The Davis Funds

Fund Overview

Davis Appreciation & Income Fund

Overview
Investment Strategy
Historical Record During Uncertain Markets
Fund Attributes
Fund Factsheet (pdf)
Prospectus (pdf)

Overview

Since its inception in 1992, the goal of the Davis Appreciation and Income Fund has been to provide investors with a lower volatility approach to building long term wealth.

Utilizing the rigorous, research-intensive Davis Investment Discipline, Portfolio Managers Andrew A. Davis and Keith Sabol seek to uncover attractive stocks, bonds, convertible securities and preferred securities that are then combined within the portfolio to achieve our unique risk/reward goal.

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Investment Strategy

The Fund seeks to purchase durable, well-managed businesses at value prices and hold them for the long term.

The portfolio managers seek to structure a portfolio that tends to increase more than decline, given an equal upward or downward move in the price of the underlying stock.

Portfolio Managers Andrew Davis and Keith Sabol follow a three-step investment process:

First, they carefully consider valuations, creating valuation models for each of the companies considered.

Second, they analyze the investment potential of businesses using the time-tested Davis investment discipline, purchasing only those that are trading at a discount to their estimate of fair value.

Third, having identified attractively priced convertible securities, stocks and bonds issued by durable businesses, they seek to structure a portfolio with the potential to participate in some of the upside potential of the stock while providing a degree of downside protection.

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The Fund's Historical Record During Uncertain Markets

By remaining intensely focused on risk management and carefully considering how much we might lose on a new investment before we consider how much we might earn, the Davis Appreciation and Income Fund has historically delivered much of the upside of the market, while helping to mitigate some of its downside risk.**

During the years when the market was up since 1992, the Davis Appreciation & Income Fund delivered an average annual return of 16.57% vs. 18.21% for the S&P500®.

Furthermore, in many of the market's down years since 1992, Davis Appreciation & Income Fund protected investors from much of that downside and delivered an average annual return of -12.79% vs. -20.02% for the S&P 500®.

The performance presented represents past performance and is not a guarantee of future results. Total return assumes reinvestment of dividends and capital gain distributions. Investment return and principal value will vary so that, when redeemed, an investor's shares may be worth more or less than their original cost. The total annual operating expense ratio for Class A shares as of the most recent prospectus was 1.07%. The total annual operating expense ratio may vary in future years. Returns and expenses for other classes of shares will vary. Current performance may be higher or lower than the performance data quoted. For most recent month-end performance, click here or call 800-279-0279.

* Returns calculated from 5/1/92 through 12/31/92.
** While we seek to structure a portfolio that will increase in value when the S&P 500 Index increases and that will provide downside protection when the S&P 500 Index declines in value there can be no assurance that the portfolio will perform in line with our expectations. Past performance is not a guarantee of future results.

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Fund Attributes

Our firm's consistent application of the patient, rigorous, research-intensive Davis investment discipline, combined with our strong belief in the principles of shareholder stewardship, has resulted in a number of unique attributes:

Investment Results
Davis Appreciation & Income Fund A: 8.64%1; Lipper Category Average2, 8.11% (5/1/92 - 3/31/10)

Substantial Co-investment
The Davis family, Davis Advisors, employees and directors have over $2 billion of their own money invested side by side with fellow shareholders in the various mutual funds our firm manages. This creates one of the greatest degrees of shareholder alignment in the industry. 3

A Culture of Shareholder Stewardship
At Davis, we put our clients' goals first. Morningstar has recognized this commitment by awarding the Fund its highest overall Stewardship Grade of "A", a level achieved by less than 10% of the funds Morningstar grades. 3

Lower Than Average Expense Ratio 4
Davis Appreciation & Income Fund A: 1.07%; Lipper Category Average, 1.41%.

Lower Than Average Turnover Rate 5
Davis Appreciation & Income Fund A: 15%; Lipper Category Average: 74%.

The highly-patient nature of the Davis investment discipline is reflected in our lower than average turnover ratio.

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1 Class A shares, not including a sales charge. Past performance is not a guarantee of future results.
2 Figures reported are net of reimbursements and may vary in future periods. Peer/category data is compiled using Lipper. As of March 31, 2010 the Davis Appreciation & Income Fund had been categorized under Convertible Securities.
3 As of December 31, 2009.
4 Fund expense ratio is as of most recent prospectus. Lipper Category Average is as of most recent quarter end.
5 Fund turnover is as of most recent audited financial statement. Lipper Category Average is as of most recent quarter end.

This material must be accompanied or preceded by a current Davis Series, Inc., Prospectus. Carefully consider the fund's investment objectives, risks, charges and expenses before investing or sending money. The prospectus contains this and other information and can be obtained by clicking here or calling 1 (800) 279-0279. Read the prospectus carefully before you invest or send money.

Davis Appreciation and Income Fund's investment objective is total return through a combination of growth and income. There can be no assurance that the Fund will achieve its objective. The Fund is subject to both equity and debt risk. Some important risks of an investment in the Fund are: market risk: the market value of shares of common stock can change rapidly and unpredictably; company risk: the market value of a common stock varies with the success or failure of the company issuing the stock; small- and medium-capitalization risk: companies share price tend to fluctuate more often as they tend to have limited product lines, markets and financial resources, and their securities may trade less frequently and in more limited volume than those of larger companies. See the prospectus for a complete listing of the principal risks.

There are four principal risks of owning high-yield, high-risk debt securities: 1) many issuers only resort to offering high-yield, high-risk debt securities when they cannot get financing from more traditional sources, such as banks; 2) issuers of high-yield, high-risk debt securities are likely to have a substantial amount of other debt that is more senior; 3) high-risk debt securities may be difficult to sell; and 4) prices of high-yield, high-risk debt securities are more volatile than prices of higher-rated securities.

Over the last five years, the high and low turnover ratio for Davis Appreciation and Income Fund was 28% and 15%, respectively.

Morningstar Analyst Picks are the favorite funds of the Morningstar analysts who specialize in each category. Analysts make their selections based on a fund's historical risk and return, costs and knowledge of the managers and their strategies.

Morningstar assigns a stewardship grade to funds it covers. The overall stewardship grade is the sum of the following five components that are graded on a scale of A through F: Regulatory Issues, Board Quality, Manager Incentives, Fees, and Corporate Culture. The overall grade will range from an A to an F. Morningstar utilizes a fund's public filings, responses to a survey sent out by Morningstar to the fund company and the expertise of the Morningstar analysts to determine a fund grade. The grades are subject to change and are as of March 31, 2010. The methodology for the Morningstar Stewardship grade is completely different from the performance-based Morningstar star rating and has no impact on the star rating.

The S&P 500® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. Investments cannot be made directly in an index.

Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors’ products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events and other dealer-sponsored events. Financial advisors should not consider Davis Advisors’ payment(s) to a financial intermediary as a basis for recommending Davis Advisors.

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

Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ85756, 800-279-0279.