis Government Bond Fund N/A $ 80,611 $ 1,287
Davis Government Money Market Fund N/A N/A N/A

Davis Series, Inc., Statement of Additional Information 55

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

FISCAL YEAR ENDED DECEMBER 31,
------------------------------------
2005 2004 2003
---------- ---------- ----------
DAVIS OPPORTUNITY FUND
Class A shares $ 942,831 $ 636,342 $ 353,727
Class B shares 1,001,940 986,298 759,343
Class C shares 1,152,000 740,413 418,464

DAVIS FINANCIAL FUND
Class A shares $1,064,214 $1,074,268 $ 893,023
Class B shares 2,301,816 2,859,185 2,715,260
Class C shares 949,302 1,056,708 951,017

DAVIS REAL ESTATE FUND
Class A shares $ 814,847 $ 544,372 $ 310,828
Class B shares 1,025,758 1,131,290 974,030
Class C shares 904,461 670,944 448,106

DAVIS APPRECIATION & INCOME FUND
Class A shares $ 336,931 $ 188,752 $ 134,549
Class B shares 794,946 751,298 626,165
Class C shares 440,422 284,600 194,971

DAVIS GOVERNMENT BOND FUND
Class A shares $ 42,102 $ 46,733 $ 70,274
Class B shares 299,474 461,579 927,408
Class C shares 61,496 89,600 211,914

OTHER IMPORTANT SERVICE PROVIDERS

CUSTODIAN. State Street Bank and Trust Company ("State Street" or "Custodian"),
P.O Box 8406, Boston, MA 02266-8406, serves as custodian of each Davis Fund's
assets. The Custodian maintains all of the instruments representing the Davis
Funds' investments and all cash. The Custodian delivers securities against
payment on sale and pays for securities against delivery on purchase. The
Custodian also remits the Davis Funds' 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.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. KPMG LLP ( KPMG ), 707 17 Street,
Suite 2700, Denver, CO 80202, serves as independent registered public
accountants for each of the Davis Funds. KPMG audits the Fund's financial
statements, performs other related audit services, and meets with the Audit
Committee of the Board of Directors. In addition, KPMG reviews federal and state
income tax returns and related forms.

COUNSEL. Seyfarth Shaw LLP, 55 E. Monroe St., Suite 4200, Chicago, IL
60603-5803, serves as counsel to the Davis Funds and also serves as counsel for
the Independent Directors.

Davis Series, Inc., Statement of Additional Information 56

SECTION III: CLASSES OF SHARES, PURCHASES, EXCHANGES AND REDEMPTIONS
--------------------------------------------------------------------
This Statement of Additional Information should be read in conjunction with the
prospectus. This Statement of Additional Information supplements the information
available in the prospectus.

SELECTING THE APPROPRIATE CLASS OF SHARES

Each of the Davis Funds offers Class A, B, C and Y shares. 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 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 $50,000 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. You can invest up to $500,000 in Class C shares.

CLASS A 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

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

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

Class Y shares are offered to (i) certain institutional investors investing at
least $5,000,000 at any one time and; (ii) investors 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.

SHARES ISSUED BY DAVIS GOVERNMENT MONEY MARKET FUND

The four classes of Davis Government Money Market Fund shares are available so
as to enable investors to facilitate exchanges since, with the exception of
exchanges from Class A shares to Class Y shares, shares may be exchanged only
for shares of the same class. Davis Government Money Market shares are sold
directly without sales charges; however, front-end or deferred sales charges may
be imposed, in certain cases, on their exchange into shares of other Davis Funds
(see "Exchange of Shares"). Shares of the Davis Government Money Market Fund are
offered at net asset value. However, in the case of certain exchanges, the Money
Market Fund shares received may be subject to an escrow, pursuant to a Statement
of Intention, or a contingent deferred sales load. See "Exchange of Shares."

CLASS A SHARES. Class A shares of the Davis Funds (other than shares of Davis
Government Money Market Fund) are sold at their net asset value plus a sales
charge. The amounts of the sales charges are shown in the prospectuses.

REDUCTION OF CLASS A SALES CHARGE. There are a number of ways to reduce the
sales charge imposed on the purchase of the Davis Funds' Class A shares, as
described below. These reductions are based on the fact that there is less sales
effort and expense involved with respect to purchases by affiliated persons and
purchases made in large quantities. The examples listed below are descriptive of
the types of fact patterns, which qualify for a reduction of sales charge. It is
not possible to list every potential qualifying transaction. The Distributor
uses its discretion to determine whether or not any specific transaction is
similar enough to the examples listed below to qualify for a reduction of sales
charge. If you claim any reduction of sales charges, you or your dealer must
notify the Distributor (or State Street Bank and Trust if the

Davis Series, Inc., Statement of Additional Information 57

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
reduction.

(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 immediate family members, ("immediate family members" consist of
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) OTHER GROUPS. Certain purchases made by or for more than one person may be
considered to constitute a single purchase, including: (i) purchases by trust or
other fiduciary accounts and purchases by Individual Retirement Accounts for
employees of a single employer; and (ii) 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.

(3) 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 Funds' Class A shares over a 13-month period. The
amount you say you intend to invest may include Class A shares that 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 Funds' 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.

(4) RIGHTS OF ACCUMULATION (ALL DAVIS FUNDS COMBINED). 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 or in a single Davis Fund. 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 to the value of any Davis Fund shares (at
offering price) already owned by you. Money market fund shares are not counted
in determining the total amount of Fund shares you own.

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

Similarly, a Statement of Intention for a Davis Fund's Class A shares and for
the Class A shares of other Davis Funds may be aggregated. Also, the Funds'
Class A shares and the Class A, B and C shares of the other Davis Funds that 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.

Davis Series, Inc., Statement of Additional Information 58

Lastly, the right of accumulation also applies to the Class A, B and C shares of
the other Davis Funds that you own. Thus, the amount of current purchases of a
Fund's Class A shares that you make may be added to the value of the Class A, B
and C shares of the other Davis Funds (valued at their current offering price,
excluding money market fund shares) 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.

CLASS A SHARES 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. Although the investor pays no front-end sales charge,
a contingent deferred sales charge of 0.75% may be imposed if the Distributor
paid a sales commission to a broker or agent and the shares purchased at net
asset value without a sales load are redeemed within the first year after
purchase. In addition, 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) Investments in Davis Government Money Market Fund;

(2) Class A shares purchased through the automatic reinvestment of dividends
and distributions;

(3) Class A shares purchased by present or former officers, directors, trustees
and employees (and their "immediate families") of the Fund, the Adviser and
its affiliates, and retirement plans established by them for their
employees. The term "immediate family" refers to one's spouse, children
grandchildren, grandparents, parents, parents-in-law, brothers and sisters,
sons- and daughters-in-law, a sibling's spouse, a spouse's siblings, aunts,
uncles, nieces and nephews; relatives by virtue of a remarriage
(step-children, step-parents, etc.) are included;

(4) 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;

(5) 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;

(6) Class A shares purchased by any single account covering a minimum of 50
eligible employees or participants (the Fund may, at its discretion, waive
this 50 participant minimum; for example, the 50 participant minimum may be
waived for plans expected to have 50 participants, or 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;

(7) 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;

(8) Class A shares amounting to less than $5,000,000 purchased by any state,
county, city, department, authority or similar agency; and

Davis Series, Inc., Statement of Additional Information 59

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

The Funds also may 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 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.

CLASS B SHARES. Class B shares are offered at net asset value, without a
front-end sales charge. The Distributor receives and usually reallows
commissions to firms responsible for the sale of such shares. With certain
exceptions described below, the Davis Funds (except for Davis Government Money
Market Fund) impose a deferred sales charge of 4% on shares redeemed during the
first year after purchase, 3% on shares redeemed during the second or third year
after purchase, 2% on shares redeemed during the fourth or fifth year after
purchase and 1% on shares redeemed during the sixth year after purchase. Class B
shares will be subject to a maximum Rule 12b-1 fee at the annual rate of 1% of
the class' average daily net asset value. The 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 ARRANGEMENT. Davis Funds have entered into an
agreement with Merrill Lynch to waive the Contingent Deferred Sales Charge
("CDSC") of Class B shares sold to Qualifying Retirement Plans. Under this
agreement 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 the CDSC if:

(i) The Retirement Plan is record-kept on a daily valuation basis by Merrill
Lynch and, on the date the Retirement Plan sponsor signs the Merrill Lynch
Record Keeping 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 Funds'
principal underwriter or distributor and in funds advised or managed by
MLAM (collectively, the "Applicable Investments"); or

(ii) The Retirement Plan is record-kept on a daily valuation basis by an
independent record keeper 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 Record Keeping 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 Record Keeping Service Agreement.

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 Mutual Funds convert to Class A shares once the
Retirement Plan has reached $3 million invested in Applicable Investments. The
Retirement Plan will receive a Retirement Plan level share conversion.

Davis Series, Inc., Statement of Additional Information 60

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 on 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 Funds during the one-year period. If
Class C shares are redeemed within one-year of 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 on the redemption of Class A, B or 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. On 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, if: (i) there are at least two
withdrawals a year (except for retirement accounts subject to a required minimum
distribution, in which case it may run once a year); and (ii) the aggregate
value of the redeemed shares does not exceed 12% of the account's value on an
annual basis**; (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 Funds 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.

** 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.

Subject to various limitations, shares in different Davis Funds may be exchanged
at relative net asset value. If a sales charge is due on Class A shares, and has
not previously been paid, then the sales charge will be deducted at the time of
the exchange. 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 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.

Davis Series, Inc., Statement of Additional Information 61

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 that invests at least $5,000,000 ("Government Entities");
(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 Funds' Distributor ("Wrap Program Investors"); and (iv) at
least $500,000 for a 401(k) plan, 457 plan, employer sponsored 403(b) plan,
profit sharing and money purchase pension plan, defined benefit plan, or
non-qualified deferred compensation plan where plan level or omnibus accounts
are held on the books of the Fund.

Wrap Program Investors may 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 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 generally are
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 weight
the benefits of any services to be provided by the sponsor against the higher
expenses paid by Class A shareholders.

The Distributor may waive the investment minimums at its discretion. For
purposes of the minimums, the Distributor may treat appropriately related
investors (for example, trust funds of the same bank, separate accounts of the
same insurance company, clients whose funds are managed by a single bank,
insurance company, investment adviser, broker-dealer, or institutional clients
of a financial intermediary that maintains an omnibus account with the fund) as
a single investor.

HOW TO PURCHASE SHARES

Davis Funds and the Distributor reserve the right to reject any purchase order
for any reason.

Each Davis Fund prospectus provides full directions on how to purchase shares.

Broker-Dealers may remit payment

Your broker-dealer may order and remit payment for the shares on your behalf.
The broker-dealer can also order the shares from the Distributor by telephone or
wire. Please note that the following rules and provisions apply with respect to
purchases of Fund shares through a broker-dealer:

(A) The Distributor has entered into agreements with broker-dealers to
receive on its behalf purchase and redemptions orders;

(B) Such broker-dealers are authorized to designate other intermediaries
to receive purchase and redemption orders on behalf of the
Distributor;

(C) The Funds will be deemed to have received a purchase or redemption
order when an authorized broker or, if applicable, its broker's
authorized designee, receives the order; and

(D) A Client order will be priced at the Fund's net asset value next
computed after they are received by an authorized broker-dealer or the
broker-dealer's authorized designee.

Davis Series, Inc., Statement of Additional Information 62

SPECIAL SERVICES

Each Davis Funds prospectus describes a number of special services offered by
the Davis Funds. This Statement of Additional Information supplements that
discussion.

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; and non-deductible IRAs, including "Roth IRAs"),
Coverdel Education Savings Accounts 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 $15 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. The
maintenance fee will be waived for accounts sharing the same Social Security
Number if the accounts total at least $50,000 in cumulative assets (including
taxable accounts). If an IRA account is closed, a $15 fee will be assessed.

IN-KIND PURCHASES. Shares of the Davis Funds are continuously offered at their
public offering price next determined after an order is accepted. The methods
available for purchasing shares of a fund are described in the fund's
Prospectus. In addition, shares of the Davis Funds may be purchased using
securities if the Adviser determines that doing so is in the best interest of
the applicable fund and its shareholders. The Adviser must review the securities
that are offered in exchange for the "in-kind" purchase to determine that the
securities delivered to the fund: (i) meet the investment objective, strategy
and policies of the fund; (ii) do not cause the violation of any investment
restrictions at the time of acceptance; (iii) are readily marketable; (iv) may
be accurately and objectively valued on a daily basis; and (v) represent
securities that are desirable for the fund to own given the fund's investment
strategy and the Adviser's view of market conditions. The Adviser reserves the
right to reject all or any part of the securities offered in exchange for shares
of the fund. On any such in-kind purchase, the following conditions will apply:

(1) The securities offered by the investor in exchange for shares of a fund
must not be in any way restricted as to resale or otherwise be illiquid;

(2) The securities must have a value that is readily ascertainable (and not
established only by evaluation procedures) as evidenced by a listing on the
NYSE, AMEX or NASDAQ or other appropriate method; and

(3) The transaction involves a net purchase of $1 million or more in fund
shares.

Davis Funds believe that this ability to purchase shares of a fund using
securities provides a means by which holders of certain securities may obtain
diversification and continuous professional management of their investments
without the expense of selling those securities in the public market. Benefits
to the fund include the ability to purchase desirable securities without
brokerage commissions.

An investor who wishes to make an in-kind purchase must provide the Adviser with
a full and exact written description of each security that he or she proposes to
deliver to the applicable Davis Fund. The fund will advise the investor as to
those securities that it is prepared to accept and will provide the forms
required to be completed and signed by the investor. The investor should then
send the securities, in proper form for transfer and with the necessary forms,
to the Adviser and certify that there are no legal or contractual restrictions
on the free transfer and sale of the securities. The securities will be valued
as of the close of business on the day of receipt by the fund in the same manner
as portfolio securities of the fund are valued. The number of shares of the
fund, having a net asset value as of the close of business on the day of receipt
equal to the value of the securities delivered by the investor, will be issued
to the investor, less applicable stock transfer taxes, if any.

The exchange of securities by the investor pursuant to this in-kind offer will
constitute a taxable transaction and may result in a gain or loss for federal
income tax purposes. Each investor should consult his tax adviser to determine
the tax consequences under Federal and state law of making such an in-kind
purchase. This service may be discontinued at any time without prior notice.

Davis Series, Inc., Statement of Additional Information 63

EXCHANGE OF SHARES

The prospectus describes exchange procedures. This Statement of Additional
Information supplements that discussion.

MARKET TIMING. Davis Funds have not entered into any arrangements, which permit
organizations or individuals to market time the Funds. Although the Davis Funds
will not knowingly permit investors to excessively trade the Funds, shareholders
seeking to engage in market timing may employ a variety of strategies to avoid
detection, and, there can be no guarantee that all market timing will be
prevented, despite the Davis Funds' best efforts. The Funds receive purchase and
sales order through financial intermediaries and cannot always know or
reasonably detect excessive trading which may be facilitated by these
intermediaries or by the use of omnibus accounts by intermediaries. The Davis
Funds reserve the right to terminate or amend the exchange privilege at any time
by filing amended registration statements.

REDEMPTION OF SHARES

The prospectus describes redemption procedures. This Statement of Additional
Information supplements that discussion.

CERTIFICATES. In the past, the Davis Funds issued share certificates and some
still are outstanding. 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).

REDEMPTION PROCEEDS. Redemption proceeds normally are 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 SEC, or if the New York Stock Exchange is closed for other
than customary or holiday closings. You may redeem shares on any business day.
Redemption proceeds may be withheld until a sufficient period of time has passed
for State Street Bank and Trust to be reasonably sure that all checks or drafts
(including certified or cashiers checks) for shares purchased have cleared,
normally not exceeding fifteen calendar days. 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.

FEDERAL FUNDS WIRE. You may be eligible to have your redemption proceeds
electronically transferred to a commercial bank account by federal funds wire.
There is a $5 charge by State Street Bank and Trust for wire service (State
Street Bank and Trust charges $50 for wiring money internationally), and
receiving banks also may charge for this service. Redemption by federal funds
wire is usually credited to your bank account on the next business day after the
sale. Alternatively, redemption through Automated Clearing House usually will
arrive at your bank two banking days after the sale. To have redemption proceeds
sent by federal funds wire to your bank, you must first fill out the "Banking
Instruction" section on the account application form and attach a voided check
or deposit slip. If the account has already been established, an Account Service
Form or letter of instruction must be submitted with a medallion guarantee and a
copy of a voided check or deposit slip.

REDEEMING SHARES IN DAVIS GOVERNMENT MONEY MARKET FUND. You may request
redemption of part or all of your shares in Davis Government Money Market Fund
by mail by sending your request to State Street Bank and Trust Company, c/o
Davis Funds, P.O. Box 8406, Boston, MA 02266-8406. You also may redeem shares
through the Check Writing Privilege or by Expedited Redemption Privilege to a
pre-designated bank account. Normally, except for payment to a pre-designated
bank account, State Street Bank and Trust will send payment for Davis Government
Money Market Fund shares redeemed within three business days, but in no event,
later than seven days, after receipt of a redemption request in proper form.
Redemption of Davis Government Money Market Fund shares that were acquired by
exchange from shares subject to a contingent deferred sales charge may be
subject to such a charge. Shares exchanged into Davis

Davis Series, Inc., Statement of Additional Information 64

Government Money Market Fund are subject to segregation to assure payment of any
sales charges that may be due on redemption.

SEGREGATION OF DAVIS GOVERNMENT MONEY MARKET FUND SHARES. In order to secure the
payment of any sales charge or CDSC that may be due on shares exchanged into
shares of Davis Government Money Market Fund, the number of shares equal in
value to the sales charge are segregated and separately maintained in Davis
Government Money Market Fund. The purpose of the segregation is to assure that
redemptions utilizing the Davis Government Money Market Fund check writing
privilege do not deplete the account without payment of any applicable sales
charge and therefore no draft will be honored for liquidation of shares in
excess of the shares in the Davis Government Money Market Fund account that are
free of segregation.

DAVIS GOVERNMENT MONEY MARKET FUND CHECK WRITING PRIVILEGE, CLASS A SHARES. A
shareholder may issue a "Stop Payment" on any draft by calling State Street Bank
and Trust at (617) 985-8704. The "Stop Payment" order will become effective if
it is given on a timely basis pursuant to the "Stop Payment" rules in effect at
State Street Bank and Trust with respect to their regular checking accounts.

If a shareholder seeks to use the check writing privilege or expedited
redemption privilege to a pre-designated bank account to redeem Davis Government
Money Market Fund shares recently purchased by check (whether by regular or
expedited method), the Fund will refuse to accept telephone redemption requests
when made and to honor redemption drafts when presented unless it is then
reasonably assured of the collection of the check representing the purchase
(normally up to 15 days after receipt of such check). This result can be avoided
by investing by wire.

SECTION IV: GENERAL INFORMATION

This Statement of Additional Information should be read in conjunction with the
prospectus. This Statement of Additional Information supplements the information
available in the prospectus.

DETERMINING THE PRICE OF SHARES

The prospectus describes procedures used to determine the price of shares. This
Statement of Additional Information supplements that discussion.

NET ASSET VALUE. The price per share for purchases or redemptions made directly
through State Street Bank and Trust generally is 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 p.m. Eastern Standard 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 (in the
past Davis Funds issued share 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 their 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. The valuation of each Fund's portfolio
securities is described in the Fund's prospectus and annual report.

Davis Series, Inc., Statement of Additional Information 65

DIVIDENDS AND DISTRIBUTIONS

The prospectus describes the Funds' dividend and distribution policies. This
Statement of Additional Information supplements that discussion.

There are two sources of income, net income and realized capital gains, paid to
you by a fund. You will receive confirmation statements for dividends declared
and shares purchased through reinvestment of dividends. You also will receive
confirmations after each purchase or 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.

RETURNED CHECK POLICY. For the protection of the shareholder, on receipt of the
second dividend check that 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.

DAVIS OPPORTUNITY FUND AND DAVIS FINANCIAL FUND. Income dividends and
distributions from net realized capital gains, if any, are usually distributed
annually.

DAVIS APPRECIATION & INCOME FUND AND DAVIS REAL ESTATE FUND. Income dividends
are usually paid quarterly. Distributions from any net realized capital gains
are usually made annually.

DAVIS GOVERNMENT BOND FUND. Income dividends are declared daily and paid
monthly. You will receive confirmation statements for dividends declared and
shares purchased through reinvestment of dividends. Distributions from any net
realized capital gain not offset by capital loss carryovers are usually
distributed annually.

DAVIS GOVERNMENT MONEY MARKET FUND. Dividends from net income are declared daily
on shares outstanding as of the close of business the preceding day and are paid
monthly. You will receive monthly confirmation statements for dividends declared
and shares purchased through reinvestment of dividends. Income for Saturdays,
Sundays and holidays are accrued on Fridays. Dividends declared during each
calendar month are paid on the last business day of the month. Shares earn
dividends as of the first business day after the effective purchase date up
through the date of redemption.

DIVIDENDS AND DISTRIBUTIONS MAY CHANGE. Usually dividends and capital gains
distributions are paid as discussed above. However, the Board of Directors
reserves the right to suspend payments or to make additional payments.

Davis Series, Inc., Statement of Additional Information 66

FEDERAL INCOME TAXES

The prospectus provides an introduction to federal income taxes. This Statement
of Additional Information supplements that discussion. This discussion is not
intended to be a full discussion of all the aspects of the federal income tax
law and its effects on the Funds and their 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. We recommend that you consult with a tax advisor
about dividends and capital gains that may be received from the Davis Funds.

PERFORMANCE DATA

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

AVERAGE ANNUAL TOTAL RETURNS (REFLECTING THE EFFECTS OF FEDERAL INCOME TAX)
The Fund may advertise its investment performance for Class A and/or Y shares on
an after-tax basis.

DAVIS OPPORTUNITY FUND:

For the periods ended December 31, 2005: PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS LIFE OF CLASS*
---------------------------------------- ----------- ------------ ------------- --------------

CLASS A SHARES 3.17% 5.53% 11.53% 13.92%
return before taxes
CLASS A SHARES 2.62% 5.30% 9.56% N/A
return after taxes on distributions
CLASS A SHARES 2.71% 4.69% 9.17% N/A
return after taxes on distributions
and sale of fund shares
CLASS Y SHARES 8.70% 6.93% N/A 7.91%
return before taxes
CLASS Y SHARES 8.06% 6.69% N/A 5.95%
return after taxes on distributions
CLASS Y SHARES 6.38% 5.91% N/A 5.86%
return after taxes on distributions
and sale of fund shares

Davis Series, Inc., Statement of Additional Information 67

Average annual total returns for Class A shares reflect maximum sales charges.
Class Y does not impose any sales charges.

* Average annual total returns for life are for the periods from the
commencement of each Class' investment operations: Class A shares, 12/1/94
and Class Y shares, 9/18/97.

Investments in initial public offerings (IPOs) had a favorable impact on
Davis Opportunity Fund's performance in 1999 and 2000. This was a time when
the IPO market was very active. No assurance can be given that Davis
Opportunity Fund will continue to invest in IPOs to the same extent in the
future, or that such investments would be profitable.

DAVIS FINANCIAL FUND:

For the periods ended December 31, 2005: PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS LIFE OF CLASS*
---------------------------------------- ----------- ------------ ------------- --------------

CLASS A SHARES 2.91% 3.05% 12.70% 16.09%
return before taxes
CLASS A SHARES 2.25% 2.92% 12.25% N/A
return after taxes on distributions
CLASS A SHARES 2.78% 2.62% 11.20% N/A
return after taxes on distributions
and sale of fund shares
CLASS Y SHARES 8.18% 4.24% N/A 10.38%
return before taxes
CLASS Y SHARES 7.50% 4.10% N/A 10.08%
return after taxes on distributions
CLASS Y SHARES 6.24% 3.64% N/A 9.12%
return after taxes on distributions
and sale of fund shares

Average annual total returns for Class A shares reflect maximum sales charges.
Class Y does not impose any sales charges.

o Average annual total returns for life are for the periods from the
commencement of each class' investment operations: Class A shares, 5/1/91;
and Class Y shares, 3/10/97.

DAVIS REAL ESTATE FUND:

For the periods ended December 31, 2005: PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS LIFE OF CLASS*
---------------------------------------- ----------- ------------ ------------- --------------

CLASS A SHARES 7.40% 17.10% 13.99% 13.82%
return before taxes
CLASS A SHARES 5.33% 15.54% 12.27% N/A
return after taxes on distributions
CLASS A SHARES 6.39% 14.16% 11.39% N/A
return after taxes on distributions
and sale of fund shares
CLASS Y SHARES 13.20% 18.71% N/A 13.98%
return before taxes
CLASS Y SHARES 10.89% 16.97% N/A 12.16%
return after taxes on distributions
CLASS Y SHARES 10.23% 15.50% N/A 11.27%
return after taxes on distributions
and sale of fund shares

Davis Series, Inc., Statement of Additional Information 68

Average annual total returns for Class A shares reflect maximum sales charges.
Class Y does not impose any sales charges.

* Average annual total returns for life are for the periods from the
commencement of each class' investment operations: Class A shares, 1/3/94;
and Class Y shares, 11/8/96.

DAVIS APPRECIATION & INCOME FUND:

For the periods ended December 31, 2005: PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS LIFE OF CLASS*
---------------------------------------- ----------- ------------ ------------- --------------

CLASS A SHARES 1.24% 5.83% 9.28% 10.27%
return before taxes
CLASS A SHARES 0.29% 4.71% 7.48% N/A
return after taxes on distributions
CLASS A SHARES 1.41% 4.37% 7.04% N/A
return after taxes on distributions
and sale of fund shares
CLASS Y SHARES 6.52% 7.07% N/A 8.75%
return before taxes
CLASS Y SHARES 5.43% 5.87% N/A 6.86%
return after taxes on distributions
CLASS Y SHARES 4.86% 5.41% N/A 6.48%
return after taxes on distributions
and sale of fund shares

Average annual total returns for Class A shares reflect maximum sales charges.
Class Y does not impose any sales charges.

* Average annual total returns for life are for the periods from the
commencement of each class' investment operations: Class A shares, 5/1/92;
and Class Y shares, 11/13/96.

DAVIS GOVERNMENT BOND FUND:

For the periods ended December 31, 2005: PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS LIFE OF CLASS*
---------------------------------------- ----------- ------------ ------------- --------------

CLASS A SHARES (3.82)% 2.18% 3.42% 4.14%
return before taxes
CLASS A SHARES (4.76)% 0.90% 1.68% N/A
return after taxes on distributions
CLASS A SHARES (2.49)% 1.08% 1.82% N/A
return after taxes on distributions
and sale of fund shares
CLASS Y SHARES 1.22% 3.46% N/A 3.53%
return before taxes
CLASS Y SHARES 0.16% 2.08% N/A 1.90%
return after taxes on distributions
CLASS Y SHARES 0.78% 2.12% N/A 2.00%
return after taxes on distributions
and sale of fund shares

Average annual total returns for Class A shares reflect maximum sales charges.
Class Y does not impose any sales charges.

* Average annual total returns for life are for the periods from the
commencement of each Class' investment operations: Class A shares, 12/1/94
and Class Y shares, 9/1/98.

Davis Series, Inc., Statement of Additional Information 69

NOTES FOR CALCULATING RETURNS

After-tax returns are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes.

Actual after-tax returns depend on an investor's tax situation and may differ
from those shown, and after-tax returns shown are not relevant to investors who
hold their Fund shares through tax-deferred arrangements, such as 401(k) plans
or individual retirement accounts.

The Fund offers Class A, B, C and Y shares. After-tax returns are shown only for
Class A and Y. After-tax returns for each class of shares will vary.

If returns are negative, returns after taxes on distributions and sale of fund
shares may be higher than returns before taxes as the resulting capital losses
from the sale of fund shares would be available to offset capital gains from
other investments.

"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 SEC by determining the average annual
compounded rates of return over the periods indicated, which would equate the
initial amount invested to the ending redeemable value, according to the
following formula:

P(1+T)(n) = ERV

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

T = average annual total return

n = number of years

ERV = ending redeemable value at the end of the 1-, 5- and 10-year
periods of a hypothetical $1,000 payment made at the beginning
of such period

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

"Average Annual Total Return After-Taxes on Distributions" adjusts the before
taxes quotation for the effects of paying the highest individual marginal
federal income tax rate on distributions paid by the Fund. Average annual total
return after-taxes on distributions is calculated separately for each class in
accordance with the standardized method prescribed by the SEC 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:

Davis Series, Inc., Statement of Additional Information 70

P(1+T)(n) = ATV(D)

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

T = average annual total return (after taxes on distributions)

n = number of years

ATV(D) = ending redeemable value, after taxes on fund distributions
but not after taxes on sale of fund shares, at the end of
the 1, 5, and 10 year periods of a hypothetical $1,000
payment made at the beginning of such period

"Average Annual Total Return After-Taxes on Distributions and Sale of Fund
Shares" adjusts the after-taxes quotation for the effects of paying the highest
individual marginal federal income tax rate on the sale of Fund shares. Average
annual total return after-taxes on distributions and sale of Fund shares is
calculated separately for each class in accordance with the standardized method
prescribed by the SEC by determining the average annual compounded rates of
return over the periods indicated, that would equate the initial amount invested
to the ending redeemable value, according to the following formula:

P(1+T)(n) = ATV(DR)

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

T = average annual total return (after taxes on distributions
and sale of Fund shares)

n = number of years

ATV(DR) = ending redeemable value, after taxes on fund distributions
and sale of fund shares, at the end of the period of a
hypothetical $1,000 payment made at the beginning of such
period

AVERAGE ANNUAL TOTAL RETURNS (WITHOUT REFLECTING THE EFFECTS OF FEDERAL INCOME
TAX)

The Funds may advertise their investment performance for Class A, B, C and/or Y
shares without reflecting the effects of federal income tax.

DAVIS OPPORTUNITY FUND:

PAST 1 PAST 5 PAST 10
For the periods ended December 31, 2005: YEAR YEARS YEARS LIFE*
---------------------------------------- ------ ------ ------- -----
CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURN 3.17% 5.53% 11.53% 13.92%
with maximum sales charges
CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURN 8.33% 6.57% 12.07% 14.42%
without any sales charge
CLASS B SHARES
AVERAGE ANNUAL TOTAL RETURN 3.49% 5.39% 11.37%** 13.61%**
with maximum sales charges
CLASS B SHARES
AVERAGE ANNUAL TOTAL RETURN 7.49% 5.71% 11.37%** 13.61%**
without any sales charge
CLASS C SHARES
AVERAGE ANNUAL TOTAL RETURN 6.48% 5.71% N/A 7.40%
with maximum sales charges

Davis Series, Inc., Statement of Additional Information 71

CLASS C SHARES
AVERAGE ANNUAL TOTAL RETURN 7.48% 5.71% N/A 7.40%
without any sales charge
CLASS Y SHARES
AVERAGE ANNUAL TOTAL RETURN 8.70% 6.93% N/A 7.91%
Class Y shares do not impose any sales
charges

* Average annual total returns for life are for the periods from the
commencement of each class' investment operations: Class A shares, 12/1/94;
Class B shares, 5/1/84; Class C shares, 8/15/97; and Class Y shares,
9/18/97.

** Class B shares automatically convert to Class A shares after eight years.
Class B shares' performance for the ten-year and life periods include the
first eight years of Class B share performance and Class A share
performance thereafter. However, since the inception date for Class A
shares is 12/1/94, Class B shares could not be converted prior to that
date. Therefore, the performance for the life period includes Class B share
performance until 12/1/94, and Class A share performance thereafter.

DAVIS FINANCIAL FUND:

PAST 1 PAST 5 PAST 10
For the periods ended December 31, 2005: YEAR YEARS YEARS LIFE*
---------------------------------------- ------ ------ ------- -----
CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURN 2.91% 3.05% 12.70% 16.09%
with maximum sales charges
CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURN 8.03% 4.06% 13.25% 16.47%
without any sales charge
CLASS B SHARES
AVERAGE ANNUAL TOTAL RETURN 3.08% 2.81% 12.45%** 15.34%**
with maximum sales charges
CLASS B SHARES
AVERAGE ANNUAL TOTAL RETURN 7.08% 3.16% 12.45%** 15.34%**
without any sales charge
CLASS C SHARES
AVERAGE ANNUAL TOTAL RETURN 6.07% 3.16% N/A 7.72%
with maximum sales charges
CLASS C SHARES
AVERAGE ANNUAL TOTAL RETURN 7.07% 3.16% N/A 7.72%
without any sales charge
CLASS Y SHARES
AVERAGE ANNUAL TOTAL RETURN 8.18% 4.24% N/A 10.38%
Class Y shares do not impose any sales
charges

* Average annual total returns for life are for the periods from the
commencement of each class' investment operations: Class A shares, 5/1/91;
Class B shares, 12/27/94; Class C shares, 8/12/97; and Class Y shares,
3/10/97.

Davis Series, Inc., Statement of Additional Information 72

DAVIS REAL ESTATE FUND:

PAST 1 PAST 5 PAST 10
For the periods ended December 31, 2005: YEAR YEARS YEARS LIFE*
---------------------------------------- ------ ------ ------- -----
CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURN 7.40% 17.10% 13.99% 13.82%
with maximum sales charges
CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURN 12.76% 18.24% 14.55% 14.28%
without any sales charge
CLASS B SHARES
AVERAGE ANNUAL TOTAL RETURN 7.92% 17.14% 13.77%** 14.17%**
with maximum sales charges
CLASS B SHARES
AVERAGE ANNUAL TOTAL RETURN 11.91% 17.35% 13.77%** 14.17%**
without any sales charge
CLASS C SHARES
AVERAGE ANNUAL TOTAL RETURN 10.93% 17.37% N/A 10.84%
with maximum sales charges
CLASS C SHARES
AVERAGE ANNUAL TOTAL RETURN 11.93% 17.37% N/A 10.84%
without any sales charge
CLASS Y SHARES
AVERAGE ANNUAL TOTAL RETURN 13.20% 18.71% N/A 13.98%
Class Y shares do not impose any sales
charges

* Average annual total returns for life are for the periods from the
commencement of each class' investment operations: Class A shares, 1/3/94;
Class B shares, 12/27/94; Class C shares, 8/13/97; and Class Y shares,
11/8/96.

Davis Series, Inc., Statement of Additional Information 73

DAVIS APPRECIATION & INCOME FUND: For the
periods ended December 31, 2005: PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS LIFE*
----------------------------------------- ----------- ------------ ------------- -----

CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURN 1.24% 5.83% 9.28% 10.27%
with maximum sales charges
CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURN 6.29% 6.86% 9.81% 10.66%
without any sales charge
CLASS B SHARES
AVERAGE ANNUAL TOTAL RETURN 1.30% 5.56% 9.00%** 10.32%**
with maximum sales charges
CLASS B SHARES
AVERAGE ANNUAL TOTAL RETURN 5.30% 5.88% 9.00%** 10.32%**
without any sales charge
CLASS C SHARES
AVERAGE ANNUAL TOTAL RETURN 4.34% 5.89% N/A 5.20%
with maximum sales charges
CLASS C SHARES
AVERAGE ANNUAL TOTAL RETURN 5.34% 5.89% N/A 5.20%
without any sales charge
CLASS Y SHARES
AVERAGE ANNUAL TOTAL RETURN 6.52% 7.07% N/A 8.75%
Class Y shares do not impose any sales

* Average annual total returns for life are for the periods from the
commencement of each class' investment operations: Class A shares, 5/1/92;
Class B shares, 2/3/95; Class C shares, 8/12/97; and Class Y shares,
11/13/96.

** Class B shares automatically convert to Class A shares after eight years.
Class B shares' performance for the life period includes the first eight
years of Class B share performance and Class A share performance
thereafter.

From inception (May 1, 1992) until July 1, 2003, Davis Appreciation & Income
Fund was named Davis Convertible Securities Fund and invested primarily in
convertible securities.

Davis Series, Inc., Statement of Additional Information 74

DAVIS GOVERNMENT BOND FUND:

For the periods ended December 31, 2005: PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS LIFE*
----------------------------------------- ----------- ------------ ------------- -----

CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURN (3.82)% 2.18% 3.42% 4.14%
with maximum sales charges
CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURN 0.98% 3.18% 3.93% 4.60%
without any sales charge
CLASS B SHARES
AVERAGE ANNUAL TOTAL RETURN (3.60)% 2.13% 3.30%** 5.88%**
with maximum sales charges
CLASS B SHARES
AVERAGE ANNUAL TOTAL RETURN 0.33% 2.48% 3.30%** 5.88%**
without any sales charge
CLASS C SHARES
AVERAGE ANNUAL TOTAL RETURN (0.69)% 2.46% N/A 2.97%
with maximum sales charges
CLASS C SHARES
AVERAGE ANNUAL TOTAL RETURN 0.29% 2.46% N/A 2.97%
without any sales charge
CLASS Y SHARES
AVERAGE ANNUAL TOTAL RETURN 1.22% 3.46% N/A 3.53%
Class Y shares do not impose any sales
charges

NOTES CONCERNING AVERAGE ANNUAL TOTAL RETURN

"Average Annual Total Return (with maximum sales charges)" is calculated in the
same manner as "Average Annual Total Return Before Taxes."

"Average Annual Total Return (without any sales charges)" adjusts the average
annual total return (with maximum sales charges) quotation by removing the
effects of paying a sales charge. The Fund may compare its investment
performance against that of a relevant benchmark index. Index performance
calculation does not include a sales charge. To facilitate comparisons between
an index and the Fund, the Fund may quote its average annual total return before
taxes, without a sales charge.

Davis Series, Inc., Statement of Additional Information 75

OTHER PERFORMANCE MEASURES

"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 by 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.

30-DAY SEC YIELD. The 30-Day SEC Yield (defined below) with respect to each
class of shares of Davis Real Estate Fund, Davis Appreciation & Income Fund and
Davis Government Bond Fund for the period ended December 31, 2005, is as
follows:

Davis Real Davis Appreciation
Estate Fund & Income Fund Davis Government Bond Fund
----------- ------------------ --------------------------
Class A shares 2.64% 1.92% 3.90%
Class B shares 1.98% 1.18% 3.42%
Class C shares 1.96% 1.14% 3.36%
Class Y shares 3.08% 2.27% 4.21%

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

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

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

b = expenses accrued for the period.

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

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

A Fund's 30-Day SEC Yield fluctuates depending on prevailing interest rates,
quality, maturities, types of instruments held and operating expenses. Thus, any
yield quotation should not be considered representative of future results. If a
broker-dealer charges investors for services related to the purchase or
redemption of Fund shares, the yield effectively will be reduced.

Davis Series, Inc., Statement of Additional Information 76

CURRENT AND EFFECTIVE YIELDS. The current and effective yields for Davis
Government Money Market Fund's Class A shares for the seven-day period ended
December 31, 2005, were 3.65% and 3.72%, respectively.

Yield quotations are calculated in accordance with the following formulas:

Current Yield = [(C-D) - BV] x (365/7)

Effective Yield = [ [ [ (C-D) - BV] + 1]365/7] - 1

C = Net change (excluding capital change in value of
hypothetical account with balance of one share at beginning
of seven-day period).

D = Deductions charged to hypothetical account.

BV = Value of hypothetical account at beginning of seven-day
period for which yield is quoted.

Davis Government Money Market Fund's Current and Effective Yields will fluctuate
depending on prevailing interest rates, quality, maturities, types of
instruments held, and operating expenses. Thus, any yield quotation should not
be considered representative of future results. If a broker-dealer charges
investors for services related to the purchase or redemption of Fund shares, the
yield effectively will be reduced.

PERFORMANCE RANKINGS

Lipper Rankings. From time to time, the Funds 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 Funds,
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 Funds 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, Inc. All Rights Reserved. The information contained herein: (1) is
proprietary to Morningstar and/or its content providers; (2) may not be copied
or distributed; and (3) is not warranted to be accurate, complete, or timely.
Neither Morningstar nor its content providers are responsible for any damages or
losses arising from any use of this information. Past performance is no
guarantee of future result.

For each fund with at least a three-year history, Morningstar calculates a
Morningstar Rating(TM) metric each month by subtracting the return on a 90-day
U.S. Treasury Bill from the fund's load-adjusted return for the same period, and
then adjusting this excess return for risk. The top 10% of funds in each broad
asset class receive five stars, the next 22.5% receive four stars, the next 35%
receive three stars, the next 22.5% receive two stars and the bottom 10% receive
one star. The Overall Morningstar Rating for a fund is derived from a weighted
average of the performance figures associated with its three-, five- and 10-year
(if applicable) Morningstar Rating metrics. Past performance is no guarantee of
future results.

Each Fund also may 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.

Davis Series, Inc., Statement of Additional Information 77

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

Investors also may wish to compare the returns on each Davis Fund's class of
shares 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 or share prices 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 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 on the
opinions of the rating or ranking service itself, using its research or
judgment, or based on 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 performance of the Funds may be compared in publications to the performance
of various indices and investments for which reliable performance data is
available and to averages, performance rankings or other information prepared by
recognized mutual fund statistical services. The Fund's Annual Report and
Semi-Annual Report contain additional performance information and will be made
available on request and without charge by calling Davis Funds toll-free at
1-800-279-0279, Monday through Friday, 9 a.m. to 6 p.m. Eastern Standard Time.

Davis Series, Inc., Statement of Additional Information 78

APPENDIX A:
QUALITY RATINGS OF DEBT SECURITIES

MOODY'S CORPORATE BOND RATINGS

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

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

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

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

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

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

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

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

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

STANDARD & POOR'S CORPORATE BOND RATINGS

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

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

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

BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more

Davis Series, Inc., Statement of Additional Information 79

likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

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

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

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

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

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

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

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

MOODY'S COMMERCIAL PAPER RATINGS

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

STANDARD & POOR'S COMMERCIAL PAPER RATINGS

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

Davis Series, Inc., Statement of Additional Information 80

APPENDIX B:
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 Bank and Trust 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
Bank and Trust 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 that 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 Bank and Trust will redeem an appropriate number of
the escrowed shares in order to realize such difference.

5. I hereby irrevocably constitute and appoint State Street Bank and Trust 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 Bank and Trust 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 that 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.

Davis Series, Inc., Statement of Additional Information 81

APPENDIX C
SUMMARY OF DAVIS ADVISORS'
PROXY VOTING PROCEDURES AND POLICIES
APRIL 1, 2004

Davis Selected Advisers, L.P. ("Davis Advisors") votes on behalf of its clients
in matters of corporate governance through the proxy voting process. Davis
Advisors takes its ownership responsibilities very seriously and believes the
right to vote proxies for its Clients' holdings is a significant asset of the
clients. Davis Advisors exercises its voting responsibilities as a fiduciary,
solely with the goal of maximizing the value of its clients' investments.

Davis Advisors votes proxies with a focus on the investment implications of each
issue. For each proxy vote, Davis Advisors takes into consideration its duty to
clients and all other relevant facts available to Davis Advisors at the time of
the vote. Therefore, while these guidelines provide a framework for voting,
votes are ultimately cast on a case-by-case basis.

Davis Advisors has adopted written Proxy Voting Procedures and Policies and
established a Proxy Oversight Group to oversee voting policies and deal with
potential conflicts of interest. In evaluating issues, the Proxy Oversight Group
may consider information from many sources, including the portfolio manager for
each client account, management of a company presenting a proposal, shareholder
groups, and independent proxy research services.

Clients may obtain a copy of Davis Advisors' Proxy Voting Procedures and
Policies, and/or a copy of how their own proxies were voted, by writing to:

Davis Selected Advisers, L.P.
Attn: Chief Compliance Officer
2949 East Elvira Road, Suite 101
Tucson, Arizona, 85706

A copy of Davis Advisors' Proxy Voting Procedures and Policies is also included
in Davis Advisors' Form ADV Part II.

GUIDING PRINCIPLES

Creating Value for Existing Shareholders. The most important factors that we
consider in evaluating proxy issues are: (i) the Company's or management's
long-term track record of creating value for shareholders. In general, we will
consider the recommendations of a management with a good record of creating
value for shareholders as more credible than the recommendations of managements
with a poor record; (ii) whether, in our estimation, the current proposal being
considered will significantly enhance or detract from long-term value for
existing shareholders; and (iii) whether a poor record of long term performance
resulted from poor management or from factors outside of managements control.

Other factors which we consider may include:

(a) Shareholder Oriented Management. One of the factors that Davis Advisors
considers in selecting stocks for investment is the presence of
shareholder-oriented management. In general, such managements will have a large
ownership stake in the company. They will also have a record of taking actions
and supporting policies designed to increase the value of the company's shares
and thereby enhance shareholder wealth. Davis Advisors' research analysts are
active in meeting with top management of portfolio companies and in discussing
their views on policies or actions which could enhance shareholder value.
Whether management shows evidence of responding to reasonable shareholder
suggestions, and otherwise improving general corporate governance, is a factor
which may be taken into consideration in proxy voting.

(b) Allow responsible management teams to run the business. Because we try
generally to invest with "owner oriented" managements (see above), we vote with
the recommendation of management on most routine matters, unless circumstances
such as long standing poor performance or a change from our initial assessment
indicate otherwise. Examples include the election of directors and ratification
of auditors. Davis Advisors supports policies, plans and

Davis Series, Inc., Statement of Additional Information 82

structures that give management teams appropriate latitude to run the business
in the way that is most likely to maximize value for owners. Conversely, Davis
Advisors opposes proposals that limit management's ability to do this. Davis
Advisors will generally vote with management on shareholder social and
environmental proposals on the basis that their impact on share value is
difficult to judge and is therefore best done by management.

(c) Preserve and expand the power of shareholders in areas of corporate
governance. Equity shareholders are owners of the business, and company boards
and management teams are ultimately accountable to them. Davis Advisors supports
policies, plans and structures that promote accountability of the board and
management to owners, and align the interests of the board and management with
owners. Examples include: annual election of all board members, cumulative
voting, and incentive plans that are contingent on delivering value to
shareholders. Davis Advisors generally opposes proposals that reduce
accountability or misalign interests, including but not limited to classified
boards, poison pills, excessive option plans, and repricing of options.

Davis Advisors exercises its professional judgment in applying these principles
to specific proxy votes. Davis Advisors Proxy Procedures and Policies provides
additional explanation of the analysis which Davis Advisors may conduct when
applying these guiding principles to specific proxy votes.

CONFLICTS OF INTEREST

A potential conflict of interest arises when Davis Advisors has business
interests that may not be consistent with the best interests of its client. In
reviewing proxy issues to identify any potential material conflicts between
Davis Advisors' interests and those of its clients,

Davis Advisors' Proxy Oversight Group is charged with resolving material
potential conflicts of interest which it becomes aware of. It is charged with
resolving conflicts in a manner that is consistent with the best interests of
clients. There are many acceptable methods of resolving potential conflicts, and
the Proxy Oversight Group exercises its judgment and discretion to determine an
appropriate means of resolving a potential conflict in any given situation:

(1) Votes consistent with the "General Proxy Voting Policies," are
presumed to be consistent with the best interests of clients;

(2) Davis Advisors may disclose the conflict to the client and obtain the
client's consent prior to voting the proxy;

(3) Davis Advisors may obtain guidance from an independent third party;

(4) The potential conflict may be immaterial; or

(5) Other reasonable means of resolving potential conflicts of interest
which effectively insulate the decision on how to vote client proxies
from the conflict.

Davis Series, Inc., Statement of Additional Information 83

FORM N-1A

DAVIS SERIES, INC.

POST-EFFECTIVE AMENDMENT NO. 52 UNDER THE SECURITIES ACT OF 1933
REGISTRATION STATEMENT NO. 2-57209

AND

POST-EFFECTIVE AMENDMENT NO. 48 UNDER THE INVESTMENT COMPANY ACT OF 1940
REGISTRATION NO. 811-2679

PART C

OTHER INFORMATION

Item 22. Exhibits:

(a)(1) Articles of Incorporation. Incorporated by reference to
Exhibit (1) of Registrant's registration statement
2-57209, filed on Edgar April 15, 1996.

(a)(2) Articles Supplementary to Articles of Incorporation,
reclassifying shares, dated August 28, 1996.
Incorporated by reference to Exhibit (1)(b) of
Registrant's registration statement 2-57209, filed on
Edgar August 12, 1997.

(a)(3) Davis Series, Inc, Articles of Amendment, dated August
21, 1995, changing names (formerly, Retirement Planning
Funds of America, Inc.). Incorporated by reference to
Exhibit (a)(3) of Registrant's registration statement
2-57209, filed on Edgar February 26, 2001.

(a)(4) Articles Supplementary to Articles of Incorporation,
increasing shares, dated December 8, 1997. Incorporated
by reference to Exhibit (a)(4) of Registrant's
registration statement 2-57209, filed on Edgar February
26, 2001.

(a)(5) Articles Supplementary to Articles of Incorporation,
renaming "Davis Convertible Securities Fund" to "Davis
Appreciation & Income Fund".

(b) By-laws. Amended and Restated Bylaws, incorporated by
reference to Exhibit 23(b) of Registrant's registration
statement 2-57209, filed on Edgar April 27, 2000.

(d)(1) Investment Advisory Contracts. Between Davis Series,
Inc. and Davis Selected Advisers, L.P. dated January 1,
2001. Incorporated by reference to Exhibit (d)(1) of
Registrant's registration statement 2-57209, filed on
Edgar February 26, 2001.

(d)(2) Sub-Advisory Agreement between Davis Selected Advisers,
L.P., and Davis Selected Advisers - NY, Inc., dated
January 1, 2001. Incorporated by reference to Exhibit
(d)(2) of Registrant's registration statement 2-57209,
filed on Edgar February 26, 2001.

(e)(1) Underwriting Contracts. Distributing Agreement dated
January 1, 2001. Incorporated by reference to Exhibit
(23)(e)(1) of Registrant's registration statement
2-57209, filed on Edgar April 26, 2001.

(e)(2) Form of Dealer Agreement between principal underwriter
and distributing broker-dealers. Incorporated by
reference to Exhibit (e)(3) of Registrant's
registration statement 2-57209, filed on Edgar February
26, 2001.

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

(g)* Custodian Agreement. Agreement with State Street Bank &
Trust dated January 1, 2006.

(h)(1)* Other Material Contracts. Transfer Agent Agreement with
Boston Financial Data Services dated January 1, 2006.

(h)(2) Agreement Respecting Names, changing name from
Retirement Planning Funds of America, Inc., to Davis
Series, Inc., dated October 1, 1995. Incorporated by
reference to Exhibit (h)(2) of Registrant's
registration statement 2-57209, filed on Edgar February
26, 2001.

(i)* Legal Opinion. Opinion and Consent of Counsel (Seyfarth
Shaw, LLP).

(j)* Other Opinions. Consent of Independent Auditors (KPMG
LP).

(k) Omitted Financial Statements. Incorporated from the
Annual Report.

(l) Initial Capital Agreements. Not applicable.

(m)(1) Rule 12b-1 Plan. Distribution Plans for Class A, B and
C shares. Incorporated by reference to Exhibit (m)(1)
of Registrant's registration statement 2-57209, filed
on Edgar February 26, 2001.

(m)(2) Rule 12b-1 Plan. Distribution Expense Plan in Respect
to Government Money Market Fund, dated February 1,
1992. Incorporated by reference to Exhibit (m)(2) of
Registrant's registration statement 2-57209, filed on
Edgar February 26, 2001.

(n) Rule 18f-3 Plan. Plan pursuant to Rule 18f-3, as
amended June 10, 2003. Incorporated by reference to
Exhibit (n) of Registrant's registration statement
2-57209, filed on Edgar April 27, 2004.

(o) Reserved.

(p) Code of Ethics. Code of Ethics as amended February 1,
2005. Incorporated by reference to Exhibit (p) of
Registrant's registration statement 2-57209, filed on
Edgar February 25, 2005.

(q)(1) Other Exhibits. Powers of Attorney of the Registrant,
Officers and Board of Directors of Davis New York
Venture Fund, Davis Series, and Davis Variable Account
Fund, appointing Arthur Don and Thomas Tays as
attorneys-in-fact dated January 11, 2001. Incorporated
by reference to Exhibit (q) of Registrants registration
statement 2-57209, filed on Edgar February 26, 2001.

(q)(2) Other Exhibits. Powers of Attorney of the Registrant,
Officers of Davis New York Venture Fund, Inc. (Eich and
Reed), dated September 13, 2002 appointing Arthur Don
and Thomas Tays as attorneys-in-fact. Incorporated by
reference to Exhibit (q)(2) of Registrants registration
statement 2-57209, filed on Edgar July 1, 2003.

(q)(3) Other Exhibits. Power of Robert Morgenthau, dated
December 3, 2002 appointing Arthur Don and Thomas Tays
as attorneys-in-fact. Incorporated by reference to
Exhibit (q)(3) of Registrants registration statement
2-57209, filed on Edgar July 1, 2003.

(q)(4) Other Exhibits. Power of Thomas Gayner, dated April 19,
2004 appointing Arthur Don and Thomas Tays as
attorneys-in-fact. Incorporated by reference to Exhibit
(q)(4) of Registrants registration statement 2-57209,
filed on Edgar April 27, 2004.

(q)(5) Other Exhibits. Power of Douglas Haines, Principal
Financial Officer, dated September 14, 2004 appointing
Arthur Don and Thomas Tays as attorneys-in-fact.
Incorporated by reference to Exhibit (q)(5) of
Registrant's registration statement 2-57209, filed on
Edgar February 25, 2005.

(q)(7)* Other Exhibits. Power of Samuel H. Iapalucci, dated
February 17, 2006 appointing Arthur Don and Thomas Tays
as attorneys-in-fact.

* Filed herein

Item 23. Persons Controlled by or Under Common Control With Registrant

Information pertaining to persons controlled by or under common control with
Registrant is incorporated by reference from the Statement of Additional
Information contained in Part B of this Registration Statement.

Item 24. Indemnification

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

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

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

Item 25. 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-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.

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 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; President of Clipper Fund, 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. Is an employee of Shelby Cullom Davis & Co., a registered
broker/dealer.

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

DOUGLAS HAINES (3/4/71) 2949 East Elvira Road, Suite 101, Tucson, AZ 85706. Vice
President, Treasurer Chief Financial Officer, Principal Financial Officer, and
Principal Accounting Officer of each of the Davis Funds, the Selected Funds, and
Clipper Fund; Vice President of Davis Investments, LLC.

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

THOMAS D. TAYS (03/07/57), 2949 East Elvira Road, Suite 101, Tucson, AZ 85706.
Vice President, Secretary of each of the Davis Funds, Selected Funds, and
Clipper Fund; 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 26. Principal Underwriter

(a) Davis Distributors, LLC, a wholly owned subsidiary of the Adviser, located
at 2949 East Elvira Road, Suite 101, Tucson, AZ 85706, is the principal
underwriter for each of the Davis Funds, the Selected Funds, and Clipper Fund:
Davis New York Venture Fund Inc., Davis Series, Inc., Davis Variable Account
Fund, Inc., Selected American Shares, Inc., Selected Special Shares, Inc., and
Selected Capital Preservation Trust, Clipper Fund, Inc. and Clipper Funds Trust.

(b) Management of the Principal Underwriter:

NAME AND PRINCIPAL POSITIONS AND OFFICES WITH POSITIONS AND OFFICES
BUSINESS ADDRESS UNDERWRITER WITH REGISTRANT
-------------------------------- -------------------------- ----------------------------

Kenneth C. Eich President Executive Vice President and
2949 East Elvira Road, Suite 101 Principal Executive Officer
Tucson, AZ 85706

Russell Wiese Chief Marketing Officer None
609 Fifth Avenue,
New York, NY 10017.

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

Anthony Frazia Chief Compliance Officer None
609 Fifth Avenue,
New York, NY 10017.

Thomas D. Tays Vice President and Vice President and Secretary
2949 East Elvira Road, Suite 101 Secretary
Tucson, AZ 85706

Item 27. 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, Arizona 85706, and at the
offices of the Registrant's custodian, State Street Bank and Trust Company, One
Heritage Drive, North Quincy, Massachusetts 02107, and the Registrant's transfer
agent State Street Bank and Trust, c/o Service Agent, BFDS, Two Heritage Drive,
Seventh Floor, North Quincy, Massachusetts 02107.

Item 28. Management Services

Not applicable

Item 29. 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.

DAVIS 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 Tucson and State of Arizona on the 24th day of April, 2006.

The Registrant hereby certifies that this Post Effective Amendment meets all the
requirements for effectiveness under paragraph (b) of Rule 485 of the Securities
Act of 1933.

DAVIS SERIES, INC.

*By: /s/ Thomas Tays
-----------------------------------
Thomas Tays
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
--------- ----- ----
Kenneth Eich* Principal Executive Officer April 24, 2006
Kenneth Eich

Douglas Haines* Principal Financial Officer; and
Douglas Haines Principal Accounting Officer April 24, 2006

*By: /s/ Thomas Tays
-----------------------------------
Thomas Tays
Attorney-in-Fact

*Thomas Tays signs this document on behalf of the Registrant and each of the
foregoing officers pursuant to powers of attorney. Incorporated by reference to
Exhibits (q)(1), (q)(2) and (q)(5), of Part C of this Registration Statement.

/s/ Thomas Tays
----------------------------------------
Thomas Tays
Attorney-in-Fact

DAVIS SERIES, INC.

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed on April 24, 2006 by the following persons in the
capacities indicated.

Signature Title
--------- -----

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

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

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

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

Thomas S. Gayner* Director
-------------------------------------
Thomas S. Gayner

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

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

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

Samuel H. Iapalucci* Director
-------------------------------------
Samuel H. Iapalucci

Robert P. Morgenthau* Director
-------------------------------------
Robert P. Morgenthau

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

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

Marsha Williams* Director
-------------------------------------
Marsha Williams

* Thomas Tays signs this document on behalf of each of the foregoing persons
pursuant to powers of attorney. Incorporated by reference to Exhibits (q)(1),
(q)(3), (q)(4), and (q)(7) of Part C of this Registration Statement.

/s/Thomas Tays
----------------------------------------
Thomas Tays
Attorney-in-Fact

EXHIBIT LIST

23(g) Custodian Agreement
23(h)(1) Transfer Agent Agreement
23(i) Opinion and Consent of Counsel, Seyfarth Shaw, LLP.
23(j) Consent of Independent Accountants, KPMG, LLP.
23(q)(7) POA of Samuel H. Iapalucci